Tax audit- urgent

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 September 2013 VERY VERY URGENT:

A Pvt Ltd Company is in business - Developer/ Builder.

However the Co is also a partner in a partnership firm . The Share of Profit is Rs. 8 cr. during the year

Now
Question 1. Should this share of Profit of Rs. 8 Cr be considered for tax audit. Will this company be liable to tax audit under sec 44 AD.??

Question 2. Will this share of Profit of Rs. 8 Cr be taxable under Book Profit in MAT.?? (The company has already paid tax in partnership firm on Rs. 8 cr profit).

Other Information :.
Since the project undergoing is under construction.
The T/O is Nil.
Other Income : Share of Profit from Partnership firm - Rs. 8 Cr.

Expenses in P& L A/c : Rs. 11 lacs
Net Profit : Rs. Rs. 7.90 cr approx

The Expenses of project undergoing are of Rs.3.28 cr - trsfd to COP (including purchases of Rs.78.94 lacs)

SIR KINDLY ANSWER THE ABOVE QUESTION WITH A VALID SOURCE / LINK.

THANKS IN ADVANCE.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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30 September 2013 Answer 1. The profit from partnership is exempted from tax under section 10(2A). The same shall not be included in turnover for application of 44AB.

Whether the company is liable for tax audit udner 44AB shall depend on its business turnover.

Answer 2. MAT is not applicable on profit from partnership.

Kindly refer to Section 11JB(2).

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Ankur Agrawal

Ankur Agrawal (Expert)
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30 September 2013 I agree with Mr. nikhil because, 44AB shall depend on its business turnover.

and
Profit from Partnership firm, it is exempt in the Chapter-III "INCOME WHICH DO NOT PART OF THE INCOME" under section 10(2A)

115JB is not applicable on Partnership Firm it is on Company.

Ashwani Narnoli

Ashwani Narnoli (Expert)
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30 September 2013 Yes the turnover depends upon the nature of business. So, share of profit shall not be included.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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21 October 2013 The Income Tax Act is so designed that you have to give effect first to the small section and then proceed forward accordingly.

The share of profit falls u/s 10 which is much before section 115JB so it will not come under Book Profit.