44ad presumption of tax

✔ Section 44AD is applicable since turnover is within ₹2 crore.
✔ Cash deposit shown in AIS does not automatically disqualify 44AD.
✔ Only business cash receipts matter for the 5% test.
✔ If business cash receipts exceed 5%, 6% rate not allowed, but 8% is allowed.
✔ 44AD is not rejected merely due to cash deposit in AIS.

Section 44AD eligibility is not decided by cash deposits alone. The turnover limit is generally ₹2 crore, increased to ₹3 crore where cash receipts are no more than 5% of total turnover/receipts. For this test, non-account-payee cheque or draft receipts are treated as cash. With turnover of ₹2,00,55,000, the limit may therefore be ₹3 crore if the 5% condition is met; cash deposits of ₹10,50,000 alone do not establish the result. Also check whether the business or taxpayer falls within any statutory exclusion from 44AD.

This turnover is below ₹3 crore, but above ₹2 crore, so eligibility depends on the cash-receipts test and the nature of the business. Reconcile the ₹10,50,000 deposit with actual business receipts—deposits may include non-turnover items—and compare all cash receipts with total receipts. The applicable limit and tax treatment should be confirmed from the facts for the relevant assessment year.

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