venky (student) (41 Points)
26 September 2016Can a partner of a Limited Liability Partnership adopt Section 44AD?
As per the text of the provision, it does not prohibit any individual whose gross receipts are less than 1 Crore to adopt 44AD. But, as this provision is not applicable to LLP. Does that also mean that the partner of LLP also cannot adopt 44AD?
Thanks In Advance!!
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(160886 Points)
Replied 26 September 2016
Does parter have any eligible business, whose income you wish to declare u/s. 44AD?
venky
(student)
(41 Points)
Replied 26 September 2016
An Individual is a partner of a LLP sir. And that LLP is engaged in providing accounting services.
My doubt is wether the indivudual can adopt 44AD for disclosing his remuneration from the LLP?
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(160886 Points)
Replied 26 September 2016
Are you sure about taxability of the remuneration from LLP? what kind of remuneration? Will it be called business income?
venky
(student)
(41 Points)
Replied 26 September 2016
Yes sir, I'm sure that Remenuration of a partner from LLP is taxable in hands of partners and will be treted as Income from Business and Profession for the purposes of tax.
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(160886 Points)
Replied 26 September 2016
Will it be called Eligible business u/s. 44AD?
venky
(student)
(41 Points)
Replied 26 September 2016
No sir, in this case it is not eligible business. But my doubt is..if such LLP was carrying on eligible business.... Can the partner adopt 44AD for his renumeration?
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(160886 Points)
Replied 26 September 2016
If you accept is as eligible business, then yes; but you yourself has denied it, So........
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(160886 Points)
Replied 26 September 2016
To clarify your doubt:
True: Section 28(v) provides that interest and remuneration received by a partner from his LLP shall be chargeable to income-tax as profits and gains of business.
Section 44AD : The rate of computation of income on an estimated basis is 8% of turnover or gross receipts of the eligible business
1. For individual partner LLP is not business!!
2. Remuneration from LLP is not Turnover but Gross Profit from which any expenses to earn the profit are allowed to be deducted (to arrive at Net Profit)
Any doubt?
venky
(student)
(41 Points)
Replied 26 September 2016
Yes sir..I understood that remuneration is not that partners turnover and LLP is not his business. Hence, no question arises about adopting 44AD. THANKS A LOT SIR!!
But,one more don't sir... You said if I accept it as eligible business then yes.. How it is possible sir?
Income by providing Accounting services is professional income no sir?
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(160886 Points)
Replied 26 September 2016
1. "You said if I accept it as eligible business then yes.. How it is possible sir?"
Actually, it is an answer in negation. You cannot say yes, and hence its NO.
Had you accepted it as YES, I would have gone ahead with more questions, to get it back to NO.
Sometimes we learn things better this way, rather than just spoon-feeding.
2. Yes.
venky
(student)
(41 Points)
Replied 26 September 2016
CA shanky pahoja
(accountant)
(615 Points)
Replied 28 September 2016
great sir, I liked the way you respond to the query.
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(160886 Points)
Replied 28 September 2016
Thanks Mr. Shanky Pahoja for appreciation. It was enjoyable for me too.
CAclubindia
