As per section 34(4) of LLP act, 2008, accounts of LLP are required to be audited,
If the total turnover of LLP in any financial year exceeds Rs. 40 lakh, or
the total contribution exceeds Rs. 25 Lakhs, or
in any case, the partners so decide.
Here my query is...
Whether contribution as per MCA records / LLP Agreement ?
Or balance of capital(Fixed and current)as per books ?
Whether contribution means the amount mentioned in the LLP deed at the time of forming LLP or it means the balance of fixed capital and current capital as on the date of the year end?
Some practical (funny) issues:
1) Since profit (loss) for the year is transferred to partners' capital accounts the balance of the capital account may be negative, even though total contribution as per LLP deed might be exceeding Rs. 25 lakhs.
2) If two separate accounts are maintained for fixed capital / contribution and current accounts, the balance of current accounts might be exceeding Rs. 25 Lakhs, even though the balance of fixed capital / contribution might be less than 25 lakhs.
3) Sometimes, there are loan accounts of partners as well.
The intention of the legislature appears to be the total balance of capital accounts (fixed + current).
Kindly go through above and help in solving the query.
CAclubindia
