Applicability of section 44ad

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A partnership firm has following items credited in its profit and loss account:

1. Interest earned on fixed deposit - Rs. 50 Thousand

2. Expenses claimed in previous year written back: 30 Lakh

3. Insurance reciepts: 2 Lakh

Total credits in profit and loss account : 32.5 Lakh

Revenue from its primary business is Nil.

Query 1: Is the firm required to under take the audit u/s 44AB if it is having net loss during the year.

Query 2: If firm like to declare income on presumptive basis than what is the amount of profit u/s 44AD.

Replies (1)
1) Audit is not compulsory. 2) presumptive income would be 8% of 32 lakhs i.e. 2.56 lakhs and 50k would be other source income.


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