income tax

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Dhana Sai

244 Points Joined April 2017

for ex:a professional firm having gross receipts of 34 lakhs ,can it adopt 44ada ? and if it adopted 44ada then it's business income was 17 lakh ,i.e(sec 30 to sec 38 are deemed to be allowed)can it deduct salary paid to working partner ? because it is sec 40(b)
thanks for replying

Replies (4)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

208824 Points Joined July 2016

It is a debatable issue in view of contradictory reference of sections in 44ADA (1) and 44ADA (2).

The standalone interpretation of section 44ADA (2) reveals that- the deductions of salary to working partner and interest to any partner would be allowed from the profit or gain calculated at 50% or more of the gross receipts.

However, the sequential and logical reading of section 44ADA (1) reveals non applicability of any of the provisions of section 28 to 43C (which includes sections 40(b) (iv) and 40(b) (v)).

This clearly means that, taxable profit or gain of profession will be equal to 50% or more of total gross receipts for the assessee not willing to go for tax audit.

Dhana Sai

244 Points Joined April 2017

thank u mr.Dhirajlal Rambhia

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

Dear Dhirajlal Sir.,
Thank you for the reply this one.
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