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Partner ship firm remuneration and interest considered as gr

rajesh (Accountant) (583 Points)

28 September 2012

Dear Sir

An Assessee Doing a business and his gross receipts is Rs. 45,00,000 and he want to show higher profit @ 8.5% on Gross Receipts is Rs. 3,82,500

but he is also an partner in two Firms he is received total special business receipts by way of Remuneration and interest on capital is Rs. 20,00,000 at this time he is liable his account audited u/s 44AB even he is offered higher profits @ 8.5% on Gross receipts of Rs. 45,00,000

please tell

Thanking you

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7 Replies

deepali agarwal (Company Secretary) (1289 Points)
Replied 28 September 2012

No assesse is not liable for audit according to the info provided by u

ANJALI NEGI (Chartered Accountant) (1263 Points)
Replied 28 September 2012

Total Gross Receipts = 4500000

Renumeration & Interest on Capital = 2000000

Profit @ 8.5% on Gross receipts = 382500

Total Receipts= 4500000+2000000+382500= Rs. 6982500 doenot exceeds 1Crore.

Therefore he is not liable for tax audit u/s 44AB

In this annual budget, the limit of section 44AB of income tax act has been increased. Now the limit for business is increased to 1 Crore whereas the limit for profession is increased to 25 Lakhs to get his account audited. This will be applicable for the financial year 2012-13 and the analysis year 2013-14.

KARANDEEP,CA,B.Com,CS FNL (JOB) (457 Points)
Replied 28 September 2012

Originally posted by : ANJALI NEGI
	Total Gross Receipts = 4500000 Renumeration & Interest on Capital = 2000000 Profit @ 8.5% on Gross receipts = 382500 Total Receipts= 4500000+2000000+382500= Rs. 6982500 doenot exceeds 1Crore. Therefore he is not liable for tax audit u/s 44AB In this annual budget, the limit of section 44AB of income tax act has been increased. Now the limit for business is increased to 1 Crore whereas the limit for profession is increased to 25 Lakhs to get his account audited. This will be applicable for the financial year 2012-13 and the analysis year 2013-14.

Agree with Anjali....

S.Rizwana (CMA) (78 Points)
Replied 28 September 2012

Dear Rajesh,

For the A.Y 2012-13 44AB is applicable in the following cases:-

1.where turnover/sales(business) exceeds Rs. 60,00,000

2. where gross receipts ( professional income) exceeds Rs.15,00,000

3.where Turnover is less than Rs.60,00,000 and profit considered less than 8% of turnover then only he is liable for tax audit.

In your assessee case receipts from business doesnot exceed Rs.60,00,000 and profit considered as 8.5% which is greater than 8%. So ,the assessee is not liable u/s 44AB.

Varshit Shah (Self Employed) (676 Points)
Replied 28 September 2012

Originally posted by : ANJALI NEGI
	Total Gross Receipts = 4500000 Renumeration & Interest on Capital = 2000000 Profit @ 8.5% on Gross receipts = 382500 Total Receipts= 4500000+2000000+382500= Rs. 6982500 doenot exceeds 1Crore. Therefore he is not liable for tax audit u/s 44AB In this annual budget, the limit of section 44AB of income tax act has been increased. Now the limit for business is increased to 1 Crore whereas the limit for profession is increased to 25 Lakhs to get his account audited. This will be applicable for the financial year 2012-13 and the analysis year 2013-14.

Dear Anjali , How can you consider Profit as part of Gross Receipt? Also when you consider Rs. 45 lakhs as Gross receipt then why you have considered the profit of the same receipt? Tax Audit limits mentioned by you is applicable for Current Year 2012-13 & not for the previous year.

While calculating Limit for Business or Profession eligible for Tax audit , Remuneration & Interest recd from Partnership firm is not to be considered. Hence 20 laksh will not be considered.

@ S.Rizwana - Question of audit comes when assessee has opted for Presumptive Taxation u/s 44AD & when he shows profit less than 8%. If he has not opted for such option then whatever the Profit % subject to Rs. 60 lakhs turnover he is not required to get audited his/her books of accounts.

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(Guest)

yes, I agree with varsh*t shah,

while calculating limit of Tax Audit u/s 44AB , The remuneration & interest on capital from partnership firm can not considered.HENCE IN THE ABOVE CASE TAX AUDIT IS NOT COMPULSORY.HOWEVER remuneration & interest on capital from partnership firm shall be shown as income under the head Business or profession.hence you have to show minimum Rs.3,60,000 as profit from business excluding

remuneration & interest on capital from partnership firm.

Shekhar Panwar (Partner) (21 Points)
Replied 30 September 2012

Originally posted by : Varsh*t Shah

Originally posted by : ANJALI NEGI

Total Gross Receipts = 4500000

Renumeration & Interest on Capital = 2000000

Profit @ 8.5% on Gross receipts = 382500

Total Receipts= 4500000+2000000+382500= Rs. 6982500 doenot exceeds 1Crore.

Therefore he is not liable for tax audit u/s 44AB

In this annual budget, the limit of section 44AB of income tax act has been increased. Now the limit for business is increased to 1 Crore whereas the limit for profession is increased to 25 Lakhs to get his account audited. This will be applicable for the financial year 2012-13 and the analysis year 2013-14.

Dear Anjali , How can you consider Profit as part of Gross Receipt? Also when you consider Rs. 45 lakhs as Gross receipt then why you have considered the profit of the same receipt? Tax Audit limits mentioned by you is applicable for Current Year 2012-13 & not for the previous year.

While calculating Limit for Business or Profession eligible for Tax audit , Remuneration & Interest recd from Partnership firm is not to be considered. Hence 20 laksh will not be considered.

@ S.Rizwana - Question of audit comes when assessee has opted for Presumptive Taxation u/s 44AD & when he shows profit less than 8%. If he has not opted for such option then whatever the Profit % subject to Rs. 60 lakhs turnover he is not required to get audited his/her books of accounts.

Yes this is what i was thinking.

i am totally agreed with Varsh*t Shah as anjali has already included the gross receipt from the business which is 45 lac then there is no question of adding the profit of that business in the receipt of the same business in order to calculate the threshold limit for tax audit.

and as far as the tax audit is concerened it will be not be there as the gross receipt from the business is 45 lac which is below the limit.

and the amount received by the assessee from the firm as remuneration and interest will be entertain separately.