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Query about bussiness under sec 44ad

Ankur (na) (252 Points)

22 August 2011

hello friends,

please help me on the following doubt:

is the provision of 44AD assessee based or business based?

i.e. if one person(individual) carries on two or more businesses and all these businesses have gross turnover less than rs. 6000000 then for application of 44AD will the turnover of each such business be compared with limit of Rs. 6000000 or will the sum of all these turnover be compared with Rs. 6000000?????

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6 Replies

CA YOGESH GARG GMG PLYWOODS (BUSINESS OF PLYWOOD and PARTNER IN GUPTA & MALHOTRA CHARTERED ACCOUNTANTS) (248 Points)
Replied 22 August 2011

In this case the assessee is liable for tax audit u/s 44AB for both businesses(i.e. he has two proprietor business) Because if the assessee carries on more than one business, the result of all business should be clubbed together in determinig the applicability of 44AB. Eg:

Business1	Business2	Tax Audit
12 lakhs	40 lakhs	no
12 lakhs	62 lakhs	both
48 lakh	22 lakh	both

But if an assessee has one proprietor business and he is also a partner in a firm then clubbing of businesses will not be done as both are separate entity...

1 Like

Sudarshan Raghavan (Chartered Accountant) (108 Points)
Replied 22 August 2011

in case of individual, its all businesses under one PAN...so if an individual carries more than one business, since they all will be under one PAN, they'll be clubbed....

1 Like

Manish Murarrka (Accountant) (35 Points)
Replied 22 August 2011

The sumation of Turn Over all Business is less than 60 lack then u/s 44AD applicable.

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Karthikeyan (CA Final) (174 Points)
Replied 22 August 2011

Agreed with Yogesh Garg. Nice Example

Karthikeyan

Atul Kesarkodi (IPCC+Service) (71 Points)
Replied 22 August 2011

Sir,

Your suggestion covers which AY or PY ? The Taxation study material(dec,10 edition) for AY 11-12 states the following, Please consider this...

"In order to determine whether an assessee, who is engaged in multiple businesses,is eligible to opt for section 44AD, the limit of 60lacs should be applied business wise and not by aggregating the turnover of all businesses of the assessee."

It also states following example:

Business	Turnover during PY 10-11
Retail trade	45 lacs
Civ construction	65 lacs
Catering	50 lacs

in this case , the person can opt for presumtive tax u/s 44AD in respect of his retail and catering business.but not in respect of civil. if person opts for presumtive taxation,his income from retail business shall be 8% of 45lacs= 3.60 lacs AND income from catering shall be 8% of 50 lacs= 4 lacs. HE is not required to maintain books for retail and catering. For civil , he must maintain books u/s 44AA and get them audited u/s 44AB.

2 Like