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Query on sec 44 ab

Shams Khan (CA) (38 Points)

05 June 2015

We are providing Cameras on Hire in film industry. Our Income from the said activity is 40 Lacks. Is our books to be audited under 44AB. & How? Please give me details.

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6 Replies

dig vijay (ok) (151 Points)
Replied 05 June 2015

Audit can be conducted in case of a business if gross receipts exceed 100 lakhs. So you don't need to get tax audit done. If still you want to get that done you should need to get your books ready and look for a ca (better if he is your friend,etc.) and he'll explain you everything

Bhavesh A. Manani (CA Final ) (35 Points)
Replied 05 June 2015

44AB applicable when :

In case of:

Business T/O exceeds Rs.1 cr

Profession G/R exceeds Rs.25 lacs.

The Person is carrying on business or profession and is covered under the provisions of section 44AD, 44AE, 44AF, 44BB or 44BBB and claims that his income from the said business is lower than the deemed profits and gains computed under the relevant section Thus

In case where a person has a total turnover of Rs. 98 Lakhs and has sold a Car for Rs. 8 Lakhs. In such a case, the total amount on adding up becomes Rs. 1.06 Lakhs i.e. above Rs. 1 Crore. Confusion arose whether the person is liable to get an audit done in this case and ICAI has clarified that the turnover will not include any amount on the sale of the fixed asset as it was held by the person for business use and not for the purpose of sale.

ICAI has further clarified that the amount received from the following items shall not be included while computing the Total Sales/Total Turnover/ Gross Receipts:-

Sale Proceeds of Fixed Assets
Sale Proceeds of Assets held as Investments
Rental Income
Income by way of Interest unless assessable as Business Income
Any expense which is reimbursable to the Agent by the Client

CA CMA CS Ram Pavan Kumar Melam (CA) (6980 Points)
Replied 05 June 2015

Tax audit not required in your case as the turnover is below the threshold limit of Rs. 1 crore for business and Rs. 25 Lakhs for profession.

Hiring cameras not fall under profession.

Chaitanya .s (AUDITOR) (21 Points)
Replied 06 June 2015

tax audit is required in case of the person carrying proffesion and his gross receipts exceeds Rs.25lacs

Rinkle Mahajan (Audit Executive) (25 Points)
Replied 08 June 2015

Tax audit is not required as the gross receipts is less than rs. 1 crore.

CA CMA CS Ram Pavan Kumar Melam (CA) (6980 Points)
Replied 08 June 2015

Check the applicability of presumptive provisions such as 44AF etc. as suggested by Mr. Bhavesh. In case applicable, you need to offer minimum deemed profits to tax, else tax audit is applicable