Hi,
I have some confusion regarding applicability of tax audit u/s 44AB, will be relieved to get it resolved.
Consider this scenario-
I have a Business loss of 1 lakh but the turnover is less than 1 crore, so I am not covered under 44AB as turnover is less than prescribed limit, and as 44AD was amended and tax audit audit is only required if i am covered under 44AD(4) and also if my total income exceeds basic exemption limit, as my total income is not crossing basic exemption , i can carry forward losses without a tax audit.
So my understanding is, under 44AD, if i incur loss there is no need of a tax audit, as 44AD(4) is not attracted. The section is pasted below for easy reference.
[(4) Where an eligible assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1), he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1).
(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section (4) are applicable and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.]
Now, it is established no need to get audited u's 44AD, the actual query is whether the first proviso of 44AB covers the case mentioned above, Extracts pasted for reference-
[Provided that this section shall not apply to the person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD and his total sales, turnover or gross receipts, as the case may be, in business does not exceed two crore rupees in such previous year:]
As i am declaring a loss, therefore not declaring in accordance in 44AD(1), so 44AB becomes applicable via the first proviso
Is my understanding correct or am i interpreting something incorrectly?
Looking forward to the views from the Experts here.
CAclubindia
