Revisiting applicability of 44ad in software development

ITR 1620 views 2 replies

Sudipto Choudhury

Owner

24 Points Joined November 2014

Apologies for asking this again.

I have been searcing for a single answer, but unable to find as there are mixed reactions in previous posts.

So, here goes the question rephreased.

I hold a sole propritorship with Trade Lincese and doing software development services. I have a current account and accept all receipts in that account.

a) Can this be considered as "eligible business" under section 44AD?

b) If not, under what circumstances can the "software development" be considered as "eligible business" under section 44AD or is it never possible as per the rule?

Replies (2)

CA Raj Doshi

Practising CA

8944 Points Joined December 2013

Sec 44AA enlists professionals including engineers. What the logic says is even a software developer is similar as a software engineer. So you are a professional as per this. Now sec 44AD which allows 8% of sales as presumed profits specifically excludes professionals to offer income under this category. The law is clear a d strict. You cannot offer 8% of sales as income. You have to maintain books of accounts and also file return of income in ITR-4. However you can select "No accounts case " through which you need not submit entire detailed balancesheet and profit/loss account. You need to submit only 8 items. But you cannot escape maintaining books of accounts. E : rajcdoshi @ gmail.com

CA Preetham S Shetty

Chartered Accountant

32 Points Joined November 2008

Section 44AD: Legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified*.

*Notified professions:

Profession of authorised representative; and

Profession of film artist (actor, cameraman, director, music director, art director, dance director, editor, singer, lyricist, story writer, screen play writer, dialogue writer and dress designer)—Notification: No. SO 17(E), dated 12-1-1977/

Profession of Company Secretary—Notification: No. SO 2675, dated 25-9-1992/

Profession of Information Technology—Notification: No. SO 385(E), dated 4-5-2001.