Schedule Tribe Person

If a Schedule Tribe Person who is eligible for exemption under 10 (26) has a turnover of more than 1 crore. Is that person is liable for audit or he can show his income u/s 44AD and claim exemption u/s 10(26).
Replies (3)
As the Assesee is eligible for exemption under 10(26) for income from any source in those specified areas, the question of audit doesn't arise.


Tax audit is applicable with Following Conditions:

Must be a person under Income tax Act

Must carry on business or profession

Must maintain books of account

Object to earn profit or gain

Profit or gain comparable under Chapter IV

Income is Taxable or Loss allowable under Act
------
In the Following Conditions Tax Audit do not apply :-

Entire income exempt under chapter III i.e. section 10

Pravin Ji, May I know how you have concluded that tax audit will not be applicable if a person is earning income which is exempt under sec 10?  Isn't Turnover the only criteria for determining whether sec 44AB is applicable or not. We have seen cases where the entity incurs a loss and still carry out a tax audit.  

Suresh ji
True what you wrote.

But what replied by my post is based on the fact that 44AB comes ....Under the head Profits and Gains from Business or Profession... under chapter IV Part D.

Turnover limit under 44AB should not be considered in isolation and ought to be read with charging section 28 under chapter IV

There has to be income ( includes loss also ) which is chargeable under Chapter IV read with Section 28.

Here the entire income is falling under 10(26) Chapter III (income which do not form part of total income)

in view of above provisions , in my view 44AB tax audit is not required

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