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Sec 44AA

Sunali (Learner) (1317 Points)

16 March 2010

A person has commission income; net receipts Rs. 200000/-, he is maintaining books u/s 44AA. He also deal in retail trading business, in which his turnover is less than Rs. 40.00 Lacs, is he required to maintain books for retail trading business as well..?

Pls refer any case law (if possible) along with your views.

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4 Replies

Smita Tewari (CA) (36 Points)
Replied 16 March 2010

Hello Sunali,

I think it will depend on the status of the assessee.If he is liable to pay tax as an individual then he has to maintain books of records for retail business too.

As per the recent amendment a person has to maintain books for records for if his income from business or profession exceeds Rs 1,20,000 lacs or his total sales and gross receipts as the case may be in business or profession exceed or exceedsRs 10 lacs in one of the three years immediately preceding the previous year.

Smita Tewari (CA) (36 Points)
Replied 16 March 2010

Hello Sunali,

I think it will depend on the status of the assessee.If he is liable to pay tax as an individual then he has to maintain books of records for retail business too.

Amir (Learner) (4016 Points)
Replied 16 March 2010

Dear Sunali,

I dont think any case law is required. Section language is quite clear in itself. Books will not be required for Trading Business.

Esrtwhile Sec 44AF

4) The provisions of sections 44AA and 44AB shall not apply in so far as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the total turnover or, as the case may be, the income from the said business shall be excluded.]

But under New Sec 44AD the above subsection is not there. But the fact that Sec 44AA will not apply even in this cases can be established by Sunsection (5) reds as follows-

Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) 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.

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Parth - CA,CS,CMA (Learner) (406 Points)
Replied 16 March 2010

Yes the books will be required to be maintain...

Section doesnt sets out limit for business... It sets out limit for assessee..

So if assessee's gross receipt from business (all businesses) exceeds the limit, 44AA will be attracted.

Let me give u an example..

Dont think of individual.. Lets say there is a company.. The company is engaged in two businesses.. One is commission and other is trading..

Now, when u'll make p&l of the company, u'll show both on receipt side..

Same way consider an individual as one unit.. When we prepare b/s of an individual (not a specific business), we'll have to show all the receipts.. Section doesnt say the gross income from "business" shall not exceed the specified limit.. It says gross income of "assesse" "from business" shall not exceed the limit..

NOTE: I've assumed that the gross receipt of commission business is more than the 44AA limit (as u haven't specified it)