HELLO FRIENDS, MY CLIENT HAS SHOWN THE GROSS PROFIT 6% OF SALES BUT IN PROFIT AND LOSS A/C THERE IS A COMMISSION AND OTHER INCOMES AS A RESULT NET PROFIT RAISE TO MORE THAN 8% OF SALES.
NOW PLS. TELL ME WHETHER AUDIT IS COMPULSORY OR NOT.
FOR 8% WE HAVE TO SEE GP OR NET PROFIT.
PLS. HELP ME.
THANKS.
You have to net profit and not gross profit.
Section 44AD is only for business of civil construction. or supply of labour for such a purpose.
Hence it does not include commission receipts.
You have to remove the commission receipts and the expenses incurred for earning the commission receipts and then verify the percentage of proifts ot sales.
Based on that you can make a decision.
SEC 44AD IS APPLICABLE FOR ALL BUSINESS FOR AY 2011-12.
SECTION 44 AD N/A ON commission income but is is applicable on manufacturer, wholesellers,retailers.
Chirag P Shah & Co. Chartered Accountant
Pune
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KK & Company Chartered Accountant
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AJAY SINGH AND CO LLP
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