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Sec 44ad of income tax act, ay 2011-12

TDS / TCS 805 views 2 replies

Dear frnds,

One of our client is a partnership firm, engaged in construction (residential complex) industry. For the FY 2010-11, the firm has followed presumptive taxation as per sec 44AD. They have not deducted TDS on the sub-contract work's payments. No advance tax is paid. Their total turnover is Rs.47 lacs for the fin year 2010-11.

Kindly clarify, whether directly applying 8% on 47 lacs and arriving at taxable income of Rs.3.76 lacs as profit is correct, or, on that 3.76 lacs we need to add the tds non-compliance disallowance.

Its urgent Pls reply.

 

Replies (2)

Sec 44AD provides that 8% of gross turnover shall be deemed to be the profit chargeable under the head "Profits and Gains from Buiness and Profession.

And since this profit is calculated as a percentage of turnove, the department is not concened what expenses, assessee has incurred for earning that profit.

Hence, Sec 40(a) wil not be applicable.

 

Sir, this is a related query.

As per Sec. 44AD, a partnership firm is allowed to deduct interest on capital and remuneration to working partners from the presumptive income of 8%.

But in the ITR for 4S, there is no provision to deduct the interest and remuneration - It just asks turnover and calculates 8%.

Please advise me how to adjust the interest and remuneration in form 4S ..

thanks in advance...

vinodaca74 @ gmail.com


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