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Sec 44ad to outdoor caterers

Harshad Natu (Student- CA Final) (59 Points)

12 March 2013

Assessee is HUF engaged in the business of Outdoor Catering in Maharashtra. He is paying Maharashtra VAT and Service Tax as per applicable rates. His total Turnover is Rs 60,000,00/- (including VAT & Service Tax amount Collected from customers and paid to respective Authorities) His actual profit as per books of Accounts maintained by him is Rs 12,000,00/-

Can he declare lower income U/s 44AD @ 8% of his turover ie. 4,80,000 (60,000,00 X 8%)?

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3 Replies

raghavender upadhyay (B.Com, LLB, CA FINAL) (331 Points)
Replied 12 March 2013

Yes. Sec 44 AD can be applied.

1 Like

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 12 March 2013

he can declare his income u/s 44AD @ 8% even though such income is below your actual income.

But you cannot declare your income below 8% of total turnover. If you want to do that you need to get your accounts audited u/s 44AB tax audit case from chartered accountant before the due date of fiing of return

Further, please note that your tota turnover doesnt include your VAT/Service tax iability and payment. So exclude it for calcuating turover for section 44AD

Thanks and regards

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Harshad Natu (Student- CA Final) (59 Points)
Replied 15 March 2013

Dear friends,

There are 2 opinions in this matter. The wording of the section is

" Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.

There are some opinions which say that the interpretation is 8 % or More.

I think lot of discussion is required in this regard...

so I request all experts / Member to express their views on the section