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Sec 44AF

laxmi (student) (59 Points)

27 November 2007

A retailer has a turnover of Rs.600000 and interest on deposits of Rs.100000. P&L A/c shows a profit of Rs.70000 after considering the interest. what is his taxable income considering the provisions of sec 44AF?

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18 Replies

CA Anil Jain (Chartered Accountant) (696 Points)
Replied 27 November 2007

U/S 44 AF 5% of gross receipt is taken as deemed profit in case of non maintenance of book of a/c & not fall under the criteria of tax audit.In ur given case if u choose 44 AF the taxable income will be 30000 and total taxable income will be(600000*5%+100000) & tax accordingly

NANDURI RAVI SURYA NARAYANA MU (ACCOUNTANT) (194 Points)
Replied 27 November 2007

what is the effect prior period expenditure in p&l account for the current financial year

Manindar Kakarla (C.A.Student) (42 Points)
Replied 27 November 2007

Hi Laxmi, Sec44AF will be applicable if the assesee is in retail business & turnover not exceeding 40 lakhs. Your case will not attract sec44AF because the turnover is excess of 40 lakhs.

CA Anil Jain (Chartered Accountant) (696 Points)
Replied 27 November 2007

Hello Manindar, As per Ms.Laxmi Question turnover is 600000(6Lacs) can u tell me why sec.444F is not applicable in her case? Waiting for reply, Regards, Anil Jain.

Manindar Kakarla (C.A.Student) (42 Points)
Replied 27 November 2007

Sorry Laxmi, I misread 6 lakhs as 60 lakhs.your case will attract sec 44AF.Then the income underyhe head Business or Profession is Rs 30000 & interest income will be Rs100000

laxmi (student) (59 Points)
Replied 27 November 2007

thank u very much...

SURESH KABRA (chartered accountants) (121 Points)
Replied 30 November 2007

DEAR, YOU REQUIRED TO FILE THE RETURN OF TOTAL INCOME OF Rs. 30000/- + 100000/- TOTAL Rs. 130000/- ONLY

manoj (Articled Student) (66 Points)
Replied 04 December 2007

according to sec 44AF 5% of the Turnover or the sum higher than the aforesaid sum is taxable. Interest on Deposits are Taxable under the head Income from Other Sources.

manoj (Articled Student) (66 Points)
Replied 04 December 2007

according to sec 44AF 5% of the Turnover or the sum higher than the aforesaid sum is taxable. Interest on Deposits are Taxable under the head Income from Other Sources.

vijaykumar (Student) (49 Points)
Replied 07 December 2007

Even though they declare more than 5 % U/s 44AF the assessee should get the books to be audited u/s 44AF being the turnover is more than 40 Lakhs. Interest income to be considered sepreatly in the other source heads if the deposits is related to the business then it shall be included in the business itself.

Vk Duggal (320 Points)
Replied 07 December 2007

interest income is not a income from business & profession unless the assessee is in the business of money lending or financing. There are several case laws including of supreme court of india on this. interest income is to be considered separately

(Guest)

I have a retial business run as a partnership firm.my turnover is 27lakhs. i file retunr under Sec 44AF, now 5% of 27lakhs=135000. now what all expenses can be deducted from this profit and whats my taxable income. int to partners is 30000,depriciatin is 44000 and partners remunaration is 100000. kindly help me

(Guest)

MAHI. FOR A RETURN UNDER SEC 44AF FOR TRADERS. THE ASSESSEE WILL BE DEEMED TO HAVE BEEN ALLOWED THE DEDUCTION OF ALL EXPENDITURE EVEN THE DEPRECIATION ALSO. ONLY U WILL BE ALLOWED TO GET DEDUCTION OF REMUNERATION AND INTEREST TO PARTNERS AFTER SATISFYING SOME CONDITIONS UNDER SECTION 40(b) OF THE INCOME TAX ACT. AND WRITTEN DOWN VALUE OF THE ASSET WILL BE AS THE DEPRECIATION HAS BEEN ALLOWED TO THE ASSESSEE.SO IN UR CASE 135000-30000-100000=5000 IS THE TAXABLE INCOME .