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SECTION 44AD (4) APPLICABILITY AND AUDIT UNDER SECTION 44AB

CA Vishal Variya (CHARTERED ACCOUNTANTS) (46 Points)

03 December 2021

Will Section 44AD(4) will be applicable for AY 2021-22. if Yes. Reason for that.

Deatils of Case

Opted for Section 44AD in

AY 2015-16

AY 2016-17

AY 2017-18

From AY 2018-19 to AY 2020-21. as per section 44AB(a) Audit was carried out.

But in AY 2021-22. Turnover is 80 lakhs and Income is 252000/-

Will audit will applicale to AY 2021-22 and if yes in which caluse from 44AB(a) to 44AB(e)

44AD(4) will applicable for AY 2021-22

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6 Replies

debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 03 December 2021

income would be computed as per the normal provisions of the Income Tax Act (i.e. Revenue –Expense-Depreciation) and the assessee would also be required to get his accounts audited under section 44AB. Moreover, if an assessee is applying section 44AD, he won't be allowed to claim any expense or depreciation.

Under Section 44 AB of Income Tax Act, audit of accounts is compulsory if: - Your business' gross turnover exceeds Rs. 1 crore in any preceding year or if your profession's gross receipts are more than Rs. 50 lakh in any preceding year.

CA Vishal Variya (CHARTERED ACCOUNTANTS) (46 Points)
Replied 03 December 2021

Thank You for Your Reply
My question is regarding section 44AD(4) And its linkage to Section 44AB

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 03 December 2021

According to facts of the case assessee doesn't withdraw 44AD in earlier for his choice it is apparent that due to specific provision he had to file return under normal business thus one can say he had not violated the condition under 44AD(4) thus can opt for 44AD in this AY.

This is my point of view you can wait for other experts view before coming to any conclusion.