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Tax Audit

Nagaraj (CA Final ) (48 Points)

24 September 2009

A partner geting remuneration from Partnership Firm whose remuneration exceeding 10,00,000 Liable for Tax Audit or Not. .

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16 Replies

CA Sumit Arora (CA) (1411 Points)
Replied 24 September 2009

Yes tax audit is applicable.

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sreekrishna.N (Article student) (34 Points)
Replied 24 September 2009

tax audit applicable

Max Payne (employed) (2574 Points)
Replied 24 September 2009

44AB applies where the gross receipts of profession exceeds 10 lakhs and Gross receipts or turnover of a business exceeds 40 lakhs.

The salary received by a partner of a firm is taxable under the head PGBP.

So the tax audit will be applicable if he is a professional and his salary from the firm exceeds 10 lakhs.

Rajeev (www.rkmco.com) (985 Points)
Replied 25 September 2009

Yes. Ref Explanation 2 to section 15 and Section 28(1)

if received from a professional firm , 10 lakhs

if received from a business firm ,40 lakhs

Anup rathi (CA FINAL) (268 Points)
Replied 25 September 2009

yes for an indivisual the condition for tax audit is income xceeding 10lac Rs so he is liable for tax audit

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CA Parth Shah (Chartered Accountant) (369 Points)
Replied 25 September 2009

yes.under the head pgbp sec-44ab wud b applicable.

Have a lot to achieve (C.A. B.Com(H)) (101 Points)
Replied 25 September 2009

Parth

I want to know how did you arrive at this conclusion

Plz give some clarifications

CA.Parsun Garg (JOB) (1380 Points)
Replied 25 September 2009

Dear All,

Every person carrying on business shall, if his total sales, turn over or gross recipts, as the case may be, in business exceeds Rs. 40,00,000 in any previous year

In the case of a person carrying on profession, if his gross receipts in profession exceeds Rs. 10,00,000 in any previous year

is required to get his accounts audited u/s 44AB.

So, A partner geting remuneration from Partnership Firm whose remuneration exceeding 10,00,000 is not at all Liable for Tax Audit u/s 44AB.

Rajeev (www.rkmco.com) (985 Points)
Replied 25 September 2009

I dont agree with Mr Parsun Garg . Read the provisions carefully

CA.Parsun Garg (JOB) (1380 Points)
Replied 26 September 2009

Dear Rajeev,

then u tell me the provision under which salaried person is liable to get his accounts audited under income tax act.

please read the provision carefully because it is very simple, here partner is in receipt of salary as mentioned in the query.

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Sunil (Trader) (2611 Points)
Replied 26 September 2009

The Partner's Salary is treated as income from business or profession and not taxed under the head salaries. Therefore if it is a business firm, the partners renumeration is taxable under the head income from business. It will be a part of his gross receipts from business. If this partner say draws salary from firm of 5 lakhs and in proprietorship business has over 35 lakhs, he will be audited. Likewise, a partner of a firm of specified profession drawing salary will be treated as professional receipt. If he also has professional receipt as a proprietor or individual, the salary will be included alongwith his individual propritorship receipts for purpose of 10 lakhs limit.

Regd. profit share from the firm, as it is not taxable in the hands of the partner, it is not clear whether that should be excluded from 44AB. We always enter this amount for record purpose under business (share from partnership firm). As an individual, it may get included as his gross receipts even though exempt from tax.