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Turnover of 2 businesses in sec. 44ab

Pawan Mittal (CA Final) (711 Points)

20 March 2013

The limit of Rs. 1 crore u/s 44AB for A.Y. 2013-14 is assessee wise or business wise? I mean if a person is running 3 businesses and having turnover of Rs. 40 lacs from each busines, whether he is required to get his accounts audited u/s 44AB? Because his aggregate turnover exceeds the limit of Rs. 1 crore.

If a person is carrying on one medical shop in Jaipur and another medical shop in Jodhpur with different names than will these be called different businesses?

If a person is trading in Sarees in ground floor and trading in furniture in first floor in the same building with the same name, can these be called different businesses?

Can a person covered u/s 44AD make payment exceeding Rs. 20000 by cash?

Please support your answer with suitable case laws or provisions of income tax act.

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2 Replies

Giridhar S Karandikar (Team Lead) (7553 Points)
Replied 20 March 2013

In all the case Tax Audit would be applicable.

Deepak Gupta (CA Student) (15922 Points)
Replied 20 March 2013

In cases where the assessee carries on more than one business activity, the results of all business activities should be clubbed together. In other words, the aggregate sales, turnover and/or gross receipts of all businesses carried on by an assessee would be taken into consideration in determining whether the limit of Rs.1 Crore has been exceeded or not. However, where the business is covered under the respective sections on presumptive basis, the turnover thereof shall be excluded.
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So far as a partnership firm is concerned, each firm is an independent assessee for purposes of Income-tax Act. Therefore, the figures of sales of each firm will have to be considered separately for purposes of determining whether or not the accounts of such firm are required to be audited for purposes of section 44AB.
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Para 5.17 of Guidance Note on Tax Audit u/s 44AB of the Income Tax Act, 1961 by ICAI

Sub section (1) of sec. 44AD begins with a non‐obstante clause and over‐ride section 28 to 43C. Accordingly provisions of Sec 40A(3) shall not be applicable in case assessee opts for a presumptive taxation u/s 44AD.
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In the case of Gopalsingh R. Rajpurohit vs. ACIT (2005) 94 TTJ (Ahd) 865 the assessee agreed for assessment under presumptive basis (then 44AF) and AO was directed to deleted disallowance under sec.40A(3).

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