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Urgent

sagar (CA FINAL STUDENT) (60 Points)

23 September 2011

This is a query regarding sec. 44AD of income tax act, 1961

1.) A person having gross turnover of Rs. 35 lacs maintains the books of accounts and show the net profit of Rs.2.70 lacs( Being less than 8% of Turnover). The books of accounts are not audited by a chartered accountant. Is sec.44AD considered to be defeated by above mentioned treatment.? If yes than what is the relevence of 44AB regarding the compulsory audit of accounts.? I mean that if a person having gross turnover less than 60 lacs needs to be audited his books of accounts than what is the relevence of the 60lacs limit.?

2.) Is this means that every person having gross turnover of less than 60Lacs compulsory need to show profit more than or equal to 8% of turnover.???

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2 Replies

CA Vishal kapoor (Partner) (320 Points)
Replied 23 September 2011

Hi Sagar,

Your second point is correct in some extent. it is not mandatory for every assesse to show a profit more than 8% having a turnover of less than 60 lac. He can show a profit less than 8% of the turnover but he is required to get his accounts audited from the Chartered Accountant.

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Gayathri (s) (24 Points)
Replied 23 September 2011

Hi,

If your Gross Receipts/ Total turnover does not excedd 60 Lacs you should declare income not less 8 % of Total turover/gross receipts . If the income declared is less than 8 % then books to be maintained u/S 44 AA and audited u/s 44AB only if the income exceeds maximum amount not chargeable to tax .( W.E.F Ay 2011-12)