Section 44ad is applicable or not
Sourav Roy
(Querist) 20 March 2014
This query is : Resolved
My mother want to submit ITR4 for 2013-14 as a professional trader.So I want to know is audit is mandatory for my mother just because she not able to earn more than 8% of her total turnover(Say turnover 6 lac)even though she is not required under sec 44A.Kindly suggest
R.V.RAO
(Expert) 20 March 2014
Section
44AD
Presumptive taxation not to apply to professions etc. [Section 44AD] [W.r.e.f. A.Y. 2011-12]
Sub-section (6) has been inserted in section 44AD to provide that presumptive scheme is not applicable to:
(i) a person carrying on profession as referred to in section 44AA(1);
(ii) a person earning income in the nature of commission or brokerage income; or
(iii) a person carrying on any agency business.
Further, in line with section 44AB, for the purposes of presumptive taxation under section 44AD, the threshold limit
of total turnover or gross receipts has been increased from `60,00,000 to `1crore.
source:www.icmai.in
"eligible business"under sec 44AD,is as follows:
Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.
According to Explanation (b) to Section 44AD, Eligible Business means:
(i) any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE;
AND
(ii) whose total turnover or gross receipts in the previous year does not exceed an amount of Rs. 1 Crore. (Rs. 60 Lakhs for A.Y. 2012-13)
so the queries t's MOTHER'S business is eligible busIness under sec 44AD.
so She is covered under 44AD.
She is advised that no tax audit(being less than Rs 1 crore turnover) is required.
no maintenance of books under sec 44 AD is required.
Anirudh
(Expert) 20 March 2014
Dear Mr. Roy,
Can you please clarify what is meant by Professional Trader? In which items she is trading in?
Sourav Roy
(Querist) 20 March 2014
Yes it is true my mother is basically short term investor rather than professional trader.She used to trade delivery based trading in stock market and want to submit ITR4 for carry loss.But problem is that very confused whether accounts need to be audited or not under sec 44AD.Basically my mother has little profit say Less than Rs.40000 which is lower than 8% of total turnover and exact gross turnover is close to Rs.6 lac.So considering above fact will she still required audit under any section for filling return
Rajesh Thakker
(Expert) 21 March 2014
Yes you can disclosed profit @ 8% of total sales of shares or more u/s 44AD. Your case will be never scrutinze if profit declared u/s section u/s 44AD. If your case selected for assessment on any other ground, the AO can't asked about the where about of income declared u/s 44AD.
Therefore, it is good to declare business income u/s 44AD for mental peace.
T. Kalaiselvan, Advocate
(Expert) 23 March 2014
It is better to consult a local auditor or tax consultant for further opinions and suggestions.
