Tax Audit u/s 44AB Read with Sec 44AD
himanshu singh
(Querist) 07 April 2013
This query is : Resolved
Dear Sir, please clarify the following situation relating to applicability of Tax Audit:
1.Turnover for P.Y. 2012-13 is 75 Lakh, and net profit for the year amounts to Rs. 2.25 lakh, all the books as per sec 44AA are already maintained. will there be requirement to get the Accounts audited?
2. what will be the situation if the same person get his accounts audited for P.Y. 2011-12 due to his turnover of 65 lakh. will he be required to get his accounts audited for P.Y. 2012-13 if his turnover is 75 Lakh?
raghavender
(Expert) 07 April 2013
in the first case, Sec 44 AB tax audit not required because turnover is below the prescribed limit. in this case your turnover is Rs. 75 Lakhs then Sec 44AD is applicable.
Special provision for computing profits and gains of business on presumptive basis.
44AD. (1) 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(8%) 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”.
(2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed :
Provided that where the eligible assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.
(3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.
(4) The provisions of Chapter XVII-C shall not apply to an eligible assessee in so far as they relate to the eligible business.
(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.
Explanation.—For the purposes of this section,—
(a) “eligible assessee” means,—
(i) an individual, Hindu undivided family or a partnership firm, who is a resident, but not a limited liability partnership firm as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009) 27a ; and
(ii) who has not claimed deduction under any of the sections 10A, 10AA, 10B, 10BA or deduction under any provisions of Chapter VIA under the heading “C. - Deductions in respect of certain incomes” in the relevant assessment year;
(b) “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 28 [sixty lakh rupees].]
raghavender
(Expert) 07 April 2013
For the second point of the case no need for tax audit if your turnover is below specified turnover.
Amritesh Mishra
(Expert) 07 April 2013
If the total sales, turnover or gross receipt in the business for the previous year relevant to the assessment year exceed 60 lakh for the assessment years2011-12 and 2012 -13 rs. 1 crore from assessment year 2013-14 then books of account are required to be compulsorily audited. So it was necessary to get ones account audited if turnover exceed 60 lakh during previous year 2011-12. So from the previous year2012-13 account is required to be audited if turnover exceed Rs 1 crore. so if turn over is Rs 75 lakh during previous year 2012-13, no compulsory audit is required.however it is advisable to gets your account audited as it will be beneficial for you.
Devajyoti Barman
(Expert) 07 April 2013
You are adequately advised.
Now follow the advice above.
Raj Kumar Makkad
(Expert) 07 April 2013
Nothing to add more in the given advice.
himanshu singh
(Querist) 08 April 2013
Sir where the turnover is less than 1 crore and profit is less than 8% but the assessee already maintains the books of account u/s 44AA and do not want to take use of Sec. 44AD, will he still be required to get his accounts audited?
himanshu singh
(Querist) 08 April 2013
Sir where the turnover is less than 1 crore and profit is less than 8% but the assessee already maintains the books of account u/s 44AA and do not want to take use of Sec. 44AD, will he still be required to get his accounts audited?
Whether sec 44AD be applicable to those who are already maintaining their accounts u/s44AA and their profit is less than 8%? if it is yes what will be the position the person whose turnover is 1 Lakh Maintains regular books u/s 44AA but unfortunately earns less than 8% should he get his accounts audited even for such a low turnover?
CA Ayush Agrawal
(Expert) 08 April 2013
Dear Author,
1. Get Audit of Your accounts u/s 44AD since profit is less than 8%.
2. no, audit is not applicable.
CA Ayush Agrawal
(Expert) 08 April 2013
Audit u/s 44AD is applicable when:-
> turnover less than 1 crore.
> profit shown less than 8% of turnover
Not Applicable to:-
definition is exhaustive and it includes only what it expressly means. Hence, all other persons such as -
- Non Resident; Individual, HUF and Partnership Firm
- Company
- Limited Liability Partnership
- AOP / BOI
- Artificial Juridical Person
Are impliedly not covered by the provisions of this section.
- professionals
himanshu singh
(Querist) 08 April 2013
It means a person whose turnover is still 1 lakh and having profit less than 8 % as per his books of accounts is required to get his accounts audited? is this provision is not painfull for such assessee who are maintaining their accounts?
himanshu singh
(Querist) 08 April 2013
It means a person whose turnover is still 1 lakh and having profit less than 8 % as per his books of accounts is required to get his accounts audited? is this provision is not painfull for such assessee who are maintaining their accounts?
Amritesh Mishra
(Expert) 09 April 2013
Dear
the provisions of section 44AD is in interest of revenue.
CA Ayush Agrawal
(Expert) 09 April 2013
Dear Authro,
Yes, Then 44AD will come in picture.
and first things is tell me:-
is this possible that whose t/o just 1 lacs in a whole year and even 8% profit is not there.
because it will be retails business as t/o 1 lacs and if one not getting profit of 8%, is this seem practicle ?
though this is law, and my this reply was just for getting clear your concepts, exceptional are always there.
himanshu singh
(Querist) 09 April 2013
Yes it is possible if the business is started just 15 days before the end of the financial year, and it is in reality that there is profit as per books is less than 8%.
So will there be need to get Accounts audited???
