Questions on Provisions of section 44AD or 44ADA

    Posted By : Pankaj Panchal / Published on : 25-Jun-2018 03:38 AM / View : 55 / Comment : 0
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    Seeking views of experts on provisions of section 44AD/44ADA of the Income Tax Act, 1961, as follows: 1. Whether a partnership firm can claim deduction on account of salary & interest u/s 40(b) after computing income taxable on estimated basis says 8% or 6% as the case may be of Turnover or Receipt from PGBP. My view: - Till the Finance Act, 2016, under sub-section (2) of 44AD says that any deduction allowable u/s 30 to 38 shall be deemed to be allowed. There after proviso exclude deduction deemed to allow for salary & interest paid to partners, in case of firm and shall be allowed subject to limit specified u/s 40(b) of the Act. Meaning there by deduction u/s 40(b) shall be over & above income computed u/s 44AD. After amendment made by Finance Act, 2017 in section 44AD and inset new section 44ADA, said proviso has been deleted but not whole sub-section. Sub-section (2) still says that any deduction allowable u/s 30 to 38 shall be deemed to allow u/s 44AD/44ADA. This sub-section covers or clarifies only deduction from 30 to 38 only not for section 40(b) of the Act. Although Sub-section (1) overruled from section 28 to 43C and provide method of computation the taxable income. Sub section 2 deals with deduction allowable u/s 30 to 38, which shall be deemed to allow. After changes proviso deleted but still nowhere mentioned that deduction under u/s 40(b) for salary & interest to partners shall not be available. Now requested to provide your valuable inputs 2. Eligible Assesse declaring income higher than rate specified u/s 44AD & ADA under normal provisions of the Act. Still provisions of 44AD & 44ADA will be applicable? My view: For eligible assesses for eligible business provisions of 44AD & 44ADA automatically applies wherever assesses declare profit lower than prescribed rate under normal provisions of the Act. Now requested to provide your valuable inputs 3. In case of partnership firm, profit before partner’s salary & interest is higher than 8% u/s 44AD or 44ADA but after taking effect of salary profit lower than said rate. Will same also come under provisions of section 44AD & 44ADA? If yes need to get account audited for claiming lower profit? 4. Assesses having income from LIC commission or any other commission are not allowed to avail scheme of presumptive taxation u/s 44AD/44ADA. Whether they can declare profit lower than rate specified under normal provision without getting accounts audited u/s 44AB however turnover does not exceeds Rs 1 Crores. 5. Whether word “profession of accountancy” as specified u/s 44AA of the Act covers all types of accountancy works like taxation, bookkeeping, legal, financial & audited services provided by any type of assesse (Individuals, firm, Private/Limited etc) or covers those who are eligible to practice as per Chartered Accountant Act?
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