1. Thane Branch of WIRC of ICAI e TAXINGINCOMEONINCOME ON PRESUMMPTIVEBASISMPTIVE BASIS Presentedby11 June 11 CAParasKSavla

2. 2 LegislativehistoryTaxing income on Presumptive Basis 11-06-11 3. LegislativehistoryLegislative history3 ComputingprofitsandgainsfromthebusinessoftradingincertaingoodsS.44AC Tradinginspecificgoods&deemeedincome Timberobtainedunderaforesttlease 35% Timberobtainedbyanymodeootherthanunderaforestlease 15% Anyotherforestproducenotbe gyp eingtimber 35% ProvisionsdeletedbyFA92Taxing income on Presumptive Basis 11-06-11 4. LegislativehistoryLegislative history4 ChapterXIIC S.115KtoS.115N Tobuildinganatmosphereoftrust g ptandconfidenceandalsotowidenthetaxbasebyencouragingsmallshopkeeperstopaytheirtaxes,theFinanceAct1992hasintroduceda anewsimplifiedprocedurefortaxation.taxation Applicabletoassessees notassesssedtotaxearlier IndividualsandIndividuals and HUFs, Conditions IncomeofnotmorethanRs.35,000 0fromthebusinessofretailtradeorofrunninganeatingplaceoranyvocationand, Inthecaseofretailtrade,annualtuIn the case of retail trade annual tuurnoverofuptofivelakh urnover of up to five lakh rupees; TaxRs1,400Taxing income on Presumptive Basis 11-06-11 5. LegislativehistoryLegislative history5 S.44AD(preamendment)Specialprovisionsforcomputingprofitsandgainsofbusinessoprofits and gains of business o civil construction :ofcivilconstruction:of Deemedincome 8% InsertedbyFA 94&applicabletillFY200910Inserted by FA 94 & applicable till FY 200910 S.44AESpecialprovisionsforS 44AE Special provisions for computing profits and gains of rcomputingprofitsandgainsof rbusinessofplying,hiringorle easingofgoodscarriage ApplicabletilldateA li bl ill d W.e.f.142010ratioofdeemeddincomeincreasedTaxing income on Presumptive Basis11-06-11 6. LegislativehistoryLegislative history6 S.44AFSpecialprovisionsfoorcomputingprofitsandgainso eta bus essofretailbusiness Deemedincome 5% Inserted by FA 97 and applicable up to FY 200910InsertedbyFA 97andapplicableuptoFY2009 10 S.44AD(postamendment)SpecialprovisionsforS 44AD (post amendment) Special provisions forcomputingprofitsandgainssofbusinessonpresumptivebasis Deemedincome 8% Amended by Finance (No 2) Act 2009 & applicable from 1 4AmendedbyFinance(No.2)Act2009&applicablefrom142010Taxing income on Presumptive Basis11-06-11 7. 7 PresumptivetaxationlegalprovisionTaxing income on Presumptive Basis 11-06-11 8. WhyexpansionofscopeofS.44ADWhy expansion of scope of S 44AD8 There has been a substantial increase in small businesses with the growth oftransport and communication and ge eneral growth of the economy. A large number of businesses and s service providers in rural and urban areaswho earn substantial income are outtside the taxnet. Introduction of presumptive tax p provisions in respect of small businesseswould h l a number of small b i ld help b f ll businesses t comply with th t titol ith the taxationprovisions without consuming their t time and resources. A presumptive income scheme for small taxpayers lowers the compliance costfor such taxpayers and also reduces the administrative burden on the taxmachinery. In view of the above, to expand t scope of presumptive taxation to all ,pthe p ppbusinesses, the existing section 44A has been substituted by a new sectionAD44AD. Para21.1ofExplanatoryNotestotheProvisionsofth heFinance(No.2)Act,2009 CIRCULARNO.5/2010/[F.NO.142/13/2010SO(TPL)],DATED362010142/13/2010 SO(TPL)] DATED 3 6 2010Taxing income on Presumptive Basis 11-06-11 9. ConstitutionalvalidityConstitutional validity9 Issue may arise whether fixing incoome at specified rate is constitutionallyvalid? Income occurring in Entry 82 in List 1 of the Seventh Schedule shouldbe construed liberally and in a vvery wide manner and the power tolegislate will take in all incidenta and ancillary matters including thealauthorisation to make provision to prevent evasion of tax, in any nssuitable manner and the entry w take within its fold any profits orwillgains not only actually received, b also income which is supposed bllld but lh hd bythe Legislature to have notionally accrued. Difficulties envisaged by the reven to locate the persons and to collectnuethe tax due in certain trades, if the Legislature in its wisdom thought thateit will facilitate, the collection of t tax due from such specified traderstheon a presumptive basis, there is nothing in the said legislative measureto offend article 14.Taxing income on Presumptive Basis 11-06-11 10. Constitutionalvalidity Constitutional validity10 The non obstante clause in section 44AC denying such reliefs has no basis and so unfair and arbitrary and equality of treatment is denied to such persons, necessitating grant o appropriate relief. of To the extent the non obstante clause in section 44AC excluded the provisions of sections 28 to 43C (applicable to all assessees), the provisions are unreasonable. A. SSanyasi Rao v Gi Government of Andf d dhradh Pradesh [ 989] 2 9 ITR 330 (SC)d h [1989] 219 The new provisions incorporated a provision permitting rebuttal of presumption . Hence new provisio may not be constitutional invalidons invalid. There may be hardship to some asssessee. Whether hardship Wh th h d hi can l d t uncon titlead to nstitunality?lit ? Taxing income on Presumptive Basis11-06-11 11. Schemeofnewpr Scheme of new prrovisions11 Applicabletoeligibleassessee Engagedineligiblebusiness Engaged in eligible business Whichhasamaximumgrossturnover/grossreceiptsofRs60lakhs. Rateofpresumptiveincome Rate of presumptive income 8percentofgrossturnover/groossreceipts. Taxing income on Presumptive Basis 11-06-11 12. EligibleAssessee Eligible Assessee12 Theschemeisapplicableto Individuals HUFsand partnershipfirms Notapplicabletoanassessee whois availingdeductionsunder sections10A,10AA,10B,10BAor sections 10A 10AA 10B 10BA or anyprovisionsofChapterVIAunderttheheadingC.Deductionsinrespectofcertain incomes Inabovecaseinordertoclaimdeduc bd ld d ctionsassessee isrequiredtomaintainaccountsandalso dd l getaccountsaudited Nonresidents LLP(Indianorforeign),Company(Indianorforeign),AOP,LocalAuthority,artificial jurisdictionperson. Taxing income on Presumptive Basis 11-06-11 13. Eligiblebusiness Eligible business13 Anybusiness Excluding a business already co Excludingabusinessalreadycooveredundersection44AEie engagedovered under section 44AE ie engaged inplying,hiringorleasingofcarriages Whichhasamaximumgrossturnover/grossreceiptsof60lakhs g g p UnlikeoldprovisionofS.44AD,S.44AE&S.44AF,scopeofamended provisionsapplytoallbusinessexcceptspecificallyexcluded. Itcoverstraders,manufactures,se erviceprovider. Taxing income on Presumptive Basis11-06-11 14. Whetherappliestoprofession? Whether applies to profession?14 S.44AD(1)statesengagedinaneligiblebusiness,... The word "business" is of widest imp port and an inclusive one and it means anp activity carried on continuously and syystematically by a person, by the application of his labour or skill, with a view to earn income. It does not necessarily mean trade or manufacture only. I i b i I dil d f l It is being used as d including within its scope professions vocations and callings from a fairly long s, time. Professions are generally regarde as business. ed The words "business connection" in section 9(1) and section 163 are comprehensive enough to include all heads of income mentioned in section 14. The context in which the expression "business connection" is used in section 9(1) clearly shows that there is no warrant for giving a restricted meaning to it by excluding "professional connections" frprofessional connections rom its scope. Ref Barebdra Prasad Ray v ITO 129 ITR 295 (SC) 5 Taxing income on Presumptive Basis11-06-11 15. Whetherappliestoprofession? Whether applies to profession?15 PartDofChapterIVoftheActconsist tsofsections28to43anddealswith profitsandgainsofbusinessorprofession. Thephrasehasbeenusedincertains sectionsasbusinessorprofession,but nowherehasthephrasebeenusedas sthebusinessandprofession. WherevertheLegislatureintendedth hatthebenefitofaparticularprovision shouldbeforbothbusinessorprofesssion,ithasusedthewordsbusinessor profession and wherever it intended torestrictthebenefittoeitherbusiness professionandwhereveritintendedto restrict the benefit to either business orprofession,thentheLegislaturehaasusedthewordeitherbusinessor profession, Itintendedtoextendthebenefittoeeitherbusinessorprofession,i.e.,the onewouldnotincludetheother. RefG.K.Choksi&Co.vCIT[2007]295I 376 (SC) R f G K Ch k i & C CIT [2007] 295 ITR ITR376(SC) I Taxing income on Presumptive Basis11-06-11 16. Whetherappliestoprofession? Whether applies to profession?16 Limit for carrying tax audit is Rs 60 lacs for assessee engaged in business where as it is Rs 15 lacs for professio on Specific reference for business or pr rofession in Act The data collected on tax deductio in various cases of professionals andon technical experts, showed that the tax incidence is much higher than thee amount of tax collected by way of ddeduction of tax at source at the existing rate of five per cent hence higher rcent, rate of TDS of10% prescribedprescribed. Finance Act, 2007 Explanatory Notes on provisions relating to Direct Taxes CIR. NO. 3/2008, DT. 1232008 Better view is that amended provisions does not covers profession, vocation.s Taxing income on Presumptive Basis11-06-11 17. Total TurnoverorGross Receipts?TotalTurnover or GrossReceipts ?17 S.44ABusessimilarwords. The term turnover is not specifically defined in the Act, nor specifically for the y purpose of section 44AB its meaning should be taken as commercially and44AB, commonly understood. Growmore Exports Ltd. v. Asstt. CIT [22001] 78 ITD 95 (Mum. Trib.) Regarding the interpretation of the w word turnover as made by the Institute of Chartered Accountants in the conntext of section 44AB, the Publication Guidance Note on Tax Audit under section 44AB published by the Institute of Chartered Accountants of I di i rele t Ch t d At t f India is levant. Asstt. CIT v. Hasmukh M. Shah [2003] 85 ITD 99 (Ahd. Trib.) The terms total sales, turnover and gross receipts referred to in section, gp 44AB are those which have in them income taxable or loss allowable under the Act. Dy.CITv. Mangal Dayak ChitFund(P.)Ltd.[2005]92ITD258(Hyd. Trib.)yg y ( ) []( y) Taxing income on Presumptive Basis 11-06-11 18. Total TurnoverorGross Receipts?TotalTurnover or GrossReceipts ?18 Issuemayarisewhatwouldconstituteturnover? Consideration on sale of fixed aConsiderationonsaleoffixeda assets VAT/Servicetaxcollected InterestInterest Incentives StockintradeStock in trade Transport/deliverycharges etc Taxing income on Presumptive Basis11-06-11 19. Turnoverof? Turnover of?19 Whetherturnovermeans Purchaseturnoveror Salesturnoveror Anyoneofit VijayNMaheshwari HUFvACIT ITAT:ITANo.515/Bom/1991&1725 5/Bom/1991Orderdt.29/9/1994 HC:ITA/924/1995Orderdt.27/3/19996 SC:SLP(Civil)20074/1997OrderDt 13/10/1997 Incasepurchaseturnoverpracticaaldifficulties? Taxing income on Presumptive Basis 11-06-11 20. Establishmentoft Establishment of turnovert20 Assessee wouldberequiredtoesttablishthattotalturnoverasdisclosed byhimiswithinthelimitsonthebbasisofDocuments/records/ evidencesuchas Salesinvoice/cashmemo/bill ls Bankstatement Anysecondaryrecords Returnsfiledunderanyindirect ttaxeslikeVAT/Servicetaxetc. Taxing income on Presumptive Basis11-06-11 21. Multipleactivities Multiple activities21 In case assessee is engaged in mmultiple activities whether issue may arise about computation eligible turnover and presumptive income? Eg AnXisanengineerandhehas f ll i i E A X ii d h h sfollowingincome: ConsultancyfeesRs8lacs GrossreceiptsfromtradingRs52lacs ServicechargesRs7lacs InterestincomeRs12lacs Grossreceipts/turnoverforcomp Gross receipts / turnover for compputationpresumptiveincomewouldbeRs putation presumptive income would be Rs 59lacs (52+7),consultancyfeesar rerequiredtoexcluded. RefExplanatoryMemorandumtoF FA94. Mohd.Aslam vITO[2006]150Taxman20(JODH.)(MAG.) Mohd Aslam v ITO [2006] 150 Taxman 20 (JODH ) (MAG ) Incasetrading&serviceincomeeexceedsRs60lacs,S.44ADwouldnothave anyapplication Taxing income on Presumptive Basis11-06-11 22. 22 Nonapplicabilityofce ertainprovisions Taxing income on Presumptive Basis11-06-11 23. NonApplicabilityo Non Applicability o certain sections ofcertainsections of23 Anassessee optingfortheschemeisexemptedfrom: Nonapplicabilityofprovisionso Non applicability of provisions o Chapter XVIIC ofChapterXVII C of Leadstocertainunintendedconse equences Maintenanceofbooksofaccou Maintenance of books of accou related to such business as requireduntrelatedtosuchbusinessasrequiredunt undersection44AAoftheIncometaxAct. S.44AA(iii)/(iv)givesnegativeexemp ption S.44ADnospecificexemptionfrommaintenanceofbooksofaccountsetc.contratopre replacedS.44AD(4) Assesseeclaimshehasearnedinco Assessee claims he has earned incoomelowerthanspecifiedpercentageandsuch ome lower than specified percentage and such incomeismorethanmaximumam mountnotchargeabletotax,S.44AD(5)and 44AA(2)(iv),mandateshimtomainntainbooksofaccountsandotherdocuments asspecifiedu/s44AA,getthemau as specified u/s 44AA get them auuditedfromtheaccountantandfurnishreportudited from the accountant and furnish report asrequiredu/s44AB. Taxing income on Presumptive Basis11-06-11 24. NonApplicabilityo Non Applicability o certain sections ofcertainsections of24 S.44AE S.44AEspecificexemptionfrommainteenanceofbooksofaccountsetc.asprescribed u/s44AAandauditu/s44AB However in case assessee claims that he has earned income lower than specified amount, S. 44AE(7) and 44AA(2)(iii), mandates him to maintain books of accounts and other documents( ) ( )( ), as specified u/s 44AA, get them audited f from the accountant and furnish report as required u/s 44AB. Taxing income on Presumptive Basis 11-06-11 25. ProvisionsofS.28 Provisions of S 28 to 43C 8to43C 825 NonApplicabilityofprovisionsu/s28to4 43C Nodeductionofexpensesu/s30to38 Allowability oflosses?Whetherclarif ficatory? Differenceinlanguageinpara 2of14th ScheduleofDTC,2010billS.44AD(1)is4 notwithstandingclause.Accordinglynt ith t di lA di l normalbusinessincomecomputation lb iit ti provisionsarenotapplicabletosuchsmallbusiness As a result various provisions pertaining t following items are not applicable ppg togpp Certain types of income chargeable under the head business income Allow deduction on fulfillment of cert conditionstain Deemed allowance of depreciation, additional depreciation, weighted deduction Payment of expenditure otherwise by account payee cheque beyond specified limit y Gopal Si h K R j G l Singh K. Rajpurohit v. ACIT 9 TTJ (Ahd ) 865 hi94(Ahd.) Specifically provided that partnership fir is entitle to claim deduction for interest onrm partners capital / partners remuneration. p pp Taxing income on Presumptive Basis 11-06-11 26. Implications26 ExpenditureonscientificresearchS.3 35(2AA) Assessee isnotentitledtoclaimedwe eighteddeduction RefundofMVAT f d f Isnotincludedu/s41(1)butincludedasapartofgrossreceipts Allowanceofdepreciation/additiona Allowance of depreciation / additiona depreciation aldepreciation al Depreciationaswellasadditionaldep preciationwouldbedeemedtoallowed AggregatecostofMachinerypurrchasedon252008,Rs100,000andsoldon112011forRs65,0002011 for Rs 65 000 Profitsu/s50determinedasund der Depreciation allowed @ 20% FY 08-09 Rs 40,000 (including additional depreciation),YFY 09 10 Rs 12 000 09-10 12,000 Capital gains Rs 3,000 [65,000-(100000-(40,000+12,000)) Nonallowanceofunabsorbeddeprecciation DCITv.SunilM.Kankariya[2008]298ITR(AT)205(ITATPune) Isdepreciationisallowedonassetsoldduringtheyear? Taxing income on Presumptive Basis11-06-11 27. 27 Assessment Taxing income on Presumptive Basis 11-06-11 28. Assessment28 UnlikeprovisionsoferstwhileChapterXIIC,assesseeisrequiredtofilereturn ofincomeandAOhaspowerstoissue enoticeu/s142/143forassessment UnlikeerstwhileS.44AD(5)nomanda atoryscrutinyassessmentincaseincome belowspecifiedrate AOisboundtoassessincomefromsp AO is bound to assess income from sp pecifiedbusinesspecified business AOcanmakeadditionsunexplainedinvestment,cashcreditetc. Duringassessmentproceedingincase g p geassessee sturnoveris RaisedbeyondRs60lacs Determinationofsuchincomeisnottgeverned byS.44AD Maintenanceofaccountsanditsauddit Penaltyforfurnishingincorrectpartiiculars,nonauditofaccounts ReducedbelowRs60lacs Reduced below Rs 60 lacs DeterminationofincomewouldbeggovernedbyS.44AD Taxing income on Presumptive Basis11-06-11 29. Implicationsofinc Implications of inc creaseinturnover crease in turnover29 In the instant case even after addi itional income total turnover was below specified limit. ITAT has held that We do not consider it to be a case that fully fits into the scheme of section 44AD, for which, undoubtedly, faith recording of the turnover (and other hful relevant financial parameters) is essential. Whenever the law provides any con ncession(s) from its rigors, the observance and satisfaction of the qualifying crit teria are presumed as, also contended by the assessee correctly met i e with assessee,met, i.e.,hout any doubt as the law contemplates a doubt, true disclosure, and in any case are suubject to scrutiny/verification. As aforestated, in the present case, the same cannot be said for sure, and as such, in our considered opinion, t the assessee having failed to record its turnover correctly in its books, it cannnot be said to be a case to which section 44AD of the Act is strictly applicable. y pp Shivani Builders v. ITO [2007] 108 ITD 520 (AHD.) Taxing income on Presumptive Basis 11-06-11 30. Filingofbelatedau Filing of belated au reportuditreportudit30 A combined reading of sections 44AF(5), 44AB and 271B leads to the conclusion that if the assessee fails to furnish the audit report as requireds under section 44AB [which has been incorporated in subsection (5) of section sub section 44AF] it may be liable to levy of penalty as mentioned in section 27IB. Nowhere in section 44AF [right from subsection (1) to subsection (5)] it ism mentioned that the assessee would be denied the benefit of claiming lower profits and gains than the profit and gains as specified in subsection (1) of section 44AF, if it furnishes the audit report beyond the due date as mentioned in section 44AB. Thus, it is clear that it is not the intenntion of the Legislature to altogether deny the benefit of lower profits if the asseessee maintains books of account and gets them audited and furnishes a repor as required under section 44AB thoughrt belatedly. Otherwise, it would have specified/ mentioned in the section itself to that effect. Further, Further the filing of audit report is o procedural in nature and the assessee only cannot be denied the benefit of exemmption claimed by it. Leyland Automobiles v. ITO [2008] 20 SOT 242 (COCHIN) Taxing income on Presumptive Basis 11-06-11 31. FewCases Few Cases31 Once under the special provisio exemption from maintenance ofon, books of account has been provided and presumptive tax at thepp p rate of 8 per cent of the gr ross receipt itself is the basis for determining the taxable incom the assessee is not under anyme, obligation to explain individual entry of cash deposit in the bank,l unless such entry has no nexus with the gross receipts. CITvSurinder PalAnand [2010]192Taxman(PUNJ.&HAR.) WhereamountofgrossreceiptssbeinginexcessofRs.40lakhs, section44ADisnotapplicable,principleunderlyingsaidsection alsocannotbeadopted Shri RamJhanwar Lal vITO [2009]]177TAXMAN135(RAJ.) Taxing income on Presumptive Basis 11-06-11 32. FewCases Few Cases32 The additional sales found as a result of search, was not recorded in the books of accounts regularly kep in the course of business by the pt assessee. Merely because the apppellant accepted the additional sales for the purpose of assessment of the relevant year on the basis of entries in the i d documents, th same would not constitute accounts of th th seized d t the ld ttit tt f the appellant maintained in the regula course of business and on that basisar alone liability cannot be fastened o the assessee by holding him to haveon committed the default. Brij Lal Goyal v. ACIT [2004] 88 ITD 413 (Del.) Taxing income on Presumptive Basis11-06-11 33. 33 PresumptiveTax goodscarriage Taxing income on Presumptive Basis 11-06-11 34. Presumptiveincome Presumptive income for truck ownersefortruckownerse34 Under the existing provisions of s section 44AE, a presumptive scheme is available to assessees engaged in business of plying, hiring or leasing goods carriages. The scheme applies to an assessee, who owns not more than 10 n goods carriages at any time during the previous year. Under this scheme, a fixed amount of income per vehicle is taken at the rate of Rs. 3,500 Rs 3 500 per month per vehicle for owners of heavy goods vehicle and Rsr vehicle,Rs. 3,150 per month per vehicle for the o owners of light goods vehicles. An assessee opting for this scheme is exempted from maintaining books of account tod substantiate the income. The Act has been amended to take care of inflationary trend, hence the limit has been enhanced to presume incom per vehicle for the owners of : me heavy goods vehicle to Rs 5 000 per mRs. 5,000month; and other than heavy goods vehicles to Rs 4,500 per month. s. Further an antiavoidance clause is provided to state that a prescribed fixed sum or a sum h h than the afores d sum claimed to hhigher hh f saidl d have bbeen earned bd by the assessee shall be deemed to be pprofits and gains of such business. Taxing income on Presumptive Basis 11-06-11 35. Assessee plying own & hired vehicleplyingown ned&hiredvehicle ned35 The assessee with multiple business are not barred entirely from availing the s benefits of S. 44AE. The assesee with multiple business which includes the business of plying etc with their own goods carriage, are not only entitled to the benefits of S. 44AE but also for the exclusion of the relev vant turnover from total turnover of all the business of the assessee for the purrposes of computation of monetary limits for S. 44AB in view of S. 44AE(5) S. 44AE shall apply with respect to buusiness carried through own vehicles only AnilRamgopal M li (HUF) ACIT (201 47 DTR (P A il Rl Mali(HUF)vACIT(20110)47DTR(Pune)(Trib)51310) )(T ib) 513 Under amended provisions income f from hired vehicles would be governed by S. 44AD? JCB can not be termed as goods carriag Thus, the provisions of section 44AE were ge. not applicable and the income from JCB could not be computed by applying section Bs 44AE. Gaylord Constructions v ITO [2008] 175 TAXMAN 9 (COCH.) (MAG.) 99 Taxing income on Presumptive Basis11-06-11 36. Let stalk! Lets talk!36 Taxing income on Presumptive Basis 11-06-11 37. Thankyou Thank you37E: par ras@psaindia.netT: +91 1.22.25410049 Taxing income on Presumptive Basis 11-06-11 38. 38 Appendix Taxing income on Presumptive Basisn 11-06-11 39. Sec44AD:Pream Sec 44AD : Pream mendment39 44AD. Special provision for computing prof and gains of business of civil construction, fits etc. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C in the case ofy43C, an assessee engaged in the business of civil construction or supply of labour for civil construction, a sum equal to eight per cent of the gross receipts paid or payable to the assessee in the previous year on account of such business or, as the case may be, a sum higher h hi h than the aforesaid sum as d l d by the assessee i hi return of i h f id declaredhin hisf income, shall bh ll be deemed to be the profits and gains of suc business chargeable to tax under the headch Profits and gains of business or profession: Provided that thi P id d th t nothing contained i thi s bt i d in this subsection shall apply i case th aforesaidti h ll l in the f id gross receipts paid or payable exceed an amount of forty lakh rupees. (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 nosubsection (1), further deduction under those sections shall be allowed :l Provided that where the assessee is a firm the salary and interest paid to its partnersm, shall be deducted from the income com mputed under subsection (1) subject to the conditions and limits specified in clause (b) o section 40. of Taxing income on Presumptive Basis11-06-11 40. Sec44AD:Pream Sec 44AD : Pream mendment40 (3) The written down value of any asset used for the purpose of the business referred to ind subsection (1) shall be deemed to have be calculated as if the assessee had claimedeen and h d bd had been actually allowed th d d ti n i respect of th dt ll ll d the deductio int f the depreciation f each of thi ti forh f the relevant assessment years. ( ) (4) The provisions of sections 44AA and 44A shall not apply in so far as they relate to the pABpp y y business referred to in subsection (1) and i computing the monetary limits under those in sections, the gross receipts or, as the case m be, the income from the said business shallmay be excluded. (5) Nothing contained in the foregoing pro ovisions of this section shall apply, where the assessee claims and produces evidence to prove that the profits and gains from theo aforesaid business during the previous year relevant to the assessment year commencing on the 1st day of April, 1997 or any earlier aassessment year, are lower than the profits and gains specified in subsection (1), and ther reupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee and determine the sum r payable by the assessee on the basis of asse essment made under subsection (3) of section 143. Taxing income on Presumptive Basis11-06-11 41. Sec44AD:Pream Sec 44AD : Pream mendment41 (6) Notwithstanding anything contained in the foregoing provisions of this section, an n assessee may claim lower profits and ga ains than the profits and gains specified in subsection (1) if h k b ti (1), he keeps and maintains su h b k of account and other d di t iuch books ft d th documents ast required under subsection (2) of section 44AA and gets his accounts audited andn furnishes a report of such audit as required uunder section 44AB. Explanation.For the purposes of this section, the expression civil construction includes (a) the ( ) th construction or repair of any b ildi t ti i f buildi ing, b id ibridge, ddam or other structure or of anytht tf canal or road; ( ) (b) the execution of any works contracty Taxing income on Presumptive Basis11-06-11 42. Sec44AD:Postam Sec 44AD : Postammendment42 44AD. (1) Notwithstanding anything to the c contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eeligible business, a sum equal to eight per cent of th t t l tf the total turnover or gross receipts of the assessee i th previous year on account ofi t f in the it f 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 b deemed to be the profits and gains of suchbe business chargeable to tax under the head Profits and gains of business or profession.ff f (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of subsection (1), be deemed to have been already given full effect to and no sub section further deduction under those sections shall be allowed :l Providedthatwheretheeligibleassesseeisafirm,thesalaryandinterestpaidto its partnersshallbedeductedfromtheincomecomputedundersubsection(1)subjectto( ) theconditionsandlimitsspecifiedinclause(b)ofsection40. (3)Thewrittendownvalueofanyassetofan (3) The written down value of any asset of an eligible business shall be deemed to haveneligiblebusinessshallbedeemedtohaven beencalculatedasiftheeligibleassesseehaadclaimedandhadbeenactuallyallowedthe deductioninrespectofthedepreciationforeachoftherelevantassessmentyears. Taxing income on Presumptive Basis11-06-11 43. Sec44AD:Postam Sec 44AD : Postammendment43 (4) The provisions of Chapter XVIIC shall no apply to an eligible assessee in so far as they ot relate to the eligible business. (5) Notwithstanding anything contained in the foregoing provisions of this section, an n eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in subse pgpection (1) and whose total income exceeds the ( ) maximum amount which is not chargeable to incometax, shall be required to keep and maintain such books of account and other documents as required under subsection (2) of section 44AA and get them audited and furrnish a report of such audit as required under section 44AB. Taxing income on Presumptive Basis 11-06-11 44. Sec44AD:Postam Sec 44AD : Postammendment44 Explanation.Forthepurposesofthissectioon, (a)eligibleassesseemeans,(i)anindividual,Hinduundividedfamilyoorapartnershipfirm,whoisaresident,butnotalimitedliabilitypartnershipfirmasdefinedunderclause(n)ofsubsection(1)ofsection2oftheLimitedLiabilityPartnerssection 2 of the Limited Liability PartnersshipAct,2008(6of2009)27a;and ship Act 2008 (6 of 2009)27a; and(ii)whohasnotclaimeddeductionunder ranyofthesections10A,10AA,10B,10BAordeductionunderanyprovisionsofChapterVIAundertheheadingC. Deductionsinrespectofcertainincomesintherelevantassessmentyear; (b)eligiblebusinessmeans,(i)anybusinessexceptthebusinessofply()ying,hiringorleasinggoodscarriagesreferredtoinsection44AE;and(ii)whosetotalturnoverorgrossreceipts(ii) whose total turnover or gross receipts in the previous year does not exceed ansinthepreviousyeardoesnotexceedansamountofsixtylakh rupees. Taxing income on Presumptive Basis 11-06-11 45. Sec44AE Sec 44AE45 44AE. (1) Notwithstanding anything to the c contrary contained in sections 28 to 43C, in the case of an assessee, who owns not more th ten goods carriages 30 at any time duringhan the th previous year and who i engaged i t b iid h isd in th business of plying, hi i or l i suchthef l ihiringleasing h goods carriages, the income of such busine chargeable to tax under the head Profitsess and gains of business or profession shall b deemed to be the aggregate of the profitsbe and gains, ffrom all the goods carriages own by him in the previous year, computed inned accordance with the provisions of subsectio (2).on (2) For the purposes of subsection (1), the p sub sectionprofits and gains from each goods carriage,carriage, (i) being a heavy goods vehicle, shall be an amount equal to five thousand rupees for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, o whichever is higher; (ii) other than a heavy goods vehicle, shall be an amount equal to four thousand five hundred rupees for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle whichever is highe vehicle,er Taxing income on Presumptive Basis 11-06-11 46. Sec44AE Sec 44AE46 (3) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of subsection (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowedl Provided that where the assessee is a firm, t salary and interest paid to its partners shallthe be deducted from the income computed unnder subsection (1) subject to the conditions and limits specified in clause (b) of section 40. (4)Thewrittendownvalueofanyassetuseddforthepurposeofthebusinessreferredtoin subsection(1)shallbedeemedtohavebeencalculatedasiftheassesseehadclaimed andhadbeenactuallyallowedthedeductionninrespectofthedepreciationforeachofthe relevantassessmentyears. l tt (5)Theprovisionsofsections44AAand44AB Bshallnotapplyinsofarastheyrelatetothe businessreferredtoinsubsection(1)andinncomputingthemonetarylimitsunderthose sections,thegrossreceiptsor,asthecasem sections the gross receipts or as the case may be the income from the said business shallmaybe,theincomefromthesaidbusinessshallm beexcluded. (6) Nothing contained in the foregoing proovisions of this section shall apply, where the assessee claims and produces evidence to prove that the profits and gains from theo aforesaid business during the previous year relevant to the assessment year commencing Taxing income on Presumptive Basis11-06-11 47. Sec44AE Sec 44AE47 onthe1stdayofApril,1997oranyearlierasse essmentyear,arelowerthantheprofitsand gainsspecifiedinsubsections(1)and(2),andthereupontheAssessingOfficershallproceedto makeanassessmentofthetotalincomeorloss make an assessment of the total income or loss of the assessee and determine the sum payablesoftheassesseeanddeterminethesumpayables bytheassesseeonthebasisofassessmentmadeundersubsection(3)ofsection143. (7)Notwithstandinganythingcontainedintheforegoingprovisionsofthissection,anassessee mayclaimlowerprofitsandgainsthantheprofitsandgainsspecifiedinsubsections(1)and (2),ifhekeepsandmaintainssuchbooksofacccountandotherdocumentsasrequiredunder subsection(2)ofsection44AAandgetshisacccountsauditedandfurnishesareportofsuch auditasrequiredundersection44AB., Explanation.Forthepurposesofthissection, (a)theexpressionsgoodscarriage35andhe (a) the expressions goods carriage35 and heeavygoodsvehicle35shallhavethemeanings eavy goods vehicle35 shall have the meaningsrespectivelyassignedtotheminsection2o oftheMotorVehiclesAct,1988(59of1988); (b)anassessee,whoisinpossessionofagoodscarriage,whethertakenonhirepurchaseoron instalmentsandforwhichthewholeorpar rtoftheamountpayableisstilldue,shallbe deemedtobetheownerofsuchgoodscarriage Taxing income on Presumptive Basis 11-06-11