Section 44AD - Eligible Business - Speculative Business

[PANKAJ GROVER]

Dear Sir

Whether Eligible Business under Section 44AD covers Speculative Businesses like jobbing in shares, commodities and how is the turnover will be calculated in case of Jobbing of commodities?

For .e.g. An Assessee doing business of Jobbing of Commodities has one transaction of jobbing profit of Rs 4 Lac and another transaction  of Jobbing loss of Rs 3 Lac hence net profit of Rs 1 Lac. Can he declare income under Section 44AD by calculating 8% of Rs 7 Lacs i.e Rs 56K.

Regards

RAPG & Co.

[sanjeev bajaj]

Speculative Business is a business covered u/s 44AD of the Act.

Turnover will be the total of profits & losses. In this case, Turnover is Rs. 7 Lacs.

Section 44 AD talks about 8% of the turnove or sum higher than 8 % of the turnover. In this case, there is clear profit of more than 8% of the turnover. Hence, you have to show more than 8%.

Regards

SANJEEV BAJAJ

 

AI Summary

Speculative businesses, including jobbing in shares and commodities, fall under Section 44AD; turnover is profits plus losses. A query was raised regarding whether speculative businesses, such as jobbing in shares and commodities, are eligible under Section 44AD of the Income Tax Act. The specific question was how to calculate turnover for jobbing, using an example of a profit and loss scenario resulting in a net profit. The response clarified that speculative businesses are covered under Section 44AD, and turnover is calculated by summing profits and losses. In this case, the turnover is Rs. 7 Lacs, and income must be declared as more than 8% of the turnover, which exceeds the specified percentage.