TaxTMI 
TaxTMI 
2019 (10) TMI 734
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....e 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". Sec.44AD(6) provides that the provisions of section 44AD, shall not apply to- (i) a person carrying on profession as referred to in sub-section (1) of section 44AA; (ii) a person earning income in the nature of commission or brokerage; or (iii) a person carrying on any agency business. Explanation to Sec.44AD provides that for the purposes of section 44AD,- (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); and (ii) who has not claimed deduction under any of the sections 10A, 1....
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.... to add a sum of Rs. 7,50,000/- (50% of the gross receipts of Rs. 15 lacs) which was the presumptive income from profession as against Sec.44AD which applies to presumptive income from business. Sec.44ADA applies if the income is considered as income from profession. U/S.44AD, the presumptive income chargeable to tax is 8% of the gross receipts while u/s.44ADA of the Act, the presumptive income chargeable to tax is 50% of the gross receipts. 5. U/s.44ADA notwithstanding anything contained in sections 28 to 43C, in the case of an Assessee, being a resident in India, who is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the Assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the Assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession". 6. Sec.44AA(1) of the Act applies to the following professionals: "Every person....
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....from presumptive business or profession shown in return is less than the gross receipts as per the three Forms, intimation proposing adjustment would be issued". It was also submitted that the Assessee had offered his gross receipts or income as appearing in 26AS completely u/s 44AD in his return of income and there was no mis match between the income appearing in its 26AS and the gross receipts reported u/s 44AD. CPC has completely ignored the income offered u/s 44AD in the return of income and made addition u/s 143(1)(a)(vi) in violation of the instruction issued by CBDT. 9. The Assessee reiterated that sec.44AD applies to his case and not Sec.44ADA of the Act. The Assessee submitted that from the plain reading of the act that Section 44ADA is applicable if an Assessee carries on the profession specified in Section 44AA(1). Thus, if an Assessee does not carry on the specified profession he can offer his income/receipts on presumptive basis u/s 44AD. Moreover subsection 6 to Section 44AD also emphasis this fact by clearly excluding assesses carrying on the specified profession as per section 44AA(1) from the gambit of section 44AD. The Assessee is in the business of providin....
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....f Sec.44AD of the Act because Sec.44AA(1) of the Act is not applicable to the Assessee. The CIT(A) was of the view that the addition made in the intimation u/s.143(1)(a) was justified but held that the addition shall be only of the difference between 50% of Rs. 15 lacs that ought to have been offered to tax by the Assessee u/s.44ADA of the Act and 8% of Rs. 15 lacs that was offered to tax by the Assessee u/s.44AD of the Act. The following were the relevant observations of the CIT(A): "From a conjoint reading of sections 44AA(1.), 44ADA and 194J, it is apparent that the case of the appellant is covered under the provisions of section 44ADA. Hence there is no infirmity in the action of the AO as far as invoking the provisions of section 44ADA is concerned. Further, the appellant's claim of being denied an opportunity of being heard is without basis as the AO had issued a intimation proposing the adjustment as mandated by Instruction no.10 of 2017. However, the appellant had already offered income u/s 44AD at the rate of 8% of gross receipts, hence the total addition exceeds the presumptive scheme of taxation u/s 44ADA. The AO is directed to take necessary rectif....