TaxTMI 
TaxTMI 
2022 (6) TMI 415
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....t the assessee is a partnership firm, engaged in the business of retail sale of software, providing AMC of software and other technical services. They have filed a return of income for the AY.2017-18 on 31-10-2017, declaring an income of Rs.12,60,722/-. According to the assessee, their turnover or gross receipts do not exceed Rs.2 Crores in the previous year relevant to the AY.2017-18 and, therefore, u/s.44AD of the Income tax Act, 1961 ("the Act") a sum equal to 6% of the total turnover or gross receipts shall be deemed to be the profits and gains of their business chargeable to tax. 3. Such return of income was processed u/s.143(1) of the Act determining the total income at Rs.77,14,296/- by making an addition to the extent of Rs.64,53....
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....shold limits of Rs.2 Crores. Ld. CIT(A) placed reliance on the decisions reported in Jonnalla Narasimharao Vs. CIT [1993] 68 Taxman 340 (SC), Addl.CIT Vs. T.Naggi Reddy [1993] 202 ITR 253 (SC), Chowringhee Sales Bureau (P) Ltd., Vs. CIT [1973] 87 ITR 542 (SC), Sinclair Murray & Co. (P) Ltd Vs. CIT [1974] 97 ITR 615 (SC), Union of India Vs. Bombay Tyre International Ltd [1983] 15 Taxman 29 (SC) and Mc Dowell & Co. Ltd., Vs. CIT [1985] 22 Taxman 11 (SC). On this premise, Ld. CIT(A) proceeded to estimate the taxable income at 25% of the total turnover/gross receipts of Rs.2,00,85,193/- and directed the learned Assessing Officer to recomputed the income under the head 'profits and gains of business/profession' at Rs.50,21,298/- as against the i....
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.... a given year. He further submits that though Section 44AB of the Act lays down the threshold turnover for its non-applicability or for getting the accounts audited, it does not define the said word and, therefore, resort has to be had to Section 145A of the Act, which deals with the accounting in certain cases. He brings it into our notice that u/s.145A of the Act, while dealing with the method of accounting, it stipulates that for the purpose of determining the income chargeable under the head profits and gains of business/profession, the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the asses....
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....ted that the purpose of allowable deductions u/s.80HHC of the Act and Section 44BB of the Act is different and it is not known what accounting method the assessee followed therein and, therefore, the assessee cannot rely upon the decisions cited by them. 10. We have gone through the record in the light of the submissions made on either side. Facts are not in dispute and on the other hand, the submissions made on behalf of the assessee are clear to the effect that the assessee got the accounts audited for the AYs.2014-15 to 2016-17 and subsequently for AY.2020-21. However, according to the assessee, for this AY.2017-18, the turnover is less than Rs.2 Crores threshold limit and, therefore, no accounts are audited nor produced before the au....
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....lear in its import that for the purpose of determining the income chargeable under the head "profits and gains of business/profession", the valuation of purchase and sales of goods shall be adjusted to include the tax component also and it was so understood by the ICAI the turnover shall include the tax component unless the assessee maintains a separate tax account in respect of sales tax or/and VST/CST wherein credit is made on collection and debit is made on payment. Admittedly in this case, the assessee did not get their accounts audited for this particular assessment year though it was not so for the earlier assessment years. In these circumstances, we are of the considered opinion that for the purpose of quantifying the turnover of the....