Amendment of section 44AA.
18. In section 44AA of the Income-tax Act, in sub-section (2), with effect from the 1st day of April, 2011,—
(a) in clause (iii),—
(i) for the words, figures and letters "section 44AD or section 44AE or section 44AF", the word, figures and letters "section 44AE" shall be substituted;
(ii) for the words "previous year," occurring at the end, the words "previous year; or" shall be substituted;
(b) after clause (iii), the following clause shall be inserted, namely:—
"(iv) where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax during such previous year,".
Notes on Clauses:
Clause 18 of the Bill seeks to amend section 44AA of the Incometax Act relating to maintenance of accounts by certain persons carrying on profession or business.
Under the existing provisions contained in the said section it is obligatory for every person carrying on business or profession other than the professions mentioned in sub-section (1) of the said section, if his income from business or profession exceeds one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds ten lakh rupees in any one of the three years immediately preceding the previous year or where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession are or is likely to exceed ten lakh rupees, during such previous year or where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AD or section 44AE or section 44AF or section 44BB or section 44BBB and the assessee has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, during such previous year, to keep and maintain the books of account and other documents as may enable the Assessing Officer to compute the total income of the said person in accordance with the provisions of the Act.
The proposed amendment seeks to provide that in the case of an assessee, who is covered under the new proposed section 44AD vide clause 20, the maintenance of books of account is required if he claims that the profits and gains from the business are lower than the profits and gains computed in accordance with the provisions of sub-section (1) of section 44AD and if his income exceeds the maximum amount which is not chargeable to incometax. This amendment will take effect from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-2012 and subsequent years.
