Whether benefit of presumptive taxation under section 44ADA of Income Tax Act 1961 applicable to company?
Section 44ADA is applicable to all assessee being a resident in India who is engaged in a profession referred to section 44AA(1) of Income Tax Act 1961
It may be noted that Section 44AA deals with the provision of maintenance of books of accounts. Sub section (1) to section 44AA reads as under:
Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette’ shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act.
Section 44ADA of Income Tax Act 1961 Special provision for computing profits and gains of profession on presumptive basis for the professionals. It reads as under:-
Section 44ADA of Income Tax Act 1961
(1) Notwithstanding anything contained in sections 28 to 43C of Income Tax Act 1961, in the case of an assessee, being a resident in India, who is engaged in a profession referred to section 44AA(1) of Income Tax Act 1961 and whose total gross receipts do not exceed Rs 50 lakhs in a previous year, a sum equal to 50% 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”.
(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 no further deduction under those sections shall be allowed.
(3) The written down value of any asset used for the purposes of profession shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.
(4) Notwithstanding anything contained in the foregoing provisions of this section, an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.
As per Income Tax Act 1961, Person includes:
(1) an Individual;
(2) a Hindu Undivided Family (HUF) ;
(3) a Company;
(4) a Firm
(5) an association of persons or a body of individuals, whether incorporated or not;
(6) a local authority; and
(7) Every artificial juridical person not falling within any of the preceding sub-clauses.
(8) Association of Persons or Body of Individuals or a Local authority or Artificial Juridical Persons shall be deemed to be a person whether or not, such persons are formed or established or incorporated with the object of deriving profits or gains or income.
Section 44ADA of Income Tax Act 1961is applicable to “Assessee engaged in the profession as referred in section 44AA of Income Tax Act 1961”.
Section 44 AA of Income Tax Act 1961starts with
“Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession….”
As per definition of “Person” as per Income Tax Act 1961, Person includes company.
Thus it can be concluded that benefit of presumptive taxation under section 44ADA of Income Tax Act 1961 can be availed by companies also.
Further section 44AD is applicable only to individual, HUF and partnership firm. There is no such specific applicability mentioned under section 44ADA of Income Tax Act 1961. Thus it is wider in scope and applicable to all person.