Income earned from unqualified person not covered by presumptive scheme of taxation under section 44ADA


Income earned from unqualified person notcovered by presumptive scheme of taxation under section 44ADA


There are lot many persons who are also engaged in the activities of accounting, medical, interior designing, etc. Whether they will be covered by section 44ADA for presumptive scheme of taxation is one of the most common question of the tax professionals? Can such person offer income under section 44AD on presumptive basis?

The issue was there before Income Tax Appellate Tribunal (ITAT), Mumbai bench. ITAT Mumbai has held that no addition should be made under Section 44ADA of the Income Tax Act, 1961, in a case involving income earned from a consultancy service business. In this case, the assessee had a 10th-grade qualification and lacked the professional qualifications.

In this case since the assessee lacked qualification such as legal, medical, engineering, architecture, accountancy, technical consultancy, or interior decoration, as specified in the Section 44ADA provisions, assessee filed his income under Section 44AD, showing his income at 8% of total receipts.

However, while processing the return, CPC Bengaluru added income at a rate of 50% under Section 44ADA.

ITAT noted that Section 44ADA of the Income Tax Act applies to individuals engaged in specific professions, and the assessee did not possess the necessary qualifications for any of these professions as specified in the Act.

Therefore, the provisions of Section 44ADA did not apply to the assessee’s case.

The case detail is as under:

Smt Gayatri Devi



[ ITA No.405/JP/2022]

The copy of the order is as under:

1694418356-1570.M.2023 Vishnu-nkc-brb (2)