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Question ID : 44414

TREATMENT OF PARTNERS CURRENT ACCOUNT

One of our client who is a partnership Firm has filed its return of income u/s.44AD admitting 8% income on gross turnover. The partners have shared the gross receipts amount received in banks in their proportionate ratios. Since the return is filed/s.44AD the share of profit from firm in partners books is less than what has been transferred from bank. For Eg; Gross receipts Rs.1000000/-(Rs.5 lacs each transferred to 2 partners) Share of profit is Rs.40000/- each only (8% of Rs.1000000/- offered u/s.44AD) What is the treatment of the amount showing as excess credit in the books of the partners

Posted by Parvathi on Jan 20, 2023

Filed Under MISC.

Answer ID : 83890

U have to pass the actual figures not notional. Presumptive taxation is just an option in Income Tax to declare minimum 8 percent profit.

Posted by VINAY BHARGAV KUMAR G on Jan 21, 2023
Answer ID : 83892

No need to pass any entry for excess credit. These are merely for Income-tax filing purposes. Only actual entry with actual tax amount if any will get through the books

Posted by SURAJ KUMAR CHOUDHARY on Jan 23, 2023