S. 44AB : Audit of accounts-Business-Profession–Remuneration received from Partnership Firm-Firm is separate legal entity- Remuneration and interest from partnership firm-Not to be included in gross receipt or turnover-Presumptive basis-No tax Audit is required, if remuneration does not exceeds threshold limit for Tax Audit- Return cannot be treated as invalid for failure to get Tax Audit report. [S. 2(13), 2(31)(iv), 2(36), 44AD, 139(9), 264, 271B, Art. 226]
The petitioner is an actress shown her professional income and also remuneration from two partnership firms in her return of income. The professional income being less than prescribed limit petitioner has not obtained the tax Audit report. The Assessing Officer held that though the professional income was less than the prescribed limit for the Tax audit ,the remuneration received from two partnership firms being more than the prescribed limit of gross receipts of one crore, the petitioner ought to have obtained tax audit report. As the tax audit report was not obtained the return was treated as invalid. The petitioner filed revision application before the Commissioner u/s. 264 of the Act. Commissioner also affirmed the order of the Assessing Officer. The petitioner filed writ petition before the High Court challenging the treating the return as invalid. Honouarble Court referred to the decision of the Hon’ble Madras High Court in the case of Anandkumar v. ACIT (2021) 430 ITR 391 (Mad.)(HC) where the Assessing Officer held that the assessee did not have any turnover and receipts on account of remuneration and interest from the firms cannot be construed as gross receipts mentioned in Section 44AD of the Act. The case was decided in the favour of the Revenue. The Honourable High Court held that the remuneration and interest from the partnership firm cannot be treated as gross receipt of the assessee. The order of Commissioner affirming the order of the Assessing Officer treating the return as in valid was quashed and set aside. (WP No. 1333 of 2021 dated March 09, 2022) (AY. 2017 -18)
Perizad Zorabian Irani v. PCIT (Bom.)(HC); www.itatonline.org
(HON’BLE SHRI JUSTICE K. R. SHRIRAM & HON’BLE SHRI JUSTICE N. J. JAMADAR)