Dilip & Sons, a partnership firm is in the business of retail trade, furnishes you the following data for Previous Year ended on 31st March, 2024. Particulars Amount (₹) Particulars Amount (₹) Operating Expenses 32,9

Answer 6A(i) Case 1: If Firm opts for section 44AD of the Income Tax Act, 1961 Particulars Amount 6% of 40,00,000 deemed P/G/B/P u/s 44AD 2,40,000 As all receipts are from Cheque only hence presumptive tax rate will be 6% applicable and not 8%) Taxable Income 2,40,000 Case 2: If Firm does not opts for section 44AD of the Income Tax Act, 1961 Particulars Amount Net Profit 90,000 Add: Interest disallowed u/s 40(b) allowed @ 12% only 50,000 Add: Salary to partners [₹230000+ ₹285000] 5,15,000 Book Profits as section 40(b) 6,55,000 Allowable Remuneration as per section 40(b): First 3,00,000 @ 90% of the book profit i.e. ₹2,70,000 and Balance ₹3,55,000 @ 60% i.e. ₹2,13,000 = Total (2,70,000 +2,13,000) (4,83,000) Taxable Income of Firm 1,72,000 It is therefore better not to opt for section 44AD because income is less by ₹68,000 (2,40,000 - 1,72,000) in second option. However, if the firm opts to pay tax as per regular provisions of the Income tax Act, 1961, it shall be necessary to maintain books of accounts and get them audited u/s 44AB of the Income tax Act, 1961 as the profits as per regular provisions is lower than deemed income as per section 44AD of the Income tax Act, 1961.