January 2010
Tax audit : S. 44AB of Income-tax Act, 1961 : In the case of individual carrying on business as a sole proprietor, it is necessary to comply with the provisions of S. 44AB only in respect of his business income and not in respect of his other income.
By K. B. Bhujle, Advocate
New Page 1
Reported :
37. Tax audit : S. 44AB of Income-tax Act, 1961 : In the case
of individual carrying on business as a sole proprietor, it is necessary to
comply with the provisions of S. 44AB only in respect of his business income and
not in respect of his other income.
[Ghai Construction v. State of Maharashtra, 184
Taxman 52 (Bom.)]
In this case the question for consideration before the
Bombay High Court was as to whether an individual who has income from
different sources including income from business is bound to have his income
from sources other than the business also audited u/s.44AB of the Income-tax
Act, 1961 ?
The Bombay High Court held as under :
“(i) The recommendation for the presentation of the
audited account was in all ‘cases of business or profession’ and not in
respect of the entire income of a person carrying on a business or a
profession. It is these recommendations which were accepted in the form of
S. 44AB of the Income-tax Act.
(ii) In the case of an individual carrying on business as
a sole proprietor, it is necessary to comply with the provisions of S. 44AB
only in respect of his business income. It would not be necessary to comply
with the provisions of S. 44AB in respect of his other income. In the case
of a professional, it is his professional income and not his income from
other sources which would be covered by the provisions of S. 44AB.”
