Person who are required to maintain books of accounts:
Section 44AA prescribes the persons who are mandatorily required to maintain books of accounts for Income Tax purpose. As per Section 44AA, any person carrying on any of the following profession is required to maintain books of accounts-
- legal
- medical
- engineering
- architectural
- accountancy
- technical consultancy
- interior decoration
- any other profession that may be notified by CBDT in future.
Rule 6F: Books of accounts to be maintained:
The following books of accounts and documents are required to be maintained-
- cash book;
- journal;
- ledger;
- carbon copies of the bills and receipts issued by the person in relation to sums exceeding Rs. 25;
- original bills and receipts issued to the person in respect of the expenditure incurred.
Period for which the books and other documents to be maintained:
The above books of accounts and other documents shall be kept and maintained for a minimum period of 6 years from the end of relevant A.Y. If an assessment in relation to any A.Y. has been reopened u/s 147. All the books of accounts and other documents shall continue to be kept and maintained till the assessment so reopened has been completed.
Place where books to be maintained:
The books and documents shall be kept and maintain at the place where the person is carrying on the profession or where there is more than one place at the principal place of business.
Related Case:
Applicability of the provisions relating to maintenance of books of account:
Mr. Kumar is a “Film artist”. However, he does not maintain any books of account as per the provisions of section 44AA in respect of his profession since as per his views the provisions of section 44AA relating to maintenance of books of account do not apply to persons engaged in any profession.
The provisions relating to maintenance of books of account can be classified as follows:
- Provisions relating to a person engaged in specified profession.
- Provisions relating to a person engaged in non-specified profession.
- Provisions relating to a person engaged in business.
As per section 44AA and rule 6F, the profession of “Film artist” is a specified profession and, hence, the provisions of section 44AA are applicable to him and, hence, he is either liable to maintain books of account prescribed by rule 6F or such books of account and other documents as may enable the Assessing Officer to compute his taxable income under the Income-tax Act depending upon the details of his gross receipts from such profession for the last three years immediately preceding the previous year. Thus, Mr. Kumar is not correct.
Reference:
Section 44AA, of the Income Tax Act, 1961-
Maintenance of accounts by certain persons carrying on profession or business u/s 44AA
(1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act.
(2) Every person carrying on business or profession not being a profession referred to in sub-section (1) shall,—
(i) if his income from business or profession exceeds one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds ten lakh rupees in any one of the three years immediately preceding the previous year; or
(ii) where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession are or is likely to exceed ten lakh rupees, during such previous year; or
(iii) where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AE [or section 44BB or section 44BBB], as the case may be, and the assessee has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, during such previous year; or
(iv) where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax during such previous year,
keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act.
(3) The Board may, having regard to the nature of the business or profession carried on by any class of persons, prescribe, by rules, the books of account and other documents (including inventories, wherever necessary) to be kept and maintained under sub-section (1) or sub-section (2), the particulars to be contained therein and the form and the manner in which and the place at which they shall be kept and maintained.
(4) Without prejudice to the provisions of sub-section (3), the Board may prescribe, by rules, the period for which the books of account and other documents to be kept and maintained under sub-section (1) or sub-section (2) shall be retained.