What is the Special provision for computing profits and
gains of business of civil construction

Answers were Sorted based on User's Feedback

Answer / mohd abdul qader

For Civil Construction the presemptive Taxation is
prescribed under Section 44AD of Incoem tax according to
which a person whose Gross Receipts are less than 40,00,000
can declare his profit 8% or more on his gross receipts if
he wants to declare his profit or income less than 8% then
he has to get his books of account duly audited by
chartered accountant

Is This Answer Correct ?    8 Yes 2 No

Answer / r.sivaraman

Under Sec 44AD of Indian Income Tax Act, 1965 says

1) Notwithstanding anything to the contrary contained in
sections 28 to 43C, in the case of an assessee engaged in
the business of civil construction or supply of labour for
civil construction, a sum equal to eight per cent of the
gross receipts paid or payable to the assessee in the
previous year on account of such business or, as the case
may be, a sum higher than the aforesaid sum as declared by
the assessee in his return of income, shall be deemed to be
the profits and gains of such business chargeable to tax
under the head Profits and gains of business or profession:

Provided that nothing contained in this sub-section shall
apply in case the aforesaid gross receipts paid or payable
exceed an amount of forty lakh rupees.

(2) Any deduction allowable under the provisions of
sections 30 to 38 shall, for the purposes of sub-section
(1), be deemed to have been already given full effect to
and no further deduction under those sections shall be

[Provided that where the assessee is a firm, the salary and
interest paid to its partners shall be deducted from the
income computed under sub-section (1) subject to the
conditions and limits specified in clause (b) of section

(3) The written down value of any asset used for the
purpose of the business referred to in sub-section (1)
shall be deemed to have been calculated as if the assessee
had claimed and had been actually allowed the deduction in
respect of the depreciation for each of the relevant
assessment years.

(4) The provisions of sections 44AA and 44AB shall not
apply in so far as they relate to the business referred to
in sub-section (1) and in computing the monetary limits
under those sections, the gross receipts or, as the case
may be, the income from the said business shall be excluded.

81[(5) Nothing contained in the foregoing provisions of
this section shall apply, where the assessee claims and
produces evidence to prove that the profits and gains from
the aforesaid business during the previous year relevant to
the assessment year commencing on the 1st day of April,
1997 or any earlier assessment year, are lower than the
profits and gains specified in sub-section (1), and
thereupon the Assessing Officer shall proceed to make an
assessment of the total income or loss of the assessee and
determine the sum payable by the assessee on the basis of
assessment made under sub-section (3) of section 143.]

82[(6) Notwithstanding anything contained in the foregoing
provisions of this section, an assessee may claim lower
profits and gains than the profits and gains specified in
sub-section (1), if he keeps and maintains such books of
account and other documents as required under sub-section
(2) of section 44AA and gets his accounts audited and
furnishes a report of such audit as required under section

Explanation.For the purposes of this section, the
expression civil construction includes

(a) the construction or repair of any building, bridge, dam
or other structure or of any canal or road;

(b) the execution of any works contract.

Is This Answer Correct ?    5 Yes 6 No

Answer / guest

The special provision for computing profits and gains of
business of civil construction by contract accounts.
In contract accounts accounten prepare income and expanding
accounts this are recorded all transaction for only one
contrack or one side. this con track all expendicher and
income(for sales of property or contrack instalment price
as per contrack nob and competition of con track stage)
recorder in one particular accounting system.

Is This Answer Correct ?    2 Yes 7 No

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