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168 DIRECT TAX LAWS
(ii) an inventory under broad heads of the stock of drugs, medicines and other consumable
accessories as on the first and last day of the previous year used for his profession.
Place at which books to be kept and maintained: The books and documents shall be kept
and maintained at the place where the person is carrying on the profession, or where there is more
than one place, at the principal place of his profession. However, if he maintains separate set of
books for each place of his profession, such books and documents may be kept and maintained at
the respective places.
Period for which the books of account and other documents are required to be kept
and maintained: The Central Board of Direct Taxes has also been empowered to prescribe, by
rules, the period for which the books of account and other documents are required to be kept and
maintained by the taxpayer.
Prescribed period: The above books of account and documents shall be kept and maintained
for a minimum of 6 years from the end of the relevant assessment year.
ILLUSTRATION 17
Vinod is a person carrying on profession as film artist. His gross receipts from profession
are as under:
`
Financial year 2020-21 1,15,000
Financial year 2021-22 1,80,000
Financial year 2022-23 2,10,000
What is his obligation regarding maintenance of books of accounts for Assessment Year
2024-25 under section 44AA of Income-tax Act, 1961?
SOLUTION
Section 44AA(1) requires every person carrying on any profession, notified by the Board in the
Official Gazette (in addition to the professions already specified therein), to 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 the Income-tax Act, 1961.
As per Rule 6F, a person carrying on a notified profession shall be required to maintain
specified books of accounts, only if:
(i) his gross receipts in all the three years immediately preceding the relevant previous year has
exceeded ` 1,50,000; or
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PROFITS AND GAINS OF BUSINESS OR PROFESSION 3.169
(ii) it is a new profession which is setup in the relevant previous year, it is likely to exceed `
1,50,000 in that previous year.
In the present case, Vinod is a person carrying on profession as film artist, which is a notified
profession. Since his gross receipts have not exceeded ` 1,50,000 in financial year 2020-21, the
requirement under section 44AA to compulsorily maintai n the prescribed books of account is not
applicable to him for A.Y. 2024-25.
Mr. Vinod, however, required to maintain such books of accounts as would enable the Assessing
Officer to compute his total income.
(2) Maintenance of books of account and other documents by persons carrying on
business or profession [other than notified professions referred to in section
44AA(1)] [Section 44AA(2)]:
I. In case of Individual or HUF: An Individual or HUF carrying on any business or
profession (other than notified professions specified in section 44AA(1)) must maintain
such books of account and other documents as may enable the Assessing Officer to compute
his total income in accordance the provisions of the Income-tax Act, 1961 in the following
circumstances:
(i) Existing business or profession: In cases where the income from the
existing business or profession exceeds ` 2,50,000 or the total sales,
turnover or gross receipts, as the case may be, in the business or profession
exceed ` 25,00,000 in any one of three years immediately preceding
the accounting year; or
(ii) Newly set up business or profession: In cases where the business or
profession is newly set up in any previous year, if his income from business or
profession is likely to exceed ` 2,50,000 or his total sales, turnover or gross
receipts, as the case may be, in the business or profession are likely to exceed `
25,00,000 during the previous year.
II. Person (other than individual or HUF): Every person (other than individual or HUF) carrying
on any business or profession (other than the notified professions referred to in section
44AA(1)) must maintain such books of account and other documents as may enable the
Assessing Officer to compute his total income in accordance the provisions of the Income-
tax Act, 1961 in the following circumstances:
(i) Existing business or profession: In cases where the income from the business or
profession exceeds ` 1,20,000 or the total sales, turnover or gross
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