Section 44AE in The Income Tax Act, 1961

Loading case document...

Please wait

44AE. [ Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages. [Inserted by Act 32 of 1994, Section 16 (w.e.f. 1.4.1994).]

(1)Notwithstanding anything to the contrary contained in sections 28 to 43-C, in the case of an assessee, who owns not more than ten goods carriages ] [Inserted by Act 41 of 1975, Section 11 (w.e.f. 1.4.1976).][at any time during the previous year] [ Inserted by Act 32 of 2003, Section 24 (w.e.f. 1.4.2004).][and who is engaged in the business of plying, hiring or leasing such goods carriages, the income of such business chargeable to tax under the head "Profits and gains of business or profession" shall be deemed to be the aggregate of the profits and gains, from all the goods carriages owned by him in the previous year, computed in accordance with the provisions of sub-section (2).] [Inserted by Act 32 of 1994, Section 16 (w.e.f. 1.4.1994).]

(2)[ For the purposes of sub-section (1), the profits and gains from each goods carriage, -

(i)being a heavy goods vehicle, shall be an amount equal to one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher;

(ii)other than heavy goods vehicle, shall be an amount equal to seven thousand five hundred rupees for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or an amount claimed to have been actually earned from such goods carriage, whichever is higher.]

(3)[ 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 allowed:] [Inserted by Act 32 of 1994, Section 16 (w.e.f. 1.4.1994).][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 40.] [ Inserted by Act 26 of 1997, Section 13 (w.r.e.f. 1.4.1994).]

(4)[ 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.

(5)The provisions of sections 44-AA and 44-AB 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.] [Inserted by Act 32 of 1994, Section 16 (w.e.f. 1.4.1994).]

(6)[ 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-sections (1) and (2), 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.] [ Inserted by Act 11 of 1999, Section 7 (w.r.e.f. 1.4.1997).]

(7)[ 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-sections (1) and (2), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44-AA and gets his accounts audited and furnishes a report of such audit as required under section 44-AB.] [ Inserted by Act 27 of 1999, Section 30 (w.r.e.f. 1.4.1998).][Explanation. - For the purposes of this section, -

(a)[ the expressions "goods carriage", "gross vehicle weight" and "unladen weight" shall have the respective meanings assigned to them in section 2 of the Motor Vehicles Act, 1988;

(aa)the expression "heavy goods vehicle" means any goods carriage, the gross vehicle weight of which exceeds 12000 kilograms;]]

Section 44AE in The Income Tax Act, 1961

44AE. [ Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages. [Inserted by Act 32 of 1994, Section 16 (w.e.f. 1.4.1994).]

(2)[ For the purposes of sub-section (1), the profits and gains from each goods carriage, -

(a)[ the expressions "goods carriage", "gross vehicle weight" and "unladen weight" shall have the respective meanings assigned to them in section 2 of the Motor Vehicles Act, 1988;

(aa)the expression "heavy goods vehicle" means any goods carriage, the gross vehicle weight of which exceeds 12000 kilograms;]]

AI Summary

It appears there's a misunderstanding. Section 44AE is a provision within the Income Tax Act, 1961, itself, not a court case. It doesn't have petitioners, respondents, or a court ruling in the traditional sense. It's a legislative provision. Therefore, I will provide a summary of Section 44AE as if it were the subject of legal analysis.

Short Summary

Section 44AE of the Income Tax Act, 1961 provides a presumptive taxation scheme for taxpayers engaged in the business of plying, hiring, or leasing goods carriages. It allows eligible taxpayers to declare income at a prescribed rate per vehicle, simplifying tax compliance.

Facts

Section 44AE was introduced to ease the burden of maintaining detailed books of accounts for small transporters. It applies to individuals, Hindu Undivided Families (HUFs), firms, and other entities (excluding companies) engaged in the business of operating goods carriages. The presumptive income is calculated based on the number of vehicles owned during the relevant financial year.

Issues

The primary issue addressed by Section 44AE is the simplification of income tax assessment for small transport operators, reducing compliance costs and administrative burden. Related issues include:

Determining eligibility for the scheme.
Calculating presumptive income accurately.
The impact on taxpayers who may earn less than the presumptive income.
The interaction with other provisions of the Income Tax Act.

Arguments (Hypothetical Taxpayer)

A taxpayer might argue that the presumptive income under Section 44AE is higher than their actual income due to factors like low utilization, high operating costs, or economic downturns. They might seek permission to maintain and submit regular books of accounts to prove a lower income.

Arguments (Hypothetical Income Tax Department)

The Income Tax Department would likely argue that Section 44AE is a beneficial scheme designed to simplify taxation for small transporters. They would emphasize that opting for the scheme implies acceptance of the prescribed presumptive income. They would also highlight the conditions under which taxpayers can deviate from the presumptive scheme (e.g., maintaining proper books of accounts and undergoing an audit).

Analysis

Section 44AE aims to strike a balance between simplifying tax compliance and ensuring reasonable tax collection. The presumptive income is typically based on a per-vehicle basis, considering factors like the type and capacity of the goods carriage. While it simplifies the tax process, it may not always accurately reflect the actual income of every taxpayer. Taxpayers have the option to opt out of the scheme by maintaining books of accounts and getting them audited, as per the provisions of the Income Tax Act.

Conclusion

Section 44AE provides a presumptive taxation scheme for small transporters, offering a simplified approach to income tax assessment. While it offers convenience, taxpayers should carefully evaluate whether the presumptive income aligns with their actual earnings and consider the option of maintaining regular books of accounts if necessary. The section aims to reduce the compliance burden on small businesses while ensuring a reasonable level of tax revenue.