Section 44AE of Income Tax Act, 1961, Act and brief summary of the section (Wef AY 1994-95 )
Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages.( wef AY 1994-95)
44AE. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee, who owns not more than ten goods carriages at any time during the previous year] 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).
This provision is applicable to the assessee who is having less than or equal to 10 trucks( goods carriages ) and who is engaged in the business of plying , hiring or leasing such goods carriages , the income chargeable to tax under the head profit and gains of business or profession and the aggregate of the income from all the goods carriages shall be computed as per sub section ( 2 ) of this section
Wef AY 2019-20
(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.
Unladen weight means : the weight of the vehicle without passengers and goods and fuel too . For heavy goods vehicle the profit and gains shall be calculated at the rate of rupees one thousand per ton of gross weight of the vehicle or unladen weight 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 . This is as per sub section (1) of this provision
Other than heavy goods vehicle , the profits and gains shall be calculated at the rate of rupees seven thousand five hundred only 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 , which ever is higher . This is as per subsection( 1) of this provision
(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 :
All the deductions allowable under the provisions of section 30 to 38 shall be deemed to have been already given full effect and no further deductions under those sections shall be allowed .
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.
Proviso Wef AY 1994-95
If the assessee is a firm , the salary and interest paid to the 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 .
(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.
No further depreciation is allowed when income is calculated as per sub section (1) of this provision
(5) 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.
The monetary nlimits under section 44AA and 44AB of the act shall not be applied when income is calculated under this provision
Wef AY 1997-98
(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.
If the profits and gains is lower than the profits and gains as per provision of this section and sub section (1) and (2) and assessee produces evidence regarding the same , the assessing officer shall make an assessment of the assessee under section 143(3) of the Act and will determine the sum payable by the assessee .
Wef AY 1998-99
(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 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB.
An assessee may claim profits lower than the profits as per sub section (1) and (2) of this section and he shall maintain the complete books of account and shall get it audited by a Chartered Accountant .
Wef AY2019-20
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 (59 of 1988);
The assessee has to read section 2 Motor Vehicles Act , 1989 to read the expressions “ gross weight vehicle “ , unladen weight” and goods carriage
(aa) the expression “heavy goods vehicle” means any goods carriage, the gross vehicle weight of which exceeds 12000 kilograms;
The heavy goods vehicle means any goods carriage , the gross vehicle weight of which exceeds 12000 kilograms .
(b) an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on instalments and for which the whole or part of the amount payable is still due, shall be deemed to be the owner of such goods carriage.
The assessee who is in possession of goods carriage whether taken on hir purchase or on installments shall be deemed to be the owner of the goods carriage and the provisions of this section shall apply to him .
Summary of section 44AE of the IncomeTax Act , 1961
1. This provision is applicable where assessee is owner of equal to or less than ten goods carriages
2. If it is a heavy goods vehicle than the profits and gains shall be calculated at the rate of rupees one thousand per ton per month of the unladen weight of the vehicle
3. If it is a light vehicle then the profits and gains shall be calculated at the rate of Rs. 7500.00 pm per vehicle for the months as per ownership of the assessee of the vehicle
4. No further depreciation is allowed
5. If assessee is a partnership firm then interest and salary shall be allowed out of the profits and gains of the assessee out of the business calculated as per this provision .
6. If the profits and gains are less than the profits and gains as per this section then the case of the assesseee shall be decided u/s 143(3) of the Act . The assessee shall produce the evidences for the expenses claimed .
7. If assessee shows his profits as per this section then no monetary limits under section 44AA of the Act and 44AB of the Act shall be taken into effect .
8. If the profits and gains are less than the profits as per this section then assessee has to get his books of accounts audited by a chartered Accountant .
9. The gross weight , unladen weight and good carriage , the definitions are as per section 2 of the motor vehicles Act 1989
10. If assessee has taken the goods carriage on hire purchase agreement or on installments , he shall be deemed to be the owner of the goods carriage and provision of this section shall apply on the assessee accordingly .
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The author is not responsible for any damages if caused due to mistake or not following the provisions strictly in the proceedings with any authority or court . This is just academic in nature and purpose . Author has tried to brief and explain the confusion for audit of books among some professionals . Thanks with regards .
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