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sec.44AE (Income Tax)

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This query is : Resolved


( Author )
09 February 2010

can a person show income more then prescribed under Sec. 44AE? if yes do he reqd to go for audit u/s 44AB and maintain books of A/C's u/s 44AA? but turnover doesn't exceed 40 lacs. whether trucks operated by taking on hire will also be included in counting no. of trucks for sec. 44AE?

Plz reply early


Rahul Gupta

( Expert )
09 February 2010

Yes, Income more than the prescribed limit u/s 44AE can be shown. In that case section 44AA & 44AB will not apply until it reaches the limit of 40 Lakhs prescribed u/s in 44AB. If it crosses 40 Lakhs, then Sectin 44AA & 44AB applies.

Relevant Provision > Section 44AE
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.

Further, Trucks taken on hire or installments are also considered while counting the no. of trucks u/s 44AE.
Relevant Provisions
Explanation > 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.]



AMIT

( Author )
09 February 2010

here hire means not on hire purchase but taken on monthly hire from another transporter. whether it will be counted or not?

And if a transporter can show income u/s 44AE
an if it's lower then actual logically he will opt for SEc. 44AE to save tax. Then why some show higher income inspite of having option to go with sec 44AE.



Rahul Gupta

( Expert )
09 February 2010

Yes it will be counted even if, you have taken it on monthly hire, the logic behind this is that the intention of the law is to give benfits to the assesse who has income from limited no. of vehicles and to free him from maintaining books and audits and just pay flat tax u/s 44AE.
Let us suppose, if it is not so then the purpose of giving exemptions to small transportars will be misused by big ones by taking it on hire and not owning it.

Showing higher income u/s 44AE is sometimes benficial in circunmstances where u need to claim deductions for the expenses incurred since no deductions are allowed if Sec 44AE is applicable.

Suppose > Assessee has 8 trucks then income u/s 44AE Income will be 8*5000*12 > 480,000. Now if he has expenses of say 11,00,000 and actual recipts are of say 8*15000*12 > 14,40,000 then his taxable income will be 3,40,000 i.e less tha u/s44AE.



AMIT

( Author )
10 February 2010

thanks sir for your guidance .

Suppose > Assessee has 8 trucks then income u/s 44AE Income will be 8*5000*12 > 480,000. Now if he has expenses of say 11,00,000 and actual recipts are of say 8*15000*12 > 14,40,000 then his taxable income will be 3,40,000 i.e less tha u/s44AE.

but one more query sir if in given ex: his total turnover is less then 40lacs but he is not opting for Sec. 44AE whether Sec 44AA & 44Ab wil aaply


Rahul Gupta

( Expert )
10 February 2010

Yes. As per law, If Sec 44AE is not opted then no exemption from Sec 44AA & Sec 44AB is available.

However, since Limit of 40 Lakhs has not reached so, Sec 44AB is not applicable but requirement of maintaining books will be applied u/s 44AA.

Logically, Accounts are not required to be audited u/s 44AB.


AMIT

( Author )
10 February 2010

thanks a lot.


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