30 August 2009
My assessee runs a gas agency and is also engaged in plying goods carriages. The turnover of LPG agency exceeds 40 Lacs & hence he is subjected to Tax Audit u/s 44AB in respect of that business.
As regards the plying of goods carriages, he owns 1 truck in his name & has engaged 2 trucks more and has provided these 3 trucks to LPG bottling plant of a PSU to transport the LPG cylinders from the plant to any gas agency within a vicinity of 200 kms from the bottl. plant. They are under the control of the PSU bottling plant (& thus they do not support me in my primary business of running Gas agency).
The payments of all 3 trucks are recd in his bank account (which is also used for the gas agency purpose). My assessee deducts 2% as his profit & pays the balance of the amount recd in respect of the 2 outside trucks (after deduction of TDS u/s 194C) to their owners.
My query is that can he assess his income for the owned truck u/s 44AE @ 3150/3500(and thus not maintain any books reg. this truck) and include the amount recd in respect of the 2 outside trucks from the bottling plant in the TURNOVER (alongwith that of the gas agency) for the purpose of 44AB or shall he have to maintain books reg. 1 truck owned by him?
30 August 2009
Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages.
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 70[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).
(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 71[three thousand five hundred] rupees for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or, as the case may be, an amount higher than the aforesaid amount as declared by him in his return of income;
(ii) other than a heavy goods vehicle, shall be an amount equal to 72[three thousand one hundred and fifty] rupees for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or, as the case may be, an amount higher than the aforesaid amount as declared by him in his return of income.
The following sub-section (2) shall be substituted for the existing sub-section (2) of section 44AE by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2011 :
(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 five thousand rupees 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 a heavy goods vehicle, shall be an amount equal to four 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 vehicle, 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 :
73[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.]
(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 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.
74[(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.]
75[(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.]
Explanation.—For the purposes of this section,—
(a) the expressions “goods carriageâ€76 and “heavy goods vehicleâ€76 shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988);
(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.]
YOU SHOULD NOTE THAT THE SECTION USES THE TERMS OWNS AND PLYING HIRING OF SUCH GOODS CARRIAGE..........WHICH MEANS THE SECTION IS APPLICABLE TO OWNED VEHICLES ONLY
31 August 2009
The problem is: Can I segregate the turnover of the 'owned vehicle' from the total turnover of the business (ie. gas agency + receipt of freight from bottling plant) when all is carried out under the same trade name - XYZ gas agency?
If that is so, I hope we can apply 44AE of the owned vehicle & need not keep the bills, vouchers, etc. of diesel, maintenance in respect of the owned vehicle. IMP: But we have to maintain the books of a/cs of the agency & the B/Sheet is drawn for the XYZ gas agency as a whole (all the transactions are routed through the same the bank account-which includes the receipts & payments of the freight from the plant). Can the AO ask assessee that when inter alia, the books for the owned vehicle are being maintained then why are these not supported by the biils, vchrs, etc. or shall he be satisfied that I have declared 3150/3500 p.m.
Further, how shall I deal with the receipt of the other two trucks taken by the assessee on contract and given to the bottling plant? Will that be included in assessee's turnover for 44AB? or only the 2% profit part?/
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