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Difference between section 44B and section 172

Gagan Gupta (Chartered Accountant) (161 Points)

23 January 2009

Hi All

Can you please explain, what is the difference between section 44B and section 172 of Income Tax Act. Both section seems very similar.

Regards

CA Gagan Gupta

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Ashish M (Chartered Accountant) (2731 Points)
Replied 23 January 2009

in simple words...Sec.44B is the computation section, whereas SEc.172 is the recovery mechanism..........though SEc.172 itself provides the computation.........

Sec.44B intiates with the words...."Notwithstanding anything ....................................., a sum equal to seven and a half per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business ......................”.

whereas.............Sec.172 starts as.........."The provisions of this section shall, notwithstanding anything contained in the other provisions of this Act, apply for the purpose of the levy and recovery of tax in the case of any ship, belonging................."

sub-se tion (1) of SEc.44B overrides the chapter of PGBP and sub-section (2) tells the scope of total income for the assesses who r engaged in Shipping business..whereas sec.172 overrides the whole of the act...........

Every assessee of the shipping business first of all falls under SEc.172 and has to comply by the provisions of that section and has to make a return on every departure of the ship..........as SEc.172 overrides the whole of the ACt including SEc.44B.............

In SEc.172......the scope of total income of the assessee includes only that income which it generated by shipping goods in india only [ending words of sub-section (3)]

whereas in SEc.44B..the scope of total income includes viz.......

(i) the amount paid or payable...............goods shipped at any port in India; and

(ii) the amount received or .............. or goods shipped at any port outside India......

so sec.44B takes into consideration both the income whereas sec.172 takes only that income which is provided in clause (i) above of sec.44B..............

at the last........

sec.172(7) provides that if the assessee founds it so benificial, he can take the computation method as provided in SEc.44B instead of sec.172 itself..........

this would certainly be in the case where the assessee

1. Would be having any lossess in any othe business in india.......

2. hve made certain investments. so as to claim deduction under Chapter VI-A..

as sec44B overrides only sec.28 to 43A...that means only expenses not allowable including depreciation.(sec.32)................but set off and deduction as allowable as those r not overruled.............but sec.172 rips off all these beneifts by overriding the whole act.........

i think the above discussion could be of help to you......pls do reply...............

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