BUSINESS TAX

PLANNING
Section 44AE and Section
43CA

Presented to: Prof. Ashish

Mehta
Presented by:
Abhishek Shah
Pratik Soniya
Ashish Parekh
Sudeep Mishra

Section 44AE

In the case of taxpayers engaged in the business of plying,

leasing or hiring trucks.

Sec.44AE is applicable only if following conditions are

satisfied

Condition 1
The taxpayer may be an individual, HUF, AOP, BOI, firm,
company, co-operative society, or any other person. He or
it may be a resident or a non-resident.

Condition 2
Taxpayer is engaged in the business of plying, hiring or
leasing goods carriage.

Condition 3
Taxpayer owns not more than 10goods carriages
during PY. For this purpose, a taxpayer, who is in
possession of goods carriage, whether taken on hire
purchase or on installments and for which the whole
part of the amount is payable is still due, shall be
deemed to be the lower of such goods carriage.

Consequences if section44AE is applicable-

Income to be calculated on estimated basis:

Heavy goods carriage
Rs.5000 for every month during which the goods
carriage is owned by the taxpayer

 Goods Carriage
Rs4500 for every month during which the goods
carriage is owned by the taxpayer

Estimated income is comprehensive :

All deductions under section 30 to 38 including
depreciation

and

unabsorbed

depreciation,

are

deemed to have been already allowed and no further

deduction is allowed under this section

Provision for maintenance of books of accounts :

Similar to section 44AD

Is it possible to declare Lower Income :

Similar to section 44AD

Other points to be noted

Section 44AE does not permit an assessed to apply
provisions of section 44AE in case of some lorries and
to go for regular assessment on basis of books of
account in respect of remaining lorries
The Assessing Officer cannot apply provisions of
section44AE for estimating income from truck plying,
and making addition separately on account of sale
proceeds of scrap because receipt from scrap is not a
separate source of income.

For Example,

X ltd. is engaged in business of carriage of goods. On

April 1st 2012 it, owns 10 trucks (6 out which are
Heavy goods vehicle). On may 6th 2012, one of the
heavy vehicle is sold by X ltd. to purchase a light
goods vehicle on may 10th 2012 which is put to use
only from June 17th 2012. Find out the net income of X
ltd for A.Y.2013-14.

Freight collected: 890000

Less:

Operational expenses: 640000

Dep. As per sec. 32: 190000

Other office expenses: 15000

Net profit: 45000

Other business/non business income: 670000

Section 43CA

Inserted by Finance ACT 2013

w.e.f. 1st April 2014 i.e. Assessment Year 2014-15

Effective from Current Financial Year 2013-14

Section 43CA(1)

Where consideration as a result of the transfer of

an asset (other than a capital asset), being land
or building or both, is < than value adopted or
assessed or assessable by an authority for the
purpose of payment of stamp duty, the value so
assessed shall, be deemed to be the full value of
the consideration.

Section 43CA(2)

The provisions of sub-section (2) and sub-section

(3) ofsection 50Cshall, so far as may be, apply in
relation to determination of the value adopted or
assessed or assessable under sub-section (1).

Section 43CA(3)

Where the date of agreement fixing the value of

consideration for transfer of the asset and the
date of registration of such transfer of asset are
not the same, the value referred to in sub-section
(1)may be taken as the value assessable on the
date of the agreement.

Section 43CA(4)

The provisions of sub-section (3) shall apply only

in a case where the amount of consideration or a
part thereof has been received by any mode
other than cash on or before the date of
agreement for transfer of the asset.

Permissible methods of
valuation of closing stock

Valuation of stock is vital factor in determining taxable

income of an assessee from business, as correct
profits cannot be ascertained unless the opening and
closing stocks are valued correctly.

Neither the Income-tax Act nor the Income-tax Rules

prescribes

or

permits

any

particular

method

of

valuation of stock.

A assessee may value its stock either at cost price or

at market price, whichever is less.

Cont

The new method of stock valuation cannot be rejected

merely because there would be loss of revenue in the
year of change. What is relevant is to consider
whether the method adopted is one of the recognized
methods and further whether the changed method of
stock valuation is followed consistently year after year.

If valuation of closing stock is made on the basis of the

lower of cost or market price, it can be done on the
basis of individual method or global method.

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