Advance Learning on Section 44AE Theory · Advance Learning on Section 44AE (Theory) ... commonly known as Presumptive ... or any motor vehicle not so constructed or adapted when

Advance Learning on Section 44AE (Theory)

To give relief to small assessees, the Income-tax Law has incorporated a simple scheme commonly known as Presumptive Taxation Scheme. There are two schemes viz. the scheme of section 44AD and the scheme of section 44AE. An assessee adopting these provisions is not required to maintain the regular books of account and also exempt from getting the accounts audited. In this advance learning we will cover the provisions of the presumptive taxation scheme provided in section 44AE. The scheme of section 44AE is designed to give relief to small assessees engaged in the business of goods carriage. The detailed provisions in this regard are as follows: Applicability of the scheme The provisions of section 44AE are applicable to every person (i.e., an individual, HUF, firm, company, etc.). Unlike section 44AD, in case of section 44AE there is no restriction on which categories of assessees can opt for the scheme.. All sorts of assessees can opt from this scheme. Eligible business The presumptive taxation scheme under these provisions can be opted for by an assessee who is engaged in the business of plying, hiring or leasing goods carriages and does not own more than ten goods vehicles at any time during the previous year. The important criteria in this scheme is the restriction of owning more than 10 goods vehicles at any time during the previous year. Thus, if an assessee is owning more than 10 goods vehicles during the year, then such an assessee cannot adopt this scheme. Further, this scheme can be adopted only by the assessees who are engaged in the business of plying, hiring or leasing goods carriages. Thus, an assessee engaged in the business of passenger transport cannot adopt these provisions. Illustration Mr. Kumar engaged in the business of plying, hiring or leasing goods carriages owns 9 goods vehicles during the previous year 2012-13. Can he adopt the provisions of presumptive scheme of section 44AE in respect of this business? ** The provisions of section 44AE can be adopted by an assessee who is engaged in the business of plying, hiring or leasing of goods carriages and does not own more than ten goods vehicles at any time during the previous year. In this case Mr. Kumar owned only 9 vehicles during the year, thus, he satisfied both the criteria of the scheme and hence, he can adopt the provisions of section 44AE for his business of plying, hiring or leasing goods carriages. Scheme of computation of income In case of an assessee who is willing to opt for these provisions, income will be computed on an estimated basis. The rate of computation of income on estimate basis is as follows : In respect of heavy goods vehicle :

In respect of heavy goods vehicle income will be computed @ Rs. 5,000 per month or part thereof during which the heavy goods vehicle is owned by the assessee, during the previous year. In respect of other goods vehicle : In case of any other goods vehicle (i.e. other than heavy goods vehicle) income will be computed @ Rs. 4,500 per month or part thereof during which the goods vehicle is owned by the assessee during the previous year. Meaning of Goods vehicle (carriage) and heavy goods vehicle: The expressions "goods carriage” and "heavy goods vehicle” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988 Clause (14) and clause (16) of section 2 of the Motor Vehicles Act, 1988, define "goods carriage" and "heavy goods vehicle", respectively, as follows : "Goods carriage" means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods; "Heavy goods vehicle" means any goods carriage the gross vehicle weight of which, or a tractor or a road-roller the unladen weight of either of which, exceeds 12,000 kilograms;' Illustration Mr. Khush engaged in the business of plying, hiring or leasing goods carriages owns 8 goods vehicles (heavy goods vehicles) during the previous year 2012-13. He wants to adopt the provisions of section 44AE in respect of this business. In this case what will be the income as per the provisions of section 44AE? ** As per the provisions of section 44AE, in respect of heavy goods vehicle income will be computed @ Rs. 5,000 per month or part thereof during which the heavy goods vehicle is owned by the assessee, during the previous year. In the present case Mr. Khush owned 8 heavy goods vehicles during the year and, hence, income will be computed as follows :

Particulars Rs.Income per month per heavy goods vehicle 5,000

(×) No. of goods vehicle 8

Monthly income as per the provisions of section 44AE 40,000

(×) No. of months in a year 12

Total income as per the provisions of section 44AE 4,80,000

Illustration Mr. Khushal engaged in the business of plying, hiring or leasing goods carriages owns 6 goods vehicles (light goods vehicles) during the previous year 2012-13. He wants to adopt the provisions of section 44AE in respect of this business. In this case what will be the income as per the provisions of section 44AE? **

As per the provisions of section 44AE, in respect of goods vehicle (other than heavy goods vehicle) income will be computed @ Rs. 4,500 per month or part thereof during which the goods vehicle is owned by the assessee, during the previous year. In the present case Mr. Khushal owned 6 goods vehicles during the year and, hence, income will be computed as follows:

Particulars Rs.Income per month per goods vehicle (other than heavy vehicle) 4,500





Illustration Miss. Khushali engaged in the business of plying, hiring or leasing goods carriages owns 4 goods vehicles (light goods vehicles) and 5 heavy goods vehicles during the previous year 2012-13. She wants to adopt the provisions of section 44AE in respect of this business. In this case what will be the income as per the provisions of section 44AE? ** As per the provisions of section 44AE, in respect of goods vehicle (other than heavy goods vehicle) income will be computed @ Rs. 4,500 per month or part thereof during which the goods vehicle (other than heavy goods vehicle) is owned by the assessee during the previous year. In respect of heavy goods vehicle income will be computed @ Rs. 5,000 per month or part thereof during which the heavy goods vehicle is owned by the assessee during the previous year. In the present case Miss. Khushali owned 4 light vehicles and 5 heavy goods vehicles during the year and, hence, income will be computed as follows :





Total income as per the provisions of section 44AE from goods vehicles (other than heavy goods vehicles) (A)

2,16,000

Income per month per heavy goods vehicle 5,000

(×) No. of heavy goods vehicle 5



Total income as per the provisions of section 44AE from heavy goods vehicles (B)

3,00,000

Total income from business of plying, hiring or leasing goods carriages as per the provisions of section 44AE (A + B)

5,16,000

Provisions relating to various allowances/disallowances Income computed as above (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme. From the net income computed as above, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation). Provisions in case of a partnership firm It should be noted that an assessee, being a partnership firm, can claim further deduction of remuneration and interest to its partners within the limit specified under section 40(b). In other words, in case of an assessee being a partnership firm, separate deduction from the net income computed as per presumptive taxation scheme in respect of remuneration and interest paid to partners is allowed. Further, from income computed at the aforesaid rate, no disallowance can be made under sections 40, 40A and 43B. Thus, in case of an assessee adopting the presumptive taxation scheme of section 44AE, no disallowance under section sections 40, 40A and 43B will apply. Illustration Mr. Kapoor is engaged in the business of plying, hiring or leasing goods carriages. He owned 8 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. After computing the income @ Rs. 5,000 per month, he wants to claim further deduction on account of depreciation on the goods vehicle. Can he do so as per the provisions of section 44AE? ** As per the provisions of section 44AE, from the net income computed at the prescribed rate, i.e., Rs. 4,500 per month/Rs. 5,000 per month, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation) from such income. Thus, in this case Mr. Kapoor cannot claim any further deduction from the net income computed @ Rs. 5,000 per month. Illustration SM Transport Corporation a partnership firm is engaged in the business of plying, hiring or leasing goods carriages and owned 6 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. After computing the income @ Rs. 5,000 per month, the firm wants to claim further deduction on account of remuneration and interest to its partners within the limit specified under section 40(b). Can the firm do so as per the provisions of section 44AE? ** As per the provisions of section 44AE, from the net income computed at the prescribed rate, i.e., Rs. 4,500 per month/Rs. 5,000 per month, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation) from such income. However, in case of an assessee, being a partnership firm, further deduction on account of remuneration and interest to its partner within the limit specified under section 40(b) is allowed. Thus, in this case the firm can claim further deduction on account of remuneration and interest to its partners within the limit specified under section 40(b).

Manner of computation of WDV of depreciable assets As discussed above, an assessee opting for the presumptive taxation scheme is not permitted to claim deduction on account of various expenditures including depreciation. In this context, as regards the computation of the WDV of depreciable asset, following provision should be kept in mind : Deduction on account of depreciation is not available. However, the WDV of any asset used in the business covered under the scheme of section 44AE shall be calculated as if depreciation as per section 32 is claimed and allowed. Thus, even though no depreciation is available separately, yet for purpose of computation of the WDV of the asset depreciation will be deducted. Illustration Essem Transport Corporation a partnership firm is engaged in the business of plying, hiring or leasing goods carriages and owned 8 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. After computing the income @ Rs. 5,000 per month, the partners of the firm are of the opinion that in computing the WDV of the vehicles owned by them depreciation will not be deducted since no deduction on account of the same is claimed. Is the contention of partners correct? ** As per the provisions of section 44AE, from the income computed as per the provisions of section 44AE, further deduction on account of depreciation is not available. However, the WDV of any asset used in the business covered under the scheme of section 44AE shall be calculated as if depreciation as per section 32 is claimed and allowed. Thus, the contention of the partner is not correct. Even though no depreciation is claimed by the firm, yet for purpose of computation of the WDV of the asset, depreciation will be deducted from the value of the block. Provisions relating to maintenance of books of account The scheme gives a great relief to the assessee in respect of maintenance of books of account. An assessee, who adopts above provision, is not required to maintain books of account as per section 44AA (applicable only for business covered by this section). Further, in respect of such business, the provisions of section 44AB (relating to audit) are also not applicable. Thus, the scheme relieves the assessee from the maintenance of regular books of account. Apart from giving relief from maintenance of books of account, the scheme also relieves the assessee from audit of account. Illustration Mr. Kaushal is engaged in the business of plying, hiring or leasing goods carriages. He owned 8 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. In this case will he be liable to maintain the books of account in respect of aforesaid business? **

As per the provisions of section 44AE an assessee who adopts above provision is not required to maintain books of account as per section 44AA (applicable only for business covered by this section). However, it should be noted that the relief is available only in respect of business covered by the provisions of section 44AE and not in respect of any other business. Thus, if Mr. Kaushal owns any other business, then in respect of such business the provisions of section 44AA in respect of maintenance of books of account will apply. Declaration of lower income If the actual income from the business covered under section 44AE is lower than the income prescribed under the presumptive scheme, then the assessee can declare income from aforesaid business at a lower rate (i.e., at less than Rs. 4,500/Rs. 5,000). If the assessee does so, i.e., declares lower income, then the relief from maintenance of account in not available and he is required to maintain the books of account as per section 44AA and further, he has to get such books of account audited as per section 44AB. Illustration Mr. Kaushal is engaged in the business of plying, hiring or leasing goods carriages and owned 8 heavy goods vehicles during the previous year 2012-13. His actual income per goods vehicle per month is less than Rs. 5,000. In this case can he declare income lower than the limit prescribed under section 44AE? ** As per the provisions of section 44AE, if the actual income from the business covered under section 44AE is lower than the income prescribed under the presumptive scheme, then the assessee can declare income from aforesaid business at a lower rate (i.e., at less than Rs. 4,500/Rs. 5,000). Thus, in this case Mr. Kaushal can declare lower income. However, in this case he has to maintain the books of account prescribed under section 44AA and has to get the account audited. Declaration of higher income As regards the declaration of higher income, i.e., declaring income above the prescribed rate of Rs. 4,500 per month/Rs. 5,000 per month, the scheme permits the assessee to declare at his option higher income (i.e., higher than Rs. 4,500/Rs. 5,000). Illustration Mr. Kamal is engaged in the business of plying, hiring or leasing goods carriages and owned 9 heavy goods vehicles during the previous year 2012-13. His actual income per goods vehicle per month is more than Rs. 5,000. In this case can he declare income above the limit prescribed under section 44AE? ** As per the provisions of section 44AE, if the actual income from the business covered under section 44AE is higher than the income prescribed under the presumptive scheme, then the assessee has to declare such higher income from aforesaid business. Thus, in this case Mr. Kamal can declare higher income.

FAQs

1. To whom the provisions of section 44AE are applicable?

The provisions of section 44AE are applicable to every person (i.e., an individual, HUF, firm, company, etc.).

Unlike section 44AD, in case of section 44AE there is no restriction on which categories of assessees can opt for the scheme.. All sorts of assessees can opt for this scheme.

2. Which business is eligible for the purpose of scheme prescribed under section 44AE?

The presumptive taxation scheme under these provisions can be opted for by an assessee who is engaged in the business of plying, hiring or leasing goods carriages and does not own more than ten goods vehicles at any time during the previous year.

The important criteria in this scheme is the restriction of owning more than 10 goods vehicles at any time during the previous year. Thus, if an assessee is owning more than 10 goods vehicles during the year, then such an assessee cannot adopt this scheme.

Further, this scheme can be adopted only by the assessees who are engaged in the business of plying, hiring or leasing goods carriages. Thus, an assessee engaged in the business of passenger transport cannot adopt these provisions.

Illustration

Mr. Kumar engaged in the business of plying, hiring or leasing goods carriages owns 9 goods vehicles during the previous year 2012-13. Can he adopt the provisions of presumptive scheme of section 44AE in respect of this business?

**

The provisions of section 44AE can be adopted by an assessee who is engaged in the business of plying, hiring or leasing of goods carriages and does not own more than ten goods vehicles at any time during the previous year. In this case Mr. Kumar owned only 9 vehicles during the year, thus, he satisfied both the criteria of the scheme and hence, he can adopt the provisions of section 44AE for his business of plying, hiring or leasing goods carriages.

3. How presumptive income is computed under section 44AE?

In case of an assessee who is willing to opt for these provisions, income will be computed on an estimated basis. The rate of computation of income on estimate basis is as follows :

In respect of heavy goods vehicle : In respect of heavy goods vehicle income will be computed @ Rs. 5,000 per month or part thereof during which the heavy goods vehicle is owned by the assessee, during the previous year. In respect of other goods vehicle :

In case of any other goods vehicle (i.e. other than heavy goods vehicle) income will be computed @ Rs. 4,500 per month or part thereof during which the goods vehicle is owned by the assessee during the previous year. Meaning of Goods vehicle (carriage) and heavy goods vehicle: The expressions "goods carriage” and "heavy goods vehicle” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988

Clause (14) and clause (16) of section 2 of the Motor Vehicles Act, 1988, define "goods carriage" and "heavy goods vehicle", respectively, as follows :

"Goods carriage" means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods;

"Heavy goods vehicle" means any goods carriage the gross vehicle weight of which, or a tractor or a road-roller the unladen weight of either of which, exceeds 12,000 kilograms;'

Illustration

Mr. Khush engaged in the business of plying, hiring or leasing goods carriages owns 8 goods vehicles (heavy goods vehicles) during the previous year 2012-13. He wants to adopt the provisions of section 44AE in respect of this business. In this case what will be the income as per the provisions of section 44AE? ** As per the provisions of section 44AE, in respect of heavy goods vehicle income will be computed @ Rs. 5,000 per month or part thereof during which the heavy goods vehicle is owned by the assessee, during the previous year. In the present case Mr. Khush owned 8 heavy goods vehicles during the year and, hence, income will be computed as follows :






Illustration

Mr. Khushal engaged in the business of plying, hiring or leasing goods carriages owns 6 goods vehicles (light goods vehicles) during the previous year 2012-13. He wants to adopt the provisions of section 44AE in respect of this business. In this case what will be the income as per the provisions of section 44AE? ** As per the provisions of section 44AE, in respect of goods vehicle (other than heavy goods vehicle) income will be computed @ Rs. 4,500 per month or part thereof during which the goods vehicle is owned by the assessee, during the previous year. In the present case Mr. Khushal owned 6 goods vehicles during the year and, hence, income will be computed as follows:






Illustration

Miss. Khushali engaged in the business of plying, hiring or leasing goods carriages owns 4 goods vehicles (light goods vehicles) and 5 heavy goods vehicles during the previous year 2012-13. She wants to adopt the provisions of section 44AE in respect of this business. In this case what will be the income as per the provisions of section 44AE? ** As per the provisions of section 44AE, in respect of goods vehicle (other than heavy goods vehicle) income will be computed @ Rs. 4,500 per month or part thereof during which the goods vehicle (other than heavy goods vehicle) is owned by the assessee during the previous year. In respect of heavy goods vehicle income will be computed @ Rs. 5,000 per month or part thereof during which the heavy goods vehicle is owned by the assessee during the previous year. In the present case Miss. Khushali owned 4 light vehicles and 5 heavy goods vehicles during the year and, hence, income will be computed as follows :





Total income as per the provisions of section 44AE from goods vehicles (other than heavy goods vehicles) (A)

2,16,000

Income per month per heavy goods vehicle 5,000

(×) No. of heavy goods vehicle 5



Total income as per the provisions of section 44AE from heavy goods vehicles (B)

3,00,000

Total income from business of plying, hiring or leasing goods carriages as per the provisions of section 44AE (A + B)

5,16,000

4. What are the provisions relating to various allowances/disallowances in case of an assessee opting for the scheme of section 44AE?

Income computed as above (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme.

From the net income computed as above, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation).

Provisions in case of a partnership firm It should be noted that an assessee, being a partnership firm, can claim further deduction of remuneration and interest to its partners within the limit specified under section 40(b). In other words, in case of an assessee being a partnership firm, separate deduction from the net income computed as per presumptive taxation scheme in respect of remuneration and interest paid to partners is allowed.

Further, from income computed at the aforesaid rate, no disallowance can be made under sections 40, 40A and 43B. Thus, in case of an assessee adopting the presumptive taxation scheme of section 44AE, no disallowance under section sections 40, 40A and 43B will apply.

Illustration

Mr. Kapoor is engaged in the business of plying, hiring or leasing goods carriages He owned 8 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. After computing the income @ Rs. 5,000 per month, he wants to claim further deduction on account of depreciation on the goods vehicle. Can he do so as per the provisions of section 44AE?

**

As per the provisions of section 44AE, from the net income computed at the prescribed rate, i.e., Rs. 4,500 per month/Rs. 5,000 per month, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation) from such income. Thus, in this case Mr. Kapoor cannot claim any further deduction from the net income computed @ Rs. 5,000 per month.

Illustration

SM Transport Corporation a partnership firm is engaged in the business of plying, hiring or leasing goods carriages and owned 6 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. After computing the income @ Rs. 5,000 per month, the firm wants to claim further deduction on account of remuneration and interest to its partners within the limit specified under section 40(b). Can the firm do so as per the provisions of section 44AE?

**

As per the provisions of section 44AE, from the net income computed at the prescribed rate, i.e., Rs. 4,500 per month/Rs. 5,000 per month, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation) from such income. However, in case of an assessee, being a partnership firm, further deduction on account of remuneration and interest to its partner within the limit specified

under section 40(b) is allowed. Thus, in this case the firm can claim further deduction on account of remuneration and interest to its partners within the limit specified under section 40(b).

5. What is the manner of computation of WDV of depreciable assets in case of an assessee opting for the scheme of section 44AE?

As discussed above, an assessee opting for the presumptive taxation scheme is not permitted to claim deduction on account of various expenditures including depreciation. In this context, as regards the computation of the WDV of depreciable asset, following provision should be kept in mind :

Deduction on account of depreciation is not available. However, the WDV of any asset used in the business covered under the scheme of section 44AE shall be calculated as if depreciation as per section 32 is claimed and allowed. Thus, even though no depreciation is available separately, yet for purpose of computation of the WDV of the asset depreciation will be deducted.

Illustration

Essem Transport Corporation a partnership firm is engaged in the business of plying, hiring or leasing goods carriages and owned 8 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. After computing the income @ Rs. 5,000 per month, the partners of the firm are of the opinion that in computing the WDV of the vehicles owned by them depreciation will not be deducted since no deduction on account of the same is claimed. Is the contention of partners correct?

**

As per the provisions of section 44AE, from the income computed as per the provisions of section 44AE, further deduction on account of depreciation is not available. However, the WDV of any asset used in the business covered under the scheme of section 44AE shall be calculated as if depreciation as per section 32 is claimed and allowed. Thus, the contention of the partner is not correct. Even though no depreciation is claimed by the firm, yet for purpose of computation of the WDV of the asset, depreciation will be deducted from the value of the block.

6. What are the provisions relating to maintenance of books of account in case of an assessee opting for the scheme of section 44AE?

The scheme gives a great relief to the assessee in respect of maintenance of books of account. An assessee, who adopts above provision, is not required to maintain books of account as per section 44AA (applicable only for business covered by this section). Further, in respect of such business, the provisions of section 44AB (relating to audit) are also not applicable.

Thus, the scheme relieves the assessee from the maintenance of regular books of account. Apart from giving relief from maintenance of books of account, the scheme also relieves the assessee from audit of account.

Illustration

Mr. Kaushal is engaged in the business of plying, hiring or leasing goods carriages He owned 8 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. In this case will he be liable to maintain the books of account in respect of aforesaid business?

**

As per the provisions of section 44AE an assessee who adopts above provision is not required to maintain books of account as per section 44AA (applicable only for business covered by this section). However, it should be noted that the relief is available only in respect of business covered by the provisions of section 44AE and not in respect of any other business. Thus, if Mr. Kaushal owns any other business, then in respect of such business the provisions of section 44AA in respect of maintenance of books of account will apply.

7. Can an assessee covered by section 44AE declare lower income as compared to income specified in section 44AE?

If the actual income from the business covered under section 44AE is lower than the income prescribed under the presumptive scheme, then the assessee can declare income from aforesaid business at a lower rate (i.e., at less than Rs. 4,500/Rs. 5,000).

If the assessee does so, i.e., declares lower income, then the relief from maintenance of account in not available and he is required to maintain the books of account as per section 44AA and further, he has to get such books of account audited as per section 44AB.

Illustration

Mr. Kaushal is engaged in the business of plying, hiring or leasing goods carriages and owned 8 heavy goods vehicles during the previous year 2012-13. His actual income per goods vehicle per month is less than Rs. 5,000. In this case can he declare income lower than the limit prescribed under section 44AE?

**

As per the provisions of section 44AE, if the actual income from the business covered under section 44AE is lower than the income prescribed under the presumptive scheme, then the assessee can declare income from aforesaid business at a lower rate (i.e., at less than Rs. 4,500/Rs. 5,000). Thus, in this case Mr. Kaushal can declare lower income. However, in this case he has to maintain the books of account prescribed under section 44AA and has to get the account audited.

8. Can an assessee covered by section 44AE declaration higher income as compared to income specified in section 44AE?

As regards the declaration of higher income, i.e., declaring income above the prescribed rate of Rs. 4,500 per month/Rs. 5,000 per month, the scheme permits the assessee to declare at his option higher income (i.e., higher than Rs. 4,500/Rs. 5,000).

Illustration

Mr. Kamal is engaged in the business of plying, hiring or leasing goods carriages and owned 9 heavy goods vehicles during the previous year 2012-13. His actual income per goods vehicle per month is more than Rs. 5,000. In this case can he declare income above the limit prescribed under section 44AE?

**

As per the provisions of section 44AE, if the actual income from the business covered under section 44AE is higher than the income prescribed under the presumptive scheme, then the assessee has to declare such higher income from aforesaid business. Thus, in this case Mr. Kamal can declare higher income.

MCQ

Q1. The provisions relating to presumptive taxation scheme applicable to an assessee engaged in the business of plying, hiring or leasing goods carriages are given in section ________?

(a) 44AA (b) 44AB

(c) 44AD (d) 44AE

Correct answer (d)

Justification of correct answer:

The provisions relating to presumptive taxation scheme applicable to an assessee engaged in the business of plying, hiring or leasing goods carriages are given in section 44AE.

Thus, option (d) is the correct option.

Comment on incorrect answer: Option (d) is the correct option since it gives the correct section. All the other options, viz., options (a), (b) and (c) giving incorrect sections are not correct.

Q2. The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of ___________

(a) Plying, hiring or leasing goods carriages

(b) Selling goods carriages

(c) Buying goods carriages

(d) Selling/buying goods carriages

Correct answer (a)


The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing goods carriages.

Thus, option (a) is the correct option.

Comment on incorrect answer: Option (a) is the correct option since it gives the correct business. All the other options, viz., options (b), (c) and (d) giving incorrect business are not correct.

Q3. The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing ________.

(a) Passenger transport

(b) Goods carriage

(c) Passenger as well as goods carriage

(d) Two wheeled vehicle

Correct answer (b)


The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing goods carriages.

Thus, option (b) is the correct option.

Comment on incorrect answer: Option (b) is the correct option since it gives the correct business. All the other options, viz., options (a), (c) and (d) giving incorrect business are not correct.

Q4. The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing carriage if the assessee does not own more than ____ goods vehicles at any time during the previous year.

(a) 5 (b) 10

(c) 15 (d) 20

Correct answer (b)


The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing carriages if the assessee does not own more than 10 goods vehicles at any time during the previous year.


Comment on incorrect answer: Option (b) is the correct option since it gives the correct number of vehicles. All the other options, viz., options (a), (c) and (d) giving incorrect number of vehicles are not correct.

Q5. The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing carriage if the assessee does not owning more than 10 ____ at any time during the previous year.

(a) Heavy goods vehicles

(b) Goods vehicles

(c) Goods vehicle other than heavy goods vehicles

(d) Light goods vehicles

Correct answer (b)


The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing carriages if the assessee does not own more than 10 goods vehicles at any time during the previous year.


Comment on incorrect answer: Option (b) is the correct option since it gives the correct provisions. All the other options, viz., options (a), (c) and (d) giving incorrect provisions are not correct.

Q6. The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing carriages if the assessee does not own more than 10 heavy goods vehicles at any time during the previous year.

(a) True (b) False

Correct answer (b)


The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing carriage if the assessee does not own more than 10 goods vehicles (heavy or other than heavy goods vehicles) at any time during the previous year.

Thus, the statement given in the question is false and, hence, option (b) is the correct option.

Comment on incorrect answer: The statement given in the question is false. Hence, option (a) is not correct.

Q7. The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing carriages if the assessee does not own more than 10 vehicles (other than heavy goods vehicles) at any time during the previous year.

(a) True (b) False

Correct answer (b)


The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing carriage if the assessee does not own more than 10 goods vehicles (heavy or other than heavy goods vehicles) at any time during the previous year.



Q8. The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing carriages if the assessee does not own more than 10 heavy goods vehicles and 10 goods vehicles (other than heavy goods vehicles) at any time during the previous year.

(a) True (b) False

Correct answer (b)


The provisions relating to presumptive taxation scheme prescribed under section 44AE are applicable to an assessee engaged in the business of plying, hiring or leasing of carriages if the assessee does not own more than 10 goods vehicles (heavy or other than heavy vehicles) at any time during the previous year.



Q9. The provisions relating to presumptive taxation scheme prescribed under section 44AE can be adopted by an assessee engaged in the business of passenger transportation.

(a) True (b) False

Correct answer (b)


An assessee engaged in the business of passenger transportation cannot adopt these provisions of section 44AE. These provisions can be adopted by an assessee who is engaged in the business of plying, hiring or leasing goods carriages.



Q10. Mr. Kumar engaged in the business of plying, hiring or leasing goods carriages owns 19 goods vehicles during the previous year 2012-13. Can he adopt the provisions of presumptive scheme of section 44AE in respect of this business?

(a) Yes (b) No

Correct answer (b)


The provisions of section 44AE can be adopted by an assessee who is engaged in the business of plying, hiring or leasing goods carriages and does not own more than ten goods vehicles at any time during the previous year. In this case, Mr. Kumar owns 19 goods vehicles during the year. Thus, he does not satisfy the criteria of the scheme and hence, he cannot adopt the provisions of section 44AE for his business of plying, hiring or leasing of goods carriages.


Comment on incorrect answer : Option (b) is the correct option since it gives the correct provisions. Other option, viz., option (a) giving incorrect provisions is not correct.

Q11. Mr. Khush engaged in the business of plying, hiring or leasing goods carriages owns 9 goods vehicles during the previous year 2012-13. Can he adopt the provisions of presumptive scheme of section 44AE in respect of this business?

(a) Yes (b) No

Correct answer (a)


The provisions of section 44AE can be adopted by an assessee who is engaged in the business of plying, hiring or leasing goods carriages and does not own more than ten goods vehicles at any time during the previous year. In this case Mr. Khush owns only 9 vehicles during the year. Thus, he satisfies both the criteria of the scheme and hence, he can adopt the provisions of section 44AE for his business of plying, hiring or leasing of goods carriages.


Comment on incorrect answer: Option (a) is the correct option since it gives the correct provisions. Other option, viz., option (b) giving incorrect provisions is not correct.

Q12. SM Transport Corporation (a partnership firm) engaged in the business of plying, hiring or leasing goods carriages owns 9 goods vehicles during the previous year 2012-13. Can the firm adopt the provisions of presumptive scheme of section 44AE in respect of this business?

(a) Yes (b) No

Correct answer (a)


The provisions of section 44AE can be adopted by an assessee who is engaged in the business of plying, hiring or leasing goods carriages and does not own more than ten goods vehicles at any time during the previous year. These provisions can be adopted by a partnership firm too. In this case the firm owned only 9 vehicles during the year. Thus, it satisfied both the criteria of the scheme and hence, the firm can adopt the provisions of section 44AE for its business of plying, hiring or leasing goods carriages leasing goods carriages.



Q13. Kumar Transport Corporation owned by Kumar HUF engaged in the business of plying, hiring or leasing goods carriages owns 9 goods vehicles during the previous year 2012-13. Can the HUF adopt the provisions of presumptive scheme of section 44AE in respect of this business?

(a) Yes (b) No

Correct answer (a)


The provisions of section 44AE can be adopted by an assessee who is engaged in the business of plying, hiring or leasing goods carriages and does not own more than ten goods vehicles at any time during the previous year. These provisions can be adopted by a HUF too. In this case the HUF owned only 9 vehicles during the year, thus, it satisfied both the criteria of the scheme and hence, the HUF can adopt the provisions of section 44AE for its business of plying, hiring or leasing of goods carriages.



Q14. SM Transport Corporation (a partnership firm) engaged in the business of plying, hiring or leasing goods carriages owned 9 goods vehicles during the previous year 2012-13. In the month of April, 2013 it purchased 3 more heavy goods vehicles. Can the firm adopt the provisions of presumptive scheme of section 44AE in respect of this business?

(a) Yes (b) No

Correct answer (a)


The provisions of section 44AE can be adopted by an assessee who is engaged in the business of plying, hiring or leasing goods carriages and does not own more than ten goods vehicles at any time during the previous year. These provisions can be adopted by a partnership firm too. In this case, during the year 2012-13, the firm owned only 9 goods vehicles and 3 vehicles purchased in April 2013, i.e,in the year 2013-14 and hence, for the previous year 2012-13 it satisfied both the criteria of the scheme and thus the firm can adopt the provisions of section 44AE for its business of plying, hiring or leasing goods carriages leasing goods carriages.



Q15. Kumar Transport Corporation owned by Kumar HUF engaged in the business of plying, hiring or leasing goods carriages owned 15 goods vehicles during the previous year 2012-13. The karta of the HUF is of the opinion that the HUF can adopt the provisions of section 44AE because in case of HUF the limit prescribed under section 44AE is 20 goods vehicles. Can the HUF adopt the provisions of presumptive scheme of section 44AE in respect of this business?

(a) Yes (b) No

Correct answer (b)


The provisions of section 44AE can be adopted by an assessee who is engaged in the business of plying, hiring or leasing goods carriages and does not own more than ten goods vehicles at any time during the previous year. The limit of 10 goods vehicles is applicable in respect of all assessees, viz., individual, HUF, Firm, etc. In this case the

HUF owned 15 vehicles during the year, thus, it does not satisfy the criteria of not owning more than 10 goods vehicles and hence, the provisions cannot be adopted in respect of aforesaid business.


Comment on incorrect answer: Option (b) is the correct option since it gives the correct provisions. Other option, viz., option (a) giving incorrect provisions is not correct.

Q16. In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at a prescribed rate.

(a) True (b) False

Correct answer (a)


In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at a prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of heavy goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than heavy goods vehicle.

Thus, the statement given in the question is true and, hence, option (a) is the correct option.

Comment on incorrect answer: The statement given in the question is true, hence, option (b) is not correct.

Q17. In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at a prescribed rate. The rate is Rs. 5,000 per month in respect of heavy goods vehicle and Rs. 4,500 per month in respect of goods vehicle other than heavy goods vehicle. Part of the month is to be ignored.

(a) True (b) False

Correct answer (b)


In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at a prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of heavy goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than heavy goods vehicle. The above rates are applicable for the month or part of the month as well.



Q18. In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at the prescribed rate. The rate is Rs. 4,500 per month in respect of heavy goods vehicle and 4,000 per month in respect of goods vehicle other than heavy goods vehicle. Part of the month is to be ignored.

(a) True (b) False

Correct answer (b)


In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at a prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of heavy goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than heavy goods vehicle.

Thus, the statement given in the question is false and hence, option (b) is the correct option.


Q19. In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at a prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of medium goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than medium.

(a) True (b) False

Correct answer (b)


In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of heavy goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than heavy goods vehicle.


Comment on incorrect answer : The statement given in the question is false. Hence, option (a) is not correct.

Q20. As per the presumptive taxation scheme of section 44AE, in case of heavy goods vehicle income will be computed @ Rs. 5,000 per month or part thereof during which the heavy goods vehicle is owned by the assessee, during the previous year and in case of any other goods vehicle (i.e., other than heavy goods vehicle) income will be computed @ Rs. 4,500 per quarter or part thereof during which the goods vehicle is owned by the assessee, during the previous year. (a) True (b) False

Correct answer (b)


In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at a prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of heavy goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than heavy. The rate of Rs. 5,000 and Rs. 4,500 is per month and not per quarter.



Q21. As per the presumptive taxation scheme of section 44AE, in case of heavy goods vehicle income will be computed @ Rs. 5,000 per quarter or part thereof during which the heavy goods vehicle is owned by the assessee, during the previous year and in case of any other goods vehicle (i.e. other than heavy goods vehicle) income will be computed @ Rs. 4,500 per quarter or part thereof during which the goods vehicle is owned by the assessee during the previous year. (a) True (b) False

Correct answer (b)


In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at a prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of heavy goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than heavy goods vehicle. The rate of Rs. 5,000 and Rs. 4,500 is per month and not per quarter.


Comment on incorrect answer: The statement given in the question is false, hence, option (a) is not correct.

Q22. In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at the prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of heavy goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than heavy goods vehicle. However, in case of an assessee being an individual the rate is Rs. 5,000/4,500 per quarter and not per month.

(a) True (b) False

Correct answer (b)


In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at a prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of heavy goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than heavy goods vehicle. The above rates are applicable for the month or part of the month in respect of all assessees and in no case the rate is per quarter.



Q23. In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at the prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of heavy goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than heavy goods vehicle. However, in case of an assessee being a HUF the rate is Rs. 5,000/4,500 per quarter and not per month.

(a) True (b) False

Correct answer (b)


In case of an assessee who is willing to adopt the provisions of section 44AE, income will be computed on an estimated basis at a prescribed rate. The rate is Rs. 5,000 per month or part thereof in respect of heavy goods vehicle and Rs. 4,500 per month or part thereof in respect of goods vehicle other than heavy goods vehicle. The above rates are applicable for the month or part of the month in respect of all assessees and in no case the rate is per quarter.



Q24. Mr. Khush engaged in the business of plying, hiring or leasing goods carriages owned 8 goods vehicles (heavy goods vehicles) during the previous year 2012-13. He wants to adopt the provisions of section 44AE in respect of this business. In this case what will be the income as per the provisions of section 44AE? (a) 4,80,000

(b) 8,40,000

(c) 4,32,000

(d) 5,23,000

Correct answer (a)


As per the provisions of section 44AE, in respect of heavy goods vehicle income will be computed @ Rs. 5,000 per month or part thereof during which the heavy goods vehicle is owned by the assessee, during the previous year. In the present case Mr. Khush owned 8 heavy goods vehicles during the year and hence, income will be computed as follows :







Comment on incorrect answer : Option (a) is the correct option since it gives the correct amount of income. All the other options, viz., options (b), (c) and (d) giving incorrect amount of income are not correct.

Q25. SM Transport Company engaged in the business of plying, hiring or leasing goods carriages owned 9 goods vehicles (heavy goods vehicles) during the previous year 2012-13. The firm wants to adopt the provisions of section 44AE in respect of this business. In this case what will be the income as per the provisions of section 44AE? (a) 4,50,000

(b) 5,40,000

(c) 4,86,000

(d) 4,68,000

Correct answer (b)


As per the provisions of section 44AE, in respect of heavy goods vehicle income will be computed @ Rs. 5,000 per month or part thereof during which the heavy goods vehicle is owned by the assessee during the previous year. In the present case the firm owned 9 heavy goods vehicles during the year and hence, income will be computed as follows:







Comment on incorrect answer : Option (b) is the correct option since it gives the correct amount of income. All the other options, viz., options (a), (c) and (d) giving incorrect amount of income are not correct.

Q26. Mr. Raghu engaged in the business of plying, hiring or leasing goods carriages owned 7 goods vehicles (other than heavy goods vehicles) during the previous year 2012-13. He wants to adopt the provisions of section 44AE in respect of this business. In this case what will be the income as per the provisions of section 44AE? (a) 3,78,000

(b) 3,87,000

(c) 4,20,000

(d) 2,40,000

Correct answer (a)

Justification of correct answer :

As per the provisions of section 44AE, in respect of goods vehicle (other than heavy goods vehicle) income will be computed @ Rs. 4,500 per month or part thereof during which the heavy goods vehicle is owned by the assessee, during the previous year. In the present case Mr. Raghu owned 7 heavy goods vehicles during the year and hence, income will be computed as follows:







Comment on incorrect answer: Option (a) is the correct option since it gives the correct amount of income. All the other options, viz., options (b), (c) and (d) giving incorrect amount of income are not correct.

Q27. Essem Transport Company engaged in the business of plying, hiring or leasing goods carriages owns 6 goods vehicles (other than heavy goods vehicles) during the previous year 2012-13. The firm wants to adopt the provisions of section 44AE in respect of this business. In this case what will be the income as per the provisions of section 44AE? (a) 3,42,000

(b) 3,60,000

(c) 6,30,000

(d) 3,24,000

Correct answer (d)


As per the provisions of section 44AE, in respect of goods vehicle (other than heavy goods vehicle) income will be computed @ Rs. 4,500 per month or part thereof during which the heavy goods vehicle is owned by the assessee, during the previous year. In the present case the firm owned 6 heavy goods vehicles during the year and hence, income will be computed as follows:






Thus, option (d) is the correct option.

Comment on incorrect answer: Option (d) is the correct option since it gives the correct amount of income. All the other options, viz., options (a), (b) and (c) giving incorrect amount of income are not correct.

Q28. For the purpose of section 44AE, the expressions "goods carriage” and "heavy goods vehicle” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988.

(a) True (b) False

Correct answer (a)


For the purpose of section 44AE, the expressions "goods carriage” and "heavy goods vehicle” shall have the meanings respectively assigned to them in section 2 of the Motor Vehicles Act, 1988.



Q29. For the purpose of section 44AE, "Goods carriage" means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods.

(a) True (b) False

Correct answer (a)


For the purpose of section 44AE, "Goods carriage" means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods.



Q30. For the purpose of section 44AE, "Goods carriage" means any motor vehicle constructed or adapted for use solely of the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods. Thus, a vehicle which is not a goods vehicle but is constructed in such a manner that it can be used as goods vehicle will be treated as goods vehicle.

(a) True (b) False

Correct answer (a)


For the purpose of section 44AE, "Goods carriage" means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods. Thus, a vehicle which is not a goods vehicle but is constructed in such a manner that it can be used as goods vehicle will be treated as goods vehicle.



Q31. For the purpose of section 44AE, "heavy goods vehicle" means any goods carriage the gross vehicle weight of which, or a tractor or a road-roller the unladen weight of either of which exceeds 12,000 kilograms.

(a) True (b) False

Correct answer (a)


For the purpose of section 44AE, "heavy goods vehicle" means any goods carriage the gross weight of which, or a tractor or a road-roller the unladen weight of either of which exceeds 12,000 kilograms.


Comment on incorrect answer: The statement given in the question is true. Hence, option (b) is not correct.

Q32. For the purpose of section 44AE, any goods carriage the gross vehicle weight of which, or a tractor or a road-roller the unladen weight of either of which, exceeds 12,000 kilograms will be treated as ____________

(a) Heavy goods vehicle (b) Light goods vehicle

Correct answer (a)


For the purpose of section 44AE, "heavy goods vehicle" means any goods carriage the gross weight of which, or a tractor or a road-roller the unladen weight of either of which exceeds 12,000 kilograms.


Comment on incorrect answer: Option (a) is the correct option since it gives the correct nature of the vehicle, the other option viz. option (b) giving incorrect nature of the vehicle is not correct.

Q33. For the purpose of section 44AE, any goods carriage the gross vehicle weight of which, or a tractor or a road-roller the unladen weight of either of which does not exceed 12,000 kilograms will be treated as ____________.

(a) Heavy goods vehicle (b) Other than heavy goods vehicle

Correct answer (b)


For the purpose of section 44AE, "heavy goods vehicle" means any goods carriage the gross vehicle weight of which, or a tractor or a road-roller the unladen weight of either of which, exceeds 12,000 kilograms. Rests are not heavy goods vehicle.


Comment on incorrect answer: Option (b) is the correct option since it gives the correct nature of the vehicle. The other option, viz., option (a) giving incorrect nature of the vehicle is not correct.

Q34. For the purpose of section 44AE, an assessee who is in possession of a goods carriage, whether taken on hire purchase or on installments 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.

(a) True (b) False

Correct answer (a)


For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on installments 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.



Q35. For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, taken on hire purchase and for which the whole or part of the amount payable is still due, shall not be deemed to be the owner of such goods carriage.

(a) True (b) False

Correct answer (a)


For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on installments 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.



Q36. For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, taken on installments and for which the whole or part of the amount payable is still due, shall not be deemed to be the owner of such goods carriage.

(a) True (b) False

Correct answer (b)

Justification of correct answer

For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on installments 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. In this case the assessee shall be deemed to be the owner of such goods carriage.



Q37. For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on installments and for which the whole or part of the amount payable is still due, shall not be deemed to be the owner of such goods carriage.

(a) True (b) False

Correct answer (b)

Justification of correct answer

For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on installments 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. Thus, in this case the assessee shall be deemed to be the owner of such goods carriage.



Q38. For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on installments and for which the whole (not part) of the amount payable is still due, shall not be deemed to be the owner of such goods carriage.

(a) True (b) False

Correct answer (b)


For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on installments 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. Thus, in case where the whole or part of the amount payable is still due the assessee shall be deemed to be the owner of such goods carriage.



Q39. For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on installments and for which the part (not whole) of the amount payable is still due, shall not be deemed to be the owner of such goods carriage.

(a) True (b) False

Correct answer (b)


For the purpose of section 44AE, an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on installments 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. Thus, in case where the whole or part of the amount payable is still due the assessee shall be deemed to be the owner of such goods carriage.



Q40. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be ____ income of the business covered under this scheme.

(a) Net (b) Gross

Correct answer (a)


Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme.

From the net income computed as above, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation) from such income.


Comment on incorrect answer: Option (a) is the correct option since it gives the correct nature of income. The other option, viz., option (b) giving nature of income is not correct.

Q41. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be gross income for the business covered under this scheme. From the gross income computed as above, assessee is permitted to claim deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation).

(a) True (b) False

Correct answer (b)


Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme. From the net income computed as above, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation).



Q42. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be gross income for the business covered under this scheme. From the gross income computed as above, assessee is not permitted to claim deduction under sections 30 to 38. However, he can claim deduction on account of depreciation or unabsorbed depreciation.

(a) True (b) False

Correct answer (b)





Q43. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month/Rs. 5,000 per month) will be gross income for the business covered under this scheme. From the gross income computed as above, assessee is not permitted to claim deduction on account of depreciation or unabsorbed depreciation but can claim deduction under sections 30 to 38.

(a) True (b) False

Correct answer (b)





Q44. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme. From the net income computed as above, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation) but can claim deduction on account of unabsorbed depreciation.

(a) True (b) False

Correct answer (b)


Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income of the business covered under this scheme. From the net income computed as above, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation).



Q45. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme. From the net income computed as above, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation) but can claim deduction on account of brought forward business loss.

(a) True (b) False

Correct answer (a)


Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme. From the net income computed as above, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation). However, deduction is available in respect of brought forward business loss.



Q46. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme. From the net income computed as above, assessee, being a partnership firm, can claim further deduction of remuneration and interest to its partner within the limit specified under section 40(b).

(a) True (b) False

Correct answer (a)


Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme. From the net income computed as above, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation). However, assessee, being a partnership firm, can claim further deduction of remuneration and interest to its partner within the limit specified under section 40(b).

Thus, the statement given in the question is true and hence, option (a) is the correct option.


Q47. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income of the business covered under this scheme. From the income computed at the aforesaid rate, no disallowance can be made under sections 40, 40A and 43B.

(a) True (b) False

Correct answer (a)


Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income of the business covered under this scheme. From income computed at the aforesaid rate, no disallowance can be made under sections 40, 40A and 43B.



Q48. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income of the business covered under this scheme. From income computed at the aforesaid rate, no disallowance can be made under sections 40 but disallowance can be made under section 40A and 43B.

(a) True (b) False

Correct answer (b)


Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme. From income computed at the aforesaid rate, no disallowance can be made under sections 40, 40A and 43B.


Comment on incorrect answer: The statement given in the question is false Hence, option (a) is not correct.

Q49. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income of the business covered under this scheme. From income computed at the aforesaid rate, no disallowance can be made under sections 40 and 40A but disallowance can be made under section 43B.

(a) True (b) False

Correct answer (b)


Income computed as per the provisions of section 44AE (i.e. @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme. From income computed at the aforesaid rate, no disallowance can be made under sections 40, 40A and 43B.



Q50. Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income of the business covered under this scheme. From income computed at the aforesaid rate, no disallowance can be made under sections 40A and 43B but disallowance can be made under section 40.

(a) True (b) False

Correct answer (b)


Income computed as per the provisions of section 44AE (i.e., @ Rs. 4,500 per month /Rs. 5,000 per month) will be net income for the business covered under this scheme. From income computed at the aforesaid rate, no disallowance can be made under sections 40, 40A and 43B.



Q51. Mr. Kapoor is engaged in the business of plying, hiring or leasing goods carriages. He owned 8 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. After computing the income @ Rs. 5,000 per month, he wants to claim further deduction on account of depreciation on the goods vehicle. Can he do so as per the provisions of section 44AE?

(a) Yes (b) No

Correct answer (b)


As per the provisions of section 44AE, from the net income computed at the prescribed rate, i.e. Rs. 4,500 per month/Rs. 5,000 per month, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation) from such income. Thus, in this case Mr. Kapoor cannot claim any further deduction from the net income computed @ Rs. 5,000 per month.



Q52. SM Transport Corporation a partnership firm is engaged in the business of plying, hiring or leasing goods carriages and owned 6 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. After computing the income @ Rs. 5,000 per month, the firm wants to claim further deduction on account of remuneration and interest to its partners within the limit specified under section 40(b). Can the firm do so as per the provisions of section 44AE?

(a) Yes (b) No

Correct answer (a)


As per the provisions of section 44AE, from the net income computed at the prescribed rate, i.e. Rs. 4,500 per month/Rs. 5,000 per month, assessee is not permitted to claim any deduction under sections 30 to 38 (including depreciation or unabsorbed depreciation) from such income. However, in case of an assessee, being a partnership firm, further deduction on account of remuneration and interest to its partners within the limit specified under section 40(b) is allowed, Thus, in this case the firm can claim further deduction on account of remuneration and interest to its partners within the limit specified under section 40(b).


Comment on incorrect answer: Option (a) is the correct option since it gives the correct provisions. Other option, viz., option (b) giving incorrect provision is not correct.

Q53. As per the provisions of section 44AE an assessee opting for the presumptive taxation scheme is not permitted to claim deduction on account of various expenditures including depreciation, however, the WDV of any asset used in the business covered under the scheme of section 44AE shall be calculated as if depreciation as per section 32 is claimed and allowed.

(a) True (b) False

Correct answer (a)


As per the provisions of section 44AE an assessee opting for the presumptive taxation scheme is not permitted to claim deduction on account of various expenditures including depreciation, however, the WDV of any asset used in the business covered under the scheme of section 44AE shall be calculated as if depreciation as per section 32 is claimed and allowed. Thus, even though no depreciation is available separately, yet for purpose of computation of the WDV of the asset, depreciation will be deducted.

Thus, the statement given in the question is true and hence, option (a) is the correct option.


Q54. As per the provisions of section 44AE an assessee opting for the presumptive taxation scheme is not permitted to claim deduction on account of various expenditures including depreciation. Further, the WDV of any asset used in the business covered under the scheme of section 44AE shall be calculated as if depreciation as per section 32 is not claimed.

(a) True (b) False

Correct answer (b)


As per the provisions of section 44AE an assessee opting for the presumptive taxation scheme is not permitted to claim deduction on account of various expenditures including depreciation. However, the WDV of any asset used in the business covered under the scheme of section 44AE shall be calculated as if depreciation as per section 32 is claimed and allowed. Thus, even though no depreciation is available separately, yet for purpose of computation of the WDV of the asset, depreciation will be deducted.



Q55.Essem Transport Corporation a partnership firm is engaged in the business of plying, hiring or leasing goods carriages and owned 8 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. After computing the income @ Rs. 5,000 per month, the partners of the firm are of the opinion that in computing the WDV of the vehicle owned by them depreciation will not be deducted since no deduction on account of the same is claimed. Is the contention of partner correct?

(a) Yes (b) No

Correct answer (b)


As per the provisions of section 44AE, from the income computed as per the provisions of section 44AE, further deduction on account of depreciation is not available. However, the WDV of any asset used in the business covered under the scheme of section 44AE shall be calculated as if depreciation as per section 32 is claimed and allowed. Thus, the contention of the partner is not correct. Even though no depreciation is claimed by the firm, yet for purpose of computation of the WDV of the asset, depreciation will be deducted from the value of the block.



Q56. As per the provisions of section 44AE an assessee, who adopts above provision, is not required to maintain books of account as per section 44AA.

(a) True (b) False

Correct answer (a)


An assessee who adopts the provisions of section 44AE is not required to maintain books of account as per section 44AA (applicable only for business covered by this section).



Q57. As per the provisions of section 44AE an assessee, who adopts the provisions of section 44AE, is not required to maintain books of account as per section 44AA. Further, in respect of such business the provisions of section 44AB (relating to audit) are also not applicable.

(a) True (b) False

Correct answer (a)


An assessee who adopts the provisions of section 44AE is not required to maintain books of account as per section 44AA (applicable only for business covered by this section). Further, in respect of such business, the provisions of section 44AB (relating to audit) are also not applicable.



Q58. As per the provisions of section 44AE an assessee, who adopts the provisions of section 44AE, is not required to maintain books of account as per section 44AA in respect of all his business whether covered under section 44AE or not.

(a) True (b) False

Correct answer (b)


An assessee who adopts the provisions of section 44AE is not required to maintain books of account as per section 44AA (applicable only for business covered by this section and not for other businesses).



Q59. As per the provisions of section 44AE an assessee who adopts the provisions of section 44AE,,is not required to get the account of his business audited in respect of his business whether covered under section 44AE or not.

(a) True (b) False

Correct answer (b)


An assessee who adopts the provisions of section 44AE is not required to maintain books of account as per section 44AA as well as not required to get the accounts audited (applicable only for business covered by this section and not for other businesses).



Q60. Mr. Kaushal engaged in the business of plying, hiring or leasing goods carriages. He owned 8 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. In this case will he be liable to maintain the books of account in respect of aforesaid business?

(a) Yes (b) No

Correct answer (b)


As per the provisions of section 44AE, an assessee, who adopts the provisions of section 44AE, is not required to maintain books of account as per section 44AA (applicable only for business covered by this section). However, it should be noted that the relief is available only in respect of business covered by the provisions of section 44AE and not in respect of any other business. Thus, if Mr. Kaushal owns any other business, then in respect of such business the provisions of section 44AA in respect of maintenance of books of account will apply.


Comment on incorrect answer: Option (b) is the correct option since it gives the correct provisions.. Other option, viz., option (a) giving incorrect provisions is not correct.

Q61. Mr. Kaushal is engaged in the business of plying, hiring or leasing goods carriages. He owned 8 heavy goods vehicles during the previous year 2012-13 and declared income as per the provisions of section 44AE. In this case he will not be liable to maintain the books of account in respect of all his businesses whether covered under section 44AE or not.

(a) True (b) False

Correct answer (b)


As per the provisions of section 44AE, an assessee, who adopts the provisions of section 44AE, is not required to maintain books of account as per section 44AA (applicable only for business covered by this section). However, it should be noted that the relief is available only in respect of business covered by the provisions of section 44AE and not in respect of any other business. Thus, if Mr. Kaushal owns any other business, then in respect of such business the provisions of section 44AA in respect of maintenance of books of account will apply.



Q62. Mr. Raj is engaged in the business of plying, hiring or leasing goods carriages. He owned 18 heavy goods vehicles during the previous year 2012-13. In this case he will not be liable to maintain the books of account in respect of this business if he declares income at the rates prescribed under section 44AE.

(a) True (b) False

Correct answer (b)


In this case the provisions of section 44AE cannot be adopted by Mr. Raj because he owns more than 10 goods vehicles and hence, he will be liable to maintain books of account as prescribed under section 44AA in respect of above business.



Q63. Mr. Vasu is engaged in the business of plying, hiring or leasing goods carriages. He owned 8 heavy goods vehicles during the previous year 2012-13. In this case he will not be liable to maintain the books of account in respect of this business even if he declares income at a rate which is lower than the rates prescribed under section 44AE.

(a) True (b) False

Correct answer (b)


As per the provisions of section 44AE, an assessee, who adopts the provision of section 44AE, is not required to maintain books of account as per section 44AA. The relief from maintenance of accounts is available only if the assessee adopts the provisions of section 44AE i.e. if he declares income at rates prescribed under section 44AE or at higher rate. In this case the assessee is not adopting the provisions of section 44AE and hence, he will be liable to maintain the books of account as provided in section 44AA.



Q64. Mr. Vasu is engaged in the business of plying, hiring or leasing goods carriages and he owned 8 heavy goods vehicles during the previous year 2012-13. In this case he will be liable to maintain the books of account in respect this business if he declares income at a rate which is lower than the rates prescribed under section 44AE but will not be liable to get the books of account audited.

(a) True (b) False

Correct answer (b)


As per the provisions of section 44AE, an assessee, who adopts the provision of section 44AE is not required to maintain books of account as per section 44AA. The relief from maintenance of accounts is available only if the assessee adopts the provisions of section 44AE i.e. if he declares income at rates prescribed under section 44AE or at higher rate. In this case the assessee is not adopting the provisions of section 44AE and, hence, he will be liable to maintain the books of account as provided in section 44AA. Further, if income is declared at a lower rate than the prescribed rate, books of account should be audited.



Q65. If the actual income from the business covered under section 44AE is lower than the income prescribed under the presumptive scheme, then the assessee can in no case declare income from aforesaid business at a lower rate (i.e., at less than Rs. 4,500/Rs. 5,000).

(a) True (b) False

Correct answer (b)



If the assessee declares lower income, then the relief from maintenance of account is not available and he is required to maintain the books of account as per section 44AA and further, he has to get such books of account audited. Thus, the statement given in the question is false and, hence, option (b) is the correct option.


Q66. Mr. Kaushal is engaged in the business of plying, hiring or leasing goods carriages and owned 8 heavy goods vehicles during the previous year 2012-13. His actual income per goods vehicle is less than Rs. 5,000 per month. In this case, can he declare income lower than the limit prescribed under section 44AE?

(a) Yes (b) No

Correct answer (a)


As per the provisions of section 44AE, if the actual income from the business covered under section 44AE is lower than the income prescribed under the presumptive scheme, then the assessee can declare income from aforesaid business at a lower rate (i.e., at less than Rs. 4,500/Rs. 5,000). Thus, in this case Mr. Kaushal can declare lower income, however, in this case he has to maintain the books of account prescribed under section 44AA and has to get the books of account audited.



Q67. If the actual income from the business covered under section 44AE is higher than the income prescribed under the presumptive scheme, then the assessee can in no case declare income from aforesaid business at a higher rate (i.e., at higher rate than Rs. 4,500/Rs. 5,000).

(a) True (b) False

Correct answer (b)


The scheme permits the assessee to declare at his option higher income (i.e., higher rate than Rs. 4,500/Rs. 5,000).



Q68. Mr. Kamal is engaged in the business of plying, hiring or leasing goods carriages and owned 9 heavy goods vehicles during the previous year 2012-13. His actual income per goods vehicle is more than Rs. 5,000 per month. In this case, can he declare income above than the limit prescribed under section 44AE?

(a) Yes (b) No

Correct answer (a)


As per the provisions of section 44AE, if the actual income from the business covered under section 44AE is higher than the income prescribed under the presumptive scheme, then the assessee has to declare such higher income from the aforesaid business. Thus, in this case Mr. Kamal can declare higher income.


Comment on incorrect answer : Option (a) is the correct option since it gives the correct provisions. Other option, viz., option (b) giving incorrect provisions is not correct.

Q69. If the actual income from the business covered under section 44AE is higher than the income prescribed under the presumptive scheme, then the assessee can declare income from aforesaid business at a higher rate (i.e., at higher rate than Rs. 4,500/Rs. 5,000). In this case the assessee has to maintain regular books of account as prescribed under section 44AA.

(a) True (b) False

Correct answer (b)


The scheme permits the assessee to declare at his option higher income (i.e., higher than Rs. 4,500/Rs. 5,000). If higher income is declared then there is no need to maintain regular books of account as prescribed under section 44AA.



Q70. If the actual income from the business covered under section 44AE is higher than the income prescribed under the presumptive scheme, then the assessee can declare income from aforesaid business at a higher rate (i.e., at higher rate than Rs. 5,000/Rs. 4,500). In this case the assessee has to get his books of account audited.

(a) True (b) False

Correct answer (b)


The scheme permits the assessee to declare at his option higher income (i.e., higher rate than Rs. 5,000/Rs. 4,500). If higher income is declared then there is no need to get the books of account audited.



Q71. If the actual income from the business covered under section 44AE is lower than the income prescribed under the presumptive scheme, then the assessee can declare income from aforesaid business at a lower rate (i.e., at less than Rs. 5,000/Rs. 4,500). If the assessee declares lower income, then he is required to maintain the books of account as per section 44AA if the income from such business exceeds the exemption limit.

(a) True (b) False

Correct answer (b)



If the assessee does so, i.e, declares lower income, then he is required to maintain the books of account as per section 44AA whether or not the income from this business exceeds the exemption limit and further, he has to get such books of account audited.



Q72. If the actual income from the business covered under section 44AE is lower than the income prescribed under the presumptive scheme, then the assessee can declare income from aforesaid business at a lower rate (i.e., at less than Rs. 5,000/Rs. 4,500). If the assessee declares lower income, then he is required to maintain the books of account as per section 44AA. But audit will apply only if the income from such business exceeds the exemption limit.

(a) True (b) False

Correct answer (b)



If the assessee does so, i.e. declares lower income, then he is required to maintain the books of account as per section 44AA and get the accounts audited whether or not the income from this business exceeds the exemption limit and further, Thus, the statement given in the question is false and, hence, option (b) is the correct option.


Documents

Advance Learning on Section 44AE Theory · Advance Learning on Section 44AE (Theory) ... commonly known as Presumptive ... or any motor vehicle not so constructed or adapted when