BUSINESS TAX PLANNING
BUSINESS TAX PLANNINGPresented to: Prof. Ashish Mehta
Presented by:Abhishek Shah Pratik SoniyaAshish Parekh Sudeep
MishraSection 44AE and Section 43CAIn the case of taxpayers engaged
in the business of plying, leasing or hiring trucks.Sec.44AE is
applicable only if following conditions are satisfiedCondition 1The
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 2Taxpayer is engaged in the
business of plying, hiring or leasing goods carriage.
Section 44AECondition 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 taxpayerEstimated 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 sectionProvision for
maintenance of books of accounts :Similar to section 44ADIs it
possible to declare Lower Income :Similar to section 44ADOther
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:
890000Less:Operational expenses: 640000Dep. As per sec. 32:
190000Other office expenses: 15000Net profit: 45000Other
business/non business income: 670000Inserted by Finance ACT
2013w.e.f. 1st April 2014 i.e. Assessment Year 2014-15Effective
from Current Financial Year 2013-14Section 43CAWhere 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(1)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(2)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(3)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.
Section 43CA(4)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.Permissible methods of valuation of
closing stock 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.ContTHANK YOU
