2019 (5) TMI 2047 - AT - Income Tax

Estimation of income from plying trucks: profit to be computed under the prescribed presumptive provisions of Section 44AE, directed to AO

ITAT directed that profit from plying trucks should be estimated by applying the presumptive computation prescribed under Section 44AE; the Assessing ... Estimation of income though provisions of Section 44AE - Computation of profit from plying trucks HELD THAT:- It is a fit case to estimate the profit provision from plying trucks at the rate prescribed under the provisions of Section 44AE of the Act. Accordingly, we direct the ld. AO to compute the profit from plying trucks by applying the provisions of Section 44AE of the Act. Issues: Whether the Assessing Officer should be directed to compute the assessee's income from plying goods carriages by applying the presumptive provisions of Section 44AE of the Income-tax Act, 1961 (used as a guideline for estimation) despite Section 44AE not being strictly applicable.Analysis: The assessee is engaged in lorry transport and owns sixteen vehicles; the assessment involved multiple disallowances leading to a substantially higher assessed income. The Tribunal referred to precedents where the formula under Section 44AE was applied as a guideline for estimating income of transporters (including decisions from the Ahmedabad Bench and Gayatri Corporation) and noted that the core dispute concerns estimation of income from truck operations. On that basis the Tribunal found it appropriate to apply the presumptive computation under Section 44AE as a guiding method to determine profit from plying trucks and directed the Assessing Officer to compute income accordingly.Conclusion: The appeal is partly allowed; the Assessing Officer is directed to compute the income from plying trucks by applying the provisions of Section 44AE of the Income-tax Act, 1961 (in favour of the assessee on the issue of estimation of income).