The Dy. Commissioner Of Income … vs Sri. C.P. Kunhimohammed on 15 December, 2004
Equivalent citations: 2005 94 ITD 278 Coch, (2006) 102 TTJ Coch 502
Bench: K Thangal, O Narayanan
ORDER O.K. Narayanan, Accountant Member
1. These two appeals are filed by the Revenue. The relevant assessment years are 1995-96 and 1996-97. The common grounds raised by the Revenue are as follows:
“1. The learned CIT( Appeals) erred in holding that the Assessing Officer ought to have verified the accounts maintained by the assessee in respect of the new lorry KL-11C-3654 and in directing the Assessing Officer to accept the income of that lorry on the basis of accounts maintained by the assessee after allowing depreciation.
2. While sustaining the estimation of income Under Section 44AE in respect of two old lorries the CIT(A) directed the Assessing Officer to adopt the income from the new lorry as per the accounts and allow depreciation on the same. The learned CIT(A) ought to have noticed that the assessee’s representative did not produce any details before the Assessing officer in respect of the gross receipts admitted or the claim for depreciation and hence the Assessing Officer was compelled to estimate, the income Under Section 44 AE of the Income tax Act, 1961, in respect of all the lorries.
3. The learned CIT(A) ought to have appreciated that as the assessee did not maintain proper books of accounts or basic details like goods vehicle record etc., in respect of lorry business, the income from lorry receipts was rightly computed invoking the provisions of Section 44 AE.”
2. There is a delay of 8 days in filing these appeals. We are satisfied that the delay was caused for valid reasons. Therefore, the delay is condoned and the appeals are admitted.
3. The issue involved is whether the income from a new lorry purchased by the Assessee should be assessed Under Section 44 AE or under the normal provisions of assessment.
4. The assessee is having, three lorries. Two lorries are old. One is new. In respect of old lorries, the assessee opted for the assessment Under Section 44 AE.
5. In the course of assessment, the Assessing Officer found that the assessee has not maintained the necessary details and particulars in respect of the new lorry (KL-11C-3654). Therefore, the Assessing Officer held that the income from the new lorry also need to be assessed Under Section 44 AE. Accordingly the income from all the 3 lorries were assessed by the Assessing Officer Under Section 44 AE.
6. In the first appeal, the CIT(A) accepted the contention of the assessee and directed the Assessing Officer to compute the income from the new lorry, under regular provisions and to allow depreciation thereon. The Revenue is aggrieved and therefore these appeals before us.
7. The provisions Under Section 44 AE are special provisions for computing profits and gains of business of plying, hiring or leasing, goods carriages. A scheme of compounding of income is provided therein. An amount of Rs. 2,000/- per month per lorry is presumptively determined as the income of the assessee. Once income is presumptively determined under these, provisions, it is deemed that all expenditure have been allowed in determining that income. This is a summary scheme of assessment. This provision can be availed by an assessee who owns not more than ten goods carriages.
8. Another important feature of the scheme provided Under Section 44 AE is that the running of the lorries undertaken by the assessee is treated as a separate business. There is no provision under that section which enables an assessee to apply the provisions of Section 44 AE in the case of some lorries and to go for regular assessment on the basis of books of accounts in respect of the remaining lorries. As plying, hiring or leasing the goods carriages is treated as a separate business, all the lorries owned by the assessee form part of the said business and the tax treatment of all those lorries need to be on a uniform manner.
9. The claim made by the assessee in the present case is against the central theme of Section 44 AE as explained in the above paragraph. As far as the old two lorries are concerned, the assessee wanted the income to be estimated Under Section 44 AE. This is because there cannot be much claim by way of depreciation allowance to be made on those two lorries. In the case of new lorry, on the other hand, the assessee wanted the income to be determined on regular basis. This is because he wants to take the advantage of the deduction by way of huge amount of depreciation allowance. As the lorry is a new one, the depreciation will be more.
10. This kind of pick and choose approach adopted by the assessee is not permissible under the scheme provided in Section 44 AE. Either the income from all the three lorries needs to be determined Under Section 44 AE or income from all the three lorries need to be determined on regular basis. Both are not permissible. The scheme is that of ‘EITHER / OR’.
11. In the case of two old lorries the assessee himself has stated that, no accounts, no particulars, no details are available. The Assessing Officer, has already made a finding that, in the case of new lorry also, the assessee has not maintained accounts. Therefore, we find that the income from all the three lorries need to be determined Under Section 44 AE.
12. In the facts and circumstances of the case, we set aside the order of the CIT(A) on this point and restore the computation of income from the lorries., as determined by the Assessing Officer.
13. In result these two appeals filed by the Revenue are allowed.