Meaning of Gross Vehicle Weight, Unladen Weight used insection 44AE & its Relevance
Section 44AE presumes income of the person who is in to the business of plying, hiring or leasing goods carriages. Income presumed is given in sub section 2 to section 44AE as under:
- For heavy goods vehicle, income shall be an amount equal to Rs. 1,000/- per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher;
(ii) For other than heavy goods vehicle, income shall be an amount equal to Rs. 7,500/- for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or an amount claimed to have been actually earned from such goods carriage, whichever is higher.
Important words for the purpose of section 44AE are
- Heavy Goods Vehicle
- Gross Vehicle Weight
- Unladen Weight
Words used in charging part of the section is “as the case may be” which means that that is every probability whereby in one case “gross vehicle weight” will be applicable & in another case the “unladen weight” will be applicable. Law maker were clear that either first case would be relevant or the second one.
Before we move further, Let us first read section 44AE which was amended w.e.f. 01.04.2019 from Assessment Year 2019-2020 by the Finance Act, 2018, which reads as under:
SECTION 44AE
Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages.
44AE. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an assessee, who owns not more than ten goods carriages at any time during the previous year and who is engaged in the business of plying, hiring or leasing such goods carriages, the income of such business chargeable to tax under the head “Profits and gains of business or profession” shall be deemed to be the aggregate of the profits and gains, from all the goods carriages owned by him in the previous year, computed in accordance with the provisions of sub-section (2).
54[(2) For the purposes of sub-section (1), the profits and gains from each goods carriage,—
(i) being a heavy goods vehicle, shall be an amount equal to one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle, whichever is higher;
(ii) other than heavy goods vehicle, shall be an amount equal to seven thousand five hundred rupees for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or an amount claimed to have been actually earned from such goods carriage, whichever is higher.]
(3) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed :
Provided that where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40.
(4) The written down value of any asset used for the purpose of the business referred to in sub-section (1) shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.
(5) The provisions of sections 44AA and 44AB shall not apply in so far as they relate to the business referred to in sub-section (1) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, the income from the said business shall be excluded.
(6) Nothing contained in the foregoing provisions of this section shall apply, where the assessee claims and produces evidence to prove that the profits and gains from the aforesaid business during the previous year relevant to the assessment year commencing on the 1st day of April, 1997 or any earlier assessment year, are lower than the profits and gains specified in sub-sections (1) and (2), and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee and determine the sum payable by the assessee on the basis of assessment made under sub-section (3) of section 143.
(7) Notwithstanding anything contained in the foregoing provisions of this section, an assessee may claim lower profits and gains than the profits and gains specified in sub-sections (1) and (2), if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB.
Explanation.—For the purposes of this section,—
55[(a) the expressions “goods carriage”, “gross vehicle weight” and “unladen weight” shall have the respective meanings assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988);
(aa) the expression “heavy goods vehicle” means any goods carriage, the gross vehicle weight of which exceeds 12000 kilograms;]
(b) an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on instalments 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.
Analysis:
For section 44AE, the definition of “Heavy Goods Vehicle” is given in the explanation which is as under:
(aa) the expression “heavy goods vehicle” means any goods carriage, the gross vehicle weight of which exceeds 12000 kilograms;]
As per explanation to section 44AE, The definition of “goods carriage”, “gross vehicle weight” and “unladen weight” is to be taken as same as given in section 2 of the Motor Vehicles Act, 1988 (59 of 1988) which reads as under:
In the explanatory memorandum to the amendment, no clarification, explanation, guidance is available so as to arrive at the right conclusion. To arrive at the right view, one has to refer the provisions of the Motor Vehicle Act understand it appropriately.
DEFINITIONS UNDER MOTOR VEHICLES ACT:
The definitions of various terms used in section 44AE as per Motor Vehicles Act are as under :
- Goods Carriage – Section 2(14) of Motor Vehicle Act-1988:
“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 adopted when used for the carriage of goods. - Gross Vehicle Weight – Section 2(15) of Motor Vehicle Act-1988:
“Gross Vehicle Weight” means in respect of any vehicle the total weight of the vehicle and load certified and registered by the registering authority as permissible for that vehicle. - Unladen Weight – Section 2(48) of Motor Vehicle Act-1988:
“Unladen weight” means the weight of a vehicle or trailer including all equipment ordinarily used with the vehicle or trailer when working, but excluding the weight of a driver or attendant; and where alternative parts or bodies are used the unlade weight of the vehicle means the weight of the vehicle with the heaviest such alternative part or body. - Heavy Goods Vehicle – Section 2(16) of Motor Vehicle Act-1988:
“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.
Let us analyze the definition of “Heavy Goods Vehicle” & “Unladen Weight” in both the relevant Act.
HEAVY GOODS VEHICLE – SECTION 44AE:
The definition of “heavy goods vehicle” as given in explanation to section 44AE is as under:
(aa) the expression “heavy goods vehicle” means any goods carriage, the gross vehicle weight of which exceeds 12000 kilograms;’.
Difference in between the definition of “Heavy Goods Vehicle” in section 44AE of the Income Tax Act -1961 vs. Definition in the Motor Vehicle Act-1988
As per the definition of “Heavy Goods Vehicle” as given in Motor Vehicles Act has not been adopted in toto in section 44AE of the Income Tax Act-1961.
Words “or a tractor or a road-roller the unladen weight of either of which” which is there in Motor Vehicle Act is missing in Section 44AE.
UNLADEN WEIGHT :
No meaning or definition is specifically given for “unladen weight” in section 44AE. However, in Motor Vehicles Act the concept of “unladen weight” has been attached to a vehicle or a trailer whereas the concept of “gross vehicle weight” has been attached with goods carriages (the total weight of the vehicle and load certified).
Why confusion and anomaly:
It is but obvious that in case of any normal goods carriage, the gross vehicle weight is going to be more than “unladen weight” of the vehicle. The word “as the case may be” used in section 44AE means that either gross vehicle weight or unladen weight need to be taken for computing income. Where gross vehicle need to be used and where unladen weight need to be used is not provided in section 44AE. The word used in section 44AE to some extent conveys the idea that either the gross vehicle weight would be applicable or unladen weight would be applicable. The wording used in section 44AE conveys that both the weight cannot be simultaneously applicable.
If definition of “heavy goods vehicle” in Section 44AE would have been same as in Motor Vehicle Act, no disputes or confusion would have been there. The concept of unladen weight in the motor vehicle Act is attached with Tractor, road roller.
While drafting Section 44AE, words “tractor and road roller” as available in the definition of heavy goods vehicle in the Motor Vehicle Act is not taken but the word “unladen weight” is duly taken. In my view, there appears to be an error as unladen weight is not attached to the “goods carriage” but attached to “tractor and road roller”.
It may be remembered here that section 44AE is applicable for “Goods carriage” and in my view “Tractor or Road Roller” are not goods carriage. However, CBDT vide F.No.225/233/2019/ITA-II Dated 14.08.2019 in response to the clarification sought by All India Motor Transport Congress has expressed the following view in short:
“i. In respect of a “heavy goods vehicle” i.e. all goods carriage vehicle whose gross vehicle weight exceeding 12,000 Kg, the profits and gains from each goods carriage shall be at the rate of Rs. 1,000/- per ton of gross vehicle weight for every month or part of the month.
ii. In respect of a tractor or a road-roller (where the gross vehicle weight is not applicable), if unladen weight exceeds 12,000 Kg, the profits and gains from each goods carriage for the purposes of section 44AE of the Act shall be at the rate of Rs. 1000/- per ton of unladen weight for every month or part of the month”.
To conclude:
In my personal opinion:
- The benefit of section 44AE is available to tractor and road roller even if it is not goods carriage in view of CBDT clarification vide F.No.225/233/2019/ ITA-II Dated 14.08.2019.
- For Goods carriage, Section 44AE would apply on the basis of “Gross Vehcile Weight”
- For road roller & tractor, Section 44AE would apply on the basis of “Unladen Weight”
[One can get the Gross vehicle Weight, unladen weight are available in the registration certificate or smart card of the vehicle].
