INCOME TAX OFFICER, RAIPUT vs. B S BHATIYA AND COMPANY

This is an appeal under section 260A of the Income Tax Act, 1 961 (the Act) against the order of the Income Tax Appellate Tribunal, Bilaspur Bench, Bilaspur (the Tribunal) dated 08.02.2008 in respect of Assessment Years (AY) dismissing the appeal of the Income Tax Department (the Department) and partly allowing the cross appeal of BS Bhatiya & Company, Raipur (the Assessee). THE FACTS

The Assessee engaged in ' e business of petrol and diesel pump, as well as tanker transportation. It filed a return showing the total income of ?63,690/-. The Assessing Officer (the AO) issued notice under section 143(2) / 142(1) ofthe Act to the Assessee with a detailed questionnaire.

The Assessee filed its detailed reply on 20.11.2006. Apart from others, total gross receipts on the transportation charges from the Hindustan Petroleum Corporation (the Corporation) were shown to be ?18.49,753/-. Out of this amount, an amount of ?14,46,533/- was said to be paid to the transporters and ?3,55,419/- was said to be spent on the other expenses for transportation.

The AO by his orderdated 11.12.2006 apart from others, dis-allowed the transportation charges of ?14,46,533/- said to be paid to the transporters on the ground that no bills and vouchers were produced to .^?psss" " „,•*"»» ^\ Ei&-. •» "^te r-y substantiate it and added to the income of the Assessee. The total income was assessed to ?16,97,300/-.

The Assessee filed an appeal which was partly allowed by the Commissioner Income Tax (Appeals) (the CIT-A) on 22.03.2007. The CIT-A in its order held that the income of ?14,46,533/- from the gross receipt of ?18,49,753/- held to be on the higher side and also held the total income from the transportation business to be 20% of the gross receipts of?18.49,753/-.

Aggrieved by the aforesaid order, the Department filed an appeal before the Tribunal. The Assessee also filed its cross appeal. The appeal filed by the Department was dismissed. However, the appeal filed by the Assessee was partly allowed on the ground that section 44AE of the Act was applicable and the income could be only as stipulated in that section. Hence, the present appeal. THE DECISION

We have heard counsel for the parties.

This appeal was admitted on 01.07.2009 on the following substantial question of law: "Whether on the facts and circumstances of the case, the Tribunal was legally justified in applying provisions of Section 44AE of the Income Tax Act in the case of the assessee overlooking the fact that theassessee is not the owner of the truck employed in the business ?"

Section 44AE is titled 'Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages.' Sub-section (1) of section 44AE ofthe Act provides that it is applicable to a case of an assessee, who owns not more that ten goods carriages and in case it is applicable, then the income from the transportation business is to be carried-out in view of sub-section (2) of section 44AE of the Act.

In this particular case, the Assessee is a partnership firm. The transport carriages are not owned by the Assessee, but they are owned by the partners and their wives. In view of the same, section 44AE was applicable.

The AO had specifically held that section 44AE was not applicable. However, the Tribunal without considering this question, applied the provisions of section 44AE, assuming them to be applicable.

In our opinion, section 44AE is not applicable in the case of the Assessee. The question is answered in favour of the Department and against the Assessee. padma

In view of above, the appeal is allowed. The judgement of the Tribunal is set aside and thsLof the CIT-A is restored. I '--- ChiefJustice i g^ Radhe Shyam Sharma Judge ln!?"r--!