Section 44AE of the Income Tax Act
Income-tax Act, 2025: s.58
Section 44AE of the Income-tax Act, 1961 corresponds to section 58 (Special provision for computing profits and gains of business or profession on presumptive basis in case of certain residents) of the Income-tax Act, 2025.
Read section 58 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 44AE is Goodyear (I) Ltd. v. ITO (73 ITD 189), cited in 27 of the 159 judgments on BharatTax that turn on this section.
Leading authorities on Section 44AE
Expenditure incurred for the transfer of the use of licenses, without acquiring ownership rights or an enduring benefit, constitutes revenue expenditure. Such payments are allowable as a deduction if they are directly relatable to services in the revenue field.
Penalty under Section 271(1)(c) is imposed only when there is a deliberate default and not a mere mistake. The furnishing of inaccurate particulars must be a deliberate attempt to evade tax, not just a mistake.
Non-compliance with notices issued under section 133(6) alone is not a sufficient basis to deny the genuineness of expenditure incurred by a company. The assessee's obligation extends to providing correct names and addresses of parties, not ensuring their response.
Ad hoc additions to income are not legally sustainable. Mere non-compliance with notices under section 133(6) does not invalidate genuine expenditure. Losses incidental to business should be allowed as deductions in the year of discovery.
The recording of purchase transactions and subsequent export of goods in the books of accounts can prove the genuineness and veracity of such purchase transactions.
