INCOME TAX ACT, 1961

Section ????

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Assessee was regularly engaged in the business as commission agent. Assessee showed income from other sources at Rs. 1.25,040. AO required assessee to furnish details. Assessee submitted that he also carried out transport business in the name of M/s. V.K. Transport, wherein gross receipts were Rs. 19,88,592 and expenditure of Rs. 18,63,552 was incurred, but inadvertently receipts from M/s. V.K. Transport was not shown along with business carried out in individual name of which books of account were audited. AO being not satisfied with this reply, denied benefit of claiming expenditure under section 57, thereby making an addition of Rs. 18,63,552. Held: Documentary evidence filed by assessee clearly showed that regular books of account were maintained for M/s. V.K. Transport. Transportation services relating to transport work were provided to various public limited companies. Ledger accounts of various customers were placed on record. Assessee did not own any transport vehicle and he carried out this transportation business by hiring trucks/Loory from other concerns for which charges were paid. Major expenses were towards brokerage, diesel expenses, loading services charges, Lorry charges and repairs & maintenance charges. In these facts and circumstances, the fact of assessee having carried out business of transport, could not be disputed. Since assessee was carrying out business of providing transport service, then certainly expenses incurred for carrying out business were to be allowed. It is true that assessee had not shown the business receipts and income under the head 'Business income' but this reason alone could not preclude assessee from claiming incidental expenses incurred for carrying out business. Though, assessee has declared 6.28% net profit rate on transportation business on gross receipt of Rs. 19,88,592, in interest of justice and looking at the fact that books of accounts were not audited, estimating net profit @ of 8% of gross receipts of Rs. 19,88,592, i.e., Rs. 1,59,087 would be justified. Accordingly, additions of disallowance of expenses of Rs. 18,63,552 was sustained only to the extent of Rs. 34,047.

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section ????

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