1978 (5) TMI 57 - AT - Income Tax

Summary

Issues:
1. Justification of income from plying a truck.
2. Inclusion of profit under section 41(2) of the IT Act, 1961.

Analysis:

Issue 1:
The appellant contested the income estimation from plying a truck at Rs. 8,000, arguing it was excessive. The truck was purchased for Rs. 18,000 and sold for Rs. 27,000, indicating good condition. The appellant failed to provide evidence of lower income from truck operations previously. The Appellate Tribunal upheld the income estimation, deeming it reasonable and not excessive.

Issue 2:
Regarding the inclusion of Rs. 4,500 as profit under section 41(2) of the IT Act, 1961, the Income Tax Officer (ITO) calculated it based on past depreciation. The appellant argued no depreciation was claimed or allowed previously, thus no profit should be charged. The Tribunal disagreed with the ITO's reasoning, stating that the written down value should consider actual depreciation allowed, not notional allowances. Relying on precedents, the Tribunal ruled in favor of the appellant, deleting the addition of Rs. 4,500 as profit under section 41(2).

In conclusion, the appeal was partly allowed, with the Tribunal ruling in favor of the appellant on the issue of profit inclusion under section 41(2) and upholding the income estimation from truck operations.