Leasing of trucks falls under the scope of “business”, as defined in Section 2(13) and 2(28C):”Business includes trade, commerce or manufacture or any adventure in the nature of trade…”

So, income from truck leasing is taxable under the head ‘Profits and Gains of Business or Profession’ [Section 28].

Two Methods of Computation:

1️⃣ Presumptive Taxation – Section 44AE (for small transporters)

Applicable only if the person owns ≤ 10 goods vehicles (including leased ones).

📘 Bare Act (Section 44AE):

“The income shall be deemed to be ₹1,000 per ton of gross vehicle weight (GVW) for heavy goods vehicles and ₹7,500 per month per vehicle for other goods vehicles.”

💡 Key Points:

• Applies to persons owning goods carriages, even if leased out

• Applicable only for goods vehicles, not passenger vehicles

• Income is presumed, no need to maintain books (Sec 44AA not required)

• Heavy goods vehicle = GVW > 12,000 kg

• No further deduction allowed (like depreciation, etc.)

✅ Example:

Mr. A owns 5 trucks (each <12,000 kg) and leases them.

→ Presumptive income = ₹7,500 × 5 trucks × 12 months = ₹4,50,000

This ₹4.5 lakh will be taxable under “Business Income” without further deductions.

2️⃣ Normal Taxation (Section 28 & 32) – If not opting 44AE or owning > 10 vehicles

If the assessee:

• Owns more than 10 trucks, or

• Chooses not to opt for Section 44AE,
  Then normal business provisions apply.

🔹 Income = Gross Receipts – Allowable Expenses

Allowable expenses include:

• Truck maintenance & fuel

• Driver wages, RTO fees, etc.

• Depreciation under Section 32 (usually 30% for trucks on WDV basis)

• Interest on loans for trucks

• Insurance and road tax

📒 Books of accounts must be maintained as per Section 44AA
🔍 Accounts may be audited if turnover exceeds limits in Section 44AB

Which is Better?

When a company undergoes an amalgamation or merger, the ability to carry forward its business losses and unabsorbed depreciation is not automatic. Instead, these benefits can be preserved only if certain conditions—designed to ensure continuity—are met. Here’s a simple breakdown:

Key Points:

1. Continuity of Business and Shareholding:

   • Mandatory Conditions:
     For the losses and depreciation of the amalgamating or merging company to be carried forward by the resulting entity, there must be a continuity of business. This typically means that the merged entity continues the same business as that of the transferor.
   • Shareholding Criterion:
     A significant condition is that there must be a continuity in shareholding. In many cases, at least 50% of the loss-making company’s share capital (or voting power) should be preserved in the merged entity. If this “continuity of shareholding” condition is not met, the benefits of carry forward are disallowed.

2. Applicable Provisions:

   • The general rules for carrying forward business losses and unabsorbed depreciation are set out in Section 72 of the Income Tax Act, 1961.
   • Specific restrictions in the context of amalgamations/mergers have been clarified through judicial decisions and CBDT notifications. These emphasize that without the requisite continuity conditions, the losses and depreciation cannot be transferred to the amalgamated or merged entity.

3. Practical Implications:

   • If Conditions Are Met:
     The merged entity can set off these losses and unabsorbed depreciation against its future business income, thus reducing its taxable income.
   • If Conditions Are Not Met:
     The losses and depreciation of the transferor company will be lost, and the amalgamated entity cannot claim them.