INCOME TAX INSTRUCTION NOnbsp19561998 nbspDated November 19 1998 SubjectnbspOption under section 44AD and 44AE to declare profits lower than the deemed profitsassessment year 199798regarding Sections 44AD and 44AE of the Incometax Act 1961 provide a presumptive basis to bring to tax the profits and gains arising from the business of civil construction or supply of labour for civil construction and the business of plying hiring or leasing of goods carriages respectively Subsection 5 of section 44AD and subsection 6 of section 44AE allowed an option to an assessee to offer a lower profit to tax than the profit determined on presumptive basis subject to the condition that evidence in support of the profits so declared was furnished by him and thereupon the assessment would be completed under section 1433 2 By the Finance Act 1997 subsection 5 of section 44AD and subsection 6 of section 44AE were deleted with effect from 141997 The effect is that for the assessment year 199798 an assessee has no option to declare a lower profit by producing evidence for the same The amendments made to section 44AA and section 44AB requiring compulsory maintenance of books of account and audit thereof which were made effective from 01041998 indicate that it was not the intention of the legislature to deprive the assessees of the benefit of options provided under subsection 5 of section 44AD and subsection 6 of section 44AE for the assessment year 199798 The Board is considering appropriate measures in order to remove the anomaly caused by the omission of sections 44AD5 and 44AE6 with effect from 141997 In the meanwhile the taxpayers coming under this category are not to be put to inconvenience for the assessment year 199798 The assessments for the assessment year 199798 may therefore be kept pending and in completed cases additional demand attributable to denial of such option may not be enforced till 3131999 3 These instructions may be brought to the knowledge of all the officers of your region FNo 1509495TPL BD VISHNOI Deputy Secretary TPLIII nbsp