ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

End Semester Examination – MARCH /APRIL 2015

BBM -VI SEMESTER

M111601: INCOME TAX – II

Duration: 3 Hours Max. Marks: 100

SECTION – A

Answer ALL the questions. Each carries 2 marks. (10×2=20)

Give any four distinctions between short term capital gain & long run capital gain.

The closing stock of Rs. 10,000 is undervalued by 10%. How do you treat the same while computing income from Business.

Determine the Deduction under 80D from the following

a) Health check up of self, paid by cheque Rs. 6,000

b) Medical insurance premium of son paid by cash Rs. 4,500

c) Medical insurance of wife paid by cheque Rs 12,000

d) Medical insurance of brother (dependant) paid by cheque Rs 2,000

Explain provision of 80GG.

Give any two functions of Income Tax Officer.

Elucidate provision w.r.t. preliminary expenses incurred while computing income from business.

List any two securities whose returns are exempted.

Mention any two expenses which are expressly disallowed u/s 58.

How do you tax family pension received?

Explain provisions u/s 54F.

SECTION – B

II)

Answer any FOUR questions. Each carries 5 marks. (4×5=20)

11.

Explain provisions with respect to set off and carry forward and setoff of losses.

12.

X transfers the following assets on May 15^th 2013

Assets	Cost Rs.	FMV on 1/4/81	Sale consideration
Land acquired in 1968	20,000	45,000	485,000
Goodwill of a business	Self generated	10,000	175,000
Tenancy rights	Self generated	30,000	200,000

Determine capital gain taxable. Does it make any difference if the goodwill is of a profession

13.

Determine the amount of Gifts taxable received by X in the previous year

a) Gift of Rs 75,000 from C who is the cousin of his father

b) Gift of Rs 2,000 from his mother’s sister

c) Birthday Gift of a gold chain worth Rs 11,000 from his friend

d) A house property under will of a person known to him. Stamp Duty is Rs. 1540,000

e) Purchased 500 shares from a friend outside stock exchange@ Rs.90 per share the market price of the same is Rs. 300.

14.

Compute the amount of deductions admissible u/s 80 G from the following donations made when GTI is Rs. 600,000

To Gujarat Earthquake Relief Fund	40,000
To Africa Fund	10,000
To Approved Educational Institutions	15,000
To approved temples	35,000
Clothes distributed to the poor	5,000
Municipal corporation for promotion of family planning	20,000
To SJCC for helping the poor and needy in gifts	25,000

15.

Dr. S is a Medical Practitioner. He gives you the following information
	`		`
To balance	10,000	By Rent of Clinic	18,000
To consultation fee	60,000	Purchase of Medicines	38,000
Visiting fee	45,000	Staff salaries	24,000
Gifts and Presents	8,000	Surgical equipments	40,000
Sale of Medicines	42,000	Motor car expense	8,000
Dividends	6,000	Purchase of Motor Car	140,000
LIC Maturity	100,000	House hold expense	7,000
Interest from NSC	6,000	Closing balance	2,000
	277,000		277,000

Other information

a) 50% of Motor Car expense incurred in connection with profession .Car was purchased in December 2013

b) House hold expenses include Rs.6,800 for LIC Premium

c) Gifts and presents include Rs. 3,000 from relatives

d) Closing Stock of Medicine Rs. 12,000 and on 1/4/13 opening stock was Rs. 4,000

Compute Professional Income

16.

Explain provisions of additional depreciation allowable under the head Income from business & profession.

SECTION – C

III

Answer any THREE questions. Each carries 15 marks. (3×15=45)

17.

Explain a) Powers of CBDT

b) Different types of Assessment (5+10)

18.

A starts a business on November 18^th 2012. He acquires Plant A whose cost is Rs. 26,000 and rate of depreciation is 80%. He also acquires plant B for Rs. 30,000 rate of depreciation 40%. On May 10^th 2013 he sells plant A for Rs. 22,000 and Plant B for Rs. 17,000. Expenditure incurred in connection with transfer of Plant A is Rs. 1,000.

He however acquires the following plants during the previous year 13-14

Plant	Date of purchase	Cost	Depreciation rate
C	30^th April 2013	6,000	80%
D	19^th May 2013	12,000	40%
E	June 10^th 2013	21,000	15%

Compute depreciation for the year and capital gain if any

19.

Particulars	Rs	Particulars	Rs
To establishment expenses	4,800	By Gross profit	50,840
Rent rates and taxes	2,900	Interest on Government Securities	5,200
General charges	750	Rent from House Property	5,400
Household expenses	1,730
Commission	1,500
Discount and allowances	450
Provisions for Bad Debts	1,200
Postage &Telegraph	270
Law charges	450
Advertising	1,550
Gifts and Presents	150
Fire Insurance (goods)	360
Sales tax	1,250
Repairs and renewals (not for business premises)	480
Loss on sale of motor car used For private purpose	1,800
LIC premium	1,790
Wealth tax	740
Interest on capital	350
Audit fee	300
Interest on bank loan	1,380
Provision for depreciation	2,500
Provision for income tax	3,900
Net Profits	30,840
	61,440		61,440
Other information: Actual bad debts written off was Rs. 550 Income tax actually paid was Rs. 4,200 Depreciation allowable Rs.1,700 Advertising expenses include `550 spent on special advertising campaign to open a new shop in the market. The law charges are in connection with the trade mark. He carries on business from rented premises half of which is used as his residence. Rent rates and taxes include Rs, 2,400 paid as premises rent. Compute Business Income for AY 14-15

20.

Compute Capital Gain from the following if CII for 13-14 is 939

asset	Year of acquisition	CII	Cost of acquisition	FMVon 1/4/81	Selling expenses	Selling Price
Shop	80-81	100	20,000	40,000	10,000	4,10,000
Jewellery	80-81	100	10,000	50,000		4,95,000
Shares	82-83	109	20,000		2,000	1,90,000
Shares	90-91	182	6,000		1,000	25,000
Plant	82-83	109	4,00,000(WDV)			7,00,000
Residential house	84-85	125	60,000			4,90,000
He invested Rs 20,000 in purchase of new residential house and Rs 2,000 in National Rural Development Bonds from the sale proceeds.

21.

From the following particulars compute income from other sources.

Dividends from UTI	17,000
Dividends from Tea Company(60%agriculture income)	3,000
Interim dividends from listed Co declared on 25/2/14	1,500
Dividends from Foreign Co. TDS not yet remitted	4,000
Interest on term deposit in bank received	10,800
Directors fee	2,000
Income from letting out of machinery plant etc after cessation of business	30,000
Royalty from mining	10,000
Monthly rent received from subletting a house The house was taken on rent @ Rs. 200 pm in 1971 Repairs and other expenses incurred were Rs.3,000 and Rs. 1,000 respectively	1,000
Winnings from lotteries	25,000
He claims the following expenses: collection charges for dividends of UTI 300, interest on money borrowed to purchase shares of tea Co. Rs. 1,000 depreciation and other expenses in respect of Machinery Rs 5,000

SECTION – D

Case Study (1×15=15)

22.

Mrs. B provides you the following details:

a. Taxable Income from Salaries- Rs. 4,50,000

b. Loss from House Property- Rs.1,25,000

c. Taxable income from Business- Rs. 65,000

d. Taxable STCG (other than STCG on transaction liable for STT)- Rs.1,50,000

e. Taxable income from other source (including casual income Rs.2,75,000; interest on savings bank a/c Rs. 8,500; royalty income on books published Rs.3,60,000)- Rs.8,75,000

f. Contribution to PPF- Rs.26,000

g. Payment of Life Insurance Premium- Rs.18,000

h. Payment made towards group insurance- Rs.960

i. Deposits made in Unit Linked Insurance Plan- Rs.15,000

j. Amount invested in National Savings Certificate- VIII issue- Rs.12,000

k. Amount deposited with National Housing Bank- Rs.12,000

l. Amount invested in Equity Linked Savings Scheme- Rs.6,000

m. Repayment of principal amount towards housing loan- Rs.15,000

n. Tuition fees of 3 children paid @ Rs. 750 p.m. per child- Rs. 27,000

o. Interest paid on higher education loan- Rs. 42,350

p. Medical insurance premium paid by cheque- Rs. 16,500

q. Expenditure incurred towards medical treatment of a dependant relative- Rs. 26,500 (disability being 70%)

r. Expenditure incurred towards medical treatment of specified disease of dependent relative (senior citizen)- Rs.65,000

s. Donation to PM’s National Relief Fund- Rs. 25,000

Compute Mrs. B’s total income and tax liability assuming that she does not have capital gains.

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