1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

End Semester examination – APRIL 2014

BBM – VI semESTER

Income Tax- II

Duration: 3 Hrs                                                                                                Max. Marks: 100  Section – A

1. Answer ALL the questions. Each carries 2 marks.                                             ( 10 x 2 = 20)
2. Write the tax treatment for arrears of rent under Income from House Property
3. To what extent the following are allowable deductions in computing the income of business carried on by Mr. A

• Entertainment expenditure incurred during the previous year ending 31-3-2013 is Rs. 50000
• Daily allowance given to Mohan an employee is @ 2000 per day. He was on tour for 5 days and was given Rs 10000 as daily allowance during the previous year 2012-2013.
• Ten items were presented during the previous year 2012-2013 on advertisements each costing Rs. 2000/-
• Income tax deposited in advance during the previous year 2012-2013 amounted to Rs. 10000

3. What is transfer u/s 2 (47)
4. Find out the indexed cost of following long term capital assets if they are sold during the previous year 2012-2013

SL.NO	Asset	Year of purchase	Cost	FMV 1/4/81
1 2 3 4	Jewellery Bonds House Plot inherited in 85-86	84-85 91-92 75-76 Acquired by father in 79-80	1,60,000 2,00,000 1,50,000 1,00,000	– – 4,00,000 2,00,000

 

CII 84-85 is 125,      1985-86 is 133,     for  91-92 is 199 and 2012-2013 is 852

 

5. What are bond washing transactions? Give two examples
6. Explain any two exemptions available for Long term capital gains.
7. When an individual is assessable in respect of remuneration of spouse (Sec 64 (1))
8. Can revised return be filed? Explain
9. What is a defective or incomplete return
10. Explain Intra head adjustment and inter head adjustment of losses with exceptions

Section – B

1. Answer any FOUR Each carries 5 marks.                                          (4 x 5 = 20)

1. The following are the particulars of assets at the beginning of the year

	WDV as on 1/4/2012	Rate
Building (non residential)	10,00,000	10%
Building (Residential)	5,00,000	5%
Furniture	1,00,000	10%
Plant and Machinery	15,00,000	15%
Motor cars	1,00,000	15%
Trucks used for own business	27,000	15%

Machinery worth Rs. 5, 00,000 was purchased and installed on 14/10/2012.  One machine was sold for Rs. 45,000 during the year.  The Assessee is engaged in the business of manufacturing fertilizers using Indian technical know how

One residential building was destroyed by fire during the year for which insurance company accepted a claim for Rs. 60,000

Calculate the amount of depreciation for the PY 31-3-2013.

1. What is dividend?  Explain dividend u/s 2(22)
2. Compute income from other sources from the particulars given below:-

• Interest on deposits with a company Rs. 10,000
• University remuneration on working as examiner Rs. 6000
• Royalty for writing books Rs.60,000

He claims to have spent Rs. 20,000 on writing these books

• Dividend declared by R Co. 1/3/2013 but paid on 1/5/2013 Rs. 6000
• Interim dividend paid on 1/5/2012 Rs. 3000
• Stake money on race horses Rs. 1,50,000

Horses are maintained by him and expenses on maintenance of these horses are Rs. 2, 40,000

• Family pension Rs. 36,000.

 

1. Mr.Varun Rampal whose gross total income is Rs. 70,00,000 (Rs. 20,00,000 as long term capital gain) makes the following donations during the previous year 2012-13

 

• PM national relief fund Rs. 1,25,000
• National Defence fund Rs. 2,50,000
• Municipal corporation Rs. 1,25,000
• CMC Ludhiana for promotion of Family planning Rs. 1,70,000
• Sunil Dutt – a social activist for charity purpose Rs. 50,000
• National Children Fund Rs. 40,000
• Jawaharlal Nehru Memorial fund Rs. 2,50,000
• To temple of public worship for repairs (notified) Rs. 4,00,000

Compute his total income for the AY 2013-2014

 

1.  Explain the powers and functions of the Commissioner of Income Tax
2. MR.Rawat gives you the following particulars from his accounts for the year ended 31/3/2013

• Net profit as per P&L account (without charging the following items) Rs. 2,75,000
• Expenditure on family planning Rs. 45,000
• Lump sum consideration for purchase of technical knowhow developed in government laboratory Rs. 90,000
• Entertainment expenditure Rs 30,000
• Expenditure on acquisition of patent right Rs. 84,000
• Expenditure on advertisement paid in cash Rs. 18,000
• Provision for excise duty Rs. 45000 (He paid Rs. 20,000 on 27/6/2013 and Rs. 7000 on 10/11/2013.  Due date of filing return Rs. 31/7/2013)
• Amount paid to Rajasthan University for an approved Research programme in the field of social science not connected with his business Rs. 32,000

Compute his business profit for the year ending 31-3-2013

 

Section – C

• Answer any THREE  Each carries 15 marks.                                  (3 x 15 = 45)

1. Mr. G submits the following information about sale of assets during the previous year 2012-13

Asset	Residential house	Jewellery	Listed debentures
Date of acquisition CII Cost of acquisition Date of sale Sale price Investments: Residential house Bonds of REC	11-3-1988 150 Rs. 2,80,000 15-5-2012 Rs. 20,00,000 Date of acquisition 19/11/2012 16/11/2012	1/7/1994 259 Rs. 70,000 17/5/2012 Rs. 4,00,000 Amount invested Rs. 13,00,000 Rs. 1,20,000	12/4/2004 480 Rs. 2,00,000 16/5/2012 Rs. 4,00,000

Calculate Taxable Capital Gains for the AY 2013 – 14

1. From the particulars of income of Sri Madan Mohan, compute his gross total income for the AY 2013-2014.

• He owns an agricultural land in Bangladesh from which he earned an income of Rs. 6500
• He owns a plot of land in Dharwad which is let out for Rs. 1200 pm for trading purpose
• He has a building near agricultural land in a village in India. It is let out for Rs. 900 pm and used for storing agricultural equipments and for supervision of agricultural work
• He received Rs. 12500 during the year as management consulting fee
• He has a quarry in Ankola. He has let it on a royalty of 50 paise per ton of stone raised.  During the year 14600 tons of stone was raised.  He spent Rs. 450 to earn royalty
• He has let machinery and furniture at Rs.3000 pm. He spent Rs. 1000 on the repair of these assets.  Depreciation allowed on these assets Rs. 6000
• He lives in a rented house paying a rent of Rs. 2000 pm. He has sublet 40% of this house at a rent of Rs. 1500 pm.  He has paid Rs. 1000 as municipal tax on the house and spent Rs. 500 on the repairs of the whole house
• He has received an amount of Rs. 70,000 as lottery prize on 1/11/2012
• He borrowed Rs. 30000 on 1/6/2012 from a bank @ 15% p.a interest. He invested the money in the purchase of equity shares of public limited company.  During the year he has not received any dividend from the company.

 

1. From the following particulars of income of Shri M Shaw during the year 31-3-3013 ascertain his total income tax for AY 2013-2014

• As a secretary of a company, he received salary at Rs. 16000 per month and a house rent allowance of Rs. 3000 per month. He is living in a house for which he pays Rs. 4000 p.m
• He had a house property which was let out at Rs. 2000 p.m for which he had to pay Rs. 500 as ground rent and Rs. 167 as insurance charges. The house was subject to local tax at Rs. 2000 per year
• He owned a residential house since 1965 which he sold during the year at a profit of Rs. 2500
• He had some agricultural lands in the village where from he received an income of Rs. 4200
• During the year he received Rs. 750 as interest from savings account in the bank and Rs. 3550 interest on postal saving bank account
• He was a gambler and during the year he earned an income of Rs. 5900 from gambling
• From a mutual fund his dividend income is Rs. 3000
• He earned Rs. 27500 as interest from government securities
• He had a half share in an AOP and his share of profit was Rs. 7200
• He insured his life and paid Rs. 9900 as premium and donated Rs. 20000 for promotion of family planning. AOP has no such member whose individual income exceeds the exemption limit.

1. Write short notes on:

• Central board of direct Taxes
• Commissioner of Income tax
• Deputy commissioner of Income tax

 

1. Mr. Prakash is a small businessman.  He gives you the following details from the books of accounts for the year ending 31-3-2013

1. Computed net profit (after charging the following )Rs. 55,000
2. Provisions and reserves debited to profit and loss account

• Provision for doubtful debts Rs. 30,000
• Depreciation reserve Rs. 40,000
• Household expenses Rs. 60,000

1. Donation to Prime Minister’s National relief fund Rs. 20000, other charitable donations Rs. 40000
2. Cheques issued for purchases Rs. 20000
3. OYT deposit Rs. 10,000

• Advertisement expenses Rs. 5000 spent on a wooden signboard given to a customer, advertisement gifts to fifty customers at a cost of Rs. 100 each
• Audit fees Rs. 20000

1. Patents purchased for Rs. 70,000 during the previous year
2. Market survey expenses Rs. 8000. Feasibility Report expenses Rs.12000 on a new project of Rs. 1000000
3. Incomes credited to profit and loss account were

• Bank interest on FD Rs. 5000
• Interest on Post office Savings Bank a/c Rs.3000
• Interest on UTI units Rs. 2000
• Opening stock is valued at cost + 10% basis where as closing stock is valued at cost -10% basis. Opening stock valued was Rs. 132000 and closing stock was valued Rs. 144000.

Compute the net business income for the AY 2013-2014

Section – D

 

1. IV) Compulsory question.                                                                 (1 x 15 = 15)

 

1. Profit and loss account for the year ending on 31/3/2013

Particulars	Rs	Particulars	Rs.
Salaries Commission to employees Repairs of P & M Local taxes of house property Repairs of vehicles Expenditure on scientific research (not related to own business) Depreciation of Van @ 15% purchased and used for scientific research in own field Amount given to Delhi National Laboratory Patent right Preliminary expenses 1/10th debited Bad debts Provision for sales tax (paid on  1/11/2013) Donation to hospital for family planning Employees health insurance premium Interest on loan Contribution to RPF Entertainment expenditure for customers Advertisements in TV and magazines Travelling expenses of employees Expenses on guest house Loss due to theft from factory Loss of furniture due to fire Penalty paid for excise default Festival expenses Purchase of technical know how Wealth tax paid Depreciation on an item of P & M sold during the year @ 15% Depreciation on new  item of P & M acquired on 1/7/2012  @ 15% for 9 months Depreciation on bus purchased on 1/11/2012 for 5 months @ 30% Another bus purchased on 1/6/2012 depreciation @30% for full year Net profit	4,50,000 1,50,000 45,000 10,000 20,000 1,30,000       40,000     30,000 2,00,000   40,000 25,000 60,000   28,000   50,000   60,000 53,000 30,000   80,000   20,000   36,000 20,000 15,000 53,000 60,000 2,00,000 68,000 15,000   27,000     45,000     1,05,000     1,42,000	Gross profit Rent of 40% property let out Bad debts recovered disallowed earlier Excise duty recovered – allowed earlier Gift from uncle Profit on sale of P & M used for scientific research Post office saving bank Profit on sale of export license Sale price of P&M (15% block)	19,00,000 40,000   20,000   15,000   40,000 67,000   5,000 1,80,000   40,000
Total	23,07,000		23,07,000

 

• Salary includes a lump sum payment of Rs. 1,00,000 paid in cash to an employee
• Commission of Rs. 70,000 which was due on 31/3/2013 was paid as Rs. 50000 on 15/7/2013 and Rs. 20,000 on 15/11/2013
• 60% of the house property is used for own business
• Health insurance premium of employees up to Rs. 20000 was paid in cash
• Employers contribution to RPF for the month of March 2013 Rs. 2500 due on 15/3/2013 was paid on 31/3/2013
• Advertisement includes Rs. 14000 on purchase of a neon sign board on 2/10/2012
• Festival expenses include Rs. 5000 as gifts to his daughter on birth day
• Rate of depreciation for P&M is 15% and for Buses is 30%
• Date of filing return 31/7/2013
• He is also engaged in the business of hiring vehicles

Compute business income for the AY 2013-2014

 

 

 

 

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