St. Joseph’s college of Commerce (Autonomous)
End semester examination – April 2013
B.B.M – VI SEMESTER
Income Tax – II
Duration: 3Hrs Max.Marks:100
Section – A
- Answer ALL the following questions. (10X2=20)
1) How to treat bad debts recovered but disallowed earlier?
2) What is depreciation U/S 32 (1) of the act?
3) Define the term transfers.
4) Mention any four assets which do not come under the term capital asset.
5) What is composite rent?
6) Under what circumstances the speculation losses can be allowed to be set
off.
7) What is the deduction allowable U/S 80GG.
8) Expand abbreviations-CCIT&CBDT
9) Explain the provisions of section 54EC of Income Tax under the head
capital gains.
10) What do you mean by less Tax NonGovernment securities?
Section – B
- II) Answer any FOUR (4X5=20)
11) Mr. Vijayan had the following incomes during the year 2011-12:
Rs.
Interest on Bank deposits 4, 000
Income from units of a Mutual Fund 5, 000
Interest on Govt. Security 8, 000
Winning from lottery 10, 000
Winning from horse race 5, 000
He claimed the following deductions:
Collection charges of interest on Govt. Security by Bank 100
Expenses for buying lottery tickets 1, 000
Compute income from other sources of Mr. Vijayan for Assessment year
2012-13.
12) Mr. Prabhath Bhat transfers a plot of land for a consideration of Rs.
40,00,000 on 10.10.2011. This plot of land was purchased by him in 1980-81
for Rs. 3, 50,000 (FMV as on 1.4.81 was Rs. 4, 00,000). Brokerage paid for
sale of plot of land was Rs.10, 000. He purchased a residential house for Rs.
5, 00,000 on 1.11.2011 and deposited Rs. 50, 000 in capital gain account
scheme. Compute Mr. Prabhath Bhat’s taxable capital gain for the AY
2012-13. (CII for 1981-82=100 2011-12=785)
13) State, giving brief reasons, whether the following items are allowable
while computing profits and gains of business or profession
(i) Donation to a political party.
(ii) Fees paid to the Lawyer for drafting a new Partnership Deed.
(iii) Sums paid to a labour leader to call off the strike.
(iv) Salary paid to son, who is working in the office. The salary is reasonable.
(v) Rent paid to daughter for office block which was gifted to her at the time
of her marriage.
14) Explain the rules regarding inter head set of losses.
15) Write short notes on the following:
- a) Recovery of tax.
- b) Refund of tax.
1 6) The gross total income of Mrs. Usha amounted to Rs. 6, 00,000 in the
previous year ending on 31st March, 2012. She has made the following
donations:
Rs.
(i) To prime minister’s Gujarat Earthquake Relief Fund (100%) 40,000
(ii) To Africa (public contribution India) fund (100%) 10,000
(iii) To approved educational institutions(50%) 15,000
(iv) To approved temples 35,000
(v) Clothes distributed to poor 5,000
(vi) To Municipal Corporation for promotion of family planning 20,000
Compute the amount of deduction admissible u/s 80G for the
assessment year 2012-13.
Section – C
III) Answer any three questions. (3×15=45)
- From the below given profit and loss account and additional information of Mr. David compute his taxable business income for the assessment year 2012-2013.
| Particulars | Rs. | Particulars | Rs. |
| Opening stock | 40,000 | Sales | 5,00,000 |
| Purchase | 2,20,000 | Closing stock | 50,000 |
| Wages | 15,000 | ||
| Freight | 10,000 | ||
| Gross profit | 2,65,000 | ||
| 5,50,000 | 5,50,000 | ||
| Establishment expenses | 15,000 | Gross profit | 2,65,000 |
| Salaries | 25,000 | Dividend on shares(Gross) | 6,000 |
| Rent and taxes | 12,000 | Rent from house property | 15,000 |
| Income tax | 10,000 | Refund of income tax | 2,000 |
| Household expenses | 14,000 | Interest on Govt. Securities | 1,000 |
| Reserve for bad debts | 5,000 | Bad debts recovered | 5,000 |
| Advertisement | 15,000 | Profits on sale of machinery | 3,000 |
| Donation | 6,000 | Miscellaneous income | 9,000 |
| Sale tax | 20,000 | ||
| Provision for Income tax | 8,000 | ||
| Carriage outwards | 11,000 | ||
| Drawings | 4,000 | ||
| General expenses | 16,000 | ||
| Interest on capital | 9,000 | ||
| Bad debts | 7,000 | ||
| Repairs | 7,500 | ||
| Taxes and insurance | 2,500 | ||
| Car expenses | 11,000 | ||
| Audit fees | 12,500 | ||
| Depreciation | 20,500 | ||
| Net profit | 75,000 | ||
| Total | 3,06,000 | Total | 3,06,000 |
Additional information:
- a) Salaries include payment to a relative employee, which is considered to be
unreasonable up to Rs. 6, 000.
- b) Purchases include two payments of Rs.30, 000 and Rs. 10, 000 paid in cash to a supplier
- c) Opening stock is valued at 10% above the cost
- d) Allowable depreciation is Rs. 22, 500
- e) 60% of expenses are for business purposes.
18) Dr. Surendra is a renowned medical practitioner who maintains books of account on cash basis, furnishes his Receipts and Payments Account for the financial year 2011-12:
| Income | Rs. | Expenditure | Rs. |
| Balance b/d | 14,000 | Rent of Clinic:2010-11 | 600 |
| Consultation Fees 2010-11 | 3,000 | 2011-12 | 4,800 |
| 2011-12 | 15,000 | 2012-13 | 600 |
| 2012-13 | 2,000 | Electricity and Water bills | 2,000 |
| Visiting Fees | 30,000 | Professional Books (Annual pub.) | 4,000 |
| Loan from Bank for professional purposes | 25,000 | Collection Charges on Dividend Income | 100 |
| Sale of medicines | 60,000 | Household expenses | 7,800 |
| Gift and Presents | 5,000 | Motor-car purchased | 30,000 |
| Remuneration from Articles Published in Professional Journal | 6,000 | Surgical Equipments | 4,800 |
| Dividend | 10,000 | Income tax | 10,000 |
| Interest on Post office Savings Bank A/c in joint names | 7,000 | Salary of staff | 15,000 |
| Life Ins. Premium | 15,000 | ||
| Gift to wife | 5,000 | ||
| Interest on loan | 2,000 | ||
| Car expenses | 15,000 | ||
| Purchases of medicines | 40,000 | ||
| Balance c/d | 20,300 | ||
| Total | 1,77,000 | Total | 1,77,000 |
Compute his Taxable Professional Income for the assessment year 2012-13, after taking into account the following additional information:
(i) 1/3rd of the use of car relates to his personal use.
(ii) Depreciation on Motor-car allowable is 15%, on books it is @ 100% and on surgical equipments it is 15%.
(iii) Gifts and presents include Rs. 3,000 from patients in appreciation of his medical service and Rs. 2, 000 received as Birthday Gifts from relatives.
(iv) Closing stock of medicines amounted to Rs.5, 500.
19) From the following particulars, compute taxable capital gains of Mr. Shankar (resident) for A.Y. 2012-13.
| Asset | Date of purchase | Cost (Rs.) | FMV on 1-4-81 | Date of sale | Sale price | Selling expenses |
| House property | 1-12-87 | 75,000 | – | 1-10-11 | 15,00,000 | 20,000 |
| Personal Jewellery | 1-12-78 | 12,000 | 20,000 | 1-11-11 | 3,00,000 | 4,500 |
| Listed debentures | 1-12-06 | 50,000 | – | 1-02-12 | 2,00,000 | 1,000 |
| Personal car | 1-12-02 | 30,000 | – | 1-01-12 | 12,000 | – |
| Urban agriculture Land | 1-12-75 | 48,000 | 45,000 | 1-03-12 | 4,50,000 | 30,000 |
He purchased a new agriculture land on 31.03.2012 for Rs. 1, 00,000.
( CIIs: 1981-82 =100; 1987-88=150; 2002-03=447; 2006-07=518;2011-12=785)
20) Compute income from other sources of Dr.Gokak who held the following investments in P.Y. 2011-12.
- a) 1, 10,000, 10% central Government Securities.
- b) 4, 00,000, 10% commercial securities.
- c) 8, 000 (gross) received as interest on public Ltd. Co., securities. (listed)
- d) 7, 200 received as interest on Karnataka Govt., securities.
- e) 3, 600 received as interest on XYZ Ltd., (listed).
- f) 3, 00,000, 13.5% securities of X Co Ltd. (Unlisted).
- g) 3, 50,000, 11% securities on a paper mill Co., (listed).
- h) Interest on post office savings Bank A/c- Rs. 6, 500.
- i) Dividend received from Carona Ltd., (Gross) Rs. 32, 000
For purchasing securities of X Co., Ltd., he took a loan of Rs. 2, 50,000 at 12% p.a. This loan was taken from his friend in. UK. The interest has been paid in UK but, no TDS is made. Bank charged Rs. 2, 000 as collection charges.
During the year he also got a prize in Karnataka State lottery. The net amount received by him was Rs. 2, 80,000. Interest is payment on 1st July and 1st January, every year.
21) Sh. S.K. Basu is in service in Calcutta (Population above 25 lakhs) drawing a monthly salary of Rs. 15, 000 p.m. He is also provided with a free unfurnished flat, for which employer pays a rent of Rs. 2, 500 p.m. He contributes 10 percent of his salary to recognised provident fund. The interest @8% on his provident fund account for the year ended 31st March 2012 amounted to Rs. 2, 500. He is also the owner of a house which is let out a monthly rent of Rs. 2, 500. His expenses for above here:
Rs.
(a) Municipal taxes 3, 000
(b) Interest on loan for construction of the house 6,600
(c) Repairs 500
He has also interest on Govt. securities amounting to Rs. 14,000 ( Gross).
He has also received a share from a firm assessed as firm of Rs. 5, 000 and his share of firm’s tax amounts to Rs. 600. He has paid life insurance premium for a policy on his own life Rs. 700. He paid to P.M. National Relief Fund Rs. 200.
Compute the Total income of Shri S.K.Basu.
Section – D
- IV) Answer the following compulsory question. (1X15=15)
22) Miss Ashitha submits the following details for the PY 2011-2012
Rent received from let out house Rs. 6, 000 per month.
Municipal taxes Rs. 500 p.a.
She is also employed in a private organisation
Where she gets a salary of a Rs. 14,000 per month
Taxable short term capital gain Rs. 15, 000
Taxable long term capital gain Rs. 35,000
She earned a lottery income of Rs. 10,000.
She donated Rs. 5,000 for National Relief Fund.
She paid a LIC premium on her life Rs. 8, 000
She contributed Rs. 10, 000 towards mediclaim insurance policy.
Compute her Total Taxable Income & Tax liability for the A.Y:2012-13
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