- JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2014
BBM – V SEMESTER
INCOME TAX – I
Time: 3 Hrs Max marks: 100
SECTION – A
- I) Answer the following questions. Each question carries two marks. (10×2=20)
- Define Assessee.
- Define Person.
- Give four examples of Agricultural Income.
- Who is Resident and Ordinarily Resident?
- How do you treat income from sub-letting?
- Mention any four incomes exempt u/s 10.
- How do you treat salary of a MP?
- Define Salary.
- How is composite letting out building with furniture treated?
- How do you ascertain the residential status of a HUF?
SECTION – B
- II) Answer any FOUR Each question carries five marks. (4×5=20)
- X, an Indian citizen who is appointed as senior taxation officer by the Government of Nigeria, leaves India for the first time on September 26, 2013 for joining duties in Nigeria. During the previous year 2014-15, he comes to India for 176 days. Determine his residential status for the assessment years 2014-15 and 2015-16.
- Write short notes on Statutory Provident Fund and Public Provident Fund.
- Calculate taxable Gratuity in the following cases:
- If Mrs. Seetha comes under Payment of Gratuity Act 1972
- If Mrs. Seetha does not come under Payment of Gratuity Act 1972.
Mrs. Seetha retired on 15th January, 2014 from VEL Ltd., after rendering 35 years and 7 months of service. She received Rs.1,97,200 as gratuity at the time of retirement.
She was getting Rs.11,000 p.m. as salary from 1st August 2013 and Rs.10,000 before August 2013. But she was receiving DA (entering service benefits) at Rs.1,000 p.m. throughout without any change.
- Calculate taxable pension of Mr. Ajay who was working in TAF Ltd., and retired on 30th April 2013. He received a pension of Rs.24,000 p.m. On 31st December 2013, he commuted 2/3 his pension for Rs.1.64,000.
- Assume he receives gratuity
- Assume he does not receive gratuity
- From the following calculate taxable Leave Salary
Name of the employee : Mr.Bajawat
Name of the employer : V&Co Ltd
Leave salary received : Rs.4,00,000
Salary at the time of retirement: Rs.14,000 p.m.
Duration of service : 23 years and 8 months
Leave entitled for every year of service: 40 days
Leave availed while in service: 4 months.
- Briefly explain the characteristic features of Salary.
SECTION – C
III) Answer any three questions. Each question carries 15 marks. (3×15=45)
- X furnishes the following information of his income earned during the previous year relevant to the assessment year 2014-15:
| Rs. | |
| Interest on German development bonds (two fifths received in India) | 60,000 |
| Income from agriculture in Bangladesh, received there but later on Rs.50,000 is remitted to India (agricultural activity controlled from Bangladesh) | 1,81,000 |
| Income from property in Canada received outside India[Rs.76,000 is used in Canada for meeting educational expenses of X’s daughter in USA and Rs.10,000 is later on remitted to India]
|
86,000 |
| Income earned from business in Kampala which is controlled from Delhi (Rs.15,000 is received in India) | 65,000 |
| Dividend paid by a foreign company but received in India on April 10,2013 | 46,500 |
| Past untaxed profit of 2008-09 brought into India in 2013-14 | 10,43,000 |
| Profits from a business in Madras managed from outside India | 27,000 |
| Profits on sale of a building in India but received in Sri Lanka | 14,80,000 |
| Pension from a former employer in India, received in Rangoon | 36,000 |
| Gift in foreign currency from a friend received in India on January 20, 2014 | 80,000 |
Find out the gross total income of X, if he is (a) Resident and Ordinarily a Resident, (b) Resident but Not ordinarily a Resident, (c) Non-Resident in India for the Assessment Year 2014-15.
- X (63 years), a sales executive in A Ltd., in Delhi gets the following emoluments during the previous year ending March 31, 2014:
- Basic salary: Rs.54,000 p.m.,
- Dearness allowance(forming part of salary for superannuation): Rs.2,000 p.m.,
- Entertainment allowance Rs.24,500 p.m.,
- Special allowance: Rs.50,000 p.m.,
- House rent allowance: Rs.9,000 p.m., rent paid by her: Rs. 16,000 p.m.
- Helper allowance for domestic use: Rs.5,000 p.m.
- The employer-company provides a Maruti Alto car for personal use of Mrs. X (employer’s expenditure: Rs.1,37,800, depreciation of the car @10%: Rs. 12,600.
- The employer also provides free club facility for personal use of Mrs. X (expenditure of the employer: Rs.52,100)
- Free lunch (cost being Rs.55 per day for 100 days).
- While her employer contributes Rs.7,000 p.m. towards provident fund, she contributes Rs.8,000 p.m.
- Her income from other sources is Rs.1,67,900.
- Interest credited on August 10, 2013 @12% in the provident fund account is Rs.30,000.
- During the year, Mrs. X pays insurance premium of Rs.10,000 on insurance policy on the life of her mother and Rs.3,000 on her own life insurance policy (sum assured: Rs.50,000). Premium of Rs.9,000 on insurance policy on the life of her husband falls due on March 23, 2014, though she pays the same on April 13, 2014.
Determine the total income from salary of Mrs. X for the Assessment Year 2014-15.
- X (50 years) a production manager of ABC Ltd., which is engaged in manufacture of computers, gives the following particulars of his income relevant for the assessment year 2014-15:
| Rs. | |
| Basic Salary | 60,000 p.m. |
| Bonus | 20,000 p.a. |
| Commission | 70,000 p.a. |
| Entertainment Allowance | 30,000 p.a. |
| A rent free unfurnished house has been provided in Madras, lease rent of the house | Rs.2,50,000 p.a. |
- Employer has provided free use of an Opel Corsa 1398cc car for official as well as personal purposes: expenses of the employer: Rs. 50,000 (out of which 30% is attributable towards personal purposes). Car can also be used by the family member of X. A sum of Rs.6,000 is recovered from X for using the car for private purpose.
- The employer pays a sum of Rs.400 on account of profession tax on behalf of X.
- On June 10, 2013 ABC (P)Ltd., gifts a computer, manufactured by it on its founder’s day to X (cost of the computer to the employer being Rs.24,900).
- Employer’s contribution towards recognised provident fund: Rs.90,000 p.a. Contribution of X towards provident fund: Rs.5,000.
- Payment of insurance premium by Mrs. X on X’s insurance policy Rs.4,000. He also contributes Rs 60,000 towards public provident fund.
Determine the taxable income of X for the assessment year 2014-15.
- X (66 years) has occupied three houses for his residential purposes, particulars of which are as follows:
| House I (Rs.) | House II (Rs.) | House III (Rs.) | |
| Standard Rent under the Rent Control Act(*not applicable) | 15,000 | 20,000 | * |
| Municipal Valuation | 10,000 | 30,000 | 30,000 |
| Fair Rent | 18,000 | 18,000 | 35,000 |
| Municipal taxes paid | 1,200 | 2,400 | 3,600 |
| Repairs | – | – | 200 |
| Insurance premium | 1,200 | 1,300 | 600 |
| Ground Rent | 1,800 | 7,000 | 400 |
X borrows Rs. 90,000 @ 20% per annum for construction of House III (date of borrowing: June1, 2006, date of repayment: May 10, 2015). Construction of all the houses is completed in May 2011. Determine the taxable income from House Property.
- For the assessment year 2014-15, X (age: 66 years) submits the following information:
Income from business : Rs.8,92,000
| House I (Rs.) | House II (Rs.) | |
| Fair Rent | 3,50,000 | 3,20,000 |
| Municipal Valuation | 3,60,000 | 3,50,000 |
| Standard Rent | 3,00,000 | 5,00,000 |
| Annual Rent | 6,00,000 | 4,20,000 |
| Unrealised rent of the previous year 2010-11 | 10,000 | 80,000 |
| Unrealised rent of the previous year 2009-10 | – | 3,00,000 |
| Vacant period (number of months) | 2 | 4 |
| Loss on account of vacancy | 1,00,000 | 1,40,000 |
| Municipal taxes paid | 40,000 | 50,000 |
| Repairs | 5,000 | 7,000 |
| Insurance | 20,000 | 30,000 |
| Land revenue | 25,000 | 40,000 |
| Ground rent | 66,000 | 82,000 |
| Interest on capital borrowed by mortgaging House I (funds are used for construction of House II) | 1,40,000 | – |
| Nature of occupation | Let out for residence | Let out for business |
Determine the taxable income of X for the assessment year 2014-15 assuming that X pays Rs.60,000 in the public provident fund.
SECTION – D
- IV) Answer the following compulsory question. (1×15=15)
- Venugopalis an employee in a private company in Mumbai. He receives the following emoluments:
- Salary (due on last day of every month : Rs.60,000 p.m.
- DA (enters) : 60% salary
- Holiday trip allowance : Rs.12,000 p.a.
- EA : Rs.4,000 p.m.
- HRA up to 30.9.13 : Rs.12,000 p.m.
- Rent free accommodation was provided to him w.e.f 1.10.13. The employer was living in a hired accommodation for which he paid the rent @ Rs. 12,000 p.m. The same accommodation was hired by employer at a rent of Rs.14,000 p.m. and given to employee w.e.f. 1.10.13. The cost of furnishing amounted to Rs. 90,000
- Employers contribution to RPF Rs.12,000 p.m. (same amount is contributed by him)
- He has also been provided with two small cars i20 and Maruthi Swift which he uses both for private and official purposes. Expenses incurred on cars during P.Y
| I20
Rs. |
Swift
Rs. |
|
| Cost of car | 7,50,000 | 6,00,000 |
| Petrol | 54,000 | 60,000 |
| Insurance | 30,000 | 36,000 |
- An Apple laptop costing Rs.80,000 has been provided to him exclusively for his personal purposes.
- On 1.4.13 he took loan of Rs.1,00,000 from his employer for purchasing his bike(pulsar 220cc) for his son at a concessional rate of interest of 11.75% p.a. SBI lending rate of interest on 1.4.2013 is 18.35%.
- He paid professional tax of Rs.2500 p.a.
Compute his Income under the Head Salaries for the Assessment Year 2014-15.
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