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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2013
B.B.M. – V SEMESTER
INCOME TAX – I
Duration: 3 Hours Max Marks: 100
SECTION – A
I) Answer ALL the questions. (10 x 2 = 20)
1) What are the important types of provident funds of which a salaried employee
may be member?
2) State the conditions for integration of agricultural and non-agricultural income.
3) What is the treatment of local/municipal taxes?
4) Explain with an example the difference between” diversion of income” and
“application of income”.
5) Calculate the amount of exemption of leave travel concession a/s 10(5) in each of
the following cases separately:
(i)Rs 5,650 allowed to Mr. Z Govt of India employee for going to Nainital in the
block period of 1/1/2012 to 31/12/2015.
(ii)Rs 10,450allowed to Mr. X for going to Goa in June 2008(Block period
1/1/2008 to 31/12/2011) and Rs 14,600 in Nov 2012 for going to Darjeeling for
block period commencing on 1/1/2012.
6) Mr. H was allowed to use a microwave owned by employer. Its cost was Rs
16,000 Calculate the value of benefit if it is given to employee on: (a) 1/4/2012 (b)
15/11/2012.
7) Mr. Ram Yadav is Karta of HUF having property in India and Mauritus.He
stayed in India only for 61 days to visit various temples during 2012-
13.Determine the status of HUF.
8) Mr. X is owner of a tea estate and tea factory, during the year sale proceeds of
manufactured tea was Rs 16,60,000. Expenses incurred on producing and
manufacturing tea were Rs 8, 40,000.Compute his agricultural income from tea.
9) State with reasons the nature of the following:
(i) A railway passenger meets with an accident and is disabled. He receives
compensation from the Indian Railways.
(ii) A company owning a chalk quarry contracted to supply a customer a certain
quantity of chalk yearly for ten years. The purchaser after sometime did not
wish to take further delivery and the company agreed to release him from
obligation in consideration of a lump sum payment.
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(iii) A company made annual payments for trucks bought under hire-purchase
agreement extending over a period of years.
(iv) An assessee carried on business in several commodities. In course of business,
he submitted tenders to the railways and undertook to supply certain
commodities. The amount which he had deposited as security for properly
carrying out the contract was forfeited as he could not carry out the contract.
10) How the loss from house property is treated for tax purposes.
SECTION – B
II) Answer any FOUR questions (4 x 5 = 20)
11) Calculate the amount of taxable annual accretion to RPF for MR. X from the
particulars given below:
(i) Salary @ Rs 3,500 p.m.
(ii) D.A @ Rs 1,000 p.m.(Rs 500 p.m. enters into pay for service benefits)
(iii) He and his employer contribute Rs 500 p.m.(each) to RPF
(iv) Interest credited to accumulate balance of RPF @14% is Rs 8,400.
12) Compute the tax liability of Mr. K.N.Singh (a senior citizen) of Darbhanga for
the assessment year 2013-14 if-
(a) his agricultural income is Rs 90,000 and
(b) his non-agricultural income is Rs 5,00,000.
13) Arun an employee of company in Kolkata is given choice of either accepting
house rent allowance at Rs 5,000 p.m. or rent free infurnished accommodation
having fair rental value of Rs 5,000 p.m. If he accepts HRA he will have to pay
rent at Rs 5,000 per month himself. His salary other than the facility of house or
HRA is fixed at Rs 16,000 p.m. Which one of the two options should he accept?
14) Mr. Vishal an MBA in IB who is engaged in export business visits France very
frequently. From particular given below determine his residential status for the
previous year 2012-13:
Previous Year Stay in France Previous Year Stay in France
2005-06 187 days 2009-10 70 days
2006-07 140 days 2010-11 225 days
2007-08 305 days 2011-12 306 days
2008-09 65 days 2012-13 283 days
15) Calculate the amount of basic salary for the previous year 2012-13 of an officer
of a public sector undertaking who is appointed on 1/9/2007 in the grade of Rs
18,000-500-20,000-600-26,000. He gets his increment after twelve months and his
salary is due on the last date of the month.
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16) Mr. Girish Kanad retired on 15/6/2012 from a manufacturing company after
putting service of 30 years and 7 months. He received a Gratuity of Rs 3,60,000.
Basic salary of Mr. Kanad was Rs 20,000 p.m. during 2011 and Rs 22,000 p.m.
during 2012. He was also getting D.A @Rs 5,000 p.m. which was increased from
Rs 4,000 on 1/4/2012. 50% of D.A is presumed to enter into salary for
computation of service benefits. Compute his taxable gratuity, if he is not
covered under Payment of Gratuity Act 1972.
SECTION – C
III) Answer ANY THREE questions (3 x 15 = 45 )
17) a) Determine the Residential status of the assess for the previous year 2012-13.
Mr. A. B. Sen left India for West Germany for higher studies on 1st December
2009.He maintained dwelling house for him in Delhi throughout the period
he was in West Germany. During winter vacations he came to India twice,
once on 4th January 2011 and stayed for 30 days and again on 25th December
2011, and stayed for 28 days. After completing his studies he came back to
India for good on 28th November 2012.
b) The following are the income of Shri Kiran for the previous 2012-13
Rs
(i) Profit from Business in Dharwad 7,000
(ii)Income accrued in India but received in Italy 6,000
(iii)Profit from business in England received in India 5,000
(iv)Income from house property in Africa received in India 4,000
(v)Profit from business established in Iran and deposited in a bank there, the
business being controlled from India
3,000
(vi)Income from house property in Pakistan and deposited in bank there 2,000
(vii)Past untaxed foreign income brought in to India during previous year 1,000
Compute the total income of Shri Kiran for the assessment year 2013-14 if he is
(a)ordinary Resident (b) Non Ordinary Resident (c) Non-Resident.
18) The employer of X gives the following 2 options for his appointment in Mumbai:
Option 1
Rs
Option 2
Rs
Basic Pay 9,60,000 9,60,000
Bonus 3,00,000 3,00,000
Education allowance for 2 children 30,200 –
Reimbursement of fees for 2 children in a school which is not
owned by employer
– 30,200
Sweeper allowance 40,000 –
Free sweeper – 40,000
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Entertainment allowance 60,000 –
Club facility – 60,000
Transport allowance for personal use 30,000 –
Free car (1200cc) facility for personal use ( car owned by
employer)
– 30,000
Medical allowance 18,000 –
Medical facility for X and family members – 18,000
Allowance for gas, electricity and water supply 4,500 –
Free gas, electricity and water supply – 4,500
Holiday home allowance 15,000 –
Holiday home facility – 15,000
Lunch allowance 18,000 –
Free lunch (Rs 70 x 200 days + Rs 80 x 50 days) – 18,000
Diwali gift allowance 11,000 –
Gift on Diwali – 11,000
A rent free unfurnished house : lease rent 2,00,000 2,00,000
Interest free loan of Rs 20,000 will be given to X for purchasing household items in
Mumbai. Which of the 2 options X should opt for to minimize tax bill?
19) X owns two houses- House I and House II. House I is utilized for residential
purpose by X. House II has two separate residential units- Unit I of House II(30
percent) is self occupied and Unit II of House II( 70 percent) is let out for
residential purposes rent being Rs 7,000 per month. From the information given
below, find out the income from house property of X for the assessment year
2013-14 in such a manner that the tax liability is minimized:
House I
Rs
House II
Rs
Date of completion of construction May 15, 2006 Dec 15,2006
Municipal Value 40,000 p.a. 1,00,000 p.a.
Fair Rent 48,000 p.a. 1,20,000 p.a.
Rent Received Nil 84,000 p.a.
(for 70 percent
portion)
Standard Rent 30,000 p.a. 1,20,000 p.a.
House Tax paid during 2012-13:
2012-13
2011-12
2010-11
4,000
2,000
200
10,000
6,000
5,000
Interest on loan taken in 2005 to construct two
Properties and loan is still outstanding:
9,000
46,700
Land Revenue outstanding 4,000 13,000
Ground Rent outstanding 3,000 4,000
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20) Calculate the taxable value of perquisite in the following 3 cases for PY 2012-13:
Case a) Mr. Ravi receives an annual salary of Rs 2, 00,000. He is provided with a
furnished accommodation at Gurgaon (population 11 lakh) for which his
employer pays a rent of Rs 4,000 p.m and deducts Rs 1000 p.m from Ravi’s
salary. The cost of furnishing of the residence amounts to Rs 30,000.Ravi
occupied this house for 9 monthly only.
Case b) Mr Cumin is working with a company as a sales manager on a monthly
salary of Rs 30,000. He took a loan of Rs 5,00,000 for construction of house from
his employer. The loan carried interest of 7.75% p.a. Loan was taken on
1/12/2011 and is repayable at Rs 5000 p.m commencing after 3 months from the
date of taking the loan. SBI lending rate as on 1/4/2012 is 10.75%.
Case c)ABC company sold the following moveable assets to one of its employees
in December 2012:
Asset Date of purchase
by employer
Cost to
employer
Price at which
sold to employee
Market price
on date of sale
Motor
car
10/10/2010 Rs 5,00,000 Rs 1,60,000 Rs 2,00,000
T.V 01/06/2009 Rs 40,000 Rs 10,000 Rs 18,000
furniture 15/04/2011 Rs 1,00,000 Rs 50,000 Rs 60,000
21) Mr. Nitish an employee of a public limited company at Bangalore, received the
following emoluments for the previous year 2012-13:
Rs
(i)Basic Salary @ Rs 30,000 p.m. 3,60,000
(ii)D.A as per terms of employment Rs 3,000 p.m. 36,000
(iii)Bonus equal to 1 month’s salary 33,000
(iv)Commission 60,000
(v)Advance salary 66,000
(vi)Employee’s contribution in recognized Provident Fund 48,000
(vii)Employer’s contribution in Recognized Provident Fund 48,000
(viii)Special allowance @ Rs 2000 p.m. 24,000
(ix)House rent allowance received @ Rs 10,000 p.m. 1,20,000
(x)Rent paid by him @ Rs 12,000 p.m. 1,44,000
(xi)Entertainment allowance Rs 3,000 p.m.
(He spends the whole amount while performing official duties)
36,000
(xii)Employer has provided him a Honda city car of 1600 cc capacity with
chauffeur which he uses both for his personal and official purposes
(xiii)Interest credited to his recognized provident fund @12% is Rs 30,000
(xiv)Employer company has provided him free club facility which costed the
company Rs 24,000 and free lunch for 30 days cost being Rs 150 per day.
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(xv)During the previous year he has been provided a interest free loan of Rs
18,000 to purchase a motor cycle. In November 2012 his father fell ill and he
again got interest free loan of Rs 50,000 from his employer
Find out his salary income for the assessment year 2013-14.
SECTION – D
IV) Compulsory Question (1 x 15 = 15)
22) Mr. Nainawala is the owner of a residential house which he has let-out to a
tenant along with the facilities of generator, gardener, electricity and security
man for a rent of Rs 35,000 p.m. The above rent includes the charges of above
facilities as follows:
For Generator Rs 2,000 p.m
For Electricity bills Rs 5,000 p.m.
For Gardener service Rs 1,000 p.m.
For Security man service Rs 2,500 p.m.
Other particulars are as follows:
Municipal Value
Standard rent
Municipal tax
Rs 2,50,000
Rs 2,60,000
Rs 10,000 p.a.
(out of which 60% to be borne by
tenant)
Date of completion of construction 28-02-2009
Date of letting (for the first time) 01-03-2009
Interest on loan taken to construct the
house
2006-07 to 2011-12
2012-13
Rs 30,000 p.a.
Rs 25,000 p.a.
Interest on delayed payment if interest Rs 2000. Stamp duty and registration charges
incurred in respect of lease agreement of the house Rs 2000.
Repairs expenditure on the house for the year 2012-13 Rs 5000. Actual expenditure
of Nainawala on facilities provided to tenant:
-On Generator Rs 12,000 p.a.(Petrol charges and maintenance.
– On electricity bills of tenant Rs 48,500 p.a.
– On Gardener salary Rs 1,000 p.m.
– On security man service Rs 2,300 p.m.
Municipal Tax of last year (paid during current year) Rs 10,000. Calculate house
property income and any other income for previous year 2012-13.
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