ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – SEPT/OCT. 2015

B.Com (Int Fin. & A/c) – i semester

C4 15 AR103: TAXATION-1

Duration: 3 Hours Max. Marks: 100

SECTION – A

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

Define Person 2(31) as per Indian Income tax Act of 1961.

R, was born in Dhaka in 1945, he was staying in Canada since 1974. He comes to visit India on 13.10.2014 and returns 29.03.2015. Determine his residential status for the assessment year 2015-16.

Compute the tax liability of R aged 60 years, ‘Non-Resident’ in India, whose total income for the previous year 2014-15 is 8, 90,460.

X, an employee of central government gets Rs. 30,000 p.m. as basic salary and is entitled to Rs. 1,500 p.m. as entertainment allowance. Compute deduction under section 16(ii) from gross salary in respect of entertainment allowance.

What are the different types of provident funds?

Explain the valuation of Perk in respect of lunch and refreshment under the head income from salary.

Write the provisions relating to standard deduction under section 24(a) under the head income form house property.

Write a note on the calculation in respect of Gross annual value with no Vacancy period.

Mention the taxability in respect of below mentioned items under the head Income from other sources;

(i) Dividend income received from Indian company

(ii) Dividend income received from Foreign company

10.

Explain the provision relating to payment made in cash in excess of Rs. 20,000, under the head income from business and profession.

SECTION – B

II)

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

Write a note on the exceptions to the general rule of previous year

12.

During the previous year 2014-15, X, a foreign citizen, stayed in India for just 69 days. Determine the residential status for the assessment year 2014-15 on the basis of the following information:

(i) During 2013-14 he was not present in India but during 2012-13 he came to India for 276 days

(ii) During 2011-12, X was present in India for 90 days

(iii) During 2008-09 and 2007-08, X was in India for 359 and 348 days respectively

(iv) Earlier to 2007-08 he had been regularly coming to India for 100 days every year.

13.

Mr. Rajesh earns the following income during the financial year 2014-15:

A	Profit from business in Bombay managed from London	1,60,000
B	Pension for services rendered in India but received in Burma	15,000
C	Interest on U.K. government bonds half of which is received in India	4,000
D	Income from property situated in Pakistan received there	20,000
E	Past foreign untaxed income brought to India during the previous year	7,000

Determine the total income of Mr. Rajesh for the assessment year 2015-16 if he is;

(i) Resident and ordinarily resident

(ii) Not ordinarily resident , and

(iii) Non-resident in India.

14.

S. Ramesh was employed since 1.1.1983 in a commercial establishment. His salary was fixed at Rs. 14,800 in the grade of Rs. 14,000-400-22,000 with effect from 1.7.2012. He got 15% of his salary as dearness allowance which is treated as salary for computation of retirement benefits. He retired for service on 1.2.2015. He received Rs. 3, 40,000 as gratuity form his employer. Calculate his gross total income under the head salaries for the assessment year 2015-16 if-

(i) Payment of Gratuity act 1972 applies,

(ii) Payment of Gratuity act 1972 does not apply.

15.

R an employee of a company at New Delhi is given the choice of either accepting house rent allowance at Rs. 8250 p.m. or rent free unfurnished accommodation having fair rental value of Rs. 8,250 p.m. if he accepts HRA he will have to pay rent at Rs. 8,250 p.m. himself. His salary other than facility of house or HRA is fixed at 11,000 p.m. which one of the two options should he accept?

16.

Briefly explain the provisions relating to deduction under section 80 D, 80 DD & 80 DDB

SECTION – C

III)

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

17.

Mrs. R aged 50 years an executive in X Ltd. In Delhi, gets the following emoluments during the previous year ending 31.3.2015:

Basic salary	30,000 p.m.
Dearness allowance (part of salary for superannuation)	6,000 p.m.
Entertainment allowance	1,500 p.m.
Special allowance	7,000 p.m.
House rent allowance (rent paid by her Rs. 13,000 p.m.)	11,000 p.m.
helper allowance for domestic use	1,000 p.m.
The employer- company provides a Honda city car of 1600 cc for personal use of Mrs. R as well as for official use (employer’s expenditure: Rs. 60,000, depreciation of the car @ 10% Rs. 65,000).
The employer also provides free club facility (expenditure of the employer: Rs. 18,000)
Free lunch (cost being Rs. 90 per day for 100 days.)
Mrs. R is neither a director, nor a shareholder in the employer- company.
Employer’s contribution to recognized provident fund Rs. 4,600 p.m. and she contributes Rs. 5,500 p.m.
Her income from other source	Rs. 3,10,000
Interest credited on 31.3.2015 @ 12% in the provident fund account	Rs. 36,000
During the year, Mrs. R pays insurance premium of Rs. 4,000 on insurance policy on the life of her mother and Rs. 2,500 on her own life insurance policy (sum assured: Rs. 1,00,000). Premium of Rs. 6,000 on insurance policy on the life of her husband falls due on 23.3.2015, though she pays the same on 13.4.2014. Determine the total income and tax liability of Mrs. R for the assessment year 2015-16.

18.

X (age 55 years) owns four houses, particulars of which are as follows:

	House 1	House II	House III	House IV
Municipal valuation	30,000	5,000	68,000	95,000
Fair rent	39,000	18,000	77,000	95,000
Standard rent	36,200	12,000	75,000	90,000
Rent ( if property is let out throughout the year)	42,000	–	–	–
Unrealized rent	3,500	–	–	–
Municipal taxes:
Paid by X	–	500	7,000	9,000
Paid by tenant	3,000	–	–	–
Date of completion of construction	May 31, 2013	May 31, 2013	March 31, 2013	April 1, 2012
Repairs	Nil	2,000	1,000	3,000
Collection charges	200	–	–	–
Land revenue	400	300	–	600
Ground rent	300	400	300	–
Nature of occupation	Let out for residence	Self Occupied for residence	Self occupied for business	Self occupied for residence

Property 1 remains vacant for 2 months ( March 16, 2015 to May 15, 2015). X borrows Rs. 30,000, Rs. 40,000 and Rs. 65,000 for construction of House I, House II and House IV, respectively (date of borrowing: June 15, 2008, date of repayment of loan along with interest: December 31, 2012, rate of interest: 15% p.a.).

Determine taxable income and tax liability for the assessment year 2015-16

19.

From the following receipts and payments a/c of Mr. L ascertain his taxable income from profession.

Receipts	Rs.	Payments	Rs.
To balance b/d	20,000	By Rent of Clinic	34,000
To consultation fees	2,40,000	By Purchase of Medicines	78,600
To visiting fees	1,65,000	By Staff Salary	36,000
To Gifts & presents	15,800	By Surgical Equipments	75,000
To sale of medicines	1,46,700	By Motor Car Expenses	27,800
To dividend form Indian company	16,300	By Purchase of Car	2,45,000
To Interest on securities	10,250	By Household Expenses	18,700
To interest on Post Office SB A/c	6,750	By Fixed Deposit at SBI	1,00,000
		By Balance c/d	5,700
Total	6,20,800	Total	6,20,800

Additional Information:

1. 60% of the use of car expenses incurred is in connection with profession

2. Gifts and Presents include Rs. 6,300 for patients

3. Car was purchased and put to use form 15^th March, 2015

4. Surgical equipments were purchased and put to use since 22^nd June, 2014

5. Rate of depreciation on car and surgical equipments is 15% p.a.

6. Opening stock of medicines Rs. 12,400 and closing stock Rs. 6,000

20.

During the previous year ending 31^st March, 2015, relevant to the assessment year 2015-16, Mr. N sold the following assets:

(i) A plot of land acquired from HUF at the time of partition on 13.3.2014. HUF acquired on 10.4.2001 for Rs. 60,000. (Date of sale: 5.5.2014, Sale consideration – Rs. 2, 00,000).

(ii) A residential house acquired on 23.8.2000 for Rs. 3, 04,000. (Date of sale 14.2.2015, sale consideration – Rs. 15, 00,000).

(iii) Shares (non-listed) in an Indian company acquired on 1.1.2013 for Rs. 88,500. (Date of sale: 10.7.2014, sale consideration – Rs. 1, 08,000). Assume the shares were sold outside recognized stock exchange.

(iv) Non-Listed debentures in an Indian company acquired on 15.12.2012 for Rs. 76,500 (date of sale: 15.07.2014, sale consideration – Rs. 60,000

(v) Building used for commercial purposes acquired on 31.7.2005 for Rs. 80,000 (date of sale: 17.7.2014, sale consideration – Rs. 32,000)

(vi) Jewellery acquired on 30.6.1969 for Rs. 18,000; Fair market value as on 1.4.1981- Rs. 34,000 (date of sale 20.6.2014, sale consideration – Rs. 2, 16,000).

(vii) Shares in a foreign company acquired on 1.1.1970 for Rs. 38,000: Fair market value on 1.4.1981- Rs. 95,000 (date of sale: 31.7.2014 sale consideration – Rs. 10, 10,000). Assume that the shares are sold outside recognized stock exchange.

(viii) Listed debentures in a foreign company acquired on 1.4.2013 for Rs. 90,000. (Date of sale: 15.6.2014. sales consideration – Rs. 2, 38,000).

Compute the taxable capital gain of Mr. N for the Assessment year 2015-16.

21.

From the following particulars of Pankaj from the previous year ended 31^st March, 2014, compute the income under the head ‘Income from Other Sources’:

	Rs.
Directors fee from a company	10,000
Interest on Bank deposits	3,000
Income from undisclosed source	12,000
Winnings from lotteries (net) conducted on 25.12.2014	35,000
Royalty on a book written by him	9,000
Lectures in seminars	5,000
Interest on loan given to a relative	7,000
Interest on debentures of a company (listed in a recognized stock exchange) net of taxes paid on 1.1.2014.	7,200
Interest on Post Office Savings Bank Account	500
Interest on Government Securities	2,200
Interest on Monthly Income Scheme of Post Office	33,000

He paid Rs. 1,000 for typing the manuscript of the book written by him.

SECTION – D

IV)

Case Study (1×15=15)

22.

Shri Vinesh, a resident individual, has given the following particulars of his income earned from employment during the year ended on 31.3.2015:

Rs.

Salary received in cash	1,74,400
Tax deducted at source by employer	5,400
Own contribution to a recognised provident fund, deducted by the employer	7,200
Employer’s contribution to the provident fund	8,000
Interest on accumulated balance of the provident fund (calculated @ 10.5%)	7,350
He was given throughout the year free use of a 1.4ltr engine capacity motor car (with driver) both for employment and private purposes; all the expenses were borne by the employer.
His other incomes were as follows:
Interest on government securities	3,500
Rent of house property	72,000
Long term capital gain on gold	6,800
Dividends from Unit Trust of India	5,000
Dividends from Indian companies (Gross)	3,000
he paid Rs. 4,400 as premium on the health insurance of himself and his wife under an approved scheme and incurred Rs. 40,700 on the treatment of his dependant minor son with disability during the previous year
He donated to an approved institution for scientific research Rs. 6,000. He resides in his own house whose municipal valuation is Rs. 40,000.
Compute the total income of Shri Vinesh for the assessment year 2015-16.

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