- JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
End Semester Examination – April 2014
B.Com – VI Semester
INCOME TAX – II
Time: 3 Hours. Max Marks: 100
Section – A
- Answer ALL the following questions: (10 x 2 =20)
- What is meant by grossing up? Explain two situations under which it is done.
- Mention 4 assets which when transferred do not result in capital gain.
- Explain deduction u/s 80 GG.
- From the following information of Mr. Vishwa, Compute the taxable capital gain for AY 2013-14
- Cost of acquisition of a residential house in 1993-94 – Rs 3,20,000
- Sale consideration on 1/7/2012- Rs 21,00,000
- Cost of acquisition of a new house prior to date of filing return- Rs 6,00,000
- CII for 1993-94- 244, CII for 2012-13- 852
- Explain the tax provisions relating to preliminary expenses.
- What is meant by composite rent? Explain its tax treatment.
- Vivek’s Gross Total Income for PY 2012-13 was Rs 5,00,000, he made the following donations, compute his taxable income
- National Foundation for Communal Harmony- Rs 15,000
- Donation to municipal corporation for promotion of Family Planning- Rs 40,000
- National children’s Fund- Rs 5,000
- Donation to a minority community corporation (notified)- Rs 25,000
- What is meant by ‘unabsorbed depreciation’? Explain its tax treatment relating to set off and carry forward.
- Mention 4 expenses deductible u/s 57
- Ashok received a sum of Rs 5,00,000 the details of which are as follows:
- From relatives- Rs 1,00,000
- From an unregistered charitable institution in connection with compensation for floods- Rs 50,000
- Rs 1,50,000 received from friends on the occasion of his birthday
- Rs 2,00,000 received from a neighbor who is on his death bed
Determine the amount chargeable to tax.
Section – B
- II) Answer any FOUR Each carries 5 marks. (4×5=20)
11) Mr. Y spent following amount on scientific research. Calculate the amount which he can debit to P & L A/c during assessment year 2013-14: a) Salary of staff and other expenses on research conducted before commencement of business
(i) relating to own products Rs 90,000. (ii) On products not related to own business Rs 1,10,000. b) Capital Exp. On land required for research Rs 5,40,000. c) Capital Exp. On building and plant and machinery required for research Rs 6,60,000.
12) Ram sells a residential house in Mumbai for Rs 6 lakhs on May 1st, 2012, its cost of acquisition in 1981 being Rs 30,000.On July 20th, 2012 he purchased a new residential house for Rs 2,10,000 in Meerut. On July 30, 2013, he deposited Rs 1,20,000 in Capital Gains Account Scheme. Compute the amount of exempted capital gain under the Income Tax Act C.I.I for 1981-82 is 100 and for 2012-13 is 852.
13) Compute Income from other sources of Shri Vikas for the assessment year 2013-14: (i) Dividend from UTI Rs 5,000. (ii) 5% Interest from Post Office Saving Bank Rs10,000. (iii) Interest on Fixed Deposit from Punjab National Bank Rs 7,000, income credited to his account. (iv) Rs 30,000, 7% Debentures of JCT Mills Ltd. (v) Rs 50,000, deposit in Haryana Financial Corporation at 12% interest p.a. (vi) Rs 5,200 interest received on National Development Bonds. (vii) Rs 1, 00,000, 8% Tax free commercial securities. The bank charges 2% commission on collection of net amount of interest and dividend.
14) 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
| Rs | |
| P.M National Relief Fund | 1,25,000 |
| National Defence Fund | 2,50.000 |
| Municipal Corporation | 1,25,000 |
| C.M.C Ludhiana for promotion of Family planning | 1,70,000 |
| Mr.Sunil Dutt- a social activist for charity purpose | 50,000 |
| National Children Fund | 40,000 |
| Jawahar Lal Nehru Memorial Fund | 2,50,000 |
| To temple of public worship for repairs(notified) | 4,00,000 |
Compute his total income for the assessment year 2013-14.
15) Mr. X a resident, is a practicing chartered accountant. He also runs a private accountancy coaching institute. He keeps his accounts on cash basis and his summarized cash account for the year 2012-2013 is as under:
| Rs | Rs | ||
| Balance b/d | 13000 | Office expenses | 24,000 |
| Income from other accounting work | 1,25,400 | Office telephone bills | 7,000 |
| Audit fees | 2,14,700 | Municipal taxes (property) | 4,000 |
| Institute fees | 6,100 | Institute expenses | 1,800 |
| Examiner’s fees | 4,600 | Misc. expenses | 41,500 |
| Withdrawal from PPF | 50,000 | Membership & certificate fees | 1,200 |
| Interest on investments (TDS @10%) | 18,000 | Life insurance premium | 17,000 |
| Agricultural income | 10,000 | Income -tax | 22,500 |
| Rent from property let out for residential purpose | 48,000 | Motor car purchased | 1,80,000 |
| Motor car expenses | 9,600 | ||
| Insurance of property | 840 | ||
| Balance c/d | 1,80,360 | ||
| 4,89,800 | 4,89,800 |
On the basis of above information, compute his professional income for AY 2013-14.
- One third of motor car expenses are in respect of his professional practice
- Depreciation @ 15% for motor car is Rs 27,000
- Expenses include Rs 6,000 paid as stipend to trainees and balance are personal expenses
- He purchased a computer on 30-11-2012 for Rs 54,000 and for this he took a loan of Rs 50,000 @ 15% p.a.
16) Explain the powers of an Assessing Officer.
Section – C
III) Answer any Three questions. Each carries 15 marks. (3×15=45)
17) Mr. G submits the following information about sale of assets during the previous year 2012-2013. Calculate Taxable Capital Gains.
| Asset | Residential House | Jewellery | Listed Debentures |
| Date of acquisition
C.I.I Cost of acquisition Date of sale Sale price |
11-3-1988
150 Rs 2,80,000 15-5-2012 20,00,000 |
1-7-1994
259 70,000 17-5-2012 4,00,000 |
12-4-2004
480 2,00,000 16-5-2012 4,00,000 |
| Investment | Date of acquisition | Amount invested |
| Residential House
Bonds of Rural Electrification Corporation |
19-11-2012
16-11-2012 |
13,00,000
1,20,000 |
18) From the particulars given below calculate the amount of depreciation available during the assessment year 2013-14.
| Rs | |
| Car used for Taxi service[30% Block]
W.D.V as on 1-4-2012 New car purchased on 1-5-2012 Sale price of a car sold in Dec 2012 Another taxi purchased on 1-11-2012 |
4,60,000 3,20,000 1,35,000 2,80,000 |
| Furniture of Meeting Hall[10% Block]
W.D.V as on 1-4-12 Sale price of an item of furniture sold in Jan 2013(its WDV was 36,000) New items of furniture purchased in Feb 2013 |
1,60,000 20,000 96,000 |
| Office Equipment:[15% Block]
W.D.V as on 1-4-12 Cost of new typewriter on 1-10-2012 Sales price of two old typewriters |
90,000 10,000 6,500 |
A car who’s W.D.V as on 1-4-2012 was Rs 36,000(not included in WDV as on 1-4-12) was sold on 1-3-2013 for Rs 20,000. A new car was purchased for Rs 5, 60,000 on 1-4-2012. Another car vehicle costing Rs 6, 00,000 was added on 1-12-2012.
19 a)Mr. Shivanand has the following investment in the PY 2012-13:
(i) Rs 11,000, 10% Kerala State Govt. Loan
(ii) Rs 30,000, 13.5% Debentures of HMT Ltd
(iii) Rs 35,000, 11% Securities of a Textile Mill
(iv) Rs 36,000, 10% tax free commercial securities
(v) Rs 3,580 received as interest on Tamil Nadu Govt securities
(vi) Rs 1,500 received as interest on securities of a Paper Mill
(vii) Rs 4,500 received as interest on securities of a Sugar Mill.
During the PY 2012-13 he purchased Rs 50,000, 7% capital investment Bonds on 1/10/2012.For this purpose he borrowed Rs 30,000 from Bank at 15% p.a. Interest on all securities is payable on 30th June and 31st December. The bank charged 1.5% commission on net realization of interest as collection charges.
He was also a director in a company from which he received Rs 3,000 as director’s fees. His other incomes are:
- Winning from lottery Rs 25,000
- Income from agriculture in Sri Lanka Rs 10,000
- Winning from horse race Rs 15,000
- Interest on Post Office Savings Bank Account Rs 2000
Find out his taxable income from other sources for the AY 2013-14
19 b) X is an advocate by profession. From the information given below determine the income of X for AY 2013-14.
(i) On April 30, 2012, he purchases 10 paintings of Raja Ravi Verma for Rs 9, 00,000 (fair market value is however, Rs 35, 00,000). These paintings are purchased from an advocate (who is not a registered dealer of paintings). Upto 31/3/13 these paintings are not sold.
(ii) Income of X from legal profession is Rs 60, 00,000 during the PY 2012-13
(iii) On 30/6/12, he purchases jeweller from a person (other than registered dealer) for Rs 8, 00,000(fair market value is Rs 9, 10,000). In December 2012, the jeweller is transferred for Rs 9, 50,000.
(iv)Minor son of X gets gift of Rs 75,000 from his maternal uncle on his 9th Birthday
- Minor daughter of X gets gift of Rs 60,000 from friends of X and Mrs. X on her 5th birthday
- On December 10, 2012 X purchases a Tagore painting from Jain Art gallery, Cochin. Jain Art gallery is a registered dealer. The painting is purchased under invoice no 485 issued by Jain art gallery and the invoice price/purchase price is Rs 5, 00,000. However the same painting will not be available for less than Rs 7, 50,000 from any other gallery.
- On 15, December 2012, X purchases jeweler from Tanishq (registered dealer under VAT). The invoice price is Rs 3, 70,000. However the same jewellery will not be available for less than Rs 4,40,000 from any other jewellery shop
20) Mr. Kumar of Bombay submits the following Trading & Profit & loss a/c for the year ended 31/3/2013. He is also in employment with a cinema company in Bombay. Compute the taxable income for AY 2013-14
| Rs | Rs | ||
| To opening stock | 60,000 | By sale | 4,20,000 |
| “ Purchases | 3,90,000 | “ closing stock | 80,000 |
| “ Freight | 15,000 | ||
| “ gross profit | 35,000 | ||
| 5,00,000 | 5,00,000 | ||
| To salaries & wages | 14,800 | By Gross profit | 35,000 |
| “ rent & taxes | 3,800 | “ Dividends on shares of co-op society | 2,000 |
| “ household expenses | 2,400 | “ Rent from building let out | 4,800 |
| “ income- tax | 400 | ||
| “ advance income tax | 200 | ||
| “ sales tax | 400 | ||
| “ donations | 500 | ||
| “ life insurance premium | 1,800 | ||
| “ audit fees | 200 | ||
| “ reserve for bad & doubtful debts | 680 | ||
| “ bad debts | 420 | ||
| “ miscellaneous expenses | 600 | ||
| “ depreciation | 500 | ||
| “ net profit | 15,100 | ||
| 41,800 | 41,800 |
The following information is also supplied by him;
- He received a salary of Rs 12,000 from the cinema company and has contributed 15% of his salary to a RPF.
- Purchases include Rs 5000 as advance to his supplier in March 2013 against goods to be delivered in April 2013
- Rent & taxes include Rs 1800 being municipal taxes paid for the building let out. Taxable income from house property (computed)- Rs 2,100
- Premium is paid on his life policy of Rs 15,000.
- Donation was given to a family planning institution in India
- Miscellaneous expenses include Rs 400 paid to an approved rural development fund
- The W.D.V of the business furniture on 1/4/2012 was Rs 16,000 out of which an item of furniture was sold for Rs 10,000
- He paid Rs 5000 to local college (which is an approved institution) for its building.
21) Write a note on – a) Commissioner of Income Tax
- b) Types of Assessment
- c) Tax provisions related to gifts received
Section – D
- IV) Compulsory Question: (1 x 15=15)
22) Compute the taxable income and tax liability of X (63 years) for AY 2013-14
| Rs | |
| Net income from computer hardware business | 17,30,000 |
| Interest on post office savings bank account | 13,000 |
| STCG on transfer of land | 6,24,000 |
| LTCG on house property (computed after indexation) | 5,55,000 |
| Winning from horse race (net) | 57,400 |
| Loss from betting | 10,000 |
| Interest on bank fixed deposits:
-in the name of minor son -in his own name -in the name of minor daughter -in the name of major unmarried daughter |
600 40,000 3,200 60,000 |
| Expenditure incurred for the medical treatment of his 67 years old elder brother(dependent on X, being a person with disability) | 8,000 |
| Repayment of loan taken for part time studies of major daughter for graduate course in management (loan is taken from a notified charitable institution) | 80,000 |
| Payment of interest on the aforesaid loan | 17,000 |
| Donation to the aforesaid notified charitable institute | 5,000 |
| Brought forward loss of a discontinued business pertaining to the AY 2009-10 | 40,000 |
| Purchase of a work of art on 1st nov 2012 from a friend for Rs 84,000 (market value is however Rs 3,00,000) | 84,000 |
| Purchase of a painting on 1st December 2012 from a registered dealer for Rs 60,000 (invoice price of Rs 60,000. However, a similar painting is not available for less than Rs 3,00,000) | 60,000 |
| Payment of a disputed sales tax liability of the PY 2011-12 pertaining to computer hardware business (not yet deducted from the income given above) | 34,000 |
| Deposit in PPF account | 10,000 |
Latest Govt Job & Exam Updates: