REG NO:

ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESER EXAMINATION – MARCH/APRIL 2016

B.COM – VI SEMESTER

C1 11 601: INCOME TAX – II

Duration: 3 Hours Max. Marks: 100

SECTION – A

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

Explain the term Block of Assets.

How to treat bad debts recovered but disallowed earlier?

Define Capital Asset as per Income tax Act of 1961.

What do you mean by Indexed cost of acquisition and Indexed cost of improvement?

State the Standard deduction for Family Pension.

What is Casual Income? What is the rate of TDS for casual incomes?

Explain provisions relating to Deduction u/s 80TTA.

Compare the provisions of the sections 80 QQB & 80 RRB.

Write a note on the different types of Assessments.

10.

Write a note on the powers of the CBDT.

SECTION – B

II)

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

11.

Written Down Value (W.D.V) of the block having two machines namely X and Y as on 1.4.2014 is Rs. 6,00,000. Machine Z was acquired on 5.11.2014 for Rs. 3,00,000 and put to use on the same date. Machine Z is sold on 28.3.2015 for Rs. 4,00,000.

(a) Compute the depreciation allowable for the assessment year 2015-16.

(b) What will be the amount of depreciation allowed, if machine ‘X’ is sold instead of machine ‘Z’.

12.

An analysis of the profit and loss account and the balance sheet of X as at 31.3.2015 reveal that the following expenses which were due, were though debited to the profit and loss account but have been paid after 31.3.2015. What will be the tax treatment of the expenses?

Sales tax

50,000

20,000 paid on 14.7.2015

30,000 paid on 1.10.2015

Excise-duty

1,20,000

40,000 paid on 14.7.2015

40000 paid on 1.10.2015

40,000 paid on 1.11.2015

13.

Dinesh purchased jewellery worth Rs. 80,000 during the year 1984-85. During the year 1990-91, he further purchased jewellery worth Rs. 90,000. All the jewellery was sold by him on 15.5.2014. The jewellery purchased in 1984-85 was sold for Rs. 7,90,000. He purchased a plot of land for Rs. 3,55,000 on 4.1.2015 for construction of residential house. On 15.6.2015 he deposited Rs. 5,00,000 in the Capital Gains Accounts Scheme and further sum of Rs.2,00,000 as on 15.11.2015. He owns only one residential house as on 15.5.2014.

Compute the capital gains for the assessment year 2015-16.

14.

X(42 years ) gives the following information for the previous year 2014-15:

(a) On 1.12.2014, he gets gift of House A from his friend B (stamp duty value is determined at Rs. 6,00,000)

(b) On 3.12.2014, he gets gift of House B from C (who is father-in-law of his elder brother) (Stamp duty value is Rs. 40,000, however, current market value is Rs. 65,000).

(d) On 14-12-2014, X purchases a work of art for Rs. 5,00,000 from E (FMV is 5,30,000).

(e) On 20-12-2014, X purchases Jewellery for Rs. 7,00,000 from F (FMV is Rs. 7,25,000). F is not a registered Dealer.

Write the tax treatment for the above mentioned information.

15.

A submits the following information regarding his income for the previous year 2014-15.

Salary (Computed)	4,15,000
Income from Rent (computed)	48,000
Winnings from lottery (Gross)	15,000
He makes the following deposits/payments during the year: Contribution towards PPF	1,10,000
Premium paid in cash on mediclaim policy for his dependent father	8,000
Purchase of listed equity shares of notified company as new retail investor	40,000
Amount paid in cash for preventive health check of himself and spouse	6,000

He has a son being a person with disability, dependent on him, for whom he incurs expenses for his medical treatment and rehabilitation. He also deposits a sum of Rs. 25,000 for the benefit of his son under a scheme framed by the UTI for such a purpose.

Compute his total income and tax liability for the assessment year 2015-16.

16.

From the following particulars of Pankaj from the previous year ended 31^st March 2015, compute the income under the head “Income from Other Sources”:

	`
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 01.01.2015	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 – C

III)

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

17.

Sri Ram Gopal is the owner of a business. Following is his P/L account for the year ended on 31.3.2015:

Establishment charges	5,110	Gross profit	50,870
Rent rates & taxes	2,900	Interest on Government securities (gross)	5,350
Sundry expenses	7,050	Rent form property	5,400
Household expenses	1,880
Provision for bad debts	1,200
Loss of sale on motor car (used for private purpose)	1,800
Insurance premium (including life insurance for Rs. 1,790)	2,880
Interest on bank loan	1,380
Provision for depreciation	6,400
Net profit	31,020
	61,620		61,620

Additional Information:

(1) Bad debts written off during the year Rs. 650

(2) Admissible depreciation as per income tax rules Rs. 1,600

(3) The Assessee is running his business in a rented property, half of which is used by him for his own residence. Rent of Rs. 2,400 in respect of entire house is included in rent, rates and taxes. The balance of Rs. 500 is on account of municipal tax paid for property given on rent.

Compute the Business Income of Shri Ram Gopal for the assessment year 2015-16.

18.

A had the following assets which were sold/compulsorily acquired during the previous year.

Particulars	Date Of Acquisition	Mode Of Acquisition	Date of sale/ Compulsory acquisition	Sale price/ compensation	Cost of acquisition by assessee or previous owner
Gold	1981-82	Self	31.10.2014	12,00,000	1,00,000
Urban agricultural land	1986-87	Self	15.11.2014	17,80,000	2,00,000
Rural agricultural land	1978-79	Gift from father on 1.5.1982	15.12.2014	4,00,000	50,000
Motor car for personal use	1990-91	Self	15.1.2015	1,50,000	80,000
Land and building forming part of Industrial undertaking	15.10.1995	self	15.2.2015 (compulsorily Acquired)	6,00,000	4,00,000 (WDV as on 1.4.2014)

A purchased a residential house property on 20.2.2014 by investing Rs. 5,00,000. He purchased an agricultural land on 13.4.2015 for Rs. 1,40,000. He also purchased building for Rs. 1,50,000 on 31.7.2015 to be used for industrial undertaking. Compute the Income from capital Gain.

19.

The following incomes are received by Mr. Mohan during financial year:

Director’s fees	2,000
Income from agricultural land in Pakistan	5,000
Ground rent for land in Pathankot	10,000
Interest on Postal savings bank account	100
Interest on deposits with Industrial Finance Corporations of India	500
Dividend form a foreign company	700
Rent from subletting a house	26,250
Rent payable by Mr. Mohan for the Sub-Let house	12,000
Other expenses on Sub-let house	1,000
Winnings from Horse race (Gross)	12,300
Interest on securities (Gross)	4,000

You are required to calculate income from other sources of Mr. Mohan for the assessment year 2015-16.

20.

Find the net income in the following cases for the assessment year 2015-16:

	Mrs. X (Rs.)	Mrs. Y (Rs.)
Business Income	24,75,000	–
Speculative business income form dealing in equity shares (securities transaction tax of Rs. 1,874 deducted)	–	24,75,000
Interest on company deposit	1,00,000	1,00,000
Contribution towards public provident fund	90,000	90,000
Life insurance premium (sum assured: Rs. 6,00,000) (policy taken in June 2014	70,000	70,000
Amount invested in debentures of a notified infrastructure company	6,000	6,000
Donation to a notified public charitable institution	18,000	18,000
Rent for residential house paid at Delhi	2,39,000	2,39,000
Mediclaim insurance premium	30,000	30,000
Age during 2014-15	59 years	50 years

21.

X (32 years), a part-time college lecturer at Bombay, furnishes the following particulars for the assessment year 2015-16:

Rs.

Computed Salary	5,37,600
Examinership remuneration	84,000
Royalty on books for university students	1,92,000
Income from house property	2,10,000
Long term capital gain	2,15,000
Short term capital gain	1,10,000
Interest on government securities	48,000
Bank interest	20,000
Income from tuitions	1,16,000
Contribution of X to Statutory provident fund	46,000
Contribution to public provident fund	41,000
Expenditure on mediclaim insurance premium of dependent grandmother who is resident (age: 67 years)	26,000
Donation to government for the purpose of promoting family planning	1,24,000

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

SECTION – D

IV)

Case Study (1×15=15)

22.

From the following Receipts & Payments A/c for Dr. I a medical practitioner, ascertain his taxable income from profession.

Particulars	Rs.	Particulars	Rs.
To Balance b/d	58,500	By Cost of Medicines	2,20,000
To Loan from Bank	1,00,000	By General Expenses	4,500
To Sale of Medicines	2,65,000	By Motor Car Expenses	60,000
To Consultation Fees	1,60,000	By Salary	12,000
To Visiting Fees	30,000	By Rent of Dispensary	24,000
To Interest on Govt. Securities	36,000	By Telephone & Cell Phone Expenses	5,000
To Rent from House property	80,000	By Household Expenses	16,000
To Gift from Father-in-law	50,000	By Life Insurance Premium	25,000
To Gift from patients	20,000	By Interest on loan	2,000
		By Car Insurance Premium	7,000
		By House property Insurance Premium	5,000
		By Municipal Tax on House property	8,000
		By Travelling Expenses	10,000
		By Charity	1,000
		By Books purchased	25,000
		By Repayment of Housing Loan	88,600
		By Fixed Deposit of SBI	2,50,000
		By Balance c/d	36,400
	7,99,500		7,99,500

Additional information:

a. ½ of Motor Car expenses are in respect of personal use.

b. Consultation fees includes a receipt of Rs.60,000 as advance for attending a medical camp in April 2014.

c. WDV of Motor Car as on 1-04-2014 was Rs.2,50,000 and the rate of depreciation is 15%.

d. Traveling expenses is not admissible to the extent of 30%

e. Dr. I is eligible to claim depreciation on surgical equipments and furniture to the extent of Rs.12,500.

f. Closing stock of medicines Rs.40,000

g. Books purchased are not annual publications and are eligible for 60% depreciation.

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