LOYOLA COLLEGE (AUTONOMOUS), CHENNAI –600 034
M.Com., DEGREE EXAMINATION – COMMERCE
THIRD SEMESTER – NOVEMBER 2004
CO 3952 – INCOME TAX LAW & PRACTICE – II
02.11.2004 Max:100 marks
1.00 – 4.00 p.m.
SECTION – A
Answer ALL the questions (10 ´ 2 = 20 marks)
- Define the term Business as per IT Act.
- What do you mean by Block of Assets?
- What do you mean by clubbing of Income?
- What is Intra – Head Adjustment of Loss?
- Define the term TRUST.
- What is the meaning of change in the constitution of a firm?
- What is meant by Partnership firm assessed as Association of persons?
- What is Residence of Company?
- How the minor’s Income is treated under Income – Tax Act?
- Give the order of set off of carried forward of losses.
SECTION – B
Answer any FIVE questions (5 ´ 8 = 40 marks)
- Explain the various points to be considered while allowing depreciation on the Assets.
- Discuss the Deemed Incomes under section 69.
- Following are the particulars submitted by Mr.Kuldeep for the year ending 21st march 2004. Compute his total income:
(i) Income from House property: Rs.
- a) Income from house ‘A’ – 60,000
- b) Loss from house ‘B’ (Both are let out) – 20,000
(ii) Income from Business or profession:
- a) Income from cloth business – 30,000
- b) Loss from Hardware business – 60,000
- c) Loss from speculation business – 10,000
(iii) Income from other sources:
- a) Income from Lottery – 25,000
- b) Loss from maintenance of race horses – 7,000
- c) Interest on securities – 10,000
(iv) Cross salary – 66,000
- Discuss the Admissibility of following expenses/losses:
- Loss by embezzlement by employees and theft by outsiders or through negligence of employees.
- Membership fee paid to the Indian Institute of foreign trade.
- Premium paid on ‘loss of profit (on account of strike, lock-out etc) policy.
- Professional Tax paid to local Authority.
- Amount paid to the employee under the profit – sharing scheme adopted by the employer.
- Interest charged to a partner on debit balance.
- Calculate depreciation allowance for the assessment year 2004 – 05 from the details given below by Mr.X:
- The written value of the Assets on April, 2003 was:
Rs.
Office Building – 2,00,000
Factory Building – 3,00,000
Workers Recreation Room – 29,000
Machinery – 1,50,000
Furniture – 25,000
Type writer – 11,000
Tractor – 25,000
- A new machine costing Rs.50,000 was installed on 20th July 2003.
- A new typewriter was purchased for Rs.5,000 on 1st 2003.
- A new foreign car purchased for Rs.2,30,000 on 1-2-2004.
- Extension at a cost of Rs.50,000 was made during the year in the office building.
- Furniture of the written – down value of Rs.3,500 was discounted on 1st Jan 2004. It has been sold for Rs.1,400 on 1-2-2004.
- Explain the exempted incomes in case of charitable or religious trusts.
- Explain the provisions of minimum alternative tax on companies u/s 115 JA.
- Write a note on Expenditure incurred in the field of Scientific Research.
SECTION – C
Answer any TWO questions (2 ´ 20 = 40 marks)
- Explain the incomes of other persons included with the total income of the Assessee under sec 60 – 64.
- A, B, and C are partners in a firm, sharing profits and losses in the ratio of 2 : 2 : 1 respectively. The profit and loss Account for the year ended 31st march, 2004 is as follows:
Rs. Rs.
To Sunday Trade expenses 1,02,000 By Cross Profit 2,78,200
To Interest on Capital @ 13% By interest on securities 10,000
A 13,000 (gross)
B 6,500
C 6,500
——— 26,000
To Rent to B 30,000
To Salary to B 72,000
To Commission to C 36,000
To Net profit 22,200
———— ————-
2,88,200 2,88,200
———— ————-
Compute the total income of the firm and Taxable Income of the three partners in the firm.
B and C are working partners.
- X is a registered medical practitioner. She keeps her books on cash basis. The summarized cash Account for the year ended 31st march 2004 is as under.
Rs. Rs.
Opening Balance 2,700 Cost of medicines 20,000
Bank Loan 6,000 Surgical equipment 6,000
Sale of medicines 30,500 Motor car 12,000
Consultation fees 10,000 Salary 1,200
Visiting fees 8,000 Rend of Dispensary 1,200
Interest on Investments 9,000 General expenses 600
Rent from property 7,200 Personal expenses 3,600
Sale of Building 15,000 L.I.C. premium 2,000
Sale of Furniture 5,000 Interest on Bank Loan 360
Property insurance 400
fixed deposit in bank 30,000
Closing Balance 14,240
———– ———–
93,400 93,400
———– ———–
keeping in view the following additional information, Compute her income from
profession for the p.y 2003 – 04:
- 1/3 Car expenses are for personal use.
- Written down value of the house property on 1st April, 2003 was Rs.20,000 and that of furniture was Rs.4,000. There were no other assets in these books.
- Rate depreciation of the new car is @ 20% and on surgical equipment’s 25%.
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