Income Tax -I

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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2013
B.COM – V SEMESTER
INCOME TAX – I
Time: 3 Hours Max. Marks: 100
SECTION – A
I) Answer ALL the following questions: (10×2=20)
1. Define a Person.
2. X starts a new business on March 29th 2012. He closes his books of a/c on
31st March 2012. However he wants the income generated in this period
for AY 13-14. Is he legally correct?
3. How do you differentiate exemption with Deduction in IT.?
4. Give any 4 cases where income of previous year is charged in the
previous year itself.
5. Explain the Tax provisions of Leave Travel Concession availed
6. How do you treat arrears of rent of earlier years recovered in the previous
year?
7. How is Retrenchment Compensation received taxed
8. Mention the conditions given under Rule 4 w.r.t Unrealised Rent.
9. X a resident of Pune gets Rs.2,20,000 p.a as basic salary. He receives Rs.
65,000 p.a as HRA, though he pays a House Rent of Rs. 60,000. Determine
HRA taxable.
10. Calculate the Municipal Tax deductable from the following
MRV Rs. 60,000 , Municipal Taxes 10% of MRV, 50% of it to be payable by
Tenant and the remaining to be paid by the owner of which only 40 %
was paid and the balance due
SECTION – B
II) Answer any FOUR of the following questions: (4×5=20)
11. Explain in detail tax provisions relating to Motor Car facilities availed by
an employee.
12. X was born in Pune in 1978. Later on he migrated to Australia in
December 2011and took citizenship there with effect from Jan 1st 2012. He
comes to India on 15th Feb 2013 for a visit of 190 days. Find out his
residential status of X for AY 13-14 on the assumption that before 2011 he
stayed in India at least 275 days every year explaining the provisions in
detail.
13. X, a marketing specialist of Madras is working with two concerns, P. Co,
& Q Co.. He retires from P.Co on June 30th 2005 and receives Rs. 29,000 as
gratuity out which 28,000 was exempt from tax
He retires from Q Co., on December 2 nd 2012 after 6 years 11 months
service and receives Rs.3,70,000 as gratuity. Basic salary (average) drawn
from Q Co. for preceding 10 months ending November 30th 2012 is Rs.
22,000. Besides, he received Rs. 1,000 as DA which forms part of salary
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and 5 % commission on turnover of Rs. 6,70,000 achieved by him for
previous 10 months. Determine taxable gratuity.
14. Anil built a residential house and for completion of the house he took a
loan of Rs. 20,00,000 from a Bank as under.
a. On 1-5-2006 Rs. 5,00,000 @ 10%
b. On 1-11-2007 Rs. 8,00,000 @ 9%
c. On 1-1-2009 Rs. 4,00,000 @ 8%
House was completed in Oct 2009.and since then it is occupied for the
residential purposes of his family. He repaid Rs. 4,00,000 to the bank on
1st Dec 2012 and the bank adjusted this amount against 1st Loan.
Determine the amount of deduction u/s 24
15. Give any ten incomes which are Totally Exempt from tax u/s 10
16. A house is completed on April 1st 2012 and the following is available
about this house
Particulars Amount
MRV 30,000
p.a
FRV 32,000
p.a
ACTUAL RENT 4,000
p.m
Municipal taxes-paid 6,000
p.a
Due 4,000
Fire insurance premium 3,600
Land revenue 6,000
INTEREST ON LOAN
1-4-09 to 31-3-2012 45,000
1-4-12 to 31-3-13 15,000
The HP was Let out for the Period 1-4-2012 to 31-12 2012 and self occupied
from 1-1-2013. Compute income from House Property
SECTION – C
III) Answer any THREE of the following (3×15=45)
17. Find out the income of Xavier for the AY 13-14 on the assumption
that he is (a) Resident (b) Not Ordinary Resident & (c) Non
Resident
i. Royalty from Patent registered in USA but received in India
Rs.20,00,000
ii. Dividends from Italian Co. Rs.18,00,000
iii. Profit of a sole proprietary business situated in Dubai,
received in Mauritius(business entirely controlled from
India) Rs.4,50,000
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iv. Loss from a business situated in Pakistan Rs. 2,00,000
v. Rent of a commercial property in Bhutan Rs. 2,35,000
vi. Speculation profit earned and received in India on 1st April
2013 Rs.4,00,000
vii. Profit from sale of house property in UK ( 50% received in
Chennai) Rs. 1,77,000
viii. Income from profession set up in Bangalore( consultancy
provided in UK and amount received in UK) Rs. 8,32,000
18. What are the different types of Provident Funds? Explain in detail
IT provisions relating to them.
19. Compute taxable salary form the following.
Particulars Rs.
Salary p.m 8,000
Arrears of salary 4,000
D.A p.m 2,000
LIC premium paid by employer 10.000
Bonus 15,000
Education allowance for grandchild
p.m
400
Cash gift 10,000
CCA p.m 1,000
Medical expenses paid by employer 6,000
He & his employer contributes 15% of
his salary to RPF
–
Lunch allowance @ Rs.100 per day for
250 days
–
Provided with a credit card,
bill of which is paid by Co.
6,000
20. Mr Ajay is the owner of a house which consists of 3 independent
units. The floor area is in the ratio of 40%: 40%: 20%. The 2nd & 3rd
portion are Let out where as the 1st portion is self occupied. Other
Details are
FRV 90,000
Municipal valuation 1,00,000
Standard rent 80,000
Municipal taxes 10% of MRV
Repair expenses 10,000
Ground Rent
Actual Rent -2nd
portion
5000 p.m
3rd
Portion
2,000 p.m
2nd Portion remains vacant for 2 months. Ajay had started the
construction of the House in 2009. He borrowed Rs. 10,00,000 @ 14 %
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on 1-7-2009 for construction which was completed on 18th July 2011. He
repaid a Loan of Rs. 2,00,000 on 31st March 2012.
21. Explain in detail with examples Capital & Revenue Items
SECTION – D
IV) Compulsory question. (15marks)
22. Mr. Ganesh an employee working in Dreams Ltd. Mumbai has
presented the following particulars of his salary for PY 12-13 and
expects you to determine taxable salary and the deductions that he
can claim u/s 80
i. Basic salary Rs. 20,000 p.m
ii. DA-80% of salary( 50% enters retirement benefits)
iii. Bonus one month
iv. Commission Rs. 66,000
v. Leave encashment of current year Rs. 20,000
vi. He has engaged a helper @ Rs.1,200 p.m and his employer
pays him Rs. 1,500 p.m on this account.
vii. Medical bills re-imbursed (a) notified hospital Rs. Rs.22,000
(b)Private Hospital Rs. 53,000
viii. Mobile Bill of employee paid by employer Rs.15,000
ix. Employment tax paid by employer Rs. 2,500
x. On 1-12-12 he has taken a loan of Rs. 3,00,000 from his
employer to purchase a car @8.25%. Prescribed rate at SBI is
11.25%
xi. He and his employer contribute Rs. 3,200 p.m each towards
RPF.
xii. Interest on RPF credited Rs. 20,000 @ 10%
xiii. He received Rs. 20,000 as LTC but has not travelled
anywhere.
xiv. A car of 1.8 ltrs is provided for personal & official purpose.
xv. He has been provided with a rent free house owned by
Employer along with facility of Gardener costing employer
Rs.6,000 p.a Furniture costing Rs. 1,00,000 has been provided
which is owned by the employer.
xvi. His personal club bills paid by employers. 25,000 p.a
xvii. LIC premium on his life paid by the employer Rs.5.000
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1. JOSEPHS COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – OCTOBER 2014

BCOM – V SEMESTER

 INCOME TAX – I

Duration: 3 Hours                                                                                       Max. Marks: 100

SECTION – A

 

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

 

1. X an Indian origin settled in Canada visits India for 150 days every year since 2010. Determine his Residential status.
2. ABC Ltd., an Indian Co. carries on business in Delhi and London. The entire management and control is outside India and 80% of profits are from London. What is its residential status?
3. Identify the category of the ‘Persons’ below
4. Gods and Idols Mumbai Municipal Corporation.
5. Give two cases where income of Previous Year is assessed in the same year.
6. Specify the provisions of entertainment allowance deduction to Government Employees
7. List any four examples of Perks which are fully exempt from tax.
8. How would you treat the following received?
9. Leave travel concession   Encashment of earned leave during service.
10. What are the conditions to be satisfied if unrealized rent is to be deducted from actual rent?
11. How is annual value and taxable income of one self occupied house property determined?
12. Define Assessee u/s 2(7)

 

 SECTION – B

1. Answer any FOUR Each carries 5 marks.                                  (4×5=20)
2. From the following information compute tax liability of R for the AY 14-15

Business Income Rs. 4,60.000 . Income from sale of trees of spontaneous growth Rs. 1,00,000. Agriculture income Rs. 60,000

 

12. George retired on 13/2/2014 and received Rs. 1,80,000 as leave encashment for 15 months. He has served for 20 years and his employer allowed him 45 days leave for every one year of service. His salary for calendar year 2013 was Rs. 11,000 p.m and it was raised to Rs. 12.500 with effect from 1/1/2014 Compute taxable amount of Leave encashment.

 

13. Bimal built  a residential house at Bangalore and for the completion of the house he took a loan of Rs. 40 lakhs from a bank as under:
14. a) On 1/5/2007 Rs. 16 lakhs @ 10%
15. b) On 1/11/2008 Rs.16 lakhs @ 9%
16. c) On 1/1/2010 Rs. 8 lakhs @ 8%

House was completed in October 2010 and since then it is Let Out. He repaid Rs 8,00,000 to the bank on 1^st December 2013 and the bank adjusted this amount against the 1sr Loan

Determine the amount of deduction u/s 24

 

14. Determine Income for House property from the following particulars.

1/3^rd of the house is used for own business

1/3^rd of the house used for own Residence

1/3^rd of the house let out for Rs. 3,000 p.m and was self occupied for one month during the year. Municipal rental Value Rs 96,000 p.a  on which municipality levies taxes @ 10 %. These taxes are paid by tenant.

 

15. Give any ten examples of incomes that are fully exempt from Tax.

 

16. Explain in detail tax treatment of Statutory Provident Fund, Recognised Provident Fund and Unrecognised Provident Fund with respect to employers and employees contribution, Interest on accumulated balance and Refund/lumpsum received at the time of retirement.

 

SECTION – C

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

 

• X has the following incomes for the year 13-14. Determine his taxable income if he is a Ordinary Resident, Not ordinary Resident & Non Resident

Profits on sale of Machinery in London (1/3^rd received in India) Rs. 90,000

Salary from Indian Co. received in London ( one fifth is paid for services rendered  in India) Rs. 1,20,000

Income from property in London received there Rs.10,000.

Income from agriculture in Germany which was later remitted to India Rs.50,000

Dividends from Indian Co. received in London Rs.15,000.

Rental income from a property in Nepal deposited by the tenant in a foreign branch of Indian bank operating there Rs.18,000.

Fees in foreign currency received from a friend. 1/3^rd received in India   Rs.9,00,000.

 

• X owns four houses the particulars of which are as follows.

	House I	House II	House III	House IV
MRV	2,00,000	16,000	86,000	5.00.000
FRV	2,50,000	22,000	92,000	5,55,000
Rent	–	–	–	5.72,000
Unrealized rent	–	–	–	90,000
Municipal tax paid	17,000	800	3,000	45,000
Date of completion of construction	June 16 1991	June 1974	June 1997	March 1998
Repairs	Nil	2,000	950	Nil
Collection charges	—	–	–	400
Land revenue	800	–	230	900
Interest on Loan borrowed for repairs	2,000	800	810	10.000
Interest on loan borrowed for construction	5700	–	–	–
Interest on loan borrowed for payment of municipal taxes	200	–	600	100
Nature of occupation.	Self occupied for residence	Self occupied for business	Self occupied for residence	Let out for residence

House IV remains vacant for the month of January and he could not occupy house III for 2 months. Compute taxable income from House Property.

 

19. X was employed with ABC ltd. He retired w.e.f 1.2.2014 after completing a service of 24 years and 4 months.  He submits the following information

• Basic salary Rs. 10,000 pm (at the time of retirement)
• Dearness allowance 120% of basic salary (40% of basic salary forms part of salary as perterms of employment )
• Last increment Rs. 1000 w.e.f 1.7.13
• His pension was determined at Rs. 6000 per month. He got 50% of the pension commuted w.e.f 1.3.14 and received a sum of Rs. 200000 as commuted pension.  In addition to this, he received  agratuity of Rs. 240000 and leave encashment amounting to Rs. 112000 on account of accumulated leave of 240 days.  He was entitled to 40 days leave for every year of service.

Compute his gross salary for AY 2014-15 assuming that he is not covered under payment of gratuity act.

 

 

20. S lives in Pune population 20 lakhs and received the following salary.

Basic salary Rs. 18,000 p.m

DA Rs 2,500 p.m

CCA Rs 800 p.m

Entertainment allowance Rs 12,000 p.a

Commission on sales achieved by him Rs 24,000

Furnished Rent free Accommodation owned by the Co. is provided. The cost of Furniture is Rs 1,20,000

Medical bills reimburse by Co. Treatment taken in private hospital Rs. 2,000

He is provided with a car of 1.8 ltrs and a driver for both personal and official purpose. Maintenance expenses met by the employer of Rs. 30,000 & depreciation of Rs. 10,000 Drivers salary is 15,000.

Professional tax paid by employer Rs 2,000

During an official trip he was paid travelling and daily allowance of Rs. 16,000 and 12,000

He and his employer contributed Rs. 35,000 p.a  each  to RPF

Compute taxable salary.

 

21. L has a house property in Mumbai which has two equal units, unit I and Unit II. Unit I is self occupied for residence and unit II is let out for a rent of Rs.6,000 p.m. Rent of two months could not be recovered .Municipal value of the property is Rs. 1,30,000, standard rent Rs. 1,25,000 and fair rent Rs. 1,40,000. Municipal tax is levied @15% of municipal valuation which is paid by L. other expenses paid are repairs Rs. 800, insurance Rs. 1,500 interest on capital borrowed for the current year Rs 63,000 (Loan borrowed in 1998)

Find House Property income of L

 

SECTION – D

1. IV) Case study- Compulsory questions.           (15 marks)
2. R retired from G Ltd, Pune on 31/10/13 after service of 18 years and 8 months. At the time of retirement his employer pays a gratuity of Rs. 96,000 his average monthly salary of preceding 10 month is Rs.8, 200. He also receives pension of Rs. 1,000 p.m but one 1/12/2013 he gets 70% of the pension commuted for Rs. 35,000.Besides the aforesaid pension and gratuity he receives the following  emoluments from G Ltd., per month. Basic Pay Rs. 8,600, HRA Rs.600 , (rent paid by him Rs 1250 p.m) entertainment allowance Rs. 600 , contribution to RPF by employer and employee 10% of salary . Lumpsum received from RPF at the time of retirement Rs 90,000

Compute taxable salary.

 

 

ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – SEPT./OCT.2015
B.COM – V SEMESTER
C1 12 501: INCOME TAX – I
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I)		Answer ALL the questions.  Each carries 2 marks.                                        (10×2=20)
		1.		Determine the status of the following persons a)      RBI b)     Reliance industry limited c)      Markfed d)     A & B who are carry on business with an agreement
		2.		Determine Previous Year for the Assessment Year 15-16 a)      Business commenced on 1-1-15 b)     X who joins a company  on 1-1-14
		3.		Identify the type of receipt: a)      Price received on sale of know-how b)     Royalty received in advance
		4.		How do you determine the residential status of a Company.
		5.		How is entertainment allowance exempted for the Government employee
		6.		Mr. A joined central government job on 1st October 2012 in the grade of Rs.30,000-1,000-50,000. What is his salary for the previous year 2014-15.
		7.		Compute exemption in case of the  following: a)      Transport Allowance b)     Children hostel allowance
		8.		An AC was transferred by the company to his employee for Rs. 26,000 on 1/12/14. Its cost on 1/11/12 was Rs. 40,000. What is the value of the perk?
		9.		How do you treat arrears of rent received in the previous year?
		10.		Give any two cases where income from House Property is exempt
SECTION – B
II)		Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)
		11.		Mr. K an Indian citizen leaves India for the first time on 31st May 2010 and comes back on 15th May 2013. He again leaves on 10th June 2014 to come back on 14th January 2015. Determine his Residential status for AY 15-16.
		12.		From the following information submitted by X, in respect of monthly salary and allowances, find out the house rent allowance chargeable to tax for the assessment year 2015-16: Name of the employer of X A Ltd. B Ltd. Period of employment Up to July 31, 2014 From Sep.1, 2014 Place of posting Agra Bombay (from feb.1, 2015: Goa)       Rs. Rs. Basic salary *(increased to Rs.25,000 from March 1, 2015) 16,000 21,000* House rent allowance 9,000 11,000 Rent paid at Agra (from April 1, 2014 to Aug. 31, 2014) 8,200 – Rent Paid at Bombay (from Sept.1, 2014 to Jan. 31, 2015) – 12,000 Rent paid at Goa (from Feb.1,2015) – 9,000
		13.		Calculate the tax  liability of Mr. H Net agricultural income Rs. 50,000 Non agricultural income Rs 2,95,000
		14.		A  took a housing loan of Rs. 10 lakhs from a bank as under On 1/5/2008 Rs. 4,00,000 @ 10% On 1/11/2009 Rs. 4,00,000 @ 9% On 1/1/2011 Rs. 2,00,000 @ 8% House was completed in October 2011. He repaid Rs.2,00,000 on 1st December 2014 and bank adjusted this amount against the loan of 2008. Determine amount of deduction admissible u/s 24 if house is let out.
		15.		Explain in detail provisions of:- a)      Gratuity b)     Commuted Pension
		16.		X retires on 1st July 2014 after 18 years of service and receives Rs.75,000 as amount of leave encashment for 15 months. His employer allows 45 days leave for every one year of service. During service he has already encashed leave for 12 months. Calculate his taxable income if his average salary during 1-7-13 to 1-7-14 was Rs. 5,000
SECTION – C
III)	Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)
	17.		X (53 years) owns a house property.  It is situated at Nariman point, Mumbai.  The following information is available:   ` Municipal valuation 33,20,000 Market rent of a similar property at Nariman Point, Mumbai 60,00,000 Market rent of a similar property at Andheri (East), Mumbai 38,00,000 Standard rent 57,00,000 Municipal tax of 2014-15 4,50,000 Municipal tax of 2014-15 paid in 2014-15 3,92,000 Municipal tax of 2013-14 paid in 2014-15 3,00,000 Advance municipal tax for next 5 years paid in 2014-15 18,00,000 Repair expenses (10 per cent is borne by tenant) 90,000 Insurance 80,000   The above property is let out on monthly rent of Rs.5,70,000 up to June 30, 2014.  Tenant has vacated the property on June 30, 2014 without paying one month rent.  The property is lying vacant during July and August 2014 as no suitable tenant is available.  X occupies the property for his own residence from September 1, 2014.  Till September 1, 2014, he resides in a rented accommodation for which he pays rent of ` 80,000 per month.  Construction of the property was completed in April 2013.  A loan of ` 90,00,000 was taken to finance construction of the property.  This loan was taken from an Indian private limited company. Interest liability pertaining to the period ending March 31, 2013 is ` 24,80,000.  Interest liability for the previous year 2014-15 is Rs.11,50,000.  Every year interest is paid on due dates.  However, tax is not deducted under section 194A. X recovers on March 20, 2015, one month’s unrecovered rent from the tenant. Find out the income from house property for the assessment year 2015-16.
	18.		X an employee of a private sector company at Coimbatore, retires on January 31, 2015.  He submits the following information-  Basic salary:  ` 80,000 per month. Dearness allowance (forming part of salary): ` 5,000 per month. Retirement gratuity not exceeding ½ months salary for each year of completed service computed on average salary of last 10 months claimed exempt under section 10 (10)(ii), he is not covered by the Payment of Gratuity Act, 1972: ` 11,50,000. He does not have any leave to his credit at the time of retirement.  However, the employer has paid leave encashment of Rs.30,000 under company’s service rules. He has been allotted a furnished house at Coimbatore (population:26 lakh) by the company.  He has not vacated this property till March 31, 2015.  Lease rent of the property paid by the employer company is Rs.20,000 per month.  Besides, the company pays Rs.3,000 per month as rent of furniture provided along with the house.  The company does not charge any rent till the date of retirement.  However, a nominal rent of Rs.9,000 per month is charged after retirement in respect of the facility of rent-free furnished house. He has been provided with a car from the employer –company (1610 cc) without driver but only for coming and going from residence to office and back. A company maintains recognized provident fund to which each employee along with the company contributes 12 per cent of salary. Interest is credited in the provident fund account at the rate of 8.5 per cent which comes to ` 95,000. Professional tax paid by X : ` 2,000 on April 1, 2015. X wants to claim a deduction of   ` 20,000 on account of entertainment expenditure incurred by him for official purposes.  Nothing is reimbursed by the company on this account. Compute Income taxable under the head salaries.
	19.		Mrs. X (44 years) received the following income from B Ltd. during the year ending March 31, 2015:        ` Salary @ Rs.30,000 per month 3,60,000 Leave travel concession for proceeding on leave (expenditure on air fare:  72,000) 75,000 Lunch allowance @ Rs.3,000 per month (expenditure:  `36,000) 36,000 Medical allowance (expenditure:  ` 20,000) 24,000 Allowance for purchase and maintenance of uniform for official use (expenditure incurred by X:  ` 4,000) 18,000   Mrs. X also enjoyed the following benefits and perquisites: Free unfurnished flat in Bombay for which employer is paying a monthly rent of Rs.30,000. Free use of a Maruti alto car with driver for personal use and official use.  Car can also be used by the family members of Mrs. X. Free service of personal attendant (Salary:`12,000) and sweeper (Salary: `  18,000) Free use of employer’s DVD player (costs to the employer:  `32,000, year of purchase: 2002-2003) Compute net income of Mrs. X for the assessment year 2015-16, on the assumption that her income from other sources is ` 40,000.
	20.		X gives you the following information pertaining to the previous year ending on March 31, 2015:   ` Royalty from a patent registered in USA (royalty is received outside India from a foreign company and the foreign company has used the patent for manufacturing purposes in India) 20,00,000 Dividend from an Italian company (X holds 55 per cent shares in the Italian company, business of the company is partly controlled from India and dividends are received outside India) 18,00,000 Profit of a sole proprietary business situated in Dubai, received in Mauritius (business is entirely controlled from India) 4,50,000 Loss from a business situated in Pakistan (controlled from Pakistan) (-) 2,00,000 Rent of a commercial property situated in Bhutan (received in Nepal) 2,35,000 Speculation profit earned and received in India on April 1, 2016 4,00,000 Profit on sale of a house property situated in UK (50 per cent is received in Chennai and 50 per cent is received in UK) 1,77,000 Income from a profession set up in Bangalore (consultancy is provided in UK and amount is received in UK) 8, 32,000   Find out net income of X for the assessment year 2015-16 on the assumption that (a) X is resident and ordinarily resident in India (ROR), b) X is resident but not ordinarily resident (RNOR), (c) X is non-resident (NR) in India.
	21.		Bring out in detail provisions relating to a)      SPF , RPF , URPF and PPF b)     Any five fully exempted incomes (10+5)
SECTION – D
IV)		Case Study                                                                                                              (1×15=15)
		22.		Mr. W owns and occupies two houses for his residence and claims to have no income from house property. From the following information would you agree with him or do you consider he has taxable income from house property. Analyse.   HOUSE A HOUSE B Standard Rent 36,000 56,000 Fair Rent 42,000 62,000 Municipal valuation 24,000 44,000 Municipal taxation paid 1,200 1,200 Municipal taxes due 1,200 1,200 Ground rent paid 1,000 500 Date of completion of these houses was 31-1-12. He had taken a loan of Rs.2,50,000 @10% p.a for construction of House A on 1-6-2010 and he repaid Rs. 2,00,000 on 1-10-2014

 

 

 

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