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)

 

1. Define the term Business as per IT Act.
2. What do you mean by Block of Assets?
3. What do you mean by clubbing of Income?
4. What is Intra – Head Adjustment of Loss?
5. Define the term TRUST.
6. What is the meaning of change in the constitution of a firm?
7. What is meant by Partnership firm assessed as Association of persons?
8. What is Residence of Company?
9. How the minor’s Income is treated under Income – Tax Act?
10. Give the order of set off of carried forward of losses.

 

SECTION – B

 

Answer any FIVE questions                                                                         (5 ´ 8 = 40 marks)

 

11. Explain the various points to be considered while allowing depreciation on the Assets.

 

12. Discuss the Deemed Incomes under section 69.

 

13. Following are the particulars submitted by Mr.Kuldeep for the year ending 21^st march 2004. Compute his total income:

(i) Income from House property:                                   Rs.

1. a) Income from house ‘A’    –        60,000
2. b) Loss from house ‘B’ (Both are let out) –       20,000

(ii) Income from Business or profession:

1. a) Income from cloth business    –        30,000
2. b) Loss from Hardware business    –        60,000
3. c) Loss from speculation business    –        10,000

(iii) Income from other sources:

1. a) Income from Lottery    –        25,000
2. b) Loss from maintenance of race horses –          7,000
3. c) Interest on securities    –        10,000

(iv) Cross salary                                                 –        66,000

 

14. 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.

 

15. 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 20^th July 2003.
• A new typewriter was purchased for Rs.5,000 on 1^st 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 1^st Jan 2004. It has been sold for Rs.1,400 on 1-2-2004.

 

16. Explain the exempted incomes in case of charitable or religious trusts.

 

17. Explain the provisions of minimum alternative tax on companies u/s 115 JA.

 

18. Write a note on Expenditure incurred in the field of Scientific Research.

 

SECTION – C

 

Answer any TWO questions                                                                          (2 ´ 20 = 40 marks)

 

19. Explain the incomes of other persons included with the total income of the Assessee under sec 60 – 64.

 

20. 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 31^st 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.

 

21. X is a registered medical practitioner. She keeps her books on cash basis.  The summarized cash Account for the year ended 31^st 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. 1/3 Car expenses are for personal use.
2. Written down value of the house property on 1^st April, 2003 was Rs.20,000 and that of furniture was Rs.4,000. There were no other assets in these books.
3. Rate depreciation of the new car is @ 20% and on surgical equipment’s 25%.

 

 

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