ca final may 2014 set of mock test papers issued by...

CA Final May 2014

Set of Mock Test Papers

Issued by ICAI

For more details Contact

08983-47-5152

Test Series: February, 2014

MOCK TEST PAPER – 1

FINAL COURSE: GROUP – I

PAPER – 1: FINANCIAL REPORTING Question No. 1 is compulsory.

Attempt any five questions from the remaining six Questions. Working notes should form part of the answer.

Wherever necessary, suitable assumptions may be made by the candidates.

Time Allowed – 3 Hours Maximum Marks – 100 1. (a) Take Ltd. has borrowed ` 30 lakhs from State Bank of India during the financial year

2011-12. The borrowings are used to invest in shares of Give Ltd., a subsidiary company of Take Ltd., which is implementing a new project, estimated to cost ` 50 lakhs. As on 31st March, 2012, since the said project was not complete, the directors of Take Ltd. resolved to capitalize the interest accruing on borrowings amounting to ` 4 lakhs and add it to the cost of investments. Comment.

(b) The closing inventory at cost of a Company amounted to ` 9,56,700. The following items were included at cost in the total: (i) 350 Shirts, which had cost ` 380 each and normally sold for ` 750 each.

Owing to a defect in manufacture, they were all sold after the balance sheet date at 50% of their normal price. Selling expenses amounted to 5% of the proceeds.

(ii) 700 Trousers, which had cost ` 520 each. These too were found to be defective. Selling expenses for the batch totaled ` 3,800. They were sold for ` 950 each.

What should be the closing inventory value (to the nearest rupee), after considering the above items?

(c) A Ltd. holds an option to purchase equity shares in a listed company B Ltd. for ` 5 per share at the end of a 90 day period. State whether the option is a derivative financial asset or not with reasons.

(d) Kismis Ltd. is a 100% subsidiary of Kaju Ltd. Which of the following are related party transactions for the purpose of consolidated financial statements? (i) Salary paid to employees of Kismis Ltd. (ii) Loans given to employees of Kaju Ltd. (iii) Inter-company sales between Kaju Ltd. and Kismis Ltd. (iv) Loan given by Kismis Ltd. to managing director of Kaju Ltd.

© The Institute of Chartered Accountants of India

(v) Transfer of Asset by Kaju Ltd. to Kismis Ltd. (4 × 5 = 20 Marks) 2. H Ltd., which has an authorised and issued share capital of 10 crore equity shares of

` 10 each fully paid, has a balance of revenue reserve of ` 1,62,000 thousand on 31st March, 2011, after paying a dividend for the year ended on that date. You are also given the following information: (1) On 1st April, 2011, H Ltd. purchased 90 lakh of the 4 crore issued equity shares of

` 10 each fully paid in A Ltd. for ` 1,42,500 thousand. The balance in revenue reserve of A Ltd. as on 31st March, 2011 was ` 3,45,000 thousand after paying dividend for the year.

(2) For the year ended 31st March 2012, H Ltd. made a trading profit of ` 1,84,000 thousand and paid a dividend of 15% while Anoop Ltd. made a trading profit of ` 1,40,000 thousand and paid a dividend of 20%.

(3) For the year ended 31st March, 2013, H Ltd. made a trading profit of ` 2,65,400 thousand and paid a dividend of 20% while A Ltd. incurred a trading loss of ` 1,41,000 thousand and no dividend was paid.

(4) During the year ended 31st March, 2013, A Ltd. had manufactured and sold to H Ltd. an item of plant for ` 80,000 thousand which included 25% profit on selling price to A Ltd. The plant had been included in the fixed assets of H Ltd. and a full year's depreciation had been provided thereon at 20% on cost.

You are required to show the relevant Notes to Accounts for the Consolidated Balance Sheet of H Ltd. as on 31st March, 2013, together with the corresponding figures for the preceding year, assuming that H Ltd. has a subsidiary and it prepared consolidated financial statements on 31.3.2012 as well as 31.3.2013. (16 Marks)

3. (a) Templeton Finance Ltd. is a non-banking finance company. The extracts of its balance sheet are given below:

Liabilities Amount Assets Amount ` in 000 ` in 000 Paid-up equity capital 100 Leased out assets 800 Free reserves 500 Investment: Loans 400 In shares of subsidiaries

Deposits 400 group companies 100 In debentures of

subsidiaries and group

100

Cash and bank balances 200 Deferred expenditure 200 1,400 1,400


You are required to compute 'Net owned Fund' of Templeton Finance Ltd. as per the NBFC (Deposit Accepting or Holding) Companies Prudential Norms (RBI) Directions 2007. (8 Marks)

(b) OM Commercial Bank has a criterion that it will give loan to companies that have an economic value added greater than zero for the past three years on average. The bank is considering lending money to a small company that has the economic value characteristics shown below. Does that company meet the bank’s criterion for a positive economic value added? The data relating to the company is as follows: (i) Average operating income after tax equals ` 25,00,000 per year for the last

three years. (ii) The average total assets of company over the past three years equals

` 75,00,000. (iii) The weighted average cost of capital appropriate for the company equals 10%

which is applicable to all three years. (iv) The company’s average current liabilities over the past three year equals

` 15,00,000. (8 Marks) 4. The summarized Balance Sheet of Tirupati Limited as on 31.12.2012 is as follows:

Liabilities (` in lakhs)

Assets (` in lakhs)

1,00,000 equity shares of Goodwill 5 ` 10 each fully paid 10 Fixed assets 15 1,00,000 equity shares of Other tangible assets 5 ` 6 each, fully paid up 6 Intangible assets (market value) 3 Reserves and Surplus 2 Liabilities 10 28 28

Fixed assets are worth ` 24 lakhs. Other Tangible assets are revalued at ` 3 lakhs. The company is expected to settle the disputed bonus claim of ` 1 lakh not provided for in the accounts. Goodwill appearing in the Balance Sheet is purchased goodwill. It is considered reasonable to increase the value of goodwill by an amount equal to average of the book value and a valuation made at 3 years’ purchase of average super-profit for the last 4 year.

After tax, profits and dividend rates were as follows: Year PAT Dividend %

(`in lakhs) 2009 3.0 11%


2010 3.5 12% 2011 4.0 13% 2012 4.1 14%

Normal expectation in the industry to which the company belongs is 10%. C holds 20,000 equity shares of `10 each fully paid and 10,000 equity shares of `6 each,

fully paid up. He wants to sell away his holdings. Determine the break-up value and market value of both kinds of shares. What should be the fair value of shares, if controlling interest is being sold? (16 Marks)

5. (a) From the following data, prepare a Value Added Statement of Merit Ltd., for the year ended 31.3.2012:

Particulars ` Particulars `

Decrease in Stock 24,000 Sales 40,57,000 Purchases 20,20,000 Other Income 55,000 Wages & Salaries 10,00,000 Manufacturing & Other Expenses 2,30,000 Finance Charges 4,69,000 Depreciation 2,44,000 Profit Before Taxation 1,25,000 Total 41,12,000 41,12,000 Particulars `

Profit Before Taxation 1,25,000 Less: Tax Provisions (40,000) Income Tax Payments (for earlier years) (3,000) Profit After Taxation 82,000 Appropriations of PAT Debenture Redemption Reserve 10,000 General Reserve 10,000 Proposed Dividend 35,000 Balance carried to balance Sheet 27,000 Total 82,000

(b) S Ltd. grants 1,000 options to its employees on 1.4.2010 at ` 60. The vesting period is two and a half years. Market price on that date is ` 90. All the options were exercised on 31.7.2013. Journalize, if the face value of equity share is ` 10 per share. (10 + 6 = 16 Marks)


6. (a) The Balance Sheet of Appropriate Ltd. as at 31st March, 2013 is as follows:.

Note No.

31st March,

2013

31st March,

2012 Equity & Liabilities Share Capital 1 XXX XXX Reserves and Surplus 2 0 0 Employee stock option outstanding 3 XXX XXX Share application money refundable 4 XXX XXX Non-Current Liabilities Deferred tax liability (Arising from Indian Income Tax) 5 XXX XXX Current Liabilities Trade Payables 6 XXX XXX

Total XXXX XXXX Assets Non-Current Assets Fixed Assets -Tangible 7 XXX XXX Capital Work in progress (including capital advances) 8 XXX XXX Current Assets Trade Receivables 9 XXX XXX Deferred Tax Asset (Arising from Indian Income Tax) 10 XXX XXX Profit and Loss (Debit balance) XXX XXX

Total XXXX XXXX

Comment on the presentation in terms of revised Schedule VI and Accounting Standards notified by the Central Government.

(b) Luck Mutual Fund is registered with SEBI and having its registered office at Mumbai. The fund is in the process of finalising the annual statement of accounts of one of its open ended mutual fund schemes. From the information furnished below you are required to prepare a statement showing the movement of unit holders’ funds for the financial year ended 31st March, 2012.

` ’000 Opening Balance of net assets 12,00,000 Net Income for the year (Audited) 85,000 8,50,200 units issued during 2011-12 96,500


7,52,300 units redeemed during 2011-12 71,320 The par value per unit is ` 100

(12 + 4 = 16 Marks) 7. Answer any four of the following:

(a) A Company is in the process of setting up a production line for manufacturing a new product. Based on trial runs conducted by the company, it was noticed that the production lines output was not of the desired quality. However, company has taken a decision to manufacture and sell the sub-standard product over the next one year due to the huge investment involved.

In the background of the relevant accounting standard, advise the company on the cut-off date for capitalization of the project cost.

(b) X Limited was making provisions up to 31-3-2012 for non-moving inventories based on no issues for the last 12 months. Based on a technical evaluation the company wants to make provisions during the year 31-03-2013 in the following manner:

Total value of inventory ` 3 crores.

Provision required based on 12 months ` 8 lakhs.

Provision required based on technical evaluation ` 7.50 lakhs.

Does this amount to change in accounting policy?

Can the company change the method of provision? (c) Annual lease rent = ` 40,000 at the end of each year Lease period = 5 years Guaranteed residual value = ` 14,000 Fair value at the inception (beginning) of lease = ` 1,50,000

Interest rate implicit on lease is 12.6%. The present value factors at 12.6% are 0.89, 0.79, 0.7, 0.622, 0.552 at the end of first, second, third, fourth and fifth year respectively.

Show the Journal entry to record the asset taken on finance lease in the books of the lessee.

(d) How should the following be recognised and measured in the interim financial statements? (i) Gratuity and other defined benefit schemes; (ii) Year-end bonus; (iii) Income-tax expense;


(iv) Provisions (v) Foreign currency translation gains and losses.

(e) Comment whether other income like (i) export incentives; and (ii) interest from customers should be considered/included as segment revenue or not as per AS 17.

(4 x 4 =16 Marks)



MOCK TEST PAPER –1


PAPER – 2 : STRATEGIC FINANCIAL MANAGEMENT

Question No. 1 is compulsory. Attempt any five questions from the remaining six questions. Working notes should form part of the answer.

Time Allowed – 3 Hours Maximum Marks – 100

1. (a) You as an investor had purchased a 4 month call option on the equity shares of X Ltd. of ` 10, of which the current market price is ` 132 and the exercise price `150. You expect the price to range between ` 120 to ` 190. The expected share price of X Ltd. and related probability is given below:

Expected Price (`) 120 140 160 180 190 Probability 0.05 0.20 0.50 0.10 0.15

Compute the following: (1) Expected Share price at the end of 4 months. (2) Value of Call Option at the end of 4 months, if the exercise price prevails. (3) In case the option is held to its maturity, what will be the expected value of the

call option? (5 Marks) (b) If the market price of the bond is ` 95; years to maturity = 6 yrs: coupon rate = 13%

p.a (paid annually) and issue price is ` 100. What is the yield to maturity? (5 Marks) (c) RBI sold a 91 day T-bill of face value of ` 100 at an yield of 6%. What was the

issue price? (5 Marks) (d) An exporter requests his bank to extend the forward contract for US$ 20,000 which

is due for maturity on 31st October, 2013, for a further period of 3 months. He agrees to pay the required margin money for such extension of the contract.

Contracted Rate – US$ 1= ` 62.32 The US Dollar quoted on 31-10-2013:- Spot – 61.5000/61.5200 3 months’ Discount - 0.93% /0.87% Margin money for buying and selling rate is 0.45% and 0.20% respectively.


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Compute: (i) The cost to the importer in respect of the extension of the forward contract,

and (ii) The rate of new forward contract. (5 Marks)

2. (a) AGD Co is a profitable company which is considering the purchase of a machine costing ` 32,00,000. If purchased, AGD Co would incur annual maintenance costs of ` 2,50,000. The machine would be used for three years and at the end of this period would be sold for ` 5,00,000. Alternatively, the machine could be obtained under an operating lease for an annual lease rental of ` 12,00,000 per year, payable in advance. AGD Co can claim depreciation @ 25% on WDV basis. Annual lease rental will be paid in the beginning of each year.

Required: (1) Using an after-tax borrowing rate of 7%, evaluate whether AGD Co should

purchase or lease the new machine. (2) Suppose a bank had offered to lend AGD Co ` 32,00,000 for a period of five

years interest payable every six months, then you are required to: (i) Calculate the Annual Percentage Rate (APR) implied by the bank’s offer with

interest payable every six months. (ii) Calculate the amount of installment payable at the end of each six-month

period if the offered loan is to be repaid in equal installments. (10 Marks) (b) A mutual fund made an issue of 10,00,000 units of ` 10 each on January 01, 2008.

No entry load was charged. It made the following investments:

Particulars ` 50,000 Equity shares of ` 100 each @ ` 160 80,00,000 7% Government Securities 8,00,000 9% Debentures (Unlisted) 5,00,000 10% Debentures (Listed) 5,00,000 98,00,000

During the year, dividends of ` 12,00,000 were received on equity shares. Interest on all types of debt securities was received as and when due. At the end of the year equity shares and 10% debentures are quoted at 175% and 90% respectively. Other investments are at par.

Find out the Net Asset Value (NAV) per unit given that operating expenses paid during the year amounted to ` 5,00,000. Also find out the NAV, if the Mutual fund had distributed a dividend of ` 0.80 per unit during the year to the unit holders. (6 Marks)


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3. (a) Z Ltd. importing goods worth USD 2 million, requires 90 days to make the payment. The overseas supplier has offered a 60 days interest free credit period and for additional credit for 30 days an interest of 8% per annum.

The bankers of Z Ltd offer a 30 days loan at 10% per annum and their quote for foreign exchange is as follows:

` Spot 1 USD 56.50 60 days forward for 1 USD 57.10 90 days forward for 1 USD 57.50

You are required to evaluate the following options: (I) Pay the supplier in 60 days, or (II) Avail the supplier's offer of 90 days credit. (8 Marks)

(b) Nominal value of 10% bonds issued by a company is `100. The bonds are redeemable at `110 at the end of year 5.

Determine the value of the bond if required yield is (i) 5%, (ii) 5.1%, (iii) 10% and (iv) 10.1%. (8 Marks)

4. (a) XYZ Ltd., is considering merger with ABC Ltd. XYZ Ltd.’s shares are currently traded at ` 20. It has 2,50,000 shares outstanding and its earnings after taxes (EAT) amount to ` 5,00,000. ABC Ltd., has 1,25,000 shares outstanding; its current market price is ` 10 and its EAT are ` 1,25,000. The merger will be effected by means of a stock swap (exchange). ABC Ltd., has agreed to a plan under which XYZ Ltd., will offer the current market value of ABC Ltd.’s shares: (i) What is the pre-merger earnings per share (EPS) and P/E ratios of both the

companies? (ii) If ABC Ltd.’s P/E ratio is 6.4, what is its current market price? What is the

exchange ratio? What will XYZ Ltd.’s post-merger EPS be? (iii) What should be the exchange ratio; if XYZ Ltd.’s pre-merger and post-merger

EPS are to be the same? (8 Marks) (b) Suppose that a 1-year cap has a cap rate of 8% and a notional amount of ` 100

crore. The frequency of settlement is quarterly and the reference rate is 3-month MIBOR. Assume that 3-month MIBOR for the next four quarters is as shown below.

Quarters 3-months MIBOR (%) 1 8.70 2 8.00


4

3 7.80 4 8.20

You are required to compute payoff for each quarter. (8 Marks) 5. (a) Sa Re Gama Electronic is in the business of selling consumer durables. In order to

promote its sales it also financing the goods to its customer allowing them to make some cash down payment and balance in installments.

In a deal of LCD TV with selling price of ` 50,000, a customer can purchase it for cash down payment of ` 10,000 and balance amount by adopting any of the following option:

Tenure of Monthly Installments Equated Monthly Installment (`) 12 3,800 24 2,140

You are required to determine the flat and effective rate of interest for each alternative. (6 Marks)

(b) X Co., Ltd., invested on 1.4.2009 in certain equity shares as below:

Name of Co. No. of shares Cost (`) M Ltd. 1,000 (`100 each) 2,00,000 N Ltd. 500 (`10 each) 1,50,000

In September, 2009, 10% dividend was paid out by M Ltd. and in October, 2009, 30% dividend paid out by N Ltd. On 31.3.2010 market quotations showed a value of `220 and `290 per share for M Ltd. and N Ltd. respectively.

On 1.4.2010, investment advisors indicate (a) that the dividends from M Ltd. and N Ltd. for the year ending 31.3.2011 are likely to be 20% and 35%, respectively and (b) that the probabilities of market quotations on 31.3.2011 are as below:

Probability factor Price/share of M Ltd. Price/share of N Ltd. 0.2 220 290 0.5 250 310 0.3 280 330

You are required to: (i) Calculate the average return from the portfolio for the year ended 31.3.2010; (ii) Calculate the expected average return from the portfolio for the year 2010-11;

and


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(iii) Advise X Co. Ltd., of the comparative risk in the two investments by calculating the standard deviation in each case. (10 Marks)

6. (a) X Limited, just declared a dividend of ` 14.00 per share. Mr. B is planning to purchase the share of X Limited, anticipating increase in growth rate from 8% to 9%, which will continue for three years. He also expects the market price of this share to be ` 360.00 after three years.

You are required to determine: (i) the maximum amount Mr. B should pay for shares, if he requires a rate of

return of 13% per annum. (ii) the maximum price Mr. B will be willing to pay for share, if he is of the opinion

that the 9% growth can be maintained indefinitely and require 13% rate of return per annum.

(iii) the price of share at the end of three years, if 9% growth rate is achieved and assuming other conditions remaining same as in (ii) above.

Calculate rupee amount up to two decimal points. Year-1 Year-2 Year-3 FVIF @ 9% 1.090 1.188 1.295 FVIF @ 13% 1.130 1.277 1.443

PVIF @ 13% 0.885 0.783 0.693 (8 Marks)

(b) Yes Ltd. wants to acquire No Ltd. and the cash flows of Yes Ltd. and the merged entity are given below:

(` In lakhs) Year 1 2 3 4 5 Yes Ltd. 175 200 320 340 350 Merged Entity 400 450 525 590 620

Earnings would have witnessed 5% constant growth rate without merger and 6% with merger on account of economies of operations after 5 years in each case. The cost of capital is 15%.

The number of shares outstanding in both the companies before the merger is the same and the companies agree to an exchange ratio of 0.5 shares of Yes Ltd. for each share of No Ltd.

PV factor at 15% for years 1-5 are 0.870, 0.756; 0.658, 0.572, 0.497 respectively.


6

You are required to: (i) Compute the Value of Yes Ltd. before and after merger. (ii) Value of Acquisition and (iii) Gain to shareholders of Yes Ltd. (8 Marks)

7. Write short notes on any of four of the following: (a) Steps involved in Simulation analysis of Capital Budgeting (b) Foreign Currency Convertible Bonds (FCCBs) (c) Exchange Traded Funds (d) Various kinds of Systematic Risk (e) CAMEL Model of Credit Rating (4 ×4 Marks = 16 Marks)



MOCK TEST PAPER -1 FINAL COURSE: GROUP – I

PAPER – 3 : ADVANCED AUDITING AND PROFESSIONAL ETHICS Question No. 1 is compulsory Answer any five from the rest

1. (a) Following is the data regarding six segments of Z Ltd.:

(` in ‘000s) Particulars A B C D E F

Segment Revenue (Rs.) 150 310 40 30 40 30 Segment Result (Rs.) 25 (95) 5 5 (5) 15 Segment Assets (Rs.) 20 40 15 10 10 5

The Finance Director is of the view that it is sufficient that segments A and B alone be reported. Advise

(b) B Ltd. wishes to obtain a machine tool costing ` 20 lakhs by way of lease. The effective life of the machine tool is 12 years but the company requires it only for the first five years. It enters into an agreement with R Ltd. for a lease rental of ` 2 lakhs p.a.

The Finance Director of B Ltd. is not sure about the treatment of these lease rentals and hence requests your assistance in proper disclosure of the same. For calculation purposes, the implicit rate of interest may be taken at 15%. Discount factors : 0.87, 0.76, 0.66, 0.57 and 0.50.

(c) Honey Ltd., as part of overall cost cutting measure announced voluntary retirement scheme (VRS) to its employees, to reduce the employee strength. During the first half year ended 30.9.2013 the company paid a compensation of ` 72 lakhs to those who availed the scheme. The Chief Accountant has reflected this payment as part of regular salaries and wages paid by the company. Is this correct?

(d) During the course of statutory audit of an investment company dealing in shares and securities, in spite of repeated reminders by the statutory auditor, the company officials did not provide the investments held by the company at the Balance Sheet date for verification and also did not provide the details for valuation of unlisted shares as on the Balance Sheet date. The statutory auditor, in his final audit report to the shareholders, reported as follows:

“Subject to the verification of the existence and value of the investments, the Balance Sheet shows a true and fair view.”


Is the report made by the Statutory auditor correct? (5 × 4 = 20 Marks) 2. Comment on the following with reference to the Chartered Accountants Act, 1949 and

schedules thereto: (a) Mr. Rajiv, a locally based Chartered Accountant, accepted an audit assignment at a fee

lower than that charged by the previous auditor, who was stationed in another town and had to spend a lot of money on travel for which he did not charge separately.

(b) The superannuation-cum-pension fund for the employees of a company was under a separate ‘trust’. Both the company and the trust were under the same management. The auditor, who was auditing the accounts of the company as well as the trust noted some irregularities in the operation of the trust and commented upon these irregularities in the confidential report given to the trustees, but did not mention about these irregularities in his report on the Annual accounts of the Trust.

(c) M/s ABC a firm of Chartered Accountants received ` 2 lakhs in January, 2013 on behalf of one of their clients, who has gone abroad and deposited the amount in their Bank account, so that they can return the money to the client in July, 2013, when he is due to return to India.

(d) Mr. Jojo. a practicing Chartered Accountant engages himself as part time finance manager of Fast Return Securities Ltd. He is of the view that as both functions are independent, he need not take permission from the Institute. (4 × 4 = 16 Marks)

3. (a) As a Statutory Auditor, how would you report on the following under CARO: (1) OM Pvt. Ltd. Is a dealer in Shares and Securities. (2) RST Pvt. Ltd is a Manufacturer of jewellery. A senior employee of the

Company informed you that the Company does not properly disclose the purity of gold used on the jewellery. (8 Marks)

(b) As a branch auditor of a nationalised bank, how would you verify the following? (1) Advances to DOT COM Companies. (2) Balances in account of a bank situated in a foreign country. (8 Marks)

4. (a) Raja & Co, a firm of Chartered Accountants, requires your help in identifying the audit procedures that can be performed using CAATs. Please guide them. (4 Marks)

(b) TUI Ltd's previous year ended on 31st March 2012. During that period it made a claim for refund of customs duty which was admitted as due by the customs authorities during April 2012. TUI Ltd neither credited the claim in the profit and loss account nor reported the same in clause 13(b) of Form 3CD for the reason that this has been admitted as due by the authorities only in the next financial year. Further TUI Ltd had changed the method of determination of cost formula for the purpose of stock valuation from FIFO basis to Weighted Average Cost basis, but that was also not reflected in clause 11(b) of Form 3CD which requires reporting on change in


accounting method employed. Comment. (4 Marks) (c) Your firm has been appointed as Central Statutory Auditors of a Nationalised Bank.

The Bank follows financial year as accounting year. State your views on the following issues which were brought to your notice by your Audit Manager: (i) The bank has recognised on accrual basis income from dividends on securities and

Units of Mutual Funds held by it as at the end of financial year. The dividends on securities and Units of Mutual Funds were declared after the end of financial year.

(ii) In case of all such advances which have been classified as non-performing for the first time during the current financial year, only the last date of the financial year has been reckoned as the date of account becoming non-performing.

(4 x 2 =8 Marks) 5. (a) Designing an Audit Strategy is the backbone of the “Audit Planning” process.

Discuss. (8 Marks) (b) Elaborate how the Statutory Auditor can verify the existence of related parties for

the purpose of reporting under Accounting Standard 18. (8 Marks) 6. (a) As a Statutory Auditor, how would you deal with the following?

(i) While commencing the statutory audit of Binu Company Limited, the auditor undertook the risk assessment and found that the detection risk relating to certain class of transactions cannot be reduced to acceptance level.

(ii) While auditing accounts of a public limited company for the year ended 31st March 2013, an auditor found out an error in the valuation of inventory, which affects the financial statement materially – Comment as per standards on auditing.

(iii) At the statutory audit of PQR Limited, the physical verification of fixed assets was conducted. However the auditor was not able to confirm the existence of valuables and important machinery. In this connection, the auditor obtained a certificate from the management to prove its existence and value and accepted the same blindly without any further procedures. (4 × 3 = 12 Marks)

(b) Briefly discuss any four areas in which Due Diligence can take place. (4 Marks) 7. Write short note on any four of the following:

(a) Other Misconduct (b) Rolling Statement (c) Corporate Governance (d) Inquiry (e) Reconciliation of cost and financial records. (4 × 4 = 16 Marks)



MOCK TEST PAPER 1


PAPER – 4 : CORPORATE AND ALLIED LAWS Question No.1 is compulsory.

Attempt any five questions from the remaining six Questions.


1. (a) Ashish Ltd. in its First General Meeting appointed six Directors whose period of office is liable to be determined by rotation. Briefly explain the procedure and rules regarding retirement of these directors. Will it make any difference, if Ashish Ltd. does not carry on business for Profit ? (5 Marks)

(b) The Board of directors of M/s Ripple Ltd. in a meeting held on 30th April 2014 declared an interim dividend payable on the paid up equity share capital of the company. In the board meeting scheduled for 15th May 2014, the board wants to revoke the said declaration. State with reference to the provisions of the Companies Act, 1956 whether the board of directors can do so. (5 Marks)

(c) Ashfaq Ltd, a member of a recognised stock exchange proposes to buy and sell shares of a particular company on behalf of investors as well as on their own account. They seek your advice as to restrictions, if any, under Securities Contracts (Regulation) Act, 1956 for dealing in securities on their own account. Advise. (5 Marks)

(d) Mr. Anant, a Director of ABC Limited proceeding on a long foreign tour, appointed Mr. Zoyeb as an alternate director to act for him during his absence. The articles of the company provide for appointment of alternate directors. Mr. Anant claims that he has a right to appoint alternate director. (5 Marks)

2. (a) The shareholders and creditors of Wish Limited, in the meeting convened for approval of a scheme of reconstruction of the company, passed resolutions. The scheme of reconstruction provided for the following: (i) Sale of vacant land and appropriation of proceeds for payment of outstanding

wages, tax dues and repayment of loan. (ii) Unsecured creditors to forgo 40% of their claims against the company and

receive debentures for the balance amount. A few share holders and creditors raised objections against the said arrangements.

Advise the directors about the steps to be taken to give effect to the proposed scheme under the Companies Act, 1956. (8 Marks)

(b) A group of shareholders has approached you for advice regarding the affairs of


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Impression Ltd. According to them, the management of the company is not carrying out its functions in accordance with the prudent commercial practice and if the affairs of the company are allowed to run in future in the same manner, the company’s solvency would be in danger. They want that a Special Audit be conducted to find out the actual nature of the transactions. (i) You are required to state with reference to the provisions of the Companies

Act, 1956, as to when a special audit can be directed and by whom ? (ii) Draft an application to be submitted to the appropriate authority in this respect. (8 Marks)

3. (a) A meeting of the Board of Neelgagan Ltd. was held on a public holiday. However due to lack of quorum, the proceedings of the meeting could not be held and therefore the Chairman of the meeting decided with the consent of the majority that the Board meeting be adjourned to next Monday. However, the date fixed for the adjourned meeting happened to be a ‘public holiday’. Advise and draw your analogy with reference to the provisions of the Companies Act, 1956, whether the adjourned meeting of the Board can be held on a day which is a public holiday. (8 Marks)

(b) Advise the Board of Director of Spectra Papers Ltd. regarding validity and extent of their powers, under the provisions of the Companies Act, 1956 in relation to the following matters: (i) Buy-back of the shares of the Company, for the first time, upto 10% of the paid

up equity share capital without passing a special resolution. (ii) Delegation of Power to the Managing Director of the company to invest surplus

funds of the company in the shares of some companies. (8 Marks) 4. (a) It is apprehended by the Directors of a Public Company that they are likely to be

prosecuted for an offence under the Companies Act, 1956 which is not compoundable. Explain the provisions of the Companies Act, 1956 under which the Directors can seek relief from the liability for offence. What will be the position in case prosecution has already been launched ? (8 Marks)

(b) Omile Ltd. was a supplier of Raw Materials to Amar Ltd., which could not make payment to Omile Ltd. owing to huge losses and financial constraints. Ultimately, Amar Ltd, went into liquidation and Official Liquidator was appointed. Omile Ltd. filed a suit for recovery of its dues. The Court awarded a decree in favour of Omile Ltd. Armed with the Court’s decree, Omile Ltd. approached the Official Liquidator to pay the amount to it in preference over dues of the workmen. The workmen protested the demand of Omile Ltd. and contended that their dues rank pari passu with the Secured Creditors and will override all other claims of other creditors even where a decree has been passed.

You are required to ascertain the validity of the argument of the workmen in the light


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of the provisions of the Companies Act, 1956 and the decide cases on the subject. (8 Marks) 5. (a) The profits of MJR Company Limited for the financial year 2009-2010 fell

considerably due to recession. The Board of directors of the company, therefore, bonafide did not recommend any dividend for the year. At the Annual General Meeting of the company, a group of shareholders/members objected to the Board's decision and wanted the Board to make recommendation for dividend. On refusal by the Board, the members, who feel oppressed by the Board's decision to skip the dividend, move to the Company Law Board/ and complain against the Board on the ground of oppression and mismanagement. Examining the provisions of the Companies Act, 1956, decide: (1) Whether the members’ contention shall be tenable? (2) Whether the act of Board of Directors not to recommend any dividend shall

amount to oppression and mismanagement? . (8 Marks) (b) SEBI received complaints from some investors alleging that Vishal Ltd. and some

brokers are indulging in price manipulation in the shares of Vishal Ltd. Explain the powers that can be exercised by SEBI under the Securities and Exchange Board of India Act, 1992 in case the allegations are found to be correct. (8 Marks)

6. (a) Explain briefly the procedure relating to enforcement of security interest under SARFAESI Act, 2002. (8 Marks)

(b) Annual general meeting of Emblem Ltd. has been scheduled in compliance with the requirements of the Companies Act, 1956. In this connection, it has some directors who are rotational and out of which some have been appointed long back, some have been appointed on the same day. Decide in this connection: (i) Which of the directors shall be retiring by rotation and be eligible for re-election? (ii) In case two directors were appointed on the same day, how would you decide

their retirement by rotation? (iii) In case the meeting could not decide how the vacancies caused by retirement

to be dealt with, what shall be consequences ? (iv) What will be your answer, assuming that the matter could not be decided even

at the adjourned meeting? (8 Marks) 7. Attempt any four:

(a) Mrs. Shipra an Indian national desires to obtain Foreign Exchange on current account transactions for the following purposes: (i) Payment of commission on exports made towards equity investment in wholly


4

owned subsidiary abroad of an Indian Company. (ii) Remittance of hiring charges of transponder. (4 Marks)

(b) The Central Government has formed an opinion that Mr. Crux (a member of the Competition Commission of India) has acquired such financial interest that it may affect prejudicially his functions as a member of the Competition Commission and it wants to remove him from his office. You are required to state with reference to the provisions of the Competition Act, 2002, whether the Central Government can do so and if yes, how? (4 Marks)

(c) The existing Inter-state Cooperative Society seeks your advice regarding the papers to be submitted to the Registrar of Companies for its registration as a Producer Company under the provisions of the Companies Act, 1956. You are required to prepare a list of such papers. (4 Marks)

(d) Explain the rule of ‘beneficial construction’ while interpreting the statutes quoting an example.. (4 Marks)

(e) How the trials under PMLA are conducted in special courts? Is the offence under PMLA are bailable? (4 Marks)




FINAL COURSE: GROUP – II

PAPER – 5: ADVANCED MANAGEMENT ACCOUNTING Question No. 1 is compulsory

Answer any five questions from the remaining six questions


1. (a) Mini SIAM, located in Himachal Pradesh, manufactures high quality industrial products. NIA Industries have asked Mini SIAM for a special job that must be completed within one week.

Raw material R1 (highly toxic) will be needed to complete the NIA Industries’ special job. Mini SIAM purchased the R1 two weeks ago for `7,500 for a job ‘A’ that recently was completed. The R1 currently in stock is the excess from that job and Mini SIAM had been planning to dispose of it. Mini SIAM estimates that it would cost them `1,250 to dispose of the R1. Current replacement cost of R1 is `6,000.

Special job will require 250 hours of labour G1 and 100 hours of labour G2. Mini SIAM pays their G1 and G2 employees `630 and `336 respectively for 42 hours of work per week. Mini SIAM anticipates having excess capacity of 150 [G1] and 200 [G2] labour hours in the coming week. Mini SIAM can also hire additional G1 and G2 labour on an hourly basis; these part-time employees are paid an hourly wage based on the wages paid to current employees.

Suppose that material and labour comprise Mini SIAMs only costs for completing the special job. What is the minimum price that Mini SIAM should bid on this job?

(5 Marks) (b) Following information are extracted from monthly budgets of Victoria Ltd. You are

required to find out missing figures. November December

Beginning WIP Inventory 36,000 ??? Beginning Finished Goods Inventory 44,000 ??? Variable Cost of Goods Sold 1,23,000 ??? Direct Material Usage 50,000 56,000 Direct Labour 53,100 69,000 Variable Overhead 25,000 29,000 Variable Cost of Goods Manufactured 1,09,000 1,14,800


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Ending WIP Inventory ??? ??? Ending Finished Goods Inventory ??? 45,000

(5 Marks) (c) A process industry unit manufactures three joint products: A, B and C. C has no

realisable value unless it undergoes further processing after the point of separation. The cost details of C are as follows:

Per Unit `

Upto Point of Separation Marginal Cost 30 Fixed Cost 20 After Point of Separation Marginal Cost 15 Fixed Cost 5 70

C can be sold at ` 37 per unit and no more.

(i) Would you recommend production of C?

(ii) Would your recommendation be different if A, B and C are not joint products? (5 Marks)

(d) Answer the following independent situations relating to an assignment problem with a minimization objective: (i) Just after row and column minimum operations, we find that a particular row

has 2 zeroes. Does this imply that the 2 corresponding numbers in the original matrix before any operation were equal? Why?

(ii) Under the usual notation, where a32 means the element at the intersection of the 3rd row and 2nd column, we have, in a 4 × 4 assignment problem, a24 and a32 figuring in the optimal solution. What can you conclude about the remaining assignments? Why? (5 Marks)

2. (a) A Company has two production departments KTS and KTW. Standards for the forthcoming year is as follows:

Particulars Department KTS

Department KTW

Direct Labour Hours available per period 12,000 8,000


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Standard Wage Rate per hour ` 3 ` 2.5 Expected Learning Curve 80% 70% Standard Variable Overheads per hour ` 10 ` 6 Standard Fixed Overheads per hour ` 11 ` 7 Direct Labour Hours required for first 100 units

36 per unit 18 per unit

The direct materials are introduced in Department KTS. The company has following quote for purchase of direct material:

Level of Outputs (Units) Price of Direct Material per unit of output 100 ` 36.00 200 ` 32.40

Overtime, if required is paid at the time and half. The overhead rates as given above do not include overtime premium. It is the policy of the company to add profit margin as under in quoting the prices:

Department Percentage KTS

10% of Labour & 15% Overhead Cost KTW

The company has received a special order. Special tooling costs of the order amount to ` 5,500. If this order is for 200 units or less, it will be executed in the period which has a workload of 7,680 direct labour hours in Department KTS and 4,200 direct labour hours in Department KTW. Required: If the company decides to get the work executed entirely within the company, what price, on cost-plus basis, should be quoted for the order, if it consists of 100 Units, 200 units. (12 Marks)

(b) State whether the learning curve theory can be applied to .the following independent situations briefly justifying your decision: (i) A labour intensive sculpted product is carved from the metal provided to the

staff. The metal is sourced from different suppliers since it is scarce. The alloy composition of the input metal is quite different among the suppliers.

(ii) Pieces of hand-made furniture are assembled by the company in a far off location. The labourers do not know anything about the final product which utilizes their work. As a matter of further precaution, rotation of labour is done frequently.


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(iii) Skilled workers have been employed for a long time. The company has adequate market for the craft pieces done by these experts.

(iv) A company funds that it always has an adverse usage of indirect material. It wants to apply learning curve theory to improve the way standards have been set. (4 Marks)

3. (a) Given below is an iteration in a simplex table for a maximization objective linear programming product mix problem for products X1, X2 and X3.

Cj 6 4 10 0 0 0

Basic Variable Quantity X1 X2 X3 S1 S2 S3

0 S1 400 0 4/3 0 1 -1/3 0 6 X1 400 1 2/3 2 0 1/3 0 0 S3 400 0 5/3 0 0 -2/3 1

Zj 2,400 6 4 12 0 2 0 Cj - Zj 0 0 -2 0 -2 0

Answer the following questions: (i) Is the above solution feasible? (ii) Perform one more iteration with X2 entering the solution to get a solution with

the same value for the objective function. (iii) Indicate the shadow prices. (iv) If customer is prepared to pay higher price for product X3 then by how much

should the price be increased so that the company's profit remains unchanged?

(v) From the given table, derive any one original constraint inequality with the coefficients of variables in their simplest whole number forms. (8 Marks)

(b) A company following standard marginal costing system has the following interim trading statement for the quarter ending 30th June, 2013, which reveals a loss of ` 17,000, detailed below:

` Sales 4,99,200

Closing Stock (at prime cost) 18,000 Direct Material 1,68,000 Direct Labour 1,05,000 Variable Overhead 42,000


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Fixed Overhead 1,20,000 Fixed Administration Overhead 40,000 Variable Distribution Overhead 19,200 Fixed Selling Overhead 40,000 Loss 17,000

Additional information is as follows: (i) Sales for the quarter were 1,200 units. Production was 1,400 units, of which

100 units were scrapped after complete manufacture. The factory capacity is estimated at 2,000 units.

(ii) Because of low production, labour efficiency during the quarter is estimated to be 20% below normal level.

You are required to analyse the above and report to the management giving the reasons for the loss. (8 Marks)

4. (a) Venus Medical Care Co. (VMCC) is operating its entire business through its four customers V1, V2, V3, and V4. V1 and V2 are small pharmaceutical stores while V3 and V4 are large discount stores with attached pharmacies. VMCC prices its products at 25% above variable cost, although all four customers demand and receive a sizable discount off the list price.

The Finance Officer Mr. Albert has been asked to undertake a customer profitability analysis that shows the profit from each customer and each customer channel, stand-alone pharmaceuticals, and large pharmaceuticals attached to discount stores.

Mr. Albert identifies `20,250 of general administration costs to small pharmaceuticals stores and `48,375 of general administration costs to the large discount stores.

You are required to assist Mr. Albert in preparing a customer profitability report as desired. Also suggest some points to improve VMCC’s profit.

Item Small Pharmaceuticals

Large Pharmaceuticals

Activity Rate

V1 V2 V3 V4 Number of Orders 4 9 6 3 `750 Order Size `40,000 `20,000 `4,25,000 `4,00,000 n/a Average Discount 5% 10% 18% 12% n/a Regular Deliveries 4 9 6 3 `375 Expedited Deliveries 2 0 2 0 ` 1,250

(8 Marks)


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(b) The BSA Cycle Company is planning to design, develop and market a new racing cycle. The project is composed of the following activities:

Activity Description Predecessors Time (Weeks)

A Design Frame None 4 B Design Wheels None 3 C Design Gears None 3 D Design Handlebars C 2 E Test Steering A,B,D 1 F Test Gears A,B,D 2 G Performance Test E, F 3 H Manufacturing Layout A,B,D 3 I Manufacture Demonstrators H 5 J Prepare Advertising G 2 K Prepare Users’ Manuals G 4 L Distribute to Dealers I,J,K 2

(i) Construct the network. (ii) Determine the critical path and the duration of the Project. (iii) BSA Cycle Company’s management would like to get the new bicycle to

their dealers in 15 weeks. Would it help if they: (a) Work overtime to get the frame designed in only 3 weeks? (b) Assign more designers to design the gears? If so, from what activity

should the designers be taken from? (8 Marks) 5. (a) A hotel operated by a company has 180 single rooms and 60 double rooms. The

rent of the double rooms is set at 160% of the rent of the single rooms. The operational costs per day per rooms are estimated as under:

Single Rooms (`) Double Rooms (`)

Variable Costs 300 500 Fixed Costs 500 780

The average occupancy of both the single rooms and double rooms is expected to be 85% through a year of 365 days. In fixing the room rent, the company desires to earn a margin of safety of 20%. The hotel has to pay tax of 20% on its tariff.


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Required: (i) Calculate the tariff per day per (1) single room and (2) Double Room. (ii) The hotel intends to reserve the normal occupancy of 12 single rooms for one

of its valued corporate customers at a discount (excluding tax) of 10% of the rent. What increase in the occupancy of the remaining single rooms days is required to compensate the loss arising from the discount. (12 Marks)

(b) Write a note on “Requirements Explosion”. (4Marks) 6. (a) Duke Ltd. has two Divisions ‘Dx’ and ‘Dz’ with full profit responsibility. The Division

‘Dx’ produces Component ‘X’ which it sells to ‘outside’ customers only. The Division ‘Dz’ produces a product called the ‘Z’ which incorporates Component ‘X’ in its design. ‘Dz’ Division is currently purchasing required units of Component ‘X’ per year from an outside supplier at market price.

New CEO for Indian Operations has explored that ‘Dx’ Division has enough capacity to meet entire requirements of Division ‘Dz’ and accordingly he requires internal transfer between the divisions at marginal cost from the overall company’s perspective.

Manager of Division ‘Dx’ claims that transfer at marginal cost are unsuitable for performance evaluation since they don’t provide an incentive to the division to transfer goods internally. He stressed that transfer price should be ‘Cost plus a Mark-Up’.

New CEO worries that transfer price suggested by the manager of Division ‘Dx’ will not induce managers of both Divisions to make optimum decisions. You are requested to help him out of the problem. (6 Marks)

(b) “Cost is not the only criterion for deciding in favour of shut down” – Briefly explain. (4 Marks)

(c) Arnav Automobiles Ltd. is a leading manufacturer of commercial vehicles in India. It uses Standard Costing and Variance Analysis to measure its operating performance. Now management of Arnav Automobiles Ltd. wants to compete globally and changed its performance measurement system to Kaizen Costing. State why Kaizen Costing could be more useful for performance measurement than the Standard Costing and Variance Analysis. (6 Marks)

7. Answer any four of the following questions: (a) What is target costing? It is said that target costing fosters team work within the

organisation. Explain how target costing creates an environment in which team work fosters. (4 Marks)


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(b) What qualitative factors should be considered in an decision to outsource manufacturing of a product? (4 Marks)

(c) "Sunk cost is irrelevant in decision making, but all irrelevant costs are not sunk costs." Explain with examples. (4 Marks)

(d) Write a short note on the characteristics of the dual problem. (4 Marks) (e) Brief the principles associate with synchronous manufacturing. (4 Marks)


Test Series: February, 2014 MOCK TEST PAPER – 1

FINAL COURSE: GROUP – II PAPER – 7: DIRECT TAX LAWS

Question 1 is compulsory. Answer any five questions from the remaining six questions.

Time Allowed – 3 Hours Maximum Marks – 100 1. (a) Home Ltd., a company engaged in the business of manufacture of industrial

equipments, furnishes the following particulars pertaining to P.Y. 2013-14. Compute the deduction allowable under section 32 and section 32AC for A.Y.2014-15, while computing its income under the head “Profits and gains of business or profession”. Also, compute the written down value of plant and machinery as on 1.4.2014. Particulars ` in crores 1. Written down value of plant and machinery (15% block) as on

1.4.2013 40.00

2. Sold plant and machinery on 12.12.2013 (15% block) 6.00 3. Purchase of second hand machinery (15% block) on 1.8.2013

for business purpose (the machinery was put to use immediately)

30.00

4. Purchased new computers (60% block) on 25.12.2013 for office use

1.00

5. Acquired and installed new plant and machinery (15% block) on 16.09.2013 (` 52 crore) and on 6.1.2014 (` 58 crore)

110.00

6. New air conditioners purchased and installed in office premises on 21.8.2013

0.40

(10 Marks) (b) Blueprint Ltd. furnishes the following particulars of its wealth for the valuation date

of 31st March, 2014. The company is engaged in jewellery business. Compute its net wealth on valuation date 31.03.2014 and the wealth tax payable.

` Land is situated in an area located at a distance of 7 kms from the local limits of the Municipality, the said area has a population of 4,00,000 according to last preceding census.

95,00,000


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Land is situated in an area located at a distance of 3 kms from the local limits of the Municipality, the said area has a population of 1,05,000 according to the last preceding census.

48,00,000 Land in urban area (for construction of Mall) 26,00,000 Motor car (including one imported car worth ` 8 Lacs) 15,00,000 Jewellery (held as stock-in-trade) 28,00,000 Bank balance 10,00,000 Cash in hand as per cash book 3,10,000 Guest house and land appurtenant thereto in rural area 18,00,000 Residential flats of identical size provided to six employees for their use near factory in rural areas (salaries of three such employees exceed ` 10,00,000 p.a.)

60,00,000 Residence provided to managing director (salary ` 12,00,000 p.a.)

15,00,000

Residence provided to whole time director (salary ` 20,000 p.m.)

20,00,000

The company has taken the following loans : ` (a) for purchase of jewellery 10,00,000 (c) for residence provided to whole time director 1,90,000

(10 Marks) 2. Sargam Ltd., engaged in the business of manufacturing, shows a net profit of ` 7 crores

for the financial year ended 31-3-2014, after debiting/crediting the following items: (i) On EPABX and mobile phones (exclusively used for the business purpose)

purchased during the year, depreciation amounting to ` 24 lacs was claimed at higher rate of 60% treating them at par with computer.

(ii) 55 lacs paid to Naryana Ltd, towards feasibility study conducted for examining proposals for technological advancement relating to the existing business, where the project was abandoned without creating a new asset.

(iii) 38 lacs paid for the higher studies of the director's son abroad, with a stipulation that he would be appointed as a trainee in the company under "apprentice training scheme" where there is no evidence of existence of such scheme.

(iv) Payment of ` 32 lacs (without deducting tax at source) towards purchase of software from a non-resident, meant for subsequent resale in the Indian market, was ultimately sold at a profit during F.Y. 2013-14.


3

(v) Dividend of ` 12 lacs received from a foreign company in which this company holds 28% in nominal value of the equity share capital of the company. ` 0.28 lac expended on earning this income.

(vi) 48 lacs were paid on 13th July, 2013 to a National Laboratory with a stipulation that the said contribution shall be used for the purpose of an approved scientific research programme only.

(vii) Secret commission of ` 10 lacs was paid and debited under commission account. (viii) Purchased a brand new bus for ` 13 lacs and donated to a school where the

children were studying and debited the same to the Workmen and Staff Welfare Account.

Additional Information: • A debt of ` 15 lacs was claimed as bad debt in the previous year 2012-13.

However, the Assessing Officer allowed only a sum of ` 8 lacs as bad debts. In the previous year 2013-14, a sum of ` 5 lacs is recovered ultimately in respect of the debt. The effect of the recovery of bad debt was not given in the books of account.

Compute total income of Sargam. Ltd. for the Assessment Year 2014-15 and work out the amount of tax payable on such income, indicating reasons for treatment of each item. Ignore provision relating to minimum alternate tax. (16 Marks)

3. (a) Ms. Geeta received the following gifts during the P.Y.2013-14 from her friend Mr. Suhesh, - (1) Cash gift of ` 54,000 on her birthday, 1st August, 2013. (2) 80 shares of Veena Ltd., the fair market value of which was ` 80,000, on her

birthday, 1st August, 2013. On 10th August 2013, 120 shares of Drama Ltd., was purchased by her from Mr. Suhesh for ` 20,000 the fair market value of which was ` 80,000 on the date of transfer. Mr. Suhesh had originally purchased the shares on 12.10.2012 at a cost of ` 12,000. Further, on 12th October, 2013, Ms. Geeta purchased land from her sister’s mother-in-law for ` 3,50,000. The stamp value of land was ` 5,00,000. On 23rd March, 2014, she sold the 120 shares of Drama Ltd. for ` 1,20,000. Compute the income of Ms. Geeta chargeable under the head “Income from other sources” and “Capital Gains” for A.Y.2014-15. (5 Marks)

(b) Graeme Smith, a foreign national and a cricketer came to India as a member of South Africa cricket team in the year ended 31st March, 2014. He received ` 10 lakhs for participation in matches in India. He also received ` 1.5 lakh for an advertisement of a product on TV. He contributed articles in a newspaper for which


4

he received ` 50,000. When he stayed in India, he also won a prize of ` 35,000 from horse racing in Kolkata. He has no other income in India during the year. (i) Compute tax liability of Graeme Smith for Assessment Year 2014-15. (ii) Are the income specified above subject to deduction of tax at source? (iii) Is he liable to file his return of income for Assessment Year 2014-15? (iv) What would have been his tax liability, had he been a match referee instead of

a cricketer? (5 Marks) (c) Alliya LLP, a limited liability partnership in India, is engaged in development of

software and providing IT enabled services through two units, one of which is located in a notified Special Economic Zone (SEZ) in Noida. The particulars relating to previous year 2013-14 furnished by the assessee are as follows: Total Turnover: SEZ unit ` 140 lakhs and the other unit ` 80 lakhs Export Turnover: SEZ unit ` 80 lakhs and the other unit ` 40 lakhs Profit: SEZ unit ` 70 lakhs and the other unit ` 20 lakhs. The assessee has no other income during the year. (i) Compute tax payable by Alliya LLP for the Assessment Year 2014-15. (ii) Will the amount of tax payable change, if Alliya LLP is an overseas entity?

(6 Marks) 4. (a) Deluxe, a partnership firm engaged in real estate business, sold a land for ` 70 lacs

on 07-08-2013, in the course of its business. The buyer was a stranger to the assessee firm. The valuation adopted by the stamp valuation authority was ` 1 crore. The Assessing Officer wants to adopt the value of ` 1 crore for computing the profit arising from the sale of land, by invoking the provisions of section 50C. Is the same justified?

(b) Fine Ltd is a public limited company. As a good corporate citizen and as a measure of gaining goodwill of the people living in and around its industry, which is to some extent a polluting industry, it provided funds for establishing drinking water facilities to the residents in the vicinity of the refinery and also provided aid to the school run for the benefit of the children of those local residents. The Assessing Officer declined to allow that expenditure on the ground that it was not an item of expenditure incurred by the assessee for earning the income. The company, however, claimed that such social costs can be claimed as deduction. Is the claim of Fine Ltd. tenable in law? Discuss.

(c) Mr. Rajan is a retail trader and his returned income for the last five years ranged between ` 10 lakh to ` 13 lakh. Mr. Rajan celebrated his silver wedding anniversary on 12th January, 2014 by hosting a grand cruise party in the luxury cruise liner “The


5

Oyster”, for which he had spent ` 30 lakh. The Assessing Officer, in the course of scrutiny assessment of Mr. Rajan, asked him to explain the source of such expenditure. The explanation offered by Mr. Rajan that the same was out of his savings for the last ten years, was not found satisfactory by the Assessing Officer, since two years ago, he had spent to tune of ` 50 lakh on the lavish wedding of his daughter. You are required to examine the tax consequences.

(d) Mr. Krishna, a sole proprietor was previously a partner of True India Partnership firm. On 23rd February, 2014, in accordance with the partnership deed, he took over the entire business of partnership firm on its dissolution including fixed assets, current assets and liability.

Krishna in his return of income for the Assessment Year 2014-15 claimed ` 7 lakhs as set-off of losses, suffered by the erstwhile partnership firm against his income earned as an individual proprietor, considering the case as inheritance of business.

However, the Assessing Officer disallows the claim of set off on the ground that it is not a case of inheritance. Discuss the validity of the action of Assessing officer.

(4 × 4 = 16 Marks) 5. (a) Royal Ltd., an Indian company, exports strawberries to Deluxe Inc for an amount of

` 47 Lacs. Deluxe Inc. is located in a Notified Jurisdictional Area (NJA). Royal Ltd. charges ` 48 lacs and ` 52 lacs for sale of similar goods to Coral Inc and

Mirage Inc, respectively, which are not located in NJA and both of them are not associated enterprises of Royal Ltd.

Assuming that permissible variation notified by Central Government for such class of international transactions is 3% of the transaction price, state the tax implications under section 94A in respect of the above transaction by Royal Ltd. with Deluxe Inc.

(b) Avinash Kumar, a resident individual, is a musician deriving income of ` 89,000 from concerts performed outside India. Tax of ` 8,900 was deducted at source in the country where the concerts were performed. India does not have any double tax avoidance agreement with that country. His income in India amounted to ` 3,45,000. Compute tax liability of Avinash Kumar for the assessment year 2014-15 assuming he has deposited ` 30,000 in Public Provident Fund and paid medical insurance premium in respect of his father, aged 65 years, ` 30,000.

(c) A public charitable trust, created under a trust deed for providing relief to disabled persons, registered under section 12AA, furnishes the following particulars of its receipts during the year ended 31st March, 2014 -

Particulars ` (in Lacs) (i) Income from properties held by trust (net) 23 (ii) Income (net) from business (incidental to main objects) 20


6

(iii) Voluntary contributions from public (including the corpus donation of ` 8 Lacs)

14

The trust applied ` 23 Lacs towards various activities and programmes undertaken for the benefit of autistic persons during the year. The trust has also paid ` 13 Lacs towards repayment of a loan taken a year back for the purpose of construction of its centre for training the disabled persons in various handicraft works.

Determine the tax liability, if any, of the trust for the assessment year 2014-15. (d) Dear Ltd., a domestic company, purchases its own unlisted shares on 16th

September, 2013. The consideration for buyback amounted to ` 28 lakh, which was paid on the same day. Dear Ltd. had received ` 21 lakh on issue of these shares one year back. Compute the additional income-tax payable by Dear Ltd. Further, determine the interest, if any, payable if such tax is paid to the credit of the Central Government on 15th December, 2013. Would there be any tax implication in the hands of the shareholders? Discuss. (4 × 4 = 16 Marks)

6. (a) On an application made by Mr. Jain, an order was passed by the Settlement Commission on 28-01-2014 under section 245D. The said order had a mistake apparent on record. The Settlement Commission passed an amended order dated 28-04-2014 which resulted in modifying the liability of Mr. Jain.

Mr. Jain is of the view that order of the Settlement Commission is final and conclusive and it has no power to rectify the said mistake.

You are required to examine the following: (i) Correctness of claim made by Mr. Jain (ii) Validity of the order amended by the Settlement Commission (6 Marks)

(b) Examine the following cases and state whether the same are liable for penalty as per the provisions of the Income-tax Act, 1961. (i) Jack & Associates had made payment in excess of the limits prescribed to the

contractors for carrying out labour job work at various sites, but had not deducted tax at source as per section 194C.

(ii) Pan Asia Hotels were asked by Income-tax Officer (CIB) to furnish details of all such tourists who stayed in their hotels and had paid bill amount in excess of ` 10,000. They have not furnished the requisite information in spite of various reminders. (6 Marks)

(c) Explain the applicability of the provision relating to the deduction of tax at source in the following transactions: (i) Canara Bank pays ` 100,000 per month as rent to the Central Government for

a building in which one of its branches is situated.


7

(ii) A notified infrastructure debt fund eligible for exemption under section 10(47) of the Income-tax Act, 1961 pays interest of ` 8 lakhs to Mr. John, a resident of Notified Jurisdictional area. (2 x 2 = 4 Marks)

7. (a) A search was conducted under section 132 in the business premises of Harsh on 30th November, 2013. At that time, assessments under section 143(3) for A.Y. 2011-12 and A.Y. 2012-13 and reassessment proceeding under section 147 for A.Y. 2010-11 were pending before the Assessing Officer. (i) What are the assessment years for which notice can be issued for making

post-search assessment? (ii) What would be the fate of pending assessments and reassessment? (iii) What would be the effect, if the post-search assessment orders are annulled

by the Income-tax Appellate Tribunal? (3 × 2 = 6 Marks) (b) Discuss the correctness or otherwise of the following with reference to the

provisions of the Income-tax Act, 1961. (i) Commissioner (Appeals) has no power to decide a matter that was not raised

before him. (ii) The Income-tax Appellate Tribunal cannot amend its orders. (iii) A case before the Appellate Tribunal cannot be dealt when there is a

difference of opinion amongst the members of the Bench. (3 × 2 = 6 Marks) (c) Diksha received a notice under section 148 from the Assessing Officer for A.Y.

2010-11 on the ground that depreciation on certain assets was allowed in excess. The Assessing Officer recorded the reason for reopening. The original assessment was completed under section 143(3). In course of reassessment proceeding, the Assessing Officer also disallowed certain sum under section 14A in respect of expenses purported to be in relation to dividend from companies and tax-free interest. However, the Assessing Officer did not record the reason for applying the provisions of section 147 in respect of the issue of disallowance under section 14A and passed the order disallowing the excess depreciation and also certain sum under section 14A. Is there any infirmity in the order passed by the Assessing Officer? (4 Marks)


1

Test Series: February, 2014 MOCK TEST PAPER – 1

FINAL COURSE: GROUP – II PAPER – 8: INDIRECT TAX LAWS

Question No. 1 is compulsory. Attempt any five questions from the remaining six questions.

Working notes should form part of the answer.

Wherever necessary, suitable assumptions may be made by the candidates


1. (a) Expressway India Ltd. is engaged in the manufacture of machines. It has supplied one machine to XYZ & Co. The contracted sale price for delivery at buyer’s premises is ` 15,00,000. You are required to determine the assessable value for the subject transaction under section 4 of the Central Excise Act, 1944. Give reasons with suitable assumptions where necessary. The contracted sale price includes the following elements of cost:

`

Warranty charges 38,000 Cost of drawings and designs used in the production of goods, supplied by buyer

8,500

Cost of primary packing 5,000 Cost of packing at buyer's request for safety during transport 7,000 Excise duty 1,10,600 VAT (Sales tax) 34,000 Octroi 10,500 Freight and insurance charges paid from factory to ‘place of removal’ 31,000 Actual freight and insurance from ‘place of removal’ to buyer's premises 62,300

(5 Marks) (b) Shubham Enterprises, engaged in the manufacture of excisable goods has effected

clearances of goods of the value of ` 440 lakh during the financial year 2012-13. The said clearances include the following details:


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S. No.

Particulars Amount (` in lakh)

(i) Goods subject to valuation based on retail sale price under section 4A of the Central Excise Act, 1944 (said goods are eligible for 40% abatement)

120

(ii) Goods on which duty is paid based on annual capacity of production under section 3A of the Central Excise Act, 1944

90

(iii) Clearances without payment of duty to a 100% export oriented unit

65

(iv) Goods bearing brand name of National Small Industries Corporation

80

(v) Exports to Bhutan 40 (vi) Balance clearances of goods in the normal course 45

Shubham Enterprises has sought your advice as to whether it is eligible to claim the benefit of exemption under Notification No. 8/2003 – C.E. dated 01.03.2003 in the financial year 2013-14. (5 Marks)

(c) Realty Logic Ltd., dealing in activities relating to Real estate business furnishes the following information pertaining to services provided by it:

Particulars Amount (` ) Construction services provided to World Health Organisation Construction of Private clinic of a Dentist Renovation service provided to Government relating to plant for sewerage treatment Construction of roads in a factory Construction of residential complex meant for use of Member of Parliament

30,00,000 60,00,000 45,00,000

20,00,000 75,00,000

Renting of residential dwelling for use as residence Repair and maintenance of airport

40,00,000 30,00,000

Compute the value of taxable service and the service tax liability of Realty Logic Ltd. considering the rate of service tax at 12% assuming that it is not eligible for small service providers’ exemption under Notification No. 33/2012 – ST dated 20.06.2012. (5 Marks)

(d) Housing Hub Ltd. undertakes works contracts and maintains sufficient records to quantify the labour charges. From the details given below, determine the taxable turnover, input tax credit and net VAT payable under the State VAT Law:


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Particulars ` (in lakh)

(i) Total contract price (excluding VAT) 400 (ii) Labour charges paid for execution of the contract 60 (iii) Cost of consumables used not involving transfer of property in

goods 20

(iv) Material purchased and used for the contract taxable at 12.5% VAT (including VAT)

90

Housing Hub Ltd. also purchased a plant for use in the contract for ` 20.8 lakhs (inclusive of VAT).In the VAT invoice relating to the same, VAT was charged at 4% separately. Assume 100% input tax credit is available on capital goods immediately and output VAT is leviable at 12.5%. (5 Marks)

(e) Century Industries has imported a machine from UK. Compute the assessable value and customs duty payable on the machine with the help of the information provided below:

(i) F.O.B. value of machine 20,000 UK Pounds (ii) Freight paid (air) 6,000 UK Pounds (iii) Design and development

charges paid in UK 5,00 UK Pounds

(iv) Commission payable to local agent @ 2% of F.O.B. in Indian rupees

(v) Date of bill of entry 28.12.2013 (Rate BCD 10%; Exchange rate as notified by CBEC ` 100 per UK Pound)

(vi) Date of entry inward 25.12.2013 (Rate of BCD 12%; Exchange rate as notified by CBEC ` 102 per UK Pound)

(vii) C.V.D. is payable @ 12% (viii) Special C.V.D. – as

applicable

(ix) Insurance charges have been actually paid but details are not available.

(5 Marks) 2. (a) Examine the validity of the following with reference to the Central Excise Law:

(i) As per Rule 3(5A) of the CENVAT credit Rules, 2004, if the capital goods are cleared as waste and scrap, the manufacturer is required to pay an amount


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equal to the duty leviable on transaction value. (ii) Unregistered premises used solely for affixing lower ceiling prices on

pharmaceutical products to comply with requirements of under Drugs (Prices Control) Order (DPCO), 2013 are required to obtain central excise registration.

(3 x 2 = 6 Marks) (b) Examine the chargeability of service tax in the following cases:-

(i) Services provided, in relation to serving of food or beverages, by an air conditioned canteen maintained in a factory.

(ii) Services provided by NSDC in relation to National Skill Development programme in the month of October, 2013. (3 x 2 = 6 Marks)

(c) Examine the correctness of the following statements under Customs. (i) Import of LCD TV is allowed as part of free Baggage allowance under Baggage

Rules, 1998. (ii) Drawback is allowed in respect of milk products. (3 Marks)

3. (a) The assessee, SPB Ltd., had two divisions namely, textile division and plastic division situated adjacent to each other on a common ground and surrounded by a common boundary wall. Both the units had separate central excise registrations but the assessee, a single entity, had a common PAN under the Income-tax Act.

In order to receive continuous and uninterrupted supply of electricity, the assessee installed DG sets/electricity generation plant to be used in the factory of the textile division and it used furnace oil as fuel in the generation of electricity. The assessee availed CENVAT credit on furnace oil, used as fuel for the generation of electricity, which was used for captive consumption in their own factory. When the assessee's other unit required electricity, the assessee supplied part of the electricity so generated to its other unit.

Revenue claimed that the assessee ought to reverse the credit taken on furnace oil used in the generation of electricity and supplied to the other unit. However, the assessee contended that since both the units were situated within a common boundary wall, the electricity supplied to the other unit could not be treated as being supplied to a different entity but within its own factory. The assessee further contended that separate registration of the plastic unit would not make it a different factory. Discuss with the help of a decided case law, whether the Department’s contention is valid in law. (6 Marks)

(b) (i) Examine with the help of a decided case law whether tax is to be deducted at source under section 194J of the Income-tax Act, 1961 on the amount of service tax if it is paid separately and is not included in the fees for professional services/technical services?


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(ii) Examine with the help of a decided case law whether extended period of limitation be invoked for mere contravention of statutory provisions without the intent to evade service tax being proved? (3 x 2 = 6 Marks)

(c) RST Ltd. entered into technical collaboration with BCD Ltd. of Indonesia and imported drawings and designs in paper form through professional courier and post parcels. RST Ltd. declared the value of these drawings and designs at a very nominal value. However, the Assistant Commissioner of Customs valued these drawings and designs at a high value and levied duty on them. RST Ltd. contended that customs duty cannot be levied on drawings and designs as they do not fall in the definition of goods under the Customs Act, 1962.

Do you feel the stand taken by the RST Ltd. is tenable in law? Support your answer with a decided case law, if any. (3 Marks)

4. (a) Sun Corporations Ltd. (SCL) was engaged in the manufacture of electronic transformers, semi-conductor devices and other electrical and electronics equipments. During the course of such manufacture, SCL also manufactured machinery in the nature of testing equipments to test their final products.

SCL had stated in its balance sheet that the testing equipments had been capitalised. The said position was further substantiated in the Director’s report wherein it was mentioned that during the year, the company developed a large number of testing equipments on its own.

The Department issued a show cause notice to SCL, levying duty on such testing equipments. However, SCL contended that such items were assembled in the factory for purely research and development purposes, but research being unsuccessful, same were dismantled. Hence, it would not amount to manufacture.

SCL further submitted that the said project was undertaken only to avoid importing of such equipment from the developed countries with a view to save foreign exchange. Examine with the help of a decided case law, whether in the given case, the duty is payable on the testing equipments. (6 Marks)

(b) Bharti Constructions was a construction company rendering services under the category of “construction of residential complex service” and was paying the service tax in accordance with the Finance Act, 1994. They undertook certain construction work on behalf of a trust and paid the service tax. However, later they filed refund claim for the service tax so paid contending that they were not actually liable to pay service tax as it was exempt.

Although Department did not dispute the fact that service tax was exempted in the instant case, it nevertheless rejected the refund claim on the ground that the refund application filed by the assessee was beyond the limitation period as stated in section 11B of the Central Excise Act, 1944.


6

Is the Department correct in rejecting the refund claim? Substantiate your answer with the help of a decided case law, if any. (6 Marks)

(c) Examine with the help of a decided case law whether judicial review of the order of the Settlement Commission by the High Court or Supreme Court under writ petition/special leave petition, is permissible? (3 Marks)

5. (a) (i) Heera Enterprises is engaged in manufacturing the articles of jewellery falling under heading 7113 on job work basis for Panna Jewellers. Panna Jewellers is of the opinion that since Heera Enterprises is manufacturing the articles, liability to obtain registration, maintain accounts, pay duty leviable on such goods and comply with all the relevant provisions of Central Excise Rules, 2002 is on Heera Enterprises. You are required to determine whether Panna Jewellers’ opinion is correct in law. (4 Marks)

(ii) “Any Central Excise Officer not below the rank of Superintendent may arrest any person”. Discuss the validity of the statement under the provisions of the Central Excise Act, 1944. (2 Marks)

(b) (i) Lavi Ltd. was awarded a contract in October, 2013 for providing plastering services in respect of an immovable property for ` 4,00,000/-. As per the terms of contract, the material required for plastering was also provided by Lavi Ltd. Are said services subject to service tax. If so, determine the service tax liability of Lavi Ltd.

(ii) What are the objectives with which filing of return procedures under VAT laws are designed? (3 × 2 = 6 Marks)

(c) Mr. Desraj, an exporter was held guilty of exporting ‘prohibited goods’ due to which his goods were confiscated. He demanded the release of goods in lieu of redemption fine under section 125 of the Customs Act, 1962. However, the customs officer denied to grant him the said option. Examine whether, in the instant case, the customs officer is bound to release the goods in lieu of redemption fine. (3 Marks)

6. (a) Examine the validity of the following statements relating to remission of duty under central excise law:- (i) Remission of duty can be granted on goods cleared from the factory after

payment of duty, but destroyed by fire in transit? (ii) Upon grant of remission of duty, the CENVAT credit on inputs used in final

product has to be reversed. (6 Marks) OR

(a) Mr. Harnam Singh, manufactures electric cables for selling them within India as well as for export to Germany. He has stored his goods in the warehouse for the purpose of exports. However, on account of Tsunami earthquake, goods cannot be shipped so as to be exported to Germany. Now, he wishes to divert the goods which


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were kept in the warehouse for the purpose of export, for home consumption. Explain briefly the procedure under Central Excise Act, 1944 to be adopted by Mr. Harnam Singh for diverting the said goods kept in the warehouse for the purpose of export to Germany for home consumption. (6 Marks)

(b) (i) Determine the place of provision of services as well as their taxability in each of the following independent cases: (a) Mr. Naresh, a London based Interior Decorator provides his professional

services in respect of property which is intended to be located in Gujarat. (b) A U.S.A. based company possessing specialization in building

construction has been awarded a contract for construction of Gurudwara in respect of specific sites in Canada by Punjab based Gurpreet Singh.

(ii) Explain in brief the disadvantages of composition scheme available for small dealers under VAT system. (3 x 2 = 6 Marks)

(c) M D Jefferson Exporters have exported raw iron outside India. FOB value of 1,000 tonne of goods exported is ` 3,00,000. Rate of duty drawback on such export is ` 200 per tonne. Market price of goods is ` 1,75,000 (in wholesale market). You are required to ascertain whether M D Jefferson Exporters is entitled to duty drawback and if yes, what is the quantum of such duty drawback? (3 Marks)

7. (a) (i) Can a document which is relevant for a proceeding under the Central Excise Act, 1944 be searched by a Central Excise Officer? Explain the relevant provisions.

(ii) Write a brief note on the matters with respect to which an appeal does not lie before the Customs Excise Service Tax Appellate Tribunal against any order passed by Commissioner (Appeals), under section 35B of the Central Excise Act, 1944

(b) (i) “The Commissioner of Central Excise may order Special audit under service tax on random basis.” Discuss briefly.

(ii) Explain briefly whether VAT is leviable on each of the following lease transactions:- (a) Sale of leased asset after lease period (b) Maintenance of leased asset (3 x 2 = 6 Marks)

(c) What will be the dates of commencement of the definitive anti-dumping duty in the following cases under section 9A of the Customs Tariff Act, 1975 and the rules made thereunder: (i) where no provisional duty is imposed; (ii) where provisional duty is imposed; (iii) where anti-dumping duty is imposed retrospectively from a date prior to the

date of imposition of provisional duty. (3 Marks)


1



FINAL COURSE: GROUP – II

PAPER – 6: INFORMATION SYSTEMS CONTROL & AUDIT Question No. 1 is compulsory.

Attempt any five questions from the remaining six Questions. Time Allowed – 3 Hours Maximum Marks – 100

1. ABC Ltd. is a global FMCG company serving to its customers worldwide. The company is having its various offices at different geographical locations. Though, the company is using various in-house developed software applications but still it faces the problems in data consolidation on a real time basis. To overcome these problems, the company engaged a Technical Consultant to prepare a detailed report regarding the issues and their possible solutions. The consultant called a meeting of all the stakeholders and deliberated in-depth for various issues. Afterwards, he prepared a detailed report and submitted to the top management of the company. The key recommendation was to implement a real time ERP package, which equips the enterprise with necessary capabilities in order to gain a competitive edge in the volatile business environment. Accordingly, the company decided to go for an ERP package implementation with an aim to improve its efficiency and synchronize various isolated functions into streamlined business processes. It is expected that after implementation of ERP package, the information required by the business managers would be available all the time; it will be accurate, reliable and no unauthorized disclosure of the same will be made. Further, it is also presumed that the company will be running its business on 24×7 basis.

Read the above carefully and answer the following: (a) Any system has to possess few key characteristics to qualify for a true ERP

solution. Explain those characteristics in brief. (b) Discuss the steps involved in the implementation of a typical ERP package. (c) With reference to the conversion from existing information system to a new system,

explain the file conversion in brief. (d) To ensure that no unauthorized disclosure of the information will be made, proper

authentication mechanism needs to be implemented. How Information Technology (Amendment) Act 2008 addresses this issue with reference to its Section 3?

(5 × 4 = 20 Marks) 2. (a) Describe the weaknesses of waterfall model in brief. (8 Marks)

(b) Explain the role of an IS Auditor with reference to Authorization Controls. (4 Marks)


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(c) Discuss ‘Publication of rules, regulation etc. in Electronic Gazette’ with reference to Section 8 under Information Technology (Amendment) Act 2008. (4 Marks)

3. (a) What is Executive Information Systems (EIS)? Explain major characteristics of EIS in brief. (8 Marks)

(b) Explain Restorative Information Protection with the help of examples. (4 Marks) (c) What may be the possible advantages of SDLC from the perspective of IS Audit in

your opinion (4 Marks) 4. (a) Discuss the tasks to be undertaken in the ‘Business Impact Analysis’ phase while

developing a Business Continuity Plan. (8 Marks) (b) Describe major points, which are required to be taken into consideration for Asset

and Security Classification with reference to Information Security Policy. (4 Marks) (c) What do you mean by Detective Controls? Explain with the help of examples. Also

discuss the broad characteristics of detective controls in brief. (4 Marks) 5. (a) What do you understand by an Expert System? Briefly explain the key benefits of

Expert Systems. (8 Marks) (b) Discuss the detailed controls and objectives of Access Control with reference to

Information Security Management System (ISMS). (4 Marks) (c) Discuss major disadvantages/limitations of continuous auditing in brief. (4 Marks) 6. (a) Describe five principles of COBIT 5 in brief. (8 Marks) (b) Discuss any four common threats to the computerized environment in brief.(4 Marks) (c) Explain the key activities of ‘Plan Phase’ of ISMS. (4 Marks) 7. Write short notes on any four of the following:

(a) Cold Site and Hot Site (b) Preventive Maintenance (c) Scoring Approach for Risk Assessment (d) ‘Service Transition’ under ITIL V3 (e) ‘Recognition of Foreign Certifying Authorities’ under Section 19 of Information

Technology (Amendment) Act, 2008. (4 × 4 = 16 Marks)


For SFM Charts, Contact: +8983-47-5152, Mayank Kothari’s Classes. Snapshot of Chart of Portfolio Management is given

below

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