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PART TIME SEM- IIIUniversity Paper 2009

TAXATION Time : 3 Hours Total Marks : 100

Notes. 1) Attempt any FIVE questions2) Use of Bare Income Tax Act is allowed .3) Figures to the right of the question indicates marks.4) Make suitable assumptions wherever required.5) All Questions carry equal marks.

Q.No.1. From the following Profit & Loss Account of Mr. Sameer, compute his total taxable Income for the assessment year 2009-10 (20)

Profit & Loss Account for the year ended 31st March 2009Particulars Rs. Particulars Rs.To Opening StockTo Purchase To SalariesTo Bad DebtsTo AdvetisementTo Fire Insurance PremiumTo ConveyanceTo Interest on Proprietor’s CapitalTo General ExpensesTo Wealth taxTo Sales Tax penaltyTo DepreciationTo Net Profit

Total Rs

3,10,0009,25,000 70,000 28,000 15,000 5,000 8,000

45,000 65,000 5,000 4,000 30,0002,10,000

17,20,000

By SalesBy Closing StockBy Income TaxRefundBy DividendFrom Co-Op BankBy Gift fromMotherBy Lottery Prize

Total Rs

12,50,000 3,15,000

15,000

30,000

10,0001,00,000

17,20,000

Additional Information:- 1) Depreciation allowable as per Income Tax Rules is Rs.35,000.2) General Expenses include:

a) Purchase of lottery tickets Rs.1,000b) Income Tax paid Rs.10,000c) Sameer’s son’s school fees Rs.10,000

3)Purchases include Rs.1,00,000 paid for cash purchases exceeding the limit prescribed under section 40A (3) of Income Tax Act 1961.4) Mr.Sameer is physically handicapped with 75% disability.5) Mr.Sameer has contributed Rs.20,000 towards Life Insurance premium for self, which is included in salaries.

Q.2. Mr. Vipul has purchased a residential house on 1st Aug,1981 for Rs.3,00,000. he incurred Rs.1,00,000 towards cost of improvement during the previous year 1983-84. he sold the house on 1st Feb,2009 for Rs.25,00,000/He paid Brokerage of Rs.75,000Cost Inflation Index for the financial year 1981-82 is 100; for financial 1983-84 is 116 and financial year 2008-09 is 582.Compute the Income from Capital Gains of Mr.Vipul for assessment year 2009-10

20 MarksQ.3. Write short notes on any Three.

a) Depreciationb) Deduction from income from salaryc) Indexationd) Perquisitese) Deductions under income from Other Sources.

Q.4. Mr.Kashiram owns to houses. He furnishes the following information for the previous year ended 31st March 2009. you are required to compute his Net Taxable Income for the previous year ended 31st March,2009 form the following data:

Particulars House at Mumbai House at Sangli

1. Nature of occupancy2.Actual rent3. Municipal Ratable value4.Municipal taxes paid5.Fire Insurance Premium paid on 1.1.2009 for the year ending 31.12.20096.Ground rent payable7. Cost of water proofing8. Interest paid on loan for construction of property9.Repayment of principal amount of loan

Self Occupancy

Rs.29,000Rs. 6,500

Rs.7,200Rs.220Rs.2,000

Rs.12,500Rs.10,000

Let Out9500pmRs.68,000Rs.9,000

Rs.8,000Rs.400Rs.5000

Rs.16,000Rs.15,000

Mr. Kashiram was required to pay Rs.700 p.m. to his sister out of the income earned from Sangli House as per his Father’s will.

Q.5.Explain any Three of the following (20)a) Assessmentb) Personc) Companyd) Block of assete) Assessee

Q.6. a) What is the scope of income for Resident and Ordinary Resident and Non resident? (10)

b) How is the residential status of an Individual as “Resident and Ordinary Resident”determined under section 6(1), 6(6) (a) of the Income Tax Act,1961? (10)

Q.7. a) Explain briefly any 5 items of expenses which are allowed as deduction while computing Income from Business or Profession. (10)

(b) Enumerate and explain briefly the exemptions available under section 10 with reference to any 5 items. (10)

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Notes. 1) Attempt any FIVE questions2) Use of Bare Income Tax Act is allowed .3) Figures to the right of the question indicates marks.4) Make suitable assumptions wherever required.

1. Prof. Gopal is a lecturer in a college at Mumbai. The details of his salary and other expenses for the previous year 2007-08 are as follows: (20 Marks)

Rs.a) Basic Salary 40,000b) Dearness Allowance (forming part of salary) 7,000c) City compensatory allowance 3,000d) Education allowance for his son 4,000e) House Rent Allowance 6,200

i) Rent Paid 7,100ii) Exempt u/s 10(13A) 2,400

f) Remuneration from Mumbai University for acting as an examiner and remuneration from Delhi

University as paper setter 3,500g) Allowance for looking after the evening shift of

the College 500 p.m.

He incurred an expenditure of Rs.1,000 for attending a seminar at Delhi and the expenditure was reimbursed by the college. During the year he spent Rs.3,000 for purchase of books. Professional Tax Paid by him is Rs.1,600

You are required to compute the taxable income from salary of Prof. Gopal for the Assessment year 2008-2009.

2. Define and explain any Three of the following terms: 20 Marksa) Assesseeb) Assessment Year and previous yearc) Incomed) Annual valuee) Block of Assets

3. Mr. Oswal owns a building consisting of three identical units whose construction was completed on (31st March 2007). The building was occupied from 1st April 2007 onwards. The particulars pertaining to the three units for the year ended 31st March 2008 are given below: 20 Marks

Particulars Unit 1 (Rs) Unit 2 (Rs.) Unit 3 (Rs.)

Fair Rent Rent ReceivedMunicipal Taxes-----paid-----due but not yet paidLand Revenue Due but OutstandingGround Rent Due but not paid

60,000-

3,0003,0001,2002,400

60,00072,000

5,0005,0001,2002,400

60,000-

3,0003,0001,2002,400

Nature of occupation : unit 1 self occupied for residence. Unit 2 Let out for residence. Unit 3 used for own business. On 1st April,2005 he had borrowed a sum of Rs.5,00,000 bearing interest rate of 12% P.A. for construction of this building. The total cost of construction of the building is Rs.12,00,000. The interest on borrowed sum on the construction of the Building is Rs.72,000. Computer the income from house property of Mr.Oswal for the Assessment year 2008-09

4. Define the concept of residential status and its impact on the incidence of tax in the case of individuals with suitable examples. 20 Marks

5. Enumerate and discuss any five items of expenses which are expressly allowed as deduction in the computation of income from business and profession 20 Marks

6. Write short notes on (ANY THREE) 20 Marksa) Amortization of preliminary expensesb) Depreciation allowancec) Provided Fund under in Income Taxd) Deductions from income from house propertye) Research and development expenditure.

7. Mr. Bharadwaj, proprietor of Bharadwaj and sons submits the following information for the previous year ended 31st March,2008. 20 Marks

Profit and Loss Account for the year ended 31st March 2008.Particulars Amount

Rs.Particulars Amount

Rs.Salaries and Wages Printing and stationaryMotor car expensesRentEntertainment expensesAdvertisement ExpensesDepreciationDrawingsAdvance income taxEmbezzlement by an employeeDonationSelf Welfare expensesNet Profit

1,22,00024,40029,60024,00017,00047,00032,00050,00015,0005,00028,00066,0002,80,000

Gross ProfitAgricultural IncomeInterest on PPF accountGift from fatherWinning from lotteries NSC interest

7,10,0008,0006,0004,00010,0002,000

Total 7,40,000 7,40,000

Additional information:a) Allowable depreciation u/s 32 of Income Tax: Rs.35,000b) Half the rent is attributable towards the residence of the proprietorc) Staff welfare expenses include Rs.16,000 incurred fir his own medical treatmentd) Advertisement expenses include Rs.15,000 towards introduction of a new product.e) Printing and stationary expenses include Rs.4,400 paid for printing of marriage card of his sonf) He spent Rs.200 for purchase of lottery tickets.g) A deduction of Rs.21,000 is available u/s 80(G) in respect of donation expenditure incurred.

You are required to compute the taxable income of Mr.Bharadwaj for the Assessment Year 2008-2009 *****************************************



Notes. 1) Attempt any FIVE questions2) Use of Bare Income Tax Act is allowed .3) Figures to the right of the question indicates marks.4) Make suitable assumptions wherever required.

1. Mr. Ram Dayal is working as a purchase manager with a private sector company in Mumbai. He has provided the following particulars of his income for the financial year 2006-07Basic Salary ……………………………………………………..Rs.40,000 per monthDearness Allowance…………………………………………………20,000 per monthHouse rent Allowance……………………………………………….8,000 per monthMedical Allowance…………………………………………………10,000 per monthTravelling Allowance……………………………………………….15,000 per monthSpecial Duties Allowance…………………………………………...25,000 per monthProfession Tax………………………………………………………….200 Per monthMr. Dayal Lives in a rented house, for which he pays an annual rent of Rs.24,000 As per the employment contract the dearness allowance is taken into account for giving retirement benefits.

Mr. Dayal made a contribution of Rs.7500 to a recognized provident employer also made a matching contribution to the fund. The employer paid a premium of Rs.6000 on the life policy if Mr.Dayal

You are required to compute the taxable income from salary of Mr Ram Dayal. 20 Marks

2. a) What is the scope of income of the following individual assesses:i) Resident but not ordinarily resident 5 Marksii) Non Resident 5 Marks

b) What incomes are taxable under the head income from other sources 10 Marks

3. Define and explain any three of the following terms: 20 Marksa) Person b) Assesseec) Perquisite d) Self Occupied Propertye) Capital Asset.

4. a) What do you understand by “Transfer of capital Asset”?[selection 2(14)]Enumerate any three transactions that are not regarded as transfer of capital asset’? (Section 47)

10 Marks b) What deductions are admissible to individuals in respect of payment towards donation to charities? What are the conditions for availing such deductions? (Section 80G)

10Marks

5. Mrs. Sunita shanker is a management consultant. Mrs. Shanker is also a visiting faculty at a few management colleges. She provides you with the following details of her receipts and payment s pertaining to her profession for the financial year 2006-2007

Receipts Amount Payments AmountBank Balance(1.4.06) 1,40,000 Purchase of a computers…………….60,000Fees from clients……12,00,000 Motor car expenses………………….90,000Honorarium from clients 60,000 Purchase of Books………………….. 50,000Cash gift from clients…..50,000 Salary to staff……………………….100,000………………………………………Office Repairs……………………….50,000………………………………………Income Tax……………………… 1,50,000………………………………………Subscription to journals ……………25,000………………………………………Annual membership fees………………………………………of a professional body……………….5,000……………………………………....Telephone charges…………………30,000……………………………………….Entertainment expenses………… 24,000……………………………………….Household expenses……………… 6,000……………………………………….office expenses……………………60,000………………………………………Bank Balance(31.3.2007)……… 8,50,000 Total Rs…….. 15,00,000 Total Rs…. 15,00,000

Additional Information:1) Mrs. Sunit Shanker had maintains her books of account on cash basis.2) 50% of the motor expenses pertain to Professional work3) Depreciation on motor car is charged at the rate of 20 per cent per annum.

You are required to computer the taxable income under the head profits and gains of business and professional of Mrs. Sunita Shanker. 20 Marks

6. Mr. Joseph owns two houses in Mumbai. He gives you the following details for the financial year 2006-07Particulars House# 1 House#2Fair Rental Value…………………………………... 25,000……………….22,000Rent Received ………………………………………28,000……………….25,000Municipal Valuation………………………………...26,000……………….25,000Municipal Tax Paid………………………………......3,000………………...4,000Repairs……………………………………………….1,500…………………2,500Fire Insurance Premium……………………………...2,000…………………3,000Land Revenue………………………………………..2,500…………………4,000Ground Rent…………………………………………1,600………………….6,000Nature of Occupation………………………………...Let Out………………Let Out

Residence……………Business

Additional InformationMr. Joseph had obtained a loan by mortgaging Huse#1. the loan was used to finance the construction of House#2. during the year Rs.4000was paid as interest.

You are required to compute Joseph’s taxable income under the head income from house property. 20 Marks

7.Write short Notes. On any three of the following 20 Marksa) Agricultural Incomeb) Amortisation of preliminary expensesc) Set off and carry forward of lossesd) Incomee) Methods of accounting

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Notes. 1) Question No1 and Q. No. 2 are compulsory and carry20 marks each.2) Attempt any FOUR from the remaining question. These carry 15 marks each.3) Make suitable assumptions wherever required.

1. Mr. Sunil is a proprietor of a business. The following was the Profit and Loss Account of his business for the year ended 31st March,2006:- 20 Marks

Rs. Rs.To Office Salaries 1,14,000 By Income 4,73,161To Proprietor’s Salary 16,000 By Rent 1,44,000To General Expenses 7,500 By Bad Debt Recovered 23,000To Bad Debts 1,500 (disallowed in earlier year)To Advertisement 4,200 Interest(Net) 16,900To Fire Insurance Premium 1,800 (TDS-Rs.1,900)To Depreciation on Car 13,900To Motor Car Expenses 24,300To LIC Premium Paid 21,200To Foreign Travel Expenses 45,600To Donations 21,500To Interest on Proprietor’s Capital 18,900To Reserve for Future Losses 55,000To Income Tax Paid 22,400To Net Profit 2,89,331

_________ ____________Total Rs. 6,57,151 Total Rs. 6,57,151

Further information is given below:-a) General expenses include Rs.1,200 paid as a help to a poor student.b) Out of the donations a sum of Rs.11,000 is eligible for deduction u/s80G@ 50%

c) One third of Motor Car Expenses is for personal use of the car.d) The depreciation as per I.T. Act is Rs.31,200

Compute the taxable income of Mr. Sunil for the year ended 31-3-2006[A.Y.2006-07]

2. From the following particulars compute the taxable income of Ms. Medha Sawant for the A.Y. 2006-07:- 20 Marksa) Her net salary is @ Rs.25,600/- per month. The following monthly deductions were made from salary:

- Professional Tax @ Rs.220- Provident Fund @ Rs.2,500- TDS @ Rs.1,500

b) She received part time salary @ Rs.5,000 per month from November,2005c) Gift received from parents Rs.66,000 and loan taken from brother Rs.1,00,000d) Mediclaim Premium paid is Rs.11,230/- in cash.e) Purchased NSC of Rs.40,000 while interest received on bank of deposit is Rs.12,228. dividend received during the year amounted to Rs.23,560.f) Leave salary received Rs.30,000/-g) H.R.A. is @ 20% months of salary, was received.

h) Bonus- 2 months of salary, was received.i) Her income from horse race betting’s amounted Rs.5,000/-3. a) Define “Perquisites” State any five items of perquisite which are not taxable.

8 Marks b) How is the residential status of an individual as “Resident and Ordinarily Resident” determined u/s6(1), 7 Marks

4. a) Mr. Mukund is the owner of the following properties for which the details are as follows for the financial year 2005-06:-

House 1 House II(Self Occupied) (Let Out)

Municipal Reteable value (Rs) 63,000 2,27,000Municipal Tax thereon 20% 15%Rent Received (Rs) Nil 2,10,000Repairs (Rs) 30,000 45,000Interest on borrowings for construction (Rs) 16,000 48,000HDFC loan repaid (Rs) 36,000 24,000

From the above, compute his income from house property. 8 Marks

b) Vijay Purchases 250 equity shares of ABC Ltd. On 1-6-1987 for Rs.270 per share and incurs expenditures on brokerage of Rs.500. on July1,1996, he gets bonus of 200 shares. On September 1,1997 he gets on 300 rights shares for Rs.140 per share . On February 28,2006. he sells all the 750 shares for Rs.400 per share and incurs an expenditure of Rs.1,500 on brokerage 7 Marks

Compute his taxable income for A.Y.2006-07. he does not have any other source of income .

The Cost inflation index fot the year 1987-88 is 150; for the F.Y.1996-97 is 199; fir F.Y.1997-98 is 331 and for the F.Y.2005-06 is 497.

5. (a) Enumerate any ten items which are items which are exempt from income tax u/s.107 Marks

(b) Explain in brief any three deductions under section 80 of the I.T. Act,1961 8 Marks

6. (a) Enumerate any six items which are not deductible as business expenditure.8 Marks

(b) All “receipts are not income” Explain with illustrations. 7 Marks

7. (a) Explain the “Scope of Income” under Income tax Act,1961 8 Marks

(b) Explain briefly the provisions of “Set off and carry forward losses” under the income tax act in respect of “Business Income” 7 Marks

8. Write short notes on (ANY THREE):- 15 Marksa) Agricultural Incomeb) “Person” under income tax Actc) Deductions from income from Salaryd) Depreciation under I.T. Act,1961e) Non- Resident.

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1. Mr. Dheeraj was the General Manager of a company XYZ Ltd. Since January,1978.He was entitled to a basic salary of Rs.15,000 p.m. He also received Rs.1500 p.m. as clearness allowance, rs.200 p.m. as city compensatory allowance.Rs.1000 p.m. as entertainment allowance, and Rs.400 p.m. as house rent allowance. He resides with his parents at their house. He contributed Rs.1000 p.m. to the recognized provident fund of the company. The company also contributed an equal amount. He retired voluntarily on 31-12-2004, He received the following amounts on retirement.

a) Gratuity Rs.80,000 (he is not covered under the payment of Gratuity Act)b) Compensation for voluntary retirement under a scheme approved by the Central Government Rs.1,80,000c) Payment of Rs.2,00,000 as accumulated balance from Recognised Provident Fund.d) Payment of Rs.3,00,000 from an approved Superannuation Fund in lieu of an annuity.

His pension was fixed at Rs.4,000 p.m. On 1-2-2005 he commuted ½ of the pension for Rs.1,50,000 he had provided a car by the company fro office purpose and private purpose the capacity of car exceeds 106 litres and the maintenance and the Chauffeurs Following deductions were made during the year from his salary1) Income tax deducted at Source Rs.1,500 per month2) Professional tax deducted at source Rs.200 per monthCompute the income of Mr.Dheeraj under the head-salaries for the assessment year 2005-06 20 Marks

2. a) Raj Furnishes the following particulars of his income earned during the previous year 2004-051) profits from business in Delhi which is managed from outside India 1,25,0002) Income earned from business inNepal which is controlled from India 2,00,0003) Past profit of 1995-96 brought to India in 2004-05 40,0004) Profit on sale of building in India but received in Nepal 1,30,0005) Income from agriculture in Nepal received there but later on remitted To India 60,0006) Pension from a former employer in India, received in Nepal 20,0007) Interest on F.D. With a Bank in India

i) Received in India 5,000ii) Received abroad 4,500

8) Dividend on share if foreign Companyi) Received abroad 15,000ii) Received in India 12,000

find out scope of the total income of Raj if he is (i) Ordinary Resident, (ii) Not Ordinary Resident or (iii) Non-Resident in India for the assessment year 2005-06 12 Marks

b) Discuss the concept of residential status of an individual in detail. 8 Marks

3. Write short notes (ANY FIVE) 15 Marks1) Person as defined in income tax act 19612) Block of Assets3) Depreciation allowable u/s324) Annual Value5) Agricultural Income6) Income7) Perquisites

4. a) Enumerate ten items discuss any three items of expenses which are not allowed an while computing income from business 10 Marks

b) Discuss the incidence of tax in case of an individual 5 Marks

5. Mr.Pandit owns three houses one each at Mumbai. Delhi and Baroda the details of which for the year ended 31-3-2005 are as follows :-

(1) The house at Mumbai has an annual rental value of Rs.75,000 and us occupied by Mr.Pandit for his residence. He has to pay Rs.10,000 per annum. For municipal taxes for constructing this house he had borrowed money of which 2,00,000 is still outstanding. Interest is payable thereon @ 9.5% per annum. The house was vacant for Three Months.

(2) The house at Delhi has an annual rental value of Rs.1,25,000 and is also occupied by Mr. Pandit for his residence whenever he comes to Delhi. The Municipal ground rent @ Rs.500 per month is also payable. Mr. Pandit had borrowed Rs.3,00,000 on 1-7-1999 for carrying out repairs for the house on which interest @ 12% per annum is payable. He has also paid fire insurance premium of Rs.2500 for the above house.

(3) The construction of the house at Baroda has been completed on 31-03-2002. and it has 4 flats all of which have been rented out for residential purposes. The fair rent of each flat is Rs.5000 per month whereas the actual rent received is Rs.6000 per month for 2 flats and Rs.4500 for the other 2 flats. Municipal taxes for each flat amount to Rs.3500 per annum. Other expenditure incurred for the above house is as follows:

a) Salary to rent collector Rs.1500 per monthb) Fire insurance premium Rs.1000 Per flatc) Interest payable on loan taken for construction of the house Rs.36000

Calculate the income from House Property of Mr. Pandit for the assessment year 2005-06

6. (a) Mention in brief various deductions available to an assessee under the head Capital Gains 8 Marks

(b) Explain the concept of capital and revenue expenditure and it’s relevance in determining taxable income. 7 Marks

7. (a) What is meant by income from other sources? Give 5 examples of income chargeable to tax under this head. 7 Marks

(b) Discuss the provisions of income tax Act regarding i) LIC premium, Contribution to provident fund and ii) Interest on certain securities, dividends etc. 8 Marks

8. a) Explain briefly the exemptions available u/s 10 with reference to any five items 8 Marks

b) Describe the conditions to be fulfilled u/s 80 G (5) of the act by a charitable fund or institution for being approved and recognized. 7 Marks.

___________________________PART TIME SEM- III

University Paper 2004TAXATION

Time : 3 Hours Total Marks : 100


Q.1. Mr.Ramlal the general manager of Y. Ltd. Retired on December 31,2003 after 30 years of service. The particulars of his income are as follows:

1) Salary Rs.8,000 per month from January 1,2003. house rent allowance Rs.3,000 per month from January 1,2003

2) Medical expenses reimbursed by the employer Rs.21,000 for the period from April 1,2003 which includes Rs.5,000 paid to a Government hospital.

3) The employer provides him a car of less than 1.6 litres capacity and driver for official and personal use:

4) Ramlal contributes 22% (12% regular and 10% additional voluntary contribution) to a recognized provident fund and the company matches his regular contribution of 125

5) He lives in a rented house in Delhi and pays Rs.4,000 per month as rent.6) Ramlal received Rs.1,50,000 as gratuity. He is not covered by the payment of

Gratuity Act. 19727) He received Rs.1,60,000 for encashment of lever; being 10 months leave no

availed of 8) In addition to the above he is provided with the other benefits and facilities

such as a) Free gas and water for his domestic use Rs.4,000b) A domestic servant (salary paid by the employer)3,500c) Free lunch outside office Rs.5,000d) Education allowance of Rs.6,000

Compute Mr. Ramlal’s Income for the assessment year 2004-05 20 Marks

Q.2. Following is the Profit and Loss account of SS Ltd. For the year ended 31-3-2004Particulars Rs. Particulars Rs.To Opening StockFinished goods 5,00,000Work in Progress 1,00,000

To Raw material consumedTo Salaries, Wages, and bonusTo Power and fuelTo StoresTo Administrative expensesTo Sales expensesTo DepreciationTo Interest to: Suppliers for late payment Unsecured lenders Bank Debentures Financial Institutions

6,00,00044,00,00016,00,000, 4,00,00010,00,000 5,00,00010,00,00015,00,000

1,00,000 4,00,000 2,00,000 3,00,000 5,00,000

By SalesBy CommissionBy Excess Provision no Longer needed: For income tax For expensesBy closing Stock: Finished goods Work In Progress

1,80,00,000 30,00,000

5,00,000 2,00,000

7,00,000 1,00,000

To provision for income taxTo Transfer to: General reserve Debenture redemptionTo Interim dividendTo Proposed dividendTo Balance c/fd

25,00,000

30,00,00015,00,00010,00,00015,00,000 5,00,0002,25,00,000

___________2,25,00,000

You are informed that- 1) sales expenses included Rs.50,000 being entertainment expenses.2) Money borrowed through debentures was used for new plant and machinery costing Rs.30,00,0003) Depreciation allowable as per income tax rules is Rs.25,00,0004) administrative expenses include Rs.20,000 paid for carrying on scientific research5) Out of the interest debited to profit and loss account the following is unpaid:

a) To suppliers for late payment Rs.10,000b) To financial institutes Rs.50,000

The above amounts were unpaid till 31st October 2004 the due date for filing the return of income for SS ltd.Shri Jash, The managing Director asks you to compute profit and gains of business for the assessment year 2004-2005. 20 Marks

Q.3. Write short notes on (ANY THREE) a) Exempt Incomeb) Expenditure on Scientific Researchc) Deduction of Export profitsd) Entertainment allowance 5x3=15 Marks

Q.4.a) How will you determine the income from house property under the income tax act

b) Discuss briefly the specific deductions allowed while computing income form House Property. 7+8=15 Marks

Q.5. What are the different categories of persons according to their legal status? Give an illustration of each. 15 Marks

Q.6. a) Briefly discuss any 5 incomes, which are exempt under section 10 of the income tax act 8 Marks

b) what do you mean by depreciation under Income Tax Act. briefly explain the calculation of depreciation for Income Tax Act. 7 Marks

Q.7. a) Enumerate the provisions of “Set off and carry forward losses” as contemplated under the Income Tax Act in respect of different types of business activities.10Marks

b) Discuss the scope of the head “Income form other Sources” and explain the deductions available under the head. 5 Marks

Q.8. a)Explain Long Term Capital Gains. How do you calculate Long term Capital Gains? 8 Marks b) Briefly explain the deductions with respect to Long Term Capital Gains.7 Marks

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Notes. 1) Only text of the Income Tax Act 1961 is permitted in the examination hall.2) Attempt Question No1 and Q. No. 2 are compulsory and any FOUR of the remaining questions i.e. Questions Nos 3 to 8

3) Question nos 1 and Q.2 carry20 marks each.4) all other questions. are off carry 15 marks each.5) Make suitable assumptions wherever required.

Q.1.write short notes on any of the FOUR (4x5=20)a) Dividend received by individualsb) Concept of income accrued or arisingc) Depreciation allowable u/s32d) payments made in cashe) Concept of indexed cost of acquisitionf) Capital Asset and Transferg) Annual value

Q.2. Win Win ltd. Provides you with the following details to compute Its income from business for the Assessment year 2003-2004 20 Marksa) Net Profit for the financial year 2002-03 amounted to Rs.10,00,000/-b) Income Tax paid for the financial year 2002-03 amounted to Rs.7,00,000/-c) Dividend Income received during the financial year 2002-03 amounted to Rs.2,00,000/-d) Depreciation allowable u/s32, though provided in the profit and loss account amounted to Rs.4,50,000/- is Rs.3,00,000/- onlye) Amounts received not taxable under the Act not credited to P& L A/c amounted to Rs.5,00,000/-f) Salary paid amounted to Rs.25,75,000/- was duly accounted before arriving at the net profit of Rs.10,00,000/- for the financial year 2002-03g) Discount paid amounted to Rs.2,00,000/- was duly accounted during the financial year 2002-03 before arriving at the net Profit mentioned above.h) The disallowances u/s43B amounted to Rs.4,50,000/- during the financial year 2001-02 subsequently duly paid

Q.3. Discuss any three section under the Act which provide for exemption or deduction in respect of export earnings 15 Marks

Q.4. Explain briefly the exemption available u/s 10 with reference to any five items 15 Marks

Q.5. Mr. A receives Salary of Rs.6,00,000/- during the financial year 2002-03. he claims the Standard Deduction amounting to Rs.20,000/- and profession tax of Rs.3,000/-

Mr. A also receives income from other sources consisting of dividend income and income from bank deposits amounting to Rs.50,000/-and Rs.5,000/- respectively. He also informs of claim u/s88 amounting to Rs.10,000/-

You are advised to compute the taxable income of Mr.A. 15 Marks

Q.6. a) Distinguish between “Taxable profit and Commercial Profit 5 Marks

b) Any three specific disallowances under the head “Income from business or profession” 10 Marks

Q.7. a) Explain the concept of capital and revenue expenditure 5 Marks b) Give five examples of expenditure incurred wholly and exclusively for the purpose of business 10 Marks

Q.8. Write short Notes on ANY THREEa) Agriculture Incomeb) AOP and BOIc) Mediclaimd) Speculation Lossese) Stock Options (3x5=15 Marks)

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1. Mr. Bhargav proprietor of ‘MAA AMBE gives you the following information about his income from which you are required to calculate his taxable income for the A.Y.2002-03 20 Marks

M/S MAA AMBETrading and Profit and Loss A/c for the year ended 31-3-2002

Rs. Rs.To opening Stock 2,84,028 By Sales 41,33,935To Purchases 22,92,942 By Closing Stock 4,03,109To gross Profit 19,60,074

________ _________45,37,044 45,37,044

To Salaries 1,02,500 By Gross Profit 19,60,074To Electricity 24,050 By Dividend on shares 3,048To Printing and Stationery 12,098 By Interest on FD with Bank 2,050To Traveling and Conveyance 1,66,094To Telephone and Fax 78,195To Interest on loan 2,84,520To LIC Premium 22,000To Income Tax 28,000To Depreciation 1,54,500To Staff Welfare 24,230To Donation 22,000To Postage 13,025To Sales promotion 1,20,278To Commission 2,00,000To Professional fees 25,000To Mediclaim 10,000To Sundry Expenses 65,920To Transportation 4,01,325To Repairs 19,380To Octroi 48,342

To Net Profit 1,43,715_________ __________19,65,172 19,65,172

Additional Information:1) Salaries includes salary to proprietor’s wife Rs.Rs.20,000/-2) Telephone and fax includes personal telephone expenses of Rs.7,068/-3) Electricity expenses includes electricity charges for residential lines Rs.3,022/-4) Depreciation as per Income Tax Act,1961 works out to Rs.2,01,643/-5) Donation is eligible to 100% deduction u/s80G6) Sundry expenses includes cost of furniture of Rs.24,000/-7) LIC premium includes contribution to LIC Pension Scheme Rs.10,000/- eligible for education u/s80CCC8) Sales promotion includes payment of Rs.24,600/- in cash.9) Mr. Bhargav has also earned interest of Rs.548/- on his savings account and Accrued interest on his NSCs works out to Rs.6,048/-

2. Write short Notes on (ANY FOUR) 20 Marksa) Agricultural Incomeb) Receipts of casual and non recurring naturec) Person as defined under the income Tax Act,1961d) Incomee) Taxability of Gratuityf) Deduction of Interest on housing loan u/s24(1)g) Block of assets and Depreciation

3. Answer the following questions by giving reasons: (ANY THREE) 15 Marksa) Mr. Ravi, a proprietor, receives a demand notice to pay sales tax of Rs.12,400/-

for the year 1995-96 which he had paid short in that year. He pays the same in Dec.2001. whether he will be allowed this expense?

b) X. Ltd. Had written off Rs.3,20,000/- receivable from Y ltd. As bad debts in the year 1999-2000. it receives Rs.1,80,000/- out of the same in the year 2001-02 whether it is taxable ?

c) Mr. Monty receives advance salary of Rs.24,000/- in the month of March 2002. the employers accountant treats this amount as his salary and deducts tax thereon. Mr. Monty contends that this is the salary for the month of April 2002 and hence should be taxed in the year 2002-03 relevant to A.Y.2003-04. whether his contention is justifiable?

d) Mr. Shrikant gives salary of Rs.24,000/- to his wife who is the commerce graduate. The ITO wants to disallow the same. Is the ITO right in doing so?

e) Mrs. Rohini having salary Income of Rs.78,000/- sells her shares and suffers from loss of Rs.8,400/- she claims that she had invested amount in those shares from out of her receipts from salary so she should be allowed to set off the loss on sale of shares against her salary income. Is her contention right?

4. a) Calculate Rebate u/s.88 in case of Mrs. Priya for the A.Y/ 2002-03 form the 8 Marks

following information:-Deposit if PPF 12,000Provident Fund deducted by employer 18,000LIC Premium paid 6,000Infrastructure Bonds purchased 18,000Stamp duty paid on purchase of house 16,500Registration fees paid for registration of agreement for purchase of house 12,300Repayment of housing loan- principal 2,018Interest 8,040NSC purchases 10,000

Accrued interest on earlier NSCs 4,080Contribution to LIC pension scheme 4,000

b) Explain the concepts of Rebate u/s88B and 88 c 7 Marks

5. Discuss the following receipts which are exempt form tax: (ANY THREE)15 Marksa) Share of profit from partnership firmb) Leave Travel Concessionc) HRA Receivedd) Dividende) Commuted value of pensionf) Amount received under Voluntary Retirement Scheme.

6. a) Discuss the concept of residential status of an individual in detail 10 Marks b) Discuss the incidence of tax in case of an individual 5 Marks

7. Mr. Rangnathan is employed in a company at Mumbai and gives you the following information for the year 2001-02 15 Marks

i) He joined service in the pay scale of 1500-300-3000-500-6000 on 1st April 1993ii) His other receipts are:

Dearness Allowance 150%of BasicCity Compensatory Allowance Rs.600/-p.mH.R.A. Rs.3,000/-p.mSelf improvement Allowance Rs.1,000/-p.mConveyance Allowance (to meet the Cost of travel to and from office to res.Rs.1,000/-p.mCommission @ 0.1% on sales of Rs.2Crores

iii) He is provided with a car of mote that 16 h.p. rating along with chauffeur to be used for both official and personal purposes.iv) He had inherited house property form his uncle which he has let out on a monthly rent of Rs.4,000/- he has take a loan to renovate the house and

had paid interest of Rs.12,600/- on the housing loan.v) His inherited property not being at the place of his services, he is staying in

rented premises and paying a rent of Rs.5,000/-p.m.vi) He has also received interest of Rs.502/- on his savings bank a.cvii) An amount of Rs.20,000/- is deducted from his salary against his contribution to provident fund and Rs.2,500/- is deducted towards Professional tax .

Compute his total taxable income for the A.Y.2002-03

8. a) The following information is available from Miss Reeta for the year 2001-021. she has two house properties the details of which are as under:- 15 Marks

Particulars House1 House2Self Occuple Let out(Rs.) (Rs)

Municipal valuation 60,000/- 90,000/-Rent received ----- 1,20,000/-Fair Rent 72,000/- 96,000/-Repairs 6,000/- 3,500/-Cost of Purchase 3,60,000/- 4,80,000/-Interest on housing loan 18,048 24,096/-Municipal Taxes 10% of Municipal valuationInsurance (as % of cost of purchase) 2% 3%Collection charges --- 1,500/-

2. She told 500 shares of X Ltd.@Rs/60/- per share in February 2002 which she had purchased in November 1999 @ Rs.25/- per share. The cost inflation index for the year 2001-02 was 426 whereas index for the year 1999-2000 was 389.

3. she received interest of Rs.1,080/- on FD with companies and interest of Rs.580/- on her savings band a/c. the accrued interest on her NSCs is Rs.6,500/- she had received interest of Rs.3,000/-on her investment in PPF and dividend of Rs.5,200/- on her investment in shares. She had received Rs.6,000/- as interest from her investment in postal monthly scheme.

4. she had donated Rs.5001/- to CRY where deduction @ 100% is available u/s 80G and Rs.101/- to charitable institution where deduction @ 50% is available.

5. she had also contributed Rs.4,000/- to LIC pension Scheme eligible for deduction u.s.80 CCC .Compute her total taxable income for the A.Y. 2002-03

b) Explain the concept of capital and revenue expenditure and it’s relevance in determining taxable income. 8 Marks

c) Explain the concept of set off of losses under the same head of income and set off of losses under different heads of income. 7 Marks.

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