March 2005
Time: 3Hours Marks: 100
N.B.:
(1) Q.1 from Section I is compulsory carrying 22 marks.
(2) Answer any three questions from remaining questions from Section I carrying 16 marks each.
(3) Attempt all the questions from Section II carrying 10 marks each.
(4) Answers to both the sections are to be written in same answer book.
Q.1.
The following is the Receipts and payments account of MR. Rajesh, an architect, for the year ending on March 31, 2004.
| Receipts Amount | (Rs.) | Payments Amount | (Rs.) |
| To Balance b/d. | 3,00,000 | By Salaries to staff | 88,000 |
| To Professional fees | 6,50,000 | By Printing & Stationery | 98,300 |
| To Rent from House Property | 1,20,000 | By Society Maintainence charges for : - Office 8,000 - Houses 5,000 | 13,000 |
| To Gift received from clients for professional work | 8,000 | By Advance Tax | 30,000 |
| To Loan from HDFC Bank (on April 1, 2003 for House at Panvel) | 2,00,000 | By Purchase of new house at Panvel (on April 1, 2003) | 2,50,000 |
| -- | -- | By Other Office Expenses | 83,000 |
| -- | -- | By Purchase of Car (on April 1, 2003) | 50,000 |
| -- | -- | By Donation | 5,000 |
| -- | -- | By Mediclaim Insurance Premium (by Cheque) | 10,000 |
| -- | -- | By HDFC Loan Repaid | 50,000 |
| -- | -- | By Municipal Taxes | 20,000 |
| -- | -- | By Interest on HDFC Bank Loan | 20,000 |
| -- | -- | By Balance c/d. | 5,60,700 |
| Total | 12,78,000 | Total | 12,78,000 |
You are also informed that :
(1) The details of his business assets :
| Name of the Asset | WDV on 1-4-03 | Rate of Depreciation as per I.T. Act |
| Office Premises | Rs. 10,00,000 | 10% |
| Furniture | Rs. 3,50,000 | 15% |
| Car | -- | 20% |
(2) He stays in a house at Vashi. He purchased a new house at Panvel on April 1, 2003. The municipal valuation of this house is Rs. 1,00,000. It is rented at a monthly rent of Rs. 10,000 from April 1, 2003.
(3) Municipal taxes paid includes municipal taxes of house at Vashi Rs. 10,000 and Rs. 2,000 for house at Panvel, balance for office.
(4) Donation was made to Indira Gandhi Memorial Trust.
(5) 1/4th of the car use has been for personal purposes.
Determine the taxable income of Mr. Rajesh for the assessment year 2004-05. (22)
Q.2.
Mr. X, joined a company, AB Ltd. on June 1, 2003 and was paid the following emoluments and allowed perquisites as under : (16)
Emoluments :Basic pay – Rs. 50,000 per month Dearness Allowance – Rs. 20,000 per monthBonus (Target Achiever) – Rs. 1,00,000 per month Perquisites :
(1)Furnished accommodation owned by the employer and provided free of cost. Taxable value of this rent free furnished accommodation was Rs. 2,20,000.
(2)Motorcar owned by the company along with Chauffeur for official and personal use, the taxable value being Rs. 36,000.
(3)The company paid medical insurance premium of Mr. X amounting to Rs. 15,000. Before joining the company AB Ltd., he was a Central Government employee and retired on May 31, 2003. He was paid the following emoluments and perquisites till May 31, 2003 by the Government. Basic Salary - Rs. 96,000 p.a. Dearness Allowance- Rs.6,000 p.a.Entertainment Allowance since 1960- Rs. 24,000 p.a. From June 1, 2003 he receives the monthly pension of Rs. 3,000 from the Government. He received Rs. 30,000 as Leave Salary in respect of earned leave at his credit. He received Rs. 1,20,000 as gratuity. Compute the taxable salary of Mr. X for assessment year 2004-05.
Q.3.
a) During the previous year ending on March 31, 2004 Mr. A sells the following :-(8)
| Assets | Date of Sale | Sale Proceeds Rs. | Cost of acquisition Rs. | Year of purchase | FMV on 1-4-81 Rs. |
| Shares | 1-4-03 | 4,10,000 | 1,00,000 | 1993-94 | 1,80,000 |
| Agricultural Land in Urban Area | 10-6-03 | 23,00,000 | 6,17,250 | 1986-87 | 2,00,000 |
| Agricultural Land in Rural Area | 25-5-03 | 30,00,000 | 2,30,000 | 1973-74 | 3,40,000 |
| Debentures (Listed) | 10-4-03 | 3,17,900 | 2,30,615 | 1993-94 | 1,80,000 |
| Personal Car | 1-7-03 | 1,25,000 | 70,000 | 1986-87 | NotAvailable |
Calculate the income under the head Capital Gain of Mr. A for assessment year 2004-05. Cost Inflation Index : F.Y. 2003-04 – 463; F.Y. 1986-87 – 140; F.Y. 1993-94 – 244.
b) Mr. B holds the following securities on April 1, 2003 :(8) - Rs. 1,00,000 7%securities of Tamil Nadu Government. - Rs. 60,000 14% non-listed Debentures of ABC Ltd. On August 1, 2003, he borrows Rs. 33,000 at 7% p.a. and invests it in 8% securities of Central Government purchased at Rs. 110 (Face Value Rs. 100). On October 1, 2003, he further borrows Rs. 40,000 @ 8% p.a. for investing it in 10% listed debentures of DEF Ltd. Determine his income from other sources for the assessment year 2004-05. The interest on all investments are due and received on March 31 every year.
Q.4.
a) Mr. X is a USA citizen. He came to India on October 15, 2003 for a visit and was in India till 31st March, 2004. In earlier previous years, he is in India as under :
| 1993-94 | 188 days |
| 1994-95 | 190 days |
| 1995-96 | 185 days |
| 1996-97 | 200 days |
| 1997-98 | 40 days |
| 1998-99 | 300 days |
| 1999-00 | 195 days |
| 2000-01 | 185 days |
| 2001-02 | 100 days |
| 2002-03 | 200 days |
Find out the residential status of Mr. X for the assessment year 2004-05 assuming that he is not a person of Indian origin. (8)
b) Compute the income of Mr. Kaka for the assessment year 2004-05, assuming that he is resident but not ordinary resident in India during the previous year 2003-04.(8)
| (i) | Interest on company deposits in India | Rs. 70,000 |
| (ii) | Income deemed to be earned in India | Rs. 31,000 |
| (iii) | Income from business, situated in Japan and controlled in India (40% is received in India and balance is received outside India) | Rs. 84,000 |
| (iv) | Salary received in India for services rendered outside India | Rs. 92,000 |
| (v) | Interest received from Government of India (Received outside India) | Rs. 1,60,000 |
| (vi) | Interest received from a foreign company outside India (On capital which is utilized outside India) | Rs. 70,000 |
| (vii) | Past untaxed profit of the year 2000-01 brought into India in May, 2003 | Rs. 1,10,000 |
| (viii) | Royalty received in India from a non-resident in respect of technology used by such person outside India | Rs. 50,000 |
| (ix) | Pension from a former employer in India, received in Nepal | Rs. 2,30,000 |
Q.5.
Answer the following :-
a) Find out the amount of rebate u/s 88 of the Income Tax, 1961 in the cases given below for the assessment year 2004-05.(4)
| Assessee | Gross Total Income | Tax on Income (other than LTCG) | Investments | |
| (1) | Mr. K | Rs. 1,40,000 | Rs. 15,000 | Rs. 59,000 in LIC and Rs. 20,000 in PPF. |
| (2) | Mr. J | Rs. 66,000 | Rs. 2,200 | Rs. 20,000 in Infrastructure Bonds and Rs. 70,000 in PPF. |
| (3) | Mr. L | Rs. 1,51,000 | Rs. 16,000 | Rs. 30,000 in NSC and Rs. 30,000 in Infrastructure Bonds. |
| (4) | Mr. M | Rs. 5,50,000 | Rs. 1,38,000 | Rs. 70,000 in PPF and Rs. 30,000 inInfrastructureBonds |
b) The rate of T.D.S. on payment of interest to a resident other than a company is 12%. Is it correct? Give reasons. (2)
c) Master T is the minor son of Mr. N. HE has earned Rs. 1,00,000 in the previous year 2003-04 from acting in a film. In addition to that he earned Rs. 10,000 as interest from debentures of an Indian company. (Debentures were gifted to him by his mother). Who is liable to pay tax on the above incomes? (2)
d) Mrs. X is employed with A Ltd., where her husband Mr. X and his brother are holding 15% shares each, whether the clubbing provision u/s. 64(1)(ii) will be attracted? Explain. (2)
e) Mr. R transferred Rs. 3,00,000 to his wife Mrs. R out of love and attraction. She earns interest on it of Rs. 30,000. In whose hands Rs. 30,000 is taxable? Why?
f) Enumerate any four payments to which TDS provisions are applicable. (4)
Q.6.
a) Define and explain as per Income Tax Act, 1961 (any two) :
(1)Person, (2) Assessee, (3)Previous Year. (8)
b) What is ‘Capital Asset’ as per Income Tax Act, 1961? Whether the following are capital Assets within the definition of sec. 2(14) :
(i) Goodwill of a business
(ii) A House for personal use
(iii) Personal Scooter
(iv) Utensils
(v) Vacant Land
(vi) Jewelry
(vii) Shares of AB Ltd.
(viii) Debentures of XY Ltd. (8)
Q.7.
a) Define and explain the term "Business" as per the provisions of the Central Sales Tax Act, 1956. (4)
b) State, giving reasons, whether the following activities are business activities or not as per Central Sales Tax Act, 1956 : (6)
(i) Sales of Machines by a Machinery Manufacturer
(ii) Purchase of a house for personal use
(iii) Sale of scrap
Explain in details the Provisions of C.S.T. Act, 1956 regarding sale or purchase in the course of Import or Export u/s 5. (10)
Q.8.
Define and explain the following terms under B.S.T. Act, 1959. (Any two) :(a) Goods,(b)Business,(c) Purchase Price (10)
Explain when does a dealer become liable to pay sales tax under Bombay Sales Tax Act, 1959. (10)
Q.9.
From the following Purchase and Sales Register of A and Co. find out from when is the Co. liable for registration, under B.S.T. Act, 1959.
| Purchase Register | |||||
| Date | Inv. No. | Name of Party | Place | Amount (Rs.) | Remarks |
| 1-1-04 | 101 | Shetty, N. M. | Mumbai | 50,000 | Machinery Purchase – Taxable |
| 3-1-04 | 201 | V. N. Kamat | Nasik | 5,000 | Raw Materials – Taxable |
| 8-1-04 | 301 | A. N. Reddy | Ratnagiri | 30,000 | Raw Materials – Taxfree |
| 11-1-04 | 401 | V. T. Shetti | Vashi | 40,000 | Raw Materials – Taxable |
| 15-1-04 | 501 | H. N. Maniar | Mumbai | 9,000 | LabourCsharges |
| 25-1-04 | 601 | G. N. Ravi | Valsad | 7,000 | Raw Materials –Taxable |
| Sales Register | ||||
| Date | Inv. No. | Name of Party | Amount (Rs.) | Remarks |
| 8-1-04 | 01 | Sneha T. | 15,000 | Taxable |
| 13-1-04 | 02 | Vicky | 20,000 | Taxfree |
| 22-1-04 | 03 | Avinash | 60,000 | Taxable |
| 24-1-04 | 04 | Genu | 30,000 | Taxable |
| 28-1-04 | 05 | Anna | 10,000 | Labour Charges |
| 30-1-04 | 06 | Aparna | 30,000 | Taxable |
Taxable goods are manufactured within the factory and delivered on the date of production. (10)
Q.9.
M/s. Patel & Co. provides you with the following information regarding Sales Tax Liability for the month of January, 04.(10)
| Particulars | Rs. |
| Sale of Schedule "A" goods | 33,00,000 |
| Sale of Schedule "B" goods | 18,00,000 |
| Sale of Schedule "B" goods @ 8% (inclusive of Sales Tax Surcharge and Turnover Tax) | 21,96,000 |
| Sale of Schedule "c" goods @ 13% (exclusive of taxes) | 36,00,000 |
| Cost of Installation | 4,00,000 |
| Labour charges recovered | 8,00,000 |
| Sale against Form 14 | 1,00,000 |
| OMS Sales | 6,40,000 |
| Sales Return of Schedule ‘A’ Goods | 3,00,000 |
| Sales Return of Schedule ‘B’ Goods | 5,00,000 |
| Sale Return against Form 14 (including previous month) | 2,00,000 |
The Company is also liable to Pay Purchase Tax of Rs. 1,02,000. They are also entitled to set-off of Rs 2,70,000. They are also liable for Surcharge and Turnover Tax.
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