Model Answer B.Com (Hons) VI Semester Subject-Income Tax Law and Accounts Paper Code- AS-2643

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1 Answer 1 Short Answer Type Questions Model Answer B.Com (Hons) VI Semester Subject-Income Tax Law and Accounts Paper Code- AS-2643 i. Deductions 100% are as under:- a) National Defence Fund Set up by the Central Govt. b) Prime minister s National Relief Fund c) Prime Minister s Armenia earthquake Relief Fund d) National Foundation for communal Harmony e) Andhra Pradesh Chief Minister s Cyclone Relief Fund ii. Under Section 80 U iii. Under Section 80 C iv. Rs. 2,50,000 v. Hindu Undivided Family has not been defined in the income tax Act. But, as per the Hindu Law all such persons who are descendants of common ancestors form an H.U.F. This includes wives and unmarried daughters of the family members. H.U.F. is also referred to as joint Hindu Family. H.U.F. consist of many members of the family. vi. The net profit in the profit and loss Account and calculated in accordance with the provisions of Section 28 and 44 D is book profit provided amount of remuneration paid or payable to partners has not been deducted from it. If such amount of remuneration has been deducted while calculating net profit then such amount shall be added to net profit to get book profit. vii. Rules regarding taxation (TDS) OF Dividends: a) Dividend distributed by a domestic company is exempt, so company is not empowered to deduct tax at source. b) The amount received as dividend from co-operative society shall be included in the income. However, the society is not empowered to deduct tax at source. c) The dividend received from a foreign company is to be included in the income but foreign company is not liable to make TDS. viii. Advance Tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during the year, as computed in accordance with the provisions of advanced tax, is Rs. 10,000 or more. Instalments of advance tax and due dated during the financial year are as under (all assesse other than company):- a) On or before 15 September not less than 30% of such advance tax. b) On or before 15 th Dec not less than 60% of such advance tax c) On or before 15 th March the whole amount of such advance tax ix. An assessing officer means the assistant commissioner or deputy commissioner or deputy director or assistant director or the Income Tax officer who is vested with the relevant jurisdiction by virtue of directions or orders issued by the central board of direct taxes and it also includes the joint commissioner or joint director who is

2 directed to exercise of perform all or any of the pow er and functions conferred on or assigned to an assessing officer. x. An appeal is the petition against an order of the assessing officer. When an assessee is not satisfied with a order of assessing officer, he may file an appeal against his order or may appeal for its revision to the commissioner of income tax. Answer:2 Computation of total income (for the assessment year ) Particulars Amount Income from Business 1,52,000 Income from other sources:- Interest from Govt securities 2000 Dividend from Co- operative society 2600 Interest on Debentures 3000 Interest from a business firm 400 Gross Total Income- Less : Deduction u/s 80c to 80u:- Donation to prime Minister National Relief Fund (80G) 3000 Donation to C.G. Govt. for promoting the family welfare (80G) 2000 Donation to public hospital (80 G) (16, ) = 14000*50% = 7, ,60,000 Total Income (12,000) 1,48,000 Working Note:- Calculation of qualifying amount for deduction under section 80G :- (least of the following two):- (i) 10% of adjusted total income (1,60,000*10%) = 16,000 (ii) Amount of with limit donation = 20,000 Qualifying amount =16,000

3 Answer 3. Computation of Total Income of Mr. X (For the assessment year ) Income from salary (15000*12 1,80,000 Income from house property:- GAV (Rent recd ) 4000*12 Less: Municipal Tax Annual Value 48,000 NIL 48,000 Deduction u/s 24:- 30% of annual value 14,400 Income from House Property 33,600 Capital Gains: Long term Capital Gains Short term Capital Loss Income from other sources: Dividend from co-operative society Interest from firm Interest from govt. securities Winning from lotteries Gross Total Income Less: Deduction u/s 80c to 80D Deduction u/s 801c (10,000+31,000) Deduction u/s 80D (20000) ,000 1,000 1,15,000 41,000 1,00, ,26,000 3,54,600 (1,41,000) Answer-4. Computation of Total income of Shri Vivek for the A.Y Income from salary Income from House property: G.A.V.(Rent received) (-) M.Tax Nil Annual Value (-)Deduction U/S 24:- 30% on annual value 6000 Income from House Property Income From Business Long Term Capital gains Income from other sources: Royalties Dividend(Exempt) Interest on Govt. Securities 8800 Total Income 2,13,600

4 Income of a minor son( ) Gross Total Income Less:- Deductions U/S 80 C to 80U: Life Insurance Premium paid (U/s 80C) Contribution to P.P.F (U/s 80C) Health Insurance Premium Paid(u/s 80D) 8000 Donation to N.D.F(u/s 80G) 5000 Royalty Income (u/s 80 Q.Q.B) (83000) Total Income Computation of Tax liability Total Income Tax on L.T.C.G *20% 6000 Tax on Other Income( ) Tax on first Tax on next Tax on balance Add: E.C.@ 3% Nil Gross Tax liability Answer-5: Computation of total Income of Namo Patel for the A.Y Income from House Property: G.A.V. (-) M. Tax paid Annual Value (-) Ded U/S 24:- 30% of Annual Value 4320 Income from H.P Income from Business:-

5 Net Profit +Income tax disallowed Exp Capital gains:- LTCG from transfer of property LTCG from Investment Income from other sources :- Dividend from Indian Company(Exempt) Gross Total Income (-) Ded u/s 80C to 80U: Amount spent for treatment handicapped Family member(u/s 80DD) Donation to recognized Medical institution ((80G) 16180*50% 8090 (58090) Total Income Answer-6. Computation of Total Income of Firm C for the A.Y Book Profit Less: Partners Remuneration(Least of the following) (i) Actual Remuneration (ii) Statutory limit Income from Business B/F Business Loss Income from business Long term Capital gains: Nil (i) Capital Gain invests specified assets(u/s 54 EC) (ii) Amount deposited in capital gain A/C scheme 1956 Income from other sources: Taxable LTCG Interest on fixed deposit 50000

6 (-) Unabsorbed dep Gross Total income (-) Ded U/S 80C to 80U Nil Total Income Computation of Tax liability Tax on LTCG 8000 Tax on other income % 420 Gross Tax liability Note- Proper working note for calculation of book profit & other adjustments as required need to be shown. Answer.7. In this answer students are expected to write brief introduction. Then explain various types of Assessment. Types of assessment may be as follow. (a) Self-Assessment (b) Assessment on the basis of return (c) Regular assessment by the Assessing officer (d) Re-Assessment Note- Proper explanation of above points are required. Answer.8. In this answer students are required to write a brief introduction about CBDT or CIT. Then various power of any one are to be explained. Various power of CBDT may be as follows: (a) Power U/S 295 (b) Power U/S 296 (c) Power U/S 119 (d) Power U/S 117 (e) Power U/S 120 (f) Power U/S 127 (g) Power U/S 132 (h) Power U/S 138 Note-Proper explanation of power under various sections are required by students. Prepared by: B.P. Singhraul Assistant Professor Dept. of Commerce Guru Ghasidas Vishwavidyalaya