REVISIONARY TEST PAPER 1 BASIC SUMS ON TAX COMPUTATION

Transcription

1 REVISIONARY TEST PAPER 1 BASIC SUMS ON TAX COMPUTATION Question 1: Compute Tax Liability of Mr. X from the following information- A. SALARIES 15,00,000 B. HOUSE PROPERTY 10,00,000 C. BUSINESS/PROFESSION 15,00,000 D. CAPITAL GAINS LTCG on listed equity shares (STT) Exempted LTCG on building 4,00,000 STCG on building 3,00,000 STCG on listed equity shares (STT) 2,00,000 E. OTHER SOURCES Interest income 1,00,000 Winning from lotteries 4,00,000 Question 2: Compute Tax Liability of Mr. X from the following information- A. Business Income 1,00,000 B. LTCG on Building 15,00,000 Question 3: Compute Tax Liability of Mr. X from the following information- LTCG ON BUILDING 20,00,000 Question 4: Compute Tax Liability of Mr. X from the following information- Winning from lotteries 10,00,000 Question 5: Compute Tax Liability of Mr. X from the following information- A. Business Income 20,00,000 B. LTCG on Building 5,00,000 Deduction under Chapter VIA 2,00,000 Question 6: Compute Tax Liability of Mr. X from the following information- LTCG on Building 10,00,000 Deduction u/s. 80C 70,000 Question 7: From the following particulars, you are required to work out the tax payable by Mrs. Pinto, aged 70 years (i) Family Pension Gross 75,000 (ii) Income from House Property (Net) 3,24,000 (iii) Income from Other Sources : (a) Interest on Bank Deposits 15,000 (b) Income from Horse Racing 20,

2 (iv) Capital gains on transfer of Land - Long-term 15,000 Question 8: Compute tax liability of Mrs. X from the following information: Short term Capital Gain on Sale of Shares(STT) 4,50,000 Business Income 90,000 Deduction U/s 80C 70,000 Deduction U/s 80GGC 60,000 Question 9: Mr. X is having Business Income and Agricultural income Compute tax payable. Question 10: Mrs. X is having Business Income and Agricultural income Compute tax payable. Question 11: Mr. X is engaged in growing of sugarcane & manufacturing sugar following are other details: (1) Sale of Sugar 8,00,000 (2) Market value of sugar cane grown 80,000 (3) Cost of sugar cane grown 76,000 (4) Other expenses 2,00,000 Question 12: Compute Tax liability of Mr. X in the following cases- (1) Total Income is 1,20,00,000 (2) Total Income is 1,50,00,000 (3) Total Income is 1,02,00,000 (4) Total Income is 1,06,00,000 Question 13: Mr. X sold listed equity shares of X Ltd. The Full value of consideration of which 25,00,000 and the Indexed cost of acquisition of which is 10,00,000 (Cost of Acquisition 8,00,000). Compute tax liability if : (i) The shares are sold through recognised Stock exchange (ii) The shares are sold in private placement SOLUTION TO RTP 1 Solution to Question 11: Computation of Tax Liability Profit or gains from business or profession Sale of Sugar 8,00,000 Less: Market value of sugar cane grown 80,000 Other expenses 2,00,000 2,80,000 PGBP/GTI/TI 5,20,000 Add: Agricultural income for rate purposes (80,000 76,000) = 4,000 [as it does not exceed 5,000] 267 NIL 5,20,000 Tax on Total Income Upto 2,50,000 NIL Next 10% 25,000 Bal. 20% 4,000 29,000 Add: EC & 3% ,870

3 REVISIONARY TEST PAPER 2 DEDUCTION UNDER CHAPTER VI A Question 1: X is a salaried employee. His basic salary is 40,000 p.m. He gets one month salary as bonus. He has been provided with rent free unfurnished accommodation which is owned by the employer company at the place of his posting i.e. Chennai. Both employer and employee contribute 15% of salary to Recognised Provident Fund. He gets bank interest on Fixed Deposit of 10,000. He made the following investments during the year: Life insurance premium on his own life (sum assured 80,000) 9,000 Notified equity linked saving scheme of UTI 12,000 Repayment of principal amount of housing loan (self occupied property) 27,000 Payment of interest on the above loan 2,60,000 Tuition fees of two children (14, ,000) 40,000 Deposit in Home loan account scheme of NHB 12,000 Pension fund of LIC 14,000 Interest On Savings Account with Bank 12,000 BF Loss from Capital Gain 2,00, Question 2: Mr. X is a Central Government employee having a basic salary of 2,25,000 p.a. and 75,000 Dearness Allowance (Forming part of salary). Both he and the employer each contributed 70,000 each to the Pension Fund referred to section 80CCD. Amount invested in PPF Compute his Total Income Question 3: Mr. Prasad is the Karta of HUF. The family declares a gross total income 4,00,000 for the assessment year. The gross total income includes taxable long-term capital gain 65,000 and short-term capital gain 35,000 which is 15% u/s. 111A of the Income-tax Act, The details of HUF fund investment made during the year are: i) Amount deposited in PPF in the name of members of HUF 19,000 ii) Contribution made to - (a) Indira Gandhi Memorial Trust 7,000 (b) Delhi University (declared as an institution of national eminence) 3,000 (c) Zila Saksharta Samiti 5,000 (d) An approved charitable trust 30,000 (e) Government for the purpose of promoting family planning 10,000 (f) Hanuman Temple in Mohalla 20,000 75,000 Compute total income of HUF chargeable to tax for the assessment year Question 4: Mr. X furnishes you the following information to compute his total income, given that his Gross Total Income 5,60,

4 Premium paid 20,000 on LIP of 1,00,000 on the life of the assessee. [policy issued after ] Premium paid 10,000 on a LIP of 1,50,000 on the life of his wife. Premium paid 5,000 on LIP of 50,000 on the life of the mother of the assessee. Contribution to Recognised Provident Fund 15,000 Contribution to ULIP 10,000 Repayment of housing loan taken from the State Bank of India 15,000 ( 9,000 as the principal and 6,000 as interest). The loan was utilised by the assessee to purchase a flat for his own residential purpose in the year Subscription to units of Mutual Fund notified u/s 10(23D) 18,000 Contribution to 15 year Post office Savings Bank (Cumulative Time Deposits) 8,000. Tuition fees of Children for three children 15,000 each Contribution to LIC Pension Fund 1,85, Question 5: Mr. A, a business man submits the following particulars: a) Income from House property at Kolkata 30,000 b) Business income 40,000 c) Long term capital gains 30,000 d) Deduction U/s 80C 12,000 He pays 2,000 p.m. as rent for his residential accommodation in Delhi. Neither, he nor his family owns any residential accommodation. Compute Total income Question 6: Compute Total Income of Mr. X from the following information:- Salaries 5,19,200 (including transport allowance 19,200) Post office saving A/c. interest 8,000 Bank saving A/c. interest 12,000 (1) LIC premium paid for dependent parents 10,000 and for major son (disabled u/s. 80U) 16,000. Policy is taken on and the assured sum is 2,00,000 and 1,00,000 respectively. (2) Amount donated for scientific research in cash 12,000. (3) Amount donated in cash for National Children s Fund 8,000. (4) Amount given as donation to political party in cash 5,000 (5) Medical insurance premium paid in cash for self 8,000 and also expenses incurred in cash for preventive health check up of mother 8,000. Medical expenses incurred for Father 8,000 (aged 80yr and a resident of India and not covered under Mediclaim). (6) Mr. X is a retail investor invested for the first time in the notified listed equity shares u/s. 80CCG 70,000. (7) Mr. X s deposited 50,000 in the name of his girl child under Sukanya Samriddhi A/c. Interest accrued 4,000 during the year. (8) Donation in cheque given towards Clean Ganga Fund 30,000. (9) Purchase a house for self occupation during the year and paid interest of 30,000 and principal repayment of 20,000 to a scheduled Bank. 269

5 SOLUTION TO RTP-2 Answer to Question 2: Computation of Total Income (I) Salaries Basic salary 2,25,000 Dearness Allowances 75,000 Employers contribution to pension Fund - taxable 70,000 Gross Total Income 3,70,000 Less: Deduction under Chapter VIA: a) Under section 80C: Amount invested in PPF 1,30,000 b) Under section 80CCD(1): Employees contribution to pension Fund (i) Amount contributed 70,000 (-) Set aside for sec. 80CCD(1B) 50,000 20,000 (ii) 10% of salary (2,25, ) 30,000 Whichever is lower 20,000 1,50,000 Maximum limit u/s. 80CCE 1,50,000 c) Under section 80CCD(1B): Employees contribution towards NPS subject to maximum limit 50,000 [It is more beneficial to first claim 50,000 deduction u/s. 80CCD(1B) and thereafter the remaining portion of contribution can be claimed as deduction u/s. 80CCD(1)] d) Under section 80CCD(2): Employer s contribution to pension Fund Amount contributed 70,000 Maximum (10% of 3,00,000) 30,000 Whichever is lower 30,000 30,000 2,30,000 Total Income 1,40,000 Solution to Question 4: Gross Total Income 5,60,000 Less: Deduction Under Chapter VIA Deduction U/s 80C Insurance Premium on his life [20,000 or 10% of 1,00,000, lower] 10,000 Insurance Premium on the life of his wife 10,000 Insurance Premium on the life of his mother --- Contribution to Recognised Provident Fund 15,000 Contribution to ULIP 10,000 Repayment of housing loan to SBI- principal amount only 9,000 Contribution to Post office savings Bank CTD 8,

6 Tuition fees of maximum 2 children 30,000 Mutual Fund referred to u/s 10(23D) 18,000 1,10,000 Maximum 1,50,000 1,10,000 Deduction U/s 80CCC for contribution to LIC Pension Fund amount contributed or 1,50,000 whichever is lower 1,50,000 2,60,000 Maximum Deduction U/s 80CCC and 80C - 1,50,000 as per Section 80CCE 1,50,000 1,50, Total Income 4,10,000 Solution to Question 5: Amount ( ) a) Income from House property 30,000 b) Business income 40,000 c) Long term capital gains 30,000 Gross Total Income 1,00,000 Less: Deductions under chapter VIA i) Deduction u/s. 80C 12,000 ii) u/s. 80GG (Note 1) 14,500 Total Income 73,500 Note 1: Deduction u/s. 80GG shall be the minimum of the following three amounts a) Rent paid 10% of Adjusted Gross Total Income = 24,000 5,800 = 18,200 b) 25% of Adjusted Gross Total Income = 14,500 c) 5,000 p.m. = 60,000 Adjusted Gross Total Income = GTI LTCG Deduction u/s. 80C to 80U except u/s. 80GG = 1,00,000 30,000 12,000 = 58,000 Solution to Question 6: (1) Taxable Salaries 5,19,200 Less: Transport allowances Exempted u/s. 10(14) 1600 *12 19,200 5,00,000 (2) House property Net Annual Value Nil Less: Interest on loan 30,000 (30,000) (maximum 2,00,000) (2) Other Sources Interest on Sukanya Samriddhi a/c exempted u/s. 10(11A) NIL Post office saving A/c. interest 8,000 Less: Exempted u/s. 10(15) 3,500 4,500 Bank saving A/c. interest 12,000 16,500 Gross Total Income 4,86,500 Less: Deduction Under Chapter VIA Refer working Notes 1,71,

7 Total Income 3,15,500 Working Notes: Computation of Deduction allowed under chapter VIA (1) Section 80C: LIC premium paid For parents: Not allowed For Major son: Allowed Maximum 15% of sum assured 15,000 on policy taken on or after for disabled person [Assuming assessee does not claim deduction u/s. 80DD] Amount Deposited under Sukanaya Samriddhi A/c 50,000 Repayment of housing loan 20,000 Maximum limit 1,50,000 85,000 (2) Section 80CCG: Amount invested in notified listed equity shares 50% of 70,000 or 25,000; lower 25,000 25,000 [Since the GTI of Mr. X does not exceed 12 lakhs] (3) Section 80D: Mediclaim premium paid in cash not allowed Preventive health check up of Mother allowed even if paid in cash 8,000 or maximum 5,000; lower 5,000 Medical expenses incurred for father 8,000 13,000 Maximum limit 30,000 (4) Section 80G: Donation to National Children s Fund (100% without ceiling limit) upto 10,000 cash payment allowed 8,000 Donation towards Clean Ganga Fund by Cheque. (100% Without ceiling limit) 30,000 38,000 (5) Section 80GGA Donation for Scientific research not allowed since cash payment exceeds 10,000 NIL NIL (6) Section 80GGC Donation to political party 100% - not allowed Where payment made in cash NIL NIL (7) Section 80TTA: Saving A/c. interest included in GTI (i) Post office 4,500 (ii) Bank 12,000 16,500 Maximum limit 10,000; lower 10,000 10,000 Total Deduction under chapter VIA 1,71,

8 REVISIONARY TEST PAPER 3 ADVANCE SUMS ON TAX LIABILITY Question 1: Following details are furnished by Sundaram for the year ending March 31, 2017 Rupees Director s Remuneration (net of tax and own contribution to Provident Fund) 5,00,000 Sundaram's contribution to Provident Fund 30,000 Employer's contribution to Provident Fund 30,000 Leave Travel Concession received 10,000 (entire amount spent in traveling) Free use of car of 1500 cc provided by the company. (Expenses borne by employer partly personal and partly official) Medical expenses reimbursed by the company 18,000 Tax deduction at source on Salary 12,000 Sundaram was occupying a bungalow on rent at New Delhi since November, He agreed to transfer his tenancy right in the said bungalow in favour of Bala Ltd. for a sum of 2,00,000. He invested 80,000 in bonds of NHAI. Sundaram acquired 2,000 shares of 5 Lakhs during Company allotted him Bonus shares in March 1:1. The entire shares held in the company have been sold by him during November, 1,100 per share.[stt 0.125%] On 1/12/2016 Sundaram received from his friend 10,000 shares in ABC Ltd. as gift Market Value 2,00,000. He also received 3,00,000 as gift from Spouse of his Father brother on his birthday on 1/1/2017 Dividends from ACC Ltd., an Indian Company 2,500 Dividend collection charge 200 Interest income of minor child amounted to 2,500. Question 2: Smt. Savita Rani born on She is a Deputy Manager in a company in Mumbai. She is getting a monthly salary and D.A. of 45,000 and 12,000 respectively [Only 50% of DA forms part of salary]. She also gets a House Rent Allowance of 6,000 per month. She is a member of Recognized P.F. wherein she contributes 15% of her salary and half D.A. Her employer also contributes an equal amount. (b) She is living in the house of her minor son in Mumbai. (c)during the previous year her minor son has earned an income of 30,000(computed) as Rent from a House Property, which had been transferred to him by Smt. Savita Rani without consideration a few years back. (d) During the previous year she sold Govt. of India Capital Indexed Bonds for 6,00,000 on , which she purchased on for 80,

9 (e) Her employer gave her an interest free loan of 1,50,000 on to one of her son s wife for the purchase of an Alto Maruti Car. Nothing has been paid to the company towards the loan. Take 10.5% as SBI Rate] (f) During the previous year she paid 15,000 by cheque to GIC towards Medical Insurance Premium of her dependent mother. (g) During the year she purchased an immovable property for 25,00,000 though the value as per Stamp Valuation authority is 30,00,000. (h) Brought forward Short Term Capital Loss 1,00,000. (I) Following Donation has been made by Cheque: (i) National Fund for control and drug abuse 20,000 (ii) Swachh Bharat Kosh 10,000 (iii) Clean Ganga Fund 20,000 (j) She received the following gifts on 1/11/2016 : Nature of assets Date of Stamp Value/ acquisition by Market Price the previous owner Building from 1/8/ ,00,000 friend Jewellery from relative 1/6/ ,00,000 (k) Amount spent for medical treatment of specified disease of Husband (aged 70 years) 90,000. Insurance claim received 25,000. Compute the taxable income and tax liability of Mrs. Savita Rani. Question 3: The following is the profit & loss account for the year ended 31/3/2017 M/s. ABC of which Sri Daga is the owner: To Manufacturing Expenses 5,00,000 By Sales 12,00,000 To Excise Duty 92,795 By Interest Income (net of 16,000 TDS of 4000) To Fine paid to excise department 2,000 By Dividend Received from 10,000 Indian Company To Salary & Wages 1,21,445 By Sale of listed shares 50,000 subjected to STT (long Term) To General Charges 16,750 To Interest on Bank Loan 21,000 To Daga s Remuneration 38,750 To Depreciation 91,000 To Advance Tax 25,000 To Donation to Electoral Trust 16,000 To Net Profit 3,52,

10 12,77,000 12,77,000 Compute the income from business of Sri Daga from the Sugar Mill after taking into account the following information into consideration: (i) Depreciation in respect of all assets has been ascertained at 50,000 as per Income Tax rules. (ii) He is a partner in a firm from where he received interest of 18% p.a. He also received remuneration of 2,00,000 from the firm ( the Firm got a deduction of 1,60,000). (iii) His minor son received gifts of 1,00,000 each from his grandfather and from cousin uncle Question 4: From the following information, compute tax liability: Director s Remuneration in a company having only Agricultural Income 1,50,000 Share of Profit from a partnership firm 80,000 Income from business of letting cars on hire 1,40,000 Salary received as a partner from a firm manufacturing tea 36,000 Lease rent received from lands given to tenants for agricultural Operations In cash 30,000 In Kind 18,000 Sale of agricultural produce 60,000 Share of Income from HUF 40,000 Sale proceeds of agricultural lands situated in a village 1,20,000 Fixed deposit interest received 18,000 Dividends from an Indian Company having rubber plantations 6,000 Payment of government tax on agricultural lands 16,000 Purchase of seeds in cash 21,000 Tractor hire charges (for agricultural operations) 2,500 Question 5: Mr. Tenzingh is engaged in composite business of growing and curing (further processing) Coffee in Coorg, Karnataka. The whole of coffee grown in his plantation is cured. Relevant information pertaining to year ended are given below: ( ) WDV of Car as on , 00, 000 WDV of machinery as on (15% rate) 15, 00, 000 Expenses incurred for growing coffee 3, 10, 000 Expenditure for curing coffee 3, 00, 000 Sale value of cured coffee 22, 00, 000 Besides being used for agricultural operations, the car is also used for personal use; disallowance for personal use may be taken at 20%. The expenses incurred for car running and maintenance are 50, 000. The machines were used in coffee curing business operations. He also has estates in Rubber and Tea. He derives income from them as under: Manufacture of rubber 5,00,000 Manufacture of Tea 7,00,000 Sale of seedlings from Nursery 1,00,000 Compute the income arising from the above activities for the assessment year. 275

11 Question 6: Mrs. X, an American national came to India on 15 th October, 2016 and returned on 1 st March, While in India, she had purchased a show room which was leased out to a company on a rent of 25,000 per month from Nov 1, She had taken loan from a bank for purchased of this show room on which bank had charged interest of 95,000 up to March 31, She had received the following gifts in India: - From parents of husband 51,000 - From married sister of husband 11,000 - From friends 4,50,000 Income from Business in USA and received there: 2,00,000 Determine her residential status and compute the total income chargeable to tax along with the amount of tax payable on such income for the assessment year. Question 7: Mrs. X of Canada, aged 60 years, furnishes the following information for the previous year ended March 31, 2017 Particulars Pension received from Canadian Government received in Canada Long-term capital gain on sale of land at Mumbai Short-term capital gain on sale of shares of Indian listed companies in respect of which STT was paid Premium paid to Canadian Life Insurance Corporation at Canada Mediclaim policy premium paid Tax saving bond purchased in March 2017 Rent received in respect of house property at Mumbai Amount spent for medical treatment of disabled brother Donation given to clean Ganga Fund 20,000 1,00,000 20,000 10,000 2,000 30,000 70,000 2,000 5,000 Compute the tax liability Question 8: Compute tax liability of Mr. X from the following Particulars Income from poultry farming 6,00,000 Revenue from fisheries 2,00,000 Interest on compulsory acquisition by Government for delayed payment received In P.Y (Pertains to to ) 10,00,000 Expenses in respected of above interest 25,000 Amount received in maturity of Life Insurance Policy including bonus of 20,000 (premium paid 8,000 p.a) 1,20,000 Winning from lotteries (net of TDS 30%) 3,50,000 Lottery ticket cost 2,000 Interest on PPF 15,000 Amount received on maturity of PPF 10,00,000 Rent received from agricultural land let out for film shooting 80,

12 Solution to Question 8: Computation of tax liability for the A.Y (A) Income from Business Income from poultry farming 6,00,000 Revenue from fisheries 2,00,000 8,00,000 (B) Other Sources Interest on compulsory acquisition 10,00,000 (taxable in the year of receipt) Less: Standard 50% 5,00,000 5,00,000 *No deduction allowed for actual exp. Amount received in maturity of LIP [since the premium does exceed 10% of policy value Excluding Bonus], therefore exempted u/s. 10(10D) NIL Winning from lotteries (,350,000/0.70) 5,00,000 [no deduction allowed for any exp.) Interest on PPF exempted u/s. 10(11) NIL Amount received on maturity of PPF - not taxable NIL Rent received from agricultural land let out for film shooting - taxable 80,000 [not an agricultural income, since not let out for Agricultural operation] 10,80,000 Gross Total Income/Total Income 18,80,000 Tax on normal income [18,80,000 5,00,000] Up to 2,50,000 NIL Next 2,50,000@10% 25,000 Next 5,00,000@ 20% 1,00,000 Bal. 3,80,000@ 30% 1,14,000 2,39,000 Tax on winning from 30% on 5 lakh 1,50,000 3,89,000 Add: EC & 3% 11,670 4,00,670 Less: TDS 1,50,000 Tax Payable 2,50,

13 REVISIONARY TEST PAPER 4 Question 1: Mr. Malik owns a factory building on which he had been claiming depreciation for past few years. It is the only asset in the block. The factory building and land appurtenant there to were sold during the year. The following details are available: Building completed in September, 2002 for. 10,00,000 Land appurtenant thereto purchased in April, 2001 for. 12,00,000 Advance received from a prospective buyer for land in May, 2002 forfeited in favour of Assessee, as negotiations failed. 50,000 WDV of the building block as on ,74,800 Sale value of Factory building in November, ,00,000 Sale value of Appurtenant land 60,00,000 The Assessee is ready of invest in long-term specified Assets under section 54EC, within specified time. Compute the amount of taxable capital gain and the amount to be invested under section 54EC for availing the maximum exemption. [CII : 426; CII : 1125] Question 2: Mr. Rajesh is serving in a Public Limited Company as General Manager (Finance). His total emoluments for the year ended 31 st March, 2017 are as follows: Basic Salary 5,40,000 HRA (Computed) 1,80,000 Transport allowance 22,400 He also owns a residential house, let out for a monthly rent of 15,000. The fair rental value of the property for the let out period is 1,50,000. The House was self-occupied by him from 1 st January, 2017 to 31 st March, He has taken a loan of 20 lacs for the construction of the property, and has paid interest 40,000 during the year. He is also engaged in the business of retail trade for which sales amounted to 10,00,000. His father was engaged in the business of electronic goods. His father died in During the year he received 10,000 from a customer relating to his father s business. Mr. Rajesh sold shares of different Indian companies on 14 th April, 2016: Name Sale value Purchase price Acquired on No. of (per share) (per share) shares A Ltd nd May, B Ltd th April, Sale proceeds were subject to brokerages of 0.1% and securities transaction tax of 0.085% on the gross consideration. He received I.T. refund of 5,750 (including interest 750) relating to the Asst. Year Vacant site lease rent received amounted to 20,000. Compute the tax liability of Mr. Rajesh. [CII OF = 852, , ] Question 3: Dr. Krishna furnishes you the following information : Income and Expenditure Account for the year ended 31 st March,

14 To Medicines consumed To Staff Salary To Hospital consumables To Rent paid To Administrative expenses To Net Income By Fee receipts By Rent By Dividend from Indian companies i) Rent paid includes rent for his residential accommodation of (paid by Cheque). ii) Hospital equipments Opening WDV 5,00, Acquired (Cost) 2,00,000 iii) Medicines consumed include medicines (cost) 10,000 used for Dr. Krishna s family. iv) Rent received --- relates to a property situated at Mysore (Gross Annual Value). The municipal tax of 2,000 paid in December, 2016 has been included in the administrative expenses. v) He received 5,000 per month as salary from Full Cure Hospital. This has not been included in the fee receipts credited to income and expenditure account. Compute Gross Total Income. Question 4: R retired from Government service in March 2016 and got a sum of 20 Lakhs on account of retirement benefits. Out of the aforesaid sum R purchased on 26 th April, 2016, two heavy goods vehicles for 8 Lakhs, four medium goods vehicles for 4 Lakhs and two light commercial vehicles for 2 Lakhs for the purpose of carrying on business of plying, hiring and leasing goods carriages. However R could actually start business of plying the aforesaid vehicles on 4 th July, 2016, only though R had got the delivery of the aforesaid vehicles on the date of purchase itself. However, he did not maintain any regular books of accounts and also the vouchers in respect of the aforesaid business. As per R's Diary his gross receipts during the financial year ending 31 st March, 2017 are 1,77,600 and the sum total of the entire business expenditure (other than Depreciation) is 52,100. R had inherited a house from his father. During financial year R was able to let out this house only for eight months at a monthly rent of 5,000. R has also furnished the following information in relation to this house : Municipal taxes paid by the tenant during financial year, , based on Municipal Valuation of 53,000 5,300 Interest paid on loan taken for renovation of the house 12,000 Actual repair & renovation expenses incurred during 8,000 Water taxes levied and paid to Municipal Corporation 400 On 4 th April, 2016, R was able to recover the unrealised rent of 22,000, but R had to pay a sum of 11,000 on account of Litigation expenses with the old tenant (including Advocate's fee) during financial year, During financial year , R received 60,000 on account of pension from Government. R requires you to compute his total income. Question 5: Ram owns a building consisting of three identical units, the construction of which was completed on 1/4/2016. The building was occupied from 1/4/2016. The particulars pertaining to the 3 units for the year ended 31/3/2017 are given below:

15 PARTICULARS UNIT I UNIT II UNIT III Fair Rent 50,000 50,000 50,000 Rent Received - 72,000 - Municipal Taxes Paid 3,000 5,000 3,000 Outstanding Municipal Taxes 3,000 5,000 3,000 Land revenue due but not paid 1,200 1,200 1,200 Ground Rent paid 2,400 2,400 2,400 Nature of occupation Self occupied Let out Used for business On 1/4/2015 Ram had borrowed a sum of 5,00,000 bearing 12% p.a. for construction of the building. The total construction cost came to 12,00,000. The business income before considering any item connected with property was 2,10,000. Municipal Taxes and Land revenue due on 31/3/2017 were however paid on 1/7/2017. [Due date of return 31/7/2017] Compute tax liability. Solution to Question 5: Note 1: Pre construction interest from 1/4/2015 to 31/3/2016 = 5,00,000 x 12% = 60,000 For each unit = 20,000 (1/3 rd of 60000) Particulars Amount( ) (A)INCOME FROM HOUSEPROPERTY Unit1 Annual value Nil Less: Interest on loan Current year interest (60,000 x 1/3) 20,000 Pre construction interest (1/5 th of 20,000) 4,000 24,000 UNIT 1 (A) (24,000) Unit 2 Fair rental value 50,000 Rent received 72,000 Gross annual value 72,000 Less: Municipal taxes paid 5,000 Net annual value 67,000 Less : standard deduction u/s 24(a) (20,100) Interest on loan u/s 24(b) [ ] (24,000) UNIT2 (B) 22,900 INCOME FROM HOUSE PROPERTY (A+B) (1,100) (B) BUSINESS AND PROFESSION Income from business 2,10,000 Less: (1) Municipal Taxes 6,000 (2) Land revenue 1,200 (3) Ground rent 2,400 (4) Interest on loan 20,000 (5) Depreciation [10% of (4, )] 42,000 71,600 [pre-construction interest capitalized under PGBP] INCOME FROM PGBP 1,38,400 GROSS TOTAL INCOME (A + B) 1,37,

16 REVISIONARY TEST PAPER 5 Question 1: Mr. X has sold a residential House for 20,00,000 to Mr. Y on (Indexed cost of Acquisition 5 lakh). Brokerage on sale is 1%. The Stamp Duty Value of the property is 35,00,000. Out of the sale proceeds Mr. X purchase a new residential house on for 17,50,000. On the date of transfer of residential house Mr. X owned 3 houses. You are required to compute the Total income of Mr. X and Mr. Y for the A.Y Question 2: State in brief the applicability of tax deduction at source provisions, the rate and amount of tax deduction in the following cases for the financial year : (1) Payment of 27,000 made to Jacques Kallis, a South African cricketer, by an Indian newspaper agency on for contribution of articles in relation to the sport of cricket. (2) Rent of 1,70,000 paid by a partnership firm for use of plant and machinery. (3) Winning from horse race 1,50,000. (4) 2,00,000 paid to Mr. A, a resident individual on by the state of Uttar Pradesh on compulsory acquisition of his urban land. (NOV 14 IPCC) Question 3: Mrs. Geetha and Mrs. Leena are sisters and they earned the following income during the Financial Year Mrs. Geetha is settled in Malaysia since 1984 and visits India for a month every year. Mrs. Leena is settled in Indore since her marriage in Compute the total income of Mrs. Geetha and Mrs. Leena for the assessment year : Sl. No. (i) (ii) (iii) Particulars Income from Profession in Malaysia, (set up in India) received there Profit from business in Delhi, but managed directly from Malaysia Rent (computed) from property in Malaysia deposited in a Bank at Malaysia, later on remitted to India through approved banking channels. 281 Mrs. Geetha Mrs. Leena 15,000-40,000-1,20,000 - (iv) Dividend from PQR Ltd. an Indian Company 5,000 9,000 (v) (vi) Dividend from a Malaysian company received in Malaysia Cash gift received from a friend on Mrs. Leena s 50 th birthday 15,000 8,000-51,000 (vii) Agricultural income from land in Maharashtra 7,500 4,000 (viii) Past foreign untaxed income brought to India 5,000 - (ix) (x) Fees for technical services rendered in India received in Malaysia Income from business in Pune (Mrs. Geetha receives 50% of the income in India) 25,000-12,000 15,000 (xi) Interest on debentures in an Indian company (Mrs. 18,500 14,000

17 (xii) Geetha received the same in Malaysia) Short-term capital gain on sale of shares of an Indian company ,000 25,500 (xiii) Interest on savings account with SBI 12,000 8,000 (xiv) Life Insurance premium paid to LIC - 30,000 (NOV 14 IPCC) Question 4: Mr. Mittal has four minor children consisting of three daughters and one son. The annual income of all the children for the Assessment Year were as follows : First daughter (Including Scholarship received 5,000) 10,000 Second Daughter 8,500 Third Daughter (Suffering from disability specified U/s 80U) 4,500 Son 40,000 Mr. Mittal gifted 2,00,000 to his minor Son who invested the sane in the business and derived income of 20,000 which is included above. Compute the amount of income earned by Minor Children to be clubbed in the bands of Mr. Mittal. [Nov -14 IPCC] Question 5:Mr. Devansh an Indian Resident aged 38 years carries on his own business. He has prepared following Profit & Loss A/c for the year ending : Salary Advertisement Sundry Expenses Particulars Particulars Fire Insurance ( 10,000relates to House Property) Income Tax & Wealth Tax Household expenses Depreciation (allowable) Contribution to a University approved and notified U/s 35(1)(ii) Municipal taxes paid for House property Printing & Stationary Repairs & Maintenance Net Profit Other information : (i) 48,000 24,000 54,500 30,000 27,000 42,500 23,800 1,00,000 36,000 12,000 24,000 1,32,200 5,54,000 Gross Profit Cash Gift (on the occasion of Marriage) Interest on Debentures (Listed in recognized stock Exchange) Net of Taxes 4,30,000 1,20,000 3,600 5,54,000 Mr. Devansh owns a House Property which is being used by him for the following purposes: - 25% of the property for own business

18 - 25% of the property for self-residence - 50% let out for Residential purpose (ii) Rent received from 50% let out portion during the year was 1,65,000 (iii) On he acquired a vacant site from his friend for 1,05,000. The state stamp valuation Authority fixed the value of the site at 2,80,000 for stamp duty purpose. (iv) He received interest on Post-office Savings bank Account amounting to 500. (v) (vi) Cash gift on the occasion of marriage includes gift of 20,000 from non-relatives. LIC premium paid (policy value 3,00,000 taken on ) 60,000 for his disable son. (vii) He purchased shares of X Company Ltd. on for 1,00,000 and received 1 : 1 bonus on He sold 5000 bonus shares in September 2016 for 2,20,000 (Shares are not listed and STT not paid). Compute Total Income and Net Tax payable by Mr. Devansh for the Assessment Year [Nov -14 IPCC] Question 6: Mr. X (aged 54 years) provides the following information and you are required to compute his total income - 1. Salary including dearness allowance 4,00, Bonus 25, Salary to servant provided by the employer 24, Bill paid by employer for gas, electricity and water provided free of cost at his flat 33, Cost of laptop provide by the employer 60,000 (used both for official and personal purpose) Additional information: 1. He purchased a flat in a Co-operative housing society in Delhi for 10,75,000 in April 2012 by taking loan from state bank of India amounting to 15% per annum interest, 65,000 from his own savings and a deposit from a Nationalized Bank to whom this flat was given on lease for 10 years at a monthly lease rental of 5,500. The outstanding amount of loan is 1,60, He paid Municipal taxes of 4,500 P.A and Insurance in respect of the said flat He earned a profit of 15,000 in shares speculation business and incurred a loss of 20,200 in speculation business of Cotton. Both the transaction were settled in derivative market. 4. In the year , he had gifted 50,000 to his wife and 30,000 to his son who has aged 11yrs then. These amounts were advanced to Mr. 15% per annum interest. 5. He received a gift of 25,000 each from his four friends on the occasion of his birthday. 6. He contributed 10,500 to public provident fund and 6,000 to unit linked insurance plan. 7. He deposited 60,000 in tax saver deposit with a nationalized bank in the name of his married son. 8. He has taken a policy on life for his married daughter on and paid a premium of 25,000. The sum assured for policy is 2,00,000. (MAY 14- IPCC) 283

19 Question 7: Mr. X (aged 55 years) owned a residential house in Ghaziabad. It was acquired by Mr. X on for 6,00,000. He sold it for 50,00,000 on The stamp valuation authority of the State fixed value of the property at 75,00,000. The Assessee paid 2% of the sale consideration as brokerage on the sale of the said property. Mr. X, acquired a Residential House property at Kolkata on for 10,00,000 and 5,00,000 on in the capital gains bonds of Rural Electrification Corporation Ltd. He deposited 4,00,000 on and 3,00,000 on in the capital gain deposit scheme in a Nationalized Bank for construction of an additional floor on the residential house property in Kolkata. Compute the Capital Gain chargeable to Tax for the Assessment Year and Income Tax chargeable thereon assuming Mr. X has no other income. CII: F.Y = 140; F.Y = (MAY 14 IPCC) Question 8: (NOV 13 IPCC) The following is the profit & loss account of Mr. A, aged 58 years, a resident, for the year ended : Particulars Particulars Rent Repair of car Wealth tax Medical expenses Salary Depreciation on car Advance income tax Net Profit 60,000 3,000 5,000 4,500 18,000 3,000 1,500 2,35,000 Gross profit Gift of cash from a friend ( received on ) Sale of car Interest on income tax refund 2,85,000 25,000 17,000 3,000 Other information: 3,30,000 3,30,000 (1) Mr. A bought a car during the year for 20,000. He charged on the value of the car. The above car was sold during the year for 17,000. The use of the car was 3/4 th for business and 1/4 th for personal use. (2) Medical expenses were incurred for the treatment of his wife. (3) Salary had been paid on account of car driver. (4) Rent includes arrears of rent from April 15 to October 5,000 p.m., paid in cash on (5) Mr. A had also let out a house property at a monthly rent of 25,000. The annual letting value is considered to be 2,50,000. The municipal taxes are 6,000, out of which 3,000 are [paid by the tenant and 3,000 are yet to be paid by Mr. A. Interest on loan taken for the house property is 20,

20 (6) Mr. A s minor daughter received 75,000 from stage acting, interest on company deposits of Mr. A s daughter (Deposit was made out of income from stage acting) was 10,000. (7) Mr. A incurred an expense of 50,000 on the medical treatment of his dependant son, who has disability of more than 80%. (8) Mr. A had taken a loan during the year for the education of his son, who is pursuing B.com in Delhi University. Interest paid on the same during the year was 10,000. Compute the total income of Mr. Aditya for the assessment year Question 9: (NOV 13 IPCC) From the following details, find out the salary chargeable to tax of Mr. Anand for A.Y : Mr. Anand is a regular employee of Malpani Ltd. in Mumbai. He was appointed on in the scale of 25,000-2,500-35,000. He is paid dearness allowance (which forms part of salary for retirement 15% of basic pay and bonus equivalent to one and a half month s basic pay as at the end of the year. He contributes 18% of his salary (basic pay plus dearness allowance) towards recognized provident fund and the company contributes the same amount. He is provided free housing facility which has been taken on rent by the company at 15,000 per month. He is also provided with following facilities : (i) The company reimbursed the medical treatment bill of 40,000 of his daughter, who is dependent on him. (ii) The monthly salary of 2,000 of house keeper is reimbursed by the company. (iii) He is getting telephone 1000 per month. (iv) A gift voucher of 4,700 was given on the occasion of his marriage anniversary. (v) The company pays medical insurance premium to effect an insurance on the health of Mr. Anand 12,000. (vi) Motor car running and maintenance charges fully paid by employer of 36,600. (The motor car is owned and driven by Mr. Anand. The engine cubic capacity is below 1.60 litres. The motor car is used for both official and personal purpose by the employee.) (vii) Value of free lunch provided during office hours is 2, ANSWER TO RTP 5 Solution to Question 1: Computation of total income of Mr. X A. Computation of Capital Gains Full Value of Consideration [As per section 50C] 35,00,000 Less: Brokerage on sale (1% of 20,00,000) 20,000 Less: Indexed Cost of Acquisition 5,00,000 5,20,000 Gross Long term capital gains 29,80,000 Less: Exemption u/s. 54 Cost of new house purchased including (17,50,000) 285

21 Taxable LTCG 12,30,000 Gross Total Income / Total Income 12,30,000 Computation of total income of Mr. Y Income from Other sources: On purchase of residential house at a price lower than the stamp Value which is exceeding 50,000 u/s. 56(2)(vii) [35,00,000 20,00,000] 15,00,000 Gross Total Income / Total Income 15,00,000 Note: (1) The restriction of maximum one house on the date of transfer is applicable u/s. 54F and not u/s. 54. Therefore, even though Mr. X has already 3 houses but exemption u/s. 54 on purchase of another house cannot be denied. (2) U/s. 54 the amount of exemption is the cost of new house and not the stamp duty value. Further, the cost of house also includes the stamp duty Solution to Question 2: (a) (i) (1) U/s 194E, tax shall be deducted at 20.6% of 27,000 = 5562 (2) Payment does not exceed 1,80,000. Hence, no requirement to deduct at source. (3) Under section 194BB, tax is to be deducted at source, if the winnings from horse races exceed 10,000. The rate of deduction of tax at source is 30%. Hence, tax to be deducted = 1,50,000 x 30% = 45,000. (4) Since the amount paid is less than 2,50,000 there is no requirement to deduct tax at source U/s 194LA. Solution to Question 3: Sl. No. Particulars Mrs. Geetha [Non-resident of India] (i) Income from Profession in Malaysia, (set up in India) Nil - received there accrued where profession is carried on. (ii) Profit from business in Delhi, but managed directly from 40,000 - Malaysia - accrued where business is carried on. (iii) Rent (computed) from property in Malaysia deposited in a - - Bank at Malaysia, later on remitted to India through approved banking channels. (iv) Dividend from PQR Ltd. an Indian Company exempted Nil Nil (v) Dividend from a Malaysian company received in Malaysia Nil 8,000 (vi) Cash gift received from a friend on Mrs. Leena s 50th - 51,000 birthday taxable u/s. 56(2)(vii) (vii) Agricultural income from land in Maharashtra exempted Nil Nil u/s. 10(1) (viii) Past foreign untaxed income brought to India Nil - Mrs. Leena [Resident & oridary resident of India] 286

22 (ix) Fees for technical services rendered in India received in 25,000 - Malaysia Since income accrued in India (x) Income from business in Pune (Mrs. Geetha receives 50% 12,000 15,000 of the income in India) (xi) Interest on debentures in an Indian company (Mrs. Geetha 18,500 14,000 received the same in Malaysia) (xii) Short-term capital gain on sale of shares of an Indian 15,000 25,500 company (xiii) Interest on savings account with SBI 12,000 8,000 Gross Total Income 1,22, Less: Deduction u/s. 80C-Life Insurance premium paid to LIC Deduction under section 80TTA- maximum 10,000-10,000 30, Total Income ,500 Solution to Question 4: Computation of income earned by minor children to be clubbed with the income of Mr. Mittal (i) Particulars Income of first daughter [ ,000 (income derived out of skill and talent not to be clubbed)] 287 5,000 Less: Income exempt under section 10(32) 1,500 Income to be clubbed 3,500 (ii) Income of second daughter 8,500 Less: Income exempt under section 10(32) 1,500 Income to be clubbed 7,000 (iii) Income of son 40,000 Less: Income exempt under section 10(32) 1,500 Income to be clubbed 38,500 Total Income to be clubbed as per section 64(1A) [(i)+(ii)+(iii)] 49, Solution to Question 5: (a) Computation of total income and net tax liability of Mr. Devansh for A.Y Particulars Income from house property(note 1) 1,02,900 Profit and gains of business or profession (Note 2) 37,600 Long-term capital gains (cost of bonus share Nil) 2,20,000 Income from other sources (Note 3) 1,79,000 Gross Total Income 5,39,500 Less: Deduction under Chapter VI-A Deduction under section 80C LIC Premium paid 60,000 [restricted to 15% of sum assured to insure the life of disabled i.e,5% of 3,00,000] 45,000 Total Income 4,94,500

23 Tax on total income Tax on normal income (494,500 2,20,000) i.e, 2,74,500 [upto 2,50,000 Nil + on 10% on 74,500] 288 7,450 Tax on long-term capital gains under section [2,20,000 20%] 44,000 51,450 Less: Rebate under section 87A 5,000 46,450 Add: Education 2% and 1% 1,394 Total tax liability 47,844 Less: Tax deducted at source on interest on debentures [ 3,600 10/90] Net Tax liability Net tax liability (rounded off) Working Notes: Particulars (1) Income from House Property (i) Self-occupied portion (50%) Nil (ii) Let-out portion 50% Gross Annual Value 1,65,000 Less: Municipal taxes paid in respect of let out portion (50% of 36,000) ,000 Net Annual Value (NAV) 1,47,000 Less: Deduction under section 24@30% of NAV 44,100 (2) Profits & Gains of Business or Profession 1,02,900 Net profit as per profit and loss account 1,32,200 Add: Items not deductible (i) Fire Insurance [relating to let-out and self-occupied house property] 7,500 (ii) Income-tax and wealth-tax 27,000 (iii) Household expenses-personal expenses 42,500 (iv) Contribution to university approved under section 35(1)(ii), considered separately (v) Municipal Taxes paid in respect of let-out and self-occupied portions [75% of 36,000] Less: Deduction@175% for contribution to university approved and notified under section 35(1)(ii) [1,00, %] Less: Income deductible/not taxable 1,00,000 27,000 2,04,000 3,36,200 1,75,000 1,61,200

24 i) Cash gift 1,20,000 ii) Interest on debentures 3,600 1,23,600 (3) Income from Other Sources Cash gift on the occasion of marriage is exempt purchase of vacant site for lower consideration difference taxable U/s 56(2)(vii), Interest of 500 on post-office savings bank account exempt under section 10(15) 289 Nil 37,600 1,75,000 Interest on debentures (gross) [ 3, /90] 4,000 Other Sources 1,79, Solution to Question 6: Computation of Total Income of Mr. X for the A.Y Particulars I. Income from Salaries Salary including dearness allowance 4,00,000 Bonus 25,000 Salary to servant provided by the employer 24,000 Bill paid by employer for gas, electricity and water provided free of cost at his flat 33,000 Cost of laptop provide by the employer Nil 4,82,000 (used both for official and personal purpose) II. Income from House Property Gross Annual Value [5500 x 12] 66,000 Less: Municipal taxes paid 4,500 Net Annual Value 61,500 Less: Standard deduction u/s. 30% 18,450 Less: Interest on loan u/. 24(b) [1,60,000 x 15%] 24,000 19,050 III. Profit or gains from business or professions Share speculation business 15,000 Cotton speculation business (20,200) (5,200) Derivative transaction in security and commodity are considered as non-speculative and losses can be set off against House Property income. IV. Income from Other Sources Interest income to be clubbed: w.r.t wife [50,000 x 15%] 7,500 w.r.t Minor son (now aged 16 years] 4,500 leass: Exemption u/s. 10(32) 1,500 3,000 Aggregate gift received from friend 1,00,000 1,10,500 [Taxable u/s 56(2)(vii)] Gross Total Income 6,06,350 Nil

25 Less: Deduction under chapter VIA Under Section 80C: PPF 10,500 ULIP 6,000 LIC [max- 10% of 2,00,000] 20,000 FD in the name of son not allowed NIL 36,500 [own name allowed] Total Income 5,69, Solution to Question 7: Nature of Asset: Residential House ; Computation of Capital Gains Period of Holding: to (Long term) 290 Full Value of Consideration [as per section 50C] 75,00,000 Less: Brokerage on sale [2% on 50,00,000] 1,00,000 Indexed cost of acquisition [6,00,000 x 1125/140] 48,21,429 49,21,429 Gross Long-term capital Gains 25,78,571 Less: (1) Exemption u/s. 54: Purchase of residential house on ,00,000 Amount deposited in CGDS On ,00,000 On (not allowed since deposited after NIL return filing date) 14,00,000 (2) Exemption u/s. 54EC: Amount deposited in bonds of RECL: on (after 6 months from ) NIL NIL Taxable LTCG 11,78, Answer to Question 8: Computation of total income of Mr. A for the Assessment Year Particulars Amount ( ) Amount ( ) Income from house property (Note 2) 1,90,000 Income from business or profession (Note 1) 2,44,250 Income from capital gain (to be carried forward)(note 4) (2,250) NIL Income from other sources (Note 3) 11,500 Gross Total Income 4,45,750 Less Deduction under chapter VIA Deduction u/s 8DD Expenses made for disabled children (severely disabled) (1,25,000) Deduction under sec 80E