Solved Scanner. (Solution of December ) CMA Inter Group - I (Syllabus-2012) Paper - 7 : Direct Taxation

Transcription

1 Solved Scanner (Solution of December ) CMA Inter Group - I (Syllabus-2012) Paper - 7 : Direct Taxation [Chapter - 21] Objective Questions 1. (a), (b), (c) (5 marks each) (a) (i) ` 10,000 (ii) ` 5,00,000 (iii) ` 35,000 (iv) ` 2,00,000 (v) ` 30,000 (b) (i) (b) Agricultural Income (ii) (c) ` 12,000 (iii) (c) 10% (iv) (d) Any adult member of family (v) (b) Current Year (c) (i) (d) (ii) (b) (iii) (e) (iv) (c) (v) (a) [Chapter - 5] Capital Gains 1. (d) (i) (2 marks) Cost of acquisition of site to be adopted by Mr. Jain will be ` 8 lakhs as per Section 49 (4). [Chapter - 2] Income from Salaries 1

2 Solved Scanner Solution CMA Inter Gr. I Paper - 7 (Old Syllabus) 2 1. (d) (ii) (2 marks) Value of Perquisite will be: (Rent free Accommodation) (a) 15% of Salary (12,00,000 15%) ` 1,80,000 Or (b) Actual Lease Rent paid by employer ` 3,00,000 Which ever is lower i.e. ` 1,80,000 [Chapter - 18] Interest, Advance Tax, TDS, Collection & Recovery of Tax 1. (d) (iii) (1 mark) TDS Rate is 2% u/s 194C. [Chapter - 16] Assessment of Co-operative Societies and Trusts 2. (a) (4 marks) Yes, the Trust form for the purpose of yoga as carrying on charitable purpose. Entitled to get Registration u/s 12 AA of the Income Tax Act, The minimum amount to be applied for charitable purpose should not be less than 85% of the Income for availing the exemption u/s 11. [Chapter - 3] Income from House Property 2. (b) (9 marks) Computation of Income from House Property of Mr. Ashok for the A.Y : (i) House I House II Expected Rent Standard Rent or Municipal Valuation 1,50,000 3,00,000 (ii) Actual Rent (Which ever is More) 2,40,000 6,00,000 Gross Annual Value 2,40,000 6,00,000 Less: Municipal Tax paid 20,000 30,000 Net Annual Value 2,20,000 5,70,000 Less: Deduction u/s 24 (66,000) (1,71,000)

3 Solved Scanner Solution CMA Inter Gr. I Paper - 7 (Old Syllabus) 3 (iii) Interest on Money borrowed (Paid + Outstanding) (1,60,000) (80,000) Income from House Property (6,000) 3,19,000 [Chapter - 2] Income from Salaries 2. (c) (2 marks) (i) The Creation of a mortgage implies the existence of a debt. The Creation of a Charge does not necessarily imply the existence of debt. (ii) A mortgage can only be created by act of parties. A charge may be created by act of parties or by operation of law. (iii) A mortgage deed must be registered and attested by two witnesses, while a charge need not be made in writing and if reduced to writing, it need not be attested or registered. (iv) A mortgage must be executed in respect of specific property, while a charge may be created upon the wealth or property of a person which may be unspecified. (v) Simple mortgage carries personal liability unless excluded by express contract. In the case of Charge, no Personal liability is generally created. [Chapter - 2] Income from Salaries 3. (a) (8 marks) Computation of Income from Salary of Mr. Nitin for A.Y : (i) Basic Salary 7,20,000 (ii) DA 3,60,000 (iii) Value Motor Car. (1,800 12) 21,600 (iv) Contribution to Provident fund in excess of 12% of Salary (employer contribution) 21,600 (v) Value of concessional Rent free accommodation 15% of Salary 1,08,000

4 Solved Scanner Solution CMA Inter Gr. I Paper - 7 (Old Syllabus) 4 Less: Amount of Rent deducted from salary 5, ,000 48,000 (vi) Life Insurance Premium 45,000 (vii) Free education facility to daughter (because cost in less than 1,000 in similar school, office) (viii) Free Lunch Provided during hours (because it is less than ` 50 per day i.e = 18,250) Nil Exempt Gross Salary 12,16,200 [Chapter - 5] Capital Gains 3. (b) (7 marks) Computation of Capital gain of Mrs. Kirithika for A.Y : Sale Consideration 70,00,000 Less: 1% 70,000 Less Index Cost of acquisition: 69,30,000 Land May ,00,000 Registration Exp. 80,000 (8,80, /497) 19,24,668 Cost of Construction: (10,00, /551) 19,72,777 Long Term Capital gain 30,32,555 Less: Exemption u/s 54 11,00,000 u/s 54 EC 9,50,000 20,50,000 Taxable LTCG 9,82,555

5 Solved Scanner Solution CMA Inter Gr. I Paper - 7 (Old Syllabus) 5 [Chapter - 10] Income Exempt from Tax & Agricultural Income 4. (a) (6 marks) (i) Agricultural Income taxable in the hands of non resident. Therefore, Agricultural Income of ` 1,50,000 earned from land situated in Bihar by Mrs. Bhagyashree, a non resident taxable in India. (ii) Foreign Allowances of Govt. employee are examples. Therefore, Allowances (` 5,00,000) received by Mr. Ram Kumar is USA are exempt. (iii) Principal amount ` 4,00,000 withdrawn from PPF A/c by resident individual is exempt from Tax. [Chapter - 9] Deductions in Computing Total Income 4. (b) (4 marks) Computation of Total Income of Mr. Praveen Kumar for A.Y : Gross Total Income 27,50,000 Less: u/s 80 D Deductions ` 25,000 out of 26,000 Medical Insurance Premium & ` 5,000 out of Medical expenditure 30,000 u/s 80 DD B 80,000 Total Income 26,40,000 [Chapter - 4] Profits & Gains of Business or Profession 4. (c) (i) U/s 80 GGB: Deduction in respect of contribution given by companies to Political parties is allowed as deduction if paid by Account payee cheque. It is assumed that contribution made by company to Political party by cheque. Therefore, deduction U/s 80 GGB will be allowed. (ii) Interest of ` 80,000 paid to Bank on loan taken and utilised for payment of dividend will be allowed u/s 36 (1) (iii). (iii) 30% of ` 75,000 i.e. ` 22,500 will be disallowed due to non deduction of TDS u/s 194 J 10%.

6 Solved Scanner Solution CMA Inter Gr. I Paper - 7 (Old Syllabus) 6 (iv) (v) Interest of ` 40,000 on Bank overdraft utilised for payment of dividend will be allowed u/s 37. Provision for Bad & doubtful debts will not be allowed as deduction. [Chapter - 4] Profits & Gains of Business or Profession 5. (a) Expenses allowed on actual payment basis u/s 43 B: (i) Bonus & commission (ii) Interest on loan or advances taken from Schedule Banks. (iii) Any sum payable by the assessee to the Indian Railways for the use of Railway Assets. (iv) Any sum payable by the assessee by way of Tax, duty, cess or fee whatever name called, under any law for time being in force. (v) Any Interest on any loan or borrowings from public financial institutions or state financial corporation. (vi) Any sum payable by an employer in lien of any leave at the credit to his employee. Due date for payment is on or before the due date for furnishing of Return of Income u/s 139(1). [Chapter - 18] Interest, Advance Tax, TDS, Collection & Recovery of Tax 5. (b) (i) Nil (Discount of ` 30,000 allowed to a customer) (ii) Nil Because Amount of commission is less than the basic exemption limit of ` 15,000. (iii) Rate of tax is 30% and the amount of tax will be ` 25,71,429. (iv) Nil because Agricultural land is not taxable u/s 194 IA. [Chapter - 8] Set Off & Carry Forward of Losses 5. (c) Only Depreciation can be carried forward due to belated filing of Return business loss can not be carried forward with effect from A.Y belated return filed u/s 139(4) can be revised.

7 Solved Scanner Solution CMA Inter Gr. I Paper - 7 (Old Syllabus) 7 [Chapter - 18] Interest, Advance Tax, TDS, Collection & Recovery of Tax 6. (a) (4 marks) (i) Calculation of Installment of Advance Tax for a domestic company with Tax Liability of ` 3,90,000 15% of Tax Liability upto 15 th June ` 58,500 45% of Tax Liability upto 15 th September ` 1,17,000 75% of Tax Liability upto 15 th December ` 1,17, % of Tax Liability upto 15 th March ` 97,500 (ii) A Senior Citizen or Super Senior Citizen is not liable to Pay Advance Tax if he has not any Business Income in the previous year. Therefore, A Super Senior Citizen (Age 80 years) having pension income and property income is not liable to pay advance Tax. [Chapter - 12] Assessment of Individuals 6. (b) (6 marks) Computation of total Income of Mr. Raman: Income from Salary: 2,20,000 Income from House Property (Loss): (3,20,000) Income from Business: Non Speculation Business 1,60,000 1,60,000 Loss from Speculation Business (5,40,000) Capital Gain: ST CG on Listed from Listed Securities (2,80,000) LT CG on Sale of Land 2,40,000 LT CG on Sale of Listed Securities exempt u/s 10(38) Income from Other Sources: Exempt Family pension 2,20,000 Less: Deduction u/s 57 15,000 2,05,000

8 Solved Scanner Solution CMA Inter Gr. I Paper - 7 (Old Syllabus) 8 Income from Lottory 2,10,000 Add: TDS 90,000 3,00,000 5,05,000 Inter head set off (Adjustment) u/s 71: House Property loss set off from Salary Income (2,20,000) House Property loss set off from Business Income (1,00,000) Gross Total Income 5,65,000 Being Total Income Losses to be carried forward (1) Loss from Speculation Business 5,40,000 (2) ST CL on Sale of Listed Securities 40,000 [Chapter - 4] Profits & Gains of Business or Profession 6. (c) Computation of Income from Business of Express Shipping Inc. Freight ` 200 lakhs Demurages ` 40 lakhs Handling charges ` 20 lakhs ` 260 lakhs Deemed Income 7.5% of ` 260 lakhs ` lakhs Expenses are net allowed u/s 44 B [Chapter - 21] Objective Questions 7. (a) True (b) False because an advance pricing agreement shall be valid for a period of 5 years. (c) True (d) True (e) False

9 Solved Scanner Solution CMA Inter Gr. I Paper - 7 (Old Syllabus) 9 8. (a) (6 marks) (i) (a) Any person who has undertaken an international transaction or (b) A person who is contemplating to undertake an International Transaction. (ii) Advance Agreement shall be valid for such period not exceeding five(5) consecutive previous years as may be specified in the agreement. (iii) APA will not applicable before the date of agreement for which application is made. (iv) The Advance Agreement shall be binding on assessee, commissioner of Income Tax and Assessing Officer. (v) The Advance Agreement shall not be binding if there is a change in law or facts of the agreement. (vi) If the assessment or reassessment proceedings for an assessment year relevant to a previous year to which the agreement applies have been completed before the expiry of period allowed for furnishing of modified return, the Assessing Officer shall, in a case where modified return is filed in accordance with the provisions of sub-section(1) of Section 139, proceed to assess or reassess or recompute the total income of the relevant assessment year having regard to and in accordance with the agreement. 8. (b) (4 marks) (i) Statement is correct. (ii) Statement is correct.

10 Solved Scanner Solution CMA Inter Gr. I Paper - 7 (Old Syllabus) (c) Specified domestic transaction means the following transactions, provided the aggregate of such transactions entered into by the assessee in the previous year exceeds a sum of ` 20 crores. 1. Section 40A(2) payments to specified persons not deductible under certain circumstances. 2. Where any goods or services held for the purpose of the eligible business are transferred to any other business carried on by the assessee. 3. Any transaction referred to in Section 80A; 4. Any business transacted between the assessee and other person as referred to in Sub-sec(10) of Sec. 80IA; 5. Any other transactions as may be prescribed. 9. (a) Maintenance and keeping of information and documents u/s 92D: Every person who has entered into an International transaction shall keep following information and documents (i) Description of ownership structure with detail of shares or other ownership interest. (ii) A profile of multinational group of which the assessee enterprise is a part. (iii) A broad description of the business of the assessee and the industry in which the assessee operate, Business of Associate enterprises. (iv) Nature and terms including prices of International transactions. (v) A description of functional performs and assets employed by the asessee. (vi) A record of economic and market analysis. (vii) Record of uncontrolled transactions.

11 Solved Scanner Solution CMA Inter Gr. I Paper - 7 (Old Syllabus) 11 (viii) (ix) Description of methods considered for determining of Arm s Length Price. Details of Adjustments if any made to arrive at Arm s Length Price. 9. (b) (6 marks) Methods of Computing Arm s Lengths Price: (i) Comparable uncontrolled price method (ii) Resale price method (iii) Cost plus method (iv) Profit split method (v) Transactional net margin method (vi) Other method as prescribed by Board i.e CBDT. 9. (c) (4 marks) When The Gross total Income of a non resident Indian is less than or equal to ` 2,50,000 i.e below the basic exemption limit. Shuchita Prakashan (P) Ltd. 25/19, L.I.C. Colony, Tagore Town, Allahabad Visit us :