SIDDHARTH EDUCATION SERVICES LIMITED For CS, CA, ICWA [Foundation, Inter, Final] BMS, M.Com 301,Prestige Chambers, Opp. Thane Railway Stn. P.F.2, Thane (W): 2533 4903 4, Vaibhav Soc., 1 st Floor, Opp. Municipal Garden, Dombivli (E)Tel:2443455 2/18, Popatlal Bldg, Opp.Bank of Maharashtra, Ranade Rd, Dadar(W).Tel: 55240023 Time :3Hours Direct and Indirect Tax (CS) Marks : 100 PART A Answer question number 1, which is compulsory and any three from the rest. Q.1. (a) Fill in the blanks: 1. Compensation received from an insurer on account of damage to the crops is income. 2. Time limit for filing revised return when assessment has not been completed is from the end of the relevant assessment year. 3. Deduction under section 80CCC is restricted to. 4. The deduction for amortization of preliminary expenses under section 35D is allowable at of the qualifying expenditure in each of the successive years beginning with the year in which business commences. 5. Surcharge is applicable for Indian Companies @ if. (1mark each) (b) Choose the most appropriate answer from the given option in respect of the following: I. Foreign Income received in India during the current year is taxable in case of a) Ordinarily Resident b) Non Ordinarily Resident c) Non Resident d) All of the above. II. Which of the following is not an example of capital receipt a) Money received on issue of shares b) Money received on sale of land c) Money received on sale of goods d) None of the above. III. Maximum qualifying limit for deduction under section 80E is a) Rs 50,000 b) Rs 1,00,000 c) Rs 1,10,000 d) No Limit IV. For Non resident assessee engaged in the shipping business, income will be % as per section 44B. a) 5% b) 7.5% c) 8% d) 10% V. Which of the following is not an asset under section 2(ea) of the wealth-tax Act,1957 a) Motor car b) Boats and aircrafts c) Guest house situated 35 kms away from the municipalty d) Cash (1mark each) 1
(C) During the previous year 2011-12, Bhrugesh, an Indian citizen, stayed in India for 61 days. Determine his residential status for the assessment year 2012-13 on the basis of the following information : (i) He was not in India during the following period; 2010-11 - 269 days 2009.10-220 days 2008.9-266 days 2007.8-300 days (ii) During 2003-04, he was present in India for 121 days. (iii) During 2002-03 and 2001-02, he was in India for full year. (iv) For other years he was not in India. (5 marks) Q.2 (a) Ms. Rosy, resident of Germany married with Mr. Jimy of India on 29 th March, 2010 and came to India for the first time on 15.7.2011 and then went back to Germany on 30 th December, 2011. She came back on 5 th January, 2012 and then she stayed in India. She let out her property in Germany for Rs. 25,000/- which she received in Germany and transferred to India. She had invested in FD of Rs. 5,00,000/- carrying an interest of 9%, which she directly received in India. In addition to this she received following gifts; 1. From brother Cash gift Rs. 1,00,000/- 2. From friends on marriage of sister Rs. 10,000/- 3. From friends On her marriage Rs. 55,000/- 4. She got a plot of land gifted by her Mother in law, which she lets out for Rs. 18,000/- p.m. w.e.f. 1 st October, 2011. 5. From niece Rs. 51,000. Determine her residential status, compute taxable income and tax liability for AY 2012-13. (7 marks) (b) State briefly with reasons whether the statements are true or false; 1. Losses of the speculative business carried by assessee, can be carried forward only for 8 years. 2. Individual assesses are not required to file income tax return online. 3. The lottery tickets purchased will be allowed as Deductions from lottery income. 4. An Indian Company which is wholly controlled from outside India is non-resident. (2 marks each) Q3 (a) write short notes on the following (Any three): i. Conditions for deduction available under section 80JJAA. ii. Shares of profit from partnership firm iii. Perquisites taxable in the hands of specified employees. iv. Special provisions for computing profits and gains of small businessmen v. Amortisation of telecom licence fee (3 marks each) b) Mrs. X transferred her immovable property to ABC ltd. Subject to a condition that out of the rental income, a sum of Rs.36,000 per annum shall be utilised for the benefit of her son s wife. Mrs X claims that the amount of Rs. 36,000 (utilized by her son s wife) should not be included in her total income as she no longer owned the property. State with reasons whether the contention of Mrs. X is valid in law? c) What do you mean by the arrears of rent and also explain the taxability when arrears of rent is received in any year other than the for which the same was due. (2 marks) Q.4 a) Distinguish between of the following (Any three of the following) 2
1. Fair rent and annual rent 2. Exemption and deduction 3. Summary assessment and Scrutiny assessment 4. Exemption to capital gains under section 54 and exemption to capital gains under section 54F 5. Normal depreciation and additional depreciation Q.4 b) Gulshan submits the following information relevant for the financial year 2011-12 Profit (Rs) Loss(Rs) Salary income 8,00,000 Income from house property : House A 25,000 House B 30,000 Profit and gains of business or profession: Business-A 12,000 Business-B 20,000 Business-C (speculative) 22,000 Business-D (speculative) 35,000 Capital gains : Short term capital gains 10,000 Short term capital gains 30,000 Long term capital gains on sale of 16,000 building Income from the others sources: 15,000 Determine the net income of Gulshan for the assessment year 2011-12. (3 marks each) (6 marks) Q.5 Mr. Sushant furnishes the following particulars for compilation of his wealth-tax return pertaining to the assessment year 2012-13 : (i) Flat purchased under instalment payment scheme in 1994 for Rs. 8,50,000 used for self occupation and market value as on 31st March, 2012 Rs. 15,00,000 (ii) Gift of Jewellery made to wife from time to time amounting to Rs. 5,00,000 and market value as on 31st March, 2012 Rs. 9,00,000. (iii) Cash in hand 1,25,000 (iv) Bank Balance with HDFC Bank Rs. 2,50,000 (v) Urban land transferred to minor handicapped child, market value as on 31st March, 2012 Rs. 5,00,000 (vi) 2 motor cars (one is held as stock-in-trade in business and other used for personal purposes) (each) Rs. 6,00,000 (vii) Loan against flat being instalment remaining unpaid Rs. 70,000 Compute the net wealth of Sushant indicating reasons for the treatment under the provisions of the Wealth-tax Act, 1957 and the wealth-tax payable. (6 marks) Q.5 (b) Briefly explain the provisions of Capital gains for the assets transferred by the partner in the firm for capital contribution and asset transferred by the firm to the partner at the time of dissolution of the partnership firm,. (5 marks) Q.5 (c) Mrs.Preeti owns a house property which is let out @ Rs10,000 p.m. During the previous year ending 31 st march 2010, she received---(i) arrears of rent of Rs 30,000 and (ii) unrealized rent of Rs20,000.You are required to compute her income chargeable to tax under the head income from house property. 3
Q. 6 (a) Mr. Mohan, is a Company Secretary drawing following salary and allowances, etc. Rs. Basic Pay 15,000 p.m. House Rent Allowance 4,000 p.m. City Compensatory Allowance 300 p.m. Project Allowance (Actual expenses Rs. 15,000) 2,000 p.m. Research Allowance (Actual expenses Rs. 18,000) 3,000 p.m Reimbursement of Medical Expenses 24,000 (including Rs. 6,000 spent in a Government hospital) He is given a motor car of 1400 cc engine capacity and is entitled to use it both for office and private purposes. He is also given the facility of a driver w.e.f. 1-10-2010. He is given a facility of watchman and gardener by his employer for which his employer pays Rs. 500 p.m. to each such employee. 500 shares of the face value of Rs. 10 each given to him free of cost under ESOP. The market value of the shares is Rs. 10,000. He contributes 15% of his basic salary to recognised provident fund to which is employer contributes equal amount. Interest credited to recognised provident fund @12% p.a. is Rs. 84,000. The company has taken a personal accident policy for him, the annual premium being Rs. 1,200. He resides in a house in Delhi belonging to his HUF and pays rent of Rs. 5,000 p.m. Compute his income under the head salaries for the assessment year 2011-12. (5 marks) Q. 6 (b) Attempt any two of the following:- 1. Expenditure on scientific research is allowed as deduction even if contribution is made to other institutions for scientific research. Explain the statement. 2. What are capital assets? What items are not included in capital assets? 3. Discuss the cases in which payments by way of loan/advance to the extent of accumulated profits by a closely held company is treated as dividend under section 2(22)(e) (3 marks each) Q.6 (c) Mr. Ronak has a property which consists of three identical flats. Construction of the property started in June 2006 and the construction completion on March, 2011, One flat is let-out on Rs. 5,000 p.m., and the second for Rs. 6,000 p.m., the third is occupied by Ronak himself. Other relevant details are given below : Annual municipal valuation of the property Annual municipal tax paid Ground rent paid Insurance premium on property Standard rent of the property Fair rent of the property Rs. 1,50,000 24,000 3,000 1,500 1,98,000 2,00,000 R had borrowed Rs. 1,00,000 against his fixed deposits to repair the tenanted portion of the flat which is let out for Rs. 5,000 p.m. He paid interest of Rs. 12,000 on the said loan. He had spent Rs. 4,000 for collection of rent. The second unit which was let for Rs. 6,000 p.m. remained vacant for a period of 2 months during the year. PART - B Q. 7 Attempt any four of the following; 1. a) How the point of taxation is determined when the payment is received in advance. b) 2. Explain the course of action to be taken by the assessee when the excess service tax is paid. 4
3. Discuss the advance rulings under service tax 4. Fill in the blanks; i. The registration certificate is to be granted to the service provider within number of days. ii. Service tax return is to be filed in Form no. iii If service tax due on 5 th June, 2011, Rs. 50,000 is deposited on 28 th June, 2011, the interest charged is Rs. iv. Service tax is administered by v. Return of service tax is filled in from. 5. Explain the general exemptions available under service tax? (5 marks each) Q8. Attempt any four of the following: PART C i. How the cascading effect in case of sales tax is evaded by the introduction of VAT. ii. A Determine the liability of VAT of X for the month of December, 2011 using Invoice Method of computation from the following data: Purchase Price of Goods acquired from Local Market (including VAT) Rs. 52 Lakhs; VAT Rate on Input 4%; Transportation, Insurance, Warehousing and Handling cost incurred by X Rs. 20,000 Goods sold at a Profit Margin 14%; VAT rate on Sales 12.50%. iii. Explain various variants of VAT? iv. What is input VAT credit? Can the credit be availed in case of capital goods? v. What are the disadvantages under VAT mechanism? (5 marks each) 5