TAXTATION – B.

COM II YEAR

Question for Present Examination purpose

1. Explain the residential Status of an Individual?

For the purpose of determining the residential status of an individual there are two sets of
conditions called (i) Basic Conditions (ii) Additional Conditions
Basic Conditions:-
(a) He is in India in the relevant precious year for a minimum period of 182 days.
(b) He is in India for a period of 60 days or more during the current previous year and
365 days or more during the four years proceeding the relevant previous year.
Additional Conditions:-
(a) He has been resident in india for 2 out of 10 previous years preceding the current
previous year.
(b) He has been in india for a period of 730 days or more during the 7 years proceeding
the current previous year.

Rules for determining the residential status of individuals

(i) Resident and Ordinary Resident:- Any individual who satisfies any one of the
basic conditions and both the additional conditions is called Resident and
Ordinary Resident. Resident But Not.
(ii) Ordinary Resident:- Any individual who satisfies one of the basic conditions but
does not satisfy both the additional conditions or any one condition is called as
Resident But Not Ordinary Resident.
(iii) Non Resident:- Non Resident is a person who does not satisfy any one of the
basic conditions. It is immaterial whether he satisfies additional conditions or not.
Even if he satisfies both the additional conditions but failed to satisfy one of the
basic conditions, Still he is treated as Non – Resident.

Explanation:-

(a) The period of 182 days of stay may not be continuous.

(b) He may stay in his own house or rented house or in a choultry or in a lodge.
(c) His stay may not be at one place.
(d) While calculationg number of days of stay in india, day of departure was not
included. But now as per decision of Authority for advance Rulings, both day of
departure from india and day of arrival in india are to be counted as stay in india.

2. Blanket rate method:- (Short Questions) Under this method, the assessee’s total income
is divided into different groups and for each group, the rate of tax is prescribed. The rate
of tax of that group shall be applicable on the assessee’s total income which group the
total income of the assessee falls.

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 TAXTATION – B.COM II YEAR

This method is based on the principle that the person with lower income should pay tax at
a lower rate. This method is in force in so many countries of the world, but it was
discontinued in india after 31st March 1939.
For Example:

Group Income Rate of Tax

One Upto Rs. 1,50,000 Nil
Two from Rs. 1,50,001 to 10%
3,00,000
Three from Rs. 3,00,001 to 20%
5,00,000
Four from Rs. 5,00,001 onwards 30%
If the total income of assessee in Rs. 3,25,000 it will fall under group three where
the rate of tax is 20%.
Therefore tax payable by him is Rs. 65,000 (3,25,000X20%)

3. Explain the Import Procedure to be followed under Customs Duty?

The Import of goods is of two types (1) Import of goods for personal purpose (2) Import
of goods for commercial purpose. If a person desires to import goods from any Foreign
country for commercial purpose has to obtain ‘Import Export Code Number’ from the
Director General of Foreign Trde. If goods are imported by Air, Sea and Land normal
provisions are applicable. Simple provisions are applicable if goods are imported by
Baggage, Store and Post. The procedure to be observed for importing the goods through
Land, Water and Air is more or less the same with slight differences here and there. Iport
procedure will be discussed under two headings.
Differences here and there. Import procedure will be discussed under two headings.
(a) Procedure to be followed by importer
(b) Procedure to be followed by person-in-charge of conveyance carrying imported
goods.

Procedure to be followed by person-in-charge of conveyance:- According to Sec 2(3)

of Customs rules one of the staff members of the transport organization is made
responsible to follow the rules and regulations of the Customs Act, and such person is
designated as ‘ Person-in-charge’.

The following are the important duties to be discharged by person in charge:

1) The person in charge has to submit a Report known as Import Manifest or Import
Report.
2) He is responsible to ensure that the conveyance comes through approved route and
lands at specified place only.
3) Goods are unloaded only after obtaining the permission from the customs officials.

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4) He has to ensure that the conveyance does not leave india without written order of
customs authorities.
5) For violation of any rule, he will be penalized. Generally the following are the
reasons for punishment or penalty or both.
a. Giving false declaration or statement.
b. Shortage of goods in the conveyance.
6) Other provisions related to conbeyance.
a. Verification of import report by Officer-in-Charge.
b. Obtaining permission to unload the goods i.e., Entry Inwards.
c. The goods which are mentioned in import Manifest alone are to be unloaded.
d. Unloading of goods will be done at the approved place only.
e. Unloading of goods shall take place under the supervision of customs official.
f. Goods are to be unloaded on working days in working hours only.

Import procedure to be observed by the Importer:

1. Submission of Bill of Entry – an application to the Customs department for

clearance of goods.
2. Assessment of Duty: there are two methods of assessment (i) First check or
appraisement method (ii) Second check or Appraisement method.
3. Clearance of goods: If the importer has not cleared the goods within 30 days from
the date of unloading the custodian is authorized to sell the goods by auction. In
the case of animals, perishable goods he can sell them before the expiry of 30
days.

4. Best judge ment assessment:- (Short Question) (Sec 144) When the assessment
is made by the assessing officer based on his judgment it is known as Best
judgment assessment. In the following situations assessing officer may adopt this
method.

I) When assessee has not filed the return.

II) When assessee fails to produce the books of accounts.
III) When the assessee fails to get audit of his books.
IV) When the assessing officer finds that the particulars furnished in the return
are incomplete and incorrect.
V) Assessee failed to comply with the notice issued by the Dept.

KNOWLEDGE IS POWER

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