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Decerrber 2012

Syllabus 2008

Applied Direct Taxation



Full Marks: 100

figures in the margin on the right side indicate



lrswer Question No, I which

is compulsory ancl any tive from the rcst.

Wherever necessary, you may make suitctble assumptions and stdte them clearly in your dnswer.

Working notes shouldfonn part of the anstler

1. (a) Choose the most appropriate alternative: lx13=13 (/'| The basic exemption limit for a non-resident super senior citizen above the age of 80 years for the
assessment year 2012- 13 is





B. Rs. 2,50,000 B.

.c om
Rs. 5,00,000

All questions relate to lhe assessment year 2012-l 3, unless stated otherwise-

D. Rs.



When patent is transferred, the amount received is


Chargeable under the head 'Profits and gains of business or profession'


(i{i) Rent derived flrom land located outside India, used exclusively for agricultural purpose is A. Agricultural income B. pxempt income C. Taxable as business D. Taxable under the




head 'lncorre from other sources' Ram introduced his building costing Rs. 10,00,000 acquired in April,2007 into the business newly commenced by him from 01.04.2011. The actual cost ofbuilding for the purpose ofdepreciation for the assessment year 2012-13 would be Rs.

se s

Not chargeable to tax

the D. Adjusted towards the patent value in the from --block other sources' of assets
Taxable under head 'lncome




B- 5,90,490



None of these.

(v) Motor car with


more than 1-6J!lrs cubic capacity is given to the employee both for official and pesonal use rvith expenditure on running and maintenance met by the employer. The car was self driven by the employee. The perquisite value shall be


Rs.2,400 p.m. D. Nl The liability for payment of advance tax would arise only when the tax liability of the taxpayer after


Rs. 1,200


B. Rs.


reducing tax deductible at source exceeds

(A.. Rs. 10,000

B. Rs.5,000

C. Rs.20,000
scheme, is

D. D.

None of these
Taxable as capital

(vii) Amount is received under the notified reverse mortgage A. Taxable as'Income B. Exempt from tax C.
from other


50% taxable

(viii) 2131,6"1n,

an employee in a transport company, received Rs. 10,000 per month by way ofallowance to meet his personal expenses in the course of running such transport system from one place to another. The amount chargeabJe lo tax is




Rs. 3,000 p.m.


Fullv taxable


Fully exernpt

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Syllabus 2008

scholarship of Rs. 20,000 to meet the cost of education. The amount of scholarship

(ix) Rajiv received A.


chargeable to tax is Rs.


tax is

10,000 D. Rs. 5,000 Sita received per month in the capacity ofwindow ofthe deceased spouse who died in the course ofoperational duties in Indian anny. Thi amount of family pension chargeable to

B. Rs. 20,000 farrily pension ofRs. 10,000

C. Rs.

A. Rs.


B. Rs.


C. NiI



(xi) A religious trust

l2AA received Rs. 2,00,000 by way of anonymous donation. The total amount of donation received during the year was Rs. 15,00,0b0. Th" uI1ornt of anonymous
registered under section donatipn chargeable to tax is

ofa company is B. Fully deductible c. 50% deductible D. ,5% deductible (xiii) Raja gifted b building to Miss Vimala on 02.04.201 l, its market value on tlle said date being Rs. 30 lacs.


Fees paid to Regishar ofcompanies for increasing the authorized capital


capital expenditure


Rs. 30,00,000


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l2AA is -

Miss Vimala got married to his son on 12.03.2012,The market value on the said datewas Rsl32 lacs. The value ofthis house as on 31.03.2012, as per schedule III to the Wrath Tax Act is Rs. l5 lacs. The value ofhouse includible in the net wealth ofRaja, as on 31.03.2012 is

C. Rs. 15,00,000

(b) Fill up the blanks:

.c om

A. Rs. 2,00,000

B. Rs. 1,00,000

C. Rs. 75,000


Nil. Not taxable

Rs. 32,00,000




Gift received from a trust registered under section taxable income ofan individual.
from other sources.


Interest received on delayed payment of enhanced compensation shall be de"rn"6 1o 6" not an income/interest relating to the concemed year alone is income) ofthe year in which

it is received.

linituaealnot included) in the



Dividend received from a company having only agricultural income is non-agricultural income/S0% taxable) in the hands of its shareholder.


(iii) Any sum paid on account ofwealth

tax is

(deductible/not deductible) while computing income (agricultural income/


(v) There are two schools of Hindu Law, one in Mitakshara and the other is . irD ?he.depreciation allowable in respect ofan asset used for the purpose ofbusiness for less than 180 days shall be restricted to (50% l25o/ol75o/o) of the normjl rate of depreciation. ihe .(vn) rate of TDS will be in all cases, if pAN is not furnished by the deductee.



(viu' The minimum for the excluding surcharge, education cess, etc.].

-,--+-ealtemate tax u/s 115JB


2012- 13 shall


i -

% of book profit [Basic rate

(ix) The minimum penalty levied u/s 27lA for not maintaining books of account, documents as required u/s 44AA is . (x) Prima facie, revision of any order can be made by the commissioner of Income-tax within four years.


(xi) Unabsorbed

loss underthe head 'Capital gains' shall be carried forward for a pe yeprs immediately following the assessment year in which such loss was incurred.



(xii) -oss from



profits from gambling.

lcatrUcarVotl be carried forward and set

off in subsequent years under

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2. (a) State the difference between residential status ofa company and that of others. (b) Explain the difference between'Total Income, and ,Gross Total Income,. -"

Syllabus 2008
z z

(d) Mr A fumishes the following particulars ofhis (i) Income from agriculture in Bangladesh,

(5) :lR'who resides at Delhi, gets Rs. 6,00,000 as basic salary. He receives Rs. 1,70,000 as house rent allowance. Rent paid by him is Rs. 1,80,000. Find out the amount oftaxable HRA for the assessment year ZOl2-13.4
incorne during the previous year


received thereof Rs. 2,00,000 and subsequently remitted to

Bahrain for educational expenses and Rs. 2 lakhs remitted in India later).

from business outside India managed from India Rs. 90,000 and received outside India. L- L" "Find out the gross total income of Mr, A for the assessment year 2012-13 if A is (i) Resident and ordinarily resident (ii) Resident but not ordinarily resident and (iii) Non-resident.

(v) Profit



4. (a)



What is the perquisite value.of sweat equity shares allotted to Mr. Rao? In case these shares are sold subsequently, what would be their cost of acquisition in the hands of Mr. Rao? 6 Determine the eligibility and quantum ofdeduction under chapter vI-A in the following cases:
Subscription to notified long-term infrastructure bonds Rs. 30,000 paid by Mr. A who had also paid life insurance premium of Rs. 70,000 during the year

Contribution to notfied pension scheme (referred to section 80 CCD) by the employer Rs. 40,000 for an employee whose basic salary plus dearness allowance was Rs. 3,00,000 for the 4


Excel Ltd- allotted 1000 (sweat) equity shares ofRs. l0 each to Mr. Rao, Ceneral Manager. The fair market value-of the shares computed in accordance with the method prescribed under the Incomf+ax AcyRules was Rs, 500 per share, whereas it was allotted at Rs. 300 per share.


Discuss how the above items will be treated in the hands of Mr. Rama and Mrs. Seetha for the assessment year 2012-13 (Computation of income is not 5


above company on 15.01.20 in the National Stock Exchage for a net consideration of Rs. 180 per share, per share, paying the applicable STT thereon.


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(a) Dn 01.05.2011, Mr. Rama transfened the right to receive rental income arising from a factory godown owned oy him, to his major son Mr. Lava, for a period of l0 years. The rental income i".ivea isis. t'0,'000 per month. On 12.03.2008, h^e gifted-2000 shares offace value ofRs. 100 each, in Janak Granites Ltd., a listed company, tdiris wife Mrs. Seetha. Mr. Rama had purchased them on 19.02,2006 at Rs. l l0 each, Janak Granites Ltd. allotted bonus shares in the ratio of l: I on 12.04.2009. Mrs. Seetha sold all shares of the

Mr. Gopi carrying on business as-proprietor converted the same into a limited cpmpany by name Gopi pipes (p) Ltd. from 01.07.2011. The details ofthe assets are,given below:


Block -


WDV of plant & machinery (rate of depreciation @15%) WDV of building (rate of depreciation @10%)

.c om

(ii) Gift ofRs. 52,000 received in foreign currency from a relative in India. (iii) Anears of salary Rs. 70,000 received in India from a former employer in England. T * - c(iv) Income from property received abroad but later on remitted to India Rs. 3,20,000. (Rs. I lakh used in


Rs. 12,00,000

The company Gopi Pipes (P) Ltd. acquired plant and machinery in December 201 doing the business from 01.07.2011.

for Rs. 10,00,000. It has been


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Syllabus 2008


Compute the quanturr of depreciation to be claimed by Mr. Gopi and successor Gopi Pipes (P) Ltd. for the assessment year 2012- lJ.

Note:-lgnore additional



Name any four specified businesses covered under section 35AD and state the fiscal incentives available to 5 such


(c) Mr

Ashwin started a proprietary business on 20.04.2012 with a capital ofRs. 5,50,000. His wife Smt. Padma gifted Rs. 2,00,000 on the occasion ofhis birthday on 28.07.2010, out of which he introduced Rs. 1,00,000 into his proprietary business.
Details ofhis income from business are given below:

He did not withdraw any amount from the business for his personal use.

Determine the amount chargeable to tax in the hands ofAshwin and the amount liable for clubbing in the hands of 5 his wife Smt.


se s

.c om
Rs. (1,50,000)

Financialyear 2010-l I 201l-12



Rs. 4,00,000

5. (a)

State with brief reason whether the following are 'assets' as on 31.03.2012 under the Wealth Tax


(ii) (iii) (iv)

A commercial complex let out after completion of construction from 0l.0l.20l2' A vacant land acquired in March 2008 by a company meant for construction of factory building^


Vacant lands owned by a real estate company for the past 7 years.

(vi) A farm house beyond 30 kms from corporation limits by an individual. (vii) A guest house located 30 kms beyond the city limits owned by a company. (b) b,retly discuss the provisions of section 142(2A,) ofthe Income-tax Act, 196l relating to special audit. 4 (c) State the difference btween Exemption u/s l0 and Deduction under Chapter VIA ofthe Income-tax Act, 1961.
lvitr; Equity shares in a company owned by



6 tN Mr. Nitin completed


)neresf paid on loans borrowed for the purpose ofconsturction during the 30 months prior to completion was
The house was let-out on a monthly rent of Rs. 18,000. Annual corporation tax paid is Rs. 35,000.
Interest paid during the year is Rs. 25,000.

Amount spent on repairs is Rs. 6,000. Fire insurance premium paid Rs. 3,000 p.a. The properfy was vacant for 4 months.


construction ofa residential house on 01.04.2010.

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Residential complex building owned and let out by a company for 270 days during the year Accommodation to an employee having aggregate annual salary of Rs. 4,50,000, let out by a company.


Annual letting value as per corporation records is Rs. 1,50,000.

Sltllabus 2008

He had also received arears ofrent ofRs. 36,000 during the year, which had not been not charged to tax in the earlier year Compute the income under the head "lncome from House Property" for the assessment year



Dscuss whether it is required on the part ofan assessee desiring to claim deduction ofbad debt written off, to p\ove that the debt written offin the books as irrecoverable or bad debt, is incapable ofrecovery or that the said deb[had really tumed bad. 4
how jewellery has to be valued as per Wealth Tax

(c) \Iirlain



'A' Ltd. owns two plant: Plant X and Plant Y, as on April 01.04.2011: Rs.



I (rate ofdepreciation: l5o4 depreciated value on


The company purchases Plant Z on May 31, 2011 for Rs. 20,000.

It sells Plant X (on April 10, 2011) and Plant Y (on December 11, 201 Rs. 40,000; Rs. 36,000 and Rs. 24,000 respectively.

Find out the WDV ofthe block ofassets on 3l .03.2012. Explain the treatment relating to depreciation and allied issues relating to the above. What is the opening WDV of the block as on01.04.2012?

.c om

and Plant Z (on March 1,2012) for

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(b) (c)

State the provisions for valuation of self-occupied property under section 7(2) of the Wealth Tax


5 5

State ten instances/transactions where Permanent Account Number (PAN) has to be compulsorily Please state the deductibility


ofthe following


Compensation paid to cancel purchase order of a machine due to abnormal rise in its price. Assessee claims it as a trading loss.


(b) Erplain (c)

the provisions for carry forward and set offofbusiness losses under section 72. Explain the order of priority amongst business loss, current depreciation and brought forward unabsorbed 6


(i) (ii) (iii)

Litigation expenses for restraining another company from using

assessee's trade mark.

Brokerage paid for raising loan to finance assessee-company's business.


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Explain the provisions in regard to a reference to Valuation Officer for valuation of a capital asset under the provisos of the Income-tax Act, 1961.

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