REVISION TEST PAPER 2 CMA INTERMEDIATE
PAPER – 4: DIRECT TAXATION
Time Allowed – 3 Hour Maximum Marks – 100
Working Notes should form part of the answer. Wherever necessary, suitable assumptions may be made by the candidates and disclosed by way of a note. Attempt all question.
- DynamicIndia & Co. commences production on 16/8/2021. It incurred the following expenses related to scientific research, find deduction u/s 35 for the P.Y. 2021-22.
Date | Particulars | Amount | Purpose |
18/8/2021 | Paid to an Approved University for research in Social science | 50,000 | Non- business |
15/10/2021 | Paid to a scientist (not the employee of the company) | 30,000 | Business |
18/11/2021 | Paid to approved National laboratory | 60,000 | Non- business |
15/12/2021 | Purchase of land & building for in house research (cost of land Rs
1,50,000) |
5,00,000 | Business |
18/12/2021 | Purchase of car to carry research-workers | 2,00,000 | Business |
16/8/2018 to
15/8/2021 |
Capital expenditure (including cost of land Rs 1,00,000) | 5,00,000 | Business |
“ | Purchase of material | 3,00,000 | Business |
“ | Payment of salary (other than Perquisites) | 2,00,000 | Business |
“ | Perquisites provided to research-personnel | 1,00,000 | Business |
“ | Other revenue expenditure | 80,000 | Business |
1/4/2018 to
15/8/2018 |
Capital expenditure (other than land) | 9,00,000 | Business |
“ | Payment of salary (other than Perquisites) | 50,000 | Business |
1/4/2016 to
31/3/2018 |
Capital expenditure | 80,000 | Business |
“ | Revenue expenditure | 30,000 | Business |
- Uttarand Dakshin, partners of PP Traders, furnishes the following details –
Profit and loss account for the year ended 31-3-2022
(10 Marks)
Particulars | Amount | Particulars | Amount |
Bonus paid to employee | 50,000 | Gross Profit | 10,00,000 |
Interest on loan taken from bank | 45,000 | Interest on drawings | |
Other Expenses | 40,000 | Uttar | 2,000 |
Salary to partners | Dakshin | 3,000 | |
Uttar | 2,44,000 | ||
Dakshin | 4,88,000 | ||
Interest on capital @ 15% | |||
Uttar | 4,500 | ||
Dakshin | 6,000 | ||
Depreciation | 40,000 | ||
Net profit | 87,500 | ||
10,05,000 | 10,05,000 |
In computing the income, the following facts are to be taken into consideration:
- Intereston loan is paid to brother of Shri Khote for loan taken for payment of advance income
- During the previous year 2016-17, assessee had claimed Rs 45,000 as bad debt out of which only Rs 35,000 was During the previous year, he recovers Rs 25,000.
- Contributiontowards unrecognised provident fund was paid within
- Legalexpenses include Rs 2,000 paid for preparation of income tax
- Stockis undervalued by 10%.
- Giftreceived was given by a supplier for achieving target
- Outstandingcustoms duty has been paid on 31-12-2021.
- Duringthe previous year, he comes to know that his former employee had embezzled cash of Rs 5,000 on 31-3-2020, which was not accounted
- Travelingexpenses include Rs 50,000 being cost of trip to Singapore by an employee for 10 However, only8 days of trip is useful to business and 2 days has been allowed as holiday to employee.
- Rentincludes expenditure on extension of shed on rented building Rs 26,000. However, such extension wascompleted on 1-5-2021 with total cost of Rs 50,000.
- Generalexpenses includes –
- Salaryof Rs 1,200 paid to domestic
- Compensationof Rs 2,000 paid for retrenchment of an Compute his business income for the A.Y. 2021-22
.Compute his business income for the A.Y. 2022-23 (15 Marks)
- Duringthe previous year 2020-21, profit and loss account of Shri Raj, proprietor of Raj Enterprises engaged in the business of readymade garments, shows profits of Rs 1,50000. With the following information, compute his taxableincome from business –
- Intereston capital Rs 5,000
- Purchasesinclude goods of Rs 12,000 from his younger brother in However, market value of such goodsis Rs 9,000.
- Interestpaid outside India Rs 1,00,000 without deducting tax at
- Penaltypaid to Government for non-filing of GST return Rs 5,000
- e) Penaltypaidto customer for non-fulfilling of order within time Rs 10,000
- Baddebts Rs 1,00,000. Money has been advanced for purchase of
- Revenueexpenditure on promoting family planning among employees Rs 10,000.
- Premiumpaid on health of employees Rs 6,000 in cash
- Premiumpaid on health of his relatives Rs 6,000 in cheque
- Employer’scontribution to RPF Rs 12,000. One-half of the amount is paid after due date as per relevant Act but before 31-3-2021.
- Employeescontribution to RPF Rs 10,000. ½ of the amount is paid after due date as per relevant
- Interest on latepayment of professional tax Rs 1,000 (yet to be paid)
- Intereston loan from State Bank of India Rs 10,000 (Rs 5,000 is not paid till due date of filing of return)
- Intereston late refund from income tax department Rs 500
- Saleincludes sale to Raj Rs 10,000. (Cost of such goods Rs 8,000; Market value of such goods Rs 12,000)
- Hereceived Rs 80,000 from a debtor at a time in
- Recoveryof bad debt Rs 10,000 (out of which Rs 8,000 was allowed as deduction during Y.2016-17)
- Depreciation(being not debited in accounts) Rs 20,000 allowed as deduction u/s 32
(20 Marks)
- Alihas 10,000 shares of X (P) acquired on 15/05/1981 for Rs 12 each. On 15/07/1983 he converted 6,000 of such shares into stock in trade. On that date, market value of such share was Rs 15 each. On 1/05/2007, he further converted 2,000 of such shares into stock in trade. On such date, market value of the share was Rs 30 each. On 17/02/2021, he sold all shares for Rs 225 each. Brokerage incurred 2%. State tax treatment. Fair market value of suchshares as on 01-04-2001 was Rs 16/- (10 Marks)
- Balancesheet of Purva India (P) as on 31/12/2020
Liabilities | Amount | Assets | Amount |
Equity Share capital of Rs 10 each | 8,00,000 | Land | 6,00,000 |
Preference Share capital | 1,00,000 | Building (WDV as per IT Act) | 3,00,000 |
Reserves | 2,00,000 | Machinery (WDV as per IT Act) | 4,00,000 |
Loan | 6,00,000 | Current Asset | 10,00,000 |
Creditors | 6,00,000 | ||
23,00,000 | 23,00,000 |
Additional information
Company went into liquidation on the balance sheet date and all current assets and building realized at book value. The realized money was applied in payment of outside liabilities and preference shareholder. Utkarsh is aholder of 10% equity share and 20% preference share of the company. Equity shares were originally acquired byhim on 16/08/2002 at face value. However, he subscribed to preference share on 1-04-2020, which was issued at par. He received a part of land (MV Rs 5,00,000) and cash (for preference share) Rs 20,000. Compute capital gain in hands of company & Utkarsh.
(15 Marks)
- Computetaxable income under the head Income from other sources of X from the following data:
Particulars | Amount |
Private tuition fee received | 10,000 |
Winning from lottery | 2,000 |
Award from KBC (a TV show) [Gross] | 3,20,000 |
Pension from employer of deceased husband | 25,000 |
Interest on bank deposit | 25,000 |
Directors fee (Gross) | 5,000 |
Letting out of vacant land | 25,000 |
Remuneration for checking the examination copy of employer’s school | 10,000 |
Remuneration for checking the examination copy of C.A | 10,000 |
Income tax refund | 5,000 |
Interest on income tax refund | 100 |
Composite rent (related expenditures are Rs 5,000) | 10,000 |
Rent on sub-letting of house property (rent paid to original owner Rs 12,000) | 20,000 |
Income tax paid | 2,000 |
Payment made for personal expenses | 18,000 |
Payment made to LIC as premium | 2,000 |
(10 Marks)
- Ram (38 years) has incurred following expenses:
Particulars | Rs |
Mediclaim Insurance premium paid for himself | 9,000 |
Mediclaim Insurance premium paid for spouse | 8,000 |
Mediclaim Insurance premium paid for dependent children | 6,000 |
Mediclaim Insurance premium paid for father (62 years) | 18,000 |
Preventive health-check up expenditure for father | 6,000 |
Preventive health-check up expenditure for himself (paid in cash) | 4,000 |
Compute deduction available to Mr. Ram u/s 80D. (6 Marks)
- PCo-operative Society furnishes following details of income, compute taxable income for the purpose of Y.2021-22:
Income from collective disposal of labour | Rs 25,000 |
Income from marketing of the agricultural produce grown by its member | Rs 30,000 |
Income from marketing of the agricultural produce grown by outsider | Rs 3,000 |
Dividend from another co-operative society | Rs 15,000 |
Income from processing of agricultural produce of its member with aid of power | Rs 50,000 |
(6 Marks)
- Findout the amount of advance tax payable by ABC on specified dates for the F.Y. 2020-21:
Business income | Rs 1,75,000 |
Long term capital gain on 31-7-2020 | Rs 2,50,000 |
Bank interest | Rs 10,000 |
TDS on business income | Rs 20,550 |
(8 Marks)