NATIONAL MANAGEMENT COLLEGE – THUDUPATHY
MODEL EXAMINATION – 1
COURSE : CA INTERMEDIATE (2022-23)/GROUP 1
SUB: TAXATION MARKS: 100 MARKS TIME : 3 HOURS/20/2/2023
ANSWER THE FOLLOWING QUESTIONS
- Mr. S is the manager of a private company at Delhi since 1/3/2020. He is in the grade of
*15,000 – 1,000 230,000, plus a DA @ 10% of his basic salary, half of which enters into retirement benefits. He has contributed 14% of his basic salary in RPF account. His employer contributes an equal amount. During the PY he took a loan of Rs.1,00,000 from his provident fund for his daughter’s marriage out of which he repaid Rs.20,000 during the year by way of deduction from his salary. He has been provided with rent-free house for which the company pays rent of Rs.90,000 pa. He is getting transport allowance of Rs.4,800 pm. He is also getting fixed medical allowance of Rs.3,500 pm and tiffin allowance of Rs.2,500 pm. His club bills of Rs.25,000 were also paid by the company. Facility of club was used for the official purposes. He received Rs.16,000 by way of encashment of leave on 31/3/2022. He has been provided with the facility of a gardener and a cook who are paid each 2,000 pm by the employer. He is also provided with a laptop costing Rs.1,00,000 for personal use. Two children of Mr. S are studying in the school run by the employer for which no fees are paid. Expenditure per student in the similar school is Rs.1,500 pm. His salary falls due on the first day of the next month. He paid LIC premium on the life of his major son 15,000. He has invested Rs.1,00,000 in fixed deposit with Punjab National Bank for a period of three years. Compute his total income for the AY 2022-2023 i.e. PY 2021-2022. (10 Marks)
- Mr. K owns the house property of which 60% is let out on rent of Rs.6,000 pm and 40% is
self-occupied. The let out portion was also self-occupied during April and May 2021. Municipal Value of the house is Rs.72,000 and fair rent is Rs.70,000. Taxes paid for the house property are Rs.6,000. He took the loan of Rs.3,00,000 @ 12% pa for the construction of the house on 1/4/2016 and the construction was completed on 31/1/2021. Compute the income under head house property for AY 2022-2023 i.e. PY 2021-2022. (10Marks)
3.Jay Ltd is a manufacturing company and started the business on 1/4/2021.It gives you the following information from which calculate its business income and total income.
Profit and loss account
|Particulars||Amount in Rs||Particulars||Amount in Rs|
|Adjusted purchases||21,80,000||Outward supply||45,70,000|
|Salaries and wages||2,00,000||Dividend of Indian company||5,000|
|Electricity expenses||80,000||Interest on debentures||30,000|
|Telephone expenses||20,000||Rent of house property||2,40,000|
|Municipal taxes for HP payable||21,000|
|Interest for house property||18,500|
|Advertisements in publication of political party||22,000|
|Purchase of new palnt & machinery||2,00,000|
|Purchase of car||3,00,000|
|Personal expenses of directors||50,000|
|Purchase of non residential building||10,00,000|
|Donation paid to IIT||2,00,000|
|Income tax paid||1,00,000|
|Customs duty paid||75,000|
|Penalty for the late payment of custom duty||50,000|
- Jay ltd owns a building of which ground floor is used for the business purpose and the first floor is let out
2.Rs.1,00,000 of purchases are cash purchase
3.Electricity and telephone expenses outstanding are Rs.20,000 and are not recorded in the Books of accounts
- Plant & machinery was purchased on 15/7/2021 but was put to use on 15/12/2021
- Car & non residential building were put to use on 15/4/2021
6.A donation to IIT was given with the specific directions to use the money for the research in pollution control which has been approved by the Central government
7.Company had given a donation to PMNRF of Rs.25,000 which has not been recorded in the books of accounts
- As on 31/3/2022 the company has a capital employed of Rs.15,40,000 and the total cost of fixed assets is Rs.15,00,000
9.Municipal taxes and interest on the borrowed capital for the house have been paid between 1/4/2022 and 31/7/2022. (10 Marks)
4.From the profit & loss account of Mr.Ram for the year ended 31/3/2022, compute his income from business for the A Y 2022-2023 ie PY 2021-2022
|Particulars||Amount in Rs.||Particulars||Amount in Rs|
|Reserve for bad debts||3,000||Commission||1,205|
|Loss on sale of car||1,200|
|Interest on capital||1,000|
|Interest on bank loan||1,550|
|Transferred to reserve||3,000|
|Life insurance premium(self)||550|
|Loss of part of building by fire (uninsured)||1,500|
On Building 1000
On Furniture 200
|Difference in trial balance||105|
The amount of depreciation allowable as per Income Tax rules in respect of building and furniture was Rs.800 and Rs.150 respectively. A sum of Rs.1000 is included in the advertising expenses expended on a special advertising camping undertaken during the year in respect of a product of a company placed recently in market. Salaries include Rs.3000 being the amount drawn by Mr.Ram during the year.
5.Mr.C purchases a house property for Rs.1,06,000 on 15/5/1975. The following expenses are incurred by him for making addition / alteration to the house property:
|Cost of construction of first floor in 1982-1983|
Cost of construction of the second floor in 2002-2003
Reconstruction of the property in 2012-2013
FMV of the property on 1/4/2001 is Rs.8,50,000/-. On the same date SDV has been Rs.8,75,000. The house property is sold by Mr.C on 10/8/2021 for s.68,00,000 (expenses incurred on transfer :Rs.50,000). Compute the capitl gains.
6.Compute income from other sources of Mr.Arun for the A.Y 2022-2023 from the following receipts:
|Agricultural income from land in Punjab||24,000|
|Directors meeting fees from PQR ltd||6,000|
|Agricultural income from Nepal||36,000|
|He had deposited Rs.300000 in pension scheme of LIC in the earlier years.Amount received as annuity from there||24,000|
|Winnings from lottery received net of TDS (expenses incurred on purchasing lottery ticket Rs.500)||7,000|
|During the year he rented furniture lying unused after repairing the same to his friend for twelve months.rental income earned by him||16,000|
|Repairs of furniture (wdv as on 1/4/2021 was Rs.20,000 and rate of depreciation is 10%)||4,000|
|Honorarium from a co operative society of which he is a member cum advisor||50,000|
7.Compute the GTI of Mr.F for the A.Y 2022-2023 ie PY 2021-2022 from the information given below:
|Net income from house property|
Income from business(before providing depreciation)_
STCG on sale of shares
LTCL from sale of property (b/f from AY 2021-2022)
Net profit from business of growing and manufacturing tea
Dividend from Indian companies carrying on agricultural operations
Current year depreciation
B/F business loss ( loss incurred 6 years ago)
8.Mr.Raja is a shareholder of D ltd holding 35% of shares. His wife is employed in the same company.She is getting the salary of Rs.25,000 pm, allowances of Rs.2000 pm and pays the professional tax of Rs.200 pm. Her salary does not match her qualifications or experience. Mr. Raja is owner of shop from which he earned Rs.50,000 pm as rent.Municipal taxes paid by him are Rs.10,000 pa.Both husband and wife have earned Rs.2,00,000 p.a each as interest from debentures. Calculate their total incomes for the A.Y 2022-2023. (10 Marks)
9.Mrs.Mitul,a resident individual,aged 63 years is a qualified medical practioner.She runs her own clinic.Income &expenditure A/c of Mrs. Mitul for the year ending 31/3/2022 is as under:
|Expenditure||Amount Rs||Expenses||Amount Rs|
Power & fuel
Interest on housing loan
Interest on education loan for son
Salary received from True Care Hospitals(p) ltd
Rental income from house property
Dividend income from foreign companies
|Basic pay||13,000 pm|
|Transport allowance||2,000 pm|
Further, during AY 2022 2023 e PY 2021-2022, her son had undergone a medical treatment in True Care Hospitals (P) Ltd. free of cost. The hospital would have charged a sum of 60,000 for a similar treatment to un-related patients
1)She owns a residential house, Ground floor of the house is self-occupied by her while first floor has been rented out since 1/102021. The reconstruction of the house was started on 1/4/2021 and was completed on 30/9/2021. The monthly rent is Rs.10,000. The tenant also pays Rs.3,000 pm as power back-up charges She took a housing loan of 12,00,000 on 1/4/2021. Interest on housing loan for the period 1/4/2021 to 30/9/2021 was Rs.60,000 and for the period 1/10 2021 to 31.3.2022 was Rs.40,000. During the year, she also paid municipal taxes for the FY 2020-2021 5,000 and for FY 2021-2022 rs.5,000.
2) Other information
(a) Conveyance expenses include a sum of 12,000 incurred for conveyance from house to True CareHospitals (P) Ltd. and vice-versa in relation to her employment
(b) Power & fuel expenses include a sum of Rs.6000 incurred for generator fuel for providing power back up to the tenant.
(c) Administrative expenses include a sum of 10,000 paid as Municipal Taxes for her house.
(d) Clinic equipments details are:
Opening WDV of clinic equipment as on 1/4/2021 was RS.1,00,000 and fresh purchase made on 20/8/2021 is 25,000 which was paid in cash.
(e) She also paid nation fee of 40.000 for her grand-daughter, which has been debited to her Capital A/c.
(f) She availed a loan of 800,000 from bank for higher education of her son. She repaid principal of Rs.50,000 and interest of 26000 during AY 2002-2003 ie PY 2021-2022.
(g) Amount paid to scientific research association approved & notified u/s 35 Rs.25,000
You are required to compute her net taxable income and net tax liability for AY 2022 2023 i.e PY 2021-2022 (10 Marks)
10.Answer all the questions (4*5=20 Marks)
Examine with reasons, whether the following statements are true or false, with regard to the provisions of the Income-tax Act, 1961:
(i) The Assessing Officer has the power, inter alia, to allot PAN to any person by whom no tax is payable.
(ii) Where the Karta of a HUF is absent from India, the return of income can be verified by any male member of the family.
Mr.Aakash has undertaken certain transactions during the F.Y.2023-23, which are listed below. You are required to identify the transactions in respect of which quoting of PAN is mandatory in the related documents —
1. Payment of life insurance premium of ₹45,000 in the F.Y.2022-23 by account payee cheque to LIC for insuring life of self and spouse
2. Payment of ₹1,00,000 to a five-star hotel for stay for 5 days with family, out of which ₹60,000 was paid in cash
3. Payment of ₹80,000 by ECS through bank account for acquiring the debentures of A Ltd., an Indian company
4. Payment of ₹95,000 by account payee cheque to Thomas Cook for travle to Dubai for 3 days to visit relatives
5. Applied to SBI for issue of credit card.
Examine the applicability of tax deduction at source provisions, the rate and amount of tax deduction in the following cases for the financial year 2022-23:
(1) Payment of ₹27,000 made to Jacques Kallis, a South African cricketer, by an Indian newspaper agency on 02-07-2022 for contribution of articles in relation to the sport of cricket.
(2) Payment made by a company to Mr.Ram, sub-contractor, ₹3,00,000 with outstanding balance of ₹1,20,000 shown in the books as on 31-03-2023
(3) Winning from horse race ₹1,50,000 paid to Mr.Shyam, an Indian resident
(4) ₹2,00,000 paid to Mr.A, a resident individual, on 22-02-2023 by the State of Uttar Pradesh on compulsory acquisition of his urban land.
Mr.Jay having total income of ₹8,70,000, did not pay any advance tax during the previous year 2022-23. He wishes to pay the whole of the tax, along with interest if any, on filing the return in the month of July, 2023. What is total tax which Mr.Jay has to deposit as self-assessment tax along with interest, if he files the return on 29.07.2023? Assume that he does not exercise the option under section 115BAC.
Compute the amount of tax deduction at source on the following payments made by M/s S Ltd. during the financial year 2022-23 as per the provisions of the income-tax Act, 1961.
Sr.No Date Nature of Payment
(i) 1-10-2022 Payment of ₹2,00,000 to Mr.R, a transporter who owns 8 goods carriages throughout the previous year and furnishes a declaration to this effect alongwith his PAN
(ii) 1-11-2022 Payment of fee for technical services of ₹25,000 and royalty of ₹20,000 to Mr.Shyam who is having PAN
(iii) 30-06-2022 Payment of ₹25,000 to M/s X Ltd. for repair of building
(iv) 01-01-2023 Payment of ₹2,00,000 made to Mr.A for purchase of diaries made according to specifications of M/s S Ltd. Howerver, no materials was supplied for such diaries to Mr.A by M/s S Ltd or its associates
(v) 01-01-2023 Payment of ₹2,30,000 made to Mr.Bharat for compulsory acquisition of his house as per law of the State Government
(vi) 01-02-2023 Payment of commission of ₹14,000 to Mr.Y