The Institute of Cost and Works Accountants of India 2008 Certification CWA/ICWA Applied Direct Taxation - Test 4 - Question Paper
PAPER-7 APPLIED DIRECT TAXATION
TEST PAPER - I/7/ADT/2008/T-4
Time Allowed: 3 Hours Full Marks: 100
Answer Question No. 1 is compulsory and any two from the rest in this section.
Q1) (a) Choose the correct answer: 1* 8=8
(i) The registration of a charitable trust can be cancelled under section 12AA
of the Income-tax Act 1961 by;
(a) Assessing officer;
(b) Commissioner of Income-tax;
(c) Chief Commissioner of Income-tax;
(d) Central Board of Direct Taxes.
(ii) X ltd has failed to remit the tax deducted at source from annual rent of
Rs.6,60,000 paid to Mr. A for its office building. Said rent is
(a) Fully allowable as a business expenditure
(b) Not allowable in view of section 40(a) (i);
(c) Allowable to the extent of 50%
(d) None of the above.
(iii) In respect of listed shares held for 10months sold on 12.8.2007, the rate of
tax in respect of capital gains is;
(a) 10%
(b) 20%
(c) 15%
(d) Not determinable, as the capitals gains will form part of the total income whose other components are not known.
(iv) In case of an investor in shares, in respect of shares sold, securities transaction tax paid (at the time of purchase of the said shares earlier)
(a) To be added to the cost of acquisition;
(b) To be deducted as expenditure connected with transfer;
(c) Not deductible at all while computing capital gains;
(d) None of the above.
(v) Expenditure incurred in carrying out illegal business is;
(a) Not allowable as deduction in any case;
(b) Allowable as deduction, if gross total income is less than Rs.5 Lakhs;
(c) Allowable as deduction, in all cases;
(d) Allowable as deduction, if income from illegal business is offered.
(vi) Any income chargeable under the head Salaries is exempt from tax under section 10(6) (viii), if it is received by any non-resident individual as remuneration for services rendered in connection with his employment in
foreign ship where his total stay does not exceed a period of _________days
in that previous year;
(a) 90
(b) 182
(c) 60
(d) 120
(vii) Validity period of stay recovery granted by ITAT is;
(a) 180 days;
(b) One year;
(c) Till final order is passed by the Tribunal;
(d) Three years
(viii) In case of a rural hospital built after 31.3.2007 fulfilling the required conditions laid down in section 80IB (11), the profits and gains derived from running the hospital are;
(a) Deductible in full;
(b) Deductible to the extent of 50%;
(c) Deductible to the extent of 75%;
(d) Taxable in full,
(b) Please state regarding admissibility of the following expenditure in computing the business income:
(i) Interest for late payment or non-payment of advance tax;
(ii) Legal charges for obtaining loan from financial institutions;
(iii) Expenses incurred in developing software programme;
(iv) Additional depreciation on second hand machinery purchased.
(v) Penalty paid for non-submission of VAT audit report in time;
(vi) Annual listing fees paid to stock exchanges;
(vii) Insurance premia paid by a firm on life insurance policies of its partners;
(viii) Penalty of a compensatory nature paid for breach of a contract. 8
(c ) Write short notes
1) Section 43B
2) Special economic zone under Section 10A 2*2=4
Q2) (a) Discuss tax treatment of House Rent Allowance 2
(b) An assessee had raised invoice of Rs. 20,000 in A.Y. 2002-03. He has not received the amount, but is very much hopeful of getting the amount. However, he has provided for that amount amount in provision for bad & doubtful debts, as three years are over. Can he claim deduction as a bad debts? 2
(c) Explain the terms Terminal Depreciation & Balancing Charge 4 (d What are the instances when income of previous year is charged in previous itself
8
Q3) Dr. Krishna furnishes you the following information :
_Income & Expenditure Account for the year ended 31/03/08_
Expenditure_in Rs. Income_in Rs.
To Medicine Consumed 242,000 By Fees Receipts
8,47,500
To Staff Salary 1,65,000 By Rent
27,000
|
To Hospital Consumables 47,500 9,000 To Administrative Expenses 60,000 To Rent Paid 1,23,000 To Net Profit 2,46,000 |
By Dividend from Indian Companies |
8,83,500 8,83,500
Additional Information:
(i) Rent paid includes rent for his residential accommodation of Rs. 30,000 (paid
by cheque).
(ii) Hospital Equipment (eligible for depreciation @15%)
01.04.07 Opening WDV Rs.5,00,000
07.12.07 Acquired (Cost) Rs.2,00,000
(iii) Medicine consumed include medicines (cost) Rs. 10,000 used for Dr. Krishnas family
(iv) Rent received relates to a property situated at Mysore (Gross Annual Value). The municipal tax of Rs. 2,000 paid in December 07 has been included in the Administrative Expenses.
(v) He received Rs. 5,000 p.m. as salary from Full Care Hospital. This has not been included in the Fee Receipts credited to Income & Expenditure A/C.
(vi) He sold a vacant site in July 06 for Rs 5,00,000. It was inherited by him from his father in January 2000. The site was acquired by his father in December 1992 for Rs. 1,50,000.
Compute Dr. Krishnas taxable income for the year ended 31/03/2008. 16
Q4) (a) From the following data furnished by R, determine the income of house property 31/03/2008 :
Rs.
Annual value as per municipal records 1,60,000
Rent received from tenant 1,44,000
Municipal Tax paid by tenant on behalf of R 10,000
Interest on Borrowing Cost 10,000
Repairs on property paid by tenant 6,000
Refundable Deposit collected from tenant as a security deposit which does not carry any interest 3,00,000
The difference between unbuilt area & specified area is 10%
10
(b) ABC is a partnership firm carrying on business, in which A,B&C are the partners sharing profits &loss equally-In respect of A.Y.2008-09, it furnishes the following particulars :
(1) Loss as per Profit &Loss Account after debiting remuneration to partners &sharing on their capital . Rs.2,50,000
(2) Remuneration to partners :A-90,000; B-60,000; C-30,000; in total 1,80,000
(3)Interest paid on capital :
Capital as on 01/04/2007 Interest
B Rs. 1,00,000 Rs. 20,000
C Rs. 1,00,000 Rs. 20,000
You are required to workout the income of the firm & of the partners A, B & C assuming that the partners have no others income 6
Q5) Mr. X came to India for the first time on 1st November, 2007. During his stay in India up to 30th October, 2008 he stayed at Bombay up to 10th May, 2008 and thereafter remained in Bangalore till his departure from India. Determine his residential status for the Assessment Year 2009 -10. 4
Q6) X (36 Years) received the following emolument during the previous year 2008 - 09
|
Basic Pay |
Rs.52,000 |
|
Commission |
Rs.26,000 |
|
Free car facility for X and his family member only for private use (expenditure of the employer including normal wear and tear Rs.21,000) |
Rs. 21,000 |
|
Entertainment allowance |
Rs. 3,000 |
On October 1, 2008 the employer gives a housing loan of Rs. 170000 at 11 per cent per annum(repayable in 15 years )
He contributes Rs. 6000 towards recognized provision fund his income from other sources is Rs. 100000.
Determine the taxable income and tax liability for the assessment year 2009 - 10 if :
(a) X is an employee of POR, a partnership firm
(b) X is an of Haryana Government since 1964.
12
Q7) X purchased the following capital assets
|
Year of |
Cost |
Fair market value | |
|
purchase |
Rs. |
on April 1, 1981 Rs. | |
|
Gold |
1974-75 |
20,000 |
60,000 |
|
Shares in Atul Ltd. (unlisted) |
1979-80 |
1,10,000 |
70,000 |
X dies on Augest 5, 1997 and as per his will these assets are transferred to his son B.B sells these assets on June 5, 2008 for a total consideration of Rs. 11,50,000 (gold: 740000, shares: Rs. 4,10,000). Find out the amount of capital gains chargeable to tax for the assessment year 2009-10.
Q8) X, a resident individual, submits the following information, relevant for the previous year ending March 31, 2009:
|
Particular |
Rs. |
|
Income from salary (computed) |
30,000 |
|
Income from house property | |
|
House I |
6,000 |
|
House II |
(-)25,000 |
|
House III (self computed) |
(-)5,000 |
|
Profit and Gains of business or profession | |
|
Business I |
8,000 |
| ||||||
|
Determine the net income for the assessment year 2009-10. 8 |
|
Attachment: |
| Earning: Approval pending. |
