| Direct and Indirect Taxation |
| Time: 3 Hours |
October – 2003 |
Marks: 100 |
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| N.B. : |
(1) |
Q.1 from Section I is compulsory carrying 22 marks. |
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(2) |
Answer any three questions from remaining questions from Section I carrying 16 marks each. |
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(3) |
Attempt Q.No. 7 to 9 carrying 10 marks each |
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(4) |
Answers to both the sections are to be written in same answer book. |
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SECTION I |
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| Q.1. |
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Mr. Vivekananda, the proprietor of M/s Saraswati Enterprise, give you the following information for the year ended 31st March, 2002.Profit & Loss Account for the year ended 31st March 2002
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Rs. |
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Rs. |
| To Salaries and Wages |
1,20,000 |
By Gross Profit B/d |
6,35,000 |
| " Printing & Stationery |
24,000 |
" Agricultural Income |
10,000 |
| " Motor Car Expenses |
29,000 |
" Interest on PPF |
5,000 |
| " Rent |
24,000 |
" Gift from father |
5,000 |
| " Business Promotion Expenses |
18,000 |
" Winning from Lotteries |
10,000 |
| " Advertisement Expenses |
45,000 |
" Interest on Post office Savings Banks |
2,000 |
| " Depreciation on Machinery |
33,000 |
" Bank Interest |
3,000 |
| " Donations |
28,000 |
" Accrued Interest on NSC |
6,000 |
| " Goods taken for Personal Exp. |
25,000 |
" Profit on Sale of Import Licence |
5,000 |
| " Advance I. Tax |
15,000 |
" Salary and Interest received Partnership firm from |
15,000 |
| " Embezzlement of Cash by Employee |
6,000 |
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| " Staff Welfare Exp. |
65,000 |
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| To Net profit C/d |
2,63,100 |
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| Rs. |
6,96,000 |
Rs. |
6,96,000 |
Other Information :
| (a) |
Depreciation allowable as per Income Tax rules Rs. 35,000 on Machinery (No depreciation has been provided on Motor Car). |
| (b) |
Half of the Rent, is attributable to his residential flat. |
| (c) |
Staff Welfare expenses include Rs. 15,000/- spent for his own medical treatment. |
| (d) |
Advertisement expenses include Rs. 6,000/- spent for launching a new product. |
| (e) |
Donation are made to the following :(i)Paid to National Foundation for commercial Harmony Rs. 10,000/-(ii)To Indira Gandhi Memorial Trust Rs. 9,000/-(iii)Paid to National Defence fund Rs. 8,000/-(iv)Rs. 1,000/- worth of medicines given to approved institutions. |
| (f) |
1/3rd (one third) of Motor Car expenses are considered as personal. |
You are required to compute his Total Income for the financial year 31st March, 2002, relevant to the assessment year 2002-03. |
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| Q.2. |
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Dr. Ram Bharose is employed with Bhagwan Hospital as a full time Doctor. Following are details of his income for the year ended 31st March 2002.
| (a) |
Basic salary Rs. 12,000 per month. |
| (b) |
D.A. @ 30% of Basic. |
| (c) |
H.R.A. Rs. 10,000 (Exempt u/s 10(3A) Rs. 4,500) |
| (d) |
He is provided conveyance facility for journey from his residence to hospital and back. |
| (e) |
Entertainment allowance Rs. 500 p.m. |
| (f) |
Arrears of salary Rs. 6,000. |
| (g) |
Profession Tax paid by him Rs. 2,400. |
| (h) |
Best Doctor Award given to him by Bhagwan Hospital Rs. 2,500. |
| (i) |
He was selected the best surgeon by the state government and was awarded “The Dhanvantari" award instituted in Public Interest Rs. 10,000. |
| (j) |
He received honorarium for presenting papers in various seminars Rs. 3,000. |
| (k) |
He was owning a surgical equipment which was given on hire to Dr. Laxman Prasad. Hire charges received by him were Rs. 30,000. The expenses on maintenance amounted to Rs.2,500 and allowable depreciation Rs. 4,500. |
| (l) |
He paid Rs. 16,000 by cash to LIC for pension fund. |
| (m) |
He paid by cheque for medical insurance as follows-
| (a) |
For self |
2670 |
| (b) |
For Wife |
2670 |
| (c) |
Dependent Children |
2670 |
| (d) |
Independent Parents |
2670 |
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10680 |
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Compute the net taxable income for A.Y. 2002-03. |
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| Q.3. |
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Mr. Yesaji owns three houses. House I is self occupied and house II & III are let out. The following information is available for the year ended 31/03/2002
| Particulars |
H-l |
H-ll |
H-lll |
| Fair Rent |
Rs.25,000 |
Rs.35,000 |
Rs.95,000 |
| Rent Received |
-- |
Rs.3,000 |
Rs.4,000 |
| Vacancy (Months) |
-- |
2 months |
-- |
| Municipal taxes paid by Yesaji |
Rs.3,000 |
Rs.4,000 |
Rs.5,000 |
| Repairs and Collection Expenses |
Rs.10,000 |
Rs.12,000 |
Rs.14,000 |
| Interest on Housing Loan |
Rs.4,000 |
Rs.10,000 |
Rs.15,000 |
He owns 4,000 equity shears in AB Ltd. a listed company. He had purchased them in September 1997 at Rs. 200 per share. He sold 50% of the shares in May, 2001 at Rs. 400 per share and balance 50% in October, 2001 at Rs. 500 per share. He paid brokerage of Rs. 30,000 on sale of shares. The cost inflation index for F.Y. 1997-98 is 331 and for 2001-2002 is 426. He paid Medical insurance premium of Rs. 5,000 in cash.Mr. Yesaji is a physically handicapped person. Compute his Net Taxable Income for A.Y. 2002-03. |
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| Q.4. |
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Mr. Anuj, an Indian citizen furnishes the following particulars of his income earned during the year (Previous Year) ended 31-3-2002 relevant to the Assessment year 2002-03.
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Rs. |
| (a) |
Interest on U.K. Development Bond. (Received in India) |
42,000 |
| (b) |
Profit on sale of plant on Malaysia (Fully Received in India) |
92,000 |
| (c) |
Profit on sale of property at Bombay (Received in India) |
1,04,000 |
| (d) |
Income from Business in Ceylon Controlled from India |
20,000 |
| (e) |
Rental income from property in New York deposited by a Tenant in a foreign Branch of Indian Bank deposited there |
25,000 |
| (f) |
Salary earned and received in New Zealand |
38,000 |
| (g) |
Pension from employer in India received in Mauritius |
60,000 |
You are required to find out his total Income if he is :-
| (a) |
Resident and ordinarily Resident in India. |
| (b) |
Resident but not ordinarily resident in India and |
| (c) |
Non-resident for the Assessment year 2002-03. |
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| Q.5. |
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Answer whether the following statements are correct with reason in one sentence, (any Eight):
| (a) |
Life Insurance premium paid by cash Rs. 5,000 is eligible for rebate u/s 88. |
| (b) |
The income earned Rs. 10,000 in the USA by Resident Indian is not taxable in India. |
| (c) |
The residential property let out for commercial purpose is not taxable as income from house property. |
| (d) |
Dr. Anand who is a full time employee of Jaslok Hospital receives professional fees of Rs. 50,000 from Jaslok hospital and claims it to be income from business & profession. |
| (e) |
Mr. Rajeev receives dividend of Rs. 15,000 from NKGSB Co. op Bank Ltd & claims it exempt u/s 10(33). |
| (f) |
Mr. Aditya sells his motor car for Rs. 1,00,000 on 28/02/2002 and claims depreciation for 11 months. |
| (g) |
Mr. Madhav spends Rs. 25,000 on medical treatment of his physically handicapped minor son who is dependent on him and claims deduction of Rs. 40,000 u/s 80 U. |
| (h) |
The minor daughter of Mr. Ramdas earns interest on Fixed Deposits Rs. 5.000/- which is clubbed with the income of Mr. Ramdas. |
| (i) |
Mr. Jawhar owns two houses both of which are not let out. Mr. Jawhar treats the annual value of both the houses as 'NIL' since both the houses are self occupied. |
| (j) |
Mr. Sham a retired person age 62 years claims rebate of Rs. 15,000 u/s 88 B from the amount of tax due of Rs. 17,000. |
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| Q.6. |
a) |
Enumerate any Eight items of investments/payments eligible for rebate u/s 88 of Income Tax Act. |
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b) |
Write a note on TDS from salaries u/s 192 of Income Tax Act. |
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SECTION II |
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| Q.7. |
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Define and explain the following under the Central Sales Tax Act, 1956 (any two)(1) Business (2) Sales Price (3) Sale |
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OR |
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| Q.7. |
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Explain the provisions of Sale/Purchase in Course of Inter-State trade u/s 3 of Central Sales Tax Act, 1956. |
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| Q.8. |
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Define and explain the following according to Bombay Sales Tax Act 1959 (any two):(1) Goods (2) Dealer (3) Purchase Price. |
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OR |
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| Q.8. |
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Explain the provisions u/s 11 of Bombay Sales Tax Act 1959 relating to tax at reduced rate. |
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| Q.9. |
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Mr. Ponting is a dealer. From the following information find out which day he will be liable to pay tax. Give reasons for your answer:
| Date |
Purchase |
Sales |
| Taxable |
Tax free |
Taxable |
Tax free |
| 2/4/01 |
10,000 |
15,000 |
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— |
| 4/4/01 |
— |
— |
6,000 |
14,000 |
| 10/4/01 |
20,000 |
40,000 |
5,000 |
10,000 |
| 20/4/01 |
— |
— |
10,000 |
40,000 |
| 30/4/01 |
40,000 |
60,000 |
— |
— |
| 2/5/01 |
— |
— |
50,000 |
15,000 |
| 10/5/01 |
5,000 |
20,000 |
10,000 |
30,000 |
| 20/5/01 |
10,000 |
10,000 |
15,000 |
15,000 |
| 31/5/01 |
— |
— |
10,000 |
10,000 |
| 01/06/01 |
15,000 |
15,000 |
20,000 |
20,000 |
| 03/06/01 |
5,000 |
10,000 |
20,000 |
30,000 |
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OR |
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| Q.9. |
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Mr. Jayasurya, a registered dealer gives you the details of sales for the month of Dec. 2001 as follows:
| (1) |
Sale of Goods covered by Sch. A (Rate of Tax NIL) |
Rs. 4,00,000 |
| (2) |
Sale of Goods covered by Sch. B (Rate of Tax 2%) |
Rs. 2,00,000 |
| (3) |
Sale of Goods covered by Sch. C (Rate of Tax @ 10% |
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(i) OMS Sales against from C @ 4% CST |
Rs. 1,50,000 |
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(ii) Resale of goods which were purchased from registered dealer (certificate u/s 12 A (1)) received, |
Rs. 4,00,000 |
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(iii) Sale of Goods Taxable at Full Rate |
Rs. 1,00,000 |
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Rs. 12,50,000 |
Compute the Sales Tax liability for the month of Dec. 2001. |
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