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Direct & Indirect Taxes
Time: 3 Hours
APRIL - 1998
Marks: 100
 
 
SECTION - I
 
Q. 1. Ms. Trupti, a practising lawyer, furnishes the following particulars of her receipts and payment account prepared for the year ended 31st March, 1997.
 
 
Receipt
Rs.
Payments
Rs.
To Balance b/f
5,000
By Computer purchased
70,000
To Fees from clients
1,25,000
By Printer purchased
10,000
To Salary from college as lecturer
45,000
By Interest on loan
12,000
To L.I.C. (Policy matured)
40,000
By General Expenses
22,000
To Gift from a client
15,000
By Office Salaries
20,000
To Income tax Refund
10,000
By Computer Stationery
10,000
To Interest P.P.F. A/c
5,000
By Gifts to staff & clients
10,000
To Gift from mother
10,000
By Mediclaim Insurance
12,000
    By Household withdrawals
32,000
    By Membership fees
5,000
    By Income tax paid
20,000
    By Donation to Air Force Central Welfare Fund
10,000
    By Car expenses
10,000
    By Balance c/d
12,000
Total
2,55,000
Total
2,55,000
 
  Other Informations:
 
  i) Half of the car expenses for personal use.
 
  ii) The loan was taken for purchase of furniture for her residence.
 
  iii) Depreciate: Computer and Printer @ 25% p.a.
 
  iv) Books worth Rs. 2,000 purchased for her son, included in general expenses.
 
  v) Household withdrawals include rent paid for her own residence Rs. 1,000 per month.
 
  Compute her total taxable income for the assessment year 1997-98.
 
   
 
Q. 2. Mr. Rajesh is a sales manager of Raj Ltd. provides you the following information for the year ending 31st March, 1997.
15
  a) Basic Salary Rs. 6,500 per month.
 
  b) Dearness allowance Rs. 1,000 per month.
 
  c) Bonus Rs. 8,000.
 
  d) Commission 1% on sales for the year was Rs. 15,00,000.
 
  e) Perquisite value Rs. 7,500.
 
  f) Educational allowance Rs. 300 per month (exempted Rs. 100 per month)
 
  g) Entertainment allowance Rs. 825 per month since 1st January, 1990.
 
  h) Professional tax deducted Rs. 700.
 
  Mr. Rajesh has made following Investments.
 
  I) 14% debenture in D.C.M. Ltd. Rs. 50,000.
 
  II) 11% Fixed Deposit with S.B.I. Rs. 25,000.
 
  Mr. Rajesh Donated Rs. 10,000 to Prime Minister National Relief Fund and spent Rs. 20,000 on dependent brother who is physically handicapped.
 
  Compute the total Taxable Income of Mr. Rajesh of the assessment year 1997-98.
 
   
 
Q. 3. Shree Maneklal has let out the house property situated at Mumbai, for residential purposes. The construction of this house was commenced in January, 1991 and completed on 31st March, 1992. Other particulars of the house during the year 1996-97 are as follows:
15
  i) Municipal valuation Rs. 40,000.
 
  ii) Rent received Rs. 4,050 per month.
 
  iii) Standard Rent Rs. 35,000.
 
  iv) Fire Insurance Premium Rs. 5,000.
 
  v) Municipal Taxes Rs. 7,000 paid by tenant.
 
  vi) Interest on capital borrowed for repairs Rs. 6,000. (out of which Rs. 1,000 ore outstanding)
 
  vii) Ground rent Rs. 7,000.
 
  viii) Repair Rs. 3,000.
 
  ix) Annual Charges created by his father by will in favour of his sister Rs. 8,000.
 
  x) The house remained vacant for two months during the year.
 
  xi) Collection charges Rs. 1,000.
 
  He also received the following sums during the year: Rs. 200 interest on Post Office Savings Bank. Interest on bank Fixed Deposits Rs. 15,000. Dividend from Unit Trust of India Rs. 2,000. Income Tax refund Rs. 4,900 (Including Interest Rs. 900) Winning from Horse Race Rs. 6,000 Director's Fees from Sun Ltd. Rs. 2,000 Accrued interest on Indira Vikas Patra Rs. 3,000.
 
  Calculate his total Income for the assessment year 1997-98.
 
   
 
Q. 4. Miss. Cindy, a resident of U.S.A. came to India for the first time on 1st may, 1990. She stayed here without break for 3 years and left for Japan on 1st May, 1993. She returned to India on 1st April, 1994, and got back to U.S.A. on 1st December, 1994. She was posted back to India on 20th January, 1997, and is still here. Determine her residential status for the Previous Year ended on 31st March, 1997, giving explanation for your answer.
15
   
 
Q. 5. a) Define and explain any two of the following as per Income Tax Act, 1961 -
15
  i) Annual Value
 
  ii) Person
 
  iii) Assessment.
 
   
 
  b) Enumerate Eight items and discuss any three items of expenses which are expressly not allowed as deduction while computing income from profits and Gains of Business and Profession, under the Income Tax Act, 1961.
15
   
 
Q. 6. "Rate of Tax differs in different circumstances", explain with reference to the provision of Section 8 of the Central Sales Tax Act.
 
 
OR
 
Q. 6. a) Define and explain the term Dealer as per the provision of the Central Sales Tax Act 1956.
10
  b) State with reasons whether the following person is dealer or not as per provision of the Central Sales Tax Act, 1956 (any two):
10
  i) Trader in machinery parts
 
  ii) Artist
 
  iii) Chartered Accountant.
 
   
 
Q. 7. a) Define and explain the term "Manufacture" as per the provision of Bombay Sales Tax Act 1959.
10
  b) Explain with reasons whether the following activities are manufacturing activities as per the provision of the Bombay Sales Tax Act 1959. (any two):
 
  i) Assembling cycle from various parts.
 
  ii) Polishing furniture.
 
  iii) Refining of Crude oil.
 
  iv) Repairing machinery.
 
 
OR
 
  Write briefly the provisions of Section 42 of the Bombay Sales Tax Act 1959 in respect of Drawback-Set off-refund etc.
 
   
 
Q. 8. Rajashri is a manufacturer. From the following details find out from which month she is liable for registration as per the provisions of the Bombay Sales Tax Act 1959. Give reasons for your answer:
 
 
Month
Purchases Taxable
Production Taxable Within Maharashtra
Sales Taxable Within Maharashtra
Within Maharashtra
Within Maharashtra
 
Raw Material
Machinery
   
March 97
20,000
1,00,000
-
-
April 97
15,000
-
-
-
May 97
18,000
-
10,000
15,000
June 97
-
-
25,000
20,000
July 97
-
30,000
-
9,000
Aug. 97
40,000
-
10,000
20,000
Sep. 97
20,000
-
15,000
30,000
 
 
OR
 
Q. 8. Azad Store is registered dealer gives you following details of sales for the month of -
10
  Computer Sales Tax Liability under Bombay Sales Tax Act, 1959 monthwise.
 
   
 
Q. 9. Explain briefly any two of the following under the Central Excise and Salt Act.
10
  i) Excisable goods
 
  ii) Self removable procedure
 
  iii) factory
 
 
OR
 
Q. 9. Explain the basis of a charge of excise duty as per Section 3 of the Central Excise and Salt Act, 1944.
10
   
 
Q. 10. M/s. DDK Industries manufactures "Z" product. Retail price of the product is Rs. 200 per 5 unit.
10
  Group A type dealers are eligible for 10% discount.
 
  Group B type dealers are eligible for 15% discount.
 
  Group C type dealers are eligible for 20% discount.
 
  Company has scheme of giving 5% quantity discount to those dealers whose purchases are atleast 10% more than their own purchases in previous month. Additional discount was granted on excess quantity purchases. Purchases for the month of August 1997 are as follows:
 
 
 
January 98
Amount
Rs.
February 98
Amount
Rs.
March 98
Amount
Rs.
Gross sales including sales tax @ 13% (Schedule C goods)
11,30,000
5,65,000
9,04,000
Labour charges received
2,00,000
3,00,000
5,00,000
Sales against Form 14 (excluding Sales tax)
5,00,000
4,00,000
3,00,000
Resale (Schedule A goods)
3,00,000
5,00,000
6,00,000
OMS sales (excluding sales tax) (Out of Maharashtra)
4,70,000
2,35,000
1,96,000
Total turnover
26,00,000
20,00,000
25,00,000
 
  Rate of excise duty is 10% per unit.
 
  Find out total excise duty payable.
 
   
 
 
OR
 
 
Dealer
Total Unit sold
Units eligible for extra discount
A
2,000
300
B
1,000
250
C
3,000
400
 
Q.10. M/s. Vighnaharta & Co. is manufacturer of excisable goods. From the following particulars prepare Personal Ledger Account for the month of August, 1997 in statutory form. Balance as on 1-8-97 Rs. 20,000
10
 
Date Particulars
8-8-97 Amount deposited in Union Bank of India Rs. 50,000 as excise deposits against challan No. 410.
14-8-97 Goods cleared as per invoice No. 680 drawn on M/s Vitthal & Co. Pandharpur paying excise duty Rs. 24,600.
20-8-97 Goods cleared as per invoice No. 681 drawn on Balaji & Co. Tirupathi. Assessable value Rs. 2,00,000. Rate of Excise duty Rs. 10%.
25-8-97 Excise deposit Rs. 10,000 deposited in Union Bank of India as per challan No. 411.
31-8-97 Goods cleared as per invoice No. 682 on Ram & Co. Nasik, paying excise duty Rs. 20,400.

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