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Direct & Indirect Taxes
Time : 3 Hours
October - 1998
Marks : 100
 
Section I
Q.1. The following is the Profit & Loss Account of Mr. Krutik. Compute his total taxable income for the Assessment Year 1997-98. 20
 
 
Rs.
 
Rs.
To  Salaries and Bonus
‘’    Provision for doubtful      debts
‘’    Printing & Stationary
‘’    Entertainment Exp.
‘’    Bad Debts
‘’    Interest on capital
‘’    Advertisement exp.
‘’    General Expenses
‘’    Donations
‘’    Adv. Income tax paid
‘’    bank charges for      collection of  dividends
‘’    Office Rent
‘’    Depreciation
‘’    Net Profit

 
45000 

10,000 
6,000 
25,000 
5,000 
5,000
20,000 
17,000
20,000 
10,000 

2,000
25,000
5,000
1,05,900
---------
3,00,900 

=======
By Gross Profit
‘’   Share of profit from
‘’   Partnership firm
‘’   Dividend from Indian     Companies
‘’   Net (T.D.S. Rs. 2100)
‘’   Sales Tax Refund
‘’   Recovery of Bad Debts
 
2,30,000 

30,000 


17,900
10,000
13,000








--------
3,00,900
======

Additional Informations :
1. Advertisement expenses include Rs. 5,000, for advertisement in     souvenieer of a political party.
2. Recovery of bad-debts was earlier allowed as deduction.
3. Donations are given as under :
    a) Rs. 15,000 to National Foundation For communal Harmony.
    b) Books worth Rs. 5,000 to an approved charitable trust rendering services in educational field.
4. Depreciation allowable as per Income Tax Rules Rs. 4,000.
5. General Expenses include Rs. 10,000 paid to an approved laboratory, for carrying on scientific research.

 
Q.2 Mr. Chetan is the owner of two house properties of Mumbai of which he uses second house for his personal use.
The Following are the particulars in respect of two properties.
 
 
House I
House II
Municipal Reatable value
Rent Received
Municipal Taxes
Actual Repairs
Ground Rent
Insurance Premium
Vacancy
Collection Charges
Interest on loan for construction
 
26,000     
30,000     
2,000      
1,000     
200     
1,000      
2 months     
3,000     
8,000      
36,000     
S.O.P     
4,000     
200     
--     
 
600    
3 Months     
--    
2,000    
 


In addition Mr. Chetan invested through the year in fixed deposits with following :
1) Bank of India Rs. 25,000 @ 12% P.A.
2) HCL co LTD. Rs. 25,000 @ 15% P.A.
During the year he won Rs. 25,000 from Crossword Puzzles and he donated Rs. 10,000 to B.M.C for promoting family plannning and Rs. 15,000 Spent for his Physically handicapped dependant brother.
Compute his total income for Assessment Year 1997-98. (Term S.O.P means self occupied property.)

15
     
Q.3 Professor Tuttu, who is physically handicapped, is employed with MTV college of Commerce, He furnishes the following information for the previous year ended 31st, March 1997, and requests you to compute his total taxable income for the Assesment Year 1997-98.Salary of Rs. 12,500 p.m; Arrears of salary Rs. 12,000; Leave Salary received Rs. 10,000 during the year; Examinership fees from his college Rs. 2000; Fees for setting T.Y.B.com, papers from Mumbai University Rs. 4m000’ Royalty for wiritng book on accountancy Rs. 20,000. Expenses incurred for writing manuscripts, proff reading etc. are Rs. 4,000; Deducted from for promoting. Family planning to Prime Minister’s draught’ Relief Fund Rs. 10,000 and to Indira Gandhi Memorial Trust Rs. 12,000. 15
     
Q.4. Mr. Tom, a British citizen had a following income during the year ended on 31 st March, 1997.
 

 
Rs.
1
2
3
4
5
6
7
8
Income from house property in India
Income from property in Rome.
Interest from bank account in India
Income from business in Bangladesh, being controlled from India
Interest on bank account in U.S.A.
Salary earned and received in Tokyo
Income earned and received in London
Dividend from British Company received in India
15,000   
10,000   
1,200   
16,000   
11,000   
12,000   
13,000   
17,000   


Compute his Total income for the assessment year 1997-98, if he is :
i) A Resident   ii) A Resident but not ordinary Resident    iii) A Non-Resident.

15
     
Q.5 a) Define and explain any two of the following as per Income Tax Act, 1961-
i) Assessment Year    ii) Company    iii) Business
8
     
  b) Enumerate six items of incomes exempt under Section 10 of the Income tax Act, 1961, and discuss briefly any two of them. 7
Section II
 
Q.6 a) Define and explain the term ‘’Business’’ as per the provision of the Central sales Tax Act, 1956. 10
  b) State with reasons whether the following activities are business activities as per the provisions of the Centrla Sales Tax Act, 1956 (any two) :1. Purchase of computer for personal use 2. Export of equipment 3. Running of an Educatinal Institute.OrExplain where sale or purchase is said to take place in the course of interstate trade or comerce as per the provision of the Central Sales Tax Act, 1956.  
Q.7 Define and explain any two of the following as per the provision of the Bomaby Sales Tax Act, 1959.
1. Resale 2. Sale 3. Goods.
10
 
OR
 
  Explain sales or purchases of certain goods free from taxes. Give four exaples. (Section 5 of Bomaby Sales tax Act. 1959.)  
     
Q.8 Mr. Amit is a trader and importer. From the following information find out on which day he will be liable to pay tax as per the provision of the Bomaby Sales Tax Act, 1959, Give reason to your answer - 10
 
Date
Purchases
Taxable goods
Sales
Taxable goods
 
Within Maharashtra
Out of Maharashtra
Within Maharashtra
15-4-97
20-4-97
25-4-97
28-4-97
30-4-97
5-5-97
8-5-97
20-5-97
31-5-97

 
15,000
-
-
20,000
-
-
15,000
-
-

-
-
3,000
-
-
2,200
-
10,000
-

-
10,000
-
-
45,000
-
-
-
20,000
 
 
OR
 
  M/s. Yogesh & Co. requests you to compute liability under Bombay Sales Tax Act, 1959 for the month of January 1998 from the following information. M/s. Yogesh & Co. is registered dealer under Bombay Sales Tax act. 1959.
 
 
Amount in Rs.
Sale of Schedule A goods
Sale of Schedule B goods
Sale of Schedule C Goods
    (at the rate of 13%)
Sales out of Maharashtra
Labour charges received
Resale of goods
    (Registered dealer purchases)

 
4,00,000       
2,00,000         
5,00,000       
   
10,00,000       
4,00,000       
6,00,000         
Total :
31,00,000        
========       
 
Amount in Rs.
Less : Sale returns of Schedule A goods
         Second sale (Resale)
         Schedule C goods
 
20,000        
30,000      
50,000      
 
Total :
1,00,000       
=======     
 


M/s. Yogesh & Co. is also liable to pay puchase tax of Rs. 20,000.
Theyare also entitled to set off of Rs. 36,500.
sales figures are exclusive of sales tax.

 
     
Q.9 Discuss the meaning of the following terms in the context of Central excies and Salt Act (any two)-
i) Movables   ii) Marketibility   iii) Manufacturer    iv) Factory.
10
 
OR
 
  Discuss the basis of valuation as per section 4 of the Central Excise and Salt Act. 10
     
Q.10 Mr. Wagh is a manufacturere of W product. During the year he manufactures 10,000 units. He sold 3,000 units at Rs. 700 per unit to an industrial consumer, 2000 units to the Government agencies at Rs. 680 per unit 4,000 units were sold in wholsales market at Rs. 720 per unit, 950 units sold in retail at Rs. 800 per unit 50 units were given as free sample.

Out of the 2,000 units sold to the Government agencies 25 units were rejected, which were subsequently sold to other customer at Rs. 300 per unit.The rate of duty on product is 10%What is the duty payable?Note that all the prices are exclusive of excise and sales tax.OROn the Morning of 2nd January, 1998 following was the position of the PLA Account of M/s Govinda & Company Pvt. Ltd. manufacturer of Product A.1. Balance in PLA account Rs. 20,000.2. Balance in RG 23A part II Rs. 30,000. 3. Imported raw material received with bill of entry for exciese purpose showing custom duty Rs. 1,00,000. Additional duty Rs. 20,000.4. Input received along with xerox copy of invoice duplicate for transporter showing excise duty paid Rs. --5. Input received along with the invoice duplicate for transporter showing excise duty paid Rs. 10,000 At 4 p.m. an urgent message was received to dispatch maximum possible quantity of finished product A to Patna. Assessable value of product A is Rs. 500 per piece and duty rate is 10%. There is adequate stock of product A in the store room. What is the maximum quantity of product A that can be despatched immediately?
10

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