CWA ICWA Inter Stage I : Business Taxation - December 2007

CWA ICWA Inter - Stage I • Business Taxation • December 2007

This Paper has 43 answerable questions with 0 answered.

I—8(BTN) Revised Syllabus
Time Allowed : 3 Hours	Full Marks : 100

The figures in the margin on the right side indicate full marks
All questions relate to the assessment year 2007–08
Section — A
Answer Question No. 1 which is compulsory and any two from the rest.
Marks

The figures in the margin on the right side indicate full marks

All questions relate to the assessment year 2007–08

Section — A

Answer Question No. 1 which is compulsory and any two from the rest.

Marks

(a)

Choose the correct answer:

1x6

(i)

If any expenditure is incurred by an Indian company wholly and exclusively for the purpose of amalgamation of demerger, the said expenditure is:

(1)	Not allowable as a deduction in computing profits and gains of business or profession.
(2)	Fully deductible as revenue expenditure in the year in which it is incurred.
(3)	Not deductible but is eligible to be treated as an intangible asset in respect of which depreciation can be claimed.
(4)	Allowed as a deduction spread over five successive previous years beginning with the previous year in which the amalgamation or demerger takes place.

(0)

(ii)

If an employer transfers second hand motor car to the employee, the perquisite valued at

(1)	Actual cost less depreciation @ 30% for every completed year under straight line method.
(2)	Actual cost less depreciation @ 20% for every completed year under WDV method.
(3)	Actual cost less depreciation @ 30% for every completed year under WDV method.
(4)	Actual cost less depreciation @ 20% for every completed year under SLM method.

(0)

(iii)

Where assessment has not been completed, belated income–tax return for assessment year 2007–08 can be filed upto

(1)	31–03–2009
(2)	31–12–2008
(3)	31–03–2008
(4)	31–12–2009

(0)

(iv)

Gift received from one or more unrelated person(s) during the previous year shall form part of an individual's income, if the aggregate of gift exceeds.

(1)	Rs. 50,000
(2)	Rs. 1,00,000
(3)	Rs. 1,35,000
(4)	Rs. 1,65,000

(0)

(v)

The due date for filing return of net wealth of an individual, who is a partner in a firm, whose turnover for the year ended 31–03–2007 exceeds Rs. 40 lacs, is

(1)	30^th June, 2007
(2)	31^st July, 2007
(3)	31^st October, 2007
(4)	None of the above.

(0)

(vi)

Which one of the following is an "asset" as per section 2(ea) of the Wealth–tax Act?

(1)	Any residential property forming part of stock–in–trade.
(2)	Any residential house that has been let out for a minimum period of 180 days during the previous year.
(3)	Commercial complex
(4)	House occupied for the purpose of assessee’s business.

(0)

(b)

State with reasons, whether true or false:

3x4

(i)

Maximum deduction for medical insurance premium paid, allowable under section 80D of Income–tax Act 1961 is Rs. 20,000.

(0)

(ii)

Donations made in kind are allowed as a deduction under section 80G of Income–tax Act 1961 provided, the trust is recognized by the CBDT to accept such donations.

(0)

(iii)

TDS in now applicable on rent in respect of plant, equipment machinery etc, also apart from land or building.

(0)

(iv)

The tax liability under the Wealth–tax Act is determined solely on the basis of residential status of on assessee.

(0)

(a)

X, who resides in Kanpur, receives Rs. 78,000 as basic pay during the financial year 2006–07. He stays in his father’s house up to August 31, 2006 for which he does not pay any rent, and thereafter in an accommodation taken on monthly rent of Rs. 3,000. The employer, however, pays Rs. 700 per month as house rent allowance throughout the previous year. Calculate the HRA taxable in hands of X for the assessment year 2007–08.

(0)

(b)

Is there any option for an employer, not to deduct tax at source, in respect of perquisites portion of salaries paid to an employee? Discuss.

(0)

(c)

Fill up the blanks:

(i)

The rate of Minimum Alternate Tax has been increased from _______ percent to _______ percent of book profits with effect from assessment year 2007–08.

(0)

(ii)

Long–term capital gain which are exempt u/s. 10(38) credited to profit and loss account are _______ (subject to/not subject to) Minimum Alternate Tax, from assessment year 2007–08

(0)

(iii)

Exemption u/s. 10(32) of IT Act 1961 in respect of income of minor child included in the hands of assessee under section 64(IA) is restricted to Rs. _______ per child.

(0)

(a)

MH Construct & Co., an non–resident firm, is engaged in the business of Civil Construction (Turnover of 2006–07 being Rs. 38,50,000). It wants to claim the following deductions while offering income under presumptive provisions:

	Rs.
Salary and interest to partners [as permitted by section 40(b)] Salary to employees Depreciation Cost of materials used Other expenses Total Net Profit (Rs. 38,50,000–37,70,000)	60,000 5,00,000 2,70,000 25,90,000 3,50,000 37,70,000 80,000

The following information are also provided:

(i)	Taxable income from other business is Rs. 1,90,000.
(ii)	Long–term capital gain is Rs. 40,000.
(iii)	The firm is eligible for a deduction of Rs. 5,000 under section 80G.

Determine the

total income of MH Construct & Co. and tax payable for the assessment year 2007–08.

8+2

(0)

(b)

Mr. Kuber chand, owner of a property gives it on a rent of Rs. 11,000 per month to a bank. Municipal value of the property is Rs. 1,30,000 fair rent is Rs. 1,40,000 and standard rent is Rs. 1,34,000. Municipal tax paid by Mr. Kuber chand is Rs. 26,000 on March 3, 2006 and Rs. 30,000 on May 10, 2006. On May 1, 2006, the rent is increased from Rs. 11,000 per month to Rs. 15,000 per month with retrospective effect from April 1, 2005. Arrears of rent are paid on May 1, 2006. Find out the income chargeable to tax for the assessment year 2007–08.

(0)

Mr B.K. Jain, a farmer of Jaipur, submits the following particulars of his wealth as on March 31, 2007:

Rs.

(a)

Agricultural land in

(i)
(ii)

Jaipur city (8 kms within Jaipur city limit)
A village (20 kms beyond Jaipur city limit)

5,00,000
2,00,000

(b)

House property:

(i)
(ii)

Residential house in Jaipur city
Farm house at a distance of 3 kms from the village where
agricultural land is situated

5,00,000

4,00,000

(c)

Industrial land not in use but held for more than 2 years

4,00,000

(d)

Growing crops and fruits on trees

50,000

(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)

(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t)

Trees on agricultural land
Motor car
Animals and dairy farm
Tools and implements for agriculture
Grains in godown
Horse and carts
Gold ornaments
Cash in hand (He normally keeps a cash balance of Rs. 25,000 only,
Rs. 50,000 was deposited in to bank on 1–4–2007)
Deposit in Jeevan Dhara Policy of LIC
Household goods
Units in U.T.I.
Deposit in NSC
Liability for income tax (2005–06)
Loan from LIC (against policies) for industrial land
Amount due for purpose of house at Jaipur city
Liability for ornaments purchased

30,000
2,00,000
1,00,000
50,000
1,50,000
50,000
8,00,000

75,000
80,000
60,000
25,000
20,000
15,000
2,00,000
1,00,000
50,000

You are required to compute the net wealth (stating clearly the treatment of each item above) of Mr. B.K.Jain as on 31–3–2007 and the wealth–tax payable.

(0)

Write short notes on any two of the following:

8x2

(a)

Double taxation relief under section 90A of the Income–tax Act, 1961.

(0)

(b)

Submission of income–tax return through Tax Return Preparer.

(0)

(c)

Assessment of charitable or religious trust u/s. 21A of the Wealth–tax Act.

(0)

Section — B
Answer Question No. 6 which is compulsory and any two from the rest

Section — B

Answer Question No. 6 which is compulsory and any two from the rest

(a)

Fill up blanks

1x6

(i)

Import manifest is required to be filed by the person in charge of vessel ______ arrival of vessel.

(0)

(ii)

The relevant date for foreign trade rate for customs valuation is ______.

(0)

(iii)

Goods covered by Central Excise tariff but fully exempt from duty are ______ [excisable/not excisable] goods.

(0)

(iv)

State Government ______ (can/can not) waive the condition of submission of C Form by issue of notification.

(0)

(v)

SSI units whose turnover exceeds Rs. ______ per annum have to furnish declaration in prescribed form for central excise purposes.

(0)

(vi)

Under the Customs Act, where refund becomes due in the final assessment, interest will be payable if refund is not granted within ______ .

(0)

(b)

State with reasons, whether true or false.

3x4

(i)

The peak rate of basic customs duty on non–agricultural products is 15%.

(0)

(ii)

Cenvat credit on capital goods has to be availed in full in the year of purchase.

(0)

(iii)

As per section 20 of the Central Sales tax Act, 1956 appeal may be filed within 90 days from the date which the order is served on the aggrieved person.

(0)

(iv)

There is no provision under the Customs Act for remission of customs duty on goods lost, damaged for pilfered.

(0)

(a)

Vasudha Electronics Ltd. having its factory at Delhi, furnishes the following information:

(i)

3000 Units sold at factory gate.

(ii)

6000 Units sold to dealers in Nagpur. Actual transport expenses Rs. 30,000 charged.

(iii)

1000 Units sold to dealers in Lucknow, actual transport expenses Rs. 10,000, but charged to dealers at Rs. 12,000.

(iv)

Invoice price for the above is Rs. 10,000 per unit, excluding transport charges and all items below:

(1)	Sales tax shown separately Rs. 40,000.
(2)	Octroi shown separately Rs. 18,000.
(3)	Dharmada shown separately collected from dealers Rs. 12,000.

The basic rate of excise duty is 16%.
Determine the total excise duty payable, assuming that the dealer is not entitled to any exemption.

(0)

(b)

Discuss whether Cenvat credit can be availed in respect of goods used for manufacture of capital goods within the factory and in respect of inputs for effluent treatment plant.

(0)

(a)

What is effective rate of customs duty on baggage?

(0)

(b)

Can gold be brought into India? What is the customs duty payable thereon? Can such gold be subsequently sold in India?

(0)

(c)

Briefly discuss about the Deductive value method for customs valuation.

(0)

(a)

What is meant by ’place of business’ under the Central Sales tax Act, 1956? What should a dealer do towards registration, if he has more than one place of business?

(0)

(b)

What are the acts of omission or commission which attract the penal provisions of section 10 of the Central Sales tax Act?

(0)

(c)

A dealer makes inter–state sale of goods which are generally exempt within the State, to registered as well as unregistered dealers? Should he obtain any Central Sales–tax Form from the buyers?

(0)

10.

Write short notes on the following:

4x4

(a)

Liability of a company in liquidation, under the Central Sales–tax Act.

(0)

(b)

Meaning and relevance of ’Crossing Customs frontiers of India’ under the Central Sales–tax Act.

(0)

(c)

Relevant date for rate and valuation of customs duty for import through post and imports as baggage.