CS Inter Group I : Tax Laws - December 2008

CS Inter - Group I • Tax Laws • December 2008

This Paper has 40 answerable questions with 0 answered.

Roll No…………
Time allowed : 3 hours	Maximum marks : 100
Total number of questions : 8	Total number of printed pages : 3

All references to sections mentioned in Part–A of the Question Paper relate to the Income–tax Act, 1961 and the relevant Assessment Year 2008–09 unless stated otherwise.
PART — A
(Answer Question No. 1 which is COMPULSORY and any three of the rest from this part) Â�

All references to sections mentioned in Part–A of the Question Paper relate to the
Income–tax Act, 1961 and the relevant Assessment Year 2008–09
unless stated otherwise.

PART — A

(Answer Question No. 1 which is COMPULSORY
and any three of the rest from this part)
Â�

Attempt any five of the following :

(i)

"Under certain circumstances, capital receipts are also taxable as income." Comment.

(0)

(ii)

"The re–assessment of the assessee’s total income can be made at any time." Do you agree ? Discuss.

(0)

(iii)

Discuss the tax treatment of unrealised rent and its recovery in subsequent years.

(0)

(iv)

State the exemption in respect of ‘gratuity’ under section 10(10).

(0)

(v)

Briefly explain the special provisions for computing profit and gains of retail business.

(0)

(vi)

Explain the process of computation of income of a Hindu Undivided Family.

(0)

(3 marks each)

(a)

Vijay is a salaried employee. His basic salary is Rs.60,000 per month. He gets one month salary as bonus. He has been provided a rent-free unfurnished house which is owned by the employer company at the place of his posting in Chennai. He gets bank interest of Rs.15,000 and he makes the following investments/deposits every year :

	Rs.
Life insurance premium on his own life (sum–assured value : Rs.60,000) Notified equity linked saving scheme of UTI Re–payment of loan taken on 1st July, 2000 for the purchase of house property Payment of interest on above loan Tuition fees for 2 children Notified bonds of infrastructure company Deposit in home loan account scheme of the National Housing Bank Mediclaim insurance premium	13,500 18,000 40,500 1,60,000 60,000 4,500 13,500 16,000

Find out the net income of Vijay for the assessment year 2008–09.

(0)

(6 marks )

(b)

How do you compute capital gains in case of depreciable asset under section 50 ?

(0)

(4 marks )

(c)

What do you understand by ‘advance payment of tax’ ? When does the liability to pay advance tax arise ? When such a tax is to be paid ?

(0)

(5 marks )

(a)

Choose the most appropriate answer from the given options in respect of the following having regard to the provisions of the Income–tax Act, 1961 :

(i)

A Ltd. has unabsorbed depreciation of Rs.4,50,000 for the previous year 2007–08. This can be carried forward —

(a)
(b)
(c)
(d)

For a maximum period of 8 years and set–off against business income
Indefinitely and set–off against business income
Indefinitely and set–off against any head of income
None of the above.

(0)

(ii)

The deduction allowable in respect of family pension taxable under the head ‘income from other sources’ is–

(a)
(b)
(c)
(d)

33.33% of the pension
30% of the pension or Rs.15,000 whichever is less
33.33% of the pension or Rs.15,000 whichever is less
None of the above.

(0)

(iii)

Exemption of certain amount (not exceeding the income clubbed) is available under section 10(32) where a minor’s income is clubbed with the income of the parent. The maximum exemption available is —

(a)
(b)
(c)
(d)

Upto Rs.1,200 in respect of each minor child
Upto Rs.1,500 in respect of each minor child
Upto Rs.2,000 in respect of each minor child
Rs.3,000 in aggregate.

(0)

(iv)

Under section 80GGB, deduction is allowable in respect of contribution to political parties by –

(a)	Any person other than local authority and every artificial juridical person wholly or partly funded by the Government
(b)	Local authority and every artificial juridical person wholly or partly funded by the Government
(c) (d)	An Indian company None of the above.

(0)

(v)

The additional benefit available to a resident woman assessee below the age of 65 years at any time during the previous year 2007–08 is –

(a)
(b)
(c)
(d)

Higher basic exemption limit of Rs.1,35,000
Higher basic exemption limit of Rs.1,45,000
Rebate of tax payable subject to a maximum of Rs.5,000
None of the above.

(0)

(1 mark each)

(b)

Briefly explain and illustrate how the tax liability of an assessee is determined with reference to residence.

(0)

(4 marks )

(c)

Compute the net wealth of Natwar, a resident individual, as on 31st March, 2008 from the following particulars :

(i)	He has a house property at Delhi valued at Rs.18,00,000 which is used for business purpose;
(ii)	Vehicles for personal use –– Motor car : Rs.6,60,000; Motor van : Rs.3,30,000; and Jeep : Rs.3,24,000;
(iii) (iv)	Cash in hand : Rs.3,15,000; Jewellery : Rs.12,60,000; and
(v)	He had transferred an urban house plot in February, 2008 in favour of his niece, which was not revocable during her life time. His niece died on 14th March, 2008 and Natwar could get the title of plot re–transferred to his name on 15th April, 2008. Market value of house plot as on 31st March, 2008 is Rs.14,10,000.

(0)

(6 marks )

(a)

Re–write the following sentences after filling–up the blank spaces with appropriate word(s)/figure(s) :

(i)

The rate of income-tax applicable to a co–operative society is ________ % of total income where the income does not exceed Rs.10,000.

(0)

(ii)

Appreciation in the value of foreign currency held on capital account is not treated as ___________

(0)

(iii)

For belated filing of income–tax return, the assessee is liable to pay interest @ _________ for every month.

(0)

(iv)

The foreign institutional investor shall pay income-tax on the income by way of short term capital gains arising from transfer of securities other than units referred to in section 115AB @ _________

(0)

(v)

Free holiday trips to a non–specified employee is _________ perquisite.

(0)

(1 mark each)

(b)

Write a short note on ‘best judgement assessment’ with suitable illustration.

(0)

(4 marks )

(c)

Gopi sells a residential house property in Agra for Rs.15,40,000 on 23rd April, 2007, which was purchased by him on 20th April, 1985 for Rs.2,90,000. On 16th June, 2007, he purchases a house in Delhi for Rs.12,00,000 for the purpose of residence of his daughter. Compute the capital gains for the assessment year 2008–09.
(Note: Cost Inflation Index for the financial years – 1985–86 : 133; and 2007–08 : 551.)

(0)

(6 marks )

(a)

State, with reasons in brief, whether the following statements are correct or incorrect :

(i)

All perquisites are taxable.

(0)

(ii)

Deduction is available in respect of all expenses incurred by the owner in respect of house property.

(0)

(iii)

Assessee is entitled to get deduction of any premium in respect of mediclaim policy, paid by any mode.

(0)

(iv)

Any investment made out of long–term capital gains in specified bonds cannot exceed Rs.30,00,000.

(0)

(v)

Any person can act as a tax return preparer.

(0)

(2 marks each)

(b)

Discuss briefly the provisions relating to filing of an appeal to the Income–tax Appellate Tribunal.

(0)

(5 marks )

PART — B
(Answer ANY TWO* questions from this part)*

PART — B

(Answer ANY TWO questions from this part)

(a)

Define new Excise Control Code (ECC) number.

(0)

(5 marks )

(b)

"Taxable event is manufacture and not ownership." Explain the statement under the Central Excise Act, 1944.

(0)

(5 marks )

(c)

How is custom duty determined where goods consist of articles liable to different rates of duty?

(0)

(5 marks )

(d)

Explain the term ‘sale’ under the Central Sales Tax Act, 1956.

(0)

(5 marks )

(a)

Jolly is a dealer engaged in oil business at Bangluru. From the following particulars, compute the central sales tax payable :

Rs.

Turnover for the year including central sales tax
Cost of oil container as packing material
Trade commission against (separate credit notes to be issued)
Excise duty
Freight, insurance and transport charges recovered separately
in the invoices
Installation charges
Goods returned by dealer within 6 months of sales, but after
end of the financial year
Goods returned by dealer beyond 6 months of sales after end of
the financial year
The dealer received ‘�Form–C’ from all the buyers.

22,50,000
50,000
64,000
1,25,000

95,000
36,000

62,000

27,000

(0)

(10 marks )

(b)

An assessee sold goods at Rs.98,500 which included carriage outward of Rs.3,000 and insurance of Rs.500. Excise duty is 16%, cess on excise duty is 3% and sales tax is Rs.4,000. Compute the assessable value of goods.

(0)

(5 marks )

(c)

Explain the term ‘temporary detention of baggage’ under the Customs Act, 1962.

(0)

(5 marks )

(a)

Briefly explain the maximum retail price (MRP) based valuation for excise duty purposes.

(0)

(5 marks )

(b)

State whether the customs duty is chargeable on goods derelict, wreck, jetsam and flotsam.

(0)

(5 marks )

(c)

What do you understand by ‘goods re–imported after exportation’? Is customs duty chargeable on such goods ?

(0)

(5 marks )

(d)

What are the benefits of registration under the Central Sales Tax Act, 1956 ?

(0)

(5 marks )

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