| 1. | (a) | Income earned by a mutual concern from mutual activities is not taxable. Comment. | 3 | (0) |
| | (b) | Rani is entitled to get a pension of Rs. 1,500 per month from Raja Ltd. She gets three–fifths of the pension commuted and receives Rs. 90,000. Compute the taxable portion of commuted value of pension when (i) she does not receive gratuity; (ii) receives Rs. 50,000 as gratuity. | 3 | (0) |
| | (c) | What do you mean by ‘set off and carry forward of losses’ ? Which losses can be carried forward ? | 3 | (0) |
| | (d) | Mention the penalty imposable under the following cases : | (i) | Failure to pay tax deducted at source. | | (ii) | Failure to get accounts audited as required under section 44AB. |
| 3 | (0) |
| | (e) | Explain the provisions of the Income–tax Act, 1961 regarding tax deduction at source on rent | 3 | (0) |
| 2. | (a) | Naresh, who is neither a director nor he has substantial interest in any company, is offered an employment by Freewheel Ltd., Mumbai with the following two alternatives : | Alternative | | I | II | | Rs. | Rs. | Basic pay
Bonus
Education allowance for 2 children
Education facility for 2 children in a school
maintained by employer
Sweeper allowance
Sweeper facility
Entertainment allowance
Club facility
Transport allowance for personal use
Free car (1200 cc) facility for personal use
(car owned by the employer)
Medical allowance
Medical facility for Naresh and his family
members in a hospital maintained by employer
Allowance for gas, electricity and water supply
Free gas, electricity and water supply (bills will be in the
name of the employer)
Holiday home allowance
Holiday home facility
Lunch allowance
Free lunch (Rs. 70 x 200 days + Rs. 80 x 50 days)
Diwali gift allowance
Gift on Diwali
A rent-free unfurnished home – lease rent | 66,000
9,000
30,200
–
10,000
–
6,000
–
12,000
–
18,000
–
4,500
–
8,000
–
18,000
–
7,500
–
14,000 | 66,000
9,000
–
30,200
–
10,000
–
6,000
–
12,000
–
18,000
–
4,500
–
8,000
–
18,000
–
7,500
14,000 |
Which of the two alternatives Naresh should opt for on the assumption that both employer and employee will contribute 10% of salary towards un recognised provident fund ? Interest–free loan of Rs.20,000 will be given to him for purchasing household items. | 7 | (0) |
| | (b) | Determine the tax liability of Madhuri for the assessment year 2003-04 from the following particulars : | Capital gains | Rs. | | Long term | 1,00,000 | | Short term | 11,000 | | 1,11,000 | | Business loss | 45,000 | | She purchased National Savings Certificates for 12,000 |
| 5 | (0) |
| | (c) | How do you treat unrealized rent allowed as a deduction in the past and realized in a subsequent year when the assesses is no more the owner of the property ? | 3 | (0) |
| 3. | (a) | From the following particulars, compute the gross total income of Radha : | (i) | She is employed on a part time basis in a fashion designing firm on a monthly salary of Rs. 5,000. | | (ii) | She has a house property situated in Delhi which has been let out at a rent of Rs.3,000 p.m. | | (iii) | She holds the following shares and securities : | — | 1,000 Equity shares in X Ltd. of Rs. 10 each, bought @ Rs.40 per share. | | — | Rs.20,000, 8% ICICI Bonds. | | — | 1,000, 12% Preference shares of Rs.100 each in Rosa Ltd. Dividend received on 25th March, 2003. | | — | X Ltd. declared 18% equity dividend on 25th March, 2003, but the cheque was received subsequent to 31st March, 2003. Other interest and dividends were, however, duly received. |
| | (iv) | She had set up a factory with building, plant, machinery, furniture, etc. However, she decided to give it on hire at a composite rent of Rs. 12,000 p.m.
During the year, she spent Rs.15,000 for repairs and Rs.5,000 for insurance of the factory. The depreciation allowable is Rs.50,000. She had borrowed Rs.5,00,000 against mortgage of these assets and paid Rs.60,000 interest thereon. The amount was spent for marriage of her brother. |
| 7 | (0) |
| | (b) | Roger, a foreign national, furnishes the following data for the previous year ended 31st March, 2003 : | Rs. | | (i) | Royalty from Indian concern under an, agreement made on 15th September, 1995 approved by the Central government |
3,00,000 | | (ii) | Expenditures as per sections 28 to 44C for Earning such income | 2,00,000 | | (iii) | Interest from an Indian company on money lent in foreign currency | 6,00,000 | | (iv) | Expenditure on collection of above interest | 50,000 | | (v) | Income from units of UTI purchased in foreign currency | 5,00,000 | | (vi) | Collection charges for collecting above income | 40,000 | | (vii) | Gross sale of business in India | 30,00,000 | | (viii) | Expenditure as per sections 28 to 44C for above business | 28,00,000 | | (ix) | Donations to Prime Minister National Relief Fund | 6,00,000 |
Determine the total income of Roger for the assessment year 2003–04 and the tax payable by him. | 10 | (0) |
| 4. | (a) | Meenakshi owns a house property which is situated at Delhi and is used for residential purposes throughout the year.The annual value of the property as per the municipal records is Rs. 1,00,000 whereas the rent received from the tenant is Rs. 80,000. The municipal taxes are paid partly by Meenakshi (Rs.3,000) and partly by the tenant (Rs. 5,000). The tenant bears the entire repair expenses of Rs. 5,000. He also deposited with the landlady a sum of Rs. 25,000 as refundable security which, however,does not carry any interest. The difference between ‘unbuilt area’ and ‘specified area’ does not exceed 5%. What will be the value of the house property on 31st March, 2003, if – (i)
(ii)
(iii) | The house is built on freehold and;
It was acquired after 1st April, 1974 for Rs. 10,00,000; and
The cost of improvement is Rs.20,000 ? |
| 5 | (0) |
| | (b) | Vinod started a retail business in textiles on 1st April, 2002. During the financial year 2002–03, the turnover from the business is Rs. 36,50,000 and net profit of Rs. 1,61,000 has been achieved from operations. As a tax consultant, advise him as to what conditions are to be complied with before filing return of income for the assessment year 2003–04 ? Briefly discuss the relevant provisions. | 5 | (0) |
| | (c) | Write a lucid note on ‘best judgement assessment’ with a suitable illustration. | 5 | (0) |
| 5. | (a) | Chatterjee and Co., a firm of Company Secretaries at Kolkata, has furnished the profit and loss account for the year ended 31st March, 2003 as under : | Rs. | | | | Rs. | | Expenses | 1,65,000 | Gross receipts | | Depreciation on assets | 45,000 | from profession | 2,20,000 | | Remuneration to partners | 1,41,000 | Net loss | 1,31,000 | | | 3,51,000 | | 3,51,000 |
| Additional information : | | (i) | Expenses include an amount of Rs. 22,500 being interest on capital to partners credited @ 12% per annum on the balances and Rs.22,500 being the expenditure not allowable under section 37. | | (ii) | Depreciation as per the income tax rules is Rs.48,000. Compute the taxable income of the firm indicating the maximum permissible remuneration and interest allowable to partners under the provisions of the Income tax Act, 1961. |
| 5 | (0) |
| | (b) | Write a short note on ‘time limit for completion of assessment or reassessment’ under the provisions of the Income–tax Act, 1961. | 5 | (0) |
| | (c) | Briefly explain the provisions with regard to ‘payment of advance tax’ under the Income–tax Act, 1961. | 5 | (0) |
