| 1. | (a) | Ms.Purvi is a Chartered Accountant in practice. She maintains her accounts on cash basis. Her Income and Expenditure account for the year ended March 31, 2012 reads as follows: | Expenditure | Rs. | Income | Rs. | Rs. | Salary to staff
Stipend to articled
assistants
Incentive to articled
assistants
Office rent
Printing and stationery
Meeting, seminar and
conference
Purchase of car
Repair, maintenance
and petrol of car
Travelling expenses
Municipal tax paid in
respect of house
property
Net Profit | 5,50,000
37,000
3,000
24,000
22,000
31,600
80,000
4,000
35,000
3,000
9,28,224
17,17,824 | Fees earned:
Audit
Taxation services
Consultancy
Dividend on shares of
Indian companies (Gross)
Income from unit Trust of
India
Honoranum received. from
Various institutions. for
valuation of answer papers
Rent received from
residential flat let out |
7,88,000
5,40,300
2,70,000 |
15,98,300
10,524
7,600
15,800
85,600
17,17,824 |
Other Information: | (i) | Allowable rate of depreciation on motor car is 15%. | | (ii) | Value of benefits received from clients during the course of profession is Rs. 10,500. | | (iii) | Incentives to articled assistants represent amount paid to two articled assistants for passing IPCC Examination at first attempt. | | (iv) | Repairs and maintenances of car include Rs. 2,000 for the period from 1–10–2011 to 30–09–2012. | | (v) | Salary include Rs. 30,000 to a computer specialist in cash for assisting Ms. Purvi in one professional assignment. | | (vi) | The total travelling expenses incurred on foreign tour was Rs. 32,000 which was within the RBI norms. | | (vii) | Medical Insurance Premium on the health of dependent brother and major son dependent on her amounts to Rs. 5,000 and Rs. 10,000 respectively paid in cash. | | (viii) | She invested an amount of Rs. 10,000 in National Saving Certificate. Compute the total income and tax payable of Ms. Purvi for the assessment year 2012–2013. |
| 10 | (0) |
| | (b) | Infotech software systems is an information technology software company. The receipts during financial year 2011–12 are as under: | Particulars | Rs. | | (i) | Receipts for the analysis of information technology software. | 1,80,000 | | (ii) | Receipts for providing advice, consultancy and assistance on
matter related to specifications to secure a database. | 4,10,000 | | (iii) | Receipts for providing the right to use the canned software on
which the amount of excise duty has been paid and the benefit
under Notification (No. 31/2010 Cus Dated 27–02–2010 has not
been availed). | 5,10,000 | | (iv) | Receipts for the upgradation of the information technology
software. | 2,65,000 | | (v) | Infotech software systems in the financial year 2010–11 has
provided the taxable services valuing of Rs. 15,00,000. | |
Determine the value of taxable service and the amount of service tax, education cess and secondary and higher education cess payable by Infotech software systems for the financial year 2011–2012. The amount of service tax has been charged separately. | 5 | (0) |
| | (c) | R. Ltd of Mumbai made a total purchases of input and capital goods of Rs. 60,00,000 during the month of February, 2012. The following further information is available. | (i) | Goods worth Rs. 15,00,000 were purchased from Assam on which C.S.T 2% was paid. | | (ii) | The purchases made in February, 2012 include goods purchased from unregistyred dealers amounting to Rs. 18,50,000. | | (iii) | It purchased capital goods (not eligible for input credit) worth Rs. 6,50,000 and those eligible for input credit for Rs. 9,00,000. | | (iv) | Sales made in Mumbai during the month of February, 2012, is Rs. 10,00,000 on which VAT at 12.5% is payable. | | Assuming that all purchases given are exclusive of tax and VAT 4% is paid on them calculate: | | (a) | the amount of purchases eligible for input credit. | | (b) | the amount of input credit available for the month of February, 2012. | | (c) | the VAT payable for the month of February, 2012. |
The input VAT credit on eligible capital goods is available in 36 equal monthly instalments. | 5 | (0) |
| 2. | (a) | Answer any two sub–parts out of three sub–parts of the question. | (i) | Paras is resident of India. During the F.Y 2011–12 interest of Rs. 1,88,000 was credited to his Non–resident (External) Account with SBI. Rs. 30,000 being interest on fixed deposit with SBI was credited to his saving bank account during this period. He also earned Rs. 3,000 as interest on this saving account. Is Paras required to file return of income?
What will be your answer, if he owns one shop in kerala having area of 150 sq. ft. ? |
| (ii) | Mr. Sharma has four children consisting 2 daughters and 2 sons. The annual income of 2 daughters were Rs. 9,000 and Rs. 4,500 and of sons were Rs. 6,200 and Rs. 4,300 respectively. The daughter who has income of Rs. 4,500 was suffering from a disability specified under section 80U. Compute the amount of income earned by minor children to be clubbed in hands of Mr. Sharma. |
| (iii) | Explain the treatment of unrealized rent and its recovery in subsequent years under the provisions of Income Tax Act, 1961. |
| 2x2=4 | (0) |
| | (b) | A Partnership Firm, gives the following particulars relating to the services provided to various clients by them for the half–year ended on 30–09–2011 | (i) | Total Bills raised for Rs. 8,75,000 out of which bill for Rs. 75,000 was raised on an approved International Organization and payments of bills for Rs. 1,00,000 were not received till 30–09–11. | | (ii) | Amount of Rs. 50,000 was received as an advance from XYZ Ltd. on 25–09–2011 to whom the services were to be provided in October, 2011. You are required to find out the: |
| (a) | Taxable value of services |
| (b) | Amount of service tax and education,cess and secondary and higher education cess payable. |
| 4 | (0) |
| | (c) | Explain the consumption variant of VAT. Mention the reasons for the preference of this variant of VAT. | 4 | (0) |
| 3. | (a) | Anshu transfers land and building on 02–01–2012 and furnishes the following informations. | Particulars | Rs. | | (i) | Net consideration received | 14,00,000 | | (ii) | Value adopted by Stamp Valuation Authority | 16,00,000 | | (iii) | Value ascertained by Valuation Officer on reference by the
Assessing Officer | 17,00,000 | | (iv) | This land was acquired by Anshu on 1–04–1981. Fair Market
value of the land as on 01–04–1981 was | 1,10,000 | | (v) | A Residential building was constructed on land by Anshu at
cost of Rs. 3,20,000 (construction completed on 01–12–2002
during financial year 2003–04.) | | | | Short term capital loss Incurred on sale of shares during
financial Year 2007–08 b/f of Rs. 1,50,000. | |
Anshu seeks your advice to the amount to be invested in NHAI bonds so as to
be exempt from capital gain tax under Income Tax Act.
Cost inflation index for FY 1981–1982 = 100
Cost inflation index for FY 2002–2003 = 447
Cost inflation index for FY 2011-2012 = 785 | 8 | (0) |
| | (b) | Test the veracity of the following assertions with reference to the statutory provisions relating to service tax. Do not assign any reason for them. | (a) | Services provided by consulting engineers in computer hard ware engineering and computer software engineering are not includible in their taxable services. |
| (b) | Services provided to any person by a mandap keeper for the use of the precincts of a religious place as a mandap are not exempt from service tax. |
| (c) | The following are the person(s) who provides scientific or technical consultancy service | (i) | a scientist | | (ii) | a technocrat | | (iii) | any engineering organisation |
|
| (d) | Pre–school coaching institutions services are taxable. |
| (e) | X–took certificate of practice with effect from 25–1–2012. He has to make an application for registration before 24–3–2012. |
| (f) | Small scale service provider who is claiming exemption of Rs. 10 lakh shall have to apply for registration where the aggregate value of taxable services exceeds Rs. 9 lakhs. |
| (g) | Gross amount charged for taxable services includes only that amount received towards the taxable service which is received after the provision of such services. |
| (h) | Service tax for the month of March or quarter ending March should be deposited by 5th April. |
| 8x½=4 | (0) |
| | (c) | Test the veracity of the following assertions with reference to the statutory provisions relating to value added tax. Do not assign any reason for them. | (a) | Input credit under VAT is available in respect of Central Sales Tax paid on purchases. |
| (b) | VAT is leviable at the first stage of sale. |
| (c) | Input credit is available in respect of customs duty paid on goods imported from a country outside India. |
| (d) | Input credit is available only if the purchaser has obtained proper tax Invoice. |
| (e) | No registration is required under any VAT regime. |
| (f) | A trader can take credit of the inputs purchased by him only if he has obtained proper tax invoice from the valuer. |
| (g) | VAT is inflationary in nature. |
| (h) | White paper on State level VAT provides a framework for drafting various State VAT legislations. |
| 8x½=4 | (0) |
| 4. | (a) | Mr. Y carries on his own business. An analysis of his trading and profit & loss for the year ended 31-3-2012 revealed the following information: | (1) | The net profit Was Rs. 11,20,000. | | (2) | The following incomes were credited in the profit and loss account: | (a) | Dividend from UTI Rs. 22,000. | | (b) | Interest on debentures Rs. 17,500 | | (c) | Winnings from races Rs. 15,000. |
| | (3) | It was found that some stocks were omitted to be included in both the opening and closing stocks, the value of which were: | Opening stock Rs. 8,000. | | Closing stock Rs. 12,000 |
| | (4) | Rs. 1,00,000 was debited in the profit and loss account being contribution to a University approved and notified under section 35(1) (ii). | | (5) | Salary includes Rs. 20,000 paid to his brother which is unreasonable to the extent of Rs. 2,500. | | (6) | Advertisement expenses include 15 gift packets of dry fruits costing Rs. 1,000 per packet presented to important customers. | | (7) | Total expenses on car was Rs. 78,000. The car was used both for business and personal purposes. 3/4th is for business purposes. | | (8) | Miscellaneous expenses included Rs. 30,000 paid to A & Co., a goods transport operator in cash on 31–1–2012 for distribution of the company’s product to the warehouses. | | (9) | Depreciation debited in the books was Rs. 55,000. Depreciation allowed as per IT rules was Rs. 50,000. | | (10) | Drawing Rs. 10,000 . | | (11) | Investment in NSC Rs. 15,000. |
Compute the total income of Mr. Y for the assessment year 2012–13. | 8 | (0) |
| | (b) | Punjabi Banquets is engaged in providing ‘mandap keeper services’. For the month of January, 2012, it provided the following information: | S.No. | Particulars | Amount
Rs. | | (1) | Banquet hall let out for marriage function:
The gross amount charged for banquet hall including catering
charges (Catering charges have been separately indicated in the
invoice). |
6,00,000 | | (2) | Amount received for rooms let out for stay of guests attending
the marriage. |
40,000 | | (3) | Amount collected for letting out the hall for All India Dance
Competition. No food was supplied along with it. |
5,00,000 | | (4) | Mandap for shooting of marriage sequence of a Daily Soap
Opera. |
2,40,000 |
Compute the amount of service tax, education cess and secondary and higher education cess payable by Punjabi Banquets for the month of January, 2012. | Additional Informations: | | (1) | Point of taxation in all the aforesaid case is January, 2012. | | (2) | All the amounts stated above are exclusive of service tax. | | (3) | Punjabi Banquets is not eligible for small service providers exemption under notification. No.6/2005ST dated 01–03–2005 for the financial year 2011–12. |
| 4 | (0) |
| | (c) | Determine the liability of VAT of X for the month of December 2011 using invoice method of computation from the following data: Purchase price of goods acquired from local market
(including VAT) | Rs. 52 lakhs | | VAT rate on input | 4% | Transportation, insurance, warehousing and handling
cost incurred by X | Rs. 20,000 | | Goods sold at a profit margin | 14% | | VAT rate on sales | 12.50 % |
| 4 | (0) |
|
| 5. | (a) | During the previous year 2011–12 the following transactions occurred in respect of Mr. A. | (a) | Mr. A had a fixed deposit of Rs. 5,00,000 in Bank of India. He instructed the bank to credit the interest on the deposit @ 9% from 1–4–2011 to 31–3–2012 to the savings bank account of Mr. B, son of his brother, to help him in his education. | | (b) | Mr. A holds 75% share in a partnership firm. Mrs. A received a commission of Rs. 25,000 from the firm for promoting the sales of the firm. Mrs. A possesses no technical or professional qualification. | | (c) | Mr. A gifted a flat to Mrs. A on April 1, 2011. During the previous year the flat generated a net income of Rs. 52,000 to Mrs. A. | | (d) | Mr. A gifted Rs. 2,00,000 to his minor son who invested the same in a business and he got a share income of Rs. 20,000 from the investment. | | (e) | Mr. A’s minor son derived an income of Rs. 20,000 through a business activity involving application of his skill and talent.
During the year Mr. A got a monthly pension of Rs. 10,000. He had no other income. Mrs. A received salary of Rs. 20,000 per month from a part time job.
Discuss the tax implications of each transaction and compute the total income of Mr. A, Mrs.,A and their minor child. |
| 8 | (0) |
| | (b) | What are the documents to be attached by a service provider along with an application for registration under service tax? | 4 | (1) |
| | (c) | | (i) | What are the different varants of VAT and how is deduction available for tax paid on inputs including capital inputs? |
| (ii) | What are the different stages of VAT? |
| Can it be said that the entire burden falls on the final consumer? |
| 2+2 | (0) |
| 6. | (a) | MNP Ltd. commenced operations of the business of a new four–star hotel in Chennai on 1–4–2011. The company incurred capital expenditure of Rs. 40 lakh during the period January, 2011 to March, 2011 exclusively for the above business, and capitalized the same in its books of account as on 1st April, 2011. Further, during the Previous Year 2011–12, it incurred capital expenditure of Rs. 2.5 crore (out of which Rs. 1 crore was for acquisition of land) exclusively for the above business. Compute the income under the heading "profits and gains of business or profession" for the assessment year 2012–13, assuming that MNP Ltd. has fulfilled all the conditions specified for claim of deduction under section 35AD and has not claimed any deduction under Chapter VI–A under the heading "C. Deductions in respect of certain incomes". The profits from the business of running this hotel (before claiming deduction under section 35AD) for the assessment year 2012–13 is Rs. 80 lakhs. Assume that the company also has another existing business of running a four–star hotel in Kanpur, which commenced operations 5 years back, the profits from which was Rs. 130 lakhs for assessment year 2012–13. | 8 | (0) |
| | (b) | Avinash is a qualified Chartered Accountant. He acquired the certificate of practice from the ICAI in May, 2010. For the financial year 2011–12 his receipts (including service tax) are as follows: | Particulars | Amount (Rs.) | Services rendered in tax planning
Representation of client before CESTAT
Preparation of financial statements of XYZ Ltd.
Certification of documents under Export and Import policy of
Government of India.
Receipts for the legal advice given to, clients in the month of
December, 2011. | 50,000
40,000
4,00,000
1,50,000
50,000 |
In the financial year 2010–11 he has provided the value of taxable service of value of Rs. 11,00,000.
Using the above information, calculate the value of taxable services for the financial year 2011–2012. | 4 | (0) |
| | (c) | Ms. Pragya, a dealer submits the following information. Compute the net VAT liability from the following information: | Rs. | Import of raw material (including 10% import duty)
Raw material purchased from Kerala. (including excise duty @ 12%)
VAT @ 4 % on the above purchase
Raw material purchased from Karnataka
Transportation and manufacturing expenses | 1,10,000
2,24,000
85,000
47,000 |
Pragya sold entire stock to Nishu at a profit of 10% on the cost of production. VAT rate on such sale is 4%. | 4 | (0) |
| 7. | (a) | Mr. Mohit is employed with XY Ltd. on a basic salary of Rs. 10,000 p.m. He is also entitled to Dearness allowance @ 100% of basic salary, 50% of which is included in salary as per terms of employment. The company gives him house rent allowance of Rs. 6,000 p.m. which was increased to Rs. 7,000 p.m with effected from 1–1–2012. He also got an increment of Rs. 1,000 p.m. in his basic salary with effect from 1–02–2012. Rent paid by him during the previous year 2011–2012 is as under: | April and May, 2011 | — | Nil, as he stayed with his parents | | June to October, 2011 | — | Rs. 6,000 p.m for an accommodation in Ghaziabad. | | November, 2011 to March, 2012 | — | Rs.8,000 p.m for an accommodation in Delhi |
Compute his gross salary for assessment year 2012–13. | 8 | (0) |
| | (b) | Mention the due dates for filing of service tax returns. Can an assessee submit a revised return ? | 4 | (0) |
| | (c) | Briefly explain the system of cross checking under VAT Act. | 4 | (0) |
