IPCC : Taxation - November 2009

IPCC • Taxation • November 2009

This Paper has 25 answerable questions with 0 answered.

Roll No………
Total No. of Questions — 8]	[Total No. of Printed Pages — 3
Time Allowed : 3 Hours	Maximum Marks : 100

Answer all questions

Working notes should form part of the answer.

Marks

From the following details, compute the total income of Siddhant of Delhi and tax payable for the A.Y.2009–10:

	Rs.
Salary including dearness allowance Bonus Salary of servant provided by the employer Rent paid by Siddhant for his accommodation Bills paid by the employer for gas, electricity and water provided free of cost at the above flat	3,35,000 11,000 12,000 49,600 11,000

Siddhant was provided with company’s car (self–driven) also for personal use and it is not possible to determine expenditure on personal use and all expenses were borne by the employer.

Siddhant purchased a flat in a co–operative housing society for Rs.4,75,000 in April, 1990, which was financed by a loan from Life Insurance Corporation of India of Rs.1,60,000 @ 15% interest, his own savings of Rs.85,000 and a deposit from a nationalized bank for Rs.2,50,000 to whom this flat was given on lease for ten years. The rent payable was Rs.3,500 per month.

The following particulars are relevant:

(a)	Municipal taxes paid	Rs.4,300 (per annum)
(b)	Society charges for passage lights, watchman’s salary	Rs.1,900 (per annum)
(c)	Insurance	Rs.860
(d)	He earned Rs.2,700 in share speculation business and lost Rs.4,200 in cotton speculation business.
(e)	In the year 2003–04, he had gifted Rs.30,000 to his wife and Rs.20,000 to his son who was aged 11. The gifted amounts were advanced to Mr. Rajesh, who was paying interest @ 19% per annum.
(f)	Siddhant received a gift of Rs.25,000 each from four friends.
(g)	He contributed Rs.5,600 to Public Provident Fund and Rs.4,000 to Unit Linked Insurance Plan.
(h)	He received national award for humanitarian work from the Central Government in the form of a land whose fair market value is Rs.5,00,000 as on 31st March, 2009.

(0)

(a)

From the following particulars of Pankaj for the previous year ended 31^st March, 2009, compute the income chargeable under the head "Income from other sources":

		Rs.
(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi)	Directors fee from a company Interest on bank deposits Income from undisclosed source Winnings from lotteries (Net) Royalty on a book written by him Lectures in seminars Interest on loan given to a relative Interest on debentures of a company (listed in a recognised stock exchange) net of taxes Interest on Post Office Savings Bank Account Interest on Government Securities Interest on Monthly Income Scheme of Post Office	10,000 3,000 12,000 33,500 9,000 5,000 7,000 3,588 500 2,200 33,000

He paid Rs.1,000 for typing the manuscript of book written by him.

(0)

(b)

Mr. Raman is a co-owner of a house property alongwith his brother.

	Rs.
Municipal value of the property Fair rent Standard rent under the Rent Control Act Rent received	1,60,000 1,50,000 1,70,000 15,000 p.m.

The loan for the construction of this property is jointly taken and the interest charged by the bank is Rs.25,000, out of which Rs.21,000 has been paid. Interest on the unpaid interest is Rs.450. To repay this loan, Raman and his brother have taken a fresh loan and interest charged on this loan is Rs.5,000.

The municipal taxes of Rs.5,100 have been paid by the tenant.

Compute the income from this property chargeable in the hands of Mr. Raman for the A.Y. 2009–10.

(0)

(c)

Compute the net taxable capital gains of Smt. Megha on the basis of the following information –

A house was purchased on 1.5.1997 for Rs.4,50,000 and was used as a residence by the owner. The owner had contracted to sell this property in June, 2007 for Rs.10 lacs and had received an advance of Rs.70,000 towards sale. The intending purchaser did not proceed with the transaction and the advance was forfeited by the owner. The property was sold in April, 2008 for Rs.15,00,000. The owner, from out of sale proceeds, invested Rs.4 lacs in a new residential house in January, 2009.

(0)

Mr. Rajat submits the following information for the financial year ending 31^st March, 2009. He desires that you should:

(a) Compute the total income and
(b) Ascertain the amount of losses that can be carried forward.

(i) He has two houses : (a) House No. I – Income after all statutory deductions (b) House No. II – Current year loss	Rs. 72,000 (30,000)
(ii) He has three proprietary businesses : (a) Textile Business : (i) Discontinued from 31st October, 2008 – Current year loss (ii) Brought forward business loss of A.Y.2005–06 (b) Chemical Business : (i) Discontinued from 1st March, 2007 – hence no profit/loss (ii) Bad debts allowed in earlier years recovered during this year (iii) Brought forward business loss of A.Y. 2007–08 (c) Leather Business : Profit for the current year (d) Share of profit in a firm in which he is partner since 2002	40,000 95,000 Nil 35,000 50,000 1,00,000 16,550
(iii) (a) Short-term capital gain (b) Long-term capital loss	60,000 35,000
(iv) Contribution to LIC towards premium	10,000

(0)

Answer any three of the following:

3x4=12

(a)

Explain the consequences of failure to deduct tax at source and payment of the same to the Government Account under the Income-tax Act, 1961.

(0)

(b)

What are the circumstances under which the Assessing Officer can make a reference to the Valuation Officer under section 55A of the Income–tax Act, 1961?

(0)

(c)

Explain the concept of reverse mortgage and discuss its tax implications.

(0)

(d)

Discuss briefly on carry forward and set off of losses in the case of change in constitution of firm or succession.

(0)

Answer the following:

2x4=8

(a)

Should service tax be paid even, if it is not collected from the client or service receiver?

(0)

(b)

Mr. Raju is a multiple service provider and files only a single return. State with reasons whether he can do so?

(0)

(c)

Explain the term "Vocational Training Institute" under the provisions of service tax.

(0)

(d)

State with reason in brief whether the following statement is true or false with reference to the provisions of service tax:

Mr. Salim, an architect has received the fees of Rs.4,48,500 after the deduction of income–tax of Rs.51,500. Service tax will be payable on Rs.4,48,500.

(0)

(a)

Rosy Tours Co. has arranged three package tours during F.Y. 2008 – 09. The particulars of the services and charges are as under:

(i)	Tour 1: April, 2008 – Charges received Rs.3.5 Lacs. The package includes transportation, accommodation, food, tourist guide and entry fees for monuments.
(ii)	Tour 2: October, 2008 – Charges received Rs.6.5 Lacs. The package includes transportation and accommodation for stay.
(iii)	Tour 3: December, 2008 - Charges received Rs.4 Lacs. The charges are solely for arranging accommodation for stay. However, the bills issued to the clients do not mention it clearly that the charges are solely for arranging the accommodation for stay.

All the charges are excluding service tax. The rate of service tax is 12% + education cess. Compute the value of taxable service and service tax payable there on.

(0)

(b)

Answer the following:

3x3=9

(i)

Whether export service provided by a service provider is excluded for the purpose of payment of service tax?

(0)

(ii)

List the documents to be submitted along with the first service tax return.

(0)

(iii)

What is the due date for payment in case of e–payment of service tax?

(0)

Answer the following:

2x4=8

(a)

What are the different rates under VAT system?

(0)

(b)

Under what circumstances registration can be cancelled under VAT?

(0)

(c)

Briefly explain the income variant of VAT.

(0)

(d)

State with reasons in brief whether the following statement is true or false with reference to the provisions of value added tax.
The VAT rate on sale of lottery ticket is 4%.

(0)

(a)

Mr. X, a manufacturer sells goods to Mr. B, a distributor for Rs.2,000 (excluding VAT). Mr. B sells goods to Mr. K, a wholesale dealer for Rs.2,400. The wholesale dealer sells the goods to a retailer for Rs.3,000, who ultimately sells to the consumers for Rs.4,000.

Compute the tax liability, input credit availed and tax payable by the manufacturer, distributor, wholesale dealer and retailer under invoice method assuming VAT rate @ 12.5%.

(0)

(b)

Answer the following:

3x3=9

(i)

What are the different stages of VAT? Can it be said that entire burden falls on the final consumer?

(0)

(ii)

Discuss filing of return under VAT.

(0)

(iii)

List six purchases which are not eligible for input tax credit.

(0)

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