CS Inter :: Tax Laws : June 2004

Income earned by a mutual concern from mutual activities is not taxable. Comment.

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.

Explain the provisions of the Income-tax Act, 1961 regarding tax deduction at source on rent

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 Rs.		II Rs.
Basic pay	66,000		66,000
Bonus	9,000		9,000
Education allowance for 2 children	30,200		—
Education facility for 2 children in a school maintained by employer	—		30,200
Sweeper allowance	10,000		—
Sweeper facility	—		10,000
Entertainment allowance	6,000		—
Club facility	—		6,000
Transport allowance for personal use	12,000		—
Free car (1200 cc) facility for personal use (car owned by the employer)	—		12,000
Medical allowance	18,000		—
Medical facility for Naresh and his family members in a hospital maintained by employer	—		18,000
Allowance for gas, electricity and water supply	4,500		—
Free gas, electricity and water supply (bills will be in the name of the employer)	—		4,500
Holiday home allowance	8,000		—
Holiday home facility	—		8,000
Lunch allowance	18,000		—
Free lunch (Rs. 70 x 200 days + Rs. 80 x 50 days)	—		18,000
Diwali gift allowance	7,500		—
Gift on Diwali	—		7,500
A rent-free unfurnished home — lease rent	14,000		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 unrecognised provident fund ? Interest-free loan of Rs.20,000 will be given to him for purchasing household items.

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

How do you treat unrealised rent allowed as a deduction in the past and realised in a subsequent year when the assessee is no more the owner of the property ?

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.

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 ?

Vinod started a retail business in textiles on 1st April, 2002. During the fi nancial 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.

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

Write a short note on ‘time limit for completion of assessment or reassessment’ under the provisions of the Income-tax Act, 1961.

Briefly explain the provisions with regard to ‘payment of advance tax' under the Income-tax Act, 1961.

Explain the concept of ‘related person’ under the Central Excise Act, 1944 with the help of decided cases. Give atleast two examples not covered under the concept of related person.

Explain the salient features of procedure for clearance under the Customs Act, 1962 in the following cases :
 (i) Home consumption; and
(ii) Warehousing.

Give a brief description of CENVAT credit. What are its salient features

Kamath was a dealer engaged in oil business at Bangalore. He furnished the following particulars with a request to compute the central sales tax payable for the year 2002-03 (April to March) :

		Rs.
	Total turnover for the year which included central sales tax :	22,50,000
(i)	Cost of oil containers as packing material	50,000
(ii)	Trade commission against separate credit notes to be issued	64,000
(iii)	Excise duty	1,25,000
(iv)	Freight, insurance and transport charges recovered separately in the invoices	95,000
(v)	Installation charges	36,000
(vi)	Goods returned by dealers within 6 months of sale, but after the end of financial year	62,000
(vii)	Goods returned by dealers beyond 6 months of sale, after end of the financial year	30,00,000
(viii)	The dealer received ‘Form-C from all the buyers.

State any five of the generally accepted principles in classification of goods under the central excise laws.

What is ‘sale’ under the Central Sales Tax Act, 1956 ? What are the transactions that do not constitute a sale under the said Act ? Explain.

What are the various functions involved in assessment stage under the Customs Act, 1962 and explain one such function in detail ?