CWA/ICWA Final :: Strategic Tax Management : December 2005

F-16(STM)
Revised Syllabus

Time Allowed : 3 Hours Full Marks : 100
The figures in the margin on the right side indicate full marks
Answer Question No. 1 which is compulsory and any five from the rest .
Total six questions are to be answered.
Marks

1. Answer the following questions as appropriate by selecting the correct choice: 2x10=20
(a) The time limit for filling appeal before the Income Tax Appellate Tribunal against the order of the commissioner of Income Tax (Appeals) is
(i)30 days from date of order
(ii)30 days from receipt of order
(iii)60 days from receipt of order
(iv)60 days from date of order
(b) An order passed u/s 179 of the Income Tax Act, 1961, holding a director of a private limited company as assessee in default liable for dues of the private limited company is
(i)Not appealable before the CIT(A) u/s 246 of I.T. Act 1961
(ii)Appeable before the CIT(A) subject to payment of dues
(iii)Appealable before Income Tax Appealable Tribunal
(iv)Appealable before the settlement commission
(c) In order to attract excise duty under the Central Excise Act, 1944 goods must be
(i)Movable
(ii)Movable Or Immovable
(iii)Immovable
(iv)Neither
(d) Notional interest on security deposit/advance received by manufacturer from buyer is includible in the transaction value if
(i)Price is the sole consideration for sale
(ii)If there evidence that selling price is lowered due to such advance/deposit
(iii)The transaction is at arms length
(iv)In all cases
(e) Land is an asset for Wealth Tax Act, 1957 if it is
(i)Vacant land located in a muncipality
(ii)Location beyond 8 Kilometers of a muncipality/town
(iii)Land on which construction is not permissible
(iv)Land occupied by a building used for business
(f) Deduction u/s 54F of Income Tax Act, 1961 for capital gains on transfer of a long-term capital asset other than a house property is available only if
(i)On the date of transfer of orginal asset assessee does not own more than one residential house property
(ii)On the date of transfer of orginal asset assessee does not own more than one commertial house property
(iii)On the date of transfer of orginal asset assessee does not own any other house property
(iv)On the date of transfer of orginal asset assessee does not owns at least one other house property
(g) Deprciation u/s 32 of I. T. Act 1961 is available if
(i)Asset is leased by the assessee
(ii)Asset is owned by the assessee
(iii)Asset is not used during the year at all
(iv)Asset is used for personal purpose but not for business
(h) Which of the following is not liable to sales tax under CST Act?
(i)Lottery tickets
(ii)Newspapers
(iii)Sim cards
(iv)Trade licences
(i) Goods return are not liable to sales tax if they are
(i)Returnd by the buyer at any time in the financial year in which sale takes place
(ii)With in six months of the end of the financial year in which sale takes place
(iii)With in six months of sale
(iv)With in six months of sale but not later than three months from end of the relevant financial year in which sale took place
(j) Income of ancsetral property is not taxable as income of Hindu Undivided Family in hte following cases:
(i)Family of husband and wife having no child
(ii)Family of husband and wife having a child
(iii)Family of two windows of deceased brothers
(iv)Widowed husband surviving a deceased wife with no issues
Please turn over

( 2 )

F-16(STM)
Revised syllabus		 Marks
2. (a) State the conditions to be fulfilled for carry forward of unabsorbed depreciation and accumulated losses in the hands of the amalgamated company. 9
(b) Mr. Bharghava had filed an appeal against higheer collection of provisional antidumping duty and the issue is decided in his favour on 12-04-2004, the amount levied in excess being Rs. 2.3 lac. The refund is issurd after ten months fromthe date of finalisation of duty. The authirities refuse to grant interest on the ground that the claim for refund was filed belatedly. Discuss. 3
(c) Nayanandh Granites Ltd. obtained a chemical in Netherlands for an exeptionally low price. Whist the market price was an equivalent of INR 200 per Kg., they got it at a low price of INR 160 per kg. In determining the customs valuation, the authorities contend that price to be adopted should be INR 160 per kg, even though the purchase is bona fide and supported by genuine purchase bill. Is this correct? 4
(3) The accoutns of the X Ltd., an Indian Company for the year ended 31.3.2005 prepare in accordance with the provisions of parts II and III of Schedule VI to the Companies Act, 1956 reveals the following:
Rs. in lacs
PAT but prior to depreciation
Less: Depreciation for the year		 200
30
Net profit after depreciation
Less: provision for loss of Z Ltd., its subsidiary		 170
10
Balance 160
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As per its book, the company has unabsorbed business loss of Rs. 30 lacs for the asst. Year 2003-2004 and Rs. 80 lacs for the asst. Year 2004-2005. The unabsorbed depreciation as per books are Rs. 20 lacs and Rs. 90 lacs respectively. The carried forward business losses eligible for set off under the Income Tax Act, 1961 for these two years are Rs. 56 lacs and Rs. 90 lacs respectively.
For the current year, Income Tax (including defered tax) debited is Rs. 3 lacs and depreciation allowable as per the Income Tax Act is Rs. 40 lacs. The net profit includes a sum of Rs. 40 lacs from export turnover.
Compute the tax payable by X Ltd. for the asst. year 2005-2006.
4. Briefly discuss in 3-4 sentences about the validity of the following statements:
(a)The time limit for moving a rectification petition under section 154 of the Income Tax Act, 1961 is four years from the date of the order of the AO sought to be rectified.
(b)The gross turnover of Mr. X is Rs. 30lacs and that of his minor child whose income is clubbed in his hands, Rs. 15 lac. The AO contends that Mr. X is liable to tax audit under section 44AB of the Income Tax Act, 1961.
(c)X Ltd., having its head office at Raipur, despatched goods to its branch in Chennai for Rs. 10 lacs. Sales Tax authority under the CST Act contends that since Form F is not received, CST of 10% is payble.
(d)Mr. A has imported an equipment from poland for 20,000 USD (CIF value). The rates prevalling on the date of presentation of bill of entry are (a) Bank realisation rate of the bill Rs. 46.50, (b) Rate notified by the Government under section 14(3) Rs. 46.70 (c) R.B.I. floor rate Rs. 46.30. The assessable value for customs purposes is taken as Rs. 93,400.
(e)Ram imports machinery. He pays fee for transfer of technolgy to the importer, and also training charges. These items are includible in ascertainment of "price" for purpose of section 14(1) of the Customs Act.
(f)1000 units of Rs. 50 each raw material are purchased by Ram on which duty at 16% i.e. Rs. 8,000 has been paid. Ram avails Cenvat credit thereafter. Since these inputs are subseqentlu not required, he sells them for rs. 55 each. On the date of clearence, the duty rate is 10%. The excise authorities contend that Rs. 8,000, being the duty at the first instance, should be paid.
(g)2000 units of raw material were purchased on which duty paid was Rs. 32,000. 20 units were damaged during the course of unloading, rendering them unfit for consumption or sale. Cenvat credit can be claimed in respect of all the units.
(h)Under the Income Tax Act, 1961, local authorities are exempt from payment of education cess.
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5. (a) Assessable Value of an imported machinery falling under chapter heading 84 is Rs. 2,00,000. Rate of customs duty is 20%. Excise duty payble on the machinery, if manufactured in India, is 16%. There is an exemption notification, which provides that if the manufacturer does not avail Cenvat credit of inputs, the excise duty payble will be 8%. Education cess is 2%. Caluculate the customs duty payable, if machinery is imported by a manufacturer for his own use. How much Cencat credit will be available to the manufacturer? What are the restriction on availment of the Cenvat credit? 12
(b) Though Union Government cannot levy Income Tax on agricultural income, it has indirectly lecied Income Tax in agricultural income. Do you agree? Explain. 4
6. (a) A major step was initiated in Budget 2004 for integration of goods and service tax. Explain highlights of the provisions. 10
(b) M/s. Slow Movers Ltd. have obtained a term loan from Bihar State Financial Corporation. The company maintains books of account on mercantile basis. They have made provision of Rs. 3,00,000 in their books of account towards interest payble to the Bihar State Financial Corporation for 2004-2005. However, actual payments were made as follows:
(i)Rs. 40,000 on 10-4-2004.
(ii)Rs. 55,000 on 5-1-2005,
(iii)Rs. 35,000 on 21-9-2005,
(iv)Rs. 65,000 on 14-12-2005,
(v)Rs. 25,000 on 25-7-2006,
(vi)Rs. 60,000 on 2-4-2007,
(vii)Rs. 20,000—required for waiver to Financial corporation on 3-4-2007
State how much payment will be allowed as deduction for Income Tax and in which Assessment Year/s.
 6
7. (a) Explain distinguishing features between provisions of 'pilferage' and 'loss or destruction of goods' under Customs Act. 8
(b) What is 'captive consumption' under Central Excise? How the goods are valuable in case of captive consumption? 8
8. (a) Explain provisions of valuation for excise purposes on basis of MRP printed on the product. 10
(b) Discuss provision for classification of Mixture or Combinations in Central Excise Tariff. 6

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