2016
(May)
COMMERCE
(Speciality)
Course: 601
(Direct Tax - II)
Full Marks:
80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full
marks for the questions
1. (a) Write True or False: 1x4=4
i.
Interest on capital or loan received by a
partner from a firm is taxable under the head ‘income from other sources’.
ii.
Conversion of personal effect into
stock-in-trade shall be subjected to capital gain.
iii.
Winning from lotteries, cross-word puzzles,
horse races and other races, card games, etc., are casual income and hence
exempt.
iv.
Loss under the head ‘income from house property’
can be carried forward even if the return is not furnished before the due date
prescribed u/s 139 (1).
(b) Fill in the
blanks: 1x4=4
i.
Salary, bonus, commission or remuneration due to
or received by a working partner from the firm is taxable under the head ____.
ii.
Conversion of debentures into shares shall not
be regarded as ____ for capital gain purpose.
iii.
If no system of accounting is followed, interest
on securities is taxable on ____ basis.
iv.
Loss under the head ‘house property income’ can
be carried forward for ____.
2. Write short notes on any four of the following: 4x4=16
a)
Inadmissible deduction u/s 40.
b)
Capital asset.
c)
Carry forward of business losses.
d)
Allowable deductions from ‘income from other
sources’.
e)
Tax planning in case of employee’s remuneration.
3. (a) Write down briefly the basic principles for arriving
at Business income. 11
Or
(b) Mr. B, a
businessman, submits the following Profit and Loss Account for the year ending
31.32015:
Particulars
|
Rs.
|
Particulars
|
Rs.
|
Salaries
Travelling expenses
Rent & taxes
Interest on capital
Administrative charges
Depreciation
Income Tax
Net Profit
|
75,000
1,25,800
3,000
5,000
25,000
25,000
50,000
3,51,200
|
Gross Profit
Interest on company deposits
Discount received
|
6,50,000
8,500
1,500
|
6,60,000
|
6,60,000
|
The following additional information is furnished:
a)
Salaries include a payment of Rs. 24,000 to Mrs.
B, who is acting as supervisor of the quality control department. She does not
have any other income during this year. Till February, 2014 she was employed in
R Ltd., in a similar post for 10 years and was drawing a monthly salary of Rs.
1,500.
b)
Mr. B had gone on a foreign tour in connection
with business. The journey was for 15 days in which he spent 3 days on visiting
tourist spots. Total expenses incurred, which were within RBI norms as well, in
respect of this foreign tour was Rs. 75,000.
c)
Administrative charges include expenses in
respect of donation of Rs. 1,000 to the trade association for the purposes of
advertisement in souvenir published by it.
d)
Depreciation allowance as per Income Tax Rules,
1962 is Rs. 45,000.
e)
Mr. B raised a loan from LIC of India on the
security of his life insurance policy and used the same for the payment of
expenses relating to repairs of machinery. Interest of Rs. 2,500 in respect of
this loan was paid out of his drawings.
From the above
particulars, compute the total income under the head Business/Profession of Mr.
B for the assessment year, 2015-16. 11
4. (a) What is Transfer of Capital Asset? Discuss the
procedure for computation of capital gains. 4+8=12
Or
(b) Mr. A transfer
the following capital assets:
House Property
|
Gold
|
Shares
|
|
Date of acquisition
Date of transfer
Sale consideration (in Rs.)
Cost of Acquisition (in Rs.)
Cost of improvement incurred in 2012-13 (in Rs.)
Expenditure on transfer (in Rs.)
|
30.06.1984
31.01.2015
19,00,000
90,000
1,27,800
20,000
|
31.08.2013
28.02.2015
7,00,000
5,00,000
-
10,000
|
30.04.1987
15.03.2015
10,00,000
8,00,000
-
5,000
|
Determine the amount of capital gain chargeable to tax for
the assessment year, 2015-16 considering CII of 1984-85, 2012-13 and 2014-15 at
125, 852 and 1024 respectively. 12
5. (a) Explain the assets exempted from Tax under the
Wealth-tax Act. 11
Or
(b) Explain briefly
the deemed assets under the Wealth-tax Act. 11
6. (a) (i) For the previous year ending March, 31, 2015, Mr.
C (59 years) submits the following information:
i.
Income from house property – Rs. 2,50,000.
ii.
Loss from Business (non-speculative) – Rs.(-)
1,00,000.
iii.
Bank fixed deposit interest – Rs. 50,000.
iv.
Deposit in public provident fund account – Rs.
1,25,000
v.
Payment of life insurance premium on own life –
Rs. 35,000
vi.
Mediclaim insurance premium on the life of C’s
father – Rs. 30,000.
Determine the
amount of net income and tax liability of Mr. C. 8
(ii) Write briefly the provisions of carry forward and
set off of loss from house property under the Income-tax Act.
Or
(b) (i) Loss under a head of income can be set off against income
under any other head of income in the same assessment year. Is there any
exception to this rule? 7
(ii) Show the order in which current and brought forward
losses are to be set off. 4
7. (a) Distinguish between
tax avoidance and tax evasion. What are the objectives of tax planning? 4+7
Or
(b) Explain the methods commonly used by tax payers to minimize
tax liability. 11