2018
(May)
COMMERCE
(Speciality)
Course: 601
(Direct Tax - II)
Time: 3 hours
The figures in the
margin indicate full marks for the questions
(NEW COURSE)
Full Marks: 80
Pass Marks: 24
1.
(a) Write True or False: 1x4=4
1) Preliminary
expenditure incurred after 31.03.2008 are allowed deduction in 10 equal
installments.
2) Conversion
of debentures into shares shall not be regarded as transfer for capital gain
purpose.
3) If
no system of accounting is followed, interest on securities is taxable on
receipts basis.
4) Loss
on account of owning and maintaining the racehorse can be carried forward
indefinitely.
(b)
Fill in the blanks: 1x4=4
1) Short-term
capital loss on particular assessment year can be set off in the same
assessment year from _____.
2) For
claiming exemption under Section 54, the assessee should construct the
residential property within _____ years after the date of transfer.
3) Interest
on units of a Mutual Fund on or after April 1, 2003 shall be _____.
4) Where
a part of the block of assets is sold for a price less than the opening WDV
plus cost of assets, if any, acquired during the year, the balance amount shall
be treated as _____ for charging depreciation.
2.
Write short notes on any four of the following: 4x4=16
a) Block
of assets.
b) Chargeability
under the head ‘Profits and gains of business or profession’.
c) Long-term
and short-term capital gains.
d) Not
allowable deductions from ‘income from other sources’.
e) Carry
forward of business losses.
3.
(a) What do you understand by the term ‘depreciation’? What are the rules
regarding grant of deduction for depreciation? 4+10=14
Or
(b) The following are the fixed assets owned and used by a
firm in its business of manufacturing articles for the assessment year,
2016-17:
|
Block of Assets
|
WDV on
01.04.2015
(Rs.)
|
Addition during the year
(Rs.)
|
Rate of
Depreciation
|
|
(a) Factory
Building
|
10,00,000
|
2,00,000
(Completed on
01.01.2016)
|
10%
|
|
(b) Residential
Building
|
5,00,000
|
1,00,000
(Completed on
01.05.2015)
|
5%
|
|
(c) Plant and
Machinery
|
45,00,000
|
15,00,000
(installed on
15.06.2015)
|
15%
|
|
(d) Furniture
and Fittings
|
2,00,000
|
50,000
(Put to use on
13.04.2016)
|
10%
|
Calculated the total amount of depreciation. 14
4.
(a) Explain, in detail, capital gain exempted from tax. 14
Or
(b) Mr. S submits the following particulars about the sale
of assets during the year, 2014-15: 14
|
|
Jewellery
(Rs.)
|
Land
(Rs.)
|
Gold
(Rs.)
|
|
Sales Price
Expenses on sales
Cost of acquisition
Year of acquisition
CII
|
5,00,000
-
60,000
1987-88
150
|
18,50,000
50,000
2,10,000
1984-85
125
|
3,50,000
-
1,00,000
1999-2000
389
|
Calculate the amount of capital gain chargeable to tax for
the assessment year 2015-16 if CII for 2014-15 is 1024.
5.
(a) Explain the provisions of the Income-tax Act regarding carry forward of
losses. 14
Or
(b) Mr. A furnishes the following particulars of his income
for the assessment year 2016-17. You are required to deal with set-off and
carry forward of losses: 14
|
|
(Rs.)
|
|
Profit from
wholesale business
Income from an
agency business
Speculation income
Short-term capital
gain
Long-term capital
gain
|
50,000
4,000
1,000
6,000
12,000
|
The carry forward items from the assessment year, 2015-16
are:
|
|
(Rs.)
|
|
Loss from retail
business(now discontinued)
Loss in agency
business
Loss from wholesale
business
Speculation loss
Short-term capital
loss
Long-term capital
loss
|
5,000
6,000
5,000
6,000
7,500
9,000
|
Current year’s depreciation for wholesale business is Rs.
2,500.
6.
(a) Explain the important areas where tax planning may be attempted. 14
Or
(b) What propositions may an employee consider for the
purpose of tax planning under the head ‘Salaries’?
(OLD COURSE)
Full Marks: 80
Pass Marks: 32
1.
(a) Write True or False: 1x4=4
1) Unabsorbed
depreciation which could not be set off in the same assessment year, can be
carried forward for 8 years.
2) Exemption
under Section 54F shall not be allowed if the assessee, on the date of
transfer, owns any residential house.
3) Income
under the head ‘income from other sources’ is taxable on due basis.
4) A
business loss can be carried forward and set off in the subsequent assessment
year whether the business on account of which this loss has arisen is continued
or not.
(b)
Fill in the blanks: 1x4=4
1) Dividend
declared by a domestic company shall be _____.
2) Wealth
tax is no longer applicable from the assessment year _____ onwards.
3) For
claiming exemption u/s 54B, the asset transferred should be _____.
4) Loss
on account of owning and maintaining racehorses can be carried forward for
_____ years.
2.
Write short notes on any four of the following: 4x4=16
a) Amortisation
of preliminary expenses.
b) Unabsorbed
depreciation.
c) Cost
of acquisition.
d) Carry
forward of capital losses.
e) Exempted
assets under the Wealth-tax Act.
3.
(a) What are the incomes which are chargeable to tax under the head ‘Profits
and gains of Business or profession’? Discuss in detail. 12
Or
(b) Mr. X, a businessman, submits the following Profit and
Loss Account for the year ending 31.03.2016: 12
|
Particulars
|
(Rs.)
|
Particulars
|
(Rs.)
|
|
Salaries
Travelling Expenses
Rent and 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
3,76,200
|
Gross Profit
Interest on Company
deposits
Discount received
|
6,75,000
8,500
1,500
|
|
|
6,85,000
|
|
6,85,000
|
The following additional information is furnished:
1) Salaries
include a payment of Rs. 30,000 to Mrs. X, who is acting as supervisor of the
quality control department. She does not have any other income during this
year. Till February, 2015 she was employed in Z Ltd. In a similar post for 10
years and was drawing a monthly salary of Rs. 2,000.
2) X
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 in respect of this foreign tour were Rs. 80,000.
3) Depreciation
allowance as per the Income-tax Rules, 1962 is Rs. 45,000.
4) X
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. 3,000 in respect of this loan was paid out of his drawings.
From the above particulars, compute the business income of
Mr. X to be taxable for the assessment year 2016-17.
4.
(a) (1) How to convert cost of acquisition into indexed cost of acquisition? 3
(2) Explain the method of computation of short-term and
long-term capital gain. 8
Or
(b) (1) State any six items of income included in Section
56(1) under the head ‘Income from other sources’. 6
(2) State any five items deductible under Section 57 in
computing taxable income under the head ‘Income from other sources’. 5
5.
(a) What are the assets mentioned in Section 2(ea) of the Wealth-tax Act, 1957?
Discuss in detail. 11
Or
(b) What is net wealth? How is it computed? 4+7=11
6.
(a) Write the provisions of the Income-tax Act regarding carry forward and set
off of business loss and capital loss.
11
Or
(b) From the following details, compute the gross total
income of Mr. B for the assessment year, 2016-17:
|
|
Rs.
|
|
Taxable income from
salary
Income from house
property:
House A (let out)
House B (self-occupied, interest on borrowed money)
Short-term capital
gain
Long-term capital
loss
Interest on
securities (gross)
|
80,000
(-) 95,000
(-) 9,000
12,000
25,000
10,000
|
7.
(a) (1) Distinguish between tax planning and tax management. 7
(2) Distinguish between tax planning and tax evasion. 4
Or
(b) What are the objectives of tax planning? “Tax evasion is
a crime, but tax avoidance is not.” Comment briefly. 7+4=11
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