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Gauhati University Question Papers: Direct Taxes (Nov-Dec’ 2014)

Full Marks: 80
Time: 3 hours
(The figures in the margin indicate full marks for the questions)
1. (a) Fill in the blanks with appropriate word/ words:                                 1x5=5

1)         The rates of income tax for a given year is fixed by the _______ Act passed by the Parliament.
2)         The liability to pay advance-tax arises when the estimated amount of income tax for a financial year is _______ or more.
3)         Income from the sale of a portion of fixed assets is taxable under the head _______.
4)         Allowances paid by the UNO are _______ exempted.
5)         Income tax is an _______ tax on income.
(b) State whether the statement is true or false:                      1x5=5
1)         Nationality of an assessee has no relation with the concept of residential status.
2)         Perquisites cannot be given in monetary form.
3)         In India, Wealth Tax Act of 1957 has been made effective from 1st April, 1958.
4)         ‘Best Judgement assessment’ is also known as ‘ex-parte assessment’.
5)         Residential status is determined with reference to the individual’s physical presence in India.
2. Write short answer to the following in about 50 words each:                       2x5=10
a)         Define ‘Person’ as per Income Tax Act.
b)         Explain short term capital gain.
c)          State two items of income which can be included under the head “Income from other sources.”
d)         Mention any two perquisites which are taxable for specified employees.
e)         State the meaning of Assessment year as per the Income Tax Act.
3. Describe briefly any fou of the following:                                                5x4=20
a)         State the consequences of non-payment of advance-tax.
b)         Enumerate any five types of income which are fully exempted from tax.
c)          Explain the meaning of ‘Income from other source’ as per Income-tax Act.
d)         Define ‘assets’ under the Wealth Tax Act.
e)         Describe about ‘Tax deducted at source’ regarding personal income of an individual.
f)          What do you mean by ‘Self Assessment’ under the Income Tax Act, 1961?
g)         Mr. S Dutta is working in a private company in Guwahati. He draws Rs. 15,000 basic salary. Rs. 7,000 p.m. As D. A. Rs. 500 p.m. as city compensatory allowances and Rs. 5,000 p.m. as house rent allowance. On 25.03.2014, he also drew the salary for the month of April 2014 in advance. During the period from 1.4.2013 to 30.06.2013, he resided in his father-in-law’s house without paying any rent. On 1.7.2013 he started residing in another house where he paid a monthly rent of Rs. 4,000 p.m. Calculate the amount of taxable house rent allowance for the assessment year 2014-15.
4. Answer the following:                                                                             5x4=20
(a) (1) Mr. A holds shares since 1968 which he acquired for Rs. 1,00,000. Their fair market value on 1.4.1981 was           Rs. 1,50,000. On 1.10.1983 he negotiated their sale with Mr. B and accepted Rs. 30,000 as earned money, the balance being payable within one month. Mr. B failed to pay the negotiated sum and the earnest money was forfeited, In September, 2013, the shares were sold for Rs. 58,00,000. Compute the amount of capital gain for A. Y. 2014-15.
(2) Mrigen Das is the owner of a house property located at Guwahati. The municipal value of which is Rs. 1,20,000. The house is let out for a monthly rent of Rs. 8,000. The fair market value is Rs. 84,000. Expenses relating to the house are municipal tax Rs. 2,000, fire insurance premium Rs. 5,000, collection charges Rs. 2,000 and ground rent Rs. 1,000.
The interest on loan taken for the construction of the house is Rs. 20,000 for the previous year 2013-14.
Determine the taxable income from house property of Mrigen Das for the assessment year 2014-15.
1)         Elaborate the meaning of Total Income.
2)         What are the deductions allowed while computing income from house property?
(b) From the following information relating to saving/investment of Mr. Prakash Jha during the previous year 2013-14, ascertain the amount of allowable deduction u/s. 80C for the assessment year 2014-15 assuming his gross total income to be Rs. 4,70,000;
1)         Life insurance premium on his own life (sum assured Rs. 40,000) – Rs. 5,000.
2)         Deposit in Public Provident Fund Account Rs. 90,000.
3)         Payment under Unit Linked Insurance Plan Rs. 3,000.
4)         Contribution to recognized Provident Fund (20% of basic) – Rs. 36,000.
5)         Repayment of instalment of Loan taken from ICICI Bank for construction of house Rs. 24,000.
6)         Interest accrued on NSC (VIII issue) – Rs. 2,000.
7)         Donation to charitable institution Rs. 20,000.                      10
Define ‘Capital Gains’ as per the Income Tax Act. Describe the procedure of computation of short-term and long-term capital gains as per the provisions of this Act.
(c) (1) Mr. Joseph, a foreign citizen (not being a person of Indian original), comes to India for the first time in the last 20 years on March 20, 2013. On September 1, 2013, he leaves India for Russia on a business trip. He comes back on February 26, 2014.
Determine the residential status of Mr. Joseph for the assessment year 2014-15.
(2) Enumerate the deduction that are allowed in respect to expenses and losses while computing income from business or profession.                                           5+5=10
Explain the Procedure of assessment of tax under the Income Tax Act, 1961.
(d) The following are the particular of income of Mr. Rahman, employed in a private limited company in Guwahati, for the year ended 31st March, 2014:

1)      Basic salary
2)      Dearness allowance
3)      Entertainment allowance
4)      Free furnished accommodation for which the employer paid a rent of Rs. 5,000 p.m. Cost of furniture provided in the house is Rs. 15,000.
5)      Employer’s contribution to recognized provident fund @ 13% p.a. on basic salary
6)      Uniform allowance Rs. 400 p.m. (Actual expenditure Rs. 200 p.m. on an average)
7)      Medical allowance Rs. 500 p.m. (Actual expenditure Rs. 4,200 during the year.)
15,000 p.m.
7,500 p.m.
1,500 p.m.

During the previous year his employer deducted Rs. 2,500 as professional tax from his salary.
Compute his income from salary for the relevant assessment year 2014-15.                     10
What is net wealth? Explain the items of assets included for ascertaining the net wealth of a person.                                                                                                                               10


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