[Direct Tax - I Solved Question Papers 2018, Dibrugarh University Solved Question Papers, B.Com 5th Semester]
DIRECT TAX LAW I – NEW SYLLABUS QUESTION PAPERS
2018 (November)
COMMERCE (Speciality)
Course: 504 (Direct Tax – I)
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
1)
The
total income of individual leaving India up to the date of his departure shall
be chargeable to tax in that assessment year. True
2)
Scholarship
received by students must be financed by the government. False
3)
Any
income received by any person for or on behalf of the New Pension System Trust
(established on February 27, 2008) will not be chargeable to tax. True
4)
Interest
on borrowed capital is allowable as deduction if capital is borrowed for the
purpose of purchase, construction, repair, renewal, etc. True
(b) Choose the correct answer of the
following: 1x4=4
1)
The
contribution made by the Central Government in the previous year, to the
account of an employee under a pension scheme referred to in
a) Section 80C.
b) Section 80CCC.
c) Section 80CCD
2)
Where
an assessee uses his property for carrying on any business or profession, no
income is chargeable to tax under the head
a) Income from Salaries.
b) Income from House Property.
c) Income from Other Sources.
3)
The
Appellate Tribunal, constituted by the Central Government, functions under the
Ministry of Law, consists of which of the following two classes of members?
a) Judicial and accountant.
b) Commissioners and accountant.
c) Inspector of income tax and
accountant.
4)
Statutory
Provident Fund is set up under the provisions of the
a) Provident Fund Act, 1952
b) Provident Fund Act, 1925
c) Income-tax Act, 1961
2.
Write short notes on any four of the following: 4x4=16
a)
Charge of Income Tax.
Ans:
Section
4 is the charging section for the Income tax Act, 1961 (the Act). It provides
for the charge and collection/ payment of Income Tax India. The important
Provisions of this section are:
Ø Where any Central Act enacts for any
Assessment Year that income-tax shall be charged at any rate or rates,
Ø Income-tax at that rate or rates (including
additional tax) shall be charged for that year in accordance with and subject
to all the provisions of the Act.
Ø In respect of the Total Income of the
Previous Year of every Person
Ø However, if by virtue of any provision
of the Act, Income Tax India is to be charged in respect of the income of a
period other than the previous year, then it shall be charged accordingly.
Ø The Income-tax chargeable as above
shall be deducted at source or paid in advance, if so required under any
provision of the Act.
b) Entertainment
Allowance.
Ans: Entertainment allowance is fully taxable for non-government
employees. But in case of government employee’s a deduction is allowed u/s
16(ii) at the least of the following:
(a)
Statutory
limit: 5000
(b)
1/5th
of basic salary
(c)
Actual
entertainment allowance
c)
Approved Superannuation Fund.
Ans: The tax
treatment as regards the contribution to and payment from the fund is as under:
Ø Employee's contribution: Deduction is
available under section 80C from gross total income.
Ø Employer's contribution: Contribution
by the employer to the approved superannuation fund is exempt upto Rs. 1,
00,000 per year per employee. If the contribution exceeds Rs. 1, 00,000 the
balance shall be taxable in the hands of the employee.
Ø Interest on accumulated balance: It is
exempt from tax.
Any payment from an approved
superannuation fund is exempt from tax if it is made on the following
situations:
a)
on
the death of a beneficiary to an employee
b)
in
lieu of or in commutation of an annuity on his retirement at or after a
specified age or on his becoming in capacitated prior to such retirement
c)
By
way of refund of contribution on the death of beneficiary
d) Unrealized Rent.
Ans: For the
purpose of determining the Annual value, the actual rent shall not include the
rent which cannot be realized by the owner. However, the following conditions
need to be satisfied for this:
(a) The tenancy
is bona fide;
(b) The
defaulting tenant has vacated, or steps have been taken to compel him to vacate
the property.
(c) The
defaulting tenant is not in occupation of any other property of the assessee;
(d) The assessee
has taken all reasonable steps for the recovery of the unpaid rent or satisfied
the assessing Officer that legal proceedings would be useless.
(e) Unrealised
rent of earlier years is not deductible.
Treatment of unrealized rent recovered
Where any rent
cannot be realized, and subsequently if such amount is realized, such an amount
will be deemed to be the income from house property of that year in which it is
received. However, in the cases where unrealized rent is subsequently realized,
it is not necessary that the assessee continues to be the owner of the property
in the year of receipt also.
e)
Commissioner of Income Tax.
Ans: PRINCIPAL DIRECTOR GENERAL/DIRECTOR GENERAL/PRINCIPAL CHIEF
COMMISSIONER/CHIEF COMMISSIONER OF INCOME-TAX AND THEIR POWERS
The Central Government may appoint such
persons as it thinks fit to be the Director General/Chief Commissioner of
Income-tax. The jurisdiction of these authorities shall be determined by the
C.B.D.T. keeping in view the area, persons, incomes or cases. The C.B.D.T. may
be general or special order and subject to such conditions, restrictions or
limitations, authorize any Principal Director General/Director or Chief
Commissioner to perform such functions of any other income-tax authority as may
be assigned to him in such order.
Powers
of these income tax authorities
a)
The Principal Director General/Director General
or Principal Chief Commissioner/ Chief Commissioner may be empowered to
authorize a Deputy Commissioner to exercise the powers of an Assessing Officer
in respect of a person, case, income or an area.
b)
These authorities may be empowered by the Board
to appoint income-tax authorities below the rank of an Assistant Commissioner.
c)
These authorities may, after giving the assessee
a reasonable opportunity of being heard in the matter, and after recording his
reasons, transfer the case from one Assessing Officer subordinate to him.
d)
The Director General or Director or any other
officer so authorised, may exercise the powers of Assessing Officer, in case he
has reason to suspect that any income has been concealed or is likely to be
concealed by an assessee coming within his jurisdiction.
e)
Such directors can issue instructions to the
Assessing Officers and such instructions are issued for their guidance and are binding
on them.
f)
Taxation Laws has given the power to the
Director to make any inquiry or investigation in case of such type of assessee
who falls within his jurisdiction and in whose case he has reason to suspect
that any income has been concealed or is likely to be concealed. This section
also confers on the Director such powers which are vested in a court under the
Code of Civil Procedure, 1908.
g)
The Director shall be competent to make any
inquiry under this Act and for this purpose shall have all the powers that an
Assessing Officer has under this Act in relation to the making of inquiries.
3.
(a) “Appeal against the order of the Assessing Office lies with the
Commissioner (Appeals).” Do you agree? Write an explanatory note in support of
the above statement. 14
Ans: Meaning
of Appeal
In general
parlance, ‘appeal’
means ‘making a request’ and in legal parlance, it means ‘apply to a higher
court for a reversal of the decision of a lower court’. In India, the taxpayer
computes the tax payable on his total income and pays to the government. If the
Income Tax department (the government) disagrees with the tax computed by the
taxpayer, they can levy an additional tax. Under Income Tax Act, the liability
is determined at the level of Assessing Officer (it can be Income Tax Officer
(ITO) or Assistant/Deputy Commissioner of Income Tax). A tax payer aggrieved by
various actions of Assessing Officer (say higher tax demand) can appeal before
Commissioner of Income Tax (Appeals). Further appeal can be preferred before
the Income Tax Appellate Tribunal. On substantial question of law, further
appeal can be filed before the High Court and even to the Supreme Court.
Appeal to the commissioner of taxes:
Aggrieved tax
payer can file appeal before the Commissioner (Appeals) having, jurisdiction
over the tax payer. Appeal can be filed when a taxpayer is adversely affected
by the Orders passed by Tax authorities. Every appeal to the Commissioner
(Appeals) is to be filed in Form No. 35, signed by the taxpayer/director or his
authorized representative. Appeal Fees to be paid depending upon total income
determined by the Assessing Officer, subject to a maximum of Rs.1000.
Appeal is to be
filed within 30 days of the date
of service of notice of demand relating to assessment or penalty order or the
date of service of order sought to be appealed against, as the case may be. The
commissioner may admit an appeal after the expiry of 30 days, if he is satisfied
that there was sufficient cause of not presenting the appeal within the period
of 30 days.
On
receipt of Form no. 35, Commissioner of Income-tax (Appeals) fixes date and
place for hearing the appeal by issuing notice to the tax payer and the
Assessing Officer, against whose order appeal is preferred. Commissioner
of income tax is required to give opportunity of
hearing to the assessee and to the assessing officer. The following shall have
the right to be heard at the hearing of the appeal:
a)
The appellant either in person or by an
authorised representative;
b)
Assessing Officer, either in person or by a
representative.
Powers of commissioner
1)
The Commissioner shall have the power to adjourn
the hearing of the appeal from time to time.
2)
The Commissioner, may before disposing off any
appeal, make such further inquiries as they think fit or may direct the
Assessing Officer to make further enquiry and report the result of the same.
3)
The Commissioner may, at the hearing of an
appeal, allow the appellant to go into any ground of appeal, not specified in
the grounds of appeal, the Commissioner (Appeals) is satisfied that omission of
that ground from the form of appeal was not willful or unreasonable.
4)
The order of the Commissioner disposing of the
appeal shall be in writing and shall state the points for determination,
decision thereon and the reason for the decision.
5)
Limitation of period to decide the appeal by
Commissioner (Appeals), the Commissioner (Appeals) may decide upon the appeal
(where it is possible) within a period of One year from the end of financial
year in which appeal is made.
6)
On the disposal of the appeal, the orders passed
by them shall be passed on the assessee as well as to the Commissioner.
After the hearing
is concluded, Commissioner (Appeals) passes order in writing and disposes the
appeal. In disposing the appeal, the Commissioner (Appeals) as the case
may be, has following powers:
1)
To confirm, reduce, enhance or annual the
assessment;
2)
To confirm, cancel, enhance or reduce the
penalty imposed; and
3)
In other cases to pass such orders in the appeal
as he thinks fit.
The Commissioner (Appeals), as the case may
be, will not pass any order enhancing the tax liability or a penalty or
reducing the amount of refund without giving a reasonable opportunity to the
appellant of being heard. He may pass orders on matters which may not have been
referred to him.
Or
(b)
Mention any fourteen such incomes that are absolutely exempt from income tax
under Section 10 of the Income-tax Act, 1961. 14
Ans: Income
Exempted from tax under Sec. 10:
1. Agricultural Income: Income
from agriculture is exempt. However, if the net agricultural income exceeds
Rs.5,000, it is taken into account for determining the rates of income-tax on
incomes liable to tax. [Sec.10 (1)]
2. Receipt from Hindu Undivided Family: Any sum
received by an individual as a member of Hindu Undivided Family where such sum
has been paid out of the income of the family or in the case of any impartible
estate, where such sum has been paid out of the income of the estate belonging
to the family, irrespective of whether tax is payable or not by the HUF on its
total income. However, certain receipts from HUF are liable to be clubbed in
the hands of an individual member u/s 64(2). [Sec.10 (2)]
3. Partner’s Share in the Firm’s Income: In the
case of a person being a partner of a firm which is separately assessed as
such, partner’s share in the total income of the firm is exempt. Share of a
partner of the firm shall be computed by dividing the total income of the firm in
the profit sharing ratio mentioned in the Partnership Deed. [Sec.10 (2A)]
4. Value of Leave Travel Concession: Value of
any leave travel concession or assistance received by or due from the employer
to employee (including noncitizens) and his family (spouse, children and
dependent- father, mother, brother, sister dependent on him) in connection with
his proceeding on leave or after retirement or termination of his service to
any part of India. [Sec.10(5)]
5. Leave Encashment : Any
payment received by a Central/State Govt. employee, as cash equivalent of leave
salary in respect of period of earned leave at his credit at the time of his
retirement whether o superannuation or otherwise. However, in case of other
employees the exemption is available subject to specified limits. For details
see ‘Receipts Exempt from Income Tax’ in the chapter ‘Salary’. [Sec.10(10AA)]
6. Compensation to Employee: Any
compensation received by a workman under Industrial Disputes Act or under any
other Act or rules, order or notification issued there under or under any
standing order or under any award, contract of service or otherwise at the time
of his retrenchment is exempt to the extent such compensation is in accordance
with Section 25F (b) of Industrial Disputes Act, subject to a maximum of
Rs.5,00,000.
7. Payment from Provident Fund: Any
payment (including interest) from a provident fund under Provident Fund Act,
1925 or Public Provident Fund Scheme, 1968. [Sec.10(11)]
8. Payment from Sukanya Samriddhi Account: Any
payment from an account under the Sukanya Samriddhi Account Rules, 2014
[Sec.10(11A)]
9. Accumulated Balance of Recognised Provident
Fund: Any accumulated balance due and becoming payable to an employee
from a recognised provident fund, on fulfillment of any of the following
conditions:
(i) If he has rendered a continuous
services of five years or more; or
(ii) If his service, though not as stated
in (i) above, has been terminated due to his ill-health or by the contraction
or discontinuation of his employer’s business or any other cause beyond his
control; or
(iii) If on cessation of his employment, his
accumulated balance is transferred to recognised provident fund maintained by
his new employer;
10. House Rent Allowance: Any
special allowance granted to an assessee by the employer to meet expenditure
incurred on payment of rent for residential accommodation subject to prescribed
limits and conditions. [Sec.10(13A)]
11. Allowances of MPS and MLAs:
(a) Any daily allowance received by Members of
Parliament or any State Legislature.
(b) Any allowance received by any Member of
Parliament under the Members of Parliament (Constituency Allowance) Rules,
1986.
(c) Any constituency allowance received by any
member of any State Legislature under any Act or rules made by it. [Sec.10(17)]
12. Income of a Professional Association set up for
the control, supervision, regulation or encouragement of the professions of
law, medicine, accountancy, engineering, architecture or other notified
profession (i.e. Company Secretary, Chemistry, Materials Management and Town
Planning), subject to specified conditions. [Sec.10(23A)]
13. Income of a New Agency [i.e.
Press Trust of India Ltd.] set up in India, which applies its income or
accumulates it for application solely for collection and distribution of news and does
not distribute its income in any manner to its members. [Sec. 10(22B)]
14. Income of a Minor Child liable
to be included in income of his parent u/s 64(1A) is a exempt up to a maximum of
Rs.1, 500 per minor child. [Sec.10 (32)]
4. (a) Shri Uttom, is an employee of an Guwahati-based
company. He provides the following particulars of his salary income: 14
|
1)
Basic salary – Rs. 50,000 per month.
2)
Dearness allowance – Rs. 12,500 per month (40 per
cent of which is include for the purpose of determining retirement benefit).
3)
Bonus – Rs. 25,000.
4)
Transport allowance – Rs. 7,600 p.m. (out of which
Rs. 1,600 is used for the journey between office and residence, remaining
amount is not spent).
5)
He contributes 15% of basic salary towards RPF and the
company also makes a matching contribution.
6)
Interest credited to RPF @ 12% is Rs. 30,000.
7)
Reimbursement of medical bills Rs. 60,000 out of
this Rs. 20,000 is in respect of medical bill of his wife and she got her
medical treatment from government hospital.
8)
Leave encashment Rs. 30,000. It relates to
encashment of current year’s leave.
9)
He has been provided with a rent free house hired by
employer at Rs. 15,000 p.m.
10)
He paid Rs. 3,000 as professional tax.
|
Compute Shri Uttom income under the head Income from
Salaries for the Assessment year, 2018 – 19.
Computation
of salary of Shri Uttom for the Assessment Year (2018-2019)
|
Particulars
|
Amount
|
Amount
|
|
a) Basic Salary (50,000*12)
b)
Dearness Allowance
c)
Bonus
d)
Transport Allowance (Now fully taxable)
f)
Employer’s Contribution to RPF (6,00,000+60,000=6,60,000*15%)
Less:
Exempted upto 12% of salary [6,60,000*12%]
f)
Interest on RPF
Less:
Exempted upto 9.5% (30,000*9.5/12)
g)
Leave encashed during service (Fully taxable)
h)
Reimbursement of medical expenses
Government Hospital (Exempted)
Other Hospital (Fully taxable)
|
99,000
79,200
30,000
23,750
|
6,00,000
1,50,000
25,000
91,200
19,800
6,250
30,000
Exempt
40,000
|
|
Gross Salary
Less: Deduction U/S 16
(ia) Standard Deduction
(iii) Professional tax paid
|
|
9,62,250
50,000
2,500
|
|
Income from Salary
|
|
9,09,750
|
Or
(b)
What do you mean by the term ‘perquisites’ under the head salary? What are the
classifications of perquisites? Explain briefly the perquisites which are not
taxable. 3+2+9=14
Ans: Perquisites (Sec. 17[2]): The term
perquisite is defined to signify some benefit in addition to the amount that
may be legally due by way of contract of services rendered. Section 17(2) gives
an inclusive definition of perquisites. As per the Terms of Section 17(2),
Perquisites Includes:
(i) The value of rent-free accommodation provided (used or not) to the
assessee by his employer;
(ii) The value of any concession in the matter
of rent respecting any accommodation provided
(used or not) to the assessee by his employer;
(iii) The value of any benefit or amenity granted or provided (used or not)
free of cost or at concessional rate in any of the following cases (specified
employee):
(a) By a company to an employee, who is a
director thereof;
(b) By a company to an employee being a person
who has a substantial interest in
the company;
‘Substantial Interest’ : In relation to a
company, means a person who is the beneficial owner of shares, not being shares
entitled to a fixed rate of dividend whether with or without a right to
participate in profits, carrying not less than 20% of the voting power.
(c) by any employer (including a company) to
an employee to whom the provision of clause (a) and (b) do not apply and whose
income under the head of Salaries (whether due from, or paid or allowed by, one
or more employer), exclusive of the value of all benefits or amenities not
provided for by way of monetary payment, exceeds Rs. 50,000.
(iv) Any sum actually paid by the employer in respect of any obligation on
behalf of the employee;
(v) any sum payable (not necessarily paid) by the employer to effect an
assurance on the life of the employee or to effect a contract for an annuity;
(vi) the value of any other fringe benefit or amenity as may be
prescribed.
The
perquisites can be divided into three categories:
1.
Perquisites
which are taxable for all employees
2.
Perquisites
which are fully exempted
3.
Perquisites
which are taxable for specified employees only
2. Perquisites
which are fully exempted:
Ø Medical facility in employer’s
hospital, clinic, dispensary (or) nursing home to the members of employee’s
family (spouse, children, dependent parents, dependent brother and sister).
Ø Medical facility in a
government hospital paid or reimbursed by the employer.
Ø Any medical expenses paid (or)
reimbursed by the employer to the employee for treatment in a hospital for
notified diseases.
Ø Mediclaim insurance premium
paid (or) reimbursed by the employer to the employees in respect of med claim
insurance policy on his own life or life of members of his family.
Ø Refreshment provided by
employee to all during office hours.
Ø Recreation facilities provided
by employer to employees.
Ø Amount spent on training of
employees. Cost of refresher course attended by employee, met by employer
including expenditure of higher education or training India or abroad.
Ø Goods manufactured and sold by
employer to his employees at concessional rates.
Ø Free telephones including
mobile phone provided by the employer for personal or official purpose or
official purpose etc.
Ø Free education facility
provided to the children of employee in an institution owned/maintained by
employer provided fair value of education does not exceed Rs 1000.
Ø Interest-fee/concessional loan
of an amount not exceeding or loan taken for medical treatment of member of the
family of employee.
Ø Computer/laptop given to an
employee for official/personal use.
Ø Transfer of movable assents
(other than computer, car or electronic items) to employee after using them for
10 years or more.
5. (a) Mr. Swadhin owns resident house
properties. Following are the particulars of two house properties owned by him:
|
|
House – I
|
House – II
|
|
Municipal valuation (in Rs.)
Fair rent (in Rs.)
Standard rent (in Rs.)
Actual rent received (in Rs.)
Self-occupied
Let out
Municipal taxes:
Due (in Rs.)
Paid (in Rs.)
Interest on borrowed money (in Rs.)
|
1,00,000
88,000
90,000
9,000 p.m.
01.04.2017 to 30.11.2017
01.12.2017 to 31.03.2018
6,000
3,000
10,000
|
92,000
96,000
1,08,000
10,000 p.m.
01.12.2017 to 31.03.2018
01.04.2017 to 30.11.2017
8,000
NIL
42,000
|
Loan taken to construct House – II is still
outstanding. Loan was taken in 1998. Find out the income from house properties
of Swadhin for the Assessment Year, 2018-19. 14
Ans: Computation of Income from house
property of Mr. Swadhin for the assessment year 2018-19
|
Particulars
|
House
– A
|
House
– B
|
|
1. Municipal Rental Value
2. Fair Rental Value
3. Standard Rental Value
4. Expected Rental Value (MRV or FRV
whichever is higher but limited upto SRV)
5. Actual Rent received or
receivable (Annual rent less unrealised rent)
6. Gross Annual Value (higher of 5
or 6)[in case of vacancy only point 5 is considered)
7. Less: Municipal taxes paid
|
1,00,000
88,000
90,000
90,000
36,000
90,000
3,000
|
92,000
96,000
1,08,000
96,000
90,000
96,000
Nil
|
|
8. Net Annual value (6-7)
Less: Deduction under section. 24
(a) Standard Deduction @ 30%
(b) Interest on money borrowed
|
87,000
26,100
10,000
|
96,000
28,800
42,000
|
|
Income/ (Loss from house property)
|
50,900
|
25,200
|
Note:
1.
In the given question both the properties are partly let out and partly self
occupied. No benefit is allowed for partly letout and partly self occupied
house property.
Or
(b)
Explain how to compute income from self-occupied house property. Write a note on
special provisions with regard to unrealized rent when it is realized
subsequently. 10+4=14
Ans: Treatment of unrealized rent
For the purpose
of determining the Annual value, the actual rent shall not include the rent
which cannot be realized by the owner. However, the following conditions need
to be satisfied for this:
(a) The tenancy
is bona fide;
(b) The
defaulting tenant has vacated, or steps have been taken to compel him to vacate
the property.
(c) The
defaulting tenant is not in occupation of any other property of the assessee;
(d) The assessee
has taken all reasonable steps for the recovery of the unpaid rent or satisfied
the assessing Officer that legal proceedings would be useless.
(e) Unrealised
rent of earlier years is not deductible.
Treatment of unrealized rent recovered
Where any rent
cannot be realized, and subsequently if such amount is realized, such an amount
will be deemed to be the income from house property of that year in which it is
received. However, in the cases where unrealized rent is subsequently realized,
it is not necessary that the assessee continues to be the owner of the property
in the year of receipt also.
6.
(a) Write a note on Central Board of Direct Taxes. Explain the powers of
Assessing Officers. 4+10=14
Ans: Central Board of Direct Taxes and their
powers
The Central Board of Direct Taxes
(CBDT) is the highest executive authority. It is subject to the overall
control of the Central Government. It is authorized to discharge all those
functions prescribed in the Act and those which are entrusted to it by the
Central Government. The Central Board of Direct Taxes consists of a
Chairman and following six Members:
a) Chairman
b) Member
(Income-tax)
c) Member
(Legislation & Computerisation)
d) Member
(Personnel & Vigilance)
e) Member
(Investigation)
f) Member
(Revenue)
g) Member
(Audit & Judicial)
Powers of assessing officers and others as named above: The
Assessing Office shall exercise the following powers:
1.
Powers of
Civil Court. These authorities shall have the same powers, as are vested in
a court under the Code of Civil Procedure 1908, when trying a suit in respect
of the following matters:
1)
Discovery and Inspection;
2)
Enforcing the attendance of any person including
any officer of a banking company and examining him under oath;
3)
Compelling a person to produce books of accounts
and other documents; and
4)
Issuing commissions.
2.
Powers of
Search and Seizure of assets and books of accounts. These authorities shall
have the power of searching any building, place vessel, vehicle or aircraft and
seize books of accounts, other documents, money, bullion, jewellery or other
valuable articles or things. Identification marks shall be put on the seized
assets. The assets so seized shall be retained by the Assessing Officer in his
authority to recover the existing and estimated tax liability of the assessee.
The books of accounts or the other documents seized shall not be retained by
the authorities for a period exceeding 180 days from the date of seizure.
3.
Power of
Assessment. As Assessing Officer or any other authority acting as Assessing
Officer shall have following powers while performing his functions:
1)
Power regarding self-assessment.
2)
Power of making regular assessment and Best
judgement assessment.
3)
Power to reopen an assessment.
4)
Power to reopen an assessment in case income has
escaped assessment.
5)
Power to treat a person as an agent.
6)
Power to assess a person leaving India and
trying to alienate his assets.
4.
Power to
call for information. These authorities has the power to:
(a) can call any firm to
provide him with a return of the addresses and names of partners of the firm
and their shares;
(b) can ask any Hindu
Undivided Family to provide him with return of the addresses and names of
members of the family and the manager;
(c) can ask any person who
is a trustee, guardian or an agent to deliver him with return of the names of
persons for or of whom he is an agent, trustee or guardian and their addresses;
(d) can ask an
assessee to furnish a statement of names and addresses of all the persons to
whom he has paid in any previous year rent, interest, commission, royalty or
brokerage etc. amounting to more than Rs. 1,000 or such higher amount as may be
prescribed together with particulars of all such payments.
5.
Power of Survey. An Income-tax authority may enter any place where business
or profession is carried on, if such place is within the limits of the area
assigned to him or is occupied by any person is respect of whom the Assessing
Officer exercises jurisdiction. The
objectives of conducting Income Tax surveys are:
• To discover new
assessees;
• To collect useful
information for the purpose of assessment;
• To verify that the
assessee who claims not to maintain any books of accounts is in-fact
maintaining the books;
• To check whether the
books are maintained, reflect the correct state of affairs.
6.
Power to Inspect Registers of Companies: The above-mentioned authority, may
inspect, if necessary, take copies or causes copies to be taken of any register
of members, debenture holders, mortgagees of company or of any entry in such
register.
7. Collection of
Information: For
the purpose of collection of information which may be useful for any purpose,
the Income tax authority can enter any building or place within the limits of
the area assigned to such authority, or any place or building occupied by any
person in respect of whom he exercises jurisdiction.
Or
(b)
What do you mean by ‘right to appeal’? What are the procedures in appeal?
Explain in detail. 4+10=14
Ans: Meaning of Appeal
In general
parlance, ‘appeal’
means ‘making a request’ and in legal parlance, it means ‘apply to a higher
court for a reversal of the decision of a lower court’. In India, the taxpayer
computes the tax payable on his total income and pays to the government. If the
Income Tax department (the government) disagrees with the tax computed by the
taxpayer, they can levy an additional tax. Under Income Tax Act, the liability
is determined at the level of Assessing Officer (it can be Income Tax Officer
(ITO) or Assistant/Deputy Commissioner of Income Tax). A tax payer aggrieved by
various actions of Assessing Officer (say higher tax demand) can appeal before
Commissioner of Income Tax (Appeals). Further appeal can be preferred before
the Income Tax Appellate Tribunal. On substantial question of law, further
appeal can be filed before the High Court and even to the Supreme Court.
Statutory
right of appeal
Every law that provides for some form of
adjudication also usually provides for appeal in one form or the other against
orders passed by the lower authorities. This is based on the concept of equity
and recognition that every authority is fallible. The mechanism of appeal
provides safeguard against erroneous, unjust or invalid orders. The appeal
proceedings ordinarily embrace all proceedings whereby an appellate authority
is called upon to review, revise, affirm, reverse or modify the decisions of
the lower or subordinate authority.
Under the scheme of the Income Tax Act, appeal
can be preferred only against orders specified under the relevant act. It is
pertinent to note that the right to appeal is conferred by the statute and that
right to appeal cannot be assumed to be an inherent right. Therefore appeal against
non-appealable orders can be dismissed as not maintainable. Being a privilege
and not a right, every person seeking to file an appeal must take care to make
sure that he fulfils every condition, procedure and restrictions provided under
the law in order that his appeal be considered by the appropriate authority.
Though right of appeal is not inherent but a
statutory right, it is a substantive right. Thus once the law provides for an
appeal, a person who complies with the prescribed conditions gets a vested
right to have the appeal dealt with under the law. Therefore the appellate
authorities while construing right of appeal opt for liberal interpretation. It
is for this reason that the courts have held appeal against levy of interest
valid under the board category of denial of liability to be assessed. Similarly
appeal against non-granting of interest on refund is also held to be valid.
Who can
file an appeal?
Only a person aggrieved by an order would
have a right to file an appeal. An assessee can said to be aggrieved when he is
required
to bear tax, legal burden or is denied some benefit to which he claims
to be
entitled. If an assessee who has been allowed an additional deduction or
allowance such as depreciation or has been permitted a set off of loss which
was not claimed can file an appeal.
Any partner of a firm or any member of AOP
can file appeal against adverse order in case of firm or AOP as
aggrieved persons. In case of adverse order passed in the matter of deceased
person, his legal heirs can file appeal. In case of HUF, Karta can file appeal.
The representative assessee as defined u/s 160 is eligible to file an appeal. Similarly
a beneficiary though assessment is made on representative assessee is also
eligible to file an appeal.
Pre-requisites
for appeal
No appeal shall be admitted unless at the
time of filing of the appeal:
a)
Where a return has been filed by the assessee,
the assessee has paid the tax due on the income returned by him; or
b)
Where the return has not been filed by the
assessee, the assessee has paid an amount equal to the amount of advance tax
which was payable by him.
Provided that, on an application made by the
appellant in this behalf, the Deputy Commissioner (Appeals) may, for reason to
be recorded in writing, exempt him from the operation of these provisions.
Procedure for
filing an appeal
1. First Appeal
before Commissioner (Appeals): Aggrieved tax payer can file appeal before the
Commissioner (Appeals) having, jurisdiction over the tax payer. Appeal can be
filed when a taxpayer is adversely affected by the Orders passed by Tax
authorities. Every appeal to the Commissioner (Appeals) is to be filed in Form
No. 35, signed by the taxpayer/director or his authorized representative and
must be filed within 30 days. Appeal Fees to be paid depending upon total
income determined by the Assessing Officer, subject to a maximum of Rs.1000.
2. Appeal before
Income Tax Appellate Tribunal (ITAT): Appeal against an order of Commissioner (Appeals)
lies with the Income Tax Appellate Tribunal (ITAT). The tribunal shall be
constituted by the central government and shall consist of as many judicial and
accountant members as it thinks fit. Both tax payer and the Assessing Officer
can file appeal before ITAT.
3. Appeal before High Court: Appeal against Appellate Tribunal’s order lies
with the High Court, where the High Court is satisfied that the case involves a
substantial question of law. Appeal to the High Court against Appellate
Tribunal’s order can be filed by the tax payer or the Chief
Commissioner/Commissioner within 120 days of receipt of the order and in the
form of memorandum of appeal, precisely stating the substantial question of law
involved. Appeal
filed before High Court is heard by bench of not less than two Judges and
decision is by majority
4. Appeal before Supreme Court: Appeal against High Court’s order in respect
of Appellate Tribunal’s order lies with the Supreme Court in those cases, which
are certified to be fit for appeal to the Supreme Court. Special leave can also be
granted by the Supreme Court under Art. 136 of the constitution of India
against the order of the High Court.
(OLD COURSE)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
1. (a) Write
True or False: 1x4=4
1)
A
company shall be ‘non-resident’ if its place of effective management is
situated wholly or partially outside India during the relevant accounting year.
False,
100% outside India
2)
Statutory
Provident Fund is set up under the provision of the Provident Fund Act, 1952. False, 1925
3)
Any
income derived by the SAARC fund for regional project is exempt from tax. True
4)
Income
is taxable under the head Income from House Property only if the assessee is
not the owner of a house property. False
(b) Choose the correct answer of the following: 1x4=4
1)
One
can deposit in Public Provident Fund subject to
a)
Minimum Rs. 500 and maximum Rs.
1,50,000 per annum.
b) Minimum Rs. 600 and maximum Rs.
2,00,000 per annum.
c) Minimum Rs. 700 and maximum Rs. 2,50,000
per annum.
2)
Example
of an Association of Persons (AoP) is
a)
A village Panchayat.
b) Mark fed.
c) Reliance Industries Limited.
3)
Pankaj
is entitled to hostel allowance @ Rs. 500 p.m. per child for 3 children. It
will be exempted to the extent of
a)
Rs. 7,200.
b) Rs. 12,000.
c) Rs. 16,400.
4)
Underground
allowance granted to an employee who is working in uncongenial, unnatural
climate in underground mines is exempted to the limit of
a) Rs. 1,000 per month.
b)
Rs. 800 per month.
c) Rs. 600 per month.
2. Write short
notes on any four of the following: 4x4=16
a)
Income.
b)
Annuity.
c)
Deemed
Income.
d)
Recognized
Provident Fund.
e)
Municipal
Rental Value.
f)
Income-tax
Act, 1961.
3. (a) Explain
in detail any twelve incomes which are exempted under Section 10 of the
Income-tax Act, 1961. 12
Or
(b) “Income
received in India is taxable in all cases irrespective of residential status of
the assessee.” Explain the statement in detail. 12
4. (a)
“Income-tax concession is given to newly established units in special economic
zone.” Explain this statement. 11
Or
(b) Write
brief notes on the following:
+
=11
1)
Income
which are not included in the total income.
2)
Tax
holiday for industrial units in trade zones.
5. (a) From
the following information compute the taxable income from salary of Shri Kamal
Deka for the Assessment Year, 2018 – 19: 11
|
1)
Basic salary –
Rs. 3,60,000 p.a.
2)
Dearness
allowance – Rs. 36,000 (25% enters for retirement benefit)
3)
Education allowance for two children at Rs. 350 per month per child and
hostel allowance for two children at Rs. 450 per month per child.
4)
Commission received on turnover – Rs. 50,000.
5)
Special allowance Rs. 3,000 per month.
6)
Entertainment allowance @ Rs. 10,000 per annum.
7)
He is provided with a rent-free house hired by employer at Rs. 10,000
per month.
8)
He is provided with a car of 1.8 litre capacity (with driver) for both
official and personal purposes.
9)
He receives Rs. 20,000 as leave travel concession but has not travels
anywhere.
10) Professional tax paid by him – Rs.
250 per month.
|
Compute the
taxable income from salary of Shri Kamal Deka for the Assessment Year, 2018-19.
Or
(b) In order
to encourage savings for the social security of employees, government has set
up various kinds of provident funds. In
the light of the above statement, explain the following:
+
=11
1)
Recognized
Provident Fund.
2)
Unrecognized
Provident Fund.
6. (a) Mohan
is a manager (finance) in Reliance Ltd., Mumbai and gets Rs. 34,000 per month
as salary. He owns two houses one of which is let out to the employer-company
which in turn provided the same to Mohan as rent-free accommodation. Determine
the net income of Mohan for the Assessment Year, 2018-19 taking into account
the following information relating property income: 11
|
|
House – I
|
House – II
|
|
Fair rent (FR) (in Rs.)
Annual rent (in Rs.)
Municipal valuation (MV) (in Rs.)
Standard rent
Municipal taxes paid (in Rs.)
Repairs (in Rs.)
Insurance (in Rs.)
Land revenue (in Rs.)
Ground rent (in Rs.)
Interest on capital borrowed by
mortgaging House – I
(funds are used for construction
of House – II) (in Rs.)
Unrealized rent of the previous
year, 2003 – 04 (in Rs.)
Unrealized rent of 2017-18 (in
Rs.)
Nature of occupation
Date of completion of
construction
|
60,000
63,000
61,000
NA
14,000
3,500
3,000
7,500
4,000
18,000
-
-
Let out to Reliance Ltd.
March 1999
|
1,82,000
1,84,000
1,85,000
NA
40,000
7,700
33,000
24,000
7,800
-
1,60,000
55,000
Let out to Rohan for Business
April 2001
|
Ans: Computation of Income from house
property for the assessment year 2017-18
|
Particulars |
Unit I |
Unit II |
|
1. Municipal Rental Value 2. Fair Rental Value 3. Standard Rental Value 4. Expected Rental Value (MRV or FRV
whichever is higher but limited upto SRV) 5. Actual Rent received or
receivable (Annual rent less unrealised rent) 6. Gross Annual Value (higher of 5
or 6)[in case of vacancy only point 5 is considered) 7. Less: Municipal taxes paid |
61,000 60,000 NA 61,000 63,000 63,000 14,000 |
1,85,000 1,82,000 NA 1,85,000 1,29,000 1,85,000 40,000 |
|
8. Net Annual value (6-7) Less: Deduction under section. 24 (a) Standard Deduction @ 30% (b) Interest on money borrowed |
49,000 14,700 |
1,45,000 43,500 18,000 |
|
Income/ (Loss from house property) Total Income from house property =
34,300+83,500=1,17,800 |
34,300 |
83,500 |
Note: Interest is deducted from 2nd house income because loan amount is used for 2nd house.
Or
(b) Explain
the procedure of computation of gross annual value in the case of self-occupied
house property. 11
7. (a) What is
the role of commissioner of income tax? Explain the powers which are entrusted
to him by Central Board of Direct Taxes. 11
Or
(b) Write notes on the following: 5.5+5.5=11
1)
Central
Board of Direct Taxes.
2)
Commissioner
of Income Tax.
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