Sunday, April 19, 2020

Dibrugarh University B.Com 6th Sem: Income Tax Solved Question Papers (May' 2019 New Course)


2019 (May)
COMMERCE (General)
Course: 601 (Income Tax)
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)         The residential status of an assessee may change from year to year.             True
2)         Any amount withdrawn from the Statutory Provident Fund is exempt from tax.      True
3)         Entertainment allowance is fully taxable irrespective of any expenditure incurred on entertainment of guests or customers.                    True
4)         House Property Income = Annual Value of Building – Specified deductions u/s 22.     False
(b) Fill in the blanks:                                      1x4=4

1)         The income tax was introduced in India for the first time in 1860 by British rulers.
2)         Under Section Sec. 10(16), the full amount of scholarship granted to meet the cost of education is exempted.
3)         The value of perquisites is chargeable to tax under the head Salaries.
4)         Income from house property held by a local authority shall be exempted.
2. Write short notes on any four of the following:           4x4=16
a) Person [Section 2(31)]: Person includes seven types of persons namely:
a.       An individual;
b.      An Hindu undivided family (HUF);
c.       A company;
d.      A firm;
e.      An association of persons (AOP) or a body of individuals (BOI);
f.        A local authority;
g.       Every artificial juridical person not falling within any of the preceding sub clauses.
The 2 basic differences between AOP and BOI are:
a) In BOI there are only individuals but in AOP there can be any type of persons.
b) BOI is creation of law whereas AOP can be created by different persons coming together for doing some income producing activity on the voluntary basis.
An Association of person or body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person was formed or established or incorporated with object of deriving income, profits and gains.
b) Special Economic Zone: Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of an SEZ structure is to increase foreign investment.
One of the earliest and the most famous Special Economic Zones were founded by the government of the People's Republic of China under Deng Xiaoping in the early 1980s. The most successful Special Economic Zone in China, Shenzhen, has developed from a small village into a city with a population over 10 million within 20 years. Following the Chinese examples, Special Economic Zones have been established in several countries, including Brazil, India, Iran, Jordan, Kazakhstan, Pakistan, the Philippines, Poland, Russia, and Ukraine.
SPECIAL PROVISION IN RESPECT OF NEWLY ESTABLISHED UNITS IN SPECIAL ECONOMIC ZONE [SECTION 10AA]:
CONDITIONS TO BE SATISFIED: The following conditions should be satisfied to claim deduction u/s 10AA:
Condition 1 :  Assessee, being an entrepreneur as referred to in clause (j) of section 2 of the Special Economic Zones Act, 2005. Entrepreneur is a person who has been granted a letter of approval by the Development Commissioner to set a unit in a Special Economic Zone.
Conditions 2 :  The Unit in Special Economic Zone who begins to manufacture or produce articles or things or provide any services during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2006.
Conditions 3 :  It is not formed by the splitting up, or reconstruction, of a business already an existence.
Conditions 4 :  It not formed by the transfer to a new business, of old plant and machinery. However, it can be formed by transfer of old plant or machinery to the extent of 20%.
Condition 5 :   The assessee has income from export of articles or thing or from services from such unit. In other words, the assessee has exported goods or provided services out of India from the Special Economic Zone by land, sea , air, or by any other mode, whether physical or otherwise.
Conditions 6 :  Books of Accounts of the taxpayer should be audited. The Tax payer should submit Audit Report in Form No.56F along with the return of income.
c) Profit in lieu of Salary [Section17(3)]: The amount of any compensation due to or received by an assessee from his employer or former employer or in connection with the termination of his employment. [Sec.17 (3)]. These payments include the following.
(1)    Terminal compensation
(2)    Payment from an unrecognized provident fund or an unrecognized superannuation fund
(3)    Payment under Keyman Insurance Policy
(4)    Any amount due or received before joining or after cessation of employment
(5)    Any other sum received by the employee from the employer.
d) Deemed Owner of House Property: Under Section 27 of the Income Tax Act the assessee in the following cases is deemed to be the owner of the house property, though not owner of the house property:-
(a)   If an individual transfers a house property to his or her spouse (except in connection with an agreement to live apart) or to a minor child (except a married daughter) without adequate consideration, he is deemed as the owner of the property for tax purposes.
(b)   The holder of an Impartible Estate is deemed to be the owner of all the properties comprised in the estate.
(c)    A member of a co-operative society, company or association of persons, to whom a property or a part thereof is allotted or leased under a house building scheme of the society, company or association, is deemed to be the owner of such property.
(d)   A person who has acquired a right in a building by way of a lease for a term of not less than 12 years, is the deemed owner of the property. This provision does not cover any right by way of a lease renewable from month to month or for a period not exceeding one year.
e) Self-occupied Property: Self occupied property are those which are not let out for any commercial or residential purpose but occupied by the owner himself. A vacant house property is considered as self-occupied for the purpose of income tax. Two self occupied house property are exempted from tax and if assessee owns more than two houses than such houses are assumed to be let out. The annual value of such self occupied house property is taken as nil if the following conditions are satisfied:
1. If the property is owned by the Assessee.
2. If such property cannot be occupied by Assessee, by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at other place in a building not owned by him.
3. If the property or part thereof mentioned above is not let out during previous  year.
4. If not benefit is derived by the assessee.

3. (a) Define the terms ‘previous year’ and ‘assessment year’. What are the exceptions to the rule that income of a previous year is assessed to tax in the assessment year?                             5+5+4=14
Ans: Previous Year: [Sec. 3]: As the word ‘Previous’ means ‘coming before’ , hence it can be simply said that the Previous Year is the Financial Year preceding the Assessment Year  e.g. for Assessment Year 2019-2020 the  Previous Year should be the Financial Year ending 31st March 2019. The term previous year is very important because it is the earned during the previous year is to be assessed to tax in the assessment year. The simple rule is that the income of a previous year is taxed in its relevant assessment year. At present the previous Year 2018-2019 (1-4-2018 to 31-3-2019) is going on.
Assessment Year: [Sec. 2 (9)]: “Assessment Year” means the period of 12 months commencing on the 1st day of April every year. In India, the Govt. maintains its accounts for a period of 12 months i.e. 1st April to 31st March every year. As such it is known as Financial Year.  The Income Tax department has also selected same year for its Assessment procedure.
The Assessment Year is the Financial Year of the Govt. of India during which income a person relating to the relevant previous year is assessed to tax. Every person who is liable to pay tax under this Act, files Return of Income by prescribed dates. These Returns are processed by the Income Tax Department Officials and Officers. This processing is called Assessment. Under this Income Returned by the assessee is checked and verified.
Tax is calculated and compared with the amount paid and assessment order is issued. The year in which whole of this process is under taken is called Assessment Year. At present the Assessment Year 2019-2020 (1-4-2019 to 31-3-2020) is going on.
Exception to the rule Income tax is charged on the income of the previous year
As a normal rule, the income earned during any previous year is charged to tax in the immediately succeeding assessment year. However, in the following circumstances the income is taxed in the same year in which is earned.
1. Income of Shipping Business (Section 172) : In case a non-resident Shipping Company, which has no representative in India, earns income from any Indian port it will not be allowed to leave the port till the tax on such income has been paid or alternative arrangements to pay tax are made in the current year itself.
2. In case of persons leaving India permanently [Section 174] : If the Assessing Officer has the reasons to believe that an individual will leave India with no intentions of coming back, he may him to pay tax on the income earned during the previous year up to the date of his leaving the country.
3. Assessment of association of persons or body of individuals or artificial judicial person formed for a particular event or purpose [Sec.174A] : Where it appears to the Assessing Officer that any association of persons or a body of individuals or an artificial judicial person formed or established or incorporated or immediately after such assessment year, the total income of such person or body or judicial person, for the period from the expiry of the previous year for that assessment year upto the date of its dissolution, shall be chargeable to tax in that assessment year.
4. In case of persons trying to transfer their assets [Section 175] : If the Assessing Officer is of the opinion that any person is likely to sell, transfer, dispose off or to part with any of his assets with the intentions to avoid payment of any tax liability, he may ask to file the return and pay taxes during the previous year itself.
5. Discontinued business [Section 176] : In case any business or profession is discontinued during a previous year the income of the period from the expiry of last previous year till the date of discontinuation will be assessed to tax in the current previous year itself.
The power of the Assessing Officer to invoke the provisions of section 176 is discretionary and with reference to the other provisions mentioned above, it is mandatory. In the above cases, the income of the previous year may be taxed as the income of the assessment year immediately preceding the normal assessment at the rates applicable to that assessment year. For example, when a person is likely to leave abroad on 15-9-2018, the assessing officer can assess in his case the income earned from 1-4-2018 to the probable date of departure at the rates applicable to the assessment year 2018-19 itself, though as per the rules he will have to be assessed during 2019-20 assessment year.
Or
(b) “The incidence of income tax depends upon the residential status of an assessee.” Explain this statement in detail. 14
Ans: Incidence of Taxes: As per Section 5 of the Income Tax Act 1961, incidence of tax on a taxpayer depends on his residential status and also on the place and time of accrual or receipt of income.
 In order to understand the relationship between residential status and tax liability, one must understand the meaning of “Indian income” and “Foreign income”. An Indian income is one which satisfies any of the following conditions:
1)      If income is received (or deemed to be received) in India during the previous year and at the same time it accrues (or arises or is deemed to accrue or arise) in India during the previous year, or
2)      if income is received (or deemed to be received) in India during the previous year but it accrues (or arises) outside India during the previous year, or
3)      if income is received outside India during the previous year but it accrues (or arises or is deemed to accrue or arise) in India during the previous year.
 Similarly, foreign income is one which satisfies both the following conditions:
1)      Income is not received (or not deemed to be received) in India; and
2)      Income does not accrue or arise (or does not deemed to accrue or arise) in India.
Indian income is always taxable in India irrespective of the residential status of the taxpayer. Foreign income of an individual and HUF from a business controlled or profession setup in India will be taxable in the hands of resident and ordinarily resident and resident but not ordinarily resident but not in the hands of a non-resident. However, Foreign income from a business controlled or profession setup outside India will be taxable only in the hands of resident and ordinarily resident and not in the hands of a resident but not ordinarily resident or a non-resident person.
Foreign income of any other taxpayer (Company, Firm, AOP, BOI etc.) will be taxable if the taxpayer is resident in India and will not be taxable in case the taxpayer is non-resident in India. 
Tax incidence of different taxpayers is as follows—
Particulars
ROR
RNOR
NR
Income received in India
Income deemed to be received in India
Income accruing or arising in India
Income deemed to accrue or arise in India
Income received/ accrued outside India from a business in India
Income received/ accrued outside India from a business controlled outside India
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
No

4. (a) What do you mean by tax-free income? Discuss any twelve incomes which are neither included in total income nor income tax is payable on them.                                2+12=14
Ans: Tax Free incomes are those which are not chargeable to tax or the income that does not form part of total income under the Income Tax Act, 1961. All the incomes covered under Sec. 10 are exempted from tax.
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)]
Or
(b) Explain the following:                            7+7=14
1)         Tax exemption for 100% export-oriented units.
2)         Tax holiday in respect of free trade zones.
Ans: 1) Ans: 100% EXPORT ORIENTED UNDERTAKINGS (100% E.O.U.) [Sec - 10B]
A deduction of such profits and gains as are derived by a hundred percent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee. The Provisions of Sec 10B are given below:
1. CONDITIONS TO BE SATISFIED: This section applies to any undertaking which fulfils all the following conditions, namely:
a)      It manufactures or produces any articles or things or computer software;
b)      It is not formed by the splitting up, or the reconstruction, of a business already in existence:
c)       No deduction under this section shall be allowed to an assessee who does not furnish a Return of his Income on or before the due date specified under sub-section (1) of section 139.
d)      Should not be formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking
e)      It is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
f)       Audit Report should be submitted in Form No. 56G.
2. AMOUNT OF DEDUCTION: If the aforesaid conditions are satisfied , the deduction u/s 10B may be computed as under : (Profit of the Business of the undertaking X Export turnover)/Total Turnover of the business.
3. PERIOD OF DEDUCTION: This deduction shall be allowed for a period of 10 consecutive Assessment Years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles, or things or computer software. No deduction under section 10B shall be allowed to any undertaking from the assessment year beginning on the 1st day of April, 2010 and subsequent years.
4. TRANSFER UNDER A SCHEME OF AMALGAMATION OR DEMERGER: In case an undertaking eligible for deduction under this section is transferred, before the expiry of the specified period, to another Indian company in a scheme of amalgamation or demerger:
(a) No deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or demerger takes place ; and
(b) The provisions of this section shall apply to the amalgamated or the resulting company as if the amalgamation or demerger had not taken place.
2) FREE TRADE ZONE (FTZ)[ Section 10A]
1.   CONDITIONS TO BE SATISFIED: In order to get deduction, an undertaking must satisfy the following conditions:
 Condition 1:
It must begin manufacture or production in free trade zone :
It has begun or begins to manufacture or produce during the previous year relevant to the assessment year—
(a) commencing on or after 1-4-1981, in any free trade zone; or
(b) commencing on or after 1-04-1994, in any software technology park  or electronic hardware technology park or;
(c) commencing on or after the 1-04-2001 in any special economic zone;
Conditions 2 :
It should not be formed by splitting / reconstruction of business.:
Conditions 3 :
It should not be formed by transfer of old machinery: it is not formed by the transfer to a new business of machinery or plant previously used for any purpose.
Conditions 4 :
Sale construction should be remitted to India in convertible foreign exchange.:
Sale consideration should be remitted to India in convertible foreign exchange, within a period of six months from the end of the previous year or, within such further period as the competent authority may allow in this behalf.
Condition 5 :
Report of Chartered Accountant :
The deduction under [this section] shall not be admissible for any assessment year beginning on or after the 1st day of April, 2001, unless the assessee furnishes in the prescribed Form 56 , along with the return of income, the report of an Chartered Accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.                
Condition 6 :
Return of income should be submitted in time.
 2.   AMOUNT OF DEDUCTION – GENERAL PROVISIONS: If the aforesaid conditions are satisfied , the deduction u/s 10A may be computed as under :
Profits of the business of eligible undertaking = Export Turnover of eligible undertaking/Total Turnover of eligible undertaking.
3.   PERIOD AND RATE OF DEDUCTION: Out of the total income of an assessee a deduction of 90% of such profits and gains as are derived by an undertaking from the export of articles, or things or computer software shall be allowed. Rate of deduction for unit set up in Special Economic Zone on or after 1-4-2003 shall be as follows for first 10 assessment years:
First 5 Years – 100 % of profits and gains.
Next 2 Years : 50% of such Profit and Gains is deductible for further 2 assessment years.
Next 3 Years :  for the next three consecutive assessment years, so much of the amount not exceeding 50% of the profit as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account.
4. TRANSFER UNDER A SCHEME OF AMALGAMATION OR DEMERGER: In case an undertaking eligible for deduction under this section is transferred, before the expiry of the specified period, to another Indian company in a scheme of amalgamation or demerger:
(a) No deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or demerger takes place ; and
(b) The provisions of this section shall apply to the amalgamated or the resulting company as if the amalgamation or demerger had not taken place.

5. (a) Mr. X is a production manager of an industrial unit at Chennai. The particulars of his salary income are as under:
1)      Basic salary – Rs. 40,000 p.m.
2)      Dearness allowance (given under the terms of employment) – Rs. 15,000 p.m.
3)      Entertainment allowance – Rs. 1,000 p.m.
4)      Medical allowance – Rs. 500 p.m.
5)      House rent allowance – Rs. 12,000 p.m.
6)      Rent paid for the house – Rs. 15,000 p.m.
7)      Car of 1.2 liters capacity provided by employer for private and official use. Employer meets expenses of car.
8)      He and his employer (each) contribute 13% of salary to Recognized Provident Fund.
9)      Mr. X had taken interest-free loan of Rs. 15,000 to purchase a refrigerator.
Compute income under the head salary for the Assessment Year, 2018-19.                          14
Ans: Follow our YouTube Channel for solution
Or
(b) Explain in brief the following items as per the Income-tax Act, 1961:              3.5*4=14
1)         Statutory Provident Fund.
2)         House Rent Allowance.
3)         Perquisites.
4)         Leave Travel concession.
Ans: 1) Statutory Provident Fund: This Fund is mainly meant for Government/University/Educational Institutes (affiliated to university) employees. Provisions of Income Tax Act for such provident fund are stated below:
Particulars
SPF
1. Employee's/ assessee's contribution
Deduction u/s 80C is available from gross total income subject to the limit specified therein
2.Employer's contribution
Fully exempt from tax
3. Interest on Provident Fund
Fully exempt from tax
4.Repayment of lump sum amount on retirement / resignation /termination
Fully exempt u/s 10(11)
2) House Rent allowance [Sec.10 (13A)] : House rent allowance (HRA) received by an employee from his employer is an exempted income. If the actual house rent allowance received by the employee is in excess of the lowest limit as prescribed, the excess sum will be taxable salary. HRA is exempt from tax to the lower of the following.
(a) 50% of Salary in Mumbai, Kolkata, Chennai, Delhi; 40% of salary in other cases.
(b) Actual amount of house rent allowance received; or
(c) The excess of rent paid over 10% of salary.
If the employee is living in his own house or in a house where he is not paying any rent, HRA is fully taxable.
Salary for this purpose means basic salary and dearness allowance if the terms of employment so provide. It also includes any commission based on a fixed percentage of turnover achieved by the employee, as per the terms of the service contract. However, it excludes all other allowances and perquisites. Relevant period means the period for which the accommodation is occupied by the employee. The assessee shall be required to produce the rent receipts in proof of actual payment, for the purpose of regular assessment, in all cases. However, for the purpose of claiming deduction of HRA at source, employees drawing HRA up to Rs.3,000 p.m. are exempted from production of rent receipts. W.e.f. 1.6.2016, for the purpose of claiming deduction of HRA at source, the employee shall be required to furnish in Form 12BB, the name, address and PAN of the landlord(s), if the aggregate rent paid during a previous year exceeds Rs.1 lakh.
3) 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.

4) Leave Travel Concession (LTC): Leave Travel Concession is a non-taxable perquisite available for salaried class. An Employee with his dependent family members can avail of this facility to travel anywhere in India / native place. Exemption is limited to the amount actually spent. The amount exempt is the value of any travel concession or assistance received or due to the assessee.
1. Journey by Air: Economy Class Airfare of India Airlines by the shortest route or the actual amount spent, whichever is lower.
2. Journey by Rail: A/C 1st Class rail fare by the shortest route or actual amount spent, whichever is lower.
3. Where the place of destination is connected by Rail: Air-conditioned first class Rail fare by the shortest route or the actual amount spent for the journey performed by road whichever is lower.

6. (a) Who are the persons liable to pay tax on income from house property? Explain briefly the different types of incomes from house property not chargeable to tax.     4+10=14
Ans: Person liable to pay tax on income from house property: It is only the owner of the house property who can be tax under this head of income. The tax under this section is in respect of the legal or beneficial owner and not the occupation or possession of house property.
Again, the assessee who is deemed to be the owner of the house property is also is also chargeable to tax under this head.  Under Section 27 of the Income Tax Act the assessee in the following cases is deemed to be the owner of the house property, though not owner of the house property:-
(a)   If an individual transfers a house property to his or her spouse (except in connection with an agreement to live apart) or to a minor child (except a married daughter) without adequate consideration, he is deemed as the owner of the property for tax purposes.
(b)   The holder of an Impartible Estate is deemed to be the owner of all the properties comprised in the estate.
(c)    A member of a co-operative society, company or association of persons, to whom a property or a part thereof is allotted or leased under a house building scheme of the society, company or association, is deemed to be the owner of such property.
(d)   A person who has acquired a right in a building by way of a lease for a term of not less than 12 years, is the deemed owner of the property. This provision does not cover any right by way of a lease renewable from month to month or for a period not exceeding one year.
Properties exempted from tax under the head income from house property (Sec. 10)
1) Income from a farm house.
2) Annual value of one palace in the occupation of an ex-ruler.
3) Property income of a local authority.
4) Property income of an approved scientific research association.
5) Property income of an educational institution and hospital.
6) Property income of a registered trade union.
7) Income from property held for charitable purposes.
8) Property income of a political party.
9) Income from property used for own business or profession.
10) Annual value of two self occupied property.
Or
(b) Following are the particulars of two house properties owned by Mr. Ghanshyam:

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 (in Rs.)
Due
Paid
Interest on borrowed money (in Rs.)
96,000
88,000
90,000
9,000 p.m.
01.04.2018 to 30.11.2018
01.12.2018 to 31.03.2019

6,000
3,000
10,000
90,000
96,000
1,08,000
10,000 p.m.
01.12.2018 to 31.03.2019
01.04.2018 to  30.11.2018

8,000
Nil
42,000
Loan taken to construct House – II is still outstanding Loan was taken in 1998. Find out Mr. Ghanshyam income from house property for the Assessment Year, 2018-19.        14
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