2020
COMMERCE
(General / 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
(i) Interest on capital to proprietor is not income in the hands of proprietor, hence not deductible from business income.
(ii) To claim exemption u/s 54B, the asset transferred should be rural agricultural land.
(iii) Income earned from subletting of house property is taxable under the head Income from House Property.
(iv) A short-term capital loss can be set off from any other head of income in the same assessment year.
(b) Fill in the blanks: 1x4=4
(i) Unabsorbed depreciation which could not be set off in the same assessment year can be carried forward for _______period.
(ii) Securities Transaction Tax paid by the purchaser of shares shall ______of such shares.
(iii) Winning from lotteries, crossword puzzles, horse races and other races are ________income.
(iv) Speculation loss can be carried forward for the maximum of ________years.
2. Write short notes
on any four of the following:
4x4=16
(a) Inadmissible deduction u/s 40
(b) Transactions not regarded as transfer
(c) Tax planning for salaried assessee
(d) Carry forward of business losses
(e) Block of assets
3. (a) What do you mean by the term ‘depreciation’? Explain the conditions for claiming depreciation while computing the income from business and profession. 4+10=14
Or
(b) Mr. Rajesh Agarwal is a practicing chartered accountant. He has prepared the following Income & Expenditure A/c for the year ending 31st March, 2020:
Income & Expenditure A/c for the ended 31st March, 2020
|
Expenses |
Amount
(Rs.) |
Income |
Amount
(Rs.) |
|
To Office Expenses To Employee’s Salaries To Magazine Expenses To Personnel Expenses To Donation to NDF To Income Tax To Car Expenses To Telephone Expenses To Depreciation on Car To Net Surplus |
11,00,000 15,50,000 6,000 1,70,000 5,000 1,23,000 20,000 10,000 15,000 24,11,000 |
By Audit Fees By Gift from Mother-in-law By Dividend By Profit on Sale of Units of UTI By Tax Consultancy Fees By Income Tax Refund |
47,05,000 50,500 80,000 64,500 5,00,000 10,000 |
|
54,10,000 |
54,10,000 |
You are required to compute professional
income of Mr. Agarwal for the Assessment Year, 2020-21 after taking into
account the following points:
14
(i) Employee’s salaries include Rs. 15,000, payment made to domestic help
(ii) Assessee is owner of a building. Its written-down value is Rs. 8,00,000 on 1st April, 2019. The building is used for official purposes. In addition to it, furniture costing Rs. 3,00,000 whose written-down value on 1st April, 2019 is Rs. 2,50,000 which is also used for profession. Both assets are eligible for depreciation @ 10% under the Income-tax Act
(iii) 50% of motorcar expenses are in respect of his professional practice
4. (a) What do you mean by ‘capital asset’ as defined under the Income-tax Act, 1961? Distinguish between short-term and long-term and capital gain. Discuss how short-term and long-term capital gain are computed. 2+4=8=14
Or
(b) Miss Priya sells agricultural land situated in an urban area for Rs. 11,31,000 (brokerage paid @ 2%) on 31st March, 2020. (Cost of acquisition was Rs. 3,82,000 on 1st March, 2006. It was used for agricultural purposes, from 2010 to date of sale.)
On 31st March, 2020, she owns only one residential house property. On 6th April, 2020, she purchases the following assets:
(i) Agricultural land for Rs. 1,20,000
(ii) A residential house property for Rs. 5,00,000
Find out the capital gain chargeable to tax for the Assessment Year, 2020-21. CII for the Financial Year, 2005-06 is 117. 14
5. (a) What do you mean by set-off of losses? When can a loss be carried forward to set off against future income? Discuss briefly the provisions of the Income-tax Act, 1961 regarding the carry forward and set-off of losses from capital gain. 3+4+7=14
Or
(b) Mr. Aditya, a resident individual, submits the following information relevant to the Previous Year ending 31st March, 2020:
|
Particulars |
Amount
(Rs.) |
|
1. Income from Salary
(computed) 2. Income from House Property: (i) House I (ii) House II (iii) House III (self-occupied) 3. Profit and Gains of
Business or Profession: (i) Business I (ii) Business II (iii) Business III (speculative) (iv) Business IV (speculative) 4. Capital Gains: (i) Short-term capital loss (ii) Long-term capital gains on transfer of shares 5. Income from Other Sources
(computed): (i) Income from card games (ii) Income from betting (iii) Loss on maintenances of race horses |
2,12,000 12,000 (-) 2,50,000 (-) 10,000 8,000 (-) 12,000 (-) 64,000 36,000 (-) 6,000 5,400 36,000 24,000 (-) 4,600 |
Determine the Gross
Total Income for the Assessment Year, 2020-21. 14
6. (a) “Tax planning is a scientific way to save tax whereas tax evasion is a tax concealment.”
In the light of the above statement, show how a person can minimize his tax liability through tax planning. Distinguish between tax planning and tax evasion. 8+6=14
Or
(b) Write notes on the following: 7+7=14
(i) Deduction u/s 80C
(ii) Tax Management
(Old Course)
Full Marks: 80
Pass Marks: 32
1. (a) Write True or
False: 1x4=4
(i) Salary, bonus, commission or remuneration due to or received by a working partner from the firm are taxable under the head ‘Income from Business or Profession’.
(ii) Capital gain arises from transfer of any asset.
(iii) Loss under the head ‘Capital Gain’ in a particular assessment year can neither be set-off nor carried forward.
(iv) If no system of accounting is followed, interest on securities is taxable on receipt basis.
(b) Fill in the blanks: 1x4=4
(i) Short-term capital gain is a gain arising from the transfer of an asset which is held by the assessee for not more than ______months from the date of its acquisition.
(ii) The Central Board of Direct Taxes was set up in the year ______.
(iii) Depreciation is allowed to _____of the asset.
(iv) Dividend declared by a domestic company shall be _______in the hands of shareholder.
2. Write short notes
on any four of the following:
4x4=16
(a) Unabsorbed depreciation
(b) Cost of acquisition
(c) Long-term and short-term capital gain
(d) Exempted assets under the Wealth-tax Act
(e) Carry forward of business losses
3. (a) Explain the basic principles to be followed for arriving at Business Income. 12
Or
(b) Dr. Rajiv Kakoty is a medical practitioner. He submits you the following Income & Expenditure A/c for the Previous Year ending on 31st March, 2019 along with some additional information:
Income & Expenditure A/c for the year ended 31st March,
2019
|
Expenses |
Amount
(Rs.) |
Income |
Amount
(Rs.) |
|
To Rent of Clinic To Electricity Charges To Telephone Expenses To Staff Salaries To Depreciation on Surgical Equipments To Purchase of Medicines To Depreciation on X-ray Machine To Income Tax To Donation to NDF To Motorcar Expenses To Income Tax Appealed To Depreciation on Car To Refreshment Expenses To Net Surplus |
3,60,000 40,000 20,500 3,40,000 60,000 1,80,000 20,000 55,000 4,000 35,500 20,000 40,000 25,500 8,76,500 |
By Visiting Fees By Consultative Fees By Sale of Medicines By Dividends |
6,00,000 12,80,000 1,72,000 25,000 |
|
20,77,000 |
20,77,000 |
Compute his professional income for the
Assessment Year, 2019-20 after taking into account the following points: 12
(i) A sum of Rs. 5,000 paid on account of domestic consumption of electricity included in electricity and water charges
(ii) Half of the motorcar expenses are for professional use
(iii) Telephone expenses include 40% for personal use
(iv) Opening stock of medicine was
4. (a) Define the term ‘capital gain’. Discuss the procedure for computation of capital gain as prescribed by the Income-tax Act, 1961. 4+7=11
Or
(b) Discuss the provisions regarding exemption of long-term capital gain u/s 54 of the Income-tax Act, 1961. 11
5. (a) Explain the assets exempted from tax under the Wealth-tax Act. 11
Or
(b) What is net wealth? How is it computed? 4+7=11
6. (a) What do you understand by set-off of losses? When can a loss be carried forward to set off against future income? Discuss briefly the provisions of the Income-tax Act regarding the carry forward and set-off of losses from capital gains. 3+3+5=11
Or
(b) Explain the provisions of the Income-tax Act, 1961 regarding set-off and carry forward of losses under different heads of income. 11
7. (a) Distinguish between tax avoidance and tax evasion. Explain the objectives of tax planning. 4+7=11
Or
(b) Explain the following: 5+6=11
(i) Limitations of tax planning
(ii) Tax deduction u/s 80C
***
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