problem on Legal Consultancy Services

This query is : Open

Nikhil Kothari (Querist)
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30 September 2010 I am unable to solve this below given problem, so please can anyone help me in solving this problem...

Ajay & Co., a partnership firm, is providing taxable legal consultancy services, for the second consecutive assessment year. The firm furnishes the following information relating to the services rendered, bills raised, amounts received relating to this services, for the year ended 31.3.2010:
a)Free services rendered to poor
people(Value of the services
computed on comparative basis) 40,000

b)Advances received from clients
for which no taxable service
has been rendered so far. 5,00,000

C)Services billed to clients
Gross amount 12,00,000
(Service tax has been charged
separately in all the bills;
the firm follows mercantile
system of accounting)

d)The firm has received the
following amounts duing the
year:
Relating to taxable services
rendered in March, 2009
(excluding service tax at
applicable rates and TDS under
section 194-J of the IT Act,
1961 to the tune of45,320) 5,44,680

Relating to taxable services
rendered in current year 2009 (excluding Service tax at
applicable rates and TDS under
section 194-J of the IT Act, 1961
to the tune of1,20,000) 9,80,000*
(* includes50,000 for
appearance fee before Labour
Court received from another firm)

Service tax has been separately received for applicable items in d) above.

You are required to compute the value of taxable services for the year ended 30.3.2010 and the Service tax payable, briefly explaining the treatment of each item above.

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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30 September 2010 We can only give you the information which is required for calculation of tax. You have to make arithmatical calculation.

1. Free service is exempted from tax.
2. Service tax is to be deposited , where advance has been recived although rendering of service is pending.

3. In other case, Tax to be paid where amount has been recived.

Nikhil Kothari

Nikhil Kothari (Querist)
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30 September 2010 Thank you sir for helping...
I am well aware with the theoretical aspects, but failing with calculations itself.

Actually it is a CA-IPCC exam question and even the Institute has not answered this in their suggested answers.

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Nikhil Kothari

Nikhil Kothari (Querist)
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01 October 2010 Not yet resolved, still open..

Nikhil Kothari

Nikhil Kothari (Querist)
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01 October 2010 Computation of Taxable services for the Assessment Year 2010-2011.

a)Free services NIL

b)Advanced received(assuming
inclusive of tax) 4,53,309
[5,00,000*100/110.3]

c)Services billed to client 12,00,000

d)(i)Services rendered before
effective date i.e., in
March. NIL
(effective date:01/09/2009)

(ii)Services rendered in
current year. 9,51,949
{[9,80,000+1,20,000-50,000]
*100/110.3} _________

Total Taxable Services 26,05,258
_________

Sir please say whether my above computation of taxable service is correct or not...