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Can anyone please help me to solve this income tax problem

14 October 2012

CAN ANYONE PLEASE HELP ME TO SOLVE THIS INCOME TAX PROBLEM
Mr. X(43yr, Non-resident) has the following income during AY 2012-13

Income from HP- Rs. 2,18,500
Business Income – NIL
Income from card games – Rs. 2,16,000
Short Term Capital gains(STCG) – Rs. 4,22,000
There is an unabsorbed depreciation of Rs. 2,06,000
Find the net income and taxable liability of Mr. X for the AY 2012-13
If STCG is due to sale of shares after deducting STT

Thanking all
Shibendu Banerjee

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8 Replies

praveen (Chartered Accountant) (6971 Points)
Replied 14 October 2012

Solution is as follows:

a) GAV of HP - Rs. 218500

standard deduction of 30% - Rs.65550

NAV of HP = Rs. 152950

b) Short term capital gain Rs. 422000 (taxable at 15%)

c) Card game - Rs.206000 (taxable at 30%)

d) Unabsorbed deprecation Rs.206000 - set off against house property income of Rs.152950 and balance against capital gains. Hence capital gains beccomes (422000-53050)= 368950*15%

total tax will be 30% of 206000 + 15% of 368950 = 64800+28343 = 93143

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shibendu banerjee (student) (62 Points)
Replied 14 October 2012

Thanks a lot Parveen. I want a litl more help, if Mr. X is a resident then what will be the exact solution?

shibendu banerjee (student) (62 Points)
Replied 14 October 2012

Sory sir u r Praveen, sory for spelng mistake.

praveen (Chartered Accountant) (6971 Points)
Replied 14 October 2012

I dont think there will be any changes.

shibendu banerjee (student) (62 Points)
Replied 14 October 2012

But sir, if Mr. X is a resident then can we apply sec 111A ?

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C.Balaji (Learner) (1867 Points)
Replied 15 October 2012

Taxability of short term capital gains

Section 111A of the Income tax Act provides that those equity shares or equity oriented funds which have been sold in a stock exchange and securities transaction tax is chargeable on such transaction of sale then the short term capital gain arising from such transaction will be chargeable to tax @ 15% from assessment year 2009-10 onwards.

shibendu banerjee (student) (62 Points)
Replied 15 October 2012

Income from HP(Let it is GAV)…… Rs. 2,18,500
Less: Std Deduction @ 30%.................(Rs. 65550)
NAV...........................……………….Rs.1,52,950
LESS: unabsorbed Dep……………..(Rs.1,52,950)
Then Income from HP……………………. NIL
STCG………………………………........ Rs. 4,22,000
Less: remaining unabsorbed dep…..(Rs. 53,050)
Net STCG…………..…......................... Rs. 3,68,950
Card Games………………………..….Rs. 2,16,000
Net Income……………………….....…Rs 5,84,950
Tax Liability for AY 2012-13
Tax On card games( Rs 2,16,000*30%) Rs.64,800
Add: Tax on 3,68,950 @ 15% = (3,68,950-1,80,000)*15% = Rs. 28,343
Tax…......…………………………..............................................Rs. 93143
Add: Education Cess……………………………….................Rs. 1,863
Add: Secondary & HE Cess ………......................................Rs.    931
Total Tax liability (Rounded off)…….......................................Rs.95,940
(I Think this is what Praveen sir's complete solution)

Note:- An alternative solution can be made but that will make higher tax liability for Mr. X
Like Deduct all unabsorbed depreciation from STCG (i.e 4,22,000-2,06,000= 2,16000)
then income from HP (NAV) – 1,52,950; STCG- 2,16,000; Card game – 2,16,000
Tax on card game= 64,800
And Tax on income from STCG U/S 111A = [(1,52,950+2,16,000) –(1,80,000-1,52,950)]*10%=34,190
so toal tax =64,800+34,190 = 98,990 , Edu cess @ 3% i.e 2,970
Total tax liability = 98,990+2970 = Rs. 1,01,960 which is Rs. 6,020 higher than previous.