Can any one send suggested of Tax Paper Nov09 PCC?
Thanks in Advance
Vatsalya Bhardwaj
(Final Student)
(427 Points)
Replied 10 February 2010
CA PCC Nov. 2009 Tax Paper Solved
1 |
State with reasons , wheather the following statements are true or false having regard to the provisons of the Income-tax Act, 1961, for the assessment year 2010-11:
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a)
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As per sec. 49(2A) read with Section 47(Xa) of the Income-tax Act, 1961, no capital gains on conversion of foreign currency exchangable bonds into shares or debentures, for faciliating the issue of FCEBs by Indian Companies.
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b)
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Person not deducting tax also deemed to be an assessee in default under section 191 read wirh section 201 of the Income-tax Act, 1961.
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c)
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The benefit of weighted deduction of 125% under section 35(2AB) of the Income-tax Act, 1961 has now been extended to contribution made to a company for scientific research approved under section 35(1)(iia) to an assessee.
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d)
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Where the payment is made in cash by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payer , in excess of Rs.20,000 in a day, no disallowance gets attracted under section 40A(3) of the Income-tax Act, 1961 read with Rule 6DD of the Income-tax Rules, 1962
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e)
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An AOP having gross receipts of Rs.50 lacs during the financial year 2008-09 is not required to deduct tax at source under section 194C of the Income-tax Act, 1961, on payment made to contractors during the financial year 2009-10.
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Solution
Ans. |
True
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True
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False*
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False**
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False
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Page No. |
7.7
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16.20
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6.25
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6.46
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16.6 & 16.9
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* As u/s 35(2AB), assessee is eligible for weighted deduction of 150%.
2.
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Dr. Parekh is a resident individual. His Income and Expenditure Account for the year ending 31st March, 2010 is given below:
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To
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Amount
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By
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Amount
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Salary to Staff |
3,78,000
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Consultation Fees |
11,85,000
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Cost of Medicine |
6,35,000
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Cost of Medicines Recovered |
7,85,000
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Rent |
66,000
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Stock of Medicine |
25,000
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Administrative Cost |
1,98,000
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Interest on PO MIS |
86,400
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Advance Tax |
2,40,000
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Interest on TD with bank (Net of TDS Rs.3,000) |
27,000
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Membership Fees |
5,000
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Rent Received |
20,000
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Depreciation on Apparatus |
42,500
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Winning from lotteries (Net of TDS Rs.3,000) |
7,000
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Net Profit |
5,70,900
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21,35,400
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21,35,400
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(i)
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He has deposited Rs.70,000 in PPF. | ||||
(ii)
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He received salary of Rs.1,50,000 and commission of Rs.50,000 from a nursing home in which Dr. (Mrs.) Parekh also an equal partner | ||||
(iii)
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He received fees of Rs.50,000 from University of Trividad as lecturer. | ||||
(iv)
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Received pension of Rs.84,000 from LIC Jeevan Suraksha | ||||
(v)
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Paid Rs.22,500 by cheque as mediclaim insurance premium for his medical treatment. | ||||
(vi)
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He paid LIC premium of Rs.80,000 for his own life | ||||
(vii)
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Cost of administration includes Rs.3,000 paid for municipal tax for the house let out to a tenant. | ||||
(viii)
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Depreciation as per Income-tax Rules to be computed as follows: | ||||
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- WDV as on 01.04.2009 | Rs.3,00,000 | |||
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- Rate of depreciation | @ 15% | |||
(ix)
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Cost of lottery tickets amounting to Rs.350 has not been debited to Income and Expenditure Account. |
You are required to compute the total income and tax payable thereon by Dr. Parekh for the assessment year 2010-11.
Solution
Computation of total income of Dr. Parekh for the A.Y. 2010-11
Particulars | Amount | Amount | Amount |
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Salaries | |||
- From Nursing Home (Salary + Commission) |
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2,00,000
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Income from House Property |
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Rent Received |
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20,000
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Less: Municipal Tax paid |
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3,000
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Net Annual Value |
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17000
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Less: Standard Deduction u/s 24(a) [30% of Net Annual Value] |
5,100
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Less: Interest on loan u/s 24(b) |
Nil
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5,100
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11,900
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Profits and Gains of Business or Profession |
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Consultation Fees |
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11,85,000
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Cost of Medicine recovered |
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7,85,000
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Stock of Medicine |
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25,000
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19,95,000
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Less: Expenses |
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Salary to staff |
3,78,000
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Cost of medicine |
6,35,000
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Rent paid |
66,000
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Administrative Cost (as reduced by municipal tax) |
1,95,000
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Membership Fees |
5,000
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Depreciation as per I.T. Act (Rs.3,00,000 * 15%) |
45,000
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13,24,000
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6,71,000
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Income from Other Sources |
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Interest on PO MIS |
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86,400
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Interest on TD with Bank including TDS |
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30,000
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Winning from Lottery (including TDS) |
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10,000
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Fees from University |
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50,000
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Pension from LIC Jeevan Suraksha |
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84,000
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2,60,400
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Gross Total Income
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11,43,300
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Less: Deduction u/s |
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80C (Investment in PPF + LIC Premium paid) (Subject to maximum of Rs.1,00,000) |
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1,00,000
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80D Mediclaim Insurance Premium [Maximum Limit] |
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15,000
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1,15,000
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Total Income
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10,28,300
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Computation of tax liability
Particulars | Details | Amount |
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Tax on Lottery Income |
Rs.10,000 * 30%
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3,000
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Tax on Other Income of Rs.10,18,300 |
Rs.1,60,000 * 0% + Rs.1,40,000 * 10% + Rs.2,00,000 * 20% + Rs.5,18,000 * 30%
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2,09,490
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Total Tax
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2,12,490
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Add: Education Cess & SHEC |
Rs.2,12,490 * 3%
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6,375
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Tax & Cess Payable
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2,18,865
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Less: Pre-paid Taxes |
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Advance Tax |
2,40,000
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TDS |
6,000
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2,46,000
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Refundable
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Rounded off u/s 288B
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27,140
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3(a) |
Mrs. Indu, resident individual, own a house in USA.She receives rent @ $2,000 per month. She paid municipal taxes of $1,500 during the financial year 2009-10. She also owns a two storied house in Mumbai, ground floor is used for her residence and first floor is let out at a monthly rent of Rs.10,000. Standard Rent for each floor is Rs.11,000 per month. Municipal Taxes paid for the house amounts to Rs.7,500. Mrs. Indu had constructed the house by taking a loan from a nationalised bank on 20-06-2007. She repaid the loan of Rs.54,000 including interest of Rs.24,000. The value of one dollar is to be taken as Rs.45. Compute total income from house property of Mrs. Indu. |
Solution
Computation of income from house property of Mrs.Indu
Particulars |
Details |
Details |
Amount |
House 1: Let out [Sec. 23(1)] |
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Gross Annual Value [Rent Received] [i.e., 2,000 * 45 * 12] |
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10,80,000 |
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Less : Municipal Tax [1,500 * 45] |
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67500 |
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Net Annual Value |
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10,12,500 |
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Less : Deduction u/s |
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24(a) Standard Deduction |
3,03,750 |
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24(b) Interest on loan (3/4 th ) |
Nil |
3,03,750 |
7,08,750 |
House 2 First Floor: Let out [Sec. 23(1)] |
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Gross Annual Value [Higher of Standard Rent and Actual Rent] |
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1,32,000 |
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Less : Municipal Tax [7,500 * 1/2] |
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3,750 |
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Net Annual Value |
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1,28,250 |
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Less : Deduction u/s |
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24(a) Standard Deduction |
38,475 |
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24(b) Interest on loan |
12,000 |
50,475 |
77,775 |
House 2 Ground Floor: Self occupied [Sec. 23(2)(a)] |
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Net Annual Value |
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Nil |
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Less : Deduction u/s |
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24(b) Interest on loan |
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12,000 |
(-) 12,000 |
Income from House Property
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7,74,525
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3(b) |
Mrs. Indira, a landlord, derived income from letting a house property to M/s Vaibhav Corporation Ltd. of Rs.1,00,000 per month. She charged the service tax @ 10.3% on lease rent charges. Calculate the deduction of tax at source (TDS) to be made by M/s Vaibhav Corporation Ltd. on payment made to Mrs. Indira and narrate related formalities in relation to TDS. What are the consequences of failure to deduct or pay TDS |
Solution
Tax required to be deducted by M/s Vaibhav Corporation Ltd. on rent are as under:
Rent paid: Rs.12,00,000 [i.e., Rs.1,00,000 * 12]
Tax required to be deducted
Period | Working | Amount of TDS |
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April to September |
Rs.1,00,000 * 6 * 15%
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Rs.90,000
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October to March |
Rs.1,00,000 * 6 * 10%
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Rs.60,000
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Total Tax required to be Deducted
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Rs.1,50,000
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Assuming that rent became due within the month to which it pertains
Further refer page 16.13 and 16.20
4(a) |
Determine the taxability of income of US based company Heli Ltd., in India on entering following transactions during the financial year 2009-10:
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i)
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Rs.5 lacs received from an Indian domestic company for providing technical know how in India.
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ii)
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Rs.6 lacs from an Indian firm for conducting the feasibility study for the new project in Finland
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iii)
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Rs.4 lacs from a non-resident for use of patent for a business in India.
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iv)
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Rs.8 lacs from a non-resident Indian for use of know how for a business in Singapore
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v)
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Rs.10 lacs for supply of manuals and designs for the business to be established in Singapore
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Explain the rate of tax applicable on taxable income for US based company, Heli Ltd., in India. |
Solution
The taxability are as under: | |
i) |
As per sec.9(1)(vii) , any fees received from a resident person for providing technical know how in India is deemed to accrue or arise in India. Hence, Rs.5 lacs shall be taxable in India
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ii) | Any income accruing or arising out of India is not taxable in hands of non-resident, hence Rs.6 lacs is not taxable in India. |
iii) | Rs.4 lacs shall be taxable in India as it is deemed to accrue or arise in India |
iv) | Any income accruing or arising out of India is not taxable in hands of non-resident, hence Rs.8 lacs is not taxable in India. |
v) | Any income accruing or arising out of India is not taxable in hands of non-resident, hence Rs.6 lacs is not taxable in India. |
The taxable income will be taxable @ 40% (plus education cess 2% and SHEC 1%).
4(b) |
Mr. Pranav, a resident individual had purchased a plot of land at a cost of Rs.75,000 in June, 1998. He constructed a house for his residence on that land at a cost of Rs.1,25,000 in August 2000. He sold that house in May, 2009 at Rs.15,00,000 and purchased another residential house in June, 2009 for Rs.8,00,000. He furnishes other income and investment as follows:
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Net of interest on fixed deposit with a Bank
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Rs.44,850
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TDS made by bank
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Rs.5,150
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Investment in NSC VIII issue
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Rs.20,000
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You are required to compute taxable income and tax payable by Mr.Pranav for the assessment year 2010-11. |
Solution
Computation of total income of Mr. Pranav for A.Y.2010-11
Particulars | Details | Amount | Amount |
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Capital Gains |
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Full Value of Consideration |
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15,00,000
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Less: Indexed Cost of Acquisition [Rs.75,000 * 632 / 351] |
1,35,043
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Less: Indexed Cost of Construction [Rs.1,25,000 * 632 / 406] |
1,94,581
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3,29,624
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Long Term Capital Gain
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11,70,376
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Less: Deduction u/s 54 [Being investment in residential house] |
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8,00,000
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3,70,376
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Income from Other Sources |
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Interest on Fixed Deposit with a Bank |
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50,000
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Gross Total Income
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4,20,376
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Less: Deduction u/s 80C [Investment in NSC VIII issue] |
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20,000
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Total Income
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4,00,376
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Rounded off u/s 288A
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4,00,380
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Computation of tax liability
Particulars
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Amount
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Tax on Long Term Capital Gain after adjusting shortfall in basic exemption limit [i.e., 20% of Rs.{3,70,376 - (1,60,000 - 30,000})] |
48,075
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Add: Edcuation Cess & SHEC [Rs.48,075 * 3%] |
1,442
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Tax and cess payable
|
49,517
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Less: Tax Deducted at Source |
5,150
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Net Payable (Rounded off u/s 288B)
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44,370
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5 |
Answer the following:
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a)
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Are there any restrictions on deduction allowable to the partnership firm in respect of salary and interest to its partners under section 40(b) of the Income-tax Act, 1961.
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b)
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Interest is chargeable under section 234A for delay or default in furnishing return of income. Discuss briefly. | |
c)
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Explain the difference between tax deduction at source and tax collection at source. | |
d)
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Describe average rate of tax and maximum marginal rate under section 2(10) and 2(29C) of the Income-tax Act, 1961. |
Solution
a) | Refer page 6.63 |
b) | Refer page 18.2 |
c) | Refer page 16.1 & 16.24 |
d) |
Refer page 1.11 & maximum marginal rate means the rate of income-tax (including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individual, association of persons or, as the case may be, body of individuals as specified in the Finance Act of the relevant year. For A.Y. 2010-11, maximum marginal rate is 30.90%
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6 |
Ms. Priyanka, a proprietress of Royal Security Agency received Rs.1,00,000 by an account payee cheque, as advance while signing a contract from providing taxable service; she receive Rs.5,00,000 by credit card while providing the service and another Rs.5,00,000 by a pay order after completion of service on January 31, 2010. All three transactions took place during financial year 2009-10. She seek your advice about her liability towards value of taxable service and the service tax payable by her. |
Solution
Computation of service tax liability of Ms. Priyanka (assuming she is a small service provider)
Particulars | Amount | Amount |
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Value of taxable service received |
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11,00,000
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Less: Exemption |
|
10,00,000
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Chargeable Value |
|
1,00,000
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Tax on above [Rs.1,00,000 * 10%] |
|
10,000
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Add: Education Cess [Rs.10,000 * 2%] |
200
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Add: SHEC [Rs.10,000 * 1%] |
100
|
300
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Service Tax Payable
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|
10,300
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Computation of service tax liability of Ms. Priyanka (assuming she is not a small service provider)
Particulars | Amount | Amount |
---|---|---|
Value of taxable service received |
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11,00,000
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Tax on above [Rs.11,00,000 * 10%] |
|
1,10,000
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Add: Education Cess [Rs.1,10,000 * 2%] |
2,200
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Add: SHEC [Rs.1,10,000 * 1%] |
1,100
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3,300
|
Service Tax Payable
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1,13,300
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7.
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Mr. Goenka, a trader selling raw materials to a manufacturer of finished products. He imports his stock in trade as well as purchases the same from the local markets. Following transactions took place during financial year 2009-10
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Calculate the VAT and invoice value charged by him to a manufacturer. Assume the rate of VAT @ 12.50%
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Cost of imported materials (from other State) excluding tax
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Rs.1,00,000
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Cost of local materials including VAT
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Rs.2,25,000
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Other expenditure including storage, transport, interest and loading and unloading and profit earned by him
|
Rs.87,500
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Solution
Computation of Invoice Value
Particulars | Amount |
---|---|
Cost of imported materials (from other State) excluding tax
|
1,00,000
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Cost of local materials excluding VAT [Rs.2,25,000 - (Rs.2,25,000/112.50% * 12.50%)]
|
2,00,000
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Other expenditure including storage, transport, interest and loading and unloading and profit earned by him
|
87,500
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Invoice Value (before tax)
|
3,87,500
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Add: VAT [Rs.3,87,500 * 12.50%] |
48,438
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Invoice Value (including tax)
|
4,35,938
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Computation of VAT Payable
Particulars | Amount |
---|---|
VAT
|
48,438
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Less: Input Credit [Rs.2,25,000/112.50% * 12.50%] |
25,000
|
Invoice Value (including tax)
|
23,438
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8. |
Answer the following:
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---|---|---|
a)
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Ms. Amrapali, a registered Service Provider did not render any service during the financial year 2009-10 . Whether she is required to file service tax return?
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b)
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VAT would increase the working capital requirements and the interest burden. Discuss
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c)
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Mr. Bharat is a registered Service Provider. He transfers his business to Mr. Rakesh on 31st July 2009. Explain the requirement to be complied with by Mr. Bharat and Mr. Rakesh on such transfer under the provisions of Service Tax.
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d)
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Write the provisions on liability for payment of service tax on services provided abroad.
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e)
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Which Act and Rule governs the levy of Service tax in India.
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Solution
a)
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Refer page 19.19 |
b)
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Refer page 20.4 |
c)
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Refer page 19.17 |
d)
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Services can be exported without payment of tax. For this purpose , Central Government has framed Export of Service Rules, 2005 . The said rule also enables the Government to grant rebate of input taxes paid for the provision of Services which are ultimately exported. Further refer page 19.33
|
e)
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Refer page 19.1 |
Vatsalya Bhardwaj
(Final Student)
(427 Points)
Replied 10 February 2010
u can refer to following link:
Vatsalya Bhardwaj
(Final Student)
(427 Points)
Replied 10 February 2010
u can also download it from following link: