Please help me in CS objective questions of Tax Laws

CA SURENDRA KUMAR RAKHECHA (Practising CA at Surat) (26263 Points)
Replied 26 January 2011

Originally posted by : Hardik Dave

(1), In certain cases, income of other person is included in the income of assessee. It is called- (a)Clubbing of income,

(2) The method of accounting for computing income is the method of accounting regularly enployed by the assessee under the head: - (d)profits and gains from business or profession,

(3) The income which is not exempt under section 10 of the Income Tax Act, 1961:- (a)Income of minor child in excess of Rs. 10,000,

(4)which of the following is not an asset under section 2(ea)of the wealth Tax Act, 1957:- (d)Cash at bank,

(5)The following are considered as capital assets as per section 2(14) of Income Tax Act, 1961, except:- Stock in Trade.

4 Like

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 26 January 2011

The replies given by Surendra Sir is correct.

1 Like

CA SURENDRA KUMAR RAKHECHA (Practising CA at Surat) (26263 Points)
Replied 26 January 2011

Here I explain how to develop conceptual clarity :

(1), In certain cases, income of other person is included in the income of assessee. It is called- (a)Clubbing of income,(b)Increase in income, (c)Addition to income, (d)Set-off of income,

Look at the options given. The best fit answer is Clubbing because including means clubbing. Also think about the word "clubbing." The club is a place ( like caclub) where persons join. That joining prima-faice ( at the first instance) does not mean increasing or addition to income of the club. So including is restricted to forming a club.

Further; if you are still not clear and think that Increase in Income and Addition to Income is almost one and same. Set-off of Income is altogether different.

(2) The method of accounting for computing income is the method of accounting regularly enployed by the assessee under the head: -(a)House property,(b)capital Gain,(c)salaries, (d)profits and gains from business or profession,

Generally we maintain books of account of business. Hence with common sense also we are in a position to give answer of this question. Have you seen a salaried person to maintain books of account ?

(3) The income which is not exempt under section 10 of the Income Tax Act, 1961:- (a)Income of minor child in excess of Rs. 10,000, (b)Dividend income in the hands of shareholders,(c)Income from units in the hand of Unit holders , (d)Long term Capital Gain from sale of shares listed in a recognized stock Exchange,

Here clue is in first option itself - something exceeding is not exempt. Also see the last three options : All are related to shares and securities i.e. Dividend, Units Income (dividend is declared on units), LTCG - on shares.

So even you know that dividend is exempt; you can apply this test on all the options which will help develop to find right answer.

(4)which of the following is not an asset under section 2(ea)of the wealth Tax Act, 1957:- (a)Motor car,(b)Boats and aircrafts, (c)Guest house,(d)Cash at bank,

In first three options; it is clear that these are asset which are altogether different from Cash at Bank.

(5)The following are considered as capital assets as per section 2(14) of Income Tax Act, 1961, except:- (a)paintings, (b)sculptures,(c)Any work of Arts, (d)Stock in Trade.

Apply point No. 4 again and you will find the answer.

4 Like

Sunshine (Helping All) (10575 Points)
Replied 27 January 2011

sir aap great hain..

1 Like

harsh (MBA (Fin) M.Com PGDFM PGDIM DIM Msc(cs) PGDCA Accounts Mananger) (36 Points)
Replied 09 March 2012

please solve this question

Riya has a house property in Delhi whose particulars are as under:

Muncipal Value 3,00,000

Standard Rent 3,12,000

Municipal Taxes Paid 50,000

Interest on money borrowed for acquiring the house

after 01-04-2009 1,60,000

Period of occupation for own residence 2 Months

Actual rent for 10 months 35,000 p.m.

Compute the income from house property for assessment year 2011-12.

harsh (MBA (Fin) M.Com PGDFM PGDIM DIM Msc(cs) PGDCA Accounts Mananger) (36 Points)
Replied 09 March 2012

please solve this question

from the following particulars. calculate the taxable income of Suman for the assessment year 2012-13: Salary per month 16,000

Dearness Allowance per month 6,000

Medical bill reimbursed per month

Medical bill reimbursed(out of which Rs.14,000 is spent on

treatment of specified Ailment in a hospital approved by the Chief Commissioner) 42,000

free telephone at residence 12,000

House Rent Allownace per month (Rtent paid Rs. 15,000 p.m for a house in delhi) 10,000

House property is let out on a monthly rent of Rs. 2,000. The annual value of the house proerty is Rs.

30,000. Muncipal tax paid is Rs. 1,800 for whole year. Re-payment of house building loans taken from friends is Rs. 5,000 and from Life Insurance Corporation is Rs. 9,000(which includes Rs. 6000 on account of interest)

Interest on Savings Bank A/c 34,000

Interest on PPF A/c 2,000

Income from units of Unit Trust of India 800

Life Insurance Premium 6,000

Contribution to PPF 6,000

Deposit in Account under National Savings Scheme,1992 10,000

Interest accrued on (NSC VII issue) 34,000

The construction of the building was completed on 01-01-1993.