Amendments 2013

7/29/2019 Amendments 2013

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ANNOUNCEMENT NO.1

AMENDMENTSFORMAY -2013 EXAMINATION

DAYS: 11-03- 2013 TO 16-03-2013(THERE MAY BE FIVE OR SIX CLASSES)

TIMINGS: 7:00 A.M. TO 11:00

A.M.

VENUE:

METRO MALLKASHMERE GATE

FEE : `3000/-(IT INCLUDES COST OF THE NEW BOOKS FOR MAY -2013 EXAMINATION)

THE STUDENTS WILLING TO TAKE AMENDMENT CLASSES SHOULD

REGISTER AT OUR CENTRE.

Kashmere Gate Parsvnath Mall, Hall No. 14 (Near FAST TRAX /HDFC ATM/BEST FOODS/STARBANQUET) Kasmere Gate Metro Station, Delhi

Laxmi Nagar1/48, Lalita Park, Laxmi Nagar Metro Station (Opposite Metro Pillar No.21), Vikas Marg, Laxmi Nagar, Delhi 110092

Pitam Pura Metro Station Office No. ED-1A, Near Aggarwal Sweets, Madhuban

Chowk,


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Pitam Pura Metro Station (Opposite Metro Pillar No. 370-371), Delhi 110034

ANNOUNCEMENT NO.2

FULL SYLLABUS TEST SHALL BE

HELDON

07TH OCT 2012

1. METRO MALL KASHMERE

GATE

7:00 A.M. TO 10:00 A.M.

2. METRO MALL KASHMERE

GATE

5:00 P.M. TO 8:00 P.M.

THE STUDENTS WHO WANT TO APPEAR IN THE

TEST SHOULD OBTAIN ENTRY SLIP FROM OUR

OFFICE

PLEASE BRING TWO PHOTOS


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Kashmere Gate Parsvnath Mall, Hall No. 14 (Near FAST TRAX /HDFC ATM/BEST FOODS/STAR

BANQUET) Kasmere Gate Metro Station, Delhi

Laxmi Nagar1/48, Lalita Park, Laxmi Nagar Metro Station (Opposite Metro Pillar No.21), Vikas Marg, Laxmi Nagar, Delhi 110092

Pitam Pura Metro Station Office No. ED-1A, Near Aggarwal Sweets, Madhuban

Chowk,Pitam Pura Metro Station (Opposite Metro Pillar No. 370-371), Delhi 110034

9811429230 / 9212011367ANNOUNCEMENT NO.3

SOLUTIONTO THE TEST HELD IN AGGARWAL CITYMALL ON 26TH AUGUST 2012

IPCCTotal No. of Question 7] [Total No. of

Printed Pages 27

Time Allowed 3 Hours

Maximum Marks 100

Answers to questions are to be given only in English except in the case of candidates

who have opted for Hindi medium. If a candidate who has not opted for Hindi

medium, answers in Hindi, his answers in Hindi will not be valued.

Question No.1 is compulsory

Attempt any five questions from the remaining six questions.

Wherever required, suitable assumptions may be made by the candidate.

Working notes should form part of the answer.

1(a). The following are details of purchases, sales, etc. effected by Kapil & Co., a registered dealer,

for the year ended 31.03.2012:

Particulars

Amount

(`)Purchase of raw materials within State, 1000 units,

inclusive of VAT levy at 6% 7,42,000


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Inter-State purchase of raw materials, inclusive of CST at 2% 3,06,000

Import of raw materials,

inclusive of basic customs duty plus education cess of`38,050 5,35,000

Capital goods purchased on 01.05.2011, inclusive of VAT levy at 10% 5,50,000(input credit to be spread over 2 financial years)

Other manufacturing expenses 2,00,000

Sale of taxable goods within State, inclusive of VAT levy at 4% 10,40,000

Sale of goods within State, exempt from levy of VAT 2,00,000

(Goods were manufactured from the Inter-State purchase of raw materials)

Closing stock as on 31.03.2012 was 100 units of raw materials purchased within the State

Input credit is allowed only on raw material used in manufacture of the taxable goods.

Compute the VAT liability of the dealer for the year ended 31.03.2012.

Solution 1(a):

Computation of VAT liability of Kapil & Co. for the year ended 31.03.2012:-

Particulars

Amount

(`)

Input tax credit:

Intra-State purchases of 1000 units of raw materials

106

6000,42,7

42,000

Inter-State purchases of raw materials

--

Import of raw materials

--

Purchase of Capital Goods

2110

10000,50,5

25,000Other manufacturing expenses

--

Total input tax credit available :

67,000

Output VAT payable:

Sale of taxable goods within State [(10,40,000 x 4)/104]

40,000


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Sale of exempted goods within State

--

VAT credit to be carried forward (40,000 67,000)

(27000)

Notes:-1. VAT paid on purchase of capital goods is eligible for input tax credit. However, the same

has to be spread over a period of two years.

2. VAT system allows credit in respect of purchases made during a period to be set-off

against the taxable sales during that period, irrespective of when the supplies/inputs

purchased are utilized/sold. Therefore, input tax credit in respect of closing stock of raw

materials need not be reduced from total input tax credit available.

Note: The statement in the question, Input credit is allowed only on raw materials used in

manufacture of the taxable goods, implies that the same is not allowable in respect of sale of

goods within the State which are exempt from levy of VAT.

1(b). The broad break-up of tax and allied details of Mrs. Rinku, born

Marks

on 31st March, 1952 are as under:

4

`

Long-term capital gains on sale of house

2,00,000

Short-term capital gains on sale of shares in B Ltd. (STT paid)

30,000

Prize winning from a T.V. show

20,000

Business income2,40,000

Net agricultural income

4,40,000

Deduction allowed under section 80C to 80U

60,000Compute the tax payable by Mrs. Rinku for the assessment year 2012-13.

Solution.

Computation of Gross Total Income

Business Income

2,40,000Long term capital gain on sale of house

2,00,000

Short-term capital gains on sale of shares in B Ltd. (STT paid)

30,000

Casual Income (Prize winning from a T.V. show)

20,000

Gross Total Income4,90,000


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Less: Deduction u/s 80C to 80U

60,000

Total Income

4,30,000

Computation of tax payable by Mrs. Rinku for the A.Y. 2012-13

Particulars`

(i) Tax on long-term capital gain of`1,30,000 (2,00,000 70,000) @ 20%

26,000

(ii) Tax on short term capital gain of`30,000 @ 15%

4,500

(iii) Tax on winnings of`20,000 from a T.V. show @ 30%

6,000

(iv) Tax on balance income of`1,80,000

Nil

Deficiency of`70,000 has been allowed from LTCG

Amount of tax before EC

36,500Add: Education cess @ 2%

730

Add: SHEC @ 1%

365

Tax payable by Mrs. Rinku

37,595

Rounded off u/s 288B

37,600

(i) Mrs. Rinku has completed 60 years of age on 31st March, 2012 i.e. she has completed the age

of 60 years on the last day of the previous year.

Therefore, she is entitled to the higher basic exemption limit of`2,50,000.

(ii) Partial integration is not applicable because her non-agricultural income is not exceeding the

exemption limit of`2,50,000.

1(c). A firm made the following payments of advance tax during the financial year 2011-12:

Marks

5

`Upto September 15, 2011

8,25,000

Upto December 15, 2011

16,64,000

Upto March 15, 2012

26,23,000

The income returned by the firm is `88,00,000 under the head profits and gains of business or


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profession and `9,50,000 by way of long term capital gains on sale of a property effected on

December 1, 2011. What is the interest payable by the assessee under section 234B and section

234C for assessment year 2012-13? Assume that the return of income was filed on 30.09.2012 i.e.the due date and tax was fully paid on self assessment.

Solution1(c):

Computation of Tax Liability`

Business income

88,00,000

Long term capital gains

9,50,000

Total Income

97,50,000

Tax on `88,00,000 @ 30%

26,40,000

Tax on `9,50,000 @ 20%

1,90,000

Add: Education cess @ 2%56,600

Add: SHEC @ 1%

28,300

Tax Liability

29,14,900

(Tax liability excluding capital gains `88,00,000 x 30% + EC@ 3%

27,19,200)

Interest under section 234C

Since capital gains arises on 1st December 2011, installment for 15th September shall be checked

without including tax on capital gain and shall be as given below:

Amount payable as

advance tax

Amount actually paid by

way of advance tax

Shortfall Int

` ` `Upto September 15, 2011

(27,19,200 x 30%)

8,15,760 8,25,000 Nil N

Installments for 15th December and 15th March shall be including tax on capital gains and is as

given below:

Amount payable as

advance tax

Amount actually paid by

way of advance tax

Shortfall Int

` ` `Upto December 15, 2011

(29,14,900 x 60%)

17,48,940 16,64,000 84,940

(84,900 x 1% x

3 month)

2

Upto March 15, 2012

(29,14,900 x 100%)

29,14,900 26,23,000 2,91,900

(2,91,900 x 1%

x 1month)

2

Interest Payable under section 234C


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`5,466

Interest under section 234B

2,91,900 x 1% x 6

`17,514

1(d). Punjabi Banquets is engaged in providing mandap keeper services. For the month of January,

2012, it provided the following information:S. No.

Particulars

Amount

`

(1)

Banquet hall let out for marriage function:

The gross amount charged for banquet hall including catering charges(Catering charges have been separately indicated in the invoice).

6,00,000

(2)

Amount received for rooms let out for stay of guests attending the marriage.

40,000

(3)

Amount collected for letting out the hall for All India Dance Competition.No food was supplied along with it.

5,00,000

(4)

Mandap for shooting of marriage sequence of a Daily Soap Opera

2,40,000

Compute the amount of service tax, education cess and secondary and higher education cess

payable by Punjabi Banquets for the month of January, 2012.

Additional Informations:

(1) Point of taxation in all the aforesaid case is January, 2012.

(2) All the amounts stated above are exclusive of service tax.

(3) Punjabi Banquet is not eligible for small service providers exemption under

notification. No.6/2005 ST dated 01-03-2005 for the financial year 2011-12.

Solution 1(d):


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`

Computation of Service Tax Payable by Punjabi Banquets

Total Value Charged

6,00,000

Less: Abatement N.N. 01/2006 (40% of gross amount charged)

2,40,000

Taxable value3,60,000

Amount received for rooms let out for stay of guests

40,000

Amount collected for letting out the hall for All India Dance Competition

5,00,000

(No food was supplied along with it.)

Mandap for shooting of marriage sequence of a Daily Soap Opera

Nil

(Since shooting cannot be considered to be a function hence it is not taxable as

Mandap Keeper Service)

Value of Taxable Services

9,00,000Service Tax @ 10.3% on `9,00,000

92,700

1(e). When does e-payment of service tax become mandatory?

Solution 1(e):

The assessee who has paid service tax of `10,00,000/- or above including the amount paid by

utilization of CENVAT credit in the preceding financial year has to compulsorily deposit the

service tax liable to be paid by him electronically, through internet banking.

2(a). (i) Brett Lee, an Australian cricket player visits India for 100 days in every financial year. MarksThis has been his practice for the past 10 financial years. Find out his residential 4status for the assessment year 2012-2013.

(ii) State with reason, whether the statement is True or False:

Mr. X, Karta of HUF, claims that the HUF is non-resident as the business of HUF is transacted from

and all the policy decisions are taken there.

Solution 2(a)(i):

An individual is said to be resident in India in any previous year, if he complies with at least one

of the following conditions:-

(a) He is in India in that year for a period amounting in all to 182 days or more, or

(b) He is in India in that year for a period amounting in all to 60 days or more and also for 365

days or moreduring four years preceding the relevant previous year.

Since, Brett Lee has complied with the second condition hence he is resident.

Further more, An individual shall be considered to be not ordinarily resident in India in case hisstay in India is 729 days or less during preceding seven years.


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Since stay of Brett Lee during preceding seven years is 700 days. Hence, he is NOR.

Solution 2(a)(ii):

True, A HUF is considered to be a non-resident where the control and management of its affairsare situated wholly outside India. In the given case, since all the policy decisions of HUF are

taken from UK, the HUF is a non-resident.

2(b). Mr. X is engaged in rendering taxable services and gross receipt during the year is `80,00,000

and it includes `3,00,000 for services rendered to Embassies, `2,00,000 for services rendered

to RBI and `1,60,000 for services rendered to Government. He is carrying on the profession in

his own building (market rent `4,00,000 p.a.) and expenses incurred / paid for the building are

as given below:

Municipal Tax ` 40,000

Repairs ` 60,000

Depreciation `1,00,000

Ground rent ` 20,000Land revenue ` 10,000

Expenses incurred in rendering services are `20,00,000. He is eligible for SSP exemption.

Interest paid under section 75 is `30,000.

Service tax has been charged in addition to above amounts wherever it was applicable.

Compute income tax liability for assessment year 2012-13 and service tax liability for financialyear 2011-12.

Solution 2(b):

`

Computation of income under the head Business/Profession

Income from rendering services

80,00,000.00

Less: Expenses

20,00,000.00

Less: Interest under section 75

30,000.00

Less: Municipal tax

40,000.00

Less: Repairs

60,000.00Less: Depreciation

1,00,000.00

Less: Ground rent

20,000.00Less: Land revenue

10,000.00

Income under the head Business/Profession


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57,40,000.00

Computation of Tax Liability

Tax on `57,40,000 at slab rate

15,74,000.00

Add: Education cess @ 2%

31,480.00Add: SHEC @1%

15,740.00

Tax Liability

16,21,220.00

Computation of Service Tax Liability

Gross Receipts

80,00,000.00

Less: SSP exemption

10,00,000.00

Less: Services rendered to Embassies

3,00,000.00Taxable services

67,00,000.00Service Tax @ 10.3%

6,90,100.00

2(c). Mr. X is a Registered in Central Excise, Central Sales Tax and Delhi VAT and he has

purchased raw material for`12,00,000 in Delhi and paid excise duty @ 10% plus education

cess and secondary and higher education cess @ 3% and Delhi VAT @ 4%.

(i) 1/6th of raw material is stock transferred to some other state.

(ii) 1/6th of raw material is used in manufacturing of final product which is exempt from VATand processing charges and profit is `1,00,000.

(iii) 1/6th of raw material is used in manufacturing of final product which is exempt from excise

duty but VAT is payable and processing charges and profit is `1,00,000.

(iv) 1/6th of raw material is used in manufacturing of final product which is exported fromIndia.

(v) 1/6th of raw material is used in manufacturing of final product which is sold in some other

state and CST @ 2% and processing charges and profit is `1,00,000.

(vi) 1/6th of raw material is used in manufacturing of final product which is sold in the samestate. Processing charges and profit is `1,00,000.

Output excise duty rate is 10% plus EC / output Delhi VAT @ 12.5%.

Compute Output Excise Duty / VAT / Tax Credit / Net Excise duty /VAT.

Solution 2(c):


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`

Raw material

12,00,000

Excise duty @ 10%

1,20,000

EC @ 2%

2,400SHEC@ 1%

1,200

Total

13,23,600

Delhi VAT @ 4%

52,944

13,76,544

(i)

Since 1/6th of the stock has been transferred to some other state, VAT credit allowed for such

stock transfer shall be 2% (4% - 2%).

Tax paid (52,944 x 1/6)8,824

VAT credit (4% - 2%)

4,412

(In case of stock transfer VAT credit is allowed after retaining 2%)

(ii)

Raw material

2,00,000

VAT (`52,944 x 1/6)

8,824

Processing charges

1,00,000Assessable value

3,08,824

Excise duty @ 10%30,882

EC @ 2%

618

SHEC@ 1%

309

Total

3,40,633

VAT

Nil(Since output VAT is exempt, hence VAT credit for input VAT is not allowed and it will be

added in the cost)

(iii)

Raw material

2,00,000

Excise duty @ 10%

20,000


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EC @ 2%

400

SHEC@ 1%

200

Processing charges1,00,000

Total3,20,600

Delhi VAT @ 12.5%

40,075

3,60,675

(Since output excise duty is exempt, Cenvat credit for input excise duty is not allowed and it will

be added in the cost)

(iv)

No tax is payable in case of export but Tax credit will be allowed.

(v)Raw material

2,00,000

Processing charges

1,00,000Assessable value

3,00,000

Excise duty @ 10%

30,000

EC @ 2%

600

SHEC@ 1%

300Total

3,30,900

Central sales tax @ 2%

6618

3,

3

7

,5

18

(vi)

Raw material

2,00,000

Processing charges

1,00,000

Assessable value

3,00,000


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Excise duty @ 10%

30,000

EC @ 2%

600

SHEC @ 1%300

Total3,30,900

Delhi VAT @ 12.5%

41,363

3,72,263

Particulars

Excise Duty

`EC @ 2%

`SHEC @ 1%

`DVAT

`

OUTPUT TAX

1/6th raw material (Stock transfer) - - - -

1/6th Final Product (Exempt from VAT) 30,882 618 309 -

1/6th Final Product (Exempt from exciseduty)

- - - 40,075

1/6th Final product Exported - - - -

1/6th Final product sold in some other

State

30,000 600 300

1/6th Final product sold in same State 30,000 600 300 41,363

Total 90,882 1,818 909 81,438

Less: INPUT TAX CREDIT

1/6th raw material (Stock transfer) 20,000 400 200 4,412

1/6th Final Product (Exempt from VAT) 20,000 400 200 -

1/6th Final Product (Exempt from excise

duty)

- - - 8,824

1/6th Final product Exported 20,000 400 200 8,8241/6th Final product sold in some other

State

20,000 400 200 8,824

1/6th Final product sold in same State 20,000 400 200 8,824

Total 1,00,000 2,000 1,000 39,708

Tax payable - - - 41,730

VAT / CENVAT Credit Balance 9,118 182 91 -

Cenvat credit for excise duty and service tax shall be refundable only in case of exports,

otherwise its carry forward is allowed.

2(d).

(i) Is e-filing of service tax return permitted?

(ii) In case of import of services, is a recipient of such services in India liable to pay service

tax?

(iii) Who is liable to pay service tax in relation to services provided by a goods transport

agency?

1

Solution 2(d):

(i)


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With effect from 01.10.2011, e-filing of service tax returns has been made mandatory for all the

assesses (Notification No. 43/2011 dated: 25.08.2011).

The assessee can e-file the return through software ACES i.e. AUTOMATION OF CENTRAL

EXCISE AND SERVICE TAX.

(ii) Clause (iii) of rule 2(1)(d) of the Service Tax Rules, 1994 provides that in relation to anytaxable service provided or to be provided by any person from a country other than India and

received by any person in India, the person liable to pay service tax is the recipient of such

service. Thus, in case of import of services, recipient of such services in India shall be liable to

pay service tax.

(iii) In relation to taxable service provided by a goods transport agency, where the consignor or

consignee of goods is-

(a) any factory registered under or governed by the Factories Act, 1948,

(b) any company formed or registered under the Companies Act, 1956,

(c) any corporation established by or under any law,

(d) any society registered under Societies Registration Act, 1860 or under any law corresponding

to that Act in force in any part of India,(e) any co-operative society established by or under any law,

(f) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 or the

rules made thereunder, or

(g) any body corporate established, or a partnership firm registered, by or under any law.the person liable for paying service tax is any person who pays or is liable to pay freight either

himself or through his agent for the transportation of such goods by road in a goods carriage.

3(a). Mr. Vaibhav owns five houses at Cochin. Compute the gross annual value of each house from

the information given below :

House-IHouse-II

House-III

House-IV

House V

Municipal value1,20,000

2,40,000

1,10,000

90,00075,000

Fair rent

1,50,000

2,40,000

1,14,000

84,000

80,000

Standard rent


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1,08,000

N.A.

1,44,000

N.A.

78,000

Actual rent received/ receivable1,80,000

2,10,000

1,20,000

1,08,000

72,000

Solution 3(a):

House I `

Computation of Gross Annual Value

(a) Fair Rent

1,50,000

(b) Municipal Valuation

1,20,000 (c) Higher of (a) or (b)

1,50,000

(d) Standard Rent

1,08,000

(e) Expected Rent {Lower of (c) or (d)}

1,08,000

(f) Rent Received/Receivable1,80,000 (g) Higher of (e) or (f) shall be GAV1,80,000

House II

`


(a) Fair Rent

2,40,000


2,40,000 (c) Higher of (a) or (b)

2,40,000

(d) Standard RentN.A

(e) Expected Rent {Lower of (c) or (d)}2,40,000

(f) Rent Received/Receivable

2,10,000 (g) Higher of (e) or (f) shall be GAV

2,40,000

House III


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`


(a) Fair Rent

1,14,000


1,10,000 (c) Higher of (a) or (b)

1,14,000(d) Standard Rent

1,44,000


1,14,000

(f) Rent Received/Receivable


1,20,000

House IV

`


(a) Fair Rent84,000


90,000 (c) Higher of (a) or (b)

90,000

(d) Standard Rent

N.A


90,000(f) Rent Received/Receivable


1,08,000

House V

`


(a) Fair Rent

80,000


75,000 (c) Higher of (a) or (b)

80,000

(d) Standard Rent78,000


78,000(f) Rent Received/Receivable72,000 (g) Higher of (e) or (f) shall be GAV

78,000

3(b). State the liability of service tax in respect of the following services:

(i) Services provided for personal use or use by the family members of a foreign diplomatic

agent in a foreign diplomatic mission.


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(ii) A company located in the State of Jammu & Kashmir rendered service in Delhi. Is the

service provided by the company liable for service tax?

(iii) Service rendered to a friend free of cost.

Solution 3(b):Answer (i):

Exemption to services provided for personal use or for use of Family Members of Diplomatic

Agents or Career Consular Officers posted in Foreign Diplomatic Mission / Consular Post in

India as per Notification No. 34/2007 dated 23.05.2007

Answer (ii):

Yes, when the company located in the State of Jammu & Kashmir had rendered services outside

the State, the service tax would be attracted as the location where service is provided is relevant.

Answer (iii):

Service tax is not payable on free service. Service tax is payable only when there is

consideration. No service tax is payable when value of service is 'zero' as the charging section-section 66 provides that service tax is chargeable on the value of taxable service.

3(c). Mr. Janak bought 200 listed shares on 19.04.2010 @ `2,000 per share.

He gifted these shares to his wife Mrs. Janki on 21.03.2011.

On 01.04.2011, bonus shares were allotted in the ratio of 1:1.

All these shares were sold by Mrs. Janki as under:

Date of sale

Manner of saleNo. of shares

Net sales value (`)

10.04.2011

Private sale, to her friend Mrs. Hema (Market value on this date was `2,10,000)

100 original shares

1,70,000

21.05.2011

Sold in recognized stock exchange, STT paid

100 original shares2,20,000

21.07.2011

Private sale to an outsider

All bonus shares

2,50,000


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Briefly state the income-tax consequences in respect of the sale of the shares by Mrs. Janki,

showing clearly the person in whose hands the same is chargeable, the quantum and the head of

income in respect of the above transactions. Detailed computation of total income is NOT

required.

Net sales value represents the amount credited after all taxes, levies, brokerage, etc., and the samemay be adopted for computing the capital gains.

Solution 3(c):

Where an asset has been transferred by an individual to his spouse otherwise than for adequate

consideration, the income arising from the sale of the said asset by the spouse will be clubbed in

the hands of the individual.

Where there is any accretion to the asset transferred, income arising to the transferee from such

accretion will not be clubbed. Hence, the profit from sale of bonus shares allotted to Mrs. Janki

will be chargeable to tax in the hands of Mrs. Janki.

Therefore, the capital gains arising from the sale of the original shares has to be included in the

hands of Mr. Janak, and the capital gains arising from the sale of bonus shares would be taxable

in the hands of Mrs. Janki.

Income/loss to be clubbed in the hands of Mr. Janak

(i)

(ii)

100 Original shares sold on 10.04.2011

Sale consideration

Less: Cost of acquisition of 100 shares (` 2,000 x 100)

Short term capital loss to be included in the hands of Mr. Janak

100 Original shares sold on 21.05.2011

100 shares sold on 21.05.2011 in a recognized stock exchange, STT paid. Long-term

capital gains on sale of such shares is exempt under section 10(38)

1,7

2,0

(30

Income taxable in the hands of Mrs. Janki on sale of 200 bonus shares

Bonus shares

Sale consideration

Less: Cost of acquisition of bonus shares

Short-term capital gains

Taxability in the hands of Mrs. Hema under the head Income from other sources

Mrs. Hema has received shares from her friend, Mrs. Janki, for inadequate consideration. Eventhough shares fall within the definition of property under section 56, the provisions of section

56 would not be attracted in the hands of Mrs. Hema, since the difference between the fair market

value of shares and actual sale consideration does not exceed `50,000.

3(d). Test the veracity of the following assertions with reference to the statutory provisions relating

to value added tax. Do not assign any reason for them.

(a) Input credit under VAT is not available in respect of Central Sales Tax paid on


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purchases.

(b) VAT is leviable at the last stage of sale.

(c) Input credit is available in respect of import duty paid on goods imported from acountry outside India.

(d) Input credit is available only if the purchaser has obtained proper tax invoice.

(e) No declaration form is prescribed under VAT system.

(f) Taxpayers Identification Number is a 11 digit alpha numeric number.

(g) Set off of input tax credit on capital goods is available only to manufactures and not to

traders.

(h) White paper on State level VAT provides a framework for drafting various State VAT

legislations.

Solution 3(d):

(h) True

(i) False

(j) False(k) True

(l) True

(m) False

(n) False

(o) True

4(a). Mr. X is a Dealer Registered in Delhi Value Added Tax Act, 2004 and also under Central

Sales Tax Act, 1956 and he has submitted the informations as given below:

(i) Purchased Goods A from Delhi for`2,00,000 and paid VAT @ 4% and sold the goods in

Delhi at a profit of 50% on purchase price and charged VAT @ 4%.

(ii) Purchased goods B from U.P. for `4,00,000 and paid central sales tax @ 2% and sold

goods in Delhi at a profit of 50% on purchase price and charged VAT @ 12.5%.

(iii) Purchased goods C from Delhi for`8,00,000 and paid VAT @ 12.5% and sold the goods

at a profit of 50% on purchase price to a registered dealer in Orissa and charged Central Sales

Tax @ 2%

(iv) Purchased goods D for`10,00,000 in Delhi and paid VAT @ 12.5% and sold the goods ata profit of 50% on purchase price to an unregistered dealer in Punjab and charged Central Sales

Tax @ 12.5%.

(v) Purchased goods E from Madhya Pradesh for`6,00,000 and paid Central Sales Tax @ 1%

and sold goods at a profit of 50% on purchase price in Maharashtra and charged central sales

tax @ 1%.

(vi) Purchased goods F from Delhi `14,00,000 and paid VAT @ 1% and the goods were sold


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at a profit of 50% on purchase price to an unregistered dealer in Maharashtra and charged

central sales tax @ 1%.

(vii) Purchased goods G for`12,00,000 in Delhi and paid VAT @ 12.5% and goods were stock

transferred to some other state.

(viii) Purchased goods H for `16,00,000 in Delhi and paid VAT @ 4% and goods wereexported at a profit of 50% on purchase price and no tax was charged (because as per section 6

Central Sales Tax Act, 1956, CST can not be charged in case of export sale.)

(ix) Purchased goods I for`18,00,000 in Delhi and paid VAT @ 12.5% and sold the goods at a

profit of 50% on purchase price to a manufacturer in SEZ and no VAT was charged.

Show the tax treatment for VAT,CST and also compute his income tax liability for the

assessment year 2012-13.

Solution 4(a):

`

(i)Purchased Goods A from Delhi

2,00,000

Add: VAT @ 4%

8,000

Purchase Price

2,08,000

Cost

2,00,000

Add: Profit {2,08,000 8,000(as VAT credit is available)} x 50%

1,00,000

Sale Price before VAT

3,00,000Input tax credit

8,000

Goods sold in Delhi3,00,000

Add: VAT @ 4%

12,000

Sale Price

3,12,000

(ii)

Purchased goods B from U.P.4,00,000

Add: Central sales tax @ 2%

8,000

Purchase Price

4,08,000Add: Profit (4,08,000 x 50%)

2,04,000

Sale Price before VAT


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6,12,000

Input tax credit

Nil

Goods sold in Delhi

6,12,000Add: VAT @ 12.5%

76,500Sale Price

6,88,500

(iii)

Purchased goods C from Delhi

8,00,000

Add: VAT @ 12.5%

1,00,000

Purchase Price

9,00,000

Cost8,00,000

Add: Profit {9,00,000 1,00,000(as VAT credit is available)} x 50%

4,00,000

Sale Price before CST12,00,000

Input tax credit

1,00,000

Goods sold in Orissa

12,00,000


24,000

Sale Price12,24,000

(iv)

Purchased goods D from Delhi

10,00,000

Add: VAT @ 12.5%1,25,000

Purchase Price

11,25,000

Cost10,00,000

Add: Profit {11,25,000 1,25,000(as VAT credit is available)} x 50%5,00,000

Sale Price before CST

15,00,000

Input tax credit

1,25,000

Goods sold in Punjab to unregistered dealer

15,00,000

Add: Central sales tax @ 12.5%


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1,87,500

Sale Price

16,87,500

(v)

Purchased goods E from Madhya Pradesh6,00,000


6,000

Purchase Price

6,06,000

Add: Profit (6,06,000 x 50%)

3,03,000

Sale Price

9,09,000

Input tax credit

Nil

Goods sold in Maharashtra9,09,000


9,090

Sale Price9,18,090

(vi)

Purchased goods F from Delhi

14,00,000

Add: VAT @ 1%

14,000

Purchase Price14,14,000

Cost

14,00,000

Add: Profit {14,14,000-14,000(as VAT credit is available)} x 50%

7,00,000

Sale Price21,00,000

Input tax credit

14,000

Goods sold in Maharashtra to unregistered dealer21,00,000

Add: Central sales tax @ 1%21,000

Sale Price

21,21,000

(vii)

Purchased goods G from Delhi

12,00,000

Add: VAT @ 12.5%


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1,50,000

Purchase Price

13,50,000

Goods Stock transferred

12,00,000VAT credit allowed in stock transfer (12,00,000 x 10.5%)

1,26,000(in case of stock transfer, VAT credit shall be allowed after retaining 2%)

(viii)

Purchased goods H from Delhi

16,00,000

Add: VAT @ 4%

64,000

Purchase Price

16,64,000

Cost

16,00,000

Add: Profit {16,64,000 64,000(as VAT credit is available)} x 50%8,00,000

Sale Price

24,00,000

Input tax credit64,000

Goods exported

24,00,000

(ix)

Purchased goods I from Delhi

18,00,000

Add: VAT @ 12.5%2,25,000

Purchase Price

20,25,000

Cost

18,00,000

Add: Profit {20,25,000-2,25,000(as VAT credit is available)} x 50%9,00,000

Sale Price

27,00,000

Input tax credit2,25,000

Goods sold to manufacturer in SEZ27,00,000

VAT A/C

Particulars ` `

OUTPUT TAX VAT CST

Goods A 12,000 ---

Goods B 76,500 ---

Goods C --- 24,000


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Goods D --- 1,87,50

Goods E --- 9,090

Goods F --- 21,000

Goods G (Stock transfer) Not applicable ---

Goods H (Export) Nil ---

Goods I (Sale to SEZ) Nil ---

88,500 2,41,59LESS: INPUT TAX CREDIT

Goods A 8,000

Goods B Not allowed

Goods C 1,00,000

Goods D 1,25,000

Goods E Not allowed

Goods F 14,000

Goods G 1,26,000

Goods H 64,000

Goods I 2,25,000

6,62,000

After adjusting output VAT of `88,500 and CST of `2,41,590, there will be unutilised VAT

credit of`3,31,910 and it can be set off from other output tax or it can be carried forward or

refund can be claimed but procedure differs from State to State. At the year end it should be

shown on the assets side of the balance sheet under the head CURRENT ASSETS, LOAN AND

ADVANCES.

Computation of Income Tax Liability

Particulars

Purchases

Amount

`Particulars

Sales

Am

Goods A 2,00,000 Goods A

Goods B 4,08,000 Goods B

Goods C 8,00,000 Goods C 1Goods D 10,00,000 Goods D 1

Goods E 6,06,000 Goods E

Goods F 14,00,000 Goods F 2

Goods H 16,00,000 Goods H 2

Goods I 18,00,000 Goods I 2

Net profit 39,07,000

1,17,21,000 1,1

Income under the head Business/Profession39,07,000.00

Gross Total Income

39,07,000.00

Less: Deduction u/s 80C to 80UNil

Total Income

39,07,000.00


10,24,100.00


20,482.00

Add: SHEC @ 1%


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10,241.00

Tax Liability

10,54,823.00


10,54,820.00

Income shall be computed exclusive of VAT & CST because any VAT & CST collected shall bepaid to the Government and it will not be considered to be income. Similarly VAT paid by the

dealer is collected from the customer hence it will not be considered to be expense. Further, the

stock transfer of goods G is having a neutral effect and thus ignored for calculation of

business/profession income.

4(b). Mr. Rakesh and Mr. Anish are brothers and they earned the following incomes during the

financial year 2011-12. Mr. Rakesh settled in U.K. in the year 1975 and Mr. Anish settled in

Surat. Compute the total income for the Assessment Year 2012-13.

Sr. No.

Particulars

Mr. RakeshMr. Anish

1.

Interest on U.K. development bonds, 50% of interest received in India

25,000

20,000

2.

Dividend from British Company received in London

8,00010,000

3.

Profit from a business in Mumbai, but managed directly from London

10,00012,000

4.

Profit on sale of shares of an Indian company received in India

50,00080,000

5.

Income from a business in Delhi

20,000

20,000


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6.

Fees for technical services rendered in India, but received in London

1,00,000

-

7.

Interest on SB deposit in SBI, Bangalore

5,000

15,000

8.

Agricultural income from a land situated in Rajasthan

25,000

25,000

9.

Income under the head House Property at Bangalore

50,40033,600

Solution 4(b):

Computation of total income of Mr. Rakesh and Mr. Anish for the A.Y. 2012-13

Sl.

No.

Particulars Mr. Rakesh

Non-Resident

Mr

R1. Interest on U.K. Development Bonds 12,500

2. Dividend from British Company received in London -

3. Profit from a business in Mumbai but managed directly from London 10,000

4. Profit on sale of shares of an Indian company received in India 50,000

5. Income from a business in Delhi 20,000

6. Fees for technical services rendered in India but received in London 1,00,000

7. Interest on SB Deposit in SBI Bangalore 5,000

8. Agricultural income from a land in Rajasthan [(Exempt u/s.10(1)] -

9. Income under the head House property at Bangalore 50,400

Gross Total income 2,47,900

Total Income 2,47,900


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4(c). State the due dates for filing of service tax returns. Will the delayed filing of service tax return

result in payment of any late fee? If so, how much?

Solution 4(c):

The service tax return (in Form ST-3) should be filed on half yearly basis by the 25 th of the month

following the particular half-year. The due dates on this basis are as under:

Half year Due date

1st April to 30th September 25th October

1st October to 31st March 25th April

In case the due date of filing of return falls on a public holiday, the assessee can file the return on

the immediately succeeding working day.

Yes, late fee will be levied for delay in furnishing of the service tax return. The prescribed late

fee is given hereunder:

Particulars Late feePeriod of delay `

(a) 15 days from the date prescribed for

submission of the return

500

(b) Beyond 15 days but not later than 30 days from the date

prescribed for submission of the return.

1,000

(c) Beyond 30 days from the date prescribed for submission of

the return

An amount of` 1,000 plus

` 100 for every day from the

31st day till the date of

furnishing the said return

However, the total late fee for delayed submission should not exceed ` 20,000.

5(a). Mr. X has submitted information given below.

i) Income from owning and maintaining of race horse ` 2,00,000.

ii) Income from owning and maintaining of race camels ` 1,00,000.

iii) He had winning of ` 1,60,000 from horse race on 01.12.2011 and winning from

camel race `1,80,000 on 07.12.2011.

iv) He purchased lottery tickets of `10,000 on 01.02.2012 and had winning of

`2,00,000 on 12.02.2012.

v) He has received Royalty of book of literary nature @ 50% of print price of` 600and total copies sold are 2,000

Compute tax liability for the A.Y 2012-13.

Solution 5(a):

Computation of Total Income for the A.Y 2012-13

`


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Income under head Other Source

Income from owning and maintaining race horse

2,00,000

Income from Royalty

6,00,000Income from winning horse race (casual income)

1,60,000Income from winning camel race (casual income)

1,80,000

Income from lottery income (casual income)

2,00,000

Income under head Other Sources

13,40,000

Income under head Business/Profession

Income from owning and maintaining race camel

1,00,000

Gross Total Income14,40,000

Less: Deduction u/s 80QQB (WN 1)

1,80,000

Total Income12,60,000


Tax on ` 7,20,000 at slab rate

76,000

Tax on casual income i.e. ` 5,40,000 @ 30%

1,62,000

Tax before education cess2,38,000


7,140

Tax Liability

2,45,140

Working Note:

1. Maximum deduction allowed u/s 80QQB

15% of print price i.e. ` 600 x 15% x 2,000= `1,80,000.

5(b). R. Ltd of Mumbai made a total purchases of input and capital goods of`60,00,000 during themonth of February ,2012. The following further information is available.

(i) Goods worth `15,00,000 were purchased from Assam on which C.S.T 2% was

paid.

(ii) The purchases made in February, 2012 include goods purchased from unregistered

dealers amounting to `18,50,000.

(iii) It purchased capital goods (not eligible for input credit) worth `6,50,000 and those

eligible for input credit for`9,00,000.


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(iv) Sales made in Mumbai during the month of February, 2012 is `10,00,000 on which

VAT at 12.5% is payable.

Assuming that all purchases given are exclusive of tax and VAT 4% is paid on them

calculate:

(a) the amount of purchases eligible for input credit.

(b) the amount of input credit available for the month of February, 2012.

(c) the VAT payable for the month of February, 2012.

The input VAT credit on eligible capital goods is available in 36 equal monthly instalments.

Solution 5(b):

`(a) Computation of Amount of Eligible Purchases for Input Tax Credit

Total Purchases

60,00,000Less: Ineligible Purchases

Purchase From Assam 15,00,000

Purchase From Unregistered Dealer 18,50,000

Capital goods not eligible 6,50,000

40,00,000

Eligible Purchases for Input Tax Credit

20,00,000

(b) Computation of Input Tax Credit for the month of February 2012

Capital Goods ( 9,00,000 x 4%/36)

1,000Inputs (11,00,000 x 4%)

44,000

Input Tax Credit45,000

(c) Computation of VAT Payable for the month of February 2012

Output Tax ( 10,00,000 x 12.5%)

1,25,000

Less: Input Tax Credit

45,000

VAT Payable80,000

Note:

1. Total purchases are `60,00,000 but details are given only for `49,00,000, hence remaining

`11,00,000 are presumed to be raw material eligible for tax credit.

5(c). (i) What records should be maintained under VAT system by a registered dealer?


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(ii) Lee traders a registered dealer having stock of goods cost `30,000 purchased from outside

the State, wishes to opt for the Composition Scheme. Advise the dealer whether it is possible?

State the conditions to be satisfied by a dealer before opting for composition scheme.

Solution 5(c)(i):

The following records should be maintained under VAT system:1. Purchase records, showing details of purchases on which tax has been paid, purchases made

without payment of tax, purchases made from an exempted unit (Military Canteen) and

purchases made from outside State.

2. Sales records, showing separately sales made at different tax rates, zero-rated taxable sales and

tax-free sales.

3. VAT account - A monthly account specifying total output tax, total input tax and net tax

payable or the excess tax credit due for carry forward.

4. Details of input tax calculations where the dealer is making both taxable and tax free sales.

5. Stock records showing stock receipts and deliveries and manufacturing records.

6. Stock records showing separately the particulars of goods stored in cold storage, warehouse,

godown or any other place taken on hire.

7. Order records and delivery challan, wherever applicable.

8. Annual accounts including trading, profit and loss accounts and the balance sheet.

9. Bank records, including statements, cheque book counter foils and pay-in-slips.

10. Cash book, daybook and ledger.

Solution 5(c)(ii):

No it is not possible for dealer to opt for composition scheme because If any dealer is procuring

goods from outside the State or is selling or supplying goods to any place outside the State at any

time during the year.

There are the following conditions to be satisfied by a dealer before opting for composition

scheme:

Composition Scheme is not allowed in the following cases:(i) If any dealer is procuring goods from outside the State or is selling or supplying goods to anyplace outside the State at any time during the year.

(ii) If he is registered under Central Sales Tax Act.

5(d). Write a note on Rule 7 of Point of Taxation Rules 2011

Solution 5(d):


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Service tax to be paid on actual receipt basis in certain cases Rule 7

As per rule 7 of point of taxation in the following cases, service tax shall be paid on actual receipt

basis.

1. Individuals or proprietary firms or partnership firms providing taxable services referred below:(i) Consulting Engineer

(ii) Practising Chartered Accountant(iii) Scientist or a Technocrat

(iv) Legal Consultancy Services

(v) Practising Company Secretary

(vi) Practising Cost Accountant

(vii) Interior Decorator

(viii) Architect

2. In case of Reverse Charge, but payment should be made within a period of 6 months of the

date of invoice otherwise point of taxation shall be determined in the normal manner.

6(a). Check the taxability of the following gifts received by Mrs. Rashmi during the previous year

2011-12 and compute the taxable income from gifts for Assessment Year 2012-13:

(i) On the occasion of her marriage on 14.08.11, she has received `90,000 as gift out of which

`70,000 are from relatives and balance from friends.

(ii) On 12.09.2011, she has received gift of`18,000 from cousin of her mother.

(iii) A cell phone of`21,000 is gifted by her employer on 15.08.2011.

(iv) She gets a gift of`25,000 from the elder brother of her husband's grandfather on

25.10.2011.

(v) She has received a gift of`2,000 from her friend on 14.04.2011.

Solution 6(a):

Computation of taxable income of Mrs. Rashmi from gifts for A.Y.2012-13

Particulars Taxable amount Reason for taxability or

`

otherwise of each gift

(p) Relatives and friends Nil Gifts received on the

occasion of

marriage are not taxable.

(q) Cousin of Mrs. Rashmis mother 18,000 Cousin of Mrs. Rashmis

mother isnot a relative. Hence, the gift

is taxable.

(r) Elder brother of husbands grandfather 25,000 Brother of husbands

grandfather is

not a relative. Hence, the gift is

taxable.


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(s) Friend 2,000 Gift from friend is

taxable.

Aggregate value of gifts 45,000

Since the aggregate value of gifts received by Mrs. Rashmi during the previous year 2011-12

does not exceed `50,000, the same is not chargeable to tax under section 56 of the Income-TaxAct, 1961.

Gift received from the employer in kind upto `5,000 is exempt from income tax but excess over it

is taxable hence in this case taxable amount of gift shall be `16,000 (21,000 5,000)

6(b). (i) Explain the role of chartered Accountants in proper compliance of VAT. (Any 4 points).

(ii) Briefly explain the benefits of the system of cross-checking under VAT as per White Paper.

Solution 6(b)(i):

Under the VAT system, trust has been reposed on tax payers, as there will be no regularassessment of all VAT returns, but only a few VAT returns will be taken up for scrutiny

assessment. In other cases, the return filed by the trader will be accepted. It will not be also seenwhether proper records have been maintained by the trader.

As a consequence, a check on compliance becomes essential. Chartered Accountants can ensure

tax compliance by:-

(i) helping the client in systematic record keeping;

(ii) helping the client in interpretation of the provisions of VAT law, and

(iii) performing audit of VAT accounts.

(iv) reporting the under-assessment, if any, made by the dealer requiring additional payment or

(v) reporting any excess payment of tax warranting refund to the tax payers.

Solution 6(b)(ii):

In the VAT system more emphasis has been laid on self-assessment. Hence, a system of cross-

checking is essential. Dealers may be asked to submit the list of sales or purchases above a

certain monetary value or to give the dealer-wise list from whom or to whom the goods have been

purchased/sold for values exceeding a prescribed monetary ceiling.A cross-checking computerized system is being worked out on the basis of coordination between

the tax authorities of the State Government and the authorities of Central Excise and Income-tax

to compare constantly the tax returns and set-off documents of VAT system of the States and

those of Central Excise and Income-tax. This comprehensive cross-checking system will helpreduce tax evasion and also lead to significant growth of tax revenue. At the same time, by

protecting the interests of tax-complying dealers against the unfair practices of tax-evaders, the

system will also bring in more equal competition in the sphere of trade and industry.

6(c). Test the veracity of the following assertions with reference to the statutory provisions relating

to service tax. Do not assign any reason for them.

(a) Services provided by consulting engineers in computer hardware engineering and


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computer software engineering are includible in their taxable services.

(b) Services provided to any person by a mandap keeper for the use of the precincts of a

religious place as a mandap are exempt from service tax.

(c) Service provided by public funded research institutions like CSIR, IIT under scientific

or technical consultancy service is exempt from service tax.

(d) Service tax shall be leviable on fee collected by public authority while performing

statutory functions.

(e) Service tax is administered by Central Board of Direct Taxes (CBDT).

(f) Small scale service provider who is claiming exemption of`10 lakh shall have to apply

for registration where the gross value of taxable services exceeds `9 lakhs.

(g) The amount of service tax shall be rounded off in the multiple of ten.

(h) Service tax for the month of March or quarter ending March should be deposited by 5th

April

Solution 6(c):

(t) True

(u) True

(v) False

(w) False

(x) False

(y) True

(z) False

(aa)False

6(d). ABC Ltd., a domestic company has total income of`500,00,000 and company has distributed

dividend of`65,00,000 and one of the shareholder Mr. X has received dividend of `5,00,000.

Compute tax liability and additional tax liability of the company and also that of the

shareholder.

(ii) Presume that ABC Ltd. is a foreign company.

Solution 6(d)(i):

Tax liability and additional tax liability of the company shall be as given below:

`

Profit before tax

500,00,000.00Income tax on `500,00,000 @ 30 %

150,00,000.00

Surcharge @ 5%

7,50,000.00

Education cess @ 2%3,15,000.00

SHEC @ 1%

1,57,500.00


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Income tax liability

162,22,500.00

Dividend

65,00,000.00

Additional income tax @ 15% of`65 lakhs

9,75,000.00

Add: Surcharge @ 5%48,750.00


20,475.00

Add: SHEC @ 1%

10,237.50

Additional income tax

10,54,462.50


10,54,460.00

Tax liability of the shareholder shall be nil.

Solution 6(d)(ii):Tax liability and additional tax liability of the company shall be as given below:

`

Profit before tax

500,00,000.00

Income tax on `500,00,000 @ 40%

200,00,000.00

Surcharge @ 2%

4,00,000.00

Education cess @ 2%

4,08,000.00

SHEC @ 1%

2,04,000.00Income tax liability

210,12,000.00

Additional income tax of the foreign company is nil.

Tax liability of the shareholder shall be as given below:

Dividend from foreign company

5,00,000.00


32,000.00


640.00Add: SHEC @ 1%

320.00

Tax Liability

32,960.00

7(a). Explain the following definition as per Income tax Act:

(i). Assessee

2 x


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(ii). Assessment Year and Previous Year

7(b). From the following particulars of Income furnished by Mr. Anirudh pertaining to the year

ended 31.03.2012, compute the total income for the assessment year 2012-13, if he is:

(i) Resident and ordinary resident;

(ii) Resident but not ordinary resident;

(iii) Non-resident:

Particulars Amount (`)(a) Profit on sale of shares in Indian Company received in German 15,000

(b) Dividend from a Japanese Company received in Japan 10,000

(c) income from business in London deposited in a bank in London,

later on remitted to India through approved banking channels 75,000

(d) Dividend from RP Ltd., an Indian Company 6,000

(e) Agricultural income from land in Gujarat 25,000

7(c). Mr. X has agricultural income `10,00,000 and income from business `12,00,000 and casual

income `5,00,000 and he has completed the age of 80 years on 31.03.2012. Compute his tax

liability Assessment Year 2012-13.

7(d). Nathan Aviation Ltd. is running two industrial undertakings, one in a SEZ (Unit S) and another

in a normal area (Unit N). The brief summarized details for the year ended 31.03.2012 are as

under:(` in lacs)

S N

Domestic turnover 10 100

Export turnover 120 Nil

Gross profit 20 10

Less: Expenses and depreciation 7 6Profits derived from the unit 13 4

The brought forward business loss pertaining to Unit N is `2 lacs. Briefly compute the business

income of the assessee.

Solution 7(a):

(i).AssesseeSection 2(7)Assessee means a person by whom any tax or any other sum of money is payable under Income

tax Act, and includes

(a) every person in respect of whom any proceeding under Income tax Act has been taken for the

assessment of his income or of the income of any other person in respect of which he is

assessable, or of the loss sustained by him or by such other person, or of the amount of refund due

to him or to such other person.


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(b) every person who is deemed to be an assessee under any provision of Income tax Act.

(c) every person who is deemed to be an assessee in default under any provision of Income tax

Act.

(ii).

Assessment YearSection 2(9)Assessment year means the period of twelve months commencing on the 1 st day of April every

year.

Previous Year Section 2(34)

Previous year means the previous year as defined in section 3.

Previous year means the financial year immediately preceding the assessment year.

Solution 7(b):

Computation of total income of Mr. Anirudh for the A.Y. 2012-13

Particulars Resident &

ordinarilyresident

Resident but

not ordinarilyresident

1) Profit on sale of shares of an Indian company, received in Germany 15,000 15,000

2) Dividend from a Japanese company, received in Japan. 10,000 -

3) Income from business in London deposited in a bank in London 75,000 -

4) Dividend from RP Ltd., an Indian Company [See Note (i) below] - -

5) Agricultural income from land in Gujarat [See Note (ii) below] - -

TOTAL INCOME 1,00,000 15,000

Notes

(i) Dividend from Indian company is exempt under section 10(34)

(ii) Agricultural income is exempt under section 10(1).

Solution 7(c):

Computation of Total Income

`

Income under the head Business/Profession

12,00,000

Income under the head Other Sources (Casual income)

5,00,000Gross Total Income

17,00,000

Less: Deduction u/s 80C to 80U

Nil

Total Income

17,00,000

Agricultural income

10,00,000


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Step 1. Tax on (agricultural income + non agricultural income)

i.e. Tax on ` 22,00,000/- at slab rates

4,80,000

Step 2. Tax on (`5,00,000 + agricultural income) at slab rates

2,70,000Step 3. Deduct Tax at Step 2 from Tax at Step 1

2,10,000

Tax on casual income `5,00,000 @ 30%

1,50,000

Tax before education cess

3,60,000


7,200

Add: SHEC @ 1%

3,600Tax Liability

3,70,800

Solution 7(d):

Computation of business income of Nathan Aviation Ltd.

Particulars

Total profit dervied from Units S & N (`13 lacs + `4 lacs)

Less: Exemption under section 10AA [See Working Note below]

Less: Brought forward business loss

Working Note

Computation of exemption under section 10AA in respect of Unit S located in a SEZ

Domestic turnover of Unit S

Export turnover of Unit S

Total turnover of Unit S

Profit derived from Unit S

Exemption under section 10AA

Profit of Unit S x Export turnover of Unit S = 13 120

Total turnover of Unit S 130


39/39

Note 100% of the profit derived from export of articles or things or from services is eligible for deducti

section 10AA, assuming that F.Y. 2011-12 falls within the first five year period commencing from the

manufacture or production of articles or things or provision of services by the Unit in SEZ.

Amendments 2013

Documents

Transcript of Amendments 2013