Tax Practice Book Sample Ay 2012-13

7/29/2019 Tax Practice Book Sample Ay 2012-13

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i Roots Institute of Financial Markets1197 NHBC Mahavir Dal Road. Panipat. 132103 Haryana.

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Roots Institute of Financial Markets

RIFM

Practice Book

Tax Planning and Estate Planning

Assessment Year 2012-13


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Forward

Welcome to RIFM

Thanks for choosing RIFM as your guide to help you in NCFM/CFP Certification.

Roots Institute of Financial Markets is an advanced research institute Promoted

by Mrs. Deep Shikha CFPCM

. RIFM specializes in Financial Market Education and

Services. RIFM is introducing preparatory classes and study material for StockMarket Courses of NSE , NISM and CFP certification. RIFM train personals

like FMM Students, Dealers/Arbitrageurs, and Financial market Traders,

Marketing personals, Research Analysts and Managers.

We are constantly engaged in providing a unique educational solution through

continuous innovation.

Wish you Luck

Faculty and content team, RIFM


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Our Team

Deep Shikha Malhotra CFPCM

M.Com., B.Ed.

AMFI Certified for Mutual Funds

IRDA Certified for Life Insurance

IRDA Certified for General Insurance

PG Diploma in Human Resource Management

CA. Ravi Malhotra

B.Com.

FCA

DISA (ICA)

CERTIFIED FINANCIAL PLANNERCM

Vipin Sehgal CFPCM

B.Com.

NCFM Certification In Capital Market (Dealers) Module



Neeraj Nagpal CFPCM

B.Com.



NCFM Certification In:

Capital Market (Dealers) Module

Derivatives Market (Dealers) Module

Commodities Market Module

Kavita Malhotra

M.Com. Previous (10th Rank in Kurukshetra University)



Certification in all Modules of CFPCM Curriculum (FPSB India)


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Exam Pattern

Test Duration 120 Min.

No. of Questions

1Marks 40

2 Marks 20

4 Marks 15

75

Maximum Marks 140Pass % 60

Passing Marks 84

Negative Marking Nil

Grade System

Grade Score(percentage)

A Equal and above 80%

B Equal and above 70% and less than 80%

C Equal and above 60% and less than 70%

FAIL Less than 60%


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Curriculum

Tax Planning & Estate Planning

COURSE TITLE: Tax Planning & Estate Planning

COURSE DESCRIPTION: This module would cover the knowledge requirements relating to tax

planning and estate planning for a CFP professional.

LEARNING OBJECTIVES: At the end of this module, a student should be able to:

1. Evaluate the appropriateness of tax strategies for individual family situations.2. Integrate tax planning into the six step Financial Planning process.

3. To understand the universal nature of estate planning needs.

4. To recognize the high level of ignorance regarding estate planning among the general

population as well as students.

5. To comprehend the fundamental objective of greater efficiency in wealth transfer.

DETAILED CLASS OUTLINE:

Tax Planning Considerations

1. Ethical considerations in tax planning

a. Privileged communications

b. Dangers of tax evasion

2. Tax compliance matters

a. Filing tax returns and documentation

b. Advance tax

c. The audit process

d. Refund of income taxe. Judicial review

3. Taxation terminology

a. Inclusions

b. Exclusions


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c. Deductions

Tax Computations

4. Tax calculations and special rules

a. Gross income

b. Adjusted gross income

c. Itemized deductions

d. Taxable income

e. Tax liability

f. Clubbing of Income

5. Tax characteristics of business forms

a. Sole proprietorship

b. General partnership

c. Limited liability companies

d. Trusts

e. Foundations/exempt organizations

f. Professional associations/corporations

g. Co-operative Societies

h. Others

6. Non Resident Indians (NRIs)

a. Residential status of individuals

b. Types of accounts for non-residents

c. Investment opportunities for non-residents

d. Tax implication for non-residents

7. Heads of income


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a. Salaries

b. Income from other sources

c. Capital gains

d. Business/ profession

e. House property

f. Interest on government securities

8. Capital Gains tax rules

a. Determination of gain or loss

b. Characterization of gain or loss

c. Netting rules

d. Indexation benefitse. Capital loss limitations

Tax Planning Strategies

9. Tax relief

a. Exemptions

b. Deductions

c. Rebates

10. Non taxable transactions (e.g., gifts, estate)

11. Tax management techniques

a. Deferral and acceleration

b. Maximizations of exclusions and credits

c. Managing loss limitations

d. Capital asset transactions


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e. Deductible expenditures of individuals and business forms

12. Interest and penalty taxes and other charges

a. Failure to file tax return or to pay tax

b. Preparer penalties

c. Accuracy related penalties

d. Fraud/concealment penalties

Estate Planning

13. Features of trust

a. Classification of trusts

b. Characteristics of selected trust provisions

c. Rule against perpetuities

14. Taxation of trust

A. Income tax implications of trusts

a. Exemptions

b. Simple and complex trusts

c. Distributable net income

d. Tax implications of trusts

e. Recommendations and justifications of the most appropriate trust

f. Tax issue on retirement plans at death

15. Property documentation


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a. Sale letter/ power of attorney

b. Freehold

c. Mutation

d. Will

e. Succession


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Assessment Year 2012-13

Index

1. Ethical consideration in tax planning

2. Tax compliance matters

3. Taxation terminology

4. Tax calculations and special rules

5. Tax characteristics of business forms

6. Non Resident Indians (NRIs)

7. Heads of income

8. Capital Gains tax rules

9. Tax relief

10.Non taxable transactions (e.g., gifts, estate)

11.Interest and penalty taxes and other charges

12.Tax and estate planning

Sample paper A

Sample Paper BImportant Questions

Most Important Questions

Annexure 1 Income Tax Rates for AY 2011-12

Annexure 2 Dividend Tax under Section 115-O

Annexure 3 Securities Transaction Tax

Annexure 4 Minimum Alternate Tax

1-3

4-15

16-22

23-36

37-52

53-66

67-124

125-142

143-167

168-172

173-179

180-196

197-210

211-224

225-231

232-251

252-254

255-256

257

258


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Chapter-2

Filling Tax Return

1. As per section 139(1), a company shall have to file return of income:

A. When its total income exceeds Rs.1,80,000B. When its total income exceeds the maximum amount which is non chargeable

to income-taxC. In all cases irrespective of any income or loss earned by it.

2. As per section 139(1), a firm shall have to file return of income:

A. When its total income exceeds Rs.1,80,000B. When its total income exceeds the maximum amount which is non chargeable

to incomeC. In all cases, irrespective of any income or loss can by it

3. As per section 139 (1), an individual other than a senior citizen or a woman shall have

to file return of income if:

A. His total income exceeds Rs. 1,80,000B. His total income exceeds Rs. 2,50,000C. His total income exceeds Rs. 1,90,000D. His total income before allowing deduction u/s 80C to 80U and section

10A ,10Band 10BA exceeds Rs. 1,80,000E. His gross total income exceeds Rs. 1,80,000

4. As per section 139 (1) an individual, who is of the age of 60 years or more and resident

in India shall have to file return of income if-

A. His total income exceeds Rs. 2,50,000B. His gross total income exceeds Rs. 2,50,000C. If his total income before allowing deduction u/s 80C to 80U and section 10A,

10B and 10BA exceeds Rs. 2,50,000D. If his total income after allowing of deduction u/s 80C and 80U a rd section 10A,

10B and 10BA exceeds Rs. 2,50,000

5. An individual who is of the age of 60 years or more but non-resident in India shall have

to file return of income if:

A. His total income exceeds Rs. 2,50,000B. His total income before allowing deduction under section 80C to 80U and


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section 10A, 10B and 10BA and exceeds Rs. 2,50,000C. His total income before allowing deduction under section 80C to 80U and

section 10A, 10BA and 10BA exceeds Rs. 1,80,000

6. A woman who is resident in India and less than 60 years of age shall have to file the

return of income if her total income exceeds:

A. Rs. 1,90,000B. Rs. 1,90,000 before allowing deduction under section 80C to 80U and section10A, 10B and 10BA

C. Rs. 1,60,000 before allowing deduction under section 80C to 80U and section10A, 10B and 10BA

7. A woman who is non-resident in India and less than 65 years of age shall have to file

the return of income if her total income exceeds:

A. Rs. 1,90,000 before allowing deduction under section 80C to 80U and section10A, 10B and 10BA

B. Rs. 1,80,000 before allowing deduction under section 80C to 80U and section10A, 10B and 10BA

8. As per section 139( I), a person other than a company or a firm shall have to file return

of income if:

His total income exceeds Rs. 1,80,000A. His total income exceeds the maximum amount which is not chargeable to tax ,B. His total income exclusive of deduction under Chapter VI and sections 10A,

10B and 10BA exceeds the maximum amount which is not chargeable incometax

C. In all cases irrespective of any income or loss

9. The total income of a trust before claiming exemption u/s 11 is Rs. 2, 80,000. It is

eligible for exemption u/s 11 to the extent of Rs. 1, 00,000. Such trust shall:

A. Have to file a return of incomeB. Not be required to file return of income as its taxable income is Rs. 1,80,000

10. A dies on 15-11-2011 and his total income till 15-11-2011 was Rs. 1, 90,000.

Thereafter the business of A was inherited by his son R & his total income from such

business was Rs. 1, 45,000. The son do not have any other income. In this case theson:

A. Has to file a consolidated return of income amounting to Rs. 3,65,000B. Has to file two returns of income, one on behalf of his father for Rs. 1,90,000 &

other in his own capacity for Rs. 1,75,000


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C. Has to file one return of income on behalf of his father for Rs. 3,65,000D. Has to file only one return of income on behalf of his father for Rs. 1,90,000

64 Income Tax Authority below the rank of Deputy Commissioner of Income tax:

A. Is appointed by the Central Board of Direct TaxesB. May be appointed by Board/ Director General/Chief Commissioner/ Director

/Commissioner if authorised by BoardC. Is appointed only by the Central Govt. Board

65 The circulars issued by the Board are:

A. Binding on assessee as well as Income Tax Authorities.B. Binding on Income Tax AuthorityC. Neither binding on Income Tax Authorities nor on the assessee

66 The jurisdiction of the Assessing officer shall be in case of any person:

A. Who is carrying on business or profession within the area vested with himB. Who is having place of residence with in that areaC. Who is carrying on business or profession or having place of residence within

that area

67 Where a person is carrying on business or profession in more places than one, the

jurisdiction of such person shall be with:

A. Each Assessing Officer in whose jurisdiction such person carry on suchbusiness

B. That Assessing Officer in whose jurisdiction the principal place of business or

profession in situated

68 Any dispute relating to jurisdiction of an Assessing Officer to assess any person shall

be determined by:

A. The BoardB. The Director General / Chief Commissioner or Commissioner of Income TaxC. Joint Commissioner/Joint Director of Income Tax

69 The assessee can object to the jurisdiction of Assessing Officer, if no return is filed:

A. Within 3 months of notice u/s 142(1) or 148 for filing the return of income or timeallowed to show cause why best judgment assessment u/s 144 should not bemade, whichever is earlier

B. Within one month of notice u/s 142(1) or 148 for filing the return of Income ortime allowed to show cause u/s 144 whichever is earlier


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C. Within the time allowed in notice u/s 142(1) or 148 for filing return of Income ortime allowed to show cause u/s 144 whichever is earlier


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Answers Chapter 21 C 31 D 61 A

2 C 32 B 62 B

3 D 33 B 63 A

4 C 34 C 64 B

5 C 35 C 65 B6 B 36 A 66 C

7 B 37 D 67 B

8 C 38 B 68 B

9 A 39 C 69 C

10 D 40 C 70 C

11 B 41 C 71 B

12 A 42 B 72 B

13 A 43 A

14 B 44 A

15 A 45 B

16 B 46 C

17 A 47 B

18 C 48 B

19 A 49 A

20 C 50 A

21 C 51 B

22 C 52 B

23 A 53 B

24 B 54 A

25 C 55 B

26 A 56 B

27 B 57 A

28 D 58 C

29 B 59 C

30 A 60 B


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Chapter- 5

Tax Characteristics of Business Forms

21. Remuneration received by a non-working partner shall:

A. Be taxable in the hands of the partnerB. Not be taxable in the hands of such non working partnerC. Not be taxable as the firm will not be allowed deduction on account of such

amount and it will be treated as share of profits

23. Amit and Namit are partners in M/s XYZ & Co... a interior decoration firm and sharing

profits and losses in ratio of 2:1 for the previous year ending on 31 March, 2012. Book

Profit of the firm is Rs.145000.Compute the maximum total amount of allowable

remuneration to working partners?

A. Rs.150000B. Rs.168000C. Rs.152600D. 117000

24. Namit & Sumit are partners of M/s R. S. & Co. a legal firm and sharing profits and

losses in ratio of 6:7 for the previous year ending on 31 March, 2012.Book profit of the

firm is Rs.525000.Compute the profit available to be distributed to the partners after

allowing the maximum possible remuneration for the partners?

A. Rs.222500B. Rs.120000C. Rs.280000D. Rs.245000

25. Mr. Amit & Sumit are partners in the firm ABC & Co. Their P& L Ratio 3:1, their book

profit Rs. 3, 50,000. Computation of Remuneration of Mr. Amit & Sumit each partner in

the firm (hint the remuneration paid on the basis of P& L ratio.

A. 26,500, 87,500B. 1,50,000, 15,000

C. 2,25,000, 75000D. None of the above

26. Mr. Amit & Namit are partners in the firm ABC & Co. Their P& L Ratio 5:3, their book

loss Rs. 7, 50,000. Computation of Remuneration of Mr. Amit & Namit each partner in


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the firm

A. 5,40,000B. NilC. 7,50,000D. 1,50,000

27. Namitj and Sumit are partners in M/s ABC & Co. and sharing profits and losses in ratio

of 2:1 for the previous year ending on 31 March, 2012. Book Profit of the firm is

Rs.245000.Compute the maximum total amount of allowable remuneration to working

partners?

A. Rs.150500B. Rs.150000C. Rs.220500D. None of the above

28. Amit and Sumit are partners of M/s R. S. & Co. and sharing profits and losses in ration

of 6:7 for the previous year ending on 31 March, 2012.Book profit of the firm isRs.425000. Compute the profit available to be distributed to the partners after allowing

the maximum possible remuneration for the partners?

A. Rs.80000B. Rs.875000C. Rs.202500D. Rs.425000

29. Income derived from property held under trust wholly for charitable or religious

purposes can be accumulated up to_________.

A. 35% of incomeB. 85% of IncomeC. 15% of IncomeD. 75% of Income

30. A charitable trust is assessed to tax as

A. FirmB. Association of personsC. Company

D. Society

31. During the previous year 2011-12, charitable trust derived income of Rs. 670600 from

the property held under the trust for charitable purpose. The trust actually spent only

Rs.270600 during the previous year 2010-11. Determine the taxable income of the


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trust assuming the trust has not applied for the extension option for applying the

unutilized portion of the income for charitable purpose during the next previous year,

i.e., 2012-13?

A. Rs.349100B. Rs.341100C. Rs.299410D. Rs.345840

32. The Trust has derived income from held property Rs. 1000000/- during the year March

2012, the Trust has only spend 750000/-. What is the unutilized amount for AY2012-

13?

A. 100000B. 250000C. 850000D. NIL


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Answer Sheet Chapter 5

1 A 20 C 39 C

2 B 21 C 40 B

3 A 22 C 41 D

4 D 23 A 42 D

5 B 24 B 43 B

6 A 25 C 44 D

7 B 26 D 45 B

8 B 27 C 46 C

9 A 28 A 47 D

10 C 29 C 48 C

11 D 30 B

12 A 31 C

13 C 32 A

14 C 33 D

15 C 34 B

16 B 35 C

17 C 36 D

18 B 37 B

19 B 38 C


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Solutions

Solution: 31

Income from property held for charitable purpose=670600

Less: 15% set apart for the future=100590

Less: Amount actually spent during the previous year=270600

Unutilized balance (Taxable amount) =299410

Solution 32

Income from property held for charitable purpose=1000000

Less: 15% set apart for the future=150000


Solution: 33

Income from property held for charitable purpose=870600Less: 15% set apart for the future=130590


Unutilized balance=369410

Less: Amount spent during P.Y.2011-12=67800

Taxable income of the P.Y.2011-12=301610 (369410-67800)


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Chapter- 7

Heads of Income

1. R Ltd pays a salary of Rs. 1, 90,000 to his employee G and undertakes to pay the

Income Tax amounting to Rs. 3,090 during the previous year 2011-12 on behalf of

G. The gross Salary of G shall be:

A. Rs. 1,90,000B. Rs. 1,93,090C. Rs. 1,86,910

2. R, who is entitled to a Salary of Rs. 1 0,000 p.m., took an advance of Rs. 20,000

against the salary in the month of March 2012. The gross salary of R for

assessment year 2012-13 shall be:

A. Rs. 1,40,000B. Rs. 1,20,000

C. none of these two

3. R was employed on 1-7-2003 in the grade of Rs. 15,000-400-17,000-500-22,000.His

gross salary for the assessment year 2012-23 shall be

A. Rs. 1,99,200B. Rs.2,04,000C. Rs. 2,14,500D. Rs.2,10,000

4. R was employed from 1-8-2008 in the grade of Rs. 15,000-400-17,000-500-22,000and his salary was fixed at Rs. 16,200 from the date of joining. His gross salary for

the assessment year 2012-13 shall be.

A. Rs. 1,99,200B. Rs. 2,04,000C. Rs. 2,08,000D. Rs. 2, I 0,000

5. Salary of R is Rs. 10,000 p.m. R had taken Salary in advance for the months of April

2011 to June 2011 in March 2011 itself. The gross salary of R for assessment year

20 12-13 shall be:

A. Rs. 1,20,000B. Rs. 90,000C. none of these two


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6. The Government of India announced increase in the D.A on 15-3-2011 with

retrospective effect from 1-5-2007 and the same were paid on 6-4-2011. The arrears

of D.A shall be taxable in the previous year:

A. 2010-11B. 2011-12

C. In respective previous years to which these relate

7. R is employed with G Ltd., at a salary of Rs. 10,000 p/m. As G Ltd., was in financial

crisis, it paid the salary of January 2012 to March 2012 to R only in July 2012. The

gross salary of R for assessment year 2012-13

A. Rs. 1,20,000B. Rs. 90,000C. none of these two

8. R, who is entitled to Salary of Rs. 10,000 p.m. took advance salary from hisemployer for the months of April and May 2012 along with Salary of March 2012 on

31-3-2012.The gross salary of R for assessment year 2012-13 shall be:

A. Rs. 1,20,000B. Rs. 1,40,000C. none of these two

9. R who was working with another company joined the present employer w.e.f. 1-5-

2011 at a Salary of Rs. 20,000 p.m. His salary becomes due on first of next month.

He was also entitled to a pension of Rs. 8,000 p.m. From his former employer as he

retired on 31-3-2011. His gross salary for assessment year 2011-12 shall be:

A. Rs.1,20,000B. Rs. 2,46,000C. Rs. 2,96,000

10. Salary of R becomes due on Ist of next month and it is paid on 7th of that month.

For assessment year 2012-13, the salary of R shall be taken from:

A. April 2009 to March 2010B. March 2011 to February 2012

C. none of these

11. Encashment of leave salary at the time of retirement is fully exempt in the case of:

A. Central Government employee


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B. State Government employeeC. Both Central and State Government employeesD. Government employee and employee of local authority.

12. Tick the incomes which will be included in the meaning of salary for encashment of

leave salary to other employees.

A. D.AB. Dearness allowance to the extent the terms of employment so provideC. BonusD. Taxable allowanceE. Fixed commissionF. Commission if fixed percentage on turnoverG. Fixed percentage of commission on net profits.

68 Payment from statutory fund and public provident fund shall be:

A. TaxableB. Fully exemptC. Taxable to the extent of employer's contribution and interest thereon

69 An employer has provided free meal worth Rs. 110 per meal for 300 days in the

office, during office hours, to his employees. Such facility provided to the employees

shall:

A. Be a perquisite in the hands of the employees and taxable @ 60 per day for300 days

B. Be a tax free perquisite in the hands of the employeesC. Be a tax free perquisite in the hands of the employees but liable to FBT in

the hands of the employerD. Neither be a perquisite nor liable to FBT in the hands of the employer

70 An employer has made a gift of Titan Watch worth Rs. 12,000 to his employee.

Such gift shall:

A. Be a perquisite in the hands of the employee and the value of suchperquisite shall be Rs. 12,000

B. Be a perquisite and the value of such perquisite shall Rs. 7,000C. Not be a perquisite

71 (i) The employer had purchased a car for Rs. 3, 00,000 which was being used for

official purposes. After 2 year 6 months of its use, the car is sold to R, the employee,

for Rs. 1, 20,000. The value of this perquisite shall be

A. Rs. 72,000B. Rs. 60,000


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C. NilD. Rs. 1,23,000E. Rs. 1,20,000

(ii)What will be your answer if instead of car, the asset purchased is a computer?

A. Rs. 72,000B. Rs. 60,000C. NilD. Rs. 1,23,000E. Rs. 1,20,000

(iii) What will be your answer if the asset is neither car nor any computer?

A. Rs. 72,000B. Rs. 60,000C. NilD. Rs. 1,23,000E. Rs. 1,20,000

72 (i) R is provided with a rent free accommodation owned by his employer in Delhi.

The value of this perquisite shall be:

A. 20% of salaryB. 15% of salaryC. 20% of salary plus excess of FRV over 50% of salaryD. 20% of salary plus excess of FRV over 60% of salaryE. 10% of salaryF. 7.5% of salary

(ii) What will be your answer if the accommodation is provided in a city having

population of 9 lakhs as per 2001 census?

A. 20% of salaryB. 15% of salaryC. 20% of salary plus excess of FRV over 50% of salaryD. 20% of salary plus excess of FRV over 60% of salaryE. 10% of salaryF. 7.5% of salary

73 R is entitled to a watchman allowance of Rs. 600 p.m. for the security of hisresidence. He pays Rs. 500 p.m. to the watchman employed by him. The taxable

allowance shall be:

A. Rs. 120 p.m.B. Rs. 100 p.m.


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C. Rs. 600 p.m.


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Answers Chapter 7

1 B 36 C 71i)A,ii)C,

iii)E 106 C

2 B 37 A,B,D,F,I 72 i)B,ii)F 107 C

3 C 38 C 73 C 108 B

4 C 39 C 74i)C,ii)C,iii)C

,iv)E,v)E 109 C

5 B 40A,C,D,E,F,

G,H,Q 75 i)B,ii)B 110 C

6 B 41 I)B II)D 76 i)A,ii)A, 111 B

7 A 42 B 77 i)A,ii)A,iii)B 112 B8 B 43 A 78 i)B,ii)B 113 D

9 C 44 C 79 B 114 B10 B 45 C 80 B 115 C

11 C 46 C 81 B 116 C

12 B 47 A 82 A 117 B

13 C 48 C 83 B 118 C

14 C 49 B 84 C 119 C

15 C 50 B 85 D 120 C

16 B 51 B 86 A 121A,C,E,F,G,H

,I,J

17 A 52 C 87 A 122 C

18 A,E,G 53 C 88 i)A,ii)D 123 C

19 C 54 C 89 C 124 A20 B 55 A 90 A 125 B

21i)A ii)A

iii)B iv) Av) B vi)C 56 A 91 B 126 A

22i)B ii)C

iii)B iv) C 57 A 92 A 127 B

23 A 58 A 93 C 128 C24 C 59 A 94 B 129 B

25 B 60 C 95 A 130 C

26 C 61 C 96 D 131 C

27 B 62 C 97 B 132 B

28 C 63 D 98 C 133

A,B,C,F,G,H,I,K,M,P,Q,S,U,W,Y,Z,AA,BB,CC,DD

29 D 64 D 99 A 134 C

30 A 65 C 100 B 135

B,C,D,G,I,K,

L.M31 B 66 D 101 C 136 C

32 C 67 C 102 C 137 B

33 C 68 B 103 A 138 B

34 B 69 A 104 A 139 C

35 B 70 B 105 A 140 C


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Answers Chapter 7

141 B 176 B 211 B

142 B 177 B 212 C

143 B 178 C.D 213 C

144 C 179 B,C,D,E,F,G,H,I 214 B

145 D 180 B 215 B

146 C 181 B 216 A

147 B 182 D 217 B

148 C 183 B 218 a)B b)D

149 B 184 B 219 B

150 D 185 B 220 B

151 C 186 C.D 221 A

152 B 187 D 222 C

153 C 188 C 223 A

154 B 189 C 224 (a)B (b)D

155 A 190 C 225 C

156 A 191 A 226 C

157 A 192 C 227 C

158 C 193 B

159 C 194 C

160 D 195 B

161 C 196 B

162 C 197 C

163 C 198 A

164 B 199 B

165 B 200 B

166 B 201 C

167 C 202 C

168 B 203 B

169 B 204 C

170 C 205 B

171 B 206 C

172 C 207 B

173 C 208 B174 B 209 C

175 C 210 C


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Solution

Solution: 3

Gross Salary

01-04-2011 to 31-06-2011 (17500*3 ) - 52500

01-07-2011 to 31-03-2012 (18000*9) - 162000

214500

Solution: 5

April 2011 to June 2011 full in A.Y. 2011-12

July 2011 to March 2011 in A.Y. Rs.10000*9 - 90000

Solution: 9

Salary (20000*10) - 200000

Pension - 96000

296000

Solution: 83

Exempted amount is minimum of the following:Actual amount received =Rs.40000015 days average salary for 12 years = (15000 x12x15)/30 =Rs.90000

Amount specified= Rs.500000So tax free amount is Rs.90000 and taxable amount is (400000-90000) =Rs.310000

Solution: 84

Four weeks average salary = (5000+4800+6200+5600)/4 =5400Exempted amount is minimum of the following:

Actual amount received =Rs.45000015 days average salary for completed years of service = 15 x 5400 x 15/7 =Rs.1, 73,571

Amount specified= Rs.5, 00,000So tax free amount is Rs.1, 73,571 and taxable amount is (450000-173571) =Rs.2, 76,429

Solution: 85

Exempted amount is minimum of the following:Actual amount received =Rs.1, 50,00015 days average salary for 11 years = (4800 x11x15)/7 =Rs.1, 13,142

Amount specified= Rs.5, 00,000So tax free amount is Rs.1, 13,142 and taxable amount is (150000-113142) =Rs.36, 857


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Solution: 86

Exempted amount is the minimum of the following:Actual amount received = Rs.20000015 days average salary for 19 years = (18000 x 19 x 15)/30 =Rs.171000

Amount specified = Rs.500000So tax free amount is Rs.171000 and taxable amount is (200000-171000) = Rs29000

Solution 87

19500(i) 19500 x 15 x 28 = 3,15,000

26(ii) 10,00,000(iii) 3, 30,000:. 3, 15,000 is exempt and balance Rs. 15,000 is taxable.Note.-If an employee is covered under Payment of Gratuity Act, 1972, salary last drawn is taken and not thesalary of preceding 10 months

Solution 88Rs.

Salary from April, 2011 to January, 2012April 2011 to June, 2012 15,200 x 3 45,600July 2011 to January, 2012 15600 x 7 109200

___________154800

DA @ 15% 23220___________

178020____________

(a) Gratuity Act Applies(I) 15600 + 2340 x 15 x 32 = 3, 31,200

26(ii) Rs.10,00,000(iii) Rs. 3, 40,000Hence Taxable Amt. = 3, 40,000 - 331200 = 8800Gross Salary = 1,78,020 + 8800 18,68,20

(b) Gratuity Act does not apply17802 *32 = 18262*33 284832

2 2Maximum limit 1,00,00,00Received amount 3,40,000

3, 50,0003, 40,000

:. Taxable Amt. = 3, 40,000 - 2848832 = 55,168


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Gross Salary 178020 + 55168= 233188* Average salary on the basis of preceding 10 months 178020 = Rs. 17802

10

Solution 89

The exemption shall be to the extent of the minimum of the following three amounts:(a) Amount of gratuity received Rs. 6, 00,000.(b) 15 days' salary for every year of service i.e., 22400 x 15 x 19 = Rs. 2, 45,538

26(c) Rs. 10,00,000Therefore Rs. 2, 45,538 shall be exempt from tax.

Solution 90 Rs. Rs.Salary (17000 x 3 + 17,500 x 2 1/2) 94750Dearness Allowance @ 50% 47375Gratuity received 2, 40,000Less: Exempt(i) Amount specified 10,00,000(ii) Half month average salary forEvery year of service[25, 6,50 x 17] 2,18,025

2(iii) Actual amount received 2, 40,000 - 2, 18,025 21,975Pension (4,000 + 8000 + 8000 + 8000 + 2000 x 3) 34,000

Computed pension received 6, 00,000Less: Exempt [6, 00,000 x 4/3 x 1/3] 2, 66,667 3, 33,333

_________ ________Gross Salary 531,433

__________

Note.-Average Salary = 17000 x 8 + 17,500 x 2 = 1,71,000 + 50% of 85500 =2,56,500/10 = 25,650

Solution 91

1. 50% of Commuted Pension is equal to Rs. 3, 00,000. Hence commuted value of 1/3 of the pension wouldamount to Rs. 300000 x 100 *1/3 = = Rs. 2, 00,000;

50Rs. 2, 00,000 would, therefore, be exempt and balance Rs. 1, 00,000 would be taxable.

2. 50% of commuted pension is equal to Rs. 3, 00,000. Hence commuted value of 50% of pension wouldamount to 300000 x 100 *1/2 = = Rs. 3,00,000;

50

Therefore, entire Rs. 3, 00,000 would be exempt. Taxable NIL


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Chapter 10

Non Taxable Transactions (e.g. Gifts, Estate)

1. Gift, whether in cash or kind, received by an individual on the occasion of his/hermarriage shall be:

A. fully exempt even if it exceeds Rs. 50,000B. fully taxable if it exceeds Rs. 50,000C. exempt upto Rs. 50,000 and balance taxable

2. Gift exceeding Rs. 50,000 received by HUF from relative of the member of HUF shall

be:

A. Fully taxable

B. Fully exemptC. Taxable to the extent it exceeds Rs. 50,000

3. Gift exceeding Rs. 50,000 received by an individual from his relative R shall be:

A. Fully exemptB. Fully taxableC. Exempt up to Rs. 50,000 and the balance shall be taxable

4. Gift of immovable property or specified movable property received by an individual or

HUF shall be:

A. Fully exempt whether the value of such gift is less than or more than Rs.50000B. Fully taxableC. Fully taxable if the value of such gift exceed Rs.50000

5. Mr. Amit who is a Non-resident receives a gift from some friends on his marriage in

India. The amount of the gift was Rs.2, 45,000.Calculate the amount chargeable to tax

under the head Income from other sources?

A. Rs.245000

B. Rs.195000C. Rs.0D. Rs.50000

6. W.e.f. 1-10-2009 Gift of specified movable property received by individual or HUF shall


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be taxable in the hands of the recipient:

A. To the extent of market value of the movable property as may be prescribedprovided if exceeds Rs. 50,000

B. To the extent of the cost of the movable property

7. Mr. Amit who is a Non-resident receives a gift from his father on his visit to India. The

amount of the gift was Rs.45000.Calculate the amount chargeable to tax under thehead Income from other sources?

A. Rs.45000B. Rs.5000C. Rs.0D. Rs.50000

8. An individual has received a gift of Rs. 30,000 each during the previous year from his

two friends, the amount taxable under the head income from the other sources shall be:

A. Rs. 10,000B. Rs. 60,000C. Nil

9. X receives a cash gift of Rs. 50,000 on September 30, 2010 from his friend A. He receives

another cash gift of Rs. 50,000 from his friend B on October 1, 2010. What is the taxable

value in the hand of X for AY 2012-13?

A. 50,000B. NilC. 1,00,000

D. None of the above


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Answer Sheet chapter 10

1 A 5 C 9 B 13 D

2 A 6 A 10 C 14 D

3 A 7 C 11 B 15 D

4 C 8 B 12 A 16 B


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Sample Paper A

One Mark Questions (40 Question)

1. Incometax Act extends to:

A. Whole of IndiaB. Whole of India except Jammu & KashmirC. Whole of India except SikkimD. Whole of India except Jammu & Kashmir and Sikkim

2. In Some Cases assessment year and previous year can be same financial year.

A. TrueB. False

3. Casual Income received by the assess is:

A. Fully exemptB. Exempt up to Rs. 5000C. Fully taxable

4. Export incentives received by an assess are

A. ExemptB. Taxable under section 28C. Exempt up to certain limits

5. The tax on total income exclusive of long term capital gain is 30% +7.5% surcharge + education cess@ 2% in case of

A. An Indian CompanyB. A domestic companyC. A foreign company

6. The maximum exemption in case of leave encashment shall be:

A. Rs. 240000B. Rs. 350000C. Rs. 300000

7. If rent is paid for a house situated in Delhi, the house rent allowance shall be exempt to the maximum

extent of:

A. 40% of salaryB. 50% of salaryC. 60% of salary


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8. A surcharge of 7.5% on income tax is payable by

A. Any companyB. An Indian companyC. Domestic company

9. An income under the head capital gain to a local authority is:

A. ExemptB. Taxable

10. Encashment f leave salary at the time of retirement is fully exempt in the case of:

A. Central Government employeeB. State government employeeC. Bothe central and government employeesD. Government employee and employee of local authority.

Four Mark Questions

4. R is provided with a car of 1.6 liter capacity by the employer along with driver. The expenses of runningand maintenance of car are met by R himself. Besides using the car for official purposes also. Thevaluation of the perquisite of car shall be

A. Rs. 32400B. Rs. 12000C. Rs. 8000D. Rs. 10400

5. R ltd. Paid Rs. 11000000 during the previous year 2010-11 for acquiring the telecommunication rightswhich were effective for 11 years. It commenced the business of operating the telecommunicationservice with effect from previous year 2011-12. R limited shall be entitled to a deduction of:

A. Rs. 10 lakhs w.e.f. previous year 2009-10B. Rs. 11 lakhs w.e.f. previous year 2011-12C. Rs. 12 lakhs w.e.f. previous year 2011-12D. None of these

6. R who was working with another company joined the present employer w.e.f. 1-5-2011 at a salary oRs. 10000 p.m. His salary becomes due on first of next month. He was also entitled to a pension of Rs.4000 p.m. from his former employer. His gross salary for the assessment year 2012-13 shall be:

A. Rs. 110000B. Rs. 158000C. Rs. 148000

D. Rs. 168000

7. Where a shareholder of an amalgamating company gets the shares of the amalgamated company inlieu of the shares held by him in an amalgamating company, the cost of acquisition of such shares shalbe:


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A. Market value of the shares of an amalgamating company as on the date of amalgamation.B. Cost of the shares held in amalgamating companyC. Market value of the share of the amalgamated company as on the date of amalgamation

8. An employee availed the exemption of leave encashment of Rs. 100000 in the past. He received fromthe second employer a sum of Rs. 250000 as encashment of leave. He will be entitled to exemption tothe extent of:

A. NilB. Rs. 250000C. Rs. 200000D. Rs. 140000

9. Municipal valuation of the house is Rs. 100000 whereas the fair rent of house property Rs. 120000 andstandard rent is Rs. 110000; actual rent received or receivable is Rs. 140000; municipal taxes paid10%. The annual value in this case shall be:

A. Rs. 90000B. Rs. 100000C. Rs. 130000D. Rs. 120000


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E.

One MarkQuestions

Two MarkQuestions

Four MarkQuestions

Question Answer Question Answer Question Answer

1 A 1 C 1 C

2 A 2 C 2 B

3 B 3 D 3 B

4 B 4 B 4 A5 B 5 A 5 B

6 C 6 A 6 C

7 B 7 B 7 B

8 C 8 C 8 C

9 A 9 B 9 C

10 C 10 C 10 B

11 A 11 A 11 B

12 A 12 B 12 C

13 B 13 B 13 C

14 B 14 C 14 B

15 A 15 D 15 B

16 B 16 B

17 B 17 A

18 B 18 B

19 B 19 F

20 B 20 B

21 C

22 A

23 A

24 D

25 C

26 A,B,D

27 D

28 B

29 B

30 B

31 C

32 A

33 B

34 A

35 C

36 B

37 C

38 C

39 B

40 B


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Roots Institute of Financial Markets (RIFM)

Every effort has been made to avoid any errors or omission in this book. In spite ofthis error may creep in.

Any mistake, error or discrepancy noted may be brought to our notice, which, shall be taken care of in the

next printing. It is notified that neither the publisher nor the author or seller will be responsible for any

damage or loss of action to anyone of any kind, in any manner, therefrom.

ROOTS Institute of Financial Markets, its directors, author(s), or any other persons involved in the preparation

of this publication expressly disclaim all and any contractual, tortuous, or other form of liability to any person

(purchaser of this publication or not) in respect of the publication and any consequences arising from its use,

including any omission made, by any person in reliance upon the whole or any part of the contents of this

publication.

No person should act on the basis of the material contained in the publication without considering and taking

professional advice.


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Tax Practice Book Sample Ay 2012-13

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Transcript of Tax Practice Book Sample Ay 2012-13