VI Semester B.Com. Examination, May/June 2008
(Semester Scheme)
COMMERCE (Paper - 6.2)
Income Tax - I
Time : 3 Hours Max. Marks : 90
SECTION - A
Answer any ten questions. (10x2=20)1. a) What do you mean by “Profession” ?
b) What do you mean by “expressly admissible expenses” ?
c) Define “Speculative transaction”.
d) Define “Transfer of an asset”.
e) What do you mean by “long term capital gain” ?
f) How do you determine the “cost of acquisition” if the asset is acquired by gift ?
g) How do you gross up the value in the following cases.
i. Net interest received on bank deposits.
ii. Net amount received on winning from lottery.
h) What is a “Bond Washing Transaction” ?
i) Mention the provisions for deductions under Section 80DD.
j) Give the meaning of set-off and carry forward.
k) Hoe do you set-off and carry forward short term capital losses.
l) Give the meaning of Gross Total Income and Total Income.
SECTION - B
Answer any five questions. (5x5=25)
2. Mr. X purchased a house property in 1978 for Rs. 80,000/-. The fair market value of this house was Rs. 1,40,000/- on 1st April 1981. In the year 1985 on 1st November he incurred Rs. 60,000 for improvement of the house and sold the property on 10th September 2005 for Rs. 15,00,000/- and purchased a house for Rs. 5,00,000 on 15th March 2006. Compute the capital gain chargeable to tax for the assessment year 2006-07. The cost inflation index are 1981-82 = 100, 1985-86 = 133, 2005-06 = 497.
3. Discuss with reasons, the admissibility of the following expenses while computing profits and gains of business.
a) Income tax paid Rs. 30,000/-
b) Outstanding sales tax pf previous years paid during the year Rs. 20,000/-
c) Interest paid on loan taken for daughter’s marriage Rs. 8,000/-
d) Loss due to Robbery Rs. 50,000/-
e) Legal expenses Rs. 10,000/- to defend the assessee’s title to his assets.
4. Briefly discuss the provisions for deductions under Section 80 U.
5. In the year 1986-87 Mr. A purchased an agricultural land in an urban area for Rs. 2,00,000. In the year 2005-06, this land was acquired by the urban development authority. He was received a compensation of Rs. 12,00,000/- from the authority. Compute his capital gain and also advice him regarding the amount of capital gain to be deposited in the capital gain account scheme to avoid income tax.
6. Mr. Bharath furnishes the following particulars of his incomes for the P.Y 2005-06. You are required to compute his income from other sources for the A.Y. 2006-07.
i) Interest on listed securities (Net) Rs. 4,490/-
ii) Dividends from a foreign co. Rs. 8,000/-
iii) Winning from Horse Race (Net) Rs. 13,880/-
iv) Interest on debentures of a local authority Rs. 3,600/-
v) Interest on post office Savings Bank A/c. Rs. 750/-
7. Briefly discuss any five powers of commissioner of Income Tax.
8. What are the types of assessments ? Briefly discuss self assessment.
9. Mention the provisions to set-off and carry forward the following losses.
i) Loss from house property and ii) Long Term Capital Loss.
SECTION - C
Answer any three questions. (3x15=45)
10. Mr. Naremdra a practicing Chartered Accountant gives you the Receipts and Payments of his profession for the year ended 31-3-2006.
Receipts Rs.
Consultation 120000
Audit fees 150000
Appellate Tribunal Appearance 80000
Payment from clients 260000
Miscellaneous (Professional) 40000
Payments
Office expenses 75000
Office rent 36000
Salaries 60000
Printing and stationery 6000
Purchase of books (Annual publication) 5000
Subscription to C.A. Institute 12000
Travelling expenses 10000
Interest on Bank loan 8000
Donation to National Defence Fund 20000
Bank loan was taken for construction of his residential house. He is running his profession in his own building. 20% of traveling expenses are not allowed.
Compute his income from profession for the A.Y. 2006-07.
11. Dr. Gurudev, a medical practitioner, furnishes his Receipts and Payments Accountant for the previous year ended 2005-06. You are required to compute his income from profession for the A.Y. 2006-07.
Receipts and Payments Account
Rs. Rs.
Balance b/f 40000 Purchase of Professional books 30000
Visiting fee 120000 Membership fee of Medical Council 6000
Consultation fee 80000 House hold expenses 18000
Sale of Medicines 135000 Rent of clinic 24000
Salary as a part time Income tax 26000
Lecturer 96000 Purchase of medicine 100000
Gifts from patients 30000 Car expenses 40000
Interest on post office Electricity and water 12000
S/B A/c12000 Salary to staff 36000
Dividends from
Domestic Co. 10000 Surgical equipment 40000
Balance c/f 191000
523000 523000
Additional information :
a) 50% of motor car expenses relates to his personal use.
b) Depreciate car and surgical equipments by 15% and books by 100%
c) Gifts include Rs. 10000, received from his patients on his birthday gift.
12. Compute taxable capital gains for the A.Y. 2006-07 from the information given below.
The assessee has purchased 1600 Equity shares of Rs. 10/-each for Rs. 60 per share on 1st January 1989 and paid brokerage of Rs. 2,000 and transfer fee of Rs. 1,000/- on 1st September 1991 the Co., issued 400 bonus shares to him. In November, 2004 the Co., issued 1000 rights shares at Rs. 30/- per share to him. On 1st October 2005, he sold 400 bonus shares and 600 rights shares at Rs. 120 per share. On 1st January 2006, he sold the remaining shares with him at Rs. 90/- per share. The cost inflation indices are 1988-89 = 161, 1991-92 = 199, 2004-05 = 480, 2005-06 = 497 (Assume that the assessee has not paid securities transaction tax.)
13. Mr. A a resident of India has furnished the following incomes for the P.Y. 2005-06. Compute his income from other courses for the A.Y. 2006-07.
i) Winnings from crossword puzzles (Net) Rs. 6,940.
ii) Royalty from text book written by him (Gross) Rs. 45,000. (Admissible deductions Rs. 12,500).
iii) 8% interest on Rs. 40,000 Municipal Debentures.
iv) 10% Interest on Rs. 30,000 in 7% Capital Investment Bonds of GOI and received interest for the year.
v) Rs. 2,000 as interest on bank deposits.
vi) Income from undisclosed sources Rs. 10,000/-
14. Mr. Raju has the following details of his incomes for the previous year 2005-06.
A) Being a Tax Consultant
i) Receipts :
Consultation fee Rs. 2,10,000
Arbitration Charges Rs. 60,000
ii) Payments :
Rent of Building Rs. 36,000 (1/3 portion used for his residence)
Electricity and water charges for the building Rs. 10,000/-
Salary to staff Rs. 24,000/-
Stationery and other expenses Rs. 20,000/-
B) Taxable Income from House property Rs. 35,000/-
C) During the year he had sold 500 equity shares at Rs. 45/- each which were purchased by him during 1995-96 at Rs. 15 each (The cost inflation Indices are 1995-96 = 281, 2005-06 = 497).
D) Taxable income from other sources Rs. 30,000/- Mr. Raju has paid the following amounts.
i) LIC premium Rs. 12,000/-
ii) Purchased NSC worth Rs. 6,000/-
iii) Donation to a charitable recognized education institution Rs. 6,000/-
iv) Medical insurance premium paid by cash Rs. 2,000/-
Compute his total income for the A.Y. 2006-07.
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