CA PE II Question Papers Group II
Income Tax and Central Sales Tax May 2007
This Paper has 33 answerable questions with 0 answered.
Total No. of Questions— 6]
Time Allowed : 3 Hours
Maximum Marks : 100
Answers to questions are to be given only in English except in the cases 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.
Questions of both the Sections have been given together without the Sections being mentioned in the question-paper. Candidates are advised to attempt all the required questions in the same answer-book.
Attempt all questions
Workings notes should form part of the answer. Wherever required, suitable assumptions may be made by the candidate.
1. (a) Dr. Sparsh Kumar is running a clinic, His Income and Expenditure Account for the year ending 31st March, 2007 is given below:
Expenditure Amount Rs. Income Amount Rs.
To Staff Salary
To Medicine consumed
To Administrative Expenses
To Donation to Prime
Minister’s Relief Fund
To Excess of Income over
2,47,560 By Fees Receipts
By Davidend from
By Winning from Lotteries
Net of TDS
(TDS Rs. 12,240)
By Income–tax Refund 12,63,600
Total Rs. 18,08,610 Total Rs. 18,08,610
(i) Depreciation in respect of all assets has been ascertained at Rs. 50,000 as per Income–tax Rules.
(ii) Medicines consumed include medicine of (cost) Rs. 16,000 used for his family.
(iii) For Receipts include Rs. 14,000 honorarium for valuing medical examination answerbooks.
(iv) He has also received Rs. 80,000 on account of Agricultural Income which had not been included in the above Income and Expenditure Account.
(v) He has also received Rs. 57,860 on maturity of one LIC Policy, not included in the aboveIncome and Expenditure Accounts.
(vi) He received Rs. 6,000 per month as salary from a City Care Center. This has not been included in the ‘Fees Receipts’ credited to Income and Expenditure Account.
(vii) He has sold Land in June, 2006 for Rs. 6,00,000 (valuation as per stamp valuation authority Rs. 8,00,000). The Land was acquired by him in October, 1998 for Rs. 4,50,000.
(viii) He has paid premium of one LIC Policy Rs. 12,000 (sum assured Rs. 50,000).
(ix) He has paid Re. 2,500 for purchase of lottery tickets.
From the above compute the Income and Tax payable of Dr. Sparsh Kumar for the Asst. year 2007–08.
Cost Inflation Index:
(b) M/s Sidhant & Co., a sole proprictary concern is converted into a company, Sidhant Co. Ltd with effect from November 29, 2006. The written down value of assets as on April 1, 2006 is as follows:
Items Rate if Dep. WDV as on 1 April, 06
Plant and Machinery 10%
15% Rs. 3,50,000
Further, on October 15, 2006, M/s Sidhant & Co. purchased a plant for Rs. 1,00,000 (rate of depreciation 15%). After conversion, the company added another plant worth Rs. 50,000 (rate of depreciation 15%)
Compute the depreciation available to (i) M/s Sidhant & Co. and (ii) Sidhant Co. Ltd. for Asst. year 2007–08.
2. (First Alternative)
(a) Explain marginal relief and calculate the amount of tax payable and amount of marginal relief on the income of Rs. 10,30,000 by an individual for Asst. year 2007–08. 6 (0)
(b) List out the conditions for availing deduction under Section 80QQB of Income tax Act, 1961. 6 (0)
2. (Second Alternative)
(a) Explain the provision relating to multiplex theatres and convention centres under Section 801–B of the Income–tax, 1961. 6 (0)
(b) Discuss the tax implications arising consequent to conversion of a Capital Asset into Stock–in–trade of business and its subsequent sale. 6 (0)
3. (a) State with reasons in brief whether the following statements are true or false with reference to the proisions of the Income–tax Act, 1961: 5×2=10
(i) Voluntary contributions received by charitable trust, university and educational institutions are not taxable as the definition of Income in Section 2(24) does not cover the same. (0)
(ii) Surcharge payable by the foreign company on total income is 2.5% for Asst. year 2007–08. (0)
(iii) Income escaping assessment relating to assessment year 2004–05 is Rs. 2,00,000. The time limit for issue of the notice under Section 148 is 31st March, 2006. (0)
(iv) Mr. S is employed in T Ltd. as a Chartered Accountant. The annual membership fee of Mr. S paid by T. Ltd. is not a perquisite and hence not chargeable to tax. (0)
(v) An assessee being aggrieved by the order of Assessing Officer can file a revision petition to the Commissioner of Income–tax within a period of two years. (0)
(b) Fill in the blanks with reference to the provisions of the Income–tax Act: 5×1=5
(i) The maximum period for which speculation loss can be carried forward is _____ years. (0)
(ii) M Ltd. gives a gift of Re. 7,500 to its employee Ganesh on his birthday. The taxable value of the gift in the hands of Ganesh is _____ (0)
(iii) The exemption limit of income available to a senior citizen is Rs. _____ for Asst. year 2007–08. (0)
(iv) The time limit for filing an appeal before Income–tax Appellate tribunal is _____ days of the receipt of appeal order from Commissioner of Income–tax (Appeals) (0)
(v) Mr. Z has paid a sum of Rs. 65,000 on 31.11.2008 as tuition fees to a university in Australia. The amount deductible under Section 80C for Asst. year 2007–08 is Rs. _____ (0)
4. Write short notes on any three of the following: 3×6=18
(a) Deduction to be allowed on actual payment basis (Section 43B) (0)
(b) Scheme of Submisalon of Return through Tax Return Preparer (Section 139 B) (0)
(c) Deduction from Gross Total Income under Section 80GG (0)
(d) Incentives for newly established units in Special Economic Zene (Section 10AA). (0)
5. (a) State with brief reasons whether the following statements are true/false in the light of Central Sales–tax Act: 5×2=10
(i) Hide and skins are declared goods. (0)
(ii) Subsidy given by government to manufacturers to compensate cost of production will form part of sale price. (0)
(iii) Packing charges realised by the dealer is an integral part of sale price. (0)
(iv) There is no time limit prescribed for liquidator on his assumption of charge for intimation to Sales–tax authorities. (0)
(v) When goods are sent by VPP, the sale is said to take place in the state from where the percel is sent. (0)
(b) Fill in the blanks in the light of the provision of Central Sales–tax Act: 5×1=5
(i) Hari of Chennai made a sale of goods to an Export House in Delhi. These goods were later exported by the Export House to Canada. To enable Hari to claim the exemption under CST Act, the Export House should provide to Hari________ (0)
(ii) One of the essential feature of an inter–state sale is that a transation should be________ (0)
(iii) Vikas effected the first inter–state sale on 22.3.2007 and applied for registration on 20.4.2007. The effective date for registration will be ________ (0)
(iv) Charity or Dharmada collected by the dealer ________ from part of sale price. (0)
(v) The authority to declare goods of special importance lies with ________ (0)
6. Explain any two of the following with reference o the provisions of the Central Sales–tax Act: 5×2=10
(a) Act or omission for which penalties can be levied (0)
(b) On what consideration goods of special importance are selected? (0)
(c) What are the relevant provisions under Central Sales–tax for forfeiture of security by the authority granting certificate of registration? (0)