CA PE II Question Papers Group II
Income Tax and Central Sales Tax November 2002
This Paper has 23 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
1. (a) Mrs. Lakshmi aged about 66 years in a Finance Manager of M/s Lakshmi & co. Pvt. Ltd. based at Calcutta. She is in continuous service since 1954 and receives the following salary and perks from the company during the year ending 31.03.2002:
(i) Basic Salary (50,000 x 12) = Rs.6,00,000
(ii) D. A. (20,000 x 12) = Rs. 2,40,000
(iii) Bonus-2 months Basic Pay
(iv) Commission – 0.1% of the Turnover of the Company. The turnover for the F.Y. 2001-02 was Rs. 15.00 crores
(v) Contribution of the Employer and employee to the PF Account Rs.3,00,000 each
(vi) Interest credited to P.F. Account at 9.5% – Rs.60,000
(vii) Rent free unfurnished accommodation provided by the company for which the company pays a rent of Rs. 70,000 per annum
(viii) Contribution of the Employer and employee to the PF Account Rs.3,00,000 each
(ix) Children’s education allowance to meet the hostel expenditure of three children – Rs. 5,000 each.
She makes the following payments and Investments:
(i) Premium paid to insure the life of her major son – Rs. 15,000
(ii) Medical Insurance premium for self – Rs. 5,000 ; Spouse – Rs. 5,000
(iii) Donation to a public charitable Institution registered under 80G Rs. 2,00,000
(iv) LIC Pension Fund – Rs.12,000
Determine the tax liability for the Assessment Year 2002-03. 15 (0)
(i) In the Leap year 1999–2000 (Previous year) A sailor has remained on ship for a PrivateCompany owning ocean going ships as follows:
(1) Outside the territorial waters of India for 183 days
(2) Inside the territorial waters of India for 183 days.
Is he considered to be resident or not for the Assessment Year 2000–01 (Previous year 1999–2000).Comment.
(ii) In the following cases State the head of Income under which the receipt is to be assessed and comment
(1) X Let out his property to Y. Y sublets it. How is Subletting receipt is to be Assessed in the hands of Y.
(2) X has build a house on a leasehold Land. He has let–out the above property and claims Income from House Property under “Other sources” and deducted expenses on repairsecurity charges, Insurance and collection charges in all amounting 40% of receipts.
(3) Z uses his property his own business can be claim depreciation.
(iii) Discuss the allowability of the following:
(1) Rajan has to pay to a Hospital for treatment Rs. 42,000 and spent nothing for Life Insurance or for Maintenance of Handicapped dependent.
(2) Rajan has incurred for treatment Rs. Nil in the previous year and deposited Rs. 25,000 with LIC for maintenance of handicapped dependants.
(3) Rajan has incurred Rs. 20,000 for treatment and Rs.25,000 was deposited with LIC for maintenance of handicapped dependants.
2. (First Alternative)
(a) For the Asst. year 2002-03, the Gross Total Income of Mr. Chaturvedi was Rs. 1,68,240 which includes Long term Capital gain of Rs. 45,000 and Short term Capital gain of Rs. 8,000. The Gross total Income also includes interest income from Banks of Rs. 12,000. Mr. Chaturvedi has invested in PPF Rs. 60,000 and also paid a medical insurance premium Rs. 11,000. Mr. Chaturvedi also contributed Rs. 15,000 to Public Charitable Trust eligible for deduction U/S 80G. Compute the total income and tax there on of Mr. Chaturvedi, who is 70 years old as on 31.3.2001. 12 (0)
(b) What is Profit in lieu of Salary and under what head this is chargeable to tax? 3 (0)
2. (Second Alternative)
(a) Mr. A, a senior citizen, has furnished the following particulars relating to his House Properties:
House I House II
Nature of occupation Self occupied Letout
Municipal Valuation Rs. 60,000 Rs. 1,20,000
Fair Rent Rs. 90,000 Rs. 1,50,000
Standard Rent Rs. 75,000 Rs. 90,000
Actual Rent per month — Rs. 9,000
Municipal Taxes paid Rs.6,000 Rs.12,000
Interest on Capital Borrowed Rs. 70,000 Rs. 90,000
Loan for both Houses were taken on 1.4.1998. House II was remained vacant for 4 months.
Besides the above two houses, A has inherited during the year an old house from his grand father. Due to Business commitments, he sold the house immediately for a sum of Rs.250 lakhs. The house was purchased in 1960 by his grand father for a sum of Rs.2.00 lakhs. However the fair market value as on 1.4.1981 was Rs.20.00 lakhs. With the sale proceeds, A purchased a new house in March, 2002 for a sum of Rs.100 lakhs and the balance was used in his business.
The other Income particulars of Mr. A besides the above are as follows (A.Y. 2002–03)
Business Loss Rs. 2.00 lakhs
Income from other sources (Bank Interest) Rs. 1.00 lakh
Investments made during the year PPF Rs. 70,000
ICICI Infrastructure Bone Rs. 30,000
Cost of Inflation Index A.Y. 2002-03 426
Compute total Income of Mr. Y and his tax liability for the Asst. year 2002–03
(b) Discuss the Tax liability of Arrears of Rent. 3 (0)
3. Discuss the following with regard to: 3×6=18
(a) Discuss the provisions of 44 AB Audit under the Income – tax Act, 1961. (0)
(b) When the Dividend Income would be taxed in the hands of a Shareholder. (0)
(c) Discuss the Revision of order U/S 264 of the Income – tax Act. (0)
4. Write short notes on any three of the following: 3×6=18
(a) Set off and carry forward of Losses under Capital Gain (0)
(b) Appeallable orders before Commissioner of Appeals (0)
(c) Defective Returns (0)
(d) Valuation of Inventory U/S 145A of the Income – tax Act. (0)
5. (a) What are the different forms used in Central Sales Tax? state, when and what purpose they are to be used? (briefly in two/three sentences for each form). 7 (0)
(b) X sells his land along with the standing crops and Tress for Rs. 20 lakhs. Sales TaxOfficer wants to assess for Sales Tax the value of standing Crops and Trees. Comment. 2 (0)
(c) X of Kolkata Sells goods to Y of Chennai and delivers the same at Kolkata to MKS Transport. The Lorry receipt was sent to Y by Post. While Goods were in transit, Y Sells the Goods to Z of Vijayawada by making an endorsement of LR and Goods were diverted to Vijayawada. Is the Second Sale between Y and Z chargeable to tax? 2 (0)
(d) D of Delhi comes to Hyderabad and purchased certain chemicals and transported them in his own name to Delhi. Is the Sale chargeable to Central Sales Tax? 2 (0)
(e) When is a duplicate certificate of Registration issued and how? 2 (0)
6. State with reasons whether the following are True/False under CST Act: 5×2=10
(a) Charity or Dharmada Collected by dealer will not form part of Sale Price (0)
(b) Packing charges realised by the dealer was an integral part of Sale price. (0)
(c) Sale of Bundles of old newspaper as Waste papers, are exempt. (0)
(d) ‘Goods’ include Shares and Securities. (0)
(e) There is no benefit for a person to purchase the Goods from a registered dealer. (0)