CA PE II Question Papers Group II
Income Tax and Central Sales Tax November 2003
This Paper has 26 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) Mr. Murali provides the following information for the year ending 31–03–2003:
(i) Sales (Retail Trade in Garments) (no book of Accounts maintained) Rs. 32,00,000
(ii) Rent from house property at Chennai (per month) Rs. 10,000
(iii) Vacant site Lease Rent Rs. 12,000
(iv) Murali purchased 20,000 shares of X Co. Ltd., who declared 1 : 1 bonus on 1-01-2000
Murali sold 1,000 bonus shares in September, 2002 for Rs. 1,20,000.
(v) Received Rs. 50,000 on 12-02-03 being amount due from Mr. C relating to Electronic goods supplied by Murali’s father, which was written off as Bad debt by his father in A.Y.2001-02 and allowed as deduction. Murali’s father died in August, 2001.
(vi) Brought forward business loss relating to discontinued automobile business of Murali relating to A.Y. 2001-02. Rs.2,00,000
(vii) Brought forward depreciation relating to discontinued automobile business of Murali Rs. 1,50,000
(viii) Murali contributed Rs. 15,000 to Prime Minister’s National Relief Fund and Rs. 10,000 to Heritage Charitable Trust enjoying exemption u/s 80G.
Compute taxable income of Mr. Murali for the previous year ended 31-03-03. (A.Y. 2003-04).
(b) Gopichand Industries furnishes you the following information:
Block I Plant and Machinery (consisting of 10 looms)
Rate of depreciation 25%
Block II Building (consisting of 3 buildings)
Rate of depreciation 10%
Acquired on 5-07-02 —5 looms for 4,00,000
Sold on 7-12-02 —15 looms for 10,00,000
Acquired on 10-01-03 —2 looms for 3,00,000
Compute depreciation claim for the Assessment year 2003-04. 6 (0)
(c) Ms. Vimla sold a residential building at Jodhpur for Rs. 15,00,000 on 01-07-02.
The building was acquired for Rs. 1,50,000 on 01-06-96.
She paid brokerage @ 2% at the time of sale of the building. She invested Rs. 7 lakhs in purchase of a residential building in December, 2002 and deposited Rs. 2 lakhs in NABARD Capital Gains Bond in March, 2003.
Cost inflation index:
1996 — 97 305
2002 — 03 447
2. (First Alternative)
(a) Sri Hari is the General Manager of ABC Ltd. From the following details compute the taxable income for the Assessment year 2003-04:
Basic salary Rs. 20,000 per month
Dearness allowance 30% of basic salary
Transport allowance Rs. 2,000 per month
Motor car running and maintenance charges fully paid by employer Rs. 36,000
(The motor car is owned and driven by employee Hari. The engine cubic capacity is below 1.60 litres. The motor car is used for both official and personal purpose by the employee).
Expenditure on accommodation in hotels while touring on official duties met by the employers Rs. 30,000
Loan from recognized provident fund
(maintained by the employer) Rs. 40,000
Value of lunch provided by the employer during office hours. Cost to the employer Rs. 12,000
Residence telephone bill of Hari paid by the employer Rs. 15,000
Computer (cost Rs. 50,000) kept by the employer in the residence of Hari from 01-10-02
Hari made the following payments:
Medical insurance premium:Paid in cash Rs. 2,000
Paid by cheque Rs. 3,200
(b) Discuss about Rate of Rebate and quantum of Rebate u/s of the Income Tax Act, 1961. 4 (0)
2. (Second Alternative)
(a) Mr. A and B constructed their houses on piece of land purchased by them at New Delhi. The Built up area of each house was 1,000 sq. ft. Ground floor and an equal area in the First floor. A started construction on 1-04-01 and completed on 31-03-02. B started the construction on 01-04-01 and completed the construction on 30-06-02. A occupied the entire house on 01-04-02. B occupied the Ground floor on 01-07-02 and let out the First floor for a rent of Rs. 15,000 per month. However, the tenant vacated the house on 31-12-02 and B occupied the entire house during the period 01-01-03 to 31-03-03.
Following are the other informations:
(i) Fair Rental value of each unit (Ground floor/First floor) 1,00,000 per annum
(ii) Municipal value of each unit (Ground floor/First floor) 72,000 per annum
(iii) Municipal taxes paid by A — 8,000
B — 8,000
(iv) Repair and Maintenance charges paid by A — 28,000
B — 30,000
A has availed a housing loan of Rs. 20,00 lakhs @ 12% p.a. on 01-04-01. B has availed a housing loan of Rs. 12.00 lakhs @ 10% p.a. on 01-07-01. No repayment was made by either of them till 31-03-03. Compute Income from House Property for A and B for the previous year 2002-03 (A.Y. 2003-04).
(b) (i) Distinguish between Foregoing of Salary and Surrender of Salary. 2+2=4 (0)
(ii) An employee instructs his employer to pay a certain portion of his salary to a charity and claims it as exempt as it is diverted by overriding charge/title—Comment (0)
3. (a) Discuss briefly about Returns to be filed under Section 139(1) proviso; i.e. under Economic Criteria. 6 (0)
(b) When is an individual/HUF is said to be “Resident and ordinarily Resident” under theIncome Tax Act, 1961? 6 (0)
(c) Discuss about deductions in respect of remuneration for services rendered outside India u/s SORRA of the Income Tax Act, 1961. 6 (0)
4. (a) What are the transactions not regarded as transfer as per Sec. 47 under the Income Tax Act, 1961. (List at least six of such transactions). 6 (0)
(b) Self assessment tax u/s 140A of the Income Tax Act, 1961. 6 (0)
(c) Discuss about set off and carry forward of losses under the head Capital Gains. 5 (0)
5. Answer any five from the following with brief reasons whether they are True/False under CST Act: 5×2=10
(a) Both registered and unregistered dealers can collect tax under CST. (0)
(b) Cost of Freight separately charged in the invoice shall be deducted from Sale price. (0)
(c) Subsidy given by Government to manufacturers to Compensate Cost of Production will from part of Sale price. (0)
(d) All Directors of Private Company (present and past) are personally liable for any tax due under the CST Act. (0)
(e) Indian Railways which sells unclaimed/uncollected goods is a dealer. (0)
(f) “Goods” include Shares and Securities. (0)
(g) When goods are sent by VPP, the sale is said to take place in the State from where the parcel is sent. (0)
6. Answer the following as per the CST Act, 1956:
(a) Ansari and Co. transferred its goods from its factory at Cochin to its Branch at Mysore. Comment on the procedure to be adopted for branch transfer. 4 (0)
(b) ABC Ltd. is located in Special Economic Zone. It wants to know the concessions or benefits under the CST Act. Advise. 4 (0)
(c) Mr. A reports his turnover at Rs. 52,00,000 for the year ended 31-03-03. Also he reported that goods sold in March, 2003 have been returned by the customers to the value of Rs. 5,20,000 in May, 2003. He has not charged tax separately in the sale invoices. Assuming the tax rate @ 4% compute his tax liability under the Sales Tax Act. 4 (0)
(d) X of Mumbai books his goods by air to his Branch Office at London. Subsequently, he transfers the documents of title to the buyer at Scotland after the goods have crossed the Customs Frontiers of India. Is this a sale in the course of export. 4 (0)
X, an Export House of Delhi, first enters into a contract of sale with Y of New York, USA and subsequently purchases these goods from Z of Chennai for the purpose of export to Y of New York. Is the sale by Z to X (last sale before export) be termed as sale in the course of export? 4 (0)