CA PE II question Papers Group II
Income Tax and Central Sales Tax November 2004
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
(i) Smt. Savita Rani born on 01.07.1938. She is a Deputy Manager in a Company in Mumbai. She is getting a monthly salary and D.A. of Rs. 45,000 and 12,000 respectively. She also gets a House Rent Allowance of Rs. 6,000 per month. She is a member of Recognised P.F. wherein she contributes 15% of her salary and half D.A. Her employer also contributes an equal amount.
(ii) She is living in the house of her minor son in Mumbai.
(iii) During the previous year 2003-2004 her minor son has earned an income of Rs. 30,000 (computed) as rent from a House Property, which had been transferred to him by Smt. Savita Rani without consideration a few years back.
(iv) During the previous year 2003-2004 she sold Government of India Capital Indexed Bonds for Rs. 1,50,000 on 30.09.2003, which are purchased on 01.07.2000 for Rs. 80,000 (Cost inflation index-F.Y. 2000-2001–406 and for the F.Y. 2003-2004–463)
(v) Her employer gave her an interest free loan of Rs. 1,50,000 on 01.10.2003 to one of her son’s wife for the purchase of an Alto Maruti Car. Nothing has been repaid to the company towards the loan.
(vi) During the previous year 2003-2004 she paid Rs. 15,000 by cheque to GIC towardsMedical Insurance Premium of her dependent mother.
Compute the taxable income and tax liability of Mrs. Savita Rani for the A.Y. 2004-2005.
(b) Mr. Tony had estates in Rubber, Tea and Coffee. He derives income from them. He has also a nursery wherein he grows plants and sells. For the previous year ending 31.3.2004, he furnishes the following particulars of his sources of income from estates and sale of Plants. You are required to compute the taxable income for the Assessment year 2004-2005:
(i) Manufacture of Rubber 5,00,000
(ii) Manufacture of Coffee grown and cured 3,50,000
(iii) Manufacture of Tea 7,00,000
(iv) Sale of Plants from Nursery. 1,00,000
(c) A Proprietory Business was started by Smt. Rani in the year 2001. As on 1.4.2002 her capital in business was Rs. 3,00,000.
Her husband gifted Rs. 2,00,000, on 10.4.2002, which amount Smt. Rani invested in her business on the same date. Smt. Rani earned profits from her proprietory business for the Financial years 2002-2003, Rs. 1,50,000 and Financial year 2003-2004 Rs. 3,90,000. Compute the income, to be clubbed in the hands of Rani’s husband for the Assessment year 2004-2005 with reasons. 6 (0)
2. (First Alternative)
(a) State the special provisions in respect of certain undertakings or enterprises in certain special category states as laid down under Section 801C of the Act. 10 (0)
(b) Is it mandatory for an Assessee to claim depreciation under Section 32 of the Income – tax Act? 4 (0)
(c) Ownership itself is the criteria for assessment under the head income from house property. Discuss. 4 (0)
2. (Second Alternative)
(a) State the conditions to be fulfilled by an Amalgamated Company for carry forward of the Accumulated losses and Unabsorbed depreciation of the Amalgamating Company. 10 (0)
(b) State the provisions relating to the exemption in respect of long – term capital gains on transfer of listed Equity Shares. 4 (0)
(c) The Income – tax Act grants exemption from tax to political parties in respect of theirincome. The incomes so exempt be stated, as per the provisions of the Act. 4 (0)
3. (i) Mr. ‘X’ furnishes the following data for the previous year ending 31.3.2004:
(a) Equity Shares of AB Ltd., 10,000 in number were sold on 31.5.2003, at Rs. 350, for each share.
(b) The above shares of 10,000, were acquired by ‘X’ in the following manner:
(i) Received as gift from his father on 1.6.1980 (5,000 shares) the market price on 1.4.81 Rs. 50 per share.
(ii) Bonus shares received for AB Ltd. on 21.7.1984 (2,000 shares).
(iii) Purchased on 1.2.1993 at the price of Rs. 125 per share (3,000 shares).
(c) Purchased on residential house at Rs. 25 lakhs, 0n 1.9.2004 from the sale proceeds of shares.
(d) ‘X’ is already owning a residential house, even before the purchase of above house.
You are required to compute the taxable capital gain. He has no other source of incomechargeable to tax.
(Cost of Index–Financial year 1992-93 Rs. 223, Financial year 2003-2004 is Rs. 463.)
(ii) (a) Mr. A is provided with two cars, to be used official and personal work, by his employer ABC Ltd. The following information is available from the company records:
Car 1 Car 2
Cost of the Car 6,00,000 4,00,000
Running and maintenance (Borne by the company) 40,800 28,000
Salary of driver (Borne by the company) 24,000 24,000
The taxable monetary emoluments of Mr. A are Rs. 90,000 Compute the taxable ‘Perk’ in respect of Cars, on the assumption car 2, is exclusively used by ‘A’.
(b) A car purchased by S on 10.8.1999 for Rs. 3,25,000 for personal use is brought into the business of the assesses on 01.12.2003, when its market value is Rs. 1,50,000. Compute the actual cost of the car and the amount of depreciation for the Assessment year 2004-2005 assuming the rate of depreciation to be 20%. 4 (0)
4. Write short notes on any three of the following: 3×6=18
(i) Deduction in respect of Royalty income on patents. (0)
(ii) The term ‘Business connection’ under the Income – tax Act 1961. (0)
(iii) ‘Encashment of Earned Leave’ and its taxability under the Act. (0)
(iv) Special provision for full value of consideration in certain cases, in the context of capital gains liability. (0)
5. (i) Total interstate sale for the Financial Year 2003-2004 of X Ltd. is Rs. 1,50,70,000, which consists of the following:
4% CST sales 91,50,000
2% CST sales 59,20,000
Out of the goods sold for Rs. 1,50,000, on 16.7.2003 that were liable to CST @4%, goods worth Rs. 50,000 were returned on 12.12.2003 and goods worth Rs. 1,20,000 were returned on 01.2.2004. A buyer to whom goods worth Rs. 55,000 carrying 2% CST was despatched on 16.4.2003, rejected the goods and the same were received back on 15.11.2004. Compute the taxable turnover and tax liability of X Ltd., since all the relevant Forms have been received.
(ii) Write short notes on the following:
(a) Cancellation of the Certificate of the CST Act. 5 (0)
(b) Penultimate Sale of Export. 5 (0)
6. (i) State with reason, whether the following sales are liable for CST: 3×2=6
(a) Sale of bundles of Old Newspapers. (0)
(b) Sale of Electricity. (0)
(c) Sale of standing trees to be severed under the terms of Contract. (0)
(ii) Is the registration as a dealer, compulsory, under the CST Act? 4 (0)