{"id":22718,"date":"2013-03-02T12:56:06","date_gmt":"2013-03-02T07:26:06","guid":{"rendered":"http:\/\/www.kopykitab.com\/blog\/?p=22718"},"modified":"2021-08-17T11:07:39","modified_gmt":"2021-08-17T05:37:39","slug":"icai-exam-papers-direct-tax-laws-nov-2011","status":"publish","type":"post","link":"https:\/\/www.kopykitab.com\/blog\/icai-exam-papers-direct-tax-laws-nov-2011\/","title":{"rendered":"ICAI Exam Papers Direct Tax Laws Nov 2011"},"content":{"rendered":"

ICAI Exam Papers Direct Tax Laws Nov 2011<\/strong><\/p>\n

CA Final – Group II : Direct Tax Laws – November 2011<\/strong><\/p>\n

This Paper has 24 answerable questions with 0 answered.<\/strong><\/p>\n

Total No. of Questions \u2014 7] [Total No. of Printed Pages \u2014 11<\/strong>
\nTime Allowed : 3 Hours Maximum Marks : 100<\/strong><\/p>\n

Answers to questions are to be given only in English except in the case of candidates who\u00a0<\/em><\/p>\n

have opted for Hindi Medium. If a candidate has not opted for Hindi medium, his\/her answers
\nin Hindi will not be valued.
\nWorking notes should form part of the answer.
\nQuestion No. 1 is compulsory.
\nAnswer any five Questions from the remaining six questions.
\nMarks
\n1. (a) Jyoti Education Centre, a charitable institution registered under section 12AA of the Income\u2013tax Act runs schools for primary and secondary education. The following particulars pertaining to the previous year 2010\u201311 are furnished to you by the institution:
\n(Rs. in lakh)
\n(i) Gross Receipts from students towards admission
\nfees, tuition fees, development fees, laboratory
\nfees, etc. 152.75
\n(ii) Dividend received on units of mutual funds
\nspecified in section 10(23D). 16
\n(iii) Donations received (including anonymous
\ndonation 2.50 lakh). 10.50
\n(iv) Grant from State Government. 7.25
\n(v) Amount applied for purposes of schools. 90.60
\n(vi) Purchase of computers and laboratory equipments. 21.40
\n(vii) Included in (v) above, a sum of Rs.3.50 lakh, being
\nthe amount applied for the benefit of the founder
\nof the institution.
\n(viii) The institution had accumulated Rs.20 lakh under
\nsection 11(2) in the previous year 2007\u201308 for a
\nperiod of two years for acquiring and developing a
\nplot of land for construction of a new school. Land
\nwas purchased for Rs.15 lakh and development was
\nmade at a cost of Rs.2 lakh in the previous year 2010\u201311.
\n(ix) Excess of expenditure over income in the previous
\nyear 2009\u201310. 35
\nCompute total income of the institution and tax payable by it for the Assessment Year 2011\u201312. 10 (0)
\n(b) A. Limited engaged in manufacturing activity has the following immovable properties as on 31st March, 2011. State, with reasons,whether the assets are chargeable to wealth tax as on the valuation date 31st March, 2011.
\n(i) A plot of agricultural land in Chennai acquired on 1st January, 2009 for conversion into non\u2013agricultural land to be used for opening a new factory. The approval of the Tamil Nadu State Government for conversion into industrial land was obtained on 1st November, 2010. The development activity for conversion was in progress on 31stMarch, 2011.
\n(ii) A building is under construction at Coimbatore. The said building after construction will be used partly for accommodating senior executives each having annual salary exceeding Rs.5 lakh and partly as guest house.
\n4 (0)
\n(c) Madhav, a child artist acting in laughter shows accumulated a wealth of Rs. 25 lakh over a short span of time. The same was put into securities by his mother, who is also the guardian. The securities were sold in 2010\u201311 resulting in capital gain of Rs. 10 lakh, which was invested in a plot of land in urban area. The Assessing Officer proposes to include the value of the land in computation of net wealth of the mother under section 4(1) on the valuation date. Is the proposition of the Assessing Officer justified in law? 3 (0)
\n(d) “The rules laid down in Schedule III to the Wealth\u2013tax Act are not binding on the Valuation Officer.” Examine the correctness of the statement. 3 (0)
\n2. XYZ Private Limited is engaged in manufacturing and selling ceramic tiles. The net profit of the company as per its Profit & Loss Account for the year ended 31stMarch, 2011 is Rs. 150 lakh after debiting or crediting the following items:
\n(i) One\u2013time license fee of Rs. 20 lakh paid to a foreign company for obtaining franchise on 1stJune, 2010.
\n(ii) Rs. 29,000 paid to A & Co., a goods transport operator in cash, on 31stJanuary, 2011 for distribution of the company\u2019s products to its warehouse.
\n(iii) Rent of Rs. 6 lakh received from letting out a part of its office premises. Municipal tax in respect of the said part of the building amounting to Rs. 15,000 remains unpaid.
\n(iv) Rs. 2 lakh, being contribution to a University approved and notified under section 35(1)(ii).
\n(v) Rs. 3 lakh, being loss due to destruction of a machinery caused by a fire due to short circuit. The Insurance Company did not admit the claim of the company.
\n(vi) Rs.4 lakh and Rs. 1 lakh being amounts waived by a bank out of principal and arrear interest respectively in an one\u2013time settlement. The loan was obtained for meeting working capital requirement four years back.
\n(vii) Rs. 1 lakh, being amount payable to a contractor (who does not have Permanent Account Number) for repair work at the company\u2019s factory. Tax of Rs. 2,000 was deducted and paid in time.
\n(viii) Dividend of Rs. 0.10 lakh from P.Limited on 1000 equity shares of Rs. 10 each purchased at Rs. 100 per share on 10th October, 2010; The rate of dividend declared is 100%, the record date being 1stDecember, 2010. The shares were sold on 1st March, 2011 at Rs. 80 per share. Loss of Rs. 0.20 lakh has been debited to Profit & Loss Account.
\n(ix) Depreciation on tangible fixed assets Rs. 1 lakh
\nAdditional Information:<\/em><\/p>\n

(i) Depreciation on tangible fixed assets as per Income\u2013tax Rules Rs.1.75 lakh.
\n(ii) The company has obtained a loan of Rs. 2 lakh from ABC Private Limited in which it holds 16% voting rights. The accumulated profits of ABC Private Limited on the date of receipt of loan was Rs. 0.50 lakh.
\nCompute total income of XYZ Private Limited for the Assessment Year 2011\u201312 indicating reasons for treatment of each item. Ignore the provisions relating to minimum alternate tax.<\/p>\n

16 (0)
\n3. (a) A partnership firm consisting of three partners X, Y, and Z is engaged in the business of manufacturing and selling toys.
\nTurnover of the business for the year ended 31st March, 2011 amounts to Rs. 55 lakh.
\nBad debts written off in the books are Rs. 75,000.
\nInterest at 12% is provided to partner, Z on his capital of Rs. 6 lakh as authorized by the partnership deed.
\nThe firm had business loss of Rs. 50,000 and unabsorbed depreciation of Rs. 1,50,000 carried forward from Assessment Year 2010\u201311. The firm did not pay tax under presumptive tax system in assessment year 2010\u201311. The firm opts for presumptive taxation under section 44AD for Assessment Year 2011\u201312.
\n(i) Compute the income of the firm chargeable under the head “profits and gains of business or profession”.
\n(ii) What would be the liability for interest under section 234B and 234C, if the firm has not paid any advance tax?
\n7 (0)
\n(b) Mr. X transferred his residential house to Y for Rs. 10 lakh on 1st April, 2010. The value of the said house as per Stamp Valuation Authority was Rs. 16 lakh. Mr. Y is a childhood friend of Mr. X.
\nMr. X gifted a plot of land (purchased by him on 1st August, 2007) to Mr. Y on, 1st July, 2010. The value as per Stamp Valuation Authority is Rs. 8 lakh. Mr. Y sold the land on 1st March, 2011 at Rs. 14 lakh.
\nCost Inflation Index\u2013 2007\u201308: 551; 2010\u201311: 771.
\nCompute the income of Mr. Y chargeable under the heads “Capital Gains” and “Income from other sources” for Assessment Year 2011\u201312. 5 (0)
\n(c) JJ Limited, a company incorporated in Australia has entered into an agreement with KK Limited, an Indian company for rendering technical services to the latter for setting up a fertilizer plant in Orissa. As per the agreement JJ Limited rendered both off\u2013shore services and on\u2013shore services to KK Limited at fee of Rs. 1 crore and Rs. 1.5 crore respectively. JJ Limited is of the view that it is not liable to tax in India in respect of fee of Rs. 1 crore as it is for rendering services outside India. Discuss the correctness of the view of JJ Limited. 4 (0)
\n4. Attempt any four questions out of the following questions: 4×4=16
\n(a) Rajesh regularly files his return of income electronically. While he was trying to upload his return of income for assessment year 2010\u201311 on 31stJuly, 2010, last date for filing the same, he found it extremely difficult to do the same due to network problems and ultimately he became successful in making e\u2013filing of , his return only at 1 A.M. on 1st August, 2010. The return contained a claim for carry forward of business loss of Rs. 11akh. This circumstance was recorded in a letter delivered to the office of the Deputy Commissioner of Income Tax on 1st August, 2010 during normal office hours. Rajesh made a request to the CBDT for condonation of delay in filing the return of income.
\nDiscuss whether the CBDT has the power to condone the delay in filing the return of income and permit carry forward of loss in the given circumstance. (0)
\n(b) PQR Limited has written off certain debts as bad debts in the books of account and claimed deduction under section 36(1)(vii) in the return of income filed for Assessment Year 2011\u201312. The Assessing Officer made disallowance for deduction of bad debts on the ground that the debts have not been established to have become irrecoverable and bad in the previous year 2010\u201311.
\nExamine the correctness of the action of the Assessing Officer. (0)
\n(c) MNO Limited is engaged in manufacturing activities. It received liquidated damages of Rs. 10 lakh from supplier of machinery due to delay in supply of machinery. State, with reasons whether or not the income by way of liquidated damages is assessable as income from business. (0)
\n(d) ABC JET Limited, an airline company pays landing and parking charges to the Airports Authority of India. Discuss whether the company is required to deduct tax at source from such payment. (0)
\n(e) ABC Limited has claimed exemption on the income from long\u2013term capital gains under section 54EC by investing in bonds of National Highway Authority of India within the prescribed time. In the computation of “book profit” under section 115JB, the company claimed exclusion of long\u2013term capital gains because of exemption available on it by virtue of section 54EC. The Assessing Officer reckoned the book profit including long\u2013term capital gains for the purpose of levy of minimum alternate tax payable under section 1I5JB.
\nIs the action of the Assessing Officer justified in law? (0)
\n5. (a) Explain the term “Bilateral Relief” in the context of Double Taxation Avoidance Agreement. 4 (0)
\n(b) Ajay, a non\u2013resident Indian has the following sources of income in India during the previous year 2010\u201311:
\nParticulars Rs.
\ni. Income from house property
\nlocated in India (computed) 1,80,000
\nii. Dividend from Indian Companies 75,000
\niii. Interest on debentures of Indian
\ncompany (Subscribed in
\nconvertible foreign exchange)
\nLess: Interest on loan taken for
\npurchase of debentures.<\/p>\n

1,00,000<\/p>\n

20,000<\/p>\n

80,000
\niv. Long\u2013term capital gains on sale of
\ndebentures subscribed in US $:
\nCost in 2002\u201303
\nSale in 2010\u201311<\/p>\n

Less: Commission to brokers<\/p>\n

4,00,000
\n6,00,000
\n2,00,000
\n6,000<\/p>\n

1,94,000
\nCost Inflation Index : 2002\u201303\u2013 447; 2010\u201311\u2013 711.
\nCompute tax payable by Ajay for Assessment Year 2011\u201312, if he opts for the provisions of Chapter XII\u2013A of the Income\u2013tax Act. 6 (0)
\n(c) State the consequences that would follow if the Assessing Officer makes adjustment to arm\u2019s length price in international transactions of the assessee resulting in increase in taxable income. What are the remedies available to the assessee to dispute such adjustment? 6 (0)
\n6. (a) The Assessing Officer within his jurisdiction surveyed a popular Cyber Cafe at 12\u20190 clock in night for the purpose of collecting information which may be useful for the purposes of the Income\u2013tax Act. The Cyber Cafe is kept open for business every day between 2 P.M. and 2 A.M. The owner of the Cyber Cafe claims that the Assessing Officer could not enter the cafe in late night. The Assessing Officer wanted to take away with him the books of account kept at the Cyber Cafe. Examine the validity of the claim made by the owner and the proposed action of the Assessing Officer. 4 (0)
\n(b) The Assessing Officer issued a notice under section 142(1) on the assessee on 24th December, 2010 calling upon him to file return of income for Assessment Year 2010\u201311. In response to the said notice the assessee furnished a return of loss and claimed carry forward of business loss and unabsorbed depreciation. State whether the assessee would be entitled to carry forward as claimed in the return. 4 (0)
\n(c) The regular assessment of MNO Ltd. for the Assessment Year 2009\u201310 was completed under section 143(3) on 13th March, 2011. There was an audit objection by the Revenue Audit team that interest on loan should be disallowed partly as there was diversion of borrowed fund to sister concern without charge of interest.
\nBased on the above facts:
\n(i) Sate, with reasons, whether the Assessing Officer can issue notice under section 148 on the basis of audit objection of the Revenue Audit team.
\n(ii) If the action stated in (i) above is not permitted, what is the option open to the Revenue Department to deal with the said audit objection ?
\n5 (0)
\n(d) Discuss the correctness or otherwise of the following statements with reference to the provisions of the Income\u2013tax Act:
\n(i) An appeal before Income\u2013tax Appellate Tribunal cannot be decided in the event of difference of opinion between the Judicial Member and the Accountant Member on a particular ground.
\n(ii) A High Court does not have an inherent power to review an earlier order passed by it on merits.
\n3 (0)
\n7. (a) Ms. Madhvi, a resident individual and self\u2013employed industrial designer, furnished the following particulars for the year ended 31\u201303.2011 :
\nRs.
\ni. Gross total income. 5,00,000
\nii. Housing loan principal repayment. The
\nproperty is under construction at Jaipur as on
\n31\u201303\u20132011. 1,10,000
\niii. Principal repayment of housing loan from a
\nrelative. This property is self\u2013occupied situated
\nat Jodhpur. 50,000
\niv. Contribution to Public Provident Fund in the
\nname of her mother. 70,000
\nv. She deposited Rs. 5,000 per month in her
\naccount under a pension scheme notified by
\nthe Central Government.
\nCompute total income of Ms. Madhvi for Assessment Year 2011\u201312 stating reasons for the deduction eligible under appropriate provisions of Chapter VI\u2013A. 5 (0)
\n(b) A sum of Rs. 60,000 was paid to Mr. Dastur, an advocate on 1st July, 2010 towards fees for his professional services without deducting tax at source. Later on, a further sum of Rs. 70,000′ was due to him on 27th February, 2011 from which tax of Rs. 13,000 was deducted at source. The tax so deducted was deposited on 25thJune, 2011. Compute interest payable by the deductor under section 201(1A). 5 (0)
\n(c) Explain whether there is conflict between accounting standards and provisions of the Income\u2013tax Act in respect of the following: 3×2=6
\n(i) Effect of fluctuation in foreign currency rates where a capital asset is imported by a company. (0)
\n(ii) Permanent fall in value of long\u2013term investments held by a company. (0)\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

ICAI Exam Papers Direct Tax Laws Nov 2011 CA Final – Group II : Direct Tax Laws – November 2011 This Paper has 24 answerable questions with 0 answered. Total No. of Questions \u2014 7] [Total No. of Printed Pages \u2014 11 Time Allowed : 3 Hours Maximum Marks : 100 Answers to questions are … Read more<\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":""},"categories":[4731,120],"tags":[],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/22718"}],"collection":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/comments?post=22718"}],"version-history":[{"count":1,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/22718\/revisions"}],"predecessor-version":[{"id":115906,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/22718\/revisions\/115906"}],"wp:attachment":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media?parent=22718"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/categories?post=22718"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/tags?post=22718"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}