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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI 600 034
B.Com.DEGREE EXAMINATION -COMMERCE
FIFTH SEMESTER APRIL 2018
CO 5504- INCOME TAX LAW AND PRACTICE
Date: 27-04-2018 Dept. No. Max. 100 Marks
Time: 09:00-12:00
SECTION- A
Answer all the questions (10x2=20)
1. What is previous year?
2. Who are considered as person under sec.2
3. Give any 5 partly exempted allowances.
4. What are the different types of provident funds?
5. What are the conditions to be fulfilled for the basis of charge in the case of house property?
6. Mention the 3 important factors to be taken for considering the expected rent.
7. Who is a professional? And give examples.
8. What do you mean by inadmissible expenses for a business?
9. What are self generated assets?
10. Who are the authorized persons to issue the security as per sec.18?
SECTION-B
Answer any FOUR from the following (4x10=40)
11. Explain the canons of taxation
12. Write the rules for the determination of residential status of an individual
13. Compute the taxable income of Mr.RangaRao for the assessment year 2017-18 from the following, if he
is resident, not ordinarily resident and c)non-resident
Incomes

Salary received in India for 3 months
Income from the house rent
Interest from bank deposit in India
Past untaxed profit earned in Austria brought during the previous year 2016-17
Income from agriculture in China being invested in India
Income from Burma being controlled from Chennai
Dividend of French company
90,000
1,34,700
10,000
2,00,000
1,23,500
1,01,500
2,30,000
14. Discuss the residential status of an individual in case of
Resident
ii) Ordinary resident
iii) Non-resident
b)Mr.Windey is a German. During the financial year2016-17 he was in India for 120 days. Determine
his residential status for the assessment year 2017-18 on the assumption that during the financial years
2003-04 to 2015-2016 he was present in India as follows:
Year
Days
year
Days
Year
days
2003-04
25
2007-08
16
2011-12
150
2004-05
289
2008-09
28
2012-13
59
2005-06
270
2009-10
30
2013-14
59
2006-07
20
2010-11
50
2014-15
182
And 2015-16=182 days
15. X has given the following information of residential house property situated at Delhi.
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Details
Date of transfer
July 10, 2016
Date of purchase
October 1984
Sale consideration
18,00,000
Stamp duty valuated on sale consideration
20,00,000
Cost of acquisition
50,000
Expense of transfer
10,000
To get the exemption under section 54, the following residential house properties are purchased by X at Noida
Date of acquisition
December 20, 2016
Cost of acquisition
12,00,000
X transfers his house properties at Noida as follows
Sale consideration
12,90,000
Stamp Duty value
13,20,000
Date of transfer
April 10, 2018
Find out the capital gain chargeable to tax in the hands of X for different assessment years.
Note: CII 1984-1985 125, 2016-2017 1125.
16. Mr.Nagarjuna is the owner of 2 houses. In respect of theses he has furnished the following particulars:
Particulars
House I
House II
Date of completion of construction
Municipal rent
Actual rent
Municipal tax
Ground rent
Interest on loan taken for the construction
31st March 2002
3,60,000
3,00,000
36,000
1,000
50,000
1st July 2006
6,00,000
60,000 P.m
30,000
7,800
1,82,000
Compute his income from house property for the assessment year 2017-18. Out of the municipal taxes
of House I Rs.18,000 paid by Miss.Devi who is the tenant.
17.Mr. Dinesh Yadav is a lawyer practicing Hyderabad. His cash is as follows:
Receipts
Rs.
Payments
Rs.
To balance
Fees
Remuneration as examiner
Interest on bank deposits
Rent from house property
Dividends
50,000
3,50,000
30,000
25,000
80,000
16,000
By rent of chamber
Car expenses
House hold expenses
Local tax for the house
Repairs of the house
LIC premium for self
Cost of journals
Medical treatment for self
Balance
24,000
36,000
1,20,000
12,000
40,000
48,000
40,000
50,000
1,81,000
Total
5,51,000
5,51,000
Additional information:
of the house is used by Mr. Yadav for his own residence.
b)Mr.Yadav is insured for Rs.4,00,000
c)Mr. Yadav has to get medical treatment for an eye ailment caused by consistence study of law books.
of the car expenses relate to personal use of the car by Mr.Dinesh.
depreciation computed at the prescribed rate on the diminishing value method of the car Rs.20,000.
Compute his income from profession.
SECTION
Answer any Two questions (2x20=40)
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18. Miss.Susmitha is employed in Kolkatta with a mercantile firm as HR manager. From the undernoted
particulars, compute his taxable income for the assessment year 2017-18.
Basic salary Rs.50,000 x 12= 6,00,000
b)DA at 20% of the basic salary but only10% of salary is eligible for service benefits.
Incentive commission at of the sales achieved by him but not exceeding 50% of monthly salary of
Rs.50,000. The turnover achieved by him for the relevant previous year before charging the said
commission was Rs.34,56,000.
d)Miss. Susmitha contribution to the recognized provident fund of the firm is Rs.1,20,000 for the year and
his employer also contributes an equal amount.
Interest credited to provident fund at the rate of 14% P.a amounted to Rs.8,400
f)The employer has provided to Miss.susmitha whose rent of Rs.14,000 per month is paid to the owner by
employer. Cost of furniture provided is 2,00,000.
She is provided with a motor car of not more than1.6 ltrs. Rating which she uses for both private and
official purposes. Drivers salary of Rs.2,500 P.m. is paid by the employer. she is also provided with a
gardener and watchman whose salary was Rs.1,200 per month and Rs.1,400 per month.
During the relevant previous year she purchased books worth Rs1,600 for his office work.
She also has been getting entertainment allowance of Rs.16,000 per year from the same employer.
Her son is a medical student of Kolkatta medical college and she spent Rs.4,000 for his studies as college
tuition fees.
According to the terms of appointment her employer contributes a sum of Rs.12,000 per year to an
approved superannuation fund on his account.
During the previous year Miss. Susmitha paid the following life insurance premium.
a)on a policy of Rs.1,20,000 on her own life with LIC-Rs.24,000
b)with Max India Insurance Co. on a policy of Rs.1,00,000 on her husband's life-Rs.24,000
professional tax paid by her Rs.3,000 and Income tax paid by her employer is Rs.8,000
19.Mr.XavierRajan (29 years)furnishes the following information relevant for the assessment year 2017-18
and following is the profit and loss account for the year ended 31 March 2017
Particulars
Rs.
Particulars
Rs.
To office expenses
Sundry expenses
Entertainment expenses
Audit fees
Legal charges
Extension of building
Depreciation on plant and machinery
Salary to staff
Bonus
Employees RPF
Un approved gratuity fund
Sales tax
Provision for sales tax
Donation to approved research centre
Net profit
45,000
39,000
5,000
12,000
4,000
6,000
23,000
43,000
36,000
15,000
4,000
38,000
25,000
19,000
5,82,600
By gross profit
Sundry receipts
Bad debts recovered (not allowed as deduction earlier)
Customs duties recovered from the government (earlier allowed as deduction)
Gift received from father
8,03,000
11,000
7,100
32,500
43,000
Total
8,96,600
8,96,600
Other information:
i)As shown in the profit and loss account Rs.19,000 is paid to a scientific research association for the
purpose of carrying on approved scientific research in natural science not related to the business of
Mr.Xavierrajan. Besides He purchases a plant of Rs.30,000 for the purpose of carrying on scientific
research related to his business. Neither cost of plant nor depreciation thereon is debited to profit and loss
account.
ii)Out of bonus of Rs.36,000, Rs.4,000 is paid during 2016-17 andRs.26,000 is paid by July 31 2017(being
the due date of furnishing return of income). The balance of Rs.6,000 is however, paid on
November 11 2017.
iii) Depreciation on plant and machinery and extension of building as per income tax provision is Rs.19,000.
iv) Sales tax of Rs.38,000 includes a)interest for late payment of sales tax Rs.1,200 b)penalty for evading
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sales tax Rs.10,000
Provision for sales tax represents an outstanding sales tax liability, which is however, paid on
July 10 2017.
vi) Salary to staff includes a payment of pension of Rs.5,000 to the widow of former employee.
Ascertain the net income and tax liability of Mr.Xavierrajan for the assessment year 2017-18, assuming
that he deposits Rs.20,000 in PPF account during the previous year 2016-17 and his income from other
sources is Rs.1,06,000.
20. Mr.Rajan owns 3 houses 2 of which are self occupied, the particulars of which are as under
Particulars
House I
House II
House III
Municipal value
Fair rental value
Standard rent
Actual rent
Repairs
Insurance
Municipal taxes
80,000
82,000
Nil
Nil
10,000
6,000
5,000
1,20,000
1,30,000
1,10,000
Nil
20,000
7,000
10,000
2,50,000
2,20,000
2,30,000
2,00,000
5,000
3,000
15,000
Interest on money borrowed for repairs of the property II is Rs.50,000 Find out the net income from the
house property.
21. The following particulars of Mr.Johnson for the previous year ended 31st March 2016 compute his total
income for the assessment year 2017-2018.
Particulars
Amount
Directors' fee from accompany
Interest on bank deposits
Income from undisclosed sources
Winnings from lotteries'
Royalty on book written by him
By giving training programme
Interest on loan given to his friends
Interest on tax free debentures of a company(listed in a recognized stock exchange net
Dividend on shares
Interest on post office savings bank account
Interest on government securities
A sum of rupees received as gift on 1-8-10 from a friend
A sum of rupees received as gift on 1-10-10 from his sister
10,000
3,000
12,000
82,200
8,000
5,000
7,000
3,560
6,400
500
2,200
26,000
50,000
He paid Rs. 200for collection of dividend and Rs.1,000 for typing the manuscript of book written by him
He also had the following transaction:
1. House property purchased for Rs.6,00,000 (stamp duty value:6.5 lakh)
2. Plot of land purchased for Rs. 7,00,000 (stamp duty value lakh).