M.Com. DEGREE EXAMINATION, APRIL 2016
Third Semester
Commerce
INCOME TAX LAW AND TAX PLANNING
(2012 onwards)
Time 3 Hours Maximum 75 Marks
Section A 3 15)
Answer all questions.
All questions carry equal marks.
1. State the scope of total income.
2. What deductions are allowed from the annual value in
computing taxable income from house property?
3. Write note on "Exempted capital gains".
4. State the provisions for setting of losses in respect of
speculation business.
5. Write note on "Income Escaping Assessment".
Section B 10 50)
Answer all questions choosing either or
All questions carry equal marks.
6. Describe the difference among the capital receipts,
capital expenditure, revenue receipts and revenue
payments.
Or
Explain any ten incomes which are totally exempt
from income tax.
Sub. Code
611304
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7. Miss. Sumitha is employed with a software
company at Hyderabad. She received following
incomes during the year ending 31.3.2014.
Calculate her income from salary.
Basic salary . 15,000 p.m
D.A. (forming part of pay for superannuation
benefits) 30% of basic salary.
She gets house rent allowance at the rate of
. 2,000 p.m.
She is provided with a car of 1.5 lt. Capacity engine
with driver which was used partly for official and
partly for private purposes.
The employer also paid her health club expenses
amounting to . 7,000
Ration bill of employee paid by the employer
. 20,000
She was provided with air ticket by her employer
for her private journey . 3,000
She took advance salary of 2 months.
She contributes 20% of salary to a recognised
provident fund and her employer contributes the
same
City compensatory allowance provided to her
. 1,500 p.m
She made a purchase of . 15,000 from her credit
card, the company provided the same.
Or
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Mr. Basu of Kolkata submits the following
particulars of his let out residential house. Rent
received for house as well as for various amenities
provided to the tenant
.
For house 6,000 p.m
For lift maintenance 500 p.m
For security charges 500 p.m.
For electricity and water 1000 p.m
Municipal Valuation 70,000 p.a.
Fair Rental value 56,000 p.a
Standard Rent 60,000 p.a.
Municipal Taxes to be
paid by tenant of
MRV)
Repairs expenses met by
tenant
5,000
Insurance premium paid by
Mr. Basu
1,000
Annual Charge imposed by
Court in favour of his
mother
10,000 p.a
Interest on loan taken in
2008 for the renovation of
the house
20,000 p.a.
In 2008-09 a tenant defaulter in the payment of
rent to the tune of . 36,000, but Mr. Basu could
claim a deduction of . 26,000 only in the previous
year 2011-12. After a long litigation Mr. Basu could
recover from the tenant only . 20,000 during the
previous year 2013-14. Mr. Basu spent . 16,000
only to provide the above mentioned amenities to
the tenant. Compute Mr. Basu's income from house
property and any other income for the Assessment
Year 2014-15.
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8. From the following statement, compute the income
from profession of Dr. S.Kapoor if accounts are
maintained on mercantile system
. .
To Dispensary rent 36,000 By Visiting fees 45,000
To Electricity and water
charges 6,000 By Consultation
fees 1,25,000
To Telephone expenses 6,000 By Sales of
medicine 72,000
To Salary to nurse and
compounder 36,000 By Dividends 5,000
To Depreciation on surgical
equipment 6,000
To Purchase of medicine 36,000
To Depreciation on
X-ray machine 2,000
To Income tax 5,500
To Donation to Rama
Krishna Mission 6,000
To Motor car expenses 9,600
To Depreciation on car 4,800
To Net income 93,100
2,47,000 2,47,000
Note
Electricity and water charges include domestic
bill of . 2,500.
Half of motor car expenses are for professional
use.
Telephone expenses include 40% for personal
use.
Opening stock of medicine was . 6,000 and
closing stock . 4,000.
Or
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Mr. X owns a residential house at Bangalore. From
the following information compute the amount of
capital gains.
.
Cost of construction (during 94-95) 4,00,000
Cost of additions and improvements (during
97-98)
2,00,000
Sale consideration (sale made on 10.10.2013) 29,00,000
Expenses o transfer 20,000
Cost of new house purchase in Hyderabad (on
15.l.2014) (House is half finished)
5,00,000
Amount deposited in capital gain deposit
scheme in SBI on 25-7-2014. An amount of
. 2,00,000 withdrawn from capital gain
deposit scheme on 12th May 2016 and utilized
for the completion of the house. Cost inflation
index for 1994-95 is 259, for 1997-98 is 331
and for 2013-14 is 939
3,00,000
9. Determine the total income from following
particulars
Previous Year
2012-13
Previous Year
2013-14
House Property
income (computed)
20,000 20,000
Salary income
(computed)
1,80,000 1,90,000
Business Profit before
depreciation
40,000 1,20,000
Depreciation for the
year
1,20,000 1,40,000
Capital Gain-short
term
10,000 Nil
Income from Other
Sources
20,000 40,000
Or
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From the following particulars, determine
assessable profit or loss to be carried forward as the
case may be for the assessment year 2014-15
.
Loss for 2006-2007 carried forward 1,00,000
Loss for 2007-08 carried forward 15,000
Depreciation allowance for 2007-08 carried
forward
5,000
Loss for 2008-09 carried forward 10,000
Depreciation allowance for 2008-09 carried
forward
5,000
Loss for 2009-10 carried forward 5,000
Depreciation allowance for 2009-10 CIF 2,500
Loss for 2010-11 carried forward 5,000
Depreciation allowance for 2010-11 carried
forward
2,500
Profit for 2011-12 15,000
Depreciation due for 2011-12 5,000
Profit for 2012-13 50,000
Depreciation due for 2010-11 10,000
Profit for 2013-2014 1,20,000
Depreciation due for 2013-2014
Determination of Assessable Profits
10,000
10. Explain in brief the provisions of income tax law
relating to "Advance payment of tax".
Or
Explain the procedure to compute advance tax.
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Section C 10 10)
(Compulsory Question)
11. From the following Profit and Loss Account of a
manufacturer, calculate the income under the head
'Profits and Gains of Business or Profession' for the year
ending on 31st March 2014.
. .
Salaries to employees 95,000 Gross Profit 3,80,000
Advertisement
expenses (in cash) 24,000
Bad debts
recovered (allowed
earlier)
12,000
General Expenses 16,000 Interest form
securities 14,000
Entertainment
expenses 22,000 Income form
Houses property 25,000
Bad Debts 1,000
Drawings by the
proprietor 24,000
Sales-tax (due and
paid on 1-7-2013) 6,000
Interest on
Proprietor's capital 7,000
Repairs 2,500
Rent 21,000
Legal Expenses 5,000
Depreciation 15,500
Bonus 6,000
Bonus to the
proprietor 4,000
Car purchased 72,000
Expenses on car
during the year 12,000
Donations
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. .
Provisions for bad
debts 2,000
Net Profit 6,000
90,000
4,31,000 4,31,000
From the examination of books of accounts, the following
other information's are available
Advertisement expenses were spent on insertions in
news papers.
. 3,000 were spent on purchase of land and are
included in legal expense.
Half of the repair expenses were on let-out building.
Depreciation allowable on all assets including car is
. 14,400
Bonus was paid to employees on 30.6.2014 and date
of filing of return is 31.7.2014.