Question 1

CBDT has wide Notification No. 17/2022 dated 21.04.2022, inserted Rule 12AB, notified which are all the person other than a company or firm who is not required to file return of income under Section 139(1) must file the return of Income. State who are required compulsorily to file return of income.

Accepted Answer

As per CBDT Notification No. 17/2022 dated 21.04.2022, which inserted Rule 12AB in the Income Tax Rules, 1962, the following persons (other than companies and firms) are compulsorily required to file return of income under Section 139(1), regardless of whether their income exceeds the basic exemption limit:

**1. Directors of Companies:** Every individual who is a director of any company during the financial year must file a return of income, irrespective of the quantum of income earned.

**2. Managing Partners of Firms:** Every individual who is a managing partner of a firm (other than a Limited Liability Partnership) must file a return of income.

**3. Persons with Specified Business/Professional Income:** Individuals carrying on business or profession and required to maintain books of accounts or records must file returns, even if income falls below the exemption limit.

**4. Persons with Rental Income:** Individuals having income from property/rent exceeding ₹50,000 in the financial year must file a return.

**5. Non-Residents Earning Income in India:** Any individual who is a non-resident and has earned income from sources in India during the financial year must file a return, as per Section 139(1).

**6. Persons with Specified Financial Transactions:** Individuals meeting specified thresholds regarding bank deposits, foreign remittances, investments, or securities above prescribed limits are required to file returns.

**7. Persons with Foreign Assets:** Individuals hold…

Question 2

Compute the amount of net minimum GST payable in cash by Evershine Pvt. Ltd. for the month of September 2023.

Accepted Answer

**Assumption:** Evershine Pvt. Ltd. is registered in Rajasthan (confirmed by Transactions 4 and 5 attracting CGST + SGST, indicating intra-state supply from Rajasthan-based suppliers). Transactions 1 and 2 are inter-state (from UP and Karnataka respectively), attracting IGST @ 18%.

**Note:** The question provides only inward supply data and opening ITC balances. No outward supply (output tax liability) figures are stated; hence the net cash payable is computed as: Output Tax − Total Available ITC. The computation below establishes total eligible ITC.

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**Transaction 1 — Raw Material from PQR Ltd., Kanpur (UP)**
Inter-state supply → IGST @ 18%. Goods worth ₹1,00,000 not received during the month. Per **Section 16(2)(b) of the CGST Act 2017**, ITC is available only when goods are actually received. Eligible ITC = IGST on ₹19,00,000 = **₹3,42,000**.

**Transaction 2 — Machinery from MNO Pvt. Ltd., Bengaluru (Karnataka)**
Inter-state supply → IGST = ₹2,00,000 × 18% = ₹36,000. However, the company has claimed **depreciation on the full value including GST** under the Income Tax Act 1961. Per **Section 16(3) of the CGST Act 2017**, where a registered person has claimed depreciation on the tax component of cost of capital goods, ITC on such tax component shall not be allowed. Eligible ITC = **NIL**.

**Transaction 3 — Stock from GST Dealer, Ajmer (Rajasthan)**
Intra-state supply (both parties in Rajasthan) → CGST @ 14% + SGST @ 14%. Stock is purchased for business (transport/tr…

Question 3

Compute the taxable Capital Gain for the assessment year 2024-25, using Price Index: F.Y. 2013-14 = 220, F.Y. 2009-10 = 148 and F.Y. 2001-02 = 100

Accepted Answer

**Answer: ₹24,40,000 (or ₹24.4 lakhs)**

**Step 1: Cost of Acquisition for Inherited Property**
Under Section 49(1)(ii), for property inherited, the cost of acquisition is the FMV on the date of inheritance. Since the property can be traced as held on 01.04.2001 with FMV ₹13 lakhs, this amount is taken as the base cost for indexation purposes per Section 55(2).

**Step 2: Computation of Indexed Cost of Acquisition**
The property comprises two components:

(a) Original property:
- Base cost (FMV on 01.04.2001) = ₹13 lakhs (Index = 100)
- Sale year index (FY 2022-23) = 220
- Indexed cost = ₹13 lakhs × (220/100) = **₹28.6 lakhs**

(b) Improvements made in 2013-14:
- Cost of improvement = ₹10 lakhs (Index for 2013-14 = 220)
- Indexed cost = ₹10 lakhs × (220/220) = **₹10 lakhs**

Total Indexed Cost of Acquisition = ₹28.6 lakhs + ₹10 lakhs = **₹38.6 lakhs**

**Step 3: Capital Gain Computation**
Sale consideration (10.03.2023) = ₹75 lakhs
Less: Indexed cost of acquisition = ₹38.6 lakhs
Capital Gain (before exemption) = **₹36.4 lakhs**

**Step 4: Character of Gain**
The property was inherited in December 2009 and sold in March 2023, constituting a holding period exceeding 2 years. Thus, this is a **long-term capital gain** for a residential house.

**Step 5: Exemption under Section 54**
The assessee qualifies for exemption under Section 54 (exemption from LTCG on transfer of residential property) as:
- Does not own any other residential house (condition satisfied)
- New residential h…

Question 4

State with reason whether the following persons are required to file their return of income as per the provisions of the Income Tax Act, for the assessment year 2024-25:
(i) Mr. Aneesh aged 31 years, who opted for default tax regime u/s 115 BAC(1) had a taxable income of ₹ 2,90,000 for the previous year 2023-24.
(ii) Smt. Patel, aged 65 years, has a TDS credit of ₹ 55,000 during the previous year 2023-24.
(iii) The gross receipts of Mr. Ajit, aged 45 years, an architect for the previous year 2023-24 was ₹ 12,00,000, but his profit from profession was only ₹ 2,25,000 and he has no other income.

Accepted Answer

**Filing Requirements Analysis for Assessment Year 2024-25 (Previous Year 2023-24)**

**Basic Exemption Limits (PY 2023-24):**
- Individuals below 60 years: ₹2,50,000
- Senior Citizens (60 to below 80 years): ₹3,00,000
- Super Senior Citizens (80 years and above): ₹5,00,000

**Persons required to file under Section 139(1):**
- Whose total income exceeds the basic exemption limit, OR
- Who have paid advance tax or TDS during the PY, OR
- Whose gross receipts from business/profession exceed ₹25,00,000, OR
- Who have claimed refund in the previous year

**(i) Mr. Aneesh (Age 31, Taxable Income ₹2,90,000):**

**Required to file.** Mr. Aneesh's taxable income of ₹2,90,000 exceeds his basic exemption limit of ₹2,50,000 (applicable to individuals below 60 years). Under Section 139(1), every person whose income exceeds the basic exemption limit is mandatorily required to file a return of income. The fact that he has opted for the default tax regime under Section 115 BAC(1) does not exempt him from the filing requirement; this provision only determines the tax rate applicable (flat 20% without exemptions), but does not affect the filing obligation. Therefore, filing is mandatory.

**(ii) Smt. Patel (Age 65, TDS Credit ₹55,000):**

**Required to file.** Even though Smt. Patel's income is not explicitly stated, the presence of TDS credit of ₹55,000 indicates that income tax has been deducted at source during the previous year. Under Section 139(1), a person who has paid TDS is required …

Question 5

You are required to compute the taxable value of supply on which GST is to be paid by Mr. Ravindra for the month of January 2024. All amounts stated above are exclusive of GST, wherever applicable. Suitable Notes should form part of your answer.

Accepted Answer

**Computation of Taxable Value of Supply for January 2024**

Mr. Ravindra is a registered person providing multiple supplies. The taxable value on which GST is payable is determined as follows:

**Supply 1: Chief Selector Remuneration (₹5,00,000)**
While this service relates to sports, it is provided TO a recognized sports body by an individual in an administrative/management role, not by a sports person providing athletic services. The exemption for sports services under Notification 12/2017-Central Tax applies to services provided BY sports bodies or BY sports persons for sporting activities. Services provided TO the sports body for administration are TAXABLE. **Taxable Value: ₹5,00,000**

**Supply 2: Pure Labour Contract for Construction (₹1,80,000)**
Construction services, including pure labour contracts for construction of independent residential units, are TAXABLE supplies under GST (charged at 5% for residential construction). The taxable value includes the labour cost. **Taxable Value: ₹1,80,000**

**Supply 3: Warehouse Rental for Sugarcane (₹75,000)**
Although immovable property rent is typically exempt under Section 12 of the IGST Act, 2017, the supply here is specifically described as 'warehousing of sugarcane,' which constitutes a warehousing and storage service, not mere immovable property rent. Storage and warehousing services are TAXABLE supplies (charged at 5%). **Taxable Value: ₹75,000**

**Supply 4: Services to Municipal Corporation for Slum Improvement (₹6,…

Question 6

Mr. Ravi furnished the following information regarding the income made towards Scientific Research during the year 2023-24: (i) Revenue expenditure on Scientific Research ₹ 2,00,000. (ii) Capital Expenditure on Scientific Research ₹ 3,00,000. (iii) Contribution to Notified approved research association ₹ 1,25,000. (iv) Amount paid to H Limited an Indian company which has as its main object scientific research and approved by the prescribed authority ₹ 2,50,000. (v) Expenditure incurred ₹ 50,000 towards purchase of Land for Scientific research. (vi) Arrears of salary to research staff in the F.Y. 2022-23 (before commencement of business) and certified by the prescribed authority. Compute the deduction allowable u/s 35 for the assessment year 2024-25, assuming that he has not opted for defau…

Accepted Answer

**Computation of Deduction u/s 35 for Assessment Year 2024-25:**

**Item (i) - Revenue Expenditure on Scientific Research (₹2,00,000):** Fully deductible under Section 35(1)(i) of the Income Tax Act, 1961. Revenue expenditure incurred on scientific research is allowed as a complete deduction in the year incurred.

**Item (ii) - Capital Expenditure on Scientific Research (₹3,00,000):** Deductible in equal annual instalments over 5 years under Section 35(1)(ii). First year deduction = ₹3,00,000 ÷ 5 = ₹60,000.

**Item (iii) - Contribution to Notified Approved Research Association (₹1,25,000):** Fully deductible under Section 35(1)(ii). Contributions to notified approved research associations are allowed as deduction in the year paid.

**Item (iv) - Amount Paid to H Limited (₹2,50,000):** Fully deductible under Section 35(1)(iii). Payments to Indian companies having scientific research as their main object and approved by the prescribed authority are deductible in full.

**Item (v) - Expenditure on Purchase of Land (₹50,000):** Not deductible. Land is a capital asset and does not qualify as scientific research expenditure under Section 35. Only capital assets used in scientific research operations (such as equipment and machinery) are covered, not land acquisition.

**Item (vi) - Arrears of Salary before Commencement of Business (Not stated in amount):** Not deductible. Expenditure incurred before commencement of business, including salary arrears from F.Y. 2022-23, is not allowa…

Question 7

Mr. Sahil, resident Indian aged 60 years, a Manufacturer at Chennai, gives the following Manufacturing, Trading and Profit & Loss Account for the year ended 13.03.2024.

Accepted Answer

**Computation of Total Income of Mr. Sahil for AY 2024-25**

Mr. Sahil is a **Senior Citizen** (aged 60 years), resident Indian, manufacturer at Chennai. Old Tax Regime assumed (question tests deductions under 80C, 80EE, 80G).

**I. Income from Business/Profession**

Net Profit per P&L is adjusted as follows:

**SGST Penalty ₹1,70,000** — Added back. Under **Section 37(1) of the Income Tax Act, 1961**, penalties for statutory violations are not deductible business expenditure.

**Excess commission to brother ₹10,000** — Added back. Under **Section 40A(2)(b)**, payments to specified relatives (brother qualifies) exceeding fair market value are disallowed. Amount paid ₹46,000; market rate ₹36,000; disallowance = ₹10,000.

**Cash Credit Interest ₹13,000 (26.12.2023)** — No adjustment. Interest paid to a scheduled bank on cash credit is allowable on **actual payment basis under Section 43B(d)**. Paid within FY 2023-24; deduction sustained.

**Staff Salary ₹48,000** — No adjustment. Monthly salary ₹4,000 = ₹48,000 p.a. is well below the basic exemption limit; no TDS default under **Section 192** and no disallowance under **Section 40(a)(ia)**. Allowable as a business expense.

**Bank Term Loan Interest ₹2,00,000** — Deducted additionally. This amount was paid on 31.03.2024 but NOT debited in the P&L. Under **Section 43B(d)**, interest on loans from scheduled banks is deductible on actual payment basis. Since ₹2,00,000 was paid within FY 2023-24, it is allowable. The **balance paid…

Question 8

Mr. Sahil, resident Indian aged 40 years, a Manufacturer at Chennai, gives the following Manufacturing, Trading and Profit & Loss Account for the year ended 31.03.2024

Accepted Answer

**Computation of Total Income of Mr. Sahil (Resident, Age 40) for Assessment Year 2024-25**

**Head I — Profits and Gains of Business or Profession (Section 28 of the Income Tax Act, 1961)**

The starting point is the **Net Profit as per P&L Account: ₹13,56,000**.

Certain amounts debited to the P&L must be **added back** as they are inadmissible under the Act:

(a) **SGST Penalty ₹7,000** — Disallowed under Section 37(1). Penalties imposed by statutory authorities are penal in nature and are not expenditure incurred wholly and exclusively for business purposes; they are not deductible.

(b) **Depreciation as per Books ₹2,00,000** — Book depreciation is disallowed and replaced by depreciation computed under Section 32 of the Income Tax Act.

(c) **Loss on Sale of Shares ₹20,000** — Mr. Sahil is a manufacturer; shares held by him are investments, not stock-in-trade. This loss is in the nature of a **Short-Term Capital Loss (STCL)** and cannot be deducted as a business expense.

Total additions: ₹2,27,000. Adjusted figure: ₹15,83,000.

Certain amounts **credited** to the P&L are **not chargeable** under the head PGBP; they are deducted and taxed under their respective heads:

(a) Dividends from domestic companies ₹15,000 → Income from Other Sources (Section 56(2)(i))
(b) Winning items ₹10,500 → Income from Other Sources (Section 115BB)
(c) Lottery income (net of TDS, as appearing in P&L) ₹10,500 → Income from Other Sources (Section 115BB); gross amount is ₹15,000
(d) Profit on …

Question 9

Depreciation allowable under the act to be computed on the basis of following information:

Plant & Machinery (Depreciation Rate @ 15%)
Opening WDV (as on 01.04.2023): ₹ 12,00,000
Additions During the year (Used for more than 180 Days): ₹ 2,00,000
Total Additions during the year: ₹ 4,00,000

Note: Ignore Additional Depreciation u/s 32(1ii)

Consider the depreciation and tax liability of Mr. Sahil for the A.Y. 2024-25 (if he has exercised the option of shifting out of the default tax regime provided under Section 115BAC(1A)).

Accepted Answer

Under **Section 32 of the Income Tax Act, 1961**, depreciation is allowable on Written Down Value (WDV) basis. The depreciation must be calculated separately for assets based on their holding period during the financial year.

**Depreciation Calculation for A.Y. 2024-25 (F.Y. 2023-24):**

The total additions of ₹4,00,000 must be classified as:
- Additions used for more than 180 days: ₹2,00,000
- Additions used for 180 days or less: ₹2,00,000 (₹4,00,000 - ₹2,00,000)

Depreciation on assets used for more than 180 days is calculated at full rate on Opening WDV plus such additions:
(₹12,00,000 + ₹2,00,000) × 15% = **₹2,10,000**

Depreciation on assets used for 180 days or less is calculated at half the rate:
₹2,00,000 × 15% × 0.5 = **₹15,000**

**Total Depreciation Allowable: ₹2,25,000**
Closing WDV: ₹12,00,000 + ₹4,00,000 - ₹2,25,000 = **₹13,75,000**

**Tax Liability Implication:**

Since Mr. Sahil has exercised the option to shift out of the default new tax regime under **Section 115BAC(1A)** and chosen the old tax regime, he is entitled to claim depreciation of **₹2,25,000** as a deduction from his gross total income. This is a critical distinction because under the new tax regime, depreciation is NOT allowed as a deduction. The depreciation deduction reduces his taxable income by ₹2,25,000, thereby reducing his overall tax liability. The tax benefit achieved equals ₹2,25,000 multiplied by his applicable tax slab rate. This makes the choice to opt for the old regime particular…

Question 10

Mr. Sahil, resident Indian aged 40 years, a Manufacturer at Chennai, gives Manufacturing, Trading and Profit & Loss Account for the year ended 31.03.2024 with further information provided. Compute the total income and tax liability of Mr. Sahil for the A.Y. 2024-25 if he has exercised the option of shifting out of the default tax regime provided under Section 115BAC(1A).

Accepted Answer

**Note: The Manufacturing, Trading and Profit & Loss Account figures and 'further information' referenced in the question were not provided with this query. The solution below presents the complete framework, adjustments, and tax computation methodology that must be applied to the given data. Once figures are substituted, this framework yields the final answer.**

**Regime Selection:** Mr. Sahil has opted out of the default new tax regime under **Section 115BAC(1A) of the Income Tax Act, 1961** (inserted w.e.f. AY 2023-24). Opting out means he is taxed under the **old (regular) regime**, allowing all eligible deductions under Chapter VI-A, depreciation u/s 32, set-off of losses, etc.

**Step 1 — Computation of Business Income (Manufacturing)**

Net Profit as per P&L Account: ₹ XXX

**Add back (Disallowances/Inadmissible Expenses):**
- Personal expenses debited to P&L [Section 37(1)]
- Income tax, wealth tax paid [Section 40(a)(ii)]
- TDS not deducted / not deposited on due date of return [Section 40(a)(ia)] — 30% of such expenditure disallowed
- Salary/interest to partners [Section 40(b)] — if partnership; not applicable here as proprietorship
- Cash payments exceeding ₹10,000 in a single day to a single person [Section 40A(3)] — 100% disallowed
- Payments to relatives exceeding fair market value [Section 40A(2)]
- Provision for doubtful debts, contingent liabilities [not deductible under Section 36/37]
- **Section 43B items** (PF, ESI, GST, interest on loans from banks/FIs, …

Question 11

Mr. Tilak aged 35 years, furnishes the following information regarding his income for the assessment year 2024-25. Compute the total income if he is:

Accepted Answer

**Computation of Total Income of Mr. Tilak for Assessment Year 2024-25:**

**1. If Resident and Ordinarily Resident (RAR):**

A **RAR** is taxable on **worldwide income**—income from all sources whether situated in India or outside India, irrespective of whether it is earned in India or remitted to India. The taxing jurisdiction is unrestricted.

Applying to Mr. Tilak:
- Malaysian service remuneration: ₹50,000 (foreign source, but taxable as RAR has worldwide income liability)
- English business profits: ₹3,00,000 (entire amount taxable; remittance to India is irrelevant)
- Singapore profits brought to India: ₹1,00,000 (entire amount taxable despite being past untaxed income)

**Total Income = ₹4,50,000**

**2. If Resident but Not Ordinarily Resident (RNOR):**

A **RNOR** is taxable on (a) **all income from Indian sources**, and (b) **foreign income only to the extent remitted to India**. The remittance rule restricts taxability of foreign income to amounts actually received in India or accruing in India.

Applying to Mr. Tilak:
- Malaysian service remuneration: ₹50,000 (immediately remitted to India—hence fully taxable as the remittance condition is satisfied)
- English business profits: Only **₹25,000** is taxable (the total profits are ₹3,00,000, but only ₹25,000 is received/remitted into India; the balance ₹2,75,000 remains outside India and is not taxable as no remittance occurred in the relevant year)
- Singapore profits brought to India: ₹1,00,000 (brought to India—hen…

Question 12

Mr. Tilak aged 35 years, furnishes the following information regarding his income for the assessment year 2024-25. Compute the total income if he is: (1) Resident and Ordinarily Resident, (2) Resident but Not Ordinarily Resident. (Ignore the provisions of Section 115BAC). Given: (a) Remuneration of ₹50,000 for service rendered in Malaysia, credited to his bank account in Malaysia and immediately remitted to his bank account in India. (b) Profits from a business in England controlled from Bombay ₹3,00,000 (out of which ₹25,000 is received in India). (c) Amount brought to India out of past untaxed profits earned in Singapore ₹1,00,000. (d) Capital gain on sale of land in India but received in Malaysia ₹2,00,000. (e) Income from agriculture land at Nepal of ₹18,000, received there and then br…

Accepted Answer

**Part (1): Resident and Ordinarily Resident (ROR)**

As an ROR individual, Mr. Tilak is taxed on his **worldwide income**. All income from any source, irrespective of where earned or received, is taxable.

**Income Analysis for ROR:**

(a) Remuneration from Malaysia: Taxable ₹50,000 (worldwide income includes foreign earned income)

(b) Business profit from England controlled from Bombay: Taxable ₹3,00,000 (entire income is taxable; place of control is India making it Indian business income)

(c) Past untaxed profits brought from Singapore: Taxable ₹1,00,000 (brought to India during the year)

(d) Capital gain on Indian land: Taxable ₹2,00,000 (income from Indian source; place of receipt immaterial)

(e) Agricultural income from Nepal: **Not taxable ₹0** (under Section 9(3) of Income Tax Act 1961, agricultural income from outside India is excluded)

(f) Principal repayment on home loan: Not deductible ₹0 (Section 24 allows interest only, not principal; this is capital expenditure)

(g) Interest on SBI savings account: Taxable ₹12,000 (Indian source income)

**Total Income if ROR = ₹6,62,000**

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**Part (2): Resident but Not Ordinarily Resident (RNOR)**

As an RNOR individual under **Rule 8 of Income Tax Rules 1962**, Mr. Tilak is taxed on:
- Income accrued or arising in India
- Income earned outside India but **received in India during the year**
- Amounts **brought to India**

**Income Analysis for RNOR:**

(a) Remuneration from Malaysia: Taxable ₹50,000 (foreign income …

Question 13

Examine the applicability of Tax Deduction at Sources (TDS) or Tax Collection at Source (TCS) as per the Income Act, 1961 for the assessment year 2024-25 in the following independent situations.

Accepted Answer

**Part (i): TDS on Rent - Section 194-I**

**TDS IS APPLICABLE** under Section 194-I at 10% on the monthly rent of ₹75,000.

Section 194-I provides for TDS deduction on rent paid for any building or residential property when the monthly rent exceeds ₹50,000. Here, the monthly rent of ₹75,000 (excluding GST, which is levied separately and not included in the rent for TDS threshold) clearly exceeds the ₹50,000 threshold. Therefore, TDS is attracted.

The applicable rate is **10%** because the recipient (Mr. Ram) is an individual, has furnished his PAN, and is presumed to be an Indian resident. Although Mr. Ram has furnished PAN and filed his return of income regularly before the due date, **these facts do not exempt the deductor from TDS obligation**. TDS is a statutory deduction mandatory on the payer (ABC Limited) and cannot be waived based on the payee's PAN status or return filing compliance. The deductor must deduct ₹7,500 TDS per month (10% of ₹75,000) and deposit the same with the government.

**Part (ii): TCS on Sale of Motor Vehicles - Section 206C(1F)**

TCS is applicable under Section 206C(1F) on sale of motor vehicles. The applicability and rate depend on the sale consideration in each transaction:

**First Car (₹4,00,000 on 01.05.2023):** **TCS IS NOT APPLICABLE** because the sale consideration of ₹4,00,000 does not exceed the threshold of ₹10,00,000. Section 206C(1F) prescribes that TCS at 1% is applicable only when the sale consideration in a single transaction e…

Question 14

Examine the applicability of Tax Deduction at Sources (TDS) of Tax Collected at Source (TCS) as per the Income Act, 1961 for the assessment year 2024-25 in the following independent situations.

Accepted Answer

**Sub-part (i): TDS on Rent**

TDS is **applicable** on the rent paid by ABC Limited to Mr. Ravi under **Section 194I of the Income Tax Act, 1961**. The monthly rent of ₹75,000 (excluding GST) exceeds the threshold of ₹50,000 prescribed under Section 194I. Since the rent of building exceeds ₹50,000 per month, TDS at the rate of **10%** must be deducted by the payer (ABC Limited). The furnishing of PAN and regular filing of returns by Mr. Ravi do not exempt him from TDS; these are conditions that may qualify him for certain reliefs but do not absolve the payer from the statutory obligation to deduct TDS. ABC Limited must deduct TDS of ₹7,500 per month (₹75,000 × 10%) and remit it to the government before the due date. Note that GST is levied separately and is not included in the rent amount for TDS calculation purposes.

**Sub-part (ii): TCS on Sale of Motor Vehicles**

TCS is **NOT applicable** on the sale of cars by XYZ Pvt. Ltd to Mrs. Anju under **Section 206C(1G) of the Income Tax Act, 1961**. The threshold for TCS on sale of motor vehicles is ₹10 lakhs per transaction. The first car is sold for ₹4,00,000 and the second car for ₹1,20,000—both amounts are individually below the ₹10 lakhs threshold. Section 206C(1G) applies only when the value of a single motor vehicle exceeds ₹10 lakhs. Since each car falls below this limit, TCS is not triggered. The furnishing of PAN and regular filing of returns by Mrs. Anju, while important for compliance, are not relevant in this case …

Question 15

Mr. Ravi received an advance of ₹ 2,00,000 on 10.5.2023 from a closely held manufacturing company (private company in which the public are not substantially interested) in which he holds 22% shareholding. The company had an accumulated profit of ₹ 1,00,000 at the time of giving the advance. Compute the amount of perquisite to be included in the hands of Mr. Ravi for the assessment year 2024-25 and also state the head under which it is to be included.

Accepted Answer

**Answer: ₹14,291**

For advances given to shareholders in closely held companies (where the public are not substantially interested), the amount constitutes a **perquisite** equal to the interest foregone at the prescribed rate. The prescribed rate of interest for FY 2023-24 is **8% per annum**.

**Computation:**
Perquisite = Advance × Prescribed Rate × Period (in years)

Period from 10.5.2023 to 31.3.2024:
- May 10–31: 21 days
- June–December 2023: 214 days
- January–March 2024: 91 days (2024 is a leap year)
- Total: 326 days (or 0.8932 years)

Perquisite = ₹2,00,000 × 8% × (326/365)
Perquisite = ₹2,00,000 × 0.08 × 0.8932
Perquisite = ₹14,291.20 ≈ **₹14,291**

**Head of Income:** **Income from Other Sources** (Section 56 of the Income Tax Act, 1961)

Note: The accumulated profit figure of ₹1,00,000 does not affect the perquisite calculation under the current framework. The perquisite is determined solely by the interest at the prescribed rate on the advance for the period it remained outstanding.

Question 16

Mr. Ravi received an advance of ₹2,00,000 on 10.5.2023 from a closely held manufacturing company (private company in which the public are not substantially interested) in which he holds 22% shareholding. The company had an accumulated profit of ₹1,00,000 at the time of giving the advance. Compute the amount of income to be included in the hands of Mr. Ravi for the assessment year 2024-25 and also state the head under which it is to be included.

Accepted Answer

**Answer: ₹1,00,000 under the head 'Income from other sources'**

When a shareholder of a closely held company receives any advance (or loan, or other payment not being a loan repayable within specified period), the amount is deemed to be dividend under **Section 2(22)(e) of the Income Tax Act, 1961**. A closely held company is defined as a private company in which the public are not substantially interested.

The amount of deemed dividend is calculated as the excess of the advance received over the accumulated profit available at the time of giving the advance:

**Deemed Dividend = Amount advanced – Accumulated profit**

In this case, the company's accumulated profit of ₹1,00,000 represents earnings available for distribution. Since the advance of ₹2,00,000 exceeds this accumulated profit, the excess constitutes deemed dividend.

The shareholder's percentage holding (22%) does not affect the computation—the full amount of excess is treated as deemed dividend.

**Income to be included in Mr. Ravi's hands:**
- **Amount: ₹1,00,000**
- **Head of Income: Income from other sources** (as per **Section 17(1)(a) of the Income Tax Act, 1961**, which specifically mentions that dividends are taxable under this head)
- **Assessment Year: 2024-25** (since the advance was received on 10.5.2023, falling in FY 2023-24)

This deemed dividend income must be included in Mr. Ravi's total income for AY 2024-25 as it constitutes income from other sources.

Question 17

Mr. Ravi received an advance of ₹ 2,00,000 on 10.5.2023 from a newly held manufacturing company (private company in which the public are not substantially interested) on which he holds 22% shareholding. The company had an agreement profit of ₹ 1,00,000 at the time of giving the advance. Compute the amount of income to be included in the hands of Mr. Ravi for the assessment year 2024-25 and also state the head under which it is to be included.

Accepted Answer

Mr. Ravi is a shareholder with 22% shareholding in a closely held company. The advance of ₹2,00,000 received on 10.5.2023 falls under Section 2(22)(e) of the Income Tax Act 1961, which treats amounts obtained as advances or loans from closely held companies as income if they exceed 20% of the company's book profit. The company's agreement profit (book profit) at the time was ₹1,00,000. The threshold amount (20% of book profit) = ₹20,000. Since the advance of ₹2,00,000 exceeds this threshold of ₹20,000, the excess amount becomes chargeable as income. **Amount to be included as income = ₹2,00,000 - ₹20,000 = ₹1,80,000**. This income falls under the head **Other Sources** as per Section 56 of the Income Tax Act. The amount will be included in Mr. Ravi's total income for assessment year 2024-25, corresponding to the financial year 2023-24 in which the advance was received on 10.5.2023.

Question 18

Mr. Rao furnished the following information regarding the payments made towards Scientific Research during the financial year 2023-24: (i) Revenue expenditure on Scientific Research incurred during the year ₹1,00,000. (ii) Capital Expenditure for Scientific Research ₹3,00,000. (iii) Contribution to Notified approved research association ₹1,50,000. (iv) Amount paid to H Limited an Indian company which has as its main object scientific research and approved by the prescribed authority ₹2,50,000. (v) Expenditure of ₹2,50,000 towards purchase of Land for scientific research. (vi) He also incurred revenue expenditure of ₹2,00,000 towards salary of research staff in the F.Y.2022-23 (before commencement of business) and certified by the prescribed authority. Compute the deduction allowable u/s 35…

Accepted Answer

**Deduction allowable under Section 35 of the Income Tax Act, 1961 for A.Y. 2024-25**

Mr. Rao is not under the default tax regime u/s 115BAC, so all deductions under Section 35 are available in full.

**Item-wise analysis:**

**(i) Revenue expenditure on scientific research — ₹1,00,000:** Fully deductible @ 100% under **Section 35(1)(i)**. Deduction = ₹1,00,000.

**(ii) Capital expenditure on scientific research — ₹3,00,000:** Deductible @ 100% under **Section 35(1)(iv) read with Section 35(2)**. Note: This applies only to assets other than land. Deduction = ₹3,00,000.

**(iii) Contribution to notified approved research association — ₹1,50,000:** Deductible @ 100% under **Section 35(1)(ii)**. (Weighted deduction of 150% was reduced to 100% with effect from A.Y. 2021-22 by Finance Act 2020.) Deduction = ₹1,50,000.

**(iv) Amount paid to H Limited (approved Indian company, main object = scientific research) — ₹2,50,000:** Deductible @ 100% under **Section 35(1)(iia)**. Deduction = ₹2,50,000.

**(v) Purchase of Land for scientific research — ₹2,50,000:** **NIL deduction.** Under **Section 35(2)(1A)**, expenditure on the acquisition of land does not qualify for deduction under Section 35, even if it is for the purpose of scientific research.

**(vi) Pre-commencement revenue expenditure on salary of research staff — ₹2,00,000:** Deductible @ 100% under the **proviso to Section 35(1)(i)**. Revenue expenditure on scientific research incurred within 3 years immediately preceding the…

Question 19

Mr. Rao furnished the following information regarding the payments made towards Scientific Research during the financial year 2023-24:
(i) Revenue expenditure on Scientific Research incurred during the year ₹ 1,00,000.
(ii) Capital Expenditure for Scientific Research ₹ 3,00,000.
(iii) Contribution to Notified approved research association ₹ 1,50,000.
(iv) Amount paid to II Limited an Indian company which has as its main object scientific research and approved by the Notified authority ₹ 2,30,000.
(v) Expenditure of ₹ 2,50,000 towards purchase of Land for scientific research.
(vi) He also incurred revenue expenditure of ₹ 2,00,000 towards salary of research staff in the F.Y. 2023-24 (before commencement of business) and certified by the prescribed authority.
Compute the deduction allowable …

Accepted Answer

**Answer: ₹5,40,000**

**Analysis of each item under Section 35(1):**

**(i) Revenue expenditure on scientific research (₹1,00,000):** Revenue expenditure on scientific research is deductible in full under Section 35(1)(i). **Deduction: ₹1,00,000**

**(ii) Capital expenditure for scientific research (₹3,00,000):** Capital expenditure on scientific research is deductible by spreading equally over 5 years commencing from the year of incurrence under Section 35(1)(ii). Annual deduction = ₹3,00,000 ÷ 5 = **₹60,000 for A.Y. 2024-25**

**(iii) Contribution to notified approved research association (₹1,50,000):** Contributions to research associations approved under Section 35(1)(iii) are deductible in full. **Deduction: ₹1,50,000**

**(iv) Amount paid to approved company for scientific research (₹2,30,000):** Payments to an approved company having scientific research as its main object are deductible in full under Section 35(1)(iv), provided the company is approved by the notified authority. **Deduction: ₹2,30,000**

**(v) Expenditure on purchase of land (₹2,50,000):** Land is expressly excluded from the definition of capital expenditure for scientific research under Section 35(1)(ii). The Supreme Court has held that land cannot be considered capital asset for SR purposes. **Deduction: ₹Nil**

**(vi) Revenue expenditure before commencement of business (₹2,00,000):** This is revenue expenditure incurred before commencement of business. Section 35(1)(i) applies only to revenue expend…

Question 20

Examine the applicability of Tax Deduction at Source (TDS) or Tax Collection at Source (TCS) as per the Income Tax Act, 1961 for the assessment year 2024-25 in the following independent situations.

Accepted Answer

**Part (i) - Rent Payment by ABC Limited**

The applicable provision is **Section 194-IA of the Income Tax Act, 1961**. This section requires Tax Deduction at Source (TDS) on rent of immovable property (other than plant/machinery) at the rate of 5% if the monthly rent exceeds ₹50,000. Goods and Services Tax (GST) is excluded from the TDS calculation as it is a separate tax unrelated to income.

Facts of the case: Monthly rent = ₹75,000 (GST excluded), Total annual rent for FY 2023-24 = ₹75,000 × 12 months = ₹9,00,000. The monthly rent of ₹75,000 exceeds the threshold of ₹50,000.

However, Section 194-IA contains an important exception: TDS is NOT required if the recipient has furnished a valid Permanent Account Number (PAN). In this case, Mr. Ram has furnished his PAN and has also filed his income tax return regularly before the due date, confirming his status as a PAN holder.

**Conclusion: NO TDS is required** on the rent paid by ABC Limited to Mr. Ram, as the PAN exemption applies.

**Part (ii) - Purchase of Cars by Mrs. Anju**

The applicable provision is **Section 194O of the Income Tax Act, 1961**. This section mandates Tax Collection at Source (TCS) on the sale of motor vehicles at the rate of 1% when the sale price of a single vehicle exceeds ₹10,00,000.

Analysis of each purchase:

**Car 1** (Cost ₹4,00,000, purchased 01.05.2023): The sale price does not exceed ₹10,00,000. Section 194O does not apply as the threshold condition is not met. **NO TCS is required.**

**C…

Question 21

Mr. Surinder furnishes the following particulars for the previous year ending 31.03.2024. He had a Residential House, inherited from his father in December 2009, the Fair Market Value of which on 01.04.2001 is ₹13 lakhs. In the year 2013-2014, further construction and improvements costing of ₹10 lakhs. The House was originally purchased by his father on 01.03.2000 for ₹10 Lakhs. On 10.05.2023, the House was sold for ₹75 Lakhs. Expenditure in connection with transfer is ₹50,000. On 20.12.2023, he purchased a Residential House for ₹12 lakhs and he does not own any other house. Compute the taxable Capital Gain for the assessment year 2024-25. (Cost Inflation Index: F.Y. 2013-14=220, F.Y.2023-24=348, F.Y. 2009-10=148 and F.Y. 2001-02=100)

Accepted Answer

**Net Sale Consideration:** The house was sold for ₹75 lakhs on 10.05.2023. After deducting transfer expenses of ₹50,000, the net sale consideration is ₹74,50,000.

**Cost of Acquisition (Indexed):** For inherited property originally acquired by the father before 01.04.2001, the cost of acquisition is the Fair Market Value on 01.04.2001, which is ₹13 lakhs. This is indexed from 01.04.2001 (CII 100) to the year of sale 2023-24 (CII 348): ₹13,00,000 × (348/100) = ₹45,24,000.

**Cost of Improvements (Indexed):** Further construction in FY 2013-14 costing ₹10 lakhs is indexed from FY 2013-14 (CII 220) to FY 2023-24 (CII 348): ₹10,00,000 × (348/220) = ₹15,81,818.

**Total Indexed Cost of Acquisition and Improvement:** ₹45,24,000 + ₹15,81,818 = ₹61,05,818.

**Capital Gain:** ₹74,50,000 - ₹61,05,818 = ₹13,44,182.

**Application of Section 54 Exemption:** The individual has purchased a new residential house for ₹12,00,000 on 20.12.2023. This is within 1 year of the sale (10.05.2023) and he does not own any other residential house, satisfying all conditions of Section 54. Under Section 54, the capital gain is exempted to the extent of the lower of (a) the capital gain realized or (b) the amount invested in the new residential house. Therefore, exemption = min(₹13,44,182, ₹12,00,000) = ₹12,00,000.

**Taxable Capital Gain = ₹13,44,182 - ₹12,00,000 = ₹1,44,182 (or ₹1.44 lakhs rounded)**

Question 22

Mr. Surinder furnishes the following particulars for the previous year ending 31.03.2024. He had a Residential House, inherited from his father in December 2009, the Fair Market Value of which on 01.04.2001 is ₹ 13 lakhs. In the year 2013-2014, there construction and improvements costing of ₹ 10 lakhs. The House was originally purchased by his father on 01.03.2000 for ₹ 10 Lakhs. On 10.05.2023, the House was sold for ₹ 75 Lakhs. Expenditure in connection with transfer is ₹ 50,000. On 29.12.2023, he purchased a Residential House for ₹ 12 lakhs and he does not own any other house.

Accepted Answer

**Answer: Taxable Long-Term Capital Gain = ₹1,44,182 (₹1.44 lakhs)**

Mr. Surinder inherited a residential house in December 2009. Since the property was originally acquired by his father before 01.04.2001 and inherited after 01.04.2001, under **Section 55(2)(a)**, the Fair Market Value on 01.04.2001 (₹13 lakhs) is deemed as the Cost of Acquisition instead of the date-of-inheritance FMV.

**Computation of Indexed Cost of Acquisition:**
The FMV on 01.04.2001 (₹13 lakhs) is indexed from 2001-02 to 2023-24 using the Cost Inflation Index. Improvements made in 2013-14 (₹10 lakhs) are indexed separately from 2013-14 to 2023-24. Using standard CII values: 2001-02 (100), 2013-14 (220), and 2023-24 (348), the base cost becomes ₹45,24,000 and improvements become ₹15,81,818, totaling ₹61,05,818.

**Computation of Long-Term Capital Gain:**
Sale price is ₹75 lakhs. Transfer expenditure of ₹50,000 is deducted to arrive at net sale price of ₹74,50,000. LTCG = ₹74,50,000 − ₹61,05,818 = ₹13,44,182.

**Application of Section 54 Exemption:**
Under **Section 54**, since Mr. Surinder purchased another residential house for ₹12 lakhs on 29.12.2023 (within 2 years of sale) and does not own any other residential house, the entire cost of the new house (₹12 lakhs) qualifies for exemption, being less than the LTCG.

**Taxable Capital Gain = ₹13,44,182 − ₹12,00,000 = ₹1,44,182**

Question 23

Following is further information relating to Financial Year 2023-2024: (i) Administrative Charges include ₹ 46,000 paid as commission to member of Assessee. The Commission amount deposited at monthly rate is ₹ 36,000. (ii) Remittance paid ₹ 31,000 in cash to a Transport Carrier on 26.12.2023. This amount is included in Manufacturing Expenses. (Assume that the provisions relating to TDS are not applicable on this payment). (iii) A Sum of ₹ 4,000 per month was paid as salary to a staff throughout the year and this has not been recorded in books of account. (iv) Bank Term Loan Interest actually paid upto 31.03.2024 was ₹ 2,00,000 and the balance was paid in October 2024. (v) Miscellaneous Expenses include ₹ 10,000 contributed to Prime Minister's Relief Fund. (vi) Loss on Sale of Shares repres…

Accepted Answer

**Note:** This question references a Profit & Loss Account 'given above' that is not reproduced here. The solution presents all adjustments with computed figures. The business profit (Net Profit as per P&L) is denoted as 'NP'. All adjustments shown below must be applied to that figure.

**Regime Note:** Mr. Sahil has opted OUT of the default new tax regime under **Section 115BAC(1A) of the Income Tax Act, 1961**, i.e., he is assessed under the **old tax regime**. All Chapter VI-A deductions and exemptions are therefore available.

---

**COMPUTATION OF INCOME FROM BUSINESS OR PROFESSION (AY 2024-25)**

Net Profit as per P&L Account: ₹NP

**Add back (Inadmissible/Non-business items):**
(i) Excess commission paid to member [**Section 40A(2)**] — commission paid ₹46,000 vs. reasonable rate ₹36,000: **+₹10,000**
(ii) Contribution to PM's Relief Fund (not a business expense; allowable under **Section 80G**): **+₹10,000**
(iii) Loss on Sale of Shares (not a business item; to be reclassified under Capital Gains): **+₹XX** (as per P&L)
(iv) Book depreciation (to be replaced by tax depreciation): **+₹XX** (as per P&L)

**Less (Allowable deductions not recorded/non-business receipts):**
(i) Salary not recorded in books (₹4,000 × 12 months; actually paid, hence deductible u/s 37): **−₹48,000**
(ii) Profit on Sale of Shares (LTCG; to be reclassified under Capital Gains): **−₹XX** (as per P&L)
(iii) Depreciation allowable under **Section 32** of the Income Tax Act, 1961: **−₹2,25,000**

*…

Question 24

Mr. Joshi, resident Indian, aged about 58 years, furnished the following details of his income for the previous year 2023-24: (i) Income from House property (computed) ₹2,00,000. (ii) Income from Proprietary Business ₹3,00,000. (iii) Short Term Capital Gain on sale of Land ₹2,00,000. (iv) Short Term Capital loss on sale of equity shares listed in recognized stock exchange (STT paid) ₹75,000. (v) Interest on Bank fixed deposit ₹50,000 received by his son, aged 21 years, out of money gifted by Mr. Joshi in 2022. (vi) Loss from Speculation Business ₹40,000. (vii) Loss from Owning and Maintenance of Race Horses ₹50,000. Brought forward losses: (a) Brought forward House property loss of assessment year 2021-22 ₹2,50,000. (b) Brought forward business loss of Proprietary business from assessment …

Accepted Answer

**Answer: Total Income for AY 2024-25 is ₹2,25,000**

**COMPUTATION OF TOTAL INCOME FOR AY 2024-25**

Under the old tax regime (opting out of Section 115BAC(1A)), the income is computed as follows:

**1. INCOME FROM HOUSE PROPERTY**
Current year income: ₹2,00,000
Less: Brought forward loss from AY 2021-22: ₹2,50,000
Set-off limited to income available: ₹2,00,000
Net income from house property: **₹0**
Balance loss to carry forward: ₹50,000

**2. INCOME FROM BUSINESS AND PROFESSION**
Income from Proprietary Business: ₹3,00,000
Less: Brought forward loss (AY 2013-14): ₹50,000
Less: Brought forward unabsorbed depreciation (AY 2014-15): ₹1,00,000
Net income from proprietary business: ₹1,50,000

Speculation Business Loss ₹40,000 and Race Horse Loss ₹50,000: Cannot be set-off against income from proprietary business. These shall be carried forward separately under Section 73 and Section 58 respectively.

**3. INCOME FROM CAPITAL GAINS**
Short-term capital gain (land): ₹2,00,000
Less: Short-term capital loss (equity shares, STT paid): ₹75,000
Net capital gains: **₹1,25,000**

Long-term capital loss of ₹90,000 brought forward from AY 2018-19: **Cannot be carried forward** as the return of income was filed on 31.01.2019 after the due date. Section 79 of the Income Tax Act 1961 explicitly bars carry-forward of capital losses if the return is furnished after the due date.

**4. OTHER INCOME**
Interest on bank fixed deposit ₹50,000 received by son (aged 21): Not assessable to Mr. Joshi. S…

Question 25

Compute the taxable Capital Gain for the assessment year 2024-25. (Cost Inflation Index: F.Y. 2013-14 = 220, F.Y. 2023-24 = 348, F.Y. 2024-25 = 100)

Mr. Joshi, resident Indian, aged about 58 years, furnished the following details of his income for the previous year 2023-24:
(i) Income from House property (computed) ₹ 2,00,000.
(ii) Income from Proprietary Business ₹ 3,00,000.
(iii) Short Term Capital Gain on sale of Land ₹ 2,00,000.
(iv) Short Term Capital loss on sale of equity shares listed in recognized stock exchange (STT paid) ₹ 75,000.
(v) Interest on Bank fixed deposit ₹ 50,000 received by his son, aged 21 years, out of money gifted by Mr. Joshi in 2022.
(vi) Long Term Speculation Business ₹ 40,000.
(vii) Loss from Owning and Maintenance of Race Horses ₹ 50,000.

Following are the …

Accepted Answer

**Computation of Total Income and Taxable Capital Gain for AY 2024-25:**

**A. Capital Gains Computation:**

**Short-term Capital Gain (STCG):**
Sale of Land: ₹2,00,000
Less: STCL on equity shares (listed on recognized stock exchange, STT paid): ₹(75,000)
Net STCG: ₹1,25,000

**Long-term Capital Gain (LTCG):**
Long-term Speculation Business: ₹40,000

**Brought Forward LTCL (AY 2018-19):** ₹60,000
NOT available. Per Section 80(a), capital losses can be carried forward only if the return is filed within the prescribed time. The return for AY 2018-19 was filed on 31.10.2019, which is after the due date of 31.07.2019. Hence, this loss is forfeited.

**Taxable Capital Gain: ₹1,25,000 + ₹40,000 = ₹1,65,000**

**B. Computation of Total Income:**

**1. Income from House Property:**
Computed Income: ₹2,00,000
Less: Brought Forward Loss (AY 2023-24): ₹(2,00,000)
Net Income/(Loss): ₹0
Excess Loss to Carry Forward: ₹50,000

**2. Income from Proprietary Business:**
Business Income: ₹3,00,000
Less: Unabsorbed Depreciation (AY 2014-15): ₹(1,00,000)
Net Income: ₹2,00,000

**3. Capital Gains (as computed above):** ₹1,65,000

**4. Interest on Bank FD:** ₹Nil
The interest of ₹50,000 was received by his son (aged 21 years) out of money gifted in 2022. Since the son is a major, Section 64 does not apply, and this income is taxable in the son's hands, not in Mr. Joshi's hands.

**5. Loss from Race Horses:** ₹Nil
Loss of ₹50,000 from owning and maintaining race horses cannot be set off against othe…

Question 26

State with reason whether the following persons are required to file their return of income as per the provisions of the Income Tax Act, 1961 for the assessment year 2024-25.

Accepted Answer

**Answer to (i) – YES, return filing is required.** Mr. Aneesh is 31 years old, placing him in the category with a basic exemption limit of ₹2,50,000 for assessment year 2024-25. His total income of ₹2,90,000 exceeds this limit. Under Section 139(1) of the Income Tax Act, 1961, any person whose total income exceeds the basic exemption limit is mandatorily required to file a return of income. The option to adopt the default tax regime (new tax regime) u/s 115BAC(1A) does not exempt him from this filing obligation.

**Answer to (ii) – YES, return filing is required.** The presence of TDS credit of ₹55,000 indicates that tax has been deducted at source from Smt. Patel's income during the previous year. Section 139(1) of the Income Tax Act, 1961 mandates filing of return when TDS has been deducted, regardless of whether total income exceeds the basic exemption limit. Smt. Patel, being aged 65 years, falls in the 60-80 age bracket with a basic exemption limit of ₹3,00,000. The TDS credit must be claimed and reconciled in her return for proper accounting of taxes paid.

**Answer to (iii) – NO, return filing is not required.** The critical factor for determining return filing requirement is total income, not gross receipts. Mr. Ajit's total income (profit from profession) is ₹2,25,000, which is below the basic exemption limit of ₹2,50,000 applicable to individuals below 60 years for assessment year 2024-25. Additionally, there is no indication of TDS being deducted from his income. …

Question 27

State with reason whether the following persons are required to file their return of income as per the provisions of the Income Tax Act, 1961 for the assessment year 2024-25:
(i) Mr. Amesh aged 31 years, who opted for default tax regime u/s 115 BAC(1A) had a total income of ₹ 2,00,000 for the previous year 2023-24.
(ii) Smt. Patel, aged 65 years, has a TDS credit of ₹ 55,000 during the previous year 2023-24.
(iii) The gross receipts of Mr. Ajit, aged 45 years, an architect for the previous year 2023-24 was ₹ 12,00,000, but his profit from profession was only ₹ 2,25,000 and he has no other income.

Accepted Answer

For assessment year 2024-25, filing of return is mandatory under Section 139(1) of the Income Tax Act, 1961 only if **total income exceeds the applicable basic exemption limit**. The exemption limits for financial year 2023-24 are: individuals below 60 years – ₹2,50,000; individuals 60 but below 80 years – ₹3,00,000; and individuals 80 years and above – ₹5,00,000.

**Mr. Amesh (Age 31):** NOT REQUIRED to file. His total income of ₹2,00,000 is below the exemption limit of ₹2,50,000 applicable to individuals below 60 years. Although he opted for the new tax regime u/s 115 BAC(1A), the basic exemption limit remains ₹2,50,000 under both old and new regimes. The filing obligation is determined by the exemption limit, not the regime chosen. Since his income does not exceed the exemption limit and no TDS or advance tax has been mentioned, filing is not mandatory.

**Smt. Patel (Age 65):** NOT REQUIRED to file if her total income is below ₹3,00,000 (the exemption limit for individuals aged 60-80 years). The mere fact that TDS of ₹55,000 has been deducted does not make filing mandatory. However, she **CAN file voluntarily** under Section 139(2) to claim refund of the TDS deducted. Such voluntary filing is optional but advisable when TDS exceeds the tax liability.

**Mr. Ajit (Age 45):** NOT REQUIRED to file. His total income of ₹2,25,000 from the profession is below the exemption limit of ₹2,50,000. The filing requirement under Section 139(1) is based on **total income, not gross rece…

Question 28

CBDT has vide Notification No. 37/2022 dated 21.04.2022, inserted Rule 12AB, notified which are all the person other than a company or firm who is not required to file return of income under Section 139(1) must file the return of Income. State who are required compulsorily to file return of Income.

Accepted Answer

**Rule 12AB** (inserted by CBDT Notification No. 37/2022 dated 21.04.2022) prescribes the following categories of persons other than companies and firms who must compulsorily file return of income under Section 139(1), irrespective of their total income:

**1. Cash Deposits in Saving Accounts:** Persons who have deposited more than **₹1 crore** in one or more saving accounts during the financial year.

**2. Cash Expenditure for Goods:** Persons who have incurred cash expenditure exceeding **₹2 lakhs** for purchase of goods in a single transaction (excluding food items, fuel, and prescribed services) or aggregate cash expenditure exceeding **₹10 lakhs** for purchase of goods and services during the financial year.

**3. Foreign Travel:** Persons who have incurred cash expenditure exceeding **₹1 lakh** for foreign travel.

**4. Outward Remittance:** Persons who have made outward remittance exceeding **₹1 crore** outside India during the financial year.

**5. Motor Vehicles:** Persons who own one or more motor vehicles (excluding two-wheeled vehicles).

**6. Immovable Property:** Persons who own immovable property other than agricultural land (value exceeds prescribed threshold).

**7. Electricity Consumption:** Persons whose electricity consumption exceeds **10,000 kWh** during the financial year.

**8. Cash Gifts from Unrelated Persons:** Persons who have received or enjoyed cash gifts exceeding **₹1 lakh** from unrelated persons during the financial year.

**9. Foreign Credit…

Question 29

CBDT has vide Notification No. 37/2022 dated 21.04.2022, inserted Rule 12AB, notified which are all the person other than a company or firm who is not required to file the return of income under Section 139(1) must file the return of Income. State who are required compulsorily to file return of income.

Accepted Answer

**Rule 12AB** was inserted by CBDT vide Notification No. 37/2022 dated 21.04.2022 to expand the scope of persons required to file return of income under Section 139(1) of the Income Tax Act, 1961. It applies to persons other than companies or firms who are not ordinarily required to file ITR under Section 139(1) but must file if they meet specified criteria relating to income or financial transactions.

**Persons compulsorily required to file return of income under Rule 12AB:**

**1. Persons with specific income sources:**
Any person having income chargeable to tax, loss in business or profession, income or loss from capital gains, or income from house property—even if total income is below the taxable limit.

**2. Persons with high-value financial transactions:**
- Borrowed more than ₹1 crore during the financial year
- Deposited more than ₹1 crore without satisfactory source explanation
- Single purchase of goods/articles exceeding ₹2 lakhs
- Foreign travel expenditure of ₹1 lakh or more
- Electricity consumption bill exceeding ₹2 lakhs per month or during the year
- Expenditure of ₹10 lakhs or more for buying/constructing a house
- Remittance abroad aggregating ₹10 lakhs or more
- Donation of ₹50,000 or more to any person or entity

**3. Persons with significant asset holdings:**
- Purchase of motor vehicle costing ₹10 lakhs or more
- Aggregate value of investments, deposits, and jewellery holdings of ₹30 lakhs or more
- Immovable property (other than self-occupied residen…

Question 30

Evershine Pvt. Ltd., a GST registered supplier located in Jaipur, Rajasthan is engaged in supply of taxable packaging goods and consultancy services. It provides following details of outward supplies activities undertaken during the month of September 2023:

(A) Details of Outward Supplies:
(1) Supply of goods of ₹ 18,00,000 to Validdi Enterprises, a registered person of Udaipur, Rajasthan. Further, received ₹ 95,000 from Validdi Enterprises towards freight charges (as agreed to deliver the goods at Validdi Enterprises' premises) which was not included in above value of supply.
(2) Supply of goods worth ₹ 35,00,000 to Calc. Exim, a registered person of Prayagraj, Uttar Pradesh. Further, the government of ₹ 60,000 charged separately (not included above) from Calc. Exim on account of municip…

Accepted Answer

**PART A: COMPUTATION OF VALUE OF OUTWARD SUPPLIES AND GST LIABILITY**

**(1) Supply to Validdi Enterprises, Udaipur, Rajasthan (Intra-State)**
As per **Section 15(2)(c) of the CGST Act, 2017**, any amount charged by the supplier for anything done in relation to the supply at the time of or before delivery of goods is includible in the value of supply. Freight charges of ₹95,000 (for delivery at buyer's premises) are therefore includible.
Value of supply = ₹18,00,000 + ₹95,000 = **₹18,95,000**
CGST @ 9% = ₹1,70,550 | SGST @ 9% = ₹1,70,550

**(2) Supply to Calc. Exim, Prayagraj, Uttar Pradesh (Inter-State)**
As per **Section 15(2)(a) of the CGST Act, 2017**, taxes, duties, cesses, fees and charges levied under any law other than GST laws, if charged separately, are includible in value of supply. Municipal taxes of ₹60,000 levied in relation to this supply are includible.
Value of supply = ₹35,00,000 + ₹60,000 = **₹35,60,000**
IGST @ 18% = ₹6,40,800

**(3) Supply of Services to Sunshine Ltd., Jodhpur, Rajasthan (Intra-State)**
As per **Section 15(3)(a) of the CGST Act, 2017**, discount given before or at the time of supply, recorded in the invoice, is deductible from value of supply.
Value of supply = ₹6,00,000 − ₹30,000 = **₹5,70,000**
CGST @ 9% = ₹51,300 | SGST @ 9% = ₹51,300

**(4) Bill-to-Ship-to Transaction: Supply to Ragini Enterprise, Mumbai, Maharashtra (Inter-State)**
This is a bill-to-ship-to scenario. As per **Section 10(1)(b) of the IGST Act, 2017**, where goods are…

CA Inter Taxation

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Particulars	IGST (₹)	CGST (₹)	SGST (₹)
Opening Balance	5,000	20,000	50,000
Tr.1 – RM from PQR Ltd. (UP)	3,42,000	—	—
Tr.2 – Machinery, MNO (Karnataka)	NIL	—	—
Tr.3 – Stock, Ajmer (Raj.)	—	2,10,000	2,10,000
Tr.4 – Car, Mihir Auto (Raj.)	—	NIL	NIL
Tr.5 – Factory floor goods, Jaipur	—	NIL	NIL
Total ITC Available	3,47,000	2,30,000	2,60,000