QA-D1Income from profession - total income and tax liability comp
14 marks very hard
Mr. Samar, a resident individual, aged 43 years, provides professional services in the field of interior decoration. His Income & Expenditure A/c for the year ended 31st March, 2023 is as under:
Expenditure: Employees' Remuneration & Benefits ` 13,66,000; Office & Administrative Exp. ` 3,14,000; General Expenses ` 75,000; Electricity Expenses ` 65,000; Medical Expenses ` 80,000; Purchase of Furniture ` 48,000; Depreciation ` 90,000; Excess of income over expenditure ` 39,43,000. Total ` 59,81,000.
Income: Consultancy Charges ` 58,80,000; Interest on Public Provident Fund (PPF) Account ` 60,000; Interest on Savings Bank Account ` 20,000; Interest on National Savings Certificates VIII Issue (for 3rd year) ` 21,000. Total ` 59,81,000.
Additional information:
(i) The expenses on Employees' Remuneration & Benefits includes:
(a) Family Planning expenditure of ` 20,000 incurred for the employees which was revenue in nature, paid through account payee cheque.
(b) Payment of salary of ` 25,000 per month to sister-in-law of Mr. Samar, who was in-charge of the Accounts & Receivables department. The reasonable salary at market rates is ` 20,000 per month.
(ii) Employees' Contribution to EPF for the month of February, 2023 - ` 10,000 was deposited after the due date under the relevant Act relating to EPF.
(iii) Medical Expenses of ` 80,000 were for treatment of father of Mr. Samar (aged 72 years, not covered by any health insurance policy). Payment made through account payee cheque.
(iv) General expenses include ` 25,000 paid to Ms. Anjaleen on 5th January, 2023 as commission for securing work from new clients, without deduction of tax at source.
(v) Written down value of depreciable assets as on 1st April, 2022: Professional Books ` 90,000; Computers ` 35,000.
(vi) New Furniture purchased on 31st August, 2022 and put to use on the same day. Payment: ` 18,000 in cash on 31.08.2022; ` 19,000 by account payee cheque on 05.09.2022 as balance cost; ` 11,000 in cash on 31.08.2022 to transporter as freight charges.
(vii) Mr. Samar purchased a car on 02.04.2021 for ` 3,35,000 for personal use. On 30.04.2022 he brought the said car for use in his profession. The fair market value of the car as on 30.04.2022 was ` 2,50,000.
(viii) Mr. Samar made a contribution of ` 1,00,000 in his PPF A/c on 31.01.2023.
(ix) The Gross Professional Receipts of Mr. Samar for P.Y. 2021-22 was ` 52,00,000.
Compute the total income and tax liability of Mr. Samar for A.Y. 2023-24, assuming that he has not opted for payment of tax under section 115BAC. Ignore provisions under section 14A relating to disallowance of expenditure incurred in relation to income not includible in total income.
Q1(v)Tax liability computation - minimising tax for senior citize
2 marks hard
Case: Mr. Kamal, an Indian citizen, aged 61 years, has set-up his business in Canada and is residing in Canada since 2010. He owns a house property in Canada, half of which is used by him for his residence and half is given on rent (converted into INR is ` 12,00,000 p.a.). He purchased a flat in Delhi on 13.10.2020 for ` 42,00,000. The stamp duty value of the flat was ` 35,00,000. He has taken a loan from Canara Bank in India of ` 34,00,000 for purchase of this flat. The interest on such loan for the F.Y. 2022-23 was ` 3,14,000 and principal repayment was ` 80,000. Mr. Kamal has given this flat on m…
What would be the tax liability (computed in the manner so as to minimise his tax liability) of Mr. Kamal for the A.Y. 2023-24?
(A) ` 1,82,950
(B) ` 1,87,110
(C) ` 1,80,350
(D) ` 1,84,510
Q2Clubbing of income - spouse's business partly funded by husb
2 marks easy
Mrs. Archana, wife of Mr. Raj, started a business of trading in beauty products on 15.5.2022. She invested ` 5 lakhs in the business on 15.5.2022 out of gift received from her husband, Mr. Raj. She further invested ` 4 lakhs from her own savings on 15.12.2022. She earned profits of ` 1,50,000 from her business for the financial year 2022-23. Which of the following statements is correct?
(A) Share of profit of ` 1,50,000 is includible in the hands of Mrs. Archana.
(B) Share of profit of ` 66,667 is includible in the hands of Mr. Raj and share of profit of ` 83,333 is includible in the hands of Mrs. Archana.
(C) Share of profit of ` 83,333 is includible in the hands of Mr. Raj and share of profit of ` 66,667 is includible in the hands of Mrs. Archana.
(D) Share of profit of ` 1,50,000 is includible in the hands of Mr. Raj.
Q3TDS - interest under section 201(1A) for late deduction and
2 marks easy
An amount of ` 60,000 was paid to Mr. Samar on 1.7.2022 towards fees for professional services without deduction of tax at source. Subsequently, another payment of ` 75,000 was due to Mr. Samar on 28.02.2023, from which tax @10% (amounting to ` 13,500) on the entire amount of ` 1,35,000 was deducted and the net amount was paid on the same day to Mr. Samar. However, this tax of ` 13,500 was deposited only on 22.6.2023. The interest chargeable under section 201(1A) would be:
(A) ` 480
(B) ` 1,290
(C) ` 1,260
(D) ` 810
Q4Partnership firm - taxable remuneration to working partner,
2 marks easy
Mr. C, aged 35 years, is a working partner in M/s BCD, a partnership firm, with equal profit sharing ratio. During the P.Y. 2022-23, the firm has paid remuneration to Mr. B, Mr. C and Mr. D, being the working partners of the firm, of ` 2,00,000 each. The firm has paid interest on capital of ` 1,20,000 in toto to all the three partners and the same is within the prescribed limit of 12%. The firm had a loss of ` 1,12,000 after debiting remuneration and interest on capital. Note – Remuneration and interest on capital is authorized by the partnership deed. You, being the CA of Mr. C, are in the process of computing his total income. What would be his taxable remuneration from the firm?
(A) ` 2,00,000
(B) ` 1,51,600
(C) ` 1,27,600
(D) ` 1,50,000
Q5Agricultural income - definition of rural agricultural land
1 marks easy
Income derived from farm building situated in the immediate vicinity of an agricultural land (not assessed to land revenue) would be treated as agricultural income if such land is situated in –
(A) an area at a distance of 3 kms from the local limits of a municipality and has a population of 80,000 as per last census
(B) an area within 1.5 kms from the local limits of a municipality and has a population of 12,000 as per last census
(C) an area within 2 kms from the local limits of a municipality and has a population of 11,00,000 as per last census
(D) an area within 8 kms from the local limits of a municipality and has a population of 10,50,000 as per last census
Q6HUF - coparcenary rights after Hindu Succession (Amendment)
1 marks easy
The Gupta HUF in Maharashtra comprises of Mr. Harsh Gupta, his wife Mrs. Nidhi Gupta, his son Mr. Deepak Gupta, his daughter-in-law Mrs. Deepti Gupta, his daughter Miss Preeti Gupta. Which of the members of the HUF are eligible for coparcenary rights?
(A) Only Mr. Harsh Gupta and Mr. Deepak Gupta
(B) Only Mr. Harsh Gupta, Mr. Deepak Gupta and Miss Preeti Gupta
(C) Only Mr. Harsh Gupta, Mr. Deepak Gupta, Mrs. Nidhi Gupta and Mrs. Deepti Gupta
(D) All the members are co-parceners