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Past papers › Cost & Mgmt › May 2013

CA Inter Cost & Mgmt — Suggested Answers — May 2013

This page contains all 20 questions from the CA Inter Cost & Management Accounting Suggested Answers for the May 2013 attempt cycle, sourced from VSI Jaipur.

QbService Tax, Point of Accrual
4 marks medium
State with reasons whether the following statements are correct or incorrect under the IT Act Provisions: (1) Mr. P provides the service in March, 2012. He receives the payment by cheque on 30-3-2012 and the cheque is cleared on 15-4-2012. The point of accrual of this service will be 30-3-2012 and the rate of service tax will be 10%. (2) Postal services for registered post are liable to service tax. (3) Mrs. SR Brothers having office in Jammu, provide the services to Mr. OR Ltd in Patna. These services are not liable to service tax. (4) Jaipur Branch of ABC Ltd. provides services in Baroda Branch of ABC Ltd. These services are not liable to service tax.
QbService Tax - Recruitment Services
4 marks medium
ABC & Co. is a partnership firm engaged in the business of recruitment and supply of labourers. The firm, which had rendered taxable services to the value of ₹ 9.5 lacs in the financial year 2011-12, furnishes the following details pertaining to the half year coded on 30-9-2012: Announts collected from companies for pre-recruitment screening: ₹ 3,00,000 Amnounts collected from companies for recruitment of permanent staff: ₹ 1,80,000 Amounts collected from companies for recruitment of temporary staff: ₹ 4,80,000 Advances received from prospective employers for conducting campus interviews on colleges: ₹ 80,000 Wherever applicable, service tax has been charged separately and received from clients. Compute the value of taxable service rendered and the service tax payable by the assessee for the relevant half year. The rate of service tax is 12%, education cess is 2% and higher education cess is 1%.
QbKVT - Service Tax
4 marks medium
How is the value of the service under service tax provisions determined where such value is not ascertainable ?
QcVAT - Taxable turnover, input credit, VAT payable calculatio
5 marks medium
Mr. Bansilal of Punjab is a manufacturer, registered under VAT. He provides the following particulars for the financial year 2012-13: 1. Purchases from local registered dealer (excluding VAT 4%) - ₹1,15,000 2. Purchases from a dealer having opted composition scheme (includes VAT 4%) - ₹2,20,000 3. Purchases of machinery eligible for input credit on 1-10-2012 (excluding VAT 4%) Depreciation rate 15% p.a. - ₹5,00,000 4. Other direct & indirect expenses - 30% of total purchases (excluding depreciation) 5. Profit margin - 20% of the total cost 6. Unutilized balance of VAT input credit as on 1-4-2012 - ₹7,600 7. 90% of the production is sold during the year 8. VAT rate for sales is 12.5% Find the taxable turnover, net VAT payable and input credit for the year 2012-13.
QcVAT Computation - Input Tax Credit
4 marks medium
Manufacturer A sold product X to B of Delhi @ ₹ 1,000 per unit. He has charged CST @ 4% on the said product and paid ₹ 60 as freight. B of Delhi sold goods to C of Delhi @ ₹ 1,250 per unit and charged VAT @ 12.5%. C of Delhi sold goods to D, a consumer @ ₹ 1,500 per unit and charged VAT @ 12.5%. Compute VAT Liability of B & C.
QcKVT - VAT
4 marks medium
What are the procedural requirements under VAT Act for claiming set off of input tax on capital goods ?
Q2(a)Income tax - Residential status, income computation, taxabil
8 marks very hard
Case: Income details for Devesh and Siddhart: 1. Interest on American Development bonds, 50% of interest received in India - Devesh: ₹46,000, Siddhart: ₹18,000 2. Dividend from a Japanese Company received in America - Devesh: ₹10,000, Siddhart: ₹15,000 3. Profit on sale of shares of an Indian company received in India - Devesh: ₹45,000, Siddhart: ₹75,000 4. Profit from a business in Mumbai, but managed directly from America - Devesh: ₹10,000, Siddhart: — 5. Income from a business in Mumbai - Devesh: ₹32,000, Siddhart: ₹28,000 6. Fees for technical services rendered in America and received in America…
Devesh and Siddhart are brothers and they earned the following incomes during the previous year 2012-13. Devesh works in America in the year 1985 and Siddhart settled in Mumbai. Devesh visits India for 20 days every year. Both stay in America every year for a month. Compute their total income for the Assessment year 2013-14 from the following information:
Q3(a)(i)Leave Travel Concession
4 marks medium
Rajesh went to Shirapur on a holiday on 15-11-2012 with his wife and two children (son Sam - age 6 years; twin daughters - age 3 years). They were by aeroplane (economy class) and they used personal car. The total cost of tickets by his employer was ₹ 56,000 (₹ 43,000 for adults and ₹ 13,000 for the minor children). Compute the amount of Leave Travel Concession exempt. Will the answer be any different if among his three children, two are sons and one is daughter aged 3 years old? Discuss.
Q3(a)(ii)Retrenchment Compensation
4 marks medium
Mr. Gobind received retrenchment compensation of ₹ 10,00,000 after 30 years 4 months of service. At the time of retrenchment, he was drawing basic salary of ₹ 20,000 p.m. dearness allowance of ₹ 5,000 p.m. Compute his taxable retrenchment compensation.
Q3(b)Service Tax / EABIST Scheme
4 marks medium
What is meant by EABIST scheme? Enlist the benefits of EABIST scheme to an assessee under the Service Tax Provisions.
Q3(c)VAT / Composite Scheme
4 marks medium
Seth Traders, a registered dealer of Bihar having stock of goods worth ₹ 60,000 purchased from West Bengal wishes to opt for composite scheme. Advise the dealer whether it is possible?
Q4(a)Income Tax Computation / Loss Carry Forward
8 marks hard
From the following information of Mr. Mohit for the financial year 2012-13 you are required to compute his total income for the financial year 2012-13 and ascertain the amount of losses which will be carried forward to next year. (i) He owns two houses: House No. 1 - Income after all statutory deductions ₹ 80,000; House No. 2 - Current year loss ₹ (38,000). (ii) He has three proprietary business concerns: (a) Textile business: (I) Discontinued from 30th September 2012 - Current year's loss ₹ 40,000; (II) Brought forward loss of Asst. year 2009-10 ₹ 55,000; (b) Chemical Business - since discontinued Nil; (c) Bad debts allowed in earlier years recovered during the year ₹ 33,000. (iii) Brought forward business loss of Asst. year 2011-12 ₹ 50,000. (c) Leather Business - Profit for the current year ₹ 1,00,000. (d) Share of Profit in a firm in which he is partner since 2001 ₹ 16,550. (iii) (a) Short Term Capital Gain ₹ 60,000. (b) Long Term Capital Loss ₹ 35,000. (iv) Contribution to LIC towards premium ₹ 10,000.
Q5(b)Indirect Taxes / VAT
4 marks medium
What is 'Negative list of services'? Which services by Government or a local authority are not included in the negative list of services?
Q5aIncome Computation, Clubbing of Income
8 marks hard
Mr. A is an employee of Larsen Limited and has substantial interest in the company. His salary is ₹ 25,000 p.m. Mrs. A also is working in that company at a salary of ₹ 10,000 p.m. without any professional qualification. Mr. A also receives ₹ 30,000 as income from securities. Mrs. A owns a house property which she has let out. Rent received from such house property is not specified. Mr. & Mrs. A have three minor children-two daughters and one son. Income of the two daughters is ₹ 2,600 p.a and that of his son is ₹ 1,200 p.a. Compute the income of Mr and Mrs. A.
Q6(a)Capital gains, indexed cost of acquisition, securities trans
9 marks hard
Ms. Neelima had purchased 500 equity shares in A Ltd at a cost of ₹ 30 per share (Brokerage 1%) in February 1979. She got 50 bonus shares in September 1980. She again got 500 bonus shares at the time of holding on March, 1985. Fair market value of the shares of A Ltd. on April, 1981 is ₹ 50. In January 2013, she transferred all her shares @ ₹ 240 per share (brokerage 2%). Compute the capital gains taxable in the hands of Ms. Neelima for the financial year 2013-14 assuming:
Q6(b)Service tax computation, taxable service value
4 marks medium
Mr. Rajesh, a proprietor of Z enterprise provides taxable services. He received the following amount during the financial year 2012-13: (i) ₹ 1,25,000 as advance while signing a contract. (ii) ₹ 6,00,000 by pay order during process of providing service. (iii) ₹ 5,25,000 by credit card after completion of service as 31st Dec., 12. Compute the value of taxable service and amount of service tax payable by him. Assume service tax has been charged separately. Z enterprise is not eligible for small service provider's exemption in the financial year 2012-13. The rate of service tax is 12%, education cess is 2% and higher education cess is 1%.