Q1(a)Income from profession, deductions under Chapter VI-A, tax c
10 marks hard
Dr. Shashank is a noted child specialist of Mumbai. His Income and Expenditure account for the financial year ended 31-03-2015 is given below:
Expenditure:
- Staff salary: ₹2,78,000
- Administrative expenses: ₹1,64,000
- Medicine consumed: ₹3,95,800
- Consumables: ₹57,500
- Depreciation: ₹1,25,000
- Rent of clinic: ₹1,20,000
- Donation to National Children's Fund: ₹51,000
- Net Profit: ₹6,58,700
Income:
- Fee receipts: ₹16,76,000
- Winning at TV game show (Net of TDS): ₹35,000
- LIC policy matured: ₹1,15,000
- Honorarium for giving lectures at seminars: ₹24,000
Additional information:
(1) Depreciation computed as per Income Tax Rules, 1962 has been ascertained at ₹75,000.
(2) Medicines consumed include cost of medicine for self and family of ₹18,000 and for treating poor patients of ₹24,000 from whom he did not charge any fee.
(3) Salary includes ₹30,000 paid in cash to a computer specialist who computerized his patient's data on 30th September 2014.
(4) Donation to National Children's Fund has been made by way of an account payee cheque.
(5) He has paid a sum of ₹25,000 for a Life Insurance Policy (Sum assured ₹2,00,000) of himself, which was taken on 1-07-2012.
(6) He also contributed ₹1,20,000 towards Public Provident Fund.
(7) Dr. Shashank also paid interest of ₹10,000 on loan taken for higher education of his daughter.
(8) Dr. Shashank made investments in equity shares listed in a recognized stock exchange of ₹30,000 and units of equity oriented fund of Rajiv Gandhi Equity Savings Scheme of ₹40,000.
(9) Dr. Shashank also made donation of ₹1,00,000 to a charitable trust registered and eligible for deduction under Income Tax Act, 1961.
You are required to compute the total income and tax payable by Dr. Shashank for the Assessment Year 2015-16.
Q1(b)Service tax on IT services, exemption for UN, advance receiv
0 marks easy
MCSS Tech Solutions is providing taxable Information Technology software services and provides the following information related to the services tendered, invoice issued and payment received for these services, for the half year ended on 31st March 2015:
(i) Advance received on 31st March 2015 for upgradation and enhancement of software service to be rendered in the month of April 2015: ₹7,50,000
(ii) Service provided to United Nations in New Delhi for analysis, design and programming of latest information technology software: ₹6,00,000
(iii) Service billed to various clients (including the services provided to United Nations): ₹56,00,000
Service tax, Education cess and Secondary and Higher Education cess have been charged separately in all the bills.
Compute the value of total taxable services and the total service tax payable by MCSS Tech. Solutions @ 12.36% for the half year ended on 31st March 2015.
Q1(c)Central Sales Tax computation, deductions from taxable turno
4 marks medium
Mr. Devansh, a dealer of rice plant machinery in the State of Punjab, provides the following information:
Total inter-state sales during the FY 2014-15 is ₹95,00,000 (CST included in this sales). This sales also includes the following:
- Dharmada: ₹7,50,000
- Freight: ₹4,50,000 (₹3,00,000 shown separately in the invoices)
- Cost of packing boxes for machinery: ₹68,500
- Installation and commissioning charges shown separately: ₹65,000
Determine CST payable assuming that all transactions were covered by valid 'C' forms and the VAT rate within the state is 5%.
Q2(a)(i)Scope of total income, taxability in India, Section 5 and Se
4 marks medium
Explain with reasons whether the following transactions attract income-tax in India in the hands of recipients:
Q2(a)(ii)Residential status, not ordinarily resident, Section 6
4 marks medium
Ms. Bindu, a non-resident, residing in New York since 1990, came back to India on 19-02-2013 for permanent settlement in India. Explain her residential status of Ms. Bindu for the Assessment Year 2015-16 in accordance with the various provisions of Indian Income Tax Act.
Q2(b)Service tax on manpower recruitment and supply, taxable valu
0 marks easy
Rahul & Co. is a firm engaged in the business of recruitment and supply of Manpower. It furnishes the following details pertaining to the quarter ended 31-03-2015:
(i) Amount collected from clients for recruitment of Permanent Staff: ₹5,00,000
(ii) Amount collected from clients for recruitment of Temporary Staff: ₹3,00,000
(iii) Amounts collected from clients for pre-recruitment screening: ₹2,50,000
(iv) Domestic helps arranged for friends & relatives (Value of similar services is ₹45,000 to other customers)
(v) Amount collected from a warehouse of agricultural produce for labour provided for loading and unloading: ₹1,75,000
(vi) Advances received from prospective employers for conducting campus interviews in colleges to be held in May 2015: ₹2,00,000 (Such campus interviews could not be conducted due to student's strike in those colleges. Hence, the advances received was later on returned to the employers.)
None of the clients of Rahul & Co. was a body corporate during the relevant quarter. Compute the value of taxable services rendered and the total service tax payable @ 12.36% by the assessee for the relevant quarter assuming that Rahul & Co. is not eligible for the small service provider's exemption in the financial year 2014-15. All above amounts are inclusive of service tax, where applicable.
Q2(c)VAT input tax credit, net VAT liability, capital goods credi
0 marks easy
Balaji Enterprises, a registered dealer, provides the following details of purchases, sales, etc. for the year ended 31st March 2015:
- Purchase of raw materials within State (1500 units), inclusive of VAT @ 12.5%: ₹4,01,000
- Inter-State purchases of raw materials, inclusive of CST @ 2%: ₹3,06,000
- Import of raw materials, inclusive of custom duty: ₹4,50,000 (custom duty ₹50,000)
- Capital goods purchased on 15-6-2014, inclusive of VAT levy @ 10% (input credit to be spread over 3 years): ₹3,30,000
- Manufacturing expenses: ₹1,75,000
- Sales of taxable goods within state, inclusive of VAT @ 4%: ₹10,92,000
- Sale of exempted goods within state (manufactured from Inter-State purchase of raw materials): ₹2,25,000
Closing Stock of 200 units of raw material purchased within State as on 31st March 2015. Input tax credit is allowed only on raw materials used in manufacturing of taxable goods. Compute the net VAT liability of Balaji Enterprises for the year ended on 31st March 2015.
Q3(a)Section 10AA deduction, SEZ unit, export profits, year of es
0 marks easy
Rudra Ltd. has one unit at Special Economic Zone (SEZ) and another unit at Domestic Tariff Area (DTA). The company provides the following details for the previous year 2014-15:
Particulars | SEZ Unit (₹) | DTA Unit (₹)
Total Sales | 6,00,00,000 | 2,00,00,000
Export Sales | 4,60,00,000 | 1,60,00,000
Net Profit | 80,00,000 | 20,00,000
Calculate the eligible deduction under section 10AA of the Income-tax Act, 1961 for the Assessment Year 2015-16 in the following situations:
(i) If both the units were set up and start manufacturing from 24-5-2008.
(ii) If both the units were set up and start from 14-5-2012.
Q3(b)CENVAT credit eligibility, capital goods, input services, re
5 marks medium
BC Pvt. Ltd., a manufacturer, has furnished the following information:
S.No. | Particulars | Excise Duty/Service Tax Paid (₹)
(i) | Input 'A' — Invoice dated 23-09-2014 | 1,56,000
(ii) | Input 'B' — Invoice dated 10-4-2015 | 1,35,000
(iii) | Input 'C' — Invoice missing | 89,460
(iv) | Input Service 'X' — Invoice dated 12-11-2014 | 45,140
(v) | Input Service 'Y' — Invoice dated 20-5-2014 | 68,240
(vi) | Machinery (eligible capital goods under Chapter 82) — Invoice dated 12-9-2014 | 3,54,670
(vii) | GTA service for bringing raw materials to the factory — Invoice dated 10-4-2015 (Payment not made to GTA but service tax paid under reverse charge; Value of Services ₹3,00,000) | 9,270
Excise duty/Service tax given above are including education cess and secondary and higher education cess. BC Pvt. Ltd. is not entitled to SSI exemption. You are required to determine the total CENVAT credit that can be availed by BC Pvt. Ltd. during the month of April 2015.
Q3(c)Customs duty, applicable rate, bill of entry date vs date of
3 marks medium
Rajeshwari Industries imported a machinery from Germany in an aircraft. The bill of entry was presented on 12-01-2014 and the aircraft arrived in India on 25-07-2014. The rates of import duty are:
- Bill of entry on 12-01-2014: 12%
- Arrival of aircraft on 25-07-2014: 15%
In the above case, determine the applicable rate of import duty.
Q4(a)Salary income, perquisites, house property income, clubbing
8 marks hard
From the following details furnished by Mr. Dinesh, a marketing manager of XL Corporation Ltd., Delhi, compute the gross total income for the Assessment Year 2015-16:
- Salary including Dearness Allowance of ₹10,800 p.m.: ₹6,50,000
- Conveyance allowance: ₹900 p.m.
- Salary of servant provided by employer: ₹48,000
- Bills paid by the employer for gas, electricity and water provided free of cost at the residence of Mr. Dinesh: ₹52,000
Dinesh purchased a flat in a co-operative housing society in Dwarka, Delhi for self-occupation for ₹35,00,000 in April 2011, financed by a loan from Bank of India of ₹20,00,000 @ 11% interest, his own savings of ₹5,00,000, and a deposit of ₹10,00,000 from Bank of Baroda, to whom he let out his another house in Rohini, Delhi on lease for ten years. The rent payable by Bank of Baroda is ₹35,000 per month.
Other relevant particulars:
(i) Municipal taxes paid by Dinesh for his flat in Dwarka are ₹18,000 per annum and for his house in Rohini are ₹12,000 per annum.
(ii) Principal loan amount outstanding as on 01-04-2014 was ₹18,50,000.
(iii) He also paid ₹8,000 towards insurance of both the houses.
(iv) In the financial year 2013-14, he had gifted ₹40,000 each to his wife and minor son. The gifted amounts were advanced to Mr. Sandeep, who is paying interest @ 18% per annum.
(v) Mr. Dinesh's son is studying in a school run by the employer company throughout the financial year 2014-15. The education facility was provided free of cost. The cost of such education in a similar school is ₹2,500 per month.
(vi) Dinesh also received gift of ₹45,000 each from his two friends during the financial year 2014-15.
Q4(b)(i)Point of Taxation Rules, continuous supply of services
2 marks easy
What will be the point of taxation in case of continuous supply of services?
Q4(b)(ii)Service tax adjustment, excess payment, refund, adjustment a
2 marks easy
Mohan, a service provider, had received ₹2,50,000 in advance from Rakesh. Mohan had deposited service tax on such amount in the relevant half year. He finally rendered services valuing to ₹2,20,000 only and refunded the balance amount to Rakesh. Mohan wants to adjust service tax on ₹30,000 refunded by him from his current dues of service tax. Advise him.
Q4(c)Assessable value under Section 4, Central Excise Act, inclus
4 marks medium
A manufacturer of machinery sold his machine on which Excise duty is payable under Section 4 of Central Excise Act, 1944. Details are as follows:
- Sale Invoice Price: ₹7,50,000
- Erection Charges (erection to be done at customer's factory): ₹50,000
- Packing charges: ₹12,000
- Design Charges: ₹20,000
- Insurance Charges (for dispatch to customer's factory): ₹5,000
- Outward freight (from place of removal to customer's factory): ₹17,000
- State VAT: 12.5%
- Cash discount @ 2% was allowed as the customer had made full advance payment.
Excise duty rate is 12% and education and secondary & higher education cesses as applicable. Calculate Assessable Value of the machine and excise duty payable.
Q5(a)Capital gains, Section 50C stamp duty valuation, Section 56(
0 marks easy
Ms. Mohini transferred a house to her friend Ms. Ragini for ₹35,00,000 on 01-10-2014. The Sub Registrar valued the land at ₹48,00,000. Ms. Mohini contested the valuation and the matter was referred to Divisional Revenue Officer, who valued the house at ₹41,00,000. Accepting the said value, differential stamp duty was also paid and the registration was completed.
The total income of Mohini and Ragini for the assessment year 2015-16, before considering the transfer of said house, are ₹2,80,000 and ₹3,45,000 respectively. Ms. Mohini had purchased the house on 15th May 2010 for ₹25,00,000 and registration expenses were ₹1,50,000.
You are required to explain provisions of Income-tax Act, 1961 applicable to the present case and also determine the total income of both Ms. Mohini and Ms. Ragini taking into account the above said transactions.
Cost inflation indices:
(i) Financial Year 2010-11: 711
(ii) Financial Year 2014-15: 1024
Q5(b)Negative list of services, Section 66D, Finance Act 1994
4 marks medium
State whether the following services are covered under negative list of services under Section 66D. Need not assign any reason:
(i) Service provided by the Department of Post by way of speed post, express parcel post, Life Insurance and agency services provided to a person other than Government.
(ii) Service provided by way of supply of farm labour relating to agriculture.
(iii) Services by way of renting of residential dwellings for use as residence.
(iv) Services for funeral, burial, crematorium or mortuary and transportation of the deceased.
(v) Services relating to education as a part of an approved vocational education course.
(vi) Service of transportation of passengers with or without accompanied belongings, by Railways in an air conditioned coach.
(vii) Services by way of transportation of goods by road by a goods transportation agency.
(viii) Selling of space or time slots for advertisement broadcast by FM Radio.
Q5(c)Transaction value definition, Section 4, Central Excise Act
4 marks medium
Define the term 'Transaction value' as per Central Excise Act, 1944.
Q6(a)Chapter VI-A deductions, Section 80C, 80D, 80CCC, clubbing o
4 marks medium
Compute the eligible deduction under Chapter VI-A for the Assessment Year 2015-16 of Ms. Roma, who has a gross total income of ₹15,00,000 and provides the following information about investments/payments during the year 2014-15:
S.No. | Particulars | Amount (₹)
1 | Life Insurance premium paid (Policy taken on 01-01-2012, sum assured ₹1,50,000) | 35,000
2 | Public Provident Fund Contribution | 90,000
3 | Repayment of Housing loan to Bhartiya Mahila Bank, Bangalore | 20,000
4 | Payment to LIC Pension Fund | 25,000
5 | Mediclaim Policy taken for self, wife and dependent children — Premium paid | 20,000
6 | Medical Insurance premium paid for parent (Senior Citizen) | 25,000
Additionally: Mr. Ramesh gifted a sum of ₹5 lacs to his brother's minor son on 16-4-2014. On 15-4-2014, his brother gifted debentures worth ₹6 lacs to Ms. Ramesh. Son of Mr. Ramesh's brother invested the amount in fixed deposit with Bank of India @ 9% p.a. interest and Mrs. Ramesh received interest of ₹45,000 on debentures received by her.
Explain the provisions applicable to the above case under the Income Tax Act, 1961.
Q6(b)Service tax liability determination, price cum duty, Section
4 marks medium
Ms. Vasundhara, a service provider who pays service tax regularly, was of the opinion that a particular service rendered by her was not liable to service tax. She therefore did not charge service tax in her bill. She received the payment for the bill amount without service tax. However, it was later confirmed that service tax is payable on the said service. How will service tax liability of Ms. Vasundhara be determined in such a case?
Q6(c)Price cum duty concept, back-calculation of excise duty, Sec
4 marks medium
Explain the term 'Price cum Duty' as per Central Excise Act, 1944.
Q7(a)Return of loss carry forward, TDS on immovable property Sect
0 marks easy
Briefly explain any two of the following three sub-divisions:
Q7(b)Service tax liability of subcontractor, works contract, outs
4 marks medium
Ashok, a taxable service provider, outsourced a part of work by engaging Suresh, a subcontractor. Service tax is charged and paid by Ashok for the total work. Whether Suresh, the sub-contractor, is liable to charge and pay any service tax?
Q7(c)CENVAT credit on capital goods, pollution control equipment,
4 marks medium
RSL Pvt. Ltd. purchased a pollution control equipment on 20-6-2010 for ₹15,00,000 (including excise duty of ₹1,85,400) and took the CENVAT credit of 50% of the excise duty paid in the financial year 2010-11 and balance credit of 50% in the financial year 2011-12. After using such equipment, sold it as scrap for ₹50,000 excluding excise duty, on 31st December 2014. Examine whether:
(i) RSL Pvt. Ltd. was correct in availing the CENVAT credit on the said equipment in financial years 2010-11 and 2011-12?
(ii) On selling of above equipment in the financial year 2014-15, it needs to pay the amount of excise duty earlier availed as CENVAT Credit?