Q1(a)Total income and tax computation — multiple heads, capital g
10 marks hard
Mr. Hari provides the following information for the year ending 31-03-2012:
(i) Rent from vacant site let on lease: Rs.1,12,000
(ii) Rent from house property at Delhi: Rs.20,000 per month
(iii) Turnover from retail trade in grains (No books of account maintained): Rs.24,37,500
(iv) Arrears of salary received from ex-employer: Rs.40,000
(v) Purchase of 10,000 shares of X Co. Ltd., on 01-01-2008: Rs.1,00,000. He received a 1:1 bonus on 01-01-2009. Sale of 5,000 bonus shares in September, 2011: Rs.2,20,000
(vi) Received Rs.1,50,000 on 12-02-2012 being amount due from Mr. A relating to goods supplied by Hari's father, which was written off as bad debt by his father in Assessment Year 2010-11 and allowed as deduction. Hari's father died in July 2010.
(vii) Brought forward business loss relating to discontinued textile business of Hari relating to Assessment Year 2010-11: Rs.1,97,500
(viii) Brought forward depreciation relating to discontinued textile business of Hari: Rs.1,50,000
(ix) Hari contributed Rs.30,000 to Prime Minister's National Relief Fund and Rs.40,000 to Charitable Trust enjoying exemption u/s 80G.
Compute the total income and the tax thereon of Mr. Hari for the Assessment Year 2012-13.
Q1(b)Service tax computation for a CA — point of taxation, advanc
5 marks medium
Mr. Ghosh is a practising Chartered Accountant. He has furnished the following information for the month of January 2012:
(i) A bill for annual professional service was raised on Amco Ltd., for Rs.7,20,000 on 22nd December 2011. However he received Rs.7,00,000 in full and final settlement of the above bill on 23rd January 2012.
(ii) An advance of Rs.3,00,000 was received from Atul Ltd., for services to be provided in the month of April and May.
(iii) Services were provided to a friend free of cost in January 2012 for which Ghosh normally charges Rs.1,20,000 from other clients.
(iv) Rs.1,00,000 was received on 20th January 2012 from client 'C' whom Ghosh represented in the Income-tax Appellate Tribunal which sent a notice to Mr. C.
(v) Rs.1,00,000 was received on 18th January 2012 for services rendered as a part time lecturer in a local college.
Additional information: (i) In all the aforesaid cases the service tax has not been charged separately. (ii) He is not eligible for the exemption available to the small service provider.
Compute the service tax, education cess and higher education cess payable by Mr. Ghosh for the month of January 2012. The rate of service tax is 10%, education cess is 2% and higher education cess is 1%.
Q1(c)VAT liability computation — input tax credit, inter-state pu
5 marks medium
The following are details of purchases, sales, etc. effected by Varadan & Co., a registered dealer, for the year ended 31-03-2012:
- Purchase of raw materials within State (500 units, inclusive of VAT levy at 12.5%): Rs.11,25,000
- Inter-State purchases of raw materials, inclusive of CST at 4%: Rs.4,08,000
- Import of packing material, inclusive of customs duty of Rs.10,000: Rs.2,10,000
- Capital goods purchased on 01-04-2011 at VAT levy at 10% (input credit to be spread over 2 financial years): Rs.5,50,000
- Sales of taxable goods within State, inclusive of VAT levy at 4%: Rs.40,24,000
- Sales of goods within State, exempt from levy of VAT (goods were manufactured from the Inter-State purchase of raw materials): Rs.1,20,000
Compute the VAT liability of the dealer for the year ended 31-03-2012.
Q2(a)HUF taxation — clubbing of income, minor's income, lottery w
8 marks hard
Mr. B is the Kartha of a HUF, whose members derive income as given below:
(i) Income from B's profession: Rs.45,000
(ii) Mrs. B's salary as fashion designer: Rs.76,000
(iii) Minor son D — interest on fixed deposits with a bank which were gifted to him by his uncle: Rs.10,000
(iv) Minor daughter P's earnings from sports: Rs.95,000
(v) D's winnings from lottery (gross): Rs.1,95,000
Discuss the tax implications in the hands of Mr. and Mrs. B.
Q2(b)Service tax — small service provider threshold, aggregate tu
4 marks medium
D & Co. has been providing taxable services for the past few years. Its gross value of taxable services provided during the financial year 2009-10 and 2010-11 is Rs.12 lakhs and Rs.8.75 lakhs respectively. During the financial year 2011-12 it provided service for Rs.13 lakhs. Calculate the service tax liability of D & Co. for the financial year 2011-12. Rate of Service Tax 10%, Education cess 2% and Higher Education cess @ 1%.
Q2(c)VAT computation — subtraction method
4 marks medium
How is VAT computed under the subtraction method?
Q3(a)Capital gains — conversion of capital asset to stock-in-trad
8 marks hard
Mr. C inherited from his father 8 plots of land in 1980. His father had purchased the plots in 1960 for Rs.5 lakhs. The fair market value of the plots as on 1-4-1981 was Rs.8 lakhs (Rs.1 lakh for each plot).
On 1st June 2001, C started a business of dealer in plots and converted the 8 plots as stock in trade of his business. He recorded the plots in his books at Rs.45 lakhs being the fair market value on that date. In June 2005, C sold the 8 plots for Rs.50 lakhs.
In the same year he acquired a residential house property for Rs.45 lakhs. He invested an amount of Rs.5 lakhs in construction of one more floor in his house in June 2006. The house was sold by him in June 2011 for Rs.63,50,000.
The valuation adopted by the registration authorities for charge of stamp duty was Rs.85,50,000. As per the assessee's request the assessing officer made a reference to a valuation officer. The value determined by the valuation officer was Rs.87,20,000. Brokerage of 1% of sale consideration was paid by C.
The relevant Cost Inflation Indices are:
F.Y. 1981-82: 100
F.Y. 2001-02: 426
F.Y. 2005-06: 497
F.Y. 2006-07: 519
F.Y. 2011-12: 785
Give the tax computation for the relevant assessment years with reasoning.
Q3(b)Service tax — return filing, reverse charge mechanism, nil r
4 marks easy
State whether the following are true or false giving reasons to substantiate your answer:
Q3(c)VAT — input tax credit eligible purchases
4 marks medium
Enlist any six purchases eligible for availing input tax credit.
Q4(a)Business income computation — capital expenditure, TDS defau
8 marks hard
Following is the profit and loss account of Mr. Q for the year ended 31-03-2012:
Debit: To Repairs on Building Rs.1,81,000 | To Amount paid to IIT Mumbai for an approved Scientific Research programme Rs.1,00,000 | To Interest Rs.1,10,000 | To Travelling Rs.1,30,550 | To Net Profit Rs.93,950 | Total Rs.6,15,500
Credit: By Gross Profit Rs.6,01,000 | By I.T. Refund Rs.8,100 | By Interest on Company Deposits Rs.6,400 | Total Rs.6,15,500
Additional information:
(1) Repairs on building includes Rs.1,00,000 being cost of laying a toilet roof.
(2) Interest payments include Rs.50,000 on which TDS has not been deducted and penalty for contravention of Central Sales Tax Act of Rs.24,000.
Compute the income chargeable under the head 'Profits and gains of Business or Profession' of Mr. Q for the year ended 31-03-2012 ignoring depreciation.
Q4(b)Service tax — taxable value, exemptions for UN, RBI, J&K, te
4 marks medium
Pranav Private Ltd., is engaged in providing a taxable service and furnishes the following information:
- December 2011 (includes Rs.2,00,000 for services rendered to the United Nations Organisation): Rs.5,00,000
- January 2012 (includes Rs.1,50,000 for services rendered within the Indian territorial waters): Rs.4,00,000
- February 2012 (includes Rs.1,75,000 for services rendered to the RBI): Rs.5,00,000
- March 2012 — Advance receipt for services to be rendered in April 2012 (includes Rs.1,60,000 for services rendered in the State of Jammu & Kashmir): Rs.5,00,000
Compute the taxable services for the year ended 31-03-2012.
Q4(c)VAT composition scheme — eligibility conditions
4 marks medium
What are the conditions to be fulfilled by the dealer accepting the composition scheme under the value added tax?
Q5(a)Total income — set-off and carry forward of losses, speculat
8 marks hard
Mr. Rahul, an assessee aged 61 years, gives the following information for the previous year 31-03-2012:
a. Loss from profession: Rs.1,05,000
b. Capital loss on the sale of property — short term: Rs.55,000
c. Capital gains on sale of shares — long term: Rs.2,05,000
d. Loss in respect of self occupied property: Rs.15,000
e. Loss in respect of let out property: Rs.30,000
f. Share of loss from firm: Rs.1,60,000
g. Income from card games: Rs.55,000
h. Winnings from lotteries: Rs.1,00,000
i. Loss from horse races in Mumbai: Rs.40,000
j. Investment in infrastructure bonds: Rs.21,000
k. Medical Insurance premium paid by cheque: Rs.18,000
Compute the total income of Mr. Rahul for the assessment year 2012-13.
Q5(b)Service tax — interest and penalty for non-payment or delaye
4 marks medium
What are the consequences of non-payment or delayed payment of service tax?
Q5(c)VAT — input tax credit concept, elimination of cascading eff
4 marks medium
What is meant by input tax credit in the context of VAT provisions? How does input tax credit help in achieving the essence of VAT?
Q6(a)Taxability of receipts — heads of income, bonus shares, deem
8 marks hard
Discuss whether the following receipts are taxable and also indicate the head of income under which the same is taxable:
Q6(b)Service tax — advance payment provisions
4 marks medium
Briefly explain the provision relating to advance payment of Service Tax.
Q6(c)VAT registration — compulsory and voluntary registration
4 marks medium
Discuss the compulsory and voluntary registration under VAT.
Q7(a)(i)TDS applicability — interest, advertisement, rent, brokerage
4 marks medium
Bharghav doing textiles business furnishes you the following information:
Total turnover for the financial year — 2010-11: Rs.61,00,000; 2011-12: Rs.59,00,000
State whether the provisions of tax deduction at source are attracted for the following expenses incurred during the financial year 2011-12:
- Interest paid to Indian Bank on Term Loan: Rs.92,800
- Advertisement expenses to R (two individual payments of Rs.24,000 and Rs.34,000): Rs.58,000
- Factory rent paid to C: Rs.1,85,000
- Brokerage paid to B, a sub-broker: Rs.6,000
Q7(a)(ii)Income tax return — signing and verification u/s 139, author
4 marks medium
Enumerate the circumstances in which an individual assessee is empowered to sign and verify his return of income u/s 139 by himself or otherwise by an authorized signatory.
Q7(a)(iii)Capital gains — conversion of capital asset to stock-in-trad
4 marks medium
Discuss the tax implication arising consequent to conversion of a Capital Asset into stock-in-trade of business and its subsequent sale.
Q7(b)Service tax — treatment of excess service tax collected from
4 marks medium
Explain the treatment for excess amount of service tax collected from the Recipient under Service Tax.
Q7(c)VAT — self-assessment system and cross-checking mechanism
4 marks medium
Since the VAT system emphasizes on self assessment the need for a system of cross-checking has arisen. Elaborate.