CHANAKYA NATIONAL LAW UNIVERSITY

NYAYA NAGAR, MITHAPUR, PATNA- 800001

Mid Semester Examinations - February, 2022
8th Semester
Taxation Laws
Answer all Questions Roll No. - _______
Total Time: 2 hrs. Maximum Marks: 15
Figures in the brackets indicate full marks

1. The assessee, GRK, assessed as an individual, was having income from various sources
including salary and business income. In the relevant assessment year he participated in a car
rally which was designed to test endurance and the reliability of the automobiles as well as
skill of the drivers. The participants in the car rally were required to observe the traffic
regulations as well as the regulations prescribed by the Rally Committee. Prizes were
awarded on the basis of least penalty points for violations. On this basis, the assessee won
the first prize and received a total sum of Rs. 22,000.
The Revenue seeks to include the winning amount from the car rally in the total income of
the assesse. Whether such winning can be included in the total income of the assesse?
[5 Marks]
2. The assessee is a shareholder in two tea companies, and received certain dividends from the
companies. The relevant Income Tax Rules provided that 60% of the income of the tea
companies would be exempted from tax as agricultural income. The assessee claimed that
since 60% the income of the tea companies is exempt from tax, the dividend income received
by her in respect of the shares held by her in the tea companies, is to the extent of 60%
agricultural income in her hands and therefore exempt from tax.
Can the asssessee succeed in her claim? Decide. [5 Marks]

3. Discuss the scheme of division of taxation powers between the Centre and the States with
reference to the lists provided in Seventh Schedule of the Constitution of India.
[5 Marks]