TAXATION SEA PAPER

Duration: 60 Min

Answer Any Three from following questions (from 1 to 5)

(7 marks)

1. Mr. Aditya is a proprietor of Star Stores having 2 units. On 1.4.2020, he has transferred
Unit 2, which he started in 2003-04, by way of slump sale for a total consideration of
INR 18 lakhs. The professional fees & brokerage paid for this transfer are Rs. 78,000.
His Balance Sheet as on 31-03-2020 is as under:

Liabilities Rs Assets Unit 1 Unit 2 Total

(Rs) (Rs)
Own Capital 20,50,000 Land 12,75,000 7,50,000 20,25,000
Revaluation 2,50,000 Furniture 2,00,000 5,00,000 7,00,000
reserve
Bank Loan (70% 8,50,000 Debtors 2,00,000 3,50,000 5,50,000
for Unit 1)
Trade Creditors 4,50,000 Patents - 7,25,000 7,25,000
(20% for Unit 2)
Unsecured Loan 4,00,000
(30% for Unit 2)
40,00,000 16,75,000 23,25,000 40,00,000

Other Information:

a. Land of Unit 2 was purchased at Rs.5,00,000 in the year 2003 and revalued at
Rs.7,50,000 as on 31.3.2020.No individual value of any asset is considered in the
transfer deed.

b. Patents were acquired on 01-12-2018 on which no depreciation has been

provided.

c. Furniture of Unit 2 of Rs.5,00,000 were purchased on 01-12-2019 on which no

depreciation has been provided.

d. Fair market value of capital asset transferred by way of slump sale of Unit 2 is
Rs. 18,10,000.

Compute the capital gain for A.Y. 2021-22.

 (7 marks)

2. From the following particulars of income furnished by Mr. Ashutosh, aged 65

years, pertaining to year ended 31.03.2021, show the working for computation of
total income for the A.Y. 2021-22 and tax thereon, if he is a Resident and
ordinarily resident.

Sr. No Particulars Amount

(in Rs)
(i) Long term Capital gain on sale of land in Jaipur to Mr. 15,00,000
Ramesh, a non- resident, outside India. The consideration is
also received outside India in foreign currency
(ii) Rent from property in Delhi, let out to a branch of a foreign 2,20,000
company. The rent agreement is entered outside India.
Monthly rent is also received outside India
(iii) Agricultural income from a land situated in Nepal, received in 55,000
Nepal
(iv) FD Interest on bank deposit in UCO Bank, Delhi 18,000
(v) Gift received from his daughter on his birthday 55,000
(vi) Past foreign taxed income brought to India 37,000

(7 marks)

3. What is agricultural income? How is agricultural income taxed in the hands of

assessee? Give two examples of agricultural income.
 (7 marks)

4. Poorna has one house property at Indira Nagar in Bangalore. She stays with her
family in the house. The rent of similar property in the neighborhood is
Rs. 25,000 p.m. The municipal valuation is Rs. 2,80,000 p.a. Municipal taxes
paid are Rs. 8,000. The house construction began in April 2014 with a loan of
Rs. 20,00,000 taken from SBI Housing Finance Ltd. @9% p.a. on 1.4.2014. The
construction was completed on 30.11.2016. The accumulated interest up to
31.3.2016 is Rs. 3,60,000. On 31.3.2021, Poorna paid Rs. 2,40,000 which
included Rs. 1,80,000 as interest. There was no principal repayment prior to this
date. Compute Poorna’s income from house property for A.Y. 2021-22.

(7 marks)

5. Mr. Kunal (age 33 years) an associate director of Transaction Square Limited

submits following information relevant for AY 2021-22:

a. Basic Salary Rs. 14,56,000, Entertainment allowance 1,06,000, Bonus 7,50,000,

income tax penalty paid by employer Rs 9,500, LTC Rs 1,00,000 (actual
expenditure on fare is more than 1,00,000) ,

b. Free residential telephone Rs 18,000, Reimbursement of gas bills Rs 8,500,

Professional tax paid by Mr. Kunal Rs 3,650.

c. House rent allowance 35,000, Monthly Rent paid by him 27,000.

d. Arrears of bonus not taxed earlier Rs, 52,000, payment of delegation fee to FICCI
for attending all India conference for corporate managers Rs 3000,

e. Dividend from Infosys Ltd an Indian company Rs 57,880 and agricultural income
from Bhutan Rs 1,39,000.

f. During the year Mr. Kunal makes the following contribution and expenditure:

Contribution towards recognized provident fund Rs 80,000

Insurance premium for policy of his wife Rs 5,200 (sum assured 90,000)

Deposit in 10 year account under post office savings bank Rs 2,400

Payment of school fees of 2 children Rs 19,200 for each child

Calculate tax liability for AY 2021-22 assuming he resides in Mumbai.

Answer any one question from 6 & 7
(4 marks)

6. Mr. Vikas received a gold ring worth Rs. 60,000 on the occasion of his daughter’s
wedding from his best friend Mr. Vishnu. Mr. Vishnu also gifted a gold chain to
Kavya, daughter of Mr. Vikas, worth Rs. 80,000 on the said occasion. Compute
taxable income in the hands of Mr. Vikas and Ms. Kavya with reasoning for
same.

(4 marks)

7. What benefits are offered under presumptive scheme of taxation for medical
professionals? What are the conditions for availing presumptive taxation scheme?