Mock Test by CA Akshansh Garg

CA Final (May 2023)

DT- Mock Test Paper 2

Time allowed- 3 Hours Maximum Marks: 100

1. Part B of Question paper comprises of 6 questions. Answer question no. 1 which is
compulsory and any 4 questions out of the remaining 5 questions.
2. Working notes should form part of the answer.

Part A- Multiple Choice Question (30 Marks)

1. The following are the particulars relating to four Indian companies,namely, A Ltd., B
Ltd., C Ltd. and D Ltd. (10 Marks) (2 Marks each)

Particulars A Ltd. B Ltd.

Date of setting up/registration 1.9.2019 1.11.2021
Main object Manufacture Manufacture of
of steel apparel
Place MadhyaPradesh Warangal in
Telengana
Value of new plant and machinery ` 10 crore ` 4 crore
installed and put to use on the date of
setting up of the company
Gross Total Income of P.Y.2021-22 ` 4.90 crore ` 2.80 crore
No. of new employees employed on the 1000 1000
date of setting up of the company
Monthly emoluments to employees by
account payee cheque:
500 employees ` 24,000 per ` 24,000 per
employee employee
500 employees ` 25,100 peremployee ` 26,000 per
employee
Particulars C Ltd. D Ltd.
Date of setting up/registration 1.4.20 00 1.1.2005
Main object Trading in Trading in food
Leather goods grains

Place Tamil Nadu Karnataka

Turnover
P.Y.2017-18 ` 347 crore ` 201 crore
P.Y.2018-19 ` 395 crore ` 225 crore
P.Y.2019-20 ` 499 crore ` 251 crore
P.Y.2020-21 ` 350 crore ` 342 crore

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Mock Test by CA Akshansh Garg

P.Y.2021-22 ` 424 crore ` 380 crore

Details of income returned &
assessed for A.Y.2022-23
As per return of income filed ` 14 crores ` 17 crores
Income determined u/s 143(1)(a) ` 16 crores ` 20 crores
Income assessed u/s 143(3) ` 20 crores ` 22 crores
From the information given above, choose the most appropriate answer to the following
questions –
1.1 What would be the tax liability (rounded off) of B Ltd. for A.Y.2022-23, if it avails the
beneficial tax rates under the special provisions inserted by the Taxation Laws
(Amendment)Act, 2019 in the Income-tax Act, 1961 by fulfilling theconditions
specified thereunder? Assume that the gross total income reflects the computation
under the special provisions.
(a) ` 70,47,040
(b) ` 22,88,000
(c) ` 25,16,800
(d) ` 17,16,000
1.2 What would be the tax liability (rounded off) of A Ltd. for A.Y.2022-23, if it avails the
beneficial tax rates under the special provisions inserted by the Taxation Laws
(Amendment)Act, 2019 in the Income-tax Act, 1961 by fulfilling theconditions
specified thereunder? Assume that the gross total income reflects the computation
under the special provisions.
(a) ` 1,23,32,320
(b) ` 59,89,980
(c) ` 14,59,740
(d) ` 9,95,280
1.3 What would be the total income (rounded off) of A Ltd. and BLtd. for A.Y.2022-
23, if they do not opt for the special provisions inserted by the Taxation Laws
(Amendment) Act, 2019 in the Income-tax Act, 1961? Assume that the gross total
income reflects the computation under the special provisions.
(a) ` 2,90,00,000; ` 2,40,00,000
(b) ` 58,00,000; ` 2,40,00,000
(c) ` 2,90,00,000; ` 60,00,000
(d) ` 58,00,000; ` 60,00,000
1.4 What would be the quantum of penalty payable by C Ltd. under section 270A,

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Mock Test by CA Akshansh Garg

assuming that the under-reporting of income isnot due to mis-reporting and none of
the additions made in the assessment qualifies under section 270A(6)? Assume
thatC Ltd. has not opted for the special provisions inserted by the Taxation Laws
(Amendment) Act, 2019.
(a) ` 58,24,000
(b) ` 69,88,800
(c) ` 87,36,000
(d) ` 1,04,83,200
1.5 What would be the quantum of penalty payable by D Ltd. under section 270A, assuming
that the under-reporting of income is due to misreporting? Assume that D Ltd. has not
opted for the special provisions inserted by the Taxation Laws (Amendment) Act, 2019.
(a) ` 1,16,48,000
(b) ` 1,39,77,600
(c) ` 2,91,20,000
(d) ` 3,49,44,000

2. Mr. Prem is a partner in two firms X & Co., Mumbai and Y & Co., Delhi. X & Co. has
four partners, including Prem, who share profits and losses equally. Mr. Prem resigned
from X & Co. on 1.4.2021. On the said date, the capital balance of each of the partners
stood at ` 32 lakhs. In order to settle the dues of Mr. Prem, the firm revalues its land
for the first time since purchase; the valuer also valued self-generated goodwill at ` 70
lakhs. The firm has the following capital assets, whose details are as follows.
(10 Marks) (2 Marks each)

Particulars of Assets Date of Cost of Value as on 1.4.2021 as per

purchase acquisition Valuation Report (Rule 11U)
(book value)
1. Land at Pune 21.1.2013 ` 15 lakhs ` 50 lakhs
2. Land at Nagpur 18.4.2015 ` 25.4 lakhs ` 45 lakhs
3. Land at Mumbai 14.5.2013 ` 88 lakhs ` 250 lakhs
4. Self-generated goodwill ` 70 lakhs
In April, 2021, X & Co. gave Land at Nagpur and ` 15 lakh money to Mr. Prem to settle his
capital balance.
The firm Y & Co. dissolved on 1.3.2022 and distributed its land at Chandigarh, Mohali and
Gurgaon on the same date to its three partners, Prem, Akshay and Aarav, respectively, who

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Mock Test by CA Akshansh Garg

were sharing profits and losses equally. The particulars of these lands are given hereunder –

Particulars of Assets Date of Cost of Value as per

purchase acquisition Valuation Report
(book value) as on 1.3.2022
(Rule 11U)
1. Land at Chandigarh (given to Prem) 3.7.2011 ` 18.4 lakhs ` 62 lakhs
2. Land at Mohali (given to Akshay) 15.9.2015 ` 15.24 lakhs ` 59 lakhs
3. Land at Gurgaon (given to Aarav) 27.2.2011 ` 16.7 lakhs ` 70 lakhs
In addition, Prem and Akshay were given money of ` 8 lakhs and ` 11 lakhs, respectively on
1st March, 2022.
Cost Inflation Index is as follows: F.Y.2010-11– 167; F.Y.2011-12 – 184; F.Y.2012-13 – 200;
F.Y.2013-14 – 220; F.Y.2014-15 – 240; F.Y.2015-16 – 254 and F.Y.2021-22 – 317.
On the basis of the facts given above, choose the most appropriate answer to Q.1 to Q.5
below, based on the provisions of the Income-tax Act, 1961 -

1 What would be the amount taxable under section 9B in the hands of X & Co. and Y & Co. for
. A.Y.2022-23?

(a) ` 13,30,000 and ` 1,08,58,000, respectively

(b) ` 28,30,000 and ` 1,27,58,000, respectively
(c) ` 19,60,000 and ` 1,40,66,000, respectively
(d) ` 13,30,000 and Nil, respectively
2 What would be the capital gains taxable under section 45(4) in the hands of X & Co. for
. A.Y.2022-23?

(a) Long-term capital gains of ` 23,79,160

(b) Long-term capital gains of ` 23,76,500
(c) Long-term capital gains of ` 17,55,410 and short-term capital gains of ` 6,23,750
(d) Long-term capital gains of ` 17,53,448 and short-term capital gains of ` 6,23,052
3 What would be the capital gains taxable under section 45(4) in the hands of Y & Co for
. A.Y.2022-23?

(a) Nil
(b) ` 1,08,58,000
(c) ` 1,27,58,000
(d) ` 1,40,66,000

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Mock Test by CA Akshansh Garg

4 What would be the amount apportioned to Land at Pune and Land at Mumbai of X & Co., to
. be reduced from full value of consideration for computing capital gains of such asset, when
sold at a future date?
(a) ` 3,11,526 and ` 14,41,922
(b) ` 3,11,875 and ` 14,43,535
(c) ` 2,92,568 and ` 14,62,842
(d) ` 2,92,241 and ` 14,61,207
5 If self-generated goodwill is sold in the P.Y.2022-23 for ` 80 lakhs, what would be the capital
. gains on such sale in the A.Y.2023-24?
(a) ` 10,00,000
(b) ` 73,76,250
(c) ` 73,76,948
(d) ` 80,00,000
3. Mr. Raj is an Indian citizen living in Country T for the last 10 years. His brother, Mr. Rahul
also left India 10 years before and settled in Country Q. He has become a citizen of Country Q.
Prior to that, they have always been in India since birth. Their parents were also born in India.
Both of them come on a visit to India during the entire months of June, July and August every
year upto P.Y.2020-21. Both brothers decided to start a business in India and hence, visited
India for setting up the business on 1st December, 2021. The income of Mr. Raj and Mr. Rahul
is ` 20 lakhs each, out of which income from foreign sources is ` 5.5 lakhs for Mr. Raj and `
4.5 lakhs for Mr. Rahul. They left India for their respective countries only on 3rd April, 2022.
What is their residential status for A.Y.2022-23? (1 Mark)
(a) Both of them would be non-residents
(b) Mr. Raj is a resident but not ordinarily resident and Mr. Rahul is a non-resident
(c) Mr. Rahul is a resident but not ordinarily resident but Mr. Raj is a non-resident
(d) Both of them would be resident but not ordinarily resident
4. Mr. A, aged 59 years, won ` 9 lakh and Mr. B, aged 50 years, won ` 8 lakh from
lotteries. Tax deductible at source under section 194Bwas duly deducted. Assuming
that this is the only source of income ofMr. A and Mr. B for A.Y.2022-23, are Mr. A and
Mr. B liable to pay advance tax for that year? (1 Mark)
(a) No, Mr. A and Mr. B are not liable to pay advance tax as tax deductible at source
under section 194B has been fullydeducted
(b) Yes, Mr. A and Mr. B are liable to pay advance tax
(c) Mr. A is liable to pay advance tax but Mr. B is not liable to pay advance tax
(d) Mr. B is liable to pay advance tax but Mr. A is not liable to pay advance tax

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Mock Test by CA Akshansh Garg

5. ABC Inc., a Country A company whose place of effective managementis outside India,
receives royalty from A Ltd., an Indian company, in pursuance of an agreement made
which is approved by the Central Government. XYZ Inc., a Country B company whose
place of effective management is outside India, receives fees for technical services (FTS)
from A Ltd. in pursuance of an agreement made which is approved bythe Central
Government. The DTAA between India and Country A provides that royalty will be
subject to tax in the Source State at 9% and the DTAA between India and Country B
provides that FTS will be subject to tax in the Source State at 12%. Both ABC Inc. and
XYZ Inc. do not have a permanent establishment in India. ABC Inc. and XYZInc.
have also invested in shares of Indian companies in respect of which they receive
dividend. The treaty states that the dividend will be taxed at the rates provided under the
domestic laws of the sourcecountry. Are ABC Inc. and XYZ Inc. required to file their
return ofincome for A.Y.2022-23, assuming that the tax deductible at source has been
fully deducted? (2 Marks)
a) Both ABC Inc. and XYZ Inc. have to file their return of income u/s 139 for
A.Y.2022-23
b) Both ABC Inc. and XYZ Inc. need not file their return of income u/s 139 for
A.Y.2022-23
c) ABC Inc. has to file its return of income u/s 139 for A.Y.2022-23, but XYZ Inc.
need not file its return of income
d) XYZ Inc. has to file its return of income u/s 139 for A.Y.2022-23, but ABC Inc.
need not file its return of income.
6. Mr. Pranav, a resident aged 48 years, and his brother Mr. Vaibhav, a non-resident
aged 45 years, are due to receive dividend of ` 7 lakhs (gross) and ` 5 lakhs (gross),
respectively, from A Ltd., an Indian company in January, 2022. The interest
expenditure incurred by themin the P.Y. 2021-22 on loan taken for investing
in shares of A Ltd. Is ` 1.50 lakh and ` 80,000, respectively. What is their
tax liability for A.Y. 2022-23 on such dividend received by them in January 2022,
assuming that it is the only source of income of Mr. Pranav and Mr. Vaibhav
and they wish to make maximum tax savings? (2 Marks)
(a) ` 25,480 and ` 8,840, respectively
(b) ` 23,400 and ` 7,800, respectively
(c) ` 19,240 and ` 8,840, respectively
(d) ` 19,240 and ` 1,04,000, respectively

7. PQR Ltd., a domestic company, has distributed on 15.6.2022, dividend of ` 50 lakh to

its shareholders. On 17.9.2021, PQR Ltd. has received dividend of ` 54 lakh (Net of
TDS) from its domestic subsidiary company XYZ Ltd. The deduction under section

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Mock Test by CA Akshansh Garg

80M allowable to PQR Ltd. Would be – (2 Marks)

a) ` 50 lakhs
b) ` 54 lakhs
c) ` 60 lakhs
d) Nil

8. XYZ Ltd., a domestic company not opting for the provisions of section 115BAA, has
a total income of ` 10,02,00,000 for A.Y.2022-23. The gross receipts of XYZ Ltd. for
P.Y.2019-20 is ` 410 crore. The tax liability of X Ltd. for A.Y.2022-23 is - (2 Marks)
a) ` 3,23,00,000
b) ` 3,35,92,000
c) ` 3,36,67,200
d) ` 3,50,13,890

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Mock Test by CA Akshansh Garg

Part B- Descriptive Question (70 Marks)

Q1 Anustup Chandra Flour Mills Ltd., a domestic company engaged in manufacture of

wheat flour,furnishes the following information pertaining to the year ended 31-3-2022:
(i) Net profit as per the Statement of Profit and Loss is ₹ 77 lakhs after considering the
items listed in (ii) to (vi) below.
(ii) The company is a member of Vishnu Foods & Co., an AOP in which the members'
shares are determinate and their shares in profit/loss are clearly known. The entire
income of the AOP is from business activities. During the year, the company has
derived share income of ₹ 9 lakhs from the AOP. The company has spent a sum of ₹
90,000 towards earning such income.
(iii) The company has provided for income-tax (including interest under sections 234B and
234C of ₹ 62,000) for ₹ 3 lakhs and ₹ 5 lakhs towards share in loss of foreign subsidiary.
(iv) Amount debited to the Statement of Profit and Loss towards interest to a public
financial institution is ₹ 12 lakhs. Of this, ₹ 4 lakhs was paid on 12-12-2021 only.
(v) The company committed breach of building norms while extending the factory
building. The City Corporation initiated proceedings against the company and the
company settled the issue by paying compounding fee of ₹ 1 lakh. This amount forms
part of general expenses, which has beendebited to the Statement Profit and Loss.
(vi) In the administrative expenses, the company has debited a sum of ₹ 70,000 towards
fee for delayed filing of statement of TDS under section 234E of the Income-tax Act,
1961.
(vii) The company has credited revaluation surplus of ₹ 10 lakhs on fair valuation of assets
under Ind AS 16 and Ind AS 38 to other equity.
(viii) The company has credited ₹ 5 lakhs to other comprehensive income on fair valuation
of equity instruments in which the company has Investment.
During the current year, the depreciation charged as per books of account of the
company is the same as allowable under the Income-tax Act, 1961 [before
considering the provisions of section32(2)]. The company proposes to adopt this
practice consistently in the future years.
You are required to compute the income-tax payable by the company for the
assessment year 2021-22. The company is an Indian Accounting standard compliant
company.
Note: The Turnover of company for the P.Y 2019-20 was ₹ 350 crore. (14 Marks)

Q2(a).

T and Q are individuals, who constitute an Association of Persons, sharing profit and losses
in the ratioof 2:1. For the accounting year ended 31st March, 2022, the Profit and Loss
account of the business wasas under:

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Figures are in ₹ ‘000s

Cost of goods sold 4,250 Sales 4,900
Remuneration to: Dividend from Indian companies 25
T 130 Capital gains-Long term (computed) 640
Q 170
Employees 256
Interest to:
T 48.3
Q 35.7
Other expenses 111.7
Sales-tax penalty due 39
Net profit 524.3
5,565 5,565

Additional information furnished:

(i) Other expenses included:
(a) wrist watches costing ₹ 2,500 each were given to 12 dealers, who had
exceeded thesales quota prescribed under a sales promotion scheme;
(b) employer’s contribution of ₹ 6,000 to the Provident Fund was paid on 14th
January,2022
(c) ₹ 30,000 was paid in cash to an advertising agency for publicity.
(ii) Outstanding sales tax penalty was paid on 15th October, 2022. The penalty was
imposed by the Sales-tax Officer for non-filing of returns and statements by the
due dates.
T and Q had, for this year, income from other sources of ₹ 3,60,000 and ₹ 2,32,000
respectively
Required to:
(i) Compute the total income of the AOPs for the assessment year 2022-23; and
(ii) Discuss the tax implication for that year in the hands of the individual members
(8 Marks)
2(b).
PR Ltd. is an Indian company engaged in the manufacturing of supreme quality cotton
bedsheets. It has total borrowings of ` 60 crores by way of loan as on 31.03.2022. SK Ltd.
of Canada imported 4 lakh bedsheets from PR Ltd. for the resale in Canada @ ` 2,200 per
unit. PR Ltd. sold similar bedsheets to other dealers in Canada @` 2,300 per unit.
PR Ltd. received a bank guarantee on 1.04.2021 for availing a cash credit limit of ` 9 crores
for which SK Ltd. was the guarantor. The terms of trade for other dealers was to make
payment within 1 month from the date of sale of goods by PR Ltd., whereas for SK Ltd., the
credit period allowed was 3 months from the date of sale of goods. The cost of capital was
12% per annum and the supply of goods is assumed to be uniform throughout the year.
You are required to determine whether PR Ltd. and SK Ltd. are associated enterprises. If yes,

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Mock Test by CA Akshansh Garg

compute the ALP of the transaction between them and the amount to be added to the income
of PR Ltd., if any, by way of an ALP adjustment.
Assuming that the above adjustments to the transfer price have been made suo-moto by PR
Ltd. in its return of income, what is the time limit for the repatriation of such excess money?
What are the implications if the excess money is not repatriated within such prescribed time
limit? (6 Marks)

Q3(a).
Edu All Charitable Trust registered under section 12AA, following cash system of
accounting,furnishes you the following information for P.Y. 2021-22:
(i) Gross receipts from hospital ₹ 200 lakhs.
(ii) Gross receipts from medical college ₹ 95 lakhs (offering recognized degree courses).
(iii) Corpus donations by way of cheque ₹ 42 lakhs and by way of cash ₹ 6 lakhs.
(iv) Anonymous donations by cash ₹ 12 lakhs.
(v) Administrative expenses for hospital ₹ 75 lakhs.
(vi) Fees not realized from patients ₹ 18,00,000 as on 31st March, 2022.
(vii) Depreciation on assets of the trust ₹ 37,50,000. The entire cost of assets ₹ 250 lakhs
claimed as application in the earlier years.
(viii) Acquired a building for ₹ 80 lakhs on 01.06.2021 for expansion of hospital (cost of
land included therein ₹ 50 lakhs). Stamp duty value of the land and building on the
date of registration of sale deed ₹ 210 lakhs.
(ix) The trust gave corpus donation of ₹ 19 lakhs to Help Aid Trust having objects of
charitable nature registered under section 12AA but not similar to the objects of the
donor trust.
You are required to compute the total income of the trust and its income-tax liability in such
a manner that it can avail the optimal benefit within the four corners of the Income- Tax
Act, 1961.
Note: Trust does not want to seek accumulation of income by virtue of section 11(2) of the
Act.

3(b).
Mr. Ganesh, a resident individual aged 52 years, has furnished the following details of his
income earned during the previous year 2021-22:
India
Income from a sole-proprietary business in Pune ` 80 lakhs.
Share of profit from a partnership firm in Mumbai ` 20 lakhs.
Country G
Agricultural Income (gross) of CGD 40000 from tea gardens. Taxable @20%.
Brought forward business loss of F.Y.2018-19 in Country G was CGD 5,200 which is not

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Mock Test by CA Akshansh Garg

permitted to be set off against other income as per the laws of that country.
Country M
Dividend income (gross) of CMD 30,000. Taxable @10%.
Rental Income of CMD 52,000 from house property. Taxable @15%. He paid CMD 6,000
towards municipal taxes in Country M. Municipal taxes are not allowed as deduction in
Country M.
Other Information
Mr. Ganesh has deposited ` 1,50,000 in public provident fund and paid medical insurance
premium of ` 28,000 by account payee cheque to insure the health of himself and his wife
(aged 48 years).
India has no DTAA with Country G and Country M.

Compute total income and tax liability of Mr. Ganesh for the A.Y. 2022-23 after providing
for deduction under section 91, assuming that 1 CGD/CMD = ` 70. Mr. Ganesh is not opting
for section 115BAC.

4(a).
Examine the applicability of provisions relating to deduction/collection of tax at source and
compute the amount of tax to be deducted/collected at source in the following cases for
financial year ended 31st March, 2022 as per provisions contained in the Income-tax Act,
1961: (8 Marks)
1. Mr. Rajesh remitted an amount of ` 5,80,000 towards maintenance expenses of his son
pursing education in University of Australia. He also remitted ` 7,80,000 to University
of Australia, for the purpose of his son’s education, out of loan taken from his
employer, ABC Ltd., an Indian manufacturing company. Both the remittances were
made through the same authorized dealer under the Liberalised Remittance Scheme of
RBI.
2. Mr. Appy, a resident Indian, [E-commerce participant] sells goods worth ` 84 lakhs
through e-commerce website of HIGHSALE [E-commerce Operator]. Mr. Appy has
not furnished PAN or AADHAR No. to the E-commerce Operator. He has furnished
his return of income for all the assessment years before the due date of filing return of
income.
3. Mr. Suresh, an individual carrying on retail business with turnover of ` 3.2 crores in
the P.Y.2020-21. He made contract payment for repair of residential house of ` 3 lakhs
and` 75,000 towards commission to Mr. Vallish for business purposes.
4. Mr. Rajesh, a wholesale trader whose turnover was ` 95 lakhs in P.Y. 2020-21. He
made payment of ` 20 lakhs in January, 2022, ` 12 lakhs in Feb 2022 and ` 23 lakhs in
March 2022 for reconstruction of his residential house.

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Mock Test by CA Akshansh Garg

4(b).
STYLE Inc, a notified Foreign Institutional Investor (FII), derived the following
incomes for the financial year 2021-22:-
1. Interest received on investment in Rupee Denominated Bonds of ABC Ltd., an
Indian company (investment was made in the F.Y.2018-19) - ₹ 8,50,000
2. Dividend from listed shares of Indian companies – ₹ 6,20,000
3. Interest on securities – ₹ 17,32,000 (Expenses of ₹ 26,000 has been incurred to
earn such income)
4. Income from sale of securities and shares:

(i) Bonds of J Ltd.

[Date of purchase 5 May 2017; Date of sale 7 March 2022]
Sale proceeds : ₹ 47,00,000
Cost of purchase : ₹ 32,00,000
Cost Inflation Index: F.Y.2017-18:272; F.Y.2021-22:317
(ii) Listed Shares of E Ltd.
[Date of purchase – 2 May, 2021; Date of sale – 9 February, 2022]
Sale Consideration ₹ 12,40,000
Purchase cost ₹ 7,80,000
[STT paid both at the time of purchase and sale]
(iii) Unlisted equity shares of M Ltd.
[Date of purchase – 1 July, 2021; Date of sale – 7 March, 2022]
Sale Consideration ₹ 8,40,000
Purchase cost ₹ 3,72,000
Compute the total income and tax liability of the FII, STYLE Inc., for the A.Y. 2022-23 as
per section 115AD, assuming that no other income is derived by STYLE Inc. during the
F.Y.2021-22.

Q5.
(a) XYZ Ltd. received the draft order from the Assessing Officer as per section 144C of the
Income- tax Act, 1961 due to variations determined by the Transfer Pricing Officer in the arm's
length price. But XYZ Ltd. did not prefer to file the objection against the draft order before the
Dispute Resolution Penal, instead, he prefer to do appeal before the CIT appeals under section
246A against the final order received from the Assessing Officer.
You are required to advise XYZ Ltd., whether his contentions are tenable? Discuss the issue
with reference to provisions of section 144C of the Income-tax Act, 1961. (4 Marks)
(b) During search conducted on premises of an assessee, some gold bars were seized by the
department from lockers of assessee. Assessee voluntarily disclosed some income during

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Mock Test by CA Akshansh Garg

course of search. Assessee moved an application before Assessing Officer, for adjustment of
tax liability on income surrendered during search by sale of seized gold bars. However, said
application was turned down by the Assessing Officer. Explain whether action of the AO is
justified, in light of relevant case laws? (4 Marks)

(c) Describe the three-tier structure for transfer pricing documentation mandated by BEPS
Action Plan 13. Which provisions under the Income-tax Act, 1961 dealt with Master File and
CbC reporting.
(6 Marks)

Q6(a).

Trade & Co., a non-resident entity based in Australia, owns and operates an electronic facility
through which it effects online sale of goods manufactured by it. Discuss the equalisation levy
implications of the following receipts for the P.Y.2021-22 in the hands of Trade & Co., if –
Trade & Co. has no permanent establishment in India
Trade & Co. has a permanent establishment in India, and the sale of goods is effectively
connected to the permanent establishment in India

Particulars Amount in `

(a) Receipts from sale of goods to persons resident in India 180 lakhs
(b) Receipts from sale of goods to persons not resident in India but resident 80 lakhs
in other parts of South-East Asia
Out of the said sum, ` 38 lakhs relates to receipts from persons using
internet protocol address located in India.

Would your answer change if out of the receipts in (b) above, only ` 14 lakhs relate to receipts
from persons using internet protocol address located in India? (6 Marks)
Q6(b).
MCM is a firm liable to tax at the rate of 30% and has filed its return of income. The following
information are provided to you:
(i) Returned Total income - ₹ 1,00,00,000
(ii) Total income determined U/s 143(1)(a) - ₹ 1,20,00,000
(iii) Total income assessed U/s 143(3) - ₹ 1,60,00,000
(iv) Total income reassessed U/s 147 - ₹ 1,90,00,000

Considering that none of the additions or disallowances made in the assessment or re -

assessment as above qualifies under section 270A(6), compute the amount of penalty to be

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Mock Test by CA Akshansh Garg

levied U/s 270A of the Income-tax Act, 1961 at the time of assessment U/s 143(3) and at the
time of reassessment U/s 147 (Assume under-reporting of income is not on account of
misreporting).

Q6(c).
Distinguish between Tax planning and Tax Evasion. (4 Marks)

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