ST.

JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

REG NO:
END SEMESTER EXAMINATIONS – MARCH/APRIL 2016
B.B.M. – VI SEMESTER
M1 11 601: INCOME TAX - II
Duration: 3 Hours Max. Marks: 100
SECTION - A
I) Answer ALL the questions. Each carries 2 marks. (10x2=20)
1. What is tax rebate?
2. Mr X received Rs. 70,000 as winnings from Lottery .what is the tax liability?
3. Explain in brief “Loss that can be carried forward”
4. Explain provisions relating to additional depreciation allowable for New plant
and Machinery in a manufacturing organization.
5. How would you treat the following while computing the Business Income
a) Provision for contingencies of Rs. 75,000
b) Cash payment of Rs 25,000 on a bill due when there was a bank strike
6. How would you treat closing stock of Rs, 80,000 undervalued while
computing income from Business
7. How would you treat the payments made to outside agencies to promote
research?
8. What is Best Judgment Assessment?
9. Mr. X spent Rs. 50,000 on preparation of feasibility report, Rs. 30,000 on
conducting survey and Rs. 20,000 on legal charges in drafting agreement. How
much can he claim as deduction while computing business income?
10. Give two reasons why pan card is important in India.
SECTION - B
II) Answer any FOUR questions. Each carries 5 marks. (4x5=20)
11. Mr. D.D. Dewan & Company are Chartered Accounts in Delhi. They have submitted the
following Income and Expenditure Account for the year. Compute the income from
profession.
Expenses ` Income `
To Drawings 48,000 By Audit fees 2,24,000
‘’ Office rent 42,000 ‘’ Financial Consultancy 98,000
service
‘’ Telephone installation 15,000 ‘’ Dividends from an 6,000
charges under O.Y.T. Indian Company (Gross)
scheme
‘’ Electricity Bill 4,200 ‘’ Dividend on units of 4,000
UTI
‘’ Salary of Staff 66,000 ‘’ Accountancy works 24,000
‘’ Charities 1,200
‘’ Gifts given to relatives 9,600
‘’ Car Expenses 21,000
‘’ Subscription for Journals 2,500
‘’ Institute fee 1,200
‘’ Stipends given to 12,000
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 trainees
‘’ Net Income 1,33,300
3,56,000 3,56,000
Notes:
a. Depreciation of car during the year amounts to ` 5,000
b. 30% of the time, car is used for personal purposes.

12. Mr. Raj Singh Parmar sold a plot of land at Jaipur on 1-6-2014 (C.I.I. = 1024) for
` 14,40,000. He paid `40,000 as selling expenses. The plot was received by
him on death of his father on 15-3-85 (C.I.I. = 125). His father had acquired it
on 1-4-1980 for ` 1,00,000 and its F.M.V. on 1-4-1981 was ` 1,20,000.
On 1-10-2014 he invested ` 3,00,000 in bonds issued by Rural Electrification
Corporation Limited notified u/a 54EC and 2,00,000 on 1-3- 2015 in Bonds of
National Highway Authority of India.
Compute his taxable capital gain.
13. From the following particulars of Mr. Amarpreet Thind, compute the amount
of taxable gifts chargeable as “Income under the head other sources”:
a. He received a cheque of ` 1,00,000 as a gift from his grandfather on 15
May 2014.
b. He received ` 21,000 from his friend from Canada as a gift on 31 May
2014.
c. He received ` 5,00,000 under a will from his grandmother on 30 June
2014.
d. He received ` 50,000 from his father’s friend on 30 June 2014.
e. He received ` 75,000 as a gift from his uncle on 30 September 2014 on
his birthday.
f. He received ` 20,000 as gift from his employer on 1 October 2014.
g. He received a gift of ` 51,000 from his father’s brother on 30 November
2014.
14. Explain the Powers of
i) CBDT ii) Income Tax officer
15. Explain various exemptions u/s 54, 54B, 54D, 54EC & 54F in the light of the
conditions to be satisfied for claiming deduction, the new asset to be invested
in and the amount of deduction allowed.
16. Shri Anil earned gross total income of `5,00,000 in the previous year 2014-15
and made the following donations during the year:
a. ` 10,000 to Chief Minister’s Earthquake Relief Fund Gujarat.
b. ` 15,000 to National foundation for Communal Harmony.
c. ` 20,000 to Municipal Corporation approved for promotion of family
planning.
d. ` 45,000 to approved institutions.
Compute the amount of deduction admissible to him u/s 80G for the
assessment year 2015-16.

SECTION - C

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III) Answer any THREE questions. Each carries 15 marks. (3x15=45)
17. Following is the Profit and Loss Account of Mr. A for the year ending
31-3-2015.
Debits ` Credits `
To Salary 3,20,000 By Gross Profit 10,85,000
‘’ Office expenses 48,000 ‘’ Bad debt recovered 15,000
‘’ Depreciation 80,000 ‘’ Commission 22,000
‘’ Audit fees 25,000 ‘’ Sundry receipts 13,000
‘’ Repairs 48,000 ‘’ Custom duty 30,000
recovered
(disallowed earlier)
‘’ Amount transferred to 90,000
special reserve
‘’ Expenditure on Diwali 10,000
festival
‘’ Contribution to 18,000
unapproved gratuity fund
‘’ Interest payable 70,000
‘’ Expenses on research 50,000
‘’ Provision for income 60,000
tax
‘’ Bonus 18,000
‘’ Provision for sales tax 15,000
‘’ Employer’s contribution 11,000
to employees’ PF
‘’ Legal expenses 10,000
‘’ Net Profit 2,92,000
11,65,000 11,65,000
Other information is:
a. Depreciation includes ` 20,000 being unabsorbed depreciation of earlier
years.
b. Repairs include `18,000 being expenditure on constriction of wash
rooms which were completed on 31-12-2014.
c. Research expenses include `30,000 being cost of a computer acquired
for research, which is not connected to assessee’s field of business.
d. Interest payable includes ` 5,000 paid as penalty for late payment of
interest .
e. Sales tax is actually paid on 10-4-2015.
f. Salary includes payment of `40,000 given as compensation to the
widow of a deceased employee.
g. Out of bad debts recovered only `10,000 were allowed as deduction
earlier.
From the information given above calculate the business income of Mr. A for
the assessment year 2015-16.

18. Shri Ram Nath Shukla has given the following information regarding his
investments:

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 Name of the Date of C.I.I. Cost Price Date of SalePrice
Companies Purchase ` Sale `
a) Shares in
companies:

i) A Ltd. 1-1-2003 447 10,000 30-10-2014 40,000

ii)B Ltd. 1-1-2004 463 30,000 31-10-2014 80,000
iii)C Ltd. 31-1-2014 939 20,000 30-12-2014 26,000
iv)D Ltd. 28-2-2014 939 18,000 31-1-2015 14,000
House Properties:
Flat at Marine 1-12-87 150 60,000 30-6-2014 5,20,000
Drive –self-
occupied
Shop at Pune (let- 30-6-2003 463 80,000 30-9-2014 2,80,000
out)

Compute Capital Gain Taxable

19. From the following particulars of Mr. Edward for the previous year ended 31st
March 2015, compute his total Income for the Assessment year 2015-16.
He Received: `
a. Director’s fee from a company 10,000
b Interest on Bank Deposits 3,000
c Income from undisclosed sources 12,000
d Winnings from lotteries (Net) 24,500
e Royalty on a book written by him 8,000
f By giving lectures in functions 5,000
g Interest on loan given to a relative 7,000
h Interest on tax free debentures of a company (listed in 3,600
recognized stock exchange) (Net)
i Dividend on shares 6,400
j Interest on post office savings bank A/c 500
k Interest on Government Securities 2,200

He paid `100 for collection of dividend and `1,000 for typing the manuscript of
book written by him.

20. M/s A & Bros. have following assets on 1-4-2014:

Sl. Assets WDV on Additions Scrap Rate of
No. 1-4-2014 during the value of depriciation

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 year asset put
out of use
during the
year
1 Plant & 42,20,000 6,90,000 2,10,000
15%
machinery
2 Aircraft 34,50,000 - - 40%
3 Motor Buses & 6,40,000 2,80,000 4,15,000 30%
Lorries (used for
hiring)
4 Imported car NIL 3,60,000 - 15%
5 Patent Rights NIL 8,00,000 NIL 25%
6 Technical Know NIL 6,00,000 NIL 25%
how
Calculate the amount of depreciation which firm can claim for the assessment
year 2015-16 and also calculate the WDV on 1-4-2015. New Bus was brought
into use from 1-12-2014, Plant & Machinery on 1-7-2014 and Patent Rights and
Technical Know-how on 1-11-2014 and imported car on 1-6-2014.

21. Mr. Tarasu having gross total income of Rs.5,00,000 for the financial year
2014-15 furnishes the following information:
a) Deposited Rs.50,000 in tax saver deposit in the name of major son in a
nationalized bank;
b) Paid Rs.40,000 towards premium on life insurance policy of his married
daughter;
c) Interest is on listed equity shares (lock in period 3 years) – Rs.40,000;
d) Contributed Rs.1,00,000 to P.M National Relief Fund.
e) Donated Rs.20,000 to a Govt. recognized institution for scientific research;
his gross total income does not include any income under the head profits
and gains of business profession;
f) Interest on bank deposit (saving bank) – Rs.1,00,000;
Compute the total income of Mr. Tarasu for the A.Y. 2015-16.

SECTION - D
IV) Case Study – Compulsory question. (1x15=15)
22. Given below is the profit and loss account of Shri Rajaram for the year ended 31-3-2015.
Dr. ` Cr. `
To Salaries 7,000 By Gross Profit 50,000
To Drawings 8,000 By Interest on Post Office 3,600
Saving Bank Account
To Insurance Premium on 1,000 By Proceeds from Life 3,400
his life Insurance Policy
To Depreciation 4,500 By Interest on Bank 3,600
deposits (fixed deposit)
To Donation to the 500
recognized institutions

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 To General Expenses 2,600
To Education expenditure 6,600
on his three dependent sons
in England
To Provisions for doubtful 1,500
debts
To Income-tax 2,000
To Rent 1,700
To Net Profit 25,200
60,600 60,600

Compute his taxable income for current assessment year after taking the
following information into consideration:
i) The amount of depreciation allowance is `4,000
ii) General expenses include ` 600 for his private expenses.

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