Topic wise Test Papers of CA Inter - Direct Tax - NOV-23 Exams

Topic: Income from Capital Gain and IFOS

Total Marks: 50 Marks

Time Allowed: 70 minute

Questions:

Part-A Multiple Choice Questions

[Total 20 Marks – 2 Marks for each MCQ]

1. In P.Y. 2022-2023, Mr. A has transferred the following assets:

Asset transferred Full Value of Indexed Cost of Transfer
Consideration Acquisition Date
(`) (`)

Residential house property 8 crores 6 crores 25.11.2022

Jewellery 3 crores 2 crores 05.01.2023

Mr. A bought a new residential house property on 01.04.2021 for ` 1 crore and on 28.02.2023 deposited
` 3 crores in a capital gains deposit account scheme. On 30.07.2023, Mr. A has withdrawn ` 3 crores
from capital gains deposit account and acquired a residential house property worth ` 2.5 crore. What
would be the capital gains in the hands of Mr. A for A.Y. 2023-24, if the expenses in connection with
transfer of jewellery were ` 2,00,000?
(a) ` 80,50,000
(b) ` 81,55,705
(c) ` 98,00,000

(d) ` 48,00,000
2. Mr. Vishal and Mr. Guha sold their residential house property in Pune for ` 3 crore and ` 4 crore,
respectively, in January, 2023. The house property was purchased by them 25 months back. The indexed
cost of acquisition is ` 1 crore and ` 1.75 crore, respectively. Mr. Vishal purchased two residential flats,
one in Delhi and one in Agra for ` 70 lakhs and ` 80 lakhs, respectively, in April, 2023. On the same
date, Mr. Guha also purchased two residential flats, one in Mumbai and the other in Pune, for ` 80 lakhs
and ` 75 lakhs, respectively. Both of them invested ` 30 lakhs in bonds of NHAI in March, 2023 and `
30 lakhs in bonds of RECL in April, 2023. What is the income taxable under the head “Capital Gains”
for A.Y.2023-24 in the hands of Mr. Vishal and Mr. Guha?
(a) ` 70 lakhs and ` 95 lakhs, respectively
(b) ` 60 lakhs and ` 85 lakhs, respectively

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2 Test Papers of CA Inter - Direct Tax - MAY/NOV-23 Exams — Questions
(c) Nil and ` 95 lakhs, respectively
(d) Nil and ` 20 lakhs, respectively
3. Mr. Ram, an Indian resident, purchased a residential house property at Gwalior on 28.05.1999 for ` 28.5
lakhs. The fair market value and the stamp duty value of such house property as on 1.4.2001 was ` 33.5
lakhs and ` 32.4 lakhs, respectively. On 05.02.2012, Mr. Ram entered into an agreement with Mr.
Byomkesh for sale of such property for ` 74 lakhs and received an amount of ` 3.9 lakhs as advance.
However, as Mr. Byomkesh did not pay the balance amount, Mr. Ram forfeited the advance. What would
be the indexed cost of acquisition of Mr. Ram if he sells the property in F.Y. 2022-23?
Cost Inflation Index for F.Y. 2001-02: 100; F.Y. 2022-23: 331
(a) ` 1,10,88,500
(b) ` 1,07,24,400
(c) ` 97,97,600
(d) ` 94,33,500
4. Mr. X, aged 61 years, earned dividend of ` 12,00,000 from ABC Ltd. in P.Y. 2022-23. Interest on loan
taken for the purpose of investment in ABC Ltd., is ` 3,00,000. Income includible in the hands of Mr. X
for P.Y. 2022-23 would be -
(a) ` 12,00,000
(b) ` 9,60,000
(c) ` 9,00,000
(d) ` 2,00,000
5. Mr. Vikas transferred 600 unlisted shares of XYZ (P) Ltd. to ABC (P) Ltd. on 15.12.2022 for ` 3,50,000
when its fair market value was ` 5,15,000. The indexed cost of acquisition of shares for Mr. Vikas was
computed at ` 4,25,000.
Determine the income chargeable to tax in the hands of Mr. Vikas and ABC (P) Ltd. in respect of the
above transaction.
(a) ` 90,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and nothing is
taxable in the hands of ABC (P) Ltd.
(b) ` 75,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and nothing is
taxable in the hands of ABC (P) Ltd.
(c) ` 90,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and ` 1,65,000 is
taxable under the head “Income from other sources” in the hands of ABC (P) Ltd.
(d) ` 75,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and ` 1,65,000 is
taxable under the head “Income from other sources” in the hands of ABC (P) Ltd.
6. Mr. Vikas received a gold ring worth ` 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 ` 80,000
on the said occasion. Would such gifts be taxable in the hands of Mr. Vikas and Ms. Kavya?
(a) Yes, the gift of gold ring and gold chain is taxable in the hands of Mr. Vikas and Ms. Kavya,
respectively
(b) Such gifts are not taxable in the hands of Mr. Vikas nor in the hands of Ms. Kavya
(c) Value of gold ring is taxable in the hands of Mr. Vikas but value of gold chain is not taxable in
the hands of Ms. Kavya

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 Test Papers of CA Inter - Direct Tax - MAY/NOV-23 Exams — Questions 3
(d) Value of gold chain is taxable in the hands of Ms. Kavya but value of gold ring is not taxable in
the hands of Mr. Vikas
7. A building was acquired on 1.4.1995 for ` 20,00,000 and sold for ` 80,00,000 on 01.06.2022. The stamp
duty value on the date of transfer was ` 85,00,000. The fair market value of the building on 1.4.2001 was
` 25,00,000. Its stamp duty value on the same date was ` 22,00,000. Determine the capital gains on sale
of such building for the A.Y. 2023-24?
Cost Inflation Index for F.Y. 2001-02: 100; F.Y. 2022-23: 331
(a) ` 7,18,000
(b) ` 12,18,000
(c) ` 5,75,000
(d) (` 2,75,000)
8. Mr. Akshaya Biyani celebrated his 26th birthday on 15th May 2022 and arranged a grand party at
Radisson Blu hotel. On this occasion, he invited his friends, blood relatives and distant relatives to attend
the party. The ceremony was very grand, the feast was also very spectacular. All the arrangements and
decorations were absolutely wonderful. At the end of party, Mr. Akshaya was awarded by gifts and
flower’s bouquet as infra:
Gifts received Type of Gift Remarks
from
Mother One 22K Gold She purchased on the same day for ` 37,822
Chain
Father One 22K Gold He purchased on the same day for ` 56,075
Bracelet
Wife 4 Gold Rings She purchased these rings on 15.5.2022 for ` 35,500 each.
Fair market value on 15th May 2022 is ` 37,429 each.
Sister Painting This painting is made by her. Fair market value is ` 45,000.
Cousin brother One Gold chain He purchased it on the same day for ` 18,200.
(Father’s brother’s
son)
Closest cousins I-20 Car Value of ` 4,10,000
(mother’s sister’s
sons/daughters)

Friends and other Cash ` 1,51,000

distant relatives

Mr. Akshaya desires to set up a new manufacturing unit with his friend in partnership on 1.12.2022.
For making investment in the firm, he sold following jewellery which he has received on his 26th
birthday celebration as gifts:
- Mother’s gifted Gold Chain for ` 42,150
- Father’s gifted Gold Bracelet for ` 60,180
- Cousin brother’s gifted Gold Chain for ` 20,600
His wife gave him ` 1 lakh as a gift so that he could invest sufficient money in the unit.
On 1st December 2022, he invested ` 6,00,000 (including the amount received on sale of above gifts
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4 Test Papers of CA Inter - Direct Tax - MAY/NOV-23 Exams — Questions
and amount received from his wife) and his friend invested ` 4,00,000 in the firm.
Based on the facts of the case scenario given above, choose the most appropriate answer to the
following questions:
(i) What is the amount of capital gain taxable in the hand of Mr. Akshaya for P.Y. 2022-23?
(a) Short term capital gains ` 10,833
(b) Short term capital gains ` 29,833
(c) Short term capital gains ` 22,117
(d) No, capital gains is taxable in his hands, since he received the capital assets as gift.
(ii) What is the gift amount not considered as income under section 56(2)(x) for P.Y. 2022-23?
(a) ` 8,98,613
(b) ` 3,06,813
(c) ` 8,16,813
(d) ` 7,16,813
(iii) What is the gift amount taxable in the hands of Mr. Akshaya for P.Y. 2022-23?
(a) ` 1,51,000
(b) ` 1,69,200
(c) ` 5,79,200
(d) ` 5,61,000

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 Test Papers of CA Inter - Direct Tax - MAY/NOV-23 Exams — Questions 5
Part-B Descriptive Questions
[Total 30 Marks]

1. Mrs. Harshita purchased a land at a cost of ` 35 lakhs in the financial year 2004-05 and held the same
as her capital asset till 20th March, 2022.
She started her real estate business on 21st March, 2022 and converted the said land into stock-in-trade
of her business on the said date, when the fair market value of the land was ` 210 lakhs.
She constructed 15 flats of equal size, quality and dimension. Cost of construction of each flat is ` 10
lakhs. Construction was completed in February, 2023. She sold 10 flats at ` 30 lakhs per flat in March,
2023. The remaining 5 flats were held in stock as on 31st March, 2023.
She invested ` 50 lakhs in bonds issued by National Highways Authority of India on 31st March, 2023
and another ` 50 lakhs in bonds of Rural Electrification Corporation Ltd. in April, 2023.
Compute the amount of chargeable capital gain and business income in the hands of Mrs. Harshita
arising from the above transactions for Assessment Year 2023-24 indicating clearly the reasons for
treatment for each item.
[Cost Inflation Index: F.Y. 2004-05: 113; F.Y. 2021-22: 317]. [7 Marks]

2. Mr. Aditya is a proprietor of Star Stores having 2 units. On 1.4.2022, he has transferred Unit 2, which
he started in 2004-05, by way of slump sale for a total consideration of ` 18 lakhs. The professional
fees & brokerage paid for this transfer are ` 78,000. His Balance Sheet as on 31-03-2022 is as under:
Liabilities ` Assets Unit 1 ` Unit 2 ` Total
Own Capital 20,50,000 Land 12,75,000 7,50,000 20,25,000
Revaluation reserve 2,50,000 Furniture 2,00,000 5,00,000 7,00,000
Bank Loan (70% for Unit 1) 8,50,000 Debtors 2,00,000 3,50,000 5,50,000
Trade Creditors (20% for Unit 2) 4,50,000 Patents - 7,25,000 7,25,000
Unsecured Loan
(30% for Unit 2) 4,00,000

40,00,000 16,75,000 23,25,000 40,00,000

Other Information:
1. Land of Unit 2 was purchased at ` 5,00,000 in the year 2004 and revalued at ` 7,50,000 as on
31.3.2022.
2. No individual value of any asset is considered in the transfer deed.
3. Patents were acquired on 01-12-2020 on which no depreciation has been provided. (Rate of
depreciation on Patent is 25%)
4. Furniture of Unit 2 of ` 5,00,000 were purchased on 01-12-2021 on which no depreciation has
been provided. (Rate of depreciation on Furniture is 10%)
5. Fair market value of capital asset transferred by way of slump sale of Unit 2 is ` 18,10,000.
Compute the capital gain for A.Y. 2023-24. [7 Marks]

3. Compute Capital Gain and IFOS of Mr. Raghav for the A.Y. 2023-24 from the following details:
He was holding 30% equity shares in TSP (P) Ltd., an Indian company. The paid up share capital of
company as on 31st March, 2022 was ` 20 lakh divided into 2 lakh shares of` 10 each which were
issued at a premium of ` 30 each. Company allotted shares to shareholders on 1st October, 2013.

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6 Test Papers of CA Inter - Direct Tax - MAY/NOV-23 Exams — Questions
He sold all these shares on 30th April, 2022 for ` 60 per share. Equity shares of TSP (P) Ltd. are listed
on National Stock Exchange and Mr. Raghav has paid STT both at the time of acquisition and transfer
of such shares. FMV on 31.1.2018 was ` 50 per share.
On 12.2.2023, interest of fixed deposits of ` 90,000 credited to his SBI Bank. On 30.4.2022,` 5,500
and on 30.12.2022, ` 8,500 credited to interest on saving bank A/c with SBI Bank. [5 Marks]

4. The Government compulsorily acquired land of Mr. Shivam in April 2020 and paid compensation of `
20 lakhs in June 2022. The land was acquired by Mr. Shivam in June 2004 for ` 12 lakhs. He had filed
for additional compensation through Court and was awarded ` 18 Lakhs in February 2023 but this
amount was received only during May 2023. Compute the taxable capital gain from the above
transaction indicating the relevant assessment year. Expenses in connection with compulsory
acquisition were ` 30,000 and for obtaining enhancement of compensation was ` 1 lakh
Cost inflation index: FY 2004-05 :113; FY 2020-21: 301; FY 2021-22: 317; FY 2022-23:331
[5 Marks]

5. Ms. Mishika has entered into an agreement with M/s BB Build Limited on 25.04.2019 in which she
agrees to allow such Company to develop a shopping mall on land owned by her in New Delhi. She
purchased such land on 05.05.2009 for ` 15,00,000. In consideration, M/s BB Build Limited will
provide 20% share in shopping mall to Mishika. The certificate of completion of shopping mall was
issued by authority as on 26.12.2022. On such date, Stamp duty value of shopping mall was `
4,14,00,000. Subsequently on 18.03.2023, she sold her 15% share in shopping mall to Mr. Ketav in
consideration of ` 65,00,000.
Cost Inflation Indices: 2022-23: 331, 2019-20:289, 2009-10: 148
Compute capital gain of Ms. Mishika for the assessment year 2023-24. [6 Marks]

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