Ques 1

Provision:
As per Section 189 of the Indian Contract Act 1872, an agent possesses the
authority to act in an emergency to safeguard their principal from loss. This provision
dictates that an agent may undertake all necessary actions to protect their principal's
interests, akin to the actions a person of ordinary prudence would take in similar
circumstances for their own benefit.
Analysis:
In the presented scenario, Mr. Shiv, the cargo owner, encountered a situation where
his cargo of wheat was stranded on a reef in the sea, posing a risk of damage due to
its perishable nature. The managing agents of the vessel, acting on behalf of Mr.
Shiv, entered into a salvage agreement with the salvors to protect the cargo. The
salvors, recognizing the perishable nature of the goods, stored them at their own
expense to prevent further loss. However, Mr. Shiv refuses to reimburse the salvors,
contending that the ship-owner, as the bailee of the cargo, is liable for such
expenses until the contract is terminated.
Conclusion:
Referring to Section 189 of the Indian Contract Act 1872, the salvors' actions can be
acknowledged as those of agents of necessity for Mr. Shiv. By promptly and
reasonably storing the perishable cargo to prevent further loss, the salvors acted in
Mr. Shiv's best interest, fulfilling the criteria outlined in the provision. Therefore, Mr.
Shiv is obligated to reimburse the salvors for their expenses, as they acted as agents
of necessity, irrespective of the ship-owner's liability as the bailee of the cargo.
Ques 3
(i) As per AS 26 intangible asset value to be recognized as intangible asset
on 31st Mar 2021 will be Rs 30 Lac as expenditure incurred before
recognition criteria should not be included i.e. 98-68.

(ii) Expenditure to be shown in P&L

Carrying Amount 31st Mar 2021 30lac

Add: Expenditure incurred 72lac
Book Value 102lac
Less: Recoverable amount (52lac)
Impairment Loss 50lac

(iii) Carrying value as on 31st Mar 22 will be book value less impairment Loss
i.e. 102-50 = 52
Ques 4
 Under section 6(1) an individual, a person of Indian origin and who comes on
a visit to India and having total income other than income from foreign
sources exceeding 15 lakhs during the previous year, such individual is said
to be resident in India, if he stays in India during the previous year for 120
days or more and for 365 days or more during the 4 years immediately
preceding the relevant previous year.
 As per section 6(6) such individual whose stay in India is for 120 days or more
in P.Y would be resident but not ordinarily resident.

 Mr. Manek is a person of Indian origin who has come on a visit to India during
the previous year. Since his total income other than income from foreign
sources exceeds ₹15,00,000, he would be a resident in India if he stays in
India during the previous year for 120 days or more and for 365 days or more
during the 4 years immediately preceding the relevant previous year.

His stay in India during the previous year 2021-22 is as under:

1.04.2021 to 10.07.2021 101 days
24.02.2022 to 25.03.2022 30 days
Total 131 days
 Since he stays in India is for 131 days during the P.Y. 2021-22 and for 400
days during the 4 immediately preceding the P.Y., he is resident but not
ordinarily resident in India for the P.Y. 2021-22.

Computation of total income and tax liability of Mr. Manek for the A.Y. 2022-23
Particulars Amount
1,51,000 received from wife’s parents -
(Gifts from relative is exempt)

21,000 received from wife’s sister (Gifts -

from relative is exempt)

16,00,000 received from close friend

(taxable as cash gift is exceeding Rs 16,00,000
50,000 from non-relative as income tax)

Taxable Income
16,00,000
Calculation of tax 0n 16,00,000
2,50,000 Nil
2,50,000 - 5,00,000 @ 5%
5,00,001 - 7,50,000 @ 10%
7,50,001 – 10,00,000 @ 15%
10,00,001 – 12,50,000 @ 20%
12,50,001 – 15,00,000 @ 25%
Above 15,00,000 @ 30%
Add HRC @ 4%
Tax = 2,26,200

Ques 5
Particulars Amount
Income from let out property (Australia)
GAV (3000*12*55) 19,80,000
Less: Municipal tax (1000+500) *55 82500
NAV 18,97,500
Less: Deduction u/s 25
- 30% NAV 5,69,250
- Interest
13,28,250

Self-occupied property (Delhi)

Less: Interest on Housing Loan 2,00,000

Total Income from HP 11,28,250

WN1 Pre construction Interest

1.6.2017 – 31.03.2020 6,80,000 (20lac*12%*34/12)
Allowed as deduction in 5 instalments 1,36,000

CY Interest(20lac*12%) 2,40,000
Total Interest 3,76,000
Max allowed only 2,00,000