CA INTERMEDIATE

SUBJECT- TAXATION
Test Code – IMP 2413
(Date :)
(Marks - 100)

TOPIC : FULL COURSE

Time allowed : 3 hours
SECTION – A : INCOME TAX LAW (50 MARKS)
(i) Working Notes should form part of the answers. However, in answers to Question in Division A,
working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the candidates, and disclosed by way
of notes.

Division A - Multiple Choice Questions (MCQs)

Write the most appropriate answer to each of the following multiple – choice questions by
choosing one of the four options given. All questions are compulsory.

1. CASE SCENARIO:
Mr. Sachin, a very senior citizen age 82 years, has furnished the following particulars relating
to his house properties:
Particular House - I Self House II Let
Occupied Out (Amount
(Amount in Rs.) in Rs.)
Municipal valuation 60,000 1,20,000
Fair rent 90,000 1,50,000
Standard rent 75,000 90,000
Actual rent per month - 9,000
Municipal taxes paid 6,000 12,000
Interest on loan borrowed (Loan is taken on 1 st 10,000 15,000
April, 1999)
Repayment of loan 30,000 20,000
Vacant period - Four Months

Besides above two houses, he has inherited during the year an old house from his
grandfather. It was under litigation and according to court decision it was received by
him during the previous year. He sold this house immediately for a sum of
Rs.2,53,62,000. The house was purchased in 1961 by his grandfather for a sum of
Rs.20,000. However, the fair market value on 1st April, 2001 was Rs.8,00,000. With the
sale proceeds, he purchased a new house for a sum of Rs. 1,24,10,000 on 1 st April, 2024
and used same for the self-residence. Cost of Indexation 348 for A.Y. 2024-25.
The other incomes are as follows:

Particular Amount (Rs.)

Income From cloth business (net) 3,33,000
Interest on saving bank account 1,96,000

Page 1 of 13
 Deposited in Sukanya Samriddhi Account 40,000

The investment made during the year by Mr. Sachin are as follows:
Particular Amount
(Rs.)
Deposited in Public Provident Fund 70,000
Premium paid on life policy taken on the life of son's wife 30,000
Total of above 1,00,000

He purchased an electric car for Rs.30,00,000 during the previous year for the family
use. He took loan of Rs.20,00,000 at 12% p.a. interest rate on 1 st August, 2023 to
purchase this car. Due to beneficial

Based on the above information, choose the most appropriate option of the following
Multiple-Choice Questions (MCQ) assuming that he opts old tax regime: -

1. What would be the total income under the head “House Property” of Mr. Sachin
for the A.Y. 2024-25?
(a) Rs. 17,000
(b) Rs. 12,800
(c) Rs. 42,200
(d) Rs. 38,000
2. What would be the income under the head “Capital Gain” of Mr. Sachin for the
A.Y. 2024-25?
(a) Rs. 2,25,78,000
(b) Rs. 1,01,68,000
(c) Rs. 1,24,10,000
(d) Rs. 1,21,52,000
3. What is the amount of Maximum deduction allowable to Mr. Sachin from Gross
Total Income under Chapter VI-A of Income Tax Act, 1961 for A.Y. 2024 – 25 ?
(a) Rs. 1,50,000
(b) Rs. 2,00,000
(c) Rs. 3,50,000
(d) Rs. 3,10,000
4. What would be the amount of total income to Mr. Sachin for the A.Y.2024 – 25.
(a) Rs. 1,03,64,000
(b) Rs. 1,06,54,000
(c) Rs. 1,05,04,000
(d) Rs. 1,04,54,000

5. What would be the tax liability of Mr. Sachin for A.Y. 2024-25?
(a) Rs. 23,59,470
(b) Rs. 24,64,717
(c) Rs. 20,39,232
(d) Rs. 25,71,878
Page 2 of 13
 (5 x 2 MARKS = 10 MARKS)
Independent Multiple Choice Questions
6. What will be the taxable compensation for the assessment year 2024-25, in case of
where Mr. Devendra (age: 45 years) is employed in a public company and is paid a sum
of Rs. 6,00,000 on voluntary Retirement from service. The normal age of retirement in
the company is 60 years and Devendra, who was of 45 years at the time of retirement
had completed 20 years of service. His monthly salary at the time of retirement was as
follows:
Basic pays Rs. 10,000, Dearness allowance (50% is included for pension) Rs. 6,000,
House Rent allowance Rs. 3,000 and conveyance allowance Rs. 8,000. (He does not opt
for the provisions of section 115BAC).
(a) Rs. 1,00,000
(b) Rs. 5,00,000
(c) Rs. 7,80,000
(a) Rs. 6,00,000 (1 MARK)

7. Sh. Kishan (age 50 years) obtained a loan of Rs. 50,000 @ 15% per annum for
construction of house on 9th June, 2018. Construction of house was completed on 15th
Feb, 2024 and house was let out from the same day. Calculate the allowable deduction
of interest out of income from house property for the assessment year 2024-25, if
whole of the loan was repaid on 13th June, 2023, assume 365 days in a year. (He does
not opt for the provisions of section 115BAC)
(a) Rs. 9,000
(b) Rs. 8,716
(c) Rs. 8,750
(d) Rs. 9,375 (1 MARK)

8. Mr. Suresh received commission of insurance business Rs. 21,600(net amount), Rs.
26,600(net amount) and Rs. 1,700(gross amount) from three insurance company during
the previous year 2023-24 on respective date which include commission from new
business also. He failed to provide Pan to First company but Pan was provided to other
companies. He does not keep a record for expenses. Compute the total taxable
commission income of Mr. Suresh for the assessment year 2024-25. (He does not opt
for the provisions of section 115BAC)
(a) Rs. 34,957
(b) Rs. 37,800
(c) Rs. 35,017
(d) Rs. 41,583 (1 MARK)
9. Mr. Karan completed his MBA in April 2023 and jointed XYZ Ltd. from 01.05.2023. His
basic salary is Rs. 2,25,000 p.m. He is paid 12% of basic salary as D.A. forming part of
retirement benefits. He contributed 11% of his pay and D.A. towards recognized
provident fund and the company contributes the same amount. Accumulated interest
on provident fund as on 31.3.2024 is Rs. 49,325. What would be the income chargeable
to tax under the head “Salaries” of Mr. Karan for the A.Y. 2024 – 25, if he does not opt
for section 115BAC ?
(a) Rs. 27,26,442
Page 3 of 13
 (b) Rs. 27,30,884
(c) Rs. 27,22,000
(d) Rs. 27,71,325 (1 MARK)
10. Mr. X acquires an asset in the year 2017 – 18 for the use for scientific research for Rs.
2,75,000. He claimed deduction under section 35(1)(iv) in the previous year 2017 – 18.
The asset was brought into use for the business of Mr. X in the P.Y. 2023 – 24, after the
research was completed. The actual cost of the asset to the included in the block of
assets is -
(a) Nil
(b) Market value of the asset on the date of transfer to business
(c) Rs. 2,75,000 less notional depreciation under section 32 upto the date of transfer.
(d) Actual cost of the asset i.e., Rs. 2,75,000 (1 MARK)

Division B - Descriptive Questions

Question No. 1 is compulsory.

Attempt any two questions out of remaining three questions.
QUESTION : 1

Mr. Chetan carries on his own business. An analysis of his trading and profit and loss for the
year ended 31/03/2024 revealed the following information:
(a) The net profit was Rs. 12,50,000.
(b) It was found that some stocks were omitted to be included in both the opening and
closing stocks, the value of which were:
 Opening stock Rs. 10,000
 Closing stock Rs. 15,000

(c) Rs. 1,00,000 was debited in the profit and loss account , being contribution to a
University approved and notified under section 35(1)(ii).
(d) Advertisement expenses include 15 gift packets of dry fruits costing total Rs. 20,000
presented to important customers.
(e) Salary includes Rs. 30,000 to a computer specialist in cash for assisting Ms. Radha in
one professional assignment.
(f) The travelling expenses include expenditure incurred on foreign tour of Rs. 32,000
which was within the RBI Norms.
(g) Depreciation debited in the books was Rs. 55,000. Depreciation allowed as per Income
–tax Rules, 1962 was Rs. 50,000.
(h) Drawings Rs. 10,000.
(i) He invested an amount of Rs. 10,000 National Saving Certificate.
(j) He has paid Rs. 2,00,000 towards advance tax during the P.Y. 2023-24 (not debited to
P&L)
(k) The following income were credited in the profit and loss account:
- winning from horse races Rs. 15,000 (gross) (assume TDS not deducted)
- interest on debentures Rs.17, 500(gross) (assume TDS not deducted)
- income from UTI Rs. 15,000 (gross) (assume TDS not deducted)

Page 4 of 13
Compute the total income of Mr. Chetan for the A.Y. 2024-25, assuming that he has not
opted to pay tax u/s 115BAC.
(15 MARKS)
QUESTION : 2(A)
Mr. Ram and Mr. Shyam are brothers and they earned the following incomes during the
financial year 2023-24. Mr. Ram settled in America in the year 1996 and Mr. Shyam settled
in Delhi.
S. No. Particulars Mr. Ram (in Mr.Shyam (in
Rs.) Rs.)
1. Dividend from German Company, received in
London. 30,000 20,000
2. Fees for technical services rendered in India,
but received in UK. 2,00,000 -
3. Agricultural income from a land situated in
Madhya Pradesh. 50,000 60,000
4. Rent received in respect of house property at
Bihar (Net of 30% u/s 24(a) 80,000 1,00,000
5. Income from house property in London
deposited in a bank at London, later on
remitted to India (computed) 50,000 -
6. Agricultural income from a land in Rajasthan 5,000 10,000
7. Profit from a business in Jaipur, but managed
directly from UK. 1,00,000 1,40,000
Compute the total income for the A.Y. 2024-25.
(6 MARKS)
QUESTION : 2(B)
Examine and explain the TDS implications in the following cases along with reasons thereof,
assuming that the deductees are residents and having a PAN which they have duly furnished
to the respective deductions.

(a) A sum of Rs. 41,000 has been credited as interest on recurring deposits by a banking
company to the account of Mr. Harsh Raj whose age 63 years.

(b) Interest of Rs. 7,000 paid by Rupam Ltd. to Kamini and Rs. 4,500 to Umang HUF on
31st January 2024, by way of account payee cheque on account of debentures of the
company held by them. Debentures of Rupam Ltd. are not listed on a recognized
stock exchange in India.
(4 MARKS)
QUESTION : 3(A)
Ms. Kriti is a Chartered Accountant in practice. She maintains her accounts on cash basis.
Her income and expenditure account for year ended 31st March, 2024 reads as follows:
Expenditure Rs. Income Rs. Rs.
Salary to staff 5,50,000 Fees earned:
Stipend to article assistants 37,000 Audit 17,88,000
Incentive to articled Taxation services 5,40,300
Page 5 of 13
 assistants
Office rent
Printing and stationary
Meeting, seminar and
conference
Purchase of car
Repair, maintenance and
petrol of car
Travelling expenses
Municipal tax paid in
respect of house property
Net profit
3,000 Consultancy 2,70,000 25,98,300
24,000 Dividend on shares of
22,000 Indian companies 10,524
(Gross)
31,600 Income from units of 7,600
80,000 mutual fund (Gross)
Honorarium received
4,000 from various 15,800
35,000 institutions for
valuation of answer
3,000 papers
Rent received from 85,600
19,28,224 residential flat let out

27,17,824
27,17,824
Other information:
(i) Allowable rate of depreciation on motor car is 15%. (Motor car was put to use for
more than 180 days)
(ii) Incentives to articled assistants represent amount paid to two articled assistants for
passing IPCC Examination at first attempt.
(iii) Salary includes Rs. 15,000 to a computer specialist in cash on 15.07.2023 for assisting
Ms. Kriti in one professional assignment.

On the basis of above information, determine whether Ms. Kriti should opt for presumptive
basis taxation for computation of her Gross Total Income for A.Y. 2024 - 25.

(8 MARKS)
QUESTION : 3(B)
Discuss the following situation:
Mrs. Kasturi transferred her immovable property to ABC Co. Ltd. subject to a condition that
out of the rental income, a sum of Rs. 36,000 per annum shall be utilized for the benefit of
her son’s wife. Mrs. Kasturi claims that the amount of Rs. 36,000 (utilized by her son’s wife)
should not be included in her total income as she no longer owned the property. State with
reasons whether contention of Mrs. Kasturi is valid in law.
(2 MARKS)
QUESTION : 4(A)
Mr. Mohan submits the following information for the financial year ending 31 st March 2024.
He desires that you should:
(a) Compute the total income assuming that he does not opt to tax under section
115BAC.
(b) Ascertain the amount of losses that can be carried forward
(i) He has two houses..
a. House No. I - Income after all statutory deductions- Rs. 82,000
b. House No. II - Current year’s loss - Rs. 30,000

Page 6 of 13
 (ii) He has three propriety business
a. Textile business
i. Discontinued from 31st October 2023 - Current year loss- Rs.
40,000
ii. brought forward business loss of Assessment year 2020-21 -
Rs. 95,000
b. Chemical Business
i. Discontinued from 1st March 2023, hence no profit/ loss- NIL
ii. Bad debts allowed in earlier year recovered during this year-
Rs. 35,000
iii. Brought forward business loss of assessment year 2022-23- Rs.
50,000
c. Leather Business: Profit for the current year – Rs. 1,00,000
d. share of profit in a firm in which he is partner since 2013 – Rs. 16,550
(iii) Short term capital gain- Rs. 60,000
Long term capital loss- Rs. 35,000
(iv) contribution towards LIC premium – Rs. 10,000
(6 MARKS)

QUESTION : 4(B)
Explain the provisions of filling return of income by residents who is Beneficial Owner/
Beneficiary of any asset located outside India.
OR
Elaborate the conditions, non- fulfillment of which would render a return of income filled by
an assessee not maintaining regular books of accounts, defective.
(4 MARKS)

SECTION – B : INDIRECT TAXES (50 MARKS)

(i) Working Notes should form part of the answers. However, in answers to Question in Division A,
working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the candidates, and disclosed by way
of notes.
(iii) All questions should be answered on the basis of position of the GST law as amended by
provisions of the CGST Act, 2017 and the IGST Act, 2017 as amended by the Finance Act, 2021,
including significant notifications and circulars issued, up to 30th April 2023.

Division A - Multiple Choice Questions (MCQs)

Write the most appropriate answer to each of the following multiple – choice questions by
choosing one of the four options given. All questions are compulsory.
1. Mr. Kumar started interior designing practice from the month of January. His turnover
up to the month of March was 12,50,000. On 30th June, his turnover exceeded
20,00,000 (current financial year) & reached to 20,05,000. Mr. Kumar applied for GST

Page 7 of 13
registration (as regular taxpayer) on 15th July and registration was granted to him on
25th July.
On 16th July, he entered into a contract for designing the flat of Mr. Shyam. The service
was completed on 22nd July and Mr. Kumar issued invoice on the same day for
6,00,000. On 5th July, Mr. Kumar purchased capital goods amounting to 4,50,000 and
from 25th July to 31st July, he availed input services amounting to 1,75,000 in relation
to an output service to be provided in the month of August.
On 1st August, Mr. Kumar got another contract for interior designing from Mr. Ram,
which he accepted on 2nd August. The service was completed on 6th August and
invoice was issued on 7th August for 5,00,000. Payment was received on 29th August.
All values are excluding taxes, unless specifically mentioned. Mr. Kumar makes only
intra-State outward supplies and all purchases are also intra-State. Rates of tax are
CGST - 9% and SGST – 9%.
In relation to the above, answer the question 1 to 3:

(1) The effective date of registration for Mr. Kumar is- (2 MARKS)
(a) 30th June
(b) 15th July
(c) 25th July
(d) 16th July
(2) Mr. Kumar can issue a revised tax invoice till- (2 MARKS)
(a) 23rd October
(b) 8th September
(c) 25th September
(d) 25th August

(3) Eligible input tax credit available with Mr. Kumar for the month of July is-
(a) CGST 40,500 & SGST 40,500
(b) CGST 15,750 & SGST 15,750
(c) CGST 56,250 & SGST 56,250
(d) CGST 36,000 & SGST 36,000 (2 MARKS)

(4) Which of the following activities is a supply of services?

(i) Transfer of right in goods/ undivided share in goods without transfer of title in
goods
(ii) Transfer of title in goods
(iii) Transfer of title in goods under an agreement which stipulates that property
shall pass at a future date upon payment of full consideration as agreed.
(a) (i)
(b) (iii)
(c) (i) and (iii)
(d) (i), (ii) and (iii) (2 MARKS)

(5) Services by way of admission to ____________ is not exempt from GST.

(a) Museum
(b) National-park
(c) Tiger reserve

Page 8 of 13
 (d) Recognised sporting event where the admission ticket costs 600 per person.
(2 MARKS)

(6) ABC Ltd. generated e-way bill on 12th February at 14.00 hrs. It used over-
dimensional cargo for a distance of 100 km. When the validity period of the e-way
bill will expire, if there is no extension of the same?
(a) Midnight of 13th-14th February
(b) Midnight of 17th-18th February
(c) At 14.00 hrs. of 13th February
(d) At 14.00 hrs. of 14th February (2 MARKS)
2. A non-resident taxable person is required to apply for registration:
(a) within 30 days from the date on which he becomes liable to registration
(b) within 60 days from the date on which he becomes liable to registration
(c) at least 5 days prior to the commencement of business
(d) within 180 days from the date on which he becomes liable to registration
(1 MARK)
3. What is the validity of the registration certificate granted under GST for a normal tax
payer?
(a) One year
(b) Two years
(c) Valid till it is cancelled
(d) Five years.
(1 MARK)
4. Can a registered person under composition scheme collect GST on his outward
supplies from recipients?
(a) Yes, in all cases
(b) Yes, only on such goods as may be notified by the Central Government
(c) Yes, only on such services as may be notified by the Central Government
(d) No
(1 MARK)
Division B - Descriptive Questions
Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
QUESTION : 1(A)
M/s. Mahi Air Ltd. located in Anand, Gujarat is engaged in manufacturing of Air Coolers and
Air Purifiers. They supply goods all over India and their aggregate turnover during F.Y. 2021-
22 was 122 lakhs. They provide the details of various activities undertaken during the month
of September 2022 are as follows.
Page 9 of 13
S. No. Particulars Amount
1. Outward supplies made during the month : 14,00,000
1. Within Gujarat 11,00,000
2. Outside Gujarat 3,00,000
2. On 5th September 2022, the company had issued 10 numbers of
exchange vouchers @ 1,000 each of which can be
exchanged/redeemed against purchase of Air cooler worth 10,000 each
at any of the company’s outlets in the State of Gujarat. Out of the
above, 7 vouchers were encashed during the month of September 2022
& rest 3 encashed during the month of October 2022.
3. Purchase of materials within Gujarat which includes materials worth 8,00,000
3,00,000 purchased from M/s. Kalpana Industries registered as a
Composition Dealer.
4. In respect of few invoices worth 1,00,000 (outside Gujarat) raised
during the month of June 2022, the stipulated condition was to pay the
dues within 1 month from the dates of raising of invoices, otherwise
interest @ 24% p.a. was payable on supplies made against such
invoices. The buyers failed to pay the dues within the stipulated time
and made the payment together with interest of 11,200 during the
month of September 2022.
5. Bought air tickets from Ahmedabad to Guwahati Airport, Assam for its
marketing executives. The total fare of the tickets was 60,000 out of
which 55,000 is the basic fare. Applicable GST Rate is 5% on basic fare
for air tickets
6. Send 10 managers for 15 days training course organized by IIM 50,000
Ahmedabad, Gujarat on 5th September 2022. The IIM provides
Participation Certificates at the end of the course.

The Rates of GST applicable on various supplies are as follows:

Nature of Supply CGST SGST IGST
Goods 6% 6% 12%
Services other than item of S. No [5] 9% 9% 18%
Composition Supplies 2.5% 2.5% ------

Opening balances of input tax credit as on 1st September, 2020 were as follows
CGST SGST IGST
4,000 10,000 5,000
All the figures mentioned above other than S. No (iv) are exclusive of taxes.
Both Inward & Outward supplies within the State of Gujarat are Intra State supplies and
outside Gujarat supplies are Inter State Supplies.

Calculate the amount of tax payable in cash by M/s. Mahi Air Ltd. for the month of
September 2022.
Brief and suitable notes should form part of your answer.
(8 MARKS)
Page 10 of 13
QUESTION : 1(B)
Examine which of the following independent services are exempt from GST:
(a) Food supplied by the canteen run by a hospital to the in-patients as advised by the
doctors.
(b) An RWA in a housing society, registered under GST, collects the maintenance charges of
Rs. 6,500 per month per member.
(4 MARKS)
QUESTION : 1(C)
What are the documents and devices to be carried by person-in-charge of conveyance
under rule 138A of CGST Rules, 2017?
(3 MARKS)
QUESTION : 2(A)

Red Pepper Ltd., Delhi, a registered supplier, is manufacturing taxable goods. It provides the
following details of taxable inter - State supply made by it during the month of March.

Particulars Amount

List price of taxable goods supplied inter-state (exclusive of taxes) 15,00,000

Subsidy received from the Central Government for supply of taxable goods to 2,10,000
Government School (exclusively related to supply of goods included at S. No. 1)
Subsidy received from an NGO for supply of taxable goods to an old age home 50,000
(exclusively related to supply of goods included at S. No. 1)
Tax levied by Municipal Authority 20,000

Packing charges 15,000

Late fee paid by the recipient of supply for delayed payment of consideration 6,000
(Recipient has agreed to pay Rs. 6,000 in lump sum and no additional amount is
payable by him)
The list price of the goods is net of the two subsidies received. However, the other
charges/taxes/fee are charged to the customers over and above the list price.
Calculate the total value of taxable supplies made by Red Pepper Ltd. during the month of
March. Rate of IGST is 18%.
(6 MARKS)

QUESTION : 2(B)

M/s Chand is a manufacturer of paper products having a factory at Pune, Maharashtra. M/s
Kela and M/s Bela of Mumbai, Maharashtra are appointed as agents to sell the products on
behalf of M/s Chand with the conditions that both of them guarantee the realization of
payments from the buyers.

Page 11 of 13
Both M/s Kela and M/s Bela provide short-term borrowing facilities to buyers for timely
payment of dues against supplies made to them and for this they charge interest from the
ultimate buyer. While M/s Kela raises invoices in the name of M/s Chand and M/s Bela
raises invoices in its own name.
In light of provisions contained in Para 3 of Schedule I of CGST Act 2017, kindly explain the
treatment of interest charged by M/s Kela and M/s Bela in the above-mentioned cases.
(4 MARKS)
QUESTION : 3(A)
M/s United Electronics, a registered dealer, is supplying all types of electronic appliances in
the State of Karnataka. Their aggregate turnover in the preceding financial year by way of
supply of appliances was 120 lakh.
The firm also expects to provide repair and maintenance service of such appliances from the
current financial year.
With reference to the provisions of the CGST Act, 2017, examine:
(i) Whether the firm can opt for the composition scheme, under section 10(1) and
10(2), for the current financial year, as the turnover may include supply of both
goods and services?
(ii) If yes, up to what amount, the services can be supplied?
(5 MARKS)

QUESTION : 3(B)

M/s ABC Ltd is a contractor executing works contract services, situated in Tamil Nadu. It
entered into a contract with M/s XYZ Ltd another registered person in Tamil Nadu to
provide works contract services in various states of south India. The precise location details
would be shared later. In this regard M/s ABC ltd received an advance of Rs. 1 Crore
including GST.
You are required to advice M/s ABC Ltd Whether
1. They are liable to pay tax under GST on such advance amount?
2. Whether the tax liability is to be paid as CGST+SGST or as IGST?
3. What would be the tax rate at which such tax liability is to be paid?
(3 MARKS)

QUESTION : 3(C)
Explain the order of discharge of Tax and other dues as per provisions of section 49(8) of the
CGST Act, 2017.
(2 MARKS)
QUESTION : 4(A)
1. What is the place of supply of services by way of transportation of goods, including
by mail or courier when both the supplier and the recipient of the services are
located in India?
2. A person from Mumbai goes to Kullu-Manali and takes some services from ICICI Bank
in Manali. What is the place of supply?

Page 12 of 13
 (6 MARKS)
QUESTION : 4(B)
List out the situations in which a credit note/ debit note may be issued
(4 MARKS)

Page 13 of 13