000. St st ‘On April 1, 2022, depreciated value of the block of assets (rate of depreciation: 25%) is It consists of assets A and B, The tax payer Mr. Rama purchases asset C (rate of depreciation: 25 %) during the previous year 2022-23 for % 30,000 and sells asset A on May 3, 2022 for % 1,80,000. Determine the amount of depreciation. (Ignore Alternative Tax Regime under Section 115BAC) Computation of Depreciation ae aay Solution: BS ag Nenana ana, eS ‘Shashi owns two buildings A and Bon April 1, 202 22 (rate of D spreciation: 10%, 114,15,700). He purchases on December 1, 2022 building C for? 3, 10,000 (rate of de; jiation: tad'zele bukding A during the previous year 2022-23 (on 1-10-2022) for © 8,70,000 Date ae . Ignore Alternative Tax Regime under Section 115B8AC). td val lepreciat ‘amount of depreciation. Solution: jer expenses in relation to the acquisition are ¥ 70,000. Calculate the amount of depreciation for the assessment year 2023-24. Rate of depreciation is 15%. (Ignore Alternative Tax Regime under Section 115BAC) Solution: (& scanned with OKEN Scanner"The particulars of depreciat ines W.DV.on | Addition Date Rateof 1-4-2022 t |__ Depreciation Fiankand Machinery using inmanufacturing activity 30,00,000 | 15,00,000 | (1-06-20) 15% Furniture 3,00,000 | 2,00,000 | (31-09-20) 10% Motor Cars 6,00,000_| _3,00,000_| _ (31-12-20) 15%. je entire stock of furniture was Soldfor® 4,00,000 andoutofshx motor ‘During the year 2022-23, cars, two were sold for 4,00,000. The selling expenses were 40,000, ® 20,000, € 10,000 and 16,000, respectively. The machinery was sold for € 25,00,000 during the PY. 2022-23. Calculate depreciation land STCL for the assessment year 2023-24, (under Existing Tax Regime and Alternative Tax Regime). Solution: Calculation of Depreciation chinery as on 01-04-2022 is % 1,80,000, sd was aequired in May 2022 but actualy 23,20,000in December 2022. esa Oae) Santa A block of asset consists of 5 machines. The WDV of m: Rate of depreciation is 15%. A new machine costing & 1,60,000 Put to use only on 10-10-2022. Two old machines arealso sold for’ Determine amountof depreciation forthe A.Y. 2023-24. ‘Solution: Comoutation of Amount of Deoreciation \Veeresh and Co. had a block of plant and machinery hi ry having WDV of & 50,00,000 as on 1-4-202, During the year an additional machinery costing € 20,00,000 was purchasedon 5-9-2022. On 2-11-2022 fire had broken in the premises of the company destroying a consider the old plant and machinery. Insurance company pald the damages of € 25,00, 000; are; ate depreciation applicableis 10%. Calculate the amount of depreciation chargeableto P&LA/cforthe year ended 31-03-2023, Willit make any difference ifthe entire block of plant and machinery is destroyed by fire? Existing Tax Regime and Alternative Tax Regime). " fire? (unde Solution: : (& scanned with OKEN ScannerShaila owns two assets - asset I and asset 11-on April 1, 2022. Rate of depreciation 25 percent, depreciated value on 1" April 2022, € 2,37,000. She purchases asset III on 31” May 2022 for 20,000 and sells asset I on 12" December 2022, asset I1 on 12 December 2022 and asset IIlon 1" March 3023 for € 10,000, ¢ 15,000 and ® 24,000 respectively. Determine the amount of depreciation. (Ignore Alternative Tax Regime under Section 115BAC) Se BBB O SSS SRC RN gai oe Tre deprecated valve of @ block of assets (consisting of asset A end’) (rate of desreniatien TOA sett roedan 1-4-2022, Tefollowinginformationisavetebie: on Rateor Date of whenitis ‘Actual Cost depreciation | purchase puttouse (percent) qs | 10 10-3-2022 0-4-2022 20,000 Assets D 10 1-3-2022 3-2-2023 30,000 Assets E 10 6-5-2022 6-5-2022 40,000 AssetsF 10 15-5-2022 2-1-2023 60,000 Assets G 10 6-6-2022 6-4-2023 80,000 Plant A is sold on 16-8-2022 for % 86,000. Determine the amount oF depreciation. (Ignore Attemative Tax Regime under Section 115BAC) Solution: Computation of Depreciation 30 2 ee ae A block of assets Consists of 3 machines, whose WDVon 1-4-2021 was 2,001 Soe cechine of the same block was purchased for ® 50,000. Another machine was Pul Fao ckbutto use on 25~4-2022, costbeing® 40,000. Thefirst3 machines were soldon 15 £ 1,50,000. The rate of depreciation for all the above machines was 15% p.a. Find the val the block of machine on 1-4-2023, as the case may be. (under Existing Tax Regi Alternative Tax Regime). Solution: .0n 10 oe irchased on 3-2- {15-12-2022 for ue of WOV of ime and Calculation of Capital Gain/WDV — (& scanned with OKEN Scanner1-4-2022. During the year, an a mes "_Archita had a Plant and Machinery having a WDV of 25 lakhs on ee ‘costing % 10,00,000 was purchased on 31-8-2022. On 31-10-2022, fire had broken in the premises of the assessee destroying a considerable part of the plant and machinery. Insurance company paid damages €12,50,000. Calculate the amount of depreciation chargeable to ; ss A/c for the year ended 31st March 2023. Will it make any difference if the entire block of plant destroyed? Plant and Machinery is used in manufacturing industry. Rate of depreciation 15%. (under Existing Tax Regime and Alternative Tax Regime). Solution: Calculation of Depreciation on Plant and Machinery “Gowri Shankara is in manufacture of a component submits the following information: ‘Nameof Assets Plantand Machinery Block ofassets T 1 Tit Rate of depreciation 15% WDVofP&Mon1.4.2022 ae - Pant =A 8,50,000 B 12,50,000 c 5,60,000 Additionsof plants during 2022-23 Plant =P. 22,50,000 Q 8,00,000 10,00,000 R Plant P and Qare purchased and put to use by the assesse during June 2022, whereas Plant R was purchased and put to use during January 2023. During the 2022-23 old plants namely plant A is fold for € 6,50,000, plant B for ® 9,50,000 and plant C for & 4,00,000. Compute the permissible amount of normal and additional depreciation for the Assessment Year 2023-24. (Ignore ‘Section 115BAC) see ktaatenéanentené Dlantand Machinery Alternative Tax Regime under: (& scanned with OKEN ScannerTo Fire Insurance premium ToBad debts ToSalary to Staff ToAudit fee (in cash) ‘To Proprietor’s Bonus To Interest on Capital ‘By Gross Profit By Bad debts recovered butallowed earlier 5,000 By Interest from securities 6,000 By Rent received from employees 12,000 By Interest from debtors for delayed payment 3,000 Totncome Tax To Depreciation ToGST (due) ‘ToAdvance Income tax paid To Charities ToMotar carexpenses ‘ToMunicipaltaxes of quarters lettoemployees ‘ToNet profit By Amount received from LIC ‘onmaturity of policy, 3,000 1,79,000 Additional Information: 1) Office expenses include € 3,000 paid as compensation to an old employee whose services were terminatedin theinterestof the business and 1,200by way ofhelptoapoor student. il) WoVofplantand machinery’ 10,000. Anew machinery costing 20,000 was purchased on 16.12.2022andputintouseon16.01.2023. li) 60% of Motor car expenses are for proprietor’s personal use. Compute business income for theA.Y. 2023-24. (under Existing Tax Regime and Alternative Tax Regime). Solution: Computation of Taxable Income from Business (& scanned with OKEN Scanner: Followi To Salaries 3,30,000 | By Gross profit 5,00,0 To Office expenses 36,000 | By Bad debts recovered 20,0 To Depreciation 28,000 | ByDividends _ 6,0 To GST 18,000 | By Rent fromHouse Property 18,0 To Legal expenses 16,000 .| By Commission 20,0 To Income Tax 14,000 | BY Brokerage 20,0 To Exp. onacq.of patent rights 24,000 | By Sundry receipts 10,0 6,0 By Share of income from HUF (1/2 of § 48,000 being cost of patent rights acquired on 15.12.2022) 12,000 To Repairs To Donation 4,000 To Provision for bad debts ~ 6,000 To General expenses 24,000 . 88,000 To Net Profit 6,00,06 . -6,00,000 Additional Information: i) Salaries include 12,000 paid to the workers employed at home. ii) _ Depreciation’of ¥ 6,000 being unabsorbed depreciation of earlier years, not recorded. ii) | Legal expenses include% 2,000 paid to the lawyer in connection with personal case. iv) Generalexpenses includez 8,000 as contribution to; staff welfare fund. vy. Outofbad'debts recovered only % 8,000 were allowed as deduction earlier. Calculate the income of Mr. Chandan from the business for the Assessment Year 2023-24 (Ignore Alternative Tax Regime under Section 145BAC) Salution: © scanned with OKEN Scanner“a Dr. Kt . : Gross profit 37,000 Advertisement , Rental income 1,65,000 Sundry expenses Dividends from an Indian Co. 24,000 Intereston own capital Winnings from lottery (net) 1,15,000 Fire insurance (% 10, 000) 7 Interest on non-government . relates to house property) securities 1,92,000 Income tax and wealth tax House hold expenses Contribution to national laboratory for carrying on research Provision for bad debts Repairs to house property Municipal taxes of house Property . {nsurance premium on own life Donation toa political party Depreciation (allowable) Vet profit . 7,33,000 7,33,000 Dr. Kuvempu owns a house property having 4 units, out of which Unit-I having 25% carpet area is d gains of business and 1sed for own business purpose. Determine the income under the head profits an ‘ drofession of Dr. Kuvempu for the A.Y. 2023-24. (under Existing Tax Regime and Alternative Tax zegime). © scanned with OKEN Scanner\jith forthe year ending 31st March 2023. The following isthe P/LA/cof Mr. By Gross Profit To Si To Office expenses By Bad debts recovered © " To Depreciation By Dividend 3,00) To GST By Commission 10,00 To Legal expenses By Rent of house property 9,000 To Income Tax By Brokerage 10,000 To Patents purchased (1/8th) By Sundry receipts 5,000 To Repairs : By Share of income from HUF 3,000 To Donation . ; : : To Provision for bad debts To General expenses To Net Profit ae 44,000 |. 3,00,000 Additional Information: , othe . . ‘Salary includes % 6,000 paid to workers employed at home. a) *b) Legalexpenses includes 1,000 paid to the advacate in connection with i 4 c) Generalexpenses includes 4,000 as contribution to staff welfare fund. eel ae : Out of the bad debts recovered only & 4,000 were allowed as deduction earlier. @ ‘Compute his income from business for the assessment year 2023-24. (Ignore Altern, : am “ Regime underSection 11 5SBAC) oe : © scanned with OKEN Scanner4 r the year ende from business for the A.Y. 2023-24. (Ignore Alternative Tax Regime under Section 115BAC) Gross profit b/d 6,40,000 General expenses Interest on Govt. securities 11,200 Interest on Bank loan Discounts received 16,000 Audit fees Bad debts recovered Intereston capital (not written off earlier year) 800 Rent Sundry receipts 16,000 Provision for income tax Dividend 16,000 Charity “* Legal expenses Compensation to retrenched employees Extension of building 7,00,000 zooooo] Additional Information: 1. General charges included % 8,000 towards purchase of computer. 2. Legal expenses include 1,600 penalty by customs authority. 3. Rentincludes% 8,000 paid as rent of the house in which the assessee lives. 4. Depreciation allowed 12,000 as perincome tax rules. (Excluding depreciation on computer purchased). 5. Incometax provision is excessive to the extent of 75,000. © scanned with OKEN Scanner‘sole trading concer of Mr Mehadi Hassan furnishes the following Trading and Profitand LossAN and other information for the year ending on 31st March 2023. Compute his taxable ycome fror" aan cae Sforthe relevant A.V. 2023-24. (Ignore Alternative Tax Regime under Section 115840) Dr. Trading and Profit and Loss Account Ss Opening Stock 46,000 | Sales Purchases 2,50,000 | Closing stock a Carriages 12,000 | Rent from house property ne Railway damage 12,000 | Refundof customs duty RO Advertisements 12,000 | Refund from income tax a 5,000 Salary tostaff 18,000 | Bad debts recovered 154 Repairs to house property 2,000 |, Capital Gains on sale of 20,000 Fire Insurance: short term capitalinvestments " House property 1,800 | Profits onsale ofa carused Office and Godown 2,000 | inthebusiness 25,000 Goods 5,000 Life insurance premium: On life of proprietor 3,000 On employees life 2,000 Depreciation: House property "6,000 Business assets (excluding patents) 14,000 Wealth tax 6,000 Income tax 12,000 Patents Rights purchased 35,000 Interest on capital borrowed: ForBusiness 7,000 Forreconstruction of HP 5,000 Family planning expenses among employees 4,000 Bad debts 9,000 Provision for bad debts 3,000 Provision for GST 22,000 Net Profitc/d 2,11,200 Total 00,000 | ‘Total 7,00,000 (& scanned with OKEN ScannerAdditional Information: i) Opening Stock is valued at cost minus 12% however closing stock is valued at cost plus 8% basis. ii) Bad debts recovered include 5,000 disallowed earlier. iii) Income Tax includes ¥ 4,000 for preparation and filling of income tax returns and % 1,000 income tax penalty on an earlier Assessment and % 2,000 legal charges on income tax appeal. vi) Rent from house property includes ® 6,000 rentreceived from the employees of the concern. vii) 75% of house property expenses are personal use. Solution: a Gross profit Advertisement expenses Dividends from Indian Co. ne ‘Sundry expenses 4,500 | Rentfrom House Property 5/500 Pears oneatial 2,000 Intereston securities (non de) ceue insurance premium, 3,000 | Lottery winning (TDS-3, a (@1,000relatestoHP) - Incometax a Household expenses Ke Bad debts. 11000 Provision for bad débts S00 Repairs of HP 1,000 Municipaltaxor HP 3)600 Le Insurance Premium 6.000 Donation to congress party 23000 Depreciation (allowable) 3,700 NetPro 2,16,000 2,64,800 Tir Prasodownsa HP whichisusedasfollows: | 2,64,800 2) 25% of carpet area for his own business. b)25% of carpet area fr his camet area is let out. d) Advertsing expenses Includes expenditure of 3,000 or noes ©) 50% Of 000 on neon sign bi ‘Compute his Taxable Income from Business for A.Y. 2023-24. (Ignore ign board. underSection 115BAC) Alternative Tax Regime (& scanned with OKEN ScannerHegives youthe following additional information: LEE Wenig aie a the following Profitand Loss Account of Mr. K. C. Saha, a income from business for the year ending 31st March 23, (Cgnore A. Profit and Loss Account manufacturer. Calculate the taxable ternative Tax Regime under) jarytoemployees 95,000 | Gross Profit easement expenses in cash 24,000 | Interest on Securities a tacad General expenses 16,000 | Income from house Property 25,000 Entertainmentexpenses 22,000 | Bad debts recovered Bad debts . 1,500 .| (allowed earlier by 12,000 Drawings by proprietor 24,000 -| Income-tax Authority) GST (due and paid on 1-7-2022) 6,000 | Profiton sale ofimportiicence 80,000 Interest on proprietor’s capital 7,000 Repairs ; “2,500 Rent ches 21,000 - Legal expenses 5,000 Depreciation 15,000 Bonus (due) . 6,000 Bonus to proprietor i 7 4,000 Motor car purchased 72,000 oe car during the year 12,000 nations 2,000 poe LL planning expenses Profit 4,31,000 4,31,000 %3,000 was spent on the purchase of land and is included in legal expenses. Half of repair expense were on let-out building... Depreciation allowable on all assets including motor caris ¥ 14,400 as per IT rule. + Boniicwae naid tn amnlnuane an 2-8-2079 hitMr. KC. Saha filed his returns an 31-7-2023. © scanned with OKEN ScannerFrom the following Pre ALY. 2023-24, (1 Ignore Altern: Particulars ‘To Salaries To Purchase of machinery for research To Life insurance premium To Bonus to staff To Printing &Stationery To Household expenses To Miscellaneous expenses © To Advertisement paid in cash To Car expenses: _ Petrol 12,000 Driver’s salary 6,000 To Property tax on HP To Medical expenses of his wife To Provision for GST To Depreciation * To Gifts and presents To Net profit ind Loss Account of Mr, Sachin compute his income from business for the ative Tax Regime under Section 115BAC) By Gross profit By Interest on Debentures By Dividend from UTI By Discount received By Horse race gains(gross) By Refund of I.T. By Cash assistance from Govt, By Bad debts recovered Adjustment Information: 1. 1/2 of the car expenses are for personal use. 2. Depreciation onall assetsis% 7,200 3. Research conducted by the Mr. Sachin is related to his business. : 4. 40% of bad debts recovered were disallowed earlier. sae © scanned with OKEN Scannere008) ma n of | David, pute his taxable business income for the Assessment Year 2023-24. (under Existing Tax Regime and Alternative Tax Regime). Profit and Loss Account for the year ended 31-03-2023 Particulars z Opening stock : 40,000 Purchase 2,20,000 Wages 15,000 Freight 10,000 Gross profit 2,65,000 5,50,000 Establishment expenses 15,000 Salaries ' 25,000 Rentand taxes 12,000 Income tax 10,000 Household expenses 14,000 Reserve for bad debts 5,000 Advertisement 15,000 Donation 6,000 GST 20,000 Provision for income tax 8,000 Carriage outwards 11,000 Drawings 4,000 General expenses 16,000 Interest on capital 9,000 Bad debts 7,000 Repairs : 7,500 Taxes and insurance "2,500 Car expenses ° 11,000 Particulars Sales Closing stock Gross profit Dividend on shares (Gross) Rent from house property Refund of income tax Interest on Govt. Securities Bad debts recovered Profit on sale of machinery Miscellaneous income 2,65,000 6,000 15,000 2,000 1,000 5,000 3,000 9,000 © scanned with OKEN Scanner— — Le Audit fees Depreciation Net profit 3,06,000 3,06,000 Additional Information: 5 ~asonable upto a) Salaries include Payment to a relative employee, which is considered to be unre: %6,000. b) Purchases include two Payments of 30,000 and? 10,000 paidin cash toa supplier. €) Opening stockis valued at 10% above the cost. d) Allowable depreciation is™ 22,500. ©) 60% of car expenses are for business purposes. , jentitic f) General expenses include z 10,000 given to notified research institute for carrying on sci research, Solution: : a Pnmwneenat 8 ee © scanned with OKEN ScannerProfit and Loss Account for the year ending 31st March 2023 ¢_|Particulars To General expenses By Gross Profit 22,00,000 ToSalarytostaff 2,40,000 | ByCommission 40,000 ToSalarytoSairam 1,20,000 | By Bad debts recovered 60,000 Tointereston capital 60,000 | (earlierallowed) ToInterest on overdraft 40,000 | ByInterestonlisted debentures 1,00,000 ToExtension of Building 1,50,000 ToInterestonloan 40,000 ToDepreciation : 1,20,000 To Office expenses 80,000 ToAudit fees 72,000 ToFireInsurance 78,000 ToBonustostaff 1,00,000 ToContribution to RPF 1,22,000 ToAdvertisement 2,00,000 ToReserveforbaddebts 60,000 ToBaddebts written off 90,000 ToNetProfit 3,48,000 24,00,000 24,00,000 Other Information: 'a) Depreciation allowable as per IT Rules € 1,40,000 (excludes depreciation on permanenesign board.) b) Advertisement includes? 50,000 being cost of permanentsign board. ¢) Income of% 60,000 accrued during the previous year not entered in P&LA/c. d) Loanwastaken to pay income tax arrears. e) 2 40,000 paid as damages for failure to fulfil a contract in time Is included in general expenses, f) Office expenses includes 5,000 paid as salary to his wife, who casually helps in the business, Compute taxable income from Business for the Assessment Year 2023-24. (Ignore, ir 15BA ee Alternative Tax Regime under Section 115BAC) enn a8 cen Penne fram Rieiness © scanned with OKEN ScannerVetration . >) on-25 (1 ea iv “ a ation 28 (Taxable’tneome from Businei®) (Bambee, -2608) (Hoaimea) \g is the Profit and Loss Account of Mr. Charita, (Ignore Alternative Tax Regime) Parti oR i euler Particulars 60,000 | By Gross profit ¥ To Rates 6,000 | By Interest on debentures 28,000 To Salary of staff 24,000 . 54,000 | By Rent from property To Diwali Puja expense ji 16,000 a 2,000 | By Sundry income EF 000 fo Intereston loan 1,25,000 | By Commission i000 5 To Sundry expenses 55,000 | By Bad debts recovered To Bad debts 6,000 | (disallowed earlier) To Charity 1,000 To Reserve for bad debts 2,000 To Entertainment 8,500 To Loss by theft 14,000 To GST penalty 10,000 To Net profit 2,94,500 6,38,000 6,38,000 Additional Information: 2) Rentincludes % 12,000 of a shop belonging to assessee himself. b) Salary of staffincludes salary of f 24,000 ofa son, whoisa B.Com. in business and proprietor’s salary % 1,000 p.m. a . c) Aloanof% 60,000 at 15% p.a. is taken from his wife out of funds advanced by him and interestis included in interest on loan. d) Sunday expenses include 9,000 being expenses incurred on pilgrimage to Haridwar. e) Entertainmentincludes? 1,500 spenton tea of some guests of a local MLA. f) Loss by theft took place when somebody pretending to be a customer stole a necklace worth? 6,000 in his shop, 8,000 were stolen from his house in the night by delocking. g) Heearned% 40,000 in Goldsmuggling not shown in books. h) Rates include® 4,000 forthe property let. g i) GST paidand depreciation not taken to Profit and Loss account? 8,000 and= 5,000 respectively. Solution: Student and who casually helps © scanned with OKEN Scanner) (modified, ee previous year ended 31st Mr Dravid presents you the Trading and Profit a March 2023 end requires you to compute from Business for the assessment year 2023-24, (under Existing Tax Regime and Alternative Tax Regime). Particulars By Sales By Closing Stock To Opening Stock Jo Purchases To Wages ‘To Carigge inward ‘To Gross Profit By Gross Profit By Interest on Debenture (net) By Bad debts recovered (Previously allowed) By Sundry income By Rent from House let out ToSteff salary JoBank cesh transaction tax Tohudi Fee ToIncome tax To Car Expenses To Advertising expenses To Donation To Generel Expenses To GST Provision To Technical know-how purchased during the year To Interest on Capital ‘To Depreciation on Car * To Provision for Bad debts ToNet Profit © scanned with OKEN ScannerAdditional information: 1. Opening stock is under-valued by 15%. 2. Closing stock is over-valued by 10%. 3} Purchase includes a cash pa pain of? 30,000 towards raw materia ase 4. 20% of car expenses are attributable to the use of ‘car for, perso TG i i of 21,250 were 5. Out of the Income Tax and GST provision, Income Tax of ® 6,2 paid before filing the return of Income. jal sciences. . soci 6. Donation of § 5,000 to Delhi University for carrying on research in © scanned with OKEN Scannerg P&LAccountforthe Tax Regime under Section 115BAC) business income. (Ignore Alternative a 00,000 To Salaries 25,000 To Rentand rates To Establishment expenses 1, 20, 000 | By Commission 2,70,000 | By Refund of VAT © scanned with OKEN Scanner5,000 To Provision for bad debts By Refund of excise penalty 50,000 To Publicity | fl pea By Interest 25,000 To Patent purchas 3 100,000 | By Rent from House pro 00 ToTechnical know-how [on 1-1-2023] 1,00,000 | By Profitonsale penererte - a.on0 To Depreciation 70,000 | By Share of To GST provision 80,000 of income from HUF 1,00,000 To Donationto National Laboratory 50,000 To Net Profit 4,45,000 14,50,000 14,50,000 Otherinformation: a) Establishment expenses include ¥ 10,000 for repairs to house pro| Fe perty. b) Salary includes % 30,000 to owners son and ITO points out? 5,000 is excessive. c) _ Establishment expenses also included % 5,000 expenditure paid out of India without TDS in India. d) * 40% of GST provision was paid before last date for filing return and the balance still unpaid. e) Depreciation allowable as per IT provision % 50,000 [Excluding patent and technical know- how purchased] : © scanned with OKEN ScannerSteere Following Is To Purchases To Gross profit c/d To Salaries By Gross profit b/d 250 To Rent and Taxes By Bank Interest To Commission To Legal charges To Bad-debts written off To Reserve for bad-debts To Repairs to machinery To Depreciation on fixed assets . To Other Expenses To Income-tax To Net profitc/d : 1,45,250 Compute income from business for the A.Y. 2023-24, after taking into consideration the following information: (Ignore Alternative Tax Regime under Section 115BAC) . 1) Rent includes 1,800 related to the house which was used as part of her own residence. ll) | Bad-debts written off 3,000 were Irrecoverable, but included in last year's sale, iil) Legal charges Include 500 pald for the registration of land acquired forthe business, Iv) _Deprectation allowable as per Income.Tax rules for the year was ¥ 15,000, Both opening stock and closing stock of the year were undervalued at 20% below cost Vv, © scanned with OKEN Scannerhi theyearending 3istMarch 2023. Dr. a, particulars ~«d;SCAmount | Particulars “Amount To Opening stock 110,000 | By Sales 16,00,000 ToPurchases 14,00,000 | By Closingstock 2,20,000 ToWages ToGross profit '38,20,000 ToAdvertisement 2,00,000 | By Gross profitb/d 20,10,000 ToSalarytostaff 6,60,000 | ByRent 2,40,000 ToGovinda'ssalary 1,20,000 | By Commission 1,50,000 ToAuditfees 60,000 | By Bad debts recovered To Bad debts 40,000 |__(earlierdisallowed) 70,000 ToReserve for bad debts 50,000 | By Dividendon SRMLtd. 30,000 2,50,000 |. Shares (gross) To General expenses To Municipal tax on business premises 24,000 To Fire insurance premium on goods 26,000 ‘ToDepreciation 78,000 “ ToPatentrights 1,60,000 To Staff welfarefund 40,000 ToEmployees RPF 50,000 To Goods and Services Tax 1,90,000 ToDonation to NDF 1,00,000 ToPremium on Govinda’s : Life Insurance 36,000 ToNet profit 4,16,000 25,00,000 25,00,000 Otherinformation: i) Openingstockand closing stock were over valued by 10% il) Advertisementincludes® 1,00,000, being costof permanentsignboard. iii) Businessincome oft 70,000 was not recorded Inthe Profit & Loss A/c. iv) General expenses include® 50,000 paid forsecuring business orders and? 60,000spenton Govinda’sbirthday. | 5 v) - Depreciation allowable onall assets including permanentsignboard butexcluding patentrights asperIT rules was® 90,000. vi) Patentrights wereacquired on 11.10.2022 onwhich depreciation allowableat 25%. Computetaxable income from business forthe assessment Year 2023-24. (IgnoreAlternative Tax Regime under Section 115BAC) olution: teen eae semen neinace (& scanned with OKEN Scannerig Profit and Loss account for the year ending 31.03.2023 of Sri Akil compute oe oo from business for the A.Y. 2023-24, (Ignore Alternative Tax Regime under Section To Office salaries By Gross profit To Proprietors salary By Interest on Government To Interest on capital Securities 22,500 To General expenses By Rent from house property 38,000 To Bad debts By Profit on sale of 3 To Advertisement machinery 5,000 To Fire insurance premium By Interest on Post Office To Income tax S.B.A/c 2,500 ToR.B.D. By Bad debt received To Motor car expenses (earlier not allowed) 12,000 To Donation By Sundry income 6,600 To GST To Repairs To Audit fees To Other expenses To Depreciation fo Net profit 6,66,600 dtherinformation: ) Advertisementincludes the cost of sign board % 2,500 Motor car expenses includes % 5,500 as motorcar expenses of private use Repairs includes® 2,750 of residential house Allowable depreciation? 18,000 Other expenses includes € 2,000 related to house hold expenses. © scanned with OKEN ScannerFollowing is the Trading and profitand loss A/cof Manjunath Enretpriees forthe yearended 31st March 2023. Particulars To Opening Stock 1,24,000 | By Sales 33,30,000 : To Purchases 7,28,000 | By Closing stock 1,36,000 To Carriage 78,800 : To Wages 52,000 To Manufacturing expenses 63,000 To Gross profit 24,20,200 To Salaries 2,28,000 | By Gross profit 24,20,200 To Interest on capital 1,72,000 | By Rent from house property 44,000 To Drawing 1,10,000 | By Dividend from Tata Chemicals 10,600 To Rent and taxes 1,54,000 | By Bad debts recovered 15,000 To Donation . _25,000 | By Interest on debentures of M&M 18,000 To Repairs 61,000 | By Misc. income 8,000 To Depreciation 73,000 | By Gifts from relatives 70,400 ‘To General expenses 24,000 © scanned with OKEN Scanner6,000 10,000 5,000 46,900 23,300 30,000 18,000 16,00,000 * 25620 [| Additionalinformation: 1) Stocks are valued 10% belowcost. Depreciation allowable as per I.T. rules? 54,000. To Legal charges To IT appeal expenses To Audit fees To LIC premium To Fire insurance premium for goods To Daughter’s college fees To Travelling expenses To Net profit 25,86,200 2) 3) Legal charges are in'connection with purchase of land. 4) Repairs include 2 6,000 related to house property. 5) Salaries include % 4,600 paid to a domestic servant. 6) 40% of bad debts recovered were disallowed earlier. Compute taxable income from business for the A. Y. 2023-24. (Ignore Alternative Tax Regime) Calutian: © scanned with OKEN ScannerParticulars Particulars ‘To General Expenses 7,000 | By Gross profit ToFire insurance premium 2,000 | By Bad debts recovered ToBad debts 1,000 | By Interest from Govt. Securities To Salaries 65,000 | By Rent from employees ToAdvertisement (In cash) 22,250 | By Lottery income ‘To Proprietor’s salary 12,500 | By Interest from debtors for To Intereston capital 2,000 | delayed payment To Provision for income tax 1,000 | By Discount received To Depreciation 2,000 | By Profit on sale of plant To GST (due) 5,000 | By Dividend from foreign company To Advance income tax paid fo Donation to approved Scientific research associations ‘Donation to university to conduct social research ‘0 Motor car expenses o Municipal tax of quarters given to employees Family planning expenditures 3Charities to poor boy to supporthis Education Net profit otal ditional Information: i) Advertisement expenses are incurred to promote the sales. i) iil) Out of bad debts recovered ¢ 3,000 were disallowed in earlier previous year years. General expenses include % 2,500 paid as compensation to an old employee whose service was detrimental to interest of the business.. wv) v) vi) Depreciation allowable on all assets as per income tax rules was? 1,800. GSTwas paid on 28-7-2022. Last date for filling the income tax return was 31-7-2022. 40% of the car expenses were incurred for personal use. Calculate taxable profit from business of Mr. Jagadananda for the A.Y. 2023-24. (under Existing Tax Regime and Alternative Tax Regime). lution: Comautation of Taxable Income from Business © scanned with OKEN Scannerwer 2a 24. ) Conn SS ne profit after charging the following? 72,000. Provisions end reserves debited to profitand loss account: @ > Provision for Discount on Debtors? 42,000 @) Provision for Depreciation? 31,000. Household expenses 748,000. Donation (epproved) 79,000. Computer purchased for scientific research = 20,000. Bere cheque issued for purchases Z 25,000. OTT Geposk7 16,000 Agretsaement expenses on a signboard given to customers % 45,000. fees % 25,000 paidincesh. F = purchased during the year™ 75,000. Market survey expenses Z 15,000, Feasibility report expenses % 35,000 on a new project of = 60,00. () Openizig sock is valued at cost + 10% basis and closing stock is valued at cost - 10% basis. - Opening Hock wes valued at Z 66,000 and closing stock was valued at? 72,000. Incomes credited to profit and loss account were: () Bankintereston FD77,000, (ii) Refund of custom duty% 5,000 (@) Intereston UTI mutual fund? 3000, (iv) Bad debts recovered 3,000 = Alternative Tax Regime under Section 115BAC) Compute the business income,(Ignore. font 7 -~—.-.+tatinn of Taxable Income from Business Sofution: (mi) © scanned with OKEN ScannerMr. Nirmal (resident) lives in Delhi. He is an advocate and his receipt and payment accounts are as follows: Receipts and Payments Account By Bookspurchased (Annual Publications) By Repairs to Godown By Municipal tax on Godown By Maintenance expensesofcar By Telephone installation To Balance b/d To Sitting fee To Salary as a part time lecturer To Exam remuneration from university To Interest on fixed Deposits charges under OYT scheme 4,000 To Sale proceeding of car By Domestic expenses 20,000 To Sale proceeds of shares By Plant purchased for office 700 To Dividend received By Car purchased 25,000 By Life Insurance Premium 5,000 By Donation to Recognisedinstitution 1,200 By Gift to father 400 By Income Tax 3,500 By IT assessment expenses 200 By Installment of housing loan 17,000 (Principal amount 10,000) 2,932 By Balance c/d © scanned with OKEN ScannerAdditional information: a) 1/3part of Godownis used for profession and 2/3 for self-occupation. b) Caris used 50% for professional purpose. c) Heresides in his own house. 1/4 portion of the house is used for office purpose. Compute Mr, Nirmal professional Income. (Ignore Alternative Tax Regime) Solution: Computation of Taxable Income from Profession © scanned with OKEN Scannerae Ss Following ist! ended 31-03-2023. Ee SO S he Receipts and Payments Account of Mr.-Bi To Balance b/d To Arbitration fees To Legal counselling fees To Loan from bank To Rent from property To Interest on bank FD To Dividend from Tata Ltd. To Share of Income from HUF Ri By Staff salaries By Professional books By Refreshment charges By Rent of office By Telephone charges By Printing charges By Electric charges By Purchase of car By Computer purchased By Car expenses By Contribution to PPF By NSC purchased By BAR association fees By Balance c/d By Subscription to Journals 56,000 18,000 2,000 4,000 15,000 18,000 3,000 6,000 2,50,000 50,009 7,000 10,000 14,000 2,000 24,000 © scanned with OKEN ScannerAdditional Information: 1/2 of the car expenses pertain to Personal use. 0 ii) Depreciation rate - car 15%, computer 40% and books 40%. ii) 25% of telephone expenses pertain to personal use. iv) Halfofthe electric charges are for the house Property. Gifts from clients % 10,000 not included in the above account. v) vi) Loan from Bank is for personal use. Compute his total income from profession forthe Solution: a -— A.Y. 2023-24, (Ignore Alternative Tax Regime) © scanned with OKEN ScannerShri Yativary: a leading advocate at Bangalore. He keeps his books on cash basis and his summarized receipts and payments account for the year ended 31-03-2023 was given below: Receipts and Payment Account for the year ended 31-03-2023 a a Receipts : To Balance b/d 8,000 | By Car expenses To Legal fee: By Office expenses ~ 2020-21 1,05,000 | By Salary to attender 9,000 2021-22 20,000 | By Subscription to law journal 500 2022-23 6,000 | By.Purchase of law books 12,000 © scanned with OKEN ScannerEl CL MOLLE EP To Free from consultancy work By Donation to an approved Clg. an To Special commission fees By Rentof chamber To Salary as part time lecturer in lay 3022-23 an To Examiner’s fees from law universit 2021-22 “yon To Sales proceeds of furniture 2020-21 2500 used in the profession By Electriclighting ea To Director's fee form the cornpany By LIC premium 1,000 To Dividend from Indian Co, By Car purchased ad To Rernuneration frorn an article By House hold expenses ae By Income appeal expenses ap 1,30,000 published in law journal To Maturity amount frorn LIC By Purchase of land for office By Balance c/d To Gifts from clients Total 2,98,700 Notes: a) Rentand electric lighting were in respect of the building used for profession. b) 30% ofthe car expenses are in respect of office use. c) Carwas purchased on 24-10-2022 and rate of depreciation is 15% p.a. d) Depreciation on law booksis @ 40% p.a. Calculate the taxable income from profession for the assessment year 2023-24. (Ignore Alternative Tax Regime under Section 115BAC) © scanned with OKEN Scanneres ee SAIS Mr. Chandan is a chartered accountant in Bengaluru. He has submitted the following income and expenditure account forthe year. Compute his income from profession. (Ignore Alternative Tax Regime) Drawings Audit fees Office rent Financial consultancy service Telephoneinstallation Dividends from an Charges under OYT scheme Indian Co. (gross) Electricity bill Dividend on units of UTI Salary of staff Accountancy works Professional tax Family pension Charities Gifts given to relatives Car expenses : Subscription for journals Institutefee Stipendsto trainees 1,33,300 Notes: i) Depreciation of car during the year amounts? 5,000. ii) 30% of the car is used for personal purposes. Solution: Netincome 3,56,000 Computation of Taxable Income from Profession © scanned with OKEN ScannerMr, Rama Rao is a Cha rte , = i artered A ii eceipts and Pa’ ending 31.03.2023is as follows: ccountant in Mysore. His RecelP! Receipts S To Balance B/d To Dividend ’ By font ee TK a . sy Reni 0 s pee ee income 5,60,000 | By Telephone charges 24,000 To Race course incom: 90,000 | By Professional expenses 20,000 ToLottery prize(nat) (net) 24,000 | By Motor Car expenses _ 48,000 (net) 1,20,000 | By Misc. expenses 30,000 By Purchase of car (31.09.22) 1,80,000 By Advance income tax 1,00,000 By Personal expenses 1,80,000 By Purchase of professional books 8,000 By Electricity 4,000 By LIC premium 16,000 By Balance c/d 1,44,000 9,14,000 9,14,000 Additional information: a) 1/3 0fcar expenses relates to personal use. b) Depreciation of motor car allowed is15%. Rent includes 30,000 paid for residential accommodation. °) E d) Misc. expensesinclude donation paid toa notified Temple %20,000. for the A.Y. 2023-24. (Ignore Alternative Tax Regime Compute his professional income underSection 115BAC) Solution: pa —autatian af Taxable Income from Profession © scanned with OKEN ScannerBOE BSR ses The following is the Receipt and Payment Account of Mr. Ramkia Chartered Accountant for the P.Y. endedon31-3-2023. To Balance b/d By Staff salary 3,00,000 To Audit fees By Stipend to Audit Clerks 1,00,000 To Tax consultancy fees By Office rent 90,000 To Project report fees By Software development To Stipend to articled clerks expenses . _ 10,000 To Accounting software charges By Office expenses 1,25,000 To Guest lectures in CA Institute By Books: Annual 30,000 To Bank interest Non Annual 30,000 To Remuneration as member By Car expenses 65,000 tax reforms commission By CA institute membership fee 5,000 To Bonus and Commission from firm By Contribution to PPF 50,000 By Balance c/d 1,65,000 9,70,000 9,70,000 Other Information: a) % car usage is personal use, b) Depreciation on car % 10 furniture % 7,000. Compute income from Profession taxable Alternative Tax Regime under Section 115BAC) Solution: 000, c) Depreciation on Office for the A.Y. 2023-24, (Ignore Pnmeeneeneti 8 ee ee © scanned with OKEN Scanner' itive Tax Regime) A/c for the financial year 2022-23. (Ignore Alternative Receipts and Payme: neral expenses Balance b/d e Sai 7 i 3,000 Professional fees 1,00,000 | Magazine Subscription 20,000 Dividend from an Indian Co., 9,000 | Motor Car expense . 50,000 Share from HUF 11,000 | Purchase of scanning machine 5,00 Share of Profits from Income tax 20 4 Partnership firm 15,000 | Professional tax ieee House property expenses: Pp Taxes 6,000 Repairs 3,000 18,000 Interest onloan 9,000 geet ta Mil best Balance c/d 22,000 Compute his gross total income for the relevant assessment year 2023-24 after taking into account the following ii information: i) 30% of the Car expenses are inrespect of Personal use, ii) Depreciate Scanning machine @ 15% it was purchased on 10th Dec, 2022, iii) He stays in his house; One-third of the house is used as his Clinic, The arnce --—..— the whole houseic# 24 ann © scanned with OKEN ScannerMr. Sick is a registered medical practitioner. He keeps his book 0 on cash basis rand his summarized cash account forthe year ended 31st March 2023is as follows: Baiance b/d Loan from Bank General expenses 450 Sate of medicines Motor car expenses 6,000 Consultation fees Salaries 1,200 Visiting fees Rent of dispensary 2,400 Interest on Govt. securities Telephone expenses S00 Rent from house property Personal expenses 1,600 Giftfrom father-in-law Life insurance premium 2,500 Giftfrom patients Interest on loan from Bank 200 Insurance premium: Car 700 House property 500 1200 Local taxes 800 Travelling expenses (personal) 1,000 Charity Balance c/d i) _ Halfofthe motor car expenses, are in respect of his personal use. fi) Consultation fees include a receipt of % 6,000 as advance for attending a medical camp In April 2022. ili) The written down value of Motor Caron 1-4-2022 was? 12,720. Rate of depreciation 15%. iv) Loan from Bank @ 2% interest. Compute taxable Income from profession for the assessment year 2023-24. (Ignore Alternative Tax Regime under Section 1158AC) Solution: Computation of Taxable Income from Profession © scanned with OKEN ScannerBy Clinic rent . To Balance b/d To Visiting fees By Staff salaries 80,000 To Consultation fees By Rent and taxes 25,000 To Sale of medicine By Electricity & water charges 14,000 To Operation theatre rent By Purchase of medical books To Interest 25,000 | (annual publication) 14,000 By Purchases of surgical equipments 40,000 By Motor car expenses 10,000 By Medical association members fees 5,000 By Audit fees 20,000 By Staff welfare expenses 12,000 By Diwali expenses 6,000 By Entertainment expenses 12,000 By Medicines purchased . 30,000 iditional Information: a) b) °) qd) e) ution: By Balance c/d 3,60,000 Gift from patient % 4,000 was given to him bya patientnot included in 1/4 of Motor car expenses relate to personal use. The rate of depreciation on surgical equipments is 15%. Interest received is on Bank deposits. Audit fee include income tax appeal expenses of ? 10,000. Compute his taxable income from profession for the assessment year 2023-24. (Ignore Alternative Tax Regime. 2) © scanned with OKEN Scanner theaccount,[De ‘Punitha submits the ‘following particulars, “calcul pl ssessment Year 2023-24. (Ignore Alternative Tax Regime under Section 115BAC) By Salary att 0 Consultation fees By Purchase of medicines o Visiting fees 62,500 | By Professional books 10,000 0 Agriasturel income 40,000 | By Purchase of car 2,40,000 0 Interest on Bank deposits 10,000 | By Car expenses 20,000 o Giftfrom patients 15,000 | By Computer purchased 50,000 0 Rent from house property 48,000 | By Personal expenses 45,000 0 Loan from Bank for profession 1,50,000 | By Incometax 15,000 0 Operation charges 90,000 | ByLIC premium 10,000 0 Sale of medicines 32,500 | By Repayment ofloan 35,000 By Municipal tax on house property 5,000 By Intereston loan 7,500 By Closing balance (c/d) dditional Information: 2) 25% of car expenses relate to personal use. b) Rate of depreciation on professional books 40%, car 15% and computer 40%. ae Acash gift of 2,500 received from a patient was not recorded in the books. Camnurtatinn af Tayahle Income from Profession © scanned with OKEN ScannerPES RERUN Oe ne Dr. Sharma is a renowned m forthe financial year 2022-23. (Ig; 1g aecount Be EOD ios itioner. He furnishes his receipts and paymee) nore Alternative Tax Regime under Section 115BA\ Receipts and Payments Account ToBalance byd By Rent of Clinic 16,000 ultation fee pte , 2021-22 14,800 — 50,000 2022-23 16,600 2023-24 foo ByEl sce AW it | icon . , lectricity & Water ToVisiting fees 30,000 | By Purchase of Professional Books ree To Loan from bank for By Household expenses 2000 professional purposes 1,75,000 | By Municipal taxes paid on property 2'800 To Sale of medicines 70,000 | By Salestax on medicine 148,000 ‘To GST on medicine 3,000 | By Purchase of motor car eepes To Gift from patient 50,000 | By Fire Insurance on property 37) a ‘To Remuneration from articles By Surgical equipment ison Published in professional By Advance Income tax on magazine 16,000 | By Salary to nurse , To Rent from house property 11,000 | By Entertainment expenses 6,000 To Interest on post office By Purchase X-ray machine 94,500 National Savings Certificate 7,000 | By Expenses of income tax proceedings 15,000 By Life Insurance premium 15,000 By Gifttowife 5,000 By Intereston loan 2,000 By Loana/c- instalment paid 15,000 By Donation to political party 500 By Car expenses 15,000 By Purchases of medicines 35,000 By Balance c/d 17,000 Compute Dr. Sharma professional income for the assessment year 2023-24 with the help of the following additional information. a) One third of car expenses is for personal use. b) Depn. on motor cat is 15%, opening stock of medicines is valued at 8,000. c) Remuneration from articles includes? 3,000 received for setting the QP. © scanned with OKEN ScannerFrom the following Income and Expenditure Account and additional information of Dr. Darshanik Patel, who maintains books of accounts under mercantile system of accounting. (Ignore Alternative Tax Regime under Section 115BAC) Compute taxable income from profession for the Assessment Year 2023-24. Rent of clinic 2021-22 2022-23 Consultation fe 2021-22 2022-23 5,500 85,000 © scanned with OKEN Scanner10,009 65,000 2023-24 Electricity and water Visiting fees Household expenses Loan from bank (for profession) 1,25,000 Municipaltaxes on house Property Loan from bank (for personal) 50,000 Purchase of motor car Gifts from patients 20,000 Laptop purchased (on 1-3-2022) Remuneration for articles Published Income tax in professional journal 8,000 Saiary to Compounder Sale of medicines 60,000 Purchase of books Operation theatre rent 15,000 Expenses on IT proceedings Rent from house property 12,000 Life insurance premium Interest on Post Office NSC 2,000 30,000 Income from horse race Gift to wife Interest on loan (profession) Interest on loan (personal) Loan instalment paid (profession) Donation toa notified Temple Car expenses Purchase of surgical equipments Purchase of medicines Excess of income over expenditure 4,87,500 4,87,500 Additional information: @) 40% of car expenses are for personal use. b) Depreciation on carand surgical equipmentsis @ 15% and on laptop 40% and books 40%. c) Incometax includes % 2,000 professional tax paid to State Government. d) — Gifts from patients include ¢ 8,000 received on the occasion of marriage from friends. e) Closing stock of medicines is% 7,500. Solution: Computation of Taxable Income from Profession © scanned with OKEN ScannerNy " a : Mrs. Rao, 2 physician and its the following receipts and payments account forthe year ending 31-3-2023. (Ignore Alternative Tax. ‘Regime under Section 115BAC) ‘(Particulars Pa =e Ceeey z Jo Balance b/d By Rent of clini To Consultation fees 2021-22 80,000 2020-21 2022-23 1,20,000 2021-22 2,50,000 By Surgical Equipments 1,00,000 2022-23 30,000 By Computers 50,000 To Visiting fees 80,000 By Interest on loan (profession) 12,000 To Winning from lottery (gross) 50,000 By Professional books To Interest on post-office saving A/c 30,000 Purchased (annual publication) 15,000 To Giftfrom patients 40,000 By Purchase of Car 1,50,000 To Share from HUF 20,000 By House hold Expenses 20,000 To Sale of Medicine 90,000 By Incometax 5,000 Jo Loan from Bank 1,50,000 By Life Insurance premium 18,000 By Gift to mother 12,000 By Car Expenses 30,000 By Lottery ticket 25,000 By Staff salary 1,20,000 By Balance c/d 78,000 18,35,000 8,35,000 Additional Information: 1) WDV of car on 31-3-2022 was ¥ 1,00,000. On which 15% depreciation to be charged. Car is used 60% for profession and 40% for private purpose. 2) _ Visiting fee due but not received for 2022-23is% 18,000. 3) Consultation fees due but not received for 2021-22 is% 8,000. 4) Surgical equipments and computers were purchased and put to use on 10-9-2022. Determine Taxable Income from profession for Assessment year 2023-24. Solution: © scanned with OKEN Scanner