CBCS/PG/3rd Sem.

/Commerce/COMM-CT-302/2020

UNIVERSITY OF NORTH BENGAL

PG 3rd Semester Examination, 2020

COMMERCE
CORPORATE TAX PLANNING AND MANAGEMENT - I
COURSE: COMM-CT-302
Time Allotted: 2 Hours Full Marks: 40

ASSIGNMENT
The figures in the margin indicate full marks.

Instructions- the format of the assignment shall be as follows: Cover Page

Contents- as uploaded by NBU, Main page Contents; Number of pages
should not exceed fifteen A4 pages, including figures and tables.
Pages should be numbered. The examinee must upload scanned PDF files
from handwritten scripts for all the eight papers.

Answer any one assignment from the following 40×1 = 40

1. (a) “All Indian Companies are treated as Domestic Companies for the purpose of 12+28
Income Tax in India, but all Domestic Companies are not treated as Indian
Companies”. Is this statement valid? Justify your views with proper provisions of
the Income Tax Act 1961 and suitable examples and state why it is advantageous
to have a status as a Domestic Company rather than a foreign Company in India.
(b) The table given below shows distribution and written down value of assets held on
1.4.2019 and purchased and sold during the previous year 2019-20 by Aritra
Environ Co. Pvt. Ltd., established in the year 2004 in Matigara in Darjeeling
district, West Bengal.
Description of Buildings Buildings Furniture Electrostatic Dust Solid waste Computer
Assets for for and Precipitation collection recovery and
Residential Factory Fixture machines machines recycling
purpose machines
W.D.V. in 59,62,000 89,76,200 8,32,520 44,50,000 19,25,000 21,53,000 4,90,000
(Rs.) on
1.4.2019
Purchased on 4,56,000 NIL 2,44,000 NIL NIL NIL 1,65,000
2.5.2019
Purchased on NIL 14,16,530 55,600 5,16,000 4,47,560 NIL 1,65,000
12.11.2019
Purchased on NIL 2,40,000 NIL 12,14,000 NIL 8,78,500 NIL
6.12.2019
Sold on 11,22,300 NIL 83,000 NIL 2,93,000 4,16,000 NIL
1.6.2019
Sold on NIL 5,66,700 NIL 8,95,000 2,93,000 NIL NIL
1.6.2019
(All figures are in Rupees)

The accountant of the company calculated a total depreciation of Rs. 25,67,878 to

be claimed under section 32 in the returns for the A.Y. 2020-21. However, he was
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CBCS/PG/3rd Sem./Commerce/COMM-CT-302/2020
not aware of the provisions for additional depreciation for West Bengal and did not
include it in his computations. You are required to recalculate the Depreciation
Allowance that can be claimed by the company in the A.Y. 2020-21 taking into
account the system of block of assets and provisions for normal and additional
depreciation. All suitable notes related to the computations must be given. The rates
of depreciation can be accessed from the schedule of depreciation given by the
Income Tax Department (https://www.incometasindia.gov.in/)

2. (a) From the following information find out the taxable income and the tax liability of 25+15
PTY company Ltd. for the Assessment Year 2019-20 taking into consideration the
provisions of MAT. The company was incorporated in 2008 and produces steel
rods and frames. The equity shareholding pattern of the company is as follows:
LICI holds 10% shares, Reliance Industry holds 10% shares, Surela Investment and
Trading Limited, a 100% subsidiary of Reliance Industries holds 10%, UTI holds
10% shares and the rest of the shares are held by a large number of individual
shareholders.
The following particulars are available from the financial statements of the
company for the Financial Year 2019-20:
Amount, Rs. Crore
1. Gross Turnover of the company 7600
2. Net Profit as per Profit and Loss Account 1440
3. Dividends declared and distributed 240
4. Provisions for Income Tax 230
5. Penalty for Income Tax 20
6. Customs duty paid 92
7. GST paid 156
8. Provision for Bad Debts 24
9. Loss of Subsidiary Co A debited to P/L a/c 35
10. Transfer to General Reserve 370
11. Depreciation on assets including depreciation on 265
re-valued assets
12. Brought forward Business loss from the P.Y. 2017-18 70
13. Brought forward Business loss from P.Y. 2010-11 40
14. Unabsorbed Depreciation from P.Y. 2015-16 95
15. Depreciation on re-valued assets 45
16. Amount withdrawn from Revaluation Reserve and credited to P/L a/c 85
17. Agricultural Income credited to P/L a/c 60
Items number 30 to 11 were debited to Profit and Loss Account while computing
Net Profit for the year. It was also calculated that the taxable income calculated for
the A.Y. 2020-21 under ordinary income tax provisions without taking MAT into
consideration was Rs. 700 crore. Compute the actual tax liability of the company
for the A.Y. 2020-21. Also state whether MAT credit carried forward from A.Y.
2016-17 and A.Y. 2017-18 amounting to Rs. 140 crore and 65 crore can be set off
in this assessment year. (All notes required for calculation must be shown).
(b) State in details the provisions which allows Domestic Companies to avail special
tax rates under sections 115BA, 115BAA and 115 BAB and illustrate your answer
with relevant examples. Can companies lower their effective tax rates than the
corporate tax rates in these special cases? If yes, show with tax planning examples
as to how this can be done.

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