MF00121 assignment spring 2016

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Q.
No
1
DRIVE
PROGRAM
SEMESTER
SSUBJECT CODE &
NAME
BK ID
CREDIT
MARKS
ASSIGNMENT
SPRING 2016
MBA
III
MF 0012
TAXATION MANAGEMENT
B1760
4
60
Note: Answer all questions. Kindly note that answers for 10 marks questions should be
approximately of 400 words. Each question is followed by evaluation scheme.
Question
Marks
Total Marks
Mr. X (38 year) is employed by A Ltd. as marketing manager in Pune. The following
information is furnished by Mr. X for the previous year ending 31st March 2015.
Basic salary Rs. 12,00,000 p.a., DA Rs. 40,000 p.a. (36 % of DA is considered for gratuity and
Pension, but not for Provident fund). Club allowance Rs. 5,000 p.m., Furnishing allowance Rs.
2,000 p.m. and HRA Rs. 40,000 p.m. Conveyance allowance is Rs. 2,000 p.m. which can be used
both for office and private purposes.
Up to August 31, 2014, he resides with his parents and does not pay any rent. From September 1,
2015 he has been allotted a company accommodation at Pune (population 23 lakhs)in lieu of
house rent allowance.
Club allowance has been discontinued from January 1, 2015. And Mr. X has been provided
by the company club facility for private (20 %) and office use (80%). Expenditure by the company
uptil 31st March 2015 was Rs. 20,500.
On 20 Nov. 2014, Mr X has taken an interest free loan from the company (SBI lending rate for
Similar loan being 18.5 % p.a.). Mr. X and his employer contribute @ 10 % of his salary to P.F.
Interest Credited by the company in Provident Fund on June 1, 2014 @ 9.7 % is Rs. 2,11,200.
Assuming that income of Mr. X from Other Sources Rs. (-30,000), find out the net income and
liability of Mr. X for the Assessment Year 2015-16.
A
Based on above Compute the taxable income and tax liability
(before deducting TDS) of Ms. X for the A.Y. 2015-16 Rs. 8
2,600 (being Income-tax refund and Rs. 200 being Interest
thereon):
2
2
a) How is advance money received against cost of acquisition adjusted ?
10
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b) State giving reasons, whether the following assets are Short term or Long term :
i)
X purchases a house on 10th March 2012 and transfers on 6th June 2014.
ii)
Y purchases unquoted shares in an Indian company on 10th March 2012 and transfers
on 6th June 2012.
iii)
Z acquires units of mutual fund on 7th July 2013 and transfers those on 10th July 2014.
iv)
A purchases diamonds on 12 September 2011 and gifts the same to his friend B on 31st
December 2014 and B transfers the asset on 20 October 2014.
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A
3
a) How is advance money received against cost of
acquisition adjusted ?
b) State giving reasons, whether the following assets are
Short term or Long term :
 X purchases a house on 10th March 2012 and transfers
on 6th June 2014.
 Y purchases unquoted shares in an Indian company on
10th March 2012 and transfers on 6th June 2012.
 Z acquires units of mutual fund on 7th July 2013 and
transfers those on 10th July 2014.
 A purchases diamonds on 12 September 2011 and gifts
the same to his friend B on 31stDecember 2014 and B
transfers the asset on 20 October 2014.
2
10
2
2
2
2
Ms. A purchases a house property on 1st January 1976 for Rs. 95,000. She enters into an
Agreement for sale of the same property to Mr. X on 1st November 1983 and receives Rs. 10,000
as advance. Following the demise of Mr. X immediately thereafter, the money was forfeited by
Ms. A. Later Ms. A gifts her property to her friend Ms. B on 15th May 1985. The following
expenses are incurred by Ms. A and Ms. B for improvement of the property :
Particulars
Additions of two rooms by Ms. A during 1978-79
Addition of first floor by Ms. A during 1983-84
Addition of second floor by Ms. B during 1990-91
Cost
(Rs.)
25,000
40,000
1,15,000
Ms. B enters into an agreement for sell the property for RS. 8,50,000 to Mr. P on 1st April 1993
after receiving an advance of Rs. 50,000. Mr. P could not pay the balance amount within the
stipulated time of two months and Ms. B forfeits the amount of advance.
Ms. B finally transfers the property to Ms. C for Rs. 14,75,000 on 1st December 2014. Given the
Fair Market Value of the property on 1st April 1981 being Rs. 1,15,000; Cost Inflation Index for
1981-82 : Rs. 100; for 1983-84 : Rs.116; for 1985-86 : Rs. 133; for 1990-91 : Rs. 182; for
1993-94 : Rs. 244 and 2014-15: Rs.1,024 compute the Capital gains in the hands of Ms. B
for the Assessment Year 2015-16.
A
Compute the Capital gains in the hands of Ms. B for the
Assessment Year 2015-16.
10
10
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4
i)
Ms. Brinda, a U.S. citizen visits India on 1st January 2014 to study and conduct research on
Indian folk culture. She has been regularly visiting India for 100 days in the past five
consecutive years to carry the research. Advise the residential status of Ms. Brinda under
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extant rules referring to section 6 of the Income-tax Act 1961.
ii)
What are the provisions of Advance tax under section 2(1) ?
i)
Ms. Brinda, a U.S. citizen visits India on 1st January
A
5
A
6
2014 to study and conduct research on Indian folk
10
5
culture. She has been regularly visiting India for
100 days in the past five consecutive years to carry
the research. Advise the residential status of Ms.
Brinda under extant rules referring to section 6 of
the Income-tax Act 1961.
ii)
What are the provisions of Advance tax under
section 2(1) ?
5
Explain the need of Service tax in India. What are the different approaches to Service tax in
India ?
Explain the need of Service tax in India. What are the different
approaches to Service tax in India ?
10
10
Mr. X (aged 59 years) furnishes the following Profit and Loss account for the year ended 31st
March, 2015. Compute the Gross Total Income of Mr. X under respective heads, his Net Taxable
Income and Tax liability in the assessment year 2015-16.
Particulars
Rs.
Particulars
Rs.
General Expenses
13,400 Gross profit
3,15,500
Bad debts
22,000 Commission
8,600
Advance tax
2,000 Brokerage
37,000
Insurance
600 Miscellaneous Income
2,500
Salary to Staff
26,000 Bad Debt Recovery
11,000
Salary to Mr. X
51,000 Interest on Debenture
25,000
(Net interest Rs.22,500 + TDS
Rs. 2,500)
Interest on Cash Credit
4,000 Interest on Fixed Deposits
13,000
(Net interest Rs. 11,700 + TDS
Rs. 1,300)
Interest on loan to Mrs. X
42,000
Interest on Capital of Mr. X
23,000
Depreciation
48,000
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7,000
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Contribution to Employees’
Provident Fund
Net Profit
Total
13,000
1,60,600
4,12,600
Total
4,12,600
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Supplementary information:
Permissible depreciation as per CBDT circular is Rs. 37,300 which includes depreciation of
permanent glow sign board.
i.
ii.
iii.
iv.
v.
A
Advertisement expenditure includes Rs. 3,000, being cost of permanent glow sign board
affixed outside the office premises.
Commission accrued but not received Rs. 4,500 is not credited to P & L Account.
Mr. X pays premium of Rs. 6,000 on his own life.
General expenses includes :
a) Rs. 500 spent for arranging a party for Mr. X’s son who arrives from Canada.
b) Rs. 1,000 for contribution to a political party.
Loan availed from Mrs. X was for payment of arrear tax.
Mr. X (aged 59 years) furnishes the above Profit and Loss
account for the year ended 31st March, 2015.
Compute the Gross Total Income of Mr. X under respective 10
heads, his Net Taxable Income and Tax liability in the
assessment year 2015-16.
10

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