Paper - F-3 : Tax Compliances and Management - Surana college

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PG - 145
lll semester M.B"A" (Day) Degree Examination, January zo12
(2007-08 Scheme)
MANAGEMENT
F-3 : Tax Compliances and Management
Time : 3 Hours Max. Marks : 75
I n stru cti o n : C al c u I ato rs a re a I towed.
SECTION - A
1' Answeranysix questions, each question carriestwo marks. (6x2=12)
a) What are excisable goods ?
b) What is STT ?
c) List the rates of tax as applicable to super senior citizen of T.A.y. ZO11-12.
d) State the conditions to be fulfilled for levy of excise duty in lndia.
e) DefineTax Management.
f) state any two fully exempted allowances in income tax.
g) What is cascading effect ?
h) state the provisions regarding set-off of capital losses.
P.T.O.

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SECTION _ B
Answer any threequestions, eaeh question carrieseight marks.
(8x3=24)
2. How is residence of assessees determined for income tax purposes ? Explain
the incidence of residence on tax liability.
3' X Ltd. a domestic company, has two businesses A and B. For the last two years
business A has been running at a loss wiping out the entire profits of business
B. At the end of f inancial year 2010-1 1 there are brought forward losses of
Rs. 8,00,000 and unabsorbed depreciation Rs. 5,00,000.
ln the financial year 2011-12 onwards it is expected that business B will earn a
profit of Rs, 5,00,000 annually and if business A is continued at a minimum
levelthere will be an annual loss of Rs. 1,00,000 and rate of tax will be g0.g%.
Suggest to the management of the company :
i) Whether business A should be continued or shut-down.
ii) lf continued for how many years ?
4. a) Mr. X a person holding lndian passport, brings 1 kg gold, out of which
Rs. 3,60,000 are in form of biscuits and balance of Rs. 40,000 in form of
gold jewellery which he was using abroad. What is the duty payable if (a) the
person is returning after 3 months stay (b) the person is returning after
9 months stay abroad and the gold belongs to him (c)the person is returning
after B months stay abroad and the gold belongs to his friend, who has given
it only for carrying to lndia (d) he is returning after 1B months stay abroad.
b) Shri Sharma sells his only residential house in Mangalore on 24th August,
2010 for Rs. 32,20,000 and incurs an expenditure of Rs. 20,000 in connection
with the transfer. 'Cost of acquisition of the house for him in 1g7B was
Rs. 1 ,80,000 and on 1st April, 1981 the fair market value was Rs. 4,00,000.
On 16th January, 2011 he purchased a residential f lat in Mangalore for
Rs. 5,00,000 and deposited Rs. 1,00,000 in the capital Gains Account
Scheme.
Compute the taxable capital gains for assessment year 2011-12. The cost
inflation index for 1981-82 was '100 for 2009-10 it is 632 and 20i 0-1 1 is 71 1 .

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PG _ 145
5' From the following Profit and Loss Account of a business for the period ended
31st March,2010 ascertain the taxable profits from business and the total income
for the assessment year 2010-1 1 :
Office Salaries 10,000 Gross profit
1,57,500
Proprietor's salary 5,000 Profit on sale of residential house 20,000
lnt. on Proprietor's capital 2,000 Bad debts recovered (not allowed
Generalexpenses 5,000 as deduction by Assessing officer in
Bad debts 2,000 earlier previous year for lack of proof) 3,000
Advertisements 4,500 lnterest from Govt. Securities 5,000
Fire lnsurance Premium 2,000 Dividends from lndian Agricurturar
Depreciation 4,000 companies (Entire income exempt) 2,500
Reserve for future losses 8,000 rnterest from post office saving
Custom duty 2,000 Bank A/c 2,000
lncome tax on last assessment 4,000 Refund of penalty on custom Duty
Advance LT. paid 2,000 paid in an earlier year 2,000
Donations to Delhi Govt. to
provide medical relief to the
poor 1,000
Legal charges for defending suit
for alleged breach of trading
contract
S00
Motor-car expenses 1,000
Net Profit 1,39,000
Rs. 1,92,000 Rs. 1,92,000
Generalexpenses include Rs. 1,000 paid as compensation to an old employee
whose services were terminated as his continuance in service was considered
detrimentalto the profitable conduct of the business and Rs. 200 by way of help

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to a poor university student. The depreciation is found to be in excess by
Rs. 1,800. The advertisement cost includes one wooden showcase Rs. 500,
Calendars and Diaries Rs. 1,500. Motor-car expenses includes Rs. 500 as
motor-car expenses for private use of car. The assessee has received demand
notices of sales-tax amounting to Rs. 8,000 and he has not disputed this liability.
Reserve forfuture losses is meantlorthis liability. The net consideration received
on the sale of residential house is Rs. 1,50,000.
6. a) From the followihg figures, you are required to ascertain the depreciation
admissible and other liabilities, if any in respect of the previous year relevant
to the A.Y. 201 1 -12.
WDV at the beginning of the year
Additions during the year
Sales during the year
P&M Building
2,50,000 10,00,000
3,00,000 Nil
6,00,000 2,00,000
b) Mr. X was employed in a company, He relived from service on 1st Jan.
2011, after completing 30 years of service. From 1st July 2009 his pay scale
was{8,000-200-10,000 -300-13,000 and he was getting dearness allowance
@ 20% of his pay under the terms of employment. He had seven month's
earned leave to his credit (on the basis of 30 days per year) which was
approved. Hence, he was paidT 57,4A0 as salary paidT 11,480 as dearness
allowance. Compute the amount exempt regarding encashment of earned
leave for the assessment year 2011-12.
SECTION _ C
Answerany two questions, each question carries 12 marks.
(12x2=241
7. Explain the following deductions :
i) a) B0 GGB
c) B0 JJA
b) B0 r-A
d) 80LA
e) 80 GGA.
ii) Explain importance of tax planning in lndia.

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PG - 145
8. From the following information compute the tax payable by 7 & Co. keeping in
view the provisions of MAT u/s 1 15 JB for the A.Y. 2011-12:
1) Profit and Loss Account
Exp. related to export sales 7,20,0A0 Export sales u/s 10 A 10,00,000
Exp. related to other sales 16,00,000 Others sales 20,00,000
Security transaction tax paid LTCG (Exempt u/s 10 (38)l 2,00,000
relating to LTCG 5,000 lnterest on Govt. Securities 25,000
Depreciation 1,50,000
Proposed dividend 2,50,000
lncome-tax 1,00,000
Net profit 4,00,000
32,25,000 32,25,000
2) The company revalued its assets from { 3,00,000 to { 6,00,000 and provided
depreciation on { 6,00,000 @ 25o/o. The depreciation allowable under the
lncome-Tax Act is T 80,000
3) B/F loss as per books of account { 2,00,000
4) BIF depreciation as per books of accountt 50,000
5) B/F unabsorbed depreciation T 1 ,00,000
6) The company received export turnover u/s 10 A T 10,00,000 in lndia in
convertible foreign exchange within prescribed time.
9. Compute the assessable value and custom duty payable from the following
information ;
i) FOB value of machine - 8000 t
ii) Fright paid (air) 2,500 t
iii) Design and development charges paid in UK-500 t
iv) Commission payableto local agent @2Yo of FOB in lndian rupees

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v) Date of bill of entry 24-10-2007 (Rate BCD 20%, exchange rate as notified
by CBEC Rs. 68 Per UK f)
vi) Date of entry inwarcl 20-10-2007 (Rate of BcD !Bo/o, exchange rate as
notified bY CBEC Rs' 70 Per UK f )
vii) CVD payable @ 16% plus education cess as applicable
viii) Special CUD as aPPlicable
ix)tnsurancechargesactuallypaidbutdetailsnotavailable.
SECTION - D
10. Case StudY (ComPulsory) :
(1x15=15)
Dr. Jagannath, a Civil Assistant Surgeon, was in Government service till 30-6-2010'
He joined as an adviser (part time) from 1st October, 2010, in a charitable
dispensary on an honorarium of Rs. 3,000 per month. He owns a house property'
Ground floor is occupied by him for his residence, the annual value of which is
Rs. 30,000. First floor was built by him and was let out from 1st June' 2010 on a
monthly rent of Rs. 2,500, after its completion in May, 2010' He is also a
visiting Surgeon to various hospitals. From the following further information'
furnished for the year ending 31st March, 2A11, you are required to compute the
total income for the assessment year 2011-12 and tax liability with suitable tax
Planning'
,',
Rs.
a) Salary from Government Service
b) House Rent Allowance
c) GratuitY Received
d) Leave at Credit Encashment
e) Provident Fund
f) Commuted Pension
g) Pension
,:,
24,000 P.m.
4,500 P.m.
2,30,000
1,48,000
1,75,000
1,30,000
8,000 P.m'

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PG - 145
h) Gross Receipts from various Hospitars as Visiting surgeon
i) Car petrol
j) Periodicals
k) Donation to prime Minister's Nationar Rerief Fund
l) He purchased an ord car on 1-6-2008 used for visits to Hospitars.
The written-down value as at 31st March 2O1O
m) Amount withdrawn from National savings scheme, 1gB7
(Principal Rs. 10,000 and interest Rs. 15,000)
n) Royalty received on the Text-Book for Hindiauthored
90,000
19,000
9,000
10,000
80,000
25,000
by him and recommended as Text-Book for schoors
o) MunicipalTax on House property
:
30,000
Ground floor
First ftoor (paid on 15_4_201 1)
4,000
6.000 10,000
p) Repayment to Housing Deveropment Finance corporation Ltd.
(Paid in June, 2011- principar Rs. 10,000 + rnterest Rs. 15,000) 25,000
q) Deposit in public provident Fund A/c
30,000