M.Com. (Semester II) (CBCS) Examination, 2017
TAXATION (PAPER-I)
Day Date: Wednesday, 19-04-2017 Max. Marks: 70
Time: 10.30 AM to 01.00 PM
N.B. All questions are compulsory.
Figures to the right indicate full marks.
Q.1 Select the right answers from given alternatives. 14
Loss on account of owning, and maintaining the race horses of
particular assessment year can be set off in the same assessment
year from:
Any business income
Any income under the head other sources
Income from race horses
None of the above
Loss under the head business and profession other than specified
business referred to in section 35AD can be set off in the same
assessment year from
Income under any other head
Income under any other head except salary income
Income under any other head except house property
Relative for the purpose of section shall include:
Spouse, brother and sister of the individual
Spouse, brother, sister or any lineal ascendant or descendant of
that individual.
Spouse, children and dependent brothers and sisters of the
individual.
Spouse, children, dependent parents, dependent brothers and
sisters of the individual.
Interest on Capital or on loan received by a partner from a firm is:
Exempt u/s 10
Taxable under head business and profession to the extent it is not
disallowed under Section 40b
Taxable under head business and profession
Taxable under head business and profession on account of interest
on capital and income from other source on account of loan to the
firm.
The depreciation is allowed to:
The owner of asset
Owner including fractional owner of the asset
Lessee
Where the entire block of the asset is sold for a price more than the
opening WDV and asset, if any acquired during the year, the excess
amount shall be subject to:
Balancing charge
Short term capital gain
Long term or short term capital gain depending upon the period for
which block is held
Period of holding of bonus shares or any other financial asset allowed
without any payment shall be reckoned from:
The date of holding of original shares/financial asset
The date of offer of bonus shares/financial asset
The date of allotment of such bonus shares/financial assets
The assesses is allowed to opt for market value as on 1.4.1981 in
case of:
All capital assets
All capital assets other than depreciable assets
All capital assets other than depreciable assets, goodwill of a
business, right to manufacture, tenancy rights, loom hours and
route permits.
Income under the head income from other sources is taxable on:
Due basis
Receipt basis
On the basis of method of accounting regularly employed by the
assesses.
10) The income from lottery, cross word puzzle, races, card games etc.
are taxable at:
Normal slab rate of income tax like any other income
Flat rate of 20% plus education cess plus SHEC
Flat rate of 30% plus education cess plus SHEC
11) An individual has received a gift of Rs. 30,000 each during the
previous year from his two friends, the amount taxable under the head
income from the other source shall be:
Rs. 10,000 Rs. 60,000 Nil
12) An assesses has paid life insurance premium of Rs. 25,000 during the
previous year for a policy of Rs. 2,00,000 taken on 1.4.2014. He
shall:
Not be allowed any deduction under section 80C
Be allowed deduction under section 80C to the extent of 10% of the
capital sum assured i.e. Rs. 20,000
Be allowed deduction for the entire premium as per the provisions
of section 80C
13) Deduction under section 80D is allowed on account of payment of
preventive health check up of
Assesses only
Assesses or his family only
Assesses or his family or his parent or parents
Page 2 of 5
SLR-Q-16
14) For person carrying on profession, tax audit is compulsory, if the
gross receipts of the previous year exceeds:
Rs. 10 Lac Rs. 1 Crore
Rs. 15 Lac None of the above
Q.2 Write short notes on any two. 14
Clubbing of income for assets transferred to spouse without adequate
consideration.
Set off and carry forwarding of business loss.
Assets which are not treated as Capital assets.
Deduction under section 80C.
Q.3 Shri Ravindra furnishes the following particulars of his income for the
financial year ending 31.03.2015.
07
1. Dividend in September, 2014 from UTI Rs. 20,000.
2. Dividends received in July, 2014 from Assam Tea Co. Ltd. Rs. 36,000
of income of the company is agricultural income)
3. Amount received on 1.11.2014 in connection with winning from Horse
race Rs. 56,000.
4. Amount received on 1.12.2014 in connection with winning from lottery
Rs. 2,80,000. Cost of lottery tickets purchased Rs. 20,000.
5. Directors fees received in August, 2014 Rs. 20,000.
6. He has rented a residence of Rs. 25,000 per month. Half portion of
this house was sub-let on a monthly rent of Rs. 25,000 p.m.
Compute his taxable income for the assessment year 2015-16.
Mr. Mohla, an author, furnished the following information for the
assessment year 2015 16.
07
1. Taxable Salary 4,82,000
2. Royalty income from the book of scientific nature
after deducting expenses 5,08,000
3. Contribution towards PPF 25,000
4. Contribution towards statutory Provident Fund 3,000
5. Tuition fees for two children
Child A 15,000
Child B 8,000 23,000
6. Payment of insurance premium on the life of major
Married son (Sum assured Rs. 60,000) 8,000
7. Investment in National Saving Certificates (VIII
Issues)
15,000
8. Repayment of housing loan taken from Delhi
University for construction of a house which was
completed in 2008 and is self occupied 8,000
Compute the deduction allowable to Mr. Mohla under section 80C to
80U.
Page 3 of 5
SLR-Q-16
Q.4 Rajaram is the proprietor of a business. The following was the Profit
Loss Account of his business for the year ended 31.03.2015.
14
Rs. Rs.
To Office Salaries 1,90,000 By Gross Profit 4,25,000
To Proprietors salary 60,000 By Profit on sale of
residential house
(long term)
To General Expenses 45,000
To Telephone expenses 8,000 90,000
To Bad debts 11,500 By Bad debts
recovered
(disallowed in
earlier years
assignment)
By Interest form
Govt. Securities
By Dividends
(Gross) received
from agricultural
companies)
By Interest from
Bank A/c
By Income from
Horse Racing
(Gross)
24,000
14,000
6,000
2,000
10,000
To Advertisement 8,400
To Fire insurance premium
To Depreciation
To Motor car expenses
To Legal charges for
defending suit for
alleged breach of a
trading contract
To Donation to Delhi
University for Social
Research
To Interest on proprietors
capital
To Reserves for future
losses
To Income tax paid on last
assessment
To Life Insurance Premium
To Advance income tax
To Net profit
1,500
11,700
8,500
4,000
10,000
15,000
4,000
7,100
6,000
4,000
1,76,300
Total 5,71,000 Total 5,71,000
Further information is given as under:
General expenses include Rs.30,000 paid as compensation to an old
employee whose services were terminated as his continuance in
service as considered detrimental to the profitable conduct of the
business and Rs.1,000 as help to a poor university student.
A sum of Rs. 5,000 being cost of a small machine has also been
included in General expenses
The advertisement cost includes expenditure of Rs. 6,000 on one
wooden show window and Rs.1,800 on calendars and diaries.
One fourth of Motor car Expenses are for personal use of the car.
The depreciation (including on small machine show window) is found to
be in excess by Rs. 2,000 compared to the amount allowable under
Income-Tax Rules.
Out of the sundry creditors for purchases, a sum of Rs. 1,00,000 was
paid to the single party on single day otherwise than by an account
payee cheque bank draft.
Reserve for future losses represents a demand for Sales-tax under
dispute.
Compute Rajaram's taxable profit from business for the assessment year 2015-16.
Page 4 of 5
SLR-Q-16
Q.5 Mallinath is a resident of India. He furnishes the following information
about his incomes during previous year 2014-15.
14
1. Capital gain Rs. 10,500 from a house which he occupied for two years
before the date of sale 31.7.2014
2. On 31.12.2014, he sold equity shares of Thapar Ltd. for Rs. 1,65,000
through the recognized stock exchange, which were purchased by him
on 1.4.1986 for Rs. 21,000. Securities transacting tax paid Rs. 125.
3. He sold an agricultural land for Rs. 5,25,500 on 5.4.2014. The land was
owned by him since 4.7.2001, and was purchased for Rs. 6,000. The
land is situated in a village with population of 8,000.
4. On 1.3.2015, he sold a flat for Rs. 9,82,500 which was purchased by
him on 1.1.1977 for Rs. 60,000. The fair market value of this flat was
Rs. 90,000 on 1.4.1981
Compute his taxable income from capital gain for assessment year 2015 16.
OR
Samant is shareholder of Greenfields Ltd. He acquired 5,000 shares of the
company of the face valued of Rs. 10 per share in 1972. The fair market
value of the shares as on 1.4.1981 was Rs. 90 per share. He made a
further purchase of 2,000 shares at the rate of Rs.200 in 1985-86.
Greenfield Ltd., issued bonus shares in 1989-90 in the proportion of
when the market value was Rs. 300 per share.
AB Ltd., Company, in a scheme of amalgamation in 2014-15 made
proposal to acquire the shares of Greenfield Ltd., as per the offer as Rs.
500 per share in cash plus 1 share in AB Ltd., for every 3 shares of
Greenfield Ltd.
The market value of shares AB Ltd. on the date of offer is Rs. 600 per
share.
Compute the Capital Gain, if any, arising to Samant if he accepts the offer.
[C.I.I. for 1981-82 is 100, for 1985-86 is 133 and for 1989-90 is 172].