MF0012 & TAXATION MANAGEMENT

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DRIVE-Fall 2014

PROGRAM/SEMESTER-MBADS (SEM 3/SEM 5) MBAFLEX/ MBAN2 (SEM PGDFMN (SEM 1)

SUBJECT CODE & NAME-MF0012 & TAXATION MANAGEMENT

BK ID-B1760

CREDITS-4

MARKS-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.

Q1. Explain the objectives of tax planning. Discuss the factors to be considered in tax planning.

(Objectives of tax planning, Factors in tax planning) 5,5

Answer-1

Objectives of Tax Planning

The prime objectives of tax planning are:

Multi-dimensional investment decisions: In a democratic welfare state like India the government requires substantial investment in infrastructure, education and healthcare. The tax laws give attractive benefits to investors in these areas;

Q2. Explain the categories in Capital assets.

Mr. C acquired a plot of land on 15th June, 1993 for 10,00,000 and sold it on 5th

January, 2010 for 41,00,000. The expenses of transfer were 1,00,000.

Mr. C made the following investments on 4th February, 2010 from the proceeds of the plot.

a) Bonds of Rural Electrification Corporation redeemable after a period of three years, 12,00,000

b) Deposits under Capital Gain Scheme for purchase of a residential house 8,00,000 (he does not own any house)

Compute the capital gain chargeable to tax for the AY2010-11.

(Explanation of categories of capital assets, Calculation of indexed cost of acquisition, Calculation of long term capital gain, Calculation of taxable long term capital gain) 4,2,2,2

Answer-2

Categories of capital assets

For taxation purposes, the capital assets have been, divided into (a) shortterm capital assets and (b) long-term capital assets.

(a)    Short-term capital assets: According to Section 2(42A), a short-term capital asset means a capital asset held by an

Solution:

Assessment Year 2010-11

Q3. Explain major considerations in capital structure planning. Write about the dividend policy and factors affecting dividend decisions.

(Explanation of factors of capital structure planning, Explanation of dividend policy, Factors affecting dividend decisions) 6, 2, 2

Answer-3

Major considerations in capital structure planning

Broadly, the following factors would be worth considering, while planning the capital structure.

1. Risk of two kinds, that is, financial risk and business risk: In the context of capital structure planning, financial risk is more relevant. Financial risk is of two types:

Q4. X Ltd. has Unit C which is not functioning satisfactorily. The following are the details of its fixed assets:

The written down value (WDV) is ` 25 lakh for the machinery, and 15 lakh for the plant. The liabilities on this Unit on 31st March, 2011 are 35 lakh.

The following are two options as on 31st March, 2011:

Option 1: Slump sale to Y Ltd for a consideration of 85 lakh.

Option 2: Individual sale of assets as follows: Land ` 48 lakh, goodwill ` 20 lakh, machinery 32 lakh, Plant 17 lakh.

The other units derive taxable income and there is no carry forward of loss or depreciation for the company as a whole. Unit C was started on 1st January, 2005. Which option would you choose, and why?

(Computation of capital gain for both the options, Computation of tax liability for both the options, Conclusion) 4,4,2

Answer-4

Option 1: Slump sale

Computation of net worth of Unit C	(in lakhs)
Land (book value)	30

Q5. Explain the Service Tax Law in India and concept of negative list. Write about the exemptions and rebates in Service Tax Law.

(Explanation of Service Tax Law in India, Explanation of concept of negative list, Explanation of exemptions and rebates in Service Tax Law) 5, 2 , 3

Answer-5

Service Tax Law in India

Service tax was introduced in India in 1994 by Chapter V of the Finance Act, 1994. It was imposed on an initial set of three services in 1994 and the scope of the service tax has since been expanded continuously by subsequent Finance Acts. There is no separate Service Tax Act, but all pronouncements relating to service tax are in the annual Finance Acts. Service Tax Rules, 1994 were enacted to begin with, and with notifications from time to time the law has been a

Q6. What do you understand by customs duty? Explain the taxable events for imported, warehoused and exported goods. List down the types of duties in customs

An importer imports goods for subsequent sale in India at $10,000 on assessable value basis. Relevant exchange rate and rate of duty are as follows:

Particulars	Date	Exchange Rate Declaredby CBE&C	Rate of Basic Customs Duty
Date of submission of bill of entry	25th February, 2010	45/$	8%
Date of entry inwards granted to the vessel	5th March, 2010	` 49/$	10%

Calculate assessable value and customs duty.

(Meaning and explanation of customs duty, Explanation of taxable events for imported, warehoused and exported goods, Listing of duties in customs, Calculation of assessable value and customs duty) 2, 3, 2, 3

Answer-6

Meaning and explanation of customs duty

Customs duty is the duty imposed on goods imported into the country. In the years before globalisation it was difficult to import goods on account of stiff duty rates and procedures, especially for less developed and developing nations like India. A joke used to be that the word ‘custo

Dear students get fully solved  SMU MBA Fall 2014 assignments

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