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ASSIGNMENT
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DRIVE
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WINTER 2015
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PROGRAM
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MBADS – (SEM 3/SEM 5) / MBAN2 / MBAFLEX –
(SEM 3) /
PGDFMN – (SEM 1)
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SUBJECT CODE & NAME
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MF0012 - TAXATION MANAGEMENT
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SEMESTER
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3
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BK ID
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B1760
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CREDITS
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4
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MARKS
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60
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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.
1. 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.
Based on
above Compute the taxable income and tax liability (before deducting TDS) of
Ms. X for the A.Y. 2015-16 Rs. 2,600 (being Income-tax refund and Rs. 200 being
Interest thereon)
Answer: Calculation of tax liability of Mr. X
Basic
salary 1200000
DA 40000
Club
allowance (5000*9 months) 45000
Furnishing
allowance (2000*12 months) 24000
HRA
(40000*5 months) 200000
HRA 280000
(least of:
40000*7 months = 280000
1200000*0.40*7/12=280000)
Conveyance
QUESTION.
2 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:
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.
Answer: a) Adjustment of advance money
received against cost of acquisition (Section 51)
It is
possible for an assessee to receive some advance in regard to the transfer of
capital asset. Due to breakdown of negotiations the assessee may have retained
the advance. In calculating capital gains the above advance retained by the
assessee must be used to reduce the cost of acquisition.
QUESTION.
3 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
Cost
(Rs.)
Additions
of two rooms by Ms. A during 1978-79 25,000
Addition
of first floor by Ms. A during 1983-84 40,000
Addition
of second floor by Ms. B during 1990-91 1,15,000
Ms.
B enters into an agreement for sell the property for RS. 8,50,000 to Mr. P on
1st April 1993after 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.
Compute
the Capital gains in the hands of Ms. B for the Assessment Year 2015-16.
Answer: Calculation of the capital gain of Ms. B
for the A.Y 2015-16
Sale
Proceeds 14,75,000
Less:
Indexed cost of acquisition 70,356
QUESTION.
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 extant rules referring to section 6
of the Income-tax Act 1961.
ii)
What are the provisions of Advance tax under section 2(1)?
Answer: i) Residential status: On the parameter of
residence in India, there are three categories: resident, non-resident, and not
ordinarily resident. The definition depends upon physical presence of the
person in case of individuals, and upon control and management in case of
companies and HUFs.
For
example, if an individual is in India during the year for 182 days or more he
or she is deemed to be a resident.
Alternatively,
if he or she has spent
QUESTION.
5 Explain the need of Service tax in India. What are the different approaches
to Service tax in India?
Answer: Service
tax is a tax levied by Central Government of India on services provided or to
be provided excluding services covered under negative list and considering the
Place of Provision of Services Rules, 2012 and collected as per Point of
Taxation Rules, 2011 from the person liable to pay service tax. Person liable
to pay service
QUESTION.
6 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.
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Particulars
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Rs.
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Particulars
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Rs.
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General Expenses
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13,400
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Gross profit
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3,15,500
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Bad debts
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22,000
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Commission
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8,600
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Advance tax
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2,000
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Brokerage
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37,000
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Insurance
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600
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Miscellaneous Income
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2,500
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Salary to Staff
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26,000
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Bad Debt Recovery
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11,000
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Salary to Mr. X
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51,000
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Interest on Debenture
(Net interest Rs.22,500 + TDS Rs. 2,500)
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25,000
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Interest on Cash Credit
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4,000
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Interest on Fixed Deposits
(Net interest Rs. 11,700 + TDS Rs. 1,300)
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13,000
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Interest on loan to Mrs. X
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42,000
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Interest on Capital of Mr. X
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23,000
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Depreciation
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48,000
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Advertisement
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7,000
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Contribution to Employees’ Provident Fund
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13,000
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Net Profit
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1,60,600
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Total
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4,12,600
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Total
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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.
Advertisement expenditure includes Rs. 3,000, being cost of permanent glow sign
board affixed outside the office premises.
ii.
Commission accrued but not received Rs. 4,500 is not credited to P & L
Account.
iii.
Mr. X pays premium of Rs. 6,000 on his own life.
iv.
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.
v.
Loan availed from Mrs. X was for payment of arrear tax.
A
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 heads, his Net Taxable Income
and Tax liability in the assessment year 2015-16.
Answer: Computation of Gross Total Income of Mr. X under respective heads, his Net Taxable
Income and Tax liability in the assessment year 2015-16
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Net
profit as per profit and loss account
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160000
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Add: Inadmissible expenses
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Expenses
for arranging a party for Mr. X’s son
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500
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Contribution
to a political party
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1000
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Advance
tax
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2000
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Salary
to Mr. X
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51000
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Interest
on Capital of Mr. X
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23000
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Dear
students get fully solved assignments
Send
your semester & Specialization name to our mail id :
help.mbaassignments@gmail.com
or
call
us at : 08263069601
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