(Direct Tax - II)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions.
1. (a) Write True or False: 1x4=4
a. Business outside India and business in India stand on the same footing for the purpose of computation of income from business and profession u/s 28 of the Act.
b. Indexation of cost of capital asset is a must for all types of capital assets in computing income from capital gains.
c. Short-term capital loss can be set off from short-term as well as out of long-term capital gains.
d. Assets belonging to assesses on the valuation date are taxable under the Wealth-tax Act.
(b) Name four expenses which are not allowed as deduction in computing capital loss. 1x4=4
2. Write short notes on the following: 4x4=16
a. Substantial interest.
b. Corporate assesses.
3. (a) Write about the different expressly admissible deductions allowed under Section 30 – 36 of the Income-tax Act, 1961 in computing income from ‘business and profession’. 11
(b) From the Profit and Loss Account of Mr. Porag for the year ending 31.03.2013, compute his business income:
Profit & Loss A/c
To General expenses
To Bad debts
To Provision for bad debts
To Insurance (house)
To salary to staff
To salary to Porag
To Interest on bank overdraft
To Interest on loan taken from Mrs. Porag
To Interest on capital of Porag
To Depreciation on building
To Advertisement expenses
To Contribution to employee RPF
To Net profit
By Gross profit
By Sundry receipt
By Bad debt recovered
(earlier disallowed as deduction)
By Interest on deposit with a trust
By Interest on units of UTI
By Rent from house property
a. The amount of depreciation allowable under the Income-tax Act is Rs. 40,200
b. Advertisement expenses include Rs. 5,000 being cost of advertisement in new-papers.
c. Income of Rs. 10,000 accrued during the year but not recorded in Profit and Loss Account.
d. Porag pays Rs. 12,000 as premium on his own life.
e. General expenses include Rs. 4,500 given to Mrs. Porag for arranging a party in honour of her friend.
f. Employers contribution to provident fund for last two months @ Rs. 1,000 per month has not been paid to appropriate authority within due date.
g. Mr. Porag has spent Rs. 8,000 during the year in attending a marriage party.
4. (a) What do you mean by capital assets as defined by the Income-tax Act, 1961? What are its types? Discuss how short-term and long-term capital gain is computed. 2+3+7=12
(b) During the year ended on 31st March, 2013, Mr. A sold the following assets:
a. Shop purchased in 1985 – 86 (cost inflation index 133) for Rs. 18,000 was sold for Rs. 1,70,000.
b. Machinery purchased in 1983 – 84 (cost inflation index 125) for Rs. 50,000 (written down value on 1-4-12 Rs. 35,000) was sold for Rs. 60,000.
c. Furniture purchased on 1-5-2012 for Rs. 1,000 was sold for Rs. 1,300.
d. Machinery purchased on 1-5-2012 for Rs. 10,000 was sold for Rs. 12,000.
e. Agricultural land in Agra purchased in 1979 – 80 for Rs. 10,000 [(fair market value on 1-4-81 (cost inflation index 100) being Rs. 15,000] was sold for Rs. 1,60,000.
f. One residential house purchased in 1987 – 88 (cost inflation index 150) costing Rs. 30,000 was sold for Rs. 2,20,000.
During the year, he bought another house for his residence for Rs. 4,00,000. Compute the amount of taxable capital gain for the assessment year 2013-14. 12
5. (a) Define the term ‘asset’ for the purpose of computation of net wealth. Name the assets that are excluded from it. 6+5=11
(b) What is wealth tax? Who is required to pay it? How is wealth tax computed? 2+2+7=11
6. (a) Explain the provisions of the income-tax Act, 1961 regarding carry forward and set-off of losses. 11
(b) Mr. R. furnishes the following particulars of his income for the previous year 2012 – 13:
a. Salary income – Rs. 68,000.
b. Income from house A – Rs. 36,000
c. Loss from house B – Rs. 24,000
d. Loss from house C – Rs. 22,000
e. Profit from business A – Rs. 60,000
f. Profit from Business B – Rs. 70,000
g. Profit from share business (speculative) – Rs. 82,000
h. Loss from silver business (speculative) – Rs. 94,000
i. Long-term capital gain on sale of shares on which security transaction tax has been paid – Rs. 22,000
j. Short-term capital loss on sale of land – Rs. 44,000
k. Income from card games – Rs. 22,000
l. Winning from lotteries (gross) – Rs. 60,000
m. Income from horse race (gross) in Dibrugarh – Rs. 40,000
n. Loss from horse race in Jorhat – Rs. 21,000
Compute gross total income of Mr. R for the assessment year 2013 – 14.
7. (a) What is tax avoidance? Discuss the differences between tax avoidance and tax evasion. 3+8=11
(b) Write note on the following: 5+6=11
a. Gross qualifying amount.
b. Tax planning for senior citizens.