| (c) Where the Commissioner of Income-tax is satisfied that the activities of the charitable trust, which has been accorded registration is not genuine, he can cancel the registration by passing an order in writing. (d) Where an urban agricultural land owned by an individual, continuously used by him for agricultural purposes for a period of two years prior to the date of transfer, is compulsorily acquired under law and the compensation is fixed by the State Government, resultant capital gain is exempt. Capital Gains 12. The house property of Charu is compulsorily acquired by the government for Rs.15,00,000 vide Notification issued on 12-3-2006. Charu had purchased the house in 1986-87 for Rs.3,00,000. The compensation is received on 15-4-2009. The compensation is further enhanced by an order of the court on 15-5-2010 and a sum of Rs.4,00,000 is received as enhanced compensation on 21-10-2010. A wants to claim full exemption of the capital gains. Advise Charu in this respect. Compute the capital gain and determine the year in which it is taxable. Also specify the period upto which the investment in the new house should be made by the assessee. (Cost Inflation Index (CII): 2009-10 : 632, 2005-06 : 497, 1986-87 : 140). Income from other sources 13. Mr. Ketan acquired a land at Mumbai from Mr. Agarwal for a purchase consideration of Rs. 1 crore on 01.01.2010. The assessable value of the property for stamp duty purposes is Rs. 1.30 crore. Subsequently, in a different transaction he was gifted with a land near Indore by his friend, the assessable value of which for stamp duty purpose is Rs. 49,000. Advise on the taxability of these transactions. Clubbing of Income 14. The following details are furnished in respect of Mr. Amit and his family members. Determine the gross total income: | Particulars Income as a child artist in films Business Income (Own) Salary income from Amit Ltd. in which Mr. Amit holds 25% voting power @3,000 p.m. Share of profit from Firm AB & Co. Commission from AB & Co. Interest income | | Mr. Amit Mrs. Amit Minor Child | | Rs. --- (45,000) -- (40%) 80,000 -- 9,000 | | Rs. -- -- 50,000 -- 25,000 6,000 | | Rs. 65,000 -- -- (10%) 20,000 -- 5,000 |
| Note: (1) Mrs. Amit possesses B. Com degree and works as accountant of Amit Ltd. (2) Mrs. Amit does not render any services to M/s. AB & Co. (3) Interest income received by Mrs. Amit is from an investment of Rs.45,000 gifted by Mr. Amit and Rs.40,000 invested from her own resource. Computation of total income and tax liability of an individual 15. Rajat is a Chartered Accountant in practice. He maintains his accounts on cash basis. He is a Resident and ordinarily resident in India. His profit and loss account for the year ended March 31, 2010 reads as follows: | | Expenditure Salary to staff Stipend to articled assistants Incentive to articled assistants Office rent Printing and stationery | | Rs. 6,65,800 4,68,600 3,82,000 15,16,400 9,635 | | 5,25,000 Fees earned: 18,000 Audit 5,000 Taxation services 24,000 Consultancy 6,600 Dividend on shares of | | Meeting, seminar and conference Repairs, maintenance and petrol of car | | Income from Unit 38,600 Trust of India 22,400 Profit on sale of shares 15,000 Honorarium received | | Postage, telegram and fax Depreciation Traveling expenses Municipal tax paid in | | respect property Net profit | | valuation of answer papers 32,500 Rent received from residential flat let out 29,500 55,000 1,000 | | Other information: (i) The total traveling expenses incurred on foreign tour was Rs.20,000 which was within the RBI norms. (ii) Incentive to articled assistants represent amount paid to two articled assistants for passing PE-II Examination at first attempt. (iii) Repairs and maintenance of car includes Rs.1,600 for the period from 1.10.2009 to 30.09.2010. (iv) Salary include Rs.30,000 to a computer specialist in cash for assisting Mr. Rajat in one professional assignment. (v) Rs.1,500, interest on loan paid to LIC on the security of his Life Insurance Policy and utilised for repair of computer, has been debited to the drawing account of Mr. Rajat. (vi) Birthday gifts received by his minor son include cash Rs.30,000, which was deposited with a nationalised bank. Interest accrued upto 31.3.2010 amounted to Rs.1,500. (vii) Medical Insurance Premium on the health of: | | Self Dependent brother Major son dependent on him Minor married daughter Wife dependent on assessee (viii) Shares sold were held for 10 months before sale. | | Amount 10,000 5,000 3,000 2,000 6,000 | | Mode of payment By Cheque By Cheque By Cash By Cheque By Cheque | | (ix) Rajat paid life membership subscription of Rs.1,000 to Chartered Accountants Benevolent Fund. The amount was debited to his drawings account. The Chartered Accountants Benevolent Fund is an approved fund under section 80G of Income- tax, 1961. Compute the total income and tax payable of Rajat for the Assessment year 2010-11. Deductions from Gross Total Income 16. Discuss the allowability of the following: (i) Rajan has to pay to a hospital for treatment Rs.42,000 and spent nothing for life insurance or for maintenance of handicapped dependent. (ii) Rajan has incurred for treatment Rs. Nil in the previous year and deposited Rs.25,000 with LIC for maintenance of handicapped dependant. (iii) Rajan has incurred Rs.20,000 for treatment and Rs.25,000 was deposited with LIC for maintenance of handicapped dependant.
| Deductions from Gross Total Income 17. From the following information find out the net income and tax liability of Arjun, a resident individual, for the assessment year 2010- 11- Rs. | | Salary Business income Capital gain Long-term Short-term (not covered by section 111 A) Winning from horse races Total Mediclaim insurance on his own health Contribution towards pension fund of LIC Expenditure on medical treatment of a dependent relative (being a person with disability) Deposit for maintenance of a handicapped dependent relative Donation to the Government of India for family planning Donation to the Central Welfare Fund of Indian army Life insurance premium on the life of Mrs. Arjun. Profits and gains of business or profession | | 15,00,000 (-) 1,50,000 1,60,000 1,20,000 1,40,000 17,70,000 20,000 45,000 15,000 30,000 1,80,000 45,000 25,000 | | 18. Write short notes on deduction to be allowed on actual payment basis (Section 43B). Assessment Procedure 19. In computing income under certain heads of income, method of accounting is irrelevant, while in some it is relevant. Comment. Income tax Authorities 20. Write short notes on power to transfer cases under section 127. Appeals and Revision 21. Discuss revision of orders under section 264 of the Income-tax Act. The Central Sales-tax Act, 1956 22. Choose the correct answer with regard to the provisions of the Central Sales-tax Act : | (a) A penultimate sale is considered to be in the course of export, only if the dealer selling the goods furnishes a declaration in (i) Form C (ii) Form D (iii) Form F (iv) Form H. (b) Amendment of certificate of registration can be made (i) only upon an application made by the assessee (ii) by the Assessing authority suo motu (iii) on a application from assessee, or by the assessing authority suo motu on information received from any other source (iv) None of the above (c) Which of the following is not declared goods? (i) Imported cotton (ii) Cotton yarn waste (iii) Raw unginned cotton (iv) Ginned cotton (d) The burden of proving that transfer of goods is otherwise than by way of sale, lies on - (i) dealer who claims exemption (ii) assessing authority who alleges that it is a taxable sale (iii) the carrier who moves the goods (iv) None of the above. 23. Fill in the blanks in the light of the provisions of the CST Act: (a) The dealer's turnover is the ¼¼¼¼¼¼received and receivable by him in respect of sale of any goods in the course of inter-State trade. (b) Sales or purchases of ascertained goods shall be deemed to be ¼¼¼.. a State, if the goods were within that State at the time the ¼¼¼¼¼.of sale was made. (c) Sales, subsequent to the first one, made to the registered dealer or Government ¼¼¼¼¼.shall not be liable to tax. (d) The rate of CST applicable to goods exempt from State Sales Tax is ¼¼¼¼¼¼.. (e) The State from which ¼¼¼¼¼. commences shall be the ¼¼¼¼¼¼¼¼State empowered to assess, collect and enforce payment of CST.
| Definitions 24. What are the different declaration forms used in Central Sales Tax? State, when and for what purpose they are to be used? (Briefly in two/three sentences for each form). Determination of Turnover 25. Mr. D, a first stage dealer in packing machinery in the State of Gujarat furnishes the following data: Rs. | | (i) Total inter state sales during F.Y. 2009-10 CST not shown separately (ii) Above sales include: Excise duty Freight (of this Rs.50,000 is not shown separately in invoices ) Insurance charges incurred prior to deliver of goods Installation and commissioning charges shown separately Incentive on sales received from manufacturer | | 9,00,000 1,50,000 32,000 15,000 30,000 | | Determine the turnover and CST payable, assuming that all transactions were covered by valid `C' Forms.
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