PAPER-14
INDIRECT AND DIRECT TAX MANAGEMENT
REVALIDATION TEST PAPER-RV/14/TXM/2010
(Answer Question 1 and any FIVE from the remaining)
PART A
1. a) i) Enumerate the list of person / entities treated as “individual” u/s 3 of the Wealth
Tax Act.
ii) Who are the persons / entities to whom Wealth Tax is not applicable u/s 45 of the
Wealth Tax Act?
iii) Is Wealth Tax a debt owed on the valuation date and hence deductible while
computing net wealth?
iv) On what grounds can it be said that partial partition in de-recognised under the
Wealth Tax Act?
v) How far is the exemption of Public charitable trust under the Income Tax Act,
1961 relevant for exemption under Wealth Tax Act?
3*5
b) State with reasons whether the following statements are true or false
i) Waste and Scrap are always treated as excisable goods.
ii) Importers can store imported without payment of duty in public warehouse
or private warehouse 5*2
PART B
2. Given below is the P&L A/C of K,L,M & Associats, a partnership firm for the
previous year 2009-2010.
Particular Rs. Particular Rs.
Purchase
Direct & Indirect Expense
Depreciation
Interest to partners
Salaries to partners
Net Profit
15,45,000
8,00,000
2,00,000
2,00,000
6,60,000
1,40,000
Sales
Interest on Securities
(TDS – Rs.5,000)
35,00,000
45,000
35,45,000 35,45,000
You are further informed
i) Depreciation allowable as per Section 32 is Rs.1,50,000
ii) Purchase include cash purchase of Rs.30,000
iii) A,B,C share profits in the ratio of 4:3:3 C is a sleeping partner
iv) Interest is paid to partners @20% p.a. interest is authorized by partnership
deed
v) Salaries, authorized by partnership deed are paid to all the partners equally
Compute (i) Book profit and
(ii) Total income of the firm in the following cases:-
(a) It is a professional form
(b) It is a business firm
(c) It does not file the return of its income , leading to best judgment
assessment.
(15)
3. An Importer has imported a machine from UK at FOB cost of 10,000 UK pounds.
Other details are as follows:-
a. Freight from UK to Indian Port was 700 pounds
b. Insurance was paid to Insurer insured in India – Rs.6000
c. Design and development charges of 2000UK pounds were paid to a
consultancy firm in UK
d. The importer also spent and amount of Rs.50,000 in India for development
work connected with the machinery.
e. Rs.10,000 were spent in transporting the machinery from Indian Port to
the factory of importer.
f. Rate of exchange RBI: Rs. 68.82 = One UK Pound
g. Rate of exchange as announced by CBE 2C (Board) by Notification u/s 14
(3) (a) (i): Rs.68.70 = One UK Pound
12
h. Rate at which bank recovered the amount from importer Rs.68.35 = One
UK Pound.
i. Foreign exporters have an Agent in India Commission is payable to the
agent in Indian Rupees @5% of FOB price.
Custom duty payable was 10%. If similar goods were produced in India, Excise
duty payable @24%. There is an excise exemption notification which exempts the
duty as in excess of 16%. Education Cess 2% and SAH Education Cess 1%. Find
custom duty payable .
How much Cenvat can be availed by importer, if he is manufacturer? (15)
4. a) Detail the implications of ‘Demerger’ with reference to Income Tax.
b) State the factors to be considered in taking a management decision relating to
owning or leasing fixed assets
8+7
5(a). Software is ‘goods’, but unbranded Software is Service” – Comment (10)
(b) 1500 pieces of a product ‘K’ were manufactured during the financial year. Its list
price (ie, retail price) is Rs.250 per piece, exclusive of taxes. The manufacturer offers
20% discount to wholesalers on the list price. During the year, 840 pieces were sold in
wholesale, 510 pieces were sold in retail, 35 pieces were distributed as free samples.
Balance quantity of 115 pieces was in stock at the end of the year. The rate of duty is
16% plus education cess and SAH education cess as applicable. What is the total duty
paid during the financial year? Assume that the manufacture is not eligible for SSI
concession. (5)
6. a) What are the methods under which the arm’s length price, relating to an
international transaction, is determined us 92C?
b) J Ltd., is an Indian Company which is a 100% subsidiary of K Ltd., a foreign
company. K Ltd. Sells its product to J Ltd., at 15$ per unit. At the same time, it sells its
products to an unrelated party at $ 20 per unit. How will the arm’s length price be
determined in this transaction?
8+7
7.(a)Write a note on Exemption granted to SSI
(b) Define Captive Consumption 8+7
8.Write Short Notes on any three of the following:
(a) Slump Sale
(b) Anti Dumping Duty
(c) Basic Principle of VAT
(d) Dutiability of Waste and Scrap 5*3
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