|Time Allowed : 3 Hours||Full Marks : 100|
|The figures in the margin on the right side indicate full marks.|
|Answer Question NO. 1 carrying 20 marks which is compulsory and |
any five from the rest.
|Working notes should form part of the answer.|
|1.||(a)||Fill in the blanks:||1x6=6|
|(i)||A company is registered in France. Management of affairs is partly in, India. The status of the company for tax purpose is _______ . (Resident/Non–resident/not ordinary resident).||(0)|
|(ii)||Under section 115JB of the Income–tax Act, 1961, book profits should be _______ (increased/decreased/unaffected) by the amount of deferred tax.||(0)|
|(iii)||Under section 18(1)(c) of the Wealth–tax Act, 1957, the maximum penalty levianle for concealment is _______ (200%/300%/500%) of the tax sought to be evaded.||(0)|
|(iv)||Exchange of a capital asset is deemed to be _______ (trade/transfer/barter)||(0)|
|(v)||The normal time limit for passing an order of final assessment of excise duty is _______ (6/12/24) months from the date of passing of provisional assessment||(0)|
|(vi)||Application for CST registration is to be submitted within _______ (15/30/90) days from the date on which the applicant becomes liable for tax.||(0)|
|(b)||State with reasons, whether true or false (Mere conclusion will not suffice):||2x7=14|
|(i)||X is employed as a Cost Accountant in T Ltd. The annual membership fees for the Institute is paid by the company. It is not perquisite and hence not chargeable to income tax.||(0)|
|(ii)||No notice of hearing under section 143(2) of the Income–tax Act, 1961 shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.||(0)|
|(iii)||Cutting jumbo rolls of fax to convert fax paper of standard length and winding on spools is ‘manufacture’ for excise duty purpose.||(0)|
|(iv)||A charitable or religious trust or institution is required to file an application for registration under section 12A within one year from the date of creation of a trust or establishment of institution.||(0)|
|(v)||The celling limit of deducation under section 24(b) in respect of interest on loan taken on 01.04.2007 for repairs of self occupied house is Rs. 30,000 p.a.||(0)|
|(vi)||Cash gifts received in excess of Rs. 25,000 to be taxed under section 56(2)(vi) under the head ‘Income from other sources’.||(0)|
|(vii)||Where the return income is not furnished by the assessee on or before the due date, interest is payable under section 234B.||(0)|
|2.|| Hema & Co. a partnership firm, has been running a manufacturing unit for producing turbines. The opening WDV of the assets as on 01.04.2007 is as under: |
All the assets have been put to use for 150 days during the year.
(i) Trading Division, and
(ii) Unit for manufacturing boilers.
The details of assets (all assets are new) pertaining to these divisions are as follows:
You are required to:
|3.||(a)||K is karta of HUF whose present income is above Rs. 2.5 lakhs. C and D are the adult coparceners. Each of them has not less than 15 years of personal working experience in grains business, in which high profits are expected. The individual funds of all adult members of the family are proposed to be invested in this new venture. They seek your advice whether this can be started as HUF business or as partnership business with K, C and D being partners. (K would represent the HUF, C & D will join as individuals). Advice them on the pros and cons of starting as HUF or partnership firm, from the income–tax point of view (consider TDS provisions also).||13||(0)|
|(b)||Vatsan & Co., a partnership firm has incurred a loss of Rs. 5,000 for the assessment year 2008–09. Since the same is insignificant, partners decide not to file income–tax return. Is this proper?||3||(0)|
|4.||(a)||Mahesh holds 2000 shares in ABC Ltd. This company amalgamated with another company during the previous year ending 31st March, 2008. Under the scheme, Mahesh was allotted 100 shares in this new company. The market value of shares so allotted is higher by Rs. 50,000 than the value of holding in ABC Ltd. The assessing Officer proposes to treat the transaction as an exchange and to tax the amount of Rs. 50,000 as capital gains. Please state whether the ITO’s proposal is justified.||6||(0)|
|(b)||A company imported machinery on 15.09.2006 at a cost of Rs. 10 crores. The Custom Duty payable thereon was 20%. The company claimed Modvat credit of Rs. 1 crore. The rate of depreciation on the machinery is 15%. Assuming that the machinery was put to use of 15.10.2006. What is the depreciation allowable on the machinery?||6||(0)|
|(c)||Where the net result of computation for any assessment year in respect of any source of income falling under any head is a loss, the assessee shall entitled to have such loss set off against his income from any other source under the same head. What are the exceptions to this rule?||4||(0)|
|5.||(a)||Total interstate sale for the financial Year 2008–09 of X Ltd. is Rs. 1,50,70,000 which consists of the following: Sale upto 31.01.2008 Rs. 91,50,000 (if the goods are sold within the State, sales tax rate is 12.5%). Sale during 01.06.2008 to 31.03.2009∗ Rs. 59,20,000 (if the goods are sold within the State, sales tax rate is 4%). The sales figures are not excluding sales tax. |
CST rate was 3% upto 31.05.2008 and 2% thereafter.
Out of the goods sold for Rs. 1,50,000, on 16.07.2008 that were liable to CST @ 2%, goods worth Rs. 50,000 were returned on 12.12.2008 and goods worth Rs. 1,20,000 were returned on 01.02.2009. A buyer to whom goods worth Rs. 55,000 carrying 2% CST was dispatched on 16.04.2008, rejected the goods and the same were received back on 15.11.2008.
Compute the taxable turnover and tax liability of X Ltd., since all the relevant forms have been received.
|(b)||The assesses M Ltd. entered into a joint venture with a foreign collaborator N for promotion and selling antennas, accessories and other communication equipments. The agreement between them indicates that N owned majority of equity shares in M Ltd. Technical services were provided by N to M Ltd. for various functions that were carried out in respect of antenna system in India, for which technical services fee was paid to N by M Ltd. Based on the above facts, the department opined that both M Ltd. and N were related persons and that the technical fee paid by M Ltd. was includible in the assessable value of the imported components in terms of Customs Valuation Rules. Decide referring to decided case law.||6||(0)|
|6.||(a)||An assessee cleared various manufactured final products during June, 2008. The duty payable for June, 2008 on his final products was as follows: Basic Rs. 2,00,000, education cess as applicable. During the month, be received various inputs on which total duty paid by suppliers of inputs was as follows; Basic duty Rs. 50,000, eduction cess Rs. 1,000, SAH education cess Rs. 500, Excise duty paid on capital goods received during the month was as follows; Basic duty Rs. 12,000, education cess Rs. 240. SAH education cess Rs. 120. Service Tax paid on input services was as follows; Service tax Rs. 10,000, education cess Rs. 200. SAH education cess Rs. 100. How much duty the assessee will be required to pay by GAR–7 challen for the month of June, 2008. If assessee had no opening balance in his PLA account? What is last date for payments?||10||(0)|
|(b)||Explain situations where the provisions of unjust enrichment under section 11B(2) of the Central Excise Act, 1944, will not apply and the applicant will be entitled to refund.||6||(0)|
|7.||(a)||Discuss the tax implication arising consequent to conversion of a capital asset into Stock in Trade of business and its subsequent sale.||8||(0)|
|(b)||Mr. A who is resident in India wins a lottery of Rs. 10,00,000 during the financial year 2007–08. He is a daily wage–earner who earns on an average Rs. 2,000 per month. He won the prize in December, 2007 and received it in the same month after deduction of TDS of 33.66%. He invested Rs. 6,00,000 in Post Office MIS in joint name with his wife. With the balance amount, he started a small business in January, 2008. His income from business for 3 months (January, 2008 to March, 2008) is Rs. 24,000. His Post Office MIS income is Rs. 12,000 (for 3 months). Calculate his tax liability for the assessment year 2008–09.||8||(0)|
|8.||Write short notes on any four of the following:||4x4|
|(a)||"Business" as defined under CST Act;.||(0)|
|(c)||Distinction between ‘Identical goods’ and ‘Similar goods’ with reference to Customs Valuation Rules, 2007;||(0)|
|(d)||Classification of excisable goods when they are prima facie classifiable under two or more headings;.||(0)|
|(e)||"Rectification of mistake" under Customs Act;||(0)|
|(f)||Payment of duty under protest under Central Excise Law.||(0)|