| 1. | Answer any ten of the following, giving brief reasons not exceeding 3 or 4 sentences: | 2x10=20 | |
| | (a) | A company issued 3,00,000 debentures of face value of Rs. 100 at a discount of Rs.5 per debenture in July, 2004. The debentures were repayable after 5 years. The company claimed the discount of Rs. 15,00,000 as expenditure for purpose of business for the Assessment Year 2005–2006. Is the claim allowable? | | (0) |
| | (b) | State the formula for calculating profit allowable as deduction under section 80HHE. | | (0) |
| | (c) | Fill in the blanks — | (i) | If an order passed by Assessing Officer has been subject matter of appeal, Commissioner of Income Tax can revise an order in respect of ___________. | |
| (ii) | Application can be filed for settlement of case before Settlement Commission if the additional amount of income exceeds Rs. ____________. | |
| | (0) |
| | (d) | Define 'Arm's length price'. State the context in which this term has been defined. | | (0) |
| | (e) | What is the maximum remuneration allowable as deduction under income tax to working partner of a firm which is carrying on a legal profession? | | (0) |
| | (f) | SSI units are exempt from excise duty, if their turnover is less than Rs. 100 lakhs. While calculating the limit, state whether following turnover is includible or not includible — | (i) | Goods manufactured with other's brand name; | |
| (ii) | Export through merchant exporter under bond. | |
| | (0) |
| | (g) | Explain provisions regarding depreciation on capital goods when Cenvat credit is availed on excise duty paid on capital goods. Illustrate with an example. | | (0) |
| | (h) | Fill in the blanks —
A single member bench of CESTAT can hear the case when duty or penalty involved does not exceed Rs. ____________lakhs. However, a single member bench cannot decide an issue if the dispute is relating to _____________. | | (0) |
| | (i) | State correct or wrong — | (i) | CST is not payable if goods are supplied to a unit in Special Economic Zone; | | (ii) | Countervailing duty is payable on Assessable Value plus basic customs duty plus anti–dumping duty. |
| | (0) |
| | (j) | X had dispatched goods from UP to Haryana. While goods were moving from Up to Haryana, X made a sale to Y by transfer of documents. Later, Y sold the goods to Z by endorsing documents in favour of Z. Now , Y is claiming that the subsequent sale is exempt from CST. State which forms are required to be submitted by him to substantiate his claim and which form he will have to submit to Z and X? | | (0) |
| | (k) | Fill in the blanks —
Imported goods can be kept in customs bonded warehouse up to _________ days without payment of any interest. Beyond that period, interest payable is ___________ %. Interest up to Rs. two crores can be waived by __________. | | (0) |
| 2. | (a) | You have been appointed as Cost Auditor to conduct special audit of Cenvat credit under section 14AA of Central Excise Act. Discuss major areas where you will concentrate while conducting your audit. | 8+8=16 | (0) |
| | (b) | XYZ Company, of which you are Finance Manager, is planning to introduce scheme of Voluntary Retirement (VRS) to its employees. Explain provisions when compensation paid to employee at the time of voluntary retirement will be exempt from income tax in the hands of employee. | | (0) |
| 3. | (a) | Goods can be cleared from factory for export without payment of duty. However, it is possible to clear goods on payment of duty and then claim refund of duty. State when the procedure of paying duty and clearing refund may be beneficial to assessee. | 6+5+5=
16 | (0) |
| | (b) | A pensioner, who is 69 years of age, got pension of Rs. 1,88,000 in Financial Year 2004–05. He also earned bank interest of Rs. 11,000. Calculate his tax liability for A Y 2005–06. | | (0) |
| | (c) | A manufacturer of cement was excavating limestone from mines and using it for manufacture of cement. The mine was located 10 kilometers away from factory. The limestone excavated was brought in the factory by rope way, which was connecting mine and the factory. Manufacturer was using explosive for blasting in mines. Manufacturer intends to claim Cenvat credit of excise duty paid on the explosives. Advise him about eligibility of Cenvat credit. | | (0) |
| 4. | (a) | Dinesh Ltd. wishes to shift one of its industrial undertakings situate at Bangalore city to a non–urban area. The relevant details are: | (Rs. in lacs) | Capital gains u/s 50 in respect of plant and machinery
(all assets purchased 30 months back)
Capital gains u/s 50 in respect of factory building
(acquired before 40 months)
Capital gains on transfer of land portion of the above factory building |
20
12
8 |
The expenses of shifting to the new non–urban area unit are Rs. 2lacs. What will be the capital gain for the assessment year 2005–06, if the assessee is willing to invest Rd. 13 lacs in new plant and machinery and Rs. 16lacs in new factory land and building. Six months prior to the date of transfer, the assessee has acquired new machinery costing Rs. 3 lacs for this new unit. | 8 | (0) |
| | (b) | Prestige Internationals Ltd. manufacture coffee makers, from their plant at Bangalore from where the products are moved to various depots. The company packs them in plain white carton from the factory, for protecting the goods during transportation. At the depots, the plain cartons are discarded and put inside a printed carton before effecting sales. The company includes the value of printed carton in the assessable value, but not the cost of plain white cartons. Is the same correct under the Central Excise Act, 1944? | 5 | (0) |
| | (c) | X availed Cenvat credit of Rs. 42,000 for manufacture of an item chargeable to duty. These goods were lying in his factory till 28.2.2005, from 1.3.2005, the final product was made exempt from duty. Now, when the final goods are cleared, should the Cenvat credit of Rs. 42,000 availed earlier be reversed? | 3 | (0) |
|
| 5. | (a) | Mr. Ram furnishes the following information pertaining to inter–state sales effected by him: | Products | | L | M | N | Local State Sales tax
Total sales value | 12%
7,84,000 | 8%
5,40,000 | 3%
4,12,000 |
Additional information| (i) | In respect of product L sold in May, 2004,goods of total sales value Rs. 67,200 were returned in July, 2004 and Rs.44,800 in December, 2004:Rs. 56,000 were rejected and returned in January, 2005. | | (ii) | Buyer of product N did not produce C forms. | | (iii) | A buyer of product M for total sale value Rs. 43,200 did not furnish C form as the product was not covered in his registration certificate. | | Compute the taxable turnover and the sales tax liability of the three products L, M and N, for the financial year 2004–05. |
| 9 | (0) |
| | (b) | The turnover of Mr. Rajesh, an individual, for the assessment year 2004–05 was Rs. 50lakhs. On 28.11.2004, he made a payment of Rs. 2 lakhs to a building contractor of factory building. What is the tax to be deducted at source from the payment to contractor? | 3 | (0) |
| | (c) | Discuss whether inter–State sales of computer readable floppy discs containing standard computer software attract CST. Will your answer be different if the floppy contains software developed for a customer specifically? | 4 | (0) |
| 6. | (a) | M/s. Srivastava Heavy Electricals Ltd. manufactures industrial boilers, which are normally loaded openly on a containerised truck. A company having a unit in Kodaikanal Hills has ordered a boiler with special plastic packing as a safeguard to boiler during hazardous mountain climbing. Briefly discuss whether the cost of plastic packing should be included in the assessable value under section 4 of the Central Excise Act, 1944. | 5 | (0) |
| | (b) | An importer realised that he paid excess customs duty at the time of import. These goods were not sold to customers but had been used for manufacture of other goods. Is his claim for refund of the excess duty paid, valid under the Customs Act? | 3 | (0) |
| | (c) | Discuss the provisions relating to claim of refund under the Central Excise Act, where the refund arises due to Cenvat credit being in excess. | 8 | (0) |
| 7. | (a) | Mr. Gurpreet owns the following assets as on 31.03.2005: | (i) | Guest house located beyond 30kms. from municipal limits of Patna | 20 | | (ii) | Let-Out house (vacant for 3 months) at Udaipur | 30 | | (iii) | Building used for running own business | 18 | | (iv) | Cars used exclusively for business use | 5 | | (v) | Aircraft | 100 | | (vi) | Commercial building at Bangalore | 90 |
The assessee entered into an agreement for sale Udaipur house in February, 2005, and received an advance of Rs. 15 lacs. The registration of the house was effected 10.4.05.
Mr. Gupreet had gifted cash of Rs.2 lacs on 10.4.02 to his wife. She bought jewellery using the cash. The market value of such jewellery as on 31.3.05 is 3 lacs. Determine the net wealth and wealth–tax payable by Mr. Gupreet. | 8 | (0) |
| | (b) | The net wealth of a firm consisting of three partners Aditya, Archit and Mandar having equal shares and a capital contribution of Rs.7,00,000/-; Rs.3,00,000/-; Rs.2,00,000/- respectively is as under: | (i) | value of assets located outside India — Rs. 20,00,000, | | (ii) | Value of assets located in India —Rs.50,00,000, | | (iii) | Debts incurred in relation to assets in India — Rs.10,00,000. | | Determine the value of the partners in the firm under the Wealth–tax Act,1957. |
| 8 | (0) |
| 8. | What would be your advise regarding admissibility of the following items of expenditure in computing the business income: | 2x8=16 | |
| | (a) | A donation of Rs.1 lakh made to a University for starting a laboratory for scientific research (i) relating to the assessee's business, (ii) not relating to the assessee's business. | | (0) |
| | (b) | Travelling expenses including a sum of Rs. 15,000 incurred by a Director in travelling aboard for negotiating purchase of plant & machinery. | | (0) |
| | (c) | Amount payable as damagees to Govt. on account of shortfall in export target. | | (0) |
| | (d) | Overdraft from bank for payment of income tax; interest charged by the bank is Rs.20,000. | | (0) |
| | (e) | Payment of interest of Rs.40,000 on monies borrowed from bank for payment of dividends to shareholders. | | (0) |
| | (f) | Rs. 12,000 paid for shifting of business from the original site to the present place which is more advantageously located. | | (0) |
| | (g) | Retenchment compensation of Rs.4 lakhs paid to the workmen on the closure of one of the units. | | (0) |
| | (h) | Fees paid to the Registrar of Companies for bringing about a change in the Memorandum and Articles of Association in regard to issue of Equity. | | (0) |
