CWA ICWA Inter Stage I : Business Taxation - December 2008

CWA ICWA Inter - Stage I • Business Taxation • December 2008

This Paper has 44 answerable questions with 0 answered.

1—8(BTN) Revised Syllabus
Time Allowed : 3 Hours	Full Marks : 100

The figures in the margin on the right side indicate full marks.
SECTION A
Answer Question No. 1 which is COMPULSORY and any two from the rest in this section.
Marks

The figures in the margin on the right side indicate full marks.

SECTION A

Answer Question No. 1 which is COMPULSORY and any two from the rest in this section.

Marks

(a)

Choose the correct answer:

1x6

(i)

The sum payable to a contractor by a partnership firm for doing petty repairing work in the factory during the year (any single amount) is not likely to exceed Rs. 20,000 and aggregate payments to him during the year will be about Rs. 75,000. The person making the payment to the contractor is

(1)	Liable to deduct tax at source on each such payment under section 194–C as the total payment will exceed Rs. 50,000/—
(2)	Liable to deduct tax at source when the payment exceeds Rs. 20,000/– individually.
(3)	Liable to deduct tax at source when the payment exceeds Rs. 1,00,000/– in the aggregate.
(4)	Not liable to deduct tax on such payments at all.

(0)

(ii)

The unabsorbed loss from a speculation business that is carried forward to the next year

(1)	Can be set off only against the profit of same speculation business.
(2)	Can be set off against income/profit from any head of income except salaries.
(3)	Cannot be set off beyond 16 years.
(4)	Can be set of only against income from the same or any other speculative business.

(0)

(iii)

The profit arising on sale of a painting held for two generations is

(1)	Not liable to tax as paintings being personal effect is not a capital asset.
(2)	Not liable to tax as it is held for five years before being sold.
(3)	Liable to tax as long term capital gain.
(4)	Liable to capital gains tax as short term gain.

(0)

(iv)

With effect from 1.6.2007, the rate for deduction of tax at sources from fees for professional or technical services, has been increased from .... % ......%.

(1)	2.5 to 5
(2)	5 to 7.5
(3)	5 to 10
(4)	10 to 15

(0)

(v)

Under the Wealth–tax Act, in the case of assesses other than individuals and HUFs, following amount of cash in hand is regarded as asset

(1)	In excess of Rs. 25,000/–
(2)	In excess of Rs. 50,000/–
(3)	In excess of Rs. 1,00,000/–
(4)	Not recorded in the books of accounts.

(0)

(vi)

Under the Wealth–tax Act, where jewellery held by an assessee is worth around Rs. 4,00,000/–, the valuation of jewellery is the fair market value as on value valuation date, as per valuation

(1)	In the statement in the prescribed form to be submitted by the assessee along with return of wealth.
(2)	Valuation report of registered valuer
(3)	Valuation report of approved jewellery shops
(4)	None of the above.

(0)

(b)

State with reasons, whether true or false (answers without reasoning will not deserve any credit):

2x4

(i)

Income from subletting premises is liable to income–tax as income from house property.

(0)

(ii)

Vivitha derives income chargeable as income from other sources; she has made cash payment of Rs. 25,000 towards salary of an employee, which she wants to claim as expenditure. Her friend advises her that the same is possible.

(0)

(iii)

Time limit for passing final order of settlement in respect of an application made after 1.6.2007 and before 31.03.2008 is six months from the date of filing of valid application.

(0)

(iv)

Where an asset is transferred by an individual to a person (non–relative) for a period of seven years, the value of the same cannot be clubbed in the hands of the individual.

(0)

(a)

Briefly discuss the situations in which the various types of persons are regarded as ‘non–resident’ for the purposes of the Income–tax Act, 1961.

(0)

(b)

Is unrealized rent received subsequently taxable? What is the tax treatment of receipt of arrears of rent? Under what head of income will they be charged? Has ceased to be the owner of the house property concerned?

(0)

(c)

Janak is a shareholder in Prem Plastics Ltd. The company bought back the shares held by him on 30.3.2008. Payment was received by Janak from the company on 15.4.2008. Discuss the tax consequences in the hands of Janak, clearly indicating the assessment year of taxability, if any. You are informed that Janak maintains books of account on cash basis.

(0)

(d)

What is a belated return of income as envisaged by section 139(4) of the Income–tax Act, 19617 Can such a belated return of income be revised?

(0)

(a)

ABC Ltd. is a company engaged in the construction and sale of buildings. It has the following assets as on 31.03.2008:

		Rs. in Lakhs
(i) (ii) (iii) (iv) (v) (vi) (vii) (viii)	Flats (residential) ready for sale Commercial properties ready for sale Guest house situated 30 kms away from Delhi 2 residential houses occupied by (1) An officer having an annual salary of Rs. 4 lakhs (2) An officer having an annual salary of Rs. 6 lakhs Cars used for Company’s business Aircraft used for personal use of directors Urban land held from 31.03.1999, on which no building could be built due to dispute of title Cash in hand	200 500 25 10 15 20 400 50 5

Net Wealth of the Company as on 31.3.2008 is to be computed from above.

(0)

(b)

Mr. X has the following incomes/losses pertaining to the assessment year 2008–2009:

(a)
(b)
(c)
(d)
(e)

Long–term capital loss
Net profit from business
Net loss from let out property
Net loss from self–occupied residential property
Business loss carried forward from Assessment year 2001–02

Rs.
Rs.
Rs.
Rs.
Rs.

20,000/–
50,000/–
3,000/–
7,000/–
10,000/–

Compute his total income.

(0)

(c)

Mr. A, an individual, aged about 50, has made the following payments during the financial year 2007–2008:

(i)	Prepayment of entire outstanding housing loan balance of Rs. 80,000 as on 1.4.2007. The loan was taken from HDFC Ltd. 10 years ago. He repaid this amount out of the maturity proceeds of his life insurance policy (Rs. 1,90,000/–) which he received on 1.4.2007.
(ii)	He contributed Rs. 15,000 to recognized provident fund (by way of deduction from salary).
(iii)	He purchased National Savings Certificate Rs. 5,000 in the name of his wife.
(iv)	He paid his health insurance premium (for self) of Rs. 20,000 through his credit card on 31.03.2008. He paid the credit card company the amount on 25.04.2008.

What is the amount of deduction to which Mr. A is entitled to, under sections 80C and 80D of the Income–tax Act, 1961 for the assessment year 2008–2009?

(0)

Write short notes on any three of the following:

6x3

(a)

Exemption form Wealth–tax (any six items):

(0)

(b)

Valuation of self–occupied residential house acquired/constructed on or after 01.04.1974;

(0)

(c)

Liability to Wealth–tax of charitable and religious trusts;

(0)

(d)

Deduction of income–tax at source from payments made to contractors after 01.06.2007.

(0)

SECTION B
Answer Question No. 5 which is COMPULSORY and any two from the rest in this section.

SECTION B

Answer Question No. 5 which is COMPULSORY and any two from the rest in this section.

(a)

Choose the correct answer:

(i)

Annual financial information statement is required to be submitted by the assessee paying duty of Rs.

(1)	50 lakh or more in a year through PLA
(2)	1 crore or more in a year through PLA
(3)	1 crore through PLA and/or through cenvat credit in a year.
(4)	All the assesses irrespective of duty paid.

(0)

(ii)

Cenvat credit availed should be utilized only within a period of

(1)	1 year
(2)	3 year
(3)	End of financial year in which the input was purchased.
(4)	No time limit for utilization.

(0)

(iii)

For purpose of valuation of imported goods, foreign exchange rate to be considered is as applicable on date of

(1)	Grant of entry inwards
(2)	Presentation of bill of entry
(3)	Grant of entry inward or presentation of bill of entry whichever is later
(4)	Grant of entry inward or presentation of bill of entry whichever is earlier.

(0)

(b)

State with reasons whether true or false (answers without reasoning will not deserve any credit):

2x3

(i)

For determining the customers value or assessable value as per section 14(1) of the Customs Act, special discount limited to exclusive agents is not admissible.

(0)

(ii)

For matters of omission other than those covered by section 10 of the CST Act, the State Law provisions will apply.

(0)

(iii)

Declared goods under the CST Act, are those goods which are declared to be goods of special important by way of notification in the Official Gazette by the Central Government each year.

(0)

(c)

Fill up the blanks:

1x5

(i)

Recording of sound on duty paid magnetic cassette ________ (is/is not) manufacture for the purposes of excise duty.

(0)

(ii)

Present Cenvat Credit Rules have been issued in the ________.

(0)

(iii)

Where Company X amalgamates with Company Y, goods can be removed from factory of X to Y. ________ (after/without) payment of excise duty under rule ________ of Cenvat Credit Rules.

(0)

(iv)

Where an importer proves that the anti–dumping duty imposed is more than the ________ of dumping, he will be entitled to refund under section ________ of the Customs Tariff Act, 1975.

(0)

(v)

Education cess ________ (is/is not) payable on safeguard duty payable under section 8C of the Customs Tariff Act, 1975.

(0)

(a)

After visiting USA. Mrs. & Mr. Saxena brought to India a lap–top computer valued at Rs. 1,80,000, personal effects valued at Rs. 90,000 and a personal computer worth Rs. 53,000. What is the customs duty payable?

(0)

(b)

W dispatches goods form Karnataka and raises invoice on X in Madhya Pradesh, W charges 3% CST and pays the same in Karnataka. During the course of movement of goods, X sells goods to Y in West Bengal and Y ultimatery sells goods to Z in Kolkata. Z takes delivery of goods and the movement of goods comes to end. Sales from X to Y and Y to Z are by transfer of lorry way bill receipts. Explain the forms to be issued so that the first and subsequent sales are exempt from central sales tax.

(0)

(c)

Briefly explain about Duty Entitlement Pass Book (DEPB) Scheme.

(0)

(d)

Is it correct to say that for chargeability to excise duty purposes, an occasional sale does not mean that the impugned product is marketable?

(0)

(a)

Briefly discuss about the general exemption and concessions given to SSI units for excise duty purposes.

(0)

(b)

Can an importer, exporter or ‘person in charge’ amend the documents submitted to customs authorities? If yes, from what date is the amendment effective?

(0)

(c)

Explain briefly the provisions CST Act, relating to Inter–State sale by transfer of document of title to goods.

(0)

(d)

What is the "taxable event" in the case of export of goods under customs law? Is export duty payable in case of applicable goods where ship travels 40 nautical miles from Indian port, title passes to the buyer, but the ship returns to India because of engine trouble? What is the relevant date for export duty?

(0)

Write short notes on any three of the following:

6x3

(a)

"Place of business" under the CST Act;

(0)

(b)

Appeals to appellate authority under the CST Act;

(0)

(c)

Similar goods under Customs Law;

(0)

(d)

Meaning of "Accessory" for excise duty purposes.

(0)

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