1. | XYZ Lrd., which manufactures various products shows a net profit of Rs. 6,50,000 for the year ended 31st March; 2003; after debiting the following: (a) | Fees paid to an architect for valuation of the office–building and factory building for contesting excessive municipal tax levied, Rs. 12,500. | (b) | Compensation paid to a director on termination of service, Rs. 1,30,000. | (c) | Expenses paid to Management Consultant for preparation of budgeting formats, Rs. 34,000. | (d) | Payment of Rs. 15,000 in advance for getting a new telephone connection under OYT Scheme. | (e) | Expenditure incurred for repairing a property taken on lease for business, Rs. 4,000. | (f) | Expenses incurred for registration of the trade mark of a product, Rs. 11,150. | (g) | Anticipated loss on forward contact for purchase of raw material as a result of a fall in market price, Rs. 1,20,780. | (h) | Expenditure incurred initially on Installation of fluorescent tube lights, Rs. 800. | (i) | Cost of lunch given at a 5–star hotel where four representatives of suppliers were treated to lunch along with the purchase manager and secretary of the company, Rs. 3,800. | How would you deal with the above in computing total Income of the company? | 2x9=18 | (0) |
2. | Mr. X, a reputed vocal musician, is also a part time employee in a company. He furnishes the following particulars of his income and expenditure for the year ending 31st March, 2003. (a) | Net salary received Rs. 30,000 after deduction of Income–tax, Rs. 6,000, contribution to recognised provident fund. Rs. 5,4000 and rent for quarters, Rs. 4,600 at 10% of salary only. | (b) | Commission on Sales at 3% of Turnover, Rs. 8,00,000 as per appointment letter. | (c) | Salary paid to a servant, Rs. 1,200 per month, who was used for both domestic and professional purposes. | (d) | Dictor’s bill paid, Rs. 2,000 for treatment of throat so as to improve his voice. | (e) | His gross professional receipts amounted to Rs. 50,000 for the year including Rs. 6,000 earned for performances in the USA. He claims exemption on Rs. 6,000. | (f) | Cost of two instruments, Rs. 1,000 (Rs. 500 each). | (g) | He resides his own house, the annual letting value of which as per municipal assessment is Rs. 2,400, and fair rent is Rs. 500 per month. The municipal tax is Rs. 650 and he spent Rs. 1,000 on repair, Rs. 53 on urban land tax and Rs. 40 on fire insurance. | (h) | A purse of Rs. 50,000 was presented to him at a function as a token of appreciation of the services rendered by him to the cause of music. | (i) | Life insurance premium paid Rs. 40,000 on a policy of Rs. 5,00,000. | (j) | Agricultural income Rs. 6,000. His minor son earned Rs. 10,000 from agricultural lands gifted by X to him in 1999. | How should the above items be dealt with under the Income–tax Act, 1961? You need not compute his total income for the relevant assessment year. | | 16 | (0) |
3. | The following particulars are available about Mr. T. for the previous year ended 31st March, 2003: (a) (b) (c)
(d) (e) (f) | Profit of business A carried on in India Loss of business B carried on in India Profits of business C carried on in the U.K. and controlled from India, the profit having been received in U.K. Loss of business D carried on the U.K. the business being controlled from Mumbai. Income from property in India Income from properties in the U.K. 25% of which the receivable in India | | Rs. 80,000 (–) 30,000
52,000 (–) 46,000 32,000 1,92,000 | (g) | Royalty received in the U.K. for use of chemical formula in | | | (a) India (b) U.K. | 60,000 30,000 | 90,000 | (h) | Gain on sale of land in India | | 50,000 |
Determine the total income of Mr. T. for the assessment year 2003-2004, assuming that his status is (i) | Resident and ordinarily resident in India; | (ii) | Resident and not ordinarily resident in India; | (iii) | Non-resident in India. | | 16 | (0) |
4. | (a) | X, Y and Z are the three partners of a firm, sharing profit and losses as 2:3:5. It is constituted by a deed of partnership, but there has been a change in the profit–sharing ratio in the Financial Year 2002–2003 from the earlier year. The firm did not submit a certified copy of the new deed of partnership and it had been treated as an AOP. The profit and loss account of the firm for the year ended on 31st March, 2003 shows the following: Opening stock Sales purchases Other business receipts Other expenses Closing stock | Rs. 1,21,000 – 15,70,000 – 1,57,000 – | Rs. – 21,40,000 – 66,000 – 32,000 | Remuneration to Partners X Y Z Interest to partners @ 24% per annum X Y Z Net profit | 60,000 80,000 1,02,000
30,000 36,000 42,000 40,000 | | | 22,38,000 | 22,38,000 |
Other Income of partners
Interest on Govt. securities Interest on company deposits Contribution to PPF | X Rs. 34,000 15,500 10,000 | Y Rs. 7,000 10,000 20,000 | Z Rs. 42,000 20,000 16,000 |
Determine the tax of the partnership assessed as on AOP as also of X, Y and Z. | 10 | (0) |
| (b) | Mr. P, a citizen of India, has been residing in the U.S.A. but returns to India on 17.8.2002 for permanently residing in India. Discuss his Wealth Tax liability in the following cases: (i) | He brought Rs. 15,00,000 (in Dollar) with him and purchased 2 cars at Rs. 8 lakh and Rs. 7 lakh, one for his business and second one for personal use respectively. | (ii) | He had sent Rs. 20 lakh on 3.5.2000 and purchased a residential house in Delhi on 17.5.2000. | (iii) | He had remitted Rs. 10 lakh to India on 1.9.2001 and purchased jewellery with the sum on 17.9.2002. | | 6 | (0) |