CWA ICWA Inter Stage I : Business Taxation - June 2007

CWA ICWA Inter - Stage I • Business Taxation • June 2007

This Paper has 39 answerable questions with 0 answered.

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

The figures in the margin on the right side indicate full marks
All questions relate to the assessment year 2007–08
Section — I
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

All questions relate to the assessment year 2007–08

Section — I

Answer Question No. 1 which is compulsory and any two from the rest in this Section.

Marks

(A)

Fill up the blanks:

1x6

(a)

Where an Indian company incurs any expenditure in connection with amalgamation or demerger, the same is allowable as deduction, spread over _______ successive previous years beginning with the year _______.

(0)

(b)

Where an employer gifts a second hand motor car to an employee, the perquisite value is actual cost less depreciation at _______ % for every completed year under _______ method of computing depreciation.

(0)

(c)

Belated return of income for the assessment year 2007–08 can be filed on or before _______, where no assessment has been made.

(0)

(d)

Exemption under section 10B of the Income–tax Act, 1961 is available till assessment year _______

(0)

(e)

The due date for filing wealth-tax return by a closely held company, whose turnover is below Rs. 40 lakhs, is _______.

(0)

(f)

Where L whose cash and bank balance on 14.01.2007 is Rs. 50,000 gifts Rs. 2,50,000 to M, without any actual delivery of the money, Rs. _______ will be clubbed in the hands of L for wealth–tax purposes.

(0)

(B)

State with reasons, whether the following statements are true or false (Answer without reasons will not receive any credit):

2x6

(a)

In the case of an individual resident in India, who is an author, maximum deduction available from gross total income in respect of eligible royalty income is Rs. 5,00,000.

(0)

(b)

Under section 12A of the Income–tax Act, 1961 application for registration of charitable trust can be made within one year from the date of creation of the trust.

(0)

(c)

Where business is carried on, on behalf of the assessee’s minor child (whose income is clubbed in assessee’s hands), by the assessee, which is besides assessee’s own business, the gross receipts of both should be reckoned for judging the applicability of section 44AB of the Income–tax Act, 1961.

(0)

(d)

Gift received from assessee’s grandfather in excess of Rs. 50,000 will be taxed as income from other sources.

(0)

(e)

Property held by an assessee under trust for any private purpose of charitable nature in India is not an exempt asset under section 5 of the Wealth–tax Act.

(0)

(f)

A charitable trust whose income is not exempt under any clause of section 10 of the Income–tax Act, 1961 will be chargeable to wealth-tax in all cases, where the trust forfeits exemption.

(0)

(a)

Briefly discuss the provisions of the Income–tax Act, 1961 relating to deductibility of interest paid in respect of capital borrowed for the purpose of business of profession.

(0)

(b)

Can deduction of interest be claimed even where such borrowing is for acquiring a capital asset? Should any income be earned from out of such asset?

(0)

(c)

Can interest be claimed as deduction where the borrowing is used for generating income which is not includable in assessee’s total income? Will the answer be different if the income forms part of total income, but deduction is amiable under Chapter VIA? Briefly explain the related provisions.

(0)

(d)

On 31.08.2006, the assessee remitted tax deducted at source pertaining to interest for the year ended 31.03.2006. Can the assessee, who follows mercantile system, claim the interest in question, in the assessment year 2007–08?

(0)

(a)

OPTIMA Ltd. is engaged in the business of plying goods carriages. On 1st April, 2006, the company owns 10 trucks (6 out of which are "heavy goods vehicles"). On May 2, 2006 one of the heavy goods vehicles is sold by OPTIMA Ltd. to purchase a light goods vehicle on May 6, 2006, which is put to use only from June 15, 2006. Find out the total income of OPTIMA Ltd. for the assessment year 2007–08 taking into consideration the following data gathered from its books:

	Rs.
Freight collected Less:Operational expenses	8,90,000 6,40,000
Depreciation as per section 32 Other office expenses Net profit Other non–business income	1,90,000 15,000 45,000 70,000

(0)

(b)

NDA Ltd., running an industrial undertaking located within the corporation limits, decided in December, 2006, to shift the said undertaking to non–urban area. The company sold some of the assets (which were used in business and on which depreciation had been claimed wherever admissible) and acquired new assets in the process of shifting (completed in March, 2007). The relevant details are as follows:

	(Rs. in lakhs)
	Land	Building	Plant and Machinery	Furniture
Sale proceeds (sale effected in March, 2007) Indexed cost of acquisition Adjusted cost as per section 50 Cost of new assets purchased in July, 2006 for the purpose of the industrial undertaking in the new place	8 4 – 4	18 10 4 7	16 12 5 17	3 2.2 2 2

Compute the capital gains of NDA Ltd. for the assessment year 2007–08, bearing in mind that exemption if any, available, should be claimed such that it is most beneficial to the assessee.

(0)

Mr. Gurpreet, a person of Indian origin, had been residing in Kenya since 1987 and returned to India for permanent settlement in May, 2005, when he remitted money into India. As on the valuation date March 31, 2007, the following particulars of his assets and liabilities are furnished:

		Rs.
(a)	Self–occupied house at Kolkata	10,00,000
(b)	Residential house at Madras let out for the whole year at Rs. 20,000 per month– market value	13,00,000
(c)	Land at Delhi (no restriction for construction)	7,00,000
(d)	2 motor cars (market value)– (i) Purchased at Rs. 5,00,000 on 1.4.2006 out of moneys remitted from Kenya (ii) Old car for personal use (purchased on 2.5.2003 for Rs. 4,25,000)	4,50,000 2,00,000
(e)	Jewellery, including Rs. 3,00,000 acquired in July, 2006 out of remittance from Kenya	7,00,000
(f)	House plot of area 525 square metres in urban area, transferred to minor son on 1.8.2006	6,00,000
(g) (h) (i) (j) (k) (l)	Shares in listed companies Loan for purchase of land transferred to minor son Cash at Bank Cash lying at house Race horse Income–tax dues	6,00,000 1,00,000 4,00,000 70,000 90,000 2,00,000 20,000

You are required to compute the net wealth of Mr. Gurpreet as on 31.3.2007 and the wealth–tax payable for the assessment year 2007–08.

(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.

1x4

(i)

In order to attract excise duty under the Central Excise Act, 1944, goods must be

(a)	Movable
(b)	Movable or immovable
(c)	Immovable
(d)	None of the above

(0)

(ii)

The following is not liable to sales–tax under CST Act, 1956:

(a)	Newspapers
(b)	Lottery tickets
(c)	Sim cards
(d)	Trade Licenses

(0)

(iii)

R of Coimbatore, Tamil Nadu sold to a Malaysian Ship at Kochi port in Kerala some goods for consumption on board the ship; such sale will be

(a)	Intra–State sale
(b)	Inter–State sale
(c)	Export sale as it is a foreign ship
(d)	Sale in the course of import

(0)

(iv)

Imported goods can be kept in custom bonded warehouse up to _______ days without payment of any interest. Beyond that period interest payable is ______ per cent.

(0)

(B)

State with reasons whether true or false:

2x6

(a)

There is provision for payment of Central Excise Duty "under protest".

(0)

(b)

Goods mentioned in Central Excise tariff but fully exempt from excise duty are not "excisable goods".

(0)

(c)

State Government cannot waive condition of submission of C Form by issue of a notification.

(0)

(d)

Central Government is empowered to make Rules providing for the manner of determination of the sale price for a works contract, under the CST Act, 1956.

(0)

(e)

On 14.3.2007, Central Excise or customs authorities can make a provisional attachment of property of a person to whom a show cause notice has been issued.

(0)

(f)

Customs Officer should pass an adjudication order in all situations where the assessment is done contrary to the claim of importer/exporter.

(0)

(a)

Define the term Large Taxpayer Unit (LTU) under the Central Excise Law.

(0)

(b)

Is it compulsory for a taxpayer to join LTU Scheme?

(0)

(c)

Briefly discuss about the “Other taxes” which are deductible in arriving at the “transaction value” under the Central Excise Act.

(0)

(d)

SV Ltd. purchase a Boring ’Drilling Machine at a cum’ duty price of Rs. 32,14,476. The excise duty rate charged on the said machine was @ 16% plus education cess @ 2%. The machine was purchased on 1.4.2005 and disposed off on 1.10.2006 for a price of Rs. 12 lakhs. The company was claiming depreciation @ 25% following straight line method. In the light of the said information, answer the following questions:

(i)	What was the excise duty paid on the machine?

(ii)	What is the Cenvat credit allowable?

(iii)

What is the amount of Cenvat credit reversible or duty payable at the time of clearance of the said machinery?

2x3

(0)

(a)

How is value determined for purposes of special CVD under the Customs Tariff Act?

(0)

(b)

Write brief note on Anti–dumping Duty.

(0)

(c)

Briefly discuss about EDI system of assessment under the Customs Act.

(0)

(a)

Explain the term "Crossing the customs frontiers of India" as per the Central Sales–tax Act, 1956.

(0)

(b)

Mr. Ashok Kumar, a first stage dealer in packing machinery in the city of Mumbai, furnishes the following data:

		Rs.
(i)	Total inter–State sales during financial year 2006–07 CST not shown separately	92,50,000
(ii)	Above Sales include:
	Excise Duty Freight (of this 50,000 is not shown separately in invoices) Insurance charges incurred prior to delivery of goods Installation and commissioning charges shown separately	9,00,000 1,50,000 32,000 15,000

Determine the turnover and CST payable, assuming that all transactions were covered by valid "C" Forms.

(0)

(c)

What is "Interest–free period" in respect of warehoused goods under the Customs Act, 1962? Is interest payable when warehouse goods are exempt from duty on the date of clearance?

(0)

Disclaimer ♣ Privacy Policy ♣ Who We Are ♣ Terms of Service