| 1. | (a) | The net profit of Siddharth Electricals Ltd. for the year ended on 31.3.08 arrived at Rs. 47 lacs after Debit/Credit of the following: | (i) | Development charges of Rs. 75,000 paid to Government on a piece of industrial land purchased in the preceding year. | | (ii) | Amount of Rs. 5 lacs being the cost of stocks lost in fire. | | (iii) | Expenditure of Rs. 50,000 incurred on development and perfecting the designs used in manufacturing. | | (iv) | Amount of Rs. 1 lac paid for obtaining an expert opinion for setting up a factory. | | (v) | Expenditure of Rs. 1,25,000 incurred on replacement of wooden trolleys by stainless steel trolleys. | | (vi) | Expenditure of Rs. 3.50 lacs incurred on developing and making of gardens and lawns in factory compound. | | (vii) | Commodity Transaction tax of Rs. 5,000 paid on the future derivative transactions, income from which stands credited in P&L account. | | (viii) | Dividend of Rs. 1,25,000 on Mutual Fund units. | | (ix) | Interest of Rs. 12,500 received on an income–tax refund. | | (x) | Rent of Rs. 3 lacs for letting out part of the office building. | | Compute the income and the amount of tax payable for Asst. year 2008–09 keeping into consideration the following further information: | | (1) | Amount of Rs. 40,000 recovered from a debtor whose amount was claimed as bad debts in Asst. year 05–06. | | (2) | Short–term capital gain of Rs. 2 lacs on the sale of listed shares was credited in the investments. | | (3) | Long–term Capital gains of Rs. 10 lacs on sale of piece of land credited in the block of building was earned on 18.9.07. The entire sales consideration was invested in the bonds as specified in Section 54EC on 28.3.2008. | | (4) | Payment of labour charges bill of Rs. 25,000 which was credited in the books on 12.3.07 was made in Cash on 6.8.07 Rs. 15,000 and on 6.9.07 Rs. 10,000. |
| 14 | (0) |
| | (b) | Atul Housing Finance Co. Ltd. provides you the following particulars from its accounts for the year ended on 31.3.2008 and seeks your opinion as to availability of deduction underSection 36(1) (viii) and the amount thereof:
Profits from the business computed as per part D of Chapter IV of the Act but before claiming deduction u/s 36(i) (viii) Rs. 560 lacs –Paid–up share Capital
–General Reserve
–Balance in reserve created u/s 36(i) (viii) on 31.3.2007 | Rs. 500 lacs
Rs. 100 lacs
Rs. 1,100 lacs |
| 6 | (0) |
| 2. | (a) | Whether the following be treated as transfer of capital asset for the purpose of tax under capital gain: | 4 | |
| | | (i) | Transfer of house property in a transaction of reverse mortgage. | | (0) |
| | | (ii) | Conversion of foreign currency bonds into shares. | | (0) |
| | (b) | State in brief about the chargeability of the following to Fringe Benefit Tax in A.Y.2008–09: | 3 | |
| | | (i) | Expenses on foreign travel by the partners of a firm for the purposes of its business. | | (0) |
| | | (ii) | Distribution of free samples and expenses on display of a newly launched product. | | (0) |
| | | (iii) | Contribution by the employer to an approved superannuation fund for employees. | | (0) |
| | (c) | Examine the correctness of the following statements: | 5 | |
| | | (i) | Section 2(14) of the Act excludes all items of movable property which are held for personal use of the assessee or any member of his family. | | (0) |
| | | (ii) | The Appellate Tribunal is empowered to grant indefinite stay for the demand disputed in appeals before it. | | (0) |
| | (d) | What meaning has been assigned to "Venture Capital Undertaking" in section 10(23FB) of the Act? | 4 | (0) |
| 3. | (a) | Explain in brief about the treatment to be given in each of the following cases under the IT. Act, for A.Y. 08–09: | 10 | |
| | | (i) | Pankaj a salaried employee received from his employer medical allowance of Rs.12,000 and reimbursement of Rs. 16,000 on account of medical facilities. | | (0) |
| | | (ii) | A farmer resident of Jaipur sold his rural agricultural land situated in Nepal and received Indian Rupees 2 lacs over the cost of acquisition of this land. | | (0) |
| | | (iii) | Radhe received on 11.9.07 gifts each of Rs. 21,000 from his two friends Shiva "and Krishna and of Rs. 51,000 from his sister living in UK. | | (0) |
| | | (iv) | A loss of Rs. 85,000 was sustained by Simran in the activity of owning and maintaining camels for races. | | (0) |
| | | (v) | Interest of Rs. 20,000 on bank FDRs received by minor son of Rajesh. These FDRs were made by the minor son out of his earnings from stage acting. | | (0) |
| | (b) | Who can be treated as an agent of a non–resident foreign collaborator for the purpose of proceedings and/or any other matters under the Income Tax Act? | 6 | (0) |
| 4. | (a) | Explain the meaning of "eligible expense" for the purpose of claiming benefit of Section 35D. | 6 | (0) |
| | (b) | Can a trust created for charitable purposes in Feb. 07 having filed application for registration as per section 12A on 11.4.08 claim benefits of Sections 11 and 12 from Asst. Year 07–08? | 4 | (0) |
| | (c) | Explain the purposes for which the Central Government as per Section 90 of the LT. Act can enter into an agreement with any foreign country. | 6 | (0) |
|
| 5. | (a) | Specify all those instances which are generally incorporated in Article 5(2) in all DTA agreements to signify the presence of a permanent establishment. | 4 | (0) |
| | (b) | Is CIT (Appeals) empowered to consider an appeal filed by an assessee challenging the order of assessment in respect of which the proceedings before the Settlement Commission abates? | 4 | (0) |
| | (c) | An interest free loan of Rs. 50 lacs was given by HSP Ltd. to its sister concern SH Ltd. (which sells its entire production to HSP Ltd.) for procurement of raw material available at a discount on cash payment. A.O. proposes to disallow the interest paid on loans by HSP Ltd. to the extent of interest foregone by advancing loan to SH Ltd. Is the action of A.O. in doing so correct? | 4 | (0) |
| | (d) | Can A.O. complete the assessment of an income from international transactions in disregard of the order passed by the Transfer Pricing Officer by accepting the contention of the assessee? | 4 | (0) |
| 6. | (a) | Samode Food Processing Cooperative Society engaged in processing without the aid of power of the agricultural produce of its members, in carrying out activities of marketing of agricultural produce, in agency business and others, furnishes the following particulars of its income for the year ended on 31.3.2008: –Income from processing of the produce of members
–Income from marketing activities
–Income from letting of building used as godowns
–Dividend from another Cooperative Society
–Collective disposal of Labour of its members
–Income from agency business
–Interest on deposits from another Cooperative Society | Rs. 50,000
Rs 30,000
Rs. 96,000
Rs. 45,000
Rs. 25,000
Rs. 75,000
Rs. 15,000 |
Compute the income chargeable to tax for A.Y. 2008–09. | 8 | (0) |
| | (b) | "Section 145A of the Act is not in agreement with the principal laid down by AS–2 of the Institute of Chartered Accountants of India." Explain the controversy. | 5 | (0) |
| | (c) | When can a non–resident or a Foreign company be treated as having a permanent establishment in India? | 3 | (0) |
| 7. | (a) | Mr. Duggal, a Chartered Accountant and citizen of India after serving 16 years in U.K. returned back on 12.4.2007 for permanent settlement in Delhi started professional practice, furnishes value of his all Assets and Liabilities held on 31.3.08 and request you to compute his net wealth for A.Y. 08–09 : | Rs. | (i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii) | Car used for professional work
Car used for personal purposes
Laptop used for personal purposes
Desktop/Scanner/Printer used in Office for professional work
Bank Term Deposits
Shares of listed and unlisted various companies
Loan against the car used for professional work
Urban land purchased in the name of handicapped son (Minor) | 15 lacs
5 lacs
1 lac
2 lacs
10 lacs
5 lacs
5 lacs
3 lacs | | (ix) | Jewellery valuing now Rs.5 lacs purchased out of money from NRE account on 1.12.2006 | | (x) | House property valuing now Rs.40 lacs purchased on 11.10.2003 from the funds in NRE account was given on rent to a corporate house on 1.7.2007 | | (xi) | Amount of Rs.. 2,00,000 was withdrawn from bank on 27.3.08 for a deal of a house which could not be materialized and therefore the cash was deposited back in bank on 2.4.2008. | | (xii) | Jewellery worth Rs. 2 lacs was gifted on 22.3. 2008 to wife on the occasion of 25th marriage anniversary . |
| 10 | (0) |
| | (b) | The recognition of the heirloom jewellery granted to a former ruler by the Central Government in March, 1957 was withdrawn by the Board on 11.8.2007 with retrospective effect from 1.4.1970. The fair market value of this jewellery on 11.8.2007 was Rs. 100 lacs and on 31.3.2008 was Rs. 110 lacs. Explain the implications of it on the Wealth Tax Liability of the former ruler. | 4 | (0) |
| | (c) | What meaning has been assigned to "Net Wealth" under the Wealth Tax Act, 1957? | 2 | (0) |
