CS Inter :: Tax Laws : June 2003

Armello, a German national, came to India for the first time during the year 2000-01. During the financial years 2000-01, 2001-02, 2002-03, 2003-04 and 2004-05, he was in India for 130 days, 75 days, 59 days, 100 days and 80 days respectively. Determine his residential status for the assessment year 2005-06.

State the circumstances under which a residential house will not be liable to wealth-tax.

Determine the tax liability of Ms. Puja for the assessment year 2005-06 on the assumption that she contributes Rs.60,000 towards public provident fund and pays insurance premium of Rs.20,000 on her life insurance policy (sum assured : Rs.1,50,000).

Bahadur, a defence personnel, was killed in a war. His wife was paid an ex-gratia payment of Rs.1,00,000 in February, 2005. She also received the family pension of Rs.7,500 per month during the year 2004-05. Advise her on the taxability of receipts.

Jolly is an employee of a private limited company at Mumbai. The following particulars of his income for the year ended 31st March, 2005 have been ascertained :

Discuss the provisions of the Income-tax Act, 1961 regarding penalties imposed in the following cases :
 (i) For concealment of income.
(ii) For failure to get his accounts audited as directed under section 142(2A).

Discuss the provisions relating to determination of tax liability of an association of persons.

Abhay purchased 1,000 listed equity shares of Rs.10 each at Rs.100 per share from a broker on 4th May, 1996. He paid Rs.3,000 as brokerage. On 15th March, 2004, he was given bonus shares by the company on the basis of one share for every two shares held. On the same date, he was also given a right to acquire 1,000 rights shares @ Rs.90 per share. He acquired 50% of the rights shares offered and sold the balance 50% of the rights shares for a sum of Rs.67,500 on 7th April, 2004. The rights shares were allotted to him on 30th April, 2004.

All the shares held by him were sold on 24th September, 2004 @ Rs.280 per share through a recognised stock exchange.

(i)	Compute capital gain and tax for the assessment year 2005-06 assuming his income from other sources is Rs.40,000.
(ii)	What shall be your answer if in the above case rights shares were sold on 5th November, 2004 but other shares were sold on 24th September, 2004.
(Note : The cost inflation index for the year 1996-97 — 305; and 2004-05 — 480.)

Advise an assessee on the admissibility or otherwise on the following aspects giving reasons in respect of its business income :

(i)	Brokerage paid for raising loan for the business.
(ii)	Cost of erecting medical unit annexe to the factory for emergency treatment of the employees.
(iii)	Compensation paid to an employee for the premature termination of his services.
(iv)	Travelling expenses of a director, who went to Japan for negotiating the purchase of a new heavy machinery which was to be installed during next year.
(v)	Lump sum consideration of Rs.5 lakh paid for acquiring know-how.

What are the exceptions to well accepted principle that loss of one person cannot be availed for ‘set off’ or ‘carry forward’ by another person under the provisions of the Income-tax Act, 1961 ?

Explain with examples the terms ‘goods’ and ‘declared goods’ in the context of the Central Sales Tax Act, 1956.

Gopal is doing only job work by charging Rs.20 per product. The cost of materials supplied to him for the job work is Rs.100 per product. Calculate the excise duty payable @ 8% assuming that the job worker has undertaken to pay the excise duty.

During the year 2004-05, the gross inter-State sales made by Stead Fast Ltd. of Jodhpur is Rs.71,79,000. Although the central sales tax is not shown separately, the following information is available from the records of the company :

(i)

The company sells machinery which makes copper wire rods. If it is sold in Rajasthan State, the sales tax rate is 7% (plus additional tax @ 10% of sales tax).

(ii)

Information regarding sales with and without Form-C is as follows : Inter-State Sale with Form C Rs. Inter-State Sale without Form-C (Rs.) Gross sales 44,25,000 27,54,000 It includes the following: Excise duty 19,12,500 6,15,000 Freight (not being shown separately) 55,500 72,000 Packing charges 22,815 29,550 Cost of installation (shown separately) 1,38,000 1,59,000 Insurance charges to cover seller’s risk 15,750 22,800 Insurance charges to cover buyer’s risk (at the request of the buyer) 22,500 1,26,000 Freight (shown separately) 1,05,000 25,500 The following items have not been deducted to calculate gross sales turnover : Trade discount (given by way of credit note on 31st March, 2005) 27,000 30,000 Goods returned within 6 months 3,00,000 1,50,000 Incentive bonus for additional sales 37,500 30,000 Ascertain the sales turnover and central sales tax payable.

State whether registration under the Central Excise Act, 1944 is mandatory. If so, who is liable to get registered under this Act ?

What is meant by ‘cascading effect’ in the context of the Central Excise Tariff Act, 1985 ?

Write short notes on the following under the Customs Act, 1962 :
 (i) Baggage and bonafide baggage; and
(ii) Out of charge.