CWA/ICWA Final :: Strategic Tax Management : June 2007

*F-16(STM)* *Revised Syllabus*
Time Allowed : 3 Hours		Full Marks : 100
The figures in the margin on the right side indicate full marks
Attempt Question NO. 1 carrying 20 marks which is compulsory and any five from the rest.
Marks

(a)

Fill in the gaps:

(i)	Under section _______ of the Income Tax Act, 1961 no tax is deductible if amount of rent paid/credited during the financial year does not exceed Rs. _______
(ii)	The Assessing Office may refer the computation of _______ _______ price under section 92C to the Transfer Pricing Officer if he considers it necessary and expendient.
(iii)	Net wealth of an assessee in excess of Rs. _______ is taxable under the Wealth Tax Act, 1957 at _______ percent.
(iv)	The rate of depreciation on general plant and machinery is _______ and on motorcars other than those used for running them on hire is _______.
(v)	The deduction for amortization of preliminary expenses under section 35D is allowed at _______ of the qualifying expenditure in each of the _______ sucessive years begining with the year in which business commences.

2x5=10

(b)

Specify the correct answer.

(i)

Sale under CST Act includes a transaction in the nature of/a delivery of goods on _______

(a)

Job work

(b)

Hypothecation

(c)

Hire purchase

(d)

Pledge

(ii)

CST is not chargeable on the following as it is not sale of goods _______.

(a)

Business

(b)

(c)

Trade mark

(d)

Advance license

(iii)

The following item is normally included (not excluded) in determining assessable value under central excise:

(a)	Erection charges
(b)	Notional interest on security deposit
(c)	Transport charges after place of removal
(d)	Optional after sales service charges.

(iv)

A SEZ (Special Economic Zone) unit has to submit the following forms to the manufacturer to obtain goods without CST from him ______
(a) Z form (b) S form (c) H form (d) I form.

(v)

In case of sale to registered dealers and Government agencies which issue C/D forms the maximum rate of CST tax is ______
(a) 0% (b) 1% (c) 4% (d) 12%

2x5=10

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( 2 )

F-16(STM)
Revised syllabus

Marks

Find out the income from property chargeable to tax for the assessment year 2007-08 in the following cases:

	X Rs.	Y Rs.
Municipal value [a] Fair rent [b] Standard rent under the rent control [c] Actual rent if the property is let out throughout the previous year [d1] Unrealized rent of the previous year 2006-07 [d2] Period when the property remains vacant (number of months) Loss due to vacancy [d3] Municipal taxes— — Tax of the year 2006-07 — Paid by X and Y during 2006-07 — Paid by X and Y after March 31, 2007 — Paid by tenants during 2006-07	1,20,000 1,30,000 1,10,000 1,26,000 10,500 (1) 10,500 18,000 17,000 1,000 —	1,20,000 1,30,000 1,10,000 1,26,000 Nill (Nill) (Nill) 18,000 8,000 1,000 9,000

Bindu & Co. is a partnership firm, assessed as a firm. The firm engaged in wholesale turmeric trade, consists of three partners P, Q and R, sharing the profits and losses equally. Capital contributions are also equal. Following is the summarized position of the financial results of the firm for the year ended 31st March, 2007:

Rs. Rs.

To Administrative expenses
To Book depreciation
To Net profit 2,40,000
30,000
2,40,000
5,10,000 By Gross profit
By Income tax refund 4,90,000
20,000

5,10,000

Additional Informations:

(a)

P and R are working partners. The partnership deed has authorized remuneration of Rs. 5,000 p.m. to P and R each. R is also entitled to sales commission of 1% on sales.

(b)

Depreciation for the current year alone, as per the applicable rates under the Income-tax Act, 1961 is Rs. 40,000.

(c)

Brought-forward figures of the earlier year, for which the return of income was field in time, are:

Unabsorbed business loss
Unabsorbed depreciation Rs.
25,000
20,000

(d)

Administrative expenses include:

Interest to three partners @ 15%
Banking cash transaction tax
Fringe benefit tax

Rs.
1,50,000
10,000
30,000

(e)

The gross profit to sales ratio of the firm is 10%

Compute the total income of Bindu & Co. and the tax payable thereon. What will be the treatment in the individual returns of P, Q and R? Also state the head of income under which each item is to be disclosed in the hands of each partner.

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( 3 )

F-16(STM)
Revised syllabus

Marks

4.	(a)	Prithvi Computer Ltd., sells computers to its customers, with a branded operating system software pre-loaded therein. The Department contends that in ascertaining the transaction value for excise duty purposes, cost of operating system software should also be added, since a computer cannot function without an operating system. Is this contention correct?	6
	(b)	XYZ Pharma Ltd. wishes to distribute free samples of medicines routinely manufactured to leading hospitals. How should they be valued? What will be the case if it is a newly developed produce?	4
	(c)	X receives raw materials from Y, an outsider merchant manufacturer, on which job work is done. How should valuation be done for excise purposes? Will the answer differ if X and Y are related persons?	6
5.	(a)	Detail the implications of 'Demerger' with reference to Income Tax	8
	(b)	State the factors to be considered in taking a management decision relating to owning or leasing fixed assets.	8
6.	(a)	Enumerate entities to which provisions of Wealth Tax Act do not apply.	4
	(b)	Under Wealth Tax Act, what is the scope of taxation of an individual not residing in India?	2
	(c)	A company incorporated outside India is not liable to Wealth Tax. Discuss.	2
	(d)	Is the interest in Cooperative Society taxable in the hands of its members?	2
	(e)	A child artist, acting in films, amassed a wealth of Rs. 20 lakhs over a few years which was held in form of shares by his father and guardian. The share were sold in 2006-07, resulting in a capital gain of Rs. 15 lakhs, which was invested in a plot of land. The W.T.O. proposes to include the value of the plot of land in the net wealth of the father u/s 4(1). Is this in order?	6
7.	(a)	Explain briefly the procedure for fixing anti-dumping duty on a product.	8
	(b)	Explain in brief the procedure for assessment and clearance of imported goods from customs port.	2
8.	(a)	Discuss the binding nature of a Court's decision "sub silentio" and judgement "per incuriam".	8
	(b)	Write a note on 'Declared Goods' under CST Act.	8
__________