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CA IPCC : Sample / Mock Test Paper - TAXATION 2011

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CA IPCC
Tilak Vidyalaya Higher Secondary School (TVHSS), Kallidaikurichi

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PAPER 4 : TAXATION Answer all questions PART - I 1. Following are the details of income provided by Mr. Ramaswamy for the year ending 31.3.2009: (i) Rental income from property at Chennai - Rs.5,00,000, Municipal Value Rs.4,00,000; Standard Rent - Rs.3,50,000, Fair Rent Rs.3,00,000. (ii) Municipal and water tax paid to Municipality, Current year - Rs.40,000, Arrears Rs.1,60,000. (iii) Interest on loan borrowed towards major repairs to the property Rs.1,40,000 (iv) Arrears of rent from property at Hyderabad which was sold on 10.04.2005 Rs.25,000 Mr. Ramaswamy furnishes the following additional information regarding sale of a property in Delhi: (i) Mr. Ramaswamy s father acquired a property in April 1988 for Rs.40,000. Mr. Ramaswamy acquired this property by inheritance on 1st December 1988 after the demise of his father. (ii) Fair Market Value as on 01.04.1981 was Rs.15,000. (iii) Fair Market Value as on 12.12.1988 was Rs.45,000. (iv) Sale consideration received is Rs.40,00,000. (v) Stamp duty charges paid by the purchaser at the time of registration @ 13% is Rs.6,50,000 without any protest. (vi) Mr. Ramaswamy has invested the sale consideration in a residential flat for Rs.25 lakhs out of the sale proceeds. A sum of Rs.20 lakhs was invested in Capital Gains Bonds issued by NHAI and Rural Electrification Corporation Limited. Compute the total income and tax payable thereon by Mr. Ramaswamy for the assessment year 2009-10. [Cost Infl ation Index (CII): F.Y.2008 -09: 582, F.Y.1988 -89: 161] Rs. Municipal taxes paid 55,000 Insurance premium 8,000 Interest on money borrowed 25,000 15 Compute income from house property of Ashok for assessment year 2009 -10. (b) Mohan owns two houses. He transfers the following long -term capital assets during previous year 2008-09: Residential house property at Bangalore May 07, 2008 Date of sale Gold Silver May 15, 2008 May 14, 2008 Rs. 12,00,000 Particulars Rs. 9,00,000 Rs. 7,00,000 5,00,000 8,00,000 3,50,000 Sale consideration Indexed acquisition cost the of Mohan purchases the following assetsAmount invested Residential house at Bangalore November 7, 2008 8,00,000 Bonds of National Highways Authority of November 10, 2008 India for the purpose of section 54EC 3,50,000 Ascertain the amount of capital gain chargeable to tax for the assessment year 2009-10. Can he claim exemption under sections 54, 54EC and 54F? 3. (a) Ram is the Karta of a HUF, whose members derive income as given below: Particulars Amount (Rs.) (i) Income from Ram s own business 55,000 (ii) Mrs. Ram a an engineer draws salary 95,000 (iii) Minor son Ajay earning interest on fixed deposits with PQR Ltd. which were gifted to him by his uncle 25,000 (iv) Minor daughter Supriya gave a music contest and received remuneration 1,20,000 (v) Ajay got winnings from lottery (Gross) 2,50,000 Discuss the taxability of the above items. (b) Shyam has converted his private assets comprising of the following assets into his business assets on 01.4.2008: Particulars Asset of Original cost Date of Fair Market Value recorded acquisition Value as on in the books as 01.04.2008 on 01.04.2008 Building 25,00,000 01.04.2006 35,00,000 40,00,000 Land 20,00,000 01.04.2006 30,00,000 20,00,000 8,00,000 01.04.2007 3,00,000 8,00,000 Furniture Compute the cost of asset to be capitalized in the books of Shyam. 16 or 3. (a) Mr. Suresh and Mrs. Suresh are foreign citizens. During the previous year 2008-09, Mr. Suresh and Mrs. Suresh have the following income: Particulars Mr. Suresh Mrs. Suresh Amount Amount (Rs.) (Rs.) (i) Interest on company deposits in India 50,000 7,50,000 (ii) Income deemed to be received in India 35,000 60,000 (iii) Income from business situated in Nepal and controlled from India (40 percent is received in India and 60 per cent is received outside India) 70,000 42,000 (iv) Dividend declared by an Indian company 35,000 50,000 (v) Salary received in India for services rendered outside India 97,000 90,000 (vi) Interest received from the Government of India (received outside India) 60,000 21,000 (vii) Interest received from a foreign company outside India (on capital which is utilized outside India) 80,000 7,000 (viii) Income from a business in France, controlled from Mumbai 42,000 97,000 (ix) Royalty received in India from the Government of India 15,000 7,000 (x) Royalty received in India from a nonresident in respect of technology used by such person outside India 22,000 10,000 (xi) Agricultural income in Europe 58,000 76,000 From the above particulars ascertain the gross total income of Mr. Suresh and Mrs. Suresh for the assessment year 2009-10, if Mr. Suresh is a resident but not ordinarily resident in India and Mrs. Suresh is non - resident in India. (b) Dr. Umesh is an individual medical practitioner. His gross receipts from the medical practice for the year ending 31.03.2008 are Rs. 80 Lakhs. The gross receipts for the year ending 31.03.2009 are Rs. 9 Lakhs. During the financial year 2008 -09, he makes the following payments to a resident contractor for various activities: Contract Name of the Description No. Contractor Contract 17 of the Amount credited paid or in the books (Rs.) A Mr. P Medical equipment maintenance contract 50,000 B Mr. P Household personal equipment maintenance contract 2,70,000 C Mr. R Clinic furnishing contract 19,000 D Mr. R Clinic furnishing contract 18,000 E Mr. R Clinic furnishing contract 19,500 Examine the liability to deduct tax and the amount of TDS under section 194C(1) for the A.Y. 2009-10. (a) Discuss the applicability of TDS provisions under section 194 -I to service tax component of rental income. (b) Explain the c oncept of reverse mortgage and discuss its tax implications. (c) A non-resident is engaged in shipping business. The company also operates its ship in India. Explain how the income from the company s business operation in India is computed. (d) Write short note on payment of advance tax in case of capital gains/casual income. PART II 5. Answer any five of the following :Marks) (4 2=8 (a) Who is the person liable to pay service tax in relation to general insurance business? (b) Discuss the liabil ity of the service provider if he has not collected the service tax from the client. (c) Guru Kalishwar Study Centre (GKSC) is a commercial training centre which provides vocational training that impart skills to enable the trainee to seek employment or un dertake self-employment, directly after such training or coaching . Discuss whether GKSC is liable to pay service tax under the category c ommercial training or coaching services . (d) Hi-tech Ltd. is providing business auxiliary services. It has made an advance payment of service tax during the month of January, 2009 on its own and wants to adjust the same in the subsequent period. The company has appointed you as a consultant to know whether it can do so. Give your opinion. (e) State briefly whether the services provided by the Reserve Bank of India to any person, are taxable services under the Finance Act, 1994 as amended. 6.(a) (i) Prahlaad has paid the amount of service tax for the quarter ending June 30, 2009 by cheque. The date of presentation of cheque to the designated bank is July 5, 2009 and it is realised by the bank on July 7, 2009? What is the date of payment of service tax in this case? Whether any interest and penalty is attracted in this case? (4 Marks) (ii) Anand, a practicing chartered accountant, provides taxable audit services. He has started his practice in the mid year of 2008 . He wants to file the service tax return first time. Whether 18 the records including computerized data maintained by him shall be acceptable by the department? For how long such records shall be preserved by him? (4 Marks) (b) Answer any three: (3 3=9 Marks) (i) Explain the provisions relating to the transactions with associated enterprise. (ii) Explain the special provision for payment of service tax in case of an air travel agent. (iii) Discuss the liability of a sub-contractor to pay service tax. (iv) Briefly discuss, the liability of a service provider in relation to delivery of contents of a cinema in digitized encrypted form. 7. Answer any five of the following:Marks) (4 2=8 (a) Which is the most widely used variant of VAT and why? (b) Administrating VAT in India is a real big challenge. Examine the validity of the statement. (c) Who is eligible for composition scheme? (d) Illustrate any two purchases which are not eligible for input tax credit. (e) Explain whether units in SEZ and EOU units are required to pay input tax on purchases made by them? 8. (a) Calculate the VAT liability for the period Jan. 1, 200 9 to Jan. 31, 200 9 from the following particulars: Inputs worth Rs. 1,00,000 were purchased within the State. Rs. 2,00,000 worth of finished goods were sold within the State and Rs. 1,00,000 worth of goods were sold in the course of inter -State trade. VAT paid on procurement of ca pital goods worth Rs. 1,00,000 during the month was at 12.5%. If the input and output tax rate in the State are 12.5% and 4% respectively and the central sales tax rate is 3%, show the total tax liability under the State VAT law and under the Central Sales Tax Act. (8 Marks) (b) Answer any three: (3 3=9 Marks) (i) Distinguish between input tax and output tax. (ii) What are the special features of the composition scheme? (iii) Distinguish between compulsory and voluntary registration . (iv) Under what circumstances registration can be cancelled under VAT? 19

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Chartered Accountancy (ICAI India) : Integrated Professional Competence Course (IPCC) - Model / Mock Test Paper for Taxation Group I Paper 4

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