Paper 7- Direct Taxation – MTP CMA Intermediate Group 1

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Model Test Paper 7 CMA Inter. Syllabus 2016

Paper 7 – Direct Taxation

Full Marks :100                                                     Time allowed: 3 hours

Answer Question No. 1 which is compulsory and any FIVE from Question No 2 to 7.

Part-I

1. (a) Multiple Choice Questions:                                                                              10x 1 = 10

i. The employer contribution to superannuation fund shall be tax free perquisite upto____.

  1. 50,000
  2. 1,00,000
  3. 1,50,000
  4. 2,50,000

ii.Time limit for acquisition or construction of self occupied house property for claiming

deduction of interest is ______.

  1. 2 yrs
  2. 3 yrs
  3. 4 yrs
  4. 5 yrs

iii. Threshold limit for eligible business u/s 44AD is;

  1. 50 Lakh
  2. 1 crore
  3. Two crore
  4. 3 crore

iv. Threshold limit for getting accounts audit for a person carrying on profession is

  1. 25 Lakh
  2. 35 Lakh
  3. 50 Lakh
  4. None of the above

v. Quantum of deduction as specified u/s 80EE is _______.

  1. 5,000
  2. 15,000
  3. 50,000
  4. None of the above

vi. Threshold limit for TDS on commission or brokerage as per section 194H is_____.

  1. 5,000
  2. 10,000
  3. 15,000
  4. None of the above

vii. Income computation and Disclosure Scheme (ICDS) is effective from which assessment year.

  1. 2014-15
  2. 2015-16
  3. 2016-17
  4. 2017-18

viii. Form _______ is furnished with the prescribed authority for Equalization levy.

  1. Form 1
  2. Form I
  3. Form II
  4. None of the above

xi. ______ under section 156 is given for tax demand.

  1. Notice
  2. Opportunity of being heard
  3. Deferment of tax
  4. Nine of the above

x. Underground allowance is exempt upto the ____ p.m

  1. Rs. 500
  2. Rs. 600
  3. Rs. 800
  4. Rs. 1,000

(b) Match the following.                                                                      5×1=5

Column A   Column B
i Section 80 A Zero coupon bonds
ii ICDS VI B Deemed Income chargeable to tax
iii Section 80P C Compulsory filling of Loss return
iv Section 59 D The effect of changes in foreign

exchange rate.

v Section 2(48) E In respect of income of Co operative

Societies.

 

(c) State true or false with reasons:                                               5×1=5

i. An eligible assessee referred to in section 44AD shall pay the advance tax, to the extent of the whole amount of such advance tax during each financial year on or before the 31st March.

ii. Conveyance facility provided to the High court and Supreme Court is taxable.

iii. The assessee shall not be eligible for relief u/s 89 in case he has claimed exemption u/s 10 (10C).On the other had if he claims relief u/s 89, he cannot claim exemption u/s 10(10C).

iv. Any amount paid for brokerage or commission for arrangement of the loan will be allowed as deduction.

v. Securities transaction tax shall neither form part of the cost in case of purchase nor allowed as deduction as expenses of transfer in case of such equity shares and units.

        (d) Fill in the blanks                                                                     5×1=5

i. ________ depreciation is allowable on temporary wooden structure and tin shed as these are purely temporary erection.

ii. Where the assessee fails to furnish statement within the time prescribed u/s 167(1) & (3), he shall be liable to pay a penalty of _____ each day during which the failure continues.

iii. Provision of Equalization levy is levied by ________.

iv. As per section 270A the rate of penalty for underreporting of income is _______.

v. Income tax is a ______________ on the total income of a person earned during a period of one previous year.

Part-II

(Answer any Five Questions out of seven questions to be answered)

2(a) Distinguish between Capital Expenditure and Revenue expenditure.         7 Marks

(b) R has occupied two houses for his residential purposes, particulars of which are as follows:

Particulars Amount (Rs.) Amount (Rs.)
Municipal valuation 2,30,000 1,70,000
Fair rent 2,90,000 2,00,000
Standard rent under Rent Control Act 2,42,000 2,30,000

 

Municipal taxes paid 15% 15%
Fire insurance 2000 1000
Interest on capital borrowed for construction of house (` 20,00,000 is

borrowed @ 12% p.a. on 15.4.2015, construction is completed on

28.3.2016 and loan is yet to be repaid)

2000 Nil

 

Income of R from other sources is Rs. 5,40,000. Determine the taxable income for the assessment year 2017-18 on the assumption that he contributes Rs. 1,20,000 towards the public provident fund.                              8 Marks

3(a) X, a Director of ABC Pvt. Ltd. Pune is offered an employment with the following two alternative packages:                                 8 Marks

Particulars Amount (Rs.) Amount (Rs.)
Basic Pay per annum 1,38,000 1,38,000
Conveyance allowance for private use 9,000
Motor car facility for private use of X and his family members (valued) 9,000
Entertainment Allowance 18,000
Club facility (Valued) 18,000
Children Education Allowance (for 2 children) 9,700
Free Education Facility in an institution run by the employer for Children

(Valued)

9,700
Rent Free unfurnished house with fair rental value 30,000 30,000

 

Which of the two packages should X opt for on the assumption that employer and employee will contribute 20% of the basic pay towards an unrecognized provident fund. Assume the population of Pune is more than 25 Lakhs as per 2001 census.

3(b) The income of Mr Pankaj is given below please compute the Income from other sources for the A.Y 2017-18.                                 7 Marks

Particulars Amount (Rs.)
Director’s Fees 2,000
Income from agricultural land in Pakistan 5,000
Ground rent for land in Pathankot 10,000
Interest on Postal Savings Bank A/c 100
Interest on deposits with Industrial Finance Corporation of India 500
Dividend from a foreign company 700
Rent from sub-letting a house 26,250
Rent payable by Mr. Mohan for the sub-let house 12,000
Other expenses on sub-let-house 1,000
Winnings from horse-race (Gross) 12,300
Interest on Securities (gross) 4,000

 

4(a) A sold on 31.10.2016 an agricultural land, which he has been using for agricultural purposes for several years, for ` 28,00,000. He acquired that land in 1978 for ` 1,00,000. The market value of such land as on 1.4.1981 was ` 2,00,000. He purchased rural agricultural land for ` 3,50,000 on 25.2.2017 which was sold for ` 5,00,000 on 15.5.2017. Further, A sum of ` 5,50,000 was invested by him purchase of residential property on 25.5.2017. He owned only one house property before this date. Compute capital gain for assessment year 2017-18 and assessment year 2018-19. 8 Marks

4(b) X who is a person with severe disability submits you the following Information. Compute: (a) the taxable income (b) the net tax payable by X for assessment year 2017-18:                                                               7 Marks

Particulars Amount (Rs.)
Salary (per month) 3,000
Interest on Government securities 2,000
Interest on Saving Bank Deposits 69,000
Long-term capital gains 2,90,000
He deposited ` 10,000 in his Public Provident Fund during the previous year.

 

5(a) Satish is practicing as a Chartered Accountant in Delhi. He deposits all receipts in his bank account and pays expenses by cheque. Following is the analysis of his bank account for the year ending 31.3.2017:                                    8 Marks

Particulars Amount (Rs.) Particulars Amount (Rs.)
Balance b/f 7,250 Salaries 10,14,000
Professional Receipts 31,40,000 Rent of Chamber 6,84,500
Dividend from UTI 8,000 Audit fee 23,000
Rent from residential HP 72,000 Telephone Expenses 51,000
Share of Income in HUF 6,750 Misc. Office Expenses 55,500
Motor car Expense 8,000
Advance Income Tax 40,000
Personal Expenses 45,500
Property expenditures

Repairs        1,500

Collection Chg  2,000

Insurance      1,500

Taxes          5,000

10,000
By Balance c/d 13,02,500
32,34,000 32,34,000

 

Other Information:

  1. He stays in his house the municipal value of which is Rs. 8,000. The expenses which have been included in the above account in respect of this house: Insurance premium and Municipal tax are Rs.500 & Rs. 2,400.
  1. Written down value of the car as on 1st April 2016 was 6 Lakh.

Compute the gross total income of satish assuming that he does not opt for presumptive income under section 44ADA.

5(b) From the following details, compute the Gross Total Income of A for the assessment year 2017-18:                                           7 Marks

Particulars Amount (Rs.)
Taxable income from salary 80,000
Income from house property House ‘A’ (let out)

House ‘B’ (self-occupied, interest on borrowed money)

(95,000)

(9,000)

Short-term capital gain 12,000
Loss from long-term assets 25,000
Interest on securities (Gross) 10,000

 

6(a) Compute the total income of Mr. X, a lecturer of a college affiliated to Madras University, for the assessment year 2017-18 on the basis of the following particulars:                                                                                                                                                    10 Marks

Particulars Amount (Rs.)
Salary @ `50,000 per month 6,00,000
Dearness allowance @ 50% of salary 3,00,000
Warden ship allowance @ ` 1,500 per month 18,000
Examiner ship remuneration from University 25,400
Royalty from books of artistic nature 2,73,000
Income from card games 6,400
Winnings from lottery (Gross) 20,000
Expenses on lottery tickets 10,000
Interest on saving bank deposit 67,000
Deposit in recognised provident fund 1,22,000
Life insurance premium paid 30,000

 

6(b) During the financial year 2016-17 a New Delhi-based charitable organisation sold a house property for Rs. 50 lakh and earned a long-term capital gain of Rs. 20 lakhs. In the same year it bought another house property far Rs. 40lakh. Find out the taxable capital gain.                                                             5 Marks

7(a) Raj Industries Ltd. furnishes you the following information for the year ended 31.03.2017                                                                8 Marks

Particulars Amount (Rs.)
Net Profit as per Statement of Profit and Loss 16,00,000
Provision for warranties to customers Statement of PL A/c 2,00,000
Wealth tax paid debited to Statement of PL A/c 30,000
Agricultural income credited to Statement of PL A/c 1,00,000
Deferred tax credited to Statement of PL A/c 4,00,000
The company has as per books: Brought forward depreciation of Rs. 2,50,000 and Business loss of Rs.3,00,000

 

Compute “book profit” under section 115JB for the assessment year 2017-18.

7(b) State the due date of installments of advance tax payable by all assessee other than assessee covered u/s 44AD.                               7 Marks

8. Short Notes (Answer any three questions out of four)                       (5 x 3=15 Marks)

A. Verification of return
B. Penalty u/s 271AAB
C. ICDS IX on “Borrowing Cost”
D. Penalty for failure to deduct or pay Equalization levy