CA INTERMEDIATE

SUBJECT- TAXATION
Test Code – IJP 2516
(Date :)
(Marks - 100)
TOPIC : Full Course paper

(Time : 3 hours)

SECTION A: INCOME TAX LAW - 50 MARKS

PART A – MCQ PORTION (15 MARKS)

Mr. Akash (aged 47 years) is a CEO of BAC Enterprises (P) Ltd. During the P.Y.2023 -
24, he has earned the following income -

 Salary of 45 lakhs
 long-term capital gain on sale of listed equity shares (STT paid) amounting
to 6,54,000
 dividend of 12,00,000 from shares of Indian companies
 interest on saving bank account with SBI of 16,000
 interest on fixed deposits with BOB of 45,000

Mr. Akash has made the following payments towards medical insurance premium
for health policies taken for his family members:

 Medical premium for his spouse aged 43 years: 13,500 (by cheque)
 Medical premium for his mother aged 65 years: 26,670 (by cheque)
 Preventive health check-up of 5,500 each for his wife and mother in cash.
Mr. Akash also incurred medical expenses, by credit card, of 17,000 for the treatment
of his mother and of 27,000 for his father who is 67 years old.

He has multiple life insurance policies. The details of such policies are given hereunder:

Particulars X Y Z A B
(Term
insurance
policy)
Date of issue 1.4.2017 1.4.2023 1.4.2025 1.4.2024 1.3.2023
Annual premium 40,000 3,00,000 2,00,000 2,50,000 80,000
(excluding GST)
GST@18% 7,200 54,000 36,000 45,000 14,400
Total premium 47,200 3,54,000 2,36,000 2,95,000 94,400
Date of maturity 31.3.2026 31.3.2032 31.3.2034 31.3.2033 28.3.2056

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Consideration received 7,00,000 36,00,000 28,00,000 30,00,000 -
on maturity (including
bonus)
Sum assured 5,00,000 33,00,000 25,00,000 27,00,000 2,00,00,000

On the basis of the facts given above, choose the most appropriate answer to

Q.1 to Q.5 below, based on the provisions of the Income-tax Act, 1961 -

1. Which are the life insurance policies in respect of which Mr. Akash would be
eligible for exemption under section 10(10D) in respect of maturity proceeds?
Choose the option most beneficial to Mr. Akash.
(a) X, Y and Z
(b) X and Y
(c) X, Z and A
(d) Y and Z
2. What would be your answer to MCQ 1, if Mr. Akash surrendered LIC A in A.Y. 2026-
27 and claimed exemption under section 10(10D) in respect of such LIC? This
information is only for the purpose of this MCQ.
(a) X, Y and Z
(b) X and Y
(c) X, Z and A
(d) Y and Z
3. What would be the amount of deduction available to Mr. Akash under Chapter VI-A
for the A.Y. 2024-25 if he has exercised the option to shift out of the default tax
regime?
(a) 82,170
(b) 78,500
(c) 2,28,500
(d) 2,32,170
4. What is Mr. Akash’s tax liability for A.Y.2024-25 under the default tax regime
under section 115BAC?
(a) 16,97,350
(b) 16,80,190
(c) 18,41,270
(d) 18,84,170
5. What is Mr. Akash’s tax liability for A.Y.2024-25 if he has exercised the option to
shift out of the default tax regime?
(a) 17,30,470
(b) 18,93,720
(c) 17,29,210
(d) 17,27,500

6. Mr. Anil started business of manufacturing tables in February 2024. He follows

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 mercantile system of accounting. He purchased wood from Mr. A, Mr. B and
Mr. C. The details of purchases and payment made are as under:

Date of Purchase Payment due as per Date of

purchase amount written agreement, if payment
(Rs.) any

Mr. A, a micro 15.02.2024 5 lakhs Within 30 days from 29.03.2024

enterprise the date of purchase
Mr. B, a small 17.03.2024 7 lakhs No written agreement 15.04.2024
enterprise
Mr. A, a 25.03.2024 8 lakhs Within 40 days from 30.11.2024
medium the date of purchase
enterprise
How much deduction would be available to Mr. Anil in A.Y. 2024-25 in respect of
purchases made during the P.Y. 2023-24 while computing business income?
(a) Nil
(b) 5 lakhs
(c) 13 lakhs
(d) 12 lakhs
7. Mr. Sunil took an education loan of 8 lakhs on 1.7.2023 from State Bank of India,
Mumbai, for his son’s MBA from University of Oxford, UK and remitted the said
amount through the same bank, which is an authorised dealer, under the Liberalised
Remittance Scheme of RBI (LRS). He, further, remitted 2 lakhs on 15.10.2023 to his
son for his personal expenditure, out of his personal savings, through Bank of India,
Mumbai which is also an authorised dealer, under LRS. Mr. Sunil also remitted 6 lakhs
on 28.3.2024, out of his personal savings, under LRS through Union Bank of India,
Mumbai, for his sister’s medical treatment in London.

Mr. Sunil has furnished undertaking containing the details of earlier remittance to
Bank of India and Union Bank of India.

What is the amount of tax to be collected from Mr. Sunil in respect of the
remittance of amounts to his son and sister?

(a) [email protected]% of 1 lakh in respect of remittance for son’s education; @5% of 2

lakhs in respect of remittance for son’s personal expenditure and 5% of 6
lakhs in respect of remittance for sister’s medical treatment.
(b) [email protected]% of 1 lakh in respect of remittance for son’s education; @20% of 2
lakhs in respect of remittance for son’s personal expenditure and 5% of 6
lakhs in respect of remittance for sister’s medical treatment.
(c) [email protected]% of 1 lakh in respect of remittance for son’s education; no TCS in
respect of remittance for son’s personal expenditure and sister’s medical
treatment since each transaction is of less than 7 lakhs.
(d) [email protected]% of 1 lakh in respect of remittance for son’s education; @5% of Rs. 1
lakh in respect of remittance for sister’s medical treatment.
8. Mr. Garg, aged 45 years and a resident in India, is having a total income of
5,70,000 comprising of long term capital gains taxable under section 112 of
70,000, long term capital gains taxable under section 112A of Rs. 1,50,000, short

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 term capital gains taxable under section 111A of Rs. 1,00,000 and other income of
2,50,000. Compute his tax liability for A.Y. 2024-25 under the default tax regime
under section 115BAC.
(a) Nil
(b) 5,200
(c) 9,360
(d) 19,760

PART B - Descriptive part (35 marks)

Q1 is compulsory and Answers any 2 from remaining 3 questions

QUESTION : 1(A)
Mr. Sahil, resident Indian aged 40 years, a Manufacturer at Chennai, gives the
following Manufacturing, Trading and Profit & Loss Account for the year ended
31.03.2024.
Manufacturing, Trading and Profit & Loss Account
for the year ended 31.03.2024
Particulars Rs. Particulars Rs.
To Opening Stock 71,000 By Sales 43,50,000
To Purchase of Raw By Closing Stock 2,00,000
Materials 17,20,500
To Manufacturing
Wages & Expenses 5,80,500
To Gross Profit 21,78,000
Total 45,50,000 Total 45,50,000
To Administrative By Gross Profit 21,78,000
Charges 2,90,000 By Dividend From
To SGST Penalty Paid Domestic Companies 15,000
(It is not compensatory nature) 7,000 By Winning from
To GST Paid 1,10,000 Lotteries (Net of TDS) 10,500
To General Expenses 55,000 (TDS 4,500)
To Miscellaneous Expenses 1,50,500 By Profit on Sale of
To Loss on Sale of Shares 20,000 Shares 45,000
To Interest to Bank (on Machinery 60,000
term loan)
To Depreciation 2,00,000
To Net Profit 13,56,000
Total 22,48,500 Total 22,48,500

Following are the further information relating to Financial Year 2023 -2024:

(i) Administrative Charges include 46,000 paid as commission to brother of Assessee.

The Commission amount at the market rate in 36,000.
(ii) The assessee paid 33,000 in cash to a Transport Carrier on 26.12.2023. This amount is
included in Manufacturing Expenses. (Assume that the provisions relating to TDS are
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 not applicable on this payment).
(iii) A Sum of 4,000 per month was paid as salary to a staff throughout the year and this
has not been recorded in books of account.
(iv) Bank Term Loan Interest actually paid upto 31.03.2024 was 20,000 and the balance
was paid in October 2024.
(v) Miscellaneous Expenses include 10,000 contributed to Prime Minister's Relief Fund.
(vi) Loss on Sale of Shares represents shares sold within a period of 6 months from the
date of purchase.
(vii) Profit on Sale of Shares represents shares held for 2 years & Securities Transaction Tax
was paid on it.
(viii) Housing Loan Principal repaid during the year was 50,000 and it relates to residential
property occupied by him. Interest on Housing Loan was 2,60,000. Housing Loan
was taken from Canara Bank. (Value of house property is 45 Lakhs, loan value 25 Lakhs
and sanction date 31.03.2017).
These amounts were not dealt with in the Profit and Loss Account given above.
(Assume this housing loan is eligible for 80EE deduction).

(ix) Deprecation allowable under the Act to be computed on the basis of following
information:

Plant & Machinery (Depreciation Rate @15%) Rs.

Opening WDV (as on 01.04.2023) 12,00,000
Additions During the year (Used for more than 180 Days) 2,00,000
Total Additions during the year 4,00,000
Note: Ignore Additional Depreciation u/s 32(1)(iia)
Compute the total income and tax liability of Mr. Sahil for the A.Y. 2024 -25 if he has
exercised the option of shifting out of the default tax regime provided under Section
115BAC(1A).

(15 MARKS)

QUESTION : 2
Mrs. Sarika, an Indian citizen, is in employment with an overseas company located in UAE.
She is not liable to tax in UAE. During the P.Y. 2023-24, she comes to India for 121 days. She
was in India for 50 days, 100 days, 76 days and 145 days in the financial years 2019-20, 2020-
21, 2021-22 and 2022-23, respectively. Her annual income for the previous year 2023-24 is as
follows:
Particulars Amount (Rs.)
(i) Salary accrued or arisen in UAE 15,00,000
(ii) Income accrued and arisen in India 2,00,000
(iii) Income deemed to be accrued and arisen in India 7,00,000
(iv) Income arising and received in UAE, from a 5,00,000
business set up in India
(v) Life Insurance premium paid by cheque in India 1,00,000
Mrs. Sarika has opted out of the default tax regime under section 115BAC. From the
information given above,
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 (i) You are required to determine the residential status and total income of Mrs. Sarika
for the A.Y. 2024-25.
(ii) What would be your answer if income arising and received in UAE, from a
business set up in India is Rs.10,00,000 instead of Rs.5,00,000?
(iii) In continuation to point (ii), what would be your answer if Mrs. Sarika comes to India
in P.Y. 2022-23 for 45 days instead of 145 days?
(10 MARKS)

QUESTION : 3(A)
Ms. Priyanka, General Manager of ABC Ltd., Mumbai, furnishes the following particulars for
the financial year 2023-24:

(i) Salary 40,000 per month

(ii) Value of medical facility in a hospital maintained by the company Rs. 10,000.
(iii) Rent free accommodation owned by the company
(iv) Housing loan of Rs. 7,00,000 given on 01.04.2023 at the interest rate of 6% p.a. (No
repayment made during the year). The rate of interest charged by State Bank of India
(SBI) as on 01.04.2023 in respect of housing loan is 9.5%.
(v) A dining table was provided to Ms. Priyanka at her residence. This was purchased on
1.6.2020 for Rs. 60,000 and sold to Ms. Priyanka on 1.5.2023 for Rs.30,000.
(vi) Personal purchases through credit card provided by the company amounting to Rs.
10,000 was paid by the company. No part of the amount was recovered from Ms.
Priyanka.
(vii) A Maruti Suzuki car which was purchased by the company on 16.7.2021 for Rs.
2,50,000 was sold to the assessee on 14.7.2023for Rs.1,60,000.
Other income received by the assessee during the previous year 2023-24:

(a) Interest on Fixed Deposits with a company 7,000

(b) Income from specified mutual fund 3,000
(c) Interest on bank fixed deposits of a minormarried daughter 4,000
(viii) Deposit in PPF Account made during the year 2023-24 Rs.40,000
Compute the gross total income of Ms. Priyanka for the Assessment year 2024-25 if she
exercised the option to shift out of the default tax regime under section 115BAC.

(6 MARKS)

QUESTION : 3(B)
M/s. Ravi & sons, a partnership firm consisting of two partners, reports a net profit of
Rs. 7,50,000 before deduction of the following items:
 Salary of Rs. 25,000 each per month payable to two working partners of the firm (as
authorized by the deed of partnership)
 Depreciation on plant and machinery under section 32 is Rs. 2,50,000

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 Interest on capital 15% per annum (as per the deed of partnership).
The amount of capital eligible for interest is Rs. 6,00,000 for both partners
 Carry forward loss of P.Y. 2022-23 - 50,000 Compute for A.Y. 2024-25:
(i) Book-profit of the firm under section 40(b) of the Income-tax Act, 1961.
(ii) Amount of salary that can be paid to working partners as per section 40(b).
(10 MARKS)

QUESTION : 4(A)

Mr. Mohit submits the following information for the previous year 2023 - 24:

(Amount in Rs.)

(i) Income from salary 6,50,000

(ii) Income from House-I 55,000

(iii) Loss from House-II (self-occupied property) 1,25,000

(iv) Loss from House-III 190,000

(v) Loss from leather business 68,000

(vi) Profit from cloth business 1,70,000

(vii) Short term capital loss in equity-oriented funds on which 35,000

STT was paid

(viii) Income from crossword puzzles 12,000

(ix) Dividend from foreign company (Gross) 8,500

(x) Loss on owning and maintenance of race horses 7,500

(xi) Income from owning and maintenance of race bulls 9,000

Compute the gross total income and losses to be carried forward of Mr. Mohit for
assessment year 2024-25 under regular provisions of the Act. Mr. Mohit has filed his return
of income on 25.07.2024.
(6 MARKS)

QUESTION : 4(B)
What are the consequences of failure to intimate Aadhar Number. Is there any fee for
such default?
(4 MARKS)
OR
(B) (i) What is the fee for default in furnishing return of income u/s 234F?
(ii) To whom the provisions of section 139AA relating to quoting of Aadhar Number
do not apply?
(4 MARKS)

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 SECTION B: GST - 50 marks

PART A – MCQ PORTION (15 MARKS)

CASE SCENARIO

XYZ Private Limited is a mid-sized company, registered in Delhi, dealing in the manufacturing
and distribution of electronic goods in India. The company has been operating for over a
decade and has a robust supply chain network across the Country. The Company needs to
ensure compliance with various GST regulations related to return filing, registration, and
payment of tax.

The company is exploring to expand its sales channel in India through distributors in each
State. In view of the same, the company has undertaken following activities in the month of
June.

(a) Organized a distributor conclave in Udaipur, Rajasthan, where the distributors from
Rajasthan, Gujarat and Madhya Pradesh participated in the conclave held in
Rajasthan. The total cost of hotel accommodation was 25 lakh, which was paid by
the Delhi office to the Hotel located in Rajasthan.
(b) The company purchased certain gift items for distribution to the participants in the
conclave. The gift items were purchased from the vendor located in Ludhiana, Punjab
and were delivered to the hotel in Udaipur, Rajasthan for distribution to the
participants of the conclave. The cost of such gift items was 25 lakh. However, the
value of individual gift items was restricted to 75,000.
(c) The company purchased an insurance policy for its employees travelling for the
conclave and the premium for such insurance policy was Rs. 1 lakh which was paid by
the company. There is no requirement under any law requiring such insurance policy.
(d) The company took on rent, a new warehouse near its factory in Delhi for storage and
dispatch of goods. The goods are being transported between the factory and new
warehouse in non-motorized cart. The value of such goods transported in single
trip is up to 5 lakh. Further, the rent of warehouse is Rs. 18 lakh for the initial 11
months and the same shall be revised to 21 lakh after expiry of initial 11 months.
The rate of tax applicable is 18% IGST, 9% CGST and SGST each unless otherwise
specified.
On the basis of the facts given above, choose the most appropriate answer to Q.1 to
Q.5 below -

1. Which of the following statements is correct under GST law in relation to the hotel
accommodation service received by the Company?
(a) The hotel shall charge CGST and SGST in the invoice issued to theCompany.
(b) The Hotel shall charge IGST in the invoice issued to the Company
(c) The Hotel shall issue a bill of supply to the Company.
(d) The Hotel shall charge CGST and SGST to the extent the charges are related to
participants of Rajasthan and IGST to the extent charges are related to the
participants of Gujarat and Madhya Pradesh, on the invoice issued to the
Company.
2. What shall be the place of supply in relation to the gift items purchased by XYZ
Private Limited?
(a) Rajasthan i.e. the location where the goods were received
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 (b) Delhi i.e. the principal place of business of the Company
(c) Punjab i.e. the location from where the goods were dispatched
(d) Permanent location of participants receiving the gifts
3. Which of the following statements is true in relation to the gift items and the
insurance policy purchased by the Company?
(a) The company is not eligible to avail the input tax credit in relation to both,
gift items and the insurance policy.
(b) The company is eligible to avail the input tax credit related to gifts valuing less
than Rs. 50,000.
(c) The company is eligible to avail the input tax credit only on insurance policy
as the same is provided to employees i.e. related person of the Company.
(d) There is no restriction in availment of input tax credit related to gifts and
insurance policy.
4. Which of the following statements is correct in relation to the issuance of e-way
bill for transportation of goods between factory and warehouse in non-motorized
cart?
(a) E-way bill is required to be issued by the company for each instance of
transportation of goods irrespective of the consignment value of goods
(b) E-way bill is not required to be issued in the given case irrespective of the
consignment value of the goods.
(c) E-way bill is required to be issued for goods of the consignment value above
Rs. 50,000
(d) E-way bill is required to be issued for goods of the consignment value above
Rs. 1,00,000
5. Which of the following statements is most appropriate in relation to the new
warehouse taken on rent by the Company?
(a) Separate GST registration is not required mandatorily.
(b) Separate GST registration is required mandatorily.
(c) GST registration is required as a casual taxable person for the term of rent
agreement.
(d) Separate GST registration is required once the rent is more than Rs. 20
lakh per annum.

PART B - Descriptive part (35 marks)

Q1 is compulsory and Answers any 2 from remaining 3 questions

QUESTION : 1

Craftmodel Limited, a registered dealer in Patna (Bihar), is engaged in various types of

supplies. It is not engaged in renting of cars business. The company provided the
following details for the month of January,2024.

9
 Sl. Particulars Amount in Rs.
No.
(i) Outward supply of goods made during the month to As given in
various non-related persons: particulars
column
Particulars Market Transaction
value Value
(Rs.) (Rs.)
a. in the State of 3,00,000 4,00,000
Bihar (Intra-State)
b. to other States 7,50,000 6,00,000
(Inter-State)
(ii) The company pledged its 5% equity shares to the merchant
banker for the purpose of proposed initial public offer.
(iii) Stock transfer of goods worth Rs. 58,000 without
consideration to its branch at Gaya (Bihar). Branch has been
declared as an additional place of business in the
registration certificate.
(iv) Intra-State inward supply of various services for use in the 12,00,000
course or furtherance of business (30 invoices). Out of 30
invoices, details of 10 invoices amounting to Rs. 2,50,000
were not furnished by the suppliers in their GSTR-1s and
resultantly, were not reflected in Craftmodel Limited’s
GSTR-2B.
(v) Outward supply of services of milling of paddy into rice 2,00,000
(Intra-State)
(vi) Outward supply of services of giving trucks on hire to a 1,50,000
Governmental authority (Intra-State)
(vii) Amount paid to IIM Ahmedabad, Gujarat for providing 15 5,00,000
days’ management training to 10 managers from 10th
January. The IIM provided Participation Certificates at the
end of the training program.
(viii) Purchased air tickets for its employees from Patna to
Guwahati, Assam airport in economy
class. Total fare was Rs. 1,00,000, out of which basic fare
was Rs. 80,000.
Additional Information:

(a) All the amounts given above are exclusive of taxes, wherever applicable.
(b) During the course of arranging and filing documents, the Accountant of Craftmodel
Limited observed that an invoice for 30,000 (excluding tax) dated 2nd December, 2023
was omitted to be recorded in the books of accounts and no payment was made against
the same till the end of January, 2024. This invoice was issued by Mr. Rahuketu of
Patna, from whom Craftmodel Limited had taken cars on rental basis. Invoice
included cost of fuel also.
(c) Regarding pledging of shares, the face value of shares is 5,00,000. The
market value of shares is Rs. 8,00,000.
(d) Rate of GST applicable on various supplies are as follows:
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 Nature of supply CGST SGST IGST

Car rental service 2.5% 2.5% 5%

Transportation of passengers by air 2.5% 2.5% 5%

All other inward and outward supplies 9% 9% 18%

(e) No opening balance of input tax credit exists in the beginning of the relevant tax
period.
(f) Subject to the information given above, conditions necessary for claiming ITC were
complied with.
You are required to calculate the amount of net GST liability payable in cash by
Craftmodel Limited for the month of January, 2024.

(15 MARKS)

QUESTION : 2(A)

From the following information provided by M/s Sasta Bazaar. Determine the time of
supply for the purpose of payment of GST:

(i) It issued coupon on 20.06.2023, worth 2,000 redeemable against purchase of specific
plastic items. This coupon was redeemed on 31.07.2023.
(ii) It issued coupon on 01.08.2023 worth 3,000 which is redeemable against purchase of
any item. This coupon was redeemed on 18.08.2023.
(iii) It received interest of 10,000 for late payment from a customer on 11.11.2023 for
supply of goods which was originally made on 24.06.2023.
(5 MARKS)
QUESTION : 2(B)
With reference to GST law, Determine the place of supply with reasons in the following
independent circumstances:-

(i) Miss Kanika of Kolkata (West Bengal) visited to Jodhpur Law University (Rajasthan)
and paid her college fees by purchasing a demand draft from a bank located in the
University campus. Miss Kanika did not have any account with the bank.
(ii) Mizu Machine Ltd., registered in the State of Andhra Pradesh, supplied a machinery to
Keyan Wind Farms Ltd., registered in the State of Karnataka. However, this machinery
was assembled and installed at the wind mill of Keyan Wind Farms Ltd., which was
located in the State of Tamilnadu.
(5 MARKS)
QUESTION : 3(A)

Sheen Ltd. a registered supplier wishes to transport cargo by road between two cities
situated at a distance of 372 kilometres. Calculate the validity period of e-way bill under
rule 138(10) of the CGST Rules, 2017 for transport of the said cargo, if it is over
dimensional cargo or otherwise.

(5 MARKS)
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QUESTION : 3(B)

Apex Cinemas, a registered person engaged in making supply of services by way of

admission to exhibition of cinematograph films in multiplex screens was issuing
consolidated tax invoice for supplies at the close of each day in terms of section 31(3)(b)
of the CGST Act, 2017 read with fourth proviso to rule 46 of the CGST Rules, 2017.

During the month of February, 2024, the Department raised objection for this practice and
asked to issue separate tax invoices for each ticket.

Advise Apex Cinemas for the procedure to be followed in this regard.

(5 MARKS)

QUESTION : 4(A)
Discuss briefly the place of supply of goods purchased over the counter in one State and
transported to another State by the buyer.
(5 MARKS)
OR

What would be the place of supply of services provided by an event management company
for organizing a sporting event for a Sports Federation which is held in multiple States?
(5 MARKS)
QUESTION: 4(B)
Discuss whether the amount available in the electronic credit ledger can be used for making
payment of any tax under the GST Laws?
(5 MARKS)

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