19002153 Reg. No.................................

19002153 Name.....................................

M.Com. DEGREE (C.S.S.) EXAMINATION, NOVEMBER 2019

Third Semester
Faculty of Commerce
DTO 3C 12—DIRECT TAXES—LAW AND PRACTICE
(2012—2018 Admissions)

Time : Three Hours Maximum Weight : 30

NPC permitted.
Section A
Answer any five questions.
Weight 1 each.
1. Income tax is charged on the income of the P.Y. What are the exemptions to this rule ?
2. What is meant by perquisites ? Give five examples of tax free perquisites.
3. Explain the computation of taxable amount of gratuity under the head salaries.
4. Define Annual Value.
5. What is unabsorbed depreciation ? How will you treat it for tax purposes ?
6. Mr. George a resident of Agra receives Rs. 1,92,000 as basic salary during the year 2015–16. In
addition, he gets Rs. 19,200 per annum as dearness allowance forming part of pay 7 % commission
on sales made by him (Sales made by Mr. George during the year 2015–16 is Rs. 86,000) and
Rs. 24,000 per annum as HRA. He pays Rs. 21,500 p.a. as rent. Compute the HRA exempt from
tax.
7. Particulars of income of Sri. Anil who is resident but not ordinarily resident for the A.Y. 2016–17
are given below :
(a) Profit from business in U.S.A. received in India Rs. 1,00,000.
(b) Share of profit from a firm in India Rs. 50,000.
(c) Income from house property in U.S.A., deposited there Rs. 60,000.
(d) Income from agriculture in Sri Lanka received in India Rs. 40,000.
(e) Profit from business in U.K. which is controlled from India but deposited in a Bank a/c in
U.K. Rs. 70,000.
Calculate Gross Total Income of Sri Anil.
8. Calculate tax liability of an individual resident in India for the A.Y. 2016–17. Total Income
Rs. 3,00,000, Agricultural Income Rs. 15,000.
(5 × 1 = 5)
Turn over
1/6
 19002153

Section B
Answer any five questions.
Weight 2 each.
9. Explain clearly four types of securities under the head income from other sources.
10. What do you understand by aggregation of income ? Explain.
11. Mr. Y was employed as a fireman in a factory since 1st April, 1983. He is covered under the
payment of Gratuity Act. He retired from service on 1st August 2015. His pay at the time of
retirement was Rs. 8,000 per month. His annual increment of Rs. 200 falls due on 1st April every
year. He was getting dearness allowance at Rs. 800 p.m. for the last several years. He contributes
14 % of basic pay to RPF to which the factory also contributes an equal amount. He was also
getting HRA at Rs. 2,000 per month, althrough he is living in his wifes house for which he does not
pay any rent. Fair rental value of the home is Rs. 800 per month. This house belonged to Mr. Y but
he had transferred it to his wife without adequate considerations. He received Rs. 1,90,000 for
gratuity and Rs. 2,00,000 from provident fund. He received Rs. 28,000 pension during the P.Y.
2015–16. Assuming that salary in due on the last day of the month. Compute taxable salary for
the A.Y. 2016–17.
12. Mr. A let out a house to Mr. B on 1-4-08 @ Rs. 3,000 p.m. for 5 years. After the expiry of 5 years.
Mr. B refused to vacate the house. Hence Mr. A filed a suit to get the house vacated and incurred
expenses Rs. 1,000 in this connection. Later on Mr. A agreed to review the tenancy for 5 years
w.e.f. 1-4-2013 if B pays him rent @ Rs. 4,000 p.m. B agreed to it and paid the arrears of rent from
1-4-13 to 31-3-15 on 1-6-15. Mr. A paid the following amount during the previous year.
House tax Rs. 6,000, Inassurance premium Rs. 800, Ground rent Rs. 500. Find out income from
house property for the A.Y. 2016–17.
13. Mr. X gives you the following particulars from his accounts for the year ended on 31–03–2016 :
Net Profit ... 2,00,000
Contributions to unrecognised provident fund ... 40,000
Provision for income tax ... 50,000
Advertisement expenses including advertisement
for Rs. 4,000 in a souvenir of a political party ... 20,000
Provision for excise duty ... 30,000
Holiday home expenses ... 35,000
Insurance premium for the health of employees paid by cheque ... 10,000
Penalty imposed by customs authorities for breach of law ... 25,000
Interest for late payment of VAT ... 1,000
Compute income from business.
2/6
 19002153

14. In April, 1994, S subscribed to the first issue of equity share capital of a Public Limited Company
(face value of each share was Rs. 100) to the extent of Rs. 25,000. In 1997, the company converted
the face value of its share from Rs. 100 to Rs. 10 each. Half of the holdings of the shares held by S
was sold by him in October, 2015 for Rs. 60,000. S had to pay a brokerage of 2 % on sale, (CII for
1994–95 and 2015–16 may be taken as 259 and 1081 respectively). What is the nature of gains
realised and compute the same.

15. Mr. P’s investments during the year ended 31st March, 2016 consisted of the following :

Rs. 17,500, 10 % Government Securities.

Rs. 10,000, 12% Agra Municipal Bonds

Rs. 20,000, 9 % Bombay Port Trust Bonds.

7 % Government Bonds Rs. 18,000.

Rs. 10,000, 9 % Securities issued by a foreign Government. Interest credited to Sukanya

Samriddhi A/c Rs. 3,000. He paid Rs. 60 as commission for collecting the interest taxable
under the head interest on securities and Rs. 1,200 as interest on loan which he had
taken for the purpose of purchasing the Bombay Port Trust Bonds. Find out income from
other sources.

16. Sri. Ram was assessed to tax in the A.Y. 2015–16 for their first year of operation and the assessment
order showed that the assessee had suffered a loss of Rs. 6,000 and was further entitled to
depreciation Rs. 15,000, and capital expenditure on Scientific research Rs. 3,200. During the P.Y.
2015–16 the assessee had to a taxable profit from its operations amounting to Rs. 10,000 before
charging depreciation Rs. 5,200. The other income during the year amounted to Rs. 4,600. Determine
the taxable income of the assessee for the A.Y. 2016–17.

(5 × 2 = 10)

Section C

Answer any three questions.

Weight 5 each.

17. Discuss the provisions of IT Act regarding deduction to made in computing the total income of an
individual in respect of payments.

18. From the following information compute the gross tax liability of Mr. Ram for the A.Y. 16–17 :

1 Salary for 12 months 5,44,000.

2 Interest on listed securities (gross) 3,000

Turn over

3/6
 19002153

3 Interest on Government Securities 5,000.

4 Interest paid on loan taken to purchase Government Securities Rs. 1,000.
5 Income from house property (Computed) Rs. 30,000.
6 LTCG 70,000.
7 Short term capital loss Rs. 10,000.
8 Dividend from an Indian Co Rs. 4,000.
9 Income from mutual fund (gross) Rs. 7,000.
10 Personal agricultural income Rs. 20,000.
11 B/fd agricultural loss Rs. 25,000.
12 Paid insurance premium Rs. 13,000 on a policy taken after 1-4-12 of Rs. 1,20,000.
13 Paid donations to National Childrens Fund Rs. 5,000.
14 Contribution to unrecoginsed provident fund Rs. 3,000.
15 Deposited in PPF Rs. 30,000.
19. Dr. Varma is a teacher. Following informations relate for the A.Y. 2016–17 :
Basic salary Rs. 12,000 p.m. DA – 45 % of salary wardenship allowance Rs. 400 p.m., Examinership
remuneration Rs. 3,000, Royalty from books for schools (computed) Rs. 22,500, Gross interest on
Government Securities Rs. 5,000 ; Interest on tax-free debentures (gross) Rs. 3,000. Debentures
are issued by a public sector company and are notified. Dividend on shares of a foreign company
Rs. 2,500, Income from house property Rs. 1,10,000 (computed) contribution to statutory PF
Rs. 5,000, contribution to PPF Rs. 12,000, Premium paid by cheque on medical insurance policy on
health of dependent father Rs. 3,000. Donations to an approved charitable institution Rs. 10,000.
Compute his total income.
20. Sri. Abdu owns 3 residential houses and a bungalow. The bungalow is used for his own residence
and three houses are let out. The rental value of the let out house is Rs. 75,000 and that of the
bungalow is Rs. 30,000.
The expenses of the let out properties are :
(a) Municipal taxes paid Rs. 15,000.
(b) Interest on mortgage (Money not utilised for house property) Rs. 2,000.
(c) Collection charges for recovery of rent Rs. 300.
(d) Repairs and alterations Rs. 4,000.
One of the tenants is in arrears of rent amounting to Rs. 600 in respect of the year in question and
is unable to pay the same. The Conditions of Rule 4 are not satisfied. The expenses of bungalow
are municipal taxes paid 4,500, Insurance premium Rs. 350, ground rent Rs. 75. He is also employed
and received salary of Rs. 5,48,000 for the previous year ended 31st March, 2016. Compute gross
total income.
4/6
 19002153

21. Sri. Pandey is a reputed Vakil of Bikanae. He has prepared following income and expenditure
account for the year ended 31st March, 2016 :

Rs. Rs.

Household expenses 1,12,000 Legal fees 3,26,000

Office expenses 7,000 Special Commission appointment fees 1,400

Charity 500 Cash gifts received from clients 2,000

Telephone expenses 500 House rent 15,000

Income tax 900 Interest on Government Securities 3,000

Rent 4,000 Salary as a part time lecturer in law 6,000

Gift to daughter 2,000

Electricity charges 1,000

Donation to National

Defence Fund 1,000

Contribution to PPF 2,400

Books for profession

(annual publication) 3,000

Salaries 15,000

Purchase of motor car 60,000

Purchase of furniture 2,000

LIC premium 5,000

Motor Car expenses 6,000

Purchase of type writer 6,000

Excess of income

over expenditure 1,25,100

3,53,400 3,53,400
Turn over

5/6
 19002153

Following are other particulars :

1 Sri. Pandey lives in one-half of the house and the other half is used for office rent and
electricity charges are in respect of this house.

2 One-half of car expenses are for personal use.

3 Depreciate motor car @ 15 %, Type writer 15 % and furniture 10 %.

Compute taxable income from business and professions for the A.Y. 2016–17.

22. From the following information compute the capital gains for the A.Y. 2016–17 :

House I House II

Date of purchase .. May 1977 December 1980

Cost of acquisition .. 1,90,000 2,50,000

Cost of additional construction in 1980 .. 10,000 25,000

Fair market value on 1-4-81 .. 1,75,000 3,50,000

Cost of additional construction in 1994–95 .. 51,800 77,700

Sale proceeds of property in 2015–16 .. 24,00,000 42,00,000

Cost Inflation Index : 1981–82–100, 1994–95–259, 2015–16–1081.

(3 × 5 = 15)

6/6