Taxation Short Questions Answers

7/28/2019 Taxation Short Questions Answers

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S.P.Desai Chartered accountant MMS Tax short questions

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Taxation: Short Questions

1 Karta of HUF was in India for only one day during the previous year 2011.12,All the other members of

the family were there in India . Karta feels the Residential status of his is Non Resident for the

Assessment year 2012.13,hence HUF for that year is Non Resident.Discuss.

True coz he doesnt satisfy the first condition of 182 days and the residential status of HUF depends

on the residential status of the Karta (HUF is NR if control and mgmt. is wholly situated outside

India).

2.The meetings of the members of Company including Special general meetings during the P Y 2011.12

were held in India ,however all the meetings of the Board except one was held in Dubai during the year,

discuss the residential status of the Company for A Y 2012.13 assuming the Company is Incorporated in

London.

Company is resident if it is an Indian co. OR during the PY its control & mgmt. is wholly situated in

India. Company being incorporated in London makes it a non-Indian co. As regards the second

alternative condition, control and mgmt. lies where the meeting of BOD is held. In the given case,

board meetings were held in Dubai and hence the control is said to be outside India. Hence, NR.

3.Mr. A has gone out of India for the first time on 1-1-2011,for the purposes of watching Cricket match,

discuss Residential status of Mr. A for the said P.Y.

R & OR (satisfies the basic condition of 182 days in that PY and both the additional conditions)

4.Mr B ,U S Citizen went out of India for the purposes of employment on 1.1.2011 He came for the first

time in India on 1.4.2009 and is continuously was in India since then ,Discuss Residential status of Mr B

for that P Y

R but NOR (satisfies basic condition of 182 days in PR 2010-11 but does not fulfill the additional

conditions)

5What rates of taxes are applicable for the Previous Year 2008.09,discuss the Assessment Year,Budget

Finance bill for that Previous year.

Rates

AY = 2009-10

Finance bill 2008

6.Mr C earned Income of Rs 5,00,000/- on 02.01.1998, Discuss with reference to the date concept of

Previous ,Assessment Year,and Finance Act & Budget for the relevant year.

PY = 1997-98


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AY = 1998-99

Finance Bill 1997

7Mr B is a Partner of B C & Co Partnership Firm, remuneration received by Mr B from the said Firm Mr B

had taken as Salary for the said previous year. Discuss.

Allowed. The salary income will be taxable in the hands of the partner under the head Income from

Business & Profession to the extent it has been allowed to be deducted in the hands of the Firm u/s

40 (b).

{You may ignore reading this - For salary to be allowed as an expense u/s 40 (b), the following

conditions should be satisfied: (1) salary to working partner (2) salary in accordance with partnership

deed and 2 more conditions which are more complicated..if you want to know them, Ill explain over

the phone}

8.Mr A died & Mrs C wife of Mr A received family pension of Rs 90000/- from the Company in which A

was employed , discuss taxability therefore ,Mrs C had considered the same as Salary in her I Tax Return.

Incorrect. Will be taxed under the head Income from Other Sources.

9.Mr A owns House which is given on Rent To Mr B ,Mr B sublet a part of the said house to Mr C and

treats this as Income from House Property discuss.

Incorrect. Cant be under HP coz he is not the owner. Will be taxed under IFOS.

10.Mr B earns lottery Income of Rs 60000/-(Net) for which he had purchased Lottery Tickets worth Rs

15000/- TDS Of Rs 20000/- was there discuss the taxable Income.

No deduction available in respect of winnings from lotteries. Taxable income will be Rs. 80,000

(Net+TDS)

11.Mr B had paid Rs 15000/- towards medical treatment of his son who is permanently handicapped

dependent on Mr B ,Assessing Officer contends allowable deduction Rs 15000/- only Discuss.

Allowable deduction u/s 80DD (allowed upto a sum of Rs. 50,000)

12.Mr N gives donation of Rs 15000/-as medicines to a registered Trust having Registration Certificate

under Section 80G ,claims the same as deductible under 80G Discuss.

Deduction u/s 80G is not available for donation given in kind.

13.Mr X received Salary of Rs 1229340/-after deduction of Prof Tax 2500/-,PF 110000/-Hosing Loan Rs

258900/-(60% being Interest, rest Principal. Compute Taxable Income.


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14.Mrs X carries out retail business in readymade garments ,where yearly Sales are 1289200/-having Net

Profit @20% before Depreciation of Rs 48900/-on car 50% of the same is used for Personal purposes.

Compute Taxable Income.

As per normal provisions, taxable income will be profit (@20%) less 50% depreciation i.e. 24,450.

15.Mr B carried business in stationary gross Profit Rs 178000/-& Net Profit Rs 83200/-after charging

expenses of Rs 38000/- being personal expenses.

Personal expenses to be disallowed so add back to net profit for calculating taxable income.

16Mr A is having in his stock of stationery on 1.4.2011 Rs 5000/-,during the year 2011.12 Purchases

were Rs 100000/- Sales were Rs 225000/-on 31.03.2012 stock was Rs 2500/- calculate chargeable

expenses of stationery.

17 Mr. X had taken medical insurance of Rs. 18,200, 50% of which paid in cash, Rs. 15,000 another

medical insurance on his wifes parents. Discuss deductibility under Sec 80D.

Deduction u/s 80D allowed for insurance premium for assesse or his family (i.e. wife or dependent

children) or parents. Allowed upto Rs. 15,000 but only if payment made in a mode other than cash.

So, only 50% of 18,200 will be allowed.

And his wife s parents would be dissalowed.

18 Mr. A had taken a loan from his friend Rs. 5 lakhs @ 10% p.a for the purposes of his higher studies

eligible under Sec. 80E, he claims the interest paid on such loan being deductible. Discuss.

Not allowed since the loan has to be from a financial institution or an approved charitable institution.

Not from a friend.

19 Mr. B hospitalized and incurred expenditure of Rs. 5000, in respect of a disease specified and claims

Rs. 40000 as expenditure deductible under the relevant section. Discuss.

Deduction allowed u/s 80DDB is Rs. 40,000 or the sum actually paid, whichever is less. Hence,

assessees contention is wrong.

20 Mr. A had a machinery of Rs. 50,000 on which depreciation allowable is 10% p.a . He lets out the

machinery for 2 months and received rent of Rs. 30000. Mr. A had incurred total maintenance expenseson the machine Rs. 12,000. Calculate the taxable income under the head income from other sources.

21 Mr. B received foreign currency gift worth Rs. 1,50,000 from Mr. C who is his friend. Mr. B claims the

said gift as exempted one since received in foreign currency. Discuss.


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22. Mr. C received jewellery worth Rs. 60000 as gift from Mr. D who is not relative of Mr. C claims the

same being exempt in his income tax return. Discuss

Taxable u/s 56(2)(vii) since not from a relative and the FMV exceeds Rs. 50,000. Taxable income under

IFOS will be FMV i.e. Rs. 60,000

23 The cost of the land purchased on 1.1.1960 for Rs. 30000 (market value as on 1.4.81 Rs. 2,00,000),

The purchaser claims the deduction while computing capital gain the cost being Rs. 10 lakhs as on

31.3.12 being market value as on that date. Discuss

Incorrect. The cost should be the FMV on the date of purchase of FMV on 1.4.81, whichever is later.

Accordingly, it will be Rs. 2,00,000 (subject to indexation).

24 Mr. C constructs first floor on 31.3.1978 for Rs. 50,000, constructs 2nd

floor on 31.5.1992 for indexed

cost Rs. 3,00,000 , incurs repairs expenses on the property on 31.5.1993 , indexed cost Rs. 1,00,000.

Calculate the allowable improvement cost with justification.

Cost of improvement means the capital expenditure incurred on improvement by assesse. However,

the cost of improvement incurred before 1.4.81 is to be ignored. Hence, the allowable COI = 4,00,000

(3,00,000+1,00,000).

Taxation Short Questions Answers

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