Test Series: October, 2020 (a) Resident but can’t determine resident and ordinarily resident or resident but

ent or resident but not ordinarily

resident from the given information
MOCK TEST PAPER
INTERMEDIATE (NEW) COURSE (b) Non-Resident
PAPER – 4: TAXATION (c) Resident but not ordinarily resident
Time Allowed – 3 Hours Maximum Marks – 100
(d) Resident and ordinarily resident
SECTION – A: INCOME TAX LAW (60 MARKS)
(ii) What is his taxable perquisite for A.Y. 2020-21?
Working Notes should form part of the answer. Wherever necessary, suitable assumptions may be made by
the candidates and disclosed by way of a note. However, in answers to Question in Division A, (a) ` 55,000
working notes are not required.
(b) ` 90,400
The relevant assessment year is A.Y.2020-21.
(c) `1,05,400
Division A – Multiple Choice Questions
Write the most appropriate answer to each of the following multiple choice questions by choosing (d) `1,90,400
one of the four options given. All questions are compulsory. (iii) What is the income chargeable under the head “Salaries” in the hands of Mr. Rajesh Sharma for
1. Mr. Rajesh Sharma, aged 54 years, an Indian citizen, is working as Assistant Manager in ABC India Ltd. A.Y. 2020-21?
He is getting basic salary of ` 58,000 per month. He used to travel frequently out of India for his office
(a) ` 9,76,600
work. He left India from Delhi Airport on 5 th Oct, 2019 and returned to India on 2 nd Apr,2020.
For previous year 2019-20, following information are relevant; (b) ` 9,86,600

(a) Dearness Allowance - 10% of Basic Pay (considered for retirement purposes) (c) ` 9,71,600

(b) Bonus - ` 98,000 (d) ` 9,61,600

(c) Medical allowance paid during P.Y. 2019-20 amounting to `60,000 (iv) The tax liability (without considering surcharge and Health and education cess, if any) of
Mr. Rajesh Sharma towards unexplained jewellery would be ____
(d) He was also reimbursed medical bill of his mother amounting to `15,000.
(a) ` 1,00,000
(e) He was also transferred a laptop by company for ` 15,000 on 31st Dec 2019. The laptop was
acquired by company on 1 st Oct,2016 for ` 1,00,000. Company was charging depreciation at (b) ` 1,50,000
31.666% assuming useful life of laptop as 3 years.
(c) ` 3,00,000
(f) He was also reimbursed salary of house servant of ` 4,000 per month during P.Y. 2019-20. (d) ` 2,50,000
(g) Professional Tax paid by employer during P.Y. 2019-20 amounting to ` 2,400. (v) The total tax liability of Mr. Rajesh Sharma for A.Y. 2020-21 is _______
(h) 400 equity shares allotted by ABC India Ltd. during P.Y. 2019-20 at the rate of ` 250 per share (a) ` 5,16,800
against fair market value of share of ` 350 on the date of exercise of option.
(b) ` 5,18,880
(i) Short-term capital gain on sale of shares of listed company on which STT is paid amounting to
` 94,000. (c) ` 4,38,800

(j) Mr. Rajesh was also found owner of ` 5 lakh worth jewellery, of which he could not provide any (d) ` 4,40,880 (5 x 2 Marks)
satisfactory explanation.
2. Mr. Ajay Sahu, proprietor of M/s Blue Bird Enterprises having turnover of ` 65 lakhs and not subject to
Based on the above information, choose the most appropriate option of the following Multiple Choice tax audit under the Income-tax Act, 1961 during P.Y. 2018-19, has received two bills for payment. The
Questions (MCQs) for A.Y. 2020-21:- first bill is for ` 42,00,000 from Vijay Associates, an advocate and property dealer firm, for his daughter’s
hearing and ` 21,00,000 from same Vijay Associates for brokerage service provided in relation to
(i) What is Mr. Rajesh Sharma’s residential status for the A.Y. 2020-21? purchase of one property. Both bills were raised on 21-12-2019 but payment were made in instalments.
1st Instalment of ` 5,00,000 as advance was payment on 15-11-2019, 2nd Instalment of ` 45,00,000

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on 25-03-2020 and balance amount ` 13,00,000 on 11-05-2020. Determine the TDS liability for Mr. Ajay Division B – Descriptive Questions
Sahu, if any, for A.Y. 2020-21?
Question No. 1 is compulsory
(a) ` 2,50,000
Attempt any two questions from the remaining three questions
(b) ` 3,15,000 1. From the following information provided by Mr. Raj, aged 42 years working as a manager in XYZ Limited,
(c) ` 65,000 for the year ended 31.3.2020, you are required to compute his total income and tax payable for the A.Y.
2020-21.
(d) Nil (2 Marks)
Basic salary ` 25,000 p.m.
3. Sham Singh spends ` 1,00,000 on cultivation and harvesting of his agricultural produce. 50% of the
DA (50% of it is meant for retirement benefits) 50% Basic Pay
production is sold for `1,10,000 and rest is stored for self consumption. What is the amount of the
agricultural income? Own contribution to Recognized Provident Fund (R.P.F.) ` 30,000
Employer's contribution to R.P.F. 20% of basic salary
(a) ` 60,000
Interest credited in the R.P.F account@15% p.a., ` 15,000
(b) ` 1,10,000
Arrears of rent received from XYZ Limited ` 75,000
(c) ` 1,20,000
Received interest ` 10,000 from Axis Bank Savings account during the year, and interest of ` 12,040
(d) ` 1,00,000 (2 Marks) (gross) from the debentures of M/s. Coal India Ltd.
4. Mr. Square, an Indian citizen, currently resides in Dubai. He came to India on a visit and his total stay He made payment through cheque ` 15,370 towards premium on Life insurance policies and ` 22,500
in India during the F.Y. 2019-20 was 135 days. He has no source of Income in India. Following is his for Mediclaim Insurance Policy for his major dependent daughter.
details of stay in India in the preceding previous years: He had contributed ` 1,196 pm towards Atal Pension Yojana and ` 5,000 pm towards Sukanya Sarnridhi
account.
Financial Year Days of Stay in India
XYZ Limited has taken residential house of Mr. Raj as Company's guest house and later purchased from
2018-19 125 him in the year 2018 at market value for ` 75 lakhs. Purchase cost was only ` 10 lakhs in April, 2004.
2017-18 106 During August, 2019, Mr. Raj had sold his gold chain and a diamond ring for ` 3,40,000 which he had
2016-17 83 purchased in April, 2004 for ` 1,13,000.
Donation of ` 11,000 to Prime Minister’s National Relief Fund were given during the year by way of
2015-16 78
cheque.
2014-15 37
(CII for 2004-05:113, 2018-19: 280, and 2019-20: 289) (14 Marks)
2013-14 40
2. (a) Miss Deepika, a citizen of India, got married to Mr. John of Australia and left India for the first time
2012-13 35 on 20.8.2019. She has not visited India again during the P.Y. 2019 -20. She has derived the
following income for the year ended 31-3-2020:
You are his tax consultant. Advise him on his residential status for the P .Y. 2019-20.
(a) Resident but Not Ordinary Resident (RNOR) Particulars `
(i) Income from sale of centrifuged latex processed from rubber plants grown 1,50,000
(b) Resident and Ordinary Resident in kanyakumari.
(c) Non-Resident (ii) Income from sale of coffee grown and cured in Kodagu, Karnataka 2,00,000
(d) Resident but information incomplete to know whether resident but not ordinarily resident or (iii) Income from sale of coffee grown, cured, roasted and grounded in 5,00,000
resident and ordinarily resident (2 Marks) Colombo. Sale consideration was received in Chennai.

5. Ms. Dilar who is not required to furnish return u/s 139(1) as his gross total income itself is less than (iv) Income from sale of tea grown and manufactured in West Bengal. 12,00,000
basic exemption limit, has incurred expenditure of ` 2,00,000 for her daughter for travel to U.S.A. during (v) Income from sapling and seedling grown in a nursery at Cochin. Basic 2,00,000
P.Y. 2019-20. Is she required to file return for A.Y. 2020-21? If yes, what is the due date? operations were not carried out by her on land.

(a) Yes; 31st July, 2020 You are required to determine the residential status of Miss Deepika and compute the business
income and agricultural income of Miss. Deepika for the Assessment Year 2020-21. (7 Marks)
(b) Yes; 30th September, 2020
(c) Yes; 31st August, 2020
(d) No, she is not required to file return of income for A.Y. 2020-21 (2 Marks)
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 (b) Mr. Karan is engaged in the business of producing and selling toys. During the previous year 201 9- Compute the income chargeable under the head “Capital Gains” for A.Y. 2020-21. The choice of
20, his turnover was ` 1.75 crores. He opted for paying tax as per presumptive taxation scheme exemption must be in the manner most beneficial to the assessee.
laid down in section 44AD. He has no other income during the previous year. Is he liable to pay Cost Inflation Index: F.Y. 2004-05 113
advance tax and if so, what is the minimum amount of advance tax to be paid and the due date for
payment of such advance tax assuming that whole of the turnover represents cash receipts? F.Y. 2006-07 122
(3 Marks) F.Y. 2019-20 289 (7 Marks)
(c) Mr. Varun filed return on 30 th September, 2020 related to Assessment Year 2020-21. In the month (c) From the following transactions relating to Mrs. Natasha, determine the amount chargeable to tax
of October 2020, his tax consultant found that the interest on fixed deposit was omitted in the tax in her hands for the A.Y. 2020-21. Your answer should be supported by reasons:
return. (i) On 1-1-2020, being her birthday, she received a gift of ` 40,000 by means of cheque from
(i) What is the time limit for filing a belated return? her father's maternal uncle.
(ii) Can Mr. Varun file a revised return? (ii) On 12-2-2020, she acquired a vacant site from her friend for ` 1,32,000. The State stamp
valuation authority fixed the value of site at ` 2,00,000 for stamp duty purpose.
Justify the above with the relevant provisions under section 139.
(iii) She bought 50 equity shares of a private company from another friend for ` 75,000. The fair
Assume that the due date for furnishing return of income was 31 st July, 2020 and the assessment market value of such shares on the date of purchase was ` 1,33,000. (3 Marks)
was not completed till the month of October 2020. (4 Marks)
4. (a) Nishant gifted ` 10 lakhs to his wife, Nisha on her birthday on, 1st January, 2019. Nisha lent
3. (a) Mr. Abhimanyu has furnished the following particulars relating to payments made and expenditure ` 5,00,000 out of the gifted amount to Krish on 1 st April, 2019 for six months on which she received
incurred towards scientific research for the year ended 31.3.2020: interest of ` 50,000. The said sum of ` 50,000 was invested in shares of a listed company on
15th October, 2019, which were sold for ` 75,000 on 30 th December, 2019. Securities transaction
Sl. No. Particulars ` (in lakhs)
tax was paid on such sale. The balance amount of gift was invested as capital by Nisha in a newly
(i) Payment made to AB University, an approved University 15 business started on 1.4.2019. She suffered loss of ` 15,000 in the business in Financial Year
(ii) Payment made to Siya College 17 2019-20.

(iii) Payment made to IIT, Madras (under an approved programme for 12 In whose hands the above income and loss shall be included in Assessment Year 20 20-21?
scientific research) Support your answer with brief reasons. (4 Marks)
(b) The following are the details relating to Mr. Rajesh, a resident Indian, relating to the year ended
(iv) Machinery purchased for in-house scientific research 25
31.03.2020
Compute the deduction available under section 35 of the Income-tax Act, 1961 for A.Y. 2020-21, Particulars Amount (`)
while computing his income under the head “Profits and gains of business or profession”.
Short term capital gain 1,40,000
(4 Marks)
Loss from house property 2,20,000
(b) Mr. Yusuf bought a vacant land for ` 80 lakhs in March 2005. Registration and other expenses
Loss from speculative business 50,000
were 10% of the cost of land. He constructed a residential building on the said land for ` 100 lakhs
during the financial year 2006-07. Loss from card games 20,000
He entered into an agreement for sale of the above said residential house with Mr. John (not a Brought forward Long term capital loss of A.Y. 2015-16 86,000
relative) in July 2019. The sale consideration was fixed at ` 600 lakhs and on the date of Dividend from Shaiba Ltd. 11,00,000
agreement, Mr. Yusuf received ` 20 lakhs as advance in cash. The stamp duty value on that date Loss from tea business 96,000
was ` 620 lakhs.
Mr. Rajesh’s wife, Isha is employed with Shine Ltd., at a monthly salary of ` 25,000, where
The sale deed was executed and registered on 10-2-2020 for the agreed consideration. However,
Mr. Rajesh holds 21% of the shares of the company. Isha is not adequately qualified for the post
the State stamp valuation authority had revised the values, hence, the value of property for stamp
held by her in Shine Ltd.
duty purposes was ` 650 lakhs. Mr. Yusuf paid 1% as brokerage on sale consideration received.
You are required to compute taxable income of Mr. Rajesh for the A.Y. 2020 -21. Ascertain the
Subsequent to sale, Mr. Yusuf made following investments:
amount of losses which can be carried forward. (7 Marks)
(i) Acquired a residential house at Delhi for ` 80 lakhs.
(c) Mention the significant differences between TDS and TCS. (3 Marks)
(ii) Acquired a residential house at London for ` 40 lakhs.
(iii) Subscribed to NHAI bond: ` 45 lakhs on 29-5-2020 and ` 15 lakhs on 12-7-2020.

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SECTION B - INDIRECT TAXES (40 MARKS) NEW COURSE III. State which of the following statement is true in respect of security services provided by Shanky
Consultants to registered business entities:
QUESTIONS
(a) Shanky Consultants shall issue GST compliant tax invoice.
(i) Working Notes should form part of the answers. However, in answers to Question in Division A,
(b) Shanky Consultants shall issue bill of supply stating “Tax to be paid by service recipient under
working notes are not required.
reverse charge”.
(ii) Wherever necessary, suitable assumptions may be made by the candidates, and disclosed by way of (c) Shanky Consultants can issue any document in lieu of tax invoice.
note.
(d) Shanky Consultants shall issue receipt voucher every time Shanky Consultants receives
(iii) All questions should be answered on the basis of the position of GST law as amended up to 3 0th April, payment. (3 x 2 Marks = 6 Marks)
2020.
2. Akash Ltd. a registered person in Punjab has purchased Air Conditioner for invoice value of ` 32,000
(iv) The GST rates for goods and services mentioned in various questions are hypothetical and may not (which includes GST at 18%) from Mukesh Ltd. registered in Punjab. Akash Ltd. had capitalized Air
necessarily be the actual rates leviable on those goods and services. Further, GST compensation Conditioner in his books of accounts for full value of ` 32,000 and taking the benefit of depreciation on
cess should be ignored in all the questions, wherever applicable. the same. Keeping in view of the above situation the input tax credit which Akash Ltd. is required to
take in his books of accounts will be;
Division A - Multiple Choice Questions (MCQs)
(a) Nil
Write the most appropriate answer to each of the following multiple choice questions by choosing
(b) `4,881
one of the four options given. All questions are compulsory.
(c) `5,760
Total Marks: 12 Marks
(d) `2,880 (2 Marks)
Each MCQ under Question No. 1 carries 2 Marks each
3. Which document is required in case of movement of goods of consignment value of ` 1,05,000 for
1. M/s. Shanky Consultants, a partnership firm registered in Delhi, renders following services during the reasons other than supply:-
year: (a) Bill of supply
(i) Security services: ` 2,00,00,000/ to registered business entities. (b) Receipt Voucher
(ii) Manpower services (Accountants): ` 5,00,000/- (c) Payment voucher
(iii) Auditing services: ` 1,00,00,000/- (d) E-way bill (2 Mark)
Other Information: 4. Which of the following services are exempt under GST?
(i) Shanky Consultants also paid sponsorship fees of ` 70,000/- at seminar organized by a private NGO (i) testing of agricultural produce
(a partnership firm) in Delhi.
(ii) supply of farm labour
(ii) Shanky Consultant pays rent amounting to ` 6,00,000/- for a building owned by MCD.
(iii) warehousing of agricultural produce
(iii) Assume all services are taxable at 18% and all transactions to be intra-State supplies.
(a) (i)
Based on the above information, answer the following questions:
(b) (i) and (ii)
I. What is the aggregate turnover of Shanky Consultants?
(c) (ii) and (iii)
(a) ` 3,05,00,000/-
(d) (i), (ii) and (iii) (2 Mark)
(b) ` 3,05,70,000/-
Division B - Descriptive Questions
(c) ` 1,05,00,000/-
(d) ` 1,05,70,000/- Question No. 1 is compulsory.

II. GST liability paid under reverse charge by Shanky Consultants is? Attempt any two questions out of remaining three questions.
(a) CGST: ` 60,300/-, SGST: ` 60,300/- Total Marks: 28 Marks
(b) CGST: ` 6,300/-, SGST: ` 6,300/- 1. Mr. Harihar, a supplier of goods, pays GST under regular scheme. He has made the following
(c) CGST: ` 54,000/-, SGST: ` 54,000/- outward taxable supplies in a tax period:
(d) None of the above Particulars (`)
Intra-State supply of goods 10,00,000
Inter-State supply of goods 8,00,000
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 He has also furnished the following information in respect of purchases made by him in that tax period: What is the method to fix the time of supply of the service? (4 Marks)

Particulars (`) 3. (a) Examine whether the supplier is liable to get registered in the following independent cases: -

Intra-State purchases of goods 3,00,000 (i) Happy Ltd. of Himachal Pradesh is exclusively engaged in intra-State supply of pan masala.
It’s aggregate turnover in the current financial year is ` 24 lakh.
Inter-State purchases of goods 2,50,000
(ii) Akki Ltd. of Assam is exclusively engaged in intra-State supply of taxable services. It’s
Mr. Harihar has following ITCs with him at the beginning of the tax period: aggregate turnover in the current financial year is ` 25 lakh.

Particulars (`) (iii) Aaru Ltd. of Assam is engaged in intra-State supply of both taxable goods and services. It’s
aggregate turnover in the current financial year is ` 30 lakh. (6 Marks)
CGST 57,000
(b) Angira Ltd. is a supplier of taxable goods in Karnataka. It got registered under GST in the month
SGST 60,000 of September, 20XX and wishes to pay its IGST liability for the month. Since it is making the
IGST 1,40,000 GST payment for the first time, it is of the view that it needs to mandatorily has the online
banking facility to make payment of GST; offline payment is not permitted under GST. You are
Note: required to apprise Angira Ltd. regarding the various modes of deposit in the electronic cash
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively. ledger. Further, advise it with regard to following issues:

(ii) Both inward and outward supplies are exclusive of taxes, wherever applicable. (a) Are manual challans allowed under GST?

(iii) All the conditions necessary for availing the ITC have been fulfilled. (b) What is the validity period of the challan? (4 Marks)

Compute the minimum GST payable in cash, by Mr. Harihar for the tax period and the ITC to be 4. (a) Explain the meaning of the term "recipient of supply of goods and/or services" under the CGST
carried forward to the next month. Make suitable assumptions as required. (8 Marks) Act, 2017. (5 Marks)

2. (a) Shri Krishna Pvt. Ltd., a registered supplier, furnishes the following information relating to goods (b) List out the situations in which a Credit note/Debit note may be issued under the CGST Act,
sold by it to Shri Balram Pvt. Ltd.- 2017. (5 Marks)

S. No. Particulars Amount (`)

(i) Price of the goods [excluding taxes and other charges mentioned 1,00,000
at S. Nos. (iii), (v) and (vi)]
(ii) Municipal tax 2,000
(iii) Inspection charges 15,000
(iv) Subsidy received from Shri Ram Trust 50,000
[Subsidy is directly linked to the goods supplied]
(v) Late fees for delayed payment inclusive of GST 1,000
[Shri Balram Pvt. Ltd. paid the late fees. However, these charges
were ultimately waived by Shri Krishna Pvt. Ltd. and the amount
was refunded to Shri Balram Pvt. Ltd. during the same month]
(vi) Weighment charges 2,000
[Such charges were paid by Shri Balram Pvt. Ltd. to Radhe Pvt.
Ltd. on behalf of Shri Krishna Pvt. Ltd.]
Note: Price of the goods is net of the subsidy received.
Determine the value of taxable supply made by Shri Krishna Pvt. Ltd. to Shri Balram Pvt. Ltd.
(6 Marks)
(b) Modern Security Co. provides service of testing of electronic devices. In one case, it tested a
batch of devices on 4 th and 5th September but could not raise invoice till 19 th November because
of some dispute about the condition of the devices on return. The payment was mad e in
December.

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