Direct and Indirect Taxation Paper-I

Subject Code- 23115 Model Answer Q.P. Code- 36362

Exam Date: 01/11/2023 T.Y.B.Com.- SEM- V Marks – 100
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Q.1A) Choose the Most Appropriate alternative and rewrite the statements (Any Ten)

1. . Income earned and received in India is taxable in the hands of ___________.

(a) Resident and Ordinary Resident only (b) Resident but not Ordinary Resident only
(c) Non-Resident only. (d) All three Residential categories of persons.

2. Voluntary Retirement Compensation received by an employee is exempt upto Rs. ___________

(a) 20,00,000. (b) 10,00,000. (c) 5,00,000. (d) 3,50,000.

3. Lumpsum payment received on retirement from Statutory Provident Fund is _______.

(a) Exempt. (b) Exempt up to 12% of Basic Salary.
(c) Exempt up to 9.5% interest rate. (d) Exempt up to 50%of amount received.

4. Pre-construction period interest on housing loan is allowed as deduction in ____ instalments,

upon completion of construction
(a) One (b) Three (c) Five (d) Seven.

5. _______________is not a deduction under the head of salary.

(a) Standard deduction. (b) Entertainment allowance.
(c) Tax on Employment (d) Interest on loan

6. While computing the exemption of Gratuity for a person covered under the payment of Gratuity
Act, Salary refers to ___________.
(a) Basic plus Dearness Allowance (b) Net taxable Salary
(c) Gross Salary (d) Basic plus Dearness Allowance plus % of commission on turnover.

7. in case of unlisted shares, Short-Term Capital Gain arises, if the period of holding of shares is
__________.
(a) Not more than 36 months (b) Not more than 12 months
(c) Not more than 24 months (d) Not more than 10 months

8 .Deductions under chapter VI A can’t exceed __________.

(a) Rs.1,50,000 (b) Gross Total Income
(c) Net Taxable Income (d) Rs. 2,50,000.

9. Indexation of costs will be allowed, only while computing ______________.

(a) Short term capital gain (b) Long term capital gain
(c) Medium term capital gains (d) Both short term and long-term capital gains

10. From the following, ----------- is a capital asset as defined u/s 2(14) of the Income Tax Act, 1961.

(a) Urban Agricultural land (b) Personal Scooter (c) Personal Utensils (d) Personal Car
11. If any asset is used for less than ------- days in the year of acquisition, the depreciation rate will be
50% of the normal rate as per Income Tax Act 1961.

(a) 180 (b) 90 (c) 365 (d) 45

12. The value of rent free accommodation provided by the employer is a ---------- perquisite.

(a) Taxable (b) Taxable only in case of specified employees

(c) Not Taxable (d) 50% is Taxable

Q.1(b) State whether the following statements are Ture or False (any ten) 10
1. Shiv Shakti Mitra Mandal is assessable under the Income tax as Association of Persons. -TRUE
2. Standard Deduction U/s 16(1) under the head salary can’t exceeds Rs.50,000. - TRUE
3. Leave Encashment is exempted upto a maximum of Rs.3,00,000.-TRUE
4. Income earned and received outside India is not taxable to Resident and Ordinary Resident-FALSE.
5. Income from smuggling is not taxable under the Income Tax Act, as it is illegal. -FALSE
6. Depreciation is allowed only when it is claimed. -FALSE
7.Capital gain on transfer of depreciable business assets is always short-term capital gain. -TRUE
8. Income by way of interest received on compensation or on enhanced compensation on
compulsory acquisition of capital asset is chargeable under the head Other Sources. -TRUE
9.There are total Five heads of Income. -TRUE
10. Donation to a political party is an allowable business expenditure. -FALSE
11. Repairs of a worn out part of machinery used in factory is an admissible expense under Income
Tax Act ,1961.-TRUE
12. Status of Indian citizen is always a resident. -FALSE

TRUE- 1,2,3,7,8,9,11
FALSE- 4,5,6,10,12

Solution No. 2. A) Dr Sanjay Ghokshe

Computation of Net Taxable Income M
Income for Salaries
Basic Salary 1626000 1
Dearness allowances 6,82,920 1
GROSS SALARY 23,08,920
Less: Deductions U/s 16
1.Standard Deduction U/s 16 (i) 50000 1
2.Professional Tax U/s 16 (ii) 2500 52,500 22,56,420 1
Income from other sources
Income from crossword puzzle 59,000 1
Royality from publisher 67,000 1,26,000 1,26,000 1
GROSS TOTAL INCOME 23,82,420 1
Less: Deduction under Chapter VI A
U/s 80CCC Contribution to Pension Fund 1,40,000 1
U/s 80 Deduction in respect of medical 20,000 1,60,000 1
insurance
NET TAXABLE INCOME 22,22,420 1
10
 Solution No. 2.b. Ashvaghosha.
Computation of Net Taxable Income
INCOME FROM HOUSE PROPERTY Rs. Rs. Rs. M
House Parel - Let Out Property
Gross Annual Value 8,00,000 1
Less: Municipal Taxes 32,000 1
NET ANNUAL VALUE 7,68,000
Less: Deductions U/s 24
Standard Deduction 230400 230400 5,37,600 1
House II - Self occupied property
NET ANNUAL VALUE NIL 1
Less: Interest on housing loan (2,00,000) (2,00,000) 1

INCOME FROM OTHER SOURCES

Interest on fixed deposit with company 32,000 32000 1
GROSS TOTAL INCOME 3,69,600 1
Less: Deductions under Chapter VI A
U/s 80 C NSC 60,000 1
U/s 80 E Interest on Education Loan for Higher Education 32,000 92,000 1
NET TAXABLE INCOME 2,77,600 1
10
OR

Q2 C) Computation of Net Taxable Income

Name of an Individual – Mr Ghanshyam

Previous Year - 2022-23
Assessment Year - 2023-24
Residential Status - R& OR

Sr. Particulars Annexure No Amount

no

1 Income under head salary 1 16,67,000

2 Income under head house 2 3,14,000

property

3 Income from Business and -

Profession

4 Income from Capital Gain -

5 Income from other sources

 GROSS TOTAL INCOME

Less Deductions u/c VIA 19,81,000

80C Investment in PPF (1,50,000) 1

(limited to )

80D Mediclaim Insurance (15,000) 1

premium

NET TAXABLE INCOME 18,16,000 1

Annexure 1
Computation of Income under head salary

Particulars Amount Rs Amount Rs

Basic Salary (80,000 *12) 9,60,000 1

Dearness Allowance 3,00,000 1

(25,000*12)

House Rent Allowance 6,00,000

(50,000*12)

Less Exempt (20,000*12) 2,40,000 3,60,000 1

Perquisite value of laptop 2,10,000

Less Exempt 2,10,000 NIL 1

Fixed Medical Allowance 25,000 1

Entertainment Allowance Rs 72,000 1

6000*12.

GROSS SALARY 17,17,000

Less Deductions u/s 16

 Standard Deduction 50,000 1

NET TAXABLE INCOME 16,67,000 1

Annexure 2
Computation of Income under head house property
Particulars Self-Occupied (Rs) Let Out Property (Rs)

A. Reasonable Lettable Value/

ER

a. Municipal Valuation Rs 6,00,000

b. Fair Rent Rs 8,00,000

c. Higher of a and b Rs 8,00,000

d. Standard Rent N. A

e. Lower of c and d Rs 8,00,000

B. Actual Rent Received Rs 10,20,000

(85,000*12)

Gross Annual Value NIL Rs 10,20,000 1

Less Municipal Taxes NIL NIL (paid by tenant) 1

NET ANNUAL VALUE (NAV) NIL Rs 10,20,000 2

Less: Deductions under section 24

Standard Deduction (30% OF NAV) Rs 3,06,000 1

Interest on Home loan (2,00,000) Rs 2,00,000 2

NET TAXABLE INCOME FROM (2,00,000) Rs 5,14,000 1

HOUSE PROPERTY

NET TAXABLE INCOME FROM HOUSE PROPERTY- Rs 3,14,000. (01)

Q3 (a)
Name of The Assessee: Mrs. Urvashi Pandit Status: Individual; R & OR
Previous Year: 2022-23 Assessment Year: 2023-24
Computation of Total Income
Particulars ₹ ₹ ₹ Marks
A) Income from Business or Profession
Net Profit as per Profit & Loss A/c 4,47,250
Add: Expenses Disallowed
Depreciation as per Books 12,000 1
Advertisement Expenses 15,000 1
Laptop Purchased 58,000 1
Interest on Personal Loan 22,000 1,07,000 1
5,54,250
Less: Non Business Incomes
Dividend from Indian Co. 10,000 1
Saving Bank Interest 13,900 1
Interest on Time Deposit 40,000 (63,900) 1

Less: Allowable Expenses

Deprecation as per Income Tax Rules (10,000) 1
Income from Business or Profession 4,80,350 1
B) Income from Other Sources
Interest on Time Deposit 40,000 1
Dividend from Indian Co. 10,000 1
Saving Bank Interest 13,900 1
C) Gross Total Income 63,900 1
D) Less: Deduction U/C VI-A 5,44,250 1
U/s 80C: ULIP 80,000
U/s 80CCC: Pension Plan of LIC 25,000 1,05,000 1
Total 80C + 80CCC 1
U/s 80TTA: Saving Bank Interest 13,900
Maximum Allowable 10,000 1
E) Net Taxable Income (1,15,000) 1
4,29,250 2
Note: 1) Laptop Purchase is an asset and not expenses hence disallowed.
3) Interest on Personal Loan is not a business expense hence disallowed.

Q3 (b)
Name of The Assessee: Mr. Divakar Raorane Status: Individual; R & OR
Previous Year: 2022-23 Assessment Year: 2023-24
Computation of Total Income
Particulars ₹ ₹ ₹ Marks
A) Income from House Property
Municipal Valuation 2,89,000 1
Actual Rent Received 2,87,000 1
Gross Annual Value (Higher of the Above) 2,89,000 1
Less: Municipal Taxes Paid (10,000) 1
Net Annual Value 2,79,000 1
Less: Deduction u/s 24
Standard Deduction @ 30% of NAV 83,700 1
Interest on Housing Loan 50,000 (1,33,700) 1
1,45,300
Add: Unrealized Rent Recovered 10,200 1
Less: Standard Deduction @ 30% of NAV (3,060) 7,140 1
Taxable Income from House Property 1,52,440
B) Income from Business & Profession
Net Profit as per Profit & Loss Account 6,92,400
Add: Expenses Disallowed
Repairs for House Property 15,000 1
Municipal Tax 10,000 1
Interest on Housing Loan 50,000 1
Income Tax 12,400 1
Furniture Purchase 82,000 1,69,400 1
8,61,800
Less: Non Business Incomes
Rent Received from Let-out House Property 2,87,000 1
Unrealized Rent 10,200 (2,97,200) 5,64,600 1
Income from Business or Profession 7,17,040 1
C) Gross Total Income
D) Less: Deduction U/C VI-A
U/s 80C: ELSS 60,000 1
U/s 80D: Medical Insurance 12,000 (72,000) 1
E) Net Taxable Income 6,45,040 1

Q.4 A
Name of the Assessee: Mr. Siddheshwar Status: Individual
Previous Year: 2022-23 Assessment Year: 2023-24

Particulars Rs. Rs. Rs. Marks

Sale Consideration 90,00,000 1
Less: Indexed Cost of
Acquisition
Cost 8,25,000
FMV as on 1-4-2001 9,75,000
Whichever is higher 9,75,000
(9,75,000 x 331 /100) 32,27,250 2
Less: Indexed Cost of
Improvement
1) First floor –
2007-08 = (3,50,000 x 331 / 129) 8,98,062 1

2) Second floor –
2014-15 = (5,00,000 x 331 / 240) 6,89,583 1
Less: Expenses on Transfer
(Brokerage) 1,40,000 49,54,895 1
Long Term Capital Gain 40,45,105 1
Less: Exemptions:
1) U/s 54
(Purchase of New 25,00,000 1
Residential House)
2) U/s 54 EC
(National Highway
Authority of India’s
Bonds)) 4,00,000 29,00,000 1
Net Taxable Long Term-Capital 11,45,105 1
Gain
10

Q.4 B
Name of the Assessee: Mr.Vinay (Liberalized Conditions)
Previous Year: 2022-23 Assessment Year: 2023-24

A. Ascertaining whether a resident:

Basic Condition Sec. 6(1)
No. Basic Conditions Stay in India Whether Marks
satisfied or not
satisfied
1 Stay in India during the He leaves India on 11-12- Satisfied 4
Previous Year 2022-23 ≥ 182 2022 for first time so, he is in
days India for 255 days

(He is covered by
Exception)

Conclusion: Mr. Vinay is a Resident 1

B. Ascertaining whether an Ordinary Resident:
Additional conditions Section 6(6)
 1 Resident in India for at least He is a resident for more than Satisfied
2 out of 10 immediately 2 years
preceding previous years 2

And
2 Stay in India during 7 Ashe leaves for first time he Satisfied 2
previous years immediately will be always in India, during
preceding Previous Years last 7 years, i.e 2558 days
2022-23 ≥ 730 days

Conclusion: Mr Vinay is a Resident and an ordinary resident. 1

Q.4 C
Name of the Assessee: Mr. Dharmendra Status: Individual
Previous Year: 2022-23 Assessment Year: 2023-24
Particulars Rs. Rs. Rs. Marks
Sale Consideration 95,00,000 1
Less: Indexed Cost of
Acquisition
Cost 9,00,000
FMV as on 1-4-2001 10,00,000
Whichever is higher 10,00,000
(10,00,000 x 331 /100) 33,10,000 2
Less: Indexed Cost of
Improvement

2007-08 = (2,10,000 x 331 / 129) 5,38,837 1

2019-20 = (3,80,000 x 331 / 289) 4,35,225 1

Less: Expenses on Transfer 1,25,000 44,09,062 1

50,90,938 1
Long Term Capital Gain
Less: Exemptions:
U/s 54
(Purchase of New 40,00,000 1
Residential House)
U/s 54 EC
(National Highway
Authority of India’s NIL 40,00,000 1
Bonds)) 1
Net Taxable Long Term-Capital 10,90,938
Gain 10
Q.4 D
Computation of Gross Total Income of Mr. Tushar for the
Assessment Year 2023-24.
Particulars Resident and Resident Marks
Ordinarily but not
Resident Ordinarily
Resident
Rs. Rs.
1) Income from business in Pune, controlled 3,75,000 3,75,000 1
from U.S.A.
2) Income from agriculture in Bangladesh 5,50,000 NIL 1
3) Rent from house in Nasik, received in 1,25,000 1,25,000 1
London
4) Professional fees earned in India, received 1,00,000 1,00,000 1
in Sri Lanka
5) Royalty from a company in Japan, 2,25,000 NIL 1
received in U.K.
6) Interest credited to HDFC Bank, New 1,20,000 NIL 1
York Branch
7) Income from business in U.K. controlled 2,00,000 2,00,000 1
from Mumbai
8) Amount brought into India out of the past NIL NIL 1
untaxed profits earned outside India
Total Taxable Income in India 16,95,000 8,00,000 2