INTERMEDIATE COURSE

GROUP – I

REVISION TEST PAPERS

MAY, 2024

BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
(Set up by an Act of Parliament)
New Delhi

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 ¤THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

All rights reserved. No part of this publication may be reproduced, stored in a

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Edition : February, 2024

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 Contents
Page Nos.
Objective & Approach ............................................................................................... i – vii
Objective of RTP ..................................................................................................................... i
Planning & Preparing for Examination ........................................................................... ii
Subject-wise Applicability .................................................................................................. iv

Paper-wise RTPs
Paper 1: Advanced Accounting ........................................................................... 1 – 31
Paper 2: Corporate and Other Laws ................................................................32 – 56

Part-I: Announcements Stating Applicability & Non-Applicability .............32 – 34

Part-II: Questions and Answers .................................................................34 – 49

Paper 3: Taxation .............................................................................................................. 50 – 83

Section A: Income-tax Law .......................................................................... 50 – 69

Section B: GST .................................................................................................. 70 – 83
Applicability of Standards/Guidance Notes/Legislative Amendments etc.
for May, 2024 – Intermediate Examination ........................................ 84 – 88

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 REVISION TEST PAPER, MAY, 2024 – OBJECTIVE & APPROACH
(Students are advised to go through the following paragraphs carefully to
derive maximum benefit out of this RTP)
I. Objective of Revision Test Paper
Revision Test Papers are one among the many educational inputs
provided by the Board of Studies (BOS) to its students. Popularly
referred to as RTP by the students, it is one of the very old publications
of the BOS whose significance and relevance from the examination
perspective has stood the test of time.
The primary objectives of the RTP are:
x To help students get an insight of their preparedness for the
forthcoming examination;
x To update them on the latest developments relevant for the
forthcoming examination in select subjects;
x To enhance the confidence level of the students adequately.
Students must bear in mind that the RTP contains a variety of questions
based on different topics of the syllabi and thus a comprehensive study
of the entire syllabus is a pre-requisite before answering the questions
of the RTP. In other words, in order to derive maximum benefit out of
the RTPs, it is advised that before proceeding to solve the questions
given in the RTP, students ought to have thoroughly read the Study
Materials and Statutory Update, wherever applicable.
The topics on which the questions are set herein have been carefully
selected and meticulous attention has been paid in framing different
types of questions. Detailed answers are provided to enable the
students to do a self-assessment and have a focused approach for
effective preparation.
Live Learning Classes by renowned subject experts conducted free of
charge in virtual mode for the students of Foundation, Intermediate and
Final levels provide the students much required support in preparing for
their exams conveniently at home as these classes can be accessed live
or viewed later as recorded lectures through hand-held devices such as
smart phones, laptops, I-pads, tablets, etc. anytime anywhere. Further,

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 REVISION TEST PAPER
INTERMEDIATE EXAMINATION

students are advised to attempt the Multiple-Choice Questions (MCQs)

at MCQ Paper Practice Portal which is a holistic platform for self-
assessment within the stipulated timeframe.
Students are welcome to send their suggestions for fine tuning the RTP
to the Joint Director, Board of Studies, The Institute of Chartered
Accountants of India, A-29, Sector-62, Noida 201309 (Uttar Pradesh).
RTP is also available on BOS Knowledge Portal at https://boslive.icai.org
for downloading.
II. Planning and preparing for examination
Ideally, when the RTP reaches your hand, you must have finished reading
the relevant Study Materials of all the subjects (along with the Statutory
Update in case of Paper 3A and Paper 3B) available at the BoS
Knowledge Portal. Get a good grasp of the concepts/ provisions/
amendments/ cases discussed therein.
After reading the Study Materials alongwith Statutory Update
thoroughly, then, proceed to solve the questions given in the RTP on
your own. RTP is an effective tool to revise and refresh the concepts and
provisions discussed in the Study Material. RTPs are provided to you to
help you assess your level of preparation. Hence you must solve the
questions given therein on your own and thereafter compare your
answers with the answers given therein.
Examination tips
How well a student fares in the examination depends upon the level and
depth of his preparation. However, there are certain important points
which can help a student better his performance in the examination.
These useful tips are given below:
y Reach the examination hall well in time.
y As soon as you get the question paper, read it carefully and
thoroughly. You are given separate 15 minutes for reading the
question paper.
y Plan your time so that appropriate time is awarded for each
question.

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y First impression is the last impression. The question which you can
answer in the best manner should be attempted first.
y Always attempt to do all questions. Therefore, it is important that
you must finish each question within allocated time. Keep
sometime for checking the answers as well.
y Read the question carefully more than once before starting the
answer to understand very clearly as to what is required.
y Answer all parts of a question one after the other; do not answer
different parts of the same question at different places.
y Write in a neat and legible hand-writing.
y Always be concise and write to the point and do not try to fill
pages unnecessarily.
y There must be logical expression of the answer.
y In case a question is not clear, you may state your assumptions
and then answer the question.
y Check your answers carefully and underline important points
before leaving the examination hall.
y In case of case scenario based MCQs, read the facts given in the
case attentively. Also, read each MCQ based thereon and all the
options carefully, before choosing the correct answer.

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III. Subject-wise Applicability

PAPER – 1 : ADVANCED ACCOUNTING
The April, 2023 edition of the Study Material, comprising of three
modules, is applicable for the students appearing for May, 2024
Examination. For understanding the coverage of syllabus, it is important
to read the Study Material carefully.
You must read the study material thoroughly to attain conceptual clarity.
The tables, diagrams and flow charts in study material have been
extensively prepared to facilitate easy understanding of concepts.
Likewise, examples and illustrations given in the Study Material would
enable you to grasp the application of theoretical concepts in real-world
scenarios. After covering the concepts and illustrations, work out the
exercise questions at the end of each chapter and then compare your
answers with the answers given to test your level of understanding.
Also, solve the MCQs and case scenario based MCQs uploaded in MCQ
Practice Dashboard. This will help you to maximize your speed and
accuracy in solving independent MCQs and case scenario based MCQs
in the Examination.
The RTP consists of twenty questions together with their answers on
different topics discussed in the study material. Answers to the questions
have been given in detail along with the working notes for easy
understanding and comprehending the steps in solving the problems.
Moreover, the answers have been presented in the same manner as
expected from the students in the examination. The students are
expected to solve the questions under examination conditions and then
compare their solutions with the solutions given in the RTP. This will
facilitate them to further strategize their preparation for scoring good
marks in the examination.

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PAPER – 2: CORPORATE AND OTHER LAWS

The April, 2023 edition of the Study Material is applicable for
Intermediate Course Paper 2: Corporate and Other Laws. The Study
Material has been divided into three modules (Modules 1, 2 & 3) for
ease of handling by students.
The Study Material is based on the provisions of the Companies Act,
2013, the Limited Liability Partnership Act, 2008, the General Clauses Act,
1897 and the Foreign Exchange Management Act, 1999, as amended
upto 30th April 2023.
The relevant amendments in the Companies Act, 2013 for the period
1st May 2023 to 31 st October 2023 are covered under Part I of the RTP.
These amendments have also been uploaded on the website at
https://resource.cdn.icai.org/77836bos62488.pdf. For the ease of
reference, the amendments have been grouped into chapters which
correspond with the chapters of the Study Material.
The students are advised to read the Study Material thoroughly to attain
conceptual clarity. Tables, diagrams and flow charts have been
extensively used to facilitate easy understanding of concepts. Examples
and Illustrations given in the Study Material would help the students to
understand the application of concepts. Work out the exercise questions
at the end of each chapter and then, compare your answers with the
answers given to test your level of understanding. Thereafter, solve the
MCQs and case scenarios based MCQs uploaded in MCQ Paper Practice
Dashboard and assess your level of understanding.
Finally, solve the questions given in this RTP independently and compare
the same with the answers given to assess your level of preparedness for
the examination.
PAPER – 3: TAXATION
Section A: Income-tax Law (50 Marks)
The Income-tax law, as amended by the Finance Act, 2023 and
significant notifications, circulars and other legislative amendments upto
31.10.2023 are relevant for May, 2024 Examination. The relevant
assessment year for May, 2024 examination is A.Y. 2024-25.

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The June, 2023 edition of the Study Material, comprising of two modules
(Modules 1 & 2), is based on the provisions of income-tax law, as
amended by the Finance Act, 2023 and significant notifications and
circulars issued upto 30.04.2023. Hence, the same is applicable for
May, 2024 Examination. Further, a list of topic-wise exclusions from the
syllabus and inclusions with reference to section 10 in the syllabus has
been specified by way of “Study Guidelines” and the same has been
webhosted at https://resource.cdn.icai.org/76864bos61928.pdf at BoS
Knowledge Portal.
The above referred study material has to be read along with Statutory
Update for May, 2024 Examination webhosted at
https://resource.cdn.icai.org/77982bos62599.pdf at BoS Knowledge
Portal, which contains the significant notifications/circulars issued between
01.05.2023 and 31.10.2023, which are also relevant for May, 2024
Examination.
You have to read the Study Material thoroughly to attain conceptual
clarity. Tables, diagrams and flow charts have been extensively used to
facilitate easy understanding of concepts. The amendments made by the
Finance Act, 2023 and latest notifications and circulars have been given
in italics/bold italics. Examples and Illustrations given in the Study
Material would help you understand the application of concepts. Work
out the exercise questions at the end of each chapter and then, compare
your answers with the answers given to test your level of understanding.
Thereafter, solve the MCQs and case scenarios based MCQs uploaded in
MCQ Paper Practice Dashboard and assess your level of understanding.
Finally, solve the questions given in this RTP independently and compare
the same with the answers given to assess your level of preparedness for
the examination.
Section B: Goods and Service Tax (50 Marks)
For Section B: Goods and Services Tax of Paper 3: Taxation, the provisions
of the CGST Act, 2017 and the IGST Act, 2017 as amended by the Finance
Act, 2023, including significant notifications and circulars issued and other
legislative amendments made, up to 31st October, 2023, are applicable for
May 2024 examination.

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Further, a list of topic-wise exclusions from the syllabus has been specified
by way of “Study Guidelines for May, 2024 Examination”. The same is
given as part of “Applicability of Standards/Guidance Notes/Legislative
Amendments etc. for May, 2024 - Intermediate Examination”
appended at the end of this Revision Test Paper.
The June, 2023 edition of the Study Material alongwith the Statutory
updates for May, 2024 examination is applicable for Intermediate Course
Paper 3: Taxation, Section B: Goods and Services Tax. The Study Material
has been divided into two modules for ease of handling by students.
Study Material is based on the provisions of the CGST Act and IGST Act as
amended upto 30.04.2023. The amendments in the GST law made between
01.05.2023 and 31.10.2023 are covered in the Statutory Updates for
May 2024 examination. For the ease of reference, the amendments have
been grouped into Chapters which correspond with the Chapters of the
Study Material.
You have to read the Study Material alongwith the Statutory Update
thoroughly to attain conceptual clarity. You are advised to solve the
questions given in this RTP independently and compare the same with the
answers given to assess your level of preparedness for the examination.

vii MAY 2024 EXAMINATION

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 PAPERR – 1::
ADVANCED
D ACCOUNTING

QUESTIONS

PART – I: Multiple Choice Questions based on Case Scenarios

1. RTS Ltd, (“RTS” or the “Company”), is engaged in the business of
manufacturing of equipments/components. The Company has a
contract with the Indian Railways for a brake component which is
structured such that:
x The Company’s obligation is to deliver the component to the
Railways’ stockyard, while the delivery terms are ex-works, the
Company is responsible for engaging a transporter for delivery.
x Railways sends an order for a defined quantity.
x The Company manufactures the required quantity and informs
Railways for carrying out the inspection.
x Railways representatives visit the Company’s factory and inspect
the components, and mark each component with a quality check
sticker.
x Goods once inspected by Railways, are marked with a hologram
sticker to earmark for delivery identification by the customer
when they are delivered to the customer’s location.
x The Company raises an invoice once it dispatches the goods.
The management of RTS is under discussion with the auditors of the
Company in respect of accounting of a critical matter as regards its
accounting with respect subsequent events i.e. events after the
reporting period. They have been checking as to which one of the

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following events after the reporting period provide evidence of

conditions that existed at the end of the reporting period?
i. Nationalisation or privatization by government
ii. Out of court settlement of a legal claim
iii. Rights issue of equity shares
iv. Strike by workforce
v. Announcing a plan to discontinue an operation
The Company has received a grant of ` 8 crores from the Government
for setting up a factory in a backward area. Out of this grant, the
Company distributed ` 2 crores as dividend. The Company also
received land, free of cost, from the State Government but it has not
recorded this at all in the books as no money has been spent.
RTS has a subsidiary, A Ltd, which is evaluating its production process
wherein normal waste is 5% of input. 5,000 MT of input were put in
process resulting in wastage of 300 MT. Cost per MT of input was
` 1,000. The entire quantity of waste was on stock at the end of the
financial year.
i. When should RTS Ltd recognize revenue as per the Accounting
Standards notified under the Companies (Accounting Standards)
Rules, 2006? Would your answer be different if inspection is
normally known to lead to no quality rejections?
(a) Revenue should be recognized on dispatch of components.
The assessment would not change even in case where
inspection is normally known to lead to no quality rejections.
(b) Revenue should be recognized on completion of inspection
of components. The assessment would not change even in
case where inspection is normally known to lead to no
quality rejections.
(c) Revenue should be recognized on dispatch of components.
The assessment would change where inspection is normally
known to lead to no quality rejections.
(d) Revenue should be recognized on delivery of the component

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ADVANCED ACCOUNTING

to the Railways’ stockyard. The assessment would change

where inspection is normally known to lead to no quality
rejections.
ii. In respect of A Ltd, state with reference to Accounting Standards
notified under the Companies (Accounting Standards) Rules,
2006, what would be value of the inventory to be recorded in the
books of accounts?
(a) ` 4,700,000.
(b) ` 5,000,000.
(c) ` 4,950,000.
(d) ` 4,947,368.
iii. Please guide regarding the accounting treatment of both the
grants mentioned above in line with the requirements of
Accounting Standard 12.
(a) Distribution of dividend out of grant is correct. In the second
case also not recording land in the books of accounts is
correct.
(b) Distribution of dividend out of grant is incorrect. In the
second case, not recording land in the books of accounts is
correct.
(c) Distribution of dividend out of grant is correct. In the second
case, land should be recorded in the books of accounts at a
nominal value.
(d) Distribution of dividend out of grant is incorrect. In the
second case, land should be recorded in the books of
accounts at a nominal value.
General MCQs
2. Gyan Ltd. borrowed ` 10 crore for construction of a plant at the rate of
10% per annum (interest paid annually ` 1 crore). The construction was
being carried on and out of the borrowings, ` 4 crore was temporarily
placed in a fixed deposit at the rate of 6% per annum (interest earned

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` 24 lakh). At the year end, how much cost of borrowing Gyan Limited
will capitalise?
(a) Interest paid on ` 10 crore i.e. ` 1 crore
(b) Interest paid on ` 6 crore as only this amount was utilized i.e. ` 60
Lakh.
(c) Interest paid less income on temporary investment i.e. ` 76 lakh
(d) Nothing will be capitalized
Part II - Descriptive Questions
Introduction to Accounting Standards
3. What do you mean by Carve outs/ins in Ind AS? Explain
Framework for Preparation and Presentation of Financial Statements
4. Shiva started a business on 1 st April 2022 with ` 15,00,000 represented
by 80,000 units of ` 25 each. During the financial year ending on
31st March, 2023, he sold the entire stock for ` 35 each. In order to
maintain the capital intact, calculate the maximum amount, which can be
withdrawn by Shiva in the year 2022-23 if Financial Capital is maintained
at historical cost.
Applicability of Accounting Standards
5. Based upon criteria for rating of non-corporate entity, categorize the
following as Level I, Level II and Level IIl Level IV entities for the purpose
of compliance of Accounting Standards in India.
(a) Rama Textiles whose turnover (excluding other income) exceeds
ten crore but does not exceed rupees fifty crore in the immediately
preceding accounting year.
(b) Star Industries is having borrowings (including public deposits) in
excess of rupees two crore but not in excess of rupees ten crore at
any time during the immediately preceding accounting year.
(c) Newman Industries is having borrowings (including public
deposits) less than rupees fifty lakh at any time during the
immediately preceding accounting year.

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ADVANCED ACCOUNTING

(d) SS Finance is a financial institution carrying its business in India

since last 10 years.
(e) DD Finance, holding company of SS Finance. (Entity mentioned at
Point (v) above)
(f) Reliable Co-op Bank, a co-operative bank, carrying banking
operations since last 15 years.
AS 3 “Cash Flow Statements”
6. From the following particulars calculate cash flows from Operating
activities:

Particulars `
Retained earning 17,000
Depreciation 4,000
Loss on Sale of Machinery 3,000
Provision for tax 7,000
Interim Dividend paid during the year 10,000
Dividend paid during the year 8,000
Premium payable on redeemable Preference Shares 2,000
Profit on sale of investment 10,000
Refund of tax 1,000

Additional Information:

31. 3. 22 31. 3. 23
` `
Trade Receivable 10,000 12,000
Trade Payable 7,000 15,000
Provision for Tax 4,000 7,000
Prepare Expenses 2,000 1,000
Outstanding Expenses 1,400 1,000

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AS 18 “Related Party Disclosures”

7. (i) A Ltd. enter into an agreement with Mr. Bhola for running a business
for a fixed amount payable to the later every year. The contract states
that the day-to-day management of the business will be handled by
Mr. Bhola, while all financial and operating policy decisions are taken
by the Board of Directors of the Company. Mr. Bhola does not own
any voting power in A Limited.
(ii) Shri Manoj a relative of key management personnel received
remuneration of ` 3,50,000 for his services in the company for the
period from 1st April, 2022 to 30th June, 2022. On 1 st July, 2022, he
left the service.
You are required to suggest how the above transactions will be treated
as at the closing date i.e. on 31st March, 2023 for the purposes of AS 18-
Related Party Disclosures.
AS 24 “Discontinuing Operations”
8. Arzoo Ltd. is in the business of manufacture of passenger cars and
commercial vehicles. The company is working on a strategic plan to
shift from the passenger car segment to the commercial vehicles
segment over the coming 5 years. However, no specific plans have been
drawn up for sale of neither the division nor its assets. As part of its
plan, it has planned that it will reduce the production of passenger cars
by 20% annually. It also plans to commence another new factory for the
manufacture of commercial vehicles plus transfer of employees in a
phased manner. These plans have not approved from the Board of
Directors and the new factory for manufacture of commercial vehicles
has not yet started. You are required to comment if mere gradual
phasing out in itself can be considered as a ‘Discontinuing Operation'
within the meaning of AS 24.
AS 13 “Accounting for Investments”
9. ABC Ltd. holds 2,000, 15% Debentures of ` 100 each in XYZ Ltd. as on
April 1, 2022 at a cost of ` 2,50,000.
Interest is payable on June, 30 and December, 31 each year.

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ADVANCED ACCOUNTING

Following are the details of 15% Debentures purchased and sold during
the year 2022-23.

Particulars
On May 1, 2022, 1,000 debentures are purchased cum-interest at
` 1,05,000.
On November 1, 2022, 1200 debentures are sold ex-interest at
` 1,28,200.
On November 30, 2022, 500 debentures are purchased ex-interest at
` 54,500.
On December 31, 2022, 900 debentures are sold cum-interest for
` 1,18,000

You are required to prepare the investment Account showing value of

holdings on March 31, 2023 at cost, using FIFO Method.
AS 16 “Borrowing Costs”
10. H Ltd. began the construction of a new building on 1 st April 2022. It
obtained a special loan of ` 6,00,000 on 1st April 2022 at an interest of
12% to finance the construction of the building.
The company's other outstanding two non-specific loans on 1 st April,
2022 were as follows:

Amount in ` Rate of Interest

30,00,000 14%
54,00,000 16%

The expenditure incurred on the building project was as per detail given
below:

Amount in `
1st May, 2022 12,00,000
st
1 July, 2022 15,00,000
st
1 October, 2022 27,00,000
st
1 March, 2023 7,20,000

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The building was completed by 31 st March 2023.

Following the provisions of Accounting Standard 16, you are required to
calculate the amount of interest to be capitalized and also give one
Journal Entry for capitalizing the cost and borrowing cost in respect of
the building.
AS 19 “Leases”
11. Sooraj Limited wishes to obtain a machine costing ` 30 lakhs by way of
lease. The effective life of the machine is 14 years, but the company
requires it only for the first 3 years. It enters into an agreement with Star
Ltd., for a lease rental for ` 3 lakhs p.a. payable in arrears and the
implicit rate of interest is 15%. The chief accountant of Sooraj Limited is
not sure about the treatment of these lease rentals and seeks your
advice. (use annuity factor at @ 15% for 3 years as 2.28)
AS 14 “Accounting for Amalgamations”
12. Naresh Ltd. had the following transactions during the financial year
2022-2023:
(i) Naresh Ltd. acquired running business of Sunil Ltd. for ` 10,80,000
on 15th May, 2022. The fair value of Sunil Ltd.'s net assets was
` 5,16,000. Naresh Ltd. is of the view that due to popularity of
Sunil Ltd.’s product in the market, its goodwill exists.
(ii) Naresh Ltd. had taken a franchise on July 2022 to operate a
restaurant from Sankalp Ltd. for ` 1,80,000 and at an annual fee of
10% of net revenues (after deducting expenditure). The franchise
expires after 6 years. Net revenues were ` 60,000 during the
financial year 2022-2023.
(iii) On 20th August, 2022, Naresh Ltd, incurred costs of ` 2,40,000 to
register the patent for its product. Naresh Ltd. expects the patent’s
economic life to be 8 years.
Naresh Ltd. follows an accounting policy to amortize all intangibles on
straight line basis over the maximum period permitted by accounting
standards taking a full year amortization in the year of acquisition.

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ADVANCED ACCOUNTING

Goodwill on acquisition of business to be amortized over 5 years (SLM)

as per AS 14.
Prepare a schedule showing the intangible assets section in Naresh Ltd.
Balance Sheet at 31st March, 2023.
AS 15 “Employee Benefits”
13. Hello Limited belongs to the manufacturing industry. The company
received an actuarial valuation for the first time for its pension scheme
which revealed a surplus of ` 12 lakhs. It wants to spread the same over
the next 2 years by reducing the annual contribution to ` 4 lakhs instead
of ` 10 lakhs. The average remaining life of the employees is estimated
to be 6 years. You are required to advise the company on the following
items from the viewpoint of finalization of accounts, taking note of the
mandatory accounting standards.
AS 4 “Contingencies and Events occurring after the balance sheet date”
14. Surya Limited follows the financial year from April to March. It has
provided the following information.
(i) A suit against the Company's Advertisement was filed by a party
on 5th April, 2023, claiming damages of ` 5 lakhs.
(ii) Company sends a proposal to sell an immovable property for ` 45
lakhs in March 2023. The book value of the property is ` 30 lakhs
as on year end date. However, the Deed was registered on 15th
April, 2023.
Keeping in view the provisions of AS-4, you are required to state with
reasons whether the above events are to be treated as Contingencies,
Adjusting Events or Non-Adjusting Events occurring after Balance Sheet
date.
AS 7 “Construction Contracts”
15. The following data is provided for M/s. Raj Construction Co.
(i) Contract Price - ` 85 lakhs
(ii) Materials issued - ` 21 Lakhs out of which Materials costing ` 4
Lakhs is still lying unused.at the end of the period.

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(iii) Labour Expenses for workers engaged at site - ` 16 Lakhs (out of

which ` 1 Lakh is still unpaid)
(iv) Specific Contract Costs = ` 5 Lakhs
(v) Sub-Contract Costs for work executed - ` 7 Lakhs, Advances paid
to Sub-Contractors - ` 4 Lakhs
(vi) Further Cost estimated to be incurred to complete the contract -
` 35 Lakhs
You are required to compute the Percentage of Completion, the
Contract Revenue and Cost to be recognized as per AS-7.
AS 9 “Revenue Recognition”
16. Following information of BS Products Ltd. is given:
(i) Goods of ` 2,00,000 sold to Den Ltd. on 20-03-2023 but at the
request of the buyer these were delivered on 10-04-2023. ·
(ii) On 15-01-2023 goods of ` 3,00,000 were sent on consignment
basis, of which 20% of the goods unsold are lying with the
consignee as on 31-03-2023.
(iii) ` 4,00,000 worth of goods were sold on approval basis on
01-12-2022. The period of approval was 3 months after which they
were considered as sold. Buyer sent approval for 75% goods upto
31-01-2023 and no approval or disapproval received for the
remaining goods till 31-03-2023.
(iv) Apart from the above, BS Products Ltd. sells goods to dealers also.
One of the condition of sale is that interest is payable @ 2% p.m.
for delayed payments by dealers. Percentage of interest recovery is
only 10% i.e. ` 50,000 on such overdue outstanding due to various
reasons. During the year 2022-23, company wants to recognize the
entire interest receivable of ` 60,000.
You are required to advise the accountant of BS Products Ltd., with valid
reasons, the amount to be recognized as revenue in above cases in the
context of AS-9 and also determine the total revenue to be recognized
for the year ending 31-03-2023.

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AS 21 “Consolidated Financial Statements”

17. Zoom Ltd. acquired 70% shares of Star Ltd. @ ` 30 per share. Following
is the extract of Balance Sheet of Star Ltd.:
`
15,00,000 Equity Shares of ` 10 each 1,50,00,000
15% Debentures 15,00,000
Trade Payables 82,50,000
Property, Plant and Equipment 1,05,00,000
Investments 67,50,000
Current Assets 1,02,00,000
Loans and Advances 33,00,000

On the same day Star Ltd. declared dividend at 20% and as agreed
between both the companies Property, Plant and Equipment were to be
depreciated @ 10% and investment to be taken at market value of
` 90,00,000. Calculate the Goodwill or Capital Reserve to be recorded in
Consolidated Financial Statements.
Preparation of Financial Statements of Companies
18. Aqua ltd. has authorized capital of ` 50 lakhs divided into 5,00,000
equity shares of ` 10 each. Their books show the following ledger
balances as on 31 st March, 2023:
` `
Inventory 1.4.2022 6,65,000 Bank Current Account 20,000
(Dr. balance)
Discounts & Rebates 30,000 Cash in hand 11,000
allowed
Carriage Inwards 57,500
Purchases 12,32,500 Calls in Arrear @ ` 2
per share 10,000
Rate, Taxes and 55,000 Equity share capital 20,00,000
Insurance

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Furniture & Fixtures 1,50,000 (2,00,000 shares of ` 10

each)
Business Expenses 56,000 Trade Payables 2,40,500
Wages 14,79,000 Sales 36,17,000
Freehold Land 7,30,000 Rent (Cr.) 30,000
Plant & Machinery 7,50,000 Transfer fees received 6,500
Engineering Tools 1,50,000 Profit & Loss A/c (Cr.) 67,000
Trade Receivables 4,00,500 Repairs to Building 56,500
Advertisement 15,000 Bad debts 25,500
Expenses
Commission & 67,500
Brokerage Expenses

The inventory (valued at cost or market value, which is lower) as on

31st March, 2023 was ` 7,05,000. Outstanding liabilities for wages
` 25,000 and business expenses ` 36,500.
Charge depreciation on written down values of Plant & Machinery
@ 5%, Engineering Tools @ 20% and Furniture & Fixtures @10%.
Provide ` 25,000 as doubtful debts for trade receivables. Provide for
income tax @ 30%. It was decided to transfer ` 10,000 to reserves.
You are required to prepare Statement of Profit & Loss for the year
ended 31st March, 2023 and Balance Sheet as at that date.
Buy back of Securities
19. Mukti Ltd. (a non-listed company) provide the following information as
on 31.3.2023:

(`
`)
Land and Building 21,50,000
Plant & Machinery 15,00,000
Non-current Investment 2,00,000
Trade Receivables 5,50,000
Inventories 1,80,000

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Cash and Cash Equivalents 40,000

Share capital:1,00,000 Equity Shares of ` 10 each fully paid 10,00,000
up
Securities Premium 3,00,000
General Reserve 2,50,000
Profit & Loss Account (Surplus) 1,50,000
10% Debentures (Secured by floating charge on all assets) 20,00,000
Unsecured Loans 8,00,000
Tarde Payables 1,20,000

On 21st April, 2023 the Company announced the buy back of 15,000 of
its equity shares @ ` 15 per share. For this purpose, it sold all its
investment for ` 2.50 lakhs.

On 25th April, 2023, the company achieved the target of buy back. On
1st May, 2023 the company issued one fully paid up share of ` 10 each
by way of bonus for every eight equity shares held by the equity
shareholders.
You are required to pass necessary Journal Entries for the above
transactions.
Accounting for Reconstruction of companies
20. As a part of the reconstruction scheme of Getting better Ltd, the
following terms were agreed upon-
1. The shareholders to receive in lieu of their present holdings (viz.
10,000 shares of ` 50 each), the following-
(a) 15,000 Fully paid equity shares of ` 10 each;
(b) 12% fully paid preference shares to the extent of 2/5 of total
equity shares;
(c) To pay them ` 50,000 and transfer the remaining to the
reconstruction account.
2. 8% Preference share capital - ` 3,00,000

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To write down the value of preference shares to ` 50 (original face

value ` 100).

3. 14% debentures of the nominal value of ` 2,00,000 along with

accrued interest ` 56,000 was waived off for three fourths of the
total amount, and the remaining being paid in cash.
Show the necessary journal entries in the books of Getting better
company based on the above scheme.

SUGGESTED ANSWERS/HINTS

Answer to Case Scenario and MCQ

Q. No. Hints
1. i. (b)
ii. (d)
iii. (d)
2. (c)

Descriptive Answers
3. Certain changes have been made in Ind AS considering the economic
environment of the country, which is different as compared to the
economic environment presumed to be in existence by IFRS. These
differences are due to differences in economic conditions prevailing in
India. These differences which are in deviation to the accounting
principles and practices stated in IFRS, are commonly known as
‘Carve-outs’. Additional guidance given in Ind AS over and above what
is given in IFRS, is termed as ‘Carve in’.
4.

Particulars Financial Capital Maintenance

at Historical Cost (``)
Closing equity 28,00,000 represented by cash
(` 35 x 80,000 units)

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Opening equity 80,000 units x ` 25 = 20,00,000

Permissible drawings to keep Capital 8,00,000 (28,00,000 – 20,00,000)
intact

5. (a) Level III Entity – Rama textiles, whose turnover (excluding other
income) exceeds rupees ten crore but does not exceed rupees fifty
crore in the immediately preceding accounting year.
(b) Level III Entity – Star industries is having borrowings (including
public deposits) in excess of rupees two crore but not in excess of
rupees ten crore at any time during the immediately preceding
accounting year.
(c) Level IV Entity– Newman Industries is having borrowings (including
public deposits) less than rupees fifty lakhs at any time during the
immediately preceding accounting year.
(d) Level I Entity – SS is a financial institutions carrying its business in
India since last 10 years.
(e) Level I Entity – DD finance, Holding company of SS finance (Entity
mentioned in point (d) above).
(f) Level I Entity – Reliable co-operative banks carrying on banking
business since last 15 years.
6. Calculation of Cash Flow from Operating Activities

Particulars Amount `
Retained earnings 17,000
Add: Depreciation 4,000
Add: Loss on sale of Machinery 3,000
Add: Premium Payable on redeemable Preference 2,000
Shares
Add: Dividend paid 8,000
Add: Interim dividend paid during the year 10,000
Add: provision for tax made during the current year 7,000
Less: Refund of tax (1,000)

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Less: Profit on Sale of Investment (10,000)

Operating Profit before Working Capital Changes 40,000
Add: Decrease in Prepaid Expenses 1,000
Less: Increase in Trade receivable (2,000)
Add: Increase in Trade Payable 8,000
Less: Decrease in Outstanding Expenses (400)
Cash generated from (Net of refund) operation 46,600
Less: Income tax paid (4,000 – 1,000) (3,000)
Net Cash flow operating activities 43,600

7. (i) Mr. Bhola will not be considered as a related party of A Ltd. in view of
provisions of AS 18 “Related Party Disclosures” which states,
"individuals owning, directly or indirectly, an interest in the voting
power of the reporting enterprise that gives them control or
significant influence over the enterprise, and relatives of any such
individual are related parties".
In the given case, in the absence of share ownership, Mr. Bhola
would not be considered to exercise significant influence on A
Limited, even though there is an agreement giving him the power
to manage the company. Further, the fact that Mr Bhola does not
have the ability to direct or instruct the board of directors does
not qualify him as a key management personnel.
(ii) According to AS 18 on ‘Related Party Disclosures’, parties are
considered to be related if at any time during the reporting period
one party has the ability to control the other party or exercise
significant influence over the other party in making financial
and/or operating decisions.
Hence, Shri Manoj, a relative of key management personnel should
be identified as related party for disclosure in the financial
statements for the year ended 31.3.2023 as he received
remuneration for his services in the company for the period from
1st April,2022 to 30 th June,2022.

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8. Mere gradual phasing out is not considered as discontinuing operation

as defined under AS 24, ‘Discontinuing Operations’.
Examples of activities that do not necessarily satisfy criterion of the
definition, but that might do so in combination with other circum-
stances, include:
(1) Gradual or evolutionary phasing out of a product line or class of
service;
(2) Discontinuing, even if relatively abruptly, several products within
an ongoing line of business;
(3) Shifting of some production or marketing activities for a particular
line of business from one location to another; and
(4) Closing of a facility to achieve productivity improvements or other
cost savings.
In view of the above, mere gradual phasing out in itself cannot be
considered as discontinuing operation. The companies’ strategic plan
also has no final approval from the board through a resolution and there
is no specific time bound activities like shifting of assets and employees.
Moreover, the new segment i.e. commercial vehicle production line in a
new factory has not started.
9. In the Books of ABC Ltd
15% Debentures (Investment) Account
Particulars Face Interest Principal Particulars Face Interest Principal
Value Value
` ` ` ` ` `
1.4.22 To Balance 30.6.22 By Bank A/c
b/d 2,00,000 7,500 2,50,000 22,500
1.11.22 By Bank A/c
1,20,000 6,000 1,28,200
1.5.22 To Bank 1.11.22 By P&L A/c 21,800
A/c 1,00,000 5,000 1,00,000
31.12.22 By Bank A/c 90,000 6,750 1,11,250
30.11.22 To Bank 31.12.22 By Bank A/c 10,500
A/c 50,000 3,125 54,500

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31.12.22 To P&L 1,250 31.3.23 By Balance

A/c c/d 1,40,000 5,250 1,44,500
31.3.23 To P&L
A/c
(Transfer) 35,375
3,50,000 51,000 4,05,750 3,50,000 51,000 4,05,750

1. Loss on sale of debentures on 1.11.22

Cost = 2,50,000/2,000X 1,200 = ` 1,50,000
Sale proceeds = ` 1,28,200
Loss = ` 1,50,000 less ` 1,28,200 = ` 21,800
2. Profit on sale of debentures on 31.12.22
Cost = 2,50,000/2,000X 800 + 1,00,000/1,000X 100 = ` 1,10,000
(1,00,000+10,000)
Sale proceeds = ` 1,11,250
Loss = ` 1,11,250 less ` 1,10,000 = ` 1,250
3.

Calculation of closing Units `

balance:
Debentures in hand remained
in hand at 1.4.23
Purchased on 1st May, 22 900 1,00,000 x 9/10 90,000
Purchased on 30th Nov. 22 500 54,500 54,500
1,400 1,44,500

10. Interest amount to be capitalized

`
Specific borrowings (` 6,00,000 x 12%) = 72,000
Non-specific borrowings
[` 30,35,000 (` 36,35,000 – ` 6,00,000) x 15.29%*] = 4,64,052
Amount of interest to be capitalized = 5,36,052

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Journal Entry for capitalizing cost and borrowing cost

Date Particulars Dr. (`
`) Cr. (`
`)
31.3.2023 Building account Dr. 66,56,052
(Cost of building ` 61,20,000
+ borrowing cost ` 5,36,052)
To Bank account 66,56,052
(Being amount of cost of
building and borrowing cost
thereon capitalized)
Working notes:
(i) Computation of average accumulated expenses
`
` 12,00,000 x 11 / 12 = 11,00,000
` 15,00,000 x 9 / 12 = 11,25,000
` 27,00,000 x 6 / 12 = 13,50,000
` 7,20,000 x 1 / 12 = 60,000
61,20,000 36,35,000

(ii) Calculation of average interest rate other than for specific

borrowings

Amount of loan (`
`) Rate of Amount of
interest interest
(`)
30,00,000 14% = 4,20,000
54,00,000 16% = 8,64,000
84,00,000 12,84,000
Weighted average rate of = 15.29%*
12,84,000
interest ቀ84,00,000 × 100ቁ (Rounded off)

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11. As per AS 19 ‘leases’, a lease will be classified as finance lease if at the

inception of the lease, the present value of minimum lease payment x
amounts to at least substantially all of the fair value of leased asset. In
the given case, the implicit rate of interest is given at 15%. The present
value of minimum lease payments at 15% using PV- Annuity Factor can
be computed as:

Annuity Factor (Year 1 to Year 3) 2.28

Present Value of minimum lease payments (` 3 lakhs each ` 6.84 lakhs
year)

Thus present value of minimum lease payments is ` 6.84 lakhs and the
fair value of the machine is ` 30 lakhs. In a finance lease, lease term
should be for the major part of the economic life of the asset even if
title is not transferred. However, in the given case, the effective useful
life of the machine is 14 years while the lease is only for three years.
Therefore, lease agreement is an operating lease. Lease payments under
an operating lease should be recognized as an expense in the statement
of profit and loss on a straight line basis over the lease term unless
another systematic basis is more representative of the time pattern of
the user’s benefit.
12. Naresh Ltd.
Balance Sheet (Extract relating to intangible asset) as on
31st March 2023
Note No. `
Assets
(1) Non-current assets
Intangible assets 1 8,11,200
Notes to Accounts (Extract)
` `
1. Intangible assets
Goodwill (Refer to note 1) 4,51,200

x
In calculating the present value of the of minimum lease payments, the discount rate
is the interest rate implicit in the lease.

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Franchise (Refer to Note 2) 1,50,000

Patents (Refer to Note 3) 2,10,000 8,11,200
Working Notes:
`
(1) Goodwill on acquisition of business
Cash paid for acquiring the business (purchase 10,80,000
consideration)
Less: Fair value of net assets acquired (5,16,000)
Goodwill 5,64,000
Less: Amortisation as per AS 14 ie. over 5 years (as (1,12,800)
per SLM)
Balance to be shown in the balance sheet 4,51,200
(2) Franchise 1,80,000
Less: Amortisation (over 6 years) (30,000)
Balance to be shown in the balance sheet 1,50,000
(3) Patent 2,40,000
Less: Amortisation (over 8 years as per SLM) (30,000)
Balance to be shown in the balance sheet 2,10,000

13. According to AS 15 (Revised 2005) ‘Employee Benefits’, actuarial gains

and losses should be recognized immediately in the statement of profit
and loss as income or expense. Therefore, surplus amount of ` 12 lakhs
is required to be credited to the profit and loss statement of the current
year.
14. Accordingly, the treatment as per AS -4 “Events occurring after the
balance sheet date” is:
(i) Suit filed against the company is a contingent liability but it was
not existing as on date of balance sheet date as the suit was filed
on 5th April after the balance sheet date. As per AS 4,
'Contingencies' is restricted to conditions or situations at the
balance sheet date, the financial effect of which is to be
determined by future events which may or may not occur.

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However, it may be disclosed with the nature of contingency,

being a contingent liability.
This event does not pertain to conditions on the balance sheet
date. Hence, it will have no effect on financial statement and will
be a non-adjusting event.
(ii) In this case, no adjustment to assets and liabilities is required as
the event does not affect the determination and the condition of
the amounts stated in the financial statements for the year ended
31st March, 2023. There was just a proposal before 31st March,
2023 and hence sale cannot be shown in the financial statements
for the year ended 31st March, 2023.
Sale of immovable property is an event occurring after the balance
sheet date is a non-adjusting event.
15. Computation of contract cost

` Lakh ` Lakh
Material cost incurred on the contract (net of 21-4 17
closing stock)
Add: Labour cost incurred on the contract 16
(including outstanding amount)
Specified contract cost given 5
Sub-contract cost (advances should not be 7
considered)
Cost incurred (till date) 45
Add: further cost to be incurred 35
Total contract cost 80

Percentage of completion = Cost incurred till date/Estimated total cost

= ` 45,00,000/` 80,00,000
= 56.25%

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Contract revenue and costs to be recognized

Contract revenue (` 85,00,000x56.25%) = ` 47,81,250
Contract costs = ` 45,00,000
16. (i) the seller of goods has transferred to the buyer the property in the
goods for a price or all significant risks and rewards of ownership
have been transferred to the buyer and the seller retains no effective
control of the goods transferred to a degree usually associated with
ownership; and
(ii) no significant uncertainty exists regarding the amount of the
consideration that will be derived from the sale of the goods.
Case (i)
The sale is complete but delivery has been postponed at buyer’s request.
BS Products Ltd. should recognize the entire sale of ` 2,00,000 for the
year ended 31 st March, 2023.
Case (ii)
20% goods lying unsold with consignee should be treated as closing
inventory and sales should be recognized for `2,40,000 (80% of `
3,00,000). In case of consignment sale revenue should not be recognized
until the goods are sold to a third party.
Case (iii)
In case of goods sold on approval basis, revenue should not be
recognized until the goods have been formally accepted by the buyer or
the buyer has done an act adopting the transaction or the time period
for rejection has elapsed or where no time has been fixed, a reasonable
time has elapsed. Therefore, revenue should be recognized for the total
sales amounting ` 4,00,000 as the time period for rejecting the goods
had expired.
Case (iv)
As per the standard, “where the ability to assess the ultimate collection
with reasonable certainty is lacking at the time of raising any claim, the
revenue recognition is postponed to the extent of uncertainty involved.
In such cases, the revenue is recognized only when it is reasonably

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certain that the ultimate collection will be made”. In this case, interest
should be recognized only if the ultimate collection is certain and the
company expects to realize interest for the delayed payments for
` 50,000 only. Hence, based on the past experience, the realization of
interest for the delayed payments by the agent is certain only to the
extent of this amount and not ` 60,000. Therefore, the interest income
of ` 50,000 should be recognized in the books for the year ended
31st March, 2023.
Thus total revenue amounting ` 8,90,000 (2,00,000 + 2,40,000 + 4,00,000
+ 50,000) will be recognized for the year ended 31st March, 2023 in the
books of BS Products Ltd.
17. As per para 13 of AS 21 any excess of the cost to the parent of its
investment in a subsidiary over the parent’s portion of equity of the
subsidiary, at the date on which investment in the subsidiary is made,
should be described as goodwill to be recognised as an asset in the
consolidated financial statements. When the cost to the parent of its
investment in a subsidiary is less than the parent’s portion of equity of
the subsidiary, at the date on which investment in the subsidiary is
made, the difference should be treated as a capital reserve in the
consolidated financial statements.
Since dividend is declared by Star Ltd. on the date of acquisition itself, it
would be out of the divisible profits of Star Ltd. existing on the date of
acquisition i.e., pre-acquisition profits from the perspective of Zoom Ltd.
Accordingly, as per para 12 of AS 13, such pre-acquisition dividend
would be reduced from the cost of investment, as seen below in the
determination of Goodwill on the date of acquisition.

Calculation of Goodwill or Capital

Reserve ` `
Cost of Investment in Star Ltd. (70%
stake):
15,00,000 Equity Shares x 70% x ` 30
per share 3,15,00,000
Less: Pre-acquisition dividend:
10,50,000 shares x ` 2 (21,00,000) 2,94,00,000

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Less: Share of Zoom Ltd. in Net Assets

of Star Ltd (W.N) (1,55,40,000)
Goodwill on Date of Acquisition 1,38,60,000

Working Note:

Calculation of net asset ` `

Assets
Property, Plant and Equipment 1,05,00,000
Less: Value written off (` 105 lakhs x
10%) (10,50,000)
94,50,000
Investments at Market Value 90,00,000
Current Assets 1,02,00,000
Loans and Advances 33,00,000 3,19,50,000
Less: Liabilities
Trade Payables 82,50,000
15% Debentures 15,00,000 (97,50,000)
Net Assets of Star Ltd. 2,22,00,000
Share of Zoom Ltd. in Net Assets of Star
Ltd.: 70% 1,55,40,000

Note: In the absence of information about the reserves, it is presumed

that the given extract of the Balance Sheet of Star Ltd. is after considering
the effects of the dividend declared on the date of acquisition.
18. (a) Balance Sheet of Aqua ltd. as at 31st March, 2023

Particulars Note (`
`)
No.
I Equity and Liabilities
(1) Shareholders' Funds
(a) Share Capital 1 19,90,000
(b) Reserves and Surplus 2 3,82,000

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(2) Current Liabilities

(a) Trade Payables 2,40,500
(b) Other Current Liabilities 3 61,500
(c) Short-Term Provisions 4 1,35,000
Total 28,09,000
II ASSETS
(1) Non-Current Assets
(a) Property, Plant and Equipment 5 16,97,500
(2) Current Assets
(a) Inventories 7,05,000
(b) Trade Receivables 6 3,75,500
(c) Cash and Cash Equivalents 7 31,000
Total 28,09,000

Statement of Profit and Loss of Aqua Ltd.

for the year ended 31st March, 2023

Particulars Note (`
`)
No.
I Revenue from Operations 36,17,000
II Other Income 8 36,500
III Total Revenue [I + II] 36,53,500
IV Expenses:
Cost of purchases 12,32,500
Changes in Inventories (40,000)
[6,65,000-7,05,000]
Employee Benefits Expenses 9 15,04,000
Depreciation and Amortization 82,500
Expenses
Other Expenses 10 4,24,500
Total Expenses 32,03,500

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V Profit before Tax (III-IV) 4,50,000

VI Tax Expenses @ 30% (1,35,000)
VII Profit for the period 3,15,000

Notes to Accounts:
1. Share Capital

Authorized Capital
5,00,000 Equity Shares of ` 10 each 50,00,000
Issued Capital
2,00,000 Equity Shares of ` 10 each 20,00,000
Subscribed Capital and fully paid
1,95,000 Equity Shares of `10 each 19,50,000
Subscribed Capital but not fully paid
5,000 Equity Shares of `10 each ` 8 paid 40,000
(Call unpaid `10,000) 19,90,000

2. Reserves and Surplus

General Reserve 10,000

Surplus i.e. Balance in Statement of
Profit & Loss:
Opening Balance 67,000
Add: Profit for the period 3,15,000
Less: Transfer to Reserve (10,000) 3,72,000
3,82,000
3. Other Current Liabilities

Outstanding Expenses [25,000+36,500] 61,500

4. Short-term Provisions

Provision for Tax 1,35,000

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5. Property, Plant and Equipment

Particulars Value Depreciation Depreciation Written down
given rate Charged value at the end
(``) (``) (`
`)
Land 7,30,000 - 7,30,000
Plant & 7,50,000 5% 37,500 7,12,500
Machinery
Furniture & 1,50,000 10% 15,000 1,35,000
Fixtures
Engineering 1,50,000 20% 30,000 1,20,000
Tools
17,80,000 82,500 16,97,500

6. Trade Receivables

Trade receivables 4,00,500

Less: Provision for doubtful debts (25,000)
3,75,500

7. Cash & Cash Equivalent

Cash Balance 11,000

Bank Balance in current A/c 20,000
31,000

8. Other Income

Miscellaneous Income (Transfer fees) 6,500

Rental Income 30,000
36,500

9. Employee benefits expenses

Wages 14,79,000
Add: Outstanding wages 25,000
15,04,000

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10. Other Expenses

Carriage Inwards 57,500

Discount & Rebates 30,000
Advertisement 15,000
Rate, Taxes and Insurance 55,000
Repairs to Buildings 56,500
Commission & Brokerage 67,500
Miscellaneous Expenses [56,000+36,500] (Business 92,500
Expenses)
Bad Debts 25,500
Provision for Doubtful Debts 25,000
4,24,500

19. In the books of Mukti Ltd.

Journal Entries

Date Particulars Dr. Cr.

2023 ` `
April 21 Bank A/c Dr. 2,50,000
To Investment A/c 2,00,000
To Profit on sale of investment 50,000
(Being investment sold on profit)
April 25 Equity share capital A/c Dr. 1,50,000
Securities premium A/c Dr. 75,000
To Equity shares buy back A/c 2,25,000
(Being the amount due to equity
shareholders on buy back)
Equity shares buy back A/c Dr. 2,25,000
To Bank A/c 2,25,000
(Being the payment made on account of
buy back of 15,000 Equity Shares)

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General Reserve A/c OR P&L A/c Dr. 1,50,000

To Capital redemption reserve A/c 1,50,000
(Being amount equal to nominal value
of buy back shares transferred from free
reserves to capital redemption reserve
account as per the law)
May 1 Capital redemption reserve A/c Dr. 1,06,250
To Bonus to equity shareholder A/c 1,06,250
(W.N.1)
(Being the utilization of capital
redemption reserve to issue bonus
shares)
Bonus to equity shareholder A/c Dr. 1,06,250
To Equity share capital A/c 1,06,250
(Being issue of one bonus equity share
for every ten equity shares held)

Working Note:
1
Amount of bonus shares = ቂሺ1,00,000 - 15,000ሻ× 8ቃ ×10

= ` 1,06,250
20. Journal entries in the books of Getting better Co.

Date Particulars Dr. Cr.

` `
Share capital A/c (`50) Dr. 5,00,000
To Share capital A/c (`10) 1,50,000
To 12% Preference share capital 2,00,000
A/c 50,000
To Bank A/c 1,00,000
To Reconstruction A/c
(Being 15,000 equity shares of ` 10
and 12% preference shares issued,

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ADVANCED ACCOUNTING

paid in cash and remaining forgone

as a part of Reconstruction Scheme
dated...)
Preference Share capital A/c (` 100) Dr. 3,00,000
To Preference share capital A/c 1,50,000
(` 50) 1,50,000
To Reconstruction A/c
(Being the preference share capital
reduced and forfeited as per
reconstruction scheme)
14% Debenture A/c Dr. 2,00,000
Interest accrued on Debentures A/c Dr. 56,000
To Bank A/c 64,000
To Reconstruction A/c 1,92,000
(Being the debenture holders paid
their interest and amount foregone
as per reconstruction scheme)
Reconstruction A/c Dr. 4,42,000
To Capital Reserve A/c 4,42,000
(Being the balance in reconstruction
ac transferred to capital reserve as
per reconstruction scheme)

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CORPORATE
E AND D OTHER
R
LAWS

PART – I: ANNOUNCEMENTS STATING APPLICABILITY FOR MAY, 2024

EXAMINATIONS
Applicability for May, 2024 examinations
The Study Material (April 2023 edition) is applicable for May, 2024
examinations. This study material is updated for all amendments till 30 th April,
2023.
Further, all relevant amendments/ circulars/ notifications etc. in the Company
law part for the period 1st May, 2023 to 31 st October, 2023 are mentioned
below:
THE COMPANIES ACT, 2013
I. Chapter 3: Prospectus and Allotment of Securities
Notification S.O. 4744(E) dated 30 th October, 2023
The Central Government has inserted sub- section (3) and sub- section (4) to
section 23 of the Companies Act, 2013, through the Companies (Amendment)
Act, 2020.
Amendment:
In section 23, the following sub- sections to be included:
“(3) Such class of public companies may issue such class of securities for the
purposes of listing on permitted stock exchanges in permissible foreign
jurisdictions or such other jurisdictions, as may be prescribed.
(4) The Central Government may, by notification, exempt any class or classes
of public companies referred to in sub-section (3) from any of the provisions
of this Chapter, Chapter IV, section 89, section 90 or section 127 and a copy of
every such notification shall, as soon as may be after it is issued, be laid
before both Houses of Parliament.”

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[Enforcement Date: 30 th October, 2023]

(Pg 3.6)
Sub- section (3) and sub- section (4) to section 23 have been inserted through
the Companies (Amendment) Act, 2020. However, the said sub- sections have
been enforced w.e.f. 30 th October, 2023.
II. Chapter 7: Management and Administration
Notification S.O. G.S.R. 801(E) dated 27 th October, 2023
The Central Government has amended the Companies (Management and
Administration) Rules, 2014, through the Companies (Management and
Administration) Second Amendment Rules, 2023.
Amendment:
in Rule 9, after sub-rule (3), the following sub- rules shall be inserted,
namely:-
“(4) Every company shall designate a person who shall be responsible for
furnishing, and extending co-operation for providing, information to the
Registrar or any other authorised officer with respect to beneficial interest in
shares of the company.
(5) For the purpose of sub-rule(4), the company may designate-
(i) a company secretary, if there is a requirement of appointment of such
company secretary under the Act and the rules made thereunder; or
(ii) a key managerial personnel, other than the company secretary; or
(iii) every director, if there is no company secretary or key managerial
personnel.
(6) Until a person is designated as referred under sub-rule (4), the following
persons shall be deemed to have been designated person;
(i) company secretary, if there is a requirement of appointment of such
company secretary under the Act and the rules made thereunder; or
(ii) every Managing Director or Manager, in case a company secretary has not
been appointed; or

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(iii) every director, if there is no company secretary or a Managing Director or

Manager.
(7) Every company shall inform the details of the designated person in
Annual return.
(8) If the company changes the designated person at any time, it shall
intimate the same to the Registrar in e-form GNL-2 specified under the
Companies (Registration Offices and Fees) Rules, 2014.”

Old Law (Pg 7.13)

Sub- rule (4), (5), (6), (7) and (8) of Rule 9 is newly inserted

PART – II: QUESTIONS AND ANSWERS

QUESTIONS

DIVISION A: MULTIPLE CHOICE QUESTIONS

Case Scenario 1
Golden Limited is a listed company which is incorporated in 2013 having its
registered office at Delhi and corporate office in Noida. It is registered with an
authorised share capital of ` 20 crore divided into 2 crore equity shares of
` 10/- each. The paid-up share capital of the company is ` 10 crore divided
into 1 crore equity shares of ` 10/- each. The company is in construction
activities like construction of buildings, roads, etc.
On 8th January, 2022, the company incorporated a wholly owned subsidiary, D
Limited which is involved in supplying of construction materials like steel, iron,
cement, bricks, etc. D Limited elects to choose to prepare its first financial
statements for the period from 8th January, 2022 to 31st March, 2022.
On 2nd January, 2022, Golden Limited incorporated a new wholly owned
subsidiary, E Limited for providing project management consultancy service to
its customers or to parent company. On 5th January, 2022, Golden Limited
through its subsidiary, E Limited acquired 100% partnership interest in XYZ &
Co., partnership firm. E Limited elects to choose to prepare its first financial

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statements for the period from 2nd January, 2022 to 31st March, 2023 and
conducted its Annual General Meeting on 16th August, 2023.
On 1st July, 2022, the subsidiary company, D Limited incorporated a new
wholly owned subsidiary, F Limited.
Golden Limited prepared its standalone financial statements for the year
2021-22 and presented before the Board of Directors of the company on
25th August, 2022 for their approval and the same were adopted by the
shareholders in the Annual General Meeting held on 2 nd September, 2022.
Golden Limited prepared its standalone and consolidated financial statements
for the year 2022-23 and presented before the Board of Directors of the
company on 20th August, 2023 for their approval and the same were adopted
by the shareholders in the Annual General Meeting held on 26th September,
2023.
On the basis of above facts and by applying applicable provisions of the
Companies Act, 2013 and the applicable Rules therein, choose the correct
answer (one out of four) of the following MCQs given herein under: -
1. What is the last date for conducting AGM for E Limited?
(a) 30th September, 2022
(b) 31st December, 2022
(c) 30th September, 2023
(d) 31st December, 2023
2. What is the due date for conducting AGM for Golden Limited for the
year ended March 31, 2023?
(a) 30th September, 2023
(b) 31st October, 2023
(c) 30th November, 2023
(d) 31st December, 2023
3. The Companies Act, 2013 provides that in addition to standalone
financial statement, the company shall also prepare consolidated
financial statements which shall also be presented at AGM. Accordingly,

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the consolidated financial statements of Golden Limited for the financial

year ended 31st March, 2022 includes, financial statements:
(a) Golden Limited and D Limited
(b) Golden Limited, D Limited and E Limited
(c) Golden Limited, D Limited, E Limited and XYZ & Co., partnership
firm
(d) Golden Limited, D Limited, E Limited, F Limited and XYZ & Co.,
partnership firm
4. The Companies Act, 2013 provides that in addition to standalone
financial statement, the company shall also prepare consolidated
financial statements which shall also be presented before AGM.
Accordingly, the consolidated financial statements of Golden Limited for
the financial year ended 31st March, 2023 includes:
(a) Golden Limited and D Limited
(b) Golden Limited, D Limited and E Limited
(c) Golden Limited, D Limited, E Limited and XYZ & Co., partnership
firm
(d) Golden Limited, D Limited, E Limited, F Limited and XYZ & Co.,
partnership firm
5. Please select which is the correct option/ which is the most correct
statement:
(a) Golden Limited had given the notice for holding AGM in Mumbai
on Monday, 26th September, 2023 at 11.00 A.M.
(b) Golden Limited had given the notice for holding AGM in Delhi on
Monday, 26th September, 2023 at 11.00 A.M.
(c) Golden Limited had given the notice for holding AGM in Noida on
Tuesday, 27th September, 2023 at 11.00 A.M.
(d) Golden Limited had given the notice for holding AGM in Delhi on
Monday, 26th September, 2023 at 8.30 A.M.

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Case Scenario 2
Omx Software Private Limited is a private company and having its registered
office in Bangalore and is a wholly owned subsidiary of Omx Software Inc,
situated in USA. Mr. Rajat Kapoor, Mr. Shubham and Mr. Peter are directors of
Omx Software Private Limited. Mr. Rajat and Mr. Shubham are Indian residents
while Mr. Peter is a non-resident and stays in USA. Mr. Peter is also a director
in Omx Software Inc.
Mr. Rajat left India on 2nd November, 2021 for the purpose of looking after the
business of Omx Software Inc. Mr. Rajat came to back to India on
12th February, 2022 to meet his family and left India on 26th February, 2022
and went back to USA to look after the business of Omx Software Inc. Mr.
Rajat again visited India on 25th August, 2022 and stays in India for the whole
year.
Omx Software Private Limited had availed a consultancy service from a
company situated in USA for development of software for the purpose of
rendering service to its customers situated in India.
Mr. Rajat had purchased a residential property in USA on 27th April, 2022
which was self-occupied by him for his residential use.
6. Considering the provisions of the Foreign Exchange Management Act,
1999, which of the following options correctly determines the residential
status of Mr. Rajat Kapoor:
(a) Mr. Rajat Kapoor to be treated as resident in India for Financial
Year (FY) 2022-2023 and FY 2023-2024 since he stays in India for
more than 182 days
(b) Mr. Rajat Kapoor to be treated as non-resident in India for FY
2022-2023 since he left India for the purpose of carrying business
of Omx Software Inc and resident for FY 2023-2024
(c) Mr. Rajat Kapoor to be treated as non-resident for FY 2022-2023
and FY 2023-2024
(d) Mr. Rajat Kapoor to be treated as resident in India for FY 2022-
2023 since he stays in India for more than 182 days and non-
resident for FY 2023-2024

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7. Considering the provisions of the Foreign Exchange Management Act,

1999, how much amount can company remit outside India:
(a) Permissible amount remitted to US company for obtaining
consultancy without obtaining prior approval of RBI is USD
1,000,000 per project
(b) Permissible amount remitted to US company for obtaining
consultancy without obtaining prior approval of RBI is USD
100,000 per project
(c) Permissible amount remitted to US company for obtaining
consultancy without obtaining prior approval of RBI is USD
200,000 per project
(d) Permissible amount remitted to US company for obtaining
consultancy without obtaining prior approval of RBI is USD
2,000,000 per project
8. Considering the provisions of the Foreign Exchange Management Act,
1999, in respect of purchase of residential property by Mr. Rajat in USA
which of the following statement is correct?
(a) Purchase of residential property by Mr. Rajat is a current account
transaction
(b) Mr. Rajat has to sell his property before returning to India
permanently as he becomes resident in subsequent years
(c) Purchase of residential property by Mr. Rajat is neither capital
account transaction nor current account transaction
(d) Purchase of residential property by Mr. Rajat is a capital account
transaction
9. Bhavesh, Yash and Chirag incorporated a Limited Liability Partnership for
doing the business of trading of timber under the name Solid Lakkad
LLP. Chirag has shifted his residence from 12, Block C, Kamla Nagar,
Agra to 808, Sector 1, Bodla, Agra on 16 th November, 2023. Chirag
informed the firm about change of his address on 20 th November, 2023
sending a written notice. Now, by which date Solid Lakkad LLP is
required to file a notice with the registrar?

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(a) 01st December, 2023

(b) 05th December, 2023
(c) 16th December, 2023
(d) 20th December, 2023
10. Druk Software Company Inc., a company incorporated in Australia,
proposes to establish a place of business at Mumbai. The list of the
Directors includes (i) Mr. Arun – Managing Director, (ii) Mr. Ranveer –
Director, (iii) Mr. Ramesh Malik - Director and (iv) Mr. Navaaz - Director.
Ms. Lavina has been appointed as the Secretary of Druk Software
Company Inc. It is to be noted that Mr. Ramesh Malik and Mr. Navaaz,
resident in India, are the persons who have been authorised by Druk
Software Company Inc. to accept on behalf of the company service of
process, notices or other documents required to be served on Druk
Software Company Inc. In relation to the company’s establishment, you
are required to enlighten the Druk Company Inc. with respect to whose,
a declaration will be required to be submitted to the Registrar of
Companies by Druk Software Company Inc. for not being convicted or
debarred from formation of companies in or outside India.
(a) Mr. Arun, Mr. Ranveer, Mr. Ramesh Malik, Mr. Navaaz and
Ms. Lavina
(b) Mr. Arun, Mr. Ramesh Malik, Mr. Navaaz and Ms. Lavina
(c) Mr. Ramesh Malik and Mr. Navaaz
(d) Mr. Arun, Mr. Ranveer, Mr. Ramesh Malik and Mr. Navaaz
DIVISION B: DESCRIPTIVE QUESTIONS
PART I: COMPANY LAW
The Companies Act, 2013
11. Ram Pvt. Ltd. is the holding company of Laxman Pvt. Ltd. As per the last
profit and loss account for the year ending 31st March, 2023 of Laxman
Pvt. Ltd., its turnover was ` 1.80 crore; and paid up share capital was
` 80 lakh. The Board of Directors wants to avail the status of a small
company. The Company Secretary of the company advised the directors
that the company cannot be categorized as a small company. In the light

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of the above facts and in accordance with the provisions of the

Companies Act, 2013, you are required to examine whether the
contention of Company Secretary is correct, explaining the relevant
provisions of the Act.
12. Prakash and some of his friends are members of Focus Limited, a
company with a paid-up share capital of ` one crore. They all intend to
propose a resolution at the forthcoming General Meeting of the
company which is going to be held in CP, New Delhi i.e. the place where
Registered Office of Focus Limited is situated.
(i) Kindly provide guidance to Prakash and his friends on the requisite
minimum paid-up share capital they should hold to initiate a
members' resolution.
(ii) What are the other requirements that Prakash and his friends need
to keep in mind for moving a members’ resolution.
13. PQR Private Limited operates as a manufacturing company, generating a
turnover of ` 150 crore and holds an outstanding loan of ` 75 crore
from a public financial institution solely in the previous financial year
(with a total loan availed of ` 110 crore, but ` 35 crore were repaid
during the same year). The company's Board has delegated the authority
to Chief Executive Officer (CEO) to designate an internal auditor to
conduct internal audit. However, the CEO believes that the company is
not legally obligated to have an internal auditor. Analyse the accuracy of
the CEO's perspective by referring to the provisions outlined in the
Companies Act, 2013. What would be your response if the Board of
Directors wanted to appoint the Mr. Nagendra (an ex- employee who is
a qualified Chartered Accountant) as an internal auditor?
14. The Governments of Tamil Nadu and Andhra Pradesh collectively hold
60% of the paid-up Equity Share Capital of Orange Limited. The audited
financial statements of Orange Limited for the financial year 2022-23
were presented at its Annual General Meeting convened on 17th August,
2023. However, pending the comments of the Comptroller and Auditor
General of India (CAG) on the said accounts the meeting was adjourned
without adoption of the accounts. Therefore, the company did not file its
financial statements with the Registrar of Companies. Afterwards, on
receipt of CAG comments on the accounts, the adjourned annual

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general meeting was held on 20 th September, 2023 whereat the

accounts were adopted. Thereafter, Orange Limited filed its financial
statements relevant to the financial year 2022-23 with the Registrar of
Companies on 29 th September, 2023.
Examine, with reference to the applicable provisions of the Companies
Act, 2013, whether, Orange Limited has complied with the statutory
requirement regarding filing of accounts with the Registrar.
15. NOP Limited, since its incorporation in 2002, is engaged in the
production of premium quality glass bottles. According to financial
results of the company as on 31.3.2023 net worth of the company was
` 90 crore and turnover for the year 2022-23 was ` 510 crore. The
company proposed to accept the deposits as on 1 st February, 2024,
which would be due for repayment on 30 th September, 2028 from the
public for expansion and redevelopment programs of company.
Furthermore, the company has accepted a loan of ` 1.5 crore from Mr. P
Kishore (Director) and the loan was to be repaid after 24 months.
Company in its books of account, records the receipt as a loan under
non-current liabilities. At the time of advancing loan, Mr. P Kishore
affirms in writing that such amount is not being given out of funds
acquired by him by borrowing or accepting loans or deposits from
others and complete details of such loan transaction is furnished in the
boards' report.
On the basis of above facts answer the following questions:
(i) Whether company was eligible to accept deposit from public?
What is the criteria for acceptance of deposit and tenure for which
deposit can be accepted? Whether the tenure decided by company
was in accordance with provisions of the Companies Act, 2013?
(ii) With reference to the loan advanced by Mr. P Kishore to company,
state whether the same is to be classified as a deposit or not?
16. Fine Publishers, registered in Tokyo, began operating in India during the
financial year 2009. The company has duly submitted all necessary
documents to the registrar within the specified due date. On 1st March,
2023, Fine Publishers has shifted its principal office in Tokyo. Is Fine

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Publishers required to undertake any steps due to change in address of

principal office. Give your answer in reference to the provisions of the
Companies Act, 2013.
Limited Liability Partnership Act, 2008
17. Mohit is a creditor of ABC LLP. He has a claim of ` 10,00,000 against the
LLP. However, the assets of the LLP are valued at only ` 7,00,000. Now,
Mohit seeks to hold the partners of the LLP personally accountable for
the shortfall of ` 3,00,000. Under the provisions of the Limited Liability
Act, 2008, can Mohit demand for the deficit from the partners of ABC
LLP?
PART II: OTHER LAWS
The General Clauses Act, 1897
18. Yogveer Singh has a mango orchard at Manchanga Village, Bilaspur. The
orchard has more than one hundred Mango trees. Yogveer Singh has
sold orchard along with all the mango trees. Explain, in the lights of
provisions of the General Clauses Act 1897, whether the sale of trees will
be considered as sale of Immovable Property?
Interpretation of Statutes
19. What does the principle of "reading the statute as a whole" imply in the
interpretation of statutes? Explain with the help of an example.
The Foreign Exchange Management Act, 1999
20. Mr. Shivesh, an Indian National desires to obtain Foreign Exchange for
the following purposes:
(i) Remittance of US Dollar 50,000 out of winnings on a lottery ticket.
(ii) US Dollar 100,000 for sending a cultural troupe on a tour of U.S.A.
Advise him whether he can get Foreign Exchange and if so, under what
conditions?

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SUGGESTED ANSWERS/HINTS

1. (d)
2. (a)
3. (c)
4. (d)
5. (b)
6. (b)
7. (a)
8. (c)
9. (c)
10. (d)
11. As per section 2(85) of the Companies Act, 2013, small company means
a company, other than a public company:
(i) paid-up share capital of which does not exceed four crore rupees,
and
(ii) turnover of which as per profit and loss account for the
immediately preceding financial year does not exceed forty crore
rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act.
In the instant case, as per the last profit and loss account for the year
ending 31st March, 2023 of Laxman Pvt. Ltd., its turnover was to the
extent of ` 1.80 crore, and paid-up share capital was ` 80 lakh. Though
Laxman Pvt. Ltd., as per the turnover and paid-up share capital norms,
qualifies for the status of a ‘small company’ but it cannot be categorized

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as a ‘small company’ because it is the subsidiary of another company

(Ram Pvt. Ltd.).
Hence, the contention of the Company Secretary is correct.
12. (i) In terms of section 111 of the Companies Act, 2013, the members of
a company are given a statutory right to propose resolutions for
consideration at the general meetings. According to sub-section (1),
the number of members required to make a requisition for moving
resolution shall be same as required to requisition a general meeting
as per section 100 (2). The requirement is as under:
“In case of a company having share capital, such number of
members who hold minimum 1/10th of the paid-up share capital
that carries right of voting shall be eligible to make a requisition
for moving a resolution at the general meeting.”
Accordingly, Prakash and his friends must hold minimum 1/10 th of
paid-up share capital (i.e. ` 10 lakh worth of share capital carrying
right to vote) of Focus Limited in order to be eligible for moving a
resolution at the general meeting.
(ii) The other requirements as per section 111 for making a requisition
to move a resolution at the general meeting which Prakash and his
friends should keep in mind are as under:
(a) Two or more copies of the requisition are required to contain
signatures of all the requisitionists i.e. Prakash and friends.
(b) The requisition must be deposited by them at CP where the
registered office of Focus Limited is situated.
(c) In the case of a requisition requiring notice of a resolution, it
needs to be deposited by them not less than six weeks
before the meeting.
(d) In case of any other resolution, the same is to be deposited
by them not less than two weeks before the meeting.
(e) A sum reasonably sufficient to meet the expenses to be
incurred by Focus Limited in giving effect to proposing the
resolution shall also be deposited by Prakash and his friends
along with the requisition.

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13. According to the provisions of section 138 of the Companies Act, 2013,
read with Rule 13 of the Companies (Accounts) Rules, 2014, every
private company having—
(A) turnover of 200 crore rupees or more during the preceding
financial year; or
(B) outstanding loans or borrowings from banks or public financial
institutions exceeding 100 crore rupees or more at any point of
time during the preceding financial year.
shall be required to appoint an internal auditor which may be either an
individual or a partnership firm or a body corporate.
Internal Auditor shall either be a Chartered Accountant or a Cost
Accountant, or such other professional as may be decided by the Board
to conduct internal audit of the functions and activities of the company.
The internal auditor may or may not be an employee of the company.
Thus, PQR Private Limited is required to appoint an internal auditor as
the outstanding loans from public financial institutions during the year
have exceeded 100 crore (irrespective of the fact that the outstanding
loan during the year is 75 crore rupees).
Hence, the advice of CEO is not correct.
Internal Auditor may be any professional as decided by the Board and
may be even an employee of the company. Hence, the Board of
Directors may appoint Mr. Nagendra, an ex- employee who is a qualified
Chartered Accountant, as an internal auditor.
14. According to first provision to section 137(1) of the Companies Act,
2013, where the financial statements are not adopted at Annual General
Meeting (AGM) or adjourned AGM, such unadopted financial statements
along with the required documents shall be filed with the Registrar
within thirty days of the date of Annual General Meeting and the
Registrar shall take them in his records as provisional till the financial
statements are filed with him after their adoption in the adjourned
Annual General Meeting for that purpose.
According to second proviso to section 137(1) of the Companies Act,
2013, financial statements adopted in the adjourned AGM shall be filed

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with the Registrar within thirty days of the date of such adjourned AGM
with such fees or such additional fees as may be prescribed.
In the instant case, the accounts of Orange Limited were adopted at the
adjourned AGM held on 20th September, 2023 and filing of financial
statements with Registrar was done on 29 th September, 2023 i.e. within
30 days of the date of adjourned AGM. However, Orange Limited has
not filed its unadopted financial statements within 30 days of the date of
the Annual General Meeting held on 17th August, 2023.
Hence, Orange Limited has not complied with the statutory requirement
regarding filing of unadopted accounts with the Registrar, but has
certainly complied with the provisions by filing of adopted accounts
within the due date with the Registrar.
15. (i) As per Rule 2(1)(e) of the Companies (Acceptance of Deposits) Rules,
2014, the term “eligible company” means a public company as
referred to in section 76(1) of the Companies Act, 2013, which is
‘eligible’ to accept deposits from the public at large only if it meets
the below-mentioned criteria. Accordingly:
x It should be a public company.
x It should have net worth of minimum ` 100 crore or a
turnover of minimum ` 500 crore.
x It has obtained the prior consent by means of a special
resolution passed in general meeting.
x The special resolution has been filed with the Registrar of
Companies.
x An ordinary resolution is sufficient if an eligible company is
accepting deposits within the limits specified under section
180 (1) (c).
In the instant case, the turnover of NOP Limited is ` 510 crore,
hence it is eligible to accept deposits from the public.
Tenure for which Deposits can be Accepted: A company is not
permitted to accept or renew deposits (whether secured or
unsecured) which is repayable on demand or in less than six

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months. Further, the maximum period of acceptance of deposit

cannot exceed thirty-six months.
The tenure for the proposed deposits dated 1 st February, 2024
which would be due for repayment on 30 th September, 2028, is not
valid, as the maximum period of acceptance of deposit cannot
exceed 36 months. Hence, it is not in compliance with the
provisions of the Companies Act, 2013.
(ii) In terms of Rule 2(1)(c)(viii) of the Companies (Acceptance of
Deposits) Rules, 2014, any amount received from a person who is
director of the company at the time of giving loan to the company
shall not be treated as deposit if such director furnishes to the
company at the time of giving money, a written declaration to the
effect that the amount is not being given out of funds acquired by
him by borrowing or accepting loans or deposits from others and
further, the company shall disclose the details of money so
accepted in the Board's report.
In the given case, the said deposits by Mr. P Kishore shall not be
treated as deposit.
16. Section 380 (3) of the Companies Act, 2013, provides that where any
alteration is made or occurs in the documents delivered to the Registrar
under section 380, the foreign company shall, within 30 days of such
alteration, deliver to the Registrar for registration, a return containing
the particulars of the alteration in the prescribed form. The Companies
(Registration of Foreign Companies) Rules, 2014, has prescribed that the
return containing the particulars of the alteration shall be filed along
with prescribed fees. Accordingly, Fine Publishers is required to submit
to the Registrar the new address of the principal office (in Tokyo) of the
company within 30 days of such alteration.
17. A limited liability partnership is a body corporate formed and
incorporated under the Limited Liability Partnership Act, 2008 and is a
legal entity separate from that of its partners. The LLP itself will be liable
for the full extent of its assets but the liability of the partners will be
limited. Creditors of LLP shall be the creditors of LLP alone. In other
words, creditors of LLP cannot claim from partners. The liability of the
partners will be limited to their agreed contribution in the LLP. Hence,

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the creditors of ABC LLP are the creditors of ABC LLP only. Partners of
LLP are not personally liable towards creditors. Thus, Mohit can not
claim his deficiency of ` 3,00,000 from the partners of ABC LLP.
PART II: OTHER LAWS
18. According to section 3(36) of the General Clauses Act 1897, ‘Movable
Property’ shall mean property of every description, except immovable
property. While section 3(26) provides, ‘Immovable Property’ shall
include:
(i) Land,
(ii) Benefits to arise out of land, and
(iii) Things attached to the earth, or
(iv) Permanently fastened to anything attached to the earth.
In the given question, Yogveer Singh has sold mango orchard along with
all the mango trees. In the lights of provisions of the Act, as trees are
benefits arise out of the land and attached to the earth, hence, mango
trees are immovable property.
19. It is the elementary principle that construction of a statute is to be made
of all its parts taken together and not of one part only. The deed must
be read as a whole in order to ascertain the true meaning of its several
clauses, and the words of each clause should be so interpreted as to
bring them into harmony with other provisions – if that interpretation
does no violence to the meaning of which they are naturally susceptible.
And the same approach would apply with equal force with regard to
Acts and Rules passed by the legislature.
One of the safest guides to the construction of sweeping general words
is to examine other words of like import in the same enactment or
instrument to see what limitations must be imposed on them. If we find
that a number of such expressions have to be subjected to limitations
and qualifications and that such limitations and qualifications are of the
same nature, that circumstance forms a strong argument for subjecting
the expression in dispute to a similar limitation and qualification.
Example: If one section of an Act requires ‘notice’ should be given, then
a verbal notice would generally be sufficient. But, if another section

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provides that ‘notice’ should be ‘served’ on the person or ‘left’ with him,
or in a particular manner or place, then it would obviously indicate that
a written notice was intended.
20. Under provisions of section 5 of the Foreign Exchange Management Act,
1999 certain Rules have been made for drawal of Foreign Exchange for
Current Account transactions. As per these Rules, Foreign Exchange for
some of the Current Account transactions is prohibited. As regards some
other Current Account transactions, Foreign Exchange can be drawn with
prior permission of the Central Government while in case of some
Current Account transactions, prior permission of Reserve Bank of India
is required.
(i) Remittance out of lottery winnings is prohibited as the same is
included in First Schedule to the Foreign Exchange Management
(Current Account Transactions) Rules, 2000. Hence, Mr. Shivesh
cannot withdraw Foreign Exchange for this purpose.
(ii) Foreign Exchange for meeting expenses of cultural tour can be
withdrawn by any person after obtaining permission from
Government of India, Ministry of Human Resources Development,
(Department of Education and Culture) as prescribed in Second
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, Mr. Shivesh can withdraw the
Foreign Exchange after obtaining such permission.
In all the cases, where remittance of Foreign Exchange is allowed, either
by general or specific permission, the remitter has to obtain the Foreign
Exchange from an Authorised Person as defined in Section 2(c).

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R – 3:: TAXATION
N

SECTION A: INCOME TAX LAW

The Income-tax law, as amended by the Finance Act, 2023, including
significant notifications/circulars issued upto 31 st October, 2023, is applicable
for May, 2024 examination. The relevant assessment year for May, 2024
examination is A.Y.2024-25. The June, 2023 edition of the Study Material is
based on the provisions of Income-tax law as amended by the Finance Act,
2023 and significant notifications/circulars issued upto 30.04.2023, and hence,
the same is relevant for May, 2024 examination. The Statutory Update
containing significant notifications/circulars issued between 1.5.2023 and
31.10.2023 which are relevant for May, 2024 examination is webhosted at
https://resource.cdn.icai.org/77982bos62599.pdf

QUESTIONS

Case Scenario
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

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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
Consideration ` 7,00,000 ` 36,00,000 ` 28,00,000 ` 30,00,000 -
received 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.

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(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

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(c) ` 17,29,210
(d) ` 17,27,500
6. Mr. Anil started business of manufacturing tables in February 2024. He
follows 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:

Buyer Date of Purchase Payment due Date of

purchase amount as per written payment
(`` ) agreement, if
any
Mr. A, a 15.02.2024 5 lakhs Within 30 days 29.03.2024
micro from the date
enterprise of purchase

Mr. B, a small 17.03.2024 7 lakhs No written 15.04.2024

enterprise agreement
Mr. A, a 25.03.2024 8 lakhs Within 40 days 30.11.2024
medium from the date
enterprise of purchase

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

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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) TCS@0.5% 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) TCS@0.5% 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) TCS@0.5% 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) TCS@0.5% of ` 1 lakh in respect of remittance for son’s education;
@5% of ` 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 ` 1,50,000, short term capital gains taxable under section 111A
of ` 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

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(d) ` 19,760
9. Ms. Rita, an Indian citizen and an MBA from Howard University, was
employed in AFL LLP of Country A since June, 2016. She came to India
on 15.11.2023 and joined as CEO of Autofit Ltd. Ms. Rita was in India
before she left for overseas education in May, 2012 and was
subsequently employed outside India and never visited India thereafter.
There is no income-tax in Country A. She has earned interest income of
` 2,40,000 (net) in Country A and salary income from AFL LLP of ` 15
lakhs up to the date of her return to India in the financial year 2023-24.
Salary income (computed) of Ms. Rita from Autofit Ltd. up to 31.03.2024
is ` 13,50,000 and she earned dividend of ` 3,00,000 from shares of an
Indian company.
What would be the residential status of Ms. Rita and her total income for
the A.Y. 2024-25?
10. Mr. Raj, a resident in India, owns two house property, one in Delhi and
another in Kanpur. The property in Kanpur is self-occupied by Mr. Raj,
however, the property in Delhi is let out throughout the year. The
particulars of the Delhi house for the P.Y. 2023-24 are as under:

Standard rent ` 1,72,000 p.a.

Municipal valuation ` 2,05,000 p.a.
Fair rent ` 1,95,000 p. a
Rent received 15,000 p.m.
Municipal tax (Paid by Mr. Raj) 5% of municipal valuation

Municipal tax paid by Mr. Raj on 10.6.2023 for Kanpur house is ` 3,500.
Mr. Raj had taken a loan from SBI of ` 35 lakhs@12 p.a. in April, 2021 for
purchase of Delhi house. The stamp duty value of this house was ` 40
lakhs. Mr. Raj purchased a plot in Kanpur in May, 2021 and the
construction of the Kanpur house was began in June, 2021 and was
completed on December, 2022. Mr. Raj took a loan of ` 25,00,000@10%
on 1-7-2021 for the construction of this house. No repayment has been
done so far for both the loans.

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During the P.Y. 2023-24, Mr. Raj has earned a salary income of
` 18,00,000. Compute total income of Mr. Raj for the A.Y. 2024-25 under
both tax regimes.
11. Mr. Rajkumar bought a residential house for ` 5 crores in March 2016.
He entered into an agreement for sale of the said residential house with
Ms. Nikita (not a relative) in July 2023 for ` 17 crores. The sale proceeds
were to be paid in the following manner:
(i) 10% through account payee bank draft on the date of agreement.
(ii) 80% on the date of the possession of the property.
(iii) Balance after the completion of the registration of the title of the
property.
Ms. Nikita was handed over the possession of the property on
10.11.2023 and the registration process was completed on 05.02.2024.
She paid the sale proceeds as per the sale agreement.
Value of property for stamp duty in July 2023 was ` 19 crores.
Subsequently, the State stamp valuation authority had revised the values,
hence, the value of property for stamp duty purposes was ` 20 crores on
05.02.2024. Mr. Rajkumar paid 1% as brokerage on sale consideration
received.
Subsequent to sale, he purchased another residential house for ` 13
crores in Mumbai in March 2024.
You are required to compute the capital gains chargeable to tax in the
hands of Mr. Rajkumar for A.Y. 2024-25.
What would be the capital gain, if any, in A.Y. 2025-26 if Mr. Rajkumar
transfers the new residential house in December 2024 for ` 15 crores?
CII: 2015-16: 254; 2023-24: 348
12. Mr. Rajesh is a working partner in M/s Sunflower Associates, a partnership
firm. Mr. Rajesh has contributed ` 15 lakhs as capital in the firm.
Partnership deed authorises payment of interest to partners @ 13% and
also payment of remuneration to partners @20,000 per month. Whole of
the remuneration is allowable as deduction to M/s Sunflower Associates.

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Mr. Rajesh has set up a unit in SEZ in May, 2017. The total turnover,
export turnover and net profit for the year ended 31.3.2024 were ` 120
lakhs, ` 45 lakhs and ` 7.5 lakhs respectively. Out of the export turnover
of ` 45 lakhs, only ` 40 lakhs has been received in convertible foreign
exchange by 30.9.2024.
During the P.Y. 2023-24, Mr. Rajesh has commenced a business of
warehousing facility for storage of edible oil. The net profit of this
business as per profit & loss account is ` 7,50,000. The following items
are debited to Profit & Loss Account:
(i) Personal drawings ` 70,000
(ii) Advance income-tax paid ` 1,00,000
(iii) Purchase of warehouse building of ` 10 lakhs on 10.6.2023 for the
purpose of storage of edible oil.
The following items are credited to Profit & Loss account:
(i) Interest on saving bank account with post office ` 15,000
(ii) Interest on fixed deposit with SBI ` 20,000
(iii) Dividend from Indian companies (Gross) ` 32,000
He has paid the premium of ` 60,000 on life insurance policy in the
name of her married daughter. The policy was taken on 1.10.2018 and
the sum assured being ` 5,00,000.
Compute the total income and tax payable by Mr. Rajesh for the
A.Y. 2024-25 under default tax regime and normal provisions of the Act.
13. Mr. Rahul, an Indian citizen residing in Mumbai, files his return of
income every year on time. He has Aadhaar number as well. He has not
intimated his Aadhaar number to the prescribed authority till August
2023. He approached you on 1.9.2023 and asked you the consequences
for not doing so and the effective date form which those consequences
would become effective?
What would be your answer if Mr. Rahul wants to intimate his Aadhaar
number to the prescribed authority now?

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SUGGESTED ANSWERS/HINTS

MCQ No. Most Appropriate MCQ No. Most Appropriate

Answer Answer
1. (a) 5. (a)
2. (c) 6. (c)
3. (c) 7. (b)
4. (b) 8. (b)

9. Determination of residential status of Ms. Rita for the A.Y. 2024 -25
As per section 6(1), in order to be a resident of India in the P.Y.2023-24,
Ms. Rita should satisfy either of the following two conditions -
(1) Her stay in India should be for a period of 182 days or more in the
P.Y.2023-24; or
(2) Her stay in India should be for a period of 60 days or more in the
P.Y.2023-24 and for a period of 365 days or more in the four
immediately preceding previous years.
Ms. Rita’s stay in India in the P.Y.2023-24 is 138 days (i.e., 16 days + 31
days +31 days + 29 days + 31 days). She left India in May, 2012 and
never visited India thereafter. Her stay in India in the four immediately
preceding previous years would be Nil.
Therefore, she does not satisfy either condition (1) or condition (2) for
being a resident.
As per section 6(1A), an individual who is a citizen of India would be
deemed to be a resident of India if his total income, other than income
from foreign sources, exceed ` 15 lakh during the relevant previous year
and he is not liable to tax in any other country by reason of his domicile
or residence or any other criteria of similar nature.

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Ms. Rita’s total income, other than income from foreign sources, would
be ` 16,50,000 for A.Y.2024-25 as shown below -

Particulars `

Salary income from Autofit Ltd. [Computed] [Accrues or 13,50,000

arises in India]
Dividend from shares of an Indian company [Accrues or 3,00,000
arises in India]
16,50,000

Since Ms. Rita is a citizen of India who is not liable to pay income-tax in
Country A and her total income, other than income from foreign
sources, exceed ` 15 lakhs, she would be deemed resident in India under
section 6(1A) for A.Y.2024-25. A deemed resident is, by default, a
resident but not ordinarily resident.
In case of a resident but not ordinarily resident, income accrues or
arises, deemed to accrue or arise and received or deemed to be received
in India, is taxable. In addition, Income which accrues or arises outside
India would also be taxable if it is derived from a business controlled in
or a profession set up in India.
Ms. Rita’s total income for A.Y. 2024-25

Particulars `

Salary income from AFL LLP [Not taxable since it -

accrues or arises outside India]

Salary income from Autofit Ltd. [Computed] 13,50,000

Interest income in Country A [Not taxable since it -

accrues or arises outside India]

Dividend from shares of an Indian company 3,00,000

Total Income 16,50,000

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10. Computation of total income of Mr. Raj for A.Y. 2024-25 under
default tax regime

Particulars ` `
I. Salaries
Gross salary 18,00,000
Less: Standard deduction under section 50,000 17,50,000
16(ia)
II. Income from house property
Rented property at Delhi
Step I - Computation of Expected Rent
Expected Rent = Higher of Municipal 1,72,000
Value of ` 2,05,000 and Fair Rent of
` 1,95,000, but restricted to Standard
Rent of ` 1,72,000
Step II - Actual Rent
Actual rent received or receivable 1,80,000
(` 15,000 x 12)
Step III – Computation of Gross
Annual Value
GAV is the higher of Expected Rent and 1,80,000
Actual rent received/ receivable
Gross Annual Value 1,80,000
Less: Municipal taxes (5% of ` 2,05,000) 10,250
Net Annual value 1,69,750
Less: Deductions under section 24 -
(i) 30% of net annual value 50,925
(ii) Interest on loan (` 35 lakhs x 12%) 4,20,000 (3,01,175)
Self occupied property at Kanpur
Annual value [No deduction for Nil
municipal taxes is allowed in respect of
self-occupied property]

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Less: Deduction under section 24 -

Interest on borrowed capital [Not Nil Nil
allowable under section 115BAC]
Income from house property (3,01,175)

Gross Total Income [Loss from house 17,50,000

property is not allowed to be set off
against income under any other head
while computing income under section
115BAC]

Less: Deduction under section 80EEA Nil

[Not allowable under section 115BAC]

Total Income 17,50,000

Computation of total income of Mr. Raj for A.Y. 2024-25 under

normal provisions of the Act

Particulars ` `
I. Salaries
Gross salary 18,00,000
Less: Standard deduction under section 50,000 17,50,000
16(ia)
II. Income from house property
Rented property at Delhi
Step I - Computation of Expected Rent
Expected Rent = Higher of Municipal 1,72,000
Value of ` 2,05,000 and Fair Rent of
` 1,95,000, but restricted to Standard
Rent of ` 1,72,000
Step II - Actual Rent
Actual rent received or receivable 1,80,000
(` 15,000 x 12)

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Step III – Computation of Gross Annual

Value
GAV is the higher of Expected Rent and 1,80,000
Actual rent received/ receivable
Gross Annual Value 1,80,000
Less: Municipal taxes (5% of ` 2,05,000) 10,250
Net Annual value 1,69,750
Less: Deductions under section 24 -
(i) 30% of net annual value 50,925
(ii) Interest on loan (` 35 lakhs x 12%) 2,70,000 (1,51,175)
[` 4,20,000 - ` 1,50,000, being the
interest for which deduction under
section 80EEA is claimed]
Self occupied property at Kanpur

Annual value [No deduction for Nil

municipal taxes is allowed in respect of
self-occupied property]

Less: Deduction under section 24 -

Interest on borrowed capital 2,00,000 (2,00,000)

[` 2,50,000 (` 25,00,000 x 10%) plus
pre construction interest of ` 37,500,
being 1/5th of (` 25,00,000 x 10% x
9/12)] [` 2,87,500, restricted to
` 2,00,000]

Income from house property (3,51,175)

Gross Total Income [As per section 15,50,000

71(3A), loss from house property can be
set off against income under any other
head to the extent of ` 2,00,000 only.
Balance loss of ` 1,51,175 to be carried
forward to A.Y. 2025-26]

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Less: Deduction under section 80EEA 1,50,000

[Since the loan is sanctioned between
1.4.2019 and 31.3.2022 and the stamp
duty value of the property does not
exceed ` 45 lakhs, deduction of
` 1,50,000 is allowed in respect of interest
on loan for Delhi house]

Total Income 14,00,000

11. Computation of capital gains of Mr. Rajkumar for A.Y. 2024-25

Particulars `
(in crores)
Actual sale consideration ` 17 crores
Value adopted by Stamp Valuation Authority ` 19 crores
[Where the actual sale consideration is less than the
value adopted by the Stamp Valuation Authority for the
purpose of charging stamp duty, and such stamp duty
value exceeds 110% of the actual sale consideration,
then, the value adopted by the Stamp Valuation
Authority shall be taken to be the full value of
consideration as per section 50C.
However, where the date of agreement is different from
the date of registration, stamp duty value on the date
of agreement can be considered provided the whole or
part of the consideration is received by way of account
payee cheque/bank draft or by way of ECS through
bank account or through prescribed electronic modes
on or before the date of agreement.
In this case, since advance of ` 1.7 crores is received by
account payee bank draft, stamp duty value on the date
of agreement can be adopted as the full value of
consideration.
Gross Sale consideration (Stamp duty value on the date 19
of agreement, since it exceeds 110% of the actual
consideration)

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Less: Brokerage @1% of sale consideration (1% of ` 17 0.17

crores)
Net Sale consideration 18.83
Less: Indexed cost of acquisition 6.85
[` 5 crores x 348/254]
Long term capital gains 11.98
[Since the residential house property was held by
Mr. Rajkumar for more than 24 months immediately
preceding the date of its transfer, the resultant gain is a
long-term capital gain]
Less: Exemption under section 54 10
Where long-term capital gains exceed ` 2 crore, the
capital gain arising on transfer of a long-term
residential property shall not be chargeable to tax to
the extent such capital gain is invested in the purchase
of one residential house property in India, one year
before or two years after the date of transfer of original
asset. However, if the cost of new residential house
exceeds ` 10 crores, the amount exceeding ` 10 crore
would not be taken into account for exemption.
Therefore, in the present case, the exemption would be
available in respect of the residential house acquired in
Mumbai and to the extent of ` 10 crores only.
Long term capital gains chargeable to tax 1.98

Computation of capital gains of Mr. Rajkumar for A.Y. 2025-26

Particulars `
(in crores)
Sale consideration 15
Less: Cost of acquisition (-) capital gains exempt in 3
A.Y. 2024-25 (` 13 – ` 10)
Short term capital gains chargeable to tax 2
Since the residential house property was held by
Mr. Rajkumar for not more than 24 months
immediately preceding the date of its transfer]

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12. Computation of total income of Mr. Rajesh for the A.Y. 2024-25
under default tax regime under section 115BAC

Particulars Amount (in `)

I Profits and gains of business and
profession
Income from firm M/s Sunflower
Associates
Interest on capital@13% p.a. on ` 15 1,80,000
lakhs, restricted to 12%, which is the
maximum deduction allowable in the
hands of the firm
Salary to Mr. Rajesh as a working 2,40,000 4,20,000
partner, which is allowable as
deduction in the hands of firm
(` 20,000 x 12)
Profit from SEZ unit
Net profit from SEZ unit 7,50,000
Income from warehousing facility
for storage of edible oil
Net profit as per profit and loss 7,50,000
account
Less: Income credited to profit
and loss account but taxable
under the head ‘Income from
Other Sources’
Interest on savings bank A/c with 15,000
post office
Interest on fixed deposit with SBI 20,000
Dividend from Indian companies 32,000
(Gross)
6,83,000

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Add: Payments not allowable as

deduction
Advance income-tax paid disallowed 1,00,000
u/s 40(a)(ii)
Personal drawings disallowed u/s 37 70,000
Purchase of building 10,00,000
18,53,000
Less: Depreciation on building 1,00,000 17,53,000
[` 10,00,000 x 10%]
II Income from Other Sources
Interest on savings bank 15,000
A/c with post office
Less: Exempt under section 3,500 11,500
10(15)
Interest on fixed deposit with SBI 20,000
Dividend from Indian companies 32,000 63,500
(Gross)
Gross Total Income/ Total Income 29,86,500
[No deduction under section 80C,
80TTA and 10AA would be allowable]

Computation of tax payable under default tax regime

for A.Y. 2024-25

` `

Tax on total income of ` 29,86,500

On first ` 3,00,000 Nil
` 3,00,001 – ` 6,00,000 [@5% of ` 3 lakhs] 15,000
` 6,00,001 – ` 9,00,000 [@10% of ` 3 lakhs] 30,000
` 9,00,001 – ` 12,00,000 [@15% of ` 3 lakhs] 45,000
` 12,00,001 – ` 15,00,000 [@20% of ` 3 lakhs] 60,000

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` 15,00,001 - ` 29,86,500 [@30% of 4,45,950

` 14,86,500]
5,95,950
Add: Health and Education cess @4% 23,838
6,19,788
Less: Advance income-tax paid 1,00,000
Tax payable 5,19,788
Tax Payable (Rounded off) 5,19,790

Computation of total income of Mr. Rajesh for the A.Y. 2024-25

under normal provisions of the Act

Particulars Amount (in `)

Gross Total Income as per section 29,86,500
115BAC
Less: Deduction under section 10AA 1,25,000 28,61,500
[` 7,50,000 x 40,00,000/ ` 1,20,00,000 x
50%, being seventh year of operation]
Less: Deduction under Chapter VI-A
Deduction under section 80C
Life insurance premium [maximum 10% 50,000
of sum assured]
Deduction under section 80TTA
Interest on saving bank account with 10,000 60,000
post office, restricted to
Total Income 28,01,500

Computation of tax payable by Mr. Rajesh for A.Y. 2024-25 under

the regular provisions of the Act

Particulars ` `
Tax on total income of ` 28,01,500
Upto ` 2,50,000 Nil

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` 2,50,001 – ` 5,00,000 [@5% of ` 2.50 lakhs] 12,500

` 5,00,001 – ` 10,00,000 [@20% of ` 5 lakhs] 1,00,000
` 10,00,001 - ` 28,01,500 [@30% of 5,40,450 6,52,950
` 18,01,500]
Add: Health and education cess@4% 26,118
Total tax liability 6,79,068
Less: Advance income-tax paid 1,00,000
Tax payable 5,79,068
Tax payable (rounded off) 5,79,070

Computation of adjusted total income and AMT of Mr. Rajesh for

A.Y. 2024-25

Particulars ` `

Total Income (computed above as per 28,01,500

regular provisions of income tax)
Add: Deduction under section 10AA 1,25,000
Adjusted Total Income 29,26,500
Alternative Minimum Tax@18.5% 5,41,403
Add: Health and education cess@4% 21,656
Total tax liability 5,63,059
Less: Advance income-tax paid 1,00,000
Tax payable 4,63,059
Tax payable (rounded off) 4,63,060

Since alternate minimum tax payable is less than the regular income-tax
payable, tax payable under normal provisions of the Act is ` 5,79,070.
13. Where a person, who has been allotted PAN and is required to intimate
his Aadhaar number, has failed to intimate the same on or before the
31.3.2022, the PAN of such person shall become inoperative.

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Consequences of failure to intimate Aadhar Number

A person, whose PAN has become inoperative, would be liable for
further consequences for the period commencing from the date
specified by the Board till the date it becomes operative, namely –
(i) refund of any amount of tax or part thereof, due under the
provisions of the Act shall not be made;
(ii) interest shall not be payable on such refund for the period,
beginning with the date specified and ending with the date on
which it becomes operative;
(iii) where tax is deductible under Chapter XVIIB in case of such
person, such tax shall be deducted at higher rate, in accordance
with provisions of section 206AA;
(iv) where tax is collectible at source under Chapter XVII-BB in case of
such person, such tax shall be collected at higher rate, in
accordance with provisions of section 206CC.
The consequences specified above will be effective from 1.7.2023.
If Mr. Rahul wants to intimate his Aadhaar number to the prescribed
authority on 1.9.2023, he would be liable to pay a fee of ` 1,000 as
specified under section 234H. His PAN would become operative within
30 days from the date of intimation of Aadhaar number and would not
be liable for the above consequences once his PAN becomes operative.

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SECTION B: GOODS AND SERVICES TAX

QUESTIONS

(1) All questions should be answered on the basis of the position of

GST law as amended up to 31.10.2023.
(2) The GST rates for goods and services mentioned in various
questions are hypothetical and may not necessarily be the actual
rates leviable on those goods and services. Further, GST
compensation cess should be ignored in all the questions, wherever
applicable.

ABC Ltd. has its manufacturing unit in the State of Rajasthan. Further, it has
ancillary units in the State of Madhya Pradesh and Gujarat and is registered in
each of these States. Moreover, ABC Ltd. owns and operates a hotel in
Udaipur, Rajasthan.
In addition to the aforesaid, ABC Ltd. owns a commercial space which is
rented out to a registered person at the monthly rent of ` 50,000. The
maintenance of the premises is the responsibility of ABC Ltd. In pursuance of
the same, during the month of April, ABC Ltd. incurred certain expenses on
the purchase of maintenance related materials. The said expenses are
recoverable from the tenant alongwith the invoice issued for rent. The rate of
tax applicable on the material used for maintenance was 5%.
During the year, ABC Ltd. agreed to provide the hotel to Mr. X for a business
conference to be held at Udaipur. Mr. X is an unregistered person residing in
Maharashtra.
ABC Ltd. made a supply of machinery in the month of June, details of which
are as follows-
- Basic price of the machinery before TCS under Income Tax Act, 1961–
` 45,000

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- Tax collected at source under Income-tax Act, 1961 – ` 2,500

- It received a subsidy of ` 3,500 from Green Foundation Pvt. Ltd. for
usage of green energy and the subsidy was linked to the units of energy
saved and not aforesaid machinery.
In addition to the aforesaid transactions, ABC Ltd. spent an amount of ` 5 lakh
on the procurement of certain goods which were distributed as part of the
corporate social responsibility [CSR] expenditure required under the
provisions of the Companies Act, 2013.
During the scrutiny proceedings in the State of Gujarat, jurisdictional GST
officer asked ABC Ltd to submit the copy of audited financial statements for
Gujarat and was of the view that ABC Ltd. is required to get his accounts
audited by a Chartered Accountant separately under GST Law for filing annual
return and reconciliation statement in each State.
All above amounts are exclusive of GST, wherever applicable. The rate of GST
on all inward and outward supplies is 18%, unless otherwise mentioned.
Assume that there is no other outward or inward transaction apart from
aforesaid transactions.
Based on the facts of the case scenario given above, choose the most
appropriate answer to Q. Nos. 1 to 5 below:-
1. For the transaction related to renting of commercial space, what should
be the rate of tax charged by ABC Ltd.?
(a) The rate of GST on rent and maintenance material related recovery
shall be 18%.
(b) The rate of GST on rent shall be 18% and, on the material, shall be
5%.
(c) No GST shall be charged on the recovery related to material used
in maintenance. Rate of GST on rent shall be 18%.
(d) The rate of GST on rent and maintenance material related recovery
shall be 5%.
2. Compute the value of supply under section 15 of the CGST Act, 2017 made
by ABC Ltd. in the month of June?
(a) ` 45,000

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(b) ` 47,500
(c) ` 48,500
(d) ` 51,000
3. With respect to the hotel accommodation service provided to Mr. X, GST
payable by ABC Ltd. is ____________.
(a) nil, GST on accommodation service is payable by the recipient, Mr.
X, under reverse charge
(b) nil, GST on accommodation services provided to an unregistered
person is exempt from GST
(c) in the nature of CGST and SGST
(d) in the nature of IGST
4. Which of the following options is correct with regard to the availability
of ITC to ABC Ltd. in respect of GST paid on the procurement of goods
meant for the purpose of corporate social responsibility activity?
(a) The amount of ITC related to such procurement of goods is not
available to ABC Ltd.
(b) The amount of ITC related to such procurement of goods is
available to ABC Ltd.
(c) The amount of ITC only to the extent of 50% of amount of such
procurement of goods is available to ABC Ltd.
(d) The amount of ITC shall be available to the registered person to
whom such goods are distributed under CSR activity.
5. Which of the following options is correct with regard to the advice given
by GST officer in respect of auditing of accounts?
(a) There is no requirement of separate audit of the financial
statements from the perspective of GST provisions.
(b) Only reconciliation statement shall be audited by a Chartered
Accountant.
(c) The annual return as well as the reconciliation statement shall be
audited by a Chartered Accountant.

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(d) Separate audit of financial statements at each State level is

required by ABC Ltd. under the GST law.
6. M/s Cute & Co., a partnership firm, registered supplier under GST in
Bengaluru (Karnataka State), has provided the following information for
the month of October, 2023:

S. Details of transactions Amount

No. (`` )
(i) Intra-State taxable supply of Direct Selling Agent 2,50,000
(DSA) service to public sector Bank.
(ii) Services provided to a Governmental authority by 99,900
way of sanitation conservancy.
(iii) Rent paid to a residential dwelling taken for 25,000
running an office for providing DSA services;
Owner of the residential property was not
registered under GST; This is an intra-State
supply availed.
(iv) Purchased a car for the official use of managing 9,00,000
partners of the Firm for business use (Inter-State
purchase).
(v) Availed Information Technology services for their Nil
business from Partner’s friend Mr Allan Waugh
from Melbourne, Australia.
Mr. Waugh refused to take any consideration.
Open Market value of said service was ` 1,25,000.
(Inter-State transactions).
(vi) Provided training and performance appraisal
services in Bengaluru to following persons:
(a) ABC Private Limited, a registered supplier in 3,00,000
the State of Kerala
(b) Babu Cones, a proprietorship concern of 1,00,000
Rajasthan, which was not registered under GST

Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.

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(ii) All the amounts given above are exclusive of taxes.

(iii) All the conditions necessary for availing the ITC have been fulfilled.
(iv) There was no opening balance of any input tax credit.
(v) The turnover of M/s Cute & Co was ` 2 crore in the previous
financial year.
Compute the net GST payable in cash, by M/s Cute & Co. for the month
of October, 2023. Correct legal provisions should form part of your
answer.
7. 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.
8. 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.
9. (a) Happy Constructions Ltd., a registered builder under GST in
Bengaluru, Karnataka has got permission to build five floors from the

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Municipal Projects for one of its projects at Suraj Nagar. Aditya

Constructions, a neighbouring housing project approached Happy
Constructions Limited to discuss regarding blockage of sun light
issue arising out of construction of five floors and asked it to build
only three floors for which ` 20 lakh was offered as compensation.
Happy Constructions Limited agreed to the offer. It may be noted
that Aditya Constructions is not ready to pay any further amount to
Happy Constructions Ltd. in addition to the amount already agreed.
Briefly explain with correct legal provision whether the above
amount received as compensation is liable to GST or not? And if
considered as taxable, then calculate the total GST payable by
Happy Constructions Ltd. Assume the applicable rate of CGST and
SGST is 9% each.
Also state the conditions to be complied with.
(b) The aggregate turnover of M/s Mangal & Co., a registered person,
for the financial year 2022-2023 was ` 8 Crores. It approaches you
as GST Consultant for the issue of e-invoicing.
Advice whether it is mandatory to issue e-invoice?
Also list out the entities which are exempt from the mandatory
requirement of e-invoicing.
10. (a) Ramlala Enterprises, registered in Delhi, is engaged in supply of
interior decoration services to Andhra Bhawan located in Delhi.
Service contract is entered into with the Government of Andhra
Pradesh (registered only in Andhra Pradesh). The total contract value
inclusive of GST is Rs 15,50,000 and payment for the same is due in
October, 2023.
You are required to determine amount of tax, if any, to be
deducted in the above case assuming the rate of CGST, SGST and
IGST as 9%, 9% and 18% respectively.
Will your answer be different, if Ramlala Enterprises is registered
under composition scheme?
(b) Examine the implications of GST on supply of food and beverages
at cinema halls.

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SUGGESTED ANSWERS/HINTS

Question Answer
No.
1. (a) The rate of GST on rent and maintenance material related
recovery shall be 18%.
2. (a) ` 45,000
3. (c) in the nature of CGST and SGST
4. (a) The amount of ITC related to such procurement of goods
is not available to ABC Ltd.
5. (a) There is no requirement of separate audit of financial
statements from the perspective of GST provisions.

6. Computation of net GST payable in cash

Particulars CGST SGST @ 9% IGST @ 18%

@ 9% (`` ) (`` )
(`` )
Output tax liability [Refer 33,750 33,750 54,000
Working Note 1]
Less: ITC available [Refer Working 2,250 2,250 -
Note 2]
Net GST payable 31,500 31,500 54,000
Add: Tax Payable under reverse 2,250 2,250
charge to be paid in cash [The
amount available in the electronic
credit ledger may be used for
making any payment towards
output tax. Further, output tax
means the tax chargeable on
taxable supply of goods and/or
services but excludes tax payable

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on reverse charge basis. Thus,

tax liability under reverse charge
has to be paid in cash]
Total GST Payable in cash 33,750 33,750 54,000

Working Notes
1. Computation of total value of taxable supplies made by M/s
Cute & Co. for the month of October, 2023

Particulars Amount CGST SGST IGST

(`` ) (`` ) (`` ) (`` )
Taxable under Forward
Charge
Intra-State taxable supply of 2,50,000 22,500 22,500
DSA service
[Since DSA services are
provided by partnership firm,
so taxable under forward
charge]
Services provided to a 99,900 - -
Governmental authority by
way of sanitation conservancy
[Specifically exempt under
GST]
Information Technology Nil
services [Import of services
from a non-related person
without consideration, in the
course or furtherance of
business is not a supply.]
Training and performance 3,00,000 54,000
appraisal services to ABC
Private Limited [Taxable; the
place of supply of services in
relation to training and

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performance appraisal to a
registered person, shall be the
location of such person. Thus,
place of supply is Kerala and
hence an inter-State
transaction.]
Training and performance 1,00,000 9,000 9,000
appraisal services to Babu
Cones. [Taxable, the place of
supply of services in relation
to training and performance
appraisal to an unregistered
person, shall be the location
where the services are actually
performed. Thus, place of
supply is Bengaluru, hence
Intra-State transaction]
7,49,900 31,500 31,500 54,000
Taxable under Reverse
Charge
Rent paid for residential unit 25,000 2,250 2,250
[Service by way of renting of
residential dwelling to a
registered person is taxable
under reverse charge
mechanism]
Total value of taxable 7,74,900 33,750 33,750 54,000
supplies

2. Computation of ITC that can be availed by M/s Cute & Co. for
the month of October, 2023

Particulars CGST SGST IGST

(`` ) (`
`) (`` )
Rent paid to residential dwelling for 2,250 2,250 -
providing DSA services

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[ITC is available as services are used

in the course or furtherance of
business.]
Purchase of car Nil
[Blocked credit in terms of section
17(5) of the CGST Act, 2017]
Total ITC 2,250 2,250 -

7. As per section 12(4) of the CGST Act, 2017, the time of supply of vouchers
exchangeable for goods is-
¾ Date of issue of the voucher, if the supply that it covers is
identifiable at that point, or
¾ Date of redemption of the voucher in other cases.
(i) In the given case, supply can be identified at the time of
purchase of the coupons. Therefore, the time of supply of
the coupons is the date of their issue i.e. 20.06.2023.
(ii) In the given case, supply cannot be identified at the time of
purchase of the coupons. Therefore, the time of supply of
the coupons is the date of their redemption i.e. 18.08.2023.
(iii) Section 12(6) of the CGST Act, 2017 prescribes that time of
supply in case of addition in value on account of interest/
late fee/penalty for delayed payment of consideration for
goods is the date on which the supplier receives such
addition in value. Therefore, time of supply in the given case
is 11.11.2023.
8. (i) Section 12(12) of the IGST Act, 2017 provides that the place of supply
of banking and other financial services, including stock broking
services to any person is the location of the recipient of services in
the records of the supplier of services. However, if the location of
recipient of services is not available in the records of the supplier, the
place of supply is the location of the supplier of services.

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Therefore, since the location of recipient is not available in the

records of the supplier, the place of supply is the location of the
supplier of services, i.e. Rajasthan (or Jodhpur).
(ii) Section 10(1)(d) of the IGST Act, 2017 provides that if the supply
involves goods which are to be installed or assembled at site, the
place of supply is the place of such installation or assembly.
Thus, the place of supply is the site of assembly of machine, i.e.
Tamilnadu.
9. (a) Agreeing to obligation to refrain from an act, or to tolerate an act or
situation, or to do an act has been specifically declared to be a supply
of service vide para 5(e) of Schedule II of the CGST Act, 2017 if the
same constitutes a supply as per the CGST Act, 2017.
In the given case, Happy Constructions Limited has agreed to build
only three floors, even though it is permitted to construct five
floors by the Municipal Authorities, for a compensation of ` 20
lakh. This results in supply of service.
The conditions to be complied with for the above supply will be
(a) There must be an expressed or implied agreement or
contract must exist.
(b) Consideration must flow in return to this contract/
agreement.
Since Aditya Constructions is not ready to pay any further amount
to Happy Constructions Limited in addition to the amount already
agreed, the amount received ` 20 lakh shall be treated as inclusive
of GST and the GST payable will be ` 20,00,000 x 9/118 =
` 1,52,542.37 or ` 1,52,542 (rounded off) as CGST and SGST each.
(b) E-invoicing has been made mandatory for all registered businesses
(except specified class of persons) with an aggregate turnover in
any preceding financial year from 2017-18 onwards greater than
` 5 crore in respect of B2B supplies (supply of goods or services or
both to a registered person) or for exports.
Hence, it is mandatory for M/s Mangal & Co. to issue e-invoices.

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Following entities are exempt from the mandatory requirement of

e-invoicing:
¾ Special Economic Zone units
¾ Insurer or banking company or financial institution including
NBFC
¾ GTA supplying services in relation to transportation of goods
by road in a goods carriage
¾ Supplier of passenger transportation service
¾ Person supplying services by way of admission to exhibition
of cinematograph films in multiplex screens
¾ Government Department and a local authority
Further, the above taxpayers exempted from the mandatory
requirement of e-invoicing are required to provide a declaration
on the tax invoice stating that though their aggregate turnover
exceeds the notified aggregate turnover for e-invoicing, they are
not required to prepare an e-invoice.
Thus, above mentioned entities are not required to issue e-
invoices even if their turnover exceeds ` 5 crore in the preceding
financial year from 2017-18 onwards but are required to provide a
declaration as discussed above.
10. (a) As per section 51 of the CGST Act, 2017 read with section 20 of the
IGST Act, 2017 and Notification No. 50/2018 CT 13.09.2018, following
persons are required to deduct CGST @ 1% [Effective tax 2% (1%
CGST + 1% SGST/UTGST)] or IGST @ 2% from the payment
made/credited to the supplier (deductee) of taxable goods or services
or both, where the total value of such supply, under a contract,
exceeds ` 2,50,000:
(a) a department or establishment of the Central Government or
State Government; or
(b) local authority; or
(c) Governmental agencies; or
(d) an authority or a board or any other body, -

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(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government,
with 51% or more participation by way of equity or control,
to carry out any function; or
(e) Society established by the Central Government or the State
Government or a Local Authority under the Societies
Registration Act, 1860, or
(f) Public sector undertakings.
Further, for the purpose of deduction of tax, the value of supply
shall be taken as the amount excluding CGST, SGST/UTGST, IGST
and GST Compensation Cess indicated in the invoice.
Proviso to section 51(1) of the CGST Act, 2017 stipulates that no
tax shall be deducted if the location of the supplier and the place
of supply is in a State or Union territory which is different from the
State or as the case may be, Union territory of registration of the
recipient.
Section 12(3) of the IGST Act, 2017, inter alia, stipulates that the
place of supply of services, directly in relation to an immovable
property, including services provided by interior decorators, shall
be the location at which the immovable property is located or
intended to be located. Accordingly, the place of supply of the
interior decoration of Andhra Bhawan shall be Delhi.
Since the location of the supplier (Ramlala Enterprises) and the
place of supply is Delhi and the State of registration of the
recipient i.e. Government of Andhra Pradesh is Andhra Pradesh, no
tax is liable to be deducted in the given case.
The answer will remain unchanged even if Ramlala Enterprises is
registered under composition scheme.
(b) Eating joint is a wide term which includes refreshment or eating
stalls/ kiosks/ counters or restaurant at a cinema also.

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The cinema operator:

(i) may run these refreshment/eating stalls/kiosks/counters/
restaurant themselves
or
(ii) they may give it on contract to a third party.
The customer may like to avail the services supplied by these
refreshment/snack counters or choose not to avail these services.
Further, the cinema operator can also install vending machines, or
supply any other recreational service such as through coin-
operated machines etc. which a customer may or may not avail.
It is hereby clarified vide Circular No. 201/13/2023 GST dated
01.08.2023 that:
(i) supply of food or beverages in a cinema hall is taxable as
‘restaurant service’ as long as:
(a) the food or beverages are supplied by way of or as part
of a service, and
(b) supplied independent of the cinema exhibition service.
(ii) where the sale of cinema ticket and supply of food and
beverages are clubbed together, and such bundled supply
satisfies the test of composite supply, the entire supply will
attract GST at the rate applicable to service of exhibition of
cinema, the principal supply.

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 Applicability of Standards/Guidance Notes/Legislative Amendments etc. for
May, 2024 Examination
Intermediate Level

Paper 2: Corporate and Other Laws

The provisions of the Companies Act, 2013 and the Limited Liability Partnership
Act, 2008 along with significant Rules / Notifications / Circulars / Clarification /
Orders issued by the Ministry of Corporate Affairs, and the laws covered under
Part II: Other Laws, as amended by concerned authority, including significant
notifications and circulars issued up to 31.10.2023 are applicable for May 2024
examination.
The Study Material has to be read along with the 'Relevant Legislative
amendments for May 2024 examinations' for the period of 1.5.2023 to
31.10.2023.

Paper 3: Taxation

Section A: Income-tax Law

The provisions of income-tax law, as amended by the Finance Act, 2023,
including significant circulars, notifications, press releases issued and legislative
amendments made upto 31.10.2023, are applicable for May, 2024 examination.
The relevant assessment year for income-tax is A.Y. 2024-25.
The Study Material for Intermediate Paper 3A, based on the provisions of
income-tax law, as amended by the Finance Act, 2023, is relevant for May, 2024
examination. The Study Material has to be read along with the Statutory Update
covering significant notifications and circulars issued between 1.5.2023 to
31.10.2023. Statutory Update for May, 2024 examination has been webhosted at
https://resource.cdn.icai.org/77982bos62599.pdf
Note –The Study Guidelines specifying the list of topic-wise exclusions from the
scope of syllabus and topic-wise inclusion of clauses of section 10 in the syllabus is
webhosted at https://resource.cdn.icai.org/76864bos61928.pdf

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INTERMEDIATE EXAMINATION

Section B: Goods and Services Tax

Applicability of the GST law

The provisions of the CGST Act, 2017 and the IGST Act, 2017 as amended by the
Finance Act, 2023 including significant notifications and circulars issued and other
legislative amendments made, which have become effective up to 31.10.2023, are
applicable for May 2024 examination.
The amendments made by the Annual Union Finance Acts in the CGST Act,
2017 and IGST Act, 2017 are made effective from the date notified
subsequently. Thus, only those amendments made by the relevant Finance Acts
which have become effective till 31.10.2023 are applicable for May 2024
examination. Accordingly, all the amendments made by the Finance Act, 2023
are applicable for May 2024 examination.
Further, since the amendments made by the Central Goods and Services
Tax (Amendment) Act, 2023 and Integrated Goods and Services Tax
(Amendment) Act, 2023, (enacted as on 18.08.2023) have become
effective from 01.10.2023, the same are also applicable for May 2024
examination.
The Study Guidelines given below specify the exclusions from the syllabus for
May 2024 examination.

List of topic-wise exclusions from the syllabus

(1) (2) (3)

S. No. in Topics of the Exclusions
the syllabus (Provisions which are excluded from the
syllabus corresponding topic of the syllabus)
2(iii) Charge of tax CGST Act, 2017
including reverse (i) Rate of tax prescribed for supply of
charge goods*
(ii) Rate of tax prescribed for supply of
services*
(iii) Categories of supply of goods, tax on
which is payable on reverse charge
basis under section 9(3)

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IGST Act, 2017

(i) Rate of tax prescribed for supply of
goods
(ii) Rate of tax prescribed for supply of
services
(iii) Categories of supply of goods, tax on
which is payable on reverse charge
basis under section 5(3)
2(iv) Exemption from CGST Act, 2017 & IGST Act, 2017
tax Exemptions for supply of goods
3(ii) Basic concepts of IGST Act, 2017 & IGST Rules, 2017
place of supply (i) Place of supply of goods imported
into, or exported from India
(ii) Place of supply of services where
location of supplier or location of
recipient is outside India
(iii) Special provision for payment of tax by
a supplier of online information and
database access or retrieval [OIDAR]
services
(iv) Refund of integrated tax paid on
supply of goods to tourist leaving
India
(v) Special provision for specified
actionable claims supplied by a person
located outside taxable territory
3(iii) Basic concepts of CGST Act, 2017 & CGST Rules, 2017
time of supply Provisions relating to change in rate of tax
in respect of supply of goods or services
3(iv) Basic concepts of CGST Act, 2017 & CGST Rules, 2017
value of supply Chapter IV: Determination of Value of
Supply [Rules 27-35] of CGST Rules, 2017
3(v) Basic concepts of CGST Act, 2017 read with CGST Rules,

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input tax credit 2017

(i) Manner of determination of input tax
credit in respect of inputs or input
services and reversal thereof [Rule 42].
(ii) Manner of determination of input tax
credit in respect of capital goods and
reversal thereof in certain cases [Rule
43].
(iii) Input tax credit provisions in respect of
inputs and capital goods sent for job
work.
(iv) Input tax credit provisions relating to
distribution of credit by Input Service
Distributor [ISD].
(v) Manner of recovery of credit
distributed in excess.
(vi) Manner of reversal of credit of
additional duty of customs in respect
of Gold dore bar.

*Rates specified for computing the tax payable under composition levy are
included in the syllabus.
Note: The syllabus includes select provisions of the CGST Act, 2017 and IGST Act,
2017 and not the entire CGST Act, 2017 and the IGST Act, 2017. The provisions
covered in any topic(s) of the syllabus which are related to or correspond to the
topics not covered in the syllabus shall also be excluded.
In the above table, in respect of the topics of the syllabus specified in column
(2) the related exclusion is given in column (3). Where an exclusion has been
so specified in any topic of the syllabus, the provisions corresponding to such
exclusions, covered in other topic(s) forming part of the syllabus, shall also be
excluded. For example, since provisions relating to ISD are excluded from the
topics “Input tax credit”, the provisions relating to (i) registration of ISD and
(ii) filing of returns by an ISD are also excluded from the topics “Registration”
and “Returns” respectively.

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The entire content included in the Study Material and the Statutory Update for
May 2024 examination shall be relevant for the said examination. The
amendments in the GST law made after the issuance of the Study Material - to
the extent covered in the Statutory Update for May 2024 examination alone
shall be relevant for the said examination. Statutory Update has been
webhosted at the following link:
https://resource.cdn.icai.org/77999bos62625.pdf
Though the Statutory Update for May 2024 examination shall provide the
precise scope and coverage of the amendments, for the sake of clarity, it may
be noted that the amendments made in the various provisions of the GST law
for providing relief to the taxpayers of Manipur shall not be applicable for
May 2024 examination.

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