1.

BASIC CONCEPTS

1. Mr. X has a total income of ₹ 12,00,000 for P.Y. 2022-23, comprising of

income from house property and interest on fixed deposits. Compute his
tax liability for A.Y. 2023-24 assuming his age is –

a. 45 years
b. 63 years
c. 82 years

Assume that Mr. X has not opted for the provisions of section 115BAC

2. Compute the tax liability of Mr. A (aged 42), having total income of ₹ 51
lakhs for the Assessment Year 2023-24. Assume that his total income
comprises of salary income, Income from house property and interest on
fixed deposit. Assume that Mr. A has not opted for the provisions of section
115BAC.

3. Compute the tax liability of Mr. B (aged 51), having total income of ₹
1,01,00,000 for the Assessment Year 2023-24. Assume that his total
income comprises of salary income, Income from house property and
interest on fixed deposit. Assume that Mr. B has not opted for the provisions
of section 115BAC.

4. Compute the tax liability of Mr. C (aged 58), having total income of ₹
2,01,00,000 for the Assessment Year 2023-24. Assume that his total
income comprises of salary income, Income from house property and
interest on fixed deposit. Assume that Mr. C has not opted for the provisions
of section 115BAC.

5. Compute the tax liability of Mr. D (aged 37), having total income of ₹
5,01,00,000 for the Assessment Year 2023-24. Assume that his total
income comprises of salary income, Income from house property and
interest on fixed deposit. Assume that Mr. D has not opted for the provisions
of section 115BAC.

6. Mr. Raghav aged 26 years and a resident in India, has a total income of
₹ 4,40,000, comprising his salary income and interest on bank fixed
deposit. Compute his tax liability for A.Y. 2023-24.

7. Mr. Dinesh aged 35 years and a resident in India, has a total income of
₹ 4,80,000, comprising of long term capital gains taxable under section
112. Compute his tax liability for A.Y.2023-24.

8. Who is an “Assessee”?

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9. State any four instances where the income of the previous year is
assessable in the previous year itself instead of the assessment year.

10. Compute the tax liability of Mr. Kashyap (aged 35), having total income
of ₹ 51,75,000 for the Assessment Year 2023-24. Assume that his total
income comprises of salary income, income from house property and
interest on fixed deposit. Assume that Mr. Kashyap has not opted for the
provisions of section 115BAC.

11. Mr. Agarwal aged 40 years and a resident in India, has a total income
of ₹ 4,50,00,000, comprising long term capital gain taxable under section
112 of ₹ 55,00,000, short term capital gain taxable under section 111A of
₹ 65,00,000 and other income of ₹ 3,30,00,000. Compute his tax liability
for A.Y. 2023-24. Assume that Mr. Kashyap has not opted for the provisions
of section 115BAC.

12. Mr. Sharma aged 62 years and a resident in India, has a total income
of ₹ 2,30,00,000, comprising long term capital gain taxable under section
112 of ₹ 52,00,000, short term capital gain taxable under section 111A of
₹ 64,00,000 and other income of ₹ 1,14,00,000. Compute his tax liability
for A.Y. 2023-24. Assume that Mr. Sharma has not opted for the provisions
of section 115BAC.

13. Determine the status of the following:

Case
(a) Howrah Municipal Corporation
(b) Corporation Bank Ltd.
(c) Mr. Amitabh Bachchan
(d) Amitabh Bachchan Corporation Ltd.
(e) A joint family of Sri Ram, Smt. Ram and their son Lav and Kush
(f) Calcutta University
(g) X and Y who are legal heirs of Z
(h) Sole proprietorship business
(i) Partnership Business

14. Birla Ltd., a cement manufacturing company, entered into an

agreement with a supplier for purchase of additional cement plant. One of
the conditions in the agreement was that if the supplier failed to supply the
machinery within the stipulated time, the company would be compensated
at 5% of the price of the respective portion of the machinery without proof
of actual loss. The company received ₹ 8.50 lakhs from the supplier by way
of liquidated damages on account of his failure to supply the machinery
within the stipulated time. What is the nature of liquidated damages
received by Birla Ltd. from the supplier of plant for failure to supply
machinery to the company within the stipulated time — a capital receipt or
a revenue receipt?

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2. Residence and Scope of Total Income
1. Mr. Anand is an Indian citizen and a member of the crew of a Singapore
bound Indian ship engaged in carriage of passengers in international traffic
departing from Chennai port on 6th June, 2022. From the following details
for the P.Y. 2022-23, determine the residential status of Mr. Anand for A.Y.
2023-24, assuming that his stay in India in the last 4 previous years
(preceding P.Y. 2022-23) is 400 days:

Particulars Date
Date entered into the Continuous Discharge 6th June,
Certificate in respect of joining the ship by Mr. 2022
Anand
Date entered into the Continuous Discharge 9th
Certificate in respect of signing off the ship by December,
Mr. Anand 2022

2. Brett Lee, an Australian cricket player visits India for 100 days in every
financial year. This has been his practice for the past 10 financial years.
(a) Find out his residential status for the assessment year 2023-24.
(b) Would your answer change if the above facts relate to Srinath, an
Indian citizen who resides in Australia and represents the Australian
cricket team?
(c) What would be your answer if Srinath had visited India for 120 days
instead of 100 days every year, including P.Y. 2022-23?

3. Mr. B, a Canadian citizen, comes to India for the first time during the P.Y.
2018-19. During the financial years 2018-19, 2019-20, 2020-21 2021-22
and 2022-23, he was in India for 55 days, 60 days, 90 days, 150 days and
70 days, respectively. Determine his residential status for the A.Y. 2023-
24.

4. The business of a HUF is transacted from Australia and all the policy
decisions are taken there. Mr. E, the Karta of the HUF, who was born in
Kolkata, visits India during the P.Y. 2022-23 after 15 years. He comes to
India on 1.4.2022 and leaves for Australia on 1.12.2022. Determine the
residential status of Mr. E and the HUF for A.Y. 2023-24.

5. From the following particulars of income furnished by Mr. Anirudh

pertaining to the year ended 31.3.2023, compute the total income for the
assessment year 2023-24, if he is:

(i) Resident and ordinary resident;

(ii) Resident but not ordinarily resident;
(iii) Non-resident

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 Particulars ₹
(a) Short term capital gains on sale of shares of an Indian 15,000
Company, received in Germany
(b) Dividend from a Japanese Company, received in Japan 10,000
(c) Rent from property in London deposited in a bank in 75,000
London, later on remitted to India through approved
banking channels
(d) Dividend from RP Ltd., an Indian Company 6,000
(e) Agricultural income from land in Gujarat 25,000

6. Mr. David, an Indian citizen aged 40 years, a Government employee

serving in the Ministry of External Affairs, left India for the first time on
31.03.2022 due to his transfer to High Commission of Canada. He did not
visit India any time during the previous year 2022-23. He has received the
following income for the Financial Year 2022-23:

S. No. Particulars ₹
(i) Salary (Computed) 5,00,000
(ii) Foreign Allowance [not included in (i) above] 4,00,000
(iii) Interest on fixed deposit from bank in India 1,00,000
(iv) Income from agriculture in Nepal 2,00,000
(v) Income from house property in Nepal 2,50,000

Compute his Gross Total Income for Assessment Year 2023-24.

7. Miss Vivitha paid a sum of 5000 USD to Mr. Kulasekhara, a management

consultant practising in Colombo, specializing in project financing. The
payment was made in Colombo. Mr. Kulasekhara is a non-resident. The
consultancy is related to a project in India with possible Ceylonese
collaboration. Is this payment chargeable to tax in India in the hands of Mr.
Kulasekhara, since the services were used in India?

8. Compute the total income in the hands of an individual aged 35 years,

being a resident and ordinarily resident, resident but not ordinarily resident,
and non- resident for the A.Y. 2023-24 –

Particulars Amount (₹)

Interest on UK Development Bonds, 50% of interest 10,000
received in India
Income from a business in Chennai (50% is received 20,000
in India)

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 Short term capital gains on sale of shares of an Indian 20,000
company, received in London
Dividend from British company received in London 5,000
Long term capital gains on sale of plant at Germany, 40,000
50% of gains are received in India
Income earned from business in Germany which is 70,000
controlled from Delhi (₹ 40,000 is received in India)
Profits from a business in Delhi but managed entirely 15,000
from London
Income from house property in London deposited in a 50,000
Bank at London, brought to India (Computed)
Interest on debentures in an Indian company, received 12,000
in London
Fees for technical services rendered in India but 8,000
received in London
Profits from a business in Mumbai, managed from 26,000
London
Income from property situated in Nepal received there 16,000
(Computed)
Past foreign untaxed income brought to India during 5,000
the previous year
Income from agricultural land in Nepal, received there 18,000
and then brought to India
Income from profession in Kenya which was set up in 5,000
India, received there but spent in India
Gift received on the occasion of his wedding 20,000
Interest on savings bank deposit in State Bank of India 12,000
Income from a business in Russia, controlled from 20,000
Russia
Dividend from Reliance Petroleum Limited, an Indian 5,000
Company
Agricultural income from a land in Rajasthan 15,000

9. Mr. Ram, an Indian citizen, left India on 22.09.2022 for the first time to
work as an officer of a company in Germany. Determine the residential
status of Ram for the assessment year 2023-24.

10. Mr. Dey, a non-resident, residing in US since 1990, came back to India
on 1.4.2021 for permanent settlement. What will be his residential status
for assessment year 2023-24?

11. Mr. Ramesh & Mr. Suresh are brothers and they earned the following
incomes during the financial year 2022-23. Mr. Ramesh settled in Canada

5
in the year 1996 and Mr. Suresh settled in Delhi. Compute the total income
for the A.Y. 2023-24.

Sr. Particulars Mr. Mr.

No. Ramesh Suresh
(₹) (₹)
1. Interest on Canada Development Bonds (only 35,000 40,000
50% of interest received in India)
2. Dividend from British company, received in 28,000 20,000
London
3. Profits from a business in Nagpur, but managed 1,00,000 1,40,000
directly from London
4. Short term capital gain on sale of shares of an 60,000 90,000
Indian company, received in India
5. Income from a business in Chennai 80,000 70,000
6. Fees for technical services rendered in India, 1,00,000 ----
but received in Canada
7. Interest on savings bank deposit in UCO Bank, 7,000 12,000
Delhi
8. Agricultural income from a land situated in 55,000 45,000
Andhra Pradesh
9. Rent received in respect of house property at 1,00,000 60,000
Bhopal
10. Life insurance premium paid --- 30,000

12. Examine the correctness or otherwise of the statement - “Income

deemed to accrue or arise in India to a non-resident by way of interest,
royalty and fees for technical services is to be taxed irrespective of
territorial nexus”.

13. Examine with reasons whether the following transactions attract

income-tax in India in the hands of recipients:

(i) Salary payable by Central Government to Mr. John, a citizen of India

of ₹ 7,00,000 for the services rendered outside India.
(ii) Interest on moneys borrowed from outside India ₹ 5,00,000 by a
non-resident for the purpose of business within India say, at Mumbai.
(iii) Post office savings bank interest of ₹ 19,000 received by a resident
assessee, Mr. Ram, aged 46 years.
(iv) Royalty paid by a resident to a non-resident in respect of a business
carried on outside India.
(v) Legal charges of ₹ 5,00,000 paid in Delhi to a lawyer of United
Kingdom who visited India to represent a case at the Delhi High
Court.

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14. Mrs. Roma, an Indian Citizen, is a government employee working for
the Indian Government. She submits the following information for the
previous year ending 31.03.2023:

Particulars ₹
1 Salary income received in Malaysia for services 2,00,000
rendered there
2 Profit from business carried on in Orissa 80,000
3 Loss from business carried on in Baroda (20,000)
4 Profit from business carried on in Paris (income 42,000
is earned and received in Sydney and business
is controlled from Paris)
5 Loss from business carried on in Canada (though (46,000)
profits are not received in India, business is
controlled from Dehradun)
6 Unabsorbed depreciation of business in Canada 16,000
7 Profit from Indonesia business (controlled form 70,000
Delhi) and 60% of profit deposited in a bank in
Indonesia and 40% received in India
8 Rent from house property situated in Canada 1,92,000
and received in Canada

Determine the gross total income of Roma for the A.Y. 2023-24 ignoring
the provisions of section 115BAC on the assumption that she is:

(1) Resident but not ordinarily resident in India

(2) Non-resident in India.

15. Mr. Dhanush, an Indian citizen aged 35 years, worked in ABC Ltd. in
Mumbai. He got a job offer from XYZ Inc., USA on 01.06.2021. He left India
for the first time on 31.07.2021 and joined XYZ Inc. on 08.08.2021. During
the P.Y. 2022-23, Mr. Dhanush visited India from 25.05.2022 to
22.09.2022. He has received the following income for the previous year
2022-23 –

Particulars ₹
Salary from XYZ Inc., USA received in USA 7,00,000
Dividend from Indian companies 5,50,000
Agricultural income from land situated in Punjab 55,000
Rent received/receivable from house property in 4,00,000
Lucknow
Profits from a profession in USA, which was set up 6,00,000
in India, received there

7
Determine the residential status of Mr. Dhanush and compute his total
income for the A.Y. 2023-24

16. Sam came to India first time during the P.Y. 2022-23. During the
previous year, he stayed in India for
(i) 50 days;
(ii) 183 days; &
(iii) 153 days.
Determine his residential status for the A.Y. 2023-24.

17. Andy, a British national, comes to India for the first time during 2018-
19. During the financial years 2018-19, 2019-20, 2020-21, 2021-22 and
2022-23, he was in India for 55 days, 60 days, 80 days, 160 days and 70
days respectively. Determine his residential status for the assessment year
2023-24.

18. Miss Pal, an Indian citizen, left India for first time on 1st April, 2022 for
joining job in Tokyo. She came to India on 11th Jan, 2023 for only 170 days.
Determine her residential status for P.Y. 2022-23.

19. Mr. X, aged 19 years, left India for first time on May 31, 2022.
Determine his residential status for the previous year 2022-23 if:
(i) He left India for employment purpose
(ii) He left India on world tour.

20. X came India for first time on July 24, 2018. From July 24, 2018 to
December 25, 2019 he was in India. Again, he came to India on August 5,
2022 for employment purpose & left India on November 25, 2022
permanently. Determine his residential status for the previous year 2022-
23 assuming –
(a) He is a foreign citizen
(b) He is an Indian citizen

21. X, a foreign citizen, resides in India during the previous year 2022-23
for 83 days. Determine his residential status for previous year 2022-23
assuming his stay in India during the last few previous years are as follows
-

Year Days Year Days Year Days Year Days

2007- 220 days 2011- 36 days 2015- 137 days 2019- 175 days
08 12 16 20
2008- 15 days 2012- 115 days 2016- 265 days 2020- 15 days
09 13 17 21
2009- 257 days 2013- 123 days 2017- 310 days 2021- 67 days
10 14 18 22
2010- 110 days 2014- 65 days 2018- 121 days
11 15 19

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22. Ram provides following details of income, calculate the income which
is liable to be taxed in India for the A.Y.2023-24 assuming that –
(a) He is an ordinarily resident
(b) He is not an ordinarily resident
(c) He is a non-resident.

Particulars Amount
Salary received in India from a former employer of UK 1,40,000
Income from tea business in Nepal being controlled from India 10,000
Interest on company deposit in Canada (1/3rd received in 30,000
India)
Profit from a business in Mumbai controlled from UK 1,00,000
Profit for the year 2012-13 from a business in Tokyo remitted 2,00,000
to India
Income from a property in India but received in USA 45,000
Income from a property in London but received in Delhi 1,50,000
Income from a property in London but received in Canada 2,50,000
Income from a business in Jambia but controlled from Turkey 10,000

23. Miss Monica, a foreign national, comes India every year for 90 days
since 2007-08.

a) Determine her residential status for the previous year 2022-23.

b) Will your answer differ, if she comes India for 100 days instead of 90
days every year.

24. Mr. Sid, a British national, joined XYZ Co. Ltd. as an engineer in India
on 1st May, 2012. On 31st December, 2013, he went to Sri Lanka on
deputation. On 1st April, 2018, he came back to India and left for Sri Lanka
again on 31st May, 2018. He returned to India and joined his original post
on 1st July, 2022. Determine his residential status for the A.Y. 2023-24.

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 3. Incomes which do not form part
of Total Income
1. Mr. B grows sugarcane and uses the same for the purpose of
manufacturing sugar in his factory. 30% of sugarcane produce is sold for ₹
10 lacs, and the cost of cultivation of such sugarcane is ₹ 5 lacs. The cost
of cultivation of the balance sugarcane (70%) is ₹ 14 lacs and the market
value of the same is ₹ 22 lacs. After incurring ₹ 1.5 lacs in the
manufacturing process on the balance sugarcane, the sugar was sold for₹
25 lacs. Compute B’s business income and agricultural income.

2. Mr. C manufactures latex from the rubber plants grown by him in India.
These are then sold in the market for ₹ 30 lacs. The cost of growing rubber
plants is ₹ 10 lacs and that of manufacturing latex is ₹ 8 lacs. Compute his
total income.

3. Mr. X, a resident, has provided the following particulars of his income for
the P.Y. 2022-23.
i. Income from salary (computed) - ₹ 2,80,000
ii. Income from house property (computed) - ₹ 2,50,000
iii. Agricultural income from a land in Jaipur - ₹ 4,80,000
iv. Expenses incurred for earning agricultural income - ₹ 1,70,000

Compute his tax liability for A.Y. 2023-24 assuming his age is -
(a) 45 years
(b) 70 years
Assume that Mr. X does not opt for the provisions of section 115BAC.

4. Mr. A, a member of a HUF, received ₹ 10,000 as his share from the

income of the HUF. Is such income includible in his chargeable income?
Examine with reference to the provisions of the Income-tax Act, 1961.

5. Compensation on account of disaster received from a local authority by

an individual or his/her legal heir is taxable. Examine the correctness of the
statement with reference to the provisions of the Income-tax Act, 1961.

6. “Exemption is available to a Sikkimese individual, only in respect of

income from any source in the State of Sikkim”. Examine the correctness
of the statement with reference to the provisions of the Income-tax Act,
1961.

7. Y Ltd. furnishes you the following information for the year ended
31.3.2023:

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 Particulars ₹ (in lacs)
Total turnover of Unit A located in Special Economic 100
Zone
Profit of the business of Unit A 30
Export turnover of Unit A 50
Total turnover of Unit B located in Domestic Tariff Area 200
(DTA)
Profit of the business of Unit B 20

Compute deduction under section 10AA for the A.Y. 2023-24, assuming that
Y Ltd. commenced operations in SEZ and DTA in the year 2018-19.

8. Examine whether the following incomes are chargeable to tax, and if so,
compute the amount liable to tax:
(i) Arvind received ₹ 20,000 as his share from the income of the HUF.
(ii) Mr. Xavier, a ‘Param Vir Chakra’ awardee, who was formerly in the
service of the Central Government, received a pension of ₹ 2,20,000
during the financial year 2022-23.
(iii) Agricultural income of ₹ 1,27,000 earned by a resident of India from a
land situated in Malaysia.
(iv) Rent of ₹ 72,000 received for letting out agricultural land for a movie
shooting.

9. Examine the taxability of agricultural income under the Income-tax Act,

1961. How will income be computed where an individual derives agricultural
and non-agricultural income?

10. Whether the income derived from saplings or seedlings grown in a

nursery is taxable under the Income-tax Act, 1961? Examine.

11. Examine with reasons in brief whether the following statements are
true or false with reference to the provisions of the Income-tax Act, 1961:
(i) Exemption is available to a Sikkimese individual, only in respect of
income from any source in the State of Sikkim.
(ii) Pension received by a recipient of gallantry award, who was a former
employee of Central Government, is exempt from income-tax.
(iii) Mr. A, a member of a HUF, received ₹ 10,000 as his share from the
income of the HUF. The same is to be included in his chargeable
income.

12. Rudra Ltd. has one unit at Special Economic Zone (SEZ) and other unit
at Domestic Tariff Area (DTA). The company provides the following details
for the previous year 2022-23.

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 Particulars Rudra Ltd. (₹) Unit in DTA (₹)
Total Sales 6,00,00,000 2,00,00,000
Export Sales 4,60,00,000 1,60,00,000
Net Profit 80,00,000 20,00,000

Calculate the eligible deduction under section 10AA of the Income-tax Act,
1961, for the Assessment Year 2023-24, in the following situations:
(i) If both the units were set up and start manufacturing from 22-05-
2014.
(ii) If both the units were set up and start manufacturing from 14-05-
2018.

13. X Ltd. grows sugarcane to manufacture sugar. Details for the previous
year 2022-23 are as follows:

Particulars ₹ in lacs.
Cost of cultivation of sugarcane (5,000 tons) 10
Sugarcane sold in market (1,000 tons) 3
Sugarcane used for sugar manufacturing (4,000 tons) -
Cost of conversion 5
Sugar produced & sold in market 25

Compute income of X Ltd.

14. Mr. X aged 42 years has non-agro income of ₹ 3,25,000 and agro
income of ₹ 2,55,000. Compute his tax liability for the A.Y. 2023-24.

15. Mr. Tony had estates in Rubber, Tea and Coffee. He derives income from
them. He has also a nursery wherein he grows plants and sells. For the
previous year ending 31.3.2023, he furnishes the following particulars of
his sources of income from estates and sale of plants. Compute taxable
income:
(a) Manufacture of Rubber ₹ 5,00,000.
(b) Manufacture of Coffee grown and cured ₹ 3,50,000.
(c) Manufacture of Tea ₹ 7,00,000.
(d) Sale of plants from nursery ₹ 1,00,000.

16. State the tax treatment of the following income -

(a) A is employed in an agricultural farm and entrusted with tilling of land,
his remuneration being 50% of the net profits earned by the farm.
(b) C receives a dividend of ₹ 12,000 from a company whose entire income
is derived from agricultural operations only.
(c) D of Kolkata earns an income of ₹ 12,000 from agricultural land owned
by him and situated in Bangladesh. Such income is received in
Bangladesh.
(d) F receives ₹ 600 on account of interest on loan on the mortgage of
land which is used for agricultural purposes.

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(e) G earns an income of ₹ 1,200 from lease of land for grazing of cattle
required for agricultural operations.
(f) H receives ₹ 400 on account of interest on arrears of rent in respect of
land used by tenant for agricultural operations.
(g) Income from the sale of replanted trees where the denuded parts of
the forest are replanted and subsequent operation in forestry are
carried out.
(h) Income from sale of trees of forest which are of spontaneous growth
and in relation to which forestry operations alone are performed or
Income from sale of wild grass of spontaneous growth
(i) Income from sale of tea leaf from a tea garden.
(j) Income from sale of jute produced in land situated in Bangladesh.
(k) Income from poultry farming
(l) Income from growing flowers in gardens
(m) Income from sale of tobacco leaves after being dried to make it fit for
sale.
(n) Income from fisheries or poultry or dairy
(o) Income of ₹ 50,000 from agricultural land, the land is situated in
Bangladesh
(p) Income of ₹ 25,000 from the land used as stone quarries.

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 4. Salaries
1. Mr. Raj Kumar has the following receipts from his employer:
(1) Basic pay ₹ 40,000 p.m.
(2) Dearness allowance (D.A.) ₹ 6,000 p.m.
(3) Commission ₹ 50,000 p.a.
(4) Motor car for personal use
(Expenses met by the employer) ₹ 1,500 p.m.
(5) House rent allowance ₹ 15,000 p.m.

Find out the amount of HRA eligible for exemption to Mr. Raj Kumar
assuming that he paid a rent of ₹ 16,000 p.m. for his accommodation at
Kanpur. DA forms part of salary for retirement benefits.

2. Mr. Srikant has two sons. He is in receipt of children education allowance

of ₹ 150 p.m. for his elder son and ₹ 70 p.m. for his younger son. Both his
sons are going to school. He also receives the following allowances:
Transport allowance: ₹ 1,800 p.m.
Tribal area allowance: ₹ 500 p.m.

Compute his taxable allowances.

3. Mr. Sagar who retired on 1.10.2022 is receiving ₹ 5,000 p.m. as pension.

On 1.2.2023, he commuted 60% of his pension and received ₹ 3,00,000 as
commuted pension. You are required to compute his taxable pension
assuming:
(a) He is a government employee.
(b) He is a private sector employee and received gratuity of ₹ 5,00,000
at the time of retirement.
(c) He is a private sector employee and did not receive any gratuity at
the time of retirement.

4. Ravi retired on 15.6.2022 after completion of 26 years 8 months of

service and received gratuity of ₹ 15,00,000. At the time of retirement,
his salary was:
Basic Salary: ₹ 50,000 p.m.
Dearness Allowance: ₹ 10,000 p.m. (60% of which is for retirement
benefits)
Commission: 1% of turnover (turnover in the last 12 months was
₹ 1,20,00,000)
Bonus: ₹ 25,000 p.a.

Compute his taxable gratuity assuming:

(a) He is private sector employee and covered by the Payment of Gratuity
Act, 1972.

14
(b) He is private sector employee and not covered by Payment of Gratuity
Act, 1972.
(c) He is a Government employee.

5. Mr. Gupta retired on 1.12.2022 after 20 years of service and received

leave salary of ₹ 5,00,000. Other details of his salary income are:
Basic Salary: ₹ 5,000 p.m. (₹ 1,000 was increased w.e.f. 1.4.2022)
Dearness Allowance: ₹ 3,000 p.m. (60% of which is for retirement
benefits)
Commission: ₹ 500 p.m.
Bonus: ₹ 1,000 p.m.
Leave availed during service: 480 days
He was entitled to 30 days leave every year.

You are required to compute his taxable leave salary assuming:

(a) He is a government employee.
(b) He is a non government employee.

6. Mr. A retires from service on December 31, 2022, after 25 years of

service. Following are the particulars of his income/investments for the
previous year 2022-23:

Particulars ₹
Basic pay @ ₹ 16,000 per month for 9 months 1,44,000
Dearness pay (50% forms part of the retirement benefits) 72,000
₹ 8,000 per month for 9 months
Lumpsum payment received from the Unrecognized 6,00,000
Provident Fund
Deposits in the PPF account 40,000

Out of the amount received from the unrecognized provident fund, the
employer’s contribution was ₹ 2,20,000 and the interest thereon ₹ 50,000.
The employee’s contribution was ₹ 2,50,000 and the interest thereon ₹
60,000. What is the taxable portion of the amount received from the
unrecognized provident fund in the hands of Mr. A for the assessment year
2023-24?

7. Will your answer be any different if the fund mentioned above was a
recognized provident fund?

15
8. Mr. B is working in XYZ Ltd. and has given the details of his income for
the P.Y. 2022- 23. You are required to compute his gross salary from the
details given below:

Basic Salary ₹ 10,000 p.m.

D.A. (50% is for retirement benefits) ₹ 8,000 p.m.
Commission as a percentage of turnover 0.1%
Turnover during the year ₹ 50,00,000
Bonus ₹ 40,000
Gratuity ₹ 25,000
His own contribution in the RPF ₹ 20,000
Employer’s contribution to RPF 20% of his basic salary
Interest accrued in the RPF @ 13% p.a. ₹ 13,000

9. Mr. Dutta received voluntary retirement compensation of ₹ 7,00,000

after 30 years 4 months of service. He still has 6 years of service left. At
the time of voluntary retirement, he was drawing basic salary ₹ 20,000
p.m.; Dearness allowance (which forms part of pay) ₹ 5,000 p.m. Compute
his taxable voluntary retirement compensation, assuming that he does not
claim any relief under section 89.

10. Mr. X is appointed as a CFO of ABC Ltd. in Mumbai from 1.9.2020. His
basic salary is ₹ 6,00,000 p.m. He is paid 8% as D.A. He contributes 10%
of his pay and D.A. towards his recognized provident fund and the company
contributes the same amount. The accumulated balance in recognized
provident fund as on 1.4.2021, 31.3.2022 and 31.3.2023 is ₹ 50,35,000, ₹
71,46,700 and ₹ 94,57,700, respectively. Compute the perquisite value
chargeable to tax in the hands of Mr. X u/s 17(2)(vii) and 17(2)(viia) for
the A.Y. 2022-23 and A.Y. 2023-24.

11. Mr. D went on a holiday on 25.12.2022 to Delhi with his wife and three
children (one son – age 5 years; twin daughters – age 3 years). They went
by flight (economy class) and the total cost of tickets reimbursed by his
employer was ₹ 60,000 (₹ 45,000 for adults and ₹ 15,000 for the three
minor children). Compute the amount of LTC exempt.

12. In the above illustration 11, will there be any difference if among his
three children the twins were 5 years old and the son 3 years old? Discuss.

16
13. Compute the taxable value of the perquisite in respect of medical
facilities received by Mr. G from his employer during the P.Y. 2022-23:

Medical premium paid for insuring health of Mr. G ₹ 7,000

Treatment of Mr. G by his family doctor ₹ 5,000
Treatment of Mrs. G in a Government hospital ₹ 25,000
Treatment of Mr. G’s grandfather in a private clinic ₹ 12,000
Treatment of Mr. G’s mother (68 years and dependant) by ₹ 8,000
family doctor
Treatment of Mr. G’s sister (dependant) in a nursing home ₹ 3,000
Treatment of Mr. G’s brother (independent) ₹ 6,000
Treatment of Mr. G’s father (75 years and dependent) abroad ₹ 50,000
Expenses of staying abroad of the patient and ₹ 30,000
Limit specified by RBI ₹ 75,000

14. Mr. C is a Finance Manager in ABC Ltd. The company has provided him
with rent- free unfurnished accommodation in Mumbai. He gives you the
following particulars:

Basic salary₹ 6,000 p.m.

Dearness Allowance ₹ 2,000 p.m. (30% is for retirement benefits)
Bonus ₹ 1,500 p.m.

Even though the company allotted the house to him on 1.4.2022, he

occupied the same only from 1.11.2022. Calculate the taxable value of the
perquisite for A.Y. 2023-24.

15. Using the data given in the previous illustration 14, compute the value
of the perquisite if Mr. C is required to pay a rent of ₹ 1,000 p.m. to the
company, for the use of this accommodation.

16. Using the data given in illustration 14, compute the value of the
perquisite if ABC Ltd. has taken this accommodation on a lease rent of ₹
1,200 p.m. and Mr. C is required to pay a rent of ₹ 1,000 p.m. to the
company, for the use of this accommodation.

17. Mr. C is a Finance Manager in ABC Ltd. The company has provided him
with rent- free unfurnished accommodation in Mumbai. He gives you the
following particulars:

Basic salary₹ 6,000 p.m.

Dearness Allowance ₹ 2,000 p.m. (30% is for retirement benefits)
Bonus ₹ 1,500 p.m.

17
Even though the company allotted the house to him on 1.4.2022, he
occupied the same only from 1.11.2022.

Compute the value of the perquisite if ABC Ltd. has provided a television
(WDV ₹ 10,000; Cost ₹ 25,000) and two air conditioners. The rent paid by
the company for the air conditioners is ₹ 400 p.m. each. The television was
provided on 1.1.2023. However, Mr. C is required to pay a rent of ₹ 1,000
p.m. to the company, for the use of this furnished accommodation.

18. Using the data given in illustration 17 above, compute the value of the
perquisite if Mr. C is a government employee. The licence fees determined
by the Government for this accommodation was ₹ 700 p.m.

19. Mr. X and Mr. Y are working for M/s. Gama Ltd. As per salary fixation
norms, the following perquisites were offered:
(i) For Mr. X, who engaged a domestic servant for ₹ 500 per month, his
employer reimbursed the entire salary paid to the domestic servant
i.e. ₹ 500 per month.
(ii) For Mr. Y, he was provided with a domestic servant @ ₹ 500 per month
as part of remuneration package.

You are required to comment on the taxability of the above in the hands
of Mr. X and Mr. Y, who are not specified employees.

20. Mr. X retired from the services of M/s Y Ltd. on 31.01.2023, after
completing service of 30 years and one month. He had joined the company
on 1.1.1993 at the age of 30 years and received the following on his
retirement:

(i) Gratuity ₹ 6,00,000. He was covered under the Payment of Gratuity

Act, 1972.
(ii) Leave encashment of ₹ 3,30,000 for 330 days leave balance in his
account. He was credited 30 days leave for each completed year of
service.
(iii) As per the scheme of the company, he was offered a car which was
purchased on 30.01.2020 by the company for ₹ 5,00,000. Company
has recovered ₹ 2,00,000 from him for the car. Company depreciates
the vehicles at the rate of 15% on Straight Line Method.
(iv) An amount of ₹ 3,00,000 as commutation of pension for 2/3 of his
pension commutation.
(v) Company presented him a gift voucher worth ₹ 6,000 on his
retirement.
(vi) His colleagues also gifted him a Television (LCD) worth ₹ 50,000 from
their own contribution.

Following are the other particulars:

18
 (i) He has drawn a basic salary of ₹ 20,000 and 50% dearness allowance
per month for the period from 01.04.2022 to 31.01.2023.
(ii) Received pension of ₹ 5,000 per month for the period 01.02.2023 to
31.03.2023 after commutation of pension.

Compute his gross total income from the above for Assessment Year 2023-
24 assuming he has not opted for the provisions of section 115BAC.

21. Shri Bala employed in ABC Co. Ltd. as Finance Manager gives you the
list of perquisites provided by the company to him for the entire financial
year 2022-23:

(i) Domestic servant was provided at the residence of Bala. Salary of

domestic servant is ₹ 1,500 per month. The servant was engaged by
him and the salary is reimbursed by the company (employer).

In case the company has employed the domestic servant, what is the
value of perquisite?

(ii) Free education was provided to his two children Arthy and Ashok in a
school maintained and owned by the company. The cost of such
education for Arthy is computed at ₹ 900 per month and for Ashok at
₹ 1,200 per month. No amount was recovered by the company for
such education facility from Bala.
(iii) The employer has provided movable assets such as television,
refrigerator and air-conditioner at the residence of Bala. The actual
cost of such assets provided to the employee is ₹ 1,10,000.
(iv) A gift voucher worth ₹ 10,000 was given on the occasion of his
marriage anniversary. It is given by the company to all employees
above certain grade.
(v) Telephone provided at the residence of Shri Bala and the bill
aggregating to ₹ 25,000 paid by the employer.
(vi) Housing loan @ 6% per annum. Amount outstanding on
1.4.2022 is ₹ 6,00,000. Shri Bala pays ₹ 12,000 per month towards
principal, on 5th of each month.

Compute the chargeable perquisite in the hands of Mr. Bala for the A.Y.
2023-24.

The lending rate of State Bank of India as on 1.4.2022 for housing loan
may be taken as 10%.

22. AB Co. Ltd. allotted 1000 sweat equity shares to Sri Chand in June
2022. The shares were allotted at ₹ 200 per share as against the fair market
value of ₹ 300 per share on the date of exercise of option by the allottee
viz. Sri Chand. The fair market value was computed in accordance with the
method prescribed under the Act.

19
 (i) What is the perquisite value of sweat equity shares allotted to Sri
Chand?
(ii) In the case of subsequent sale of those shares by Sri Chand, what
would be the cost of acquisition of those sweat equity shares?

23. X Ltd. provided the following perquisites to its employee Mr. Y for the
P.Y. 2022-23 –

(1) Accommodation taken on lease by X Ltd. for ₹ 15,000 p.m. ₹ 5,000

p.m. is recovered from the salary of Mr. Y.
(2) Furniture, for which the hire charges paid by X Ltd. is ₹ 3,000 p.m.
No amount is recovered from the employee in respect of the same.
(3) A Car of 1,200 cc which is owned by X Ltd. and given to Mr. Y to be
used both for official and personal purposes. All running and
maintenance expenses are fully met by the employer. He is also
provided with a chauffeur.
(4) A gift voucher of ₹ 10,000 on his birthday.

Compute the value of perquisites chargeable to tax for the A.Y. 2023-24,
assuming his salary for perquisite valuation to be ₹ 10 lakh.

24. Mr. Goyal receives the following emoluments during the previous year
ending 31.03.2023.

Basic pay ₹40,000

Dearness Allowance ₹15,000
Commission ₹10,000
Entertainment allowance ₹4,000
Medical expenses reimbursed ₹25,000
Professional tax paid ₹2,000 (₹ 1,000 was paid
by his employer)

Mr. Goyal contributes ₹ 5,000 towards recognized provident fund. He has

no other income. Determine the income from salary for A.Y. 2023-24, if Mr.
Goyal is a State Government employee.

25. In the case of Mr. Hari, who turned 70 years on 28.3.2023, you are
informed that the salary (computed) for the previous year 2022-23 is ₹
10,20,000 and arrears of salary received is ₹ 3,45,000. Further, you are
given the following details relating to the earlier years to which the arrears
of salary received is attributable to:

20
 Previous year Taxable Salary(₹) Arrears now received
(₹)
2010 – 2011 7,10,000 1,03,000
2011 – 2012 8,25,000 1,17,000
2012 – 2013 9,50,000 1,25,000

Compute the relief available under section 89 and the tax payable for the
A.Y. 2023-24. Assume that Mr. Hari does not opt for section 115BAC.

Note: Rates of Taxes:

Assess Slab rates of income-tax

ment For resident individuals of For other resident
Year the age of 60 years or more individuals
at any time during the
previous year
Slabs Rate Slabs Rate
2011– Upto ₹ 2,40,000 Nil Upto ₹ 1,60,000 Nil
12
₹ 2,40,001 - ₹ 5,00,000 10% ₹ 1,60,001 - ₹ 5,00,000 10%
₹ 5,00,001 - ₹ 8,00,000 20% ₹ 5,00,001 - ₹ 8,00,000 20%
Above ₹ 8,00,000 30% Above ₹ 8,00,000 30%
2012– Upto ₹ 2,50,000 Nil Upto ₹ 1,80,000 Nil
13
₹ 2,50,001 - ₹ 5,00,000 10% ₹ 1,80,001 - ₹ 5,00,000 10%
₹ 5,00,001 - ₹ 8,00,000 20% ₹ 5,00,001 - ₹ 8,00,000 20%
Above ₹ 8,00,000 30% Above ₹ 8,00,000 30%
2013– Upto ₹ 2,50,000 Nil Upto ₹ 2,00,000 Nil
14
₹ 2,50,001 - ₹ 5,00,000 10% ₹ 2,00,001 - ₹ 5,00,000 10%
₹ 5,00,001 - ₹ 10,00,000 20% ₹ 5,00,001 - ₹ 10,00,000 20%
Above ₹ 10,00,000 30% Above ₹ 10,00,000 30%

Note – Education cess@2% and secondary and higher education cess @

1% was attracted on the income-tax for all above preceding years.

26. Mr. Mohit is employed with XY Ltd. on a basic salary of ₹ 10,000 p.m.
He is also entitled to dearness allowance @100% of basic salary, 50% of
which is included in salary as per terms of employment. The company gives
him house rent allowance of ₹ 6,000 p.m. which was increased to ₹ 7,000
p.m. with effect from 01.01.2023. He also got an increment of ₹ 1,000 p.m.
in his basic salary with effect from 01.02.2023. Rent paid by him during the
previous year 2022-23 is as under:

21
April and May, 2022 - Nil, as he stayed with his parents
June to October, 2022 - ₹ 6,000 p.m. for an accommodation in Ghaziabad
November, 2022 to March, 2023 - ₹ 8,000 p.m. for an accommodation in
Delhi

Compute his gross salary for assessment year 2023-24 assuming he has
not opted for the provisions of section 115BAC.

27. Ms. Rakhi is an employee in a private company. She receives the

following medical benefits from the company during the previous year
2022-23:

Particulars ₹
1 Reimbursement of following medical expenses
incurred by Ms. Rakhi
(A) On treatment of her self employed daughter 4,000
in a private clinic
(B) On treatment of herself by family doctor 8,000
(C) On treatment of her mother-in-law dependent 5,000
on her, in a nursing home
2 Payment of premium on Mediclaim Policy taken on 7,500
her health
3 Medical Allowance 2,000 p.m.
4 Medical expenses reimbursed on her son's 5,000
treatment in a government hospital
5 Expenses incurred by company on the treatment of 1,05,000
her minor son abroad including stay expenses
6 Expenses in relation to foreign travel of Rakhi and 1,20,000
her son for medical treatment
Note - Limit prescribed by RBI for expenditure on
medical treatment and stay abroad is USD
2,50,000 per financial year under liberalized
remittance scheme.

Examine the taxability of the above benefits and allowances in the hands
of Rakhi.

28. Mr. X is employed with AB Ltd. on a monthly salary of ₹ 25,000 per

month and an entertainment allowance and commission of ₹ 1,000 p.m.
each. The company provides him with the following benefits:
1. A company owned accommodation is provided to him in Delhi.
Furniture costing ₹ 2,40,000 was provided on 1.8.2022.
2. A personal loan of ₹ 5,00,000 on 1.7.2022 on which it charges
interest @ 6.75% p.a. The entire loan is still outstanding. (Assume
SBI rate of interest on 1.4.2022 was 12.75% p.a.)

22
 3. His son is allowed to use a motor cycle belonging to the company.
The company had purchased this motor cycle for ₹ 60,000 on
1.5.2019. The motor cycle was finally sold to him on 1.8.2022 for ₹
30,000.
4. Professional tax paid by Mr. X is ₹ 2,000.

Compute the income from salary of Mr. X for the A.Y. 2023-24 assuming
Mr. X has not opted for the provisions of section 115BAC.

29. Mr. Balaji, employed as Production Manager in Beta Ltd., furnishes you
the following information for the year ended 31.03.2023:

(i) Basic salary upto 31.10.2022 ₹ 50,000 p.m.

Basic salary from 01.11.2022 ₹ 60,000 p.m.
Note: Salary is due and paid on the last day of every month.
(ii) Dearness allowance @ 40% of basic salary.
(iii) Bonus equal to one month salary. Paid in October 2022 on basic salary
plus dearness allowance applicable for that month.
(iv) Contribution of employer to recognized provident fund account of the
employee@16% of basic salary.
(v) Professional tax paid ₹ 2,500 of which ₹ 2,000 was paid by the
employer.
(vi) Facility of laptop and computer was provided to Balaji for both official
and personal use. Cost of laptop ₹ 45,000 and computer ₹ 35,000
were acquired by the company on 01.12.2022.
(vii) Motor car owned by the employer (cubic capacity of engine exceeds
1.60 litres) provided to the employee from 01.11.2022 meant for
both official and personal use. Repair and running expenses of ₹
45,000 from 01.11.2022 to 31.03.2023, were fully met by the
employer. The motor car was self-driven by the employee.
(viii) Leave travel concession given to employee, his wife and three
children (one daughter aged 7 and twin sons aged 3). Cost of air
tickets (economy class) reimbursed by the employer ₹ 30,000 for
adults and ₹ 45,000 for three children. Balaji is eligible for availing
exemption this year to the extent it is permissible in law.

Compute the salary income chargeable to tax in the hands of Mr. Balaji for
the assessment year 2023-24 assuming he has not opted for the provisions
of section 115BAC.

30. From the following details, find out the salary chargeable to tax for the
A.Y. 2023-24 assuming he has not opted for the provisions of section
115BAC-

Mr. X is a regular employee of Rama & Co., in Gurgaon. He was appointed

on 1.1.2022 in the scale of ₹ 20,000 -₹ 1,000 - ₹ 30,000. He is paid 10%
D.A. & Bonus equivalent to one month pay based on salary of March every

23
year. He contributes 15% of his pay and D.A. towards his recognized
provident fund and the company contributes the same amount. DA forms
part of pay for retirement benefits.

He is provided free housing facility which has been taken on rent by the
company at ₹ 10,000 per month. He is also provided with following
facilities:

(i) Facility of laptop costing ₹ 50,000.

(ii) Company reimbursed the medical treatment bill of his brother of ₹
25,000, who is dependent on him.
(iii) The monthly salary of ₹ 1,000 of a house keeper is reimbursed by the
company.
(iv) A gift voucher of ₹ 10,000 on the occasion of his marriage anniversary.
(v) Conveyance allowance of ₹ 1,000 per month is given by the company
towards actual reimbursement of conveyance spent on official duty.
(vi) He is provided personal accident policy for which premium of ₹ 5,000
is paid by the company.
(vii) He is getting telephone allowance @ ₹ 500 per month.

31. Ms. Akansha, a salaried employee, furnishes the following details for
the financial year 2022-23:

Particulars ₹
Basic salary 6,20,000
Dearness allowance 4,20,000
Commission 75,000
Entertainment allowance 9,000
Medical expenses reimbursed by the employer 18,000
Profession tax (of this, 50% paid by employer) 4,000
Health insurance premium paid by employer 8,000
Gift voucher given by employer on her birthday 10,000
Life insurance premium of Akansha paid by employer 26,000
Laptop provided for use at home. Actual cost of Laptop to 45,000
employer Children of the assessee are also using the
Laptop at home]
Employer company owns a Maruti Suzuki Swift car, which
was provided to the assessee, both for official and
personal use. Driver was also provided. (Engine cubic
capacity more than 1.6 litres). All expenses are met by
the employer
Annual credit card fees paid by employer [Credit card is 7,000
not exclusively used for official purposes; details of usage
are not available]

24
You are required to compute the income chargeable under the head Salaries
for the assessment year 2023-24.

32. Ashok, an employee of ABC Ltd., receives ₹ 8,05,000 as gratuity under

the Payment of Gratuity Act, 1972. He retires on 10th September, 2022
after rendering service for 35 years and 7 months. The last drawn salary
was ₹ 32,700 per month. Calculate the amount of gratuity chargeable to
tax.

33. Mr. Oldman retired from his job after 29 years 6 months and 15 days
of service on 17/12/2022 and received gratuity amounting ₹ 4,00,000. His
salary at the time of retirement was basic ₹ 6,000 p.m., dearness allowance
₹ 1,200 p.m., House rent allowance ₹ 2,000, Commission on turnover 1%,
Commission on profit ₹ 5,000. He got an increment on 1/4/2022 of ₹ 1,000
p.m. in Basic. Turnover achieved by assessee ₹ 1,00,000 p.m. Calculate his
taxable gratuity if he is a —
a. Government employee
b. Non-Government employee, covered by the Payment of Gratuity Act;
c. Non-Government employee not covered by the Payment of Gratuity
Act

34. Mrs. X is working with ABC Ltd. since last 30 years 9 months. Her salary
structure is as under:
Basic ₹ 5,000 p.m.
Dearness allowance ₹ 3,000 p.m.
On 15/12/2022, she died.

State the treatment of gratuity in following cases:

Case 1: Mrs. X retired on 10/12/2022 & gratuity ₹ 4,00,000 received by

her husband (legal heir) as on 18/12/2022.
Case 2: Husband of Mrs. X received gratuity on 18/12/2022 falling due after
death of Mrs. X.

Mrs. X is covered by the Payment of Gratuity Act.

35. a. Mr. Bhanu is working in Zebra Ltd. since last 25 years 9 months.
Company allows 2 months leave for every completed year of service to its
employees. During the job, he had availed 20 months leave. At the time of
retirement on 10/8/2022, he got ₹ 1,50,000 as leave encashment. As on
that date, his basic salary was ₹ 5,000 p.m., D.A. was ₹ 2,000 p.m.,
Commission was 5% on turnover + ₹ 2,000 p.m. (Fixed p.m.). Turnover
effected by the assessee during last 12 months (evenly) ₹ 5,00,000. Bhanu
got an increment of ₹ 1,000 p.m. from 1/1/2022 in basic and ₹ 500 p.m.
in D.A. Compute his taxable leave encashment salary.

25
b. How shall your answer differ if the assessee had taken 2 months leave
instead of 20 months, during his continuation of job.

36. Mr. Das retired on 31/3/2023. At the time of retirement, 18 months

leave was lying to the credit of his account. He received leave encashment
equivalent to 18 months Basic salary ₹ 1,26,000. His employer allows him
1½ months leave for every completed year of service. During his tenure,
he availed of 12 months leave. At the time of retirement, he also gets D.A.
₹ 3,000. His last increment of ₹ 1,000 in basic was on 1/4/2022. Find
taxable leave encashment.

37. Mr. Amit has retired from his job on 31/3/2022. From 1/4/2022, he was
entitled to a pension of ₹ 3,000 p.m. On 1/8/2022, he got 80% of his
pension commuted and received ₹ 1,20,000. Compute taxable pension if
he is:
Case a) Government employee;
Case b) Non-Government employee & not receiving gratuity;
Case c) Non-Government employee (receiving gratuity, but not covered
by the Payment of Gratuity Act)

38. X, a resident of Ajmer, receives ₹ 48,000 as basic salary during the

previous year 2022-23. In addition, he gets ₹ 4,800 as dearness allowance
forming part of basic salary, 7% commission on sales made by him (sale
made by X during the relevant previous year is ₹ 86,000) and ₹ 6,000 as
house rent allowance. He, however, pays ₹ 5,800 as house rent. Determine
the quantum of exempted house rent allowance.

39. Compute the taxable house rent allowance of Mr. Abhijeet from the
following data:
Basic Salary ₹ 5,000 p.m., D.A. ₹ 2,000 p.m., HRA ₹ 4,000 p.m., Rent
paid ₹ 4,000 p.m. in Pune.
On 1/07/2022, there is an increment in Basic salary by ₹ 1,000.
On 1/10/2022, employee hired a new flat in Kolkata at the same rent as
he was posted to Kolkata.
On 1/01/2023, employee purchased his own flat and resides there.

40. Mr. Laloo Singh, received education allowance of ₹ 80 p.m. for his 1st
child, ₹ 90 p.m. for his 2nd child and ₹ 120 p.m. for his 3rd child. He also
received hostel allowance of ₹ 1,000 p.m. None of his children are studying.
Find taxable Children Education Allowance and Hostel allowance.

41. Mr. & Mrs. X have three children and two of them are not studying.
Both Mr. & Mrs. X are working in A Ltd. and getting children education
allowance ₹ 500 per month and hostel allowance ₹ 1,000 per month.
Compute taxable children education allowance and hostel allowance.

26
42. Mr. Mugal joined Star Ltd. on 1/4/2022. Details regarding his salary
are as follows:

Particulars Amount (in ₹)

Basic 5,000 p.m.
Dearness Allowance 2,000 p.m. (50% considered for retirement
benefit)
Education Allowance 1,000 p.m. (he has 1 son and 3 daughters)
Hostel Allowance 2,000 p.m. (none of the children is sent to
hostel)
Medical Allowance 1,000 p.m. (total medical expenditure
incurred ₹ 3,000)
Transport Allowance 1,800 p.m. (being used for office to
residence & vice versa)
Servant Allowance 1,000 p.m.
City compensatory 2,000 p.m.
Allowance
Entertainment Allowance 1,000 p.m.
Assistants Allowance 3,000 p.m. (paid to assistant ₹ 2,000 p.m.)
Professional Development 2,000 p.m. (actual expenses for the
Allowance purpose ₹ 8,000 p.m.)
Bonus 24,000 p.a.
Commission 9,000 p.a.
Fees 5,000 p.a.

Compute his gross taxable salary for the assessment year 2023-24.

43. Miss Sonal, being a citizen of India and Government employee has
following salary details:

Particulars Amount in ₹
Basic Salary 2,000 p.m.
Dearness Allowance 3,000 p.m.
Dearness Pay 1,000 p.m.
Fees 50,000 p.a.
House Rent Allowance 5,000 p.m. (Rent paid for Kolkata house
₹ 4,000 p.m.)
Children Education allowance 3,000 p.m. (She is having one adopted
child)
Children allowance 1,000 p.m.
Hostel allowance 2,000 p.m.
Dress Allowance 5,000 p.m. (Actual expenditure ₹
10,000 p.m.)
Uniform Allowance 2,000 p.m. (Actual expenditure ₹ 1,000
p.m.)
Tiffin Allowance 1,000 p.m.

27
Education Allowance for her own 2,000 p.m. (Actual expenditure ₹ 1,500
education p.m.)

Compute her gross salary for the assessment year 2023-24.

44. Mr. Chauhan has the following salary structure:

a) Basic Salary ₹ 5,000 p.m.
b) Entertainment Allowance ₹ 1,000 p.m.
c) Education Allowance ₹ 500 p.m. (he has 3 children)
d) DA ₹ 3,000 p.m.
e) Fees ₹ 5,000 p.a.
f) Bonus ₹ 10,000 p.a.
g) Professional tax of employee paid by employer ₹ 2,000 for the year
h) He has been provided a rent-free accommodation in Mumbai.
i) 60% of DA only forms part of retirement benefits

Compute taxable value of accommodation in the hands of Mr. Chauhan in

the following cases:

I) The employer owns such accommodation.

II) The employer hires such accommodation at a monthly rent of ₹ 900.

45. Miss Stuti has the following salary structure:

a) Basic salary 15,000 p.m.
b) Dearness Allowance 5,000 p.m. (not forming part of
retirement benefit)
c) Hostel Allowance 1,000 p.m. (does not have any
child)
d) Tiffin Allowance 500 p.m.
e) Transport Allowance 200 p.m.
f) Bonus 20,000 p.a.
g) Commission 15,000 p.a.
h) Free refreshment in office worth 5,000 p.a.
i) Mobile phone facility by employer 900 p.m.
j) Computer facility worth 10,000 p.a.

She has been provided a Rent-free Accommodation (owned by employer)

in Kolkata. The house was allotted to her with effect from 1/5/2022 but she
could occupy the same only from 1/6/2022. Find her gross taxable salary.

46. Miss Khushi has the following salary details:

i) Basic salary ₹ 6,000 p.m.
ii) DA ₹ 3,000 p.m.
iii) Academic development allowance ₹ 1,000 p.m., expenditure
incurred ₹ 700 p.m.
iv) Entertainment allowance ₹ 500 p.m.

28
She has been provided with a rent-free accommodation in Purulia. On
1/7/2022, she was posted to Kolkata. A new house further allotted to her
on same date. But she surrendered her Purulia house only on 31/12/2022.
Rent paid by employer for Purulia House ₹ 500 p.m. while Kolkata house is
owned by the employer. Find her gross taxable salary.

47. A company ‘X’ grants option to its employee ‘R’ on 1st April, 2017 to
apply for 100 shares of the company for making available right in the
intellectual property to the employer-company at a pre-determined price of
₹ 50 per share with date of vesting of the option being 1st April, 2018 and
exercise period being 1st April, 2018 to 31st March, 2023. Employee ‘R’
exercises his option on 31st March, 2022 and shares are allotted/
transferred to him on 3rd April, 2022.
Fair market value of such share on different dates are as under:

01-04-2017 01-04-2018 31-03-2022 03-04-2022

₹ 100 ₹ 180 ₹ 440 ₹ 470

Compute taxable perquisite, if any, in hands of Mr. R for A.Y. 2023-24.

48. Sonam, has been provided a car (1.7 ltr.) by his employer Vikash Ltd.
The cost of car to the employer was ₹3,50,000 and maintenance cost
incurred by the employer ₹ 30,000 p.a. Chauffeur salary paid by the
employer ₹3,000 p.m. Find value of perquisite for Sonam for the A.Y. 2023-
24, if the car is used for:

a) Office purpose.
b) Personal purpose.
c) Both purposes.

In case (b) and (c), employee is being charged ₹ 15,000 p.a. for such
facility.

49. Sri Bhagawan, has been provided with the following servants by his
employer:

Servant Appointed by Salary of Servant

Watchman Employer 2,000 p.m.
Cook Employee’s wife 3,000 p.m.
Maid servant Employer 1,000 p.m.
Sweeper Employee 500 p.m.
Gardener Employer 1,000 p.m.

Sri Bhagawan has also been provided a rent-free accommodation, which is

owned by the employer. Find taxable value of servant facility if –
Case a) He is a specified employee.
Case b) He is a non-specified employee.

29
50. Determine taxable perquisite in the following cases:
1. Miss Shradha received a wrist-watch of ₹ 3,000 on 17/7/2022 and a
golden chain worth ₹ 12,000 on 18/8/2022 from her employer, Mr.
Raju.
2. Miss Rakhi received ₹ 11,000 cash–gift from her employer, Dipu Ltd.
3. Mr. Anirudha is working with X & Co. a partnership firm. During the
year, the employer firm gifted a diamond ring worth ₹ 80,000 to wife
of Mr. Anirudha.

51. Find taxable amount of perquisite in the following cases:

1. Y has been allowed a fixed medical allowance of ₹ 2,000 p.m.
2. Apart from reimbursement of petty medical bill of ₹ 25,000, Z and his
family get medical treatment in a dispensary maintained by the
employer. Value of facility provided to Z and his family members during
the previous year are as follows:

Particulars Amount
a. Z 2,000
b. Mrs. Z 5,000
c. Major son of Z (independent) 8,000
d. Minor daughter of Z 25,000
e. Dependent younger brother of Z 8,000
f. Independent younger sister of Z 10,000
g. Dependent sister-in-law 5,000

52. Himalaya Ltd. reimburses the following expenditure on medical

treatment of the son of an employee Karan. The treatment was done at UK:
1. Travelling expenses ₹ 1,15,000.
2. Stay expenses at UK permitted by RBI ₹ 45,000 (Actual expenses ₹
70,000).
3. Medical expenses permitted by RBI ₹ 50,000 (Actual expenses ₹
70,000).

Compute the taxable perquisites for the assessment year 2023-24 in the
hands of Karan, if his annual income from salary before considering medical
facility perquisite was

(i) ₹ 1,50,000;
(ii) ₹ 2,00,000.

53. Mr. Sharma has been appointed as an accountant of ABC Ltd as on

1/4/2020, since then he is working with the same company. The salary
structure and increment details are as under:

Basic ₹ 5000 - 1000 - 8000 -1500 - 14000

D.A. ₹ 3000 – 500 – 5000 – 1000 - 10000
He and his employer contribute to URPF 14% of basic and DA.

30
Every year 9% interest is credited to such fund. As on 1/4/2022, the fund
gets recognition.
Hence, the accumulated balance in URPF was transferred to RPF. Comment
on tax treatment of such transferred balance.

54. Following are the particulars of income of Mrs. S. Choudhury for the
Previous Year 2022-23:
a. Basic salary @ ₹ 15,000 per month.
b. Dearness Allowance @ 60% of salary.
c. Medical Allowance @ 600 per month (Actual expenditure ₹ 5,000).
d. House Rent Allowance received @ ₹ 6,000 per month and she pays rent
of ₹ 7,200 per month for her house in Durgapur.
e. City compensatory allowance ₹ 1,500 per month.
f. She owns a car which she is using for official purposes. Her employer
reimburses her @ ₹ 3,000 per month.
g. She is contributing ₹ 2,100 per month towards a recognized provident
fund. The employer is also contributing the same amount. Interest
credited to R.P.F @ 11% ₹ 2,200.
h. She paid ₹ 1,800 as professional tax during the year.

Compute income from salary of Mrs. Choudhury for the assessment

year 2023-24.

31
 5. Income from House Property
1. Jayashree owns five houses in India, all of which are let-out. Compute
the GAV of each house from the information given below –

Particulars House House House House House

I II III IV V
(₹) (₹) (₹) (₹) (₹)
Municipal Value 80,000 55,000 65,000 24,000 80,000
Fair Rent 90,000 60,000 65,000 25,000 75,000
Standard Rent N.A. 75,000 58,000 N.A. 78,000
Actual rent 72,000 72,000 60,000 30,000 72,000
received/ receivable

2. Rajesh, a British national, is a resident and ordinarily resident in India

during the P.Y. 2022-23. He owns a house in London, which he has let out
at £ 10,000 p.m. The municipal taxes paid to the Municipal Corporation of
London is £ 8,000 during the P.Y. 2022-23. The value of one £ in Indian
rupee to be taken at ₹ 95. Compute Rajesh’s Net Annual Value of the
property for the A.Y. 2023-24.

3. Mr. Manas owns two house properties one at Bombay, wherein his family
resides and the other at Delhi, which is unoccupied. He lives in Chandigarh
for his employment purposes in a rented house. For acquisition of house
property at Bombay, he has taken a loan of ₹ 30 lakh@10% p.a. on
1.4.2021. He has not repaid any amount so far. In respect of house property
at Delhi, he has taken a loan of ₹ 5 lakh@11% p.a. on 1.10.2021 towards
repairs. Compute the deduction which would be available to him under
section 24(b) for A.Y. 2023-24 in respect of interest payable on such loan.

4. Anirudh has a property whose municipal valuation is ₹ 1,30,000 p.a. The

fair rent is ₹ 1,10,000 p.a. and the standard rent fixed by the Rent Control
Act is ₹ 1,20,000 p.a. The property was let out for a rent of ₹ 11,000 p.m.
throughout the previous year. Unrealised rent was ₹ 11,000 and all
conditions prescribed by Rule 4 are satisfied. He paid municipal taxes
@10% of municipal valuation. Interest on borrowed capital was ₹ 40,000
for the year. Compute his income from house property for A.Y. 2023-24.

5. Ganesh has a property whose municipal valuation is ₹ 2,50,000 p.a. The

fair rent is ₹ 2,00,000 p.a. and the standard rent fixed by the Rent Control
Act is ₹ 2,10,000 p.a. The property was let out for a rent of ₹ 20,000 p.m.
However, the tenant vacated the property on 31.1.2023. Unrealised rent
was ₹ 20,000 and all conditions prescribed by Rule 4 are satisfied. He paid
municipal taxes @8% of municipal valuation. Interest on borrowed capital

32
was ₹ 65,000 for the year. Compute the income from house property of
Ganesh for A.Y. 2023-24.

6. Poorna has one house property at Indira Nagar in Bangalore. She stays
with her family in the house. The rent of similar property in the neighbour
hood is ₹ 25,000 p.m. The municipal valuation is ₹ 2,80,000 p.a.. Municipal
taxes paid is ₹ 8,000. The house construction began in April 2016 with a
loan of ₹ 20,00,000 taken from SBI Housing Finance Ltd. @9% p.a. on
1.4.2016. The construction was completed on 30.11.2018. The
accumulated interest up to 31.3.2018 is ₹ 3,60,000. On 31.3.2023, Poorna
paid ₹ 2,40,000 which included ₹ 1,80,000 as interest. There was no
principal repayment prior to this date. Compute Poorna’s income from
house property for A.Y. 2023-24.

7. Smt. Rajalakshmi owns a house property at Adyar in Chennai. The

municipal value of the property is ₹ 5,00,000, fair rent is ₹ 4,20,000 and
standard rent is ₹ 4,80,000. The property was let-out for ₹ 50,000 p.m. up
to December 2022. Thereafter, the tenant vacated the property and Smt.
Rajalakshmi used the house for self-occupation. Rent for the months of
November and December 2022 could not be realized in spite of the owner’s
efforts. All the conditions prescribed under Rule 4 are satisfied. She paid
municipal taxes @12% during the year. She had paid interest of ₹ 25,000
during the year for amount borrowed for repairs for the house property.
Compute her income from house property for the A.Y. 2023-24.

8. Ganesh has three houses, all of which are self-occupied. The particulars
of the houses for the P.Y. 2022-23 are as under:

Particulars House I House II House III

Municipal valuation p.a. ₹ 3,00,000 ₹ 3,60,000 ₹ 3,30,000
Fair rent p.a. ₹ 3,75,000 ₹ 2,75,000 ₹ 3,80,000
Standard rent p.a. ₹ 3,50,000 ₹ 3,70,000 ₹ 3,75,000
Date of completion/purchase 31.3.1999 31.3.2002 01.4.2015
Municipal taxes paid during the year 12% 8% 6%
Interest on money borrowed for - 55,000
repair of property during the current
year
Interest for current year on money 1,75,000
borrowed in April, 2015 for purchase
of property

Compute Ganesh’s income from house property for A.Y. 2023-24 and
suggest which houses should be opted by Ganesh to be assessed as self-
occupied so that his tax liability is minimum.

33
9. Prem owns a house in Madras. During the previous year 2022-23, 2/3rd
portion of the house was self-occupied and 1/3rd portion was let out for
residential purposes at a rent of ₹ 8,000 p.m. Municipal value of the
property is ₹ 3,00,000 p.a., fair rent is ₹ 2,70,000 p.a. and standard rent
is ₹ 3,30,000 p.a. He paid municipal taxes @10% of municipal value during
the year. A loan of ₹ 25,00,000 was taken by him during the year 2018 for
acquiring the property. Interest on loan paid during the previous year 2022-
23 was ₹ 1,20,000. Compute Prem’s income from house property for the
A.Y. 2023-24.

10. Mr. Anand sold his residential house property in March, 2022. In June,
2022, he recovered rent of ₹ 10,000 from Mr. Gaurav, to whom he had let
out his house for two years from April 2016 to March 2018. He could not
realize two months rent of ₹ 20,000 from him and to that extent his actual
rent was reduced while computing income from house property for A.Y.
2018-19.

Further, he had let out his property from April, 2018 to February, 2022 to
Mr. Satish. In April, 2020, he had increased the rent from ₹ 12,000 to ₹
15,000 per month and the same was a subject matter of dispute. In
September, 2022, the matter was finally settled and Mr. Anand received ₹
69,000 as arrears of rent for the period April 2020 to February, 2022.

Would the recovery of unrealized rent and arrears of rent be taxable in the
hands of Mr. Anand, and if so in which year?

11. Ms. Aparna co-owns a residential house property in Calcutta along with
her sister Ms. Dimple, where her sister’s family resides. Both of them have
equal share in the property and the same is used by them for self-
occupation. Interest is payable in respect of loan of ₹ 50,00,000@10%
taken on 1.4.2021 for acquisition of such property. In addition, Ms. Aparna
owns a flat in Pune in which she and her parents reside. She has taken a
loan of ₹ 3,00,000 @ 12% on 1.10.2021 for repairs of this flat.

Compute the deduction which would be available to Ms. Aparna and Ms.
Dimple under section 24(b) for A.Y. 2023-24.

12. Mr. Raman is a co-owner of a house property along with his brother
holding equal share in the property.

Particulars ₹
Municipal value of the property 1,60,000
Fair rent 1,50,000
Standard rent under the Rent Control Act 1,70,000
Rent received 15,000 p.m.

34
The loan for the construction of this property is jointly taken and the
interest charged by the bank is ₹ 25,000, out of which ₹ 21,000 has been
paid. Interest on the unpaid interest is ₹ 450. To repay this loan, Raman
and his brother have taken a fresh loan and interest charged on this loan
is ₹ 5,000. The municipal taxes of ₹ 5,100 have been paid by the tenant.

Compute the income from this property chargeable in the hands of Mr.
Raman for the A.Y. 2023-24.

13. Mr. X owns one residential house in Mumbai. The house is having two
identical units. First unit of the house is self-occupied by Mr. X and another
unit is rented for ₹ 8,000 p.m. The rented unit was vacant for 2 months
during the year. The particulars of the house for the previous year 2022-23
are as under:

Standard rent ₹ 1,62,000 p.a.

Municipal valuation ₹ 1,90,000 p.a.
Fair rent ₹ 1,85,000 p. a
Municipal tax (Paid by Mr. X) 15% of municipal valuation
Light and water charges ₹ 500 p.m.
Interest on borrowed capital ₹ 1,500 p.m.
Lease money ₹ 1,200 p.a.
Insurance charges ₹ 3,000 p.a.
Repairs ₹ 12,000 p.a.

Compute income from house property of Mr. X for the A.Y. 2023-24.

14. Mr. Vikas owns a house property whose Municipal Value, Fair Rent and
Standard Rent are ₹ 96,000, ₹ 1,26,000 and ₹ 1,08,000 (per annum),
respectively.

During the Financial Year 2022-23, one-third of the portion of the house
was let out for residential purpose at a monthly rent of ₹ 5,000. The
remaining two-third portion was self-occupied by him. Municipal tax @ 11
% of municipal value was paid during the year.

The construction of the house began in June, 2015 and was completed on
31-5-2018. Vikas took a loan of ₹ 1,00,000 on 1-7-2015 for the
construction of building.

He paid interest on loan @ 12% per annum and every month such interest
was paid.

Compute income from house property of Mr. Vikas for the Assessment Year
2023-24.

35
15. Mrs. Rohini Ravi, a citizen of the U.S.A., is a resident and ordinarily
resident in India during the financial year 2022-23. She owns a house
property at Los Angeles,

U.S.A., which is used as her residence. The annual value of the house is $
20,000. The value of one USD ($) may be taken as ₹ 75. She took
ownership and possession of a flat in Chennai on 1.7.2022, which is used
for self-occupation, while she is in India. The flat was used by her for 7
months only during the year ended 31.3.2023. The municipal valuation is
₹ 3,84,000 p.a. and the fair rent is ₹ 4,20,000 p.a. She paid the following
to Corporation of Chennai:
Property Tax ₹ 16,200
Sewerage Tax ₹ 1,800

She had taken a loan from Standard Chartered Bank in June, 2020 for
purchasing this flat. Interest on loan was as under:

Particulars ₹
Period prior to 1.4.2022 49,200
1.4.2022 to 30.6.2022 50,800
1.7.2022 to 31.3.2023 1,31,300

She had a house property in Bangalore, which was sold in March, 2019. In
respect of this house, she received arrears of rent of ₹ 60,000 in March,
2023. This amount has not been charged to tax earlier.

Compute the income chargeable from house property of Mrs. Rohini Ravi
for the assessment year 2023-24.

16. Two brothers Arun and Bimal are co-owners of a house property with
equal share. The property was constructed during the financial year 1998-
1999. The property consists of eight identical units and is situated at
Cochin.

During the financial year 2022-23, each co-owner occupied one unit for
residence and the balance of six units were let out at a rent of ₹ 12,000 per
month per unit. The municipal value of the house property is ₹ 9,00,000
and the municipal taxes are 20% of municipal value, which were paid during
the year. The other expenses were as follows:

(i) Repairs ₹ 40,000

(ii) Insurance premium (paid) ₹ 15,000
(iii) Interest payable on loan taken for construction of house ₹ 3,00,000

One of the let out units remained vacant for four months during the year.

36
Arun could not occupy his unit for six months as he was transferred to
Chennai. He does not own any other house.

The other income of Mr. Arun and Mr. Bimal are ₹ 2,90,000 and ₹ 1,80,000,
respectively, for the financial year 2022-23.

Compute the income under the head ‘Income from House Property’ and the
total income of two brothers for the assessment year 2023-24.

17. Mr. Varun is a resident but not ordinarily resident in India during the
Assessment Year 2023-24. He furnishes the following information regarding
his income/expenditure pertaining to his house properties for the previous
year 2022-23:

1. He owns two houses, one in Australia and the other in Delhi.

2. The house in Australia is let out there at a rent of SGD 3,000 p.m. The
entire rent is received in India. He paid Property tax of SGD 1000 and
Sewerage Tax SGD 500 there. (1SGD=INR 55)
3. The house in Delhi is self-occupied. He had taken a loan of ₹ 20,00,000
to construct the house on 1st June, 2018 @12%. The construction was
completed on 31st May, 2021 and he occupied the house on 1st June,
2021.

The entire loan is outstanding as on 31st March, 2023. Property tax paid in
respect of the second house is ₹ 2,500.

Compute the income chargeable under the head "Income from House
property" in the hands of Mr. Varun for the Assessment Year 2023-24.

18. Mr. Roy owns a house in Kolkata. During the previous year 2022-23,
3/4th portion of the house was self-occupied and 1/4th portion was let out
for residential purposes at a rent of ₹ 12,000 p.m. The tenant vacated the
property on 28th February, 2023. The property was vacant during March,
2023. Rent for the months of January 2023 and February 2023 could not
be realized in spite of the owner’s efforts. All the conditions prescribed
under Rule 4 are satisfied.

Municipal value of the property is ₹ 4,50,000 p.a., fair rent is ₹ 4,70,000

p.a. and standard rent is ₹ 5,00,000. He paid municipal taxes @10% of
municipal value during the year. A loan of ₹ 30,00,000 was taken by him
during the year 2013 for acquiring the property. Interest on loan paid during
the previous year 2022-23 was ₹ 1,51,000. Compute Roy’s income from
house property for the A.Y. 2023-24.

37
19. Mr. Ramesh, a property dealer, has developed an independent floor of
4 residential units. He sold one of its residential units to Mr. Vikas, who is
a dealer in spare parts, for ₹ 55 lakhs on 01.06.2022. The agreement was,
however, entered into on 01.04.2022. Mr. Ramesh had received a down
payment of ₹ 5 lakhs by an account payee cheque from Mr. Vikas on the
date of agreement.

Mr. Ramesh sold remaining 3 residential units to Mr. Raj, Mr. Ashok and Mr.
Ashish for ₹ 60 lakhs each on 01.12.2022. All the units were transferred by
way of first-time allotment.

The stamp duty value of each residential unit on various dates are as follows
- 01.04.2022 – ₹ 65 lakhs
01.06.2022 - ₹ 68 lakhs
01.12.2022 – ₹ 70 lakhs

Discuss the tax consequences of above transactions, in the hands of each

one of them, viz, Mr. Ramesh, Mr. Vikas, Mr. Raj, Mr. Ashok and Mr. Ashish.

20. Calculate Gross Annual Value for the following house properties.
(₹ in ‘000)

Particulars H1 H2 H3 H4 H5 H6
Gross Municipal value for the whole 120 130 140 150 160 180
year
Fair rent for the whole year 105 115 135 155 175 168
Standard rent (for the whole year) NA 100 135 180 165 144
Actual rent receivable 100 110 135 175 200 100
Period of the previous year 12 12 12 12 12 10
(in months)

21. Find out the gross annual value in case of the following properties let
out throughout the previous year for the assessment year 2023-24:
(₹ in ‘000)

Particulars H1 H2 H3 H4 H5
Municipal annual value 90 500 30 100 315
Fair rent 300 300 300 300 300
Standard rent under the Rent Control 50 800 240 250 500
Act
Actual rent receivable p.a. 120 600 180 360 150
Unrealized rent of the P.Y. 2022-23 2 3 1 3 2
(in terms of months)

38
22. Find out the Gross annual value in case of the following properties:
(₹ in 000)

Particulars H1 H2 H3 H4 H5 H6
Gross Municipal Value p.a. 200 300 400 500 300 300
Fair rent p.a. 300 600 750 180 200 400
Standard rent under the Rent 300 180 280 225 250 240
Control Act p.a.
Actual rent p.a. 600 900 300 240 216 240
Property remains vacant 1 3 2 1 2 1
(in number of month)

23. X owns a house property in Pune, details relating to which are Municipal
value ₹ 2,00,000 p.a., Fair rent ₹ 1,80,000 p.a., Standard rent ₹ 2,10,000
p.a. It is let out throughout the previous year (rent ₹ 10,000 p.m. up to
15/10/2022 and ₹ 12,000 p.m. thereafter). The property is transferred by
X to Y on February 28, 2023. However, Y failed to recover rent for March,
2023. Find gross annual value of the property in the hands of X and Y for
the A.Y. 2023-24

24. Find out the gross annual value in respect of the following properties
for the A.Y. 2023-24:
(₹ in ‘000)

Particulars H1 H2 H3
Gross Municipal value 150 180 120
Fair rent 140 140 240
Standard rent 120 240 300
Actual rent if property is let out throughout the 180 300 150
previous year 2022-23
Unrealized rent of the previous year 2022-23 25 40 20
Unrealized rent of the year prior to the previous 30 50 60
year 2021-22
Period when the property remains vacant (in 3 1 -
number of months)

25. Find out the gross annual value in the following cases for the A.Y. 2023-
24:

Particulars H1 (₹) H2 (₹)

Situated at Chandigarh Amritsar
Municipal value p.a. 60,000 60,000
Fair rent p.a. 70,000 70,000
Standard rent under the Rent Control Act p.a. 80,000 50,000
Actual rent p.m.:
From April 1, 2022 to July 31, 2022 5,000 6,000

39
From October 1, 2022 to February, 2023 9,000 8,500

For the remaining period properties were vacant.

26. Find out the gross annual value in respect of the following properties:
(₹ in thousands)

Particulars H1 H2 H3
Value determined by the Municipality for determining 500 800 600
Municipal tax
Rent of the similar property in the same locality 400 900 600
Rent determined by the Rent Control Act 700 720 700
Actual rent receivable 350 540 600
Unrealized rent of the previous year 2022-23 10 Nil 150
Period when the property remains vacant (in number 5 3 2
of months)

27. Compute net annual value with the following details for the A.Y. 2023-
24:

Particulars H1 H2 H3 H4 H5 H6
Situated at Patna Anand Hyderabad Balurghat Jodhpur Etawa
Municipal ₹ ₹ ₹ ₹ ₹ ₹
Value 1,00,000 2,00,000 3,00,000 4,00,000 4,25,000 6,00,000
Gross ₹ ₹ ₹ ₹ ₹ ₹
Annual 1,00,000 2,50,000 1,80,000 5,00,000 8,00,000 5,00,000
Value
Municipal ₹ 5,000 10% 5% 20% 12% 10%
tax for P.Y.
Sewerage - 5% ₹ 1,000 3% ₹ 3,750 ₹ 1,000
tax
Water Tax - 3% 5% 2% 5% -

Additional information:
a. In case of H3, municipal tax paid for the financial year 1994-95 to 2021-
22 is ₹ 2,00,000.
b. In case of H4, municipal tax paid for the financial year 2023-24 is ₹
3,000.
c. In case of H6, all taxes charged by municipality are paid to the extent
of 80% (50% by owner and 30% by tenant).

40
28. Following information are provided by an assessee for his house
properties for computing interest on loan allowed u/s 24(b):

Particulars HP1 HP2 HP3 HP4 HP5

a) Interest on loan taken for repair 20,000 30,000 10,000 15,000 25,000
of H.P.
b) Interest on loan taken for 20,000 25,000 30,000 17,000 18,000
purchasing H.P. (50% paid)
c) Interest on new loan taken for 10,000 12,000 13,000 14,000 16,000
repaying old loan which was taken
for purchasing H.P.
d) Interest on loan taken for 10,000 10,000 10,000 10,000 10,000
payment of interest on earlier loan
e) Interest on loan for payment of 2,000 2,000 2,000 2,000 2,000
Municipal tax
f) Interest on loan by mortgaging -- -- 5,000 -- --
HP3 for business purpose
g) Interest on loan for 20,000 -- -- -- --
reconstruction of HP1 paid outside
India without deducting tax at
source
h) Interest on loan for -- 20,000 -- -- --
reconstruction of HP2 payable
outside India on which TDS has
not been deducted and no
payment yet been made
i) Interest on loan on mortgage of 10,000 -- -- -- --
HP1 for renovation of HP2

29. Calculate interest on loan allowed for assessment year 2018-19 to

2023-24 from the following information:
Loan was taken on 1/1/2014 ₹ 5,00,000 @ 12% p.a.
Construction commenced on 1/8/2014.
Construction completed on 31/3/2019. Repayment made as under:

On 1/4/2015 On 1/4/2018 On 1/4/2021 On 1/7/2022

₹ 1,00,000 ₹ 1,00,000 ₹ 1,00,000 ₹ 1,00,000

30. Mr. Rajesh owns two house properties both of which are let out.
Compute his income from the following details:

Particulars H1 H2
Situated at Gaya Mumbai
Gross Municipal value 1,00,000 2,00,000
Fair rent 95,000 2,10,000
Standard rent 90,000 2,00,000
Actual rent receivable 1,00,000 1,80,000

41
Unrealised rent of current year 8,000 2,000
Municipal tax 10% 1,000
Fire insurance 2,000 1,200
Repairs Nil 2,000
Interest on loan for construction (@ 12%) 10,000 Nil

Other Information:

a. Loan taken for construction is still unpaid.

b. Municipal tax of H1 is still unpaid, while, that of H2 is half paid by
tenant.

31. Mr. Pandey, owner of three houses in Chennai, furnished the following
information. Compute his income from house property for the assessment
year 2023-24:

House House House

Particulars No. No. No.
1 2 3
Self Self Self
occupied occupied occupied
Standard rent under Rent Control Act 1,50,000 15,00,000 18,00,000
Municipal value 2,00,000 13,00,000 13,50,000
Fair rent 2,50,000 16,00,000 19,00,000
Municipal tax (10% of municipal value)
paid
Interest on loan taken for purchases of 90,000 1,70,000 1,65,000
houses (Loan taken in P.Y. 2019-20)

32. Sri Jayram has a house property used for own residence for 9 months
and for remaining 3 months of the previous year, it was unused. Gross
Municipal value of the property ₹ 6,00,000 p.a. Fair Rent ₹ 5,00,000,
Standard Rent ₹ 4,00,000. He incurred repair expenditure of ₹ 10,000 &
paid municipal tax ₹ 5,000 during the year. Compute income from house
property in the following cases for the A.Y. 2023-24:

1. He borrowed ₹ 1,00,000 @ 12% (simple interest) on 17/8/1998 for

purchase of the house property and such amount as well as interest is
still unpaid.
2. He borrowed ₹ 10,00,000 @ 12% (simple interest) on 17/8/1998 for
purchase of the house property and such amount as well as interest is
still unpaid.
3. He borrowed ₹ 5,00,000 @ 12% (simple interest) on 17/8/1999 for
construction of the house property, construction of which was completed
on 31/3/2000 and such amount is still unpaid.

42
4. He borrowed ₹ 20,00,000 @ 18% (simple interest) on 17/8/1999 for
construction of the house property, construction of which was completed
on 31/3/2000 and such amount is still unpaid.
5. He borrowed ₹ 1,80,000 @ 15% on 1/4/1998 and further borrowed ₹
10,00,000 @ 10% on 17/8/1999 for construction of the house property
and such amount is still unpaid. Construction completed on 1/2/2000.
6. He borrowed ₹ 5,00,000 @ 12% on 1/4/2001 for repairs of the house
property.
7. He borrowed ₹ 1,80,000 @ 15% on 1/4/1998 and further borrowed ₹
20,00,000 @ 14% on 17/8/1999 for construction of the house property
and such amount is still unpaid. Construction completed on 1/2/2000.

33. Miss Anjali owns a house property, which is let out, to her employer
company for a monthly rent of ₹ 20,000. Company allotted the same house
to Miss Anjali as rent-free accommodation. Municipal tax paid ₹ 20,000,
interest on loan paid ₹ 90,000. Comment on tax treatment under the head
income from house property.

34. Compute income under the head ‘Income from house property’ of Sri
from the following information:

Particulars H1 H2 H3 H4
Used for Self Self Self Own
occupied occupied occupied Business
Situated at Mumbai Abu Kolkata Hyderabad
Gross Municipal Value 3,00,000 2,00,000 7,00,000 3,00,000
Fair Rent 2,00,000 2,00,000 6,00,000 1,20,000
Standard Rent 3,00,000 2,40,000 7,00,000 2,00,000
Municipal Tax 15% 15% 15% 15%
Repairs 13,000 4,000 8,000 8,000
Ground Rent 20,000 Nil Nil 6,000
Land Revenue Nil 10,000 Nil Nil
Interest on Loan 40,000 10,000 2,10,000 20,000
Loan taken on 1998-99 1998-99 2019-20 1999-00

35. Miss Paro has a house property having two separate residential units
(unit A covering 40% of total area and unit B covering 60% of total area).
Unit A is self-occupied by the assessee and unit B is let out to Sri Devdas
for a monthly rent of ₹ 3,000. With the following further information,
compute her taxable income from house property:

Municipal Value ₹ 1,00,000 Municipal Tax 10%

Fair Rent ₹ 1,20,000 Interest on Loan ₹ 30,000
Standard Rent ₹ 2,00,000 Annual charge ₹ 5,000

43
36. Mr. Rana used his house property for self-occupation till 1/8/2022 and
let out the same for remaining period for rent of ₹ 6,000 p.m. Compute his
income from house property from the following details:
Municipal value ₹ 1,00,000,
Fair Rent ₹ 80,000,
Standard Rent ₹ 96,000,
Municipal tax 16%,
Interest on loan ₹ 10,000

37. How shall your answer differ if in the above illustration, property is let
out to tenant from 1/4/2022 to 1/12/2022 and from 1/12/2022 to
1/3/2023, it was self-occupied. Standard rent of such property is ₹ 50,000.

38. Miss Rani used her house property for self-occupation till 1/9/2022 and
let out the same for remaining period for rent of ₹ 6,000 p.m. Municipal tax
paid ₹ 5,000, interest on loan accrued ₹ 10,000. Compute her taxable
income from house property.

39. Mr. Ajnabi has a house property in Cochin. The house property has two
equal dimension residential units. Unit 1 is self occupied throughout the
year and unit 2 is let out for 9 months for ₹ 10,000 p.m. and for remaining
3 months it was self-occupied. Compute his taxable income from the
following details:

Municipal value ₹ 2,00,000, Fair Rent ₹ 1,60,000, Standard rent ₹

3,00,000, Municipal tax 10% (60% paid by assessee), Interest on loan ₹
40,000, Expenditure on repairs ₹ 20,000.

40. Mr. Lucky Ali owns a house property let out since 1/4/2018 to a school
for monthly rent of ₹ 10,000. There was no change in rent till 31/3/2022.
On 1/4/2022, as per court decision rent was increased to ₹ 12,000 p.m.
with retrospective effect from 1/4/2020 and duly paid by school in the same
year. Legal expenditure for such suit has been incurred by Mr. Ali ₹ 30,000.
Discuss tax treatment u/s 25A.

41. X Ltd. has two house properties both of which are vacant. Municipal
value of 1st house property is ₹ 1,00,000 and that of 2nd is ₹ 80,000. It
has computed income from house property as under:

Particulars Details Amount

HP1: Self occupied [Sec. 23(2)(a)]
Net Annual Value (NAV) Nil
Less: Interest on loan u/s 24(b) Nil
Income from HP1 Nil
HP2: Deemed to be let out [Sec. 23(4)]
Gross Annual Value (GAV) 80,000
Less: Municipal tax Nil

44
Net Annual Value (NAV) 80,000
Less: Standard deduction u/s 24(a) @ 30% of NAV 24,000 56,000
Income from house property 56,000

Do you agree with the computation of income from house property of the
assessee.

42. Mr. Abul Hasan owns three houses at Ranchi. He furnishes the following
particulars for the previous year 2022-23:

House No. I: The house was constructed in 2021 and let out to a friend at
a monthly rent of ₹ 10,000 upto 31.1.2023 and thereafter, it was let out at
its fair rent of ₹ 15,000 per month. He has paid ₹ 15,000 as municipal taxes
@ 10% of Municipal Value. He has also paid fire insurance premium of ₹
2,000.

House No. II: Ground floor is let out @ ₹ 20,000 p.m. first floor, identical
to ground floor, is occupied by him for his residence. Municipal taxes paid
@ 20% amounted to ₹ 80,000.

House No. III: The house was constructed in 2011 and is used for his
business. The annual value of this house is ₹ 1,00,000 and he spent ₹ 5,000
as municipal taxes and ₹ 2,000 for repairs.

Other information:

A loan of ₹ 40,00,000 has been taken on 01-6-2020 for construction of

House No. II. Construction of the house was completed on 01-6-2021. He
repaid the entire loan on 31-12-2022. Interest on loan is payable @ 12%
p.a.

Compute his income from house property for the A.Y. 2023-24.

43. Sarju Middey is the owner of 2 houses in Kolkata. From the following
particulars of the houses, compute his income from house property for the
assessment year 2023-24:

House A: Let-out to an employee of the business of Sarju @ ₹ 5,000 p.m.

which is necessary for the purpose of business. Municipal tax paid ₹ 3,000
and interest on loan taken for purchasing the house amounted to ₹ 9,000.

House B: The house consists of 3 identical flats. First flat is used by him
for his own business. Second flat is used by him for his own residence. The
third flat is let out at a monthly rent of ₹ 15,000. Municipal taxes paid @
5% amounted to ₹ 20,250.

45
Other information:

a. Unrealised rent for the P.Y. 2022-23 relating to third flat of House B
amounted to ₹ 10,000.
b. A loan of ₹ 20,00,000 was taken on 01.07.2019 for construction of the
House B. Construction of House B was completed on 01.06.2021.
Interest on loan is 12% p.a. No repayment was made.

46
 6. PGBP
1. Mr. X, a proprietor engaged in manufacturing business, furnishes the
following particulars:

Particulars ₹
(1) Opening balance of plant and machinery as on 30,00,000
1.4.2022 (i.e., WDV as on 31.3.2022 after reducing
depreciation for P.Y. 2021-22)
(2) New plant and machinery purchased and put to use 20,00,000
on 08.06.2022
(3) New plant and machinery acquired and put to use 8,00,000
on 15.12.2022
(4) Computer acquired and installed in the office 3,00,000
premises on 2.1.2023

Compute the amount of depreciation and additional depreciation as per the

Income-tax Act, 1961 for the A.Y. 2023-24. Assume that all the assets were
purchased by way of account payee cheque.

2. A car purchased by Dr. Soman on 10.08.2019 for ₹ 5,25,000 for personal

use is brought into professional use on 1.07.2022 by him, when its market
value was ₹ 2,50,000.

Compute the actual cost of the car and the amount of depreciation for the
assessment year 2023-24 assuming the rate of depreciation to be 15%.

3. A newly qualified Chartered Accountant Mr. Dhaval, commenced practice

and has acquired the following assets in his office during F.Y. 2022-23 at
the cost shown against each item. Calculate the amount of depreciation
that can be claimed from his professional income for A.Y. 2023-24. Assume
that all the assets were purchased by way of account payee cheque.

Sl. Description Date of Date Amount

No. acquisition when put ₹
to use
1. Computer including 27 Sept., 22 1 Oct., 22 35,000
computer software
2. Computer UPS 2 Oct., 22 8 Oct., 22 8,500
3. Computer printer 1 Oct., 22 1 Oct., 22 12,500
4. Books (other than annual 1 Apr., 22 1 Apr., 22 13,000
publications are of ₹
12,000)

47
 5. Office furniture 1 Apr., 22 1 Apr., 22 3,00,000
(Acquired from a practicing
C.A.)
6. Laptop 26 Sep., 22 8 Oct., 22 43,000

4. Mr. Gamma, a proprietor started a business of manufacture of tyres and

tubes for motor vehicles on 1.1.2022. The manufacturing unit was set up
on 1.5.2022. He commenced his manufacturing operations on 1.6.2022.
The total cost of the plant and machinery installed in the unit is ₹ 120 crore.
The said plant and machinery included second hand plant and machinery
bought for ₹ 20 crore and new plant and machinery for scientific research
relating to the business of the assessee acquired at a cost of ₹ 15 crore.

Compute the amount of depreciation allowable under section 32 of the

Income-tax Act, 1961 in respect of the assessment year 2023-24. Assume
that all the assets were purchased by way of account payee cheque and Mr.
Gamma has not opted for the provisions of section 115BAC.

5. Mr. A, furnishes the following particulars for the P.Y. 2022-23. Compute
the deduction allowable under section 35 for A.Y. 2023-24, while computing
his income under the head “Profits and gains of business or profession”.

Particulars ₹
1. Amount paid to notified approved Indian Institute of 1,00,000
Science, Bangalore, for scientific research
2. Amount paid to IIT, Delhi for an approved scientific 2,50,000
research programme
3. Amount paid to X Ltd., a company registered in India 4,00,000
which has as its main object scientific research and
development, as is approved by the prescribed
authority
4. Expenditure incurred on in-house research and
development facility as approved by the prescribed
authority
(a) Revenue expenditure on scientific research 3,00,000
(b) Capital expenditure (including cost of acquisition of 7,50,000
land ₹ 5,00,000) on scientific research

6. Mr. A commenced operations of the businesses of setting up a

warehousing facility for storage of food grains, sugar and edible oil on
1.4.2022. He incurred capital expenditure of ₹ 80 lakh, ₹ 60 lakh and ₹ 50
lakh, respectively, on purchase of land and building during the period
January, 2022 to March, 2022 exclusively for the above businesses, and
capitalized the same in its books of account as on 1st April, 2022. The cost
of land included in the above figures is ₹ 50 lakh, ₹ 40 lakh and ₹ 30 lakh,

48
respectively. During the P.Y. 2022-23, he incurred capital expenditure of ₹
20 lakh, ₹ 15 lakh & ₹ 10 lakh, respectively, for extension/ reconstruction
of the building purchased and used exclusively for the above businesses.

Compute the income under the head “Profits and gains of business or
profession” for the A.Y.2023-24 and the loss to be carried forward,
assuming that Mr. A has fulfilled all the conditions specified under section
35AD and wants to claim deduction under section 35AD and has not claimed
any deduction under Chapter VI-A under the heading “C – Deductions in
respect of certain incomes”.

The profits from the business of setting up a warehousing facility for storage
of food grains, sugar and edible oil (before claiming deduction under section
35AD and section 32) for the A.Y. 2023-24 is ₹ 16 lakhs, ₹ 14 lakhs and ₹
31 lakhs, respectively. Also, assume in respect of expenditure incurred, the
payments are made by account payee cheque or use of ECS through bank
account.

7. Mr. Suraj, a proprietor, commenced operations of the business of a new

three-star hotel in Madurai, Tamil Nadu on 1.4.2022. He incurred capital
expenditure of ₹ 50 lakh during the period January, 2022 to March, 2022
exclusively for the above business, and capitalized the same in his books
of account as on 1st April, 2022. Further, during the P.Y. 2022-23, he
incurred capital expenditure of ₹ 2 crore (out of which ₹ 1.50 crore was for
acquisition of land) exclusively for the above business.

Compute the income under the head “Profits and gains of business or
profession” for the A.Y. 2023-24, assuming that he has fulfilled all the
conditions specified under section 35AD and opted for claiming deduction
under section 35AD; and he has not claimed any deduction under Chapter
VI-A under the heading “C – Deductions in respect of certain incomes”.

The profits from the business of running this hotel (before claiming
deduction under section 35AD) for the A.Y. 2023-24 is ₹ 25 lakhs. Assume
that he also has another existing business of running a four-star hotel in
Coimbatore, which commenced operations fifteen years back, the profits
from which are ₹ 120 lakhs for the A.Y. 2023-24. Also, assume that
payments for capital expenditure were made by net banking.

8. Mr. Arnav is a proprietor having two units – Unit A carries on specified

business of setting up and operating a warehousing facility for storage of
sugar; Unit B carries on non-specified business of operating a warehousing
facility for storage of edible oil.

Unit A commenced operations on 1.4.2021 and it claimed deduction of ₹

100 lacs incurred on purchase of two buildings for ₹ 50 lacs each (for
operating a warehousing facility for storage of sugar) under section 35AD

49
for A.Y. 2022-23. However, in February, 2023, Unit A transferred one of its
buildings to Unit B.

Examine the tax implications of such transfer in the hands of Mr. Arnav.

9. X Ltd. contributes 20% of basic salary to the account of each employee

under a pension scheme referred to in section 80CCD. Dearness Allowance
is 40% of basic salary and it forms part of pay of the employees.

Compute the amount of deduction allowable under section 36(1)(iva), if the

basic salary of the employees aggregate to ₹ 10 lakh. Would disallowance
under section 40A(9) be attracted, and if so, to what extent?

10. Delta Ltd. credited the following amounts to the account of resident
payees in the month of March, 2023 without deduction of tax at source.
What would be the consequence of non-deduction of tax at source by Delta
Ltd. on these amounts during the financial year 2022-23, assuming that
the resident payees in all the cases mentioned below, have not paid the
tax, if any, which was required to be deducted by Delta Ltd.?

Particulars Amount in ₹
(1) Salary to its employee, Mr. X (credited and paid in 12,00,000
March, 2023)
(2) Directors’ remuneration (credited in March, 2023 28,000
and paid in April, 2023)

Would your answer change if Delta Ltd. has deducted tax on directors’
remuneration in April, 2023 at the time of payment and remitted the same
in July, 2023?

11. During the financial year 2022-23, the following payments/expenditure

were made/ incurred by Mr. Raja, a resident individual (whose turnover
during the year ended 31.3.2022 was ₹ 99 lacs):

(i) Interest of ₹ 45,000 was paid to Rehman & Co., a resident

partnership firm, without deduction of tax at source;
(ii) ₹ 10,00,000 was paid as salary to a resident individual without
deduction of tax at source;
(iii) Commission of ₹ 16,000 was paid to Mr. Vidyasagar, a resident, on
2.7.2022 without deduction of tax at source.

Briefly discuss whether any disallowance arises under the provisions of

section 40(a)(ia) of the Income-tax Act, 1961 assuming that the payees in
all the cases mentioned above, have not paid the tax, if any, which was
required to be deducted by Mr. Raja?

50
12. A firm has paid ₹ 7,50,000 as remuneration to its partners for the P.Y.
2022-23, in accordance with its partnership deed, and it has a book profit
of ₹ 10 lakh. What is the remuneration allowable as deduction?

13. Rao & Jain, a partnership firm consisting of two partners, reports a net
profit of ₹ 7,00,000 before deduction of the following items:

(1) Salary of ₹ 20,000 each per month payable to two working partners
of the firm (as authorized by the deed of partnership).
(2) Depreciation on plant and machinery under section 32 (computed) ₹
1,50,000.
(3) Interest on capital at 15% per annum (as per the deed of
partnership). The amount of capital eligible for interest is ₹ 5,00,000.

Compute:
(i) Book-profit of the firm under section 40(b) of the Income-tax Act,
1961.
(ii) Allowable working partner salary for the assessment year 2023-24
as per section 40(b).

14. Hari, an individual, carried on the business of purchase and sale of

agricultural commodities like paddy, wheat, etc. He borrowed loans from
Andhra Pradesh State Financial Corporation (APSFC) and Indian Bank and
has not paid interest as detailed hereunder:

₹
(i) Andhra Pradesh State Financial Corporation 15,00,000
(P.Y. 2021-22 & 2022-23)
(ii) Indian Bank (P.Y. 2022-23) 30,00,000
45,00,000

Both APSFC and Indian Bank, while restructuring the loan facilities of Hari
during the year 2022-23, converted the above interest payable by Hari to
them as a loan repayable in 60 equal instalments. During the year ended
31.3.2023, Hari paid 5 instalments to APSFC and 3 instalments to Indian
Bank.

Hari claimed the entire interest of ₹ 45,00,000 as an expenditure while

computing the income from business of purchase and sale of agricultural
commodities. Examine whether his claim is valid and if not what is the
amount of interest, if any, allowable.

15. Vinod is a person carrying on profession as film artist. His gross receipts
from profession are as under:

Financial year 2019-20 - ₹ 1,15,000

51
Financial year 2020-21 - ₹ 1,80,000
Financial year 2021-22 - ₹ 2,10,000

What is his obligation regarding maintenance of books of accounts for

Assessment Year 2023-24 under section 44AA of Income-tax Act, 1961?

16. Mr. Praveen engaged in retail trade, reports a turnover of ₹ 1,98,50,000

for the financial year 2022-23. His income from the said business as per
books of account is ₹ 13,20,000 computed as per the provisions of Chapter
IV-D “Profits and gains from business or Profession” of the Income-tax Act,
1961. Retail trade is the only source of income for Mr. Praveen. A.Y. 2022-
23 was the first year for which he declared his business income in
accordance with the provisions of presumptive taxation u/s 44AD.

(i) Is Mr. Praveen also eligible to opt for presumptive determination of

his income chargeable to tax for the assessment year 2023-24?
(ii) If so, determine his income from retail trade as per the applicable
presumptive provision assuming that whole of the turnover
represents cash receipts.
(iii) In case Mr. Praveen does not opt for presumptive taxation of income
from retail trade, what are his obligations under the Income-tax Act,
1961?
(iv) What is the due date for filing his return of income under both the
options?

17. Mr. X commenced the business of operating goods vehicles on

1.4.2022. He purchased the following vehicles during the P.Y. 2022-23.
Compute his income under section 44AE for A.Y. 2023-24.

Gross Vehicle Weight Number Date of purchase

(in kilograms)
(1) 7,000 2 10.04.2022
(2) 6,500 1 15.03.2023
(3) 10,000 3 16.07.2022
(4) 11,000 1 02.01.2023
(5) 15,000 2 29.08.2022
(6) 15,000 1 23.02.2023

Would your answer change if the goods vehicles purchased in April, 2022
were put to use only in July, 2022?

18. Miss Vivitha, a resident and ordinarily resident in India, has derived the
following income from various operations (relating to plantations and
estates owned by her) during the year ended 31-3-2023:

52
 S. No. Particulars ₹
(i) Income from sale of centrifuged latex processed 3,00,000
from rubber plants grown in Darjeeling.
(ii) Income from sale of coffee grown and cured in 1,00,000
Yercaud, Tamil Nadu.
(iii) Income from sale of coffee grown, cured, roasted 2,50,000
and grounded, in Colombo. Sale consideration was
received at Chennai.
(iv) Income from sale of tea grown and manufactured in 4,00,000
Shimla.
(v) Income from sapling and seedling grown in a 80,000
nursery at Cochin. Basic operations were not
carried out by her on land.

You are required to compute the business income and agricultural income
of Miss Vivitha for the A.Y. 2023-24.

19. Mr. Venus., engaged in manufacture of pesticides, furnishes the

following particulars relating to its manufacturing unit at Chennai, for the
year ending 31-3-2023:

(₹ in lacs)
WDV of Plant and Machinery on 31.3.2022 30
Depreciation including additional depreciation for P.Y. 4.75
2021-22
New machinery purchased on 1-9-2022 10
New machinery purchased on 1-12-2022 8
Computer purchased on 3-1-2023 4

Additional information:
1. All assets were purchased by A/c payee cheque.
2. All assets were put to use immediately.
3. New machinery purchased on 1-12-2022 and computer have been
installed in the office.
4. During the year ended 31-3-2022, a new machinery had been
purchased on 31-10-2021, for ₹ 10 lacs. Additional depreciation,
besides normal depreciation, had been claimed thereon.
5. Depreciation rate for machinery may be taken as 15%.

Compute the depreciation available to the assessee as per the provisions

of the Income-tax Act, 1961 and the WDV of different blocks of assets as
on 31-3-2023. Assume that he does not opt for section 115BAC.

53
20. Mr. Abhimanyu is engaged in the business of generation and distribution
of electric power. He opts to claim depreciation on written down value for
income-tax purposes. From the following details, compute the depreciation
allowable as per the provisions of the Income-tax Act, 1961 for the
assessment year 2023-24, assuming that he does not opt for section
115BAC:

(₹ in lacs)
(i) WDV of block as on 31.3.2022 (15% rate) 50
(ii) Depreciation for P.Y. 2021-22 7.50
(iii) New machinery purchased on 12-10-2022 10
(iv) Machinery imported from Colombo on 12-4-2022. 9
This machine had been used only in Colombo earlier and
the assessee is the first user in India.
(v) New computer installed in generation wing unit on 2
15-7-2022

All assets were purchased by A/c payee cheque.

21. Examine with reasons, the allowability of the following expenses

incurred by Mr. Manav, a wholesale dealer of commodities, under the
Income-tax Act, 1961 while computing profit and gains from business or
profession for the Assessment Year 2023-24.

(i) Construction of school building in compliance with CSR activities

amounting to ₹ 5,60,000.
(ii) Purchase of building for the purpose of specified business of setting
up and operating a warehousing facility for storage of food grains
amounting to ₹ 4,50,000.
(iii) Interest on loan paid to Mr. X (a resident) ₹ 50,000 on which tax has
not been deducted. The sales for the previous year 2021-22 was ₹
202 lakhs. Mr. X has not paid the tax, if any, on such interest.
(iv) Commodities transaction tax paid ₹ 20,000 on sale of bullion.

22. Examine with reasons, for the following sub-divisions, whether the
following statements are true or false having regard to the provisions of the
Income-tax Act, 1961:

(i) For a dealer in shares and securities, securities transaction tax paid
in a recognized stock exchange is permissible business expenditure.
(ii) Where a person follows mercantile system of accounting, an
expenditure of ₹ 25,000 has been allowed on accrual basis and in a
later year, in respect of the said expenditure, assessee makes the
payment of ₹ 25,000 through a crossed cheque, ₹ 25,000 can be the
profits and gains of business under section 40A(3A) in the year of
payment.

54
 (iii) It is mandatory to provide for depreciation under section 32 of the
Income-tax Act, 1961, while computing income under the head
“Profits and Gains from Business and Profession”.
(iv) The mediclaim premium paid to GIC by Mr. Lomesh for his employees,
by a draft, on 27.12.2022 is a deductible expenditure under section
36.
(v) Under section 35DDA, amortization of expenditure incurred under
eligible Voluntary Retirement Scheme at the time of retirement alone,
can be done.
(vi) An existing assessee engaged in trading activities, can claim
additional depreciation under section 32(1)(iia) in respect of new
plant acquired and installed in the trading concern, where the
increase in value of such plant as compared to the approved base
year is more than 10%.

23. Examine, with reasons, the allowability of the following expenses under
the Income- tax Act, 1961 while computing income from business or
profession for the Assessment Year 2023-24:
(i) Provision made on the basis of actuarial valuation for payment of
gratuity ₹ 5,00,000. However, no payment on account of gratuity
was made before due date of filing return.
(ii) Purchase of oil seeds of ₹ 50,000 in cash from a farmer on a banking
day.
(iii) Tax on non-monetary perquisite provided to an employee ₹ 20,000.
(iv) Payment of ₹ 50,000 by using credit card for fire insurance.
(v) Salary payment of ₹ 4,00,000 to Mr. X outside India by a company
without deduction of tax assuming Mr. X has not paid tax on such
salary income.
(vi) Payment made in cash ₹ 30,000 to a transporter in a day for carriage
of goods

24. Examine with reasons, whether the following statements are true or
false, with regard to the provisions of the Income-tax Act, 1961:

(a) Payment made in respect of a business expenditure incurred on 16th

February, 2023 for ₹ 25,000 through a crossed cheque is hit by the
provisions of section 40A(3).

(b) (i) It is a condition precedent to write off in the books of account, the
amount due from debtor to claim deduction for bad debt.

(ii) Failure to deduct tax at source in accordance with the provisions of

Chapter XVII-B, inter alia, from the amounts payable to a non-resident
as rent or royalty, will result in disallowance while computing the
business income where the non-resident payee has not paid the tax
due on such income.

55
25. Mr. Sivam, a retail trader of Cochin gives the following Trading and
Profit and Loss Account for the year ended 31st March, 2023:

Trading and Profit and Loss Account for the year ended 31.03.2023

Particulars ₹ Particulars ₹
To Opening stock 90,000 By Sales 1,12,11,500
To Purchases 1,10,04,000 By Closing stock 1,86,100
To Gross Profit 3,03,600 -
1,13,97,600 1,13,97,600
To Salary 60,000 By Gross profit b/d 3,03,600
To Rent and rates 36,000 By Income from UTI 2,400
To Interest on loan 15,000
To Depreciation 1,05,000
To Printing & stationery 23,200
To Postage & telegram 1,640
To Loss on sale of 8,100
shares (Short term)
To Other general 7,060
expenses
To Net Profit 50,000
3,06,000 3,06,000

Additional Information:

(i) It was found that some stocks were omitted to be included in both the
Opening and Closing Stock, the values of which were:

Opening stock ₹ 9,000

Closing stock ₹ 18,000

(ii) Salary includes ₹ 10,000 paid to his brother, which is unreasonable to

the extent of ₹ 2,000.

(iii) The whole amount of printing and stationery was paid in cash by way
of one time payment to Mr. Ramesh.

(iv) The depreciation provided in the Profit and Loss Account ₹ 1,05,000
was based on the following information:
The opening balance of plant and machinery( i.e., the written down
value as on 31.3.2022 minus depreciation for P.Y. 2021-22) is ₹
4,20,000. A new plant falling under the same block of depreciation was

56
 bought on 01.7.2022 for ₹ 70,000. Two old plants were sold on
1.10.2022 for ₹ 50,000.

(v) Rent and rates includes GST liability of ₹ 3,400 paid on 7.4.2023.

(vi) Other general expenses include ₹ 2,000 paid as donation to a Public

Charitable Trust.

You are required to compute the profits and gains of Mr. Sivam under
presumptive taxation under section 44AD and profits and gains as per
normal provisions of the Act assuming he has not opted for the provisions
of section 115BAC. Assume that the whole of the amount of turnover
received by account payee cheque or use of electronic clearing system
through bank account during the previous year.

26. Mr. Sukhvinder is engaged in the business of plying goods carriages.

On 1st April, 2022, he owns 10 trucks (out of which 6 are heavy goods
vehicles, the gross vehicle weight of such goods vehicle is 15,000 kg each).
On 2nd May, 2022, he sold one of the heavy goods vehicles and purchased
a light goods vehicle on 6th May, 2022. This new vehicle could however be
put to use only on 15th June, 2022.

Compute the total income of Mr. Sukhvinder for the assessment year 2023-
24, taking note of the following data:

Particulars ₹ ₹
Freight charges collected 12,70,000
Less: Operational expenses 6,25,000
Depreciation as per section 32 1,85,000
Other office expenses 15,000 8,25,000
Net Profit 4,45,000
Other business and non-business income 70,000

27. Mr. Raju, a manufacturer at Chennai, gives the following Manufacturing,

Trading and Profit & Loss Account for the year ended 31.03.2023:

Manufacturing, Trading and Profit & Loss Account for the year
ended 31.03.2023

Particulars ₹ Particulars ₹
To Opening Stock 71,000 By Sales 2,32,00,000
To Purchase of Raw 2,16,99,000 By Closing stock 2,00,000
Materials
To Manufacturing 5,70,000
Wages & Expenses

57
To Gross Profit 10,60,000
2,34,00,000 2,34,00,000
To Administrative 3,26,000 By Gross Profit 10,60,000
charges
To SGST penalty 5,000 By Dividend from 15,000
domestic companies
To GST paid 1,10,000 By Income from 1,80,000
agriculture (net)
To General Expenses 54,000

To Interest to Bank 60,000

(On machinery term
loan)
To Depreciation 2,00,000
To Net Profit 5,00,000
12,55,000 12,55,000

Following are the further information relating to the financial year 2022-
23:

(i) Administrative charges include ₹ 46,000 paid as commission to

brother of the assessee. The commission amount at the market rate
is ₹ 36,000.
(ii) The assessee paid ₹ 33,000 in cash to a transport carrier on
29.12.2022. This amount is included in manufacturing expenses.
(Assume that the provisions relating to TDS are not applicable to this
payment)
(iii) A sum of ₹ 4,000 per month was paid as salary to a staff throughout
the year and this has not been recorded in the books of account.
(iv) Bank term loan interest actually paid upto 31.03.2023 was ₹ 20,000
and the balance was paid in November 2023.
(v) Housing loan principal repaid during the year was ₹ 50,000 and it
relates to residential property acquired by him in P.Y. 2021-22 for
self-occupation. Interest on housing loan was ₹ 23,000. Housing
loan was taken from Canara Bank. These amounts were not dealt
with in the profit and loss account given above.
(vi) Depreciation allowable under the Act is to be computed on the basis
of following information:

Plant & Machinery (Depreciation rate @ 15%) ₹

WDV as on 31.03.2022 minus Depreciation for P.Y. 2021-22 11,90,000
Additions during the year (used for more than 180 days) 2,00,000
Total additions during the year 4,00,000

58
Note: Ignore additional depreciation under section 32(1)(iia)

Compute the total income of Mr. Raju for the assessment year 2023-24
assuming he has not opted for the provisions of section 115BAC.

Note: Ignore application of section 14A for disallowance of expenditures in

respect of any exempt income.

28. Mr. Tenzingh is engaged in composite business of growing and curing

(further processing) coffee in Coorg, Karnataka. The whole of coffee grown
in his plantation is cured. Relevant information pertaining to the year ended
31.3.2023 are given below:

Particulars ₹
Opening balance of car (only asset in the block) as on 3,00,000
1.4.2022 (i.e. WDV as on 31.3.2022 (-) depreciation for P.Y.
2021-22)
Opening balance of machinery as on 1.4.2022 15,00,000
(i.e., WDV as on 31.3.2022 (-) depreciation for P.Y. 2021-22)
Expenses incurred for growing coffee 3,10,000
Expenditure for curing coffee 3,00,000
Sale value of cured coffee 22,00,000

Besides being used for agricultural operations, the car is also used for
personal use; disallowance for personal use may be taken at 20%. The
expenses incurred for car running and maintenance are ₹ 50,000. The
machines were used in coffee curing business operations.

Compute the income arising from the above activities for the A.Y. 2023-24.

29. Mr. X, a grower and manufacturer of tea, purchased machinery (15%)

on 10-04-2021 for ₹ 10 lakh. He computed depreciation for A.Y. 2023-24
as given below; needs your comment on his working:

Particulars Amount
Opening W.D.V. as on 1/4/2021 Nil
Add: Assets purchased during the year 10,00,000
10,00,000
Less: Depreciation for the P.Y. 2021-22 60,000
[₹ 10,00,000 * 15% * 40%]
(As he is engaged in the business of growing and
manufacturing tea; hence 60% is considered as part of
agricultural income)
Opening W.D.V. as on 1/4/2022 9,40,000

59
Less: Depreciation for the P.Y. 2022-23 56,400
[₹ 9,40,000 * 15% * 40%]
Opening W.D.V. as on 1/4/2023 8,83,600

Further, compute his business income for A.Y. 2023-24 assuming that his
income before depreciation and without reducing element of agricultural
income is ₹ 8,00,000/-

30. B Ltd., a newly formed manufacturing concern, has furnished you the
following details to compute Depreciation allowed for the A.Y. 2022-23 and
2023-24:

Assets Date of Acquisition Cost of Acquisition Rate of depreciation

Plant A 02/04/2021 5,00,000 15%
Plant B 07/05/2021 3,00,000 15%
Plant C 15/12/2021 2,00,000 15%
Plant D 05/05/2022 1,00,000 15%

31. An industrial undertaking, which commenced the manufacturing

activity with effect from 1st September, 2022 has acquired the following
assets during the previous year 2022-23:

Assets Date of Date when Cost of

acquisition put to use acquisition
Factory building 4-4-2022 1-9-2022 50,00,000
Plant & Machinery
Machinery A 5-5-2022 1-9-2022 2,00,000
Machinery B 7-6-2022 1-9-2022 5,00,000
Machinery C 30-8-2022 1-9-2022 10,00,000
Machinery D 1-9-2022 31-10-2022 4,00,000
Machinery E 1-1-2023 28-2-2023 3,00,000
Machinery F (second hand) 11-1-2023 13-1-2023 2,00,000
Motor car 1-2-2023 1-2-2023 5,00,000
Air-conditioner 1-2-2023 2-2-2023 1,00,000
(installed in the office)

Compute the depreciation allowable for the assessment year 2023-24 and
the written down value as on 1st April 2023.

32. Important Ltd. is a power-generating unit. On 1-4-2020, it purchased

a plant of ₹ 50,00,000 eligible for depreciation @ 15% on SLM. Compute
balancing charge or terminal depreciation assuming the plant is sold on
21/4/2022 for:
A) ₹ 7,50,000 B) ₹ 30,00,000 C) ₹ 45,00,000 D) ₹ 55,00,000

60
33. Dr. R purchased a house property on 1-12-2020 for ₹ 10,00,000. Till
1-12-2022, the same was self-occupied as a residence. On this date, the
building was brought into use for the purpose of his medical profession.
What would be the depreciation allowable for the assessment year 2023-
24?

34. Roshan started a business of designing on 01-04-2021. He acquired a

laptop on 01-04-2021 for ₹ 50,000 for his business use. Since his gross
total income for the previous year 2021-22 is only ₹ 55,000/-, he did not
file his return of income. During the previous year 2022-23, his business
income before depreciation u/s 32 is ₹ 5,60,000. Since he is required to file
his return of income for the assessment year 2023-24, he seeks your advice
for computing depreciation. Please compute depreciation on his behalf
assuming that:
a. He is maintaining books of account from 01-04-2021 but did not provide
any depreciation on laptop.
b. He is maintaining books of account from 01-04-2021 and provided
depreciation ₹ 8,000 on laptop.
c. He is maintaining books of account from 01-04-2022.

35. A car was purchased by S on 10.8.2018 for ₹ 3,25,000 for personal use
is brought into the business of the assessee on 01.12.2022, when its
market value is ₹ 1,50,000. Compute the actual cost of the car and the
amount of depreciation for the Assessment year 2023-24 assuming the rate
of depreciation to be 15%.

36. Compute depreciation u/s 32 for the A.Y. 2023-24 from the following
information:

a. W.D.V. of plant and machinery (15%) as on 01-04-2022 ₹ 10,00,000

b. Plant D acquired on 10-07-2022 for ₹ 5,00,000/-. ₹ 1,00,000 has been
paid in cash to the vendor and balance amount has been paid through
an account payee cheque. Such plant was put to use on the same day.
c. The assessee is engaged in the business of manufacturing of industrial
paints.

37. Narang Textiles Ltd. purchased a machinery from Germany for Euro
1,00,000 on 03-09-2021 through a term loan from Fortune Bank Ltd. The
exchange rate on the date of acquisition was ₹ 65. The assessee took a
forward exchange rate on 05-10-2022 when the rate specified in the
contract was ₹ 67 per USD. Compute depreciation for the assessment years
2022-23 and 2023-24. Ignore additional depreciation.

38. M/s Sidhant & Co., a sole proprietary concern is converted into a
company, Sidhant Co. Ltd. with effect from November 29, 2022. The written
down value of assets as on April 1, 2022 is as follows:

61
 Items Rate of Depreciation WDV as on 1 April,
2022
Building 10% ₹ 3,50,000
Furniture 10% ₹ 50,000
Plant & Machinery 15% ₹ 2,00,000

Further, on 15-10-2022, M/s Sidhant & Co. purchased a plant for ₹ 1,00,000
(rate of depreciation 15%). After conversion, the company added another
plant worth ₹ 50,000 (rate of depreciation 15%). Compute the depreciation
available to
(i) M/s Sidhant & Co. and
(ii) Sidhant Co. Ltd.
for the A.Y. 2023-24

39. Dynamic India & Co. commences production on 16/8/2022. It incurred

the following expenses related to scientific research, find deduction u/s 35
for the P.Y. 2022-23.

Date Particulars Amount Purpose

18/8/2022 Paid to an Approved University for 50,000 Non-
research in Social science business
15/10/2022 Paid to a scientist (not the employee of 30,000 Business
the company)
18/11/2022 Paid to approved National laboratory 60,000 Non-
business
15/12/2022 Purchase of land & building for in house 5,00,000 Business
research (cost of land ₹ 1,50,000)
18/12/2022 Purchase of car to carry research- 2,00,000 Business
workers
16/8/2019 Capital expenditure (including cost of
to land ₹ 1,00,000) 5,00,000 Business
15/8/2022
“ Purchase of material 3,00,000 Business
“ Payment of salary (other than 2,00,000 Business
Perquisites)
“ Perquisites provided to research- 1,00,000 Business
personnel
“ Other revenue expenditure 80,000 Business
1/4/2019 to Capital expenditure (other than land) 9,00,000 Business
15/8/2019
“ Payment of salary (other than 50,000 Business
Perquisites)
1/4/2017 to Capital expenditure 80,000 Business
31/3/2019
“ Revenue expenditure 30,000 Business

62
40. Awishkar Enterprises purchased machinery for ₹ 5,00,000 as on
18/8/2021 for scientific research.

On 17/7/2022, the research work being completed. On 31/3/2023, the

machinery being sold for -

Case 1) ₹ 1,00,000
a. After using the same for business purpose other than scientific research.
The WDV of the respective block is ₹ 4,80,000. Depreciation rate 15%.
b. Without using the same for any other purpose

Case 2) ₹ 7,00,000
a. After using the same for business purpose other than scientific research.
The WDV of the respective block is ₹ 4,80,000. Depreciation rate 15%.
b. Without using the same for any other purpose State tax implications

State tax implications

41. Telefast Ltd., a company providing telecommunication services, obtain

a telecom licence on 20-4-2022 for a period of 10 years which ends on 31-
3-2032 (licence fee being ₹ 18 lakh). Find out the amount of deduction u/s
35ABB of the Income Tax Act, 1961, if:

(a) the entire amount is paid on 6-5-2022;

(b) the entire amount is paid on 1-4-2023;
(c) the entire amount is paid in equal installments on 30-4-2022; 30-4-
2023 and 30-4-2024

42. Twinkle Enterprises has acquired a telecom licence. Details in respect

of such licence are as under:

Particulars Particulars
Acquisition cost ₹ 1,00,000 Life of licence 10 years
Date of purchase 16/8/2021 Licence sold 100%
Payment terms Lump sum Date of sale of licence 15/3/2024
Date of first payment 16/8/2021 Sale value ₹ 1,20,000

State the tax consequence in the several previous years up to 2023-24

related to such transactions.

43. Tweety Enterprises has acquired telecom licence. Details in respect of

this licence are as under:

Particulars Particulars
Acquisition cost ₹ 3,00,000 Life of licence 7 years
Date of purchase 14/7/2019 Licence sold 40%
Payment terms Lump sum Date of sale of licence 12/12/2022

63
Date of first payment 14/7/2020 Sale value ₹ 1,20,000

44. Jardine Ltd. is an existing Indian company, which sets up a new

industrial unit. It incurs the following expenditure in connection with the
new unit:

Particulars Amount
Preparation of project report 4,00,000
Market survey 5,00,000
Legal and other charges for issue of additional capital 2,00,000
required for the new unit
Total 11,00,000

The following further data is given:

Particulars Amount
Cost of project 30,00,000
Capital employed in the new unit 40,00,000

What is the deduction admissible to the company u/s 35D?

45. Debit side of the profit and loss account of Mayank Ltd. shows the
following expenses, which have been due but are outstanding as on 31-3-
2023

Payment outstanding on First payment Second payment

31-3-2023
Particulars Amount Date Amount Date Amount
paid paid
Leave encashment 65,000 01-06-2023 15,000 25-12-2023 50,000
expenses
Interest payable to 14,000 10-06-2023 3,000 13-12-2023 11,000
Bank
Bonus payable to 87,000 02-05-2023 30,000 30-09-2023 57,000
employees
Interest payable to 75,000 13-05-2023 50,000 10-01-2024 25,000
LIC loan

Due date for filing return of income is 31-10-2023

Find out the previous years in which the aforesaid payments are deductible.
The company maintains books of accounts on the basis of mercantile
system of accounting.

46. X Co., a firm, is engaged in the business of trading of cloth (turnover

of 2022-23 being ₹ 57,80,000, out of which ₹ 25,00,000 has been received
in account payee cheque). It wants to claim the following deductions:
64
 Particulars Amount
Salary and interest to partners [as permitted by sec. 40(b)] 60,000
Salary to employees 4,90,000
Depreciation 2,70,000
Cost of materials used 35,90,000
Other expenses 13,45,000
Total 57,55,000
Net profit (₹ 57,80,000 – ₹ 57,55,000) 25,000

Determine the net income of X & Co. for the assessment year 2023-24
assuming that
(i) taxable interest income is ₹ 90,000;
(ii) Long term capital gain is ₹ 1,40,000; and
(iii) the firm is eligible for a deduction of ₹ 15,000 under sec. 80G.

47. Mr. Sukhvinder is engaged in the business of plying goods carriages.

On 1st April, 2022, he owns 10 trucks (out of which 6 are heavy good
vehicles of (unladen weight of each is 20 ton)). On 2/5/2022, he sold one
of the heavy goods vehicles & purchased a light goods vehicle on 6 th May,
2022. This new vehicle could however be put to use only on 15-6-2022.
Compute the total income of Mr. Sukhvinder for the A.Y. 2023-24, taking
note of the following data:

Particulars Amount Amount

Freight Charges collected 8,70,000
Less: Operational expenses 6,25,000
Depreciation as per Sec. 32 1,85,000
Other Office expenses 15,000 8,25,000
Net Profit 45,000
Other business and non-business income 70,000

48. Uttar and Dakshin, partners of PP Traders, furnishes the following

details –

Profit and loss account for the year ended 31-3-2023

Particulars Amount Particulars Amount

Bonus paid to employee 50,000 Gross Profit 10,00,000
Interest on loan taken 45,000 Interest on drawings
from bank
Other Expenses 40,000 Uttar 2,000
Salary to partners Dakshin 3,000
Uttar 2,44,000
Dakshin 4,88,000

65
Interest on capital @
15%
Uttar 4,500
Dakshin 6,000
Depreciation 40,000
Net profit 87,500
10,05,000 10,05,000

Additional information

1. Depreciation for the year allowed u/s 32 is ₹ 30,000.

2. During the last year, firm has incurred loss of ₹ 8,50,000 (which includes
unabsorbed depreciation of ₹ 50,000).
3. Interest on loan taken from bank is yet to be paid.

Compute total income of firm.

49. How shall your answer differ if brought forward loss is ₹ 9 lacs (which
includes unabsorbed depreciation of ₹ 1 lac)

50. Mr. Sunil is a practicing Chartered Accountant. He also runs a private

coaching institute. His bank accounts for the year ended 31/3/2023 is given
below:

Receipts ₹ Payments ₹
To Balance b/f 20,000 By Office expenses 18,000
To Audit fees 2,00,000 By Municipal tax on 800
property
To Income from other 1,00,000 By Coaching expenses 800
professional work
To Coaching fees 1,200 By Personal expenses 5,000
To Interest on Investment 2,000 By Membership fees 500
To Examiner’s fees 1,000 By Life insurance 13,000
premium
To Rent from property 5,000 By Income tax 5,000
By Motor Car purchased 1,80,000
By Motor Car expenses 10,200
By Insurance of 1,600
property
By Balance c/d 94,300
3,29,200 3,29,200

Additional Information

a. 20% of motor car expenses is in respect of profession.

b. Depreciation allowance for motorcar is ₹ 27,000, if wholly used for
profession.
66
c. Outstanding fees on 31-3-2023 ₹ 2,000. Whereas ₹ 500 receivable from
Mita is considered as bad.
d. Outstanding fees of P.Y. 2019-20 ₹ 10,000 received during the year,
which is included in the audit fees.
e. Office expenses include payment of ₹ 2,000 incurred during the
previous year 2021-22.

Compute his gross total income for the A.Y. 2023-24 assuming he
maintains accounts on cash basis.

51. From the following particulars of Shri Khote for the year ending 31st
March, 2023, find out his taxable income from business for the assessment
year 2023-24:

Particulars ₹ Particulars ₹
To Opening Stock 1,20,000 By Sales 2,14,20,000
To Purchases 2,10,00,000 By Profit on sale 5,000
of import licence
To Salaries 25,000 By Gift received 24,000
To Legal Expenses 10,000 By Closing Stock 2,00,000
To Bad Debts 5,000
To Rent 50,000
To Interest on loan 2,500
To Depreciation 15,000
To Income tax paid 2,000
To Outstanding Customs 25,000
Duty
To Advertisement 2,000
To Legal expenses 12,000
To Contribution towards 5,000
URPF
To General expenses 17,500
To Traveling expenses 1,00,000
To Net Profit 2,58,000
2,16,49,000 2,16,49,000

In computing the income, the following facts are to be taken into

consideration:

1. Interest on loan is paid to brother of Shri Khote for loan taken for
payment of advance income tax.
2. During the previous year 2018-19, assessee had claimed ₹ 45,000 as
bad debt out of which only ₹ 35,000 was allowed. During the previous
year, he recovers ₹ 25,000.
3. Contribution towards unrecognised provident fund was paid within time.
4. Legal expenses include ₹ 2,000 paid for preparation of income tax
return.

67
5. Stock is undervalued by 10%.
6. Gift received was given by a supplier for achieving target sale.
7. Outstanding customs duty has been paid on 31-12-2023.
8. During the previous year, he comes to know that his former employee
had embezzled cash of ₹ 5,000 on 31-3-2022, which was not accounted
for.
9. Traveling expenses include ₹ 50,000 being cost of trip to Singapore by
an employee for 10 days. However, only 8 days of trip is useful to
business and 2 days has been allowed as holiday to employee.
10.Rent includes expenditure on extension of shed on rented building ₹
26,000. However, such extension was completed on 1-5-2023 with total
cost of ₹ 50,000.
11.General expenses includes –
a. Salary of ₹ 1,200 paid to domestic servant.
b. Compensation of ₹ 2,000 paid for retrenchment of an employee.

Compute his business income for the A.Y. 2023-24

52. During the previous year 2022-23, profit and loss account of Shri Raj,
proprietor of Raj Enterprises engaged in the business of readymade
garments, shows profits of ₹ 1,50000. With the following information,
compute his taxable income from business –
a. Interest on capital ₹ 5,000
b. Purchases include goods of ₹ 12,000 from his younger brother in cash.
However, market value of such goods is ₹ 9,000.
c. Interest paid outside India ₹ 1,00,000 without deducting tax at
source.
d. Penalty paid to Government for non-filing of GST return ₹ 5,000
e. Penalty paid to customer for non-fulfilling of order within time ₹
10,000
f. Bad debts ₹ 1,00,000. Money has been advanced for purchase of
Building.
g. Revenue expenditure on promoting family planning among employees
₹ 10,000.
h. Premium paid on health of employees ₹ 6,000 in cash
i. Premium paid on health of his relatives ₹ 6,000 in cheque
j. Employer’s contribution to RPF ₹ 12,000. One-half of the amount is
paid after due date as per relevant Act but before 31-3-2023.
k. Employees contribution to RPF ₹ 10,000. ½ of the amount is paid after
due date as per relevant Act.
l. Interest on late payment of professional tax ₹ 1,000 (yet to be paid)
m. Interest on loan from State Bank of India ₹ 10,000 (₹ 5,000 is not paid
till due date of filing of return)
n. Interest on late refund from income tax department ₹ 500
o. Sale includes sale to Raj ₹ 10,000. (Cost of such goods ₹ 8,000; Market
value of such goods ₹ 12,000)
p. He received ₹ 80,000 from a debtor at a time in cash.

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q. Recovery of bad debt ₹ 10,000 (out of which ₹ 8,000 was allowed as
deduction during A.Y.2018-19)
r. Depreciation (being not debited in accounts) ₹ 20,000 allowed as
deduction u/s 32

69
 7. Capital gains
1. How will you calculate the period of holding in case of the following
assets?
(1) Shares held in a company in liquidation
(2) Bonus shares
(3) Flat in a co-operative society

2. A is the owner of a car. On 1-4-2022, he starts a business of purchase

and sale of motor cars. He treats the above car as part of the stock-in-trade
of his new business. He sells the same on 31-3-2023 and gets a profit of ₹
1 lakh. Discuss the tax implication in his hands under the head “Capital
gains”.

3. X converts his capital asset (acquired on June 10, 2004 for ₹ 60,000)
into stock-in- trade on March 10, 2022. The fair market value on the date
of the above conversion was ₹ 5,50,000. He subsequently sells the stock-
in-trade so converted for ₹ 6,00,000 on June 10, 2022. Discuss the year of
chargeability of capital gain and business income.

4. M held 2000 shares in a company ABC Ltd., an Indian company. This

company amalgamated with another Indian company XYZ Ltd. during the
previous year ending 31-3-2023. Under the scheme of amalgamation, M
was allotted 1000 shares in the new company. The market value of shares
allotted is higher by ₹ 50,000 than the value of holding in ABC Ltd. The
Assessing Officer proposes to treat the transaction as an exchange and to
tax ₹ 50,000 as capital gain. Is he justified?

5. In which of the following situations capital gains tax liability does not
arise?

(i) Mr. A purchased gold in 1970 for ₹ 25,000. In the P.Y. 2022-23, he
gifted it to his son at the time of marriage. Fair market value (FMV)
of the gold on the day the gift was made was ₹ 1,00,000.
(ii) A house property is purchased by a Hindu undivided family in 1945
for ₹ 20,000. It is given to one of the family members in the P.Y.
2022-23 at the time of partition of the family. FMV on the date of
partition was ₹ 12,00,000.
(iii) Mr. B purchased 50 convertible debentures for ₹ 40,000 in 1995
which are converted into 500 shares worth ₹ 85,000 in November
2022 by the company.

6. Mr. Abhishek a senior citizen, mortgaged his residential house with a

bank, under a notified reverse mortgage scheme. He was getting loan from
bank in monthly installments. Mr. Abhishek did not repay the loan on
maturity and hence gave possession of the house to the bank, to discharge

70
his loan. How will the treatment of long-term capital gain be on such
reverse mortgage transaction?

7. Examine, with reasons, whether the following statements are True or

False.

(i) Alienation of a residential house in a transaction of reverse mortgage

under a scheme made and notified by the Central Government is
treated as "transfer" for the purpose of capital gains.
(ii) Zero coupon bonds of eligible corporation, held for 14 months, will
be long- term capital assets.
(iii) Zero Coupon Bond means a bond on which no payment and benefits
are received or receivable before maturity or redemption.

8. Mr. A converts his capital asset acquired for an amount of ₹ 50,000 in

June, 2003 into stock-in-trade in the month of November, 2019. The fair
market value of the asset on the date of conversion is ₹ 4,50,000. The
stock-in-trade was sold for an amount of ₹ 6,50,000 in the month of
September, 2022. What will be the tax treatment?

Financial year Cost Inflation Index

2003-04 109
2019-20 289

9. Singhania & Co., a sole proprietorship owns six machines, put in use for
business in March, 2021. The depreciation on these machines is charged @
15%. The opening balance of these machines after providing depreciation
for P.Y. 2021-22 was ₹ 8,50,000. Three of the old machines were sold on
10th June, 2022 for ₹ 11,00,000. A second hand plant was bought for ₹
8,50,000 on 30th November, 2022.

You are required to:

(i) determine the claim of depreciation for Assessment Year 2023-24.

(ii) compute the capital gains liable to tax for Assessment Year 2023-24
(iii) If Singhania & Co. had sold the three machines in June, 2022 for ₹
21,00,000, will there be any difference in your above workings?
Explain.

10. Mr. A is a proprietor of Akash Enterprises having 2 units. He transferred

on 1.4.2022 his Unit 1 by way of slump sale for a total consideration of ₹
25 lacs. The fair market value of capital assets of unit 1 on 1.4.2022 is ₹
30 lacs. Unit 1 was started in the year 2005-06. The expenses incurred for
this transfer were ₹ 28,000. His Balance Sheet as on 31.3.2022 is as under:

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 Liabilities Total (₹) Assets Unit 1(₹) Unit 2 Total (₹)
(₹)
Own Capital 15,00,000 Building 12,00,000 2,00,000 14,00,000
Revaluation 3,00,000 Machinery 3,00,000 1,00,000 4,00,000
Reserve
(for building of
unit 1)
Bank loan 2,00,000 Debtors 1,00,000 40,000 1,40,000
(70% for unit 1)
Trade creditors Other
(25% for unit 1) 1,50,000 assets 1,50,000 60,000 2,10,000
Total 21,50,000 Total 17,50,000 4,00,000 21,50,000

Other information:

(i) Revaluation reserve is created by revising upward the value of the

building of Unit 1.
(ii) No individual value of any asset is considered in the transfer deed.
(iii) Other assets of Unit 1 include patents acquired on 1.7.2020 for ₹
50,000 on which no depreciation has been charged.

Compute the capital gain for the assessment year 2023-24.

11. Mr. Cee purchased a residential house on July 20, 2020 for ₹ 10,00,000
and made some additions to the house incurring ₹ 2,00,000 in August 2020.
He sold the house property in April 2022 for ₹ 20,00,000. Out of the sale
proceeds, he spent ₹ 5,00,000 to purchase another house property in
September 2022.

What is the amount of capital gains taxable in the hands of Mr. Cee for the
A.Y. 2023-24?

12. Long term capital gain of ₹ 75 lakh arising from transfer of building on
1.5.2022 will be exempt from tax if such capital gain is invested in the
bonds redeemable after five years, issued by NHAI under section 54EC.
Examine with reasons whether the given statement is true or false having
regard to the provisions of the Income-tax Act, 1961.

13. Calculate the income-tax liability for the assessment year 2023-24 in
the following cases:

Mr. A Mrs. B Mr. C Mr. D

(age 45) (age 62) (age 81) (age 82)
Status Resident Non-resident Resident Non-resident

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Total income 2,40,000 2,80,000 5,90,000 4,80,000
other than
long- term
capital gain
Long-term 15,000 10,000 60,000 Nil
capital gain from sale of from sale of from sale of
vacant site listed equity agricultural
shares (STT land in
paid on sale rural area
and
purchase of
shares)

Note - Assume that Mr. A, Mrs. B, Mr. C and Mr. D do not opt for section
115BAC.

14. Mr. Mithun purchased 100 equity shares of M/s Goodmoney Co. Ltd. on
01-04-2006 at rate of ₹ 1,000 per share in public issue of the company by
paying securities transaction tax.

Company allotted bonus shares in the ratio of 1:1 on 01.12.2021. He has

also received dividend of ₹ 10 per share on 01.05.2022.

He has sold all the shares on 01.10.2022 at the rate of ₹ 4,000 per share
through a recognized stock exchange and paid brokerage of 1% and
securities transaction tax of 0.02% to celebrate his 75th birthday.

Compute his total income and tax liability for Assessment Year 2023-24,
assuming that he is having no income other than given above. Fair market
value of shares of M/s Goodmoney Co. Ltd. on 31.1.2018 is ₹ 2,000.

15. Aarav converts his plot of land purchased in July, 2004 for ₹ 80,000
into stock-in-trade on 31st March, 2022. The fair market value as on
31.3.2022 was ₹ 3,00,000. The stock-in-trade was sold for ₹ 3,25,000 in
the month of January, 2023.

Find out the taxable income, if any, and if so under which head of income
and for which Assessment Year?

Cost Inflation Index: F.Y. 2004-05:113; F.Y. 2021-22: 317.

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16. Mrs. Harshita purchased a land at a cost of ₹ 35 lakhs in the financial
year 2004-05 and held the same as her capital asset till 20th March, 2022.

She started her real estate business on 21st March, 2022 and converted
the said land into stock-in-trade of her business on the said date, when the
fair market value of the land was ₹ 210 lakhs.

She constructed 15 flats of equal size, quality and dimension. Cost of

construction of each flat is ₹ 10 lakhs. Construction was completed in
February, 2023. She sold 10 flats at ₹ 30 lakhs per flat in March, 2023. The
remaining 5 flats were held in stock as on 31st March, 2023.

She invested ₹ 50 lakhs in bonds issued by National Highways Authority of

India on 31st March, 2023 and another₹ 50 lakhs in bonds of Rural
Electrification Corporation Ltd. in April, 2023.

Compute the amount of chargeable capital gain and business income in the
hands of Mrs. Harshita arising from the above transactions for Assessment
Year 2023-24 indicating clearly the reasons for treatment for each item.

[Cost Inflation Index: F.Y. 2004-05: 113; F.Y. 2021-22: 317].

17. Mr. A is an individual carrying on business. His stock and machinery

were damaged and destroyed in a fire accident.

The value of stock lost (total damaged) was ₹ 6,50,000. Certain portion of
the machinery could be salvaged. The opening balance of the block as on
1.4.2022 (i.e., WDV as on 31.3.2022 after providing depreciation for P.Y.
2021-22) was ₹ 10,80,000.

During the process of safeguarding machinery and in the fire fighting

operations, Mr. A lost his gold chain and a diamond ring, which he had
purchased in April, 2005 for ₹ 1,20,000. The market value of these two
items as on the date of fire accident was ₹ 1,80,000.

Mr. A received the following amounts from the insurance company:

(i) Towards loss of stock ₹ 4,80,000

(ii) Towards damage of machinery ₹ 6,00,000
(iii) Towards gold chain and diamond ring ₹ 1,80,000

You are requested to briefly comment on the tax treatment of the above
three items under the provisions of the Income-tax Act, 1961.

74
18. Examine the taxability of capital gains in the following scenarios for the
Assessment Year 2023-24, determine the taxable amount and rate of tax
applicable:

(i) On 20th December, 2022 5,000 shares of AB Ltd., a listed company are
sold by Mr. Kumar @ 500 per share and STT was paid at the time of sale
of shares. These shares were acquired by him on 5th June, 2018 @ ₹
425 per share by paying STT at the time of purchase. On 31st January,
2019, the shares of AB Ltd. were traded on a recognized stock exchange
at the Fair Market Value of ₹ 450 per share.

(ii) Mr. Satish is the owner of a residential house which was purchased on
1st July, 2016 for ₹ 10,50,000. He sold the said house on 14th October,
2022 for ₹ 25,00,000. Valuation as per stamp valuation authorities was
₹ 45,00,000. He invested ₹ 15,00,000 in RECL Bonds on 20th March,
2023.

(iii) The Cost Inflation index for-

F.Y. 2016-17 254
F.Y. 2022-23 317

19. On 23rd December, 2022, Rajat sold 500 grams of gold, the sale
consideration of which was ₹ 13,50,000. He had acquired this gold on 20th
August, 2000 for ₹ 4,00,000. Fair market value of 500 grams of gold on 1st
April, 2001 was ₹ 3,60,000. Find out the amount of capital gain chargeable
to tax for the assessment year 2023-24.

20. Mr. Anand has purchased a house property as on 17/08/2002 for ₹

5,00,000. On 1/05/2004, he constructed a new floor on the same house at
a cost of ₹ 2,50,000. On 1/10/2022, he sold such house for ₹ 18,00,000
and incurred brokerage @ 2% for arranging customer. Compute capital
gain.

21. Mrs. Parminder has jewellery, being gifted on 1/04/2005 by her brother
Jitendar. Jitendar acquired such asset for ₹ 60,000 as on 1/07/1995. On
1/07/2002, Jitendar has sewn a diamond worth ₹ 25,000 in such jewellery.
On 1/04/2009, Mrs. Parminder incurred polish expenditure on such
jewellery costing ₹ 5,000. As on 1/04/2022, Mrs. Parminder sold such
jewellery for ₹ 12,00,000. Brokerage @ 1% of sale value was paid by her.
The fair market value of the jewellery as on –

1/04/2001 is ₹ 2,00,000;
1/04/2005 is ₹ 5,00,000; and
1/04/2022 is ₹ 7,50,000.

Compute capital gain in hands of Mrs. Parminder for the A.Y. 2023-24.

75
22. Miss Isha has 1,000 10% Debentures of X Ltd. acquired on 17/04/2009
for ₹ 120 each. As on 1/02/2023, she sold such asset for ₹ 1,45,000.
Brokerage @ ½ % of sale value was paid by her. Compute capital gain.

23. Lucky has a house property acquired on 18/08/2009 for ₹ 6,00,000.

He used the house for his own residential purpose. On 18/08/2012 he
incurred capital expenditure on re-construction of house ₹ 3,00,000. On
15/05/2022, he brought office goods (inflammable) worth ₹ 1,00,000 at
home to be delivered to a party staying near to his home. At the night of
that day accidental fire took place and damaged the whole house property,
furniture worth ₹ 5,00,000 and business stock.

Insurance claim received on 18/08/2022 –

1. for the house ₹ 1,00,000 in cash & a new house allotted to him (fair
market value of which is ₹ 44,00,000 on 18/08/2022);
2. for house-hold furniture ₹ 2,00,000; and
3. for stock ₹ 80,000.

State –
– Tax-treatment under the head Capital gains.
– How shall your answer differ if such compensation is received by the
assessee on 15/04/2023.

24. Ali has 10,000 shares of X (P) Ltd. acquired on 15/05/1981 for ₹ 12
each. On 15/07/1983 he converted 6,000 of such shares into stock in trade.
On that date, market value of such share was ₹ 15 each. On 1/05/2007, he
further converted 2,000 of such shares into stock in trade. On such date,
market value of the share was ₹ 30 each. On 17/02/2023, he sold all shares
for ₹ 225 each. Brokerage incurred 2%. State tax treatment. Fair market
value of such shares as on 01-04-2001 was ₹ 16/-

25. ABC & Co. has three partners A, B and C sharing profit or loss in the
ratio 5:3:2. They admitted D as a new partner on 31/03/2022 for 1/5th
share and D is to bring ₹ 2,00,000 as his capital which he brought in form
of furniture (earlier used in his home) ₹ 50,000 immediately & further
brought jewellery of which fair market value is ₹ 2,00,000 on 2/04/2022
(however such assets was recorded in the books at ₹ 1,50,000). D had
acquired such jewellery for ₹ 45,000 on 7/07/2001. Compute capital gain
in the hands of Mr. D.

26. Sunil has a house property acquired on 7/07/1995 for ₹ 3,00,000. He

incurred improvement expenditure on such property ₹ 70,000 on
16/08/2000 and ₹ 50,000 on 17/07/2010. Market value of such property
as on 1/04/2001 is ₹ 4,50,000. On 16/08/2013, such property is
compulsorily acquired by the Government and compensation decided at ₹
11,50,000. 20% of the compensation received on 31/03/2023 and balance
on 2/06/2023.

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On further appeal, on 16/08/2023 enhanced compensation is declared by
the Government ₹ 2,00,000. Expenditure incurred to get enhanced
compensation is ₹ 11,000. Such compensation received on 18/08/2024.
Compute income under the head Capital Gains of Sunil for the assessment
year 2023-24, 2024-25 and 2025-26.

27. Balance sheet of Purva India (P) Ltd. as on 31/12/2022

Liabilities Amount Assets Amount

Equity Share capital of ₹ 8,00,000 Land 6,00,000
10 each
Preference Share capital 1,00,000 Building (WDV as per 3,00,000
IT Act)
Reserves 2,00,000 Machinery (WDV as 4,00,000
per IT Act)
Loan 6,00,000 Current Asset 10,00,000
Creditors 6,00,000
23,00,000 23,00,000

Additional information

Company went into liquidation on the balance sheet date and all current
assets and building realized at book value. The realized money was applied
in payment of outside liabilities and preference shareholder. Utkarsh is a
holder of 10% equity share and 20% preference share of the company.
Equity shares were originally acquired by him on 16/08/2002 at face value.
However, he subscribed to preference share on 1-04-2021, which was
issued at par. He received a part of land (MV ₹ 5,00,000) and cash (for
preference share) ₹ 20,000.

Compute capital gain in hands of company & Utkarsh.

28. H Ltd. acquired 100% holding interest [being 50,000 shares] in S (P)
Ltd. for ₹ 10,00,000 on 10-12-2002. On 7/03/2020, H Ltd. transferred its
land (cost of acquisition of which is ₹ 2,00,000 acquired on 5/05/2004) to
S (P) Ltd. (Indian company) for ₹ 9,00,000. On 31/03/2023, H Ltd.
transferred 1,000 shares of S (P) Ltd for ₹ 1,00,000. Show tax treatment.

29. S Ltd. transferred its machinery (WDV of the block of asset ₹ 2,00,000
as per Income tax Act) to its 100% holding company, H Ltd. (Indian
company) as on 15/05/2022 for ₹ 2,40,000. On 31/07/2022, H Ltd.
converted such asset into stock in trade (Market value as on 31/07/2022 is
₹ 3,00,000) and sold on 17/08/2022 for ₹ 3,20,000. H Ltd. has no such
block of machinery. Show tax treatment.

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30. Mr. Joseph has 1,000 equity shares of X Ltd. that he acquired on
17/08/2007 through will of his father. His father acquired such shares on
17/07/2004 through gift from his father in law (Mr. Z). Mr. Z acquired such
shares on 18/08/2000 for ₹ 20 each. Fair market value of such shares as
on –

1/04/2001 17/07/2004 17/08/2007

₹ 18 each ₹ 25 each ₹ 40 each

On 31/03/2013, X Ltd. amalgamated with Y Ltd. and amalgamated

company issued its 3 equity shares for every two equity shares of
amalgamating company. On 2/04/2022, Mr. Joseph sold 1,000 shares of Y
Ltd to one of his friends for ₹ 38 each. Compute capital gain.

31. T Ltd. grants option to its employee Rajat on 1st April, 2018 to apply
for 100 shares of the company for making available right in the intellectual
property to the employer-company at a pre-determined price of ₹ 150 per
share with date of vesting of the option being 1st April, 2020 and exercise
period being 1st April, 2020 to 31st March, 2023. Mr. Rajat exercises his
option on 31st May, 2022 and shares are allotted/transferred to him on 13th
June, 2022. Fair market value of such share on different dates are as under:

01-04-2018 01-04-2020 31-05-2022 13-06-2022

₹ 470 ₹ 890 ₹ 1,250 ₹ 1,470

On 31-12-2022, Mr. Rajat gifted 25 shares to his brother and sold balance
shares at market value of ₹ 2,180 per share. Compute taxable value of
perquisite, if any, and capital gain in hands of Mr. Rajat for A.Y. 2023-24.

32. X Ltd. has several undertakings carrying on several businesses. During

the year 2022-23, the company sold one of its undertaking (as it was
continuously generating loss since last 5 years) for a lump sum value of ₹
300 lacs without assigning value to individual asset and liabilities. Book
value of sundry assets and liabilities of the undertaking as on the date of
sale is as under:

Items Book Value Market

Value
Land ₹ 50 lacs (Value for the purpose of Stamp duty ₹ ₹ 100 lacs
70,00,000)
Machinery ₹ 70 lacs (WDV as per IT Act ₹ 60 lacs) ₹ 100 lacs
Furniture ₹ 50 lacs (WDV as per IT Act ₹ 90 lacs) ₹ 75 lacs
Stock ₹ 30 lacs ₹ 35 lacs
Debtors ₹ 40 lacs ₹ 40 lacs
Creditors ₹ 50 lacs

Brokerage on transfer paid @ 5%. Compute capital gain.

78
33. Mr. Raj has a self-occupied house property acquired 10 months ago for
₹ 5,00,000. He sold such property for ₹ 6,00,000 to Rajshree.

Case (a): Stamp duty authority for the purpose of levying stamp duty
adopted value of ₹ 6,25,000.
Case (b): Stamp duty authority for the purpose of levying stamp duty
adopted value of ₹ 6,75,000.

Compute capital gain on such transfer.

34. Mr. A, who transfers land and building on 2-01-2023, furnishes the
following information:

a. Net consideration received ₹ 10 lakhs;

b. Value adopted by stamp valuation authority, which was not contested
by Mr. A ₹ 12 lakhs;
c. Value ascertained by Valuation Officer on reference by the Assessing
Officer ₹ 13 lakhs;
d. This land was distributed to Mr. A on the partial partition of his HUF on
1-04-2001. Fair market value of the land as on 1-04-2001 was ₹
1,00,000.
e. A residential building was constructed on the above land by Mr. A at a
cost of ₹ 2,00,000 (construction completed on 1-12-2004) during the
Financial Year 2004-05.

Compute capital gain.

35. Liza transferred the following assets on 2-05-2022, determine capital

gain for the A.Y. 2023-24

Particulars Cost FMV Sale value

1/04/2001
Land acquired in 1976 25,000 1,00,000 30,00,000
Goodwill of business [Business Nil 40,000 2,00,000
commenced on 1-05-1995]
Tenancy right Nil 30,000 3,00,000

Brokerage paid on transfer @ 2%

36. Mr. Rocky purchased 1,000 shares of Azad (P) Ltd @ ₹ 12 per share as
on 1/08/1998. Company declared one bonus share for every two shares
held on 31/03/2000. As on 7/07/2006, Rocky got 500 shares of the same
company as gift from his friend Rakesh (Rakesh acquired such share on
1/04/2001 @ ₹ 14 per share). As on 1/03/2022, company further declared
one bonus share for every five shares held. On 1/01/2023, Rocky sold all
the shares @ ₹ 50 each. Find capital gain of Mr. Rocky.

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37. Mr. A purchased 5,000 units of a mutual fund as on 10/10/2022 @ ₹
80. On 1/11/2022, the fund declares 4 bonus units for every 5 units held.
The record date for declaring bonus is 01/11/2022.

On 01/12/2022, Mr. A sold 2,500 original units @ ₹ 20. On 10/01/2023, Mr.

A sold 1,000 bonus units @ ₹ 25.

On 12/02/2023, Mr. A sold remaining 2,500 original units @ ₹ 30. On

14/03/2023, Mr. A sold remaining 3,000 bonus units @ ₹ 45. All units sold
to his friend. Compute capital gain.

38. Mr. Raunak purchased 1,000 shares of Zey (P) Ltd @ ₹ 12 per share as
on 1/08/2021. As on 1/05/2022, company declared one right share for each
share held @ ₹ 15 each. Mr. Raunak renounced 40% of such right in favour
of Miss Rani @ ₹ 2 per share and for balance, he subscribed to the company.
On 1/07/2022, Mr. Raunak and Miss Rani sold all the shares to one of their
friend @ ₹ 50 each. Find capital gain of both the assessee.

39. Short term capital gain on transfer of shares on which STT is paid
₹ 1,30,000
Other income ₹ 1,66,000
Calculate tax of Mr. X aged 45 years?

40. Mr. Jadu has sold following assets on 31/03/2023:

Assets transferred Cost Acquired on Sold for Expenses on

transfer
Land ₹ 4,00,000 19/08/2009 ₹ 15,00,000 ₹ 40,000
Government ₹ 10,000 17/07/2006 ₹ 1,00,000 ₹ 5,000
securities
Debentures (listed) ₹ 20,000 17/04/2010 ₹ 1,00,000 ₹ 2,000

Compute his tax liability.

41. Mr. Sidhartha has a residential house property taxable u/s 22. Such
property is acquired on 12/08/2005 for ₹ 2,00,000. The property is sold on
1/03/2023 for ₹ 25,00,000. He acquired another residential house on
31/03/2023 for ₹ 17,00,000 for self-occupation. On 1/03/2024, he sold
such new residential house for ₹ 30,00,000. Compute his capital gain for
the A.Y. 2023-24 and 2024-25.

42. X Ltd. has a building acquired on 17/08/2021 for ₹ 5,00,000. The

assessee, as a tenant, earlier used the building, for industrial purpose since
last 7 years and even after purchase it is continuously used for industrial
purpose. Such building is compulsorily acquired by Government at an
agreed value of ₹ 12,00,000 as on 15/07/2022. The compensation was

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received on 1/03/2023. The written down value of the block (consist of 3
buildings) as on 1/04/2022 is ₹ 7,50,000.

The company acquired a new building for industrial purpose for ₹

2,00,000 as on –
Case A) 31/03/2023;
Case B) 2/04/2023.

Determine his taxable capital gain.

43. Sonu has jewellery acquired on 17/07/2010 for ₹ 5,00,000. On

18/08/2013 Sonu incurred improvement expenditure on such jewellery by
adding diamond to it worth ₹ 3,00,000. On 18/08/2021, he transferred
such jewellery to his friend Monu for ₹ 40,00,000.

Sonu already has a self-occupied house property in Lucknow, however on

17/03/2022 he purchased another residential house property for ₹
30,00,000 for the purpose of letting out.

As on 5/04/2023, his friend offered him house worth ₹ 25,00,000 (Value

for Stamp duty purpose is only ₹ 14,00,000/-) for ₹ 15,00,000 only & Sonu
purchased the same.

On 7/04/2024, Sonu sold the new house acquired from his friend for ₹
19,00,000. Value determined for the purpose of stamp duty purposes ₹
22,00,000 and market value as on the date of transfer is ₹ 26,00,000.
Compute capital gain in hands of Sonu for several years.

44. Mr. X has sold following assets during the year 2022-23

Items Cost of acquisition Sale consideration Year of

acquisition
Land ₹ 10 lacs ₹ 150 lacs 1998-99
Jewellery ₹ 30 lacs ₹ 120 lacs 2008-09

On 31/03/2023, he has purchased a residential house of ₹ 30,00,000 for

self occupation as he had no other house till date. Compute capital gain.

45. X Ltd. is shifting its undertaking from Jaipur to Napasar (other than
urban area). In this regard it sold its 4 machineries and 2 sets of furniture
during the previous year 2022-23 as under –

Machinery Depreciation Book Sold for Furniture Depreciation Book Sold for
Rate Value Rate value
A 15% 2,00,000 3,00,000 X 10% 1,00,000 2,00,000
B 15% 3,00,000 8,00,000 Z 10% 60,000 90,000

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 C 15% 5,00,000 6,00,000
D 30% 6,00,000 5,00,000

WDV of the block of asset as under –

Name of the Block Block consist of WDV as on
1/04/2022
Machinery 15% A, B & C 11,00,000
Machinery 30% D&E 9,00,000
Furniture 10% X&Z 1,50,000

X Ltd. is seeking whether the transaction shall be taxable as slump sale or

not and compute capital gain.

On 7/04/2023, assessee further purchased machineries worth ₹ 3,70,000

and land of ₹ 1,00,000 for the purpose of new industrial undertaking.

Compute capital gain.

46. Raj Ltd. has an industrial undertaking operating in an urban area.

During the year 2022-23, it sold its two machineries for ₹ 2,00,000 and ₹
3,80,000 in course of shifting its industrial undertaking from urban area to
rural area. The written down value of the block (consists of 4 machineries)
as on 1/04/2022 was ₹ 3,50,000.

The company incurred ₹ 20,000 expenses on other purposes as specified

in a scheme framed by the Central Government for the purposes of this
section. Determine its taxable capital gain, if the company acquired new
machinery for industrial purpose for ₹ 50,000 as on –
Case A) 28/03/2023;
Case B) 12/04/2023

47. During the previous year 2022-23, Jay exchanges his agricultural land
(being acquired on 1-04-2002 for ₹ 40,000) against the agricultural land of
Vijay (being acquired on 1-02-2022 for ₹ 90,000). Fair market value of such
properties on the date of transfer is ₹ 3,00,000. Compute capital gain
assuming that both the land is situated in urban area.

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 8. INCOME FROM OTHER SOURCES

1. Rahul, a resident Indian, holding 28% of equity shares in a company,

took a loan of ₹ 5,00,000 from the same company. On the date of granting
the loan, the company had accumulated profit of ₹ 4,00,000. The company
is engaged in some manufacturing activity.

(i) Is the amount of loan taxable as deemed dividend, if the company is

a company in which the public are substantially interested?

(ii) What would be your answer, if the lending company is a private limited
company (i.e. which is not a company in which the public are
substantially interested)?

2. Mr. A, a dealer in shares, received the following without consideration

during the P.Y. 2022-23 from his friend Mr. B, -

(1) Cash gift of ₹ 75,000 on his anniversary, 15th April, 2022.

(2) Bullion, the fair market value of which was ₹ 60,000, on his birthday,
19th June, 2022.
(3) A plot of land at Faridabad on 1st July, 2022, the stamp value of which
is ₹ 5 lakh on that date. Mr. B had purchased the land in April, 2009.

Mr. A purchased from his friend Mr. C, who is also a dealer in shares, 1000
shares of X Ltd. @ ₹ 400 each on 19th June, 2022, the fair market value of
which was ₹ 600 each on that date. Mr. A sold these shares in the course
of his business on 23rd June, 2022.

Further, on 1st November, 2022, Mr. A took possession of property (office

building) booked by him two years back at ₹ 20 lakh. The stamp duty value
of the property as on 1st November, 2022 was ₹ 32 lakh and on the date of
booking was ₹ 23 lakh. He had paid ₹ 1 lakh by account payee cheque as
down payment on the date of booking.

On 1st March, 2023, he sold the plot of land at Faridabad for ₹ 7 lakh.

Compute the income of Mr. A chargeable under the head “Income from
other sources” and “Capital Gains” for A.Y. 2023-24.

83
3. Discuss the taxability or otherwise of the following in the hands of the
recipient under section 56(2)(x) the Income-tax Act, 1961 -

(i) Akhil HUF received ₹ 75,000 in cash from niece of Akhil (i.e.,
daughter of Akhil’s sister). Akhil is the Karta of the HUF.
(ii) Nitisha, a member of her father’s HUF, transferred a house property
to the HUF without consideration. The stamp duty value of the house
property is ₹ 9,00,000.
(iii) Mr. Akshat received 100 shares of A Ltd. from his friend as a gift on
occasion of his 25th marriage anniversary. The fair market value on
that date was ₹ 100 per share. He also received jewellery worth ₹
45,000 (FMV) from his nephew on the same day.
(iv) Kishan HUF gifted a car to son of Karta for achieving good marks in
XII board examination. The fair market value of the car is ₹
5,25,000.

4. Mr. Hari, a property dealer, sold a building in the course of his business
to his friend Rajesh, who is a dealer in automobile spare parts, for ₹ 90
lakh on 1.1.2023, when the stamp duty value was ₹ 150 lakh. The
agreement was, however, entered into on 1.9.2022 when the stamp duty
value was ₹ 140 lakh. Mr. Hari had received a down payment of ₹ 15 lakh
by a crossed cheque from Rajesh on the date of agreement. Discuss the
tax implications in the hands of Hari and Rajesh, assuming that Mr. Hari
has purchased the building for ₹ 75 lakh on 12th July, 2021.

Would your answer be different if Hari was a share broker instead of a

property dealer?

5. Interest on enhanced compensation received by Mr. G during the

previous year 2022-23 is ₹ 5,00,000. Out of this interest, ₹ 1,50,000
relates to the previous year 2018-19, ₹ 1,65,000 relates to previous year
2019-20 and ₹ 1,85,000 relates to previous year 2020-21. Discuss the tax
implication, if any, of such interest income for A.Y. 2023-24.

6. Examine under which heads the following incomes are taxable:

(i) Rental income in case property held as stock-in-trade for 3 years

(ii) Salary received by a partner from his partnership firm
(iii) Rental income of machinery
(iv) Winnings from lotteries by a person having the same as business
activity
(v) Salaries payable to a Member of Parliament
(vi) Receipts without consideration
(vii) In case of retirement, interest on employee’s contribution if
provident fund is unrecognized.
(viii) Rental income in case of a person engaged in the business of letting
out of properties.

84
7. Examine whether the following are chargeable to tax and the amount
liable to tax:

(i) A sum of ₹ 1,20,000 was received as gift from non-relatives by Raj on

the occasion of the marriage of his son Pravin.
(ii) Interest on enhanced compensation of ₹ 96,000 received on 12-3-2023
for acquisition of urban land, of which 40% relates to P.Y. 2021-22.

8. On 10.10.2022, Mr. Govind (a bank employee) received ₹ 5,00,000

towards interest on enhanced compensation from State Government in
respect of compulsory acquisition of his land effected during the financial
year 2014-15.

Out of this interest, ₹ 1,50,000 relates to the financial year 2015-16; ₹

1,65,000 to the financial year 2016-17; and ₹ 1,85,000 to the financial year
2017-18. He incurred ₹ 50,000 by way of legal expenses to receive the
interest on such enhanced compensation.

How much of interest on enhanced compensation would be chargeable to

tax for the assessment year 2023-24?

9. The following details have been furnished by Mrs. Hemali pertaining to

the year ended 31.3.2023:

(i) Cash gift of ₹ 51,000 received from her friend on the occasion of her
“Shastiaptha Poorthi”, a wedding function celebrated on her husband
completing 60 years of age. This was also her 25th wedding
anniversary.
(ii) On the above occasion, a diamond necklace worth ₹ 2 lacs was
presented by her sister living in Dubai.
(iii) When she celebrated her daughter's wedding on 21.2.2023, her friend
assigned in Mrs. Hemali's favour, a fixed deposit held by the said friend
in a scheduled bank; the value of the fixed deposit and the accrued
interest on the said date was ₹ 52,000.

Compute the income, if any, assessable as income from other sources.

10. Examine the following transactions in the context of Income-tax Act,

1961:

(i) Mr. B transferred 500 shares of R (P) Ltd. to M/s. B Co. (P) Ltd. on
10.10.2022 for ₹ 3,00,000 when the market price was ₹ 5,00,000.
The indexed cost of acquisition of shares for Mr. B was computed at
₹ 4,45,000. The transfer was not subjected to securities transaction
tax.

85
 Determine the income chargeable to tax in the hands of Mr. B and
M/s. B Co. (P) Ltd. because of the above said transaction.

(ii) Mr. Chezian is employed in a company with taxable salary income of

₹ 5,00,000. He received a cash gift of ₹ 1,00,000 from Atma
Charitable Trust (registered under section 12AB) in December 2022
for meeting his medical expenses.

Is the cash gift so received from the trust chargeable to tax in the
hands of Mr. Chezian?

11. Sunder died on 31st July 2022 while being in Central Government
service. In terms of rules governing his service, his widow Mrs. Sunder is
paid a family pension of ₹ 10,000 p.m. and dearness allowance of 40%
thereof. State whether the amount of family pension is assessable in her
hands, and if so, under what head of income. Can she claim any
relief/deduction on such receipt? Compute taxable income for the
assessment year 2023-24 and tax thereon.

12. Compute taxable income under the head Income from other sources of
Mrs. X from the following data:

Particulars Amount
Private tuition fee received 10,000
Winning from lottery 2,000
Award from KBC (a TV show) [Gross] 3,20,000
Pension from employer of deceased husband 25,000
Interest on bank deposit 25,000
Directors fee (Gross) 5,000
Letting out of vacant land 25,000
Remuneration for checking the examination copy of 10,000
employer’s school
Remuneration for checking the examination copy of C.A 10,000
Income tax refund 5,000
Interest on income tax refund 100
Composite rent (related expenditures are ₹ 5,000) 10,000
Rent on sub-letting of house property (rent paid to original 20,000
owner ₹ 12,000)
Income tax paid 2,000
Payment made for personal expenses 18,000
Payment made to LIC as premium 2,000

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13. Shri Anil follows cash basis of accounting and has furnished the
Receipts & Payment A/c of previous year 2022-23 for computing his
income:

Particulars Receipts Payments

Interest on listed debenture of A Ltd. 16,200
Letting of building & machinery @ ₹ 15,000 p.m. 1,50,000
under a composite lease
Collection charges 1,000
Repairs 5,000
Capital repairs 16,000
Interest paid outside India without deducting tax 8,000
on loan taken for construction of building
Gift from father 6,000
Ground rent received (related to financial year 600
2021-22)

The following additional information are also provided -

Allowable depreciation on Building and Machinery - ₹ 4,000
Fire Insurance on Building and Machinery (not paid) - ₹ 1,000

14. Mr. Balaji, employed as Production Manager in Beta Ltd., furnishes you
the following information for the year ended 31-03-2023:

i. Basic salary upto 31-10-2022 ₹ 50,000 p.m.

Basic salary from 01-11-2022 ₹ 60,000 p.m.
Note : Salary is due and paid on the last day of every month.
ii. Dearness allowance @ 40% of basic salary.
iii. Bonus equal to one month salary. Paid in October 2022 on basic salary
plus dearness allowance applicable for that month.
iv. Contribution of employer to recognized provident fund account of the
employee @ 16% of basic salary.
v. Profession tax paid ₹ 3,000 of which ₹ 2,000 was paid by the
employer.
vi. Facility of laptop and computer was provided to Balaji for both official
and personal use. Cost of laptop ₹ 45,000 and computer ₹ 35,000
were acquired by the company on 01-12-2022.
vii. Motor car owned by the employer (cubic capacity of engine exceeds
1.60 litres) provided to the employee from 01-11-2022 meant for
both official and personal use. Repair and running expenses of ₹
45,000 from 01-11-2022 to 31-03-2023, were fully met by the
employer. The motor car was self-driven by the employee.
viii. Leave travel concession given to employee, his wife and three
children (one daughter aged 7 and twin sons – aged 3). Cost of air
tickets (economy class) reimbursed by the employer ₹ 30,000 for
adults and ₹ 45,000 for three children. Balaji is eligible for availing
exemption this year to the extent it is permissible in law.

87
Compute
a. Gross salary chargeable to tax in the hands of Mr. Balaji for the
assessment year 2023-24.
b. Taxable salary chargeable to tax in the hands of Mr. Balaji for the
assessment year 2023-24.

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 9. Income of Other Persons included in
Assessee’s Total Income

1. Mr. Vatsan has transferred, through a duly registered document, the

income arising from a godown to his son, without transferring the godown.
In whose hands will the rental income from godown be charged?

2. Mr. A holds shares carrying 25% voting power in X (P) Ltd. Mrs. A is
working as a computer software programmer in X (P) Ltd. at a salary of ₹
30,000 p.m. She is, however, not qualified for the job. The other income of
Mr. A & Mrs. A are ₹ 7,00,000 & ₹ 4,00,000, respectively. Compute the
gross total income of Mr. A and Mrs. A for the A.Y. 2023-24, assuming that
they do not opt for section 115BAC.

3. Will your answer be different if Mrs. A was qualified for the job?

4. Mr. B holds shares carrying 30% voting power in Y (P) Ltd. Mrs. B is
working as accountant in Y (P) Ltd. getting income under the head salary
(computed) of ₹ 3,44,000 without any qualification in accountancy. Mr. B
also receives ₹ 30,000 as interest on securities. Mrs. B owns a house
property which she has let out. Rent received from tenants is ₹ 6,000 p.m.
Compute the gross total income of Mr. B and Mrs. B for the A.Y. 2023-24.

5. Mr. Vaibhav started a proprietary business on 01.04.2021 with a capital

of ₹ 5,00,000. He incurred a loss of ₹ 2,00,000 during the year 2021-22.
To overcome the financial position, his wife Mrs. Vaishaly, a software
Engineer, gave a gift of ₹ 5,00,000 on 01.04.2022, which was immediately
invested in the business by Mr. Vaibhav. He earned a profit of ₹ 4,00,000
during the year 2022-23. Compute the amount to be clubbed in the hands
of Mrs. Vaishaly for the A.Y. 2023-24. If Mrs. Vaishaly gave the said amount
as loan, what would be the amount to be clubbed?

6. Mrs. Kasturi transferred her immovable property to ABC Co. Ltd. subject
to a condition that out of the rental income, a sum of ₹ 36,000 per annum
shall be utilized for the benefit of her son’s wife.

Mrs. Kasturi claims that the amount of ₹ 36,000 (utilized by her son’s wife)
should not be included in her total income as she no longer owned the
property.

Examine with reasons whether the contention of Mrs. Kasturi is valid in law.

7. Mr. A has three minor children – two twin daughters, aged 12 years, and
one son, aged 16 years. Income of the twin daughters is ₹ 2,000 p.a. each
and that of the son is ₹ 1,200 p.a. Mrs. A has transferred her flat to her

89
minor son on 1.4.2022 out of natural love and affection. The flat was let
out on the same date and the rental income from the flat is ₹ 10,000 p.m.
Compute the income, in respect of minor children, to be included in the
hands of Mr. A and Mrs. A u/s 64(1A) (assuming that Mr. A’s total income
is higher than Mrs. A’s total income, before including the income of minor
children).

8. Compute the gross total income of Mr. & Mrs. A from the following
information:

Particulars ₹
(a) Salary income (computed) of Mrs. A 2,30,000
(b) Income from profession of Mr. A 3,90,000
(c) Income of minor son B from company deposit 15,000
(d) Income of minor daughter C from special talent 32,000
(e) Interest from bank received by C on deposit made
out of her special talent 3,000
(f) Gift received by C on 30.09.2022 from friend of 2,500
Mrs. A

Brief working is sufficient. Detailed computation under various heads of

income is not required.

9. Mr. Vasudevan gifted a sum of ₹ 6 lakhs to his brother's wife on 14-6-

2022. On 12-7-2022, his brother gifted a sum of ₹ 5 lakhs to Mr.
Vasudevan's wife. The gifted amounts were invested as fixed deposits in
banks by Mrs. Vasudevan and wife of Mr. Vasudevan's brother on 01-8-
2022 at 9% interest. Examine the consequences of the above under the
provisions of the Income-tax Act, 1961 in the hands of Mr. Vasudevan and
his brother.

10. Mr. Sharma has four children consisting 2 daughters and 2 sons. The
annual income of 2 daughters were ₹ 9,000 and ₹ 4,500 and of sons were
₹ 6,200 and ₹ 4,300, respectively. The daughter who has income of ₹ 4,500
was suffering from a disability specified under section 80U.

Compute the amount of income earned by minor children to be clubbed in

hands of Mr. Sharma.

11. During the previous year 2022-23, the following transactions occurred
in respect of Mr. A.

(a) Mr. A had a fixed deposit of ₹ 5,00,000 in Bank of India. He instructed

the bank to credit the interest on the deposit @ 9% from 1-4-2022 to

90
 31-3-2023 to the savings bank account of Mr. B, son of his brother, to
help him in his education.
(b) Mr. A holds 75% profit share in a partnership firm. Mrs. A received a
commission of ₹ 25,000 from the firm for promoting the sales of the
firm. Mrs. A possesses no technical or professional qualification.
(c) Mr. A gifted a flat to Mrs. A on April 1, 2022. During the previous year
2022- 23, Mrs. A’s “Income from house property” (computed) was ₹
52,000 from such flat.
(d) Mr. A gifted ₹ 2,00,000 to his minor son who invested the same in a
business and he derived income of ₹ 20,000 from the investment.
(e) Mr. A’s minor son derived an income of ₹ 20,000 through a business
activity involving application of his skill and talent.

During the year, Mr. A got a monthly pension of ₹ 10,000. He had no other
income. Mrs. A received salary of ₹ 20,000 per month from a part time job.

Examine the tax implications of each transaction and compute the total
income of Mr. A, Mrs. A and their minor child assuming they do not wish to
opt for section 115BAC.

12. Mr. A has gifted a house property valued at ₹ 50 lakhs to his wife, Mrs.
B, who in turn has gifted the same to Mrs. C, their daughter-in-law. The
house was let out at ₹ 25,000 per month throughout the year. Compute the
total income of Mr. A and Mrs. C.

Will your answer be different if the said property was gifted to his son,
husband of Mrs. C?

13. A proprietary business was started by Smt. Rani in the year 2020. As
on 1.4.2021 her capital in business was ₹ 3,00,000.

Her husband gifted ₹ 2,00,000 on 10.4.2021 to her and such sum is

invested by Smt. Rani in her business on the same date. Smt. Rani earned
profits from her proprietary business for the Financial year 2021-22, ₹
1,50,000 and Financial year 2022-23 ₹ 3,90,000. Compute the income, to
be clubbed in the hands of Rani’s husband for the Assessment year 2023-
24 with reasons.

14. Mr. B is the Karta of a HUF, whose members derive income as given
below:

Particulars ₹
(i) Income from B' s profession 45,000
(ii) Mrs. B' s salary as fashion designer 76,000
(iii) Minor son D (interest on fixed deposits with a bank 10,000
which were gifted to him by his uncle)

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 (iv) Minor daughter P's earnings from sports 95,000
(v) D's winnings from lottery (gross) 1,95,000

Examine the tax implications in the hands of Mr. and Mrs. B.

15. Examine the tax implication of each transaction and compute the total
income of Mr. Tushar and Mrs. Tushar and their minor son for the
assessment year 2023-24, assuming they do not wish to opt for section
115BAC.

(1) Mr. Tushar has a fixed deposit of ₹ 6,00,000 in State bank of India. He
instructed the bank to credit the interest on the deposit @9% from 1st
April, 2022 to 31st March, 2023 to the savings bank account of Mr. Raj,
son of his brother, to help him in his education.
(2) Mr. Tushar started a proprietary business on 1st May, 2022 with
capital of ₹ 6,00,000. His wife, Mrs. Tushar, a software Engineer, gave
cash of ₹ 5,00,000 on 1st May, 2022, which was immediately invested
in the business by Mr. Tushar. He earned a profit of ₹ 4,00,000 during
the previous year 2022-23.
(3) Mr. Tushar's minor son derived an income of ₹ 20,000 through a
business activity involving application of his skill and talent.

16. Discuss the tax treatment in the following cases:

1. Harish has transferred certain securities owned by him to a trust for his
married sister, Harsha, as on 1/7/2022. He has the power to revoke the
trust at his desire. On 31/3/2024, he revoked such trust. Income
accrued for the previous year 2022-23 and 2023-24 are ₹ 1,20,000 and
₹ 1,50,000 respectively and such income is received and enjoyed by
Harsha.
2. Raja transferred his property on 1/4/2022 to Rani with a clause that, he
will take property back from Rani whenever he requires. Raja was in
need of money on 1/4/2023 and he took back property from Rani. The
property yields annual income of ₹ 2,00,000.
3. Seema transferred on 1/4/2022 her property to Neema for the life time
of Neema with a clause that after death of Neema, property shall be
back to Seema. Neema died on 1/4/2023. Seema has not taken back
the property till 31/3/2024. Property yields annual income of ₹
1,00,000.

17. Ram and Mrs. Ram hold 20% and 30% equity shares in Anand Ltd.
respectively. They are employed in Anand Ltd. (taxable salary being ₹
2,40,000 p.a. and ₹ 3,60,000 p.a. respectively) without any technical or
professional qualification. Other incomes of Ram and Mrs. Ram are ₹ 70,000
and ₹ 1,00,000 respectively. Find out the net income of Ram and Mrs. Ram
for the assessment year 2023-24.

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18. Mr. & Mrs. Om both are working in A Ltd. without possessing any
technical or professional qualification. From the following details compute
their income for the A.Y. 2023-24:

Particulars Mr. Om Mrs. Om

Taxable Salary from A Ltd. ₹ 2,20,000 ₹ 70,000
Other income ₹ 50,000 ₹ 80,000
Share of holdings: Case 1 15% 6%
Case 2 3% 17%
Case 3 18% 1%

19. Mr. & Mrs. X working in A Ltd. without possessing any qualification.
From the following details compute their income for the A.Y. 2023-24:

Particulars Mr. X Mrs. X

Share of holdings 15% 6%
Taxable salary from A Ltd. ₹ 1,20,000 ₹ 60,000
Case 1) Other income ₹ 50,000 ₹ 80,000
Case 2) Other income ₹ 90,000 ₹ 65,000
Case 3) Other income Nil Nil

20. Mr. X gifted 1,000 shares of a non-domestic company worth ₹ 6,00,000

(acquired on 15/3/2022) to Mrs. X out of natural love and affection as on
15/4/2022.

On 31/1/2023, Mrs. X received dividend ₹ 60,000 on such shares in India.

On 1/2/2023, Mrs. X sold such shares for ₹ 10,00,000 and received
consideration in India. Show tax treatment, if on 1/2/2023, Mrs. X invested
₹ 10,60,000 in –

Case A
A house property from which rent accrued in the previous year 2022-23 is
₹ 53,000.
Case B
A newly formed partnership firm and contributed initial capital. Interest
received (taxable portion) on such contribution ₹ 13,250 and share of profit
₹ 20,000.
Case C
A newly started proprietorship business & contributed capital, profit accrued
for the year is ₹ 42,400.

21. Mr. & Mrs. Mantri have income under the head “Profits & gains of
business or profession” of ₹ 3,00,000 and ₹ 4,00,000 respectively. They
have 7 children. From the following details compute taxable income of Mr.
and Mrs. Mantri for the A.Y. 2023-24:

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 a. 1st child (aged 26 years) is a chartered accountant. His annual income
from profession is ₹ 4,00,000. His income from house property for
the P.Y. 2022-23 is ₹ 30,000. He has a son (4 years old) who has
earned interest on fixed deposit of ₹ 5,000.
b. 2nd child (aged 17 years being a married daughter) who is a stage
singer, earned income of ₹ 1,00,000 during the P.Y. 2022-23. She
earned interest on fixed deposit ₹ 8,000. Such fixed deposit has been
made out of such singing income.
c. 3rd child (aged 16 years) is suffering from disability specified u/s 80U
(to the extent 55%) blind. He has received interest income of ₹
40,000 for loan given to a private firm. He is dependent on Mrs.
Mantri.
d. 4th child (aged 14 years) has earned income of ₹ 45,000 during the
P.Y.2022-23 out of his physical and mental effort. Expenditure
incurred to earn such income is ₹ 15,000. His loss from house
property is ₹ 30,000.
e. 5th child (aged 12 years) is a partner in a partnership firm from which
he earned interest income (taxable) of ₹ 40,000 and share of profit
of ₹ 35,000. Other two partner of the firm are Mr. & Mrs. Mantri.
f. 6th child (aged 9 years) has 1,000 debentures of ₹ 100 each of a
public sector company acquired through will of his Grand father.
Interest income on such debenture is ₹ 10,000. Expenditure incurred
to collect such interest is ₹ 200. Such debenture was sold and long-
term capital gain earned ₹ 25,000.
g. 7th child (aged 7 years) has earned interest on fixed deposit ₹ 500.

22. Mr. Todi is a member of HUF. It consists of Mr. Todi, Mrs. Todi, Mr. Todi’s
major son (Mr. A) & Mr. Todi’s minor son (B)

On 1/4/2021, Mr. Todi transferred his house property acquired through his
personal income to the HUF without any consideration. On 1/7/2022, HUF
is partitioned and such property being divided equally.

Net annual value of the property for the P.Y. 2021-22 is ₹ 80,000 & that for
the P.Y. 2022-23 is ₹ 1,00,000.

State tax treatment for both the years.

23. A proprietary business was started by Smt. S. Mundhra in the year

2020. As on 1.4.2021 her capital in business was ₹ 3,00,000. Her husband,
Shri V. Mundhra, gifted ₹ 2,00,000, on 10.04.2021, which amount Smt. S
invested in her business on the same date. Smt. S earned profits from her
proprietary business for the financial years 2021-22, ₹ 1,50,000 and
financial year 2022-23 ₹ 3,90,000. Compute the income, to be clubbed in
the hands of S’s husband for the A.Y. 2023-24.

94
24. Mr. Singh is a trader. Particulars of his income and those of the
members of his family are given below. These incomes relate to the
previous year ended 31st March, 2023:

Particulars Amount
Income from business (Mr. Singh’s) 90,000
Salary derived from an educational institution by Mrs. Singh. 50,000
She is the principal of the institution
Interest on company deposits derived by Master Deep Singh 12,000
(minor son). These deposits were made in the name of Deep
Singh by his father’s father about 6 years ago.
Receipts from sale of paintings and drawings made by minor 60,000
Dipali Singh (minor daughter of Mr. & Mrs. Singh and noted
child artist)
Income by way of lottery earnings by Master Dipindar Singh 6,000
(minor son of Mr. Singh)

Discuss whether the above will form part of the assessable income of any
individual and also compute the assessable income of Mr. Singh.

25. Balu is the Karta of a HUF, whose members derive income as given
below:

Particulars Amount
Income from Balu’s own business 50,000
Mrs. Balu a dermatologist (taxable salary) 80,000
Minor son Deepak (earning interest on fixed deposits with ABC 15,000
Ltd., which were gifted to him by his grandfather)
Minor daughter Priya gave a dance performance and received 1,00,000
remuneration
Deepak got winnings from lottery (gross) 2,00,000

Explain how the above will be taxed.

26. Ram & Mrs. Ram submit the following particulars of their income
relevant for the assessment year 2023-24:

Mrs. Ram receives a salary of ₹ 30,000 (computed) and taxable allowance

of ₹ 22,500 from G Ltd. in which her father-in-law holds 25% of equity
share capital and she herself holds 10% of equity capital

1. Ram receives a salary of ₹ 11,340 (computed) from S Ltd., in which

Mrs. Ram, her sisters and brother hold 21% of equity share capital.
2. Ram is a (10% share) partner in EFG, a partnership firm, which is
engaged in the business identical to G Ltd. and receives ₹ 75,000 as
salary and interest from the firm during the relevant previous year. None
of the relatives of Ram has any interest in the firm.

95
3. Mrs. Ram is employed by the firm EFG on a salary of ₹ 9,000 p.a.
(computed)
4. Interest of minor daughter of Ram from a partnership firm is ₹ 43,500
5. Mrs. Ram transferred ₹ 1,00,000 on 20-5-1973 and ₹ 70,000 on 15-6-
1973 to her daughter-in-law, who invested the aforesaid fund in a
partnership firm at 12% p.a. Out of interest income, her daughter-in-
law has purchased debentures in an Indian companies and during the
previous year she receives ₹ 2,000 as interest.

Find out taxable income of Mr. and Mrs. Ram on the following assumptions:

a. That Ram is not a beneficial shareholder in G Ltd. throughout the

previous year.
b. That Ram holds 10 shares in G Ltd. only during 15 days of the previous
year.

96
 10. Aggregation of Income, Set-
off and Carry Forward of Losses
1. Mr. A (aged 35 years) submits the following particulars pertaining to the
A.Y. 2023-24:

Particulars ₹
Income from salary (computed) 4,00,000
Loss from self-occupied property (-)70,000
Loss from let-out property (-) 1,50,000
Business loss (-)1,00,000
Bank interest (FD) received 80,000

Compute the total income of Mr. A for the A.Y. 2023-24, assuming that he
does not opt for the provisions of section 115BAC.

2. Mr. B, a resident individual, furnishes the following particulars for the

P.Y.2022-23:

Particulars ₹
Income from salary (computed) 45,000
Income from house property (24,000)
Income from non-speculative business (22,000)
Income from speculative business (4,000)
Short-term capital losses (25,000)
Long-term capital gains taxable u/s 112 19,000

What is the total income chargeable to tax for the A.Y. 2023-24, assuming
that he does not opt for the provisions of section 115BAC?

3. During the P.Y. 2022-23, Mr. C has the following income and the brought
forward losses:

Particulars ₹
Short term capital gains on sale of shares 1,50,000
Long term capital loss of A.Y.2021-22 (96,000)
Short term capital loss of A.Y.2022-23 (37,000)
Long term capital gain u/s 112 75,000

97
What is the capital gain taxable in the hands of Mr. C for the A.Y. 2023-
24?

4. Mr. D has the following income for the P.Y. 2022-23:

Particulars ₹
Income from the activity of owning and maintaining the race 75,000
horses
Income from textile business 85,000
Brought forward textile business loss (relating to A.Y. 2022-23) 50,000
Brought forward loss from the activity of owning and 96,000
maintaining the race horses (relating to A.Y.2020-21)

What is the total income in the hands of Mr. D for the A.Y. 2023-24?

5. Mr. E has furnished his details for the A.Y. 2023-24 as under:

Particulars ₹
Income from salaries (computed) 1,50,000
Income from speculation business 60,000
Loss from non-speculation business (40,000)
Short term capital gain 80,000
Long term capital loss of A.Y.2021-22 (30,000)
Winning from lotteries (Gross) 20,000

What is the taxable income of Mr. E for the A.Y. 2023-24?

6. Compute the gross total income of Mr. F for the A.Y. 2023-24 from the
information given below –

Particulars ₹
Income from house property (computed) 1,25,000
Income from business (before providing for depreciation) 1,35,000
Short term capital gains on sale of unlisted shares 56,000
Long term capital loss from sale of property (brought (90,000)
forward from A.Y. 2022-23)
Income from tea business 1,20,000
Dividends from Indian companies carrying on agricultural 80,000
operations (Gross)
Current year depreciation 26,000
Brought forward business loss (loss incurred six years ago) (45,000)

98
7. Mr. Sohan submits the following details of his income for the assessment
year 2023-24:

Particulars ₹
Income from salary (computed) 3,00,000
Loss from let out house property (-) 40,000
Income from sugar business 50,000
Loss from iron ore business b/f (discontinued in P.Y. (-) 1,20,000
2017-18)
Short term capital loss (-) 60,000
Long term capital gain 40,000
Dividend 5,000
Income received from lottery winning (Gross) 50,000
Winnings from card games (Gross) 6,000
Agricultural income 20,000
Short-term capital loss under section 111A (-) 10,000
Bank interest on Fixed deposit 5,000

Calculate gross total income and losses to be carried forward, assuming

that he does not opt for the provisions of section 115BAC.

8. Mr. Batra furnishes the following details for year ended 31.03.2023:

Particulars ₹
Short term capital gain 1,40,000
Loss from speculative business 60,000
Long term capital gain on sale of land 30,000
Long term capital loss on sale of unlisted shares 1,00,000
Income from business of textile (after allowing current 50,000
year depreciation)
Income from activity of owning and maintaining race 15,000
horses
Income from salary (computed) 1,00,000
Loss from house property 40,000

Following are the brought forward losses:

(i) Losses from activity of owning and maintaining race horses-

pertaining to A.Y.2020-21 ₹ 25,000.
(ii) Brought forward loss from business of textile ₹ 60,000 - Loss
pertains to A.Y. 2015-16.

99
Compute gross total income of Mr. Batra for the Assessment Year 2023-24,
assuming that he does not opt for the provisions of section 115BAC. Also
determine the losses eligible for carry forward to the Assessment Year
2024-25.

9. Mr. A furnishes you the following information for the year ended
31.03.2023:

Particulars (₹ )
(i) Income from plying of vehicles (computed as per 3,20,000
books) (He owned 5 light goods vehicle throughout the
year)
(ii) Income from retail trade of garments 7,50,000
(Computed as per books)
(Sales turnover ₹ 1,35,70,000)
Mr. A had declared income on presumptive basis under
section 44AD for the first time in A.Y. 2022-23.
Assume 10% of the turnover during the previous year
2022-23 was received in cash and balance through A/c
payee cheque and all the payments in respect of
expenditure were also made through A/c payee
cheque or debit card.

(iii) He has brought forward depreciation relating to A.Y. 1,00,000

2021-22

Compute taxable income of Mr. A and his tax liability for the assessment
year 2023-24 with reasons for your computation, assuming that he does
not opt for section 115BAC.

10. Mr. Aditya furnishes the following details for the year ended 31-03-
2023:

Particulars Amount
(₹)
Loss from speculative business A 25,000
Income from speculative business B 5,000
Loss from specified business covered under section 35AD 20,000
Income from salary (computed) 3,00,000
Loss from let out house property 2,50,000
Income from trading business 45,000
Long-term capital gain from sale of urban land 2,00,000
Long-term capital loss on sale of shares (STT not paid) 75,000

100
Long-term capital loss on sale of listed shares in recognized 1,02,000
stock exchange (STT paid at the time of acquisition and sale
of shares)

Following are the brought forward losses:

(1) Losses from owning and maintaining of race horses pertaining to A.Y.
2021-22 ₹ 2,000.
(2) Brought forward loss from trading business ₹ 5,000 relating to A.Y.
2018-19.

Compute the total income of Mr. Aditya and show the items eligible for carry
forward, assuming that he does not opt for the provisions of section
115BAC.

11. Mr. Garg, a resident individual, furnishes the following particulars of his
income and other details for the previous year 2022-23.

Particulars ₹
(1) Income from Salary (computed) 15,000
(2) Income from business 66,000
(3) Long term capital gain on sale of land 10,800
(4) Loss on maintenance of race horses 15,000
(5) Loss from gambling 9,100

The other details of unabsorbed depreciation and brought forward losses

pertaining to Assessment Year 2022-23 are as follows:

Particulars ₹
(1) Unabsorbed depreciation 11,000
(2) Loss from Speculative business 22,000
(3) Short term capital loss 9,800

Compute the Gross total income of Mr. Garg for the Assessment Year 2023-
24 and the amount of loss, if any that can be carried forward or not.

12. The following are the details relating to Mr. Srivatsan, a resident Indian,
aged 57, relating to the year ended 31.3.2023:

Particulars ₹
Income from salaries (computed) 2,20,000
Loss from house property 1,90,000
Loss from cloth business 2,40,000

101
 Income from speculation business 30,000
Loss from specified business covered by section 35AD 20,000
Long-term capital gains from sale of urban land 2,50,000
Loss from card games 32,000
Income from betting (Gross) 45,000
Life Insurance Premium paid (10% of the capital sum 45,000
assured)

Compute the total income and show the items eligible for carry forward,
assuming that he does not opt for the provisions of section 115BAC.

13. Mr. Rajat submits the following information for the financial year ending
31st March, 2023. He desires that you should:

(a) Compute the total income and

(b) Ascertain the amount of losses that can be carried forward.

Particulars ₹
(i) He has two houses:
(a) House No. I – Income after all statutory deductions 72,000
(b) House No. II – Current year loss (30,000)
(ii) He has three proprietary businesses:
(a) Textile Business:
(i) Discontinued from 31st October, 2022 – Current 40,000
year loss
(ii) Brought forward business loss of A.Y.2018-19 95,000
(b) Chemical Business:
(i) Discontinued from 1st March, 2020 – hence no Nil
profit/loss
(ii) Bad debts allowed in earlier years recovered 35,000
during this year
(iii) Brought forward business loss of A.Y. 2019-20 50,000
(c) Leather Business: Profit for the current year 1,00,000
(d) Share of profit in a firm in which he is partner since 16,550
2008
(iii) (a) Short-term capital gain 60,000
(b) Long-term capital loss 35,000
(iv) Contribution to LIC towards premium 10,000

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14. Ms. Geeta, a resident individual, provides the following details of her
income / losses for the year ended 31.3.2023:

(i) Salary received as a partner from a partnership firm ₹ 7,50,000. The

same was allowed to the firm.
(ii) Loss on sale of shares listed in BSE ₹ 3,00,000. Shares were held for
15 months and STT paid on sale and acquisition.
(iii) Long-term capital gain on sale of land ₹ 5,00,000.
(iv) ₹ 51,000 received in cash from friends in party.
(v) ₹ 55,000, received towards dividend on listed equity shares of
domestic companies.
(vi) Brought forward business loss of assessment year 2021-22 ₹
12,50,000.

Compute gross total income of Ms. Geeta for the Assessment Year 2023-24
and ascertain the amount of loss that can be carried forward.

15. Mr. P, a resident individual, furnishes the following particulars of his

income and other details for the previous year 2022-23:

Sl. No. Particulars ₹

(i) Income from salary (computed) 18,000
(ii) Net annual value of house property 70,000
(iii) Income from business 80,000
(iv) Income from speculative business 12,000
(v) Long term capital gain on sale of land 15,800
(vi) Loss on maintenance of race horse 9,000
(vii) Loss on gambling 8,000

Depreciation allowable under the Income-tax Act, 1961, comes to ₹ 8,000,

for which no treatment is given above.

The other details of unabsorbed depreciation and brought forward

losses (pertaining to A.Y. 2022-23) are:

Sl. No. Particulars ₹

(i) Unabsorbed depreciation 9,000
(ii) Loss from speculative business 16,000
(iii) Short term capital loss 7,800

Compute the gross total income of Mr. P for the Assessment year 2023-24,
and the amount of loss that can or cannot be carried forward.

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16. Mr. Kabir, a resident individual aged 45 years, furnishes the following
particulars of his income and other details for the previous year 2022-23:

Particulars Amount (₹)

Income from tea business 5,00,000
Losses from sugar business 4,00,000
Dividend from Indian company carrying on 1,00,000
agricultural operations (gross)
Agricultural income 55,000
Salary received as a partner from a partnership firm. 4,50,000
The same was allowed to the firm.
Net annual value of house property 4,20,000
Loss from gambling 1,00,000
Short term capital gains on sale of land 75,000
Loss on sale of shares listed in BSE. Shares were held 3,00,000
for 15 months and STT paid on sale and acquisition
Life insurance premium paid (10% of the capital sum 80,000
assured)
Bank interest on Fixed deposit (gross) 55,000
Interest on saving bank account 13,000

The other details of brought forward losses pertaining to A.Y. 2022-23 are
as follow:

Particulars Amount (₹)

Brought forward business loss from sugar business 1,00,000
Brought forward short term capital loss 45,000
Brought forward loss from house property 3,00,000
Brought forward loss from maintenance of race horses 60,000

Compute the total income of Mr. Kabir for the Assessment Year 2023-24
and the amount of loss, if any, that can be carried forward, if he does not
opt for section 115BAC.

17. Compute gross total income of Mr. X in following cases -

Source of income Case I Case II

Income from house property (A) 30,000 40,000
Income from house property (B) (10,000) (25,000)
Speculation income 80,000 (70,000)
Business income (30,000) 50,000
Income from activity of owning and maintaining (50,000) 10,000
race-horses business (A)

104
Income from activity of owning and maintaining 20,000 (6,000)
race-horses business (B)
Income from agricultural business (25,000) 10,000
Short term capital gain (transaction A) 30,000 (20,000)
Short term capital gain (transaction B) (10,000) 5,000
Long term capital gain (transaction A) (30,000) 45,000
Long term capital gain (transaction B) 10,000 (2,000)
Income from lottery 40,000 -
Income from horse races 10,000 25,000
Income on card games (5,000) (3,000)
Interest on securities 20,000 10,000

18. Compute gross total income of Mr. Jacky from following data -

Source of income Amount

Income under the head ‘Salaries’ 2,60,000
Income from house property (A) 60,000
Income from house property (B) (2,80,000)
Speculation income 20,000
Business income (1,30,000)
Income from activity of owning and maintaining race- (1,50,000)
horses
Income from agricultural business (1,25,000)
Short term capital gain 30,000
Long term capital gain (1,00,000)
Income from lottery 10,000
Income from horse races 1,70,000
Interest on securities after adjusting interest (70,000)
expenses and other expenses

19. Smart has computed his tax liability as under –

Particulars Details Amount

Income from business A 4,50,000
Long term capital gain 20,000
Less: Income from business B u/s 71 (10,000) 10,000
Income from other sources 50,000
Gross Total Income 5,10,000
Less: Deduction u/s 80C to 80U -
Total Income 5,10,000
Tax liability 15,080

Comment on the above computation.

105
20. Mr. Bhola has furnished you the following data –
Income from house property (₹ 1,30,000)
Salaries (Net) ₹ 80,000
Income from other sources (₹ 90,000)
Income from lotteries ₹ 3,50,000

Mr. Bhola is seeking your advice relating to set off and carry-forward.

21. Mr. Tej Singh has the following income details – ₹

Income from house property (30,000)
Salaries 4,80,000
Income from other sources 30,000

He has computed his Gross total income for the A.Y.2023-24 as under

Particulars Amount
Income from house property (10,000)
Salaries 4,80,000
Income from other sources 30,000
Gross total income 5,00,000
Carry forward of loss under the head income form 20,000
house property

– Comment

22. Compute Gross total income of Mrs. Shikha from following details for
the A.Y. 2023-24

Particulars Amount
Income from house property A 60,000
Income from house property B (1,50,000)
Income from house property C 1,00,000
Income from other sources 1,00,000
Losses u/s 22 for the A.Y. 2022-23 (30,000)
Losses u/s 22 for the A.Y. 1998-99 (15,000)
Losses u/s 56 for the A.Y. 2022-23 (45,000)

106
23. Mr. Arun is running several businesses since last so many years. From
the following details, compute his taxable business income:

Current year Brought Year to Whether Year of

Nature of income forward (b/f) which b/f business disc-
business loss loss continued ontinuation
relates of business
Readymade 1,00,000 2,30,000 2016-17 Yes NA
garments
1,70,000 2002-03
Retail of 80,000 50,000 2017-18 Yes NA
cosmetics Unabsorbed
depreciation
Whole sale of Nil 80,000 2019-20 No 2020-21
soft-toys
Wholesale of 30,000 being 70,000 2005-06 No 2005-06
fruits bad debt
recovery
Optical 30,000 70,000 2004-05 No 2005-06
Bad debt
recovery
90,000 - - Yes NA
Investment 15,000
business Dividend - - Yes NA
from foreign
company
Medicines 40,000 - - No 1997-98
Bad debt
recovery
Manufacturing - 40,000 2016-17 No 2017-18
of school no
uniform return
filed

24. Compute total income of X Ltd. under following cases –

Business A: Business of Ice cream
Business B: Business consists of purchase and sale of shares of other
companies (being treated as speculative business as per explanation of sec.
73)

Case 1 Case 2 Case 3 Case 4

Particulars A B A B A B A B
Income of P.Y. 80,000 20,000 75,000 85,000 (56,000) 1,50,000 3,00,000 (50,000)
2022-23
B/f loss of P.Y. 70,000 65,000 85,000 50,000 90,000 65,000 30,000 90,000
2021-22
Unabsorbed - - - - - - - 20,000
depreciation

107
25. MNP Ltd. commenced operations of the business of a new four-star
hotel in Chennai on 1-4-2022. The company incurred capital expenditure of
₹ 40 lakh during the period January, 2022 to March, 2022 exclusively for
the above business, and capitalized the same in its books of account as on
1st April, 2022. Further, during the Previous Year 2022-23, it incurred
capital expenditure of ₹ 2.5 crore (out of which ₹ 1 crore was for acquisition
of land) exclusively for the above business. Compute the income under the
heading “profits and gains of business or profession” for the assessment
year 2023-24, assuming that MNP Ltd. has fulfilled all the conditions
specified for claim of deduction u/s 35AD and has not claimed any deduction
under Chapter VI-A under the heading “C.-Deductions in respect of certain
incomes”. The profits from the business of running this hotel (before
claiming deduction u/s 35AD) for the A.Y. 2023-24 is ₹ 80 lakhs. Assume
that the company also has another existing business of running a four-star
hotel in Kanpur, which commenced operations 5 years back, the profits from
which was ₹ 130 lakhs for assessment year 2023-24.

26. Compute taxable income under following cases for the A.Y. 2023-24:

Particulars Case 1 Case 2 Case 3 Case 4

STCG LTCG STCG LTCG STCG LTCG STCG LTCG
Income of the 1,00,000 (30,000) (30,000) 1,00,000 1,00,000 (20,000) (30,000) 1,00,000
P.Y. 2022-23
B/f loss of P.Y. 50,000 - - 50,000 60,000 50,000 10,000 20,000
2021-22

27. P, Q and R are partners in a firm sharing profits and losses in the ratio
of 1:1:2, provide the following information. Find firm’s net income
assuming that salary and interest are not paid to partners:

i. Net income of the firm in assessment year 2022-23 is (-) ₹ 1,20,000,

out of which unadjusted depreciation is ₹ 40,000.
ii. On 31.05.2022, R retires from the firm and the other partners carry on
the same business.
iii. The firm’s income for the Assessment Year 2023-24 before adjusting
the aforesaid loss and depreciation is ₹ 1,20,000.

108
 11. Deductions under Chapter
VI-A {S.80C – 80U}
1. Examine the following statements with regard to the provisions of the
Income-tax Act, 1961:
(a) For grant of deduction under section 80JJAA, filing of audit report in
prescribed form is must for a corporate assessee; filing of return
within the due date laid down in section 139(1) is not required.
(b) Filing of belated return under section 139(4) of the Income-tax Act,
1961 will debar an assessee from claiming deduction under section
80QQB

2. Compute the eligible deduction under section 80C for A.Y.2023-24 in

respect of life insurance premium paid by Mr. Ganesh during the P.Y.2022-
23, the details of which are given hereunder –

Date of Person insured Actual capital Insurance

issue of sum assured premium paid
policy (₹) during 2022-
23(₹)
(i) 30/3/2012 Self 6,00,000 48,000
(ii) 1/5/2017 Spouse 1,50,000 20,000
(iii) 1/6/2020 Handicapped son 4,00,000 80,000
(section 80U disability)

3. An individual assessee, resident in India, has made the following deposit/

payment during the previous year 2022-23:

Particulars ₹
Contribution to the public provident fund 1,50,000
Insurance premium paid on the life of the spouse 25,000
(Policy taken on 1.4.2017) (Assured value ₹ 2,00,000)

What is the deduction allowable under section 80C for A.Y. 2023-24?

4. The basic salary of Mr. A is ₹ 1,00,000 p.m. He is entitled to dearness

allowance, which is 40% of basic salary. 50% of dearness allowance forms
part of pay for retirement benefits. Both Mr. A and his employer, ABC Ltd.,
contribute 15% of basic salary to the pension scheme referred to in section
80CCD. Explain the tax treatment in respect of such contribution in the
hands of Mr. A.

109
5. The gross total income of Mr. X for the A.Y.2023-24 is ₹ 8,00,000. He
has made the following investments/payments during the F.Y. 2022-23 –

Particulars ₹
(1) Contribution to PPF 1,10,000
(2) Payment of tuition fees to Apeejay School, New 45,000
Delhi, for education of his son studying in Class XI
(3) Repayment of housing loan taken from Standard 25,000
Chartered Bank
(4) Contribution to approved pension fund of LIC 1,05,000

Compute the eligible deduction under Chapter VI-A for the A.Y. 2023-24.

6. Mr. A, aged 40 years, paid medical insurance premium of ₹ 20,000 during

the P.Y. 2022-23 to insure his health as well as the health of his spouse. He
also paid medical insurance premium of ₹ 47,000 during the year to insure
the health of his father, aged 63 years, who is not dependent on him. He
contributed ₹ 3,600 to Central Government Health Scheme during the year.
He has incurred ₹ 3,000 in cash on preventive health check-up of himself
and his spouse and ₹ 4,000 by cheque on preventive health check-up of his
father. Compute the deduction allowable under section 80D for the A.Y.
2023-24.

7. Mr. Y, aged 40 years, paid medical insurance premium of ₹ 22,000 during

the P.Y. 2022-23 to insure his health as well as the health of his spouse and
dependent children. He also paid medical insurance premium of ₹ 33,000
during the year to insure the health of his mother, aged 67 years, who is
not dependent on him. He incurred medical expenditure of ₹ 20,000 on his
father, aged 71 years, who is not covered under mediclaim policy. His father
is also not dependent upon him. He contributed ₹ 6,000 to Central
Government Health Scheme during the year. Compute the deduction
allowable under section 80D for the A.Y. 2023-24.

8. Mr. X is a resident individual. He deposits a sum of ₹ 50,000 with Life

Insurance Corporation every year for the maintenance of his disabled
grandfather who is wholly dependent upon him. The disability is one which
comes under the Persons with Disabilities (Equal Opportunities, Protection
of Rights and Full Participation) Act, 1995. A copy of the certificate from
the medical authority is submitted. Compute the amount of deduction
available under section 80DD for the A.Y. 2023-24.

9. What will be the deduction if Mr. X had made this deposit for his
dependant father?

110
10. Mr. B has taken three education loans on April 1, 2022, the details of
which are given below:

Loan 1 Loan 2 Loan 3

For whose education loan was B Son of B Daughter of B
taken
Purpose of loan MBA B. Sc. B.A.
Amount of loan (₹) 5,00,000 2,00,000 4,00,000
Annual repayment of loan (₹) 1,00,000 40,000 80,000
Annual repayment of interest (₹) 20,000 10,000 18,000

Compute the amount deductible under section 80E for the A.Y.2023-24.

11. Mr. A purchased a residential house property for self-occupation at a

cost of ₹ 45 lakh on 1.4.2017, in respect of which he took a housing loan
of ₹ 35 lakh from Bank of India @ 11% p.a. on the same date. The loan
was sanctioned on 28th March, 2017. Compute the eligible deduction in
respect of interest on housing loan for A.Y. 2023-24 under the provisions of
the Income-tax Act, 1961, assuming that the entire loan was outstanding
as on 31.3.2023 and he does not own any other house property.

12. The following are the particulars relating to Mr. A, Mr. B, Mr. C and Mr.
D, salaried individuals, for A.Y. 2023-24 –

Particulars Mr. A Mr. B Mr. C Mr. D

Amount of loan ₹ 43 lakhs ₹ 45 lakhs ₹ 20 lakhs ₹ 15 lakhs
taken
Loan taken from HFC Deposit Deposit Public sector
taking NBFC taking NBFC bank
Date of sanction of 1.4.2021 1.4.2020 1.4.2020 30.3.2019
loan
Date of 1.5.2021 1.5.2020 1.5.2020 1.5.2019
disbursement of
loan
Purpose of loan Acquisition of Acquisition of Purchase of Purchase of
residential residential electric electric
house house vehicle for vehicle for
property for property for personal use personal use
self- self-
occupation occupation
Stamp duty value
of house property ₹ 45 lakhs ₹ 48 lakhs - -

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 Cost of electric - - ₹ 22 lakhs ₹ 18 lakhs
vehicle
Rate of interest 9% p.a. 9% p.a. 10% p.a. 10% p.a.

Compute the amount of deduction, if any, allowable under the provisions of

the Income-tax Act, 1961 for A.Y.2023-24 in the hands of Mr. A, Mr. B, Mr.
C and Mr. D. Assume that there has been no principal repayment in respect
of any of the above loans upto 31.3.2023.

13. Mr. Shiva aged 58 years, has gross total income of ₹ 7,75,000
comprising of income from salary and house property. He has made the
following payments and investments:

(i) Premium paid to insure the life of her major daughter (policy taken
on 1.4.2018) (Assured value ₹ 1,80,000) – ₹ 20,000.
(ii) Medical Insurance premium for self – ₹ 12,000; Spouse – ₹ 14,000.
(iii) Donation to a public charitable institution ₹ 50,000 by way of cheque.
(iv) LIC Pension Fund – ₹ 60,000.
(v) Donation to National Children’s Fund - ₹ 25,000 by way of cheque
(vi) Donation to Jawaharlal Nehru Memorial Fund - ₹ 25,000 by way of
cheque
(vii) Donation to approved institution for promotion of family planning - ₹
40,000 by way of cheque
(viii) Deposit in PPF – ₹ 1,00,000

Compute the total income of Mr. Shiva for A.Y. 2023-24.

14. Mr. Ganesh, a businessman, whose total income (before allowing

deduction under section 80GG) for A.Y. 2023-24 is ₹ 4,60,000, paid house
rent at ₹ 12,000 p.m. in respect of residential accommodation occupied by
him at Mumbai. Compute the deduction allowable to him under section
80GG for A.Y. 2023-24.

15. During the P.Y. 2022-23, ABC Ltd., an Indian company,

(1) contributed a sum of ₹ 2 lakh to an electoral trust; and

(2) incurred expenditure of ₹ 25,000 on advertisement in a brochure of
a political party.

Is the company eligible for deduction in respect of such contribution /

expenditure, assuming that the contribution was made by cheque? If so,
what is the quantum of deduction?

16. Mr. A has commenced the business of manufacture of computers on

1.4.2022. He employed 350 new employees during the P.Y. 2022-23, the
details of whom are as follows –

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 No. of Date of Regular/ Total monthly
employees employment Casual emoluments per
employee (₹)
(i) 75 1.4.2022 Regular 24,000
(ii) 125 1.5.2022 Regular 26,000
(iii) 50 1.8.2022 Casual 24,500
(iv) 100 1.9.2022 Regular 24,000

The regular employees participate in recognized provident fund while the

casual employees do not. Compute the deduction, if any, available to Mr. A
for A.Y. 2023- 24, if the profits and gains derived from manufacture of
computers that year is ₹ 75 lakhs and his total turnover is ₹ 10.16 crores.
What would be your answer if Mr. A has commenced the business of
manufacture of footwear on 1.4.2022?

17. Mr. Aakash received royalty of ₹ 2,88,000 from a foreign country for a
book authored by him, being a work of literary nature. The rate of royalty
is 18% of value of books. The expenditure incurred by him for earning this
royalty was ₹ 40,000. The amount remitted to India till 30th September,
2022 is ₹ 2,30,000. The remaining amount was not remitted till 31st March,
2023. Compute the amount includible in the gross total income of Mr.
Aakash and the amount of deduction which he will be eligible for under
section 80QQB.

18. Mr. A, a resident individual aged 61 years, has earned business income
(computed) of ₹ 1,35,000, lottery income of ₹ 1,20,000 (gross) during the
P.Y. 2022-23. He also has interest on Fixed Deposit of ₹ 30,000 with banks.
He invested an amount of ₹ 1,50,000 in Public Provident Fund account.
What is the total income of Mr. A for the A.Y. 2023-24, assuming that he
does not opt for section 115BAC?

19. Mr. Gurnam, aged 42 years, has salary income (computed) of ₹

5,50,000 for the previous year ended 31.03.2023. He has earned interest
of ₹ 14,500 on the saving bank account with State Bank of India during the
year. Compute the total income of Mr. Gurnam for the assessment year
2023-24 from the following particulars, assuming that he does not opt for
section 115BAC:

(i) Life insurance premium paid to Birla Sunlife Insurance in cash

amounting to ₹ 25,000 for insurance of life of his dependent parents.
The insurance policy was taken on 15.07.2019 and the sum assured
on life of his dependent parents is ₹ 2,00,000.
(ii) Life insurance premium of ₹ 25,500 paid for the insurance of life of his
major son who is not dependent on him. The sum assured on life of
his son is ₹ 3,50,000 and the life insurance policy was taken on
30.3.2012.

113
(iii) Life insurance premium paid by cheque of ₹ 22,500 for insurance of
his life. The insurance policy was taken on 08.09.2018 and the sum
assured is ₹ 2,00,000.
(iv) Premium of ₹ 26,000 paid by cheque for health insurance of self and
his wife.
(v) ₹ 1,500 paid in cash for his health check-up and ₹ 4,500 paid in cheque
for preventive health check-up for his parents, who are senior citizens.
(vi) Paid interest of ₹ 6,500 on loan taken from bank for MBA course
pursued by his daughter.
(vii) A sum of ₹ 5,000 donated in cash to an institution approved for
purpose of section 80G for promoting family planning.

20. Examine the following statements with regard to the provisions of the
Income-tax Act, 1961:

(i) During the financial year 2022-23, Mr. Amit paid interest on loan
availed by him for his son's higher education. His son is already
employed in a firm. Mr. Amit will get the deduction under section 80E.
(ii) Subscription to notified bonds of NABARD would qualify for deduction
under section 80C.
(iii) In order to be eligible to claim deduction under section 80C,
investment/ contribution/ subscription etc. in eligible or approved
modes, should be made from out of income chargeable to tax.
(iv) Where an individual repays a sum of ₹ 30,000 towards principal and ₹
14,000 as interest in respect of loan taken from a bank for pursuing
eligible higher studies, the deduction allowable under section 80E is ₹
44,000.
(v) Mrs. Sheela, widow of Mr. Satish (who was an employee of M/s. XYZ
Ltd.), received ₹ 7 lakhs on 1.5.2022, being amount standing to the
credit of Mr. Satish in his NPS Account, in respect of which deduction
has been allowed under section 80CCD to Mr. Satish in the earlier
previous years. Such amount received by her as a nominee on closure
of the account is deemed to be her income for A.Y.2023-24.
(vi) Mr. Vishal, a Central Government employee, contributed ₹ 50,000
towards Tier II account of NPS. The same would be eligible for
deduction under section 80CCD.

21. Examine the allowability of the following:

(i) Rajan has to pay to a hospital for treatment ₹ 62,000 and spent
nothing for life insurance or for maintenance of dependent disabled.
(ii) Raja, a resident Indian, has spent nothing for treatment in the
previous year and deposited ₹ 25,000 with LIC for maintenance of
dependant disabled.
(iii) Rajan has incurred ₹ 20,000 for treatment and ₹ 25,000 was
deposited with LIC for maintenance of dependant disabled.

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 (iv) Payment of ₹ 50,000 by cheque to an electoral trust by an Indian
company.

22. For the Assessment year 2023-24, the Gross total income of Mr.
Chaturvedi, a resident in India, was ₹ 8,18,240 which includes long-term
capital gain of ₹ 2,45,000 taxable under section 112 and Short-term capital
gain of ₹ 58,000. The Gross total income also includes interest income of ₹
12,000 from savings bank deposits with banks and ₹ 40,000 interest
on fixed deposits with banks. Mr. Chaturvedi has invested in PPF ₹
1,20,000 and also paid a medical insurance premium ₹ 51,000. Mr.
Chaturvedi also contributed ₹ 50,000 to Public Charitable Trust eligible for
deduction under section 80G by way of an account payee cheque. Compute
the total income and tax thereon of Mr. Chaturvedi, who is 70 years old as
on 31.3.2023. Ignore the provisions of section 115BAC.

23. Mr. Rajmohan whose gross total income was ₹ 6,40,000 for the financial
year 2022-23, furnishes you the following information:

(i) Stamp duty paid on acquisition of residential house (self-occupied) -

₹ 50,000.
(ii) Five-year post-office time deposit -₹ 20,000.
(iii) Donation to a recognized charitable trust ₹ 25,000 which is eligible
for deduction under section 80G at the applicable rate.
(iv) Interest on loan taken for higher education of spouse paid during the
year - ₹ 10,000.

Compute the total income of Mr. Rajmohan for the Assessment year 2023-
24, assuming that he has not opted for section 115BAC.

24. Compute the eligible deduction under Chapter VI-A for the A.Y. 2023-
24 of Ms. Roma, aged 40 years, who has a gross total income of ₹
15,00,000 for the A.Y. 2023-24 and provides the following information
about her investments/payments during the P.Y. 2022-23:

Sl. Particulars Amount

No. (₹)
1. Life Insurance premium paid (Policy taken on 31-03- 35,000
2012 and sum assured is ₹ 4,40,000)
2. Public Provident Fund contribution 1,50,000
3. Repayment of housing loan to Bhartiya Mahila Bank, 20,000
Bangalore
4. Payment to L.I.C. Pension Fund 1,40,000
5. Mediclaim Policy taken for self, wife and dependent 30,000
children, premium paid by cheque
6. Medical Insurance premium paid by cheque for 52,000
parents (Senior Citizens)

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25. Mr. Raj Kumar (aged 65 years) is retired from a Public Sector
Undertaking. He resides in Delhi. He provides you the following particulars
of his income and certain payments/investments for the previous year
2022-23:
- Pension income of ₹ 8,50,000
- Interest from fixed deposits with SBI of ₹ 3,35,000 (Gross)
- Life insurance premium paid by cheque ₹ 27,500 for insurance of his
life. The insurance policy was taken on 10-07-2017 and the sum
assured is ₹ 2,40,000.
- Premium of ₹ 37,500 paid by cheque for health insurance of self and
his wife, who is also a senior citizen.
- ₹ 3,000 paid in cash for his health check-up and ₹ 4,500 paid through
cheque for preventive health check-up of his father aged 90 years.
- Paid interest of ₹ 8,500 on loan taken from bank for MBA course
pursued by his son.
- A sum of ₹ 1,20,000 donated by cheque to an institution approved for
the purpose of section 80G for promoting family planning.
- ₹ 10,000 contributed towards PM CARES Fund by cheque.

Compute the total income of Mr. Raj Kumar for the assessment year 2023-
24, assuming he does not opt for section 115BAC.

26. Calculate the amount of deduction u/s 80C from following data
₹ in ‘000

Particulars A B C D E F G
Payment of LIC premium 5 8 6 8 4 - 10
LIC policy amount 80 70 50 40 50 - 40
NSC purchased 20 15 18 17 35 85 20
Repayment of housing loan 20 25 10 - 12 - 80
Contribution to Unit linked 10 5 - - 3 2 3
insurance plan
School fee paid for one child 10 15 6 18 3 5 -
Amount deposited in PPF 5 40 10 6 7 9 -
Notified units of Mutual fund 50 80 60 10 40 100 Nil
Gross Total Income 370 180 320 190 160 540 75
Total income consists of income under the head “Profit and gains of business
or profession” only.

27. X completed his studies on 1-04-2022 and was immediately employed

by X Ltd. on the following terms:
Basic Salary ₹ 20,000 p.m.
DA ₹ 5,000 p.m. (forming a part of retirement benefit)
Bonus ₹ 50,000

During the year, his employer contributed ₹ 33,000 to the pension scheme
being notified u/s 80CCD of the Income Tax Act, 1961. X also contributed

116
similar amount. His income from house property is ₹ 50,000. During the
year he contributed ₹ 15,000 to pension plan of LIC, to PPF ₹ 1,00,000 and
paid LIC premium of ₹ 16,000 (Policy value ₹ 1,20,000). Compute his total
income.

28. X, 40 years old, paid following sums by cheque -

Person Insured Amount

Mediclaim Insurance premium for X 18,000
Mediclaim Insurance premium for Mrs. X (not dependant on X) 5,000
Contribution to the Central Government Health Scheme for 3,000
Dependant Daughter
Mediclaim Insurance premium for Son (not dependant on X) 3,000
Contribution to the Central Government Health Scheme for 1,000
Brother (dependant on X)
Mediclaim Insurance premium for Mother-in law (dependant on 900
X age 70 years)
Mediclaim Insurance premium for Mother (dependant on X age 26,500
59 years)
Mediclaim Insurance premium for Grand parents (dependant 1,600
on X)
Mediclaim Insurance premium for Father (not dependant on X 32,000
age 61 years)
Contribution to the Central Government Health Scheme for 2,000
Father
Total 68,000

Compute deduction available to Mr. X u/s 80D.

29. Mr. Ram (38 years) has incurred following expenses:

Particulars ₹
Mediclaim Insurance premium paid for himself 9,000
Mediclaim Insurance premium paid for spouse 8,000
Mediclaim Insurance premium paid for dependent children 6,000
Mediclaim Insurance premium paid for father (62 years) 18,000
Preventive health-check up expenditure for father 6,000
Preventive health-check up expenditure for himself (paid in 4,000
cash)

Compute deduction available to Mr. Ram u/s 80D.

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30. Mr. Shyam (40 years) has incurred following expenses:

Particulars ₹
Mediclaim Insurance premium paid for himself 12,000
Mediclaim Insurance premium paid for spouse 11,000
Mediclaim Insurance premium paid for dependent children 6,000
Mediclaim Insurance premium paid for mother (76 years) 18,000
Preventive health-check up expenditure for mother 8,000
Medical expenditure incurred for father (78 years) 39,000

Compute deduction available to Mr. Shyam u/s 80D.

31. Mr. Rahim (55 years) has incurred following expenses:

Particulars ₹
Mediclaim Insurance premium paid for himself 10,000
Mediclaim Insurance premium paid for spouse 10,000
Mediclaim Insurance premium paid for dependent children 5,000
Mediclaim Insurance premium paid for mother (76 years) 9,000
Mediclaim Insurance premium paid for father (82 years) 39,000
Preventive health-check up expenditure for father 6,000
Medical expenditure incurred for father 14,000

Compute deduction u/s 80D.

32. Compute total income of Sri Bhandari from following information:

Taxable salary (Net) ₹ 75,000
Income from other sources ₹ 20,000
Agricultural income ₹ 4,000
He deposited in LIC annuity plan ₹ 18,000
He paid medical insurance premium by cheque for his dependant blind
mother (certified as severe disable person), aged 68 years, ₹ 20,000.

33. Find the amount of deduction u/s 80DDB for the following cases:

Name of the P Q R S T
Assessee
Residential status Ordinarily Not Non Resident Resident
of the assessee resident ordinarilyResident but not
resident Indian
Citizen
Expenditure ₹ 6,000 ₹ 80,000 ₹ ₹ 72,000 ₹ 80,000
incurred for 1,00,000
medical treatment
(specified disease)
of dependant
brother

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Age of Brother 28 63 68 88 52
Residential status Resident Non Resident Resident Resident
of dependant resident
Medical Insurance - - - - ₹ 8,000
claim received.

34. Compute total income for the A.Y. 2023-24 of Miss Dipika, a resident
individual, from the following details:

Particulars Amount
Profits and gains of business or profession 80,000
Income from Other Sources 10,000
Long-term Capital Gains 5,00,000
Payment of medical insurance premium on own life 5,000
Donation to National Foundation for communal harmony 4,000
Donation to the fund set up by the Gujarat Govt. for 5,000
providing Relief to victims of earthquake in Gujarat
Donation to Indira Gandhi Memorial Trust 1,000
Donation to Prime Minister’s Drought Relief Fund 5,000
Donation to Approved Charitable Institution 12,000
Donation to Central Government for promotion of family 3,000
planning
Donation to a poor boy for higher education 10,000
Donation of cloth to an approved institution worth 12,000
Donation to charitable institution for construction of home for 8,000
a particular community

35. Compute total income of Sri Bajaj of Delhi from the following data:

Particulars Amount
Profits & gains of business or profession 80,000
Income from house property (let-out and situated at Kolkata) 40,000
Income from other sources 10,000
Rent paid for office 8,000
Rent paid for residential house 40,000

36. Mr. X, is suffering from low-vision (certified as severe disability). He

has following incomes details -

Net Salary ₹ 45,000

Short term capital gain ₹ 45,000
Long term capital gain ₹ 1,50,000
Mrs. X, suffering from leprosy (certified as 50% disable), is fully dependant
on Mr. X. Compute his total income.

119
37. Preeti furnished following details -

Particulars Amount
Income from Business
Business A (Readymade garments) 50,000
Business C (Processing bio-degradable wastes) 25,000
(started during previous year)
Long term capital gain 25,000
Short term capital gain 65,000
Saving Bank interest 2,000
Interest on deposits with IDBI 1,000
Interest paid on loan taken for deposits in IDBI 1,200
Interest on NSC (including last year interest ₹ 1,500) 4,200
Investment in NSC 500
LIC premium paid on the life of dependent blind mother 12,000
(Sum assured ₹ 1,00,000)
Investment in LIC annuity plan 8,000
Donation to National Defence Fund 12,500

Compute her total income and tax liability.

38. Vikash has the following salary structure – ₹

Basic salary 8,000 p.m.
Dearness allowance 1,000 p.m.
Entertainment allowance 500 p.m.
Children education allowance (for 3 children) 1,000 p.m.
Contribution to RPF by his employer 10,000 p.a.
Own contribution to RPF 10,000 p.a.

His employer also provides rent-free furnished accommodation at Kolkata

for which his employer paid ₹ 12,000 p.m. (₹ 2,000 for furniture and ₹
10,000 for accommodation). However, he is charged ₹ 1,000 p.m. for
accommodation and ₹ 1,000 p.m. for furniture.

He also supplied following details for computing total income –

a. Fixed Deposit interest ₹ 52,000
b. Rent received ₹ 1,50,000 from a house at Mumbai
c. Income from royalty on a book (artistic nature) @ 20% ₹ 3,20,000
d. He contributed ₹ 5,000 to approved scientific research association
e. He contributed ₹ 10,000 to a political party
f. Interest on Government securities ₹ 14,000
g. Investment in PPF ₹ 25,000
h. His date of birth is 7-9-1979.

Compute total income.

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Note
Salary for the purpose of –

Particulars Accommodation RPF

Basic salary 96,000 96,000
Dearness allowance 12,000 12,000
Entertainment allowance 6,000 -
Children Education allowance 9,600 -
Total 1,23,600 1,08,000

2.Adjusted GTI = Gross taxable income – Long term capital gain – STCG
being covered by sec. 111A – All deduction under 80’s other than sec. 80GG
– Income u/s 115A, etc.
= ₹ 5,83,140 – ₹ (35,000 + 5,000 + 10,000 + 2,40,000) = ₹ 2,93,140

39. Mr. Sai, an employee, furnishes the following particulars for previous
year ending on 31-3-2023:

a. Salary income as computed (after all deduction) for the year ₹ 5,07,000
b. During the year arrear of bonus were received (not included above)
relates to F.Y. 1997-98 ₹ 5,000
c. Assessed income of financial year 1997-98 (consists of salary only) ₹
56,000
d. On 25-3-2023, amount deposited in PPF A/c ₹ 50,000
e. Income from other sources for the P.Y. 2022-23 ₹ 50,000

You are requested to compute relief u/s 89(1) in terms of tax payable. The
rates for the A.Y. 1998-99 are:

On first ₹ 40,000 - Nil

On next ₹ 20,000 - 10%
On next ₹ 60,000 - 20%
On balance - 30%
Ignore standard deduction u/s 16(i) applicable in the P.Y. 1997-98

40. During the previous year, Shri Prajapati received from his employer ₹
2,00,000 as gratuity, out of which ₹ 1,10,000 is exempt u/s 10. His relevant
data of last few previous years are as follows:

P.Y.2021-22 P.Y.2020-21 P.Y.2019-20 P.Y.2018-19

Basic salary ₹ 3,46,000 ₹ 2,75,000 ₹ 1,70,000 ₹ 65,000
Income from ₹ 1,16,000 ₹ 1,15,000 ₹ 1,10,000 ₹ (65,000)
House property

Compute relief u/s 89.

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 12. Computation of Total
Income and Tax Payable
1. Miss Charlie, an American national, got married to Mr. Radhey of India
in USA on 2.03.2022 and came to India for the first time on 16.03.2022.
She left for USA on 19.9.2022. She returned to India again on 27.03.2023.
While in India, she had purchased a show room in Mumbai on 30.04.2022,
which was leased out to a company on a rent of ₹ 25,000 p.m. from
1.05.2022. She had taken loan from a bank for purchase of this show room
on which bank had charged interest of ₹ 97,500 upto 31.03.2023. She had
received the following cash gifts from her relatives and friends during
1.4.2022 to 31.3.2023:

- From parents of husband ₹ 51,000

- From married sister of husband ₹ 11,000
- From two very close friends of her husband
(₹ 1,51,000 and ₹ 21,000) ₹ 1,72,000

(a) Determine her residential status and compute the total income
chargeable to tax along with the amount of tax liability on such
income for the Assessment Year 2023-24.
(b) Would her residential status undergo any change, assuming that she
is a person of Indian origin and her total income from Indian sources
is ₹ 18,00,000 and she is not liable to tax in USA?

2. Dr. Niranjana, a resident individual, aged 60 years is running a clinic in

Surat. Her Income and Expenditure Account for the year ending March 31st,
2023 is as under:

Expenditure ₹ Income ₹
To Medicine consumed 35,38,400 By Consultation and 58,85,850
medical charges
To Staff salary 13,80,000 By Income-tax refund 5,450
(principal ₹ 5,000,
interest ₹ 450)
To Clinic consumables 1,10,000 By Dividend from 10,500
units of UTI (Gross)
To Rent paid 90,000 By Winning from 35,000
game show on T.V.
(net of TDS of ₹
15,000)
To Administrative 2,55,000 By Rent 27,000
expenses

122
 To Amount paid to 1,50,000
scientific research
association approved
u/s 35
To Net profit 4,40,400
59,63,800 59,63,800

(i) Rent paid includes ₹ 30,000 paid by cheque towards rent for her
residential house in Surat.
(ii) Clinic equipments are:
1.4.2022 Opening W.D.V. - ₹ 5,00,000
7.12.2022 Acquired (cost) by cheque - ₹ 2,00,000
(iii) Rent received relates to residential house property situated at Surat.
Gross Annual Value₹ 27,000. The municipal tax of ₹ 2,000, paid in
December, 2022, has been included in "administrative expenses".
(iv) She received salary of ₹ 7,500 p.m. from "Full Cure Hospital" which
has not been included in the "consultation and medical charges".
(v) Dr. Niranjana availed a loan of ₹ 5,50,000 from a bank for higher
education of her daughter. She repaid principal of ₹ 1,00,000, and
interest thereon ₹ 55,000 during the previous year 2022-23.
(vi) She paid ₹ 1,00,000 as tuition fee (not in the nature of development
fees/ donation) to the university for full time education of her
daughter.
(vii) An amount of ₹ 28,000 has also been paid by cheque on 27th March,
2023 for her medical insurance premium.

From the above, compute the total income of Dr. Smt. Niranjana for the
A.Y. 2023-24 under the regular provisions of the Income-tax Act, 1961,
assuming that she has not opted for to pay tax under section 115BAC.

3. Ms. Purvi, aged 55 years, is a Chartered Accountant in practice. She

maintains her accounts on cash basis. Her Income and Expenditure account
for the year ended March 31, 2023 reads as follows:

Expenditure (₹) Income (₹)

Salary to staff 15,50,000 Fees earned:
Stipend to articled 1,37,000 Audit 27,88,000
Assistants Taxation services
15,40,300
Incentive to articled 13,000
Consultancy 55,98,300
12,70,000
Assistants Dividend on shares 10,524
of X Ltd., an Indian
company (Gross)
Office rent 12,24,000 Income from UTI 7,600
(Gross)

123
 Printing and stationery 12,22,000 Honorarium received 15,800
from various
institutions for
valuation of answer
papers

Meeting, seminar and 31,600 Rent received from 85,600

conference residential flat let
out
Purchase of car (for 80,000
official use)

Repair, maintenance 4,000

and petrol of car
Travelling expenses 5,25,000
Municipal tax paid in 3,000
respect of house
property
Net Profit 9,28,224
57,17,824 57,17,824

Other Information:

(i) Allowable rate of depreciation on motor car is 15%.

(ii) Value of benefits received from clients during the course of profession
is ₹ 10,500.
(iii) Incentives to articled assistants represent amount paid to two articled
assistants for passing IPCC Examination at first attempt.
(iv) Repairs and maintenance of car include ₹ 2,000 for the period from
1-10- 2022 to 30-09-2023.
(v) Salary includes ₹ 30,000 to a computer specialist in cash for assisting
Ms. Purvi in one professional assignment.
(vi) The travelling expenses include expenditure incurred on foreign tour
of ₹ 32,000 which was within the RBI norms.
(vii) Medical Insurance Premium on the health of dependent brother and
major son dependent on her amounts to ₹ 5,000 and ₹ 10,000,
respectively, paid in cash.
(viii) She invested an amount of ₹ 10,000 in National Saving Certificate.
(ix) She has paid ₹ 70,000 towards advance tax during the P.Y. 2022-23.

Compute the total income and tax payable of Ms. Purvi for the assessment
year 2023-24.

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4. Mr. Y carries on his own business. An analysis of his trading and profit
& loss for the year ended 31-3-2023 revealed the following information:
(1) The net profit was ₹ 11,20,000.
(2) The following incomes were credited in the profit and loss account:
(a) Income from UTI ₹ 22,000 (Gross)
(b) Interest on debentures ₹ 17,500 (Gross)
(c) Winnings from horse races ₹ 15,000 (Gross)
(3) It was found that some stocks were omitted to be included in both
the opening and closing stocks, the value of which were:
Opening stock ₹ 8,000.
Closing stock ₹ 12,000.
(4) ₹ 1,00,000 was debited in the profit and loss account, being
contribution to a University approved and notified under section
35(1)(ii).
(5) Salary includes ₹ 20,000 paid to his brother which is unreasonable to
the extent of ₹ 2,500.
(6) Advertisement expenses include 15 gift packets of dry fruits costing
₹ 1,000 per packet presented to important customers.
(7) Total expenses on car was ₹ 78,000. The car was used both for
business and personal purposes. ¾th is for business purposes.
(8) Miscellaneous expenses included ₹ 30,000 paid to A & Co., a goods
transport operator in cash on 31-1-2023 for distribution of the
company’s product to the warehouses.
(9) Depreciation debited in the books was ₹ 55,000. Depreciation allowed
as per Income-tax Rules, 1962 was ₹ 50,000.
(10) Drawings ₹ 10,000.
(11) Investment in NSC ₹ 15,000.

Compute the total income of Mr. Y for the assessment year 2023-24,
assuming that he has not opted to pay tax under section 115BAC.

5. Balamurugan furnishes the following information for the year ended 31-
03-2023:

Particulars ₹
Income from textile business (1,35,000)
Income from house property (15,000)
Lottery winning (Gross) 5,00,000
Speculation business income 1,00,000
Income by way of salary (Computed) 60,000
Long term capital gain u/s 112 70,000

Compute his total income, tax liability and advance tax obligations. Assume
he does not opt for section 115BAC.

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6. Mr. Rajiv, aged 50 years, a resident individual and practicing Chartered
Accountant, furnishes you the receipts and payments account for the
financial year 2022-23.

Receipts and Payments Account

Receipts ₹ Payments ₹
Opening balance 12,000 Staff salary, bonus and 21,50,000
(1.4.2022) Cash on stipend to articled
hand and at Bank clerks
Fee from professional 59,38,000 Other administrative 11,48,000
services (Gross) expenses
Rent 50,000 Office rent 30,000
Motor car loan from 2,50,000 Housing loan repaid to 1,88,000
Canara Bank (@ 9% SBI (includes interest
p.a.) of ₹ 88,000)
Life insurance 24,000
premium (10% of sum
assured)
Motor car (acquired in 4,25,000
Jan. 2023 by A/c
payee cheque)
Medical insurance 18,000
premium (for self and
wife) (paid by A/c
Payee cheque)
Books bought on 20,000
1.07.2022 (annual
publications by A/c
payee cheque)
Computer acquired on 30,000
1.11.2022 by A/c
payee cheque (for
professional use)
Domestic drawings 2,72,000
Public provident fund 20,000
subscription
Motor car maintenance 10,000
Closing balance 19,15,000
(31.3.2023) Cash on
hand and at Bank
62,50,000 62,50,000

Following further information is given to you:

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 (1) He occupies 50% of the building for own residence and let out the
balance for residential use at a monthly rent of ₹ 5,000. The building
was constructed during the year 1997-98, when the housing loan was
taken.
(2) Motor car was put to use both for official and personal purpose. One-
fifth of the motor car use is for personal purpose. No car loan interest
was paid during the year.
(3) The written down value of assets as on 1-4-2022 are given below:

Furniture & Fittings ₹ 60,000

Plant & Machinery ₹ 80,000
(Air-conditioners, Photocopiers, etc.)
Computers ₹ 50,000

Note: Mr. Rajiv follows regularly the cash system of accounting.

Compute the total income of Mr. Rajiv for the assessment year 2023-24
assuming that he has not opted to pay tax under section 115BAC.

7. From the following details, compute the total income and tax liability of
Siddhant, aged 31 years, of Delhi both as per the regular provisions of the
Income-tax Act, 1961 and as per section 115BAC for the A.Y. 2023-24.
Advise Mr. Siddhant whether he would opt for section 115BAC:

Particulars ₹
Salary including dearness allowance 3,35,000
Bonus 11,000
Salary of servant provided by the employer 12,000
Rent paid by Siddhant for his accommodation 49,600
Bills paid by the employer for gas, electricity and 11,000
water provided free of cost at the above flat

Siddhant purchased a flat in a co-operative housing society in Delhi for ₹

4,75,000 in April, 2015, which was financed by a loan from Life Insurance
Corporation of India of ₹ 1,60,000@15% interest, his own savings of ₹
65,000 and a deposit from a nationalized bank for ₹ 2,50,000 to whom this
flat was given on lease for ten years. The rent payable by the bank was ₹
3,500 per month. The following particulars are relevant:

(a) Municipal taxes paid by Mr. Siddhant ₹ 4,300 (per annum)

(b) House Insurance ₹ 860
(c) He earned ₹ 2,700 in share speculation business and lost ₹ 4,200 in
cotton speculation business.

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 (d) In the year 2016-17, he had gifted ₹ 30,000 to his wife and ₹
20,000 to his son who was aged 11. The gifted amounts were
advanced to Mr. Rajesh, who was paying interest@19% per annum.
(e) Siddhant received a gift of ₹ 30,000 each from four friends.
(f) He contributed ₹ 50,000 to Public Provident Fund.

8. Ramdin, aged 33 years, working as Manager (Sales) with Frozen Foods

Ltd., provides the following information for the year ended 31.03.2023:

− Basic Salary - ₹ 15,000 p.m.

− DA (50% of it is meant for retirement benefits) - ₹ 12,000 p.m.
− Commission as a percentage of turnover of the Company - 0.5 %
− Turnover of the Company - ₹ 50 lacs
− Bonus - ₹ 50,000
− Gratuity - ₹ 30,000
− Own Contribution to R.P.F. - ₹ 30,000
− Employer’s contribution to R.P.F. - 20% of basic salary
− Interest credited in the R.P.F. account @ 15% p.a. - ₹ 15,000
− Gold Ring worth ₹ 10,000 was given by employer on his 25th wedding
anniversary.
− Music System purchased on 01.04.2022 by the company for ₹ 85,000
and was given to him for personal use.
− Two old light goods vehicles owned by him were leased to a transport
company against the fixed charges of ₹ 6,500 p.m. Books of account
are not maintained.
− Received interest of ₹ 5,860 on bank FDRs on 24.4.2022 and interest
of ₹ 6,786 (Net) from the debentures of Indian Companies on
5.5.2022.
− Made payment by cheques of ₹ 15,370 towards premium on Life
Insurance policies and ₹ 22,500 for Mediclaim Insurance policy for
self and spouse.
− Invested in NSC ₹ 30,000 and in FDR of SBI for 5 years ₹ 50,000.
− Donations of ₹ 11,000 to an institution approved u/s 80G and of ₹
5,100 to Prime Minister’s National Relief Fund were given during the
year by way of cheque.

Compute the total income and tax payable thereon for the A.Y. 2023-24.
Assume Ramdin does not opt for section 115BAC.

9. From the following particulars furnished by Mr. X for the year ended
31.3.2023, you are requested to compute his total income and tax payable
for the assessment year 2023-24, assuming that he does not opt for paying
tax under section 115BAC.

(a) Mr. X retired on 31.12.2022 at the age of 58, after putting in 26 years
and 1 month of service, from a private company at Mumbai.

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(b) He was paid a salary of ₹ 25,000 p.m. and house rent allowance of ₹
6,000 p.m. He paid rent of ₹ 6,500 p.m. during his tenure of service.
(c) On retirement, he was paid a gratuity of ₹ 3,50,000. He was covered
by the payment of Gratuity Act. Mr. X had not received any other
gratuity at any point of time earlier, other than this gratuity.
(d) He had accumulated leave of 15 days per annum during the period of
his service; this was encashed by Mr. X at the time of his retirement.
A sum of ₹ 3,15,000 was received by him in this regard. His average
salary for last 10 months may be taken as ₹ 24,500. Employer allowed
30 days leave per annum.
(e) After retirement, he ventured into textile business and incurred a loss
of ₹ 80,000 for the period upto 31.3.2023.
(f) Mr. X has deposited ₹ 1,00,000 in public provident fund.

10. Rosy and Mary are sisters, born and brought up at Mumbai. Rosy got
married in 1982 and settled at Canada since 1982. Mary got married and
settled in Mumbai. Both of them are below 60 years. The following are the
details of their income for the previous year ended 31.3.2023:

S. Particulars Rosy Mary

No. ₹ ₹
1. Pension received from State Government -- 60,000
2. Pension received from Canadian 20,000 --
Government
3. Long-term capital gain on sale of land at 1,00,000 1,00,000
Mumbai
4. Short-term capital gain on sale of shares of 20,000 2,50,000
Indian listed companies in respect of which
STT was paid
5. LIC premium paid -- 10,000
6. Premium paid to Canadian Life Insurance 40,000 --
Corporation at Canada
7. Mediclaim policy premium paid by A/c Payee -- 25,000
Cheque
8. Deposit in PPF -- 20,000
9. Rent received in respect of house property 60,000 30,000
at Mumbai

Compute the taxable income and tax liability of Mrs. Rosy and Mrs. Mary
for the Assessment Year 2023-24 and tax thereon. Ignore the provisions of
section 115BAC.

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11. Mr. X, an individual set up a unit in Special Economic Zone (SEZ) in the
financial year 2018-19 for production of washing machines. The unit fulfills
all the conditions of section 10AA of the Income-tax Act, 1961. During the
financial year 2021-22, he has also set up a warehousing facility in a district
of Tamil Nadu for storage of agricultural produce. It fulfills all the conditions
of section 35AD. Capital expenditure in respect of warehouse amounted to
₹ 75 lakhs (including cost of land ₹ 10 lakhs). The warehouse became
operational with effect from 1st April, 2022 and the expenditure of ₹ 75
lakhs was capitalized in the books on that date.

Relevant details for the financial year 2022-23 are as follows:

Particulars ₹
Profit of unit located in SEZ 40,00,000
Export sales of above unit 80,00,000
Domestic sales of above unit 20,00,000
Profit from operation of warehousing facility (before 1,05,00,000
considering deduction under Section 35AD)

Compute income-tax (including AMT under Section 115JC) liability of Mr. X

for Assessment Year 2023-24 both as per regular provisions of the Income-
tax Act and as per section 115BAC for Assessment Year 2023-24. Advise
Mr. X whether he should opt for section 115BAC.

12. Mrs. Shalini is a retired Government employee. She was born on

01.04.1943 in India. She is residing in Delhi. She stayed with her elder son
Mr. Nakul from 1st May, 2022 to 15th October, 2022, who is residing in
Australia. She stayed in India for 361 days during the 4 previous years
preceding the previous year 2022-23. During the previous year 2022-23,
pension of ₹ 7,15,461 is credited in her account with State Bank of India,
Uttam Nagar Branch, Delhi after deducting tax at source of ₹ 14,565. She
received interest of ₹ 4,352 on her saving A/c with SBI during the previous
year 2022-23. She also received interest of ₹ 67,500 on Fixed Deposits with
Canara Bank in the month of April, 2022.

She has purchased two life insurance policies for her son Mr. Yuvaan and
married daughter Mrs. Kajal, the details of which are as follows:

Person insured Policy Date of Sum Premium

purchased payment of Assured paid
on premium
Mr. Yuvaan (50 15.10.2021 23.10.2022 ₹ 9,84,655 ₹ 1,00,388
years old)
Mrs. Kajal (45 years 20.09.2021 25.09.2022 ₹ 2,00,000 ₹ 17,000
old)

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She has taken a medical insurance for herself for which she paid an amount
of ₹ 35,000 towards health insurance premium by A/c payee cheque. She
incurred ₹ 7,500 towards preventive health check-up of herself and her
husband in cash. She also incurred medical expenditure of ₹ 25,000 in cash
in the month of January 2023 for her husband. In the month of March 2023,
she incurred medical expenditure of ₹ 10,500 for herself, which is paid by
account payee cheque. She has given a wristwatch of ₹ 10,000 on her
husband’s 85th birthday. Her husband is resident in India for the P.Y. 2022-
23. Mrs. Shalini does not opt to pay tax under section 115BAC.

Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:

What would be the amount of deduction under Chapter VI-A available to

Mrs. Shalini for the A.Y. 2023-24?
(a) ₹ 2,05,466
(b) ₹ 2,08,466
(c) ₹ 2,07,388
(d) ₹ 2,18,466

What would be the Gross total income of Mrs. Shalini for the assessment
year 2023-24?
(a) ₹ 7,87,313
(b) ₹ 8,04,878
(c) ₹ 7,59,378
(d) ₹ 8,09,378

What is the amount of net tax payable/(refundable) of Mrs. Shalini for the
A.Y. 2023-24?
(a) (₹ 10,850)
(b) (₹ 1,790)
(c) (₹ 1,080)
(d) (₹ 450)

What would be the total income of Mrs. Shalini for the assessment year
2023-24, if she opts to pay tax under section 115BAC?
(a) ₹ 7,51,880
(b) ₹ 8,01,880
(c) ₹ 7,87,310
(d) ₹ 8,09,380

What is the amount of net tax payable/(refundable) of Mrs. Shalini for the
A.Y. 2023-24, if she opts to pay tax under section 115BAC?
(a) ₹ 22,760
(b) ₹ 13,200
(c) ₹ 26,200
(d) ₹ 25,030

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13. Mr. Kamal, a resident and ordinarily resident aged 58 years, is engaged
in the business of manufacturing of steel. He is subject to tax audit under
section 44AB of Income-tax Act, 1961. He has provided following
information:

Profit & Loss account for the year ended 31st March, 2023

Particulars (₹) Particulars (₹)

To Administrative 6,45,000 By Gross Profit 88,45,000
expenses
To Salaries & wages 30,00,000 By Profit on sale 2,00,000
of asset of
scientific research
To Interest on loans 11,25,000 By Winning from 47,250
lottery (Net of
TDS @ 30%)
To Depreciation 9,25,500
To Professional fees 4,05,000
To Rent, rates & taxes 4,20,000
To Travelling & 2,10,000
conveyance
To Net Profit 23,61,750

Total 90,92,250 Total 90,92,250

Explanatory information:

(i) Opening and closing stock of finished goods were undervalued by 10%.
Opening stock of ₹ 3,30,000 and Closing stock of ₹ 4,38,000 was
shown.
(ii) Salaries & wages include following items:
(a) Contributed 20% of basic salary in National Pension Scheme referred
in section 80CCD for an employee Mr. Ganesh who has withdrawn
basic salary of ₹ 4,00,000 and Dearness allowance is 40% of basic
salary. 50% of Dearness allowance forms part of the salary.
(b) Some of the employees opted for retirement under the voluntary
retirement scheme; a sum of ₹ 3,50,000 was paid to them on 1st
January, 2023.
(iii) Interest on loan includes interest paid @ 15% per annum on loan of ₹
18,00,000 which was taken from State Bank of India on 01.07.2022 for
purchase of new electric car of ₹ 20,00,000. The car is used for personal
purpose.
(iv) Depreciation allowable as per Income-tax Rules, 1962 is ₹ 5,50,000 but
during the calculation of such depreciation following addition was not
considered:

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 Motor car purchased for ₹ 3,50,000 for supply of finished goods to
dealers on 25-09-2022.
(v) An asset was purchased for ₹ 7,00,000 on 17-11-2021 for conducting
scientific research and the deduction was claimed under section 35 of
the Income-tax Act, 1961. This asset was sold on 05-10-2022 for a
consideration of ₹ 9,00,000.

Other information:

A plot of Industrial land which was used by Mr. Kamal for business purpose
for last 10 years was compulsorily acquired by Central Government on
07.10.2022. The compensation of ₹ 15,00,000 was received on
27.01.2023. Such property was purchased by him on 08.10.2007 for ₹
2,50,000. He has purchased another plot of industrial land on 15.04.2023
for ₹ 7,00,000. Government has also paid ₹ 1,05,000 as interest on such
compensation on 28.02.2023.

Cost Inflation Indices: FY 2022-23: 317, FY 2007-08: 122

Compute the total income and tax liability of Mr. Kamal for the assessment
year 2023-24 assuming that he has not opted for the provisions of section
115BAC.

14. Mr. Manek, a person of Indian origin and citizen of USA, got married to
Ms. Anjali, an Indian citizen residing in USA, on 24th January, 2022 and
came to India on 25-03-2022. He left for Country X on 10th July, 2022. He
returned to India again on 24-02-2023 with his wife to spend some time
with his parents-in law for 30 days and thereafter returned to USA. He
stayed in India for 400 days during the 4 years preceding the previous year
2022-23.

He received the following gifts from his relatives and friends of her wife
during 01-04-2022 to 31-03-2023 in India:

From wife’s parents ₹ 1,51,000

From wife’s sister ₹ 21,000
From very close friends of his wife ₹ 16,00,000

Determine his residential status and compute the total income chargeable
to tax along with the amount of tax liability on such income for the
Assessment Year 2023-24.

15. Mr. Akash owns a residential house property whose Municipal Value,
Fair Rent and Standard Rent are ₹ 1,60,000, ₹ 1,70,000 and ₹ 1,90,000,
respectively. The house has two independent units. Unit I (25% of floor
area) is utilized for the purpose of his profession and Unit II (75% of floor
area) is let out for residential purposes at a monthly rent of ₹ 8,500.

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Municipal taxes @8% of the Municipal Value were paid during the year by
Mr. Akash. He made the following payments in respect of the house
property during the previous year 2022-23:

Light and Water charges ₹ 2,000, Repairs ₹ 1,45,000, Interest on loan

taken for the repair of property ₹ 36,000. Mr. Akash has taken a loan of ₹
5,00,000 in July, 2016 for the construction of the above house property.
Construction was completed on 30th June, 2019. He paid interest on loan
@12% per annum and every month such interest was paid. No repayment
of loan has been made so far.

Income of Mr. Akash from his profession amounted to ₹ 8,00,000 during

the year (without debiting house rent and other incidental expenditure
including admissible depreciation of ₹ 8,000 on the portion of house used
for profession).

Determine the Gross total income of Mr. Akash for the A.Y. 2023-24 ignoring
the provisions of section 115BAC.

16. Mr. Suresh has a sole proprietory manufacturing unit. On 1st April,
2022, he owns Plant A and Plant B (rate of depreciation 15%). Depreciated
value of the block on 1st April, 2022 is ₹ 10,00,000. Plant B is transferred
on 15th October, 2022 for ₹ 19,00,000. Expenditure on transfer of Plant B
is ₹ 20,000. Plant C (rate of depreciation 15%) is purchased on 10th March,
2023 for ₹ 22,00,000. However, Plant C is put to use on 2nd September,
2023 Business income of Mr. Suresh before claiming any depreciation is ₹
11,00,000.

On 1st March, 2023, Mr. Suresh transfers 900 equity shares in A Ltd.
(unlisted) for ₹ 23,50,000. Mr. Suresh does not own any residential house
property. These shares were purchased on 2nd April, 2015 for ₹ 2,00,000.
To avail of the benefit of exemption under different sections, he made the
following investments on 1st May, 2023.

(i) A residential house property at Kolkata: ₹ 19,00,000

(Out of which stamp duty expenditure is ₹ 30,000).
(ii) NHAI bonds: ₹ 3,00,000.

Find out the gross total income of Mr. Suresh for the A.Y. 2023-24.
CII – F.Y. 2022-23: 331; F.Y. 2015-16:254

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17. Mr. Ram, a resident Individual aged 65 years, submits the following
details of his income for the assessment year 2023-24:

Particulars ₹
Loss from speculative business A 30,000
Income from speculative business B 1,50,000
Loss from specified business covered under section 35AD 20,000
Income from Salary (computed) 2,00,000
Loss from let out house property 1,90,000
Loss from cloth business 80,000
Long-term capital gain from sale of urban land 3,00,000
Long-term capital loss on sale of shares (STT not paid) 1,00,000
Long-term capital loss on sale of listed shares in recognized 1,50,000
stock exchange
(STT paid at the time of acquisition and sale of shares)
Income from betting (Gross) 80,000
Loss from gambling 8,000
Interest on saving bank deposits 12,000
Interest on fixed deposits with banks 40,000

Compute the total income of Mr. Ram and show the items eligible for carry
forward, assuming that he does not opt for the provisions of section
115BAC.

18. Mr. Kamal, a resident individual aged 48 years, is working at a senior

management position in a private bank since past 20 years. During the
previous year 2022-23, he received the following emoluments from the
employer:

(a) Basic Salary ₹ 3,50,000 per month.

(b) Client entertainment reimbursement of ₹ 20,000 per month out of which
he submitted bills for ₹ 2,00,000 for the relevant year.
(c) Leave travel allowance of ₹ 4,00,000 per annum. He took a trip to Goa
with his spouse and two children in December 2022, for which plane
boarding tickets of ₹ 1,00,000 and hotel bookings of ₹ 3,00,000 were
submitted to the employer.
(d) Performance bonus amounting to 20% of annual basic salary.
(e) He is eligible to take a staff housing loan upto ₹ 20,00,000 at a
concessional rate of 2.5% p.a. He availed a housing loan of ₹ 15,00,000
out of the same on 1st June 2022. No repayment of loan has been made
during the F.Y. 2022-23. The lending rate of SBI as on 1.4.2022 for
housing loan may be taken as 8% p.a.
(f) The Bank also allotted 1,500 sweat equity shares to Mr. Kamal in May
2022 at the rate of ₹ 1,300 per share. The Fair market value of the
share was ₹ 1,500 per share on the date of exercise of option by Mr.

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 Kamal. He sold all the shares for ₹ 2,100 per share on 31.03.2023 on
recognized stock exchange. Assume Securities transaction tax has been
paid.

The following transactions were made by Mr. Kamal during the previous
year 2022-23:

(a) He earned rental income of ₹ 35,000 per month from a 3 BHK residential
flat situated at Delhi. He purchased the said flat for ₹ 45 Lakhs in June,
2022 using the housing loan availed from the employer and his own
savings. It was let out from July, 2022. Municipal taxes of ₹ 12,000 for
F.Y. 2022-23 was paid by Mr. Kamal.
(b) He invested ₹ 30,00,000 in RBI Floating Rate Savings Bonds on 1st
September 2022 earning an interest of 7% p.a. Interest is credited half
yearly on 1st January and 1st July every year. (Assume receipt basis for
taxation)
(c) He also paid LIC premium of ₹ 15,000 for self, ₹ 20,000 for wife and ₹
30,000 for dependent father, aged 75 years. Medical insurance premium
paid on the health of dependent brother and major dependent son
amounted to ₹ 5,000 (paid by cheque) and ₹ 10,000 (paid in cash),
respectively.
(d) In December 2022, he earned dividend income of ₹ 5,00,000 (gross)
on shares of the bank held by him.

You are required to compute his total income and tax liability for the
assessment year 2023-24, clearly showing all workings. (Ignore section
115BAC provisions)

19. Mr. Kamal, having business of manufacturing of consumer items and

other products, gives the following Trading and Profit & Loss Account for
the year ended 31.03.2023:

Trading and Profit & Loss Account

Particulars ₹ Particulars ₹
Opening Stock 5,62,500 Sales 2,33,25,000
Purchases 1,88,62,500 Closing Stock 6,75,000
Freight & Cartage 1,89,000
Gross profit 43,86,000
2,40,00,000 2,40,00,000
Bonus to staff 71,250 Gross profit 43,86,000
Rent of premises 80,250 Income-tax refund 30,000
Advertisement 7,500 Warehousing 22,50,000
charges
Bad Debts 1,12,500
Interest on loans 2,51,250

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 Depreciation 1,07,250
Goods and Services 1,62,525
tax demand paid
Miscellaneous 7,88,475
expenses
Net profit of the year 50,85,000
66,66,000 66,66,000

Following are the further information relating to the financial year 2022-
23:

(i) Income-tax refund includes amount of ₹ 4,570 of interest allowed

thereon.
(ii) Bonus to staff includes an amount of ₹ 7,500 relating to P.Y. 2021-22,
paid in the month of December 2022.
(iii) Advertisement expenses include an amount of ₹ 2,500 paid for
advertisement published in the souvenir issued by a political party. The
payment is made by way of an account payee cheque.
(iv) Miscellaneous expenses include:
a. amount of ₹ 15,000 paid towards penalty for non-fulfillment of
delivery conditions of a contract of sale for the reasons beyond
control,
b. amount of ₹ 1,00,000 paid to Political Party by cheque.
(v) Goods and Services Tax demand paid includes an amount of ₹ 5,300
charged as penalty for delayed filing of returns and ₹ 12,750 towards
interest for delay in deposit of tax.
(vi) Mr. Kamal had purchased a warehouse building of ₹ 20 lakhs in rural
area for the purpose of storage of agricultural produce. This was made
available for use from 15.07.2022 and the income from this activity is
credited in the Profit and Loss account under the head “Warehousing
charges”.
(vii) Depreciation under the Income-tax Act, 1961 works out at ₹ 65,000.
(viii) Interest on loans includes an amount of ₹ 80,000 paid to Mr. X, a
resident, on which tax was not deducted.

Compute the total income and tax liability of Mr. Kamal for the A.Y. 2023-
24 in a most beneficial manner.

20. Akhil, 35 years, has provided following details relating to his income
for the previous year 2022-23:
a. Income from business ₹ 15,00,000
b. Income from saving bank interest ₹ 12,000
c. Interest on PPF ₹ 36,000
d. Investment in PPF ₹ 1,50,000

You are requested to compute his tax liability and advise him whether he
should opt for alternative tax regime u/s 115BAC.

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 13. Advance Tax
1. Find out the amount of advance tax payable by Mr. A on specified dates
under the Income tax Act, 1961 for the financial year 2022-23:

Business income ₹ 4,85,000

Long term capital gain on 31-5-2022 ₹ 60,000
Winning from lotteries on 12-6-2022 ₹ 50,000
Interest on loan ₹ 10,000
Other income ₹ 5,000
Investment in PPF ₹ 10,000
Tax deducted at source:
Case 1 ₹ 38,000
Case 2 ₹ 15,000

2. Find out the amount of advance tax payable by ABC Ltd. on specified
dates for the F.Y. 2022-23:

Business income ₹ 1,75,000

Long term capital gain on 31-7-2022 ₹ 2,50,000
Bank interest ₹ 10,000
TDS on business income ₹ 20,550

3. Find out the amount of advance tax payable by A on specified dates for
the financial year 2022-23:

Business income (Tax of ₹ 4,704 is deducted at source) ₹ 5,11,000

Agricultural income ₹ 86,000

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 14. TDS AND TCS
1. Examine the TDS implications under section 194A in the cases mentioned
hereunder–
(i) On 1.10.2022, Mr. Harish made a six-month fixed deposit of ₹ 10
lakh@9% p.a. with ABC Co-operative Bank. The fixed deposit
matures on 31.3.2023.
(ii) On 1.6.2022, Mr. Ganesh made three nine months fixed deposits of
₹ 3 lakh each, carrying interest@9% p.a. with Dwarka Branch,
Janakpuri Branch and Rohini Branch of XYZ Bank, a bank which has
adopted CBS. The fixed deposits mature on 28.2.2023.
(iii) On 1.10.2022, Mr. Rajesh started a six months recurring deposit of
₹ 2,00,000 per month@8% p.a. with PQR Bank. The recurring
deposit matures on 31.3.2023.

2. ABC Ltd. makes the following payments to Mr. X, a contractor, for

contract work during the P.Y. 2022-23–
₹ 20,000 on 1.5.2022
₹ 25,000 on 1.8.2022
₹ 28,000 on 1.12.2022

On 1.3.2023, a payment of ₹ 30,000 is due to Mr. X on account of a contract

work.

Discuss whether ABC Ltd. is liable to deduct tax at source under section
194C from payments made to Mr. X.

3. Certain concessions are granted to transport operators in the context of

cash payments u/s 40A(3) and deduction of tax at source u/s 194-C.
Elucidate.

4. Examine the applicability of the provisions for tax deduction at source

under section 194DA in the following cases -
(i) Mr. X, a resident, is due to receive ₹ 4.50 lakhs on 31.3.2023,
towards maturity proceeds of LIC policy taken on 1.4.2020, for
which the sum assured is ₹ 4 lakhs and the annual premium is ₹
1,25,000.
(ii) Mr. Y, a resident, is due to receive ₹ 3.95 lakhs on 31.3.2023 on LIC
policy taken on 31.3.2012, for which the sum assured is ₹ 3.50 lakhs
and the annual premium is ₹ 26,100.
(iii) Mr. Z, a resident, is due to receive ₹ 95,000 on 1.8.2022 towards
maturity proceeds of LIC policy taken on 1.8.2016 for which the sum
assured is ₹ 90,000 and the annual premium was ₹ 10,000.

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5. Calculate the amount of tax to be deducted at source (TDS) on payment
made to Ricky Ponting, an Australian cricketer non-resident in India, by a
newspaper for contribution of articles ₹ 25,000.

6. Moon TV, a television channel, made payment of ₹ 50 lakhs to a

production house for production of programme for telecasting as per the
specifications given by the channel. The copyright of the programme is also
transferred to Moon TV. Would such payment be liable for tax deduction at
source under section 194C? Discuss.

Also, examine whether the provisions of tax deduction at source under

section 194C would be attracted if the payment was made by Moon TV for
acquisition of telecasting rights of the content already produced by the
production house.

7. Mr. X sold his house property in Bangalore as well as his rural agricultural
land for a consideration of ₹ 60 lakh and ₹ 15 lakh, respectively, to Mr. Y
on 1.8.2022. He has purchased the house property and the land in the year
2021 for ₹ 40 lakh and ₹ 10 lakh, respectively. The stamp duty value on
the date of transfer, i.e., 1.8.2022, is ₹ 85 lakh and ₹ 20 lakh for the house
property and rural agricultural land, respectively. Examine the tax
implications in the hands of Mr. X and Mr. Y and the TDS implications, if
any, in the hands of Mr. Y, assuming that both Mr. X and Mr. Y are resident
Indians.

8. Mr. X, a salaried individual, pays rent of ₹ 55,000 per month to Mr. Y

from June, 2022. Is he required to deduct tax at source? If so, when is he
required to deduct tax? Also, compute the amount of tax to be deducted at
source.

Would your answer change if Mr. X vacated the premises on 31st December,
2022? Also, what would be your answer if Mr. Y does not provide his PAN
to Mr. X?

9. XYZ Ltd. makes a payment of ₹ 28,000 to Mr. Ganesh on 2.8.2022

towards fees for professional services and another payment of ₹ 25,000 to
him on the same date towards fees for technical services. Discuss whether
TDS provisions under section 194J are attracted.

10. Examine whether TDS provisions would be attracted in the following

cases, and if so, under which section. Also specify the rate of TDS applicable
in each case. Assume that all payments are made to residents.

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 Particulars of the Nature of payment Aggregate of
payer payments made in
the F.Y.2022-23
1 Mr. Ganesh, an Contract Payment for ₹ 5 lakhs
individual carrying repair of residential
on retail business house
with turnover of ₹ Payment of commission ₹ 80,000
2.5 crores in the P.Y. to Mr. Vallish for business
2021-22 purposes

2. Mr. Rajesh, a Contract Payment for ₹ 20 lakhs in

wholesale trader reconstruction of January, 2023,
whose turnover was residential house (made ₹ 15 lakhs in Feb
₹ 95 lakhs in P.Y. during the period 2023 and ₹ 20 lakhs
2021-22. January- March, 2023) in March 2023.
3. Mr. Satish, a salaried Payment of brokerage for ₹ 51 lakhs
individual buying a residential
house in March, 2023
4. Mr. Dheeraj, a Contract payment made ₹ 48 lakhs
pensioner during October-
November 2022 for
reconstruction of
residential house

11. Mr. Sharma, a resident Indian aged 77 years, gets pension of ₹ 52,000
per month from the UP State Government. The same is credited to his
savings account in SBI, Lucknow Branch. In addition, he gets interest@8%
p.a. on fixed deposit of = ₹ 20 lakh with the said bank. Out of the deposit
of ₹ 20 lakh, ₹ 2 lakh represents five year term deposit made by him on
1.4.2022. Interest on savings bank credited to his SBI savings account for
the P.Y.2022-23 is ₹ 9,500.
(1) From the above facts, compute the total income and tax liability of
Mr. Sharma for the A.Y. 2023-24, assuming that he has not opted
for section 115BAC.
(2) What would be the amount of tax deductible at source by SBI,
assuming that the same is a specified bank? Is Mr. Sharma required
to file his return of income for A.Y.2023-24, if tax deductible at
source has been fully deducted? Examine.
(3) Is Mr. Sharma required to file his return of income for A.Y. 2023-24,
if the fixed deposit of ₹ 20 lakh was with Canara Bank instead of
SBI, other facts remaining the same?

12. Mr. Gupta, a resident Indian, is in retail business and his turnover for
F.Y. 2021-22 was ₹ 12 crores. He regularly purchases goods from another
resident, Mr. Agarwal, a wholesaler, and the aggregate payments during the
F.Y. 2022-23 was ₹ 95 lakh (₹ 20 lakh on 1.6.2022, ₹ 25 lakh on 12.8.2022,
₹ 22 lakh on 23.11.2022 and ₹ 28 lakh on 25.3.2023). Assume that the

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said amounts were credited to Mr. Agarwal’s account in the books of Mr.
Gupta on the same date. Mr. Agarwal’s turnover for F.Y. 2021-22 was ₹ 15
crores.

(1) Based on the above facts, examine the TDS/TCS implications, if any,
under the Income-tax Act, 1961.
(2) Would your answer be different if Mr. Gupta’s turnover for F.Y. 2021-
22 was ₹ 8 crores, all other facts remaining the same?
(3) Would your answer to (1) and (2) change, if PAN has not been
furnished by the buyer or seller, as required?

13. An amount of ₹ 40,000 was paid to Mr. X on 1.7.2022 towards fees for
professional services without deduction of tax at source. Subsequently,
another payment of ₹ 50,000 was due to Mr. X on 28.2.2023, from which
tax @ 10% (amounting to₹ 9,000) on the entire amount of ₹ 90,000 was
deducted. However, this tax of ₹ 9,000 was deposited only on 22.6.2023.
Compute the interest chargeable under section 201(1A).

14. Ashwin doing manufacture and wholesale trade furnishes you the
following information:

Total turnover for the financial year

Particulars ₹
2021-22 1,05,00,000
2022-23 95,00,000

Examine whether tax deduction at source provisions are attracted for the
below said expenses incurred during the financial year 2022-23:

Particulars ₹
Interest paid to UCO Bank on 15.8.2022 41,000
Contract payment to Raj (2 contracts of ₹ 12,000 each) 24,000
on 12.12.2022
Shop rent paid (one payee) on 21.1.2023 2,50,000
Commission paid to Balu on 15.3.2023 7,000

15. Compute the amount of tax deduction at source on the following

payments made by M/s S Ltd. during the financial year 2022-23 as per the
provisions of the Income-tax Act, 1961.

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 Sr. Date Nature of Payment
No.
(i) 1-10-2022 Payment of ₹ 2,00,000 to Mr. R, a transporter
who owns 8 goods carriages throughout the
previous year and furnishes a declaration to
this effect alongwith his PAN.
(ii) 1-11-2022 Payment of fee for technical services of ₹
25,000 and Royalty of ₹ 20,000 to Mr. Shyam
who is having PAN.
(iii) 30-06-2022 Payment of ₹ 25,000 to M/s X Ltd. for repair of
building.
(iv) 01-01-2023 Payment of ₹ 2,00,000 made to Mr. A for
purchase of diaries made according to
specifications of M/s S Ltd. However, no
material was supplied for such diaries to Mr. A
by M/s S Ltd or its associates.
(v) 01-01-2023 Payment of ₹ 2,30,000 made to Mr. Bharat for
compulsory acquisition of his house as per law
of the State Government.
(vi) 01-02-2023 Payment of commission of ₹ 14,000 to Mr. Y.

16. Examine the applicability of TDS provisions and TDS amount in the
following cases:

(a) Rent paid for hire of machinery by B Ltd. to Mr. Raman ₹ 2,60,000
on 27.9.2022.
(b) Fee paid on 1.12.2022 to Dr. Srivatsan by Sundar (HUF) ₹ 35,000
for surgery performed on a member of the family.
(c) ABC and Co. Ltd. paid ₹ 19,000 to one of its Directors as sitting fees
on 01-01-2023.

17. Examine the applicability of tax deduction at source provisions, the rate
and amount of tax deduction in the following cases for the financial year
2022-23:

(1) Payment of ₹ 27,000 made to Jacques Kallis, a South African

cricketer, by an Indian newspaper agency on 02-07-2022 for
contribution of articles in relation to the sport of cricket.
(2) Payment made by a company to Mr. Ram, sub-contractor, ₹ 3,00,000
with outstanding balance of ₹ 1,20,000 shown in the books as on
31-03-2023.
(3) Winning from horse race ₹ 1,50,000 paid to Mr. Shyam, an Indian
resident.
(4) ₹ 2,00,000 paid to Mr. A, a resident individual, on 22-02-2023 by
the State of Uttar Pradesh on compulsory acquisition of his urban
land.

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18. Briefly discuss the provisions relating to payment of advance tax on
income arising from capital gains and casual income.

19. Mr. Jay having total income of ₹ 8,70,000, did not pay any advance tax
during the previous year 2022-23. He wishes to pay the whole of the tax,
along with interest if any, on filing the return in the month of July, 2023.
What is total tax which Mr. Jay has to deposit as self-assessment tax along
with interest, if he files the return on 29.07.2023? Assume that he does not
exercise the option under section 115BAC.

20. Briefly discuss the provisions of tax deducted at source and compute
the amount of TDS under the Income-tax Act in respect of the following
payments:
(i) ₹ 51,000 paid to Mr. A, a resident individual as interest income on
compensation awarded by Motor Accidents Claims Tribunal by a
transport company.
(ii) Ms. Asha deposited ₹ 35,00,000 @10% p.a. on 1.7.2022 with ABC Co-
operative bank limited.
(iii) Mr. Naresh won ₹ 15,00,000 in Kon Banega Crorepati
(iv) Mr. Avinash deposited ₹ 2,00,000 @11% p.a. on 1.5.2022 for half year
with Hike Investment LLP.

21. Kishore & Sons is a dealer of coal. Its turnover for the F.Y. 2021-22 was
₹ 12 crores. The State Government of Hyderabad granted a lease of coal
mine to Kishore & Sons on 1.5.2022 and charged ₹ 11 crores for the lease.
Kishore & Sons sold coal of ₹ 95 lakhs to M/s BAC Co. during the P.Y. 2022-
23. M/s XYZ Ltd. purchased coal of ₹ 55 lakhs from Kishore & Sons for
trading purpose in July 2022. Turnover of M/s XYZ Ltd. during the P.Y. 2021-
22 was ₹ 12 crores. PAN is duly furnished by the buyer and seller to each
other. Details of sale to and payments from M/s BAC Co. by Kishore & Sons
are as follows:

S. Date of sale Date of receipt/ Amount (₹)

No. Payment
1 29.05.2022 10.05.2022 35,00,000
2 30.06.2022 10.07.2022 25,00,000
3 25.11.2022 25.10.2022 8,00,000
4 20.01.2023 22.01.2023 15,00,000
5 01.03.2023 15.02.2023 12,00,000

Turnover of M/s BAC Co. during the P.Y. 2021-22 was ₹ 11 crores. The above
amounts were credited to Kishore & Sons account in the books of M/s BAC
Co. on the date of sale. M/s BAC Co. furnishes a declaration to Kishore &
Sons that coal is to be utilized for generation of power.

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Based on the above facts, choose the most appropriate answer to Q.
No. 1 to 5 –

1. Who is required to deduct/ collect tax at source in respect of lease of

coal mine by the State Government of Hyderabad to Kishore & Sons
and at what rate?

(a) State Government of Hyderabad is liable to collect tax at source @

2% on ₹ 11 crores
(b) State Government of Hyderabad is liable to collect tax at source
@0.1% on ₹ 10.50 crores, being the amount exceeding ₹ 50 lakhs
(c) Kishore & Sons is liable to deduct tax at source @0.1% on ₹ 10.50
crores, being the amount exceeding ₹ 50 lakhs
(d) Neither State Government of Hyderabad is liable to collect tax at
source nor Kishore & Sons is liable to deduct tax at source

2. Is Kishore & Sons required to collect tax at source in respect of the

sale transactions with M/s BAC Co. If yes, when and what is the
amount of tax to be collected?

(a) Yes; ₹ 1,000 on 30.6.2022, ₹ 800 on 25.10.2022, ₹ 1,500 on

20.1.2023 and ₹ 1,200 on 15.2.2023
(b) Yes; ₹ 35,000 on 10.5.2022, ₹ 25,000 on 30.6.2022, ₹ 8,000 on
25.10.2022, ₹ 15,000 on 20.1.2023 and ₹ 12,000 on 15.2.2023
(c) Yes; ₹ 1,000 on 10.7.2022, ₹ 800 on 25.10.2022, ₹ 1,500 on
22.1.2023 and ₹ 1,200 on 15.2.2023
(d) No, Kishore & Sons is not liable to collect tax at source

3. Is Kishore & Sons required to collect tax at source in respect of the

sale transaction with M/s XYZ Ltd. If yes, what is the amount of tax
to be collected?

(a) Yes; ₹ 55,000

(b) Yes; ₹ 5,500
(c) Yes; ₹ 500
(d) No, Kishore & Sons is not liable to collect tax at source

4. Is M/s BAC Co. required to deduct tax at source in respect of the

purchase transactions with Kishore & Sons. If yes, when and what is
the amount of tax to be deducted?

(a) Yes; ₹ 1,000 on 30.6.2022, ₹ 800 on 25.10.2022, ₹ 1,500 on

20.1.2023 and ₹ 1,200 on 15.2.2023
(b) Yes; ₹ 3,500 on 10.5.2022, ₹ 2,500 on 30.6.2022, ₹ 800 on
25.10.2022, ₹ 1,500 on 20.1.2023 and ₹ 1,200 on 15.2.2023
(c) Yes; ₹ 1,000 on 10.7.2022, ₹ 800 on 25.10.2022, ₹ 1,500 on
22.1.2023 and ₹ 1,200 on 15.2.2023

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 (d) No, M/s BAC Co. is not liable to deduct tax at source

5. Assume for the purpose of this MCQ, M/s BAC Co.’s turnover for the
F.Y. 2021-22 was ₹ 9 crore, who will be required to deduct/ collect
tax at source in respect of transactions between Kishore & Sons and
M/s BAC Co. and at what rate?

(a) Kishore & Sons is liable to collect tax at source @1% of ₹ 95 lakhs
(b) Kishore & Sons is liable to collect tax at source @0.1% of ₹ 45 lakhs,
being the sum exceeding ₹ 50 lakhs
(c) M/s BAC Co. is liable to deduct tax at source @0.1% of ₹ 45 lakhs,
being the sum exceeding ₹ 50 lakhs
(d) Neither Kishore & Sons is liable to collect tax at source nor M/s BAC
Co. is liable to deduct tax at source

22. State Government of Madhya Pradesh grants a lease of coal mine to

ABC Co. Ltd., an Indian company, on 1.10.2022 and charged ₹ 8 crores for
the lease. ABC Co. Ltd. sold coal for ₹ 2 crores to Mahapower Ltd., another
Indian company, during the previous year 2022-23. Mahapower Ltd.
furnishes a declaration to ABC Co. Ltd. that the coal is to be utilized for the
purpose of generation of power. The turnover of ABC Co. Ltd. and
Mahapower Ltd. for the F.Y. 2021-22 amounted to ₹ 11 crores and ₹ 12
crores, respectively. What is the amount of tax required to be deducted or
collected at source in respect of the above transactions, if any?

23. Mr. X working in Y Ltd. furnishes the following, compute the tax to be
deducted at source by Y Ltd.

Taxable salary ₹ 5,00,000

Loss from House Property ₹ 5,000
Loss from Business ₹ 10,000
Gross Interest Income (TDS ₹ 5,000) ₹ 60,000
Investment in PPF ₹ 10,000

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