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ACHARYA INSTITUTE OF GRADUATE STUDIES Soldevnahalli Bangalore-560107 Department of Commerce 1 Internal Assessment test August 2013 for the

Vth Semester B.COM


st

Date: 30/08/2013 Subject: Income Tax

Max Marks: 50 Time:1 hrs

Section A I. Answer any 2 of the following. 2x2=4

1. a. Define assessee. b. What are the sources of Income-Tax Law? c. List the Heads of Income? Section B II. Answer 2 of the following 2x8=16 2. Mrs. Y has agricultural income of `1,00,000, income under the head salary amounting to `2,55,000, long term capital gain of `10,00,000 and casual income of `1,00,000 (winnings of a game show on TV). Compute her tax liability for the assessment year 2013-14 in all three cases . Mr. X has joined ABC Ltd. on 01.07.2002 in the pay scale of `7,000 500 10,000 800 15,600 1,000 22,600. The employer has allowed him dearness allowance @ 7% of his basic pay from 01.04.2012 to 30.06.2012 and thereafter dearness allowance was allowed @ 10% of the basic pay. Compute employees Gross Salary for the Assessment Year 2013-14. Solution 1: ` Computation of Gross Salary Basic Pay 1,56,000.00 [(12,400 x 3) + (13,200 x 9)] Working Note: ` 01.07.2002 30.06.2003 = 7,000 p.m. 01.07.2003 30.06.2004 =

7,500 p.m. 01.07.2004 30.06.2005 = 8,000 p.m. 01.07.2005 30.06.2006 = 8,500 p.m. 01.07.2006 30 06.2007 = 9,000 p.m. 01.07.2007 30.06.2008 = 9,500 p.m. 01.07.2008 30.06.2009 = 10,000 p.m. 01.07.2009 30.06.2010 = 10,800 p.m. 01.07.2010 30.06.2011 = 11,600 p.m. 01.07.2011 30.06.2012 = 12,400 p.m. 01.07.2012 30.06.2013 = 13,200 p.m. Dearness Allowance 14,484.00 Working Note: ` From April to June 7% of (12,400 x 3) = 2,604 From July to March 10% of (13,200 x 9) = 11,880 Total = ` (2,604 +11,880) = 14,484 Gross Salary 1,70,484.00 Income under the head Salary 1,70,484.00 Gross Total Income 1,70,484.00 Less: Deduction u/s 80C to 80U Nil Total Income (Rounded off u/s 288A) 1,70,480.00 3.

4. Mr. Daniel, a citizen of U.K., has come to India for the first time on 01.07.2008. The particulars of his arrival and departure are as given below: Date of arrival Date of departure 01.07.2008 07.09.2008 01.01.2009 08.03.2009 11.07.2009 20.09.2009 10.02.2010 09.05.2010 01.01.2011 20.05.2011 11.03.2012 21.06.2012 27.03.2013 Solution 12: In 2008-09 {July 31, August 31, September 7, January 31, February 28, March 8} Days of stay in India are 136, so Mr. Daniel is non-resident. In 2009-10 {July 21, August 31, September 20, February 19, March 31} Days of stay in India are 122, so, he is non-resident. In 2010-11 {April 30, May 9, January 31, February 28, March 31} Days of stay in India are 129, so, he is non-resident. In 2011-12 {April 30, May 20, March 21} Days of stay in India are 71 and also he stays for 365 days or more during 4 years preceding the relevant previous year and also he is able to comply with at least one of the conditions of section 6(6)(a) as given below. 1. He is non resident in India in at least nine out of ten previous years preceding that year. or 2. He has during the seven previous years preceding that year been in India for a period of 729 days or less. Hence he is NOR.

Section C III. Answer 2 of the following 2x15=30

Mr. X is employed in ABC Ltd., Calcutta and is getting basic pay `10,000 p.m., dearness allowance `4,000 p.m. (50% of dearness allowance forms part of salary for the purpose of retirement benefits). The employee was allowed bonus `1,000 p.m. and commission @ 2.5% on the sales turnover of `60,00,000. The employer has paid him house rent allowance `4,000 p.m. The employee has paid rent `4,500 p.m. Compute his Gross Salary for the Assessment Year 2013-14. Computation of Gross Salary Basic Pay 1,20,000.00 (10,000 x 12) Dearness Allowance 48,000.00 (4,000 x 12) Bonus 12,000.00 (1,000 x 12) Commission 1,50,000.00 (2.5% of 60,00,000) House Rent Allowance {Sec 10 (13A), Rule 2A} 23,400.00 Working Note: Least of the following is exempt: 1. `48,000 2. `54,000 29,400 = `24,600 3. 50% of retirement benefit salary = `1,47,000 (Retirement benefit salary = `2,94,000) Received = `48,000 Exempt = `24,600 Taxable = `23,400 Gross Salary 3,53,400.00 Income under the head Salary 3,53,400.00

Gross Total Income 3,53,400.00 Less: Deduction u/s 80C to 80U Nil Total Income 3,53,400.00 Computation of Tax Liability Tax on `3,53,400 at slab rate 15,340.00 Add: Education cess @ 2% 306.80 Add: SHEC @ 1% 153.40 Tax Liability 15,800.20 Rounded off u/s 288B 15,800.00

5. Write a note on determination of residential status of an individual. 6. Mr. Ashish Bhatia earns the following incomes during the financial year 2012-13. A. Profits from a business in Japan, controlled from India, half of the profits received in India `60,000 B. Income from agriculture in Nepal, brought to India`10,000 C. Income u/h house property in Bombay, received in UK `1,70,000 D. Income u/h house property in USA, received there but subsequently remitted to India `2,20,000 E. Income u/h house property in USA, received there (`50,000 remitted in India) `1,00,000 F. Salary received in India for services rendered in USA `60,000 G. Income from profession in Paris, which was set up in India, received in Paris`90,000 H. Interest from deposit with an Indian company, received in Japan `19,000 I. Income from profession in Bombay received in Paris `39,000

J. Profits of business in Iran, deposited in a bank there, business controlled from India (out of `4,80,000, `1,00,000 is remitted in India) `4,80,000 K. Interest on German development bonds, half of which is received in India12,000 L. Income under the head house property in Canada, one-fifth is received in India Determine the gross total income of Mr. Ashish Bhatia if he is (i) Resident and ordinarily resident, (ii) Resident but not ordinarily resident, (iii) Non-resident in India during the financial year 2012-13. Solution 22: ROR 60,000 NOR 60,000 NR 30,000 50,000

(1) Income accruing/arising outside India from a business controlled in India, half of the income received in India (2) Income accruing/arising outside India and received outside 10,000 ----------India (3) Income accruing/arising in India 1,70,000 1,70,000 1,70,000 (4) Income accruing/arising outside India and received outside 2,20,000 ----------India (5) Income accruing/arising outside India and received outside 1,00,000 ----------India (6) Income received in India 60,000 60,000 60,000 (7) Income accruing/arising and received outside India, but 90,000 90,000 -----profession set up in India (8) Income accruing/arising in India 19,000 19,000 19,000 (9) Income accruing/arising in India 39,000 39,000 39,000 (10) Income accruing/arising outside India and received 4,80,000 4,80,000 -----outside India, but business controlled from India (11) Income accruing/arising outside India, half received 12,000 6,000 6,000 outside India and half in India (12) Income accruing/arising outside India, 4/5th received 50,000 10,000 10,000 th outside India and 1/5 in India Gross Total Income 13,10,000 9,34,000 3,34,000