Unit I

1. State the objectives of the taxation. 2. Define the term Assessee 3. Who is called Representative Assessee !. Who is an Assessee in defa"lt #. Write short notes on $i% &otal income $ii' Assessee. (. Write a short note on ).*.+ ,. Define the follo-in. term $a' /revio"s 0ear $b' person "1s 22313 4. What is 5ncome "1s 2 of the 5ncome &ax Act 6. Write a note on 7/erson8 "1s 2 of the 5ncome &ax Act. 19. Who is a person "nder the income tax act 11. What are 7total income8 and 7:ross total income8 12. What is an 7 Assessment 0ear8 13. Define the term income. 1!. State the proced"re follo-ed in comp"tin. of the total income of an assessee. 1#. What are the exception to the r"le that assessments are made on the total income of the previo"s 0ear 1(. Who is an ordinar0 resident 1,. Who is a not ordinaril0 resident 14. Who is a non resident 16. Write a note on incidence of &ax. 29. )o- -ill 0o" ascertain residential stat"s of an individ"al assessee 21. &he tax liabilit0 of an individ"al is determined on the basis of his residential stat"s. Disc"ss 22. ;xplain the income exempted from 5ncome &ax. 23. <r.= an 5ndian citi>en? leaves 5ndia to :erman0 for a job on 94.19.12. -hat -ill be his residential stat"s for assessment 0ear2913 @ 1! if he has never left 5ndia earlier

2!. /artic"lars of income of <r. S"bramani -ho is resident b"t not ordinaril0 resident in 5ndia for the assessment 0ear 2913 @ 1! are .iven belo-A a3 5ncome earned in /aBistan b"t received in 5ndia Rs.#?99?999 b3 Share of profit from a firm in 5ndia Rs. 1?99?999

c3 /ast "ntaxed forei.n income bro".ht to 5ndia d"rin. the previo"s 0ear 2912 @ 2913 Rs. 3?99?999 Comp"te .ross total income of <r. S"bramani.

2#. +rom the follo-in. details calc"late the &otal 5ncome of <s. Rani if she is a3 Drdinar0 resident b3 i3 ii3 iii3 iv3 2(. Eot ordinar0 resident and c3 non Resident Dividend from 5ndian compan0 Rs. 199999 Dividend from forei.n compan0 Rs.1#9999 received in india /ast "ntaxed 5ncome bro".ht in to 5ndia d"rin. this previo"s 0ear Rs. !2999 5ncome from b"siness in Fen0a b"t controlled from 5ndia Rs. 299999

+rom the follo-in. partic"lars of income of <r. Sachin comp"te his total income if he is a3 b3 C3 Drdinar0 Resident Eot ordinar0 Resident Eon Resident

i3 553 iii3

Share of income from joint vent"re in 5ndia Rs.29999 Dividend Rs.2999 A.ric"lt"ral income from Gondon Rs.!9999

5v3 Salar0 received in 5ndia Rs. 16(99 b"t the services for the same -ere rendered in America v3 Hi3 5ncome from b"siness2 controlled from 5ndia3 in Sin.apore Rs. 29999 remitted to 5ndia 5ncome earned and received in <ala0sia from banB deposit Rs. 19999

Hii3

5ncome accr"ed in 5ndia b"t received in D"bai Rs.29999

Unit II
2#. Define Salar0 "nder the income tax Act. 2(. What are the characteristics of salar0 2,. What are the items incl"ded "nder the head of Salar0 "1s 1, 24. What are allo-ances )o- -ill 0o" treat them 26. ;xplain the partiall0 exempted allo-ance pa0able to emplo0ees. 39. ;xplain the f"ll0 ;xempted allo-ances as per 5.&. Act. 31. What are the f"ll0 taxable allo-ances "nder the 5.&.Act 32. What are 7&ax free perI"isites 33. )o- do 0o" exempt )o"se Rent Allo-ance 3!. What are the item incl"ded is salar0 -hile comp"tin. rent free ho"se 3#. What is profit in lie" of salar0 3(. Write a note on pension. 3,. What is meant b0 entertainment allo-ances 34. What is note on standard ded"ction 36. What is comm"ted val"e of pension !9. What are perI"isites )o- are the0 taxable !1. )o- perI"isites are val"ed for income tax p"rposes !2. Who are specified emplo0ees !3. What are the perI"isites taxable in the hands of all emplo0ees !!. What 0o" mean b0 perI"isites )o"se -hat are the r"les relatin. to the val"ation of rent free

!#. Define profit in Gie" of Salar0. &o -hat extent are these exempted from &ax

!(. Disc"ss the ded"ctions allo-able "nder the head 7salaries8 !,. -hat is the maxim"m amo"nt of I"alif0in. 5nvestment "1s 49c !4. <r. A is salaried emplo0ee -orBin. in Delhi. )e .ives the follo-in. details. Salar0 Rs.29999 /.m. D.A. 2+ormin. part3 Rs. 19999 p.m. ).R.A Rs. 4999 p.m. 2Rent paid b0 him Rs. 19999 p.m3 Calc"late &axable )RA !6. <r. Ar"m.ham? an emplo0ee of A compan0 ltd.? received Rs. 2?99?999 as .rat"it0 2 he is covered "nder the pa0ment :rat"it0 Act?16,23. )e retired on Jan"ar0 31? 2912 after service of 26 0ears and 6 month. At the time of retirement? his monthl0 salar0 -as Rs. #299. Comp"te his taxable .rat"it0 for the assessment 0ear 2913 @ 1!. <r. John is emplo0ed as an ;n.ine Driver in So"thern Rail-a0. )e is .ettin. Rs.,?#99 p.m. as dearness pa0 and Rs. 2?#99 as dearness allo-ance. )e received the follo-in. allo-ances also. a3 Rs. 1(#99 as r"nnin. allo-ance b3 Rs. 299 p.m. per child as ed"cation allo-ance for the ed"cation of his t-o sons. c3 Dne of these sons is livin. in hostel on -hom <r. John is spendin. Rs. 499 /.<. )e is .ettin. Rs. #99 p.m. for his son as hostel allo-ance o meet his sons hostel expenses. d3 Rs. 299 p.m. as cit0 compensator0 allo-ances e3 Rs. !99 p.m. as "niform allo-ance? -hole of it is spent for official p"rpose. f3 Rs. 12#9 p.m. as ho"se rent allo-ance. <r. John has taBen a ho"se for his residence at Coimbatore and pa0s Rs. 1##9 p.m. as rent. )e contrib"tes 19 per cent of his basic pa0 and dearness pa0 to his stat"tor0 provident f"nd and the so"thern Rail-a0 also contrib"tes a similar amo"nt. <r.Ramanathan is :eneral <ana.er of a Compan0 in <adras and dra-s Rs.4?#99 per month as salar0. )e is provided -ith a ho"se for -hich the Compan0 pa0s Rs. (9?999 /.A as rent. +"rnit"re and fittin.s costin. Rs. 39?999 are also provided. )e is also provided -ith a Car of 1.( Gts ratin. b0 his emplo0er? and the Car is "sed both for /rivate and Dfficial p"rposes. All expenses incl"din. salar0 of driver are borne b0 the emplo0er. &he emplo0er has also provided him services of s-eeper K Rs. 1!91L p.m a -atchman K Ra.1(91L p.m and :ardener K (991L p.m. )e is a member of reco.ni>ed /rovident f"nd to -hich he contrib"tes 12M if salar0 and a similar contrib"tion is made b0 the emplo0er. 5nterest on provident f"nd balance at 1!M credited to his provident f"nd acco"nt amo"nted to Rs. !?299. )is son is st"d0in. in an en.ineerin. colle.e and

the expendit"re of Rs. 2!?999 p.a on this acco"nt -as met b0 the emplo0er. Comp"te his salar0 income for the previo"s 0ear 2913L1!.

2.+rom the follo-in. details comp"te the income of A -ho is emplo0ed b0 R Gtd. +or the assessment 0ear 2913L1!. 2i3 Nasic salar0 2ii3Dearness allo-ance2considered for service benefits3 2iii3 )i.h cost of livin. allo-ance 2iv3 )o"se rent allo-ance2act"al rent paid is Rs.(9?999 in delhi3 2v3Commission 2at 2M of t"rnover achieved b0 A3 2vi3 5ns"rance premi"m of 5C5C5 pr"dential on polic0 in the name Df <rs.A 2s"m ass"red Rs.2?99?9993 paid b0 A !!?999 1?1(?999 24?999 39?999 !4?999 14?999

Dn 19th <arch? 2912 R Gtd. Dffers eI"it0 shares to emplo0ees at the rate of Rs.!19 per share2<arBet price Rs.(99 per share on 19th <arch 29123. A accepts the offer applies for #99 shares on 29th <arch 29122<arBet price on 29th <arch? 2912 Rs.#69 per share.

3. <r. Raman is an emplo0ee of a private compan0 in Chennai. )e s"pplies 0o" the follo-in. partic"lars of his income. 2a3 Nasic salar0 Rs. 29?999 p.m 2b3 D.A #9M of salar0 2#9M of D.A enters into pa0 for service benefits.3 2c3 <arria.e allo-ance Rs. (99p.m 2d3 ;d"cation allo-ance Rs. 2,9 p.m 2Allo-ance K Rs.69 p.m per child3. 2e3 Non"s one month salar0. 2f3 ;ntertainment allo-ance Rs. 1?299 p.m )e and his emplo0er contrib"te K 1(M of salar0 to R/+ separatel0. D"rin. 2911L2912? he had received t-o months basic salar0 as advance -hich -as incl"ded in the income of the previo"s 0ear 2912L13.

)e is provided rent fee ho"se o-ned b0 the emplo0er. )e also received a fixed medical allo-ance of Rs.399 p.m. Amo"nt spent on medicine Rs. !?#99 d"rin. the 0ear. Calc"late his salar0 income for the assessment 0ear 2913L1!.

!. <r.:? an emplo0ee of <ad"rai2pop"lation 14 laBhs3 based compan0 provides the follo-in. partic"lars of his salar0 incomeA 2a3 Nasic Salar0 2b3 /rofit bon"s 2c3 Commission on t"rnover 2d3 ;ntertainment allo-ance 2e3 Cl"b facilit0 2f3 &ransport allo-ance 2.3 Rent free ho"se provided b0 emplo0er? lease Rent paid b0 emplo0er 2h3 +ree ed"cation facilit0 for three children of the emplo0ee 2bill iss"ed in the name of emplo0ee3 2i3 :as? electricit0 and -ater bill iss"ed in the name of ;mplo0ee b"t paid b emplo0er Comp"te income "nder the head salar0. 1(?499 22?#99 (?999 p.m 12?999 p.m 12?999 !2?999 2?999 p.m (?999 1?999 p.m

#. <r.C is the p"rchase officer of a compan0 in <ad"rai2pop"lation 14 Gaths3. )e f"rnished the follo-in. partic"lars re.ardin. his income for the previo"s 0ear 2912L13. 2a3 Eet salar0 Rs.,#?999 after ded"ctin. Rs.,?999 from income for tax? Rs.12?999 as contrib"tion to reco.ni>ed provident f"nd and rent of b"n.alo- Rs.3?(99. 2b3 Non"s Rs.(999. 2c3 &ravellin. expenses? for -hich he has received &o"r allo-ance of Rs.2#?999. 2d3 ReLimb"rsement of <edical bill Rs.,?#99.

2e3 )e lives in b"n.alo- belon.in. to the compan0. 5ts fair rent is Rs.2?,#9 p.m. &he compan0 has provided a :ardener and a CooB? each of -hom is paid a salar0 of Rs.2#9 per month and Rs.199 per month respectivel0. &he compan0 has paid Rs.(?999 for electricit0 and Rs.1?299 per -ater bills. 2f3 )e has been provided -ith a 1.4 Gts. Car for official and personal "se. &he maintenance expenses? r"nnin. expenses and drivers salar0 are paid b0 the compan0. 2.3 &he follo-in. amo"nts -ere deposited in his provident f"nd acco"ntA 2i3 Dne contrib"tion Rs.12?999 2ii3 Compan0s contrib"tion Rs.12?999 2iii3 5nterest credited at 4M p.a Rs.23?999 2h3 Deposit in his p"blic provident f"nd Rs.1(?999 Comp"te his taxable salar0 income for the AO A 2912L13

(. +rom the follo-in. partic"lars of <r.= -orBin. in a compan0 at Chennai? comp"te his taxable income from salar0 for the assessment 0ear 2913L1!. 2a3 Nasic Salar0 2b3 Contrib"tion to Reco.nised provident f"nd2R/+3 2c3 ;mplo0ers contrib"tion to R/+ 2d3 5nterest on R/+ K 19.#M 2e3 )o"se rent allo-ance Rent paid b0 him 2f3 <edical allo-ance <edical expenses 2.3 +ree services of -ater? .as and the pa0ment -as done N0 the emplo0er 2h3 )e -as provided -ith a cooB -hose salar0 -as borne b0 the emplo0er. 2i3 )e -as provided a motor car b0 his emplo0er for officer "se onl0. 1?!99 !?!99 Eil 1?#99 p.m 1?(99 1?(99 19?#99 !?999 (?999 1?999 3?999

2j3 )e claims the follo-in. ded"ctionA 2i3 ,99 in connection -ith p"rchase of booBs. 2ii3 /aid Rs.(9 as tax on emplo0ment. )int A 1. <edical Allo-ance is f"ll0 taxable. <edical expenses are to be i.nored. 2. +ree services of -ater? .as? cooB is not taxable as <r.= is not a specified emplo0ee? since salar0 of <r.= does not exceed Rs.#9?99?9992NasicPDAPCommissionPNon"sP&axable allo-ancesL1(2ii3 and 1(2iii33. 3. Car provided for office "se is not taxable.

UNIT III
#9. Define Ann"al Hal"e. #1. Define .ross ann"al val"e. #2. )o- do 0o" determine Ann"al val"e of )o"se propert0 #3. Write a note on ;xempted income from ho"se propert0. #!. Write short notes on a. "nrealised rent b3Hacanc0 allo-ances ##. Write a note on self occ"pied propert0. #(. Describe the conditions to be satisfied in char.in. income tax on )o"se propert0. #,. What are the circ"mstances "nder -hich a person becomes 7Deemed D-ner8 of a ho"se propert0. #4. ;n"merate the incomes from ho"se propert0 -hich are -holl0 exempt from tax. #6. Define 7 Ann"al val"e 7 and state the ded"ction that are allo-ed from the ann"al val"e in comp"tin. the income ho"se propert0. (9. ;xplain the ded"ctions allo-able "1s 2!2i3 -hile calc"latin. 5ncome from )o"se propert0. (1. )o- -ill 0o" comp"te income from let o"t ho"se propert0 (2. Comp"te expected rental val"e from the follo-in.A <"nicipal rental val"e Rs. 194999 +air rental val"e Rs. 129999

Standard rent Rs. 192999

(3. +rom the follo-in. information? 0o" are find o"t the .ross ann"al val"e of let o"t propert0. a3 b3 c3 d3 e3 <"nicipal rental val"e +air rental val"e Ann"al rent if it is let o"t thro".ho"t the 0ear Standard rent "nder rent control act Goss d"e to vacanc0 6(999 11(999 114999 11#999 4999

(!. +rom the follo-in. calc"late Eet ann"al Hal"e <"nicipal Rental Hal"e +air Rental Hal"e Standard Rent Act"al Rent 3!999 3#999 3999 /.m. 24999

<"nicipal &ax Rs.1#99 is paid b0 the o-ner. (#. Calc"late 5ncome from )o"se propert0 of <s. S"dha from the follo-in. information. )o"se -as constr"cted in 166,? ,#M let o"t and 2#M is self occ"pied b0 <s. S"dha herself? the other details of the propert0 are as follo-s <"nicipal Rental Hal"e +air rental val"e Standard Rent <"nicipal &ax 5nterest on borro-in. Capital #9999 (9999 ##999 !999 19999

((. <r. &end"lBar constr"cted a m"ltistor0 b"ildin. at Nan.alore consistin. !9 flats. ;ach flat is Get o"t KRs. 1#99 p.m. <"nicipal Hal"e Rs ,#9999 +ollo-in. are the other partic"larsA a3 Gift maintenance Rs.1#999 b3 Water p"mp expenses Rs. 2999 c3 :ardeners salar0 Rs. 1999 d3 Watchman salar0 Rs.2999

<"nicipal tax paid at 19M of <.H. 5nterest on loan for constr"ction of ho"se Rs. 2#999 Comp"te 5ncome from ho"se propert0 <r. =avier let o"t his ho"se. Complete the 5ncome from )o"se propert0 from the follo-in.A 2a3 +air rental val"e Rs. 3(?999 2b3 Act"al rent received Rs. !?999 p.m 2c3 <"nicipal rental val"e Rs. !9?999 2d3 Standard Rent Rs. 34?999 2e3 <"nicipal tax 19M 2f3 Act"al repair expenses Rs. !?999 2.3 :ro"nd rent Rs. 2?9991L 2h3 5nterest on loan Rs. 12?9991L 2i3 Hacanc0 period 3 months

(,. &he partic"lars of a residential ho"se constr"cted on 31st ma0 166( are .iven belo-. Act"al Rent Rs. 6(99A <"nicipal taxes paid Rs. 1499 :ro"nd rent Rs.#9A 5ns"rance Rs.49? Collection char.es act"all0 paid Rs.399Q 5nterest on amo"nt borro-ed for constr"ction of the ho"se. &he o-ner mort.a.ed the ho"se for Rs. 3(999 to meet the expenses of his da".hters marria.e and paid interest of Rs. 3999 on the mort.a.e loan d"rin. the 0ear. &he assessee also reali>ed from his tenants of earlier 0ears to the extent of Rs.4999 o"t of -hich Rs. (999 -as allo-ed earlier. Comp"te the total income of the assessee on the ass"mption that his salar0 income 2comp"ted3 is Rs. 129999 and income from other so"rces is Rs.!9999

13 A is the o-ner of ! ho"ses. Dne ho"se is let to a tenant for Rs. 3999 p.a. &he second ho"se? the m"nicipal val"ation of -hich is Rs. !#99 p.a. is in his o-n occ"pation. &he ho"se? the third ho"se remained vacant thro".ho"t the -hole 0ear as it -as not in

rentable condition. &he fo"rth ho"se? the m"nicipal val"ation of -hich is Rs.(999 is "sed b0 A for his b"siness. )is expenses in respect of these ho"ses areas follo-A 5nterest on loan taBen to repair the residential ho"se +ire 5ns"rance premi"m for 1st?2nd and !th ho"se Collection char.es :ro"nd rent in respect of 2nd ho"se &he first ho"se? -hich is let remained vacant for t-o months. Calc"late As income from ho"se propert0. !99 1!19 3#9 299

23 <r. / is the o-ner of a ho"se propert0 in Fanp"r. 5t has been let o"t for Rs. 69999. &he tax pa0able b0 the o-ner comes to Rs. 4!99 on m"nicipal val"ation of Rs. 4!999 b"t the landlord has taBen an a.reement from the tenant statin. that the tenant -o"ld pa0 tax direct to the m"nicipalit0. &he landlord? ho-ever? bears the follo-in. expenses on tenants amenities. Water Char.es 2 as per a.reement3 1999 Gift <aintenance 1999 Salar0 of :ardener 1299 Gi.htin. of Stairs 499 &he landlord claims the follo-in. Ded"ctions Repairs 39999 Gand reven"e 1999 Collection Char.es 2999 Ge.al char.es inc"rred on p"rchase of land on -hich ho"se propert0 is sit"ated Rs. 2!999 Comp"te the taxable income from ho"se propert0. 33 A ho"se -as completed on April 1? 2911 and follo-in. information is available abo"t the ho"ses. <"nicipal val"e of the )o"se +air Rental Hal"e of the )o"se Act"al Rent <"nicipal taxes Get o"t for the period 91L9!L2911 to 31L12L2911 and self on-ards. +ire 5ns"rance premi"m Gand Reven"e 5nterest on loan for the period a3 91.9!.2994 to 31.93.2911 39999 p.a. 32999 p.a. !999 p.m. (999 p.a. occ"pied from 91L91L2912 3(99 (999 !#999

b3 91.9!.2911 to 31.93.2912

1#999

Calc"late income from ho"se propert0 for the previo"s 0ear endin. on 31.93.2912. !3 <r. W o-ns t-o self @ occ"pied ho"ses in Ambala. +rom the follo-in. information find o"t that -hich ho"se he sho"ld choose as self @ occ"pied Standard Rent fixed "nder Rent control Act +air Rent <"nicipal Hal"ation <"nicipal &axes 2paid3 <"nicipal taxes 2 D"e3 :ro"nd Rent2paid3 )o"se A 3(999 !2999 2!999 1299 1299 1999 )o"se N #(999 (2999 !!999 1299 1299 #99

Date of completion of these ho"ses -as 31.91.2996. <r. W had taBen a loan of Rs. 2#9999 K 19M p.a. for cons"mption of )o"se A on 91.9(.299, and he repaid Rs. 299999 on 91.19.2911. #3 <r. = has three ho"se properties -hich he "ses for his residential p"rposes <"nicipal Hal"e +.R.H Standard Rent <"nicipal &axes ;xpenses on repairs 5ns"rance premi"m Oear in -hich loan taBen for p"rchase of the ho"se 5nterest on loan paid d"rin. the previo"s 0ear 2911 L 12 5 !999 9 #999 9 (999 9 !999 2999 1999 1664 3#99 9 55 555 (9999 49999 ,9999 (#999 4!999 ,2999 (999 !999 2#99 6999 3999 3999

2992 299, !9999 2#999

+ind o"t income from ho"se propert0 as a tax expert. (3 +ollo-in. are the partic"lars of t-o ho"se properties o-ned b0 <r. S-ami <"nicipal val"ation +air Rent Standard Rent Act"al Rent received Self occ"pied )o"se 5 6(999 44999 69999 6999 p.m. 91.9!.2911 @ 39.11.11 )o"se 55 69999 6(999 194999 19999 p.m. 91.12.11 @ 31.93.12

Get o"t <"nicipal &axesL D"e 5nterest <one0 on

91.12.11 @ 31.93.12 (999 paid 3999 borro-ed 19999

91.9!.11 @ 39.11.11 4999 Eil !2999

Goan taBen to constr"ct )o"se 55 is still o"tstandin.. Goan -as taBen in 1664. +ind o"t <r. S-amis income from ho"se propert0.

1. +rom the partic"lars f"rnished b0 S"man for the previo"s 0ear endin. <arch31? 2912. Comp"te the taxable income from ho"se propert0 for the assessment 0ear 2912L13. )e o-ns a ho"se propert0 at a metro cit0. 5ts fair rental val"e per ann"m is Rs.2,?999 and <"nicipal val"e Rs.2!?999. &he ho"se -as let o"t from April 1? 2911 to A"."st 31? 2911 K Rs. 2?199 per month. +rom September 1? 2911? S"man occ"pied the ho"se for his residence. ;xpendit"re inc"rred and paid on the propert0 A 2a3 <"nicipal tax Rs.!?999 2b3 +ire ins"rance Rs.2?#99 2c3 Gand reven"e Rs.!?(99 and 2d3 Repair Rs.1?999. 5nterest paid on borro-in.s for constr"ction A 2a3 for the 0ear Rs.21?(99 2b3 /roportionate preconstr"ction interest Rs.12?6(9. 2. +rom the partic"lars .iven belo- comp"te income from ho"se propert0 for the assessment 0ear 2912L13. Date of Completion <"nicipal Rental val"e +air Rental val"e Self occ"pied Get o"t A 1.11.1662 A Rs.3(?999 A Rs.39?999 A 213 portion A 113 portion? from 91.9!.2911 to 31.94.2911 at Rs.1?999 p.m and self occ"pied from 91.96.2911 on-ards. <"nicipal taxes +ire 5ns"rance /remi"m A Rs.3?999 p.a A Rs.2?!99 p.a

:ro"nd Rent 5nterest on Goan

A Rs.!?299 p.a A Rs.,?#99 p.a

3. <r.Gandlord is the o-ner of to- ho"ses. 5n respect of these he has f"rnished the follo-in. partic"larsA )o"se A 2Rs.3 2a3 Date of completion of constr"ction 2b3 <"nicipal Rental Hal"e 2c3 Act"al rent received 2d3 <"nicipal taxes paid 2e3 :ro"nd rent 2f3 5nterest on loan taBen for constr"ction 231.93.166(3 3?(9?999 3?99?999 3(?999 1?999 #9?999 )o"se N 2Rs.3 291.9,.29993 (?99?999 (9?999 p.m 39?9992D"e3 ,?499 1?42?999

Comp"te his income from ho"se propert0 for the assessment 0ear 2913L1!. D"t of the <"nicipal &axes of )o"se A? Rs.14?999 are paid b0 the tenant.

!. <r.R constr"ction one ho"se in 1649. #9M of the propert0 is let o"t and #9M is occ"pied for his residence. &he let o"t portion -as also occ"pied for 2 months. &he partic"lars areA <"nicipal val"e of f"ll ho"se Ann"al rent of #9M portion <"nicipal tax :ro"nd rent Repairs +ire ins"rance premi"m Collection char.es 5nterest on loan taBen for constr"ction #?999 p.a !?999 p.a 1?999 p.a 199 p.a 699 p.a 299 p.a 399 p.a 1?999 p.a

)is income from all other so"rces amo"nts to Rs.#9?999. Determine his .ross total income.

#. +rom the follo-in. calc"late income from ho"se propert0 of <r.<"r".an. <"nicipal val"ation Act"al rent <"nicipal tax &he o-ner bears the follo-in. expensesA 2a3 Gift maintenance 2b3 :ardener Salar0 2c3 /"mp maintenance Rs. ,?#99 Rs. 2?#99 Rs. !?999 Rs. 1?2#?999 per ann"m Rs. 1?2#?999 per ann"m Rs. !?999

&he o-ner pa0s 2#M of the m"nicipal tax. )int A ;xpenses paid b0 o-ners is ded"cted from rent since rent received is taBen as composite rent for ho"se and facilities provided.

UNIT IV
(4. Define clearl0 the term N"siness. (6. Define clearl0 the term profession. ,9. ;xplain deemed profits "1s !1. ,1. What 0o" mean b0 self @ .enerated assets ,2. Write a note on expendit"re on scientific research. ,3. What are the provisions relatin. to preliminar0 expenses

,!. What are the income char.eable to tax "nder the head 7profits and .ain of b"siness or profession ,#. ;xplain the method of comp"tin. income from b"siness. ,(. What are the expenses expressl0 allo-ed in comp"tation of profits and .ains of b"siness or profession ,,. What are expenses expressl0 disallo-ed -hile comp"tin. profits and .ains of b"siness or profession in case of an0 assessee and an0 firm ,4. What are the ded"ction allo-ed to a N"siness man in comp"tin. taxable profits ,6. What is meant b0 specified profession or b"siness "1s !!AD 1 !#A; ;xplain. 49. Write a short note on 2a3 Scientific research expendit"re 2b3 Nad debts 2c3 Advertisement expendit"re . 41. Nriefl0 explain the treatment for ;xpendit"re on scientific Research 42. What are called Deemed /rofit 43. Define the term 7profession8 4!. A firm paid Rs.2#999 for advertisement expenses in cash. Comp"te its admissibilit0. 4#. When a"dit is comp"lsor0 "1s. !!AN for b"siness

4(. Dr. Eara0anan is medical practitioner in Chennai. +rom the follo-in.? calc"late his income from profession for the assessment 0ear 2913 @ 291!. a3 b3 C3 d3 e3 f3 .3 h3 i3 j3 :ross receipts from dispensar0 :ross receipts from cons"ltanc0 Dperation fees Hisitin. +ees :ift from patients <edicines p"rchased Closin. stocB medicines Dpenin. stocB medicines Salar0 to emplo0ees Dr. Eara0anan -ent to attend a medical seminar in :erman0 to "pdate Bno-led.e and spent 23#999 1(#999 2#9999 #9999 39999 12#999 3#999 19999 1#9999 (#999

B3 <edical booBs p"rchased 29999 4,. <r. RajaseBaran is a chartered acco"ntant in Chennai. )e deposits all receipts in a banB and pa0s all expenses b0 cheI"e. &he follo-in. is the anal0sis of his banB acco"nt for the 0ear ended 31.93.13 Receipt Nalance c1d +ees from a"dit Acco"ntin. char.es Received Cons"ltation char.es :ift from clients )o"se rent :ift from race co"rse 2net3 Share of income from )ind" *ndivided famil0 Rs. ,#99 49999 !9999 1#999 #999 22#99 4324 141,2 /a0ment Salaries Rent of chamber &elephone ;xpenses /rofessional ;xpenses Scooter expenses Dffice expenses /"rchase of scooter Advance &ax Donation Eational savin. certificate p"rchased :ift to his da".hter G.5.C premi"m /ersonal expenses )o"se propert0 expenses Nalance c1d 16(#99 Rs 1!999 !#99 1999 3999 #999 ##99 29999 3#999 4999 29999 #999 19999 19#99 19999 !#999 16(#99

Comp"te his income from profession for the assessment 0ear 2913 @ 291! after taBin. in to acco"nt the follo-in.A a3 R of scooter expense relate personal "se. b3 Depreciation on the scooter amo"nts to Rs. 3999. c3 <r. RajaseBaran sta0s in his o-n ho"se. &he m"nicipal val"e of the ho"se is Rs.49991L d3 &he ho"se propert0 expenses is pertainin. to the ho"se let o"t -hich incl"des m"nicipal taxes Rs.2999.

44. Calc"late depreciation from the follo-in. .iven for the assessment 0ear 2913 @ 291! WDH as on Additions 91.9!.2911 +"rnit"re 2#999 #999 Residential ho"se 1#9999 199999 NooBs #999 46. +rom the follo-in. / S G a1c calc"late income from N"siness /artic"lar &o salar0 &o Repairs &o Nad Debts &o provision for bad debts &o donation &o ;ntertainment ;xpenses &o provision for :rat"it0 &o 5ncome &ax &o provision for income tax &o Wealth tax &o Car p"rchased &o <"nicipal tax 2 for ho"se3 &o :eneral expenses &D /atent 2before 1.9!.64 &o Eet profit 99 Additional 5nformationA a3 N"siness income Rs. !2?,99 is not sho-n in the /SG a1c b3 Depreciation -orth Rs. #?999 approved b0 the a"thorit0 is not sho-n in the /SG a1c. Rs. #99999 2#999 4999 19999 2#999 #999 /artic"lar Rate Depreciation 19M #M (9M Rs. 1#99999 399999 199999 2#999 !999 of

/artic"lar N0 :ross /rofit N0 S"ndr0 receipts N0 Rent from ho"se propert0 N0 sales of machine 2 profit3 N0 Nad Debt recovered Disallo-ed earlier

29999 N0 Nad recovered earlier 1#999 29999 2#999 #9999 (999 1#999 #(999 11#2999 16329

debts 3999 allo-ed

1632999

c3 Rs. !?999 relatin. to other so"rces is incl"ded in .eneral expenses. d3 Rs. #9?999 -orth of income not relatin. to b"siness is incl"ded in s"ndr0 receipts.

69. +rom the follo-in. details of Dr. F"mar calc"late &otal 5ncome for the A.O 2913L1!. Receipt &o Dpenin. cash balance &o Cons"ltation fees &o Salar0 from <edical &o 5nterest from NanB &o Dividend &o Gand from NanB Rs. 19999 #9999 (999 12999 1299 39999 196299 a3 T of car expenses are treated as personal b3 Depreciate = Ra0 <achine K 29M /a0ment N0 cons"ltin. Room ;xpenses N0 = ra0 <achine N0 Car ;xpenses N0 G5C /remi"m N0 5ncome &ax N0 )o"sehold ;xpenses N0 Closin. cash balance Rs. 12999 !#999 (999 12999 29999 12999 2299 196299

61. Cash booB of an a"ditor for the period ended 31.93.2913 &o Nalance b1d &o A"dit fess &o Acco"ntanc0 -orB fee &o Dther so"rces of 5ncome &o Rent from ho"se propert0 6?(1! #!?,#9 2!?!,# 2,,!# 1!299 N0 Dffice expenses /ersonal expenses N0 <embership fees N0 5ncome tax N0 Car expenses N0 5ns"rance2)o"se3 N0 Nalance c1d 131,4! 2a3 Depreciation on car at 1#M 2b3 11! th of car expenses? for personal expenses. Comp"te professional income of the AO 2912L2913. 2!?1#9 !,(6 !9!# 2!63 23!#9 #!29 399 131,4!

,3 /rofit and Goss Acco"nt of <1s Raj" S compan0 :eneral ;xpenses +ire ins"rance /remi"m Nad debts Salaries Advertisement 2 in cash3 /roprietors Salar0 5nterest on capital 5ncome &ax Depreciation Sales &ax 2 d"e3 Advance income tax paid Donations <otor car expenses <"nicipal taxes of I"arters Get to emplo0ees ,999 :ross /rofit 2999 Nad debts? recovered b"t disallo-ed earlier 1999 5nterest from :ovt. Sec"rities (#999 Rent received from emplo0ees 222#9 5nterest from debtors for dela0ed pa0ment 12#99 2999 1999 2999 #999 1999 #99 ,#9 #999 36999 1((999 1!999 9 !999 !999 12999 (999

1((99 9

:eneral expenses incl"de Rs. !999 paid as compensation to an old emplo0ee -hose services -ere terminated in the interest of the b"siness and Rs. 2299 b0 -a0 of help to a poor st"dent. Depreciation calc"lated accordin. to the rates comes to Rs.2699. Sales tax -as paid on 91.9#.2912 Date of filin. of ret"rn 31.9,.2912. 43 +ollo-in. is the profit and loss acco"nt of <r. S.F. for the 0ear endin. 31.93.12 Debits &o Salar0 &o Repairs &o /atents 2111!th part3 &o Nad Debts &o /rovision for bad debts &o Reven"e expendit"re on Scientific Research &o ;xpendit"re on promotion of famil0 plannin. amon.st emplo0ees Donation to an approved instit"tion &o )ealth ins"rance premi"m Rs Credit #99999 N0 :ross profit 29999 ,999 12999 11999 N0 commission N0 S"ndr0 Receipts N0 Rent from let o"t ho"se N0 /rofit from sale of old <achine 29999 N0 Nad debt recovered 1!999 N0 5nterest on :ovt. Sec"rities2 5nvestment made o"t of b"siness f"nds3 1#999 N0 5nterest on income tax ref"nd 1(999 Rs 121999 9 12999 14999 39999 1(999 19999 29999 4999

of emplo0ees &o Contrib"tion to emplo0ees provident f"nd K1#M of emplo0ees salar0 &o Advertisement &o ;xpenses on ."est )o"se &o 5nterest on borro-ed mone0 &o ;ntertainment expenses &o Goss of stocB d"e to theft b0 an emplo0ee &o Sales tax penalt0 &o Donation to a "niversit0 for research &o :rat"it0 &o Depreciation &o 5ncome &ax &o /rovision for income tax &o Eet profit Additional informationA

39999 !9999 3(999 #9999 29999 4999 12999 !9999 39999 129999 !9999 29999 293999 132!99 9

132!99 9

1. #9M of health ins"rance of emplo0ees has been paid in cash. 2. 5ncome tax provision is excessive to the t"ne of Rs.4999 3. /atents -ere acI"ired on 91.11.2912 !. 5ncome accr"ed d"rin. the 0ear b"t not credited to p S l acco"nt Rs.29999 #. ;xpenses on advertisement incl"de an expendit"re of rs.1#999 on neon si.n board. 2Rate of dep. 5s 1#M (. WDH of machine sold -as Eil ,. Research cond"cted b0 the "niversit0 is not related to asessees field of b"siness 4. WDH of assets on 91.9!.2912 -asA +actor0 b"ildin. 299999? Eon @ factor0 b"ildin. 399999 plant and machiner0 Rs.399999. A ne- machiner0 costin. rs. 299999 -as acI"ired on 1#.12.2912 and -as act"all0 p"t to "se on 1#.91.2913 +rom the information .iven above calc"late the b"siness income of <r. S.F. for the assessment 0ear 2913 @ 1! 63 +rom the follo-in. statement ? comp"te the income from profession of Dr.S.F Fapoor if acco"nts are maintained on mercantile s0stemA

&o Dispensar0 rent &o ;lectricit0 and -ater char.es &o &elephone expenses &o Salar0 to n"rse and compo"nder &o Dep. Dn s"r.ical eI"ipment &o /"rchase of medicines &o Depreciation on = ra0 <achine &o 5ncome tax &o Donation to Rama Frishna mission &o <otor Car expenses &o Dep. Dn car &o Eet income

3(999 (999 (999 3(999 (999 3(999 !999 ##99 !999 6(99 !499 63199 2!,999

N0 visitin. fees N0 Cons"ltation fees N0 Sales of medicines N0 Dividends

!#999 12#999 ,2999 #999

2!,999

EoteA 1. ;lectricit0 and -ater char.es incl"de domestic bill of Rs. 2#99 2. )alf of motor car expenses are for professional "se. 3. &elephone expenses incl"de !9M for personal "se !. Dpenin. stocB of medicines -as Rs.(999 and closin. stocB -as Rs. !999

193 +rom the follo-in. partic"lars? comp"te the b"siness income of <r. S. Ran.nathan &o Salaries &o Rent and taxes &o services char.es &o Ge.al expenses &o Reserve for income tax &o Depreciation &o ;xpenses on acI"isition of patent ri.hts &o Dffice expenses &o Contrib"tion to R/+ &o Nad debts &o Donation to ED+ &o Eet profit 69999 N0 :ross profit 29999 N0 Dividend !999 N0 Nad debts recovered 2 allo-ed earlier3 #999 N0 5nterest from post (999 N0 Dffice savin.s NanB 12999 #(999 !2999 12999 !#99 2#99 19#(99 3#6(99 3#9999 !999 !!99 1299

3#6(99

EoteA 1. Ge.al expenses incl"de Rs. 2999 inc"rred b0 assessee for defendin. a case for dama.es for breach of contract -hich -as decided in favo"r of assessee. 2. Depreciation of the 0ear on assets other than patent ri.hts is Rs.1(699. 3. Contrib"tion to R/+ d"e on 31.93.12 Rs.2999.

1. +rom the follo-in. /rofit and Goss A1c of a man"fact"rer? calc"late income "nder the head 7/rofits and :ains of N"siness or /rofession8 for the 0ear endin. 31st <arch 2913. /artic"lars Salaries to emplo0ees Advertisement exp 2paid in cash3 ;ntertainment expenses Nad Debts 2!?999 1(?999 1?#99 5nterest on sec"rities 1!?999 Rs. 6#?999 /artic"lars :ross profit Rs. 3?49?999

5ncome from ho"se propert0 2#?999 Nad debts recoverd 2allo-ed earlier3 12?999

Sales tax2d"e and paid on 91.9,.29123 5nterest on proprietors capital Repairs Rent Ge.al expenses Depreciation Non"s Non"s to proprietor Car p"rchased (?999 ,?999 2?#99 21?999 #?999 1#?999 (?999 !?999 ,2?999

;xpenses on car d"rin. the 0r Donation /rovisions for bad debts Eet profit

12?999 2?999 (?999 69?999 !?31?999 !?31?999

2. F"mar a la-0er b0 profession Beeps his cash booB as per cash s0stem of acco"ntin.. &he follo-in. is the s"mmar0 of his cash booB for the 0ear ended 31st <arch 2913. Receipts &o Nalance &o +ees &o rem"neration as examiner &o 5nterest on banB deposits 1?299 &o Rent from ho"se propert0 !?999 &o Dividends !?499 !?499 N0 <edical treatment of self N0 Nalance 14?199 ##?199 ##?199 #?999 Rs. #?999 3#?999 3?999 2?#99 4?999 1?(99 /a0ments N0 Rent of chamber N0 Car expenses N0 )o"sehold expenses N0 Gocal taxes for ho"se N0 Repairs of the ho"se N0 G5C premi"m for self N0 Cost of Jo"rnals Rs. 2?!99 3?(99 12?999

UNIT V

62. Write short notes in A a3 Defective Ret"rn b3 Nelated Ret"rn C3 D"e date of filin. Ret"rn.

63. ;xplain the po-ers exercised b0 an0 fo"r income tax a"thorities.

6!. Write a short note on Nest J"d.ment Assessment. 6# What is called Defective Ret"rn 96 What are the powers of chief commissioner of Income tax? 6, Write short note on self Assessment. 6#. What 0o" mean b0 belated ret"rn 6(. Define S"rchar.e 6,. ;xplain the feat"res of /AE