1. X ltd is engaged in the business of manufacture of goods in India for domestic market.

The audited
profit and Loss account for the year ending 31 st March 2018 is as follows:

Particulars Amount Particulars Amount

Cost of goods sold 13,78,100 Sales 42,70,500
Office Expenses 1,30,000 Rent of quarters near factory given to workers
60,000
Salary to employees 12,80,000 Rent of commercial property given on rent to
a foreign bank 1,30,000
Expenditure on scientific research 84,000 Sale proceeds of gold(not being stock in trade)
2,60,000
Bad debts 10,000 Amount charged from persons using guest
house of company 10,000
Entertainment expenses 57,000
Advertisement expenditure 2,27,000
Travelling expenses 3,20,000
Interest 82,000
Advance Income-Tax 30,000
Income and Wealth Tax 86,400
Sales tax, Excise duty and customs 1,76,000
duty
Municipal tax of quarters given to 16,000
workers
Municipal tax of commercial 12,000
property
Repairs of worker's quarters 12,000
Repairs of commercial property 7,000
given on rent
Repairs of factory 10,000
Insurance 36,000
Land revenue of worker's quarters 2,000
Land revenue of commercial 6,000
building
Depreciation 1,86,000
Other expenses 1,10,710
Net profit 4,72,290
Total 47,30,500 47,30,500

Other Information:

1. Cost of goods Sold include,Goods of Rs.3,80,000 purchased from Mrs .X during the year,who is wife of
Director Mr.X.

The market value of the goods is Rs.2,86,000.

2.Goods purchased from Y Ltd of Rs.90,000 which is paid by bearer cheque

3.Out of Salaries of Rs.12,80,000 –

a.Rs 30,000 is employees contribution to recognized provident fund ,Rs.17,500 of which is credited in the
employees account in the relevant fund before due date

b.Rs.40,000 is paid outside India on which tax has not been deducted at source

4. Expenditure on scientific research includes Rs.30,000 on cost of land and Rs.24,000 paid to an approved
national laboratory for undertaking scientific research under an approved programme

5. Advertisement expenditure includes Rs.16,000 being cost of advertisement which appears in political
party magazine

Determine taxable income of X ltd for assessment year 2018-19

 2.XYZ ltd is an Indian company furnishes the following particulars for the assessment year 2018-19

Particulars Amount Particulars Amount

Salary to staff 12,40,000 Gross Profit 25,58,000

Travelling and Conveyance 18,000 Rent of flats given to officers 12,000

Office expenses 3,000 Sundry Receipts 5,000

Sales Tax 28,500 Interest on bank deposits 17,000

Contribution to approved national
laboratory for carrying out approved Capital gains on Short-term
scientific research 79,500 Investment 3,000
Gratuity Fund 5,000
Reserve for future losses 20,000
Bad debts written off 3,000
Advance Income-tax 13,000
Car Expenses 9,000
Depreciation On:
Machinery 18,000
Car 3,000
Furniture 5,000
Building 3,000
Rent and Repairs of building 3,000
Advertisement expenses 7,500
Municipal taxes and Ground rent of
flats given to officers 7,000
Sundry expenses 16,000
Income-tax 11,000
Dividend tax 700
Net Profit 11,01,800

Total 25,95,000 Total 25,95,000

Other Information:

1. Car is utilized for non-business purpose by a friend of a director. In past years one-fourth of such
expenditure was disallowed
2. Sundry expenses include Rs.9000 being payment of printing bill to relative of the managing director,
payment is unreasonable to the extent of Rs.4700

3. Salary includes payment of Rs.21,000 in cash to employee. It also includes medi-claim insurance
premium for the benefit of employees of Rs.15,000 out of which Rs.6000 is paid in cash.

4. Though amount of depreciation on building, car and furniture has been calculated as per tax provisions,
depreciation in respect of machinery is in excessive to the extent of Rs.2000

5.The company has deposited Rs.2,40,000 with Maruti Udyog Limited on March 1,2018.the car is likely to
be delivered in June 2018.The said amount is not debited to profit and loss account.

6.The company gets a refund of sales tax of Rs.3000.(It was allowed as deduction for the previous year
2013-14).The amount is not credited to the profit and loss account,as the Commissioner’s appeal against
the refund is still pending in the Delhi High court

Determine the taxable income of the assessee company for the AY 2018-19