JBIMS

SYMHRDM - SYMIM

Direct Taxation - Revision

1. Mr. A is the owner of a house property. One-fourth of the house is self occupied and
the remaining is let out at Rs.5,000 per month. Unrealised rent not received during the
year 2018-19 Rs.10,000. Following additional information is available :

Rs.
Municipal taxes paid by Mr. A (including arrears of 1,000
earlier year Rs.500)
Municipal taxes paid by tenant 500
Interest on funds borrowed for repairs 36,000
Repairs of house (borne by tenant) 3,000
Municipal value 1,68,000
Fair market value 1,64,000
Standard rent 1,60,000
Fire insurance 2,000
Light and water charges 1,500
Painting expenses 30,000

Mr. A receives during the year unrealised rent of the previous year 2015-16 Rs.4,000.
You are required to ascertain the income chargeable to tax under the hear “Income from
House Property” of Mr. A for A.Y. 2019-2020.

2. From the following Profit and Loss Account of Mr. B for the year ended March 31,
2019, compute his business income :

Rs. Rs.
To Opening Stock 36,000 By Sales 3,26,000
To Purchases 3,06,000 By Closing Stock 98,000
To Gross Profit 82,000
------------ ------------
4,24,000 4,24,000
======== ========
To Office salaries 20,000 By Gross Profit 82,000
To General expenses 9,500 By Interest on bank deposits 14,100
To Interest on capital 2,000 By Interest on company 17,600
deposits
To Provision for doubtful 6,000 By refund of income tax for 1,000
debts A.Y. 2015-16
To Depreciation 14,000 Agricultural income 10,000
To Advertisement 8,000 Share of profit from 20,000
partnership firm
To Fire Insurance Premium 1,200 Commission 5,000
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 To Donation 2,000 Dividends from domestic 3,000
Companies
To embezzlement by 1,000
employee
To Staff Welfare 2,000
To Bad Debts 1,000
To Entertainment 2,000
To Motor car expenses 2,000
To Advance Income tax 4,000
To GST paid 5,000
To Income tax for 2017-18 3,000
To Drawings 8,000
To Net Profit 60,000
------------ -----------
1,52,700 1,52,700
======= =======

Following additional information is given :

1. Allowable depreciation was Rs.10,000.
2. General expenses include furniture purchased worth Rs.2,500.
3. Rs.1,500 paid as penalty imposed by Income tax Officer has been wrongly included
in General expenses.
4. Office salaries include salaries paid to Mrs. X Rs.3,000. Mrs. X, B.Com., writes the
accounts of the business.
5. Advertisement includes Rs.1,000 for the advertisement in souvenir of a political
party and Rs.5,000 for introducing a new product, the benefit of which will accrue
for 3 years.
6. 1/5th of motor car expenses are considered personal.

3. From the following information, compute the income under “Income from Other
Sources” of Mr. X :
a. Income from agricultural land in India Rs.10,000
b. Income from agricultural land in Nepal Rs.12,000
c. Mr. X is a tenant of Mr. Y. Mr. X has, in turn rented the bungalow to Mr. Z for a
rent of Rs.1,500 per month. Mr. X pays rent of Rs.500 per month to Mr. Y.
d. Interest earned :
i. Interest on deposits with banks Rs. 1,500
ii. Interest on Public Provident Fund Rs.10,000
iii. Interest on Government Securities
(Net Rs.13,500; Tax deducted at source Rs.1,500)
e. Lottery prize Rs.14,000 (net)
He had purchased lottery tickets worth Rs.1,000.
f. He received a refund of Rs.5,000 from the Income tax Department comprising of
refund of excess Income tax Rs.4,000 and interest on income tax refund Rs.1,000.

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4. Mr. X, a State Government employee, gives you the following information for the year
ended 31st March, 2019 :
Rs.
Basic salary
Upto 31-8-2018 20,000 p.m.
From 1-9-2018 25,000 p.m.
Dearness allowance 15,000 p.m.
Arrears of salary 20,000
Conveyance allowance received (amount spent Rs.18,000) 25,000
Commission on sales 10,000
Entertainment allowance 7,000
Employer’s contribution to Recognised Provident Fund 15% of basic
salary & D.A.
Children’s education allowance 500 p.m. per
child for two
children
Hostel Allowance 380 p.m. per
child for two
children
City Compensatory allowance 300 p.m.
Re-imbursement of medical expenses in government hospital 48,000
Re-imbursement of other medical expenses 10,000
Medical insurance premium paid by employer 12,000
Life insurance premium paid by employer 11,500
Leave salary received 28,000
Profession tax (of which Rs.2,000 was paid by employer) 2,500

Other information :

a. Dividend received from Bank of India Rs.12,000

b. Interest received from Government securities Rs.24,000
c. Royalty received Rs.62,000
d. He contributed Rs.1,50,000 towards recognised provident fund and Rs.50,000
towards Pension Fund of LIC.
e. He paid by cheque for Mediclaim premium of Rs.28,000 on health of himself,
spouse and dependent children. He also paid Rs.31,000 for Mediclaim premium
on health of his parents, who are independent.
f. He had taken loan from SBI for higher education of his son who is pursuing MBA
with Mumbai University. During the year 2018-19, he paid Rs.60,000 as interest
on this loan.

Compute his taxable income for A.Y. 2019-20.

5. Mr. C, a severely physically disabled (85% disability) individual is employed with

XYZ Ltd. He furnishes you the following information for the year ended 31 st March,
2019.

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 a. Basic salary Rs.20,000 p.m.
b. Dearness allowance @ 10% of basic salary
c. Profession tax deducted Rs.200 p.m.
d. Bonus Rs.30,000.
e. House Rent Allowance Rs.900 p.m. (fully taxable)
f. Gratuity withdrawn while in service Rs.50,000.
g. Perquisite value of gas, water and electricity Rs.3,000.
h. Arrears of salary received as per revised pay scale. Net arrears Rs.50,000. Tax
deducted at source on arrears of salary Rs.15,000.
i. He owned a residential house which was used for his own residence. Fair rent
Rs.80,000 and Municipal value Rs.70,000.
j. He spent the following amounts during the year :
i. Municipal taxes paid Rs.5,000
ii. Insurance of property Rs.3,000
iii. Interest on housing loan from ICICI Bank Rs.40,000 for purchase of
house.
iv. Repairs Rs.6,000.

Other information :
k. Dividend received from Reliance Industries Rs.40,000.
l. Interest received on Debentures Rs.22,000.
m. He paid by cheque Mediclaim premium of Rs.27,000 on health of himself, spouse
and dependent children.
n. He had taken loan from SBI for higher education of his son who is pursuing MBA
with Mumbai University. During the year 2018-19, he paid Rs.70,000 as interest
on loan.

Compute the total income of Mr. C for A.Y. 2019-20.

6. From the following data of Mr. D for the previous year ended 31-3-2019, compute the Income
from Other Sources :
Particulars Rs.
Director’s fees from a Company 20,000
Interest on bank deposit 5,000
Income from undisclosed source 10,000
Winning from lottery (Net) 49,000
Royalty on book written by him. He paid Rs.1,000 for typing the 11,000
manuscript of the book.
Lectures in seminars 7,000
Interest on loan given to a relative 6,000
Interest on debentures of a Company (Tax deducted at source 18,000
Rs.2,000)
Interest on Post Office Savings Bank Account 4,500
Interest on Government securities 3,500
Interest on Monthly Income Scheme of Post Office 30,000
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7. Mr. S is a research engineer employer in ABC Ltd. on a monthly salary of Rs.10,000
plus D.A. Rs.1,000 per month. During the year he incurred Rs.500 on conveyance and
Rs.1,000 on purchase of books.

His other income is as follows :

a. Interest on fixed deposit in State Bank Rs.2,500.
b. Remuneration for examinership from a University Rs.2,000.
c. A lottery prize of Rs.10,000. He had spent Rs.1,000 for purchasing the lottery
ticket.
d. A prize of Rs.2,000 in photography competition.
e. Royalty received in respect of a research book Rs.20,000. He claims expenditure
of Rs.53000 in preparing the manuscript, purchasing books etc.
f. Dividend on equity shares Rs.Rs.5,000.
g. Dividend on 200 preference shares of Rs.100 each at Rs.5 per share.
h. Interest on 8% debentures in A Ltd. of Rs.10,000.
i. He has paid Rs.100 as collection charges to his bankers for collection of
interest on debentures.
j. Mr. S has incurred Rs.50,000 for treatment of a disabled dependant and
Rs.45,000 was deposited with LIC for maintenance of handicapped dependant.

You are required to calculate his taxable total income for A.Y. 2019-20.

8. Mr. X purchased a house property on 21st April, 1995 for Rs.70,000. He gifted the
house property to his friend Mr. Y on 30th August, 2006. Following renovations were
carried out by Mr. X and Mr. Y to the house property :

By Mr. X during FY 1999-2000 20,000

By Mr. X during FY 2005-2006 1,30,000
By Mr. Y during FY 2015-2016 5,00,000

The fair market value of the property as on 1-4-2001 is Rs.2,00,000. The house was
sold by Mr. Y to Mr. T on 2nd February, 2019 for a consideration of Rs.20,00,000.

In order to save capital gains tax, on 4 th August, 2019, Mr. B invested in a new
residential house property an amount of Rs.25,00,000. He sold the new house property
on 25th July, 2020 for Rs.28,00,000. Compute the capital gains of Mr. Y for A.Y. 2019-
20 and 2020-21.

F.Y. CII
2001-02 100
2005-06 117
2006-07 122
2015-16 254
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 2018-19 280

9. From the information given below, find out the income chargeable to tax for AY 2019-
20 in the hands of Mr. A, assuming he is (i) an ROR, (ii) an RNOR and (iii) an NR.
Give reasons for the taxability or otherwise of each item.

S. Particulars Amount
No. Rs.
a. Royalty received by him outside India from the Government of India 20,000
b. Technical fees received from XYZ Ltd. (an Indian company) in USA 1,20,000
for advice given by him in respect of a project situated in UK
c. Capital gains from the transfer of a capital asset in India. 1,55,000
Consideration received in USA.
d. Income from a business connection in India (it is received outside 2,00,000
India)

10. A is a citizen of India and employed in India with an Indian company. He leaves India
for the first time on August 21, 2018 to complete a project in Australia for his employer
company. He will not come back before March, 2019. Find out his residential status
for AY 2019-20.

11. Short notes :

a. Cost inflation index
b. Annual value of house property u/s 23(1) of Income tax Act, 1961
c. “Transfer” u/s 2(47) of Income tax Act, 1961
d. Scope of total income of a person who is resident but not ordinarily resident in India
e. Deductions allowed from annual value whilst computing taxable income from house
property
f. Exemption u/s 54 of Income tax Act, 1961
g. Any 5 items of income which can be included under the head “Income from other
sources”
h. Any 5 items which qualify for deduction u/s 80C of Income tax Act, 1961
i. Agricultural income
j. Deduction u/s 80U
k. Capital asset u/s 2(14) of Income tax Act, 1961
l. Deduction u/s 80D of Income tax Act, 1961
m. Relationship between “previous year” and “assessment year”
n. Section 37 of the Income tax Act, 1961
o. Basic tests to be fulfilled by an individual in order to be treated as “Resident” in India.