2012
DIRECT TAXES
Full Marks: 80
Time: 3 hours
(The figures in the margin indicate full marks for the questions)
1. Answer the following as directed: 1x10=10
a) As per Section 2(7) a person by whom any tax or any other sum of money is payable under the Income Tax Act is known as _______. (Fill in the blanks)
b) Income tax is an annual tax on income. (State whether the statement is true or false)
c) Perquisites cannot be given in monetary form. (State whether the statement is true or false)
d) Fringe benefits provided to the employees on which Fringe Benefit Tax is payable by the employer is tax free in the hands of employees. (State whether the statement is true or false)
e) Nationality of an assessee has no relation with the concept of residential status. (State whether the statement is true or false)
f) An Indian citizen is always considered as resident and ordinarily resident in India. (State whether the statement is true or false)
g) Residential status is determined with reference to the individual’s physical presence in India. (State true or false)
h) Receipts from crossword puzzles and horse race are not taxable as income. (State true or false)
i) Indexation of the cost of _______ is required to be done in case of long term capital asset. (Fill in the blank)
j) ‘Best judgement assessment’ is also known as ‘ex-parte assessment’. (State whether the statement is true or false)
2. Write short answer to the following in about 50 words each: 2x5=10
a) State the meaning of income as per the Income Tax Act.
b) State the meaning and nature of direct tax.
c) State the meaning and assessment of tax.
d) State the meaning of agricultural income.
e) Define assets under the Wealth Tax Act.
3. Answer the following in around 200 words each: 5x4=20
(a) Explain the meaning of and tax implication of the head ‘Income from other sources’.
Or
Elaborate the meaning of gross total income.
(b) Explain the meaning of capital asset. How do capital gains arise?
Or
What are the deductions allowed while computing income from house property?
(c) State the procedure of filing tax return by various categories of assessee.
Or
State the provisions relating to advance payment of tax.
(d) Discuss the use of PAN and TAN. How can these be procured as per the Income Tax Act?
Or
State the consequence of non-payment of advance tax.
(e) Explain the manner of computation of and tax implication of ‘Profits and gains from business and profession’.
Or
Discuss the manner of determining the residential status under resident but not ordinarily resident.
4. Answer the following:
(a) (1) Mr. Subha had purchased a residential house property on 15-5-1987 for Rs. 1,30,000. He had spent Rs. 70,000 on improvement of the house during the year 1988-89.
On 4-8-2010 he sold the house for Rs. 13,95,000. His expenses on transfer amounted to Rs. 12,000.
Compute the amount of capital gains for assessment year 2011-12.
Given, cost of inflation index (CII) 1987-88=150; 1988-89=161; 2010-11=711.
(2) Ankan of Hyderabad is the owner of a house property in Guwahati. The house is let out at a rent of Rs. 10,000 p.m. Its municipal valuation is Rs. 1,20,000 p.a. and standard rent is Rs. 1,15,000 p.a.
The fair rent of the house is Rs. 1,35,000.
The house was self-occupied for two months; and remained vacant for one month. Municipal tax paid Rs. 8,500. Compute the net annual value for the assessment year 2011-12. 5+5=10
Or
State the components of profit in lieu of salary; and tax liability thereon. 10
(b) Explain the procedure of assessment of tax under the Income Tax Act 1961. 10
Or
Discuss the provisions of the Income Tax Act with regard to tax deduction at source and duty of the authorities deducting tax at source. 10
(c) Discuss with reason whether the following are agricultural incomes as per the Income Tax Act: 10
1) Rent from the house property situated in a village.
2) Rent in kind received in respect of land given for cultivation under ‘bhage kheti’.
3) Life annuity received as a consideration for transfer of land used for agricultural purposes.
4) Land leased for grazing of animals required for agricultural purpose.
5) Income derived from land used as stone quarries.
6) Income derived from goat rearing.
7) Compensation received for acquisition of agricultural land for defense and military purposes.
Or
State the evolution and history of income tax in India. 10
(d) Mr. Ayan is employed in a public limited company in Hyderabad. During the previous year 2010-11, he received the following payments from his employer:
| | Rs. |
| Basic salary Dearness allowance Entertainment allowance Servant allowance Bonus for the year Commission received | 13,000 p.m. 8,500 p.m. 1,000 p.m. 600 p.m. 73,000 34,000 |
Free furnished accommodation for which the employer paid a rent of Rs. 5,000 p.m.
Employer’s contribution to recognized provident fund @ 13% p.a. on basic salary. Uniform allowance Rs. 200 pm (actual expenditure Rs. 100 pm on an average)
During the previous year, the employer deducted Rs. 2,000 as professional tax from his salary.
Compute his income from salary for the relevant assessment year. 10
Or
What is net Wealth? How is it computed? Discuss. 10
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