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Direct tax practice, Exercises of Business Taxation and Tax Management

Shri Govind Guru UniversityBusiness Taxation and Tax Management

Several practice problems related to Indian income tax. The problems involve determining the residential status of individuals, computing income from salary, and computing tax liability. The problems provide detailed information about the income and expenses of the individuals, and require the application of Indian income tax laws to arrive at the solutions. useful for students studying Indian income tax law or for individuals preparing for Indian income tax exams.

Typology: Exercises

2021/2022

Available from 11/27/2022

Pandeyji_30
Pandeyji_30 🇮🇳

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Examples for Practice- Sollution
1. Mr. A,leaves India on 18th April, 2019 and then comes back to India
on 9th January, 2020. His stay in India during earlier years is as follows:
2018- 19: Nil; 2017-18: 54 days; 2016-17: 162 days. Prior to this, he never
went out of India. Determine his residential status.
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Examples for Practice- Sollution

1. Mr. A,leaves India on 18th April, 2019 and then comes back to India

on 9th January, 2020. His stay in India during earlier years is as follows:

2018- 19: Nil; 2017-18: 54 days; 2016-17: 162 days. Prior to this, he never

went out of India. Determine his residential status.

2) Mr. X is a manager of a textile company at japer since 1986. He

submits the following particulars of his income for the financial year

(a) Basic Salary Rs. 240000 Per Annum. (b) Dearness allowance Rs. 5000 P.M (200 P.M enters into retirement benefit). (c) Education allowance for two children @150 P.M per child. (d) Commission on sales @ 1% of turnover of Rs. 10,00,000. (e) Travelling allowance Rs. 30,000. The entire amount was spent by him for official purpose. (f) He was given cloth worth Rs. 1000 by his employer free of cost. (g) He resides in the flat of the company at Jaipur (26 Lacs Population). (h) A cook and a watchman have been provided by the company at the bungalow who are paid @ 400 each P.M (i) He has been provided with a motor car of 1.8 Ltrs Engine capacity for his official and personal use. All expenses are borne by employer of the car. (j) Employer’s contribution to RPF is Rs. 40000 and interest credited to RPF @13% amounted to Rs. 16250. (k) His own contribution to RPF Rs. 40000. (l) Rent of house recovered from his salary Rs. 1500 P.M Compute the Income from Salary for the a.y year 2011-

4) Mrs.X is getting family pension of 7,000 p.m. and has incurred

p.m. as bank collection charges. She also has dividend income from

domestic company of 7,00,000 and bank collection charges are1,000.

She has long term capital gain of `3,89,000. Compute her tax liability

for assessment year 2020-21.

5) AT & Co. (HUF) decisions are taken from India except 2 decisions which

are taken from outside India. Determine residential status of HUF for AY

2020-21 assuming Karta of HUF is (a) ROR in India; (b) RNOR in India and

(c) Non-Resident in India.

7) Mr. X furnishes the following particulars for the previous year

relevant to A/Y 2020-21. Profit and Loss A/c for the year ending 31-3-

Particulars Rs. Particulars Rs. To salary to staff 11500 By Gross Profit 125000 To entertainment expenses 6500 To general expenses 5500 To bad debts 2250 To reserve for bad debts 5000 To advertising expense 3500 To interest on X Capital A/C 1500 To acquisition of patent’s rights

To telephone expenses 6000 To depreciation 5000 To provision of income tax 2000 To Net Profit 62750 125000 125000 Other information:

  1. Salary to staff includes salary paid to a relative which is unreasonable to the extent of Rs.1,550.
  2. Provision for income tax is excessive to the extent of Rs.1,
  3. Depreciation according to the income tax provision comes to Rs.4,
  4. During the previous year 2019-20 the following payment were made and the same have not been debited to profit and loss account of 2019-20. a. Rs.1,500 paid on 10-6-2019 on account of outstanding customs duty of the previous year 18-19, and b. Rs.2,500 paid on 15-6-2020 on account of outstanding GST of the previous year 2019-
  5. Patents were acquired on 4-11- Find out the taxable income of X for the A/Y 2020-21. Due date of filling return of income of assessment year 2019-20 and 2020-21 is 31st July of the relevant A/Y.

9) Determine the residential status of A for AY 2020-21 A is an Indian

Citizen and goes from India to Spain for visit purposes on 27th

December, 2019. Prior to this, he had never been out of India.

11) Mr. Avinash furnishes the following particulars of his income

for the A/Y 2020-21. Profit and Loss Account for the year ending 31-

Particulars Rs. Particulars Rs. To office expenses 12400 By Gross Profit 298000 To general expenses 12000 By sundry receipts 19000 To legal expenses 8000 By custom duties recovered back from Govt. (earlier not allowed as deduction) 15300 To depreciation on Machinery 11000 By bad debts recovered (earlier allowed as deduction) 3000 To staff salary 21000 By gift from son 40000 To bonus to staff 15000 To contribution to approved gratuity fund 16000 To outstanding liability for GST 18000 To audit fees 21000 To Net Profit 240900 375300 375300 Other information: a. Bonus to employees according to the Payment of Bonus Act 1965, comes to Rs. 4,200. b. Depreciation on machinery shown in the profit and loss account is calculated according to the income tax provisions. c. General expense includes payment of Rs.9,000 to an approved educational institute for the purpose of carrying on scientific research in natural science. The research is, however now related to the business of the assessee. d. During the previous year Mr. Avinash also made a capital expenditure of Rs.5,000 for

8. Mr.X has income from business of owning and maintaining race camels

60,000, loss from owning and maintaining race horses7,000 and income

from horse races 7,000. He has brought forward business loss of7,000 of the

assessment year 2005-06 and brought forward business loss of `7,000 of the

assessment year 2017-18. Compute his tax liability for the assessment year