CA Inter Test – 2 | NOV 2023 CA Aarish Khan

TEST PAPER 2 – NOV 2023 | CA INTER INCOME TAX

Question 1:
Mrs. Roma, an Indian Citizen, is a government employee working for the Indian Government. She
submits the following information for the previous year ending 31.03.2023:
Rs.
1 Salary income received in Malaysia for services rendered there 2,00,000
2 Profit from business carried on in Orissa 80,000
3 Loss from business carried on in Baroda (20,000)
4 Profit from business carried on in Paris (income is earned and 42,000
received in Sydney and business is controlled from Paris)
5 Loss from business carried on in Canada (though profits are not (46,000)
received in India, business is controlled from Dehradun)
6 Unabsorbed depreciation of business in Canada 16,000
7 Profit from Indonesia business (controlled from Delhi) and 60% of profit 70,000
deposited in a bank in Indonesia and 40% received in India
8 Rent from house property situated in Canada and received in Canada 1,92,000
Determine the gross total income of Roma for the A.Y. 2023-24 ignoring the provisions of section
115BAC on the assumption that she is:
1) Resident but not ordinarily resident in India
2) Non-resident in India. (8 Marks)

Question 2:
Mr. Kamal, a resident individual aged 48 years, is working at a senior management position in a
private bank since past 20 years. During the previous year 2022-23, he received the following
emoluments from the employer:
a) Basic Salary Rs. 3,50,000 per month
b) Client entertainment reimbursement of Rs. 20,000 per month out of which he submitted
bills for Rs. 2,00,000 for the relevant year.
c) Leave travel allowance of Rs. 4,00,000 per annum. He took a trip to Goa with his spouse and
two children in December 2022 for which plane boarding tickets of Rs. 1,00,000 and hotel
bookings of Rs. 3,00,000 were submitted to the employer.
d) Performance bonus amounting to 20% of annual basic salary.
e) He is eligible to take a staff housing loan upto Rs. 20,00,000 at a concessional rate of 2.5% p.a.
He availed a housing loan of Rs. 15,00,000 out of the same on 1st June 2022. No repayment of
loan has been made during the F.Y. 2022-23. The lending rate of SBI as on 1.4.2022 for
housing loan may be taken as 8% p.a.
f) The Bank also allotted 1,500 sweat equity shares to Mr. Kamal in May 2022 at the rate of Rs.
1,300 per share. The Fair market value of the share was Rs. 1,500 per share on the date of
exercise of option by Mr. Kamal. He sold all the shares for Rs. 2,100 per share on 31.03.2023
on recognized stock exchange. Assume Securities transaction tax has been paid.
The following transactions were made by Mr. Kamal during the previous year 2022-23:
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CA Inter Test – 2 | NOV 2023 CA Aarish Khan
(a) He earned rental income of Rs. 35,000 per month from a 3 BHK residential flat situated at
Delhi. He purchased the said flat for Rs. 45 Lakhs in June, 2022 using the housing loan
availed from the employer and his own savings. It was let out from July, 2022. Municipal
taxes of Rs. 12,000 for F.Y. 2022-23 was paid by Mr. Kamal.
(b) He invested Rs. 30,00,000 in RBI Floating Rate Savings Bonds on 1st September 2022
earning an interest of 7% p.a. Interest is credited half yearly on 1st January and 1st July every
year. (Assume receipt basis for taxation)
(c) He also paid LIC premium of Rs. 15,000 for self, Rs. 20,000 for wife and Rs. 30,000 for
dependent father, aged 75 years. Medical insurance premium paid on the health of dependent
brother and major dependent son amounted to Rs. 5,000 (paid by cheque) and Rs. 10,000
(paid in cash), respectively.
(d) In December 2022, he earned dividend income of Rs. 5,00,000 (gross) on shares of the bank
held by him.
You are required to compute his total income and tax liability for the assessment year
2023-24, clearly showing all workings. (Ignore section 115BAC provisions) (8 Marks)

Question 3:
Mr. Rishabh, a resident individual, aged 54 years, is engaged in the business of manufacturing clothes.
He earned profit of Rs. 82,45,000 as per profit and loss account after debiting and crediting the
following items:
(i) Depreciation Rs. 15,40,000
(ii) Short term capital gains on transfer of listed equity shares in a company on which STT is paid
Rs. 10,00,000
(iii) He received income-tax refund of Rs. 15,550 which includes interest on refund of Rs. 4,550.
(iv) Dividend income from Indian companies Rs. 15,00,000
Additional information –
(i) Mr. Rishabh installed new plant and machinery for Rs. 65 lakhs on 1.10.2022 which was put
to use on 1.1.2023. Depreciation (including additional depreciation) on this amount of Rs. 65
lakhs is included in the depreciation debited to profit and loss account which has been
computed as per Income-tax Rules.
(ii) Mr. Rishabh took a loan from SBI of Rs. 50 lakhs on 15.9.2022 @10.5% p.a. to purchase such
plant and machinery. Total interest upto 31.3.2023 has been paid on 31.3.2023 and the same
has been debited to profit and loss account. Interest is charged by the bank on monthly basis.
(iii) Advance tax paid during the year is Rs. 17,50,000
(iv) Rishabh purchased goods for Rs. 40 lakhs from Mr. Ram, his brother. The market value of the
goods is Rs. 35 lakhs.
(v) He paid Rs. 40,000 as life insurance premium taken on the life of his married daughter who is
not dependent on him. The sum assured is Rs. 5,00,000 and the policy was taken on 1.4.2017.
(vi) He paid Rs. 45,000 by cheque towards health insurance policy covering himself, his spouse
and his children.
(vii) On 1.7.2022, Mr. Rishabh withdrew Rs. 1.5 crores in cash from three current accounts
maintained by him with HSBC. There are no other withdrawals during the year. He regularly
files his return of income.
You are required to compute the total income and tax payable by Mr. Rishabh for the A.Y. 2023-24,
in the manner so that he can make maximum tax savings. (14 Marks)

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