RASHTREEYA SIKSHANA SAMITHI TRUST®

RV INSTITUTE OF MANAGEMENT
BENGALURU-5600041
(Autonomous Institution Affiliated to BCU)
MID TERM EXAMINATIONS – MARCH -2023
Batch: 2021-23 Semester: III
Sub Code and Name: 21MBA331- DIRECT TAX
Max. Marks: 50 Duration: 1.30 Hours

Course Outcomes (COs)

CO1 Understand corporate taxation system in India
CO2 Understand the basic concepts of Income tax and apply the same on real world situation
CO3 Understand and Computation of taxable Income under different heads
CO4 Understand and apply the deductions available while computing Income Tax
CO5 Evaluate Indian Company and Foreign company tax liability in Indian context
Cognitive Levels (CL)
L1 Remember / Recall the concept or Knowledge
L2 Understanding the Concept of Knowledge
L3 Application of the Concept of Knowledge
L4 Analyzing / Evaluating the concept of Knowledge
L5 Synthesis or Creating new knowledge

Sl. No Section – A CL Marks COs

Answer any THREE of the following questions. Each question carries Five marks. (5 x 3 =15)
1 Mr Kohli, a citizen of India, has been an export manager of Arjun Overseas Limited, an L3 5 CO1
Indian Company, since 1.5.2015. He has been regularly going to the USA for export
promotion. He spent the following days in the USA. for the last five years:
The previous year ended No. of days spent in the USA

31.3.2019 317 days

31.3.2020 150 days

31.3.2021 271 days

31.3.2022 311 days

31.3.2023 294 days

Determine his residential status for the assessment year 2023-2024 assuming that prior to
1.5.2018 he had never travelled abroad.
2 Mr. Mohan purchased a Building for Rs. 5,00,000 in 2001-02. He constructed 1st floor L3 5 CO2
during July 2008 incurred cost of Rs. 20,00,000. On 28/07/2022 he sold it of Rs. 32,00,000
and incurred cost of Rs. 2,00,000 for transfer. The Stamp Duty Value (SDV) at the time of
transfer was Rs. 75,00,000. Calculate his Capital Gain for the AY 2023-24.
3 Differentiate Revenue expenditure and capital expenditure L2 5 CO2
4 Briefly explain deduction u/s 54, 54 B, 54 D, 54EC and 54F L2 5 CO2
5 Elaborate the Tax Planning and Tax Evasion with suitable examples L2 5 CO1
Section – B
Answer any TWO of the following questions. Each question carries Ten marks. (10 x 2 =20)
6 a. Mr. Mohan purchased a Residential House for Rs. 3,00,000 in 1984-85. He L3 10 CO1
constructed 1st floor during July 1998-99 incurred cost of Rs. 2,00,000. The Fair
Market Value as on 2001-02 was Rs. 12,00,000. On 28/07/2022 he sold it of Rs.
98,00,000 and incurred cost of Rs. 2,00,000 for transfer. He purchased new house
within a year for Rs. 60,00,000. Calculate his Capital Gain for the AY 2023-24.
(CCI- 2021-22 is 331, 2001-02 is 100)
b. Mr. X purchases a house property for Rs. 76,000 on 10th May, 1984. He gets the
first floor of the constructed in 1988-89 by spending Rs. 80,000. He dies on 12th
 September, 2004. The property is transferred to Mrs. X by his will. Mrs. X spends
Rs. 81,900 during 2005-06 for renewal / reconstruction of the property. Mrs. X
sells the house property for Rs. 18,00,000 on 15th, March 2023 (brokerage paid
by Mrs. X is Rs. 18,000). The fair market value of the house on 1st April 2001, is
Rs 3,20,000. Find out the amount of capital gains chargeable to tax for the
Assessment Year 2023-24. The cost inflation index for 2001-02 was 100, for
2005-06 it was 117 and for 2022-23 it was 331.
7 The following are the incomes of Shri Ram Prasad for the previous year 2022-23 L3 10 CO3
a. Profit from business in Iran received in Pakistan of 5,00,000
b. Income from house property in Iran received in India of 2,50,000
c. Income from house property in Australia and deposited in a Bank there of
equivalent of INR Rs. 1,80,000
d. Profits of business established in England deposited in a bank there of 5,00,000
(out of Rs. 5,00,000 a sum of Rs.2,00,000 is later brought into India)-this business
is controlled from India;
e. Accrued in India but received in England of Rs. 2,00,000
f. Profit earned from business in Bangalore of 6,00,000 received in New York
g. Income from agriculture in England-it is all spent on the education of children in
London of 1,50,000 and
h. Past untaxed foreign income brought into India during the previous year of 10,000.
From the above particulars ascertain the taxable income of Shri Ram Prasad for the
previous year 2022-23 if Shri Ram Prasad is (i) a resident, (ii) a not ordinarily
resident, and (iii) a non-resident.
8 X Ltd a Manufacturing company owns the following assets on April 1st 2022 L3 10 CO3
Assets Rate of Depreciation WDV as on 1-04-22

Plant A 30% 16,00,000

Plant B 15% 18,50,000

Plant C 15% 28,50,000

Plant D 30% 4,00,000

X ltd purchases the following assets
Assets Rate of depreciation Date of Purchase Cost price (Rs)

Plant E 30% 12th January 2023 13,00,000

Plant F 15% 12th September 2022 8,00,000

X ltd sells the following Plants during the PY 2022-23
Assets Rate of Depreciation Sale consideration

Plant C 15% 8,00,000

Plant A 30% 16,00,000

Determine the amount of depreciation for the Ay 2023-24. The company is not All eligible
for additional depreciation.
Section – C
Case Study – Compulsory (1 x15=15)
9 Sri Venkat is the proprietor of the business. His profit and loss account for the year ended L4 15 CO2
March 31, 2022, is as follows:

Particulars Amount Particulars Amount

Establishment 7,500 Gross Profit 1,82,070
Interest on Govt.
Rent, Rates and Taxes 3,500 5,400
Securities
Rent from House
General Charges 1,500 5,400
property
Household expenses 50,500
Commission 2,500
 Discount & Allowances 5,000
Bad debts 6,000
Provision for bad debts 1,200
Postage &Telegrams 270
Law Charges 5,000
Advertising 2,500
Fire Insurance Premium (for
360
Goods)
Repairs And Renewals (not for
1,000
business premises)
Loss on sale of Motor Car 2,500
Life Insurance Premium 2,000
Wealth Tax 1500
Interest on capital 3,500
Audit fees 3,000
Interest on Bank loan 6,000
Depreciation 2,500
Provision for Income Tax 4,200
Net Profit 80,840
192,870 192,870
Following further information are given:
1. Amount of Income Tax Actually paid during the year is Rs. 4,500
2. Depreciation allowable is Rs 2,000 as per income Tax rule.
3. Advertising expenses includes Rs 500 pent on special advertising campaign to
open a new shop in the market.
4. Law charges are in connection with protection of the trademark.
5. Sri Venkat carries on his business from rented premises, half of which is used as
his residence.
6. Bank Loan is taken for personal purposes.
7. General Charges includes home servant expenses of Rs. 500.
Compute the business income of Sri Narayana and his total income for the AY-2023-24.