TAXATION-I - HONOURS

Semester - CC 4.1 Ch
Paper -Paper
2019 Examination Paper Solved
Group-A
1 for the first
to India
, a foreign national (not being a person of Indian origin), came2018-19, 2019-20 and
17, 2016.
During the financial years 2016-17, 2017-18,
2020 3 "PU
he
was in India for 150 days, 75 days, 21 days, 190 days and 72 days respectively. LDe
,

ermine residential (5 marks)

status of Mr. Paul for the assessment year 2021-i4.
SOLUTION
ng the previous year 2020-21, Mr. Paul days & during four years im-
was in India for 72
ediately preceding the previous year, he was in India for 436 days as shown below
Year 2016-17 2017-18 2018-19 2019-20 Total
No. of days
stayed in India 150 days 75days 21 days 190 days 436 days
he satisfies of the cónditions he becomes resi-
hus,
dent in India for the
one
specified u/s 6(1) & consequently,
P.Y. 2020-21.
Condition (ii) of sec. 6(6) requires that an individual should be present in India for at least 730
days during 7 years immediately preceding the relevant previous year. Mr. Paul was in India
for 436 days during 2013-14 to 2019-20. Hence, he does not satisfy this condition.
Thus, he is a resident but not ordinarily resident in India for the previous year 2020-21.

Or,
On 10th 2020 the Assessing officer comes to know that Mr. Subham Das will leave
(a) May,
with intention of returning. The Assessing Officer wants to tax
India on 30th May, 2020 no

to 30h May, 2020 along with the current assessment, which is ob

his income earned up
Mr. Das. Discuss.
jected by
- -

SOLUTION
Pg. 8
Refer Q9. on
income.
Mention any two fully exempted
(b)

SOLUTION
Refer Pg. 61
Calcutta University as per >sec. 2(31) of Income Tax Act, 1961.
status of
ic) State the

OLUTION
eter Pg. 12 (2 +2+1=5 marks)
 Prayas Taxatin
t whether tlhe tollow ing incomes are treated as agricultural inCome lor the purp of
o m e tav:

a)ompensation recoeived from the Government for the requisition of land which has buven
used tor
agricultural purposes.
(b) Dividend received from a company whose major income constitutes agricultural income
(c) Profit varned from the sale of wild grass of spontaneous growth.
(d) Income earned from the sale of tea grown and manufactured by the assessee.
(e) Inconme by way of selling rice produced fronm the
paddy, purchased by the
assessee
(5 urks)
SOLUTION
(a) No: (b) No; (¢) No; (d) Agricultural income to the extent of 60%; («) Nó

3. Imtiaz submits the

following particulars of the incomes and outgoings for the year 2020-21:
(a) Income trom lottery (net after deduction of tax @
30%) F 84,000.
(b) Rent from
sub-letting of house 7 1,08,000; rent collection charge? 1,800; nsurance pre-
mium 4S00; rent paid 7 84,000.
(c) Dividend from ABPL Ltd., an
Indian Company
24,000.
(d) Dividend from Johnson Ltd., a
foreign company
72,000.
Compute his income from other sources for the assessment year 2021-22.

(1 2 1 +1 5narks)
SOLUTION
Computation of income from other sources of Mr. E for A.Y.
2021-22
Particulars Amount Amount Amount
Dividend received from an lndian
company 24,00
Dividend received from
Foreign company 72,00
Winning from lottery ( 84,00 / 70%)
1,20,000
Sub-letting of lHouse
less: Expenses 1,08,000
Rent Collection Charges
1.800
Insurance Premiumn 4800
Rent P'aid 84,000 90,600 17,400
Income from Other Sources
2,33,400
4. State the
provisions of the lncome lax Act
regarding clubbing of incone of minor with
income of parents. the
(5 arks)
SOLUTION
Refer Pg. 497

Or,
Cunpute amount of deductions available to the assessr
u/s 80 in the
following cadses:
 Honours
= 2019 Paper Solved
at
tneutment ot his depahient
hcurred medical enpenditure ot R 5 . N ) for
bv an appovEi dxtor)
iit
Cos Cars old and suttering trom c a n e r (certitnd
covered R 50,000 from the
insurance
compan
SOLUTION
25,000 (i.e., i
75,000- 50,000) is
allowable u/s SODI
Ouvankar has
deposited ? 50,0) under seheme tramed b 11C tor manten.ince or n
a
Cenent brother with
severe disability (0) The disabity is certitici Dv the
tent medical authority omj
SOLUTION
1,25,000 is allowable u/s soDD
(C) Saswata had taken a loan from bank
50,000
for
doing MBA. During the provous year he
including interest 10,000. epai
SOLUTION
7 10,000 is allowable u/s 80E.

Group B
5. The following is the Profit and Loss
Account of Shri Vivek Kr. Shaw tor the
31.03.2021: year ended
Dr.
Cr.
Particulars
Particulars
To Opening Stock
To Purchases
90,000| By Sales 5.35,000
3,85,500 By Closing Stock 14000
To Wages 34,050 By Bad Debt Recovered 2.000
To Rent 12,000 (disallowed in earlier year)
To General Charges 16,500 By Bank Interest S.500
To Donation to National Defence 2,500 By Interest on PPF 3.500
Fund
To Salaries 64,600 By lnterest on NSC
To Bad Debt 3,000 By Profit on sale of machinery 4.000
To Provision for doubtful debt 6,200
To Depreciation ,500
To Income Tax 3,900
To Legal Expenses 6,200
To Interest on Capital 8,000
To Net Profit 55,100
6,98,050 6,98,050
Other Infonuation:
stock were valued at 10% below cost.
and closing
(a) Both opening tor intringement of
? 3,000 pad as penalty customs regulations.
Ib) Leval expenses include
iv
include ? 15,000 paid in cash.
T'urchases
(c)
rules ? 12.000. (10 arks)
per IT
2021-22.
as
(d) Depreciation for the
assessment year
Mr. Shaw
income irom business of
Compute

Profession
SOLUTIONN of Business o r
of Profits and Gains
Computation A.Y.2021-22
Shaw for the
Shri Vivek Kr. Amount
of Notes Details

Particulars

Profits &gains of Business or Profession 55,100

of account
Net profit a s per books
Add: Expenditure disallowed but debited in P/LA/C 3,900
Income tax
3,000
Penalty
3 6,200
Provision tor bad debts
2,500
Donations
5 8,000
Interest on capital
Cash Purchase 15,000
10,500 49,100
Depreciation
1,04,200
Less: Expenditure allowed but not debited in P/L A/c
Depreciation 12,000

Less Income not taxable but credited to P/L A/c 2,000

Bad debt recovery (earlier not allowed) 2,000
Interest on PPF 3,500
Less: Income taxable under other heads
Interest on NSC
10 1,050
Profit on sale of machinery 11 4,000
Bank interest
10 8,500 31,050
73,150

Adjustment for valuation of stock

Add: Under valuation of closing stock 12 16,000
Les: Under valuation of
opening stock 13 10,000 6,000
Profits and Gaims of Bustness or Profession
79,150
Notes:
1. Income tax is
specifically disallowed u/s 40(a).
2. Any ayment for infringenment of law is not allowed as deduction.
3. Any reserve or prov isions are not allowed as deduction as these are not expenditure or loSs.
Honours 2019 Paper Solved
t O n Is not
allowed as it in not rlatod to businesn f Iryer, funaton sidli
lowed u/s 80G
5. Interest on capital is not
allowalbl
n y expenditure icurred cash
7.
in in exces of ?10,000 shall b dinallvwed u/s 30A)
Depreciation is allowed per IT At o t as pr boniks
as
8. Bad debt recovery is taxable only if it is carlier allowed
9. Interest on PE
10.
is
exempt
Interest income taxable under the head ineome fron tther oure
is
11. Profit on sale of machinery is considered under the e
head rapital
12.
Under valuation of ClosingStock yain
Value of closing Stock (?1,44,000/90) - ?1,60,000
Under valuation of
13.
closing stoxk 10% of ?1,60,00)- 216,00) is
Under valuation of stock
opening
Value of Stock
(790,000/90%) =71,00,000.
Under valuation of stock is 10% of
?1,00,000- 7 10,000
Or,
(a) Chemco Ltd. engaged in manufacture of chemicas and furnishes the following par-
ticulars relating to manufacturing unit at Haldia for the year ended on 31
0 2021
WDV of
machinery on 01.04.2020 10,00,000
New machinery purchased on 01.08.2020 10,00,000
New machinery purchased on 01.01.2021
4,00,000
Machinery sold on 15.01.2021
1,00,000
All assets were put to use
immediately. Kate of
depreciation on
mach1nery
Rate of additional depreciation is 20% Is 15
Compute the depreciation allowable to Chemco Ltd and the WDV
of bloxk of assets
as on 31.03 2021

SOLUTION
Computation of Depreciation
Particulars
Opening W.D.V Amount
Add: Purchase 10,00,000
during the year
14,00,000
Iess: Sale proceeds during the year 24,00,000
Closing w.D V. (before depreciation) 1,00,000
Depreciation [?19,00,0X0 * 15. 4,00,000 15% 23,00,000
Additional Depreciation |10,00,0X) 20 +
3,15,000
4,00,000
Total Depreciation
20% 2 2,40,000
5,55,000
 Prayas axation 1

furnishes the fol-

manufacture jute of bags
Ritu Bala Khan engaged
in the business of deduction available u/s 35
os. 2020-21. Compute
the
for the previous year business or proBession.
lowing particulars and gains for
the head profits
the income under
while computing 2,00,000
scientific re-
to WT, Kharagpur for
an approved
Amount pail
Search program
related to 20,000
research not
Amount paid to ISI, Kolkata for statistical
business
Amount paid to lIEST, Shibpur for scientific research 3,00,000
land in for in-house research 10,00,000
P'urchased a
piece of Aachipur
Kevenue expenditure incurred for in-house research 50,000
(4+1 5narks)
SOLUTION
Computation of amount of deduction admissible u/s 35 for Scientific Research
Amount
Particulars Working
Contribution to IT 2,00,000 x 100% 2,00,000
Contribution to ISI 20,000 x 100% 20,000
Contribution to IIEST 73,00,000 x 100% 3,00,000
Expenditure on in-house research
Cost of land Not cligible Nil
Revenue Expenditure 50,000
Total deduction u/s 35 5,70,000
Smt. Samprity Karak furnished the following information for the previous year 2020-21:
A. Income from Business

Toy business
(+) 20,000
Cloth business
(+) 46,000
Readymade garments business 12,000
Speculative business 18,000
(+)
B. Income from House Property 38,000
C. Income from Capital Gain
Long-term on sale of Land
(+) +4,000
Short-term on sale of Gold
21.000
D. Income from other Sources
interest on Bank Deposit () 12,000
Winning from Lottery (Gross)
() 12,000
E. Brought forward losses

Speculation loss from 2019-20

20,000
Loss from Cloth business 8,000
of Cosmetics business
Unabsorbed depreciation
Honours 2019 Paper Solved
(diseontinued from 2012-13) for the P Y 2012
Compute total income of Smt. Karak for the 1
(19 mark
A.Y. 2021-22.
SOLUTION
Compulation of total income of Smt. Samprity Karak for the AY
212L
Particulars Amunt Arurit
IO Jrn Flous Pruwity
Profils aul Gans oL Bususs or ProfessIO
- Toy business
210,1M
- Cloth business

Readymade garnwnls bu-iness (12,1M

Tess: B/f loss fron cloth business B,000)

Less: U'nabsorbed lepreciation 5,000 1,0
Speculative business
Less: B/ speculation loss (Balance loss of 7
2,000 18,00
shall be c/)

Caital Gas
Long term Capital gain 44,000
Less: Short Term Capital Loss 21,000 2%
ucone fron (tlherSources
Interest on fixed bank deposit 12,000
Winning from lottery 12,000 24.000
TotalIncome 1,26,00
Or

Mr. Manik Das (aged 32 years) submits the tollowing particulars for the assessment year
2021-22:

Income from I louse Property

50,400
Income from Business
72,600
Long-ternm capital gains on sale of building
21,840
Interest from fixed dieposit with a bank
18,000
Donations made to:

Approved University of national eminence 3,600

Prime Minister's Drought Relief Fund (in kind)
Prime Minster's National Relief Fund
1,800
4,500
J.. Nehru Memorial Fund
Approved charitable Institulion (paid by cheque) 2,500
16,200
viii
10,000
Approved P'olitical Party GICI by cheque 31,600
health to
his wn

' a y h e n t of medical insurance premium

on
(10 marks)
section B0G.
deduction under
Compute the amount of allowable

SOLUTION Manik Das for the A.Y. 2021-22

Total Income of
Computation of Details Amount

Particulars 50,400
Income from House Propertyy 72,600
Profits & gains of business or profession 21,840
Capital gains: Long term capital gains 18,000
Income from Other Sources 1,62,840
Gross Total Income

Less: Deduction under chapter VIA 25,000

Sec. 80D (Medical Insurance) (Max Limit)
10,000
Sec. 80GGC (Donation to political party)
14,650% 49,650
Sec. 80G (Donation)
1,13,190
Total Income
$ Statement showing amount of deduction u/s 80G: Rate Deduction
Amount
Donation madeto 100% 3,600
Approved University of national eminence 3,600
Prime Minister's Drought Relief Fund (in kind) 1,800
Prime Minster's National Relief Fund 4,500 100% 4,500
J. L. Nehru Memorial Fund 2,500 50% 1.250
10,600 50% 5,300
Approved charitable Institution (paid by cheque)
Total amount of donation u/s 80G 14,650
Calculation of Deduction for donation on which limit is applicable:

Computation of limit

Adjusted GTI LTCG Deductions other than

-

1,62,840 21,840 725,000 -

710,000

GTI
deduction u/s 80G 1,06,0M)
Limit 10% of Adjusted CT 10%of 1,un, 000 = 710,600

During the previous year 2020-21, Mr Madhusudhansoldthefollowing capitalassets

Sale Cost of Date of Fair Market
Asset acquisition acquisition value as on
Proceeds ()
01.04.2001
Debentures
2,48,000 1,85,000 30.06.20077 1,68,000
18,22,000 8,42,400 25.08.2005 8,10,000
Gold
Buildin
22,11,900 9,00,000 10.05.2008 9,86400
Assuming that his business income is ? 3,47,500, determine his income for the assessment

(10 marks)
y e a r 2021-22.
Honours 2019 Paper Solved

SOLUTION
of total income of Mr. Madhusudhan
for the A.Y. 2021-22
computation Amount

Particulars
3,47,500
Profits and Gains of Business or Profession 1,17,560
Capital Gains (Working) 4,65,060
Long Term Capital Gain
Madhusudhan for the A.Y.2021-22
Working: Computation of Capital Gains of Mr. Debenture Gold Building
Particulars 18,22,000 22,11,900
2,48,000
Sale Proceeds Nil
Nil Nil
Less: Expenses on transfer 18,22,000 22,11,900
Net sale consideration 2,48,000
Less: Cost of acquisition (Index benefit is not available) 1,85,000
Less: I n d e x e d C o s t o f a c q u i s i t i o n [ ( 7 8 , 4 2 , 4 0 0 * 3 0 1 ) / 1 1 7 ] 21,67,200
Less: I n d e x e d Cost of acquisition [(79,00,000 * 301)/137|
19,77,372

63,000 (3,45,200) 2,34,528

Term Capital Gain
Long
Group C

with T Ltd. receives the following emoluments during the previ-

8. Mrs. Bindhani, is working
ous year 2020-21:
1t July each year).
24,000 (increment of 7 1,000 p.m. falls due
on
Basic pay on 01.04.2020
(a)
(b) Dearness Allowance (forming part salary)@ 100% of basic pay.
of
Children Education Allowance 600 p.m. (she has one child).
(c)
University as examiner7 1,400.
(d) Remuneration from Calcutta
bonus 15,000 p.a.
(e) Medical Allowance 1,000 p.m. and
a free furnished accommodation in Kolkata. Fair rental value
of
(6) The employer provided
the house was 4,500 p.m. and furnished with furniture costing ? 50,000. She was pro-
watchman whose monthly salaries were 7 3,000 and 7 4,500
sweeper and
a
vided with a

A free telephone was also provided by employer at her residence, which

respectively.
was used by her both for personal and official purposes.

(e) She is a member of a recognished provident fun and contributed 14% of her salary. Her
14% of her salary to the provident fund.
employer also contributed
(h) Interest credited at 13% p.a. credit balance of provident fund 6,500.
) She had taken a life policy for R 5,00,000 on her own life tor w hich she paid a premiun of

15,000 during the previous year. (Policy was taken on 01.08.19.)

her professional tax of? 1,000
() Employer paid
p.m.
L) She is provided with a 14H. P. car owned by employer and has been used both for the

nurpose of her employment ana personal use. Entire expenses was borne by the em-
ployer
Compute income from salary O S Dndnani tor the assessment year 2021-22
(15 1arks)
 202122
SoLUTION Bindhani for
the A.Y.
Ms.
ot Tanable SalaIy
of
omutation Details Details
Working
Particular

nus
AllowanS ,97,01
Tearness allow and 200
Children Fducation allow.ance
1,2000

lts: wmtnd 100 12 12,00003,15,0000

Modical \llowance

P'eruisites u/s 17) 15 of slary'

Rnt tra turnsial aiRIUNituon

\ccommodativn
94,050
10% ofR 50,000 5,000 99,050
Furniture
3,000 * 12 36,000
Sweper tacility
Watehman tacility 4.500 12 54,000
Telephone facility liempt
Motor cartfacility 1.800 12 21,600
Professional Tan paid by the ,000| 211,650
employer
Employer's contribution to RPF 2% (being 14% - 12%) of 11,880
salary
Interest on RPFin excess of 9.5% (6,500/13) x3.5 1,750 13,630
Gross Taxable Salary 8,52,280
Lss: Standard Deduction u/s 16(ia) 50,000
Less: Professional Tax u/s16(i) 1,000 51,000
Taxable Salary | 8,01,280
Notes
1. Salary for the purpose of

Particulars Rent free accommodation RPF

Basic salary
2,97,000 2,97,000
Bonus 15,000
Dearness allowance
2,97,000 2,97,000
Medical allowance 12,000
Children Education allowance 6,000
Total
6,27,000 5,94,000
Or,
(a) Mr. D. Podder, an employee ot a priVate company in Kolkata (not covered under payment of

Crabuity Act), retired from service on lecember 31, 2020 after 32 years and 8 months of
vice. He received gratuity ot <9000, lis salary at the time of retirement was 7 32,000 p.m
ser
a1d dearness allowance was x 6A0U P.m. (not torms part of salary). His incren
increment of 7 00
Honours 2019 Paper Solved
. te u c on T July e v e n voar. Cakulate the amount ot tan.alle gratuiti t t

the assessment year

2021-22
SOLUTION
Computation of Taxable Gratuity of MMr. D Podder for the A.Y. 2021-22
Amount
Dctails
Gratuity Received
Particulas 0.000

Less: Minimum of the

following is evemptri as perSr 10(100n)
a) Actual Gratuity Received
b) Statutory Amount 20,00 0000

c) completed year of service salary p.m. [/:*3210| 5,.04S00 5,04.800

Taxable Gratuity 4,75,200

Workings:
1. Completed year of service is 32 years.
2. Salary here means Basic + Dearness Allowance Commission on turnover. bem ast To
months average just preceding the month of rotirement, as shown lwlow:
Particulars 1 10
I otal
Feb Mar
Apr May June uly Aug Sept Oct Nov
Basic 31,100 31.100 3I,it 31,100) 200X) 200N 20XX) 12UXX ,15,5xX
D.A.

Commissin
lotal
Average Nlary
b) Mr. Rahul Kumar Thakur retired
08.02.2021 trom a private
on
company atter completion ot 30
years and 9
months of service. He is entitled to I month leave for
vach completod year of ser-
vice. He took 8 months leave during his service lite. At the time
of retirement his basic
16,000 p.m. and D.A. @ 50% of basic pay. However, he pay was
got an increment of basic pay 1,000
p.m. from 01.01.2021. He received 400,000 as
leave salary of Mr. Thakur for the A.Y.
leave encashment.
Compute tanable amount o
2021-22|Assume D.A. forms of part salary].
SOLUTION
Computation of Taxable Leave encashment Salary of Mr.
Rahul Kunmar for the A.Y.2021-22
Leave Encashment Received
Particulars Details Amount
Less: Minimum of the following is
exemypted 4.00,000
as
per Sec. 10(10AA)(ii):
a) Actual Amount Received
b) Statutory Amount 4,00,000
months 3,00,000
c) 10
Average Salary p.m. (10 x 22,712)
d) |[1' completed year of service Leave 2,27,121
taken) salary p.m]
*
-

I1*30- 8 *22,7121
Taxable Leave Encashment 4,99,664 2,27,121
1,72,879
 xii
Prayas Taxation 1

Workings
1.Completed year of service: 30 years 9 months = 30 years

. a r y here Basic + Dearnes Allowance+ CommiSSion

means

erage from the date of retirement)

on
turnover (last 10 months ay.

April Feb
Particulars May June July Aug Sept Oct Nov
122 days) Dec Jan "20 Total

Bas I5,000 15.000 15,000 15,000 15,000

davs)
15,000 15,000 5,000
D. A. 5.500 7.500 7.500 7.500 16,0004,414 1.51.414
7500 7500 7500 7,300 7,500 8,000 2,207
OMMissum 73.707

Total

Terage salary ie. 2,27,121/ 10 months

(c) Mr. Sourav Sikdar was
working with a
company at a salary ofR 20,000 p.m. on 31.12.2020 he
left the job and received 2,50,000 as refund from
amount of Unrecognised Provident Fund (URPF). The
2,50,000 includes 50,000 as accumulated
interest. Both Sourav and
contributed equal amount to the his employer
will be treated for income tax
provident fund. How the amount received
by Mr. Sikdar
purpose during the A.Y. 2021-22? (5+6+4= 15 marks)
SOLUTION
Lump sum received from URPF is taxable as under:
Employer's contribution 1,25,000 taxable as salary
Employee's contribution
Interest on employer's contribution
1,25,000 not taxable
25,000 taxable as salary
Interest on
employee's contribution 25,000 taxable as income from other
9. sources
Sarju Middey the owner of 2 houses in Kolkata.
is
From the
houses, compute his income from
house property for the following particulars of the
House A assessment year 2021-22:
: Let-out to an
for the
employee of the business of Sarju ® 7 5,000
purpose of business. Municipal tax p.m. which is necessary
paid k 3,000 and interest on loan
chasing the house amounted to 7 9,000. taken tor
pur
House B:The
house consists of 3 identical flats. First flat is used
Second flat is used by him for his own by him for his own
15,000. Municipal taxes
residence. The third 'usiness
flat is let out at a monthly rent ot
paid o 5% amounted to 7 20,250.
Other information:
(a) Unrealised rent for the P.Y. 2020-21
relating to third flat
of I House B
(b) A loan of 720,00,000 was taken on
D1.07.2017
amounted 10,000.
to ?
for
House B was completed construction of the House B.
on d.00.2019. Interest on loan is 12% Construction o
p.a. No repayment was
mal
(15 marks
 xiii
Honours 2019 Paper Solved

SOLUTION
Middey for the A.Y. 2021-22
Computation of Income from House Property of Sarju
Particulars Details Details Amoun
FlatII: Let out
Gross Annual Value (Working 1) 1,80,000

Less: Municipal Tax 7 20,250/3 6,750

Net Annual Value 1,73,250

Less: Deduction u/s

24(a) Standard Deduction 51,975
24(b) Interest on loan [ 3,24,000/ 3 1,08,000 1,59,975 13,275

FlatI Self occupied Nil

Net Annual Value

Less: Deduction u/s 1,08,000 (1,08,000)

24(b)Intereston loan [R 3,24,000/3
94,725
Income from House Property
Working 1: Computation of Gross Annual Value Unit 3
Steps Particulars Working
Municipal Value 20,250/ 5%)/3 1.35,000
Fair Rent 15,000 x 12 1,80,000
Standard Rent
1 Reasonable Expected Rent Higher of MV & FR (RER cannot 1,80,000
exceed SR)
Actual Rent Receivable 15,000x 12-7 10,000 1.70.000
Gross Annual Value Higher of Step 1 &2 1,80,000
Working 2:Calculation of Interestto be deducted inrespect of House 2
Previous Year Month Interc t
Pre-construction Interest
2017-18 9 1.80.000
2018-19 2 2.40.000
Total
1/5tlh of pre-construction (a)
4.20,000
84,000
P'ost-construction interest (b) 12
240,000
Total interest (a) + (b)
3,24,000