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C.S. Executive Tax Law Dec.09 Solved Ans.

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Qn. 1. (A) Choose the most appropriate answer from the given options in respect of the following having regard to the provisions of the relevant direct, tax laws
(i) Income-tax in India is charged at the rate(s) prescribed by — (a) The Finance Act
(b) The Income-tax Act
(c) The Central Board of Direct Taxes
(d) The Ministry of Finance
Solution: (a)The Finance Act
(ii) Under the Income-tax Act, 1961, depreciation on machinery is charged on — (a) Purchase price of the machinery
(b) Market price of the machinery
(c) Written down value of the machinery
(d) All of the above.
Solution: (c) Written down Value of the machinery
(iii) Income accruing in India in previous year is taxable for — (a) Resident
(b) Not ordinarily resident
(c) Non-resident
(d) All of the above.
Solution (d) All of the above
(iv) Sandeep purchased a house for his residential purpose after taking a loan in January, 2007. During the previous year 2008-09, he paid interest on loan Rs, 1,67,000. While computing income from house property, the deduction is allowable to the extent of —

(a) Rs.30,000
(b) Rs, 1,00,000
(c) Rs.1,67,000
(d) Rs.1,50,000.
Solution: (d) Rs. 1,50,000
(v) Which of the following is an 'asset' under section 2(ea) of the Wealth-tax Act, 1957 — (a) Equity shares in a company
(b) Balance in provident fund
(c) Motor car held as stock-in-trade –
(d) Jewellery for personal use.
Solution: (d) Jewellary for personal use

(B) Re-write the following sentences after Filling-in the blank spaces with appropriate word(s)/figure(s) : (i) Deduction for bad debt is allowed to an assessee carrying on business in the year in which the debt is ________ as bad.

(ii) Deduction available under section 80GG towards rent paid shall not exceed Rs.,______ per month. (iii) It is obligatory for an assessee to pay advance tax where the amount of tax payable is Rs. ________ or more. (iv) A belated return of income can be filed at any time before the expiry of ________ from the end of relevant assessment year.

(v) Wealth-tax is levied on the net wealth of a person as on 31" March, this date is known as _______ date. Solution: (i) declared (ii) 2000 (iii) 5000 (iv) 1 year (v) Valuation date.

(C) Rajan is an employee of a private limited company and gets the following emoluments during the previous year ended on 31sl March, 2009:
Salary: Rs.96,000;
Salary in lieu of leave: Rs.6,000;
Entertainment allowance: Rs. 10,000; and
Commission: Rs.8,000.
Rajan's son studies in a school which is owned and maintained by the company. The cost of education in a similar school in the locality is Rs.22,000 per year, but the company charges Rs.4,000 from Rajan. Salary of a domestic

C.S. Executive Tax Law Dec.09 Solved Ans.
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servant provided to Rajan by the company is Rs. 6,000 and the same is paid by the company. The company purchases a computer on 1st April, 2008 for Rs. 50,000 which is given to Rajan for office and private use. The company purchases a refrigerator for Rs.20,000 on 30th June, 2008 for personal use of Rajan. Rajan and the company both contribute Rs. 1.2,000 towards recognised provident fund. Rajan deposits Rs.40,000 towards public provident fund. Rajan earns Rs.1,00,000 by way of rent from a vacant plot, of land. Compute the taxable income and tax liability of Rajan for the assessment year 2009-10.

Solution
(I) Income from salary
Salary
Salary in lieu of leave
Entertainment allowance
Commission
Perquisites
Domestic servant
Computer
Refrigerator
Benefit to cost of education (22,000- 4,000)
Contribution to PF (in excess of 12%)
Gross Salary
(-) deduction U/S 16
Professional Tax
Entertainment allowance
Total Amount
(II) Income from house Property
Gross total Income (I + II)
(-) Deduction U/S 80 C – 80 U
U/S 80 C ( Contribution to PPF )
Total Income

96,000
6,000
10,000
8,000
6,000
NIL
NIL

6,000
18,000
480
1,44,480

NIL
NIL

NIL
1,44,480...
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