CU Exam: 2021 General Paper Solved

4th Semester : Paper – CC-4.1 Cg

Solved as per provision of A.Y. 2022-23
Wherever reference to page number is given, it is referred to Taxation I by Mundhra & Mundhra published by Law Point

Question 1

  1. Rahul, Indian citizen, left India for the first time on 31st December 2017. He visited India during the P. Y’s 18-19, 19-20 and 20-21 for 80 days, 75 days and 100 days respectively. He came to India on 2nd July, 2021 and left India on 30th August, 2021. Determine the residential status of Rahul for the Assessment Year 2022-23.
  2. Which HUF will be termed as Resident for the assessment year 2021-22?

Answer 1

  1. During the previous year 2021-22, Rahul was in India for 60 days as shown below–
     P.Y.AprMayJuneJulyAugSepOctNovDecJanFebMarTotal
    21-22303060

    Since he is an Indian citizen comes to India for visit purpose, hence for becoming resident he has to stay in India for at least 182 days. However, he is in India for only 60 days during the previous year, hence he is non-resident for the A.Y. 2022-23

    We assume that his income (other than income from foreign sources) does not exceed ₹ 15,00,000

  2. Refer Page 32

Question 2

Write short notes on:
  1. Previous Year
  2. Heads of Income

Answer 2

Refer Page 6 and 13

Question 3

Write short notes on:
  1. Annual value
  2. Arrear rent

Answer 3

Refer Page 227 and 255

Question 4

Mr. Ratan an employee of XYZ Ltd. receives basic salary of ₹ 25,000 per month, dearness allowance (forming part of salary) ₹ 12,000 per month, house rent allowance of ₹ 6,000 per month. He gets a commission @ 5% of the annual turnover of ₹ 5,00,000. He resides in a rented house in Mumbai and pays ₹ 4,000 per month as rent.
Compute his taxable HRA for the assessment year 2022-23.

Answer 4

Computation of Taxable House Rent Allowance
ParticularsDetailsAmount
House Rent Allowance Received 72,000
Less: Exempted being minimum of the following u/s 10(13A)  
a) Actual Amount Received72,000 
b) 50% of Salary #2,34,500 
c) Rent paid – 10% of salary [₹ 48,000 – ₹ 46,900]1,1001,100
Taxable House Rent Allowance 70,900
# Salary = Basic + DA (only to the extent forming part of retirement benefit) + Commission = ₹ 3,00,000 + ₹ 1,44,000 + ₹ 25,000 = ₹ 4,69,000

Question 5

Mention any five incomes which are fully exempted from tax.

Answer 5

Refer Page 61

Question 6

Kohli (aged 35 years) pays health insurance premium for the health of the following persons during the previous year 2021-22:

ParticularsAmount (₹)
Self8,000
Dependent Brother8,000
Spouse8,000
Son5,000
Father (65 years)34,000
Mother (60 years)26,000

Calculate the amount of deduction u/s 80D for the assessment year 2022-23.

Answer 6

Computation of deduction u/s 80D available to Mr. Kohli

ParticularsAmountAmount
Mediclaim Insurance premium paid for himself 8,000
Mediclaim Insurance premium paid for brother Not eligible
Mediclaim Insurance premium paid for spouse 8,000
Mediclaim Insurance premium paid for son 5,000
Deductible amount (A) 21,000
Add: Additional deduction for parents  
Mediclaim Insurance premium paid for mother26,000 
Mediclaim Insurance premium paid for father34,00060,000
Deductible amount (B) [Max Limit] 50,000
Deduction u/s 80D (A + B) 71,000

Question 7

Anthony, aged 51 years, submits the following information for the assessment year 2022-23:

Particulars(₹)
Gross total income4,46,000
Payment of medical insurance premium for his entire family by cheque14,000
Life insurance premium paid for his own life11,000
Donations made to: 
National Defence Fund5,000
Jawaharlal Nehru Memorial Fund4,000
Notified Church for renovation30,000

Compute total income of Mr. Anthony for the assessment year 2022-23.

Answer 7

Computation of Total Income of Mr. Anthony for the A.Y. 2022-23

ParticularsDetailsAmount
Gross Total Income 4,46,000
Less: Deduction under chapter VIA  
Sec. 80C [LIC Premium]11,000 
Sec. 80D [Medical Insurance Premium]14,000 
Sec. 80G [Donation]22,000$47,000
Total Income 3,99,000

$ Statement showing amount of deduction u/s 80G:

Donation made toAmountRateDeduction
Donation to Prime Minster’s National Relief Fund5,000100%5,000
Donation to Jawaharlal Nehru Memorial Fund4,00050%2,000
Donation to a notified church30,000*50%15,000
Total amount of donation u/s 80G22,000

* Calculation of Deduction for donation on which limit is applicable:

Computation of limit
Adjusted GTIGTI – Deductions other than deduction u/s 80G₹ 4,46,000 – ₹ 11,000 – ₹ 14,000 = ₹ 4,21,000
Limit10% of Adj. GTI10% of ₹ 4,21,000 = ₹ 42,100

Question 8

  1. Discuss the provisions of clubbing of income of a minor.
  2. Write a short note on rebate u/s 87A.

Answer 8

Refer 497 & 22

Question 9

Proloy is appointed in G.M. Pvt. Ltd. in Kolkata. From the following particulars compute his income from salary for the assessment year 2022-23:

  1. Basic salary ₹ 50,000 per month
  2. Dearness allowance (forming part of salary) ₹ 30,000 per month
  3. Entertainment allowance ₹ 8,000 per month
  4. Medical allowance ₹ 3,000 per month
  5. Bonus ₹ 12,000 paid as per contract
  6. He is provided with an accommodation in Kolkata for which the employer pays rent of ₹ 2,500 per month.
  7. Personal electricity expenses of ₹ 2,500 and profession tax of ₹ 1,500 are reimbursed by the employer.
  8. The employer contributes ₹ 10,000 per month to the recognized provident fund.
  9. Interest @13% per annum amounting ₹ 7,800 was credited to this recognized provident fund on March 31, 2022.

Answer 9

Computation of Taxable Salary of Proloy for the A.Y. 2022-23

ParticularsDetailsDetailsAmount
Basic  6,00,000
Bonus  12,000
Allowances:   
Dearness allowance 3,60,000 
Entertainment Allowance 96,000 
Medical Allowance 36,0004,92,000
Perquisites u/s 17(2)   
Rent free accommodation [Lower of 15% of salary or rent paid] 30,000 
Reimbursement of Electric Bill 2,500 
Professional Tax 1,50034,000
Employer’s contribution to provident fund1,20,000  
Less: Exempt to the extent of 12% of salary1,00,80019,200 
Interest on provident fund7,800  
Less: Exempted upto 9.5% [(₹ 7,800/13) * 9.5]5,7002,10021,300
Gross Taxable Salary  11,59,300
Less: Deduction u/s    
16(ia) Standard Deduction 50,000 
16(iii) Professional Tax 1,50051,500
Taxable Salary 11,07,800

Working: Salary for the purpose of RFA

ParticularsRFARPF
Basic4,80,0004,80,000
Bonus12,000
Dearness allowance3,60,0003,60,000
Entertainment Allowance96,000
Medical Allowance36,000
Total9,84,0008,40,000

Question 10

Sri Saha is the owner of three houses situated in Durgapur, the particulars of which for the previous year 2021-22 are as follows:
House No. 1House No. 2House No. 3
Construction completed on31.3.200230.9.200431.8.2001
How used

Let out for residence

For own residence

Let out for residence

Municipal value1,00,00015,0001,80,000
Rent received1,00,0001,56,000
Fair rent1,10,40014,4001,60,000
Interest on loan   12,00012,500   10,000
Municipal tax (on municipal value)10%10%10%
Vacancy period2 months
Compute his income from House Property for the assessment year 2022-23.

Answer 10

Computation of Income from House Property of Shri Saha for the A.Y. 2022-23

ParticularsDetailsDetailsAmount
House 1: Let out   
Gross Annual Value (Working 1) 1,00,000 
Less: Municipal Tax 10,000 
Net Annual Value 90,000 
Less: Deduction u/s    
24(a) Standard Deduction27,000  
24(b) Interest on loan12,00039,00051,000
House 3: Let out    
Gross Annual Value (Working 1) 1,80,000 
Less: Municipal Tax 18,000 
Net Annual Value 1,62,000 
Less: Deduction u/s   
24(a) Standard Deduction48,600  
24(b) Interest on loan10,00058,6001,03,400
House 2: Self occupied    
Net Annual Value Nil 
Less: Deduction u/s    
24(b) Interest on loan (Note) 12,500(12,500)
Income from House Property  1,41,900

Computation of Gross Annual Value                                                                                      

StepParticularsWorkingH IH III
1stCalculation of RERBeing Gross Municipal Value1,10,4001,80,000
2ndARRFor the period actually let out1,00,0001,56,000
3rdHigher of aboveHigher of Step 1 & Step 21,10,4001,80,000
4thGross Annual Value1,00,000#1,80,000

#ARR is less than RER due to vacancy (otherwise ARR would have been ₹ 1,20,000 i.e. ₹ 1,00,000/10 * 12). Therefore, GAV (due to step 4) will be the ARR computed in step 2.

Question 11

From the following information, compute the income from Business of Sri Dasgupta for the assessment year 2022-23:

Profit & Loss Account for the year ended 31st March, 2022

ParticularsParticulars
To Salaries72,000By Gross Profit b/f5,70,000
Insurance10,000Bad debt recovery (previously allowed as deduction)10,000
Advertisement12,000Dividend from Indian company41,500
Travelling expenses4,000Winnings from horse race (gross)10,500
Miscellaneous expenses10,000  
Entertainment expenses7,000  
Medical expenses of proprietor

15,000 

  
Car expenses15,000  
Depreciation28,000  
General Reserve6,000  
Net profit4,53,000  
 6,32,000 6,32,000

Additional information:

  1. Included in salary ₹ 7,000 paid to Sri Dasgupta’s son who never attended the business.
  2. Insurance includes 30% paid for fire insurance of business assets and the balance paid as life insurance premium of Sri Dasgupta’s life.
  3. ₹ 32,000 was paid in cash to a supplier who refuses to accept cheque.
  4. The car was used for both business and personal purposes. 2/3 rd of the car expenses was for business purpose.
  5. Depreciation as per Income tax rules amounted to ₹ 31,000.

Answer 11

Computation of Profits & gains of Business or Profession of Sri Dasgupta for the A.Y.2022-23

ParticularsNoteDetailsAmount
Net Profit as per books of accounts  4,53,000
Add: Expenditure disallowed but debited in P/L A/c   
Medical Expenses115,000 
Salary to relative27,000 
Life Insurance Premium37,000 
Cash Payment in excess of ₹ 10,000 [Sec. 40A(3)]432,000 
Car Expenses55,000 
General Reserve66,000 
Depreciation as per books of account728,0001,00,000
   5,53,000
Less: Expenditure allowed but not debited in P/L A/c:   
Depreciation as per I.T. Rules731,000 
Less: Income taxable under other heads credited to P/L A/c:   
Dividend841,500 
Lottery Income810,50083,000
Profits & gains of Business or Profession  4,70,000

Notes:

  1. Personal expenses of proprietor shall be disallowed.
  2. Payment of salary to son shall be disallowed as he never attended the office.
  3. LIC premium is not allowable. However, he can claim deduction u/s 80C
  4. As per sec. 40A(3), cash payment in excess of ₹ 10,000 shall be disallowed.
  5. 1/3rd of car expenses shall be disallowed
  6. General Reserve is not an expenses
  7. Depreciation as per I.T Rules shall be allowed
  8. Dividend and lottery income is taxable as Income from Other Sources.

Question 12

A Ghosh submits the following incomes and losses for the assessment year 2022-23:

ParticularsAmount (₹)
Income from house property12,800
Income from textile business35,700
Loss from stationary business10,000
Speculation loss2,000
Long term Capital gain25,000
Short term Capital loss10,000
Winning from lottery (Gross)12,000
Brought forward losses from the assessment year 2021-22: 
Loss from house property8,000
Loss from stationary business7,000
Loss under the head long term capital gains4,300

All the above brought forward losses were first computed in the assessment year 2021-22. Compute total income of Mr. Ghosh for the assessment year 2022-23.

Answer 12

Computation of Gross Total Income of Mr. A Ghosh for the A.Y. 2022-23
ParticularsDetailsAmount
Income from house property12,800
Less: Brought forward loss from house property8,0004,800
Profits and gains of business or profession
– Profit from textile business35,700
– Loss from stationery business(10,000)
25,700
Less: Brought forward loss from stationery business(7,000)18,700
Speculative Business(2,000)1 
Capital gains
Long term capital gain25,000
Less: Short term capital Loss10,000
 15,000
Less: Brought forward capital loss4,30010,700
Income from Other sources
Winning from lottery (Gross)12,000
Gross Total Income46,200
Loss to be carried forward for subsequent assessment years:

1.  Speculation loss of ₹ 2,000 shall be carried forward to next year.

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