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
- 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.
- Which HUF will be termed as Resident for the assessment year 2021-22?
Answer 1
- During the previous year 2021-22, Rahul was in India for 60 days as shown below–
P.Y. Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Total 21-22 – – – 30 30 – – – – – – – 60 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
- Refer Page 32
Question 2
- Previous Year
- Heads of Income
Answer 2
Refer Page 6 and 13
Question 3
- Annual value
- 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
| Particulars | Details | Amount |
|---|---|---|
| House Rent Allowance Received | 72,000 | |
| Less: Exempted being minimum of the following u/s 10(13A) | ||
| a) Actual Amount Received | 72,000 | |
| b) 50% of Salary # | 2,34,500 | |
| c) Rent paid – 10% of salary [₹ 48,000 – ₹ 46,900] | 1,100 | 1,100 |
| Taxable House Rent Allowance | 70,900 |
Question 5
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:
| Particulars | Amount (₹) |
|---|---|
| Self | 8,000 |
| Dependent Brother | 8,000 |
| Spouse | 8,000 |
| Son | 5,000 |
| 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
| Particulars | Amount | Amount |
|---|---|---|
| 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 mother | 26,000 | |
| Mediclaim Insurance premium paid for father | 34,000 | 60,000 |
| 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 income | 4,46,000 |
| Payment of medical insurance premium for his entire family by cheque | 14,000 |
| Life insurance premium paid for his own life | 11,000 |
| Donations made to: | |
| National Defence Fund | 5,000 |
| Jawaharlal Nehru Memorial Fund | 4,000 |
| Notified Church for renovation | 30,000 |
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
| Particulars | Details | Amount |
|---|---|---|
| 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 to | Amount | Rate | Deduction |
|---|---|---|---|
| Donation to Prime Minster’s National Relief Fund | 5,000 | 100% | 5,000 |
| Donation to Jawaharlal Nehru Memorial Fund | 4,000 | 50% | 2,000 |
| Donation to a notified church | 30,000* | 50% | 15,000 |
| Total amount of donation u/s 80G | 22,000 | ||
* Calculation of Deduction for donation on which limit is applicable:
| Computation of limit | ||
| Adjusted GTI | GTI – Deductions other than deduction u/s 80G | ₹ 4,46,000 – ₹ 11,000 – ₹ 14,000 = ₹ 4,21,000 |
| Limit | 10% of Adj. GTI | 10% of ₹ 4,21,000 = ₹ 42,100 |
Question 8
- Discuss the provisions of clubbing of income of a minor.
- 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:
- Basic salary ₹ 50,000 per month
- Dearness allowance (forming part of salary) ₹ 30,000 per month
- Entertainment allowance ₹ 8,000 per month
- Medical allowance ₹ 3,000 per month
- Bonus ₹ 12,000 paid as per contract
- He is provided with an accommodation in Kolkata for which the employer pays rent of ₹ 2,500 per month.
- Personal electricity expenses of ₹ 2,500 and profession tax of ₹ 1,500 are reimbursed by the employer.
- The employer contributes ₹ 10,000 per month to the recognized provident fund.
- 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
| Particulars | Details | Details | Amount |
|---|---|---|---|
| Basic | 6,00,000 | ||
| Bonus | 12,000 | ||
| Allowances: | |||
| Dearness allowance | 3,60,000 | ||
| Entertainment Allowance | 96,000 | ||
| Medical Allowance | 36,000 | 4,92,000 | |
| 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 | 1,500 | 34,000 | |
| Employer’s contribution to provident fund | 1,20,000 | ||
| Less: Exempt to the extent of 12% of salary | 1,00,800 | 19,200 | |
| Interest on provident fund | 7,800 | ||
| Less: Exempted upto 9.5% [(₹ 7,800/13) * 9.5] | 5,700 | 2,100 | 21,300 |
| Gross Taxable Salary | 11,59,300 | ||
| Less: Deduction u/s | |||
| 16(ia) Standard Deduction | 50,000 | ||
| 16(iii) Professional Tax | 1,500 | 51,500 | |
| Taxable Salary | 11,07,800 | ||
Working: Salary for the purpose of RFA
| Particulars | RFA | RPF |
|---|---|---|
| Basic | 4,80,000 | 4,80,000 |
| Bonus | 12,000 | – |
| Dearness allowance | 3,60,000 | 3,60,000 |
| Entertainment Allowance | 96,000 | – |
| Medical Allowance | 36,000 | – |
| Total | 9,84,000 | 8,40,000 |
Question 10
| House No. 1 | House No. 2 | House No. 3 | |
|---|---|---|---|
| Construction completed on | 31.3.2002 | 30.9.2004 | 31.8.2001 |
| How used | Let out for residence | For own residence | Let out for residence |
| ₹ | ₹ | ₹ | |
| Municipal value | 1,00,000 | 15,000 | 1,80,000 |
| Rent received | 1,00,000 | — | 1,56,000 |
| Fair rent | 1,10,400 | 14,400 | 1,60,000 |
| Interest on loan | 12,000 | 12,500 | 10,000 |
| Municipal tax (on municipal value) | 10% | 10% | 10% |
| Vacancy period | 2 months | — | — |
Answer 10
Computation of Income from House Property of Shri Saha for the A.Y. 2022-23
| Particulars | Details | Details | Amount |
|---|---|---|---|
| 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 Deduction | 27,000 | ||
| 24(b) Interest on loan | 12,000 | 39,000 | 51,000 |
| 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 Deduction | 48,600 | ||
| 24(b) Interest on loan | 10,000 | 58,600 | 1,03,400 |
| 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
| Step | Particulars | Working | H I | H III |
|---|---|---|---|---|
| 1st | Calculation of RER | Being Gross Municipal Value | 1,10,400 | 1,80,000 |
| 2nd | ARR | For the period actually let out | 1,00,000 | 1,56,000 |
| 3rd | Higher of above | Higher of Step 1 & Step 2 | 1,10,400 | 1,80,000 |
| 4th | Gross Annual Value | 1,00,000# | 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
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Salaries | 72,000 | By Gross Profit b/f | 5,70,000 |
| Insurance | 10,000 | Bad debt recovery (previously allowed as deduction) | 10,000 |
| Advertisement | 12,000 | Dividend from Indian company | 41,500 |
| Travelling expenses | 4,000 | Winnings from horse race (gross) | 10,500 |
| Miscellaneous expenses | 10,000 | ||
| Entertainment expenses | 7,000 | ||
| Medical expenses of proprietor | 15,000 | ||
| Car expenses | 15,000 | ||
| Depreciation | 28,000 | ||
| General Reserve | 6,000 | ||
| Net profit | 4,53,000 | ||
| 6,32,000 | 6,32,000 |
Additional information:
- Included in salary ₹ 7,000 paid to Sri Dasgupta’s son who never attended the business.
- Insurance includes 30% paid for fire insurance of business assets and the balance paid as life insurance premium of Sri Dasgupta’s life.
- ₹ 32,000 was paid in cash to a supplier who refuses to accept cheque.
- The car was used for both business and personal purposes. 2/3 rd of the car expenses was for business purpose.
- 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
| Particulars | Note | Details | Amount |
|---|---|---|---|
| Net Profit as per books of accounts | 4,53,000 | ||
| Add: Expenditure disallowed but debited in P/L A/c | |||
| Medical Expenses | 1 | 15,000 | |
| Salary to relative | 2 | 7,000 | |
| Life Insurance Premium | 3 | 7,000 | |
| Cash Payment in excess of ₹ 10,000 [Sec. 40A(3)] | 4 | 32,000 | |
| Car Expenses | 5 | 5,000 | |
| General Reserve | 6 | 6,000 | |
| Depreciation as per books of account | 7 | 28,000 | 1,00,000 |
| 5,53,000 | |||
| Less: Expenditure allowed but not debited in P/L A/c: | |||
| Depreciation as per I.T. Rules | 7 | 31,000 | |
| Less: Income taxable under other heads credited to P/L A/c: | |||
| Dividend | 8 | 41,500 | |
| Lottery Income | 8 | 10,500 | 83,000 |
| Profits & gains of Business or Profession | 4,70,000 |
Notes:
- Personal expenses of proprietor shall be disallowed.
- Payment of salary to son shall be disallowed as he never attended the office.
- LIC premium is not allowable. However, he can claim deduction u/s 80C
- As per sec. 40A(3), cash payment in excess of ₹ 10,000 shall be disallowed.
- 1/3rd of car expenses shall be disallowed
- General Reserve is not an expenses
- Depreciation as per I.T Rules shall be allowed
- 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:
| Particulars | Amount (₹) |
|---|---|
| Income from house property | 12,800 |
| Income from textile business | 35,700 |
| Loss from stationary business | 10,000 |
| Speculation loss | 2,000 |
| Long term Capital gain | 25,000 |
| Short term Capital loss | 10,000 |
| Winning from lottery (Gross) | 12,000 |
| Brought forward losses from the assessment year 2021-22: | |
| Loss from house property | 8,000 |
| Loss from stationary business | 7,000 |
| Loss under the head long term capital gains | 4,300 |
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
| Particulars | Details | Amount |
|---|---|---|
| Income from house property | 12,800 | |
| Less: Brought forward loss from house property | 8,000 | 4,800 |
| Profits and gains of business or profession | ||
| – Profit from textile business | 35,700 | |
| – 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 gain | 25,000 | |
| Less: Short term capital Loss | 10,000 | |
| 15,000 | ||
| Less: Brought forward capital loss | 4,300 | 10,700 |
| Income from Other sources | ||
| Winning from lottery (Gross) | 12,000 | |
| Gross Total Income | 46,200 | |
| Loss to be carried forward for subsequent assessment years: 1. Speculation loss of ₹ 2,000 shall be carried forward to next year. | ||