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Posted By: Jyothi Member Level: Diamond Posted Date: 17 Dec 2007
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2007 Bangalore University B.Com Income Tax - I Question paper
V Semester B.Com. Examination, Nov./Dec. 2007
(Semester Scheme)
COMMERCE
Paper - 5.2 : Income Tax - I
Time : 3 Hours Max. Marks : 90
Instruction : Answers should be written completely either in English or in Kannada.
SECTION - A
Answer any ten sub-question. Each sub-question carries two marks : (10x2=20)
1. a) Define agricultural income u/s 2 (1A) of the Income Tax Act 1961.
b) Mention any two incomes from house property but taxable under a different head of income.
c) How do you treat an income as an Indian income or as a foreign income ?
d) State the salary for the purpose of computation of taxable value of rent-free accommodation.
e) Mention the four canons of taxation according to Adam Smith.
f) State the rate of income tax applicable to female assessees below the age of 65 years.
g) Mention any two capital expenditures and any two revenue losses.
h) Who is a resident and ordinarily a resident ?
i) State how the 'Leave Travel Concession' is exempted.
j) How do you determine the residential status of a Joint Stock Company in India ?
k) How do you treat the unrealised rent of the past recovered in the current previous year ?
l) Who is a specified employee ?
SECTION - B
Answer any five questions. Each question carriers five marks :
2. State with reasons, whether the following incomes are agriculture or non-agricultural incomes :
a) Income from growing flowers and creepers.
b) Dividend received from a company engaged in agricultural operations.
c) Interest on loan given to a farmer.
d) Income from agricultural activities in Srilanka.
e) Income from conversion of sugarcane into jaggery by the farmer himself.
3. Explain the income tax provisions of 'Agricultural Income'.
4. State the tax liability of an individual on the basis of residential status.
5. Explain the taxation composite rent under different situations.
6. Mr. Krishna gives you the following information relevant to the previous year 2006-07 :
a) Net salary received Rs. 1,15,000.
b) Salary deducted at source : Income Tax Rs. 8000, Employment tax Rs. 2,000, Life insurance premium Rs. 5,000 and contribution to Statutory Provident Fund at the rate of 15% of salary.
c) D.A. Rs. 1,000 p.m., CCA Rs. 300 p.m., HRA Rs. 2,000 p.m. (he lives in his father-in-law's house).
d) Employer and Employee's contribution to provident fund is equal.
Computer his taxable salary for the relevant Assessment Year.
7. Mr. Sunder retired from services on 31st March 2007. His pension was fixed at Rs. 6000 p.m. He commutes one-half of his pension and received Rs. 3,00,000. Find out the taxable amount of commuted pension, if ;
a) he is a Government employee,
b) he is a Non-Govt. employee who also gets gratuity, and
c) he is a Non-Govt. employee who does not get any gratuity.
8. Mr. Kumar resigned from his service from a public company on 30th November 2006 after completing 24 years and 10 months of service. During his service he was allowed to get 45 days of earned leave for every completed year of service. During his service he had available 10 months leave and had encashed 6 months leave. On resignation he was paid leave salary of Rs. 2,20,000 for his credit of 20 months earned leave. His average salary during the 10 months preceding to the date of his resignated was Rs. 11,000. Compute his taxable leave salary for the assessment year 2007-08.
9. Mr. Sandeep started construction of his house on 1-6-2003 and took a loan of Rs. 3,00,000 @ 15% p.a. He took another loan of Rs. 5,00,000 @ 15% p.a. on 1-4-2006. The construction was completed on 30-11-2006 and was self occupied for residence from 1-12-2006. Compute his income from house property for the assessment year 2007-08.
SECTION - C
Answer any three questions. Each question carries fifteen marks :
(3x15=45)
10. Answer both parts of the question. Part - (a) carries 07 marks and part (b) carries 08 marks.
a) Mrs. Mangala, a citizen of India went to England on 2-10-2000 for higher studies for a period of two years. After she came back she was employed in a Multinational Company in India. The company sent her for 6 months training to Germany on 1-3-2003. She was transferred to the company's Head Office in New York on 15-8-2004. However she left India on 2-10-2004 and reported for duty on 5-10-2004. She visited India during the months of Nov. and Dec. 2005. The company transferred her back to her original post in India and she returned to India on 26-1-2007. Determine her residential status for the AY 2007-08.
b) Following are the particulars of Mr. George relevant to the previous year 2006-07. Computer his Total Income based on different residential status.
i) Income from agriculture in Indonesia, one-half of the income is received in Bangalore and the balance is received in Pakistan, Rs. 30,000.
ii) Income from agriculture in Punjab, the whole amount is received in London and used for children education there, Rs. 25,000.
iii) Profit from a business in Chennai, the business is controlled and managed from Colombo, 50% of the profits are received in Colombo, Rs. 50,000.
iv) Profit from a business in Paris, the business is managed from Mumbai one-half of the profits are received in Bangalore and the balance is remitted to India, Rs. 60,000.
v) Dividend from Microsoft Corporation Ltd. Rs. 20,000.
vi) Share of profit from a partnership firm in Mumbai, Rs. 22,000.
vii) Interest on fixed deposits in State Bank of India, Rs. 10,000.
viii) Interest on SB account in Post Office, Rs. 2,000.
11. Mrs. Ranga is an employee of State Bank of India ; She furnishes the following information for computation of her taxable salary for the Assessment Year 2007-08 :
i) Basic Salary Rs. 12,500-500-18,000 p.m. from 1-1-2002.
ii) Dearness Allowances @ 15% of salary.
iii) Entertainment Allowances, Rs. 250/- p.m., Bonus Rs. 4,000/-, Children Education Allowances for her three children Rs. 200/- p.m. per child and Travelling Allowances for tour Rs. 15,000/- (during the year she spent Rs. 14,000/- on these travels).
iv) She and her family members took medical treatment in a private hospital during the year. The bank reimnursed Rs. 25,000/- regarding these expenditures.
v) The bank has provided her an accommodation by deducting Rs. 1,000/- p.m. from her salary, but the bank is paying a rent of Rs. 5,000/- p.m. to the owner of this house. Furniture costing Rs. 30,000 is also provided in this house by the bank.
vi) Employee and employer contributed 15% of her salary and D.A. towards the SPF. The interest credited to the P.F. A/c is Rs. 3,300/- @ 10% during the year.
vii) During the year the bank has paid her Employment Tax of Rs. 2,000/- Income Tax of Rs. 8,000/- and Health Insurance Premium of Rs. 1,500/-.
12. Mr. Jayaswamy owns a big house (erection completed on July 31st, 2001). The house has three independent units. Unit - 1 (50% of the floor area) is let out for residential purpose on a monthly rent of Rs. 8,200. Unit - 1 remained vacant for one month when it is not put to any use. A sum of Rs. 700 could not be collected from the tenant Unit - 2 (25% of the floor area) is used by him for the purpose of his profession, while Unit - 3 (the remaining 25%) is utilised for the purpose of his residence. The other particulars of the house are as follows :
Municipal valuation : Rs. 80,000, Fair rent Rs. 90,000, Standard rent under the Rent Control Act : Rs. 1,00,000, Municipal taxes : Rs. 12,000, Repairs : Rs. 14,000, Ground rent : Rs. 6,400, Annual charge created under the will by his father in favour of his sister : Rs. 10,000. He has borrowed Rs. 4,00,000 @ the rate of 10% from SBI for the construction of this house on 1st Aug. 1999 and nothing is repaid so far. His income from profession is Rs. 1,05,000 (without debiting house rent and other incidental expenditure including admissible depreciation on the portion of the house used for profession : Rs. 9,000). Determine his Taxable Income from House Property for the previous year 2006-07.
13. Sri Ramappa owns four houses (House - 2 and 4 are self occupied for residence, House - 3 is used for own business and House - 1 is let out) and furnishes the following information for the financial year 2006-07. Compute his income from House Property for the relevant A.Y.
Particulars House - 1 House - 2 House - 3 House - 4
Rs. Rs. Rs. Rs.
Municipal valuation 49,000 28,000 87,000 90,000
Fair rent 42,000 25,000 80,000 1,05,000
Standard rent 38,200 15,000 75,000 90,000
Rent (if property is
let out throughout
the previous year) 42,000 --- ---- ----
Unrealised rent 3,500 --- ---- ----
Municipal taxes :
- Paid by Ramappa --- 500 7,000 9,000
- Paid by tenant 5,000 --- ---- ----
Repairs 2,500 4,500 2,250 3,000
Land revenue to State
Government 1,000 500 1,200 1,300
Education Cess to
Government 250 200 300 350
Water & Health Cess
to Municipality 500 100 400 800
Date of completion of
construction 31-5-2005 31-5-2005 31-3-2005 1-4-2005
Property - 1 remained vacant for two months (March 16, 2007 to May 15, 2007). Mr. Ramappa borrows Rs. 50,000, Rs. 75,000 and Rs. 1,00,000 for the construction of House - 1, House - 2 and House - 4 respectively on 15th June 2003 at the rate of 12% per annum. He, however makes repayment of loan amount of Rs. 50,000, 25,000 in respect of House - 1 and House - 2 respectively on December 31, 2004.
14. Sri Ganapathy who was employed as a foreman in a factory in Lucknow and is covered by the Payment of Gratuity Act 1972, retired on 30th November 2006 after completing 34 years and 4 months of service. At the time of retirement the employer paid him a gratuity of Rs. 2,00,000 and accumulated balance of recognised provident fund Rs. 80,000. He ia also entitled to a pension of Rs. 3,000 p.m. He commuted one-third of his pension and received on 1st February 2007 the commuted value amounting to Rs. 1,50,000. On the basis the the following information compute his Income from Salary for the Assessment Year 2007-08 assuming that salary and pension are due on the last day of the month :
Basic Salary Rs. 5,500 p.m. D.A. Rs. 2,000 p.m. Bonus Rs. 6,000. Project Allowance Rs. 4,000, House Rent Allowance Rs. 1,000 p.m. (He paid house rent of Rs. 600 p.m. for 12 months), employer and employee's contribution of RPF Rs. 6,000 each.
___________________
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