Tax Mock Test 3

Taxation (Test 003)

TAXATION

MOCK TEST - 003

Answers all questions
A.Y. 2011-12

Question 1

12 Marks

Anand, a resident, gives you the following information for the year ended 31-3-2011.
Interest on Government Securities (Gross)	Rs.59000
Income from units of Unit Trust of India (gross)	Rs.10000
Interest from deposits in Indian companies (gross)	Rs.90000
Long term capital gain on sale of property situated in India	Rs.20000
Winning from horse races in India	Rs.20000
He has donated a sum of Rs.25000 to Municipal Corporation of Delhi for promoting family planning. He has paid Rs.2000 by cheque to New India Assurance Co. for mediclaim for himself. He paid LIC premium Rs.1000 for his life. Compute total income and tax liability of Anand for the assessment year 2011-12.

Question 2	8 Marks
Write a brief notes on the provision of sec. 35AD

Question 3	8 Marks
Preeti furnished following details -

Particulars	Amount
Income from Business
Business A (Readymade garments)	50000
Business C (Processing bio-degradable wastes) (started during previous year)	25000
Long term capital gain	25000
Short term capital gain	65000
Bank interest	2000
Interest on deposits with IDBI	1000
Interest paid on loan taken for deposits in IDBI	1200
Interest on NSC (including last year interest Rs.1500)	4200
Investment in NSC	500
LIC premium paid on the life of dependent blind mother (Sum assured Rs.50000)	12000
Investment in LIC annuity plan	8000
Donation to National Defence Fund	12500
Compute her total income and tax liability.

Question 4

4 Marks

Mr. Vijay gifted cash Rs.1,00,000 to Miss Pinky on 15-04-2010. As on 15-05-2010, Mr. Vijay married with Miss Pinky. At the time of marriage ceremony, she received cash gift of Rs.2,00,000 from her/his near and dear one. Further, as on 15-06-2010, she received cash gift of Rs.50,000 from her husband. She invested the entire amount on 15-06-2010 in Debenture of X Ltd. and earned interest of Rs.35,000 during the year ending on 31-03-2011. Compute income of Mr. & Mrs. Vijay.

Question 5

8 Marks

T Ltd. grants option to its employee Rajat on 1st April, 2004 to apply for 100 shares of the company for making available right in the intellectual property to the employer-company at a pre-determined price of Rs. 150 per share with date of vesting of the option being 1st April, 2006 and exercise period being 1st April, 2006 to 31st March, 2011. Mr. Rajat exercises his option on 31st May, 2010 and shares are allotted/transferred to him on 13 th June, 2010. Fair market value of such share on different dates are as under:

01-04-2004	01-04-2006	31-05-2010	13-06-2010
Rs.470	Rs.890	Rs.1250	Rs.1470
On 31-12-2010, Mr. Rajat gifted 25 shares to his brother and sold balance shares at market value of Rs.2180 per share. Compute taxable value of perquisite, if any, and capital gain in hands of Mr. Rajat for A.Y. 2011-12.

Question 6

(5 X 5)

Explain with reason either the statements are true or false:
a.	Zero Coupon bonds can be issued by scheduled bank
b.	Interest received on compensation or enhanced compensation is fully taxable in the yera of receipt
c.	No TDS is requried to be deducted on payment made to road transport operator on or after Sept, 2009 provided such operator furnishes his PAN to the payer.
d.	Anonymous donation referred u/s 115BBC is exempt to the maximum of Rs.100000.
e.	Before filing an appeal before an appellate authority, every assessee is required to refer his case to Dispute Resolution Panel u/s 144C .

Question 7

(5 X 5)

a.	What type of taxable service is covered under 'Legal Consultancy Service'?
b.	Write a short note on 'Service Tax Return Preparer Scheme'
c.	When can a service provider is required to surrender his registration certificate
d.	Generally, service tax is paid by service provider. however, in some cases, tax is required to be paid by service receiver. Please describe such cases
e.	X Ltd. (not a small service provider) provides following details for the month of March, please suggest the company in quantifying and ascertaining due date for payment of service tax liability of the company:
It provides taxable service of Rs.500000 (excluding tax) It received Rs.220600 from the clients for the aforesaid services It also recovered Rs.110300 from the clients against the taxable services provided on 28/02/2011. It also received Rs.55150 from a client as advance.

Question 8

(5 X 5)

a.	What are the eligible purchases for availaing input tax credit under VAT?
b.	Who is required to be registered under VAT law? Please provide time-limit for making application for registration and consequences of non-registration.
c.	What are the different VAT rates?
d.	Explain, in the context of VAT, with reason either the statements are true or false:
	(i.) In VAT system, issuance of invoice is at the option of the dealer.
	(ii) VAT is a single point tax chargeable at last point of sale.
e.	Explain, in the context of Service Tax Law, with reason either the statements are true or false:
	(i.) Service tax return cannot be revised.
	(ii) Return of service tax is required to be furnished in ST-2.