Methodology for discussion / presentation of case study: 1.

There are 5 cases which have been prepared for discussion / presentation. 2. It is proposed that 5 groups should be made and they will be as ed to prepare for the case. !. "ach group will first present what they propose to submit before the audience. #. They will give the computation of income and substantiate the wor ing. $roup 1: Mr.% is an individual and he owns a proprietory business which is carried out& from a flat no.1 in a housing comple'. (e is residing in a separate house& flat no.2& with his family. (is sources of income for the year are as under: a. Income from house property& flat no.1& from giving it on part time usage basis for evening tuitions ) 2*+ of fees collected by tutor. The total fees collected by the tutor for ! months in the entire year is ,s.25***/-. The entire fascility of blac board& des s etc for purpose of tuitions is available in the flat no.1 itself. The tutor was given the fascility only from 1st .anuary onwards. b. Mr.% is running his business from flat no.1 and the total profit that he has earned from the business is ,s.25&**&***/c. Mr. % is a horse lover. (e maintains a stud farm from where he is doing race horse breeding. (e has been doing this activity from the last ! years. To develop progenies of good blood lines Mr.% has to race the horses in races. (is horses have earned pri/e money of ,s.5*&***/- during the year. (e has spent an amount of ,s.0 lacs in breeding and maintaining race horses. d. Mr.% has spent ,s.25*** on Municipal ta'es for flat no.1 out of which ,s.22&5**/pertain to earlier years. Mr.% is following mercantile method of accounting. (e has claimed only ,s.2&5**/- as e'penses while computing his business income. e. Mr.% has unabsorbed brought forward business loss of ,s.15&**&***/1ompute total income of Mr.%.

$roup 2: Mr. 2 is a developer and builder. (is returned income for !1/!/2*1! is ,s.5* lacs. (is return is under scrutiny and the assessing officer has come up with the following 3ueries. Mr.2 needs your help to prepare his response: a. The depreciation schedule consists of bloc of 0*+ on account of 4indmill. The 456 of 0*+ bloc as on 1/#/2*12 is !*&**&***/-. Mr.2 had purchased a wind mill for ,s.1 crore

is 78:11-12 on which he had claimed 0*+ depreciation. The assessing officer is of the view that in the new mind will the following e'penses were included: "lectrical fencing (T line 1oncrete base for 4indmill installation ,s.5&**&*** ,s.2&**&*** ,s.!&**&***

The %ssessing 9fficer is of the opinion that the 456 of these items on 1/#/2*12 is ,s.2&**&***/-. (e wants to allow depreciation only to the e'tent of 15+ on the above items instead of 0*+. b. Mr.2 is following mercantile method of accounting. (e had to incur e'penses by way of payment of 6%T for the flats sold by him during the period 1/#/1::0 to !1/!/2**; due to the <upreme 1ourt ruling. The total amount of 6%T paid by him is ,s.1 crore. (e has made a claim of this amount from his customers but has not shown it as receivable in his boo s. (e has e'penses out the entire e'penses in his profits for the year. The %9 is of the opinion that this e'pense is not allowable. c. Mr. 2 is operating out of an independent office. (e has redone the boundary wall and incurred a cost of ,s.! lacs. (e has claimed this as revenue e'penses where as the %9 feets that only 5+ depreciation is allowable on this e'pense.

$roup !: Mr. %mit is a salaried person. (is salary total salary that he receives in his ban is ,s. 25&**&***/- %part from cash salary he also receives the following fascility from the 1ompany: 1. (e has availed a loan fascility from the 1ompany of ,s.1&**&***/- on which the 1ompany charges him interest of !+. 2. (e is using his father=s car >6ol s4agon ?assat@ for the 1ompany purpose. The company pays rent of ,s.25***/- per month to his father. The car is also used by him for his personal purposes. (e does not eep a log of the car usage. (e has been provided with a 1ompany driver. !. The company bears the entire medical e'penses of the family of Mr.%mit. 5uring the year& wife of Mr.%mit underwent cancer treatment for which cost of ,s.5&**&***/- was incurred by the 1ompany. The treatment was carried out in a government recogni/ed hospital. (e want to now what will be the implications if the the treatment has to be continued in A<%. The 1omBany is ready to bear the entire e'penses. #. Mr.%mit had sold a house for ,s. 1 crore in 78:11-12. The total capital gain on the sale of house was ,s.25&**&***/-. (e had reinvested into a new house on !*/;/2*12 and the cost of new house was ,s.1&5*&**&***/-. ?rior to purchase of this house& on !*/#/2*12&

he had also sold a piece of land for ,s. 5*&**&***/-. The land was purchased in 78:C0C: for ,s. 25&***/-. The 7M6 of the land was ,s.#5&***/- as on 1/#/01. The 7M6 of the land sold as on !*/#/2*12 was ,s.;*&**&***/-. (e has also invested ,s.5*&**&***/- in capital gains bonds.

$roup #: The Da= has o'ygen gas cylinders which were purchased by him in 78:2**#-*5 for ,s.! lacs which he has put on rent. (e is earning a rent of ,s.25&***/- from renting the cylinders. The Da= had an agricultural land& purchased in 1:0#-05 which was situated 15 ms away from the boundary of municipal corporation and the population was 5**1 as per the last census. The cost of the land was ,s.2 lacs and the same was sold for ,s.# crore in 78:12-1!. The Da= has not carried out any agricultural activity on land since the time that he has bought it. The assessee is having income from dividend on shares of ,s.5&**&***. The total investment in shares is ,s&1 crore. The Da= is having income from business amounting to ,s.25 lacs. (e has availed an 95 fascility of ,s.1.5* crore for business purpose. %ll the amounts for investment in shares are routed through his 95 account. The Da= has not maintained any account of e'penses incurred for earning e'empt income. The dividend income forms part of the business balance sheet of the Da=. The income from renting of cylinders& sale of agricultural land are part of his personal balance sheet.

$roup 5: The Da= is a doctor who is running a hospital in his individual capacity. (e has given part of the property to Mr.2 who runs a medical store there. The Da= has entered into an agreement with Mr.2 fi'ing the annual rent for ,s.1****/- a month after finishing the trial period of the initial 1 year. The doctor has re3uisitioned medicines for patients from the medical store and has collected the amounts for the medicines from the patients. The medical store has raised a debit note on the doctor for the amounts due for supply of medicines. The total worth of medicines ta en for the year is about ,s.1.5*. The doctor is following cash system of accounting and the amount payable for the medicines procured is not reflecting in the boo s of accounts. The total profit earned from running the hospital is ,s.1* lacs. There has been no debit of depreciation in the boo s of accounts. The cost of land is ,s. # crore and the cost of construction of building is ,s.C5 lac. The building has been put to use in the %pril of 2*11. The total machinery installed is ,s. 1* lacs and the cost of furnishing is ,s.5 lacs. The Da= has made an 75 during the year on which he is earning interest of ,s.25&***/-. The assessee is also renting part of the machinery to visiting doctors for which he is earning rent of ,s.5&*** per month. The cost of the machinery given on rent is ,s. 2 lacs& which is already included in the total cost as mentioned above.

The following will be considered while mar ing you: 1. ?resentation 2. ?articipation of members of the group. !. Manner in which 3uestions are replied to. #. Eueries raised on the presentation of other groups 5. Fature of 3uery raised.