DISTRICT RESOURCE CENTRE

MAHBUBNAGAR
B.Com III YEAR PRE-FINAL EXAMINATION JAN/FEB-2011
(Common paper for Computers & Computer Application)
INCOME TAX [302]
Time : 3 hours Max.Marks: 100

PART-A [5 X 5 = 25 Marks]
Answer any 5 questions. Answer to the theory questions should not exceed 20 Lines each.

1. Assessment Year
2. Permanent Account Number [PAN]
3. Revenue Expenses Vs Capital Expenses
4. Mr.Chand is a state Government Employee working in Hyderabad.
His Salary particulars are as under: Basic Pay Rs.1800 pm, DA Rs.750pm, CCA Rs.180pm,
HRA Rs.600pm(Rent paid Rs.750pm). Calculate exempted amount of HRA.

5. Gross Annual Value.

6. Mr.Vijay kumar purchased Diamond Ring on 5th July,1985 for Rs.68,000 and sold for Rs.5,10,000
during the previous year relevant to the current assessement year. Cost inflation index for 1985-86 is
133 and for the previous year is 632. Calculate Capital Gain.

7. The following are the particulars of investment of Mr.Bupesh for the previous year ended March
31st,2010
.(i) Rs.1,00,000 2% Tax free Kerala Govt.Securities.
(ii)Rs.90,000 4% (less Tax) AP Govt.Bonds.
(iii)Bank Charges paid Rs.60
(iv)Interest paid on loan taken for the purchase of Tax free Govt.Securities Rs.850

8. The following are the particulars of Income and other related information of Mr.Janaiah. Compute
Total Income. Income from House Property(Letout) Rs.60,000 Loss from self occupied House
Rs.21,000 Income from Profession Rs.3,50,000 long term Capital Gain Rs.75,000 Interest on NSC
VIII issue Rs.3,000

PART-B [5 X 15 = 75 Marks]
Answer all questions. Answer to the theory questions should not exceed 4 pages each.

9. (a) What are the conditions to be satisfied for an Income to be treated as an

Agricultural Income?
[OR]
(b) Explain any Ten items which are fully exempted Incomes to Individuals from
Income Tax.

10. (a) From the following compute the Income of Sri.Badrinath under the head
Salary: Basic pay Rs.15,000; Dearness Allowance(Enters for Retirement benefit)
Rs.7,500pm; Annual Bonus 5% of Basic Pay, Entertainment Allowance Rs.2,000pm.
Employer provides with the following benefits:

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(i) Rs.8,000 is awarded as Scholarship for his Daughter.
(ii) Free refreshments costing Rs.10 per day is served for 300 days in the office.
(iii) A Rent free accomdation is provided in a city having 10.2 lakhs of population. Cost of
Furniture provided is Rs.70,000
(iv) A small Motor Car is provided for Official purpose
(v) The Employer provided the services of Watchman and a cook whose monthly salary @
Rs.3,000 pm each and Bonus to them one month salary also paid by the Employer.
(vi) Employer allowed to use a computer costing Rs.60,000 for official and personal purpose.
(vii) Reimbursement of Medical expenses spent in a recognized Hospital in India Rs.30,000.
(viii) Employer’s contribution to Approved Superannuation Fund Rs.1,08,000.
(ix) Employer paid Rs.5,000 for extra work (i.e) for undertaking Tution to his son.
Professional Tax paid by the Assessee is Rs.450 pm.

[OR]
(b) Sri.V.V.Prasad is the owner of a House, which is letout on a monthly rent of Rs.7,500. The
Municipal Valuation is Rs.80,000 pa. Prasad incurs the following expenses. Municipal Taxes
Rs.9,300, Repairs Rs.5,000, Interest paid on the loan taken to purchase the house Rs.14,300.
Compute Income from House Property.

10. (a) Sri. Murali is the owner of a Business. From the following Profit & Loss A/c Compute
Income under the head of Profit & Gain of Business.
Dr Profit & Loss A/c for the year ending 31st March, 2010 Cr
Particulars Rs. Particulars Rs.
To Salaries 33,000 By Gross Profit 4,05,000
To Proprietor’s Salary 10,000 By Rent 50,000
To Taxes & Insurance 5,200 By Interest on Bank Deposits 10,000
To Advertisement 55,000 By Bad debts Recovered 5,000
To Lighting 11,100 (out of this Rs.3,000 is
To Cost of goods given under disallowed earlier)
warranty claims 7,500 By Export Incentive 37,500
To Life Insurance Premium 3,200 Received
To Bad debts 2,500
To Provision for doubtful debts 3,000
To Interest on Loan 16,000
To Interest on Capital 8,000
To Sales Tax Penalties 5,000
To Depreciation 18,000
To Net Profit 3,30,000
__________ ___________
5,07,500 5,07,500
Additional Information:-
(i) Depreciation allowed as per I.T.Act is Rs.15,300.
(ii) Advertisement expenses includes Rs.25,000 paid in cash on the last day of the Accounting Year.
(iii) On the last date of the Accounting Year the cashier reported a cash shortage of Rs.200 and
Stock
Verifier found a shortage of Rs.500 worth goods.
(iv) The Assessing Officier found a valuable item of gold worth Rs.1,00,000 at the residence of the
Assessee and explanation for source of funding is not satisfactory.
(v) Lighting Expenses includes Rs.2,000 towards Electricity generating expenses.
(vi) For achieving the sales target he received a Motor Cycle worth Rs.45,000 as gift from a supplier.

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(vii) Interest on Loan includes Rs.3,000 Interest on Loan taken from wife out of her “STRIDHAN”
[OR]

(b) Sri. Raju a chartered Accountant in Hyderabad submitted the following particulars.
Compute the Income from Profession.
RECEIPTS: Audit Fee: Companies Rs.2,88,000, Banking Companies Rs.1,56,000, Firms
Rs.75,000, Others Rs.81,000, Gifts from clients worth Rs.22,500, Interest on Bank Deposits Rs.3,200
share of Income from HUF Rs.11,000, Financial Advices Rs.1,05,000, Accountancy works
Rs.3,07,500
PAYMENTS: Office Rent Rs.77,000, Telephone Charges Rs.32,000, Salaries to Staff Rs.86,500,
Stipend given to Trainees Rs.27,000, Subscription to Journals Rs.4,000, Car expenses Rs.36,800,
Electricity Bill Rs.17,800, Membershp fee paid to Institute of CA Rs.2,000, Purchase of Books
Rs.13,000, Purchase of Computer Rs.36,000

ADDITIONAL INFORMATION:-
(i) Depreciation on Car Rs.64,100
(ii) One month Rent Rs.7,000 is outstanding
(iii) Audit Fee from the Banks due is Rs.75,000
(iv) 25% of the Car use is personal

12 (a) Mr. Venkat Purchased a property for residential purpose for Rs.7,50,000 in 1975. During the
financial year 1983-84 he had spent Rs.1,20,000 towards improvement. On 1 st April,1995 he entered
into an agreement to sell the House and received Rs.1,20,000 as an advance. This advance was
forfeited as the purchaser did not pay the balance of amount in time. During the previous year
relevant to the current assessement year the entire property was sold for Rs.21,42,000, Brokerage paid
is 1%. On the last day of the previous year he purchased a small house for his residential purpose for
Rs.2,50,000[ Brokerage Paid 0.5%]. Calculate from Capital gain if Cost Index for 1983-84 is 116
[OR]
(b) The Investments of Mr.AmirKhan during the Financial Year are as under.
Rs.20,000 5% Municipal Bonds
Rs. 5,000 12 years 12% National Defence Certificates.
Rs.10,000 8% Bombay Development Loan
Rs.30,000 5.5% Tax free Indian Govt.Loan
Rs.40,000 6% Tax free Debentures of XYZ Ltd.(Unlisted)
Rs.20,000 9% Tax free Debentures of ABC Ltd(Listed)
Rs.12,000 10% Textile Company Debentures(Less Tax ,Listed)
On 1-12-2009 he bought Rs.40,000 6% Debentures of a Paper Company, for this purpose
he took a loan at 5% and paid Rs.250 for Brokerage. The Interest on these Securities was realized
through Bank and banker charged 1% on gross interest. Compute Income from Interest on Securities.

13 (a) Sri. Govind submitted the following particulars. Compute Total Income.
Salary Rs.25,200 pm and Profession Tax paid Rs.4,200
Rent received Rs.5,000pm Contribution to LIC Pension Fund Rs.9,500
Medical Insurance Premium paid for self Rs.10,000 and for father age 59 years Rs.18,000

[OR]
(b) Write a Short Notes On:

(i) Tax Deduction at Source

(ii) Advance Payment of Tax

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(iii) Best Judgement Assessment.