CORPORATE TAXATION — Summer 2018

Rebate under section 87A is available to _____ if net income does not exceed_____ and subject to maximum limit of Rs_______1 A. Resident Individual, 500000,5000 B. Resident Individual, 250000,3000 C. All assessee, 500000,5000 D. HUF,250000,5000 Number of digits in a PAN card are- 2 A. 9 B. C. 8 D. Resident/NR and they seek advance ruling in respect of impermissible avoidance arrangement, has to make an application in form no.3 A. 34E B. 34EA C. 34C D. 34D 4 Identify odd one out for Arms length price methods A Comparable Uncontrolled price method B Resale price method C Profit split method D Double Taxation Agreement 5 __________Exempt from tax unless expressly taxable. A Capital receipt B Revenue Receipt C Double Income D None 6 Tea income is chargeable to tax at___ A 40% B 35% C 60% D 65%

Multiple Choice Questions. (6 Marks)

Answer the following in brief.(1 Marks Each) 1. GST 2. Assessee 3. Double taxation 4. Finance Act.

State and explain briefly any 4 Deduction allowable under section 80 of Income Tax Act.

Xpurchases 1000 equity shares in Altd at the rate of Rs.16 per share (brokerage: 1%) on December 10, 1979. He gets 500 bonus shares (by virtue of holding of 1000 shares) on January 10, 1984. Fair market value of shares of Altd on 1.4.1981 is Rs.24. on the April 13, 2016; he transfers 1000original shares @Rs.300 per share (brokerage-1.5%) On the April 15, 2016, he transfers 500bonus shares at Rs.310 per share (brokerage-1.5%). These shares are transferred in BSE. Find out the amount of capital gain.

List out different areas of Tax Planning and explain any two in detailed.

Dividend referred under section 115-Ovs Section 2(22)(e).1

Xltd a paper manufacturing concern, purchase a machine on March 1,1997 for Rs.610000 for its laboratory with view to improving the quality of art paper manufactured by company. 1. What will be the amount of deduction under section 35 on account of capital expenditure for the year 19997-1998 2. If the research activity for which machine was purchased ceases in 2015 and machine is brought into business on November 1, 2015(Market value-Rs.230000), depreciation is admissible at the rate of 15%, Depreciated value of block of assets on 1.4.2015 is Rs1407860, and the scientific machine is sold for Rs190000 on 4.4.2016, what would be the amount of depreciation? 3. If the research activity for which machine was purchased ceases on 1.11.2015(Market value-Rs.230000), and machine is sold on April 4,2016 without using it for another purpose, Sale price being Rs190000, or 540000 or 810000 or 2200000.Compute capital gain.

Mr. DP (62 years), a non resident is engaged in business of shipping. During the previous year 16-17 one of the ships owned by Xcollects freight as follows:  On 6.8.2016, a sum of Rs 40 lakh for shipping goods from cochin part (it includes demurrage of Rs 10000 and handling charges of Rs 60000) and  On 10.1.2017, a sum of Rs25lakh for shipping goods from Bombay (it is paid to DP in New York)  Besides, DP collects Rs 3270000 in India on 3.3.2017 for shipping goods from Karachi to California. Barring the cases noted above, DP does not have any other income in India. DP incurs an expenditure of Rs 240000 in India (out of which Rs 65000 is paid in cash). DP has brought forward loss of Rs 5000 from trading business in India which was discontinued in 2015. Compute the tax liability of DP for AY 2017-18. Assume Mr DP opts for normal assessment under section 172(7).

Discuss the provisions of tax planning with reference to repairs/ renewal/ renovation.

Mr X (28 Years) is ROR in India. His income is Rs896000 from a business in India and Rs192000 from business in Foreign country with whom India has ADT agreement. According to ADT, income is taxable in the country in which it is earned and not in the other country. However, in the other country, such income can be considered for tax. Business income of Rs192000 is taxable at 23%. During the PY, Xhas deposited Rs42000 in PPF out which Rs10000 is deposited out of foreign income. He has also received Rs32000 on Govt securities. Find out the tax liabilities for AY17-18

Elaborate Associated Enterprise with reference to Transfer Pricing.

Answer the questions for independent cases of Advance ruling. 2+2+3 1. Applicability of advance ruling and to whom it is binding on? (2Marks) 2. Cases where Advance ruling to be void in certain circumstances. (2Marks)2 3. Fees and Form to be filed for advance ruling. (3Marks)

Xltd is a manufacturing company. On April 1,2016 it owns Plant Aand Plant B (Rate of Depreciation-15%, Depreciated value of block being Rs.240000). Plant c (Rate of depreciation-15%) is purchased by company on June 10,2016 for Rs.60000 and put to use on same day. Find out tax consequences in following cases: 1. Plant Bis destroyed by fire on January 25, 2017.Rs.10000 being insurance compensation is paid by insurance company on February 10, 2017. 2. Suppose insurance compensation in situation (1) is Rs.370000. 3. All plants are destroyed by fire on January 25, 2017. The compensation paid by insurance company on February 10, 2017 is Rs.20000.

Xltd is a closely held company engaged in manufacture of insecticides and fertilizers. The value of plant and machinery owned by company is Rs.55lakh.Compute Book profit. Particulars Rs. Domestic sales 2223900 Export sales 576100 Amount withdraw from General reserve (Reserve 200000 created in 1996-97 by debiting P&Laccount) Amount withdrawn from revaluation reserve 150000 Less: Depreciation (Normal) 616000 Depreciation (Due to revaluation) 270000 Salary and wages 210000 Wealth tax 10000 Income tax 350000 Outstanding custom duty 17500 Proposed dividend 60000 Consultation fees paid to tax consultant 21000 Other exp 139000 Net Profit 1456500 The assessee claims the following as deductions:  Deduction under section 80IB-30% of 1456500  Depreciation under section 32 is Rs.536000  The company wants to set up following losses Particulars For Tax Purpose For Accounting Purpose B/Floss of 2010-11 1480000 400000 Unabsorbed depreciation Nil 70000 Compute the tax liability. OR3

Xltd is a manufacturing company located in India. Business income of company for the PY 16-17 under section 28 is Rs4000000. Xltd holds share in few companies. Investee Country of Shareholding Dividend Whether Companies incorporation of Xtd in received investee of investee co Investee co % during PY co has 2016-17 paid tax under sec 115O A India 51 40000 Yes B India 26 50000 Yes C Country C 51 60000 No D Country C 26 70000 No E Country C 25 80000 No On1.9.2016, Xltd declares a dividend of Rs500000 for its own shares. Find out the tax liabilities(income tax and DDT sec.115O on assumption that India has ADT agreement with country Cand as per agreement dividend income is taxable in India and not in Country C.