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Osmania University
Code No. 1017/ET
FACULTY OF COMMERCE
B.Com. III Year Examination, March/April, 2008
[Common for General, Computers, Computer Applications (Voc.)]
INCOME TAX
Time: Three Hours Maximum Marks: 100
PART – A
(Marks: 5 x 5 = 25)
Answer any FIVE questions in not exceeding 20 lines each.
1. Explain the term “Income”.
2. Calculate taxable amount of House Rent Allowance when:
a. Gross Salary Rs. 4,40,000
b. Advance Salary Rs. 60,000
c. Dearness allowance Rs. 1,20,000 (50% forms part of salary)
d. HRA received Rs. 90,000
e. Rent paid at Hyderabad Rs. 75,000
3. calculate Gross annual Value when:
a. Municipal Rental Value Rs. 1,20,000
b. Fair Rental Value Rs. 1,50,000
c. Standard Rent Rs. 1,60,000
d. Actual Rental Value Rs. 1,40,000
4. From the following information calculate the amount of depreciation:
a. W.D.V. on 1-4-2006 Rs. 10,00,000
b. Additions on 15-01-2007 Rs. 8,00,000
c. Transfer of 60% block of assets Rs. 12,00,000
d. Rate of depreciation 15%
5. Mr. ‘X’ purchases shares of X Ltd on 30-6-05 for Rs. 80,000. He transfers these shares on 30-6-2006 for Rs. 4,40,000. Transfer expenses 2%. Compute taxable capital gains when the CII for the year 2005-06 is 497 and 2006-07 is 519.
6. What is Best Judgment Assessment?
7. Explain Bond Washing Transactions.
8. Discuss the provisions of Section 80G of IT act 1961.
PART – B
(Marks: 5 x 15 = 75)
Answer the following in not exceeding 4 pages each
9. a. Explain the term agricultural income and its important characteristics. Also discuss the procedure of the assessment.
OR
b. Discuss any 10 incomes exempt from tax u/s 10 of the IT act 1961.
10. a. Mr. Ram working at State Bank of Hyderabad, draws the following emoluments:
i. Basic pay Rs. 25,000 p.m.
ii. Dearness Allowance Rs. 12,000 p.m. (part of salary)
iii. Arrears of salary Rs. 48,000.
iv. Overtime remuneration Rs. 68,000
v. Leave encashed Rs. 42,000
vi. Children education allowance Rs. 2,000 p.m. (for 3 children)
vii. City compensatory allowance Rs. 1,500 p.m.
viii. Deputation allowance Rs. 6,000
ix. Rent-free accommodation at Warangal for which the employer pays a rent of Rs. 4,000 p.m.
x. Employee and employer contribute Rs. 60,000 each statutory provident fund and the interest credited there on at rate of 11% Rs. 44,000.
xi. Mr. Ram pays an LIP of Rs. 14,000 and employment tax Rs. 4,800
Compute income from salaries.
OR
b. Mr. ‘X’ is the owner of two houses. From the below given information compute income from house property:
Particulars House-I (Rs.) House-2 (Rs.)
Municipal value 55,000 65,000
Fair rental value 75,000 80,000
Standard rent 60,000 90,000
Actual rent 70,000 75,000
Municipal taxes 6,000 9,000
Library cess 4,000 5,000
Interest on loan (for construction) 10,000 12,000
Pre-construction interest 60,000 40,000
Date of construction 1-6-2003 1-8-1997
Ground rent 8,000 6,000
Land revenue - 3,000
Fire insurance premium 2,000 -
Note: (1) Municipal taxes of the House-1 are paid by tenants
(2) Library cess of the House-2 is still outstanding.
11. a. Below given is the Receipts and Payments A/c of Dr. Satish a Medical Practitioner. Compute income from profession:
Receipts and Payments A/c for the year ended 31-3-2007
Dr.Cr.
Receipts Rs. Payments Rs.
To Opening balance 40,000 By Dispensary expenses 60,000
To Consultation fee 80,000 By Salaries 40,000
To Interest 20,000 By Books and Journals 10,000
To Dividends 10,000 By Donations 10,000
To Rent 40,000 By Income tax 12,000
To Gifts from patients 20,000 By Surgical equipment 18,000
To Examiners fee 40,000 By Medicines purchased 28,000
To Operation fee 30,000 By shares purchased 32,000
To Royalty on the books By Traveling 20,000
of medicine 40,000
To Visiting fee 40,000 By Life Insurance 4,000
To Lecture fee 20,000 By Subscription to
medical council 2,000
To Sale of medicines 8,000 By Telephone expenses 4,000
By balance c/d 1,48,000
3,88,000 3, 88,000
Other information:
i. Allowable depreciation on all assets Rs. 18,000
ii. Gifts include Rs. 12,000 received from parents
iii. Traveling expenses include Rs. 8,000 relating to pilgrimage trip to Tirupathi
iv. Stock medicines as on 31.3.2007 Rs. 18,000
b. Compute income from business for the assessment year 2007-08:
Profit & Loss A/c for the year ended 31-3-2007
Particulars Rs. Particulars Rs.
To Salaries 40,000 By Gross profit 4,40,000
To Bad debts 10,000 By By rent from house property 60,000
To General expenses 60,000 By rent from open plots 40,000
To Provision for bad debts 6,000 By rent from staff quarters 20,000
To Fire insurance 8,000 By bad debts recovered 20,000
To Advertisement 6,000
To Interest on capital 8,000
To Interest on loan 30,000
To Depreciation 40,000
To Provision for sales tax 20,000
To Provision for Income tax 18,000
To Gratuity 12,000
To Net profit 3,22,000
5,80,000 5,80,000
Additional information:
i. Allowable depreciation on all assets Rs. 60,000
ii. Sales tax actually paid Rs. 26,000
iii. Actual bad debts written off Rs. 8,000
iv. Income tax actually paid Ra. 40,000
v. Bad debts recovered were disallowed earlier
vi. Advertisement expenses were paid in cash.
12. a. From the information given below compute taxable capital gains for the assessment year 2007-08:
Assets Date of Cost of Date of Transfer Transfer
acquisition acquisition transfer consideration expenses
Residential house 1.1.1979 Rs. 1,00,000 31.12.2006 14,10,000 10,000
(CII=100) (FMV. Rs. 1,50,000)
Urban agricultural 30.6.1992 Rs. 1,80,000 1.02.2007 12,40,000 40,000
lands (CII=223)
Gold and Jewelery 1.7.1988 Rs. 2,40,000 1.09.2006 22,00,000 10%
(CII=161)
Note: From the transfer consideration of each asset half the amount is re-invested in the same asset.
b. Mr. ‘X’ Furnishes the following information. Compute income from other sources:
i. Interest on Govt. Securities Rs. 16,800 (Net)
ii. Interest on Debentures of ‘X’ Ltd. Rs. 8,920 (Net) (listed)
iii. Interest on Debentures of ‘Y’ Ltd. Rs. 7,960 (Net) (un-listed)
iv. Lottery winnings Rs. 60,000 (gross)
v. Agency commission Rs. 40,000
vi. Race horse winnings Rs. 12,000 (Maintenance expenses Rs. 20,000)
vii. Royalty on publication of books Rs. 48,000 (Expenses on the preparation of manuscript Rs. 8,000)
viii. Interest on loan taken to purchase Govt. Securities Rs. 1,800.
13. a. Discuss the legal provisions relating to set off and carry forward of losses under IT act, 1961.
b. Compute tax liability of Mr.Venkat aged 48 years:
i. Salary received Rs. 1,20,000
ii. Income from business Rs. 3,60,000
iii. Un-absorbed depreciation Rs. 60,000 (2005-06)
iv. Brought forward business losses (2005-06) Rs. 1,80,000
v. Brought forward long-term capital losses Rs. 20,000 (2005-05)
vi. House property income Rs. 80,000
vii. Life insurance premium paid Rs. 60,000
viii. House construction loan repaid Rs. 40,000
ix. Deposited in Public provident fund Rs. 18,000
x. Mediclaim insurance premium paid Rs. 14,000.
Osmania University
Code No. 1017/ET
FACULTY OF COMMERCE
B.Com. III Year Examination, March/April, 2008
[Common for General, Computers, Computer Applications (Voc.)]
INCOME TAX
Time: Three Hours Maximum Marks: 100
PART – A
(Marks: 5 x 5 = 25)
Answer any FIVE questions in not exceeding 20 lines each.
1. Explain the term “Income”.
2. Calculate taxable amount of House Rent Allowance when:
a. Gross Salary Rs. 4,40,000
b. Advance Salary Rs. 60,000
c. Dearness allowance Rs. 1,20,000 (50% forms part of salary)
d. HRA received Rs. 90,000
e. Rent paid at Hyderabad Rs. 75,000
3. calculate Gross annual Value when:
a. Municipal Rental Value Rs. 1,20,000
b. Fair Rental Value Rs. 1,50,000
c. Standard Rent Rs. 1,60,000
d. Actual Rental Value Rs. 1,40,000
4. From the following information calculate the amount of depreciation:
a. W.D.V. on 1-4-2006 Rs. 10,00,000
b. Additions on 15-01-2007 Rs. 8,00,000
c. Transfer of 60% block of assets Rs. 12,00,000
d. Rate of depreciation 15%
5. Mr. ‘X’ purchases shares of X Ltd on 30-6-05 for Rs. 80,000. He transfers these shares on 30-6-2006 for Rs. 4,40,000. Transfer expenses 2%. Compute taxable capital gains when the CII for the year 2005-06 is 497 and 2006-07 is 519.
6. What is Best Judgment Assessment?
7. Explain Bond Washing Transactions.
8. Discuss the provisions of Section 80G of IT act 1961.
PART – B
(Marks: 5 x 15 = 75)
Answer the following in not exceeding 4 pages each
9. a. Explain the term agricultural income and its important characteristics. Also discuss the procedure of the assessment.
OR
b. Discuss any 10 incomes exempt from tax u/s 10 of the IT act 1961.
10. a. Mr. Ram working at State Bank of Hyderabad, draws the following emoluments:
i. Basic pay Rs. 25,000 p.m.
ii. Dearness Allowance Rs. 12,000 p.m. (part of salary)
iii. Arrears of salary Rs. 48,000.
iv. Overtime remuneration Rs. 68,000
v. Leave encashed Rs. 42,000
vi. Children education allowance Rs. 2,000 p.m. (for 3 children)
vii. City compensatory allowance Rs. 1,500 p.m.
viii. Deputation allowance Rs. 6,000
ix. Rent-free accommodation at Warangal for which the employer pays a rent of Rs. 4,000 p.m.
x. Employee and employer contribute Rs. 60,000 each statutory provident fund and the interest credited there on at rate of 11% Rs. 44,000.
xi. Mr. Ram pays an LIP of Rs. 14,000 and employment tax Rs. 4,800
Compute income from salaries.
OR
b. Mr. ‘X’ is the owner of two houses. From the below given information compute income from house property:
Particulars House-I (Rs.) House-2 (Rs.)
Municipal value 55,000 65,000
Fair rental value 75,000 80,000
Standard rent 60,000 90,000
Actual rent 70,000 75,000
Municipal taxes 6,000 9,000
Library cess 4,000 5,000
Interest on loan (for construction) 10,000 12,000
Pre-construction interest 60,000 40,000
Date of construction 1-6-2003 1-8-1997
Ground rent 8,000 6,000
Land revenue - 3,000
Fire insurance premium 2,000 -
Note: (1) Municipal taxes of the House-1 are paid by tenants
(2) Library cess of the House-2 is still outstanding.
11. a. Below given is the Receipts and Payments A/c of Dr. Satish a Medical Practitioner. Compute income from profession:
Receipts and Payments A/c for the year ended 31-3-2007
Dr.Cr.
Receipts Rs. Payments Rs.
To Opening balance 40,000 By Dispensary expenses 60,000
To Consultation fee 80,000 By Salaries 40,000
To Interest 20,000 By Books and Journals 10,000
To Dividends 10,000 By Donations 10,000
To Rent 40,000 By Income tax 12,000
To Gifts from patients 20,000 By Surgical equipment 18,000
To Examiners fee 40,000 By Medicines purchased 28,000
To Operation fee 30,000 By shares purchased 32,000
To Royalty on the books By Traveling 20,000
of medicine 40,000
To Visiting fee 40,000 By Life Insurance 4,000
To Lecture fee 20,000 By Subscription to
medical council 2,000
To Sale of medicines 8,000 By Telephone expenses 4,000
By balance c/d 1,48,000
3,88,000 3, 88,000
Other information:
i. Allowable depreciation on all assets Rs. 18,000
ii. Gifts include Rs. 12,000 received from parents
iii. Traveling expenses include Rs. 8,000 relating to pilgrimage trip to Tirupathi
iv. Stock medicines as on 31.3.2007 Rs. 18,000
b. Compute income from business for the assessment year 2007-08:
Profit & Loss A/c for the year ended 31-3-2007
Particulars Rs. Particulars Rs.
To Salaries 40,000 By Gross profit 4,40,000
To Bad debts 10,000 By By rent from house property 60,000
To General expenses 60,000 By rent from open plots 40,000
To Provision for bad debts 6,000 By rent from staff quarters 20,000
To Fire insurance 8,000 By bad debts recovered 20,000
To Advertisement 6,000
To Interest on capital 8,000
To Interest on loan 30,000
To Depreciation 40,000
To Provision for sales tax 20,000
To Provision for Income tax 18,000
To Gratuity 12,000
To Net profit 3,22,000
5,80,000 5,80,000
Additional information:
i. Allowable depreciation on all assets Rs. 60,000
ii. Sales tax actually paid Rs. 26,000
iii. Actual bad debts written off Rs. 8,000
iv. Income tax actually paid Ra. 40,000
v. Bad debts recovered were disallowed earlier
vi. Advertisement expenses were paid in cash.
12. a. From the information given below compute taxable capital gains for the assessment year 2007-08:
Assets Date of Cost of Date of Transfer Transfer
acquisition acquisition transfer consideration expenses
Residential house 1.1.1979 Rs. 1,00,000 31.12.2006 14,10,000 10,000
(CII=100) (FMV. Rs. 1,50,000)
Urban agricultural 30.6.1992 Rs. 1,80,000 1.02.2007 12,40,000 40,000
lands (CII=223)
Gold and Jewelery 1.7.1988 Rs. 2,40,000 1.09.2006 22,00,000 10%
(CII=161)
Note: From the transfer consideration of each asset half the amount is re-invested in the same asset.
b. Mr. ‘X’ Furnishes the following information. Compute income from other sources:
i. Interest on Govt. Securities Rs. 16,800 (Net)
ii. Interest on Debentures of ‘X’ Ltd. Rs. 8,920 (Net) (listed)
iii. Interest on Debentures of ‘Y’ Ltd. Rs. 7,960 (Net) (un-listed)
iv. Lottery winnings Rs. 60,000 (gross)
v. Agency commission Rs. 40,000
vi. Race horse winnings Rs. 12,000 (Maintenance expenses Rs. 20,000)
vii. Royalty on publication of books Rs. 48,000 (Expenses on the preparation of manuscript Rs. 8,000)
viii. Interest on loan taken to purchase Govt. Securities Rs. 1,800.
13. a. Discuss the legal provisions relating to set off and carry forward of losses under IT act, 1961.
b. Compute tax liability of Mr.Venkat aged 48 years:
i. Salary received Rs. 1,20,000
ii. Income from business Rs. 3,60,000
iii. Un-absorbed depreciation Rs. 60,000 (2005-06)
iv. Brought forward business losses (2005-06) Rs. 1,80,000
v. Brought forward long-term capital losses Rs. 20,000 (2005-05)
vi. House property income Rs. 80,000
vii. Life insurance premium paid Rs. 60,000
viii. House construction loan repaid Rs. 40,000
ix. Deposited in Public provident fund Rs. 18,000
x. Mediclaim insurance premium paid Rs. 14,000.
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