Marwadi Education Foundations Group of Institutions, Rajkot

Faculty of Management MBA Sem. III Pre Final Examination 2013-14 Max. Marks: 70 2830009 Corporate Taxation [CT] Time: 3 Hrs.

Instructions: 1) Attempt all questions 2) Make suitable assumptions wherever necessary 3) Figures to the right indicate full marks Q. 1 (a) Explain the following terms with suitable example: (i) Assessment Year and Previous Year; (ii) 07 Assessee and Person; (iii) Income and Gross Total Income Q. 1 (b) Explain the various residential status of an individual Q. 2 (a) Differentiate: (i) Tax Avoidance and Tax Evasion; (ii) Tax Planning and Tax Management Q. 2 (b) Define the following terms: (i) Company; (ii) Indian Company; (iii) Investment Company OR Q. 2 (b) Explain various methods of computation of arms length price. 07 Q. 3 (a) Explain various tax incentives available with reference to new business location of a business. 07 Q. 3 (b) Ram Leela Ltd is an Indian company. It owns an industrial undertaking which starts production 07 on April 1, 2012. On the same day, the company appointed 94 casual workmen. On 1st May, 2012, appoints 10 regular workmen with salary of Rs. 3000 per month. Calculate the amount of deduction u/s 80JJAA for the AY 2013-14. OR Q. 3 (a) Explain the salient features of Tonnage Tax Scheme and give the rate of amount of daily tonnage income applicable from AY 2013-14. Q. 3 (b) Bullet Raja is engaged in the business of carriage of goods. On 1st April, 2012, he owns 10 trucks 07 (6 out of it are heavy vehicles). On May 6, 2012, one of the heavy truck sold and purchased a light vehicle on May 10, 2012, which has not been used for the business till March 31, 2013. Find out the net income of Bullet Raja for the AY 2013-14. Q. 4 (a) Compare various tax benefits available to partnership firm, LLP and company with reference to 07 form of the organization. Q. 4 (b) Dhoom Ltd. is a widely held company. It is currently considering a major expansion of its 07 production department, for that purpose requires Rs. 1 crore. Company can get this finance either by issuing share of Rs. 100 each with Rs. 150 premium, or by 12% debenture or by loan from SBI @ 15% p.a. Expected rate of return before tax is expected @ 25%. Suggest the best alternative available for the company to raise the finance. OR 07 07 07 07

Q 4 (a)

Krish (42 years) is an actor deriving income from films and advertisements in India and abroad. 07 His foreign income is Rs. 9.5 crore for which he has paid TDS Rs. 19 lacs in the country of origin of income. India do not have any tax agreement with that country regarding tax avoidance. His Indian Income is Rs. 20 lacs. He is resident in India and has deposited Rs. 2.20 lacs in PPF during PY. Calculate the amount of relief due to him u/s 91for AY 2013-14.

Q. 4 (b) Explain the income that are taxable in the hands of nonresident in India.

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Q. 5 (a) Chulbul Ltd. is a manufacturing company. On April 1, 2012, it owns Plant A and B 07 (Depreciation rate is 15%, and WDV Rs. 240000). Plant C with same rate of depreciation purchased on June 10, 2012 for Rs. 60000 and put in use on the same day. Find out the tax consequences if; (i) Plant B destroyed by fire on January 25, 2013. Rs. 10000 paid by the insurance company on February 10, 2013. (ii) Plant B destroyed by fire on January 25, 2013. Rs. 370000 paid by the insurance company on February 10, 2013. Q. 5 (b) Write a detailed note on MAT and procedure to calculate it. OR Q. 5 (a) Explain the factors that require to make the tax planning in respect of employees remuneration 07 in detail. Q. 5(b) Singh Ltd. is considering the purchase of a new machine of Rs. 60000 with an estimated useful 07 life of 5 years with salvage value of Rs. 3000, in replacement of an old machine purchased 3 years ago for Rs. 30000 with life of 8 years. The present market value of old machine is Rs. 35000. After commencing new machine, profit before depreciation is expected to increase by Rs. 12000. Relevant rate of depreciation is 15% on new machine and tax rate is 32.445%. Assume after tax cost of capital to be 14%. Advise the company. 07