IPCC November 2014

Time Allowed 3 Hours

Maximum Marks
100
Answers to questions are to be given only in English except in the case of candidates who
have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers
in
Hindi, his answers in Hindi will not be valued.
Question No. 1 is compulsory
Attempt any five questions from the remaining six questions.
Working notes should form part of the answer.
Wherever appropriate, suitable assumption/s should be made by the
candidate.
Q.1 (A) Mr. Rahul, aged 55 years, a resident individual and practicing Chartered
Accountant, furnishes you the receipts and payments account for the financial
year 2013-14.
Receipts
Opening balance
(1.4.2013)
Cash on hand and at
bank
Fee from professional
services
Rent
Motor car loan from
Vyasa
Bank (@ 11% p.a.)

`
Payments
16,500 Staff salary, bonus and
stipend
8,51,50 to articled clerks
Other administrative
0
expenses
72,000
3,00,00 Office rent
Housing loan repaid to SBI
0
(includes interest of `
65,000)
Life insurance premium
Motor car (acquired in Dec.
2013)
Medical insurance premium
(for self and wife)
Books purchased (annual
publications)
Laptop acquired on
1.12.2013
(for professional use)
Domestic drawings
Public provident fund
subscription
________ Motor car maintenance
12,40,00 Closing balance (31.3.2014)

`
1,77,000
51,500
48,000
1,00,000
30,000
4,00,000
15,000
18,500
40,000
2,82,000
45,000
12,500
20,500
12,40,000

IPCC November 2014

Following further information is given to you:

(1)

He occupies the first floor of the building for own residence and has let out
ground floor for residential use at a monthly rent of ` 6,000. Both the floors
have the same area. The building was constructed during the year 1997-98.

(2)

Motor car was put to use both for official and personal purpose. One-fourth of
the motor car use is for personal purpose. No car loan interest was paid during
the year.

(3)

The written down value of assets as on 1-4-2013 are given below:

Furniture & Fittings
Plant & Machinery (Air-conditioners, Photocopiers, etc.)
Computers

` 75,000
` 90,000
` 60,000

Compute the total income of Mr. Rahul for the assessment year 2014-15,
assuming that he follows cash system of accounting regularly.
(10
Marks)
(B)

ABC Co. Ltd. is engaged in the manufacture of excisable goods. It procured

the following items during the month of January, 2014.

Determine the

amount of CENVAT credit available by giving necessary explanations for

treatment of various items.
Items

Excise

duty paid* [`]

Electrical transformers falling under Chapter85 of the Excise Tariff
52,000
Moulds and dies
1,00,000
Pollution control equipment
Office equipment
20,000

30,000

IPCC November 2014

Capital goods used outside the factory for generation of
10,000
electricity for captive use within the factory
Refractories
5,000
*(including EC and SHEC)

(5

Marks)

(C) Rock Farmer Association is engaged in providing services relating to agriculture. It

furnishes the following details with respect to the activities undertaken by them in the
month of May, 2013:
Sl.
No.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)

Particulars
Cultivation of ornamental flowers
Packing of tomato ketchup
Warehousing of potato chips
Sale of tea on commission basis
Packaging of pulses in retail packs
Training of farmers on use of scientific tools and agro
machinery
leasing of vacant land to a stud farm
Grading of wheat according to its quality
Testing of samples from plants for pest detection
Rearing of silk worms

Amount
(`)
42,000
54,000
1,65,000
68,000
42,000
10,000
1,63,000
42,000
1,21,500
83,500

Compute the service tax liability of Rock Farmer Association for the month of May,
2013.

Assume that the point of taxation in respect of all the activities mentioned

above falls in the month of May, 2013 itself.

Rock Farmer Association has paid service tax of ` 7,14,000 during the Financial Year
2012-13.
(5 Marks)

Q. 2 (A)(i) Mr. A purchased a residential house property for self-occupation at a cost of `

30 lakhs on 1.6.2013 in respect of which he took a housing loan of ` 24 lakhs
from Bank of India@ 11% p.a on the same date. Compute the eligible deduction
in respect of interest on housing loan for A.Y. 2014-15 and A.Y. 2015-16 under
the provisions of the income-tax act ,1961 assuming that the entire loan was
outstanding as on 31.3.2015 and he does not own any other house property.
(4 Marks)

IPCC November 2014

(ii)
MN Ltd, a manufacturing company purchased the following Plant and Machinery.
Date of Acquisition
and installation

Actual Cost
(in ` Crores)

25-05-2013
90.00
31-08-2013
20.00
15-04-2014
120.00
From the above information compute the amount of depreciation available u/s
32(1), additional depreciation, if any and deduction u/s 32 AC for the Assessment
Years 2014-15 and 2015-16.
What will be the consequences if asset acquired on 31-08-2013 is sold on 01-052016?
(4
marks)
(B)

What will be the assessable value of the excisable goods in the following cases?

(i)

The price-cum-duty of excisable goods sold by A is ` 200 per unit. Excise duty @
8% has been charged by A on such goods. However, A comes to know that the
actual rate of duty chargeable on the goods sold by him is 12% and not 8%. A has
collected only ` 200 per unit from the customers.

(ii)

B sells his excisable goods @ ` 200 per unit (inclusive of excise duty @ 12%)
However, it has been found that B has collected ` 50 per piece separately.

(iii)

The price of the excisable goods sold by C is ` 500 per unit. C does not charge
any duty of excise in his invoice on the belief that goods sold by him are exempt
from payment of duty vide an exemption notification. However, he comes to know
that the goods are not exempt from excise duty but are liable to duty @ 12%.
In all the above cases education cesses have to be considered separately.
(4 Marks)

(C) From the following details, compute the central sales-tax payable by a dealer carrying
on business in New Delhi:
`
Total turnover for the year which included

16,00,000

IPCC November 2014

(i) Trade Commission for which credit notes have to be issued
separately
(ii) Installation charges

48,000
25,000

(iii) Excise duty

80,000

(iv) Freight, insurance and transport charges recovered separately in

the invoice
(v) Goods returned by dealers within six months of sale, but after the
end of the financial year
Central sales tax Buyers have issued C forms for all purchases

60,000
40,000

(4
Marks)
Q.3
(A)

Mr. Madhav is the Finance Head of Gamma Ltd. at Ahmedabad. From the
following details, compute his total income for the Assessment Year 2014-15:
Basic salary
` 22,500 per
month
Dearness allowance

1/4th of basic

salary
Transport allowance (for commuting between place of residence and

2,000 per month

office)
Cost of laptop facility provided for both official and personal use

40,000
Conveyance allowance (out of the said amount ` 10,000 was

12,000
incurred on conveyance for his official duties)
Expenditure on accommodation in hotels while touring on official

45,000
duties met by the employer
Lunch provided by the employer during office hours. Cost to the

13,500
employer
Gamma Ltd. had taken a house on lease for which it paid a rent of ` 3,500 p.m. The
said accommodation was provided to Mr. Madhav, who pays rent @ ` 1,000 p.m
to the company. Gamma Ltd. also hired furniture @ ` 500 p.m and provided the
same to Mr. Madhav free of cost.

In addition, the company provided a television

owned by it (Cost ` 20,000) to Mr. Madhav, free of cost.

IPCC November 2014

Mr. Madhav made the following payments:
Medical insurance premium: Paid in cash
1,500

Paid by cheque
4,500

Contribution to Public Provident Fund (PPF)

1,00,000

`
(8
Marks)

(B)

Write a note on the Abatement on damaged or deteriorated goods as per Customs

Act, 1962?
(4 Marks)

(C)

Arihant Traders, a registered dealer having stock of goods costing ` 1,50,000

purchased from outside the State, wishes to opt for the composition Scheme. Advise
the dealer whether it is possible?
State the other conditions to be satisfied by a dealer before opting for composition
scheme.
(4
Marks)

Q.4 (A) Determine the taxability for the A.Y. 2014-15 of the following incomes in the hands
of an individual whose residential status is
(a) Resident but not ordinarily resident;
(b) Non-Resident.
Particulars
Amount (`)
1. Salary received in Canada for rendering service in Bangalore
50,000
2. Capital gain on sale of a house situated in Surat
(Sale consideration is received in Canada)
2,00,000
3. Dividend from foreign company received in Canada
8,000
4. Income earned from business in London which is controlled from Mumbai
(` 1,00,000 is received in India)
4,00,000
5. Profits from a business in Indore but managed entirely from Canada
1,25,000
6. Rental income (computed) from house property situated in Canada

IPCC November 2014

(rent is deposited in a bank at Canada and later on remitted to India)
1,20,000
7. Interest received in London from the Government of
India for project situated in London
35,000
8. Royalty from a non-resident company received in London in connection
with business situated outside India
5,00,000
9. Past foreign untaxed income of 2012-13 earned and received there brought to
India during the p/y
25,000
10.Interest on savings bank deposit in Bank of India, Bhopal
10,000
11.Share of income received in India from a partnership firm situated in Dubai
80,000
12.Dividend from Dabur India Ltd., an Indian Company
19,000
13.Agricultural income earned and received in Nepal from a land situated in Nepal
1,50,000
(8 marks)
(B)

Kalaniketan Enterprises imported some goods from UK. The assessable value of the
imported goods is 10,453.50. Compute the customs duty payable from the
following additional information

Date of bill of entry

notified by CBEC is

24.10.2013 rate of BCD is 10%; exchange rate as

` 68 per

Date of entry inwards

notified by CBEC is
CVD is payable @ 12%,

20.10.2013 rate of BCD is 8%; exchange rate as

` 70 per
Special CVD 4%
(4

Marks)
(C) Explain the meaning of Manufacture and Produce as per Central Excise Act, 1944?
(4 Marks)
Q.5 (A) Mr. Aakash, aged 55 years owned a residential house in Ghaziabad. It was
acquired by Mr.
Aakash on 10-10-1986 for ` 6,00,000. He sold it for `53,00,000 on 4-11-2013. The
stamp valuation authority of the state fixed value of the property at ` 65,00,000.
The Assessee paid 2% of the sale consideration as brokerage on the sale of the
said property.

IPCC November 2014

Mr. Aakash Acquired a residential house property at Kolkata on 10-12-2013 for `
10,00,000 and deposited `7,00,000 on 10-4-14 and ` 5,00,000 on 15-6-2014 in the
capital gain bonds of Rural Electrification Corporation Ltd. He deposited `4,00,000
on 6-7-2014 and `3,00,000 on 1-11-2014 in the capital gain deposit scheme in a
nationalized bank for construction of an additional floor on the residential house
property in Kolkata.
Compute the capital gain chargeable to tax for the assessment year 2014-15 and
income tax chargeable thereon assuming Mr. Aaksh has no other income .
Cost inflation index for F/Y 1986-87 = 140 and for F/Y 2013-14= 939.
(8Marks)

(B)

State whether the following are true or false giving reasons to substantiate your

answer:
(i) Services by way of transportation of goods by an aircraft or a vessel from a
place outside India upto the customs station of clearance in India are taxable.
(ii) Services provided by the RBI are chargeable to service tax.
(iii) Service tax return can be revised within 90 days after it which was filed.
(iv) Jaipur Branch of ABC Ltd. provides services to Baroda Branch of ABC Ltd. These
services are not liable to service tax.
(4 Marks)
(C) Define Input Service as per Cenvat Credit Rules, 2004?
(4 Marks)

Q.6 (A) Mr. Vivek furnished the following information for the assessment year 2014-15:
Particulars
Income from salaries
4,50,000
Loss from house property
(50,000)
Income from business (before providing for depreciation)
1,65,000
Short term capital gain from sale of land
54,000
Long term capital loss from sale of building
(86,000)

IPCC November 2014

Long term capital gain from shares (STT paid)
32,000
Short term capital loss under section 111A
(25,000)
Share of profit in a firm in which he is a partner
45,000
Winnings from lottery (Gross)
58,000
Loss on gambling
(8,000)
Dividend from a domestic company carrying on agricultural operation
15,000
Income from betting
10,000
Current year depreciation
60,000
Brought forward business loss relating to assessment year 2012-13
1,20,000
You are required to:
(a) Compute the gross total income and
(b) Ascertain the amount of losses that can be carried forward.

(4

marks)
(B) Ria, Roma and Raj three new retail investors, have made the following investments in
equity shares/units of equity oriented fund of Rajiv Gandhi equity savings scheme for
the previous year 2013-14 as below:

Investment in listed Equity shares

Investment in equity oriented
funds
Gross total income

Ria
`
50,00
0

Roma
`
23,00
0

10,00
0
10,80,0
00

12,00
0
11,50,0
00

Raj
`
55,0
00
12,60,
00

Calculate the amount of deduction allowable under section 80 CCG in all the three
cases for the Assessment year 2014-15.

IPCC November 2014

What would be the Tax-treatment in the hands of Raj, if he sells his investments in
the F/Y 2014-15?
(4 Marks)

(C)

Explain when a sale is said to take place outside a state as per CST Act?
(4
Marks)

(D) Explain various entries of taxes in the Constitution?

(4 Marks)

Q.7 (A) Answer any two of the following three sub divisions.
(1) Mr. B grows sugarcane and uses the same for the purpose of manufacturing sugar in
his factory. 30% of sugarcane produce is sold for ` 10 lacs, and the cost of
cultivation of such sugarcane is ` 5 lacs. The cost of cultivation of the balance
sugarcane (70%) is ` 14 lacs and the market value of the same is ` 22 lacs. After
incurring ` 1.5 lacs in the manufacturing process on the balance sugarcane, the
sugar was sold for ` 25 lacs. Compute Bs business income and agriculture income.
(2x2=4 Marks)
(2) State whether filing of income-tax return is mandatory for the A/Y 2014-15 in
respect of the following cases:
(i) Mr. Chauhan, a non-resident (aged 82 years) having total income of ` 1,60,000
after deduction of ` 1,20,000 under Chapter VI-A. His total income comprises
of Income from house property and interest income.
(ii) Registered trade union eligible for exemption under section
10(24)
having following incomes:
Income from house property (computed)
`
1,10,000
Income from other sources (computed)
`
50,000
(iii) Mr. Santosh, a resident individual(aged 39 years), having following incomes:
Income from salary
`
4,95,000
Interest from savings bank account
` 5,000
(iv) A Limited Liability Partnership (LLP) with business loss of ` 1,80,000 during the
previous year 2013-14.
(4
Marks)
(3) Explain the meaning of Assessment Year and Previous Year?
= 4Marks)
(B)

(2X2

(i) Siddhi Ltd. exported some goods to Samson Inc. of USA. It received US $ 9,000
as consideration for the same and sold it @ Rs. 44 per US dollar. Compute the
value of taxable service under rule 2B of the service tax (Determination of Value)
Rules, 2006 in the following cases:-

IPCC November 2014

(a)
(b)

RBI reference rate for US dollar at that time is Rs. 45 per US dollar.
RBI reference rate for US dollars is not available.

(ii) What would be the value of taxable service if US $ 9,000 are converted into UK
4,500. RBI reference rate at that time for US $is Rs. 46 per US dollar and for UK
is Rs. 88 per UK Pound.
(4
Marks)
(C)

Dinar Enterprises, a dealer in Hyderabad, purchased raw material worth `

90,00,000 (excluding VAT) and manufactured finished goods worth `
1,60,00,000 from such rawmaterial in the month of December, 2013. It
received an order for the said finished goods from its Bangalore branch in
January, 2014. Hence, it transferred these finished goods to Bangalore in the
same month.
Compute the amount of input tax credit available and net VAT payable under the
State VAT Law by Dinar Enterprises for the month of January, 2014 and the
balance input tax credit carried forward to next month, if any. Input VAT rate is
12.5% and output VAT rate is 4%.
(4 Marks)