B.Com. Degree (C.B.C.S.

S) Examination, 2015
Fifth Semester
Core Optional 3. Income Tax Law and Practice
Model Question Paper
Common for Model-I&II and UGC Sponsored Programme (Taxation)
Time: 3 Hours

Maximum: 80 Marks
(2013 Admission onwards)

Answer may be written either in English or in Malayalam.

Part A
Answer All questions. Each question carries 1 mark
1. What is Direct tax?
2. What is CBDT?
3. What is Total Income
4. When is a firm resident in India?
5. What is Maximum Marginal Rate?
6. What is a converted property?
7. What is surcharge?
8. What is Average Rate of Tax?
9. What is capital asset?
10. What is standard rent?

(10x1=10)

Part B
Answer any Eight questions.Each question carries 2 marks.
11. List any two exempted incomes
12. What do you mean by previous year?
13. What do you mean by Transferred Balance?
14. Who is an Assessee in Default?
15. What do you mean by Domestic Company?
16. What do you mean by assessment year?
17. What do you mean by deemed income?
18. What are the fully exempted allowances?
19. What do you mean by perquisites?
20. What do you mean by commuted pension?
21. Write a note on House rent allowance
22. What do you mean by Taxable Annual Accretion?(8x2=16)

Part C
Answer any Six questions. Each question carries 4 marks.
23. Define Annual Value. What are the deductions allowed from annual value?
24. What are the expenses disallowed while computing income from business?
25. Who are the deemed owners of a property?
26. Write a note on residential status of Individual
27. Whoare specified Employees? Which are the perquisites taxable for them?
28.Mr. Reddy retires from private service on 30 th April 2014 and his pension has been fixed at
Rs.6000 p.m. He gets of his pension commuted and gets Rs 300000. He also received Rs
150000 as gratuity. He gets his pension commuted during Jan. 2015. In all cases pension
becomes payable on 1st day of each month. Calculate taxable pension for the year 2014-15.
29.Gopu, an Indian citizen, leaves India to USA for a job on 21.09.2014. Whatwill be his residential
status for the assessment year2015-16 if he has never left India earlier?
30.After serving for 33 years and 9 months in Bharath Chemicals Ltd. Mr. X, Who is covered under the
payment of Gratuity Act retires from serviceon 30 th Nov. 2014. The employer pays him a gratuity
of Rs 900000. Hismonthly salary at the time of retirement was Rs 30000, D.A Rs 9000 andHRA
Rs 4500. Determine the taxable Gratuity.
31.Mr. Krishna, a resident of Agra receives Rs. 1, 92,000 as basic salary during the Year 2014-15. In
addition, he gets Rs.19,200 p.a. as D.A forming part of pay, 7% commission on sales made by him
(sales-8600) and Rs.24,000 p.a as H.R.A. He pays Rs.21500 p.a as rent. Compute the house rent
allowance exempt from Tax
(6x4=24)
Part D
Answer any Two questions. Each question carries 15 marks
32. Mr. X is the owner of a big house whose municipal valuation is Rs36,000 p.a. 1/3portion of the
house is let out to a tenant at Rs. 1,600 p.m for residential purposesand remaining 2/3portion is
occupied by him for his own residence.The construction of this house started in June 2008 and
was completed on1.11.2010.The house is subject to local taxes of Rs. 3600 p.a which are unpaid.
The other expenses in respect of this house are Insurance premium Rs.600 and property tax to
State Govt. Rs. 720.
Mr. X had taken a loan Rs.50, 000on 1.07.2008 for the construction of this house. The loan has
not yet been repaid and an interest@12%p.ais payable on it.
Find out Xs income from house property for the assessment year 2015-16.
33. From the following information, compute taxable salary of Mr. Ajin who is employed ina textile
industry in Mumbai on a monthly salary of Rs. 4,000. He is entitled to a commission of 1% on
sales achieved by him, which were Rs. 10 lakh for the year. In addition, he received the following
emoluments from the employer during the previous year:

1.

D.A Rs. 2000 per month which is granted under terms of employment and counted for
retirement benefits.
2. Bonus Rs. 32,000
3. H.R.A Rs. 1000p.m. (Rent paid for house in Mumbai Rs.1200 p. m)
4. Entertainment allowance Rs. 1000 p.m
5. Children education allowance Rs. 500 p.m for two children
6. Transport allowance Rs. 1000 p.m
7. Medical allowance Rs.500 p.m
8. Servant allowance Rs. 200 p.m
9. City compensatory allowance RS. 300p.m
10. Research allowance Rs.500p.m(amount spent on research Rs. 3000)
11. A small car is provided to him by employer forhis official and personal use. All expenses
relating to car including drivers wages are met by the employer.
12. During the year, he paid employment tax of Rs.4000.
34.Sri .Vishnu is the proprietor of a business. His profit and loss account for the year ended
31stMarch2015 is as follows.
Rs. Rs.
Establishment 4, 800Gross Profit 3, 50,840
Rent, rates and taxes 2,900 Interest on Govt. Securities
5,400
General charges 750 Rents from House Property5,400
Household expenses 51,730
Commission
1,500
Discount and allowances 450
Provision for bad debts
1,200
Postage and telegrams
270
Law charges
450
Advertising
1,550
Fire insurance premium
360
(for goods)
Sales tax paid
1,450
Repairs renewals
(Not for business premises)630
Loss on sale of motor car
(used for private purposes) 1,800
Life insurance premium
1,780
Wealth tax
740
Interest on capital 350
Audit fee
300
Interest on bank loan
1,380
Provision for depreciation2,500
Provision for income tax
3,900
Net profit2, 80,840
3, 61,6403, 61,640

Following further information are given

1.
2.
3.
4.
5.
6.
7.
8.

Actual bad debt written -off during the year amount to Rs. 550
Amount of Income Tax actually paid during the year is Rs.4, 200
Depreciation allowable IS Rs.1, 700 as per Income Tax Rules
Advertising Expenses include Rs. 550 spent on special advertising
campaign to open new shop in the market.
Law Charges are in connection with protection of trademark.
Sri.Vishnu carries on his business from rented premises, half of which is
used as his residences. Rent rates and taxes include Rs. 2,400 paid as rent
of premises during the year.
Bank loan is taken for business purposes.

Compute the business Income of Sri. Vishnu for the assessment year 2015-16.
35. What do you mean by perquisites? Explain different types of perquisites
(15x2=30)