INCOME TAX II KEY FOR IMPORTANT QUESTIONS.

BY Dr. M.KAMARAJ. DEPARTMENT OF COMMERCE, TAC,

PONDICHERRY.
BOOK AUTHOR; V.P. GAUR AND D.B. NARANG. PUBLISHED YEAR-2012-13.
UNIT.I. CARRY FORWARD AND SET OFF OF LOSSES.
KEY FOR PROBLEM.NO.2.
Computation of Total Income For Assessment Year 2012-13
I. House Property Income
Rs.
(i) Income From let-out House (computed)
6,000
(ii) Self-occupied house (Annual Value is taken as)
_NIL
House property Income
II. Business Income
(i) Electric Goods Business
Rs.
Profits from electric goods business
10,000
Add : Profit from agency business
_3,000
13,000
Set-off B/F loss from Electric goods Business 6,000
Set-off B/F loss from Agency business
_1,000
7,000
6,000
Set-off B/F unabsorbed depreciation
_1,000
5,000
(ii)

Speculation Business
Speculation gain from Gold
Set-off B/F speculation loss from Silver
B/F Speculation loss from silver shall be
carried forward further

Rs.

6,000

2,000
-4,000
_2,000
_NIL

Income under the head Profits & Gains

5,000

III. Capital Gains

(a) Long-term Capital Gain from land
Less Long-term Capital Loss

(b)

Short term Capital Gain

Set-off Short-term Capital Loss B/F
Balance to the set off from LTCG
Taxable Capital Gain
G.T.I

7,000
_4,400
2,600
2,000
3,000
_(-)1,000
1,600
12,600

KEY FOR PROBLEM NO. 8.

Computation of Total Income For Mr. Moopnar
Rs.
I. Profits and gains

Rs.

80,000

Profit from business A

Loss from business

of current year to be set of

_20,000
60,000

Set off B/F unabsorbed depreciation of the A/Y 2009-10

_25,000
35,000

Set of B/F loss (A/Y 2006-07)

_18,000

II. Capital Gains

Short term capital gain

50,000

Set off S.T. Capital loss A/Y 2010-11

_10,000
40,000

L.T Capital loss of 2012-13

Rs. 20,000

B/F off S.T. Capital loss of 2009-10

Rs. 4,000

Both of be C/F
III.Other Sources:Interest on Securities
Income from owning and maintaining horses

24,500
15,000

Loss from owning and maintaining horses

A/Y 2010-2011 cannot be set off as period of
4 years is over
Loss of Race horses A/Y 2011-12 to be set of

NIL
(-) 18,000

Loss Still to be C/F

_3,000

Income from lotteries

20,000

Income from card games

16,000

Loss from gambling

(Cannot be set off)

NIL

___NIL
_36,000
__60,500

Gross Total Income

1,17,500

UNIT-II. ASSESSEMENT OF INDIVIDUAL INCOME.

KEY FOR PROBLEM NO.4.
Calculation of Total Income of Mr. Shashi Kant
Resident

(a)

(b)

Rs.

Rs.

Rs.

Income accrued and received in India

Salary received being salary income

60,000

60,000

60,000

Income accrued in India but received

outside India
(i) Income accrued in India

25,000

25,000

25,000

1,60,000

1,60,000

1,60,000

15,000

15,000

15,000

1,00,000

60,000

60,000

Income accrued and received outside India

(i) Income from house property in Pakistan 12,000

---

---

46,000

46,000

---

--_______
4,18,000

--_______
3,66,000

--_______
3,20,000

(ii) Profit from sale of plant

(c)

Income accrued outside India but

received in India
(i) Profit from business in germane
but received in India
(ii) Interest on Japan development Bonds

(d)

Not Non
ordinarily
Resident

(ii) Profit from Business establishment in

Bangladesh
(iii) Foreign Income of past previous year
brought in India during the year
G.T.I & Total Income

KEY FOR PROBLEM NO,7.

Computation of Business and Total Income
I. Profits & Grains

Rs.

Net Profit as per P & L A/c

Add : Disallowed expenses

25,200
Rs.

Drawing

8,000

Insurance Premium on his life

1,000

Depreciation

4,500

Donation

500

Education Expenses

6,600

Provision for doubtful debts

1,500

Income Tax

2,000

private Expenses

___600

_24,700
49,900

Less : Expenses allowed by not debited

Depreciation

_4,000
45,900

Less : Income credited but not taxable under this head

Interest on P.O.S.B. A/c
Life Insurance Maturity value
Interest on Bank Deposit

100
6,900
_3,600

Income under the head Profits & Gains

_10,600
35,300

II. Other Sources :

Interest on Bank Deposit
Post Office Saving Bank Interest Exempted

3,600
__NIL

Gross Total Income

__3,600
38,900

III.Deductions u/s 80:

80 C : Q.A. of Saving (Note 1)

1,000

80 G : Donations 50% of Q.A.

__250

Total Income

__1,250
_37,650

Note : 1. Q.A. for deduction u/s 80C : L I. Premium Rs. 1,000

2. Life Insurance Maturity value is fully exempted.

UNIT-III. ASSESSMENT OF HUF.

KEY FOR PROBLEM NO. 8.
Computation of Total Income of H.U.F
Rs.
I. Income from House property
(a) Ancestral house : Self occupied

Rs.
NIL

(b) Let out house : Actual Rent Received

Less Municipal Taxes
Net Annual Value
Standard Deduction : 30% of NAV

34,400
___NIL
34,400
_10,320
24,080

Income from house property

II. Income from Profits & Gains
(a) From Family Business

5,18,700

III. Income from other Sources

(a) Interest on Govt. Securities
(b) Interest from Bank Deposit
Gross total Income
IV. Deduction u/s 80 :
(i) u/s 80D : Medical Insurance Premium
(ii) u/s 80 C : Life Insurance Premium
NSS 1992
Total Income
V.Computation of Tax Liability.
Tax
Add : Education cess @ 3% of Tax
Tax Payable
Tax Payable rounded off Rs. 36,420.

9,000
_26,000
_35,000
5,77,780
2,000
45,000
_4,000

_49,000

_51,000
5,26,780

35,356
_1,061
36,417

KEY FOR PROBLEM NO.9.

Computation of Business Income of H.U.F
Rs.
Net Profit as per P & L A/c

Rs.
65,200

Add : Disallowed expenses

Household expenses

17,000

Income Tax and Wealth Tax

10,700

Gifts and Presents

4,500

Charities

4,300

Loss on sale of Car (Personal)

3,200

Life Insurance Premium

7,300

Provision for Depreciation

11,000

Difference in trial Balance

200

Rent for residence of H.U.F

_6,000
_64,200
1,29,200

Less : Allowable expenses

Depreciation

___9,000
1,29,200

Less Incomes not taxable under this head

Income Tax refund

3,000

Bad Debt recovered disallowed earlier

3,000

Agricultural Income

_7,000
__13,000

Taxable Business Profit

1,07,200

UNNIT-IV. ASSESSMENT OF FIRM. KEY FOR PROBLEM NO. 11

I.
Computation of Firms Business Income
Net Profit as per P & L A/c
Add : Expenses debited but not allowed
Salary to P
Salary to Q
Interest on Capital fully disallowed as not mentioned
in deed [Rs. 19,000 + Rs. 9,500 + Rs. 7,600]
Donation
Book Profit
Less : Remuneration u/s 40 (b)
(a) Actual remuneration paid to working partners as per
Deed [Rs. 1,20,000 + Rs. 60,000]
Firms Business Income

Rs.
90,000
Rs.
1,20,000
60,000
36,100
__4,000
2,20,100
3,10,100

1,80,000
1,30,100

II. Computation of Firms Total Income

1. Income from house property
2. Profits & Gains
3. Other Sources : Interest on Govt. Securities Rs. 15,000
Interest on Bank Deposits Rs. 6,000
Gross Total Income
III. Deduction u/s 80 G : Donation to National
Foundation for Communal harmony Rs. 4,000 @ 100%
Total Income
IV. Computation of Firms Tax
Tax @ 30% of Total Income
Add : Education cess @ 3% of Tax
Tax Payable
V. Computation of Partners Income
Partner P : Profits & Gains
Remuneration [1,20,000 x 1,71,500/1,80,000]
Partner Q : Profits & Gains
Remuneration [60,000 x 1,71,500/1,80,000]
Partner R

Rs.
24,000
1,30,100

_21,000
1,75,100
__4,000
1,71,500

51,450
_1,543.50
52,993.50

1,15,000

56,500
NIL

KEY FOR PROBLEM NO. 16.

Computation of Business Income of the Firm assessed as u/s 185
Rs.

Rs.

I. Income from House property

Profit as per P & L A/c

18,000

Add : Expenses charged but not allowed :

Interest on Capital

Rs.

Asim

2,000

John

1,500

Rahim

_1,000
4,500

Depreciation

2,500

Reserve for bad debts

500

Interest on loan from John

300

Commission to Rahim
Salary to Rahim

1,000
_2,000
_10,800
28,800

Less : Income credited but to be treated under a separate head :

Income from other Sources : Interest on securities

_3,000
25,800

Less : Allowable Business Expenses

Depreciation

_2,400

Business Income of Firm

23,400

KEY FOR PROBLEM NO. 25.

Computation of Business Income of the Firm assessed as u/s 185
Profit as per given the Profit and Loss Account
Add : Items not allowed :
Charity
Bad debts reserve
Interest on Capital :
A
1,280
B
__750
Salary to Partners :
A
B

Rs.
28,530
Rs.
570
1,430

2,000

1,800
1,200

Rent paid by the firm for partners residence

3,000
1,500
_8,530
37,060

Less : Allowable deduction :

Depreciation not charged earlier
Total Income

_3,340
33,720

Firms Tax @ 30% of 33,720 = Rs. 10,116 + Education Cess @ 3% Rs. 303 Total Tax Rs.
10,419
Partner As Total Income
Income from other sources :
Interest on Govt. Securities
Income from House Property
Other Income
Gross Total Income
Deduction u/w 80 C to 80 U
Total Income
Partner Bs Total Income
Income from other Sources :
Interest on Govt. Securities
Interest on Post Office Saving Bank (Exempted)
Other Income
Gross Total Income
Less : Deductions u/s 80 C to 80 U
Total Income

500
600
1,12,000
1,13,000
___NIL
1,13,000

2,100
86,000
88,100
__NIL
88,100

UNIT-V. ASSEMENT OF AOP. KEY FOR THE PROBLEM NO.3.

I. Computation of tax liability of AOP
AOP shall pay tax t the rates applicable to an individual as total income of any of its members
without adding share from AOP as calculated below does not exceed the exempted limit.
Rs.
Tax on Rs. 2,16,000
Add : Education cess @ 3% of tax
Total Tax payable

1,600
_480
5,080

II. Computation of total income and tax liability of members of AOP

MR.K
Rs.
Income from House Property : ARV
45,000
Less Municipal Taxes
__NIL
Annual Value
45,000
Standard Deduction 30%
13,500
Income
Income from other sources :
Interest on deposits with HUDCO
Gross Total Income
Deduction u/s 80C to 80 U :
Total Income
Add : 1/3rd Share from AOP
Tax Liability : NIL
MRS.L
Rs.
Income from other sources : Bank Interest
Gross Total Income
Deduction u/s 80C to 80U
Total Income
Add : 1/3rd share from AOP
Tax liability : NIL
MR.M
Income from salary
Pension from Govt.
Income from other sources : Interest accrued on NSC VIII issue
Interest on Govt. securities
Gross Total Income
Deduction u/s 80C : Interest accrued on NSC
Total Income
Add : 1/3rd Share from AOP

31,500
_26,000
57,500
___NIL
57,500
_72,000
1,29,500
Rs.
_96,000
96,000
___NIL
96,000
_72,000
1,68,000
Rs.
50,000

12,600
_5,000

_17,600
67,600
_12,600
55,000
_72,000
1,27,000

Tax liability : NIL

********* ALL THE BEST*************
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