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Appendix
CS Executive Programme Module-I (New Course)
June - 2010
INDEX
Paper 1 — General and Commercial Laws I. 1
Paper 2A — Company Accounts I. 5
Paper 2B — Cost and Management Accounting I. 11
Paper 3 — Tax Laws I.15
PAPER'S
Paper - 1 : General and Commercial Laws
Chapter-1 : Constitution of India
2010 - June [1] {C} (a) “Constitution of India is basically federal with strong
unitary features.” Discuss. (8 marks)
(b) Explain the writ jurisdictions of the Supreme Court and High Courts as
provided in the Constitution of India. (6 marks)
Chapter-2: Interpretation of Statutes
2010 - June [1] {C} (c) Explain the mischief rule in the interpretation of
statutes. (6 marks)
Chapter-3 : An Overview of Law Relating to Specific Relief; Arbitration
and Conciliation Torts; Limitation and Evidence
2010 - June [3] Distinguish between the following :
(iii) ‘Battery’ and ‘assault’.
(iv) ‘Condition precedent’ and ‘condition subsequent’.
(v) ‘Primary evidence’ and ‘secondary evidence’. (4 marks each)
2010 - June [4] Write notes on the following :
(ii) Setting aside of an award
(iii) Perpetual injunction
(iv) Rectification of an instrument
(v) Specific performance of a contract (4 marks each)
CS Executive Programme Module- I (New Course) I-2
2010 - June [7] (c) Alok contracts to sell a piece of land to Vimal consisting
of 100 bighas for Rs. 10 lakh and it turns out that only 50 bighas of land
belongs to Alok. W ho can demand specific performance of contract and who
cannot ? If there is a demand of specific performance from rightful party, what
will be the consideration ? (5 marks)
2010 - June [8] (c) Kamini informed Ajay in the year 2001 that she had
committed theft of jewellery of her neighbour. Thereafter, Kamini and Ajay
were married in 2002. In the year 2003, criminal proceeding were instituted
against Kamini in respect of the theft of jewellery. Ajay is called to give
evidence in the case. Decide whether Ajay can disclose the communication
made to him by Kamini. (5 marks)
Chapter-4 : Law relating to Transfer of Property
2010 - June [2] Attempt the following :
(i) State the circumstances in which a property may be transferred in
favour of an unborn person.
(ii) Explain the rule of lis pendens as provided in the Transfer of Property
Act, 1882. (4 marks each)
2010 - June [7] (b) Kamal transfers his property worth Rs. 10,000 to Shyam
and by the same instrument asked Shyam to transfer his property worth Rs.
5,000 to Manoj. Kamal dies before Shyam made his election. Can Manoj get
compensation ? If so, from whom and how much ? (5 marks)
Chapter-5 : Law relating to Stamps
2010 - June [2] Attempt the following :
(v) Explain the consequences of the instruments which are not duly
stamped under the Indian Stamp Act, 1899. (4 marks each)
Chapter-6 : Law relating to Registration of Documents
2010 - June [2] Attempt the following :
(iv) State the documents which are required to be compulsorily registered
under the Registration Act, 1908. (4 marks)
2010 - June [5] (a) A document was executed outside India and it was
presented for registration after a lapse o f four months from the date of its
arrival in India. Whether the document may be accepted for registration by the
Registrar ? Decide. (6 marks)
2010 - June [7] (a) Ashok sells a house to Vinay by a written document and
delivers possession to Vinay, but the document is not registered. After one
year, Ashok sues Vinay to take back the possession of the property on the
ground that non-registration of a document has no validity. Will Ashok
succeed ? Which doctrine of law can be invoked by Vinay in his defence ?
(6 marks)
CS Executive Programme Module- I (New Course) I-3
Chapter-7 : Law Relating to Information Technology
2010 - June [2] Attempt the following :
(iii) What are ‘cyber offences’ under the Information T echnology Act,
2000 ? (4 marks)
2010 - June [4] Write notes on the following :
(i) E-governance (4 marks)
Chapter-8 : The Code of Civil Procedure, 1908 (C.P.C.)
2010 - June [8] (a) Anil was a trustee of a trust. After Anil’s death, Brij
wrongfully takes the possession of the trust property. Chandan, the son of Anil
files a suit for recovery of possession of the property against Brij as the legal
heir of Anil in his individual capacity. But Chandan did not succeed. Then
Chandan files another suit for recovery of trust property against Brij in the
capacity of trustee as he was appointed as trustee after the death of Anil.
Whether the second suit is barred by the doctrine of constructive res judicata ?
Explain. (6 marks)
(b) Mohan filed a suit against Sohan and Rohan for partition of coparcenery
property ‘P-1'. The suit has been decided . Mohan files another suit against
Sohan and Rohan for the partition of coparcenery property ‘P-2', which was
in existence at the time of filing of the first suit. Decide. (5 marks)
Chapter-9 : The Code of Criminal Procedure, 1973
2010 - June [3] Distinguish between the following :
(i) ‘Summons cases’ and ‘warrant cases’.
(ii) ‘Bailable offences’ and ‘non-bailable offences’. (4 marks each)
Chapter-11 : Objective Questions
2010 - June [5] (b) Choose the most appropriate answer from the given options
in respect of the following :
(i) Under the Transfer of Property Act, 1882, the transfer of property may
be made—
(a) Orally
(b) By written document
(c) By written document with its registration
(d) By delivery of property except where transfer is required to be in
writing under the law.
(ii) The right to foreclosure is available to the mortgagee when it is—
(a) English mortgage
(b) Simple mortgage
(c) Mortgage by conditional sale
(d) Usufructuary mortgage.
CS Executive Programme Module- I (New Course) I-4
(iii) The income of transferred property may be accumulated for an
unlimited time where the property is transferred with condition—
(a) For the payment of debts taken by the transferor
(b) For the maintenance of the property itself
(c) For the maintenance of the descendants of the transferor
generation after generation
(d) All of the above.
(iv) Under the Specific Relief Act, 1963, the relief of cancellation of a
written instrument is available—
(a) When an instrument is void or voidable at the option of the
plaintiff
(b) Where the plaintiff may apprehend serious injury if the instrument
is left outstanding
(c) Where the instrument requires registration but is not registered
(d) Where conditions mentioned (a) and (b) above are fulfilled.
(v) The definition of the ‘State’ as given under Article 12 of the
Constitution of India includes—
(a) The Central Government and Parliament of India
(b) The Government and the Legislature of each State
(c) All local or other authorities within India and under the control of
the Government of India
(d) All of the above. (1 mark each)
2010 - June [5] (c) Re-write the following sentences after filling-in the blank
spaces with appropriate word(s)/figure(s) :
(i) Perpetual injunction is granted under section of the Specific
Relief Act, 1963.
(ii) A police officer may arrest an accused without warrant in case of
.
(iii) The Court of a Judicial Magistrate of the First Class is authorised to
pass a sentence of .
(iv) The right to maintenance under section 125 of the Code of Criminal
Procedure, 1973 is available to .
(v) The application of revision under the provisions of the Code of Civil
Procedure, 1908 is made to . (1 mark each)
2010 - June [6] State, with reasons in brief, whether the following statements
are correct or incorrect :
(i) The Constitution of India makes a few exceptions in which the
Parliament is authorised to make the laws even on the subjects
included in the State List.
CS Executive Programme Module- I (New Course) I-5
(ii) Article 174 of the Constitution of India empowers the Governor of the
State to dissolve the State Legislature.
(iii) The Right to Information Act, 2005 confers on all citizens of India a
right to information.
(iv) Certain categories of information have been exempted from disclosure
under the Right to Information Act, 2005.
(v) Under certain circumstances, a person is liable for the torts committed
by another.
(vi) On the same cause of action, a fresh suit is barred by law.
(vii) Decree is a formal expression of an adjudication, whereas an order is
the decision of the court.
(viii) The procedure provided under any special or local law is not affected
by the procedure given under the Code of Civil Procedure, 1908.
(2 marks each)
Paper - 2 : Company Accounts
Chapter-1 : Accounting Standards
2010 - June [2] (a) Write short notes on the following:
(i) Non-acceptability of International Accounting Standards (3 marks)
Chapter-2 : Accounting for Share Capital
2010 - June [4] (c) “Buy-back may be misused by the corporate entities at the
cost of innocent investors.” Give your comments. (3 marks)
Chapter-4 : Underwriting of Issues and Acquisition of Business
2010 - June [4] (b) Rax Ltd. invited applications from public for 1,00,000
equity shares of Rs. 10 each at a premium of Rs. 5 per share. The entire issue
is underwritten by the underwriters A, B, C, and D to the extent of 30%, 30%,
20%, and 20% respectively with the provision of firm underwriting of 3,000,
2000, 1,000 and 1,000 share respectively. Underwriters are entitled to
maximum commission as per law. The company has received applications for
70,000 shares from public out of which applications for 19,000, 10,000, 21,000
and 8,000 shares were marked in favour of A, B, C and D respectively.
Calculate the liability of each underwriter treating firm underwriting on par
with marked applications. Also ascertain the underwriting commission @ 2.5%
payable to each underwriter. (6 marks)
CS Executive Programme Module- I (New Course) I-6
Chapter-5 : Final Accounts of Joint Stock Companies
2010 - June [2] (a) Write short notes on the following:
(ii) Capitalisation of profits and reserves (6 marks)
2010 - June [3] The following balances have been extracted from the books
of Pioneer Traders Ltd. as on 30 th September, 2009:
(Rs. ‘000)
Dr. Cr.
Share capital (Authorised and issued):
Equity (15,00,000) Shares of Rs. 100 each) — 1,50,000
8% Redeemable preference (40,000 shares) — 4,000
Securities premium — 2,500
Preference share redemption 4,800 —
General reserve — 10,000
Land (cost) 30,000 —
Buildings (cost less depreciation) 70,000 —
Furniture (cost less depreciation) 2,000 —
Motor vehicle (cost less depreciation) 3,500 —
Trading account!Gross profit — 90,000
Establishment charges 25,000 —
Rate, taxes and insurance 1,200 —
Commission 600 —
Discount received — 500
Interest on investments — 800
Depreciation 6,000 —
Sundry office expenses 6,000 —
Payment to auditors 400 —
Sundry debtors and creditors 10,660 2,560
Profit and loss account (as on 30.9.2008) — 1,000
Unpaid dividend — 200
Cash in hand 1,200 —
Cash at bank in current account 19,500 —
Security deposit 1,000 —
Outstanding expenses — 600
Investments in G.P. Notes 20,000 —
Stock in trade (at or below cost) 35,300 —
Provision for taxation (year ended 30.9.2008) — 7,000
Income-tax paid under dispute (year ended 30.9.2008) 10,000 —
Advance payment of income-tax 22,000 —
2,69,160 2,69,160
CS Executive Programme Module- I (New Course) I-7
The following further details are available:
(i) The preference shares were redeemed on 1 st October, 2008 at a
premium of 20% but no entries were passed for giving effect thereto,
expect payment standing to the debit of preference share redemption
account.
(ii) Depreciation as provided upto 30th September, 2009 is as follows:
(a) Building!Rs. 2,10,00,000.
(b) Furniture!Rs. 20,00,000.
(c) Motor vehicles!Rs. 60,00,000.
(iii) Establishment charges include Rs. 18,00,000 paid to managing
director as remuneration in terms of agreement which provides for a
remuneration of 5% of annual net profits.
(iv) Payment to auditors includes Rs. 1 ,00,000 for taxation work in
addition to audit fees.
(v) Market value of investments on 30th September, 2009 is Rs.
1,80,00,000.
(vi) Sundry debtors include Rs. 40,00,000 due for a period exceeding six
months.
(vii) All receivables and deposits are considered good for realisation.
(viii) Income-tax demand for the year ended 30 th September, 2008 Rs.
1,00,00,000. has not been provided for agains t which appeal is
pending.
(ix) Income-tax is to be provided @ 34% . Also provide for tax on divisible
profit @ 16%.
(x) Directors recommended payment of dividend on equity shares at the
rate of 12%.
(xi) Ignore previous year’s figures.
You are required to prepare the profit and loss account for the year
ended 30th September, 2009 and a balance sheet as at that date.
Chapter-6 : Consolidation of Accounts
2010 - June [2] (b) Following are balance sheets of H Ltd. and S Ltd. as at 31st
March, 2009:
Liabilities H Ltd. S Ltd.
(Rs.) (Rs.)
Share capital (Shares of Rs. 100 each) 5,00,000 2,00,000
General reserve as on 1st April, 2008 1,00,000 60,000
Profit and loss account 1,40,000 90,000
Bills payable — 40,000
Creditors 80,000 50,000
8,20,000 4,40,000
CS Executive Programme Module- I (New Course) I-8
Assets
Goodwill 40,000 30,000
Other fixed assets 3,60,000 2,20,000
1,500 Shares in S Ltd. at cost 2,40,000 —
Stock 1,00,000 90,000
Debtors 20,000 75,000
Cash at bank 60,000 25,000
8,20,000 4,40,000
The profit and loss account of S Ltd. showed a balance of Rs. 50,000 on 1 st
April, 2008. A dividend of 15% was paid on 15 th October, 2008 for the year
2007-08. The dividend was credited by H Ltd. to its profit and loss account. H
Ltd. acquired shares on 1st October, 2008. The bills payable of S Ltd. were all
issued in favour of H Ltd. and the same were got discounted by H Ltd.
Included in the creditors of S Ltd. are Rs. 20,000 for goods supplied by H Ltd.
The stock of S Ltd. includes goods to the value of Rs. 8,000 which were
supplied by H Ltd. at a profit of 33.33% on cost. Prepare consolidated balance
sheet of H Ltd. and S Ltd. as on 31st March, 2009. (9 marks)
Chapter-7 : Valuation of Shares and Intangible Assets
2010 - June [2] (a) Write short notes on the following:
(iii) Phases of generation of intangible assets. (3 marks)
2010 - June [4] (a) Balance sheet of Diamond Ltd. as at 30 th June, 2009 is
given below:
Liabilities Rs.
Share capital: 40,000 Shares of Rs. 10 each 4,00,000
General reserve 80,000
Profit and loss account 64,000
Sundry creditors 2,56,000
Income-tax reserve 1,20,000
9,20,000
Assets
Land and buildings 2,20,000
Plant and machinery 2,60,000
Patents and trade marks 40,000
Preliminary expenses 24,000
Stock 96,000
Debtors 1,76,000
Bank balance 1,04,000
9,20,000
CS Executive Programme Module- I (New Course) I-9
The expert valuer valued the land and buildings at Rs. 4,80,000, goodwill
at Rs. 3,20,000 and plant and machinery at Rs. 2,40,000. Out of the total
debtors, it is found that debtors of Rs. 16,000 are bad. The profits of the
company have been as follows:
31st March, 2007 : Rs. 1,84,000
31st March, 2008 : Rs. 1,76,000
31st March, 2009 : Rs. 1,92,000
The company follows the practice of transferring 25% of profits to
general reserve. Similar type of companies earn at 10% of the value of their
shares. Plant and machinery, and land and buildings have been depreciated at
15% and 10% respectively. Ascertain the value of shares of the company by
using—
(i) Intrinsic value method;
(ii) Yield value method; and
(iii) Fair value method. (6 marks)
Chapter-8 : Objective Questions
2010 - June [1] {C} (a) State, with reasons in brief, whether the following
statements are correct or incorrect:
(i) Accounting policies vary from enterprise to enterprise.
(ii) In the absence of declaration of dividend, there is no need to provide
for depreciation in the accounts of companies.
(iii) Securities premium money can be distributed as dividend.
(iv) For calculating minority interest, there is a need to distinguish between
capital and revenue profits of the subsidiary.
(v) While preparing the consolidated balance sheet, a contingent liability
in respect of a transaction between the holding and the subsidiary
companies is disappeared from the foot note. (2 marks each)
2010 - June [1]{C} (b) Choose the most appropriate answer from the given
options in respect of the following:
(i) Indian accounting standards are formulated under the authority of the
of the—
(a) Council of the Institute of Chartered Accountants of India
(b) National Advisory Committee on Accounting Standards
(c) International Accounting Standard Board
(d) Accounting Standard Board.
(iii) As per section 79 of the Companies Act, 1956 from the date of
receiving the sanction of the Central Government, a company must
issue shares at discount within a period of—
(a) One month
(b) Two months
CS Executive Programme Module- I (New Course) I-10
(c) Three months
(d) Six months.
(iii) As per section 387 of the Companies Act, 1956, total remuneration to
manager should not exceed the rate of net profit of the company except
with approval of the Central Government—
(a) 5%
(b) 2%
(c) 11%
(d) 10%
(iv) Profit on cancellation of own debentures should be transferred to—
(a) Profit and loss account
(b) Profit and loss appropriation account
(c) Capital reserve account
(d) Reserve capital account.
(v) Profit prior to incorporation is transferred to—
(a) General reserve
(b) Capital reserve
(c) Goodwill account
(d) Profit and loss account. (1 mark each)
2010 - June [1] {C} (c) Re-write the following sentences after filling-in the
blank spaces with appropriate word(s)/figure(s):
(i) Goodwill is asset.
(ii) Preliminary expenses being of capital nature may be written-off against
.
(iii) Collateral security implies security given for a loan.
(iv) Interim dividend is a dividend declared at any time between the
where the final dividend is declared.
(v) Stock reserve for unrealised profit in respect of inter-company
transactions should be created by debiting and crediting
while preparing consolidated profit and loss account.
(1 mark each)
CS Executive Programme Module- I (New Course) I-11
Paper - 2B : Cost and Management Accounting
Chapter-1 : Introduction to Cost and Management Accounting
2010 - June [7] (a) Write short notes on the following:
(ii) Activity based costing (3 marks)
Chapter-2 : Material Cost
2010 - June [8] (a) A company manufactures 5,000 units of a product per
month. The cost of placing an order is Rs. 100. The purchase price of the raw
material is Rs. 10 per kg. The re-order period is 4 to 8 weeks. The consumption
of raw materials varies from 100 kgs. to 450 kgs. per week, the average
consumption being 275 kgs. The carrying cost of inventory is 20% per annum.
You are required to calculate—
(i) Re-order quantity
(ii) Re-order level
(iii) Maximum level
(iv) Minimum level
(v) Average stock level
Assume 52 weeks in a year. (6 marks)
Chapter-4 : Direct Expenses and Overheads
2010 - June [8] (b) Following information is availab le for a factory for the year
2008:
Rs.
Direct material .......... 3,00,000
Direct wages .......... 2,50,000
Factory overheads .......... 1,50,000
Administrative overheads .......... 1,68,000
Selling overheads .......... 1,12,000
Distribution overheads .......... 70,000
Profit .......... 2,10,000
A work order has been executed in the year 2008 and the expenses incurred
were—materials Rs. 4,000; and wages Rs. 2,500.
Assuming that in the year 2009 the rate of factory overheads has
increased by 20%, distribution overheads have gone down by 10% and selling
and administration overheads have each gone up by 12.5%, at what price
should the product be sold so as to earn the same rate of profit on the selling
price as in the year 2008? Factory overheads are based on direct wages while
other overheads are based on factory cost. (9 marks)
CS Executive Programme Module- I (New Course) I-12
Chapter-6 : Budgetary Control
2010 - June [7] (a) Write short notes on the following:
(i) Superiority of zero base budgeting (ZBB) to traditional budgeting
(3 marks)
Chapter-7 : Marginal Costing
2010 - June [7] (b) Two manufacturing companies which have the following
operating details decided to merge:
Company!I Company!II
Capacity utilisation (%) 90 60
Sales (Rs. in lakhs) 540 300
Variable costs (Rs. in lakhs) 396 225
Fixed costs (Rs. in lakhs) 80 50
Assuming that the proposal is implemented, calculate—
(i) Break-even sales of the merged plant and the capacity utilisation at
that stage.
(ii) Profitability of the merged plant at 80% capacity utilisation.
(iii) Sales turnover of the merged plant to earn a profit of Rs. 75 lakh.
(iv) When the merged plant is working at a capacity to earn a profit of
Rs. 75 lakh, what percentage increase in selling price is required to
sustain an increase of 5% in fixed overheads? (9 marks)
Chapter-8 : Analysis & Interpretation of Financial Statements
2010 - June [6] Summarised income statement and balance sheet of
Progressive Ltd. are given below:
Income Statement for the year ended 31st December, 2009
(Rs. ‘000)
Sales 1,600
Less: Cost of goods sold 1,310
Gross margin 290
Less: Selling and administration expenses 40
Net operating income (EBIT) 250
Less: Interest 45
Earnings before tax 205
Less: Tax paid 82
Net income after tax 123
Earnings per share (EPS) is Rs. 3.075.
Balance Sheet as at 31st December, 2009
Liabilities (Rs. ‘000)
Paid-up capital (40,000) shares of Rs. 10 each fully paid) 400
Retained earnings 120
Debentures 700
CS Executive Programme Module- I (New Course) I-13
Creditors 180
Bills payable 20
Other current liabilities 80
1,500
Assets (Rs. ‘000)
Net fixed assets 800
Inventory 400
Debtors 175
Marketable securities 50
Cash 1,500
Price per share is Rs. 15.
Industry’s average ratios are:
Current ratio .......... 2.4
Quick ratio .......... 1.5
Sales to inventory .......... 8.0
Average collection period .......... 36 days
Price per share/book value of share .......... 1.6
Debts to assets .......... 40%
Times interest earned .......... 6
Profit margin .......... 7%
Price to earnings ratio .......... 15
Return to total assets .......... 11%
(i) Progressive Ltd. would like to borrow Rs. 5,00,000 form a bank for
less than a year. Evaluate the firm’s current financial position by
calculating ratios that you feel would be useful for the bank’s
evaluation.
(ii) What problem areas are suggested by your ratio analysis? What are the
possible reasons for them?
(iii) Do you think that the bank should give the loan?
(iv) If Progressive Ltd.’s inventory utilisation ratio (sales to inventory)
and average collection period were reduced to industry average, what
amount of funds would be generated? (15 marks)
Chapter-9 : Cash Flow Statement
2010 - June [7] (a) Write short notes on the following:
(iii) Cash, cash equivalents and cash flows. (3 marks)
CS Executive Programme Module- I (New Course) I-14
Chapter-10 : Objective Questions
2010 - June [5] {C} (a) State, with reasons in brief, whether the following
statements are correct or incorrect:
(i) Under Flux M ethod , labour turnover is calculated by number of
workers left divided by average number of workers.
(ii) In cost plus contracts, the contractor runs a risk of incurring a loss.
(iii) There is no need to record attendance of piece rate workers since
attendance is not relevant for ascertaining the amount of wages to be
paid.
(iv) A profit centre whose performance is measured by its return on
investment (ROI) is known as investment centre.
(v) Contribution is not only the criterion for deciding profitability.
(2 marks each)
2010 - June [5] {C} (b) Choose the most appropriate answer from the given
options in respect of the following:
(i) The rate of change of labour force in an orgainsation during a
specified period is called—
(a) Labour efficiency
(b) Labour turnover
(c) Labour productivity
(d) None of the above.
(ii) When a contract is not complete at the end of the year, profit on
incomplete contract—
(a) Is not considered
(b) Is considered for inclusion in the profit for the year
(c) Is considered for the inclusion of a part of the year
(d) None of the above.
(iii) When prices fluctuate widely, the method that will avoid the efect of
fluctuations is—
(a) FIFO
(b) LIFO
(c) Simple average
(d) Weighted average.
(iv) Fixed costs remain fixed—
(a) Over a short period
(b) Over a long period and within relevant range
(c) Over a short period and within a relevant range
(d) Over a long period.
CS Executive Programme Module- I (New Course) I-15
(v) When the under or over absorbed overheads amount is significant, it
should be disposed off by—
(a) Transferring to costing profit and loss account
(b) Using a supplementary ra te
(c) Carry over to next year
(d) None of the above. (1 mark each)
2010 - June [5] {C} (c) Re-write the following sentences after filling-in the
blank spaces with appropriate word(s):
(i) expenses are excluded from cost.
(ii) An account giving details of cost of production, cost of sales and profit
made during a particular period is called .
(iii) The process of apportionment of factory overheads among production
and service department is called of factory overheads.
(iv) The time for which the employer pays remuneration to workers but
obtains no direct benefit is called .
(v) A system that keeps a running and continuous record that tracks
inventories and cost of goods sold on day-to-day basis is called
. (1 mark each)
Paper - 3 : Tax Laws
Chapter-4 : Incomes Which Do Not Form Part of Total Income
2010 - June [3] (b) Distinguish between the following:
(ii) ‘Free trade zone’ and ‘special economic zone’.
Chapter-5 : Computation of Total Income Under Various Heads
2010 - June [1] {C} (c) Particulars of income received by Mrs. Sarita for the
year ended 31st March, 2010 are as follows:
(i) Family pension received from the Government of Madhya Pradesh
Rs.15,000.
(ii) Royalty received from a publisher Rs.42,700. She spent Rs. 2,700 on
books, stationery, typing etc.
(iii) Winnings from lotteries (gross) Rs. 90,000.
(iv) Winnings from horse race (net) Rs.35,000.
(v) Interest from tax-free debentures of a public company (listed)
Rs.18,000.
(vi) Interest on tax free notified government bonds Rs. 10,000.
CS Executive Programme Module- I (New Course) I-16
(vii) Dividend received from a foreign company (net) Rs.8,000. Nothing
has been paid to the Government of India out of tax deducted at
source.
From the above information, compute income from other sources of Mrs.
Sarita for the assessment year 2010-11. (5 marks)
2010 - June [2] (b)Write short notes on the following:
(ii) Taxation of zero coupon bonds
(iii) Profit in lieu of salary. (3 marks each)
2010 - June [3] (b) Distinguish between the following:
(i) ‘Mercantile system of accounting’ and ‘cash system of accounting’.
(iii) ‘Exemption to capital gains under section 54G’ and ‘exemption to
capital gains under section 54GA’. (2 marks each)
2010 - June [4] (c) Discuss the cases in which payment by way of
loan/advance to the extent of accumulated profits by a closely held company
is treated as dividend under section 2(22)(e). (4 marks)
2010 - June [5] (a) Amit is a cloth merchant in Ghaziabad. From the following
profit and loss account for the year ended 31th March, 2010, compute his
taxable income and tax payable for the assessment year 2010-11 :
Rs. Rs.
Opening stock 1,00,000 Sales 40,00,000
Purchases 25,00,000 Closing stock 3,00,000
Reserve for bad debts 10,000 Gift from friend 70,000
Household expenses 20,000 Gift from brother 80,000
Advertisement 40,000
Depreciation 20,000
Salaries and wages 1,20,000
Reserve for future losses 20,000
Travelling expenses 15,000
Expenditure on scientific
research 50,000
Net profit 15,55,000
44,50,000 44,50,000
Additional information :
(i) Household expenses include an amount of Rs. 5,000 paid for premium
on life insurance policy of Amit.
(ii) Depreciation admissible as per the income-tax rules is Rs. 30,000.
(iii) Advertisement costing Rs. 10,000 appeared in a newspaper owned by
a political party is included in the total amount spent on advertisement.
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(iv) Expenditure on air fare from Delhi to Bangalore and from Bangalore
to Delhi of a sales manager costing Rs. 10,000 is included in travelling
expenses. The sales manager is otherwise entitled for a second class
AC train where the expenditure would be Rs. 4,000.
(v) Expenditure on scientific research relates to the money spent by Amit
on conducting research relating to the business of cement which he
proposes to undertake in future. (7 marks)
(b) Explain with the help of suitable illustration how capital gains are
computed under section 45(2) in case of conversion of capital asset into stock-
in-trade. (4 marks)
2010 - June [6] (a) Naveen owns a house at Indore. Its municipal valuation is
Rs. 24,000. He incurred the following expenses in respect of the house
property :
Municipal tax @ 20%, fire insurance premium Rs. 2,000 and land revenue Rs.
2,400. He took a loan of Rs. 25,000 @ 16% per annum on 1st April, 2006. The
whole amount is still unpaid. The house was completed on 1 st April, 2009. Find
out the income from house property for the assessment year 2010-11 in respect
of the following options:
(i) If the house is used by the assessee throughout the previous year for
his residential purpose; and
(ii) If the house is let-out for residential purposes on monthly rent of Rs.
2,000 from 1st April, 2009 to 31st January, 2010 and self-occupied for
the remaining period. (6 marks)
Chapter-6 : Aggregation of Income, Set-off or Carry Forward of Losses
and Deductions from Total Income
2010 - June [3] (a) An asset is transferred by a person to another person under
a partly revocable transfer whereby a part of the asset will revert back to the
transferor. Who shall be liable to pay tax in respect of income from the asset
transferred as per section 61? (2 marks)
2010 - June [3] (b) Distinguish between the following:
(iv) ‘Intra-head adjustment’ and ‘inter-head adjustment’. (2 marks)
Chapter-7 : Taxation of Individuals, HUF, Firms, Association of Persons,
Cooperative Societies and Non Residents
2010 - June [3] (c) Ram and Shyam are partners in Mozart Co., a partnership
firm, which is engaged in manufacturing carpets. They share profits and losses
in the ratio of 2:3. The profit and loss account of the firm for the year ended
31st March, 2010 is as follows:
Liabilities Rs.
Cost of goods sold 10,00,000
Depreciation 50,000
CS Executive Programme Module- I (New Course) I-18
Salary to staff 1,00,000
Remuneration to partners:
Ram Rs. 2,50,000
Shyam Rs. 1,20,000 3,70,000
Interest on capital @ 15% :
Ram Rs. 45,000
Shyam Rs. 67,500 1,12,500
Sundry expenses 1,00,500
Net profit 7,35,200
24,68,200
Assets
Sales 23,00,000
Dividends 28,200
Winnings from lotteries (Rs.2,00,000) 1,40,000
24,68,200
Additional information :
(i) The firm donated Rs. 30,000 to National Defence Fund and this
amount is included in sundry expenses.
(ii) Depreciation admissible under the income-tax rules is Rs. 68,000.
(iii) The firm is evidenced by partnership deed.
Compute the taxable income and amount of tax liab ility of the firm for the
assessment year 2010-11. (7 marks)
Chapter-8 : Filing of Returns, Signatures, E-Filings, Assessment and
Reassessment
2010 - June [2] (b)Write short notes on the following:
(i) Belated return (3 marks)
2010 - June [2] (c) Discuss the procedure for rectification of mistakes under
the Income-tax Act, 1961. (4 marks)
2010 - June [5] (c) Describe the powers of Central Board of Direct Taxes
(CBDT) under the Income-tax Act, 1961. (4 marks)
Chapter-9 : TDS and O ther Related Tax Matter
2010 - June [4] (b) State the provisions regarding deduction of tax at source
in respect of the following incomes:
(i) Winnings from horse races.
(ii) Payment by way of fees or royalty for professional or technical
services.
(iii) Payment of compensation on acquisition of immovable property.
(2 marks each)
CS Executive Programme Module- I (New Course) I-19
2010 - June [6] (b) What are due dates of payment of advance tax in the case
of corporate and non-corporate assessees? (3 marks)
2010 - June [6] (c) How is the liability to advance tax computed as per
provisions of section 210? (3 marks)
2010 - June [6] (d) Explain the deductions which are available to an assessee
under section 57 while computing taxab le income chargeable under the head
‘income from other sources’. (3 marks)
Chapter-12 : The Wealth Tax Act, 1957
2010 - June [4] (a) Raman has following assets and liabilities as on 31st
March, 2010. Compute his net wealth and wealth-tax liability for the
assessment year 2010-11:
Market Value
(Rs.)
(i) Cash in hand 75,000
(ii) Cash at bank 10,00,000
(iii) Residential house (Loan taken to purchase
this house Rs. 5,00,000) 45,00,000
(iv) Land in rural area (it is within 5 kms. from Delhi) 48,00,000
(v) Land in urban area (construction not permitted
under the law, loan taken to purchase this land
Rs.3,00,000) 28,00,000
(vi) Motor car for personal use 14,00,000
(vii) Jewellery 6,00,000
(viii) Aircraft for personal use (Loan taken to purchase
aircraft Rs. 20,00,000) 1,00,00,000
(ix) Farm house situated within 20 kms. from local
limits of municipality 24,00,000
(x) One let-out residential house given on rent throughout
the year (Loan taken to construct this house
Rs. 2,00,000) 20,00,000
(5 marks)
Chapter-14 : Levy, Collection and Payment of Service Tax along w ith
CENVAT Credit Rules
2010 - June [7] Attempt the following:
(a) As per rule 2(1)(d) of the Service Tax Rules, 1994, who is the person
specified to be liable for paying service tax in respect of the following
services—
CS Executive Programme Module- I (New Course) I-20
(i) Telecommunication services.
(ii) Services in relation to general insurance business.
(iii) Services in relation to any taxable service or service to be provided by
any person from a foreign country to any person in India.
(iv) Business auxiliary service of distribution of mutual fund by a mutual
fund distributor or an agent, as the case may be.
(v) Sponsorship services provided to any body corporate or firm located
in India. (1 mark each)
(b) (i) Which category of persons must mandatorily obtain registration under
Chapter V of the Finance Act, 1994? (3 marks)
(ii) What are time limits for making application for registration and
granting registration for service tax under Chapter V of the Finance
Act, 1994? (2 marks)
(c) (i) When is an assessee registered under service tax required to surrender
the registration certificate?
(ii) On which amount—amount of bill raised on client or amount actually
received from the client, service tax is payable?
(iii) If an assessee pays service tax on the billed amount but he gets less
amount from his customers, can he get refund from the government?
(iv) If the service provider fails to recover service tax on a bill of Rs.
12,000 where service tax is not shown separately in the invoice, what
will be the amount of service tax?
(v) When will the small service provider claiming exemption from paying
service tax apply for registration under service tax? (1 mark each)
(d) Comment on the following statements—
(i) “Service tax is payable as soon as advance is received even if the
service is provided later.” (2 marks)
(ii) “Excess service tax collected is to be paid to the Central Government”.
(3 marks)
(e) Discuss the exemption available to small service providers from paying
service tax. (5 marks)
Chapter-15 : Value Added Tax (VA T)—A n Overview
2010 - June [8] Attempt of the following:
(i) “As a result of introduction of value added tax (VAT ), the central sales
tax will be phased out.” Explain the statement. (5 marks)
CS Executive Programme Module- I (New Course) I-21
Chapter-16 : Computation and Other Procedural Aspects Relating to
VAT
2010 - June [8] Attempt of the following:
(iii) “VAT liability of a dealer is calculated by deducting input tax credit
from tax collected on sales during the payment period”. Discuss with
the help of a suitable illustration.
(iv) Discuss the cases of purchases in respect of which generally no input
tax credit is available.
(v) Explain the various methods of computation of VAT liab ility.
(5 marks each)
Chapter-17 : Appointment, Jurisdiction and Powers Authorities and The
Certifications for Professionals
2010 - June [8] Attempt of the following:
(ii) Discuss in what respects VAT system as adopted in India is deficient
in the direction of getting maximum benefits of VAT. (5 marks)
Chapter-19 : Objective Questions
2010 - June [1] {C} (a) Choose the most appropriate answer from the given
options in respect of the following having regard to the provisions of the
relevant direct tax laws:
(i) Which of the following income is agricultural income—
(a) Rent received from agricultural land
(b) Income from dairy farm
(c) Income from poultry farm
(d) Dividend from a company engaged in agriculture.
(ii) The term ‘income includes the following types of incomes—
(a) Legal
(b) Illegal
(c) Legal and illegal both
(d) None of the above.
(iii) Every year, the residential status of an assessee—
(a) May change
(b) Will certainly change
(c) Will not change
(d) None of the above.
(iv) Sneha is an employee in a private company. In the previous year she
received salary Rs. 1,80,000 and entertainment allowance Rs. 12,000.
She spent Rs. 6000 on enterta inment. Under section 16(ii), she is
entitled to deduction of-
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(a) Rs.12,000
(b) Rs. 6,000
(c) Rs. 5,000
(d) Nil
(v) In whose total income, the income of a minor child is included—
(a) Father
(b) Mother
(c) Father and mother both
(d) Parent whose total income is greater (1 mark each)
(b) State, with reasons in brief, whether the following statements are correct or
incorrect:
(i) An Indian company is always resident in India no matter where and to
what extent its control and management is situated.
(ii) Rent from house property let-out by an assessee to his employees
when such letting is incidental to his main business, will be chargeable
to tax under the head ‘income from house property’.
(iii) Income by way of winnings from lotteries in the hands of a dealer as
a regular business activity is not chargeable to tax under the head
‘profits and gains of business or profession’.
(iv) Income from transfer of self-generated goodwill of a profession is not
chargeable to tax under the head ‘capital gains’.
(v) Literary awards instituted by the Central Government are exempted
from income-tax. (1 mark each)
2010 - June [2] (a)Re-write the following sentences after filling-in the blank
spaces with appropriate word(s)/figure(s):
(i) The maximum exemption limit under the Income-tax Act, 1961 in case
of a woman who is less than 65 years of age and who is non-resident
in India is Rs.____________.
(ii) The time limit for filing an appeal before the appellate tribunal on
receipt of an appeal order from the Commissioner is _______ days.
(iii) Wealth-tax is charged at the rate of ______ % on net wealth in excess
of Rs._________ lakh under the Wealth-tax Act, 1957.
CS Executive Programme Module- I (New Course) I-23
(iv) Business loss relating to illegal business is ________ as deduction.
(v) Marriage gift from a non-relative is ________ to tax. (1 mark each)
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