MOCK TEST

Category-C

Full Syllabus

IPCC

A.Y.2013-14 Total No. of Question – 7] [Total No. of Printed Pages –9

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.

Wherever required, suitable assumptions may be made by the candidate.

Working notes should form part of the answer.

1(a). Mrs. Purvi is a Chartered Accountant in practice. She maintains her accounts on cash

basis. Her income and Expenditure account for the year ended March 31, 2013 reads as

follows:

Expenditure ` Income ` `

Salary to Staff 5,50,000 Fees earned:

Stipend to articled

Assistants

37,000

Audit 7,88,000

Incentive to Articled

Assistants

3,000

Taxation Services 5,40,300

Office rent 24,000 Consultancy 2,70,000 15,98,300

Printing and Stationery

22,000

Dividend on shares of

Indian Companies(Gross)

10,524

Meeting, Seminar and

Conference

31,600

Income from unit Trust

of India

7,600

Purchase of car 80,000 Honorarium received

from Various

Institutions for valuation

of answer papers

15,800

Repair, Maintenance

And petrol of car

4,000

Rent Received from

Residential flat let out

85,600

Travelling expenses 35,000

Municipal Tax paid in

respect of house

Property

3,000

Net profit 9,28,224

17,17,824 17,17,824

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Other information:

(i) Allowable rate of depreciation on motor car is 15%

(ii) Value of benefits received from clients during the course of profession is

`10,500.

(iii) Incentives to articled assistants represent amount paid to two articled

assistants for the passing IPCC Examination at first attempt.

(iv) Repairs and maintenances of car include ` 2,000 for the period from

01.10.2012 to 30.09.2013.

(v) Salary include `30,000 to a computer specialist in cash for assisting Mrs.

Purvi in one professional assignment.

(vi) The total travelling expenses incurred on foreign tour was `32,000 which was

within the RBI norms.

(vii) Medical Insurance premium on the health of dependent brother and major

son dependent on her amounts to `5,000 and `10,000 respectively paid in

cash.

(viii) She invested an amount of `10,000 in National Saving Certificate.

Compute the Total Income and Tax Payable of Mrs. Purvi for the Assessment Year

2013-2014.

1(b). Rishabh Professionals Ltd. is engaged in providing services which became taxable with

effect from July 01, 2012. Compute the service tax payable by Rishabh Professionals

Ltd. on the following amounts (exclusive of service tax) received for the month of

March, 2013:-

Particulars Amount

(`) Services performed during March 2013 5,00,000

Services by way of renting of residential dwelling for use as residence 1,50,000

Market Value of free services rendered to the friends 20,000

Advance received in March,2013 for services to be rendered in July,

2013

(The agreement got terminated in April, 2013. Hence, no services were

rendered in July,2013. However, a sum of ` 3,50,000 was refunded in

June, 2013)

5,00,000

Other receipts 12,00,000

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1(c). Compute net VAT liability of Rishi from the following information:

Particulars ` ` Raw materials from foreign market (Including Import duty

@ 20% plus EC)

- 1,23,600

Raw material purchased from local market

Cost of raw material 2,50,000

Add: Excise duty @ 16% 40,000

2,90,000

Add: VAT @ 4%

11,600 3,01,600

Raw material purchased from neighbouring State

(Including CST @ 2%)

51,000

Storage and transportation cost 9,000

Manufacturing expenses 30,000

Rishi sold goods to Madan and earned profit @ 12% on the cost of production. VAT

rate on sale of such goods is 4%.

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1(d). Briefly explain the “Exemption available to small scale service providers” in reference

to service tax. Marks

2

2(a). Mr. X is a Dealer Registered in Delhi Value Added Tax Act, 2004 and also under

Central Sales Tax Act, 1956 and he has submitted the informations as given below:

(i) Purchased Goods A from Delhi `1,00,000 inclusive of VAT @ 4% and sold the

goods in Delhi for `1,50,000 inclusive of VAT @ 4%.

(ii) Purchased goods B from U.P. for `2,00,000 inclusive of central sales tax @ 2% and

sold goods in Delhi for `2,50,000 inclusive of VAT @ 12.5%.

(iii) Purchased goods C from Delhi for `4,00,000 inclusive of VAT @ 12.5% and sold

the goods to a registered dealer in Orissa for `4,75,000 inclusive of central sales tax @

2%

(iv) Purchased goods D for `5,00,000 in Delhi inclusive of VAT @ 12.5% and sold the

goods for `5,50,000 to an unregistered dealer in Punjab inclusive of central sales tax @

12.5%.

(v) Purchased goods E from Madhya Pradesh for `3,00,000 inclusive of central sales

tax @ 1% and sold goods in Maharashtra for `3,50,000 inclusive of central sales tax @

1%.

(vi) Purchased goods F from Delhi `7,00,000 inclusive of VAT @ 1% and the goods

were sold to an unregistered dealer in Maharashtra for `7,50,000 inclusive of central

sales tax @ 1%.

(vii) Purchased goods G for `6,00,000 in Delhi inclusive of VAT @ 12.5% and goods

were stock transferred to some other state.

(viii) Purchased goods H for `8,00,000 in Delhi inclusive of VAT @ 4% and goods

were exported for `8,50,000 and no VAT was charged (because as per section 6 Central

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Sales Tax Act, 1956, CST cannot be charged in case of export sale.)

(ix) Purchased goods I for `9,00,000 in Delhi inclusive of VAT @ 12.5% and sold the

goods to a manufacturer in SEZ for `10,50,000 and no VAT was charged.

Show the tax treatment for VAT and also compute his income tax liability for the

assessment year 2013-14.

2(b). Compute capital gains in the following situations for the assessment year 2013-14:

Asset Gold Land Residential

house

Personal

Motor Car

Date of purchase 01.07.1978 01.04.1980 01.07.2010 01.05.2003

Cost price 3,00,000 5,00,000 7,00,000 2,00,000

Cost of improvement 20,000 1,00,000 3,00,000 Nil

Year of improvement 1979-80 1980-81 2010-11 2006-07

Fair market value on

01.04.1981

2,90,000 5,50,000 N.A. N.A.

Date of Sale 01.01.2013 01.01.2013 01.01.2013 01.01.2013

Full value of consideration 30,00,000 32,00,000 15,00,000 1,80,000

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2(c). State with reasons, whether tax deduction at source provisions are applicable to the

following transactions and if so, the rate of tax deduction:

(i) X & Co. (Firm) engaged in wholesale business assigned a contract for construction

of its godown building to Mr. Ravi, a contractor. It paid `25,00,000 to Mr. Ravi as

contract payment.

(ii) Y & Co. engaged in real estate business conducted a lucky dip and gave Maruti car

to a prize winner.

(iii) An Insurance Company paid `45,000 as Insurance Commission to its agent Mr.

Hari.

(iv) AB Ltd. allowed a discount of `50,000 to XY & Co. (a firm) on prompt

(immediate) payment towards supply of automobile parts.

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3(a).

Mr. Nixon, an American citizen, is appointed by a multi-national company to its branch

in New Delhi in 2009. Mr. Nixon has never been to India before this appointment. He

arrives in Bombay on 15th

April, 2009 and joins the New Delhi office on 20th

April,

2009. His wife and children join him in India on 20th

October, 2009. The company

allotted him a leased residence for purposes of his stay. This residence is occupied by

him from the beginning of October, 2009.

On 10th

February, 2010, he is transferred by his employer, on deputation basis, to be

the Regional Chief of his employer‟s operations in South East Asia having

headquarters in Hongkong. He leaves New Delhi on 11th

February and arrives in

Hongkong on 12th February, 2010. Mr. Nixon leaves behind his wife and children in

India till 14th

August, 2011, when they leave along with him for Hongkong. Mr. Nixon

had come to India earlier on 15th

June, 2011, on two months‟ leave. The members of

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the family occupied the residence till date of departure to Hongkong.

At the end of the period of deputation, Mr. Nixon is reposted to India and joins the

New Delhi office of his employer as Chief of Indian operations on 2nd

February, 2013.

In what residential status Mr. Nixon will be assessable, for the various years, to income

tax in India?

3(b).

(i) Write a note on administration of service tax.

(ii) List the documents to be submitted alongwith the first service tax return.

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3(c).

Mr. Tony has estates in Rubber, Tea and Coffee. He derives income from them. He has

also a nursery wherein he grows plants and sells. For the previous year ending

31.03.2013, he furnishes the following particulars of his sources of income from estates

and sale of Plants.

You are requested to compute the taxable income and tax liability for the assessment

year 2013-14.

`

(i) Manufacture of rubber 5,00,000

(ii) Manufacture of coffee grown and cured 3,50,000

(iii) Manufacture of tea 7,00,000

(iv) Sale of plants from nursery 1,00,000

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4(a). Mr. X has submitted information given below.

i) Income from owning and maintaining of race horse ` 2,00,000.

ii) Income from owning and maintaining of race camels ` 1,00,000.

iii) He had winning of ` 1,60,000 from horse race on 01.12.2012 and winning

from camel race `1,80,000 on 07.12.2012.

iv) He purchased lottery tickets of `10,000 on 01.02.2013 and had winning of

`2,00,000 on 12.02.2013.

v) He has received Royalty of book of literary nature @ 50% of print price of ` 600 and total copies sold are 2,000

vi) He has paid advance tax as given below:

Upto 15.09.2012 ` 30,000

Upto 15.12.2012 ` 80,000

Upto 15.03.2013 ` 1,30,000

Balance was paid on 10.06.2013

Compute tax liability for the A.Y 2013-14 and interest under section 234A, 234B and

234C.

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4(b). Write a note on Signing of Return of Income of all the assessee. Marks

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4(c). (i) How will a taxable service be valued when the consideration thereof is not wholly

or partly in terms of money?

(ii) Write a note in brief on Provisional Payment of Service Tax.

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4(d). (i) Under what circumstances registration can be cancelled under VAT?

(ii) Briefly explain the income variant of VAT.

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5(a).

(i) Nathan Aviation Ltd. is running two industrial undertakings, one in a SEZ (Unit S)

and another in a normal area (Unit N). The brief summarized details for the year

ended 31.03.2013 are as under:

(` in lacs)

S N

Domestic turnover 10 100

Export turnover 120 Nil

Gross profit 20 10

Less: Expenses and depreciation 7 6

Profits derived from the unit 13 4

The brought forward business loss pertaining to Unit N is `2 lacs. Briefly compute

the business income of the assessee.

(ii) Explain with brief reason whether the return of income can be revised under

section 139(5) of the Income-tax Act, 1961 in the following cases:

(i) Defective or incomplete return filed under section 139(9).

(ii) Belated return filed under section 139(4).

(iii) Return already revised once under section 139(5).

(iv) Return of loss filed under section 139(3).

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5(b).

ABC partnership firm, is engaged in providing a taxable service. For the quarter ended

on 31st March 2013, its gross receipts were ` 18, 00,000 (no amount has been received

by firm up to 31-12-2012 during F.Y. 2012-2013). The break-up of these receipts are

as follows:

Month in which services are performed Receipt

(`)

July, 2012 (includes ` 1,00,000 for the services in relating to betting) 4,00,000

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August, 2012 (includes ` 1,25,000 for the services rendered within the

Indian territorial waters)

3,00,000

January, 2013 (includes ` 1,75,000 for services rendered to Reserve

Bank of India)

5,00,000

February, 2013 (includes ` 1,50,000 for services rendered in the State of

Jammu & Kashmir)

6,00,000

In the financial year 2011-12, ABC partnership firm had paid `2,47,200 as Service Tax

(@12.36%). State the amount of Service Tax Liability for the quarter ended on 31st

March, 2013.

5(c).

(i) What are the different rates under VAT system?

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

answer:

a) Under VAT, the tax is payable on the first sale price.

b) VAT would increase the working capital requirements and the interest

burden.

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6(a). Mr. X has taken a loan of `10,00,000 from S.B.I @ 10 % p.a. on 01.07.2008 for

construction of one residential house which was completed on 01.07.2010. It was let

out @ ` 55,000 p.m. w.e.f 01.04.2012 and Mr. X has paid Municipal tax of `20,000

though the amount due is `30,000.

He has repaid Principal amount of `70,000 on 01.07.2012.

He has Agricultural income of ` 3,00,000 and unadjusted loss of house property of P.Y.

2003-04 `10,000 and P.Y. 2004-05 `21,000

He has invested `10,000 in NSC and `5,000 in Public Provident Fund and `5,000 in Post

Office 5 Year Time Deposit.

Compute his Income Tax Liability for the A.Y. 2013-14.

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6(b). Define the following as per Point of Taxation of Rules,2011?

(i) Date of Payment as Per Rule 2A

(ii) Define Rule 5 of POT Rules 2011?

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6(c). (i) Enlist the installments of advance tax and due dates thereon in case of

companies.

(ii) Define “Relative” as given in the taxability of Gift?

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6(d). Ashok, purchased raw material „A‟ for `30,00,000 plus VAT @ 4%. Out of such raw

material 60% was used for manufacture of taxable goods and the remaining for

manufacture of goods which are exempt from VAT.

Another raw material „B‟ was purchased for `15,00,000 on which VAT was paid @

1%. Entire raw material „B‟ was used for manufacture of taxable goods only.

The entire taxable goods were sold for `50,00,000 plus VAT @ 12.5%.

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Compute VAT liability of Ashok on the assumption that there was no opening or

closing inventory.

(i) Note: Ashok is not a dealer who opted for Composition Scheme.

7(a).

From the following details compute the total income of Siddhant of Delhi and tax

liability for the Assessment Year 2013-14:

` Salary including dearness allowance 3,35,000

Bonus 11,000

Salary of servant provided by the employer 12,000

Rent paid by Siddhant for his accommodation 49,600

Bills paid by the employer for gas, electricity and water

provided free of cost at the above flat

11,000

Siddhant was provided with company‟s car engine capacity 1.6 litre (self driven)

also for personal use and it is not possible to determine expenditure on personal

use and all expenses were borne by the employer.

Siddhant purchased a flat in a Co-operative Housing Society for `4,75,000 in April,

2006, in Delhi, which was financed by a loan from Life Insurance Corporation of

India of `1,60,000 @ 15% interest, his own savings of `65,000 and a deposit from a

nationalised bank for `2,50,000 to whom this flat was given on lease for ten years.

The rent payable was `20,000 per month. The following particulars are relevant:

`

(a) Municipal taxes paid 4,300

(per annum)

(b) Society charges for passage lights, watchman‟s

salary

1,900

( per annum)

(c) Insurance

860

(d) He earned `2,700 in share speculation business and lost `4,200 in cotton

speculation business.

(e) In the year 2006-07 he had gifted `30,000 to his wife and `20,000 to his son

who was aged 11. The gifted amounts were advanced to Mr. Rajesh, who was

paying interest @ 19% per annum.

(f) Siddhant received a gift of `25,000 each from four friends.

(g) He contributed `5,600 to public provident fund and `4,000 to Unit Linked

Insurance Plan.

(h) He received national award for humanitarian work from the Central

Government in the form of a land whose fair market value is `5,00,000 as on

31st March, 2013.

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7(b).

During the year ended 31.3.2012, Kohli & Co. , running a coaching centre, has

collected a sum of ` 10.2 lacs as service tax, ` 70,000 was met through Cenvat credit

and the balance was paid by cheques on various dates. The details pertaining to the

quarter ended 30.6.2012 are as under:

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Particulars Amount

(`) Market value of free coaching rendered 20,000

Coaching fees collected from students (Service tax collected separately) 14,50,000

Advance received from a college for coaching their students, on

30.6.2012.

However, no coaching was conducted and the money was returned on

12.4.2013

3,00,000

Determine the Service Tax Liability for the quarter and indicate the date by which the

service tax has to be remitted by the assessee.