TAXATION workbook

d) It means during the survivorship, any co-owner can transfer/sell entire property without the consent of other 122. “Tenancy-in-common” and “Joint tenancy” are both the forms of co-ownership. What is the main difference between the two, as regards to survivorship right? a) Both forms of co-ownership have the right of survivorship and there is no difference b) Tenancy in common and Joint tenancy both are not the forms of co ownership but the forms of tenancy c) Tenancy in common has the right of survivorship whereas joint tenancy does not have d) Joint tenancy has the right of survivorship whereas tenancy in common does not 123. As per section 44 of transfer of property Act, when one of the coparcener of a HUF, transfers his/her interest/share in a dwelling house belonging to HUF to a person who is not a member of HUF, then which one of the following is a right of the transferee (incoming person who has bought that share): a) Right of common possession b) Right of common or part enjoyment of the house c) Right to enforce partition d) Right to become a member of HUF 124. Which of the following with regard to trust would be taxed at maximum marginal rate? a) A determinate trust where individual shares of beneficiary is known b) An indeterminate trust where income of none of the beneficiary is in excess of basic limit chargeable to tax c) A private determinate trust that includes business income d) A private determinate trust that is set up by a will for support and maintenance of a dependent relative and includes business income 125. Your client is a trustee of a trust which was set up by his friend for the benefits of his minor son and daughter. During the previous year both the beneficiary have attained majority. Your client being a trustee needs to distribute the entire trust property equally among both the beneficiary. He wants to know from you the rate of tax applicable in the hands of each of the beneficiary on the trust assets that they would receive: a) NIL, because such transfer is treated as transfer of capital assets, b) As per tax slab applicable to an individual c) @20% plus education cess, it being transfer of capital asset d) At maximum marginal rate CFP Level – 2, Module – 2 Taxation - Workbook Page 51

Section – V: Solutions QUESTION NO. CORRECTOPTION 111 A 112 B 113 D 114 C 115 B 116 B 117 D 118 C 119 A 120 C 121 B 122 D 123 C 124 C 125 A CFP Level – 2, Module – 2 Taxation - Workbook Page 52

Additional Practice Questions Q.1 X has generated Long Term Capital gain on gold amounting Rs.4,00,000, Short term capital loss of equity Rs.80,000 and short term capital loss on land amounting Rs.2,00,000. Besides he has income from other sources Rs.2,10,000. Compute his tax liability. a) Rs.3640/- b) Rs.24720/- c) Rs.19570/- d) Rs.22145/- Q.2 X created a trust for the equal benefit of his mother, father and a sister Mrs. Rs.X was appointed as trustee who herself falls in 30% tax bracket. The trust generated income of Rs.12,00,000. The income of mother, father and sister is Rs.25,000/-, Rs.40,000/- and Rs.50,000/- p.m. respectively. What shall be the tax liability of trust, ifage of mother is 62 years and father is 64 years. a) Rs.215280/- b) Rs.370800/- c) Rs.258000/- d) Rs.360000/- Q.3 X created a trust for the equal benefit of his mother (62 years) father (64 years) and sister (39 years), Mrs. Rs..X was appointed trustee who herself falls in 30% tax bracket. Trust generated income of Rs.6,00,000. Before including the income from trust, mother falls in 5% tax bracket, father in 20% and sister in 30% tax bracket. What shall be tax liability on trust income? a) Rs.120000/- b) Rs.185400/- c) Rs.180000/- d) Rs.114400/- Q.4 What if in above case shares of mother, father and sister were indeterminate. a) Rs.180000/- b) Rs.207648/- c) Rs.207650/- d) Rs.213210/- CFP Level – 2, Module – 2 Taxation - Workbook Page 53

Q.5 Ravi has earned salary income of Rs.10,60,000 which includes employer’s contributions to NPS of 70,000. He has occupied a house for his own residence and has paid municipal tax of the same Rs.12,000 and repaid loan EMIs of Rs.334200/-which include intrest of Rs.233200/-. He has contributed Rs.70000 as his own contribution to NPS and invested Rs.40,000 in PPF. His total income shall be: a) Rs.640000 b) Rs.540000 c) Rs.691000 d) Rs.660000 Q.6 Leela aged 45 years receives gifts of Rs.4,00,000 from his sister and Rs.5,50,000 from the son of her sister on her birthday. Besides she has interest income on savings account with a post office to the tune of Rs.14,500. What will be her total income if she invests Rs.1,20,000 in PPF, Rs.40,000 in Sukanya Smridhi Scheme and Rs.50000 in NPS. a) Rs.5200 b) Rs.10400 c) Rs.551000 d) Rs.351000 Q.7 Rohit incurred a short term capital loss on equity Rs.80,000, long term capital gain on gold Rs.8,40,000. Besides he forfeited a sum of Rs.2,00,000 received as advance money for the proposed deal of his residential flat which he purchased 6 years ago. He invested Rs.150000 in PPF and paid mediclaim premium for self, spouse and minor child @ 9000/- each and @ Rs.16000/- for mother and father each who are more than 60 years of age. Compute his tax liability. a) Rs.156560 b) Rs.155530 c) Rs.105600 d) Rs.106080 Q.8 X’s minor son is a renowned Kathak performer and has earned Rs.5,00,000 from such performance. This sum was deposited into fixed deposits which earned an interest of Rs.12,000. Minor child also received gifts on his birthday to the tune ofRs.80,000 out of which Rs.20,000 were given by relatives. X’s personal income for relevant PY is Rs.9,00,000/- what shall be the total income of X and minor child respectively. CFP Level – 2, Module – 2 Taxation - Workbook Page 54

a) 972000 and 500000 b) 958500 and 512000 c) 970500 and 500000 d) 960000 and 510500 Q.9 X has earned personal income of Rs.9,00,000 and his minor child has earned lottery winnings of Rs.1,00,000. What shall be the total income of X and minor child respectively. a) Rs.9,00,000 and Rs.1,00,000 b) Rs.9,98,500 and Nil c) Rs.10,00,000 and Nil d) Rs.9,00,000 and Rs.98,500 Q.10 Ms. Garima is employed at Delhi. She receives Rs.84000/- as HRA for PY 2019-20 along with her salary of Rs.25000/- per month and DA of Rs.5000/- p.m. which forms part of retirement benefits. She stays with her aunt by paying a rent of Rs.6000/-p.m. What shall be salary income of Ms. Garima. a) Rs.396000 b) Rs.444000 c) Rs.360000 d) Rs.358000 Q.11 Your client aged 42 years paid by cheque Rs.19000/- health insurance premium on the health of himself, spouse and dependent children and spent Rs.6000 in cash on preventive health check. He also paid premium of Rs.32000/- for the health of his senior citizen parents. Compute the amount deductible u/s 80D for AY 2020-21. a) Rs.55000/- b) Rs.57000/- c) Rs.56000/- d) Rs.49000/- Q.12 Your client (50 years) has received total salary income of Rs.1010500 for PY 2019-20. He has income from other sources Rs.96000 (interest from savings bank account Rs.16000 and interest on FD Rs.80000). He pays LIC premium 47000/- and mediclaim premium Rs.26000/-. He contributes Rs.20000 to his own PPF and Rs.30000 to the PPF of his married daughter. Find his tax liability for AY 2020-21. a) Rs.112682 b) Rs.112680 CFP Level – 2, Module – 2 Taxation - Workbook Page 55

c) Rs.118860 D) Rs.101300 Q.13 You client age 42 years borrows Rs.20 lakh at the rate of 8% per annum from a bank on 19th April 2019 to invest in public issue of 5 years 10% debenture of a X company. The company allots the debentures on 30th April 2019. Interest in payable every year on 30thApril as per terms of allotment. Your client has earned interest of 6 lakh on other debentures held by him during the PY 19-20. He has invested 30000 in PPF and Rs.20000 in Sukanya Smridhi Scheme. He paid mediclaim of his mother (68 years) Rs.18000 and incurred Rs.32000 on the actual medical expenditure of his father (81 years) who had no mediclaim cover. His tax liability comes to: a) Rs.nil b) Rs.10040 c) Rs.13330 d) Rs.3480 Q.14 Your client has earned income of Rs.5,75,000 from salary and interest income of Rs.15,000. He has also incurred long term capital loss on unlisted shares which hewants to carry forward, which ITR form shall be used by him a) ITR-1 b) ITR-2 c) ITR-3 d) ITR-4 Q.15 Which of the following shall be agricultural income? a) Interest on loan given to a farmer who gave 4 bags of wheat as interest b) Income from growing of ‘Bonzai’ plants c) Income from dairy farming d) Income from poultry farming Q.16 X has earned total income of Rs.8,60,000 from a trading business. He also earned 6,00,000 from growing and manufacturing of Tea in India. What shall be his tax liability? a) Rs.159650/- b) Rs.263000/- CFP Level – 2, Module – 2 Taxation - Workbook Page 56

c) Rs.270890/- d) Rs.2168640/- Q.17 X, owns a house which has a municipal value of Rs.2,40,000; fair rental value of Rs.3,00,000 and standard rent Rs.3,60,000. 1/4th of the house is used for X’s residence, another 1/4th is let out on a rent of Rs.13000 p.m. and remaining half is used by X for his own business which has earned him income of Rs.7,50,000 before deducting the expenses in relation to the house property. The expenses incurred for the entire house include municipal taxes (Rs.12,000), land revenue paid (Rs.8000) insurance premium (Rs.6,000), interest on borrowed capital to repair the house (Rs.2,00,000) and depreciation Rs.40,000. Compute X’s total income. a) Rs.27100 b) Rs.7100 c) Rs.617000 d) Rs.644100 Q.18 Roger had purchased 500 equity shares of X Ltd. listed in stock exchange in India and abroad in April 2012 at the rate of Rs.225 per share. He intends to transfer today all the shares at a price of Rs.460 per share privately to his father in an off-market deal. Calculate his capital gains tax liability for AY 2020-21. a) Rs.14170 b) Rs.12,2206+ c) Rs. Nil d) Rs.24,200 Q.19 Roger purchased Rs.1,000 equity shares of face value of Rs.10 each on 10th May 2019 in ABC Ltd. at Rs.56. The company declared 50% dividend with record date being 3rd August 2019. On 20th October 2019 he transferred 800 shares out of these 1,000 shares, at Rs.37 per share. He transferred balance 200 shares on 20th December 2019 at Rs.20 per share. During FY 2019-20 Roger also generated long term capital gain of Rs.76,000 on sale of gold. Determine his capital gains for AY 2020-21. a) LTCG Rs.57,600 b) LTCG Rs.53,600 c) LTCG Rs.76,000; STCL Rs.18,400 d) LTCG Rs.76,000; STCL Rs.22,400 Q.20 On 1stApril, 2019, Urvashi sold gold jewellery worth Rs.10.12 lakh, which she had acquired of Rs.2.90 lakh in FY 2007-08, for partially self funding of her house three years down the line. She CFP Level – 2, Module – 2 Taxation - Workbook Page 57

incurred transfer expenses of Rs.2,000 on the sale. She wishes to invest the proceeds in bonds specified under Section 54EC. Calculate the amount that she can invest from the sale proceeds, and by which date. a) Rs.3.98 lakh, by 31stMarch, 2018 b) Rs.Nil, since Section 54EC does not allow for capital gains on sale of gold c) Rs.3.60 lakh, by 30thSeptember, 2019 d) Rs.10.10 lakh by 30thSeptember, 2018 Q.21 Urvashi Aged (34) is employed in a Mumbai based firm. She receives following remuneration for (19-20) Basic salary Rs.25,00,000 HRA Rs.5,00,000 Other allowances Rs.3,00,000 She pays rent @ Rs.35,000/- p.m. Calculate Urvashi’s income tax liability for AY 2020-21. She contributes Rs.1 lakh to her PPF account and Rs.38759 for life insurance. Also, the health insurance premium is Rs.25000 for deduction under the Income Tax Act 1961. She earns interest of Rs.8,986 on her savings bank account and Rs.28,960 on the fixed deposits during FY20119-20. a) Rs.7,23,900 b) Rs.7,45,270 c) Rs.7,32,392 d) Rs.7,46,510 Q.22 Aashish purchased 4000 units at Rs.20/- per unit of a debt oriented mutual fund during 2015- 16. He received dividends of 20%, 22%, 24% and 20% in this period. He reinvested the same by Rs.21.40, Rs.22.62, Rs.23.48 and Rs.24.10 on the last day of November 2016 to 2019. He sold all the units on 31stDecember, 2019 at 25.80 per unit. Compute taxable capital gains from this transaction. CII 19-20 :289: 18-19 :280, 17-18 : 272, 16-17 :264, 15-16:254. a) LTCG 13062.83, STCG 3238 Appx b) LTCL 2374, STCG 3238 Appx c) STCG 3238, LTCG 24844 Appx. d) STCG 24844, LtCG 3238 Appx CFP Level – 2, Module – 2 Taxation - Workbook Page 58

Q.23 Income from lotteries in excess of Rs.10000 and race horses in excess of Rs.5000 are subject to TDS at the rate of: a) 30% b) 15% c) 30.9% d) 15.45% Q.24 Interest on saving bank interest is allowed deduction under section 80TTA uptoRs. a) Rs.5000 b) Rs.15000 c) Rs.10000 d) Rs.13500 Q.25 Rent of open plot of land is taxable under the head a) Capital gains b) House property c) Other sources d) Business income Q.26 Interest on post office savings account is a) Fully taxable b) Exempt uptoRs.3500 u/s 10(15) and also additionally deductible u/s 80TTA uptoRs.10000 c) Deductible uptoRs.10000 u/s 80TTA d) Subject to TDS @ 10% if amount exceeds 10000 Q.27 Short term capital gains on listed debentures is taxed at a) 15% b) 30% c) 10% d) Normal rates as per income slab of the assessee Q.28 Rohit a person of Indian origin residing in US visited India on 29th September 2019 and went back on 5th April 2020. During his stay in India he visited Dhaka (Bangladesh) on 11th October 2019 and came back to India on 14th October 2019. During last seven previous years he was in India for 709 days. What will be his residential status for AY 2020-21. a) Resident and ordinary resident CFP Level – 2, Module – 2 Taxation - Workbook Page 59

b) Non resident c) Resident but not ordinary resident Q.29 X a ‘citizen of Canada’ came to India on 10th April 2019 and went back on 7th June 2019. He again came to India at 6 a.m. on 14th November 2019 and went back on same day at 7 p.m. During the last four PY he was in India for 368 days. He earned income from a business in India worth Rs.8,00,000 and remitted Rs.4,00,000/- from his foreign business income in India during PY 19-20 to Finance the education of his ‘son’ who is studying at ISB, Bangalore. Taxable Income of X in India shall be a) Rs.12,00,000/- b) Rs.8,00,000/- c) Rs.4,00,000/- d) Nil Q.30 A simple interest is payable by assessee to income tax department under section 234D in case of excess refund granted. The rate of interest so payable is a) 0.5% per month (or part thereof) b) 1% per month (or part thereof) c) 1.5% per month (or part thereof) d) 2% per month (or part thereof) Q.31 If advance tax instalment are not paid on or before due dates interest is charged U/s a) 234A b) 234B c) 234C d) 234D Q.32 Dividend on Fixed Maturity Plans is a) exempt in the hands of investor b) taxed at 15% c) taxed at normal rates d) taxed at 20% Q.33 In case of company paying rent of building in excess of Rs.240000 p.a. TDS is applicable at the rate a) 10% b) 5% CFP Level – 2, Module – 2 Taxation - Workbook Page 60

c) 2% d) 15% Q.34. Interest on bank deposits is not-subject to TDS if it is earned on: a) Saving bank account b) Recurring deposit account c) Fixed deposit account d) Gold bond accounts Q.35 If total income of an individual exceeds 1 crore, then surcharge is payable at the rate a) 12% b) 10% c) 15% d) 3% Q36. Trust is created for benefit of relatives of venture capital. Shares of 4 beneficiaries are 40%, 25%, 20%, 15%. While they are assessable respectively in Tax slab on 5%, 20%, 20%, 30%, beneficiary in 5% tax slab has income from Trust only, Tax on 2nd beneficiary in 20% bracket exceeds previous slab by 80000 pursuant to receiving income from trust. Total Income of 8.5 lakh is to be distributed amongst the beneficiaries during the year. What would be tax payable by trustee on account of Trust in that year (Ignore education cess.) a) 119250 b) 75000 c) 148750 d) 114750 Q37. What shall be tax payable in previous case including surcharge and education cess. a) 127462.50 b) 124020 c) 153210 d) 146850 Q38. Assume in previous question that the tax on 2nd beneficiary in 20% bracket exceeds previous slab by 80000 before including income from trust. Compute tax payable including surcharge and education cess. a) 146580 b) 127460 c) 134415 CFP Level – 2, Module – 2 Taxation - Workbook Page 61

d) 135720 Q39. A management college professor retired from service on 1st March 2018 at the age of 60 year. She had accumulated a balance of Rs.1.25 crore in her retirement account. She also received gratuity from the college under the payment of Gratuity Act. She commuted the tax exempt value of her retirement fund. The rest of the amount was utilized by the college to buy her a 25 year fixed annuity differed by a year and paid annually thereafter. If the effective yield from such annuity product were 7.5% p.a. and she is willing to save maximum permissible amount under section 80C and 80D, what tax liability you estimate for her for AY 20-21. a) 39670 b) 34523 c) 20300 d) 39673 Q40. Mr. A purchased 1,000 shares of an unlisted company at Rs.983 per share on 25th April 2011. The company allotted rights shares at Rs.245 per share in the ratio of 1 share for every 2 shares held by investors on 18th January 2014 which was subscribed by Mr. A. The company got listed on 1st March 2019 and Mr. A sold 1400 shares at Rs. 1975 per share in off market transaction on 1stFeb, 2020. Find the capital gains in the transaction. a) Original shares LTCG 521870 (20% option) Right Shares LTCG 692000 (10% Option) b) Original Shares 86210 (20% option) Right Shares LTCG 69200 (10% Option) c) Original Shares 521870 (20% option) Right Shares LTCG 668836 (20%) d) Original Shares 521870 (10% Option) Right Shares LTCG 668836 (20% Option) Q41. Mr. A redeemed the entire units of a debt oriented Mutual Fund on 31st December 2019 at Rs.22.16 per unit. He originally purchased 3500 units at a pice of Rs.17.47 per unit under dividend reinvestment option on 4thDecember 2016. He received dividends of 20%, 18%, 17% in this period on his outstanding units which were reinvested respectively at NAVs of Rs.19.43, Rs.20.91, Rs.22.61 in the month of November in the years 2017 to 2019. What is the tax treatment of these transactions for AY 2020-21. a) LTCG 1257 and STCG 4303 b) LTCG 10625 and STCG 1257 c) LTCG Loss 20 and STCG 1257 d) LTCG 20 and STCL 1257 CFP Level – 2, Module – 2 Taxation - Workbook Page 62

Q42. A person taken home loan and education loan, he paid 30000 as principal 13000 as interest against home loan and 18000 as principal and 8000 as interest against education loan, what would be education u/s 80C and 80E? a) 43000 & 26000 b) 30000 & 26000 c) 13000 & 8000 d) 30000 & 8000 Q43. A house property in Kolkatta having a municipal value of Rs.5 lakh, Fair Rental Values of 6 lakh was intended to be let out to tenants. Unfortunately during previous year no tenant was found. Municipal Tax is 5000 (of which Rs.1200 is payable). Interest paid on loan taken for purpose of property is Rs.179000. What is deemed income from house property.(assume owner already have 2 self occupied properties) a) NIL b) Loss 179000 c) Loss 3800 d) Gain 240160 Q44. An assesses lives with parents. From 1stAugust, 2019 he takes a rented accommodation for this he is paying 10000 pm, his basic salary is 240000 and HRA received is 5500 pm. What is taxable HRA. a) 44000 b) 66000 c) 22000 d) 6000 Q45. Mr. Arun invested Rs.80000 in debt oriented mutual fund on 26th March 2017 @15.21 per units under dividend reinvestment option. He received dividend 18% in 2018 and 20% in 2019 on his outstanding units which were reinvested at NAV of Rs.17.16, and Rs.19.10, on the last business day of February. Compute the taxable income from this transaction if he sold the units in 30th March 2020 @22.15 per unit. a) LTCG 31141 and STCG 4608.88 b) LTC loss 30826 and STCL 4608.88 c) LTCG 30826 and STCL 4608.88 d) LTCL 30826 and STCG 4608.88 CFP Level – 2, Module – 2 Taxation - Workbook Page 63

Q46. X acquired 1000 listed shares @900/- per share of a company on 6/6/17. Later on company gave one right for 2 shares held @680/- per share on 18/3/19. X sold 1200 shares @2825/- per share on 30/1/20. Calculate his capital gains and Tax liability, if he has no other Income. a) 13290 b) 22510 c) 217720 d) 25080 Q47. What if in last question shares are unlisted. a) 398010 b) 385146 c) 42900 d) 410146 Q48. In an unfortunate incident, Keshav’s plant catches fire and machinery gets destroyed. Keshav had insured the factory against it written down value of machinery was Rs.38200 and replacement cost Rs. 6,00,000. The insurance company has paid compensation of Rs.4,50,000. What shall be Taxable amount? If he has not yet replaced the machine. a) Short term loss Rs.1,50,000 b) Loss from business Rs.1,50,000 c) STCG Rs.4,11,800 d) Business Income Rs.68,000 Q49. ‘X’ Purchases equity shares in Y ltd. a listed company on BSE on March 1, 2018. He sold off all the shares on March 4, 2020 at a loss of Rs.1,30,000. He wants to set off the loss against LTCG of Rs.60,000 from gold and business income of Rs.70,000. Shares were purchased and sold on Recognized stock exchange. Whether such a loss can be set off. a) Yes, uptoRs.60,000 against LTCG on gold. b) Yes, entire Rs.1,30,000 can be set off c) No, it cannot be set off but can be carried forward d) Yes, it can be set off, only against LTCL from gold, rest will carry forward for 8 years Q50. Neetu invests Rs.2,40,000 in an debt oriented scheme on 1/02/2019 and receives a dividend of Rs.32,000 on 31/03/2020, the record date. The investment sold on 02/06/2020 for Rs.1,92,000. How much short term loss if any arising from this investment is allowable for set off in AY 2021- 22. a) Entire Rs.48,000 can be set off CFP Level – 2, Module – 2 Taxation - Workbook Page 64

b) NIL c) Rs.32,000 since provision of 94(7) apply d) Rs.16,000 Q51. What it in previous question units are purchased on 02/01/2020. a) Rs.48,000 b) NIL c) Rs.32,000 d) Rs.16,000 Q52. Mrs. X whose date of birth is 30th March 1958 has a total salary income of Rs.9,78,000 for PY 2019-20. She has income from others sources Rs.18,142 from her saving account. Her only investments are contribution to EPF which are 12% of her basic pay of Rs.40,000 pm. Find her tax liability for AY 2020-21. a) Rs.1,10,705 b) Rs.87440 c) Rs.1,14,030 d) Rs.1,05,708 Q53. X reports following income/losses during the PY 2019-20. Income from growing a crop in Nepal Rs.80,000, income from growing a crop in Sikkim Rs.1,30,000. Loss from growing manufacturing of Tea in Assam Rs.1,00,000. He received interest on capital and remuneration of Rs.60,000 and Rs.90,000 from a partnership firm which is doing agriculture in India. Compute his tax liability. a) 1030 b) 4120 c) Nil d) 40000 Q54. XY a partnership firm recorded a total sale of Rs.75 lakh during the PY Expenses on goods purchased Rs.30 lakh, deprecation charge Rs.3 lakh. It also earned LTCG of Rs.90,000 and paid Rs.20,000 as donation to PM NRF for deduction u/s 80G. The firmalso has brought forward loss of Rs.70,000 and unabsorbed depreciation Rs.60,000 of last PY. Assuming firm goes for presumptive scheme under section 44AD. Calculate net income. a) Rs.6,00,000 b) Rs.6,70,00 c) Rs.6,90,000 d) Rs.5,40,000 CFP Level – 2, Module – 2 Taxation - Workbook Page 65

Q55. X sold agricultural land in Urban area for Rs.80 lakh which he purchased 6 years ago. Indexed cost of this land is Rs.35 lakh and he incurred Rs.50,000 on brokerage at the time of sale. He acquired a coffee farm 20km away from urban area limits for Rs.45 lakh and transferred the same during the PY of Rs.60 lakh. Compute capital gainfrom these transaction for the AY 2018- 19. a) +Rs.15 lakh b) Rs.60 lakh c) NIL d) Rs.44.5 lakh Q56. X invested Rs.40,000 each in equity and debt mutual funds 18 months ago. He sold both the portfolios for Rs.55,000 and Rs.60,000 respectively. Calculate tax assuming his other income are Rs.10,81,670. a) Rs.10,60,000 b) Rs.10,75,000 c) Rs.1,43,000 d) Rs.1,48,720 Q57. X rented a property to a company for a rent of Rs.5,00,000. He also earned a lottery winning of Rs.1,00,000 during the PY. How much TDS shall be done on Mr. X a) Rs.80,000 b) Rs.82,400 c) Rs.30,000 d) Rs.30,900 Q59. How would the LTCG from gold ETF be taxed? a) Exempt 10(38) b) 20% after benefit of indexation c) 10% without benefit of indexation d) (b) or (c) as the tax payer wishes Q60. A defect pointed out by assessing officer in return should be rectified within a) 15 days b) 30 days c) 45 days d) 7 days CFP Level – 2, Module – 2 Taxation - Workbook Page 66

Q61. Long term capital gain on listed bonds / debentures shall be taxed at a) 10% without indexation b) 20% with indexation c) (a) or (b) at the option tax payer d) 20% without indexation Q62. Long term capital gain on unlisted bonds / debentures shall be taxed at a) 10% without indexation b) 20% with indexation c) (a) or (b) at the option tax payer d) 20% without indexation Q63. LTCG on zero coupon bonds shall be taxed at a) 10% without indexation b) 20% with indexation c) (a) or (b) at the option tax payer d) 20% without indexation Q64. X rented a property to a company for a rent of Rs.5,00,000. He paid interest on borrowed capital for construction of property Rs.50,000 and municipal tax Rs.10,000. What shall be taxable income from house property? a) Rs.4,90,000 b) Rs.4,50,000 c) Rs.4,40,000 d) Rs.2,93,000 Q65. X received a cheque of Rs.80,000 as token of appreciation from the employer. He also received a gift of Rs.50,000 from a friend. His salary income excluding Rs.80,000 cheque is Rs.8,86,000 what shall be taxable income. a) Rs.1,30,000 b) Rs.9,36,000 c) Rs.9,66,000 d) Rs.10,16,000 Q66. A acquired 1,400 shares of an unlisted company @Rs.200 per share on 15/9/17 and was given 350 right shares @Rs.220 per share on 15/1/19. He sold all the shares @Rs.850 per share on CFP Level – 2, Module – 2 Taxation - Workbook Page 67

30/12/19. Compute his tax liability. If he has no other income for AY 2020-21. [CII 2019-20:289, 2017-18:272, 2018-19:280] a) Rs.1,75,693 b) Rs.1,76,480 c) Rs.1,79,500 d) Rs.1,81,770 Q67. XYZ a partnership firm has earned profits from business to the tune of Rs.9,80,000 before deducting remuneration paid to partners. It also earned LTCG on equity Rs.3,00,000 and LTCG on gold Rs.80,000. Compute the taxable income of firm assuming it paid maximum remuneration permissible under section 40(b) to the partners. a) Rs.6,78,000 b) Rs.3,02,000 c) Rs.5,82,000 d) Rs.6,82,000 Q68. Revised tax return can be submitted within: a) On year from the due date of filling return b) On year from end of relevant assessment year c) One year from and end of relevant previous year d) Six months from the due date of filling of return Q69. Your client is running a business of manufacturing taps. He recorded a turnover of Rs.90 lakh and opted for presumptive scheme under sections 44AD. He also earns rental income from a let-out house and interest on bank deposits x. Which income tax return and by which date can be filled by him. a) ITR 2 by 31/07/AY b) ITR 3 by 30/09AY c) ITR 4 by 31/07/AY d) Both (2) or (3) as per his choice. Q70. Sunder Nath earned taxable salary Income of Rs.4,90,000 and LTCG on unlisted shares Rs.90,000. He has invested Rs.80,000 in NPS and paid medicaim of Rs.26,000 for himself and his wife. Compute his tax liability. a) Rs.32,450 b) Rs.27,295 c) Rs.12,740 CFP Level – 2, Module – 2 Taxation - Workbook Page 68

d) Rs.18,030 Q71. Rohit is an India citizen. He left India for the First time on 05/09/19 for exploring US markets for exports of goods manufactured in India by him. He returned on 5th April 2020. Determine his residential status for Ay 2020-21. a) Citizen of India b) Resident and ordinary Resident c) Resident but not ordinary resident d) Non resident Q72. Mr. Sanjiv Roy, CEO of a company had to take foreign tours so often that he remained out of Q73. India for as many as 300 days during 2019-20. He was also out of India for 1052 days during last four years. For PY 2019-20 he shall be: a) Foreigner b) ROR c) Resident but NOR d) Non resident What is amount of penalty for misreporting of income resulting in under reporting income. a) 100% of tax on under reported income b) 200% of tax on under reported income c) 300% of tax on under reported income d) 100% of tax on under reported income Q74. X Doctor recorded total receipts of Rs.48 lakh from his medical profession. The total expenses incurred by him in connection with his profession were Rs.19,40,000 and depreciation as assets Rs.2,00,000. He also earned LTCG on equity Rs.90,000, LTCG on gold Rs.85,000 and ST capital loss on equity Rs.30,000. What shall be taxable income if he adopts section 44ADA. a) Rs.25,45,000 b) Rs.24,00,000 c) Rs.25,45,000 d) Rs.24,85,000 Q75. Your client a non -resident Indian has earned Long term capital gains from sale of a property in India to the tune of 9,50,000 during the relevant previous year. He has also earned Interest of 48,000 from NRE account held with SBI in India and 93,000 from NRO account held with same bank. Compute his tax liability for relevant assessment year. a) 163360 CFP Level – 2, Module – 2 Taxation - Workbook Page 69

b) 197600 c) 163358 d) 190000 Q.76. Your client a person of Indian origin settled in US came to visit India for 180 days during the PY. During 4 preceding previous year he was in India for 725 days and 3 year preceding these 4 years he was in India for 1000 days. Determine residential status for relevant PY. a) ROR b) RNOR c) Non Resident Q77. Your client a person of Indian origin settled in Canada came to visit India for 184 days during the PY. During 4 preceding previous years he never came to India but in 3 year prior to these 4 year he was in India for 270, 280, and 180 days respectively. What shall be his residential status. a) ROR b) RNOR c) NR Q78. Somu Mukherjee a citizen of India is employed with a US company since 1994. He decides to resign from his job and wishes to settle in India finally. He came to India on 29th December 2019 to actualize his plans. His stay out of India during precedingin4 years was 1080 days and during 3 year preceding these 4 he was India for 105,107 and 98 days respectively. What shall be his residential status for AY 2020-21. a) ROR b) RNOR c) NR Q79. X a non-resident Indian settled in Dubai had given a loan of 50,00,000 to Y a resident of India who used it for a business carried out in India. Y paid an Interest of 9,00,000 to X directly in X’S bank account at Dubai. X also earned business income of 80,00,000 from his Dubai business Compute X’S taxable income in India. a) 50,00,000 b) 9,00,000 c) 89,00,000 d) 71,00,000 CFP Level – 2, Module – 2 Taxation - Workbook Page 70

Q80 X an non-resident gave a loan of 50 lakh to Y another non- resident in Singapore. Y used these funds for his business in India and paid interest of 6,00,000 to X in Singapore. The interest income of 6,00,000 for Mr. X shall be. a) Exempt from Tax in India b) Shall not be included as it is foreign income. c) Shall be taxable as it is Indian income d) Shall be exempt as it is received outside India. Q81. Your client a RNOR reported LTCG from sale of land in India to the tune of 9,00,000. He also earned business income of 25,00,000 in Dubai. He remitted 60% of business income in Dubai to India to start a new business in India. His taxable income for the PY shall be a) 34,00,000 b) 24,00,000 c) 9,00,000 d) 19,00,000 Q82. What shall be tax liability of your client in Q81 if he invested 150000 in PPF during the Py. a) 135200 b) 185400 c) 154500 d) 103000 Q83. Loss under the Head house property can be set off against “ salary income” to the extent of a) 1,50,000 b) 2,00,000 c) 2,50,000 d) No limit Q84. Loss under the Head” house property” during the current previous year cannot be set off against. a) Income from Salary b) Capital gains c) Business Income d) Winning from lotteries CFP Level – 2, Module – 2 Taxation - Workbook Page 71

Q85. Loss under the Head “ house property” of the current year. a) Can be set off against any income up to a limit of 2,00,000 b) Can be set of against any income except Long Term capital gains up to a limit of 2,00,000 c) Can be set off against any income except” Winnings” up to a limit of 2,00,000 d) Can be set off against any income except” Winnings” without any limit. Q86. X owns a big house half of which is let out on a monthly rent of 12000 pm. Remaining half is self-occupied by X for his own residence. X has paid municipal taxes of 8000 for the entire house and has also repaid EMIs aggregating 592500 in respect of loan taken from SBI housing Finance. EMIs include principal repayment of 112000 and interest a mounting 480500. X has also earned income from business amounting 630000 and has invested 145000 in NPS Compute his taxable income for the AY. a) 287500 b) 39500 c) 182000 d) 230000 Q87. Your client provides following detail for previous year. Loss from house property: 360000, Short Term capital loss equity 98,000, Long Term loss on Equity 3,00,000 (STT paid on all equity transitions) and LTCG on gold 9,00,000. Investment in PPF 1,50,000. Compute his tax liability. a) 72512 b) nil c) 41610 d) 39550 Q88. Your client a business man has not followed section 44 AD and has computed business income of 9,85,000 after deducting all expenses. These expenses included three bills of 17,000 , 19000 and 9500 respectively which were paid by bearer cheques. What shall be his taxable income. a) 985000 b) 1002000 c) 1021000 d) 1030500 CFP Level – 2, Module – 2 Taxation - Workbook Page 72

Q89. Ajay Singh Chauhan is employed with MNC on monthly salary of 6,00,000. He was also offered 500 ESoPs. By his employer company @800 per ESoP. Ajay applied for 300 ESoPs. When the market price was 2100/ per share. Other income of Ajay include dividends from Indian companies 7,50,000, dividend from foreign company 85000 and dividend from MFs 1790000. He invested maximum under section80CCD(1), 80CCD(1B) and donated 20000 in cash to Chari table trust. Compute his tax liability. a) 2333760 b) 2328315 c) 2116650 d) 2260500 Q90. In an unfortunate incident, Keshav’s plant catches fire and machine gets destroyed. Keshav had insured the factory. Written down value of machine was 38200 and replacement cost 600000. The insurance company has paid compensation of 450000. Assuming Keshav has replaced the machine, the tax implication shall be. [ignore add depreciation] a) Short Term Loss 150000 b) Loss from business 150000 c) STCG 411800 d) Depreciation u/s 32: 28230 CFP Level – 2, Module – 2 Taxation - Workbook Page 73

Solutions of Additional Practice Questions QUESTION CORRECTOP QUESTION CORRECTOP QUESTION CORRECTOP NO. TION NO. TION NO. TION 1 A 2 A 31 C 61 A 3 D 32 A 62 D 4 D 33 A 63 C 5 B 34 A 64 D 6 D 35 C 65 C 7 D 36 A 66 C 8 C 37 B 67 C 9 B 38 D 68 C 10 D 39 C 69 D 11 C 40 B 70 C 12 D 41 B 71 B 13 A 42 D 72 B 14 B 43 D 73 B 15 B 44 C 74 C 16 D 45 A 75 B 17 D 46 C 76 C 18 B 47 A 77 A 19 A 48 C 78 B 20 C 49 D 79 B 21 A 50 A 80 C 22 A 51 D 81 C 23 A 52 B 82 A 24 C 53 C 83 B 25 C 54 D 84 D 26 B 55 C 85 C 27 D 56 D 86 D 28 C 57 A 87 B 29 B 58 C 88 C 30 A 59 B 89 A 60 A 90 D CFP Level – 2, Module – 2 Taxation - Workbook Page 74

Solutions Additional Questions Q1. Long term capital gain Rs.4,00,000 Less: STCL (E) Rs.80,000 STCL(L) Rs.2,00,000 Net LTCG Rs.1,20,000 Add: Income “OS” Rs.2,10,000 Total Income Rs.3,30,000 Tax on LTCG (Rs.1,20,000 – Rs.40,000 shifted to make up for exemption of 250000) 80000 x 20% = 16000 – (Rebate 87A) 12500 = 3500 + 140 (Cess) = 3640 Q2. A Mother’s Income Rs.3,00,000 = Rs.10000 B. Share of mother Rs.4,00,000/- Rs.2,00,000 x 5% = Rs.40,000 Rs.2,00,000 x 20% Father Income Rs.4,80,000 = Rs.1000 Share of father – 4,00,000 Rs.20,000 x 5% = Rs.76000 Rs.3,80,000 x 20% C. Sister’s Income Rs.6,00,000/- Share of sister Rs.4,00,000 x 20% Rs.80,000 Add: EC 4% Rs.207000 Rs.8280 Rs.215280 Q3. Mother’s shares Rs.2,00,000 x 5% Rs.10,000 Father’s Share Rs.2,00,000 x 20% Rs.40,000 Sister’s share Rs.2,00,000 x 30% Rs.60,000 Rs.110000 Add: 4% EC Rs.4400 Rs.114400 CFP Level – 2, Module – 2 Taxation - Workbook Page 75

Q4. Rs.6,00,000 x 35.353% = 213210 = 213210 (Round off) Q5. 1. Income from HP NAV – nil 24(b) Rs. 2,00,000 (max) (233200) Loss Rs.200000 2. Total Income Salary income Rs.1060000 Less SD 50,000 Less: H. Property Rs.200000 GTI Rs.810000 Less: 80C (101000 + 40000) 80CCD (1) 20000 Rs.150000 Ravi’s contribution to NPS Rs.50000 80CCD (1B)50000 (Extra) Employer’s contribution to NPS 80CCD(2) Rs.70000 Rs. 70000 Total Income = Rs.540000 Q.6 Income from other sources Rs.550000 (Gift from nephew) Rs.11000 (Interest on PQSB, (14500-3500) GTI Rs.561000 Less: 8 0C (120000+40000) Rs.150000 80CCD(1)(11B) Rs.50000 Rs. 50000 80TTA Rs.10000 Total Income Rs.351000 Q.7 Advance money forfeited “other sources” Rs.2,00,000 +LTCG Rs.7,60,000 CFP Level – 2, Module – 2 Taxation - Workbook Page 76

(840000 – STC Loss) Rs.960000 GTI Less 80C – ₹150000 ₹200000 (Limited to ₹2,00,000 as LTCG cannot be used for 80D ₹57000 (25000+32000) deduction U/s 80) TI ₹7,60,000 Tax Liability Tax LTCG (760000 – 250000)x 20% = ₹102000 Add EC 4% = ₹4080 ₹ 106080 Q.8 X’s Income Minor’s Child Income Dance Performance Rs.5,00,000 Personal Income Rs.9,00,000 Add: Minor child’s income Rs.70500 (12000 + 60000 – 1500) Rs.970500 Q.10 Salary for calculation of HRA = Basic salary + DA S = 25000 + 5000 = 30000 HRA Exemption 1) 50% of salary (15000) 2) Rs.7000/- 3) [6000 – 10% of Salary] Rs.3000 BS 25000 x 12 = Rs.300000 Rs.60000 DA 5000 x 12 = Rs.48000 HRA 84000 – 36000 = CFP Level – 2, Module – 2 Taxation - Workbook Page 77

Rs.408000 LESS SD U/S 16(ia) 50,000=358000 Q.11 For self/spouse and children (19000 + 5000) 24000 Add: For parentsRs.32000 Total Rs.56000 Q.12 Salary Rs.1010500 LESS SD Rs.50000 Other source Rs.96000 TI Rs.1056500 Less: 80C – Rs.97000 Rs.132000 80D – Rs.25000 80TTA – Rs.10000 Total Income Rs.924500 Tax Rs.97400 + Rs.3896 Rs.101296 (R/o 101300) Q.13 Interest @ 8% on 20 lakh from 19th April 2017 to 31st March 2018 for 348 days comes to Rs.152548. This investment will have no income till 31st March 2018, so entire interest becomes expenditure which can be set off other interest income of Rs.600000/-Therefore GTI Rs.6,00,000– Rs.152548/- = Rs.447452 less deduction u/s 80C50,000 80D-30000 = 367452 (Rs.367450/-). Tax on this income 5872.5 less sec 87A 5872.5,NIL Q.16 Taxable Income = (Rs.860000 + 40% of 6,00,000) = Rs.11,00,000 Agri Income (60% of Rs.600000) = Rs.360000 Calculation of Tax 1. Tax on 1460000 = Rs.250500 2. Tax on (360000 + 250000) 610000 = Rs.34500 CFP Level – 2, Module – 2 Taxation - Workbook Page 78

3. Tax at (1) – Tax at (2) = Rs.216000 4. Tax payable = 216000 + 4% of EC 8640 = Rs.2168640 Q.17 A. Let out house (1/4) MV Rs.60000 FRV Rs.75000 SR Rs.90000 AR Rs.13000 PM GAV Rs.1,56,000 Less: Rs.3000 M. Tax (1/4) Rs.153000 NAV Less: Rs.45900 24(a) 30% of NAV Rs.50000 24 (b) Interest Rs.57100 Net Income B. Self-occupied (1/4) NAV Nil Less: 24(b) Rs.30000 – Rs.30000 Net income from HP (57100 – 30000) = Rs.27100 C. Business income 750000 Less: (a) M.Tax (1/2) 6000 (b) Land Rev. (1/2) 4000 (c) Ins. Prem (1/2) Rs.3000 (d) Interest (1/2) Rs.100000 (e) Depreciation (1/2) Rs.20000 Rs.617000 Total Income = 617000 + 27100 = Rs.644100 Q.18 Rs.12,100 (solution given below) Number of shares 500 Nos. CFP Level – 2, Module – 2 Taxation - Workbook Page 79

Purchase price 225 Rs. per share Sales price 460 Rs.per share Alternative-1 112,500 Rs.(500 x 225) Cost of acquisition Sales consideration 230,000 Rs.(500 x 460) Less: Indexed cost of acquisition Long term Capital Gain 1,62,562Rs.(500 x 225) x 289 / 200 Tax @ 20% Add Education Cess @ 4% (3% + 1%) 67,438 Rs.(230000-153000) Tax liability from capital gain Tax liability rounded off 13,488 Rs.(77,000 x 20%) 540Rs.(15400 x 3%) 14,028 14,030 Rs.(Round off) Alternative-2 230,000 Rs.(500 x 430) Sales consideration 112,500 Rs.(500 x 225) Less: cost of acquisition (without indexation) 117,500 Rs.(230000–112500) Long term capital gain 11,750 Rs.117500 x 10% Tax @ 10% 470Rs.11750 x 3% Add Education Cess @ 3% (2% +1%) 12,220 Rs.11750 + 353 Tax liability from capital gain 12,220 Rs.(Round off) Tax liability rounded off Note: An assessee can choose lower of the two alternatives for payment of capital gains tax liability. Q.19 A) Rs.57,600 (Solution given below) For 800 shares: 29,600 Rs.(800 x 37) Sale consideration (Date : 20th October 2019) 44,800 Rs.(800 x 56) Less: Cost of acquisition (Date : 10th May 2019) 15,200 Rs.(29,600–44,800) Short term capital loss (STCL) 4,000 Rs.(0.50x10)x805 Dividend received Yes Whether Section 94(7) is applicable For 200 shares: 4,000 Rs.(200 x 20) Sale consideration (Date 20th December 2019) Page 80 CFP Level – 2, Module – 2 Taxation - Workbook

Less: Cost of acquisition (Date : 10th May 2019) 11,200Rs.(200 x 56) Short term capital loss (STCL) (7,200) Rs.(4,000x11200) Dividend received 1,000 (0.50 x 10) x 805 Whether Section 94(7) is applicable No Computation of income from capital gain 76,000 Rs. LTCG on sale of gold (11,200) Rs.(-15200+4000) Less: STCL on sale of 800 shares (7,200) Rs. Less: STCL on sale of 200 shares 57,600 Net LTCG for AY 2020-21 (Rs.76000–11200–7200) Note: As per section 94(7), dividend stripping it applicable only if: 1) Shares or MF units are bought within 3 months of dividend record date 2) Shares are sold within 3 months of dividend record date/MF units are sold within 9 months of dividend record date 3) There is short term capital loss (STCL) on such sale 4) Dividend received is less than the STCL on sale If it is applicable, the amount of dividend received is deducted from the total STCL figure for shares/MF units sold. Balance will be either set-off against capital gains, if any, or carried forward to next assessment year. Q.20 Rs.3.81 lakh, by 30th September 2019 (Solution given below) Purchase cost Rs.290,000 Sale proceeds on 1st April 2019 Rs.1,012,000 Less :Expenses on transfer Rs.2,000 Net Sale proceeds Rs.1,010,000 (1012000–2000) Cll for 2007-08 129 Cll for 2019-20 289 Indexed cost of acquisition Rs.6,49,690 (290000 x 289/129) Long-term capital gain Rs.3,60,310 (1010000–649690) To be invested in bonds specified u/s 54EC by 30th September 2019 CFP Level – 2, Module – 2 Taxation - Workbook Page 81

Q.21 Rs.7,23,900 (Solution given below) Income under the head salaries: Basic 2,500,000 Rs.25,00,000 HRA 500,000 Rs.5,00,000 Less: Exempt (See note) Rs.(170,000) Other allowances Rs.3,00,000 Total income under the head salaries – Rs.31,30,000 (25,00,000+5,00,000 - 1,70,000+3,00,000) LESS SD u/s 16(ia) 50,000 Income from other sources (saving account upto Rs.10000 exempt U/s 80TTA)– Rs. 28960 Income from other sources (fixed deposits) Gross Total Income 3108960 Less: Deduction u/s 80C 38759 Insurance Premium PPF 100000 Less: Deduction u/s 80D (restricted to maximum limit of Rs.) Net Income 25000 Tax on net income 2945201 Upto₹2,50,000 Nil ₹2,50,001 to ₹5,00,000 @ 10% ₹12,500 ₹5,00,001 to ₹10,00,000 @ 20% (5,00,000–2,50,000)x5% ₹10,00,001 and above @ 30% ₹100,000 Tax Payable (10,00,000–5,00,000)x20% ₹583,560 CFP Level – 2, Module – 2 Taxation - Workbook (2945201–1000000)x30% ₹696,060 (12,500+1,00,000+598560) Page 82

Surcharge -₹ Education cess and higher education cess (2% + 1%) ₹27,842 (696060 x4%) Total tax payable ₹723902 Rounded off (696060+27842) ₹723,900 Note: House rent allowance exempted: Least of the following: Allowance received 500000 Rent paid 10% of salary (170000(35000*12)-10% of 25,0,000 50% of salary (25, 00,000*50%) 12, 50,000 Q.22 Original Year Units Amount Indexed Units 15-16 4000 CoA/CoA 16-17 373.831 80000 Nov. 16 8000 91024 Dividend 2x4000 21.4 17-18 425.394 8000 (289/254 x80000) Nov. 17 9622.42 9622.42 8758 Dividend 22.62 (ST) (289/264 x8000) 2.20x4373.831 11518.42 9622.42 Nov. 18 23.48 Dividend 18-19 490.551 11518.141 11518.141 2.4x4799.225 10580.76 (ST) 24.1 Nov. 19 19-20 439.035 10580.76 10580.76 Dividend (ST) 2x5290.382 LTCG: Selling price 4373.831 x 25.80 = 112844.83 Less ICOA (91024 +8758) 99782 LT (Gain) 13062.8 CFP Level – 2, Module – 2 Taxation - Workbook Page 83

STCG – Selling price 1354.98 x 25.80 = 34958.48 Less COA 31721.321 STCG 3237.159 Q.28 Total stay of Sept. Oct. Nov. Dec. Jan. Feb. Mar. 182 Rohit in PY 2019-20 2 29 30 31 31 28 31 Days So resident. But during 7 years stay less than 730 days. So RNOR. Q.29 X shall be RNOR as he is India for 59 days and 13 h Rs. during 19-20.Accordingly he will be taxable only for Indian income. Remittance of foreign income in India is not relevant. Q36. Ans. (a) 123750 (i) Beneficiary A - Share 40% (340000) up to 250000 no tax, tax on remaining income 5% 4500. (ii) Beneficiary B – Share 25% (212,500)x20% = 42500. Since the Tax after including Trust Income exceeds the previous slab by 80000, the income of B is 9,00,000 including trust income, so entire 2,12,500 falls in 20% bracket. (iii) Beneficiary C – Share 20% (170000)x20% = 34000 (iv) Beneficiary D – Share 15% (127500)x30% = 38,250 Total Tax (9000+42500+34000+38250) = 119250 Q38. (a) A Share 40% 340000 – Tax (4500) (b) B Share 25% 212500 100000x20% = 20000 =53750 112500x30% = 33750 (Because, The TI of B before Trust Income must be 900000/-. So 100000@20% and balance @30%) (c) Share 20% (70000x20%) = 34000 Share 15% (127500x30%)=38250 (4500+53750+34000+38250) = 130500+4% 3220 = 135720 CFP Level – 2, Module – 2 Taxation - Workbook Page 84

Q39. Retirement Fund 1.25 Cr, she must have commuted 1/3rdof that since this is maximum exempt (4166666). Uncommuted Amount 8333334, used for buying annuity deferred by one year so total fund available 8958333 (8333334+7.5% of 8333334). 25 year [email protected]% Amount 747589. So gross Income = 747589 Less 80C =150000 80D =50000 TI =547589 = (547590) Tax =19518 + Education Cess +780.7220298.72 20300 Q40. Share–since the shares are listed at the time of sale–12 months shall make them long term. But shares are transferred off market so exemption of 10(38) shall not be available. But Assesse has the option of paying 10% tax without the benefit of indexation or 20% with indexation. Shares sold on 1 Feb 18 Option A – 20@Indexation Right Shares Original shares long term = 1000 FVC 1975*1000 = 1975000 = 1975*40 = 790000 = 983000*289/184 = 1543951 = 98000*289/220 = 128736.36 = 1975000 - 1543951 = 431049 = Less = 661263.63 = 431049*20% = 86209.78 = *20%*668836 = 132252.72 Option-B B OPTION= 790000 – 98000 1975000 - 983000 = 99200 = 692000*10% CFP Level – 2, Module – 2 Taxation - Workbook Page 85

992000*10% = 99200 = 69200 Option A better Option B is better Q41. Total units purchased on 4thDecember 2016 = 3500 Dividend Received in November 2017 = 20% i.e. 35000*20% = 7000 Unit as purchased and reinvestment by dividend received = 7000/19.43 = 360.26 Total units as on November 2017 = 3500 + 360.26 = 3860.26 Dividend received in Nov 18 = 18% i.e. 3860.26*18% = Rs.6948.46 Unit as purchased and reinvestment by dividend received = 6948.46/20.91 = 332.30 Total units as on November 2018 = 3860.26+332.3 = 4192.56 Dividend received on Nov 2019 = 17% i.e. 4192.56*17% = Rs.7127.35 Units as purchased and reinvestment by dividend received = 7127.35/22.61 = 315.23 Total units as on November 2019 = 4192.56 + 315.26 = 4507.8 STCG Calculation of STCG (Units sold in the last year) = Sale Price – Purchase Price Sale Price = (360.26 + 332.3 + 315.23)*22.16 = 22333 Cost of Acquisition = 7000 + 6948.46 + 7127.35 = 21076 STCG = 1257 Long Term Capital Gain (LTCG) Original Units 3500*22.16 = 77560 289/264*61145 = 66935 LTCG = 10625 Q43. GAV– 6,00,000 Less: MT paid 1200 NAV 598800 less 24(a) 30% NAV – 179640 24(b) Int on Loan -179000 IHP- 240160 CFP Level – 2, Module – 2 Taxation - Workbook Page 86

Q44. HRA received 5500*12 = 66000 Exempt April to July nil August to March 5500*8 44000 Taxable 22000 Lowest of the following (i) 8000 pm (40% of 20000) (ii) 5500 pm least (iii) 10000 – 2000 = 8000 Q45. Units allotted on 26/03/17 80000/15.21 = 5259.67 – LT Units allotted on 28/2/18 5259.67*1.8 9467.45/17.16 = 551.71 – ST Units allotted on 28/2/19 [5259.67+551.71]*2.0 = 11622.76/19.10 = 608.52–ST Sold on 30/03/ 2020 = 118717 (A) LTCG 22.15*5259.67 0*289/264 = 87576 (B) Less Less: Indexed Cost LT = 31141 (B) STCG 1160.23*22.15 = 25699.09 (551.71+608.52) Less Less: Cost of Acquisition = 21090.21 (9467.45+11622.76) 4608.88 Q46. (C) Total shares held (1000 original + 500 Right)( 1500 Shares sold 1200 [1000 original + 200 Right] FiFo Capital gains Right Shares – ST Original – LT FVC (2825x200) 565000 FVC (2825*1000) 2825000 Less CoA (680*200) 136000 I-CoA 900000 CFP Level – 2, Module – 2 Taxation - Workbook Page 87

900x1000 429000 Exampt 1 LAKH) = 19,25,000 Taxable @15% u/s/ IIIA. So, total income 22,54,000, tax liability [429000-250000(BEL)] 179000*15%=26850 +10% ON 18,25,000=182500+4% Cess 8374= 217724 (217720) Q47. (a) If shares are unlisted they are long term if held for more than 24 months. Therefore original shares (1000) shall give a long term gain of Rs.1868750(2825000-900000*289/272) which will not be exempt u/s 10(38) as no STT is paid, but shall be taxable at 20%. Also STCG capital gains of Rs.4,29,000 shall not be taxable at special rate of 15% u/s 111A but at the normal rate. So, STCG Rs.4,29,000 LTCG Rs.1868750 GTI Rs.22,97,750 Deduction NIL TI Rs.22,97,750 Tax Rs.18,68,750x20% =Rs.3,73,750 Rs.4,29,000 Slab Rate =Rs.8,950 Rs.3,82,700 EC (4%) =Rs.15,308 Rs.3,98,008 (398010) Q48. (C) Since the money received as compensation is more than WDV, Excess shall be STCG. Q49. (d) LTC loss on shares is to be ignored if STT is paid. CFP Level – 2, Module – 2 Taxation - Workbook Page 88

Q50. (a) 94(7) Not applicable, so entire loss Rs.48,000 (Rs.2,40,000 – Rs.1,92,000) can be set off. Q51. (d) 94(7) applicable, so (Rs.48,000 – Rs.32,000) Rs.16,000 can be set off. Q52. (b) Income from salary Rs.9,78,000 - 50000 LESS SD Income from OS Rs.18,142 GTI Rs.9,46,142 80c – Rs.57,600 Rs.57,600 [EPF 12% OF Rs.4,80,000] 80TTBRs.50,000 Rs.18,142 TI Rs.870400) Tax Rs.84,080 (Senior Citizen) EC 4% Rs.3363.2 Rs.87443.2 Rs.87440 Q53. (c) Agricultural Income Non Agricultural Income Crop in Sikkim Rs.1,30,000 Crop in Nepal Rs.80,000 –Loss from Tea (60% is Agriculture–Rs.60,000 –Loss from Tea (40%) Rs.40,000 Rs.70,000 TI Rs.40,000 + Remuneration +Interest Rs.1,50,000 from Firm Net Agricultural Income Rs.2,20,000 No Partial Integration tax liability Nil Q54. (d) Business Income 8% of Rs.75 lakh =Rs.6,00,000 (44AD) Less: BF – Loss =Rs.70,000 Less: Unab Deb =Rs.60,000 Business Income =Rs.4,70,000 +LTCG =Rs.90,000 GTI =Rs.5,60,000 CFP Level – 2, Module – 2 Taxation - Workbook Page 89

80G =Rs.20,000 Net Income / TI =Rs.5,40,000 Q55. (c) First Transaction – LTCG FVC Rs.80,00,000 Less: EOT Rs.50,000 I-CoA Rs.35,00,000 LTCG Rs.44,50,000 Less: Exempt Rs.44,50,000 u/s 54B NIL Second Transaction: Not a capital asset – No Taxable gain Q56. (d) Equity – LTCG– 112A [Rs.55,000 – Rs.40,000] 15000Exempt Debt –STCG (Rs.60,000 – Rs.40,000) Rs.20,000 Taxable Normal rate So, Income OS Rs.10,81,670 STCG Rs.20,000 GTI/TI Rs.11,01,670 Tax Rs.1,43,001 EC–4% Rs.5720.04 Rs.1,48,720 (R/o) Q57. (a) TDS – Rend 194I – 10% of 5C = Rs.50,000 TDS – Winning – 30% of IL = Rs.30,000 = Rs.80,000 Q64. (d) Page 90 GAV Rs.5,00,000 Less: MT Rs.10,000 CFP Level – 2, Module – 2 Taxation - Workbook

NAV Rs.4,90,000 24(a) Rs.1,47,000 24(b) Rs.50,000 Rs.2,93,000 Q65. (c) Gift from employer in fully taxable as salary income. Gift from friend uptoRs.50,000 exempt so, Rs.8,86,000 + Rs.80,00,000 = Rs.9,66,000 Q66. (c) Unlisted shares – Long Term in 24 months, So 1400 shares shall be LT. FVC = Rs.11,90,000 (1400xRs.850) Less: Indexed CoA = Rs.2,97,500 – (Rs.2,80,000 x 289/272) = Rs.8,92,500 LTCG Taxable @20% 350 shares – Short Term 350 x (Rs.850 – Rs.220) = Rs.2,20,500 – Normal Rate Tax LTCG (Rs.8,92,500-Rs.29,500 Deficiency) Rs.8,63,000 x 20.6% = Rs.1,72,600 + 6904 = Rs.1,79,504 (179500) Q67. (c) Book profit Rs.9,80,000 (Profit business after all expenses except remuneration to partners) Less: Rs.2,70,000 Rs.6,78,000 Remuneration: Rs.4,08,000 =[Rs.6,78,000] On Rs.3,00,000 (90%) Rs.3,02,000 On Rs.6,80,000 (60%) 2,00,000 Business Income Rs.80,000 LTCG (E) Rs.5,82,000 LTCG (Gold) TI CFP Level – 2, Module – 2 Taxation - Workbook Page 91

Q70. (c) Salary Rs.4,90,000 Tax liability = Rs.18,000 LTCG Rs.90,000 Rs.90,000 x 20% = Rs.6,750 GTI Rs.5,80,000 Rs.3,85,000(Slab) = Rs.24,750 87A=12500 Less Cess 4% =12250 80CCD (I) =490 80CCD (IB) =12740 80D TI Rs.49,000 ]=Rs.1,05,000 Rs.31,000 Rs.25,000 Rs.4,75,000 Q71. (b) Since is not going for business / employment afresh. Both the basic conductions shall be examined. During PY 2019-20 he is India for 158 days and more than 365 days during four preceding year. He is Resident Additionally; he is also fulfilling both the additional conditions so he is RoR. Q72. (b) 60 days + 365 days – Resident also fulfills both additional conductions. Q74. (c) Professional Income Rs.24,00,000 (50% of 48 lakh) 90000 +LTG Equity ] +LTCG on Gold Rs.85,000 Rs.55,000 Rs.25,45,000 Less: STCL on Equity Rs.30,000 CFP Level – 2, Module – 2 Taxation - Workbook Page 92

Q75. (b) Computation of taxable income of NRI. LTG 9,50,000 Interest NRE - Exempt u/s10 (4) Interest NRO 93,000 Gross Total Income 10,43,000 Deduction Nil 10,43,000 Tax = 190000 LTCG 950000 x 20% = Nil Normal 190000 = 7600 H & Ecess 197600 Q76. (c) PIO coming to visit for less than 182 days- non resident. Q77. (a) PIO coming to visit for more than 182 days – Resident also in last 7 years 730 days in India and resident in 2 years out of 10 years. So Resident and ordinarily resident. Q78. (b) Somu, citizen of India coming to settle in India (Not visit) during the PY stay in India during 19- 20. December January February March 3 31 28 31 =93 days Stay in preceding 4 years = (1460 – 1080) 380 days So resident of India During last 7 years stay in India = (380 + 105 + 107 + 98) 690 days (Less than 730 days) CFP Level – 2, Module – 2 Taxation - Workbook Page 93

Q79. (b) So RNOR X a non resident liable to pay tax on India in income only. So interest received from Y is deemed to accrue in India as Y used the funds for a business in India. Q80. (c) Interest of 6,00,000 shall be Indian Income. Q81. (b) RNOR taxable for Indian income i.e. 9,00,000 only. Q82. (a) RNOR – LTCG – 9,00,000; deduction u/s 80C cannot be given. So taxabl3e income = 9,00,000 Tax (9,00,000 – 2,50,000 B.E.L) 6,50,000 x 20.8% = 135200. Q86. (d) Income from house property A Let out house GAV 144000 4000 Less 140000 M tax 282500 NAV 142500 (Loss) Less 24 (a) 30% of NAV 42000 24 )b) Interest 240500 - B Self Occupied Nil NAV Less 200000 (Maximum) 24 (b) Interest 242500 - 200000 Loss (342500) So Loss from house property Compilation of Total Income 6,30,000 Business Income CFP Level – 2, Module – 2 Taxation - Workbook Page 94

Loss from ‘H P’ (2,00,000) Gross Total Income 4,30,000 Less (Payment of Principal) → 80 C 112000 1,50,000 (Maximum) 80 CCD (1) 86000 [Maximum 20% of GTI] NPS 145000 80 CC D (1B) 50000 50000 Total Income 230000 * Loss up to 2,00,000 only can be set off in current year as per section 71 (B) [w.e.f. AY 18-19] Rest of Loss i.e. 142500 can be carried to subsequent years (8). ** NPS can contribution of 145000 can be taken u./s 80CCD (1B) up to 50000 and 80 CCCD (1) 86000 I e 20% of GTI ( Maximum). 80C and 80 CCD (1) cannot exceed 150000. Q87. (b) Long Term capital gain (Net) (9,00,000 – STCG (E) 802000 Less long term equity Loss from HP ( 360000) Maximum 300000 GTI 200000 80C 302000 Taxable Income Not Available 302000 Tax @ 20.8 on (302000 – 250000 ) = 10816 Less 87A = 10816 Tax = nil Q88. (b) = 1021000 (985000 + 17000 + 19000) Q89. (b) Page 95 CFP Level – 2, Module – 2 Taxation - Workbook

Basic salary 72,00,000 ESOP’s (2100 – 800) x 300 3,90,000 Income from salary 75,90,000 Less SD u/s 16(ia) Div. from for comp 50,000 GTI 8,5000 80CC D(1) 7,62,5000 80CC D (1B) 50000 150000 80G Nil 2,00,000 Total Income = 74,25,000 Tax on 74,25,000 20,40,000 Add surcharge 10% 2,04,000 22,44,000 Add H&EC 4% 89,760 23,33,760 Q90. (d) 38200 WDA of block on 01-04- PY 600000 Add actual cost of new medicine 450000 Less “Money” received as Insurance Comp. 188200 28230 WDA on 31/03 PY Depreciation @15% CFP Level – 2, Module – 2 Taxation - Workbook Page 96