MBA193F3

USN
RAMAIAH
Institute of Technology
(Autonomous Institute, Affiliated to VTU)
(Approved by AICTE, New Delhi & Govt. of Karnataka) Accredited by NBA & NAAC with ‘A’ Grade

SEMESTER END EXAMINATIONS JANUARY – FEBRUARY 2021

Program : Master of Business Administration Semester : III
Course Name : Tax Management Max. Marks : 100
Course Code : MBA193F3 Duration : 3 Hrs

Instructions to the Candidates:

 Answer one full question from each unit.
 UNIT-V, Case Study is Compulsory.

UNIT- I
1. a) What is direct taxes code? CO1 (03)
b) Explain Tax planning, Tax evasion and Tax Management. CO1 (07)
c) The Government of Japan appoints X, an Indian citizen, as senior CO1 (10)
taxation officer. He leaves India, for the first time, on Sepember3,
2018 for joining his duties in Japan. During the previous year 2019-20,
he comes to India on November 2, 2019 for 200 days. Determine the
residential status of X for the assessment years 2019-20 and 2020-21.

2. a) Define Gross Total Income. CO1 (03)

b) Explain any seven characteristics of Income. CO1 (07)
c) X (45 years) is an Indian citizen. He leaves India for the first time on CO1 (10)
July 3, 2019. He comes back on April 5, 2020. He gives the following
information regarding his income pertaining to the assessment year
2020-21.
Rs.
 Salary from an Indian company for rendering
service in India 9,45,000
 Royalty from the Government of India (received
outside India) 2,00,000
 Technical fees from a foreign company (received
outside India and technical fees pertain to a
project of the foreign company situated in India) 9,28,000
 Technical fees from an Indian company (received
outside India and technical fees pertain to a
project of the Indian company situated outside
India) 11,24,000
 Dividend from an Indian company (received in
India) 4,00,000
 Dividend from a foreign company (received
outside India) 3,10,000
From the information given above find out the taxable income of X for
the assessment year 2020-21 in the following two situations
 Situation 1 – X leaves India on July 3, 2019 to meet his friends
and relatives.
 Situation 2 – X leaves India on July 3, 2019 for the purpose of
employment.

UNIT – II
3. a) What is meant by commuted pension and uncommuted pension? CO2 (03)

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b) Explain Income tax provisions in respect of taxability of Leave salary. CO2 (07)

c) X a marketing specialist of Madras is working with two concerns P Co CO2 (10)

and Q Co. He retires from P Co on June 30, 2012 and receives Rs
29000 as gratuity out of which Rs 28000 is exempt from tax under
section 10(10) (iii). He retires from Q Co on December 2, 2019 after
6 years and 11 months’ service and receives Rs 370000 as gratuity.
Average Basic salary drawn from Q Co for preceding 10 months ending
November 30, 2019 is Rs 22000. Besides he has received Rs 1000 per
month as dearness allowance which forms part of salary for the
purpose of computation of retirement benefit and 5 per cent
commission on turnover achieved by him. Total turnover achieved by
him during the period of 10 months ending November 30, 2019 is
Rs 670000. Determine the amount of gratuity taxable for the
assessment year 2020-21.

4. a) State when depreciation is disallowed under section 32. CO2 (03)

b) Explain the expenses disallowed to a Businessman in computing CO2 (07)
profits.
c) X ltd a sugar manufacturing company, owns the following assets on April 1, CO2 (10)
2019:
Assets Written down value on Rate of depreciation
April 1, 2019 (%)
Rs.
Plant A 3,15,000 15
Plant B 16,20,000 15
Plant C 8,05,000 15
Plant D 97,000 40
On March 25, 2020, it sells plant D for Rs.3,05,000. On November 10, 2019, it
acquires the following assets:
Assets cost (Rs) Rate of depreciation
(%)
Plant E (second-hand) 5,000 40
Plant F (foreign made car) 3,80,000 15
Plant G (Indian car) 75,000 15
Building A 4,85,000 10
Know-how 16,00,000 25
Plant H (office telephone system) 15,000 40
Plant I (office machine) 55,000 100
Computer (second hand) 46,000 60
Determine the amount of depreciation admissible for the assessment
year 2019-20.

UNIT – III
5. a) Define “partnership”. CO3 (03)
b) Explain the conditions for claiming deduction of interest to partners CO3 (07)
under section 40(b).
c) P, Q & R are partners in a firm, sharing profits and losses in the proportion of CO3 (10)
3:3:2 respectively. The profit and loss account for the year ended 31.3.2020 is as
follows:
Rs. Rs.
To sundry trade 2,00,000 By gross profit b/d 8,20,000
expenses By interest on Govt.
To interest on capital Securities (gross) 16,000
at 24%
P - 24,000
Q – 18,000
R – 12,000 54,000
To rent to Q 48,000
To salary to Q 3,45,000
To commission to R 1,15,000
To net profit 74,000
8,36,000 8,36,000
Compute the total income of the firm and taxable income of the three

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partners in the firm. Q & R are working partner and remuneration is
given to them as per partnership deed.

6. a) What is meant by Minimum Alternative Tax? CO3 (03)

b) Explain the determination of Book profit under section 115JB. CO3 (07)
c) ABC ltd furnishes the following particulars. Compute the total taxable income of CO3 (10)
the company for the assessment year 2020-21 (accounting year ended on March
31, 2020).
Rs.
Net income which includes penal interest of Rs. 31,000 paid (in lakh)
for delayed payment of sales tax and interest of Rs.2 lakhs
paid on fixed deposits from public subject to the following
adjustments: 31.34
 Depreciation which included Rs.0.50 lakh for guest house
building 1.65
 Unabsorbed depreciation of the assessment year 2012-13 7.35
 Unabsorbed business loss brought forward 24.48
Short term capital gain on sale of shares (trade investment) 0.99
Long-term capital gain on sale of equity shares on may 10,
2019(computed under section 48) 2.52
Brought forward short-term capital loss 0.45
Brought forward long-term capital loss of the assessment
year 2015-16 on sale of shares 0.50
Gross interest from Government securities 1.27
Bank commission for realizing interest. 0.07

UNIT – IV
7. a) What is meant by Income tax E-filing? CO4 (03)
b) Explain the mode of Submission of returns for the Assessment Year CO4 (07)
2019-20.
c) Who has to submit return of income on voluntary basis as a statutory CO4 (10)
obligation? Discuss.

8. a) What is meant by advance payment of tax? CO4 (03)

b) Who has to deduct tax at source? Explain. CO4 (07)
c) What is meant by certificate of tax deduction/collection? Discuss its CO4 (10)
nature.

UNIT – V
9. Case Study: (Compulsory)
Mrs. X (age:28 years), a resident Individual, is owner of a CO5 (20)
departmental store at Bengaluru and income is derived from different
agencies of manufacturing companies. She requests you to compute
her total income and tax liability of the assessment year 2020-21 on
the basis of the following profit and loss account for the year ending
March 31, 2020:
Rs. Rs.
Opening stock 12,00,000 Sales 80,81,000
Purchases 41,79,000 Closing stock 9,00,000
Sales and wages 4,90,000
Rent and rates 18,000
Household expenses 50,000
Commission 67,000
Income tax for 2019-20 10,000
Advertisement 14,000
Postage and telegrams 9,000
Interest on own capital 55,000
Reserve for future losses 10,000
Depreciation (furniture) 9,000
Net profit 28,70,000
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89,81,000 89,81,000

The following additional particulars are furnished:

i) Stock of goods at the opening as well as the closing day of the
accounting year had consistently been valued at 20% below the
cost price.
ii) The amount of household expenses includes a contribution of
Rs. 4,000 towards public provident fund
iii) Sales include a sum of Rs. 20,000 representing goods
withdrawn for the use of Mrs. X’s family members. These goods
were purchased at a cost of Rs. 24,000. Market value of these
goods is Rs. 27,000.
iv) Depreciation according to the Income-tax rules works out to
Rs. 9,200.
v) Salary and wages include Rs.40,000 being entertainment
allowance paid to employees.

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