Mock Test Paper - Series I: July, 2024

Date of Paper: 29th July, 2024

Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP - I

PAPER – 1 : ADVANCED ACCOUNTING
Time Allowed – 3 Hours Maximum Marks – 100
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case Scenario based MCQs (30 Marks)
Part I is compulsory.
Case Scenario
1. Super Ltd., a manufacturing company, has the following summarized Balance
Sheet as of March 31, 2024:
Equity Shares of ` 10 each fully paid up: ` 17,00,000
Reserves & Surplus:
Revenue Reserve: ` 23,50,000
Securities Premium: ` 2,50,000
Profit & Loss Account: ` 2,00,000
Infrastructure Development Reserve: ` 1,50,000
Secured Loan:
9% Debentures: ` 38,00,000
Unsecured Loan: ` 8,50,000
Property, Plant & Equipment: ` 58,50,000
Current Assets: ` 34,50,000
Super Ltd. plans to buy back 35,000 equity shares of ` 10 each fully paid up
on April 1, 2024, at ` 30 per share. The buyback is authorized by its articles,
and necessary resolutions have been passed. The payment for the buyback
will be made using the company's bank balance, which is part of its current
assets.
Answer the following questions based on the above information:
(a) As per The Companies Act, 2013 under Section 68 (2) the buy-back of
shares in any financial year must not exceed
i 20% of its total paid-up capital and free reserves
ii 25% of its total paid-up capital and free reserves
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 iii 25% of its total paid-up capital
iv 20% of its total paid-up capital
(b) How many shares can Super Ltd. buy back according to the Shares
Outstanding Test?
(i) 35,000 shares
(ii) 42,500 shares
(iii) 37,500 shares
(iv) 54,375 shares
(c) What is the maximum number of shares that can be bought back
according to the Resources Test?
(i) 35,000 shares
(ii) 42,500 shares
(iii) 37,500 shares
(iv) 54,375 shares
(d) According to the Debt Equity Ratio Test, what is the maximum number
of shares that can be bought back?
(i) 35,000 shares
(ii) 42,500 shares
(iii) 37,500 shares
(iv) 54,375 shares
Multiple Choice Questions [4 MCQs of 2 Marks each: Total 8 Marks]
2. Venus Limited received a parcel of land at no cost from the government for
the purpose of developing a factory in an outlying area. The land is valued at
` 75 lakhs, while the nominal value is ` 10 lakhs. Additionally, the company
received a government grant of ` 30 lakhs, which represents 25% of the total
investment needed for the factory development. Furthermore, the company
received ` 15 lakhs with the stipulation that it be used to purchase machinery.
There is no expectation from the government for the repayment of these
grants.
Answer the following questions based on the above information:
(a) The land received from Government, free of cost should be presented
at:
(i) ` 75 Lakhs
(ii) ` 30 Lakhs
(iii) ` 10 Lakhs
(iv) ` 45 Lakhs
(b) As per AS 12, how the Government Grant of ` 30 Lakhs should be
presented:
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 (i) It should be recognised in the profit and loss statement as per the
related cost.
(ii) It will be treated as capital reserve.
(iii) It will be treated as deferred income.
(iv) It will not be recognised in the financial statements.
(c) As per AS 12, how the Government Grant of ` 15 Lakhs with a condition
to purchase machinery may be presented as:
(i) Capital Reserve
(ii) Shareholders Fund
(iii) Deferred Income
(iv) Income in statement of profit and loss as received.
(d) Which of the above grants are required to be recognised in the statement
of profit and loss on a systematic and rational basis over the useful life
of the asset:
(i) Land received as Grant
(ii) Government Grant of ` 30 Lakhs
(iii) Government Grant of ` 15 Lakhs with a condition to purchase
machinery
(iv) Noe of the above
Multiple Choice Questions [4 MCQs of 2 Marks each: Total 8 Marks]
3. Axis limited is a manufacturing company. It purchased a machinery costing
` 10 Lakhs in April 2023. It paid ` 4 lakhs upfront and paid the remaining
` 6,00,000 as deferred payment by paying instalment of ` 1,05,000 for the
next 6 months. During the year, the Company sold a land which was classified
as its ‘property, plant and equipment’ for ` 25,00,000 and paid ` 1,00,000 as
income tax as long term capital gain on such sale. During the year, the
Company also received income tax refund along with interest.
(a) As per the requirements of AS 3, ‘Cash Flow Statements’, how the
amount for purchase of machinery should be presented:
(i) ` 10 lakhs as ‘Cash flows from Investing Activities’ and ` 30,000
will simply be booked in profit and loss with no presentation if Cash
Flow Statement.
(ii) ` 10.30 lakhs as ‘Cash flows from Investing Activities’ as entire
amount is spend on purchase of machinery.
(iii) ` 10 lakhs as ‘Cash flows from Investing Activities’ and ` 30,000 as
‘Cash flows from Financing Activities’.
(iv) ` 10.30 lakhs as ‘Cash flows from Financing Activities’ as the
machinery has been purchased on finance.

3
 (b) At what amount, the machinery should be recognised in the financial
statements:
(i) ` 400,000
(ii) ` 10,30,000
(iii) ` 600,000
(iv) ` 10,00,000
(c) How should the income tax paid on sale of land should be disclosed in
the Cash Flows Statement:
(i) Cash flows from Operating Activities
(ii) Cash flows from Investing Activities
(iii) Cash flows from Financing Activities
(iv) No disclosure in Cash Flow Statement
(d) How should the interest on income tax refunds should be disclosed in
the Cash Flows Statement:
(i) Cash flows from Operating Activities
(ii) Cash flows from Investing Activities
(iii) Cash flows from Financing Activities
(iv) No disclosure in Cash Flow Statement
Multiple Choice Questions [4 MCQs of 2 Marks each: Total8 Marks]
4. Gyan Ltd. borrowed ` 10 crore for construction of a plant at the rate of 10%
per annum (interest paid annually ` 1 crore). The construction was being
carried on and out of the borrowings, ` 4 crore was temporarily placed in a
fixed deposit at the rate of 6% per annum (interest earned ` 24 lakh). At the
year end, how much cost of borrowing Gyan Limited will capitalise?
(a) Interest paid on ` 10 crore i.e. ` 1 crore
(b) Interest paid on ` 6 crore as only this amount was utilized i.e. ` 60 Lakh.
(c) Interest paid less income on temporary investment i.e. ` 76 lakh
(d) Nothing will be capitalised. (2 Marks)
5. Cost of current investment acquired was ` 1,00,000 but the fair value was
` 80,000. The Investment was recorded at ` 80,000. Now the fair value of
Investment is Rs 1,20,000. At what value should it be recorded and how much
gain will be credited to profit and loss account.
(a) No change is required and it will continue at ` 80,000
(b) Current investment will be recorded at ` 1,00,000 and gain of ` 20,000
will be credited to profit and loss account.
(c) Current investment will be recorded at ` 1,20,000 and gain of ` 40,000
will be credited to profit and loss account.

4
 (d) Current investment will be recorded at ` 1,20,000 but no gain will be
credited to profit and loss account. (2 Marks)
6. In determining the cost of inventories, it is appropriate to exclude certain costs
and recognise them as expenses in the period in which they are incurred.
Which of the following is not an examples of such costs:
(a) Abnormal amounts of wasted materials, labour, or other production
costs;
(b) Storage costs, unless the production process requires such storage;
(c) Raw Material cost
(d) Selling and distribution costs. (2 Marks)

PART II – Descriptive Questions (70 Marks)

Question No.1 is compulsory
Answer any four questions from the remaining five questions.
Wherever necessary, suitable assumptions may be made and indicated in answer
by the candidates. Working Notes should form part of the answer.
1. (a) On 15th June, 2024, Y limited wants to re-classify its investments in
accordance with AS 13 (revised). Decide and state the amount of
transfer, based on the following information:
(1) A portion of long term investments purchased on 1st March, 2023
are to be re-classified as current investments. The original cost of
these investments was ` 14 lakhs but had been written down by
` 2 lakhs (to recognise 'other than temporary' decline in value). The
market value of these investments on 15th June, 2024 was ` 11
lakhs.
(2) Another portion of long term investments purchased on
15th January, 2023 are to be re-classified as current investments.
The original cost of these investments was ` 7 lakhs but had been
written down to ` 5 lakhs (to recognize 'other than temporary'
decline in value). The fair value of these investments on 15th June,
2024 was ` 4.5 lakhs.
(3) A portion of current investments purchased on 15th March, 2024 for
` 7 lakhs are to be re-classified as long term investments, as the
company has decided to retain them. The market value of these
investments on 31st March, 2024 was ` 6 lakhs and fair value on
15th June 2024 was ` 8.5 lakhs.
(4) Another portion of current investments purchased on 7th December,
2023 for ` 4 lakhs are to be re-classified as long term investments.
The market value of these investments was:
on 31st March, 2024 ` 3.5 lakhs
on 15th June, 2024 ` 3.8 lakhs (7 Marks)
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 (b) The financial statements of PQ Ltd. for the year 2023-24 approved by
the Board of Directors on 15th July, 2024. The following information was
provided:
(i) A suit against the company's advertisement was filed by a party on
20th April, 2024, claiming damages of ` 25 lakhs.
(ii) The terms and conditions for acquisition of business of another
company have been decided by March, 2024. But the financial
resources were arranged in April, 2024 and amount invested was
` 50 lakhs.
(iii) Theft of cash of ` 5 lakhs by the cashier on 31st March, 2024 but
was detected on 16th July, 2024.
(iv) Company sent a proposal to sell an immovable property for ` 40
lakhs in March, 2024. The book value of the property was ` 30 lakhs
on 31st March, 2024. However, the deed was registered on
15th April, 2024.
(v) A, major fire has damaged the assets in a factory on 5th April, 2024.
However, the assets are fully insured.
With reference to AS-4 "Contingencies and events occurring after the
balance sheet date", state whether the above mentioned events will be
treated as contingencies, adjusting events or non-adjusting events
occurring after the balance sheet date. (7 Marks)
2. From the following particulars furnished by the Prashant Ltd., prepare the
Balance Sheet as at 31st March, 2024 as required by Schedule III of the
Companies Act, 2013:
Particulars Debit (`) Credit (`)
Equity share capital (face value of ` 10 each) 15,00,000
Calls-in-arrears 5,000
Land 5,50,000
Building 4,85,000
Plant & machinery 5,60,000
General reserve 2,70,000
Loan from State Financial Corporation 2,10,000
Inventories 3,15,000
Provision for taxation 72,000
Trade receivables 2,95,000
Short-term loans & advances 58,500
Profit & loss account 1,06,800
Cash in hand 37,300
Cash at bank 2,85,000
Unsecured loans 1,65,000

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 Trade payables 2,67,000
Total 25,90,800 25,90,800
The following additional information is also provided:
(1) 10,000 equity shares were issued for consideration other than cash.
(2) Trade receivables of ` 55,000 are due for more than six months.
(3) The cost of building and plant & machinery is ` 5,50,000 and ` 6,25,000
respectively.
(4) The loan from State Financial Corporation is secured by hypothecation
of plant & machinery. The balance of ` 2,10,000 in this account is
inclusive of ` 10,000 for interest accrued but not due.
(5) Balance at Bank included ` 15,000 with Aakash Bank Ltd., which is not
a scheduled bank. (14 Marks)
3. (a) The following information was provided by PQR Ltd. for the year ended
31st March, 2024 :
(1) Gross Profit Ratio was 25% for the year, which amounts to
` 3,75,000.
(2) Company sold goods for cash only.
(3) Opening inventory was lesser than closing inventory by ` 25,000.
(4) Wages paid during the year ` 5,55,000.
(5) Office expenses paid during the year ` 35,000.
(6) Selling expenses paid during the year ` 15,000.
(7) Dividend paid during the year ` 40,000.
(8) Bank Loan repaid during the year ` 2,05,000 (included interest
` 5,000)
(9) Trade Payables on 31st March, 2023 were ` 50,000 and on
31st March, 2024 were ` 35,000.
(10) Amount paid to Trade payables during the year ` 6,10,000
(11) Income Tax paid during the year amounts to ` 55,000
(Provision for taxation as on 31st March, 2024 ` 30,000)·
(12) Investments of ` 8,20,000 sold during the year at a profit of
` 20,000.
(13) Depreciation on furniture amounts to ` 40,000.
(14) Depreciation on other PPE amounts to ` 20,000.
(15) Plant and Machinery purchased on 15th November, 2023 for
` 3,50,000.
(16) On 31st March, 2024 ` 2,00,000, 7% Debentures were issued at
face value in an exchange for a plant.

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 (17) Cash and Cash equivalents on 31st March, 2023 ` 2,25,000.
(i) Prepare cash flow statement for the year ended 31st March, 2024,
using direct method.
(ii) Calculate cash flow from operating activities, using indirect method.
(10 Marks)
(b) Wow Ltd. agreed to takeover Wonder Ltd. on 1st April, 2024. The terms
and conditions of takeover were as follows:
(i) Wow Ltd. issued 56,000 equity shares of ` 100 each at a premium
of ` 15 per share to the equity shareholders of Wonder Ltd.
(ii) Cash payment of ` 39,000 was made to equity shareholders of
Wonder Ltd.
(iii) 24,000 fully paid preference shares of ` 50 each issued at par to
discharge the preference shareholders of Wonder Ltd.
(iv) The 8% Debentures of Wonder Ltd. (` 78,000) converted into
equivalent value of 9% debentures in Wow Ltd.
(v) The actual cost of liquidation of Wonder Ltd. was ` 23,000.
Liquidation cost is to be reimbursed by Wow Ltd. to the extent of
` 15,000.
You are required to:
(1) Calculate the amount of purchase consideration as per the
provisions of AS 14 and
(2) Pass Journal Entry relating to discharge of purchase consideration
in books of Wow Ltd. (4 Marks)
4. The following are the summarized Balance Sheet of VT Ltd. and MG Ltd. as
on 31st March, 2024:
Particulars VT Ltd. (`) MG Ltd. (`)
Equity and Liabilities
Equity Shares of ` 10 each 12,00,000 6,00,000
10% Preference Shares of ` 100 each 4,00,000 2,00,000
Reserve and Surplus 6,00,000 4,00,000
12% Debentures 4,00,000 3,00,000
Trade Payables 5,00,000 3,00,000
Total 31,00,000 18,00,000
Assets
PPE 14,00,000 5,00,000
Investment 1,60,000 1,60,000
Inventory 4,80,000 6,40,000
Trade Receivables 8,40,000 4,20,000
Cash at Bank 2,20,000 80,000
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 Total 31,00,000 18,00,000
Details of Trade receivables and trade payables are as under:
VT Ltd. (`) MG Ltd. (`)
Trade Receivable
Debtors 7,20,000 3,80,000
Bills Receivable 1,20,000 40,000
8,40,000 4,20,000
Trade Payables
Sundry Creditors 4,40,000 2,50,000
Bills Payable 60,000 50,000
5,00,000 3,00,000
PPE of both the companies are to be revalued at 15% above book value.
Inventory in Trade and Debtors are taken over at 5% lesser than their book
value.
Both the companies are to pay 10% equity dividend, Preference dividend
having been already paid.
After the above transactions are given effect to, VT Ltd. will absorb MG Ltd.
on the following terms:
(i) VT Ltd. will issue 16 Equity Shares of ` 10 each at par against 12 Shares
of MG Ltd.
(ii) 10% Preference Shareholders of MG Ltd. will be paid at 10% discount
by issue of 10% Preference Shares of ` 100 each, at par, in VT. Ltd.
(iii) 12% Debenture holders of MG Ltd. are to be paid at 8% premium, by
12% Debentures in VT Ltd., issued at a discount of 10%.
(iv) ` 60,000 is to be paid by VT Ltd. to MG Ltd. for Liquidation expenses.
(v) Sundry Debtors of MG Ltd. includes ` 20,000 due from VT Ltd.
You are required to prepare :
(1) Journal entries in the books of VT Ltd.
(2) Statement of consideration payable by VT Ltd. (14 Marks)
5. From the following information of Kedar Ltd. and its subsidiary Vijay Ltd. at
31st March, 2024, prepare a consolidated balance sheet as at that date,
having regard to the following:
(i) Reserves and Profit and Loss Account of Vijay Ltd. stood at ` 62,500
and ` 37,500 respectively on the date of acquisition of its 80% shares by
Kedar Ltd. on 1st April, 2023.
(ii) Machinery (Book-value ` 2,50,000) and Furniture (Book value ` 50,000)
of Vijay Ltd. were revalued at ` 3,75,000 and ` 37,500 respectively on
1st April, 2023 for the purpose of fixing the price of its shares. [Rates of
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 depreciation computed on the basis of useful lives: Machinery 10%,
Furniture 15%.]
Kedar Ltd. and VIJAY Ltd. give the following information as on
31st March, 2024
Kedar Ltd. VIJAY Ltd.
(`) (`)
Equity and Liabilities: Shareholders’ funds
Share Capital: Shares of ` 100 each 15,00,000 2,50,000
Reserves 5,00,000 1,87,500
Profit and Loss Account 2,50,000 62,500
Trade Payables 3,75,000 1,42,500
PPE
Machinery 7,50,000 2,25,000
Furniture 3,75,000 42,500
Other non-current assets 11,00,000 3,75,000
Non-current Investments
Shares in Vijay Ltd.:2,000 shares at `
4,00,000 —
200 each

(14 Marks)
6. (a) Distinguish between Amalgamation, Absorption and External
Reconstruction of Company. (4 Marks)
Or
Summarised Balance Sheet of Cloth Trader as on 31.03.2023 is given
below:
Liabilities Amount Assets Amount
(`) (`)
Proprietor's Capital 3,00,000 Fixed Assets 3,60,000
Profit & Loss Account 1,25,000 Closing Stock 1,50,000
10% Loan Account 2,10,000 Sundry Debtors 1,00,000
Sundry Creditors 50,000 Deferred Expenses 50,000
Cash & Bank 25,000
6,85,000 6,85,000

10
 Additional Information is as follows :
(1) The remaining life of fixed assets is 8 years. The pattern of use of
the asset is even. The net realisable value of fixed assets on
31.03.2024 was ` 3,25,000.
(2) Purchases and Sales in 2023-24 amounted to ` 22,50,000 and
` 27,50,000 respectively.
(3) The cost and net realizable value of stock on 31.03.2024 were
` 2,00,000 and ` 2,50,000 respectively.
(4) Expenses for the year amounted to ` 78,000.
(5) Deferred Expenses are amortized equally over 5 years.
(6) Sundry Debtors on 31.03.2024 are ` 1,50,000 of which ` 5,000 is
doubtful. Collection of another ` 25,000 depends on successful
re-installation of certain product supplied to the customer;
(7) Closing Sundry Creditors are ` 75,000, likely to be settled at 10%
discount.
(8) Cash balance as on 31.03.2024 is ` 4,22,000.
(9) There is an early repayment penalty for the loan of ` 25,000.
You are required to prepare Profit & Loss Account for the year 2023-24
(Not assuming going concern). (4 Marks)
(b) Synergy Ltd., is in engineering industry. The company received an
actuarial valuation for the first time for its pension scheme which
revealed a surplus of ` 6 lakhs. It wants to spread the same over the
next 2 years by reducing the annual contribution to ` 2 lakhs instead of
` 5 lakhs. The average remaining life of the employee is estimated to
be 6 years.
You are required to advise the company. (4 Marks)
(c) Karan Enterprises having its Head Office in Mangalore, Karnataka has a
branch in Greenville, USA. Following is the trial balance of Branch as at
31-3-2024:
Particulars Amount ($) Amount ($)
Dr. Cr.
Fixed assets 8,000
Opening inventory 800
Cash 700
Goods received from Head Office 2,800
Sales 24,050
Purchases 11,800
Expenses 1,800
Remittance to head office 2,450
Head office account 4,300
28,350 28,350
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(i) Fixed assets were purchased on 1st April, 2020.
(ii) Depreciation at 10% p.a. is to be charged on fixed assets on
straight line method. ·
(iii) Closing inventory at branch is $ 700 as on 31-3-2024.
(iv) Goods received from Head Office (HO) were recorded at ` 1,85,500
in HO books.
(v) Remittances to HO were recorded at ` 1,62,000 in HO books.
(vi) HO account is recorded in HO books at ` 2,84,500.
(vii) Exchange rates of US Dollar at different dates can be taken as :
1-4-2020 ` 63
1-4-2023 ` 65 and
31-3-2024 ` 67
Prepare the trial balance after been converted into Indian rupees in
accordance with AS-11. (6 Marks)

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 Mock Test Paper - Series I: July, 2024
Date of Paper: 29th July, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP - I

PAPER – 1 : ADVANCED ACCOUNTING
ANSWERS
Case Scenario
1. (a) (ii)
(b) (ii)
(c) (iii)
d) (iv)
2. (a) (iii)
(b) (ii)
(c) (iii)
(d) (iii)
3. (a) (iii)
(b) (iv)
(c) (ii)
(d) (ii)
4. (c)
5. (b)
6. (c)

PART II – Descriptive Questions (70 Marks)

1. (a) As per AS 13 ‘Accounting for Investments’, where long-term investments

are reclassified as current investments, transfers are made at the lower
of cost and carrying amount at the date of transfer; and where
investments are reclassified from current to long term, transfers are
made at lower of cost and fair value on the date of transfer.
Accordingly, the re-classification will be done on the following basis:
(i) In this case, carrying amount of investment on the date of transfer
is less than the cost; hence this re-classified current investment
should be carried at ` 12 lakhs in the books.

1
 (ii) In this case also, carrying amount of investment on the date of
transfer is less than the cost; hence this re-classified current
investment should be carried at ` 5 lakhs in the books.
(iii) In this case, reclassification of current investment into long-term
investments will be made at ` 7 lakhs as cost is less than its fair
value of ` 8.5 lakhs on the date of transfer.
(iv) In this case, market value (considered as fair vale) is ` 3.8 lakhs on
the date of transfer which is lower than the cost of ` 4 lakhs. The
reclassification of current investment into long-term investments
will be made at ` 3.8 lakhs.
(b) (i) Suit filed against the company is a contingent liability but it was not
existing as on balance sheet date as the suit was filed on 20th April
after the balance Sheet date. As per AS 4, 'Contingencies' used in
the Standard is restricted to conditions or situations at the balance
sheet date, the financial effect of which is to be determined by
future events which may or may not occur. Hence, it will have no
effect on financial statements and will be a non-adjusting event.
(ii) In the given case, terms and conditions for acquisition of business
were finalised and carried out before the closure of the books of
accounts but transaction for payment of financial resources was
effected in April, 2024. This is clearly an event occuring after the
balance sheet date. Hence, necessary adjustment to assets and
liabilities for acquisition of business is necessary in the financial
statements for the year ended 31st March 2024.
(iii) Only those significant events which occur between the balance
sheet date and the date on which the financial statements are
approved, may indicate the need for adjustment to assets and
liabilities existing on the balance sheet date or may require
disclosure. In the given case, theft of cash was detected on 16th
July, 2024 after approval of financial statements by the Board of
Directors, hence no treatment is required.
(iv) Adjustments to assets and liabilities are not appropriate for events
occurring after the balance sheet date, if such events do not relate
to conditions existing at the balance sheet date. In the given case,
sale of immovable property was under proposal stage (negotiations
also not started) on the balance sheet date. Therefore, no
adjustment to assets for sale of immovable property is required in
the financial statements for the year ended 31st March, 2024.
(v) The condition of fire occurrence was not existing on the balance
sheet date. Only the disclosure regarding event of fire and loss
being completely insured may be given in the report of approving
authority.

2
2. Prashant Ltd.
Balance Sheet as on 31st March, 2024
Particulars Notes `
Equity and Liabilities
1 Shareholders' funds
a Share capital 1 14,95,000
b Reserves and Surplus 2 3,76,800
2 Non-current liabilities
Long-term borrowings 3 3,65,000
3 Current liabilities
a Trade Payables 2,67,000
b Other current liabilities 4 10,000
c Short-term provisions 5 72,000
Total 25,85,800
Assets
1 Non-current assets
Property, Plant and Equipment 6 15,95,000
2 Current assets
a Inventories 3,15,000
b Trade receivables 7 2,95,000
c Cash and bank balances 8 3,22,300
d Short-term loans and advances 58,500
Total 25,85,800
Notes to accounts
`
1 Share Capital
Equity share capital
Issued & subscribed & fully paid up
1,50,000 Equity Shares of ` 10 each
(of the above 10,000 shares have been
issued for consideration other than cash) 15,00,000
Less: Calls in arrears (5,000) 14,95,000
2 Reserves and Surplus
General Reserve 2,70,000
Profit & Loss balance 1,06,800
Total 3,76,800

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 3 Long-term borrowings
Secured
Loan from State Financial Corporation 2,00,000
(2,10,000-10,000)
(Secured by hypothecation of Plant and
Machinery)
Unsecured Loan 1,65,000
Total 3,65,000
4 Other current liabilities
Interest accrued but not due on loans (SFC) 10,000
5 Short-term provisions
Provision for taxation 72,000
6 Property, Plant & Equipment
Land 5,50,000
Building 5,50,000
Less: Depreciation(b.f.) (65,000) 4,85,000
Plant & Machinery 6,25,000
Less: Depreciation (b.f.) (65,000) 5,60,000
Total 15,95,000
7 Trade receivables
Outstanding for a period exceeding six 55,000
months
Other Amounts 2,40,000
Total 2,95,000
8 Cash and bank balances
Cash and cash equivalents
Cash at bank 2,85,000
Cash in hand 37,300
Other bank balances Nil
Total 3,22,300
3. (a) (i) PQR Ltd.
Cash Flow Statement for the year ended 31st March, 2024
(Using direct method)
Particulars ` `
Cash flows from Operating Activities
Cash sales (` 3,75,000/25%) 15,00,000
Less: Cash payments for trade payables (6,10,000)
Wages Paid (5,55,000)
4
 Office and selling expenses
` (35,000 + 15,000) (50,000) (12,15,000)
Cash generated from operations before
taxes 2,85,000
Income tax paid (55,000)
Net cash generated from operating activities
(A) 2,30,000
Cash flows from Investing activities
Sale of investments ` (8,20,000 + 20,000) 8,40,000
Payments for purchase of Plant &
machinery (3,50,000)
Net cash used in investing activities (B) 4,90,000
Cash flows from financing activities
Bank loan repayment (including interest) (2,05,000)
Dividend paid (40,000)
Net cash used in financing activities (C) (2,45,000)
Net increase in cash (A+B+C) 4,75,000
Cash and cash equivalents at beginning of
the period 2,25,000
Cash and cash equivalents at end of the
period 7,00,000
(ii) ‘Cash Flow from Operating Activities’ by indirect method
`
Net Profit for the year before tax and 2,80,000
extraordinary items
Add: Non-Cash and Non-Operating Expenses:
Depreciation 60,000
Interest Paid 5,000
Less: Non-Cash and Non-Operating Incomes:
Profit on Sale of Investments (20,000)
Net Profit after Adjustment for Non-Cash Items 3,25,000
Less: Decrease in trade payables 15,000
Increase in inventory 25,000 (40,000)
Cash generated from operations before taxes 2,85,000
Working Note:
Calculation of net profit earned during the year
` `
Gross profit 3,75,000
Less: Office expenses, selling expenses 50,000

5
 Depreciation 60,000
Interest paid 5,000 (1,15,000)
2,60,000
Add: Profit on sale of investments 20,000
Net profit before tax 2,80,000
(b) As per AS 14, ‘Accounting for Amalgamations’ consideration for the
amalgamation means the aggregate of shares and other securities
issued and payment made in form of cash or other assets by the
transferee company to the shareholders of the transferor company.
(i) Computation of Purchase Consideration
`
(a) Preference Shares: ` 50 per share
24,000 Preference shares 12,00,000
(b) Cash 39,000
(c) Equity shares: 56,000 equity shares in
Wow Ltd. @ ` 115 64,40,000
76,79,000
(ii) Journal entry
` `
Liquidator of Wonder Ltd. Dr. 76,79,000
To Cash 39,000
To Preference Share Capital A/c 12,00,000
To Equity Share Capital A/c 56,00,000
To Securities Premium A/c 8,40,000
[56,000 x ` 15 (115-100)]
4. (i) Journal Entries in the Books of VT Ltd.
Dr. Cr.
` `
PPE Dr. 2,10,000
To Revaluation Reserve 2,10,000
(Revaluation of PPE at 15% above book
value)
Reserve and Surplus Dr. 1,20,000
To Equity Dividend 1,20,000
(Equity dividend @ 10%)
Equity Dividend Dr. 1,20,000
To Bank Account 1,20,000

6
(Payment of equity dividend)
Business Purchase Account Dr. 9,80,000
To Liquidator of MG Ltd. 9,80,000
(Consideration payable for the business
taken over from MG Ltd.)
PPE (115% of ` 5,00,000) Dr. 5,75,000
Inventory (95% of ` 6,40,000) Dr. 6,08,000
Debtors Dr. 3,80,000
Bills Receivable Dr. 40,000
Investment Dr. 1,60,000
Cash at Bank Dr. 20,000
(` 80,000 –` 60,000 dividend paid)
To Provision for Bad Debts (5% of
18,000
` 3,60,000)
To Sundry Creditors 2,50,000
To 12% Debentures in MG Ltd. 3,24,000
To Bills Payable 50,000
To Business Purchase Account 9,80,000
To Capital Reserve (Balancing
1,61,000
figure)
(Incorporation of various assets and
liabilities taken over from MG Ltd. at agreed
values and difference of net assets and
purchase consideration being credited to
capital reserve)
Liquidator of MG Ltd. Dr. 9,80,000
To Equity Share Capital 8,00,000
To 10% Preference Share Capital 1,80,000
(Discharge of consideration for MG Ltd.’s
business)
12% Debentures in MG Ltd. (` 3,00,000 ×
Dr. 3,24,000
108%)
Discount on Issue of Debentures
Dr. 36,000
(` 3,60,000 × 10%)
To 12% Debentures (` 3,24,000/90 ×
3,60,000
100)
(Allotment of 12% Debentures to debenture
holders of MG Ltd. at a discount of 10%)
Sundry Creditors Dr. 20,000
To Sundry Debtors 20,000

7
 (Cancellation of mutual owing)
Goodwill Dr. 60,000
To Bank 60,000
(Being liquidation expenses reimbursed to
MG Ltd.)
Capital Reserve/P&L A/c Dr. 60,000
To Goodwill 60,000
(Being goodwill set off)
(ii) Statement of Consideration payable by VT Ltd. for 60,000 shares
(payment method)
Shares to be allotted 60,000/12 × 16 = 80,000 shares of VT Ltd.
Issued 80,000 shares of ` 10 each i.e. ` 8,00,000 (i)
For 10% preference shares, to be paid at 10% discount
` 2,00,000x 90/100 ` 1,80,000 (ii)
Consideration amount [(i) + (ii)] ` 9,80,000
5. Consolidated Balance Sheet of Kedar Ltd. and its Subsidiary Vijay Ltd.
as at 31st March, 2024
Particulars Note (`)
No.
I. Equity and Liabilities
(1) Shareholder's Funds
(a) Share Capital 15,00,000
(b) Reserves and Surplus 1 8,61,500
(2) Minority Interest (W.N.5) 1,20,375
(3) Current Liabilities
(a) Trade Payables 2 5,17,500
Total 29,99,375
II. Assets
(1) Non-current assets
(i) Property, plant & Equipment 3 14,94,375
(ii) Intangible assets 4 30,000
(b) Other non- current assets 5 14,75,000
Total 29,99,375

8
Notes to Accounts
`
1. Reserves and Surplus
Reserves 5,00,000
Add: 4/5th share of Vijay Ltd.’s 1,00,000 6,00,000
post-acquisition reserves
(W.N.3)
Profit and Loss Account 2,50,000
Add: 4/5th share of Vijay Ltd.’s 11,500 2,61,500
post-acquisition profits (W.N.4)
8,61,500
2. Trade Payables
Kedar Ltd. 3,75,000
Vijay Ltd. 1,42,500 5,17,500
3. Property, plant & Equipment
Machinery
Kedar Ltd. 7,50,000
Vijay Ltd. 2,50,000
Add: Appreciation 1,25,000
3,75,000
Less: Depreciation (37,500) 3,37,500
Furniture -
Kedar Ltd. - 3,75,000
Vijay Ltd. 50,000
Less: Decrease in value (12,500)
37,500
Less: Depreciation (5,625) 31,875 14,94,375
4. Intangible assets
Goodwill [WN 6] 30,000
5. Other non-current assets
Kedar Ltd. 11,00,000
Vijay Ltd. 3,75,000 14,75,000
Working Notes:
1. Pre-acquisition profits and reserves of Vijay Ltd. `
Reserves 62,500
Profit and Loss Account 37,500
1,00,000
Kedar Ltd.’s = 4/5 × 1,00,000 80,000
9
 Minority Interest = 1/5 × 1,00,000 20,000
2. Profit on revaluation of assets of Vijay Ltd. -
Profit on Machinery ` (3,75,000 – 2,50,000) 1,25,000
Less: Loss on Furniture `(50,000 – 37,500) 12,500
Net Profit on revaluation 1,12,500
Kedar Ltd.’s share 4/5 × 1,12,500 90,000
Minority Interest 1/5 × 1,12,500 22,500
3. Post-acquisition reserves of Vijay Ltd. -
Post-acquisition reserves (Total reserves less pre- 1,25,000
acquisition reserves = ` 1,87,500 – 62,500)
Kedar Ltd.’s share 4/5 × 1,25,000 1,00,000
Minority interest 1/5 × ,25,000 25,000
4. Post -acquisition profits of Vijay Ltd. -
Post-acquisition profits (Profit & loss account balance 25,000
less pre-acquisition profits = ` 62,500 – 37,500)
Add: Excess depreciation charged on furniture @ 15% -
on ` 12,500 i.e. (50,000 – 37,500) 1,875
26,875
Less: Under depreciation on machinery @ 10% -
on ` 1,25,000 i.e. (3,75,000 – 2,50,000) (12,500)
Adjusted post-acquisition profits 14,375
Kedar Ltd.’s share 4/5 × 14,375 11,500
Minority Interest 1/5 × 14,375 2,875
5. Minority Interest -
Paid-up value of (2,500 – 2,000) = 500 shares -
held by outsiders i.e. 500 × ` 100 50,000
Add: 1/5th share of pre-acquisition profits and reserves 20,000
1/5th share of profit on revaluation 22,500
1/5th share of post-acquisition reserves 25,000
1/5th share of post-acquisition profit 2,875
1,20,375
6. Cost of Control or Goodwill -
Paid-up value of 2,000 shares held by Kedar Ltd. i.e. 2,00,000
2,000 × ` 100
Add: 4/5th share of pre-acquisition profits and reserves 80,000
4/5th share of profit on the revaluation 90,000

10
 Intrinsic value of shares on the date of 3,70,000
acquisition
Price paid by Kedar Ltd. for 2,000 shares 4,00,000
Less: Intrinsic value of the shares (3,70,000)
Cost of control or Goodwill 30,000
6. (a) Difference between Amalgamation, Absorption and External
Reconstruction
Basis Amalgamation Absorption External
Reconstruction
Meaning Two or more In this case, an In this case, a
companies are existing newly formed
wound up and a company takes company takes
new company is over the over the business
formed to take business of one of an existing
over their or more existing company.
business. companies.
Minimum At least three At least two Only two
number of companies are companies are companies are
Companies involved. involved. involved.
involved
Number of Only one resultant No new resultant Only one
new resultant company is company is resultant
companies formed. Two formed. company is
companies are formed. Under
wound up to form a this case a newly
single resultant formed company
company. takes over the
business of an
existing company.
Objective Amalgamation is Absorption is External
done to cut done to cut reconstruction is
competition and competition and done to
reap the reap the reorganise the
economies in large economies in financial structure
scale. large scale. of the company.
Example A Ltd. and B Ltd. A Ltd. takes over B Ltd. is formed to
amalgamate to the business of take over the
form C Ltd. another existing business of an
company B Ltd. existing company
A Ltd.

11
 Or
(a) Profit and Loss Account for the year ended 2023-24 (not assuming
going concern)
Particulars Amount Particulars Amount
` `
To Opening Stock 1,50,000 By Sales 27,50,000
To Purchases 22,50,000 By Closing Stock 2,50,000
To Expenses* 78,000 By Trade payables 7,500
To Depreciation 35,000
To Provision for 30,000
doubtful debts
To Deferred cost 50,000
To Loan penalty 25,000
To Net Profit (b.f.) 3,89,500
30,07,500 30,07,500
(b) According to AS 15 (Revised) “Employee Benefits”, actuarial gains and
losses should be recognized immediately in the statement of profit and
loss as income or expense. Therefore, surplus of ` 6 lakhs in the
pension scheme on its actuarial valuation is required to be credited to
the profit and loss statement of the current year. Hence, Synergy Ltd.
cannot spread the actuarial gain of ` 6 lakhs over the next 2 years by
reducing the annual contributions to ` 2 lakhs instead of ` 5 lakhs. It has
to contribute ` 5 lakhs annually for its pension schemes.
(c) Trial Balance of Foreign Branch (converted into Indian Rupees) as on
March 31, 2024
Particulars $ (Dr.) $ (Cr.) Conversion Rate ` (Dr.) ` (Cr.)
Basis
Fixed Assets 8,000 Transaction 63 5,04,000
Date Rate
Opening 800 Opening Rate 65 52,000
Inventory
Goods 2,800 Actuals 1,85,500
Received
from HO
Sales 24,050 Average Rate 66 15,87,300
Purchases 11,800 Average Rate 66 7,78,800
Expenses 1,800 Average Rate 66 1,18,800
Cash 700 Closing Rate 67 46,900
Remittance 2,450 Actuals 1,62,000
to HO

12
HO Account 4,300 Actuals 2,84,500
Exchange Balancing 23,800
Rate Figure
Difference
28,350 28,350 18,71,800 18,71,800
Closing Stock 700 Closing Rate 67 46,900
Depreciation 800 Fixed Asset 63 50,400
Rate

13
 Mock Test Paper - Series I: July, 2024
Date of Paper: 30th July, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP – I

PAPER – 2: CORPORATE AND OTHER LAWS
Time Allowed – 3 Hours Maximum Marks – 100
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case Scenario based MCQs (30 Marks)
Part I is compulsory
Case Scenario 1
GlobalTech Pvt. Ltd., a technology giant with operations in software development,
hardware manufacturing, and IT consulting, has recorded significant financial
growth over the past few years. For the financial year 2023-2024, the company
reported the following financial metrics:
 Net worth: ` 520 crore
 Turnover: ` 1,050 crore
 Net profit: ` 4.5 crore
In the financial year 2022-2023, GlobalTech Pvt. Ltd. had a net worth of ` 480 crore,
a turnover of ` 1,020 crore, and a net profit of ` 4 crore. The company has a
subsidiary, TechSubs Ltd., and a foreign subsidiary, GlobalTech International,
which has a branch office in India.
GlobalTech Pvt. Ltd. spent ` 1.2 crore on various CSR activities during the financial
year 2023-2024. However, ` 30 lakh remained unspent and was transferred to the
Unspent Corporate Social Responsibility Account as per section 135(6) of the
Companies Act, 2013.
The company’s board comprises members from different parts of the country and
they ensure that the administrative overheads do not exceed the prescribed limit of
total CSR expenditure.
The company held its annual general meeting on 20 th August, 2024 and filed the
annual return in compliance with the provisions of the Companies Act, 2013.
On the basis of above facts and by applying applicable provisions of the Companies
Act, 2013 and the applicable Rules therein, choose the correct answer (one out of
four) of the following Multiple Choice Questions (MCQs 1-6) given herein under: -
1. Based on the financial metrics of GlobalTech Pvt. Ltd., is the company
required to constitute a Corporate Social Responsibility (CSR) Committee for
the for the financial year 2023-2024?
1
 (a) Yes, because its net worth exceeds ` 500 crore.
(b) No, because it has not met the required net profit criteria.
(c) Yes, because its turnover exceeds ` 1,000 crore.
(d) No, because its net profit is less than ` 5 crore.
2. Given that GlobalTech Pvt. Ltd. has ` 30 lakh in its Unspent Corporate Social
Responsibility Account, which of the following statements is true?
(a) The company is not required to constitute a CSR Committee if it has
unspent CSR funds.
(b) The company must constitute a CSR Committee in Financial year
2024-2025, as it has balance in Unspent CSR account.
(c) The company can use the unspent funds for any other business activity.
(d) The company must transfer the unspent amount to the Prime Minister's
National Relief Fund.
3. If GlobalTech Pvt. Ltd. had an average net profit of ` 5 crore over the past
three immediately preceding financial years, what is the minimum amount it
must spend on CSR activities in the financial year 2024-2025?
(a) ` 5 lakh
(b) ` 10 lakh
(c) ` 20 lakh
(d) ` 30 lakh
4. GlobalTech Pvt. Ltd. must ensure that the administrative overheads do not
exceed a certain percentage of the total CSR expenditure. What is this
percentage?
(a) 2%
(b) 5%
(c) 10%
(d) 15%
5. What is the latest date by which GlobalTech Pvt. Ltd. must it file its annual
return with the Registrar of Companies (RoC)?
(a) 10th September 2024
(b) 15th September 2024
(c) 10th October 2024
(d) 19th October 2024
Case Scenario 2
GreenLeaf LLP is a limited liability partnership engaged in the business of eco-
friendly product manufacturing. The LLP was initially established with three
partners: Priya, Sameer, and EcoCorp Ltd., a corporate entity. Priya and Sameer

2
are the designated partners, with Priya being a resident in India. EcoCorp Ltd. has
appointed Anil, an individual, as its nominee to act on its behalf.
After a few years, Sameer decides to retire, leaving Priya and EcoCorp Ltd. as the
remaining partners. Due to some administrative oversight, GreenLeaf LLP
continues its operations without appointing a new partner. This situation persists
for seven months, with Priya being aware of the reduced number of partners. During
this period, GreenLeaf LLP enters into several contracts and incurs significant
financial obligations.
On the basis of above facts and by applying applicable provisions of the Limited
Liability Partnership Act, 2008, and the applicable Rules therein, choose the correct
answer (one out of four) of the following Multiple Choice Questions (MCQs 6-8)
given herein under:
6. Given that Sameer retired and GreenLeaf LLP continued with only Priya and
EcoCorp Ltd., what should GreenLeaf LLP have done within six months to
comply with the LLP Act?
(a) Dissolved the LLP
(b) Continue operating with one designated partner
(c) Appoint at least one body corporate which should be a foreign company
(d) Appointed at least one more partner who should also be a designated
partner, as every LLP should have at least two designated partners
7. According to the Limited Liability Partnership Act, 2008, choose the correct
statement in relation to who must be a resident in India among the designated
partners?
(a) At least one individual designated partner shall be resident in India
(b) All designated partners shall only be resident in India
(c) It is mandatory for only corporate partners to be resident in India
(d) At least four designated partners shall be resident in India
8. In the given case scenario suppose EcoCorp Ltd. also leaves the LLP and the
LLP continues business for more than six months with only one partner, who
is personally liable for the obligations incurred during that period?
(a) Priya
(b) Both Priya and EcoCorp Ltd.
(c) EcoCorp Ltd.
(d) Priya, Sameer and EcoCorp Ltd.
9. Lavender International Entertainment Inc., headquartered and registered in
New York City and a prominent name in lifestyle audio innovations,
professional audio and lighting solutions, and digital transformation, is present
in more than seventy countries including India. Due to certain mis-
happenings, the company was unable to file its financial statements along with
necessary documents for the year 2023 with the Registrar of Companies (in
India) within the stipulated time as permitted by the Companies Act, 2013. It
3
 is observed that the ROC may, for any special reason and on an application
made in writing by Lavender International Entertainment, extend the ‘filing
time’ maximum up to a certain period. From the following options, choose the
correct one in this respect:
(a) ‘Filing time’ in respect of filing of financial statements along with
necessary documents by Lavender International Entertainment Inc. can
be extended by ROC maximum by one month beyond the stipulated time
period.
(b) ‘Filing time’ in respect of filing of financial statements along with
necessary documents by Lavender International Entertainment Inc. can
be extended by ROC maximum by two months beyond the stipulated
time period.
(c) ‘Filing time’ in respect of filing of financial statements along with
necessary documents by Lavender International Entertainment Inc. can
be extended by ROC maximum by three months beyond the stipulated
time period.
(d) ‘Filing time’ in respect of filing of financial statements along with
necessary documents by Lavender International Entertainment Inc. can
be extended by ROC maximum by six months beyond the stipulated time
period.
10. The Board of Directors Vishvas Ltd. decide to pay 5% of the issue price of
shares as underwriting commission to the underwriters. However, the Articles
of Association of the company permit only 3% commission. What is the
maximum amount of underwriting commission that can be paid to the
underwriters.
(a) 2%
(b) 3%
(c) 5%
(d) No limit has prescribed under the Companies Act, 2013 in case
underwriting commission is to be paid in case of issue of shares.
Case Scenario 3
Amit, an Indian resident during the Financial Year (FY) 2021-2022, decided to
pursue higher studies in Biotechnology in Switzerland. On 15th July 202 2, he left
India to begin his two-year academic program. The determination of Amit’s
residential status under the Foreign Exchange Management Act (FEMA), 1999, for
the Financial Years 2022-2023 and 2023-2024, is crucial to understand his
obligations and entitlements concerning foreign exchange transactions.
In terms of financial requirements, Amit needs USD 25,000 annually to cover his
tuition fees. Additionally, he requires USD 30,000 annually for incidental expenses
and living costs while studying abroad. Thus, his total annual requirement amounts
to USD 55,000, making it imperative to assess the provisions under the Foreign
Exchange Management Act, 1999, that govern the remittance of foreign.

4
On the basis of above facts and by applying applicable provisions of the Foreign
Exchange Management Act, 1999, therein, choose the correct answer (one out of
four) of the following MCQs (11-13) given herein under:
11. What would be Amit’s residential status for FY 2022-2023 under FEMA, 1999?
(a) Resident in India
(b) Non-Resident Indian (NRI)
(c) Person of Indian Origin (PIO)
(d) Overseas Citizen of India (OCI)
12. What would be Amit’s residential status for FY 2023-2024 under FEMA, 1999?
(a) Resident in India
(b) Non-Resident Indian (NRI)
(c) Person of Indian Origin (PIO)
(d) Overseas Citizen of India (OCI)
13. Suppose now Amit wants more money for his living cost abroad. What is the
maximum amount that can still be remitted abroad per financial year under
the Liberalized Remittance Scheme (LRS)?
(a) USD 100,000
(b) USD 195,000
(c) USD 200,000
(d) USD 500,000
14. ABC Real Estate Ltd., a prominent real estate company, has recently acquired
a piece of land in a suburban area. The land has a small lake that is expected
to generate significant tourism revenue in the future. Additionally, the land has
several old structures that are permanently fastened to the earth, such as a
stone pavilion and a historical monument. ABC Real Estate Ltd. plans to
develop the area by refurbishing the existing structures and enhancing the
natural surroundings to attract tourists.
Considering the above scenario, identify which of the following components
are classified as "Immovable Property" under the General Clauses Act, 1897:
(a) Only the land and the stone pavilion.
(b) Only the land and the benefits arising from the lake.
(c) The land, benefits arising from the lake, and the stone pavilion.
(d) The land, the benefits arising from the lake, the stone pavilion, and the
historical monument.
15. The Ministry of Transport is planning to construct a new highway that will
connect City A and City B. According to the initial plan, the highway is
expected to cover a distance of 150 kilometers. During the survey, the
engineers measure the distance between the two cities as the crow flies,
without considering the natural terrain and existing road curves. This method
5
 is in line with the provisions of the General Clauses Act, 1897 regarding the
measurement of distance for the purposes of any Central Act or Regulation.
Considering the above scenario, which statement is correct about the
measurement of distance as per the General Clauses Act, 1897?
(a) The distance should be measured along the existing roadways and
curves.
(b) The distance should be measured considering the natural terrain and
obstacles.
(c) The distance should be measured in a straight line on a horizontal plane
unless otherwise specified.
(d) The distance should be measured as a combination of straight lines and
natural curves.

PART – II Descriptive Questions (70 Marks)

Question No.1 is compulsory.
Attempt any Four questions out of the remaining Five questions.
1. (a) ABC Limited is a registered public company having the following:
i Directors and their Relatives 20
ii Employees 15
iii Ex-Employees (Shares were allotted during 20
employment)
iv Members holding shares jointly (10 shares x 2 joint- 20
holders each)
v Other Members 150
The Board of Directors of ABC Limited proposes to convert the company
into a private limited company. Referring the provisions of the
Companies Act, 2013, advise:
i. Whether the company can be converted into a private company?
ii. Whether existing number of members need to be reduced for the
proposed conversion into a private company? (5 Marks)
(b) Sunday Ltd. is a listed entity engaged in the business of providing
engineering solutions to clients across the country. The company
followed consistent growth over the years. Rate of Declaration of
dividend in immediately preceding three financial years were 15%, 20%,
and 25%.
Unfortunately, due to obsolescence of a special part of machinery,
company incurred losses in current financial year.
Even though, during the financial year 2023-24, the company declared
interim dividend of 10% on the equity shares.

6
 The Board of Directors of the company approved the financial result for
the financial year 2023-24 in its meeting held on 5th August, 2024, and
recommended a final dividend of @15% in this board meeting.
The general meeting of the shareholders was convened on 31st August,
2024. The shareholders of the company demanded that since interim
dividend @10% was declared by the company, so the final dividend
should not be less than 20%. It was also submitted that rate of
declaration of dividend in immediately preceding three years were 15%,
20% and 25%, but the Company Secretary emphasised that final
dividend cannot be increased.
Advise whether the decision of Company Secretary is correct? What
should be correct rate of final dividend?
Justify your answer with reference to provisions of the Companies Act,
2013. (5 Marks)
(c) Analyse the below mentioned situation in the light of the provisions of
the Foreign Exchange Management Act, 1999.
(i) Mr. Vinod has won a big lottery and wants to remit US Dollar 20,000
out of his winnings to his son who is in Singapore.
(ii) Mr. Shyam requires US Dollar 5,000 for remittance towards hiring
charges of transponders. (4 Marks)
2. (a) Explain the meaning of Crystallization of a Floating Charge. (5 Marks)
(b) Define the term ‘Book of account’ as per the Companies Act, 2013.
(5 Marks)
(c) Define the following with reference to the provisions of the General
Clauses Act, 1897:
(i) Measurement of Distances
(ii) Duty to be taken pro rata in enactments (4 Marks)
3. (a) Explain the exceptions to the Doctrine of Indoor Management.
(5 Marks)
(b) Prateek Limited, an unlisted company, registered in the State of
Arunachal Pradesh with 42 shareholders, wants to organize the Annual
General Meeting of the company on 13th August 2024 which happens to
be Raksha Bandhan, a day declared as a holiday by the Government of
Arunachal Pradesh.
Advise the company on the feasibility of the above with reference to the
provisions of the Companies Act, 2013. (5 Marks)
(c) Explain the Doctrine of Contemporanea Expositio. (4 Marks)
4. (a) Assess the eligibility of the following individuals for appointment as
Auditors in accordance with the regulations outlined in the Companies
Act, 2013:
7
 (i) Chintamani is a practicing Chartered Accountant, and his spouse,
Chitralekha, holds securities of Nagmani Ltd. valued at a face value
amount of ` 80,000 (with a market value of ` 50,000). The directors
of Nagmani Ltd. are considering the appointment of Chintamani as
an auditor for the company.
(ii) Mani, the real sister of Mr. Priyanshu, a Chartered Accountant,
holds the position of CFO at Parivar Ltd. The directors of Parivar
Ltd. are considering the appointment of Mr. Priyanshu as an auditor
for the company. (5 Marks)
(b) Define the term ‘Small limited liability partnership’ as per the provisions
of the Limited Liability Partnership Act, 2008. (5 Marks)
(c) When can the Preamble be used as an aid to interpretation of a statute?
(4 Marks)
5. (a) Priya, Smita, Shilpa, and Shefali were partners in Sharma & Associates
LLP. Shilpa resigned from the firm effective 7th May 2024. However,
neither Sharma & Associates LLP nor Shilpa informed the Registrar of
Companies about her resignation. Is Shilpa still liable for any losses
incurred by the firm from transactions entered into after 7th May 2024?
Analyze this situation with reference to the provisions of the Limited
Liability Partnership Act, 2008. (5 Marks)
(b) Vishal Ltd., an unlisted company, has been directed by the Central
Government to prepare periodical financial results and undergo a limited
review of these results. The Board of Directors is objecting, arguing that,
as an unlisted entity, they are not required to prepare periodical financial
results. Analyze this situation with reference to the relevant provisions
of the Companies Act, 2013. (5 Marks)
(c) In 2022, the Central Government enacted the "Digital Communications
Act" to regulate and manage digital communications across the country.
The Act provides specific duties and responsibilities for the Director of
Digital Communications, including the oversight of digital infrastructure,
enforcement of regulations, and ensuring compliance with data
protection standards.
In 2023, the Director of Digital Communications, Mr. Arjun Patel, was
appointed to lead the implementation of this Act. However, in January
2024, Mr. Patel took a medical leave of absence for six months. During
his absence, Ms. Priya Sharma, the Deputy Director of Digital
Communications, was lawfully assigned to perform the duties of the
Director.
While Mr. Patel was on leave, a major data breach incident occurred
involving a significant violation of the Digital Communications Act.
Ms. Sharma took immediate action to investigate the breach, enforce
penalties, and implement new compliance measures to prevent future
incidents.

8
 The actions taken by Ms. Sharma, while performing the duties of the
Director, led to a legal challenge. The opposing party argued that only
the Director, as specified in the Act, had the authority to enforce such
penalties and measures, and that Ms. Sharma's actions were not valid.
Analyze the validity of Ms. Priya Sharma's actions in the context of the
General Clauses Act, 1897, considering the provisions related to ‘Official
chiefs and subordinates’. (4 Marks)
6. (a) Enumerate the persons who are entitled to receive the Notice of the
General Meeting, as per the provisions of the Companies Act, 2013.
(5 Marks)
OR
(a) Enumerate the provisions of the Companies Act, 2013 in respect to the
following:
(i) Time limit for filing of annual return when Annual General Meeting
is held.
(ii) Time limit for filing of annual return when Annual General Meeting
is not held. (5 Marks)
(b) Explain the provisions of the Companies Act, 2013 [read along with the
Companies (Registration of Foreign Companies) Rules, 2014] in respect
of ‘Audit of accounts of foreign company’. (5 Marks)
(c) Explain the meaning of term ‘currency’ as per the provisions of the
Foreign Exchange Management Act, 1999. (2 Marks)
(d) Define the term ‘Official Gazette’ as per the provisions of the General
Clauses Act, 1897. (2 Marks)

9
 Mock Test Paper - Series I: July, 2024
Date of Paper: 30 th July, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP – I

PAPER – 2: CORPORATE AND OTHER LAWS
ANSWER TO PART – I CASE SCENARIO BASED MCQS
1. (c)
2. (b)
3. (b)
4. (b)
5. (d)
6. (d)
7. (a)
8. (a)
9. (c)
10. (b)
11. (b)
12. (b)
13. (b)
14. (d)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS
1. (a) According to section 2(68) of the Companies Act, 2013, "Private
company" means a company having prescribed minimum paid-up share
capital, and which by its articles, limits the number of its members to 200.
However, where two or more persons hold one or more shares in a
company jointly, they shall, for the purposes of this clause, be treated as
a single member.
It is further provided that following shall not be included in the number of
members -
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the
company, were members of the company while in that employment
and have continued to be members after the employment ceased.

1
 Accordingly, total Number of members in ABC Limited are:
(i) Directors and their relatives 20
(ii) Joint shareholders (10x2) 10
(iii) Other Members 150
Total 180
(i) ABC Limited may be converted into a private company only if the
total members of the company are limited to 200. In the instant
case, since existing number of members are 180 which is within the
prescribed maximum limit of 200, so ABC Limited can be converted
into a private company.
(ii) There is no need for reduction in the number of members for the
proposed private company as existing number of members are 180
which does not exceed maximum limit of 200.
(b) Interim dividend: As per section 123(3) of the Companies Act, 2013,
the Board of Directors of a company may declare interim dividend during
any financial year or at any time during the period from closure of
financial year till holding of the annual general meeting out of the surplus
in the profit and loss account or out of profits of the financial year in
which such interim dividend is sought to be declared.
Provided that in case the company has incurred loss during the current
financial year up to the end of the quarter immediately preceding the
date of declaration of interim dividend, such interim dividend shall not be
declared at a rate higher than the average dividends declared by the
company during the immediately preceding three financial years.
Final dividend: The company in general meeting may declare
dividends, but no dividend shall exceed the amount recommended by
the Board. [Clause 80 of Table F in Schedule I]
According to the given facts, Sunday Ltd. incurred losses in current
financial year 2023-24. It is also provided that, in the immediately
preceding three financial years, the company declared dividend at the
rate of 15%, 20% and 25% respectively. Accordingly, the rate of
dividend declared shall not exceed 20%, the average of the rates
(15+20+25=60/3) at which dividend was declared by it during the
immediately preceding three financial years.
Board of Directors of Sunday Ltd. recommended a final dividend @15%
for financial year 2023-24 in the meeting held on 5 th August 2024. It was
approved in the general meeting. However, shareholders demanded that
since Interim dividend was at the rate of 10%, so final dividend should
not be less than 20%. The general meeting cannot declare the dividend
at a rate higher than the rate of dividend recommended by the Board.
Yes, the decision of Company Secretary that final dividend cannot be
increased beyond the rate of 15% as recommended in the Board
Meeting, is correct.

2
 (c) According to section 5 of the Foreign Exchange Management Act, 1999,
any person may sell or draw foreign exchange to or from an authorized
person if such a sale or drawal is a current account transaction. Provided
that Central Government may, in public interest and in consultation with
the reserve bank, impose such reasonable restrictions for current
account transactions as may be prescribed.
As per the rules, drawal of foreign exchange for current account
transactions are categorized under three headings-
1. Transactions for which drawal of foreign exchange is prohibited,
2. Transactions which need prior approval of appropriate government
of India for drawal of foreign exchange, and
3. Transactions which require RBI's prior approval for drawl of foreign
exchange.
(i) Mr. Vinod wanted to remit US Dollar 20,000 out of his lottery
winnings to his son residing in Singapore. Such remittance is
prohibited and the same is included in the Foreign Exchange
Management (Current Account Transactions) Rules, 2000.
Hence Mr. Vinod cannot withdraw foreign exchange for this
purpose.
(ii) In the given situation, it is a current account transaction, where
Mr. Shyam is required to take approval of the Central Government
for drawal of foreign exchange for remittance of hire charges of
transponders.
2. (a) Crystallization of a Floating Charge
When the creditor enforces the security due to the breach of terms and
conditions of floating charge or the company goes into liquidation, the
floating charge will become a fixed charge on all the assets available on
that date. This is called crystallization of a floating charge.
A floating charge remains dormant until it becomes fixed or crystallizes.
On crystallization of charge, the security (i.e. raw material, stock-in-
trade, etc.) becomes fixed and is available for realization by the lender
so that borrowed money is repaid. Crystallization of floating charge may
occur when the terms and conditions of floating charge are violated or
the company ceases to continue its business or the company goes into
liquidation or the creditors enforce the security covered by the floating
charge.
(b) According to section 2(13) of the Companies Act, 2013, ‘Books of
account’ includes records maintained in respect of:
(i) all sums of money received and expended by a company and
matters in relation to which the receipts and expenditure take place;
(ii) all sales and purchases of goods and services by the company;
(iii) the assets and liabilities of the company; and

3
 (iv) the items of cost as may be prescribed under section 148 in the
case of a company which belongs to any class of companies
specified under that section.
(c) (i) Measurement of Distances
According to section 11 of the General Clauses Act, 1897, in the
measurement of any distance, for the purposes of any Central Act
or Regulation made after the commencement of this Act, that
distance shall, unless a different intention appears, be measured in
a straight line on a horizontal plane.
(ii) Duty to be taken pro rata in enactments
According to section 12 of the General Clauses Act, 1897, where,
by any enactment now in force or hereafter to be in force, any duty
of customs or excise or in the nature thereof, is leviable on any
given quantity, by weight, measure or value of any goods or
merchandise, then a like duty is leviable according to the same rate
on any greater or less quantity.
Pro rata is a Latin term used to describe a proportionate allocation.
3. (a) Exceptions to Doctrine of Indoor Management
Relief on the ground of ‘indoor management’ cannot be claimed by an
outsider dealing with the company in the following circumstances:
1. Knowledge of irregularity - In case this ‘outsider’ has actual
knowledge of irregularity within the company, the benefit under the
rule of indoor management would no longer be available. In fact,
he/she may well be considered part of the irregularity.
2. Negligence: If with a minimum of effort, the irregularities within a
company could be discovered, the benefit of the rule of indoor
management would not apply. The protection of the rule is also not
available where the circumstances surrounding the contract are so
suspicious as to invite inquiry, and the outsider dealing with the
company does not make proper inquiry.
3. Forgery: The rule does not apply where a person relies upon a
document that turns out to be forged since nothing can validate
forgery. A company can never be held bound for forgeries
committed by its officers.
4. Where the question is in regard to the very existence of an
agency.
5. Where a pre-condition is required to be fulfilled before company
itself can exercise a particular power. In other words, the act done
is not merely ultra vires the directors/officers but ultra vires the
company itself.
(b) Section 96(2) of the Companies Act, 2013, states that every Annual
General Meeting (AGM) shall be called during business hours, that is,
between 9 a.m. and 6 p.m. on any day that is not a National Holiday and
shall be held either at the registered office of the company or at some
4
 other place within the city, town or village in which the registered office
of the company is situated.
However, AGM of an unlisted company may be held at any place in India
if consent is given in writing or by electronic mode by all the members in
advance.
Explanation—For the purposes of this sub-section, ‘National Holiday’
means and includes a day declared as National Holiday by the Central
Government.
In the instant case, Prateek Limited, an unlisted company, can hold its
AGM on 13th August 2024 which happens to be a holiday declared by
the Government of Arunachal Pradesh and so, this is not a national
holiday.
(c) Doctrine of Contemporanea Expositio
This doctrine is based on the concept that a statute or a document is to
be interpreted by referring to the exposition it has received from
contemporary authority. The maxim “Contemporanea Expositio est
optima et fortissinia in lege” means “contemporaneous exposition is the
best and strongest in the law.” This means a law should be understood
in the sense in which it was understood at the time when it was passed.
This maxim is to be applied for construing ancient statutes, but not to
Acts that are comparatively modern.
4. (a) (i) As per section 141(3)(d)(i) of the Companies Act, 2013, an auditor
is disqualified to be appointed as an auditor if he, or his relative or
partner holding any security of or interest in the company or its
subsidiary, or of its holding or associate company or a subsidiary
of such holding company. Further the proviso provides that, the
relative of the auditor may hold the securities or interest in the
company of face value not exceeding of ` 1,00,000.
In the present case, Chitralekha (spouse of Chintamani, the
auditor), is having securities of Nagmani Limited having face value
of ` 80,000, which is within the prescribed limits under the proviso
to section 141(3)(d)(i). Therefore, Chintamani will be eligible to be
appointed as an auditor of Nagmani Limited.
(ii) As per section 141(3)(f), an auditor is disqualified to be appointed
as an auditor if a person whose relative is a director or is in the
employment of the company as a director or a Key Managerial
Personnel. In the instant case, since Mani, real sister of Mr.
Priyanshu (Chartered Accountant) is the CFO (a KMP) of Parivar
Ltd., hence, Mr. Priyanshu will be disqualified to be appointed as
an auditor in the said company.
(b) Small limited liability partnership
According to section 2(1)(ta) of the Limited Liability Partnership Act,
2008, small limited liability partnership means a limited liability
partnership:
5
 (i) the contribution of which, does not exceed twenty-five lakh rupees
or such higher amount, not exceeding five crore rupees, as may be
prescribed; and
(ii) the turnover of which, as per the Statement of Accounts and
Solvency for the immediately preceding financial year, does not
exceed forty lakh rupees or such higher amount, not exceeding fifty
crore rupees, as may be prescribed; or
(iii) which meets such other requirements as may be prescribed, and
fulfils such terms and conditions as may be prescribed.
(c) Preamble merely affords help in the matter of construction, if there is an
ambiguity in the law.
Courts refer to the preamble as an aid to construction in the following
situations:
Situation 1: Where there is any ambiguity in the words of an enactment
the assistance of the preamble may be taken to resolve the conflict.
Situation 2: Where the words of an enactment appear to be too general
in scope or application then courts may resort to the preamble to
determine the scope or limited application for which the words are
meant.
5. (a) According to section 24(3) of the Limited Liability Partnership Act, 2008,
where a person has ceased to be a partner of a LLP (hereinafter referred
to as ‘former partner’), the former partner is to be regarded (in relation
to any person dealing with the LLP) as still being a partner of the LLP
unless:
(a) the person has notice that the former partner has ceased to be a
partner of the LLP; or
(b) notice that the former partner has ceased to be a partner of the LLP
has been delivered to the Registrar.
Hence, by virtue of the above provisions, as no notice of resignation was
given to Registrar of Companies, Shilpa will still be liable for the loss of
firm of the transactions entered after 7 th May 2024.
(b) Periodical Financial Results [Section 129A of the Companies Act,
2013]
The Central Government may, require such class or classes of unlisted
companies, as may be prescribed,:
(a) to prepare the financial results of the company on periodical basis
and in prescribed form
(b) to obtain approval of the Board of Directors and complete audit or
limited review of such periodical financial results in the prescribed
manner; and
(c) file a copy with the Registrar within a period of thirty days of
completion of the relevant period with such fees as may be
prescribed.
6
 Therefore, the objection of the Board of Directors on the ground that as
Vishal Ltd. is an unlisted company, periodical financial results need not
be prepared, is not correct. Section 129A clearly specifies that the
prescribed class(es) of unlisted companies has to prepare Periodical
Financial Results.
(c) Official Chiefs and subordinates
According to section 19 of the General Clauses Act, 1897, a law relative
to the chief or superior of an office shall apply to the deputies or
subordinates lawfully performing the duties of that office in the place of
their superior, to prescribe the duty of the superior.
In the instant case, Ms. Priya, the Deputy Director of Digital
Communications, was lawfully assigned to perform the duties of the
Director. Hence, the actions taken by Ms. Priya Sharma were valid.
6. (a) Persons entitled to receive the Notice of the General Meeting
According to section 101(3) of the Companies Act, 2013, the notice of
every meeting of the company shall be given to:
(1) every member of the company, legal representative of any
deceased member or the assignee of insolvent member;
(2) the auditor or auditors of the company;
(3) every director of the company.
OR
(a) Time limit for Filing of Annual Return
(i) A copy of annual return shall be filed with the Registrar of
Companies (RoC) within 60 days from the date on which the Annual
General Meeting (‘AGM’) is held.
(ii) Where no annual general meeting is held in any year, it shall be
filed with the Registrar of Companies (RoC) within 60 days from the
date on which the annual general meeting should have been held,
along with the reasons for not holding the AGM.
(b) Audit of accounts of foreign company
According to the Companies (Registration of Foreign Companies) Rules,
2014,
(i) Every foreign company shall get its accounts, pertaining to the
Indian business operations prepared in accordance with section
381(1) of the Companies Act, 2013 and Rules thereunder, shall be
audited by a practicing Chartered Accountant in India or a firm or
limited liability partnership of practicing chartered accountants.
(ii) The provisions of Chapter X i.e. Audit and Auditors and rules made
there under, as far as applicable, shall apply, mutatis mutandis, to
the foreign company.

7
(c) Currency
According to section 2(h) of the Foreign Exchange Management Act,
1999, ‘Currency’ includes all currency notes, postal notes, postal orders,
money orders, cheques, drafts, travelers’ cheques, letters of credit, bills
of exchange and promissory notes, credit cards or such other similar
instruments, as may be notified by the Reserve Bank.
(d) Official Gazette
According to section 3(39) of the General Clauses Act, 1897, ‘Official
Gazette’ or ‘Gazette’ shall mean:
(i) The Gazette of India, or
(ii) The Official Gazette of a state.
The Gazette of India is a public journal and an authorised legal document
of the Government of India, published weekly by the Department of
Publication, Ministry of Housing and Urban Affairs. As a public journal,
the Gazette prints official notices from the government. It is authentic in
content, accurate and strictly in accordance with the Government
policies and decisions. The gazette is printed by the Government of India
Press.

8
 Mock Test Paper - Series I: July, 2024
Date of Paper: 31st July, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP - I

PAPER – 3: TAXATION
Time Allowed – 3 Hours Maximum Marks – 100
SECTION – A: INCOME TAX LAW (50 MARKS)
Working Notes should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of a note.
However, in answers to Questions in Division A, working notes are not
required.
The relevant assessment year is A.Y.2024-25.
Division A – Multiple Choice Questions
Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
1. Mr. Rudra is engaged in the business of trading since 2018. His turnover for
the P.Y. 2022-23 was ` 6 crores. His minor daughter’s marriage is fixed in
December, 2023. He planned destination wedding in Goa for his minor
daughter. For the wedding, he withdrew ` 40,00,000 cash in the month of
September, 2023 and ` 65,00,000 cash in the month of October, 2023 from
Hamara Paisa Bank.
He booked 30 rooms for 5 days for the accommodation of his relatives in
Raho Hotel and paid ` 40,000 in cash as advance and balance by account
payee cheque. He took the catering services of Tasty Caterers, a sole
Proprietor, for the wedding for which he paid ` 10,20,000 on 15.10.2023. For
her wedding, he gifted his daughter a house property, purchased from SK
Builders on 10.10.2023 by account payee cheque for ` 15,00,000. The
stamp duty value of the property on 10.10.2023 is ` 16,00,000 and on the
date of transfer to minor daughter is ` 20,00,000.
Mr. Rudra paid ` 45,000 in cash and balance in cheque to travel agent for
the return ticket of some of his relatives to US. He regularly files his return of
income.
Based on the above information, choose the most appropriate option of the
following Multiple Choice Questions (MCQs):-
(i) The amount of tax to be deducted by Hamara Paisa Bank on cash
withdrawals by Mr. Rudra is -
(a) ` 10,000
(b) ` 25,000

1
 (c) ` 1,70,000
(d) ` 1,85,000 (2 Marks)
(ii) The amount of tax to be deducted by Mr. Rudra on payment made to
Tasty Caterers is -
(a) ` 10,200
(b) ` 20,400
(c) ` 51,000
(d) Nil (2 Marks)
(iii) What shall be the amount taxable and in whose hands with respect to
purchase of immovable property by Mr. Rudra from SK Builders and
gift of the same to his daughter?
(a) ` 1,00,000 in the hands of Mr. Rudra and ` 20,00,000 in the
hands of minor daughter
(b) Nothing is taxable in the hands of Mr. Rudra and Minor daughter
(c) ` 1,00,000 in the hands of Mr. Rudra and nothing is taxable in the
hands of minor daughter
(d) Nothing is taxable in the hands of Mr. Rudra but ` 20,00,000 is
taxable in the hands of minor daughter (2 Marks)
2. Mr. Mayank had bought a residential house worth ` 2.5 crores at South
Extension, Delhi in 2018 and let out the house on rent to Mr. Rihaan. The
property was funded through loan from PNB. The interest due for F.Y.
2023-24 to PNB is ` 25 lakhs, out of which he paid only ` 20 lakhs during
the year. Mr. Mayank then took a loan of ` 1.5 crores from SBI on 1.7.2023
for construction of first floor in that house for self-occupation. The
construction is in progress as on 31.3.2024. Mr. Mayank started repaying
EMIs due to SBI. During the P.Y. 2023-24, he repaid principal amount of
` 25 lakhs and ` 5 lakhs to PNB and SBI, respectively. He also paid interest
of ` 8 lakhs to SBI out of ` 10 lakhs, being interest due for the period from
1.7.2023 to 31.3.2024.
Mr. Mayank owns another house in Haryana. He transferred that house to
his minor daughter Miss Sia on her birthday as her birthday gift. Miss Sia
gave the said house to the local Panchayat from September, 2023 at a rent
of ` 5,000 per month. Mrs. Mayank’s total income for A.Y.2024-25 is higher
than that of Mr. Mayank. This is the first year when Miss Sia has any source
of income.
Mr. Mayank bought electric vehicle worth ` 50 lakhs on loan from BSM Bank
which it sanctioned on 1.4.2022. BSM Bank charged interest of ` 7 lakhs on
electric vehicle for the P.Y.2023-24. Mr. Mayank has also taken loan from
ABC Bank for his daughter’s higher education. He paid ` 50,000 as interest
to ABC Bank. He also paid mediclaim of ` 20,000 to New India Assurance
Scheme for insuring his health.

2
 From the information given above, choose the most appropriate answer to
the following questions -
(i) What is the amount of interest allowable as deduction u/s 24 to
Mr. Mayank for A.Y.2024-25?
(a) ` 2 lakhs
(b) ` 25 lakhs
(c) ` 28 lakhs
(d) ` 35 lakhs (2 Marks)
(ii) What is the amount of deduction permissible to Mr. Mayank under
Chapter VI-A of Income-tax Act, 1961 for A.Y. 2024-25 if he has opted
out of the default tax regime?
(a) ` 1,70,000
(b) ` 2,20,000
(c) ` 3,70,000
(d) ` 9,20,000 (2 Marks)
(iii) In whose hands would Sia’s rental income from house property at
Haryana be taxable and how much income would be taxable?
(a) In Sia’s hands; ` 24,500
(b) In Mr. Mayank’s hands; ` 24,500
(c) In Mrs. Mayank’s hands; ` 23,000
(d) It would change every year depending on the parent whose
income is higher in that year. (2 Marks)
3. Mr. Arpan (aged 35 years) submits the following particulars for the purpose
of computing his total income:
Particulars `
Income from salary (computed) 4,00,000
Loss from let-out house property (-) 2,20,000
Brought forward loss from let-out house property for the (-)2,30,000
A.Y. 2023-24
Business loss (-)1,00,000
Bank interest (FD) 80,000
Compute the total income of Mr. Arpan for the A.Y.2024-25 and the amount
of loss that can be carried forward for the subsequent assessment year
under normal provisions of the Act?
(a) Total income ` 2,00,000 and loss from house property of ` 2,50,000
and business loss of ` 20,000 to be carried forward to subsequent
assessment year.

3
 (b) Total income ` 1,60,000 and loss from house property of ` 2,30,000 to
be carried forward to subsequent assessment year.
(c) Total income ` 4,00,000 and business loss of ` 20,000 to be carried
forward to subsequent assessment year.
(d) Total income is Nil and loss from house property of ` 70,000 to be
carried forward to subsequent assessment year. (2 Marks)
4. Mr. Raja, aged 64 years, was not able to provide satisfactory explanation to
the Assessing Officer for the investments of ` 7 lakhs not recorded in the
books of accounts. What shall be the tax payable by him on the value of
such investments considered to be deemed income as per section 69?
(a) ` 2,18,400
(b) ` 55,000
(c) ` 5,46,000
(d) ` 54,600 (1 Mark)

Division B – Descriptive Questions

Question No. 1 is compulsory.
Attempt any two questions from the remaining three questions.
1. Mr. Ayush, a resident individual, aged 54 years, is engaged in the business
of manufacturing textiles. He earned profit of ` 82,45,000 as per profit and
loss account after debiting and crediting the following items:
(i) Depreciation ` 15,40,000
(ii) Short term capital gains on transfer of listed equity shares in a
company on which STT is paid ` 10,00,000
(iii) He received income-tax refund of ` 15,550 which includes interest on
refund of ` 4,550.
(iv) Dividend income from Indian companies ` 15,00,000. Dividend
received from each company is less than ` 5,000.
Additional information –
(i) Mr. Ayush installed new plant and machinery for ` 65 lakhs on
1.10.2023 which was put to use on 1.1.2024. Depreciation (including
additional depreciation) on this amount of ` 65 lakhs is included in the
depreciation debited to profit and loss account which has been
computed as per Income-tax Rules, 1962.
(ii) Mr. Ayush took a loan from SBI of ` 50 lakhs on 1.9.2023 @10.5% p.a.
to purchase such plant and machinery. Total interest upto 31.3.2024
has been paid on 31.3.2024 and the same has been debited to profit
and loss account.
(iii) Advance tax paid during the year is `17,50,000

4
 (iv) Ayush purchased goods for ` 40 lakhs from Mr. Ram, his brother. The
market value of the goods is ` 35 lakhs.
(v) He paid ` 40,000 as life insurance premium taken on the life of his
married daughter who is not dependent on him. The sum assured is
` 5,00,000 and the policy was taken on 1.4.2016.
(vi) He paid ` 45,000 by cheque towards health insurance policy covering
himself, his spouse and his children.
(vii) On 1.7.2023, Mr. Ayush withdrew ` 1.5 crores in cash from three
current accounts maintained by him with SBI. There are no other
withdrawals during the year. He regularly files his return of income.
You are required to compute the total income and tax payable by Mr. Ayush
for the A.Y. 2024-25 assuming that he has shifted out of the default tax
regime under section 115BAC. (15 Marks)
2. (a) Miss Geeta, a citizen of India, got married to Mr. Peter of Australia and
left India for the first time on 20.8.2023. She has not visited India again
during the P.Y. 2023-24. She has derived the following income for the
year ended 31-3-2024:
Particulars `
(i) Income from sale of centrifuged latex processed 1,50,000
from rubber plants grown in kanyakumari.
(ii) Income from sale of coffee grown, cured, roasted 5,00,000
and grounded in Colombo. Sale consideration was
received in Chennai.
(iii) Income from sale of tea grown and manufactured in 12,00,000
West Bengal.
(iv) Income from sapling and seedling grown in a 2,00,000
nursery at Cochin. Basic operations were not
carried out by her on land.
You are required to determine the residential status of Miss Geeta and
compute the business income and agricultural income of Miss. Geeta
for the Assessment Year 2024-25. (6 Marks)
(b) Briefly discuss the provisions of tax deduction at source under the
Income-tax Act, 1961 and determine the amount, if any, of TDS in
respect of the following payments:
(i) Mr. Vikas received a sum of ` 10,20,000 on 28.02.2024 as pre-
mature withdrawal from Employees Provident Fund Scheme
before continuous service of 5 years on account of termination of
employment due to ill-health.
(ii) Indian Bank sanctioned and disbursed a loan of ` 12 crores to B
Ltd. on 31-12-2023. B Ltd. paid a sum of ` 1,20,000 as service fee
to Indian Bank for processing the loan application. (4 Marks)

5
3. (a) Mr. Jain and his wife Mrs. Jain are partners in a partnership firm
holding 25% share each. During the F.Y. 2023-24, the firm paid
` 2,50,000 to each of them as remuneration. Apart from this, they
provide you the following information in respect of F.Y. 2023-24:
(i) Salary received by Mr. Jain from his employer ` 12,50,000.
(ii) Interest on fixed deposit earned by Mrs. Jain ` 14,00,000. (The
fixed deposit was opened by using her "Stridhan")
(iii) Income of their three minor children Neeta, Meeta and Seeta was
` 15,000; ` 10,000 and ` 2,000 respectively.
You are required to compute the gross total income of Mr. and
Mrs. Jain as per the provisions of Income-tax Act for the A.Y. 2024-25
assuming that they have shifted out of the default tax regime.
(4 Marks)
(b) Mr. Ram, an employee of the Central Government is posted at New
Delhi. He joined the service on 1 st February, 2021. Details of his
income for the previous year 2023-24, are as follows:
(i) Basic salary: ` 3,80,000
(ii) Dearness allowance: ` 1,20,000 (40% forms part of pay for
retirement benefits)
(iii) Both Mr. Ram and Government contribute 20% of basic salary to
the pension scheme referred to in section 80CCD.
(iv) Gift received by Ram’s minor son on his birthday from friend:
` 70,000. (No other gift is received by him during the previous
year 2023-24)
(v) On 25.03.2023, Mr. Ram gifted a sum of ` 6,00,000 to Mrs. Ram
to start a business by introducing such amount as her capital. On
1st April, 2023, her total investments in business was ` 10,00,000
which includes ` 6,00,000 gifted by Mr. Ram. During the previous
year 2023-24, she has loss from such business ` 1,30,000.
(vi) Mr. Ram deposited ` 70,000 in Sukanya Samridhi account on
23.01.2024. He also contributed ` 40,000 in an approved annuity
plan of LIC to claim deduction u/s 80CCC.
(vii) He has taken an educational loan from SBI for his major son who
is pursuing MBA course from Gujarat University. He has paid
` 15,000 as interest on such loan.
Determine the total income of Mr. Ram for the assessment year
2024-25. Ignore provisions under section 115BAC. (6 Marks)
4. (a) Determine the capital gains/loss on transfer of listed equity shares
(STT paid both at the time of acquisition and transfer of shares) and
units of equity oriented mutual fund (STT paid at the time of transfer of
units) for the A.Y.2024-25 and tax, if any, payable thereon, in the
following cases, assuming that these are the only transactions covered
6
 under section 112A during the P.Y.2023-24 in respect of these
assessees:
(i) Mr. Shagun purchased 300 shares in A Ltd. on 20.5.2017 at a
cost of ` 400 per share. He sold all the shares of A Ltd. on
31.5.2023 for ` 1200. The price at which these shares were
traded in National Stock Exchange on 31.1.2018 is as follows –
Particulars Amount in `
Highest Trading Price 700
Average Trading Price 680
Lowest Trading Price 660
(ii) Mr. Raj purchased 200 units of equity oriented fund, Fund A on
1.2.2017 at a cost of ` 550 per unit. The units were not listed at
the time of purchase. Subsequently, units of Fund A were listed
on 1.1.2018 on the National Stock Exchange. Mr. Raj sold all the
units on 3.4.2023 for ` 900 each. The details relating to quoted
price on National Stock Exchange and net asset value of the units
are given hereunder:
Particulars Fund A
Amount in `
Highest Trading Price 750 (on 31.1.2018)
Average Trading Price 700 (on 31.1.2018)
Lowest Trading Price 650 (on 31.1.2018)
Net Asset Value on 31.1.2018 800
(4 Marks)
OR
(a) Mr. Aman has furnished the following particulars relating to payments
made and expenditure incurred towards scientific research for the year
ended 31.3.2024:
Sl. Particulars ` (in lakhs)
No.
(i) Payment made to AB University, an approved 15
University
(ii) Payment made to Siya College 17
(iii) Payment made to IIT, Bangalore (under an 12
approved programme for scientific research)
(iv) Machinery purchased for in-house scientific 25
research
Compute the deduction available under section 35 of the Income-tax
Act, 1961 for A.Y. 2024-25, while computing his income under the head

7
 “Profits and gains of business or profession” under default tax regime
under section 115BAC. (4 Marks)
(b) Mr. Sailesh is a Marketing Manager in Smile Ltd. From the following
information, you are required to compute his income chargeable under
the head Salary for assessment year 2024-25.
(i) Basic salary is ` 70,000 per month.
(ii) Dearness allowance @ 40% of basic salary
(iii) He is provided health insurance scheme approved by IRDA for
which ` 20,000 incurred by Smile Ltd.
(iv) Received ` 10,000 as gift voucher on the occasion of his marriage
anniversary from Smile Ltd.
(v) Smile Ltd. allotted 800 sweat equity shares in August 2023. The
shares were allotted at ` 450 per share and the fair market value
on the date of exercising the option by Mr. Sailesh was ` 700 per
share.
(vi) He was provided with furniture during September 2019. The
furniture is used at his residence for personal purpose. The actual
cost of the furniture was ` 1,10,000. On 31st March, 2024, the
company offered the furniture to him at free of cost. No amount
was recovered from him towards the furniture till date.
(vii) Received ` 10,000 towards entertainment allowance.
(viii) Housing Loan@ 4.5% p.a. provided by Smile Ltd., amount
outstanding as on 01.04.2023 is ` 15 Lakhs. ` 50,000 is paid by
Mr. Sailesh every quarter towards principal starting from June
2023. The lending rate of SBI for similar loan as on 01.04.2023
was 8%.
(ix) Facility of laptop costing ` 50,000 (6 Marks)

8
 SECTION B – GOODS AND SERVICES TAX (50 MARKS)
QUESTIONS
(i) Working Notes should form part of the answers. However, in answers to
Questions in Division A, working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the candidates,
and disclosed by way of notes.
(iii) All questions should be answered on the basis of position of the GST law as
amended by provisions of the CGST Act, 2017 and the IGST Act, 2017 as
amended by the Finance Act, 2023, including significant notifications and
circulars issued, up to 29th February, 2024.
Division A –Case Scenario based MCQs (15 Marks)
Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
Himadri started providing a bouquet of goods and services in the month of April of
the current financial year under the regular scheme in the State of Telangana and
obtained voluntary registration under GST before starting the business.
In the month of April, she availed the services of construction of a godown for the
business from her brother-in-law who was financially dependent on him. She also
availed professional consultancy services in April for her business from her son
who is a well settled Chartered Accountant in Telangana. Himadri did not pay any
consideration for both these services as both of them were her relative/ family
member respectively.
In April, she supplied 1,000 packages to Natraj Traders each consisting of a pen
holder, a pen and a pencil box at a single price of ` 150. Rates of GST for pen
holder, pen and pencil box are 5%, 12% and 18% respectively.
She received following payments during the month of May:
- earned ` 1,60,000 by providing services as business facilitator to YYZ Bank
with respect to accounts in its urban area branch
- earned ` 50,000 by providing services by way of renting of residential dwelling
for use as a boutique to Supriya, an unregistered person.
- received ` 70,000 for supply of manpower for cleanliness of roads, public
places, architect services, etc., not involving any supply of goods, to
Municipality.
Himadri made supply of taxable Product A during June, details of which are as
follows-
- Basic price of Product A before TCS under Income-tax Act, 1961– ` 45,000
- Tax collected at source under Income-tax Act, 1961 – ` 2,500

9
- She received a subsidy of ` 55,000 from Habitat Foundation Pvt. Ltd. for
usage of green energy and the subsidy was linked to the units of green energy
and not the aforesaid product.
Himadri provides the following information regarding receipt of inward supplies
during July-
- purchased buses (seating capacity of 24 persons) for transportation of her
employees from their residence to office and back. Depreciation is claimed on
the GST component under the Income tax Act, 1961.
- purchased a truck having GST component of ` 1,50,000 for transportation of
finished goods. No depreciation claimed on the GST component under the
Income tax Act, 1961.
- availed outdoor catering services for a marketing event organised for her
prospective customers.
All the amounts given above are exclusive of taxes, wherever applicable. Further,
all the supplies referred above are intra-State supplies unless specified otherwise.
Conditions necessary for claiming input tax credit (ITC) have been fulfilled subject
to the information given above. The opening balance of input tax credit for the
relevant tax period of Himadri is Nil.
Based on the facts of the case scenario given above, choose the most appropriate
answer to Q. Nos. 1 to 6 below:-
1. Supply of package made by Himadri to Natraj Traders is a ______________
and is taxable under GST @ __________.
(a) composite supply; 12%
(b) mixed supply; 18%
(c) composite supply; 18%
(d) mixed supply; 12%
2. Out of payments received by Himadri in month of May, value of exempt supply
is _____ .
(a) ` 50,000
(b) ` 70,000
(c) ` 1,20,000
(d) ` 1,60,000
3. Compute the value of supply under section 15 of the CGST Act, 2017 made
by Himadri in the month of June.
(a) ` 45,000
(b) ` 47,500
(c) ` 48,500
10
 (d) ` 51,000
4. Compute the amount of input tax credit that can be claimed by Himadri in July.
(a) ` 30,000
(b) ` 37,000
(c) ` 1,50,000
(d) ` 1,57,000
5. In respect of services availed by Himadri in April, which of the following is a
correct statement?
(a) Godown construction service availed from her brother-in-law free of cost
is considered as a deemed supply.
(b) Professional service availed from her son free of cost is considered as a
deemed supply.
(c) Neither of the two services availed by her is a deemed supply.
(d) Both services availed by her are deemed supply.
6. Out of payments received by Himadri in month of May, the value of supply on
which tax payable by the recipient under reverse charge is _________.
(a) ` 50,000
(b) ` 70,000
(c) ` 1,20,000
(d) ` 1,60,000 (6 x 2 Marks = 12 Marks)
7. Suvidha Enterprises issued invoices pertaining to two independent outward
supplies, where in one invoice value of supply was understated by ` 75,000
and in another invoice, value was overstated by ` 45,000. Which of the
following is correct in respect of document to be issued by the firm for
understatement and overstatement of invoice value?
(i) Debit note is to be issued for ` 75,000.
(ii) Credit note is to be issued for ` 75,000.
(iii) Debit note is to be issued for ` 45,000.
(iv) Credit note is to be issued for ` 45,000.
(a) (i) & (iii)
(b) (ii) & (iii)
(c) (i) & (iv)
(d) (ii) & (iv) (2 Marks)

11
8. Riya & Co., a partnership firm, is engaged in retail trade since 1st April. The
firm became liable for registration on 1st October. However, it applied for
registration on 10th October and was granted certificate of registration on 5th
November.
Determine the effective date of registration of Riya & Co.?
(a) 1st April
(b) 1st October
(c) 10th October
(d) 5th November (1 Mark)

PART II - Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
1. (a) M/s. ABC & Co., a chartered accountancy firm, has its office in
Bengaluru. It is registered under GST in the State of Karnataka. In the
month of April, it supplied statutory audit services to Dhruv
Manufacturers of Karnataka for ` 1,20,000. Further, it charged
` 1,60,000 for the ITR filing services provided to the recipients located
within Karnataka in said month. It also received ` 1,80,000 for internal
audit services provided to a client registered in Mumbai, Maharashtra.
All the amounts are exclusive of GST.
M/s. ABC & Co. has also provided following information regarding the
expenses incurred in the month of April for the purpose of providing the
taxable services:
Sr. Particulars CGST SGST
No. (`) (`)
1. Membership fee of a club (located in 2,000 2,000
Bengaluru) paid for a senior partner of the
firm
2. Rent paid to landlord, who is registered in 3,850 3,850
State of Karnataka, for office located in
Karnataka (Refer Note below)
3. Professional fee paid to 18,000 18,000
Mr. Jamnaprasad, a practicing Chartered
Accountant, for professional services
availed
[TDS of ` 20,000 is deducted under
section 194J of the Income-tax Act, 1961]
4. Air conditioner purchased for office 3,000 3,000
purpose

12
 Note - Landlord did not upload his GSTR-1 within the prescribed time
resulting in the GST amount not being reflected in GSTR-2B of M/s. ABC
& Co.
Other suppliers have duly uploaded their GSTR-1 within the prescribed
time and GST amount is reflected in GSTR-2B of M/s. ABC & Co.
Compute the net GST payable in cash by M/s. ABC & Co. for the month
of April.
Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively
assuming that all the remaining conditions of utilisation of ITC are
fulfilled. (10 Marks)
(b) Guru Enterprises (Delhi), a registered taxpayer, made a taxable supply
to Y Ltd. (Delhi) for a price of ` 10,00,000 (excluding any tax or
discounts). It received a price linked subsidy of ` 1,10,000 from Jiva
Enterprises Pvt Ltd. The price of ` 10,00,000 is after consideration of
such subsidy amount. Further, after delivery of the goods to Y Ltd., Guru
Enterprises arranged post-delivery inspection of goods and charged
` 10,000 for the same.
In respect of above supply, Guru Enterprises had procured some raw
material from X Ltd., for which it owed ` 25,000. The said amount was
directly paid by Y Ltd. to X Ltd. and was not included in the price of goods
of ` 10,00,000 mentioned above.
The payment of consideration for above supply was delayed by Y Ltd.
Hence, an interest amount of ` 20,000 (in lumpsum) was also charged
by Guru Enterprises.
The applicable tax rates are - CGST - 6%, SGST - 6% and IGST - 12%.
You are required to determine value of taxable supply as well as the
applicable tax liability for the above supply transaction. (5 Marks)
2. (a) Keshav Ltd., a registered company of Chennai, Tamil Nadu has provided
following education related services for the month of October:
Particulars Amount (`)
Services of transportation of students, faculty and staff 2,50,000
from home to college and back to Galgotian College, (a
private college) providing degree courses in BBA, MBA,
B.Com., M.Com.
Online monthly magazine containing articles and 1,00,000
updates in law to students of Pariksha Law College
offering degree courses in LLB and LLM
Housekeeping services to Career Coaching Institute 50,000
Security services to Happy Higher Secondary School for 3,25,000
security in school premises
Services of providing breakfast, lunch and dinner to 5,80,000
students of Ayushmann Medical College offering degree
courses recognized by law in medical field
13
 All the above amounts are exclusive of GST.
Compute the value of taxable supplies of Keshav Ltd. for the month of
October with necessary explanations. (6 Marks)
(b) Champak Ltd. avails legal services from a firm of advocates. The firm
issues invoice for the services to Champak Ltd. on 17 th Feb. However,
Champak Ltd. was not happy with the services provided by the firm as
its legal case was not handled by the firm in a professional manner and
it resulted in the company losing the case. The company delayed the
payment to the firm and finally made the payment on 3 rd November.
Determine the time of supply of the legal services provided by the firm
of advocates to Champak Ltd. (4 Marks)
3. (a) Answer the following questions:
(i) Mr. Jagmag is a registered dealer in Kerala paying tax under
composition levy from 1 st April. However, he opts to pay tax under
regular scheme from 1st December. Is he liable to file GSTR-4 for
the said financial year during which he opted out of composition
scheme? (3 Marks)
(ii) Mrs. Gargi, a registered dealer in Rajasthan, did not file GSTR-3B
for the month of June, but she wants to file GSTR-3B for the month
of July. Is it possible? Answer with reference to section 39 of the
CGST Act, 2017. (2 Marks)
(b) Can a chartered accountant become a GST practitioner (GSTP)?
Discuss. (5 Marks)
4. (a) What would be the place of supply of services provided by an event
management company for organizing an event which is held in multiple
States? (5 Marks)
OR
(a) Services provided by an entity registered under section 12AB of the
Income-tax Act, 1961 are exempt from GST if such services are provided
by way of charitable activities. Elaborate the term ‘charitable activities’.
(5 Marks)
(b) (i) List the details of outward supplies which can be furnished using
Invoice Furnishing Facility (IFF). (2 Marks)
(ii) Which are the commodities which have been kept outside the
purview of GST? Examine the status of taxation of such
commodities after introduction of GST. (3 Marks)

14
 Mock Test Paper - Series I: July, 2024
Date of Paper: 31 st July, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP - I

PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
Division A – Multiple Choice Questions
MCQ No. Sub-part Most Appropriate MCQ No. Most Appropriate
Answer Answer
1. (i) (a) 3. (a)
(ii) (d) 4. (c)
(iii) (b)
2. (i) (b)
(ii) (c)
(iii) (b)
Division B – Descriptive Questions
1. Computation of total income of Mr. Ayush for A.Y. 2024-25 under the
regular provisions of the Act
Particulars ` ` `
I Income from business or
profession
Net profit as per profit and loss 82,45,000
account
Add: Items of expenditure not
allowable while computing
business income
(i) Interest on loan taken for 1,75,000
purchase of plant & machinery
[Interest from the date on
which capital was borrowed till
the date on which asset was
first put to use, not allowable
as deduction under section
36(1)(iii). Accordingly, interest
of ` 1,75,000 [` 50,00,000 x
10.5% x 4/12] has to be added
back, since the same is
debited to the profit and loss
account]

1
 (ii) Purchase of goods at a price 5,00,000
higher than the fair market
value
[The difference between the
purchase price (` 40 lakhs)
and the fair market value
(` 35 lakhs) has to be added
back as per section 40A(2)
since the purchase is from a
related party, i.e., his brother
and at a price higher than the
fair market value] 6,75,000
89,20,000
Less: Items of income to be
treated separately under the
respective head of income
(i) Income-tax refund including 15,550
interest on refund of ` 4,550
(ii) Dividend from Indian 15,00,000
companies
(iii) Short term capital gains on 10,00,000
transfer of listed equity shares 25,15,550
64,04,450
Less: Depreciation on interest
on loan capitalised to plant and
machinery
` 1,75,000, being the amount of
interest on loan taken for purchase
of plant and machinery from the date
on which capital was borrowed till
the date on which asset was first put
to use, shall be capitalized
Normal depreciation @15% x 50% 13,125
on such interest
Additional depreciation @20% x 17,500 30,625
50% on such interest
[Since plant & machinery was put
to use for less than 180 days in
P.Y. 2023-24, it is eligible for 50%
of the rate of depreciation]
63,73,825
II Capital Gains
Short term capital gains on transfer 10,00,000
of listed equity shares
III Income from Other Sources
Interest on income-tax refund 4,550

2
 Dividend from Indian companies 15,00,000 15,04,550
Gross Total Income 88,78,375
Less: Deductions under Chapter
VI-A
- Deduction under section 80C 40,000
Life insurance premium for
married daughter [Allowable as
deduction though she is not
dependent, since child of an
individual whether dependent or
not falls within the meaning of
term “Person”. Accordingly,
whole of the amount of
` 40,000 is allowable as it does
not exceed 10% of the
` 5,00,000, being the sum
assured]
- Deduction under section 80D 25,000 65,000
Health insurance premium for
self, spouse and children
[Allowable as deduction, since it
is paid otherwise than by way of
cash. However, it is to be
restricted to ` 25,000
Total Income 88,13,375
Total Income (Rounded off) 88,13,380
Computation of tax payable by Mr. Ayush for A.Y. 2024-25
under the regular provisions of the Act
Particulars ` `
Tax on total income of ` 88,13,380
Tax on short term capital gains on transfer of 1,50,000
listed equity shares @15% u/s 111A [` 10,00,000
x 15%]
Tax on other Income of ` 78,13,380
Upto ` 2,50,000 Nil
` 2,50,001 – ` 5,00,000 [@5% of ` 2.50 lakh] 12,500
` 5,00,001 – ` 10,00,000 [@20% of ` 5,00,000] 1,00,000
` 10,00,001- ` 78,13,380 [@30% of ` 68,13,380] 20,44,014 21,56,514
23,06,514
Add: Surcharge @10%, since total income
exceeds ` 50,00,000 but does not exceed ` 1 2,30,651
crore
25,37,165

3
 Add: Health and education cess@4% 1,01,487
Total tax liability 26,38,652
Less: TDS u/s 194N @ 2% on ` 50 lakhs, being 1,00,000
the cash withdrawals exceeding ` 1 crore
Less: Advance tax paid 17,50,000 18,50,000
Tax payable 7,88,652
Tax payable (rounded off) 7,88,650
2. (a) Miss Geeta is said to be resident if she satisfies any one of the
following basic conditions:
(i) Has been in India during the previous year for a total period of
182 days or more
(or)
(ii) Has been in India during the 4 years immediately preceding the
previous year for a total period of 365 days or more and has been
in India for at least 60 days during the previous year.
Miss Geeta’s stay in India during the P.Y.2023-24 is 142 days
[30+31+30+31+20] which is less than 182 days. However, her stay in
India during the P.Y.2023-24 exceeds 60 days. Since, she left India for
the first time, her stay in India during the four previous years prior to
P.Y.2023-24 would be more than 365 days. Hence, she is a resident
for P.Y.2023-24.
Further, Miss Geeta would be “Resident and ordinarily resident” in
India in during the previous year 2023-24, since her stay in India in the
last seven previous years prior to P.Y.2023-24 is more than 729 days
and she must be resident in the preceding ten years.
Computation of business income and agricultural income of Miss
Geeta for A.Y. 2024-25
Particulars Income Business Agricultural
Income Income
` `
(i) Income from sale of
centrifuged latex
processed from rubber
plants grown in
Kanyakumari (Apportioned
between business and
agricultural income in the
ratio of 35:65 as per Rule
7A of Income-tax Rules,
1962) 1,50,000 52,500 97,500
(ii) Income from sale of coffee
grown, cured, roasted and
grounded in Colombo and
4
 received in Chennai [See
Note 1 below] 5,00,000 5,00,000 -
(iii) Income from sale of tea
grown and manufactured
in West Bengal
(Apportioned between
business and agricultural
income in the ratio of
40:60 as per Rule 8 of the
Income-tax Rules, 1962) 12,00,000 4,80,000 7,20,000
(iv) Income from sapling and
seedling grown in a
nursery at Cochin. Basic
operations were not
carried out on land [See 2,00,000 - 2,00,000
Note 2 below]
20,50,000 10,32,500 10,17,500
Notes:
(1) Since Ms. Geeta is resident and ordinarily resident in India for
A.Y. 2024-25, her global income is taxable in India. Entire income
from sale of coffee grown, cured, roasted and grounded in
Colombo is taxable as business income since such income is
earned from sale of coffee grown, cured, roasted and grounded
outside India i.e., in Colombo.
(2) As per Explanation 3 to section 2(1A), income derived from
sapling or seedlings grown in a nursery would be deemed to be
agricultural income, whether or not the basic operations were
carried out on land. Hence, income of ` 2,00,000 from sapling and
seedling grown in a nursery at Cochin is agricultural income.
(b) TDS implications
(i) On pre-mature withdrawal from EPF
No tax is deductible under section 192A even though the
employee, Mr. Vikas, has not completed 5 years of continuous
service, since termination of employment is on account of his ill-
health. Hence, Rule 8 of Part A of the Fourth Schedule is
applicable in this case.
(ii) On payment of service fee to bank
Even though service fee is included in the definition of “interest”
under section 2(28A), no tax is deductible at source under section
194A, since the service fee is paid to a banking company, i.e.,
Indian Bank.
5
3. (a) Computation of Gross Total Income of Mr. Jain and Mrs. Jain for
A.Y. 2024-25
Particulars Mr. Jain Mrs. Jain
` ` ` `
Salary 12,50,000 -
Less: Standard deduction
under section 16(ia) 50,000
12,00,000
Interest on Fixed Deposit - 14,00,000
earned by Mrs. Jain
Total income (before 12,00,000 14,00,000
including remuneration from
firm and minor’s income)
Remuneration from firm 2,50,000
(assumed that the same is
fully deductible in the hands
of the firm)
Remuneration of ` 2,50,000
received by Mr. Jain has to
be included in the total
income of Mrs. Jain, since
both of them have
substantial interest in the
concern (i.e., each having
25% share in the firm, in the
2,50,000 5,00,000
present case), and her total
income of `14 lakh exceeds
the total income of her
spouse excluding this
income (i.e., ` 12 lakh). It is
assumed that such
remuneration is fully
deductible in the hands of
the firm.
Total Income (before 12,00,000 19,00,000
including minor’s income)
Income of three minor
children to be included in
Mrs. Jain’s income1, since
her total income before -
including minor’s income is
higher than that of her
husband.
- Neeta 15,000
- Meeta 10,000
- Seeta 2,000
27,000

1 It is assumed that the income of the minor children are not on account of their skills.
6
 Less: Exemption of ` 1,500
u/s 10(32) in respect of the 4,500 22,500
income each child so
included.
Gross Total Income 12,00,000 19,22,500
(b) Computation of Total Income of Mr. Ram for A.Y. 2024-25
Particulars Amount Amount
` `
Salaries
Basic Salary 3,80,000
Dearness Allowance 1,20,000
Employer contribution to NPS = 20% of 76,000
` 3,80,000
5,76,000
Less: Standard deduction
[` 50,000 or ` 5,76,000, whichever is 50,000
lower] 5,26,000
Profits and gains of business or
profession
Where the amount gifted by Mr. Ram (` 6
lakh, in this case) is invested by Mrs. Ram
in a business as her capital, proportionate
share of profit or loss, as the case may be,
computed by taking into account the value (78,000)
of the investment as on 1.4.2023 to the
total investment in the business (` 10 lakh)
would be included in the income of
Mr. Ram [loss of ` 1,30,000 x 6/10]
Income from other sources
All income of the minor son would be 70,000
included in the income of the parent
Mr. Ram, since his income is higher than
the income of Mrs. Ram (loss of ` 52,000,
based on the information given in the
question). Accordingly, ` 70,000, being
amount of gift received by minor son
during the P.Y. 2023-24, would be
included in the income of Mr. Ram as the
amount of gift exceeds ` 50,000.
Less: Exemption in respect of income of
minor child included in Mr. Ram’s income 1,500
68,500
Less: Business loss of ` 78,000 set-off to 68,500
the extent of

7
 (Balance business loss of ` 9,500 to be
carried forward to the next year, since the
same cannot be set-off against salary income)
Nil
Gross Total Income 5,26,000
Less: Deductions under Chapter VI-A
Under section 80C – deposit in Sukanya 70,000
Samridhi Account
Under section 80CCC – Contribution to 40,000
LIC Annuity Plan
Under section 80CCD(1) – Employee
contribution to NPS (` 76,000 – ` 50,000
deduction claimed u/s 80CCD(1B)], since
it is lower than ` 42,800, being 10% of 26,000
salary (` 3,80,000 + ` 48,000)
Allowable in full, since less than 1,36,000
`1,50,000, being the maximum permissible
deduction u/s 80C, 80CCC & 80CCD(1)
Under section 80CCD(1B) – Employee 50,000
contribution to NPS
Under section 80CCD(2) – Employer 59,920
contribution to NPS restricted to 14% of
basic salary + DA forming part of pay,
since employer is Central Government
= 14% x (` 3,80,000 + ` 48,000)
Under section 80E – Interest paid on loan
taken for higher education 15,000
2,60,920
Total Income 2,65,080
4. (a) First alternative
For the purpose of computation of long-term capital gains chargeable
to tax under section 112A, the cost of acquisition in relation to the long -
term capital asset, being an equity share in a company or a unit of an
equity oriented fund or a unit of a business trust acquired before 1 st
February, 2018 shall be the higher of
(a) cost of acquisition of such asset, i.e., actual cost; and
(b) lower of
(i) the fair market value of such asset as on 31.1.2018; and
(ii) the full value of consideration received or accruing as a
result of the transfer of the capital asset.
(i) The fair market value of listed equity shares as on 31.1.2018 is
the highest price quoted on the recognized stock exchange as on
that date.
8
 Accordingly, long-term capital gain on transfer of STT paid listed
equity shares by Mr. Shagun would be determined as follows:
The FMV of shares of A Ltd. would be ` 700, being the highest
price quoted on National Stock Exchange on 31.1.2018. The cost
of acquisition of each equity share in A Ltd. would be ` 700, being
higher of actual cost i.e., ` 400 and ` 700 [being the lower of FMV
of ` 700 as on 31.1.2018 (i.e., the highest trading price) and
actual sale consideration of ` 1,200]. Thus, the long-term capital
gain would be ` 1,50,000 i.e., (` 1,200 – ` 700) x 300 shares. The
long-term capital gain of ` 50,000 (i.e., the amount in excess of
` 1,00,000) would be subject to tax@10% under section 112A
(plus cess@4%), without benefit of indexation. The tax on capital
gain @10.4% would be ` 5,200 (` 50,000 x 10.4%)
(ii) In the case of units listed on recognised stock exchange on the
date of transfer, the FMV as on 31.1.2018 would be the highest
trading price on recognised stock exchange as on 31.1.2018 (if
units are listed on that date), else, it would be the net asset value
as on 31.1.2018 (where units are unlisted on that date).
Accordingly, the FMV of units of Fund A as on 31.1.2018 would be
` 750 (being the highest trading price on 31.1.2018, since the
units of Fund A are listed on that date).
The cost of acquisition of a unit of Fund A would be ` 750, being
higher of actual cost i.e., ` 550 and ` 750 (being the lower of FMV
of ` 750 as on 31.1.2018 and actual sale consideration of ` 900).
Thus, the long-term capital gains on sale of units of Fund A would
be ` 30,000 (` 900 – ` 750) x 200 units.
Since the long term capital gains on sale of units of Fund A is
` 30,000, which is less than ` 1,00,000, the said sum is not
chargeable to tax under section 112A.
(a) Second alternative
Computation of deduction allowable under section 35
Particulars Amount Section % of Amount of
(` in lakhs) deduction deduction
(` in lakhs)
Payment for scientific
research
AB University, an 15 35(1)(ii) Nil Nil
approved University
Siya College 17 - Nil Nil
IIT Bangalore (under an 12 35(2AA) Nil Nil
approved programme
for scientific research)

9
 In-house research
Capital expenditure – 25 35(1)(iv) 100% 25
Purchase of Machinery r.w. 35(2)
Deduction allowable under section 35 25

Deduction under section 35(1)(ii) and 35(2AA) is not allowable under

default tax regime under section 115BAC.
(b) Computation of income under the head “Salaries” of Mr. Sailesh
for the A.Y.2024-25
Particulars ` `
Basic Salary [` 70,000 x 12 months] 8,40,000
Dearness allowance [40% of `8,40,000] 3,36,000
Entertainment allowance 10,000
Interest on housing loan given at 49,291
concessional rate, would be perquisite,
since the amount of loan exceeds
` 20,000, For computation, the lending
rate of SBI on 1.4.2023 @8% has to be
considered. Thus, perquisite value would
be determined @ 3.5% (8% - 4.5%) [See
Working Note]
Health insurance premium paid by the Nil
employer [tax free perquisite]
Gift voucher on the occasion of his 10,000
marriage anniversary [As per Rule
3(7)(iv), the value of any gift or voucher or
token in lieu of gift received by the
employee or by member of his household
exceeding ` 5,000 in aggregate during
the previous year is fully taxable] (See
note below)
Allotment of sweat equity shares
Fair market value of 800 sweat equity 5,60,000
shares @ ` 700 each
Less: Amount recovered @ ` 450 each 3,60,000 2,00,000
Use of furniture by employee
10% p.a. of the actual cost of ` 1,10,000 11,000
Use of Laptop
Facility of use of laptop is not a taxable Nil
perquisite
Transfer of asset to employee
Value of furniture transferred to 1,10,000
Mr. Sailesh

10
Less: Normal wear and tear @10% for
each completed year of usage on SLM
basis [1,10,000 x 10% x 4 years (from 44,000 66,000
September 2019 to September 2023)]
Gross Salary 15,22,291
Less: Standard deduction u/s 16 [Actual
salary or ` 50,000, whichever is less] 50,000
Net Salary 14,72,291
Working Note:
Computation of perquisite value of loan given at concessional rate
For computation, the lending rate of SBI on 1.4.2023 @8% has to be
considered. Thus, perquisite value would be determined @ 3.5% (8% -
4.5%)
Month Maximum outstanding Perquisite value
balance as on last date at 3.5% for the
of month (`) month (`)
April, 2023 15,00,000 4,375
May, 2023 15,00,000 4,375
June, 2023 14,50,000 4,229
July, 2023 14,50,000 4,229
August, 2023 14,50,000 4,229
September, 2023 14,00,000 4,083
October, 2023 14,00,000 4,083
November, 2023 14,00,000 4,083
December, 2023 13,50,000 3,937.50
January, 2024 13,50,000 3,937.50
February, 2024 13,50,000 3,937.50
March, 2024 13,00,000 3,792
Total value of this perquisite 49,290.50
Note: An alternate view possible is that only the sum in excess of ` 5,000
is taxable. In such a case, the value of perquisite would be ` 5,000 and
gross salary and net salary would be ` 15,17,291 and ` 14,67,291,
respectively.

11
 SECTION B – GOODS AND SERVICES TAX
Division A –Case Scenario based MCQs

Question Answer
No.
1. (b) mixed supply; 18%
2. (b) ` 70,000
3. (a) ` 45,000
4. (c) ` 1,50,000
5. (b) Professional service availed from her son free of cost is
considered as a deemed supply.
6. (d) ` 1,60,000
7. (c) (i) & (iv)
8. (b) 1st October

Division B - Descriptive Questions

1. (a) Computation of net GST payable by ABC & Co. for the month of
April
Particulars Value of CGST SGST IGST
supply (`) (`) (`)
Intra-State statutory 1,20,000 10,800 10,800
audit services
Intra-State ITR filing 1,60,000 14,400 14,400
services
Inter-State internal audit
services since place of 1,80,000 - - 32,400
supply is location of
recipient, i.e. Mumbai,
Maharashtra
Total output tax liability 25,200 25,200 32,400
Less: ITC [Refer Working (21,000) (21,000)
Note]
[CGST credit is set off
against CGST liability
and SGST credit is set off
against SGST liability
since CGST credit
cannot be utilized
towards payment of
SGST liability and vice
versa.]
Net GST payable 4,200 4,200 32,400

12
 Working Note:
Computation of ITC that can be availed
Particulars CGST (`) SGST (`)
Computation of eligible ITC
Membership fee paid Nil Nil
[ITC on membership of a club is blocked
except when such services are provided by
an employer to its employees under a
statutory obligation.]
Office rent paid to landlord Nil Nil
[No ITC since the supplier did not upload the
details of invoice in his GSTR-1 and said
details are not being reflected in GSTR-2B of
the recipient.]
Professional fee paid 18,000 18,000
[ITC on services used in the
course/furtherance of the business is allowed.]
Air conditioner for office purpose 3,000 3,000
[ITC on goods used in the course/furtherance
of the business is allowed.]
Total eligible ITC 21,000 21,000
(b) Computation of value of taxable supply and tax liability
Particulars Amount (`)
Price of goods (exclusive of tax and discounts) 10,00,000
Add: Subsidy received from Jiva Enterprises Pvt. Ltd. 1,10,000
[Subsidy provided by non-Government bodies and which
is directly linked to the price, is includible.]
Add: Post-delivery inspection charges -
[Anything done by the supplier in respect of the supply of
goods after the delivery of goods is not includible in value.]
Add: Amount directly paid by Y Ltd. to X Ltd. 25,000
[Liability of the supplier, in relation to the supply being
valued, if discharged by the recipient of supply and not
included in the price, is includible in the value.]
Add: Interest 17,857
[Interest for delayed payment of consideration is includible
in the value. Since interest is received in lumpsum, amount
is inclusive of GST [` 20,000 x 100/112] (rounded off).]
Value of taxable supply 11,52,857
CGST @ 6% (rounded off) 69,171
SGST @ 6% (rounded off) 69,171
13
2. (a) Computation of value of taxable supplies of Keshav Ltd.
Particulars Amount
(`)
Services of transportation of students, faculty and staff to 2,50,000
Galgotian College
[Not exempt, since transportation services provided to an
educational institution are exempt only if such institution
provides pre-school education or education up to higher
secondary school or equivalent.]
Online monthly magazine to students of Pariksha Law
College Nil
[Services of supply of online educational journals provided
to an educational institution providing qualification
recognized by law are exempt.]
Housekeeping services to Career Coaching Institute 50,000
[Not exempt since such services are provided to a non-
educational institute.]
Security services to Happy Higher Secondary School Nil
[Security services provided to an educational institution
providing education up to higher secondary school are
exempt since such services are performed in the premises
of educational institution.]
Services of providing breakfast, lunch and dinner to 5,80,000
students of Ayushmann Medical College
[Not exempt, since catering services provided to an
educational institution are exempt only if such institution
provides pre-school education or education up to higher
secondary school or equivalent.]
Value of taxable supplies 8,80,000
(b) Tax on services supplied by a firm of advocates by way of legal services
to any business entity is payable under reverse charge by such firm of
advocates. Time of supply of services that are taxable under reverse
charge is earliest of the following two dates in terms of section 13(3) of
the CGST Act, 2017:
• Date of payment [3 rd November]
• 61st day from the date of issue of invoice [19 th April]
The date of payment comes subsequent to the 61 st day from the issue
of invoice by the supplier of service. Therefore, the 61 st day from the
date of supplier’s invoice has to be taken as the time of supply. This
fixes 19th April as the time of supply.
3. (a) (i) Where a taxpayer opts to withdraw from the composition scheme,
he has to file GSTR-4 for the period for which he has paid tax under
the composition scheme. Such return is required to be furnished
14
 till 30th day of April following the end of the financial year during
which such withdrawal falls. Therefore, in the given case,
Mr. Jagmag is liable to file GSTR-4 for the said F.Y. during which
he opted out of composition scheme by 30 th April of next F.Y.
(ii) A registered person is not allowed to furnish a return for a tax period
if the return for any of the previous tax periods has not been
furnished by him. Therefore, in the given case, Mrs. Gargi cannot
file GSTR-3B for July, if she has not filed GSTR-3B for the
preceding month, i.e., June.
(b) A chartered accountant can become a GST practitioner (GSTP).
However, holding a certificate of practice as a chartered accountant and
having GST registration does not imply that such chartered accountant
is a GST practitioner as well. For becoming a GSTP, even a chartered
accountant in practice has to follow the enrolment process of GSTP as
provided under the GST law and only upon approval of such enrolment
can a chartered accountant represent himself as a GSTP.
4. (a) In case of an event, if the recipient of service is registered, the place of
supply of services for organizing the event is the location of such person.
However, if the recipient is not registered, the place of supply is the place
where event is held.
Since the event is being held in multiple states and a consolidated
amount is charged for such services, the place of supply will be deemed
to be in each State in proportion to the value for services determined in
terms of the contract or agreement entered into in this regard.
In the absence of a contract or agreement between the supplier and
recipient of services, the proportionate value of services made in each
State (where the event is held) will be computed in accordance with
relevant provisions of GST law by the application of generally accepted
accounting principles.
Alternative answer
(a) The term ‘charitable activities’ mean activities relating to-
(i) public health by way of-
(A) care or counseling of
(I) terminally ill persons or persons with severe physical or
mental disability;
(II) persons afflicted with HIV or AIDS;
(III) persons addicted to a dependence-forming substance
such as narcotics drugs or alcohol; or
(B) public awareness of preventive health, family planning or
prevention of HIV infection;
(ii) advancement of religion, spirituality or yoga;

15
 (iii) advancement of educational programmes/skill development
relating to,-
(A) abandoned, orphaned or homeless children;
(B) physically or mentally abused and traumatized persons;
(C) prisoners; or
(D) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests & wildlife.
(b) (i) Details of outward supplies which can be furnished using IFF are
as follows:
(a) invoice wise details of inter-State and intra-State supplies
made to the registered persons;
(b) debit and credit notes, if any, issued during the month for such
invoices issued previously.
(ii) Constitution defines the Goods and Services tax (GST) as a tax on
supply of goods or services or both, except supply of alcoholic
liquor for human consumption. Therefore, alcohol for human
consumption is kept out of GST by way of definition of GST in the
Constitution.
Five petroleum products viz. petroleum crude, motor spirit (petrol),
high speed diesel, natural gas and aviation turbine fuel have
temporarily been kept out of the purview of GST; GST Council shall
decide the date from which they shall be included in GST. The
erstwhile taxation system (CST/VAT & central excise) still
continues in respect of the said commodities.

16
 Mock Test Paper - Series II: August, 2024
Date of Paper: 16th August, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP - I

PAPER – 1 : ADVANCED ACCOUNTING
Time Allowed – 3 Hours Maximum Marks – 100
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs)
3. Part II comprises questions which require descriptive type answers.

PART I – Case Scenario based MCQs (30 Marks)

Part I is compulsory.
Case Scenario
1. Anshul manufacturers purchased 20,000 Kg. of raw material at ` 170 per Kg.
Direct transit cost incurred ` 5,00,000 and normal transit loss is 3%. Anshul
manufacturers actually received 19,000 kg of raw material. During the year it
consumed 17,600 kg of raw material.
Further information:
(i) The purchase price includes ` 15 per kg as GST in respect of which
full credit is allowed and will be availed by Anshul manufacturers.
(ii) Assume that there is no opening stock.
Answer the following questions based on above:
a. What will be the cost of material:
(i) ` 36,00,000
(ii) ` 34,00,000
(iii) ` 39,00,000
(iv) ` 31,00,000
b. what will be the value of the closing stock:
(i) ` 1,70,000
(ii) ` 1,85,500
(iii) ` 2,38,000
(iv) ` 2,59,700
c. What will be the cost per Kg of raw material:
(i) ` 180
(ii) ` 183.6

1
 (iii) ` 185.5
(iv) ` 189.4
d. How much amount as abnormal loss will be debited in P&L:
(i) ` 72,000 approx
(ii) ` 73,440 approx
(iii) ` 74,200 appox
(iv) ` 75,760 approx
Multiple Choice Questions [4 MCQs of 2 Marks each: Total 8 Marks]
2. Aazad Ltd. has the following particulars:
Particulars ` (lacs)
10% Preference Share Capital (` 10 each) 2,500
Equity Share Capital of ` 10 each 8,000
Capital Redemption Reserve 1,000
Securities Premium 800
General Reserve 6,000
Profit & Loss A/c 300
Cash 1,650
Investments (Market Value ` 1,500 lacs) 3,000
The company decides to redeem all it’s preference shares at a premium of
10% and buys back 25% of equity shares @ ` 15 per share. Investments
amounting to Market Value of ` 1,000 lakhs sold at ` 3,000 lakhs and raises
a bank loan of ` 2,000 lakhs.
Answer the following questions based on above:
(a) The amount of Profit/Loss on Sale of Investment is:
(i) ` 1,500 lakhs Profit
(ii) ` 1,000 lakhs Profit
(iii) ` 2,000 lakhs Loss
(iv) ` 1,000 lakhs Loss
(b) Securities Premium available for Buyback after redemption of
Preference Shares
(i) ` 550 lakhs
(ii) ` 800 lakhs
(iii) Can’t utilize securities premium for buyback
(iv) ` 350 lakhs

2
 (c) Total amount to be transferred to Capital Redemption Reserve:
(i) ` 2,000 lakhs
(ii) ` 4,500 lakhs
(iii) ` 2,500 lakhs
(iv) ` 1,750 lakhs
(d) Cash balance after buyback
(i) ` 1,150 lakhs
(ii) ` 2,200 lakhs
(iii) ` 3,250 lakhs
(iv) ` 900 lakhs
Multiple Choice Questions [4 MCQs of 2 Marks each: Total 8 Marks]
3. On April 1, 2022, Hello Limited approached a software company for
implementation of SAP ERP at its organisation. The cost of implementation of
SAP ERP is ` 25,00,000 and the time required is 15 months. The company
was also required to pay ` 100,000 annually after implementation for
maintenance and normal updation of ERP. The implementation work started
in June, 2022 and could not be finished in 15 months. The ERP was
implemented on May 2024. Due to delay in implementation the vendor
refunded ` 2,00,000. The Company recognised the intangible asset ‘SAP
ERP’ on September 2023 (15 months from June 2022). After two years, the
Company has got the SAP ERP more upgraded with latest version and
additional features and functions which also increased its speed and usage to
Hello Limited for ` 7,00,000.
(a) On which date the Intangible asset should be recognised:
(i) April 2022 (When it was decided that SAP ERP is to be
implemented)
(ii) June 2022 (When the implementation work started)
(iii) September 2023 (When the implementation work should have
completed as per agreed terms)
(iv) May 2024 (When the SAP actually got implemented)
(b) At what amount the SAP ERP should be initially recognised as ‘intangible
asset:
(i) ` 25,00,000
(ii) ` 26,00,000
(iii) ` 23,00,000
(iv) ` 32,00,000

3
 (c) How should the annual maintenance and updation expenses should be
accounted for:
(i) Should be capitalised with ‘Intangible Asset’
(ii) Should be recognised as a separate ‘Intangible Asset’
(iii) Should be recognised as expense in Profit and Loss annually.
(iv) No accounting is required
(d) During the implementation period, how the expenditure incurred will be
accounted for:
(i) It will be expensed in profit and loss as and when incurred
(ii) It will be recognised as an asset ‘Intangible asset under
development’
(iii) It will only be disclosed in notes to accounts and will be recognised
when complete
(iv) It will be recognised as an item of Property, Plant and Equipment
Multiple Choice Questions [4 MCQs of 2 Marks each: Total 8 Marks]
4. Vijay Ltd. borrowed ` 30 lakh at interest rate of 5% per annum and purchased
plant and machinery for ` 60 lakh (using borrowed funds) and started
production. It took 1 year time for Vijay Ltd. to create optimum market for the
goods manufactured and generate revenue. How much borrowing cost can be
capitalised with cost of plant and machinery:
(a) ` 1.5 lakh
(b) ` 3 Lakh
(c) Nil
(d) ` 5 Lakh (2 Marks)
5. The cost of inventories of items that are not ordinarily interchangeable and
goods or services produced and segregated for specific projects should be
assigned using following cost formula
(a) By specific identification of their individual costs
(b) First-in, First-out (FIFO) Method
(c) Weighted average cost formula
(d) The formula used should reflect the fairest possible approximation to the
cost incurred in bringing the items of inventory to their present location
and condition. (2 Marks)
6. Securities held as stock-in-trade held by an entity are:
(a) Investments
(b) Not Investments
(c) May or may not be Investments
(d) Not an asset for entity (2 Marks)
4
 PART II – Descriptive Questions (70 Marks)
Question No.1 is compulsory.
Answer any four questions from the remaining five questions.
Wherever necessary, suitable assumptions may be made and indicated in answer
by the candidates. Working Notes should form part of the answer.
1. (a) A Ltd. purchased on 1 st April, 2023 8% convertible debenture in C Ltd.
of face value of ` 2,00,000 @ ` 108. On 1st July, 2023 A Ltd. purchased
another ` 1,00,000 debentures @ ` 112 cum interest. On 1 st October,
2023 ` 80,000 debentures were sold @ ` 105. On 1st December, 2023,
C Ltd. give option for conversion of 8% convertible debentures into
equity share of ` 10 each. A Ltd. received 5,000 equity shares in C Ltd.
in conversion of 25% debentures held on that date. The market price of
debenture and equity share in C Ltd. on 31 st December, 2023 is ` 110
and ` 15 respectively. Interest on debenture is payable each year on
31st March, and 30th September. Prepare investment account in the
books of A Ltd. on average cost basis for the accounting year ended
31st December, 2023. (10 Marks)
(b) A company incorporated in June 2023, has setup a factory within a
period of 8 months with borrowed funds. The construction period of the
assets had reduced drastically due to usage of technical innovations by
the company and the company is able to justify the reasons for the same.
Whether interest on borrowings for the period prior to the date of setting
up the factory should be capitalized although it has taken less than 12
months for the assets to get ready for use. You are required to comment
on the necessary treatment with reference to AS 16. (4 Marks)
2. You are required to prepare a Balance Sheet as at 31 st March 2024, as per
Schedule III of the Companies Act, 2013, from the following information of
Vishnu Ltd.:
Particulars Amount Particulars Amount
(`) (`)
Term Loans (Secured) 40,00,000 Investments (Non-
current) 9,00,000
Trade payables 45,80,000 Profit for the year 32,00,000
Cash and Bank Balances 38,40,000 Trade receivables 49,00,000
Miscellaneous
Staff Advances 2,20,000
Expenses 2,32,000
Other advances (given by Loan from other
14,88,000
Co.) parties 8,00,000
Provision for
Provision for Taxation 10,20,000
Doubtful Debts 80,000
Securities Premium 19,00,000 Stores 16,00,000
Loose Tools 2,00,000 Finished Goods 30,00,000
General Reserve 62,00,000 Plant and 2,14,00,000
Machinery (WDV)
5
 Additional Information: -
1. Share Capital consists of-
(a) 1,20,000 Equity Shares of ` 100 each fully paid up.
(b) 40,000, 10% Redeemable Preference Shares of ` 100 each fully
paid up.
2. Write off the amount of Miscellaneous Expenses in full, amounting
` 2,32,000.
3. Staff Advances and Other Advances are Considered to be short term.
(14 Marks)
3. (a) You are required to give the necessary journal entry at the inception of
lease to record the asset taken on finance lease in books of lessee from
the following information:
Lease period = 5 years;
Annual lease rents = ` 50,000
at the end of each year.
Guaranteed residual value = ` 25,000
Fair Value at the inception (beginning) of lease = ` 2,00,000
Interest rate implicit on lease is = 12.6% (Discounted rates for year 1 to
5 are .890, .790, .700, .622 and .552 respectively). (7 Marks)
(b) Smile Ltd. purchased machinery for ` 80 lakhs (useful life 4 years and
residual value ` 8 lakhs). Government grant received was ` 32 lakhs.
The grant had to be refunded at the beginning of third year. Show the
Journal Entry to be passed at the time of refund of grant and the value
of the fixed assets in the third year and the amount of depreciation for
remaining two years, if the grant had been credited to Deferred Grant
A/c. (7 Marks)
4. A Ltd. and B Ltd. give the following information as at 31.03.2024:
A Ltd. B Ltd.
(` in lakhs) (` in lakhs)
Equity Share Capital (Fully paid shares of 22,500 9,000
` 10 each)
Securities Premium 4,500 -
Foreign Project Reserve - 465
General Reserve 14,550 4,800
Profit and Loss Account 4,305 1,162.5
12% Debentures - 1,500
Trade payables 1,800 694.5
Provisions 2,745 1,053
Land and Buildings 9,000 -

6
 Plant and Machinery 21,000 7,500
Furniture, Fixtures and Fittings 3,456 2,550
Inventory 11,793 6,061.5
Trade receivables 3,180 1,650
Cash at Bank 1,671 913.5
All the bills receivable held by B Ltd. were A Ltd.'s acceptances.
On 1st April 2024, A Ltd. took over B Ltd. in an amalgamation in the nature of
merger. It was agreed that in discharge of consideration for the business, A
Ltd. would allot three fully paid equity shares of ` 10 each at par for every two
shares held in B Ltd. It was also agreed that 12% debentures in B Ltd. would
be converted into 13% debentures in A Ltd. of the same amount and
denomination.
Details of trade receivables and trade payables are as under:
Particulars A Ltd. B Ltd.
(` in lakhs)
Trade Payables:
Creditors 1,620 694.5
Bills Payable 180 -
1,800 694.5
Trade receivables:
Debtors 3,180 1,530
Bills Receivables - 120
3,180 1,650
Expenses of amalgamation amounting to ` 1.5 lakhs were borne by
A Ltd.
You are required to:
Prepare A Ltd.'s Balance Sheet immediately after the merger. (14 Marks)
5. Star Ltd. and its subsidiary Moon Ltd. Give the following information as on
31st March, 2024:
Star Ltd. Moon
(`) Ltd. (`)
Share Capital
Equity Share Capital (fully paid up shares of ` 10 12,00,000
2,00,000
each)
Reserves and Surplus
General Reserve 4,35,000 1,55,000
Cr. Balance in Profit and Loss Account 2,80,000 65,000

7
 Current Liabilities
Trade Payables 3,22,000 1,23,000
Non-Current Assets
Property, Plant and Equipment
Machinery 6,40,000 1,80,000
Furniture 3,75,000 34,000
Non-Current Investments
Shares in Moon Ltd. - 16,000 shares @ ` 20 each 3,20,000 -
Current Assets
Inventories 2,68,000 62,000
Trade Receivables 4,70,000 2,35,000
Cash and Bank 1,64,000 32,000
Star Ltd. acquired the 80% shares of Moon Ltd. on 1st April, 2023. On the date
of acquisition, General Reserve and Profit Loss Account of Moon Ltd. stood
at ` 50,000 and ` 30,000 respectively.
Machinery (book value ` 2,00,000) and Furniture (book value ` 40,000) of
Moon Ltd. were revalued at ` 3,00,000 and ` 30,000 respectively on
1st April,2023 for the purpose of fixing the price of its shares (rates of
depreciation on W.D.V basis: Machinery 10% and Furniture 15%). Trade
Payables of Star Ltd. include ` 35,000 due to Moon Ltd. for goods supplied
since the acquisition of the shares. These goods are charged at 10% above
cost. The inventories of Star Ltd. includes goods costing ` 55,000 (cost to Star
Ltd.) purchased from Moon Ltd.
You are required to prepare the Consolidated Balance Sheet of Star Ltd. with
its subsidiary as at 31 st March, 2024. (14 Marks)
6. (a) "Accounting Standards standardize diverse accounting policies with a
view to eliminate the non-comparability of financial statements and
improve the reliability of financial statements." Discuss and explain the
benefits of Accounting Standards (4 Marks)
Or
XYZ Ltd. proposes to declare 10% dividend out of General Reserves due
to inadequacy of profits in the year ending 31-03-2024.
From the following particulars ascertain the amount that can be utilized
from general reserves, according to the Companies Rules, 2014: (`)
8,00,000 Equity Shares of ` 10 each fully paid up 80,00,000
General Reserves 25,00,000
Revaluation Reserves 6,50,000
Net profit for the year 1,42,500

8
 Average rate of dividend during the last five years has been 12%.
(4 Marks)
(b) Following is the cash flow abstract of Alpha Ltd. for the year ended
31st March, 2024:
Cash Flow (Abstract)
Inflows ` Outflows `
Opening cash and 80,000 Payment for Account 90,000
bank balance Payables
Share capital – 5,00,000 Salaries and wages 25,000
shares issued
Collection from Payment of 15,000
Trade overheads
Receivables 3,50,000 Machinery acquired 4,00,000
Debentures 50,000
redeemed
Sale of Machinery 70,000 Bank loan repaid 2,50,000
Tax paid 1,55,000
Closing cash and
bank balance 15,000
10,00,000 10,00,000
Prepare Cash Flow Statement for the year ended 31 st March, 2024 in
accordance with AS 3. (5 Marks)
(c) M/s Shrikant operates a number of retail outlets to which goods are
invoiced at wholesale price which is cost plus 25%. These outlets sell
the goods at the retail price which is wholesale price plus 20%.
Following is the information regarding one of the outlets for the year
ended 31.3.2024:
Stock at the outlet 1.4.2023 ` 45,000
Goods invoiced to the outlet during the year ` 4,86,000
Gross profit made by the outlet ` 90,000
Goods lost by fire ?
Expenses of the outlet for the year ` 30,000
Stock at the outlet 31.3.2024 ` 54,000
You are required to prepare the following accounts in the books of
M/s Shrikant for the year ended 31.3.2024: [a] Outlet Stock Account [b]
Outlet Profit & Loss Account (5 Marks)

9
 Mock Test Paper - Series II: August, 2024
Date of Paper: 16th August, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP - I

PAPER – 1 : ADVANCED ACCOUNTING
ANSWERS

1. (a) (i)
(b) (iv)
(c) (iii)
(d) (iii)
2. (a) (ii)
(b) (i)
(c) (iii)
(d) (iv)
3. (a) (iv)
(b) (iii)
(c) (iii)
(d) (ii)
4. (c)
5. (a)
6. (b)
PART II – Descriptive Questions (70 Marks)
1. (a) Investment Account for the year ending on 31 st December, 2023
Scrip : 8% Convertible Debentures in C Ltd.
[Interest Payable on 31 st March and 30 th September]
Date Particulars Nominal Interest Cost ` Date Particulars Nominal Interest Cost
value ` ` Value (`) (`)
(`)
1.4.23 To Bank 2,00,000 - 2,16,000 30.09.23 By Bank - 12,000 -
A/c A/c
1.7.23 To Bank 1,00,000 2,000 1,10,000 [`3,00,000
A/c (W.N.1) x 8% x
(6/12]
31.12.23 To P & L - 14,033 - 1.10.23 By Bank 80,000 84,000
A/c A/c
[Interest] 1.10.23 By P & L 2,933
A/c (loss)
(W.N.3)

1
 1.12.23 By Bank 733
A/c
(Accrued
interest)
(` 55,000 x
.08 x 2/12)
1.12.23 By Equity 55,000 59,767
shares in C
Ltd. (W.N.
3 and 4)
31.12.23 By Balance
c/d (W.N.5) 1,65,000 3,300 1,79,300
3,00,000 16,033 3,26,000 3,00,000 16,033 3,26,000

SCRIP: Equity Shares in C LTD.

Date Particulars Cost (`) Date Particulars Cost
(`)
1.12.23 To 8 % debentures 59,767 31.12.23 By balance c/d 59,767
Working Notes:
(i) Cost of Debenture purchased on 1 st July = ` 1,12,000 – ` 2,000
(Interest) = `1,10,000
(ii) Cost of Debentures sold on 1 st Oct.
= (` 2,16,000 + ` 1,10,000) x 80,000/3,00,000 = ` 86,933
(iii) Loss on sale of Debentures = ` 86,933– `84,000 = ` 2,933
Nominal value of debentures converted into equity shares
=` 55,000
[(` 3,00,000 – 80,000) x.25]
Interest received before the conversion of debentures
Interest on 25% of total debentures = 55,000 x 8% x 2/12 = 733
(iv) Cost of Debentures converted = (` 2,16,000 + `1,10,000) x
55,000/3,00,000 = ` 59,767
(v)
Cost of closing balance of = (` 2,16,000 + `1,10,000) x
Debentures 1,65,000 / 3,00,000
= ` 1,79,300
(vii) Closing balance of Debentures has been valued at cost.
(viii) 5,000 equity Shares in C Ltd. will be valued at cost of ` 59,767
being lower than the market value ` 75,000 (` 15 x5,000)
Note: It is assumed that interest on debentures, which are converted into
cash, has been received at the time of conversion.
(b) As per AS 16 ‘Borrowing Costs’, a qualifying asset is an asset that
necessarily takes a substantial period of time to get ready for its intended
use or sale. Further, the standard states that what constitutes a
2
 substantial period of time primarily depends on the facts and
circumstances of each case. However, ordinarily, a period of twelve
months is considered as substantial period of time unless a shorter or
longer period can be justified on the basis of facts and circumstances of
the case. In estimating the period, time which an asset takes,
technologically and commercially, to get it ready for its intended use or
sale is considered.
It may be implied that there is a rebuttable presumption that a 12 months
period constitutes substantial period of time.
Under present circumstances where construction period has reduced
drastically due to technical innovation, the 12 months period should at
best be looked at as a benchmark and not as a conclusive yardstick. It
may so happen that an asset under normal circumstances may take
more than 12 months to complete. However, an enterprise that
completes the asset in 8 months should not be penalized for its efficiency
by denying it interest capitalization and vice versa.
The substantial period criteria ensures that enterprises do not spend a
lot of time and effort capturing immaterial interest cost for purposes of
capitalization.
Therefore, if the factory is constructed in 8 months then it shall be
considered as a qualifying asset. The interest on borrowings for the
same shall be capitalised although it has taken less than 12 months for
the asset to get ready to use.
2. Balance Sheet of Vishnu Ltd. as at 31 st March, 2024
Note `
I EQUITY AND LIABILITIES:
(1) (a) Share Capital 1 1,60,00,000
(b) Reserves and Surplus 2 110,68,000
(2) Non-current Liabilities
Long term Borrowings- 40,00,000
Terms Loans (Secured)
(3) Current Liabilities
(a) Trade Payables 45,80,000
(b) Other current liabilities 3 8,00,000
(c) Short-term Provisions (Provision for
taxation) 10,20,000
Total 3,74,68,000
II ASSETS
(1) Non-current Assets
(a) Property, Plant and Equipment 4 214,00,000
3
 (b) Non-current Investments 9,00,000
(2) Current Assets:
(a) Inventories 5 48,00,000
(b) Trade Receivables 6 48,20,000
(c) Cash and Cash Equivalents 38,40,000
(d) Short-term Loans and Advances 7 17,08,000
Total 3,74,68,000
Notes to accounts
(` )
1. Share Capital
Authorized, issued, subscribed & called
up
1,20,000, Equity Shares of ` 100 each 1,20,00,000
40,000 10% Redeemable Preference 40,00,000 1,60,00,000
Shares of 100 each
2. Reserves and Surplus
Securities Premium Account 19,00,000
General reserve 62,00,000
Profit & Loss Balance
Opening balance -
Profit for the period 32,00,000
Less: Miscellaneous Expenditure
written off (2,32,000) 29,68,000 110,68,000
3. Other current liabilities
Loan from other parties 8,00,000
4. Property, plant and equipment
Plant and Machinery (WDV) 214,00,000
5. Inventories
Finished Goods 30,00,000
Stores 16,00,000
Loose Tools 2,00,000 48,00,000
6. Trade Receivables
Trade receivables 49,00,000
Less: Provision for Doubtful Debts (80,000) 48,20,000
7. Short term loans & Advances
Staff Advances* 2,20,000
Other Advances* 14,88,000 17,08,000

4
3. (a) Present value of minimum lease payment is computed below:
Year MLP DF (12.6%) PV
` `
1 50,000 0.890 44,500
2 50,000 0.790 39,500
3 50,000 0.700 35,000
4 50,000 0.622 31,100
5 50,000 0.552 27,600
5 25,000 0.552 13,800
1,91,500
Present value of minimum lease payment = ` 1,91,500
Fair value of leased asset = ` 2,00,000
As per AS 19, on the date of inception of Lease, Lessee should show it
as an asset and corresponding liability at lower of Fair value of leased
asset at the inception of the lease and present value of minimum lease
payments from the standpoint of the lessee. The accounting entry at the
inception of lease to record the asset taken on finance lease in books of
lessee is suggested below:
` `
Asset A/c Dr. 1,91,500
To Lessor (Lease Liability) A/c 1,91,500
(Being recognition of finance lease as asset and
liability)
(b) As per AS 12 ‘Accounting for Government Grants,’ income from Deferred
Grant Account is allocated to Profit and Loss account usually over the
periods and in the proportions in which depreciation on related assets is
charged. Accordingly, in the first two years (` 32 lakhs /4 years) = ` 8
lakhs x 2 years= ` 16 lakhs will be credited to Profit and Loss Account
and ` 16 lakhs will be the balance of Deferred Grant Account after two
years. Therefore, on refund of grant, following entry will be passed:
` `
Deferred Grant A/c Dr. 16 lakhs
Profit & Loss A/c Dr. 16 lakhs
To Bank A/c 32 lakhs
(Being Government grant refunded)
1. Value of Fixed Assets after two years but before refund of
grant
Fixed assets initially recorded in the books = ` 80 lakhs
Depreciation for each year
5
 = (` 80 lakhs – `8 lakhs)/4 years = ` 18 lakhs per year
Book value of fixed assets after two years
= ` 80 lakhs – (` 18 lakhs x 2 years) = ` 44 lakhs
2. Value of Fixed Assets after refund of grant
On refund of grant the balance of deferred grant account will
become nil. The fixed assets will continue to be shown in the books
at ` 44 lakhs.
3. Amount of depreciation for remaining two years
Depreciation will continue to be charged at ` 18 lakhs per annum
for the remaining two years.
4. Books of A Ltd.
Balance Sheet of A Ltd. as at 1st April, 2024 (after merger)
Particulars Notes ` (in lakhs)
Equity and Liabilities
1 Shareholders' funds
A Share capital 1 36,000
B Reserves and Surplus 2 24,981
2 Non-current liabilities
A Long-term borrowings 3 1,500
3 Current liabilities
A Trade Payables (1,800+694.5-120) 2,374.5
B Short-term provisions (2,745+1,053) 3,798
Total 68,653.5
Assets
1 Non-current assets
A Property, Plant & Equipment 4 43,506
2 Current assets
A Inventories (11,793+6,061.5) 17,854.5
B Trade receivables (3,180+1,650-120) 4,710
Cash and cash equivalents
C (1,671+913.5-1.5) 2,583
Total 68,653.5

6
 Notes to Accounts
`
1. Share Capital
Equity share capital
Authorized, issued, subscribed and paid-up: 36 crores
equity shares of ` 10 each (out of these shares, 13.5 36,000
crores shares have been issued for consideration other
than cash)
2. Reserves and Surplus
General Reserve 14,550
Securities Premium 4,500
Foreign Project Reserve 465
Profit and Loss Account ` (4,305 +1,162.5-1.5) 5,466
Total 24,981
3. Long-term borrowings
Secured
13% Debentures 1,500
4. PPE
Land & Buildings 9,000
Plant & Machinery 28,500
Furniture & Fittings 6,006
Total 43,506
Working Note:
Computation of purchase consideration
Purchase consideration was discharged in the form of three equity
shares of A Ltd. for every two equity shares held in B Ltd.

Purchase consideration = ` 9,000 lacs × 3 = ` 13,500 lacs

2
5. Consolidated Balance Sheet of Star Ltd. and its Subsidiary Moon Ltd.
as at 31 st March, 2024
Particulars Note No. (`)
I. Equity and Liabilities
(1) Shareholder's Funds
(a) Share Capital 12,00,000
(1,20,000 equity shares of ` 10 each)
(b) Reserves and Surplus 1 8,16,200
(2) Minority Interest (W.N.4) 99,300

7
 (3) Current Liabilities
(a) Trade Payables 2 4,10,000
Total 25,25,500
II. Assets
(1) Non-current assets
(i) Property, plant and equipment 3 13,10,500
(ii) Intangible assets 4 24,000
(2) Current assets
(i) Inventories 5 3,25,000
(ii) Trade Receivables 6 6,70,000
(iii) Cash at Bank 7 1,96,000
Total 25,25,500
Notes to Accounts
`
1. Reserves and Surplus
General Reserves 4,35,000
Add: 80% share of Moon Ltd.’s
post-acquisition reserves (W.N.3) 84,000 5,19,000
Profit and Loss Account 2,80,000
Add: 80% share of Moon Ltd.’s 21,200
post-acquisition profits (W.N.3)
Less: Unrealised gain (4,000) 17,200 2,97,200
8,16,200
2. Trade Payables
Star Ltd. 3,22,000
Moon Ltd. 1,23,000
Less: Mutual transaction (35,000) 4,10,000
3. Property, plant and equipment
Machinery
Star Ltd. 6,40,000
Moon Ltd. 2,00,000
Add: Appreciation 1,00,000
3,00,000
Less: Depreciation (30,000) 2,70,000 9,10,000
Furniture
Star Ltd. 3,75,000

8
 Moon Ltd. 40,000
Less: Decrease in value (10,000)
30,000
Less: Depreciation (4,500) 25,500 4,00,500
13,10,500
4. Intangible assets
Goodwill [WN 5] 24,000
5. Inventories
Star Ltd. 2,68,000
Moon Ltd. 62,000 3,30,000
Less: Inventory reserve (5,000)
3,25,000
6. Trade Receivables
Star Ltd. 4,70,000
Moon Ltd. 2,35,000
7,05,000
Less: Mutual transaction (35,000)
6,70,000
7. Cash and Bank
Star Ltd. 1,64,000
Moon Ltd. 32,000 1,96,000
Working Notes:
1. Profit or loss on revaluation of assets in the books of Moon Ltd. and
their book values as on 1.4.2023
`
Machinery
Revaluation as on 1.4.2023 3,00,000
Less: Book value as on 1.4.2023 (2,00,000)
Profit on revaluation 1,00,000
Furniture
Revaluation as on 1.4.2023 30,000
Less: Book value as on 1.4.2023 (40,000)
Loss on revaluation (10,000)
2. Calculation of short/excess depreciation
Machinery Furniture
Upward/ (Downward) Revaluation 1,00,000 (10,000)
Rate of depreciation 10% p.a. 15% p.a.
Difference [(short)/excess] (10,000) 1,500

9
 3. Analysis of reserves and profits of Moon Ltd. as on 31.03.2024
Pre- Post-acquisition
acquisition profits
profit upto (1.4.2023–31.3.2024)
1.4.2023
(Capital General Profit and
profits) Reserve loss
account
General reserve as on 31.3.2024 50,000 1,05,000
Profit and loss account as on 30,000 35,000
31.3.2024
Upward Revaluation of machinery 1,00,000
as on 1.4.2023
Downward Revaluation of (10,000)
Furniture as on 1.4.2023
Short depreciation on machinery (10,000)
Excess depreciation on furniture 1,500
Total 1,70,000 1,05,000 26,500
4. Minority Interest
`
Paid-up value of (2,00,000 x 20%) 40,000
Add: 20% share of pre-acquisition profits and reserves
[(20% of (50,000 + 30,000)] 16,000
20% share of profit on revaluation 18,000
20% share of post-acquisition reserves 21,000
20% share of post-acquisition profit 5,300
1,00,300
Less: Unrealised Profit on Inventory
(55,000 x 10/110) x 20% (1,000)
99,300
5. Cost of Control or Goodwill
Cost of Investment 3,20,000
Less: Paid-up value of 80% shares 1,60,000
80% share of pre-acquisition profits and
reserves (` 64,000 + `72,000) 1,36,000 (2,96,000)
Cost of control or Goodwill 24,000
6. (a) Accounting Standards standardize diverse accounting policies with a
view to eliminate the non-comparability of financial statements and
improve the reliability of financial statements. Accounting Standards
10
provide a set of standard accounting policies, valuation norms and
disclosure requirements. Accounting standards aim at improving the
quality of financial reporting by promoting comparability, consistency and
transparency, in the interests of users of financial statements.
The following are the benefits of Accounting Standards:
(i) Standardization of alternative accounting treatments:
Accounting Standards reduce to a reasonable extent confusing
variations in the accounting treatment followed for the purpose of
preparation of financial statements.
(ii) Requirements for additional disclosures: There are certain
areas where important is not statutorily required to be disclosed.
Standards may call for disclosure beyond that required by law.
(iii) Comparability of financial statements: The application of
accounting standards would facilitate comparison of financial
statements of different companies situated in India and facilitate
comparison, to a limited extent, of financial statements of
companies situated in different parts of the world. However, it
should be noted in this respect that differences in the institutions,
traditions and legal systems from one country to another give rise
to differences in Accounting Standards adopted in different
countries.
Or
Amount that can be drawn from reserves
for (10% dividend on ` 80,00,000 i.e. ` 8,00,000)
Profits available
Current year profit ` 1,42,500
Amount which can be utilized from
reserves (` 8,00,000 – 1,42,500) ` 6,57,500
Conditions as per Companies (Declaration of dividend out of
Reserves) Rules, 2014:
Condition I
Since 10% is lower than the average rate of dividend (12%), 10%
dividend can be declared.
Condition II
Maximum amount that can be drawn from the accumulated profits and
reserves should not exceed 10% of paid up capital plus free reserves ie.
` 10,50,000 [10% of (80,00,000 + 25,00,000)]
Condition III
The balance of reserves after drawl ` 18,42,500 (` 25,00,000 -
` 6,57,500) should not fall below 15% of its paid up capital ie.
` 12,00,000 (15% of ` 80,00,000]

11
 Since all the three conditions are satisfied, the company can withdraw
` 6,57,500 from accumulated reserve (as per Declaration and Payment
of Dividend Rules, 2014).
(b) Cash Flow Statement for the year ended 31.3.2024
` `
Cash flow from operating activities
Cash received on account of trade 3,50,000
receivables
Cash paid on account of trade payables (90,000)
Cash paid to employees (salaries and wages) (25,000)
Other cash payments (overheads) (15,000)
Cash generated from operations 2,20,000
Income tax paid (1,55,000)
Net cash generated from operating activities 65,000
Cash flow from investing activities
Payment for purchase of machinery (4,00,000)
Proceeds from sale of machinery 70,000
Net cash used in investment activities (3,30,000)
Cash flow from financing activities
Proceeds from issue of share capital 5,00,000
Bank loan repaid (2,50,000)
Debentures redeemed (50,000)
Net cash used in financing activities 2,00,000
Net decrease in cash and cash equivalents (65,000)
Cash and cash equivalents at the beginning 80,000
of the year
Cash and cash equivalents at the end of the 15,000
year
(c) Outlet Stock A/c
Particulars ` Particulars `
To balance b/d 45,000 By Sales (90,000/20 × 5,40,000
120)
To Goods sent at outlet 4,86,000 By goods lost 27,000
(balancing figure)
To Gross Profit 90,000 By balance c/d 54,000
6,21,000 6,21,000

12
 Outlet Profit and Loss A/c
Particulars ` Particulars `
To Expenses 30,000 By Gross Profit 90,000
To Goods lost 27,000
To Net Profit 33,000
(balancing figure)
90,000 90,000

13
 Mock Test Paper - Series I: August, 2024
Date of Paper: 17th August, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP – I

PAPER – 2: CORPORATE AND OTHER LAWS
Time Allowed – 3 Hours Maximum Marks – 100
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs)
3. Part II comprises questions which require descriptive type answers.
PART I – Case Scenario based MCQs (30 Marks)
Part I is compulsory
Case Scenario 1
XYZ Ltd. was incorporated on April 1, 2023. The Board of Directors, within the required
timeframe, appointed Mr. A as the first auditor of the company on April 20, 2023. Mr.
A was tasked with auditing the company’s financial statements for the financial year
2022-23, and he held office until the conclusion of the first Annual General Meeting
(AGM), which was held on September 30, 2023.
During the AGM, the shareholders decided to appoint Mr. B, a partner in the audit firm
MNO LLP, as the new auditor. MNO LLP is a limited liability partnership incorporated
under the LLP Act, 2008. Mr. B and his firm were appointed to hold office from the
conclusion of the 1st AGM until the conclusion of the 6th AGM in 2028.
Five years later, in 2028, the company is considering whether to reappoint Mr. B and
MNO LLP for another term. The shareholders are discussing the provisions of the
Companies Act, 2013, and the implications of reappointing the same auditor or audit
firm for multiple terms.
On the basis of above facts and by applying applicable provisions of the Companies
Act, 2013 and the applicable Rules therein, choose the correct answer (one out of
four) of the following Multiple Choice Questions (MCQs 1-5, of 2 marks each) given
herein under: -
1. Who was responsible for appointing the first auditor of XYZ Ltd., and within
what timeframe should the appointment have been made?
(a) Shareholders, within 60 days of registration of company
(b) Board of Directors, within 30 days of registration of company
(c) Board of Directors, within 60 days of registration of company
(d) Shareholders, within 30 days of registration of company
2. How long can MNO LLP, as an audit firm, hold office as the auditor of XYZ
Ltd. according to the Companies Act, 2013?
(a) One term of five consecutive years
1
 (b) Two terms of five consecutive years
(c) One term of six consecutive years
(d) Three terms of five consecutive years
3. If XYZ Ltd. wants to reappoint MNO LLP for another term after 2028, what
does the Companies Act, 2013, mandate?
(a) MNO LLP can be reappointed for another term of five years.
(b) MNO LLP cannot be reappointed, as they have already served one term.
(c) MNO LLP cannot be reappointed, as they have already served two
terms.
(d) MNO LLP can be reappointed, but the tenure must be reduced to three
years.
4. What is the maximum tenure for which Mr. A as the first auditor of XYZ Pvt.
Ltd., can hold office?
(a) From the date of appointment until the conclusion of the first AGM i.e.
30th September 2023
(b) From the date of appointment until the conclusion of the second AGM (in
2024)
(c) From the date of appointment until the conclusion of the third AGM (in
2025)
(d) From the date of registration of company until the conclusion of the first
AGM i.e. 30th September 2023
5. By what date the copy of the annual return is to be filed with the Registrar of
companies in case of first AGM of XYZ Ltd.?
(a) 29th November 2023
(b) 30th December 2023
(c) 31st January 2024
(d) 29th February 2024

Case Scenario 2
In 2023, Tech Innovations LLP was established as a Limited Liability Partnership
under the Limited Liability Partnership Act, 2008. The LLP was formed with two
partners: Alex and Jordan, who contributed equally to the capital. Alex contributed
5,00,000, while Jordan also contributed 5,00,000. The firm was registered with the
Registrar of Companies on April 1, 2023.
Tech Innovations LLP's operations focused on software development and technology
consulting. As per the LLP agreement, both partners shared profits and losses equally.
The LLP agreement also stipulated that any changes in the partnership, such as the
addition of a new partner or transfer of interest, required the consent of both existing
partners.

2
In June 2024, Tech Innovations LLP decided to admit a new partner, Priya, who
brought in ` 2,00,000 as her capital contribution. This change was duly recorded and
filed with the Registrar of Companies. Furthermore, the LLP decided to hold an annual
general meeting within six months from the end of the financial year to approve
financial statements and discuss business matters.
On the basis of above facts and by applying applicable provisions of the Limited liability
Partnership Act, 2008 and the applicable Rules therein, choose the correct answer
(one out of four) of the following Multiple Choice Questions (MCQs 6-7 of 2 marks
each) given herein under:
6. As per the LLP Act, 2008, what is required for admitting a new partner into the
LLP?
(a) The consent of one existing partner- Only Alex
(b) A majority vote of existing partners- Either Alex or Jordan
(c) The consent of all existing partners- Both Alex and Jordan
(d) Approval from the Registrar of Companies
7. When is Tech Innovations LLP required to hold its annual general meeting?
(a) By 30th April, 2024
(b) By 30th June, 2024
(c) By 31st July, 2024
(d) By 30th September, 2024

Case Scenario 3
In 2024, Global Enterprises Ltd., a company specializing in international trade, needed
to send an important notice to one of its clients, Mr. Rajiv Patel, regarding a contractual
amendment. According to the company’s internal regulations and the contract terms,
the notice had to be served by post.
On April 15, 2024, the company's legal department prepared the notice and addressed
it to Mr. Patel at his registered address. The notice was properly addressed, prepaid,
and sent via registered post with acknowledgment due to ensure the highest level of
confirmation for delivery.
A few days later, on April 20, 2024, the notice was returned with a stamp indicating
that it was "not claimed" by Mr. Patel. The legal department recorded the return of the
notice and noted the endorsement.
The company’s legal advisor referred to past case laws for similar scenarios to ensure
that the notice was considered legally served under Section 27 of the General Clauses
Act, 1897. They reviewed the following precedents:
United Commercial Bank v. Bhim Sain Makhija: It was noted that merely sending a
notice by registered post without the acknowledgment due did not provide sufficient
legal protection for proving service.

3
Jagdish Singh v. Natthu Singh: This case demonstrated that if a notice sent by
registered post was returned with a refusal endorsement, it was considered served.
Smt. Vandana Gulati v. Gurmeet Singh alias Mangal Singh: It was established that if
a notice sent by registered post to a proper address was returned with an endorsement
like "not claimed", it was deemed served unless proven otherwise.
On the basis of above facts and by applying applicable provisions of the General
Clauses Act, 1897 and the applicable Rules therein, choose the correct answer (one
out of four) of the following Multiple Choice Questions (MCQs 8-10 of 2 marks each)
given herein under:
8. According to Section 27 of the General Clauses Act, 1897, what three
conditions must be fulfilled for a service by post to be deemed effective?
(a) Properly addressed, Pre-paid, and Posting by ordinary post
(b) Properly addressed, Pre-paid, and Posting by registered post
(c) Properly addressed, Pre-paid, and Sending by courier
(d) Properly addressed, Pre-paid, and Hand delivery
9. In the case of United Commercial Bank v. Bhim Sain Makhija, why was the
presumption of service under registered post found to be insufficient?
(a) Because the notice was sent by ordinary post
(b) Because the notice was sent by registered post but not with
acknowledgment due
(c) Because the address was incorrect
(d) Because the recipient did not respond
10. What does the case of Jagdish Singh v. Natthu Singh demonstrate about the
service of notice?
(a) Notice sent by registered post without return endorsement is invalid
(b) Notice sent by registered post and returned with refusal endorsement is
deemed served
(c) Notice sent by ordinary post is deemed served if not returned
(d) Notice served by hand delivery is always valid
Independent case scenarios
11. XYZ Ltd., a manufacturing company, had taken a loan from ABC Bank and
registered a charge on its assets on January 1, 2022. On April 1, 2024, XYZ
Ltd. paid off the entire loan to ABC Bank. According to Section 82 of the
Companies Act, 2013, XYZ Ltd. was required to file an intimation with the
Registrar of Companies (ROC) regarding the satisfaction of the charge within
30 days from the date of the payment.
However, due to an oversight, the company did not submit the intimation until
July 15, 2024. To rectify this, the company decided to take advantage of the
extended period for intimation provided under the proviso to Section 82 (1),

4
 which allows for an extension up to 300 days with the payment of additional
fees.
The additional fee for late intimation was `5,000, and the company's
compliance officer needed to calculate the total fee to be paid for the delayed
filing.
As per the given facts, examine by how many days XYZ Ltd. was late in
submitting the intimation of satisfaction of charge? What additional fee should
the company pay for this delay?
(a) 90 days , Fee = 1,000
(b) 76 days , Fee = 5,000
(c) 90 days , Fee = 5,000
(d) 300 days , Fee = 10,000 (2 Marks)
12. Athlete Rajiv Sharma, a professional tennis player from India, achieved
remarkable success by winning a prestigious international tennis tournament
held in Paris, France. As a result of his victory, he received a prize money of
$150,000 from the event organizers. Rajiv was excited about his winnings and
planned to use a portion of the prize money to fund his training and future
tournaments abroad.
Rajiv decided to remit $150,000 to his personal account in France to manage
his finances and cover his training expenses. However, before proceeding, he
needed to ensure that the remittance complied with the Foreign Exchange
Management Act (FEMA), 1999, specifically concerning the remittance of
prize money or sponsorship of sports activities abroad.
Under FEMA regulations, individuals other than international, national, or
state-level sports bodies are subject to specific guidelines when remitting
amounts exceeding $100,000. Rajiv was aware that the amount involved in
his case exceeded this threshold and sought advice on the necessary steps
and compliance.
Enumerate in the given instance, according to FEMA regulations, what must
Rajiv Sharma do if he wishes to remit prize money exceeding US $100,000
abroad?
(a) Remit the amount directly without any additional requirements.
(b) Obtain approval from Paris Government before remitting the amount
(c) Only provide proof of winning the prize
(d) Require prior approval of Ministry of Human Resource Development
(Department of Youth Affairs and Sports) (2 Marks)
13. Kite Sports Academy, a private coaching club, provides coaching for cricket,
football and other similar sports. It coaches sports aspirants pan India. It also
conducts various sports events and campaigns, across the country. In 2022,
to mark the 25th year of its operation, a cricket tournament (akin to the format
of T-20) is being organized by Kite Sports Academy in Lancashire, England,
in the first half of April. The prize money for the ‘winning team’ is fixed at USD
5
 40,000 whereas in case of ‘runner-up’, it is pegged at USD 11,000. You are
required to choose the correct option from the four given below which signifies
the steps to be taken by Kite Sports Academy for remittance of the prize
money of USD 51,000 (i.e. USD 40,000+USD 11,000) to England keeping in
view the relevant provisions of Foreign Exchange Management Act, 1999:
(a) For remittance of the prize money of USD 51,000, Kite Sports Academy
is required to obtain prior permission from the Ministry of Human
Resource Development (Department of Youth Affairs and Sports).
(b) For remittance of the prize money of USD 51,000, Kite Sports Academy
is required to obtain prior permission from the Reserve Bank of India.
(c) For remittance of the prize money of USD 51,000, Kite Sports Academy
is not required to obtain any prior permission from any authority,
whatsoever, and it can proceed to make the remittance.
(d) For remittance of the prize money of USD 51,000, Kite Sports Academy
is required to obtain prior permission from the Ministry of Finance
(Department of Economic Affairs). (2 Marks)
14. A Ltd. is incorporated on 3rd January, 2023. As per the Companies Act, 2013,
what will be the financial year for the company:
(a) 31st March, 2023
(b) 31st December, 2023
(c) 31st March, 2024
(d) 30th September, 2024 (2 Marks)
15. A charge was created by Cyprus Limited on its office premises to secure a
term loan of ` 1 crore availed from ABM Bank Limited through an instrument
of charge executed by both the parties on 16th February, 2023. Inadvertently,
the company could not get the charge registered with the concerned Registrar
of Companies (ROC) within the first statutory period permitted by law and the
default was made known to it by the lending banker with a stern warning to
take immediate steps for rectification. The latest date within which the
company must register the charge with the ROC so as to avoid paying ad
valorem fees for registration of the charge is:
(a) 27th April, 2023
(b) 17th April, 2023
(c) 2nd May, 2023
(d) 16th June 2023 (2 Marks)

6
 PART – II Descriptive Questions (70 Marks)
Question No.1 is compulsory.
Attempt any Four questions out of the remaining Five questions.
1. (a) New Ltd. is a company in which Old Ltd. is holding 65% of its paid up
share capital. One of the shareholder of Old Ltd. made a charitable trust
and donated his 10% shares in Old Ltd. and `50 crore to the trust. He
appoints New Ltd. as the trustee. All the assets of the trust are held in
the name of New Ltd. Can a subsidiary hold shares in its holding
company in this way? (5 Marks)
(b) The Government of India is holding 51% of the paid-up equity share
capital of Surya Ltd. The Audited financial statements of Surya Ltd. for
the financial year 2023-24 were placed at its annual general meeting
held on 1st August, 2024. However, pending the comments of the
Comptroller and Auditor General of India (CAG) on the said accounts the
meeting was adjourned without adoption of the accounts. On receipt of
CAG comments on the accounts, the adjourned annual general meeting
was held on 29th September, 2024 whereat the accounts were adopted.
Thereafter, Surya Ltd. filed its financial statements relevant to the
financial year 2023-24 with the Registrar of Companies on 20th October,
2024. Examine, with reference to the applicable provisions of the
Companies Act, 2013, whether Surya Ltd. has complied with the
statutory requirement regarding filing of accounts (unadopted and
adopted) with the Registrar? (5 Marks)
(c) Mr. A, an Indian National desires to obtain Foreign Exchange for the
following purposes:
(i) Remittance of US Dollar 50,000 out of winnings on a lottery ticket.
(ii) US Dollar 100,000 for sending a cultural troupe on a tour of U.S.A.
Advise him whether he can get Foreign Exchange and if so, under what
conditions? (4 Marks)
2. (a) What are the powers of Registrar to make entries of satisfaction and
release of charges in the absence of any intimation from the company.
Discuss this matter in the light of provisions of the Companies Act, 2013.
(5 Marks)
(b) What is the mode of service of documents to Registrar or members, as
per the provisions of the Companies Act, 2013. (5 Marks)
(c) Explain various provisions applicable to rules or bye-laws being made
after previous publications as enumerated in Section-23 of the General
Clauses Act, 1897. (4 Marks)
3. (a) Navni Ltd. has accumulated a significant amount in its securities
premium account. The company is considering different ways to utilize
these funds. Advise the directors of the company on the application of
the securities premium account as per the provisions of the Companies
Act, 2013. (5 Marks)
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 (b) KMN Ltd. scheduled its annual general meeting to be held on 11 th March,
2024 at 11:00 A.M. The company has 900 members. On 11 th March,
2024 following persons were present by 11:30 A.M.
(1) P1, P2 & P3 shareholders
(2) P4 representing ABC Ltd.
(3) P5 representing DEF Ltd.
(4) P6 & P7 as proxies of the shareholders
(i) Examine with reference to relevant provisions of the Companies
Act, 2013, whether quorum was present in the meeting.
(ii) What will be your answer if P4 representing ABC Ltd., reached in
the meeting after 11:30 A.M.?
(iii) In case lack of Quorum, discuss the provisions as applicable for an
adjourned meeting in terms of date, time & place.
(iv) What happens if there is no Quorum in the Adjourned meeting?
(5 Marks)
(c) Write short note on:
(i) Provisio
(ii) Explanation,
with reference to interpretation of Statutes, Deeds and Documents.
(4 Marks)
4. (a) The Board of Directors of Avni Ltd. requested its Statutory Auditor to
accept the assignment of designing and implementation of suitable
financial information system to strengthen the internal control
mechanism of the Company. How will you approach to this proposal, as
a Statutory Auditor of Avni Ltd., taking into account the consequences,
if any, of accepting this proposal? (5 Marks)
(b) Define the term ‘Body Corporate’ as per the provisions of the Limited
Liability Partnership Act, 2008. (5 Marks)
(c) Differentiate Mandatory Provision from a Directory Provision. What
factors decide whether a provision is directory or mandatory? (4 Marks)
5. (a) M/s Sulbha LLP was incorporated on 01.09.2022. On 01.01.2023, one
partner of a partnership firm named M/s Sulbha which is registered with
Indian Partnership Act, 1932 since 01.01.2000 requested ROC that as
the name of LLP nearly resembles with the name of already registered
partnership firm, the name of LLP should be changed. Explain whether
M/s Sulbha LLP is liable to change its name under the provisions of
Limited Liability Act, 2008? (5 Marks)
(b) CA. Mudit is a partner in SM & Company (Chartered Accountants) and
ML & Company (Chartered Accountants). SM & Company are statutory

8
 auditors of Liberal Ltd. (a listed company) for past ten years as on 31st
March, 2027. Advice under relevant provisions of the Companies Act,
2013, whether ML & Company be appointed as statutory auditor of
Liberal Ltd. during cooling off period (after 31st March, 2027) for SM &
Company? (5 Marks)
(c) A Ltd. declares a dividend for its shareholders in its AGM held on 27 th
September, 2024. Referring to provisions of the General Clauses Act,
1897 and Companies Act, 2013, advice, the dates during which A Ltd. is
required to pay the dividend? (4 Marks)
6. (a) The Board of Directors of ABC Ltd. called an extra-ordinary general
meeting upon the requisition of members. However, the meeting was
adjourned on the ground that the quorum was not present at the meeting.
In the light of the provisions of the Companies Act, 2013, the Board of
directors on the decision to adjournment of the meeting. (5 Marks)
OR
(a) Zorab Garments Limited served a notice of General Meeting upon its
members. The notice stated that a resolution to increase the share
capital of the company would be considered at such meeting. Roshni, a
shareholder of the company complained that the amount of the proposed
increase was not specified in the notice. Is the notice valid? (5 Marks)
(b) Shaltom Ltd., an international corporation headquartered outside Japan,
is interested in expanding its investor base and thus is planning to issue
a prospectus for the subscription of its securities to potential investors in
India. However, the company has not yet established a physical place of
business within India.
As a consultant for Shaltom Ltd., you have been asked to provide
guidance on the legal procedures and compliance requirements that the
company must follow to issue this prospectus in India. (5 Marks)
(c) Explain the meaning of term ‘Foreign Exchange’ as per the provisions of
the Foreign Exchange Management Act, 1999. (4 Marks)

9
 Mock Test Paper - Series I: August, 2024
Date of Paper: 17th August, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP – I

PAPER – 2: CORPORATE AND OTHER LAWS
ANSWER TO PART – I CASE SCENARIO BASED MCQS
1. (b)
2. (b)
3. (a)
4. (a)
5. (a)
6. (c)
7. (d)
8. (b)
9. (b)
10. (b)
11. (b)
12. (d)
13. (c)
14. (c)
15. (b)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS
1. (a) According to section 19 of the Companies Act, 2013 a company shall not
hold any shares in its holding company either by itself or through its
nominees. Also, holding company shall not allot or transfer its shares to
any of its subsidiary companies and any such allotment or transfer of
shares of a company to its subsidiary company shall be void.
Following are the exceptions to the above rule:
(a) where the subsidiary company holds such shares as the legal
representative of a deceased member of the holding company; or
(b) where the subsidiary company holds such shares as a trustee; or
(c) where the subsidiary company is a shareholder even before it
became a subsidiary company of the holding company but in this
case it will not have a right to vote in the meeting of holding
company.

1
 In the given case one of the shareholders of holding company has
transferred his shares in the holding company to a trust where the
shares will be held by subsidiary company. It means now subsidiary
will hold shares in the holding company. But it will hold shares in
the capacity of a trustee. Therefore, we can conclude that in the
given situation New Ltd. can hold shares in Old Ltd.
(b) According to first proviso to section 137(1) of the Companies Act, 2013,
where the financial statements are not adopted at annual general
meeting or adjourned annual general meeting, such unadopted financial
statements along with the required documents shall be filed with the
Registrar within thirty days of the date of annual general meeting and the
Registrar shall take them in his records as provisional till the financial
statements are filed with him after their adoption in the adjourned annual
general meeting for that purpose.
According to second proviso to section 137(1) of the Companies Act,
2013, financial statements adopted in the adjourned AGM shall be filed
with the Registrar within thirty days of the date of such adjourned AGM
with such fees or such additional fees as may be prescribed.
In the instant case, the accounts of Surya Ltd. were adopted at the
adjourned AGM held on 29th September, 2024 and filing of financial
statements with Registrar was done on 20th October, 2024 i.e. within 30
days of the date of adjourned AGM.
Hence, Surya Ltd. has not complied with the statutory requirement
regarding filing of unadopted accounts with the Registrar, but has
certainly complied with the provisions by filing of adopted accounts within
the due date with the Registrar.
(c) Under provisions of section 5 of the Foreign Exchange Management Act,
1999 certain Rules have been made for drawal of Foreign Exchange for
Current Account transactions. As per these Rules, Foreign Exchange for
some of the Current Account transactions is prohibited. As regards some
other Current Account transactions, Foreign Exchange can be drawn
with prior permission of the Central Government while in case of some
Current Account transactions, prior permission of Reserve Bank of India
is required.
(i) In respect of item No.(i), i.e., remittance out of lottery winnings,
such remittance is prohibited and the same is included in First
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, Mr. A cannot withdraw Foreign
Exchange for this purpose.
(ii) Foreign Exchange for meeting expenses of cultural tour can be
withdrawn by any person after obtaining permission from
Government of India, Ministry of Human Resources Development,
(Department of Education and Culture) as prescribed in Second
Schedule to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Hence, in respect of item (ii), Mr. A can
withdraw the Foreign Exchange after obtaining such permission.
2
 In all the cases, where remittance of Foreign Exchange is allowed, either
by general or specific permission, the remitter has to obtain the Foreign
Exchange from an Authorised Person.
2. (a) Section 83 of the Companies Act, 2013 empowers the Registrar to make
entries with respect to the satisfaction and release of charges even if no
intimation has been received by him from the company.
This situation would arise where the property subject to a charge is sold
to a third-party and neither the company nor the charge-holder has
intimated the Registrar regarding satisfaction of the earlier charge.
Accordingly, with respect to any registered charge if evidence is shown
to the satisfaction of Registrar that the debt secured by charge has been
paid or satisfied wholly or in part or that the part of the property or
undertaking charged has been released from the charge or has ceased
to form part of the company’s property or undertaking, then he may enter
in the register of charges a memorandum of satisfaction that:
 the debt has been satisfied in whole or in part; or
 part of the property or undertaking has been released from the
charge or has ceased to form part of the company’s property or
undertaking.
This power can be exercised by the Registrar despite the fact that no
intimation has been received by him from the company.
According to section 82 (4), section 82 shall not be deemed to affect the
powers of the Registrar to make an entry in the register of charges under
section 83 or otherwise than on receipt of an intimation from the
company i.e. even if no intimation is received by him from the company.
Information to affected parties: According to section 83 (2), the
Registrar shall inform the affected parties within 30 days of making the
entry in the register of charges.
Issue of Certificate: As per Rule 8 (2) of the Companies (Registration
of Charges) Rules, 2014, in case the Registrar enters a memorandum of
satisfaction of charge in full, he shall issue a certificate of registration of
satisfaction of charge.
(b) Save as provided in the Companies Act, 2013 or the rules made
thereunder for filing of documents with the Registrar in electronic mode,
a document may be served on Registrar or any member by sending it to
him by:
1. Post, or
2. registered post, or
3. speed post, or
4. courier, or
5. by delivering at his office or address, or

3
 6. by such electronic or other mode as may be prescribed.
However, a member may request for delivery of any document through
a particular mode, for which he shall pay such fees as may be
determined by the company in its annual general meeting.
(c) Provisions applicable to making of rules or bye-laws after previous
publications [Section 23 of the General Clauses Act, 1897]:
Where, by any Central Act or Regulation, a power to make rules or bye-
laws is expressed to be given subject to the condition of the rules or bye-
laws being made after previous publication, then the following provisions
shall apply, namely:-
(1) Publish of proposed draft rules/ bye- laws: The authority having
power to make the rules or bye-laws shall, before making them,
publish a draft of the proposed rules or bye-laws for the information
of persons likely to be affected thereby;
(2) To publish in the prescribed manner: The publication shall be
made in such manner as that authority deems to be sufficient, or, if
the condition with respect to previous publication so requires, in
such manner as the Government concerned prescribes;
(3) Notice annexed with the published draft: There shall be
published with the draft a notice specifying a date on or after which
the draft will be taken into consideration;
(4) Consideration on suggestions/objections received from other
authorities: The authority having power to make the rules or bye-
laws, and, where the rules or bye-laws are to be made with the
sanction, approval or concurrence of another authority, that
authority also shall consider any objection or suggestion which may
be received by the authority having power to make the rules or bye-
laws from any person with respect to the draft before the date so
specified;
(5) Notified in the official gazette: The publication in the Official
Gazette of a rule or bye-law purporting to have been made in
exercise of a power to make rules or bye-laws after previous
publication shall be conclusive proof that the rule or bye-laws have
been duly made.
3. (a) Application of Premium received on Issue of Shares
The provisions of the Companies Act, 2013, allow the companies to
apply securities premium account for:
1) Issue of fully paid bonus shares;
2) Writing off the preliminary expenses;
3) Writing off the issue expenses (expenses including commission
paid or discount allowed on any issue of shares or debentures);
4) Premium payable on the redemption (of any preference shares or
of any debentures); or
4
 5) Buy-back (purchase of its own shares or other securities under
section 68).
(b) According to section 103 of the Companies Act, 2013, unless the articles
of the company provide for a larger number, the quorum for the meeting
of a Public Limited Company shall be 5 members personally present, if
number of members is not more than 1000.
(i) (1) P1, P2 and P3 will be counted as three members.
(2) If a company is a member of another company, it may
authorize a person by resolution to act as its representative at
a meeting of the latter company, then such a person shall be
deemed to be a member present in person and counted for
the purpose of quorum. Hence, P4 and P5 representing ABC
Ltd. and DEF Ltd. respectively will be counted as two
members.
(3) Only members present in person and not by proxy are to be
counted. Hence, proxies whether they are members or not will
have to be excluded for the purposes of quorum. Thus, P6
and P7 shall not be counted in quorum.
In the light of the provision of the Act and the facts of the question,
it can be concluded that the quorum for Annual General Meeting of
KMN Ltd. is 5 members personally present. Total 5 members (P1,
P2, P3, P4 and P5) were present. Hence, the requirement of
quorum is fulfilled.
(ii) The section further states that, if the required quorum is not present
within half an hour, the meeting shall stand adjourned for the next
week at the same time and place or such other time and place as
decided by the Board of Directors.
Since, P4 is an essential part for meeting the quorum requirement,
and he reaches after 11:30 AM (i.e. half an hour after the starting
of the meeting), the meeting will be adjourned as provided above.
(iii) In case of lack of quorum, the meeting will be adjourned as
provided in section 103.
In case of the adjourned meeting or change of day, time or place of
meeting, the company shall give not less than 3 days' notice to the
members either individually or by publishing an advertisement in
the newspaper.
(iv) Where quorum is not present in the adjourned meeting also within
half an hour, then the members present shall form the quorum.
(c) (i) Proviso: The normal function of a proviso is to except something
out of the enactment or to qualify something stated in the
enactment which would be within its purview if the proviso were not
there. The effect of the proviso is to qualify the preceding
enactment which is expressed in terms which are too general. As a
general rule, a proviso is added to an enactment to qualify or create
an exception to what is in the enactment. Ordinarily a proviso is not

5
 interpreted as stating a general rule.
It is a cardinal rule of interpretation that a proviso to a particular
provision of a statute only embraces the field which is covered by
the main provision.
(ii) Explanation: An Explanation is at times appended to a section to
explain the meaning of the text of the section. An Explanation may
be added to include something within the section or to exclude
something from it. An Explanation should normally be so read as to
harmonise with and clear up any ambiguity in the main section. It
should not be so construed as to widen the ambit of the section.
The meaning to be given to an explanation will really depend upon
its terms and not on any theory of its purpose.
4. (a) According to section 144 of the Companies Act, 2013, an auditor
appointed under this Act shall provide to the company only such other
services as are approved by the Board of Directors or the audit
committee, as the case may be. But such services shall not include
designing and implementation of any financial information system.
In the said instance, the Board of directors of Avni Ltd. requested its
Statutory Auditor to accept the assignment of designing and
implementation of suitable financial information system to strengthen the
internal control mechanism of the company. As per the above provision
said service is strictly prohibited.
In case the Statutory Auditor accepts the assignment, he will attract the
penal provisions as specified in Section 147 of the Companies Act, 2013.
In the light of the above provisions, we shall advise the Statutory Auditor
not to take up the above stated assignment.
(b) Body Corporate: According to section 2(1)(d) of the Limited Liability
Partnership Act, 2008, body corporate means a company as defined in
section 2(20) of the Companies Act, 2013 and includes:
(i) a LLP registered under the Limited Liability Partnership Act, 2008;
(ii) a LLP incorporated outside India; and
(iii) a company incorporated outside India,
but does not include—
(i) a corporation sole;
(ii) a co-operative society registered under any law for the time being
in force; and
(iii) any other body corporate (not being a company as defined in
section 2(20) of the Companies Act, 2013 or a limited liability
partnership as defined in the Limited Liability Partnership Act,
2008), which the Central Government may, by notification in the
Official Gazette, specify in this behalf.

6
 (c) Practically speaking, the distinction between a provision which is
‘mandatory’ and one which is ‘directory’ is that when it is mandatory, it
must be strictly observed; when it is ‘directory’ it would be sufficient that
it is substantially complied with. However, we have to look to the
substance and not merely the form, an enactment in mandatory form
might substantially be directory and, conversely, a statute in directory
form may in substance be mandatory. Hence, it is the substance that
counts and must take precedence over mere form. If a provision gives a
power coupled with a duty, it is mandatory: whether it is or is not so would
depend on such consideration as:
− the nature of the thing empowered to be done,
− the object for which it is done, and
− the person for whose benefit the power is to be exercised.
5. (a) Section 15 of Limited Liability Partnership Act, 2008 provides no LLP
shall be registered by a name which, in the opinion of the Central
Government is—
(a) undesirable; or
(b) identical or too nearly resembles to that of any other ‘LLP or a
company or a registered trade mark of any other person under the
Trade Marks Act, 1999’.
Further, section 17 provides, if the name of LLP is identical with or too
nearly resembles to-
(a) that of any other LLP or a company; or
(b) a registered trade mark of a proprietor under the Trade Marks Act,
1999
then on an application of such LLP or proprietor referred to in clauses
(a) and (b) respectively or a company, the CG may direct that such LLP
to change its name within a period of 3 months from the date of issue of
such direction.
Following the above provisions, LLP need not change its name if its
name resembles with the name of a partnership firm. These provisions
are applicable only in case where name is resembles with LLP, company
or a registered trade mark of a proprietor.
Hence, M/s Sulbha LLP need not change its name even it resembles
with the name of partnership firm.
(b) Section 139(2) of the Companies Act, 2013, provides that no listed
company or a company belonging to prescribed classes of companies,
shall appoint or re-appoint an audit firm as auditor for more than two
terms of five consecutive years.
The proviso to section 139(2) provides that an audit firm which has
completed its terms, shall not be eligible for re-appointment as auditor in
the same company for five years from the completion of such term.

7
 Further, it provides that as on the date of appointment no audit firm
having a common partner or partners of the other audit firm, whose
tenure has expired in a company immediately preceding the financial
year, shall be appointed as auditor of the same company for a period of
five years.
In the given question, SM & Company has also completed its two terms
of 5 years (i.e. 10 years in total).Thus, ML & Co. cannot be appointed as
statutory auditor of Liberal Ltd. during cooling period because CA. Mudit
was the common partner in both the Audit firms. This prohibition is only
for 5 years i.e. upto year 2032. After 5 years, Liberal Ltd. is free to
appoint ML & Co. as its statutory auditors.
(c) As per section 9 of the General Clauses Act, 1897, for computation of
time, the section states that in any legislation or regulation, it shall be
sufficient, for the purpose of excluding the first in a series of days or any
other period of time to use the word “from” and for the purpose of
including the last in a series of days or any other period of time, to use
the word “to”.
In the given instance, A Ltd. declares dividend for its shareholder in its
Annual General Meeting held on 27th September 2024. Under the
provisions of section 127 of the Companies Act, 2013, a company is
required to pay declared dividend within 30 days from the date of
declaration, i.e. from 28th September 2024 to 27th October 2024. In this
series of 30 days, 27th September 2024 will be excluded and last 30 th
day, i.e. 27th October 2024 will be included. Accordingly, A Ltd. will be
required to pay dividend within 28th September 2024 and 27th October
2024 (both days inclusive).
6. (a) According to section 100 (2) of the Companies Act 2013, the Board of
directors must convene a general meeting upon requisition made by the
stipulated minimum number of members.
As per section 103(2)(b) of the Companies Act, 2013, if the quorum is
not present within half an hour from the appointed time for holding a
meeting of the company, the meeting, if called on the requisition of
members, shall stand cancelled. Therefore, the meeting stands
cancelled and the stand taken by the Board of Directors to adjourn it, is
not proper and valid.
OR
(a) Under section 102(2)(b) of the Companies Act, 2013, in the case of any
general meeting other than an Annual General Meeting, all business
transacted thereat shall be deemed to be special business.
Further under section 102(1), a statement setting out the following
material facts concerning each item of special business to be transacted
at a general meeting, shall be annexed to the notice calling such
meeting, namely:
(a) the nature of concern or interest, financial or otherwise, if any, in
respect of each items, of:
8
 (i) every director and the manager, if any;
(ii) every other key managerial personnel; and
(iii) relatives of the persons mentioned in sub-clauses (i) and (ii);
(b) any other information and facts that may enable members to
understand the meaning, scope and implications of the items of
business and to take decision thereon.
Thus, the objection of the shareholder is valid since the details of
the item to be considered at the general meeting are not fully
disclosed. The information about the amount is a material fact with
reference to the proposed increase of share capital. The notice is,
therefore, not a valid notice considering the provisions of section
102 of the Companies Act, 2013.
(b) As per section 389 of the Companies Act, 2013, no person shall issue,
circulate or distribute in India any prospectus offering for subscription in
securities of a company incorporated or to be incorporated outside India,
whether the company has or has not established, or when formed will or
will not establish, a place of business in India, unless before the issue,
circulation or distribution of the prospectus in India, a copy thereof
certified by the chairperson of the company and two other directors of
the company as having been approved by resolution of the managing
body has been delivered for registration to the Registrar and the
prospectus states on the face of it that a copy has been so delivered,
and there is endorsed on or attached to the copy, any consent to the
issue of the prospectus required by section 388 and such documents as
may be prescribed under Rule 11 of the Companies (Incorporated
outside India) Rules, 2014.
Accordingly, the Shaltom Ltd. a foreign company shall proceed with the
issue of prospectus in compliance with the above stated provisions of
section 379 of the Act.
(c) According to section 2(n) of the Foreign Exchange Management Act,
1999, ‘foreign exchange’ means foreign currency and includes:
(i) deposits, credits and balances payable in any foreign currency,
(ii) drafts, travelers’ cheques, letters of credit or bills of exchange,
expressed or drawn in Indian currency but payable in any foreign
currency,
(iii) drafts, travelers’ cheques, letters of credit or bills of exchange
drawn by banks, institutions or persons outside India, but payable
in Indian currency.

9
 Mock Test Paper - Series II: August, 2024
Date of Paper: 20 th August, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP - I

PAPER – 3: TAXATION
Time Allowed – 3 Hours Maximum Marks – 100
SECTION – A: INCOME TAX LAW (50 MARKS)
Working Notes should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of a note.
However, in answers to Questions in Division A, working notes are not
required.
The relevant assessment year is A.Y.2024-25.
Division A – Multiple Choice Questions
Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
1. Mr. Sambhav (aged 48 years) furnishes the following particulars for the
previous year 2023-24 in respect of an industrial undertaking established in
"Special Economic Zone" in March 2018. It began manufacturing in April
2018.
Particulars (`)
Total sales 85,00,000
Export sales [proceeds received in India by 30.9.2024] 45,00,000
Domestic sales 40,00,000
Profit from the above undertaking 20,00,000
Export Sales of F.Y. of 2023-24 include freight and insurance of ` 5 lakhs for
delivery of goods outside India.
He received rent of ` 30,000 per month for a commercial property let out to
Mr. Akash, a salaried individual. He earned interest on savings bank A/c of
` 15,000 and interest on Post Office savings A/c of ` 7,000 during the P.Y.
2023-24.
Mr. Sambhav has shifted out of the default tax regime under section
115BAC.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions: (3 x 2 Marks)
(i) Compute the amount of export turnover and total turnover for purpose
of computing deduction under section 10AA for A.Y. 2024-25.
(a) ` 45,00,000 and ` 85,00,000, respectively
1
 (b) ` 40,00,000 and ` 80,00,000, respectively
(c) ` 45,00,000 and ` 80,00,000, respectively
(d) ` 40,00,000 and ` 85,00,000, respectively
(ii) Compute the amount of deduction available to Mr. Sambhav under
section 10AA for A.Y. 2024-25.
(a) ` 10,00,000
(b) ` 4,70,577
(c) ` 5,62,500
(d) ` 5,00,000
(iii) Compute the total income of Mr. Sambhav for A.Y. 2024-25.
(a) ` 17,60,500
(b) ` 12,60,500
(c) ` 18,72,000
(d) ` 17,64,000
2. Mr. Anshul, aged 54 years, an Indian citizen, is working as Assistant
Manager in ABC India Ltd. He is getting basic salary of
` 58,000 per month. He used to travel frequently out of India for his office
work. He left India from Delhi Airport on 5 th October, 2023 and returned to
India on 2 nd April, 2024.
For previous year 2023-24, following information are relevant;
(a) Dearness Allowance - 10% of Basic Pay (considered for retirement
purposes)
(b) Bonus - ` 98,000
(c) Medical allowance paid during P.Y. 2023-24 amounting to ` 60,000
(d) He was also reimbursed medical bill of his mother amounting to
` 15,000.
(e) He was also reimbursed salary of house servant of ` 4,000 per month.
(f) Professional tax paid by employer amounting to ` 2,400.
(g) 400 equity shares allotted by ABC India Ltd. at the rate of
` 250 per share against fair market value of share of ` 350 on the date
of exercise of option.
(h) Mr. Anshul has exercised the option to shift out of the default tax
regime under section 115BAC.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions: (3 x 2 Marks)
(i) What is Mr. Anshul’s residential status for the A.Y. 2024-25?
(a) Resident but can’t determine resident and ordinarily resident or
resident but not ordinarily resident from the given information
2
 (b) Non-Resident
(c) Resident but not ordinarily resident
(d) Resident and ordinarily resident
(ii) What are his taxable perquisites for A.Y. 2024-25?
(a) ` 55,000
(b) ` 90,400
(c) ` 1,05,400
(d) ` 1,03,000
(iii) What is the income chargeable under the head “Salaries” in the hands
of Mr. Anshul for A.Y. 2024-25?
(a) ` 9,76,600
(b) ` 9,86,600
(c) ` 9,71,600
(d) ` 9,61,600
3. Mr. Ross, an Australian citizen, is employed in the Indian embassy in
Australia. He is a non-resident in India for A.Y. 2024-25. He received salary
and allowances in Australia from the Government of India for the year ended
31.03.2024 for services rendered by him in Australia. In addition, he was
allowed perquisites by the Government. Which of the following statements
are correct?
(a) Salary, allowances and perquisites received outside India are not
taxable in the hands of Mr. Ross, since he is non-resident
(b) Salary, allowances and perquisites received outside India by
Mr. Ross are taxable in India since they are deemed to accrue or arise
in India
(c) Salary received by Mr. Ross is taxable in India but allowances and
perquisites are exempt
(d) Salary received by Mr. Ross is exempt in India but allowances and
perquisites are taxable (2 Marks)
4. Which of the following returns can be revised under section 139(5)?
(i) A return of income filed u/s 139(1)
(ii) A belated return of income filed u/s 139(4)
(iii) A return of loss filed u/s 139(3)
Choose the correct answer:
(a) Only (i)
(b) Only (i) and (ii)
(c) Only (i) and (iii)
(d) (i), (ii) and (iii) (1 Mark)
3
 Division B – Descriptive Questions
Question No. 1 is compulsory.
Attempt any two questions from the remaining three questions.
1. Ms. Farah, aged 40 years, is an advocate (Taxation). She keeps her books
of accounts on accrual basis. Her profit & loss account for the year ended on
March 31, 2024 is as follows:
Profit & Loss Account for the year ending March 31, 2024
AMOUNT AMOUNT
(`) (`)
Staff salary 40,10,000 Fees Earned from:
Rent 9,00,000 Taxation services 50,00,000
Administrative 6,50,000 Appeals 16,00,000
expenses
Incentives to office 2,00,000 Consultancy 15,00,000 81,00,000
staff
Meetings, 1,70,000 Dividend from an Indian 11,00,000
Seminars and company (gross)
conferences
Purchase of car 3,00,000 Interest on deposit 25,000
(for official use) on certificates issued under gold
01.07.2023 monetization scheme, 2015
Repairs and 35,000 Honorarium received for 50,000
Maintenance of car valuation of answer papers
Travelling 5,00,000 Rent received in respect of 90,000
Expenses house property
Municipal tax paid 9,000
in respect of house
property
Net profit 25,91,000
93,65,000 93,65,000
Other information:
(i) Administrative expenses include ` 50,000 paid to a tax consultant in
cash for assisting Ms. Farah in one of the professional assignments.
(ii) The traveling expenses include expenditure incurred on foreign
professional tour of ` 50,000 which was within the RBI norms.
(iii) Ms. Farah paid medical insurance premium for her parents (senior
citizens and not dependent on her) online amounting ` 47,000. She
also paid ` 8,500 by cash towards preventive health check-up for
herself and her spouse.
(iv) Repairs and maintenance of car is for the period from 1-10-2023 to
30-09-2024.
4
 (v) She has paid ` 1,00,000 towards advance tax during the P.Y. 2023-24.
Compute Total Income and Net tax payable as per the most beneficial
taxation scheme for Ms. Farah for the A.Y. 2024-25. (15 Marks)
2. (a) Sagar, a Chartered Accountant, is presently working in a firm in India.
He has received an offer for the post of Chief Financial Officer from a
company at New York. As per the offer letter, he should join the
company at any time between 1st September, 2023 and 31st October,
2023. He approaches you for your advice on the following issues to
mitigate his tax liability in India:
(i) Date by which he should leave India to join the company;
(ii) Direct credit of part of his salary to his bank account in Delhi
maintained jointly with his mother to meet requirement of his
family. (6 Marks)
(b) Briefly discuss the provisions of tax deduction/collection at source
under the Income-tax Act, 1961 and determine the amount, if any, of
TDS and TCS in respect of the following payments:
(i) Mr. Deepak wishes to purchase a residential house costing ` 60
lakhs from Ms. Priya. The house is situated at Chennai and its
stamp duty value is ` 65 lakhs. He also wants to purchase
agricultural lands in a rural area for ` 65 lakhs. Both the buyer as
well as the sellers are residents in India.
(ii) ABC & Co., a partnership firm is having a car dealership show-
room – 2. They have purchased cars for ` 2 crores from XYZ Ltd.,
car manufacturers, the cost of each car being more than (`12
lakhs. They sell the cars to individual buyers at a price yielding
10% margin on cost. Turnover of ABC & Co. and XYZ Ltd. was
less than ` 10 crores during the P.Y. 2022-23. (4 Marks)
3. (a) Mr. Kamal, a resident but not ordinarily resident in India during the
Assessment Year 2024-25. He owns two houses, one in Dubai and the
other in Mumbai. The house in Dubai is let out there at a rent of DHS
20,000 p.m. (1DHS=INR 22). The entire rent is received in India. He
paid property tax of DHS 2,500 and Sewerage Tax DHS 1,500 there,
for the Financial Year 2023-24. The house in Mumbai is self-occupied.
He had taken a loan of ` 10,00,000 to construct the house on 1 st June,
2020 @12%. The construction was completed on 31 st May, 2022 and
he occupied the house on 1 st June, 2022. The entire loan is
outstanding as on 31 st March, 2024. Property tax paid in respect of the
second house is ` 2,400 for the Financial Year 2023-24. Compute the
income chargeable under the head "Income from House property" in
the hands of Mr. Kamal for the Assessment Year 2024-25 under
regular provisions of the Act. (5 Marks)
(b) Mr. Ashish entered into an agreement with Mr. Dhaval to sell his
residential house located at Navi Mumbai on 16.08.2023 for
` 80,00,000.

5
 The sale proceeds was to be paid in the following manner;
(i) 20% through account payee bank draft on the date of agreement.
(ii) 60% on the date of the possession of the property.
(iii) Balance after the completion of the registration of the title of the
property.
Mr. Dhaval was handed over the possession of the property on
15.12.2023 and the registration process was completed on 14.01.2024.
He paid the sale proceeds as per the sale agreement.
The value determined by the Stamp Duty Authority on 16.08.2023 was
` 90,00,000 whereas on 14.01.2024 it was ` 91,50,000.
Mr. Ashish had acquired the property on 01.04.2001 for ` 20,00,000.
After recovering the sale proceeds from Dhaval, he purchased another
residential house property in Kanpur for ` 15,00,000.
Compute the income under the head "Capital Gains" for the
Assessment Year 2024-25.
Cost Inflation Index for Financial Year(s)
2001-02 - 100
2023-24 - 348 (5 Marks)
4. (a) Mr. Mohit submits the following information for the previous year
2023-24:
(Amount in `)
(i) Income from salary 6,50,000
(ii) Income from House-I 55,000
(iii) Loss from House-II (self-occupied property) 1,25,000
(iv) Loss from House-III 190,000
(v) Loss from leather business 68,000
(vi) Profit from cloth business 1,70,000
(vii) Short term capital loss in equity-oriented 35,000
funds on which STT was paid
(viii) Income from crossword puzzles 12,000
(ix) Dividend from foreign company (Gross) 8,500
(x) Loss on owning and maintenance of race 7,500
horses
(xi) Income from owning and maintenance of race 9,000
bulls
Compute the gross total income and losses to be carried forward of
Mr. Mohit for assessment year 2024-25 under regular provisions of the
Act. Mr. Mohit has filed his return of income on 25.07.2024. (6 Marks)

6
(b) What are the consequences of failure to intimate Aadhar Number. Is
there any fee for such default? (4 Marks)
OR
(b) (i) What is the fee for default in furnishing return of income u/s
234F?
(ii) To whom the provisions of section 139AA relating to quoting of
Aadhar Number do not apply? (4 Marks)

7
 SECTION B – GOODS AND SERVICES TAX (50 MARKS)
QUESTIONS
(i) Working Notes should form part of the answers. However, in answers to
Questions in Division A, working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the candidates,
and disclosed by way of notes.
(iii) All questions should be answered on the basis of position of the GST law as
amended by provisions of the CGST Act, 2017 and the IGST Act, 2017 as
amended by the Finance Act, 2023, including significant notifications and
circulars issued, up to 29th February, 2024.
Division A - Multiple Choice Questions (MCQs)
Write the most appropriate answer to each of the following multiple-choice
questions by choosing one of the four options given. All questions are
compulsory.
Total Marks: 15 Marks
M/s. Maahi & Co., a LLP registered dealer under GST, is engaged in various types
of business activities.
It provided GTA services to Government Department, registered under GST for
providing various services. Maahi & Co. did not exercise the option to pay GST.
The firm provided services of Direct Selling Agency (DSA Services) to a Banking
Company located in Mumbai.
The firm provided free gift to each of its employees valuing ` 50,000 once in a
financial year.
M/s Maahi & Co let out its warehouse to Mr. Shankar, who in turn let out to an
agriculturist for warehousing of agricultural produce. The firm also undertakes
catering service to “Vishwas” Anganwadi. The said Anganwadi has received
fundings from Government.
The firm purchased following goods during the month of July:-
(a) Capital goods amounting to ` 45,000 purchased on which depreciation has
been taken on full value including GST paid thereon.
(b) Raw materials purchased amounting to ` 55,000 for which invoice is missing
but delivery challan is available.
Further, for the month of July, the GST liability of the firm was ` 20,000 IGST;
` 10,000 CGST; ` 10,000 SGST. The following credits were available in the said
month-
IGST: ` 8,000
CGST: ` 12,000
SGST: ` 5,000

8
All the amounts given above are exclusive of taxes, wherever applicable. All the
supply referred above is intra-State unless specified otherwise. Conditions for
availing ITC are fulfilled subject to the information given above.
Based on the information provided above, choose the most appropriate answer for
the following questions-
1. Choose the correct statement(s).
(i) For GTA services, Government is liable to pay GST under reverse
charge
(ii) For DSA services, Banking Company is liable to pay GST under reverse
charge
(iii) For GTA services, Maahi & Co is liable to pay GST under forward charge
(iv) For DSA services, Maahi & Co is liable to pay GST under forward charge
(a) i & ii
(b) iii & iv
(c) i & iv
(d) ii & iii
2. Which of the following options is correct in respect of GTA services provided
to Government Department?
(a) GTA service is taxable @ 12% without restriction of availing input tax
credit.
(b) GTA service is taxable @ 12%, but input tax credit cannot be availed for
the same.
(c) GTA service is taxable @ 5% without restriction of availing input tax
credit.
(d) GTA service is taxable @ 5%, but input tax credit cannot be availed for
the same.
3. Gift of ` 50,000 in value provided by Maahi & Co to each of its employee will
be:
(a) Supply of goods
(b) Supply of services
(c) Exempt supply
(d) Not a supply
4. Which of the following statements is correct:-
(i) Letting out of warehouse to Shankar is exempt
(ii) Catering service to “Vishesh” Anganwadi is exempt
(iii) Letting out of warehouse to Shankar is not exempt
(iv) Catering service to “Vishesh” Anganwadi is not exempt

9
 (a) i & ii
(b) iii & iv
(c) i & iv
(d) ii & iii
5. M/s Maahi & Co is eligible to claim input tax credit of _________
(a) ` 45,000
(b) ` 55,000
(c) ` 1,00,000
(d) Nil
6. Compute the GST liability of the firm for the month of July to be paid in cash,
if rule 86B of the CGST Rules, 2017 is not applicable?
(a) IGST: ` 10,000; CGST: Nil, SGST: ` 5000
(b) IGST: ` 12,000; CGST: Nil; SGST: ` 5000
(c) IGST: Nil; CGST: ` 10,000, SGST: ` 5000
(d) IGST: 5,000; CGST: Nil, SGST: 10,000 (6 x 2 Marks = 12 Marks)
7. Kids Bazaar Pvt. Ltd., registered in Maharashtra sells kids clothing via an E-
commerce operator Champ.com. Mr. Dhruv placed an order of 10 sets of
Ethnic wear in different colours each costing ` 5,000 (GST @18% not
included) on 20th January 2023. However, he returned 2 sets back after 2 days
in accordance with the exchange policy of Champ.com. Determine the value
of supply on which Champ.com should collect TCS from Kids Bazaar Pvt. Ltd.
(a) ` 40,000
(b) ` 59,000
(c) ` 50,000
(d) ` 47,200 (2 Marks)
8. Miss Gyati, a jeweller registered under GST in Mumbai, wants to sell her
jewellery in a Trade Expo held in Delhi. Which of the following statements is
false in his case?
(a) She needs to get registration in Delhi as casual taxable person.
(b) She needs to pay advance tax on estimated tax liability.
(c) She needs to mandatorily have a place of business in Delhi.
(d) She needs to file GSTR-1/ IFF and GSTR-3B for Delhi GSTIN for the
month or quarter, as the case may be, when she gets registered in Delhi.
(1 Mark)

10
 Division B - Descriptive Questions
Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
Total Marks:35 Marks
1. (a) Vishwanath Ltd., a registered supplier in Karnataka has provided the
following details for supply of one machine·:
Particulars Amount in
(`)
(1) List price of machine supplied [exclusive of items 80,000
given below from (2) to (4)]
(2) Tax levied by Local Authority on sale of such 6,000
machine
(3) Discount of 2% on the list price of machine was
provided (recorded in the invoice of machine)
(4) Packing expenses for safe transportation charged 4,000
separately in the invoice
Vishwanath Ltd. received ` 5,000 as price linked subsidy from a NGO on
sale of each such machine, The Price of ` 80,000 of the machine is after
considering such subsidy.
During the month of February, Vishwanath Ltd. supplied three machines
to Intra-State customers and one machine to Inter-State customer.
Vishwanath Ltd. purchased inputs (intra-State) for ` 1,20,000 exclusive
of GST for supplying the above four machines during the month.
The Balance of ITC at the beginning of February was:
CGST SGST IGST
` 18,000 ` 4,000 ` 26,000
Note:
(i) Rate of CGST, SGST and IGST to be 9%,9% and 18% respectively
for both inward and outward supplies.
(ii) All the amounts given above are exclusive of GST.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
Compute the minimum net GST payable in cash by Vishwanath Ltd. for
the month of February. (10 Marks)
(b) Veda Ltd. procured the following goods in the month of January, 2024.
Inward Supplies GST (`)
(1) Goods used in constructing an additional floor of 96,200
office building. The cost of construction of
additional floor has been capitalized.

11
 (2) Trucks used for transportation of inputs in the 11,000
factory
(3) Inputs used in trial runs 8,350
(4) Confectionery items for consumption of employees 4,325
working in the factory
(5) Cement used for making foundation and structural 9,550
support to plant and machinery
Note: Depreciation has not been claimed on tax component in case of
trucks.
Compute the amount of ITC available with Veda Ltd. for the month of
January, 2024 by giving necessary explanations. Assume that all the
other conditions necessary for availing ITC have been fulfilled. (5 Marks)
2. (a) Determine the place of supply in the following independent cases:-
(i) Harpreet (New Delhi) boards the New Delhi-Kota train at New
Delhi. He sells the goods taken on board by him (at New Delhi), in
the train, at Jaipur during the journey.
(ii) LP Refineries (Mumbai, Maharashtra) gives a contract to Bhansali
Ltd. (Ranchi, Jharkhand) to supply a machine which is required to
be assembled in a power plant in its refinery located in Kutch,
Gujarat. (5 Marks)
(b) Green Agro Services, a registered person provides the following
information relating to its activities during the month of February, 2024:
Gross Receipts from (`)
Services relating to rearing of goats 3,75,000
Services by way of artificial insemination of horses 5,00,000
Processing of sugarcane into jaggery 7,00,000
Milling of paddy into rice 8,00,000
Services by way of warehousing of agricultural produce 2,25,000
All the above receipts are exclusive of GST.
Compute the value of taxable supplies under GST laws for the month of
February, 2024. (5 Marks)
3. (a) Sheen Ltd. a registered supplier wishes to transport cargo by road
between two cities situated at a distance of 372 kilometres. Calculate the
validity period of e-way bill under rule 138(10) of the CGST Rules, 2017
for transport of the said cargo, if it is over dimensional cargo or
otherwise. (5 Marks)
(b) Apex Cinemas, a registered person engaged in making supply of
services by way of admission to exhibition of cinematograph films in
multiplex screens was issuing consolidated tax invoice for supplies at
the close of each day in terms of section 31(3)(b) of the CGST Act, 2017
read with fourth proviso to rule 46 of the CGST Rules, 2017.

12
 During the month of February, 2024, the Department raised objection for
this practice and asked to issue separate tax invoices for each ticket.
Advise Apex Cinemas for the procedure to be followed in this regard.
(5 Marks)
4. (a) Who are not eligible to opt for composition scheme for goods under GST
laws? (5 Marks)
Or
(a) Under the GST law, taxes on taxable services supplied by the Central
Government or the State Government to a business entity in India are
payable by recipient of services".
State the exceptions of the above statement. (5 Marks)
(b) Who can be registered as Goods and Service Tax Practitioners under
Section 48 of the CGST Act, 2017? (5 Marks)

13
 Mock Test Paper - Series II: August, 2024
Date of Paper: 20 th August, 2024
Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE COURSE: GROUP - I

PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
ANSWERS
Division A – Multiple Choice Questions
MCQ No. Sub-part Most Appropriate MCQ Most Appropriate
Answer No. Answer
1. (i) (b) 3. (a)
(ii) (d) 4. (d)
(iii) (a)
2. (i) (a)
(ii) (c)
(iii) (a)
Division B – Descriptive Questions
1. Computation of Total Income of Ms. Farah for the A.Y.2024-25
under default tax regime under section 115BAC
Particulars ` ` `
Income from house property
Gross Annual Value 1 90,000
Less: Municipal taxes paid 9,000
Net Annual Value (NAV) 81,000
Less: Deduction under section 24(a) –
30% of NAV = 30% of ` 81,000 24,300 56,700
Profits and gains of business or
profession
Net profit as per Profit and loss 25,91,000
account
Add: Expenses debited but not
allowable
(i) Purchase of car [Amount paid for 3,00,000
purchase of car is not allowable
since it is a capital expenditure]

1 Rent received has been taken as the Gross Annual Value in the absence of other information
relating to Municipal Value, Fair Rent and Standard Rent.
1
(ii) Municipal tax paid in respect of 9,000
house property [allowable as
deduction under the head “Income
from house property”]
(iii) Payment made to tax consultant 50,000
in cash [disallowed under section
40A(3), since such cash payment
exceeds ` 10,000]
(iv) Travel expenditure on foreign -
professional tour [Since it is
incurred in connection with
professional work, the same is
allowable as deduction. As it has
already been debited to profit and
loss account, no further
adjustment is required]
(v) Repair and maintenance of car 17,500
[Repairs and maintenance paid in
advance for the period 1.4.2024 to
30.9.2024 i.e. for 6 months 3,76,500
amounting to ` 17,500 is not
allowable as deduction, since Ms.
Farah is following the accrual
system of accounting]
29,67,500
Less: Income credited but not
taxable under this head:
(i) Dividend from an Indian company 11,00,000
(taxable under the head “Income
from Other Sources")
(ii) Interest on deposit certificates 25,000
issued under gold monetization
scheme, 2015 (taxability or
otherwise to be considered under
the head “Income from Other
Sources")
(iii) Honorarium for valuation of 50,000
answer papers
(iv) Rent received in respect of house 90,000 12,65,000
property
17,02,500
Less: Depreciation on car @15% 45,000
16,57,500
Income from Other Sources
Dividend from an Indian company 11,00,000
2
Interest on deposit certificates issued -
under gold monetization scheme,
2015 [Exempt under section 10(15)]
Honorarium for valuation of answer 50,000 11,50,000
papers
Gross Total Income 28,64,200
Less: Deduction under Chapter VI-A
[Deduction under section 80D would
not be allowable] -
Total Income 28,64,200
Computation of tax payable under default tax regime under section
115BAC
Particulars `
Tax on total income of ` 28,64,200
Upto ` 3,00,000 Nil
` 3,00,001 – ` 6,00,000 [i.e., ` 3,00,000@5%] 15,000
` 6,00,001 – ` 9,00,000 [i.e., ` 3,00,000@10%] 30,000
` 9,00,001 – ` 12,00,000 [i.e., ` 3,00,000@15%] 45,000
` 12,00,001 – ` 15,00,000 [i.e., ` 3,00,000@20%] 60,000
` 15,00,001 – ` 28,64,200 [i.e., ` 13,64,200 4,09,260
@30%]
5,59,260
Add: Health and Education cess@4% 22,370
Tax Liability 5,81,630
Less: Advance Tax paid 1,00,000
Less: Tax deducted at source on dividend income from an Indian
company under section 194 [` 11,00,000 x 10%] 1,10,000
Tax payable 3,71,630
Computation of total income and tax payable by Ms. Farah
for the A.Y.2024-25 under regular provisions of the Act
Particulars `
Gross Total Income 28,64,200
[Income under the “Income from house property” “Profits and
gains from business or profession” and “Income from other
sources” would remain the same under regular provisions of the
Act]
Less: Deductions under Chapter VI-A
Section 80D
Medical insurance premium paid online for 47,000
parents, being senior citizens
3
 Payment made in cash of ` 8,500 for preventive 5,000 52,000
health check-up for self and spouse restricted to
Total Income 28,12,200

Tax on total income of ` 28,12,200

Upto ` 2,50,000 Nil
` 2,50,001 – ` 5,00,000 [i.e., ` 2,50,000@5%] 12,500
` 5,00,001 – ` 10,00,000 [i.e., ` 5,00,000@20%] 1,00,000
` 10,00,001 – ` 28,12,200 [i.e., ` 18,12,200 5,43,660
@30%]
6,56,160
Add: Health and Education cess@4% 26,246
Tax Liability 6,82,406
Less: Advance Tax paid 1,00,000
Less: Tax deducted at source on dividend income from an
Indian company under section 194 [` 11,00,000 x 10%] 1,10,000
Tax payable 4,72,406
Tax payable (Rounded off) 4,72,410
Note – Since the tax payable under default tax regime under section 115BAC
is lower than the tax payable under the regular provisions of the Act, it would
be beneficial for Ms. Farah to pay tax under default tax regime under section
115BAC for A.Y. 2024-25.
2. (a) An Indian citizen, who leaves India in any previous year, inter alia, for
purposes of employment outside India, would be resident in India during
the relevant previous year if he stayed in India during that previous year
for 182 days or more.
(i) Since Sagar is leaving India for the purpose of employment outside
India, he will be treated as resident only if the period of his stay
during the previous year amounts to 182 days or more. Therefore,
Sagar should leave India on or before 28 th September, 2023, in
which case, his stay in India during the previous year would be less
than 182 days and he would become non-resident for the purpose
of taxability in India. In such a case, only the income which accrues
or arises in India or which is deemed to accrue or arise in India or
received or deemed to be received in India shall be taxable.
The income earned by him in New York would not be chargeable
to tax in India for A.Y. 2024-25, if he leaves India on or before
28th September, 2023.
(ii) If any part of Sagar’s salary will be credited directly to his bank
account in Delhi then, that part of his salary would be considered
as income received in India during the previous year under section
5 and would be chargeable to tax under Income-tax Act, 1961, even
4
 if he is a non-resident. Therefore, Sagar should receive his entire
salary in New York and then remit the required amount to his bank
account in Delhi in which case, the salary earned by him in New
York would not be subject to tax in India.
(b) TDS implications
(i) Since the sale consideration or stamp duty value of residential
house exceeds ` 50 lakhs, Mr. Deepak is required to deduct tax at
source@1% of ` 65 lakhs, being higher of sale consideration of
` 60 lakh and stamp duty value of ` 65 lakhs under section 194-IA.
TDS provisions under section 194-IA are not attracted in respect of
transfer of rural agricultural land, even if the consideration exceeds
` 50 lakh.
(ii) Every person, being a seller, who receives any amount as
consideration for sale of a motor vehicle of the value exceeding
` 10 lakhs, is required to collect tax at source @1% of the sale
consideration from the buyer.
TCS provisions will, however, not apply on sale of motor vehicles
by manufacturers to dealers/distributors. Hence, XYZ Ltd., the
manufacturer-seller need not collect tax at source on sale of cars
to the dealer, ABC & Co., even if the value of each car exceeds
` 10 lakhs.
However, TCS provisions would be attracted when ABC & Co., sells
cars to individual buyers, since the value of each car exceeds ` 10
lakhs. ABC & Co. has to collect tax@1% of the consideration on
sale of each car to an individual buyer.
3. (a) Computation of income from house property of Mr. Kamal for
A.Y. 2024-25
Particulars ` `
1. Income from let-out property in
Dubai [See Note 1 below]
2GrossAnnual Value (DHS 20,000 p.m. x 52,80,000
12 months x ` 22)
Less: Municipal taxes paid during the year
[DHS 4,000 (DHS 2,500 + DHS 1,500) x 88,000
` 22]3
Net Annual Value (NAV) 51,92,000
Less: Deductions under section 24
(a) 30% of NAV 15,57,600

2 In the absence of information related to municipal value, fair rent and standard rent, the rent
receivable has been taken as the GAV
3 Both property tax and sewerage tax qualify for deduction from gross annual value

5
 (b) Interest on housing loan - 15,57,600
36,34,400
2. Income from self-occupied property
in Mumbai
Annual Value [Nil, since the property is NIL
self-occupied]
[No deduction is allowable in respect of
municipal taxes paid in respect of self-
occupied property]
Less: Deduction in respect of interest on
housing loan [See Note 2 below] _1,64,000
(1,64,000)
Income from house property 34,70,400
[` 36,34,400 – ` 1,64,000]
Notes:
(1) Since Mr. Kamal is a resident but not ordinarily resident in India for
A.Y. 2024-25, income which is, inter alia, received in India shall be
taxable in India, even if such income has accrued or arisen outside
India. Accordingly, rent received from house property in Dubai
would be taxable in India since such income is received by him in
India. Income from property in Mumbai would accrue or arise in
India and consequently, interest deduction in respect of such
property would be allowable while computing Mr. Kamal’s income
from house property because of self-occupied property.
(2) Interest on housing loan for construction of self-occupied
property allowable as deduction under section 24
Interest for the current year (` 10,00,000 x 12%) ` 1,20,000
Pre-construction interest
For the period 01.06.2020 to 31.03.2022
(` 10,00,000 x 12% x 22/12) = ` 2,20,000
` 2,20,000 allowed in 5 equal installments
(` 2,20,000/5) ` 44,000
` 1,64,000
(b) Computation of income chargeable under the head “Capital Gains”
for A.Y. 2024-25
Particulars `
Capital Gains on sale of residential house
Actual sale consideration ` 80 lakhs
Value adopted by Stamp Valuation Authority ` 90 lakhs
Full value of sale consideration [Higher of the above] 90,00,000

6
 [As per section 50C, where the actual sale consideration
is less than the value adopted by the Stamp Valuation
Authority for the purpose of charging stamp duty, and
such stamp duty value exceeds 110% of the actual sale
consideration, then, the value adopted by the Stamp
Valuation Authority shall be taken to be the full value of
consideration.
In a case where the date of agreement is different from
the date of registration, stamp duty value on the date of
agreement can be considered provided the whole or part
of the consideration is paid by way of account payee
cheque/bank draft or by way of ECS through bank
account on or before the date of agreement. In this case,
since 20% of ` 80 lakhs is paid through account payee
bank draft on the date of agreement, stamp duty value
on the date of agreement can be adopted as the full
value of consideration]
Less: Indexed cost of acquisition of residential 69,60,000
house [` 20 lakhs x 348/100]
Long-term capital gains [Since the residential house 20,40,000
property was held by Mr. Ashish for more than 24 months
immediately preceding the date of its transfer]
Less: Exemption under section 54 15,00,000
The capital gain arising on transfer of a long-term
residential property shall not be chargeable to tax to the
extent such capital gain is invested in the purchase of
one residential house property in India within one year
before or two years after the date of transfer of original
asset.
Long term capital gains chargeable to tax 5,40,000
4. (a) Gross Total Income of Mr. Mohit for A.Y. 2024-25
Particulars ` `
Salaries
Income from salary 6,50,000
Less: Loss from house property of 2,00,000
` 2,60,000, restricted to 4,50,000
Income from house property
Income from House I 55,000
Less: Loss from House II (self- 1,25,000
occupied)
Loss from House III 1,90,000 3,15,000
(2,60,000)

7
Set-off of loss from house property against 2,00,000
salary income, restricted to
Loss to be carried forward to A.Y. 2025-26 (60,000)
Profits and gains of business or
profession
Profit from cloth business 1,70,000
Less: Loss from leather business 68,000
1,02,000
Capital Gains
Short term capital loss in equity-oriented -
funds on which STT is paid ` 35,000 to be
carried forward to A.Y. 2025-26 since such
loss can be set-off only against capital gains
and not against income under any other
head
Income from other sources
Income from owning and maintenance of 9,000
race bulls
Loss of ` 7,500 from the activity of owning
and maintenance of race horses cannot be Nil
set-off against any source other than income
from the activity of owning and maintaining
race horses. Hence, such loss has to be
carried forward to A.Y. 2025-26.
Income from crossword puzzles 12,000
Dividend from foreign company 8,500
29,500
Gross Total Income 5,81,500
Losses to be carried forward to A.Y.2025-26:
Particulars `
Loss from house property 60,000
[to be carried forward for set-off against income from house
property]
Short-term capital loss in equity oriented funds on which 35,000
STT was paid
[to be carried forward for set-off against capital gains, long-
term or short-term]
Loss from owning and maintaining race horses 7,500
[to be carried forward for set-off against income from the
activity of owning and maintaining race horses]

8
 Note: Loss from house property can also be set-off to the extent of
` 1,02,000 from profits and gains from business or profession and
balance i.e., ` 98,000 against Income under the head “Salaries”.
(b) First alternative
If a person, who has been allotted PAN as on 1st July, 2017 and is
required to intimate his Aadhaar number, has failed to intimate the same
on or before 31st March, 2022, the PAN of such person would become
inoperative.
A person, whose PAN has become inoperative, would be liable for
following further consequences for the period commencing from the date
notified by the CBDT till the date it becomes operative –
(i) no refund of any amount of tax or part thereof, due under the
provisions of the Act;
(ii) interest would not be payable on such refund for the period,
beginning with the date notified by the CBDT and ending with the
date on which it becomes operative;
(iii) where tax is deductible at source in case of such person, such tax
shall be deducted at higher rate, in accordance with provisions of
section 206AA;
(iv) where tax is collectible at source in case of such person, such tax
shall be collected at higher rate, in accordance with provisions of
section 206CC:
Where a person, who is required to intimate his Aadhar Number under
section 139AA(2), fails to do so on or before the notified date i.e.,
31.3.2022, he shall be liable to pay such fee, as may be prescribed, at
the time of making intimation under section 139AA(2) after 31.3.2022.
However, such fee shall not exceed ` 1,000.
(b) Second alternative
(i) Fee for default in furnishing return of income u/s 234F
Where a person who is required to furnish a return of income under
section 139, fails to do so within the prescribed time limit under
section 139(1), he shall pay, by way of fee, a sum of ` 5,000.
However, if the total income of the person does not exceed ` 5
lakhs, the fees payable shall not exceed ` 1,000

(ii) Persons to whom provisions of section 139AA relating to

quoting of Aadhar Number does not apply
The provisions of section 139AA relating to quoting of Aadhar
Number would not apply to an individual who does not possess the

9
Aadhar number or Enrolment ID and is:
(i) residing in the States of Assam, Jammu & Kashmir and
Meghalaya;
(ii) a non-resident as per Income-tax Act, 1961;
(iii) of the age of 80 years or more at any time during the previous
year;
(iv) not a citizen of India.

10
 SECTION B – GOODS AND SERVICES TAX (50 MARKS)
Division A - Multiple Choice Questions

Question Answer
No.
1 (c) i & iv
2 (d) GTA service is taxable @ 5%, but input tax credit cannot be
availed for the same.
3 (d) Not a supply
4 (d) ii & iii
5 (d) Nil
6 (a) IGST: ` 10,000; CGST: Nil, SGST: ` 5000
7 (a) ` 40,000
8 (c) She needs to mandatorily have a place of business in Delhi.

Division B - Descriptive Questions

1. (a) Computation of value of taxable supply
Particulars Amount
(`)
List price of the machine 80,000
Add: Tax levied by Local Authority on the sale of machine 6,000
[Tax other than GST, if charged separately, are includible in
the value in terms of section 15 of the CGST Act, 2017.]
Add: Packing expenses for safe transportation 4,000
[Includible in the value as per section 15 of the CGST Act,
2017.]
Add: Price-linked subsidy received from a NGO on sale of 5,000
each machine
[Subsidy received from a non-Government body and which
is directly linked to the price, the same is included in the
value in terms of section 15 of the CGST Act, 2017.]
Total 95,000
Less: Discount @ 2% on ` 80,000 1,600
[Since discount is known at the time of supply and
recorded in invoice, it is deductible from the value in terms
of section 15 of the CGST Act, 2017.]
Value of taxable supply 93,400

11
 Computation of minimum net GST payable in cash by
Vishwanath Ltd.
Particulars CGST (`) SGST (`) IGST (`)
Sale of machine 25,218 25,218 16,812
[Intra-State sales = ` 93,400 × 3
machines = ` 2,80,200 [2,80,200 [2,80,200 [93,400
Inter-State sales = ` 93,400 × 1 × 9%] × 9%] × 18%]
machine = ` 93,400]
Total output tax 25,218 25,218 16,812
Less: Set off of IGST against IGST (9,188) (16,812)
and SGST
[IGST credit first be utilized
towards payment of IGST,
remaining amount can be utilized
towards CGST and SGST in any
order and in any proportion]
Less: Set off of CGST against (25,218) (14,800)
CGST and SGST against SGST
[CGST credit cannot be utilized
towards payment of SGST and vice
versa.]
Minimum net GST payable in cash Nil 1,230
Working Note:
Computation of total ITC available
Particulars CGST (`) SGST (`) IGST (`)
Opening balance of ITC 18,000 4,000 26,000
Add: Inputs purchased 10,800 10,800
during the month [` 1,20,000 ×9%] [` 1,20,000 ×9%]
Total ITC available 28,800 14,800 26,000
(b) Computation of amount of ITC available for the month of
January, 2024
S. Particulars GST (`)
No.
(1) Goods used in construction of additional floor of office Nil
building
[ITC on goods received by a taxable person for
construction of an immovable property on his own
account is blocked even if the same is used in the
course or furtherance of business.]
(2) Trucks used for transportation of inputs in the factory 11,000

12
 [ITC on motor vehicles used for transportation of goods
is not blocked.]
(3) Inputs used in trial runs 8,350
[Being used in trial runs, inputs are used in the course
or furtherance of business and hence ITC thereon is
allowed.]
(4) Confectionary items for consumption of employees Nil
working in the factory
[ITC on food or beverages is blocked unless the same
is used in same line of business or as an element of the
taxable composite or mixed supply. Further, ITC on
goods and/or service used for personal consumption is
blocked.]
(5) Cement used for making foundation and structural 9,550
support to plant and machinery
[ITC on goods used for construction of plant and
machinery is not blocked. Plant and machinery
includes foundation and structural supports through
which the same is fixed to earth.]
Total eligible ITC 28,900
2. (a) (i) The place of supply of goods supplied on a board a conveyance
like aircraft, train, vessel, motor vehicle is the location where such
goods have been taken on board.
Place of supply of goods supplied on board a conveyance is
determined under this provision even if the supply has been made
by any of the passenger on board the conveyance and not by the
carrier of the conveyance.
Thus, in the given case, the place of supply of goods is the
location at which the goods are taken on board, i.e. New Delhi
and not Jaipur where they have been sold.
(ii) If the supply involves goods which are to be installed or
assembled at site, the place of supply is the place of such
installation or assembly.
This is a case of composite supply of goods wherein two supplies
are involved, supply of goods and ancillary supply of
installation/assembling service. The principal supply is supply of
goods which are being installed.
Thus, the place of supply is the site of assembly of machine, i.e.
Kutch even though LP refineries is located in Maharashtra.
(b) Computation of value of taxable supplies
Particulars Amount
(`)
Services relating to rearing of goats Nil
13
 [Exempt since services relating to rearing of all life
forms of animals, except horses, for food etc. are
exempt.]
Services by way of artificial insemination of horses 5,00,000
[Not exempt since services of artificial insemination are
exempt only of livestock other than horses.]
Processing of sugarcane into jaggery 7,00,000
[Not exempt, since processes which alter the essential
characteristics of agricultural produce are not exempt
and processing of sugarcane into jaggery changes the
essential characteristics of sugarcane.]
Milling of paddy into rice 8,00,000
[Not exempt, since this process, being carried out after
cultivation is over, is not an intermediate production
process in relation to cultivation of plants and it also
changes the essential characteristics of paddy.]
Services by way of warehousing of agricultural produce Nil
[Specifically exempt from GST.]
Value of taxable supplies 20,00,000
3. (a) The validity period of e-way bill under rule 138(10) of the CGST Rules,
2017 for transport of cargo by road between two cities situated at a
distance of 372 km is as under:
(i) If it is over dimensional cargo: the validity period of the e-way bill
is one day from relevant date upto 20 km and one additional day for
every 20 km or part thereof thereafter.
Thus, validity period in given case:
= 1 day + 18 days
= 19 days
(ii) If it is a cargo other than over dimensional cargo: the validity
period of the e-way bill is one day from relevant date upto 200 km
and one additional day for every 200 km or part thereof thereafter.
Thus, validity period in given case:
= 1 day + 1 day
= 2 days
(b) The procedure to be followed by Apex Cinemas, a registered person
engaged in making supply of services by way of admission to exhibition
of cinematograph films in multiplex screens, is as under:-
The option to issue consolidated tax invoice is not available to a supplier
engaged in making supply of services by way of admission to exhibition
of cinematograph films in multiplex screens. Thus, Apex Cinemas
cannot issue consolidated tax invoice for supplies made by it at the close
of each day.
14
 Apex Cinemas is required to issue an electronic ticket.
The said electronic ticket shall be deemed to be a tax invoice, even if
such ticket does not contain the details of the recipient of service but
contains the other information as prescribed to be mentioned.
4. (a) The registered person who is not eligible for composition scheme for
goods under GST law are as under:
(i) Supplier engaged in making any supply of goods or services which
are not leviable to tax.
(ii) Supplier engaged in making any inter-State outward supplies of
goods or services.
(iii) Person supplying any goods or services through an electronic
commerce operator who is required to collect tax at source (under
section 52).
(iv) Manufacturer of ice cream, panmasala, tobacco, aerated waters,
fly ash bricks; fly ash aggregate, fly ash blocks, bricks of fossil
meals or similar siliceous earths, building bricks, earthen or roofing
tiles.
(v) Supplier who is either a casual taxable person or a non-resident
taxable person
(vi) Supplier of services exceeding an amount which is higher of 10%
of the turnover in a State/U.T. in the preceding financial year or ` 5
lakh.
Note: Any 5 points may be mentioned.
Or
(a) Tax on following services supplied by the Central Government or State
Government to a business entity in India is payable by the supplier
of services:
(1) services of renting of immovable property provided to an
unregistered business entity.
(2) services by the Department of Posts and the Ministry of Railways
(Indian Railways)
(3) services in relation to an aircraft or a vessel, inside or outside the
precincts of a port or an airport.
(4) services of transport of goods or passengers.
(b) Following persons can be registered as Goods and Service Tax
Practitioners:
Any person who, (i) is a citizen of India; (ii) is a person of sound mind;
(iii) is not adjudicated as insolvent; (iv) has not been convicted by a
competent court;
and satisfies any of the following conditions, namely that he:

15
1. is a retired officer of Commercial Tax Department of any State
Govt./CBIC who, during service under Government had worked in a
post not lower than the rank of a Group-B gazetted officer for a period
≥ 2 years, or
2. is enrolled as a Sales Tax Practitioner or Tax Return Preparer under
the erstwhile indirect tax laws for a period of not less than 5 years, or
3. acquired any of the prescribed qualifications
4. has passed Graduate/postgraduate degree or its equivalent
examination having a degree in specified disciplines, from any Indian
University or a degree examination of any Foreign University
recognised by any Indian University as equivalent to degree
examination
5. has passed any other notified examination
6. has passed final examination of ICAI/ ICSI/ Institute of Cost
Accountants of India
Note: Any 5 points may be mentioned.

16