Date of Joining....................                                       

Chapter name from which u join.............................

Time Allowed: 1½ hours                                       Maximum marks: 60

Total no. of Questions: 6                                      Total no. of pages: 5

NOTE: All references to sections mentioned in  the Question Paper relate to the Income-                tax Act,1961 and the relevant Assessment Year 2010-2011 unless stated otherwise.

Question no 1 is compulsory and any 4 questions from rest of the part

Q-1(A) State, with reasons in brief, whether the following statements are correct or incorrect.

(i)              If accommodation in a hotel provided to Govt. Employee, then licence fee will be as taxable perquisites.

(ii)             Gift in cash below Rs. 5, 000 is a tax free perquisite.

(iii)            Rental income from residential property owned by a company carrying on property rental business is taxable u/h Income from House Property.

(iv)           Partnership firm can get benefit of self-occupation.

(1 mark each)

(B)     Re-write the following sentences after filling in the blank spaces with appropriate word(s)/ figure(s).

(i)       ......................... journey is allowed in a block of 4 ........................... years.

(ii)      The deduction of entertainment allowance is given u/s....................... and available to ....................... employees only.

(iii)      Residential status of an assessee............................ change from year to year.

(iv)          The maximum exemption limit under the Income Tax Act, 1961 in case of a woman who is less than 65 years of age and who is non-residential in India is Rs........................

(1 mark each)

(C )    Mr. X let-out his house property from 1.4.09 to 1.12.09 at a monthly rent of Rs. 7, 000 and from 1.12.09 to 1.3.10, it was self occupied by him for residence. The other relevant dates are given below:

Municipal Value                           :                   Rs. 90, 000

Fair Rent                                     :                             Rs. 80, 000

Standard Rent                             :                   Rs. 60, 000

Municipal Tax                              :                   15% of municipal value

Interest on loan                           :                   Rs. 12, 000

Calculate income from House Property.                                                    (4 marks)

Q-2(A) Choose the most appropriate answer from the given option in respect of following having regard to the provisions of Income Tax Act, 1961;

(i)              Nihal, a salaried employee, receives medical allowance of Rs. 25,000 from his employer which is fully spent by Nihal in meeting medical expenses for himself. Determine the taxable amount of the medical allowance. -

(a)            Rs. 10, 000

(b)      Rs. 25, 000

(c)      Nil

(d)      Rs. 15, 000

(ii)             Taxable value of perquisite being sweat shares alloted by the employee is —

(a)      The fair market value of such shares as on the date when such option is exercised by the employee as reduced by the amount paid.

(b)      The fair market value of shares as on the date when such option is vested to the employee as reduced by the amount paid.

(c)      Fair market value subject to standard deduction of Rs. 50,000.

(d)      Taxable in hands of employer.

(iii)            Original cost of Motor Car purchased by company on 15-11-05 is Rs. 2,00,000. This car is sold to Mr. X on 10-11-08 for Rs. 90,000. The value of Perquisite is –

(a)            38,000

(b)            12,400

(c)            1,10,000

(d)            None of the above

(iv)           Godowns constructed and used for storing own stocks. It was later let out. The Rental Income is chargeable to tax U/H –

(a)            I/F/H/P

(b)            I/f/O/S

(c)            PGBP

(d)            None of these                                                            (1 mark each)

(B)     R submits the following information regarding his salary income for the year 2009-10 : Basic salary Rs.15,000p.m.; D.A(forming part of salary) 40% of basic salary;City Compensatory Allowance Rs.300p.m.; Children Education Allowance Rs.400 pm per child for 3 children; Transport Allowance Rs.1,000 p.m. He is provided with a rent free unfurnished accommodation which is owned by the employer. The fair rental value of the house is Rs.24,000 p.a. Compute the gross salary assuming accommodation is provided in a city where population is (a) exceeding 25 lakhs (b) exceeding 10 lakhs but not exceeding 25 lakhs (c) less than 10 lakhs

(8 marks)

Q-3(A) Distinguish between the following:

(i)              Unrealised Rent Recovered & Arrears of Rent Received.

(ii)             Medical Allowance & Medical Facility.

(iii)            Circulars & Notifications

     (2 mark each)

(B)     Explain Deemed Owner.                                                                           (3 marks)

(C)     Explain any 5 tax free perquisites.                                                             (3 marks)

Q-4(A) Mr X had borrowed Rs. 180000 @ 15% on 1.4.98 and further borrowed Rs 1000000@ 10% for construction of house property and such amount still remains unpaid. Construction was completed on 1.2.2000. Find out the deduction amount under Section 24(b) if the house is used by Mr X as self occupied property for his residence.                                                                                               (4 marks)

(B)     Ms. Parineeta retired from service after 28 years from ABC Ltd. Leave sanctioned by employer 45 days p.a. Leave availed during service 400 days. Leave encashment received: Rs. 4,30,000. Average salary for 10 months preceeding the month of retirement Rs.15,000.Compute taxable amount of Leave encashment for the Previous year 2009-10.                                                                            (4 marks)

(C)     Define Annual Value.                                                                               (4 marks)

Q-5(A) Mr B takes a interest free loan of Rs250000 on IST November of the relevant

Previous year to construct his house. The loan is repayable in 50 monthly instalments

from January of the relevant previous year. Compute the value of perquisite. (SBI lending rate-8.5% p.a)                                                                             (5 marks)

(B)     Naveen owns a house at Indore. Its municipal valuation is Rs. 24, 000. He incurred the following expenses in respect of the house property:

Municipal tax @ 20%, fire insurance premium Rs. 2, 000 and land revenue Rs. 2,400. He took a loan of Rs. 25, 000 @ 16% p.a. on 1^st April 2006. The whole amount is still unpaid. The house was completed on 1^st April 2009. Find out the income from house property for the assessment year 2010-11 in respect of the following options:

(i)              If the house is used by the assessee throughout the previous year for his residential purpose; and

(ii)             If the house is let out for residential purposes on monthly rent of Rs. 2, 000 from 1^st April 2009 to 31^st January 2010 and self-occupied for the remaining period.                                                                                          (7 marks)

Q-6.   X had been working with ABC Ltd., in a tribal area since 1-10-1996. He was entitled to the following emoluments:

1.       Basic salary w.e.f. 1-1-2009 Rs. 6,000 p.m.

2.       Dearness allowance 40% of basic salary (50% of which forms part of salary for retirementbenefits)

3.       Medical allowance Rs. 500 p.m., (entire amount is spent on his own medical treatment).

4.       Entertainment allowance Rs. 400 p.m.

5.       Children education allowance Rs. 40 p.m. per child for three children.

6.       Hostel expenditure allowance Rs. 100 p.m. per child for three children.

7.       Tribal area allowance Rs. 300 p.m.

8.       Uniform allowance Rs. 250 p.m. (He spends Rs. 1,500 on the purchase and maintenance of uniform)

9.       House rent allowance Rs. 750 per month. He pays Rs. 1,000 per month as rent.

10.     He contributes Rs. 900 per month to a recognised provident fund to which his employer contributes an equal amount.

He retired from his job on 1-1-2010 and shifted to Delhi. He was entitled to the following benefits at thetime of his retirement :

(a)      Gratuity Rs. 1,15,000

(b)      Pension from 1-1-2010 Rs. 2,000 p.m.

(c)      Payment from recognised provident fund Rs. 3,00,000

(d)      Encashment of earned leave for 150 days Rs. 36,000

He was entitled to 40 days leave for every completed year of service. He got 50% of his pension commuted in lumpsum w.ef 1-3-2010 and received Rs. 1,20,000 as commuted pension.

He joined XYZ Ltd. at Delhi w.e.f 1-2-2010 and was entitled to the following emoluments :

(I)       Basic salary Rs. 5,000 p.m.

(2)      Dearness allowance (forming part of salary) 20% of basic salary

(3)      Rent-free unfurnished accommodation in Delhi which is owned by the employer and whose fair rental value is Rs. 48,000 p.a.

He was also given the following facilities by the employer.

(a)      Motor car (1.4 Itr. engine capacity) with driver, which he uses partly for official and partly for personal purposes.

(b)      The monthly expenses incurred by ‘A’ on gas and electricity were Rs. 500 which were reimbursed by the employer.

(c)      Reimbursement of educational expenses of his two children which amounted to Rs. 350 p.m.

(d)      On 4-3-2010 his wife fell ill and the employer reimbursed the expenditure of medical treatment amounting to Rs. 17,500.

(e)      A watchman a sweeper, a cook and a gardener have been provided to whom the company pays a salary of Rs. 400 p.m.

(f)       Loan of Rs. 1,00,000 @ 12% p.a for construction of his house was given by the construction of his house given by the company. SBI rate of interest is 11% pa.

He made the following payments during the previous year: Professional tax Rs. 500