1. Mrs.
Nisha, a resident individual aged 54 years, is carrying on business of manufacturing
of textile fabrics, as a proprietor. The turnover in the previous year 2022-23 was ₹ 250
lakhs and in the current previous year 2023-24, it is ₹ 600 lakhs. The net profit as per the
profit and loss account as on 31.03.2024 is ₹ 5,61,000. She provides the following
additional information those were not considered while making the profit and loss
account for the previous year 2023-24.
i)Depreciation has not been debited to profit and loss account. The details of the plant &
machinery employed in the business are given as under:
Date Particulars Amount
01.04.2023 Opening written down value of machinery 4,75,000
used for manufacturing purpose.
03.07.2023 New machinery purchased during the year, 7,25,000
payment made by an account payee
cheque.
10.03.2024 Sold one of the old machine 75,000
She does not have any other fixed assets employed in the business.
i Received subsidy of 20% on new machine purchased on 03.07.2023 during the previous
year under technology upgradation fund Scheme from the Central Government.
ii She paid a job charges for the value addition on the fabrics ₹ 90,000 without deduction of
tax to job worker by an account payee cheque.
iii Commission paid to one agent allowed as deduction in earlier assessment year amounting
₹ 50,000, has now been received back during previous year 2023-24, from the agent due to
settlement with commission agent.
iv ₹ 25,000 paid to creditor for goods in cash.
v Incurred loss of ₹ 1,17,500 from an eligible transaction carried out in respect of trading in
derivatives in a recognized stock exchange.
vi Interest received amounting ₹ 2,00,000, duly authorised by partnership deed of M/s Ramji
textiles, @ 15% p.a. on the capital employed. She is sleeping partner in
vii
viii She Received ₹ 60,000 by pre-mature withdrawals from deposit including interest ₹ 5,000,
in post office time deposit, eligible for deduction under Section 80C.
ix She sold her gold bracelet (jewellery), used by her for personal purposes, on 01.05.2023
for ₹ 5,00,000, which was acquired for ₹ 40,000 on 01.03.2005. A diamond was embedded onto
bracelet on 01.05.2007 of ₹ 50,000. (cost inflation index 2004-05 - 113, 2007- 08 - 129 and 2023-24
- 348).
x She received a gold coin (bullion) worth ₹ 55,000 (FMV) from her cousin (daughter of
uncle) during the previous year 2023-24.
xi She incurred long term loss from sale of share of the Indian company. (The STT is paid on
the sale and purchase of the shares) ₹ 75,000.
xii She deposited a sum of ₹ 50,000 with life insurance Corporation of India every year for the
maintenance of her mother aged 70 years depended upon him and suffering from severe disability.
xiii She purchased the new residential house during the previous year and paid stamp duty
and registration fee ₹ 1,55,000 to get transfer the property in her name.
xiv You are required to compute the total income and tax payable by Mrs. Nisha for the
assessment year 2024-25. (Ignore the provisions of Section 115BAC). Give brief note wherever
necessary. (14 marks)
1. Mr. Shivansh, a resident and ordinarily resident aged 61 years, is engaged in the
business of manufacturing of motor parts. He is subject to tax audit under section 44AB
of Income Tax Act, 1961. He has provided following information:
Profit & Loss Account for the year ended 31s1 March, 2024
Particulars (₹) Particulars (₹)
To Administrative 4,30,000 By Gross Profit 58,30,000
expenses By Profit on sale of | 2,00,000
To Salaries & wages 20,00,000 asset of scientific
To Interest on loans 7,50,000 research
To Depreciation | 6,17,000
To Professional fees 2,70,000 By Winning from 31,500
lottery
To Rent, rates & 2,80,000 (Net of TDS @30%)
taxes
To Travelling & conveyance -1,40,000
To Net Profit | 15,74,500
Total 60,61,500 Total 60,61,500
Explanatory information:
(i) Opening and closing stock of finished goods were undervalued by 10%. Opening stock of
₹ 4,50,000 and Closing stock of ₹ 5,58,000 was shown.
(ii) Salaries & wages include following items :
(a) Contributed 20% of basic salary in National Pension Scheme referred to section 80CCD
regarding salary paid to an employee Mr. Ganesh who has withdrawn basic salary of ₹
3,00,000, and Dearness allowance is 40% of basic salary. 50% of Dearness allowance forms
part of the salary.
(b) Some of the employees opted for retirement under the voluntary retirement scheme; a
sum of ₹ 2,40,000 was paid to them on 1st January, 2024.
(iii) Interest on loan includes interest paid @ 15% per annum on loan of ₹ 12,00,000 which
was taken from State Bank of India on 01.05.2023 for purchase of new electric car of ₹
15,00,000. The car is used for personal purpose.
(iv) Depreciation allowable as per Income Tax Rules, 1962 is ₹ 4,50,000 but during the
calculation of such depreciation following addition was not considered:
Motor car purchased for ₹ 3,00,000 for supply of finished goods to dealers on 25-08-2023.
(v) An asset was purchased for ₹ 6,00,000 on 17-11-22 for conducting scientific research and
the deduction was claimed under section 35 of the Income-tax Act, 1961. This asset was sold
on 05-09-2023 for a consideration of ₹ 8,00,000.
Other information:
A plot of Industrial land which was used by Mr. Shivansh for business purpose for last 10
years was compulsorily acquired by Central Government on 07.05.2023. The compensation
of ₹ 12,00,000 was received on 27,02.2024. Such property was purchased by him on
08.08.2005 for ₹ 2,00,000. He has purchased another plot of industrial land on 21.04.2024
for ₹ 6,00,000. Government has also paid ₹ 54,000 as interest on such compensation on
28.03.2024.
Cost Inflation Indices: F.Y. 2023-24 : 348, F.Y. 2005-06: 117 Compute the total income and tax
liability of Mr. Shivansh for the assessment year 2023-24 assuming that he has not opted
provisions of section 115BAC. Ignore Provisions relating to AMT. (14 marks
Mr. Hari, aged 55 years, a resident individual and practicing Chartered Accountant,
furnishes you the receipts and payments account for the financial year 2023-24.
Receipts and Payments ₹ Payments ₹
Account Receipts
Opening Balances Staff salary, bonus and 20,50,000
(01 -04-2023) Bank Cash & Bank 20,000 stipend to articled clerks
other general and admin- 12,00,000
strative expenses
Fee from pro- fessional 39,60,000 Office rent 48,000
services
Life Insurance Premium 23,000
Motor car loan from SB I 2,00,000 Motor car 4,00,000
@ 10% interest (Acquired in January2024 by way of online
per annum payment)
Books bought 22000
(annual publication by credit card)
Computer acquired on 1- 11-2023 for
professional use 25,000
Domestic drawings 2,50,000
Motor car maintenance 12,000
Public Provident Fund subscription 1,40,000
Closing balances (31-03-2024) 10,000
Cash & Bank
41,80,000 41,80,000
(a) Contributed 20% of basic salary in National Pension Scheme referred to section 80CCD
regarding salary paid to an employee Mr. Ganesh who has withdrawn basic salary of ₹ 3,00,000,
and Dearness allowance is 40% of basic salary. 50% of Dearness allowance forms part of the salary.
(b) Some of the employees opted for retirement under the voluntary retirement scheme; a sum of
₹ 2,40,000 was paid to them on 1st January, 2024.
(iii) Interest on loan includes interest paid @ 15% per annum on loan of ₹ 12,00,000 which was
taken from State Bank of India on 01.05.2023 for purchase of new electric car of ₹ 15,00,000. The
car is used for personal purpose.
(iv) Depreciation allowable as per Income Tax Rules, 1962 is ₹ 4,50,000 but during the calculation
of such depreciation following addition was not considered: Motor car purchased for ₹ 3,00,000 for
supply of finished goods to dealers on 25-08-2023.
(v) An asset was purchased for ₹ 6,00,000 on 17-11-22 for conducting scientific research and the
deduction was claimed under section 35 of the Income-tax Act, 1961. This asset was sold on 05-09-
2023 for a consideration of ₹ 8,00,000.
Other information:
A plot of Industrial land which was used by Mr. Shivansh for business purpose for last 10 years was
compulsorily acquired by Central Government on 07.05.2023. The compensation of ₹ 12,00,000
was received on 27,02.2024. Such property was purchased by him on 08.08.2005 for ₹ 2,00,000. He
has purchased another plot of industrial land on 21.04.2024 for ₹ 6,00,000. Government has also
paid ₹ 54,000 as interest on such compensation on 28.03.2024.
Cost Inflation Indices: F.Y. 2023-24 : 348, F.Y. 2005-06: 117 Compute the total income and tax
liability of Mr. Shivansh for the assessment year 2023-24 assuming that he has not opted
provisions of section 115BAC. Ignore Provisions relating to AMT. (14 marks)
