TAXMANN® Chapter-wise Marks Distribution I-5 Previous Exams Trend Analysis I-7 Chapter-wise Comparison With Study Material I-11 PART I DIRECT TAX LAWS (70 MARKS) Chapter 1 INCOME FROM SALARIES 1.3 Chapter 2 INCOME FROM HOUSE PROPERTY 2.1 Chapter 3 PROFITS AND GAINS OF BUSINESS OR PROFESSION 3.1 Chapter 4 CAPITAL GAINS 4.1 Chapter 5 INCOME FROM OTHER SOURCES 5.1 Chapter 6 TAX ON CONVERSION OF UNACCOUNTED MONEY 6.1 Chapter 7 INCOME OF OTHER PERSONS, INCLUDED IN ASSESSEE’S TOTAL INCOME (CLUBBING OF INCOME) 7.1 PAGE I-13 Contents
®TAXMANN Chapter 8 SET-OFF OF LOSSES OR CARRY FORWARD AND SET-OFF OF LOSSES 8.1 Chapter 9 DEDUCTIONS FROM GROSS TOTAL INCOME 9.1 Chapter 10 TAXATION OF CO-OPERATIVE SOCIETIES 10.1 Chapter 11 DEDUCTION FOR SPECIAL ECONOMIC ZONE 11.1 Chapter 12 EXPENDITURE ON EXEMPT INCOME 12.1 Chapter 13 TAXATION OF POLITICAL PARTIES & ELECTORAL TRUST 13.1 Chapter 14 TAXATION OF CHARITABLE/ RELIGIOUS TRUSTS 14.1 Chapter 15 TAXATION OF MUTUAL CONCERNS 15.1 Chapter 16 MINIMUM ALTERNATE TAX (MAT) 16.1 Chapter 17 TAXATION OF FIRMS, LLP AND AOP/BOI 17.1 Chapter 18 ALTERNATE MINIMUM TAX (AMT) 18.1 Chapter 19 TAXATION OF BUSINESS TRUSTS (REITs, InvITs) 19.1 Chapter 20 APPLICATION VS. DIVERSION OF INCOME 20.1 Chapter 21 ASSESSMENT PROCEDURES 21.1 Chapter 22 APPEALS AND REVISIONS 22.1 PAGE I-14
TAXMANN® Chapter 23 SURVEY, SEARCH AND SEIZURE 23.1 Chapter 24 PENALTIES AND PROSECUTIONS 24.1 Chapter 25 SETTLEMENT OF CASES 25.1 Chapter 26 LIABILITY IN SPECIAL CASES 26.1 Chapter 27 ASSESSMENT OF HUF 27.1 Chapter 28 TAX DEDUCTION AND COLLECTION AT SOURCE 28.1 Chapter 29 COLLECTION AND RECOVERY OF TAX 29.1 Chapter 30 INTEREST 30.1 Chapter 31 MISCELLANEOUS TOPICS, STT/ CTT AND IFSC 31.1 Chapter 32 TAX PLANNING, TAX AVOIDANCE AND TAX EVASION (INCLUDING GAAR) 32.1 PART II INTERNATIONAL TAXATION (30 MARKS) Chapter 33 TAX INCIDENCE IN INDIA 33.3 Chapter 34 TAXATION OF NON-RESIDENTS 34.1 Chapter 35 DOUBLE TAXATION RELIEF 35.1 PAGE I-15
®TAXMANN Chapter 36 TRANSFER PRICING 36.1 Chapter 37 ADVANCE RULINGS 37.1 Chapter 38 EQUALISATION LEVY 38.1 Chapter 39 OVERVIEW OF MODEL TAX CONVENTIONS 39.1 Chapter 40 APPLICATION AND INTERPRETATION OF TAX TREATIES 40.1 Chapter 41 FUNDAMENTALS OF BEPS 41.1 SOLVED PAPER : DEC. 2021 (NEW SYLLABUS) P.1 SOLVED PAPER : MAY 2022 (NEW SYLLABUS) P.25 PAGE I-16
Q2. Can reference be made to the Valuation Officer u/s 55A where the A.O. is of the view that in the context of computation of capital gains, the value of asset as on 1.4.2001 adopted by the assessee is more than the FMV? Final May 2010] [4 Marks
47 inter alia Explanation 2 to
] CAPITAL GAINS CHAPTER 4 4.1
assessable
TAXMANN®
[
Q1. On 25.11.2021, A gave power of attorney and possession to B in respect of a vacant land acquired 10 years ago. The sale deed was executed in April, 2022. In which assessment year, the capital gain is chargeable to tax? CA Final May 2010] [4 Marks] in the previous year in which transfer took place. section 50C“assessable
Ans.
[CA
Ans.Computation
variance Q3. A sold a house to his friend B on 01.11.2021, for a consideration of ` 25,00,000. The Sub-Registrar refused to register the document for the said value, as according to him, Stamp Duty had to be paid of ` 45,00,000 which was the Government Guideline Value. Mr. A preferred an appeal to the Revenue Divisional Officer, who fixed the value of the house as ` 32,00,000 (` 22,00,000 for Land, balance for Building portion). The differential Stamp Duty was paid, accepting the said value determined.
®TAXMANN Ans. the value so claimed is at variance with the FMV of the asset.
Assuming that the FMV is ` 32,00,000, what are the tax implications in the hands of Mr. A and Mr. B for the A.Y. 2022-23? Mr. A had purchased the Land on 01.06.2017 for ` 5,19,000 & completed the construction of house on 01.12.2019 for ` 14,00,000.
CII: FY 2016-17: 264, FY 2017-18: 272, FY 2018-19: 289, FY 2020-21: 301, FY 2021-22: 317 [CA Final May 2010] [4 Marks] of Capital Gains for A.Y. 2022-23 Land (`) Building (`) ` 15,95,136 (4,00,000) Note: i.e. ` ` ` 4.2
TAXMANN® Tax Implication: Mr. A: ` ` ` Mr. B: i.e. ` x ` ` ` Q4. A resident woman (individual) sold a house property on 16.01.2022. On the said transaction, she earned a long-term capital gain of ` 1,01,50,000. She invested a sum of ` 50,00,000 in capital gains bonds specified in section 54EC on 05.03.2022. She further invested a sum of ` 50,00,000 in the same bonds on 05.05.2022. Her other income for the financial year 2021-22 was ` 56,000. Compute the tax payable by her for the A.Y. 2022-23. Assume the assessee has not opted for Sec. 115BAC. [CA Final Nov. 2010] [6 Marks] Ans. ` ` Computation of Income-Tax Payable: ` ` ` ` 4.3
Ans.
` Notes: ` Less: ` 4.4
Q5. Hari has acquired a residential house property in Delhi on 1st April, 2009 for ` 10,00,000 and decided to sell the same on 3rd May, 2011 to Ms. Pari and an advance of ` 25,000 was taken from her. The balance money was not paid by Ms. Pari and Hari has forfeited the entire advance sum. On 3rd June, 2021, he sold this house to Mr. Suri for ` 35,00,000. In the meantime, on 4th April, 2021, he had purchased a residential house in Delhi for ` 8,00,000, where he was staying with his family on rent for the last 5 years and paid the full amount as per the purchase agreement.
However, Hari does not possess any legal title till 31st March, 2022, as such transfer was not registered with the registration authority. Hari has purchased another old house in Surat on 14th October, 2021 from Mr. X, an Indian resident, by paying ` 5,00,000 and the purchase was registered with the appropriate authority. Determine the taxable capital gain arising from above transactions in the hands of Hari for A.Y. 2022-23. CA Final Nov. 2010] [5 Marks] Computation of taxable capital gain of Mr. Hari for the A.Y. 2022-23
[
®TAXMANN ` ` `
`
` ` `
i.e. “Any transfer of a capital asset or intangible asset by a private company or unlisted public company to a LLP or any transfer of share or shares held in a company by a shareholder on conversion of a company into a LLP in accordance with section 56 and section 57 of the Limited Liability Partnership Act, 2008, shall not be regarded as a transfer for the purposes of levy of capital gains tax under section 45 subject to fulfilment of certain conditions”. Explain in the context of the provisions contained in the Act. May 2011] [
two residential house properties for the purpose of claiming exemption under section 54, holding of legal title is not necessary.
TAXMANN®
` ` ` Q6.
6 Marks] Ans. s ba 4.5
[CA Final
®TAXMANN dce ` ea ` f Q7. Mr. X transferred his residential house to Y for ` 11 lakh on 1st April, 2021. The value of the said house as per Stamp Valuation Authority was ` 16 lakh. Mr. Y is a childhood friend of Mr. X. Mr. X gifted a plot of land (purchased by him on 1st August, 2018) to Mr. Y on 1st July, 2021. The value as per Stamp Valuation Authority is ` 8 lakh. Mr. Y sold the land on 1st March, 2022 at ` 14 lakh. Compute the income of Mr. Y chargeable under the heads “Capital Gains” and “Income from other sources” for Assessment Year 2022-23. [CA Final Nov 2011] [5 Marks] Ans. Computation of income of Mr. Y for A.Y. 2022-23 ` Capital Gains x Income from other sources x Total Income 19,00,000 4.6
TAXMANN® Notes: x ` ` i.e. ` ` ` ` ` 5,00,000 i.e. ` ` chargeable to tax x ` ` ` ` x x x ` Q8. What are the consequences if the amount deposited in Capital Gains Account Scheme to avail exemption from capital gains is not utilised within the stipulated time? Is there any difference in the tax treatment in the event of death of the assessee before the stipulated time? [CA Final May 2012] [3 Marks] Ans. i.e., unutilized amount shall be chargeable as capital gain in the previous year in which the specified period of two years or three years, as the case may be, expires. The nature of the capital gain shall be same 4.7
Ans.
[7 Marks
Q9. State the cases where the benefit of indexation of cost is not available determination of capital gains. 2012] ] 23D Q10. PQR Ltd. has two units–one engaged in manufacture of Computer Hardware and the other involved in developing Software. As a restructuring drive, the Company has decided to sell its Software Unit as a going concern by way of slump sale for ` 385 Lakhs to a new Company called S Ltd., in which it holds 74% Equity Shares. The FMV of the capital assets of the unit on the date of transfer calculated as per Rule 11UAE is ` 400 lakhs.
The Balance Sheet of PQR Ltd. as on 31st March 2022, being the date on which software unit has been transferred, is as under:
[CA Final May
®TAXMANN Circular No.743 dated 6.5.1996
for
4.8
TAXMANN® Liabilities ` in Lakhs Assets ` in Lakhs Paid up Share Capital 300 Fixed Assets General Reserve 150 Hardware Unit 170 Share Premium 50 Software Unit 200 Revaluation Reserve 120 Debtors Current Liabilities Hardware Unit 140 Hardware Unit 40 Software Unit 110 Software Unit 90 InventoriesHardware Unit 95 Software Unit 35 750 750 Following additional information are furnished by the Management: (i) The Software Unit is in existence since May, 2018. (ii) Fixed Assets of Software Unit includes land which was purchased at ` 40 Lakhs in the year 2015 and revalued at ` 60 Lakhs as on March 31, 2022. (iii) Fixed Assets of Software Unit mirrored at ` 140 Lakhs (` 200 Lakhs minus land value ` 60 Lakhs) is Written Down Value of Depreciable Assets as per books of account. However, the Written Down Value of these Assets u/s 43(6) of the Income-tax Act is ` 90 Lakhs. Required:( a) Ascertain the tax liability, which would arise from slump sale to PQR Ltd. (b) What would be your advice as a Tax Consultant to make the restructuring plan to the Company more tax savvy, without changing the amount of sale consideration?[ CA Final Nov. 2012, May 2011] [10 Marks] Ans.( a) minus minus as appearing in the books of account. 4.9
®TAXMANN revaluation of assets shall be ignoredComputation of Tax Liability arising on Slump Sale ` ` % ` Note:1.Net Worth of Software Unit: ` Total Assets Less: Liabilities (b) Modification in the Restructuring Plan Option 1: S Ltd - 100% Subsidiary i.e. Conditions: 4.10
(i) Purchase of new machinery during April, 2022 ` 70 lakhs (including ` 10 lakhs for purchase of computers).
(ii) Deposit in specified bank on 25th September, 2022 ` 6 lakhs.
(iii) Remaining ` 4 lakhs was held as Cash balance.
The due date for filing return of income for Mr. Shakti for A.Y. 2022-23 is 31st October, 2022. Assume that he files return on 28.10.2022. Compute the taxable capital gain arising from the above transaction for Assessment Year 2022-23. [CA Final May 2013] [6 Marks] Computation of taxable capital gains of Mr. Shakti for A.Y. 2022-23 ` ` × ` ` 4.11
Ans.
Less:Less: ` × Less:
Q11. Mr. Shakti purchased a residential house in March, 2010 for ` 22 lakhs. He sold the house on 1st December, 2021 for ` 100 lakhs. He paid brokerage at 2% on sale price. He invested ` 80 lakhs in April, 2022 in equity shares of Shakti Private Limited, an eligible start-up. Mr. Shakti holds 80% of share capital of the company. The company utilised the sum of ` 80 lakhs in the following manner:
TAXMANN® ba Result: iv not attract Capital Gains.
Option 2: S Ltd - Demerger Result: not a transfer vib
Cost Inflation Index: FY 2009-10: 148; FY 2018-19: 280; FY 2021-22: 317. [CA Final May 2013] [10 Marks] ComputationAns.
`
Note: iiiiii
Deemed cost of new plant and machinery for exemption u/s 54GB:
of Capital gains and business income of Tani for A.Y. 2022-23 ` Capital Gains Less ` 4.12
®TAXMANN
Q12. Tani purchased a land at a cost of ` 34 lakhs in the financial year 2009-10 and held the same as her capital asset till 31st March, 2018. Tani started her real estate business on 1st April, 2018 and converted the said land into stock-in-trade of her business on the said date, when the fair market value of the land was ` 150 lakhs. She constructed 20 flats of equal size, quality and dimension. Cost of construction of each flat is ` 8 lakhs. Construction was completed in December, 2021. She sold 15 flats at ` 20 lakhs per flat between Jan, 2022 and March, 2022. Remaining 5 flats were held in stock as on 31.03.2022. She invested ` 50 lakhs in bonds issued by Rural Electrification Corporation Ltd. on 31st March, 2022. Compute the amount of chargeable capital gain and business income in the hands of Tani arising from the above transactions for Assessment Year 2022-23 indicating clearly the reasons for treatment for each item.
TAXMANN® ` ` ¾ Less: Business Income × ` Less: ` × ¾ × ` ` ` × ` × × Less Notes: 47 4.13
®TAXMANN i.e., Q13. The proprietary firm of ‘Mr. Amolak’ a practicing Chartered Accountant, was converted into partnership on 01.09.2021 when his son joined him in the firm for 50% share. All the assets and liabilities of the erstwhile proprietary firm were transferred into the newly constituted partnership firm. “Mr. Amolak” was credited and paid an amount of ` 5 lakhs in his account from the firm. Explain as to chargeability of this amount of ` 5 lakhs in the hands of “Mr. Amolak” when it stands paid for: (i) transfer of business into partnership; (ii) goodwill by the incoming partner. [CA Final Nov. 2013] [4 Marks] Ans.( i) If the amount was paid for transfer of business/profession to partnership: there is a transfer of interest in the assets of the proprietor’s business as ` 4.14
TAXMANN® (ii) If the amount is paid by the incoming partner for Goodwill: CIT v. B. C. Srinivasa Setty (1981),not possible to ascertain a Also, as per the amendment made by the Finance Act, 2021, the cost of acquisition of self-generated goodwill of a profession is also Nil. ` shall be taxable as capital gains w.e.f. A.Y. 2021-22 Q14. Mr. X had a leasehold property since 5th May, 2014. The leasehold rights were converted into freehold on 20th May, 2021. The said property was sold on 10th January, 2022. The assessee claimed the capital gain as long-term capital gain. The A.O. contended the same as short-term as the property was acquired by converting the leasehold right into freehold right only on 20th May, 2021. Is Mr. X justified in his claim? [CA Final May 2015] [4 Marks] Ans. CIT v. Smt. Rama Rani Kalia (2013) (All.). 4.15
Rs. : 775 | AUTHOR : Ravi Chhawchharia PUBLISHER : TAXMANN DATE OF PUBLICATION : June 2022 EDITION : 4th Edition ISBN NO : 9789356221932 NO. OF PAGES : 672 BINDING TYPE : PAPERBACK Direct Tax Laws & International Taxation (DT) | A.Y. 2022-23 | CRACKER ORDER NOW Description USD : 43 This book is prepared exclusively for the Final Level of Chartered Accountancy Examina�on requirement. It covers the ques�ons & detailed answers strictly as per the new syllabus of ICAI. The Present Publica�on is the 4th Edition & updated till 30th April 2022 for CA-Final | New Syllabus | Nov. 2022 Exams. This book is authored by CA Ravi Chhawchharia, with the following noteworthy features: Strictly as per the New Syllabus of ICAI · Coverage of this book includes: All Past Exam Ques�ons CA Final December 2021 (New Syllabus) CA Final May 2022 (New Syllabus) Ques�ons from RTPs & MTPs of ICAI · [570+ Prac�cal Ques�ons & Answers] for self-practice · [Most Updated & Amended] Law stated in this book is as amended up to 30th April 2022 · [Updated Solu�ons/Answers] as per Law applicable for A.Y. 2022-23 [Marks Distribu�on] Chapter-wise marks distribution for Past Exams | Nov. 2019 onwards [Previous Exam Trend Analysis] from Nov. 2018 onwards · [Comparison with Study Material] Chapter-wise comparison with ICAI Study Material
