Direct Tax Laws & International Taxation - May 2015

1. Discuss, with the aid of case laws, whether the following receipts are revenue or capital in nature: (a) Liquidated damages received by A Ltd. from supplier of plant and machinery for failure to supply machinery within the stipulated time. (b) Power subsidy received by B Ltd., a cement manufacturing company, from the State Government, year after year, on the basis of actual power consumption. (c) One-time subsidy, equivalent to 60% of sales tax paid, received by C Ltd. from…

2. (a) Ramji charitable trust, registered under section 12AA, earned income from mutual funds specified under section 10(23D) to the tune of % 2 lakh in the P.Y. 2014-15 and claims exemption under section 10(35) in respect of such income. It also earned dividend income of ₹1 lakh and agricultural income of & 5 lakh in the same year, and claims exemption under section 10(34) and 10(1), respectively, in respect of such income, without complying with the conditions laid down…

3. Discuss the deductibility of the following expenditure while computing business income — PAPER -7 : DIRECT TAX LAWS 53 (a) A Ltd., a manufacturing company, has invested % 35 crore (including & 5 crore in computers installed in office) in new plant and machinery. The said plant and machinery was acquired and installed in April, 2014 and put to use in the same month. (b) BLtd. invested & 10 crore in land and @ 5 crore in new plant…

Mr. Ganesh, aged 43 years, working as a General Manager with W Consulting Ltd., furnishes the following particulars of assets transferred by him during the P.Y.2014-15 - Particulars Date of | Net Sale transfer | consider- ation z (1) | A residential house in Pune which he had purchased | 28/2/2015 | 2,00,00,000 in January, 2000 at a cost of = 31,12,000. (2) | Listed equity shares of Indian companies purchased | 15/3/2015 4,00,000 in June 2012 at a cost…

5. Mr. Vallish has acquired a residential house property in Noida on 23 May, 2001 for % 36,85,800 and decided to sell the same on 14" August, 2005 to Mrs. Poorna and an advance of % 1,50,000 was taken from her. The balance money was not paid by Mrs. Poorna and hence, Mr. Vallish has forfeited the entire advance sum. In April, 2014, he once again entered into negotiations for sale of the said property to Mr. Sridhar, and received…

6. A business trust, registered under SEBI (Real Estate Investment Trusts) Regulations, 2014, gives particulars of its income for the P.Y.2014-15: (1) Interest income from A Ltd. - ₹4 crore; (2) Dividend income from A Ltd. - ₹2 crore; (3) Short-term capital gains on sale of listed shares of A Ltd. - % 3 crore; (4) Short-term capital gains on sale of developmental properties - ₹2 crore PAPER -7 : DIRECT TAX LAWS 55 (5) Interest received from investments in…

7. Mr.Anish, carrying on the business of operating a warehousing facility for storage of food grains, has a total income of & 95 lakh for the P.Y.2014-15. He commenced operations of the business in April, 2014. In computing the total income for the P.Y.2014-15, he had claimed deduction under section 35AD in respect of investment of ₹82 lakh in building (on 1.5.2014) for operating the warehousing facility for storage of food grains. Compute his tax liability for A.Y.2015-16.

8. Gamma Ltd., a domestic company, has distributed on 10.12.2014, dividend of ₹460 lakh to its shareholders. On 1.10.2014, Gamma Ltd. has received dividend of ₹120 lakh from its domestic subsidiary company Beta Ltd., on which Beta Ltd. has paid dividend distribution tax under section 115-O. Compute the additional income-tax payable by Gamma Ltd. under section 115-0.