Direct Tax Laws & International Taxation - May 2015 MTP

Wellness charitable trust, registered under section 12AA, earned income from mutual funds specified under section 10(23D) to the tune of Rs. 4 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 Rs. 3 lakh and agricultural income of Rs. 7 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 under…

Gamma Private Limited is engaged in manufacturing and selling floor tiles. The net profit of the company as per its profit and loss account for the year ended 31st March, 2015 is Rs. 150 lakh after debiting or crediting the following items: (i) One-time license fee of Rs. 20 lakh paid to a foreign company for obtaining franchise on 1st June, 2014. (ii) Rs. 34,000 paid to Delta & Co., a goods transport operator, in cash on 31st January, 2015…

(a) Discuss, with the aid of case laws, whether the following receipts are revenue or capital in nature: (i) Liquidated damages received by Mahanadi Ltd. from supplier of plant and machinery for failure to supply machinery within the stipulated time. (ii) Power subsidy received by Godavari Ltd., a cement manufacturing company, from the State Government, year after year, on the basis of actual power consumption. (iii) One-time subsidy, equivalent to 40% of sales tax paid, received by Kaveri Ltd. from…

(a) Examine the applicability of the provisions for tax deduction at source under section 194DA in the following cases (i) Mr. X, a resident, is due to receive Rs. 7 lakhs on 31.3.2015, towards maturity proceeds of LIC policy taken on 1.4.2009, for which the sum assured is Rs. 6 lakhs and the annual premium is Rs. 80,000. (ii) Mr. Y, a resident, is due to receive Rs. 2.25 lakhs on 31.3.2015 on LIC policy taken on 1.4.2012, for which…

(a) Discuss, with the aid of decided case laws, whether the following expenditure are revenue or capital in nature – (i) Expenditure incurred on glow-sign boards displayed at dealer outlets; and (ii) Share issue expenses incurred by a company, where the public issue could not ultimately materialize on account of non-clearance by SEBI. (4 × 2 = 8 Marks) (b) Mr. Gautam, Chief Executive Officer of a multinational company, sold his house property in Bangalore as well as his rural…

(a) Ms. Shefali, a resident individual aged 60 years, is a well-known dramatist deriving income of Rs. 1,10,000 from theatrical works played abroad. Tax of Rs. 11,000 was deducted in the country where the plays were performed. India does not have any Double Tax Avoidance Agreement under section 90 of the Income-tax Act, 1961, with that country. Her income in India amounted to Rs. 5,10,000. In view of tax planning, she has deposited Rs. 1,50,000 in Public Provident Fund and…

(a) Is it valid in law to rectify an assessment order under section 154 due to subsequent change of law on retrospective basis? Also state, whether a Supreme Court judgement would warrant a rectification under section 154 in respect of an order passed earlier by the Assessing Officer. (5 Marks) (b) Fly High Ltd. has paid a sum of Rs. 9 lacs during the year ended 31-3-2015 to Airports Authority of India towards landing and parking charges. Is the company…

ABC Limited in the Annual General Meeting declared a dividend at the rate of 30 percent payable on paid up share capital of the Company as recommended by Board of Directors on 30th April, 2015. The Company did not paid declared dividend to Mr. S, the shareholder. The Company finds that there was a dispute regarding the right to receive the dividend by S. Mr. S, filed a suit against the ABC Ltd. for the payment of dividend. Examine the…