Direct Tax Laws & International Taxation - November 2020

1. An investment fund (Investment Fund |) incorporated in India in the form of a LLP has 35 unit holders each holding 2 units. The particulars of income of Investment Fund | for the P.Y.2019-20 is as follows: (i) Business income - Rs.14 lakh; (ii) Long-term capital gains - Rs.21 lakhs; and (iii) Income from other sources - Rs.7 lakhs. Another investment fund (Investment Fund II) incorporated in India in the form of a company has 50 unit holders each…

2. Mr. Ram, is carrying on business of trading in furniture, whose annual turnover is around Rs.70 to Rs.80 lakhs. From A.Y.2018-19, he declares his profits on presumptive basis under section 44AD. His brother, Mr. Shyam, is carrying on business of wholesale trading in food grains and his annual turnover is around Rs.3 crores. Mr. Shyam also exports food grains to South East Asian countries directly as well as through his associates. The following are the particulars relating to Mr.…

1.4.2019, B Ltd, an unlisted domestic company, engaged in the business of manufacturing of tyres, converted into an LLP by name M/s. S LLP fulfilling all the conditions specified in section 47(xiiib) of the Income-tax Act, 1961. Some of the relevant information is given below in respect of B Ltd., as on 31.3.2019: (a) 150 equity shares in T Ltd., an Indian company listed in National Stock Exchange was acquired for Rs.1,900 per share on 31.7.2017. On conversion, these share…

(a) “Serving the poor”, a charitable trust, is registered under section 12AA of the Act. On 1.4.2019, it got merged with M/s. AP Ltd., which is a company engaged in manufacturing of steel utensils. All the assets and liabilities of the erstwhile trust became the assets and liabilities of M/s. AP Ltd who is not entitled for registration under section 12AA of the Act. The trust appointed a registered valuer for the valuation of its assets and liabilities. From the…

4. (a) Examine the liability for tax deduction at source in the following cases for the assessment year 2020-21: (i) Mr. X, an employee of M/s. JK Ltd. since 10-04-2016. He resigned on 31-03-2020 and withdrew Rs.80,000 being the balance in his EPF account. His PAN is available with M/s JK Ltd. (ii), MNO Ltd. is a producer of natural gas. During the year, it sold natural gas worth Rs.20,50,000 to M/s HP, a partnership firm. It also incurred Rs.2,00,000…

Director General of Income-tax after getting the information that Mr. Sujay is in possession of unaccounted cash of Rs. 85 lacs, issued orders by invoking powers vested in him as per section 131(1A), for its seizure. Is the order for seizure of cash issued by the Director General of Income-tax correct? If not, does the Director General of Income-tax have any other power to seize such cash? (4 Marks) (ii) Smt. Vimal engaged in the business of growing, curing, roasting…

6. (a) Explain the circumstances under which the Assessing Officer can resort to provisional attachment of the property of the assessee. Also, state the period of time for which such attachment can take place. (4 Marks) (b) Under the provisions of a tax treaty between India and Country P, if a resident of country P makes any capital gains by selling the shares in any Indian Company, such capital gains will be taxable only in Country P and it will…