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PAPER – 4 : TAXATION
Question No
...

Answer any five questions from the remaining six questions
...

All questions in income-tax pertain to the assessment year 2016-17, unless stated otherwise
in the questions
...
Raghuveer, a resident individual aged 35 years, furnished the following information
from his Profit and Loss Account for the year ended 31 st March 2016:
(i)

The net profit was ` 6,50,000
...

(c) Gold coins worth ` 55,000 received as gift from him father
...
Depreciation allowed as
per Income-tax Act, 1961 was ` 96,000
...

(v) General expenses included:
(a) An expenditure of ` 20,500 which was paid by a bearer cheque
...

(vi) He contributed the following amounts by cheque:
(a) ` 45,000 in Sukanya Samridhi Scheme in the name of his minor daughter Alpa
...

(c) ` 28,000 towards premium for health insurance and ` 2,500 on account of
preventive health check up for self and his wife
...

The Suggested Answers for Paper 4: Taxation are based on the provisions of tax laws as amended
by the Finance Act, 2015
...
Y
...


© The Institute of Chartered Accountants of India

PAPER – 4 : TAXATION

71

You are required to compute the total income of Mr
...

(10 Marks)
(b) ET Bank Ltd
...
Compute the value of taxable services and service tax liability
...
is not eligible for small service provider exemption
(b) Service tax is not included in the above amounts and is to be charged separately
@ 14
...

(6 Marks)
(c) Nagarajuna Ltd
...
Remaining goods were given on lease to Mr
...
50%)
...

Compute the amount of net VAT payable/refund and input tax credit for the month of
December, 2015
...
Raghuveer for the Assessment Year 2016-17
Particulars
Profits and gains from business or profession
Net profit as per profit and loss account
Less: Income credited to profit and loss
account but not taxable under this head
Interest on government securities
Dividend from foreign company
Gift of gold coins received from his father

© The Institute of Chartered Accountants of India

`

`
6,50,000

25,000
18,000
55,000

98,000

`

72

INTERMEDIATE (IPC) EXAMINATION: NOVEMBER, 2016
5,52,000
85,000
6,37,000

Add: Depreciation debited in the books of account
Add: Expenses debited to profit and loss
account but not allowable as deduction
As per the proviso to section 36(1)(iii), the
interest on loan borrowed for purchase of
new asset which is not put to use upto
31
...
2016 is not allowable as deduction
...

Expenditure in excess of ` 20,000 paid
by bearer cheque to be disallowed as per
section 40A(3)
Compensation paid to an employee on
termination of his services in the business
unit is allowable on the grounds of
commercial expediency
...


Interest on government securities is taxable under the head “Income from other
sources”
...
The question does not
specify whether the government securities are notified securities
...

Alternatively, it can be assumed that the government securities are notified for the
purpose of exemption under section 10(15)
...


2
...
Raghuveer has furnished the
following information from his profit and loss account for the year ended 31 st March,
2016
...
Item (vi) particularly relates to deposit in Sukanya Samriddhi Scheme,
payment of medical insurance premium for self and spouse and payment of medical
expenses for father, each of which wholly or partly qualifies for deduction under
Chapter VI-A from gross total income
...
However, from the manner in which information is presented in the
question, it appears that the same have been given effect to in the profit and loss
account, in which case the contributions have to be added back at the first instance
while computing business income and thereafter, the eligibility for deduction under
Chapter VI-A from gross total income has to be considered
...
The business income would be ` 7,60,000
...


(b) Computation of value of taxable services and service tax liability of ET Bank Ltd
...

No
...
00

(iii)

Margin earned on reverse repo transaction

(iv)

Administration charges for extending home loans

12
...
5%

30
...
35

-

Notes:
1
...


2
...


3
...


4
...


(c) Computation of net VAT payable and input tax credit for the month of December,
2015
Particulars
Computation of input tax credit
VAT paid on raw materials purchased from local market @ 4% on
` 45,00,000
Computation of net VAT payable
VAT payable on exports (Taxed at zero rate)
Net VAT payable
CST payable on goods given on lease @12
...
of Tamil Nadu to Mr
...
e
...


© The Institute of Chartered Accountants of India

PAPER – 4 : TAXATION
2
...
5%) prevalent in the selling
State on the assumption that ‘C’ Form has not been furnished by the buyer
...
X is an
inter-state sale liable to central sales tax
...
e
...
e
...
In that case, said deemed sales will not occasion movement of goods from
Tamil Nadu to Karnataka and will be an intra-State sale liable to VAT
...


Question 2
(a) Mr
...
On 1st April 2004, he started a business of property
dealing and converted all 10 plots as stock in trade of his business and recorded the cost
at ` 40 Lakh in his books being the fair market value on 1st April 2004
...
He has constructed 2 rooms in this residential house in June
2011 and has spent ` 8 Lakh
...
2016, for ` 70 Lakh
...
On
the request of Mr
...
The Valuation Officer determined the value at ` 95 Lakh
...
Anand Prakash
paid brokerage 1% of sale consideration
...
Anand Prakash for the Assessment
year 2016-17
...
, providing security services, had entered into a
contract with Women Welfare Mandal, for exhibition of jewellery held between 22nd
August 2015 to 26th August, 2015
...
On 22nd Aug 2015, the company received ` 6,00,000 by credit card and on 26th
August 2015 ` 4,00,000 by pay order
...
5%
...
Saket under CST Act, assuming
that the VAT rate within the state is 4%
...
The sales do not include the following :
(i)

Goods worth ` 50,000 provided as free samples to Mr
...


(ii) Sale of goods amounting to ` 1,50,000 to Mr
...

(iii) Despatch of goods worth ` 2,00,000 to Mr
...

(iv) Hypothecation of the goods worth ` 12,00,000 for a working capital loan from SBI
(3 Marks)
amounting to ` 10,00,000
...
Anand Prakash for A
...
2016-17
Particulars

`

`

Capital Gains on sale of residential house property
Actual sale consideration

` 70,00,000

Value adopted by Stamp Valuation Authority

` 92,00,000

Valuation as per Valuation Officer
Gross Sale consideration (See Note 1)

` 95,00,000
92,00,000

70,000
Less: Brokerage@1% of sale consideration of ` 70,00,000
Net Sale consideration
91,30,000
Less: Indexed cost of acquisition (`50,00,000 × 1081/711) 76,01,969
[See Note 3]
11,01,656 87,03,625
Indexed cost of improvement (`8,00,000 × 1081/785)
Long-term capital gains (Total Income)

4,26,375

Total Income (rounded off)
Tax on total income (See Note 2)

4,26,380

Long-term capital gain taxable @ 20% of ` 1,76,380
(` 4,26,380 – ` 2,50,000)

35,276

Less: Rebate under section 87A (since total income is less
than `5 lakh)

2,000

Add: Education cess and Secondary and higher education cess
@3%
Total tax liability
Tax liability (rounded off)

© The Institute of Chartered Accountants of India

33,276
998
34,274
34,270

PAPER – 4 : TAXATION

77

Notes:
(1) As per section 50C, where the value of sale consideration declared by the assessee
is less than the value adopted by the Stamp Valuation Authority for the purpose of
charging stamp duty, then, the value adopted by the Stamp Valuation Authority shall
be taken to be the full value of consideration
...
Therefore, in the present case, the sale consideration would be the stamp
valuation of ` 92,00,000, since the same is more than the sale value declared by
Mr
...

(2) As per the proviso to section 112(1)(a), the unexhausted basic exemption limit can
be exhausted against the long-term capital gains, since Mr
...
Since Mr
...

(3) Since the Cost Inflation Index (CII) of F
...
2009-10, required for computing indexed
cost of acquisition of residential house property purchased on 31
...
2010, has not
been given in the question, the above solution has been worked out by considering
that the purchase of residential house property was made on or after 1
...
2010 (i
...
,
during the F
...
2010-11, the CII of which has been given in the question)
...
e
...
3
...
Y
...
e
...

Computation of total income & tax liability of Mr
...
Y
...
Anand Prakash can carry forward the long-term capital loss incurred by him for
set-off against long-term capital gains, if any, during the A
...
2017-18
...

(2) Since he has no other income, his total income would be Nil
...


(b) Computation of value of taxable service and service tax liability of Purve Sainik
Security Service Ltd
Particulars

`

Advance received by an account payee cheque (Notes 1 & 3)

5,00,000

Amount received through credit card (Note 1)

6,00,000

Amount received by a pay order (Note 2)

4,00,000

Value of taxable service

15,00,000

Service tax @ 14
...


Gross amount charged, inter-alia, includes payment by cheque and through credit
card
...


Money, inter alia, means pay order
...


Since services agreed to be provided are also chargeable to service tax in terms of
section 66B of the Finance Act, 1994, advance received is liable to service tax
...
Saket
Particulars
Total inter-State sales
Add: Sale to the foreign tourist [Note 4]

`
25,00,000
1,50,000

Total sale price

26,50,000

100 

Taxable turnover  ` 26,50,000 ×
(rounded off) [Note 5]
104 



25,48,077

CST liability
Notes:
1
...


© The Institute of Chartered Accountants of India

1,01,923

PAPER – 4 : TAXATION

79

2
...
Saket’s branch located in another State is an inter-State
stock transfer and is not liable to CST 1
...


Hypothecation of goods is specifically excluded from the definition of sale
...


Sale of goods to Mr
...


5
...
So, the CST rate would be the applicable
VAT rate within the State
...
Rajnesh, a citizen of India, serving in the Ministry of Finance in India was
transferred to High Commission of Australia on 15th March 2015
...
His income during the financial year 201516 is given hereunder:
Particulars

`

Salary from Govt
...
of India
Rent from a house situated at London, received in London
Interest accrued on National Saving Certificate during the year 2015-16
...
Rajnesh for the Assessment year 2016-17
...
Rakesh has 15% share holding in RSL (P) Ltd
...

The accumulated profit of RSL(P) Ltd
...
Rakesh & Sons had taken a loan
of ` 25 Lakh, from RSL(P) Ltd
...

(2 x 4 = 8 Marks)
(b) Mr
...
for use, as a corporate office

` 1,50,000
` 5,00,000
` 3,00,000
` 8,00,000

It has been assumed that at the time of the dispatch of goods to Mr
...


1

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80

INTERMEDIATE (IPC) EXAMINATION: NOVEMBER, 2016
Determine the value of taxable services and service tax liability thereon @ 14
...

Assume, Mr
...

(5 Marks)

(c) The inter-State sales of Mr
...
Y
...

Compute the taxable turnover and CST payable assuming rate of central sales tax to be
2% and that all the transactions/sales were covered by valid “C” form
...
Rajnesh is a non-resident for the A
...
2016-17, since he
was not present in India at any time during the previous year 2015-16
...

Computation of Gross Total Income of Mr
...
Y
...
Hence, such
income is taxable in the hands of Mr
...

Income from House Property
Rent from a house situated at London, received in London
(Income from property situated outside India would not be taxable in
India in the hands of a non-resident, since it is neither accruing or
arising in India nor is it deeming to accrue or arise in India nor is it
received in India)

© The Institute of Chartered Accountants of India

`
7,20,000

Nil

Nil

PAPER – 4 : TAXATION
Income from Other Sources
Interest accrued on National Savings Certificate is taxable 2
Gross Total Income

81

45,000
7,65,000

(ii) As per section 2(22)(e), any payment by a company, not being a company in which
public are substantially interested, of any sum by way of advance or loan
-

to a shareholder, being a person who is the beneficial owner of shares holding
not less than 10% of voting power, or

-

to any concern in which such shareholder is a partner and in which he has a
substantial interest (i
...
, he is beneficially entitled to not less than 20% of the
income of such concern)

is deemed as dividend, to the extent the company possesses accumulated profits
...
to Rakesh & Sons, a partnership
firm would be deemed as dividend, since Mr
...
and also has substantial interest in Rakesh & Sons (as
he is beneficially entitled to 50% of the income of the firm)
...
possesses accumulated profits
...
, would be deemed as dividend
...
is not liable to pay dividend distribution tax under section 115-O
on such amount of deemed dividend
...
Dhingra
Particulars

`

Land let out to Jumbo Circus [Note1(a)]

1,50,000

Building let out for providing coaching to CA students [Note1(b)]

5,00,000

Vacant land used for horticulture [Note2]
Building let out for use as corporate office [Note1(c)]
Value of taxable services
Service tax @ 14
...
Rajnesh follows mercantile system of accounting
...
Y
...

3
It is assumed that lending of money is not a substantial part of business of RSL (P) Ltd
...


The following services are taxable as they are neither exempted under any
notification nor covered in the negative list of services:a)
b)

Letting out building for providing coaching to CA students

c)
2
...
Horticulture is
treated as agriculture in terms of the definition of agriculture
...
Raghav
Particulars

`

Inter-State sales
Less: Deposits for returnable containers and packages

60,00,000
10,00,000

Sale price

50,00,000




Taxable turnover ` 50,00,000 ×




CST payable ` 50,00,000 ×

100 

(rounded off)
102 


2 
(rounded off)
102 


49,01,961
98,039

Notes:
(1) Excise duty and freight not shown separately in invoice are includible in the sale
price
...

Question 4
(a) State with reasons whether the following receipts are taxable or not under the provisions
of Income-tax Act, 1961?
(1) Mr
...

(2) Mr
...
Since the transfer was not effected during the previous
year due to failure in negotiations, he deducted the advance money forfeited from
the cost of acquisition of the property
...
Federer, a non-resident residing in Sweden, has received rent from Mr
...
Since this income is received outside India from a non-resident, Federer
claims that his income is not chargeable to tax in India
...
Pandey a resident,
being interest on recurring deposit with SBI
...
in respect of the
following services availed by it in the month of October 2015; duly mentioning why
CENVAT credit is available?
Nature of service availed
(a)
(b)
(c)
(d)
(e)

Market research services
Service of general insurance taken for motor vehicles
which are not capital goods
Credit rating services
Health & fitness centre service for the personal use of the
Managing Director of the company
Repairs & renovation services for office premises

Service tax paid
(`)
2,00,000
52,000
1,09,000
72,000
1,40,000
(5 Marks)

(c) Examine the validity of the following statements under Central Excise Act, 1944 and
under Central Excise Rules, 2002:
(i)

Goods subjected to NIL rate of duty are not excisable goods
...
, manufacturer of Khandasari Molasses, claims that it is not liable to pay
excise duty on the molasses produced
...

However, in this case, since Mr
...


© The Institute of Chartered Accountants of India

84

INTERMEDIATE (IPC) EXAMINATION: NOVEMBER, 2016
(2)

Taxable

(3)

Taxable

(4)

Taxable

As per section 56(2)(ix), any sum of money received as an
advance or otherwise on or after 1
...
2014 in the course of
negotiations for transfer of a capital asset would be chargeable
to tax under the head “Income from other sources”, if such
amount is forfeited and the negotiations do not result in transfer
of such capital asset
...
6
...
Suman under the head “Income from
other sources”, since it is forfeited due to failure in negotiations
...

In this case, since the property is situated in Mumbai, India,
income from the property is deemed to accrue or arise in India
in the hands of Mr
...

Interest of `1 lakh on recurring deposit is an income chargeable
to tax as Income from other sources in the hands of the
recipient, Mr
...


Note – The requirement of question 4(a) is to examine whether the receipts mentioned in
sub-parts [items (1) to (4)] thereunder are taxable or not under the provisions of the
Income-tax Act, 1961
...
Pandey, a resident, being interest on recurring deposit with
SBI
...
On this basis, the answer
would be that the statement is false on the reasoning that tax is required to be deducted
under section 194A on interest from recurring deposits, since with effect from 1
...
2015,
time deposit would include recurring deposit and the interest thereon exceeds the threshold
limit of `10,000, in this case
...
Shine Enterprises Ltd
...


The following services are specifically included in the definition of the input services,
under rule 2(l) of CENVAT Credit Rules, 2004:(a) Market research services
(b) Credit rating services

2
...


(c) Repairs & renovation services for office premises 4
Service of general insurance business, in so far as it relate to a motor vehicle which
is not capital goods, is excluded 5 from the definition of the input service
...


Note: The above solution is based on the position of law existing during the period mentioned in
question, i
...
as in October, 2015
...
on the services
availed by it has been taken to be exclusive of SBC
...
04
...
In that
case, amount of ‘service tax paid’ on the services availed by M/s Shine Enterprises Ltd
...
, credit of only the service tax element would be allowed, as SBC is not
CENVATable
...
5 × 14
...

Excisable goods means goods which are specified in the Central Excise Tariff Act, 1985
as being subject to a duty of excise and includes salt
...


It has been assumed that the office premises for which repairs and renovation services have been
incurred are the premises of M/s Shine Enterprises or are related to it’s premises/factory depending on
whether M/s Shine Enterprises Ltd
...

5
It has been assumed that M/s Shine Enterprises Ltd
...

4

© The Institute of Chartered Accountants of India

86

INTERMEDIATE (IPC) EXAMINATION: NOVEMBER, 2016
(ii) The said statement is valid
...

Therefore, in the given case, XYZ Ltd
...


Question 5
(a) (i)

Mr
...
The cost of cultivation of 40% of paddy produce is ` 7,00,000 which is
sold for ` 15,00,000; and the cost of cultivation of balance 60% of paddy is ` 12,00,000
and the market value of such paddy is ` 24,00,000
...

The rice was sold for ` 30,00,000
...
Kamal
...
Suresh went on a holiday on 09/09/2015 to Mysore with his wife and 3
children – one daughter born on 02/02/2009 and twin sons born on
05/05/2011
...
The ticket cost for
Mr
...

The employee reimbursed total ticket cost ` 80,000
...
imported an equipment in the month of May 2015 whose assessable value
was US $ 18,000
...
Basic custom duty on that date was 20%
and Exchange rate notified by Central Board of Excise & Customs was US $ 1
= ` 60
...
Basic custom duty on that date was 10%
and exchange rate notified by Central Board of Excise & Customs was US $ 1
= ` 65
...
5%
...


© The Institute of Chartered Accountants of India

PAPER – 4 : TAXATION

87

(e) Education cess was 2% and Secondary & higher education cess was 1%
...
avail?

(c) Maruti Ltd
...
K
...
at a price of
` 4,50,000 excluding taxes and duties
...
No

`

(i)

Assembly of music system

15,000

(ii)

Design and engineering charges

25,000

(iii)
(iv)

Outward freight and handling charges from factory to depot
Special accessories to beautify the car

2,500
18,000

Determine the total amount of central excise duty payable as per Central Excise Act,
1944, with explanation and reason
...
Kamal
Particulars

Sale of Rice
Business income
Sale Proceeds of Rice
Less: Market Value of paddy (60%)
Less: Manufacturing expenses
Agricultural Income
Market value of paddy (60%)
Less: Cost of cultivation
Sale of Paddy
Agricultural Income
Sale proceeds of paddy produce
(40%)
Less: Cost of cultivation

Business
Income
`

Agricultural Income
`

`

30,00,000
24,00,000
2,00,000
4,00,000
24,00,000
12,00,000
12,00,000

15,00,000
7,00,000
8,00,000
20,00,000

© The Institute of Chartered Accountants of India

88

INTERMEDIATE (IPC) EXAMINATION: NOVEMBER, 2016
(ii) Computation of LTC Exemption: The value of leave travel concession received by
an employee from his employer for himself and his family, in connection with his
proceeding on leave to any place in India would be exempt under section 10(5)
...

The exemption referred to shall not be available to more than two surviving children
of an individual
...

(a) The total cost of travel of `80,000, being `50,000 towards ticket cost of Mr
...
It is assumed that journey is performed by air
(economy class)
...
In this case, since the twin sons were born after
first child i
...
, one daughter, the restriction of two children is not applicable
...
e
...
e
...

Therefore, `10,000 being the cost of travel of one child would be taxable and
the remaining amount of `70,000 [`80,000 – `10,000] would be exempt
...
5% of [(A) + (B)]

(C)

1,60,875

Education cesses of customs @ 3% on [(B) + (C)] [rounded off]

(D)

8336

Value for computing special CVD [(A) + (B) + (C) + (D)]

(E) 14,56,211

Special CVD @ 4% on (E) [Note 3] [rounded off]

(F)

Total custom duty payable = [(B) + (C) + (D) + (F)]

58,248
3,44,459

Note:
1
...


2
...


© The Institute of Chartered Accountants of India

PAPER – 4 : TAXATION
3
...


(ii) Rule 3 of the CENVAT Credit Rules, 2004, inter alia, allows the credit of additional
duty of customs leviable under sections 3(1) and 3(5) of the Customs Tariff Act,
1975 to a manufacturer
...

Therefore, if Shanti Ltd
...
However, if it is a service provider, it can avail credit of `
1,60,875 only
...

Particulars
Price of the car
Add: Assembly of music system [Note 1]
Add: Design and engineering charges [Note 2]
Add: Outward freight and handling charges from factory to depot
Special accessories to beautify the car
Assessable Value
Excise duty @ 12
...


The value of assembly of music system has been included in the assessable value
of the car on the assumption that it is fitted by the manufacturer and thus, is not an
accessory*
...


Design and engineering charges have been included in the assessable value as
such payments are in connection with sale
...


Outward freight and handling charges from factory to depot have been included in
the assessable value as they are incurred for transporting the goods upto the place
of removal on the assumption that the sale is from depot
...


Value of accessories is not included in the assessable value
...
In that
case, the value of the same will not be included in the assessable value and the assessable value
and excise duty will thus work out to be ` 4,77,500 and ` 59,688 respectively
...

(2 Marks)

© The Institute of Chartered Accountants of India

90

INTERMEDIATE (IPC) EXAMINATION: NOVEMBER, 2016

(b) (i)

Specify the persons who are authorized to verify under section 140, the return of
income filed under section 139 of the Income-tax Act, 1961 in case of a company
...
Satya is manufacturer of goods in a factory located in Navi Mumbai
...
Due to increase in demand
of his products, he employed 140 new workmen during the previous year 2015-16
which included:
(a) 15 casual workmen
(b) 25 contract labourers
(c) 40 workmen employed on 20th April, 2015
(d) 35 workmen employed on 1st May, 2015
(e) 25 workmen employed on 5th August, 2015
Compute the deduction under section 80JJAA, if available to Mr
...
His profit from the
(4 Marks)
manufacture of goods for Assessment year 2016-17 is ` 5
...

(c) Mr
...
He seeks your advice on the following issues:
(i)

Is he liable for any late fee for the delayed filing of half yearly return? If yes, how
much?

(ii) Can he revise such belatedly filed return? If yes, what will be the last date of filing
the same?
(5 Marks)
(d) Examine the validity of the following statements under the provisions of the Customs Act,
1962:
(i)

Customs duty is not attracted on goods jettisoned from the vessel to save the vessel
from sinking
...

(3 Marks)
Answer
(a) Provisions for payment of advance tax in case of capital gains [First proviso to
section 234C]
Advance tax is payable by an assessee on his/its total income, which includes capital
gains also
...

Where no such installment is due, the entire tax should be paid by 31st March of the
relevant financial year
...

(b) (i)

The Managing Director of a company has to verify the return of income under
section 139
...
Satya is eligible for deduction under section 80JJAA for A
...
2016-17
since his gross total income includes profits and gains derived from the manufacture
of goods in a factory located in Navi Mumbai and he has employed new regular
workmen (i
...
, 75) in his factory in the P
...
2015-16 which is in excess of 10% of
existing number of workmen (i
...
, 120) as on 31
...
2015 6
...

Additional wages to new regular workmen employed in the P
...
2015-16
= [` 3,000 per month ×11 months × 75 new regular workmen] + [` 3,000 per month
× 40 new regular workmen × 11/30 days]
= ` 24,75,000 + ` 44,000 = ` 25,19,000
Deduction under section 80JJAA = 30% of ` 25,19,000 = ` 7,55,700
...
3
...
4
...


6

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92

INTERMEDIATE (IPC) EXAMINATION: NOVEMBER, 2016
Working Note: Number of new regular workmen employed during the P
...
2015-16 7

Particulars

No
...
Y
...
8
...
Y
...
Abhishek is liable to pay late fee for the delayed filing of half yearly return
...
09
...
10
...
Therefore, in the present case,
return has been filed with a delay of 37 days (i
...
6+30+1) from the prescribed date
...

Thus, amount of late fee payable by Mr
...
Abhishek can revise belatedly filed half yearly return till 29 th February,
2016
...

(d) (i)

The said statement is not valid
...


(ii) The said statement is not valid
...
Therefore, if any imported goods
are pilfered before unloading, customs duty would be attracted
...

7

© The Institute of Chartered Accountants of India

PAPER – 4 : TAXATION

93

Question 7
(a) Answer any two of the following of three sub divisions:
(i)

Discuss the provisions, relating to the premature withdrawal from Employees
Provident Fund, under section 192A, for A
...
2016-17
...
Kamal filed his return of Income for the Assessment Year 2014-15 on
30-03-2016
...
Atal, a super senior citizen, has reported a Gross total income
` 5,60,000 and the deductions eligible under Chapter VI-A amounting to
` 70,000 for the previous year 2015-16
...
Barun provides you the following information and requests you to determine the
Advance Tax liability with due dates for the financial year 2015-16
...


(4 Marks)

(c) Decide with reasons whether the following places can be treated as “Place of Removal”
in terms of rule 2 (qa) of CENVAT Credit Rules, 2004
...
wherein the excisable goods have been permitted to be
deposited without payment of duty
...

(4 Marks)
Answer
(a) (i)

TDS provisions relating to premature withdrawal from EPF under section 192A
Section 192A provides that where the accumulated balance due to an employee
participating in a recognized provident fund is includible in his total income owing
to 8:
-

-

8

an employee making withdrawal from recognized provident fund before
continuous service of five years (other than the cases of termination due to ill
health, contraction or discontinuance of business, cessation of employment
etc
...

Tax deduction at source under this section has to be made only if the amount of
such payment or aggregate amount of such payment of the payee is ` 30,000 or
more
...
In case he fails to do so, tax would be
deductible at the maximum marginal rate
...
Y
...
Mr
...
Y
...
3
...
Therefore,
the said return is a belated return under section 139(4)
...
Therefore, Mr
...

(2) As per sixth proviso to section 139(1), every person, being an individual whose
total income without giving effect to the provisions of, inter alia, Chapter VI-A
exceeds the basic exemption limit, is compulsorily required to furnish return of
income on or before the due date
...
Atal, a super senior citizen is required to
file return of income, since his total income of ` 5,60,000 before giving effect
to the deduction of ` 70,000 under Chapter VI-A, exceeds the basic exemption
limit of ` 5,00,000 applicable in his case
...
Barun
Particulars
Estimated tax liability for the financial year 2015-16
Less: Tax deducted at source
Tax payable
Due Date of
Amount payable
`
installment
On or before 15th Not less than 30%
18,000
September, 2015
of advance tax
(30% of ` 60,000)
liability

© The Institute of Chartered Accountants of India

`
65,000
5,000
60,000
18,000

PAPER – 4 : TAXATION
On or before 15th Not less than 60%
December, 2015
of advance tax
liability
less
amount paid in
earlier installment
th
On or before 15 Whole of the
March, 2016
advance
tax
liabilityless
amount paid in
earlier
installment(s)

18,000
(36,000, being 60%
of ` 60,000 – 18,000)
24,000
(60,000, being 100%
of ` 60,000 – 36,000)

95
18,000

24,000

Note - It is assumed that Mr
...
3
...

Advance tax is payable in his case since the tax payable is more than `10,000
...

Where the aggregator does not have a physical presence in the taxable territory, service
tax is payable by person representing the aggregator
...

(c) (i)

As per rule 2(qa) of CENVAT Credit Rules, 2004, place of removal, inter alia, means
a warehouse or any other place/premises wherein the excisable goods have been
permitted to be deposited without payment of duty
...
can be treated as a place of
removal
...

Thus, in the given case, the customs port from where goods are directly exported
can be treated as the place of removal provided the shipping bill is filed by the
manufacturer exporter at the said customs port

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