Taxation Direct and Indirect-NMIMS Solution
1. Ms. Dimple earns rental income from three house properties. She wants to plan effectively her investments so that she can get adequate deductions from her gross total income. Discuss the nature of at least five investments or contribution in specified assets that qualifies for getting deduction under section 80 C of the Income Tax Act 1961
2. Mr. Vaishnav completed his Bachelor of Science from Holkar Science College. He wants to start a business of manufacturing sanitizers looking to the current business scenario. But before starting the business he wants to understand the points of difference between direct tax and indirect tax. Elaborate. (any five points )
3. Ms. Neha submits following details for her income for the assessment year 2020-21. Compute the gross total income after considering the relevant provisions of set off and carry forward of losses
a. Calculate income from Business and Profession
b. Calculate income under the head of House Property, income from other sources and capital gain
|Winning in cross word puzzles||78000|
|Profit from printing business of school textbooks||435000|
|Short term capital gain||4500|
|Income from house property||240000|
|Long term capital gain||20000|
|Long term capital losses||-5000|
|Loss from house property under construction||-150000|
|The items brought forward for set off|
|Loss from discontinued business operation, loss belongs to the A.Y 2017-18||10000|
|Long term capital loss for the AY 2008-09||1000|
|Speculation loss for the AY 2016-17||50000|
|Loss in retail business of groceries AY 2019-20||45000|
Q1. Ms. Ankita completed her MBA from DAVV, Indore. She joined an enterprise as an Accounts Manager at a CTC of Rs 650000. She invested Rs 150000 in PPF and paid mediclaim for herself Rs 15000 using cash as a mode of payment. Discuss and compute her tax liability assuming she is residential individual for the Assessment year 2019-20
Q2. Ms. Urrjja is running successfully the business of supplying &selling woolens on the digital platform. She is keen to understand how business expenses are allowed under the Indian Income Tax Act 1961. However, these days she is more concerned about whether there is any provision under the Act which allows claiming deductions in relation to residuary expenses.
As a knowledgeable person in taxation, how will you address the worry of Ms. Urrjja. Is there any provision under the IT Act which allows to claim deductions of residual expenses? If yes, how can she avail the benefit of the said provision for her business?
Q3. Mr. Mohan, aged 65 years, derives Rs 7.5 lacs as salary from Amiir PanWala & Company for the year ended 31.03.2019. He supplies the following information to the accounts department of the employer. (Applicable Assessment year 2019-20)
|Loss from one of the Self – occupied property||Rs 200000|
|Loss from let out house property||Rs 360000|
|Interest from Flexi Fixed Deposits||Rs 150000|
- Explain and examine the applicability of TDS provision (5 Marks)
- Compute total tax liability and monthly deduction for TDS (5 Marks)
Taxation Direct and Indirect-NMIMS Solution
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Mr. Chattur, is a citizen of Germany came to India as a tourist in the previous year 2016-17 and stayed in India for a period of 162 days. He liked the south east part of the country and decided to explore all the tourist places there so he stayed in India throughout the year 2015-16. However, in the year 2013-14, 2014-15 he visited India in two International Conferences and his period of stay was 26 days and 18 days respectively. Discuss in the light of the various applicable provisions of Income Tax Act
- His residential status for AY2017-18 and the necessity to determine his residential status.
Mr. Thakkar aged 38 years furnishes the following details with regard to his options exercised for tax planning purpose for the year ending as on 31.03.2017
- a) Has taken Life insurance policy as on 30.4.2016 from Bajaj Alliance for a capital sum assured Rs.2.5 lacs, premium paid for the same Rs 75000
- b) Contribution made by a bearer cheque towards Public Provident Fund account of his father Rs20000
- c) Paid Rs85000 to a friend towards housing loan on a property taken, the property is situated at Ratlam.
- d) Subscription to units of mutual fund referred under section 10(23D) for Rs130000.
- e) Contribution made towards Public Provident Fund account of his spouse Rs90000.
He wants to know about the gross total amount which he can claim as deduction while computing his total income. Are there any provisions available under the Indian Income Tax Act for the same?If yes, then discuss how the relevant provision will be helpful, give adequate reasons supporting the answer and also calculate the amount eligible for deduction under section 80 C.
Question 3: The Assessing officer in the decided case (GE Energy Parts Inc vs. ADIT, ITAT Delhi) examined the taxability of income of GE Overseas under the Act as well as the Double Taxation Avoidance Agreement. He did not accept the contention of the assessee that the sale consideration was not taxable in India as the title in respect of the equipment’s was transferred outside India and the payments were also received outside India. He held that a lot of activities relating to marketing and sales took place in India. Further, the negotiations of prices also took place in India. These facts, in the opinion of the AO, were clear indicators of the GE India securing orders for GE Overseas. He further found that GE Overseas, by remotely sitting in foreign countries, could not make any sales, without the active involvement of GE India. This was held to be a business connection of GE Overseas in India in terms of section 9 of the Act. The AO, therefore, held that all the profits did not accrue or arise to the assessee in the foreign soil, but part of such profits arising in India, corresponding to the activities carried out in India, was chargeable to tax under the Act. Such income accruing or arising was held to be liable to tax as per the provisions of section 5(2) of the Act. Simply put, the AO has made out a case that the GE overseas entities were having business connection under the Act as well as permanent establishment under the DTAA in India in all the years under consideration.
- a) In the context of above mentioned cases, discuss what can be the objectives and importance of framing rules with respect to taxation of a business concern which operates in more than one nation from taxation perspective?
- b) Elaborate, why the assessing officer is of the contention to treat GE India as a permanent establishment in the given case?