Q.1)​ Mrs. Batliboi is a professor of law in M.K.college.

The particulars of her income for the year

ending 31/03/2016 are as follows:-
1. Royalty from books Rs.25,000. Expenses on typing etc. were Rs.2,000.
2. Honorarium received from a management Institute as a visiting lecturer Rs.3,000.
Conveyance for visiting the Institute Rs.200.
3. Examinership fees from the University of Mumbai Rs.1,000.
4. Family pension of Rs.42,000 on death of her husband from his employer.
5. She received the “Dronacharya” Award of Rs.10,000 for the “Best Teacher of the year”
from the State Government.
Compute Income from Other Sources of Mrs. Batliboi for the assessment year 2016-17.
Solution:
Name of Assessee : Mr. Batliboi
Assessment Year : 2016-17
Previous Year : 2015-16
Status : Individual
Residential Status : R&OR
Pan No : _________
Computation of Income from Other Sources
Particulars Rs. Rs.

1. Royalty from Books 25,000

Less: Expenses on typing 2,000 23,000
2. Honorarium from Management Institute 3,000
Less: Conveyance 200 2,800
3. Examinership Fees 1,000
4. Family Pension 42,000
Less: Standard Deduction (⅓ or Rs.15,000 whichever is less) 14,000 28,000
5. Dronacharya Award 10,000
Less: Exempt u/s 10(17A) 10,000 NIL
Income From Other Sources 54,800

Q.2)​ Mr. Lakdawala submits the following details for the year ending 31/03/2016.
1. He has rented his factory building along with plant and machinery, and furniture for a
lump sum hire charge of Rs.1,00,000 per year.
2. The following expenses were incurred
a. repairs to building Rs.10,000.
b. repairs to machinery Rs.5,000.
c. furniture purchases Rs.3,000.
3. Depreciation on building, machinery and furniture amounted to Rs.8,000 (as per Income
Tax Rules).
4. Salaries paid to Maintenance staff were Rs.20,000. Employees contribution to provident
fund deducted from salaries during the year Rs.2,000. Out of such contribution Rs.1,800
was paid within the due date to the credit of the employee's account.

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 5. Salaries included payment to a close relative, which was excessive to the extent of
Rs.2,000.
6. One of the ex employees had embezzled Rs.10,000 cash in the past, which was allowed
as deduction in the assessment year 2012-13. The police had caught the employee and
recovered Rs.5,000 which was handed over to Mr.Lakdawala in October 2015.
Solution:
Name of Assessee : Mr. Lakdawala
Assessment Year : 2016-17
Previous Year : 2015-16
Status : Individual
Residential Status : R&OR
Pan No : _________
Computation of Income from Other Sources
Particulars Rs. Rs. Rs.

1. Hire charges on building, plant & machinery and

furniture 1,00,000
Less: Expenses
a. Repairs to building 10,000
b. Repairs to machinery 5,000
c. Furniture purchased NIL
d. Depreciation 8,000
e. Salaries
20,000
Less: Excessive salaries to relative 18,000 41,000 59,000
Disallowed ​2,000 2,000
2. Employees contribution to P.F 1,800 200
Less: Paid and credited within due date 5,000
3. Recovery against earlier deduction 64,200
Income from House Property

Q.3)​ Mr. Mody is a director of Lata Steels Ltd. He submits the following Income & Expenditure
Account for the year ended 31/03/2016.
Expenses Rs. Income Rs.

Interest Paid (on loan for Interest:

investments) 15,000 - Bank A/c 9,000
Wealth Tax 2,000 - Public Deposits 8,000
Legal Expenses 20,000 - Debentures 12,000
Collection Charges (Interest & - Securities 4,000
Dividends) 1,000 Dividends:
Life Insurance Premium 2,000 - Lata Steels Ltd. 5,000
Drawings 25,000 Board Meeting Fees 1,000
Surplus 36,000 Commission 2,000

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 ______ Royalty from mines 60,000
1,01,000 1,01,000
Further Information:
1. Interest include interest on securities exempt to the extent of Rs.1,000. The interest paid
is in respect of only taxable investments.
2. The securities were purchased by him on 30/06/2015. Interest on securities is for one
year (2015-16).
3. Dividend from Lata Steel Works Ltd. was received in April, 2015. It was declared in the
Annual General Meeting of the company held in March 2015.
4. Commission is received from Lata Steel Works Ltd. for standing as a guarantor to a
bank.
5. Interest paid includes Rs.5,000 paid outside India on which no tax has been deducted at
source.
Solution:
Name of Assessee : Mr. Mody
Assessment Year : 2016-17
Previous Year : 2015-16
Status : Individual
Residential Status : R&OR
Pan No : _________
Computation of Income from Other Sources
Particulars Rs. Rs. Rs.

1. Interest:
a. Bank A/c 9,000
b. Public Deposits 8,000
c. Debentures 12,000
d. Securities 4,000
(-) Exempt 1,000 3,000
32,000
Less: i) Interest Paid
15,000 10,000
(-) Tax not deducted 1,000 11,000 21,000
5,000 1,000
ii) Collection Charges 2,000
2. Board Meeting Fees 60,000
3. Commission for standing guarantor to bank 84,000
4. Royalty from mines
Income from Other Sources
Notes:
1. Interest of securities is taxed in the hands of the person holding the security on the due
date. The period of holding is, therefore, immaterial.

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 2. Life Insurance Premium is a personal expenditure and Drawings is on capital account.
Hence both cannot be deducted.
3. Dividends from Lata Steel Works Ltd. is exempt u/s 10.

Q.4)​ Mr. Hari, received the following without consideration during the P.Y. 2015-16 from his
friend Mr. Rajesh:
1. Cash gift of Rs.51,000 on Diwali.
2. An expensive wristwatch, the value of which was Rs.55,000, on his birthday.
3. A plot of land at Bangalore on New Year, the stamp value of which is Rs.10 lakh on that
date. Mr. Rajesh had purchased the land in August, 2011 for Rs.3 lakh.
Compute the income of Mr. Hari chargeable under the head “Income from other sources” for the
A.Y. 2016-17.
Solution:
Name of Assessee : Mr. Hari
Assessment Year : 2016-17
Previous Year : 2015-16
Status : Individual
Residential Status : R&OR
Pan No : _________
Computation of Income from Other Sources
Particulars Rs.

1. Cash gift is taxable under section 56(2)(vii), since it exceeds

Rs.50,000 51,000
2. Stamp value of plot of land at Bangalore, received without
consideration, is taxable under section 56(2)(vii) 10,00,000
Income from Other Sources 10,51,000
Note:
1. The value of property received without consideration would be taxable under section
56(2)(vii).
2. However, wrist watch is not included in the definition of property under section 56(2)(vii).
3. Therefore, receipt of wrist watch without consideration would not attract the provisions of
section 56(2)(vii).

Q.5) ​Check the taxability of the following gifts received by Mrs. Rashmi during the previous year
2015-16 and compute the taxable income from gifts for assessment year 2016-17.
1. On the occasion of her marriage on 14/08/2015, she has received Rs.90,000 as gift out
of which Rs.70,000 are from relatives and balance from friends.
2. On 12/09/2015, she has received gift of Rs.18,000 from cousin of her mother.
3. A cell phone worth Rs.21,000 is gifted by her friend on 15/08/2015.
4. She gets a cash gift of Rs.25,000 from the elder brother of her husband's grandfather on
25/10/2015.
5. She has received a cash gift of Rs.12,000 from her friend on 14/04/2015.

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Solution:
Name of Assessee : Mrs. Rashmi
Assessment Year : 2016-17
Previous Year : 2015-16
Status : Individual
Residential Status : R&OR
Pan No : _________
Computation of Income from Other Sources
Particulars Rs.

1. Gifts received on the occasion of marriage are not taxable. NIL

2. Cousin of Mrs. Rashmi’s mother is not a relative. Hence, the
cash gift is taxable. 18,000
3. Cell phone is not included in the definition of property a per
Explanation to section 56(2)(vii). Hence, it is not taxable. NIL
4. Brother of husband’s grandfather is not a relative. Hence, the
cash gift is taxable. 25,000
5. Cash gift from friend is taxable. 12,000
Income from Other Sources 55,000

Q.6)​ The following details have been furnished by Mrs. Hemali pertaining to the year ended
31/03/2016.
1. Cash gift of Rs.51,000 received from her friend on the occasion of her “Shastiaptha
Poorthi”, a function celebrated on her husband completing 60 years of age.
2. On the above occasion, a diamond necklace worth Rs.2,00,000 was presented by her
sister living in Dubai.
Compute the income, if any, assessable as income from other sources.
Solution:
1. Any sum of money received by an individual on the occasion of the marriage of the
individual is exempt. This provision is, however, not applicable to a cash gift received
during a function celebrated on completion of 60 years of age. The gift of Rs.51,000
received from a non-relative is, therefore, chargeable to tax under section 56(2)(vii) in
the hands of Mrs. Hemali.
2. The provisions of section 56(2)(vii) are not attracted in respect of any sum of money or
property received from a relative .Thus,the gift of diamond necklace received from her
sister is not taxable under section 56(2)(vii), even though jewellery falls within the
definition of “property”.

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