School of Commerce and Finance – 2021/Semester 3 CHRIST (Deemed to be University)

“Tax liability and Tax planning”

1. Ms. Poorvi Aged 55 years is a Chartered Accountant in Practice. She

maintains her accounts on cash basis. Her income and expenditure account
for the year ended 31st March 2020 as follows:

Expenditure Amount Income Amount Amount

(Rs) (Rs) (Rs)
Salary to staff 15,50,000 Fees Earned:
Audit 27,88,000
Taxation Services 15,40,300
Consultancy 12,70,000 55,98,300
Stipend to articled 1,37,000 Dividend on shares of 10,524
Indian Company
assistants
Incentive to articled 13,000 Income from UTI 7,600
Assistants
Office rent 12,24,000 Honorarium received 15,800
from various
institutions for
valuation of answer
scripts
Printing and Stationery 12,22,000 Rent received from 85,600
Residential flat
Meeting, Seminars and 31,600
Conference
Purchase of car (office 80,000
Use)
Repair, maintenance 4,000
And petrol to car
Travelling expenses 5,25,000
Municipal taxes paid 3,000
For house property
Net profit 9,28,224
57,17,824 57,17,824
School of Commerce and Finance – 2021/Semester 3 CHRIST (Deemed to be University)

Additional Information
a. Allowable rate of depreciation on motor car is 15%
b. Value of benefits received to clients during the course of profession is Rs
10,500
c. Incentives to articled assistants represent amount paid to two articled
assistants for passing IPCC examination at first attempt
d. Repairs and maintenance of car includes Rs 2,000 for the period from
1.10.2019 to 30.09.2020
e. Salary include Rs 30,000 to a computer specialist in cash for assisting Ms.
Parvina one professional assignment.
f. The travelling expenses include expenditure incurred on foreign tour of Rs
32,000 which was within the RBI norms
g. Medical insurance premium on the health of dependent brother and
major son dependent on her amount Rs 5,000 and Rs 10,000 respectively
paid as cash.
h. She invested an amount of Rs 10000 in NSC

2. Required:
Compute the total income and tax payable of Ms. Purvi for the assessment year 2020-21.
Tax Advice:
You are also advised to provide her tax planning in which she can invest to avoid paying
more taxes.
3. Instructions to Students:
● This is a take home assignment.
● This assignment requires you to complete all the questions. All questions must be
bound together for a single submission.
● Please ensure that you show clear headings for each question or part of questions.
● Each question must be completed separately. There should be a list of references of
materials you had used or referred to in completing your assignment at the end of
your submission. Please list text sources first, followed by electronic sources.
● Use 12-point fonts with 1.5 line spacing and justified
● Reference – APA 7th edition
● Submit your work before or on published deadline.
● No late submission will be accepted.
● Plagiarism is an academic dishonesty. Submit your work in original. F grade will be
awarded for a plagiarized/copied work.

4. References
● Dr Girish Ahuja, Dr Ravi Gupta 2021. “Direct Taxes and Indirect Taxes – A.Y 2021-
22” Commercial Law Publishers (India) Pvt Ltd.
School of Commerce and Finance – 2021/Semester 3 CHRIST (Deemed to be University)