AHMEDABAD UNIVERSITY

AMRUT MODY SCHOOL OF MANAGEMENT

2021 WINTER SEMESTER
BUSINESS TAXATION - FAC125
EVALUATION TYPE: ASSIGNMENT – 1
TOPIC- INCOME FROM BUSINESS AND PROFESSION
Total Marks: 25 No. of printed pages: 04

Question 1: -
Find out the written down value for different blocks on March 31, 2020 (A. Y. 2020-2021) in the
case of X Ltd. from the information given below-
Blocks of Assets Depreciation rate Depreciated value on April 1, 2019
(%) (Rs.)
1. Plant A and B 15 3,40,000
2. Building A 10 16,92,000
After April 1, 2019, the company purchases the following assets:
Assets Date of Purchase Depreciation rate Actual cost (Rs.)
Plant C April 1, 2019 15 19,26,000
Building B March 30, 2020 10 5,00,000
Patent A April 10, 2019 25 15,000
The following assets are transferred by X Ltd.-
Assets Date of Sale Sale consideration
Plant B November 1, 2019 4,10,000
Building A May 10, 2019 22,00,000
Patent A March 1, 2020 15,500

Question 2:-
X owns the following assets on April 1, 2019: -

Assets Written down value on April 1, 2019 Rate of depreciation

(Rs.) (%)
Furniture 20,170 10
Building 9,00,500 10
Plant and machinery 2,10,000 20
Plant and machinery 64,00,000 15
Plant and machinery 2,05,000 40

During the previous year 2019-20, the following assets are purchased by X:

Date of purchase Date when the asset Asset Cost Rate of

is put to use (Rs.) Depreciation (%)
October 1, 2019 October 9, 2019 Trade mark 15,000 25
June 20, 2019 June 22, 2019 Plant (second hand) 1,90,000 40
November 30, 2019 December 1, 2019 Foreign made car Books 1,40,000 15
December 6, 2019 December 10, 2019 for professional use 2,700 40

Determine the amount of depreciation for the Assessment Year 2020-2021.

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Question 3:-
Assets Written down value on April 1, 2019 (Rs.) Rate of depreciation (%)
Building
A 13,50,000 10
B 2,25,000 10
C 40,000 5
Plant
A 45,100 15
B 68,000 15
C 7,000 40
D 31,000 40

The company acquires the following assets after April 1, 2019:-

Assets Cost (Rs.) Date of Acquisition Date when the asset Rate of
is put to use depreciation
(%)
Building D 6,00,000 May 28, 2019 June 1, 2019 10
Building E 4,00,000 June 8, 2019 June 8, 2019 5
Plant E 4,90,000 July 12, 2019 August 1, 2019 15
Plant F 2,10,000 September 18, 2019 September 19, 2019 15
Plant G 1,50,000 September 19, 2019 October 30, 2019 40
Building F 2,00,000 May 10, 2019 May 10, 2019 10
Plant H 1,30,500 June 5, 2019 July 6, 2019 15

The company sells the following assets after April 1, 2019:-

Asset Date of Sale Sale consideration (Rs.)
Building A May 11, 2019 13,00,000
Plant B May 16, 2019 20,000
Plant D December 18, 2019 2,15,000
Plant C December 8, 2019 32,000

Determine the amount of depreciation for the Assessment Year 2020-2021.

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Question 4:-
Compute the Taxable Business Income of Mr. Raghu for Assessment Year 2020-21.
The following is the Profit and Loss Account of Mr Raghu for the P. Y. 2019-20
Particulars Amount Particulars Amount
Opening Stock 10,000 Sales 5,00,000
Purchases 1,50,000 Closing Stock 65,500
Wages 50,000 Commission 18,600
General Expenses 53,400 Long term capital gain on 50,000
sale of gold
Bad Debts 22,000 Rent Income from House 12,000
Property
Provision for Bad Debts 21,000 Interest on Fixed Deposit 15,000
Insurance of House 1,500 Dividend 13,000
Municipal Taxes of House Property 5,000 Bad Debts Recovered 1000
Salary to staff 36,000
Salary to Raghu 22,000
Interest on Bank Loan 12,000
Interest on Loan from Mrs. Raghu 4,000
Interest on capital 13,000
Donations 5,000
Depreciation 60,000
GST paid 12,000
Net Profit 1,98,200
TOTAL 6,75,100 TOTAL 6,75,100

Adjustments:-
1. Purchase includes a payment of Rs. 30,000 paid by a bearer cheque to a supplier
2. Wages include Rs. 250 per month given to a personal servant of Mr. Raghu
3. Salary to staff includes Rs. 18,000 paid during the year to a relative of Raghu. The reasonable
salary for the said job profile is Rs.10,000 p.a.
4. The amount of depreciation allowable as per Income Tax is Rs. 40,200.
5. General expenses include Rs. 6,400 being car expenses. 30% of the car is being used for personal
use.
6. Following transactions were not recorded in the Profit and Loss Account:
a. Audit Fees Rs. 3500
b. Interest received from Debtors Rs. 3600

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Question 5:-
Compute the Taxable Business Income of Mr. Sahil for Assessment Year 2020-21.
Mr. Sahil provides the following Profit and Loss Account for the year ending on 31st March, 2020:
Particulars Amount Particulars Amount
Opening Stock 4,87,650 Sales 64,12,650
Purchases 51,26,800 Closing Stock 12,63,280
Consumables & Stores 46,900 Commission and Brokerage 24,150
Electricity Expenses (25% of 68,600 Bad Debts Recovered (Not 70,000
the expenses is for personal allowed in the earlier years)
use)
Office Rent 66,000 Income Tax Refund 13,050
General Repairs 19,350 Capital Gain on sale of 60,000
shares
Repairs to Car 24,690
Office Expenses 54,960
Salaries and Wages 6,52,500
Contribution to Recognized 65,250
Provident Fund
Staff Welfare Expenses 1,02,600
Bonus 54,375
Insurance Expenses 32,450
Donations 68,000
Commission Paid 65,700
Audit Fees 22,600
Bad Debts 31,500
Consultancy Expenses 25,000
Interest on Capital 35,400
Provision for Tax 26,300
Depreciation 49,500
Net Profit 7,17,005
TOTAL 78,43,130 TOTAL 78,43,130
Adjustments: -
1. Allowable Depreciation as per Income Tax Act, 1961 is Rs. 46,775
2. Purchases include Rs. 46,900 paid in cash.
3. Salary includes Rs. 1,08,000 paid to brother of Mr. Sahil who works as a manager in the firm.
The reasonable salary for such a job is Rs. 98,000 p.a.
4. Insurance Expenses include Rs. 6,000 paid towards an accident insurance of Mrs. Sahil.
5. The usage of Car to the extent of 60% was for personal purposes.
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