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DRIVE-SPRING 2014
PROGRAMMBADS (SEM
3/SEM 5) MBAFLEX/ MBAN2 (SEM 3) PGDFMN (SEM 1)
SUBJECT CODE &
NAME-MF0012 & TAXATION MANAGEMENT
BK ID-B1760
CREDIT & MARKS-4
Credits, 60 marks
Q1. The provisions
in Chapter VIA are in the form of deductions (80C to 80U) from the total
income. Explain the general rules for claiming deductions and after this
explain each major spheres deductions under sections (80C to 80U)
(Explanation of
general rules for claiming Deductions under section 80C to 80U, Explanation of
each spheres of deductions under sections (80C to 80U)) 4, 6
Answer.
General rules
for claiming deductions
The following are the general
rules for claiming deductions:
·
The
total of all deductions must be limited to the amount of the total income of
the assessee.
·
The
deductions allowed cannot result in a negative income.
Q2. Write short
notes on:
a) Profit in Lieu
of salary-Sec 17(3)
b) Tax planning
avenues for salary income
(Explanation of
Profit in lieu of salary, Explanation of Tax planning avenues for salary income)4,6
Answer.
a) Profit in
Lieu of salary-Sec 17(3)
Section 17(3) defines ‘profit in
lieu of salary’ to include:
1. The amount of compensation due
to or received by an assessee from his employer or former employer at or in
connection with
a) Termination of employment or
Q3. There certain
important things to know under Section 54ED. Explain all the important
conditions in Section 54ED in Capital Gain.
Mr. A acquired a
plot of land on 15th June,1993 for Rs. 10,00,000 and sold it on 5th Jan,2010
for Rs.41,00,000. The expenses of transfer were Rs.1,00,000.
Mr. A made the following
investments on 4th Feb,2010 from the proceeds of the plot.
a) Bonds of Rural
Electrification Corporation redeemable after a period of three years Rs.
12,00,000.
b) Deposits under
Capital Gain Scheme for purchase of a residence house Rs.8,00,000 (he does not won
any house). Compute the capital gain chargeable to tax for the AY 2010-11
(Explanation of
Section 54ED, Computation of Capital Gain chargeable)5,5
Answer.
Section 54ED
Capital gain on transfer of a
long-term asset in the nature of a share or a security is exempt subject to the
following conditions:
1. A long-term capital asset is
transferred by an assessee.
2. The long-term capital asset is
(a) a security listed in any recognized stock exchange in India (b) a unit of
UTI or a mutual fund (whether listed or not).
Q4. Elaborate and
write on the administrative mechanism envisaged in the DTC in Tax
(Explanation of Tax
administration, Explanation of Appeals and revision, Explanation of assessment
procedure)4,3,3
Answer.
Tax
administration
Tax Administration
Authorities
There shall be the following
classes of income-tax authorities for the purposes of this Code, namely:—
a) The Central Board of Direct
Taxes constituted under the Central Boards of Revenue Act, 1963
b) Chief Commissioners of Income-tax
or Director-Generals of Income-tax
Q5. Service tax is
a tax levied on services. List down the registration under service tax rules.
Write down the procedure for registration and payment of service tax. Compute
the taxable turnover and service tax liability for the year 2 of a new company
in each of the following situations:
(List of
registration under service tax rules, Explanation on procedure for registration,
Explanation on payment of service tax, Service tax computation)1,2,4,3
Answer.
List of
registration under service tax rules
Service tax registration is
required if:
·
The
taxable turnover of the service provider during the previous year exceeds the
prescribed amount (for financial year 2012-13 the limit is Rs. 9 lakh).
·
The
service tax provider is acting as an input service distributor irrespective of
the turnover.
·
The
service receiver is liable to pay service tax being recipient of service under
reverse charge.
Q6. Capital
structure is said to be optimum when the firm has selected a combination of
equity and debt that minimizes the cost of capital. What are the major
considerations in capital structure planning? Write about the dividend policy
and factors affecting dividend decisions.
(Explanation of
major considerations in capital structure planning, Explanation on dividend
policy, Explanation on factors affecting dividend decisions)6,2,2
Answer.
Major
considerations in capital structure planning
Broadly, the following factors
would be worth considering, while planning the capital structure.
1. Risk of two kinds, that
is, financial risk and business risk: In the context of capital
structure planning, financial risk is more relevant. Financial risk is of two
types:
(a) Risk of cash illiquidity: As
a firm raises more debt, its risk of cash illiquidity increases. This is for
two reasons. First, higher proportion of debt in the capital structure
increases the commitments of the company with regard to
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