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DRIVE- Fall 2016
PROGRAM/SEMESTER-MBADS
(SEM 3/SEM 5)MBAFLEX/ MBAN2 (SEM PGDFMN (SEM 1)
SUBJECT CODE
&NAME-MF0012 &TAXATION MANAGEMENT
BK ID-B1760
CREDITS-4
MARKS-60
Note:
Answer all questions. Kindly note that answers for 10 marks questions should be
approximately of 400words. Each question is followed by evaluation scheme.
Q1. Explain the objectives of tax planning. Discuss the factors to be
considered in tax planning.
(Objectives of tax planning, Factors
in tax planning) 5,5
Answer-1
Objectives of Tax Planning
The following are the important
objectives of Tax planning.
1. Reduction of Tax liability
2. Minimisation of litigation
3.
Q2.Explain the categories in Capital assets.
Mr. C acquired a plot of land on
15th June, 1993 for 10,00,000 and sold it on 5th
January, 2010 for 41,00,000. The
expenses of transfer were 1,00,000.
Mr. C made the following
investments on 4th February, 2010 from the proceeds of the plot.
a) Bonds of Rural Electrification
Corporation redeemable after a period of three years,12,00,000
b) Deposits under Capital Gain
Scheme for purchase of a residential house 8,00,000 (he does not own any house)
Compute the capital gain
chargeable to tax for the AY2010-11.
(Explanation of categories of
capital assets, Calculation of indexed cost of acquisition, Calculation of long
term capital gain, Calculation of taxable long term capital gain) 4,2,2,2
Answer-2
Categories of capital assets
For taxation purposes, the
capital assets have been, divided into (a) short term capital assets and (b)
long-term capital assets.
(a) Short-term capital assets: According to Section 2(42A), a
short-term capital asset means a capital asset held by an assessed for not more
than:
A. 12 months before its transfer
in case of company shares, (equity or preference), or any other security listed
in a recognized stock exchange, or units of UTI and mutual funds or a zero
coupon bond, and
B. 36 months before its transfer
in the case of any other asset Capital gains arising from the transfer of
short-term capital asset are called short-term capital gains.
(b) Long-term capital assets: Any capital asset other than a
short-term capital asset is termed as a long-term capital asset. Gains arising from
the transfer of long-term capital assets are called long-term capital gains.
Long-term capital gains qualify for concessional tax treatment under the Income
Tax Act.
Solution:
Assessment Year 2010-11
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Q3.Explain major considerations in capital structure planning. Write about
the dividend policy and factors affecting dividend decisions.
(Explanation of factors of
capital structure planning, Explanation of dividend policy, Factors affecting
dividend decisions) 6, 2, 2
Answer-3
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
2.
Q4.X Ltd. has Unit C which is not functioning satisfactorily. The
following are the details of its fixed assets:
The written down value (WDV) is `
25 lakh for the machinery, and15 lakh for the plant. The liabilities on this
Unit on 31st March, 2011 are35 lakh.
The following are two options as
on 31st March, 2011:
Option 1: Slump sale to Y Ltd for
a consideration of 85 lakh.
Option 2: Individual sale of
assets as follows: Land ` 48 lakh, goodwill ` 20 lakh, machinery 32 lakh, Plant
17 lakh.
The other units derive taxable
income and there is no carry forward of loss or depreciation for the company as
a whole. Unit C was started on 1st January, 2005.Which option would you choose,
and why?
(Computation of capital gain for
both the options, Computation of tax liability for both the options, Conclusion)
4,4,2
Answer-4
Option 1: Slump sale
|
Computation of net worth of
Unit C
|
(in lakhs)
|
Q5.Explain the Service Tax Law in India and concept of negative list.
Write about the exemptions and rebates in Service Tax Law.
(Explanation of Service Tax Law
in India, Explanation of concept of negative list, Explanation of exemptions
and rebates in Service Tax Law) 5, 2 , 3
Answer-5
Service Tax Law in India
Service tax was introduced in
India in 1994 by Chapter V of the Finance Act,1994. It was imposed on an
initial set of three services in 1994 and the scope of the service tax has
since been expanded continuously by subsequent Finance Acts.
The new section 65B introduced in
the Finance Act, 2012 defines services in Clause 44.In 2012, and there has been
a paradigm
Q6.What do you understand by customs duty? Explain the taxable events for imported,
warehoused and exported goods. List down the types of duties in customs
An importer imports goods for
subsequent sale in India at $10,000 on assessable value basis. Relevant
exchange rate and rate of duty are as follows:
|
Particulars
|
Date
|
Exchange
Rate Declared by CBE&C
|
Rate
of
Basic
Customs
Duty
|
|
Date of submission
of
bill of entry
|
25th
February, 2010
|
45/$
|
8%
|
|
Date of entry
inwards granted to
the
vessel
|
5th
March, 2010
|
`
49/$
|
10%
|
Calculate assessable value and
customs duty.
(Meaning and explanation of
customs duty, Explanation of taxable events for imported, warehoused and exported
goods, Listing of duties in customs, Calculation of assessable value and
customs duty) 2, 3, 2, 3
Answer-6
Meaning
and explanation of customs duty
Customs duty is the duty imposed
on goods imported into the country.
The rates of customs duties are
either specific or on ad valorem basis, that is, it is based on the value of
goods. Rule 3(i) of the Customs Valuation (Determination of Value of Imported
Goods) Rules, 2007 states that the value of imported
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