FYUG Even Semester Exam, 2025

COMMERCE | 4th Semester

Course: COMDSC-252 Subject: Law and Practice of Income Tax Full Marks: 70 Pass Marks: 28

UNIT-I

Question 1 [2 x 2 = 4 Marks]

(a) Is income tax a direct tax? Give reason.

Yes, income tax is a direct tax. The primary reason is that the liability to pay the tax and the burden of the tax fall on the same person (the assessee); it cannot be shifted to others.

(b) Name any two components of income tax.

  1. Income Tax (computed on taxable income).
  2. Health and Education Cess (currently 4%).

(c) What is residential status of an individual assessee?

Residential status is a status determined for every Previous Year based on the physical presence (number of days) of an individual in India. It determines the scope of their global income that is taxable in India.

Question 2 [10 Marks]

Option A

Discuss the incomes which are not included in total income (Exempt Incomes).

Under Section 10, following incomes are exempt:

  • Agricultural Income: Wholly exempt under Section 10(1).
  • Share of Profit from Firm: Exempt in the hands of the partner under Section 10(2A).
  • Gratuity: Exempt up to specific limits for govt/private employees.
  • Scholarships: Exempt if granted to meet educational costs.
Option B

Residential Status: Categories and Determination.

Categories: 1. Resident and Ordinarily Resident (ROR), 2. Resident but Not Ordinarily Resident (RNOR), 3. Non-Resident (NR).

Determination (Individual): An individual is a Resident if they satisfy any one basic condition: Stay in India for 182+ days in the P.Y., OR stay in India for 60+ days in the P.Y. and 365+ days in the 4 preceding years.

Determination (Firm): A firm is Resident if the control and management of its affairs is situated wholly or even partially in India.

UNIT-II

Question 3 [2 x 2 = 4 Marks]

(a) What is annual value?

Annual Value of a property is the sum for which the property might reasonably be expected to let from year to year, representing its inherent earning capacity.

(b) Tax treatment of Recognized Provident Fund (RPF).

  • Employer's contribution: Exempt up to 12% of salary.
  • Interest credited: Exempt up to 9.5% per annum.

(c) List out various deductions under Section 16.

  1. Standard Deduction (50,000).
  2. Entertainment Allowance (for Government employees only).
  3. Professional Tax.

Question 4 [10 Marks]

Option B (Numerical)

Compute Income from House Property for Mr. Das (P.Y. 2024-25).

1. Municipal Value (1,50,000) vs Fair Rent (1,80,000)Higher = 1,80,000
2. Expected Rent (Lower of 1,80,000 or Standard Rent 1,80,000)1,80,000
3. Actual Rent (16,000 x 12)1,92,000
4. Gross Annual Value (GAV) (Higher of 2 or 3)1,92,000
5. Less: Municipal Taxes (Only owner's share: 25,000 - 15,000)(10,000)
6. Net Annual Value (NAV)1,82,000
7. Less: Deduction u/s 24(a) @ 30% of NAV(54,600)
8. Add: Recovery of Unrealized Rent (70% of 14,000)9,800
Income from House Property1,37,200

UNIT-III

Question 5 [2 x 2 = 4 Marks]

(a) What is capital gain?

Capital Gain is the profit or gain arising from the transfer of a capital asset.

(b) Formula for deduction under Section 54F.

Exemption = (LTCG × Amount Invested in New House) / Net Consideration

Question 6 [10 Marks]

Option B (Numerical)

Compute Capital Gain for Mr. Shankar Sharma (A.Y. 2024-25).

  1. Full Value of Consideration: 16,50,000
  2. Less: Transfer Expenses: (6,000)
  3. Net Consideration: 16,44,000
  4. Less: Indexed Cost of Acquisition (4,00,000 × 363 / 272): (5,33,824)
  5. Long Term Capital Gain (LTCG): 11,10,176
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  6. Less: Exemption u/s 54F (11,10,176 × 8,00,000 / 16,44,000): (5,40,231)[span_26](end_span)
  7. Taxable LTCG: 5,69,945

UNIT-IV

Question 8 [10 Marks]

Option A

Provisions for Set-off of Losses.

UNIT-V

Question 10 [10 Marks]

Option A (Numerical)

Total Income of Mr. Mukul Baruah (New Tax Regime - A.Y. 2025-26).

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Under the New Tax Regime (Section 115BAC), Chapter VI-A deductions (80C, etc.) are generally not allowed[span_31](end_span).

  • Basic Salary (2,00,000 × 12): 24,00,000
  • D.A. (50% of Basic): 12,00,000
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  • Medical Allowance (650 × 12): 7,800[span_35](end_span)
  • Gross Salary: 36,07,800
  • Less: Standard Deduction: (75,000) [As per Budget 2024/25 provisions]
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  • Income from Other Sources (Interest 20,000 + Evaluation 40,000): 60,000[span_37](end_span)
  • Total Income: 35,92,800

Note: Professional Tax (4,800) is deducted from Gross Salary.