Tax Planning Class Test

Batch PGDM
Name :

Semester III
Roll No.

Q1. X furnishes the following particulars for the previous year relevant to the assessment year
2015-16
Profit and loss account for the year ending 31.03.15
Salary to staff
55,000
Gross profit
2,80,000
Bonus

7,000

Entertainment
expenses

23,000

General expenses

41,000

Bad debts

20,000

4,500

Reserve for bad debts

10,000

Advertisement
expenses

27,000

Interest on X's Capital

A/c

3,000

Expenditure on
acquisition of patent's
rights

28,000

Telephone expenses

22,000

Depreciation

Bad debt recovered

(earlier allowed as
deduction)

4,000

Provision for income

tax

25,500

Net Profit

50,000

Total
3,00,000
Total
3,00,000
Other information :
1)Provision for income tax is excessive to the extent of Rs.3,000.
2)Salary to staff includes salary paid to relative which is unreasonable to the extent of Rs.3,100.
3)Depreciation on tangible assets according to the income tax provisions comes to Rs.9,500.
4)Patents were acquired on 4.11.2014.
5)Bonus to employees according to the Payment of Bonus Act, 1965 comes to Rs.4,200
6)General expenses include payment of Rs.5,000 to an approved educational istitute for the purpose
of carrying on scientific research in natural science. The research, however is not related to business
of the assessee.
7)Advertisement expenses included cost of 20 gift packs of Rs.100 each presented to leading
esteemed customers on the occasion of Diwali.
8) During the previous year 2014-15 the following payments were made and the same have not
been debited to profit and loss account of 2014-15
(a) Rs.3,000 paid on 10.07.2014 on account of outstanding customs duty of the previous year 201314.
(b) Rs.5,000 paid on 15.12.2014 on account of outstanding sales tax of the previous year 2013-14
Compute the Profits and Gains from Business and Profession for the A.Y.2015-16