Instances of Agriculture (Agro) Income

Income from growing trade or commercial products like jute, cotton, etc. is an agro
income
Income from growing flowers and creepers is an agro income
Plants sold in pots are an agro income provided basic operations are performed.
Any remuneration received by a partner from a firm engaged in agriculture operation is
an agro income
Interest on capital received by a partner from a firm engaged in agriculture operation is
an agro income

Instances of Non-
Non-agricultural (non-
(non-agro) Income
Salary received by an employee from any business having agriculture income is non-
agro income
Dividend received from a company engaged in agricultural operation is non-agro
income
Income from salt produced by flooding the land with seawater is non-agro income
Income from fisheries, poultry farming, dairy farming, butter & cheese making, etc. is
non-agro income
Breeding & rearing of livestock is non-agro income
Interest received by a moneylender in the form of agricultural produce is non-agro
income
Profit on sale of standing crops after harvest, where such crops were acquired through
purchase is non-agro income

1.) Under which head family pension is taxable?

Ans: Family pension is taxable under the head Income from Other Sources.

2.) Write short notes on Dividend.

Ans: Dividend in general means the amount received by a shareholder whether in cash or in
kind in proportion to his shareholding in a company. Sec 10(34) provides that any income by
way of dividend referred to in sec 115-O shall be exempted. Accordingly, dividend from a
domestic company, except dividend u/s 2(22)(e) shall be exempted in the hands of the
recipient.

4.) Raja received dividend of ` 10,000 from an Indian company. Discuss the taxability
taxability of the
dividend so received in the hands of Raja.
Ans: The dividend so received from Indian company is exempt u/s 10(34) in the hands of
Raja.

1.) Define short term capital asset

Ans: It means a capital asset held by an assessee for not more than 36 months immediately
before the date of transfer. However in the following cases, an asset will be treated as a
short term capital asset if it is held for not more than 12 months immediately before the
date of transfer:
Equity or Preference shares in a company
Any listed securities e.g. debenture, Govt. Securities
Zero Coupon Bonds
Units of UTI
Units of Mutual Fund approved u/s 10(23D)

4.) When a capital gain is considered as short term?

Ans: Short term capital gain means the gain arising on transfer of short term capital assets
[Sec. 2(42B)]

5.) What are the cost of acquisitions of bonus share if :

(a) Bonus shares were allotted on 10.10.1978
(b) Bonus shares were allotted on 10.10.2008
Ans : (a) The cost of acquisitions of bonus share is the Fair Market Value of those shares on
01.04.1981.
(b) The cost of acquisitions of bonus share is Nil.

2.) What do you mean by carry forward of losses?

Ans : In case where the income of an assessment year is insufficient to set off the losses of
the year then such losses (which could not be set off) can be carried forward to subsequent
assessment year for set off against income of such subsequent year.

3.) Mention any two losses which cannot be carried forward for non-
non-submission of loss return.
Ans : The two losses which cannot be carried forward for non-submission of loss return are
Business Loss and Capital Gain loss.

Clubbing of income of a minor child (Section

(Section 64(1A))
The income of a minor child is to be clubbed in the hands of either of his parents.
The income shall be clubbed in the hands of that parent whose total income
(excluding the income of the minor) is greater.
If the marriage of his parents does not subsist, the income shall be clubbed in the
hands of that parent who maintains the minor child in the previous year.
Where any income is once included in the total income of either parent, any such
income arising in any succeeding year shall not be included in the total income of the
other parent, unless the AO is satisfied, after giving that parent an opportunity of
being heard, that it is necessary so to do.
If income is clubbed in the hands of a parents, the exemption is available to the lower
of
- Income clubbed
- ` 1500 per child p.a.
The following income of a minor shall not be clubbed and will be taxable in the hands
of the minor himself:
(i) Any income of a minor child suffering from any disability
(ii) Such income which accrues or arises to the minor child on account of any
manual work done by him
(iii) Such income which accrues or arises to the minor child on account of any
activity involving application of his skills, talent or specialised knowledge and
experience.

Tax Planning: Tax planning is a way to reduce tax liability by taking full advantages
provided by the Act through various exemptions, deductions, rebates and relief. In other
words, it is a way to reduce tax liability by applying script and moral of law.

Tax Evasion: Tax evasion is the illegal way to reduce tax liability by deliberately
suppressing income or sale or by increasing expenses, etc. which results in reduction of
total income of the assessee. Tax evasion is illegal both in script and moral. It is the
cancer of modern society and work as a clog in the development of the nation.

Exemption to the general rule that income of the previous year is taxed in the assessment
year: This is the general rule that income of the previous year of an assessee is charged to
tax in the immediately following assessment year. However, in the following cases, income
of the previous year is assessed in the same previous year :
1.) Income of non resident assessee arising from shipping business (Sec. 172)
2.) Income of person leaving India either permanently or for a long period (Sec. 174)
3.) Income of bodies formed for short duration (Sec. 174)
4.) Income of a person who is likely to transfer his properties to avoid tax (Sec. 175)
5.) Income of a discontinued business (Sec. 176)
Assessment Year [Sec 2(9)]: It means the period of 12 months commencing on the 1st day of
April every year. It is the year just after previous year in which income earned in the
previous year is charged to tax.

Previous Year [Sec. 3]: It means the financial year immediately preceding the Assessment
Year. Income earned in a year is assessed in the next year. The year in which income is
earned is known as Assessment Year.

Person [Sec 2(31)]: The term Person includes the following : (a) an individual (b) a Hindu
Undivided Family (HUF) (c) a Company (d) a Firm (e) an Association of Person (AOP) or a
Body of Individuals (BOI) (f) a Local authority and (g) Every artificial juridical person.

Association of Persons (AOP): An AOP means a group of persons who join together for
common purposes. Every combination of person cannot be termed as AOP.

Body of Individuals (BOI): BOI means a group of individuals who join together for common
purposes whether or not to earn income.

Assessee [Sec. 2(7)]: Assessee means

a) A person by whom any tax or any other sum of money is payable under this Act;
b) Every person in respect of whom any proceeding under this Act has been taken for
the assessment of his income or loss or the amount of refund due to him or
assessment of fringe benefit.

Heads of Income [Sec. 14]: According to section 14 of the Act, all income of a person
shall be classified under the following five heads:
Salaries
Income from house property
Profits and gains of business or profession
Capital gains
Income from other sources

2.) State the status of the following :

a) Kolkata Municipal Corporation Local Authority
b) A joint family of Sri Raj, Smt Raj and their son HUF
c) Corporation Bank Ltd. Company
d) Calcutta University Artificial Juridical person
e) Sole proprietorship business Individual
f) X and Y who are legal heirs of Z Body of Individual

Loss return [Sec. 139(3)]:

139(3)]: Following assessee need to file return of income irrespective of
income or loss
A company
A firm
A University / College / Other institution referred to on Se. 35(1)(ii) or (iii)
An assessee other than above is not compulsorily required to furnish return of loss.
Thus where a return of loss was not filed within the due date, the following losses cannot be
carried forward and set off.
Business loss section 72(1)
Speculation business loss section 73(2)
Losses from capital gains section 74(1)
Losses incurred in the activity of owning and maintaining race horses section
74A(3)
Belated return [Sec. 139(4)]:
139(4)]: If an assessee fails to file return within the time limit allowed
u/s 139(1) or within the time allowed under a notice issued u/s 142(1), he can file a belated
return. Assessee may file such return
Within one year from the end of relevant assessment year or
Before the completion of assessment u/s 144
Which ever is earlier
However if an assessee files a belated return, he would be liable to penal interest u/s 234A.

3.) Write short note on compulsory filing of return.

Ans: A resident person who during the previous year has any asset located outside India
or has signing authority in any account located outside India, shall furnish a return in
respect of his income or loss for the previous year.

4.) Where quoting of PAN is necessary?

Or
Mention two specified transactions where quoting of PAN is made compulsory.
Ans:
Ans: PAN must be quoted in documents pertaining to certain prescribed transactions
Transactions relating to sale or purchase of an immovable property valued at ` 5 lacs
or more
Transactions relating to sale or purchase of a motor vehicle, which requires
registration
Fixed deposits in any bank of an amount exceeding ` 50,000 in cash
Deposit exceeding ` 50,000 with Post Office Saving Bank
Transactions of securities the value of which exceeds ` 1,00,000
On opening a bank account
On payment of hotels against their bills in excess of ` 25,000 at a time
On cash-deposit of ` 50,000 or more in a bank account during any one day
Payment of an amount of ` 50,000 or more to any mutual fund for purchase of its
units
Payment of an amount of ` 50,000 or more to RBI for acquiring bonds issued by it

5.) What is TAN?

Ans:
Ans: Tax deducted Account number is allotted to a person who is responsible for deduction
of tax at source. TAN is to be quoted to all challans for payment of tax deducted at source in
all TDS certificates in all quarterly statements and documents sent to income tax authorities.

6.) Who is liable to deduct tax at source?

Ans: Person who are making payment of income are responsible to deduct tax from such
income at specified rates and pay only net amount. Tax so deducted shall be deposited with
government treasury within the stipulated time. The provisions are merely a mode of
collection of income tax and a check on tax evasion through paper control and information.

7.) Mr. Gautam Sinha has income under the head house property, salary and income
from other sources.
sources. He is to submit return of income for the first time for the assessment
year 2015
2015-16. What is the due date of submission
submission of return by him?
Ans:
Ans: The due date of submission of return by Mr. Gautam Sinha is July 31, 2015

8.) Mr. X having income from house property ` 1,00,000 fails to file his return by 31.07.2015
31.07.2015.
He seeks your advice till what time can he furnish return?
Ans: Since assessee failed to file the return within the time limit hence he can file a belated
return within one year from the end of relevant assessment year or before the assessment is
completed, which ever is earlier. He can file the return before 31.03.2017 or date of
completion of assessment, which ever is earlier.
9.) What is PAN?
Ans: Permanent Account Number (PAN) is an alpha-numeric ten characters code given in
form of a laminated card to a person by income tax department for the purpose of
identification of the assessee. A person can have only one PAN.

11.) Write short

short note on deduction of tax at source from winning from lottery.
Ans: Any person responsible for paying to any person any income by way of winning from
any lottery or crossword puzzle or card game and other game of any sort exceeding `
10,000. The rate of TDS is 30%. The tax shall be deducted at the time of payment.

Scrutiny Assessment [Sec 143(3)] : If AO considers it necessary to ensure that the assessee
has not understated his income, declared excessive loss or under-paid the tax, he can make
a scrutiny in this regard. AO shall serve a notice (before expiry of 6 months from the end of
the financial year in which the return is furnished) requiring the assessee, on a particular
date, to produce any evidence in support of the return. After collecting such information and
evidence as he deems fit and on the basis of such information and evidence so collected, he
shall pass an assessment order. Such order shall be treated as regular assessment order.
Assessment u/s 143(3) should be completed within 21 months from the end of the relevant
assessment year.

Best Judgement Assessment [Sec 144] : As per section 144(1) a best judgment assessment
can be made by the Assessing Officer, if any person :
Fails to make a return as required under Section 139(1) or has not filed a return
under section 139(4) or section 139(5);
Fails to comply with all the terms of a notice issued under section 142(1), or fails
to comply with a direction for audit of accounts issued under section 142(2A) ; or
Having made a return, fails to comply with all the terms of a notice issued under
section 143(2) of the Act.
The Assessing Officer has to make the best judgment assessment after taking into account
all the relevant material gathered and after giving the assessee an opportunity of being
heard by issuing a show cause notice on the assessee as to why a best judgment
assessment should not be made. However, in cases where a notice under section 142 (1)
has already been issued prior to the best judgment assessment, it will not be necessary to
give the assessee an opportunity of being heard. It is also incumbent on the Assessing
Officer to inform the tax payer the basis of his conclusion for arriving at best judgment
income figures, viz, basis of assessment.

15.) Who is liable to

to pay central sales tax?
Ans: Dealer who carry on business and has made an inter state sale of goods is liable to
pay central sales tax.

16.) Mention
Mention the transaction which do not constitute inter state sale under the CST Act?
Ans: The transactions which do not constitute sale are:
Mortgage
Pledge
Hypothecation
Charge

18.) Discuss the objectives of Central Sales Tax Act.

Ans: The objectives of Central Sales Tax Act are as follows:
To determine and regulate the levy, collection and distribution of taxes
To declare certain goods to be of special importance in inter-state trade or
commerce
 To specify restrictions or state laws imposing tax on the sale or purchase of goods
of special importance.

19.) Mention two basis of charging tax under Central Sales Tax Act.
Ans: The basis of charging tax under Central Sales Tax Act is
There must be a dealer
Such dealer must carry on a business
Such dealer has made an inter state sale of goods

20.) Define goods as per CST Act

Ans: It includes all materials, articles, commodities and all other kind of movable
properties, other than newspaper, actionable claim, stock, shares and securities.

21.) Define turnover as per CST Act 1956

Ans: Turnover means aggregate of the sale prices received and receivable by a dealer in
respect of sales of any goods in the course of inter-state trade or commerce made during
any prescribed period.

1.) Discuss the features of WB VAT

Ans : The features of WB Vat are as follows:
It is an indirect tax
It eliminates cascading effect of tax
It is multi point tax

2.) Distinguish between VAT and Sales Tax

Ans : The difference between VAT and Sales Tax are follows:
VAT Sales Tax
It is a multipoint tax It is a single point tax
There is no chance of tax on tax There is chance of tax on tax
It reduces competition It causes unhealthy competitions
No additional tax burden is there Additional tax burden is there
The structure of VAT system is simple The structure of sales tax system is complex

3.) Define goods under the VAT

Or
State two items which are not considered as goods under the WB VAT Act.
Ans : Goods includes all kinds of movable property but it does not include the following:
Newspaper, actionable claims, stocks, shares or securities
Country liquor or foreign liquor
Lottery tickets
Motor spirit of any kind
Rectified spirit and Extra Neutral Alcohol (ENA)

5.) What do you mean by Input Tax credit and reversal of credit?
Or
What do you mean by Input
Input Tax Credit as per the WB VAT Act, 2003?
Ans : Input tax credit or rebate in relation to any period means setting off of the amount of
input tax or part thereof paid by a registered dealer against the amount of output tax
payable by the same registered dealer.
Reversal of credit : Reverse credit means reversal or returning by a dealer by way of
reduction from the amount of input tax credit or input tax rebate for a period the amount of
input tax credit or rebate availed by him during any period which he was not entitled to or
become disentitled to the enjoyment of such input tax credit or input tax rebate.
21.) What is turnover of sale as per WB VAT Act?
Ans: Turnover of sales in relation to any period means the aggregate of the sale prices or
parts of sale prices received or receivable by a dealer in respect of sales as per this act and
as per section 2(g) of the CST Act made during such period.

22.) What do you mean by reverse credit?

Ans : Reverse credit means reversal or returning of the amount of input tax credit or input
tax rebate availed by him during any period which he was not entitled to. Such return shall
be by way of deduction from the amount of input tax credit or input tax rebate for a period.

2.) What are the conditions when excise duty is leviable or chargeable?
Or
Excise
What are the basic conditions for levying excise duty under the Central Excise Act, 1944?
Ans : The conditions when excise duty is leviable or chargeable are:
There must be a manufacture
Manufacture must be India excluding Special Economic Zone(SEZ)
The manufacture must result in goods
Such goods must be excisable goods

5.) Define Manufacture as per the Central Excise Act

Ans : As per section 2(f) of the Act, Manufacture is a process incidental or ancillary to
complete a manufactured product or it is a process mentioned in schedules of CETA 1985.
Manufacture implies a change but all changes are not manufacture

6.) Define Factory as per the Central Excise Act

Ans : As per Section 2(e) of the Act, Factory means any premises including the precincts
thereof where excisable goods are manufactured other than salt or manufacturing process
connected with production of excisable goods is ordinarily carried on.

10.)
10.) Define Wholesale Dealer as per Central
Central Excise Act
Ans : As per section 2(k) of the Act, Wholesale dealer means a person who buys or sells
excisable goods in wholesale for the purpose of trade or manufacture and includes a broker
or commission agent.

12.) If the rate of duty of an excisable item is zero%, the item can be called non
non--excisable
goods. Do you agree?
Ans:
Ans: If the rate of duty is zero %, the item can not be called non excisable goods because it
is mention in the first and second schedules of CETA 1985.

13.) Is the production of excisable goods in China factory by an Indian Company dutiable in
India under the Central Excise Act, 1944.
Ans: The production is not dutiable in India as goods are not manufactured in India.