CA Inter Taxation Question Paper Nov 2019

CA Inter Taxation Question Paper Nov 2019 – CA Inter Tax Study Material is designed strictly as per the latest syllabus and exam pattern.

CA Inter Tax Question Paper Nov 2019

Section A

Question 1.
From the following particulars furnished by Mr. Ganesh, aged 58 years, a resident Indian for the previous year ended 31.03.2020, you are requested to compute his total income and tax liability under normal as well as special provisions (AMT), if any, applicable to him for the Assessment Year 2020-21:

  1. He occupies ground floor of his residential building and has let out first floor for residential use at an annual rent of ₹ 2,28,000. He has paid municipal taxes of ₹ 60,000 for the current financial year.
  2. He owns an industrial undertaking established in a SEZ and which had commenced operation during the financial year 2017-18. Total turnover of the undertaking was ₹ 200 lakhs, which includes ₹ 140 lakhs from export turnover. This industrial undertaking fulfils all the conditions of section 10AA of the Income-tax Act, 1961. Profit from this industry is ₹ 25 lakhs.
  3. He received royalty of ₹ 2,88,000 from abroad for a book authored by him on the nature of artistic. The rate of royalty as 18% of value of books and expenditure made for earning this royalty was ₹ 40,000. The amount remitted to India till 30th September, 2020 is ₹ 2,30,000.
  4. Received ₹ 40,000 as interest on saving bank deposits.
  5. Received ₹ 47,000 as share of profit from an AOP where all the members are individual and which had paid the tax by normal rates of income tax.
  6. He also sold his vacant land on 10.11.2019 for ₹ 10 lakhs. The stamp duty value of land at the time of transfer was ₹ 14 lakhs. The FMV of the land as on 1st April, 2001 was ₹ 4 lakhs. This land was acquired by him on 5.08.1995 for ₹ 1.80 lakhs. He had incurred registration expenses of ₹ 10,000 at that time. The cost of inflation index for the years 2019-20 and 2001-02 are 289 and 100 respectively.
  7. He paid the following amounts, out of his taxable income:

(a) Insurance premium of ₹ 39,000 paid on life insurance policy of son, who is not dependent on him.

(b) Insurance premium of ₹ 48,000 on policy of his dependent father.

* Part I consists of multiple choice questions are not available in Public domain.

(c) Tuition fees of ₹ 42,000 for his three children to a school. The fees being ₹ 14,000 p.a. per child. [14 Marks]
Answer:
Computation of Total Income and Tax Liability of Mr. Ganesh for Previous Year ending on 31.03.2021 (Assessment Year 2021-22)
CA Inter Accounts Paper Nov 2019 – CA Inter Tax Study Material 1
CA Inter Accounts Paper Nov 2019 – CA Inter Tax Study Material 2
CA Inter Accounts Paper Nov 2019 – CA Inter Tax Study Material 3

CA Inter Accounts Question Paper Nov 2019

Computation of Tax Liability

Income Rate of Tax Tax Amount
First 2,50,000 NIL NIL
Next 2,50,000 5% 12,500
Next 4,09,600 20% 81,920
Total Tax on Normal Income 94,420
Add: Tax on Long Term Capital Gain @20% on Rs. 2,53,333 50,667
Gross Tax 1,45,087
Add: HEC @4% of Rs.1,45,087 5,803
Tax Liability (A) 1,50,890
Tax Liability as per Section 115JC:
Adjusted Total Income = 11,62,930+17,50,000+58,000 (2,48,000-1,90,000) = 29,70,930
Tax on Adjusted Total Income = 18.5% of Rs. 29,70,930 = 5,49,622 5,49,622
Add SHEC @4% of 5,49,622 = 21,985 21,985
Tax Liability as per section 115JC 5,71,607
Hence Tax Liability which is higher 1,48,290 or 5,71,607 5,71,607

Notes:

1. When income of one or more members of AOP has personal income of more than exemption limit, the AOP is taxable at maximum marginal rate or at a higher rate. As a result of which share of profit will not be taxable in the hands of its members. Hence in the instant case, share of profit from AOP is not included in taxable income of Mr. Ganesh.

2. AMT provisions are not applicable to an individual whose adjusted total income does not exceed Rupees Twenty Lacs. Hence AMT is applicable in the instant case as total income exceeds Rs. 20 Lakhs.

Question 2.
(a) Mr. Mukesh born on 1.4.1960 furnished his original return for Assessment Year 2020-21 on 30.07.2020. He has shown salary income of ₹ 7.30 lakhs (computed) and interest from his savings bank of ₹ 12,700 and from his fixed deposits of ₹ 43,000. He also claimed deduction under section 80C ₹ 1.50 lakhs. He had claimed deduction u/s 80D of ₹ 25,000. He also claimed deduction u/s 80TTA of ₹ 10,000. His employer had deducted TDS of ₹ 33,950 from his salary, which he adjusted fully against tax payable.

He paid health insurance premium of ₹ 38,000 by account payee cheque for self and wife. He paid ₹ 1,500 in cash for his health checkup and ₹ 4,000 by cheque for preventive health check-up of his parents. He also paid medical insurance premium of ₹ 33,000 during the year to insure the health of his mother, aged 80 years, staying with his younger brother. He further incurred medical expenditure of ₹ 25,000 on his father, aged 81 years, who is staying with him. His father is not covered under any mediclaim policy.

He seeks your advice about possibility of revising his return and if possible file his revised return. Analyse the above narrated facts as per applicable provisions of the Income-tax Act, 1961. Does he need to revise his return and for what reasons? Please advise him suitably and if needed, re-compute his income and tax payable or refund due for the Assessment Year 2020-21. [9 Marks]
Answer:
Computation of Total Income and Tax Liability of Mr. Mukesh for the Previous Year 2020-21

Particulars Amount Amount
Income from Salary 7,30,000
Income from Other Sources:
Interest on Saving Bank Account 12,700
Interest on Fixed Deposit 43,000 55,700
Gross Total Income 7,85,700
Less: Deductions:
Section 80C: 1,50,000
Section 80TTA 10,000
Section 80D 25,000 1,85,000
Total Income 6,00,700

Computation of Tax Liability

Income Rate of Tax Tax Amount
First 3,00,000 NIL NIL
Next 2,00,000 5% 10,000
Next 1,00,700 20% 20,140
Gross Tax on Normal 30,140
Add: SHEC @4% of Rs.32,640 1,206
Total Tax 31,346
TDS 33,950

CA Inter Accounts Question Paper Nov 2019

Computation of Total Income and Tax Liability of Mr. Mukesh for the Previous Year 2020-21

(Assessment year 2021-22) [REVISED RETURN]

Particulars Amount Amount
Income from Salary 7,30,000
Income from Other Sources:
Interest on Saving Bank Account 12,700
Interest on Fixed Deposit 43,000 55,700
Gross Total Income 7,85,700
Less: Deductions:
Section 80C: 1,50,000
Section 80TTA 10,000
Section 80D 75,000 2,35,000
Total Income 5,50,700

Computation of Tax Liability

Income Rate of Tax Tax Amount
First 3,00,000 NIL NIL
Next 2,00,000 5% 10,000
Next 50,700 20% 10,140
Gross Tax on Normal 20,140
Add: SHEC @4% of Rs.22,640 806
Total Tax 20,946
TDS 33,950
Refund 13,005

Notes:

1. Section 80D:
Self: 38,000 — 25,000 Maximum
Senior Citizen: 5,000 + 33,000 + 25,000 = 50,000
Maximum Total Deduction = 75,000

2. Yes, He can file revise return due to section 80D deduction claim under section 139(5), which can be filed by 31.03.2022.

(b) State in brief the applicability of tax deduction at source provisions, the rate and amount of tax deduction in the following cases for the financial year 2019-2020 under the Income-tax Act, 1961. Assume that all payments are made to residents:

(i) Sanjay, a resident Indian individual, not deriving any income from business or profession makes payments of ₹ 12 lakh in January, 2020, ₹ 20 lakh in February, 2020 and ₹ 20 lakh in March, 2020 to Mohan, a contractor for reconstruction of his residential house.
(ii) ABC Ltd. makes the payment of ₹ 1,50,000 to Ramlal, an individual transporter who owned 6 goods carriages throughout the previous year. He does not furnish his PAN.
(iii) Smt. Sarita paid ₹ 5,000 on 17th April, 2019 to Smt. Deepa from the deposits in National Savings Scheme account. [5 Marks]
Answer:

(i) As per section 194M if any payment is made to contractor in excess of Rs.50 lakhs in any financial year then @5% TDS applicable.

In this case no TDS is made in Jan. 2021, Feb. 2021 but when making payment of Rs.20 Lakhs in March 2021 then amount exceeded 50 Lakhs. Hence TDS applicable and 5% of total amount Rs.52 Lakhs = Rs.2,60,000 is amount of TDS.

(ii) As per sections 194C and 206AA TDS @20% is applicable if assessee having less than 10 goods carriages throughout the year and not providing PAN. If providing PAN then no TDS.

In this Ram Lai is not providing the PAN hence TDS applicable. Rs.30,000 is TDS amount.

(iii) In National Savings Scheme Account TDS is not applicable. Here No TDS.

CA Inter Accounts Question Paper Nov 2019

Question 3.
(a) Ms. Pooja a resident individual provides the following information of her income/losses for the year ended on 31st March, 2020:

S.No. Particulars (₹)
1 Income from salary (Computed) 2,20,000
2 Income from House Property (let out) (Net Annual Value) 1,50,000
3 Share of loss from firm in which she is partner 10,000
4 Loss from specified business covered under section 35AD 20,000
5 Income from textile business before adjusting the following items : 3,00,000
(a) Current year depreciation 60,000
(b) Unabsorbed depreciation of earlier year 2,25,000
(c) Brought forward loss of textile business of the A.Y. 2018-19 90,000
6 Long-term capital gain on sale of debentures 75,000
7 Long-term capital loss on sale of equity shares (STT not paid) 1,00,000
8 Long-term capital gain on sale of equity shares listed in recognized stock exchange (STT paid at the time of acquisition and sale) 1,50,000
9 Dividend from units of UTI 5,000

During the previous year 2019-20, Ms. Poojahas repaid ₹ 5,25,000 towards housing loan from a scheduled bank Out of this ₹ 3,16,000 was towards payment of interest and rest towards principal.

Compute the gross total income of Ms. Pooja and ascertain the amount of loss that can be carried forward. Ms. Pooja has always filed her return within the due date specified under section 139(1) of the Income-tax Act, 1961. [8 Marks]
Answer:
Computation of Total Income and Tax Liability of Ms. Pooja for Previous Year ending on 31.03.2021 (Assessment Year 2021-22)

Particulars Amount Amount Amount
Income From Salary: 2,20,000
Income From House Property:
Net Annual Value (Let Out) 1,50,000
Less-. Statutory Deduction @30% 45,000
1,05,000
Less-. Interest on Loan 3,16,000
Loss From House Property

Subject to maximum Rs. 2 lakhs can be set off with salary and Rs.l 1,000 c/f to next year

(2,11,000) (2,00,000)
20,000
Less: Unabsorbed Depreciation [Section 32(2)] (20,000) NIL
Profit and Gains from Business and Pro­fession:
Income 3,20,000
Less: Current year depreciation (60,000)
2,60,000
Less: b/f textile business loss AY 2019-20 (90,000)
1,70,000
Less: [Section 32(2)] Unabsorbed Depreci­ation (1,70,000) NIL
Particulars Amount Amount Amount
Capital Gain:
Long Term Capital Gain on Debentures 75,000
Long Term Capital Gain on Shares 1,50,000
2,25,000
Less: Loss on Shares Long Term (1,00,000)
1,25,000
Less: Unabsorbed Depreciation [Section 32(2)]                                                                  ‘ (35,000) 90,000
Gross Total Income 90,000
Less: Deduction under sections 80C to 80U NIL
Total Income 90,000

Notes:

  1. In this question GTI = Long Term Capital Gain
  2. Hence section 80C is not allowed on LTCG and Casual income.
  3. In section 35AD loss can be set off with section 35AD income only.
  4. Unabsorbed depreciation 2,25,000 – 1,70,000 = 55,000 can be set off with salary
    (Rs.20,000) and Rs.3 5,000 from Capital Gain.
  5. Section 35AD Loss Rs.20,000 c/f to next years.
  6. House Property Loss of Rs.l 1,000 can be c/f to next years.

(b) Determine the Gross total income of Shri Ram Kumar and Smt. Ram Kumar
for the assessment year 2020-21 from the following:

  1. Salary received by Shri Ram Kumar from a company ₹ 1,80,000 per annum and Smt. Ram Kumar also doing job in a company and getting salary of ₹ 2,40,000 per annum.
  2. Shri Ram Kumar transferred a flat to his wife Smt. Ram Kumar on 1st September, 2019 for adequate consideration. The rent received from this let-out flat is ₹ 9,000 per month.
  3. Shri Ram Kumar and his wife Smt. Ram Kumar both are partners in a firm. Shri Ram Kumar received ₹ 3 6,000 and Smt. Ram Kumar received ₹ 64,000 as interest from the firm and also had a share of profit of ₹ 12,000 and ₹ 26,000 respectively.
  4. Smt. Ram Kumar transferred 10% debentures worth ₹ 3,00,000 to Shri Ram Kumar. The whole amount of ₹ 3,30,000 invested by Shri Ram Kumar in the similar investments and earned income of ₹ 39,000.
  5. Mother of Shri Ram Kumar transferred a property to Master Rohit (son of Shri Ram Kumar) in the year 2018. Master Rohit (Aged 13 years) received of ₹ 15,000 as income from this Property on 20th February, 2020. [6 Marks]

Answer:
Computation of Total Income of Shri Ram Kumar for the Previous Year 2020-21
(Assessment Year 2021-22)

Particulars Amount Amount
Income from Salary: 1,80,000
Income from House Property: Rent Received 45,000
Less: Statutory Deduction @30% 13,500 31,500
Income from Firm 36,000
Gross Total Income 2,47,500

Computation of Total Income of Shrimati Ram Kumar for the Previous Year 2020-21
(Assessment Year 2021-22)

Particulars Amount Amount
Income from Salary: 2,40,000
Income from House Property: Rent Received 63,000
Less: Statutory Deduction @30% 18,900 44,100
Income from Firm 64,000
Interest on Debentures 35,454
Master Rohit Income 15,000
Less: Deduction 1,500 13,500
Gross Total Income 3,97,054

Notes:

  1. Share of Profit from Firm is Exempt.
  2. Proportionate Income on Interest on Debentures 39.000 × 30/33 = 35,454
  3. Section 64(1A) applicable and section 27 not applicable. Hence income of minor child is clubbed with Mrs. Ram Kumar being higher income.

CA Inter Accounts Question Paper Nov 2019

Question 4.
(a) Mr. Thomas, a non-resident and citizen of Japan entered into following transactions during the previous year ended 31.03.2020. Examine the tax implications in the hands of Mr. Thomas for the Assessment Year 2020-21 as per Income-tax Act, 1961. (Give brief reasoning)

  1. Interest received from Mr. Marshal, a non-resident outside India (The borrowed fund is used by Mr. Marshal for investing in Indian company’s debt fund for earning interest).
  2. Received ₹ 10 lakhs in Japan from a business enterprise in India for granting license for computer software (not hardware specific).
  3. He is also engaged in the business of running news agency and earned income of ₹ 10 lakhs from collection of news and views in India for transmission outside India.
  4. He entered into an agreement with SKK & Co., a partnership firm for transfer of technical documents and design and for providing services relating thereto, to set up a Denim Jeans manufacturing plant, in Surat (India). He charged ₹ 10 lakhs for these services from SICK & Co. [5 Marks]

Answer:

S.No. Section Taxability Reason
1 9(1)(v) Interest received by Mr. Thomas a non-resident is taxable. Income is deemed to be accrued in India. Borrowed funds are used in Indian company’s debt fund.
2 Proviso to Section 9 Amount is not taxable. Income not accrued in India. Business enterprises is computer software generating.
3 Explana­tion to section 9 Amount is not taxable. Income not accrued in India.
4 9(1)(vii) Income is taxable Income is accrued in India.

(b) Mr. Govind purchased 600 shares of “Y” limited at ₹ 130 per share on 26.02.1979. “Y” limited issued him, 1,200 bonus shares on 20.02.1984. The fair market value of these share at Mumbai Stock Exchange as on 1.04.2001 was ₹ 900 per share and ₹ 2,000 per share as on 31.01.2018. On 31.01.2019 he converted 1000 shares as his stock in trade. The shares was traded at Mumbai Stock Exchange on that date at a high of ₹ 2,200 per share and closed for the day at ₹ 2,100 per share.

On 07.07.2019 Mr. Govind sold all 1800 shares @ ₹ 2,400 per share at Mumbai Stock
Exchange and securities transaction tax was paid.
Compute total income of Mr. Govind for the assessment year 2020-21. [5 Marks]
Answer:
Computation of Total Income of Mr. Govind for the Previous Year 2020-21
(Assessment Year 2021-22)

Particulars Amount Amount
Business Income: Section 45(2)
Gross Sale Proceed 1,000 X 2,400 24,00,000
Less: Conversion Date Value 1,000 X 2,150 21,50,000 2,50,000
Capital Gain:
Gross Sale Proceed 800 X 2,400 19,20,000
Less: Indexed Cost of Acquisition 800X900X301 /100 = 21,67,200 21,67,200
Loss is c/f to next years and can be set off only against LTCG. (2,47,200)
It cannot be set off with business income
Gross Total Income 2,50,000
Less: Deductions under sections 80C to 80U NIL
Total Income 2,50,000

(c) Briefly explain the provisions relating to tax deduction at source on cash with drawal under section 194N of the Income-tax Act, 1961. [4 Marks]

OR
Ms Julie received following amounts during the previous year 2020-21:

(1) Received loan of ₹ 5,00,000 year from the ABC Private Limited, a closely held company engaged in textile business. She is holding 10% of the equity share j capital in the said company. The accumulated profit of the company was ₹ 2,00,000 on the date of the loan.

(2) Received Interest on enhanced compensation of ₹ 5,00,000. Out of this interest, ₹ 1,50,000 relates to the previous year 2017-18, ₹ 1,90,000 relates to previous year 2018-19 and ₹ 1,60,000 relates to previous year 2019-20. She paid ₹ 1 lakh to her advocate for his efforts in the matter. [2+2 Marks]
Discuss the tax implications, if any, arising from these transactions in her hand with reference to Assessment Year 2020-21.

(c) The following are the provisions relating to tax deduction at source on cash withdrawal under section 194N of Income-tax Act, 1961 :

Deductor Bank, Co-operative bank or a post office, who is responsible for paying any sum in cash to an accountholder.
Threshold Limit It is Rs. 1 Crore. However, w.e.f. July 1, 2020, in case of a defaulter, who has not submitted return in past, threshold limit is Rs. 20 lakh.
When Deductible Tax is deductible at the time of payment in Cash.
Rate of TDS Tax is deductible at the rate of 2 per cent of payment (or aggregate payment) in cash exceeding Rs. 1 Crore.

Alternative

(c) Taxability in the hands of Ms. Julie

  1. As per section 2(22)(e), the loan is treated as dividend in the hands of shareholder, to the extent of accumulated profits.
  2. Interest received on enhanced compensation is taxable as income from other sources as per section 57(iv) read with section 56(2)(viii).

Section B

Question 5.
KNK Ltd., a registered supplier of Mumbai is a manufacturer of heavy machines. Its outward supplies (exclusive of GST) for the month of January, 2020 are as follows :

S. No. Particulars Amount (₹)
(i) Inter-state 85,00,000
(ii) Intra-state 15,00,000

Applicable rate of CGST, SGST and IGST on outward supply are 9%, 9% and 18% respectively. Details of GST paid on inward supplies during the month of January, 2020 are as follows:

S. No. Particulars CGST paid (₹) SGST paid
(₹)
(i) Raw materials A
(of which 70% of inputs procured were used and 30% were in stock at the end of the January, 2020)
60,000 60,000
(ii) Raw Materials B
(of which 90% material received in factory and remaining material completely damaged due to a road accident on the way to factory. There was no negligence on the part of the KNK Ltd.)
50,000 50,000
(iii) Construction of pipelines laid outside the factory premises 30,000 30,000
(iv) Insurance Charges paid for trucks used for transportation of goods 55,000 55,000

Additional Information:

(i) There is no opening balance of any Input Tax Credit and all the conditions necessary for availing the Input Tax Credit (ITC) have been fulfilled.
(ii) Details of GST paid on inward supplies are available in GSTR-2A except for item (i) i.e. Raw Material A, for which supplier has not filed its GSTR-1 for the month of January 2020, hence corresponding Input Tax Credit (ITC) is not reflecting in GSTR-2A of KNK Ltd. in January, 2020.

Compute the following:

(i) Amount of eligible Input Tax Credit (ITC) available for the month of January, 2020.
(ii) Net minimum GST payable in Cash, for the month of January, 2020 after using available Input Tax Credit.
Working notes should form part of your answer. [8 Marks]

Answer:

(i) Computation of ITC available for the month of January, 2020
Step-1: Computation of Eligible ITC as per BOOKS of KNK Ltd.

Particulars CGST
(Rs.)
SGST
(Rs.)
(i) Raw Material ‘A’
[For claiming ITC, there is no need to wait till 100% input s arc actually used in production /actually sold]
60,000 60,000
(ii) Raw Material ‘B’
[As per section 17(5)(fe), ITC shall not be available in respect of goods lost or destroyed]
45,000 45,000
(iii) Construction of pipe line outside the factory [It is a blocked credit as per section 17(5)(c)] Nil Nil
(iv) Insurance charges paid for trucks used for trans­portation of goods

[Since ITC is available on trucks, it will be available on amount paid for insurance on trucks also]

55,000 55,000
ITC as per BOOKS 1,60,000 1,60,000

Step-2: Segregation of ITC on the basis of uploading of corresponding GSTR 1 by supplier.

Eligible ITC regarding invoices by supplier CGST
(Rs.)
SGST
(Rs.)
(a) Uploaded [Raw material ‘B’ and insurance charges] 1,00,000 1,00,000
(b) Not uploaded [Raw material ‘A’] 60,000 60,000

Step-3: ITC available for the month
As per Rule 36(4), the ITC in respect of which details have not been uploaded by suppliers in GSTR-1 cannot exceed 10% of eligible credit available in respect of which details have been uploaded.

Particulars CGST
(Rs.)
SGST
(Rs.)
(d) Eligible ITC regarding uploaded invoices 1,00,000 1,00,000
(b) Eligible ITC regarding NOT uploaded invoices

[10% of eligible ITC in respect of which details have been uploaded or such eligible ITC as per books, whichever is less]

6,000 6,000
Eligible ITC available for the month of January 2020

[After application of Rule 36(4)]

1,06,000 1,06,000

(ii) Computation of GST payable in Cash for the month of January, 2020

Particulars IGST (Rs.) CGST (Rs.) SGST (Rs.)
(i) Inter-state Outward supply 85,00,000 @ 18% 15,30,000 Nil Nil
(it) Intra-state Outward supply 15,00,000 @ 9% each for CGST & SGST Nil 1,35,000 1,35,000
GST payable on Outward supplies 15,30,000 1,35,000 1,35,000
Less: ITC available [as per Part (i)] Nil (1,06,000) (1,06,000)
Net GST payable in cash 15,30,000 29,000 29,000

CA Inter Accounts Question Paper Nov 2019

Question 6.
(a) Following are the particulars, relating to one of the machine sold by M/S SQM Ltd. to M/s. ACD Ltd. in the month of February 2020 at List price of ₹ 9,50,000. (Exclusive of taxes and discount) Further, following additional amounts have been charged from M/s ACD Ltd.:

S.No. Particulars Amount (₹)
(i) Municipal taxes chargeable on the machine 45,000
(ii) Outward freight charges (Contract was to deliver machine at ACD Ltd.’s factory- ie. F.O.R. contract) 65,000

Additional information:

(i) M/s SQM Ltd. normally given an interest free credit period of 30 days for payment, after that it charges interest @1% P.M. or part thereof on list price.
ACD Ltd. paid for the supply after 45 days but, M/s SQM Ltd. waived the interest payable.
(ii) M/s SQM Ltd. received ₹ 50,000 as subsidy, from one non-government organi­zation (NGO) on sale of such machine. This subsidy was not linked to the price of machine and also not considered in list price of ₹ 9,50,000.
(iii) M/s ACD Ltd. deducted discount of ₹ 15,000 at the time of final payment, which was not as per agreement.
(iv) M/s SQM Ltd. collected ₹ 9,500 as TCS (Tax Collected at Source) under the provisions of the Income-tax Act, 1961.

Compute the Taxable Value of supply as per provision of GST laws, considering that the price is the sole consideration for the supply and both parties are unrelated to each other.
Note: Correct legal provision should form part of your answer. [6 Marks]
Answer:
Determination of Taxable Value of Supply

Particulars Amount
List price of machine (as given in the question) 9,50,000
Add:    Municipal taxes
[As per section 15(2)(a), such taxes are included]
45,000
Add. Outward freight charges
[As per section 15(2)(c), incidental charges are included]
65,000
Add. Interest charges
[It will not be included, as the supplier has waived]
Nil
Add: Subsidy
[As per section 15(2)(e), any subsidy directly linked to price (ex­cluding subsidies provided by Government) is included. But, in the given case, the subsidy is not linked. So, it will not be included]
Nil
Add: Discount amount
[As per section 15(3), the discount after the time of supply is deductible, if it is in terms of agreement entered before supply. In the given case, it is not as per agreement, so not deductible.
(Nil)
Add: TCS collected by the supplier [TCS under section 206C of
Income-tax Act, 1961 is not includible as it is an interim levy not having the character of tax.]
Nil
Taxable value of supply 10,60,000

(b) In the following independent cases, decide, which person is liable to pay GST, if any.
You may assume that recipient is located in the taxable territory. Ignore the Ag- gregate Turnover and Exemption available.

(i) ‘Veer Transport’, a registered Goods Transport Agency (GTA) paying IGST @12%, transported goods by road of Dilip & Company, a sole proprietary firm (other than specified person) which is not registered under GST or any other Law.

(ii) Mr. Kamal Jain, an unregistered famous author, received ₹ 20 lakhs of consid-eration from PQR Publications Ltd. for supply of services by way of temporary transfer of a copyright covered under section 13(1)(a) of the Copyright Act, 1957 relating to original literary works of his new book. [2+2 Marks]
Answer:

Particulars Person liable to pay Tax
(i) Supply of services by GTA:
Since the GTA is registered and is paying GST @ 12%, it is not covered under Entry 1. Thus, RCM is not applicable.
Supplier (Veer Transport)
(ii) Supply of services by author:
Since author is not registered, it is not covered under Entry 9A. Thus, RCM is applicable.
Recipient

(PQR Publica­tions)

CA Inter Accounts Question Paper Nov 2019

Question 7.
(a) BBD Pvt. Ltd. of Gujarat exclusively manufactures and sells product ‘Z’ which is exempt from GST vide notifications issued under relevant GST legis-lations. The company sells Z’ only within Gujarat and is not registered under GST laws. The turnover of the company in the previous year 2018-19 was ₹ 50 lakh. The company expects the sales to grow by 10 % in the current year 2019-20.

However, effective from 01.01.2020 exemption available on Z’ was withdrawn by the Central Government and GST @ 5% was imposed thereon. The turnover of the company for the nine months ended on 31.12.2019 was ₹ 42 lakh.

BBD Pvt. Ltd. is of opinion that it does not require to get registered under GST for current financial year 2019-20.
Examine the above scenario and advise BBD Pvt. Ltd. whether it needs to get registered under GST or not? [4 Marks]
Answer:
Before 1-1-2020:
BBD Pvt. Ltd. is engaged exclusively in the business of supplying goods which are not 1 liable to GST. It is exempted from registration under section 23 of CGST Act, 2017.

W.e.f. 1-1-2020:
The turnover of the company is Rs. 42 Lakhs since the aggregate turnover exceeds Rs. 40 lakhs, the company is liable to take registration as per section 22(1). Moreover, as per section 25(1), the company should apply for registration within 30 days from the date on which it becomes liable to registration, (i.e. within 30 days from 1-1-2020).

(b) “It is mandatory to furnish the details of conveyance in Part B of E- way Bill.”
Comment on the validity of the above statement with reference to provisions of | E-Way Bill under CGST Rules, 2017. [3 Marks]
Answer:
Given statement is Not valid:
The Explanation 2 to Rule 138(3) stipulates that the e-way bill is valid for movement of goods by road only when the information is Part B is furnished. But, it is not : required, where the goods are transported for a distance of up to 50 Km. within the State/Union territory:

  1. From the place of business of the consignor to the place of business of the transporter for further transportation, or
  2. From the place of business of the transporter finally to the place of business | of the consignee.

(c) “In form GSTR-1, submission of Invoice-wise details of outward supplies is mandatory for all kind of invoices issued during the tax period.”
Comment on the validity of the above statement with reference to GST laws. [3 Marks]
Answer:
Given statement is Not Valid:
The invoice-wise details is required for following:
(a) Inter-state and intra-state supplies made to the registered persons, and
(b) Inter-state supplies made to the registered persons where the invoice value more than Rs. 2.5 lakhs.

CA Inter Accounts Question Paper Nov 2019

Question 8.
(a) Who can impose restrictions on utilization of input tax credit (ITC) avail-able in the electronic credit ledger and under what circumstances can restrictions be imposed under the CGST Rules 2017 ? [5 Marks]
Answer:
Who can impose restrictions on utilization of ITC
As per rule 86A, the following can impose restrictions on utilization of ITC:
(a) Commissioner
(b) An officer authorized by Commissioner in this behalf, not below the rank of an Assistant Commissioner.
Circumstances in which restrictions may be imposed:
As per rule 86A, in the following cases, the restrictions may be imposed:

(i) The credit of ITC has been availed on the basis of tax invoices/debit notes:

(a) issued by registered person who has been found non-existent or not conducting business.
(b) without receipt of goods or services.
(c) in respect of which tax has not been paid to the government.
(d) the registered person is not in possession of tax invoice.

(ii) The registered person availing ITC has been found non-existent or not to be conducting any business from the registered place.

OR

(b) Explain the order of discharge of tax and other dues as per provisions of Section 49(8) of the CGST Act, 2017. [5 Marks]
Answer:
Order of discharge of tax/other dues
As per section 49(8), every taxable person shall discharge his tax and tax dues in following order:
(a) Self-assessed tax and other dues relating to returns of previous tax period.
(b) Self-assessed tax and other dues relating to returns of current tax period.
(c) Any other amount payable under the Act including demand determined under
section 73 or section 74.

(c) With reference to provisions of CGST Act, 2017 discuss in brief, when “Importation of services” to be considered as supply and when it is not to be considered as supply. [5 Marks]
Answer:
The “importation of services” is considered as supply in the following cases:

  1. When services are imported for consideration whether or not in the course or furtherance of business, [section 7(1)(b)]
  2. When services are imported without consideration from a related person or related establishment in the course or furtherance of business.

The “importation of services” is NOT considered as supply if the import of service is without consideration from:

(a) Related person or related establish­ment But not in course or furtherance of business
(b) Unrelated person or related estab­lishment Whether or not in the course or further­ance of business.

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