Full computation with Income and Expense account
Problem (Revision Class on pen drive 15 golden hours) ID - 03
Ms. Purvi aged 55 years, is a Chartered Accountant in practice. She maintains her accounts on cash basis. Her Income and Expenditure account for the year reads as follows:
Expenditure | | Income | |
| | Fees earned: | |
Salary to staff | 15,50,000 | Audit | 27,88,000 |
Stipend to articled assistants | 1,37,000 | Taxation services | 12,70,000 |
Incentive to articled assistants | 13,000 | Consultancy | 15,40,300 |
Office rent for 12 months paid to ABC limited | 12,24,000 | Dividend on shares of Indian companies (Gross) | 10,524 |
Printing and stationery | 12,22,000 | Income from UTI | 7,600 |
Meeting, seminar and Conference | 31,600 | Rent received from residential flat let out | 85,600 |
Purchase of car | 80,000 | Honorarium received from various institutions for valuation of answer papers and other incomes. | 15,800 |
Repair, maintenance and petrol of car | 4,000 | | |
Travelling expenses | 5,25,000 | | |
Municipal tax paid in respect of house property | 3,000 | | |
Net Profit | 9,28,224 | | |
Total | 57,17,824 | Total | 57,17,824 |
Other Information:
Allowable rate of depreciation on motor car is 15%.
Value of benefits received from clients during the course of profession is 10,500.
Incentives to articled assistants represent amount paid to two articled assistants for passing IPCC Examination at first attempt.
Repairs and maintenance of car include 2,000 for the period of 12 months from 1.10.
Salary include 30,000 to a computer specialist in cash for assisting Ms. Purvi in one professional assignment.
The travelling expenses include expenditure incurred on foreign tour of 32,000 which was within the RBI norms.
Medical Insurance Premium on the health of dependent brother and major son dependent on her amounts to 5,000 and 10,000, respectively, paid in cash.
She invested an amount of 10,000 in National Saving Certificate.
On 01-07 she has paid in cash to Mr. Gimmy 12,000 for his outstanding stationery bill of 2 years back.
She has received loan by account payee cheque of Rs. 25,000 from ABC private limited in which she is holding 25 % of shares.
Honorarium includes 3,000 Remuneration from ADAL Ltd on account of directors sitting fees. She is director in the company.
Her total gross receipts from profession in preceding financial year was 18,50,000
You are required to
Compute the total income and tax payable.
Advise her as to how much tax should be deducted out of payment to ABC limited.
She is desirous to file return of income as per 44ADA, and seeking your advise for the same.
Required to advise ADAL ltd on the tax to be deducted at source.
Full computation with Summary Adjustments
Problem (Revision Class on pen drive 15 golden hours) ID - 04
Mr Y carries on his own business. His turnover in the business is 60 lakhs during the preceding financial year. An analysis of his trading and profit & loss for the year revealed the following information:
The net profit was 11,20,000.
The following incomes were credited in the profit and loss account
Dividend from UTI - 22,000.
Interest on debentures - 17,500.
Winnings from races - 15,000.
It was found that some stocks were omitted to be included in both the opening and closing stocks, the value of which were
Opening stock 8,000.
Closing stock 12,000.
1,00,000 was debited in the profit and loss account, being contribution to a University approved and notified under section 35(1)(ii).
Salary includes 20,000 paid to his brother which is unreasonable to the extent of 2,500.
Advertisement expenses include 15 gift packets of dry fruits costing 1,000 per packet presented to important customers.
Total expenses on car was 78,000. The car was used both for business and personal purposes ¾ is for business purposes.
Miscellaneous expenses included 30,000 paid to A &Co., a goods transport operator in cash on 31.1. for distribution of the company’s product to the warehouses.
Depreciation debited in the books was 55,000. Depreciation allowed as per Income-tax Rates, 1962 was 50,000.
Drawings 10,000.
Investment in NSC 15,000.
Rs. 20,000 was paid as professional fees to Koymoto Inc a Foreign company incorporated in Netherlands without the tax deduction at source.
During the year he travelled to Singapore for a week long business trip. He has recorded expense of 17,000 in books of accounts. However assessing officer considers 35,000 as reasonable expense.
Compute the total income tax liability.
