CA Intermediate Udesh January 2025 Group 1

Practice Test - 13 DATE: 14/07/2024

Taxation
All Questions are Compulsory.
Wherever necessary suitable assumptions may be made and disclosed by way of a note.
Working Notes should form part of the answer.

OBJECTIVE
1. Mr. Vyas, aged 80, is a retired government employee. On 1St April 2023, he received the maturity amount of his LIC
policy amounting to Rs. 3,50,000. This policy was taken by Mr. Vyas on 1st April 2016 on which the sum assured
was Rs. 3,00,000 and the annual premium was Rs. 40,000. His other income comprised of pension amounting to Rs.
85,000. Mr. Vyas furnishes a declaration in Form 15H for non-deduction of tax at source to the insurance company
stating that his net tax liability for the year is NIL. Choose the correct statement from below:
(2 Marks)
(1) The declaration made by Mr. Vyas is wrong and the insurance company has to deduct tax of Rs. 3,500 under
section 194DA
(2) The claim by Vyas is right and insurance company is not required to deduct tax at source
(3) The insurance company has to deduct tax under section 194DA since declaration in Form 15H cannot be made
for tax deduction under section 194DA
(4) The declaration made by Mr. Vyas is wrong and the insurance company has to deduct tax of Rs. 1,000 under
section 194DA

2. Mr. Nihar maintains a savings A/c and a current A/c in Mera Bank Ltd. The details of withdrawals on various dates
during the previous year 2023-24 are as follows:
Date of Cash withdrawal Saving Account Current Account
05.04.2023 15,00,000 –
10.05.2023 – 22,00,000
25.06.2023 20,00,000 –
17.07.2023 – 5,00,000
28.10.2023 35,00,000 –
10.11.2023 – 38,00,000
12.12.2023 25,00,000 –
Mr. Nihar regularly files his return of income. Is Mera Bank Limited required to deduct tax at source on the
withdrawals made by Mr. Nihar during the previous year 2023-24? If yes, what would the amount of tax deducted at
source?
(2 Marks)
(1) TDS of Rs. 3,20,000 is required to be deducted
(2) No, TDS is not required to be deducted as the cash withdrawal does not exceed Rs. 1 crore neither in saving
account nor in current account
(3) TDS of Rs. 3,00,000 is required to be deducted
(4) TDS of Rs. 1,20,000 is required to be deducted
3. Mr. X, a resident, is due to receive Rs. 6 lakhs on 31.3.2024, towards maturity proceeds of LIC policy taken on
1.4.2021, for which the sum assured is Rs. 5 lakhs and the annual premium is Rs. 1,50,000. Mr. Z, a resident, is due
to receive Rs. 99,000 on 1.10.2023 towards maturity proceeds of LIC policy taken on 1.10.2015 for which the sum
assured is Rs. 90,000 and the annual premium is Rs. 10,000.
(2 Marks)
(1) Tax is required to be deducted on income comprised in maturity proceeds payable to Mr. X and Mr. Z
(2) Tax is required to be deducted on income comprised in maturity proceeds payable to Mr. X
(3) Tax is required to be deducted on income comprised in maturity proceeds payable to Mr. Z
(4) No tax is required to be deducted on income comprised in maturity proceeds payable to either Mr. X or Mr. Z

4. The benefit of payment of advance tax in one installment on or before 15th March is available to assessees computing
profits on presumptive basis:
(2 Marks)
(1) only under section 44AD
(2) under section 44AD and 44ADA
(3) under section 44AD and 44AE
(4) under section 44AD, 44ADA and 44AE

5. What is the rate of TCS applicable under section 206C (1C) in case of Leasing or Licensing or transferring any right
or interest in any Mine or Quarry.
(1 Mark)
(1) 2%
(2) 1%
(3) 5%
(4) 3%

6. Mr. Raj (a non-resident and aged 65 years) is a retired person, earning rental income of Rs. 40,000 per month from a
property located in Delhi. He is residing in Canada. Apart from rental income, he does not have any other source of
income. Is he liable to pay advance tax in India? Assume that he pays tax under the default regime u/s 115BAC.
(2 Marks)
(1) Yes, he is liable to pay advance tax in India as he is a non-resident and is not eligible for rebate under section
87A
(2) No, he is not liable to pay advance tax in India as his tax liability in India is less than Rs. 10,000
(3) No, he is not liable to pay advance tax in India as he has no income chargeable under the head Profits and gains
of business or profession and he is of the age of 65 years
(4) Both (b) and (c)

7. Mr. Jha, an employee of FX Ltd, attained 60 years of age on 15.05.2023. He is resident in India during F.Y. 2023-24
and earned salary income of Rs. 5 lakhs (computed). During the year, he earned Rs. 7 lakhs from winning of lotteries.
What shall be his advance tax liability for A.Y. 2024-25, if all tax deductible at source has been duly deducted and
remitted to the credit of Central Government on time? Assume that he pays tax under the default regime u/s 115BAC.
(2 Marks)
(1) Rs. 2,20,000 + Cess Rs. 8,800 Rs. 2,28,800, being the tax payable on total income of Rs. 12 lakhs
(2) Rs. 2,10,000 + Cess Rs. 8,400 Rs. 2,18,400, being the tax payable on lottery income of Rs. 7 lakhs
(3) Rs. 10,000 + Cess Rs. 8,800 = Rs. 18,800, being the net tax payable on salary income
(4) Nil
8. Mr. Ram acquired a house property at Chennai from Mr. Satyam, a resident, for a consideration of Rs. 85 lakhs, on
23.8.2023. On the same day, Mr. Ram made two separate transactions, thereby acquiring an urban plot in Gwalior
from Mr. Vipun, a resident, for a sum of Rs. 50 lakhs and rural agricultural land from Mr. Danish, a resident, for a
consideration of Rs. 75 lakhs. Which of the following statements are correct assuming that in the consideration
amounts as aforementioned all the charges incidental to transfer of the immovable property are included and there is
no difference between the stamp duty value and actual consideration?
(2 Marks)
(1) No tax deduction at source is required in respect of any of the three payments.
(2) TDS@1% is attracted on all the three payments.
(3) TDS@1% on Rs. 85 lakhs and Rs. 50 lakhs are attracted. No TDS on payment of Rs. 75 lakhs for acquisition of
rural agricultural land.
(4) TDS@1% on Rs. 85 lakhs is attracted. No TDS on payments of Rs. 50 lakhs and Rs. 75 lakhs.
 SUBJECTIVE
1. Briefly discuss the provisions of tax deducted at source and compute the amount of TDS under the Income-tax Act
in respect of the following payments:
(i) 58,000 paid to Mr. Z, a resident individual as interest income on compensation awarded by Car Accidents Claims
Tribunal by a transport company.
(ii) Ms. Desha deposited 35,00,000 @10% p.a. on 1.7.2021 with XYZ Co-operative bank limited.
(iii) Mr. Naresh won 15,00,000 in Kon Banega Crorepati
(iv) Mr. Deepak deposited 2,00,000 @11% p.a. on 1.5.2021 for half year with Hike Investment LLP
(8 Marks)

2. Examine & explain the TDS implications in the following cases along with reasons thereof, assuming that the
deductees are residents and having a PAN which they have duly furnished to the respective deductors.
1. Radha Limited is engaged for Shyam Limited only in the business of operation of call centre. On 18/03/2024,
the total amount credited by Shyam Limited in the ledger account of Radha Limited is ₹ 70,000 regarding service
charges of call centre. The amount is paid through cheque on 28/03/2024 by Shyam Ltd.
2. An insurance company paid ₹ 45,000 as insurance commission to its agent, Mr Abhijeet
3. Gupta & Co (firm), engaged in wholesale business, assigned a contract for construction of its godown building
to Mr The firm paid an aggregate amount of ₹ 10,00,000 to Mr Ravi during the year.
4. Y & Co, engaged in real estate business, conducted a lucky dip and gave a Maruti Car worth ₹ 5,00,000 to the
prize winner.
5. An advertisement company paid ₹ 5,00,000 to a cricketer, Mr Peter of England, for working in an advertisement
film.
(10 Marks)

3. Ms Priya, aged 61 years, has total income of ₹ 7,50,000, including income from profession, for AY 2024-25, and has
paid advance tax of ₹ 10,000 on 13.12.2023. She has filed her return of income on 15.06.2024. Calculate the
selfassessment tax payable and the interest thereon u/s 234A, 234B and 234C, if any, by Ms Priya.
(4 Marks)

4. What are the clarifications given by CBDT with respect to section 206C(1F) relating to following issues:
 Whether TCS on sale of motor vehicle is applicable only to luxury car?
 Whether TCS is applicable on each sale or aggregate value of sale of motor vehicle, exceeding Rs 10 lakhs?
 Whether TCS is applicable in case of an individual?
 Whether TCS on sale of motor vehicle is at retail level also or only by manufacturer to distributor or dealer?
(8 Marks)

5. Compute the amount of tax deduction at source on the following payments madeby M/s. S Ltd. during the financial
year 2023-24 as per the provisions of the Income-tax Act, 1961.
Sr. No. Date Nature of Payment
(i) 1-10-2023 Payment of ₹ 2,00,000 to Mr. R, a transporter who owns 8 goods carriages throughout
the previous year and furnishes a declaration to this effect along with his PAN.
(ii) 1-11-2023 Payment of fee for technical services of ₹ 25,000 and Royalty of ₹ 20,000 to Mr. Shyam
who is having PAN.
(iii) 30-06-2023 Payment of ₹ 25,000 to M/s X Ltd. for repair of building.
(iv) 01-01-2024 Payment of ₹ 2,00,000 made to Mr. A for purchase of diaries made according to
specifications of M/s S Ltd. However, no material was supplied for such diaries to Mr.A
by M/s S Ltd or its associates.
(v) 01-01-2024 Payment of ₹ 2,30,000 made to Mr. Bharat for compulsory acquisition of his house as
per law of the State Government.
(5 Marks)
 Goods and Services Tax

OBJECTIVE
1. Presently,_______ is leviable on ______ of natural gas.
(i) GST; supply
(ii) Central excise duty; manufacture/production
(iii) Central sales tax; inter-State sale
(iv) Value Added Tax; intra-State sale
(v) State excise duty; manufacture Choose the most appropriate option.
(2 Marks)
(1) (ii), (iii) and (iv)
(2) (i)
(3) (i) and (ii)
(4) (i) and (v)

2. _______ of the total number of Members of the GST Council shall constitute the quorum at its meetings
(1 Mark)
(1) One-half
(2) One-third
(3) One-fourth
(4) Two-third

3. Mr. Shyam and Mr. Ram are two brothers running a business of supplying lubricants located in the State of Gujarat
in their company, M/s. Tata Lubricants (P) Ltd. On the death of their respected father, the two brothers have divided
their business.
However, they have signed an agreement that Mr. Ram will not enter into the business of supplying lubricants similar
to the business done by M/s. Tata Lubricants (P) Ltd. run by Mr. Shyam, for which Mr. Shyam will pay him Rs. 2.5
crores as a lump sum payment.
State whether transaction entered through the above agreement constitutes supply under CGST Act, 2017 or not.
(2 Marks)
(1) Yes, supply of goods by Mr. Shyam.
(2) Yes, supply of goods by Mr. Ram.
(3) Yes, supply of services by Mr. Shyam.
(4) Yes, supply of services by Mr. Ram.

4. Which of the following activities are not treated as supply even if made without consideration?
(1 Mark)
(1) Permanent transfer or disposal of business assets where ITC has been availed of such assets.
(2) Supply of goods by a principal to his agent where the agent undertakes to supply such goods on behalf of the
principal.
(3) Import of services by a person from a related person outside India for his personal use.
(4) Supply of goods between related persons made in the course or furtherance of business.
5. Which of the following activities is a supply of services?
(i) Transfer of right in goods/ undivided share in goods without transfer of title in goods
(ii) Transfer of title in goods
(iii) Transfer of title in goods under an agreement which stipulates that property shall pass at a future date upon
payment of full consideration as agreed.
(2 Marks)
(1) (i)
(2) (iii)
(3) (i) and (iii)
(4) (i), (ii) and (iii)

6. The director of M/s. Carrier Ltd. provided premises to it at a monthly rental of Rs. 2,50,000 which is registered as
principal place of business (from where its carries out business operations).
M/s. Carrier Ltd. wants to understand whether the monthly rental of Rs. 2,50,000 should be termed as 'transaction
value' for determination of value of supply.
Will answer differ if premises is provided by independent supplier ie. M/s. Kalp Ltd.
(2 Marks)
(1) No, Yes.
(2) Yes, Yes
(3) Yes, No
(4) No, No

7. M/s. Gemini Exports has sold scrap amounting to Rs. 3,84,000 excluding Tax collected at Source @ 1% under Income
Tax Act, 1961. The scrap was transported to the place of business of the recipient for which M/s. Gemini Exports
charged additional Rs. 5,100 as transportation charges.
All the given amounts are exclusive of GST.
Determine the value of supply.
(2 Marks)
(1) Rs. 3,84,000
(2) Rs. 3,89,940
(3) Rs. 3,89,100
(4) Rs. 3,82,260

8. Assuming that all the activities given below are undertaken for a consideration, state which of the following is not a
supply of service?
(1 Mark)
(1) Renting of commercial office complex
(2) An employee agreeing to not work for the competitor organization after leaving the current employment
(3) Repairing of mobile phone
(4) Provision of services by an employee to the employer in the course of employment

9. CGST and UTGST is leviable in case the supply of goods takes place within:
(1 Mark)
(1) Delhi
(2) Puducherry
(3) Jammu and Kashmir
(4) Lakshadweep

10. Which of the following are not included in the value of supply in terms of section 15 of the CGST Act, 2017?
(1 Mark)
(1) CGST, SGST, UTGST, GST Compensation Cess
(2) Commission and packing charges
(3) Interest for delayed payment of consideration
(4) Payments made to third parties by the recipient on behalf of the supplier in relation to the supply
 SUBJECTIVE
1. State the person liable to pay GST in the following independent services provided:
(i) Siddhi Builders, registered in Haryana, rented out 20 residential units owned by it in Sanskriti Society to Rudra
Technologies, an IT based firm registered in the State of Haryana, for accommodation of its employees.
(ii) M/s. Puranik Consultants, a partnership firm registered in Delhi as a regular tax payer, paid sponsorship fees
of Rs 70,000 at a seminar organized by a private NGO (a partnership firm) in Delhi.
(5 Marks)

2. Determine whether the following supplies amount to composite supply as per CGST Act:
(i) A bike dealer sells a brand-new bike along with registration, insurance and 1 year free maintenance services.
(ii) A Mobile company has offered the scheme of free charger along with the mobile phone.
(5 Marks)

3. Green Agro Services, a registered person provides the following information relating to its activities during the month
of February, 2023:

Gross Receipts from Amt (Rs.)

Services relating to rearing of sheeps 6,00,000
Services by way of artificial insemination of horses 4,00,000
Processing of sugarcane into jaggery 8,00,000
Milling of paddy into rice 7,50,000
Services by way of fumigation in a warehouse of agricultural produce 1,80,000
All the above receipts are exclusive of GST.
Compute the value of taxable supplies under GST laws for the month of February, 2023.
(5 Marks)

4. Which are the commodities which have been kept outside the purview of GST?
(5 Marks)

5. Enumerate the deficiencies of the existing indirect taxes which led to the need for ushering into the GST regime.
(5 Marks)

6. "Exchange is a form of supply of goods or services or both, made or agreed to be made for a consideration by a
person in the course or furtherance of business." — Explain it with the help of an example.
(5 Marks)

7. Zeel Ltd., a registered supplier, sold a machine to Parel Ltd. It provides the following information in this regard: -

S. Particulars Amount (Rs)

No.
(i) Price of the machine [excluding taxes and other charges mentioned at S. Nos. (ii) and (iii)] 20,000
(ii) Third party inspection charges [Such charges were payable by Zeel Ltd. but the same have been 6,000
directly paid by Parel Ltd. to the inspection agency. These charges were not recorded in the
invoice issued by Zeel Ltd.]
(iii) Freight charges for delivery of the machine 1,000
[Zeel Ltd. has agreed to deliver the goods at Parel Ltd.’s premises]
(iv) Subsidy received from the State Government on sale of machine under Skill Development 5,000
Programme [Subsidy is directly linked to the price]
(v) Discount of 2% is offered to Parel Ltd. on the price mentioned at S. No. (i) above and recorded
in the invoice

Note: Price of the machine is net of the subsidy received.

Determine the value of taxable supply made by Zeel Ltd. to Parel Ltd.
(5 Marks)
 ADVANCED ACCOUNTING
Question 1(i to iv) Carry 1 Mark

1.(i). Which of the following item does the statement (iii). An asset can be recognized as per AS 26 if the value
below describe? of the asset can be measured:-
(1) Reliably
“A possible obligation that arises from past events
(2) Accurately
and whose existence will be confirmed only by the (3) Probably
occurrence or non-occurrence of one or more (4) None of the above
uncertain future events not wholly within the
entity's control” (iv). What are intangible assets?
(1) A provision (1) Monetary assets with physical substance
(2) 'Non-monetary assets without physical
(2) A current liability
substance
(3) A contingent liability (3) Non-monetary assets with physical substance
(4) Deferred tax liability (4) Monetary assets without physical substance

(ii). An onerous contract is a contract in which

__________ of meeting the obligations under the
contract __________ the economic benefits
expected to be received under it.
(1) Unavoidable costs; are less than
(2) Unavoidable costs; exceed
(3) Avoidable costs; exceed
(4) Avoidable costs; are less than
 Subjective Question

2. The Accountant of Mobile Limited has sought your opinion with relevant reasons, whether the following transactions
will be treated as change in Accounting Policy or not for the year ended 31st March, 2023. Please advise him in the
following situations in accordance with the provisions of relevant AS;
(a) Provision for doubtful debts was created @ 2% till 31st March, 2012. From the Financial year 2022-2013, the
rate of provision has been changed to 3%.
(b) During the year ended 31st March, 2023, the management has introduced a formal gratuity scheme in place of
ad-hoc ex-gratia payments to employees on retirement.
(c) Till the previous year the furniture was depreciated on straight line basis over a period of 5 years. From current
year, the useful life of furniture has been changed to 3 years.
(d) Management decided to pay pension to those employees who have retired after completing 5 years of service in
the organization. Such employees will get pension of Rs. 20,000 per month. Earlier there was no such scheme
of pension in the organization.
(e) During the year ended 31st March, 2023, there was change in cost formula in measuring the cost of inventories
(5 Marks)

3. M/s Ravi Constructions undertook the construction of a highway on 01.04.2022. The contract was to be completed
in 2 years. The contract price was estimated at Rs. 300 crores. Up to 31.03.2023 the company incurred Rs. 240 crores
on the construction. The engineers involved in the project estimated that a further Rs. 90 crores would be incurred for
completing the work. What amount should be charged to revenue for the year 2022-23 as per the provisions of AS 7
"Construction Contracts"? Show the extract of Profit & Loss A/c in the books of M/s. Ravi Constructions.
(4 Marks)

4. Ravi Ltd. contracted with a supplier to purchase machinery which is to be installed in its Department A in three
months' time. Special foundations were required for the machinery which were to be prepared within this supply lead
time. The cost of the site preparation and laying foundations were Rs. 1,24,230. These activities were supervised by
a technician during the entire period, who is employed for this purpose of Rs. 35,000 per month. The technician's
services were given by Department B to Department A, which billed the services at Rs. 38,500 per month after adding
10% profit margin.
The machine was purchased at Rs. 1,58,34,000 inclusive of IGST @ 12% for which input credit is available to Ravi
Ltd. Rs. 45,770 transportation charges were incurred to bring the machine to the factory site. An Architect was
appointed at a fee of Rs. 25,000 to supervise machinery installation at the factory site.
Ascertain the amount at which the Machinery should be capitalized under AS 10 considering that IGST credit is
availed by the Ravi Limited. Internally booked profits should be eliminated in arriving at the cost of machine.
(4 Marks)

5. The financial statements of PQ Ltd. for the year 2017- 18 approved by the Board of Directors on 15th July, 2018. The
following information was provided:
(i) A suit against the company's advertisement was filed by a party on 20th April, 2018, claiming damages of Rs.
25 lakhs.
(ii) The terms & conditions for acquisition of business of another company have been decided by Mar,2018. But
financial resources were arranged in April, 2018 & amount invested was 50 lakhs
(iii) Theft of cash of Rs. 5 lakhs by the cashier on 31st March, 2018 but was detected on 16th July, 2018.
(iv) Company sent a proposal to sell an immovable property for Rs. 40 lakhs in March, 2018. The book value of the
property was Rs. 30 lakhs on 31st March, 2018. However, the deed was registered on 15th April, 2018.
(v) A, major fire has damaged the assets in a factory on 5th April, 2018. However, the assets are fully insured.
With reference to AS-4 "Contingencies and events occurring after the balance sheet date", state whether the above
mentioned events will be treated as contingencies, adjusting events or nonadjusting events occurring after the balance
sheet date.
(5 Marks)

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