Tax Book 2023

Chapter 30 Solved Past Papers Income Tax Numericals of ICMAP Stage IV - (2003 to 2018)

Rs.

INCOME FROM BUSINESS

Net profit before tax 700,000

Add: Depreciation on personal car 20,000

Partners drawings (Rs. 100,000 x 2) 200,000

Cash gift not accounted for as deemed income u/s 39 150,000

Unsupported payments 50,000

Penalties for non-observance of good environmental regulations 50,000

470,000

Taxable income 1,170,000

COMPUTATION OF TAX LIABILITY:

The tax liability shall be higher of tax on taxable income or Minimum tax under 153.

Tax on Rs. 1,170,000

Conceptual Approach to Taxes _____825

Tax on Rs. 1,170,000

[10,000 + 12.5% x (1,170,000 - 800,000)] (A) 56,250

Less proportionate tax on receipts covered under minimum

tax liability Rs. 56,250 / 1,170,000 x 1,070,000 (Related to (B) (51,442) 4,808

income from services) (Balance tax related to sale of scrap)

OR

Minimum tax liability u/s 153

Gross receipts 3,000,000

10% of gross receipts (C) 300,000

Hence higher of (B) or (C) is to be added under NTR, hence 300,000

304,808

Less: Tax withheld by corporate clients 300,000

Balance tax payable 4,808

Notes

1. It is assumed that tax depreciation and accounting depreciation are same.


2. Interest on loan and donation have not been accounted for as the same are liability for the
   hospital to construct Special Cancer Ward and return the loan from friend. Assumed both were
   being received through cross cheques otherwise the same shall be treated as income u/s 39.


3. As loss incurred by burning of surgical equipments and by theft was fully insured, hence no gain
   or loss has been considered for the purpose of computation of taxable income.


4. There is no treatment of excess perquisites included in salaries, as this concept is no more

Conceptual Approach to Taxes _____825