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AURO UNIVERSITY

(INDIA)

The School of Management & Entrepreneurship

Master of Business Administration

Module
TAXATION
Semester-IV: Block-7
(2013-15)
Module Leader
CA. Dhaarna Singh Rathore

www.aurouniversity.edu.in
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Introduction
This module is prepared to explore key elements and concepts of the academic discipline of
Taxation. This Module has been designed to give you an overview of Taxation with special
orientation towards Income Tax and relevant provisions applicable to Companies. We will not only
try to go through the provisions of Indian Income Tax Law in depth but also try to get acquainted
with Tax Planning concepts and devices. With some knowledge, care and study, we can legitimately
reduce the Tax burden of our clients or the Company for which we are working or even ourselves!!
Benjamin Franklin identified tax as one of lifes two certainties. Albert Einstein is quoted as
saying, The hardest thing in the world to understand is income tax. Those two comments
provide good reason for us to be acquainted with this subject and break this myth. Knowledge
about the tax system helps students to understand the role of taxation in Indian economy and the
implications for them. It also enables them to become better informed citizens. Thus the primary
focus of this Module is to build an understanding of tax among students.
The aim of this Module is to equip you with relevant skills of this discipline so that you can not only
legitimately reduce the Tax burden of the Company for which you would be working but also
facilitate a Tax-saving strategy for it. The Main Tax Laws which are intended to be covered in this
Module are Income Tax, Value-Added Tax and Service Tax. The module has been designed to
build students knowledge and understanding, comprehension and application of their ideas to
Tax Planning in particularly these areas.
This is a Masters level module. As you should now be aware, the level of the material may well
be higher than anything you have encountered before. Certainly, the pace of the module will be
faster than you are used to. Naturally, this will require considerable work, including, of course,
much reading. This reading will be essential for you to be successful on the module. However, as
always, we think the work will be rewarded by the enjoyment of a stimulating and motivating
pedagogy. Lets make a resolve to keep the Learning process so interesting that the mental block
about presumed complication of Taxation never affects us adversely.
Important note
All elements of this module lecture, seminar exercises, workshops AND Self Study Exercises
will be assessed on a continuous basis through various parameters. If you miss anything, it is
likely that you will not be able to perform in some of the assessments.
If you fail to attend a seminar, or the workshops for whatever reason, your seminar tutor will
NOT give you copies of the hand-outs at a later seminar. Neither will back-copies be issued
during lectures. They would however be available on the VLE. Students who have a valid
reason for having missed a seminar or a workshop can print back copies of hand-outs from the
VLE.
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Contents
Introduction......................................................................................................................................2
Module objectives............................................................................................................................4
Course Prerequisites:.......................................................................................................................5
Student Experience:.........................................................................................................................5
Learning outcomes:.........................................................................................................................5
Semester Plan Synopsis...................................................................................................................6
Recommended Reading List............................................................................................................7
List of websites:...............................................................................................................................7
Assessment:.....................................................................................................................................8
Summary of Assessment Components...........................................................................................10
Weekly Coverage...........................................................................................................................11
Week I............................................................................................................................................11
Week II...........................................................................................................................................12
Week III.........................................................................................................................................13
Week IV.........................................................................................................................................14
Week V...........................................................................................................................................15
Week VI.........................................................................................................................................16
Week VII........................................................................................................................................17
Week VIII.......................................................................................................................................18
Student Assessment of Module......................................................................................................19
A Note on Equal Opportunities......................................................................................................20

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Taxation
Module objectives
The primary objective of the course is to familiarize the students with the basic aspects of
Income Tax, VAT and Service Tax. Although there are a plethora of Tax Laws in our country yet
these three have been chosen so as to be relevant for a student pursuing MBA in Finance
specialisation for application in Industry. The Tax system is undergoing significant changes and
it is my endeavour to provide an updated, contemporary and useful study material which will be
pertinent to Industry. Moreover it is assumed that the student will be well conversant with the
provisions applicable to Individuals and hence we take your knowledge to the next level i.e Tax
planning for Companies.
The specific objectives of this course are

To be aware of basic provisions of Income Tax related to various heads of income


To develop an in depth knowledge of Income Tax related to Taxation of Companies
To take cognizance of various Tax planning devices available to a company to reduce its
tax burden
To know the provisions of Income Tax applicable to Non-residents
To appreciate the reasons of restructuring a business and methods of doing the same.
To have an awareness of various Tax procedures relevant to business.
To have an elementary knowledge of Service Tax and VAT

In order to achieve these goals, and of course to pass this course at Auro University, you are
expected to follow these guidelines:
Obtain knowledge about Taxation, firstly through reading the compulsory core text.
Attend a series of weekly lectures/ seminars, workshops as part of your assessment,
where you will be asked to apply your knowledge and analyze case studies.
Read the Financial Dailies and magazines on a regular basis like Economic Times,
Business Standard, The Hindustan Times, and The Times of India
Devote enough time other than class hours to solve on your own problems and exercises
as recommended by the Module Leader.
Adhere to attendance rules and regulations and pass the various components of internal
assessments which will be conducted from time to time. None of the assessments will be
conducted on any other date or any other reason except those mentioned in this module
handbook.
Contrary to popular belief among students that Taxation is only for CAs, this module tries to
cater to the needs of an MBA student with Finance specialization who would be placed in the
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Industry or become an entrepreneur later. This is a fundamental course in Taxation which is


focused on students learning of Taxation basics and mastering the tax planning tools so that they
can apply it in employment as well as business thereby making their learning experiential and
transformational. The teaching method used for this course would be a combination of lectures
and discussions, numericals and case studies, quizzes and presentations. The main objective
would be to arouse in the learner such a curiosity that he/she asks, analyses and discerns the
information shared by him. Hence the assessments would also be a combination of quizzes and
assignments, Case analysis and presentations.

Course Prerequisites:
The course assumes a working knowledge or understanding of the five heads of Income under
Income Tax as applicable to Individuals.

Student Experience:
Students on this module will experience a range of learning opportunities. These will include
lectures, seminar work, workshops and Case Studies, and they will be able to demonstrate their
engagement with the module through participation in the presentation and discussion sessions.

Learning outcomes:
Knowledge and Understanding
By the end of this module, students should be able to
Demonstrate knowledge of the concepts, principles and rules of taxation of Corporates.
Understand meaning of Assesse, income, residential status, deduction, exemption,
assessment, appeal, revision etc.
Compute income tax from various sources of Income.
Compute income tax for Companies
Disciplinary and Professional
By the end of this module, students should be able to
Recognise tax planning opportunities and recommend appropriate tax strategies for
decision making.
Develop analytical reasoning tools to assess how taxes affect economic decisions for
business related taxpaying entities:
(a) Through the amount and timing of income recognition and deduction.
(b) Related to property transactions that generates recognized, deferred or no taxable
gains or losses.
(c) Related to organisations form decisions.
Communicate tax conclusions in a clear and concise manner to relevant stakeholders.
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Semester Plan Synopsis

Week

II

III

IV

Assignment/
Evaluation/Assessment/
Submission deadline

Topic of the lecture


Law of Income tax in
Brief, Introduction to
Five heads of Income and
Computation of Tax
under each

Workshop / Seminar
Activity

Appreciating the fine line


between Tax planning,
avoidance and evasion.

Definitions: Company,
Indian Company,
Domestic Company,
Report-I and PPT to be put
industrial Company etc.
in VLE dropbox in Week Group Presentation-1
Residential Status and
II 4:00 pm
Tax Incidence
Taxation of Companies
Business Restructuring:
Report-I and PPT to be put
Amalgamation
Group Presentation-2
Demerger
in VLE dropbox in Week
Conversion
III 4:00 pm
Business Tax Procedures:
Advance Payment Report-I and PPT to be put
of Tax
in VLE dropbox in Week Group Presentation-3
TDS/TCS
IV 4:00 pm
Return/Assessment
Income

of

VI

Appeals, Revision and


References
Penalties and Prosecution

VII

Settlement of Cases
Search, Seizure and
Block Assessment

Mid Term Test

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VIII

Service Tax
Value Added Tax

Submission of Report II

Revision

Recommended Reading List and List of Websites


Preferred Text Book for this course would be:
Corporate Tax Planning & Business Tax Procedure by Dr. V.K. Singhania & Dr. Monica
Singhania: Taxmanns 16th Edition.
Some Other books for reference are:
1. Direct Tax- Lal & Vashisht- Pearson Ed. 28 E
2. Vinod Singhania- Students Guide to Income Tax- Taxman Publication
3. How to Deal with VAT- Kul Bushan- Pearson Education/ PHI, 1/e, 2004
4. Income Tax Law & Practice, Mahesh Chandra & Shukla- Pragati
5. Students Handbook on Income Tax, VAT and Service Tax by T. N. Manoharan: Snow white
publication Pvt. Ltd.
6. Corporate Law (Pocket Edition): 26th Edition 2012.
7. Taxmanns Direct Tax Manual: Volume 1 Acts, 2012 42nd Edition.
8. A compendium of advance ruling on Income Tax with commentary, Dr. Girish Ahuja & Dr.
Ravi Gupta.
9. Simplified Approach to Corporate Tax Planning & Management by Dr. Girish Ahuja and Dr.
Ravi Gupta: Bharats 13th Edition.
10. Corporate Tax Planning by Kushal Kumar Agarwal: Atlantic Publishers
11. Corporate Tax Planning by R.N.Lakhotia, Subhash Lakhotia

List of websites:
www.icai.org
www.sebi.gov.in
www.incometaxindia.gov.in
www.mca.gov.in

www.capitaline.com
www.thehindubusinessline.com
www.business-standard.com
www.tmi.com

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You should also keep up to date with business-related current affairs. You are strongly
recommended to check out the business and economics sections of newspapers [Economic
Times, Business Standard, The Hindustan Times, The Times of India] and the Sunday
equivalents. You should also take a regular look at The Economist, Business India, Business
World and the Business Today. If you are systematic, making a note of key articles and,
ideally, building up a file of photocopies, this task should not take more than an hour or so each
week. [You might, for example, set yourself a target of identifying 6 key articles, or two key
topics per week]

Assessment:
Assessments for this course will consist of Formative (50% weightage) as well as Summative
(50% weightage) Components. The formative component will be conducted from time to time on
an internal basis whereas the Summative assessment will be conducted through an End term
Examination.
Students are instructed to work very diligently for these assessments as good performance will
not only help them in scoring good marks but also help them in thorough in-depth understanding
of the subject.
Students are also instructed to make submissions in time. Late submissions will not be accepted
under any circumstances. Students will not be allowed to take a repeat of any assessment under
any circumstances. Module leader reserves the right for allowing any student to submit an
assignment in lieu of any assessment component in extreme medical reasons duly verified by the
Program office.
Formative Assessments:
This will consist of three components:
I)
Report I: This is a Group Assignment. The class will be divided into three groups.
Each group, starting from Week II through Week IV will make a series of
presentations on various devices of Tax Planning with reference to specific business
decisions. The group is expected to cite the provision and sections related to the
specific Tax planning device, explain how the provision helps in reducing tax liability
and quote recent Cases. The group should also submit a Presentation and a Report
in the VLE Dropbox and also discuss the same during the Workshop. This component
will have a weightage of 10%. The purpose of this assessment is to help students
learn to work as a team as well as be able to critique the various Tax Planning
methods.
Following will be the topics of presentation for the various Groups:
Week
Week II

Group
Group I

Topic of Presentation
Tax Planning with reference to:
Location of Business
Nature of Business

Week III

Group II

Week IV

Group III

Form of Organization
Tax Planning with reference to:
Financial Management decisions
Managerial decisions
Employees remuneration
Sale of Scientific research Assets
Receipt of Insurance Compensation
During Liquidation of a company
Tax Planning in respect of:
Non Resident

II)

Mid term test: This will be conducted in Week V at 10:00 am with a duration of 2
hours. It will consist of numerical based questions and will cover the syllabi covered
in Week I to Week IV. It will have a weightage of 20%. The purpose of this
assessment is to help students revise whatever has been covered in class till that date
and identify weak areas so as to be properly prepared for the End term Exam.

III)

Report II: This is also Group Assignment. The class will be divided into two groups.
Group I is expected to prepare a short ready reckoner of VAT. The booklet should
contain following details:
Importance of VAT
Modes of Computation
Administrative Procedures - Kaizad
Group II is expected to prepare a short ready reckoner of Service Tax. The booklet
should contain following details:
Importance of Service Tax
Computation of Service Tax
Payment of Service Tax
Administration of Service Tax - Khushboo
This component will have a weightage of 20%. The purpose of this assessment is to help
students develop an elementary level understanding of these Tax Laws.

Summative Assessment:
This will be conducted through an End term Examination. The duration of the exam will be of 3
hours and it will be conducted out of 100 marks. It will consist of three sections; Section A will
be of 20 marks consisting of short notes; Section B will be a Case study of 20 marks; Section C
will consist of a combination of five numerical and theoretical questions of 20 marks each out of
which the student is expected to answer any three. The coverage for this component will be the
entire syllabi as covered in the class and as mentioned in the Weekly coverage in the Module
handbook. It will have a weightage of 50%. The purpose of this assessment is to ensure that

every student possesses a foundation level knowledge of this subject in order to move to the next
semester.

Summary of Assessment Components


Type of
Assessment
Report I

Due Date
Group I Week II
Group II - Week III
Group III Week IV

Weightage
10%

Mid term Test

Week V

20%

Report II

Week VIII

20%

End Term

Schedule to be
provided by Program
Office

50%

Note:
Groups will be notified by Program Office

Weekly Coverage
Week I
Chapter covered:
Law of Income tax in Brief
Lecture Outline
The first session is an overview of the Income Tax Act. We deliberate upon basic
concepts with special emphasis on Five heads of Income and calculation of Tax liability
for an individual.
Learning Outcome

To know the basic definitions used in Income Tax Act


To understand the concept of Residential status
To understand what are the main five heads of Income
To be able to compute Taxable income and Tax on it under each of the five heads

Week I Workshop/ Seminar


Students will be made aware of various Tax slabs and Tax rates applicable to different assesses
for the Assessment year 2012-13
Students will be acquainted with the website www.taxmanagementindia.com
Readings for Week I
Corporate Tax Planning & Business Tax Procedure by Dr. V.K. Singhania & Dr. Monica
Singhania: Taxmanns 16th Edition.: Ch.1,2

Week II
Topic covered:
Taxation of Companies
Lecture Outline
The second session is an overview of Corporate Tax in India. We deliberate
various types of Companies and computation of Tax payable by the Company
Learning Outcome

To be acquainted with the various types of companies


To identify the residential status of a company
To compute Taxable income of the Company
To compute Taxable income of the Company
To know about Dividend Tax

Week II Workshop
Exhaustive Practice of numericals on Taxation of Companies
Week II Seminar
Students will deliberate on various Tax planning methods that can be used by Companies to
reduce their Tax liability. This Week Gr.1 makes a presentation on Tax planning with reference to
specific business decisions.
Readings for Week II
Corporate Tax Planning & Business Tax Procedure by Dr. V.K. Singhania & Dr. Monica
Singhania: Taxmanns 16th Edition.: Ch.3,4,5

Week III
Topic covered:
Business Restructuring

Lecture Outline
This Session is a beginning towards understanding the way business enterprises
can rearrange their affairs and what will be the tax implications of the same. We discuss
Income Tax Provisions related to Amalgamation, Demerger and Conversion.
Learning Outcome

To understand the reasons for restructuring of Business


To identify the methods of Restructuring
To understand the Tax implications of Amalgamation
To understand the Tax implications of Demerger
To understand the Tax implications of Conversion

Week III Workshop


Exhaustive Practice of numericals on related topics
Week III Seminar
Students will deliberate on various Tax planning methods that can be used by Companies to
reduce their Tax liability. This Week Gr.2 makes a presentation on Tax planning with reference to
a different set of specific business decisions.
Readings for Week III
Corporate Tax Planning & Business Tax Procedure by Dr. V.K. Singhania & Dr. Monica
Singhania: Taxmanns 16th Edition.: Ch.20,21,22

Week IV
Topic covered:
Business Tax Procedures
Lecture Outline

This session is explores various Procedures which Companies need to follow for
proper administration of Income Tax in India. In this session our main thrust will be
Advance Tax and TDS
Learning Outcome

To know when the liability for Advance Tax arises and what are the due dates.
To be aware of the scheme of TDS
To be aware of the scheme of TCS
To know when interest is payable by assesses
To be acquainted with miscellaneous provisions related to Refunds

Week IV Workshop
Student will be given a hands on experience of e-tds returns
Week IV Seminar
Students will deliberate on various Tax planning methods that can be used by Companies to
reduce their Tax liability. This Week Gr.3 makes a presentation on Tax planning with reference to
non residents.
Readings for Week IV
Corporate Tax Planning & Business Tax Procedure by Dr. V.K. Singhania & Dr. Monica
Singhania: Taxmanns 16th Edition.: Ch.26,27,28,29

Week V
Topic covered:
Return/Assessment of Income
Lecture Outline
This is a very important session from the point of view of how Income Tax returns
are filed and how assessment of Income is done.
Learning Outcome

To be acquainted with the various types of Income Tax Returns


To be acquainted with the various types of Assessments
o Self Assessment
o Summary Assessment
o Scrutiny Assessment
o Best Judgement Assessment

Week V Workshop/ Seminar


A mid term exam will be conducted in Week V at 2 p.m. with a duration of 2 hours. It will
consist of numerical based questions and will cover the syllabi covered in Week I to Week IV. It
will have a weightage of 20%. The purpose of this assessment is to help students revise
whatever has been covered in class till that date and identify weak areas so as to be properly
prepared for the End term Exam.
Readings for Week V
Corporate Tax Planning & Business Tax Procedure by Dr. V.K. Singhania & Dr. Monica
Singhania: Taxmanns 16th Edition.: Ch.30

Week VI
Topic covered:
Appeals,Revisions, References
Penalties and Prosecutions
Lecture Outline
This is a session to become aware of the redressal provisions that the Act provides
to the assessees in case they wish to appeal. We shall also discuss acts for which the Law
can penalise or prosecute the assesses.
Learning Outcome

To be acquainted with what is an appeal and who are the appellate authorities
To identify when the assesee should apply to which appellate authorities and how
To discern various penalties under different situations and other judicial norms associated
with the same

Week VI Workshop/ Seminar


A Guest Lecture of eminent Chartered Accountant will be arranged to give practical exposure to
students. Students are expected to make notes of the same as questions based on this Lecture will
be asked in the End term Exam
Readings for Week VI
Corporate Tax Planning & Business Tax Procedure by Dr. V.K. Singhania & Dr. Monica
Singhania: Taxmanns 16th Edition.: Ch.31,32

Week VII
Topic covered:
Settlement of Cases
Search, Seizure and Block Assessment
Lecture Outline
This session represents the culmination of study of the Income Tax Act. We continue with
discussions of the last week and try to understand how Cases are settled and provisions related to
Search, Seizure and Block Assessment.
Learning Outcome

To understand what is a case under Income Tax Act and how to apply for Settlement
To understand the Powers of various Income Tax Authorities with respect to settlement of
Cases
To understand the Powers of various Income Tax Authorities with respect Search and
Seizure

To get acquainted with the scheme of Block Assessment

Week VII Workshop/Seminar


Discussion on latest Case Laws and decisions related to Search and Siezure
Readings for Week II
Corporate Tax Planning & Business Tax Procedure by Dr. V.K. Singhania & Dr. Monica
Singhania: Taxmanns 16th Edition.: Ch.33, 34

Week VIII
Topics covered:
Service Tax
Value Added Tax
Lecture Outline
This session will be carried on in Workshop mode. The Class will be divided into
two groups. One group will deliberate on the nuances of Service Tax and the other on the
nuances of Value Added Tax. They will prepare brief booklets to deliberate on the
provisions of these two tax laws and share their understanding in the Class with the help
of presentations.
Learning Outcome: Service Tax

To be acquainted with the provisions of Service Tax


To understand the features of Service Tax
To understand how service tax is paid
To understand how service tax is administered
To know what are the Taxable services

Learning Outcome: Value Added Tax

To appreciate the importance of VAT


To know the merits and demerits of VAT
To compute VAT
To understand how VAT is administered

Week II Seminar
REVISION/DOUBT CLEARING SESSION
Readings for Week II
Corporate Tax Planning & Business Tax Procedure by Dr. V.K. Singhania & Dr. Monica
Singhania: Taxmanns 16th Edition.: Ch.36, 37

Student Assessment of Module


I hope that you found this module challenging but worthwhile. Each year, the module changes
slightly, in part as I think of ways I can do things better and in part because students suggest
possible improvements. I would appreciate your comments on what I got right and what I could
improve on. I would therefore be grateful if you could anonymously complete the following table,
adding any additional observations you may have on the reverse. A summary of student appraisals
is reported at Field Meetings, attended by student representatives, and I would be happy to provide a
copy to any student who asks for one.
1 = Strongly Agree

2 = Agree

3 = Neither Agree nor Disagree

4 = Disagree

5 = Strongly Disagree
1

MODULE

as a whole:

Was well organised


Had an acceptable workload

Gave me confidence in my understanding of


Financial Accounting
Was relevant to my main field/s of study
Was adequately resourced in terms of learning
support material
Was adequately resourced in terms of
accommodation and physical facilities
The LECTURES:
Were interesting
Were clearly delivered
The SEMINARS:
Were interesting
Were clearly delivered

A Note on Equal Opportunities


Auro University aims within its courses to provide equal access to learning to students from
diverse backgrounds, irrespective of their gender, race, disability, sexual orientation, age, religion
and maturity. If you feel this module is not fulfilling this aim, please take it up with the module
leader, or ask your student representative to do so. Feel free also to comment on this aspect of
the module in the evaluation.