CS Executive Tax Laws Suggested Answers-1

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New Syllabus Paper Code -424

Time Allowed : 3 Hrs Maximum Marks : 100
No. of Questions :6 Test Date : 04-06-2019
CS-Executive (June 2019) Examination

Test Paper with Solutions
TAX LAW
Answer All qustions.
PART – I
Q.1
(a) Ramamoorthy, an employee of M/s. Gopal krishan & Co. of Chennai receives following
payments during the previous year ended March 31, 2019.
Particualrs (`) (`)

Basic Salary 40,000
Dearness Pay 3,000
Leave Salary 5,400
Professional tax paid by the employer 1,000

Fair rent of the flat provided by the employer 6,000
Rent paid for furniture 1,000
Rent recovered by the employer 3,000
Contribution to Statutory Provident Fund 4,000
Employer's Contribution to Statutory Provident Fund 4,000
Donation to a local temple 50,000
Compute his taxable income for the assessment year 2019-2020.

(4 Marks)
` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 1

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Sol. Computation of Total Income of Ramamoorthy
For assessment year 2019-20
Particulars `
Basic Salary 40,000
Dearness pay 3,000
Leave salary 5,400
Professional tax paid by employer 1,000
Concessional Rent accommodation 5,260
Employer’s contribution to SPF -
Gross Salary 54,660
Deduction u/s 16
(i) Standard deduction 40,000
(ii) Professional Tax 1,000
13,660
Less: Contribution to SPF 4,000
Total Income 9,660
Working Note:
It is assumed that population of Chennai is more than 25 lakhs.
Value = 15% of salary
15% [40,000 + 3,000 + 5,400] = 7,260
Add: Furniture value 1,000
8,260
Less: Rent recovered 3,000
5,260
Q.1 (b) M & Sons., a Hindu Undivided Family (HUF), had purchased a land for INR 1,50,000in
2002-03. In the previous year (PY) 2006-07, a partition takes place and the coparcener,
B, gets this plot valued at INR 200,000. In PY 2007-08 he incurs expenses of INR
2,50,000 on the plot towards fencing of the plot of land. B then sells this plot at INR
15,00,000/- in PY 20018-19. You are required to compute the capital gains for
Assessment Year (AY) 2019-20.
Cost Inflation Index (CII) 2002-03-105, 2007-08-129 & 2019-20-280
(4 Marks)
Sol. Computation of capital gain
Sales consideration ` 15,00,000
(-) Transfer Exp. -
Net sales consideration ` 15,00,000
(-) Index cost of Acquisition
280
1,50,000 × ` 4,00,000
105
(-) Index cost of improvement
280
2,50,000 × ` 5,42,636
129
Long term capital gain ` 5,57,364

th
Q.1 (c) A domestic company purchased its own unlisted shares on 20 August 2018 for a
total consideration of INR-30,00,000 which was paid on the same day. The company
has issued the same share 2 years ago for 15,00,000. Compute the tax liability of the
company if the tax on buy-back was deposited by the company to the credit of
th
Central Government on 15 February 2019.
(4 Marks)
Sol. As per provision of Sec 115QA with regard to the Buyback of shares.
(i) Tax payable is to be paid by company.
(ii) Tax rate 20% (surcharge 12% + Cess 4%)of distributable income.
(iii) Tax is payable on the difference amount.
In question
Buy back 30 Lac
Issue 15 Lac
Difference = 15 Lac
Tax payable = 15 Lac × 23.296%
= ` 3,49,395
Q.1 (d) Discuss giving reason regarding admissibility or otherwise of the following
expenditures while computing income under the head Income from Business or
Profession :
(i) Expenses incurred in connection with a branch, the business of which was
discontinued during the previous year.
(ii) Penalty paid to customs authorities for importing prohibited goods which
gave a huge profit to the business.
(iii) Interest paid on an amount borrowed to acquire a plant for business use upto
the date on which the plant is put to use.
(iv) Rent paid on daughter of the assessee for her building used as office
premises of the business. The building was actually gifted to her by the
assessee (father) at the time of her marriage.
(You need not rewrite the statements. Write only admissible / Not admissible with
reasons)
(4 Marks)
Sol. (i) It is admissible expenditure
(ii) Penalty paid for illegal activities of the assesse are not to be allowed as expenditure
under the Income tax Act.
(iii) Interest paid upto assets put to use is not allowed as revenue expenditure it will be
part of cost of assets.
(iv) It is admissible expenditure because building is using as office premises.

Q.1 (e) Manish Garg a non-resident during AY 2018-19. came back to India on 16th July,2018
for settling in India permanently. Now, for the Financial Year 2018-19 his status is
resident and ordinary resident of India for tax purposes. He has reported his income
from various sources as under the Financial Year 2018-19.
Salary received and earned in USA from 1-4-2018 to `
15-7-2018 (Gross) 12,60,000
Salary earned and received in India (computed) 8,47,000
Dividend from Indian Company received in India 12,000
Rent received in USA for a property situated in USA 4,50,000
Calculate his gross taxable income for the assessment year 2019-20.
Which disclosures he is required to give in out of above given information's in the
return form for A.Y. 2019-20.
(4 Marks)
Sol. Calculation of Gross total income of Manish Garg

For assessment year 2019
Salary received and earned in USA 12,60,000
Salary earned and received in India 8,47,000
Dividend from Indian company Exempt
Rent from USA property (4,50,000 – 30% std. deduction) 3,15,000
Gross Total Income 24,22,000
Attempt all parts of either Q. No. 2 or Q. No. 2A

Q.2 (a) Y acquired a house from his father by way of gift on 5th May 2005. On this day its Fair
Market Value (FMV) was 4,20,000. His father had purchased the house in the year
2002-03 for 2,50,000. Y introduced the house as his capital contribution on 5th May,
2018 to a partnership firm in which he became a partner on that date.
The fair market value of the house on 5th May, 2018 was ` 20,00,000, but it was taken
in the books of accounts of the firm at ` 16,00,000. Compute the amount of capital
gain taxable in the hands of Y, if any, for the AY 2019-20. Cost Inflation Index (CII) for
the year 2002-03-105, 2018-19-280.
(3 Marks)
Sol. Calculation of Capital Gain
Sales Consideration ` 16,00,000
(-) Transfer Exp. ---
Net sales consideration ` 16,00,000
(-) Index Cost of Acquisition
280
2,50,000 × ` 6,66,666
105
Long term capital gain 93,3334

Q.2 (b) "The income earned by an assessee in a previous year is assessable for tax in the
assessment year. There is no exception to it". Comment.
(3 Marks)
Sol. INSTANCES WHERE INCOME OF PREVIOUS IS ASSESSED IN THE SAME YEAR

[SECTIONS 172 TO 176]
(1) Sec.172 - Shipping business of a non-resident: Where a ship belonging to or chartered
by a non-resident carrying passengers, livestock, mail or goods is shipped at a port in India,
the ship is allowed to leave the port only if the tax due thereon has been paid or satisfactory
arrangements have been made for payment thereof.
(2) Sec.174 - Persons leaving India: When it appears to the Assessing Officer that any
individual may leave India during an assessment year or shortly after its expiry and he has
no present intention of returning to India.
(3) Sec.174A - Assessment of AOP / BOI or artificial juridical person formed for a
particular event or purpose: Where it appears to the Assessing officer that any
association of persons or body of individuals or an artificial juridical person formed for a
particular event or purpose is likely to be dissolved in the assessment year in which such
AOP/BOI was formed or immediately after such assessment year.
(4) Sec.175 - Persons likely to transfer property to avoid tax: During any current
assessment year if it appears to the Assessing Officer that a person is likely to charge, sell,
transfer, dispose off or part with any of his assets to avoid payment of any liability under the
Act.
(5) Sec.176 - Discontinued business or profession:
(i) This section applies where any business or profession is discontinued in any
assessment year.
(ii) The total income from 1st April of that assessment year upto the date of
discontinuance shall be taxable in the year of discontinuance at the discretion of
Assessing Officer.
Q.2 (c) When will you consider a foreign company as a resident company in India ?
(3 Marks)
Sol. RESIDENTIAL STATUS OF A COMPANY [SEC. 6(3)] :
A company is said to be resident in India in any previous year, if,
(i) it is an Indian company; or
(ii) its place of effective management, in that year, is in India.
Explanation - For the purposes of this clause "place of effective management" means a
place where key management and commercial decisions that are necessary for the conduct
of the business of an entity as a whole are, in substance made.

Q.2 (d) A gifted debentures of Ria Ltd., to a girl B in March, 2015. Later, B married to A's son
C in March, 2017. B received interest of ` 1,40,000 from the debentures in the
Previous Year 2018-19. The Assessing Officer (AO) added the interest income of B
with the income of A under the provisions of Section 64(1) (vi). Comment on the
action of the AO.
(3 Marks)
Sol. Individual is assessable in respect of Income from assets transferred to son's wife
[Sec. 64(1)(vi)] : If an individual transfers any asset (whether directly or indirectly) to his/her
son's wife otherwise than for adequate consideration, the income from such an asset shall
be included in his / her total income.
NOTE : To attract clubbing, the relationship of father-in-law or mother-in-law and daughter-

in-law should subsist both at the time of transfer of the asset and at the time of accrual of
the income.
So income will be taxable in the hands of B and it will not be added in the income of A.
Q.2 (e) Amrita, a resident aged 25 years, manufactures tea leaves from the tea plants, grown
by her in India. Manufactured tea is sold in India for ` 40 Lakh. The cost of growing
tea plant was ` 15 Lakh and the cost of manufacturing tea leaves was ` 10 Lakh.
Compute her tax liability for the assessment year 2019-20.
(3 Marks)
Sol. Computation of Total Income of Amrita

For A.Y. 2019-20
Selling price of Tea 40,00,000
(-) Expenses [10,00,000 + 15,00,000] 25,00,000
15,00,000
(-) Agricultural Income 9,00,000
[Rule 8] 6,00,000
Computation of Tax
Step 1 : Tax on [ TI + Ag. Income] 2,62,500
Step 2 : Tax on [Ag Income + 2,50,000] 15,75,00
Step 3 : [Step 1 – Step 2] 1,05,000
+ Cess 4% 4,200
Total 1,09,200
OR (Alternate question to Q. No. 2)
Q.2A (i) Indicate three situations where the Return of Income has to be compulsorily filed
under section 139(1) of the Income Tax Act, 1961.
(3 Marks)

Sol. OBLIGATION TO FILE RETURN OF INCOME 139(1) :
Every persons shall be liable to file a return of income -
(a) being a Company or a firm (irrespective of whether it has earned any income or
loss); or
(b) being a person other than a company or a firm, if -
his total income or income of any other person in respect of which he is assessable
to tax exceeds the maximum amount not chargeable to income tax;
SIXTH PROVISO TO SECTION 139(1) :
If a person being an individual or HUF or AOP or BOI or an artificial juridical person if
his total income or the total income of any other person in respect of which he is assessable
under this Act during the previous year, without giving effect to the provisions of
Chapter VI-A or section 10(38) exceeded the maximum amount which is not
chargeable to income-tax.
then also such person shall be liable to mandatorily file return of income for the previous
year on or before the due date.
Q.2A (ii) Shobhit Goel, aged 32 years, furnishes the following details of his total income for
the Assessment Year 2019-20 :
Income from Salaries (after allowing eligible standard deduction) 27,88,000
Income from house property (Computed) 15,80,000
Interest income from FDRs' 7,22,0000
He has not claimed any deduction under chapter VIA. You are required to compute
the tax liability of Mr. Shobhit Goel as per the provisions of Income Tax Act, 1961.
(3 Marks)
Sol. Computation of total Income of Shobhit
Income from salaries ` 27,88,000
Income from property ` 15,80,000
Income from other sources
Interest income from FD ` 7,22,000
Total Income ` 50,90,000
Computation of Tax payable
Upto ` 250,000 Nil
5% [2,50,000 – 5,00,000] ` 12,500
20% [5,00,000 – 10,00,000] ` 1,00,000
30% [10,00,000 – 50,90,000] ` 12,27,000
13,39,500
+ Surcharge 10% 1,33,950
1473450
Marginal Relief ` 70950
+ Cess 4% 1402500
56100
1458600

W.N. Marginal Relief
MR = Tax on TI (including surcharge) – [(Tax on 50L + Income exceed 50L)]
= 1473450 – [1312500 + 90,000]
Q.2A (iii) Shashi Bhushan has submitted' details of the following income/loss as computed
below, for the previous year 2018-19 :
Loss from let out house property 2,50,000
Loss from non-speculation business 3,20,000
Income from speculation business 12,45,000
Loss from specified business covered u/s 35 AD 4,10,000
Winnings from lotteries (Gross) 1,50,000
Winnings from bettings 90,000
Loss from card games 3,40,000
You are required to compute the total income of the assessee for the assessment
year 2019-20, showing clearly the manner of set-off and the items eligible for carry
forward.
(3 Marks)
Sol. Computation of Total Income of Shashi
For A. Y. 2019-20
Loss from House Property (2,50,000)
Set from speculation business 2,50,000 -
Income from PGBP
Loss from Non-speculation business (3,20,000)
Set off from speculation business 3,20,000 -
Income from speculation business 12,45,000
(-) Set off loss of Houses Property (2,50,000)
(-) Set off loss of Non-speculation business (3,20,000)
6,75,000
Loss of business covered u/s 35AD
-
Winning from lotteries 1,50,000
Winning from betting 90,000 2,40,000
Gross Total Income 9,15,000
Less: Deduction – VI A NIL
Total Income 9,15,000
Notes :
(i) Loss of house property can be set off from speculative business.
(ii) Loss from non speculative business can be set off from speculative business.
(iii) Loss of business covered u/s 35AD cannot be set off from any other income and
can be C/F.
(iv) Loss from card games cannot be set off from any income.

Q.2A (iv) State whether quoting of PAN in the following transaction is mandatory or not, as per
the provisions of Income Tax Act, 1961 for A.Y. 2019-20 :
(1) A makes payment to Hotel Radisson Ahmedabad of ` 50,000 against the bill
raised by the Hotel.
(2) Asbhishek, in a single transaction makes contract of ` 1,20,000 for
sale/purchase of securities (other than shares) as defined in section 2(h) of
the Securities Contracts (Regulation) Act, 1956.
(3) Payment to Mutual Funds of ` 70,000. for purchase of its units.
Your answers must be supported with reasons.
(3 Marks)
Sol. (1) No, quoting of PAN is not mandatory as there must be Hotel bill payment in cash of
an amount exceeding ` 50,000
(2) Yes, contract value is more than ` 1,00,000 so quoting of PAN is mandatory.
(3) Yes, as payment to mutual fund is more than ` 50,000
Q.2A (v) Briefly mention the concept of Self-Assessment tax u/s 140A of the Income Tax Act
1961 and its components.
(3 Marks)
Sol. Payment of tax, interest and fee before furnishing return of income
Where any tax is payable on the basis of any return required to be furnished under,
inter alia, section 139, after taking into account -
(i) the amount of tax, already paid, under any provision of the Income-tax Act, 1961
(ii) any tax deducted or collected at source;
(iii) relief of tax claimed under section 90 or 90A;
(iv) deduction of tax claimed under section 91;
(v) any tax credit claimed to be set-off in accordance with the provisions of
section 115JAA or section 115JD.
the assessee shall be liable to pay such tax together with interest and fee
payable under any provision of this Act for any delay in furnishing the return or
any default or delay in payment of advance tax before furnishing the return.
The return shall be accompanied by the proof of payment of such tax, interest
and fee.
Q.3 (a) Nisha, a resident of India owns a house property at Karnal in Haryana. The municipal
value of the property is ` 7,50,000, fair rent of the property is ` 6,30,000 and standard
rent is ` 7,20,000 per annum.
The property was let out for ` 75,000 per month for the period April, 2018 to
December, 2018.
Thereafter the tenant vacated the property and Nisha used the house for self
residence. Rent for the months of November and December, 2018 could not be
realized from the tenant. The tenancy was bonafide but the defaulting tenant was in
occupation of another property of the assessee, paying rent regularly.

She paid municipal tax @ 12% during the year and paid interest of ` 35,000 during the
year for amount borrowed towards repairs of the house property.
You are required to compute her income from "House Property" for the A.Y. 2019-20.
(5 Marks)
Sol. Computation of Total from House Properties
For A.Y. 2019-20
Step 1: Municipal value & fair rent whichever is higher but subject to standard rent 7,20,000
Step 2: Actual Rent

12 month rent (75,000×12) 9,00,000
(-) Unrealised Rent (W.N. 1)
(-) Self occupied period rent (75,000 × 3) 2,25,000 6,75,000
Step 3: [Step 1 or Step 2] whichever is higher 7,20,000

(-) Vacancy period rent Nil
GAV 7,20,000
(-) Municipal Tax (7,50,000 × 12%) (90,000)
NAV 6,30,000
(-) Deduction u/s 24
(a) Std. Deduction @ 30% of NAV (1,89,000)
(b) Interest on borrowed capital (35 000)
4,06,000
W.N. 1 Unrealized rent is not deducted because tenant was in occupation of another
property.
Q.3 (b) (i) The Assessing officer has the power to make an assessment to the best of his
judgment, in certain situations. What are they ?
(3 Marks)
(ii) Explain the quantum of late fees under section 234 F for delay in furnishing
return of income within the prescribed time limit under section 139(1) for A.Y.
2019-20.
(2 Marks)
Sol. (i) Best judgment assessment [Section 144] : A.O. shall make a best judgement
assessment.
 Fails to comply with all the terms of a notice issued u/s 142(1) or a
direction issued u/s 142(2A)
 Fails to file return u/s 139(1) and has not filed belated return u/s 139(4) or
revised return u/s 139(5)

 Having filed a return, fails to comply with all the terms of a notice issued
u/s 143(2)
(ii) Fees for Default in Furnishing Return of Income. [Sec. 234F]
Where a person required to furnish a return of income under section 139, fails to do
so within the time prescribed in section 139 (1), he shall pay, by way of fee, a sum
of,
(a) ` 5,000 if the return is furnished on or before the 31st day of December of
the assessment year:
(b) ` 10,000 in any other case :
Provided that if the total income of the person does not exceed ` 5 lakh, the fee payable
under this section shall not exceed ` 1,000.
Q.3 (c) (i) Discuss whether the following payments are subject to Tax Deducted at
Source (TDS). If so, find out the amount of tax to be deducted at source :
(1) Payment of `4,00,000 to a resident catering contractor. PAN is
intimated.
(1 Mark)
(2) LIC of India makes a payment of `6,00,000 as rent to the Central
Government for a building sin which one of its branches is situated.
PAN is intimated.
(1 Mark)
(3) Payment of winning from lottery `2,00,000 to K who has not furnished
PAN.
(1 Mark)
(ii) Who is liable to pay advance tax ? are exempted from payment of advance
tax?
Sol. (i) (1) If assessee is individual / HUF then TDS rate is 1% so ` 4,000 and any
other assessee TDS rate is 2% so ` 8,000.
(2) No TDS, if payment is made to Central Government.
(3) TDS, on winning from lottery is 30%. So TDS will be ` 60,000.
Sol. (ii) Section 208 : Tax is payable in advance only if amount of such tax is `
10,000/ - or more.
A senior citizen (i.e., a resident individual who is at least 60 years of age at
any time during the financial year) not having any income from business /
profession, is not liable to pay advance tax.

PART – II
Q.4 (a) Mention any four products which are kept outside the preview of Goods and Services
Tax. Are they exempt from any tax ?
(4 Marks)
Sol. The following products are kept outside the preview of Goods and Services tax.
(i) Alcoholic Liquor for human consumption – Article 366(12A) of the Constitution of
India provides that taxes on the supply of alcoholic liquor for human consumption
are outside the purview of the Goods and Service Tax Act.
(ii) Petroleum crude
(iii) High speed diesel oil
(iv) Motor spirit (Petrol)
(v) Natural Gas
(vi) Aviation turbine fuel
GST to be levied on the Product covered under (ii) to (vi) from such date as may be
notified by the Government on the recommendations of the GST Council (Section 9(2) of the
CGST Act). Till then Central excise duty will continue on petroleum products. The above
products are not exempted but they are kept outside the preview of GST.
Q.4 (b) Determine the place of supply of goods/services in the following cases as per the
provisions of the Integrated Goods and Service Tax (IGST) Act, 2017 :
(i) X Ltd. Of Mumbai assembles its machinery for Z of Chennai at Bengaluru.
(1 Mark)
(ii) JJ Paints Ltd. Exported paints to London from Ahmadabad.
(1 Mark)
(iii) HRD Ltd., Hyderabad provides training and performance appraisal services at
Varanasi to the employees of KK Ltd. And unregistered entity located in
Patna.
(1 Mark)
(iv) Y of Rajasthan sells car to ABC Ltd. At Surat of Gujarat.
(1 Mark)
Sol. (i) As per sec.10where the goods are assembled or installed at site, the place of
supply shall be the place of such installation or assembly; therefor in the above
question place of supply will be Bengaluru.
(ii) As per section 11 the place of supply of goods, exported from India shall be the
location outside India. Therefor in the above question place of supply will be
London.
(iii) As per section 12(5) the place of supply of services in relation to training and
performance appraisal to,-

(a) a registered person, shall be the location of such person;
(b) a person other than a registered person, shall be the location where the
services are actually performed.
Therefore in the above question the place supply will be Varanasi.
(iv) As per section 10 where the supply involves movement of goods, whether by the
supplier or the recipient or by any other person, the place of supply of such goods
shall be the location of the goods at the time at which the movement of goods
terminates for delivery to the recipient;
Therefore in the above question the place supply will be Surat.
Q.4 (c) SS Ltd. A registered person under GST, is manufacturing taxable goods. The
company supplies following information relating to GST paid on purchases made and
input services availed in July, 2018 :
GST Paid
`
Trucks used to bring raw materials 1,40,000
Raw materials purchased (to be received in August, 2018) 2,10,000
Inputs are to be received in four lots. The second lot was
received during this month 1,00,000
GST paid on six capital goods (out of the six, the invoice of one
item was missing on which a GST of ` 60,000 was paid) 3,80,000
Calculate the amount of input tax credit available to SS Ltd. For the month of July,
2018. Assume that all the conditions for availing ITC are satisfied.
(4 Marks)
Sol. Computation of ITC available
To SS Limited
For the month of July 2018
Particulars Amount in (`)
(a) Trucks used to bring raw materials (WN 1) 1,40,000
(b) Raw materials purchased (to be received in August, 2018)(WN 2) –
(c) Inputs are to be received in four lots. The second lot was received during
this month(WN 3) –
(d) GST paid on six capital goods (out of the six, the invoice of one
item was missing 3,80,000on which a GST of ` 60,000 was paid)(WN 4) 3,20,000
Total ITC available 4,60,000
WN 1 - Although the ITC on Motor Vehicles is not allowable (blocked credit), yet one of the
exceptions is that if these vehicles are used for transportation of goods, these are
allowable, hence entire ITC would be available.
WN 2 - As per Section 16(2)(b) The registered person taking the ITC must have received the
goods and / or services. In the above question as the raw material purchased to be
received in August 2018 therefore No ITC can be availed during month of July 2018.

WN 3 – As per First proviso to section 16(2)In case the goods covered under an invoice are not
received in a single consignment but are received in lots /installments, the ITC can be
taken only upon receipt of the last lot / installment. Therefore in the above question ITC
cannot be availed untile fourth lot is received.
WN 4 – As per sec.16(2)(a) For claiming ITC possession of tax invoice or debit note or such
other taxpaying documents as may be prescribed are must. Therefore in the above
question ITC on Capital goods for which invoice is missing cannot be availed.
Q.4 (d) Whether the supplier in the following cases is eligible for composition scheme :
(i) X is interior decorator and is registered in Punjab. His gross receipts in the
preceding financial year amounted to ` 60 lakhs.
(2 Marks)
(ii) A registered dealer in Haryana supplies goods to its neighboring states along
with interstate supplies. His total turnover in the current financial year is not
likely to exceed ` 40 Lakh. His aggregate turnover in the preceding financial
year was ` 45 Lakh.
(2 Marks)
Sol. (i) As per section 10(2) Supplier of services other than supplier of food articles cannot
opt for composition scheme therefore in the above question Mr. X can not opt for
composition scheme as he is providing interior decorator service.
(ii) As per section 10(2) Supplier of inter-State out ward supplies of good scan Not opt
of composition scheme therefore in the above question registered dealer of
Haryana can Not opt for composition scheme as he is supplying goods to its
neighboring states (Inter-state).
Q.4 (e) Mention due date and the purpose behind filing GSTR-2, GSTR-3 GSTR-4 and
GSTR-10.
(4 Marks)
Sol. (e)
Form No. Purpose/Particulars Due date of filing
GSTR – 2 Details of inward supplies of goods Within 11th to 15th of the
or services to be furnished monthly following month.
GSTR – 3 Every registered person other than Upto 20th of following month.
supplier of OIDAR, Composition levy
subscribers, NR taxable persons,
ISD and person effecting TDS/TCS
shall file monthly Return
GSTR – 4 Quarterly Return to be furnished by Upto 18th of the month following
composition levy Taxpayer. end of quarter.
GSTR – Every registered person who is Final Return has to be filed within
10 required to furnish return u/s 39(1) 3 months of the date of
and whose registration has been cancellation or date of order of
surrendered or cancelled shall file a cancellation, whichever is later.
Final Return electronically.

Q.5 (a) Explain briefly safeguard duty levied under Customs Act, 1962.
(3 Marks)
Sol. Safeguard duty is a duty paid on import of goods into India. This is levied on goods imported
into India, when such goods are already manufactured in India, but the costs are higher as
compared to import prices. It is levied to ensure that the Indian manufacturers don’t suffer
owing to import of cheaper goods from outside and therefore aims to create a level playing
field for the Indian manufacturers and importers, thereby with the intent of safeguarding the
National interest. The main difference with Anti-dumping duty being, while the Anti-dumping
duty prevents the predatory pricing measures / discriminatory pricing, that could be unfair for
the local goods and markets, Safeguard duties promote enabling a fair ground for the local
manufacturers.
Q.5 (b) What are the provisions of interest on delayed refunds under CGST Act 2017 ?
(3 Marks)
Sol. Section 56 of the CGST Act, 2017 states that if any tax ordered to be refunded under section
54 is not refunded within sixty days from the date of receipt of application interest at the rate
of six per cent shall be payable in respect of such refund from the date immediately after the
expiry of sixty days from the date of receipt of application under the said sub-section till the
date of refund of such tax.
Where any claim of refund arises from an order passed by an adjudicating authority or
Appellate Authority or Appellate Tribunal or court which has attained finality and the same is
not refunded within sixty days from the date of receipt of application filed consequent to such
order, interest at the rate of nine per cent shall be payable in respect of such refund from
the date immediately after the expiry of sixty days from the date of receipt of application till
the date of refund.
Q.5 (c) State the persons who are not liable for registration as per provisions of Section 23 of
Central Goods and Services Act, 2017.
(3 Marks)
Sol. Persons not liable to register [Section 23]
The Section specific that are not liable to register under the Central Goods & Services Tax
Act, 2017:
(i) Person engaged exclusively in supplying goods/services/both not liable to tax
(ii) Person engaged exclusively in supplying goods/services/both wholly exempt from tax
(iii) Agriculturist to the extent of supply of produce out of cultivation of land
(iv) Following Specified category of persons notified by the Government on GST Council
recommendation :
(a) Persons making only reverse charge supplies
(b) Persons making inter-State supplies of taxable services up to` 20,00,000
(c) Casual Taxable Persons making taxable supplies of handicraft goods or persons making
inter-State supplies of specified handicraft goods up to ` 20,00,000
(d) Job workers making inter-State supply of services to a registered person

(e) Persons making supplies of services through an ECO (other than supplies specified under
section 9(5) of the CGST Act) with aggregate turnover up to ` 20,00,000
Q.5 (d) Write a short note on social welfare surcharge under Customs Act 1962.
(3 Marks)
Sol. Social welfare surcharge : Prior to 02.02.2018, an education cess @ 2% and secondary
and higher education cess @ 1 % was leviable on the aggregate of duties of customs on
items imported into India.
However, with effect from 02.02.2018, all goods imported into India have been exempted
from education cess and secondary and higher education cess vide Notification No. 7/20187
and 8/2018 Cus dated 02.02.2018. Social welfare surcharge (SWS) @ 10% has been levied
with effect from 2nd Feb. 2018 in lieu of these cesses for providing and financing education,
health and social security.
SWS is leviable on the aggregate of duties, taxes and cesses leviable on such goods under
section 12 of the Customs Act, 1962 and any sum chargeable on that article under any law
for the time being in force as an addition to, and in the same manner as, a duty of customs.
Q.5 (e) Distinguish between Basic custom duty and Additional custom duty or
Countervailing duty.
(3 Marks)
Sol.
Basic Customs Duty Additional Customs Duty / Countervailing
Duty (CVD)
(i) Levied as a percentage of value as (i) It is equivalent to the amount of excise duty
determined under section 14(1) on like goods manufactured / produced in
(ii) General basic rate of Basic Custom India
Duty is 10% (ii) Under the GST regime, this duty is
(iii) Could be levied at “Standard” OR subsumed under GST and additional duty /
“Preferential Rates” (where imported IGST is payable on assessable value plus
from a preferential area as may be basic customs duty
specified by the Government) (iii) In case of alcoholic liquor for human
(iv) Onus is on the person (owner) to consumption is imported into India, the
substantiate with the supporting same is still under state excise which has
evidence that the goods are not been subsumed under GST. Therefore,
chargeable with a preferential rate of IGST is not leviable under Import
duty (iv) In case inward taxable supplies are in the
nature of Imported Goods, which have
been taxed and have been consumed in
the manufacture of outward taxable
supplies, Input Tax Credit is available to the
extent of IGST paid.

Attempt all parts of either Q. No. 6 or Q. No. 6A
Q.6 (a) A, a supplier of goods, pays GST under regular scheme. He is not eligible for any
threshold exemption. He has made the following outward/inward taxable supplies in a
tax period :
Sr. No. Particulars Amount (`)
1. Interstate supply of goods 10,00,000
2. Intrastate supply of goods 2,00,000
3. Intrastate purchase of goods 5,00,000
Mr. A has the following ITC's with him at the beginning of the tax period :
Amount (`)
CGST 20,000
SGST 20,000
IGST 25,000
Note :
(1) Rate of CGST, SGST & IGST is 9%, 9% and 18% respectively.
(2) Both inward and outward supplies are exclusive of taxes, wherever
applicable.
(3) All the conditions necessary for availing ITC have been fulfilled.
Compute the NET GST payable by Mr. A during the tax period. Make suitable
assumptions as required.
(5 Marks)
Sol. Computation of GST payable by Mr. A

on outward supplies
S. No. Particular (`) GST (`)
(i) Intra-State supply of goods
CGST @ 9% on `2,00,000 18,000
SGST @ 9% on `2,00,000 18,000 36,000
(ii) Inter-State supply of goods
IGST @ 18% on `10,00,000 1,80,000
Total GST payable 2,16,000
Computation of total ITC

Particular CGST @ 9% (`) SGST @ 9%(`) IGST @ 18% (`)
Opening ITC 20,000 20,000 25,000
Add: ITC on Intra-State purchases of 45,000 45,000 -
goods valuing `5,00,000
(i.e. 5,00,000 × 9%)
Total ITC 65,000 65,000 25,000

Computation of GST payable from cash ledger
Particular CGST @ 9% (`) SGST @ 9%(`) IGST @ 18% (`)
GST payable 18,000 18,000 1,80,000
Less: ITC(Working Note 3) (18,000) CGST (18,000) SGST (25,000)IGST

(47,000) CGST
(47,000) SGST
Net GST payable Nil Nil 61,000
Working Note 1 : ITC of IGST has been used to pay IGST, CGST and SGST in that order.
Q.6 (b) PQ Ltd. a manufacturer of taxable goods provides the following information
regarding inward supplies for the month of September, 2018 :
_______________________________________________________________________________
Sr. No. Items GST Paid (`)
_______________________________________________________________________________
1. Input A (one invoice on which GST payable was`20,000 is missing) 2,00,000
2. Input B (input is to be received in three installments last
installment to be received in November 2018) 4,00,000
3. Capital goods (invoice value being ` 2,00,000 inclusive of
GST but only ` 1,80,000 has been debited to asset a/c) 20,000
4. Input services (one invoice dated 22-01-2018 on which GST payable
was ` 40,000 has been received in Sept. 2018 whereas annual return
for the financial year 2017-18 was filed on 25th October 2018) 1,50,000
Compute the Input Tax Credit (ITC) available to PQ Ltd. for the month of September, 2018.
Note :
(i) All the conditions necessary for availing the ITC have been fulfilled.
(ii) PQ Ltd. is not eligible for any threshold exemption.
(5 Marks)

To PQ Limited For the month of September 2018
(a) Input A (one invoice on which GST payable was`20,000 is missing)(WN 1) 1,80,000
(b) Input B (input is to be received in three installments last
installment to be received in November 2018)(WN 2) -
(c) Capital goods (invoice value being ` 2,00,000 inclusive of
GST but only ` 1,80,000 has been debited to asset a/c) (WN 3) 20,000
(d) Input services (one invoice dated 22-01-2018 on which
GST payable was ` 40,000 has been received in Sept. 2018
whereas annual return for the financial year
2017-18 was filed on 25th October 2018)(WN 4) 1,50,000

WN 1 - As per sec.16(2)(a) For claiming ITC possession of tax invoice or debit note or such other
taxpaying documents as may be prescribed are must. Therefore in the above question ITC
on input for which invoice is missing cannot be availed.
WN 2 –As per First proviso to section 16(2)In case the goods covered under an invoice are not
received in a single consignment but are received in lots /installments, the ITC can be taken
only upon receipt of the last lot / installment. Therefore in the above question ITC cannot be
availed until third lot is received.
WN 3 – As per section 16(3)If depreciation is claimed on the amount of tax then no ITC can be
claimed on the amount of such tax. In the above question depreciation is not claimed on
amount of tax therefore ITC can be availed.
WN 4 –As per section 16(4), ITC on an invoice cannot be availed after the due date of furnishing of
the return for the month of September following the end of financial year to which such
invoice pertains or the date of filing annual return, whichever is earlier.
Since the annual return for the FGY ending 31 March, 2018 is filled on 25th Oct. 2018
therefore ITC can be claimed.
Q.6 (c) Discuss valuation rules under section 14 of the Customs Act, 1962. In this context
discuss method of valuation on the basis of identical goods and similar goods.
(5 Marks)
Sol. Identical Goods / Comparison Method [Rule 4] :

Transaction Value (TV) of identical goods will be used in determining the value of imported
goods, only when such identical goods are sold at the same commercial level, and these
goods are substantially the same quantity as the goods being valued. TV of goods exported
would be based on the transaction value of the goods of like kind and quality exported at or
about the same time to the same destination country, or in absence, another destination
country. In applying this rule, if more than one transaction value of identical goods is found,
the lowest such value shall be used to determine the value of imported goods.
Similar Goods for Imports and Computed Value Method for Exports [Rule 5] :
The TV for Imported Goods would be based on that of the similar goods (i.e., like
characteristics & country of production). The TV of goods exported, would be taken at
computed value, i.e., Cost of Production + Charges for design/brand + Reasonable profit.

Or ( Alternate Question No. 6)
Q.6A (i) Compute the amount of Input Tax Credit available to GK Ltd. in respect of the
following items procured by it in April, 2018 :
GST Paid
`
Pollution control equipment's used in the factory 1,64,000
Goods purchased for providing services during warranty period 9,000
Goods destroyed by fire 15,000
Goods given as gift to regular customers 8,000
Inputs used for quality control check 16,000
Membership of a club 15,000
Rent-a-cab services for employee to pick up and drop to home 50,000
(5 Marks)
To GK Limited
For the month of April 2018
Pollution control equipment's used in the factory 1,64,000
Goods purchased for providing services during warranty period 9,000
Goods destroyed by fire [Not allowed as per Sec. 17(5)] -
Goods given as gift to regular customers [Not allowed as per Sec. 17(5)] -
Inputs used for quality control check 16,000
Membership of a club [Not allowed as per Sec. 17(5)] -
Rent-a-cab services for employee to pick up and drop to home -
[Not allowed as per Sec. 17(5)]
Q.6A (ii) UPS Ltd. of Hyderabad supplied a power generator to TK Tyres Ltd., of Tamil Nadu
and charged the following amounts to the supply :
`
Price of generator before taxes and cash discount 9,00,000
Other charges not included in the above price :
Packing charges 15,000
Designing charges for the generator 18,000
Freight 12,000
Transit insurance 12,000
Following additional information are also furnished :
(a) Rate of GST — 18%
(b) A cash discount @ 3% on price is given to the customer at the time of supply
and the same is also recorded in the invoice.
Calculate the value of supply and the GST payable.
(5 Marks)

Sol. (ii) Computation of Taxable value of supply
Of UPS Limited
Price of generator before taxes and cash discount 9,00,000
Add: Other charges not included in the above price :
Packing charges (as per sec. 15(2)(c)) 15,000
Designing charges for the generator (as per sec. 15(2)(c)) 18,000
Freight(as per sec. 15(2)(c)) 12,000
Transit insurance(as per sec. 15(2)(c)) 12,000
Less : Discount @ 3% of 9,00,000(as per sec. 15(3)(a)) (27,000)
Taxable value of supply 9,30,000
GST @ 18% of 9,30,000 1,67,400
Q.6A (iii) ABC Ltd. India imported a machine from Smith Corporation USA for in house use in
the factory. The price of the machine as per the original agreement was 15,000 USD
and the machine was shipped on 1st Jan. 2018. While the machine was in transit,
ABC Ltd. India persuaded the exporter to grant a discount of 10% on the original
price and the agreement was fianlised on 20th Jan. 2018. The machine reached
Chennai port on 15th Feb., 2018. The assessing authorities calculated the assessable
value on the basis of original price. ABC Ltd., approach you for suitable advice. Do
you agree with the action of assessing authorities ? Give reference of decided court
case, if any.
(5 Marks)
Sol. The stand taken by the Customs Authorities is factually incorrect and can be challenged
under the Law. The basic reason is that the Transaction Value is considered at the time and
place of importation. Hence, it was contended that the Import is complete only when the
Goods become a part of the Country. Here, in the present case, the price was mutually
revised while the Goods were still in transit. Hence, the revised price could be considered
for arriving at the Assessable Value and the same was also enunciated under the case law :
Gujarat Heavy Chemicals v. Commissioner of Customs, Ahmedabad 2004.
______________________________________________________________________________________
Disclaimer Clause :
o These Solutions are prepared by the Expert Faculty Team of RESONANCE .
o Views and Answers provided may differ from ICSI due to difference in assumptions taken in support of the answers .
o In such case answers as provided by “ICSI” will be deemed as final .

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New Syllabus Paper Code -424

CS-Executive (June 2019) Examination

Answer All qustions.

Particualrs (`) (`)

Leave Salary 5,400

Professional tax paid by the employer 1,000

Rent recovered by the employer 3,000

Contribution to Statutory Provident Fund 4,000

Employer's Contribution to Statutory Provident Fund 4,000

Donation to a local temple 50,000

Compute his taxable income for the assessment year 2019-2020.

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 1

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 2

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 3

Sol. Calculation of Gross total income of Manish Garg

Attempt all parts of either Q. No. 2 or Q. No. 2A

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 4

Sol. INSTANCES WHERE INCOME OF PREVIOUS IS ASSESSED IN THE SAME YEAR

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 5

NOTE : To attract clubbing, the relationship of father-in-law or mother-in-law and daughter-

Sol. Computation of Total Income of Amrita

OR (Alternate question to Q. No. 2)

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 6

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 7

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 8

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 9

Step 2: Actual Rent

Step 3: [Step 1 or Step 2] whichever is higher 7,20,000

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 10

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 11

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 12

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 13

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 14

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 15

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 16

Attempt all parts of either Q. No. 6 or Q. No. 6A

Sol. Computation of GST payable by Mr. A

Computation of total ITC

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 17

Less: ITC(Working Note 3) (18,000) CGST (18,000) SGST (25,000)IGST

Sol. Computation of ITC available

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 18

Sol. Identical Goods / Comparison Method [Rule 4] :

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 19

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 20

` Resonance Eduventures Ltd. CIN-U80302RJ2007PLC024029 _________________________________________________Page 21

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