Computation Of Total Income

Question : 1 Mr. Lalit, a dealer in shares and securities, has entered into following transactions
during the previous year 2023-24:

(i) Received a motor car of ` 5,00,000 as gift from his friend Sunil on the occasion of his marriage
anniversary.
(ii) Cash gift of ` 21,000 each from his four friends.
(iii) Land at Jaipur on 1st July,2023 as a gift from his friend Kabra, the stamp duty value of the land
is ` 6 lakhs as on the date. The land was acquired by Mr. Kabrain the previous year 2001-02 for `
2 lakhs.
Mr. Lalit purchased from his friend Mr. Abhishek, who is also a dealer in shares, 1000 shares
of ABC Ltd. @400 each on 19th June,2023 the fair marketvalue of which was 600 each on
that date. Mr. Lalit sold these shares in the course of his business on 23rd June,2023.
Further, on 1st November, 2023, Mr. Lalit took possession of his residential house booked by
him two years back at ` 20 lakh. The stamp duty value of theproperty as on 1st November,
2023 was ` 32 lakh and on the date of booking was ` 24 lakh. He had paid` 1 lakh by account
payee cheque as down payment on the date of booking.
He received a shop (building) of the fair market value ` 1,50,000 and cash ` 50,000 in
distribution from the ABC (P) Ltd at the time of liquidation processof the company in
proportion of his share capital. The balance in general reserve of the company attributable
to his share capital is ` 1,25,000.
On 1st March,2024, he sold the plot of land at Jaipur for ` 8 lakh.
The value of the cost inflation index is 100 and 317 for the previous year 2001 -02 and 2021-22
respectively.
Compute the income of Mr. Lalit chargeable under the head "Income from other sources"
and "Capital Gains" for A.Y. 2024-25. (PYP MAY 2022)

Question : 2 From the following particulars furnished by Mr. Suresh, aged 53 years, a resident
Indian for the previous year ended March 31, 2024, you are requested to compute his total
income and tax payable for the Assessment Year2024-25. (Assuming he does not opt for the
Section 115BAC):

(i) He sold his vacant land on 09.12.2023 for ` 15 lakhs. The Stamp Duty Value (SDV) of land at the
time of transfer was ` 20.55 lakhs. The fair market value of the land as on 1st April, 2001 was ` 6
lakhs (SDV is ` 5,00,000). This land was acquired by him on 05.08.1996 for ` 3.40 lakhs. He had
incurred registration expenses of
` 15,000 at that time. The cost of inflation index for the year 2021-22 and 2001- 02 are 317 and
100, respectively.
(ii) He owns an industrial undertaking established in a Special Economic Zone (SEZ) and which
had commenced operation during the financial year 2021-22. Total turnover of the
undertaking was ` 300 lakhs, which includes ` 120 lakhs from export turnover. This industrial
undertaking fulfils all the conditions of Section 10AA of the Income-tax Act, 1961. Profit from
this industrial undertaking is ` 30 lakhs.
(iii) He has income of ` 10,000 from crossword puzzles and ` 15,000 gross interest from bank fixed
deposit.
(iv) Tuition fees of ` 36,000 for his three children to a school. The fees being ` 12,000
p.a. per child. (PYP MAY 2022)
Question :3 Mr. Mukesh born on 1 4.1964 furnished his original return for Assessment Year 2024-25
on 30.07.2024. He has shown salary income of ` 7.30 lakhs(computed) and interest from his savings
bank of ` 12,700 and from his fixed deposits of ` 43,000. He also claimed deduction under section 80C
of ` 1.50 lakhs. Hehad claimed deduction u/s 80D of ` 25,000. He also claimed deduction u/s 80TTA of `
10,000. His employer had deducted TDS of ` 33,950 from his salary, which he adjusted fully against
tax payable . He paid health insurance premium of ` 38,000 by account payee cheque for self and
wife. He paid ` 1,500 in cash for his health check-up and ` 4,000 by cheque for preventive health
check-up of his parents. He also paid medical insurance premium of ` 33,000 during the year to insure
the health of his mother, aged 80 years, staying with his younger brother. He further incurred
medical expenditure of ` 25,000 on hisfather, aged 81 years, who is staying with him. His father is not
covered under any mediclaim policy.
He seeks your advice about possibility of revising his return and if possible file hisrevised return. Analyse the
above narrated facts as per applicable provisions of the Income-tax Act, 1961. Does he need to revise his return
and for what reasons? Please advise him suitably and if needed, re-compute his income and tax payable or
refund due for the Assessment Year 2024-25. (PYP NOV 20)

Question :4 Mr. X, an employee of the Central Government is posted at New Delhi. He joined
the service on 1st February, 2020. Details of his income for theprevious year 2020-21, are as
follows:

(i) Basic salary : ` 3,80,000

(ii) Dearness allowance : ` 1,20,000 (40% forms part of pay for retirement benefits)
(iii) Both Mr. X and Government contribute 20% of basic salary to the pension scheme
referred to in section 80CCD.
(iv) Gift received by X’s minor son on his birthday from friend: ` 70,000. (No other gift is received
by him during the previous year 2023-24)

(v) During the year 2016-17, Mr. X gifted a sum of ` 6,00,000 to Mrs. X. She started a business by
introducing such amount as her capital. On 1st April, 2023, her total investments in business
was ` 10,00,000. During the previous year 2023- 24, she has loss from such business ` 1,30,000
(vi) Mr. X deposited ` 70,000 in Sukanya Samridhi account on 23.01.2024. He also contributed `
40,000 in an approved annuity plan of LIC to claim deduction u/s 80CCC.
(vii) He has taken an educational loan for his major son who is pursuing MBA course from Gujarat
University. He has paid ` 15,000 as interest on such loan which includes ` 5,000 for the
financial year 2023-24.
Determine the total income of Mr. X for the assessment year 2024-25. Ignore provisions
under section 115BAC.(PYP DEC 21)

Question :5 Mr. Bhasin, a resident individual, aged 52 years, provides management consultancy
services to various corporate and non-corporate clients. His Income &Expenditure A/c for the year
ended 31st March, 2024 is as under:
 Expenditure Amount (`) Income Amount (`)
To Employees’ 15,00,000 By Gross Receipts from 60,60,000
Remuneration Profession (last
year
` 75,00,000) (No
TDS was deducted
from any of the
receipts)
To Office & Administrative 5,00,000 By Interest on Savings 25,000
Expenses Bank Account
To Rates and Taxes 15,000 By Winnings from 99,500
Lottery (Net of cost
of lottery tickets of
` 500)
To Interest Expenses 80,000 By Rent Received 2,40,000
To Office Rent 2,40,000
To Insurance Premium 72,000
To Professional Fees 2,00,000
To Depreciation on 1,20,000
Computers
To Excess of Income
over Expenditure 36,97,500
64,24,500 64,24,500

The following details relates to F.Y. 2023-24 :

(i) Employees’ Remuneration includes a sum of ` 3,00,000 paid to his wife, Mrs. Beena
who is working as a manager in his office. She does not have any technical or
professional qualification or experience required for the job. The payment of salary
was as per market rates in comparison to similar work profile.
(ii) Mr. Bhasin owns a big house with 2 independent units. Unit - 1 (with 50% floor area)
has been let our for residential purposes at a monthly rent of ` 20,000 for the entire
year. Unit - 2 (with the balance 50% of the floor area) is used by Mr. Bhasin as his
residence- cum-office. Other particulars of the house are:
(iii) Municipal Valuation - ` 3,60,000
p.a. Fair Rent - ` 4,20,000 p.a.
Standard Rent under Rent Control Act -` 4,00,000 p.a.
(iv) Rates and taxes include a sum of ` 10,000 paid as municipal taxes of the house.
(v) Interest expenses represent interest on capital borrowed from a nationalised bank
for the construction of the house. The construction was completed in F.Y.2010 -11.
Neither the loan nor the interest was paid till the due date of filing the return of
income.
(vi) Based on the actual rent received for Unit-1, Mr. Bhasin has debited ` 2,40,000 as
notional rent for Unit-2 which is used for his profession.
(vii) The expense on insurance premium of ` 72,000 represents lump-sum health insurance
premium paid by Mr. Bhasin for 3 years effective from 1stJuly, 2023 to 30thJune, 2026
for himself, his spouse and two dependent children. The said insurance premium was
paid through account payee cheque.
(viii) The expenses on professional fees paid includes a sum of ` 1,00,000 paid to [Link],
an Indian resident on which no tax was deducted at source.
(ix) There was only one block containing computers which came into existence only on
2nd April, 2023 when new laptops (for ` 1,60,000), printers and scanners (for ` 40,000)
were purchased. He charged depreciation @ 60% in the entire cost of ` 2,00,000 and
debited the amount to Income & Expenditure A/c.
(x) Mr. Bhasin has also taken a loan of ` 5,00,000 from a nationalised bank for higher
education of his son. During F.Y.2023-24, he repaid principal of ` 75,000 along with
interest of ` 40,000. This amount is not reflected in Income and Expenditure Account.

(xi) You are required to compute the total income under proper heads of income of Mr.
Bhasin

(xii) for A.Y. 2024-25 under regular provisions of Income-tax Act 1961, assuming that he has not opted
to pay tax under section 115BAC. Also calculate the total taxpayable by him.((PYP MAY 23)

Question: 6 Mr. Ravi, a resident and ordinarily resident in India, owns a let out house
property having different flats in Kanpur which has municipal value of ` 27,00,000 and
standard rent of ` 29,80,000. Market rent of similar property is ` 30,00,000. Annual rent
was ` 40,00,000 which includes ` 10,00,000 pertaining to different amenities provided in
the building. One flat in the property (annual rent is ` 2,40,000) remains vacant for 4
months during the previous year. He has incurred following expenses in respect of
aforesaid property:

Municipal taxes of ` 4,00,000 for the financial year 2023-24 (10% rebate is obtained for
payment before due date). Arrears of municipal tax of financial year 2022 -23 paid during
the year of ` 1,40,000 which includes interest on arrears of ` 25,000.
Lift maintenance expenses of ` 2,40,000 which includes a payment of ` 30,000 which is
made in cash.
Salary of ` 88,000 paid to staff for collecting house rent and other charges.
Compute the total income of Mr. Ravi for the assessment year 2024-25 assuming that Mr.
Ravi has not opted for the provisions under section 115BAC.(PYP DEC 21)
Question: 7 During the previous year 2023-24, following transactions took place in
respect of Mr. Raghav who is 56 years old.

(i) Mr. Raghav owns two house properties in Mumbai. The details in respect of these
properties are as under –
 House 1 House 2
Self occupied Let-out
Rent received per month Not applicable ` 60,000
Municipal taxes paid ` 7,500 Nil
Interest on loan (taken for purchase of ` 3,50,000 ` 5,00,000
property)
Principal repayment of loan (taken ` 2,00,000 ` 3,00,000
from HDFC bank)
(ii) Mr. Raghav had a house in Delhi. During financial year 2013-14, he had transferred the
house to Ms. Vamika, daughter of his sister without any consideration. House would
go back to Mr. Raghav after the life time of Ms. Vamika. The transfer was made with
a condition that 10% of rental income from such house shall be paid to Mrs. Raghav.
Rent received by Ms. Vamika during the previous year 2023-24 from such house
property is ` 5,50,000.
(iii) Mr. Raghav receives following income from M/s M Pvt. Ltd. during P.Y. 2023-24:

• Interest on Debentures of ` 7,50,000; and

• Salary of ` 3,75,000. He does not possess the adequate professional qualification
commensurate with the salary received by him.
Shareholding of M/s M Pvt. Ltd. as on 31.3.2024 is as under -
Equity shares Preference shares
Mr. Raghav Nil Nil
Mrs. Raghav 2% 25%
Mr. Jai Kishan
(brother of Mrs. Raghav) 98% 75%
(iv) Mr. and Mrs. Raghav forms a partnership firm with equal share in profits. Mr. Raghav
transferred a fixed deposit of ` 1 crore to such firm. Firm had no income or expense
other than the interest of ` 9,00,000 received from such fixed deposit. Firm distributed
the entire surplus to Mr. and Mrs. Raghav at the end of the year.
(v) Mr. Raghav holds preference shares in M/s K Pvt. Ltd. He instructed the company to
pay dividends to Ms. Geetanshi, daughter of his servant. The transfer is irrevocable
for the life time of Geetanshi. Dividend received by Ms. Geetanshi during the previous
year 2023-24 is ` 13,00,000.
(vi) Other income of Mr. Raghav includes
- Interest from saving bank account of ` 2,00,000
Cash gift of ` 75,000 received from daughter of his sister on his birthday. Compute
the total income of Mr. Raghav for the Assessment Year 2024-25. (PYP JAN 21)
Question: 8 Mr. Kamal, a resident individual aged 48 years, is working at a senior
management position in a private bank since past 20 years. During the previous year
2023-24, he received the following emoluments from the employer:

(a) Basic Salary ` 3,50,000 per month.

(b) Client entertainment reimbursement of ` 20,000 per month out of which he submitted
bills for ` 2,00,000 for the relevant year.
(c) Leave travel allowance of ` 4,00,000 per annum. He took a trip to Goa with his spouse
and two children in December 2023, for which plane boarding tickets of ` 1,00,000 and
hotel bookings of ` 3,00,000 were submitted to the employer.
(d) Performance bonus amounting to 20% of annual basic salary.
(e) He is eligible to take a staff housing loan upto ` 20,00,000 at a concessional rate of 2.5%
p.a. He availed a housing loan of ` 15,00,000 out of the same on 1st June 2023. No
repayment of loan has been made during the F.Y. 2023-24. The lending rate of SBI as
on 1.4.2023 for housing loan may be taken as 8% p.a.
(f) The Bank also allotted 1,500 sweat equity shares to Mr. Kamal in May 2023 at the rate
of ` 1,300 per share. The Fair market value of the share was ` 1,500 per share on the
date of exercise of option by Mr. Kamal. He sold all the shares for ` 2,100 per share on
31.03.2024 on recognised stock exchange. Assume Securities transaction tax has been
paid.

The following transactions were made by Mr. Kamal during the previous year 2023-24:

(a) He earned rental income of ` 35,000 per month from a 3 BHK residential flat situated
at Delhi. He purchased the said flat for ` 45 Lakhs in June, 2022 using the housing loan
availed from the employer and his own savings. It was let out from July, 2023.
Municipal taxes of ` 12,000 for F.Y. 2023-24 was paid by Mr. Kamal.
(b) He invested ` 30,00,000 in RBI Floating Rate Savings Bonds on 1st September 2023
earning an interest of 7% p.a. Interest is credited half yearly on 1st January and 1st July
every year. (Assume receipt basis for taxation)
(c) He also paid LIC premium of ` 15,000 for self, ` 20,000 for wife and ` 30,000 for
dependent father, aged 75 years. Medical insurance premium paid on the health of
dependent brother and major dependent son amounted to ` 5,000 (paid by cheque)
and ` 10,000 (paid in cash), respectively.
(d) In December 2023, he earned dividend income of ` 5,00,000 (gross) on shares of the
bank held by him.
You are required to compute his total income and tax liability for the assessment year
2024-25, clearly showing all workings. (RTP MAY 23)
Question: 9 Mr. Suresh has a sole proprietory manufacturing unit. On 1st April, 2023, he
owns Plant A and Plant B (rate of depreciation 15%). Depreciated value of the block on 1 st
April, 2023 is ` 10,00,000. Plant B is transferred on 15th October, 2023 for ` 19,00,000.
Expenditure on transfer of Plant B is ` 20,000. Plant C (rate of depreciation 15%) is
purchased on 10th March, 2024 for ` 22,00,000. However, Plant C is put to use on 2nd
September, 2024 Business income of Mr. Suresh before claiming any depreciation is `
11,00,000.
On 1st March, 2024, Mr. Suresh transfers 900 equity shares in A Ltd. (unlisted) for `
23,50,000. Mr. Suresh does not own any residential house property. These shares were
purchased on 2nd April, 2015 for ` 2,00,000. To avail of the benefit of exemption under
different sections, he made the following investments on 1st May, 2024.
(i) A residential house property at Kolkata: ` 19,00,000 (out of which stamp duty
expenditure is ` 30,000).
(ii) NHAI bonds: ` 3,00,000.
Find out the gross total income of Mr. Suresh for the A.Y. 2024-25. CII – F.Y. 2023-24: 348;
F.Y. 2022-23 :331 FY 2015-16: 254(RTP MAY 23)

Question: 10 Compute total income and tax liability thereon of Mr. Raghav for the A.Y.
2024-25 from the following details:

Mr. Raghav (aged, 61 years) working in a private company from last 10 years. His salary
details for the financial year 2023-24 are:
(i) Basic Salary 1,70,000 p.m.
(ii) Dearness Allowance (forms part of retirement benefits) 80,000 p.m.
(iii) Commission 32,000 p.m.
(iv) Transport Allowance 5,000 p.m.
(v) Medical Reimbursement 40,000
(vi) Mr. Raghav resigned from the services on 30th November, 2023 after completing 10
years and 5 months of service. He was paid gratuity of ` 25 lakhs on his retirement.
He is not covered under the Payment of Gratuity Act, 1972.

(vii) He started business of hiring of goods vehicle, purchased 4 small goods vehicle on
10th December, 2023 and 4 heavy vehicles having gross weight of 20 MTs each· on 1st
January, 2024. He did not maintain books of accounts for the business of hiring of
goods vehicle. Mr. Shivpal, his very close friend gifted him ` 2 lakhs to purchase the
vehicles.
(viii) He was holding 30% equity shares in TSP (P) Ltd., an Indian company. The paid up
share capital of company as on 31st March, 2023 was ` 20 lakh divided into 2 lakh shares of`
10 each which were issued at a premium of ` 30 each. Company allotted shares to
shareholders on 1st October, 2016.
(ix) He sold all these shares on 30th April, 2023 for ` 60 per share. Equity shares of TSP
(P) Ltd. are listed on National Stock Exchange and Mr. Raghav has paid STT both at
the time of acquisition and transfer of such shares. FMV on 31.1.2018 was ` 50 per
share.
(x) On 12.2.2024, interest of fixed deposits of ` 90,000 credited to his SBI Bank. On
30.4.2023, ` 5,500 and on 30.12.2023, ` 8,500 credited to interest on saving bank A/c with
SBI Bank.
(xi) He deposited ` 1,10,000 in PPF A/c. He paid insurance premium of ` 20,000 on his life
policy during the financial year 2023-24. The policy was taken in April 2014 and sum
assured was ` 3,00,000. He also made payment of ` 25,000 towards L.I.C. pension
fund and premium of ` 40,000 towards mediclaim policy for self and ` 20,000 for his
wife. All the payment he made by A/c payee cheque.
(xii) There was no change in salary of Mr. Raghav from last two years. He does not opt to
pay tax as per section 115BAC.
(xiii) Cost inflation Index is:
(xiv)
Financial Cost Inflation
Year Index
2013-14 220
2020-21 301
2023-24 348

(RTP May 21)

Question 11: Fssrom the following information of Ms Ruchi born on 14 Oct 1980, an Indian
Resident , you are required to compute Total Income for the AY 2024-25

Particulars Amount Amount

LTCG on sale of House 1,50,000
STCG on sale of Shares in [Link] .Ltd 50,000
Loss from House Property 3,50,000
Interest from Saving Account in Post Office 15,000
Prize Winning from a TV show ( Gross) 20,000
Business Income 5,50,000
Net Agriculture Income 1,10,000
LIC Premium of self 70,000
(RTP Nov 19)