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CA FINAL (May 2025)

GROUP II – PAPER 4
DIRECT TAX LAWS & INTERNATIONAL TAXATION
(Series 4)
Time Allowed: - 3 Hours Maximum Marks: 100

This question paper comprises two parts, Part I and Part II.
Part I comprises MCQ & Part II comprises questions which require descriptive answers.
All questions relate to A.Y. 2025-26 unless stated otherwise in the question.

PART – I (MCQs)
All MCQs are compulsory

Question no. 1-15 carry 2 marks each

Case Study 1
X Ltd. (“X”) is an Indian company incorporated on 1st October, 2023 with the objective of manufacturing
medicines using state-of-the-art technology previously unused in India. One of the incidental business
objects of X as per its Memorandum of Association is trading in futures and options (“F&O”) on the
Bombay Stock Exchange and the National Stock Exchange.
It commences production from 1st December, 2023 from its newly-constructed manufacturing facility in
Uttar Pradesh; its registered office is also situated at the said manufacturing facility.
Y Inc (“Y”) is a private company incorporated in a foreign jurisdiction. X holds 30% share in the
nominal value of the equity share capital of Y. Y lent an amount of ₹ 50 crores@6% p.a. to X on 1st April
2024 and X paid the interest due for the F.Y. 2024-25 on 31st March, 2025. The transaction is at arm’s
length price and X has not availed any other loan.
Profit before giving effect to interest, tax and depreciation allowance of X for F.Y. 2024-25 is ₹
6,00,00,000, which includes dividend of ₹ 7,50,000 received by X from Y on 1st July, 2024. It earned ₹
2,50,000 from F & O trading during F.Y. 2024-25.
Additional information:
(i) X has registered a patent in India for treatment of a novel virus which it has developed in
collaboration with Y. 90% of the total expenditure for developing the patent has been incurred by
X in at its manufacturing facility in Uttar Pradesh while the remaining has been incurred by Y
outside India.
(ii) X receives royalty of ₹ 5 crore by permitting other companies to use its patent. The total
expenditure incurred for earning such royalty is ₹ 42,00,000.
You are required to answer the following:
1. What would be the amount of disallowance, if any, of interest paid by X to Y in computation
of total income of X for A.Y.2025-26?
(a) No disallowance is attracted since the transaction is at arm’s length.

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 (b) ₹ 3,00,00,000
(c) ₹ 1,20,00,000
(d) ₹ 1,80,00,000
2. At what rate of tax, will income of X from manufacturing business, dividend and F&O
trading be taxed, assuming that X opts for the special provisions of section 115BAA? Ignore
surcharge and health and education cess.
(a) 15%, 15%, 22%, respectively
(b) 22%, for all income referred to above.
(c) 15%, 22%, 30%, respectively
(d) 22%, 15%, 30%, respectively
3. Which of the statements is correct as regards taxability of royalty in the hands of X?
(a) Royalty of ₹ 5 crore is taxable@15% u/s 115BBF
(b) Royalty of ₹ 5 crore is taxable@10% u/s 115BBF
(c) Royalty of ₹ 4.58 crore (₹ 5 crore less expenditure of ₹ 42 lakh) is taxable @10% u/s
115BBF
(d) Royalty of ₹ 5 crore is not eligible for concessional rate of tax u/s 115BBF, since the entire
expenditure for development of patent was not incurred in India
4. If X desires to avail the beneficial rate of taxation provided under section
115BAA/115BAB, as the case may be, then:
(a) it cannot claim deduction u/s 32(1)(ii) as well as deduction u/s 80JJAA
(b) it can claim deduction u/s 32(1)(iia) as well as u/s 80JJAA
(c) it can claim deduction u/s 32(1)(ii) but cannot claim deduction u/s 80JJAA
(d) it cannot claim deduction u/s 32(1)(iia) but can claim deduction u/s 80JJAA
5. Which Action Plan of BEPS counter harmful tax practices?
(a) Action Plan 2
(b) Action Plan 3
(c) Action Plan 4
(d) Action Plan 5

Case Study 2
M/s. Ganga Ltd., an unlisted public company, is in the business of growing rubber. The profit & loss
account for the year ended 31.03.2025 of the company shows a net profit ₹ 37.65 crores after debiting
depreciation of ₹ 30 crores.
The company has provided the following additional information:
(i) The company has deposited ₹ 30 crores in a special account with NABARD on 29.04.2025.
(ii) The company has brought forward losses of ₹ 6 crores pertaining to Assessment Year 2023-24.
Mr. A who continuously held 60% of shares carrying voting power since incorporation of the
company, had sold his entire holding to Mr. B on 01.08.2024.
(iii) The company had an accumulated balance of ₹ 200 crores in the special account with NABARD as
on 01.04.2024. It has withdrawn ₹ 40 crores and utilized the same for following purposes:

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  Purchase of a new sprinkling machine for use in its operation ₹ 10 crores,
 Purchase of office appliances for corporate office at Chennai ₹ 10 crores.
 Purchase of computers and accessories ₹ 5 crores.
 Construction of a godown at a cost of ₹ 1 crore near the rubber estate to store raw rubber.
 Repairs to machinery ₹ 35 lakhs.
(iv) On 31.03.2025, the company has sold machinery which was purchased on 10.05.2021 for ₹ 10
crores. The purchase of the said machinery was in accordance with the scheme of deposit.
(v) Depreciation allowable as per Tax Audit Report is ₹ 28 crores.
You are required to answer the following:
6. What is the amount of deduction available under section 33AB?
(a) ₹ 30,00,00,000
(b) ₹ 15,06,00,000
(c) ₹ 39,65,00,000
(d) ₹ 15,86,00,000
7. Compute Agricultural Income of Ganga Ltd.
(a) ₹ 57,44,00,000
(b) ₹ 37,33,60,000
(c) ₹ 20,10,40,000
(d) ₹ 34,46,40,000
8. Compute Amount of brought forward losses pertaining to Assessment Year 2023-24 that
can be set-off from Business of A.Y. 2025-26.
(a) ₹ 6,00,00,000
(b) ₹ 3,60,00,000
(c) ₹ 2,40,00,000
(d) None of the Above
9. Compute Amount deemed as profits and gains of business or profession due to
misutilisation/non-utilisation of amount withdrawn from NABARD A/c.
(a) ₹ 23,65,00,000
(b) ₹ 10,00,00,000
(c) ₹ 33,65,00,000
(d) ₹ 13,65,00,000
10. Compute Taxable Income of M/s. Ganga Ltd. for A.Y. 2025-26.
(a) ₹ 14,10,40,000
(b) ₹ 57,44,00,000
(c) ₹ 20,10,40,000
(d) ₹ 37,33,60,000

Case Study 3
The Assessing Officer surveyed TR & Hotels, which was within his jurisdiction, at 11:30 p.m. on
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15.8.20XX for the purpose of obtaining information which may be relevant to the proceedings under
the Income-tax Act, 1961. The restaurant is kept open for business every day between 11 a.m. and 12
a.m.
On 25.8.20XX, the Assessing Officer entered RR & Hotels which was also within his jurisdiction at 9:15
p.m. for the purpose of collecting information which may be useful for the purposes of the Income-tax
Act, 1961. This Restaurant is kept open for business every day between 7 am to 10:30 pm.
In both the above cases, the Assessing Officer impounded and retained in his custody for a period of 18
days (exclusive of holidays), books of account and other documents inspected by him, after recording
reasons for doing so. The Assessing Officer, however, did not take prior permission from income-tax
authority equivalent to Commissioner or above for doing so.
The owners of these restaurants claim that the Assessing Officer could not enter the restaurants after
sunset and take away with him the books of account kept at the restaurants. The owners also claimed
that the Assessing Officer ought to have obtained the prior approval of income-tax authority equivalent
to Chief Commissioner or above before entering the restaurants.
You are required to answer the following:
11. Is the action of the Assessing Officer entering TR & Hotels at 11:30 pm valid?
A. Not valid, since Assessing Officer entered the restaurant after the sunset.
B. Valid, since Assessing Officer entered during the hours at which such place is open for the
conduct of business and prior permission of higher authorities is not required to be
obtained for survey.
C. Not valid, since prior permission of income-tax authority equivalent to Chief Commissioner
or above is not obtained by the Assessing Officer though he entered during the hours at
which such place is open for the conduct of business.
D. Not valid, since Assessing Officer entered after the sunset and prior permission of Chief
Commissioner or above was not obtained.
12. Would your answer to Question no. 1 change if the Assessing Officer had surveyed TR &
Hotels only for the purpose of verifying whether tax has been deducted/collected at source
in accordance with the provisions of the Income-tax Act, 1961?
A. The action of Assessing Officer is not valid, since he entered the place after sunset and
permission of income-tax authority equivalent to Chief Commissioner or above is not
obtained.
B. The action of Assessing Officer is valid, since he entered the place during the hours at which
such place is open for conduct of business and permission of Chief Commissioner or above
authorities not required to be obtained.
C. The action of Assessing Officer is not valid, since he has not obtained the permission of
Chief Commissioner.
D. The action of Assessing Officer is not valid, since he entered the place after 10 pm.
13. Is the action of the Assessing Officer entering RR & Hotels at 9:15 pm valid?
A. Not valid, since Assessing Officer entered the restaurant after the sunset.
B. Valid, since Assessing Officer entered during the hours at which such place is open for the
conduct of business and prior permission of higher authorities is not required to be
obtained.
C. Not valid, since prior permission of Chief Commissioner or above is not obtained by the
Assessing Officer though he entered the place during the hours at which such place is open

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 for the conduct of business.
D. Not valid, since Assessing Officer entered after the sunset and prior permission of Chief
Commissioner or above is not obtained.
14. Is the action of the Assessing Officer in impounding and retaining in his custody books of
account and other documents of TR & Hotels, after recording reasons for doing so, without
taking prior permission from income-tax authority equivalent to Commissioner or above,
valid?
A. The action of Assessing Officer is not valid, since prior approval of Commissioner or above
authority is not obtained.
B. The action of Assessing Officer is valid.
C. The action of Assessing Officer is not valid, since prior approval of Joint Commissioner is
not obtained.
D. The action of Assessing Officer is not valid, since he cannot retain impounded books of
accounts or other documents for a period exceeding 10 days.
15. Would your answer to MCQ 4 change if the Assessing Officer had surveyed TR & Hotels
only for the purpose of verifying whether tax has been deducted/collected at source in
accordance with the provisions of the Income-tax Act, 1961?
A. The action of Assessing Officer is not valid, since prior approval of Commissioner or above
is not obtained.
B. The action of Assessing Officer is valid.
C. The action of Assessing Officer is not valid, since he cannot impound or retain books of
accounts or other documents.
D. The action of Assessing Officer is not valid, since he cannot retain impounded books of
accounts or other documents for a period exceeding 10 days.

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 PART – II (Descriptive Questions)
This part comprises 6 questions. Question No. 1 is compulsory. Attempt any
4 questions out of the remaining 5 questions.

Question 1 (14 Marks)

On, 1.4.2024, Binu Ltd. of Delhi, a domestic company, engaged in the business of manufacturing of
metro rail seats, converted into an LLP by name M/s. Soumya LLP fulfilling all the conditions specified
in section 47(xiiib) of the Income-tax Act, 1961. Some of the relevant information is given below in
respect of Binu Ltd., as on 31.3.2024:
(a) Voluntary Retirement Scheme (VRS) expenditure incurred by the company during the PY 2022-23
is ₹ 20 lakhs. The company was allowed deduction of ₹ 4 lakhs each for the PYs 2022-23 & 2023-24
under section 35DDA.
(b) 150 equity shares in Toyo Ltd., an Indian company listed in Bombay Stock Exchange was acquired
for ₹ 1,900 per share on 10.1.2018. On conversion, these shares become the property of M/s.
Soumya LLP.
(c) Besides other assets transferred to M/s. Soumya LLP by M/s. Binu Ltd., it also transferred two
factory buildings. On 1.4.2024, M/s. Soumya LLP leased out one factory building along with plant
and machineries and furniture etc. at a consolidated lease rent of ₹ 50,000 per month.
During the previous year 2024-25, the M/s. Soumya LLP earned a profit of ₹ 25,40,000 after
debit/credit of the following items to its Profit and loss account:
(i) Mr. Binu is the working partner of the LLP. He is also a working partner in another firm. He is
actively engaged in the business of both the firms. Binu gets, a salary of ₹ 55,000 p.m. from M/s.
Soumya LLP and the same is authorised in the deed of LLP.
(ii) Mr. Ayushman, an employee, was deputed to work in the client's office in Mumbai for three
months. The LLP has paid his salary in cash for the months when he was in Mumbai, amounting
to ₹ 3,45,000 (net of TDS and other deductions), since he did not have a bank account in Mumbai.
This payment was included in amount of "salary" debited to profit and loss account. Mr.
Ayushman is normally posted in Delhi being the headquarter of M/s. Soumya LLP.
(iii) Amount of ₹ 25,000 was paid towards penalty for non-fulfilment of delivery conditions of a
contract for sale for the reasons beyond its control.
(iv) The LLP had provided an amount of ₹ 18 lakhs being the sum estimated as payable to workers
based on agreement to be entered with workers union towards periodical wage revision once in
3 years. The provision, is based on a fair estimation of wage and reasonable certainty of revision
once in 3 years.
(v) Depreciation debited to profit and loss account ₹ 5,40,000.
(vi) Gratuity provisions based on actuarial valuations ₹ 6.5 lakhs. (Gratuity actually paid ₹ 4 lakhs to
retired employees debited in Gratuity provision account).
(vii) Profit on sale of shares of M/s. Toyo Ltd. ₹ 1,27,500. These shares were sold on 31.12.2024 for ₹
2,750 per share. The highest price of Toyo Ltd. quoted on the stock exchange as on 31.1.2018 was
₹ 2,500 per share.
(viii) Repairs to plant and machinery include ₹ 59,000 in respect of plant and machinery given on
lease.
(ix) Factory licence fee paid ₹ 15,000 for each factory building.

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(x) Legal fee includes ₹ 26,000 paid to an advocate for drafting and registering the lease agreement.
Additional Information:
(1) Under an agreement of debt restructuring, the bank has converted unpaid interest amounting to
₹ 9,00,000 up to 31.7.2024 into a new loan account repayable in 3 equal annual instalments. The
first instalment was paid in March 2025 by debiting the new loan account.
(2) Mr. Binu, being a working partner, bought a car which is registered in his own name out of the
funds of LLP. The car was used exclusively for the purposes of the business of the LLP only. The
depreciation on the car amounts to ₹ 15,000 for the PY 2024-25 which is not included in the
depreciation amount debited to profit and loss account.
(3) Depreciation as per Income-tax Rules ₹ 8,10,000 (including depreciation on the assets given on
lease amounting to ₹ 90,000). It does not include depreciation on car.
(4) The LLP sold import entitlements on 1.5.2024 for ₹ 1,50,000. This sum is not included in profit
and loss account by treating it as capital receipt.
You are required to discuss the implication of such conversion and calculate the total income in the
hands of M/s Soumya LLP for the Assessment Year 2025-26.

Question 2A (8 Marks)
Siddarth Ltd. has an undertaking (Unit-X) in Special Economic Zone (SEZ) and another undertaking
(Unit-Y) in Free Trade Zone (FTZ) for manufacturing of computer software. It furnishes the following
particulars for its 5th year of operations ended on 31st March, 2025:
Unit X Unit Y
₹ (In Lacs) ₹ (In lacs)
Total Sales: 180 120
Export Sales: 120 10
(Inclusive of ₹ 10 lacs for onsite development of computer software
outside India by Unit X)

Profit earned 63 36
[After claim of bad debts under section 36(1)(vii) in Unit X]

Plant and machinery (Purchased in PY 2023-24) used in the business has been depreciated at 15% on
straight line method (SLM) basis and depreciation of ₹ 9 lacs was charged to profit and loss account in
the proportion of sales during the previous year. (Ignore Additional Depreciation)
₹ 100 lacs were realized out of export sales in time and balance of ₹ 20 lacs becomes irrecoverable due
to bankruptcy of one of the foreign buyers in Unit-X.
Compute the deduction under section 10AA of the Income-tax Act, 1961 and taxable income of Siddarth
Ltd. for the Assessment Year 2025-26.

Question 2B (6 Marks)
Earth (P) Ltd., Calcutta is engaged in trading of electronic goods. It purchased goods from its associated
enterprise Sun Pte. Ltd., Singapore, and also from unrelated party, Oceania Ltd., UK. For the F.Y.2024-
25, the gross profit margin was 15% on the sale of goods of Sun Pte Ltd., whereas it was 20% in the
case of Oceania Ltd. After-sales warranty of 6 months was provided by Sun Pte Ltd. whereas Oceania
Ltd. gave after-sales warranty of 1 year. The cost of warranty may be taken as 2% of the sale price. The
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Sun Pte. Ltd.’s brand value is internationally known and the benefit of the brand value can be taken as
1% of sale price. During the year, it sold goods of Sun Pte Ltd. for ₹ 20 crores and of Oceania Ltd. for ₹
15 crores. As regards transport cost of the goods purchased, there was no difference between related
and unrelated party. Compute the ALP of the transaction between Earth (P) Ltd. and Sun Pte Ltd.,
Singapore by applying the Resale Price Method, considering the facts of the case.

Question 3A (8 Marks)
Examine each of the following independent cases of charitable trust/institutions:
(i) Raj Charitable trust registered under section 12AB, received corpus donation of ₹ 5 lakhs
during the previous year 2024-25. The trust intends to utilize it during the previous year
2025-26 and claimed that since the donor gave the donation with a specific direction that it is
towards the corpus of the trust, it is exempt from tax under section 11(1)(d). Further, during the
year, the trust took a loan of ₹ 20 lakhs from a nationalized bank and out of it, applied ₹ 18 lakhs
on the construction of its building. The trust claimed ₹ 18 lakhs as application for charitable
purposes during the year.
(ii) Smile Foundations is a 'not for profit' trust that runs a secondary school. The total receipts
consisting of voluntary contributions and the government grants of the trust amounted to ₹ 30
lakhs (₹ 14 lakhs and 16 lakhs respectively). Is the trust required to get an approval to claim
exemption under section 10(23C)?
(iii) Little Angels is a charitable institution registered under section 12AA. To continue claiming the
benefits of the exemption provisions contained in sections 11 & 12, it applied for re-registration
under section 12AB. The trust wants to confirm whether the registration granted under section
12AB has the same perpetual validity as granted under section 12AA.

Question 3B (6 Marks)
Smt. Laxmi (age 70), a resident individual furnishes you the following particulars:
Particulars ₹
Income from business in India (computed) 6,00,000
Loss from let out property at Chennai 4,40,000
Dividend income from a domestic company 2,00,000
Business income in country "B" (tax paid thereon at 20%) 4,00,000
Rental income from property at Mumbai (computed) 1,80,000

Note: Assume that there is no double taxation avoidance agreement between India and country "B" and
she does not opt for the provisions of section 115BAC.
Compute the total income and tax payable by Smt. Laxmi for the A.Y.2025-26.

Question 4A (8 Marks)
(i) Lambda Ltd., an Indian company, utilized the services of Donald Harris, a Country M cricketer and
non-resident in India for playing in cricket league matches for a team sponsored by the company.
A sum of ₹ 32 lakhs is payable to him for playing in such matches. In addition, a sum of ₹ 8 lakhs
is also payable to him for appearing in company's advertisement for its product. He has incurred
an expenditure of ₹ 2 lakhs in India for earning the said income.
Adam Fields, an ex-cricketer hailing from Country N, was employed as a match referee in the said

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 cricket tournaments. A sum of ₹ 6 lakhs is payable to him for his services. He stayed in India for
45 days during the P.Y.2024-25. Is Lambda Ltd. required to deduct tax on the above payments
due to Donald Harris and Adam Fields? Examine. If there is an agreement between Lambda Ltd.
and Donald Harris and Lambda Ltd. and Adam Fields that the tax payable in India on income
payable to them will be borne by Lambda Ltd., then what is the amount of tax to be deducted
at source?
(ii) A notified infrastructure debt fund eligible for exemption under section 10(47) of the Income-tax
Act, 1961 pays interest of ₹ 5 lakhs to a company incorporated in USA. The US Company incurred
expenditure of ₹ 12,000 for earning such interest. The fund also pays interest of ₹ 3 lakhs to Mr.
X, who is a resident of a notified jurisdictional area. What is the amount of tax to be deducted at
source?

Question 4B (6 Marks)
Simran (P) Ltd. holds 55% of shares in Al Kuber Ltd., a Company incorporated in Dubai. Al Kuber Ltd.
has its offices in India also.
Details relating to Al Kuber Ltd. for year ended March 2025 are as stated below: (₹ in crores)
Particulars India Dubai
• Fixed Assets after considering Depreciation for tax purposes 1500 650
• Intangible Assets 225 1075
• Other Assets (value as per books of A/c) 800 1900
• Income from trading operations. The above figure includes: 730 1370
a. Income from transactions where sales are to AE 20 40
b. Income from transactions where purchases are from AE 30 55
c. Income from transactions where sales/purchases are to/from AE 45 80
• Interest & Dividend from investments 560 320
• No. of employees 70 90
 Unskilled employees out of the above mentioned total employees 5 30
(resident in respective countries)
• Payroll expenses on employees 940 1250
 Payroll expenses on Unskilled employees out of the above 100 415
mentioned total Payroll expenses
• No. of Board Meetings held 3 4

Determine the Residential Status of Al Kuber Ltd. for A.Y. 2025-26.

Question 5A (8 Marks)
(i) Anustup Chandra Textiles Ltd., had borrowed a sum of ₹ 2 crores from a bank during the period
when its business was being set up. From the surplus funds, it made short-term deposits and
earned interest of ₹ 3 lakhs. The assessee claimed that it was not a revenue receipt but a capital
receipt, since the interest was earned prior to commencement of business and in any case, the
interest received would be offset by the interest paid on the loan borrowed. The Assessing
officer negative the claim of the assessee. Is the AO justified in his action?
(ii) Ghosh Group of Educational Institutions‖, running three famous colleges in Kolkata, claimed
exemptions under section 10(23C). In all these three colleges, there is a net surplus after

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 meeting all its expenses. The Assessing Officer (AO) rejected the claim for exemption on the
ground that the presence of net surplus leads to the inference that the assessee-institution does
not exist solely for educational purposes. Is the rejection of the AO justified in law?

Question 5B (6 Marks)
Examine and state the correctness or otherwise of each of the following statements in the context of
international tax treaties between the countries and answer in brief with reasons thereof:
(i) "Providing assistance in the collection of the fair and legitimate share of tax by the countries
involved" is the sole objective of Tax Treaties entered among Countries.
(ii) A Protocol is an integral part of the Tax Treaty and has the same binding force as the main clauses
therein.

Question 6A (6 Marks)
XYZ & Co, a firm engaged in interior decoration business, employed 20 new employees on 1.4.2024 on a
monthly salary of ₹ 25,000 to be paid by account payee cheque. In addition, each employee was entitled
to 10% employer contribution to recognised provident fund. The employees were also entitled to
transport allowance of ₹ 3,000 p.m. paid in cash. The gross total income of XYZ & Co. included profits
and gains from business of ₹ 62 lakh.
The firm claimed deduction under section 80JJAA of ₹ 18 lakh, being 30% of 60 lakh (20 new
employees x ₹ 25,000 p.m. x 12) on the basis of the report of the chartered accountant issued in Form
10DA. The same chartered accountant was also the tax auditor of the firm. The chartered accountant
contended that “emoluments” do not include employer contribution to PF. Also, cash payments were
not to be considered as “additional employee cost” for the purpose of section 80JJAA. Hence, only ₹
25,000 p.m. per employee paid by account payee cheque has to be treated as additional employee cost.
Since the same does not exceed the limit of ₹ 25,000 p.m. and the employees have been employed for
more than 240 days in the P.Y.2024-25, the employees would qualify as “additional employees” for the
purpose of deduction under section 80JJAA for A.Y.2025-26.
Is his contention correct? Examine the ethical implications in this case.

Question 6B (4 Marks)
M/s. Raghuram Co. Ltd., Mumbai entered into the following agreements with various non-resident
entities during the year:
(i) Paid ₹ 4,00,000 to M/s. Neil Inc., a company based in USA for online advertisement of its
products. M/s. Neil Inc., does not have a PE in India.
(ii) Paid ₹ 50,000 to Mr. David, a non-resident individual, against providing digital space for online
advertisement of its products.
Examine the equalisation levy implications of such payments. Also, state the consequence of non-
deduction of equalisation levy.

Question 6C (4 Marks)
Vijay Agencies, a partnership firm constituted by three partners with equal shares was dissolved on
1.04.2024 after a search. The tax liability of the firm outstanding to be paid was determined at ₹ 15

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lakhs. Out of three partners, one was declared insolvent on 18.03.2025 by the Court. The Assessing
Officer, for recovering the demand, attached the Bank Accounts of other two partners and could recover
an amount of ₹ 6 lakhs from the Account of one such partner. You are asked by the partners of the
dissolved firm the following questions:
(i) About the liability of each of them to pay outstanding demand.
(ii) Whether the action of Assessing Officer to attach the Bank Account of partners to recover the tax
demand of the dissolved firm is justified?

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