Direct Tax Laws & International Taxation - May 2018 MTP

(a) Samrat Ltd. has an undertaking (Unit-A) in Special Economic Zone (SEZ) and another undertaking (Unit- B) in Free Trade Zone (FTZ) for developing computer software. It furnishes the following particulars for its 3 rd year of operations ended on 31st March, 2018: Unit A Unit B ` (In lacs) ` (In lacs) Total Sales: 150 100 Export Sales : 125 10 54 36 (Inclusive of ` 15 lacs for onsite development of computer software outside India by Unit A)…

Organic Ltd., engaged in the business of manufacturing, shows a net profit of ` 450 lakhs from its profit and loss account for the year ended 31-03-2018 after debiting and crediting the following items: (i) Depreciation provided in accounts as per straight line basis ` 30 lakhs. (ii) The company has made cash payments for purchases and expenditure as below: On 20-07-2017 ` 5.5 lakhs (for purchase of agricultural produce) On 17-01-2018 ` 6 lakhs (Due to cash demanded by…

(a) Mr. Ram purchased a plot of land in Chennai in August 2006 for ` 50 lakhs. He decided to sell the land to Mr. Mathur for ` 85 lakhs and received an advance of ` 2 lakhs in October, 2010. Mr. Mathur was unable to complete the agreement and hence, the entire advance was forfe ited by Mr. Ram. Again Mr. Ram entered into an agreement to sell the land to Mr. Shyam for ` 90 lakhs and received…

Kumar & Co., a partnership firm consisting of three partners, enhanced working partner salary from ` 30,000 per month for each partner to ` 55,000 per month for each partner. The increase in working partner salary was authorised by the deed of partnership. The Assessing Officer during the course of assessment contended that the remuneration paid to working partners @ ` 55,000 per month for each partner as excessive and applied section 40A(2)(a) though the payment was within the statutory…

Indico Pvt. Ltd. is a domestic company in India. Den Pvt. Ltd. is a company incorporated in Country ‘X’ and it is a non-resident in India. Den Pvt. Ltd. forms a company Zen Pvt. Ltd, its 100% subsidiary, in Country ‘Y’. Zen Pvt. Ltd. and Indico Pvt. Ltd. form a joint venture company Revolution (P) Ltd. in India on 10.04.2017. There is no other activity in Zen Pvt. Ltd. As per the joint venture agreement, 49% of Revolution (P) Ltd‘s…

(a) “Noorie”, a resident of India, owned for the financial year ended on 31-03-2018, a house property in Australia purchased in July, 2008; a shop in London purchased in June, 2009 and space in a commercial complex in Dubai purchased in April, 2015. She is also having authority to op erate the bank account (maintained with Citibank, Australia) of a company owned by her daughter and son in-law since August, 2016. She has been served in July, 2018 with the…

(a) Purchase commission of ` 25,000 was paid to Mr. Kashi, an agent, on 11 th August, 2017 by Mac Ltd. towards purchase made from him without deducting tax at source. Later on, a further commission of ` 55,000 was due to him on 31 st January, 2018 from which tax of ` 4,000 was deducted at source. The tax so deducted was deposited on 25 th August, 2018. Compute the amount of interest chargeable under section 201(1A). (4 Marks)…