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Winter-2014
Master of
Business Administration- MBA Semester 4
MF0012–Taxation
Management-4 Credits
(Book ID:
1759)
Assignment
(60 Marks)
Note: Answer
all questions (with 300 to 400 words each) must be written within 6-8 pages.
Each Question carries 10 marks 6 X 10=60
Q1. Explain the objectives of tax
planning. Discuss the factors to be considered in tax planning.
Answer. Objectives of tax planning
Ø Reduction of tax liability by
utilizing the benefits available in the tax laws.
Ø Informed and pragmatic financial
decision: A person adds the dimension of tax incidence in his decision making
on financial matters and it helps him to optimize his decisions.
Ø Discharging a citizen's duty: when it
comes to pay tax it is breathtaking situation for every person, they tries to
hide earned income and skip paying income tax but these are very illegal methods
of reducing tax liability and increasing the black money. Tax planning provides
the
Q2. Explain the categories in Capital
assets. Mr. C acquired a plot of land on 15th June, 1993 for 10, 00,000 and
sold it on 5th January, 2010 for 41, 00,000. The expenses of transfer were 1,
00,000.Mr. C made the following investments on 4th February, 2010 from the
proceeds of the plot.
A) Bonds of Rural Electrification
Corporation redeemable after a period of three years, 12, 00,000.
B) Deposits under Capital Gain Scheme
for purchase of a residential house 8, 00,000 (he does not own any
house).Compute the capital gain chargeable to tax for the AY 2010-11.
Answer. Categories of capital assets
1. Short term capital assets
A short term
capital assets means as per u/s 2(42A) a capital asset held by an assesses for
not more than (a) twelve months before its transfer in case of companies equity
& preference shares or any other security listed in a recognized stock
exchange or units of mutual funds and UTI or zero coupon bond and (b) 36 months
before its transfer in the case of any other asset.
2. Long term capital assets
Any capital
asset other than a short term capital asset is termed as a long term capital
asset. When gains arising from the transfer of long term capital assets are
called Long term capital gains. It qualifies
Q3. Explain major considerations in
capital structure planning. Write about the dividend policy and factors
affecting dividend decisions.
Answer. There are three major considerations in capital structure
planning, i.e. risk, cost of capital and control, which help the finance
manager in determining the proportion in which he can raise funds from various
sources.
Risk- Risk is of two kinds, i.e. financial
risk and business risk. Here we are concerned primarily with the financial
risk.
Q4. X Ltd. has Unit C which is not
functioning satisfactorily. The following are the details of its fixed assets:
|
Asset
|
Date
of acquisition
|
Book
value (Rs. lakh)
|
|
Land
Goodwill
(raised in books on 31st March, 2005)
Machinery
Plant
|
10th
February, 2003
5th
April, 1999
12th
April, 2004
|
30
10
40
20
|
The written down value (WDV) is Rs.
25 lakh for the machinery, and Rs.15 lakh for the plant. The liabilities on
this Unit on 31st March, 2011 are Rs.35 lakh.
The following are two options as on
31st March, 2011:
Option 1: Slump sale to Y Ltd for a
consideration of 85 lakh.
Option 2: Individual sale of assets
as follows: Land Rs.48 lakh, goodwill Rs.20 lakh, machinery Rs.32 lakh, and
Plant Rs.17 lakh. The other units derive taxable income and there is no carry
forward of loss or depreciation for the company as a whole. Unit C was started
on 1st January, 2005. Which option would you choose, and why?
Answer. Option
1: Slump sale
Q5. Explain the Service Tax Law in
India and concept of negative list. Write about the exemptions and rebates in
Service Tax Law.
Answer. Service Tax is a tax levied on the transaction
of certain specified services by the Central Government under the Finance Act,
1994. It is an indirect tax, which means that normally the service provider
pays the tax and recovers the amount from the recipient of taxable service. In
certain cases Government may shift the liability of payment of service tax to
the receiver of service as a measure of administrative convenience. It is often
referred to as ‘reverse charge’ in common
Q6. What do you understand by customs
duty? Explain the taxable events for imported, warehoused and exported goods.
List down the types of duties in customs. An importer imports goods for
subsequent sale in India at $10,000 on assessable value basis. Relevant
exchange rate and rate of duty are as follows:
|
Particulars
|
Date
|
Exchange
Rate Declared by CBE&C
|
Rate
of Basic Customs Duty
|
|
Date
of submission of bill of entry
|
25th
February, 2010
|
Rs.45/$
|
8%
|
|
Date
of entry inwards granted to the vessel
|
5th
March, 2010
|
Rs.49/$
|
10%
|
Calculate assessable value and
customs duty.
Answer. A tax levied on imports (and,
sometimes, on exports) by the customs authorities of a country to raise state
revenue, and/or to protect domestic industries from more efficient or predatory
competitors from abroad.
Custom duty: the word custom comes from Sanskrit
word "kashtam" which means difficulty. When goods imported into the
country from another country which creates a taxable events therefore it is
=
46,350
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assignments at nominal price of Rs.100 each.
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