CA Intermediate September 2024 Suggested Answers Paper 3 Taxation

FOR CA INTERMEDIATE EXAM PREPARATION

CA Intermediate 2024
Suggested Answers ·
Paper 3 Taxation
EXAM YEAR TYPE SUBJECT

CA Intermediate 2024 Suggested Answers Paper 3 Taxation
DATE

September 2024

Notes · Sample Papers · Previous Year Papers · Mock Tests

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PAPER – 3 : TAXATION
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m SECTION A: INCOME TAX LAW c. o
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PART - I
CaseaScenario 1
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aMs.g Prerna is having a residential house property in Nagpur, of which 1/3 is self- rd

occupied and 2/3d is let out for commercial purposes at a monthly rent of
` 12,000. Fair rent (for let out portion only) was ` 30,000 p.m., Municipal value
for the property was ` 2,40,000 and standard rent under the Rent Control Act was
` 3,00,000 for the entire property. Municipal taxes are 10% of municipal valuation
and are paid by her on 30th July, 2023. She took a loan of ` 45,00,000 for the
construction of this house from a scheduled bank on 1.4.2021. She repaid the

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entire loan along with interest on 30.6.2023. The interest rate for this loan was

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10% p.a. The construction was completed on 30th June, 2022. She earns other

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income of ` 2,00,000 during the previous year 2023-24. She wishes to opt for 1
default tax regime.
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Based on the above information, answer multiple choice question no. 1-3:
1. The Net Annual Value (NAV) of the house property for the A.Y. 2024-25 is:
(A) ` 1,28,000
(B) ` 1,44,000
(C) ` 1,84,000
(D) ` 2,00,000 (2 Marks)

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2. Deduction in respect of interest on loan for the P.Y. 2023-24 shall be:
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(A) ` 2,02,500

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(B) ` 1,35,000
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las (C) ` 5,62,500
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ag (D) ` 1,12,500 (2 Marks)

1
Read “opt for” as “pay tax under”

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

3. Compute her total income for the assessment year 2024-25
(A) ` 1,93,800
(B) ` 2,00,000
(C) Nil
(D) ` 2,05,000 (2 Marks)
Case Scenario 2
Mr. Desai (aged 52 years) is an Indian resident. He gives the following information
to you relating to the P.Y. 2023-24:
(i) Profit from the business carried out in Dubai controlled from Dubai
` 13,10,000 (received in a bank account in Dubai).
(ii) Loss from a business in Delhi - ` 4,50,000
(iii) During the F.Y. 2023-24, he also played some online games on a particular
Indian website Game.com. Game.com is a manufacturer of men's shirts. During
the year, Mr. Desai won 6 such shirts. The cost to manufacture such shirts by
Game.com is ` 3,000 per piece and it sells these shirts at ` 10,000 per piece
(excluding GST @18%). However, to play such games, Mr. Desai had to deposit
a sum of ` 50,000 with the website as a refundable deposit.
(iv) On 23rd May 2023, he gifted listed equity shares in an Indian company to his
son's daughter, Ms. Shanaya. These shares were purchased by him on 1.4.2020
for ` 65,000. The market value as on the date of transfer was
` 1,00,000. Shanaya sold these shares for a consideration of ` 50,000 on
31.3.2024.
(v) He had taken a loan of ` 25,00,000 for the purchase of an electric vehicle (for
his personal purposes) on 1.4.2022 from a scheduled bank. He paid ` 5,00,000
as interest on such loan during the P.Y. 2023-24.
(vi) He opts 2 to be governed by the default provisions of taxation regime under the
Act.

2
Read “opts” as “wants”

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SUGGESTED ANSWER TAXATION

Based on the above information, answer multiple choice question no. 4-6:
4. What shall be the total income of Mr. Desai for the A.Y. 2024-25
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(A) ` 8,78,000
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(B) ` 8,63,000
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(C) `m a
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g a ` 7,70,000
l(D) (2 Marks)a
a5. Which of the following statement is correct in respect of deductions available
to him under Chapter VI-A?
(A) He shall be eligible for a deduction of ` 1,50,000 in respect of interest on
loan irrespective of the tax regime opted by him.
(B) He shall not be eligible for any deduction under Chapter VI-A irrespective
of the tax regime opted by him.

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(C) He shall be eligible for a deduction of ` 1,50,000 in respect of interest on
loan only if he opts out of the default tax regime.

s emdefaultoftax` 50,000
(D) He shall be eligible for a deduction
loan only if he opts out ofathe
in respect of interest on

6. What is the requirement a ofg
l regime. (2 Marks)
deduction of tax at source by Game.com in respect
of such winning by Mr. Desai?
(A) Game.com needs to deduct tax at source amounting to ` 18,000.
(B) Game.com needs to deduct tax at source amounting to ` 5,400.
(C) There is no requirement for deduction of tax at source. However,
Mr. Desai need to collect tax at source from the security deposit.

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(D) Game.com needs to deduct tax at source amounting to ` 6,000.
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. Marks)
c. o 7. Mr. Sundaram owns two residential house properties in Chennai, m
(2

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which is used by him and his family for their residential lpurposes.
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Both the

ag houses are exactly identical and their expected rent/municipal value etc. are
also the same. He let out the other house for a rent of ` 1,15,000 p.m. He
took two similar loans for the purchase of these two houses on 1.4.2022. The
stamp duty value of these houses is ` 30 lakhs each. During the

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

F.Y. 2023-24, he paid ` 4,00,000 as interest for each of the houses. He does
not have any other income or investments during the year. He did not file his
return of income within the due date under section 139(1). What shall be his
total income chargeable to tax?
(A) ` 2,16,000
(B) ` 3,66,000
(C) ` 5,66,000
(D) ` 1,66,000 (2 Marks)
8. During the year 2023-24, Mrs. Kalis (aged 65 years), received ` 10,50,000 a
family pension. She had to spend ` 26,000 to get such income towards
documentation and processing charges. She does not have any other income.
Assuming she opts for 3 the default tax regime, what shall be her total income
chargeable to tax?
(A) ` 10,35,000
(B) ` 10,24,000
(C) ` 10,50,000
(D) ` 7,00,000 (1 Mark)
Answer Key

MCQ No. Correct Option
1. (C)
2. (B)
3. (B)
4. (C)
5. (C)
6. None of the options is correct
7. (C)
8. (A)

3
Read “opts for” as “pays tax under”

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SUGGESTED ANSWER TAXATION

SECTION B: GOODS AND SERVICES TAX
PART - I
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Case Scenario 3
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M/s. Veena & Co. of Jabalpur was registered under GST under composition
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scheme. Outward Supply of the firm for the month of July 2023 was ` 10 lakh,
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out of which ` 2 lakh was supply of services. In the preceding financial year, the
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firm was doing trading of taxable goods only. Turnover of the concern for the
previous financial year was ` 100 lakh.
The firm imported the following services during August, 2023:
(a) Architect services from Mr. Vinod, a partner of the firm, who resides in France
for ` 1,00,000. The said service was paid but not used for the furtherance of
the business.
(b) Management consultancy services from Mr. Lal, a renowned lawyer in

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Sweden, who was an ex-employee of the firm. The value of the said service

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was ` 3,00,000. Even though it was used in the furtherance of the business,

emthe limit of ` 150 lakh on 25.09.2023 from
no consideration was paid by the firm.

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tolpay tax under regular scheme.
Aggregate Turnover of the firm crossed
which date the firm was liable g
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All the amounts given above are exclusive of taxes wherever applicable. All the
supply referred above is intra-State unless specified otherwise.
From the information given above, choose the most appropriate answer for the
9-11 questions:
9. Tax liability of Veena & Co. for the month of July 2023 is `____________each
under CGST and SGST.

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(A) 5,000
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(C) 10,000

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(D) 14,000 (2 Marks)
10. Import of services by Veena & Co. that will be treated as supply is
` ________.
(A) Nil

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

(B) ` 1,00,000
(C) ` 3,00,000
(D) ` 4,00,000 (2 Marks)
11. Veena & Co. will be eligible to claim ITC held on Stock and Capital goods as
on _____________.
(A) 01-09-2023
(B) 24-09-2023
(C) 25-09-2023
(D) 30-09-2023 (2 Marks)
Case Scenario 4
Pawan was engaged in providing various services within the State of Rajasthan
since May 2023. His aggregate turnover crossed the threshold limit on 04.07.2023.
He applied for registration under GST on 02.08.2023. He got his GST registration
on 10.08.2023.
After taking registration, Pawan started a business across India including supply
of goods also. He dispatched goods pan India based on orders he got for the goods
dealt by him.
He received an order from Delhi for which he supplied taxable goods valuing
` 45,000. Applicable rate of IGST was 12%. He also supplied certain exempted
goods valuing ` 4,000. He made one invoice for both taxable as well as exempted
supply made to Delhi.
He asked his tax consultant for the requirement of generation of e-way bill for
this order. Tax consultant informed him that the requirement of e-way bill is
based on consignment value of goods supplied.
Even being a micro enterprise, Pawan did not receive timely payment from his
customers as a result of which he ran into severe cash crunch and eventually
could not make on-time payment to his suppliers. As a result, he decided to shut
down his business and got placed in a software company as a senior programmer
executive.
While shutting down his business, he informed his tax consultant to cancel the
GST registration. Tax consultant surrendered his registration online in GST Portal

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SUGGESTED ANSWER TAXATION

on 25.10.2023 and his application for cancellation was approved by the Proper
Officer on 31.10.2023.

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All the amounts given above are exclusive of taxes wherever applicable.
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From the information given above, choose the most appropriate answer for the

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12-14 questions:

s e date of registration of Pawan is ____________. l
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l(A) 04.07.2023 ag
12. Effective

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a (B) 02.08.2023
(C) 03.08.2023
(D) 10.08.2023 (2 Marks)
13. Consignment value of goods supplied to Delhi by Pawan is `___________.
(A) 45,000

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(B) 49,000
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(C) 50,400
(D) 54,400
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a g is supposed to file Final return under GST is
14. Due date by which Pawan
____________.
(A) 25.11.2023
(B) 30.11.2023
(C) 25.01.2024
(D) 31.01.2024 (2 Marks)

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15. Smita Limited made an outward supply of garments at an agreed price of
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` 5,00,000. The company charged ‘Go Green Cess’ levied by Local municipal

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corporation amounting to ` 10,000 for this supply. As the customer made

s em payment within 3 days from the date of delivery, Smita Limited provide a
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discount of ` 5,000 separately as a customer friendly measure, even though

ag no prior agreement was made on discount. Value of Supply made by Smita
Limited u/s 15 is ` ______________
(A) 5,05,000

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

(B) 5,10,000
(C) 5,00,000
(d) 5,15,000 (2 Marks)
16. ‘Truth is God’, a religious trust u/s 12AA of the Income-tax Act, 1961, provides
service by way of renting of premises within the precincts of a religious place
which is exempt upto ` ___________.
(A) ` 999 per day
(B) ` 1,000 per day
(C) ` 9,999 per day
(D) ` 10,000 per day (1 Mark)
Answer Key
Question Answer
No.
9. (A) 5,000
10. (B) ` 1,00,000
11. (B) 24-09-2023

12. (A) 04.07.2023
13. (C) 50,400
14. (D) 31.01.2024
15 (B) ` 5,10,000
16 (C) ` 9,999 per day

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PAPER – 3 : TAXATION
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SECTION A: INCOME TAX LAW

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aCandidates are also required to answer any two questions from the remaining
three questions.
Working notes should form part of the respective answers.
All questions relate to Assessment Year 2024-25, unless otherwise stated.

Question 1

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Mr. Raman, a resident individual aged 62 years, is engaged in the business of

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manufacturing and sales of spare parts for motor bikes, as a proprietor. He

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prepares his accounts on mercantile basis. This business is carried out on the

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ground floor of a two storied commercial building owned by him, the written

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down value of which is ` 8 lakhs as on April 1, 2023. He prepares his accounts on
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accrual basis. The Statement of Profit and Loss for the previous year ended on
March 31, 2024 shows a net profit of ` 9.25 lakhs (before taxation and
depreciation) after debiting/crediting the following items:
(i) Travelling expenses includes ` 2,40,000 being expenditure incurred on a
foreign tour to Taiwan for attending a business exhibition and meeting with
vendors, out of which ` 40,000 is incurred in Indian currency and ` 2,00,000
in foreign currency. Mr. Raman has spent 10 days in Taiwan, out of which 4

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days were utilized by him for attending marriage ceremony of a vendor's son.

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(ii) Administrative expenses include ` 9,525 paid towards interest on delay in
deposit of GST.
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(iii) General expenses include a sum of ` 3,88,000 paid to a non-resident

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for technical services without deduction of tax at source.

a (iv) Fire insurance premium
till 31 March, 2024.
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of ` 66,000 for the entire building

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

(v) Expenditure of ` 75,000, was paid to a scientific research association
approved under section 35. Out of ` 75,000, ` 50,000 was utilised towards
the purchase of land by the research association.
(vi) He let out first floor of his commercial building to Mr. Aman on April 1, 2023
and received rent of ` 35,000 per month. Municipal taxes ` 20,000 relating
to the building were paid equally by both Mr. Raman and Mr. Aman. Rent
received was credited and municipal taxes of ` 10,000 (relating to ground
floor) was debited to the statement of profit and loss.
(vii) He sold a piece of land for ` 44 lakhs on 12th April, 2023. He had acquired
the land for 40 lakhs on 1stJanuary, 2022. The gain of 4,00,000 is credited to
the statement of profit and loss.
(CII for F.Y. 2021-22-317; F.Y. 2023-24-348)

Additional Information:
(i) Mr. Raman purchased raw material from M/s. Paul Industries, a micro
enterprise, for ` 49,000 on March 10, 2024. However, the payment to
M/s. Paul Industries was made on April 5, 2024 by cheque. No written
agreement for payment existed between M/s. Paul Industries and Mr. Raman.
Another supplier M/s. Kal Industries, a small enterprise, with whom also no
written agreement existed for payment, was paid ` 1,34,000 in cash on
April 5, 2024 for purchase of raw material on March 31, 2024. Both
M/s. Paul Industries and M/s. Kal Industries follow mercantile system of
accounting.
(ii) Mr. Raman acquired a registered trademark on July 15, 2023 for ` 2,00,000.
Mr. Raman started using this trademark for his business from January 15,
2024. Mr. Raman omitted to enter any transaction relating to this trademark
in his books of accounts.
(iii) Mr. Raman bought a car for personal use on 12th April, 2020 for ` 5,40,000.
He started using this car for business purposes from 01.04.2023. As on that
day, the market value of the car was ` 2,10,000. Assume the rate of
depreciation to be 15%.
(iv) He incurred ` 2,50,000 on the purchase of a new machinery to be used in the
production of spare parts for motor bikes on May 15, 2023.

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(v) He has paid tuition fees of ` 25,000 for the education of his daughter to a
college.

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(vi) During the year, Mr. Raman has incurred ` 9,500 in cash for preventive health
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check-up where ` 5,000 was for himself and ` 4,500 was for his parents who

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are super senior citizens.
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(vii) Donation paid to a registered political party by way of cheque ` 20,000.
the total income and tax payable for assessment year 2024-25 bya
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aMr.g Raman under default tax regime and optional tax regime as per normal
Compute

provisions of the Act. Which option is advantageous to Mr. Raman? (15 Marks)
Answer
Computation of total income and tax payable by Mr. Raman for
A.Y. 2024-25 under default tax regime
Particulars ` `

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I Income from house property
Gross Annual Value of first floor (Rent
. 4,20,000

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received has been taken as gross annual value

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in the absence of other information) [` 35,000
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x 12]
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Less: Municipal taxes (paid by tenant, Nil
Mr. Aman, hence not deductible)
Net Annual Value 4,20,000
Less: Deduction @30% of NAV 1,26,000
2,94,000
II Profits and gains of business or profession
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Net Profit 9,25,000

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A/c but not allowable as deduction or to be

las considered under other heads of income
- Travelling expenses [Allowable since the a
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Nil

business purpose]

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

[Note - Alternatively, it is possible to
assume that the proportionate foreign tour
expenditure attributable to attending the
marriage ceremony of a vendor’s son is a
personal expenditure. In such case,
` 2,40,000 X 4 /10 = ` 96,000 would be
disallowed.]
- Interest on delay in deposit of GST Nil
[Interest on delay in deposit in GST is
compensatory in nature and hence,
allowable as expenditure]
- Fee for technical services to non-resident 3,88,000
[100% disallowed under section 40(a)(i)
since the TDS was not deducted]
- Fire insurance premium [Fire insurance 33,000
premium for ground floor which is
occupied for business purpose is allowed
since Mr. Raman is following mercantile
system of accounting. Remaining half for
let out portion is disallowed] [` 66,000/2]
- Contribution to scientific research 75,000
association approved u/s 35 [Not
allowable under section 35(1)(ii) as per
default tax regime]
- Municipal taxes for ground floor Nil
[Allowable since the ground floor is
occupied for business purpose]
- Sum payable for purchase of raw material 49,000
from M/s Paul Industries, a micro
enterprise [Not allowable as per section
43B(h) since payment was made to a
micro enterprise on 5.4.2024 which is
beyond the time limit specified u/s 15 of
the MSMED Act, 2006 i.e., within 15 days
from 10.3.2024]

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- Sum payable for purchase of raw material Nil
from M/s Kal Industries, a small enterprise

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[Allowable as per section 43B(h) since

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payment was made to a small enterprise

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on 5.4.2024 i.e., within 15 days from
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e However, since the payment is made in
31.3.2024.
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cash on 5.4.2024, ` 1,34,000 for purchase
of raw material would be the deemed
income of P.Y. 2024-25 as per section
40A(3A)]
14,70,000
Less: Incomes credited to profit and loss
account but not taxable as business income

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- Rent received for let out portion 4,20,000
- Gain on sale of land
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s em 6,50,000
Less: Depreciation
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- On trademarka
50%, since trademark is put to use for
25,000

less than 180 days]
- On Car [` 5,40,000 x 15%] 81,000
- On new Plant & machinery 37,500
[` 2,50,000 x 15%]

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- On Building [` 8,00,000 x 10%] 80,000

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Additional depreciation

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- On new Plant & machinery [Not

las allowable under default tax regime]
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III Capital Gains
Full value of consideration 44,00,000

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

Less: Cost of acquisition 40,00,000
Short term capital gains on land [Since land is 4,00,000
held for less than 24 months]
Gross Total Income 11,20,500
Less: Deduction under Chapter VI-A [Not Nil
allowable under default tax regime]
Total Income 11,20,500
Tax Payable
Up to ` 3,00,000 Nil
From ` 3,00,001 to ` 6,00,000 @5% 15,000
From ` 6,00,001 to ` 9,00,000 @10% 30,000
From ` 9,00,001 to ` 11,20,500 @15% 33,075
78,075
Add: Health and education cess @4% 3,123
Tax Payable 81,198
Tax Payable (Rounded off) 81,200

Computation of total income and tax payable by Mr. Raman for
A.Y. 2024-25 under normal provisions of the Act

Particulars ` `
Gross Total Income as per default tax 11,20,500
regime
Less: Additional depreciation on new Plant & 50,000
machinery [` 2,50,000 x 20%]
Less: Contribution to scientific research 75,000
association approved u/s 35
Gross Total Income as per normal 9,95,500
provisions of the Act
Less: Deduction under Chapter VI-A
Deduction under section 80C
Tuition fees to a college for daughter’s 25,000
education

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Deduction under section 80D
Preventive health check-up for self and 5,000

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parents restricted to

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Deduction under section 80GGC

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Donation to a registered political party since 20,000

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the payment is made otherwise than by cash

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50,000 g
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a the Act 9,45,500

Tax Payable
Up to ` 3,00,000 Nil
From ` 3,00,001 to ` 5,00,000 @5% 10,000
From ` 5,00,001 to ` 9,45,500 @20% 89,100
99,100

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Add: Health and education cess @4% 3,964
Tax Payable
. c 1,03,064
Tax Payable (Rounded off) m
s e 1,03,060

under normal provisions of g
la tax regime is lower than the tax payable
Since tax payable under default
a the Act, it would be beneficial for Mr. Raman to
pay tax under default tax regime u/s 115BAC.

Question 2
(a) Mr. Madan, a citizen of India and the Karta of an HUF, is employed in
M/s. PCS Pvt. Ltd. He is drawing monthly salary of ` 65,500 in India. On
June 1, 2023 he purchased one residential house property in Mumbai for
` 18,00,000 in his individual capacity. The market value of the property is
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` 32,00,000 and value for the purpose of charging stamp duty is ` 23,00,000.

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On August 31st, 2023 he was transferred to the branch office of M/s. PCS Pvt.
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Ltd. in U.S.A. and he left India on September 1st, 2023. The overseas branch

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paid him a salary of $ 2,500 per month in USA. He managed business of HUF

las from USA when he was not in India.
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ag He had also gone out of India for 99 days and 201 days in previous years
2022-23 and 2021-22, respectively. He had never gone out of India prior to
that.

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

He visited India from January 1, 2024 to January 15, 2024 for training on a
project and received 15 days salary in India as per his Indian monthly salary
before being transferred.
Mr. Rajeev, one of his friends, gifted him a sculpture in India on August 10,
2023. The market value is ` 45,100.
Determine the residential status of Mr. Madan and his HUF and compute
gross total income of Mr. Madan for the assessment year 2024-25 assuming
he opted out of the default tax regime. The value of one USD ($) may be
taken as ` 70. (4 Marks)
(b) Answer the following:
(i) M/s. PQR & Co., a proprietary firm of Mr. Yogesh, paid an amount of
` 30,500 to Mr. Amit, a resident individual aged 45 years, on June 1,
2023 towards fees for professional services. Subsequently, another
payment of ` 60,000 was due to Mr. Amit on January 30, 2024. Tax was
not deducted from both the transactions. Mr. Amit has filed his return of
income for assessment year 2024-25 on May 2,2024, taking into account
professional fees from M/s. PQR & Co. and paid the taxes due on the
income declared in the return of income.
What are the tax obligations in the hands of M/s. PQR & Co. on the
assumption that the accounts of the firm are audited under section 44AB
of the Income-tax Act 1961?
(ii) M/s. Fastest Ltd. is an Indian car manufacturer. During the F.Y. 2023- 24,
it sold cars for ` 150 lakhs to M/s. Race LLP, a distributor of cars where
the sale price of each car was ` 7.5 lakhs. The turnover for the
F.Y. 2022-23 of M/s. Fastest Ltd. was ` 15 crores and M/s. Race LLP was
8 crores. What shall be the TCS/TDS implications on M/s. Fastest Ltd.
and M/s. Race LLP? (6 Marks)
Answer
(a) Residential Status of Mr. Madan
Mr. Madan, an Indian citizen who left India on 1st September 2023 for the
purpose of employment to USA, would be non-resident in India, since he
stayed in India for 169 days (30+31+30+31+31+1+15) only during the
P.Y. 2023-24 which is less than 182 days.

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Residential Status of HUF
Since Mr. Madan is managing the HUF for part of the year from India,
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control and management of its affairs is situated partly in India.

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A HUF is. said to be “Resident and ordinarily resident” in India during the
Hence, the HUF would be resident in India for the P.Y. 2023-24.

s e
s em year 2023-24, if Karta (Mr. Madan, in this case) satisfies both the gla
g a
lfollowing
previous
a
a - He is a resident in at least 2 out of 10 previous years preceding the
conditions:

relevant previous year; and
- His stay in India in the last 7 years preceding the relevant previous year
is 730 days or more.
Mr. Madan has satisfied both the above conditions as he had never gone
out of India except for 99 days and 201 days in the P.Y. 2022-23 and

m
P.Y. 2021-22, respectively, the HUF would be ROR in India.

. co
Computation of Gross Total Income of Mr. Madan

s em
for the A.Y. 2024-25

g l a Amount in `
a
Income under the head “Salaries”
Salary earned in India: [` 65,500 x 5 + ` 65,500 x15/31] 3,59,194
Salary paid in USA: [Not taxable as Mr. Madan is a non- Nil
resident and such income does not accrue or arise or
received in India]
Less: Standard Deduction 50,000

m 3,09,194

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Income from other sources

stamp duty value of ` 23 lakhs of the residential propertyas
em5,00,000
em
Difference between the consideration of ` 18 lakhs and

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gla acquired [Taxable, since the difference of ` 5 lakhs
a
a exceed ` 1,80,000, being the higher of 10% of the
consideration and ` 50,000]

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

Sculpture received as gift from Rajeev, his friend in India Nil
[Not taxable as the value does not exceed ` 50,000]
Gross Total Income 8,09,914

(b) (i) M/s PQR & Co. is required to deduct tax at source under section 194J
@10% on the professional fees paid to Mr. Amit of ` 30,500 and
` 60,000 on 1st June 2023 and 30th January 2024, respectively, assuming
M/s PQR & Co. turnover/gross receipts exceeds the prescribed
threshold limit 1.
However, M/s PQR & Co. has not deducted the tax at source during
the P.Y. 2023-24, disallowance of ` 27,150, being 30% of ` 90,500
would be attracted u/s 40(a)(ia) though Mr. Amit has filed his return of
income considering the professional fees from M/s PQR & Co. and paid
taxes on the same.
In such a case, M/s PQR & Co. would not be deemed as assessee in
default by virtue of the first proviso to section 201(1) and the amount
disallowed i.e., 27,150 would be allowed as deduction in A.Y. 2025-26.
For non-deduction of tax at source, interest @1% would be leviable
under section 201(1A)(i) for every month or part of the month on the
amount of tax from the date on which such tax was deductible to the
date such tax was paid by the payee i.e., 2.5.2024.
Interest @1% on ` 3,050 (10% of ` 30,500) from June 2023 to May 2024
= ` 366 and on ` 6,000 (10% of ` 60,000) from January, 2024 to May
2024 = ` 300 is payable by M/s PQR & Co.
(ii) M/s. Fastest Ltd. is not required to collect tax at source u/s 206C(1F)
on sale of cars of ` 150 lakhs to M/s. Race LLP, since such sale is to a
distributor and sale price of each car does not exceed ` 10 lakhs.
M/s. Race LLP is also not required to deduct tax at source u/s 194Q,
since its turnover, being a buyer in the P.Y. 2022-23 does not exceed
` 10 crores.
However, M/s Fastest Ltd. is required to collect tax at source u/s
206C(1H) @0.1% on the sale consideration exceeding ` 50 lakhs i.e. on

1
since firm is required to get its books of accounts audited

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` 100 lakhs since turnover of M/s Fastest Ltd. exceeds ` 10 crores and
TCS u/s 206C(1F) and TDS u/s 194Q is not applicable.

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Question 3
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(a) The particulars given below are of Mr. Radhey's income (age 47 years) posted

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in a private company in Delhi, for the previous year 2023-24:
(i) seBasic Pay ` 35,000 per month till January 31, 2024, ` 40,000 p.m. from l
l a a g
ag (ii) Dearness allowance 30% of basic salary (54% of DA forms part of
February 2024.

retirement benefits)
(iii) Leave encashment for P.Y. 2023-24 ` 10,000.
(iv) He received salary for the month of April 2024 in advance on 31stMarch
2024. Also, he received an arrear salary for the month of March 2023 on
the same day.

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(v) His employer gave him a rent-free accommodation (fully furnished) in
.
Delhi from 01.04.2019. This house is owned by his employer. During the

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previous year 2019-20, the perquisite value of such rent-free furnished

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accommodation was valued at ` 39,000. The employer also provided him
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a
with the facility of a gardener to maintain this house. The salary of
gardener paid by the employer was ` 1,000 p.m. The furniture and
appliances provided with the house were bought by the employer at an
aggregate cost of ` 1,50,000 on 01.01.2020. Electricity and water bills of
` 4,000 p.m. for the said house were paid by the employer.
Cost Inflation Index
F.Y. 2019-20-289, F.Y. 2020-21-301, F.Y. 2023-24-348.

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(vi) The employer also spent ` 50,000 on a refresher course for upgrading

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Mr. Radhey's skills.

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(vii) During the previous year his wife had been admitted in

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hospital for treatment of her kidney disease, the hospital bills amounting

gla to ` 3,50,000 were paid by the employer.

a You are required to compute the taxable salary income of Mr. Radhey for the
Assessment Year 2024-25 assuming that he has opted out of the default tax
regime under section 115BAC. (6 Marks)

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

(b) Mr. Raj a resident individual, aged 69 years sold an urban agricultural land
for ` 75,00,000 to Mr. Vipul on December 15, 2023 when the stamp duty
value of agricultural land was ` 95 lakhs. However, the “agreement to sell”
the agricultural land was entered on July 15, 2023 and Mr. Vipul gave
` 4 lakhs as advance through IMPS. The stamp duty value at the time of
agreement was ` 85 lakhs. Mr. Raj paid 1% of sale consideration as
commission to a broker. The land was purchased by him on May 15, 2002 for
` 10.85 lakhs and it was being used for agricultural purposes by him since its
purchase.
Mr. Raj purchased another agricultural land in rural area on January 1, 2024
for ` 40 lakhs and this land was sold by him on March 12, 2024 for ` 45 lakhs
and he invested the entire sale proceeds in fixed deposits with a nationalized
bank on the same day.
Compute capital gain for assessment year 2024-25 if Mr. Raj exercises the
option of shifting out of the default tax regime provided under section
115BAC(1A).
Cost Inflation Index for: F.Y. 2002-03 = 105; F.Y. 2023-24-348 (4 Marks)
Answer
(a) Computation of taxable salary of Mr. Radhey for A.Y.2024-25

` `
Basic Pay [` 35,000 x 10 + ` 40,000 x 2] 4,30,000
Dearness Allowance [` 4,30,000 x 30%] 1,29,000
Leave encashment for P.Y. 2023-24 10,000
Advance salary for April 2024 received on 40,000
31.3.2024
[Note - Alternatively, it is possible to assume that
the advance salary is inclusive of DA. In such a
case, advance salary for April 2024 would be
` 52,000.]
Arrear salary for March 2023, assumed it is taxed --
on due basis during the P.Y. 2022-23.

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SUGGESTED ANSWER TAXATION

Value of Rent-free accommodation
From April 2023 to August 2023
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Value of Rent-free accommodation {15% 31,128
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of ` 2,07,515 i.e., [` 1,75,000 (35,000 x 5,
s em
me
basic salary) + ` 28,350 (1,75,000 x 30% x
l a
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54%, DA) + 4,167 (10,000/12 x 5, leave
ag
g encashment]}
a Add: Value of furniture [` 1,50,000 × 10% 6,250
p.a. for 5 months]
37,378
From September 2023 to March 2024
Value of Rent-free accommodation {10% 30,214
of ` 3,02,143 i.e., [` 2,55,000 (35,000 x 5

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+ 40,000 x 2, basic salary) + ` 41,310
(2,55,000 x 30% x 54%, DA) + 5,833
.
(10,000/12 x 7, leave encashment]}
s em
g l a
Add: Value of furniture [` 1,50,000 × 10% 8,750
p.a. for 7 months]
a
38,964 76,342
[Note - In the absence of the information of the month in
which leave encashment is received, leave encashment is
proportionated in 5:7 months period. Alternatively, it is
possible to assume that the amount of ` 10,000 is received
either during the April to August month or September to

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March 2024. In such case, perquisite value of rent-free

m accommodation would undergo a change.

c. o Facility of gardener [Salary of gardener paid by them 12,000
e
employer would be taxable as perquisite] [` 1,000 x 12] s
s em g l a
gla Facility of use of electricity [Electricity and waterabills paid 48,000
a by the employer would be taxable as perquisite] [` 4,000 x
12]
Refresher course for upgrading skills [Tax free perquisite] Nil

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

Value of medical treatment [Exempt, since medical Nil
treatment for wife is in notified hospital]
Gross Salary 7,45,342
Less: Deduction under section 16 - Standard deduction 50,000
Taxable Salary 6,95,342

(b) Computation of Capital Gains of Mr. Raj for A.Y.2024-25

Particulars `
Capital gain on sale of urban agricultural land
Actual sale consideration 75,00,000
Stamp duty value as on date of agreement 85,00,000
i.e., on 15.7.2023 [Since part consideration is
received through IMPS on the date of
agreement]
Full Value of Consideration [Stamp duty value on the date 85,00,000
of agreement since it exceeds 110% of the actual sale
consideration]
Less: Expenditure in connection with transfer [1% of sale
consideration i.e., ` 75 lakhs] 75,000
Net Sales Consideration 84,25,000
Less: Indexed cost of acquisition [` 10,85,000 x 348/105] 35,96,000
48,29,000
Less: Exemption u/s 54B – In respect of rural agricultural 40,00,000
land purchased on 1.1.2024. Mr. Raj is eligible to claim
exemption u/s 54B since he has used the urban
agricultural land for agricultural purposes for more than 2
years preceding the date of its transfer. [See Note for
alternative answer]
Long term capital gain 8,29,000
Capital gain on sale of rural agricultural land
As per section 54B, if the new agricultural land is
transferred within 3 years from the date of its purchase,

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SUGGESTED ANSWER TAXATION

while computing the capital gains on transfer of such new
agricultural land, the cost of acquisition of such land
would be reduced by the amount of capital gain claimed
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as exempted. However, since rural agricultural is not a
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capital asset, no capital gain would arise on sale of such
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land even though it is transferred within 3 years from the
l a
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a g
ag Note [Alternative answer] – Mr. Raj transferred urban agricultural land on
15.12.2023 and purchased rural agricultural land on 1.1.2024 which is sold
on 12.3.2024. Since the rural agricultural land is sold within the same
previous year in which original asset was transferred i.e., P.Y. 2023-24, a view
can be taken that the exemption under section 54B would not be available
as at the time of filing return of income such acquired land does not exist. In
such case, long term capital gain would be ` 48,29,000.

Question 4
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. years) and minor son Dev (12 years),
m
provide the following details of etheir income/losses for the previous year
(a) Mr. Suraj, (39 years), his wife Megha (35

l a s
2023-24:
a g
Mr. Suraj

(i) Salary received as a partner from a partnership firm - ` 6,15,000

He is a working partner in the firm and the salary is as per the limits
prescribed under section 40(b).

(ii) Income (loss) from house property:

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Brought forward loss from House -A (let out) - ` 96,000
.c
c. o Current year loss from House B (let out) - ` 2,30,000
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(iii) Interest received on enhanced compensation - ` 2,00,000

g a year 2018-19.
a It relates to transfer of a piece of land in the financial

Out of the above ` 35,000 relates to previous year 2023-24 and the
balance relate to preceding previous year.

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

(iv) Gift from grandfather's younger sister by cheque - ` 1,25,000

(v) Dividend on listed equity shares of domestic companies (Gross) -
` 50,000
(vi) On 1stDecember 2023, Mr. Suraj received ` 75 lakhs as maturity proceeds
from his life insurance policy which was taken on 1stMay 2012. He paid
` 6,00,000 as annual premium and the sum assured was ` 65 lakhs.
Mrs. Megha

(i) Current year loss from business. (She carried on this business with funds
which Mr. Suraj gifted to her) - ` 8,10,000.

(ii) Mrs. Megha purchased a house property from her "Stridhan" and gifted
the same to her minor son, Dev on 1stApril, 2023 out of love and
affection. The FMV of the house on the date of transfer was ` 51 lakhs.

Master Dev

Rent received from house property received from Mrs. Megha - ` 35,000 p.m.

Compute total income of Mr. Suraj, Mrs. Megha and Dev for the assessment
year 2024-25 assuming Mr. Suraj has decided to pay tax under default tax
regime provided under section 115BAC, whereas Mrs. Megha and Dev have
opted out of the default tax regime. Briefly explain the reasons for the
treatment of each item. (6 Marks)

(b) Answer the following:

(i) Vegetable Ltd. filed its return of income for the A.Y. 2023-24, on
15thDecember 2023. On 2nd January 2024, the accountant of Vegetable
Ltd. realised that he had forgotten to claim a genuine business
expenditure amounting to ` 15 lakhs. He wants to file revised return to
claim such expenditure as the assessment is not yet completed. Whether
the action of the accountant of Vegetable Ltd. is valid?

(ii) Mahendra, a resident individual aged 45 years earned a salary income of
` 2 crores during the F.Y. 2023-24. He also earned dividend from unlisted

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SUGGESTED ANSWER TAXATION

shares amounting to ` 4 lakhs. He wants to file his return of income for the
A.Y. 2024-25 through a Tax Return Preparer. Can he do so? (4 Marks)
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OR
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(b) Rani, an Indian resident aged 34 years did not file her return of income for
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e m2021-22, 2022-23 and 2023-24. She gives the following information la
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the A.Y.

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ag A.Y. 2021-22
regarding each of the A.Y.-

(i) Tax payable on the total income of Rani - ` 14,50,000

(ii) TDS deducted - ` 5,00,000

A.Y. 2022-23

(i) Tax payable on the total income of Rani - ` 5,60,000

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(ii) TDS deducted - ` 10,00,000

A.Y. 2023-24
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(i)
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Tax payable on the total income of Rani - ` 6,30,000

(ii) TDS deducted - ` 2,00,000 a
(iii) Interest payable under section 234A, 234B and 234C - ` 90,000
(calculated till 31st May 2024)

(iv) Self-assessment tax paid - ` 1,00,000

She approaches you to file updated return under section 139(8A) on

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16.5.2024. You are required to prepare a suggestion to be given to her in this

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respect. Your suggestion should include the financial aspect also (like
payment of tax) briefly outlining the relevant provisions of themIncome-tax
s e (4 Marks)
s em Act.
g la
gla a
a

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

Answer
(a) Computation of total income of Mr. Suraj, Mrs. Megha and minor son
Dev for A.Y. 2024-25

Particulars Mr. Suraj Mrs. Megha Dev [Under
[Under [Under normal
default tax normal provisions]
regime] provisions]
` ` `
Income from house
property
Annual Value [As per 4,20,000
section 27, Mrs. Megha is
the deemed owner of the
house property
transferred to minor son,
Dev without consideration
though such property is
acquired from her
“Stridhan”] [` 35,000 x12]
Less: Deduction @30% of 1,26,000
NAV
2,94,000
Brought forward loss from -
House A [Not allowed to
be set-off against income
from other heads]
Current year loss of -
Mr. Suraj from House – B
[Not allowed to be set-off
against income from other
heads since Mr. Suraj is
paying tax under default
tax regime]

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SUGGESTED ANSWER TAXATION

Profits and gains from
business or profession

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Salary from partnership 6,15,000
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firm

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Less: As per section 70, set

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off of current year loss 6,15,000

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from business of
` 8,10,000 to the extent of
[Current year loss from
business of his wife is
allowed to be set off in the
hands of Mr. Suraj since
funds for business is gifted
by him]
Income from Other -

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Sources
Interest on enhanced
m .
2,00,000
compensation [Taxable in
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l 1,00,000
Less: Deduction @50%ag
the year it is received]

1,00,000
Gift from grandfather’s 1,25,000
sister [Taxable under
section 56(2)(x), since
grandfather’s sister is not
a relative and the amount

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of gift exceeds ` 50,000]

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Dividend on shares (gross) 50,000

em
Maturity proceeds from -
la se
las LIC [Exempt under section
a g
ag 10(10D) since the annual
premium payable does not
exceed 10% of sum
assured]

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

2,75,000
Less: Set off of remaining
business loss of ` 1,95,000 1,95,000

80,000
Gift of house property Nil
from Mrs. Megha to Dev
[Exempt since the gift is
from a relative i.e., from
his mother]
Taxable Income 80,000 2,94,000 -

(b) First Alternative
(i) The due date of filing return of income of Vegetable Ltd for the
A.Y.2023-24 is 31st October, 2023 since it is a company.
However, it filed its return of income on 15.12.2023, which is a belated
return.
If any omission is discovered even in a belated return, the same can
also be revised up to 31.12.2023 being the date 3 months prior to the
end of the relevant assessment year i.e. 31.03.2024 or completion of
assessment, whichever is earlier.
However, it cannot file a revised return on 02.01.2024 since it is beyond
31.12.2023. Hence, the action of accountant of Vegetable Ltd is not
valid.
(ii) Since Mr. Mahendra is a resident individual, not being a company or a
person whose accounts are required to be audited under section 44AB
for the P.Y. 2023-24, and therefore he can file his return of income for
A.Y. 2024-25 through a Tax Return Preparer.
(b) Second Alternative
An updated return can be furnished for the previous year relevant to the
assessment year at any time within 24 months from the end of the relevant
assessment year.

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SUGGESTED ANSWER TAXATION

Accordingly, the following are the suggestions to Rani with respect to
updated return on 16.5.2024 for A.Y. 2021-22, A.Y. 2022-23 and
A.Y. 2023-24:
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A.Y. 2021-22: Since the period of 24 months from the end of A.Y. 2021-22

. em
s
expired on 31.3.2024 updated return cannot be furnished on 16.5.2024 for

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A.Y. 2021-22.

l a ag
ag
A.Y. 2022-23: For A.Y. 2022-23, updated return can be furnished up to
31.3.2025. Thus, updated return can be furnished on 16.5.2024.
Since updated return would be furnished after the expiry of 12 months but
before 24 months from the end of 31.3.2023, additional income tax would
be payable @50% of aggregate of tax (after taking into consideration tax
deducted at source) and interest payable.
Accordingly, Rani is required to pay additional income-tax in addition to
the tax payable of ` 5,60,000, interest and late fee of ` 5,000.

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Alternate answer: The main solution has been worked out in line with the
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provisions of section 140B taking tax payable as the net figure of tax after

s
adjusting TDS. However, since the term “tax payable” used in the ITR form

l a
for updated return is before the adjustment of TDS, TCS, Advance tax, interest
g
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payable etc., it is possible to take a view that the amount of tax payable of
` 5,60,000 is before adjusting TDS of ` 10,00,000. In such case, since the
refund of ` 4,40,000 would arise, updated return cannot be furnished for
A.Y. 2022-23.
A.Y. 2023-24: - For A.Y. 2023-24, updated return can be furnished up to
31.3.2026. Thus, updated return can be furnished on 16.5.2024
Since updated return would be furnished before the expiry of 12 months
from the end of 31.3.2024, additional income tax would be payable @25%
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of aggregate of tax (after taking into consideration tax deducted at source

c. o and self-assessment tax paid) and interest payable.
s e`m1,80,000 i.e.,
s em ltoa tax payable of
Accordingly, Rani is required to pay additional income-tax of
g
la ` 6,30,000, interest payable of ` 90,000 and late feesaof ` 5,000.
25% of ` 7,20,000 (` 6,30,000 + ` 90,000) in addition

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Alternate answer: The main solution has been worked out in line with the
provisions of section 140B taking tax payable as the net figure of tax after
adjusting TDS and self-assessment tax paid. However, since the term “tax

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payable” used in the ITR form for updated return is before the adjustment of
TDS, TCS, Advance tax, interest payable etc., it is possible to take a view that
the amount of tax payable of ` 6,30,000 is before adjusting TDS of ` 2,00,000
and self-assessment tax paid of ` 1,00,000. In such case, Rani is required to
pay additional income-tax of ` 1,05,000 i.e., 25% of ` 4,20,000 [` 3,30,000
(` 6,30,000 – ` 2,00,000 – ` 1,00,000) + ` 90,000] in addition to tax payable
of ` 3,30,000, interest payable of ` 90,000 and late fees of ` 5,000.

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SECTION B: GOODS AND SERVICES TAX

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1. For Part-II, Section B comprises of questions from 5-8. In Section B, answer

c. o
question no. 5 which is compulsory and any two questions from question nos.

o m m
c
6-8.
2. Working.notes should form part of the answer. e
em in Section B should be answered on the basis of position of GST gla s
3. Allsquestions
g a as amended by Finance Act, 2023 and the significant notifications/a
llaw
a circulars issued upto 29 February, 2024.
th

Part-II: Descriptive Questions

Question 5
(a) DEF Pvt. Ltd., a registered supplier of goods and services in Pune,
Maharashtra, has furnished the following details for the month of January,

m
2024. The turnover of DEF Pvt. Ltd. was ` 3.2 crores in last financial year.

. co
em
Sr. Particulars Amount

s
No. (` )
1.
g l a
Intra State supply of taxable goods 5,00,000
2. a
F Ltd. of Mumbai (unregistered) had promised to DEF 2,00,000
Pvt. Ltd. in Oct 23 to complete contract within 3
months, but they were not able to complete
committed contract, so DEF Pvt. Ltd. received
consideration for non-performance of contract on
time as decided by pre written agreement.
3. DEF Pvt. Ltd. had provided service of booking of flight 20,000
tickets for employee of H Enterprise (registered in
m
m Delhi) in the economy class from Bagdogra (West
c. o
c. o Bengal) to Pune Maharashtra.
s em 25,000
s em 4.
g la R
DEF Pvt. had purchased goods worth ` 5,00,000 from

la Ltd. issued debit note on 15.01.2024 for postadelivery
R Ltd. (registered in Gujarat) on 15.03.2023. Now

ag service to DEF Pvt. Ltd. as per part of terms of sales.

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

5. DEF Pvt. Ltd. had sold one of its unit in Pune as a going 10,00,000
concern (with all goods and unexecuted orders) to H
Ltd. (registered in New Delhi)
6. DEL Pvt. Ltd. had provided service to Mr. Y (registered 5,00,000
in Punjab) to organise business exhibition in Dubai.
7. Inter-State supply of service 10,00,000
8. Amount towards receipt of intra State services 6,00,000
9. Purchase of confectionery items which are to be used 1,00,000
to supply free of cost to customers in a customer meet
organised by DEF Pvt. Ltd.

Opening balance of Input Tax credit at the beginning of Jan 2024.
CGST ` 25,000
SGST ` 25,000
IGST ` 30,000
Additional Information:
(1) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively unless
otherwise mentioned.
(2) Both inward and outward supplies are exclusive of taxes, wherever
applicable.
(3) All the conditions necessary for availing the ITC have been fulfilled.
From the information given above, compute the output tax liability and input
tax credit available to DEF Pvt. Ltd., for the month of January, 2024. Make
suitable assumptions wherever required. (10 Marks)
(b) ABC Infra, is a partnership firm registered under GST. It furnishes the
following details about services provided during the month of February 2024:

Particulars Amount
(i) Consideration received from neighbouring Housing 5,50,000
Cooperative Society as ABC Infra agrees to install
effluent plant for treatment of wastewater even though
is no legal requirement to do so.

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(ii) Consideration received from distribution of passes for 2,42,500
cricket match organized as firm’s annual event. Total

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500 passes have been distributed.

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(iii) Services given of booking air tickets in economy class 1,20,000

em
s
for flight between Mumbai to Manipur.
mServices given for construction of buildings to State
e Government in relation to function entrusted to 8,20,000 g l a
la s
(iv)
a
ag Municipality under article 243W of the Constitution.
Construction material used of ` 2,79,375 is included in
the given figure.

All supplies mentioned above are intra-State supplies. GST rates for CGST,
SGST, IGST are 9%, 9%, 18% respectively. Compute the GST payable by the
ABC Infra for the month of February, 2024. (5 Marks)
Answer
m
c. o
(a) (i) Computation of output tax liability of DEF Pvt. Ltd. for January,

m CGST
2024

s eValue
Particulars
g l a SGST IGST @

a
@ 9% @ 9% 18%
(`) (`) (`) (`)
Output tax payable
Intra-State supply of 5,00,000 45,000 45,000
taxable goods 1
Consideration for non- 2,00,000 - -
performance of contract

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[Being ‘liquidated

m
damages’, they are not
.co
c. o the consideration for
se
m
em la
tolerating the non-

las performance of the
a g
g
contract. Hence, not a
a supply]

1
Intra-State supply of taxable goods has been logically considered as outward supply in the
above solution.

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

Service of booking of 20,000 3,600
flight tickets 2
[Taxable since service of
booking of air tickets is
being provided here.
Only the service of
transportation of
passengers in economy
class embarking from
Bagdogra is exempt.
Further, the place of
supply of services made
to a registered person is
the location of such
person, viz. Delhi in given
case. Thus, same is inter-
State supply.]
Selling of Pune unit as 10,00,000 - - -
going concern to H Ltd.
[Services by way of
transfer of a going
concern is exempt.]
Service in relation to 5,00,000 - - --
business exhibition in
Dubai
[Services by an organiser
to any person in respect
of a business exhibition
held outside India is
exempt.]

2
It has been assumed that entire ` 20,000 represents the service fee/convenience fee charged
by DEF Pvt. Ltd.

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Inter-State supply of 10,00,000 - - 1,80,000
service 3

m
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Total output tax liability 45,000 45,000 1,83,600
m
.co
(ii) Computation of input tax credit available to DEF Pvt. Ltd. for
s em
m
e Particulars
January, 2024
l a
l a s Value CGST SGST IGST @
ag
ag (`)
@ 9%
(`)
@ 9%
(`)
18%
(`)
Opening balance 25,000 25,000 30,000
Issue of debit note for 25,000 4,500
post delivery service [ITC
on debit notes issued in a
financial year can be

m
availed any time till

. co
30th November of the

em
succeeding financial year
or the date of filing of the
l a s
g
relevant annual return,
whichever is
a
earlier,
irrespective of the date of
original invoice/ supply.
Further, place of supply
being Pune in given case,
same is inter-State
supply.]

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Receipt of intra-State 6,00,000 54,000 54,000

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services
.co
c. o [ITC on services used in
se
m
em la
the course or furtherance

las of business is allowed.]
a g
ag
3
Inter-State supply of service has been logically considered as outward supply in the above
solution.

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

Purchase of 1,00,000 - - --
confectionery items
[ITC on food or beverages
is specifically disallowed
unless the same is used
for making outward
taxable supply of the
same category or as an
element of the taxable
composite or mixed
supply.]
Total 79,000 79,000 34,500

Note:
In the above solution, the words, “DEL Pvt. Ltd.” be read as “DEF Pvt. Ltd.” in Sr. no.
6 of the Question.

(b) Computation of GST payable by the ABC Infra for February, 2024

Particulars CGST @ SGST @ 9%
9% (`) (`)
(i) Consideration for agreeing to install 49,500 49,500
effluent plant
[Taxable since it is a supply of service
of agreeing to the obligation to do
an act.]
(ii) Distribution of 500 passes of cricket - -
match
[Exempt since consideration for
services by way of right to admission
to unrecognised sporting event is
not more than ` 500 per person 4]
(iii) Booking air tickets in economy class 5 10,800 10,800

4
Consideration charged is ` 485 per person (` 2,42,500/500).
5
It has been assumed that entire ` 1,20,000 represents the service fee/convenience fee
charged by ABC Infra.

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[Taxable since service of booking of
air tickets is being provided here.
Only the service of transportation of
m
o m
passengers in economy class
c. o
.c
terminating in Manipur is exempt.]
em
(iv) mService of construction of buildings
e provided to State Government 73,800 73,800
l a s
a s
l [Taxable since value of supply of ag
ag goods constitutes more than 25% of
the value of the composite supply of
goods and services.]
Total GST payable by ABC Infra 1,34,100 1,34,100

Note: In the given question, it has been assumed that the amounts given in the
question are exclusive of GST. It is also possible to assume the given amounts as

m
inclusive of GST and answer shall change accordingly.

Question 6
c. o
s em
(a) M/s. T is a registered dealer of Andhra Pradesh trading in different types of

l a
for the preceding financialgyear 2022-23 for sale of machinery was ` 1.32
machinery and its related different types of services. Their aggregate turnover

a
crores, it was first year so they had not started for providing service related
to machinery. From FY 2023-24 they are planning to provide repair and
maintenance service of ` 6.25 lakh for which they have to purchase some raw
material of ` 5 lakh from the other State (till date they are purchasing within
State only).
From the information given above, examine whether M/s. T can opt for

m
composition scheme under Section 10(1), 10(2A) or 10(2) of the CGST Act,

m
2017 for FY 2023-24?
having its permanent residence in Bhavnagar,. Gujarat
c o
(5 Marks)

c. o (b) (i) Garima m
purchased car from Kiara Motors of Jaipur, Rajasthane to take the
s
s em g l aGarima took the
la
advantage of lower registration charges and road tax.
delivery of the car from Jaipur and returned withacar to her residence in
ag Bhavnagar, Gujarat. Address of Garima recorded in the invoice issued by
Kiara Motors mentions only the name of the State i.e. Gujarat.

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

Garima is an unregistered person whereas Kiara Motors is a registered
person under GST. Determine the place of supply for supply made by
Kiara Motors to Garima. (2 Marks)
(ii) Aakar Advertisement Agency, a registered person in Nagpur,
Maharashtra, wants to display the products of its client's at most
prominent places in different States. It took on rights to use the space on
hoardings mounted on fixed surface attached to earth, situated in
Udaipur, Rajasthan and in Gwalior, Madhya Pradesh from G.N.
Enterprise registered in State of Chhattisgarh. Aakar Advertisement
Agency has an exclusive right to use the space and also to manage the
advertisements on the hoardings.
What will be the place of supply of services provided by the G.N.
Enterprise to the Aakar Advertisement Agency? (3 Marks)
Answer
(a) A registered person is eligible to opt for composition scheme for goods in
the current financial year (FY) provided his aggregate turnover does not
exceed ` 1.50 crore [other than in specified Special Category States] in the
preceding FY.
Since aggregate turnover of M/s. T in the preceding FY does not exceed
` 1.5 crore, he is eligible for composition scheme for goods under section
10(1) and 10(2) of the CGST Act, 2017 in the current FY.
As per section 10(2A) of the CGST Act, 2017, a registered person who is
eligible to pay tax under section 10(1) and (2) is not eligible for opting for
composition under section 10(2A) of the CGST Act, 2017.
As per section 10(2A) of the CGST Act, 2017, person engaged in the supply
of service is eligible for composition scheme for payment of tax @ 3% CGST
and 3% SGST provided his aggregate turnover does not exceed ` 50 lakh
in the preceding FY.
Since turnover of previous year is ` 1.32 crore and firm is not dealing in the
service only, M/s T cannot opt for composition scheme under section
10(2A) of the CGST Act, 2017 for FY 2023-24.
A person who opts to pay tax under composition scheme under section
10(1) and 10(2) of the CGST Act, 2017 is also permitted to supply services
[other than restaurant services] upto a value not exceeding:

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(a) 10% of the turnover in a State/U.T. in the preceding financial year,
or

m
c. o
(b) ` 5 lakh,

o m m
.c
whichever is higher.

s e
eofm` 1.32 crores, in current FY. l a
Thus, M/s T is permitted to supply services upto a value of ` 13,20,000 i.e.
s
a there is no restriction on composition supplier to receive inter-a
lFurther,
10%
g
g
a State inward supplies of goods or services.
Thus, it can be concluded that M/s T can opt for composition scheme of
goods under section 10(1) of the CGST Act, 2017 for FY 2023-24.
(b) (i) Where the supply of goods is made to an unregistered person, the
place of supply is the location as per the address of the unregistered
person recorded in the invoice.

m
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Further, recording of the name of the State of the unregistered person
.
in the invoice is deemed to be the recording of the address of the
unregistered person.
s em
g l a
Thus, place of supply is Bhavnagar, Gujarat.
a
(ii) The hoarding/structure erected on the land should be considered as
immovable structure/fixture as it has been embedded in earth.
Therefore, the place of supply of service provided by way of supply of
sale of space on hoarding/ structure for advertising or for grant of
rights to use the hoarding/ structure for advertising is the location
where such hoarding/ structure is located.

m
The place of supply of any service provided by way of supply/sale of

co
space on an immovable property or grant of rights to use an
m .
c. o m
immovable property is the location at which the immovable property

em
is located, i.e. the location where such hoarding/ structure is located.

la se
las Thus, for hoarding located in Udaipur, place of supply is Udaipur,
a g
ag Rajasthan and for hoarding located in Gwalior, place of supply is
Gwalior, Madhya Pradesh.

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SUGGESTED ANSWER INTERMEDIATE EXAMINATION: SEPTEMBER 2024

Question 7
(a) Mohan, a registered person in Salem, Tamil Nadu, makes intra-State supply
of taxable goods amounting to ` 13,57,000 (inclusive of GST) to a Public
Sector Undertaking (PSU). Consideration for same is received in 5 equal
instalments from the PSU.
Tax rates applicable: CGST 9%, SGST 9%, IGST 18%
What will be your view with respect to applicability of TDS provisions as per
section 51 of the CGST Act, 2017 regarding above transaction?
What is the period by which TDS is required to be deposited to the
Government account? (5 Marks)
(b) Every registered person executing works contract shall keep separate
accounts for works contract under CGST Rules, 2017.
List the details to be maintained. (5 Marks)
Answer
(a) In case of intra-State supply of goods by a supplier to a PSU, TDS @ 1%
each under CGST and SGST is liable to be deducted by PSU only when the
total value of supply under a contract exceeds ` 2,50,000 (exclusive of tax
& cess), from the payment made or credited to the supplier.
Accordingly, in the given case, since the value of supply under the contract
excluding taxes and cesses is ` 11,50,000 (` 13,57,000 × 100/118),
TDS @ 1% on payment of each of the instalment of ` 2,30,000
(` 11,50,000/5), i.e. ` 2,300 each under CGST and SGST is to be deducted
even though the individual payment is less than ` 2,50,000.
The amount of TDS deducted shall be paid to the Government by the
deductor within 10 days after the end of the month in which such deduction
is made or by 10th of the succeeding month.
(b) Every registered person executing works contract shall keep separate
accounts for works contract showing -
• the names and addresses of the persons on whose behalf the works
contract is executed;
• description, value and quantity (wherever applicable) of goods/services
received for the execution of works contract;

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• description, value and quantity (wherever applicable) of goods/services
utilized in the execution of works contract;

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• the details of payment received in respect of each works contract; and
m
.co m
the names and addresses of suppliers from whom he received goods
e
•

em
or services.
l a s
a s ag
(a)glDescribe the provisions relating to import of services by a registered person
Question 8

a as contained in the section 7(1)(b), 7(1)(c) and Schedule 1 of the CGST Act,
2017. (5 Marks)
(b) (i) List out category of persons who are exempted from the E-invoicing
provisions. (2 Marks)
(ii) No act or proceedings of the Goods and Services Tax Council shall be
invalid merely by certain reasons. What are they? (3 Marks)

o m OR
c
. persons to maintain additional
m
(b) Commissioner has notified some specified

s e
la 2(5) of the CGST Act, 2017 is one of them.
accounts or documents as mentioned in rule 56 of the CGST Rules 2017,

g
Agent as defined under Section
a or documents to be kept by agent. (5 Marks)
List the additional accounts
Answer
(a) As per the provisions of section 7(1)(b), 7(1)(c) and Schedule I of the CGST
Act, 2017, import of services for a consideration shall be considered as
supply, whether or not in the course or furtherance of business
Import of services by a person from a related person or from any of his

m
other establishments outside India, in the course or furtherance of business
o
m c
. of e-
shall be treated as supply even if made without consideration.

c. o (b) (i) Following em
invoicing even if their turnover exceeds ` 5 crore insany preceding
entities are exempt from the mandatory requirement

em l a
las financial year from 2017-18 onwards:
a g
ag • Special Economic Zone units
• Insurer
• Banking company or financial institution including NBFC

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• GTA supplying services in relation to transportation of goods by
road in a goods carriage
• Supplier of passenger transportation service
• Person supplying services by way of admission to exhibition of
cinematograph films in multiplex screens
• A Government Department
• A local authority
Note: Any two points may be mentioned.
(ii) No act or proceedings of the Goods and Services Tax Council shall be
invalid merely by reason of—
(a) any vacancy in, or any defect in, the constitution of the Council; or
(b) any defect in the appointment of a person as a Member of the
Council; or
(c) any procedural irregularity of the Council not affecting the merits
of the case.
(b) Alternative
Additional accounts/documents to be kept by agent are as follows:
(a) particulars of authorisation received by him from each principal to
receive/supply goods/services on behalf of such principal separately;
(b) particulars including description, value and quantity (wherever
applicable) of goods/services received on behalf of every principal;
(c) particulars including description, value and quantity (wherever
applicable) of goods/services supplied on behalf of every principal;
(d) details of accounts furnished to every principal; and
(e) tax paid on receipts/ supply of goods/services effected on behalf of
every principal.

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