CA FINAL NEW COURSE

DIRECT TAX LAWS AND INTERNATIONAL TAXATION

Test-1 Chapters--6,16,17,18, 19,4,9,11,13,20,22,5,8,10

Total Marks 85

CASE STUDY

The following are the details relating to four resident entities, AB & Co., LM & Co., PQ & Co. and
XY & Co. for the P.Y.2022-23-

Particulars AB & Co. LM & Co. PQ & Co. XY & Co.

(Firm) (Firm) (LLP) (Firm)
1. Nature of business/ Retail trading Business of Wholesale Interior
profession playing hiring or trading decoration
leasing goods
carriages
2. System of accounting Mercantile Cash Mercantile Cash
3. Turnover / Gross Rs. 200 lakh Rs. 101 lakhs Rs. 100 lakhs Rs. 50 lakhs
receipts
4. Amount received by Rs. 150 lakh Rs. 80 Lakhs Rs. 70 lakhs Rs. 45 lakhs
way of RTGS/NEFT in
the P.Y. 2022-23
(included in (3)above)
5. Amount received by Rs. 30 lakhs Rs. 21 Lakhs Rs. 10 lakhs Rs. 5 lakhs
way of cash in the P.Y.
2022-23 (included in
(3)above)
6. Amount received by Rs. 20 lakhs - Rs. 20 lakhs -
way of RTGS/NEFT
between 1.4.2023&

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 31.7.2023
7. Working partners’ Rs. 5 lakhs Rs. 1.50 Lakhs Rs. 3 lakhs Rs. 5 lakhs
salary
8. Interest paid on capital Rs. 1 lakhs Rs. 0.50 Lakhs - Rs. 2 lakhs
@12% paid to partners
9. Profit as per books of Rs. 5.60 lakhs Rs. 4.10 Lakhs Rs. 4.50 lakh Rs. 20 lakhs
account maintained as
per section 44AA (after
deducting working
partners’ salary and
interest on capital)
10. No. of vehicles owned - 10 (see Note 2 - -
below details)

Additional information:
(1) It may be assumed that partners’ salary and interest are authorized by the partnership deed,
relates to a period after the partnership deed and is within the permissible laid down under
section 40 (b).
(2) The details of vehicles owned by M/s. LM & Co. are as follow-
Gross vehicle weight (in kgs.) Number Date of Date when first put to
Purchase use
1. 8,000 3 28.5.2022 1.6. 2022
2. 9,000 2 31.7. 2022 1.8. 2022
3. 10,000 1 17.8. 2022 20.8. 2022
4. 11,000 1 30.9. 2022 1.10. 2022
5. 12,000 1 11.11. 2022 13.11. 2022
6. 13,000 2 31.12.2021 1.1.2022

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From the information given above, choose the most appropriate answer to the following
questions-
(i) Which of the four entities are eligible to declare income on presumptive basis under the
Income-tax Act, 1961 for A.Y.2023-24?
(a) Only AB & Co and LM & Co.
(b) Only AB & Co and XY & Co.
(c) AB & Co, PQ & Co and XY & Co.
(d) AB & Co, LM & Co and XY & Co.

(ii) What is the business income to be declared by AB & Co. and PQ & Co. for A.Y.2023-24,
assuming that the entities wish to make maximum tax savings without getting their books
of account audited?
(a) 12.60 lakhs and 4.50 lakhs, respectively
(b) 6.60 lakhs and 3.20 lakhs, respectively
(c) 5.60 lakhs and 4.50 lakhs, respectively
(d) 13 lakhs and 6.60 lakhs, respectively

(iii) What is the business income to be declared by LM & Co. for A.Y.2023-24, assuming that
the firm wishes to make maximum tax savings without getting its books of account
audited?
(a) 4, 48,000
(b) 6, 36,500
(c) 4, 36,500
(d) 4, 10,000

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(iv) What is the income to be declared by XY & Co. under the head "Profits and gains of
business or profession" for A.Y.2023-24, assuming that the firm wishes to make maximum
tax savings, without getting its books of account audited?
(a) 18 lakhs
(b) 20 lakhs
(c) 25 lakhs
(d) 22.50 lakhs

(v) Would your answer to questions (iii) and (iv) change, if the firms decide to get their books
of accounts audited?
(a) No, there would be no change in the answer to either questions (ii) and (iv)
(b) Yes, there would be change in the answer to both question (iii) and (iv)
(c) There would be a change in the answer to question (iii) but not in the answer to
question (iv)
(d) (d) There would be a change in the answer to question (iv) but not in the answer to
question (iii)
(5 x 1 = 5 marks)

MCQ
1. Which of the following statements are correct in relation to the power of an income- tax
authority to collect information which may be useful for the purposes of the Income-tax
Act, 1961?
(i) The income-tax authority can enter the place of business of the assessee only after sunrise
and before sunset.
(ii) The income-tax authority may enter the place of business only during the hours at which
such place is open for conduct of business.
(iii) The income-tax authority may impound and retain in his custody, for a period not
exceeding 15 days, books of account or other documents inspected by him. If he wishes to

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retain for a period exceeding 15 days, he has to take the prior approval of Principal Chief
Commissioner or Chief Commissioner.
(iv) The income-tax authority can on no account remove or cause to be removed from the
building or place he has entered any books of account or other documents.
(a) (i) and (iii)
(b) (i) and (iv)
(c) (ii) and (iii)
(d) (ii) and (iv).
2. Mr. X is aggrieved by an order passed under section 143(3) by the Assessing Officer. Mr.
Y is aggrieved by an order passed under section 272A by the Director General. What is
the remedy available to Mr. X and Mr. Y and the time limit within which they should
exercise the remedy?
(a) Both Mr. X and Mr. Y have to file an appeal before Commissioner (Appeals) u/s 246A
within 30 days of the date on which the order sought to be appealed against is
communicated to them
(b) Both Mr. X and Mr. Y have to file an appeal before the Appellate Tribunal u/s 253
within 60 days of the date on which the order sought to be appeal against is
communicated to them.
(c) Mr. X has to file an appeal u/s 246A before Commissioner (Appeals) within 30 days
of the date of service of the notice of demand relating to the assessment. Mr. Y has
to file an appeal u/s 253 before the Appellate Tribunal within 60 days of the date on
which the order sought to be appealed against is communicated to him
(d) Mr. Y has to file an appeal before Commissioner (Appeals) u/s 246A within 60 days
of the date on which the order sought to be appealed against is communicated to
him. Mr. X has to file an appeal u/s 253 before the Appellate Tribunal within 30 days
of the date of service of the notice of demand relating to the assessment

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3. Mr. Ganesh, a citizen of India, is employed in the Indian embassy in the USA. He is Non-
Resident for A.Y. 2023-24. He received salary and allowances in the USA from the
government of India for the year ended 31.03.2023 for services rendered by him in the
USA. In addition, he was allowed perquisites by the government. Which of the following
statements is correct?
a) Salary, allowances and perquisites received outside India are not taxable in the hands of
Mr. Ganesh, since he is a non-resident
b) Salary, allowances and perquisites received outside India by Mr. ganesh is taxable in
India since such income is deemed to accrue or arise in India
c) Salary received by Mr. Ganesh is taxable in India but allowances and perquisites are
exempt
d) Salary received by Mr. Ganesh is exempt but allowances and perquisites are taxable in
India.

4. XYZ Ltd. engaged in the business of manufacture of steel, claimed deduction under
section 80-IB on the profits and gains of business, which included transport subsidy,
interest subsidy and power subsidy received from the Government and duty drawback
receipts. XYZ Ltd. contended that all the above receipts are profits derived from the
business of the industrial undertaking and are hence, eligible for deduction under section
80-IB. Is the contention of XYZ Ltd. correct?
a) Yes; transport subsidy, interest subsidy, power subsidy and duty drawback are profits
derived from the business of the industrial undertaking and hence, eligible for deduction
u/s 80-IB
b) No; none of the above receipts can be treated as profits“ derived” from the business of
the industrial undertaking and hence, deduction u/s 80-IB cannot be claimed in respect
of any such receipt
c) No; transport subsidy, interest subsidy and power subsidy received from Government
are profits derived from the business of the industrial undertaking and hence, eligible

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 for deduction u/s 80-IB. However, duty drawbacks belong to the category of ancillary
profits and hence, deduction u/s 80-IBcannot be claimed in respect of such receipt
d) No; transport subsidy, interest subsidy and power subsidy received from Government
are ancillary profits and hence, deduction u/s 80-IB cannot be claimed in respect of such
receipts. However, duty drawbacks are profits derived from the business of the
industrial undertaking and hence, deduction u/s80-IB can be claimed in respect of such
receipt

5. Gamma Ltd. has distributed on 30.6.2022, dividend of Rs. 130 lakhs to its shareholders.
During the F.Y.2021-22, Gamma Ltd. has received dividend of Rs. 108 lakhs (Net of TDS)
from domestic companies and Rs. 30 lakhs (gross) from a foreign company in which it has
5%shareholding. What is the deduction, if any, available to Gamma Ltd. in respect of
such dividend?
a) Rs. 138 lakhs
b) Rs. 120 lakhs
c) Rs. 130 lakhs
d) Rs. 150 lakhs

6. Kamala charitable trust, registered u/s 12AB, having its main object as medical relief,
earned income of Rs. 2 lakhs as interest on bonds issued by local authority and
agricultural income of Rs. 4 lakhs during theP.Y.2021-22. Which of the following
statements is correct?
a) The trust has to apply such income for charitable purposes as per the provisions of
section 11 to claim exemption in respect of such income
b) The trust can claim exemption u/s 10(1) and 10(15) in respect of its agricultural income
and income from bonds of local authority, respectively, without applying such income
for charitable purposes

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 c) The trust can claim exemption u/s 10(15) in respect of its interest income from bonds of
local authority, without applying such income for charitable purposes. However, it
cannot claim exemption u/s 10(1) in respect of agricultural income without applying
such income for charitable purposes
d) The trust can claim exemption u/s 10(1) in respect of its agricultural income. However, it
cannot claim exemption u/s10(15) in respect of its interest income from bonds of local
authority without applying such income for charitable purposes

7. In the course of search operations under section 132 in May, 2022,Mr. Hari makes a
declaration under section 132(4) on the earning of income in respect of P.Y.2021-22 not
disclosed in the books of account. Mr. Hari explains the manner in which income was
derived and pays the tax, together with interest in respect of such income. However, he
does not disclose such income in his return of income filed on 31.7.2022. Is penalty
leviable in this case, and if so, what is the quantum of penalty?
a) No penalty is leviable since Mr. Hari has made a declaration under section 132(4)
b) Yes; penalty @ 10% is leviable
c) Yes; penalty @ 30% is leviable
d) Yes; penalty @ 60% is leviable

8. Nikhil, an individual aged 35 years, incurs the following expenses for the benefit of his
family (i.e., Self, Mrs. Nikhil and dependent children)and parents [father (80 years),
mother (76 years)] during the previous year 2022-23:
Particulars Medical insurance Preventive health Medical expenditure
premium (by check-up (by cheque)(Rs.)
cheque) (Rs.) expenditure (in
cash) (Rs.)
For the benefit of his 20,000 7,000 2,000

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 family
For the benefit of his Nil Nil 32,000
father
For the benefit of his 6,000 Nil Nil
mother

What is the amount of deduction allowable u/s 80D to Nikhil for theA.Y. 2022-23?

a) Rs.63,000
b) Rs. 55,000
c) Rs. 67,000
d) Rs. 65,000

(8 x 1 = 8 marks)

9. X Ltd. is engaged in the business of letting out of properties. As per the memorandum of
association of X Ltd. letting out of properties is its main objective. The total income of X
Ltd. comprises only of rental Income from the business of letting out of properties. Y Ltd.
is engaged in the construction and sale of properties, which is also its main objective as
per its memorandum of association. Incidentally, it lets out some properties which are
held as stock-in-trade and earns rental income there from. Which of the following
statements is correct?
a) Rental income from letting out of properties by X Ltd, and Y Ltd. is taxable under the
head "Income from house property"
b) Rental income from letting out of properties by X Ltd. and Y Ltd. is taxable under the
head "Profits and gains of business or profession”
c) Rental income from letting out of properties by X Ltd. is taxable under the head "Income
from house property and by Y Ltd. is taxable under the head "Profits and gains of
business or profession"

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 d) Rental income from letting out of properties by Y Ltd. is taxable under the head "Income
from house property" and X Ltd. is taxable under the head "Profits and gains of business
or profession

(2 marks)

Q-1 ABC LTD., a manufacturing company, is engaged in the manufacturing of leather products
since 01-11-2019 in the State of Tamil Nadu. As per Statement of Profit and Loss for the year
ended 31st March, 2023, the company showed profit of Rs. 1, 20, 00,000 after debiting or
crediting the following items:
(i) The opening and closing stock for the year were Rs. 55 lakhs and Rs. 54 lakhs respectively.
Opening stock was overvalued by 10% and closing stock was undervalued by 10%.
(ii) ABC LTD. paid Rs. 10 Lakhs in foreign currency as sales commission during the year without
deducting tax at source to Mr. John, a citizen of U.S.A and non-resident, for procuring orders
from outside India.
(iii) Rs. 45,000 paid in cash to Mr. Raj employee of the company at the time of his retirement.
(iv) Profit on sale of 2000 shares of M/s. VKL LTD, a listed company Rs. 3, 50,000. These shares
were sold on 7-10-2022 for Rs. 250 per share. The highest price of VKL LTD. quoted on the stock
exchange as on 31-01-2018 was 175 per share. The said shares were acquired for Rs. 75 per
share on 10.06.2015. STT paid both at the time of purchase and sale of shares.
(v) STCG derived from transfer of a Capital asset on which no depreciation is allowable under
the Act Rs. 75,000.
(vi) Profit of 6 lakhs on sale of plot of land on 24-07-2022 to XYZ LTD, a domestic company, the
entire shares of which are held by the assessee company. The plot was acquired by ABC LTD. on
30-09-2021.
(vii) Credits to statement of Profit and Loss Account include dividend of Rs. 50,000 received on
September 6, 2022 from a domestic company.
(viii) Rs. 20,000 paid for expenses in connection with the inauguration of a new branch opened
for expanding the business.

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(ix) Rs. 20,000 paid as penalty to Government for company's failure in performance of a
contract within stipulated time. There was delay of 4 months and according to the agreement,
the company had to pay a penalty of 5,000 per month to the Government.
(x) An amount of 5 lakhs was paid to the manager of the company under Voluntary Retirement
Scheme.
(xi) Interest of 75,000 paid by bank remittance, on deposits made by non-resident buyers of
goods manufactured by the company. The said payments were made outside India without
deduction of tax.
Additional information:
(1) During the year F.Y. 2022-23, the company has employed 56 additional employees. All these
employees contribute to a recognized provident fund. 39 out of 56 employees joined on 1-6-
2022 on a salary ofRs. 15,000 per month, 14 joined on 1-7- 2022 on a salary of Rs. 45,700 per
month, and 3 joined on 1-11-2022 on a salary of Rs. 22,000 per month. The salaries of 9
employees who joined on 1-6-2022 are being settled by bearer cheques every month. Audit
under section 44AB has been done before the due date.
(2) The company has paid through bank Rs. 1, 20,000 to National Fund for Rural Development.
(3) The Company opted for concessional rate of tax and exemption from MAT under Section
115BAB for Assessment year 2023-24.
Compute the total income and tax payable for the Assessment Year 2023-24 clearly stating the
reasons for treatment of each item.
(10 marks)

Q-2 The Director General of Income Tax after getting the information that Mr. Mogambo is in
possession of unaccounted cash of Rs. 50 lacs, issued orders by invoking powers vested in him
as per section 131(1A), for its seizure. Is the order for seizure of cash issued by the Director
General of Income Tax correct? If not, does the Director General of Income Tax have any other
power to seize such cash?
(4 marks)

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Q-3 State with reasons whether return of income is to be filed in the following cases for the
Assessment Year 2022-23:
(i) Mr. X, a resident individual, aged 80 years, has a total income of Rs. 2, 85,000. He has
claimed deduction of Rs. 1, 50,000 under section 80C. Long-term capital gains of Rs. 80,000 is
not taxable by virtue of the exemption available upto specified threshold under section 112A.
Assume that he has not opted for the special provisions under section 115BAC.
Would your answer change if Mr. X has incurred Rs. 1, 05,000 towards payment of electricity
bills for F.Y. 2021-22?
(ii) ABC, a partnership firm, has a loss of Rs. 10,000 during the previous year 2021-22.
(iii) A registered association, eligible for exemption under section 10(23B), has income from
house property of Rs. 4, 60,000.
(iv) Mr. Y, aged 45 years, an employee of ABC (P) Ltd, draws a salary of Rs. 5, 90,000 and has
income from fixed deposits with bank of Rs. 10,000.
(4 marks)

Q-4
(a) The Commissioner of Income-tax issued notice to revise the order passed by an Assessing
Officer under section 143. During the pendency of proceedings before the Commissioner, on
the basis of material gathered during survey under section 133A after issue of the first notice,
the Commissioner of Income-tax issued a second notice, the contents of which were different
from the contents of the first notice. Examine whether the action of the Commissioner is
justified as to the second notice.
(b) Examine the circumstances where the appellant shall be entitled to produce additional
evidence, oral or documentary, before the Commissioner of Income-tax (Appeals) other than
the evidence produced during the proceedings before the Assessing Officer.
(4 marks)

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Q-5 Can an assessee opt for dispute resolution before DRC if prosecution for any offence
punishable under the provisions of the Indian Penal Code has been instituted against him and
he has been convicted in respect of the same under the said Act?
(4 marks)

Q-6 Mr. M is working with MNO Limited for the last 10 years. He was granted an option on
1.7.2019 by the company to purchase 800 equity shares at a price of Rs. 250 per share. The
period during which the option can be exercised to purchase 800 shares at a pre-determined
price of Rs. 250 per share commencing on 1.7.2019 and ending on 31.3.2021. Mr. M exercised
the option on 15.3.2021 to purchase 500 shares. Fair market value on the said date was Rs.
6490 on the Bombay Stock Exchange and Rs. 6500 on the National Stock Exchange. The NSE has
recorded the higher volume of trading in that share.

The company has allotted him 500 shares on 24th April, 2021. The fair market value on the date
of allotment was Rs. 7100 per share on NSE and Rs. 7110 on the BSE that has recorded the
higher volume of trading in that share. The option was granted for making available rights in
the nature of intellectual property rights.

Determine the taxability of perquisite. Does it make any difference if the option was granted for
providing technical know-how?

(5 marks)

Q-7 ‘Sachin’ settled 1/4th share of his property under a trust for the education and maintained
of his minor daughter, ‘Pallavi’. Under the terms of the trust deed, the income accruing to the
trust, after meeting the expanses of maintenance and education of ‘Pallavi’ was to be
accumulated and paid over to her on attaining majority. The Assessing officer has assessed the

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income arising from the 1/4th share of the property so settled for the benefits of ‘Pallavi’ in the
hands of ‘Sachin’. Is the Assessing officer justified and correct in doing so?

(4 marks)

Q-8 X ltd.has two units, unit ‘N’ and unit ‘Y’. unit ‘N’ engaged in the business of power
generation installed a windfall and had a profit of Rs. 100 lakhs in Assessment year 2023 - 2024.
X ltd. claimed deprecation of Rs. 120 lakhs on windmill against the profit of Rs. 100 lakhs from
power generation business which was eligible for deductions under sections 80-IA. Unit Y,
engaged in manufacturing of wires, non-eligible business, had a profit of Rs. 70 lakhs for
Assessment year 2022-23.

The loss of Rs. 20 lakhs, I.e. balance deprecation not set off pertaining to unit ‘N’ was set-off
against the profits of unit Y carrying on non – eligible business, by the assessee, X Ltd. The
Assessing Officer was of the view that depreciation relating to a business eligible for deductions
under section 80-IA cannot be set off against non-eligible business income. Hence, under
absorb depreciation should be carried forward to the subsequent year to be set off against
business income of the assesses of that year.

Give your views on the correctness of the action of the assessing officer.

(5 marks)

Q-9 Public charitable trust register u/s 12 AB runs a hospital. It furnishes you the following
information for the year ended 31.03.2023.

1. Gross receipt from hospital Rs.525 lakhs

2. Income from business- incident to main objects Rs. 2lakhs.

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3. Voluntary contributions received from Rs.32 lakhs. It includes corpus donation of Rs.3 lakhs
and anonymous donation of Rs.5 lakhs
Note: voluntary contributions are included in gross receipt given in (1) above
4. Hospitals operational expenses incurred Rs 205 lakhs ( this does not include capital
expenditure and deprecation)
5. Gross receipts given in (i) above includes a sum of Rs. 55 lakhs which has accrued but not
received. Further, a sum of Rs. 18 lakhs was received only on 31.03.2023.
6. The trust set apart Rs. 80 lakhs for accruing a building to expand its hospital. But the
amount was paid in December, 2023 when the sale deed was register in it name.
7. In June 2022, the trust purchased and installed new computers software for Rs. 28 Lakhs.
The rate of depreciation is 40% as per Income tax Act, 1961.
8. The trust incurred Rs. 35 lakhs towards purchase of laptop compyers and printers for the
hospital
9. It rapid loan of Rs. 15 lakhs taken earlier for construction of hospital building

Compute the total income of the trust for the A.Y 2023-24 in order to avail maximum benefits
within the four corners of law.

(8 marks)

Q-10 M/s. ABC LLP filed its return of income for A.Y.2023-24, declaring total income of Rs. 18
lakhs, on 2nd October, 2023. On processing of return, the total income determined under
section 143(1)(a) was Rs. 22 lakhs, after disallowing claim for deduction under section 10AA on
account of late furnishing of return of income. Thereafter, on scrutiny, the Assessing Officer
made some additions under section 40(a) (ia) and section 43B and passed an assessment order
under section 143(3) assessing total income of Rs. 35 lakhs. Later on, the Assessing Officer

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noticed that certain income had escaped assessment and issued notice for reassessment under
section 148. The total income reassessed under section 147 was Rs. 42 lakhs.

Considering that none of the additions or disallowances made in the assessment or re -

assessment as above qualifies under section 270A(6), compute the amount of penalty to
be levied under section 270A of the Income-tax Act, 1961 at the time of assessment
under section 143(3) and at the time of reassessment under section 147 (Assume under -
reporting of income is not on account of misreporting). (4 marks)

Q-11 In respect of the taxes due from a private limited company, which could not be recovered
from it, the Tax Recovery Officer attached the properties of an erstwhile director for recovery
thereof. It was contended by the director that a notice under section 156 had not been served
on him and therefore, the proceedings for recovery were not valid. What is the correct legal
position?

(4 marks)

Q-12 Rajesh owns a house in Hyderabad. During the previous year 2022-23, 3/4th portion of
the house was self-occupied and 1/4th portion was let out for residential purposes at a rent of
Rs. 12,000 p.m. The tenant vacated the property on February 28th 2023. The property was
vacant during March, 2023. Rent for the months of January 2023 and February 2023 could not
be realised in spite of the owner's efforts. All the conditions prescribed under Rule 4 are
satisfied.

Municipal value of the property is Rs. 4,00,000 p.a., fair rent is Rs. 4,40,000 p.a. and rent is Rs.
4,80,000. He paid municipal taxes @10% of municipal value during the year. A loan of Rs.
30,00,000 was taken by him during the year 2011 for acquiring the property. Interest on loan
paid during the previous year 2022-23 was Rs. 1,48,000. Compute Rajesh's income from house
property for the A.Y. 2023-24.

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 (4 marks)

Q-13 Mr. A, a dealer in shares, received the following without consideration during the
P.Y.2022-23 from his friend Mr. B. –

(1) Cash gift of 75.000 on his anniversary, 15th April, 2022.

(2) Bullion, the fair market value of which was Rs. 60,000, on his birthday, 19th June, 2022.
(3) A plot of land at Faridabad on 1st July, 2022, the stamp value of which is 5 lakh on that date.
Mr. B had purchased the land in April, 2010.

Mr. A purchased from his friend Mr. C, who is also a dealer in shares, 1000 shares of X Ltd.
@400 each on 19th June, 2022, the fair market value of which was 600 each on that date. Mr. A
sold these shares in the course of his business on 23rd June, 2022. Further, on 1st November,
2022, Mr. A took possession of property (building) booked by him two years back at Rs. 20 lakh.
The stamp duty value of the property as on 1st November, 2022 was Rs. 32 lakh and on the
date of booking was Rs. 23 lakh. He had paid Rs. 1 lakh by account payee cheque as down
payment on the date of booking. On 1st March, 2023, he sold the plot of land at Faridabad for
Rs. 7 lakh.

Compute the income of Mr. A chargeable under the head "Income from other sources" and
"Capital Gains" for A.Y.2023-24.

(4 Marks)

Q-14 X (P) Ltd. has share capital in the form of equity share capital. The shares were held uptil
March 31, 2021 by four members A, B, C and D equally. The company made losses/profits for
the past three assessment years as follows:

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 Assessment year Business loss Unabsorbed depreciation Total Rs.
2019 – 20 Nil 1500000 1500000
2020 – 21 Nil 1200000 1200000
2021 – 22 900000 900000 1800000
Total 900000 3600000 4500000

The above figures have been accepted by the tax department.

During the previous year ending March 31, 2022, A sold his shares to Y and during the previous
year March 31, 2023, B sold his shares to Z. The profits for the past two previous year are as
follows:

For the year ending March 31, 2022: Rs. 18,00,000 (before charging depreciation 9,00,000)

For the year ending March 31, 2023: Rs. 45,00,000 (before charging depreciation ?7,50,000)

Compute the taxable income for assessment year 2023-24. Workings must form part of your
answer.

(6 Marks)

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