1
ANSWER OF CHECK YOUR PROGRESS- PGBP
Solution 1:
Computation of Total Income
 Visiting fees
 Consultation fees
 Sale of medicines
 Operation theatre rent
 Cash payment not recorded in books
Less:
 Clinic expenses
 Depreciation on medical books @ 60%
 Depreciation on surgical equipment
Working Note:
W.d.v as on 01.04.2014
Sale of surgical instruments
Purchase on 01.11.2014
Balance
Depreciation @ 7.5% on 90,000
Depreciation @ 15% on 30,000
 Motor car expenses (2/3rd of `36,000)
 Depreciation on car
 Indian Medical Association membership fees
 Payment to C.A. for filing return of income
 Entertainment expenses
 Medical purchases
Income under the head Business/Profession
Income under the head House Property
Gross Annual Value
Working Note:
(a) Municipal valuation
(b) Rent received/receivable = 5,500 x 11 =
GAV = Higher of (a) or (b)
Less: municipal tax
Net Annual Value
Less: 30% of NAV u/s 24(a)
Less: Interest on capital borrowed u/s 24(b)
Income under the head House Property
Income under the head Business/Profession
Income under the head Other Sources
{Dividend exempt u/s 10(34)}
Gross Total Income
Less: Deduction u/s 80C to 80U
Total Income
5,75,000.00
9,15,000.00
28,000.00
18,000.00
75,000.00
1,24,000.00
9,000.00
11,250.00
60,000
(30,000)
90,000
1,20,000
6,750
4,500
24,000.00
12,000.00
7,000.00
4,000.00
24,000.00
33,000.00
13,62,750.00
66,000.00
66,000
60,500
66,000
Note:
1. Maturity proceeds of life policy is exempt from tax under section 10(10D).
2. Membership fees given to the professional bodies is allowed.
Nil
66,000.00
19,800.00
30,000.00
16,200.00
13,62,750.00
Nil
13,78,950.00
Nil
13,78,950.00
2
Solution 2:
Computation of income under the head Business/Profession
Consultancy fee
Special commission
Less:
Rent (50%)
Office expenses
Depreciation on car
{3,00,000 x 15% = 45,000}
{ 45,000 x 70 % = 31,500}
Magazines and journals
Depreciation on computer @ 60%
Depreciation on legal books
{(12,000 x 60%) + (18,000 x 30%)}
Car expenses {70% x 42,000}
Electricity and water charges (50%)
Income under the head Business/Profession
Computation of income under the head Other Sources
Dividend from UTI [exempt u/s 10(35)]
Payment from university as an evaluator
Income under the head other sources
Computation of income under the head salary
Gross Salary
Income under the head salary
Computation of Total Income
Income under the head Salary
Income under the head Business/Profession
Income under the head Capital Gains (STCG)
Income under the head Other Sources
Gross Total Income
Less: Deduction u/s 80C (54,000 + 5,000)
Total Income
2,20,000
15,500
72,000
28,000
31,500
18,000
30,000
12,600
29,400
8,000
6,000
Nil
7,000
7,000
45,000
45,000
45,000
6,000
2,00,000
7,000
2,58,000
59,000
1,99,000
Note: It is assumed that life insurance policy has been taken on or after 01.04.2012.
Solution 3:
Computation of professional income as per income & expenditure account
Net profit as per profit and loss account
Add: inadmissible expenses
Domestic servant salary
Entertainment expenses
Donation for charity show
Income tax
Car expenses
Books purchased
Stationery
Rent of own building
`
14,28,800.00
1,500.00
17,500.00
600.00
5,000.00
1,250.00
2,000.00
21,000.00
60,000.00
3
Less:
Dividend {Exempt u/s 10(34)}
Profit on sale of debentures
Gift from father in law
Depreciation on building (90,000 @ 10%)
Depreciation on books (2,000 @ 60%)
Depreciation on furniture
(`30,000 @ 10%)
(`20,000 @ 5%)
Income under the head Business/profession
Income under the head Capital Gains (STCG)
Gross Total Income
Less: Deduction u/s 80C to 80U
Total Income
8,500.00
8,450.00
6,050.00
9,000.00
1,200.00
3,000.00
1,000.00
15,00,450.00
8,450.00
15,08,900.00
Nil
15,08,900.00
Note:
Expenses on opening ceremony are allowed under section 37(1).
Solution 4:
Computation of income under the head business/profession
Net Profit as per profit & loss account
Add: inadmissible expenses
Wealth tax paid
Medical expenses
(Payment of medi claim insurance is allowed u/s 36(1)(ib))
Opening stock adjustment (25,000 x 5/105)
Ankur’s salary
Total
Less:
Gift from brother
Income tax refund
Depreciation on Air conditioner @ 15%
Adjustment for sales (50,000 – 45,000)
Closing stock adjustment (30,000 x 5/105)
Business income
Computation of income under the head Salary
Basic Salary
(6,000 x 3)
Gross Salary
Income under the head Salary
Gross Total Income
Less: Deduction u/s 80C
Total Income (Rounded off u/s 288A)
1,26,000.00
4,000.00
1,200.00
1,190.48
2,500.00
1,34,890.48
10,000.00
3,000.00
3,750.00
5,000.00
1,428.57
1,11,711.91
18,000.00
18,000.00
18,000.00
1,29,711.91
4,800.00
1,24,910.00
Solution 5:
Computation of income from profession
Gross receipts:
Audit fee
Appellate tribunal appearance
Misc. Receipt
Presents from client
2,40,000.00
25,000.00
20,000.00
10,000.00
4
Total
Payments:
Stipend
Office expenses
Office rent
Salary and wages
Printing and stationery
Subscription to C.A. institute
Depreciation on books @ 60%
Travelling expenses
Income from profession
Computation of income from house property
Gross Annual Value
Less: Municipal Tax
Net Annual Value
Less: 30% of NAV u/s 24(a)
Less: Interest on capital borrowed u/s 24(b)
Income from house property
Computation of Total Income
Income from profession
Income from house property
Gross total income
Less: Deduction u/s 80C to 80U
Total Income
2,95,000.00
12,000.00
24,000.00
18,000.00
20,500.00
4,000.00
1,500.00
9,000.00
5,000.00
2,01,000.00
24,000.00
Nil
24,000.00
7,200.00
Nil
16,800.00
2,01,000.00
16,800.00
2,17,800.00
Nil
2,17,800.00
Solution 6:
Computation of Total Income
Net profit as per profit and loss account
Add: inadmissible items
Advertisement in a newspaper owned by a political party (Sec 37(2B))
Capital expenditure on advertisement
Excess amount paid to a concern in which ‘X’ has substantial interest
Employee contribution to recognised provident fund (to the extent not deposited
before the due date)
Bonus being paid to employee after the due date of filing the return
Commission to employee after the due date of filing the return
Salary paid outside India in respect of which tax is not deducted at source
Capital expenditure for promoting family planning amongst employees
(allowed only to a company assessee)
Total
Less:
Depreciation on capital expenditure on advertisement @ 25% of `14,400
(assuming used for 180 days or more)
Income under the head Business/Profession
Gross Total Income
Less: Deduction u/s 80C to 80U
Total Income
7,70,000.00
20,000.00
14,400.00
1,800.00
12,500.00
58,000.00
44,000.00
46,000.00
6,000.00
9,72,700.00
3,600.00
9,69,100.00
9,69,100.00
Nil
9,69,100.00
5
Solution 7:
Computation of Total Income
Net profit as per profit & loss account
Add: inadmissible items
Travelling expenses incurred on foreign tour to the extent not admissible
[1,80,000 – (6/8 of 1,80,000)]
Travelling expenses incurred for purchasing a machine for factory
Own salary of Jitender
Commission to employee’s paid after the due date of furnishing return of income
under section 139(1) of the Act; hence not allowed u/s 43B
Less:
Depreciation on machinery @ 15%
Income under the head Business/Profession
Gross Total Income
Less: Deduction u/s 80C to 80U
Total Income (rounded off u/s 288A)
90,000.00
45,000.00
6,500.00
26,000.00
42,000.00
975.00
2,08,525.00
2,08,525.00
Nil
2,08,530.00
Note: It is assumed that machinery is not used for manufacturing purpose, so additional depreciation is not
allowed.
Solution 8:
Net profit as per profit & loss account
Add: expenses debited to profit & loss account but not allowable
Deposit in NSC (not an expenditure)
Provision for bad debts
Provision for VAT
Salary to Mrs. Rameshwar (Sec 40A(2))
Purchase of computer (capital expenditure)
Purchase from relative (Sec 40A(2))
Payment in cash (Sec 40A(3))
Adjustment for opening stock (9,50,000 x 10 / 110)
Bonus paid after due date (Sec 43B)
Municipal tax paid after due date (Sec 43B)
Total
Less:
Depreciation on computer (40,000 x 60% x ½)
Closing stock overvalued (3,60,000 x 10/110)
Long term capital gain
Dividend from foreign company
Winnings of lottery
Business income
Income from Other Sources
Dividend from foreign company
Winnings from lottery
Income from Other Sources
Income under the head Capital Gains (LTCG)
Gross Total Income
Less: Deduction u/s 80C
{Deposit in NSC}
Total Income (rounded off u/s 288A)
9,38,000.00
42,000.00
31,000.00
45,000.00
48,000.00
40,000.00
20,000.00
80,000.00
86,363.64
25,000.00
30,000.00
13,85,363.64
12,000.00
32,727.27
36,000.00
12,000.00
5,00,000.00
7,92,636.37
12,000.00
5,00,000.00
5,12,000.00
36,000.00
13,40,636.37
42,000.00
12,98,640.00
6
Solution 9:
Computation of Total Income of Marc Ltd. for the Assessment Year 2015-16
Income under the head Business/Profession
Net profit as per profit and loss account
Add: inadmissible expenses
 Fine imposed by the municipality for violation of regulation
 Reserve for bad debts
 Under valuation of closing stock (1,08,000 x 1/9)
 Total
Less:
 Income from units of UTI
 Dividend from Indian company
 Under valuation of opening stock
 Depreciation (1,20,000 – 60,000)
Business income
Income under the head Other Sources
Dividend from Indian company {exempt u/s 10(34)}
Income from UTI {exempt u/s 10(35)}
Income under the head Other Sources
Gross Total Income
Less: Deduction u/s 80C to 80U
Total Income
8,00,000
2,000
35,000
12,000
8,49,000
35,000
20,000
10,000
60,000
7,24,000
Nil
Nil
Nil
7,24,000
Nil
7,24,000
Note:
1. Amount paid to the lawyer of Rs. 30,000 for arguing appeals before the Tribunal is an allowable expense.
Solution 10:
Computation of income from profession of Mr. Prakash for the Assessment Year 2015-16
Professional incomes
Professional fees
Less:
Salaries
Rent of chamber
Telephone expenses
Magazines subscription
9/10 of motor car expenses
Dep. on motor car (3,00,000 x 7.5% x 90%)
Misc. office expenses
Subscription to Bar Association
Income from profession
Computation of income from house property
Let out house
Gross Annual Value
Less: municipal taxes (6,000 – 2,000)
Net annual value
Less: 30% of NAV u/s 24(a)
16,75,000.00
5,00,000.00
2,55,000.00
26,000.00
3,000.00
9,000.00
20,250.00
5,500.00
1,500.00
8,54,750.00
60,000.00
4,000.00
56,000.00
16,800.00
7
Less: Interest on capital borrowed u/s 24(b)
Income from house property
Nil
39,200.00
Self occupied house
Annual value
Income from house property
Loss under the head House Property
Income under the head House Property
Nil
39,200.00
31,200.00
8,000.00
Computation of income under the head Other Sources
Honorarium for delivering lectures in C.A. Institute
Honorarium for writing articles in Hindustan Times
Dividend from Indian company {exempt u/s 10(34)}
Dividend from UTI {exempt u/s 10(35)}
Interest from a company
Income under the head Other Sources
5,000.00
1,000.00
Nil
Nil
8,000.00
14,000.00
Computation of Total Income of Mr. Prakash
Income under the head House Property
Income under the head Business/Profession
Income under the head Other Sources
Gross Total Income
Less: Deduction u/s 80C to 80U
Total Income
8,000.00
8,54,750.00
14,000.00
8,76,750.00
Nil
8,76,750.00
Note:
1. Annual value of self occupied house is taken as nil and no deduction except interest on loan is
permissible
Solution 11:
Computation of Income under the head Business/profession
`
Net Profit as per profit and loss account
Add:
 Salary to the proprietor
 Interest to Mr. A
 Interest for income tax liability
 Depreciation
Less:
 Long term capital gains
Income under the head Business/Profession
Income under the head Capital Gains (LTCG)
Gross Total Income
Less: Deduction u/s 80C
National Saving Certificate
Public provident fund
Total Income
`
3,00,000
1,60,000
30,000
20,000
10,000
4,00,000
1,20,000
4,00,000
5,20,000
1,00,000
40,000
60,000
4,20,000
Solution 12:
Computation of Income under the head Business/profession
Net Profit as per profit and loss account
Add:
3,00,000
8
 Salaries and bonus
 Sales tax payable
 Expenditure on technical know-how
 Interest on capital
 Rent of own building
Less:
Depreciation on technical know-how {u/s 32}
(36,000 x 25%)
Depreciation on building
(2,50,000 x 10%)
Interest from Indian companies
Income under the head Business/Profession
Less: Brought forward business loss of assessment year 2009-10
Income under the head Business/Profession
Income under the head Other Sources
{Interest from Indian companies}
Gross Total Income
Less: Deductions u/s 80C to 80U
Total Income
1,05,000
30,000
36,000
20,000
30,000
9,000
25,000
70,000
4,17,000
1,00,000
3,17,000
70,000
3,87,000
Nil
3,87,000
Solution 13:
Computation of Income under the head Business/profession
Net Profit as per profit and loss account
Add:
Cash purchases {u/s 40A(3)}
Recovery of bad debts {as per sec 41(4)}
Salary of Mr. X
Interest on capital
Less:
Bonus paid
Depreciation on machinery
Working Note:
Written down value
Less: Sale
Add: Purchase
Depreciation
7.5% on `4,00,000 =
15% on `4,00,000 =
Total
Already provided in profit & loss A/c
Balance
Dividend from foreign company
Long term capital gains
Income under the head Business/Profession
Less: b/f Business Loss
Less: Unabsorbed depreciation
Income under the head Business/Profession
Income under the head Capital Gains (LTCG)
Income under the head Other Sources
{Dividend from foreign company}
Gross Total Income
`
2,00,000
1,00,000
1,00,000
3,60,000
1,89,000
1,07,000
40,000
`
5,00,000
1,00,000
4,00,000
8,00,000
30,000
60,000
90,000
50,000
40,000
30,000
1,00,000
6,72,000
3,00,000
2,00,000
1,72,000
1,00,000
30,000
3,02,000
9
Less: Deduction u/s 80C to 80U
Total Income
Nil
3,02,000
Solution 14:
Computation of Income under the head Business/profession
Net Profit as per profit and loss account
Add:
Interest to Proprietor
Salary to Proprietor
Purchase of trademark
Depreciation on plant and machinery
Less:
Short term capital gains
Depreciation on trade mark
Employer contribution to recognized provident fund
Income under the head Business/Profession
Less: Brought forward depreciation
Income under the head Business/Profession
Income under the head Capital Gains (STCG)
Gross Total Income
Less: Deduction u/s 80C to 80U
Total Income
12,00,000.00
1,50,000.00
6,00,000.00
2,00,000.00
20,000.00
6,00,000.00
50,000.00
4,00,000.00
11,20,000.00
2,36,000.00
8,84,000.00
6,00,000.00
14,84,000.00
Nil
14,84,000.00