QUESTION FOR PRACTICE WITH SOLUTION
Q.1. Shridhar holds 3,000 equity shares of Hyderabad Tobacco Co. Ltd. The Board of Directors at their meeting held on 31-1-2013, declared an interim dividend of Rs. 2 per share. The company declared a final dividend of Rs. 3 per share at the Annual General Meeting held on 15-3-2013. Both the dividend warrants were received by Shridhar on 30- 4-2013. Discuss the assessment years to which the above dividends relate.
The final dividend of Rs. 3 per share was declared in the Annual General Meeting held on 15-3-2013; hence it relates to the assessment year 2014-15.
Although the interim dividend of Rs. 2 per share was declared in the previous year 2013- 14 but the dividend warrant was received in the previous year 2013-14. Hence, the interim dividend relates to the previous year 2012-13 and assessable in the assessment
Q.2. From the following particulars of the income of Sri Ram Gopal compute his taxable income under the head 'Income from Other Sources' for the year ended 31st March, 2014:
1. He owns in Burma an agricultural land which gave him an income of Rs. 25,000 during the year; also owns a plot of land in Agra which has been let out for storing non-agricultural goods at Rs. 1,000 p.m. He also has another plot of land on which village markets are held. This land fetched him an income of Rs. 2,500 during the year.
2. During the previous year, he gave Management Consultancy Service to a number of entrepreneurs. This gave him an income of Rs. 75,000.
3. He has a quarry in Jaipur. He has let it out to Mr. A on a royalty of 25 paise per ton of stone raised. In all 10,000 ton of stone was raised during the previous year. He incurred an expenditure of Rs. 400 in connection with the earning of royalty, which has been admitted by the Assessing Officer.
Q.3. Shri Hari Gopal is a member of parliament from Agra. During the previous year 2013-14 he had the following incomes :
1. As a member of parliament he received a salary of Rs. 4,000 p.m. and daily allowance of Rs. 20,000 for attending various sessions.
2. He held the following investments :
(a) 10% Preference Shares in Agra Sugar Works Ltd. of the face value of Rs. 5,000.
(b) 1,000 Equity Shares of Rs. 10 each in Tata Finlay Ltd. The company declared interim dividend of 15% on 15th February, 2014 but paid it on 1st May, 2014 and paid a final dividend of 10% on 30th March, 2014.
(c) A10% fixed deposit of Rs. 10,000 is held by him in a Bank. Interest is credited annually.
(d) He received dividend of Rs. 500 from a co-operative society.
3. He won Rs. 8,000 in crossword puzzles.
4. On 1st September, 2012 he purchased a plot of land for constructing his house. On account of shortage of funds, he could not get this house constructed and hence let out the plot at Rs. 150 per month from 1st November, 2013.
5. He has let machinery and furniture and also building to Mr. Krishna Gopal at a monthly rent of Rs. 5,000. He spent Rs. 1,500 on the repair of machinery, furniture and building during the previous year. Depreciation allowed in respect of these assets for the previous year was Rs. 10,000.
The Bank charged Rs. 20 commission on collection of dividends from various companies.
Compute the taxable income of Shri Hari Gopal under the head 'Income from Other Sources'.
Q.4. Dr. Bijli is a Professor of Economics and is a resident of India. He submits before you the following incomes for computing his taxable income under the head 'Income from Other Source for the assessment year 2014-15 :
1. He is an author of a text-book for schools which fetched him a gross royalty of Rs. 45,000. He claims the following deductions from this amount:
(a) Salary to a clerk who collects for him necessary data and goes through the find proof-reading Rs. 24,000.
(b) Purchased books worth Rs. 400 in connection with the revision of the book.
(c) Telephone expenses of Rs. 800 attributed to the publication and sale of his book and other matters in connection with the printing of the new edition of the book.
2. Income from articles which were published in 'Economic Times' and 'Eastern Economist Rs. 3,000.
3. He lives in a rented house paying rent Rs. 3,000 p.m. The house is too big for his family. Hence, he has sub-let one-third portion of the house on a rent of Rs. 1,500 p.m. Dr. Bijli has undertaken the liability of paying municipal taxes of Rs. 1,500 on the whole house and also the current repairs of the whole house amounting to Rs. 6,000.
4. Dr. Bijli received Rs. 250 per lecture delivered at the Christ ian Institute. During the previous year he delivered 24 lectures.
5. He is an examiner of a number of Universities. This source gave him a remuneration of Rs. 7,000.
6. His other incomes were :
(i) Winnings from card games and betting Rs. 6,500.
(ii) Winnings from Chess Rs. 1,000.
(iii) Received interest on Government of England Bonds Rs. 500.
7. Received Rs. 2,000 as dividend from a company in which the public are substantially interested by an account payee cheque.
Q.5. Asha Anand, a resident individual, received in cash the following income as interest on securities during the previous year ending 31st March, 2014:
Rs. 4,000 as interest on Government Securities.
Rs. 3,600 as interest on debentures issued by the local authority.
Rs. 3,600 as interest on debentures of Meghdoot Limited (not listed at any stock exchange),
Rs. 3,600 as interest on debentures of Mercury Paints Limited (listed on Delhi Stock Exchange).
Rs. 3,600 as interest on tax-free debentures of Gunjan Electricals Limited (not listed on any stock exchange).
Determine the interest on securities under the head Income from Other Sources for the assessment year 2014-15, assuming that the interest is paid in each case on 30th June and 31st December.