IGNOU| ELEMENTS OF INCOME TAX (ECO - 11)| SOLVED PAPER – (DEC - 2023)| BDP| ENGLISH MEDIUM
BACHELOR'S DEGREE PROGRAMME
(BDP)
Term-End Examination
December - 2023
(Elective Course: Commerce)
ECO-11
ELEMENTS OF INCOME TAX
Time: 2 Hours
Maximum Marks: 50
Note: Question No. 1 is compulsory. Attempt any three
questions from the remaining questions.
हिंदी माध्यम: यहां क्लिक करें
1. Compute taxable income of Shri Pankaj Lathar for the assessment year 2022-23: 14
(i) Income of
business (including Rs. 25,000 received as compensation for termination of an
agency) - 80,000
(ii) Interest on
Government Securities (net) - 1,500
(iii) LTCG on
sale of a machine - 16,000
(iv) Income
received from units of UTI - 2,000
(v) Interest
received on fixed deposit in a firm - 3,000
2. (a) Distinguish between agricultural income and partly
agricultural income with example. 8
Ans:-
Agricultural income and partial agricultural income are two different concepts
in the context of Income Tax in India.
The
detailed difference between them with examples is given here:-
Agricultural
Income:
Agricultural
income refers to income generated from activities directly related to
agriculture, such as:-
(i)
Cultivation of land: Income from the cultivation of crops, fruits or
vegetables.
(ii) Crop
cultivation: Income from growing crops, including crops that are harvested
and sold.
(iii) Animal
husbandry: Income from breeding, rearing and selling animals such as
cattle, sheep or poultry.
(iv) Fishing:
Income from catching and selling fish.
Examples:-
(a) Income from
the cultivation of rice, wheat or other crops.
(b) Income from
breeding and selling cattle.
(c) Income from
catching and selling fish.
Partly
Agricultural Income:
On the other
hand, partly agricultural income refers to income from activities that are
related to agriculture but are not exclusively dependent on it. It
includes:-
(i) Dairy
Farming: Income from raising cattle and selling milk and milk products.
(ii) Poultry
Farming: Income from raising poultry and poultry farming.
(iii)
Livestock Raising and Sale: Income from raising and selling animals such as
sheep, goats or other livestock.
(iv) Forestry
Operations: Income from operations related to forest trees, such as logging
or felling.
Examples:-
(a) Income from
dairy farming, which includes milk and milk products.
(b) Income from
poultry farming, which includes eggs and meat.
(c) Income from
raising and selling sheep or goats.
Key
Differences:-
(i)
Exemption: Agricultural income up to Rs 5,000 is exempt from income tax.
However, partly agricultural income is taxed as per the regular income tax
slabs, while the non-agricultural component is taxed separately.
(ii)
Classification: Agricultural income is classified as agricultural income,
while partly agricultural income is classified into agricultural and
non-agricultural components.
(iii) Record
keeping: It is important to maintain detailed records to differentiate
between agricultural and non-agricultural income in partly agricultural income.
In short, agricultural
income is income directly related to agriculture, while partly agricultural
income is income related to agriculture but involves additional activities. It
is essential to understand these differences for accurate tax compliance and
financial planning.
(b) When is
an individual treated as a ‘resident' in India? 4
Ans:- A
person is considered to be resident in India for a tax year, if he fulfils any
one of the following two basic conditions:-
(i) He is
physically present in India for a period of 182 days or more during that tax
year.
(ii) He is
physically present in India for a period of 60 days or more during that tax
year and 365 days or more in the aggregate during the 4 years immediately
preceding that tax year.
However,
there are certain exceptions to the second condition:-
(i) For Indian
citizens who leave India for the purpose of employment or as a crew member of
an Indian ship, the 60-day condition is replaced by 182 days.
(ii) For Indian
citizens or persons of Indian origin who visit India, the 60-day condition is
replaced by 182 days if their total income (other than foreign source income)
exceeds ₹15 lakh during the previous year.
If a person
does not fulfil either of these two basic conditions, he is treated as a
non-resident for that tax year.
3. Compute Residental status as per the provisions of
Income Tax Act for an individual, if he is: 4×3=12
(a) Resident
(b) Not
ordinarily Resident
(c)
Non-Resident
Ans:- To determine the residential status of a person
under the Income Tax Act, the following criteria are used:-
1. Number
of days in India:
(i) Resident:
If the person is present in India for:
(a) 182 days or
more during a financial year, or
(b) 60 days or
more during a financial year and 365 days or more during the four preceding
financial years.
(ii)
Non-resident: If the person does not fulfil any of these conditions.
2.
Additional criteria:
(i)
Ordinarily resident: If the person has been resident in India for at least
two years out of the ten years immediately preceding the relevant financial
year.
(ii)
Non-ordinarily resident: If the individual has been non-resident in India
in nine out of ten years immediately preceding the relevant financial year, or
if they have been present in India for 729 days or less in any of the previous
seven financial years.
3. Tax
implications:
(i)
Resident and ordinarily resident (ROR): Global income is taxed.
(ii)
Resident but not ordinarily resident (RNOR): Income derived from an Indian
source and deemed to be received or received in India is taxed.
(iii)
Non-resident (NR): Only income earned in India is taxed.
These
classifications are important for determining tax liability and compliance
requirements under the Income Tax Act.
4. (a) Mr. Madhur is getting a pension of ₹ 4,000 per
month from a company. During the previous year, he got two-third pension
commuted and received ₹ 1,86,000. Compute the exempted amount; if (i) he also
received gratuity (ii) he did not received gratuity for the assessment year
2022-23. 8
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