Problem 1.
Discuss taxability in the following cases:
(i) Mr. Jeevan Chauhan has received gift of ` 50,000 in cash from his friend.
(ii) Mr. Sudhanshu Mittal has received gift of ` 2,50,000 in cash from his brother.
(iii) Mr. Vishal Jain has received gift of ` 2,50,000 in cash from his mother’s sister.
(iv) Mr. Druv Goel has received gift of ` 2,50,000 in cash from his father’s brother.
(v) Mr. Nimit Aggarwal has received gift of ` 2,50,000 in cash from his cousin.
(vi) Mr. Naveen Jain has received gift of ` 2,50,000 in cash from brother of his spouse.
(vii) Mr. Sachin Bhatia has received gift of ` 2,50,000 in cash from his grand father.
(viii) Mr. Sunny Arora has received gift of ` 2,50,000 in cash from spouse of his brother.
(ix) Mr. Ritesh Bansal has received gift of ` 2,50,000 in cash from husband of his sister.
(x) Mr. Mohit Singh has received gift of ` 2,50,000 in cash from sister of his brother’s wife.
(xi) Mr. Rahul Kumar has received gift of ` 2,50,000 in cash from the sister of his spouse.
(xii) Mr. Hunny Jindal has received gift of `6,000 in cash on his birthday from each of his eleven friends.
(xiii) Mr. Satbeer Singh has received gift of ` 2,50,000 in kind from his friend.
(xiv) Mr. Ashok Kumar has received gift of `2,50,000 in cash from his friend on the occasion of his marriage.
(xv) Mr. Mukesh Verma has received gift of `1,00,000 in cash and `1,00,000 in kind from his fiancée.
Problem 2.
Mr. Tarun Gulati submits the particulars for the previous year 2012-13 as given below:
1. He has received a gift of `27,000 from one of his friend on 01.09.2012.
2. He has received a gift of `11,000 on 01.10.2012 from his wife Mrs. Tanya Gulati.
3. He has received a gift of `29,000 from his step daughter on 01.01.2013.
4. He has received a gift of `27,000 from grand mother of Mrs. Tanya Gulati on 07.01.2013.
5. He has received a gift of `20,000 in kind from his employer on 01.03.2013.
6. He has received gold as gift from his friend on 01.12.2012 with value `2,00,000.
7. He has received `27,000 as gift from his maternal aunt (mother’s sister) on 10.12.2012.
8. He has received dividend of `2,00,000 from a domestic company on 31.03.2013.
9. He has received two gifts of `30,000 each from his neighbours on 01.06.2012.
Compute his tax liability for assessment year 2013-14.
Answer = Tax Liability: `10,510 Problem 3.
Mr. X received gift in cash `3,00,000 from son of his father’s brother and gift of `1,00,000 in cash from brother of father of Mrs. X. He has agricultural income `5,00,000.
Compute his tax liability for Assessment Year 2013-14.
Answer = Tax Liability: `41,200 (b) He is aged 81 years.
Answer = Tax Liability: Nil
(c) He is non-resident and he has completed age of 80 years as on 31.03.2013.
Answer = Tax Liability: `41,200 Problem 4.
Mr. X is received jewellery valued `5,00,000 from brother of his grand father and his agricultural income is
`1,00,000.
Compute his income and tax liability for Assessment Year 2013-14.
Answer = Total Income: `5,00,000; Tax Liability: `41,200 Problem 5.
Following gifts are received by Mrs. Sweety, who is carrying on jewellery business, during the previous year 2012-13:
(i) On the occasion of her marriage on 07.09.2012, she has received `1,20,000 as gift out of which `85,000 are from relatives and balance from friends.
(ii) On 03.10.2012, she has received cash gift of `2,50,000 from cousin of her mother.
(iii) A mobile phone worth `15,000 is gifted by her friend on 21.09.2012.
(iv) She gets a cash gift of `2,40,000 from the elder brother of her husband's grandfather on 10.12.2012.
(v) She has received a cash gift of `6,00,000 from her friend on 27.01.2013.
(vi) She has received bullion, the fair market value of which was `4,75,000 on her birthday,19.01.2013.
Mrs. Sweety purchased from her friend, who is also carrying jewellery business, jewellery at ` 2,50,000 on 25.01.2013, the fair market value of which was `5,00,000 on that date.
Further, on 02.03.2013, Mrs. Sweety purchased a building at `20,00,000 from her friend.
The Stamp duty value of the building as on 02.03.2013 was `25,00,000.
Compute total income and tax liability of Mrs. Sweety for A.Y.2013-14.
Answer = Total Income: `15,65,000; Tax Liability: `3,08,490
SOLUTIONS
TO
PRACTICE PROBLEMS
Solution 1:
(i) Mr. Jeevan Chauhan has received gift of `50,000 in cash from his friend, in this case it will not be considered to be his income.
(ii) Mr. Sudhanshu Mittal has received gift of `2,50,000 in cash from his brother, in this case it will not be considered to be his income.
(iii) Mr. Vishal Jain has received gift of ` 2,50,000 in cash from his mother’s sister, in this case it will not be considered to be his income.
(iv) Mr. Druv Goel has received gift of `2,50,000 in cash from his father’s brother, in this case it will not be considered to be his income.
(v) Mr. Nimit Aggarwal has received gift of `2,50,000 in cash from his cousin, in this case it will be chargeable to tax.
(vi) Mr. Naveen Jain has received gift of `2,50,000 in cash from brother of his spouse, in this case it will not be considered to be his income.
(vii) Mr. Sachin Bhatia has received gift of `2,50,000 in cash from his grand father, in this case it will not be considered to be his income.
(viii) Mr. Sunny Arora has received gift of `2,50,000 in cash from spouse of his brother, in this case it will not be considered to be his income.
(ix) Mr. Ritesh Bansal has received gift of `2,50,000 in cash from husband of his sister, in this case it will not be considered to be his income.
(x) Mr. Mohit Singh has received gift of `2,50,000 in cash from sister of his brother’s wife, in this case it will be considered to be his income.
(xi) Mr. Rahul Kumar has received gift of `2,50,000 in cash from the sister of his spouse, in this case it will not be considered to be his income.
(xii) Mr. Hunny Jindal has received gift of `6,000 in cash on his birthday from each of his eleven friends, in this case it will be considered to be his income because the total amount is exceeding `50,000.
(xiii) Mr. Satbeer Singh has received gift of `2,50,000 in kind from his friend, in this case it will be considered to be his income.
(xiv) Mr. Ashok Kumar has received gift of `2,50,000 in cash from his friend on the occasion of his
marriage, in this case it will not be considered to be his income.
(xv) Mr. Mukesh Verma has received gift of `1,00,000 in cash and `1,00,000 in kind from his fiancee, in this case gift in cash will be considered to be his income and the gift in kind shall also be considered to be his income.
Solution 2: `
Computation of income under the head Salary
Gift in kind from his employer (20,000 – 5,000) 15,000.00
Income under the head Salary 15,000.00
Note: Dividend received by Mr. Tarun Gulati from domestic company is exempt u/s 10(34).
Solution 3:
` Computation of income under the head Other Sources
Gift received from son of his father’s brother 3,00,000
Gift received from bother of father’s of Mrs. X 1,00,000
Income under the head Other Sources 4,00,000
Gross Total Income 4,00,000
Less: Deduction u/s 80C to 80U Nil
Total Income 4,00,000
Agricultural Income 5,00,000
Computation of Tax Liability
Step 1. Tax on (agricultural income + non agricultural income)
i.e. Tax on ` 9,00,000/- at slab rates 1,10,000
Note: If non-agricultural income is upto the limit not chargeable to tax (`2,00,000/ 2,50,000/5,00,000),
Step 1. Tax on (agricultural income + non agricultural income)
i.e. Tax on ` 9,00,000/- at slab rates 1,10,000
Income under the head Other Sources 5,00,000
Gross Total Income 5,00,000
Less: Deduction u/s 80C to 80U Nil
Total Income 5,00,000
Agricultural Income 1,00,000
Computation of Tax Liability
Step 1. Tax on (agricultural income + non agricultural income)
i.e. Tax on ` 6,00,000/- at slab rates 50,000
Computation of Total Income of Mrs. Sweety for the A.Y. 2013-14
`
Gift received on the occasion of marriage are exempt
--Cash gift received from cousin of Mrs. Sweety’s mother is taxable under section 56 2,50,000 (Cousin of Mrs. Sweety’s mother is not a relative)
Mobile phone gifted by her friend is not taxable since it is not included in the definition
of “property” under section 56
--Cash gift received from elder brother of husband’s grandfather is taxable 2,40,000 (Brother of husband’s grandfather is not a relative)
Cash gift from friend is taxable 6,00,000
Since bullion is included in the definition of property, therefore, when bullion is
received without consideration, the same is taxable, since the aggregate fair
market value exceeds `50,000 4,75,000
Difference of `2.5 lakh in the value of jewellery purchased from her friend, is not taxable as it represents the stock-in-trade of Mrs. Sweety. Since Mrs. Sweety is carrying jewellery business and it has been mentioned that the jewellery were subsequently sold in the course of his business, such jewellery represent the
stock-in-trade of Mrs. Sweety. Nil
The immovable property purchased for inadequate consideration is outside the Scope of section 56. Therefore the difference of `5,00,000 between stamp duty
value and purchase price of building is not taxable Nil
Income under the head Other Sources 15,65,000
Gross Total Income 15,65,000
Less: Deduction u/s 80C to 80U Nil
Total Income 15,65,000
Computation of Tax Liability
Tax on ` 15,65,000 at slab rate 2,99,500
Add: Education cess @ 2% 5,990
Add: SHEC @ 1% 2,995
Tax Liability 3,08,485
Rounded off u/s 288B 3,08,490