FIN303 - TAXATION MANAGEMENT

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ASSIGNMENT

DRIVE	FALL 2018
PROGRAM	MBA
SEMESTER	3
SUBJECT CODE & NAME	FIN303 - TAXATION MANAGEMENT
BK ID	B2113
CREDITS	2, 4
MARKS	30

Note –The Assignment is divided into 2 sets. You have to answer all questions in both sets. Average score of both assignments scored by you will be considered as your IA score. Kindly note that answers for 10 marks questions should be approximately of 400 words.

SET I

Question.1. Explain the objectives of tax planning. Discuss the factors to be considered in tax planning.

Answer: Objectives of tax planning :

A. Objective of raising revenue:

 The basic and primary objective of taxation is raising revenue.  Enormous amount needed by modern governments for National defense, creation of infrastructure and social upliftment schemes make regular and systematic resource mobilization compulsory.

B. Regulatory objectives:

Taxation performs an important regulatory role in

Question. 2. Mr. R owns two buildings with the depreciated value on 1st April, 2013 of ` 22.50 lakh. The buildings were bought on 30th April, 2002 for ` 18 lakh. The block is compulsorily acquired by the government on 15th May, 2013 for which a sum of ` 50 lakh was paid as compensation on 20th

March, 2014.The building was being used by Mr. R as a tenant for about four years prior to the acquisition. Mr. R purchased a new building on 10th April, 2015 for ` 14 lakh to set up another industrial undertaking.

Compute the amount of capital gains for the assessment year 2016-17.

What would be the capital gains if the new building was purchased on 8th May, 2014?

Answer: Computation of capital gains for Assessment Year 2016-17

Question. 3. Explain major considerations in capital structure planning. Write about the dividend policy and factors affecting dividend decisions.

Answer :  Factors of capital structure planning :

1. Trading on Equity:

 The word “equity” denotes the ownership of the company. Trading on equity means taking advantage of equity share capital to borrowed funds on reasonable basis. It refers to additional profits that equity shareholders earn because of

SET II

Question. 1. X Ltd. has Unit C which is not functioning satisfactorily. The following are the details of its fixed assets:

Asset	Date of acquisition	Book value (Rs. lakh )
Land Goodwill (raised in books on 31st March, 2005) Machinery Plant	10th February, 2003 5th April, 1999 12th April, 2004	30 10 40 20

The written down value (WDV) is Rs. 25 lakh for the machinery, and Rs.15 lakh for the plant. The liabilities on this Unit on 31st March, 2011 are Rs.35 lakh.

The following are two options as on 31st March, 2011:

Option 1: Slump sale to Y Ltd for a consideration of 85 lakh.

Option 2: Individual sale of assets as follows: Land Rs.48 lakh, goodwill Rs.20 lakh, machinery Rs.32 lakh, Plant Rs.17 lakh.

The other units derive taxable income and there is no carry forward of loss or depreciation for the company as a whole. Unit C was started on 1st January, 2005. Which option would you choose, and why?

Answer:

Answer :  Total price of the unit is :

Option 1 :

The net wealth of the undertaking (aggregate value of the total assets of the undertaking minus the value of the

liabilities as

Question. 2. Explain the Service Tax Law in India and concept of negative list. Write about the exemptions and rebates in Service Tax Law.

Answer : Service tax laws in India :

 Generally, the liability to pay service tax has been placed on the ‘service provider’. However, in respect of the taxable services notified under Sec.68(2) of the Finance Act,1994, the service tax shall be paid by such person and in such manner as may be prescribed at the rate specified in Sec.66 of the Act and all the provisions of Chapter-V shall apply to such person as if he is the person liable for paying the service tax.

Question. 3. What do you understand by customs duty? Explain the taxable events for imported, warehoused and exported goods. List down the types of duties in customs.

An importer imports goods for subsequent sale in India at $10,000 on assessable value basis. Relevant exchange rate and rate of duty are as follows:

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