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Practice problems on residential Status and incidence of Tax

Problem No.1
X, an Indian national, comes to India during May 2013 to settle here permanently. During April
1993 and April 2013, he was in Australia and never came to India. Find out whether the
following incomes are taxable in India for the assessment year 2014-15:
1. He has received dividend of Rs. 19, 40,000 from Reliance Industries, an India company.
2. He has 1,000 shares in A Inc., an American company. During the financial year 2013-14,
he has received a dividend of US $ 32,000. It is deposited in his bank account in the
Netherlands. After coming back to India he wants to keep this money in the foreign bank
with the approval of RBI.
3. He has two sons A (19 years) and B (14years). Both are university students in Germany.
Income of A in India is Rs.79, 000 and outside India US $ 43,000. Income B in India is
Rs. 2, 00,000 and outside India US $ 5,000.
4. In April 2013, he has transferred equity shares in Tata Chemicals. These shares were
purchased in 1988. Amount of capital profit from this transaction is Rs. 80, 00,000. These
shares were transferred on his behalf by his broker in the Bombay Stock Exchange.
5. He has received a sum of Rs. 80, 00,000 on the death of his uncle by Will. The amount
received in December 2013 and it is deposited in Chennai Branch of Citibank.
Problem No.2
X is a citizen of South Africa. He comes to India for the first time for a visit of 250 days
on October 10, 2013. During the previous year ending 2013-14, he gets the following
fees for technical services:

Technical fees from the Government of South Africa (received in UK)


Technical fees from the Government of South Africa (received in
Chennai)
Technical fees from the Government of India (received in UK)
Technical fees from the Government of India (received in Chennai)
Technical fees from Y (a resident in India) (this fees is paid to him
outside India for providing technical service outside India, however, the
benefits of technical service is utilised by Y for carrying on a business in
India)
Technical fees from Z (a resident in India) (this fees is paid to him
outside India for providing technical service outside India, however, the
benefits of technical service is utilised by Z for carrying on a business in
Bhutan)

Rs.
8,00,000
9,00,000
10,00,000
11,00,000
2,00,000

3,00,000

Technical fees from A (a non-resident in India) (this fees is paid to him


outside India for providing technical service outside India, however, the
benefits of technical service is utilised by A for carrying on a business in
India)
Technical fees from B (a non-resident in India) (this fees is paid to him
outside India for providing technical service outside India, however, the
benefits of technical service is utilised by B for carrying on a business in
Bhutan)

2,10,000

3,10,000

Determine the amount of net income chargeable to tax in the hands of X for the assessment year
2014-15.
Problem No.3
From the information given below, determine the net of X ltd. For the assessment year 2014-15.
Business of X ltd. is controlled from outside India. All shareholders are non-resident and foreign
citizens.
1. Situation 1 X Ltd. is an Indian company.
2. Situation 2 X Ltd. is a foreign company.

1. Interest of debentures of an Indian company (received in Mauritius)


2.Profits on transfer of unquoted shares in Indian company (1/3 received
in India and 2/3 are received in Mauritius)
3.Interest on a deposit with an Australian company (1/3 is received in
India and 2/3 are received in Mauritius)
4.Interest on German Development Bonds (50% is received in Germany
and 50% is received in Mauritius)
5.Dividend from a foreign company (received in Mauritius)
6.Profits on a sale of a property situated in UK (10% of profit is
received in India and 90% received in Mauritius is utilised for
purchasing gold in India) (Value of gold on March 31, 2014 is Rs.
17,00,000
7.Income earned from business in New Zealand which is controlled
from Kolkata (20 percent is received in Kolkata, 70% received in New
Zealand and 10 percent is received in Mauritius
8.Profits from a business in Chennai (but entirely controlled and
managed from Mauritius, 70% is received in India and 30 percent is
received in Bhutan)
9. Rent of a commercial property situated in Mauritius (deposited in
State Bank of India, Mauritius branch)

Rs.
2,95,000
9,00,000
6,30,000
2,00,000
3,80,000
10,00,000

4,00,000

7,00,000

6,10,000

10. Royalty received in Mauritius for a patent right made available to a


non-resident (the non-resident has utilised patent rights for development
of a product in India) (50 percent royalty is received in India and 50
percent outside India)
11. Interest received in Mauritius on money lent to Y ltd., an Indian
company (money is lent in UK, Y ltd. has used borrowed capital for
setting up a factory in UK)
12. Fees for Technical services rendered from a profession set up in
India (the project is completed by technical executives of X Ltd. in
Spain, amount is paid in Spain and later on 50 percent is remitted to
India and 50 percent to Mauritius)

2,80,000

19,00,000

18,00,000

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