Please Ans my Tax Query...Its urgent

Tax queries 809 views 10 replies

Richa Arora CA Final

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70 Points Joined August 2009

Q1) Mr bajaj borrowed Rs 1000000 @ 12% p.a on 1-4-2008 & invested the amount on the same date in purchasing the shares of the following co. –

S ltd (domestic Co.)- 3000 shares @ 80/- each (face value-10/-).Co. declared dividend on 31-03-2009 @ 20%

P ltd (Foreign Co.)- 5000 shares @ 20/- each (face value-10/-).Co. declared dividend on 31-03-2009 @ 20%

M Co-operative soviety-Invested 300000/- as capital & recd. Dividend 50000/- on 31-03-2009

The balance money was used for personal purposes. Expenses on collection of dividend

From P Ltd. 1000/-.Compute taxable dividend for AY 2009-10.

Q2) Mr X died on 1 oct 2005 while being in Central Govt. services. In terms of rules governing his service, his wife is paid a family pension of 10000/- pm & D.A of 40% thereof.State whether the amount of family pension ia assessable in her hands, & if so, under what head of income. Can she claim any relief/decuction on such receipt? Compute taxable income for AY 2009-10.

Replies (10)

Have a lot to achieve

C.A. B.Com(H)

101 Points Joined September 2009

Dividend Received from S Ltd. (domestic co.) Exempt from tax u/s 10(34)

Dividend Received from P Ltd (foreign co.) Not Exempt from tax u/s 10(34)

Thus div. chargeable to tax u/h Income from other Sources =5000*10*20%

CA.Tarun Maheshwari

CA DISA

7150 Points Joined March 2008

Agree eith expert wrt first question. wrt Second query, Family pension is taxable in the hands of his wife under other sources. But she can claim deduction u/s 57 of Rs.15000/- or 1/3rd whichever is lower.

CA Parth Shah

Chartered Accountant

369 Points Joined August 2009

Agree with both experts.But dis would be very interesting if investment was sold in view of inserting the point of DIVIDEND STRIPPING.Capital gain would be quite interesting.

CA Ankit B Jain

Bajoria & co

42 Points Joined June 2009

Q2 ans - Yes the amount of family pension is assessable in her(Mr X Wife) hands under the head INCOME FROM OTHER SOURCE.

Basic - Rs 10000*12 = Rs 120000 + DA(40%) = 48000 .Total = 168000/-

Deduction Rs 15000 or 33.33% of Rs 168000 which ever is less

so Rs 168000 - Rs 15000 = Rs 153000 taxable.

Guest

U asked the same ques in some other forum as well. I posted my reply there, please check....

Friends dividend from coop society is also taxable. Only div 4m domestic co is not taxable since CDT is already paid on it. So total taxable div will be 59000(50000*20%+50000-1000). Exp incurred in getting div from foreign co will be allowed as deduction u/s 57.

CA Ankit B Jain

Bajoria & co

42 Points Joined June 2009

How can be the Dividend from Foreign be Rs 50,000???

I think Rs 10000

face value Rs 10.Dividend rate 20% = Rs 2 per share

5000 Shares * 2 = rs 10000

Richa Arora CA Final

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70 Points Joined August 2009

Thanx a lot 4 ur ans...Please tell me dat in Q1 interest @ 12% will also be subtracted or not???as expenses incured to earn any income is allowed(like dat 1000 expense)...