DFIN303 TAXATION MANAGEMENT JULY-AUG 2025

Description

SESSION	JUL-AUG 2025
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	3
COURSE CODE & NAME	DFIN303 TAXATION MANAGEMENT

 

 

Assignment Set – 1

 

 

Q1. a.Explain conditions to be tested to determine the residential status of an individual and the various categories of residential status in the Income Tax Act

1. Draw up the Computation format for income from let-out house property for which municipal tax, interest and principal on housing loan are paid during the previous year 5+5

Ans

(a). Residential Status of an Individual – Conditions & Categories

Indian income tax is based on residency.  The Income Tax Act, 1961 divides taxpayers into residential groups with varying tax requirements.  The status is based on the number of days spent in India in the previous year and years prior, not nationality or residence.

Basic Conditions Under Section 6(1)

To determine whether an individual is a Resident or Non-Resident, two basic conditions are examined. An individual is treated as a Resident if any one of the following conditions is

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Q2. Elaborate comprehensively on the meaning of “Agricultural Income” under the Income Tax Act, including its components, instances of inclusion and exclusion, and its indirect impact on tax computation.  10           

Ans 2.

Meaning of Agricultural Income – Components, Inclusions, Exclusions & Tax Impact

Agricultural income enjoys special treatment under the Income Tax Act because agriculture falls under the State List of the Constitution. Section 2(1A) defines agricultural income and lays down the components that qualify for exemption. Understanding what constitutes agricultural income is essential for taxpayers engaged in farming and allied activities.

Meaning of Agricultural Income

Agricultural income refers to revenues derived directly from land situated in India and used

 

 

Q3. Write down in detail about the expenses disallowed while computing Income under the head Business or Professional Income. 10       

Ans 3.

Expenses Disallowed While Computing Business or Professional Income

While determining taxable profits under the head “Profits and Gains of Business or Profession,” the Income Tax Act requires that only legitimate business expenses be deducted. Certain expenses are expressly disallowed to prevent misuse, ensure proper accounting, and maintain fairness in tax administration. These disallowances are primarily covered under

 

 

Assignment Set – 2

 

 

Q4. Discuss the applicability of ICDS u/s 145 (2).  10       

Ans 4.

Applicability of ICDS u/s 145(2)

The Income Computation and Disclosure Standards (ICDS) were notified by the Central Government under Section 145(2) of the Income Tax Act to bring uniformity, consistency, and clarity in the method of accounting across taxpayers. These standards govern the computation of taxable income under the heads “Profits and Gains of Business or Profession” and “Income from Other Sources.” ICDS does not override the Income Tax Act; instead, it guides taxpayers on how to recognize income and expenditure for tax purposes. The purpose

 

 

Q5. Discuss the comprehensive implications of tax on various financial decisions of a company, beyond just capital structure 10  

Ans 5.

Implications of Tax on Various Financial Decisions of a Company

Tax considerations form an integral part of financial decision-making within a company. Although tax planning is often associated primarily with capital structure, taxes influence almost all strategic and operational choices. Every financial decision—investment, financing, dividend distribution, mergers, acquisitions, leasing, and working capital management—carries tax outcomes that ultimately affect profitability and shareholder value.

Impact on Investment Decisions

Investment decisions are influenced by tax depreciation, incentives, allowances, and

 

 

Q6. Describe the current legal framework for gift taxation in India, what constitutes an exempt and taxable gift, and the conditions for exemption?       10       

Ans 6.

Legal Framework for Gift Taxation in India – Exemptions, Taxable Gifts & Conditions

Gift taxation in India operates under the Income Tax Act, 1961 after the abolition of the Gift Tax Act, 1958. Today, Section 56(2)(x) governs taxability of gifts received by individuals and Hindu Undivided Families (HUFs). The provision was introduced to curb money laundering and prevent tax avoidance by routing income through Gifts. The law carefully distinguishes between exempt gifts and taxable gifts, depending on the donor, occasion, and