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Corporate Tax Planning 1

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SKU: AMSEQ-051 Category:

Assignment A

 

Q.1: Distinguish between tax avoidance and tax evasion?

 

 

Q.2: What do you understand by control and Management of a Company?

 

Q.3: What is VAT?

 

Q.4: What is the concept of avoidance of double taxation.

 

Q.5: What is “Gross Total Income”?

 

Assignment B

Q.1: How the incidence of tax depends upon Residential Status of an assessee?

 

Q.2: How the tax planning with reference to new business is to be done?

 

Q.3: Telco Ltd., a company incorporated and managed in South Africa and engaged in telecommunication services, is going to invest in China. Its Chinese operations will be both manufacturing and providing services. Telco intends to penetrate the Chinese market for telecommunication and according to some market research carried out before, the operations will be highly profitable within a couple of years.

 

How to structure Telco’s investment in a tax effective manner?

 

 

Assignment C

 

Q.1 A domestic company is always a company in which the public are substantially interested –

(a) True

(b) False

(c) None of the above

(d) True in some cases.

 

Q.2 A private limited company can never be a company in which the public are substantially interested –

(a) True

(b) False

(c) True in some cases

(d) None of the above

 

Q.3 A company registered in the UK and makes arrangement for payment of dividend in India is not a domestic company –

(a) True

(b) False

(c) True in some cases

(d) None of the above

 

Q.4 A company is said to be resident of a particular company if –

(a)Control and management of the affairs of a company is

situated wholly in that particular country.

(b)Control and management of the affairs of a company is

situated outside that particular country.

(c) Control and management of the affairs of a company is

situated partly in that particular country and partly

outside that particular country.

(d) All of the above

 

Q.5 X Ltd. a foreign company manages its affairs partly from India and partly outside India. X Ltd. is said to be –

(a) Resident in India

(b) Non-Resident in India.

(c) Resident and Ordinary Resident in India,

(d) Resident but not ordinary Resident in India.

 

Q.6 A company owning the following hotels can claim deduction

under section 80-ID –

(a)A 5 star hotel in X ( a place ).

(b)A 4 star hotel in Y ( a place ).

(c)A 3 star hotel in Z ( a place ).

(d)All of the above.

 

 

 

Q.7 A company is qualified to claim deduction under section 80-IB.

By mistake the deduction was not claimed in the return in the

return of income. However, the company claims the before the

Assessing Officer at the time of assessment under section 143(3)

 

(a)Deduction will be allowed by the assessing officer.

 

(b)Deduction will not be allowed by the assessing officer.

 

(c)Deduction will be allowed by the assessing officer, if the

Commissioner of Income-tax permits.

 

(d)Deduction will be allowed by the assessing officer, if the

it is permitted by the Chief Commissioner.

 

Q.8 A Government company cannot claim any deduction under section 10A, 10AA and 10B –

(a)True

(b)False

(c)None of the above

(d)True in some cases.

 

Q.9 A limited liability partnership owns an infrastructure facility. It can claim deduction under section 80-IA –

(a)True

(b)False

(c)True in some cases

(d)None of the above

 

Q.10 Only a company(not a limited liability partnership) can claim deduction under section 10A, 10AA, and 10B –

(a)True

(b)False

(c)True in some cases

(d)None of the above

 

Q.11 Deduction under section 80JJJA is available in the following cases –

(a)Indian Company

(b)Foreign Company

(c)Limited Liability Partnership.

(d)All of the above

 

Q.12 Tonnage tax scheme is applicable in the following cases –

(a)Foreign Shipping Company,

(b)Indian Shipping Company,

(c)Limited liability partnership in shipping industry.

(d)All of the above

 

 

 

 

 

Q.13 A company will pay dividend tax if –

(a)Bonus shares are allotted to equity shareholder.

(b)Bonus shares are allotted to preference shareholders,

(c)Shares are allotted to debenture holders free of cost.

(d)Shares are allotted to employees as ESOP shares free of cost.

 

Q.14 Corporate taxation does not play any significance role in determining the choice between different sources of finance –

(a)True

(b)False

 

Q.15 A Company want to purchase a plant (cost: Rs. 80 crore).It can out rightly purchase it. Alternatively, it can take the plant on lease. The following factors are taken into consideration to find out which one is better –

(a) Corporate tax rate;

(b) Corporate rate and depreciation rate;

(c) Corporate tax rate, depreciation rate, lease rent, cost of capital and useful life of plant;

(d) None of the above.

 

Q.16 If corporate tax rate is reduced the tax saving on account of depreciation will increase –

(a) True

(b) False

(c) True in some cases

(d) None of the above

 

Q.17 If rate of depreciation is reduced the tax saving on account of depreciation will increase –

(a) True

(b) False

(c)True in some cases

(d)None of the above

 

Q.18 If borrowed funds are used for purchase of a plant and tax rates are reduced, the tax saving will increase –

(a) True

(b) False

(c) True in some cases

(d) None of the above

 

 

Q.19 Depreciation is not available in the case of machine acquired under higher purchase –

(a) True

(b) False

(c) True in some cases

(d) None of the above

 

Q.20 X Limited is considering a proposal to manufacture a component itself or purchase from market. No fresh investment in plant and machinery will be required if it decides to manufacture the component within its factory. Total Variable Cost of manufacturing is $ 74 per unit of component. Net fixed cost of use of plant and machinery comes to $ 20 per unit of component. The component is available in market at $ 79 per unit of component. It is better to purchase the component from market-

(a) True

(b) False

(c) True in some cases

(d) None of the above

 

Q.21 Y Limited has an option to purchase a machine out of own funds or alternatively a bank can finance it. At the current rate of corporate tax, the tax saving in the later option is higher. If the corporate tax rate is reduced, the second option will become less attractive-

(a) True

(b) False

(c) True in some cases

(d) None of the above

 

Q.22 In case of demerger, accumulated loss and unabsorbed depreciation of the demerged company will be-

(a) Carried forward in the hands of demerged companies.

(b) Carried forward and set off in hands of resulting companies.

(c) Set off in the hands of demerged companies.

(d) None of these.

 

Q.23 Amalgamation and demerger are considered as-

(a) Same terms always.

(b) Distinct terms always

(c) Same terms in certain cases.

(d) Distinct terms in certain cases.

 

Q.24 Net wealth is calculated as-

(a) Assets chargeable to wealth tax less the exempted assets

(b) Assets chargeable to wealth tax less debt owned

(c) Assets less debt owned

(d) Assets less exempted assets

 

Q.25 Wealth tax is chargeable

(a) @ 2% of the net wealth exceeding Rs. 30 Lakhs

(b) @ 1% of the net wealth exceeding Rs. 30 lakhs

(c) @ 1% of the entire net wealth provided it exceeds Rs. 30,00,000.

(b) @ 2% of the entire net wealth provided it exceeds Rs. 30,00,000.

 

Q.26 Wealth tax is payable if the net wealth of the assesee

(a) Exceeds Rs. 250,000

(b) Is Rs. 30,00,000 or more

(c) Exceeds Rs. 30,00,000

(d) None of the above

 

Q.27 A firm is

(a) Not liable to wealth tax

(b) Liable to wealth tax

(c) Not liable to wealth tax but partners share in the value of the assests of the firm shall be included in the net wealth of the partner

(d) All of the above

 

Q.28 Asset held by a minor child is included in the net wealth of the

(a)Father

(b)Mother

(c)Father or mother whose net wealth before clubbing is greater.

(d)Father or mother whose net wealth before clubbing is lesser.

 

Q.29 An assessee is one who pays the wealth tax, an assesse belongs to which of the following category?

(a) A company

(b) HUF

(c ) A dead person’s legal representative, the executor or administrator

(d)All of the above

 

Q.30 A house is not treated as an asset if

(a) it is meant exclusively for residential purposes

(b) house held as stock-in-trade

(c) house used for own business or profession

(d) all of the above
Q.31 VAT WAS FIRST INTRODUCED AS A TAX IN THE YEAR:-

(A) 1919
(B) 1921
(C ) 1948
(D) 1954

 

Q.32 VAT WAS FIRST INTRODUCED BY THE:-

(A) FRANCE
(B) GERMANY
(C ) USA
(D) UK

 

Q.33 WHICH IS MOST COMMON VARIANT OF VAT USED WORLD WIDE:-

(A) GROSS PROFIT VARIANT
(B) CONSUMPTION VARIANT
(C ) GROSS PRODUCT VARIANT
(D) GROSS INCOME VARIANT

 

Q.34 TIN MEANS:-

(A) TAX INFORMATION NUMBER
(B) TAX INDIA NUMBER
(C ) TAX IDENTIFICATION NUMBER
(D) TAX INTRODUCTION NUMBER

Q. 35 VAT INTRODUCTION WILL CERTAINLY:-

(A) MAKE THE REVENUE COLLECTION WORST.
(B) MAKE THE REVENUE COLLECTION BETTER.
(C ) THE REVENUE COLLECTION ARE THE SAME.
(D) REVENUE VOLUME HAS NOTHING TO DO WITHINTRODUCTION OF VAT

 

Q.36 THE ACCOUNTING UNDER THE VAT WILL BE:-

(A) REGULAR AND CHEAP.
(B) REGULAR AND EXPENSIVE
(C) IRREGULAR AND CHEAP.
(D) IRREGULAR AND EXPENSIVE

 

Q.37 TO CLAIM THE INPUT CREDIT OF TAX PAID WHAT IS MOST IMPORTANT DOCUMENT:-

(A) PERMISSION OF THE SALES TAX AUTHORITY.
(B) PROPER VAT INVOICE
(C ) CASH BOOK
(D) LEDGER

 

Q.38 WHICH IS MOST COMMON VARIANT OF VAT USED WORLD WIDE:-

(A) GROSS PROFIT VARIANT
(B) CONSUMPTION VARIANT
(C ) GROSS PRODUCT VARIANT
(D) GROSS INCOME VARIANT

 

Q.39 DUE TO INTRODUCTION OF VAT:-

(A) TAX EVASION IS RESTRICTED.
(B) TAX EVASION IS INCREASED.
(C ) VAT HAS NOTHING TO DO WITH EVASION OF TAX.
(D) TAX EVASION HAS BECOME EASY.

 

Q.40 THE ACCOUNTING UNDER THE VAT WILL BE:-

(A) REGULAR AND CHEAP.
(B) REGULAR AND EXPENSIVE
(C) IRREGULAR AND CHEAP.
(D) IRREGULAR AND EXPENSIVE

 

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