Law of Taxation

LAW OF TAXATION
 Input Tax Credit (ITC) ...........................................................................................30
 Degressive and Proportional methods of Taxation .................................................30
 Direct and Indirect Tax ...........................................................................................30
 Heads of Income.....................................................................................................31
 Agriculture Income ................................................................................................31
 Assets .....................................................................................................................31
 Turn Over ...............................................................................................................31

Part B .......................................................................................................................................33
 Cement was sold and supplied from factories outside the State of Mysore to
purchasers within the State. The State of Mysore levied tax on these sales under the
Sales Tax Act passed by the State of Mysore. It was contended against the State that it
had no power to tax the sales as they had taken place in the course of inter-state trade.
Decide,..........................................................................................................................33
 A foreign National came to India for the first time the 10th of October 2013 and
stayed at different cities in India till the 16th of May, 2014. On the same day he left
India, never to come back again. Determine his residential status for the previous year
relevant to the assessment year 2014-15, .....................................................................34
 S is the Manger of an agricultural farm. He receives a monthly salary of Rs.

50,000. For this amount he claims exemption from payment of income tax on the
ground that he has received the amount as agricultural income. Decide ......................35
 The assessee is a partner of a firm having large assets in the partnership. The
Wealth Tax Authorities initiates proceedings against the assessce to include the value
of the assets in the net wealth of the assessee. But on the valuation date the firm is
converted into a limited liability company alloting shares to the assessee equivalent to
the worth of his assets in the partnership. Examine the Wealth Tax liability of the
assessee.........................................................................................................................36
 A foreign national came to India for the first time on October 10,2016 and stayed in
Madras. He continued to stay there till the 15th of February 2017. Then he went to
Kerala and stayed at Trivandrum till the 16th of May 2017. On the 16th of May he left
India and did not come back again. Determine his residential status for the previous
year relevant to the assessment year 2017-2018...........................................................37
 A Central Government employee is provided with rent free unfurnished

accommodation. The market rent of accmmodation provided to such employees is
Rs.15,000 per month. But as per the rule of allotment to residence to such employees,
its rent has been fixed at Rs.5,000 per month. Determine the taxable value of the rent-
free accommodation .....................................................................................................38
 Assets transferred by the assessee to his minor daughter who is not married without
adequate consideration is included in the net wealth of the assessee for the payment of
wealth tax. The payment of tax is questioned by the assessee. Decide. 39
 A, B and C have specific shares in the property owned by them in the ratio 2:34.
The chargeable annual value of the property is Rs. 81,00,000. Determine the annual
value of the property of each co-owner in the property ................................................40
 A State Hindu Religious and Charitable Endowment Act, authorised the levy of an
annual fee on all religious institutions at a maximum rate of five per cent of the income
derived by them. The fund raised by this levy was to go into the consolidated fund of
the state. A question raised before the court was whether the levy was in the nature of a
tax or a fee. It was argued before the court that the levy was not a fee but a tax for the
reason that the levy was based on the capacity of the payer and not upon the quantum
of benefit expected to be conferred on any particular religious institutions. Examine the
question and decide whether it was in the nature of a tax or fee..................................41
 A question for consideration by the Court was whether the levy of tax on cotton
ginned by the tax payer in excess of the amount prescribed by Article 276 was invalid
and therefore refundable and when there was a bar in levying tax in excess of the
amount specified in the constitution whether it amounted to levy of tax under an
inapplicable entry which was ultravires the Municipality levying the tax, being an
invalid law. Examine and decide ..................................................................................42
 Where interestis on a capital sum and the creditor gets an open payment between
debtor Where interest is due on a citor does not make any appropriation of
paymatinbetween the capital either the debtor or the er tax Department, proceeds to
levy tax on it whether the interest and and interest, the Incore creditor, the creditor
objects to it. Examine whether the objection will .........................................................43
 Share of the assessee in the coparcenary property of a HUF of which there assess is
a member is Share of th the net wealth of the assessee and assessed to wealth tax. The
assessee objects to it Decide .........................................................................................44
 State, with reasons, whether the following are agricultural income or not in the
hands of the recipient....................................................................................................45
 Income from dairy farming ....................................................................................45
 Dividend paid by a company out of its agricultural income ...................................45
 Rent received for agricultural land .........................................................................45
 Profits received by a partner from a Firm engaged in agricultural activities ..........45
 Mr. 'A', an American citizen, returned to the US on January 30, 2018 after about 20
years of stay in India. He returns to India on June 5, 2020 to join an American
company as its overseas Branch Manager. Determine his residential status for the
Assessment Year 2021-22 ............................................................................................46
 Mr. X', a Government employee, presently working at Kottayam which is his Home
Station, and residing in own house there, submits the following particulars of his
annual income: Basic Salary Rs. 6,12,000; Dearñess Allowance Rs. 61,200; City
Compensatory Allowance Rs. 4,800: HRA Rs. 60,000; Contribution to GPF Rs.
60,000; LIC Premia Rs. 36,000; Premium towards Medi-claim policy Rs. 12,000.
Compute his Gross Total Income for the Assessment Year 2021-22............................47
 Mr. 'S' is a supplier of goods located in Delhi. In November, 2021, he has imported
'Architecture Services' from a relative consultant located in Germany, without any
consideration (monetary or non-monetary) for construction of his personal house ....48
 Will the import of architecture services for personal use be treated as 'supply' and
liable to IGST? .............................................................................................................48
 What will be your answer if the above services have been imported by 'S' in the
course orfurtherance of business?.................................................................................48
 A State Hindu religious and Charitable Endowment Act, authorised the levy of an
annual fee on all religious institutions at a maximum rate of 5% of the income derived
by them. The fund raised in this way was to go into the consolidated fund of the State.
The court had to consider whether the levy was in the nature of a tax or a fee. It was
contended that the contribution levied was based on the capacity of the payer and not
upon the quantum of benefit expected to be conferred on any particular religious
institution. The tax liability of the assessee depended generally on the capacity of the
assessee to pay. Decide.................................................................................................49
 Income from the sale of forest trees, fruits and flowers growing on land naturally,
spontaneously and without intervention of human agency was treated as agricultural
income and assessed to agricultural income tax. The assessee objected to it on the
ground that no human labour was expended for growing it and they had a natural or
wild spontaneous growth. Examine whether the assessee could be assessed to
agricultural income and tax levied................................................................................50
 Assets transferred by the assesses to his sons' minor married daughter without
adequate consideration was included in the net wealth of the assessee for the purpose of
wealth tax assessment. The assessee objects to it on the ground that minor married
daughter is no more a minor being already married and sent to another family to live
with her husband or his family. Decide ........................................................................51
 The assessee was in foreign countries continuously for over ten years. Due to
continued ill-health he returned to India during the previous year and has been staying
in India during the previous year for only 160 days. What is his tax liability? Discuss
52
 Mr. X, a US citizen, after about 30 years of stay in India, returns to America on

January 30, 2017. He returns to India on June 5, 2019 to join an American company as
its overseas manager. Determine his residential status for the Assessment Year 2020-21
53
 Explain with reasons as per provisions contained under the Income-tax Act, 1961,
whether the interest of Rs. 5 Lakhs paid to Mr. John, a non-resident (resident of UK) in
the month of February, 2021 by Mr. Smith, a non-resident (resident of Australia) on the
amount of Rs. 50 Lakhs borrowed for the purpose of doing business in garments at
Mumbai shall be subject to tax in India in the hands of Mr. John for the Assessment
Year 2021-22 ................................................................................................................54
 Ms. Aishwarya, aged 35 years, received Rs. 8,40,000 (Eight Lakhs and Forty
Thousand) as Gross Salary during the financial year 2021-22. She received a gift of Rs.
75,000 (Seventy-Five Thousand) from her maternal uncle on her birthday. She also
received gift of Rs. 60,000 (Sixty Thousand) from her office colleagues on the same
day. She deposited Rs. 72,000 (Seventy-Two Thousand) in Public Provident Fund
Account. Compute her income tax liability for the Assessment Year 2022.23 ............55
 'A' gifted debentures of XYZ Ltd., to a girl 'B' in March, 2017. Later, 'B' married to
A's son 'C' in March, 2019. 'B' received interest of Rs. 1,40,000 (One Lakh Forty
Thousand) from the debentures in the Previous Year 2020-21. The Assessing Officer
(AO) added the interest income of 'B' with the income of 'A' under the provisions of
Section 64(1) (vi) of the Income Tax Act. Comment on the action of the Assessing
Officer ..........................................................................................................................56
 X. a film actor is awarded a cash prize of Rs. 2 lakhs under the scheme of State
Award for films instituted by the Central Government. X claims this to be exempted
from tax as a casual receipt. Is the amount taxable ? If so, what extent? Give reasons. 8.
Mr.A, an Indian settled in America visits India during 2016-17 and stays for 300 days.
Determine his residential status for the year 2017-18 ..................................................57
 State with reasons the chargeability of the following items of receipts by Mr. X, a
citizen of India, during the Assessment Year 2016-2017. Agricultural income of Rs.
80,000 in India and Agricultural income of Rs. 1,00,000 arising from London ...........58
 Z discloses bank deposits of Rs. 10 lakhs on a raid at his premises by the income tax
officers, an unaccounted cash of Rs. 8 lakhs was seen. Discuss, how the assets were to
be treated under the Wealth Tax Act?...........................................................................59
Part C ......................................................................................................................................60
 Define tax and explain the distinction between tax and fee. Discuss the Canons of
taxation. Explain the rules regarding the determination of the residential status of the
assessee for income tax purposes .................................................................................60
 Describe the different Heads of Income under the Income tax Act and explain the
nature and incidence of Agricultural Income for the purpose of calculation of Income
Tax ................................................................................................................................61
 Write brief notes on Central Sales Tax, Kerala Value Added Tax and Service Tax.
Describe the Authorities under the Wealth Tax Act and the procedure for the
assessment of Tax .........................................................................................................62
 Discuss clubbing of income and the rules relating to set off and carry forward
under the Income tax Act .............................................................................................63
 Define dealer and place of business under the Central Sales Tax Act. Explain the
concept of interstate sale and sale in the course of import-export ................................64
 Who are the authorities under the Income tax Act? Briefly state their powers under
the Act ..........................................................................................................................65
 Discuss the principles of taxation, examining the canons of taxation. What is the
difference between Tax and Fee? Describe the rules for determining the residential
status of an assessee under the I.T. Act.........................................................................66
 Give a brief description of the Heads of Income under the I.T. Act. Explain
Clubbing of income, set off and carry forward of losses, Advance payment of tax and
tax deducted at source ..................................................................................................67
 . Write short notes on any three ..............................................................................69
 Liability to tax on interstate sales ...........................................................................69

 Incidence of agriculture income in the assessment of the assessee under the IT Act
69
 Registration and Cancellation of dealership under the Central Sales Tax Act........69
 Value Added Tax, its incidence and levy ...............................................................70
 Discuss the different types of Assessment under the Income-tax Act, 1961 ..........70
 Explain in detail, with the help of illustrations, the provisions of the Income-Tax
Act relating to computation of income under the head Income from House Property'...
71
 What is 'Input Tax Credit' (ITC)? What are the conditions to be fulfilled to get Input
Tax Credit?When the ITC is not admissible? Describe the mechanism of input tax
credit under GST with the help of illustration ..............................................................72
 Discuss the residential status of an assessee and his consequential tax liability under
the Income tax Act .......................................................................................................73
 Explain the authorities under the Income Tax Act, briefly stating their powers and
the procedure for assessment under the Act .................................................................74
 Write short notes on ...............................................................................................75

Kerala value added tax act: 2003-incidence and levy of tax ........................................75
Central sales tax act: Liability to tax on interstate sales ...............................................75
 What do you understand by 'canons of taxation'?. Also explain the characteristics of

a good tax system. Discuss Adam Smith's and modern canons of taxation .................76
 Explain the concept of 'notional income' chargeable under the head "Income from
House Property".What are the conditions of chargeability for income tax on 'house
property'? Discuss with the help of suitable illustrations and with reference to the
relevant provisions of the Income Tax Act. How is tax on house property computed?..
77
 Define 'sale' and explain its essentials. Distinguish between sale and agreement for
sale. When is a sale or purchase of goods said to take place in the course of
inter-State trade or commerce? Which transactions are not Inter-State sales? What is
sale in the course of import or export ? ........................................................................79
 Discuss different types of returns under the Kerala Value Added Tax Act ............80
 Explain the concept of Dealer and Registration of Dealer under Central Sales Tax
Act ................................................................................................................................81
 Enumerate the concept of Net Wealth under the Wealth Tax Act ..........................82
F7418
Part A
 Constitutional basis of taxation and different kinds of tax.
 Relation between Income Tax Act and Finance Act.
 Advance payment of tax.
 Central Sales Tax Act.
 Taxation of Agricultural Income.
 Incidence of Value Added Tax.
Part B
 Cement was sold and supplied from factories outside the State of Mysore to purchasers
within the State. The State of Mysore levied tax on these sales under the Sales Tax Act
passed by the State of Mysore. It was contended against the State that it had no power to tax
the sales as they had taken place in the course of inter-state trade. Decide,
 A foreign National came to India for the first time the 10th of October 2013 and stayed at
different cities in India till the 16th of May, 2014. On the same day he left India, never to
come back again. Determine his residential status for the previous year relevant to the
assessment year 2014-15,
 S is the Manger of an agricultural farm. He receives a monthly salary of Rs. 50,000. For
this amount he claims exemption from payment of income tax on the ground that he has
received the amount as agricultural income. Decide.
 The assessee is a partner of a firm having large assets in the partnership. The Wealth Tax
Authorities initiates proceedings against the assessce to include the value of the assets in the
net wealth of the assessee. But on the valuation date the firm is converted into a limited
liability company alloting shares to the assessee equivalent to the worth of his assets in the
partnership. Examine the Wealth Tax liability of the assessee.
Part C
assessee for income tax purposes.
 Describe the different Heads of Income under the Income tax Act and explain the nature
and incidence of Agricultural Income for the purpose of calculation of Income Tax.
Describe the Authorities under the Wealth Tax Act and the procedure for the assessment of
Tax.
F 6389
Part A
 State the Canons of taxation.
 Explain Direct tax and Indirect tax with examples pointing out the distinction between the
two.
 How is the Income tax Act related to the Finance Act?
 Explain advance payment of tax.
 What constitutes agricultural income under the Agricultural Income tax Act?
 Explain the meaning and importance of Service Tax.
Part B
Madras. He continued to stay there till the 15th of February 2017. Then he went to Kerala
and stayed at Trivandrum till the 16th of May 2017. On the 16th of May he left India and did
not come back again. Determine his residential status for the previous year relevant to the
assessment year 2017-2018.
 A Central Government employee is provided with rent free unfurnished accommodation.

The market rent of accmmodation provided to such employees is Rs.15,000 per month. But as
per the rule of allotment to residence to such employees, its rent has been fixed at Rs.5,000
per month. Determine the taxable value of the rent-free accommodation.
adequate consideration is included in the net wealth of the assessee for the payment of
wealth tax. The payment of tax is questioned by the assessee. Decide.
 A, B and C have specific shares in the property owned by them in the ratio 2:34. The
chargeable annual value of the property is Rs. 81,00,000. Determine the annual value of the
property of each co-owner in the property.
Part C
 Discuss clubbing of income and the rules relating to set off and carry forward under the
Income tax Act.
concept of interstate sale and sale in the course of import-export.
 Who are the authorities under the Income tax Act? Briefly state their powers under the
Act.
F2781
Part A
 Income Tax Act.
 Assessee.
 Basis of charge for Income Tax.
 Agriculture Income.
 Net Wealth.
 Service Tax.
Part B
 A State Hindu Religious and Charitable Endowment Act, authorised the levy of an annual
fee on all religious institutions at a maximum rate of five per cent of the income derived by
them. The fund raised by this levy was to go into the consolidated fund of the state. A
question raised before the court was whether the levy was in the nature of a tax or a fee. It was
argued before the court that the levy was not a fee but a tax for the reason that the levy was
based on the capacity of the payer and not upon the quantum of benefit expected to be
conferred on any particular religious institutions. Examine the question and decide whether it
was in the nature of a tax or fee.
 A question for consideration by the Court was whether the levy of tax on cotton ginned by
the tax payer in excess of the amount prescribed by Article 276 was invalid and therefore
refundable and when there was a bar in levying tax in excess of the amount specified in the
constitution whether it amounted to levy of tax under an inapplicable entry which was
ultravires the Municipality levying the tax, being an invalid law. Examine and decide.
 Where interestis on a capital sum and the creditor gets an open payment between debtor
Where interest is due on a citor does not make any appropriation of paymatinbetween the
capital either the debtor or the er tax Department, proceeds to levy tax on it whether the
interest and and interest, the Incore creditor, the creditor objects to it. Examine whether the
objection will
 Share of the assessee in the coparcenary property of a HUF of which there assess is a
member is Share of th the net wealth of the assessee and assessed to wealth tax. The assessee
objects to it Decide.
Part C
difference between Tax and Fee? Describe the rules for determining the residential status of an
assessee under the I.T. Act.
 Give a brief description of the Heads of Income under the I.T. Act. Explain Clubbing of
income, set off and carry forward of losses, Advance payment of tax and tax deducted at
source.
 Write short notes on any three:
 Liability to tax on interstate sales.
 Incidence of agriculture income in the assessment of the assessee under the IT Act.
 Registration and Cancellation of dealership under the Central Sales Tax Act.
 Value Added Tax, its incidence and levy.
G 3292
Part A
 Sovereign right to taxation.
 Taxation laws and Fundamental Rights.
 Importance of Annual Finance Act in the law of income taxation.
 Preferential tax treatment of Capital Gains.

 Scrapping of Income-Tax Settlement Commission.
 GST Council.
Part B
 State, with reasons, whether the following are agricultural income or not in the hands of
the recipient:
 Income from dairy farming.
 Dividend paid by a company out of its agricultural income.
 Rent received for agricultural land.
 Profits received by a partner from a Firm engaged in agricultural activities.
 Mr. 'A', an American citizen, returned to the US on January 30, 2018 after about 20 years
of stay in India. He returns to India on June 5, 2020 to join an American company as its
overseas Branch Manager. Determine his residential status for the Assessment Year
2021-22.
Station, and residing in own house there, submits the following particulars of his annual
income: Basic Salary Rs. 6,12,000; Dearñess Allowance Rs. 61,200; City Compensatory
Allowance Rs. 4,800: HRA Rs. 60,000; Contribution to GPF Rs. 60,000; LIC Premia Rs.
36,000; Premium towards Medi-claim policy Rs. 12,000. Compute his Gross Total Income for
the Assessment Year 2021-22.
consideration (monetary or non-monetary) for construction of his personal house. (a) Will the
import of architecture services for personal use be treated as 'supply' and liable to IGST?
(b) What will be your answer if the above services have been imported by 'S' in the course or
furtherance of business?
(3x1030 marks)
Part C
 Explain in detail, with the help of illustrations, the provisions of the Income-Tax Act
relating to computation of income under the head Income from House Property'.
 Discuss the different types of Assessment under the Income-tax Act, 1961.
 What is 'Input Tax Credit' (ITC)? What are the conditions to be fulfilled to get Input Tax
Credit?When the ITC is not admissible? Describe the mechanism of input tax credit under
GST with the help of illustration.
F 2243
Part A
 "No tax shall be levied, or collected except by authority of law". Comment, discussing the
constitutional basis of taxation.
 Explain the residential status of the assessee under the Income Tax Act.
 Discuss the liability for payment of tax by advance payment of tax.
 Explain agriculture income under the Kerala Agriculture Income Tax Act.
 What Constitutes net wealth under the Wealth Tax Act?
 Discuss the liability to tax on interstate sales.
Part B
 A State Hindu religious and Charitable Endowment Act, authorised the levy of an annual
fee on all religious institutions at a maximum rate of 5% of the income derived by them. The
fund raised in this way was to go into the consolidated fund of the State. The court had to
consider whether the levy was in the nature of a tax or a fee. It was contended that the
contribution levied was based on the capacity of the payer and not upon the quantum of
benefit expected to be conferred on any particular religious institution. The tax liability of the
assessee depended generally on the capacity of the assessee to pay. Decide.
spontaneously and without intervention of human agency was treated as agricultural income
and assessed to agricultural income tax. The assessee objected to it on the ground that no
human labour was expended for growing it and they had a natural or wild spontaneous
growth. Examine whether the assessee could be assessed to agricultural income and tax
levied.
 Assets transferred by the assesses to his sons' minor married daughter without adequate
consideration was included in the net wealth of the assessee for the purpose of wealth tax
assessment. The assessee objects to it on the ground that minor married daughter is no more a
minor being already married and sent to another family to live with her husband or his family.
Decide.
 The assessee was in foreign countries continuously for over ten years. Due to continued ill-
health he returned to India during the previous year and has been staying in India during the
previous year for only 160 days. What is his tax liability? Discuss.
Part C
 Discuss the residential status of an assessee and his consequential tax liability under the
Income tax Act.
 Explain the authorities under the Income Tax Act, briefly stating their powers and the
procedure for assessment under the Act.
 Write short notes on:
Kerala value added tax act: 2003-incidence and levy of tax.

Central sales tax act: Liability to tax on interstate sales.
G4246
Part A
 Central Board of Direct Taxes (СВІУТ).
 'Application of income' and 'diversion of income."
 Best judgement Assessment.
 Set-off and carry forward of business losses.
 'Cascading effect' in indirect taxes.

 Input Tax Credit (ITC).
Part B
 Mr. X, a US citizen, after about 30 years of stay in India, returns to America on January
30, 2017. He returns to India on June 5, 2019 to join an American company as its overseas
manager. Determine his residential status for the Assessment Year 2020-21.
whether the interest of Rs. 5 Lakhs paid to Mr. John, a non-resident (resident of UK) in the
month of February, 2021 by Mr. Smith, a non-resident (resident of Australia) on the amount
of Rs. 50 Lakhs borrowed for the purpose of doing business in garments at Mumbai shall be
subject to tax in India in the hands of Mr. John for the Assessment Year 2021-22.
 Ms. Aishwarya, aged 35 years, received Rs. 8,40,000 (Eight Lakhs and Forty Thousand) as
Gross Salary during the financial year 2021-22. She received a gift of Rs. 75,000 (Seventy-
Five Thousand) from her maternal uncle on her birthday. She also received gift of Rs. 60,000
(Sixty Thousand) from her office colleagues on the same day. She deposited Rs. 72,000
(Seventy-Two Thousand) in Public Provident Fund Account. Compute her income tax liability
for the Assessment Year 2022.23.
 'A' gifted debentures of XYZ Ltd., to a girl 'B' in March, 2017. Later, 'B' married to A's son
'C' in March, 2019. 'B' received interest of Rs. 1,40,000 (One Lakh Forty Thousand) from the
debentures
in the Previous Year 2020-21. The Assessing Officer (AO) added the interest income of 'B'
with the income of 'A' under the provisions of Section 64(1) (vi) of the Income Tax Act.
Comment on the action of the Assessing Officer.
Part C
 What do you understand by 'canons of taxation'?. Also explain the characteristics of a
good tax system. Discuss Adam Smith's and modern canons of
 Explain the concept of 'notional income' chargeable under the head "Income from House
Property".What are the conditions of chargeability for income tax on 'house property'?
Discuss with the help of suitable illustrations and with reference to the relevant provisions of
the Income Tax Act. How is tax on house property computed?
 Define 'sale' and explain its essentials. Distinguish between sale and agreement for sale.
When is a sale or purchase of goods said to take place in the course of inter-State trade or
commerce? Which transactions are not Inter-State sales? What is sale in the course of import
or export ?
F 5604
Part A
 Degressive and Proportional methods of Taxation.
 Direct and Indirect Tax.
 Heads of Income.
 Assets.
 Turn Over.
Part B
 X. a film actor is awarded a cash prize of Rs. 2 lakhs under the scheme of State Award for
films instituted by the Central Government. X claims this to be exempted from tax as a casual
receipt. Is the amount taxable ? If so, what extent? Give reasons. 8. Mr.A, an Indian settled in
America visits India during 2016-17 and stays for 300 days. Determine his residential status
for the year 2017-18.
 State with reasons the chargeability of the following items of receipts by Mr. X, a citizen
of India, during the Assessment Year 2016-2017. Agricultural income of Rs. 80,000 in India
and Agricultural income of Rs. 1,00,000 arising from London.
officers, an unaccounted cash of Rs. 8 lakhs was seen. Discuss, how the assets were to be
treated under the Wealth Tax Act?
Part C
 Discuss different types of returns under the Kerala Value Added Tax Act.
 Explain the concept of Dealer and Registration of Dealer under Central Sales Tax Act.
 Enumerate the concept of Net Wealth under the Wealth Tax Act.
Part A
 Constitutional basis of taxation and different kinds of tax.
The constitutional basis of taxation in India is enshrined in Article 265 of the

Constitution, which states that "no tax shall be levied or collected except by authorityof
law." This fundamental provision ensures that taxation powers are exercised within the
legal framework established by the legislature. The types of taxes in India can be
broadly classified into direct and indirect taxes. Direct taxes, such as income tax and
corporate tax, are levied directly on the income or profits of individuals and
corporations, respectively. Indirect taxes, like sales tax, service tax, and value-added
tax, are levied on goods and services. A landmark case that elucidates the
constitutional basis of taxation is the Supreme Court's decision in the case of
Kesavananda Bharati v. State of Kerala, which underscored the importance of the basic
structure doctrine, implying that even taxation laws must not violate the essential
features of the Constitution.
 Relation between Income Tax Act and Finance Act.
The relationship between the Income Tax Act, 1961, and the Finance Act is pivotal in
the administration of tax laws in India. The Income Tax Act is a comprehensive statute
that lays down the rules governing taxation of income, while the Finance Act is passed
annually to update the provisions of the Income Tax Act, including tax rates and slabs
for the relevant assessment year. The Finance Act thus operationalizes the fiscal
policies of the government for each financial year.
 Advance payment of tax.
Advance payment of tax is a mechanism in Indian tax law that facilitates the payment
of estimated tax liability in advance, rather than at the end of the fiscal year. This is
governed by Section 208 of the Income Tax Act, which mandates that any taxpayer
whose estimated tax liability for the year exceeds INR 10,000 must pay tax in advance.
The rationale behind this provision is to ensure a steady flow of revenue to the
government throughout the year and to reduce the burden of lump-sum tax payment at
the year-end for the taxpayer.
 Central Sales Tax Act.
The Central Sales Tax Act, 1956, is a key piece of legislation that governs the levy,
collection, and distribution of taxes on sales of goods in the course of inter-State
trade or commerce. It also declares certain goods to be of special importance in inter-
State trade or commerce and specifies the restrictions and conditions to which state
laws imposing taxes on the sale or purchase of such goods shall be subject. The Act
aims to avoid the multiplicity of taxes on the same product as it moves across state
boundaries, thereby facilitating a more unified and integrated national market.
 Taxation of Agricultural Income.
Taxation of Agricultural Income in India is governed by Section 10(1) of the Income

Tax Act, 1961, which exempts agricultural income from taxation. However, this
exemption is subject to certain conditions and limitations. For instance, as per the
Supreme Court's decision in CIT v. Raja Benoy Kumar Sahas Roy, the definition of
'agricultural income' involves basic operations like cultivation of the land and
subsequent operations which make the produce fit for sale. The maxim 'no tax
without representation' underscores the principle that taxes should be levied only
when there is a corresponding right to participate in decision-making processes.
 Incidence of Value Added Tax.

The Incidence of Value Added Tax (VAT) in India was replaced by the Goods and
Services Tax (GST) as of July 1, 2017. Prior to this, VAT was a state-level tax governed
by respective State VAT Acts, which detailed the rates and procedures applicable. The
transition to GST, as per the 101st Constitutional Amendment Act, aimed to unify the
indirect tax structure in the country, thereby embodying the maxim 'simplicity in
taxation'.
 State the Canons of taxation.
The Canons of taxation, first propounded by Adam Smith, include principles such as
equity, certainty, convenience, and economy. These principles are essential for a sound
tax system and are reflected in various tax laws. For example, the Canon of Certainty
is evident in the requirement for advance tax payments under Section 208 of the
Income Tax Act, ensuring taxpayers know their tax liability in advance.
 Explain Direct tax and Indirect tax with examples pointing out the distinction
between the two.
Direct taxes in India, such as Income Tax and Corporate Tax, are levied directly on
the income of individuals and companies respectively. They are based on the
principle of ability to pay, aligning with the maxim 'ability to pay' as the basis for
taxation. Indirect taxes, on the other hand, like GST, are levied on the supply of
goods and services and are ultimately borne by the consumer, reflecting the maxim
'taxation without representation' since the tax burden is passed on. The distinction
lies in the fact that direct taxes are progressive and cannot be shifted, while indirect
taxes are regressive and can be transferred to the end consumer.
 How is the Income tax Act related to the Finance Act?
The Income Tax Act of 1961 and the Finance Act are intrinsically linked in the Indian
taxation system. The Income Tax Act provides the structural framework for the levy
and collection of income tax, while the Finance Act, passed annually, details the
financial regulations, including tax rates and fiscal benefits for the year. For instance,
Section 2 of the Finance Act typically specifies the tax rates applicable for the financial
year, as amended by the annual Finance Act. The landmark case of *Union of India v.
Playworld Electronics Pvt. Ltd.* (1989) highlighted the authority of the Parliament to
enact provisions for taxation under the Finance Act that supplement the Income Tax
Act.
 Explain advance payment of tax.
Advance payment of tax, as mandated under sections like Section 208 of the IncomeTax
Act, is a mechanism where taxpayers estimate their tax liability for the financial year
and make payments in installments, rather than a lump sum at the end. This is
particularly relevant for taxpayers whose tax liability exceeds ₹10,000 in a financial
year. The Supreme Court in the case of *CIT v. Advance Construction Co. Pvt. Ltd.*
(1970) elucidated the rationale behind advance tax to avoid the pressure of
lump-sum payments.
 What constitutes agricultural income under the AgriculturalIncome tax Act?
Agricultural income in India is defined under Section 2(1A) of the Income Tax Act,
1961. It includes rent or revenue from land situated in India and used for agricultural
purposes, income from agricultural operations, and income derived from buildings on
or identified with agricultural land. The Supreme Court in *CIT v. Raja Benoy Kumar
Sahas Roy* (1957) clarified the scope of agricultural operations, which includes basic
operations like cultivation to subsequent operations that make the produce
market-ready.
 Explain the meaning and importance of Service Tax.
Service Tax was a form of indirect tax levied on the services provided within the
territory of India until the introduction of the Goods and Services Tax (GST) in 2017.
The significance of Service Tax lay in its contribution to the government's revenue and
its reflection of the growing service sector's role in the economy. The definition of
'service' was provided under Section 65B(44) of the Finance Act, 1994, which
included any activity carried out by one person for another for consideration. The case
of *State of West Bengal v. Kesoram Industries Ltd.* (2004) discussed the
constitutional validity of service tax provisions, affirming the legislative competence of
the Union to levy such a tax.
 Income Tax Act.
The Income Tax Act of India, established in 1961, serves as the cornerstone for tax
regulations in the country. Under Section 4 of the Act, income tax is levied on the total
income of the previous year of every person. The term 'person' encompasses a wide
range of entities as defined under Section 2(31), including individuals, Hindu
Undivided Families (HUFs), companies, firms, an association of persons or a body of
individuals, and local authorities.
 Assessee.
An 'assessee' is any person who is liable to pay tax or any other sum of money underthe
Act, as per Section 2(7). This includes not only those whose income is being assessed
but also those who are deemed to be assesses, such as legal representatives of deceased
persons or agents of non-residents.
 Basis of charge for Income Tax.
The basis of charge for income tax is articulated in Section 5 of the Act, which
delineates the scope of total income based on residential status. The total income of a
resident includes all income from whatever source derived, which is received or is
deemed to be received in India in such year by or on behalf of such person, or which
accrues or arises or is deemed to accrue or arise to him in India during such year.
Agricultural income in India is defined under Section 2(1A) of the Income Tax Act and
is generally exempt from income tax. It includes rent or revenue from land situated in
India and used for agricultural purposes, income derived from such land by agricultural
operations, and income from any process undertaken to make the produce fit for the
market. However, for individuals with a large agricultural income, it is aggregated with
non-agricultural income for rate purposes, which can result in a higher tax liability, as
elucidated in the landmark case of CIT v. Raja Benoy Kumar Sahas Roy.
 Net Wealth.
Net Wealth: Under the Indian tax laws, the concept of net wealth has been a subject of
scrutiny, especially before its abolition in 2015. The Wealth Tax Act, 1957, which
was repealed, imposed a tax on the net wealth of individuals, HUFs, and companies if
it exceeded the threshold of ₹30 lakhs at the rate of 1% on the amount exceeding the
threshold. The maxim 'ability to pay' underpins the rationale for wealth taxation,
ensuring that those with greater economic means contribute proportionately to the
state's resources. The landmark case of 'CIT v. B.C. Srinivasa Setty' highlighted the
principle that the computation mechanism is essential to the charge of tax under the
Act, and the absence of such a mechanism would render the section imposing the tax
inapplicable.
 Service Tax.
Service Tax: Service tax in India was governed by Chapter V of the Finance Act,
1994, until the introduction of the Goods and Services Tax (GST) in 2017. The service
tax was a levy on the gross amount charged by the service provider for services
rendered, excluding services covered under the negative list. The 'Place of Provision of
Service Rules, 2012' and the 'Point of Taxation Rules, 2011' were pivotal in
determining the taxability of services. The maxim 'quid pro quo' closely aligns with
service tax, indicating that the tax is levied in exchange for the provision of services.
In the case of 'Bharat Sanchar Nigam Ltd. v. Union of India', the Supreme Court
elucidated the distinction between a service and a sale, affirming that service tax could
only be levied on services and not on the sale of goods.
 Sovereign right to taxation.
Sovereign Right to Taxation: The sovereign right to taxation is enshrined in Article

265 of the Indian Constitution, which states that no tax shall be levied or collected
except by the authority of law. This constitutional provision affirms the government's
power to impose taxes while ensuring that such power is exercised within the bounds of
legality. The maxim 'no taxation without representation' echoes this sentiment,
emphasizing that taxes must be levied through proper legislative channels, reflecting
the will of the people. The case of 'Vodafone International Holdings B.V. v. Union of
India' brought to light the retrospective application of tax laws, questioning the extent
of the sovereign's right to tax.
 Taxation laws and Fundamental Rights.
Taxation Laws and Fundamental Rights: The interplay between taxation laws and
fundamental rights in India is a complex one, with the Supreme Court often stepping in
to ensure that taxation does not infringe upon fundamental rights. Article 14 of the
Constitution, which guarantees equality before the law, has been a touchstone in
evaluating the validity of tax statutes. The maxim 'equality before the law' is crucial in
this context, mandating that tax laws must be non-discriminatory and equitable. The
landmark judgment in 'Kunnathat Thathunni Moopil Nair v. State of Kerala'
underscored the importance of aligning taxation laws with fundamental rights,
particularly the right to equality.
 Importance of Annual Finance Act in the law of income taxation.

The Annual Finance Act plays a pivotal role in the law of income taxation in India,
serving as the legislative backbone for the fiscal year's tax regime. It is through the
Finance Act that amendments to tax rates and structures are enacted, reflecting the
government's policy decisions. For instance, the Finance Act of 2021, under Section
2(43), defines the term "previous year" which is fundamental in determining the period
for which income is taxable. The Act also embodies the principle of
*annuality*, which is essential to the concept of taxation, ensuring that taxes are
levied, collected, and administered in accordance with the laws applicable to the
relevant assessment year. This is in line with the maxim *lex prospicit, non respicit*,
meaning "the law looks forward, not backward." The Supreme Court's decision in the
case of *Union of India v. Playworld Electronics Pvt. Ltd.* further underscores the
importance of the Finance Act, where it was held that the provisions of the Finance Act
would prevail over the earlier laws to the extent of inconsistency or repugnancy.
 Preferential tax treatment of Capital Gains.
The preferential tax treatment of Capital Gains in India is designed to encourage

investment and economic growth. Under the Income Tax Act, 1961, long-term capital
gains (LTCG) from the sale of equity shares or units of equity-oriented funds are taxed
at a reduced rate of 10% (plus applicable surcharge and cess) on gains exceeding INR
1 lakh, as per Section 112A. This concessional rate, however, does not apply to short-
term capital gains (STCG), which are taxed at 15% under Section 111A. The rationale
behind this differential treatment is rooted in the economic maxim
*ceteris paribus*, which assumes other conditions to remain constant while examining
the effect of one variable. The case of *Commissioner of Income Tax v. Smt.
Khorshed Shapoor Chenai* elucidates the principle that preferential rates are
applicable only when specified conditions are met, reinforcing the need for clarity and
adherence to statutory provisions.
 Scrapping of Income-Tax Settlement Commission.
The scrapping of the Income-Tax Settlement Commission (ITSC), as proposed in the

Finance Bill of 2021, marks a significant shift in the dispute resolution mechanism
within the Indian tax landscape. The ITSC, established under Section 245C of the
Income Tax Act, provided a platform for settling tax disputes in a conciliatory manner.
Its abolition aligns with the government's broader objective of reducing litigation and
promoting a more transparent tax regime. The maxim *ubi jus ibi remedium*—where
there is a right, there is a remedy—finds its application altered here, as taxpayers
seeking settlement will now navigate alternative dispute resolution mechanisms, such as
the newly introduced Dispute Resolution Committee. The case of *Brij Lal & Others v.
Commissioner of Income Tax* highlights the role of the ITSC in providing relief to
taxpayers, but with its discontinuation, the focus shifts to ensuring that the rights of
taxpayers are safeguarded through other means. The transition from the ITSC to the
new system is intended to streamline the process and make it more efficient, although
it remains to be seen how effectively this change will be implemented in practice.
 GST Council.
The GST Council, established under Article 279A of the Constitution of India, serves
as a pivotal body in the governance of GST in India. It embodies the concept of
cooperative federalism, where both the Centre and the States have a say in the tax
regime. The Council's recommendations, while not binding as per the Supreme Court's
ruling, hold persuasive value and guide the harmonization of GST across the country.
A landmark case that elucidates the Council's role is the Union of India vs Mohit
Minerals Pvt. Ltd., where the Gujarat High Court held that the GST Council's
recommendations are recommendatory for the Union and States. This aligns with the
maxim "Ubi jus ibi remedium" – where there is a right, there is a remedy – ensuring
that the GST framework remains adaptable and responsive to practical needs and legal
principles. The Council's decisions, like the inclusion of petroleum products under
GST as per Article 246A, reflect a balance between autonomy and uniformity in tax
laws, crucial for the economic integration of India.
 ―No tax shall be levied, or collected except by authority of law‖. Comment, the
constitutional basis of taxation.
The constitutional basis of taxation in India is enshrined in Article 265 of the

Constitution, which states, "No tax shall be levied or collected except by authority of
law." This pivotal provision ensures that taxation is enacted through proper legislation,
thereby safeguarding the interests of the citizenry against arbitrary taxation. The
Supreme Court of India, in the case of *Kunnathat Thathunni Moopil Nair vs The State
Of Kerala*, highlighted the significance of this article, asserting that the power to levy
a tax must be clearly conferred and its provisions unambiguously defined.
Furthermore, the maxim *Leviathan fiscalis* underscores the necessity for a state to
have the power to tax, which must be exercised within the bounds of law.
 Explain the residential status of the assessee under the IncomeTax Act.
The residential status of an assessee under the Income Tax Act, 1961, is pivotal in
determining tax liability. It is categorized into 'Resident', 'Non-Resident', and 'Resident
but Not Ordinarily Resident' based on physical presence in India during the
relevant financial year. Sections 6 and 9 of the Income Tax Act provide specific
conditions for these determinations. For instance, an individual is considered a resident
if they are in India for 182 days or more during the financial year or have been in India
for 60 days or more in the year and 365 days or more in the four preceding years. Case
law, such as *CIT vs. P. Firm Muar*, provides precedents where courts have
interpreted these provisions to ascertain an individual's residential status. The maxim
*Ubi societas, ibi jus* reflects the principle that a person's tax obligations are to the
society where they reside.
 Discuss the liability for payment of tax by advance payment oftax.
The liability for payment of tax through advance payment is a proactive tax
compliance measure under the Indian Income Tax Act, 1961. As per Section 208,
every taxpayer whose estimated tax liability for the year is ₹10,000 or more is
required to pay their tax in advance, known as "advance tax". The rationale behind this
provision is to facilitate a steady income to the government throughout the year and
allow taxpayers to manage their tax outgo in smaller, manageable installments. The
case of 'CIT v. Birla Cotton Spinning and Weaving Mills Ltd.' elucidated the principle
that advance tax paid by the assessee should be treated as tax paid by them. The
maxim "actus curiae neminem gravabit" - an act of the court shall prejudice no one,
underpins the judicial approach ensuring that technical lapses in tax payments do not
unduly penalize the taxpayer, provided the substantive compliance is in place.
 Explain agriculture income under the Kerala Agriculture IncomeTax Act.
Agricultural income in Kerala is governed by the Kerala Agricultural Income Tax Act,
1991. Under this Act, 'agricultural income' refers to revenue derived from land
situated in the state of Kerala and used for agricultural purposes. The Act specifies
various deductions and allowances that can be claimed by the taxpayer, thereby
reducing the taxable agricultural income. Notably, the Kerala Agricultural Income Tax
(Repeal) Act, 2021 has repealed the 1991 Act, indicating a shift in the taxation of
agricultural income in the state. However, for the period it was in force, the Act
provided for deductions such as replantation allowance, which were significant for
taxpayers engaged in agricultural activities. The principle of "terra firma" - the land is
firm and stable, reflects the enduring nature of agricultural income as a source of
revenue for the state.
 What Constitutes net wealth under the Wealth Tax Act?
Net wealth under the Wealth Tax Act, 1957, which was repealed in 2015, was definedas
the total value of personal assets owned by an individual, HUF, or company minus the
debts owed by them on the valuation date, typically the 31st of March each year. The
Act included assets such as property, cars, jewelry, etc., while excluding certain assets
like stocks, bonds, and property used for business purposes. The maxim "ubi jus ibi
remedium" - where there is a right, there is a remedy, resonates with the Wealth Tax
Act's intent to tax wealth equitably and provide a mechanism for the redressal of
grievances related to wealth tax assessments. Although the Act is no longer in force, it
laid down the framework for taxing net wealth and included provisions for appeals and
revisions.
 Discuss the liability to tax on interstate sales.
The liability to tax on interstate sales in India is primarily governed by the Integrated
Goods and Services Tax (IGST) as per the IGST Act of 2017. Under this Act, when
goods or services are supplied from one state to another, IGST is levied by the central
government and then distributed between the states involved. This is in contrast to
intrastate sales, where both the Central Goods and Services Tax (CGST) and the State
Goods and Services Tax (SGST) or the Union Territory Goods and Services Tax
(UTGST) are applicable. The Central Board of Direct Taxes (CBDT) does not directly
deal with the taxation of interstate sales as it is primarily concerned with direct taxes.
However, the CBDT's role in formulating policies and suggesting legislative changes
can indirectly influence the administration of IGST.
 Central Board of Direct Taxes (СВІУТ).
A landmark case that elucidates the principles of interstate taxation is the Tata Iron &
Steel Co. Ltd. v. S.R. Sarkar & Others, where the Supreme Court held that a sale
which occasions the movement of goods from one state to another is a sale in the
course of interstate trade. The maxim 'lex loci celebrationis' applies to such
transactions, which means the law of the place of contract governs the transaction.
This case established the precedent that the power to tax interstate sales resides with
the Centre and not the states, thereby upholding the constitutional scheme of taxation
in India.
 ‗Application of income‘ and 'diversion of income."
The concept of 'Application of Income' and 'Diversion of Income' under Indian tax
laws is pivotal in determining the taxability of income. As per Section 60 of the
Income Tax Act, 1961, income arising from an asset transferred without adequate
consideration is included in the transferor's income. However, the Supreme Court in the
case of *Commissioner of Income Tax, Bombay v. Sitaldas Tirathdas* clarified that
only when income is diverted by an overriding title at the source, it is exempt from tax;
otherwise, it is considered as the application of income and thus taxable. The maxim
*actus curiae neminem gravabit*—an act of the court shall prejudice no one—supports
the taxpayer if the application of income arises due to a judicial decree.
 Best judgement Assessment.
The 'Best Judgement Assessment' under Section 144 of the Income Tax Act, 1961, is
invoked when an assessee fails to file the return or respond to notices. The assessing
officer then makes an assessment to the best of his judgment based on available
information. The principles of natural justice, embodied in the maxim *audi alteram
partem*—let the other side be heard—are integral to this process, ensuring that the
assessee's point of view is considered before the assessment is finalized.
 Set-off and carry forward of business losses.
Regarding the 'Set-off and Carry Forward of Business Losses', Section 72 of the
Income Tax Act allows businesses to carry forward and set off business losses against
profits for eight subsequent years, subject to certain conditions. This provision aims to
alleviate the financial burden on businesses, allowing them to recover from losses
over time. The legal maxim *lex non cogit ad impossibilia*—the law does not compel
the impossible—echoes this sentiment, recognizing the practical difficulties
businesses may face.
 ‗Cascading effect‘ in indirect taxes.
'Cascading Effect' in indirect taxes has been significantly mitigated with the
introduction of the Goods and Services Tax (GST). Prior to GST, taxes on taxes inflated
the cost of goods and services, but GST allows for the input tax credit,
reducing the cascading effect and making Indian goods more competitive
internationally. The maxim *nemo tenetur se ipsum accusare*—no one is bound to
accuse themselves—highlights the shift towards a more equitable tax system where
businesses are not unduly burdened by taxes on taxes.
 Input Tax Credit (ITC).
Input Tax Credit (ITC) is a critical component of the GST framework in India,
allowing businesses to reduce their tax liability by claiming credit for the tax paid on
inputs. As per Section 16(1) of the CGST Act, 2017, a registered person is entitled to
take credit of input tax charged on any supply of goods or services used in the course
or furtherance of business. The landmark case of 'Megha Engineering & Infrastructures
Ltd. Vs Commissioner of Central Tax' clarified the contentious issue of interest
payable on ITC, with the Telangana High Court ruling that interest should be charged
on the gross tax liability before setting off the ITC. This principle is rooted in the
maxim 'actus non facit reum nisi mens sit rea', meaning the act does not make one
guilty unless there is a guilty intention, emphasizing the importance of intent in the
application of tax laws.
 Degressive and Proportional methods of Taxation.
The degressive and proportional methods of taxation represent two distinct approaches
to levying taxes. While the proportional method implies a flat tax rate regardless of
income, the degressive method applies lower tax rates as the income increases. In the
case of 'Maharashtra State Power Generation Co. Ltd. v. DCIT', the Supreme Court
upheld the claim for deduction under section 80-IA of the Income-tax Act, 1961, for
interest income derived from the business of power generation, which aligns with the
principle of a proportional tax system where income is taxed at a consistent rate. The
maxim 'salus populi suprema lex' (the welfare of the people is the supreme law)
supports the idea that tax policies should aim to serve the greater good of the public.
 Direct and Indirect Tax.
Direct taxes, such as income tax, are levied directly on the income or wealth of
individuals or entities, while indirect taxes, like GST, are levied on the sale of goods
and services. The Supreme Court's judgment in 'PCIT v. NRA Iron & Steel Pvt. Ltd.'
upheld the addition made under section 68 of the Income-tax Act, 1961, on account of
unexplained share capital, which is a direct tax matter. The maxim 'ignorantia juris non
excusat' (ignorance of the law excuses no one) is particularly relevant here, as
taxpayers are expected to be aware of and comply with tax regulations.
 Heads of Income.
The Heads of Income under the Income Tax Act, 1961, categorize income into five
main types: Salary, House Property, Profits and Gains of Business or Profession,
Capital Gains, and Other Sources. Each category is governed by specific provisions
that dictate how income is to be taxed. In 'Commissioner of Income-tax v. D.N
Memorial Trust', the High Court upheld the Tribunal's decision granting registration
under section 12AA, which pertains to the head of income from Other Sources,
emphasizing the principle of 'audi alteram partem' (let the other side be heard) in tax
adjudications. This maxim underscores the importance of fair hearing and due process
in the determination of tax liabilities.
Agricultural income in India is defined under Section 2(1A) of the Income Tax Act,
1961, and is exempt from taxation under Section 10(1). However, this exemption is
subject to certain conditions and is not absolute. The Supreme Court in the case of
CIT v. Raja Benoy Kumar Sahas Roy elaborated on the meaning of agriculture,
which includes basic and subsequent operations. The maxim 'no tax without
representation' is often cited in the context of tax exemptions, emphasizing the
principle that taxes should be levied only with the consent of the governed, which is
reflected in the democratic process of tax legislation.
 Assets.
Assets are a critical component of tax laws, as they form the basis for the calculation of
wealth tax and capital gains. Under the Wealth-tax Act, 'assets' are defined in Section
2(ea), and only those assets are subject to wealth tax. The Income Tax Act, 1961, also
deals with assets in various sections, including Section 2(14) which defines a capital
asset. The principle 'ubi jus ibi remedium' applies here, indicating that where there is a
right, there is a remedy, and tax laws provide a mechanism for the assessment and
taxation of assets.
 Turn Over.
Turnover is an essential element for determining tax liability, especially for businesses.
Section 194Q of the Income Tax Act, 1961, introduced in the Finance Act, 2021,
mandates TDS on the purchase of goods if the turnover exceeds Rs 10 crore. This
provision reflects the maxim 'actus non facit reum nisi mens sit rea', meaning the act is
not culpable unless the mind is guilty, which in tax terms translates to the intent of tax
evasion being a necessary element for a transaction to be considered illegal. The
turnover limit is a measure to prevent tax evasion and ensure compliance.
Part B
 Cement was sold and supplied from factories outside the State of Mysore to
purchasers within the State. The State of Mysore levied tax on these sales under the
Sales Tax Act passed by the State of Mysore. It was contended against the State that it
had no power to tax the sales as they had taken place in the course of inter-state trade.
Decide,
 **Facts of the Case:** The core issue revolves around the sale and supply of cement from
factories located outside the State of Mysore to purchasers within the state. The State of
Mysore imposed a tax on these transactions under its Sales Tax Act.
 **Issues of the Case:** The primary legal question is whether the State of Mysore has the
jurisdiction to levy tax on sales that are essentially inter-state in nature, considering the
provisions of the Indian Constitution and relevant tax laws.
 **Decision/Advice:** Based on the constitutional provisions and the principles of

taxation in India, it is advised that the State of Mysore may not have the authority to impose a
tax on these sales as they appear to fall under the ambit of inter-state trade, which is subject
to central legislation.
 **Legal Reasoning:** Article 269(A) of the Constitution of India, inserted by the 122nd
Amendment in 2017, grants the power to collect Goods and Services Tax (GST) on supplies in
the course of inter-state trade to the Government of India. Furthermore, Article 286 prohibits
states from taxing inter-state trade to ensure free trade across state boundaries. The legal
maxim "actus curiae neminem gravabit," which implies that an act of the court shall prejudice
no man, supports the notion that tax laws should not place undue burden on individuals or
businesses, especially when the jurisdiction of such taxation is constitutionally questionable.
 **Related Case Law:** The case of Dharmendra M. Jani vs. The Union Of India is
pertinent, where the High Court of Judicature at Bombay dealt with the constitutionality of
certain provisions of the Integrated Goods and Services Tax Act, 2017, in the context of
inter-state trade. The court's interpretation of the constitutional provisions and tax laws can
provide guidance in resolving the present issue.
In conclusion, while the State of Mysore has the right to levy taxes within its jurisdiction, the
imposition of tax on inter-state trade transactions may not align with the constitutional
provisions and established case law. It is recommended that the matter be examined in light of
the constitutional framework to ensure compliance with the principles of taxation and
federalism in India.
 A foreign National came to India for the first time the 10th of October 2013 and
stayed at different cities in India till the 16th of May, 2014. On the same day he left
India, never to come back again. Determine his residential status for the previous
year relevant to the assessment year 2014-15,
In the context of Indian tax laws, the residential status of an individual is pivotal in
determining tax liability. According to Section 6 of the Income Tax Act, 1961, an
individual's residential status is ascertained based on physical presence in India
during a given financial year. In the case presented, the foreign national's stay in
India from October 10, 2013, to May 16, 2014, amounts to more than 182 days,
which is a crucial threshold for determining residential status.
 **Facts of the Case**: The foreign national arrived in India on October 10,
2013, and departed on May 16, 2014. This was his first and last visit to India, with
no intention to return.
 **Issues of the Case**: The primary issue is determining the residential status of
the foreign national for the assessment year 2014-15, which will influence his tax
obligations in India.
 **Decision/Advice**: Based on the facts, the foreign national qualifies as

a'Resident' for the assessment year 2014-15 under the Income Tax Act, 1961.
 **Legal Reasoning**: The reasoning hinges on the interpretation of Section 6,

which stipulates that any individual residing in India for a period exceeding 182 days
during the relevant financial year is considered a resident. The maxim 'Actori
incumbit onus probandi' applies here, placing the burden of proof on the individual to
establish their residential status.
 **Related Case Law**: The case of V.K. Ratti vs Commissioner of Income Tax
is pertinent, where the Punjab-Haryana High Court adjudicated on similar matters of
residential status and tax liability.
In conclusion, the foreign national's residential status for the previous year relevant to
the assessment year 2014-15 is 'Resident', making him liable for tax on income earned
in India during that period. It is advisable for individuals in such scenarios to consult
with tax professionals to ensure compliance and take advantage of any applicable
Double Tax Avoidance Agreements (DTAA).
 S is the Manger of an agricultural farm. He receives a monthly salary of Rs.

50,000. For this amount he claims exemption from payment of income tax on the
ground that he has received the amount as agricultural income. Decide.
 **Facts of the Case:** S is the Manager of an agricultural farm and receives a

monthly salary of Rs. 50,000. He claims exemption from income tax on the grounds
that this salary constitutes agricultural income.
 **Issues of the Case:** The primary issue is whether the salary received by S can
be classified as agricultural income and thus be exempt from income tax under the
provisions of the Income Tax Act, 1961.
 **Decision/Advice:** Based on the provisions of the Income Tax Act, 1961,

specifically Section 10(1), agricultural income is exempt from tax. However, the salary
received by S is in the nature of a fixed monthly payment for services rendered as a
manager and not directly from agricultural activities or land. Therefore, it cannot be
classified as agricultural income and is not exempt from income tax.
 **Legal Reasoning:** The definition of 'agricultural income' under Section 2(1A)

of the Income Tax Act, 1961, includes any rent or revenue derived from land which is
situated in India and is used for agricultural purposes. The Supreme Court in the case
of CIT v. Raja Benoy Kumar Sahas Roy has laid down that agricultural income
involves basic operations on the land itself and subsequent operations which make the
produce fit for the market. The salary of S does not arise from such operations but
rather from his employment as a manager, which is a non-agricultural activity.
 **Related Case Law:** In the landmark case of Raja Benoy Kumar Sahas Roy, the
Supreme Court held that income derived from land used for agricultural purposes
qualifies as agricultural income. However, in the present scenario, the income of S
does not derive from the land but from his managerial position, distinguishing it from
the case law precedent.
In conclusion, while S's role is integral to the functioning of the agricultural farm, his
income does not fall within the ambit of 'agricultural income' as per the legal
definitions and precedents set by Indian tax laws and case laws. Hence, his claim for tax
exemption on his salary as agricultural income is not tenable.
 The assessee is a partner of a firm having large assets in the partnership. The Wealth
Tax Authorities initiates proceedings against the assessce to include the value of the
assets in the net wealth of the assessee. But on the valuation date the firm is
converted into a limited liability company alloting shares to the assessee equivalent
to the worth of his assets in the partnership. Examine the Wealth Tax liability of the
assessee.
In the given scenario, the assessee, a partner in a firm with substantial assets, faces
proceedings from the Wealth Tax Authorities to include these assets in their net
wealth. However, on the valuation date, the firm transitions into a limited liability
company, with shares allocated to the assessee proportionate to their asset value in the
partnership.
 **Facts of the Case**: The assessee is a partner in a firm with significant assets.
On the valuation date for wealth tax assessment, the firm is restructured into a limited
liability company, and the assessee receives shares equivalent to the value of their
assets in the partnership.
 **Issues of the Case**: The primary issue is whether the conversion of the firm into
a limited liability company and the subsequent allocation of shares to the assessee
alters the wealth tax liability of the assessee.
 **Decision/Advice**: Based on the provisions of the Indian Wealth Tax Act and
related case law, the conversion process may be considered a transfer of assets,
potentially altering the assessee's wealth tax liability. However, specific exemptions
under the Income Tax Act, such as Section 47, may apply, negating the transfer's tax
implications if certain conditions are met.
 **Legal Reasoning**: The legal reasoning hinges on the interpretation of 'transfer'

under the Wealth Tax Act and the applicability of exemptions under the Income Tax
Act. The Bombay High Court in CIT v. Texspin Engg. and Mfg. Works held that the
conversion of a partnership firm into a company does not constitute a 'transfer' for tax
purposes. Additionally, the conversion may be exempt from capital gains tax under
Section 47 of the Income Tax Act, provided all assets and liabilities of the LLP are
transferred to the new entity.
 **Related Case Law**: The case of CIT v. Texspin Engg. and Mfg. Works is
pertinent, where the court ruled that such a conversion does not amount to a
'transfer'. Moreover, the Tribunal's decision on the taxability of conversion of a
company into an LLP provides insights into the treatment of asset transfers during
such conversions.
In conclusion, while the Wealth Tax Authorities may initiate proceedings to include
the value of the assets in the assessee's net wealth, the legal precedents and provisions
suggest that the conversion may not necessarily result in additional wealth
tax liability, subject to the fulfilment of conditions laid out in the relevant sections of
the Income Tax Act. It is advisable for the assessee to consult with a tax professional to
navigate the complexities of this case and ensure compliance with the applicable tax
laws and regulations.
Madras. He continued to stay there till the 15th of February 2017. Then he went to
Kerala and stayed at Trivandrum till the 16th of May 2017. On the 16th of May he
left India and did not come back again. Determine his residential status for the
previous year relevant to the assessment year 2017-2018.
 **Facts of the Case**: A foreign national arrived in India on October 10, 2016,
and resided in Madras until February 15, 2017. Subsequently, he moved to
Trivandrum, Kerala, where he stayed until May 16, 2017, after which he left India and
did not return within the fiscal year.
the foreign national for the assessment year 2017-2018, which is crucial for
ascertaining his tax liabilities under the Income Tax Act, 1961.
 **Decision/Advice**: Based on the information provided, the foreign national is

considered a Non-Resident for the assessment year 2017-2018. This is because hedoes
not satisfy the conditions laid out in Section 6 of the Income Tax Act, 1961, for
qualifying as a resident.
 **Legal Reasoning**: As per Section 6 of the Income Tax Act, 1961, an

individual'sresidency is determined by their physical presence in India during the fiscal
year. To be deemed a resident, the individual must have been in India for at least 182
days during the relevant fiscal year. In this case, the foreign national was present in
India for a total of 218 days (128 days in Madras and 90 days in Trivandrum), which
exceeds the threshold. However, considering the amendment introduced by the
Finance Act, 2020, which reduced the period of stay to 120 days for individuals whose
income exceeds INR 15 lakhs, the individual's income details are required to make a
definitive assessment.
 **Related Case Law**: The case of V.K. Ratti vs Commissioner of Income Tax
provides insight into the interpretation of residency under Section 6 of the Income Tax
Act, where the court held that the duration of stay and the purpose of stay
(employment, vacation, etc.) are critical factors in determining residency status.
Additionally, the legal maxim "Actus non facit reum nisi mens sit rea" implies that the
intent and act must both concur to constitute the crime or liability. In the context of tax
laws, this maxim underscores the importance of the taxpayer's intent and physical
presence in determining tax residency.
In conclusion, while the foreign national's stay duration initially suggests a resident
status, further details regarding his income and intent during the stay are required to
ascertain his tax residency conclusively. The case law and legal maxim cited provide a
framework for understanding the principles that govern such determinations. It is
advisable for the individual to consult with a tax professional to ensure compliance
with the applicable tax provisions.
 A Central Government employee is provided with rent free unfurnished

accommodation. The market rent of accmmodation provided to such employees is
Rs.15,000 per month. But as per the rule of allotment to residence to such
employees, its rent has been fixed at Rs.5,000 per month. Determine the taxable
value ofthe rent-free accommodation.
In accordance with the provisions of the Income Tax Act, the taxable value of
rent-free accommodation is determined based on the perquisite value, which is
calculated as a percentage of the salary depending on the city's population. For cities with
a population above 25 lakh, the perquisite is valued at 15% of the salary; for populations
between 10 lakh and 25 lakh, it is 10%; and for populations less than 10 lakh, it is 7.5%.
 **Facts of the Case**: A Central Government employee is provided with rent-free
unfurnished accommodation. The market rent is Rs.15,000 per month, while the rent
fixed by the rule of allotment is Rs.5,000 per month.
 **Issues of the Case**: The primary issue is determining the taxable value of the
rent-free accommodation provided to the employee.
 **Decision/Advice**: The taxable value of the accommodation should be

calculated based on the rules prescribed under the Income Tax Act, considering the
fair market value and the rent fixed by the employer.
 **Legal Reasoning**: As per the Income Tax Act, the value of perquisites,
including rent-free accommodation, is taxable under the head 'Salaries'. The
valuation of such accommodation is based on the fair market value, which is the
amount that would ordinarily be paid for the use of the accommodation in the open
market. However, if the accommodation is provided by the Central Government and
the employee is paying a concessional rent, then the value of perquisite is the amount
that exceeds 10% of the employee's salary.
 **Related Case Law**: In the case of 'Commissioner of Income Tax v. B.C.

Srinivasa Setty', the Supreme Court of India held that the nature and quality of the
transaction must be examined to determine its taxability. The maxim 'Nemo dat quod
non habet' applies here, which means one cannot give what one does not have. In
this context, the employer cannot charge tax on an amount that exceeds the fair market
value of the accommodation provided.
In conclusion, the taxable value of the rent-free accommodation provided to the

Central Government employee should be the amount that exceeds 10% of the
employee's salary, considering the fair market value and the concessional rent charged,
in line with the provisions of the Income Tax Act and the related case law. It is
advisable to consult with a tax expert to ensure compliance with the current tax laws
and regulations.
adequate consideration is included in the net wealth of the assessee for the payment
of wealth tax. The payment of tax is questioned by the assessee. Decide.
 **Facts of the Case:** The assessee has transferred assets to his minor, unmarried
daughter without adequate consideration. This transfer has been included in the net
wealth of the assessee for the purpose of wealth tax.
 **Issues of the Case:** The primary issue is whether the transfer of assets to a
minor, unmarried daughter without adequate consideration should be included in the
assessee's net wealth for wealth tax purposes.
 **Decision/Advice:** Based on the provisions of the Wealth Tax Act, 1957,

which was in force until its abolition in 2016, such transfer would typically be included
in the net wealth of the assessee.
 **Legal Reasoning:** The inclusion is justified under the clubbing provisions of

the Income-tax Act, where income from assets transferred to a spouse or minor child,
without adequate consideration, is included in the income of the transferor.
Specifically, Section 64 of the Income-tax Act would apply, which mandates that
income from such transferred asset is to be included in the income of the transferor.
Additionally, the legal maxim "Actori incumbit onus probandi" supports the notion that
the burden of proof lies with the plaintiff, in this case, the assessee, to prove that the
transfer should not be included in the net wealth for taxation.
 **Related Case Law:** A relevant case law is the decision by the Income Tax
Appellate Tribunal which held that the clubbing provisions of the Income-tax Act
apply to the income from assets transferred to a minor child, thereby reinforcing the
inclusion of such transfers in the net wealth of the assessee for tax purposes.
Furthermore, the principle established in the case of *Commissioner of Income Tax
vs. Suresh Seth* could be pertinent, where assets transferred to a minor child were
included in the net wealth of the parent for wealth tax assessment.
In conclusion, the transfer of assets by the assessee to his minor, unmarried daughter
without adequate consideration is justifiably included in the assessee's net
wealth for the payment of wealth tax, in accordance with the relevant provisions of
the Wealth Tax Act and the Income-tax Act, supported by established case law and
legal maxims.
 A, B and C have specific shares in the property owned by them in the ratio 2:34. The
chargeable annual value of the property is Rs. 81,00,000. Determine the annual value
of the property of each
co-owner in the property.
 **Facts of the Case:**

A, B, and C are co-owners of a property with shares in the ratio of 2:34. Thechargeable
annual value of the property is Rs. 81,00,000.
 **Issues of the Case:**

The primary issue is to determine the annual value of the property attributable to each
co-owner based on their specific share in the property.
 **Decision/Advice:**
As per Section 26 of the Income Tax Act, when property consisting of buildings or
lands appurtenant thereto is owned by several persons and their respective shares are
definite and ascertainable, such persons shall not be assessed as an association of
persons, but the share of each such person in the income from the property as
computed in accordance with Sections 22 to 25 shall be included in his total income.
 **Legal Reasoning:**
The annual value of the property owned by co-owners, who have definite and
ascertainable shares, is to be taxed in the hands of each co-owner separately. The
annual value is determined under Section 23 of the Income Tax Act, which states that it
is the sum for which the property might reasonably be expected to let from year to
year. In the case of CIT v/s. Podar Cement (P) Ltd., it was held that the 'owner' is a
person who is entitled to receive income from the property in his own right.
 **Related Case Law:**

In the landmark case of CIT v/s. Podar Cement (P) Ltd. etc. 226 ITR 625 (SC), the
Supreme Court clarified the definition of 'owner' under Section 22, which is pivotal for
the assessment of income from house property.
To calculate the annual value for A, B, and C:

A's share = 2 parts, B and C's share = 34 parts. Total
parts = 36.
Annual value of A's share = (2/36) * Rs. 81,00,000 = Rs. 4,50,000.
Annual value of B and C's share = (34/36) * Rs. 81,00,000 = Rs. 76,50,000. Since
B and C's individual shares are not specified, they would share the Rs. 76,50,000
based on their individual agreement or equal division if not specified.
 A State Hindu Religious and Charitable Endowment Act, authorised the levy of an
annual fee on all religious institutions at amaximum rate of five per cent of the income
derived by them. The fund raised by this levy was to go into the consolidated fund of
thestate. A question raised before the court was whether the levy was in the nature of a
tax or a fee. It was argued before the court that the levy was not a fee but a tax for the
reason that the levy was based on the capacity of the payer and not upon the quantum
of benefit expected to be conferred on any particular religious institutions. Examine
the question and decide whether it was in thenature of a tax or fee.

The case concerns a State Hindu Religious and Charitable Endowment Act which
mandates an annual levy on religious institutions at a rate of up to five percent of
their income. The proceeds are designated for the state's consolidated fund.

The primary issue is the classification of the levy imposed by the Act: whether it
constitutes a tax or a fee. The distinction hinges on the application of the funds and the
basis of the levy—whether it is correlated to the services provided to the institutions or
merely based on their income capacity.
Upon examination, the levy appears to be in the nature of a tax. This is because the levy
is not directly attributed to any specific service provided to the religious institutions
that would justify it as a fee. Instead, it is proportionate to the income of the
institutions, suggesting its character as a tax.
The legal reasoning is grounded in the principle of 'quid pro quo' which differentiates a
tax from a fee. A fee is levied in exchange for a specific service rendered, implying a
direct correlation between the levy and the service provided. In contrast, a tax is a
general exaction imposed for public purposes without a direct reference to specific
benefits conferred. The fact that the levy is directed to the consolidated fund further
supports its characterization as a tax, as fees are typically earmarked for specific
services and not merged with general state revenues.

The landmark case of Commissioner, Hindu Religious Endowments v. Sri
Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (AIR 1963 SC 966) established the
criteria for distinguishing a tax from a fee. The Supreme Court held that a levy is a fee
only if there is a reasonable correlation between the levy and the cost of services
provided, and the funds collected are not merged with the state's consolidated fund but
are earmarked for covering the service costs. This case law supports the view
that the levy in question, lacking a specific service correlation and being directed to
the consolidated fund, is a tax rather than a fee.
 A question for consideration by the Court was whether the levy of tax on cotton
ginned by the tax payer in excess of the amount prescribed by Article 276 was invalid
and therefore refundable and when there was a bar in levying tax in excess of the
amount specified in the constitution whether it amounted to levy of tax under an
inapplicable entry which was ultravires the Municipality levying the tax, being an
invalid law. Examine and decide.
In the context of Indian tax laws, the case presented involves the levy of tax on cotton
ginned by the taxpayer, which exceeds the amount prescribed by Article 276 of the
Indian Constitution. The issue at hand is whether such a levy is invalid and
consequently refundable, and if the imposition of tax beyond the constitutional limit
amounts to an ultra vires act by the Municipality.
 **Facts of the Case**: The taxpayer has been levied a tax on ginned cotton that
surpasses the ceiling imposed by Article 276.
 **Issues of the Case**: The primary issue is the validity of the tax imposed and
whether it should be refunded due to its excess over the constitutional limit.
Additionally, it questions the authority of the Municipality in levying a tax that is
potentially ultra vires.
 **Decision/Advice**: Based on the provisions of Article 276, any tax levied
beyond the prescribed limit is unconstitutional and should be refunded. The
Municipality's action in this regard is ultra vires and cannot be sustained in law.
 **Legal Reasoning**: Article 276 clearly caps the amount payable as tax on
professions, trades, callings, and employments, which by extension applies to the
ginning of cotton. The levy beyond this cap is not legally enforceable. The principle of
'actus non facit reum nisi mens sit rea' suggests that the Municipality's intent and act of
levying an excessive tax is culpable, making the levy invalid.
 **Related Case Law**: The Andhra High Court's decision in M/S. K.G.F. Cottons
(P) Ltd. vs The Assistant Commissioner (Ct) Ltu is pertinent here, where the court
held that the levy of tax must be within the constitutional bounds.
In conclusion, the levy of tax on cotton ginned by the taxpayer is invalid as it exceeds
the amount prescribed by Article 276 of the Indian Constitution. The Municipality's act
of levying such a tax is ultra vires, and the taxpayer is entitled to a refund of the excess
amount paid. The legal maxim 'actus non facit reum nisi mens sit rea' supports the
decision that without the guilty intent, the act of levying tax itself does
not constitute a crime, but in this case, the intent to levy beyond the prescribed limit
renders the act culpable. The case of M/S. K.G.F. Cottons (P) Ltd. reinforces the
principle that taxes must adhere to constitutional limitations.
 Where interestis on a capital sum and the creditor gets an open payment between
debtor Where interest is due on a citor does not make any appropriation of
paymatinbetween the capital either the debtor or the er tax Department, proceeds to
levy tax on it whether the interest and and interest, the Incore creditor, the creditor
objects to it. Examine whether the objection will
In the context of Indian tax laws, the scenario presented involves a dispute over the
taxation of interest on a capital sum where the creditor has received a payment without
specifying the appropriation towards the principal or interest. The Income Tax Act,
1961, under Section 2(14), defines capital assets and includes property of any kind
held by an assessee. Section 36(1)(iii) further elaborates on the treatment of interest on
borrowed capital, stating that it is considered an allowable business deduction as long
as it is incurred in respect of capital borrowed and used for business purposes.
 **Facts of the Case**: The creditor has received an unspecified payment from the
debtor, and the Income Tax Department has levied tax on the interest component
without any appropriation by either party.
 **Issues of the Case**: The primary issue is whether the tax levied on the interest
component, in the absence of specific appropriation by the creditor or debtor, is
justified.
 **Decision/Advice**: Based on the provisions of the Income Tax Act, the

objection by the creditor seems tenable, as the Act requires clear appropriation of
payments towards capital and interest for tax purposes.
 **Legal Reasoning**: The legal reasoning hinges on the interpretation of Section

36(1)(iii), which allows the deduction of interest on borrowed capital used for
business purposes. The lack of appropriation does not automatically allow the tax
department to assume the payment was towards interest and levy tax accordingly.
 **Related Case Law**: The case of Rajbir Singh & Anr vs Jaswant Yadav
provides insight into the legal interpretation of payments and appropriations.
Additionally, the maxim 'Actori incumbit onus probandi' applies here, placing the
burden of proof on the plaintiff – in this case, the tax department – to establish the basis
of the tax levy.
In conclusion, the creditor's objection to the tax levy on the interest without specific
appropriation appears to be supported by the legal provisions and case law precedents. It
is advisable for the tax department to consider the need for clear appropriation before
taxation of such payments. The creditor should provide
evidence of the intended appropriation of the payment to strengthen their objection and
resolve the dispute in accordance with the legal framework provided by the Income
Tax Act.
 Share of the assessee in the coparcenary property of a HUF of which there assess is a
member is Share of th the net wealth of the assessee and assessed to wealth tax. The
assessee objects toit Decide.
In addressing the query presented, it is essential to adhere to the structure provided,

incorporating relevant provisions, case laws, and maxims.
 **Facts of the Case**: The assessee, a member of a Hindu Undivided Family

(HUF), holds a share in the coparcenary property. The tax authorities have assessedthis
share as part of the net wealth of the assessee, subjecting it to wealth tax.
 **Issues of the Case**: The primary issue revolves around whether the share of an
assessee in the coparcenary property of an HUF can be considered as part of the net
wealth for wealth tax assessment.
 **Decision/Advice**: Based on the provisions of the Wealth Tax Act, 1957, and
theinterpretation of the term 'assets' under Section 2(ea), the share of the assessee in the
coparcenary property of an HUF is not to be assessed as part of the net wealth of the
individual assessee.
 **Legal Reasoning**: The legal reasoning hinges on the interpretation of the

Hindu Succession Act, 1956, particularly the amendment in 2005, which altered the
rights of coparceners and the nature of coparcenary property. The Supreme Court in the
case of Commissioner of Wealth Tax vs. Chander Sen (1986) 3 SCC 567, held that the
share of a member in an HUF cannot be merged with his individual wealth for tax
purposes. Furthermore, the maxim 'actus curiae neminem gravabit' supports the notion
that the act of the court shall prejudice no man, implying that legal interpretations
should not place undue burden on individuals.
 **Related Case Law**: The case of Yudhishter vs. Ashok Kumar (1987) 1 SCC
204, further cements the position that the share of a coparcener in an HUF is distinct
from their individual wealth and should be treated separately for taxation purposes.
In conclusion, the share of the assessee in the coparcenary property of an HUF

should not be assessed as part of the individual's net wealth for the purpose of wealth
tax. This interpretation aligns with the legal precedents and the principles of equity
embedded within the tax laws.
 State, with reasons, whether the following are agricultural income or not in the
hands of the recipient:
 Income from dairy farming.
 Dividend paid by a company out of its agricultural income.
 Rent received for agricultural land.

 Profits received by a partner from a Firm engaged in agricultural
activities.
In the context of Indian tax laws, agricultural income is defined under Section 2(1A)
of the Income Tax Act, 1961, and is exempt from tax under Section 10(1) of the same
Act. However, the definition and the extent of exemption have been subject to various
interpretations by courts, as well as specific provisions and guidelines.
 **Income from dairy farming** is generally not considered agricultural income

because it involves animal husbandry, which does not fall under the traditional
definition of agriculture involving cultivation of land. However, if the dairy farming
includes activities such as growing fodder for the cattle on the farm land, a portion of
the income attributable to the sale of such fodder may be considered agricultural
income.
 **Dividend paid by a company out of its agricultural income** is not considered

agricultural income in the hands of the recipient. The Supreme Court in the case of
'CIT v. Raja Benoy Kumar Sahas Roy' has clarified that agricultural income refers to
revenue derived directly from land which is used for agricultural purposes. Dividends
are derived from the investment in shares of a company and not directly from land.
 **Rent received for agricultural land** is considered agricultural income under the
Act, provided the land is used for agricultural purposes. The landmark ruling in 'Shiv
Shankar Lal v. CIT' supports this view, where the Supreme Court held that income
from rent or lease of agricultural land is considered agricultural income.
 **Profits received by a partner from a Firm engaged in agricultural activities** can

be considered agricultural income if the firm is solely engaged in activities that qualify
as agricultural under the Act. This is supported by the maxim 'actus non facit reum nisi
mens sit rea', which implies that the nature of the income depends on the nature of the
activities of the firm. If the firm's activities are agricultural, then the profits derived
would also be agricultural.
In conclusion, while dairy farming and dividends from a company's agricultural

income are not considered agricultural income, rent from agricultural land and profits
from a partnership firm engaged in agricultural activities are considered agricultural
income, subject to the provisions of the Income Tax Act, 1961, and the interpretations
by the judiciary. It is essential to consider the specific facts and circumstances of each
case, along with the relevant sections, case laws, and legal maxims, to determine the
nature of the income accurately.
 Mr. 'A', an American citizen, returned to the US on January 30, 2018 after about 20
years of stay in India. He returns to India on June 5, 2020 to join an American
company as its overseas Branch Manager. Determine his residential status for the
Assessment Year2021-22.

Mr. 'A', an American citizen, had been residing in India for approximately 20 years
before returning to the US on January 30, 2018. He then returned to India on June 5,
2020, to assume the role of Branch Manager for an American company.

The primary issue is determining Mr. 'A's residential status in India for the Assessment
Year 2021-22, which is crucial for tax liability purposes under the Income Tax Act,
1961.
Based on the information provided, Mr. 'A' would be considered a 'Resident but Not
Ordinarily Resident' (RNOR) for the Assessment Year 2021-22.
As per Section 6 of the Income Tax Act, 1961, an individual's residential status is
determined by their physical presence in India during the relevant financial year. An
individual is considered a resident if they are in India for 182 days or more during the
financial year or if they have been in India for 60 days or more in the financial year
and 365 days or more in the four years preceding the financial year. Since Mr. 'A'
returned to India in June 2020, he does not meet the condition of being in India for 182
days or more for the financial year 2020-21. However, considering his long stay in the
preceding years, he may be classified as RNOR.
The case of V.K. Ratti vs Commissioner of Income Tax provides insight into the
interpretation of these provisions, where the court held that the physical presence of the
individual in India is the decisive factor for determining residential status.
In conclusion, while Mr. 'A' does not qualify as a 'Resident and Ordinarily Resident'
due to his absence from India in the financial year 2020-21, his previous long-term
stay suggests that he would be considered an RNOR for the Assessment Year 2021-
22. This status impacts his tax liability, as RNORs are only taxed on income that is
received or deemed to be received in India and income that accrues or arises or is
deemed to accrue or arise in India during the financial year.
Station, and residing in own house there, submits the following particulars of his
annual income: Basic Salary Rs. 6,12,000; Dearñess Allowance Rs. 61,200; City
Compensatory Allowance Rs. 4,800: HRA Rs. 60,000; Contributionto GPF Rs. 60,000;
LIC Premia Rs. 36,000; Premium towards Medi-claim policy Rs. 12,000. Compute his
Gross Total Income forthe Assessment Year 2021-22.

Mr. X, a government employee stationed at Kottayam, has provided details of his income
which include Basic Salary, Dearness Allowance, City Compensatory Allowance, HRA,
contributions to GPF, LIC premiums, and Medi-claim policy premiums.

The primary issue is to compute the Gross Total Income of Mr. X for the Assessment
Year 2021-22, considering the various components of his income and applicable
deductions under the Indian Income Tax Act, 1961.
Based on the information provided, Mr. X's Gross Total Income would be calculated
by summing up all the income components and then subtracting the eligible
deductions under sections such as 80C for LIC premiums and contributions to GPF,
and section 80D for Medi-claim policy premiums.
The computation of Gross Total Income must adhere to the provisions of the Income
Tax Act, 1961. Under Section 10(13A), HRA is exempt subject to conditions, while
Section 80C allows deductions for contributions to GPF and LIC premiums up to a
limit of Rs. 1,50,000. Additionally, Section 80D provides deductions for health
insurance premiums like Medi-claim.

In the case of 'Commissioner of Income Tax vs. Laxmi Narain Todi' (2009), the
Supreme Court held that exemptions and deductions must be strictly interpreted as per
the provisions of the Income Tax Act, 1961. This case reinforces the need to adhere to
the specific sections and prescribed limits while computing taxable income.
In conclusion, Mr. X's Gross Total Income for the Assessment Year 2021-22 should
be meticulously computed by considering the relevant sections of the Income Tax Act,
1961, and the judicial precedents that guide the interpretation of these provisions. The
maxim 'lex non cogit ad impossibilia' applies here, suggesting that the law does not
compel the doing of impossibilities, and thus, the computation must be within the
realms of the provided facts and the statutory framework.
consideration (monetary or non-monetary) for construction of his personal house.
 Will the import of architecture services for personal use be treated as 'supply'
and liable to IGST?
 What will be your answer if the above services have been imported by 'S' in
the course orfurtherance of business?

Mr. 'S', a supplier of goods based in Delhi, imported architecture services from arelative
consultant in Germany in November 2021. The services were procured without any
consideration for the construction of his personal house.

The primary issue is whether the import of architecture services for personal use,
without consideration, constitutes a 'supply' under the CGST Act, 2017, thereby
attracting IGST. Additionally, it questions if the scenario changes when the services are
imported in the course or furtherance of business.
 As per Section 7 of the CGST Act, 2017, the import of services for personal use,
even without consideration, is deemed to be a supply. Therefore, Mr. 'S' importing
architecture services for personal use would be liable to IGST.
 If the services were imported in the course or furtherance of business, as per
Clause 4 of Schedule-I of the CGST Act, it would still be considered a supply and
liable to IGST.
The legal reasoning hinges on the definition of 'supply' under the CGST Act, which
includes all forms of supply of goods or services, including import, for a consideration
in the course or furtherance of business. The Act also covers imports without
consideration under certain conditions, as specified in Schedule-I. The place of supply,
in this case, is India, and the recipient is located in India, fulfilling the criteria for a
supply under Section 7 of the CGST Act.

While specific case laws pertaining to the import of services without consideration for
personal use were not identified, the principles laid out in the CGST Act and the IGST
Act provide clear guidance on the matter. The taxation of such imports aligns with the
maxim of 'ubi jus ibi remedium' – where there is a right, there is a remedy – ensuring
that tax laws apply justly in accordance with the defined provisions.
In conclusion, the import of architecture services by Mr. 'S', regardless of the purpose or
consideration, falls within the ambit of 'supply' as per Indian tax laws and is, therefore,
liable to IGST. It is advisable for Mr. 'S' to consult with a tax professional to ensure
compliance and to explore any possible exemptions or reliefs that may be applicable.
 A State Hindu religious and Charitable Endowment Act, authorised the levy of an
annual fee on all religious institutions at a maximum rate of 5% of the income derived
by them. The fund raised in this way was to go into the consolidated fund of the State.
The court had to consider whether the levy was in the nature of a tax or a fee. It was
contended that the contribution levied was based on the capacity of the payer and not
upon the quantum of benefit expected to be conferred on any particular religious
institution. The tax liability of the assessee depended generally on the capacity of the
assessee to pay. Decide.
In the context of the Indian tax laws, the case presented involves the levy of an annual
fee on religious institutions under a State Hindu religious and Charitable Endowment
Act. The crux of the matter lies in determining the nature of the levy—whether it is a
tax or a fee.
 **Facts of the Case**: The Act in question authorizes the collection of an annual
fee from religious institutions at a rate not exceeding 5% of their income. The
proceeds are intended for the consolidated fund of the State.
 **Issues of the Case**: The primary issue is the classification of the levy. If it is
a tax, it implies a compulsory contribution to state revenue, levied by the government
on workers' income and business profits, or added to the cost of some goods,
services, and transactions. If it is a fee, it suggests a charge for a direct service or benefit
to the institution.
 **Decision/Advice**: Based on the principles of taxation and the information

provided, the levy seems to resemble a tax more closely due to its compulsory nature
and lack of direct, quantifiable benefit to the payer. However, the final decision would
depend on a detailed examination of the Act's provisions and the intent behind the levy.
 **Legal Reasoning**: The distinction between a tax and a fee has been well
established in Indian jurisprudence. The Supreme Court of India, in the landmark
case of Commissioner, Hindu Religious Endowments v. Sri Lakshmindra Thirtha
Swamiar of Sri Shirur Mutt, delineated the difference, stating that a fee is levied
essentially for services rendered and there must be a correlation between the fee
collected and the service provided, which is not the case here.
 **Related Case Law**: The case of The Idol of Sri Renganathaswamy v. P K

Thoppulan Chettiar & Ors. is pertinent here, where the Supreme Court held that the
Act of 1959 was not applicable to the suit property of a trust, indicating the nuanced
application of such Acts.
In conclusion, while the levy is based on the capacity to pay, which is a characteristic of
a tax, the absence of a specific benefit or service in return makes it difficult to
categorize it unequivocally as a fee. The maxim 'quid pro quo'—something for
something—applies here, suggesting that for a levy to be considered a fee, there must
be a specific benefit to the payer, which does not seem to be the case.
Therefore, the levy would likely be considered a tax. However, this is a complex issue
that would benefit from a thorough legal review and interpretation based on the specifics
of the Act and the intentions of the legislature. The principles laid out in the
aforementioned cases provide a framework for understanding and resolving such
disputes.
spontaneously and without intervention of human agency was treated as agricultural
income and assessed to agricultural income tax. The assessee objected to it on the
ground that no human labour was expended for growing it and they had a natural or
wild spontaneous growth. Examine whether the assessee could be assessed to
agricultural income and tax levied.
 **Facts of the Case**: The income in question arises from the sale of forest trees,
fruits, and flowers that have grown naturally, spontaneously, and without human
intervention on the land.
 **Issues of the Case**: The primary issue is whether such income, derived without
human labor or intervention, qualifies as 'agricultural income' under the provisions of
the Income Tax Act, and consequently, whether it can be assessed to agricultural
income tax.
 **Decision/Advice**: Based on the interpretation of the Income Tax Act and

relevant case law, the income from the sale of naturally grown forest produce can be
considered agricultural income if certain conditions are met, and thus, may be exempt
from taxation.
 **Legal Reasoning**: Section 2(1A) of the Income Tax Act, 1961, defines
'agricultural income' and includes income derived from land which is used for
agricultural purposes. The Supreme Court in the case of CIT v. Raja Benoy Kumar
Sahas Roy elucidated the scope of 'agricultural operations' and included basic and
subsequent operations which require human skill and labor. However, the income
from the sale of naturally grown forest produce has been a subject of debate. The
maxim 'Actus legis nemini facit injuriam' suggests that the law does not wrong a
person by prohibiting what is beneficial to the community. In this context, if the forest
produce is naturally grown without human intervention, it may not strictly fall under
the definition of 'agricultural income' as it lacks the requisite 'agricultural operations'.
 **Related Case Law**: The Orissa High Court in the case of Raja Rajendra
Narayan Bhanja Deo held that income from the sale of forest produce, such as
timber and bamboo, is agricultural income and therefore exempt from income tax
under the Indian Income Tax Act, 1961. This ruling supports the view that naturally
grown forest produce may be considered agricultural income, provided it meets the
criteria established by judicial precedents.
In conclusion, while the sale of naturally grown forest produce may be considered
agricultural income, it is essential to examine the specific facts and operations involved
in each case to determine the applicability of tax exemptions under the Income Tax
Act. The maxim and case law cited provide a legal basis for such an examination and
support the potential classification of such income as agricultural, subject to the
satisfaction of defined conditions.
 Assets transferred by the assesses to his sons' minor married daughter without
adequate consideration was included in the net wealth of the assessee for the purpose
of wealth tax assessment. The assessee objects to it on the ground that minor married
daughter is no more a minor being already married and sent to another family to live
with her husband or his family. Decide.
In the case presented, the facts are straightforward: the assessee has transferred assets
to his son's minor married daughter without adequate consideration, which has been
included in the assessee's net wealth for wealth tax assessment purposes. The issue at
hand is whether the transfer of assets to a minor married daughter, who
is no longer considered a minor due to her marital status, should be included in the net
wealth of the assessee.
The decision in this case would likely hinge on the interpretation of the relevant
provisions of the Wealth Tax Act, 1957, which was in force before its abolition in
2015. According to the Act, wealth tax was levied on individuals, Hindu Undivided
Families (HUFs), and companies based on their net wealth as of the valuation date,
typically the 31st of March each year. However, since the Wealth Tax Act has been
abolished, the current relevance of this provision is limited to historical cases.
The legal reasoning could involve the principle of 'actus curiae neminem gravabit',
which means that an act of the court shall prejudice no man. This maxim suggests that
the law should not penalize individuals for the actions of the judiciary or administrative
processes that are beyond their control. In the context of this case, if the law at the time
of assessment did not clearly exclude the assets transferred to a minor married daughter
from the assessee's wealth, then the inclusion of such assets may be contested as
prejudicial.
A related case law that could be referenced is the Supreme Court judgment in the case
of 'Commissioner of Wealth Tax, Gujarat v. Vimlaben Vadilal Mehta', where the court
dealt with issues related to the inclusion of assets in the net wealth of an assessee. The
court's interpretation of the provisions of the Wealth Tax Act in this case could provide
a precedent for determining the taxability of transferred assets.
In conclusion, while the Wealth Tax Act, 1957, provided the framework for wealth tax
assessment during its tenure, the specific inclusion or exclusion of assets transferred to
a minor married daughter would require a detailed examination of the Act's provisions,
relevant case laws, and the application of legal maxims to ensure a fair and just
decision. It is also important to note that with the abolition of the Wealth Tax Act, such
assessments would now be historical exercises rather than current legal requirements.
 The assessee was in foreign countries continuously for over ten years. Due to continued
ill-health he returned to India during the previous year and has been staying in India
during the previous year for only 160 days. What is his tax liability? Discuss.
 **Facts of the Case:** The assessee, an Indian citizen, was residing abroad for
over a decade. Owing to persistent health issues, he returned to India in the previous
year and stayed for a total of 160 days.
 **Issues of the Case:** The primary issue is determining the tax liability of the
assessee in light of his non-resident status and the short duration of stay in India due to
health reasons.
 **Decision/Advice:** Based on the provisions of Section 6 of the Income Tax

Act, 1961, the assessee's residential status for the previous year would be 'Non-
Resident' as he does not meet the condition of being in India for 182 days or more.
 **Legal Reasoning:** The assessee's residential status is crucial in determining his
tax liability. As per Section 6, an individual is a resident if they are in India for 182
days or more during the relevant previous year, or if they are in India for 60 days or
more during the previous year and 365 days or more during the 4 years preceding the
previous year. However, the assessee does not satisfy either condition and is thus
considered a non-resident. Furthermore, the Finance Act, 2020, introduced Section
6(1A), which deems an Indian citizen earning over ₹15 lakh (other than income from
foreign sources) as a resident if they are not liable to pay tax in any other country. This
provision does not apply to the assessee as there is no indication of his income
exceeding the specified limit or his tax liability in another country.
 **Related Case Law:** The case of 'Residential Status of people unable to leave
India due to COVID-19' provides insight into the relaxation of residency conditions
under extraordinary circumstances. Although this case pertains to the COVID-19
pandemic, it sets a precedent for considering special situations like health issues
when determining tax liability. However, since the assessee's stay does not extend
beyond the stipulated 182 days, this case law does not alter his non-resident status for
tax purposes.
In conclusion, the assessee's tax liability in India would be limited to his

Indian-sourced income, if any, as his status is that of a non-resident. It is advisable for
the assessee to consult with a tax professional to ensure compliance with the
applicable laws and to explore any possible exemptions or reliefs that may be
available in his unique situation.
 Mr. X, a US citizen, after about 30 years of stay in India, returnsto America on January
30, 2017. He returns to India on June 5, 2019 to join an American company as its
overseas manager. Determine his residential status for the Assessment Year 2020-21.
 **Facts of the Case**: Mr. X, a US citizen, resided in India for approximately 30
years before relocating back to the US on January 30, 2017. He then returned to
India on June 5, 2019, to assume the role of an overseas manager for an American
company.
Mr. X for the Assessment Year 2020-21, which is crucial for ascertaining his tax
liabilities under the Indian Income Tax Act, 1961.
 **Decision/Advice**: Based on the information provided, Mr. X would be

classified as a 'Non-Resident' in India for the Assessment Year 2020-21. This is
because he
does not satisfy the conditions outlined in Section 6 of the Income Tax Act, 1961, for
being a 'Resident'.
 **Legal Reasoning**: As per Section 6 of the Income Tax Act, 1961, an individual
is considered a resident if they are in India for 182 days or more during the fiscal year
or if they have been in India for 60 days or more during the fiscal year and 365 days or
more during the four years preceding the fiscal year. In Mr. X's case, he does not meet
these criteria for the given assessment year.
 **Related Case Law**: The case of V.K. Ratti vs Commissioner of Income Tax is
pertinent here, where the Punjab-Haryana High Court held that the physical presence of
an individual, as stipulated by the Act, is the determinant factor for residential status.
Additionally, the legal maxim 'Actori incumbit onus probandi' applies, placing the
burden of proof upon Mr. X to establish his residential status.
In conclusion, Mr. X's residential status for the Assessment Year 2020-21 is that of a
'Non-Resident' under the provisions of the Indian Income Tax Act, 1961, based on the
facts presented and the legal framework governing such determinations. This status
has significant implications for his tax obligations in India, particularly concerning
the scope of income that is taxable by Indian authorities.
whether the interest of Rs. 5 Lakhs paid to Mr. John, a non-resident (resident of UK) in
the month of February,2021 by Mr. Smith, a non-resident (resident of Australia) on the
amount of Rs. 50 Lakhs borrowed for the purpose of doing business in garments at
Mumbai shall be subject to tax in India in the hands of Mr. John for the Assessment
Year 2021-22.
 **Facts of the Case:** Mr. John, a non-resident of India residing in the UK,
received interest of Rs. 5 Lakhs from Mr. Smith, another non-resident from Australia,
for a loan of Rs. 50 Lakhs used for a garment business in Mumbai.
 **Issues of the Case:** The primary issue is whether the interest income received
by Mr. John is taxable in India under the Income-tax Act, 1961, considering both
parties are non-residents, and the business is conducted in Mumbai.
 **Decision/Advice:** As per the Income-tax Act, 1961, and the Double Taxation
Avoidance Agreement (DTAA) between India and the UK, the interest income paid toa
non-resident is subject to tax in India if the debt-claim for which the interest is paid is
effectively connected with a permanent establishment or a fixed base that the
non-resident has in India. Since the loan is utilized for a business operation in Mumbai,
it is presumed to be connected with a permanent establishment in India, making the
interest income taxable in the hands of Mr. John.
 **Legal Reasoning:** Section 9(1)(v) of the Income-tax Act, 1961, deems income
by way of interest payable by a person who is a resident, except where the interest is
payable in respect of any debt-claim which is effectively connected with a permanent
establishment, situated in India, in the case of a non-resident, as income deemed to
accrue or arise in India. Furthermore, Section 195 of the Act mandates a tax deduction
at source on such interest payments to non-residents. The DTAA provisions would
also come into play, which may provide relief depending on the specific terms agreed
upon between India and the UK.
 **Related Case Law:** In the landmark case of CIT vs. Vishakhapatnam Port
Trust, the Supreme Court held that interest income arising to non-residents with
respect to loans utilized for business operations in India is taxable in India. This
principle is applicable as it aligns with the provisions of the Income-tax Act and the
relevant DTAA.
In conclusion, based on the provisions of the Income-tax Act, 1961, the DTAA
between India and the UK, and the judicial precedent set by the Supreme Court, the
interest income of Rs. 5 Lakhs paid to Mr. John by Mr. Smith is taxable in India for
the Assessment Year 2021-22. It is advisable for Mr. John to consult with a tax
professional to understand the implications of the DTAA and explore any potential
relief measures.
 Ms. Aishwarya, aged 35 years, received Rs. 8,40,000 (Eight Lakhs and Forty
Thousand) as Gross Salary during the financial year 2021-22. She received a gift of
Rs. 75,000 (Seventy-Five Thousand) from her maternal uncle on her birthday. She
also received gift of Rs. 60,000 (Sixty Thousand) from her office colleagues on the
same day. She deposited Rs. 72,000 (Seventy-Two Thousand) in Public Provident
Fund Account.
Compute her income tax liability for the Assessment Year 2022.23.

Ms. Aishwarya, a 35-year-old individual, has received a gross salary of Rs. 8,40,000
during the financial year 2021-22. Additionally, she received gifts totaling Rs.
1,35,000; Rs. 75,000 from her maternal uncle and Rs. 60,000 from her office
colleagues on her birthday. She has also made a deposit of Rs. 72,000 into her Public
Provident Fund (PPF) account.
The primary issue is to compute Ms. Aishwarya's income tax liability for the
Assessment Year 2022-23, considering the gifts received and the amount deposited in
the PPF account, in accordance with the provisions of the Income Tax Act, 1961.
Based on the Income Tax Act, 1961, Ms. Aishwarya's tax liability would be calculated
on her gross salary after allowing permissible deductions, including the amount
deposited in the PPF account. The gifts received from her maternal uncle and office
colleagues would also need to be considered as per the tax exemptions allowed under
the Act.
Under Section 10(2) of the Income Tax Act, 1961, gifts received from relatives are
exempt from tax, which would apply to the gift from her maternal uncle. The gift from
office colleagues, however, is taxable if it exceeds Rs. 50,000. The deposit into the PPF
account is eligible for deduction under Section 80C up to a limit of Rs. 1,50,000, which
would include the amount deposited by Ms. Aishwarya.

In the case of 'Commissioner of Income-tax v. D.N Memorial Trust' [2023], the court
held that genuine gifts received are not taxable, aligning with the exemption provided
under Section 10(2). This precedent supports the non-taxability of the gift received
from Ms. Aishwarya's maternal uncle.
In conclusion, Ms. Aishwarya's taxable income would include her gross salary and the
taxable portion of the gift received from her colleagues. The amount deposited in the
PPF account would be deducted from her gross total income under Section 80C,
subject to the prescribed limit. Her final tax liability would be computed accordingly,
taking into consideration the current slab rates and any applicable cess or surcharge. It
is advisable for Ms. Aishwarya to consult with a tax professional to ensure accurate
computation and compliance with all relevant tax provisions.
 'A' gifted debentures of XYZ Ltd., to a girl 'B' in March, 2017. Later, 'B' married to A's
son 'C' in March, 2019. 'B' received interestof Rs. 1,40,000 (One Lakh Forty Thousand)
from the debentures in the Previous Year 2020-21. The Assessing Officer (AO) added
the interest income of 'B' with the income of 'A' under the provisions of Section 64(1)
(vi) of the Income Tax Act. Comment on the action of the Assessing Officer.

'A' transferred debentures of XYZ Ltd. to 'B' in March 2017. Subsequently, 'B' married
'A's son 'C' in March 2019. During the Previous Year 2020-21, 'B' accrued interest
income of Rs. 1,40,000 from these debentures.

The primary issue is whether the interest income received by 'B' can be clubbed with
the income of 'A' under Section 64(1)(vi) of the Income Tax Act, given the relationship
between 'B' and 'C' and the timing of the marriage and the gift.
The action of the Assessing Officer (AO) to add the interest income of 'B' to the
income of 'A' seems to be in accordance with the provisions of Section 64(1)(vi),
which pertains to the clubbing of income arising from assets transferred to a
daughter-in-law.
Section 64(1)(vi) of the Income Tax Act stipulates that income from assets transferred
to a spouse or daughter-in-law without adequate consideration is to be included in the
income of the transferor. Since 'B' became the daughter-in-law of 'A' post the transfer
of debentures, the AO's action appears to be legally sound. However, it is crucial to
consider any relevant case law that may provide precedence for exceptions or
interpretations of this provision.

A pertinent case that could be referenced is the ruling of the Supreme Court in the case
of M.M. Aqua Technologies, where the Court held that the interest liability discharged
by issuing debentures was tantamount to ―actual payment‖. Although the facts are not
directly analogous, the principles regarding the treatment of debentures and interest
income could offer insights into the interpretation of the tax implications in the present
case.
In conclusion, while the AO's action aligns with the literal interpretation of Section
64(1)(vi), it is advisable to examine the matter in light of judicial precedents that may
influence the outcome of any potential disputes or appeals.
 X. a film actor is awarded a cash prize of Rs. 2 lakhs under thescheme of State Award
for films instituted by the Central Government. X claims this to be exempted from
tax as a casual receipt. Is the amount taxable ? If so, what extent? Give reasons.
8. Mr.A, an Indian settled in America visits India during 2016-17 and stays for 300
days. Determine his residential status for the year 2017-18.

The case involves two distinct scenarios. Firstly, X, a film actor, receives a cash prize
of Rs. 2 lakhs under the State Award for films by the Central Government and claims
tax exemption as a casual receipt. Secondly, Mr. A, an Indian residing in America,
visits India during the financial year 2016-17 and stays for 300 days.
The primary issues are whether the cash prize received by X is exempt from tax as a
casual receipt and the determination of Mr. A's residential status for the assessment year
2017-18.
For X, the cash prize is taxable under Section 56(2) of the Income Tax Act, as it does
not fall under the exceptions provided for casual receipts. For Mr. A, considering the
stipulated days of physical presence in India, he qualifies as a resident for the year
2017-18 as per Section 6 of the Income Tax Act.
The taxability of the cash prize awarded to X is governed by the provisions of the
Income Tax Act, which stipulates that casual incomes, unless explicitly exempted, are
taxable. The prize from the Central Government does not meet the criteria for exemption
and hence is taxable. In Mr. A's case, the definition of residential status under Section 6
considers the duration of stay in India, and with 300 days of physical presence, he is
deemed a resident.

The principles applied in the case of X find support in the ruling of the Supreme Court
in the case of CIT vs. Kalpana Mangaldas Patel, where it was held that awards and
prizes are taxable unless specifically exempted. For Mr. A, the case of Srinivasamurthy
vs. State of Mysore provides clarity on the determination of residential status, where
the duration of stay played a crucial role in the verdict.
In conclusion, the cash prize received by X is subject to taxation, and Mr. A's extended
stay in India categorizes him as a resident for the specified assessment year, thereby
affecting his tax liability. It is imperative to consult the relevant sections of the Income
Tax Act and refer to case laws for precise legal interpretation and application.
 State with reasons the chargeability of the following items of receipts by Mr. X, a
citizen of India, during the Assessment Year2016-2017. Agricultural income of Rs.
80,000 in India and Agricultural income of Rs. 1,00,000 arising from London.

Mr. X, a citizen of India, has received agricultural income of Rs. 80,000 in India and
Rs. 1,00,000 from London during the Assessment Year 2016-2017.

The primary issue is determining the chargeability of the agricultural income received
both in India and London under the Indian tax laws.
Based on the provisions of the Income Tax Act, 1961, agricultural income earned in
India is exempt from tax under Section 10(1). However, the agricultural income from
London is not exempt and must be considered to determine the tax rate applicable to Mr.
X's other taxable income, if any.
Agricultural income in India is exempt from tax, as per Section 10(1) of the Income
Tax Act, 1961. The Supreme Court in the case of CIT v. Raja Benoy Kumar Sahas Roy
clarified the scope of agricultural operations, which are exempt when performed in
India. However, the Act does not provide an exemption for agricultural income from
sources outside India. Therefore, while the income of Rs. 80,000 from India is not
taxable, the income of Rs. 1,00,000 from London is taxable. The legal maxim "Lex
loci" applies here, which refers to the law of the land, indicating that the Indian tax
laws apply to all residents for their global income.

In the landmark case of CIT v. Raja Benoy Kumar Sahas Roy, the Supreme Court held
that income derived from land used for agricultural purposes in India falls within the
definition of agricultural income and is exempt from tax. This case law supports the
decision that Mr. X's agricultural income from India is not chargeable to tax.
Conversely, there is no specific case law that addresses agricultural income from abroad;
however, the principle of global income taxation for Indian residents would apply,
making the London income taxable.
In conclusion, Mr. X's agricultural income of Rs. 80,000 in India is exempt from tax,
while the agricultural income of Rs. 1,00,000 from London is chargeable to tax under the
Indian Income Tax Act, 1961. This interpretation aligns with the provisions of the Act,
relevant case laws, and legal maxims pertaining to the taxation of agricultural income.
officers, an unaccounted cash of Rs. 8 lakhs was seen. Discuss, how the assets were to
be treated underthe Wealth Tax Act?
 **Facts of the Case:** During a raid at Z's premises by income tax officers, Z disclosed
bank deposits amounting to Rs. 10 lakhs. Additionally, an unaccounted cash sum of Rs. 8
lakhs was discovered.
 **Issues of the Case:** The primary issue is determining the treatment of the disclosed
bank deposits and the unaccounted cash under the Wealth Tax Act, considering the
provisions of the Income Tax Act, particularly sections relevant to undisclosed income and
assets.
 **Decision/Advice:** Based on the provisions of the Income Tax Act, the disclosed bank
deposits would likely be considered as part of Z's net wealth and subject to wealth tax unless
exempt under specific sections. The unaccounted cash of Rs. 8 lakhs could be treated as
'unexplained investment' under section 69A of the Income Tax Act, which may lead to its
inclusion in the net wealth and taxed accordingly.
 **Legal Reasoning:** Section 69A of the Income Tax Act empowers the tax authorities
to treat unexplained cash deposits as income not disclosed by the taxpayer. Furthermore, the
Supreme Court's judgment in the case of NRA Iron & Steel Pvt. Ltd. supports the addition
made by the Assessing Officer under section 68 for unexplained cash credits. In the context of
wealth tax, the unaccounted cash would likely increase the net wealth of Z, leading to a
higher wealth tax liability.
 **Related Case Law:** The case of PCIT v. NRA Iron & Steel Pvt. Ltd. is pertinent
here, where the Supreme Court upheld the addition made by the Assessing Officer under
section 68 of the Income-tax Act on account of unexplained share capital and premium
received bythe assessee. This case law supports the treatment of unaccounted cash as part of
the netwealth for taxation purposes.
In conclusion, Z's disclosed bank deposits and unaccounted cash are subject to scrutiny under
the Income Tax Act's provisions. The unaccounted cash, if not satisfactorily explained, would
be considered as unexplained investment, increasing Z's wealth tax liability. It is advisable for
Z to provide proper documentation and evidence to substantiate the legitimacy of the cash to
avoid potential penalties. The principles laid out in the aforementioned case law and the
maxim 'res ipsa loquitur' (the thing speaks for itself) suggest that the onus is on Z to clarify the
nature of these assets.
Part C
assessee for income tax purposes.
Taxation in India is a complex and multifaceted subject, governed by the provisions of

the Income Tax Act of 1961. A tax is a compulsory financial charge levied by the
government on individuals or entities to fund various public expenditures. The essence
of taxation lies in its mandatory nature, as opposed to a fee, which is generally a
voluntary payment for a specific service or benefit provided by the government. The
distinction between a tax and a fee is primarily based on the concept of 'quid pro quo' –
a Latin term meaning 'something for something'. While a tax is imposed without any
direct or immediate benefit to the taxpayer, a fee is directly related to the services
availed by the payer.
The Indian judiciary has elucidated this distinction through various case laws. One of
the landmark cases is the Commissioner, Hindu Religious Endowments v. Sri
Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, where the Supreme Court of India
laid down the criteria for differentiating between taxes and fees. The ruling emphasized
that a fee is levied essentially for services offered by the state and there must be a
reasonable correlation between the fee collected and the service provided, although it
need not be mathematically exact.
In the realm of taxation, certain principles, known as the Canons of Taxation, were
first proposed by Adam Smith in his seminal work "The Wealth of Nations". These
canons include equity, certainty, convenience, and economy, which are considered the
pillars of a sound taxation system. Equity ensures that taxpayers contribute to the
government's revenue in proportion to their ability to pay, thereby achieving fairness in
the distribution of tax burdens. Certainty implies that the tax system should be
transparent and predictable, allowing taxpayers to be fully aware of their obligations.
Convenience dictates that the method and timing of tax collection should be as
favorable as possible to the taxpayer, and economy suggests that the cost of collecting
taxes should be kept to a minimum.
Modern interpretations of the Canons of Taxation have expanded to include
additional principles such as elasticity, which allows the tax system to adapt to
changes in the economy, and simplicity, which facilitates taxpayer compliance and
administration efficiency.
Determining the residential status of an assessee is crucial for tax purposes as it

dictates the scope of taxable income. The Income Tax Act provides clear rules for this
determination. An individual is considered a resident of India if they are present in the
country for 182 days or more during the relevant financial year, or if they have
been in India for at least 60 days during the relevant year and 365 days or moreduring
the four years preceding the relevant financial year. However, there are exceptions to
these rules, particularly for Indian citizens working abroad or for individuals visiting
India.
The residential status is categorized into 'Resident and Ordinarily Resident' (ROR),
'Resident but Not Ordinarily Resident' (RNOR), and 'Non-Resident' (NR). The tax
liability of an individual varies significantly based on these categories, with ROR
individuals being taxed on their global income, while NR individuals are taxed only on
the income that accrues or arises in India.
Legal maxims play a pivotal role in interpreting tax laws, serving as guiding principles
for legal reasoning and judgment. One such maxim is 'actus non facit reum nisi mens sit
rea', which translates to 'the act is not culpable unless the mind is guilty'. In the context
of taxation, this maxim underscores the importance of intention behind tax evasion
before deeming an act as a violation of tax laws.
In conclusion, the Indian tax system is guided by a blend of statutory provisions,

judicial precedents, and traditional canons, all of which contribute to its structure and
implementation. Understanding these elements is essential for compliance and
effective tax planning. The determination of residential status is a key factor in this
process, affecting the extent of an individual's tax obligations to the government. As
the economic landscape evolves, so does the application of these principles, ensuring
that the tax system remains equitable, efficient, and adaptable to the changing needs of
society.
 Describe the different Heads of Income under the Income tax Act and explain the
nature and incidence of Agricultural Income for the purpose of calculation of Income
Tax.
The Income Tax Act of 1961 in India categorizes income into five distinct heads for
the purpose of taxation. These are: Income from Salaries, Income from House
Property, Profits and Gains from Business or Profession, Capital Gains, and Income
from Other Sources. Each category is governed by specific sections of the Income Tax
Act, which detail the nature of income included and the associated tax implications.
Income from Salaries (Section 15-17) encompasses earnings from employment, such
as wages, pensions, and allowances. Income from House Property (Section 22-27)
pertains to rental income from property owned by the taxpayer. Profits and Gains
from Business or Profession (Section 28-44) cover income generated through business
activities or professional services rendered. Capital Gains (Section 45-55) relate to
profits from the sale of capital assets, and Income from Other Sources (Section 56-59)
includes income not specifically covered under the other heads.
Agricultural income in India holds a unique position in tax law, as it is exempt from
central income tax under Section 10(1) of the Income Tax Act. However, it plays a
role in calculating tax liability when a taxpayer has both agricultural and
non-agricultural income. The Supreme Court, in the case of CIT v. Raja Benoy Kumar
Sahas Roy, clarified the definition of agricultural income and its tax treatment. The
ruling emphasized that agricultural income involves basic operations on land, such as
cultivation and subsequent operations that make the produce marketable.
The maxim 'Actus non facit reum nisi mens sit rea' reflects the principle that the intent
and act must both concur to constitute a crime or a legal liability. In the context of
taxation, this maxim underscores the importance of intention behind transactions to
determine tax liability. For instance, if a transaction is structured solely to evade taxes,
the intent becomes crucial in the eyes of the law.
In conclusion, understanding the different heads of income and the specific

provisions of the Income Tax Act is essential for accurate tax computation.
Agricultural income, while exempt from central tax, must be considered when
calculating the total tax liability due to its impact on slab rates. Case laws and legal
maxims further elucidate the principles underlying tax laws, ensuring that taxpayers
and authorities alike adhere to the spirit of the law. The interplay between these
various elements forms the bedrock of the Indian taxation system, guiding the fair
and equitable collection of taxes.
Describe the Authorities under the Wealth Tax Act and the procedure for the
assessment of Tax.
The Central Sales Tax (CST) is a form of indirect tax imposed on goods sold from one
state to another within India. It is governed by the Central Sales Tax Act, 1956, which
aims to formulate principles for determining when a sale or purchase of goods takes
place in the course of interstate trade or commerce. The CST is applicable only on
inter-state sales and not on sales made within the state or import/export of sales. The
tax is levied by the Central Government but collected and retained by the originating
state. As per the provisions of the CST Act, certain goods are declared to be of special
importance in inter-state trade or commerce, and restrictions and conditions are
specified for state laws imposing taxes on such goods.
The Kerala Value Added Tax (KVAT) was governed by the Kerala Value Added Tax
Act, 2003, which consolidated and amended the law relating to the levy of tax on thesale
or purchase of goods based on the concept of Value Added Tax in the State of Kerala.
However, with the introduction of the Goods and Services Tax (GST), the KVAT has
been subsumed under the new tax regime. The KVAT aimed to provide for the levy,
collection, and distribution of taxes on the sale of goods within the state.
Service Tax was a tax levied by the Government of India on certain service transactions,
but it has now been replaced by the GST. Before its subsumption,
Service Tax was charged on the gross or aggregate amount charged by the service
provider on certain services as defined in the Finance Act, 1994. The rate of Service Tax
had undergone changes over the years, and prior to the introduction of GST, it stood at
15%.
The Wealth Tax Act, 1957, outlined the authorities and their jurisdiction under
Chapter III of the Act. The income-tax authorities specified in section 116 of the
Income-tax Act were designated as the wealth-tax authorities for the purposes of the
Wealth Tax Act. They exercised powers and performed functions in respect of any
individual, Hindu undivided family, or company, with their jurisdiction under the
Wealth Tax Act being the same as under the Income-tax Act by virtue of orders or
directions issued under section 120 of that Act.
The procedure for the assessment of tax in India is structured under the Income TaxAct,
1961. It includes various types of assessments such as self-assessment under section
140A, summary-assessment under section 143(1), scrutiny-assessment under section
143(3), and re-assessment under section 148. These assessments ensure compliance
with tax laws and accurate calculation of tax liabilities. The
self-assessment is the initial step where taxpayers calculate their tax dues and make
payments accordingly. Summary-assessment is an automated process where the returns
filed by taxpayers are processed and checked for any discrepancies.
Scrutiny-assessment involves a detailed examination of the return by the tax authorities
to verify the accuracy of the information provided. Re-assessment may occur if there is
a belief that some income has escaped assessment in the original filing. Each of these
steps is crucial in maintaining the integrity of the tax system and ensuring that the
correct amount of tax is collected by the government.
 Discuss clubbing of income and the rules relating to set off and carry forward
under the Income tax Act.
The Indian Income Tax Act, 1961, is a comprehensive statute that outlines the tax
liabilities and deductions applicable to individuals and entities. One of the key
aspects of this Act is the concept of clubbing of income under Section 64, which
mandates the inclusion of income from certain specified persons into the income of
the assessee, thereby preventing tax evasion through transfer of income sources. For
instance, income transferred to a spouse or minor child, in many cases, will be
included in the income of the transferor for taxation purposes.
Furthermore, the Act provides for the set-off and carry forward of losses, allowing
taxpayers to adjust losses against profits from the same or different heads of income.
The set-off of losses can be intra-head, where losses from one source under a head of
income are set off against income from another source under the same head, or inter-
head, where losses from one head are set off against income from another head.
However, there are restrictions on the set-off of certain types of losses, such as
speculative business losses, which can only be set off against profits from speculative
businesses.
In addition to these provisions, the Act also allows for the carry forward of unadjusted
losses to subsequent years, subject to certain conditions. For example, losses under the
head 'Capital Gains' cannot be set off against income under any other head in the same
year, but can be carried forward to subsequent years to be set off against capital gains.
Case laws play a pivotal role in interpreting the provisions of the Act. For instance, the
Supreme Court's decision in the case of Commissioner of Income-tax v. D.N Memorial
Trust clarified the application of clubbing provisions in the context of trusts, providing
valuable precedents for similar cases. Similarly, the case of PCIT v. NRA Iron & Steel
Pvt. Ltd. dealt with the addition of unexplained share capital and premium under
Section 68, which is often linked with the clubbing of income.
Legal maxims, though not explicitly mentioned in the Act, are often used to interpret
its provisions. A relevant maxim in the context of tax laws is 'Actus non facit reum nisi
mens sit rea', which means that the intent and act must both concur to constitute the
crime. This maxim is pertinent when determining the intent behind the transfer of
income or assets, which is crucial for the application of clubbing provisions.
In conclusion, the clubbing of income and the rules for set-off and carry forward of
losses under the Income Tax Act, 1961, are designed to ensure a fair and equitable
taxation system. They prevent tax avoidance by including income from certain
relations in the taxpayer's income and provide relief by allowing losses to be adjusted
against future profits. The interpretation of these provisions is continually shaped by
judicial decisions and the application of legal principles, ensuring that the Act remains
relevant and effective in the ever-evolving landscape of taxation.
concept of interstate sale and sale in the course ofimport-export.
In the context of Indian tax laws, particularly under the Central Sales Tax Act, 1956
(CST Act), the term 'dealer' is defined as any person who carries on the business of
buying, selling, supplying, or distributing goods, directly or indirectly, for cash or
deferred payment, or for commission, remuneration, or other valuable consideration.
This includes local authorities, body corporates, companies, cooperative societies,
clubs, firms, Hindu undivided families, or any other association of persons engaged in
such activities.
The 'place of business' under the CST Act encompasses any location where a dealer
carries out business through an agent, warehouses or godowns where goods are stored,
and places where the dealer maintains their books of account. This broad definition
ensures that all relevant locations are covered for the purpose of taxation under the CST
Act.
Interstate sale, as per Section 3 of the CST Act, occurs when the movement of goods
from one state to another is occasioned by a sale or when a sale is effected by the
transfer of documents of title to the goods during their movement from one state to
another. This is a crucial aspect of the CST as it determines the applicability of tax on
transactions involving the movement of goods across state boundaries.
The concept of sale in the course of import or export is outlined in Section 5 of the
CST Act. A sale is considered to be in the course of import when it is made either
while the goods are being imported into India or immediately before their importation
into India. Similarly, a sale is in the course of export when it is made while the goods
are being exported out of India or immediately before their exportation. These sales are
exempt from CST, reflecting the intention to avoid tax barriers in international trade.
Case laws play a significant role in interpreting these provisions. For instance, the
Supreme Court of India in the case of 'State of Travancore-Cochin and Ors. v.
Shanmugha Vilas Cashew Nut Factory and Ors.' laid down principles regarding the
interpretation of sales in the course of export, which have been pivotal in subsequent
rulings.
Maxims such as 'lex non cogit ad impossibilia' (the law does not compel the impossible)
and 'in claris non fit interpretatio' (no interpretation is needed for clear expressions) are
often applied in the interpretation of tax laws to ensure that the provisions are applied
practically and clearly.
In conclusion, the CST Act provides a framework for the taxation of sales transactions
that occur across state lines within India, as well as those that are part of the import-
export process. The definitions of 'dealer' and 'place of business' are comprehensive to
encompass various scenarios under which a business might operate. The concepts of
interstate sale and sale in the course of import-export are critical in determining the tax
implications of cross-border trade. Case laws and legal maxims further aid in the
interpretation and application of these provisions, ensuring that the CST Act is
implemented in a fair and consistent manner.
 Who are the authorities under the Income tax Act? Briefly statetheir powers under
the Act.
The Income Tax Act of 1961 is the cornerstone of income taxation in India,
establishing a comprehensive framework for the levy, assessment, collection, and
recovery of income tax. The Act delineates a hierarchy of tax authorities, each vested
with specific powers to ensure the enforcement and administration of tax laws. At the
apex of this hierarchy is the Central Board of Direct Taxes (CBDT), a statutory
authority under the Ministry of Finance, Government of India. The CBDT is
empowered to formulate policies for the administration of direct taxes and oversee the
functioning of the entire income tax department.
Under the Act, the CBDT is followed by a cascade of authorities, including Principal
Chief Commissioners, Chief Commissioners, Principal Commissioners, and
Commissioners of Income Tax, who are responsible for territorial jurisdictions as
specified. These officers have the authority to administer the provisions of the Act
within their respective jurisdictions, including the assessment of tax, the imposition of
penalties, and the initiation of prosecution proceedings for non-compliance.
Further down the line are the Assessing Officers, typically the Income Tax Officers,
who directly interact with taxpayers. They are entrusted with the crucial task of
assessing the income of individuals and entities, determining tax liabilities, and
issuing notices for compliance. Their powers also extend to conducting raids and
surveys under Sections 132 and 133A of the Act, respectively, to unearth undisclosed
income.
The Act also confers specific powers on the authorities to enforce compliance and
penalize defaulters. For instance, under Section 271, authorities can levy penalties for
concealing income or furnishing inaccurate particulars of income. Similarly, Section
276B deals with the rigorous imprisonment for failure to pay tax deducted at source.
Case laws play a pivotal role in interpreting the provisions of the Act and guiding the
application of its sections. One such landmark case is the Commissioner of Income
Tax vs. Calcutta Knitwears, where the Supreme Court elucidated the scope of the term
'information' under Section 147, which deals with income escaping assessment.
Maxims, though not explicitly stated in the Act, underpin many of its provisions and
interpretations. The Latin maxim 'actus non facit reum nisi mens sit rea', implying that
the intent and act must both concur to constitute a crime, resonates with the provisions
of the Act that impose penalties or prosecution for willful default.
In conclusion, the authorities under the Income Tax Act of 1961 are structured in a
hierarchical manner, each with defined powers to administer and enforce tax laws.
Their actions are guided by the provisions of the Act, judicial precedents, and
underlying legal maxims, ensuring a robust system for the governance of income tax in
India. The interplay of these elements facilitates the effective implementation of tax
laws, balancing the need for revenue collection with the rights and obligations of
taxpayers.
difference between Tax and Fee? Describe the rules for determining the residential
status of an assessee under the I.T. Act.
Taxation in India is a complex subject that intertwines the economic principles of a
nation with its legal framework. The principles of taxation in India are deeply rooted in
the constitutional provisions and are guided by various laws, case laws, and maxims
that have evolved over time. The Income Tax Act of 1961 is the cornerstone of direct
taxation in India, providing specific sections and guidelines for the levy and collection
of taxes. One of the fundamental principles of taxation is encapsulated in Article 265 of
the Constitution of India, which states that no tax shall be levied or collected except by
the authority of law.
The canons of taxation, first propounded by Adam Smith, remain relevant today and
form the bedrock of the Indian taxation system. These canons are equity, certainty,
convenience, and economy. Equity ensures that taxpayers contribute to the government
revenue in proportion to their ability to pay, as reflected in the progressive rate
structure of the Income Tax Act. Certainty implies that tax laws should be clear and
unambiguous, allowing taxpayers to be fully aware of their obligations and
entitlements. Convenience dictates that the method and timing of tax collection should
not be burdensome, and economy suggests that the cost of collecting taxes should not
be disproportionate to the amount collected.
The distinction between a tax and a fee is significant in the Indian context. A tax is a
compulsory contribution imposed by the state to raise revenue for public purposes,
without reference to any specific benefit to the payer. In contrast, a fee is levied in
consideration of specific services rendered by the government to the individual,
implying a quid pro quo relationship. The Supreme Court of India, in the case of
Commissioner, Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of
Sri Shirur Mutt, clarified that a fee is justified only if it is levied essentially for services
rendered and there is a reasonable correlation between the fee collected and the cost of
the service provided.
Determining the residential status of an assessee is crucial under the I.T. Act as it
dictates tax liability in India. The Act lays down specific rules for this determination.
An individual is considered a resident if they are in India for 182 days or more during
the relevant financial year or if they have been in India for 60 days or more in the year
and 365 days or more in the four years preceding the relevant financial year.
However, exceptions are provided for Indian citizens leaving India for employment or as
a member of the crew of an Indian ship, as well as for Indian citizens or persons of
Indian origin visiting India.
In conclusion, the Indian tax system is guided by principles that aim to ensure fairness,
clarity, and administrative efficiency. The provisions of the Income Tax Act, along
with the judicial interpretations of these provisions, provide a structured approach to
taxation that aligns with global standards while catering to the unique socio-economic
landscape of India. Understanding these principles, the difference between taxes and
fees, and the rules for determining residential status are essential for compliance and
effective tax planning.
 Give a brief description of the Heads of Income under the I.T. Act. Explain Clubbing
of income, set off and carry forward of losses, Advance payment of tax and tax
deducted at source.
The Indian Income Tax Act, 1961, is a comprehensive statute that outlines the tax
liabilities for individuals and entities. Under this Act, income is classified under five
distinct heads for the purpose of taxation, which are: Income from Salaries, Income
from House Property, Profits and Gains of Business or Profession, Capital Gains, and
Income from Other Sources. Each category has specific provisions that determine the
taxability of income under that head. For instance, Section 15 to 17 deal with the
intricacies of 'Income from Salaries', including allowances and perquisites.
Clubbing of income, as per Section 64 of the IT Act, is a mechanism to prevent tax

evasion through the transfer of income to another person, typically a family member, to
reduce the total tax liability. This provision ensures that income which is transferred
without a genuine reason is included in the total income of the transferor, thereby
negating any tax advantage that might have been gained.
The concept of set off and carry forward of losses, governed by Sections 70 to 80,
allows taxpayers to adjust losses against income from other heads, subject to certain
conditions. If a loss under one head of income cannot be fully set off within the same
year, it may be carried forward to subsequent years to be set off against future income,
providing a form of relief for taxpayers who have incurred losses.
Advance payment of tax, mandated under Section 208, is a provision that requires
taxpayers to estimate their tax liability for the financial year and pay taxes in advance if
their tax liability exceeds Rs. 10,000. This system of staggered payments ensures a
steady flow of revenue to the government and reduces the burden of a lump-sum tax
payment at the end of the fiscal year.
Tax Deducted at Source (TDS), as per various sections starting from Section 192 to
196D, is a method where tax is deducted at the point of income generation, such as
salaries or interest payments. The deductor is responsible for deducting the appropriate
tax and depositing it with the government, providing an efficient way to collect taxes
and reducing the risk of tax evasion.
Case laws play a pivotal role in interpreting the provisions of the Income Tax Act. For
example, the landmark judgment in the case of Commissioner of Income-tax v. D.N
Memorial Trust clarified the criteria for granting registration to trusts under Section
12AA, emphasizing the importance of genuine activities over the generation of
surplus. Such judgments not only resolve specific disputes but also set precedents for
future cases, thereby shaping the application of tax laws.
Maxims, although not codified within the Income Tax Act, are often referenced for
legal interpretation. One such maxim is 'lex non cogit ad impossibilia', which implies
that the law does not compel a man to do that which cannot possibly be performed.
This principle is particularly relevant in tax law, where taxpayers are expected to
comply with the provisions to the best of their ability, but not beyond what is feasible.
In conclusion, the Indian Income Tax Act, with its detailed provisions, case laws, and
interpretative maxims, provides a structured approach to taxation. It ensures that income
is taxed fairly while offering mechanisms to mitigate the impact of losses and facilitating
the advance payment of taxes to streamline the process for both the taxpayer and the
government. Understanding these aspects is crucial for compliance and effective tax
planning.
 . Write short notes on any three:
 Liability to tax on interstate sales.
In the intricate landscape of Indian tax laws, the liability to tax on interstate sales is
governed by the Integrated Goods and Services Tax (IGST) as part of the GST regime.
IGST is a component of GST that is applicable on the supply of goods and services
across state boundaries. This tax is collected by the central government and then
distributed between the states. The concept is rooted in the destination principle, where
the tax revenue accrues to the consuming state rather than the exporting state. The
IGST model ensures a seamless flow of tax credits from one state to another, and the
tax is levied at rates that are almost equivalent to the combined Central GST (CGST)
and State GST (SGST) on intrastate supplies. The legal foundation for IGST is found
in the IGST Act of 2017, which was a transformative step in unifying the Indian
market and eliminating the cascading effectof taxes.
 Incidence of agriculture income in the assessment of theassessee under the
IT Act.
The incidence of agricultural income under the Income Tax Act, 1961, is a unique
aspect of the Indian tax system. Agricultural income, as defined under Section 2(1A) of
the IT Act, is exempt from tax to support the agrarian economy. However, for
individuals with a higher income bracket, agricultural income is included for rate
purposes, effectively resulting in a higher tax rate on non-agricultural income. This
method of partial integration, as laid out in the Finance Act, ensures that while
agricultural income remains exempt, it plays a role in determining the applicable tax
slab for the taxpayer, thereby indirectly influencing the tax liability.
 Registration and Cancellation of dealership under the CentralSales Tax Act.
Registration and cancellation of dealership under the Central Sales Tax Act, 1956, are
critical for businesses engaged in interstate trade. The CST Act defines a 'dealer' and
mandates registration for dealers engaging in interstate commerce. Registration is a
prerequisite for availing of benefits such as the issuance of 'C' forms for concessional
tax rates on interstate purchases. Cancellation of registration can occur due to various
reasons, such as cessation of business, non-compliance, or failure to pay due taxes. The
procedural aspects of registration and cancellation are detailed in the CST (Registration
and Turnover) Rules, 1957, ensuring a structured approach to dealer management
within the framework of interstate commerce taxation.
 Value Added Tax, its incidence and levy.
Value Added Tax (VAT) was a precursor to GST in India and was a state-level tax on
the sale of goods within the state. VAT aimed to eliminate the cascading effect of taxes
and was levied on the value addition at each stage of the supply chain.
However, with the introduction of GST on July 1, 2017, VAT was subsumed into the
new tax structure. GST is a comprehensive, multi-stage, destination-based tax that is
levied on every value addition. The shift from VAT to GST marked a significant
overhaul of the indirect tax system in India, promoting a common national market and
reducing the complexity of multiple state taxes.
 Discuss the different types of Assessment under the Income-taxAct, 1961.
The Income-tax Act, 1961, a comprehensive statute that governs the taxation of income
in India, outlines various types of assessments that are pivotal to the administration of
tax laws. An assessment is essentially the determination of the tax liability of an
individual or entity under the Act. The Act specifies different kinds of assessments, each
with its distinct procedures and implications.
One of the primary forms of assessment is the Self-Assessment under section 140A.
This is where taxpayers themselves calculate their tax liability and pay taxes
accordingly before submitting their returns. It reflects the principle of 'voluntas et
propositum' – the intent and purpose behind the law, which encourages voluntary
compliance by taxpayers.
Another significant type is the Summary Assessment under section 143(1), which is an
initial assessment, often automated, to ensure the return has no arithmetic mistakes or
incorrect claims. It is akin to the maxim 'error qui non resistitur approbatur' – an error
not resisted is approved, highlighting the importance of accuracy in tax filings.
The Scrutiny Assessment under section 143(3) involves a more detailed examination of
the return and supporting documents to verify the correctness of the income declared
and taxes paid. This type of assessment embodies the maxim 'audi alteram partem' –
hear the other side, ensuring that the taxpayer is given an opportunity to present their
case.
The Reassessment or Income Escaping Assessment under section 147 allows the tax
authorities to reassess previously filed returns if they believe some income has
escaped assessment. This is based on the principle 'nemo debet bis vexari' – no one
ought to be twice vexed for the same cause, but with the caveat that if something was
missed, it can be corrected.
Faceless Assessment, introduced by the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020, is a newer addition aimed at
eliminating the interface between the taxpayer and the tax officer, thereby reducing
the scope for corruption and ensuring a more transparent process.
In the realm of case law, the Supreme Court's decision in the case of PCIT v. NRA
Iron & Steel Pvt. Ltd. is a landmark judgment where the Court upheld the addition
made by the Assessing Officer under section 68 of the Income-tax Act, 1961, on
account of unexplained share capital and premium received by the assessee. This
judgment underscores the principle of 'substance over form', where the true nature
and source of income are given precedence over the formal documentation.
The maxim 'actus non facit reum nisi mens sit rea' – the act does not make one guilty
unless there is a guilty mind, is also relevant in the context of tax assessments. It implies
that for an act to be considered a violation of tax laws, there must be an intention to
evade taxes.
In conclusion, the different types of assessments under the Income-tax Act, 1961, serve
as tools for the tax authorities to ensure compliance with tax laws and to prevent
evasion. The provisions, case laws, and legal maxims associated with these assessments
provide a framework that balances the need for efficient tax collection with the rights
and responsibilities of taxpayers. Understanding these assessments, their legal basis,
and their practical application is crucial for taxpayers and professionals alike in
navigating the complexities of tax law in India.
 Explain in detail, with the help of illustrations, the provisions of the Income-Tax Act
relating to computation of income under the head Income from House Property'.
The computation of income from house property in India is governed by the provisions of the
Income-Tax Act, 1961. Under Section 22 of the Act, the income from house property shall be
chargeable to tax under the head "Income from house property". This includes any income
derived from a building or land appurtenant thereto, which is not used by the owner for the
purposes of any business or profession carried on by him. The annual value of the property,
which is deemed to be the income from the property, is determined under Section 23 of the Act.
The Gross Annual Value (GAV) of the property is the starting point for the computation of
income from house property. For a let-out property, the GAV is the higher of the expected rent
or the actual rent received/receivable. The expected rent is determined based on the fair market
value, municipal valuation, or standard rent, whichever is higher. However, if the property is
self-occupied, the GAV is considered as nil, as per the provisions of the Act.
From the GAV, municipal taxes paid during the year are deducted to arrive at the Net Annual
Value (NAV). The Income-Tax Act allows a standard deduction of 30% of the NAV, as per
Section 24(a), which accounts for repairs and maintenance of the property. Additionally, any
interest paid on borrowed capital for the acquisition, construction, repair, renewal, or
reconstruction of the property can be claimed as a deduction under Section 24(b).
One of the landmark case laws that elucidate the principles governing the computation of
income from house property is the Supreme Court judgment in the case of 'CIT vs. Shambhu
Investment Pvt. Ltd.'. This case highlighted the importance of the actual usage of the property
in determining its taxability under the head "Income from house property".
Furthermore, the maxim 'Nemo dat quod non habet' applies to the ownership aspect of house
property, implying that one cannot confer a better title than they themselves have. This is
pertinent in the context of deemed ownership under the Income-Tax Act, where certain
individuals are treated as owners for tax purposes even if they are not the legal owners of the
property.
In conclusion, the computation of income from house property involves a systematic approach
as laid out by the Income-Tax Act, taking into account various factors such as GAV, NAV,
municipal taxes, and interest on borrowed capital. It is essential to understand the legal
provisions, case laws, and maxims that influence this computation to ensure accurate and
compliant tax filings. For a detailed understanding, taxpayers are advised to refer to the
specific sections of the Income-Tax Act and consult with tax professionals. This overview
provides a foundational understanding but should not be construed as legal advice. For
personalized guidance, it is recommended to seek professional assistance.
 What is 'Input Tax Credit' (ITC)? What are the conditions to be fulfilled to get Input
Tax Credit?When the ITC is not admissible? Describe the mechanism of input tax
credit under GST with the help of illustration.
Input Tax Credit (ITC) is a cornerstone of the Goods and Services Tax (GST) system in
India, which allows businesses to reduce their tax liability by claiming credit for the tax
paid on purchases. The concept of ITC is enshrined in the CGST Act, 2017, under
Section 16, which stipulates the eligibility and conditions for claiming ITC. To be
eligible for ITC, a taxpayer must ensure that the goods or services procured are
used for business purposes, and the tax paid on these purchases is available as credit
against the tax payable on the supply of goods or services.
The conditions for claiming ITC are detailed in Section 16(2) of the CGST Act. These
include the possession of a valid tax invoice or debit note, receipt of goods or services,
the tax charged on such supplies has been paid to the government, and the furnishing of
GST returns. It is imperative that these conditions are met to avail ITC, as non-
compliance can lead to denial of the credit.
ITC is not admissible in certain situations as outlined in Section 17(5) of the CGST
Act. This includes scenarios where goods or services are used for personal
consumption, construction of immovable property (other than plant and machinery), or
where the goods are lost, stolen, destroyed, or written off. Additionally, ITC cannot be
claimed for motor vehicles and other conveyances except when they are used for
specified purposes such as transportation of goods or passengers.
The mechanism of ITC under GST is designed to prevent the cascading effect of taxes,
where tax is levied on tax. It operates on a simple principle: the tax paid on inputs can
be set off against the tax to be paid on output. For instance, if a manufacturer pays GST
on raw materials (input tax) and also collects GST on the finished goods sold (output
tax), the input tax can be deducted from the output tax, and only the balance amount is
payable to the government.
An illustration of this mechanism can be seen in the case of a manufacturer who

purchases raw materials worth INR 1,00,000 with GST at 18%, amounting to INR
18,000 as input tax. If the finished goods are sold for INR 2,00,000 with GST at 18%,
the output tax amounts to INR 36,000. Here, the manufacturer can claim an ITC of
INR 18,000, reducing the net GST liability to INR 18,000.
The jurisprudence on ITC has evolved through various case laws, which have clarified
the scope and extent of ITC. One such landmark case is the Eicher Motors Ltd. v.
Union of India, where the Supreme Court held that the credit earned under the tax paid
on inputs is a property that cannot be taken away without a legal provision. This case
underscores the right of taxpayers to avail ITC, which is integral to the GST
framework.
In conclusion, ITC is a vital feature of the GST regime, aimed at ensuring that tax is
paid only on the value addition at each stage of the supply chain. The provisions,
conditions, and case laws surrounding ITC form a complex web that taxpayers must
navigate to optimize their tax liabilities. As the GST law evolves, it is expected that
the rules governing ITC will be refined to make the process more streamlined and
taxpayer-friendly. Compliance with the legal requirements is crucial for businesses to
harness the full benefits of the ITC mechanism.
 Discuss the residential status of an assessee and his consequential tax

liability under the Income tax Act.
The residential status of an assessee is a pivotal factor in determining tax liability

under the Income Tax Act, 1961, of India. The Act classifies an individual's residential
status into three categories: Resident and Ordinarily Resident (ROR), Resident but Not
Ordinarily Resident (RNOR), and Non-Resident (NR). The determination of
residential status is based on the physical presence of the individual in India during the
relevant financial year and the preceding four years.
Section 6 of the Income Tax Act, 1961, provides the conditions under which an
individual's residential status is determined. For instance, an individual is considered a
resident if they are in India for 182 days or more during the financial year or if they
have been in India for 365 days or more during the four years preceding the financial
year and 60 days or more in the financial year in question. However, there are
exceptions to this rule, particularly for Indian citizens or persons of Indian origin who
visit India or leave India for employment purposes.
The tax implications based on residential status are significant. A ROR is taxed on
their global income, which includes income earned both in India and abroad. An
RNOR is only taxed on income that is received or deemed to be received in India and
income that accrues or arises or is deemed to accrue or arise in India. Lastly, an NR is
taxed solely on the income that accrues or arises in India.
Case laws play a crucial role in interpreting the provisions of the Act and providing
precedents for various scenarios. For example, in the case of Commissioner of
Income-tax v. D.N Memorial Trust, the court held that the trust's activities were
charitable and genuine, and thus eligible for tax exemption under the Act.
Legal maxims, though not explicitly mentioned in the Act, also influence the
interpretation and application of tax laws. A relevant maxim in the context of tax law
is 'actus non facit reum nisi mens sit rea', which means that the intent and act must
both concur to constitute the crime. This maxim is pertinent when determining the
intent behind tax evasion or avoidance schemes.
In conclusion, the residential status of an assessee under the Income Tax Act, 1961, is
a fundamental aspect that determines the scope of tax liability. It is essential to
understand the provisions, case laws, and legal maxims that govern taxation to ensure
compliance and avoid legal pitfalls. Taxpayers must be diligent in understanding their
residential status and the consequent tax implications to navigate the complex
landscape of tax laws in India.
 Explain the authorities under the Income Tax Act, briefly stating their powers and the
procedure for assessment under the Act.
The Income Tax Act, 1961, is the cornerstone of income taxation in India,
establishing a comprehensive framework for the levy, assessment, collection, and
recovery of income tax. Under this Act, various authorities are designated with specific
roles and responsibilities to ensure the effective administration of tax laws.
The Central Board of Direct Taxes (CBDT) is the apex authority under the Income Tax
Act, vested with the power to control and supervise all direct tax laws in India. The
CBDT is empowered by Section 116 of the Income Tax Act, which outlines the
hierarchy of income tax authorities, including the Principal Chief Commissioners,
Chief Commissioners, Principal Commissioners, Commissioners, Additional
Commissioners, Joint Commissioners, Assistant and Deputy Commissioners, and
Income Tax Officers.
One of the key provisions that delineate the powers of these authorities is Section 143,
which deals with the assessment procedures. Section 143(1) allows for a summary
assessment without calling the assessee, where the return is processed based on the
information furnished. However, if discrepancies are detected, the case may be subject
to a detailed scrutiny assessment under Section 143(3).
Case laws play a pivotal role in interpreting the provisions of the Income Tax Act. For
instance, the Supreme Court's judgment in the case of PCIT v. NRA Iron & Steel Pvt.
Ltd. upheld the addition made by the Assessing Officer under Section 68 of the
Income-tax Act, 1961, on account of unexplained share capital and premium received
by the assessee. This case law highlights the authority's power to scrutinize and
question the genuineness of transactions and the onus on the taxpayer to substantiate
their claims.
Maxims, though not explicitly mentioned in the Act, are often invoked to guide the
interpretation of tax laws. A relevant maxim in the context of tax law is 'Actus non
facit reum nisi mens sit rea', which translates to 'an act does not make one guilty
unless there is a guilty intent'. This principle is fundamental in tax evasion cases,
where the intent to evade tax is a crucial factor in determining culpability.
In conclusion, the Income Tax Act, 1961, through its provisions, supported by case
laws and legal maxims, establishes a robust system for the governance of income tax
in India. The authorities under the Act are equipped with wide-ranging powers to
assess, enforce, and adjudicate tax matters, ensuring compliance and collection of
revenue for the nation's development. The procedural aspects of assessment, as laid
down in the Act, provide a structured approach to tax administration, balancing the
need for efficiency with the rights and obligations of taxpayers.
 Write short notes on:

Kerala value added tax act: 2003-incidence and levy of tax.
The Kerala Value Added Tax Act, 2003, represents a significant shift in the tax structure
of the state of Kerala, moving towards a more progressive form of taxation
that aims to reduce the cascading effect of taxes. The Act stipulates the incidence and
levy of tax on the sale or purchase of goods within the state. According to Section 6,
the incidence of tax under the Act arises at the point of sale of goods, with the term
'sale' encompassing various forms of transfer of property in goods. The Act also
provides for the payment of tax at compounded rates under certain conditions, as was
the case until the amendment on April 1, 2023, which omitted this provision. The legal
maxim "actus non facit reum nisi mens sit rea," which translates to "the act does not
make a person guilty unless the mind is also guilty," is pertinent in the context of
taxation laws. It emphasizes the need for a deliberate action or intent for liability to
arise, which aligns with the provisions of the Kerala VAT Act that impose tax liability
based on the act of sale with a clear intention to transfer property in goods.
Central sales tax act: Liability to tax on interstate sales.
The Central Sales Tax Act, 1956, governs the liability to tax on interstate sales, which
are sales that occur between states. This act was enacted to formulate principles for
determining when a sale or purchase of goods takes place in the course of inter-state
trade or commerce. Under the provisions of this act, a dealer is liable to pay tax on all
sales of goods effected by him in the course of interstate trade or commerce.
Notably, the rate of tax under the Central Sales Tax (CST) is determined by whether
the sale is to a registered dealer and if the goods sold are declared goods. The CST is
an origin-based tax, meaning it is levied where the goods are sold, and not where they
are consumed.
In the realm of case law, the decision in the case of Commissioner of Income-tax v.
D.N Memorial Trust is a landmark judgment that has had a significant impact on the
interpretation of tax laws. The High Court of Jammu & Kashmir and Ladakh held thatthe
trust's activities were charitable in nature and directed the grant of registration under
Section 12AA of the Income-tax Act, 1961, thereby setting a precedent for similar cases.
Tax maxims play a vital role in the interpretation of tax statutes. A well-known maxim
is 'Cessante ratione legis cessat ipsa lex', which means 'when the reason for a law
ceases, the law itself ceases'. This maxim is often applied to interpret the applicability
of tax laws when the underlying circumstances have changed, thereby affecting the
original intent of the legislation.
In conclusion, the Kerala Value Added Tax Act, 2003, and the Central Sales Tax Act,
1956, are pivotal in the administration of tax laws in India. They provide a clear
framework for the levy and collection of taxes within and across state boundaries.
Case laws such as Commissioner of Income-tax v. D.N Memorial Trust illustrate the
dynamic nature of tax law interpretation, while tax maxims offer guiding principles
that aid in the application and understanding of complex tax statutes. Together, these
elements form the bedrock of the Indian tax system, ensuring its adaptability and
fairness in a rapidly changing economic landscape.
 What do you understand by 'canons of taxation'?. Also explainthe characteristics of a

good tax system. Discuss Adam Smith's and modern canons of taxation.
The canons of taxation are fundamental principles that serve as the cornerstone for a
fair and efficient tax system. These canons were first introduced by Adam Smith in his
seminal work, "The Wealth of Nations," where he outlined four essential criteria:
equity, certainty, convenience, and economy. Equity ensures that taxpayers contribute
to the government's revenue in proportion to their ability to pay, aligning with the
concept of progressive taxation. Certainty implies that tax obligations should be clear
and predictable, allowing taxpayers to plan their finances accordingly.
Convenience suggests that the method and timing of tax collection should be
straightforward and not burdensome to the taxpayer. Lastly, economy emphasizes
minimizing the cost of tax collection for both the government and the taxpayer.
Modern canons of taxation have expanded upon Smith's original four to include
additional criteria such as elasticity, which allows the tax system to respond to economic
changes; productivity, ensuring that taxes contribute significantly to government
revenue; simplicity, which reduces complexity and increases compliance; and diversity,
which spreads the tax burden across various sources to mitigate risks and ensure
stability.
A good tax system embodies these canons through its design and implementation. It
should be equitable, distributing the tax burden fairly across different income groups. It
should ensure fiscal adequacy, generating sufficient revenue to meet government
expenditure without resorting to excessive borrowing. Transparency is another
hallmark of a sound tax system, providing clarity on how tax revenues are collected
and spent. An effective tax system also exhibits administrative efficiency, minimizing
the costs and complexities associated with tax collection and compliance.
In the context of Indian tax laws, provisions such as Section 14 of the Income-tax Act,
1961, which categorizes income under various heads for taxation, reflect the canon of
equity by taxing different sources of income according to their nature. Case laws, such
as the landmark judgment in the Vodafone International Holdings B.V. case,
demonstrate the application of these canons in judicial decisions, particularly the
principles of certainty and equity. Legal maxims like 'actus curiae neminem gravabit,'
which means that no party should suffer due to the act of the court, reinforce the canon
of certainty in the context of tax litigation.
In summary, the canons of taxation provide a framework for evaluating and designing
tax systems that are just, effective, and conducive to economic growth. The Indian tax
system, with its blend of provisions, case laws, and adherence to legal maxims, strives
to embody these canons, though challenges in implementation and compliance persist.
As economies evolve, so too must the canons of taxation,
adapting to new financial landscapes while upholding the principles of fairness and
efficiency that underpin a robust fiscal policy.
 Explain the concept of 'notional income' chargeable under the head "Income from
House Property".What are the conditions of chargeability for income tax on 'house
property'? Discuss with the help of suitable illustrations and with reference to the
relevant provisions of the Income Tax Act. How is tax on house property computed?
In the realm of Indian tax laws, the concept of 'notional income' under the head
"Income from House Property" is a critical aspect of taxation that affects numerous
taxpayers. Notional income refers to the income that is not actually realized but is
assumed to be earned and, therefore, is taxable. Under the Income Tax Act, 1961,
specifically Section 22, the annual value of property, which includes buildings or
lands appurtenant thereto, is chargeable to tax under the head "Income from House
Property". The conditions for chargeability are threefold: the taxpayer must be the
legal owner of the property, the property should not be used for the taxpayer's
business or professional purposes, and the property may be let out or deemed to be let
out.
The computation of tax on house property begins with the determination of the Gross
Annual Value (GAV) of the property. As per Section 23, the GAV is the higher of the
expected rent or the actual rent received/receivable, minus the loss due to vacancy.
From the GAV, municipal taxes paid are deducted to arrive at the Net Annual Value
(NAV). Subsequently, a standard deduction of 30% of the NAV is allowed under
Section 24(a), along with the deduction of interest on borrowed capital under Section
24(b). The result is the income from house property, which is then subject to tax as per
the applicable slab rates.
Illustratively, if a property has a GAV of INR 500,000, municipal taxes of INR 50,000,
and interest on housing loan of INR 150,000, the computation would be as follows:
NAV is INR 450,000 (GAV minus municipal taxes), standard deduction is INR
135,000 (30% of NAV), and after deducting the interest on borrowed capital, the
income from house property would be INR 165,000, which is the amount chargeable to
tax.
Case laws have further elucidated the interpretation of these provisions. In the
landmark case of CIT v. Podar Cement (P) Ltd., the Supreme Court held that the term
'owner' is someone who is entitled to receive income from the property in their own
right, emphasizing the intention of the Act to tax income rather than mere legal title.
This case underscores the principle that tax liability arises from the ability to earn
income from a property, regardless of whether the individual is registered as the legal
owner.
Tax maxims such as 'No income, no tax' and 'Ability to pay' are also relevant in the
context of house property income. These maxims imply that tax is levied on actual or
notional income that the taxpayer has the ability to pay. In the case of house property, the
notional income is assumed based on the potential of the property to generate income,
reflecting the taxpayer's ability to pay tax on such income.
In conclusion, the taxation of notional income under "Income from House Property" is
a well-defined process in the Indian tax regime, guided by specific sections of the
Income Tax Act, judicial precedents, and underlying tax principles. It is designed to
equitably tax income that is notional yet represents the potential earning capacity of a
property owner. Taxpayers must navigate these provisions with a clear understanding to
ensure compliance and optimize their tax liability.
 Define 'sale' and explain its essentials. Distinguish between sale and agreement for
sale. When is a sale or purchase of goodssaid to take place in the course of inter-State
trade or commerce? Which transactions are not Inter-State sales? What is sale in the
course of import or export ?
In the realm of Indian tax laws, the concept of 'sale' is pivotal to the understanding
and application of various provisions, guidelines, and case laws. A 'sale' under
Section 4(1) of the Sale of Goods Act, 1930, is a contract whereby the seller
transfers or agrees to transfer the property in goods to the buyer for a price. This
transaction is characterized by the transfer of ownership and is distinct from an
agreement to sell, which is essentially a promise to transfer property in goods at a
future date or upon the fulfillment of certain conditions.
The essentials of a sale include at least two parties, the buyer and the seller; the subject
matter, which must be goods; the price, which should be money consideration; and the
transfer of property, which signifies the transfer of ownership from the seller to the
buyer. The contract must also satisfy the general principles of a valid contract under the
Indian Contract Act, 1872, such as mutual consent, lawful consideration, and
competent parties.
Distinguishing between a sale and an agreement for sale is crucial, particularly in terms
of risk and title transfer. In a sale, the risk and title pass to the buyer immediately,
whereas, in an agreement for sale, the seller retains the title until the conditions are met,
and the risk does not pass until the sale is concluded.
A sale or purchase of goods is said to take place in the course of inter-State trade or
commerce under the Central Sales Tax Act, 1956, when it involves the movement of
goods from one state to another. This is governed by Article 286 of the Constitution of
India, which restricts states from imposing tax on such sales to ensure the free flow of
trade across state boundaries.
Transactions that are not considered Inter-State sales include those where goods are
delivered within the same state, sales to or by a Special Economic Zone (SEZ)
developer or SEZ unit, and sales where goods are imported into India until they cross
the customs frontiers. These transactions are instead subject to intra-state sales tax or
GST, as applicable.
Sale in the course of import or export is delineated under Section 5 of the Central Sales
Tax Act, 1956. A sale is considered to be in the course of import when it either
occasions the import or is effected by a transfer of documents of title to the goods
before they have crossed the customs frontiers of India. Similarly, a sale is in the
course of export when it either occasions the export or is effected by a transfer of
documents after the goods have crossed the customs frontiers.
Case laws such as State of Travancore-Cochin v. Shanmugha Vilas Cashew Nut

Factory and others have played a significant role in interpreting these provisions. The
maxim 'lex non cogit ad impossibilia', which means 'the law does not compel a man to
do that which he cannot possibly perform', is often applied in the context of tax laws to
ensure that the laws are implemented within the realm of practicality and
reasonableness.
In conclusion, the intricate interplay between the provisions of the Sale of Goods Act,
the Central Sales Tax Act, constitutional articles, case laws, and legal maxims forms
the backbone of the legal framework governing sales transactions in India. These
elements collectively ensure that sales transactions are conducted fairly and within the
ambit of the law, promoting a stable and predictable commercial environment.
 Discuss different types of returns under the Kerala Value AddedTax Act.
The Kerala Value Added Tax Act, 2003, is a comprehensive statute that consolidates the
laws pertaining to the levy of tax on the sale or purchase of goods in the state of
Kerala. Under this Act, different types of returns are mandated for dealers, which serve
as a formal declaration of the tax due to the state government for a specified period.
These returns are crucial for maintaining transparency and compliance with the tax
regulations.
One of the primary returns under the Kerala VAT Act is the monthly return, which
must be filed by all registered dealers. This return includes details of sales and
purchases, input tax credit claimed, and the output tax liability. The Act stipulates that
dealers with a certain threshold of turnover must file their returns electronically,
promoting efficiency and accuracy in tax administration.
Another significant return is the annual return, which provides a consolidated

overview of the dealer's transactions throughout the financial year. It is a more
detailed document compared to monthly returns and serves as a critical tool for the
tax authorities to assess the annual tax liability of a dealer.
Dealers engaged in specific businesses may also be required to file other returns,
such as the works contract return, which pertains to transactions involving contracts
for construction, installation, or commissioning projects. This return captures the
value addition at each stage of the contract, ensuring that the tax is levied on the
actual value added to the goods and services provided.
The Kerala VAT Act also mandates the filing of a return in the case of cessation of
business, where a dealer must furnish a final return detailing all the taxable transactions
up until the date of cessation. This ensures that all tax dues are settled before the business
is formally closed.
In addition to these returns, the Act provides for the filing of revised returns, allowing
dealers to rectify any errors or omissions in previously filed returns. This provision
ensures that dealers can maintain accurate records and comply with the tax laws without
being penalized for inadvertent mistakes.
The process of filing returns under the Kerala VAT Act is facilitated by the state's
commercial taxes department, which has implemented an e-filing system. This
system allows dealers to file their returns online, making the process more
convenient and reducing the likelihood of errors associated with manual filing.
The Kerala VAT Act, through its provisions for various returns, embodies the
principles of a robust tax system that is both taxpayer-friendly and effective in
revenue collection. It reflects the state's commitment to leveraging technology to
streamline tax administration and enhance compliance.
In conclusion, the different types of returns under the Kerala VAT Act play a pivotal
role in the state's tax framework, ensuring that the tax liabilities are accurately reported
and timely paid. They form the backbone of the tax assessment and collection process,
enabling the state to mobilize resources for its development initiatives while providing
a fair and transparent tax environment for businesses.
Compliance with these return filing requirements is not only a legal obligation for dealers
but also a critical aspect of their contribution to the state's economy.
 Explain the concept of Dealer and Registration of Dealer underCentral Sales Tax Act.
The Central Sales Tax Act, 1956, is a complex piece of legislation that governs the
levy, collection, and distribution of taxes on sales of goods in the course of inter-State
trade or commerce. Under this Act, the concept of a 'dealer' is pivotal, as it determines
who is liable to pay the central sales tax. According to Section 2(b) of the Act, a 'dealer'
is defined as any person who carries on the business of buying, selling, supplying, or
distributing goods, directly or indirectly, for cash, deferred payment, commission,
remuneration, or other valuable consideration. This broad definition encapsulates
various business entities, including local authorities, companies, cooperatives,
societies, clubs, firms, Hindu undivided families, and even auctioneers who conduct
business on behalf of principals.
The registration of dealers is a critical aspect of the Central Sales Tax Act, as it ensures
compliance with tax obligations and facilitates the monitoring of interstate trade.
Section 7 of the Act outlines the procedure for the registration of dealers, mandating
that every dealer liable to pay tax under the Act must apply for registration to the
prescribed authority in the appropriate State. The application must contain all the
particulars as prescribed and be made in the prescribed form, known as Form A. The
significance of registration is further underscored by Section 6(1-A), which stipulates
that a dealer is liable to pay tax on sales effected in the course of
inter-State trade or commerce, regardless of whether such a sale would have been taxable
under the state's sales tax law if it had occurred within the state.
Case laws play a crucial role in interpreting and applying the provisions of the Central
Sales Tax Act. For instance, in the case of State of Tamil Nadu vs. M.K.
Kandaswami, the Supreme Court held that the term 'in the course of' regarding
inter-State trade or commerce must be interpreted to mean 'during the process of,'
which includes the entire process involved in the movement of goods from one State to
another. This interpretation has significant implications for determining the taxability
of transactions under the Act.
Maxims are often employed to elucidate the principles underlying tax laws. One such
maxim is 'lex non cogit ad impossibilia,' which means 'the law does not compel the
doing of impossibilities.' This maxim is relevant in the context of tax compliance,
where the law must be reasonable and not impose obligations that are impossible for
the taxpayer to fulfill. Another relevant maxim is 'impotentia excusat legem,' which
translates to 'impossibility excuses the law,' providing relief to taxpayers who cannot
comply with legal requirements due to circumstances beyond their control.
In conclusion, the concepts of 'dealer' and 'registration of dealer' under the Central
Sales Tax Act, 1956, are foundational to the administration of central sales tax in India.
The Act's provisions, bolstered by judicial interpretations and legal maxims, create a
framework that balances the need for tax collection with the practicalities of interstate
commerce. It is through the meticulous application of these provisions, case laws, and
maxims that the Act achieves its objective of regulating and taxing the sale of goods
across state boundaries.
 Enumerate the concept of Net Wealth under the Wealth Tax Act.
The concept of Net Wealth under the Wealth Tax Act, 1957, is a fundamental aspect of the
Indian taxation system that was designed to levy tax on the net wealth of an individual, Hindu
Undivided Family (HUF), or company. The net wealth is calculated by summing up the market
value of all assets owned by the taxpayer on the valuation date, typically the 31st of March
each year, and then subtracting the aggregate value of debts owed by the taxpayer, which are
related to the assets.
The Wealth Tax Act, 1957, under Section 2(m) defines 'net wealth' as the amount by which the
aggregate value computed in accordance with the provisions of the Act of all assets,
excluding those assets which are exempt from tax under Section 5, exceeds the aggregate
value of all debts owed by the assessee on the valuation date, which have been incurred in
relation to the said assets.
A landmark case that elucidates the interpretation of net wealth is the decision of the
Supreme Court in 'CIT v. B.C. Srinivasa Setty' where the court held that the goodwill
generated in a newly commenced business cannot be assessed as a capital asset since it does
not fall within the expression 'asset' under the Wealth Tax Act, as it is not an asset of an
ascertainable value.
One of the legal maxims relevant to the concept of net wealth is 'Nemo dat quod non habet',
which translates to 'no one gives what he doesn't have'. This maxim is pertinent to the Wealth
Tax Act as it implies that wealth tax cannot be levied on assets that are not legally owned by
the taxpayer or on wealth that is not in existence.
The Wealth Tax Act was repealed in 2015, and the concept of net wealth has since beenreplaced
by other measures such as the surcharge on income tax for the super-rich.
However, the principles laid down in the Act and the interpretations by the judiciary continue
to influence the understanding and application of tax laws in India.
In conclusion, the concept of net wealth under the Wealth Tax Act was a significant feature
of the Indian tax landscape, aimed at taxing the wealth of the affluent to achieve a more
equitable distribution of wealth. It was governed by specific provisions, interpreted through
case laws, and guided by legal maxims, reflecting the dynamic interplay between law and
society. Although the Act is now defunct, its legacy endures in the ongoing discourse on
wealth taxation and its role in economic development.

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LAW OF TAXATION

 Input Tax Credit (ITC) ...........................................................................................30

 Degressive and Proportional methods of Taxation .................................................30

 Direct and Indirect Tax ...........................................................................................30

 Agriculture Income ................................................................................................31

 Turn Over ...............................................................................................................31

 S is the Manger of an agricultural farm. He receives a monthly salary of Rs.

 A Central Government employee is provided with rent free unfurnished

 Income from dairy farming ....................................................................................45

 Dividend paid by a company out of its agricultural income ...................................45

 Rent received for agricultural land .........................................................................45

 Profits received by a partner from a Firm engaged in agricultural activities ..........45

agricultural income and tax levied................................................................................50

 Mr. X, a US citizen, after about 30 years of stay in India, returns to America on

assessment of Tax .........................................................................................................62

 . Write short notes on any three ..............................................................................69

 Liability to tax on interstate sales ...........................................................................69

 Value Added Tax, its incidence and levy ...............................................................70

 Write short notes on ...............................................................................................75

 What do you understand by 'canons of taxation'?. Also explain the characteristics of

 Constitutional basis of taxation and different kinds of tax.

 Relation between Income Tax Act and Finance Act.

 Advance payment of tax.

 Central Sales Tax Act.

 Taxation of Agricultural Income.

 Incidence of Value Added Tax.

 State the Canons of taxation.

 How is the Income tax Act related to the Finance Act?

 Explain advance payment of tax.

 Explain the meaning and importance of Service Tax.

 A Central Government employee is provided with rent free unfurnished accommodation.

 Income Tax Act.

 Basis of charge for Income Tax.

 Write short notes on any three:

 Liability to tax on interstate sales.

 Value Added Tax, its incidence and levy.

 Sovereign right to taxation.

 Taxation laws and Fundamental Rights.

 Importance of Annual Finance Act in the law of income taxation.

 Preferential tax treatment of Capital Gains.

 Income from dairy farming.

 Dividend paid by a company out of its agricultural income.

 Rent received for agricultural land.

 Profits received by a partner from a Firm engaged in agricultural activities.

 Discuss the liability for payment of tax by advance payment of tax.

 Discuss the liability to tax on interstate sales.

 Write short notes on:

Kerala value added tax act: 2003-incidence and levy of tax.

 'Application of income' and 'diversion of income."

 Best judgement Assessment.

 Set-off and carry forward of business losses.

 'Cascading effect' in indirect taxes.

 Degressive and Proportional methods of Taxation.

 Direct and Indirect Tax.

 Constitutional basis of taxation and different kinds of tax.

The constitutional basis of taxation in India is enshrined in Article 265 of the

 Relation between Income Tax Act and Finance Act.

 Advance payment of tax.

 Central Sales Tax Act.

 Decision/Advice: Based on the constitutional provisions and the principles of

 Decision/Advice: Based on the facts, the foreign national qualifies as

 Legal Reasoning: The reasoning hinges on the interpretation of Section 6,

 Facts of the Case: S is the Manager of an agricultural farm and receives a

 Decision/Advice: Based on the provisions of the Income Tax Act, 1961,

 Legal Reasoning: The definition of 'agricultural income' under Section 2(1A)

 Legal Reasoning: The legal reasoning hinges on the interpretation of 'transfer'

 Decision/Advice: Based on the information provided, the foreign national is

 Legal Reasoning: As per Section 6 of the Income Tax Act, 1961, an

 Decision/Advice: The taxable value of the accommodation should be

 Related Case Law: In the case of 'Commissioner of Income Tax v. B.C.

 Decision/Advice: Based on the provisions of the Wealth Tax Act, 1957,

 Legal Reasoning: The inclusion is justified under the clubbing provisions of

 Facts of the Case:

 Issues of the Case:

 Related Case Law:

 Facts of the Case:

 Issues of the Case:

 Related Case Law:

 Decision/Advice: Based on the provisions of the Income Tax Act, the

 Legal Reasoning: The legal reasoning hinges on the interpretation of Section

 Facts of the Case: The assessee, a member of a Hindu Undivided Family

 Legal Reasoning: The legal reasoning hinges on the interpretation of the

 Income from dairy farming is generally not considered agricultural income

 Dividend paid by a company out of its agricultural income is not considered

 Profits received by a partner from a Firm engaged in agricultural activities can

 Facts of the Case:

 Issues of the Case:

 Related Case Law:

 Facts of the Case:

 Issues of the Case:

 Related Case Law:

 Facts of the Case: