1. Profits and Gains of Business or Profession
1. From the following Profit and Loss a/c of M/s. X Ltd. determine the taxable income
for the assessment year 2011-2012.
General expenses 4,200 Gross profit 1,90,700
Salary to staff 60,000 Interest on bank deposit 4,000
Fire insurance 2,000 Short-term capital gains 16,700
Sales tax 5,000 Dividends received from a
foreign company
9,800
Advance income tax paid 1,000
Reserve for future losses 20,000
Rent and Repairs of building 3,000
Loss of cash by an employee
6,050
through embezzlement
Legal expenses 21,500
Net profit 98,450
2,21,200 2,21,200
 General Expenses include Rs.1,050 paid as compensation to an old employee whose
services were terminated in the interest of business and Rs.600 by way of help to a
poor student.
 Salary to staff includes payment of Rs.4,500 out of India on which tax has not been
deducted at source.
 Legal expenses include payment of Rs.8,000 to an advocate for giving advice on
income tax matters.
 During the previous year 2010-2011, the company purchases a plot of land for
Rs.90,000 in order to construct a laboratory building for research. Construction of
the building has not yet commenced. Cost of construction is expected to be
Rs.1,10,000.
2. X furnishes the following information for the assessment year 2011-2012.
Profit and Loss Account for the year ending March 31, 2011.
Rs. Rs.
Office expenses 7,800 Gross profit 1,25,700
Salary to staff 21,600 Interest on Govt. securities
(Gross)
4,000
Expenditure on occasion of Diwali 8,200 Interest on post office savings
bank
2,500
Cost of extension to building 11,200 Bad debts recovered (earlier
allowed as deduction)
300

2. Depreciation 3,700
Entertainment expenses 12,506
Contribution to:
Unapproved Gratuity Fund 6,000 Sundry receipts 2,000
Unrecognized provident fund 4,500
Reserve for bad debts 700
Net profit 58,294
1,34,500 1,34,500
 Office expenses include a sum of Rs.2,500 paid in cash.
 Depreciation according to income tax provisions works out to Rs.2,400.
 X had gone on a business trip to Bombay. Expenditure incurred on traveling was
Rs.1,900 per day for 6 days. This has not been recorded in the books.
 Commission of Rs.4,000 paid for securing a business order has not been recorded in
the books.
Find out the taxable income for the assessment year 2011-2012
3. X furnishes the following particulars for the assessment year 2011-2012.
P & L a/c for the year ending March 31, 2011
Rs. Rs.
Salary to staff 12,750 Gross profit 1,57,000
Advertisement 8,000 Rent of house property received 24,900
Wealth tax 2,500 Short-term capital gains 7,000
Income tax penalty 1,750 Bad debts recovered (disallowed
earlier)
5,600
Travelling expenses 7,100 Gift received 4,000
Bonus to staff 8,400 Winning from lottery 6,000

3. Contribution to Unrecognized
Provident fund
6,200
Car expenses 7,500
Depreciation 12,000
Repairs of house property 6,000
Municipal taxes of house
property
4,500
Interest on capital borrowed
for construction of house
property
8,000
Net Profit 1,19,800
2,04,500 2,04,500
a. Salary includes payment of Rs.1,700 to a relative which is unreasonable.
b. Advertisement includes cost of 5 articles being Rs.1,500 each.
c. Travelling expenses includes an expenditure of Rs.1,750 per day for 4 days. (Being a
business trip to Delhi.)
d. Bonus is outstanding on March 31, 2011. Balance 1/3 is paid on December 1, 2011.
(Due date of furnishing return of income – July 31, 2011.)
e. ¼ of Car expenses relate to personal use.
f. Depreciation as per income tax provisions is Rs.9,500.
Determine the taxable income of X for assessment year 2011-2012.

4. 4. X an advocate who maintains books of account on cash basis furnishes the following
particulars of his income for the previous year ending March 31, 2011.
Receipts and payments a/c for year ending March 31, 2011
Rs. Rs.
Balance b/d 2,500 Purchase of computers 8,000
Fees from clients: Car expenses 4,900
2009-2010 10,000 Office expenses 8,600
2010-2011 38,000 Interest on Loan 1,200
2011-2012 2,500 Income tax penalty 2,500
Presents from clients 6,000 Salary to staff 14,400
Loan from client 7,500 Contribution to public provident
fund
1,500
Balance c/d 25,400
66,500 66,500
1. 35% of car expenses are attributable towards use of car for personal purposes.
Depreciation @ 15%.
2. Written down value of the car on 1/4/2010 is Rs.12,500.
3. Fees due but outstanding – Rs.1,600.
4. Income of X from other sources Rs.20,000.
5. He purchased a typewriter for Rs.20,000 on April 10, 2010. Rate of depreciation 15%.
Determine the taxable income of X for the assessment year 2011-2012.