Tax Planning Class TestBatch PGDM Semester IIIName : Roll No.

Q1. X furnishes the following particulars for the previous year relevant to the assessment year 2015-16

Profit and loss account for the year ending 31.03.15Salary to staff 55,000 Gross profit 2,80,000

Bonus 7,000 Bad debt recovered (earlier allowed as deduction)

20,000

Entertainment expenses

23,000

General expenses 41,000

Bad debts 4,500

Reserve for bad debts 10,000

Advertisement expenses

27,000

Interest on X's Capital A/c

3,000

Expenditure on acquisition of patent's rights

28,000

Telephone expenses 22,000

Depreciation 4,000

Provision for income tax

25,500

Net Profit 50,000

Total 3,00,000 Total 3,00,000Other information :1)Provision for income tax is excessive to the extent of Rs.3,000.2)Salary to staff includes salary paid to relative which is unreasonable to the extent of Rs.3,100.3)Depreciation on tangible assets according to the income tax provisions comes to Rs.9,500.4)Patents were acquired on 4.11.2014.5)Bonus to employees according to the Payment of Bonus Act, 1965 comes to Rs.4,2006)General expenses include payment of Rs.5,000 to an approved educational istitute for the purposeof carrying on scientific research in natural science. The research, however is not related to businessof the assessee.7)Advertisement expenses included cost of 20 gift packs of Rs.100 each presented to leading esteemed customers on the occasion of Diwali.8) During the previous year 2014-15 the following payments were made and the same have not been debited to profit and loss account of 2014-15(a) Rs.3,000 paid on 10.07.2014 on account of outstanding customs duty of the previous year 2013-14.(b) Rs.5,000 paid on 15.12.2014 on account of outstanding sales tax of the previous year 2013-14

Compute the Profits and Gains from Business and Profession for the A.Y.2015-16