Q.4 ICAI Taxation question paper solution of nov 2020 by CS K K Agrawal

Question 4 (a) Mr. Thomas, a non-resident and citizen of Japan entered into following transactions during the previous year ended 31.03.2020. Examine the tax implications in the hands of Mr. Thomas for the Assessment Year 2020-21 as per Income Tax Act, 1961. (Give brief reasoning) (1) Interest received from Mr. Marshal, a non-resident outside India (The borrowed fund is used by Mr. Marshal for investing in Indian company’s debt fund for earning interest). S 9(1)(v)-Income accrues in India (2) Received ₹ 10 lakhs in Japan from a business enterprise in India for granting license for computer software (not hardware specific). Proviso to S 9. Income do not accrue in India (3) He is also engaged in the business of running news agency and earned income of ₹ 10 lakhs from collection of news and views in India for transmission outside India. Explanation to S 9. Income do not accrue in India (4) He entered into an agreement with SKK & Co., a partnership firm for transfer of technical documents and design and for providing services relating thereto, to set up a Denim Jeans manufacturing plant, in Surat (India). He charged ₹ 10 lakhs for these services from SKK & Co. S 9(1)(vii). Income accrues in India (b) Mr. Govind purchased 600 shares COA ₹ 900 of “Y” limited at ₹ 130 per share on 26.02.1979. “Y limited issued him, 1,200 bonus shares COA ₹ 900 on 20.02.1984. The fair market value of these share at exchange as on 1.4.2001 was ₹ 900 per share and ₹ 2,000 per share as on 31.01.2018. On 31.01.2019 he converted 1000 shares as his stock in trade. The shares was traded at Mumbai Stock Exchange on that date at a high of ₹ 2,200 per share and closed for the day at ₹ 2,100 per share. Average price ₹ 2,050. On 07.07.2019 Mr. Govind sold all 1800 shares @ ₹ 2,400 per share at Mumbai Stock Exchange and securities transaction tax was paid, Compute total income of Mr. Govind for the assessment year 2020-21.