Question 1

Section A (1 Mark)

The profits of a controlled foreign company which are apportioned to a UK company are charged to corporation tax at the UK company's average rate of tax.

Options :

A : TRUE

B : FALSE

Answer: A

Question 2

Section B (2 Mark)

A bank is concerned about excess volatility in its cash flows from some recent business loans it has made. Many of these loans have a fixed rate of interest and the bank's economics department has forecast a sharp increase in interest rates. The bank wants more stable cash flows. Which type of credit derivative contract would you most recommend for this situation?

Options :

A : Credit linked note

B : Credit option

C : Credit risk option

D : Total return swap

Answer: D

Question 3

Section C (4 Mark)

Read the senario and answer to the question.

Saxena wants to know his income tax liability for FY 2007--08 without taking into consideration any interest income from NSC. Calculate the same including surcharge and Educational Cess.

Options :

A : Rs. 1,76,130

B : Rs. 1,23,700

C : Rs. 1,77,344

D : Rs. 2,32,680

Answer: A

Question 4

Section B (2 Mark)

___________, the net profit margin realized by the enterprise from an international transaction entered into with an associated enterprise is computed in relation to cost incurred or sales affected or assets employed or to be employed in the enterprise or having regard to any relevant base.

Options :

A : Transactional Net Margin Method

B : Cost-Plus Method

C : Profit Split Method

D : All of the Above

Answer: A

Question 5

Section B (2 Mark)

Babu Lal sold his residential house on 28-06-2010 and made a long term capital gain of Rs. 372229. He purchased a new house on 22-10-2010 for Rs. 360000 which is again sold for Rs.620000 on 16-6-2011. He purchased another house on 20-12-2011 for Rs.786000. Calculate the exemption available u/s 54 for the assessment year 2012-13. [CII-12-13: 852,11-12: 785,10-11:711]

Options :

A : Rs.786000

B : Rs.360000

C : Rs.372229

D : Nil

Answer: D

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