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Taxation Laws
Previous Year Question Paper with Solution
BLS LLB 5 Years · Sem 8
May 2026 - 60/40 Examination
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BLS LLB 5 Years Sem 8 Taxation Laws May 2026 - 60/40 Question Paper with Solutions
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First published on munotes.in on 24 October 2026.
Published by munotes.in, Mumbai.
Model answers written and edited by the munotes.in editorial desk.
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The University does not publish an official answer key for this paper. The answers in this volume are model answers, written to show how a full-mark answer is built. They are a study aid, not an authority on what an examiner marked.
The question paper reproduced here is the paper as set by the University of Mumbai at the May 2026 - 60/40 examination.
The law in these answers is stated as at October 2026. The Income-tax Act, 2025 replaced the Act of 1961 from 1 April 2026; each answer gives the 1961 section the paper asks for, with the 2025 section beside it. No wealth-tax is charged for the assessment year 2016-17 or any later year (section 3(2) of the Wealth-tax Act, as amended in 2015). Since 1 July 2017 the Maharashtra VAT Act covers only liquor and a few petroleum products, and the Central Sales Tax Act six goods; other goods are taxed under the GST Acts of 2017. The central sales tax rate on sales against Form C has been 2 per cent since 1 June 2008, though section 8(1) still prints 3 per cent. The standard deduction from salary, withdrawn from 2005-06 to 2018-19, is now Rs 50,000, or Rs 75,000 under the new regime.
Contents
The questions below are the paper as the University of Mumbai set it at the May 2026 - 60/40 examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the May 2026 - 60/40 examination, reproduced as the University of Mumbai set them, in the order it set them. Nothing has been reworded, added or left out. Only the answers are ours. See the original question paper.
Duration 2 hours · Total marks 60 · 22 questions answered
Instructions printed on the paper
- N.B: 1. Ensure that you have received the Correct Question Paper. 2. Do not reveal your identity anywhere on the Answer Sheet. 3. Provide Examples/Illustrations/Citations wherever required/needed.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q.1
Q.1: Answer any six of the following
12 Marks - 2 marks each
(a)Define 'Capital Expenditure'.[2]
Answer
Capital expenditure is money spent to acquire, or bring into existence, an asset or an advantage of enduring benefit to a business. Revenue expenditure is money spent in running the business and earning its profits from day to day.
The Income-tax Act does not define the term. It uses it as a limit on deductions. Section 37(1) of the Income-tax Act, 1961 allows business expenditure laid out wholly and exclusively for the business, "not being in the nature of capital expenditure or personal expenses". Section 34(1) of the Income-tax Act, 2025 says the same. So the label decides whether a cost comes off the year's profit at once.
The tests the courts apply.
- Enduring benefit. In Assam Bengal Cement Co. Ltd. v. Commissioner of Income-tax, AIR 1955 SC 89, a cement company paid yearly "protection fees" so that its lessor would not lease nearby limestone land to rivals. The Supreme Court held the payments capital. They bought an advantage lasting the whole twenty-year lease, and paying in instalments did not change that.
- The capital field. In Empire Jute Co. Ltd. v. Commissioner of Income Tax, AIR 1980 SC 1946, a jute mill paid other mills for extra "loom hours". This was revenue expenditure. The advantage only made its trading more efficient and left its fixed capital untouched, even though it lasted.
Examples. Buying land, a building or a machine is capital expenditure. Wages, rent, repairs and raw materials are revenue expenditure.
Effect. Capital expenditure is not deducted in computing business income. Where it buys a depreciable asset, its cost is recovered over the years as depreciation under section 32 (section 33 of the 2025 Act).
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