Mumbai University Solved Question Papers
Taxation Laws
Previous Year Question Paper with Solution
LLB 3 years · Sem 4
May 2025 - 60/40 Examination
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LLB 3 years Sem 4 Taxation Laws May 2025 - 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 2025 - 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 The standard deduction from salary, withdrawn from 2005-06 to 2018-19, is now Rs 50,000, or Rs 75,000 under the new regime.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 2025 - 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 2025 - 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)What is 'Balancing Charge' under the Income Tax Act?[2]
Answer
A balancing charge is the amount taxed as business income when a depreciated asset is sold for more than its written down value. It takes back depreciation that, in hindsight, was allowed in excess.
The provision, section 41(2) of the Income-tax Act, 1961 (section 38(1)(b) of the Income-tax Act, 2025). It applies to a building, machinery, plant or furniture:
- owned by the assessee;
- on which depreciation is claimed under section 32(1)(i), the straight-line method allowed to power undertakings; and
- used for the business.
Suppose such an asset is sold, discarded, demolished or destroyed. If the money payable, with any scrap value, exceeds the written down value, the excess is taxed. But only so much of it as does not exceed actual cost minus written down value, that is, the depreciation allowed. It is income of the year in which the money becomes due, even if the business no longer exists.
Above actual cost. Any surplus over actual cost is not a balancing charge. It is a capital gain under section 50A.
Example. A power company bought a turbine for Rs 10,00,000. Its written down value is Rs 4,00,000, and it is sold for Rs 12,00,000. The balancing charge is Rs 6,00,000 (cost minus written down value). The remaining Rs 2,00,000 is a capital gain.
Block assets are different. Most assets are depreciated as a block, by the written down value method. Their sale price simply reduces the block. If the price exceeds the whole block, the excess is a short-term capital gain under section 50, not a balancing charge.
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