(a) Mr. B (49 years), a resident individual, furnishes the following particulars pertaining to the year ending 31st March…

(a) Taxable income of Mr. B for AY 2021–22

Assumptions: a resident individual aged 49 under the old regime; the plot is a capital asset; no expenses are claimed on rent; the game-show winnings are net of 30% TDS.

• Rent from the vacant plot, ₹4,00,000: vacant land is not a building, so it is not house property; it is taxed under income from other sources, ₹4,00,000.
• ₹3,00,000 from X (P) Ltd.: arrears of rent received, not taxed earlier, are charged as house property income in the year of receipt, even though the house was sold earlier (Section 25A). Less 30%: ₹2,10,000.
• Gift from friend, ₹1,20,000: not from a relative and above ₹50,000, so wholly taxable under Section 56(2)(x): ₹1,20,000.
• Gift from mother's father, ₹1,60,000: a lineal ascendant is a relative, so exempt.
• Game-show winnings: gross = 1,40,000 × 100/70 = ₹2,00,000, taxed at a flat 30% under Section 115BB, with no deduction; TDS of ₹60,000 is credited (Section 194B).
• Forfeited advance, ₹6,20,000: taxable under Section 56(2)(ix), as the negotiation for transfer of the plot failed: ₹6,20,000.
• Keyman policy, ₹4,40,000: Section 10(10D) excludes Keyman policies, so it is taxable under Section 56(2)(iv): ₹4,40,000.
• Agricultural income in Malaysia, ₹3,60,000: Section 10(1) exempts only income from land in India, so it is taxable, here under other sources: ₹3,60,000.
• PPF interest, ₹17,800: exempt under Section 10(11).

Gross total income = 2,10,000 + 4,00,000 + 1,20,000 + 2,00,000 + 6,20,000 + 4,40,000 + 3,60,000 = ₹23,50,000.

Deductions: Section 80C for PPF in the minor daughter's name, ₹1,50,000 (a child's account qualifies up to the limit). The cash donation of ₹24,000 earns no Section 80G deduction, because cash above ₹2,000 does not qualify.

Taxable income = ₹22,00,000, of which ₹2,00,000 (winnings) is taxed at 30%.

(b) Right share and its advantages

A right share is a new equity share offered by a company to its existing equity shareholders in proportion to their holding, usually below the market price. Under Section 62(1)(a) of the Companies Act, 2013, the offer is open for 15 to 30 days, and a shareholder may accept it, renounce it in favour of another person, or let it lapse; listed companies also follow the SEBI (ICDR) Regulations.

Advantages to the company:

• It raises equity quickly and cheaply, with no prospectus or underwriting, and so costs less than a public issue.
• It keeps control with existing shareholders.
• It lowers the debt-equity ratio and raises borrowing capacity.
• It needs only a small marketing effort, as a loyal shareholder base is already there.

Advantages to shareholders:

• They keep their proportionate ownership, voting power and share in reserves.
• They can buy at a discount to market price.
• They can renounce the right and sell it, which has a market value.
• There is no tax on receiving the right; tax arises only on sale or renunciation.

(c) Process accounts

Process A (units, ₹). Cost = materials 10,000 × 6 = 60,000 + labour 10,000 + overheads 6,000 = 76,000. Normal loss is 5% of 10,000 = 500 units with nil value, so normal output is 9,500 and cost per unit is 76,000/9,500 = ₹8. Actual output of 9,300 gives an abnormal loss of 200 units, valued at 200 × 8 = ₹1,600.

• Debit side: materials 10,000 units 60,000; labour 10,000; overheads 6,000. Total 76,000.
• Credit side: normal loss 500 units nil; abnormal loss 200 units 1,600; transferred to Process B 9,300 units 74,400. Total 76,000.

Process B. Cost = 74,400 + 6,140 + 6,000 + 4,600 = 91,140. Normal loss is 2% of 9,300 = 186 units, so normal output is 9,114 and cost per unit is 91,140/9,114 = ₹10. Actual output of 9,200 gives an abnormal gain of 86 units, valued at ₹860.

• Debit side: from Process A 9,300 units 74,400; materials 6,140; labour 6,000; overheads 4,600; abnormal gain 86 units 860. Total 92,000.
• Credit side: normal loss 186 units nil; finished goods 9,200 units 92,000. Total 92,000.

Abnormal Loss A/c: debit Process A ₹1,600 and credit costing profit and loss ₹1,600 (scrap nil). Abnormal Gain A/c: debit costing profit and loss ₹860 and credit Process B ₹860.