Mrs. Deepika, wife of Mr. Santosh, started a business of trading in beauty products on 15.7.2023. She invested 5 lakhs in the business on 15.7.2023…

CA Intermediate · Taxation · MTP · May 2024
Mrs. Deepika, wife of Mr. Santosh, started a business of trading in beauty products on 15.7.2023. She invested 5 lakhs in the business on 15.7.2023 out of gift received from her husband, Mr. Santosh. She invested 4 lakhs from her own savings on the same date. She earned profits of 9,00,000 from her business for the financial year 2023-24. Which of the following statements is correct?
(A) Share of profit of 9,00,000 is includible in the hands of Mrs. Deepika
(B) Share of profit of 5,00,00 is includible in the hands of Mr. Santosh and share of profit of 4,00,000 is includible in the hands of Mrs. Deepika
(C) Share of profit of 4,00,000 is includible in the hands of Mr. Santosh and share of profit of 5,00,000 is includible in the hands of Mrs. Deepika
(D) Share of profit of 9,00,000 is includible in the hands of Mr. Santosh

Suggested Answer and Working Notes:

Correct Answer: Option (B)

Share of profit of 5,00,00 is includible in the hands of Mr. Santosh and share of profit of 4,00,000 is includible in the hands of Mrs. Deepika

Topics: Paper 3A: Income Tax Laws

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