Magic Ltd. received an order for supply of service to a UK based client by name Botham Ltd. for £ 10 lakhs. Magic Ltd. was unable to provide the…

Magic Ltd. received an order for supply of service to a UK based client by name Botham Ltd. for £ 10 lakhs. Magic Ltd. was unable to provide the entire services from India and therefore after providing 60% of service, it asked Mini Ltd. of UK to provide balance 40% of services to Botham Ltd. The payment for 40% service was received by Mini Ltd. directly from Botham Ltd. Magic Limited has obtained all the required approvals for the same. Assume exchange rate as 1 £ = 105. Magic Ltd. has followed standard costing since April 2020. The Board of Directors of the company based on the advice of a foreign consultant wants to follow Kaizen Costing instead of standard costing. Mano (age 45) is a renowned expert in mechanical engineering and a person of Indian origin with non-resident status under the Income-tax Act, 1961 up to the assessment year 2023-24. He came to India on 2nd January 2024 to render his expert service to the company in its manufacturing activity. The agreement with Mano is in accordance with Industrial Policy of Government of India. He was paid 50 lakhs by Magic Ltd. for the services rendered in India. Mano returned to his native country on 25th March 2024. Magic Ltd. had agreed with Mano to bear the tax liability in this regard and accordingly made deduction of tax at source. Assume that there is no DTAA between India and the Country to which Mano belongs. Stock market indices Manish, Managing Director of Magic Ltd. wants to know whether the stock market is bullish or not. He has furnished you the closing values of Sensex from 12th to 22nd of March 2024. Days Date Day Sensex 1 12.03.2024 Tuesday 20,100 2 13.03.2024 Wednesday 19,950 3 14.03.2024 Thursday 19,900 4 15.03.2024 Friday 20,050 5 16.03.2024 Saturday No Trading 6 17.03.2024 Sunday No Trading 7 18.03.2024 Monday 20,600 8 19.03.2024 Tuesday 20,650 9 20.03.2024 Wednesday 20,700 10 21.03.2024 Thursday 20,900 11 22.03.2024 Friday 21,100 The Exponential Moving Average (EMA) of Sensex was 20,400 on the previous day i.e. 11.3.2024. The value of exponent for 31 days EMA is 0.081. Moon & Co., Noida Moon & Co, a partnership firm in which Magic Ltd. is a partner with 50% share. Moon & Co. acted as a wholesale distributor of electrical appliances manufactured by Lion (P) Ltd., Delhi. There was a mix up of data, relevant for GST returns, maintained in the computer system of Moon & Co for the financial year 2022-23 with GST data for financial year 2023-24. The annual turnover of Moon & Co. was always less than 4 crores. The GSTR 3B of the month of March 2023 contained, some errors by omitting to claim ITC because of corruption in data kept in the computer system by Moon & Co. This was found only on 15.11.2023 and the GSTR 3B has been filed upto month of September 2023 and annual return is yet to be filed. Similarly, in the income-tax return filed by Moon & Co for the assessment year 2023-24 under section 44AD, the turnover was stated as 173 lakhs instead of the correct figure of 190 lakhs. This was detected only in April, 2024. Santosh, one of the directors of Lion Private Limited- an associate of Magic Limited, who had 25% shareholding in Lion Private Limited, is in urgent need of 25 lakhs for completing the construction of his residential house. The said company arranged overdraft facility from a bank on the security of its asset and advanced 25 lakhs to its director Santosh on 1st August 2023. The said company had accumulated profit of 40 lakhs as on 31st March 2023 and was the same till the date of loan availed from bank and advanced to Santosh.