Skip to content

CMA Intermediate · Direct and Indirect Taxation · Taxation of Individuals (including AMT) and HUF

An AOP is chargeable to tax on its total income at the maximum marginal rate. Sunita, a member, is entitled to a share of ₹3,00,000 in the AOP's income, computed as per the Act. Her other income is ₹6,00,000. What is the share included in Sunita's total income, and what is her total income?

When the AOP is taxed at the maximum marginal rate or higher, the member's share is not included in the member's total income. Sunita's total income is therefore only her other income of ₹6,00,000, as including the share would cause double taxation.

  1. AShare included ₹3,00,000; total income ₹9,00,000
  2. BShare included nil; total income ₹6,00,000Correct
  3. CShare included ₹1,50,000; total income ₹7,50,000
  4. DShare included nil; total income ₹3,00,000

Explanation

Where the AOP is chargeable at the maximum marginal rate or higher, the member's share is not included in her total income. Her total income is therefore only her other income of ₹6,00,000. Adding the share (₹9,00,000) would tax the same income twice.

Did you get it right without looking?

One question tells you little. A timed set on Taxation of Individuals (including AMT) and HUF shows your real accuracy, how long you take and where you lose marks.

Practise Taxation of Individuals (including AMT) and HUFFree diagnostic mock

More Taxation of Individuals (including AMT) and HUF questions