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CMA Final · Direct Tax Laws and International Taxation · Assessment of Mutual Associations

Mr. Carlos, a non-resident foreign sportsman who is not an Indian citizen, received Rs 40,00,000 for participating in a sport in India and Rs 10,00,000 from advertisements, both covered by section 211(1)(a). He also had other taxable income of Rs 6,00,000 in India. Ignoring surcharge, cess and TDS, how is the tax computed under section 211?

The specified income of Rs 50,00,000, being participation plus advertisement income, is taxed at 20% with no deductions, and the remaining Rs 6,00,000 is taxed at rates in force. The reason is that section 211(1) covers both sources under clause (a), and the balance total income is taxed separately at normal rates.

  1. A20% on Rs 50,00,000 plus rates in force on Rs 6,00,000Correct
  2. B20% on Rs 56,00,000
  3. C20% on Rs 40,00,000 plus rates in force on Rs 16,00,000
  4. DRates in force on the entire Rs 56,00,000

Explanation

Income under clause (a), which covers both participation in India and advertisement, is Rs 40,00,000 + Rs 10,00,000 = Rs 50,00,000. It is taxed at 20% with no expense deduction, giving Rs 10,00,000. The remaining total income of Rs 6,00,000 is taxed at rates in force. The option that treats advertisement income as ordinary income wrongly excludes it from the 20% bracket.

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