M/s Sunflower Associates, a partnership firm had 5 partners. On 31.3.2020, one of the partners resigned...

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M/s Sunflower Associates, a partnership firm had 5 partners. On 31.3.2020, one of the partners resigned from the firm. Out of the four partners, only 2 are working partners. Partnership deed authorises payment of interest to partners in the range of 13% - 15% and also payment of remuneration to all the four partners @ 20,000 per month. The profit and loss account of the firm showed a net profit of 80 lakhs after debiting/crediting of the following sums: (i) Interest on capital @13% -7,15,000 (ii) Interest on loan taken from one of the partners@ 15% - *90,000 (iii) Interest on fixed deposits made out of surplus funds 35,000 (Gross) (iv) Depreciation as per books of accounts 1,15,650 (v) It applied for establishing of a unit in SEZ and the letter of approval was granted on 30.3.2020. However, it started the operation of SEZ only on 15.10.2020. The total turnover, export turnover and net profit for the year ended 31.3.2021 were 120 lakhs, 40 lakhs and * 7.5 lakhs respectively. The net profit is included in the profit of * 80 lakhs mentioned above. (vi) Interest on unsecured loans (10 lakhs) taken from third parties - 1,20,000 (vii) A building having a WDV as on 1.4.2020, of 36.45 was sold during the year for 90 lakhs. The differential amount was credited to profit and loss account. The building was the only asset in the block. Additional Information: (a) Brought forward business loss pertaining to A.Y. 2019-202 lakhs (b) On 1.9.2020, the firm commenced a warehousing facility for storage of sugar and incurred 60 lakhs (including 35 Lakhs towards cost of land). This expenditure is capitalised in the books but no depreciation is charged on the same. (c) The entire amount of unsecured loan (mentioned in point (vi) above) was given as interest-free loans to unrelated parties connected with business. (d) Out of the amount received from sale of building, the firm invested 60 lakhs on 15.4.2021 in 7-years specified bonds of the National Highways Authority of India. The bonds were issued on 31.5.2021. (e) During the year, Mr. Ratan, one of the partners, contributed 21 lakhs as capital. However, he is unable to explain the source of the funds. WDV of the assets as on 1.4.2020 (as per Income-tax Rules) Name of the asset WDV ( 48,000 6,000 Printer-cum-Scanner 17,000 Motor car (purchased and put to use on 1.3.2020) 6,80,000 Cost of mobile phones (purchased and put to use on 11.10.2020) 20,000 Compute the total income of the firm for the A. Y. 2021-22 giving reasons/explanations for the treatment of each item under the normal provisions of the Act. No need to calculate tax payable. (14 Marks) Electrical fittings Laptops M/s Sunflower Associates, a partnership firm had 5 partners. On 31.3.2020, one of the partners resigned from the firm. Out of the four partners, only 2 are working partners. Partnership deed authorises payment of interest to partners in the range of 13% - 15% and also payment of remuneration to all the four partners @ 20,000 per month. The profit and loss account of the firm showed a net profit of 80 lakhs after debiting/crediting of the following sums: (i) Interest on capital @13% -7,15,000 (ii) Interest on loan taken from one of the partners@ 15% - *90,000 (iii) Interest on fixed deposits made out of surplus funds 35,000 (Gross) (iv) Depreciation as per books of accounts 1,15,650 (v) It applied for establishing of a unit in SEZ and the letter of approval was granted on 30.3.2020. However, it started the operation of SEZ only on 15.10.2020. The total turnover, export turnover and net profit for the year ended 31.3.2021 were 120 lakhs, 40 lakhs and * 7.5 lakhs respectively. The net profit is included in the profit of * 80 lakhs mentioned above. (vi) Interest on unsecured loans (10 lakhs) taken from third parties - 1,20,000 (vii) A building having a WDV as on 1.4.2020, of 36.45 was sold during the year for 90 lakhs. The differential amount was credited to profit and loss account. The building was the only asset in the block. Additional Information: (a) Brought forward business loss pertaining to A.Y. 2019-202 lakhs (b) On 1.9.2020, the firm commenced a warehousing facility for storage of sugar and incurred 60 lakhs (including 35 Lakhs towards cost of land). This expenditure is capitalised in the books but no depreciation is charged on the same. (c) The entire amount of unsecured loan (mentioned in point (vi) above) was given as interest-free loans to unrelated parties connected with business. (d) Out of the amount received from sale of building, the firm invested 60 lakhs on 15.4.2021 in 7-years specified bonds of the National Highways Authority of India. The bonds were issued on 31.5.2021. (e) During the year, Mr. Ratan, one of the partners, contributed 21 lakhs as capital. However, he is unable to explain the source of the funds. WDV of the assets as on 1.4.2020 (as per Income-tax Rules) Name of the asset WDV ( 48,000 6,000 Printer-cum-Scanner 17,000 Motor car (purchased and put to use on 1.3.2020) 6,80,000 Cost of mobile phones (purchased and put to use on 11.10.2020) 20,000 Compute the total income of the firm for the A. Y. 2021-22 giving reasons/explanations for the treatment of each item under the normal provisions of the Act. No need to calculate tax payable. (14 Marks) Electrical fittings Laptops

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