Question 1 Mr. Raman, a resident individual aged 62 years, is engaged in the business of manufacturing and sales of spare parts for motor bikes, as a proprietor. He prepares his accounts on mercantile basis. This business is carried out on the ground floor of a two storied commercial building owned by him, the written down value of which is ` 8 lakhs as on April 1, 2023. He prepares his accounts on accrual basis. The Statement of Profit and Loss for the previous year ended on March 31, 2024 shows a net profit of ` 9.25 lakhs (before taxation and depreciation) after debiting/crediting the following items: (i) Travelling expenses includes ` 2,40,000 being expenditure incurred on a foreign tour to Taiwan for attending a business exhibition and meeting with vendors, out of which ` 40,000 is incurred in Indian currency and ` 2,00,000 in foreign currency. Mr. Raman has spent 10 days in Taiwan, out of which 4 days were utilized by him for attending marriage ceremony of a vendor's son. (ii) Administrative expenses include ` 9,525 paid towards interest on delay in deposit of GST. (iii) General expenses include a sum of ` 3,88,000 paid to a non-resident as fee for technical services without deduction of tax at source. (iv) Fire insurance premium of ` 66,000 for the entire building remained unpaid till 31st March, 2024. (v) Expenditure of ` 75,000, was paid to a scientific research association approved under section 35. Out of ` 75,000, ` 50,000 was utilised towards the purchase of land by the research association. (vi) He let out first floor of his commercial building to Mr. Aman on April 1, 2023 and received rent of ` 35,000 per month. Municipal taxes ` 20,000 relating to the building were paid equally by both Mr. Raman and Mr. Aman. Rent received was credited and municipal taxes of ` 10,000 (relating to ground floor) was debited to the statement of profit and loss. (vii) He sold a piece of land for ` 44 lakhs on 12th April, 2023. He had acquired the land for 40 lakhs on 1stJanuary, 2022. The gain of 4,00,000 is credited to the statement of profit and loss. (CII for F.Y. 2021-22-317; F.Y. 2023-24-348) Additional Information: (i) Mr. Raman purchased raw material from M/s. Paul Industries, a micro enterprise, for ` 49,000 on March 10, 2024. However, the payment to M/s. Paul Industries was made on April 5, 2024 by cheque. No written agreement for payment existed between M/s. Paul Industries and Mr. Raman. Another supplier M/s. Kal Industries, a small enterprise, with whom also no written agreement existed for payment, was paid ` 1,34,000 in cash on April 5, 2024 for purchase of raw material on March 31, 2024. Both M/s. Paul Industries and M/s. Kal Industries follow mercantile system of accounting. (ii) Mr. Raman acquired a registered trademark on July 15, 2023 for ` 2,00,000. Mr. Raman started using this trademark for his business from January 15, 2024. Mr. Raman omitted to enter any transaction relating to this trademark in his books of accounts. (iii) Mr. Raman bought a car for personal use on 12th April, 2020 for ` 5,40,000. He started using this car for business purposes from 01.04.2023. As on that day, the market value of the car was ` 2,10,000. Assume the rate of depreciation to be 15%. (iv) He incurred ` 2,50,000 on the purchase of a new machinery to be used in the production of spare parts for motor bikes on May 15, 2023. (v) He has paid tuition fees of ` 25,000 for the education of his daughter to a college. (vi) During the year, Mr. Raman has incurred ` 9,500 in cash for preventive health check-up where ` 5,000 was for himself and ` 4,500 was for his parents who are super senior citizens. (vii) Donation paid to a registered political party by way of cheque ` 20,000. Compute the total income and tax payable for assessment year 2024-25 by Mr. Raman under default tax regime and optional tax regime as per normal provisions of the Act. Which option is advantageous to Mr. Raman? (15 Marks)