IGP-CS CS EXECUTIVE TAX LAWS CA Vivek Gaba

Mock Test - 2 (Tax Laws & Practice)

CS – EXECUTIVE
By CA Vivek Gaba
Time : 3 Hour Marks: 100

Part – A [ Direct tax]

1. Under the income tax Act, 1961, 'notional profit from speculative busines is-
a) Taxable under head 'income from profits and gains of business and
profession
b) Taxable under the head 'income from other sources'
c) Taxable either as income from the other source or as income from profit and
gains of business and profession
d) Not taxable
2. Ekta (Pvt.) Ltd., engaged in manufacturing activity, acquired new plant and
machinery for ` 100 lakh for its manufacturing unit located in Bihar. The acquisiting
and unit was from 1st June, 2017. The assesse is eligible for additional
depreciation of-
a) `30 lakh
b) `20 lakh
c) `35 lakh
d) `10 lakh

3. Chola Ltd., engaged in manufacture, acquired machineries for `30 crore in July,
2016 and for `27 Crore in April, 2017 in Backward Area. All the mcachines were
used within 45 days of acquisition. The deduction under section 32AD for the
assessment year 2018-19 will be-
a) `40,50,000
b) `45,00,000
c) `85,50,000
d) `54,00,000

4. Computer the amount of investment allowance under section 32AD available to

industries located in notified backward areas in state of Andhra Pradesh or Bihar or
Telangana or West Bengal in new plant and machinery is `30 Crore on 1st April
2017:
a) `3 crore
b) `4.5 crore
IGP-CS CS EXECUTIVE TAX LAWS CA Vivek Gaba

c) `6 crore
d) `2.25 crore

5. The amount of depreciation not absorbed in the same year can be carried forward-
a) For a period of 4 years
b) For a period of 8 years
c) For a period of 6 years
d) Indefinitely

6. Where the assessee does not himself carry on scientifric research but makes
contributions to an approved university, college or institution, to be used for
scientific research related or unrelated to the business of assessee, hence the
amount of deduction from income of business shall be allowed on such contribution
to the extent of u/s 35(1)(ii)-
a) 125%
b) 150%
c) 100%
d) 200%

7. X Ltd. paid ` 10 lakh to an approved college to be used for scientific research

unrealted to its business. The amount eligible for deduction under section 35(1)(ii)
is-
a) `5 lakh
b) `10 lakh
c) `17.50 lakh
d) `Nil

8. Any capital expenditure incurred on acquiring telecom license is deductible in -

a) 5 Equal installments
b) 10 equal installments
c) 15 Equal installments
d) Equally over the period of the license

9. XYZ Ltd. engaged in the business of providing telecommunication services has

incurred a capital expenditure of `10,00,000 on telecommunication licence. The
period of licence is 10 years. Compute the amount of deduction availbale under
section 35A BB during the years.
IGP-CS CS EXECUTIVE TAX LAWS CA Vivek Gaba

a) `10,00,000
b) `1,00,000
c) `2,00,000
d) Nil

10. Which of the following business commenced during August, 2016 will not be eligible
for deduction under section 35AD -
a) Setting-up and operating a cold chain facility
b) A production unit of fertilizer in India
c) Operating of a 1 Star hotel in a village
d) Building a hospital of 200 beds

11. As per section 35DDA, total expenditure in a voluntary retirement scheme is

deductible in -
a) 5 Equal installments
b) 10 Equal installments
c) 2 Equal installments
d) The same year

12. M/s Kalyani and Company paid `84,000 as advertisement in the annual magazine
of Bhartiya Janata Party. For the organisation such expenditure allowable.
a) Considered as revenue expenditure
b) Considered as capital expenditure
c) Considered as deferred revenue expenditure
d) Disallowed under section 37(2B)

13. In the case of companies, capital expenditure incurred for the purpose of promoting
family planning amongst the employees would be deductible to the extent-
a) Equal to 1/5th in each year for 5 years
b) Equal to 1/6th in each year for 6 years
c) Equal to 1/4th in each year for 4 years
d) Equal tp 1/10th in each year for 10 years.
11. Dr. Ashok commenced medical practice on 1st September, 2017. The Previous year for
the profession for the assessment year 2018-19 would be-

(a) 1st April, 2017 to 31st March, 2018 (b) 1st September, 2017 to 31st
March, 2018
IGP-CS CS EXECUTIVE TAX LAWS CA Vivek Gaba

(c) 1st June, 2017 to 31st March, 2018 (d) 1st September, 2017 to 31st
January, 2018

12. In case of non-residents engaged in shipping business ___% freight paid or payable to
the owner or charterer shall be deemed to be total income.

(a) 5% (b) 7.5%

(c) 10% (d) 20%

12. A new business was set-up on 1st July, 2017 and trading activity was commenced
from 1st September, 2017, the previous year would be the period commencing from-

(a) 1st April, 2017 to 31st March, 2018 (b) 1st July, 2017 to 31st March, 2018

(c) 1st September, 2017 to 31st March (d) 1st October, 2017 to 31st March,
2018

13. Normal rates of income-tax are prescribed in the-

(a) Income-tax Act,1961 (b) Income-tax Rules, 1962

(b) Finance Act of the current year (d) CBDT circulars

14. According to section 2(24) definition of ‘income’ is –

(a) Inclusive (b) Exhaustive

(c) Exclusive (d) Descriptive

15. The term ‘income’ includes the following types of incomes-

(a) Legal (b) Illegel

(c) Legal and illegal both (d) None of above

16. AB & Co. received ` 2,00,000 as compensation from CD & Co. for premature
termination of contract of agency. Amount so received is-

(a) Capital receipt and taxable (b) Capital receipt and not taxable

(c) revenue receipt and taxable (d) Revenue receipt and not taxable
IGP-CS CS EXECUTIVE TAX LAWS CA Vivek Gaba

17. Which of the following is not included in taxable income-

(a) Income from smuggling activity (b) Casual income

(c) Gifts of personal nature subject to a (d) Income received in kind

Maximum of ` 50,000 received in cash

18. An Assessee, being an individual resident in India, is entitled to a deduction, from the
amount of income-tax on his total income which is chargeable for an assessment
year, of an amount equal to 100% of such income-tax or a lesser amount . The
maximum amount of total income qualifying for such deduction and the maximum
amount of deduction so available is-

(a) ` 3 laks and ` 2,000 respectively (b) ` 3 laks and ` 2,000 respectively

(c) ` 3.5 laks and ` 2,500 respectively (d) ` 5 laks and ` 5,000 respectively

19. For a domestic company, the minimum amount of total income liable for surcharge
and the rate of surcharge applicable therein are-

(a) `10 crore and 7% respectively (b) `1 crore and 7% respectively

(c) `1 crore and 12% respectively (d) `10 crore and 12% respectively

20. The total income of Atul, a resident individual, is ` 2,65,000. The rebate allowablwe
u/s 87 A would be-

(a) ` 2000 (b) Nil

(b) ` 1,500 (d) ` 1,545

21. Paresh, a software engineer at ABC Ltd. Left India on 10th August, 2017 for the
treatment of his wife. For income-tax purpose, his residential status for the
assessment year 2018-19 will be-
(a) Resident (b) Non-Resident
(c) Not ordinarily resident (d) Cannot be determined from the
given
Information

22. Ritish, an Indian citizen, left India for U.K. on 1st September, 2017 to take up a job
there . His residential status for the assessment year 2017-18 would be-
IGP-CS CS EXECUTIVE TAX LAWS CA Vivek Gaba

(a) Resident and ordinarily resident (b) Not ordinarily resident

(c) Non-resident (d) Resident.

23 If Karta is resident and ordinarily resident in India but control and management of
HUF is situated partly outside India in the previous year, the HUF is-

(a) Resident and ordinarily resident (b) Not ordinarily resident

(c) Non resident (d) Resident.

24 Determine the residential status of Mr. Karamchand , an Indian citizen who has left
India for the first time on 15th July 2017 for the purpose of employment outside India-

(a) Resident (b) Non-resident

(c) Not ordinarily Resident (d) Any of these

25. An individual is said to be resident in India in a previous year (in which the February
month has 29 days) if he is in India in that year for a period or periods amounting in
all to:

(a) 182 days or more (b) 60 days or more

(b) 183 days or more (d) 150 days or more

26. Pawan, employed in Magie Ltd., was eligible for transport allowance of ` 2,000 per
month to meet his travel expenses from residence to office. He actually incurred `
1,200 per month towards travel. The amount of travel allowance chargeable to tax
perquisite would be-

(a) ` 24,000 (b) ` 14,400

(c) ` 4,800 (d) Nil

27. Manav receives ` 50,000 as basic salary from the government during the financial
year 2017-18 and receives ` 9,000 by way of entertainment allowance which he
spends in full for official purposes. The amount deductible under section 16 (ii) in
respect of the allowance will be-

(a) ` 5,000 (b) ` 9,000

(c) ` 10,000 (d) None of the above.

IGP-CS CS EXECUTIVE TAX LAWS CA Vivek Gaba

28. Ravi is receiving ` 10,000 as medical allowance from his employer. Out of this, he
spends ` 5,000 on his own medical treatment , ` 2000 on the medical treatment
of his dependent wife and another ` 3,000 for the medical treatment of his major son
who is not a dependent on him. The amount of medical allowance taxable in his hand
is-

(a) ` 10,000 (b) ` 5,000

(c) ` 3,000 (d) Nil

29. The amount of any contribution to an approved superannuation fund by the employer
in respect of the employee is exempt from tax upto-

(a) ` 1,00,000 (b) ` 1,50,000

(c) ` 2,00,000 (d) Nil

30. Kapil gets salary of ` 12,000 p.m. and is provided with rent-free unfurnished
accommodation at Pune (Population 20 lakh). House is owned by employer , fair
rental value of which is ` 1,400 p.m. House was provided with effect from 1st July,
2017. Value of the perquisite of rent-free accommodation will be-

(a) ` 21,600 (b) ` 10,800

(c) ` 90,000 (d) ` 12,600

31. Satish is employed as chief engineer in Gama Ltd., Chennai w.e.f. 1st April, 2017 for
a consolidated salary of ` 60,000 per month. He is provided with rent-free unfurnished
accommodation owned by the employer from 1st July, 2017 onwards. The value of
taxable perquisite is-

(a) ` 1,08,000 (b) ` 81,000

(c) ` 72,000 (d) ` 54,000

32. The construction of a house was completed on 31st January, 2018. The owner of the
house took a loan of ` 20,00,000 @ 6% p.a. on 1st May, 2017. In this case the
deduction allowable for the previous year 2017-18 towards interest on borrowings is-

(a) ` 22,000 (b) ` 24,000

IGP-CS CS EXECUTIVE TAX LAWS CA Vivek Gaba

(c) ` 1,10,000 (d) ` None of the above

33. Sandeep purchased a house for his residential purpose after taking a loan in January,
2016. During the previous year 2017-18, he paid interest on loan ` 2,17,000. While
computing income from house property, the deduction is allowable to the extent of-

(a) ` 30,000 (b) ` 1,00,000

(c) ` 2,17,000 (d) ` 2,00,000

34. M took a loan of ` 6,00,000 on 1-4-2015 from a bank for construction of a house.
The loan carries an interest @ 10% p.a. The construction is completed on 30-6-2016.
The entire loan is still outstanding. The pre-construction period interest will be
`__________

(a) ` 60,000 (b) Nil

(c) ` 75,000 (d) ` 90,000

35. When a house property is let-out throughout the year for a monthly rent of ` 22,000
and municipal tax paid for current year is ` 24,000 and for the earlier year paid now
is ` 16,000, the income from house property would be-

(a) ` 1,68,000 (b) ` 1,56,800

(c) ` 1,84,800 (d) ` 2,24,000

36. The net annual value of house let-out is ` 1,00,000 and actual amount spent by the
assessee on repairs and insurance premium is ` 20,000, the amount of deduction
allowed under section 24(a) shall be `______

(a) ` 20,000 (b) ` 30,000

(c) ` 25,000 (d) ` 22,000

37. For the previous year 2016-17, taxable income of A Ltd., a domestic company
(turnover in FY 2014-15 was ` 8 crores) is ` 10,86,920. Its Tax liability would be-

(a) ` 2,47,822 (b) ` 4,47,811

 IGP-CS CS EXECUTIVE TAX LAWS CA Vivek Gaba

(c) ` 3,32,770 (d) ` 3,35,860

38. For the previous year 2017-18, taxable income of A. Ltd,. A domestic company
(Turnover in FY 2015-16 was ` 45 Crores) is ` 10,86,920. Its tax liability would be-

(a) ` 3,35,860 (b) ` 3,26,076

(c) ` 2,79,880 (d) ` 3,35,860

40. Lalit, a resident individual of 81 years works as a consultant. If his taxable income is
` 5,20,000, the tax payable by him would be.-

(a) ` 22,660 (b) Nil

(c) ` 2,060 (d) ` 4,120

41. ABC Ltd. has loss under the head Business/Profession ` 3,00,000 for previous year
2017-18. In this case, the company has to file the return latest by ………….
a) 31st July 2017 b) 31st July 2018
c) 30th September 2017 d) 30th September 2018
42. Notice u/s 143(2) shall be served within ……. from the end of the financial year in
which ROI is filed.
a) 6 months b) 6 years c) 12 months d) 30 days

43. ABC Ltd. has to file its return of income. The return shall be filed by:
a) 30th September of assessment year b) 31st July of assessment year
c) 30th September of previous year d) 30th November previous year
44. ……………… can be carried forward even if the return is not filed up to the due date.
a) Unabsorbed depreciation b) House property
c) Both of the above d) None of the above
45. Where no such installment is due i.e. income is earned after 15th March, the entire tax
should be paid by …………...
a. 15th March (B) 31st March (C) 31st July (D15th September
46. What shall be payable by assessee for deferment of advance tax beyond due dates.
(A) Interest under section 234A (B) Interest under section 234B
(C) Interest under section 234C (D) None of the above
47. Advance tax shall not be payable by an individual resident having income like interest,
rent, etc. in India, who
a) does not have any income chargeable u/h Profits and gains of business or
profession
 IGP-CS CS EXECUTIVE TAX LAWS CA Vivek Gaba

b) is of the age of sixty years or more at any time during the previous year
c) Both of them
d) Advance tax shall be payable
48. No tax is to be deducted at source if the amount credited or paid to the contractors
during the relevant previous year does not exceed:
a) ` 30,000 b) ` 75,000
c) ` 30,000 at one time or ` 1,00,000 in aggregate in financial year d) Nil
49. XYZ Ltd. has taken a showroom on rent at ` 25,000 from R Limited. XYZ Ltd. should
deduct tax at source amounting to:
a) Nil b) ` 30,000 c) ` 24,000 d) ` 27,000
50. XYZ Ltd. has taken a showroom on 1.11.2016 rent at ` 25,000 from Reena Ltd. XYZ
Ltd. should deduct tax at source amounting to:
a) Nil b) ` 20,000 c) ` 24,000 d) ` 15,750
51. What is Tax Haven?
a) tax charged at 10% b) exemption limit is high
c) high rebate is given d) No tax
52. Deduction under section 80CCC is allowed to the extent of:
a) ` 20,000 b) ` 40,000 c) ` 1,50,000 d) ` 1,00,000
53. Maximum deduction under section 80GG shall be limited to
a) ` 1,000 per month b) ` 2,000 per month
c) ` 5,000 per month d) Nil
54. Deduction available under section 80RRB in respect of Royalty income of patent shall
not exceed ……………….. in a previous year.
a) ` 1,50,000 b) ` 1,00,000 c) ` 3,00,000 d) ` 3,50,000
55. Share of income/Profit from Firm of partner is:
a) taxable at slab rate b) exempt u/s 10(2A)
c) taxable at 30% d) taxable at 20%
56. Deduction available in respect of Interest paid under section 80EE shall not exceed
……………. in a previous year
a) 1,00,000
b) 50,000
c) 2,50,000
d) 2,00,000
57. According to section 80, no loss which has not been determined in pursuance of a
return filed in accordance with provisions of section 139(3), shall be carried forward. The
exceptions are
a. Only loss under the head “Capital Gains” under section 74.
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b. Loss under head “Capital Gains” and unabsorbed depreciation carried forward u/s
32(2)
c. Loss from house property and unabsorbed depreciation carried forward u/s 32(2).
d. None of the above
58. Loss under head Salary can be set off from income under head
a) Capital Gains b) Profit & Gain of Business or Profession
c) House Property d) Loss is not possible under Salary head
59. Loss from owning and maintenance of race horses can be set off from income from
a) owning and maintenance of race horses b) Capital Gain
c) House Property d) Any head.
60. Losses from specified business u/s 35 AD can be set off from income from
a) specified business u/s 35 AD b) any business
c) capital gains d) cannot be set off
61. As per section 60 of Income Tax Act, 1961 if there is transfer of income without
transfer of asset then income from such transferred asset is treated as income of
__________?
a) Transferor (whether transfer is revocable or irrevocable)
b) Transferee (Whether transfer is revocable or irrevocable)
c) Transferor if transfer is revocable
d) Transferee if transfer is irrevocable
62. Which of the following revocable transfer ?
a) If transfer agreement contains any provision for the re-transfer of the whole any part
of the income or assets to the transferor
b) If transfer agreement does not give, in any way to transferor, a right to reassume
power over the whole or any part of income or the asets
c) Both (A) & (B)
d) None of the above
63. An Individual shall be deemed to have substantial interest in a concern –
a) In Case of company, if individual holds 10% or More equity shares in company
b) In case of company, if individual along with his wife holds 15% or more equity
share in company
c) In a case of company, if Individual holds 15% or more equity share in company
along with his relatives
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d) In case of company, if individual holds 20% or more equity share in company along
with his relative.
64. In which of the following case income from asset transfer to spouse will be treated as
income of transferor ?
a) Income from asset transferred by husband to wife before marriage
b) Income from asset transferred by husband to wife after marriage for adequate
consideration
c) Income from asset transferred by husband after divorce for inadequate consideration
d) None of the above
65. In which of the following case income from asset transfer to spouse will be treated as
income of transferor ?
a) Income from asset transferred by husband to wife before marriage
b) Income from asset transferred by husband to wife after marriage for inadequate
consideration
c) Income from asset transferred by husband after divorce for inadequate consideration
d) None of the above
66. If transaction falls under Income tax Act and DTAA then what would be the treatment
of such transaction
a) Apply whichever is more beneficial to the assessee b) Income tax Act
c) DTAA
67. The Income-tax Act, 1961 empowers the Central Government to enter into double
taxation avoidance agreements with other countries under section:

(A) 87 (B) 88 (C) 90 (D) None of the above

68. As per transfer pricing provisions, an advance pricing agreement (APA) is valid for
(A) Such period as specified in the APA, but not exceeding 3 consecutive years
(B) Such period as specified in the APA, but not exceeding 5 consecutive years
(C) 2 Years
(D) None of the above.
69. Reference to Transfer pricing officer is given under
(A) Section 92CA (B) Section 92C
(C) Section 92A (D) Section 92B
70. Specified domestic transaction defined under;
a) Section 92A b) Section 92B c) Section 92BA d) Section 92CA
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Part – B (GOODS & SERVICE TAX)

71. Input tax credit on compensation cess paid under GST (Compensation to States) Act,
2017
a) is not available c) is available
b) is available but not fully d) is available after one year
72. Maximum rate of CGST prescribed by law for intrastate supply made is----
a) 18% c) 20%
b) 40% d) 28%+cess
73. Input tax credit on Compensation cess paid under GST (Compensation to States) Act,
2017 is available for payment of
a) IGST only
b) IGST and CGST only
c) compensation under GST (Compensation to States) Act
d) None of the above
74. IGST is payable when the supply is ---
a) Interstate c) Intra-state
b) Intra- UT d) All of the above
75. Zero rated supply includes supplies made-
a) By SEZ unit in India c) to SEZ unit in India
b) Both (a) & (b) above d) None of the above
76. Exemption from registration is available to
a) Central & State Govt. Departments c) Agriculturists
b) a) & b) above d) None of the above
77. Agriculturist
a) Individual or HUF c) Individual and HUF
b) Partnership d) All the above
78. A person is having multiple business requires registration
a) Single c) Each business separately
b) Either A or B d) None of the above
79. Article _____ of constitution of India empowers parliament to impose IGST in India.
a) 69A c) 265A
b) 279A d) none of the above
80. The rate of GST as applicable on goods and services are:
a) 0% 5% 12% 16% 28% c) 0% 6% 12% 18% 28%
b) 0% 5% 12% 18% 28% d) 0% 5% 12% 18% 26%
81. Under which Constitutional Amendment Act, 2016, constitution was amended to
introduce GST in India
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a) 122 c) 121
b) 101 d) none of the above
82. Under the provisions of GST law, tax is levied
a) simultaneously by Union and State laws c) only by the Union laws
b) only by the State laws d) exclusively by Union and State laws
83. GST Laws are implemented on the recommendation of
a) Central Government c) GST Network (GSTN)
b) GST Council d) President of India
84. When did the President of India gave assent to the Central GST Law?
a) 18th April 2017 c) 22nd April 2017
b) 5th April 2017 d) 13th April 2017
85. Money means:
a) Indian legal tender c) Cheque/ Promissory note
b) Foreign currency d) all of the above
86. Under which Schedule, power to declare certain activity/ transaction as neither supply
of goods nor of services
a) Schedule I c) Schedule III
b) Schedule II d) Schedule IV
87. When was GST Council constituted?
a) 12th September 2016 c) 13th September 2016
b) 20th September 2016 d) 16th September 2016
88. What is the threshold limit for composite tax levy?
a) ` 60 lakh c) ` 50 lakh
b) ` 70 lakh d) ` 100 Lakh
89. When does the liability to pay tax on goods arise?
a) at the time of supply
b) at the time when goods reach supplier
c) at the time of preparing invoice
d) None of the above
90. The time of supply of goods shall be the earlier of _____________
a) date of issue of invoice c) last date
b) date of receipt of payment d) either of the above
91. Tax is paid on which value?
a) Transaction value c) manufacturing value
b) manufacturing value plus profit d) notional value
92. Which of the following condition/s must be satisfied to be eligible to avail Input tax
credit?
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a) on receipt of goods
b) on payment of taxes paid by supplier to Govt.
c) supplier has to be file return under section 39
d) all of the above
93. Input Tax Credit is available _________
a) in the course or furtherance of business c) on other than business expenditure
b) both a) and b) d) none of the above
94. How is Input Tax Credit on capital goods available?
a) in single installment c) equally in five installment
b) 10% every year d) none of the above
95. What is the threshold limit for an individual limit for GST registration?
a) ` 10 lakh c) ` 15 lakh
b) ` 12 lakh d) ` 20 lakh
96. In which section is “invoice” or “tax invoice” in?
a) section 34 c) section 31
b) section 37 d) section 27
97. Electronic cash ledger and Electronic credit ledger is mentioned in which section?
a) section 49 c) section 42
b) section 39 d) section 47
98. GST registration is
a) PAN based c) passport based
b) Aadhar based d) none of the above
99. Deemed registration is
a) after four working days c) after five working days
b) after three common working days d) after seven working days
100.Annual Return has to be filed every year:
a) 30th June c) 30th September
b) 31st December d) 31st October