DT MCQs For June Dec

MCQ’s
Tax Laws – CS Executive June

& December 20 Exams
Ch 1 – DT at a Glance 1
CHAPTER 1 – DT at a Glance
MULTIPLE CHOICE QUESTIONS
(1) The Central Government has been empowered by entry of the Union list of schedule VII of the constitution of India to levy
tax on income other than agricultural income.
(a) 84 (b) 81
(c) 82 (d)84
Ans.(c)
(2) The Income tax act, 1961 came into force w.e.f. _____________ .
(a) 1st April, 1962 (b) 1 st April, 1961
(c) 31st March, 1961 (d) None of above.
Ans.(a)
(3) Amongst the following _____________ is empowered to levy tax on agricultural income.
(a) Central Government (b) State Government
(c) Commissioner (d) President
Ans.(b)
(4) Circulars and Notifications are binding on the _____________ .
(a) Central Board of Direct Taxes (CBDT) (b) Assessee
(c) Income Tax Appellate Tribunal (ITAT) (d) Income Tax Authorities
Ans.(d)
(5) Supreme Courts precedent in binding on _____________ .
(a) Courts (b) Appellate Tribunals
(c) Income Tax Authorities (d) All of the above.
Ans.(d)
(6) High Corut's precedents are not binding on _____________ .
(a) Tribunal (b) Income Tax Authorities
(c) Assessee (d) None of the above.
Ans.(d)
(7) Wherever in the Act the phrase as prescribed appears it means that -
(a) Regulations are to be framed is in this respect. (b) Rules have been framed in this respect.
(c) Regulations were earlier framed in this respect, (d) Regulations are framed in this respect.
Ans.(b)
(8) Who amongst the following confers on the power to issue circulars and clarifications?
(a) IT AT (b) Central Government
(c) CBDT (d) State Government
Ans.(C)
(9) Amendments by the finance act are made applicable from _____________ .
(a) First day of next financial year (b) First day of same financial year
(c) Last day of same Accounting year (d) None of the above.
Ans.(a)
(10) The Central Board of Direct Taxes (CBDT) is headed by Chairman and also comprises of six members. The Chairman
and all the Members of the CBDT are being selected : (Dec 19)
(a) By Finance Minister (b) From IRS
(c) By Prime Minister (d) By Chief Justice of India
Ans.(b)
(11) The Central Board of Direct Taxes (CBDT) provides essential inputs for policy and planning of direct taxes in India and
is a ____________functioning under the Central Board of Revenue Act, 1963. (Dec 19)
(a) Constituted Authority (b) Revenue Administration Authority
(c) Statutory Authority (d) Central Authority
Ans.(c)
Ch 1 – DT at a Glance 2
(12) The Direct taxes are ___ in nature –

(a) Progressive in nature (b) Regressive in nature
(c) any of the above (d) None of the above
Ans.(a)
(13) The Inirect taxes are ___ in nature –

(a) Progressive in nature (b) Regressive in nature
(c) any of the above (d) None of the above
Ans.(b)
Chapter 2 - Part 1 – Basic Concepts 2.1
CHAPTER 2 - Part 1
BASIC CONCEPTS
(1) The Central Government has been empowered by entry ______________of the Union list of schedule
VII of the constitution of India to levy tax on income other than agricultural income.
(a) 84 (b) 81
(c) 82 (d) 84 Ans.(c)
(2) The Income tax act, 1961 came into force w.e.f ______________.
(a) 1st April, 1962 (b) 1st April, 1961
(c) 31st March, 1961 (d) None of above. Ans.(a)
(3) Amongst the following ______________is empowered to levy tax on agricultural income.
(a) Central Government (b) State Government
(c) Commissioner (d) President Ans.(b)
(4) Circulars are binding on the ______________.
(a) Central Board of Direct Taxes (CBDT) (b) Assessee
(c) Income Tax Appellate Tribunal (ITAT) (d) Income Tax Authorities Ans.(d)
(5) Supreme Courts precedent in binding on ______________.
(a) Courts (b) Appellate Tribunals
(c) Income Tax Authorities (d) All of the above. Ans.(d)
(6) High Court's precedents are not binding on ______________.
(a) Tribunal (b) Income Tax Authorities
(c) Assessee (d) None of the above. Ans.(d)
(7) For a individual, the minimum amount of total income liable for surcharge and the rate of
surcharge applicable therein are- (Dec. 2014)
(a) Rs. 50 lakhs and 10% respectively (b) Rs. 1 crore and 15% respectively
(c) Rs. 1 crore and 7% respectively (d) Rs. 10 crore and 12% respectively
Ans.(a)
(8) Who amongst the following confers on the power to issue circulars and clarifications?
(a) IT AT (b) Central Government
(c) CBDT (d) State Government Ans.(c)
(9) Amendments by the finance act are made applicable from ______________.
(a) First day of next financial year (b) First day of same financial year
(c) Last day of same Accounting year (d) None of the above. Ans.(a)
(10) Income Tax is charged in -
(a) Financial Year (b) Assessment Year
(c) Previous Year (d) Accounting Year Ans.(b)
(11) Income-tax in India is charged at the rate(s) prescribed by —(Dec. 2009)
(a) The Finance Act (b) The Income-tax Act
(c) The Central Board of Direct Taxes (d) The Ministry of Finance. Ans.(a)
(12) A person includes :
(a) Only Individual (b) Only Individual and HUF

(c) Individuals, HUF, Firm, Company only (d) Individuals, HUF, Company, Firm, AOP or BOI,
Local Authority, Every Artificial Juridical Person
Ans.(d)
(13) As per section 2(31), the following is not included in the definition of 'person' - (Dec. 2014)
(a) An individual (b) A Hindu undivided family
(c) A company (d) A minor Ans.(d)
(14) Every assessee is a person, and -
(a) every person is also an assessee (b) every person need not be an assessee
(c) an individual is always an assessee (d) A HUF is always an assessee Ans.(b)
(15) X and Y are legal heirs of Z. Z died in 2019 and X and Y carry on his business without entering
into a partnership. Dexribe the status of these persons
(a) Firm (b) Limited Liability Partnership
(c) Company (d) Body of Individual Ans.(d)
(16) Assessment year can be a period of :
(a) only more than 12 months (b) 12 months and less than 12 months
(c) only 12 months (d) 12 months and more than 12 months
Ans.(c)
(17) Year in which income is taxable is known as ______________and year in which income is earned is
known as ______________.
(a) Previous year, Assessment year (b) Assessment year, Previous year
(c) Assessment year, Assessment year (d) Previous year, Previous year Ans.(b)
(18) The year in which the income is earned is known as - (June, 2015)
(a) Previous year (b) Financial year
(c) Both (A) or (b) (d) None of the above. Ans.(a)
(19) All assessees are required to follow:
(a) Uniform previous year which must be calendar
(b) Uniform previous year which must be financial year only
(c) Any period of 12 months (d) Period starting from 1st July to 30th June
only Ans.(b)
(20) Under the Income-tax Act, 1961 the term 'assessee' means a person - (Dec. 2016)
(a) Who is an assessee in default (b) From whom tax is due
(c) Against whom any proceeding under the Act (d) All of the above has been taken
Ans.(d)
(21) XYZ LLP falls under ______________category of person -
(a) Individual (b) Partnership firm
(c) Company (d) Association of person Ans.(b)
(22) Municipality of Niwai falls under ______________category of person -

(a) Artificial juridical person (b) Local authority
(c) Individual (d) Association of Person Ans.(b)

(23) Under Income Tax Act partnership firm includes -
(a) Limited liability partnership (b) Limited liability company
(c) One person company (d) Association of person Ans.(a)
(24) A.O.P. should consist of :
(a) Individual only (b) Persons other than individual only
(c) Both individual and non individual persons. (d) Non of these Ans.(c)
(25) Body of individual should consist of :
(a) Individual only (b) Persons other than individual only
(c) Both individual and non individual persons. (d) Non of these Ans.(a)
(26) A person becomes a member of HUF by -
(a) Contract (b) Agreement
(c) Popularity (d) Status Ans.(d)
(27) In order to be assessed as HUF there should be -
(a) Partnership (b) Co-Partnership
(c) Co-Parcenership (d) Co-Ownership Ans.(c)
(28) Section ______________of the Income-tax Act, 1961 defines the term 'person' -
(a) 4 (b) 5
(c) 2(31) (d) 2(32) Ans.(c)
(29) ______________must be one in which two or more persons join in for a common purpose or
common action with the object of earning income or profits or gains.
(a) Partnership . (b) Co-ownership
(c) Body of Individuals (d) Association of Persons Ans.(d)
(30) For a domestic company, the minimum amount of total income liable for surcharge and the
rate of surcharge applicable therein are - (Dec. 2014)
(a) Rs. 10 crore and 7% respectively (b) Rs.1 crore and 7% respectively
(c) Rs. 1 crore and 12% respectively (d) Rs. 10 crore and 12% respectively
Ans.(b)
(31) Previous year is defined in -
(a) Section 2(34) (b) Section 2(9)
(c) Section 3 (d) Section 4 Ans.(c)
(32) Financial year means a year commencing on -
(a) 31st March of the period (b) 1st day of the April
(c) Mid of the year (d) None of these Ans.(b)
(33) First previous year in case of a business/ profession newly set up on 31-3-2019 would:
(a) Start from 1st April, 2018 and end on 31st March, 2019
(b) Start from 31sl March, 2019 and will end on 31st March, 2019
(c) Start from 1st January, 2019 and end on 31st December, 2020
(d) Start from 1sr January, 2019 and will end on 31st March, 2020
Ans.(b)
(34) Dr. Ashok commenced medical practice on 1st September, 2018. The previous year for the
profession for the assessment year 2019-20 would be - (June 2016)
(a) 1st April, 2018 to 31st March, 2019 (b) 1st September, 2018 to 31st March, 2019
(c) 1st June, 2018 to 31st March, 2019 (d) 1st September, 2018 to 31st January, 2019
Ans.(b)
(35) Income of business commenced on 1st March, 2019 will be assessed in assessment year -
(a) 2018-19 (b) 2019-20
(c) 2020-21 (d) 2021-22 Ans.(b)
(36) A person follows calendar year for accounting. For taxation, he has to follow:
(a) Calendar year only- 1st January to 31st December (b) Financial year only - 1st April to 31st
March
(c) Any of the Calendar or Financial year as per his choice
(d) He will to follow extended year from 1st January to next 31sl March (a period of 15 months)
Ans.(b)
(37) In which of the following cases, income of previous year is assessable in the previous year
itself:
(a) Assessment of persons leaving India (b) A person in employment in India
(c) A person who is into illegal business (d) A person who is running a charitable
institution
Ans.(a)
(38) The total income of Atul, a resident individual, is Rs. 2,65,000. The rebate allowable u/ s 87A
would be - (June, 2015)
(a) Rs. 2.000 (b) Nil
(c) Rs. 750 (d) Rs. 1,545. Ans.(c)
(39) In case of non-residents engaged in shipping business in India income earned during the
financial year is -
(a) Taxable in India the same financial year (b) Taxable in India the relevant assessment
year
(c) Not taxable in India in the same financial year (d) Not taxable in India. Ans.(a)
(40) 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% Ans.(b)
(41) Which amongst the following is an exception to the previous year rule?
(a) Business or Profession newly set up. (b) Where a source of income newly set up.
(c) Non-resident engaged in shipping business. (d) None of the above. Ans.(c)
(42) Income Tax is levied on the ______________of a person.
(a) Total Income (b) Total Income-Debt
(c) Gross Total Income (d) Net Income-Debt Perquisites Ans.(a)
(43) The period of 12 months commencing on the 1st day of April every year is known as
______________.
(a) Financial Year (b) Assessment Year
(c) Previous Year (d) Accounting Year Ans.(b)

(44) The charging section of the Income-tax Act, 1961, states that the income earned in a year is
taxable in the next year. This is known as ______________.
(a) Principle of mutuality (b) Previous year rule
(c) Financial year rule (d) None of these. Ans.(b)
(45) Income-tax in India is charged at the rates prescribed by - (Dec. 2014)
(a) The Finance Act of the assessment year (b) The Income-tax Act, 1961
(c) The Central Board of Direct Taxes (d) The Finance Act of the previous year.
Ans.(a)
(46) A new business was set-up on 1st July, 2018 and trading activity was commenced from 1st
September, 2018, the previous year would be the period commencing from - (Dec. 2015)
(a) 1st April, 2018 to 31st March, 2019 (b) 1st July, 2018 to 31st March, 2019
(c) 1st September, 2018 to 31st March, 2019 (d) 1st October, 2018 to 31st March, 2019.
Ans.(b)
(47) Normal rates of income-tax are prescribed in the - (Dec. 2016)
(a) Income-tax Act, 1961 (b) Income-tax Rules, 1962
(c) Finance Act of the current year (d) CBDT circulars Ans.(c)
(48) According to section 2(24) definition of 'income' is - (Dec. 2014)

(a) Inclusive (b) Exhaustive
(c) Exclusive (d) Descriptive. Ans. (a)
(49) 'Income' under section 2(24) includes - (June, 2015) Solve after IOS
(i) The profits and gains of a banking business carried on by a co-operative society with its
members.
(ii) Any advance money forfeited in the course of negotiations for transfer of capital asset.
Choose the correct option with reference to the above statements -
(a) Both (i) and (ii) (b) Only (i)
(c) Only (ii) (d) Neither (i) nor (ii). Ans.(a)
(50) Income includes -
(a) Profits and gains (b) Profit in lieu of Salary
(c) Income from other sources (d) All of the above Ans.(d)
(51) Income is divided in ______________heads of Income.
(a) 4 (b) 5
(c) 6 (d) 3 Ans.(b)
(52) Income includes -
(a) Profits or Gains (b) Capital gains
(c) Lottery winnings (d) All of the above Ans.(d)
(53) The term 'income' includes the following types of incomes — (June, 2010)
(a) Legal (b) Illegal
(c) Legal and illegal both (d) None of the above. Ans.(c)
(54) Which of the following income is not included in the term 'income' under the Income-tax Act,
1961 -
(a) Profit and gains (b) Dividend
(c) Profit in lieu of salary (d) Reimbursement of travelling expenses.
Ans.(d)
(55) Which amongst the following is not a head of Income ?
(a) Salaries (b) Income from house Property
(c) Capital gains (d) Income from exports Ans.(d)
(56) Amongst the following which activity will be taxable?
(a) Profits & gains of any insurance business (b) Income from specific services provided
by carried on by a co-operative society. trade, professional or similar association.
(c) The profits and gains of any banking business (d) All of the above. Ans.(d)
carried on by a co-operative society.
(57) AB & Co. received Rs. 2,00,000 as compensation from CD & Co. for premature termination of
contract of agency. Amount so received is - (Dec. 2014) Solve after PGBP
(a) Capital receipt and taxable (b) Capital receipt and not taxable
(c) Revenue receipt and taxable (d) Revenue receipt and not taxableAns.(a)
(58) Subsidy if given as assistance to carry on business already commenced is a ______________.
(a) Revenue receipt (b) Capital receipt Solve after PGBP
(c) It is not a receipt (d) None of these Ans.(a)
(59) Which of the following is not included in taxable income - (Dec. 2014)
(a) Income from smuggling activity (b) Casual income
(c) Gifts of personal nature subject to a maximum (d) Income received in kind.
of Rs. 50,000 received in cash Ans. (c)
(60) For the previous year 2019-20, taxable income of A Ltd., a domestic company (Turnover in FY
2017-18 was Rs.401 crores) is Rs. 10,86,920. Its tax liability would be - (June, 2015)
(a) Rs. 2,82,600 (b) Rs. 4,47,811
(c) Rs. 3,32,770 (d) Rs. 3,39,120 Ans.(d)
(61) For the previous year 2019-20, taxable income of A Ltd., a domestic company (Turnover in FY
2017-18 was Rs. 400 crores) is Rs. 10,86,920. Its tax liability would be — (June, 2015)
(a) Rs. 2,71,730 (b) Rs. 27,17,300
(c) Rs. 2,82,600 (d) Rs. 3,35,860 Ans.(c)
(62) Lalit, a resident individual of 81 years works as a consultant. If his taxable income is Rs.
5,20,000, the tax payable by him would be— (June, 2015)
(a) Rs. 22,880 (b) Nil
(c) Rs. 2,080 (d) Rs. 4,160 (Ans.d)
(63) Method of Accounting is not relevant for -
(a) Salaries (b) Income from House Property
Solve after IOS
(c) Capital Gains (d) All of the above Ans.(d)
(64) Which of the following is not included in taxable income —
(a) Reimbursement of expenses (b) Cash gifts received from non relatives
(c) Income from illegal activity company. (d) Profit on sale of equity shares of unlisted
company
Ans.(a)
(65) Total income is to be rounded off to nearest multiple of ______________and tax is to be rounded
off to nearest multiple of
(a) Ten, Rupee (b) Hundred, Ten
(c) Ten, Ten (d) Rupee, Rupee Ans.(c)
(66) An individual is said to have substantial interest in a concern if he or she, along with his or her
relatives, is, at any time during the previous year, beneficial owner of equity shares carrying
______________or more of the voting power in a company; or entitled to ______________or more of the
profits of such concern.
Solve after IOS
(a) 20%,10% (b) 10%,20%
(c) 10%,10% (d) 20%,20% Ans.(d)
(67) Surcharge @ 12% is payable by a domestic company if the total income exceeds.
(a) Rs. 10 lakhs (b) Rs. 1 crore
(c) Rs. 10 crore (d) None of the above. ANS.(C)
(68) Surcharge @ 7% is payable by a domestic company if the total income exceeds.
(a) Rs. 10 lakhs (b) Rs. 50 lakhs
(c) Rs. 1 crore (d) Rs. 10 crores. Ans.(c)
(69) The tax exemption limit for a resident senior citizen is - (Dec. 2014)
(a) Upto Rs. 2,00,000 (b) Upto Rs. 5,00,000
(c) Upto Rs. 1,80,000 (d) Upto Rs. 3,00,000 Ans.(d)
(70) Surcharge of 10% is payable by an individual where the total income exceeds :
(a) Rs. 10,00,000 (b) Rs. 3,50,000
(c) Rs. 1,00,00,000 (d) Rs. 50,00,000 Ans.(d)
(71) Surcharge of 15% is payable by an individual where the total income exceeds :
(a) Rs. 7,50,000 (b) Rs. 8,50,000
(c) Rs. 1,00,00,000 (d) None of the three Ans.(c)
(71A) Surcharge of 25% is payable by an individual where the total income exceeds :
(a) Rs. 2,00,00,000 (b) 5,00,00,000
(c) Rs. 1,00,00,000 (d) None of the three Ans.(a)
(71B) Surcharge of 37% is payable by an individual where the total income exceeds :
(a) Rs. 2,00,00,000 (b) Rs. 5,00,00,000
(c) Rs. 1,00,00,000 (d) None of the three Ans.(b)
(72) The maximum amount on which income-tax is not chargeable in case a co-operative society is:
(a) Rs. 50,000 (b) Rs. 30,000
Solve after chapter
(c) Rs. 20,000 other entities (d) Nil Ans.(d)
(73) Additional surcharge (health and education cess) of 4% per cent is payable on -
(a) Income tax (b) Income tax plus surcharge
(c) Surcharge (d) None of the three Ans.(b)
(74) What is the maximum amount of income not chargeable to tax in case of AOP/BOI ?
(a) Rs. 2,50,000 (b) Rs. 1,45,000
(c) Rs. 10,000 (d) None of these. Ans.(a)
(75) In case of Partnership firm or company and foreign company marginal relief is provided if total
income exceeds ? ______________.
(a) Rs. 1 crore (b) Rs. 10 lakhs
(c) Marginal relief (d) None of these Ans., (a)
(76) What is the rate of Health and Education cess?
(a) 3% (b) 2%
(c) 4% (d) There is no such tax. Ans.(c)
(77) The total income is rounded off to the nearest multiple of -
(a) Rs. 1 (b) Rs. 10
(c) Rs. 100 (d) Rs. 1,000 Ans.(c)
(78) Unexplained cash credits are chargeable to tax @ ______________.
(a) 10% (b) 15%
(c) 20% (d) 60% Ans.(d)
(79) If a firm's total Income is . 1,03,00,000, the marginal relief available to the firm is -
(a) Rs. 3,09,000 (b) Rs. 3,03,000
(c) Rs.1,60,800 (d) None of these. Ans.(c)
(80) If a resident Individual's (50 years of age) total Income is . 51,00,000, the marginal relief
available to the him is -
(a) Rs. 75,125 (b) Rs. 64,250
(c) Rs.20,800 (d) Nil. Ans.(b)
(81) The amount of Health and Education cess to be collected along with income-tax for AY 2020-
21 shall be
(a) 1% (b) 2%
(c) 4% (d) 3% Ans.(c
(82) In respect of a resident assessee, who is of the age of 60 years or more at any time during the
previous year but less than 80 years on the last day of Previous Year relevant to Assessment Year
2019-20: (June, 2008)
(a) Rebate of tax payable subject to a (b) Higher basic exemption of. 1,50,000.
maximum of Rs. 20,000.
(c) Higher basic exemption of. 3,00,000. (d) Higher basic exemption of . 1,35,000.
Ans.(c)
(83) Surcharge of 15% is payable by an Hindu Undivided Family where the total income exceeds :
(a) Rs. 7,50,000 (b) Rs. 8,50,000
(c) Rs. 1,00,00,000 (d) None of the three. Ans.(c)
(84) In case of resident HUF, what is maximum exemption limit for Assessment Year 2020-21 :
(a) . 3,00,000 (b) Rs. 2,50,000
(c) .5,00,000 (d) Rs. 2,20,000 Ans.(b)
(85) In case of a female individual, who is of 59 years of age, what is the maximum exemption limit
for A.Y. 2020-21:
(a) . 3,00,000 (b) Rs. 2,50,000
(c) .5,00,000 (d) Nil Ans.(b)
(86) The income-tax payable by a Resident Individual (aged 30 years) for A.Y. 2020-21 if his total
income is . 3,00,000 will be:
(a) . 2,060 (b) Rs. 2'210
(c) .2,206 (d) Nil Ans.(d)
(87) The income-tax payable by a Non Resident Individual (aged 30 years) for Assessment Year
2020-21 if his total income is . 2,70,000 will be :
(a) . 1,040 (b) Rs. 2,000
(c) . 2,080 (d) Nil Ans.(a)
(88) The income-tax payable by a Resident Individual (aged 30 years) for A.Y. 2020-21 if his total
income is Rs 5,01,500 will be :
(a) Rs.12,800 (b) Rs. 13,312
(c) Rs.13,310 (d) Rs. 300 Ans.(c)
(89) The income-tax payable by a Mrs Swati Non Resident Individual (aged 65 years) for A.Y. 2020-
21 if her total income is Rs. 2,75,000 will be :
(a) Nil (b) Rs. 1250
(c) Rs. 1,300 (d) Rs. 2600 Ans.(c)
(90) The income-tax payable by a Mr Bansal Resident Individual (aged 25 years) for A.Y. 2020-21
if his total income is Rs. 4,50,000 will be :
(a) Nil (b) Rs. 10,400
(c) Rs. 20,800 (d) Rs. 10,000 Ans.(a)
(91) Arun, a non-resident of India celebrated his 80th birthday on 10th October 2019. If his total
income for the previous year is Rs. 6,00,000, his income-tax liability for the previous year 2019-20
is - (June 2016)
(a) Rs. 33,800 (b) Rs. 41,600
(c) Rs. 20,800 (d) Nil Ans.(a)
(92) The amount of marginal relief admissible to Mr Bansal Resident Individual (aged 25 years) for
AY 2020-21 if his total income is Rs. 1,01,00,000 will be :
(a) Rs. 75, 125 (b) Rs. 2,00,000
(c) Rs. 2,20,000 (d) Nil Ans.(a)
(93) The amount of marginal relief admissible to Mr Amit Resident Individual (aged 25 years) for
AY 2020-21 if his total income is Rs. 51,00,000 will be :
(a) Rs. 75,125 (b) Rs. 1,42,100
(c) Rs. 64,250 (d) Nil Ans.(c)
(94) The maximum income of X is not chargeable to tax is case of non-resident woman of 60 years
of age.
(a) Rs. 2,50,000 (b) Rs. 3,00,000

(c) Rs. 5,00,000 (d) Rs. 10,00,000 Ans.(a)
(95) The tax payable is rounded off to the nearest multiple of —
(a) Rs. 1 (b) Rs. 1,000
(c) Rs. 10 (d) Rs. 100 Ans.(c)
(96) The income-tax payable by a Non Resident Individual (aged 30 years) for AY 2020-21 if
his total income is Rs. 2,75,500 will be:
(a) Rs. 1,330 (b) Rs. 1,326
(c) Rs. 2,650 (d) Rs. 2,650 Ans.(a)
(97) The income-tax payable by a Resident Individual (aged 30 years) for AY 2020-21 if his total
income is Rs. 5,00,000 will be :
(a) Rs. 13,000 (b) Rs. 12,875
(c) Rs. 12,880 (d) Nil Ans.(d)
(98) The income-tax payable by a Non Resident Individual (aged 30 years) for AY 2020-21 if his
total income is Rs. 5,00,000 will be:
(a) Rs. 25,750 (b) Rs. 13,000
(c) Rs. 12,875 (d) Nil Ans.(b)
(99) The income-tax payable by a Resident Individual (aged 30 years) for AY 2020-21if his total,
income is Rs. 6,00,000 will be:
(a) Rs. 33,800 (b) Rs. 33,475
(c) Rs. 32,500 (d) Rs. 30,300 Ans.(a)
(100) The income-tax payable by a Resident Individual (aged 30 years) for AY 2020-21if his total
(a) Rs. 3,04,200 ' (b) Rs. 3,01,275
(c) Rs. 2,92,500 (d) T 3,30,000 Ans.(a)
(101) The income-tax payable by a Non Resident Individual (aged 62 years) for AY 2020-21if his
total income is Rs. 2,90,000 will be :
(a) Nil (b) Rs. 2,080
(c) Rs. 4,160 (d) Rs. 4,000 Ans.(b)
(a) Nil (b) Rs. 2,080
(c) Rs. 2575 (d) Rs. 4,000 Ans.(a)
income is Rs. 3,50,000 will be:
(a) Rs. 2,080 (b) Rs. 1,040
(c) Rs. 4,160 (d) Nil Ans.(d)
(a) Rs. 3,120 (b) Rs. 6,240
(c) Rs. 8,480 (d) Nil Ans.(d)
(105) The income-tax payable by a Resident Individual (aged 80 years) for AY AY 2020-21if his
total income is Rs. 5,00,000 will be :
(a) Nil (b) Rs. 1,040
(c) Rs. 8,480 (d) Rs. 6,240 Ans.(a)
(a) Nil (b) Rs. 2,080
(c) Rs. 1,040 (d) Rs. 6,240 Ans.(b)
(107) 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 - (Dec. 2014)
(a) Rs. 5 lakh and Rs. 12,500 respectively (b) Rs. 3 lakh and T 2,000 respectively
(c) Rs. 3.5 lakh and Rs. 2,500 respectively (d) Rs. 3 lakh and Rs. 5,000 respectively
Ans.(a)
(108) Calculate Income-tax payable by an Individual (aged 30 years) for AY 2020-21if his total
income is Rs. 1,01,20,000:
(a) Rs. Rs. 33,42,300 (b) Rs. 32,75,775
(c) Rs. 34,06,810 (d) T 32,58,680 Ans.(a)
Answer Hint: Marginal relief will be provided amounting 62,025
(109) Calculate the amount of rebate u/ s 87A in case of a resident individual having total income
of Rs. 3,00,000.
(a) Rs. 5,000 (b) Rs. 2,575
(c) Rs. 2,000 (d) Rs. 2,500 Ans.(d)
(110) Tax rebate under Section 87A is admissible to resident individual if Total Income do not
exceed :
(a) Rs. 3,50,000 (b) Rs. 5,00,000
(c) Rs. 10,00,000 (d) Rs. 50,00,000 AMS. (B)
(111) The income-tax payable by a XYZ Inc a foreign company on total income of Rs. 12,25,500 will
be :
(a) Rs. 5,09,810 (b) Rs. 5,04,906
(c) Rs. 3,82,360 (d) Rs. 3,78,530 Ans.(a)
(112) The income-tax payable by a XYZ Cooperative society on total income of Rs. 50,000 will be :
(a) Rs. 12,480 Solve after other (b) Nil
(c) Rs. 20,800 entities (d) Rs.15,600 Ans.(a)
FILL-IN THE BLANK (Homework)
1 Income of a business commenced on 1st March, 2019 will be assessed during the assessment year . (June
2009)
[Ans: 2019-2020]
2 The maximum exemption limit under the Income-tax Act, 1961 in case of a woman who is less than 60
years of age and who is non-resident in India is ? ______________. (June, 2010) [Ans: Rs.2,50,000]
3 The tax payable or refund due to an assessee is to be rounded off to the nearest ______________. (Dec. 2010)
[Ans: Multiple of Rs. 10]
4 The amount of tax payable by the assessee and the amount of refund due, under the provisions of the
Income-tax Act,1961 shall be rounded-off to the nearest ______________. (June, 2011) [Ans: Multiple of f 10]
5 For the assessment year 2019-20, the basic exemption limit in case of a non-resident individual, aged 66
years is ? ______________. (Dec. 2012) [Ans: Rs.2,50,000]
6 The exemption limit of income available to a resident very senior citizen is ? ______________for Assessment
year 2020-21. [Ans: Rs. 5,00,000]
TRUE/FALSE (Homework)
1 The maximum income of Rs. 3,00,000 is not chargeable to income-tax in case of a resident woman of 65
years age. (June 2009)
Ans: True : For an individual whether man or woman resident in India who is of the age of 60 years or more
at any time during the previous vear but less than 80 years on the last day of previous year the maximum
amount not chargeable to tax isRs. 3,00,000.
2 In the case of an artificial juridical person, surcharge is payable where the total income exceeds Rs.
10,00,000.
Ans: False: Surcharge @ 10% is payable only when the total income exceeds Rs. 50 lakh but does not exceed
Rs. 1 crore and @ 15% if total income exceeds Rs. 1 crore.
3 Surcharge payable by a foreign company on total income in range of Rs. 1 crore - Rs. 10 crore is 2% and
on total income above Rs. 10 core is 5% for Assessment Year 2020-21.
ANS: True.
4 Surcharge of 15% on Income-tax is payable by an individual where the total Income exceeds Rs. 1 crore.
Ans. True.
Ch 2 – Part 2 – Residential Status 2.13
CHAPTER 2 – Part 2
Residential Status
(1) Residential status to be determined for :
(a) Previous year (b) Succeed ing Year
(c) Calendar year (d) None of the above Ans.(a)
(2) To claim the status of Not Ordinarily Resident for individual -
(a) Only one basic condition needs to be satisfied. (b) One basic and one additional condition
are to be satisfied.
(c) Need not satisfy any of the conditions. (d) Only additional condition is to be
satisfied.
Ans.(b)
(3) To claim the status of Non-resident for individual -
(a) Only one basic condition need to be satisfied. (b) One basic and one additional condition
is to be satisfied.
(c) Need not satisfy any of the conditions. (d) Only additional conditions are to be
satisfied. Ans.(c)
(4) Amongst the following which is the basic condition to identify the residential status of the
individual -
(a) Person must be in India for or more than 182 days during the previous year.
(b) Person must be in India for less than 60 days during the previous year and 365 days or more
during The four years preced=ing the previous year.
(c) He must be in India in nine out of ten previous years preceding that year.
(d) All of these. Ans.(a)
(5) Amongst the following which is the basic condition to identify the residential status of the
individual -
(a) Person must be in India for less than 180 days during the previous year.
(b) Person must be in India for 60 days or more during the previous year and 365 days or more
during the four years preceding the previous year.
(c) He must not be in India in nine out of ten previous years preceding that year.
(d) Non of these Ans.(b)
(6) Atul is a foreign citizen. His father was born in Delhi in 1951 and mother was bom in England in
1950. His grandfather was bom in Delhi in 1922. Atul visited India to see Taj Mahal and visit other
historical places. He came to India on 1st November, 2019 for 200 days. He has never come to India
before. His residential status for assessment year 2020-21 will be - (Dec. 2014)
(a) Non resident in India (b) Not ordinarily resident in India
(c) Resident in India (d) None of the above Ans.(a)
(7) Determine the residential status of Mr. X a foreign citizen who came to India for the first time
on 15 April, 2019 for a period of just 200 days -
(a) Resident (b) Non-Resident
(c) Not ordinarily Resident (d) Any of these Ans.(c)
(8) The following additional conditions are to be satisfied by a person to be resident and ordinarily
resident in India - (Dec. 2014)
(a) He is a resident in at least two out of the ten previous years immediately preceding the relevant
previous year
(b) He has been in India for 730 days or more during the seven previous years immediately
preceding the relevant previous year
(c) Both (a) and (b) (d) None of the above Ans.(c)
(9) X, an Indian citizen, who is living in Delhi since 1980, left for Japan on 1sl July, 2017 for
employment. He came back to India on 1st January, 2019 on a visit and stayed for 4 months. His
residential status for the assessment year 2019-20 would be - (Dec. 2014)
(a) Resident and ordinarily resident (b) Not ordinarily resident
(c) Nonresident (d) Resident. Ans.(c)
(10) Paresh, a software engineer at ABC Ltd. left India on 10th August, 2019 for the treatment of his
wife. For income-tax purpose, his residential status for the assessment year 2020-21 will be - (June,
2015)
(a) Resident (b) Non-resident
(c) Not ordinarily resident (d) Cannot be determined from the given
information. Ans.(a)
(11) Determine the residential status of Ms. Haseena a person of Indian origin who came for visiting
India on 15th April, 2019. She left India on 30th April 2019.
(c) Not ordinarily Resident (d) Any of these Ans.(b)
(12) Ritesh, an Indian citizen, left India for U.K. on 1st September, 2019 to take up a job there. His
residential status for the assessment year 2020-21 would be - (Dec. 2016)
(c) Non-resident (d) None of the above. Ans.(c)
(13) Mr. Rajiv, bom and brought up in India left for employment in Belgium on 15-10-2019. He has
never gone out of India, previously. What is his residential status for the assessment year 2020-21
? (June, 2017)
(a) Non-resident (b) Not ordinarily resident
(c) Resident (d) Indian citizen Ans.(c)
(14) Mr. Ramji (age 55) is Karta of HUF doing textile business at Nagar. Mr. Ramji is residing in
Dubai for the past 10 years and visited India for 20 days every year for filing the income tax return
and taking policy decisions o of HUF. His two major sons take care of the day to day affairs of the
business in India. The residential status of HUF for the assessment year 2020-21
is : (June, 2017)
(a) Non-resident (b) Resident
(c) Not ordinarily resident (d) None of the above Ans.(c)
(15) 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 - (Dec. 2014)
(c) Nonresident (d) Resident. Ans.(a)
(16) Determine the residential status of Ms. Haseena a person of Indian origin who has been visiting
India for 100 days every year since last 10 years -
(17) Determine the residential status of Ms. Maria, a US citizen who has been visiting India for 100
days every year since last 10 years -
(c) Not ordinarily Resident (d) Any of these Ans.(c)
(18) Determine the residential status of Mr. Karamchand, an Indian citizen who has left India for
the first time on 15 th July 2019 for the purpose of employment outside India -
(19) Determine the residential status of Mr. Rakesh, an Indian citizen who left India for the first
time on 15 th July 2019 for the purpose of visit outside India. He came back to India on 17th March
2020.
(c) Not ordinarily Resident (d) Any of these Ans.(a)
(20) Determine the residential status of Mohit who came to India for the first time on 15th
December, 2019 for a period of just 200 days -
(21) Arif was citizen of Afghanistan. His mother was born in a village near Kathmandu. He came to
India on visit for first time since 1982 on 02-10-2019 for 190 days. What is the residential status of
Arif ?
(22) 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 : (June, 2008)
(a) 182 Days or more (b) 60 Days or more
(c) 183 Days or more d) 150 Days or more Ans.(a)
RESIDENTIAL STATUS OF HUF
(23) The residential status of HUF depends upon the ______________.
(a) Control and management of affairs. (b) Place of residence of Karta
(c) Place of residence of Karta its members (d) Location of the head office Ans.(a)
(24) Determine the residential status of a HUF if HUF's control and management is wholly situated
in India and Karta of HUF is a Non-resident in India for that previous year.
(a) Resident and Ordinary Resident (ROR) (b) Resident but not ordinary resident
(RNOR)
(c) Non-Resident (NR) (d) ROR or RNOR Ans.(d)
(25) Find the residential status of HUF whose control and management is partly in India and the
Karta stays in India for 360 days during the period of 7 years.
(c) Not Ordinarily Resident (d) Any of these Ans.(c)

(26) Find the residential status of HUF whose control and management is wholly outside in India
and the Karta stays in India for 360 days during the period of 7 years.
(c) Not Ordinarily Resident (d) Any of these Ans.(b)
(27) Find the residential status of HUF whose control and management is partly in India and the
Karta stays in India for 750 days during the period of 7 years preceding the previous year and is
resident in last 4 years preceding the previous year.
(c) Not Ordinarily Resident (d) Any of these Ans.(a)
(28) Ram who was born and brought up in India left for employment in Dubai on 20 th August,
2019. His residential status in respect of the assessment year 2020-21 would be - (Dec. 2015)
(a) Resident and ordinarily resident (b) Non-resident
(c) Not ordinarily resident (d) None of the above. Ans.(b)
(29) Somesh was bom in New Jersey in 1976 and his father was bom in China in 1948 whereas
Somesh's grandfather was bom in India in 1932. Somesh visited India for 180 days during the
previous year. His residential status is -
(a) Resident (b) Not Ordinarily Resident
(c) Not Resident (d) Any of these Ans.(c)
(30) Sony Bros. HUF was partly controlled from India by its Karta, Mahesh who is citizen of India
but stays outside India. For the purpose of managing affairs of the HUF, Mahesh regularly visits
India. Determine the residential status of the HUF for the Assessment Year 2020-21, if during the
last 12 years Mahesh visited India for 110 days every year.
(c) Not ordinarily Resident (d) Any of these Ans.(a)
(31) Which of the following may be a 'not ordinarily resident' in India - (Dec. 2012)
(a) Partnership firm (b) Joint stock company
(c) Association of persons (d) Hindu Undivided Family. Ans.(d)
(32) HUF of Ashwin consisting of himself, his wife and 2 sons is assessed to income-tax. The
residential status of HUF would be non-resident, when - (Dec. 2015)
(a) The management and control of its affairs is (b) The management and control of its
affairs is wholly in India wholly outside India
(c) The status of karta is non-resident for that year (d) When majority of the members are
nonresident. Ans.(b)
(33) ______________will be resident in India even if its place of effective management, is outside India
during the previous year.
(a) Indian Company (b) Foreign Company
(c) Partnership firm (d) All of these Ans.(a)
(34) XYZ LLP will be ______________in India if control and management of its affairs is wholly situated
outside India during the previous year.
(c) Not Ordinarily Resident (d) Any of these Ans.(b)
(35) A company is said to be resident in India in previous year, if:

(a) It is an Indian company (b) Its place of effective management, is in
India.
(c) Either it is an Indian company or its place of management, is in India
(d) It is both an Indian Company and its place of effective effective management, is in India.
Ans.(c)
(36) XYZ Ltd. an Indian company will be ______________in India if its place of effective management is
wholly situated outside India during the previous year.
(c) Not Ordinarily Resident (d) Any of these Ans.(a)
(37) An Indian company would:
(a) be resident in India if its control and (b) be resident in India if its place of
effective management is in India management, is in India
(c) be resident in India if its place of effective (d) be always resident in India irrespective of its
management, is outside India place of effective
management.
Ans.(d)
(38) ______________will be resident in India if its place of effective management, is in India during the
previous year.
(a) Indian Company (b) Foreign Company
(c) Domestic Company (d) All of these Ans.(b)
(39) Residential status of an Indian company is resident and ordinarily resident for the year 2020-
21 - (Dec. 2015)
(a) If the entire control and management is wholly (b) If part of the control and management is
in in India India
(c) Regardless of the place of control and management (d) If it is listed on recognised stock
exchange. Ans.(c)
(40) Alpha Ltd. is an Indian company, It carries its business in Delhi and London. Total control and
management of the company is situated in London. More than 85% of its business income is from
the business in England. If so, its residential status will be - (June 2016)
(a) Resident (b) Non-resident
(c) Not ordinarily resident (d) Foreign company Ans.(a)
(41) A company incorporated outside India having its control and management fully situated in
India in the previous year will be treated as - (Dec. 2016)
(a) Resident (b) Not ordinarily resident
(c) Non-resident (d) None of the above Ans.(a)
(42) X Ltd. is an Indian Company. It carries on business in Mumbai and New York and its place of
effective management, is situated outside India. Further, 80% of total Income of the company is
from the business in London. What is the residential status of X Ltd?
(c) Not ordinarily Resident (d) Any of these. Ans.(a)
(43) A foreign company would be resident in India:

(a) if its control and management is partly in India (b) if its place of effective management, is in
India
(c) if its place of effective management, is outside (d) If its control and management is wholly
in India India
Ans. (b)
(44) Satish brought into India, in the previous year, past untaxed income which was earned in U.K.
The income will be taxable if Satish is - (Dec. 2016)
(a) An ordinarily resident (b) A not-ordinarily resident
(c) Anon-resident (d) None of the above Ans.(d)
(45) Income which accrue outside India from a business controlled from India is taxable in case of:
(a) Resident only (b) Both ordinarily resident and NOR
(c) Non-resident (d) All the assesses Ans.(d)
(46) Income deemed to accrue or arise in India is taxable if the person is -
(c) Non Resident (d) Any of these Ans.(d)
(47) Income which accrues outside India but is received in India is taxable if the person is -
(48) Income which is received outside India but is deemed to accrue in India is taxable if the person
is -
(49) Income accrued outside India and received outside India is taxable in case of:
(a) Resident and ordinary resident (ROR) only(b) Resident but not ordinary resident (RNOR) only
(c) Non resident only (d) ROR, RNOR and Non-Resident

Ans.(a)
(50) The following income is deemed to be received in India
(a) Employer's contribution to a recognised provident fund in excess of 12% of salary; and
interest credited thereon in excess of 9.5% p.a.;(b) Transferred balance in a recognised provident
fund to the extent of employer's contribution and interest thereon;
(c) Contribution made by the Central Government or any other employer in the PY, under a
pension scheme referred to in Section 80CCD; (d) All of these.
Ans.(d)
(51) Interest credited to RPF in excess of is taxable as deemed receipt.
(a) 8.00% (b) 8.50%
(c) 9.50% (d) 9.00%

Ans.(c)
(52) Which of the following incomes is deemed to accrue or arise in India ?

(a) Income from any business connection in India. (b) Income from a property in India.
(c) Income through transfer of capital asset situated in India. (d) All of these.
Ans.(d)
(53) Which of the following incomes is not deemed to accrue or arise in India ?
(a) Income from any business connection in India. (b) Income from a salary for services rendered
in India.
(c) Income through transfer of capital asset situated outside India. (d) Dividend paid by an Indian
company outside India. Ans.(c)
(54) Which of the following incomes is deemed to accrue or arise in India ?
(a) Income which falls under the head "Salaries", if it is earned in India. (b) Income chargeable
under the head "Salaries" payable by the Government to a citizen of India for service rendered
outside India.
(c) Income by way of interest payable by the Govt. (d) All of these.
Ans.(d)
(55) Which of the following incomes is deemed to accrue or arise in India -
(a) Income by way of fees for technical services payable by non-resident, where it is payable in
respect of any services utilised in a business or profession carried on by such person in India.
(c) Income chargeable under the head "Salaries" payable by the Indian Company to a citizen of India
for service rendered outside India. arise in India ?
(b) Income by way of royalty payable by resident where it is payable in respect of any right used
for the purposes of a business or profession carried on by such person outside India
(d) Income earned by a foreign company engaged in the business of mining of diamonds through
or from the activities which are confined to the display of uncut and unassorted diamond in any
special zone notified by the Central Government in the Official Gazette in this behalf. Ans., (a)
(56) Income chargeable under the head "Salaries" payable by the Government of India to a citizen
of India for service rendered outside India is taxable if the person is -
(c) Not Resident (d) Any of these Ans.(d)
(57) The person who concludes contracts on behalf of the non-resident is known as -
(a) Concluding agent (b) Stocking agent
(c) Indenting agent (d) None of these Ans.(a)
(58) Business activity carried on with which of the following agent is not a business connection?
(a) Concluding agent (b) Stocking agent
(c) Indenting agent (d) None of these Ans.(d)
(59) Fees for technical services means any consideration for rendering of any:
(a) Managerial service (b) Technical service
(c) Consultancy service (d) All of these Ans.(d)
(60 From the following particulars of Income furnished by Ms. Usha pertaining to the year ended
31-03-2019, - Particulars Amount (?)
(i) Dividend received from shares of Indian Company 55,000
(ii) Business Income carried in Singapore controlled from India, received there,and subsequently
remitted to India 37,000 If Usha is Resident what is her total income?
(a) Rs. 55,000 (b) Rs. 37,000
(c) Rs. 92,000 (d) Nil Ans.(b)
(61) From the following particulars of Income furnished by MR. X an Indian citizen pertaining to
the year ended 31-03-2020,- Particulars Amount (?)
(i) Salary received from Government of India for services rendered outside India 75,000
(ii) Income from property in US received in US 37,000
If X is Non Resident what is his total income?
(a) Rs. 75,000 (b) Rs. 37,000
(c) Rs. 1,12,000 (d) Nil Ans.(a)
(62) Mr. K is an Indian citizen. He has an income from artwork in USA and spent for medical
treatment in France Rs. 15,000 and Income from publishing magazine in UK by collecting news and
views in India (80% attributable to operations in India) is Rs. 50,000. What will be his total Income
if he is a NOR?
(a) Rs. 15,000 (b) Rs. 40,000
(c) Rs. 55,000 (d) Rs. 65,000 Ans.(b)
(63) Following are the particulars of Income of Adarsh -
(i) Income from agriculture in Indonesia being invested there only - Rs. 12,350
(ii) Income from business in Bangladesh being controlled from India - Rs. 10,150.
If Adarsh is NOR what is his total income?
(a) Rs. 12,350 (b) Rs. 10,150
(c) Rs. 22,500 (d) Rs. 2,200 Ans.(b)
If Adarsh is Resident what is his total income?
(a) Rs. 12,350 (b) Rs. 10,150
(c) Rs. 22,500 (d) Rs. 2,200 Ans.(c)
If Adarsh is Non - Resident what is his total income?
(a) Rs. 12,350 (b) Rs. 10,150
(c) Rs. 22,500 (d) Nil Ans.(d)
(66) Abhay earns the following income during the previous year ended 31st March, 2020 : (Dec
2014)
> Interest on U.K. Development Bonds (l/4th being received in India): Rs. 2,00,000;
> Profits on sale of a building in India but received in Holland : Rs. 2,00,000.
The income liable to tax for the assessment year 2020-21 if Abhay is resident and not ordinarily
resident in India, is - (a) Rs. 2,50,000 (b) Rs. 4,00,000
(c) Rs. 2,00,000 (d) Rs. 50,000. Ans.(a)

(67) Following are the particulars of Income of Prakash -
(i) Past untaxed profits brought in India during the previous year - Rs. 75,000
(ii) Income from agriculture in Japan being invested there only - Rs. 12,350
(iii) Income from business in Bangladesh being controlled from India - Rs. 10,150.
If Prakash is Resident what is his total income?
(a) Rs. 12,350 (b) Rs. 10,150
(c) Rs. 22,500 (d) Rs. 97,500 Ans.(c)
(68) Profits of Rs. 1,00,000 for the year 2018-19 of a business in Germany remitted to India during
the previous year 2019-20 (not taxed earlier) would be:
(a) Taxable in India for ROR only (b) Not taxable in India for all (ROR, RNOR
& NR)
(c) Taxable in India for all (ROR, RNOR and NR) (d) Taxable only for RNOR and NR Ans.(b)
(69) Profits of Rs. 2,00,000 is earned from a business in USA which is controlled in India, half of the
profits being received in India. How much amount is taxable in India for a Non-resident Individual
?
(a) Rs. 2,00,000 (b) Nil
(c) Rs. 1,00,000 (d) Rs. 3,00,000 Ans.(c)
(70) Dividend from British Co. of Rs. 2,00,000 received in London will be taxable in case of:
(a) Resident and ordinary resident (ROR) only (b) Not ordinary resident (NOR) only
(c) Non resident (NR) only (d) ROR, NOR and NR all Ans.(a)
(71) Thomas Inc. of Australia borrowed money from various companies in Australia for doing
business in India by name ANS Co. Ltd. Mumbai. Thomas Inc. paid interest of Rs. 500 lakhs
(converted) to various lenders. The amount of interest paid : (June' 2017)
(a) Has accrued in India (b) Is exempt from tax
(c) Does not accrue in India (d) Is taxable in Australia Ans.(a)
(72) Income of non-resident when attributed from operations in India relating to the following is
taxable in India :
(1) Profits of business
(2) Fee for technical services
(In these 2 cases we need to see, who is the payer)
(3) Royalty
(4) Income from house property in India
Select the correct answer from the options given below - (Dec. 2015)
(a) (1) and (4) (b) (1), (3) and (4)
(c) (1) and (3) (d) (1), (2) (3) and (4). Ans.(a)
(73) From the following particulars of Income furnished by Mr. Anirudh pertaining to the year
ended 31-03-2020, - Particulars Amount (?)
(i) Profit on sale of shares of private limited Indian Company received in Germany 15,000
(ii) Dividend from a Japanese Company received in Japan 10,000
(iii) Agricultural income from lands in Gujarat 27,000
If Anirudh is Non-Resident what is his total income?
(a) Rs. 15,000 (b) Rs. 10,000
(c) Rs. 27,000 (d) Rs. 25,000 Ans.(a)

(74) From the following particulars of Income furnished by Mr. Anirudh pertaining to the year
(i) Interest received from Indian Government bonds outside India 15,000
(ii) Royalty received in India from non resident who used the rights for business outside India
10,000
(iii) Agricultural income from lands in Japan received in India 37,000
If Anirudh is Non- Resident what is his total income?
(a) Rs. 15,000 (b) Rs. 10,000
(c) Rs. 25,000 (d) Rs. 62,000 Ans.(d)
(75) From the following particulars of Income furnished by Mr. Kamlesh pertaining to the year
(i) Interest received from Indian Government bonds outside India 15,000
(ii) Royalty received outside India from non resident who used the rights for business outside India
20,000
(iii) Agricultural income from lands in Japan (20% is received in India) 37,000
If Kamlesh is Non- Resident what is his total income?
(a) Rs. 15,000 (b) Rs. 20,000
(c) Rs. 7,400 (d) Rs. 22,400 Ans.(d)
(76) From the following particulars of Income furnished by Ms. Sharmilee pertaining to the year
ended 31-03-2020, -
Particulars Amount (?)
(i) Profit on transfer of building situated in Delhi received in London 15,000
(ii) Business Income carried in Singapore received there,and subsequently remitted to India 37,000
If Sharmilee is Non- Resident what is her total income?
(a) Rs. 15,000 (b) Rs. 37,000
(c) Rs. 52,000 (d) Nil Ans.(a)
(77) From the following particulars of Income furnished by Ms. Kajol pertaining to the year ended
31-03-2020, - Particulars ' . . _
Amount (?)
(i) Profit on transfer of building situated in Delhi received in London 35 000
remitted to India 37,000
If Kajol is Not ordinarily Resident what is her total income?
(a) Rs. 35,000 (b) Rs. 37,000
(C) Rs.72,000 (d) Nil Ans.(c)
(78) From the following particulars of Income furnished by Mr. Paresh pertaining to the year ended
31-03-20120-
Particulars Amount (?)
(i) Interest received in Japan on Indian Government bonds. 35,000
remitted to India 37,000
If Paresh is Not ordinarily Resident what is his total income?

(a) Rs. 35,000 (b) Rs. 37,000
(c) Rs. 72,000 (d) Nil Ans.(c)
(79) Dividends received from an Indian company in USA is ______________in case of a resident,
______________in case of a not ordinarily resident and ______________in case of a non-resident?
(a) Taxable, exempt, exempt (b) Taxable, taxable, taxable
(c) Taxable, taxable, exempt (d) Exempt, exempt, exempt Ans.(d)
(80) Income accruing in India in previous year is taxable for - (Dec 2009)
(a) Resident (b) Not ordinarily resident
(c) Non-resident (d) All of the above. Ans.(d)
(81) Every year, the residential status of an assessee - (June 2010)
(a) May change (b) Will certainly change
(c) Will not change (d) None of the above. Ans.(a)
(82) Income accruing from agriculture in a foreign country is taxable in the case of an assessee who
is — (Dec. 2010)
(a) Resident (b) Not-ordinarily resident
(c) Non-resident (d) None of the above. Ans.(a)
(83) Foreign income received in India during the previous year is taxable in the case of — (Dec.
2010)
(a) Resident (b) Not-ordinarily resident
(c) Non-resident (d) All of the above. Ans.(d)
(84) Income earned and received outside India during preceeding years but later on remitted to
India, is taxable in the case of- (June, 2012)
(a) All the assessees (b) Resident and ordinarily resident in India
(c) Non-resident (d) None of the above. Ans.(d)
(85) Past untaxed profit of the financial year 2006-07 brought to India in 2018-19 is chargeable to
tax in the assessment year 2020-21 in the hands of — (June 2013)
(a) All the assessees (b) Resident and ordinarily resident in India
(c) Non-resident in India (d) None of the above. Ans.(d)
(86) Total income of a person is determined on the basis of his — (June 2013)
(a) Residential status in India (b) Citizenship in India
(c) Both (a) and (b) above (d) None of the above. Ans.(a)
FILL-IN THE BLANK

(1) A company other than an Indian company would be a resident in India for the previous year
2019-20, if during that year its ______________is situated in India. (June 2008) [Ans: place of effective
management]
(2) The residential status of an assessee is determined for the relevant ______________. (Dec.) [Ans:
Previous Year]
(3) The incidence of tax on any assessee depends upon has ______________under the Act. [Ans:
Residential Status]
(4) If control and management of the affairs of HUF is situated wholly outside India it would become
a ______________. [Ans: Non-resident]
TRUE /FALSE
(1) An Indian company is always resident in India no matter where and to what extent its place of effective
management is situated. (June, 2010)
Ans: True: According to Section 6(3) of the Income-tax Act, 1961, an Indian company is always resident in
India no matter where and to what extent its place of effective management is situated.
(2) Sandeep Ltd. is a company registered in Japan. The place of effective management of its affairs is situated
in India. Sandeep Ltd. is non-resident company in India. (Dec. 2011)
Ans: False : As the place of effective management of affairs of Sandeep Ltd. is situated in India therefore
Sandeep Ltd. is a resident company in India.
Ch 3 – Exempt Income 3.1
CHAPTER 3 INCOMES EXEMPT FROM TAX
(1) Which of the following income is not exempt under section 10 - (Dec.)
(a) Share in total income of firm (b) Income from agriculture in Lahore
(c) Bonus on life insurance (d) Income from mutual funds. Ans.(b)
(2) Mr. X received compensation of Rs. 2,60,000 from the Central Government on account of
disaster. He claimed Rs. 1,20,000 as a deduction on account of loss or damage caused by such
disaster under this Act. What amount of compensation received shall be exempt?
(a) Rs. 2,60,000 (b) Rs. 1,40,000
(c) Rs. 1,20,000 (d) Nil Ans.(b)
(3) If in the above case, Mr. X claimed Rs. 2,60,000 as a deduction on account of loss or damage
caused by such disaster under this Act then what amount of compensation received shall be
exempt?
(a) Rs. 2,60,000 (b) Rs. 1,40,000
(c) Rs. 1,20,000 (d) Nil Ans.(d)
(4) A member of Parliament received Rs. 1,50,000 per month as salary and Rs. 4,50,000 as daily
allowances during previous year 2019-20. The taxable amount will be - (Dec. 2016)
(a) Salary Rs. 18,00,000 (b) Income from profession Rs. 22,50,000
(c) Income from other sources Rs. 18,00,000 (d) Nil Ans.(c)
(5) The amount received including bonus under Life Insurance Policy issued on 1-4-2019 in
respect of which the premium payable for the year during the term of the policy was 15% of the
actual capital sum assured. What shall be the not exempt amount?
Do after deductions chapter
(a) Premium payable exceeds 15% of actual capita] sum assured.
(b) Any sum received on which premium payable exceeds 10% of actual capital sum assured.
(c) Premium payable exceeds 20% of actual capita] sum assured.
(d) No exemption Ans.(b)
(6) If in the above case, the Life Insurance Policy is issued on life of any person, who is a person
with disability or a person with severe disability as referred to in section 80U; or suffering from
disease or ailment as specified in the rules made under section 80DDB then what shall be the not
exempt amount ?
(a) Any sum received on which premium payable exceeds 15% of the actual capital sum assured.
(c) Any sum received on which premium payable exceeds 20% of actual capital sum assured.
(d) No exemption
Do after deductions chapter
Ans.(a)
(7) The amount received including bonus under Life Insurance Policy issued on 01-04-2011 in
respect of which the premium payable for the year during the term of the policy was 15% of the
actual capital sum assured. What shall be the not exempt amount?
(a) Any sum received on which premium payable exceeds 15% of actual capital sum assured.
(c) Any sum received on which premium payable exceeds 20% of actual capital sum assured.
(d) No exemption Ans.(c) Do after deductions chapter
(8) The sum received under Life Insurance Policy including sum allocated by way on bonus on the
policy which shall not be exempt includes:
(a) Any sum received u/s 80DD(3) and 80 DDA(3). Do after deductions chapter
(b) Any sum received under Keyman Insurance Policy.
(c) Any sum received under policy issued on or after 1-4-2012 in respect of which premium payable
for any year exceeds 10% of actual sum assured.
(d) All of the above.
Ans.(d)
(9) In case, the income of an individual (i.e. the parent) includes the income of his minor child in
terms of Section 64(1A), such parent shall be entitled to exemption of :
(a) Rs. 1,500 in respect of each minor child or actual income of minor child, whichever is less.
(b) Rs. 1,500 in respect of each minor child or actual income of minor child, whichever is more.
(c) Rs. 3,000 in respect of each minor child or actual income of minor child, whichever is less.
(d) Rs. 3,000 in respect of each minor child or actual income of minor child, whichever is more.
Do after clubbing chapter Ans.(a)
(10) Mr. X, a resident employee of Hinduja Company established in India, received a scholarship of
Rs. 3,00,000 from his employer to meet education cost of his children. The employee spent an
amount of Rs. 2,75,000 on education of his children. What amount of income shall be exempt to
employee?
(a) Rs. 3,00,000
(b) Rs. 2,75,000
(c) No exemption available
(d) Rs. 25,000 Ans.(a)
(11) Education scholarship received by an employee of a company to meet education cost of his
children shall be exempt if the employee is:
(a) Indian
(b) Foreigner
(c) Indian or foreigner
(d) No exemption available Ans.(c)
(12) Mr. Sankar received Rs. 50,000 as educational scholarship from Nehru Memorial Trust (a
charitable trust). The scholarship is to assist Mr. Sankar for pursuming M.A. (History) at Jawaharlal
Nehru University, New Delhi. The amount of scholarship liable to tax is : (June, 2017)
(a) Rs. 50,000 (b) Rs. 10,000
(c) Rs. 25,000 (d) Nil Ans.(d)
(13) Amount of Daily allowance and constituency allowance shall be exempt if received by:
(a) MLA (b) MP
(c) Members of any parliamentary or legislative (d) All of the above. Ans.(d)
committee.
(14) Mr. Gupta, MLA received a constituency allowance of Rs. 40,000. What amount of income shall
be exempt to him?
(a) Rs. 4,000 (b) Rs. 40,000
(c) Rs. 10,000 (d) No exemption available Ans.(b)
(15) Notified awards and rewards instituted by the Central/State Government for the specified
purposes is exempt if received for:
(a) Literary work (b) Artistic work
(c) Scientific work (d) All of the above Ans.(d)
(16) Raghu traced a missing girl by spending Rs. 20,000. For this, he was awarded with a sum of Rs.
1,20,000. In this case the award is taxable to the extent of - (June 2016)
(a) Rs. 1,00,000 (b) Rs. 1,20,000
(c) Rs. 1,15,000 (d) Nil. Ans.(a)
(17) Mr. G received an award from the Central Government for the work done by him which was
an approved work of the Government. Such award shall be:
(a) Exempt (b) Not exempt
(c) Partly exempt, partly taxable (d) None of the above Ans.(a)
(18) Family pension received on death of member of armed forces where the death occurred in
course of operational duties and in prescribed conditions shall be exempt if received by:
(a) Widow of the member. (b) Children of the member.
(c) Nominated heirs of the member. (d) All of the above. Ans.(d)
(19) Mrs. Gita received a Family pension of Rs. 36,000 on the death of her husband being major in
army who died during the course of operational duties and in prescribed conditions. Calculate the
amount taxable.
(a) Rs. 36,000 (b) Rs. 21,000
(c) 124,000 (d) Nil amount Ans.(d)
(20) Exempt income earned from dividend includes:
(a) Dividend earned as under section 115-0 (b) Dividends received from SEZ units.
(c) Dividend received from foreign company. (d) (a) and(b) but not (c)
Ans.(d)
(21) Dividend income that is taxable:
(a) Dividend received from foreign company. (b) Dividend received as under section
2(22)(e).
Solve after IOS Chapter
(c) Both (a) and (b). (d) Nil Ans.(c)
(22) Amit received income of Rs. 32,500 from units of mutual fund specified in section 10(23D).
Taxable income will be:
(a) Rs. 32,500 (b) Rs. 3,250
(c) Rs. 30,000 (d) Income is Exempt Ans.(d)
( (23) Incomes exempt include:
(a) Income received by any person on behalf of New Pension System Trust
(b) Exemption of specified allowances and perquisites paid to Chairman or retired Chairman or any
other member or retired member of the UPSC.
(c) Income of notified infrastructure debt fund and concessional tax rate on interest received by
non-residents from such fund. (d) All of the above.
Ans.(d)
(24) Income received by certain foreign companies in India in Indian currency from sale of crude
oil or any other goods or rendering of services, as may be notified by the Central Government in
this behalf, to any person is exempt. Condition to be fulfilled to claim such exemption:
(a) The money has been received under an agreement or arrangement entered into, or approved
by, the Central Government.
(b) The foreign company, as well as the arrangement or agreement, are notified by the Central
Government having regard to the national interest.
(c) The foreign company is not engaged in any other activity in India, except receipt of income in
India under such arrangement or agreement. (d) All of the above.
Ans.(d)
(25) ABC institution was existing solely for educational purposes and not for purposes of profit.
The institution was wholly or substantially financed by the Government. The annual receipts of
the institution was Rs. 85,00,000. It earned income of Rs. 2,25,000 during the previous year 2019-
20. Calculate the amount of income taxable.
(a) Rs. 2,25,000 (b) Rs. 25,000
(c) Rs. 2,00,000 (d) Nil Ans.(d)
(26) RSR hospital was existing solely for philanthropic purposes and not for purposes of profit. The
hospital was wholly or substantially financed by the Government. The annual receipts of the
institution was Rs. 90,00,000. It earned income of Rs. 3,00,000 during the previous year 2019-20.
Calculate the amount of income taxable.
(a) Rs. 3,00,000 (b) Rs. 1,00,000
(c) Rs. 2,00,000 (d) Nil Ans.(d)
(27) RSR hospital was existing solely for philanthropic purposes and not for purposes of profit. The
hospital was wholly or substantially financed by the Government. The annual receipts of the
institution was Rs. 1,10,00,000. It earned income of Rs. 3,00,000 during the previous year 2019-20.
Calculate the amount of income taxable.
(a) Rs. 3,00,000 (b) Rs. 1,00,000
(c) Rs. 2,00,000 (d) Nil Ans.(a)
(28) A registered trade union earned Rs. 1,00,000 by way of interest on bank deposits and Rs.
1,80,000 by way of rent from let-out of its premises. Total income of the trade union chargeable to
tax would be - (Dec. 2016)
(a) Rs. 2,24,000 ' (b) Rs. 2,80,000
(c) Rs.1,80,000 (d) Nil Ans.(d)
EXEMPTION IN RESPECT OF UNDER-TAKINGS LOCATED IN SEZ

(29) In case of a unit established by an entrepreneur in SEZ, which begins to manufacture or
produce articles or things or provide any services on or after 1-4-2006, deduction for First 5 years
will be allowed as follows -
(a) 100% of profits and gains from export business (b) 75% of profits and gains from export
business
(c) 100% for first two years and 80% for remaining (d) No deduction three years Ans.(a)

produce articles or things or provide any services on or after 1-4-2006, deduction for next 5 years
will be allowed as follows -
(a) 50% of profits and gains from export business (b) 75% of profits and gains from export
business
(c) 100% for first two years and 80% for remaining (d) No deduction three years Ans.(a)
produce articles or things or provide any services on or after 1-4-2006, deduction for another next
5 years (11-15 years) will be allowed as follows -
(a) 50% of Profits from export business. (b) Amount transferred from P&L A/c to
"Special
Economic Zone Reinvestment Reserve A/c"
(c) Lower of (a) or (b) (d) Higher of (a) or (b) Ans.(c)
(32) Where a deduction under section 10AA is claimed and allowed in respect of profits of any of
the specified business, referred to in section 35AD, for any assessment year, then ________ shall be
allowed under the provisions of section 35AD
Do after
in relation to such specified business for the same or any other assessment year. PGBP
(a) No deduction (b) Full deduction
(c) 75% deduction (d) 50% deduction Ans.(a)
(33) While computing the export turnover, the expenses to be deducted are :
(a) Sales tax (b) Excise duty
(c) Expenditure incurred in foreign exchange (like : (d) All of the above.
freight, etc.) Ans.(d)
(34) Hans Ltd. is a unit located in SEZ. It has Export turnover of Rs. 500 lakhs; Total turnover of Rs.
900 lakhs; Business profits of Rs. 80 lakhs. The said export turnover includes sales tax amounting
to Rs. 20 lakhs and excise duty amounting to Rs. 30 lakhs. Further, the assessee incurred freight
amounting to Rs. 50 lakhs outside India. Compute the deduction available under section 10AA.
(c) Rs. 44.44 lakhs (d) Nil Ans. (a)
(35) Export profits of Rs. 250 lakhs pertaining to previous year 2019-20. Unabsorbed depreciation
of Rs. 100 lakhs pertaining to assessment year 2016-17. Compute the deduction available under
section 10AA.
(c) Rs. 150 lakhs (d) Nil Ans.(c)
(36) X Ltd. is located in SEZ. From the following information furnished by it, compute its total
income : Total turnover for the year = Rs. 500 lakhs, Export turnover = Rs. 400 lakhs, Business
profits = Rs. 50 lakhs. Here, export turnover represents export of computers @ Rs. 80,000 per
computer ?
(c) Rs.100 lakhs (d) Nil Ans.(b)
(37) Tax holiday under section 10AA in respect of newly established units in SEZ is allowed for a
total period of - (Dec. 2016)
(a) 5 Years (b) 10 Years
(c) 15 Years (d) 20 Years Ans.(c)
TRUE/FALSE
(1) Literary awards instituted by the Central Government are exempted from income-tax. (June,
2010)
Ans: True : Under Section 10(17A) of the Act, any payments made in cash or kind in pursuance of
any award instituted in the public interest by the Government or instituted by any other body and
approved by the Central Government is exempt from tax.
(2) There is no difference between 'exemption' and 'deduction'. (Dec. 2012)
Ans: False : If an income is exempt from tax, it is not included in the computation of income.
Exemption can never exceed the amount of income. Deduction is generally given from income
chargeable to tax. Deduction can be less than or equal to or more than the amount of income.
Ch 4 – Salaries 4.1
CHAPTER 4 SALARIES
(1) Which is the charging section of Income under the head salaries?
(a) Section 10 (b) Section 15
(c) Section 5 (d) Section 4 Ans.(b)
(2) Which of the following income is chargeable to income tax under the head salaries?
(a) Salary due (b) Advance Salary
(c) Arrears of Salary (d) All of these. Ans.(d)
(3) Any salary due from an employer or a former employer to an assessee in the previous year
whether paid or not is known as -
(a) Salary due (b) Advance Salary
(c) Arrears of Salary (d) All of these. Ans.(a)
(4) Income is taxable under the head salaries only if there exists ______________relationship between
the payer and payee.
(a) Employer - Employee (b) Principal - Agent
(c) Agent - Principal (d) All of the above. Ans., (a)
(5) A teacher receives remuneration for setting question paper for examination. What is the
chargeability position of this remuneration? Choose the most appropriate answer.
(a) It will be chargeable under the head salaries.
(b) It will be chargeable under the head income from other sources.
(c) It will not be charged to tax under any head.
(d) It will be allowed as deduction. Ans.(b)
(6) Which section gives the definition of salary?
(a) Section 15 (b) Section 17(1)
(c) Section 10 (d) None of these. Ans.(b)
(7) Which amongst the following is not included under the inclusive definition of salary ?
(a) Wages (b) Any annuity or pension
(c) Employer's contribution in RPF in excess of (d) None of these.
12% of salary Ans.(d)
(8) Mr. A joins a job on 1-7-2019 at monthly salary of Rs. 25,000. His salary becomes due on last
day of each month. His gross salary for AY 2020-21 will be —
(a) Rs. 3,00,000 (b) Rs. 2,25,000
(c) Rs. 2,50,000 (d) Rs. 2,00,000 Ans.(b)
(9) Mr. A joins a job on 1-7-2019 at monthly salary of Rs. 20,000. His salary becomes due on first
day of next month. His gross salary for AY 2020-21 will be -
(a) Rs. 1,60,000 (b) Rs. 1,80,000
(c) Rs. 2,20,000 (d) Rs. 2,40,000 Ans.(a)
(10) Mr. A joins a job on 1-7-2018 at monthly salary of Rs. 20,000 in A Ltd. He got an increment of
Rs. 1,000 in the month of July 2019. His salary becomes due on last day of each month. His gross
salary for AY 2020-21 will be -
(a) Rs. 2,49,000 (b) Rs. 2,48,000
(c) Rs. 2,40,000 (d) Rs. 2,52,000 Ans.(a)

Hint
Amont Months Total
20,000.00 3 60,000.00
21,000.00 9 1,89,000.00
(11) Mr. A joins a job on 1-7-2018 at monthly salary of Rs. 20,000 in A Ltd. He got an increment of
Rs. 1,000 in the month of July 2019. His salary becomes due on first day of next month. His gross
salary for AY 2020-21 will be -
(a) Rs. 2,49.000 (b) Rs. 2,48,000
(c) Rs. 2,40,000 (d) Rs. 2,52,000 Ans..(b)
Hint
Amont Months Total
20,000.00 4 80,000.00
21,000.00 8 1,68,000.00
Total 2,48,000.00
(12) Salary of S (Rs. 40,000 per month) becomes due on the last day of the month but is paid on 7th
of next month. Also, salary of April, 2020 and May, 2020 is received in advance in March, 2020. What
will be his gross income for A.Y. 2020-21?
(a) Rs. 5,60,000 (b) Rs. 4,80,000
(c) Rs. 4,40,000 (d) Rs. 5,20,000 Ans.(a)
(13) Mr. A joins a job in the grade of Rs. 20,000-500-25,000-1,000-40,000-1,500-60,000 on 1-7-
2008 which becomes due on last day of each month. His gross salary for AY 2020-21 will be -
(a) Rs. 3,09,000 (b) Rs. 2,97,000
(c) Rs. 3,08,000 (d) Rs. 3,21,000 Ans.(a)
Hint
Per month amount
Jul-08 Jun-09 20,000.00
Jul-09 Jun-10 20,500.00
Jul-10 Jun-11 21,000.00
Jul-11 Jun-12 21,500.00
Jul-12 Jun-13 22,000.00
Jul-13 Jun-14 22,500.00
Jul-14 Jun-15 23,000.00
Jul-15 Jun-16 23,500.00
Jul-16 Jun-17 24,000.00
Jul-17 Jun-18 24,500.00
Jul-18 Jun-19 25,000.00 3 months 75000
Jul-19 Jun-20 26,000.00 9 months 234000
Total 309000

2008 which becomes due on first day of next month. His gross salary for AY 2020-21 will be -
(a) Rs. 3,09,000 (b) Rs. 2,97,000
(c) Rs. 3,08,000 (d) Rs. 3,21,000 Ans.(c)
Per month Salary
Jul-08 Jun-09 20,000.00
Jul-09 Jun-10 20,500.00
Jul-10 Jun-11 21,000.00
Jul-11 Jun-12 21,500.00
Jul-12 Jun-13 22,000.00
Jul-13 Jun-14 22,500.00
Jul-14 Jun-15 23,000.00
Jul-15 Jun-16 23,500.00
Jul-16 Jun-17 24,000.00
Jul-17 Jun-18 24,500.00
Jul-18 Jun-19 25,000.00 4 months 100000
Jul-19 Jun-20 26,000.00 8 months 208000
Total 308000
(15) Which of the following income is taxable under the head 'income from salary' - (Dec. 2011)
(a) Salary received by a partner from firm (b) Salary received by a Member of
Parliament
(c) Salary of a Government Officer (d) None of the above. Ans.(c)
2008 which becomes due on first day of next month. He is also dearness allowance of 100% of
salary. His gross salary for AY 2020-21 will be -
(a) Rs. 6,18,000 (b) Rs. 5,94,000
(c) Rs. 6,16,000 (d) Rs. 6,42,000 Ans.(c)
Hint – 3,08,000 + 3,08,000
(17) Pankaj joins service on 1st April, 2015 in the grade of 15,000 - (1,000) - 18,000 - (2,000) -
26,000. He shall be paying tax for the year ended on 31st March, 2020 on the total salary of - (Dec.
2015)
(a) Rs. 1,76,000 (b) Rs. 2,00,000
(c) Rs. 2,14,000 (d) Rs. 2,24,000 Ans.(b)
Answer Hint: Standard deduction is allowed amounting Rs. 50,000 from Gross salary.
(18) Anjan joins a service is the grade of Rs. 15,600 - 39,100 plus grade pay of Rs. 6,000 on 01-08-
2019. He also gets dearness allowance @ 107% of salary. His tax liability for assessment year 2020-
21 will be - (Dec. 2014)
(a) Rs. 3,520 (b) Rs. 920
(c) Nil (d) Rs. 5,600 Ans.(c)
Amount Months Total

15,600.00 8 1,24,800.00
6,000.00 8 48,000.00
Total 1,72,800.00
DA 1,84,896.00
Gross Salary 3,57,696.00

Standard Deduction 50,000.00
Income under the head Salary 3,07,696.00
Tax Liability (Due to Rebate) Nil
ALLOWANCES
(19) ________ is granted to an employee by his employer to meet expenditure actually incurred on
payment of rent.
(a) Dearness Allowance (b) House Rent Allowance
(c) City Compensatory Allowance (d) None of these. Ans.(b)
(20) Which amongst the following is a fully taxable allowance?
(a) Conveyance allowance (b) Travelling allowance
(c) Medical allowance (d) Research allowance Ans.(c)
(21) For an employee in receipt of hostel expenditure allowance for his three children, the
maximum annual allowance exempt under Section 10(14) is -
(a) Rs. 10,800 (b) Rs. 7,200
(c) Rs.96,00 (d) Rs. 3,600 Atis.(b)
(22) For an employee in receipt of education allowance for his three children, the maximum annual
allowance exempt under Section 10(14) is -
(a) Rs. 1,200 (b) Rs. 2,400
W Rs.4'800 (d) Rs. 3,600 Ans.(b)
(23) Mr. A is employed in ABS Transports as cabin driver. He is paid Rs. 15,000 every month in the
whole of previous year 2019-20 as allowance for meeting his personal expenditure in the course of
running the goods vehicle. Mr. A does not receive any other amount by way of daily allowance. The
amount of allowance eligible for exemption is :
(a) Rs. 1,80,000 (b) Rs. 1,20,000
(c) Rs. 1,26,000 (d) Nil Ans.(b)
(Hint – Running allowance – 70% or 10,000 whichever is lower)
(24) Sneha is an employee in a private company. In the previous year she received salary Rs.
1,80,000 and house rent allowance of Rs. 60,000. She is residing with her parents. Her taxable
house rent allowance will be -
(a) Nil (b) Rs. 60,000
(c) Rs. 42,000 (d) Rs. 18,000 Ans.(b)
(25) Murali employed in Megha Ltd., Delhi. He is paid house rent allowance of Rs. 9,000 per month
in financial year 2019-20.
His salary for the purpose of computation of house rent allowance relief may be taken as Rs. 20,000
per month. Murali pays actual rent of Rs. 10,000 per month. How much of the house rent allowance
is tax-free - (June 2016)
(a) 1108,000 (b) Rs. 1,20,000
(c) Rs. 96,000 (d) Rs. 60,000 Ans.(c)
Hint
1 1,08,000.00
2 96,000.00
3 1,20,000.00
(26) Children education allowance received by an employee from his employer is Rs. 80 per month
per child for 3 children.
Taxable education allowance will be - (Dec. 2014)
(a) Rs. 960 (b) Rs. 480
(c) Nil (d) Rs. 1,200 Ans.(a)
(27) Chandan, a handicapped employee receives Rs. 1,500 per month as transport allowance from
his employer. His actual expenditure on transport is Rs. 1,000 per month. The amount of transport
allowance taxable under the head income from salaries will be - (Dec. 2 014)
(a) Rs. 18,000 (b) Nil
(c) Rs. 6,000 (d) Rs. 8,000. Ans.(b)
Answer Hint : Transport allowance granted to an employee, who is blind or deaf and dumb or
orthopaedically handicapped for commuting between the place of residence and the place of duty
is exempt upto Rs. 3,200 p.m.
(28) Calculate the exempt HRA from the following details : X is entitled to a basic salary of Rs. 50,000
p.m. and dearness allowance of Rs. 10,000 p.m., 40% of which forms part of retirement benefits. He
is also entitled to HRA of Rs. 20,000 p.m. He actually lives with his parents in Mumbai and pays rent
of Rs. 20,000 p.m.
(a) Nil (b) Rs. 1,75,200
(c) Rs. 64,800 (d) Rs. 2,40,000 Ans.(b)
1 2,40,000.00
2 1,75,200.00
3 3,24,000.00
(29) Raman purchased a residential house property in Ahmedabad on loan for which he paid an
interest of Rs. 50,000 during the previous year. He is working in Delhi and getting an HRA of Rs.
4,000 per month. He can claim exemption/deduction for - (June, 2015)
(a) Only HRA (b) Only interest paid
(c) Either interest paid or HRA but not both (d) Both HRA and interest paid. Ans.(d)
(30) Y received children education allowance of Rs. 500 pm for 1 of his children. Calculate taxable
amount of children education allowance for the assessment year 2020-21 if entire Rs. 500 is spent
by Y.
(a) Nil (b) Rs. 4,800
(c) Rs. 6,000 (d) Rs. 3,600 Ans.(b)
(31) Arun, a resident of Meerut, receives Rs. 38,000 per annum as basic salary. In addition, he gets
Rs. 12,000 p.a. as dearness allowance, which does not form part of basic salary, 5% commission on
turnover achieved by him (turnover achieved by him during the relevant previous year is Rs.
6,00,000) and Rs. 7,000 per annum as house rent allowance. He, however, pays Rs. 8,000 per annum
as house rent. The quantum of house rent allowance exempt from tax is - (June 2007)
(a) Nil (b) Rs. 8,000
(c) Rs. 7,000 (d) Rs. 1,200 Ans.(d)
(32) Ramesh a resident of Jaipur, receives Rs. 25,000 p.m. as basic salary. In addition, he gets Rs.
10,000 p.m. as dearness allowance, which form part of basic salary and Rs. 18,000 p.m as house rent
allowance. He, however, pays 120,000 p.m. as house rent. The quantum of house rent allowance
taxable is -
(a) Rs. 48,000 (b) Rs. 6,000
(c) Nil (d) Rs. 24,000 Ans.(a)
Hint
Per Month
1 18,000.00
2 1,16,500.00
3 14,000.00
(33) The maximum exemption in respect of transport allowance granted to an employee to meet
his expenditure for the purpose of commuting between the place of his residence and the place of
his duty shall be - (June, 2009)
(a) Rs. 1,200 per month (b) Rs. 1,400 per month
(c) Nil (d) Rs. 1,800 per month Ans.(c)
(34) The maximum exemption in respect of transport allowance granted to an blind employee to
meet his expenditure for the purpose of commuting between the place of his residence and the place
of his duty shall be - (June, 2009)
(a) Rs. 1,600 per month (b) Nil
(c) Rs. 3,200 per month (d) Rs. 20,000 per month Ans.(c)
(35) Pawan, employed in Magie Ltd., was eligible for transport allowance of Rs. 2,000 per month to
meet his travel expenses from residence to office. He actually incurred Rs. 1,200 per month towards
travel. The amount of travel allowance chargeable to tax as perquisite would be - (Dec. 2016)
(a) Rs. 24,000 (b) Rs. 14,400
(c) Rs. 4,800 (d) Nil Ans.(a)
Answer Hint: Transport allowance granted to meet the expenditure incurred on commuting
between residence and office has been made fully taxable w.e.f. AY 2019-20.
(36) Rajesh an employee of transport company receives Rs. 25,000 p.m. as basic salary. In addition,
he gets Rs. 12,000 p.m. as transport allowance to meet his personal expenditure incurred in course
of his official duty of running the transport from one place to another. He has expended Rs. 60,000
for the said purpose during the previous year. He is not in receipt of daily allowance. The quantum
of transport allowance taxable is -
(a) Rs. 43,200 (b) Rs. 24,000
(c) Rs. 1,44,000 (d) Rs. 84,000 Ans.(a)
(37) Kamlesh an employee of XYZ Ltd. receives Rs. 25,000 p.m. as basic salary. In addition, he gets
Rs. 12,000 p.m. as dearness allowance and Rs. 15,000 p.m as uniform allowance. He has expended
Rs. 60,000 to meet expenditure incurred on purchase and maintenance of uniform during the
previous year. His taxable salary is -
(a) Rs. 5,64,000 (b) Rs. 4,44,000
(c) Rs. 6,24,000 (d) Rs. 5,14,000 Ans.(d)
(38) Sahil an employee of XYZ Ltd. receives Rs. 25,000 p.m. as basic salary. In addition, he gets Rs.
15,000 p.m. as dearness allowance and Rs. 240 p.m for three children as education allowance. His
Gross salary is -
(a) Rs. 4,80,000 (b) Rs. 4,86,240
(c) Rs. 4,80,480 (d) Rs. 4,80,960 Ans.(d)
(39) Naveen an employee of XYZ Ltd. receives Rs. 30,000 p.m. as basic salary. In addition, he gets
Rs. 10,000 p.m. as dearness allowance,not forming part of salary and Rs. 2,000 p.m as fixed medical
allowance. His Gross salary is -
(a) Rs. 5,04,000 (b) 14,89,000
(c) Rs. 4,80,000 (d) Rs. 3,84,000 Ans.(a)
(40) Sneha is an employee in a private company. In the previous year she received salary Rs.
1,80,000 and entertainment allowance Rs. 12,000. She spent Rs. 6,000 on entertainment. Under
section 16(ii), she is entitled to deduction of -
(a) Rs. 12,000 (b) Rs. 6,000
(c) Rs. 5,000 (d) Nil. Ans.(d)
(41) Manav receives 50,000 as basic salary from the government during the financial year 2019-20
and receives Rs. 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 — (Dec.
2010)
(a) Rs. 5,000 (b) Rs. 9,000
(c) Rs. 10,000 (d) None of the above. Ans.(a)
(42) Ravi is receiving Rs. 10,000 as medical allowance from his employer. Out of this, he spends Rs.
5,000 on his own medical treatment, Rs. 2,000 on the medical treatment of his dependent wife and
another L 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 - (June 2016)
(a) Rs. 10,000 (b) Rs. 5,000
(c) Rs. 3,000 (d) Nil Ans.(a)
PERQUISITES
(43) Any benefit or an amenity provided to the employee by the employer directly or indirectly
whether in cash on in kind in addition to salary & wages is known as ______________.
(a) Perquisite (b) Allowance
(c) Deduction (d) Exemption Ans.(a)
(44) Who amongst the following is considered to be a specified employee?
(a) An director employee of the company. (b) An employee having the substantial
interest in the company.
(c) An employee whose income chargeable under (d) All of the above,
the head salary excluding value of all nonmonetary benefits exceeds Rs. 50,000. Ans.(d)
(45) Rent free accommodation provided to employee by the employer is
(a) Exempt from tax. (b) Taxable in case of specified employees
only.
(c) Taxable in case of non specified employee. (d) Taxable whether the employee is a
specified employee or non specified
employee. Ans.(d)
(46) Any sum paid by the employer in respect of any obligation, for which such payment would
have been payable by the employee is -
(a) Exempt from tax. (b) Taxable in case of specified employees
only.
(c) Taxable in case of non specified employee. (d) Taxable whether the employee is a
specified employee or non specified
employee. Ans.(d)
(47) The amount of any contribution to an approved superannuation fund by the employer in
respect of the employee is exempt from tax upto — (June, 2009)
(a) Rs. 1,00,000 (b) Rs. 1,50,000
(c) Rs. 2,00,000 (d) Nil Ans.(b)
(48) Credit card facility provided to employee by the employer is -
(a) Exempt from tax.
(b) Taxable in case of specified employees only.
(c) Taxable in case of non specified employees or non specified employee.
(d) Taxable whether the employee is a specified or non specified employee
Ans.(d)
(49) Manav receives Rs. 50,000 p.m. as basic salary from the government during the financial year
2019-20 and has been provided rent free accommodation in Jaipur (population exceeds 25 lakhs).
The license fee determined by the Government for such accommodation is Rs. 1,000 p.m. The
market rent of such accommodation is Rs. 5,000 p.m. The taxable value of rent free accommodation
will be —
(a) Rs. 12,000 (b) Rs. 60,000
(c) Rs. 90,000 (d) Nil Ans.(a)
(50) Kapil gets salary of Rs. 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 Rs. 1,400
p.m. House was provided with effect from 1st July, 2019. Value of the perquisite of rent-free
accommodation will be - (Dec. 2015)
(a) Rs. 21,600 (b) Rs. 10,800
(c) Rs. 16,200 (d) Rs. 12,600 Ans.(b)
(51) Satish is employed as chief enginer in Gama Ltd., Chennai w.e.f. 1st April, 2019 for a
consolidated salary of Rs. 60,000 per month. He is provided with rent-free unfurnished
accommodation owned by the employer from 1st July, 2019 onwards. The value of taxable
perquisite is - (June 2016)
(a) Rs. 1,08,000 (b) Rs. 81,000
(c) Rs. 72,000 (d) Rs.54,000 Ans.(b)
(52) Paresh receives Rs. 25,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
allowance of Rs. 10,000 p.m. (not forming part of retirement benefit) and has been provided rent
free accommodation in Jaipur (population exceeds 25 lakhs) which is owned by employer. The
market rent of such accommodation is Rs. 5,000 p.m. The taxable value of rent free accommodation
will be —
(a) Rs. 63,000 (b) Rs. 45,000
(c) Rs. 60,000 (d) Rs. 30,000 Ans.(b)
(53) Rakesh receives Rs. 25,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
allowance of Rs. 10,000 p.m. (forming part of retirement benefit) and has been provided rent free
accommodation in Alwar (population is Rs. 15 lakhs) which is owned by employer. The market rent
of such accommodation is Rs. 5,000 p.m. The taxable value of rent free accommodation will be —
(a) Rs. 42,000 (b) Rs. 31,500
(c) Rs. 60,000 (d) Rs. 63,000 Ans.(a)
(54) Sunny receives Rs. 15,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
allowance of Rs. 5,000 p.m. forming part of retirement benefit and has been provided rent free
accommodation, which is owned by employer, in Tonk (population is 8 lakhs). The market rent of
such accommodation is Rs. 1,000 p.m. The taxable value of rent free accommodation will be —
(a) Rs. 18,000 (b) Rs. 13,500
(c) Rs. 12,000 (d) Rs. 36,000 Ans.(a)
(55) Ravi receives Rs. 25,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
accommodation, which is taken on rent, in Tonk (population is 8 lakhs). The employer has paid
monthly rent of Rs. 4,000. The taxable value of rent free accommodation will be —
(a) Rs. 36,000 (b) Rs. 48,000
(c) Rs. 72,000 (d) Rs. 45,000 Ans.(b)
(56) Chhavi receives Rs. 25,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
accommodation, which is taken on rent, in Delhi (population exceeds 25 lakhs). The employer has
paid monthly rent of Rs. 10,000. The taxable value of rent free accommodation will be —
(a) Rs. 36,000 (b) Rs. 48,000
(c) Rs. 72,000 (d) Rs. 1,20,000 Ans.(c)
(57) Chhaya receives Rs. 25,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
allowance of Rs. 15,000 p.m. forming part of retirement benefit and has been provided,
accommodation owned by employer in Delhi (population exceeds 25 lakhs). The employer has
charged rent of Rs. 4,000 p.m. from Chhaya. The taxable value of concessional accommodation will
be —
(a) Rs. 24,000 (b) Rs. 48,000
(c) Rs. 72,000 (d) Nil Ans.(a)
(58) Kavya receives Rs. 25,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
allowance of Rs. 15,000 p.m. forming part of retirement benefit. She has been provided
accommodation owned by employer with effect from lst October 2019 in Delhi (population exceeds
25 lakhs). The market rent of such accommodation is Rs. 2,000 p.m. The taxable value of rent free
accommodation for AY 2020-21 will be —
(a) Rs. 36,000 (b) Rs. 12,000
(c) Rs. 72,000 (d) Rs. 48,000 Ans.(a)

(59) Garima receives Rs. 25,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
accommodation in hotel in Delhi (population exceeds 25 lakhs). The employer has paid monthly
rent of Rs. 8,000 for such hotel accommodation. The taxable value of concessional accommodation
for AY 2020-21 will be —
(a) Rs. 1,15,200 (b) Rs. 96,000
(c) Rs. 72,000 (d) Rs. 48,000 Ans.(b)
(60) Savita receives Rs. 25,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
accommodation in Delhi (population exceeds 25 lakhs) with effect from 01-04-2019. The
accommodation is owned by employer. The employer has also provided furniture original cost Rs.
50,000 (WDV Rs. 40,500) with effect from 1-10-2019. The market rent of such accommodation is
Rs. 12,000 p.m. The taxable value of concessional accommodation for AY 2020-21 will be —
(a) Rs. 74,500 (b) Rs. 77,500
(c) Rs. 76,050 (d) Rs. 74,025 Ans.(a)
(61) Mr. Arjun employed in KI (P) Ltd. at Mumbai was provided rent-free accommodation by the
employer who owned such accommodation. The salary income of Mr. Arjun for the purpose of
computing the perquisite value is Rs. 8 lakhs. The perquisite value of rent-free accommodation in
the hands of Mr. Arjun is : (June, 2017)
(a) 10% of salary i.e. Rs. 80,000 (b) 7.5% of salary i.e. Rs. 60,000
(c) Nil (d) 15% of salary i.e. T 1,20,000 Ans.(d)
(62) Allowances and perquisites allowed to an employee for services outside India are tax free in
case of - (Dec. 2016)
(a) All types of employees (b) Government employees only
(c) Non-government employees only (d) None of the above Ans.(b)
(63) When the employee is provided accommodation in a hotel for a period not exceeding
___________ days on account of his transfer from one place to another, then the value of such
perquisite shall be Nil.
(a) 10 -(b) 15
(c) 90 (d) 60 Ans.(b)
(64) Anil is employed in a company with annual salary of Rs. 8,60,000 (computed). The company
paid income-tax of Rs. 37,000 on his non-monetary perquisites. He paid Rs. 1,20,000 to recognised
provident fund during the year 2020-21. His total income would be - (Dec. 2015)
(a) Rs. 7,77,000 (b) Rs. 7,40,000
(c) Rs. 7,97,000 (d) Rs. 7,60,000 Ans.(b)
(65) Where on account of transfer of employee from one place to another, he is provided with
accommodation at the new place of posting while retaining the accommodation at the other place,
the value of perquisite shall be determined with reference to only one such accommodation which
has the lower value for a period not exceeding days.
(a) 60 (b) 90
(c) 30 (d) 120 Ans.(b)
(66) Ramesh, an employee of Gauri & Co. of Delhi, received the following payments during the
previous year ended 31st March, 2020:
Basic salary : Rs. 2,40,000 and dearness allowance : 40% of basic salary (40% forming part of
salary). Rent-free unfurnished accommodation provided by employer for which rent paid by
employer being Rs. 50,000. The value of taxable perquisite in the hands of Ramesh will be - (Dec.
2014)
(a) Rs. 41,760 (b) Rs. 50,000
(c) Rs. 36,000 _ (d) Rs. 52,500. Ans.(a)
(67) The employee is provided with furniture costing Rs. 1,50,000 along with house w.e.f. 1-7-2019.
The value of the furniture to be included in the valuation of unfurnished house shall be : (June,
2017)
(a) Rs. 11,250 (b) Rs. 15,000
(c) Rs. 22,500 (d) Rs. 16,875 Ans.(a)
(68) Employer provides a car (below 1.6 ltr. capacity) along with a driver to X partly for official and
partly for personal purpose. The expenses incurred by the company are: Running and maintenance
expenses - Rs. 32,000 & Driver's salary - Rs. 36,000. The Taxable value of car facility for assessment
year 2020-21 will be -
(a) Rs. 21,600 (b) Rs. 10,800
(c) Rs. 32,400 (d) Rs. 39,600 Ans.(c)
(69) Garima receives Rs. 2,500 p.m. as basic salary from ABC Ltd. She is also provided dearness
allowance of Rs. 1,500 p.m. forming part of retirement benefit. She has been provided motor car
(engine capacity exceeds 1.6 Its) owned by employer for her personal use. Expenditure incurred by
the employer on running and maintenance of the motor car during the relevant previous year
amounted Rs. 15,000. The taxable value of car facility for AY 2020-21 will be -
(a) Rs. 15,000 (b) Rs. 21,600
(c) Rs. 28,800 (d) Nil Ans.(d)
(70) Reshma receives Rs. 50,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
(engine capacity exceeds 1.6 Its) owned by employer for her personal use. The original cost of car
is Rs. 6,00,000 (WDV Rs. 5,10,000). Expenditure incurred by the employer on running and
maintenance of the motor car during the relevant previous year amounted Rs. 75,000. The salary
of driver paid by the employer - Rs. 96,000. The taxable value of car facility for AY 2020-21 will be
—
(a) Rs. 2,31,000 (b) Rs. 39,600
(c) Rs. 2,22,000 (d) Rs. 1,71,000 Ans.(a)
(71) Sushma receives Rs. 50,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
(engine capacity exceeds 1.6 Its) owned by employer for her personal use as well as official use. The
original cost of car is Rs. 6,00,000 (WDV Rs. 5,10,000). Expenditure incurred by the employer on
running and maintenance of the motor car during the relevant previous year amounted Rs. 75,000.
The salary of driver paid by the employer - T 96,000. The taxable value of car facility for AY 2020-
21 will be —
(a) Rs. 2,31,000 (b) Rs. 39,600
(c) Rs. 2,22,000 (d) Rs. 1,71,000 Ans.(b)
(72) Karishma receives Rs. 25,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
(engine capacity does not exceed 1.6 Its) owned by employer for her personal use. The original cost
of car is Rs. 3,50,000 (WDV Rs. 3,15,000). Expenditure incurred by the employer on running and
—
(a) Rs. 1,08,000 (b) Rs. 32,400
(c) Rs. 1,04,500 (d) Rs. 33,600 Ans.(a)
(73) Shraddha receives Rs. 25,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
(engine capacity does not exceed 1.6 Its) owned by employer for her personal as well as official use.
The original cost of car is Rs. 3,50,000 (WDV Rs. 3,15,000). Expenditure incurred by the employer
on running and maintenance of the motor car during the relevant previous year amounted Rs.
25,000. The salary of driver paid by the employer - Rs. 48,000. The taxable value of car facility for
AY 2020-21 will be —
(a) Rs. 1,08,000 (b) Rs. 32,400
(c) Rs. 1,04,500 (d) Rs. 33,600 Ans.(b)
(74) Neerja receives Rs. 25,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
(engine capacity does not exceed 1.6 Its) owned by employer for her personal use. The original cost
of car is Rs. 3,50,000 (WDV Rs. 3,15,000). Expenditure incurred by the employer on running and
of driver paid by the employer - Rs. 48,000. The employer recovers Rs. 2,000 p.m. from the
employee. The taxable value of car facility for AY 2020-21 will be -
(a) Rs. 1,08,000 (b) Rs. 84,000
(c) Rs. 80,500 (d) Rs. 32,400 Ans.(b)
(75) Shailja receives Rs. 30,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
(engine capacity exceeds 1.6 Its) owned by employer for her official use. The original cost of car is
Rs. 3,50,000 (WDV Rs. 3,15,000). Expenditure incurred by the employer on running and
—
(a) Nil (b) Rs. 84,000
(c) Rs. 80,500 (d) Rs. 32,400 Ans.(a)
(76) Kareena receives Rs. 30,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
(engine capacity exceeds 1.6 Its) owned by employer for commuting between office and residence.
The original cost of car is Rs. 3,50,000 (WDV T 3,15,000). Expenditure incurred by the employer on
The salary of driver paid by the employer - Rs. 48,000. The taxable value of car facility for AY 2020-
21 will be —
(a) Rs. 32,400 (b) Rs. 84,000
(c) Rs. 80,500 (d) Nil Ans.(d)
(77) Priyanka receives Rs. 30,000 p.m. as basic salary from ABC Ltd. She is also provided dearness
(engine capacity exceeds 1.6 Its) owned by employer for her personal use. The car is self driven by
her. The original cost of car is Rs. 3,50,000 (WDV Rs. 3,15,000). Expenditure incurred by the
Priyanka on running and maintenance of the motor car during the relevant previous year amounted
Rs. 25,000. The taxable value of car facility for AY 2020-21 will be -
(a) Rs. 31,500 (b) Rs. 10,800
(c) Rs. 35,000 (d) Rs. 21,600 Ans.(c)
(78) Sunil receives Rs. 30,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
allowance of Rs. 15,000 p.m. forming part of retirement benefit. He has been provided motor car
(engine capacity exceeds 1.6 Its) owned by employer for his personal as well as official use. The car
is self driven by him. The original cost of car is T 3,50,000 (WDV Rs. 3,15,000). Expenditure incurred
by Sunil on running and maintenance of the motor car during the relevant previous year amounted
Rs. 25,000. The taxable value of car facility for AY 2020-21 will be —
(a) Rs. 31,500 (b) Rs. 10,800
(c) Rs. 35,000 (d) Rs. 21,600 Ans.(b)
(79) Paresh receives Rs. 30,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
allowance of Rs. 15,000 p.m. forming part of retirement benefit. He has been provided motor car
(engine capacity does not exceed 1.6 Its) owned by employer for his personal as well as official use.
The original cost of car is Rs. 3,50,000 (WDV Rs. 3,15,000). Expenditure incurred by Paresh on
The salary of driver paid by the employer amounted Rs. 48,000. The taxable value of car facility for
AY 2020-21 will be —
(a) Rs. 83,000 (b) Rs. 18,000
(c) Rs. 10,800 (d) Rs. 7,200 Ans.(b)
(80) Sahil receives Rs. 30,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
allowance of Rs. 15,000 p.m. forming part of retirement benefit. He owns a motor car (engine
capacity does not exceed 1.6 Its) which is used by him for personal purposes. The original cost of
car is Rs. 3,50,000. Expenditure incurred by employer on running and maintenance of the motor
car during the relevant previous year amounted Rs. 25,000. The salary of driver paid by the
employer amounted Rs. 48,000. The taxable value of car facility for AY 2020-21 will be —
(a) Rs. 73,000 (b) Rs. 55,000
(c) Rs. 40,600 (d) Nil Ans.(a)
(81) Abdul receives Rs. 30,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
capacity does not exceed 1.6 Its) which is used by him for personal as well as official purposes. The
original cost of car is Rs. 3,50,000. Expenditure incurred by employer on running and maintenance
of the motor car during the relevant previous year amounted Rs. 25,000. The salary of driver paid
by the employer amounted Rs. 48,000. The taxable value of car facility for AY 2020-21 will be —
(a) Rs. 33,400 (b) Rs. 73,000
(c) Rs. 40,600 (d) Rs. 32,400 Ans.(c)
(82) Tapas receives Rs. 30,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
capacity exceeds 1.6 Its) which is used by him for personal as well as official purposes. The original
cost of car is Rs. 3,50,000. Expenditure incurred by employer on running and maintenance of the
motor car during the relevant previous year amounted Rs. 25,000. The salary of driver paid by the
employer amounted Rs. 48,000. The taxable value of car facility for AY 2020-21 will be —
(a) Rs. 33,400 (b) Rs. 73,000
(c) Rs. 40,600 (d) Rs. 32,400 Ans.(a)

(83) Mr. A is provided with two cars, to be used for official and personal work by his employer ABC
Ltd. The following information is available from the company records :
Car 1 Car 2
Engine Capacity 1.8 Ltrs. 1.6 Its
Cost of the Car 6,00,000 4,00,000
Running and maintenance
(Borne by the company) 40,800 28,000
Salary of driver (Borne by the company) 24,000 24,000
The taxable monetary emoluments of Mr. A are Rs. 90,000. The taxable 'Perk' in respect of Cars on
the assumption car 2, is exclusively used by 'A for personal purpose will be -
(a) Rs. 1,31,600 (b) Rs. 1,57,200
(c) Rs. 72,000 (d) Rs. 2,16,800 Ans.(a)
(Hint – Car 1  39,600 and Car 2  92,000)
(84) Mr. Gupta is given a motor car with chauffeur by the employer which is used for both official
and personal purpose. The entire running expenses of the car amounting to Rs. 64,800 was met by
the employer in the previous year 2019-20. The cubie capacity of the engine of the motor car
exceeds 1.6 liters. The perquisite value of motor car taxable in the hands of Mr. Gupta is : (June,
2017)
(a) Rs. 19,200 (b) Rs. 39,600
(c) Rs. 28,800 (d) Rs. 64,800 Ans.(b)
(85) A company has provided laptop worth Rs. 50,000 to its employee for official as well as personal
purposes. The taxable amount of perquisite will be - (Dec. 2016)
(a) Rs. 5,000 (b) Rs. 25,000
(c) Rs. 10,000 (d) Nil Ans.(d)
(86) Mr. Ramesh is provided with two cars, to be used for official and personal work by his
employer ABC Ltd. The following information is available from the company records :
Car 1 Car 2 ?
Engine Capacity 1.8 Its 1.6 Its
Cost of the Car 12,00,000 8,00,000
Running and maintenance (Borne by the company) 40,800 28,000
Salary of driver (Borne by the company) 96,000 84,000
The taxable monetary emoluments of Mr. A are Rs. 9,00,000. The taxable 'Perk' in respect of Cars
will be -
(a) Rs. 2,31,600 (b) Rs. 2,89,200
(c) Rs. 4,48,800 (d) Rs. 72,000 Ans.(a)
Hint – Decision making involved
Option 1 Option 2
Car 1 - Off + Personal 39,600.00 Car 1 - Pure Personal 2,56,800.00

Car 2 - Official +
Car 2 Pure Personal 1,92,000.00 Personal 32,400.00
2,31,600.00 2,89,200.00
(87) Jasveer receives Rs. 30,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
allowance of Rs. 15,000 p.m. forming part of retirement benefit. He has been provided cook for
which the actual cost to employer is Rs. 60,000 Jasveer has paid Rs. 20,000 to the cook. The taxable
value of cook perquisite will be —
(a) Rs. 60,000 (b) Rs. 80,000
(c) Rs. 40,000 (d) Nil Ans.(a)
(88) Manoj receives Rs. 30,000 p.m. as basic salary from ABC Ltd. He is also provided dearness
allowance of Rs. 15,000 p.m. forming part of retirement benefit. He has been provided free
electricity facility for which the actual cost to employer is Rs. 58,000. The employer has recovered
Rs. 8,000 from Manoj on account of such facility. The taxable value of electricity perquisite will be
—
(a) Rs. 58,000 (b) Rs. 66,000
(c) Rs. 50,000 (d) Nil Ans.(c)
(89) Mahesh receives Rs. 30,000 p.m. as basic salary from Delhi Public School. He is also provided
dearness allowance of Rs. 15,000 p.m. forming part of retirement benefit. His son is studying in the
school for which the employer charges Rs. 200 p.m. The cost of such education in a similar
institution in the locality is Rs. 3,500 p.m. The taxable value of education facility Will be —
(a) Rs. 39,600 (b) Rs. 27,600
(c) Rs. 42,000 (d) Nil Ans.(a)
(90) Ashraf is an employee of Moon Public School. His daughter, Zara, is studying in the said school
at a concessional fees of Rs. 600 per month (Actual fee : Rs. 4,000 per month). The amount taxable
in the hands of Ashraf will be - (June, 2015)
(a) Rs. 48,000 (b) Rs.7,200
(c) Nil (d) Rs. 40,800. Ans.(d)
(91) Ashok took an interest-free loan of Rs. 15,000 from B Ltd. (the employer). Assuming that the
market rate of interest on similar loan is 10%. the taxable value of the perquisite in the hands of
Ashok will be - (June, 2015)
(a) Rs. 150 (b) Rs. 1,500
(c) Nil (d) None of the above. Ans.(c)
(92) During the previous year 2019-20, Barun received a watch worth Rs. 20,000 from his
employer. The taxable value of the watch will be - (June, 2015)
(a) Rs. 15,000 (b) Rs. 20,000
(c) Nil (d) None of the above. Ans.(a)
(Hint – Whichever is more beneficial to the assessee)
(93) Mr. A (65 years) submits the following information for the Assessment year 2020-21 : Gross
salary - Rs. 9,20,000; Income from other sources - Rs. 60,000; Contribution to PPF - Rs. 70,000;
Compute the tax liability of A.
(a) Rs. 84,000 (b) Rs. 85,280
(c) Rs. 87,360 (d) Rs. 89,970 Ans.(b)
(94) Suresh is pilot of Jet airways. He receives Rs. 30,000 p.m. as basic salary. He is also provided
dearness allowance of Rs. 15,000 p.m. forming part of retirement benefit. He has been provided
transport facility in the conveyance owned by the company. The amount charged to general public
on account of such facility is Rs. 25,000. The employer has recovered Rs. 5,000 from Suresh. The
cost to employer is Rs. 18,500. The taxable value of transport facility will be —
(a) Rs. 25,000 (b) Rs. 20,000

(c) Rs. 18,500 (d) Nil Ans.(d)
(Note – This perquisite is fully exempt for employees of Railways and airlies)
(95) Kamal is employee of Kampala Roadways Pvt. Ltd. engaged in transportation of passengers.
He receives Rs. 30,000 p.m. as basic salary. He is also provided dearness allowance of f 15,000 p.m.
forming part of retirement benefit. He has been provided transport facility in the conveyance
owned by the company. The amount charged to general public on account of such facility is Rs.
25,000. The employer has recovered Rs. 5,000 from Kamal. The cost to employer is Rs. 18,500. The
taxable value of transport facility will be —
(a) Rs. 25,000 (b) Rs. 20,000
(c) Rs. 18,500 (d) Nil Ans.(b)
(96) "Family" for the purpose of medical facility means -
(a) Spouse of that individual (b) Children of that individual
(c) Parents, brothers and sisters of the individual
(d) All of the above or any of them wholly or mainly dependent on the individual. Ans.(d)
(97) Ms. Janhvils provided with an interest free loan by her employer for the purchase of a house.
The value of the perquisite shall be- (June 2016)
(a) Simple interest computed at the rate charged by the Central Government to its employees on 1st
April of the previous year
(b) Simple interest computed at the rate charged by State Bank of India on 1st April of the previous
year
(c) Simple interest computed at the rate charged by RBI
(d) Simple interest computed at the rate National Housing Bank on 1st April (b)
(98) Kamal is employee of Apollo Hospitals Pvt. Ltd. He receives Rs. 30,000 p.m. as basic salary. He
is also provided dearness allowance of Rs. 15,000 p.m. forming part of retirement benefit. The
employer has incurred an expenditure of Rs. 25,000 on medical treatment of his minor child and
Rs. 75,000 on medical treatment of his brother not dependent on Kamal in the hospital maintained
by the employer. The taxable value of medical facility will be -
(a) Rs. 25,000 (b) Rs. 75,000
(c) Rs. 85,000 (d) Rs. 60,000 Ans.(b)
(99) Any sum paid by the employer in respect of an expenditure incurred by an employee on his
medical treatment or treatment of any of his family member in private hospital is exempt upto -
(a) Rs. 25,000 (b) Nil
(c) Rs. 30,000 (d) Rs. 60,000 Ans.(b)
(100) Himalaya Ltd. reimburses the following expenditure on medical treatment of the son of an
employee Karan. The treatment was done at UK: (June 2005)
(i) Travelling expenses Rs. 1,15,000.
(ii) Stay expenses at UK permitted by RBI Rs. 45,000 (Actual expenses Rs. 70,000).
(iii) Medical expenses permitted by RBI Rs. 50,000 (Actual expenses Rs. 70,000).
The taxable perquisites in the hands of Karan, if his annual income from salary was f 1,56,000 will
be - (a) Rs. 2,55,000 (b) Rs. 45,000
(c) Rs. 1,60,000 (d) Nil Ans.(c)
(101) Government of India paid salary of Rs. 5 lakh and allowances/perquisites valued at Rs. 2.20
lakh to a person who is citizen of India for the services rendered by him outside India for 5 months
during the previous year. His total income chargeable to tax would be— (Dec. 2015)
(a) Rs. 6,70,000 (b) Rs. 4,50,000
(c) Rs. 7,20,000 (d) Nil Ans.(b)
(102) A company acquired a motor car for Rs. 8 lakh on 30th June, 2018. It sold the and motor car
to its employee. Jayant, for Rs. 6 lakh on 10th June, 2019. The company claimed depreciation @ 15%
for the year ended 31sl March, 2020. The perquisite value in the hands of Jayant on sale of motor
car would be - (Dec- 2016)
(a) Rs. 80,000 (b) Nil
(c) Rs.2,00,000 (d) Rs. 1,40,000 Ans.(c)
(103) During the previous year, the employee was rembursed Rs. 24,000 as medical expenses
incurred by him which includes Rs. 7,000 spent in Government hospital. The taxable perquisite in
this case shall be : (June, 2017)
(a) Rs. 9,000 (b) Nil
(c) Rs. 17,000 (d) Rs. 24,000 Ans.(c)
PROFITS IN LIEU OF SALARY, GRATUITY, EARNED LEAVE SALARY, PENSION,
LEAVE TRAVEL CONCESSION AND VRS COMPENSATION
(104) In which of the following case the gratuity received is not taxable?
(a) Government employees (b) Employees covered by Payment of
GratuityAct, 1872
(c) Any other employee (d) None of these. Ans.(a)
(105) Under Section 10(10) of the Income-tax Act, 1961, the maximum amount of gratuity received
which is not chargeable to tax shall be
a) Rs. 3,50,000 (b) Rs. 3,00,000
(c) Rs. 2,50,000 (d) Rs. 20,00,000 Ans.(d)
(106) What is the specified limit in case of employees covered by the Payment of Gratuity Act, 1972?
(a) Rs. 3,00,000 (b) Rs. 3,50,000
(c) Rs. 20,00,000 (d) Rs. 5,00,000 Ans.(c)
(107) Saurabh is an employee of XYZ Ltd. He retired on 17th Nov. 201* after rendering service of
38 years, 6 month and 1 day. Calculate the number of completed years if Saurabh is covered under
the Payment of Gratuity Act.
(a) 37 years (b) 39 years
(c) 38 years (d) 38 years 6 months 7 days. Ans.(b)
(108) Palak is an employee of ABC Pvt. Ltd. She receives Rs. 50,000 p.m. as basic salary. She is also
provided dearness allowance of Rs.15,000 p.m. forming part of retirement benefit. She received
gratuity of Rs.25,000 during the continuity of employment. The taxable portion of gratuity will be -
(a) Rs. 25,000 (b) Rs. 15,000
(c) Rs. 12,500 (d) Nil Ans.(a)
(109) Mr. Sunil is a private sector employee. He received Rs. 12,00,000 as gratuity. He retired on 16
February 2019 after rendering 25 years and 7 months of service. His basic salary was Rs. 30,000
p.m. His dearness allowance was Rs. 15,000 p.m (40% forms part of retirement benefit). He is not
covered under Payment of Gratuity Act, 1972. The amount of gratuity exempt will be -
(a) Rs. 5,40,000 (b) Rs. 10,00,000

(c) Rs. 4,50,000 (d) Rs.12,00,000 Ans.(c)
(110) Mr. Raj is a government employee. He received Rs. 25,00,000 as gratuity. He retired on 16th
February 2020 after rendermg 25 years and 7 months of service. His basic salary w.e.f. 01-10-2019
was Rs. 30,000 per month (prior to that Rs. 25,000 p.m.). His dearness allowance was Rs. 15,400
p.m. The amount of gratuity taxable will be -
(a) Nil (b) Rs.18,19,000
(c) Rs. 20,85,000 (d) Rs. 25,00,000 Ans.(a)
(111) Mr. Kalicharan is a private sector employee. He received Rs. 18,00,000 as gratuity. He retired
on 16th February 2020 after rendering 25 years and 7 months of service. His basic salary was Rs.
30,000 p.m. His dearness allowance was Rs. 15,000 p.m. He is covered under Payment of Gratuity
Act, 1972. The amount of gratuity exempt will be -
(a) Nil (b) Rs. 10,00,000
(c) Rs. 18,00,000 (d) Rs. 6,75,000 Ans.(d)
(112) Mr. Pran is a private sector employee. He received Rs. 12,00,000 as gratuity. He retired on
16th February 2020 after rendering 25 years and 7 months of service. His basic salary was Rs.
30,000 p.m. His dearness allowance was 15,000 p.m. (40% forms part of retirement benefit). He is
not covered under Payment of Gratuity Act, 1972. The amount of gratuity taxable will be -
(a) Rs. 4,50,000 (b) Rs. 10,00,000
(c) Rs. 7,50,000 (d) Rs. 12,00,000 Ans.(c)
(113) The maximum exemption under section 10(10AA) in case of leave encashment is - (1 marks,
CS June, 2011)
(a) 13,50,000 (b) Rs. 3,00,000
(c) Rs. 10,00,000 (d) Rs. 5,00,000 Ans.(b)
(114) The maximum exemption under section 10(10) in case of gratuity received by Employees
covered under Gratuity Act, 1972, is-
(a) Rs. 3,50,000 (b) Rs. 20,00,000
(c) Rs. 10,0,000 (d) Rs. 5,00,000 Ans.(b)
(115) For the purpose of calculation of average salary in case of exemption of leave encashment the
average salary drawn during the period of 10 months immediately preceding the ___________ of
retirement.
(a) Month (b) Date
(c) Week (d) Year Ans.(b)
(116) What is the annual leave entitlement specified in the Income Tax Act?
(a) 1.5 months (b) 40 days
(c) 30 days (d) None of these. Ans.(c)
(117) The amount of exemption for leave encashment in case of Government employee is —
(a) Actual amount of leave encashment received. (b) Fully exempted from tax
(c) Rs. 3,00,000
(d) 10 months average salary preceding the month of retirement
Ans.(b)
(118) Salary received in lieu of unavailed leave during service shall be - (Dec. 2012)
(a) Fully taxable (b) Fully exempted
(c) Partially taxable (d) None of the above. Ans.(a)

(119) For the year ended 31st March, 2020 Paresh receives a salary of Rs. 2,80,000. Paresh's
contribution to employee's recognised provident fund account is Rs. 59,000 and matching
contribution has been made by employer. Taxable income of Paresh will be — (Dec, 2014)
(a) Rs. 1,96,400 (b) Rs. 2,06,400
(c) Rs. 2,99,000 (d) Rs. 2,40,000 Ans.(a)
(120) An employee of a public limited company received Rs. 3,00,000 as encashment of leave salary
at the time of retirement. He has 18 months' leave to his credit at the time of retirement and his
average salary for last 10 months is Rs. 24,000. The taxable amount of leave encashment would be
- (Dec. 2016)
(a) Rs. 2,40,000 (b) 13,00,000
(c) Rs. 60,000 (d) Nil Ans.(c)
(121) Employer's contribution to recognised provident fund is taxable in excess of ___________ of

salary :
(a) 12% (b) 9.50%
(c) 9% (d) 8.50% Ans.(a)
(122) Where the employee is not in receipt of gratuity what will be the exemption?
(a) l/3rd of the commuted value of the pension (b) 1/2 of Commuted value of the pension
which he is entitled to receive which he is entitled to receive
(c) Wholly exempt (d) Wholly taxable Ans.(b)
(123) Bimal is employed in a factory at a salary of Rs. 2,400 per month. He also gets dearness
allowance @ Rs. 600 per month and bonus @ Rs. 200 per month. He retired on 31st December,
2019 and received Rs. 75,000 as gratuity under the Payment of Gratuity Act, 1972 after serving 31
years and 4 months in that factory. The amount of gratuity exempt under the Income- tax Act, 1961
will be - (Dec. 2014)
(a) Rs. 75,000 (b) Rs. 53,654
(c) Rs. 21,346 (d) Rs. 10,00,000. Ans.(b)
(124) X retired on 15-4-2019 from a company. He was entitled to a pension of Rs. 4,000 p.m. At the
time of retirement, he got 75% of the pension commuted and received Rs. 1,20,000 as commuted
pension. Compute the taxable portion of the commuted pension if he is entitled to gratuity.
(a) Rs. 66,667 (b) Rs. 53,333
(c) Rs. 1,20,000 (d) Rs. 78,667 Ans.(a)
(125) Akash is entitled to get a pension of Rs. 6,000 per month from a private company. He gets
60% of the pension commuted and receives 13,60,000. He also receives Rs. 2,00,000 as gratuity
from the same employer. The taxable portion of commuted value of pension will be - (Dec. 2014)
(a) Rs. 1,60,000 (b) Nil
(c) Rs. 3,60,000 (d) Rs. 60,000 Ans.(a)
(126) Anand is entitled to get a pension of Rs. 600 per month from a private company. He gets three-
fifth of the pension commuted and received Rs. 36,000. He did not receive gratuity. The taxable
portion of commuted value of pension is- (June, 2012)
(a) Rs. 16,000 (b) Rs. 6,000
(c) Rs. 18,000 (d) Rs. 12,000. Ans.(b)
(127) An employee of a company, who was entitled for a gratuity of Rs. 8,00,000, also received Rs.
12,00,000 by commuting 40% of his pension. The taxable amount of commuted pension is - (June
2016)
(a) Rs. 2,00,000 (b) Rs. 4,00,000
(c) Rs. 12,00,000 (d) Rs. 22,00,000 Ans.(a)
(128) Mr. Jain retires from a Private service on 1st August 2019. At the time of his retirement after
28 years and 8 months of service, he was getting the salary of Rs. 34,000 per month. He gets pension
of Rs. 10,000 per month upto 31th December 2019. With effect from Is' January 2020 he gets 4/5th
of his pension commuted for Rs. 12,00,000. Determine his gross salary taxable for AY 2020-21 will
be -
(a) Rs. 6,42,000 (b) Rs. 6,66,000
(c) Rs. 5,86,000 (d) n,92,000 Ans.(a)
(129) Rohan retires from private service on 30th April, 2019 and his pension has been fixed at Rs.
1,500 p.m. He gets 1/2 of his pension commuted during January, 2020 and receives Rs. 75,000. He
also gets Rs. 60,000 as gratuity. The total pension taxable including commuted value will be - (Dec.
2015)
(a) Rs. 16,500 . (b) Rs. 41,500
(c) Rs. 39,250 (d) Rs. 14,250 Ans.(c)
(Hint)
(12000 + 2250 ) + 25000 = 39,250
(130) What is the specified limit in case of exemption for retrenchment Compensation under
section 10(10B).
(a) Rs. 3,00,000 (b) Rs. 4,00,000
(c) Rs. 3,50,000 ' (d) Rs. 5,00,000 Ans.(d)
(131)Lump sum payment at the time of retirement or termination of service received from
unrecognised provident fund to the extent it consists of interest on employees contribution is :
(a) Taxable as salary (b) Taxable under Income from other
sources
(c) Fully exempt from tax (d) Taxable as business Income Ans.(b)
(132) The maximum amount of compensation received at the time of voluntary retirement exempt
from tax is - (June 2013)
(a) Rs. 2,00,000 (b) Rs. 5,00,000
(c) Rs. 10,00,000 (d) The actual amount received as
compensation. Ans.(b)
(133) Mr. Amit avails the benefit of LTC and went by air (economy class) on a holiday in India on
25-01-2020 along with his wife and three children consisting of son aged 2 years and twin
daughters of 6 years age. Total cost of tickets reimbursed by his employer was Rs.1,00,000 (Rs.
55,000 for 2 adults and T 45,000 for the three children). The amount taxable in hands of Amit will
be-
(a) Rs. 15,000 (b) Rs. 1,00,000
(c) Rs. 45,000 (d) Rs. 55,000 Ans.(a)
(134) Which of the following is not correct about the approved superannuation fund - (June, 2015)
(a) Employees' contribution qualifies for deduction (b) Any amount contributed by the
employer is under section 80C exempt from tax
(c) Interest on accumulated balance is exempt from (d) Under some circumstances, payments
from the income-tax fund are chargeable to income-tax
Ans.(b)
(135) Statutory provident fund is set up under the provisions of the Provident Funds Act, 1925 is
applicable to -
(a) Government organizations (b) Semi-Government organizations,
(c) Local authorities (d) All of the above Ans.(d)
28 years and 4 months of service, he was getting the salary of Rs. 34,000 per month. He gets Rs.
5,00,000 (including accumulated interest of Rs. 1,00,000) from recognised provident fund. The
employer and Mr. Jain has made a matching contribution. Compute his Income from salary for
Assessment Year 2020-2021
(a) Rs. 96,000 (b) Rs. 5,96,000
(c) Rs. 3,46,000 (d) 12,96,000 Ans.(a)
(137) Mrs. Meena retired from service with Sky Ltd. on 31st January, 2020. She received the
following amounts from unrecognised provident fund : (i) Own contribution Rs. 1,50,000; (ii)
Interest on own contribution Rs. 21,000; (iii) Employer's contribution Rs. 1,10,000; and (iv) interest
on employer's contribution T 15,000. How much of the receipt from provident fund is chargeable
to tax as income from salary - (June 2016)
(a) Rs. 21,000 ... (b) Rs. 15,000
(c) Rs. 1,25,000 (d) Rs. 1,71,000 Ans.(c)
28 years and 4 months of service, he was getting the salary of Rs. 34,000 per month. He gets Rs.
5,00,000 (including accumulated interest of Rs. 1,00,000) from unrecognised provident fund. The
employer and Mr. Jain has made a matching contribution. Compute his Income from salary for
Assessment Year 2020-21 :
(a) Rs. 96,000 (b) Rs. 5,96,000
(c) Rs. 3,36,000 (d) Rs. 2,96,000 Ans.(c)
(139) Deduction u/s 80C on employee's contribution is not available in case of:
(a) Statutory Provident Fund (b) Recognised Provident Fund
(c) Unrecognised Provident Fund (d) Public Provident Fund Ans.(c)
FILL-IN THE BLANK

(1) Leave encashment received while in service is ___________ . (June, 2012) [Ans: Taxable]
TRUE/FALSE
(1) No deduction is allowable from income from salary. (June 2009)
Ans: False : Deductions of Entertainment Allowance and tax on employment are allowed under
Section 16 under the head 'Income from salaries'.
(2) Allowances paid by any employer outside India would be wholly exempted from income tax.
(Dec. 2012)
Ans: False : According to section 10(7) of the Income-tax Act, allowances or perquisites paid or
allowed as such outside India by the Government to a citizen of India for his services rendered
outside India would be wholly exempt from tax.
(3) Allowances payable to Central Government employees for serving outside India are fully taxable
as salary. (June, 2013)
Ans: False: Allowances payable to Central Government employees for serving outside India are fully
exempt under Section 10(7) of the Income-tax Act, 1961.
Ch 5 – House Property 5.1
CHAPTER 5 INCOME FROM HOUSE PROPERTY
BASIC CONCEPTS OF TAXABILITY OF INCOME FROM HOUSE PROPERTY

(1) Which is the charging section of Income from house property?
(c) Section 24 (d) Section 10(10D) Ans.(b)
(2) Income from vacant plot is taxable under the head ___________ .
(a) Income from House Property (b) Income from Other Sources
(c) Profits & Gains of Business or Profession (d) Capital Gains Ans.(b)
(3) Which of the following conditions need to be satisfied in order to tax any income under the head
Income from house property ?
(a) The property must consist of building or land thereto.
(b) The assessee must be the owner of such house appurtenant property.
(c) The property must not be used for business or profession carried on by assessee.
(d) All of the above. Ans.(d)
(4) Income from subletting of house property is taxable under the head ___________ .
(5) In case the letting out of property is incidental to the main business, then income from such
property shall be taxable as
(c) Profits & Gains of Business or Profession (d) Capital Gains Ans.(c)
(6) XYZ Ltd. is engaged in construction of residential flats. One building consisting of 25 residential
apartments was constructed and completion certificate was obtained on 15-07-2018. Out of 25
residential apartments 5 apartments remained unsold upto 31-03-2022. The expected rent of each
apartment is Rs. 30,000 per month. You are required to determine Income from House property for
Assessment Year 2020-21.
(a) NIL (b) Rs. 3,60,000
(c) Rs. 18,00,000 (d) Rs. 12,60,000 Ans.(a)
(7) XYZ Ltd. is engaged in construction of residential flats. One building consisting of 25 residential
apartments was constructed and completion certificate was obtained on 15-07-2017. Out of 25
residential apartments 5 apartments remained unsold upto 31-03-2021. The expected rent of each
apartment is Rs. 30,000 per month. You are required to determine Income from House property for
Assessment Year 2021-22.
(a) NIL (b) Rs. 3,60,000
(c) Rs. 18,00,000 (d) Rs. 12,60,000 Ans.(d)
(8) Income from building constructed on leasehold is taxable as :

(c) Profits & Gains of Business or Profession (d) Capital Gains Ans.(a)
(9) The assessee, who was deriving income from "House property" realised a sum of Rs. 52,000 on
account of display of advertisement hoarding of various concerns on the roof of the building. The
same will be taxable under :
(10) Composite rent of let-out house property is taxable as - (Dec. 2014)
(a) Profits and gains from business or profession (b) Income from other sources
(c) Income from house property (d) Either (a) or(b) above depending upon
certain conditions. Ans.(d)
COMPUTATION OF ANNUAL VALUE - SECTION 23
(11) Expected Rent is equal to ___________ .
(a) Fair Rent (b) Municipal Valuation
(c) Lower of Fair Rent or Municipal valuation
(d) Higher of Fair Rent or Municipal valuation subject to the maximum of Standard Rent. Ans.(d)
(12) If Actual Rent received or receivable exceeds Expected Rent, the Gross Annual Value equals to
-
(a) Actual Rent received or receivable (b) Expected Rent
(c) Actual Rent - Expected Rent (d) None of these. Ans.(a)
(13) The sum for which the property might reasonably be expected to let year to year is known
as
(a) Expected Rent (b) Standard Rent
(c) Annual value (d) Municipal Valuation Ans.(a)
(14) In which of the following cases the annual value of the house is taken to be NIL.
(a) Self occupied house.
(b) Vacancy for the whole period.
(c) If the assessee holds three house properties.
(d) Both (a) & (b) but not (c) Ans.(d)
(15) Sajal is the owner of a house property covered under the Rent Control Act. Municipal value Rs.
30,000, actual rent Rs. 25,000 fair rent Rs. 36,000 and standard rent is Rs. 28,000. The gross annual
value of the house property will be - (Dec. 2014)
(a) Rs. 30,000 (b) Rs. 25,000
(c) Rs. 36,000 (d) Rs. 28,000 Ans.(d)
(16) The municipal value of a property to Rs. 2,10,000; fair rant is Rs. 1,90,000; standard rant is Rs.
1,80,000 and the actual rent isvRs. 2,40,000. The gross amount value of the property would be -
(Dec. 2016)
(a) Rs. 1,80,000 (b) Rs. 1,90,000
(c) Rs. 2,40,000 (d) Rs. 2,10,000 Ans.(c)
(17) Rohit owns a house property in Delhi which he wants to give on rent. He seeks your help to
determine the reasonable expected rent when monthly municipal value is Rs. 20,000, fair rent Rs.
25,000 and standard rent Rs. 22,000. The reasonable expected rent will be computed with reference
to following amount per month - (June, 2015)
(a) Rs. 22,000 (b) Rs. 20,000
(c) Rs. 25,000 (d) None of the above. Ans.(a)

(18) Find out the expected rent of house property A, if the following is given : Municipal value =
Rs. 1,00,000; Fair Rent = Rs. 88,000; Standard Rent = Rs. 1,12,000. Actual Rent = Rs. 1,25,000
(a) Rs. 1,00,000 (b) Rs. 88,000
(c) Rs. 1,12,000 (d) Rs. 1,25,000 Ans.(a)
(19) Find out the expected rent of house property H, if the following is given : Municipal value = Rs.
70,000; Fair Rent = Rs. 88,000; Standard Rent = Rs. 1,12,000. Actual Rent = Rs. 1,25,000
(a) Rs. 70,000 (b) Rs. 88,000
(c) Rs. 1,12,000 (d) Rs. 1,25,000 Ans.(b)
(20) Find out the expected rent of house property P, if the following is given : Municipal value = Rs.
70,000; Fair Rent = Rs. 88,000; Standard Rent = Rs. 60,000 Actual Rent = Rs. 1,25,000
(a) Rs. 70,000 (b) Rs. 88,000
(c) Rs. 60,000 (d) Rs. 1,25,000 Ans.(c)
(21) Find out the expected rent of house property Q, if the following is given :
Municipal value = Rs. 65,000; Fair Rent = Rs. 88,000; Standard Rent = Rs. 60,000 Actual Rent = Rs.
1,25,000
(a) Rs. 65,000 (b) Rs. 88,000
(c) Rs. 60,000 (d) Rs. 1,25,000 Ans.(c)
(22) Find the Gross Annual Value of house property of A if the following is given : Municipal value
= Rs. 10,000; Fair Rent = Rs. 88,000; Standard Rent = Rs. 92,000; Actual Rent = Rs. 89,000.
(a) Rs. 10,000 (b) Rs. 88,000
(c) Rs. 92,000 (d) Rs. 89,000 Ans.(d)
= Rs. 1,00,000; Fair Rent = Rs. 88,000; Standard Rent = Rs. 92,000; Actual Rent = Rs. 89,000.
(a) Rs. 1,00,000 (b) Rs. 88,000
(c) Rs. 92,000 (d) Rs. 89,000 Ans.(c)
(24) Find the Gross Annual Value of house property of A if the following is given ; Municipal value
= Rs. 1,00,000; Fair Rent = Rs. 1,20,000; Standard Rent = Rs. 1,50,000; Actual Rent = Rs. 1,30,000.
(a) Rs. 1,00,000 (b) Rs. 1,20,000
(c) Rs.1,50,000 (d) Rs. 1,30,000 Ans.(d)
(25) Find the Gross Annual Value of house property of A if the following is given: Municipal value =
Rs. 1,60,000; Fair Rent = Rs. 1,20,000; Standard Rent = Rs. 1,50,000; Actual Rent = Rs. 1,55,000.
(a) Rs. 1,60,000 (b) Rs. 1,20,000
(c) Rs.1,50,000 (d) Rs. 1,55,000 Ans.(d)
= Rs. 1,40,000; Fair Rent = Rs. 1,20,000; Standard Rent = Rs. 1,50,000; Actual Rent = Rs. 1,30,000.
(a) Rs. 1,40,000 (b) Rs. 1,20,000
(c) Rs. 1,50,000 (d) Rs. 1,30,000 Ans.(a)
(27) Calculate the Gross Annual value from the following details : Municipal Value - Rs. 45,000; Fair
rental value - Rs. 50,000; Standard rent - Rs. 48,000; Actual Rent - Rs. 42,000.
(a) Rs. 50,000 (b) Rs. 48,000
(c) Rs. 45,000 (d) Rs. 42,000 Ans.(b)
(28) Calculate the Gross Annual value from the following details:
Municipal Value - Rs. 45,000; Fair rental value - Rs. 50,000;
Standard rent - Rs. 48,000; Actual Rent Receivable - Rs. 75,000; Unrealised rent: Rs. 20,000
(a) Rs. 50,000 (b) Rs. 55,000
(c) Rs. 45,000 (d) Rs. 42,000 Ans.(b)
rental value - Rs. 50,000; Standard rent - Rs. 48,000; Actual Rent Receivable - Rs. 55,000; Unrealised
rent: Rs. 20,000.
(a) Rs. 50,000 (b) Rs. 48,000
(c) Rs. 45,000 (d) Rs. 35,000 Ans.(b)
rental value – Rs. 50,000; Standard rent - Rs. 48,000; Actual Rent Receivable - Rs. 50181.8 Vacancy
: 1 month
(a) Rs. 50,000 (b) Rs. 46,000
(c) Rs. 45,000 (d) Rs. 48,000 Ans.(b)
(31) X, an American national, is resident in India during the PY ending on 31-3-2020. He was the
owner of a building located in New York. The same was on rent @ US $ 12,500 p.m. The Municipal
Corporation of New York was paid taxes on such uilding of US $ 10,000 on 12-2-2020. The value of
one US $ in Indian rupee remained at Rs. 60 throughout the year. X wants to know his taxable
income for house property for assessment year 2020-21.
(a) Rs. 58,80,000 (b) Rs. NIL
(c) Rs. 63,00,000 (d) Rs. 90,00,000 Ans(a)
(32) Find the Gross Annual Value of house property of A if the following information is given :
Municipal value = Rs. 1,40,000; Fair Rent = Rs. 1,50,000; Standard Rent = Rs. 1,44,000; Actual Rent
(1 Month)= Rs. 15,000; Vacancy = 11 months.
(a) Rs. 1,40,000 (b) Rs. 1,50,000 by
(c) Rs. 15,000 (d) Rs. 1,44,000 Ans.(c)
(33) Find the Gross Annual Value of house property of X if the following is given ; Municipal value
= Rs. 80,000; Fair Rent = Rs. 70,000; Vacancy = 12 months
(a) Rs. 80,000 (b) Nil
(c) Rs. 70,000 (d) Rs. 10,000 Ans.(b)
(34) X is the owner of a house, the details of which are given below : (June, 2009)
(a) Municipal value : Rs. 30,000 (b) Actual rent: Rs. 32,000
(c) Fair rent36,000 (d) Standard rent: Rs. 40,000.
The gross annual value would be —
(a) Rs. 36,000 (b) Rs. 35,000
(c) Rs. 30,000 (d) Rs. 40,000. Ans.(a)
(35) Municipal value : Rs. 14,000; Fair rent: Rs. 14,500; Standard rent: Rs. 14,200. Actual rent as
property let-out throughout the previous year : Rs. 16,800. Unrealized rent of the previous year :
Rs. 7,000. The annual value of the house property shall be . (June 2007)
(a) Rs. 9,800 (b) Rs. 7,200
(c) Rs. 14,200 (d) Rs. 7,500
Ans: (c)
(36) X is owner of house which has been let out at a monthly rent of Rs. 25,000. The fair rent of the
house is Rs. 2,90,000 and standard rent is Rs. 2,60,000. The municipal value of house is Rs. 2,80,000
and municipal taxes are levied @ 10% of municipal value. The entire amount of municipal taxes are
outstanding for the year ended 31-03-2019. The amount of municipal taxes to be allowed as
deduction for computing the annual value will be :
(a) Rs. 30,000 (b) Rs. 29,000
(c) Rs. 28,000 (d) Nil Ans.(d)
(37) Z is owner of house which has been let out at a monthly rent of Rs. 25,000. The fair rent of the
and municipal taxes are levied @ 10% of municipal value. The entire amount of municipal taxes for
the year ended 31-03-20120 are paid by the owner on 31-03-2020. The amount of municipal taxes
to be allowed as deduction for computing the annual value will be :
(a) Rs. 30,000 (b) Rs. 29,000
(c) Rs. 28,000 (d) NU Ans.(c)
(38) T is owner of house which has been let out at a monthly rent of Rs. 25,000. The fair rent of the
the year ended 31-03-2020 are paid (out of which half of the municipal taxes are paid by the tenant).
The amount of municipal taxes to be allowed as deduction for computing the annual value will be:
(a) Rs. 30,000 (b) T 29,000
(c) Rs. 14,000 (d) Nil Ans.(c)
(39) Karim owns a house, which is self-occupied upto 31-5-2019. W.e.f. 1-6-2019, the property is
let to Rafi at Rs. 40,000 p.m. Determine the Gross Annual Value of the house if the municipal value
is Rs. 4,15,000; Fair Rent Rs. 4,20,000 and standard rent is Rs. 4,10,000.
(a) Rs. 4,00,000 (b) Rs. 4,20,000
(c) Rs. 4,10,000 (d) Rs. 4,15,000 Ans.(c)
(40) Shammi owns a house, which is self-occupied upto 31-5-2019. W.e.f. 1-6-2019, the property is
let to Ranjeet at Rs. 42,000 p.m. Determine the Gross Annual Value of the house if the municipal
value is Rs. 4,15,000; Fair Rent Rs. 4,30,000 and standard rent is Rs. 4,10,000.
(a) Rs. 4,20,000 (b) Rs. 4,30,000
(c) Rs. 4,10,000 (d) Rs. 4,15,000 Ans.(a)
(41) Shammi owns a house, which is self-occupied upto 31-5-2019. W.e.f. 1-6-2019, the property is
let to Ranjeet at Rs. 42,000 p.m. Determine the Net Annual Value of the house if the municipal value
is Rs. 4,15,000; Fair Rent Rs. 4,30,000 and standard rent is Rs. 4,10,000 and tenant has paid 10% of
municipal value as municipal taxes.
(a) Rs. 4,20,000 (b) Rs. 4,30,000
(c) Rs. 3,78,500 (d) Rs. 4,15,000 Ans.(a)
DEDUCTIONS FROM ANNUAL VALUE - SECTION 24
(42) Which of the following deduction are to be made from income house property?
(a) Statutory deduction (b) Interest on borrowed loan
(c) Both (a) and (b) (d) Option (a) but not (b) Ans.(c)
(43) When share of each co-owner in a house property is not definite, the income from such
property shall be - (Dec. 2015)
(a) Taxed equally (b) Exempt from tax
(c) Taxed as association of persons (d) Taxed as body of individuals. Ans.(c)
(44) Sandeep purchased a house for his residential purpose after taking a loan in January, 2018.
During the previous year 2019-20, he paid interest on loan Rs. 2,17,000. While computing income
from house property, the deduction is allowable to the extent of - (Dec. 2009)
(a) Rs. 30,000 (b) Rs. 1,00,000
(c) Rs. 2,17,000 m (d) Rs. 2,00,000. Ans.(d)
(45) When did pre-acquisition or pre-construction period commences -
(a) On the 1st year when loan is borrowed (b) On the date of borrowing
(c) On the 1st April of the year when construction is
(d) On the 31st March of the year when loan is completed borrowed
Ans.(b)
(46) When did pre-acquisition or pre-construction period ends ?
(a) 31st march immediately prior to date of construction/ Purchase
(b) Date of repayment of loan completion of construction or acquisition of property.
(c) (a) or (b) whichever is earlier
(d) Any of these Ans.(c)
(47) Which of the following amount is not allowed for deduction from income from house property
?
(a) Interest on loan borrowed for construction of house
(b) Interest on fresh loan taken to repay original house property. loan.
(c) Interest on unpaid interest.
(d) Interest on unpaid purchase price. Ans.(c)
(48) The maximum limit of deduction under section 24(b) for interest on borrowed capital on or
after 1-4-1999 for repairs of house property used for self occupation is:
(a) Rs. 30,000 (b) Rs. 2,00,000
(c) Rs. 50,000 (d) Rs. 60,000 Ans.(a)
after 1-4-1999 for acquisition or construction of such house property is:
(a) Rs. 30,000 (b) Rs. 2,00,000
(c) Rs. 50,000 (d) Rs. 60,000 Ans.(b)
(50) The maximum limit of deduction under section 24(b) for interest on borrowed capital before
1-4-1999 for construction of house property used for self occupation is:
(a) Rs.30,000 (b) Rs. 2,00,000
(c) Rs. 50,000 (d) Rs. 60,000 Ans.(a)
(51) Mr. Ahmed acquired a property in April, 2019 for self-residential use. The loan interest payable
to State Bank of India for the financial year 2019-20 amounts to Rs. 2,10,000. The amount eligible
for deduction under section 24 is : (June, 2017)
(a) Rs. 30,000 (b) Rs. 2,00,000
(c) Rs. 2,10,000 (d) Rs.1,50,000 Ans.(b)
after 1-4-1999 for construction of house property used for self occupation if the house is completed
within 5 years from the end of previous year in which loan is taken is:
(a) Rs. 30,000 (b) Rs. 2,00,000
(c) Rs. 50,000 (d) Rs. 60,000 Ans.(b)
(53) The maximum limit of deduction under section 24(b) for interest on borrowed capital
on or after 1-4-1999 for construction of house property used for self occupation shall be Rs.
2,00,000 if -
(a) the house is completed within 5 years from the previous year in which loan is taken.
(b) the house is completed within 5 years from the end of end of previous year in which
construction is started.
(c) the house is completed within 5 years from the date when construction is started.
(d) the house is completed within 5 years from the date when the loan is taken. Ans.(a)
(54) M took a loan of Rs. 6,00,000 on 1-4-2019 from a bank for construction of a house. The loan
carries an interest @ 10% p.a. The construction is completed on 30-6-2019. The entire loan is still
outstanding. The pre-construction period interest will be .
(a) Rs. 60,000 (b) Nil
(c) Rs. 75,000 (d) Rs. 90,000 Ans.(b)
(55) R took a loan of Rs. 8,00,000 on 1-4-2018 from a bank for construction of a house. The loan
carries an interest @ 12% p.a.The construction is completed on 31-03-2019. The entire loan is still
outstanding on 31-03-2019. The pre-construction period interest will be Rs. ___________ .
(a) Rs. 96,000 (b) Nil
(c) Rs. 1,92,000 (d) Rs. 1,50,000 Ans.(b)
(56) K took a loan of Rs. 8,00,000 on 1-4-2017 from a bank for construction of a house. The loan
outstanding on 31-03-2020. The pre-construction period interest allowable in Assessment Year
2020-21 will be
(a) Rs. 19,200 (b) Rs. 38,400
(c) Rs.96,000 (d) Rs. 1,92,000 Ans.(a)
(57) K took a loan of Rs. 8,00,000 on 1-4-2017 from a bank for construction of a house. The loan
outstanding on 31-03-2020. The total interest allowable in Assessment Year 2020-21 will be
(a) Rs.1,15,200 (b) Rs.1,34,400
(c) Rs. 96,000 (d) Rs.1,92,000 Ans.(a)
(58) A borrowed Rs. 5,00,000 @ 12% p.a. On 1-4-2015 for construction of house property which
was completed on 15-3-2019. The amount is still unpaid. The deduction of interest for Previous
Year 2019-20 shall be : (June, 2017)
(a) Rs. 60,000 (b) Rs. 96,000
(c) Rs. 1,80,000 (d) Rs. 2,40,000 Ans(b)
(59) When a house property is let-out throughout the year for a monthly rent of Rs. 22,000 and
municipal tax paid for current year is Rs. 24,000 and for the earlier year paid now is Rs. 16,000, the
income from house property would be - (Dec. 2015)
(a) Rs. 1,68,000 (b) Rs. 1,56,800
(c) Rs. 1,84,800 (d) Rs. 2,24,000 (Ans.(b)

the year ended 31-03-2020 are paid by the owner. The income from house property will be :
(a) Rs. 1,90,400 (b) Rs. 1,76,400
(c) Rs. 1,62,400 (d) Rs. 2,72,000 Ans (a)
the year ended 31-03-2020 are paid by the owner. Interest on borrowed capital is Rs. 2,10,000
(outstanding). The income from house property will be
(a) Rs. 2,32,400 (b) Rs. 22,400
(c) Rs. 1,62,400 (d) Rs.32,400 Ans(b)
the year ended 31-03-2020 are paid by the owner. Interest on borrowed capital is Rs. 60,000
(outstanding). The income from house property will be
(a) Rs. 1,02,400 (b) Rs. 1,62,400
(c) Rs.88'400 (d) Rs. 1,48,400 Ans (a)
(63) In case of self-occupied property, statutory deduction under section 24(a) shall be :
(a) Nil (b) Rs. 30,000
(c) Rs. 2,00,000 (d) Rs. 90,000 Ans.(a)
(64) Under which of the following circumstances the income from house property is exempt from
tax -
(a) Farm house (b) Trade Union
(c) One self occupied property (d) All of the above Ans.(d)
Hint – Farm house (Agricultural Income) and Trade Union read in Ch 3.
(65) If the respective shares of income of co-owners are not definite and ascertainable, the co-
owners shall be assessed as:
(a) AOP (b) BOI
(c) Joint owners (d) Any of these Ans.(a)
(66) Who amongst the following is not a deemed owner?
(a) An individual who transfers his house property otherwise than for adequate consideration to
his or her spouse.
(b) A member of a co-operative society, company to or an AOP to whom a building or part thereof
is alloted.
(c) The holder of impartible estate of an HUF. (d) None of the above. Ans.(d)
(67) Mr. Kamal had two children Sumit and Sushmita (married with Aman) of age 15 & 17
respectively and wife named Anu. In which of the following case he will not be considered as
deemed owner?
(a) Transfer of property to Anu. (b) Transfer of property to Sushmita.
(c) Transfer of property to Sumit. (d) None of the above. Ans.(b)

(68) What are the conditions to be fulfilled in order to claim exemption of unrealized rent?
(a) The defaulting tenant is in occupation of any of the property(b) Steps have been taken to
compel him to vacate other property of the assessee..
(c) The tenancy is bona fide.
(d) Both (b) and (c) Ans.(d)
(69) The net annual value of house let-out is Rs. 1,00,000 and actual amount spent by the assessee
on repairs and insurance premium is Rs. 20,000, the amount of deduction allowed under section
24(a) shall be ? .
(a) Rs. 20,000 (b) Rs. 30,000
(c) Rs. 25,000 (d) Rs. 22,000 Ans.(b)
(70) M took a loan of Rs. 6,00,000 on 1-4-2017 from a bank for construction of a house. The loan
outstanding. Compute the interest allowable for the assessment year 2020-21.
(a) Rs. 60,000 (b) Rs. 1,80,000
(c) Rs. 84,000 (d) Rs. 24,000 Ans.(c)
(71) A had one self occupied house property in Mumbai for residence. Fair rent of that property is
Rs. 56,000 per annum. Municipal valuation is Rs. 28,000. Municipal taxes paid are Rs. 5,000
including Rs. 1,000 for an earlier year. The house was constructed in December, 2009 with a loan
of Rs. 12,00,000 from a bank taken in November, 2008. During the previous year 2019-20, the
assessee refunded Rs. 2,30,000 which includes Rs. 2,18,000 as current year interest. Compute the
income from house property for assessment year 2020-21?
(a) Loss of Rs. 30,000 (b) Loss of Rs. 2,18,000
(c) Nil (d) Loss of Rs. 2,00,000 Ans.(d)
(72) Which out of the following is not a case of deemed ownership of house property?
(a) Transfer to a spouse for inadequate consideration
(b) Transfer to a minor child for inadequate consideration
(c) Holder of. an impartible estate
(d) Co-owner of a property Ans.(d)
Section 25A
(73) Jagdish, after sale of his house property during August, 2018, received arrears of rent
amounting to Rs. 40,000 on 2nd February, 2020. The said income is chargeable to tax under the head
___________ and the taxable income would be ? ___________ .
(a) Income from house property; Rs. 28,000 (b) Income from other Sources; Rs. 28,000
(c) Income from house property; Rs. 40,000 (d) Income from other sources; Rs. 40,000
Ans.(a)
(74) Rakesh, after sale of his house property during August, 2018, received unrealised rent
amounting to Rs. 80,000 on 2nd February, 2020. The said income is chargeable to tax under the head
___________ and the taxable income would be ? ___________ .
(a) Income from house property; Rs. 56,000 (b) Income from other Sources; Rs. 56,000
(c) Income from house property; Rs. 80,000 (d) Income from other sources; Rs. 80,000
Ans.(a)
(75) Megha received Rs. 30,000 as arrears of rent during the P.Y. 2019-20. The amount taxable u/s
25A would be ___________ .
(a) Nil (b) Rs. 30,000
(c) Rs. 21,000 (d) Rs. 25,000 Ans.(c)
(76) In case assessee is owner of more than two houses which are self occupied by him, then at the
option of the assessee :
(a) Two house shall be treated as self occupied and other houses shall be deemed to let out.
(b) Two house shall be treated as self occupied and the other house shall be deemed to be vacant
(c) All the houses shall be treated as deemed to be let out
(d) All the houses shall be treated as self. occupied. Ans.(a)
(77) Sanjeev owns a house property. Following are the details about the property :
Municipal value of house : Rs. 72,000 per annum.
Fair rent of house : Rs. 66,000 per annum.
Standard rent of house : Rs. 60,000 per annum.
The house was let out at Rs. 6,000 per month but was sold on 1st January, 2020. Find out income
from house property for the assessment year 2020-21.
(a) Nil (b) Rs. 50,400
(c) Rs. 37,800 (d) Rs. 25,000 Ans.(c)
(78) Mrs. Preeti owns a house property which is let out @ Rs. 10,000 p.m. During the previous year
ending 31s' March 2020, she received —
(i) arrears of rent of Rs. 30,000; and
(ii) unrealised rent of Rs. 20,000.
Compute her income chargeable to tax under the head 'Income from House Property. (Dec 2002)
(a) Rs. 84,000 (b) T 1,04,000
(c) Rs. 1,25,000 (d) Rs. 1,19,000 Ans(d)
(79) Ramesh let-out his house on 1st April, 2019 on rent of Rs. 15,000 p.m. The fair rent and the
municipal value of house are Rs. 13,500 p.m. and Rs. 16,000 p.m. respectively. Municipal taxes paid
for the year were Rs. 12,000. Income from house property for the assessment year 2020-212 will
be - Rs.ec 2015)
(a) Rs. 1,26,000 (b) Rs. 1,76,000
(c) Rs. 1,05,000 (d) None of the above. Ans.(a)
(80) Ms. Padmaja let out a property for Rs. 20,000 per month during the year 2019-20. The
municipal tax on the let-out property was enhanced retrospectively. Hence, she paid Rs. 60,000 as
municipal tax which included arrears of municipal tax of Rs. 45,000. Her income from house
property is - (June 2016)
(a) Rs. 1,80,000 (b) Rs. 1,57,500
(c) Rs. 1,26,000 (d) Rs. 1,36,500 Ans(c)
(81) Suresh owns two house properties. First property was used half for running his business and
the other half was let-out at Rs. 4,000 per month. The second property was wholly used as a
residence by Suresh. Municipal value of the two properties were the same at Rs. 72,000 each per
annum and local taxes @ 10%. Suresh's income from house property for the previous year 2019-
20 will be (Dec. 2014)
(a) Rs. 33,600 (b) Rs. 31,080
(C) Rs.28'560 (d) Rs. 62,160. Ans(b)

(82) X is the owner of a commercial property let out at Rs. 20,000 p.m. The municipal tax on the
property is Rs. 25,000 annually, 50% of which is payable by the tenant. This tax was actually paid
on 15-04-2020. He had borrowed a sum of Rs. 10 lacs from his cousin, resident in U.S.A. ( dollars)
for the construction of the property on which interest @ 10% is payable. He has also received
arrears of rent of Rs. 20,000 during the year, which was not charged to tax in the earlier years. What
is the property income of X for assessment year 2020-21?
(a) Rs. 82,000 (b) Rs. 73,250
(C) Rs. 62,500 (d) Rs. 88,000 Ans.(a)
(83) During the financial year 2019-20, Mr. A received a sum of Rs. 1,80,000 (Rs. 60,000 p.a.) by
way of enhancement for the last three years as the Government department (tenant) enhanced the
rate of rent with retrospective effect. The sum of rent be taxable in the assessment year 2020-21 ?
(a) Rs. 1,80,000 (b) Rs. 1,26,000
(C) Rs. 1,20,000 (d) Rs. 42,000 Ans(b)
Ch 6 - PGBP 6.1
CHAPTER 6 PROFITS AND GAINS OF BUSINESS OR PROFESSION

BASIC CONCEPTS
1.Which is the charging section of income under the head profits and gains of business or profession?

2. Export Incentives taxable under this head includes :
(a) Cash Compensatory Support (b) Duty Drawback

(c) Profit on transfer of DEPB (d) All of the above Ans.(d)
3._____________ includes any arrangement or understanding or action in concert whether or not it is
formal or in writing or whether or not it is intended to be enforceable by legal proceedings :
(a) Contract (b) Agreement

(c) Service (d) Profession Ans.(b)
4.Which of the following conditions are to be fulfilled for charging an income under the head profits
and gains of business or profession
(a) There should be profits and gains.

(b) Business or profession must be carried on by the assessee.
(c) Business or profession should be carried on at any time during previous year.
5.Which of the following are included in business according to Section 2(13):
(a) Trade (b) Commerce

(c) Manufacture (d) All of the above Ans.(d)
6.Assessee is having stock existing in the business. Valuation of stock will be at:
(a) Cost price (b) Market price

(c) Cost or market price, whichever is less
(d) Cost or market price, whichever is more Ans.(c)
7.Under the head ’profits and gains of business or profession’, the method of accounting that should be
followed by an assessee is- (June 2016)
(a) Cash system only (b) Mercantile system only

(c) Hybrid system only (d) Cash system or mercantile system only
Ans.(d)
8.Method of accounting to be followed for computing income chargeable under the head PGBP shall be
:
(a) Cash system (b) Mercantile system

(c) Cash or mercantile system at the option of
assessee (d) None of the above Ans.(c)
9.Under the Income-tax Act, 1961, 'notional profit' from speculative business is - (June, 2015)
Ch 6 - PGBP 6.2
(a) Taxable under the head 'income from profits

(b) Taxable under the head 'income from other and gains of business and profession' sources'
(c) Taxable either as income from other sources or as income from profits and gains of business and
profession
(d) Not taxable,
Ans.(d)
10.Transaction in which a contract for the purchase or sale of any commodity including stocks and
shares is periodically or ultimately settled otherwise than by the actual delivery or transfer of
the commodity or scrips is known as :
(a) Wagering transaction (b) Speculative transaction

(c) Deemed Speculation business (d) None of these Ans.(b)
11. HSK, an LLP had taken keyman insurance policy on the life of its managing partner. The policy got
matured on 13 th September, 2018 and an amount of Rs. 75 lakh was paid by the insurers to
the managing partner. The amount so received on maturity of the policy by the managing
partner is - (Dec. 2015)
(a) Fully exempt under section 10(10D) (b) 50% of Rs. 75 lakh exempt
(c) Rs. 75 lakh taxable (d) Rs. 25 lakh exempt and Rs. 50 lakh
Ans.(c)
12.Raman & Co., a partnership firm, received Rs. 5,00,000 from an insurance company under keyman
insurance policy consequent to demise of partner Pramod. The amount of premium Rs.
2,30,000 paid earlier was claimed as deduction under section 37 by the firm. The amount
received from the insurance company is - (June 2016)
(a) Tax-free under section 10(10D) (b) Fully taxable as income

(c) Rs. 2,70,000 is taxable (d) Rs. 2,30,000 is taxable
Ans.(b)
DEPRECIATION, WDV, ACTUAL COST ADDITIONAL DEPRECIATION,
UNABSORBED DEPRECIATION & INVESTMENT ALLOWANCE
13. As per section 30, which expenditure incurred for a building used for the business or profession
shall not be allowed as deduction?
(a) Rent, rates and taxes (b) Insurance of budding

(c) Repairs of building (d) Capital expenditure Ans.(d)
14. Group of assets falling within a class of assets comprising of tangible & intangible assets is known
as :
(a) Group of assets (b) Block of assets

(c) Set of assets (d) None of these Ans.(b)
15. Which of the following condition should be fulfilled for claiming depreciation u/s 32 ?
(a) Asset must be owned wholly or partly by the assessee.

(b) Asset must be used for the purpose of business or profession of the assessee.
(c) Asset should be used during the relevant year. (d) All of the above. Ans.(d)
Ch 6 - PGBP 6.3
16. Depreciation available, if asset is used for less than 180 days during the year of acquisition shall be
of block rate .
(a) 50% (b) 20%

(c) 100% (d) 15% Ans.(a)
17. If the Plant & Machinery is used for less than 180 days in the year of its acquisition, then, at what
rate the depreciation on that asset should be provided under section 32?
(a) 7 1/2% (b) 15%

(c) 20% (d) 10% Ans.(a)
18. If the Computer is purchased on 11th May, 2019 then at what rate depreciation will be provided
on it?
(a) 40% (b) 60%

(c) 30% (d) 20% Ans.(a)
19. If the machinery is purchased on 5th October, 2019 then at what rate depreciation will be
provided on it?
(a) 40% (b) 7 1/2%

(c) 15% (d) 10% Ans.(b)
20. The transfer of one or more undertakings as a result of the sale for a lump sum consideration
without values being assigned to the individual assets and liabilities in the sale is known as :
(a) Lump sum sale (b) Slump sale

(c) Aggregate sale (d) Total sale Ans.(b)
21. What is the rate of depreciation charged on computer software ?
(a) 60% (b) 40%

(c) 25% (d) 100% Ans.(c)
22. Rate of depreciation chargeable on fully temporary wooden structure for the assessment year
2020-21 is -
(a) 5% (b) 10%

(c) 40% (d) None of the above. Ans.(c)
23. Rate of depreciation chargeable on Ocean-going ships for the assessment year 2020-21 is -
(a) 20% (b) 30%

(c) 15% (d) None of the above. Ans.(a)
24. Rate of depreciation chargeable on life saving medical equipments for the assessment year 2020-
21 is -
(a) 5% (b) 10%

(c) 40% (d) 20% Ans.(c)
25. Rate of depreciation chargeable on Energy Saving Devices for the assessment year 2020-21 is -
(a) 40% (b) 15%

Ch 6 - PGBP 6.4
(c) 80% (d) 100% Ans.(a)

26. Rate of depreciation chargeable on Oil wells under Mineral Oils concerns for the assessment year
2020-21 is -
(a) 10% (b) 15%

(c) 20% (d) 7.5% Ans.(b)
27. Under the Income-tax Act, 1961, depreciation on machinery is charged on — (Dec. 2009)
(a) Purchase price of the machinery (b) Market price of the machinery
(c) Written down value of the machinery (d) All of the above. Ans.(c)
28. If a block of assets ceases to exist on the last day of the previous year, depreciation admissible for
the block of assets will (June, 2015)
(a) Nil
(b) 50% of the value of the block of assets on the first day of the previous year
(c) The total value of the block of assets on the first day of the previous year
(d) 50% of the value of the block of assets on the last day of the previous year. Ans.(a)
29.Opening WDV of the block of assets was Rs. 15,00,000. During the year, asset was acquired under
this block on 15th June 2019 amounting to Rs. 10,00,000. Rate of depreciation of the block is
15%. Calculate the amount of depreciation available during the previous year for the block.
(a) Rs. 3,25,000 (b) Rs. 3,75,000

(c) Rs. 3,00,000 (d) Rs. 2,25,000 Ans.(b)
30. Opening WDV of the block of assets was Rs. 15,00,000. During the year, asset was acquired under
this block on 15th June 2019 amounting to Rs. 10,00,000. One of the asset falling within the
block was sold for Rs. 5,50,000 on 14-01-2020. Rate of depreciation of the block is 10%.
Calculate the amount of depreciation available during the previous year for the block.
(a) Rs. 1,95,000 (b) Rs. 2,50,000

(c) Rs. 1,45,000 (d) Rs. 2,22,500 Ans.(a)
this block on 15th January 2020 amounting to Rs. 10,00,000. One of the asset falling within the
block was sold for Rs. 5,50,000 on 14 January 2020. Rate of depreciation of the block is 10%.
(a) Rs. 1,95,000 (b) Rs. 2,50,000

(c) Rs. 1,45,000 (d) Rs. 2,22,500 Ans.(c)
this block on 15th January 2020 amounting to Rs. 10,00,000. One of the asset falling within the
block was sold for Rs. 5,50,000 on 14 January 2020. Rate of depreciation of the block is 15%.
Calculate the amount of depreciation and additional depreciation available during the previous
year for the block.
Ch 6 - PGBP 6.5
(a) Rs. 4,92,500 (b) Rs. 3,17,500

(c) Rs. 2,92,500 (d) Rs. 2,17,500 Ans.(d)
this block on 11th October 2019 amounting to Rs. 15,00,000. Also, moneys payable in respect
of asset falling within this block was Rs. 38,00,000. Rate of depreciation of the block is 10%.
(a) Rs. 20,000 (b) Rs. 10,000

(c) Rs. 1,50,000 (d) Rs. 15,000 Ans.(b)
34. Adhu Ltd. owns machinery (rate of depreciation is 15%), the written down value of which as on
1st April, 2019 is Rs. 30,00,000. Due to fire, entire assets in the block were destroyed and the
insurer paid Rs. 25,00,000. The eligible depreciation in respect of this machinery is - (June
2016)
(a) Rs. 4,50,000 (b) Rs. 75,000

(c) Rs. 5,00,000 (d) Nil Ans.(d)
35. Dr. Sen has surgical equipments whose WDV as on 1-4-2019 was Rs. 4,10,000. He acquired some
more equipments inDecember 2019 for Rs. 3,50,000. He sold equipment in March 2020 for Rs.
2,00,000 whose original cost was Rs. 1,70,000. The written down value of the block for the
purpose of computing depreciation for the A.Y. 2020-21 is : (June, 2017)
(a) Rs. 5,90,000 (b) Rs. 5,60,000

(c) Rs. 7,30,000 (d) Rs. 4,30,000 Ans.(b)
36. Vaibhav, deriving business income, owns a car whose WDV as on 1st April, 2018 was Rs. 3,00,000.
This is the only asset in the block of assets with rate of 15%. It is estimated that one-third of
the total usage of the car is for personal use in both years. The WDV of the block of assets as on
31st March, 2020 would be - (June, 2015)
(a) Rs. 2,16,750 (b) Rs. 2,43,000

(c) Rs. 2,55,000 (d) None of the above. Ans.(b)
37. While computing the actual cost of any asset falling within a block, direct costs attributable to
bring asset to its present location and working condition for its intended use (i.e. expenses
incurred for acquiring the asset e.g. - freight, insurance, loading and handling etc. and expenses
incurred in connection with the installation of the asset.) shall:
(a) be added to the purchase price (b) be subtracted from the purchase price
(c) be subtracted from WDV (d) be claimed as revenue expenditure.
Ans. (a)
38. Swan (Pvt.) Ltd. acquired machinery for Rs. 5,75,000 which included excise duty of Rs. 75,000
eligible for CENVAT credit. It borrowed Rs. 3,00,000 from a bank for purchase of the said
machine. Interest on the bank loan upto the date of usage of machine was ascertained as Rs.
25,000. The machine was put to use from 15th September, 2018. Assume the rate of
depreciation at 15%. The eligible amount of depreciation will be - (Dec. 2016)
(a) Rs. 90,000 (b) Rs. 78,750

Ch 6 - PGBP 6.6
(c) Rs. 86,250 (d) Rs. 75,000 Ans.(b)

39. While computing the actual cost of any asset falling within a block, amount of duty of excise or
additional duties of customs levied on it and included in its cost, in respect of which claim of
CENVAT credit has been made and allowed under the CENVAT Credit Rules, 2004, shall be:
(a) Added to the purchase price (b) Subtracted from the purchase price
(c) Added to the WDV (d) Claimed as revenue expenditure
Ans.(b)
40. While computing the actual cost of any asset falling within a block, portion of cost of asset which
has been met directly by the Central Government or a State Government or any authority
under any law or any other person, in the form of a subsidy or grant or reimbursement, shall
be:
(a) Added to the purchase price (b) Subtracted from the purchase price
(c) Added to the WDV (d) Claimed as revenue expenditure
Ans.(b)
41. Where the assessee incurs any expenditure for acquisition of any asset in respect of which a
payment or aggregate of payments made to a person in a day, otherwise than by an account
payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing
system through a bank account, exceeds ? such expenditure shall be ignored for the purposes
of determination of actual cost.
(a) 20,000 (b) 10,000

(c) 30,000 (d) 50,000 Ans.(b)
42. Mr. X has purchased a machinery invoice value Rs. 12,00,000. He has made payment of Rs.
10,00,000 by account payee cheque, Rs. 1,50,000 through RTGS and Rs. 50,000 in cash to the
supplier of machine on 15th July 2019. The actual cost of machine will be :
(a) Rs. 12,00,000 (b) Rs. 10,00,000

(c) Rs. 11,50,000 (d) Rs. 10,50,000 Ans.(c)
43. In which of the following case no depreciation is allowable -
(a) Block exists but WDV ceases to exist. (b) WDV exists but the block ceases to exist.
(c) WDV & Block both ceases to exist. (d) All of the above. Ans.(d)
44. Sunil acquired a building for Rs. 15 lakh in June, 2017 in addition to cost of land beneath the
building of Rs. 3 lakh. It was used for personal purposes until he commenced business in June,
2019 and since then it was used for business purposes. The amount of depreciation eligible in
his case for the assessment year 2020-21 would be - (Dec. 2015)
(a) Rs. 1,50,000 (b) Rs. 75,000

(c) Rs. 37,500 (d) Rs. 1,21,500 Ans.(d)
45. Ramson Industries acquired a factory building for self use in November, 2019. The value of land
underneath the building was Rs. 5 lakh and value of building was Rs. 10 lakh. The amount of
eligible depreciation allowable for assessment year 2020-21 is- (June 2016)
(a) Rs. 1,50,000 (b) Rs. 25,000

(c) Rs. 1,00,000 (d) Rs. 50,000 Ans.(d)
Ch 6 - PGBP 6.7
46. Q & Co., a sole proprietary concern, was converted into a Company on 1-9-2019. Before the
conversion, the sole proprietary concern had a Block of Plant and Machinery (Rate of
Depreciation 15%), whose WDV as on 1 -4-2019 was Rs. 3,00,000. On 1st April, itself a new
Plant of the same Block was purchased for Rs. 1,20,000. After the conversion, the Company has
purchased the same type of Plant on 1-1-2020 for Rs. 1,60,000. Compute the depreciation that
would be allocated between the sole proprietary concern and the successor company.
(a) Rs. 26,336 : Rs. 48,664 (b) Rs. 0: Rs. 75,000

(c) Rs. 75,000 : Rs. 0 (d) No depreciation for this year Ans.(a)
47. R, an assessee carries on business in respect of which it holds tenancy rights. It carries out
improvements to the said building at a cost of Rs. 2 lakhs and claims depreciation @ 10%
thereon. Which is the correct answer?
(a) No depreciation available on the ground that the assessee is not the owner of the building
(b) Depreciation allowed of Rs. 20,000..
(c) Deduction of Rs. 2,00,000 available.
(d) The amount of Rs. 2,20,000 will be capitalised. Ans.(b)
48. XYZ Ltd is engaged in production of textile articles. Opening WDV of the block of assets was Rs.
15,00,000. During the year, plant was acquired under this block on 15th June 2019 amounting
to Rs. 10,00,000. One of the asset falling within the block was sold for Rs. 5,50,000 on 14-01-
2020. Rate of depreciation of the block is 15%. Calculate the total amount of depreciation
including additional depreciation available during the previous year for the block.
(a) Rs. 2,92,500 (b) Rs. 4,92,500

(c) Rs. 3,92,500 (d) Rs. 3,52,500 Ans.(b)
49. XYZ Ltd is engaged in production of textile articles. Opening WDV of the block of assets was Rs.
15,00,000. During the year, plant was acquired under this block on 15th December 2019
amounting to Rs. 10,00,000. One of the asset falling within the block was sold for Rs. 5,50,000
on 14-01-2020. Rate of depreciation of the block is 15%. Calculate the total amount of
depreciation including additional depreciation available during the previous year for the block.
(a) Rs. 2,92,500 (b) Rs. 3,17,500

(c) Rs. 4,92,000 (d) Rs. 3,52,500 Ans.(b)
50. Mohit purchased an asset for scientific research in the previous year 2009-10 for Rs. 30,00,000.
During the previous year 2019-20 the said asset ceased to be used for scientific research. Profit
from business before depreciation Rs. 10,00,000 and Written down value of block of assets
15% as on 1st April, 2019 Rs.after
Solve 20,00,000.
capital gains
The scientific research asset if used for business shall be eligible for depreciation @ 15%. The cost
inflation index for 2009-10 is 148 and for 2019-20 is 289. Compute the total income if the scientific
research asset is sold for Rs. 65,00,000 during 2019-20assuming that it is sold without using for
business.
(a) Rs. 43,41,892 (b) Rs. 50,00,000
(c) Rs. 65,00,000 (d) Rs. 10,00,000 Ans.(a)
Ch 6 - PGBP 6.8
Answer Hint: The business profits will be Rs. 7,00,000 + Profit on sale of scientific research asset
without having been used for business to the extent of deduction allowed under Section 41(3)
amounting Rs. 30,00,000 i.e. Rs. 37,00,000.
The capital Gains will be [Rs. 65,00,000 – (Rs. 30,00,000 x 289 +148] = Rs. 6,41,892. Thus total income
= Rs. 43,41,892.
51. What shall be your total income in the above case, if whole of the block is sold after research
machinery is being used for business.
(a) Rs. 40,31,990 (b) Rs. 55,00,000

(c) Rs. 65,00,000 (d) Rs. 10,00,000 Ans.(b)
Answer Hint: In such cases business profits shall be Rs. 10,00,000 and short term capital gains on sale
of depreciable asset will be [Rs. 65,00,000 - Rs. 20,00,000] = Rs. 45,00,000. Total Income will beRs.
55,00,000.]
52. A company incurred capital expenditure on scientific research viz., (i) land Rs. 5 lakh; (ii) building
Rs. 10 lakh; and (iii) equipments Rs. 7 lakh. The amount of expenditure eligible for deduction
under section 35 would be - (Dec. 2016)
(a) Rs. 22 lakh (b) Rs.17Iakh

(c) Rs. 15 lakh (d) Rs. 5 lakh Ans.(b)
53. Where an asset used for scientific research for more than three years is sold without having been
used for other purposes, then the sale proceeds to the extent of the cost of the asset already
allowed as deduction under section 35 in the past shall be treated as - (June 2016)
(a) Business income (b) Long-term capital gain

(c) Short-term capital gain (d) Exempted income. Ans.(a)
54. In the case of any new machinery or plant (other than ships and aircraft), acquired by an assessee
engaged in the business of manufacture or production of any article or thing as well as
assessees engaged in the business of generation or generation and distribution of power, how
much additional depreciation of actual cost of such plant and machinery is available?
(a) 10% (b) 25%

(c) 5% (d) 20% Ans.(d)
55. In the case of any new machinery or plant (other than ships and aircraft), acquired by an assessee
on 01-04-2019 engaged in the business of manufacture or production of any article or thing in
the backward areas of the State of Andhra Pradesh, how much additional depreciation of actual
cost of such plant and machinery is available in AY 2019-20?
(a) 17.5% (b) 20%

(c) 10% (d) 35% Ans.(d)
56. In the case of any new machinery or plant amounting is acquired by an assessee engaged in the
business of manufacture or production of any article or thing is put to use for less than 180
days,the additional depreciation admissible in FY 2019-20 and FY 2020-21 will be ____________
and ____________ respectively.
(a) 10%, 10% (b) Nil,20%

(c) 20%, Nil (d) 15%, Nil Ans.(a)
Ch 6 - PGBP 6.9
57. In the case of any new machinery or plant amounting Rs. 25,00,000 is acquired by an assessee on
10-12-2019 engaged in the business of manufacture or production of any article or thing,the
additional depreciation admissible in FY 2019-20 and FY 2020-21 will be ____________ and
____________ respectively.
(a) Rs. 5,00,000, NIL (b) Nil, 15,00,000

(c) Rs. 2,50,000,Rs. 2,50,000 (d) Rs. 3,75,000, Nil Ans.(c)
58. Depreciation claimed by Mr. Gupta while computing profit in profit and loss account: Rs. 50,000.
Depreciation allowable as per Income Tax Rules : Rs. 58,000. What will be the amount of
depreciation allowable while computing gross total income of Mr. Gupta.
(a) Rs. 50,000 (b) Rs. 58,000

(c) Rs. 1,08,000 (d) Rs. 8,000 Ans.(b)
59. An assessee was engaged in the business of manufacture of chemicals in Rajasthan. New
machinery amounting to Rs. 5,50,000 was purchased by it on 1st June, 2019. Calculate the
additional depreciation available.
(a) Rs. 1,10,000 (b) Rs. 82,500

(c) 155,000 (d) Nil Ans.(a)
60. If in the above case the new machinery was purchased on 5th October, 2019, calculate the total
depreciation available.
(a) Rs. 1,10,000 (b) Rs. 55,000

(c) Rs. 96,250 (d) Nil Ans.(c)
61.Calculate the additional depreciation available in the above case for the financial year 2019-20.
(a) Rs. 1,10,000 (b) Rs. 82,500

(c) Rs. 55,000 (d) Nil Ans.(c)
62. An assessee was engaged in trading of goods. New machinery amounting to Rs. 10,00,000 was
purchased by it on 1st June, 2019. Calculate the additional depreciation available.
(a) Rs. 1,00,000 (b) Rs. 2,00,000

(c) Nil (d) Rs. 2,50,000 Ans.(c)
63. Ekta (Pvt.) Ltd., engaged in manufacturing activity, acquired new plant and machinery for Rs. 100
lakh for its manufacturing unit located in Bihar. The acquisition and unit was from 1st June,
2019. The assessee is eligible for additional depreciation of - (Dec. 2016)
(a) Rs. 30 lakh (b) Rs. 20 lakh

(c) Rs. 35 lakh (d) Rs. 10 lakh Ans.(c)
64. Unabsorbed depreciation can be carried forward for :

(c) 0 years (d) Indefinite period Ans.(d)
65. Who is the "eligible assessee" engaged in the business of manufacture or production of any article
or thing, who can claim investment allowance under Section 32AD?
(a) Company (b) All persons

Ch 6 - PGBP 6.10
(c) HUF
(d) Assessee whose gross turnover exceeds Rs. 100 lakhs Ans.(b)
66. Investment allowance under Section 32AD is available at rate of ____________ actual cost of plant and
machinery:
(a) 10% (b) 15%

(c) 50% (d) 20% Ans.(b)
67. For the purpose of investment allowance under Section 32AD, new plant and machinery shall not
include investment made in:
(a) any plant or machinery which was used either within or outside before by any other person.
(b) any plant or machinery installed in any office installation premises or any residential
accommodation (including guest house);
(c) any office appliances including computers or computer software; any vehicle; or any plant or
machinery, whose whole actual cost is allowed as deduction.
(d) All of the above, Ans.(d)
68. Compute 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 if
amount invested in new plant and machinery is Rs. 30 crore on 1st April 2019 :
(a) Rs. 3 crore (b) Rs. 4.5 crore

(c) Rs. 6 crore (d) Rs. 2.25 crore Ans.(b)
69. What would be your answer if in the above case amount is invested on 17th October 2019 :
(a) Rs. 3 crore (b) Rs. 4.5 crore

(c) Rs. 6 crore (d) Rs. 2.25 crore Ans.(b)
70.Under section 32AD if the new asset is sold/ transferred within ___years then amount of deduction
allowed in respect of such new asset shall be deemed to be the income of the assessee
chargeable under the head "PGBP" of the previous year in which such new asset is sold or
otherwise transferred, in addition to taxability of gains, arising on account of transfer of such
new asset.
(a) 3 (b) 5
(c) 1 (d) 10 Ans.(b)
71. XYZ Pvt. Ltd. located in backward area of Bihar is engaged in the business of manufacturing
fertilizers. Opening WDV of the block of plant and machinery was Rs. 80 crores. During the
year, asset was acquired under this block on 11th July 2019 amounting to Rs. 150 crore. Rate of
depreciation of the block is 15%. Calculate the amount of investment allowance available
under Section 32AD.
(a) Rs. 22.5 crore (b) Rs. 30 crore

(c) Rs. 150 crore (d) Rs. 100 crore Ans.(a)
72. If in the above case, the asset was acquired on 30th December, 2019 then the amount of
investment allowance available will be :
(a) Rs. 22.5 crore (b) Rs. 30 crore

(c) Rs. 150 crore (d) Rs. 100 crore Ans.(a)
Ch 6 - PGBP 6.11
73. XYZ Pvt Ltd was engaged in the business of manufacturing fertilizers. Opening WDV of the block of
Plant and machinery was Rs. 80 crores. During the year, asset was acquired under this block on
11 July 2019 amounting to Rs. 150 crore. Rate of depreciation of the block is 15%. Calculate the
WDV of the block of asset.
(a) Rs. 100 crore (b) Rs. 143 crore

(c) Rs. 165.5 crore (d) Rs.50 crore Ans.(c)
74. XYZ Pvt. Ltd. was engaged in the business of manufacturing fertilizers located in the backward
area of State of West Bengal, Opening WDV of the block of plant and machinery was Rs. 80
crores. During the year, asset was acquired under this block on 11th July 2019 amounting to
Rs. 150 crore. Rate of depreciation of the block is 15%. Calculate the WDV of the block of asset.
(a) Rs. 100 crore (b) Rs.1655crore

(c) Rs. 143 crore (d) Rs.50 crore Ans.(c)
75. XYZ Pvt Ltd was engaged in the business of manufacturing fertilizers. Opening WDV of the block of
plant and marchinery was Rs. 80 crores. During the year, asset was acquired under this block
on 11th July 2019 amounting to Rs. 50crore. Second hand machinery was also purchased
amounting to Rs. 70 crores. Rate of depreciation of the block is 15%. Calculate the amount of
investment allowance available.
(a) Rs. 18 crore (b) Nil

(c) Rs.7.5 crore (d) Rs. 10 crore Ans.(c)
76. The amount of depreciation not absorbed in the same year can be carried forward - (Dec. 2016)
(a) For a period of 4 years (b) For a period of 8 years

(c) For a period of 6 years (d) Indefinitely Ans.(d)
CERTAIN SPECIAL DEDUCTIONS - SECTION 33AB TO 35E
77. What is the amount of deduction in relation to Tea, Coffee and Rubber development A/c, u/s
33AB?
(a) 20% of profits of such business. (b) 40% of profits of such business.
(c) 60% of profits of such business. (d) 100% of profits of such business.
Ans.(b)
78. XYZ Ltd. has dervied a profit of Rs. 100 lakhs from the business of growing and manufacturing tea
in India It has deposited a sum of Rs. 38 lakhs in Tea deposit account. What is the amount of
deduction m relation to Tea, Coffee and Rubber development A/c, u/s 33AB?

(c) Rs. 40 lakhs (d) Rs.60akhs
Ans- (b)
79. XYZ Ltd. has dervied a profit of Rs. 100 lakhs from the business of growing and manufacturing
coffee in India It has deposited a sum of Rs. 42 lakhs in development account .What is the
amount of deduction allowed in relation to Tea, Coffee and Rubber development A/ c, u/ s
33AB?

(c) Rs. 40 lakhs (d) 42 lakhs
Ch 6 - PGBP 6.12
Ans-(C)
80. If an asset acquired in accordance with the site restoration scheme is sold or otherwise
transferred in any previous year before the expiry of ____________ years from year of its
acquisition and such part of the cost of asset is relatable to the deduction already allowed
under this section will be deemed to be the profits of business in the year of such sale or
transfer:
(a) 5 (b) 4
(c) 8 (d) 10 Ans.(c)
81.The amount of deduction in relation to site restoration fund u/s 33ABA is :
(a) Aggregate of amounts deposited in Site restoration A/ c.

(b) 20% of profits of such business
(c) Higher of (a) or (b).
(d) Lower of (a) or (b). Ans.(d)
82. The amount of deduction available for revenue expenditure incurred during the previous year, on
scientific research related to the business; and expenditure incurred on scientific research
within the 3 years preceding the date in which the business commences by way of salary of
employees/purchase of materials will be :
(a) Amount of expenditure incurred (b) 2nd expenditure incurred

(c) 1.5 expenditure incurred (d) None of these Ans.(a)
83. Mr. X has incurred revenue expenditure of Rs.5,00,000 during the previous year, on scientific
research related to the business. The amount of deduction admissible under Section 35 will be :
(a) Rs. 5,00,000 (b) Rs. 10,00,000

(c) Rs. 7,50,000 (d) None of these Ans.(a)
84. Mr. X has incurred capital expenditure of Rs. 5,00,000 (which includes Rs. 1,00,000 on cost of land)
during the previous year, on scientific research related to the business. The amount of
deduction admissible under Section 35 will be :
(a) Rs. 4,00,000 (b) Rs. 8,00,000

(c) Rs. 6,00,000 (d) Rs. 10,00,000 Ans.(a)
85. The amount of deduction available for the sum paid to approved scientific research association,
university, college or institution whose object is undertaking of scientific research will be :
(a) 2 times (b) 1.5 times

(c) 1.75 times (d) None of these Ans.(b)
86. Where the assessee does not himself carry on scientific 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 - (Dec. 2014)
(a) 125% (b) 150%

(c) 175% (d) 200% Ans.(b)
Ch 6 - PGBP 6.13
87. Mr. Rajan has incurred expenditure of Rs. 5,00,000 by way of payment of sum to approved
scientific research association whose object is undertaking of scientific research. The amount
of deduction admissible under Section 35(l)(ii) will be :
(a) Rs. 8,75,000 (b) Rs. 7,50,000

(c) Rs. 5,00,000 (d) Rs. 10,00,000 Ans.(b)
88. X Ltd. paid Rs. 10 lakh to an approved college to be used for scientific research unrelated to its
business. The amount eligible for deduction under section 35(l)(ii) is - (Dec. 2015)

(c) Rs. 17.50 lakh (d) Nil Ans.(a)
89. The amount of deduction available for the sum paid to a company having as its main object
'scientific research and development' to be used by it for scientific research; or Sum paid for
social science or statistical research to a university, college, or institution will be :
(a) 100% of sum paid (b) 200% of sum paid

(c) 150% of sum paid (d) 125% of sum paid Ans.(a)
90. According to Section 35(l)(iv) Capital expenditure (other than expenditure on land) incurred on
scientific research related to the assessee’s business the amount of deduction claimed on
capital expenditure on scientific research is ;
(a) Amount of expenditure incurred (b) 1.25 x sum paid

(c) 1.5 x expenditure incurred (d) None of these Ans.(a)
91. An assessee made a capital expenditure on purchase of land amounting to Rs. 150 lacs during the
previous year on scientific research related to the business carried on by him. Amount of
deduction available to assessee for this expenditure is:
(a) 1 x expenditure incurred (b) 1.25 x sum paid

(c) 1.5 x expenditure incurred (d) NIL Ans.(d)
92. According to Section 35(2AA) the amount of deduction claimed for sum paid to a National
Laboratory for approved programme is:
(a) Amount of expenditure incurred (b) 2 x expenditure incurred

(c) 1.5 x expenditure incurred (d) None of these Ans.(c)
93. According to Section 35(2AB) – Biotech company - expenditure incurred for the manufacture or
production of chemical fertiliser :
(a) Amount of expenditure incurred (b) 1.25 x sum paid

(c) 1.5 x expenditure incurred (d) None of these Ans.(c)
94. Rosy Ltd. engaged in manufacture of bio-medicines in August, 2018 converted one equipment
which was used for scientific research purposes previously, for regular business use. The
original cost of the plant is Rs. 15 lakhs which was acquired in April, 2018. The company had
claimed deduction at 150% under section 35(2AB) in the assessment year 2019-20. The plant
used for scientific research would be included in the block of assets now at a value of: (June,
2017)
(a) Nil (b) Rs. 15,00,000

Ch 6 - PGBP 6.14
(c) Rs. 30,00,000 (d) Rs. 12,75,000 Ans.(a)

95. Assessee company engaged in the business of bio-technology incurred an expenditure of Rs.
10,00,000 on scientific research which includes cost of land of Rs. 2,00,000. Compute the
amount of deduction available.
(a) Rs. 10,00,000 (b) Rs. 8,00,000

(c) Rs. 12,00,000 (d) Rs. 20,00,000 Ans.(c)
96. The amount of deduction available for the expenditure incurred (other than cost of land or
building) on scientific research, in-house research and development facility, by a company
engaged in the business of bio-technology or manufacture or production of article or thing
(other than article or thing specified in XIth Schedule) will be:
(a) 175% (b) 125%

(c) 150% (d) None of these Ans.(c)
97. Assessee company engaged in the business of bio-technology incurred an expenditure of Rs.
10,00,000 on scientific research which includes cost of land of Rs. 2,00,000. The aforesaid
company does not maintain books of accounts for research and development facility and thus
has not audited its accounts. Compute the amount of deduction available.
(a) Rs. 10,00,000 (b) Nil

(c) Rs. 16,00,000 (d) Rs. 20,00,000 Ans.(b)
98. Any capital expenditure incurred on acquiring telecom license is deductible in - (Dec. 2016)
(a) 5 Equal installments (b) 10 Equal installmets

(c) 15 Equal installments (d) Equally over the period of the license
Ans.(d)
99. XYZ Ltd. engaged in the business of providing telecommunication services has incurred a capital
expenditure of Rs. 10,00,000 on telecommunication licence. The period of licence is 10 years.
Compute the amount of deduction available under Section 35ABB during the year.
(a) Rs. 10,00,000 (b) Rs. 1,00,000

(c) Rs. 2,00,000 (d) Nil
Ans(b)
100.Any capital expenditure incurred on acquiring spectrum is deductible in -
(a) 5 Equal installments (b) 10 Equal installmets

(c) 15 Equal installments (d) Equally over the period of the spectrum
Ans.(d)
101. Deduction in respect of expenditure incurred for obtaining licence to operate telecommunication
services shall be available during the period of:
(a) 5 years (b) License

(c) 10 years (d) 8 years Ans.(b)
102. Specified business under section 35AD includes :.

Ch 6 - PGBP 6.15
(a) Cross-country crude or petroleum oil pipeline (b) Slum redevelopment housing project,
network.
(c) Bee-keeping and production of honey and (d) All of the above.
beeswax. Ans.(d)
103. Specified business under section 35AD includes :
(a) Bee-keeping and production of honey and (b) Cross-country crude or petroleum oil
pipeline beeswax. network.
(c) Infrastructure facility (d) All of the above. Ans.(d)
104. Which of the following is a 'specified business' eligible for deduction under section 35AD ? (June,
2017)
(a) Operating warehousing facility for storage of (b) Operating leather manufacturing unit
agriculture produce
(c) Operating unit for manufacture of tooth paste (d) Units operating in Jammu & Kashmir
Ans.(a)
105. The amount of deduction available under section 35AD for capital expenditure incurred in
business of Cold chain facilities will be:
(a) 100% (b) 125%

(c) 150% (d) None of these Ans.(a)
106. The amount of deduction available under section 35AD for capital expenditure incurred in
business of Inland Container Depot or a Container Freight Station:
(a) 100% (b) 125%

(c) 150% (d) None of these Ans.(a)
107. Assessee engaged in the business of Cross-country natural gas pipeline network incurred an
expenditure on acquisition of goodwill. Deduction available under section 35AD:
(a) 100% (b) 125%

(c) 150% (d) Nil Ans.(d)
108. Assessee engaged in the business of infrastructure facility incurred a capital expenditure for
which payment of Rs. 20,000 made by way of cash on 15-10-2019. Deduction available under
section 35AD:
(a) 100% (b) 150%

(c) 125% (d) Nil Ans(d)
109. Which of the following is not one of the Specified businesses under section 35AD includes :
(a) Slurry pipe line (b) Semi-conductor wafer fabrication

manufacturing unit
(c) Hotel (d) Sugar factory Ans.(d)
110. Minimum holding period of capital asset acquired under section 35AD is :
Ch 6 - PGBP 6.16

(c) 5 years (d) 15 years Ans.(a)
111. Which of the following business commenced during August 2019 will not be eligible for
deduction under section 35AD - (June, 2015)
(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.
Ans. (c)
112.Amount of deduction available u/s 35CCC for expenditure incurred on notified Agricultural
Extension Project in Previous Year 2019-20:

(c) 1.5 times (d) Nil Ans.(c)
113. Amount of deduction available u/s 35CCC for expenditure incurred on notified Agricultural
Extension Project:

(c) 1.5 times (d) Nil Ans.(c)
114. Amount of deduction available under section 35CCD for expenditure (excluding expenditure
incurred on cost of land or building) incurred by companies on notified Skill Development
Project:
(a) 100% (b) 125%

(c) 150% (d) Nil Ans.(c)
115. Amount of deduction available under section 35CCD for expenditure (excluding expenditure
incurred on cost of land or building) which will be incur by companies on notified Skill
Development Project in AY- 2020-21 :
(a) 100% (b) 125%

(c) 150% (d) 200% Ans.(c)
116. What is the qualifying expenditure for deduction in relation to preliminary expenses u/ s 35D :
(a) Aggregate amount of eligible expenditure (b) 5% of cost of project

(c) Higher of (a) or (d) Lower of (a) or (b)
Ans.(d)
117. In year 2018-19 an assessee incurred Rs. 6 lacs as preliminary expenditure in respect of
extension of the industrial undertaking. The cost of fixed assets acquired out of such extension
was Rs. 100 lacs as on 31st March 2020. Calculate the amount of deduction to be allowed to
him in computation of his income for the A.Y. 2020-21.
(a) Nil (b) Rs. 1,00,000

(c) Rs. 1,20,000 (d) Rs. 6,00,000 Ans.(b)
118. Proportion of expenditure allowed as deduction each year in regard to expenditure incurred on
Amalgamation or Demerger or Voluntary retirement scheme :
(a) 1/5th for each 5 successive previous years (b) 1/2 for each 2 successive previous years
Ch 6 - PGBP 6.17
(c) 1/10th for each 10 successive previous years (d) Nil Ans.(a)
119. As per section 35DDA, total expenditure in a voluntary retirement scheme is deductible in - (Dec.
2016)
(a) 5 Equal installments (b) 10 Equal installments

(c) 2 Equal installments (d) The same year Ans.(a)
120. One of the employees of an organisation took voluntary retirement on 15th January 2020 and he
was paid Rs. 15 lacs as compensation. Calculate the amount of deduction to be allowed in
computation of income for the A.Y. 2020-21.
(a) Nil (b) Rs. 15,00,000

(c) Rs. 3,00,000 (d) Rs. 1,50,000 Ans.(c)
OTHER SPECIFIED DEDUCTIONS & GENERAL DEDUCTIONS - SECTION 36 & 37

123. Expenditure incurred by an assessee on the activities relating to corporate social responsibility
referred to in section 135 of the Companies Act, 2013 is :
(a) An Allowable expenditure (b) Illegal expenditure

(c) Deferred revenue expenditure (d) Not an allowable expenditure
Ans.(d)
124. An assessee paid insurance premium against risk of damage or destruction of stocks or stores
used for the purposes of his business or profession. Such expenditure shall be considered as :
(a) Revenue expenditure (b) Capital expenditure

(c) Deferred revenue expenditure (d) Illegal expenditure
Ans.(a)
125. Insurance premium was paid by a Federal Milk Co-operative Society on the life of cattle owned by
member of such cooperative society. Such society was engaged in supplying milk raised by its
members to such federal milk co-operative society. Such expenditure shall be considered as:

(c) Deferred revenue expenditure (d) None of the above
Ans.(a)
126. An assessee purchased a computer on which depreciation is admissible. Such expenditure shall
be considered as :

Ans.(b)
127. One of the employees of the organisation was terminated in the interest of business and was paid
one time compensation of Rs. 75,000. For the organisation such expenditure shall be considered
as:

Ch 6 - PGBP 6.18

Ans.(a)
128. M/s. Kalyani and Company paid Rs. 84,000 as advertisement in the annual magazine of Bhartiya
Janata Party. For the organisation such expenditure shall be:
(a) Considered as revenue expenditure (b) Considered as capital expenditure

(c) Considered as deferred revenue expenditure (d) Disallowed under Section 37(2B)
Ans.(d)
129. M/s. Raksha & Company paid Rs. 75,000 as customs duty and Rs. 84,000 as income tax during the
previous year. Calculate the amount of expenditure allowable :
(a) Rs. 1,59,000 (b) Rs. 84,000

(c) Rs. 75,000 (d) Nil
Ans.(c)
130. An employer paid an amount of Rs. 30,000 as insurance premium on the health of his employees
under a scheme framed in this behalf by GIC. Such payment was made by cash. The insurance
amount was of Rs. 3,00,000. The amount of deduction available to employer:
(a) Rs. 30,000 (b) Rs. 3,00,000

(c) Rs. 2,70,000 (d) Nil
Ans.(d)
131. An employer paid an amount of Rs. 10,000 as insurance premium on the health of his employees
under a scheme framed by GIC. Such payment was made by cheque. The insurance amount was of
Rs. 10,00,000. The amount of deduction available to employer:
(a) Rs. 10,000 (b) Rs. 10,00,000

(c) Rs. 1,00,000 (d) Nil
Ans.(a)
132. XYZ Ltd. paid a sum of Rs. 25,000 to Mrs. Seema as employee bonus for services rendered by her
which was otherwise have been payable to her as profit or dividend. The amount allowable as per
Section 40A(2) was Rs. 20,000. Calculate the amount of deduction available.
(a) Rs. 25,000 (b) Rs. 20,000

(c) Rs. 5,000 (d) Nil
Ans.(d)
133. XYZ Ltd. paid a sum of Rs. 25,000 to Mrs. Seema as employee bonus for services rendered by her
during the Previous Year 2019-20. Such amount was actually paid to her on 15th June 2020. The
amount allowable as per section 40A(2) was Rs. 20,000. Calculate the amount of deduction
available.
(a) Rs. 25,000 (b) Rs. 20,000

(c) Rs. 5,000 (d) NIL
Ans.(b)
134. XYZ Ltd. paid a sum of Rs. 25,000 to Mrs. Geeta as employee bonus for services rendered by her
during the Previous Year 2019-20. Such amount was actually paid to her on 15th October 2020.
Ch 6 - PGBP 6.19
The amount allowable as per section 40A(2) was Rs. 20,000. Calculate the amount of deduction
available to her in Previous Year 2019-20.
(a) Rs. 25,000 (b) Rs. 20,000

(c) Rs. 5,000 (d) Nil
Ans.(d)
135. XYZ Ltd. paid a sum of Rs. 25,000 to Mrs. Geeta as employee bonus for services rendered by her
during the Previous Year 2019-20. Such amount was actually paid to her on 15th August 2020. The
amount allowable as per section 40A(2) was Rs. 28,000. Calculate the amount of deduction
available to her in Previous Year 2018-19.
(a) Rs. 25,000 (b) Rs. 28,000

(c) Rs. 3,000 (d) Nil
Ans.(a)
136. Mr. A took a loan of RS. 10,00,000 on 15th June 2019 for acquisition of an asset. Such asset was
put to use on 1st April 2020. Interest paid for the period till the asset was put to use was of Rs.
60,000. The amount of revenue expenditure available to assessee in Previous Year 2019-20 :
(a) Nil (b) Rs. 60,000

(c) Rs. 6,000 (d) Rs. 10,00,000
Ans.(a)
137. Mr. A took a loan of Rs. 10,00,000 on 15th June 2019 for acquisition of an asset and immediately
put the asset on use. Interest paid for the Previous Year 2019-20 on such loan amounted to Rs.
65,000. Payment of Rs. 55,000 against the interest amount was made on 11th May, 2020 and
balance amount was paid on 11th October 2020. The amount of revenue expenditure available to
assessee in Previous Year 2019-20 :
(a) Nil (b) Rs. 65,000

(c) Rs. 55,000 (d) Rs. 10,00,000
Ans.(c)
138. The employer made a contribution of Rs. 25,000 to recognised provident fund for the previous
year 2019-20. Such payment was made on 12th March, 2020. Such expenditure shall be
considered as:

Ans.(a)
139. Mr. Ram made a contribution of Rs. 45,000 to a Pension Scheme referred under section 80CCD.
The salary of the employee was of Rs, 4,00,000 in the previous year. Calculate the amount of
deduction available to employer in Previous Year 2019-20.
Solve after Deductions
(a) NIL (b) Rs. 45,000 Chapter
(c) Rs. 40,000 (d) Rs. 4,00,000
Ans.(c)
140. The assessee employer received a sum from his employee as contributions to Provident Fund or
Employee State Insurance Fund or Superannuation fund or any other employee-welfare fund. Such
Ch 6 - PGBP 6.20
sum is first treated as income of the employer and later claimed as expenditure. Such expenditure
shall be considered as:

Ans.(a)
141. An assessee was engaged in the business of cattle rearing. He incurred a loss in respect of animals
which were used for the purposes of his business (otherwise than as stock-in trade) and which
have died. Such expenditure shall be considered as:

Ans.(a)
142. Ramesh was engaged in the business of trading of jewellery. During the previous year 2018-19
debt taken into account by him in computing the income amounted to Rs. 2,50,000. However,
during the previous year 2019-20 it was acknowledged that Rs. 1,35,000 is to be considered as
irrecoverable in the accounts of the assessee. Calculate the amount of bad-debts written off as
irrecoverable to be allowed as a deduction in the previous year 2019-20 :
(a) Rs. 2,50,000 (b) Rs. 1,35,000

(c) Rs. 1,15,000 (d) No deduction available
Ans.(b)
143. Malick & Co. engaged in trading activity could not recover Rs. 5 lakhs from a customer. It claimed
the entire amount as bad debt by writing off in the books of account. The aggregate sale made
during the year to the party amounts to Rs. 30 lakhs. The amount eligible for deduction by way of
bad debt is : (June, 2017)
(a) Nil (b) Rs. 3 lakhs

(c) Rs. 5 lakhs (d) Rs. 60,000
Ans.(c)
144.Suresh was engaged in the business of trading of jewellery. During the previous year 2019-20
debt accrued to him amounted to Rs. 2,50,000 which was not taken into account by him while
computing the income of the previous year. However, during the year itself it was acknowledged
that Rs. 1,00,000 is to be considered as irrecoverable from this debtor. Calculate the amount of
bad-debts acknowledged as irrecoverable to be allowed as a deduction in the previous year 2019-
20:
(a) Rs. 2,50,000 (b) Rs. 1,00,000

(c) Rs. 1,50,000 (d) No deduction available
Ans.(d)
145. In the case of companies, capital expenditure incurred for the purpose of promoting family
planning amongst the employees would be deductible to the extent - (Dec. 2014)
(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 to 1/10th in each year for 10 years.
Ans. (a)
Ch 6 - PGBP 6.21
146. Assessee company incurred revenue expenditure of Rs. 15,000 for promoting family planning
amongst its employees. Calculate the amount of deduction available.
(a) Rs. 3,000 (b) Rs. 15,000

(c) Rs. 18,000 (d) No deduction available Ans.(b)
147. Assessee firm incurred revenue expenditure of Rs. 15,000 for promoting family planning
(a) Rs. 3,000 (b) Rs. 15,000

(c) Rs. 18,000 (d) No deduction available Ans.(d)
148. Assessee company incurred capital expenditure of Rs. 75,000 for promoting family planning
(a) Rs. 75,000 (b) Rs. 15,000

(c) Rs. 60,000 (d) No deduction available Ans.(b)
149. Assessee company incurred capital expenditure of Rs. 50,000 and revenue expenditure of Rs.
7,000 for promoting family planning amongst its employees. Calculate the amount of deduction
available.
(a) Rs. 50,000 (b) Rs. 7,000

(c) Rs. 17,000 (d) No deduction available Ans.(c)
150.An assessee was engaged in the business of dealing in securities. He had paid Securities
Transaction Tax of Rs. 25,000 on the securities. Income arising from taxable securities
transactions computed under the head "Profits and Gains of Business or Profession" was of Rs.
2,50,000. Such expenditure of payment of Securities Transaction Tax shall be considered as:

(c) Speculative transaction expenditure (d) Illegal expenditure Ans.(a)
151. An assessee was engaged in the business of dealing in commodities. He had paid Commodities
transaction tax of Rs. 15,000 in respect of the taxable commodities transactions. Income arising of
Rs. 3,00,000 from such taxable commodities transactions was included in the income computed
under the head "Profits and gains of business or profession". Such expenditure of payment of
Commodities transaction tax shall be considered as:

(c) Speculative transaction expenditure (d) Illegal expenditure Ans.(a)
152. To claim deduction of an expenditure u/ s 37, the expenditure incurred must be:
(a) In respect of the business or profession carried

(b) Not capital in nature, on by the assessee.
(c) Not of nature described u/s 30 to 36. (d) All of the above.
Ans.(d)
153. Which of the following is not deductible while calculating taxable income from business - (Dec.
2016)
(a) Goods and services tax (b) Income-tax

(c) Customs duty (d) Local taxes
Ch 6 - PGBP 6.22
Ans.(b)
154. An assessee paid penalty of Rs. 42,000 paid for non-compliance of the provisions of Customs Act.
Such expenditure shall be considered as:

(c) Speculative transaction expenditure (d) Disallowed under Section 37(1)
Ans.(d)
155. An assessee incurred expense of tax on non monetary perquisites of employees. Such
expenditure shall be considered as:

(c) Deferred revenue (d) Expressly disallowed
Ans.(d)
156. An assessee made an expenditure on issue of shares. Such expenditure, including fees paid to
Registrar of Companies, was incurred to increase the authorized share capital, resulting in
expansion of the capital base. Such expenditure shall be considered as:

(c) Deferred revenue expenditure (d) Expressly disallowed
Ans.(b)
157. An assessee incurred an expenditure on stamp duty and registration fees for the issue of bonus
shares. Such expenditure shall be considered as:

(c) Deferred revenue expenditure (d) Expressly disallowed
Ans.(a)
158. Expenditure incurred by a hotelier on replacement of linen and carpets in his hotel. Such

Ans.(a)
159. An assessee made a payment of Rs. 25,000 as a secret commission, prohibited by law, for some
offensive purpose. Such expenditure shall be considered as:

(c) Deferred revenue expenditure (d) Non deductible expenditure
Ans.(d)
160. An assessee incurred a sum of Rs. 35,000 for perfecting title or removing defects in title. Such

Ans.(b)
161. An assessee incurred a sum of Rs. 1,10,000 for alteration of the memorandum and articles of
association. Such expenditure shall be considered as:
Ch 6 - PGBP 6.23

Ans.(a)
162. An assessee incurred a loss of Rs. 50,000 on account of foreign exchange fluctuations on loans
taken from foreign banks for revenue purposes or trading liabilities. Such loss/ expenditure shall
be considered as:

Ans.(a)
163. Under the Income-tax Act, 1961, which of the following outlays incurred by Sun Ltd. during the
previous year ended 31st March, 2020 will not be admissible as deduction while computing its
business income - , (June, 2015)
(a) Contribution to a political party in cash

(b) Interest on loan taken for payment of income-tax
(c) Capital expenditure on advertisement
SPECIFIC DISALLOWANCES - SECTION 40 & 40A
164. Mr. Ramesh during the previous year 2019-20 made a payment outside India to a non-resident
on which TDS was not paid upto time allowed under section 200. However, such TDS was
deducted and paid on 15th February 2021. When shall deduction of this expenditure be allowed to
assessee?
(a) Previous Year 2018-19 (b) Previous Year 2019-20

(c) Previous Year 2020-21 (d) Not allowed deduction Ans.(c)
165. Mr. Karan during the previous year 2019-20 made a payment outside India to a non-resident on
which TDS was not paid upto time allowed under section 200. However, such TDS was deducted
and paid on 30 September 2020. When shall deduction of this expenditure be allowed to assessee?

(c) Previous Year 2019-20 (d) Not allowed deduction Ans.(b)
166. Payments to residents on which tax has not been deducted/paid shall be disallowed to the extent
of ____________ .
(a) 0% (b) 30%

(c) 100% (d) 50% Ans(b)
167. XYZ Ltd. has made a payment of Rs. 10,00,000 to Mr. C a contractor on which tax was not
deducted at source during the previous year. The amount of expenditure to be disallowed under
Section 40(a) will be -
(a) Rs. 10,00,000 (b) Rs. 3,00,000

(c) Rs. 5,00,000 (d) Nil Ans.(b)
168. Laxmi & Co. paid Rs. 6,10,000 as contract payments to Monu Ltd. during the financial year 2019-
20. It did not deduct tax at source under section 194C. The amount liable for disallowance is - (
June 15)
Ch 6 - PGBP 6.24
(a) Rs. 6,10,000 (b) Rs. 3,05,000

(c) Rs. 12,200 (d) Rs. 1,83,000 Ans.(d)
169. Andhra Traders a partnership firm paid Rs. 80,000 as contract charges to AKP & Co. (firm). No
tax was deducted at source for the above said payment. The amount liable for disallowance u/s
40(a)(ia) for the AY 2020-21 is : (June, 2017)
(a) Nil (b) Rs. 80,000

(c) Rs. 40,000 (d) Rs. 24,000 Ans.(d)
170. Varun Ltd. paid fees for technical services of Rs. 6 lakh but omitted to deduct tax at source and
such omission continued till the 'due date’ for filing the return of income specified in section
139(1). The amount of expenditure liable or disallowance would be - (Dec. 2016)
(a) Rs. 1,80,000 (b) Rs. 6,00,000

(c) Rs. 1,20,000 (d) Nil Ans.(a)
171. XYZ Ltd. has credited a sum of Rs. 10,00,000 to Mr. C a contractor on which tax was deducted at
source during the previous year 2019-20. The payment of such TDS was made on 30-09-2020
being the due date of filing return of income. The amount of expenditure to be disallowed under
Section 40(a) in previous year 2019-20 will be :
(a) Rs. 10,00,000 (b) Rs. 3,00,000

(c) Rs. 5,00,000 (d) Nil Ans.(d)
172. Mr. Rakesh paid the income tax due of the previous year 2019-20 on 15th May 2020. When shall
deduction of this expenditure be allowed to him?

(c) Previous Year 2019-20 (d) Not allowed deduction Ans.(d)
173. Which of the following taxes are allowed as deduction while computing the business income -
(June 2013)
(a) Wealth-tax (b) Income-tax

(c) Goods and services tax (d) None of the above. Ans.(c)
174. Son of Mr. Raghu was appointed as a manager in his firm. Raghu made a payment of salary of Rs.
30,00,000 to his son whereas Assessing Officer is of opinion that such expenditure is excessive or
unreasonable having regard to the FMV which comes to be of Rs. 24,00,000. Calculate the amount
to be disallowed.
(a) Rs. 24,00,000

(b) Rs. 30,00,000
(c) Rs. 6,00,000
(d) Nil Ans.(c)
175. A person shall be deemed to have a substantial interest in a business or profession, if -
(a) In a case where the business or profession is carried on by a company, such person, at any time
during the previous year, is the beneficial owner of equity shares carrying not less than 20% of the
voting power.
Ch 6 - PGBP 6.25
(b) In any other case, such person, at any time during the previous year, is beneficially entitled to not
less than 20% of the profits of such business or profession.
(c) Both of the above.
(d) None of the above. Ans.(c)
176. Mr. Kishore claims the deduction (on accrual basis) of payment to Lalit of Rs. 25,000. Next year
he paid this amount to Lalit through a crossed cheque. What are the consequences of this
transaction ?
(a) This deduction is already claimed

(b) It will be disallowed and deemed to be the profit and gains of Business and Profession of the next
year.
(c) Deduction can be claimed in next year too.
(d) None of these Ans.(b)
177. Ravi & Co. paid Rs. 40,000 by cash to Mr. Balu a supplier on 5-9-2019. The cash payment was
made on the day on which the bank was on strike. The amount of expenditure liable for
disallowance under section 40A(3) is : (June, 2017)
(a) Rs. 40,000

(b) Rs. 12,000
(c) Rs. 20,000
(d) Nil Ans.(d)
178. Where the payment of an expenditure claimed as deduction by any assessee carrying on business
or profession other than who is in transport business exceeds Rs. 10,000, it should be paid by:
(June, 2017)
(a) Crossed cheque/ draft

(b) Account payee cheque/ account payee draft
(c) Account payee cheque
(d) Any mode other than cash Ans.(b)
179. The amount of expenditure to be disallowed u/s 40A(3) is if such expenditure exceeds
(a) Rs. 20,000

(b) Rs. 10,000
(c) Nil
(d) Rs. 30,000 Ans.(b)
180. Ashish made a cash payment of Rs. 11,000 on 28th March, 2020 in respect of purchases of goods.
Calculate the amount of expenditure to be disallowed u/s 40A(3).
(a) NIL
(c) Rs. 15,000
Ch 6 - PGBP 6.26
(b) Rs. 11,000

(d) Rs. 20,000 Ans.(b)
181. Ashish made a cash payment of Rs. 2,85,000 on 28th March, 2020 as the banks were on strike
that day and the payment was to be made urgently. Calculate the amount of expenditure to be
disallowed u/s 40A(3).
(a) Rs. 2,85,000

(b) Nil
(c) Rs. 2,65,000
(d) Rs. 20,000 Ans.(b)
182. Under section 40A(3) which of the following payment for an expenditure incurred would not be
admissible as deduction from business income — (June, 2015)
(a) Rs. 15,000 paid in cash to a transporter

(b) Rs. 8,000 paid in cash to a dealer in the morning and Rs. 7,000 paid in cash to the same dealer in the
evening
(c) Rs. 40,000 sent through NEFT to the bank account of the dealer for goods purchased
(d) Rs. 19,000 paid through account payee cheque to the dealer for goods purchased.
Ans.(b)
183. When a cash payment of Rs. 15,000 is made on 10th May, 2019 towards purchase of raw material
effected in the earlier year, i.e., on 5th June, 2018, the amount liable for disallowance under section
40A(3A) would be - (Dec. 2015)
(a) Nil
(b) 100% of payment
(c) 20% of such payment
(d) 30% of such payment Ans.(b)
184. Mohan Ltd. purchased goods on credit from Sohan Ltd. on 6th May, 2019 for Rs. 86,000 which is
paid as Rs. 15,000 in cash on 11th May, 2019; Rs. 30,000 by a bearer cheque on 31st May, 2019;
and Rs. 41,000 by an account payee cheque on 16th May, 2019. The amount of disallowance under
section 40A(3) is - (June, 2011)
(a) Rs. 15,000

(b) Rs. 45,000
(c) Rs. 41,000
(d) Rs. 30,000 Ans.(b)
185. Where an assessee doing a business incurs any expenditure in respect of which payments made
to a person in a day exceeds Rs. 10,000 should be paid through account payee cheque or demand
draft to claim deduction for such expenditure. This restriction does not apply to - (June 2 016)
(a) Payments made to RBI

(b) Payments made to cultivators
(c) Payment of terminal benefits to employees not exceeding Rs. 50,000
(d) All of the above Ans.(d)
Ch 6 - PGBP 6.27
186. Abhishek made two separate payments in cash for plying, hiring or leasing goods amounting to
Rs. 32,000 and Rs. 39,000. Discuss about the allowability of the two payments made.
(a) Both the payments will be allowed.

(b) Payment amounting to Rs. 32,000 will be allowed and the other one will be disallowed.
(c) Payment amounting to Rs. 39,000 will be allowed and the other one will be disallowed.
(d) Both the payments will be disallowed.
Ans.(b)
187.Payment of Rs. 50,000 by using credit card for fire insurance. The amount of disallowance under
section 40A(3) is -
(a) Rs. 50,000

(b) Rs. 30,000
(c) Nil
(d) Rs. 20,000 Ans.(c)
188. Payment of Rs. 50,000 made in cash towards purchases of medicines. The amount of
disallowance under section 40A(3) is -
(a) Rs. 50,000

(b) Rs. 30,000
(c) Nil
(d) Rs. 20,000 Ans.(a)
189. An assessee made a provision of Rs. 5,00,000 for the payment of gratuity to his employees on
their retirement. The gratuity fund was unapproved. Calculate amount of deduction allowable to
assessee in respect of this provision.
(a) Rs. 5,00,000

(b) Rs. 10,00,000
(c) Rs. 1,00,000
(d) NIL Ans.(d)
190. Raju succeeded to the business of his father Ramu consequent to demise of Ramu on 1-2-2019.
Raju recovered L 30,000 due from a customer which was written off by late Ramu as bad debt and
allowed in the assessment year 2015-16. The amount recovered is: (June, 2017)
(a) Exempt from tax

(b) Fully taxable as business income
(c) Rs. 15,000 being 50% taxable as business income
(d) To be set off against current year bad debts
Ans.(a)
Note : There is no provision u/s 41(4) to treat the bad debt recovered by the successor in business as
his income.
193.Deemed profits chargeable to tax under section 41 includes :
(a) Taxability of Balancing Charge in case of Power Generating Undertakings.

Ch 6 - PGBP 6.28
(b) Sale of an asset used for scientific research without having been used for the purposes of business
or profession.
(c) Recovery of bad debts.
194. Arul Industries got waiver of value added tax (VAT) of Rs. 2,20,000 for the financial year 2019-
20. The amount of waiver is - (Dec. 2016)
(a) Exempt income

(b) Capital receipt
(c) Revenue receipt
(d) None of the above Ans.(c)
195. Biren discontinued wholesale trade in medicines from 1st July, 2016. He recovered Rs. 1,50,000
in October, 2019 being a bad debt which was written-off and allowed in assessment year 2017-
18. He has eligible brought forward business loss of wholesale trade in medicines of Rs.
1,70,000. The consequence of bad debt recovery is that - (June 2016)
(a) It is chargeable to tax

b) It is eligible for set-off against brought forward business loss
(c) The brought forward business loss is taxable now
(d) 50% of the amount recovered now is taxable
Ans.(b)
196. Sameer sold goods worth Rs. 50,000 at credit on 1st April, 2015. However, he has written off Rs.
10,000 of it as bad debts and claimed deduction for the same during the year 2016-17. On 4th
April, 2019, the defaulting debtor made payment of Rs. 45,000. The taxable amount of bad
debts recovered for the year 2019-20 would be — (June, 2015)
(a) Rs. 5,000

(b) 150,000
(c) Rs. 45,000
(d) Rs. 10,000 Ans.(a)
197. An assessee discontinued his textile business during the previous year 2017-18 and incurred a
loss of Rs. 1,50,000. During the previous year 2018-19 assessee earned deemed profits in the
discontinued business of Rs. 1,75,000. Calculate the amount taxable as business income.
(a) Rs. 1,75,000

(b) Rs. 1,50,000
(c) Rs. 25,000
(d) NIL Ans.(c)
198. Saraswath Ltd. made provision of Rs. 12 lakh for bonus payable for the year ended 31st March,
2020. It paid Rs. 7 lakh on 31st July, 2020; Rs. 3 lakh on 30th September, 2020; and Rs. 2 lakh
on 15th December, 2020. The amount eligible for deduction under section 43B would be - (Dec.
2015)
(a) Rs. 10 lakh

Ch 6 - PGBP 6.29
(b) Rs. 12 lakh

(c) Rs. 7 lakh
(d) Rs. 3 lakh Ans.(a)
199. As per section 43B, certain payments are to be allowed as deduction only on actual payment.
Such sums include:
(a) Any sum payable by the assessee to the Indian Railways for the use of railway assets.
(b) Employer's contribution to provident fund or superannuation fund or gratuity fund or any other
fund for the welfare of employees.
(c) Bonus or commission to employees for services rendered as referred u/s 36(l)(ii).
Ans.(d)
200. As per section 43B, Interest on loans are to be allowed as deduction only on actual payment. Such
payments include :
(a) An interest payable by the assessee to the schedule bank or a co-operative bank
(b) An interest payable by the assessee to the primary agricultural credit society
(c) An interest payable by the assessee to the primary' co-operative agriculture bank
(d) An interest payable by the assessee to his friend
Ans.(a)
201. As per section 43B, certain payments are to be allowed as deduction only on actual payment.
Such sums include:
(a) Sum payable by assessee by way of tax, duty, cess or fee, by whatever name called, under any law
for the time being in force.
(b) Employer's contribution to provident fund or superannuation fund or gratuity fund or any other
fund for the welfare of employees.
(c) Bonus or commission to employees for services rendered as referred u/s 36(l)(ii).
Ans.(d)
202. Assessee incurred an expenditure of municipal tax of Rs. 51,000 relating to office building for the
Previous Year 2019-20 but did not pay the same till 30-09-2020. Such sum was paid on 15th
March, 2021. In which assessment year deduction shall be allowed to assessee?
(a) A.Y. 2019-20 (b) A.Y. 2020-21

(c) A.Y. 2021-22 (d) None of the above Ans.(c)
203.(218) XYZ Ltd. took a loan of Rs. 3,50,000 from a Public Financial Institution. It incurred an
interest expense of Rs. 35,000 against this loan in the Previous Year 2019-20 but did not pay
the interest amount to bank. The assessee paid this amount on 15th March 2021. In which
assessment year deduction shall be allowed to assessee?
(a) A.Y. 2019-20 (b) A.Y. 2020-21

(c) A.Y. 2021-22 (d) None of the above Ans.(c)
204.(219) If in the above question, assessee makes the payment of interest amount to bank on 15 th
September, 2020 then in which assessment year deduction shall be allowed to assessee?
Ch 6 - PGBP 6.30
(a) A.Y. 2019-20 (b) A.Y. 2020-21

(c) A.Y. 2021-22 (d) None of the above Ans.(b)
205. XYZ Ltd. took a loan of Rs. 10,00,000 from a Public Financial Institution. It incurred an interest
expense of Rs. 70,000 against this loan in the Previous Year 2019-20 but did not pay the
interest amount to bank. It requested the bank to convert the amount of interest into loan on
15th September, 2020. Such converted loan is actually paid on 15th December, 2021. In which
assessment year deduction shall be allowed to assessee?
(a) A.Y. 2019-20 (b) A.Y. 2020-21

(c) A.Y. 2021-22 (d) A.Y. 2022-23 Ans.(d)
206. An assessee transferred his land (stock in trade) on 15th May 2019 for Rs. 75,00,000. However,
the value adopted by State Government authority for the purpose of payment of stamp duty in
respect of such transfer was Rs. 90,00,000. What shall be the full value of the consideration
received or accruing as a result of such transfer for the purposes of computing profits and
gains from transfer of such asset.
(a) Rs. 75,00,000 (b) Rs. 90,00,000

(c) Rs. 15,00,000 (d) Rs. 1,65,00,000 Ans.(b)
207. Mahesh transferred his land (stock in trade) on 21st June 2019 for Rs. 80,00,000. However, the
value adopted by State Government authority for the purpose of payment of stamp duty in
respect of such transfer was Rs. 72,00,000. What shall be the full value of the consideration
received or accruing as a result of such transfer for the purposes of computing profits and
(a) Rs. 72,00,000 (b) Rs. 80,00,000

(c) Rs. 8,00,000 (d) Rs. 1,52,00,000 Ans.(b)
208. Mukesh transferred his land (stock in trade) on 1st June 2019 for Rs. 80,00,000. However, the
value adopted by State Government authority for the purpose of payment of stamp duty in
respect of such transfer on the date of agreement fixing the value of consideration for transfer
of the asset was Rs. 85,00,000 and on the date of registration of such transfer of asset was Rs.
83,00,000. He received consideration of Rs. 25,00,000 by cheque before the date of agreement.
What shall be the full value of the consideration for the purposes of computing profits and
(a) Rs. 80,00,000 (b) Rs. 85,00,000

(c) Rs. 83,00,000 (d) Rs. 25,00,000 Ans.(b)
209. Hari transferred his land on 1st September 2019 for Rs. 80,00,000. However, the value adopted
by State Government authority for the purpose of payment of stamp duty in respect of such
transfer on the date of agreement fixing the value of consideration for transfer of the asset was
Rs. 75,00,000 and on the date of registration of such transfer of asset was Rs. 73,00,000. He
received consideration of Rs. 25,00,000 by cheque before the date of agreement. What shall be
the full value of the consideration for the purposes of computing profits and gains from
transfer of such asset.
(a) Rs. 80,00,000 (b) Rs. 75,00,000

(c) Rs. 73,00,000 (d) Rs. 25,00,000 Ans.(a)
Ch 6 - PGBP 6.31
ACCOUNTS AND AUDIT - SECTION 44AA & 44AB

210. Which amongst the following are specified books of account?
(a) Cash Book (b) Carbon copies or counterfoils of bills

(c) Original bills issued (d) All of the above
Ans.(d)
211. The books of accounts are to be kept and maintained for a period of how many years from the
end of the relevant assessment year.

(c) 8 years (d) Unlimited period
Ans.(a)
212. A person carrying specified profession will have to maintain books of account prescribed by Rule
6F of the Income-tax Rule, 1962, if gross receipts are more than Rs. 1,50,000 for - (June, 2015)
(a) All preceding 5 years (b) Any of the preceding 5 years

(c) All preceding 3 years (d) Any of the preceding 3 years.
Ans.(c)
213. In case of specified professions, what is the minimum amount the Gross receipts should exceed in
all of the three immediately preceding previous years or, where the business is newly setup,
the amount that gross receipts are likely to exceed during current previous year, so as to
maintain the books of accounts.
(a) Rs. 1,00,000 (b) Rs. 1,20,000

(c) Rs. 1,50,000 (d) Rs. 10,00,000
Ans.(c)
214. In which case a partnership firm setting up new business other than specified profession is
required to maintain accounts ?
(a)If total sales turnover is likely to exceed Rs. 10,00,000 during such previous year.
(b) If turnover likely to exceed Rs. 1,20,000 during such previous year.
(c)If turnover is likely to exceed Rs. 1,00,000 during such previous year.
(d) If turnover is likely to exceed Rs. 1,00,000 during such assessment year.
Ans.(a)
215. In case existing business carried on by Mr. X he is required to maintain accounts :
(a)if his income from business exceeds Rs. 2,50,000 or turnover thereof exceeds Rs. 25,00,000 in any
of the 3 previous years immediately preceding the previous year.
(b) if his income from business exceeds Rs. 2,50,000 and turnover thereof exceeds Rs. 10,00,000 in
any of the 3 previous years immediately preceding the previous year.
(c)if his income from business exceeds Rs. 1,50,000 and turnover thereof exceeds Rs. 10,00,000 in any
of the 3 previous years immediately preceding the previous year.
(d) if his income from business exceeds Rs. 1,20,000 and turnover thereof exceeds Rs. 25,00,000 in
any of the 3 previous years immediately preceding the previous year.
Ans.(a)
Ch 6 - PGBP 6.32
216. In which case newly set up business or profession other than specified profession is required
to maintain accounts ?
(a)If total sales or turnover is likely to exceed Rs. 10,00,000 during such previous year.
(b) If turnover likely to exceed Rs. 1,12,000 during such previous year.
(c)If turnover is likely to exceed Rs. 1,00,000 during such previous year.
(d) If turnover is likely to exceed Rs. 10,00,000 during such previous year.
Ans.(a)
217. In case, newly set up business or profession by individual or HUF other than specified profession
is required to maintain accounts ?
(a)If total sales is likely to exceed Rs. 25,00,000 during such previous year.
(b) If his income is likely to exceed Rs. 2,50,000 during such previous year.
(c)Either (a) or (b)
(d) None of the above
Ans.(c)
218. Accounts of a person carrying on business are required to be audited for previous year in which
total sales, turnover or gross receipts exceeds _____________ :
(a) Rs. 60,00,000 (b) Rs. 1,00,00,000

(c) Rs. 15,00,000 (d) Rs. 50,00,000
Ans.(b)
219. A person carrying on profession is required to get his accounts compulsorily audited by a
Chartered Accountant if his gross receipts from profession for the previous year exceed - (Dec.
2012)
(a) Rs. 10,00,000 (b) Rs. 25,00,000

(c) Rs. 50,00,000 (d) Rs. 1,00,00,000
Ans.(c)
220. A person carrying on profession will also have to get his accounts audited before the specified
date, if gross receipts from the profession for a previous year or years relevant to assessment
year exceed - (Dec. 2014)

(c) Rs. 1 crore (d) Rs. 50 lakh.
Ans.(d)
221. The penalty for failure to maintain accounts under section 44AA is -
(a) Rs. 10,000 (b) Rs. 20,000

(c) Rs. 50,000 (d) Rs. 25,000.
Ans.(d)
222. The maximum penalty for failure to get accounts audited under section 44AB or furnish audit
report along with return of income is - (June, 2009)
(a) Rs. 10,000 (b) Rs. 20,000

(c) Rs. 50,000 (d) Rs. 1,50,000.
Ch 6 - PGBP 6.33
Ans.(d)
223. The maximum penalty leviable for failure to get accounts audited or to furnish report under
section 44AB is - (Dec. 2015)
(a) Rs. 75,000 (b) Rs. 1,00,000

(c) Rs. 1,50,000 (d) Rs. 3,00,000
Ans.(c)
DEEMED PROFITS IN CASE OF CERTAIN BUSINESSES - SECTION 44AD, 44ADA & 44AE
224. Accounts of a person carrying on business referred to u/ s 44AD are required to be audited for
previous year if -
(a) The assessee doesn’t want to claim profits as per section 44AD.
(b) Profits from such business to be lower than the profits and gains deemed u/s 44AD.
(c) The "total income" exceeds maximum amount, which is not chargeable to tax in any PY
Ans.(d)
225. Section 44AB shall not apply to the person, who declares profits and gains for the previous year
in accordance with the provisions of Section 44AD(1) and his total sales, turnover or gross
receipts, as the case may be, in business does not exceed in such previous year :
(a) Rs. 2 crore (b) Rs. 1 crore

(c) Rs. 50 lakhs (d) Rs. 25 lakhs
Ans.(a)
226. For computation of profits of business on presumptive basis under section 44AD, the deemed
profits shall be calculated at the rate of % of the total turnover or gross receipts of such
business :
(a) 8 (b) 10
(c) 20 (d) 5
Ans.(a)
227. For computation of profits of business on presumptive basis under section 44AD, the deemed
profits for the receipt which has been received through banking channel shall be calculated at
the rate of % of the total turnover or gross receipts of such business :
(a) 8 (b) 6
(c) 10 (d) 20
Ans.(b)
228. The total turnover of the business of assessee was of Rs. 30,00,000. The assessee declared a profit
of Rs. 2,80,000. What shall be the deemed profits of assessee under section 44AD?
(a) Rs. 2,80,000 (b) Rs. 2,40,000

(c) Rs. 40,000 (d) Rs. 2,60,000 Ans.(a)
Ch 6 - PGBP 6.34
229.The total turnover of the business of assessee was of Rs. 50,00,000. The assessee's receipt from
non- banking channels are Rs. 20,00,000 and from banking channels are Rs. 30,00,000. What
shall be the deemed profits of assessee under section 44AD?
(a) Rs. 2,80,000 (b) Rs. 2,40,000

(c) Rs. 3,40,000 (d) Rs. 2,60,000 Ans.(c)
230. The total turnover of the business of assessee was of Rs. 50,00,000. All receipts are from banking
channels. What shall be the deemed income of assessee under section 44AD?
(a) Rs. 4,00,000 (b) Rs. 3,40,000

(c) Rs. 3,00,000 (d) Rs. 2,50,000 Ans.(c)
231. The provisions of section 44AD shall not apply to :
(a) Person carrying on specified profession as (b) A person earning income in the nature of
referred to Section 44AA. commission or brokerage.
(c) Person carrying on any agency business. (d) All of the above. Ans.(d)
232. Provisions of section 44AD for computation of presumptive income are not applicable to - (June,
2015)
(a) Limited liability partnership (b) Partnership firm

(c) Resident Hindu Undivided Family (d) Resident individual. Ans.(a)
233. Person covered under section 44AD are required to pay advance tax _____________ -
(a) up to 15th March of the financial year (b) up to 31st March of the financial year
(c) Within 15 days from the end of the financial (d) Upto the due date of furnishing return of
year income.
Ans.(a)
234. When a partnership firm has total sales of Rs. 90 lakh, the maximum amount deductible as salary
of working partners on the basis of presumptive income determined under section 44AD is -
(Dec. 2015)
(a) Rs. 4,92,000 (b) Rs. 3,60,000

(c) Rs. 3,30,000 (d) NIL
Ans.(d)
235. For computation of profits of profession on presumptive basis under section 44ADA, the deemed
profits shall be calculated at the rate of _____________ % of the gross receipts of such profession :
(a) 8 (b) 50
• (c) 20 (d) 5
Ans.(b)
236.The provisions of Section 44ADA are applicable if gross receipts from profession does not exceed
?.
(a) Rs. 50,00,000 (b) Rs. 2,00,00,000

(c) Rs. 1,00,00,000 (d) Rs. 1,50,00,000
Ans.(a)
Ch 6 - PGBP 6.35
237. When a person carries on the business of carrying goods for hire for the whole year with 5 self-
owned and 3 leasehold other than heavy goods vehicles, the presumptive income chargeable to
tax under section 44AE would be - (Dec. 2015)
(a) Rs. 4,80,000 (b) Rs. 7,20,000

(c) Rs. 3,96,000 (d) Rs. 3,36,000
Ans.(b)
238. Mr. X is carrying of profession of company secretary. His gross receipts from profession is Rs.
45,00,000 in Previous year 2019-20. His deemed profits as per provisions of Section 44AD A
are :
(a) Rs. 3,60,000 (b) Rs. 22,50,000

(c) Rs. 4,50,000 (d) Rs. 9,00,000 Ans.(b)
239. Anuj owns 6 goods carriage vehicles. Out of these 2 are heavy goods vehicle having gross unladen
weight of 15 tons acquired by him on 15lh January, 20120. His taxable income under section
44AE will be - (Dec. 2014)
(a) Rs. 4,50,000 (b) Rs. 4,05,000

(c) Rs. 8,10,000 (d) Rs. 3,60,000. Ans.(a)
Answer Hint: Deemed Profits under Section 44AD = Rs. 7,500 Rs. 4 Rs. 12 + (Rs. 1,000 Rs. 15 Rs. 2x 3)
240. Assessee who owns not more than ___ goods carriages at any time during the previous year and
engaged in the business of plying, hiring or leasing such goods carriages shall be eligible to
compute profits under Section 44AE:
(a) 10 (b) 8
(c) 6 (d) 15 Ans, (a)
241. For computing deemed profits under section 44AE in case of goods carriage being a goods vehicle
the amount with which per vehicle per month has to be multiplied is:
(a) Rs. 10,000 (b) Rs. 7,500

(c) Rs. 50,000 (d) Rs. 1,50,000 Ans.(b)
242. For computing deemed profits under section 44AE in case of goods carriage being a heavy goods
vehicle the amount per ton of gross weight or unladen weight with which per vehicle per
month has to be multiplied is :
(a) Rs. 10,000 (b) Rs. 7,500

(c) Rs. 1,500 (d) Rs. 1,000 Ans.(d)
243. An assessee was engaged in the business of plying, hiring or leasing of goods carriages. He held 4
heavy goods vehicle for the entire year having gross unladen weight of 13 tons and three goods
carriage other than heavy goods vehicle which were acquired on 15th July 2019. Compute the
deemed profits u/ s 44AE.
(a) Rs. 5,62,500 (b) Rs. 8,26,500

(c) Rs. 4,20,000 (d) T 3,78,000 Ans.(b)
Answer Hint: Deemed Profits under Section 44AD = Rs. 7,500 x 3 x 9 + (Rs. 1,000 x 13 x12m x4vehivles)
Ch 6 - PGBP 6.36
244. Mr. Siraj engaged in retail trade reports a turnover of Rs. 43 lakhs for the previous year 2019-20.
He deposited Rs. 30,000 in his PPF account held with SBI. His total income for the AY 2020-21
by applying Section 44AD provision is : (June, 2017)
(a) Rs. 1,85,000 (b) Rs. 3,44,000

(c) Rs. 3,14,000 (d) Rs. 4,00,000 Ans.(c)
AGRICULTURAL INCOME
245. Agricultural income means —
(a) Rent or Revenue derived from land situated in India and used for agricultural purposes.
(b) Income from farm building used for agricultural purpose.
(c) Income from saplings or seedlings grown in a nursery.
246. Which of the following income is agricultural income - (June, 2010)
(a) Rent received from agricultural land

(b) Income from dairy farm
(c) Income from poultry farm
(d) Dividend from a company engaged in agriculture.
Ans.(a)
247. Which of the following income is an agricultural income - (June, 2011)
(a) Income from brick making

(b) Income from agriculture land situated in Pakistan
(c) Prize from government on account of higher crop yield
(d) Compensation received from insurance company on account of loss of crop.
Ans.(d)
248. Agriculture income includes which of the following income -
(a) Rent derived from land.

(b) Income derived from agricultural land by agricultural operations.
(c) Income from farm building.
Ans.(d)
249. Which of the following is the condition for applicability of partial integration of agricultural
income ?
(a) The taxpayer is a firm.

(b) Agricultural income exceeds Rs. 10,000.
(c) The non-agricultural income exceeds the maximum amount not chargeable to tax.
Ans.(c)
Ch 6 - PGBP 6.37
250. As per Rule 7A income derived from the sale of Latex/Cenex/Block rubbers manufactured or
processed from rubber plants grown by seller in India will be disintegrated between business
and agricultural income in the ratio of:
(a) 35 :65 (b) 30:60

(c) 0:100 (d) 25 : 75 Ans.(a)
251. As per Rule 7B income derived from the sale of coffee grown & cured by seller in India will be
disintegrated between business and agricultural income in the ratio of:
(a) 35 : 65 (b) 30: 60

(c) 0:100 (d) 25 : 75 Ans.(d)
252. As per Rule 7B income derived from the sale of Coffee grown, cured, roasted and grounded by
seller in India will be disintegrated between business and agricultural income in the ratio of :
(a) 35 : 65 (b) 30:60

(c) 40 : 60 (d) 25 : 75 Ans.(c)
253. As per Rule 8 income derived from the sale of Tea grown & manufactured by seller in India will
be disintegrated between business and agricultural income in the ratio of:
(a) 35 :65 (b) 30:60

(c) 40: 60 (d) 25 : 75 Ans.(c)
254. Mr. Vinayak derived income from sale of tea manufactured and grown in Coorg, Karnataka. His
income for the previous year 2019-20 from the said activity is Rs. 20 lakhs. The amount exempt
from tax by way of agricultural income is :
(a) Rs. 8 lakhs (40%) (b) Rs. 5 lakhs (25%)

(c) Rs. 12 lakhs (60%) (d) Rs. 7 lakhs (35%) Ans.(c)
255. Mrs. Rose derives Rs. 5,40,000 by way of income from sale of coffee grown and manufactured in
India. The income chargeable to income-tax would be - (Dec. 2016)
(a) 50%, i.e., Rs. 2,70,000 (b) . 25%, i.e., Rs. 1,35,000
(c) 40%, i.e., Rs. 2,16,000 (d) 60%, i.e., Rs.3,24,000 Ans.(b)
256. Balu paid Rs. 1,00,000 to Raj for purchase of standing crop (paddy). He harvested the produce,
i.e., by incurring expenditure of Rs. 25,000. He sold the said paddy for Rs. 1,80,000 to a trader.
His other income for the year ended 31st March, 2019 was Rs. 4,60,000. The total income of
Balu is - (June 2016)
(a) Rs. 6,40,000 (b) Rs. 5,15,000

(c) Rs. 4,85,000 (d) Rs. 5,60,000 Ans.(b)
257. Mr. Ramesh engaged in the business of growing and manufacturing tea in India received Rs. 2
lakhs from Tea Board towards replacement of tea bushes destroyed by forest fire. The amount
received from Tea Board by Mr. Ramesh is : (June, 2017)
(a) Liable to tax (b) Exempt from tax

(c) 50% is exempt from tax (d) 25% is exempt from tax Ans.(a)
258. Partial integration is applicable when the taxpayer is :

Ch 6 - PGBP 6.38
(a) HUF (b) An Individual

(c) BOI or an AOP or artificial juridical person (d) Any of the above Ans.(d)
259. Mr. Suresh has non-agricultural income of Rs. 6,50,000. Agricultural income earned of Rs. 50,000.
Compute the income tax payable by him.
(a) Rs. 67,600 (b) Rs. 52,000

(c) Rs. 5,200 (d) Rs. 72,800 Ans.(b)
260. Mr. Sumesh has earned agricultural income of Rs. 4,500. Compute the income tax payable by him.
(a) Rs. 450 (b) Nil

(c) Rs. 4,500 (d) Rs. 300 Ans.(b)
261. Mr. Suresh has non-agricultural income of Rs. 50,000. Agricultural income earned of Rs. 7,000. On
what amount the partial integration would be applicable?
(a) Rs. 50,000 (b) Rs. 7,000

(c) Rs. 57,000 (d) Will not be applicable. Ans.(d)
262. Mr. Asim, a 60 years old individual, is engaged in the business of roasting and grounding of coffee,
derives income Rs. 10 lacs during the year. Compute the tax payable by him assuming he has
not earned any other income during the year.
(a) Rs. 15,600 (b) Rs. 20,000

(c) Rs. 20,800 (d) Rs. 1,25,000 Ans.(c)
263. Dividend from shares of an Indian company is taxable under head:
(a) Income from business & profession (b) Income from other sources
(c) Exempt from tax (d) Income from salary Ans.(c)
264. Which of the following additional incomes will not be treated as agricultural income under the
Income-tax Act, 1961 - (June, 2015)
(a) Additional income from selling ginned cotton as compared to unginned cotton
(b) Additional income from selling dried-up coffee as compared to raw coffee Ans.(a)
(c) Additional income from seelling cured tobacco as compared to green tobacco
(d) Additional income from selling dried-up tea leaves leaves as compared to raw tea leaves.
265. Income of an assessee engaged in the business of growing and manufacturing tea in India is
taxable to the extent of - (Dec. 2014)
(a) 40% of such income (b) 60% of such income

(c) 70% of such income (d) 30% of such income. Ans.(a)
266. Pawan reports net income of Rs. 5 lakh from the activity of growing and manufacturing rubber.
How much of such income is to be treated as non-agricultural income - (Dec. 2015)
(a) Rs. 1,75,000 (b) Rs. 2,00,000

(c) Rs. 1,25,000 (d) Nil Ans.(a)
267. If non-agricultural income is Rs. 2,52,000 and net agricultural income is Rs. 40,000, the tax
liability of an individual assessee will be - (Dec. 2014)
(a) Nil (b) Rs.200

(c) Rs. 208 (d) Rs. 4,368 Ans.(a)
Ch 7 - Capital 7.1
CHAPTER 7 CAPITAL GAINS

BASIS OF CHARGE, CAPITAL ASSET, TRANSFER, TRANSACTION NOT REGARDED AS
TRANSFER
(1)The charging section of the income under the head capital gains is :
(c) Section 10 (d) Section 45 Ans.(d)
(2)What are the conditions to be fulfilled for charging of income under the head capital gains
(a) There must be a capital asset.
(b) There must be a transfer of such capital asset.
(c) The transfer of such capital asset has been affected during the previous year.
(3)Which of the following is not a requisite for charging income-tax on capital gains - (June, 2015)
(a) The transfer must have been effected in the relevant assessment year
(b) There must be a gain arising on transfer of capital asset
(c) Capital gains should not be exempt u/ s 54
(d) Capital gains should not be exempt u/s 54EC. Ans.(a)
(4)The following shall not be regarded as capital asset:

(a) Urban Land
(b) Securities held by a Foreign Institutional Investor as per SEBI Act, 1992
(c) Archaeological Collections
(d) Motor Car Ans.(d)
(5)The following shall be regarded as capital asset:

(a) Gold Jewellery held by jeweller as stock in trade.
(b) Securities held by a Foreign Institutional Investor as per SEBI Act, 1992, held as stock in trade
(c) Motor car held by motor car manufacturer as stock in trade
(d) None of the above Ans. (b)
(6) The following shall not be regarded as capital asset:

(a) Jewellery (b) Rural Agricultural land
(c) Archaeological Collections (d) Personal residential house Ans.(b)
(7) The following shall be regarded as capital asset:

(a) Jewellery (b) Sculptures
(c) Archaeological Collections (d) All of the above Ans.(d)
Ch 7 - Capital 7.2
(8) Rural area means any area which is outside _____________ Kilometers from the local limits of the
jurisdiction of a municipality or a cantonment board, if the population of municipality or
cantonment board is more than 10,00,000.
(a) 2 (b) 4
(c) 6 (d) 8 Ans.(d)
cantonment board is more than 1,00,000 but not exceeding 10,00,000.
(a) 2 (b) 4
(c) 6 (d) 8 Ans.(c)
cantonment board is more than 10,000 but not exceeding 1,00,000.
(a) 2 (b) 4
(c) 6 (d) 8 Ans.(a)
(11) Capital asset excludes all except - (Dec. 2014)
(a) Stock-in-trade (b) Personal effects
(c) Jewellery (d) Agricultural land in India. Ans.(c)
(12) Transfer of which of the following assets will not be considered as capital gain -
(a) Jewellery (b) Gold deposit bonds
(c) Paintings (d) Sculpture Ans.(b)
(13) When a capital asset located in India is sold by a non-resident to another non-resident
at a place outside India, the capital gains is taxable : (June, 2017)
(a) At the place of transferor
(b) At the place of transferee
(c) At the place of location of asset
(d) At the place of both transferor and transferee Ans.(c)
(14) Which of the following are included in the jewellery -

(a) Ornaments made of gold, silver and platinum.
(b) Precious metals whether or not worked or sewn into any wearing apparel.
(c) Semi-precious stones.
(15) A short term capital asset means a capital asset held by the assessee for not more than:
(a) 12 months immediately preceding the month of transfer.
(b) 24 months immediately preceding the date of its transfer.
(c) 36 months immediately preceding the date of its transfer.
(d) None of the above.
Ans.(c)
Ch 7 - Capital 7.3
(16) In terms of section 2(42A), unlisted securities are treated as long-term capital asset, if they are
held for a period of more than -
(a) 12 Months (b) 36 Months
(c) 24 Months (d) 48 Months Ans.(c)
(17) In terms of section 2(42A), listed securities are treated as long-term capital asset, if they are
held for a period of more than - (June, 2015)
(c) 24 Months (d) 48 Months Ans.(a)
(18) In terms of section 2(42A), immovable property, being land or building or both, are treated as
short-term capital asset, if they are held for a period of not more than -
(19) In case immovable property, being land or building or both, if held for a period of 24 months,
shall be treated as -
(a) Short term capital asset (b) Long term capital asset
(c) Any of the (a) or (b) (d) None of the above Ans.(a)
(20) A Long term capital asset means a capital asset held by the assessee for more than :
(a) 12 months immediately preceding the month of its transfer.
(b) 24 months immediately preceding the date of its transfer.
(c) 36 months immediately preceding the date of its transfer.
(d) None of the above.
Ans.(c)
(21) Which of the following asset is a Short-term capital asset, if it is held for more than 12 months?
(a) Securities (other than unit) listed in recognized exchange in India.
(b) Units of mutual fund other than equity oriented stock fund
(c) Zero coupon Bonds
(22) Rajat purchased a car for his personal use for Rs. 5,00,000 in April, 2019 and sold the same
for Rs. 5,50,000 in July, 2019. The taxable capital gains would be - (Dec. 2 016)
(a) Nil
(b) Rs. 5,50,000
(c) Rs. 50,000
(d) Rs. 4,00,000 Ans.(a)
(23) Which of the following is a long term capital asset if held for more than 12 months but less
than 24 months ?
(a) A unit of a Mutual Fund other than equity oriented fund specified'under section 10(23D).
(b) Shares of a listed company
(c) Shares of an unlisted company.
(d) Gold Jewellery Ans.(b)
Ch 7 - Capital 7.4
(24) Cost of acquisition of a capital asset, being a unit of a business trust, allotted pursuant to
transfer of share or shares as referred to in section 47(xvii) shall be?
(a) Nil
(b) Cost of acquisition to him of the share .
(c) Cost to previous owner.
Ans.(b)
(25) Which of the following is included in the definition of transfer u/s 2(47)?
(a) Sale, exchange or relinquishment of the asset,
(b) Extinguishment of any rights therein,
(c) Compulsory acquisition thereof under any law.
(26) In the case of a capital asset, being the right to subscribe to any financial asset, which is
renounced in favour of person, -
(a) The period shall be reckoned from the date of the offer of such right by the company or
institution, as the case may be, making such offer.
.(b) The period shall be reckoned from the date of the allotment of such right by the company or
institution, as the case may be, making such offer.
(c) The period shall be reckoned from the date of the extinguishment of such right by the company
or institution, as the case may be, making such offer
(d) None of these. Ans.(a)
(27) Which of the following transactions shall not be regarded as transfer as per the provisions of
section 47:
(a) Transfer of a capital asset, being a Government Security carrying a periodic payment of interest,
made outside India through an intermediary dealing in settlement of securities, by a non-resident
to another non-resident shall not be regarded as transfer as per IT Act.
(b) Compulsory acquisition thereof under any law.
(c) Extinguishment of rights in respect of capital asset.
(d) Conversion of capital asset into stock in trade. Ans.(a)
section 47:
(a) Any transfer as a Gift
.(b) Compulsory acquisition thereof under any law.
(c) Extinguishment of rights in respect of capital asset
(d) Conversion of capital asset into stock in trade Ans.(a)
section 47:
(a) Any distribution of capital assets on the total or partial partition of a Hindu Undivided Family.
(b) Any transfer of a capital asset by a company to its subsidiary company, if the parent company
or its nominees hold the whole of the share capital of the subsidiary company, and the subsidiary
company is an Indian company.
(c) Any transfer, in a scheme of amalgamation, of a capital asset by the amalgamating company to
the amalgamated company if the amalgamated company is an Indian company.
Ch 7 - Capital 7.5

(30) As ner Section 47.if any transfer made outside India, of a capital asset being _____________ ,
bv a non- resident to another non-resident shall not be treated as transfer-
(a) Rupee denominated Bonds of Indian Company (b) Gold deposit bonds
(c) Zero coupon bonds (d) Deep discount bonds
Ans.(a)
(31) As ner Section 471'xb'. anv transfer bv wav of conversion of preference shares of a company
into of that company shall not be regarded as transfer —
(a) Bonds (b) Gold deposit bonds

(c) Equity shares (d) Debentures
Ans.(c)
section 47:
(a) Any transfer by way of conversion of preference share into equity share of that company.
(b) Any transfer of a capital asset by a company to its subsidiary company, if the parent company
or its nominees hold the whole of the share capital of the subsidiary company, and the subsidiary
company is an Indian company.
(c) Any transfer by a unit holder of a capital asset, being a unit or units, held by him in the
consolidating plan of a mutual fund scheme, made in consideration of the allotment to him of a
capital asset, being a unit or units, in the consolidated plan of that scheme of the mutual fund.
Ans.(d)
(33) Compute the tax liability for assessment year 2020-21 of resident individual who is having
long term capital gains of Rs. 5,00,000 and has no other income -
(a) Rs. 1,04,000 (b) Rs. 39,000
(c) Rs. 51,500 (d) Rs. 13,000 Ans.(b)
(34) Compute the tax liability for assessment year 2020-21 of non-resident individual who is
having long term capital gains of Rs. 5,00,000 and has no other income -
(a) Rs. 1,04,000 (b) Rs. 49,440
(c) Rs. 51,500 (d) Rs. 23,690 Ans.(a)
(35) Mr. Chandan (age 70) received Rs. 30,000 every month during the financial year 2019-20 on
reverse mortgage of his property with State Bank of India. The amount of receipt liable to tax in the
hands of Mr. Chandan is : (June, 2017)
(a) Rs. 2,60,000 (b) Rs. 2,52,000
(c) Rs.40,000 (d) Nil Ans.(d)
(36) Any transfer in a demerger, of a capital asset, being a share or shares held in an Indian
company, by the demerged foreign company to the resulting foreign company, if the shareholders
holding not less than _____________ of the demerged foreign company continue to remain
shareholders of the resulting foreign company; and such transfer does not attract tax on capital
gains in the country, in which the demerged foreign company is incorporated, shall not be regarded
as transfer :
Ch 7 - Capital 7.6
(a) 75% in value of the shares (b) 75% of the number of shareholders
(c) 25% in value of the shares (d) 25% of the number of shareholders Ans.(a)
(37) Mrs. Lakshmi purchased shares of ABB Ltd. for Rs. 5 lakhs on 3rd April, 2019. The shares were
sold on 5th June, 2019 for Rs. 7 lakhs. She paid STT of Rs. 700 and brokerage of Rs. 500. The amount
chargeable to tax is : (June, 2017)
(a) Rs. 2,00,000 (b) Nil
(c) Rs. 1,99,500 (d) Rs. 1,98,700 Ans.(c)
(38) Ramesh sold his painting to National Museum for Rs. 20,000 on 1-6-2019. What will be the
amount of capital gain on this transaction?
(a) Rs. 20,000 (b) Rs. 10,000
(c) Nil (d) None of these Ans.(c)
COMPUTATION OF CAPITAL GAINS
(39) Short-term capital gains arising from the transfer of equity shares in a company or units of an
equity oriented fund or units of a business trust charged with security transaction tax are subject
to income-tax at the rate of - (June 2016)
(a) 10% (b) 15%
(c) 20% (d) Normal rate Ans.(b)
(40) Ms. Smita inherited a vacant site land consequent to the demise of her father on 10th June,
2010. The land was acquired by her father on 10th April, 1990 for Rs. 40,000. The fair market value
of the land on 1st April, 2001 was Rs. 2,55,000 and on the date of inheritance, i.e., 10th June, 2010
was Rs. 3,50,000. The cost of acquisition for Ms. Smita is - (June 2016)
(a) Rs. 40,000 (b) Nil
(c) Rs. 2,55,000 (d) Rs. 3,50,000 Ans.(c)
(41) Neeraj owns a house of Rs. 20,00,000, which he transfers for Rs. 22,00,000 to Kamal on 5-4-
2019. What will be the full value of consideration?
(a) Rs. 22,00,000 (b) Rs. 20,00,000
(c) Rs. 2,00,000 (d) Nil Ans.(a)
(42) Ms. Netra acquired 1000 equity shares of MMC Ltd. for Rs. 4 lakhs in April, 1996. She received
bonus shares on 1 :1 basis in April, 2019 from the company. She sold all the shares in January, 2020
through a recognized stock exchange for Rs. 8 lakhs. The fair market value of share as on 31-01-
2018 is was Rs. 3,50,000. The capital gain chargeable to tax in the hands of Ms. Netra for the
assessment year 2020-21 is :: (June, 2017)
(a) Rs. 4 lakhs (b) Nil since the entire gain is exempt from
tax
(c) Rs. 2 lakhs (d) Rs. 80,000 Ans.(a)
Answer Hint : Capital Gains in case of original shares shall be Nil and in case of bonus shares will be
Rs. 4,00,000 in accordance with the provisions of Section 112A of the Income Tax Act, 1961.
(43) Compute the capital gains for AY 2020-21 if Mr. Ramesh, a property dealer, sells a commercial
plot of land on 1-3-2020 for Rs. 50,00,000 lakhs which was acquired by him on 1-8-2017 for Rs.
25,00,000 for selling of offices constructed therein. He had incurred land development charges of
Rs. 10,00,000 on 1-10-2017. He incurred Rs. 1,00,000 for selling the plot of land.
(a) Nil (b) 15,00,000
Ch 7 - Capital 7.7
(c) Rs. 14,00,000 (d) 25,00,000 Ans.(a)

Answer Hint: Stock in trade in not a capital asset.
(44) Compute the capital gains for assessment year 2020-21 if Mr. Roy sells his personal motorcar
on 11-4-2019 for Rs. 2,55,000, which was acquired on 31-1-2018 for Rs. 6,50,000. The expenses on
transfer are 2% of selling price.
(a) Nil (b) 3,95,000
(c) Rs. 3,82,000 (d) -4,00,100 Ans.(a)
Answer Hint: Personal motor car in not a capital asset.
(45) Compute the capital gains for assessment year 2020-21 if Mr. Kallu sells his personal Jewellery
on 11-8-2019 for Rs. 12,50,000, which was acquired on 31-1-2018 for Rs. 6,50,000. The expenses
on transfer are 2% of selling price. The capital gains chargeable to tax for Assessment Year 2020-
21.
(a) Nil (b) 5,75,000
(c) Rs. 6,00,000 (d) 6,25,000 Ans.(b)
Short term capital gains arises since jewellery is held for not more than 36 months.
(46) Compute the capital gains for assessment year 2020-21 if Mr. Gillu sells shares of unlisted
company on 11-3-2020 for Rs. 12,50,000, which was acquired on 31-1-2019 for Rs. 6,50,000. The
expenses on transfer are 2% of selling price. The capital gains chargeable to tax for assessment year
2020-21.
(a) Nil (b) 5,75,000
(c) Rs. 6,00,000 (d) 6,25,000 Ans.(b)
Short term capital gains arises since unlisted shares are held for not more than 24 months.
(47) A owns a capital asset which was purchased by him on 1-5-1999 for Rs. 16,00,000.The market
value of the said asset as on 1-4-2001 was Rs. 17,00,000. The said asset was sold for Rs. 50,00,000
during the year. Compute the capital gain for the assessment year 2020-21. (Cost inflation index for
F.Y. 2001-02 = 100, and 2019-20 = 289)
(a) Rs. 1,76,000 (b) Rs. 32,00,000
(c) Rs. 87,000 (d) Rs. 4,48,000 Ans.(c)
(48) On 15th November, 2019, Mohan sold 100 grams of gold, the sale consideration of which was
Rs. 6,00,000. He had acquired the gold on 11th December, 1998 for Rs. 1,64,000. Fair market value
of 100 grams. Gold on 1st April, 2001 was Rs. 2,64,000. The amount of capital gains chargeable to
tax for the assessment year 2020-21 shall be - (Dec. 2014)
(a) Rs. 3,36,000 (b) Rs. 6,00,000
(c) Rs. (1,18,080) loss (d) ? (1,62,960) loss Ans.(d)
(49) A owns a capital asset which was purchased by him on 1-5-1999 for Rs. 12,50,000. The market
value of the said asset as on 1-4-2001 was Rs. 10,00,000. The said asset was sold for Rs. 48,00,000
during the year. Compute the capital gain for the assessment year 2020-21. (Cost inflation index for
F.Y. 2001-02 = 100 and 2019-20 = 289)
(a) Rs. 14,00,000 (b) Rs. 38,00,000
(c) Rs. 20,80,000 (d) Rs. 11,87,500 Ans.(d)
(50) A owns a capital asset which was purchased by him on 15-04-2005 for Rs. 12,50,000. The
market value of the said asset as on 1-4-2001 was 11,50,000. The said asset was sold for Rs.
Ch 7 - Capital 7.8
48,00,000 during the year. Compute the capital gain for the assessment year 2020-21. (Cost
inflation index for F.Y. 2001-02 = 100, 2005-06 = 117, 2019-20 = 289)
(a) Rs. 17,12,393 (b) Rs. 14,00,000

(c) Rs. 35,50,000 (d) Rs. 33,00,000 Ans.(a)
(51) Mrs. R sells a plot of land on 21-11-2019 for Rs. 50,00,000. She inherited the plot from her
grandfather on 01-04-2010. Her grandfather had acquired the plot on 01-03-1991 for Rs. 2,00,000.
The FMV of the plot as on 01-04-2001 was Rs. 1,35,000. Compute the capital gains. (Cost inflation
index'for F.Y. 2001-02 = 100,2010-11-167, 2019-20 = 289)
(a) Rs. 44,22,000 (b) Rs. 46,32,800
(c) Rs. 48,00,000 (d) Rs. 48,65,000 Ans.(a)
(52) Mrs. Rashmi sells a capital asset on 21-11-2019 for Rs. 50,00,000. She inherited the capital
asset from her father on 01-04- 2016. Her father had acquired the plot on 10-04-2001 for Rs.
5,00,000. Rashmi has incurred Rs. 1,00,000 on improvement of such asset on 15-05-2016. Compute
the capital gains. (Cost inflation index for 2001-02 = 100,2016-17 = 264,2019-20 = 289)
(a) Rs. 35,32,913 (b) Rs. 35,04,669
(c) Rs. 34,45,530 (d) Rs. 45,00,000 Ans.(c)
(53) Indexation benefit on Cost of acquisition is available on the long term capital asset: However,
in certain cases, indexation benefit is not available. In which of the following cases, indexation
benefit is allowed?
(a) Debentures issued by a company (b) Self generated goodwill of a business
(c) Bonus shares allotted on 1-4-2001 (d) Jewellery Ans.(d)
(54) Mr. Sunil sells the goodwill on 20-01-2020 for Rs. 38,00,000. It was self-generated by him and
he incurred cost of improvement thereof for Rs. 5,55,000 on 1-4-2016. Compute his taxable gains.
(Cost inflation index for F.Y. 2015-16 = 254 and 2019 - 20 = 289)
(a) Rs. 38,00,000 (b) Rs. 32,45,000
(c) Nil (d) Rs. 32,14,106 Ans.(a)
(55) Mr. Sunil sells the goodwill on 20-01-2020 for Rs. 38,00,000. It was purchased by him on 02-
1-2002 for Rs. 5,46,000 and he incurred cost of improvement thereof for Rs. 5,55,000 on 1-4-2016.
Compute his taxable gains. (Cost inflation index for F.Y. 2001-02 = 100,2015-16 = 254 and 2019-20
= 289)
(a) Rs. 38,00,000 (b) Rs. 32,45,000
(c) Rs. 22,22,060 (d) Rs. 26,99,000 Ans.(c)
(56) XYZ Ltd. allotted sweat equity shares to his employee A at a concessional rate on 31-5-2019. A
transfers these shares on 31-3-2020. Which type of gains is it?
(a) Long term capital gain (b) Short term capital gain
(c) Middle term capital gain (d) None of these Ans.(b)
CAPITAL GAINS IN SPECIAL CASES
(57) Cost of acquisition of securities held with depository in to be computed by - (Dec. 2016)
(a) Average cost method (b) First in first out (FIFO) method
(c) Last in first out (LIFO) method (d) Weighted average cost method Ans.(b)
(58) Aarnav converts his plot of land purchased in July, 2014 for Rs. 8,00,000 into stock-in-trade on
31st March, 2016. The fair market value as on 31st March, 2016 was Rs. 11,90,000. The stock-in-
Ch 7 - Capital 7.9
trade was sold Rs. 12,25,000 in the month of January 2020. Find out the taxable Capital gains (Cost
inflation index for F.Y. 2013-14 = 220, 2014-15 = 240, 2015-16 = 254 and 2019-20 = 289)
(a) Rs. 2,66,364 (b) Rs. 3,90,000

(c) Rs. 1,62,000 (d) Rs. 3,01,364 Ans.(b)
(59) Aarnav converts his plot of land purchased in July, 2002 for Rs. 80,000 into stock-in-trade on
31st March, 2017. The fair market value as on 31st March, 2017 was Rs. 2,00,000. The stock-in-
trade was sold Rs. 2,25,000 in the month of January 2020. Find out the taxable Capital gains (Cost
inflation index for F.Y. 2002-03 = 105, 2016-17 = 264 and 2019-20 = 289)
(a) ? (13,333)Loss (b) Rs. 11,667
(c) ? (1,142) Loss (d) Rs. 25,000 Ans.(c)
(60 When shares of a listed company held for more then 36 months are transferred privately for
Rs. 8 lakh, with original cost of acquisition of Rs. 1 lakh whose indexed cost of acquisition is Rs. 2
lakh, the income-tax payable would be - (Dec. 2015)
(a) Rs. 1,45,600 (b) Rs. 72,800
(c) Rs.1,24,800 (d) Rs. 61,800 Ans.(b)
(61) Long-term capital gains on zero coupon bonds are chargeable to tax - (June, 2015)
(a) @ 20% computed after indexation of such bonds
(b) @ 10% computed without indexation of such bonds
(c) Higher of (A) or (b)
(d) Lower of (A) or (B). Ans.(d)
(62) Where an urban agricultural land owned by an individual, continuously used by him for
agricultural purposes for a period of _____________ prior to the date of transfer, is compulsorily
acquired under law and the compensation is determined by the Central Government, resultant
capital gain is exempt.
(a) One year (b) Two years
(c) Three years (d) 6 months Ans.(b)
(63) The Government compulsorily acquired the land of Mr. X. The Government fixed his
consideration at Rs. 5,00,000 half of which was received by X on 23-6-2018 and rest of the amount
was paid to X in the year 2020-21. What will be the assessment year of chargeability of the capital
gain to X?
(a) 2016-17 (b) 2017-18
(c) 2018-19 (d) 2019-20 Ans.(d)
(64) If in the above case government enhanced the compensation by Rs. 2,00,000 in the year 2019-
20 what will be the previous year of chargeability of enhanced compensation ?
(a) 2017-18 (b) 2018-19
(c) 2019-20 (d) 2020-21 Ans.(c)
(65) The house property of Ramesh is compulsorily acquired by the Government for Rs. 40,00,000
vide Notification issued on 12th March 2018. Ramesh has purchased the house in 2001-02 for Rs.
8,50,000. The compensation is received on 15th April 2019. Find out the taxable Capital gains if
assessee has incurred litigation expenses amounting Rs. 25,000 (Cost inflation index for F.Y. 2001-
02= 100, 2017-18 = 272 and 2018-19 = 280 and 2019-20 = 289)
Ch 7 - Capital 7.10
(a) Rs. 19,12,000 (b) Rs. 16,63,000

(c) Nil (d) Rs. 31,50,000 Ans.(b)
(66) Ramesh received Rs. 7 lakh by way of enhanced compensation in March, 2020. A further sum
of Rs. 2 lakh decreed by the court is due but not received till 31st March, 2020. The amount of
income chargeable to tax for the assessment year 2020-21 would be - (Dec. 2015)
(a) Rs. 3,50,000 (b) Rs. 7,00,000
(c) Rs. 9,00,000 (d) Rs. 4,50,000 Ans.(b)
(67) Compensation received by interim order shall be deemed to be income chargeable under the
head "Capital gains" of the previous year in which _____________ .
(a) The final order of such court, Tribunal or other
(b) the compensation accrued authority is made.
(c) The appeal was first filed in such court,
(d) The interim order is passed.
Tribunal or other authority. Ans.(a)
income from short term capital gains of Rs. 2,00,000 arising on transfer of equity shares listed in
recognized stock exchange on which securities transaction is paid and long term capital gains of Rs.
3,00,000 on transfer of land and has has no other income -
(a) Rs. 39,140 (b) Rs.36,400
(c) Rs. 49,440 (d) Rs.51,500 Ans.(b)
(69) XYZ Ltd. an unlisted company bought back 10,000 shares (face value Rs. 10 per share, issued
on 1-4-2016) from its shareholders on 15-03-2020 for Rs. 60 per share. Find out the taxable Capital
gains in the hands of shareholder. (Cost inflation index for F.Y. 2016-17 = 264 and 2019-20 = 289)
(a) Rs. 5,00,000 (b) Rs. 6,00,000
Solve after ch. Various entites
(c) Nil (d) Rs. 4,96,970 Ans.(c)
(70) A owns a house property which was purchased by him on 1-5-1999 for Rs. 14,00,000.
The said property was destroyed by fire on 3-4-2019 and A received a sum of Rs. 50,00,000 from
the insurance company during the year. The market value of the above property as on 1-4-2001
was Rs. 17,00,000
Compute the capital gain for the assessment year 2020-21. (Cost inflation index for F.Y. 2001-02=
100, and 2018-19 = 289)
(a) Rs. 87,000 (b) Rs. 33,00,000
(c) Rs. 11,92,000 (d) Rs. 36,00,000 Ans.(a)
(71) M owns two machineries eligible for depreciation at the rate of 15%. The WDV of these
machines as on 1-4-2019 was Rs. 25,000 and Rs. 40,000 respectively. No other asset was acquired
in this block during the year. One of these machines were sold during the previous year for Rs.
75,000. Compute the capital gain.
(a) Short term capital gain of Rs. 10,000 (b) Short term capital loss of Rs. 10,000
(c) Long term capital gain of Rs. 10,000 (d) No capital gain as depreciation would be
allowed on one of the machines left with M. Ans.(a)
(72) In case of distribution of capital asset on liquidation of the company, the capital gains is
chargeable to tax : Solve after IOS chapter
(a) In hands of shareholders (b) In hands of the company
Ch 7 - Capital 7.11
(c) In hands of shareholders as well as company (d) Either in hands of shareholder or in

hands of company Ans.(a)
(73) M owns two machineries eligible for depreciation at the rate of 15%. The WDV of block of asset
on 1-4-2019 was Rs. 75,000. No other asset was acquired in this block during the year. Such
machines were sold during the previous year for Rs. 65,000. Compute the capital gain.
(a) Short term capital gain of Rs. 10,000
(b) Short term capital loss of Rs. 10,000
(c) Long term capital gain of Rs. 10,000
(d) No capital gain as depreciation would be allowed on one of the machines left with M.
Ans.(b)
(74) Any profits or gains arising from the slump sale effected in the previous year shall be
chargeable to income-tax as:
(a) Short term capital gain only
(b) Short term capital gains or Long term capital gains depending upon the period of holding of
the undertaking.
(c) Long term capital gain only
(d) No capital gain but the same will be taxable as business
profits. Ans.(b)
(75) Slump sale is a result of which of the following type of consideration?
(a) Lump sum Payment (b) Adhoc Payment
(c) Accurate Payment (d) Actual Payment Ans.(a)
(76) In computing capital gains in case of slump sale _____________ will be taken as cost of acquisition
of the undertaking so transferred.
(a) Book value (b) Net worth
(c) WDV (d) FMV as on 01-04-2001 Ans.(b)
(77) Mr. X has sold his land for a consideration of Rs. 25,00,000 to Mr. Y. Mr. Y has paid stamp duty
of Rs. 3,00,000 @ 10% of stamp value. The full value of consideration for computing capital gains
in hands of Mr. X in accordance with the provisions of Section 50C will be -
(c) Rs. 28 lakhs (d) Rs. 33 lakhs Ans.(b)
Answer Hint : Stamp duty value shall be the full value of consideration since it exceeds 105% of the
actual consideration.
(78) Mr. X has sold his land for a consideration of Rs. 25,00,000 to Mr. Y. Mr. Y has paid stamp duty
of Rs. 2,55,000 @ 10% of stamp value. The full value of consideration for computing capital gains
in hands of Mr. X in accordance with the provisions of Section 50C will be -
(a) Rs. 25 lakhs (b) Rs. 25.5 lakhs
(c) Rs. 28 lakhs (d) T 33 lakhs Ans.(a)
Answer Hint: Actual consideration shall be the full value of consideration since stamp duty value
do not exceed 105% of the actual consideration.
(79) Section 50C makes special provision for determining the full value of consideration in case of
transfer of — (June, 2015)
(a) Plant ah machinery (b) Land or building
(c) All movable property other than plant & (d) Computers.
Ch 7 - Capital 7.12
machinery and computers Ans.(b)

(80) Mr. X has sold his land for a consideration of Rs. 25,00,000 to Mr. Y. on 15-04-2019. Mr. Y has
paid stamp duty of Rs. 3,00,000 @ 10% of stamp value. The said land was acquired by Mr. X on 15-
07-2017 for Rs. 12 lakhs. The taxable capital gains in hands of Mr. X will be —
07-2017 for Rs. 12 lakhs. M. X was not satisfied with the stamp value and his case was referred to
Valuation officer. The valuation officer determined the value Rs. 26 lakhs. The taxable capital gains
in hands of Mr. X will be —
(c) Rs.1 lakhs (d) Rs. 18 lakhs Ans.(b)
07-2017 for Rs. 12 lakhs. Mr. X was not satisfied with the stamp value and his case was referred to
Valuation officer. The valuation officer determined the value Rs. 35 lakhs. The taxable capital gains
in hands of Mr. X will be -
(c) Rs. 10 lakhs (d) Rs. 18 lakhs Ans.(d)
(83) Where any capital asset was on any previous occasion the subject of negotiations for its
transfer, any advance or other money received and retained by the assessee in respect of such
negotiation shall be: Solve after IOS chapter
(a) Deducted from cost of acquisition (b) Treated as income from other sources
(c) Deducted from full value of consideration (d) Treated as Business Income Ans.(b)
(84) X Limited has transferred its Unit N to Y Limited by way of slump sale on November 30, 2019
for lump sum consideration of Rs. 400 lakhs. The undertaking was acquired on 1-4-2001 for Rs. 120
lakhs. The net worth of the undertaking on the date of transfer is Rs. 200 lakhs. Find out the taxable
Capital gains (Cost inflation index for F.Y. 2001-02 = 100 and 2019-20 = 289)
(c) Rs. 73.60 lakhs (d) Rs. 144 lakhs Ans.(a)
(85) Mr. X received an advance of Rs. 51,000 occasion of agreement of sale of a capital asset on 15-
07-2019. The same was forfeited by him. The said advance money will be _____________ and shall
_____________ .
Solve after IOS chapter
(a) Taxable as Income from other sources, be
(b) Taxable as Income from other sources, not be reduced from cost of acquisition of the asset.
reduced from cost of acquisition of the asset.
(c) Taxable as Capital Gains , be reduced from cost
(d) Taxable as Capital Gains, be reduced from cost of acquisition of the asset. of acquisition of the
asset. Ans. (b)
(86) Bonus shares were allotted to Mr. K for Rs. 2,00,000 on 1st April 2000. The Fair market value
of the shares on 2001 was Rs. 2,25,000. What will be the cost of acquisition?
(a) Rs. 2,00,000 (b) Rs. 2,25,000
Ch 7 - Capital 7.13
(c) Nil (d) None of these Ans.(b)

(87) Compute the net taxable capital gains of on the basis of the following information :
A house was purchased on 01-05-2001 for Rs. 5,50,000 and was used as a residence by the owner.
The owner had contracted to sell this property in June, 2019 for Rs. 10,00,000 and had received an
advance of Rs. 70,000 towards sale. The intending purchaser did not proceed with the transaction
and the advance was forfeited by the owner. The sum so forfeited has been included in the total
income of the assessee as per the provisions of Section 56(2)(ix). The property was sold in
December, 2019 for Rs. 20,00,000. (Cost inflation index for F.Y. 2001-02 = 100 and 2019-20 = 289)
(a) Rs. 4,10,500 (b) L 70,000
Solve after IOS chapter
(c) Rs. 14,50,000 (d) Rs. 4,50,000 Ans.(a)
(88) Compute the net taxable capital gains of Smt. Megha on the basis of the following information:
A house was purchased on 01-05-1997 for Rs. 4,50,000 and was used as a residence by the owner.
The owner had contracted to sell this property in June, 2009 for Rs. 10,00,000 and had received an
advance of Rs. 70,000 towards sale. The intending purchaser did not proceed with the transaction
and the advance was forfeited by the owner. The property was sold in April, 2019 for Rs. 15,00,000.
(Cost inflation index for F.Y. 2001-02=100, 2009-10 =148 and 2019-20 = 289)
(a) Rs. 4,36,000 Solve after IOS chapter
(b) Rs. 2,76,000
(c) Rs. 4,01,800 (d) Rs. 70,000 Ans.(c)
(89) Manoj acquired 1,000 equity shares 110 each in a listed company for Rs. 35,000 on 1st July,
2011. The company issued 1,000 rights shares in April, 2013 at Rs. 15 per share. The company
issued 2,000 bonus shares in June, 2019. The market price was Rs. 50 per share before bonus issue
and Rs. 25 after such issue. The cost of acquisition of bonus shares would be - (June 2016)
(a) Nil (b) Rs. 20,000
(c) Rs. 50,000 (d) Rs. 1,00,000 Ans. (a)
EXEMPTIONS FROM CAPITAL GAINS
(90) Capital gain on sale of residential house property is exempted u/s 54 if it is :
(c) Any of the above two (d) None of these Ans.(a)
(91) The benefit of exemption under Section 54 is available to :
(a) Individual (b) HUF
(c) Both Individual and HUF (d) Any person Ans.(c)
(92) The benefit of exemption under Section 54 is available when following capital asset is
transferred :
(a) Long term residential house property (b) Short term residential house property
(c) Long term residential plot of land (d) Short term residential plot of land
Ans., (a)
(93) For claiming the benefit of exemption under Section 54 _____________ new residential house
property must be purchased within 2 years of transfer of capital asset if the capital Gains exceeds 2
crore rupees:
(a) 1 (b) 2
(c) 3 (d) Any number of Ans.(a)
(94) For claiming the benefit of exemption under Section 54 one/ two new residential house
property must be purchased within of transfer of capital asset:
Ch 7 - Capital 7.14
(a) 1 year (b) 2 years

(95) For claiming the benefit of exemption under Section 54 one/ two new residential house
property must be constructed within of transfer of capital asset:
(c) 3 years (d) 4 years Ans.(c)
(96) Under section 54, in case if the new asset is transferred within _____________ of its purchase or
construction, then its cost of acquisition shall be reduced by the amount of the capital gains
exempted earlier for the purpose of computing capital gains on transfer of such new asset.
(c) 3 years (d) 4 years Ans.(c)
income from short term capital gains of Rs. 5,00,000 arising on transfer of equity shares listed in
recognized stock exchange on which securities transaction is paid and has no other income :
(a) Rs.33,800 (b) Rs. 36,930
(c) Rs. 26,000 (d) Rs. 78,000 Ans.(c)
(98) Under which section, the assessee has to reinvest the entire net consideration to claim full
exemption for the long-term capital gains earned during a previous year - (June 2016)
(a) Section 54EC (b) Section 54F
(c) Section 54G A (d) Section 54D Ans.(b)
(99) Ms. Vimla sold a residential building in Jodhpur for 1,15,00,000 on 01-7-2019. The building
was acquired for 11,50,000 on 1-6-1997. The fair market value of the building as on 01-04-2001 is
20,00,000. She paid brokerage @ 2% at the time of sale of the building. She invested Rs. 7 lakhs in
purchase of a residential building in December, 2019. Compute her taxable capital gains for the A.Y.
2020-21. (Cost inflation index : 2001-02 = 100; 2019-20 = 289)
(a) Rs. 9,26,000 (b) 12,26,000
(c) Rs. 47,90,000 (d) 13,92,000 Ans.(c)
(100) For claiming exemption under Section 54B, Short term or long term capital asset being land
which, in the immediately _____________ , preceding the date on which the transfer took place, was
being used by the HUF or individual or his parents for agricultural purposes.
(101) The benefit of exemption under Section 54D in respect of Capital gain on compulsory
acquisition of land and buildings in certain cases is admissible to —
(c) AOP (d) Any person Ans.(d)
(102) The exemption available on investment in certain bonds u/s 54EC is available to :
(c) AOP (d) Any person Ans.(d)
(103) In order to enjoy exemption under section 54EC, the resultant long-term capital gains should
be invested in specified bonds within a period of _____________ from the date of transfer. (June, 2015)
Ch 7 - Capital 7.15
(104) For claiming exemption under section 54EC the investment in bonds must be made within
_____________ of transfer of long term capital asset and the amount of investment _____________
(a)6 months, can be made in the financial year in which the asset is transferred and in the next
financial year and the same cannot exceed Rs. 50 lakhs.
(b)6 months, can be made in the financial year in which the asset is transferred and in the next
(c)One year, can be made in the financial year in which the asset is transferred and in the next
(d)One year, can be made in the financial year in which the asset is transferred and in the next
Ans.(a)
(105) Long-term capital gains on sale of a long-term capital asset in October, 2019 is Rs. 105 lakh.
The assessee invested Rs. 50 lakh in REC bonds in March, 2020 and Rs. 55 lakh in NHAI bonds in
May, 2020. The amount of exemption eligible under section 54EC is - (Dec. 2016)
(a) Nil (b) Rs. 50 lakh
(c) Rs. 55 lakh (d) Rs. 105 lakh Ans.(b)
(106) The maximum amount of investment in bonds during any of the financial year for claiming
exemption u/s 54EC is -
(a) Rs. 10 lakhs (b) No limit
(107) For claiming exemption under section 54EC the investment in bonds must be made within
_____________ of transfer of long term capital asset.
(a) 6 months (b) 1 year
(c) 2 years (d) 3 years Ans.(a)
(108) A residential house is sold for Rs. 90 lakh and the long-term capital gains computed are Rs.
50 lakh. The assessee bought two residential house for Rs. 30 lakh and Rs. 20 lakh respectively. The
amount eligible for exemption u/s 54 would be- (Dec.2015)
(c) Rs. 30 lakh (d) Nil. Ans.(a)
(109) For claiming exemption under section 54EC the investment must be made in bonds of -
(a) NHAI or NABARD (b) REC or NABARD
(c) NABARD or PFC (d) NHAI or RECL Ans.(d)
(110) Mr. Madan sold a vacant land for Rs. 120 lakhs on 10-10-2019. The indexed cost of acquisition
amounts to Rs. 18 lakhs. He deposited Rs. 50 lakhs in REC bonds in January 2020 and another Rs.
50 lakhs in March, 2020. The amount of capital gain liable to tax after deduction under section 54EC
is: (June, 2017)
(111) The benefit of exemption under Section 54EC is available when following capital asset is
transferred :
(a) Long term capital asset being land or building
(b) Any long term capital asset other than or both. residential house property
Ch 7 - Capital 7.16
(c) Short term residential house property

(d) Short term capital asset other than residential house property
Ans.(a)
(112) For claiming exemption under section 54F, the assessee must not own _____________ on the date
of transfer of the original asset:
(a) more than 1 residential house, other than the new house
(b) more than 2 residential house, other than the new house
(c) more than 3 residential house, other than the new house
(d) more than 4 residential house, other than the new house
Ans.(a)
(113) For claiming exemption under section 54F, the assessee has to invest _____________ for
purchase or construction of residential house property :
(a) Full value of consideration (b) Net Consideration
(c) The amount of capital gains (d) Cost of asset transferred Ans.(b)
(114) Under Section 54F, Where the assessee purchases within a period of 2 years, or constructs
within a period of 3 years, after the date of the transfer of the original asset, any residential house,
other than the new asset, -
(a)then the capital gain exempted earlier shall be deemed to be income chargeable under the head
"Capital gains" of the previous year in which such residential house is purchased or constructed.
(b) then the capital gain exempted earlier shall be deemed to be income chargeable under the
head "Capital gains" of the previous year in which original capital asset is sold or transferred.
(c)then the assessee will be further entitled exemption equal to the cost of new asset acquired or
constructed.
(d)Then the capital gains which was earlier exempt from tax shall be deemed to be short term
capital gains in the year in which original asset is transferred.
Ans. (a)
(115) The exemption under section 54EC is withdrawn if the transfer of new asset, conversion
thereof in money or taking loan or advance on its security within _____________ years from the date of
its acquisition.
(a) 1 (b) 2
(c) 3 (d) 5 Ans.(d)
(116) Anurag sells a plot of land on 8th July, 2019 for Rs. 40 lakh and paid brokerage on its sale @
1%. He purchased this plot on 19th December, 1996 for Rs. 10,00,000. The fair market value of the
plot as on 1-4-2001 is 12,00,000. On 1st February, 2020, he purchased a residential house for Rs.
15 lakh. He owns one residential house on 8th July, 2019. The cost inflation index for 2001-02 was
100 and for 2019-20 is 289. Find out the amount of capital gains chargeable to tax for the
assessment year 2020-21:
(a) Rs. 3,07,500 (b) Rs. 4,32,364
(c) Rs. 5,55,936 (d) Rs. 5,91,636 Ans.(a)
(117) The exemption under Section 54G of Capital gain on shifting of undertaking from urban area
to any area other than urban area is available to :
Ch 7 - Capital 7.17

(c) Any person (d) None of the above. Ans.(c)
(118) For claiming exemption under section 54G, an assessee has to invest the resultant capital
gains within a specified period.Which of the following is not eligible for such investment - (June,
2015)
(a) Furniture (b) Land
(c) Building (d) Plant or machinery. Ans.(a)
(119) Capital gain on shifting of undertaking from urban area to any area other than urban area u/
s 54G is exempted if it is a :
(c) No exemption available (d) Both (a) & (b) Ans.(d)
(120) The exemption under Section 54GB of capital gains arising from transfer of residential
property is available to :
(c) Any person (d) Both (a) & (b) Ans.(d)
(121) Capital gain on transfer of residential property under section 54GB is exempted if it is a :
(c) No exemption available (d) Both (a) & (b) Ans.(a)
(122) Capital gain on shifting of undertaking to SEZ under section 54GA is exempted if it is a :
(c) No exemption available (d) Both (a) & (b) Ans.(d)
(123) Who is eligible for exemption in the above case?
(c) Any person (d) None of the above. Ans.(c)
(124) The amount of exemption under section 54GA is:
(a) Lower of capital gain or investment in new
(b) Lower of capital gains or cost incurred, asset.
(c) As determined by assessing officer
(d) None of the above. Ans.(b)
(125) With a view to ascertaining the fair market value of a capital asset, the Assessing Officer may
refer the valuation of a capital asset to a Valuation Officer in a case where the value of the asset as
claimed by the assessee is in accordance with the estimate made by a registered if the Assessing
Officer is of opinion that -
(a) that the fair market value is inappropriate
(b) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee
the value of the asset as claimed by the assessee by Rs. 25,000 by 15% of the value claimed by the
assessee;
(c) (a) or (b)
(d) None of these Ans.(c)
(126) For the purpose of section 54GB, the eligible assessee must own more than _____________ of the voting rights in the eligible
company :
(a) 75% (b) 50%
(c) 25% (d) 60% Ans.(c)
Ch 8 – IOS 8.1
CHAPTER 8 INCOME FROM OTHER SOURCES

INCOMES TAXABLE UNDER INCOME FROM OTHER SOURCES
(1) Income of every kind, which is not to be excluded from the total income under this Act and not
charged to income-tax under any of the other four heads, shall be chargeable to income-tax under
the head :
(a) Income from salaries (b) Income from House Property
(c) Profits and gains from business and profession (d) Income from Other Sources Ans.(d)
(2) Which is the charging section for income chargeable under the head Income from other
sources ?
(c) Section 22 (d) Section 56 Ans.(d)
(3) John, engaged in fertiliser trade received rent by sub-letting a building. This will be taxable
under the head - (June, 2015)
(a) Income from house property
(b) Income from capital gains
(c) Income from profits and gains of business and profession
(d) Income from other sources.
Ans.(d)
(4) Under the Income-tax Act, 1961, dividend derived from the shares held as stock-in-
trade are taxable under the head - (June, 2015)
(a) Income from other sources
(b) Income from profits and gins of business or profession
(c) Capital gains
(d) Either capital gains or income from profits and gains of business or profession. Ans.(a)
(5) Which of the following incomes are chargeable under the head 'Income from other sources'?
(a) Dividends
(b) Winnings from lotteries
(c) Betting
(d) All of these Ans.(d)
(6) Agriculture income received from outside India will be -
(a) Taxable under the head Profit and Gains of Business or Profession
(b) Taxable under the head Income from other sources
(c) Exempt from tax
(7) Ramesh was dealing in the business of lotteries. He himself won a lottery out of Stock in trade.
Income earned from such lottery will be -
(a) IOS
(b) PGBP
(c) Exempt
Ch 8 – IOS 8.2

(8) Salary paid to a member of parliament will be -
(a) Taxable under the head Profit and Gains of Business or Profession
(b) Taxable under the head Income from other sources
(c) Exempt
(9) Any sum of money received as an advance or otherwise in the course of negotiations for
transfer of a capital asset is forfeited and the negotiations do not result in transfer of such capital
asset will be taxable under the head -
(a) Profit and Gains of Business or Profession
(b) Income from other sources
(c) Capital gains
(d) Income from house property Ans.(b)
(10) Any sum of money received exceeding Rs. 50,000 without consideration or for inadequate
consideration will be taxable under the head -
(a) Income from house property
(b) Capital gains
(c) Income from other sources
(a) Profit and Gains of Business or Profession Ans.(c)
(11) Aman entered into an agreement with Brij for sale of a building for Rs. 20 lakh in June, 2019.
Aman received advance of Rs. 2 lakh. Subsequently, the agreement was cancelled and Aman
forfeited the advance money. The advance money is - (Dec. 2015)
(a) To be reduced from the cost of acquisition
(b) To be reduced from indexed cost of acquisition
(c) Taxable as capital gains
(d) Taxable as income under the head 'income from other sources' Ans.(d)
(12) Shashank received Rs. 10,000 as directors fee from a company. This amount will be taxable
under the head -
(a) Profit and Gains of Business or Profession
(b) Income from other sources
(c) Exempt
(13) An assessee earned interest on post office savings bank account: Rs. 6,000. Such sum shall be
taxable under the head :
(a) Salaries (b) Profit & Gains of Business & Profession
(c) Capital Gains (d) Income from Other Sources Ans.(d)
(14) Rakesh owned a machinery. He let it on hire to Raghu for Rs. 2,40,000 p.a. Such amount shall
be taxable under head:
(a) Income from other sources (b) Income from house property
(c) Income from Business and profession (d) Any of the above Ans.(a)
Ch 8 – IOS 8.3
(15) Income from letting on hire of plant, machinery or furniture is chargeable under the head -
(a) Income from other sources.
(b) Profits and gains of Business or Profession.
(c) Capital Gains.
(d) Either (a) or (b) Ans.(d)
(16) Under which head income from letting on hire of machinery etc. will be taxed if the same is not
chargeable under the head 'Profits and gains of Business and Profession' ?
(a) Income from Other Sources. (b) Salaries
(c) Capital Gains (d) Income from House Property Ans.(a)
(17) Income earned by an assessee from letting on hire machinery, plant or furniture belonging to
him and also buildings, and where letting of buildings is inseparable from the letting of the said
machinery, plant or furniture shall be taxable under the head:
(18) Any sum received by employer from employees as contribution to certain funds is taxable
under the head :
(a) Salaries (b) Profit & Gains of Business & Profession
(c) Capital Gains (d) Income from Other Sources Ans.(d)
DIVIDEND, DEEMED DIVIDEND AND ITS TAXABILITY
(19) Amount paid to or received by a shareholder in proportion to its shareholding in a company
out of the total sum so distributed is known as :
(a) Share (b) Dividend
(c) Bonus (d) Profit Ans.(b)
(20) The date fixed by a company for entitlement of dividend or by a mutual fund/administration/
specified company for entitlement of dividend or bonus units is known as :
(a) Due date (b) Record date
(c) Expiry date (d) None of these Ans.(b)
(21) Radha held 1,000,12% Preference shares of Rs. 100 each in Rosa Ltd. Dividend was received
by her on 25 th March, 2020. Calculate the amount chargeable to tax.
(a) Exempt (b) Rs. 12,000
(c) Rs. 120 (d) None of the above Ans.(a)
(22) Deemed dividends as given in Section 2(22), which provides "dividend" includes -
(a)Distribution of accumulated profits, entailing release of assets by the company to its
shareholders.
(b) Distribution of debentures/deposit-certificates to shareholders or bonus shares to preference
shareholders to an extent to which the company possesses accumulated profits.
(c)Distribution to shareholders on liquidation to the extent to which the distribution is attributable
to the accumulated profits of the company immediately before its liquidation.
Ans.(d)
Ch 8 – IOS 8.4
(23) Which of the following distributions by. a company to its shareholders are not considered as
deemed dividends ?
(a) Debentures (b) Debenture Stock
(c) Shares issued for full cash consideration (d) Bonus shares Ans.(c)
(24) A private limited company engaged in manufacturing activity had general reserve of Rs. 20
lakh. It granted a loan of Rs. 5 lakh to a director who held 13% shareholding cum voting rights in
the company. The said loan was re-paid by him before the end of the year. The amount of deemed
dividend arising out of the above transaction is - (Dec. 2015)
(a) Rs. 2,60,000 (b) Rs. 2,40,000
(c) Rs. 5,00,000 (d) Nil. Ans.(c)
(25) Mr. X resident individual 45 years of age gives the following information pertaining to the
assessment year 2020-21 :
Particulars -
Dividend from shares of Indian company on which the 12,50,000 company has paid dividend
distribution tax u/s 115-0 Expenses incurred on collecting such dividends 12,500
Determine the amount of tax liability for the assessment year 2020-21.
(a) Rs. 1,28,750 (b) Rs. 1,27,460
(c) Rs. 26,000 (d) Rs. 23,180 Ans.(c)
(26) X Ltd. reduced its share capital and for that distributed to its shareholders an amount of Rs.
55,00,000. The company possessed accumulated profits of Rs. 35,00,000 as on the date of
distribution. What shall be the amount to be assesseed as deemed dividend?
(a) Rs. 55,00,000 (b) Rs. 35,00,000
(c) Rs. 20,00,000 (d) No deemed dividend Ans.(b)
(27) XYZ Pvt. Ltd. gave a loan of Rs. 5,00,000 to its shareholder. The shareholder was the beneficial
owner of equity shares of the company as he held 12% of the voting power of the Company. The
company possessed accumulated profits of Rs. 3,00,000 as on the date of advancement of loan. What
shall be the amount to be assesseed as deemed dividend in the hands of shareholder?
(a) Rs. 5,00,000
(b) Rs. 3,00,000
(c) Rs. 2,00,000
(d) Dividend will be exempt in hands of
shareholder under Section 10(34).
Ans.(d)
(28) Libra P. Ltd. engaged in trading activity had accumulated profits of Rs. 15,00,000 as on 1-4-
2019, Mr. Gautam having 30% of the equity shares and voting rights in the company received Rs. 5
lakhs as loan on 1-6-2019 from the company. The loan was repaid by him on 30-11-2019. The
amount liable to tax in the hands of Mr. Gautam as deemed dividend is: (June, 2017)
(a) Rs. 4,50,000
(b) Rs. 15,00,000
(c) Dividend will be exempt in hands of shareholder under Section 10(34).
(d) Rs. 1,50,000
Ans.(c)
Ch 8 – IOS 8.5
(29) As per section 2(22) (e), loan/ advances given by a private company to a concern in which its
shareholder has substantial interest, then to the extent of accumulated profits held by the private
company (capitalised accumulated profits not included), it shall be considered as deemed dividend
taxable in the hands of shareholder. A person is deemed to have a substantial interest:
(a)If he holds 20% of the voting power (equity shares) in the company;
(b) If he is beneficially entitled to 20% or more of the income of such concern.
(c)Either (a) or (b)
(d) None of these. Ans.(c)
(30) ABC Pvt. Ltd. gave a loan of Rs. 9,00,000 to PQR & Co.. 'C1, a shareholder of ABC Pvt. Ltd. was
holding 20% of the voting power (equity shares) in the concern PQR & Co. The company
possessed accumulated profits of Rs. 5,20,000 as on the date of advancement of loan to the PQR &
Co. What shall be the amount to be assesseed as deemed dividend in the hands of shareholder?
(a)Rs. 3,80,000
(b) Rs. 9,00,000
(c)Rs. 5,20,000
(d) Dividend will be exempt in hands of shareholder under Section 10(34).
Ans.(d)
(31) Compute income taxable under head income from other sources :
Dividend from shares of Indian company Rs. 3,000
Winnings from lotteries (net) Rs. 70,000
Rental Income of Plant and machinery y 51,000
(a) 1,51,000 (b) Rs. 1,21,0000
(c) Rs. 1,54,000 (d) y 1,24,000
Ans.(a)
(32) Compute income taxable under head income from other sources received by Mr. X :
Cash gift received from his brother on occasion of his marriage anniversary Rs. 75,000
Forfeited advance money received on occasion of transfer of capital asset Rs. 51,000
(a) Rs. 1,96,000 (b) Rs. 1,51,000
(c) Rs. 1,75,000 (d) Rs. 1,00,000 Ans.(b)
(33) Compute income taxable under head income from other sources received by Mr. X :
Cash gift received from his friend on occasion of his marriage anniversary y 75,000
Forfeited advance money received on occasion of transfer of capital asset Rs. 51,000
(a) Rs. 1,96,000 (b) Rs. 1,51,000
(c) Rs. 1,75,000 (d) Rs. 2,26,000 Ans.(d)
(34) Mrs. Laxmi, 70 years old, received Rs. 30,000 every month from SBI under reverse mortgage
scheme by mortgaging her residential house property. She also received monthly family pension of
Rs. 15,000. Her total income for the assessment year 2020-21 is - (June 2016)
(a) Rs. 5,40,000 (b) Rs. 1,80,000
(c) Rs. 1,65,000 (d) Rs. 3,60,000 Ans.(c)
Ch 8 – IOS 8.6
(35) Winnings from lotteries, crossword puzzles, races including horse races, card games and other
games of any sort or from gambling or betting of any form or nature, taxable under the head 'Income
from other sources' after grossing up is taxed without allowing basic exemption limit at flat rate of:
(a) 30% (b) 20%
(c) 10% (d) 15% Ans.(a)
(36) Winnings from lotteries (gross) Rs. 90,000. Calculate the amount to be included while
computing income under the head 'Income from Other Sources'.
(a) Rs. 90,000 (b) Rs. 1,28,571
(c) Rs. 27,000 (d) Rs. 1,17,000 Ans.(a)
(37) Amit received Rs. 70,000 being winnings from lottery after deduction of tax at source. His gross
winnings from lottery to be included in the total income is - (Dec. 2016)
(a) Nil (b) Rs. 1,00,000
(c) Rs. 70,000 (d) Rs. 30,000 Ans.(b)
(38) An assessee earned an income of Rs. 65,000 from lottery. Expenditure incurred by him in
regard to earn this income was of Rs. 18,000. Deduction of such amount of expenditure shall be:
(a) Allowed (b) Disallowed
(c) Partly allowed and partly disallowed (d) Any of the above Ans.(b)
(39) Winnings from horse race (net) Rs. 35,000. Calculate the amount to be included while
computing income under the head 'Income from Other Sources'.
(a) Rs. 35,000 (b) Rs. 50,000
(c) Rs. 10,500 (d) Rs. 60,500 Ans.(b)
(40) Miss. Z received an amount of Rs. 27,760 on 1-12-2019 in connection with winning from camel
races. Cost of race tickets purchased was Rs. 2,000. Calculate amount to be included under the head
'Income from Other Sources':
(a) Rs. 27,760 (b) Rs. 25,760
(c) Nil (d) Rs. 2,000 Ans.(a)
(41) Rs. 30,000, 11% securities (unlisted) of a textile company. What shall be the amount of interest
income earned from securities to be taxable under the head of Income from Other Sources?
(a) Rs. 30,000 (b) Rs. 3,300
(c) Rs. 26,700 (d) Not taxable Ans.(b)
(42) An assessee received an income of Rs. 9,000 (net) as interest on securities of a listed paper
manufacturing company(TDS Rate 10%). What shall be the amount of interest income earned from
securities to be taxable under head Income from Other Sources?
(a) Rs.9,000 (b) Rs. 10,000
(c) Rs. 8,100 (d) Not taxable Ans.(b)
(43) Reema received rent of Rs. 60,000 from letting a residential building (in Mumbai) along with
plant and machinery (letting out building is inseparable from letting of plant and machinery). She
expended Rs. 6,000 for repairs and insurance of the buildings and plant and machinery. The WDV
of building was Rs. 2,00,000 as on 1-4-2019 and the plant and machinery was purchased on 9th
May 2019 for Rs. 20,000. Amount taxable is :
(a) Rs. 54,000 (b) Rs.31,000
(c) Rs. 60,000 (d) Rs. 44,000 Ans.(b)
Ch 8 – IOS 8.7
(44) The dividend received by an individual from an company in excess of ____ is chargeable to tax
@ ____
(a) 10,00,000,10% (b) Rs. 5,00,000, 20%
(c) Rs. 1,00,000,10% (d) None of the above Ans.(a)
(45) If interest on securities is received after deduction of tax at source then the amount to be
included in the total income is :
(a) Gross interest (b) Net interest
(c) No amount to be included (d) None of these Ans.(a)
(46) Sum received under a Keyman insurance policy including bonus shall be taxable under the
head:
TAXABILITY OF GIFTS
(47) Rakesh acquired a motor car for Rs. 3,00,000 from his friend (non-relative) when the fair
market value of the motor car was Rs. 5,00,000. The amount liable to tax in the hands of Rakesh
from the transaction is : (June, 2017)
(a) Rs. 3,00,000 (b) Rs. 2,00,000
(c) Rs. 1,50,000 (d) Nil Ans.(d)
Note : Since motor car is not covered in the meaning of movable property.
(48) A lady received gifts worth Rs. 1,00,000 from her relatives as defined under the Income-tax
Act, 1961 and Rs. 60,000 from her office colleagures on her marriage anniversary. The taxable
amount of gifts would be - (Dec. 2016)
(a) Rs. 1,60,000 (b) Rs. 60,000
(c) Rs. 10,000 (d) Rs.1,10,000 Ans.(b)
(49) A cash gifts or immovable or movable property is taxable u/s 56(2)(x), if it is being received
by:-
(a) Individual or HUF (b) Partnership firm
(c) AOP or BOI (d) All of the above Ans.(d)
(50) Mr. A received drawings worth Rs. 1,00,000 as gift from his friend, on 20th April, 2019. The
taxable amount in the hands of the firm is :-
(a) Rs. 1,00,000 (b) Rs. 60,000
(c) Rs. 50,000 (d) No Tax liability arise Ans.(a)
(51) A firm received drawings worth Rs. 1,00,000 as gift from X, an Individual, on 20th April, 2019.
The taxable amount in the hands of the firm is :-
(a) Rs. 1,00,000 (b) Rs. 60,000
(c) Rs.50,000 (d) No Tax liability arise Ans.(a)
(52) Akshay received a gift of Rs. 35,000 each on 22th May, 2019 from his three friends. The amount
chargeable to tax in this case would be - (Dec. 2014)
(a) Rs. 50,000 (b) Rs. 1,05,000
(c) Nil (d) Rs.55,000 Ans.(b)
(53) Cash gifts exceeding _____________ shall be chargeable under the head income from other sources
Ch 8 – IOS 8.8
(a) Rs. 5,000 (b) Rs. 20,000

(c) Rs. 50,000 (d) Rs. 25,000 Ans.(c)
(54) Gifts from employer exceeding _____________ shall be chargeable under the head income from
Salary :
(a) Rs. 5,000 (b) Rs. 20,000
(c) Rs. 50,000 (d) Rs. 25,000 Ans., (a)
(55) The taxability of gift shall not apply if this gift is received from:
(a) Relative (b) Local authority
(c) By way of inheritance (d) All of these Ans..(d)
(56) Mrs. X received the following gifts during the year. Which gifts shall be included in computing
the income from other sources?
(a) Gift of Rs. 2,000 from her employer.
(b) Gift of Rs. 21,000 on 15th December from her mother's friend.
(c) Gift of Rs. 1,21,000 from her husband's brother.
(d) Gift of Rs. 60,000 on 25th November from her father's brother.
Ans.(b)
(57) Mrs. X received the following gifts during the year. Which gifts shall not be included in
computing the income from other sources?
(a) Scholarship of Rs. 1,20,000 from a charitable institution registered under section 12AA.
(b) Gifts of Rs. 51,000 each received from her four friends on the occasion of her marriage on 21st
October.
(c) Gift of Rs. 1,41,000 from her husband's brother.
(58) Which of the following income will be taxable as income from other sources -(June, 2015)
(a) Purchase of house from husband for inadequate consideration
(b) Purchase of painting from registered dealer at invoice value less than fair market value
(c) Cash gift from a non-resident friend on marriage anniversary
(d) All of the above. Ans.(b&c)
Note – Since the questions is asked in such a mannet therefore you can tick any of the
option.
(59) Richa received gift of jewellery, fair market value of which is Rs. 3,00,000 on 17th October from
her fiancee. What will be the taxable amount ?
(a) Nil (b) Rs. 3,00,000
(c) Rs. 2,50,000 (d) Rs. 50,000 Ans.(b)
(60) Mohan received a watch worth Rs. 60,000 from his cousin grandfather (brother of his
grandfather). What will be the taxable amount ?
(a) Nil (b) Rs. 60,000
(c) Rs. 10,000 (d) Rs. 50,000 Ans, (a)
(61) If A receives Rs. 31,000 from B and Rs. 20,000 from C, then, what will be the taxable amount ?
(a) Nil (b) Rs. 1,000
(c) Rs. 51,000 (d) Rs. 50,000 Ans.(c)
Ch 8 – IOS 8.9
(62) Sohan received a share of Rs. 60,000 from his cousin grandfather (brother of his grandfather).
What will be the taxable amount ?
(a) Nil (b) Rs. 60,000
(c) Rs. 10,000 (d) Rs. 50,000 Ans.(b)
(63) Nisha received a gift from his sister in Netherlands of Rs. 2,50,000. What will be the taxable
amount ?
(a) Exempt (b) Rs. 2,50,000
(c) Rs. 2,00,000 (d) Rs. 50,000 Ans.(a)
(64) Rakesh received Rs. 70,000 from his friend on the occasion of his birthday.
(a) The entire amount of Rs. 70,000 is taxable (b) Rs. 20,000 is taxable
(c) The entire amount is exempt (d) None of the above. Ans.(a)
(65) Hemali received a cash gift of Rs. 80,000 from her friend on her 25th wedding anniversary.
Amount taxable is :
(c) Rs. 30,000 (d) Rs. 50,000 Ans.(b)
(66) Gift of Rs. 5,00,000 received on 10th July, 2019 through account payee cheque from a non-
relative regularly assessed to income-tax, is -
(a) A capital receipt not chargeable to tax
(b) Chargeable to tax as income from other sources
(c) Chargeable to tax as business income
(d) Exempt upto Rs. 50,000 and balance chargeable to tax as income from other sources.
Ans.(b)
(67) Mr. A received cash gift worth Rs. 55,000 from his grandfather's brother Mahesh, on the
occasion of the marriage of his son. What will be the taxable amount -
(a) Rs. 55,000 (b) Nil
(c) Rs. 50,000 (d) Rs. 5,000 Ans.(a)
68) Mr. J received a Watch worth Rs. 55,000 from his employer on the occasion of his birthday.
What will be the tax consequences?
(a) Rs. 55,000 taxable in the hand of J, as income from Salaries
(b) Rs. 55,000 taxable in the hands of J, as Fringe salaries benefit.
(c) Rs. 55,000 taxable, as income from other sources
(d) None of these Ans.(a)
(69) On 5th February, 2020 Rajat gets a gift of motor car from a relative Madan. Fair market value
of the car is Rs. 3,60,000. The amount taxable in the hands of Rajat under section 56(2)(x) is - (Dec.
2012)
(a) Rs. 3,60,000 (b) 13,10,000
(c) Nil (d) Rs. 50,000 Ans.(c)
(70) On 30th December, 2019, Raju gets by gift a commercial flat from the elder brother of his
father-in-law (stamp duty value is Rs. 25,00,000). The amount chargeable to tax in the hands of Raju
is - (June, 2012)
(a) Rs. 25,00,000 (b) Rs. 24,50,000
Ch 8 – IOS 8.10
(c) Rs. 20,00,000 (d) Nil. Ans.(a)

(71) On 30th December, 2019, Raju gets by gift a commercial flat from the elder brother of his father
(stamp duty value is Rs. 25,00,000). The amount chargeable to tax in the hands of Raju is -
(a) Rs. 25,00,000 (b) Rs. 24,50,000
(c) Rs. 20,00,000 (d) Nil. Ans.(d)
(72) Rohan received gift of immovable property from his friend the stamp duty value is Rs. 6,00,000.
What will be the taxable amount ?
(a) Nil (b) Rs. 6,00,000
(c) Rs. 50,000 (d) Rs. 5,50,000 Ans.(b)
(73) Ramesh purchased an immovable property for a consideration of Rs. 1,00,000. The stamp duty
value is Rs. 4,00,000. What will be the taxable amount under "Income from other Source" ?
(a) Nil (b) Rs. 2,50,000
(c) Rs. 3,00,000 (d) Rs. 4,00,000 Ans.(c)
(74) Rajesh gifted an immovable property for a consideration of Rs. 70,00,000. The stamp duty
value as on the date of agreement is Rs. 81,00,000 whereas stamp duty value on the date of
registration was Rs. 82,50,000. Part of the amount of consideration of Rs. 34,00,000 has been
received by cheque on the date of agreement for transfer of the asset. What will be the taxable
amount ?
(a) Rs. 34,00,000 (b) Rs. 36,00,000
(c) Rs. 11,00,000 (d) Rs. 10,50,000 Ans.(c)
(75) Rajni received a movable property without consideration amounting to Rs. 3,00,000 on the
occasion of her marriage. The aggregate fair market value of the property was of Rs. 4,50,000. What
wilt be the taxable amount ?
(a) Nil (b) Rs.3 ,00,000
(c) Rs. 4,50,000 (d) Rs. 4,00,000
Ans.(a)
(76) Rakhi received a movable property without consideration amounting to Rs. 3,00,000. The
aggregate fair market value of the property was of Rs. 4,50,000. What will be the taxable amount ?
(a) NU (b) Rs. 3,00,000
(c) Rs. 4,50,000 (d) Rs. 4,00,000
Ans.(c)
(77) Raima received a movable property for a consideration amounting to Rs. 3,00,000. The
aggregate fair market value of the property was of Rs. 4,50,000. What will be the taxable amount ?
(a) Nil (b) Rs. 1,50,000
(c) Rs. 1,00,000 (d) Rs. 4,50,000 Ans.(b)
(78) Manju purchased bullion for Rs. 4,00,000 whose fair market value is Rs. 4,85,000. What will be
the taxable amount ?
(a) 85,000 (b) Rs. 4,85,000
Ch 8 – IOS 8.11
(c) Rs.35,000 (d) Nil Ans (a)

(79) Manju purchased bullion for Rs. 4,40,000 whose fair market value is Rs. 4,85,000. What will be
the taxable amount ?
(a) Nil
(b) Rs. 4,85,000
(c) Rs.4,40,000
(d)Rs. 45,000 Ans (a)
(80) M & Co. purchased bullion for Rs. 4,00,000 whose fair market value is Rs. 4,85,000. What will
be the taxable amount ?
(a) 85,000 (b) Rs. 4,85,000

(c) Rs. 4,00,000 (d) Nil Ans.(a)
(81) Mr. Ram received cash gift of Rs. 51,000 from his friends on the occasion of his 50th birthday.
None of the friends are relative. The amount liable to tax in the hands of Mr. Ram. would be : (June,
2017)
(a) Nil
(b) Rs. 1,000
(c) Rs. 51,000
(d) Rs. 46,000
Ans.(c)
(82) No taxability in regard to gift received shall arise if such gift is received -
(a) Under will or by inheritance.
(b) In contemplation of death of payer or donor.
(c) From Trust or institution registered u/s 12AA.

(83) Nikita, a member of her father's HUF, transferred a house property to the HUF without
consideration. The stamp duty value of the house property is Rs. 19,00,000. Discuss the taxability
or otherwise of the issue in the hands of the recipient as per section 56(2) (x) of the Income-tax Act,
1961 -
(a) Non-taxable (b) Taxable
(c) Exempt (d) None of the above. Ans.(a)
(84) X & Co. received a gift of 700 shares of RZX Pvt. Ltd. for nil consideration. The aggregate fair
market value of shares is Rs. 2,30,000. What will be the taxable amount under the head Income from
Other Sources ?
(a) Nil (b) Rs. 50,000
(c) Rs. 2,30,000 (d) Rs. 70,000 Ans.(c)
Ch 8 – IOS 8.12
(85) Where a firm or closely held company received from any person any property being shares of
closely held company without consideration: (June, 2017)
(a) The whole of the fair market'value of the shares shall be taxable
(b) The whole of the FMV shall be taxable if it exceeds Rs. 50,000
(c) The whole of FMV shall be exempt
(d) The whole of the cost of such shares shall be exempt
Ans.(b)
(86) X & Co. received a gift of 900 shares of RST Pvt. Ltd--at a consideration of Rs. 1,60,000. The
aggregate .fair market value of shares is Rs. 2,30,000. What will be the taxable amount under the
head Income from Other Sources u/s 56(2)(x)?
(a) nil (b) Rs. 50,000
(c) Rs. 70,000 (d) Rs. 1,60,000 Ans.(c)
(87) Agra (P) Ltd. issued equity shares of Rs. 10 each at Rs. 40 per share. The fair market value of
the share on the date of issue was ascertained as Rs. 25 per share. The company issued 1,00,000
equity shares. The amount liable to tax in the hands of the company would be : '(June, 2017)
(a) Rs. 15,00,000 (b) Rs. 30,00,000 Rs.
(c) Nil (d) Rs. 40,00,000 Ans. (a)
(88) VSC Pvt. Ltd. issued 1,00,000 shares. The face value of shares is Rs. 200, Fair Market value Rs.
190 and issue price Rs. 210. Calculate the amount to be considered as income in hands of VSC Pvt.
Ltd. as per section 56(2)(viib).
(a) Nil (b) Rs. 20,00,000
(c) Rs. 10,00,000 (d) Rs. 5,00,000 000 Ans.(b)
(89) If in the above case, face value of shares is Rs. 200, Fair Market value Rs. 190 and issue price
Rs. 198. Calculate the amount to be considered as income in hands of VSC Pvt. Ltd. as per section
56(2)(viib).
(a) Nil (b) Rs. 20,00,000

(c) Rs. 10,00,000 (d) Rs. 5,00,000 Ans., (a)
(90) Use Pvt. Ltd. issued 1,00,000 shares. The face value of shares is Rs. 200, Fair Market value Rs.
220 and issue price Rs. 230. Calculate the amount to be considered as income in hands of USC Pvt.
Ltd. as per section 56(2)(viib).
(a) Nil (b) Rs. 20,00,000
(c) Rs. 10,00,000 (d) Rs. 5,00,000 Ans.(c)
(91) XYZ Pvt. Ltd. issued shares. Mr. K, resident of India, purchased the shares at a consideration of
Rs. 5,00,000. The fair market value of such shares was of Rs. 4,50,000. What will be the taxable
amount under the head Income from Other Sources ?
(a) Nil (b) Rs. 50,000
(c) Rs. 4,50,000 (d) Rs. 5,00,000
Ans.(a)
Ch 8 – IOS 8.13
(92) Sameer received the following income during financial year 2019-20 : Director's fees Rs. 5,000,
income from agricultural land in Pakistan Rs. 15,000, rent from let-out of land in Jaipur Rs. 20,000,
interest on deposit with HDFC Bank Rs. 1,000 and dividend from Indian company Rs. 5,000. His
income from other sources is - (Dec. 2014)
(a) Rs. 41,000 (b) Rs. 46,000
(c) Rs. 31,000 (d) Rs. 26,000 Ans.(a)
(93) Rishab received the following gifts during the previous year :
(i) Rs. 50,000 from his employer
(ii) Rs. 1,00,000 from mother's sister
(iii) Rs. 10,000 from his friend on the occasion of his marriage
(iv) Rs. 60,000 in the form of scholarship from a registered charitable trust.
The amount of taxable gift under the head 'income from other sources' is - (June 2016)
(a) Nil (b) Rs. 50,000
(c) Rs. 1,50,000 (d) Rs. 2,10,000 Ans.(a)
(94) Comfort (Pvt.) Ltd. issued 10,000 equity shares to Pawan at Rs. 18 per share when the fair
market value of each share was determined at Rs.11 per share. The tax implication of the
transaction is - (June 2016)
(a) Rs. 70,000 taxable as income for Comfort (Pvt.) (b) Rs. 20,000 taxable as income for Pawan
(c) Rs. 10,000 taxable as income for Pawan (d) Nil Ans.(a)
DEDUCTIONS IN COMPUTING INCOME FROM OTHER SOURCES
(95) Interest on compensation/enhanced compensation shall -

(a) be taxable in the year of receipt. (b) be taxable in the year of accrual.
(c) be taxable receipt/accrual, whichever is earlier, (d) not be taxable. Ans.(a)
(96) Sarath has received a sum of Rs. 3,40,000 as interest on enhanced compensation for
compulsory acquisition of land by State Government in May, 2019, of this, only Rs.12,000 pertains
to the current year and the rest pertains to earlier years. The amount chargeable to tax for the
assessment year 2020-21 would be - (June, 2015)
(a) Rs. 12,000 (b) Rs. 6,000
(c) Rs. 3,40,000 (d) Rs. 1,70,000 Ans.(d)
(97) Ad hoc deduction available in respect of income of interest on compensation/enhanced
compensation shall be:
(a) 50% (b) 30%
(c) Nil (d) 100% Ans.(a)
(98) Assessee received interest on enhanced compensation of Rs. 50,000 as per court decree in
December 2019 by Mr. Yogesh. Out of the said amount a sum of Rs. 35,000 relates to preceding
financial years. The taxable income is:
(a) Rs. 25,000 (b) Rs. 15,000
(c) Rs. 17,500 (d) Rs. 35,000 Ans.(a)
Ch 8 – IOS 8.14
(99) Assessee received interest on enhanced compensation of Rs. 1,00,000 as per court decree in
March, 2020. He incurred legal expense of Rs. 5,000. The taxable income is:
(a) Rs. 95,000 (b) Rs. 50,000
(c) Rs. 1,00,000 (d) Rs. 47,500 Ans.(b)
(100) Incomes taxable under the head of Income from Other Sources are:
(a) Interest on bank deposits and loans.
(b) Interest on foreign Government securities.
(c) Agricultural income received from outside India.
Ans.(d)
(101) Which of the following income is not taxable under the head income from other sources ?
(a) Income from letting.
(b) Income from sub letting.
(c) Director's fees.
(d) Commission received by the director on giving bank guarantee for the company.
Ans.(a)
(102) Royalty received from a publisher by Nina was of Rs. 42,700. She spent Rs. 2,700 on books,
stationery, typing, etc. Calculate the amount of income chargeable to tax under head Income from
other sources?
(c) Rs. 40,000 (d) Rs. 2,700 Ans.(c)
(103) Mr. Ram was earning income from sub-letting of motor car to his friend. Such income shall be
taxable under which head of income?
(104) The amount deductible from family pension is upto - (Dec. 2014)
(a) Rs. 15,000 or 1/3rd of family pension whichever is less
(b) Rs. 15,000 or 1/4 of family pension whichever is less less
(c) Rs. 10,000 or 1/3rd of family pension whichever is less
(d) No deduction. Ans.(a)
(105) Ms. Mala received family pension of Rs. 15,000 per month during the previous year 2019-20.
Also, she was employed in a private firm where she got a monthly consolidated salary of Rs. 20,000
per month. Her total income chargeable to tax is : (June, 2017)
(a) Rs. 4,20,000 (b) Rs. 2,40,000
(c) Rs. 3,60,000 (d) Rs. 4,05,000 Ans.(d)
(106) Ms. Sitara is in receipt for family pension of Rs. 15,000 p.m. during 2019-20. Income
chargeable to tax for assessment year 2020-21 of Ms. Sitara is - (Dec. 2015)
(a) Rs. 1,80,000 (b) Rs. 1,20,000
(c) Rs. 1,65,000 (d) Nil. Ans.(c)
(107) J took a house on lease for 10 years and let it furthur to a tenant for his residence at a monthly
rent of Rs. 2,400. He incurred following expenses during year : Lease rent: Rs. 1000 p.m., Salary of
Ch 8 – IOS 8.15
Durban : Rs. 200 p.m. and Interest on loan taken to pay for acquisition of lease : Rs. 200 p.m.
Compute income chargeable under head Income from other sources?
(a) Rs. 12,000 (b) Rs. 28,800
(c) Rs. 16,800 (d) Nil Ans.(a)
(108) What is the taxability of dividend income under section 2(22)(a) to 2(22)(d) in hands of
shareholders?
(a) Dividend tax @ 12.5%
(b) Exempt u/s 10(34) upto Rs. 10,00,000.
(c) Dividend tax @ 12.5% + Surcharge + HEC
(109) What is the taxability of dividend income under section 2(22)(a) to 2(22)(d) in hands of
company?
(a) Dividend distribution tax @15%
(b) Exempt
(c) Dividend distribution tax @ 15% on the gross amount of dividends + 12% Surcharge + 4%
HEC i.e. 20.5552941% of the net amount of dividends
(d) None of these
Ans c
(110) Compute income taxable under head income from other sources:
Interest on Post office savings bank account Rs. 500
Rent from P&M 3,000
(a) Rs. 51,480 (b) Rs. 51,980
(c) 36,936 (d) Rs. 37,436 Ans.(a)
(111) What is the taxability of dividend income under section 2(22)(e) in the hands of company?
(a) Dividend tax @ 15%

(b) Taxable
(c) Dividend tax @ 12.5% + Surcharge +HEC
(d) Liable to pay dividend distribution tax @ 30% + 12% Surcharge + 4% HEC
Ans.(d)
(112) What is the taxability of dividend income under section 2(22) (e) in the hands of
shareholder?
(a) Exempt u/s 10(34) (b) Taxable
(c) Not Taxable (d) None of these
Ans.(a)
(113) What is the treatment of dividend income under section 12(22)(e) in the hands of
company?
(a) TDS to be deductible @ 10% by the company
Ch 8 – IOS 8.16
(b) Taxable at the @ 10% in hands of the company

(c) Taxable @ 20.35764% in hands of company
(d) Liable to pay dividend distribution tax @ 30% + 12% Surcharge + 4% HEC Ans.(d)
(114) Interim Dividend declared by a company is accrued in which of the following year ?
(a) Previous year in which it is declared.
(b) Previous year in which it is given.
(c) Financial year in which it is actually given.
(115) In which year dividend declared by a company or distributed or paid by it u/s 2(22) is
deemed to be the income?
(a) Previous year in which it is discussed.
(b) Previous year in which it is given.
(c) Previous year, in which it is so declared, distributed or paid, as the case may be.
(d) None of these. Ans.(c)
(116) Sunder died on 23rd July, 2017 while being in Central Government service. In terms of rules
governing his service, his widow Mrs. Sunder is paid a family pension of Rs. 10,000 per month and
dearness allowance of 40% thereof. Compute taxable income for the assessment year 2020-21.
(a) Rs. 1,68,000 (b) Rs. 1,20,000
(c) Rs. 1,53,000 (d) Rs. 1,05,000 Ans.(c)
(117) Amounts that are not deductible while computing Income from Other Sources:
(a) Personal expenses of the assessee; Wealth tax paid by assessee.
(b) All disallowances under section 40A.
(c) Interest/ Salaries payable outside India on which tax has not been paid or deducted.
Ans. (d)
(118) Which of the following amount is not deductible while computing income from other sources
?
(a) Any sum paid on account of income tax. (b) Any personal expenses of the assessee.
(c) 30% of the expenditure on which Tax has not (d) All of the above Ans.(d)
been deducted at source.
(119) An assessee earned income of interest on securities amounting to Rs. 65,000. He paid a
reasonable sum of Rs. 32,000 as commission to a banker for realising such interest on behalf of the
assessee. Such amount of expenditure shall be:
(a) Allowed (b) Disallowed
(c) Partly allowed and partly disallowed (d) Any of the above Ans.(a)
Ch 8 – IOS 8.17
(120) The deduction for family pension under section 57 can be determined as :
(a) One third of the family pension (b) Rs. 15,000
(c) Lower of (a) or (b) (d) Higher of (a) or (b) Ans.(c)
(121) Family pension received by a widow of a member of the armed forces where the death of the
member has occurred in the course of the operational duties in the circumstances and subject of
prescribed conditions, is -
(a) Exempt upto Rs. 3,00,000 (b) Exempt upto Rs. 3,50,000
(c) Totally exempt under section 10(19) (d) Totally chargeable to tax Ans.(c)
(122) Family pension received by Mr. Ram from the Government of Madhya Pradesh was of Rs.
15,000. Calculate the amount of income chargeable to tax under the head of income from other
sources ?
(a) Rs. 15,000 (b) Rs. 10,000
(c) Rs. 5,000 (d) Nil Ans.(b)
(123) Family pension received by Mr. Ram from the Government of Madhya Pradesh was of Rs.
15,000 p.m. Calculate the amount of deduction available, if any?
(a) Rs. 15,000 (b) 160,000
(c) Rs. 50,000 (d) Nil Ans.(a)
(124) Bahadur, a defence personnel, died in a war. His wife received the family pension of Rs. 7,500
per month during the year 2019-20. Calculate the amount of income chargeable to tax under the
head of income from other sources ?
(a) Rs. 90,000 (b) Rs. 75,000
(c) Rs. 15,000 (d) Nil Ans.(d)
(125) If in the above case bahadur did not die in a war then calculate the amount of income
chargeable to tax ?
(a) Rs. 90,000 (b) Rs. 75,000
(c) Rs. 15,000 (d) Nil Ans.(b)
Ch 9 – Clubbing 9.1
CHAPTER 9 – Clubbing of Income

CLUBBING IN CASE OF TRANSFER OF INCOME
TRANSFER OF ASSETS - SECTION 60 TO 63
(1) Transfer of income without transfer of asset would be taxable in the hands of:
(a) Transferor only (b) Transferee only
(c) Either transferor or transferee (d) Both transferor and transferee Ans.{a)
(2) A transfer which contains any provision for the re-transfer, directly or indirectly, of the whole
or any part of the income or asset to the transferor, regarded as:
(a) Transfer of income without transfer of asset (b) Indirect transfer
(c) Revocable transfer (d) Irrevocable transfer Ans.(c)
(3) X transfers his house property to a trust for benefit of Y till his death. In this case, till death of Y,
the income from house property shall be taxable in the hands of ________ and afterwards in the hands
of ________
(a) X, Y (b) X, legal heirs of Y
(c) Y, legal heirs of Y (d) Y, X Ans.(d)
(4) Mr. 'X' transfers his house property to Mr. Y with a condition that 25% of the income therefrom
should be handed over to him Mr. Y earns Rs. 1,00,000 from such house property. In this case -
(a) Total amount Rs. 1,00,000 shall be assessed in the hands of X.
(b) Only Rs. 25,000 will be assessed in the hands of X.
(c) Rs. 25,000 will be assessed in the hands of X and Rs. 75,000 will be assessed in the hands of Y.
(d) Total amount Rs. 1,00,000 shall be assessed in the hands of Y. Ans.(c)
(Hint – Full maount is not clubbed as the asset is transferred in this case. If asset would have not
been transferred then Rs. 1 Lac would have been clubbed in the hands of X)
CLUBBING IN RESPECT OF INCOME OF SPOUSE, SONS WIFE, MINOR CHILD - SECTION 64
(5) Mr. A, a fashion designer having lucrative business, pays salary to his wife, who is a model.
Remuneration received by Mrs. A shall be included in the total income of :
(a) Mrs. A (b) Mr. A
(c) Mrs. A or Mr. A (whose total income is higher (d) Mr. A and Mrs. A proportionately.
before this clubbing)
......Ans.(a)
(6) The shares of Jetha Ltd. are held by, Mr. Jetha 8%, Mrs. Jetha 10% and Mrs. Jetha's Father-in-law
6%. Who amongst the following have substantial interest in Jetha Ltd.?
(a) Mr. Jetha (b) Mrs. Jetha
(c) Mr. Jetha and Mrs. Jetha, both (d) Neither Mr. Jetha, nor Mrs. Jetha
Ans.(a)
(Hint - Relative - Husband, wife, brother or sister or any lineal ascendant or descendant of
that individual. Mr. Jetha along with his father and wife is holding minimum 20% so he has
the substantial interest. Mrs. Jetha does not have the substantial interest as her Father in law
is not her relative)
(7) If Mr. A and Mrs. A both have substantial interest in a concern and both are in receipt of
remuneration from that concern, then what will be the tax consequences?
(a) Remuneration shall be clubbed in the total income of Mrs! A.
(b) Remuneration shall be clubbed in the total income of Mr. A.
(c) Remuneration shall be clubbed in the total income of that individual whose total income (before
this clubbing) is higher.
(d) Clubbing shall not apply,
Ans.(c)
(8) Mr. A a transferred a capital asset to Mrs. A in natural love and affection. She transferred the
capital asset to her friend and she earned a capital gains of Rs. 2,50,000, The capital gains income
shall be regarded :
(c) Mrs. A or Mr. A (whose total income is higher (d) Mr. A and Mrs. A proportionately.
before this clubbing) Ans.(b)
(9) Shyam transferred 2,000 shares of X Ltd. to Ms. Babita without any consideration. Later, Shyam
and Ms. Babita got married to each other. The dividend income from the shares transferred would
be - (June, 2015)
(a) Taxable in the hands of Shyam both before and after marriage
(b) Taxable in the hands of Shyam before marriage but not after marriage
(c) Taxable in the hands of Shyam after marriage but not before marriage
(d) Never taxable in the hands of Shyam.
Ans.(d)
(10) Rohit (a Chartered Accountant) is working as Accounts Officer in Raj (P) Ltd. on a salary of Rs.
20,000 p.m. He got married to Ms. Pooja who holds 25% shares of this company. What will be the
impact of salary paid to Rohit by the company in the hands of Ms. Pooja - (Dec. 2015)
(a) 100% salary to be clubbed (b) 50% salary to be clubbed
(c) No amount be clubbed (d) 25% salary be clubbed. Ans.(c)
(11) An individual is said to have substantial interest in a concern if he or she, along with his or her
relatives, is, at any time during the previous year-
(a) Beneficial owner of equity shares carrying 20%
(b) Entitled to 20%, or more of the profits of such or more of the voting power. concern.
(c) Either (a) or (b)
(d) Both (a) and (b) Ans.(c)
(12) In the above case meaning of relative of an individual does not include the following -
(a) Grandfather's brother (b) Spouse
(c) Brother and sister (d) Daughter of the individual Ans.(a)
(13) Income from assets transferred to spouse for inadequate consideration, clubbed in the total
income of -
(a) Transferor (b) Clubbing shall not apply
(c) Transferee (d) None of these Ans.(a)
.
(14) Income from assets transferred to son's wife for inadequate consideration, shall be included
in the total income of -
(a) Transferor (b) Son's wife
(c) Both (a) and (b)
(d) Individual whose total income (before this clubbing) is higher.
Ans.(a)
(15) In the above case, relationship between transferor and transferee should subsist at the time of
(a) Transfer of the asset (b) Accrual of the income
(c) Either (a) or (b) (d) Both (a) and (b) Ans.(d)
(16) Mr. A transfers his house property to his fiancee, in this case the income from house property
shall be taxable in the hands of -
(a) Mr. A (b) Mr. A's fiancee
(c) Such individual whose total income (before this (d) None of the above.
clubbing) is higher. Ans.(b)
(17) Exemption of ________ will be available u/s 10(32) to the parent in respect of minor's income
clubbed with the parent.
(a) Rs. 1,500 (b) Rs. 5,000
(c) Rs. 15,000 (d) Rs. 1,00,000 Ans.(a)
(18) In case of clubbing of income of two minor children exemption of ________ will be available.
(a) Rs. 1,500 (b) Rs. 3,000
(c) Rs. 1,000 (d) None of these Ans.(b)
(19) income of minor child has to be included in the income of the assessee for determining rate of
_____ income tax applicable to income of the assessee.
(a) Agricultural (b) Gross total
(c) Business (d) None of these. Ans.(a)
(20) Income of a minor child shall be included in the income of -
(a) That parent whose total income (before this is clubbing greater)
(b) Minor child
(c) That parent whose total income (before this clubbing) is greater.
(d) That parent whose total income (after this clubbing) is lower. Ans.(a)
(21) Income of a minor child on account of ________ shall be taxable in his hands.
(a) Any manual work done by him.
(b) Any activity involving application of his skill, qtalent or specialized knowledge and experience.
(c) Either (a) or (b) (d) None of these Ans.(c)
(22) Minor child includes -

(a) Step child (b) Adopted child

(c) Both (a) & (b) (d) None of these. Ans.(c)
(23) Mr. Mahesh's, minor son Suresh, earning interest Rs. 40,000 on fixed deposit with ABC Ltd.,
which was gifted to him by his grandfather. Mahesh's income is higher than that of Mrs. Mahesh.
What will be the tax consequences?
(a) Rs. 40,000 shall be taxable in the hands of Suresh.
(b) Rs. 40,000 shall be clubbed in the total income of Mrs. Mahesh.
(c) Rs. 40,000 shall be clubbed in the total income of Mr. Mahesh.
(d) Rs. 40,000 shall be taxable in the hands of ABC Ltd. Ans.(c)
(24) In the above case, if Suresh is blind then, -
(a) Rs. 40,000 shall be taxable in the hands of Suresh.
(b) Rs. 40,000 shall be exempted.
(c) Rs. 40,000 shall be taxable in the hands of Mr. Mahesh.
(d) Rs. 40,000 shall be taxable in the hands of Mrs. Mahesh
Ans.(a)
(25) Mr. A transfers Rs. 25,000 to Mrs. A. She purchases investments Rs. 20,000 in X Ltd. out of such
cash transferred to her by Mr. A. She earns interest Rs. 5,000 from such investment. Hence this is
a/an -
(a) Cross transfer (b) Indirect transfer
(c) Revocable transfer (d) Irrevocable transfer Ans.(b)
(26) In the above case interest income Rs. 5,000 shall be included in the total income of -
(c) Mrs. A or Mr. A (whose total income is higher (d) Mr. A and Mrs. A
before this clubbing)
Ans. (b)
(27) In the above case, if Mrs. X deposit Rs. 5,000 in a bank, and earn Rs. 100 as interest thereon, it
shall be included in the total income of -
(c) Mrs. A or Mr. A (whose total income is higher (d) Mr. A and Mrs. A equally before this
clubbing) Ans (a)
(28) Mr. Y gifts 12.75% debentures worth Rs. 10 lakhs to Mrs. X (wife of Mr. X, his brother) and Mr.
X gifted a flat worth same amount to Mrs. Y. The flat yields a rental income of Rs. 1,30,000 p.a.
Interest income will be included in the total income of ________ and rental income will be included
in the total income of ________ .
(a) Mr. Y and Mrs. X respectively. (b) Mrs. Y and Mr. X respectively.
(c) Mr. X and Mr. Y respectively. (d) Mrs. Y and Mrs. X respectively. Ans.(c)
(29) Raja gifts Rs. 2 lakhs to his wife on 1-4-2019 which she invests in a firm on interest @ 18% p.a.
On 1-1-2020, Mrs. Raja withdraws the money and gifts it to their son's wife. In this case interest of
the period 1-4-2019 to 31-12-2019 and 1-1-2020 to 31-3-2020 shall be clubbed in the total income
of ________ .
(a) Mr. and Mrs. Raja respectively. (b) Mr. Raja
(c) Mrs. Raja and their son's wife respectively. (d) Mrs. Raja Ans.(b)
(30) In whose total income, the income of a minor child is included — (June, 2010)
(a) Father (b) Mother
(c) Father and mother both (d) Parent whose total income is greater.
Ans.(d)
(31) When the income of an individual includes Rs. 20,000 as the income of his minor child in terms
of section 64(1A), taxable income in this respect will be - (Dec. 2011)
(a) Nil (b) Rs. 20,000
(c) Rs. 18,500 (d) None of the above. Ans.(c)
(32)Income arising to a minor married daughter is -
(a)To be assessed in the hands of the minor married daughter
(b) To be clubbed with the income of that parent whose total income, before including minor's
income, is higher
(c)Completely exempt from tax
(d) To be clubbed with the income of her husband. Ans.(b)
(33) The following income that accrue to a minor child will not be included in the total income
of his parent -
(a)Income earned from fixed deposits transferred by his grand father.
(b) Income earned from house property transferred by his father
(c)Income earned from agricultural land transferred by his mother
(b) Income from from participation in dance competition
Ans.(d)
(34) Mr. Ghose has four minor children consisting 2 daughters and 2 sons. The annual income of 2
daughters was Rs. 7,500 and Rs. 5,000 and of sons was Rs. 5,500 and Rs. 1,250 respectively. The
daughter who was having income of Rs. 5,000 was suffering from a disability specified under
section 80U. Work out the amount of income earned by minor children to be clubbed in the hands
of Mr. Ghose.
(a) Rs. 19,250 (b) Rs. 14,250
(c) Rs. 9,750 (d) Rs. 10,000 Ans.(d)
(Hint - 5,000 rs will not be clubbed and 1250 rs will be fully exempt as the exemption allowed per
child is 1,500 rs.)
(35) A proprietary business was started by Smt. Rani in the year 2016. As on 1-4-2018 her capital
in business was Rs. 3,00,000. Her husband gifted Rs. 2,00,000 on 10-4-2018, which amount Smt.
Rani invested in her business on the same date. Smt. Rani earned profits from her proprietory
business for the Financial year 2018-2019, Rs. 1,50,000 which remained invested in the business.
The profit earned by Mrs. Rani in financial year 2019-2020 Rs. 3,90,000. Compute the income, to be
clubbed in the hands of Rani's husband for the Assessment year 2020-21.
(a) Rs. 2,70,000 (b) Rs. 1,20,000
(c) Nil (d) Rs. 3,90,000 Ans.(b)
(36) Income from asset transferred to spouse will be taxable in the hands of transferor if:
(a) asset has been transferred in pursuance of an consideration;

(b) asset was transferred for an adequate agreement to live apart;
(c) asset was transferred before marriage;
(d) asset was transferred for inadequate consideration
Ans.(d)
(37) Incomes of two minor children are included in the income of their father. Father is entitled to
exemption under section 10(32) upto - (Dec. 2014)
(a) Rs. 1,500 (b) Rs. 1,000
(c) Rs. 3,000 (d) Rs. 2,000. Ans.(c)
CONVERSION OF SELF-ACQUIRED PROPERTY INTO JOINT FAMILY PROPERTY

(38) If the self acquired property of an individual (being a member of HUF) is ________ then the
income derived by the joint family on account of such property shall be included in the total income
of the individual who was the owner of such property.
(a) Converted into joint family property.
(b) Transferred by him directly or indirectly, to HUF otherwise than for adequate consideration.
(c) Transferred by him, directly or indirectly to HUF for adequate consideration.
(d) Either (a) or (b)
Ans.(d)
(39) Where the converted property has been the subject-matter of a partition amongst the
members of the family, the income derived from such converted property as is received by ________
on partition shall be deemed to arise to the individual from assets transferred indirectly by the
individual to the ________ and shall be clubbed in the hands of such individual.
(a) Major child, Major child (b) Brother, brother
(c) Spouse, spouse (d) Sister, sister Ans.(c)
(40) For the purposes of clubbing of income of the specified person in the income of the individual
under section 64, the word income' includes ________ .
(a) Salaries (b) Loss
(c) Capital gains (d) Income from other sources Ans.(b)
(41) Mr. A gifts cash of Rs. 1,00,000 to his brother's wife Mrs. B. Mr. B gifts cash of Rs. 1,00,000 to
Mrs. A. From the cash gifted to her, Mrs. B invests in a fixed deposit, income therefrom is Rs.
10,000. Aforesaid Rs. 10,000 will be included in the total income of ________ .
(a) Mr. A . (b) Mr. B

(c) Mrs. A (d) Mrs B Ans.(b)
Ch 10 – Set off & C/f of losses 10.1
CHAPTER 10 – Set off & C/f of Losses

INCOME FROM UNDISCLOSED SOURCES & ITS TAXABILITY
(1) The following shall be regarded as income from undisclosed sources :
(a) Cash credits (b) Unexplained investments
(c) Unexplained money (d) All of these Ans.(d)
(2) Unexplained cash credits is chargeable to tax —
(a) @ 30% (b) @ 15%
(c) @25% (d) @78% Ans.(d)
(Hint – 60% Tax + 25% Surcharge + 4% HEC)
(3) Mr. X is found to be the owner of unexplained investments of Rs. 6,00,000. His tax liability will
be -
(a) Rs. 4,68,000 (b) Rs. 1,85,400
(c) Rs. 1,15,875 (d) Rs. 1,64,800 Ans.(a)
PROVISIONS FOR SET-OFF OR CARRY FORWARD AND SET-OFF - SECTION 70 TO 74A
(4) If a person is eligible to claim :
(1) unabsorbed depreciation
(2) current scientific research expenditure
(3) current depreciation
(4) brought forward business loss
The order of priority to set-off would be - (Dec. 2015)
(a) (4), (3), (2) & (1) (b) (2), (3), (4) & (1)
(c) (3), (4), (1) & (2) (d) (1), (2), (3) & (4) Ans.(b)
(5)Choose the correct answer from the following -
(a) Loss from business of owing and maintaining race horses can be set off against any income.
(b) Loss from lottery, card games etc. can be set off against any income.
(c) Speculation business loss can be set off only against speculation business income.
(d) Long-term capital loss can be set off against long-term or short-term capital loss.
Ans.(c)
(6)Long term capital loss can be set-off from which of the following :
(a) Short term capital gain only (b) Long term capital gain only
(c) Income from business or profession (d) Income from salary
Ans.(b)
(7)Loss from house property can be carried forward and set off in the subsequent 8 Assessment
years:
(a) Only if return of loss is filed within due date
(b) Even if return of loss is filed after due date
(c) It does not matter when return is filed
(d) Carry forward of loss from house property is not allowed at all. Ans.(b)
(8)Loss under the head "Profits and Gains of business or profession" cannot be set off against -
(a) Income under the head salaries.

(b) Income under the head capital gains.
(c) Income under the head house property.
Ans.(a)
(9)Loss arising under the head capital gain cannot be set-off against -
(a) Income Under the head salaries. (b) Income under the head
"Profits and gains of business or profession".
(c) Income under the head house property. (d) All of the above.
Ans.(d)
(10)Loss arising from specified business can be set-off from _
(a) General business profits
(b) Speculation business profits
(c) Both general business profits and speculation business profits
(d) Profits of specified business
Ans.(d)
(11)Loss from specified business can be carried forward for -
(c) Indefinite period (d) None of the above
Ans.(c)
(12) Mr. Shahu has loss from house property of Rs. 1,10,000 (computed) for the assessment year
2020-21. He can carry forward such loss for subsequent ________ assessment years. (June, 2017)
(a) 4 (b) Nil
(c) 8 (d) Indefinite Ans.(c)
(13) Loss from house property and losses in speculation business can be carried forward
respectively for -
(a) 8 Years and 4 Years (b) 4 Years and 8 Years
(c) 8 Years and 8 Years (d) 4 Years and 4 Years Ans.(a)
(14) Loss under the head 'Profits & Gains of Business or Profession (except speculation business
loss) and loss under the head capital gains can be carried forward respectively for -
(a) 8 Years and 4 Years (b) 8 Years and 8 Years
(c) 4 Years and 8 Years (d) 4 Years and 4 Years Ans.(b)
(15)The sequence applicable for set off of losses shall be -
(a) (i) Inter source set-off; (within head)(ii) Inter head set-off; (oyher head) and (iii) Set-off of
brought forward losses.
(b) (i) Inter head set-off; (ii) Inter source set-off; and (iii) Set-off of brought forward losses.
(c) (i) Set-off of brought forward losses; (ii) Inter source set-off; and (iii) Inter head set-off.
(d) (i) Set-off of brought forward losses; (ii) Inter head set-off; and (iii) Inter source set-off.
Ans.(a)
(16) A company engaged in business of purchase and sale of shares of other companies shall not
be deemed to be speculation business if -
(a) The principal business of the company is business of trading in shares or banking or granting
of loans & advances.
(b) The gross total income of the company consists mainly of income under heads "Income from
house property", "Capital Gains" and "Income from other sources"
(c) Both (a) and (b)
(d) Either (a) or (b)
Ans.(d)
(17) Loss from speculation business can be set-off against - (Dec. 2016)
(a) Income from salaries (b) Income from house property
(c) Income from speculation business only (d) Any head of income Ans.(c)
(18) Loss from speculation business is eligible for carry forward of loss for a period of - (Dec. 2016)
(c) 8 Years (d) 12 Years Ans.(a)
(19) Unabsorbed loss from house property can be carried forward for - (Dec. 2016)
(c) Indefinite period (d) Can not be carried forward Ans.(b)
(20) No loss can be set-off against - (Dec. 2016)
(af Income from salaries (b) Income from house property
(c) Income from capital gains (d) Winnings from lotteries, etc. Ans.(d)
(21) Short term capital loss can be set-off against:
(a) Short term capital gain (b) Long-term capital gain
(c) Income under any other head (d) Either (a) or (b) Ans.(d)
(22) Brought forward losses (except speculation business loss) under Profits & Gains of Business
or profession can be set-off against -
(a) (c)Income from house property.
(b) (b)Income from any other head.
(c) Profits of any business (except speculation business profit
(d)Profits of any business/profession (including speculation business profit). Ans.(d)
(23) Loss incurred in activity of owing and maintaining race horses can be set-off against only:
(a) Any Income under the head 'Income from other race horses.
(b) Only income from owning and maintaining Sources'.
(c) Income from speculation business.
(d) Income under head house property.
Ans.(b)
(24) Which of the following losses available after inter source set-off, cannot be set-off from
incomes in other heads in the same assessment year - (June 2016)
(a) Speculation losses (b) Loss from specified business
(c) Loss under the head capital gains (d) All of the above Ans.(d)
(25) To carry forward and set-off losses, a loss return must be filed by the assessee within the
stipulated time and gets the loss determined by the Assessing Officer. However, this condition is
not applicable to - (June 2016)
(a) Loss from house property (b) Loss from speculation business
(c) Loss from discontinued business (d) Loss from capital assets Ans.(a)
(26) Mr. X has earned salary income of Rs. 5,00,000 and he has suffered loss from house property
amounting Rs. 2,50,000. Speculation business loss - Rs. 1,00,000 Find out the gross total income.
(a) Rs. 5,00,000 (b) Rs. 3,00,000
(c) Rs. 2,00,000 (d) Rs. 4,00,000 Ans.(b)
(27) The maximum loss incurred under house property in current year which can be set-off from
other heads on Income is :
(a) Rs. 2,00,000 (b) Rs. 30,000
(c) unlimited (d) Rs. 50,000 Ans.(a)
(28) Mr. X has earned salary income of Rs. 5,00,000 and he has suffered loss from house property
amounting Rs. 2,00,000. General business loss - Rs. 1,00,000 Find out the gross total income.
(a) Rs. 5,00,000 (b) Rs. 3,00,000
(c) Rs. 2,00,000 (d) 4,00,000 Ans.(b)
(29) Mr. X has earned general business income of Rs. 5,00,000 and he has suffered loss from house
property amounting Rs. 2,00,000. Specified business loss under Section 35AD - Rs. 1,00,000 Find
out the gross total income.
(a) Rs. 5,00,000 (b) Rs. 3,00,000
(c) Rs. 2,00,000 (d) 4,00,000 Ans.(b)
(30) Mr. X has earned Long term capital gains on sale of equity shares listed in recognised stock
exchange on which STT - Rs. 7,20,000 Short term capital loss of Rs. 2,00,000. General business
income of Rs. 5,00,000 Find out the gross total income.
(a) Rs. 9,20,000 (b) Rs. 10,20,000
(c) Rs. 11,20,000 (d) 5,20,000 Ans.(a)
(Hint: LTCG on sale of equity shares in excess of Rs. 1,00,000 is chargeable to tax under Section
112A. STCL shall be set-off from LTCG. Hence taxable income = (7,20,000 -1,00,000 -2,00,000
+5,00,000)
(31) Ashwin has speculation business loss brought forward of the assessment years 2015-16 Rs.
1,00,000; 2016-17 Rs. 70,000 and 2017-18 Rs. 60,000. He has income from the same speculation
business for the assessment year 2020-21 Rs. 5,40,000. His total income chargeable to tax for
assessment year 2020-21 would be - (June 2016)
(a) Rs. 3,10,000 (b) Rs. 4,10,000
(c) Rs. 4,80,000 (d) Rs. 4,40,000 Ans.(c)
(32) Mr. Hussey for the previous year has (i) business loss of Rs. 1,30,000; (ii) income from salary
Rs. 2,40,000; and (iii) speculation gain of Rs. 1,10,000. His total income for income tax assessment
is: (June, 2017)
(a) Rs. 3,50,000 (b) Rs. 2,20,000
(c) Rs. 2,40,000 (d) Rs. 1,10,000 Ans.(c)
(Hint – Normal business loss can be set off against speculation Gain (business))
(33) Mathur Storage (P) Ltd. engaged in chain cold storage has brought forward business loss of Rs.
12 lakhs relating to A.Y. 2019-20. During the previous year 2019-20, its income from the said
business is Rs. 9 lakhs. It also has profit from trade in food grains of Rs. 6 lakhs. The total income of
the company for the A.Y. 2020-21 is: (June, 2017)
[Note : If chain cold storage is a specified business u/s 35AD, the brought forward business loss can
be set-off only from profits of specified business is such case the brought forward business loss can
be set-off to the extent of Rs. 9 lakh and balance loss shall be carried forward and the answer will
be Rs. 6 lakh.]
(34) Find out the gross total income of Mr. A for A.Y. 2020-21 from the following information:
Income from salaries Rs. 80,000; Loss from house property Rs. 50,000; Profit from textile trade Rs.
40,000; Loss from Automotive trade Rs. 50,000.
(a) Rs. 20,000 (b) Rs. 70,000
(c) Rs. 30,000 (d) Nil Ans.(c)
(35) Mr. Rahul have income from cloth business Rs. 1,00,000; Loss from agriculture Rs. 50,000;
Long-term capital gain Rs. 60,000 and short term capital loss Rs. 80,000 find out his gross total
income for assessment year 2020-21.
(a) Rs. 50,000 (b) Rs. 1,00,000
(c) Rs. 80,000 (d) Rs. 30,000 Ans.(b)
(36) Mr. Q has profit from speculation business Rs. 80,000; Profit from business A Rs. 1,00,000; Loss
from business B f 1,50,000 find out his gross total income for assessment year 2019-20.
(a) Rs. 80,000 (b) Rs. 1,00,000
(c) Rs. 1,50,000 (d) Rs. 30,000 Ans.(d)
(37) Mr. Ram had incurred loss in activity of owning and maintaining racehorses Rs. 90,000;
Winnings from lottery (net) Rs. 70,000; Loss in card game of assessment year 2019-20 Rs. 4,000
find out his gross total income for AY 2020-21.
(a) Rs. 1,00,000 (b) Rs. 70,000
(c) Rs. 10,000 (d) 66,000 Ans.(a)
(Hint – 70,000 / 70%)
(38) If an individual, having a sales turnover of Rs. 60 lakh files his return of income for the
assessment year 2020-21 after the due date, showing unabsorbed business loss of Rs. 23,000 and
unabsorbed depreciation of Rs. 45,000, he can carry forward to the subsequent assessment years -
(June, 2015)
(a)Both unabsorbed business loss of Rs. 23,000 and unabsorbed depreciation of Rs. 45,000
(b)Only unabsorbed business loss of Rs. 23,000
(c)Only unabsorbed depreciation of Rs. 45,000
(d)Neither unabsorbed business loss of Rs. 23,000 nor unabsorbed depreciation of Rs. 45,000.
Ans.(c)
(39) What can be the maximum net amount of negative income of a self occupied house under the
head "Income from house property " that can be set off against other head of sources of income.
(a) Rs. 30,000 (b) Rs. 1,00,000
(c) Rs. 1,50,000 (d) Rs. 2,00,000 Ans.(d)
(40) XYZ & Company, a partnership firm has three partners, X, Y and Z having equal share in profits
of the firm. X retired on 31-12-2019, profits of the firm for year ending 31-3-2020 were Rs. 1,50,000
and brought forward business losses for assessment year 2018-19 was Rs. 1,20,000 and
unabsorbed depreciation Rs. 40,000. Find the amount of brought forward loss that cannot be
carried forward?
(a) Rs. 2,500 (b) Rs.3,333
(c) Rs. 15,833 (d) Nil Ans.(a)
Hint-
Profit from 1.4.19 to 31.12.19 = 1,15,000/12 months * 9 months = Rs. 1,12,500
Share of X in profits = 1,12,500 / 3 = 37,500

And share of X in B/f Losses = Rs. 40,000
Therefore Loss of Rs. 2500 cant be carried forward by the firm
(41) Short-term capital loss can be set-off from - (June, 2012)

(a) Short-term capital gains (b) Long-term capital gains
(c) Both short-term and long-term capital gains (d) Any income of the previous year.
Ans.(c)
(42) Mr. B incurred short-term capital loss of Rs. 10,000 on sale of shares through the National
Stock Exchange. Such loss can be set-off from -
(a) Only against short-term capital gains
(b) Against both short-term capital gains and long term capital gains
(c) Against any head of income (d) None of the above. Ans.(b)
(43) Mr. B incurred long term capital loss of Rs. 10,000 on sale of shares through the National
Stock Exchange. Such loss can be set-off from -
(a)Only against long-term capital gains
(b) Against both short-term capital gains and longterm capital gains
(c)Against any head of income
(d) Cannot be set- off as it is a loss from source whose income is exempt from tax.
Ans.(a)
(44) Mr X has received the following incomes : (i) Salary received as a partner from a partnership
firm Rs. 7,50,000. (ii) Loss on sale of shares listed in BSE Rs. 3 lakhs. Shares were held for 15 months
and STT paid on sale. (in) Long-term capital gain on sale of land Rs. 5 lakhs. His gross total income
will be -
(a) Rs. 12,50,000 (b) Rs. 9,50,000
(c) Rs. 7,50,000 (d) Rs. 5,00,000 Ans.(b)
Answer Hint: Long term capital loss on sale of shares shall be allowed to be set-off from LTC arising
from sale of land. Also Salary received is PGBP Income and Not Salary Income.
(45) Loss from the activity of owning and maintaining race horses could be set-off - (June, 2015)
(a) Against income under any of the five heads of
(b) Only against income under the head 'income income from other sources'
(c) Only against income under the head 'profits and gains of business or profession'
(d) Only against income from same .
Ans.(d)
(46) Where the net result of the computation under the head "Income from house property " is a
loss and the assessee has income assessable under any other hand of income, the assessee shall not
be entitled to set off such loss, to the extent such loss exceeds , against income under the other head.
(a) 1,00,000 (b) 2,00,000
(c) 3,00,000 (d) Nil Ans.(b)
(47) For the previous year 2019-20, an assessee suffered a business loss of Rs. 2,50,000. His income
from other sources is Rs. 1,80,000. His due date of return was 31st July, 2020 but he submitted the
return on 9th September, 2019. The assessee in this case - (June 2016)
(a) Shall be allowed to carry forward the loss of Rs. 70,000
(b) Shall not be allowed to carry forward any loss
(c) Shall be allowed to set-off current year business loss to the extent of Rs. 1,80,000 but shall not
be allowed to carry forward the balance loss of Rs. 70,000
(d) Shall not be allowed to set-off the business loss to the extent of Rs. 1,80,000 and would be liable
to tax on 11,80,000
Ans.(c)
(48) Mr X has the following incomes : Loss from house property- (Rs. 2,50,000), Profits and gains
of business or profession- Rs. 5,00,000. His Gross total income will be :
(a) Rs. 2,50,000 (b) 3,00,000
(c) Rs. 7,50,000 (d) Rs. 5,00,000 Ans.(b)
CARRY FORWARD & SET-OFF LOSS IN CASE OF AMALGAMATION,
DEMERGER & BUSINESS REORGANISATION
(49)Business loss of an amalgamating company shall:
(a) be carried forward and set-off in the hands of amalgamated company subject to certain
conditions
(b) be carried forward and set-off in the hands of amalgamated company unconditionally
(c) not be carried forward
(d) be allowed to be carried forward only by amalgamating company
Ans.(a)
(50) In case of amalgamation u/s 72A, after fulfilling prescribed conditions accumulated loss
can be carried forward for -
(a) Further 8 years in the hands of amalgamating company
(b) Further 8 years in the hands of amalgamated company
(c)Further 4 years in the hands of amalgamating company
(d) Further 4 years in the hands of amalgamated company
Ans.(b)
(51) The accumulated loss shall not be set off or carried forward and the unabsorbed
depreciation shall not be allowed in the assessment of the amalgamated company unless the
amalgamated company fulfills which of the following conditions.
(a) holds continuously for a minimum period of 5 years from the date of amalgamation at least
3/4th of the book value of fixed assets of the amalgamating company acquired in a scheme of
amalgamation;
(b) fulfils such other conditions as may be prescribed to ensure the revival of the business of the
amalgamating company or to ensure that the amalgamation is for genuine business purpose.
(c) continues the business of the amalgamating company for a minimum period of 5 years from the
date of amalgamation;
(d) All of these
Ans.(d)
(52) In case of demerger after fulfilling prescribed conditions u/s 72A, the accumulated loss can
be carried forward for the –
(a) Remaining period out of 8 years in the hands of resulting company.
(b) Further 8 years in the hands of demerged undertaking.
(c) Further 8 years in the hands of resulting company.
(d) Remaining period out of 8 years in the hands of demerged undertaking. Ans.(a)
(53) In case of reorganization of business whereby firm is succeeded by a company fulfilling

conditions given u/s 47(xiii)/ (xiv), the accumulated loss and unabsorbed depreciation can be
carried forward in the hands of successor company for -
(a) Remaining period out of 8 years
(b) Further 8 years
(c) Remaining period out of 4 years
(d) Further 4 years Ans.(b)
(54) In case of amalgamation of banking company under section 72AA, accumulated loss and
unabsorbed depreciation can be carried forward in the hands of amalgamated company for -
(a) Remaining period out of 8 years
(b) Remaining period out of 4 years
(c) Further 8 years
(d) Further 4 years Ans.(c)
(55) In case of amalgamation of co-operative banks, after fulfilling the prescribed conditions,
accumulated loss and unabsorbed depreciation can be carried forward and set-off for -
(a) Further 8 years in the hands of successor cooperative bank.
(b) Remaining period out of 8 years in the hands of amalgamated co-operative bank.
(c) Further 4 years in the hands of successor cooperative bank.
(d) Further 4 years in the hands of predecessor cooperative bank.
Ans.(b)
(56) In case of demerger of co-operative banks as per prescribed conditions accumulated loss can
be carried forward and setoff in the hands of resulting co-operative bank for -
(a) Further 8 years
(b) Further 4 years
(c) Remaining period out of 8 years.
(d) Remaining period out of 4 years. Ans.(c)
(57) In the case of a closely-held company (not being a company in which the public are
substantially interested and not being an eligible start-up referred to in Section 80-IAC), the losses
incurred in any year prior to the previous year can be carried forward and set off if -
(i) on the last day of the previous year, the shares of the company carrying not less than ________ of
the voting power;
(ii) were beneficially held by persons who beneficially held shares of the company carrying not less
than ________ of the voting power on the last day of the year(s) in which the loss was incurred.
(a) 25%, 25% (b) 51%, 51%
(c) 75%, 75% (d) 50%,-50% Ans.(b)
(58) A partnership firm with 4 equal partners brought forward depreciation of Rs. 3 lakh and
business loss of Rs. 3 lakh relating to assessment year 2019-20. On 1st April, 2019, two partners
retired. The amount that assessee-firm can set-off against its income for the assessment year
2020-21 would be - (Dec. 2015)
(a) Unabsorbed depreciation of Rs. 3 lakh plus brought forward business loss of Rs. 3 lakh.
(b) Unabsorbed depreciation 'nil' plus brought forward business loss Rs. 3 lakh.
(c) Unabsorbed depreciation Rs. 3 lakh plus brought forward business loss 'nil'.
(d) Unabsorbed depreciation Rs. 3 lakh plus brought forward business loss of Rs. 1.50 lakh.
Ans.(d)
(Answer Hint: loss to the extent of share of retiring partner shall not be allowed to be carried
forward and setoff.)
(59) In which of the following case loss can be carried forward without furnishing the return of
loss?
(a) Loss from house property.
(b) Losses under the head Profits & Gains of Business or Profession except speculation business
loss.
(c) Losses under Profits & Gains of Business or Profession including speculation business loss.
(d) Losses under the head Capital Gains..
Ans. (a)
Ch 11 – Deductions 11.1
CHAPTER 11 DEDUCTIONS FROM GROSS TOTAL INCOME

(1) Gross total income means the total income computed in accordance with the provisions of the
Income-tax Act, 1961 before making -
(a) Any rebate and relief
(b) Any deductions under chapter VI-A
(c) Surcharge
(d) Education Cess and Secondary Higher Education Cess
Ans.(b)
(2) Deduction is allowed from income of -
(a) Long term capital gains
(b) Short term capital gains except u/s 111A
(c) Short term capital gains referred u/s 111A
(d) Winnings from lotteries Ans.(b)
(3) Deduction under section 80C can be claimed for fixed deposit made in any scheduled bank, if
the minimum period of deposit is- (June 2016)
(c) 10 Years (d) 12 Years Ans.(a)
(4) Deduction under section 80C is allowed to -
(a) Individual (b) Individual /HUF
(c) HUF (d) Resident Individual/HUF Ans.(b)
(5) The maximum amount of deduction under section 80C is -
(a) Rs. 70,000 (b) Rs. 1,50,000
(c) Rs. 50,000 (d) T 2,00,000 Ans.(b)
(6) Deduction under section 80C is a deduction in respect of -
(a) Payment of life insurance premia or contributions to public provident fund etc.
(b) Contribution to certain Pension Funds.
(c) Payment of medical Insurance Premia.
(d) Medical treatment of prescribed disease. Ans.(a)
(7) Mr. X has taken a life insurance policy on his own life on 01-04-2019. The capital sum assured
is Rs. 1,00,000. He has paid insurance premium of Rs. 30,000 during the previous year. He is eligible
for deduction under Section 80C amounting -
(a) Rs. 30,000 (b) Rs. 15,000
(c) Rs. 10,000 (d) Rs. 20,000 Ans.(c)
(8) Mr. X has earned income from salary Rs. 5,00,000, Long term capital loss Rs. 1,20,000 and
interest on saving bank deposits : Rs. 15,000. He has made investment of Rs. 50,000 in public
provident fund. His Total Income is -
(a) Rs. 4,55,000 (b) Rs. 3,35,000
(c) Rs.4,65,000 (d) Rs. 3,45,000 Ans.(a)
(9) Mr. X, 45 years of age has earned income from salary Rs. 5,00,000, Business Loss Rs. 1,80,000
and Income from house property : Rs. 1,50,000. He has made investment of Rs. 1,50,000 in public
provident fund and paid health insurance premium of Rs. 18,000 by cheque. His Total Income is -
(a) Rs. 3,32,000 (b) Rs. 3,35,000
(c) Rs. 3,02,000 (d) Rs. 3,05,000 Ans.(a)
(10) Mr. X, 45 years of age has earned income from salary Rs. 10,00,000 and Income from house
property : Rs. 1,50,000. He has made investment of Rs. 1,50,000 in public provident fund and paid
health insurance premium of Rs. 18,000 by cheque. He has also paid LIC premium of Rs. 35,000
(capital sum assured : Rs. 3,00,000, policy is taken on 1-4-2019) His Total Income is -
(a) Rs. 9,52,000 (b) Rs. 9,82,000
(c) Rs. 9,50,000 (d) Rs. 9,80,000 Ans.(b)
(11) The maximum amount of deduction under section 80U allowed to a person with 80% or more
of one or more disabilities is. (Dec. 2014)
(a) Rs. 40,000 (b) Rs. 60,000
(c) Rs. 50,000 (d) Rs. 1,25,000 Ans.(d)
(12) When a person suffers from severe disability, the quantum of deduction allowable under
section 80U is - (June 2016)
(a) Rs. 50,000 (b) Rs. 75,000
(c) Rs. 1,25,000 (d) Rs. 1,00,000 ANS.(C)
(13) The following is not allowed as deduction under section 80TTA - (Dec. 2014)
(a)Interest on deposits in a savings account with bank upto Rs. 10,000
(b)Interest on time deposits with bank upto Rs. 10,000
(c)Interest on deposits in a savings account with post office upto Rs. 10,000
(d)Interest on deposits with co-operative society engaged in carrying on the business of banking
upto Rs. 10,000. Ans.(b)
(14) Deduction in respect of interest on savings accounts under section 80TTA shall be allowed
with respect to savings account with - (June 2016)
(a) Bank (b) Co-operative society
(c) Post office (d) All of the above Ans.(d)
(15) An amount upto a maximum of Rs. 10,000 is deductible under section 80 TTA from the gross
total income off - (Dec. 2016)
(a) Individual only (b) HUF and individual only
(c) Company only (d) Allassessees Ans.(b)
(16) Deduction in respect of interest on deposit under section 80TTB is available to -
(a) All individual assessee
(b) Individual who is the age of 60 years or more
(c) Individual who is of the age of 80 years or more
(d) All of the above Ans.(b)
(17) Amount of deduction available to an individual in respect of interest on bank account u/s 80
TTB is -
(a)Such Interest Income
(b) Rs. 50,000
(c)Such interest income or Rs. 50,000 whichever is less

(d) Such interest income or Rs. 50,000 whichever is more. Ans.(c)
(18) The employers contribution eligible for deduction under Section 80CCD for Central Govt
employee shall not exceed -
(a) 10% of basic salary and dearness allowance if the terms of employment so provide.
(b) 14% of basic salary and dearness allowance if the terms of employment so provide.
(c) 15% of basic salary
(19) The deduction in respect of contribution to certain pension funds under section 80CCC is
allowed to -
(a) Individual
(b) Partnership firm
(c) HUF
(d) None of these
Ans.(a)
(20) The maximum amount of deduction under section 80CCC
is -
(a) Rs. 70,000
(b) Rs. 1,50,000
(c) Rs. 50,000
(d) Rs. 1,00,000 Ans.(b)
(21) Eligible Assessee under section 80CCD means
(a) An individual employed by Central Government on or after 1-1 2004

(b) Individual employed by any other employer
(c) Any individual assessee other than (a) and (c)
(d) All of the above Ans.(d)
(22) The deduction in respect of contribution to certain pension schemes of Central

Government under section 80CCD is allowed to —
(a) Individual
(b) Partnership firm
(c) HUF
(d) None of these Ans.(a)
(23) The employers contribution eligible for deduction under Section 80CCD shall not exceed -
(a) 10% of basic salary
(b) 10% of basic salary and dearness allowance if the terms of employment so provide.
(c) 15% of basic salary
(24) In case of non salaried employee, the amount of deduction under Section 80CCD shall not
exceed.
(a) Sum paid/deposited by assessee to the credit of his account in the notified pension scheme, or
20% of his gross total income in the previous year, whichever is less.
(b) Sum paid/ deposited by assessee to the credit of his account in the notified pension scheme, or
15% of his gross total income in the previous year, whichever is less.
(c) Sum paid/deposited by assessee to the credit of his account in the notified pension scheme, or
10% of his business income in the previous year, whichever is less.
(d) Sum paid/ deposited by assessee to the credit of his account in the notified pension scheme, or
15% of his business income in the previous year, whichever is less.
Ans.(a)
(25) Deduction available u/s 80RRB in respect of royalty income of patents shall not exceed X
________ in a previous year.
(a) Rs. 3,00,000 (b) Rs. 12,00,000
(c) Rs. 5,00,000 (d) Rs. 10,00,000 Ans.(a)
(26) The Additional amount of deduction available in respect of contribution to NPS of Central
Government under Section 80CCD(1B)] is-
(a) Rs. 1,50,000 (b) Rs. 50,000
(c) Rs. 60,000 (d) Rs. 40,000
Ans.(b)
(27)The aggregate amount of deduction under section 80C, 80CCC and 80CCD (1) shall not exceed
(a) Rs. 1,50,000
(b) Rs. 1,00,000
(c) Rs. 60,000
(d) Rs. 40,000 Ans.(a)
(28)The aggregate amount of deduction under section 80C, 80CCC and 80CCD(1) and (IB) shall
not exceed -
(a) Rs. 1,50,000
(b) Rs. 1,00,000
(c) Rs. 2,00,000
(d) Rs. 50,000 Ans.(c)
(29) An individual has made investments in the schemes approved under section 80C, and
80CCD of Rs. 2,50,000 and Rs. 1,00,000 respectively during the year ended 31s' March, 2020.
Amount that can be claimed by him as deduction out of income in assessment year 2020-21is -
(Dec. 2015)
(a) 50% ofRs.3,50,000 (b) Rs. 1,50,000 under section 80C and Rs. 1,00,000
under section 80CCD
(c) Rs. 2,00,000 (d) None of the above.
Ans.(c)
(30)The maximum amount of deduction admissible under section 80D is -
(Dec. 2014)
(a) Rs. 15,000 (b) Rs. 20,000
(c) Rs. 35,000 (d) Rs. 1,00,000
Ans.(d)
(31)A pays (through any mode other than cash) during the previous year medical insurance
premia as under :
(i) Rs. 28,000 to keep in force an insurance policy on his health and on the health of his wife and
dependent children;
(ii) Rs. 58,000 to keep in force an insurance policy on the health of his parents where his father is a
senior citizen. Calculate deduction under section 80D.
(a) Rs. 56,000 (b) Rs. 75,000
(c) Rs. 50,000 (d) Rs. 25,000 Ans.(b)
(32) The total amount of deduction under section 80D on account of preventive health check up of
the assessee or his family or parents of the assessee cannot exceed -
(a) Rs. 10,000 (b) Rs. 5,000
(c) Rs. 15,000 (d) Rs. 20,000 Ans.(b)
(33) A pays (through account payee cheque) during the previous year medical insurance premia as
under:
(i) Rs. 28,000 to keep in force an insurance policy on his health and on the health of his wife and
dependent children;
(ii) Rs. 58,000 to keep in force an insurance policy on the health of his father 62 years of age who is
non resident. Calculate deduction under section 80D.
(a) Rs. 25,000 (b) Rs. 50,000
(c) Rs. 56,000 (d) Rs. 33,000 Ans.(b)
(34) The deduction in respect of health insurance premia under section 80D is allowed to -
(a) Individual (b) Both individual and HUF
(c) HUF (d) None of these Ans.(b)
(35) The deduction in respect of health insurance premia if insured is senior citizen is -
(a) Rs. 15,000 (b) Rs. 20,000
(c) Rs. 50,000 (d) Rs. 25,000 Ans.(c)
(36) The deduction in respect of health insurance premia if insured is very senior citizen is -
(a) Rs. 15,000 (b) 120,000
(c) Rs. 50,000 (d) Rs. 25,000 Ans.(c)
(37) In case of senior citizen quantum of deduction u/s 80D is -
(a) Sum paid or Rs. 25,000 whichever is lower. (b) Sum paid or Rs. 25,000 whichever is
higher.
(c) Sum deposited or Rs. 25,000 whichever is lower. (d) Sum paid or Rs. 50,000 whichever is
lower.
Ans.(d)
(38) The amount of deduction available on the amount paid on account of medical expenditure
incurred on the health of the assessee or any member of his family, who is a senior citizen and no
amount has been paid to effect or to keep in force an insurance on the health of such person under
section 80D -
(a) Nil (b) Rs. 50,000
(c) Rs. 5,000 (d) Rs. 25,000 Ans.(b)
(39) Deduction under section 80D in respect of medical insurance premium is available if the
premium paid by any payment mode other than -
(a) Draft (b) Cash
(c) Account payee cheque rf(d) Bearer's cheque Ans.(b)
(40) Mr. Manish pays Rs. 55,000 as medical insurance premium by cheque under a scheme framed
by GIC, for his mother (aged 65 years and who is dependent upon Manish). If her mother is a
resident individual what amount of deduction will be allowed to Manish from his Gross Total
Income -
(a) Rs. 55,000 (b) Rs. 50,000
.(c) Rs. 25,000 (d) Rs. 75,000 Ans.(b)
(41) Varun incurred medical expenditure of Rs. 32,000 towards cataract surgery of his mother
(aged 70 years). She also underwent a minor surgery for which he incurred an expenditure of Rs.
26,000. Deduction u/s 80D will be - (Dec. 2016)
(a) Rs. 50,000 (b) Rs. 12,000
(c) Rs. 25,000 (d) Rs. 38,000 Ans.(a)
(42) Raghu's father is dependent on him and suffering with 90% disability. Raghu has incurred an
amount of Rs. 72,500 in maintaining and medical treatment of his father. The deduction he can claim
in his income-tax return for assessment year 2020-21is - (Dec. 2015)
(a) Rs. 72,500 (b) Rs. 75,000
(c) Rs. 1,25,000 (d) None of the above. Ans.(c)
(43) Deduction in respect of medical treatment of dependent being a person suffering from severe
disability u/s 80DD is -
(a) Rs. 75,000 (b) Rs. 60,000
(c) Rs. 40,000 (d) Rs. 1,25,000 Ans.(d)
(44) Under section 80DD, meaning of dependent includes -
(a) Spouse and children of individual. (b) Parents of individual,
(c) Brother and sister of the individual (d) All of the above. Ans.(d)
(45) Rajan paid Rs. 25,000 to LIC of India for the maintenance of his disabled son and incurred Rs.
15,000 for the treatment of his handicapped wife who is working in State Bank of India. The
deduction allowable to him u/s 80DD is -' (June 2016)
(a) Rs. 15,000 (b) Rs. 25,000
(c) Rs. 50,000 (d) Rs. 75,000 . Ans.(d)
(46) Mr. Ramesh pays Rs. 80,000 for medical treatment of his dependent brother (resident in India
and aged 21 years) who is suffering from disability. In this case deduction shall be allowed to
Ramesh to the extent of -
(a) Rs. 80,000 (b) Rs. 75,000
(c) Rs. 1,25,000 (d) Nil Ans.(b)
(47) In case of resident individual other than senior citizen, the quantum of deduction in respect of
medical treatment of prescribed disease under section 80DDB is lower of sum paid or -
(a) Rs. 40,000 (b) Rs. 60,000'
(c) Rs. 75,000 (d) Rs. 50,000 Ans.(a)
(48) In case of senior citizen the quantum of deduction in respect of medical treatment of
prescribed disease under section 80DDB is lower of sum paid or -
(a) Rs. 40,000 (b) Rs. 1,00,000

(c) Rs. 75,000 (d) Rs. 50,000 Ans.(b)
(49) Mr. Kalyan pays Rs. 75,000 for medical treatment of his dependent father (resident in India
and aged 65 years) who is suffering from cancer (prescribed disease). Mr. Kalyan has been
reimbursed Rs. 12,000 from his employer. Mr Kalyan shall be allowed deduction to the extent of -
(a) Rs. 75,000 (b) Rs. 63,000
(c) Rs. 88,000 (d) Rs. 50,000 Ans.(b)
(50) Mr. Suresh pays Rs. 55,000 for medical treatment of his dependent father (resident in India
and aged 65 years) who is suffering from cancer (prescribed disease) and is also severely disabled.
In this case deduction shall be allowed to Suresh to the extent of -
(a) Rs. 55,000 (b) Rs. 1,60,000
(c) Rs. 1,80,000 (d) Rs. 1,55,000 Ans.(c)
(Hint – Sec 80DD – Rs. 1,25,000 + 80DDB – 55,000)
(51) Deduction available to an individual in respect of maintenance including medical treatment of
a dependent being a person with 80% disability, when amount incurred in this respect is Rs. 40,000
will be - (Dec. 2016)
(a) Rs. 40,000 (b) Rs.50,000
(c) Rs. 1,25,000 (d) None of the above. Ans.(c)
(52) The maximum amount of deduction under section 80DDB in respect of Medical treatment of
specified disease in case of senior citizen is -
(a) Rs. 1,00,000 (b) Rs. 60,000
(c) Rs. 15,000 (d) Rs. 40,000 Ans.(a)
(53) Deduction in respect of interest on loan taken for higher education is available to assessee for
-
(a) His higher education. (b) The higher education of his relative.
(c) Both (a) or (b) (d) None of the above Ans.(c)
(54) For the purpose of section 80E "Relative", in relation to an individual, means -
(a) The spouse of the individual
(b) The children of the individual
(c) The student for whom the individual is the legal guardian
(d) All of these Ans.(d)
(55) The maximum period for which deduction is admissible under section 80E is :
(c) 8 years (d) No time limit. Ans.(c)
(56) Raghunath repaid during previous year 2019-20 education loan of Rs. 60,000 and interest on
education loan of Rs. 18,000 taken from Punjab National Bank for his son to pursue MS in Germany.
The loan was taken in the financial year 2013-14 and the payment commenced from financial year
2012-13. The amount eligible for deduction under section 80E for the assessment year 2020-21is :
(June, 2017)
(a) Rs. 60,000 (b) Rs. 78,000
(c) Rs. 18,000 (d) Nil Ans.(c)
(57) Deduction under section 80G on account of donation is allowed to : (June, 2017)
(a) A business assessee only (b) Any assessee
(c) Individual or HUF only (d) Any resident assessee Ans.(b)

(58) Deduction under section 80G is available in respect of -
(a) Donation made to certain funds or charitable institutions.
(b) Rent paid for any residential house occupied by individual.
(c) Donation for scientific research.
(d) Both (a) and (c). Ans.(a)
(59) Deduction in respect of donations to National Defence Fund is allowed under section - (June,
2015)
(a) 80G (b) 80CCG
(c) 80C (d) None of the above. Ans.(a)
(60) Deduction in respect of donations to Clean Ganga Fund is allowed under section -
(a) 80G (b) 80CCG
(61) Deduction in respect of donations to the the Swachh Bharat Kosh is allowed under section -
(a) 80G (b) 80CCG
(62) Deduction in respect of donations to the National Fund for Control of Drug Abuse is allowed
under section -
(a) 80G (b) 80CCG
(63) Deduction u/s 80G for A.Y. 2020-21shall be allowed in respect of cash donation of any amount
not exceeding ? ________
(a) Rs. 20,000 (b) Rs. 10,000
(c) Rs. 2,000 (d) Rs. 1,500 Ans.(c)
(64) Mr. Mohan whose adjusted gross total income in A.Y.- 2020-21 is Rs. 1,90,000 pays Rs. 20,000
in cash as donation to National Children fund the amount of deduction available to him is -
(a) Rs. 20,000 (b) Rs. 10,000
(c) Rs. 19,000 (d) Nil Ans.(d)
(65) Mr. Mohan whose adjusted gross total income is Rs. 1,90,000 pays by account payee cheque
Rs. 20,000 as donation to National Children fund the amount of deduction available to him is -
(a) Rs. 20,000 (b) Rs. 10,000
(c) Rs. 19,000 (d) Rs. 9,500 Ans.(a)
(66) Mr. Rajeev whose adjusted gross total income is Rs. 1,90,000 pays by account payee cheque
Rs. 21,000 as donation to Prime Ministers Drought Relief Fund. The amount of deduction available
to him is -
(a) Rs. 21,000 (b) Rs. 19,000
(c) Rs. 10,500 (d) Rs. 9,500 Ans.(c)
(67) Mr. Kamal whose adjusted gross total income is Rs. 1,90,000 pays by account payee cheque Rs.
21,000 as donation to family planning fund. The amount of deduction available to him is -
(a) Rs. 21,000 (b) Rs. 19,000
(c) Rs. 10,500 (d) Rs. 9,500 Ans.(b)
(68) Mr. Gautam whose adjusted gross total income is Rs. 1,90,000 pays by account payee cheque
Rs. 21,000 as donation to notified charitable institution. The amount of deduction available to him
is -
(a) Rs. 21,000 (b) Rs. 19,000
(c) Rs. 10,500 (d) Rs. 9,500 Ans.(d)
(69) Mr. Kamal whose adjusted gross total income is Rs. 1,90,000 has donated clothes worth Rs.
21,000 as donation to notified charitable institution. The amount of deduction available to him is -
(a) Rs. 21,000 (b) Rs. 19,000
(c) Nil (d) Rs. 9,500 Ans.(c)
(70) No deduction shall be allowed under section 80G in respect of donation of any sum exceeding
unless such sum is paid by any mode other than cash.
(a) Rs. 10,000 (b) Rs. 2,000
(c) Rs. 19,000 (d) Rs. 9,500 Ans.(b)
(71) Deduction available under section 80GG in respect of rent paid cannot be more than - (Dec.
2016)
(c) Rs. 2,000 per month (d) Rs. 10,000 per month Ans.(b)
(72) Shravan engaged in business paid monthly rent of Rs. 5,000 by cheque for his residence during
the previous year 2019-20. His adjusted total income is Rs. 3,40,000. The amount eligible for
deduction under section 80GG is : (June, 2017)
(a) Rs. 34,000 (b) Rs. 26,000
(c) Rs. 24,000 (d) Rs. 85,000 Ans.(b)
(73) The maximum amount of deduction under section 80GG in respect of rent paid is - (June, 2011)
(c) Rs. 5,000 per month (d) Rs. 10,000 per month. Ans.(c)
(74) Bharat, engaged in business, claimed that he paid Rs. 10,000 per month by cheque as rent for
his residence. He does not own any residential building. His total income computed before
deduction under section 80GG is Rs. 3,40,000. The amount he can claim as deduction under section
80GG is - (June 2016)
(a) Rs. 24,000 (b) Rs. 34,000
(c) Rs. 1,20,000 (d) Rs. 60,000 Ans.(d)
(75) Amount of deduction in case of a person suffering with disability under section 80U will be:
(a) Rs. 75,000 (b) Rs. 50,000
(c) Rs. 1,25,000 (d) Rs. 1,00,000 Ans.(a)
(76) Mr. Raj Kamal a salaried employee whose adjusted gross total income is Rs. 1,90,000 has
donated Rs. 21,000 to national rural development fund through account payee cheque. The amount
of deduction available to him under section 80GGA is -
(a) Rs. 21,000 (b) 719,000
(c) Nil (d) Rs. 9,500 Ans. (a)
(77) Mr. Raj Kamal a salaried employee whose adjusted gross total income is Rs. 1,90,000 has
donated Rs. 25,000, to Bhartiya Janta party in cash. The amount of deduction available to him is -
(a) Rs. 19,000 (b) Rs. 25,000
(c) Nil (d) Rs. 12,500 Ans.(c)

(78) Under the Income-tax Act, 1961, which of the following can claim deduction for any sum
contributed during the previous year to a political party or electoral trust - (June, 2015)
(a) Local authority (b) Individual
(c) Artificial juridical person (d) None of the above. Ans.(b)
(79) Amount of deduction in case of a person with severe disability under section 80U will be:
(a) Rs. 75,000 (b) Rs. 50,000
(c) Rs. 1,25,000 (d) Rs. 1,00,000 Ans.(c)
(80) Deduction available to an individual in respect of interest on saving bank account is - (Dec.
2011)
(a) Such Interest Income
(b) Rs. 10,000
(c) Such interest income or Rs. 10,000 which ever is less
(d) Such interest income or Rs. 10,000 which ever is more.
Ans.(c)
(81) Deduction in respect of contribution to political party will:
(a) be allowed in respect of sum paid by way of cash
(b) not be allowed if payment made in cash
(c) Be allowed if political party is unregistered
(d) be allowed if payment made in cash, subject to certain conditions
Ans.(b)
(82) The amount of deduction under Section 80JJA is available for a period of ________ consecutive
assessment years beginning with the assessment year relevant to the previous year in which the
business commences.
(c) 15 years (d) 20 years Ans. (b)
(83) An assessee, being an eligible start-up, whose gross total income includes any profits and gains
derived from business which involves innovation, development, deployment or commercialisation
of new products, processes or services driven by technology or intellectual property shall be
allowed a deduction of an amount equal to ________ of the profits and gains derived from such
business.
(a) @10% (b) @20%
(c) @100% (d) @50% Ans.(c)
(84) An assessee, being an eligible start-up, whose gross total income includes any profits and gains
derived from business which involves innovation, development, deployment or commercialisation
of new products, processes or services driven by technology or intellectual property shall be
allowed a deduction of an amount equal to 100% of the profits and gains derived from such business
for ________ consecutive assessment years out of ________ years beginning from the year in which the
eligible start-up is incorporated.
(a) 3,5 (b) 3,7
(c) 10,15 (d) 10,20 Ans.(b)
(85) Mr. X has earned income from salary Rs. 5,00,000, Income from House Property Rs. 1,20,000
and interest on saving bank deposits : Rs. 15,000. He has made investment of Rs. 50,000 in public
provident fund. His Total Income is -
(a) Rs. 5,85,000 (b) Rs. 6,85,000
(c) Rs. 5,75,000 (d) Rs. 6,20,000 Ans.(c)
(86) Deduction under Section 80JJAA is allowed ________ of additional employees cost incurred in
the course of such business in the previous year.
(a) @ 10% (b) @ 20%
(c) @30% (d) @50% Ans.(c)
(87) For the purpose of deduction under Section 80JJAA, "Additional employee" does not include
an employee whose total emoluments are more than ? ________ per month.
(a) Rs. 15,000 (b) Rs. 20,000
(c) Rs. 25,000 (d) Rs. 30,000 Ans.(c)
(88) For the purpose of deduction under Section 80JJAA, "Additional employee" does not include
an employee employed for a period of less than ________ days during the previous year;
(a) 240 (b) 300
(c) 200 (d) 180 Am. (a)
(89) The maximum amount of deduction in case of consumers cooperative society under section
80P for other business activities is:
(a) Rs. 50,000 (b) Rs. 75,000
(c) Rs. 1,00,000 (d) Rs. 1,50,000 Ans.(c)
(90) Mr. X has authored a book eligible for deduction u/s 80QQB. The price of book is Rs. 150
and 10,000 copies of books are sold. He has received royalty @ 25% of the price of book. The
amount of deduction admissible u/s 80QQB will be -
(a) Rs. 1,00,000
(b) Rs. 3,75,000
(c) Rs. 2,25,000
(d) Rs. 3,00,000 Ans.(c)
(91)An Indian resident patentee is entitled to a deduction under section 80RRB to the extent of -
(Dec. 2014)
(a) 100% of such income
(b) 50% of such income
(c) 100% of such income or Rs. 3,00,000 whichever is less
(d) 50% of such income or Rs. 3,00,000 whichever is more. Ans.(c)
12. PAN – Return Filing – Self Assessment – Refund 12.1
CHAPTER 12 – PAN – Return Filing – Self assessment - Refund

1) The Due date of filing return of income u/ s 139(1) by a company having a turnover of less than 7 100 lakhs and having no
international transactions is -
(a) 30th September of the relevant Assessment Year (b) 31st July of the relevant assessment year
(c) 30th November of the relevant assessment year (d) 31st October of the relevant assessment year. Ans.(a)
of filing return of income is 31st July of Assessment
-
(2) In case of which of the following assessees the due date Year
(a) Company assessee (b) A person other than a Company required to get its
accounts audited under this Act.
(c) A working partner of a firm, where the accounts (d) None of the above
of the firm are required to be audited
under this Act. Ans.(d)
What would be the due date of filing return of income in case of Mr. R, who is the working partner in a trading firm and
(3)
firm's turnover is Rs. 2,50,00,000 -
(a) 30th September of Assessment Year (b) 31st July of Assessment Year
(e) Mr. R is not liable to file return of income (d) 30th November of the Assessment Year Ans.(a)
(4) Zeet & Co. is a partnership firm whose turnover for the previous year 2019-20 was Rs. 220 lakhs. The 'due date' for filing
the return of income of the firm is : (June, 2017)
(a) 31st July, 2020 (b) 30,h September, 2020
(c) 30th November, 2020 (d) 31st March, 2021 Ans.(b)
(5) Zeet Ltd. engaged in manufacturing of cement also had wind mills to generate power. Entire power generated by it was
used by its wholly owned subsidiary Zoom Ltd. The amount received for the said power supply was Rs. 7 crore. Zeet Ltd.
disclosed total income of Rs. 10 crore for the assessment year 2020-21. The due date for filing return of income by Zeet Ltd.
is- (June 2016)
(a) 31st July, 2020 (b) 30th September, 2020
(c) 31st October, 2020 (d) 30,h November, 2020
Ans.(b)
(6) As per section 139(1), an individual other than an individual of the age of 60 years or more shall have to file return of
income if - (June 2016)
(a) His total income exceeds Rs. 2,50,000 (b) His total income exceeds Rs. 3,00,000
(c) His total income exceeds Rs. 2,00,000
(d) His total income before allowing deduction u/s 80C to 80U or Section 54 or section 54B or section 54D or section 54EC
or section 54F or section 54G or section 54GA or section 54GB exceeds Rs. 2,50,000
Ans.(d)
(7) The due date of filing the return of income for assessment year 2020-21 is case of a working partner of a firm whose
accounts are liable to be audited shall be - (June 2 016)
(a) 31st July of the assessment year (b) 30th September of the assessment year
(c) 30th June of the assessment year (d) 30th November of the assessment year in case it
is required to furnish report referred to in section 92E and 30th September of the assessment year in any other case
Ans.(b)
(8) The 'due date specified under section 139(1) for filing the return of income in case of companies engaged in international
transactions and who have to furnish a report under section 92E is - (Dec.
2015)
(a) 31st July (b) 31st August
(c) 30th September (d) 30th November
Ans.(d)
(9) The last date for filing return by a company which is required to furnish a report referred to in section 92E is- (Dec. 2016)
(a) 31st July of the relevant assessment year (b) 30th September of the relevant assessment year
(c) 30th November of the relevant assessment year (d) 31st December of the relevant assessment year Ans.(c)
(10) A return of income when notified as defective, has to be rectified within - (Dec.
2015)
(a) 30 days (b) The financial year
(c) 15 days (d) 60 days Ans.(c)
(1) Rate of interest for defaults in furnishing return of income is -
(a) 12% per annum (b) 1% per month
(c) 2% p.m. or part thereof (d) 1% p.m. or part thereof
Ans.(d)
(12) Where a person required to furnish a return of income under section 139, fails to do so within the time prescribed in
Section 139(1), he shall pay, by way of fee, a sum of, if the return is furnished on or before 31st day of December of the
assessment year and his total income exceeds Rs. 5,00,000.
(a) Rs. 100 for every day during which such failure (b) Rs. 5,000
continues.
(c) Rs. 1,000 (d) Rs. 10,000
Ans.(b)
Section 139(1), he shall pay, by way of fee, a sum of, if the return is furnished after 31st day of December of the
assessment year and his total income exceeds Rs. 5,00,000.
(a) Rs. 100 for every day during which such failure (b) 15,000
continues.
(c) Rs. 1,000 (d) Rs. 10,000
Ans.(d)
Section 139(1), he shall pay, by way of fee, a sum of, if the return is furnished after 31st day of December of the
assessment year and his total income does not exceeds Rs. 5,00,000.
continues.
(c) Rs. 1,000 (d) Rs. 10,000 Ans.(c)
Section 139(1), he shall pay, by way of fee, a sum of, __________ if the return is furnished on or before 31st day of
December of the assessment year and his total income does not exceeds Rs. 5,00,000.
continues.
(c) Rs. 1,000 (d) Rs. 10,000 Ans.(c)
(16) Prosecution for non-furnishing return u/s 139(1), in case where the amount of tax which would have been evaded, if the
failure had not been discovered, exceeds Rs. 25,00,000 is -
(a) With rigorous imprisonment for a term, which (b) With rigorous imprisonment for a term which
shall not be less than 6 month but which
may shall
not be less than 3 month
but may extend
extend to 7 years and with fine. to 7 years with fine.
(c) Rigorous imprisonment for maximum 3 years. (d) Rigorous imprisonment for 6 months. Ans.(a)
(17) Prosecution for non-furnishing return u/s 139(1), in case where the amount of tax which would have been evaded, if the
failure had not been discovered, do not exceed Rs. 25,00,000 is u/s 276CC is-
(a) With rigorous imprisonment for a term, which (b) With rigorous imprisonment for a term which
shall not be less than 6 month but which may shall not be less than 3 month but may extend
extend to 7 years and with fine. to 2 years with fine.
(c) Rigorous imprisonment for maximum 3 years. (d) Rigorous imprisonment for 6 months.
Ans.(b)
(18) It is not mandatory for an assessee to file a return of loss, if it pertains to - (Dec.
2014)
(a) Loss under the head 'profits and gains from (b) Loss under the head 'Income from other
business or profession' Sources'
(c) Loss under the head 'capital gains' (d) Loss under the head 'income from house
property'. Ans.(d)
(19) Any person who has not filed the return within the time allowed under section 139(1) or 139(5), may file a belated
return u/s 139(4) - (Dec. 2014)
(a) At any time before the expiry of the relevant (b) Before the completion of the assessment
assessment year
(c) (a) or (b) above, whichever is earlier (d) (a) or (b) above, whichever is later. Ans.(c)
(20) Hindu Undivided Family (HUF) of Vinay consisted of himself, his major son, minor son and his wife. At the time of
filing of return of income of the HUF for A.Y. 2020-21, Vinay was out of country. The return of income of the HUF can be
signed in this case by : (June, 2019)
(a) Karta (b) Authorized Tax Consultant
(c) Major Son (d) Minor Son Ans.(c)
(21) In the case of an individual assessee, the return of income must be verified by following, except - (Dec.
2014)
(a) Individual himself (b) Where he is absent from India, by some person
duly authorised by him in this behalf

(c) Where he is mentally incapacitated from (d) Spouse,
attending to his affairs, by his guardian or any
other person competent to act on his behalf Ans.(d)
(22) A partnership firm whose sales turnover is Rs. 250 lakh has derived income from an industrial undertaking entitled to
deduction u/ s 80-IB. The due date for filing the return of income for the AY 2020-21 will be — (June,
2015)
(c) 31st October, 2019 (d) None of the above.
Ans.(b)
(23) An individual having income from proprietary business in required to file the return of income in - (June,
2015)
(a) ITR-2 (b) ITR-3
(c) ITR-3 A (d) ITR-4
Ans.(b)
(24) Individuals having Income from Salaries, one house property and Income from other sources and having total income
upto Rs. 50 lakh is required to file return of income in :
(a) ITR-1 (b) ITR-3
(c) ITR-2 (d) ITR-4 Ans.(a)
(25) Individuals and HUFs not carrying out business or profession under any proprietorship are required to required to file
return on Income in:
(a) ITR-2 (b) ITR-3
(c) ITR-4 (d) ITR-1 Ans.(a)
(26) Individuals carrying on business chargeable to tax on presumptive basis under Section 44AD are required to file return
on income in:
(a) ITR-2 (b) ITR-3
(c) ITR-4 (d) ITR-1 Ans.(c)
(27) A partnership firm carrying on business whose turnover is ^ 5 crore is required to furnish return of Income in:
(a) ITR-2 (b) ITR-3
(c) ITR-4 (d) ITR-5
Ans.(d)
(28) A company assessee carrying on business whose turnover is Rs. 5 crore is required to furnish return of Income in :
(a) ITR-2 (b) ITR-6
(c) ITR-4 (d) ITR-5
Ans.(b)
(29) A political party is required to furnish return of Income in:
(a) ITR-2 (b) ITR-6
(c) ITR-4 (d) ITR-7
Ans.(d)
(30) Form No. is applicable to any person who is required to file a return
under section 139(4A)/(4B)/(4D).
(a) ITR-1 (b) ITR-2
(c) ITR-7 (d) ITR-8 Ans.(c)
(31) A partnership firm having 9 trucks engaged in the business of plying these trucks on hire is to file its return of income
for the assessment year 2020-21 on the basis of provisions of section 44AE. The partnership firm is required to file its return
of income in - (Dec. 2015)
(a) Form ITR-4 (b) Form ITR-3
(c) Form ITR-2 (d) Form ITR-5 Ans.(a)
(32) Which of the following can be carried forward without furnishing any return of loss -
(a) Loss under the head 'income from House (b) Unabsorbed depreciation.
Property'.
(c) Loss from the activity of owning and (d) Both (a) and (b).
maintaining race horses. Ans.(d)
(33) The return in case on a trust is required to be filed only if the total income of such person before claiming exemption u/s
11 and 12 exceeds -
(a) Rs. 10,00,000 (b) Rs. 50,000
(c) Maximum amount chargeable to tax
(d) Rs. 1,35,000 Ans.(c)
(34) Due date for furnishing return in case of a trust, political party etc. is -
(a) 30th September of assessment year where the (b) 31st July of assessment year where the accounts
accounts are audited under any law are audited under any law.
(c) 30th November of assessment year where the (d) 31st July of assessment year in every case.
accounts are audited under any law. Ans.(a)
(35) Penalty for default in furnishing return of income under section 139(4A) or (4C) is -
(a) Rs. 1,000 (b) Rs. 100 for each day during which the default continues
(c) Rs. 5,000 (d) Rs. 50,000
Ans.(b)
(36) In case an assessee discovers an omission or wrong statement in the return filed by him u/s 139(1), he may file -
(a) A belated return (b) A return of loss
(c) A revised return (d) A defective return Ans.(c)
(37) A revised return may be filed for A.Y. 2020-21 before the -
(a) end of relevant assessment year (b) Completion of assessment
(c) (a) or (b) which ever is earlier (d) Expiry of 6 month from the end of relevant
previous year Ans.(c)
(38) Chand Ltd. filed its return of income on 7th December, 2020 declaring loss of Rs. 3,50,000 for AY 2020-21. Later, it
noticed a claim of expenditure omitted in the return filed. The revised return - (June
2016)
(a) must be filed before 31st March, 2021 (b) cannot be filed
(c) must be filed before 31st March, 2022 (d) Can be filed after completion of the assessment. Ans.(a)
(39) Chatterjee filed his return of income for the A.Y. 2020-21 on 10-06-2020. He is eligible to revise his return : (June,
2017)
(a) Upto the end of the assessment year 2020-21 (b) Before the end of 1 year from the end of the
assessment year 2020-21
(c) Before completion of assessment u/s 153 (d) Before issue of notice u/s 148 Ans.(a)
(40) Time limit to rectify defect in return is -
(a) Within one week from the date of intimation. (b) With in 2 month from the date of intimation.
(c) Within 15 days from the date of intimation. (d) Within 90 days from the date of intimation. Ans.(c)
(41) The date of intimation of defect u/s 139(9) is the date on which -
(a) The letter specifying the defect is served to the (b) The letter specifying the defect is sent to the assessee.
assessee.
(c) The letter specifying the defect is prepared by (d) None of the above.
the assessing officer. Ans.(a)
(42) Consequences in the case of not rectifying defect with in specified/extended time limit is -
(a) Defective return shall be treated as a return (b) Defective return shall be treated as an invalid filed u/s 139(1). return.
(c) Defective return shall be treated as return filed (d) All of the above.
u/s 142(1). Ans.(b)
(43) A return filed by Ms. Mala was found to be defective. The Assessing Officer gave notice of the defect to the assessee.
The time-limit for rectification of the defect is - (June 2016)
(a) 30 Days (b) 15 Days
(c) 45 Days (d) 60 Days
Ans.(b)
(44) The total income of Ram is Rs. 4,90,000 and due date of filing the return of income for A.Y. 2020-21 is 31st July, 2020.
The return by Ram shall be filed on 20th September, 2020. The late fee payable for late filing of return of income shall be :
(June. 2019)
(a) Rs. 1,000 (b) Rs. 5,000
(c) Rs. 10,000 (d) No late fee upto income of Rs. 5 lakh Ans.(a)
(45) Which of the following persons is liable to apply for PAN -
(a) Turnover/gross receipts of whose business or (b) If the total income of such person exceeds profession exceeds Rs.
5,00,000. maximum amount not chargeable to tax.
(c) A person liable to file a return u/s 139(4A). (d) All of the above.
Ans.(d)
(46) Penalty for quoting or intimating wrong PAN or possessing more than one PAN is -
(a) Rs. 50,000 (b) Rs. 10,000
(c) Rs. 1,000 (d) Rs. 100
Ans.(b)
(47) Choose the transaction in respect of which quoting of PAN is mandatory.
(a) Payment of Rs. 5,000 or more to RBI for acquiring valued at Rs. 5,00,000 or more.
(b) Sale or purchase of any immovable property bonds issued by it.
(c) Payment to hotels/restaurants against their bills for amount exceeding Rs. 2,500 at any one time.
(d) All of the above,
Ans.(b)
(48) Quoting of PAN is mandatory when a person is entering into following transactions :
(1) Sale of immovable property of Rs. 10 lakh or more
(2) Deposit of cash exceeding Rs. 50,000 in Post Office Savings Bank
(3) Deposit of cash aggregating Rs. 40,000 in one day in a bank

(4) Contract of sale and purchase of securities exceeding Rs. 1 lakh
(a) (1), (2) and (3) (b) (1), (2) and (4)
(c) (1), (3) and (4) (d) (1), (2), (3) and (4) Ans.(b)
(49) Anil made following transaction for the year ended 31st March, 2020 : (a) acquired immovable property for Rs. 6 lakh;
(b) made a term deposit (TDR) of Rs. 30,000 in a bank (c) paid Rs. 75,000 to a hotel for his birthday party and (d) deposited
Rs. 45,000 cash in his Savings Bank (SB) account. Quoting of PAN is mandatory in which of these transactions: (June 2019)
(a) Purchase of immovable property (b) TDR with bank and deposit of cash in bank
(c) Payment to hotel for birthday party (d) All the three above in (a), (b) & (c) Ans.(c)
(50) Quoting of PAN is not necessary in the case of - (Dec. 2016)
(a) Purchase of immovable property valued at Rs. 50 (b) Payment of hotel bills Rs. 20,000
lakh
(c) Deposit of Rs. 75,000 into bank in a day (d) Payment of Rs. 5,00,000 for purchase of shares of a
company Ans.(b)
(51) Which of the following person cannot become tax return preparer.
(a) Any legal practitioner (b) A Chartered Accountant
(c) Any officer of scheduled bank (d) All of the above
Ans.(d)
(52) Choose the person who is not eligible to furnish return under the scheme of tax return preparer.
(a) An individual (b) A person whose accounts are required to be
audited u/ s 44AB or any other existing law
(c) A company (d) Both (b) and (c) Ans.(d)
(53) Section 139D is an initiative of the Government towards by facilitating e-filing of income tax returns.
(a) Electronic commerce (b) Electronic communication
(c) Electronic Governance (d) Electronic trade Ans.(c)
(54) In case of non-resident company a return to be verified by -
(a) Managing director (b) Any director
(c) Any person (d) any person, holding valid power of attorney
Ans.(d)
(55) In case of a firm, return is to be verified by -
(a) Minor partner (b) Any partner
(c) Managing partner (d) Either (b) or (c) Ans.(d)
(56) Rose Ltd. filed its return of income for the assessment year 2019-20 on 10th August, 2019. The notice under section
143(2) for scrutiny assessment should be served on the assessee by - (June
2016)
(a) 31st March, 2020 (b) 31st March, 2021
(c) 10th February, 2020 (d) 30th September 2020
Ans.(d)
(57) XYZ Ltd. filed its return of income for the A.Y. 2019-20 on 1st February, 2020. The return was selected for scrutiny
assessment u/s 143(3). The Assessing Officer is required to serve upon the assessee a notice u/s 143(2) upto - (Dec. 2015)
(c) 31st July, 2021 (d) 30th September, 2021.
Ans.(b)
(58) Every person shall quote his permanent account number in documents pertaining to transactions of sale or purchase of
any immovable property valued at:
(a) Rs. 5,00,000 or more (b) Rs. 10,00,000 or more
(c) Rs. 15,00,000 or more (d) Rs. 30,00,000 or more
Ans.(b)
(59) In case if refund arises, Interest is payable after expiry of days from conclusion of search till the date of completion of
assessment.
(a) 30 (b) 60
(c) 120 (d) 180 Ans.(c)
(60) Application for refund is to be made within -
(a) One year from the end of relevant assessment (b) Two years from the end of relevant assessment
year. year.
(c) 6 months from the end of relevant assessment (d) 21 months from the end of relevant assessment
year. year. Ans.(a)
(61) When an assessee has paid advance tax more than the tax due on the returned income and the return is filed before the
due date' specified is section 139(1), the refund amount is eligible for interest @ - (Dec.
2016)
(a) 12% per annum (b) 6% per annum
(c) 9% per annum (d) 8% per annum
Ans.(b)
(62) Interest is payable to assessee on refund under the Income-tax, 1961 at the rate of - (June
2016)
(a) 5% per annum (b) 6% per annum
(c) 9% per annum (d) 12% per annum
Ans.(b)
(63) Interest payable by a non-corporate assessee for deferment of advance tax is - (Dec.
2014)
(a) 1.03% p.m. (b) 15% p.a.
(c) 18% p.a. (d) 1% p.m.
Ans.(d)
(64) Interest on income tax refund is granted @ .
(a) 1% p.m. or part thereof (b) 0.5% p.m. or part
thereof
(c) 12% p.a. (d) 6% p.a.
Ans.(b)
Ch 13 – TDS – TCS – Advance Tax 13.1
CHAPTER 13 TAX DEDUCTION AT SOURCE (TDS) AND ADVANCE TAX
TAX DEDUCTION/COLLECTION AT SOURCE

(1) Tax is to be deducted at source under section 192 on salaries at the time of :
(a) Payment of salary to the employee (b) Crediting the salary to the account of employee
(c) Payment of salary to the employee or (d) Payment of salary to the employee or Crediting the
Crediting the salary to the account of salary to the account of employee whichever is earlier
employee whichever is earlier Ans.(a)
(2) Deduction of tax from salary as per section 192 shall be (June 2016)
at -
(a) 10% of salary (b) The average rate of income-tax computed on
the basis of rates in force for the financial year
in which the payment is made
(c) The maximum marginal rate of 30% (d) None of the above. Ans.(b)
(3) X Ltd. pays salary of Rs. 2,50,000 as salary to Mr. Ram. Mr Ram does not have any other income. The amount of tax deducted
at source will be -
(xxi) Rs. 20,000 (b) Rs. 10,000
(c) Rs. 20,800 (d) Nil Ans.(d)
(4) X Ltd. pays salary of Rs. 5,20,000 as salary (computed) to Mr. Ram. Mr Ram has reported a loss from house property amounting
Rs. 2,00,000. The amount on which tax to be deducted at source will be -
(a) Rs. 5,00,000 (b) Rs. 2,00,000
(c) Rs. 3,20,000 (d) Nil Ans.(c)
(5) X Ltd. pays salary of Rs. 5,00,000 as salary to Mr. Shyam. Mr Shyam has reported a business loss of Rs. 1,50,000 to his
employer. The amount on which tax to be deducted at source will be -
(a) Rs. 5,00,000 (b) Rs. 1,50,000
(c) Rs. 3,50,000 (d) Nil Ans.(a)
(6) X Ltd. pays salary of Rs. 7,00,000 (computed) to Mr. Shyam. Mr. Shyam has reported a business loss of Rs. 1,50,000 to his
employer. The monthly amount of tax deducted at source will be -
(a) Rs. 867 (b) Rs. 1,950
(c) Rs. 3,683 (d) Nil Ans.(c)
(7) X Ltd. pays salary of Rs. 8,00,000 (computed) as salary to Mr. Kamlesh. Mr. Kamlesh has reported a loss from house property
of Rs. 2,00,000 to his employer. The monthly amount of tax deducted at source will be -
(a) Rs. 2,817 (b) Rs. 6,283
(c) Rs. 1,733 (d) Nil Ans.(a)

(8) At what rate tax is to be deducted at source u/s 192A in a case where the accumulated balance due to an employee participating
in a recognised provident fund is includible in his total income owing to the provisions of rule 8 of Part A of the Fourth Schedule
not being applicable if the assessee furnish the permanent account number :
(a) 20% (b) 15%
(c) 10% (d) 2% Ans.(c)
(9) Mr. Nitin after serving Lion Ltd. for 4 years resigned his job to commence a business of his own. His provident fund account
consisted of his own contribution Rs. 50,000; employer's contribution Rs. 50,000 and interest of Rs. 20,000 being attributable
equally to the said contribution. How much would be the amount deductible at source under section 192A ? (June, 2017)
(a) Rs. 12,000 being 10% of total withdrawal (b) Rs. 10,000 being 10% of total contributions
(c) Rs. 6,000 being 10% of employer's contribution (d) Rs. 2,000 being 10% of interest on the and interest theoreon
contributions Ans.(c)
(10) At what rate tax is to be deducted u/s 192A in a case where the accumulated balance due to an employee participating in a
recognised provident fund is includible in his total income owing to the provisions of rule 8 of Part A of the Fourth Schedule not
being applicable, in case where the assessee fails to furnish his PAN.
(a) 31.20% (b) 42.744%
(c) 35.88% (d) 30% Ans.(b) 11
(11) No TDS shall be made under section 192A in a case where the accumulated balance due to an employee participating in
a recognised provident fund is includible in his total income owing to the provisions of rule 8 of Part A of the Fourth Schedule not
being applicable does not exceed ? .
(a) 30,000 (b) 50,000
(c) 10,000 (d) 5,000 Ans. (b)
(12) The amount of TDS payable on the sum of Rs. 25,000 payable to X Ltd. by Government of India by way of interest on securities
owned by it would beta) Rs. 2,57b (b) Rs. 5,150
(c) Nil (d) Rs. 7,725...

Ans.(c)
(13) The amount of TDS payable on the sum of Rs. 25,000 payable to Mr. A by way of securities owned by him of a company
listed in recognised stock exchange and issued in dematerialized form would be -
(a) Rs. 2,575 (b) Rs. 5,150
(c) Nil (d) Rs. 7,725 Ans.(c)
(14) Mr. X has invested Rs. 10,00,000 in 12% debentures of ABC Ltd. The gross amount of interest payable by the company is Rs.
1,20,000. The amount of tax deducted at source will be :
(a) Rs. 12,000 (b) Rs. 24,000
(c) Rs. 12,360 (d) Rs. 24,720 Ans.(a)

(15) Tax shall be deducted @ 10% if the interest payable on 7.75% Savings (Taxable) Bonds, 2018 exceeds ___________ during
the financial year.
(a) Rs. 5,000 (b) Rs. 10,000
(c) Rs. 20,000 (d) Rs. 25,000 Ans.(b)
(16) Rohan won a State Government lottery of Rs. 1,00,000 on 11th October, 2019. The government should deduct tax on such
winning amounting to - (June 2016)
(a) Rs. 30,000 (b) Rs. 33,000
(c) Rs. 33,990 (d) Rs. 31,200 Ans.(a)
(17) The person responsible for paying any income by way of winnings from lottery an amount exceeding Rs. 10,000, shall deduct
- (Dec. 2 015)
(a) TDS @30% (b) TDS @31.2%
(c) TDS @10% (d) No TDS. Ans.(a)
(18) While making payment of winnings from horse race, tax will be deducted at source, if the payment exceeds - (June 2016)
(a) Rs. 5,000 (b) Rs. 10,000
(c) Rs. 25,000 (d) Rs. 50,000 Ans.(b)

(19) X Ltd. pays dividend u/s 2(22)(e) to its shareholder's. Mr. A resident who is the shareholder of such company receives dividend
Rs. 2,000 through account payee cheque, what will be the amount of TDS payable -
(a) Rs. 206 (b) Rs. 618
(c) Rs. 412 (d) Nil Ans.(d)
(20) M/s. X & Company a partnership firm pays interest Rs. 5,000 to a resident company on loan borrowed from such company.
What will be the amount of TDS payable ?
(a) Rs. 2,060 (b) Rs. 1,030
(c) Rs. 3,090 (d) Nil Ans.(d)

(21) Individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business exceeds in case of
business during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable
to deduct tax at source under section 194A.
(a) 125,00,000 (b) Rs. 1,00,00,000
(c) Rs. 15,00,000 (d) Rs. 60,00,000 Ans.(b)

(22) No tax shall be deducted under Section 194A where the amount of such income or, as the case may be, the aggregate of the
amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee,
does not exceed where the payer is a banking company (including any bank or
banking institution).
(a) Rs. 40,000 (b) Rs. 15,000
(c) Rs. 25,000 (d) Rs. 5,000 Ans.(a)
(23) On 1-07-2019, Mr. Rajesh started a 9 months recurring deposit of Rs. 1,80,000 per month @ 6.25% p.a. with
TP Bank. The recurring deposit matures on 31-03-2020. Interest on such deposit amount is Rs. 42,590. Examine the
TDS implications under section 194A. ' 1
(a) Tax has to be deducted by TP Bank on the (b) Tax has not to be deducted by TP Bank on the
interest of Rs. 42,590 as it exceeds the threshold interest of Rs. 42,590. as it does not exceeds the
limit of Rs. 40,000 threshold limit of ^ 50,000
(c) Tax has to be deducted by TP Bank on the (d) Tax has to be deducted by TP Bank on the Ans.(a)
interest of Rs. 42,590 as it exceeds the threshold interest of Rs. 42,590 as it exceeds the threshold
limit of Rs. 5,000 limit of Rs. 10,000
(24) No tax shall be deducted under Section 194A on such interest income paid by way of interest on the compensation amount
awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the
amounts of such income paid during the financial year does not exceed.
(a) Rs. 40,000 (b) Rs. 15,000
(c) Rs. 25,000 (d) Rs. 50,000 Ans.(d)

(25) No tax shall be deducted under Section 194A to such income credited or paid by a co-operative society (other than a cooperative
bank) to
(a) a member thereof (b) any other co-operative society
(c) Neither (a) nor (b) (d) Both (a) and (b) Ans.(d)
(26) Tax is to be deducted at source under section 194B on lottery winnings at the time of :
(a) Payment of such income to the payee (b) Crediting of such income to the account of payee
(c) Payment or credit to the account of payee (d) Payment or credit to the account of payee whichever is earlier
whichever is later Ans.(a)
(27) Mr. Ravi solved a crossword puzzle and received Rs. 84,000 after deduction of tax at source. His income from crossword
puzzle chargeable to tax would be : (June, 2017)
(a) Rs. 84,000 (b) Nil
(c) Rs. 72,000 (d) Rs. 1,20,000 Ans.(d)

(28) Rate of tax deduction at source in case of winnings from camel race will be :
(a) 30% (b) 20%
(c) 10% (d) Nil Ans.(d)
(29) Mr. A won a cash prize of Rs. 10,000 from a crossword puzzles published by Rajasthan Patrika. The amount of TDS, Rs.
payable will be -
(a) Rs. 7,725 (b) Rs. 8,498
(c) Rs. 15,450 (d) Nil Ans.(d)
(30) In a contest, Amit wins Rs. 50,000 cash and a motor-cycle worth Rs. 50,000. The amount of tax deducted at source will be -
(Dec. 2014)
(a) Rs. 30,000 (b) Rs. 15,000
(c) Rs. 27,000 (d) Rs. 27,810. Ans.(a)
(31) The amount of TDS payable on the sum of Rs. 50,000 payable to Mr. X by Government of India by way of interest on securities
owned by it would be -
(a) Rs. 2,575 (b) Rs. 5,150
(c) Nil (d) Rs. 7,725 Ans.(c)
(32) Interest Rs. 5,000 is payable to a resident individual on listed debentures through account payee cheque. The TDS payable will
be -
(a) Nil (b) Rs. 515
(c) Rs. 1,030 (d) Rs. 1,545 Ans.(a)

(33) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or
to, the contractor, if such sum does not exceed ___________ .
(a) Rs. 30,000 (b) Rs. 20,000
(c) Rs. 10,000 (d) Rs. 5,000 Ans.(a)

(34) Where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid to the account of, or to,
the contractor,during the financial year exceeds ___________ , the payer shall be liable to deduct tax at source.
(a) Rs. 75,000 (b) Rs. 50,000
(c) Rs. 30,000 (d) Rs. 1,00,000 Ans.(d)
(35) Zen Ltd. made a payment of Rs. 11,00,000 to Amar, a resident transport contractor who owns 5 goods carriages and who has
intimated his PAN details. The tax to be deducted at source under section 194C will be - (June,
2015)
a) Rs. 10,000 (b) Rs. 200
(c) Nil (d) Rs. 11,000. Ans.(c)

(36) Payer shall not be liable to deduct tax at source where payee is engaged in the business of plying or hiring goods carriages and
owns ___________ at any time during the previous year and furnishes a declaration to that effect along with his PAN, to the person
paying or crediting such sum.
(a) 10 or less goods carriages (b) 5 or less goods carriages
(c) 20 or less goods carriages (d) 15 or less goods carriages Ans.(a)
(37) The liability to deduct tax at source on insurance commission will arise when the commission paid or payable to an agent for
the year exceeds - (Dec. 2016)
(a) Rs. 5,000 (b) Rs. 10,000
(c) Rs. 15,000 (d) Rs. 20,000 Ans.(c)

(38) Where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or
likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed ? ___________ no tax shall
be deducted on insurance commission.
(a) Rs. 75,000 (b) Rs. 50,000
(c) Rs. 30,000 (d) Rs. 15,000 Ans.(d)

(39) Rate of TDS on payments made to Individual or HUF for advertising will be -
(o) 1% (b) 2%
(c) 10% (d) 5% „
Ans.(a)
(40) Rate of TDS on payments made for contracts where payee is individual will be -
(8) 1% (b) 2%
(c) 10% (d) 5% Ans.(a)
(41) Rate of TDS in case of payments made for professional services to a firm artist will be -
(e) 1% (b) 2%
(c) 10% (d) 5% Ans.(c)
(42) Rate of TDS under Section 194J when payments are made to payee is engaged only in the business of operation of call centre
is ___________
(a) 1% (b) 2%
(c) 10% (d) 5% Ans.(b)
(43) An HUF, not subject to tax audit in the earlier year, paying fees of Rs. 35,000 to a Practising Company Secretary shall - (June,
2015)
(a) Not deduct TDS (b) Deduct TDS @ 10%
(c) Deduct TDS @ 20% (d) Deduct TDS @ 10.3%. Ans.(a)
(44) At what rate, will the tax be deducted at source by a banking company, responsible for paying to a resident any income by way
of interest other than interest on securities amounting to more than Rs. 10,000, when the payee does not furnish his PAN to deductor
- (Dec. 2014)
(a) 10% (b) 20%
(c) 30% (d) 40%. Ans.(b)
(45) Rate of tax deduction at source in case of payment in respect of life insurance policy u/s 194DA will be :
(a) 1% (b) 2%
(c) 5% (d) Nil Ans.(c)
(46) In case of payment in respect of life insurance policy u/ s 194DA, tax is not required to be deducted if the payment is less than
___________
(a) Rs. 1,00,000 (b) Rs. 2,00,000
(c) Rs. 5,000 (d) Rs. 10,000 Ans.(a)

(47) Rate of TDS in case of payment made by a business trust to Unit holder of such business trust being a resident is:
(a) 30% (b) 20%
(c) 10% (d) Nil Ans.(c)
(48) Rate of tax deduction at source in case of payment of interest by a business trust to Non-resident, not being a company, or a
foreign company is :
(a) 30% (b) 20%
(c) 10% (d) 5% Ans.(d)
(49) In case of payment in respect of commission under section 194G, tax is not required to be deducted if the payment does not
exceed ___________
(a) Rs. 15,000 (b) Rs. 2,00,000
(c) Rs. 5,000 (d) Rs. 10,000 Ans.(a)

(50) In case of payment in respect of commission u/s 194G, tax is required to be deducted @ ___________
(a) 10% (b) 5%
(c) 30% (d) 20% Ans.(b)
(51) When an employee makes premature withdrawal from employee's provident fund account, the requirement for tax deduction
is attracted when the quantum of withdrawal exceeds - (Dec. 2016)
(a) Rs. 10,000 (b) Rs. 40,000
(c) Rs. 50,000 (d) None of the above. Ans.(c)
(52) What will be the amount of TDS in case of commission Rs. 15,000 payable by Bharat Sanchar Nigam Ltd. to their public call
office franchisees ?
(a) Rs. 520 (b) Rs. 1,040
(c) Rs. 260 (d) Nil Ans.(d)

(53) Any person responsible for paying to a non-resident sportsman, who is not a citizen of India referred under section 115BBA
shall be liable to deduct tax at source :
(a) 20.80% (b) 42.744%
(c) 31.20% (d) 10.40% Ans.(a)
(54) Mr. Anderson, a British citizen, is non resident entertainer has performed in India and has been paid remuneration of Rs.
10,00,000. The amount of tax deducted at source will be :
(a) Rs. 4,27,440 (b) Rs. 2,08,000
(c) Rs. 1,04,000 (d) Nil Ans.(b)

(55) Any person who is responsible for paying, to any person, who is or has been stocking, distributing, purchasing or selling lottery
tickets, any income by way of commission, remuneration or prize on such tickets shall be liable to deduct tax at source if such
amount exceeds.
(a) Rs. 15,000 (b) Rs. 5,000
(c) Rs. 10,000 (d) Rs. 20,000 Ans.(a)

(56) Any person, who is responsible for paying, to a resident, any income by way of commission or brokerage, shall be liable to
deduct tax at source under Section 194H, in a case where the amount of such income or, as the case may be, the aggregate of the
amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee,
exceeds .
(a) f 1,000 (b) Rs. 15,000
(c) Rs. 10,000 (d) Rs. 20,000 Ans.(b)
(57) Prakash maintained a recurring deposit by paying Rs. 20,000 per month in a bank. The interest accrued and credited during
2019-20 on such deposit is Rs. 15,000. The amount of TDS required to be deducted by the bank would be : {June 2019)
(a) NIL (b) Rs. 1,500 @ 10%
(c) Rs. 3,000 @20% (d) Rs. 500 @ 10% over Rs. 10,000 Ans.(b)
(58) Sagar engaged in a business, booked a marriage hall of Yash having PAN for conducting mega sale during festival season of
F.Y. 2019-20 and paid rent of Rs. 55,000 for 3 days period. His total turnover for financial year 2019-20 is Rs. 85 lakh. The amount
of Tax Deduction at Source (TDS) to be made by Sagar on the amount of rent paid will be :
(a) NIL (b) Rs. 5,500
(c) Rs. 2,750 (d) Rs. 11,000 Ans.(a)

(59) Any person who is responsible for paying to a resident any income by way of rent shall be liable to deduct tax at source where
the amount of such income credited or paid or likely to be credited or paid during, the financial year to the account of, or to, the
payee, exceeds .
(a) Rs. 2,40,000 (b) Rs. 10,000
(c) Rs. 1,80,000 (d) Rs. 50,000 Ans.(a)

(60) Any person who is responsible for paying to a resident any income by way of rent and such income is credited or paid to a,
being a real estate investment trust, in respect of any real estate asset, referred to in Section 10 (23FCA), owned directly by such
business trust, TDS provisions will not be attracted.
(a) Business trust (b) Individual
(c) Association of persons (d) HUF Ans.(a)
(61) The maximum amount of rent payment where deduction of tax at source is not required in a financial year is - (Dec. 2014)
(a) Rs. 1,20,000 (b) Rs. 1,80,000
(c) Rs. 2,00,000 (d) None of the above. Ans.(b)

(62) No deduction of tax shall be made under Section 194-IB, where the amount of rent does not exceed ___________ for a
month or part of a month during the previous year.
(a) Rs. 20,000 (b) Rs. 50,000
(c) Rs. 60,000 (d) Rs. 6,00,000 Ans.(b)

(63) An individual responsible for paying to a resident any income by way of rent shall be liable to deduct tax at source under
Section 194-IB @ ___________ .
(a) 10% (b) 5%
(c) 30% (d) 40% Ans.(b)
(64) Any person, being a transferee, responsible for paying to a resident transferor any sum by way of consideration for transfer of
any immovable property shall not be liable to deduct tax at source where the total amount of consideration for the transfer of
immovable property is less than .
(a) Rs. 50,00,000 (b) Rs. 1,00,000
(c) Rs. 25,00,000 (d) Rs. 10,00,000 Ans.(a)
(65)Pradip acquired an urban land from Chitra for Rs. 70 lakh on 10th October, 2019. At what rate, tax is deductible at source in
respect of such transaction - (June 2016)
(a) 2% (b) 5%
(c) 1% (d) 3% Ans.(c)
(66) Compute the amount of tax to be deducted. Interest of Rs. 1,650 paid by XYZ Ltd. to Kush on 15-05-2019, by way of account
payee cheque on account of debentures of the company held by them separately. Debentures of XYZ Ltd. are listed in Bombay
Stock Exchange.
(a) Nil (b) 165
(c) 330 (d) 660 Ans.(a)
(67) Compute the amount of tax to be deducted. PQR Ltd. paid Rs. 10,00,000 to non-resident entertainer on 28-07-2019 in respect
performance in an event of promotion of a new product.
(a) Rs. 2,08,000 (b) Rs. 3,12,000
(c) Rs. 1,04,000 (d) Nil Ans.(a)
(68) Compute the amount of tax to be deducted. Sports World Magazine paid Rs. 4,00,000 to Ricky Ponting, a non-resident
cricketer, for writing an article for the September issue. The payment for the same was made on 25-06-2019.
(a) Rs. 83,200 (b) Rs. 41,600
(c) Rs. 1,24,800 (d) Nil Ans.(a)
(69) Compute the amount of tax to be deducted. Sitting fees of Rs. 25,700 paid to director of the company on 28-08-2019.
(a) Rs. 2,570 (b) Rs. 5,140

(c) 257 (d) Nil Ans.(a)
(70) Ashish, director of PQR Ltd. is eligible for board sitting fees of Rs. 10,000 for every meeting attended by him. During the year
2019-20, he had attended six meetings. The amount of tax required to be deducted from such sitting fees to be paid to Ashish by the
company shall be : (June 2019)
(a) Rs. 12,000 @ 20% (b) Rs. 1,200 @ 2%
(c) Rs. 3,000 @5% (d) Rs. 6,000 @10% Ans.(d)
(71) Compute the amount of tax to be deducted. Rs. 2,40,000 paid to Mr. A on 25-03-2020 by Rajasthan State Government on
compulsory acquisition of his urban land.
(a) Rs. 18,000 (b) Rs. 1,800
(c) Rs. 36,000 (d) Nil Ans.(d)
(72) Payment has been made by X Ltd. to Mr. A by way of royalty Rs. 20,000 and fees for technical services Rs. 20,000. What will
be the amount of TDS payable -
(a) Rs. 4,160 (b) Nil
(c) Rs. 8,320 (d) Rs. 12,480 Ans.(b)
(73) What will be the amount of TDS payable by a company if it pays Rs. 10,00,000 non competing fees to Y Ltd. ?
(a) Nil (b) Rs. 1,04,000
(c) Rs. 1,00,000 (d) Rs. 2,08,000 Ans.(c)

(74) Any person, being an Individual or Hindu undivided family (other than those who are required to deduct income-tax as per the
provisions of section 194C, section 194H or section 194J) responsible of paying any sum to a resident by way of commission, fees
for professional services and for carrying out any work in pursuance of a contract shall not be liable to deduct tax at source where
the total amount of consideration for the transfer of immovable property is less than
(a) Rs. 10,00,000 (b) Rs. 50,00,000
(c) Rs. 25,00,000 (d) Rs. 15,00,000 Ans.(b)

(75) Rate of tax deduction at source u/s 194M is :
(a) 1% (b) 2%
(c) 5% (a) Nil Ans. (c)
(76) Who is responsible to deduct tax under section 194N for paying any sum, or, as the case may be, aggregate of sums, in cash, in
excess of Rs. 1 crore during the previous year, to any person (herein referred to as the recipient) from one or more accounts maintained
by the recipient with it?
(a) a banking company to which the Banking (b) a co-operative society engaged in carrying on the business of banking
Regulation Act, 1949 applies (including any

bank or banking institution referred to in
section 51 of that Act
(c) a post office (d) All of the above Ans.(d)

(77) Rate of tax deduction at source u/s 194N is :
(a) 1% (b) 2%
(c) 5% (a) Nil Ans.(b)
(78) No deduction of tax shall be made by any person from any sums payable to -
(a) The Government (b) The Reserve Bank of India
(c) A Mutual Fund specified u/s 10(23D) (d) All of these. Ans.(d)
(79) If a payee eligible for commission exceeding Rs. 15,000 does not furnish his PAN to the payer, tax is deductible at source at-
(Dec. 2 016)
(a) Nil rate (b) 20%
(c) 10% (d) 30% Ans.(b)
(80) An intimation shall be sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to,
him before the expiry of ___________ from the end of the financial year in which the statement is filed.
(a) 6 months (b) One year
(c) 2 years (d) Five years Ans. (b)
(81) If a person responsible for deduction of tax at source, after deduction, fails to deposit the same into the Government treasury,
he will be liable to pay interest @ - (Dec. 2016)
(a) 1% per month or part of the month (b) 1.5% per month or part of the month
(c) 2% per month or part of the month (d) 15% per annum Ans.(b)
(82) In case of failure to deduct/collect tax at source, the defaulter shall be liable to pay -
(a) Simple interest @ 12% p.a. (b) Simple interest @ 10% p.a.
(c) Simple interest @ 1% p.m. or part thereof. (d) Simple interest @ 1% p.m. Ans.(c)
(83) In case of failure to pay the tax deducted at source, defaulter shall be liable to pay -
(a) Simple interest @ 12% p.a. (b) Simple interest @ 10% p.a.
(c) Simple interest @1% p.m. or part thereof. (d) Simple interest @ 1.5% p.m. or part thereof Ans.(c)
(84) An amount of Rs. 40,000 was paid to Mr. X on 01-07-2019 towards fees for professional services without deduction of tax at
source. Subsequently, another payment of Rs. 50,000 was due to Mr. X on 28-02-2020, from which tax @ 10% (amounting to Rs.
9,000) on the entire amount of Rs. 90,000 was deducted. However, this tax of Rs. 9,000 was deposited only on 22-06-2020. Compute
the interest chargeable under section 201(1A).
(a) Rs. 860 (b) Rs. 320
(c) Rs. 540 (d) Rs. 1,180 Ans.(a)

(85) Every seller shall collect tax at source from the buyer at the time of debiting of the amount payable by the buyer to the account
of the buyer; or receipt of such amount from the buyer in cash or by cheque or draft or any other mode, whichever is earlier, collect
tax at source at the rate of in case of tendu leaves.
(a) 1% (b) 2.50%
(c) 2% (d) 5% Ans.(d)
tax at source at the rate of in case of Timber obtained under a forest lease.
(a) 1% (b) 2.50%
(c) 2% (d) 5% Ans.(b)
tax at source at the rate of in case of alcoholic liquor.
(a) 1% (b) 2.50%
(c) 2% (d) 5% Ans.(a)
)88) Every seller shall collect tax at source from the buyer at the time of debiting of the amount payable by the buyer to the account
tax at source at the rate of in case of Minerals, being coal or lignite or iron ore.
(a) 1% (b) 2.50%
(c) 2% (d) 5% Ans.(a)
(89) Every person, who grants a lease or a licence or enters into a contract or otherwise transfers any right or interest either in whole
or in part in any parking lot or toll plaza or mine or quarry, to licensee or lessee, (other than a public sector company) for the use of
such parking lot or toll plaza or mine or quarry for the purpose of business, shall be liable to collect tax at source @ ___________ .
(a) 1% (b) 2%
(c) 3% (d) 10% Ans.(b)
(90) Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding
___________ shall, at the time of receipt of such amount, collect from the buyer, a sum equal to ___________ of the sale
consideration as income-tax.
(a) Rs. 10,00,000,1% (b) Rs. 2,00,000,1%
(c) Rs. 2,00,000,5% (d) Rs. 10,00,000,5% Ans.(a)

(91) In case of tax collection at source, buyer doesn't includes -
(a) A public sector company (b) State or central Government
(c) An embassy (d) All of these Ans.(d)
(92) No order shall be made under section 201(1) deeming a person to be an assessee in default for failure to deduct
the whole or any part of the tax from a person resident in India, at any time after the expiry of :
(a) seven years from the end of the financial (b) two years from the end of the financial year in which the
year in which payment is made or credit is correction statement is delivered under the proviso to
given Section 200(3),
(c) earlier of (a) or (b) (d) later of (a) or (b) Ans.(d)
(93) In case of payment to be made by or on behalf of Government, TDS/TCS shall be paid -
(a) On the same day when such deduction/ (b) With in two months from lost day of the month in which
collection is made. deduction/collection is made.
(c) With in one week from last day of the month (d) None of the above.
in which deduction/collection is made. Ans.(a)
(94) XYZ Ltd. paid Rs. 55,00,000 in part payment to contractor ABC contractors Ltd. on 15-10-2019. What is the due date for
payment of TDS ?
(a) 15-10-2019 (b) 07-11-2019
(c) 31-12-2019 (d) 15-12-2019 Ans.(b)
(95) What is the due date of payment of TDS in the above case, if XYZ Ltd. credited such amount to the account of ABC contractor
Ltd. on 31-3-2020 ?
(a) 30-04-2020 (b) 07-04-2020
(p) 31-03-2020 (d) 15-04-2020 Ans.(a)
(96) Penalty for failure to collect tax at source, as a percentage of tax to be collected is - (Dec. 2016)
(a) 25% (b) 100%
(c) 75% (d) 50% Ans.(b)
ADVANCE TAX
(97) A senior citizen is not liable for advance tax, if he does not get any income from - (Dec. 2016)
(a) Interest or securities (b) Capital gains
(b) Profit and gains from business or profession (d) All of
the above Ans.(c)
(98) Which of the following assessee is not liable to pay advance tax u/s 207 during the FY 2019-20 - (June, 2015)
(a) A senior citizen having income chargeable (b) A senior citizen not having income chargeable under the
under the head 'profits and gains of business head 'profits and gains of business or profession'
or profession'
(c) A super senior citizen having income (d) A resident individual not being senior citizen having
chargeable under the head 'profits and gains of income chargeable under the head 'profits and gains of
business or profession1 business or profession1. Ans.(b)
(99) Under section 208, it is obligatory for an assessee to pay advance tax where the tax payable is - (June,
2015)
(a) Rs. 10,000 or more (b) Rs. 20,000 or more
(c) ^5,000 or more (d) Rs. 8,000 or more. Ans.(a)

(100) Tax is payable in advance only if such amount of such tax is -
(a) Rs. 2,500 or more (b) Rs. 5,500 or more
(c) Rs. 5,000 or more (d) Rs. 10,000 or more Ans.(d)
(101) In case of individual assessee, amount of advance tax payable in the third instalment (i.e. on or before 15th
December) shall be -
(a) 30% of total advance tax payable (b) 75% of total advance tax - Advance tax paid in earlier
instalments
(c) 45% of total advance tax - Advance tax paid (d) 60% of total advance tax - Advance tax paid on earlier
in earlier instalments instalments Ans.(b)
(102) In case of individual assessee, amount of advance tax payable in the first instalment (i.e. on or before 15th
June) shall be -
instalments
in earlier instalments instalments Ans.(a)
(103) In case of individual assessee, amount of advance tax payable in the last instalment (i.e. on or before 15th
March) shall be-
instalments
in earlier instalments instalments Ans.(c)
(104) In case of Company assessee, amount of advance tax payable in the third instalment (i.e. on or before 15th
December) shall be -
(a) 15% of total advance tax payable (b) 75% of total advance tax - Advance tax paid
in earlier instalments
(c) 45% of total advance tax - Advance tax paid (d) 60% of total advance tax - Advance tax paid Ans.(b)
in earlier instalments on earlier instalments
(105) In case of Company assessee, amount of advance tax payable in the second instalment (i.e. on or before 15th
September) shall be -
(c) 45% of total advance tax - Advance tax paid (d) 60% of total advance tax - Advance tax paid Ans.(c)
(106) In case of Company assessee, amount of advance tax payable in the first instalment (i.e. on or before 15th June)
shall be -
(c) 45% of total advance tax - Advance tax paid (d) 60% of total advance tax - Advance tax paid Ans.(a)
(107) Calculate advance tax payable by Sumit on or before 15th September, 2019 from the following : Rent from house property
Rs. 46,000 per month; municipal taxes paid by him Rs. 32,000 - (Dec. 2014)
(a) Rs. 4,920 (b) Rs. 4,320
(c) Rs. 5,928 (d) Nil Ans.(d)
(108) Raghu, aged 62 years, has pension income of Rs. 2,40,000 (computed) and rental income (computed) of Rs. 3,60,000 for the
financial year 2019-20. How much amount he must have paid as advance tax in September, 2019 - (June 2016)
(a) Rs. 12,000 (b) Rs. 10,000
(c) Rs. 31,200 (d) Nil Ans.(d)

(109) An assessee liable to pay advance tax is not liable to pay interest under section 234B, if advance tax paid by him is not less
than -(Dec. 2014)
(a) 90% of advance tax payable by him (b) 80% of advance tax payable by him
(c) 100% of advance tax payable by him (d) 70% of advance tax payable by him. Ans.(a)
(110) If an assessee fails to pay advance tax as required under the Act, or the advance tax paid by him is less than of the assessed
tax, he shall be liable to pay interest u/s 234B.
(a) 80% (b) 90%
(c) 95% (d) 98% Ans.(b)
(111) Steam (P) Ltd. reports total income of Rs. 20 lakh for the year ended 31st March, 2020 (Turnover in FY 2017-18 is 480
crores).
The total tax liability payable before 15th September, 2019 by way of advance tax is - (Dec. 2015)
(a) Rs. 93,600 (b) Rs. 2,80,800
(q) Rs. 1,87,200 (d) Rs. 3,12,000 Ans.(b)
(112) An individual needs to pay Rs. 1,00,000 as advance tax. By 15th of December, how much amount must be paid by the
individual:
(a) Rs. 30,000 (b) Rs. 75,000
(c) Rs. 1,00,000 (d) Nil Ans.(b)

(113) The liability to pay interest under section 234B would arise when the advance tax plus TDS/TCS to the credit of the assessee
is less than - (Dec. 2016)
(a) 75% of the assessed tax (b) 90% of the assessed tax
(c) 60% of the assessed tax (d) 100% of the assessed tax Ans.(b)
(114) ABC Ltd. whose due date of filing the return for the assessment year 2020-21 was 30-9-2020 failed to file his return. The
Assessing Officer completed his assessment on 25-09-2021 and determined a tax liability of Rs. 2,20,000 (without giving credit for
advance tax or TDS). ABC Ltd. had paid an advance tax of Rs. 40,000 and a TDS of Rs. 18,000. Determine the interest payable by
'ABC Ltd.' under section 234B.
(a) Rs. 30,000 (b) Rs. 34,020
(c) Rs. 60,000 (d) Rs. 29,160 Ans.(d)

(115) The following particulars are furnished by Ms. Priyanka for the financial year 2019-20 (assessment year 2020-21):
Tax on total income (paid on 31-7-2020) Rs. 1,50,000
Date of filing the return 31-7-2020
Due date for filing the return 31-7-2020
116. Compute the total interest payable under sections 234C.
(a) Rs. 1,350 (b) Rs. 2,700
(c) Rs. 1,500 (d) Rs. 7,575 Ans.(d)

(117) Interest payable under section 234C is computed at - (June, 2015)
(a) Compound interest @1% per month (b) Simple interest @1% per annum
(c) Compound interest @ 1% per annum (d) Simple interest @ 1% per month. Ans.(d)
(118) Interest for default in payment of installment(s) of advance tax is levied under section - (June,
2015)
(a) 234A (b) 234B
(c) 234C (d) 234D. Ans.(c)
(119) Interest for deferment in payment of advance tax u/s 234C is calculated on the tax liability computed on - (Dec. 2015)
(a) Assessed income (b) Returned income
(c) Disputed income (d) Appealed income Ans.(b)
(119) An assessee is required to make payment of interest he failed to make the payment, of demand before the
where of 30 days from the service of notice of demand @ - expiry
(Dec. 2015)
(a) 1 % for every month or part thereof till the (b) 2% p.m. Till the date of payment
date of payment
(c) 1.5% p.m. Till the date of payment (d) 1.25% for every month or part thereof till the date of
payment. Ans. (a)
Ch 14 – Various Entities 14.1
CHAPTER 14 – Various Entities

ASSESSMENT OF INDIVIDUALS

(1) Mr. Shiva gifted a let-out building which fetches rental income of Rs. 10,500 per month to his son's wife on 1-11-2019.
The
municipal tax of Rs. 6,000 on the property was paid on 10-1-2020. The total income from all other sources (computed) amounts
to Rs. 2,60,000 except income from above said property. His total income chargeable to tax is : (June,
2017)
(a) Rs. 3,11,450 (b) Rs. 3,44,000
(c) Rs. 3,80,000 (d) Rs. 3,33,500

Ans.(b)
(2) Mr. X has earned salary income of Rs. 5,00,000 (computed) and he has suffered loss from house property amounting Rs.
2,00,000. General business loss - Rs. 1,00,000. He has made payment of Rs. 25,000 in public provident fund. Determine his
total income.
(a) Rs. 5,00,000 (b) Rs. 2,75,000
(c) Rs. 1,75,000 (d) Rs. 3,50,000

Ans.(b)
(3) Mr. X has earned salary income of Rs. 5,00,000 (computed) and he has suffered loss under the head capital gains Rs.
1,50,000. He has made payment of Rs. 75,000 in public provident fund. Determine his total income.
(a) Rs. 5,00,000 (b) Rs. 2,25,000
(c) Rs. 3,50,000 (d) Rs. 4,25,000

Ans.(d)
(4) Mr. X has earned salary income of Rs. 10,00,000 (computed) and he has suffered loss under the head capital gains Rs.
1,50,000. He has made payment of Rs. 1,00,000 in public provident fund. Determine his tax liability.
(a) Rs. 1,08,150 (b) Rs. 96,200
(c) Rs. 92,500 (d) Rs. 1,19,350

Ans.(b)
(5) Mr. X, 82 years of age resident in India has earned Long term capital gains on sale of building of Rs. 10,00,000 and has
no other income. He has made payment of Rs. 1,00,000 in public provident fund. Determine his tax liability.
(a) Rs. 2,06,000 (b) Rs. 1,04,000
(c) Rs. 82,400 (d) Rs. 1,85,400

Ans.(b)
(6) Mr. X, 82 years of age non resident in India has earned Long term capital gains on sale of building of Rs. 6,00,000 and
has no other income. He has made payment of Rs. 1,00,000 in public provident fund. Determine his tax liability.
(a) Nil (b) Rs. 1,24,800
(c) H,06,000 (d) Rs. 83,200

Ans.(b)
(7) Mr. Vijay, 21 years of age, resident in India, has earned agricultural income of Rs. 6,00,000 and has no other income. He
has made payment of Rs. 1,00,000 in public provident fund. Determine his tax liability.
(a) Nil (b) Rs. 1,03,000

(c) Rs. 30,900 (d) Rs. 28,840

Ans.(a)
(8) Mr. Ajay, 21 years of age, resident in India, has earned agricultural income of Rs. 8,00,000 and has other income of Rs.
1,00,000. He has made payment of Rs. 1,00,000 in public provident fund. Determine his tax liability.
(a) Nil (b) Rs. 1,03,000
(c) Rs. 30,900 (d) Rs. 28,840

Ans.(a)
(9) Mr. Robert aged 52 years received monthly pension of Rs. 30,000 during the financial year 2019-20. His agricultural
income
in India is Rs. 50,000. His net income-tax liability is : (June, 2017)
(a) Rs. 14,420 (b) Rs. 9,270
(c) Nil (d) Rs. 1040

Ans.(c)
Answer Hint: Salary Income = Rs. 3,60,000 - Rs. 50,000 = Rs. 3,10,000. Tax liability is nil after giving rebate under Section
87A - Rs. 3,000.
(10) Mr. Parmendra, 24 years of age, resident in India, has earned agricultural income of Rs. 6,00,000 and has his other income
is Rs. 5,00,000. He has made payment of Rs. 1,00,000 in public provident fund. Determine his tax liability.
(a) Nil (b) Rs. 1,04,000
(c) Rs. 18,200 (d) Rs. 62,400

Ans.(c)
Rebate under Section 87A is admissible as his total income does not exceed Rs. 5,00,000.
(11) Ms. Vaishali, employed in a private sector company, furnishes following information for the year ended 31-03-2020 :
Income from salary (computed) *
3,45,000
Saving Bank interest 15,000
Tax on non-monetary perquisite paid by employer Amount contributed by her during 20,000
the year are given below :
Contribution to recognized provident fund 60,000
Health insurance premium - on self (paid by crossed cheque) 7,000
Medical expenditure for dependent sister with disability 20,000

Compute the total income of Ms. Vaishali for the assessment year 2020-21.
(a) Rs. 2,08,000 (b) Rs. 2,63,000
(c) Rs. 2,73,000 (d) Rs. 2,68,000

Ans.(a)
Answer Hint : Deduction is allowed under Section 80C - Rs. 60,000, Section 80D - Rs. 7,000, 80DD - Rs. 75,000, 80TTA-
Rs. 10,000. Tax on non-monetary perquisite paid by employer is exempt in hands of employee under Section 10(10CC).
(12) Ms. Manisha, employed in a private sector company, furnishes following information for the year ended 31-03-2020 :
Rs.
Income from salary (computed) 3,55,000
Interest on public provident fund 20,000
Amount contributed by her during the year are given below :
Life insurance premium paid on her own life on policy taken on 01-04-2019 (capital sum assured Rs. 6,00,000) 70,000
Health insurance premium - on self (paid by crossed cheque) 25,000

Repayment of housing loan taken on 10-4-2019 along with interest in respect of self occupied house 45,000 (Principal - Rs.
15,000 and interest Rs. 30,000.)
Compute the total income of Ms. Manishafor the assessment year 2020-21.
(a) 12,25,000 (b) Rs. 2,55,000
(c) Rs. 2,75,000 (d) Rs. 2,68,000

Ans.(a)
Answer Hint:
Income from salary (computed) 3,55,000
Loss from house property (Self occupied house - Annual Value - Nil, Less : Interest on borrowed capital - -30,000
?
30,000)
Interest on PPF is exempt from tax -
Gross Total Income 3,33,000
Less: Deductions under Chapter VI-A
Life insurance premium subject to maximum of 10% of capital sum assured -Section 80C -60,000
Repayment of housing loan -15,000
Health insurance premium - on self - Section 80D -25,000
Deduction of saving bank interest under Section 80TTA -8,000
Total Income 2,25,000
(13) Mr. X, a resident individual, furnishes you with the following information for the year ended 31-3-
2020 :
Salary income (computed) 5,00,000
Long term capital gains on sale of land 2,50,000
Short term capital gains on sale of equity shares listed in recognized stock exchange on which STT paid 1,50,000
Unexplained Investments 2,00,000
Mr. X claims an expenditure of Rs. 15,000 incurred for making such unexplained investment. You are required to determine
his tax liability for assessment year 2020-21.
(a) Rs. 2,23,510 (b) Rs. 2,44,400
(c) Rs. 1,44,200 (d) Rs. 1,25,660

Ans.(b)
Answer Hint:
Tax liability shall be computed as under
Salary Income - Taxable at slab rates 12,500
LTCG - Taxable @ 20% 50,000
STCG on sale of equity shares listed in recognized stock exchange on which STT paid- Taxable @ 15% 22,500
Unexplained investment taxable under Section 115BBE @75% 1,50,000
2,35,000
Add: HEC @4% 9,400

Total Tax liability 2,44,400
(14) Dining the year 2019-20, Basu won Rs. 4,00,000 from a motor car rally out of which he deposited Rs. 1,50,000 in his
PPF
account. He does not have any other income. Net tax payable by Basu for AY 2020-21 will be - (June,
2015)
(a) Rs. 1,24,800 (b) Rs. 15,450
(c) Nil (d) None of the above.
Ans.(c)
(15) Arjun has a salary income (computed) of Rs. 4,60,000. He also received an interest of Rs. 18,000 on his fixed deposit
(after
deducting TDS @ 10%) and Rs. 2,000 on his saving account with SBI. He deposited Rs. 50,000 in PPF account. The net
income-tax liability (ignore TDS) of Arjun for the assessment year 2020-21 is - (June,
2015)
(a) Nil (b) Rs. 23,920
(c) Rs. 7,280 (d) Rs. 9,360.

Ans.(a)
Answer Hint: Total Income = Rs. 4,60,000 + Rs. 20,000 + Rs. 2,000 - Rs. 50,000 - Rs. 2000 = Rs. 4,30,000. Tax liability is
nil after giving rebate under Section 87A - Rs. 9,000.
(16) Rajiv (aged 28 years) received cash gift of Rs. 2 lakh on the occasion of his marriage. It includes gift from non-relative
of
Rs. 80,000. His income by way of lottery winnings is Rs. 3 lakh. His net income tax liability (ignoring TDS and rebate) would
be - (Dec. 2015)
(a) Rs. 93,600 (b) Rs. 22,880
(c) Rs. 12,480 (d) Rs. 26,000

Ans.(a)
(17) Ann (aged 30 years) received salary of Rs. 60,000 per month. Fixed medical allowance Rs. 40,000. She is in receipt of
HRA. Rs. 15,000 per month and also educational allowance of Rs. 1,500 per month for all the three of her children. Rent paid
in Mumbai - Rs. 18,000 p.m. Her net income tax liability (ignoring TDS and rebate) would be -
(a) Rs. 67,410 (b) Rs. 69,490
(c) f 74,590 (d) Rs. 98,980

Ans.(a)
Answer Hint:
Basic salary [ Rs. 60,000 Rs. 12] 7,20,000

36,000
House rent allowance 15,000 - Rs. 12,000] x 12
Fixed Medical allowance 40,000
Education allowance (1500 x 12 - (100 *2* 12) 15,600
Gross Salary 8,11,600
Less: Standard deduction 50,000
Tax liability 64,820
Add: HEC @ 4% 2,593
Total tax liability 67,410

(18) Harish (30 years of age) received salary of Rs. 50,000 per month. He receives D.A.- 40% of basic salary, City
compensatory allowance Rs. 2,200 per month, Fixed Medical allowance - Rs. 40,000. Medical Insurance premium paid in
cash - Rs. 4,800, payment by account payee crossed cheque Rs. 30,000 :
(a) Rs. 81,930 (b) Rs. 84,010
(c) Rs. 92,700 (d) Rs. 98,980

Ans.(a)
Answer Hint:
Basic salary [1 50,000 Rs. 12] 6,00,000
Dearness Allowance 2,40,000
Fixed Medical allowance 40,000
City Compensatory allowance (2,200 x 12) 26,400
Gross Salary 9,06,400
Less: Standard deduction -50,000
Less: Deduction under Section 80D -25,000
Tax liability 78,780
Add: HEC @ 4% 3,151
Total tax liability 81,930

(19) Chandran, (aged 38 years), owned 6 medium goods vehicles as on 01-04-2019. He acquired 2 more medium good vehicles
on 1-7-2019. He has unabsorbed depreciation of Rs. 70,000 and business loss of Rs. 1,00,000 for the financial year - 2018-
19. He had paid life insurance premium for insurance of married daughter - Rs. 25,000. Calculate his total income for A.Y.
2020-21:
(a) Rs. 5,50,000 (b) Rs. 4,80,000
(c) Rs. 5,25,000 (d) Rs. 4,55,000

Ans.(a)
Answer Hint:
Presumptive Income under Section 44AE ( Rs. 7,500 x 6 x 12) + (7,500 x 2 x 9) 6,75,000
Less: Brought forward business loss -1,00,000
Less: LIC premium (Section 80C) -25,000
ASSESSMENT OF VARIOUS OTHER ENTITIES

ASSESSMENT OF FIRM, AOP AND BOI
(1) Murali received Rs. 1 lakh from the HUF of which he is a coparcener. The HUF consists of four coparceners including his
father who is the Karta of the HUF. The amount paid was by way of debit to the capital account of HUF engaged in textile
business. Is the amount of receipt chargeable to tax - (Dec. 2016)
(a) Yes, full amount is taxable (b) 50%, i.e., Rs. 50,000 is taxable
(c) Nil, i.e., it is exempt from tax (d) 25%, i.e., Rs. 25,000 is taxable
Ans.(a)
(2) The relation of a HUF arises from _______________.
(a) Status (b) Contract
(c) Agreement (d) None of these

Ans.(a)
(3) Lala and sons, a Hindu undivided family,carrying on business of food grain agents has total income of Rs. 10,25,000. It
has paid health insurance premium of Rs. 25,000 of karta. The tax liability of Hindu undivided family is -
(a) Rs. 1,17,000 (b) Rs. 1,12,500
(c) Rs. 1,13,300 (d) Rs. 3,09,000

Ans.(a)
(4) Subject to the provisions of Section 64(2), any sum received by an individual as a member of a HUF from HUF shall be -
(a) Taxable (b) Exempt
(c) Regarded as personal income (d) Non of these
Ans.(b)
(5) From tax point of view, a limited liability partnership (LLP) is treated as - (Dec.
2015)
(a) Sole trader concern (b) General partnership firm
(c) Private limited company (d) Public limited company
Ans.(b)
(6) A, B and C are the partners in a firm engaged in medical profession. For the year ended on 31sl March, 2020, the book
profit of the firm was calculated as Rs. 3,00,000. The amount admissible as remuneration to partners is .
(a) 90% of book profits (b) Rs. 1,50,000
(c) A or B, whichever is more (d) Rs. 3,00,000

Ans.(c)
(7) A, B and C are the partners in a firm engaged in medical profession. For the year ended on 31st March, 2020, the book
profit of the firm was calculated as Rs. 3,00,000. The maximum amount admissible as remuneration to partners is
_______________.
(a) Rs. 2,70,000 (b) Rs. 1,50,000
(c) X NIL (d) Rs. 3,00,000

Ans.(a)
(8) A, B and C are the partners in a firm engaged in medical profession. For the year ended on 31sl March, 2020, the book loss
of the firm was calculated as Rs. 3,00,000. The maximum amount admissible as remuneration to partners is _______________.
(a) Rs. 2,70,000 (b) Rs. 1,50,000
(c) Nil (d) Rs. 3,00,000

Ans.(b)
(9) Under the Income-tax Act, 1961, interest on capital received by a partner from a partnership firm is chargeable under the
head - (June, 2015)
(a) Profits and gains of business or profession (b) Income from other sources
(c) Capital gains (d) None of the above.
Ans.(a)
(10) Any interest, salary, bonus, commission due to or received by a partner from a partnership firm is chargeable under the
head -
(a) Profits and gains of business or profession (b) Income from other sources
(c) Salaries (d) None of the above.
Ans.(a)
(11) The book profit of a partnership firm is Rs. 1,20,000. The actual remuneration paid to working partners is Rs. 3,54,000.
The
allowable deduction under section 40(b) towards remuneration to partners is - (June
2016)
(a) Rs. 1,50,000 (b) Rs. 3,54,000
(c) Rs. 1,08,000 (d) Rs. 1,20,000

Ans.(a)
(12) A non-professional firm M/ s. Bright has book profits of Rs. 9,36,000. The admissible remuneration to working partners
for
income-tax purpose shall be - (June, 2015)
(a) Rs. 6,51,600 (b) Rs. 6,81,600
(c) Rs. 2,70,000 (d) None of the above.

Ans.(a)
(13) Profit earned during the year by a partnership firm is Rs. 1,40,000. The maximum amount of remuneration deductible
from
profit is - (Dec. 2014)
(a) Rs. 1,50,000 (b) Rs. 1,40,000
(c) Rs. 1,26,000 (d) Rs. 50,000

Ans.(a)
(14) A, B and C are the partners in a firm engaged in medical profession. For the year ended on 31st March, 2020, the book
profits of the firm was calculated as Rs. 10,00,000. The maximum amount admissible as remuneration to partners in
accordance of provisions of Section 40(b) is _______________.
(a) Rs. 6,90,000 (b) Rs. 1,50,000
(c) Nil (d) Rs. 2,70,000

Ans.(a)
(15) A partnership firm has net profit of Rs. 6,20,000 before deducting interest on capital to partners @ 15% of Rs. 1,50,000
and working partner salary of Rs. 1,80,000 (as per the deed of partnership). The total income of the firm chargeable to tax
would be - (Dec. 2016)
(a) Rs. 1,10,000 (b) Rs. 3,20,000
(c) Rs. 2,90,000 (d) Rs. 1,00,000

Ans.(b)
(16) A, B and C are the partners in a firm engaged in retail trade. For the year ended on 31st March, 2020, the turnover of the
firm was Rs. 80,00,000 and has opted for presumptive basis taxation under Section 44AD. The maximum amount admissible
as remuneration to partners in accordance of provisions of Section 40(b) is _______________.
(a) Rs. 4,74,000 (b) Rs. 1,50,000
(c) Nil (d) Rs. 2,70,000

Ans.(c)
(17) In computing the income under the head Profits and Gains of Business or Profession of a firm which is assessed as such,
any interest paid to any partner in excess of _______________simple interest p.a. shall be disallowed in accordance with the
provisions of Section 40(b),-
(a) 6% (b) 12%
(c) 15% (d) 18%
Ans.(b)
(18) In computing the income under the head Profits and Gains of Business or Profession of a firm which is assessed as such,
the following shall be disallowed in accordance with the provisions of Section 40(b),-
(a) Remuneration to working partner. (b)
Remuneration to non working partner.
(c) Interest to working partner. (d) Interest to non working partner
Ans.(b)
(19) In case of book loss the maximum allowable remuneration to working partner will be :
(a) Nil (b) Rs. 1,50,000
(c) Rs. 3,00,000 (d) Rs. 10,00,000

Ans.(b)
(20) When an LLP has book profit of Rs. 6 lakh, the maximum amount allowable towards the salary of working partners would
be - (Dec. 2015)
(a) Rs. 4,50,000 (b) Rs. 6,00,000
(c) Rs. 3,00,000 (d) Nil

Ans.(a)
(21) Under the Income-tax Act, 1961, LLP is chargeable to (June, 2015)
tax @ -
(a) 30% plus surcharge plus HEC or AMT @ (b) 30% plus surcharge plus HEC or AMT @ 18.5%
18.5% plus surcharge plus HEC
(c) 30% plus cess and SHEC or MAT @ 18.5% (d) 30% plus surcharge plus HEC or MAT @ 18.5%
plus
surcharge plus HEC Ans.(a)

(22) Remuneration received by a partner of firm from such firm shall be taxable as -
(a) Salary Income (b) Profits and gains of business
(c) Capital Gains (d) Exempted income
Ans.(b)
(23) Salary received by a partner from his partnership firm is considered in his personal assessment as - (June
2016)
(a) Income from salary (b) Profit from business or profession
(c) Income from other sources (d) Exempted income
Ans.(b)
(24) In computing the income under the head Profits and Gains of Business or Profession of an association of person, any
interest paid to any member-
(a) Shall be disallowed (b) Shall be allowed
(c) Shall be allowed upto 12% p.a. (d) None of these
Ans.(a)
(25) When a non-domestic company whose income is taxable @50% is a member in an AOP and its share of profit is
indeterminate, the tax on total income of the AOP is charged at the - (June
2016)
(a) Nominal rate (b) Maximum marginal rate
(c) Rate applicable to the non domestic company (d) Least of the above three rates.
Ans.(c)
(26) DP & Co. is a partnership firm with 3 partners. The capital of each partner was Rs. 2 lakh. The partnership deed authorised
interest on capital @ 15% and working partner salary to each partner @ Rs. 10,000 per month for all the partners. The total
sales amounted to Rs. 70 lakh. The total income of the firm under section 44AD would be - (June
2016)
(a) Rs. 5,60,000 (b) Rs. 4,32,000
(c) Rs. 1,28,000 (d) Rs. 3,50,000

Ans.(a)
(27) Mr. Vijay is partner in Tools & Co., a partnership firm in Mumbai. He received Rs. 30,000 as share income from the firm
for
the year ended 31-3-2020. He also received interest at 12% per annum on the capital invested in the firm and the amount being
Rs. 24,000. His income from the firm includible in individual assessment is : (June,
2017)
(a) Rs. 54,000 (b) Rs. 24,000
(c) Rs. 30,000 (d) Nil

Ans.(b)
(28) Maruti & Co. is an AOP consisting of 4 members with equal share. None of the member has income exceeding the
taxable limit. The total income of the AOP is Rs. 5 lakhs. The income tax liability of the AOP would be : (June,
2017)
(a) Rs. 1,56,000 (b) Rs. 13,000
(c) Rs. 10,400 (d) Rs. 20,800

Ans.(b)
(29) AOP or BOI for the purpose of levy of tax as per section 167B does not include -
(a) A company (b) A company or co-operative society
(c) A company or Co-operative society or (d) A company or Co-operative society or a

society
unregistered society registered under the Societies Registration Ans.(d)

Act, 1860 or under any other law computing
to that Act in force in any part of India
(30) A society registered under the Societies Registration Act, 1860 is taxable -
(a) Taxable as AOP/BOI as per section 167B (b) Taxable as BOI but the tax rate shall be same
as is applicable in case of an individual/HUF
(c) At slab rate (d) At special rate of tax Ans.(d)
(31) A co-operative society is although a body of indvidual but taxable at:
(a) The same rate as are applicable to individual/ (b) Average rate of tax
HUF
(c) The maximum marginal rate (d) The rates given in Schedule I of the Income- Ans.(d)
tax Act
(32) In case of AOP/BOI, any interest paid to the member

shall:
(a) be allowed as deduction to the AOP/BOI (b) be allowed as deduction to the AOP/ BOI
while while
computing its income computing its income subject to maximum of

12% p.a.
(c) not be allowed as deduction (d) be allowed as deduction to the AOP/BOI Ans.(c)
while computing its income subject to
maximum of 6% p.a.
(33) An association of persons (AOP) has paid tax at the maximum marginal rate. Yash, a member of AOP received
Rs. 1 lakh to his share income. Such income is chargeable to tax in his assessment @ - (Dec. 2016)
(a) 10% (b) Nil
(c) 30% (d) 20% Ans.(b)
(34) In case of AOP whose members are other than foreign company, and their shares are indeterminate, the tax shall
be charged :
(a) at the rate applicable to individuals (b) at the maximum marginal rate i.e. 30% +
surcharge @ 37%, if applicable + HEC @
4%- 42.744%
(c) at the rate of 40% + 2% surcharge + HEC 4% (d) at the rates given in Schedule I of the Income- Ans.(b)
tax Act
(35) In case of AOP whose member include a foreign company whose income is taxable @ 50%, and their shares
are indeterminate, the tax shall be charged :
(a) at the rate applicable to individual (b) at the maximum marginal rate i.e. 30% +
4%- 42.744%
(c) at the rate applicable to the foreign company (d) At the rates given in Schedule I of the
Income-
i.e. 50% + surcharge @ 2%/5% if applicable tax Act Ans.(c)

+ HEC @4%
(36) In case of AOP whose members are other than foreign company, and whose shares are known, but the total
income of any of its member exceeds the maximum exemption limit, tax to the AOP shall be charged :
4%- 42.744%
(c) at the rate applicable to the foreign company (d) at the rates given in Schedule I of the
i.e. 40% + surcharge @ 2% if applicable + Income-tax Act Ans.(b)

HEC 1%
(37) In case of AOP whose members include a foreign company whose income is taxable @ 50%, and their shares
are determinate, the tax shall be charged :
surcharge @ 15%, if applicable + HEC @4%
(c) at the rate applicable to the foreign company (d) on that portion or portions of income of AOP
i.e. 40% + surcharge @ 2% if applicable + which is relatable to the share of the member
HEC
@4% which is a foreign company and on the Ans.(d)

balance income at the maximum marginal
rate
(38) In case of AOP/BOI where the share of the members are determinate but none of the members has taxable
income exceeding maximum exemption limit, nor any member is taxable at a rate higher than the maximum
marginal rate, the
tax shall be charged :
(a) at the rate applicable to individual/HUF (b) at the maximum marginal rate i.e. 30% +
surcharge @ 15%, if applicable + HEC @4%
(c) at the rate of 35% + HEC @4% (d) at the rates given in Schedule I of the Income- Ans.(a)
tax Act
(39) In case of AOP where the share of the members are determinate but none of the members has taxable exceedin
income maximum exemption limit, but one or more member is taxable at a rate higher than the g he, the
maximum marginal r; tax
shall be charged :
(a) at the rate applicable to individual/HUF (b) on that portion of income of AOP which is
relatable to the member taxable at higher rate,
at the rate applicable to such member and the
balance taxable income at the rate applicable
to individual / HUF
(c) on that portion of income of AOP which is (d) at the rates given in Schedule I of the Income-
relatable to the member taxable at higher tax Act

rate, at the rate applicable to such member
and the balance taxable income at the
maximum
marginal rate Ans.(c)
(40) Where the total income of the AOP/BOI, (whose none of the members has income exceeding maximum
exemption limit nor any member is taxable at a rate higher than maximum marginal rate) does not exceed Rs.
2,25,000 :
(a) Neither the AOP/BOI shall be liable to pay (b) Although the AOP/BOI shall not be liable to
any
tax nor the share of the profit of the member pay any tax but the share of the profit of each
from AOP/BOI shall be included in their member from AOP/BOI shall be included in
respective total income his total income
(c) The AOP/BOI will be liable to tax at the (d) The AOP/BOI will be liable to tax at the rate
maximum marginal rate applicable to foreign company Ans. (b)

ASSESSMENT OF CHARITABLE AND RELIGIOUS TRUSTS
(41) "Charitable purpose" includes :
(a) Relief of the poor, (b) Education,
(c) Medical relief, (d) All of these
Ans.(d)
(42) The advancement of any other object of general public utility shall be regarded as charitable purpose even if it involves
carrying on of trade/commerce/business for a cess or fee or any other consideration, if the gross receipts thereof does not
exceed of total receipts of such charitable institution.
(a) 15% (b) 20%
Ans.(b)
(43) Where the total income of the trust or institution, without giving effect to the provisions of Sections 11 and 12, exceeds
in
any previous year X , the accounts of the trust or institution must be audited by a
Chartered Accountant and
the report of such audit in the prescribed form duly signed and verified by such accountant containing prescribed particulars,
should be furnished along with the return of income.
(a) Rs. 2,50,000 (b) Rs. 10,00,000
(c) Rs. 20,00,000 (d) Rs. 25,00,000

Ans.(a)
(44) A public charitable trust registered under section 12A of Income-tax Act, for the previous year ending 31-3-2020, derived
gross income of Rs. 16 lakhs, which consists of the following : ( Rs.
in lakhs)
Income from properties held by trust (Net) 5
Income (net) from business (incidental to main objects) 4
Voluntary contribution from public 7
The trust applied a sum of Rs. 11.60 lakhs towards charitable purposes during the year. Determine the taxable income of the
trust of the assessment year 2020-21.
(a) Rs. 2,00,000 (b) Rs. Nil
(c) Rs. 4,40,000 (d) Rs. 6,00,000

Ans.(a)
(45) Ray Charitable Trust (registered under section 12AA) has total income of Rs. 20 lakhs. It applied Rs. 10 lakhs towards
its
objects. How much is chargeable to tax in case the trust does not opt for accumulation of income under section 11(2) of the
Act Rs. (June, 2017)

Ans.(b)
(46) Ramji Charitable Trust had sold a capital asset costing Rs. 70,000 on 13th June, 2019 for Rs. 1,50,000. It purchased new
asset on Is* July 2019 for Rs. 1,20,000. The amount taxable as capital gains for Ramji Charitable Trust in A.Y. 2020-21 is -
(Dec. 2015)
(a) Rs. 80,000 (b) Nil, because of charitable trust
(c) Rs. 30,000 (d) Rs. 40,000

Ans.(c)
(47) A charitable trust registered under section 12AA has gross receipts of Rs. 40 lakh. It spent Rs. 28 lakh towards its objects.
The
total income of the trust chargeable to income-tax would be - (Dec. 2016)
(a) Nil (b) Rs. 12 lakh
(c) Rs. 6 lakh (d) Rs. 2 lakh

Ans.(c)
(48) A charitable trust acquired two air-conditioners for Rs. 1,40,000 on 10lh June, 2019. It claimed the acquisition as
application of income. The amount it can claim by way of depreciation for the said air-conditioners for the AY 2020-21 is-
(Dec. 2015)
(a) Rs. 21,000 (b) Rs. 1,40,000
(c) Rs. 35,000 (d) Nil.

Ans.(d)
(49) A public charitable trust registered under section 12A of Income-tax Act, for the previous year ending 31-3-2020, derived
the following:
?in lakhs
Income from properties held by trust (Net) 10
Income (net) from business (incidental to main objects) 5
Voluntary contribution from public (including corpus donations of Rs. 10,00,000) 15
The trust applied a sum of Rs. 16 lakhs towards charitable purposes during the year. Determine the taxable income of the trust
of the assessment year 2020-21. ( Excluding Anonymous Donation)
(a) Rs. 1,00,000 (b) Rs. 14,00,000
(c) Rs. NIL (d) Rs. 4,00,000

Ans.(a)
(50) Authority having power to cancel registration of trust subject to certain conditions :
(a) Principal Commissioner (b) Director general
(c) Commissioner (d) Either A or C
Ans.(d)
(51) A charitable trust has received anonymous donations of Rs. 25,00,000. The amount of anonymous donations not taxable
will be -
(a) *1,00,000 (b) Rs. 1,25,000
(c) Rs. 2,00,000 (d) Rs. 25,00,000

Ans.(b)
(52) In case of any registered trust or institution for which registration is effective in the previous year, they cannot
claim any exemption under anv provision of section 10 [other than that relating to exemption of
(a) Agricultural income (b) Dividend Income from shares of Indian
Company
(c) Dividend Income from units of mutual fund (d) LTCG on sale of equity shares listed in
recognised stock exchange. Ans.(a)

(53) Anonymous donations received by a charitable trust is chargeable to tax at the rate of -
(a) 30% (b) 15%
(c) 20% (d) 10%

Ans.(a)
(54) On receipt of the application for registration of trust/ institution (whether at the time of initial registration or subsequently
on modification of objects), the Principal Commissioner or Commissioner shall call for such documents or information from
the trust or institution as he thinks necessary in order to satisfy himself about,-
(a) the genuineness of activities of the trust or (b) the compliance of such requirements of any other law for
institution the time being in force by the trust or institution as are
material for the purpose of achieving its objects
(c) to make such inquiries as he may deem necessary (d) All of the above
in this behalf Ans.(d)
ASSESSMENT OF NON RESIDENTS
(55) Deemed profits in case of non residents engaged in shipping business is _______________% of amount of carriage.
(a) 5 (b) 7.5
(c) 10 (d) 15
Ans.(b)
(56) Deemed profits in case of non-residents engaged in aircraft business is _______________% of amount of carriage.
(a) 7.5 (b) 10
(c) 5 (d) 12.5
Ans.(c)
(57) Investment income of non resident Indian is chargeable to tax @ _______________%.
(a) 7.5 (b) 10
(c) 20 (d) 12.5
Ans.(c)
(58) Income of Non resident entertainer being foreign citizen from performance in India is chargeable to tax @
_______________.
(a) 10% (b) 15%
(c) 20% (d)5%
Ans.(c)
(59) Income of Non resident sportsman being foreign citizen from sports in India is chargeable to tax @ _______________.
(a) 10% (b) 15%
(c) 20% (d)5%
Ans.(c)
(60) The maximum deduction of head office expenditure allowable to a non resident shall be – (Old syllabus Question)
(a) 5% of adjusted total income (b) 10% of adjusted total income
(c) 10 % of total income (d) 5% of total income
Ans.(a)
(61) The amount of deduction on account of head office expenditure in case of Non-resident cannot exceed
_______________of
adjusted total income. (Old syllabus Question)
(a) 5% (b) 15%
(c) 20% (d) 10%
Ans.(a)
(62) Where the total income of an assessee, being a non-resident Indian includes income by way of long-term capital gains
arising from transfer of unlisted securities, applicable income-tax rate on such income is - (Dec.
2014)
(a) 10% (b) 20%
(c) 30% (d) 40%
Ans.(a)
(63) In case of foreign companies having branches in India, maximum deduction (in respect of head office
expenditure) allowed in computing their income under section 44C is - (Dec. 2014)
(a) An amount equal to 5% of the adjusted total (b) An amount equal to 5% of the total income
income
(c) An amount equal to 15% of the adjusted total (d) An amount equal to 15% of the total income
income Ans.(a)
(64) In case of foreign companies having branches in India, maximum deduction (in respect of head office
expenditure) allowed in computing their income under section 44C, in case adjusted total income is a loss, -
(a) An amount equal to 5% of the adjusted total (b) An amount equal to 5% of the average adjusted total
income income
(c) An amount equal to 15% of the adjusted total (d) An amount equal to 15% of the total income
income Ans.(b)
(65) In case of Non-resident engaged in providing services or facilities in connection with, or supplying plant and machinery
on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils (including petroleum and natural
gas) of gross receipts shall be deemed income.
(a) 5% (b) 15%
(c) 20% (d) 10%
Ans.(d)
(66) X Marine Lines Inc., a Singapore company engaged in shipping business collected Rs. 150 lakh towards carrying goods
from Chennai Port. Its presumptive income chargeable to tax in India would be - (Dec.
2015)
(a) Rs. 15 lakh (b) Rs. 11.25 lakh
(c) Rs. 12 lakh (d) Nil

Ans.(b)
(67) In case of Non-resident engaged in operation of aircraft _______________of gross receipts on account of such business
shall be
deemed income.
(a) 5% (b) 15%
(c) 20% (d) 10%
Ans.(a)
(68) Where a non-resident/foreign company is liable to tax at special rate of 10% on account of royalty or fee for technical
services, such assessee shall - (June 2016)
(a) Be eligible for deduction of any expenses from (b) Not be eligible for any deduction under Chapter VI-A on
such income u/s 28 to 44C or section 57 account of such income
(c) Neither be eligible for deduction of any expenses (d) Not be eligible for deduction of any expense under section
u/s 28 to 44C or section 57 nor be eligible for any 28 to 44C or section 57 but shall be eligible for deduction
deduction under Chapter VI-A under Chapter VI-A Ans.(d)
(69) Where a foreign institutional investor received income in respect of securities other than income by way of dividend
referred to in section 115-0 or received in respect of securities other than units referred to in section 115AB, such income is
taxable @ - (Dec. 2015)
(a) 15% (b) 10%
(c) 20% (d) 30.00%
Ans.(c)
(70) A Foreign Institutional Investor (FII) has total income which includes short-term capital gains on sale of listed shares of
Rs. 30 lakh. The rate of tax for charging such income to tax is - (June
2016)
(a) 10% (b) 30%
(c) 15% (d) 40%
Ans.(c)
(71) Income of a non-resident from shipping business in India is computed at the rate of - (Dec.
2016)
(a) 5% (b) 7.5%
(c) 10% (d) 30%
Ans.(b)
(72) The income of non-resident from the business of operation of aircraft in respect of carrying of cargo or passenger in India
shall be taxable as per section 44BBA @ - (Dec. 2015)
(a) 5% of the amount received/receivable (b) 10% of the amount received/receivable
(c) 15% of the amount received/receivable (d) 7.5% of the amount received/receivable
Ans.(a)
(73) Under section 115E, the tax rate applicable for long-term capital gains referred to therein, for a resident as envisaged by
section 115C, is — (June, 2015)
(a) 5% (b) 10%
(c) 15% (d) 20%
Ans.(b)
(74) The tax on the income of non-resident can be/may be recovered :
(1) By deduction of tax at source
(2) From his associates
(3) From his agents
(a) (1) only (b) (1) & (2) only
(c) (1), (2) & (3) (d) None of the above
Ans.(c)
(75) A non-resident Indian is not required to furnish his return of income under section 139(1) if his total income in respect of
which he is assessable under the Income-tax Act, 1961 during the previous year consists of - (June
2016)
(a) Investment income only (b) Long-term capital gains only
(c) Short-term capital gains only (d) Investment income and long-term capital gains
only Ans.(d)
(76) A non-resident is not required to furnish return of income under section 139(1) if his total income during the previous
year consists of: (June 2019)
(a) Income from Technical fee (b) Income from Interest/Dividends
(c) Income from Royalty (d) Income from House Rent
Ans.(b)
Ch 15 – Assessment of Companies 15.1
CHAPTER 15 - ASSESSMENT OF COMPANIES

(1) A company is liable to pay minimum alternate tax @ _______________of its book profits.
(a) 10% (b) 12.5%
(c) 18.5% (d)15%
Ans.(d)
(2) According to section 2(1B), "amalgamation, in relation to companies means, the merger of one or more companies with
another company or the merger of two or more companies to form one company" provided all conditions except the following
are satisfied : (Dec. 2014)
(a) All assets to be transferred from amalgamating (b) All liabilities including contingent liabilities to be
company to the amalgamated company transferred from amalgamating company to amalgamated
company.
(c) Shareholders holding at least 3/ 4lh in value of (d) Shareholders holding at least 9/10th in value of shares of
shares of the amalgamating company should the amalgamating company should become shareholders
become shareholders of the amalgamated of the amalgamated company. Ans.(d)
company
(3) Which of the following is not a requirement for amalgamation of two companies ? (June, 2017)
(a) All the assets are transferred from (b) More than 50% of the directors of the
amalgamation company to amalgamated amalgamating company become directors of the

company amalgamated company
(c) All liabilities including contingent liabilities (d) Shareholders having % the in value of shares of the
are transferred from amalgamating company amalgamating company become shareholders of the
to amalgamated company amalgamated company Ans.(b)
(4) A company has earned book profits of Rs. 50 lakhs during the financial year 2019-20. The total income of the company is
Rs. 10 lakhs. The company is liable to pay income tax of -
(a) Rs. 3,12,000 (b) Rs. 7,72,750
(c) Rs. 9,62,000 (d)Rs.7,80,000

Ans.(d)
(5) In case of domestic company, where its total turnover or the gross receipt in the previous year 2017-18 does not exceed Rs.
400 crore the applicable tax rate on total income will be
(a) 25% (b) 30%
(c) 40% (d)29%
Ans.(a)
(6) Metro Ltd., a domestic company, is assessed with a total income of Rs. 11.25 crore. The surcharge payable by the company
shall be at the rate of - (June 2016)
(a) 2% (b) 7%
(c) 15% (d)12%
Ans.(d)
(7) Metro Ltd., a domestic company, is assessed with a total income of Rs. 5.25 crore. The surcharge payable by the company
shall be at the rate of -
(a) 2% (b) 7%
(c) 15% (d)12%
Ans.(b)
(8) The net profit of the company for the year ended 31-03-2020 is Rs. 25,00,000. The company has debited Rs. 10,50,000 as
income tax and provision made for ascertained liabilities is Rs. 1,50,000. The book profits of the company as per provisions
of Section 115JB will be -
(a) Rs. 35,00,000 (b) Rs. 35,50,000
(c) Rs. 37,00,000 (d)Rs.36,50,000

Ans.(b)
(9) The following is not to be added in computing the book profits.

(a) Income Tax (b) Securities transaction tax
(c) Dividend distribution tax (d)Deferredtax
Ans.(b)
(10) The following company is not liable to pay MAT.
(a) Manufacturing company (b) Banking company
(c) Power generation company (d) Life Insurance company Ans. (d)
(11) Provisions of section 115JB are applicable in case, of - (Dec. 2016)
(a) Domestic companies only (b) Foreign companies
(c) All companies (d)Closelyheldcompanies
Ans.(c)
(12) For computing the Book Profit under section 115JB, which of the following is not added back to the profits ? (June, 2017)
(a) Income-tax (b) Provision for Tax
(c) Dividend Distribution Tax U/s 115-0 (d) Securities Transaction Tax
Ans.(d)
(13) M Ltd. has Minimum Alternative Tax (MAT) credit of Rs. 5,20,000 of the assessment year 2019-20. It can carry forward
this MAT credit upto _______________assessment years immediately succeeding the assessment year 2019-20. (June, 2019)
(a) 5 (b) 10
(c) 15 (d) 20
Ans.(c)
(14) Number of years for which credit of MAT excess paid u/s 115JB can be carried forward is - (Dec.
2014)
(a) 7 Assessment years (b) 8 Assessment years
(c) 15 Assessment years (d) 10 Assessment years.
Ans.(c)
(15) MAT credit in respect of excess taxes paid under section 115JB can be carried forward for - (June,
2015)
(a) 7 Assessment years (b) 10 Financial years
(c) 15 Assessment years (d) 7 Financial years.
Ans.(c)
(16) Tax credit in respect of MAT paid as per section 115JB will be allowed only in the previous year in which the tax payable
on the total income at the normal rate is -
(a) More than the tax payable under section 115JB (b) Less than the tax payable under section 115JB
(c) Equal to the tax payable under section 115JB (d) All of the above
Ans.(a)
(17) A domestic company distributed a dividend of Rs. 30,00,000 to its shareholders. Out of this dividend, Rs. 4,00,000 paid
to a person on behalf of the New Pension System Trust and Rs. 1,00,000 paid to another corporate shareholder. The company
also received a dividend of Rs. 2,00,000 from its subsidiary which paid dividend distribution tax under section 115-0. In this
case, the amount of dividend subject to dividend distribution tax for the domestic company will be - (June 2016)
(a) Rs. 24,00,000 (b) Rs. 27,00,000
(c) Rs. 28,00,000 (d) Rs. 30,00,000

Ans.(a)
(18) Dividend distribution tax under section 115-0 is payable by - (Dec.
2016)
(a) Domestic companies only (b) Foreign companies only
(c) Both domestic and foreign companies (d) None of the above
Ans.(a)
(19) A limited company declared Rs. 20 lakh as dividend on its paid-up capital of Rs. 100 lakh. The dividend distribution tax
payable by it would be - (Dec. 2015)
(a) Rs. 3 lakh (b) Rs. 3.33 lakh
(c) Rs. 4.11 lakh (d)Rs.6.18lakh

Ans.(c)
(20) Dividend distribution tax is levied @(Plus surcharge and HEC)

(a) 5.00% (b) 10.00%
(c) 15.00% (d) 12.50%
Ans.(c)
(21) Dividend distribution tax under section 115-0 shall be deposited within _______________days from the date of
declaration/
distribution/ payment of dividend, whichever is earlier. (June 2016)
Ans.(c)
(22) Hemant holds 100 shares of Gold Ltd., a domestic company. He has been paid dividend of Rs. 10,000 during the year
2019-20. Dividend distribution tax payable under section 115-0 will be - (June,
2015)
(a) Rs. 2,055, payable by Gold Ltd. (b) Rs. 2,055, payable by Hemant
(c) Rs. 1,545, payable by Gold Ltd. (d) Rs. 1,000, payable by Hemant
Ans.(a)
(23) Radha Ltd. received dividend of Rs. 100 lakhs from King P. Ltd. of Singapore in December 2019. The company declared
interim dividend of Rs. 200 lakhs in January 2020. The dividend distribution tax payable by Radha Ltd. would be
_______________
(June, 2017)
(a) On Rs. 200 lakhs (b) On Rs. 100 lakhs
(c) Nil since dividend declared is more than (d) None of the above
dividend received Ans.(a)
Note : On Rs. 100 lakhs if King P. Ltd of Singapore is subsidiary of Radha Ltd., since dividend received from foreign subsidiary
company is to be reduced for the purpose of calculating dividend distribution tax liability.
(24) Dividend distribution tax by a domestic company under section 115-0 shall be paid within _______________ days of
declaration of dividend. (June. 2019)
(a) 30 days (b) 15 days
(c) 10 days (d)14days
Ans.(d)
(25) When an Indian company holds 30% of the nominal value of equity capital of a foreign company, the amount of dividend
received from the foreign company in the hands of Indian company is : (June 2019)
(a) Exempt from Tax (b) Taxable @ 15%
(c) Taxable @10% (d) Taxable @ 30%
Ans.(b)
(26) Rate of tax to be levied on distributed income being interest paid by business trust to unit holder of such business trust
being a non resident (not being a company) or a foreign company is _______________.
(a) 5% (b) 30%
(c) 10% (d) 34.32%
Ans.(a)
(27) Interest for delay in payment of dividend distribution tax is levied @ _______________.
(a) 1% p.m. or part thereof (b) 1.5% p.m. or part thereof
(c) 12% p.a. (d) 18% p.a.
Ans.(a)
(28) An Indian company having 30% voting power in a foreign company received dividend of Rs. 10 lakh from the foreign
company. The dividend so received by the Indian company is - (Dec. 2016)
(a) Exempt (b) Taxable @ 15%
(c) Taxable at the regular rates (d) Taxable @ 20% Ans.(b)
(29) Dividend received from a foreign company (net) Rs. 8,000. Nothing has been paid to the Government of India out of tax
deducted at source. Calculate the amount to be included while computing income under the head 'Income from Other Sources'.
(a) NIL (b) Rs. 8,000
(c) Rs. 11,428 (d) Rs. 2,400 Ans.(b)
(30) "Specified foreign company" means :

(a) Foreign company in which Indian company(b) Foreign company in which Indian company
holds 26% or more in nominal value of theholds 51% or more in nominal value of the
equity share capital of the company.equity share capital of the company.
(c) Company which is registered in India.
(31) In order to be entitled to concessional rate of tax for dividend received from a foreign company, the Indian company
should have the following minimum shareholding in such foreign company - (June, 2015)
(a) 10% (b) 25%
(c) 26% (d) 51%. Ans.(c)
(32) Alternate minimum tax rate is levied on :
(a) Gross total income (b) Total income
(c) Adjusted total income (d) Income from business & profession Ans.(c)
(33) Adjusted total income shall be the total income as increased by -
(a) Deductions claimed under sections 80-IA to (b) Deduction under section 10AA.
80RRB (other than section 80P).
(c) Both (a) &(b) (d)Either (a) or (b) Ans.(c)
(34) Provisions of alternate minimum tax shall be applicable when adjusted total income exceeds:
(c) Rs. 10 lakhs (d) Rs. 10,000 Ans.(a)
(35) The provisions of alternate minimum tax under section 115JC are applicable for limited liability partnership when the
adjusted total income exceeds : (June, 2017)
(c) Rs. 100 lakhs (d) Rs. 5 lakhs Ans. a
Note: AMT is applicable in case of LLP irrespective of adjusted its total income. The limit of Rs. 20 lakhs apples to an
individual or HUF or an AOP/BOI, whether incorporated or not, or an artificial juridical person.
(c) Rs. 20 lakh (d) Rs. 3 crore Ans.(c)
(36) For the Assessment Year 2019-20, the amount of tax payable by unit in SEZ as per normal provisions of Income Tax Act
is Rs. 4,20,000. Alternate minimum tax payable by it on the adjusted total income comes to be Rs. 4,90,000. Compute the
amount of tax payable by the SEZ.
(a) Rs. 4,20,000 (b) Rs. 4,90,000
(c) Rs. 70,000 (d) Nil Ans.(b)
Ch 16 – Assessments, Appeals, Revisions, Penalties 16.1
CHAPTER 16 – Assessment, Appeals, Revisions, Penalties

(1) Rose Ltd. filed its return of income for the assessment year 2019-20 on 10* August, 2019. The notice under section
143(2) for scrutiny assessment should be served on the assessee by - (June 2016)
(c) 10th February, 2020 (d) 30* September 2020
Ans.(d)
(2) XYZ Ltd. filed its return of income for the A.Y. 2019-20 on 1st February, 2020. The return was selected for scrutiny
assessment u/s 143(3). The Assessing Officer is required to serve upon the assessee a notice u/s 143(2) upto - (Dec. 2015)
(a) 31st July, 2020 (b) 30* September, 2020
(c) 31st July, 2021 (d) 30* September, 2021
Ans.(b)
(3) X filed his return of income for the A.Y. 2019-20 on 31st July, 2019. The return so filed was selected for scrutiny
assessment. The notice under section 143(2) for making scrutiny assessment can be served by : (June, 2019)
(a) 30* September, 2020 (b) 31st December, 2019
(c) 31st March, 2020 (d) 31st December, 2020 Ans.(a)
(4) The notice under section 143(2) must be served within - (June 2016)
(a) 12 months from the date of filing of return (b) 12 months from the due date of filing the return
under section 139(1) or from the date of filing of return of income
(c) 6 month from the end of the financial year in (d) 6 months from the end of month in which the
which the return was furnished return was furnished Ans.(c)
(5) Audit under Section 142(2A) can be conducted having regard to the following criteria:
(a) the nature and complexity of the accounts (b) volume of the accounts
(c) doubts about the correctness of the accounts, or (d) All of the above.
Atis.(d)
(6) Who can make a reference to a Valuation Officer for the purposes of assessment or reassessment, to estimate the value,
including fair market value, of any asset, property or investment u/s 142A?
(a) Assessing Officer (b) Principal Chief Commissioner
(c) Principal Commissioner (d) Director general Ans.(a)
(65) The power under Section 144A can be exercised by Joint Commissioner -
(a) on his own motion (b) on an application by the
assessee
(c) on a reference made to him by the Assessing (d) Any of the above
Officer Ans.(d)
(7) An intimation under section 143(1) can be issued within:
(a) 6 months from the end of financial year in (b) 6 months from the end of relevant assessment
which return is filed. year in which return is filed.
(c) One year from the end of financial year in (d) One year from the end of relevant assessment
which return is filed. year in which return is filed. Ans.(c)
(8) Regular assessment means assessment made under section - (Dec. 2014)
(a) 143(3) (b) 144
(c) Both (a) and (b) above (d) None of the above Ans.(c)
(9) In case of best judgment assessment:
(a) Refund cannot be granted to the assessee (b) Refund can be granted to the assessee
(c) Refund can be granted to the assessee in case of (d) None of the above.
loss. Ans.(a)
(10) If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any
assessment year, he may initiate proceedings of - (Dec. 2014)
(a) Re-assessment (b) Regular assessment
(c) Self assessment (d) Best judgment assessment. Ans.(a)
(11) A fixed deposit of Rs. 90,000 made by Mr. P on 5-11-2014 was detected on 7-9-2019. The time limit for issue of notice
u/ s
148 is : (June, 2017)
(a) 31-03-2020 (b) 31-03-2022
(c) 31-03-2024 (d) 31-03-2026 Ans.(a)
Note : Since Income likely to escape assessment does not exceed Rs. 1,00,000, income escaping assessment notice can be issued
upto 4 years from the end of relevant Assessment year.
(12) If the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax,
has escaped assessment income escaping assessment notice can be issued within -
(a) 4 years from the end of relevant assessment year. (b) 6 years from the end of relevant assessment year.
(c) 10 years from the end of relevant assessment (d) 16 years from the end of relevant assessment
year. year.
Ans.(d)
(13) Assessment under section 143 for A.Y. 2019-20 is to be completed within :
(a) 12 months from the end of relevant assessment (b) 21 months from the end of relevant assessment
year. year.
(c) 24 months from the end of relevant assessment (d) 18 months from the end of relevant assessment Ans.(a)
year. year.
(14) Notice for assessment or re-assessment of the escaped income of non-resident can not be issued to the statutory agent of
the non-residential after expiry of years from the end of the relevant assessment year.{June,
2019)
(a) 4 (b) 6
(c) 2 (d) 16
Ans.(b)
(15) The time limit for making assessment under Section 147 where notice under Section 148 is served after 01-04-2019 is
(a) Two years from the end of financial year in (b) 12 months from the end of financial year in
which notice under Section 148 was served. which notice under Section 148 was served.
(c) Nine months from the end of financial year in (d) Twenty one months from the end of financial
which notice under Section 148 was served. year in which notice under Section 148 was
served. Ans.(b)
(16) Time limit for completion of Assessment/ Re-assessment under section 147 of the Income Tax Act, 1961 is :(June,
2019)
(a) 9 months from the end of the financial year in (b) 6 months from the end of the financial year in
which notice for re-assessment is served which notice for re-assessment is served
(c) 12 months from the end of the financial year in (d) 15 months from the end of the financial year in
which notice for re-assessment is served which notice for re-assessment is served
Ans.(b)
(17) Fresh assessment order in pursuance of appellate order u/s 254 setting aside or cancelling an assessment passsed before
01-04-2019 is to be made within from the end of the financial year in which appellate order u/s 254 is received by the
Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
(a) 9 months (b) 12 months
(c) 21 months (d) 24 months Ans.(a)
(18) An apparent error in the assessment order passed u/s 143(3) dated 15-11-2019 was noticed by the assessee in February,
2020. The time limit for seeking rectification of mistake is available up to :(June, 2017)
(a) 31-03-2024 (b) 31-03-2023
(c) 31-03-2020 (d) 31-03-2021 Ans.(a)
(19) If there is an apparent error in the intimation dated 11th June, 2020 issued under section 143(1), the time-limit for filing
application for rectification under section 154 is available up to -(Dec. 2016)
(c) 31st March, 2021 (d) 31s'October, 2020
Ans.(b)
(20) An income tax authority referred to in section 116 of the Income Tax Act, 1961 may amend with a view to rectify any
mistake apparent from the records in respect of: (June. 2019)
(a) Any intimation under section 200A(1) (b) Any dispute raised by the assessee in respect of an issue
having two views
(c) Any order passed by its higher authorities (d) Any section, if required by law Ans.(a)
(21) The following is not an income tax authority :
(a) Central Board of Direct taxes (b) Chief Commissioner of Income Tax
(c) Income tax Appellate Tribunal (d) Tax Recovery officer Ans.(c)
(22) In issuing the directions or orders of Jurisdiction of Income Tax authorities, the CBDT may have regard to which of the
undermentioned criteria:
(a) territorial area (b) incomes or classes of income;
(c) persons or classes of persons (d) All of the above
Ans.(d)
(23) Under section 131, the income tax authorities shall, for the purposes of this Act, have the same powers as are vested in a
court under the Code of Civil Procedure, 1908, when trying a suit in respect of the which of the following matters :
(a) discovery and inspection (b) compelling the production of books of account
(c) issuing commissions. (d) All of the above
Ans.(d)
(24) In case assessee admits concealed income during the course of search, the penalty under Section 271AAB shall be
levied equal to :
(a) 10% of undisclosed income (b) 60% of undisclosed income
(c) 30% of undisclosed income (d) 90% of undisclosed income
Atis.(c)
(25) In case assessee do not admit concealed income during the course of search but declares such income in the return of
income of the specified previous year, the penalty under Section 271AAB shall be levied equal to :
(a) 10% of undisclosed income (b) 60% of undisclosed income
(c) 30% of undisclosed income (d) 90% of undisclosed income
Ans.(b)
(26) Mr. Rajan did not appear before the Assessing Officer in response to a notice issued under section 143(2). He repeatedly
absented from appearing before the Assessing Officer. How much could be the quantum of penalty the Assessing Officer
could levy on Mr. Rajan for the failure ? (June, 2017)
(a) Rs. 2,000 (b) Rs. 5,000
(c) Rs. 10,000 (d) Rs. 20,000 ANS.(C)

(27) Appeals to Commissioner (Appeals) is to be filed within days of service of notice of demand.
(c) 120 days (d) 180 days Ans.(a)
(28) An order passed by the Commissioner (Appeals) should be communicated to - (Dec.
2015)
(a) Assessee (b) C.I.T. who has jurisdiction over
the case
(c) Both the assessee and C.I.T. (d) The assessee
through C.I.T. Ans.(c)
(29) The order passed by the Assessing Officer when challenged before the Commissioner (Appeals) under section 246A,
memorandum of appeal should be filed in - (Dec. 2015)
(a) Form No. 35 (b) Form No. 36
(c) Form No. 36A (d) Form No. 38. Ans.(a)
(30) The assessment of Julie (Pvt.) Ltd. under section 143(3) for the assessment year 2019-20 was completed on 12th
October, 2020. The notice of demand was served on 27th October, 2020. The assessee has to file appeal before the
Commissioner (Appeals) within - (June 2016)
(c) 15 Days (d) 90 Days Ans.(a)
(31) Any party which is aggrieved by an order passed by the Appellate Tribunal may file an appeal of High Court within -
(Dec. 2016)
Ans.(d)
(32) Mr. Balwant recieved assessment order passed under section 143(3) on 10-1-2019. He wants to prefer an appeal before
CIT (Appeals) against the assessment order. The time limit for preferring appeal is __________ days from the date of receipt
of assessment order. (June, 2017)
(a) 15 (b) 30
(c) 35 (d) 60 Ans.(b)
(33) A tax payer wants to prefer an appeal against the order of the Assessing Officer. He received the order dated 30th April,
2020 on 5th May, 2020. He must prefer an appeal before the CIT (Appeals) under section 246A of the Income Tax Act,
1961, within: {June, 2019)
(a) 30 days from the date of order (b) 30 days from the date of receipt of order
(c) 60 days from the date of order (d) 60 days from the date of receipt of order
Ans.(b)
(34) Appeals to Appellate tribunal is to be filed within days of communication of decision of order.
(c) 120 days (d) 180 days
Ans.(b)
(35) The time-limit for making rectification order under section 254(2) is -
(a) 4 years from the date of order sought to be (b) 6 months from the date of order sought to be
rectified rectified
(c) 6 months from the end of financial year when (d) 4 years from the end of financial year when the
the order sought to be rectified was passed order sought to be rectified was passed
Ans.(b)
(36) Income Tax Appellete Tribunal (ITAT) as per section 254(2A) may hear and decide any appeal within a period of :
(June. 2019)
(a) 1 year from the end of financial year in which (b) 2 years from the end of financial year in which
appeal is filed appeal is filed
(c) 3 years from the end of financial year in which (d) 4 years from the end of financial year in which
appeal is filed appeal is filed
Ans.(d)
(37) If case pertains to an assessee whose total income does not exceed Rs. __________ , then it may be disposed of singly
by President/any member of Tribunal.
(a) Rs. 10,00,000 (b) Rs. 15,00,000
(c) Rs. 50,00,000 (d) Rs. 10,00,000 Ans.(c)
(38) Appeal against the order of Appellate Tribunal (ITAT) can be filed in High Court within __________ days. (June,
2019)
(a) 30 days from the date of order (b) 60 days from the date of receipt of order by the
assessee
(c) 120 days from the date of receipt of order by (d) 180 days from the date of order
the assessee Ans.(c)
(39) An appeal against the order to Tribunal to the High Court shall be filed within - (Dec. 2014)
(a) 120 days from the date of order (b) 180 days from the date of order
(c) 120 days from the date on which such order is (d) 180 days from the date of receipt of order
received Ans.(c)
(40) In case the appeal is not disposed of within of grant of stay, the stay shall stand vacated.
(c) 365 days (d) 180 days Ans.(c)
(41) Fees for filing stay application before tribunal is :
(a) Rs. 500 (b) Rs. 1,000
(c) Rs. 1,500 (d) Rs. 10,000 Ans.(a)

(42) The order of revision passed by Commissioner under section 264 is -(Dec. 2016)
(a) Appealable before Commissioner (Appeals) (b) Appealable before Appellate Tribunal
(c) Appealable before High Court (d) Not appealable
(Ans.(d)
(43) Revision of an order which is prejudicial to the revenue is made under -(Dec. 2016)
(44) Revision order of the Commissioner of Income Tax passed under section 264 of the Income Tax Act, 1961 can be
challenged by the assessee by filing an appeal to : (June, 2019)
(a) Income Tax Appellate Tribunal (ITAT) (b) High Court
(c) Commissioner Appeals (d) Dispute Resolution Penal (DRP) Ans.(b)
(45) The Commissioner of Income-tax is empowered to revise the assessment order of the Assessing Officer when the same
is erroneous and pre-judicial to the interest of revenue. Such power is vested in the Commissioner of Income-tax under -
(Dec. 2015)
(a) Section 263 (b) Section 246C
(c) Section 264 (d) Section 263 and 264. Ans.(a)
(46) The time-limit for making revisional order under section 263(2) and 263(3) is -(June 2016)
(a) 6 Months from the date of assessment
(b) 6 Months from the date of order
(c) One year from the end of the financialyear in which the order was passed
Ans.(d)
(47) The Commissioner can revise order under Section 263 within :
(a) One year from the end of financialyear in which order sought to be revised was passed.
(b) Two years from the end of financial year in which order sought to be revised was passed.
(c) Three years from the end of financial year in which order sought to be revised was passed.
(d) Four year from the end of financial year in which order sought to be revised was passed.
Ans.(b)
(48) An assessment order under section 143(3) dated 15-9-2019 was served on the assessee on 25-09-2019. The
Commissioner wants to make a revision of the order passed under section 143(3) by invoking section 263. The time limit for
passing revision order under section 263 is : (June, 2017)
(a) 31st March, 2020 (b) 31s March, 2021
(c) 31st March, 2022 (d) 26th September, 2023 Ans.(c)
(49) The time-limit for revision by Commissioner of Income-tax (CIT) under section 264 is - (June, 2015)
(c) One year (d) Two years. Ans.(c)
(50) Settlement Commission shall pass final order within __________ months from the end of the month in which
application for settlement was made.
(a) 6 (b) 12
(c) 18 (d) 24 Ans.(c)
(51) Application for settlement can be made if :

(a) Scrutiny notice is issued u/s 143(2). (b) Income escaping assessment notice is issued u/s 148.
(c) Search assessment notice is issued u/s 153A. (d) All of the above.
Ans.(d)
(52) In case if an assessee fails to maintain accounts under section 44AA, he shall be liable to penalty of __________ .
(a) Rs. 10,000 (b) Rs. 25,000
(c) Rs. 50,000 (d) Rs. 1,00,000

Ans.(b)
(53) Maximum amount of penalty for failure to get accounts audited required as per section 44AB of the Act from an
accountant is : (June, 2019)
(a) Rs. 1,50,000 (b) Rs. 1,00,000
(c) Rs. 50,000 (d) ½% of turnover or gross receipts of the business
or profession or Rs. 50,000 Ans.(a)

(54) In case of failure to furnish any information or document under section 92D(3) penalty @ 2% shall be imposed by.
(a) Assessing Officer (b) The Transfer Pricing Officer as referred to in section 92
CA
(c) Commissioner (Appeals) (d) Any of the above
Ans.(d)
(55) Penalty under section 271H shall be levied by the -
(a) Assessing Officer (b) Principal Commissioner or Commissioner
(c) Principal Chief Commissioner or Chief (d) Director general
Commissioner Ans.(a)
(56) Penalty for furnishing inaccurate statement of financial transaction or reportable account Section 271FAA is -
(a) Rs. 100 per day (b) Rs. 50,000
(c) Rs. 20,000 (d) Rs. 10,000
Ans.(b)
(57) Penalty for failure to get the accounts audited under Section 44AB :
(a) 0.5% of Turnover (b) Rs. 1,50,000
(c) 0.5% of turnover or Rs. 1,50,000 whichever is less (d) 0.5% of turnover or Rs. 1,50,000, whichever is more
Ans.(c)
(58) As per section 271A, failure to keep, maintain or retain books of account would attract penalty of - (Dec.
2016)
(a) Rs. 10,000 (b) Rs. 1,00,000
(c) Rs. 2,000 (d) Rs. 25,000
Ans.(d)
(59) Application to settlement commission can be made only -.(June. 2019)
(a) Where the additional amount of income tax payable exceeds Rs. 10 lakh
(b) Where the additional amount of income tax payable exceeds Rs. 5 lakh
(c) Where the additional amount of income tax payable exceeds Rs. 3 lakh
(d) Where the additional amount of income tax payable exceeds Rs. 1 lakh
(Ans.(a)
(60) A survey is conducted in the premises of the assessee and assessments are reopened for some assessment years. An
application for settlement could be made to the Settlement Commission when the additional amount of income-tax payable
on the income disclosed in the application exceeds - (Dec. 2016)
(c) Rs. 10 lakh (d) Rs. 100 lakh Ans.(c)

(61) Kadam sold a vacant land for Rs. 15 lakh on 20th March, 2020. The indexed cost of acquisition of the land is Rs.
12,00,000. He received Rs. 3 lakh being part of the sales consideration in cash and the balance through Electronic Clearance
System (ECS). The AO can levy penalty in such case on Kadam of an amount of : (June,
2019)
(a) Rs. 12,00,000 (b) NIL
(c) Rs. 15,00,000 (d) Rs. 3,00,000
Ans.(d)
(62)Prosecution for non-furnishing return u/s 139(1), in case where the amount of tax which would have been evaded, if the
failure had not been discovered, exceeds Rs. 25,00,000 is -
(a) With rigorous imprisonment for a term, which shall not be less than 6 month but which may extend to 7 years and with
fine.
(b) With rigorous imprisonment for a term which shall not be less than 3 month but may extend to 7 years with fine.
(c) Rigorous imprisonment for maximum 3 years.
(d) Rigorous imprisonment for 6 months.
Ans.(a)
(63)Prosecution for non-furnishing return u/ s 139(1), in case where the amount of tax which would have been evaded, if the
failure had not been discovered, do not exceed Rs. 25,00,000 is u/s 276CC is-
(a) With rigorous imprisonment for a term, which shall not be less than 6 month but which may extend to 7 years and with
fine.
(b) With rigorous imprisonment for a term which shall not be less than 3 month but may extend to 2 years with fine.
(c) Rigorous imprisonment for maximum 3 years.
(d) Rigorous imprisonment for 6 months. Ans.(b)

DT MCQs For June Dec

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DT MCQs For June Dec

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MCQ’s

Tax Laws – CS Executive June

(12) The Direct taxes are ___ in nature –

(13) The Inirect taxes are ___ in nature –

(a) Only Individual (b) Only Individual and HUF

(22) Municipality of Niwai falls under ______________category of person -

(c) Individual (d) Association of Person Ans.(b)

(c) Previous Year (d) Accounting Year Ans.(b)

(48) According to section 2(24) definition of 'income' is - (Dec. 2014)

(a) Rs. 2,50,000 (b) Rs. 3,00,000

(c) Not Ordinarily Resident (d) Any of these Ans.(c)

(35) A company is said to be resident in India in previous year, if:

(43) A foreign company would be resident in India:

(c) Non resident only (d) ROR, RNOR and Non-Resident

(c) 9.50% (d) 9.00%

(52) Which of the following incomes is deemed to accrue or arise in India ?

(c) Rs. 2,00,000 (d) Rs. 50,000. Ans.(a)

(c) Rs. 27,000 (d) Rs. 25,000 Ans.(a)

If Paresh is Not ordinarily Resident what is his total income?

FILL-IN THE BLANK

CHAPTER 3 INCOMES EXEMPT FROM TAX

EXEMPTION IN RESPECT OF UNDER-TAKINGS LOCATED IN SEZ

(30) In case of a unit established by an entrepreneur in SEZ, which begins to manufacture or

(c) Rs. 2,40,000 (d) Rs. 2,52,000 Ans.(a)

(14) Mr. A joins a job in the grade of Rs. 20,000-500-25,000-1,000-40,000-1,500-60,000 on 1-7-

Amount Months Total

Gross Salary 3,57,696.00

Tax Liability (Due to Rebate) Nil

(c) Rs. 72,000 (d) Rs. 48,000 Ans.(a)

(c) Rs. 40,600 (d) Rs. 32,400 Ans.(a)

Car 1 - Off + Personal 39,600.00 Car 1 - Pure Personal 2,56,800.00

(a) Rs. 25,000 (b) Rs. 20,000

(a) Rs. 5,40,000 (b) Rs. 10,00,000

(c) Partially taxable (d) None of the above. Ans.(a)

(121) Employer's contribution to recognised provident fund is taxable in excess of ___________ of

FILL-IN THE BLANK

CHAPTER 5 INCOME FROM HOUSE PROPERTY

BASIC CONCEPTS OF TAXABILITY OF INCOME FROM HOUSE PROPERTY

(8) Income from building constructed on leasehold is taxable as :

(c) Rs. 25,000 (d) None of the above. Ans.(a)

(c) Rs. 1,84,800 (d) Rs. 2,24,000 (Ans.(b)

(c) Transfer of property to Sumit. (d) None of the above. Ans.(b)

(C) Rs.28'560 (d) Rs. 62,160. Ans(b)

CHAPTER 6 PROFITS AND GAINS OF BUSINESS OR PROFESSION

(a) Section 15 (b) Section 24

(a) Cash Compensatory Support (b) Duty Drawback

(a) Contract (b) Agreement

(a) There should be profits and gains.

(a) Trade (b) Commerce

(a) Cost price (b) Market price

(a) Cash system only (b) Mercantile system only

(a) Cash system (b) Mercantile system

(a) Taxable under the head 'income from profits

(a) Wagering transaction (b) Speculative transaction

(a) Tax-free under section 10(10D) (b) Fully taxable as income

(a) Rent, rates and taxes (b) Insurance of budding

(a) Group of assets (b) Block of assets

(a) Asset must be owned wholly or partly by the assessee.

(a) 50% (b) 20%

(a) 7 1/2% (b) 15%

(a) 40% (b) 60%

(a) 40% (b) 7 1/2%

(a) Lump sum sale (b) Slump sale