MCQs on Unit I & Il

1. Residential status is to be determined for:

A. previous year
B. assessment year
C. accounting year
D. financial year

2. Incomes which accrue or arise outside India but are received directly into India are
taxable in case of:
A. resident only
B. Both ordinarily resident and ordinarily resident
C. Non-resident
D. All the assesses

3. Income deemed to accrue or arise in India is taxable in case of:

A. resident only
B. Both ordinarily resident and not ordinarily resident
C. Non-resident
D. All the assesses

4. Income which accrue or arise outside India from a business controlled from India is
taxable in case of:
A. resident only
B. not ordinarily resident only
C. Both ordinarily resident and not ordinarily resident
D. Non-resident

5. Income which accrue or arise outside India and also received outside India is taxable in
case of:
A. resident only
B. not ordinarily resident
C. Both ordinarily resident and not ordinarily resident
D. None of the above

6. (i)R was born in India in 1988. His parents were born in India in 1951. His grandfather
was born in Lahore in 1936 but his grand mother was in England in 1940. R will be:
A. A citizen of India
B. Person of Indian Origin
C. Overseas citizen of India
D. None of these

(ii) what will be your answer if the parents of R along with R have taken the citizenship
of England
A. A citizen of India
 C. Overseas citizen of India
D. None of these

7. R, a foreign national but a person of Indian origin visited India during previous year
2016-17 for 181 days. During 4 previous years he was in India for 400 days. R shall be:
A. Resident in India
B. Non-resident in India
C. Not ordinarily resident in India
D. Resident and ordinarily resident in India

8. Dividend paid by an Indian company outside India is:

A. Taxable in India in the hands of the recipient
B. Exempt in the hands of the recipient
C. Taxable in the hands of the company and exempt in the hands of the recipient
D. Taxable in the hands of the companyand exempt in the hands of the recipient
provided it does not exceed Rs

9. Where a non-resident has a business connection in India but its operation are
confined to purchase of goods in India for the purpose of export, such income shall-
A. Be taxable in India as it is deemed to accrue or arise in India
B. Not be taxable in India as it shall not be deemed to accrue or arise in India
C. be taxable as it is accrues or arises in India
D. be taxable as it does not accrue or arise in India

10. Interest payable outside India by a non-resident in India to a non-resident in India

shall-
A. Not be taxable in India
B. be taxable in India provided the interest is paid in respect of money borrowed and
used for a business or profession carried on in India or earning from any source of
income in India
C. be taxable in India providedthe interest is paid in respect of money borrowedand
used for a business or profession carried on in India
D. not to be taxable in India as it shall not be deemed to accrue or arise in India

11. Gratuity shall be fully exempt in the case of:

A. Central and State Governmentemployee
B. Central and State Government employees and employees of local authorities
C. Central and State Government employee, employees of local authorities and
employees of statutorycorporation
D. Central and State Government employees and employees of statutory corporation

12. Un-commuted pension received by a Government employee is:

A. Exempt
B. Taxable
 C. Partially taxable
D. Taxable upto 50 % Of the uncommuted pension

13. Encashment of leave salary at the time of retirement is fully exempt in the case of:-
A. Central Government employee
B. State Government employee
C. Both Central and State Government employees
D. Government employees and employees of local authority

14. (i) If rent is paid for a house situated in Delhi, the house rent allowance shall be
exempt to the maximum extent of:
A. 40% of salary
B. 50% of salary
C. 60% of salary
D. 75% of salary

(ii) what shall be exemption if the rent is paid for a house in Ghaziabad.
A. 40% of salary
B. 50% of salary
C. 60% of salary
D. 75% of salary

15. Leave travel concession is a tax free perquisite:

A. For one journey in a block of 4 years
B. one journey per year
C. two journeys in a block of 4 years
D. For one journey in a block of 2 years

16. R is an employee of Indian Oil Corporation ltd. He is provided with free gas for his
personal purposes by the employer. The value of this perquisite shall be:
A. Nil
B. 6.25% of the salary
c. Manufacturing cost per unit
D. Market rate of gas

Employer's contribution to statutory fund shall be:

A. Fully exempt
B. Exempt upto 12% of the salary
C. Exempt upto 10% of the salary
D. Fully taxable

18. Interest credited to statutory provident fund shall be:

A. Fully exempt
 D. Exempt upto 9.5%

19. Employer's contribution to unrecognized provident fund shall be:

A. Fully taxable
B. Fully exempt
C. Exempt upto 12% of salary
D. Neither exempt nor taxable in the year of contribution

20. Employee's/assessee's own contribution to statutory provident fund or recognized

provident fund or public providentfund shall be subject to:
A. Deduction under section 80C
B. Deduction under section 80CCC
C. Deduction under section 16 from gross salary
D. None of the above

21. Employee's contribution to unrecognized provident fund shall be subject to:

A. Deduction u/s 80C
B. Deduction under section 80CCC
C. Nil deduction
D. Deduction under section 16 from gross salary

22. Payment from recognized provident fund after 5 years of service shall be:
A. taxable
B. Fully exempt
C. Taxable to the extent of employer's contribution and interest thereon
D. None of the above

23. Income tax is

a. Professionaltax B) Direct tax C) Indirecttax
D) Service tax

24. Section 2(9) of Income tax deals

a. Person B) Assessee C) Previous Year
D) Assessment Year

25. Educational cess is charges at the rate of

26. To be an Ordinarily resident in India, an individual must satisfy .

a. Both Basic Conditions and One Additional Condition
b. One Basic Condition and Both Additional Conditions
c. One Basic Condition and One Additional Condition
d. Both Basic Conditions and Both Additional Conditions
27. Dividend from an Indian Company is .....................
a. Fully Taxable B) Partly Taxable
C) Fully Exempted D) None of these

28. Expenditureincurred on exempted income is as deduction.

a. Fully Allowed B) Partly Allowed
C) Not Allowed D) None of these

29. Gratuity is defined as per section .... .......

A) IO(IOA) B) IO(IOAA) C) 10(10) D)IOA

30. HRA is ....................

A) Fully Taxable B) Partly Taxable
C) Fully Exempted D) None of these

31. Agricultural income in Pakistan is assessable for.....

a. Resident B) Not Ordinarily Resident
C) Non-resident D) Not taxable

32. Children education allowance is exempt up to per month per child for two
children.
A) Rs.100 B) Rs.150 C) Rs.200 D) Rs.250

33. Transport allowance given by the employer to the employee is exempt up to

A) Rs.1000p.m B) Rs.1600p.m
C) Rs.1000p.a D) Rs.1600p.a

34. State which of the following income are exempted?

a. Dearness Allowance B) City CompensatoryAllowance
C) Foreign Allowance under section 10(7) D) Medical Allowance

35. Who among the following may be "not ordinarily resident"?

a. Hindu Undivided Family.
b. Company.
c. Association of persons.
d. None of these
36. A person is Non-resident if he fails to fulfil..........
a. The additional conditions.
b. At least one of the basic conditions.
C. Both basic conditions.
d. None of these

37. In case of Tax free salary, .

A) Tax is to be paid by employer
B) No tax is payable on such salary
C) Tax is to be paid by the employee.
D) Govt, itself pays the tax at a future date

38. Dearness allowance is taxable in the hands of...

a. Govt employees B) Non Govt employees
C) All employees. D) None of these

39. Deduction from gross Total income is allowed under Sec. 80C up to lower of the
Qualifying amount or a maximumof.
A) Rs. 50,000. B) Rs. 80,000.
C) Rs. D) Rs.

40. Income accrued outside India and received outside India is taxable in case of

a. Residentand ordinaryresident(ROR)onIy
b. Resident but not ordinary resident (RNOR)onIy
c. Non-residentonly
d. ROR, RNOR and Non-resident

41. Gross Total Income is arrived after .

a. only adding Incomeunder five heads of Income
b. adding Income under five heads of Income excluding losses
C. adding Income under five heads Of Income, after applying clubbing
provisionsand making adjustment of set off and carry forward of losses
d. adding Income under five heads of Income, after applying clubbing
provisionsand makingadjustmentof set off and carry forwardof lossesand after
allowing deduction under section 80Ct080U
 42. Gift to employee up to p.a. will not be treated as perquisite taxable in the
hands of employee.
A) 4,000 B) 5,000 C) 10,000 D) 2,500

43. Land mark case on operations of agricultural income is

a. Bacha F.Gujdar
b. Raja Benoy Kumar
c. Saundarya Nursery

MCQ - Unit 3 and 4

Income from House Property

I. Vacant site lease rent is taxable as -

a. Income from house property
b. Business income or income from house property, as the case may be
c, Income from other sources or business income, as the case may be
d. Income from other sources or income from house property, as the case may be

2. Treatment of unrealized rent for determining income from house property

a. To be deducted from expected rent
b. To be deducted from actual rent
c. To be deducted under section 24 from annual value
d. To be deducted from both expected rent and actual rent

3. Municipal taxes to be deducted from GAV should be

a. Paid by the tenant during the previous year
b. paid by the owner during the previous year
c. Accrued during the previous year
d. Paid during the previousyear either by tenant or owner

4. Deduction under section 24(a) is

a. 1/3rd of NAV
b. Repairs actually incurred by the owner
c. of NAV
d. Interest on borrowed capital

5. Interest on borrowed capital accrued up to the end of the previous year prior to the year
of completion of construction is
a. Allowed as a deduction in the year of completion of construction
b. Allowed in 5 equal annual installments from the year of completion of construction
c. Allowed in the respective year in which the interest accrues
6. The ceiling limit of deduction under section 24(b) in respect of interest on loan taken on
1.4.2019 for repairs of a self-occupied house is
a. 30000 pa
b. 150000 pa
c. 200000 pa
d. No limit

7. Where an assessee has two self-occupation, the benefit of nil annual be available in
respect of -
a. Both the properties
b. The property which has been acquired/constructedfirst
c. Any one of the properties, at the option of the assessee
d. Any one of the properties and once option is exercised cannot be changed in
subsequent years

8. Leena received 30,000 as arrears of rent during the P.Y. 2019-20. The amount taxable
under section 25A would be
a. 30,000
b. 21,000
c. 20,000
d. 15,000

9. Vidya received 90,000 in May, 2019 towards recovery of unrealised rent, which was
deducted from actual rent during the P.Y. 2017-18 for determining annual value. Legal
expense incurred in relation to unrealized rent is 20,000. The amount taxable under
section 25A for AN. 2020-21 would be -
a. 70,000
b. 63,000
c. 60,000
d. 49,000

10. Brahma and Company, a partnership firm, according to its partnership deed, is engaged in
the business of letting out of properties.Rental income received from letting out of
property will be chargeable under the head
a. PGBP
b. Other sources
c. Income from House Property
d. Capital gain

11. Mr. Shiva, a salaried individual has a vacant land which is given on rent by him. Rental
income received is taxable under the head -
a. PGBP
b. Other sourceÅ
c. Income from House Property
d. Capital gain
12. Mr. Nikhilesh Mishra has let out his property to Rovina which is used by Rovina for her
commercial purpose. Rovina paid as rent. Now, is taxable under
which head-
a. PGBP
b. House property
c. Other sources
d. Capital Gain

13. Annual value of property being held as stock-in-trade would be treated as NIL for the
period of from the end of the FY in which Completion Certificate of construction of
property is obtained from competent authority -
a. 6 months
b. I year
c. 2 years
d. Nil

14. Mr. A received composite rent for building and furniture from Mr. B. Mr. B does not accept
letting out of buildings without other assets. Total rent received is 9/60,000. Now,
will be taxable in the hands of Mr. A under which head
a. Income from House Property
b. PGBP
c. 'FOS
d. Capital Gain

15, For computation of Income from House Property, Gross Annual Value is
a. Higher of Expected rent and Actual rent
b. Lower of Expected rent and Actual rent
c. Higher of Standard rent and Actual rent
d. Lower of Standard rent and Actual rent

16. For calculating expected rent, should be taken-

a. Higher of Fair Rent and Municipal value, but restricted to Standard Reni
b. Lower of Fair Rent and Municipal value, but restricted to Standard Rent
c. Higher of Municipal value and Standard Rent, but restricted to Fair Value
d. Lower of Municipal value and Standard Rent, but restricted to Fair Value

17. If a single unit of property is self-occupied for part of the year and let out for rest of the
year, the Expected Rent for shall be taken into account
a. Let out period
b. Whole year
c. Self-occupied period
d. 2 months
Profit and gain from business and profession

18. An assessee uses plant and machinery for the purpose of- of carrying on his business.
Under section 31, he shall be eligible for deduction on account of -
a. Both capital and revenue expenditure on repairs
b. Current repairs
c. Current repairs plus 1/5th of capital expenditure on repairs
d. Both (a) & (b)

19. A Ltd. has unabsorbed depreciation of for the P.Y.2019-20. This can be carried
forward.
a. For a maximum period of 8 years and set-off against business income.
b. Indefinitely and set-off against business income.
c. Indefinitely and set-off against any head of income
d. Indefinitely and set-off against any head of income except salari)

20. When inventory is converted into capital asset, of inventoryon date of its
conversion would be charged as business income
a. FMV
b. Realization value
c. Cost of inventory
d. Replacement cost

21. Which of the following is a speculation business?

a. Hedging contract with respect to stock 10
b. Forward contract
c. Purchase or sale of shares without actual delivery of assei
d. Trading in derivatives

22. XYZ Ltd. incurred capital expenditure of on 1.4.2019 for acquisition of patents and
copyrights. Such expenditure is -
a. Eligible for deduction in 14 years from A.Y.2020-21
b. Eligible for deduction in 5 years from A.Y.2020-21
c. Subject to depreciation@ 25% under section 32
d. Subject to depreciation @ 15% under section 32

23, In a business, plant is used only 3 months for business purpose in FY 19-20. Total expenses
on repairs made during the year for plant is 12,000. Deduction allowed under section 31
will be
a. 12000
b. 3000
c. 9000
d. 6000

24. Interest received by partner of firm from firm will be deemed to be income from -
a. Business
b. Other sources
c. Salary
d. Exempt
25. Employer's contribution to provident fund/superannuationfund/gratuity fund is allowed
as deduction in computing income under the head "Profits and gains of business or
profession", provided it has been paid -
a. Beforethe end of the previous year
b. On or before the due date by which the employer is requiredto credit an employee's
contribution to the employee's account in the relevant fund.
c. On or before the due date for filing the return Of income under section 139(1
d. Before the end of the relevant assessmentyear

26. Priyanka Bhati opened Umbrella shop during rainy season for 3 months. It was not a
continuous venture. During these 3 months she earned and incurred expenses of e This
income will be taxable under
a. Other sources
b. House property
c. PGBP
d. Capital gain

Capital Gain

27. Which of the following would be regarded as transfer -

a. Transfer of a capital asset in a scheme of reverse mortgage
b. Transfer of a capital asset under a gift or will or an irrevocable trust
c. Transfer by way of conversion of equity shares from preference shares
d. Redemption of Zero coupon bond

28. Short-term capital gains arising on transfer of listed shares on which SIT is paid at the
time of transfer, would be chargeable to tax
a. At the rate of 10%
b. At the rate of 20%
c. At the rate of 15%
d, At the rate of 5%

29. Land or building would be long term capital asset only if it is

a. Held for more than 12 months immediately preceding the date of transfer
b. Held for more than 24 months immediately preceding the date of transfer
c. Held for more than 30 months immediately preceding the date of transfer
d. Held for more than 36 months immediately preceding the date of transfer

30. Capital gain on transfer of depreciable asset would be-

a. Long term capital gain, if held for more than 36 months
b. Long term capital gain, if held for more than 24 months
C. Long term capital gain, if held for more than 12 months
d. Short term capital gain, irrespective of the period of holding

31. Which of the following does not constitute transfer?

a. Extinguishment of any right
b. Maturity or redemptionof a zero coupon bond
c. Compulsory acquisition thereof under any law
d. Sale of stock in trade
32. Section 45(5A) is applicable to -
a. All persons
b. Only company
c. Individual and HUF
d. Firms/LLP/ individual/HUF

33. Under section 54F, capital gains are exempted if

a. Long-term capital gain arising on transfer of residential house is invested in acquisition
of one residential house situated in or outside India
b. Long-term capital gain arising on transfer of a capital asset other than a residential
house is invested in acquisition of one residential house situated in or outside India
c, Net sale consideration on transfer of a capital asset other than a residential house is
invested in acquisition of one residential house situated in India
d. Short term or long-term capital gain arising on transfer of a capital asset other than a
residential house is invested in acquisition of one residential house situated in India

34. State whether true or false. " benefit of indexation is available to slump sale asset"
a. True
b. False

35. Under section 54EC, capital gains on transfer of land or building or both are exempted if
invested in the bonds issued by NHAI & RECL or other notified bond-
a. Within a period of 6 months from the date of transfer of the asset
b. Within a period of 6 months from the end of the relevant previousyear
c. Within a period of 6 monthsfrom the end of the previousyear or the due date for filing
the return of income under section 139(1),whichever is earlier
d. At any time before the end of the relevant previous year.

36. State whether true or false, "Securities held as stock-in-trade by foreign institutional
investor is treated as capital asset.
a. True
b. False

37. For treating unlisted Zero Coupon Bond as long-term capital asset it should be held
a. For more than 12 months immediately precedingthe date of its transfer 12
b. For more than 24 months immediately precedingthe date of its transfer
c. For more than 36 months immediately precedingthe date of its transfer
d. For more than 48 months immediately precedingthe date ofits transfer

Incomefrom other sources

38. Income from letting of machinery, plant and furniture is -

a. Always chargeable to tax under the head "Profits and gains of business and
profession"
b. Always chargeable to tax under the head "Income from other sources"
c. Chargeable under the head "Income from other sources" only if not chargeable unde
the head "Profits and gains of business and profession"
d. Chargeable to tax under the head "Income from house property"
39. In respect of winnings from lottery, crossword puzzle or race including horse race or card
game etc.
a. No deduction under Chapter VI-A is allowed and basic exemption limit cannot be
exhausted
b. No deduction under Chapter VI-A is allowed but unexhausted basic exemption can be
exhausted
c. Both deduction under Chapter VI-A and basic exemption are allowed
d. Deduction under Chapter VI-A is allowed but basic exemption limit cannot be
exhausted

40. Ganesh received 60,000 from his friend on the occasion of his birthday
a. The entire amount of is taxable
b. 50,000 is taxable
c. The entire amount is exempt
d. 10,000 is taxable

41. Mr. Y has received a sum of 51,000 on 24.10.2019 from relatives on the occasion of his
marriage.
a. Entire 51,000 is chargeable to tax.
b. Only 1,000 is chargeable to tax
c. Entire 51,000 is exempt from tax
d. Only 50% i.e., 25,500 is chargeable to tax

42. Mr. Mayank has received a sum of 75,000 on 24.10.2019 from his friend on the occasion of
his marriage anniversary.
a. Entire 75,000is chargeableto tax.
b. Entire 75,000 is exempt from tax
c. Only 25,000 is chargeable to tax
d. Only 50% i.e., 37,500 is chargeable to tax

Income of other persons included in Assessee's Total Income (Clubbing of Income)

43. Income of a minor child suffering from any disability of the nature specified in section 801)
is
a. io be assessed in the hands of the minor child
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 13
d. To be clubbed with the incomeof father

44. Incomearising 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 incomeof her husband
45. Where a member of a HUF has converted or transferred his self-acquired property for
inadequateconsideration into joint family property, income arising therefrom is
a. Taxable as the income of the transferor-member;
b. Taxable in the hands of the HUF.
c. Taxable in the hands of the karta of the HUF.
d. Exempt from tax.

46. If the converted property is subsequently partitioned among the members of the family,
the income derived from such converted property as is received by the spouse of the
transferor will be taxable
a. As the income of the karta of the HUF
b. As the income of the spouse of the transferor
c. As the income of the HUF.
d. As the income of the transferor-member

47. Exemption of a certain amount (not exceeding the income clubbed) is available under
section 10(32), where a minor's income is clubbed with the income of the parent. The
maximumexemption available is
a. upto 1,500 in respect of each minor child
b. Up to 1,500 in respect of each minor child maximum of two children
c. Up to 2,000 in respect of each minor child
d. Up to <2000 in respect of each minor child maximumof two children

48. Mr. A gifts a sum of 100000 to his brother's wife Mrs. B. Mr. B gifts a sum of 100000 to
Mrs. A. From the sum gifted to her, Mrs. B invests in a fixed deposit, income therefrom is
10,000. Aforesaid 10,000 will be included in the total income of
a. Mr. A
b. Mrs. A
c. Mrs. B
d. Mr.

Set-off & Carry forward of Losses

49. According to section 80, no loss which has not been determined in pursuance of a return
filed in accordance with the provisions of section 139(3), shall be carried forward. The
exceptions to this
a. Loss from specified business under section 73A
b. Loss under the head "Capital Gains" and unabsorbed depreciation carried forward
under section 32(2)
c. Loss from house property and unabsorbeddepreciation carried forward under section
32(2) 14
d. Loss from speculation business under section 73
50. Section 70 enables set off of losses under one source of income against income from any
other source under the same head. The exceptions to this section are -
a. Loss under the head "Capital Gains", Loss from speculative business, Loss from house
property and loss from the activity of owning and maintaining race horses
b. Long-term capital loss, Loss from speculative business, Loss from specified business
and loss from the activity of owning and maintaining race horses
c. Short-term capital loss and loss from speculative business
d. Loss from specified business and short-term capital loss

51. Mr. X incurred long-term capital loss from sale of listed shares in recognized stock
exchange and STT is paid at the time Of acquisition and sale Of such shares. Such loss
a. Can be set-off only against long-term capital gains
b. Can be set-off against both short-term capital gains and long-term capital gains
c. Can be set-off against any head of income.
d. Is not allowed to be set-off

52. The maximum period for which speculation loss can be carried forward is
a. 4 years
b. 8 years
c. Indefinitely
d. Not allowed to be carry forward

53. Mr. A incurred short-term capital loss of 10,000 on sale of shares through the National
Stock Exchange. Such loss -
a. Can be set-off only against short-term capital gains
b. Can be set-off against both short-term capital gains and long-term capital gains
c. Can be set-off against any head of income.
d. Not allowed to be set-off

54. The maximum period for which loss from specified businesscan be carried forward is -
a. 4 years
b. 8 years
c. indefinitel
d. Not allowed to be carry forward

Deductionsfrom Gross total Income (Deduction u/c VI-A)

55. The deduction under section 80QQB in respect of royalty income of authors of certain
books is subject to a maximum limit of-
a. 100000
b. 300000
15
c. 500000
d. 200000
56. Under section 80GGB, deduction is allowable in respect of contribution to political parties
by -
a. Any person other than local authority and every artificial juridical person wholly or
partly funded by the Government
b. Local authority and every artificial juridical person wholly or partly funded by the
Government
c. An Indian compan
d. Any assessee

57. As per section 80CCE, 1.5 lakh is the maximum qualifying limit for deduction under
a. Sections 80C and 80CCD
b. 80 CCC and 80 CCD
c. Sections 80C, 80CCC and 80CCD(tj
d. Sections 80C, 80CCC and 80CCD

58. Deduction u/s 80C in respect of LIP, Contribution to provident fund, etc. is allowed to:
a. Any assessee
b. An individual
c. An individual or HUE
d. An individual or HUF who is resident in India

Provision of Return Filing & assessment

59. The due date for filing of a return of income for a company for Assessment Year 2020-21
is
a. 31st July, 2020
b. 30th September, 2020
c. 31st October, 2020
d. 31st August, 2020

60. Who is compulsorily required to file return?

a. Individualwhose total income is
b. Company
c. Partnership firm
d. All of the above

61. The return of a company has to be verified by

a. The ManagingDirectoror Director
b. The General Manager
c. The Secretary
d. The Manager

62. An assessee can file a revised return of income at any time before the completion of
assessment or before expiry of the following period, whichever is earlier
a. one year from the end of the relevant assessmentyear
b. two years from the end of the relevant assessmentyear
c. six months from the end of the relevant assessment year
d. end of the relevant assessmentyear
63. As Per section 139(1), filing of returns is compulsory irrespective of whether profit is
earned or loss is incurred, in case of
a. Companies only
b. Firms only
c. Both companies and firms
d. All assesses