Professional Documents
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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
Ans - d
a. Equity
c. Certainty
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) State Government (b) State Legislature
(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
Chapter 2 - Part 1 – Basic Concepts 2.2
(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 2020 X and Y carry on his business without entering into
a partnership. Describe 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)
(34) Dr. Ashok commenced medical practice on 1st September, 2020. The previous year for the
profession for the assessment year 2021-22 would be - (June 2016)
(a) 1st April, 2020 to 31st March, 2021 (b) 1st September, 2020 to 31st March, 2021
(c) 1st June, 2020 to 31st March, 2021 (d) 1st September, 2020 to 31st January, 2021
Ans.(b)
(35) Income of business commenced on 1st March, 2021 will be assessed in assessment year -
(a) 2019-20 (b) 2020-21
(c) 2021-22 (d) 2022-23 Ans.(c)
(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
Chapter 2 - Part 1 – Basic Concepts 2.5
(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 2020-21, taxable income of A Ltd., a domestic company (Turnover in FY
2018-19 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 2020-21, taxable income of A Ltd., a domestic company (Turnover in FY
2018-19was 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) – (Option 1)
(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
Chapter 2 - Part 1 – Basic Concepts 2.7
(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) – (Option 1)
(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
Chapter 2 - Part 1 – Basic Concepts 2.8
(84) In case of resident HUF, what is maximum exemption limit for Assessment Year 2021-22 :
(a) . 3,00,000 (b) Rs. 2,50,000
Chapter 2 - Part 1 – Basic Concepts 2.9
113. Basic exemption for a co-operative society for the assessment year 2020-21 is :
a) Rs. 10000
b) Rs. 15000
c) Rs. 20000
a) Nil Answer: d
114. Person is defined under section of the Income Tax Act, 1961
a) 2(31)
Chapter 2 - Part 1 – Basic Concepts 2.12
b) 2(7)
c) 2(9)
d) 3 Answer: a
115. Income earned by a LLP is taxable at the rate of:
a) 10%
b) 20%
c) 30%
d) None of the above Answer: c
116. Income is defined under section of the Income Tax Act, 1961
a) 2(31)
b) 2(24)
c) 2(9)
d) 3 Answer: b
117. Which of the following is not a revenue receipt? (i) Compensation received for the loss of a
capital asset (ii) Compensation received for damage to or loss of a trading asset. (iii) Profits
on purchase and sale of shares by a share broker on his own account. (iv) Income from
letting out buildings owned by a company to its employees etc.
a. i only
b. i and ii both
c. i , ii, and iii
d. All of the above Answer: a
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, 2020 for 200 days. He has never come to India
before. His residential status for assessment year 2021-22 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, 2020 for a period of just 200 days -
(a) Resident (b) Non-Resident
(c) Not ordinarily Resident (d) Any of these Ans.(c)
Ch 2 – Part 2 – Residential Status 2.14
(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 1st July, 2018 for
employment. He came back to India on 1st January, 2021 on a visit and stayed for 4 months. His
residential status for the assessment year 2021-22 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 for the first time on 10th August, 2020 for
the treatment of his wife. For income-tax purpose, his residential status for the assessment year
2021-22 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, 2020. She left India on 30th April 2020.
(a) Resident (b) Non-Resident
(c) Not ordinarily Resident (d) Any of these Ans.(b)
(12) Ritesh, an Indian citizen, left India for U.K. on 1st September, 2020 to take up a job there. His
residential status for the assessment year 2021-22 would be - (Dec. 2016)
(a) Resident and ordinarily resident (b) Not ordinarily resident
(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 15-10-2020. He has
never gone out of India, previously. What is his residential status for the assessment year 2021-22
? (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 20201-22
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)
(a) Resident and ordinarily resident (b) Not ordinarily resident
(c) Nonresident (d) Resident. Ans.(a)
Ch 2 – Part 2 – Residential Status 2.15
(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 -
(a) Resident (b) Non-Resident
(c) Not ordinarily Resident (d) Any of these Ans.(b)
(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 -
(a) Resident (b) Non-Resident
(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 15th July 2020 for the purpose of employment outside India -
(a) Resident (b) Non-Resident
(c) Not ordinarily Resident (d) Any of these Ans.(b)
(19) Determine the residential status of Mr. Rakesh, an Indian citizen who left India for the first
time on 15th July 2020 for the purpose of visit outside India. He came back to India on 17th March
2021.
(a) Resident (b) Non-Resident
(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, 2020 for a period of just 200 days -
(a) Resident (b) Non-Resident
(c) Not ordinarily Resident (d) Any of these Ans.(b)
(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 02-10-2020 for 190 days. What is the residential status of
Arif ?
(a) Resident (b) Non-Resident
(c) Not ordinarily Resident (d) Any of these Ans.(b)
(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)
(Hint - ROR/RNOR because data of preceeding years is not given so it can be anything ROR/RNOR)
(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.
Ch 2 – Part 2 – Residential Status 2.16
(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% Solve after chapter 11 (b) 8.50%
(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 -
(a) Resident (b) Not Ordinarily Resident
(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)
Ch 2 – Part 2 – Residential Status 2.20
(60) From the following particulars of Income furnished by Ms. Usha pertaining to the year ended
31-03-2021, - 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.(c)
(61) From the following particulars of Income furnished by MR. X an Indian citizen pertaining to
the year ended 31-03-2021,- 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 RNOR what is his total income?
(a) Rs. 12,350 (b) Rs. 10,150
(c) Rs. 22,500 (d) Rs. 2,200 Ans.(b)
(64) 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 Resident what is his total income?
(a) Rs. 12,350 (b) Rs. 10,150
(c) Rs. 22,500 (d) Rs. 2,200 Ans.(c)
(65) 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 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, 2021 : (Dec
2014)
> Interest on U.K. Development Bonds (l/4th being received in India): Rs. 2,00,000;
Ch 2 – Part 2 – Residential Status 2.21
> 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 2021-22 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 2019-20 of a business in Germany remitted to India during
the previous year 2020-21 (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) 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)
(73) From the following particulars of Income furnished by Mr. Anirudh pertaining to the year
ended 31-03-2021, - 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)
Ch 2 – Part 2 – Residential Status 2.22
(74) From the following particulars of Income furnished by Mr. Anirudh pertaining to the year
ended 31-03-2021 - Particulars Amount (?)
(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
ended 31-03-2021 - Particulars Amount (?)
(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 31-03-2021, -
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
31-03-2021, - Particulars ' . . _
Amount (?)
(i) Profit on transfer of building situated in Delhi received in London 35 000
(ii) Business Income carried in Singapore controlled from India, received there,and subsequently
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
31-03-2021-
Particulars Amount (?)
(i) Interest received in Japan on Indian Government bonds. 35,000
(ii) Business Income carried in Singapore controlled from India, received there,and subsequently
remitted to India 37,000
If Paresh is Not ordinarily Resident what is his total income?
Ch 2 – Part 2 – Residential Status 2.23
87. The residential status of Ms Kiki, Person of Indian Origin visiting India who stayed in India
during PY 20-21 for 119 days and for 368 days during PY 2016-17 to 2019-20, earning Indian
income is Rs. 16 lacs and the person is not liable to tax in any other country.
a) ROR b) RNOR
Ch 2 – Part 2 – Residential Status 2.24
88. The Residential status of Ms. Misty, Person of Indian Origin visiting India who stayed in India
during PY 20-21 for 130-170 days and for 368 days during PY 2016-17 to 2019-20, earning Indian
income is Rs. 16 Lacs and the person is liable for tax in any other country.
a) ROR b) RNOR
89. The residential status of Mr. Vivaan, an Indian Citizen/Person of Indian Origin visiting India
who stayed in India during PY for 20-21 for 181 days and for 368 days during PY 2016-17 to 2019-
20, earning Indian income is Rs 14 Lacs and the person is not liable for tax in any other country.
a) ROR b) RNOR
90.The residential status of Mr. Ayaan, an Indian Citizen/Person of Indian Origin visiting India who
stayed in India during PY for 20-21 for 182 days and for 368 days during PY 2016-17 to 2019-20,
earning Indian income is Rs 14 Lacs and the person is liable for tax in any other country.
a) Resident b) Non Resident
91. The residential status of Indian Citizen of Ms Rasgulli , who leaves India as a member of crew
of Indian ship or for the purpose of employment outside India who stayed India during PY for 20-
21 for 130-160 and for 368 days during PY 2016-17 2019-20, earning Indian income is Rs. 16 Lacs
and the person is liable for tax in any other for country.
a) ROR b) RNOR
92. The residential status of Indian Citizen Mr Monty, who leaves India as a member of crew of
Indian ship or for the purpose of employment outside India who stayed India during PY for 20-21
for 130-160 and for 368 days during PY 2016-17 2019-20, earning Indian income is Rs. 16 Lacs
and the person is not liable for tax in any other for country.
a) ROR b) RNOR
(Hint – The person is not covered in exception but gets covered under the new concwpt of Deemed
Resident) – (Indian Citizen, TI > 15 Lacs & Not taxable anywhere in the world)
Ch 2 – Part 2 – Residential Status 2.25
(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) 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)
(21) 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)
(29) 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)
Module MCQ’s
Choose the most appropriate answer from the given options in respect of the following:
1. Any rent or revenue derived from land may be treated as agricultural income if-
(a) It is derived from land
(b) The land is situated in India
(c) The land is used for agricultural purpose
(d) All the above conditions are satisfied.
Ans: (d)
2. Which of the following income is agricultural income—
(a) Rent received from agricultural land
(b) Income from dairy farm
(c) Income from poultry farm
(d) Dividend from a company engaged in
Ch 3 – Exempt Income 3.5
4. If non-agricultural income is Rs. 2,02,000 and net agricultural income is Rs. 40,000, the tax
liability of an individual assessee will be:
(a) Nil (b) Rs. 200
(c) Rs. 206 (d) Rs. 4,326.
Answer: (a)
5. Which of the following additional incomes will not be treated as agricultural income under the
Income- Tax Act, 1961: (old syllabus question)
(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
(c) Additional income from selling cured tobacco as compared to green tobacco leaves
(d) Additional income from selling dried-up tea leaves as compared to raw tea
leaves. Answer: (a)
6. 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:
(a) Rs. 1,75,000 (b) Rs. 2,00,000
(c) Rs. 1,25,000 (d) Nil
Answer: (a) Rs.1,75,000
7. Tax holiday under section 10AA in respect of newly established units in SEZ is allowed for a total
period of —
(a) 5 Years (b) 10 Years
(c) 15 Years (d) 20 Years.
11. Mr. Menon having tea estate in Munnar (Kerala) earned rs. 5 lakhs by way of growing tea leaves and
manufacturing tea. the income chargeable to tax would be:
(a) rs. 2,00,000 (b) rs. 1,75,000
(b) rs. 1,25,000 (d) None of the above
answer: (a) rs. 2,00,000
12. Ms. laxmi received rs. 60,000 by way of family pension from State Government. the amount of
family pension eligible for exemption under section 10(19) is:
(a) rs. 60,000 (b) rs. 40,000
(c) rs. 20,000 (d) Nil
answer: as per section 10(19) family pension received by the widow or children or nominated heirs,
as the case may be, of a member of the armed forces (including paramilitary forces) of the union,
where the death of such member has occurred in the course of operational duties, in such
circumstances and subject to such conditions, as may be prescribed shall be fully exempted.
exemption is available only to union and not state, hence exemption under 10(19) is Nil.
13. A registered trade union earned income by way of interest on fixed deposit held with State Bank of
India of rs. 5,60,000. the interest income chargeable to tax in the hands of trade union would be:
(a) rs. 5,60,000 (b) Nil
(c) rs. 2,60,000 (d) rs. 3,10,000
answer: (b) Nil
14. The income derived from growing, manufacturing and sale of Centrifuged latex or Cenex or
latex based cops as per rule 7a of the income-tax rules, 1962 shall be taken as agricultural and non-
agricultural income in the following ratio:
(a) 75% and 25% (b) 60% and 40%
(c ) 65% and 35% (d) None of the above
Answer: (c ) 65% and 35%
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 1-7-2020 at monthly salary of Rs. 25,000. His salary becomes due on last
day of each month. His gross salary for AY 2021-22 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 1-7-2020 at monthly salary of Rs. 20,000. His salary becomes due on first
day of next month. His gross salary for AY 2021-22 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 1-7-2019 at monthly salary of Rs. 20,000 in A Ltd. He got an increment of
Rs. 1,000 in the month of July 2020. His salary becomes due on last day of each month. His gross
salary for AY 2021-22 will be -
(a) Rs. 2,49,000 (b) Rs. 2,48,000
Ch 4 – Salaries 4.2
20,000.00 3 60,000.00
21,000.00 9 1,89,000.00
(11) Mr. A joins a job on 1-7-2019 at monthly salary of Rs. 20,000 in A Ltd. He got an increment of
Rs. 1,000 in the month of July 2020. His salary becomes due on first day of next month. His gross
salary for AY 2021-22 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, 2021 and May, 2021 is received in advance in March, 2021. What
will be his gross income for A.Y. 2021-22?
(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-
2009 which becomes due on last day of each month. His gross salary for AY 2021-22 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-09 Jun-10 20,000.00
Jul-10 Jun-11 20,500.00
Jul-11 Jun-12 21,000.00
Jul-12 Jun-13 21,500.00
Jul-13 Jun-14 22,000.00
Jul-14 Jun-15 22,500.00
Jul-15 Jun-16 23,000.00
Jul-16 Jun-17 23,500.00
Jul-17 Jun-18 24,000.00
Jul-18 Jun-19 24,500.00
Jul-19 Jun-20 25,000.00 3 months 75000
Jul-20 Jun-21 26,000.00 9 months 234000
Total 309000
Ch 4 – Salaries 4.3
(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)
(16) 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 first day of next month. He is also dearness allowance of 100% of
salary. His gross salary for AY 2021-22 will be -
(a) Rs. 6,18,000 (b) Rs. 5,94,000
(c) Rs. 6,40,000 (d) Rs. 6,42,000 Ans.(c)
Hint – 3,20,000 + 3,20,000
(17) Pankaj who has opted for Section 115BAC joins service on 1st April, 2016 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,
2021 on the total salary of - (Dec. 2015) -
(a) Rs. 1,76,000 (b) Rs. 2,40,000
(c) Rs. 2,14,000 (d) Rs. 2,24,000 Ans.(b)
Answer Hint: Standard deduction is not 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-
2020. He also gets dearness allowance @ 107% of salary. His tax liability for assessment year 2021-
22 will be - Anjan has opted for section 115BAC (Dec. 2014)
(a) Rs. 3,520 (b) Rs. 920
(c) Nil (d) Rs. 5,600 Ans.(c)
Ch 4 – Salaries 4.4
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 2021-22 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
Ch 4 – Salaries 4.6
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)
Hint - Above question is of Running allowance.
(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
Ch 4 – Salaries 4.7
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)
(Hint – Basic – 3,00,000 + DA 1,44,000 + Uniform = 180000-60000) – Standard Deduction – 50,000
(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)
Hint – 300,000 + 180000 + 80rs x 12 months)
(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 2020-21
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 Rs. 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)
Ch 4 – Salaries 4.8
(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
allowance of Rs. 15,000 p.m. forming part of retirement benefit and has been provided rent free
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
allowance of Rs. 15,000 p.m. forming part of retirement benefit and has been provided rent free
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 2020 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 2021-22 will be —
(a) Rs. 36,000 (b) Rs. 12,000
Ch 4 – Salaries 4.10
(66) Ramesh, an employee of Gauri & Co. of Delhi, received the following payments during the
previous year ended 31st March, 2021:
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. 1-7-2020.
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 2021-2022 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 2021-22 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
allowance of Rs. 25,000 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. 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 2021-22 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
allowance of Rs. 25,000 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 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 – Rs. 96,000. The taxable value of car facility for AY 2021-
22 will be —
(a) Rs. 2,31,000 (b) Rs. 39,600
(c) Rs. 2,22,000 (d) Rs. 1,71,000 Ans.(b)
Ch 4 – Salaries 4.12
(72) Karishma 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 motor car
(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
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 2021-22 will be
—
(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
allowance of Rs. 15,000 p.m. forming part of retirement benefit. She has been provided motor car
(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 2021-22 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
allowance of Rs. 15,000 p.m. forming part of retirement benefit. She has been provided motor car
(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
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 employer recovers Rs. 2,000 p.m. from the
employee. The taxable value of car facility for AY 2021-22 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
allowance of Rs. 15,000 p.m. forming part of retirement benefit. She has been provided motor car
(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
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 2021-22 will be
—
(a) Nil (b) Rs. 84,000
(c) Rs. 80,500 (d) Rs. 32,400 Ans.(a)
(Hint – Pure official use)
(76) Kareena receives Rs. 30,000 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 motor car
(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 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 2021-22 will be —
(a) Rs. 32,400 (b) Rs. 84,000
Ch 4 – Salaries 4.13
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 2021-22 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 2020-21. 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
Ch 4 – Salaries 4.15
Option 1 Option 2
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 2020-21, 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 2021-22 : 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. (115BAC Not opted)
(a) Rs. 84,000 (b) Rs. 85,280
Ch 4 – Salaries 4.16
(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 Rs. 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, 2019 It sold the and motor car
to its employee. Jayant, for Rs. 6 lakh on 10th June, 2020. The company claimed depreciation @ 15%
for the year ended 31sl March, 2021. 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 reimbursed 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. 2020 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)
Ch 4 – Salaries 4.18
(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 2021 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 2021 after rendermg 25 years and 7 months of service. His basic salary w.e.f. 01-10-2020
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 2021 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 2021 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?
Ch 4 – Salaries 4.19
(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 3,60,000. 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 2020. 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 2020. With effect from Is' January 2021 he gets 4/5th
of his pension commuted for Rs. 12,00,000. Determine his gross salary taxable for AY 2021-22 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, 2020 and his pension has been fixed at Rs.
1,500 p.m. He gets 1/2 of his pension commuted during January, 2021 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
Ch 4 – Salaries 4.21
(133) Mr. Amit avails the benefit of LTC and went by air (economy class) on a holiday in India on
25-01-2021along 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 Rs. 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)
(136) Mr. Jain retires from a Private service on 1st August 2020 At the time of his retirement after
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 2021-2022
(a) Rs. 86,000 (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, 2021. 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 Rs. 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)
(138) Mr. Jain retires from a Private service on 1st August 2020. At the time of his retirement after
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 2021-22 :
(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)
Ch 4 – Salaries 4.22
Answer: (a)
Ch 5 – House Property 5.1
(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 :
(a) Income from House Property (b) Income from Other Sources
(c) Profits & Gains of Business or Profession (d) Capital Gains Ans.(b)
(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
Ch 5 – House Property 5.3
(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)
(29) 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. 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)
(30) 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. 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 31-3-2021. 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 12-2-2021. 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 2021-22.
(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
Ch 5 – House Property 5.5
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 31-03-2021. 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
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 for
the year ended 31-03-2021 are paid by the owner on 31-03-2021. 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
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 for
the year ended 31-03-2021 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) Rs. 29,000
(c) Rs. 14,000 (d) Nil Ans.(c)
(39) Karim owns a house, which is self-occupied upto 31-5-2020. W.e.f. 1-6-2020, 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 31-5-2020 w.e.f. 1-6-2020, 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 31-5-2020. w.e.f. 1-6-2020, 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)
Ch 5 – House Property 5.6
(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, 2019.
During the previous year 2020-21, 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) – Sandeep has opted
for Section 115BAC
(a) Rs. 30,000 (b) Rs. 1,00,000
(c) Nil (d) Rs. 2,00,000. Ans.(c)
(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)
(49) The maximum limit of deduction under section 24(b) for interest on borrowed capital on or
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, 2020 for self-residential use. The loan interest payable
to State Bank of India for the financial year 2020-21 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
Ch 5 – House Property 5.7
(75) Megha received Rs. 30,000 as arrears of rent during the P.Y. 2020-21. 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, 2021. Find out income
from house property for the assessment year 2021-22.
(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 2021, 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) Rs. 1,04,000
(c) Rs. 1,25,000 (d) Rs. 1,19,000 Ans(d)
(79) Ramesh let-out his house on 1st April, 2020 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 2021-2022 will
be – (Dec 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 2020-21. 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 2020-
21 will be (Dec. 2014)
(a) Rs. 33,600 (b) Rs. 31,080
Ch 5 – House Property 5.11
(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)
16. Depreciation available, if asset is used for less than 180 days during the year of acquisition shall be
of block rate .
24. Rate of depreciation chargeable on life saving medical equipments for the assessment year 2021-
22 is -
(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 2020 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.
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 2020 amounting to Rs. 10,00,000. One of the asset falling within the
block was sold for Rs. 5,50,000 on 14-01-2021. Rate of depreciation of the block is 10%.
Calculate the amount of depreciation available during the previous year for the block.
31. Opening WDV of the block of assets was Rs. 15,00,000. During the year, asset was acquired under
this block on 15th January 2021 amounting to Rs. 10,00,000. One of the asset falling within the
block was sold for Rs. 5,50,000 on 14 January 2021. Rate of depreciation of the block is 10%.
Calculate the amount of depreciation available during the previous year for the block.
32. Opening WDV of the block of assets was Rs. 15,00,000. During the year, asset was acquired under
this block on 15th January 2021 amounting to Rs. 10,00,000. One of the asset falling within the
block was sold for Rs. 5,50,000 on 14 January 2021. 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) 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, 2020. Assume the rate of
depreciation at 15%. The eligible amount of depreciation will be - (Dec. 2016)
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) 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, 2018 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,
2020 and since then it was used for business purposes. The amount of depreciation eligible in
his case for the assessment year 2021-22 would be - (Dec. 2015)
46. Q & Co., a sole proprietary concern, was converted into a Company on 1-9-2020. Before the
conversion, the sole proprietary concern had a Block of Plant and Machinery (Rate of
Depreciation 15%), whose WDV as on 1 -4-2020 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 1-1-2021 for Rs. 1,60,000. Compute the depreciation that
would be allocated between the sole proprietary concern and the successor company.
(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 2020 amounting
to Rs. 10,00,000. One of the asset falling within the block was sold for Rs. 5,50,000 on 14-01-
2021. 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.
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 2020
amounting to Rs. 10,00,000. One of the asset falling within the block was sold for Rs. 5,50,000
on 14-01-2021. 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.
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 2020-21 is 301. Compute the total income if the scientific
research asset is sold for Rs. 65,00,000 during 2020-21 assuming that it is sold without using for
business.
(a) Rs. 40,98,648 (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 301 +148] = Rs. 3,98,648. Thus total income
= Rs. 40,98,648.
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.
57. In the case of any new machinery or plant amounting Rs. 25,00,000 is acquired by an assessee on
10-12-2020 engaged in the business of manufacture or production of any article or thing,the
additional depreciation admissible in FY 2020-21 and FY 2020-22 will be ____________ and
____________ respectively.
(a) Income from business & profession (b) Income from other sources
Ch 6 - PGBP 6.10
(a) Interest on compensation or Enhanced compensation (b) Subsidy or grant from Government -
(c) Claim for escalation of price in a contract or export incentives (d)All of the above
Ans.(c)
72. The audit report is to be filed ____ Month before the date of return Filing -
(a) 1 (b) 3
(c) 5 (d) 7 Ans.(c)
76. 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 2020 amounting to Rs. 150 crore. Rate of depreciation of the block is 15%. Calculate the
WDV of the block of asset.
(a) 500 rs. Per day & Penalty from 10,000 to 1,00,000 rs
(b) 1000 rs. Per day & Penalty from 10,000 to 1,00,000 rs
(c) 200 rs. Per day & Penalty from 10,000 to 1,00,000 rs.
(d) 200 rs. Per day & Penalty from 50,000 to 1,00,000 rs Ans.(c)
78. To Boost the real estate sector the difference between SDV and actual sale value under section
43CA on primary sale of residential houses amounting not more than 2 Crores between 12 Nov
20 to 30 June 2021 has been increased to
(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)
81. 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 if assessee has
opted fro Section 115BAC ?
(a) 5 (b) 4
(c) 8 (d) 10 Ans.(c)
84.The amount of deduction in relation to site restoration fund u/s 33ABA is :
85. 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 :
86. 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 :
Ans.(d)
102. 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.
104. Deduction in respect of expenditure incurred for obtaining licence to operate telecommunication
services shall be available during the period of:
(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)
(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)
107. 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)
108. The amount of deduction available under section 35AD for capital expenditure incurred in
business of Cold chain facilities will be:
(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)
115.Amount of deduction available u/s 35CCC for expenditure incurred on notified Agricultural
Extension Project in Previous Year 2020-21:
(a) 1/5th for each 5 successive previous years (b) 1/2 for each 2 successive previous years
(c) 1/10th for each 10 successive previous years (d) Nil Ans.(a)
122. As per section 35DDA, total expenditure in a voluntary retirement scheme is deductible in - (Dec.
2016)
126. An assessee purchased a computer on which depreciation is admissible. Such expenditure shall
be considered as :
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)
146. Assessee company incurred revenue expenditure of Rs. 15,000 for promoting family planning
amongst its employees. Calculate the amount of deduction available.
Ans.(d)
153. Which of the following is not deductible while calculating taxable income from business - (Dec.
2016)
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) 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.
(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 ?
177. Ravi & Co. paid Rs. 40,000 by cash to Mr. Balu a supplier on 5-9-2020. 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)
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)
180. Ashish made a cash payment of Rs. 11,000 on 28th March, 2021 in respect of purchases of goods.
Calculate the amount of expenditure to be disallowed u/s 40A(3).
(a) NIL
(b) Rs. 15,000
(c) Rs. 11,000
(d) Rs. 20,000 Ans.(c)
181. Ashish made a cash payment of Rs. 2,85,000 on 28th March, 2021 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) 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, 2020 for Rs. 86,000 which is
paid as Rs. 15,000 in cash on 11th May, 2020; Rs. 30,000 by a bearer cheque on 31st May, 2020;
and Rs. 41,000 by an account payee cheque on 16th May, 2020. The amount of disallowance under
section 40A(3) is - (June, 2011)
Note : There is no provision u/s 41(4) to treat the bad debt recovered by the successor in business as
his income.
194. Arul Industries got waiver of value added tax (VAT) of Rs. 2,20,000 for the financial year 2020-
21. The amount of waiver is - (Dec. 2016)
198. Saraswath Ltd. made provision of Rs. 12 lakh for bonus payable for the year ended 31st March,
2021. It paid Rs. 7 lakh on 31st July, 2021; Rs. 3 lakh on 30th September, 2021; and Rs. 2 lakh
on 15th December, 2021. The amount eligible for deduction under section 43B would be - (Dec.
2015)
(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).
(d) All of the above.
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).
(d) All of the above.
Ans.(d)
202. Assessee incurred an expenditure of municipal tax of Rs. 51,000 relating to office building for the
Previous Year 2020-21 but did not pay the same till 31-10-2021. Such sum was paid on 15th
March, 2022. In which assessment year deduction shall be allowed to assessee?
interest amount to bank. The assessee paid this amount on 15th March 2022. In which
assessment year deduction shall be allowed to assessee?
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)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.
Ch 6 - PGBP 6.32
(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)
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) 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
(d) All of the above.
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) 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)
Ch 6 - PGBP 6.34
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) 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) 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) 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
?.
Ch 6 - PGBP 6.35
(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:
244. Mr. Siraj engaged in retail trade reports a turnover of Rs. 43 lakhs for the previous year 2020-21.
He deposited Rs. 30,000 in his PPF account held with SBI. His total income for the AY 2021-22
by applying Section 44AD provision is : (June, 2017)
(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.
(d) All of the above. Ans.(d)
246. Which of the following income is agricultural income - (June, 2010)
(c) The non-agricultural income exceeds the maximum amount not chargeable to tax.
(d) All of the above.
Ans.(c)
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) 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, 2021 was Rs. 4,60,000. The total income of
Balu is - (June 2016)
(c) 50% is exempt from tax (d) 25% is exempt from tax Ans.(a)
(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)
(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)
(9) 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 1,00,000 but not exceeding 10,00,000.
(a) 2 (b) 4
(c) 6 (d) 8 Ans.(c)
(10) 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 10,000 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)
(16) In terms of section 2(42A), unlisted shares 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)
(a) 12 Months (b) 36 Months
(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 -
(a) 12 Months (b) 36 Months
(c) 24 Months (d) 48 Months Ans.(c)
(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
(d) None of these Ans.(b)
(22) Rajat purchased a car for his personal use for Rs. 5,00,000 in April, 2020 and sold the same
for Rs. 5,50,000 in July, 2020. The taxable capital gains would be - (Dec. 2016)
(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). Land or building, or both, if transferred on or after 1st April, 2018 shall be treated as a long term capital
asset, if it is being held immediately prior to the date of its transfer for more than :
(a) 36 months (b) 12 months
(c) 24 months (d) None of the above
Ans: (c)
(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.
(d) All of the above. Ans.(d)
(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)
(28) Which of the following transactions shall not be regarded as transfer as per the provisions of
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)
(29) Which of the following transactions shall not be regarded as transfer as per the provisions of
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.
(d) All of the above. Ans.(d)
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 per Section 47(xb). anv transfer by way of conversion of preference shares of a company
into _______of that company shall not be regarded as transfer —
Ans.(d)
(33) Compute the tax liability for assessment year 2021- 22 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 2021-22 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 2020-21 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)Which of the following is not a capital asset for Mr. Rao who is employed in a public sector bank?
(a) Urban land
(b) Agricultural land within 2 kms from local limits of municipality
(c) Deposit certificate issued under Gold Monetisation Scheme, 2015
(d) Jewellery
Answer: (c)
Ch 7 - Capital 7.6
(37) Mrs. Lakshmi purchased shares of ABB Ltd. for Rs. 5 lakhs on 3rd April, 2020. The shares were
sold on 5th June, 2020 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 1-6-2020. 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-
2020. 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, 2020 from the company. She sold all the shares in January, 2021
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 2021-22 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 2021-22 if Mr. Ramesh, a property dealer, sells a commercial
plot of land on 1-3-2021 for Rs. 50,00,000 lakhs which was acquired by him on 1-8-2018 for Rs.
25,00,000 for selling of offices constructed therein. He had incurred land development charges of
Rs. 10,00,000 on 1-10-2018. He incurred Rs. 1,00,000 for selling the plot of land.
(a) Nil (b) 15,00,000
(c) Rs. 14,00,000 (d) 25,00,000 Ans.(a)
Answer Hint: Stock in trade in not a capital asset.
Ch 7 - Capital 7.7
(44) Compute the capital gains for assessment year 2021-22 if Mr. Roy sells his personal motorcar
on 11-4-2020 for Rs. 2,55,000, which was acquired on 31-1-2019 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 2021-22 if Mr. Kallu sells his personal Jewellery
on 11-8-2020 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 2021-
22.
(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 2021-22 if Mr. Gillu sells shares of unlisted
company on 11-3-2021 for Rs. 12,50,000, which was acquired on 31-1-2020 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. 52,00,000
during the year. Compute the capital gain for the assessment year 2021-22. (Cost inflation index for
F.Y. 2001-02 = 100, and 2021-21 = 301)
(a) Rs. 1,76,000 (b) Rs. 32,00,000
(c) Rs. 87,000 (d) Rs. 83,000 Ans.(d)
(48) On 15th November, 2020, 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 2021-22 shall be - (Dec. 2014)
(a) Rs. 3,36,000 (b) Rs. 6,00,000
(c) Rs. (1,18,080) loss (d) Rs. (1,94,640) 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 2021-22. (Cost inflation index for
F.Y. 2001-02 = 100 and 2020-21 = 301)
(a) Rs. 14,00,000 (b) Rs. 38,00,000
(c) Rs. 20,80,000 (d) Rs. 10,37,500 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.
48,00,000 during the year. Compute the capital gain for the assessment year 2021-22. (Cost
inflation index for F.Y. 2001-02 = 100, 2005-06 = 117, 2020-21 = 301)
Ch 7 - Capital 7.8
(64) If in the above case government enhanced the compensation by Rs. 2,00,000 in the year 2020-
21 what will be the previous year of chargeability of enhanced compensation ?
(a) 2017-18 (b) 2018-19
(c) 2019-20 (d) 2020-21 Ans.(d)
(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 2020. 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 2020-21 = 301)
(a) Rs. 19,12,000 (b) Rs. 16,63,000
(c) Nil (d) Rs. 31,50,000 Ans.(b)
Ch 7 - Capital 7.10
(66) Ramesh received Rs. 7 lakh by way of enhanced compensation in March, 2021. A further sum
of Rs. 2 lakh decreed by the court is due but not received till 31st March, 2021. The amount of
income chargeable to tax for the assessment year 2021-22 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)
(68) Compute the tax liability for assessment year 2021-22 of resident individual who is having
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.28,600
(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 15-03-2021 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 2020-21 = 301)
(a) Rs. 5,00,000 (b) Rs. 6,00,000
(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 3-4-2020 and A received a sum of Rs. 55,00,000 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 2020-21 = 301)
(a) Rs. 3,83,000 (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 1-4-2020 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
(c) In hands of shareholders as well as company (d) Either in hands of shareholder or in
hands of company Ans.(a)
Ch 7 - Capital 7.11
(73) M owns two machineries eligible for depreciation at the rate of 15%. The WDV of block of asset
on 1-4-2020 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 -
(a) Rs. 25 lakhs (b) Rs. 30 lakhs
(c) Rs. 28 lakhs (d) Rs. 3 lakhs Ans.(b)
Answer Hint : Stamp duty value shall be the full value of consideration since it exceeds 110% 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 110% 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 & machinery (b) Land or building
(c) All movable property other than plant & (d) Computers.
machinery and computers Ans.(b)
Ch 7 - Capital 7.12
(80) Mr. X has sold his land for a consideration of Rs. 25,00,000 to Mr. Y. on 15-04-2020. 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-
07-2018 for Rs. 12 lakhs. The taxable capital gains in hands of Mr. X will be —
(a) Rs. 13 lakhs (b) Rs. 18 lakhs
(c) Rs. 16 lakhs (d) Rs. 10 lakhs Ans.(b)
(81) Mr. X has sold his land for a consideration of Rs. 25,00,000 to Mr. Y. on 15-04-2020. 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-
07-2018 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 —
(a) Rs. 13 lakhs (b) Rs. 14 lakhs
(c) Rs.1 lakhs (d) Rs. 18 lakhs Ans.(b)
(82) Mr. X has sold his land for a consideration of Rs. 25,00,000 to Mr. Y. on 15-04-2020. 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-
07-2018 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 -
(a) Rs. 23 lakhs (b) Rs. 14 lakhs
(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:
(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, 2020
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 2020-21 = 301)
(a) Rs. 200 lakhs (b) Rs. 280 lakhs
(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-
07-2020. The same was forfeited by him. The said advance money will be _____________ and shall
_____________ .
(a) Taxable as Income from other sources, be reduced from cost of acquisition of the asset.
(b) Taxable as Income from other sources, not be 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 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
(c) Nil (d) None of these Ans.(b)
Ch 7 - Capital 7.13
(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, 2020 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, 2020 for Rs. 20,00,000. (Cost inflation index for F.Y. 2001-02 = 100 and 2020-21 = 301)
(a) Rs. 3,44,500 (b) Rs. 70,000
(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, 2020 for Rs. 15,00,000.
(Cost inflation index for F.Y. 2001-02=100, 2009-10 =148 and 2020-21 = 301)
(a) Rs. 4,36,000 (b) Rs. 2,76,000
(c) Rs. 3,56,200 (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, 2020. 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 :
(a) Long term capital gain (b) Short term capital gain
(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:
(a) 1 year (b) 2 years
Ch 7 - Capital 7.14
(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
financial year and the same cannot exceed Rs. 100 lakhs.
(c)One year, 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.
(d)One year, 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. 100 lakhs.
Ans.(a)
(105) Long-term capital gains on sale of a long-term capital asset in October, 2020 is Rs. 105 lakh.
The assessee invested Rs. 50 lakh in REC bonds in March, 2021 and Rs. 55 lakh in NHAI bonds in
May, 2021. 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
(c) Rs. 25 lakhs (d) Rs. 50 lakhs Ans.(d)
(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)
(a) Rs. 50 lakh (b) Rs. 20 lakh
(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 10-10-2020. The indexed cost of acquisition
amounts to Rs. 18 lakhs. He deposited Rs. 50 lakhs in REC bonds in January 2021 and another Rs.
50 lakhs in March, 2021. The amount of capital gain liable to tax after deduction under section 54EC
is: (June, 2017)
(a) Rs. 2 lakhs (b) Rs. 52 lakhs
(c) Rs. 102 lakhs (d) Rs. 18 lakhs Ans.(b)
(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
(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, 2020 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, 2021, he purchased a residential house for Rs.
15 lakh. He owns one residential house on 8th July, 2020. The cost inflation index for 2001-02 was
100 and for 2020-21 is 301. Find out the amount of capital gains chargeable to tax for the
assessment year 2021-22:
(a) Rs. 2,16,182 (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
127. Capital gain of Rs. 75 lakh arising from transfer of long term capital assets will be exempt from tax if
such capital gain is invested in the bonds redeemable after three years, issued by NHAI u/s 54 EC of
the Act.
Answer : False : Because the maximum limit of investment in bond of NHAI u/s 54 EC, is just Rs. 50
lakhs.
128. 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.
36 Months
(a) (b) 4 Months
(c) 6 Months (d) 12 Months.
129. Long-term capital gains on zero coupon bonds are chargeable to tax —
(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).
Answer: (d)
130. 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 —
(a) 10% (b) 15%
(c) 20% (d) Normal rate.
Answer: (b)
(131) What is not regarded as transfer out of the following -
(a) Total partition of HUF (b) Gift
(c) Conversion of preference shares into equity (d) All of the above Ans.(d)
(132) The cost of acquisition in a resulting company in case of demerger is decided on the basis of proportion
of
(a) Net Book value of assets of demerged company (b) Net worth of the demerged company
(c) Capital employed in the demerged & Resulting company (d) Both A & B Ans.(d)
(133) In case of transfer of assets from a partner to a partnership firm, the sale value of assets is to be
considered as –
(a) FMV as on the date of transfer (b) Amount recorded in the books of account of the firm
(134) In case of transfer of assets from a partnership firm to a partner, the sale value of assets is to be
considered as –
(a) FMV as on the date of transfer (b) Amount recorded in the books of account of the firm
(c)Original Cost to the partner (d) Any of the above Ans.(a)
(135) In case of Joint Development agreement the sale value in the hands of Individual/HUF can be
considered as –
(a) SDV of building on the date of receiving completion certificate
(b) Case Consideration
(c) Addition of both a & b
(d) None of the above Ans.(c)
Ch 7 - Capital 7.19
(136) The amount of tax payable by a company on buyback of shares by a domestic company on buyback
payable amount of Rs. 75,00,000 will be –
(a) Rs. 15,00,000 (b) Rs. 16,80,000
(c)Rs. 17,47,200 (d) Rs. 15,60,000 Ans.(c)
(137) Mr. Anand purchased a land on 5th August 1998 for Rs. 35,00,000. The FMV as on 1.4.2001
was Rs. Rs. 42,00,000 and SDV as on 1.4.2001 was Rs. 40,00,000. The cost to be considered by the
assessee will be –
(a) Rs. 35,00,000 (b) Rs. 40,00,000
(c)Rs. 42,00,000 (d) Rs. 75,00,000 Ans.(b)
(138) For eligible start up u/s 54GB the shares can be subscribed maximum by –
(a) 31.3.21 (b) 31.3.20
(c) 31.3.19 (d) 31.3.22
Ans.(a)
(139) For eligible start up u/s 54GB the the lock in period for computer or computer software is –
(a) 5 Years (b) 7 Years
(c) 3 Years (d) 8 Years
Ans.(c)
(140) As per section 112A the eligible assets are –
(a) Listed Equity Shares (b) Listed Equity Oriented Mutual Funds
(c) Listed Units of Business Trust (d) All of the above
Ans.(d)
(141) As per section 112A the LTCG is taxable on gains above Rs. 1 Lac at the rate of -
(a) 10% (b) 15%
(c) 20% (d) 5%
Ans.(a)
(142) Mr. A purchased 500 shares of Reliance Industries on 14 August 2015 for Rs. 800 per share.
The shares were sold on 28th September 2021 for Rs. 2400 per share. The FMV of shares on
31.1.2018 was Rs. 1100 per share. Find the amount of Capital Gains –
(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
(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:
(a) Income from other sources (b) Income from house property
(c) Income from Business and profession (d) Any of the above Ans.(a)
(18) Any sum received by employer from employees as contribution to certain funds is taxable
under the head if not taxable in PGBP:
(a) Salaries (b) House Property
(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, 2021. Calculate the amount chargeable to tax.
(a) Exempt (b) Rs. 12,000
(c) Rs. 120 (d) None of the above Ans.(b)
(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.
(d) All of the above.
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 2021-22 :
Particulars -
Dividend from shares of Indian company of Rs. 12,50,000. Expenses incurred on collecting such
dividends 12,500 if person has not opted for section 115BAC.
Determine the amount of tax liability for the assessment year 2021-22.
(a) Rs. 1,28,750 (b) Rs. 1,95,000
(c) Rs. 26,000 (d) Rs. 23,180 Ans.(b)
(Note – As per section 57 only interest is allowed upto 20% of dividends and no other expenditure
is allowed)
(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.(b)
(28) Libra P. Ltd. engaged in trading activity had accumulated profits of Rs. 15,00,000 as on 1-4-
2020, Mr. Gautam having 30% of the equity shares and voting rights in the company received Rs. 5
lakhs as loan on 1-6-2020 from the company. The loan was repaid by him on 30-11-2020. The
amount liable to tax in the hands of Mr. Gautam as deemed dividend is: (June, 2017) -
(a) Rs. 5,00,000
(b) Rs. 15,00,000
(c) Dividend will be exempt in hands of shareholder under Section 10(34).
(d) Rs. 1,50,000
Ans.(a)
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.(c)
(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.(c)
(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
Winnings from lotteries (net) Rs. 70,000
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 Rs. 75,000
Winnings from lotteries (net) Rs. 70,000
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 2021-22 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. Mr. C aged 72 years, received INR 15,00,000 as dividend, in FY 2020-21. The tax chargeable is on -
a) INR 15,00,000
b) INR 5,00,000
c) Nil
d) INR 750000
Answer: (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 1-4-2020 and the plant and machinery was purchased on 9th
May 2020 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) Ram received INR 80,000 from his best friend on his birthday?
a) INR 80000 is taxable
b) INR 30000 is taxable
c) Entire amount is exempt
d) None of the above Answer: (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:
(a) Income from other sources (b) Income from house property
(c) Income from Business and profession (d) Any of the above Ans.(a)
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, 2020. 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, 2020.
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, 2020 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
(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 :
(a) Exempt (b) Rs. 80,000
(c) Rs. 30,000 (d) Rs. 50,000 Ans.(b)
(66) Gift of Rs. 5,00,000 received on 10th July, 2020 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, 2021 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, 2020, 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.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.
(d) All of the above. Ans.(d)
(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)
(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)
Ch 8 – IOS 8.12
(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 for Mr. K ?
(a) Nil (b) Rs. 50,000
(c) Rs. 4,50,000 (d) Rs. 5,00,000
Ans.(a)
(92) Sameer received the following income during financial year 2020-21 : 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.(b)
(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)
Ch 8 – IOS 8.13
(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, 2020, 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 2021-22 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 2020 by Mr. Yogesh. Out of the said amount a sum of Rs. 35,000 relates to preceding
financial years. If the assessee has opted for section 115BAC what will be the taxable income -
(a) Rs. 25,000 (b) Rs. 15,000
(c) Rs. 17,500 (d) Rs. 35,000 Ans.(a)
(99) Assessee received interest on enhanced compensation of Rs. 1,00,000 as per court decree in
March, 2021. 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.
(d) All of the above. 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. Mr. Raj received Rs. 80,000 from his friends on the occassion of his Marriage anniversary. Taxable income
from other sources is?
a) Entire Rs. 80,000 is exempt
Ch 8 – IOS 8.14
(110) Compute income taxable under head income from other sources:
Winnings from lotteries (net) Rs. 33,936
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) No Taxability
(c) Dividend tax @ 12.5% + Surcharge +HEC
(d) Liable to pay dividend distribution tax @ 30% + 12% Surcharge + 4% HEC
Ans.(b)
(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.(b)
(113) Mr. Dev has earned interest of Rs. 12,000 under Post Office Savings Bank Account. The income
taxable as other sources is ?
a) Rs. 12000
b) Fully Exempt
c) Rs. 8,500
d) Rs. 6,000 Answer: c
(114) 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)
(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, 2019 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 2021-22.
(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.
Ch 8 – IOS 8.16
(c) Interest/ Salaries payable outside India on which tax has not been paid or deducted.
(d) All of the above. 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)
(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) Bahadur, a defence personnel, died in a war. His wife received the family pension of Rs. 7,500
per month during the year 2020-21. 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)
(124) 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)
(125) For immovable property the ddifference between SDV and purchase value of residential
houses purchased between 12.11.20 to 30.6.21whose value is upto Rs. 2 Crores is increased to -
(a) 5% (b) 15%
(c) 10% (d) 20% Ans.(d)
(126) Which of the following incomes are not chargeable under the head “income from other
sources”:
(a) Lottery held at stock in trade
(b) Income of jockey
Ch 8 – IOS 8.17
(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)
(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)
Ch 9 – Clubbing 9.2
(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 :
(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.(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)
Ch 9 – Clubbing 9.3
(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. (Asssuming assessee has not opted for section 115BAC)
(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.
(Asssuming assessee has not opted for section 115BAC)
(a) Rs. 1,500 (b) Rs. 3,000
(c) Rs. 1,000 (d) None of these Ans.(b)
19. Income of Minor Child, includible in the income of his/her parents income, deductible to the extent of
such income does not exceeds for each minor child if assessee has opted for section 115BAC
a) Rs. 500
b) Rs. Nil
c) Rs. 1500
d) Rs. 2000
Answer: (b)
(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.
Ch 9 – Clubbing 9.4
the period 1-4-2020 to 31-12-2020 and 1-1-2021 to 31-3-2021 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 10-4-2019, which amount Smt.
Rani invested in her business on the same date. Smt. Rani earned profits from her proprietory
business for the Financial year 2019-2020, Rs. 1,50,000 which remained invested in the business.
The profit earned by Mrs. Rani in financial year 2020-2021 Rs. 3,90,000. Compute the income, to be
clubbed in the hands of Rani's husband for the Assessment year 2021-22.
(a) Rs. 2,70,000 (b) Rs. 1,20,000
(c) Nil (d) Rs. 3,90,000 Ans.(b)
Ch 9 – Clubbing 9.6
(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) if assessee has not opted for section 115BAC
(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)
42. Income of a minor child from a Fixed Deposit with a bank, made out of income earned from scholarship, is to
be?
a) Assessed in the hands of the minor child
b) Clubbed with the income of the parent whose total income before such clubbing is higher
c) Exempted from tax
d) Clubbed with father’s income
Answer: (b)
43. 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 Answer (a)
Ch 10 – Set off & C/f of losses 10.1
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 -
(a) 4 Years (b) 8 Years
(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
2021-22. 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; (other 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)
Ch 10 – Set off & C/f of losses 10.3
(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)
(a) 4 Years (b) 6 Years
(c) 8 Years (d) 12 Years Ans.(a)
(19) Unabsorbed loss from house property can be carried forward for - (Dec. 2016)
(a) 4 Years (b) 8 Years
(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)
Ch 10 – Set off & C/f of losses 10.4
(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 2021-22 Rs. 5,40,000. His total income chargeable to tax for
assessment year 2021-22 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)
(Hint – Speculation loss of last 4 AY’s can only be set off)
(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
Ch 10 – Set off & C/f of losses 10.5
(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 31-12-2020, profits of the firm for year ending 31-3-2021 were Rs. 1,50,000
and brought forward business losses for assessment year 2019-20 was Rs. 1,20,000 and
unabsorbed depreciation Rs. 40,000. Find the amount of brought forward loss that cannot be
carried forward? (In case you dot get the answer, please refer the solution given below)
(a) Rs. 2,500 (b) Rs.3,333
(c) Rs. 15,833 (d) Nil Ans.(a)
Hint-
Profit from 1.4.20 to 31.12.20 = 1,15,000/12 months * 9 months = Rs. 1,12,500
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 2020-21, 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, 2021 but he submitted the
return on 9th September, 2021. 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)
(Note - The loss can be offset against an income within the same year, even if the return is filed after
the due date but can’t be carred forward)
(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
Ch 10 – Set off & C/f of losses 10.8
(b) Further 8 years in the hands of amalgamated company including the year in which the
company is amalgamated
(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 company including the year in which the business is reorganized
(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 including the year in which the bank is amalgamated
(d) Further 4 years Ans.(c)
(55) 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 if
the assessee has opted for section 115BAC
(a) Rs. 5,00,000 (b) Rs. 3,00,000
(c) Rs. 2,00,000 (d) Rs. 4,00,000 Ans.(a)
Ch 10 – Set off & C/f of losses 10.9
(Hint - Income from house property cannot be set off from any other head under section 115 BAC.
Also speculation business loss can be set off only against income from speculation business.)
(Hint -
(56) Find out the gross total income of Mr. A for A.Y. 2021-22 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, unabsorbed depreciationof Rs. 90,000 if the
assessee has opted for section 115BAC
(a) Rs. 80,000 (b) Rs. 70,000
(c) Rs. 30,000 (d) Nil Ans.(a)
(House property loss against any other head and unabsorbed depreciation can not be set off
under section 115 BAC. Loss from automative trade can be set off against textile trade)
(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 2020-21. On 1st April, 2020, two partners
retired. The amount that assessee-firm can set-off against its income for the assessment year
2021-22 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)
60. The maximum period for which losses from speculative business can be carried forward:
a) 4 years
b) 8 years
Ch 10 – Set off & C/f of losses 10.10
c) Indefinitely
d) None of the above Answer: (a)
Ch 11 – Deductions 11.1
(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
Ch 11 – Deductions 11.3
(24) In case of non salaried employee, the amount of deduction under Section 80CCD shall not
exceed.
Ch 11 – Deductions 11.4
(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, 2021.
Amount that can be claimed by him as deduction out of income in assessment year 2021-22 is -
(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)
Ch 11 – Deductions 11.5
(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 -
Ch 11 – Deductions 11.6
(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 :
(a) 1 year (b) 4 years
(c) 8 years (d) No time limit. Ans.(c)
(56) Raghunath repaid during previous year 2020-21 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
2013-14. The amount eligible for deduction under section 80E for the assessment year 2021-22is :
(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 -
Ch 11 – Deductions 11.8
(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)
Ch 11 – Deductions 11.10
(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 Ans (a)
(89) Deduction under section 80E can be claimed for interest on loan for
a) Any course of higher education
b) Only post graduate courses
c) Only graduate courses
d) Any course of study after passing the Senior Secondary Examination or its equivalent from any recognized
school, board or university
Answer: (d)
(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)
92 .Maximum qualifying limit for deduction under section 80C is -
a) Rs. 50,000
b) Rs. 1,10,000
c) Rs. 1,00,000
d) Rs. 1,50,000
Answer: (d)
93. Deduction u/s 80C, in respect of Life Insurance Premium, Contribution to Provident Fund etc., is allowed to?
a) Any assessee
b) An individual
c) An individual / HUF
d) An individual / HUF who is resident in India
Answer: (d)
Ch 11 – Deductions 11.12
94. Which of the following is covered under section 80D of the Income Tax Act, 1961 –
a) Repayment of loan taken for higher education
b) Medical treatment of handicapped dependent
c) Medical Insurance Premium
d) Reimbursement of medical expenses
Answer: (c)
95. Which deductions are allowed under section 115BAC –
(a) 80CCD(1),80JJAA (b) 80CCD(1B),80JJAA
(c) 80CCD(2),80JJAA (d) 80CCC,80JJAA Ans.(c)
96. Additional deduction allowed under section 80CCD(1B) is
(a) Rs. 85,000 (b) Rs. 50,000
(c) Rs. 75,000 (d) Rs. 1,00,000 Ans.(b)
97. If the Assessee is other than employee then the amount exempt on partial withdrawl from NPS will be -
(a) 25% (b) 40%
(c) 60% (d) Nil Ans.(d)
98.As per section 80EEA the deduction of interest allowed is maximum upto Rs.
(a) Rs. 1,50,000 (b) Rs. 50,000
(c) Rs. 75,000 (d) Rs. 1,00,000 Ans.(a)
99. As per section 80EEA the loan should be sanctioned between -
(a)1.4.19 to 31.3.20 (b) 1.4.19 to 31.3.22
(c) 1.4.19 to 31.3.21 (d) 1.4.19 to 31.3.23 Ans.(c)
100. As per section 80EEA, the maximum value of house should be -
(a)Rs. 30 Lacs (b) Rs. 40 Lacs
(c) Rs. 45 Lacs (d) Rs. 50 Lacs Ans.(c)
101. As per section 80EEA, the maximum value of Loan should be -
(a)Not Prescribed (b) Rs. 40 Lacs
(c) Rs. 45 Lacs (d) Rs. 50 Lacs Ans.(a)
102.As per section 80EEB the deduction of interest allowed is maximum upto Rs.
(a) Rs. 1,50,000 (b) Rs. 50,000
(c) Rs. 75,000 (d) Rs. 1,00,000 Ans.(a)
103. As per section 80EEB the loan should be sanctioned between -
(a)1.4.19 to 31.3.20 (b) 1.4.19 to 31.3.22
(c) 1.4.19 to 31.3.21 (d) 1.4.19 to 31.3.23 Ans.(d)
104. For Claiming Deduction u/s 80G under Category 4 the institutions or funds need to take approval from -
th
106. As per section 80G the institution or fund approved and the period of such approval is due to expire
should make a new application _____ months prior to expiry of the said period
(a)3 Months (b) 6 Months
(c) 9 Months (d) 1 Month Ans.(b)
107. As per section 80G the institution or fund which has been provisionally approved
should make a new application _____
(a) At least 6 months prior to expiry of the period of the provisional approval
(b) within 6 months of commencement of its activities,
(c) Earlier of a & b
(d) Later of a & b
Ans.(c)
108. As per section 80G in the residual case the institution or fund
should make a new application atleast _____ prior to the commencement of the previous year
(a)3 Months (b) 6 Months
(c) 9 Months (d) 1 Month Ans.(d)
109. As per section 80G in case of the application made by the institution or fund already approved before the
introduction of new amendment clause then the Income tax officer needs to pass order within _____ months
from the end of the month from which the application is made
(a)3 Months (b) 6 Months
(c) 9 Months (d) 1 Month Ans.(a)
106. As per section 80G in case of the application made by the institution or fund approved and the
period of such approval is due to expire then the Income tax officer needs to pass order within _____
months from the end of the month from which the application is made
(a)3 Months (b) 6 Months
(c) 9 Months (d) 1 Month Ans.(b)
107. As per section 80G in case of the application made by the institution or fund which has been
provisionally approved then the Income tax officer needs to pass order within _____ months from the
end of the month from which the application is made
(a)3 Months (b) 6 Months
(c) 9 Months (d) 1 Month Ans.(b)
108. As per section 80G in case of the application made by the institution or fund is in the residual case
then the Income tax officer needs to pass order within _____ months from the end of the month from
which the application is made
(a)3 Months (b) 6 Months
(c) 9 Months (d) 1 Month Ans.(c)
109. A per section 80G the approval granted by the AO in case of the institution or fund already approved before
the introduction of new amendment clause or in case of institution or fund approved and the period of such
approval is due to expire or in case of the institution or fund which has been provisionally approved, the approval
will be valid for –
(a)1 Year (b) 2 Years
(c) 3 Years (d) 5 Years Ans.(d)
Ch 11 – Deductions 11.14
110. A per section 80G the approval granted by the AO in case of the application made by the institution or fund
is in the residual case then the approval will be valid for –
(a)1 Year (b) 2 Years
(c) 3 Years (d) 5 Years Ans.(c)
111. As per section 80GGA, the cash payment allowed is upto Rs. -
(a)1,000 rs. (b) 2,000 rs.
(c) 10,000 rs. (d) 50,000 rs. Ans.(b)
112. As per section 80IAC, the eligible start up can claim deduction of ___% in ___ out of ___ years if the turnover
does not exceed ___ Crores –
(a)100 %, 3 years ,10 Years, 100 crores
(b) 100 %, 3 years ,7 Years, 100 crores
(c) 100 %, 3 years ,10 Years, 25 crores
(d) 50 %, 3 years ,10 Years, 100 crores
Ans.(a)
113. As per section 80M___ company is eligible to deduct Dividends received upto the amount of dividend
distributed by it on or before the due date -
(a)Domestic Company (b) Foreign Company
(c) Both of the above (d) None of the above
Ans.(a)
114. Deduction in respect of interest on deposit under section 80TTB is available to ___ upto Rs. _____
(a) Non Resident Senior Citizen, 50,000 rs.
(b) Resident Senior Citizen, 10,000 rs.
(c) Resident Senior Citizen, 50,000 rs.
(d) Any Assessee Ans.(c)
12. PAN – Return Filing – Self Assessment – Refund 12.1
(2) In case of which of the following assessees the due date of filing return of income is 31st July of Assessment Yr-
(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) 31st October of the relevant assessment year Ans.(d)
(4) Zeet & Co. is a partnership firm whose turnover for the previous year 2020-21 was Rs. 220 lakhs. The 'due date' for filing
the return of income of the firm is : (June, 2017)
(a) 31st July, 2021 (b) 30th September, 2021
(c) 31st October, 2021 (d) 31st March, 2022 Ans.(c)
(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 2021-22. The due date for filing return of income by Zeet Ltd.
is- (June 2016)
(a) 31st July, 2021 (b) 30th September, 2021
(c) 31st October, 2021 (d) 30th November, 2021
Ans.(c)
(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 the basic exemption limit
Ans.(d)
(7) The due date of filing the return of income for assessment year 2021-22 is case of a working partner of a firm whose
accounts are liable to be audited shall be - (June 2016)
(a) 31st July of the assessment year (b) 30th September of the assessment year
(c) 31st October of the assessment year (d) 30th November of the assessment year
Ans.(c)
(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. PAN – Return Filing – Self Assessment – Refund 12.2
(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)
(13) 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 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)
(14) 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 after 31st day of December of the assessment
year and his total income does not 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.(c)
15. For making a TAN Application online, a person shall file his application in Form No.
a) 49A
b) 49C
c) 49B
d) 49D
Answer: (c)
16. 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)
(Hint - If two answers are correct we choose the most appropriate one which is written in the Act)
17. Quoting of PAN is compulsory in which of the following cases:
a) Deposit exceeding Rs. 50,000 in Post Office Savings Bank
b) Payments to hotels of bills of Rs. 50,000 at any one time
c) Both “A” and “B”
d) None of the above Answer: (a)
(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 Sources
business or profession'
(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. 2021-22, 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 2021-22 will be — (June, 2015)
(a) 31st July, 2021 (b) 30th September, 2021
12. PAN – Return Filing – Self Assessment – Refund 12.3
(a) Upto the end of the assessment year 2021-22 (b) Before the end of 1 year from the end of the assessment
year 21-22
(c) Before completion of assessment u/s 153 (d) Before issue of notice u/s 148 Ans.(a)
(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 assessee (b) The letter specifying the defect is sent to the 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).
(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. 2021-22 is 31st July, 2021.
The return by Ram shall be filed on 20th September, 2021. 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 bonds issued by it
(b) Sale or purchase of any immovable property valued at Rs. 10,00,000 or more.
(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
Select the correct answer from the options given below - (Dec. 2015)
(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, 2021 :
(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)
12. PAN – Return Filing – Self Assessment – Refund 12.5
(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 2021-22 on 10th August, 2021. The notice under section
143(2) for scrutiny assessment should be served on the assessee by - (June
2016)
(a) 31st March, 2022 (b) 31st March, 2023
(c) 10th February, 2022 (d) 30th September 2022 Ans.(d)
(57) XYZ Ltd. filed its return of income for the A.Y. 2021-22 on 1st February, 2022. 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, 2022 (b) 30th September, 2022
(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) 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)
(60) 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)
(61) 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)
(Note - Related to chapter 13, TDS,TCS, Advance Tax)
(62) An individual who has provided directly or indirectly consideration for the Asset for the immediate or future benefit direct
or indirect of himself or any other person is called as
(a)Beneficial owner
(b)Beneficiary
(c)Any of the above
(d)None of the above Ans.(a)
(63) ITR1 and ITR 4 are called as
(A) sahaj and Sugam
(B) sugam and Sahaj
(C) none of the above
(D) any of the above Ans.(a)
12. PAN – Return Filing – Self Assessment – Refund 12.6
(65) Due date of Return filing for Mr Krishna was 31st July 2021. Tax amount pending amounted to rupees 40,000. Income
tax return was filed on 17th December 2021. Amount of interest payable under section 234
a. 2000 rupees
b. 400 rupees
c. 800 rupees
d. 1600 rupees
Ans.(a)
66. Order of adjustment as per section 140A is
a. Tax, interest, Fees
b. Fees , Interest, Tax
c. Tax, Fees , interest
d. None of the above
Ans.(b)
(67) 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 in form 30 year.
(c) One Year from the end of relevant assessment (d) 21 months from the end of relevant assessment
Year in form 29 year. Ans.(a)
(68) The additional interest payable on account of delay of refund after the the due date provided by appellate authority
expired -
a. 1%
b. 2%
c. 3%
d. 4% Ans.(c)
(69) 4th character of Pan for an Individual stands as
aP
bC
c. H
d. J Ans.(a)
(70) 4th character of Pan for an Artifical Juridical Person stands as -
aP
bC
c. H
d. J Ans.(d)
(71) Thus, a person wishing to obtain PAN can apply for PAN by submitting the PAN application form
a. Form 49A –Indian Citizens
b. 49AA Foreign Citizens
c. Both are correct
d. Both are incorrect Ans.(c)
Ch 13 – TDS – TCS – Advance Tax 13.1
(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 -
(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 -
(a) Rs. 20,000 (b) Rs. 10,000
(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 – (Assessee has opted for section 115BAC)
(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)
(Hint – TDS will be only on employer’s amount – 50,000 + 10,000 i.e. 20,000 divide by 2 → So 60,000 x 10%)
10. The TDS Certificate issued by an employer to his employees in case of salary income is
a) Form 16
b) Form 26
c) Form 26A
d) Form 26Q Answer: (a)
(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 be
a) Rs. 2,570 (b) Rs. 5,150
(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 , security is not in demat form :
(a) Rs. 12,000 (b) Rs. 24,000
(16) Rohan won a State Government lottery of Rs. 1,00,000 on 11th October, 2020. The government should deduct tax on such
winning amounting to - (June 2016)
(a) Rs. 30,000 (b) Rs. 33,000
(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
(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 -
(23) On 1-07-2020, 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 31-03-2021. 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
(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
Ans - a
(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
(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
(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
(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
(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
(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
(57) Prakash maintained a recurring deposit by paying Rs. 20,000 per month in a bank. The interest accrued and credited during
2020-21 on such deposit is Rs. 15,000. The amount of TDS required to be deducted by the bank would be : {June 2019)
(c) Rs. 3,000 @20% (d) Rs. 500 @ 10% over Rs. 10,000 Ans.(a)
(58) Sagar engaged in a business, booked a marriage hall of Yash having PAN for conducting mega sale during festival season of
F.Y. 2020-21 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
(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
(65)Pradip acquired an urban land from Chitra for Rs. 70 lakh on 10th October, 2020. 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 15-05-2020, 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 28-07-2020 in respect
performance in an event of promotion of a new product.
(a) Rs. 2,08,000 (b) Rs. 3,12,000
(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 25-06-2020.
(a) Rs. 83,200 (b) Rs. 41,600
(69) Compute the amount of tax to be deducted. Sitting fees of Rs. 25,700 paid to director of the company on 28-08-2020.
(71) Compute the amount of tax to be deducted. Rs. 2,40,000 paid to Mr. A on 25-03-2021 by Rajasthan State Government on
compulsory acquisition of his urban land.
(a) Rs. 18,000 (b) Rs. 1,800
(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
(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) a banking company to which the Banking (b) a co-operative society engaged in carrying on the business of banking
(84) An amount of Rs. 40,000 was paid to Mr. X on 01-07-2020 towards fees for professional services without deduction of tax at
source. Subsequently, another payment of Rs. 50,000 was due to Mr. X on 28-02-2021, 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 22-06-2021. Compute
the interest chargeable under section 201(1A).
(a) Rs. 860 (b) Rs. 320
(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 13 – TDS – TCS – Advance Tax 13.10
(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 15-10-2020. What is the due date for
payment of TDS ?
(a) 15-10-2020 (b) 07-11-2020
(c) 31-12-2020 (d) 15-12-2020 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 31-3-2021 ?
(a) 30-04-2021 (b) 07-04-2021
(p) 31-03-2021 (d) 15-04-2021 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 businessor 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 2020-21 - (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
(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 -
(a) 15% of total advance tax payable (b) 75% of total advance tax - Advance tax paid in earlier
instalments
Ch 13 – TDS – TCS – Advance Tax 13.11
(c) 45% of total advance tax - Advance tax paid (d) 30% of total advance tax - Advance tax paid on earlier
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-
(a) 30% of total advance tax payable (b) 75% of total advance tax - Advance tax paid in earlier
instalments
(c) 100% of total advance tax - Advance tax paid (d) 60% of total advance tax - Advance tax paid on earlier
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
in earlier instalments on earlier instalments Ans.(b)
(105) In case of Company assessee, amount of advance tax payable in the second instalment (i.e. on or before 15th
September) 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
in earlier instalments on earlier instalments 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 -
(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
in earlier instalments on earlier instalments Ans.(a)
(107) Calculate advance tax payable by Sumit on or before 15th September, 2020 from the following : Rent from house property
Rs. 46,000 per month; municipal taxes paid by him Rs. 32,000 – (Assessee has opted for Existing Rates) (Dec. 2014)
(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 2020-21. How much amount he must have paid as advance tax in September, 2020 - (June 2016)
(a) Rs. 12,000 (b) Rs. 10,000
(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
(119) For the purposes of deducting or paying tax under section 192, a person, being an eligible start-up referred to in section 80-
IAC, responsible for paying the assessee being perquisite of the nature specified in Section 17(2)(vi) i.e. sweat equity shares/ESOP
, shall deduct or pay, as the case may be, tax on such income within specified days -
(a) after the expiry of 48 months from the end of the relevant assessment year
(b) from the date of the sale of such specified security or sweat equity share by the assessee
14 days
(c) from the date of the assessee ceasing to be the employee of the person
(d) Earliest of above 3 Ans.(d)
(120) As per Section 194 & 194K the TDS on Dividend has to be deducted if the threshold limit exceeds ___ at the rate of ___ for
a Resident Share holder/unit holder
(121) As per section 194 A,C,H,I,J – TDS has to be deducted by Individual/HUF if in theoreceding year Turn over exceeds _____
& ___ for business & Profession respectively
(a) 1 Crore & 50 Lac respectively (b) 50 Lac & 1 Crore respectively
(c) 2 Crore & 50 Lac respectively (d) 1 Crore & 2 crore respectively Ans.(a)
(122) Co Operative banks will be deduting TDS u/s 194A if in the preceding year the Turn over exceeds -
(a) 10 Crore (b) 20 Crore
(c) 50 Crore (d) 100 Crore Ans.(c)
(123) As per Section 194N the TDS will be deducted at 2% or 5% if the assessee has made defaults in filing –
(a) not filed ROI for any of the the 3 immediately Preceding P.Y.s within time,
(b) not filed ROI for all the 3 immediately Preceding P.Y.s within time
(c) not submitted books of accounts for all the 3 immediately Preceding P.Y.s within time
(d) not filed ROI and not submitted books of accounts for all the 3 immediately Preceding P.Y.s within time
Ans.(b)
(124) As per Section 194N TDS will be deducted for Return Filing defaulters at -
(a) 2% on cash withdrawls more than 20 Lacs upto 1 Crore & 3% for withdrawls for more than 1 Crore
(b) 3% on cash withdrawls more than 20 Lacs upto 1 Crore & 2% for withdrawls for more than 1 Crore
(c) 1% on cash withdrawls more than 20 Lacs upto 1 Crore & 5% for withdrawls for more than 1 Crore
(d) 2% on cash withdrawls more than 20 Lacs upto 1 Crore & 5% for withdrawls for more than 1 Crore Ans.(d)
(125) As per Section 194N TDS will be deducted on over and above amounts amount normally if the cash withdrawls exceeds
____ at the rate of _____
(126) As per section 194-O, E-Commerce operators are liable to deduct TDS if the aggregate amount paid to e- commerce participant
exceeds------@ ___---- if the PAN has been furnished
(127) As per section 194-O, E-Commerce operators are liable to deduct TDS if the aggregate amount paid to e- commerce participant
exceeds------@ ___---- if the PAN has not been furnished
(a) No Threshold Limit @ 2% (b) No Threshold Limit @ 1%
(c) No Threshold Limit @ 5% (d) 5 Lacs @ 1% Ans.(c)
(128) As per section 194J, TDS on amounts paid for Technical Fees & Royalty in the nature of consideration for
sale, distribution or exhibition of cinemato- graphic films is to be deducted at
(a) 2% (b) @1%
(c) 5% (d) 10% Ans.(a)
(129) As per section 194LC, TDS on interest on foreign currency borrowings by an Indian company or business trust
outside India on issue of long-term infrastructure bonds including long-term infrastructure bonds approved by CG onrupee
denominated bonds issued between 1.4.20 to 30.6.23 listed in IFSC is to be deducted at
(a) 2% (b) @1%
(c) 4% (d) 10% Ans.(c)
(130) As per section 194LBA, TDS on Income from units of business trust paid to NR from Special Purpose Vehicles is to be
deducted at
(a) 2% (b) @1%
(c) 4% (d) 10% Ans.(d)
(131) As per section 195, TDS on Payment of dividend to a non-resident shareholder by domestic company shall be deducted at
(a) 20% (b) @1%
(c) 4% (d) 10% Ans.(a)
(132) TDS form number for Statement for tax deducted at source from salaries
Ch 13 – TDS – TCS – Advance Tax 13.14
(133) Time limit for submission of quarterly statements for Quarter July to Sept for Form 27EQ (TCS)
(a) 1 Crore & 50 Lac respectively (b) 50 Lac & 1 Crore respectively
(c) 2 Crore & 50 Lac respectively (d) 1 Crore & 2 crore respectively Ans.(a)
(135) For Sec 206C (TCS) under subsection 1G the authorized dealer is liable to collect TCS if the oversear remittence amount
exceeds____@ ___
(136) For Sec 206C (TCS) under subsection 1G the the seller of an oversear tour programme package is liable to collect TCS if
the amount exceeds____@ ___
(137) For Sec 206C (TCS) under subsection 1G the authorized dealer or seller of an oversear tour programme package is liable to
collect TCS at the rate of ____ if he PAN is not furnished by the buyer
(a) 3% (b) 5%
(c) 5% (d) 10% Ans.(d)
(138) For Sec 206C (TCS) under subsection 1G the authorized dealer is liable to collect TCS if the oversear remittence amount for
Loan obtained from financial institution for pursuing education exceeds____@ ___
(139) For Sec 206C (TCS) under subsection 1H the seller of goods means a person whose Turnover in the preceding year exceeds
______ then the tax has to be deducted on sale amount exceeding ______ if the PAN is not furnished by the buyer at then TCS
has to be collected at_____
(140) For Sec 206C (TCS) under subsection 1H the seller of goods can collect TCS @ ____ if PAN is not firnished by the buyer
(a) 1% (b) 0.1%
(c) 5 % (d) 10 % Ans.(b)
Ch 14 – Various Entities 14.1
ASSESSMENT OF INDIVIDUALS
(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
(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.
(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.
(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.
(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.
(9) Mr. Robert aged 52 years received monthly pension of Rs. 30,000 during the financial year 2020-21. His agricultural
income in India is Rs. 50,000. His net income-tax liability is : (June, 2017)
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. (Solve after
completing Chapter 3 )
(a) Nil (b) Rs. 1,04,000
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 31-03-2021 :
Tax on non-monetary perquisite paid by employer Amount contributed by her during 20,000
the year are given below :
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 31-03-2021 :
Rs.
Income from salary (computed) 3,55,000
Saving Bank interest 8,000
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 01-04-2020 (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 10-4-2020 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 2021-22.
(a) 2,25,000 (b) Rs. 2,55,000
Ch 14 – Various Entities 14.3
Loss from house property (Self occupied house - Annual Value - Nil, Less : Interest on borrowed capital - -30,000
?
30,000)
Life insurance premium subject to maximum of 10% of capital sum assured -Section 80C -60,000
(13) Mr. X, a resident individual, furnishes you with the following information for the year ended 31-3-
2021 :
Short term capital gains on sale of equity shares listed in recognized stock exchange on which STT paid 1,50,000
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 2021-22.
(a) Rs. 2,23,510 (b) Rs. 2,44,400
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% (Tax 60% + 25% Surcharge) 1,50,000
2,35,000
(14) Dining the year 2020-21, 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 2021-22 will be - (June, 2015)
(a) Rs. 1,24,800 (b) Rs. 15,450
(c) Nil (d) None of the above. Ans.(c)
Ch 14 – Various Entities 14.4
(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 2021-22 is - (June, 2015)
(a) Nil (b) Rs. 23,920
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
(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 -
(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 :
Presumptive Income under Section 44AE ( Rs. 7,500 x 6 x 12) + (7,500 x 2 x 9) 6,75,000
(c) Nil, i.e., it is exempt from tax (d) 25%, i.e., Rs. 25,000 is taxable Ans.(a)
(Note – Read provisions once)
(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 -
(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
(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
(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
(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
(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) 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)
(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)
(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 31-3-2021. 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)
(Note – Queestions based on AOP and BOI will be covered separately in a lecture.So you can skip AOP/BOI questions
for now)
(29) 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)
30. Personal earning including income from Self Acquired Property of a member of the HUF is included in Income
of:
a) HUF income
b) Son’s income
c) Individual’s income
d) None of these Answer: (c)
(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
(a) be allowed as deduction to the AOP/BOI (b) be allowed as deduction to the AOP/ BOI
while while
(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)
(34) In case of AOP whose members are other than foreign company, and their shares are indeterminate, the tax shall be
charged :
Ch 14 – Various Entities 14.9
(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-
tax Act
Ans.(b)
(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% +
surcharge @ 37%, if applicable + HEC @
4%- 42.744%
(c) at the rate applicable to the foreign company (d) At the rates given in Schedule I of the
Income-
(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 :
(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 applicable to the foreign company (d) at the rates given in Schedule I of the
(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 :
(a) at the rate applicable to individuals (b) at the maximum marginal rate i.e. 30% +
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
Ans.(d)
(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
(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-
tax Act
Ch 14 – Various Entities 14.10
Ans - a
(39) In case of AOP where the share of the members are determinate but none of the members has taxable Exceeding the,
income maximum exemption limit, but one or more member is taxable at a rate higher than the the tax
maximum marginal rate 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-
(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
(c) The AOP/BOI will be liable to tax at the (d) The AOP/BOI will be liable to tax at the rate
(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)
(46) Ramji Charitable Trust had sold a capital asset costing Rs. 70,000 on 13th June, 2020 for Rs. 1,50,000. It purchased new
asset on 1st July 2020 for Rs. 1,20,000. The amount taxable as capital gains for Ramji Charitable Trust in A.Y. 2021-22 is -
(Dec. 2015)
(a) Rs. 80,000 (b) Nil, because of charitable trust
(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
(48) A charitable trust acquired two air-conditioners for Rs. 1,40,000 on 10lh June, 2020. 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 2021-22 is-
(Dec. 2015)
(a) Rs. 21,000 (b) Rs. 1,40,000
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 2021-22. ( Excluding Anonymous Donation)
(a) Rs. 1,00,000 (b) Rs. 14,00,000
(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)
Company
(c) Dividend Income from units of mutual fund (d) LTCG on sale of equity shares listed in
(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) 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
Select the correct answer from the options given below - (Dec. 2015)
(a) (1) only (b) (1) & (2) only
(c) (1), (2) & (3) (d) None of the above 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
Ch 14 – Various Entities 14.13
arising from transfer of unlisted securities, applicable income-tax rate on such income is - (Dec. 2014) – Check Section 112
of Capital Gains - Rates at the end of the chapter
(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)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) (Old syllabus
question, treat as extra)
(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)
(65) 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) (Old syllabus question, treat as extra)
(a) Income from Technical fee (b) Income from Interest/Dividends
(c) Income from Royalty (d) Income from House Rent Ans.(b)
(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) 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) Salary, fees, bonus received by a partner from the firm is Taxable in the hands of partner under the
head:
a) Salary
b) Business & Profession
c) Income from other sources
d) Exempt from tax Answer: (b)
(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%
Ch 14 – Various Entities 14.14
(74) Ramesh is having business income and has opted for section 115 BAC during the year 2020-21. Now in the year 23-24
Mr. Ramesh wants to opt out from 115BAC. Can you do so?
a. Yes
b. No Ans (a)
(75) Continuing the above question if Mr. Ramesh wants to again opt for section 115BAC and he is still having business
income. Can he opt again -
a. Yes
b. No Ans (b)
(76) Continuing the main question if Mr. Ramesh wants to again opt for section 115BAC and he is not having business income.
Can he opt again –
a. Yes
b. No Ans (a)
(77) Mr Suresh is not having income, and he changed the option of 115 BAC every year ?
a. Yes
b. No Ans (a)
(78) Whether rebate under section 87A is available under section 115 BAC
a. Yes
b. No Ans (a)
(79) Charitable Trust is required to furnish the the audit report ___ month before the due date of Return filing
a 1 Month
b 2 Month
c 3 Month
d 4 Month Ans (a)
(80) To claim tax benefit and electoral trust needs to donate _ % of the amount received
a 85
b 90
c 95
d 100 Ans (c)
Ch 14 – Various Entities 14.15
a. voluntary contributions
b. House Property
c. Capital Gains
d. IOS
e. All of the above Ans (e)
(83) Political parties needs to keep record of the donor if it amount of donation exceeds
a. Rs. 20,000
b. Rs. 10,000
c. Rs. 30,000
d. Rs. 40,000 Ans (a)
(84) Donations received by political parties exceeding rupees Should be received by banking channel only
a. Rs. 2,000
b. Rs. 1,000
c. Rs. 10,000
d. Rs. 4,000 Ans (a)
(85) Surcharge is applicable on cooperative society if the total income exceeds __ @ ___
a. 1 Crore, 12%
b. 50 Lacs, 10%
c. 2 Crores 25%
d. 5 Crores ,37% Ans (a)
c. Both a and b
d. Cooperative society Ans (d)
90. Rate of tax for cooperative society under section 115 BAD is flat 22___ and surcharge is flat ___ irrespective
of the income of the the co-operative society
a.22%,10%
b.10%,22%
c.25%,12%
d.10%,30% Ans (a)
Ch 15 – Assessment of Companies 15.1
(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
(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 2020-21. The total income of the company is
Rs. 10 lakhs. The company is liable to pay income tax of -
19. 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)
(20) 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)
28.Alternative Minimum Tax (AMT) is applicable if adjusted Total Income of individual, AOP, artificial
29. 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.
Answer: (a) More than the tax payable under section 115JB
30. 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 –
(a) 2% (b) 5%
(c) 10% (d) 12%. Answer: (d) 12%
31. Provisions of Section 115JB are applicable in case of –
(a) Domestic companies only (b) Foreign companies only
(c) All companies (d) Closely held companies.
Answer: (c) All companies.
32. A company will be considered as a widely held company if the RBI holds minimum __ of the company –
a) 40%
b) 50%
c) 26%
d) 25% Answer a)
33.Tax Rate of company u/s 115BAA will be -
a) 25%
b) 22%
c) 15%
d) 30% Answer b)
34. For opting section 115BAB the new manufacturing company should set up and register maximum by –
a) 31.3.2021
b) 31.3.2022
c) 31.3.2023
d) 31.3.2024 Answer c)
35. The Carbon credit will be is taxable at the falt rate of –
a) 5%
b) 10%
c) 15%
d)20% Answer b)
36. Equilisation levy of 2% is chargeable in case of -
a. to a person resident in india
c. to a person who buys such goods or services or both usinginternet protocol address located in india
d. All of the above Answer d)
(iii) online sale of goods or provision of services or both, facilitated by the e-commerce operator
(iv) any combination of activities listed in clause (i), (ii) or clause (iii) the
Ch 15 – Assessment of Companies 15.5
a) i only
b) i & iii only
c) I,ii & iii
d)I,ii,iii & iV Answer d)
38. Equilisation levy of 2% has to paid by the e-commerce operator for the quarted ending March 2021 of the
year will be maximum by –
a) 31.3.2021
b) 7.4.2021
c) 30.4.2021
d)10.4.2021 Answer a)
a. Where the e-commerce operator making or providing or facilitating e-commerce supply or services has a
permanent establishment in Indiaand such e-commerce supply or services is effectively connected with such
permanent establishment
b. Where the equalisation levy is leviable @ 6% under consideration for specified services.
c. Sales, turnover or gross receipts, as the case may be, of the e-commerce operator from the e-commerce supply
or services made or provided or facilitated is less than 2 Crore rupees during the previous year
d. All of the above Ans - d
b. Rs. 2,00,000
c. Rs. 3,00,000
d. Rs. 4,00,000 Answer a)
41. The statement for equilisation levy for PY 20-21 can be filed by –
a. 30Th June 2021
b. 31st August 2021
c.31st March 2021
d. 31st November 2021 Answer a)
Ch 16 – Assessments, Appeals, Revisions, Penalties 16.1
(1) Rose Ltd. filed its return of income for the assessment year 2021-22 on 10th August, 2021. The notice under section
143(2) for scrutiny assessment should be served on the assessee by - (June 2016)
(a) 31st March, 2023 (b) 31st March, 2022
(c) 10th February, 2021 (d) 30th September 2022 Ans.(d)
(2) XYZ Ltd. filed its return of income for the A.Y. 2021-22 on 1st February, 2022. 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, 2021 (b) 30th September, 2022
(c) 31st July, 2022 (d) 30 th September, 2023 Ans.(b)
(3) X filed his return of income for the A.Y. 2021-22 on 31st July, 2021. 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) 30th September, 2022 (b) 31st December, 2022
(c) 31st March, 2021 (d) 31st December, 2021 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. Ans.(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)
(Hint – Tick the most appropriate one as written in bare act)
(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)
(Note – Both are categorised as regular assessment broadly in legal terms)
(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 5-11-2015 was detected on 7-9-2020 The time limit for issue of notice
u/ s 148 is : (June, 2017)
(a) 31-03-2021 (b) 31-03-2023
(c) 31-03-2025 (d) 31-03-2027 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.
Ch 16 – Assessments, Appeals, Revisions, Penalties 16.2
(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. 2021-22 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 01-04-2020 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.(c)
(17) Fresh assessment order in pursuance of appellate order u/s 254 setting aside or cancelling an assessment passsed after
01-04-2020 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.(b)
(18) An apparent error in the assessment order passed u/s 143(3) dated 15-11-2020 was noticed by the assessee in February,
2021. The time limit for seeking rectification of mistake is available up to :(June, 2017)
(a) 31-03-2025 (b) 31-03-2023
(c) 31-03-2020 (d) 31-03-2021 Ans.(a)
( Note - As per section 154 order can be rectified within 4 years from the end of the year in which the order was passed)
(19) If there is an apparent error in the intimation dated 11th June, 2021 issued under section 143(1), the time-limit for filing
application for rectification under section 154 is available up to - (Dec. 2016)
(a) 31st March, 2025 (b) 31st March, 2026
(c) 31st March, 2022 (d) 31s'October, 2021 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) (Read this as a provision)
(a) Any intimation under section 200A(1) - TDS (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 : (Read this as a provision)
(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
Ch 16 – Assessments, Appeals, Revisions, Penalties 16.3
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 Ans.(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.
(a) 30 days (b) 60 days
(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 2021-22 was completed on 12th
October, 2022. The notice of demand was served on 27th October, 2022. The assessee has to file appeal before the
Commissioner (Appeals) within - (June 2016)
(a) 30 Days (b) 60 Days
(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)
(a) 30 Days (b) 60 Days
(c) 90 Days (d) 120 Days Ans.(d)
(32) Mr. Balwant recieved assessment order passed under section 143(3) on 10-1-2021. 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,
2021 on 5th May, 2021. 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.
(a) 30 days (b) 60 days
(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 month 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.(c)
(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
Ch 16 – Assessments, Appeals, Revisions, Penalties 16.4
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 total of ____of grant of stay, the stay shall stand vacated.
(a) 30 days (b) 60 days
(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)
(a) Section 264 (b) Section 260
(c) Section 263 (d) Section 262 Ans.(c)
(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
(d) None of the above
Ans.(d)
(Note – Section 263
(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the
order sought to be revised was passed.
(3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time
in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an
order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court.)
(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)
Ch 16 – Assessments, Appeals, Revisions, Penalties 16.5
(48) An assessment order under section 143(3) dated 15-9-2020 was served on the assessee on 25-09-2020. 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, 2021 (b) 31s March, 2022
(c) 31st March, 2023 (d) 26th September, 2024 Ans.(c)
(49) The time-limit for revision by Commissioner of Income-tax (CIT) under section 264 is - (June, 2015)
(a) 3 Months (b) 6 Months
(c) One year (d) Two years. Ans.(c)
(The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner shall not of his
own motion revise any order under this section if the order has been made more than one year previously)
(50) Settlement Commission shall pass final order within __________ months from the end of the month in which
application for settlement was made. (Old syllabus Question)
(a) 6 (b) 12
(c) 18 (d) 24 Ans.(c)
(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
(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
Ch 16 – Assessments, Appeals, Revisions, Penalties 16.6
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
(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) (Old syllabus Question)
(a) Rs. 50 lakh (b) Rs. 25 lakh
(c) Rs. 10 lakh (d) Rs. 100 lakh Ans.(c)
(61) Kadam sold a vacant land for Rs. 15 lakh on 20th March, 2021. 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)
(Note - The amount is received in cash and it exceeds Rupees two lacs so 100 % penalty)
(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 as per section 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 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)
64. The appeal against the order of Appellate Tribunal can be filed to High Court:
a)for any matter in the order
b)only if any question of fact is involved
c)only if any substantial question of law is involved
d)None of the above Answer: c
65. An Appeal to High Court against the order of ITAT is to be filed within a period of from the date
on which the ITAT’s order is communicated to the tax payer
a)30 Days
b)60 Days
c)90 Days
d)120 Days Answer: d
66. Income Tax Authority below the rank of Deputy Commissioner of Income Tax:
Ch 16 – Assessments, Appeals, Revisions, Penalties 16.7
73. As per section 271K if the research associations, institutions,funds fails to deliver or cause to be delivered a statement
then the penalty payable will be –
74. If it is found that in the books of account maintained by any person there is a false entry or an omission of any entry to
evade tax liability
(a) sum equal to the aggregate amount of such false or omitted entry.
(b) sum equal to the half of such false or omitted entry.
(c) sum equal to 40% of such false or omitted entry.
(d) sum equal to 80% of such false or omitted entry. Ans.(a)
75. As per section 264 of the Income Tax Act an assessee cannot find application after expiry of
(a) 2 Years (b) 1 Year
(c) 3 Years (d) 4 Years Ans.(b)
76. Penalty payable on tax payable due to underreporting resulting from mis reporting amounts to -
(a) 50% (b) 100%
(c) 300% (d) 200% Ans.(d)