PREPARATORY ONLINE MCQs EXAMINATION – MAY 2021

II SEMESTER - B.COM
16BC1HC2C06 – TAXATION

Time: 2 HOURS Maximum Marks: 70

SECTION - A

1. Answer the following questions. 6x2=12

a. From the options given below, choose which an agricultural income is.

i. Maintenance allowance charged on agriculture land.

ii. Dividend received from a company engaged in agricultural operations.
iii. Income from sale of spontaneously grown trees.
iv. Income from growing flowers and creepers.

b. For the exceptional cases from second basic condition of a residential status, 60 days is
replaced by _____days.

i. 365 days
ii. 182 days
iii. 200 days
iv. 730 days

c. Rent Free Accommodation given to an employee by the employer is a ____________.

i. Perquisite
ii. Allowance
iii. Profit in lieu of salary
iv. Exemption

d. The rent collected by the owner for the HP let out, along with additional facilities is called
as ______________.

i. Composite Rent
ii. Taxable Rent
iii. Total rent
iv. Hire charges

e. Prakash owns a house of Rs.20,00,000, which he transfers for Rs. 22,00,000 to Kamal on
5-4-2019. Brokerage expenses were Rs.20,000. What will be full value of Net consideration?

i. Rs. 20,00,000
ii. Rs. 22,00,000
iii. Rs. 21,80,000
iv. Rs. 22,40,000
f. How will you treat "profit on sale of fixed assets and investment" Under the head Income
from Business?

i. Allowed Expense
ii. Disallowed Expenses
iii. Business income
iv. Non business income

SECTION -B

2. Answer any FOUR of the following questions. 4*7=28

a. Mr.James a citizen of West Indies was appointed as sales manager in India on 1 stApril
2015 at Mumbai. On 25 January 2017 he went to Uganda on deputation for period of 3 years,
but left his wife and children in India. On 1 st may 2018 he came to India and took with him
his family to Uganda on 30th June 2018. He returned to India and joined his original job on
24th January 2019. During the year 2019- 20, he received the following incomes:
 Incomes from salary in Japan Rs 28000.
 Taxable income from shares from foreign company Rs 7500 received in Japan.
 Income from agricultural land situated in Punjab Rs 10000
 Interest received from firm in U.K. remitted to India Rs9200
 Payment from public provident fund Rs 20000.
 Profit from business in Srilanka Rs.40000 (business controlled from Chennai) of
which Rs15000 was received in India.
Calculate the gross total income of Mr. James after ascertaining his residential status
for assessment year 2020-21.

b. Calculate NAV and Interest payable.

 From the following information compute Net Annual Value of House Property for the
A.Y. 2020-2021.
 Municipal Value Rs. 1,80,000
 Fair Rental Value Rs. 1,00,000
 Let out (per month) Rs. 16,000
 Standard Rent Rs. 1,20,000
 Unrealized rent for one month.
 Vacancy Allowance one month.
 Municipal tax paid by owner of house property Rs. 20,000
 Municipal tax paid by tenant Rs. 10,000.

 An assessee started construction of his house, on 1-6-2013 took a loan of Rs. 300,000
at 15% p.a. The construction was completed on 30-11-2016 and repayment date falls
on 1-12-2018. Compute pre-construction interest for the assessment year 2020-21

c. Mr. Surendra a CA gives you the Receipts & Payments of his profession for the year ended
31/03/2020

.
 Receipts Amount Expenses Amount
To Balance b/d 25,000 By Office expenses 37,500
To Consultation Fees 60,000 By Office rent 18,000
To Audit fee 75,000 By Salaries 30,000
To Appellate Tribunal By Printing & Stationary 3,000
Appearance 40,000 By Purchase of Books (Annual
To Payment from Clients 1,30,000 Publication) 2,500
To Miscellaneous (Professional) 45,000 By Subscription to C.A Institute 6,000
By Travelling Expenses 5,000
By Interest on Bank Loan 40,000
By Donation to National Defense
fund 50,000
By Bal C/d 1,83,000

3,75,000 3,75,000

Adjustments:
1. Bank Loan was taken for construction of his residential house.
2. He is running his profession in his own building.20% of travelling expenses is not allowed.
Compute his Income from Profession.

d. Mr. Gopal sold some of his properties during the year 2019-20. They are:
i) Jewelry costing Rs.1,00,000 acquired in 2009 was sold for Rs.1,80,000 in May 2019.

ii) Household furniture costing Rs.15,000 in 1994 was sold in March 2019 for Rs.20,000.

iii) House at Kolkata let out for Residential purpose. It was inherited by him in 1965 and the
Fair Market Value as on 1/4/2001 was Rs.1,20,000. Cost of improvement during 1993 for
Rs.30,000. Selling expenses Rs.20,000. Property was sold on 31/10/2019 for Rs.25,00,000.

iv) Machinery was sold on 1/12/2019 for Rs.1,50,000 which was purchased on January 2008
for Rs.80,000 and its WDV on 1/4/2019 was Rs.90,000.

v) Self cultivated land was sold for Rs.8,50,000 and its cost in 1988-89 is Rs.1,00,000. He
purchased a new piece of land for his own cultivation for Rs.1,20,000 in June 2019.
(CII for 2009-10=148; 2008-09=137; 2019-20=289)

e. Mr. Rajesh has received the following incomes during the previous year 2019-20. Compute
taxable income from other sources for the A.Y. 2020-21.

1. Interest received (Net) on listed debentures of UR limited Rs. 5,760.

2. Winnings from Karnataka State Lottery (Gross) Rs. 1,20,000.
3. Interest received on Post Office Saving Bank A/c Rs. 3,500.
4. Dividend (Gross) received from Janata Seva Co-operative Society Rs. 2,500.
5. Family pension received Rs. 30,000 per annum.
6. Dividend received on preference shares Rs. 10,000 per annum.
7. Interest on securities Rs. 10,000.

f. Details of 2 assessee have been given below. Determine Taxable Pension and Taxable
HRA from the following information respectively.
 Mr. Chandrashekar retired from service on 30/06/2019. He gets pension of Rs. 2,000
pm up to 31/1/20 and with effect from 1/2/2020 he gets 60% of pension commuted for
 Rs. 40,800. Determine the taxable pension for assessment year 20-21 assuming that
he also receives gratuity.

 Mohan, a resident of Delhi is working in a private company. His salary particulars

are:
o Basic salary Rs. 10,000 p.m.
o D.A -20% of basic salary (enters for service benefits)
o HRA received Rs. 20,000 p.m.
o Rent paid Rs. 12,000 p.m.
Compute taxable HRA for the Assessment Year 2020-21

SECTION-C
3. Answer any 2 of the following questions. 2*15=30

a) Mrs. Shantha owns two houses in Bangalore. She has let out both the houses throughout
the year for residential purpose,

Particulars House 1 House 2

Municipal value 4,00,000 12,00,000
Fair Rental Value 7,20,000 7,20,000
Rent received 4,80,000 8,00,000
Standard Rent 6,00,000 6,00,000
Repairs 72,000 1,00,000
Municipal Tax paid 40,000 1,20,000
Insurance Premium paid 48,000 70,000

On 1/4/19 bought residential house for self occupation for Rs. 10,00,000 by taking a
housing loan in Canara Bank . Loan amount was Rs. 7,00,000 and rate of interest 12% p.a.
Compute taxable income from house property for the AY- 2020-2021

b) Mr. Vinayak an employee of Ranchi (population 15 lakhs )based company provides the
following particular of his salary income for the A.Y.20-21.
 Basic salary Rs. 12,000 p.m.
 Profit bonus Rs. 12,000.
 Commission on turnover achieved b him Rs. 42,000
 Entertainment allowance Rs. 2,000 p.m.
 Club facility provided by his employer Rs. 6,000
 Transport allowance Rs. 1,000 p.m.
 Free use of car of more than 1600cc for both personal and employment purposes;
expenses are met by employer.
 Rent free house provided by employer. Rent paid by the employer Rs. 6,000 p.m.
 Free education facility for three children of the employee (Bill issued in the name of
employer) Rs. 22,500.
 Gas, water and electricity bills issued in the name of employee but paid by the
employer. Rs. 16,800.
Compute taxable income from salary for the AY- 20-21
c) Mr. X Presents you the Trading & P&L A/c for the previous year 31.3.2020 and requires
you to compute Income from Business for the A.Y. 2020-21.

Particulars Amount Particulars Amount

To Opening Stock 85000 By Sales 394000
To Purchases 240000 BY Closing Stock 110000
To Wages 35000
To Carriage Inwards 12000
To Gross profit 132000
504000 504000
To Staff Salaries 18750 By Gross profit b/d 132000
To Office rent 12000 BY Interest on debenture 17800
To Audit Fees 5500 By Bad debts recovered 2650
(previously allowed)
To Income Tax 32000 By Rent from H.P 90000
To Car Expenses 15000 By Sundry Income 5200
To Miscellaneous expenses 40000
To Donation 2500
To General expenses 18650
To Sales Tax Provisions 16000
To Technical Know –how 30000
purchased during the year
To Interest on capital 16000
To Depreciation on car 18000
To Provision for bad debts 6500
To Net Profit 16750
TOTAL 247650 TOTAL 247650

Additional Information:
a. Opening stock is undervalued by 15%
b. Closing stock is overvalued by 10%
c. Purchases includes a cash payment of Rs.30000 towards purchases of raw-
materials.
d. 20% of car expenses are attributable to the use of car for personal purposes.
e. Out of the Income tax provision and sales tax provision, Income Tax of Rs.6250
and sales tax of Rs.1250 were paid before filing the return of Income.