Students should practice Assessment of Companies – CS Executive Tax Laws MCQ Questions with Answers based on the latest syllabus.
Assessment of Companies – CS Executive Tax Laws MCQ Questions
Question 1.
The number of years for which credit of MAT excess paid u/s 115JB can be carried forward is
(A) 10 Assessment years
(B) 8 Assessment years
(C) 15 Assessment years
(D) 9 Assessment years [Dec. 2014]
Answer:
(C) 15 Assessment years
Question 2.
According to Section 2(1 B), “amalgamation, in relation to companies means, the merger of one or more companies with another company or the merger of two or more companies to form one company” provided all conditions except the following are satisfied:
(A) All assets to be transferred from amalgamating company to the amalgamated company
(B) All liabilities including contingent liabilities to be transferred from amalgamating company to amalgamated company
(C) Shareholders holding at least 3/4th in value of shares of the amalgamating company should become shareholders of the amalgamated company
(D) Shareholders holding at least 9/ 10th in value of shares of the amalgamating company should become shareholders of the amalgamated company. [Dec. 2014]
Answer:
(D) Shareholders holding at least 9/ 10th in value of shares of the amalgamating company should become shareholders of the amalgamated company. [Dec. 2014]
Question 3.
Provisions of Section 115JC are not at all applicable to
(A) LLPs
(B) Companies
(C) Partnership firms
(D) Individuals [June 2015]
Answer:
(B) Companies
Question 4.
MAT credit in respect of excess taxes paid u/s 115JB can be carried forward for
(A) 7 Assessment years
(B) 10 Financial years
(C) 15 Assessment years
(D) 7 Financial years [June 2015]
Answer:
(C) 15 Assessment years
Question 5.
In order to be entitled to concessional rate of tax for dividend received from a foreign company, the Indian company should have the following minimum shareholding in such foreign company
(A) 10%
(B) 25%
(C) 26%
(D) 51% [June 2015]
Answer:
(C) 26%
Question 6.
Alternate minimum tax u/s 115JC is not applicable to
(A) Company
(B) Individual
(C) Partnership firm
(D) Association of persons [Dec. 2015]
Answer:
(A) Company
Question 7.
Tax credit in respect of MAT paid as per Section 115IB 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 [June 2016]
Answer:
(A) More than the tax payable under section 115JB
Question 8.
Provisions of Section 115JB are applicable in case of –
(A) Domestic companies only
(B) Foreign companies only
(C) All companies
(D) Closely held companies [Dec. 2016]
Answer:
(C) All companies
Question 9.
An Indian company having 30% voting power in a foreign company received a dividend of ₹ 10 lakh from the foreign company.
The dividend so received by the Indian company is
(A) Exempt
(B) Taxable @15%
(C) Taxable at the regular rates
(D) Taxable @ 20% [Dec. 2016]
Answer:
(B) Taxable @15%
Question 10.
For computing the Book Profit under section 115 JB, which of the following is not added back to the profits?
(A) Income-Tax
(B) Provision for Tax
(C) Dividend Distribution Tax u/s 115-0
(D) Securities Transaction Tax [June 2017]
Answer:
(D) Securities Transaction Tax
Question 11.
Which of the following is not a requirement for the amalgamation of two companies?
(A) All the assets are transferred from amalgamating company to amalgamated company
(B) More than 50% of the directors of the amalgamating company become directors of the amalgamated company
(C) All liabilities including contingent liabilities are transferred from amalgamating company to amalgamated company
(D) Shareholders having 3 / 4th in value of shares of the amalgamating company become shareholders of the amalgamated company [June 2017]
Answer:
(B) More than 50% of the directors of the amalgamating company become directors of the amalgamated company
Question 12.
The total income of XYZ Limited includes the income of dividends of ₹ 10 lakhs paid by a UK-based foreign company in which XYZ Limited holds 30% of the equity share capital. ₹ 50,000 has been spent for earning such a dividend.
The dividend income so received by the company from the UK based foreign company and the tax rate shall be:
(A) Not taxable being exempt u/s 10(34)
(B) Taxable @ 15% of ₹ 10 lakhs
(C) Taxable @ 15% of ₹ 9.5 lakhs
(D) Taxable @ 10% of ₹ 9.5 lakhs [June 2018]
Answer:
(B) Taxable @ 15% of ₹ 10 lakhs
Question 13.
MAT credit can be carried forward for a period of the following number of assessment years:
(A) 5
(B) 8
(C) 10
(D) No time limit [June 2018]
[Note: This MCQ is wrongly drafted. For further clarification please see the hints.]
Hint:
The amount of tax credit shall be carried forward up to 15 years immediately succeeding the assessment year in which tax credit becomes available. [Section 115JAA]
‘15 years’ do appear in any option and hence MCQ is wrong.
Answer:
Question 14.
Provisions of Minimum Alternate Tax (MAT) are applicable to the companies which are:
(i) Indian companies
(ii) Foreign companies in certain situations
(iii) LLP
(A) (i) and (iii)
(B) (i) and (ii)
(C) All the three
(D) None of the above [June 2018]
Answer:
(B) (i) and (ii)
Question 15.
Income-tax Act, 1961 distinguished a closely held company from a widely held company significantly from the viewpoint of:
(A) Tax levied at different rates
(B) Section 2(22)(e) where certain payments made to shareholders are treated as deemed dividend
(C) Allowed to carry forward its business losses only if the conditions specified in section 79 are satisfied
(D) Both (B) and (C) [Dec. 2018]
Answer:
(D) Both (B) and (C)
Question 16.
While calculating Book Profits under section 115JB of Income-tax Act, 1961, which of the following is not to be added?
(A) The amount of dividend up to ₹ 10 lakh
(B) Interest on Income-tax including surcharge and cess
(C) The amounts carried to any reserves
(D) The amount by way of provision for losses of subsidiary companies [Dec. 2018]
[Note: This MCQ is wrongly drafted. For further clarification please see the hints.]
Hint:
All the amounts given in options are added and hence none of the given options is correct.
Answer:
Question 17.
While calculating book profits under section 115 JB of Income-tax Act, 1961 which of the following is not to be deducted?
(A) The amount is withdrawn from any reserve or provision if any such amount is credited to the Profit & Loss Account
(B) The amount of income by way of royalty in respect of patent chargeable to tax under Section 115BBF
(C) Long-term capital gain referred under section 10(38) of the Act
(D) Brought forward loss/unabsorbed depreciation whichever is less [Dec. 2018]
Answer:
(C) Long-term capital gain referred under section 10(38) of the Act
Question 18.
The royalty of ₹ 105 lakh received by a foreign company from an Indian concern in pursuance of an agreement approved by the Central Government in the previous year 2018-2019.
The amount of tax payable on such royalty Income for Asst. The year 2019-2020 is:
(A) ₹ 10 lakh
(B) ₹ 11.1384 lakh
(C) ₹ 20 lakh
(D) ₹ 22.06 lakh [Dec. 2018]
Answer:
(B) ₹ 11.1384 lakh
Question 19.
M Ltd. has a Minimum Alternative Tax (MAT) credit of ₹ 5,20,000 for the assessment year 2021-22.
It can carry forward this MAT credit up to assessment years immediately succeeding the assessment year 2021 – 22.
(A) 5
(B) 10
(C) 15
(D) 20 [June 2019]
Answer:
(C) 15
Question 20.
Tom (P) Ltd. availed the services of a foreign company for online advertisement of its products.
It has to pay a levy @ % of the gross amount paid/payable to the foreign company when it has no permanent establishment in India.
(A) 2
(B) 5
(C) 6
(D) 10 [June 2019]
Answer:
(C) 6
Question 21.
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 the Indian company is:
(A) Exempt from Tax
(B) Taxable @15%
(C) Taxable @10%
(D) Taxable @ 30% [June 2019]
Answer:
(B) Taxable @15%
Question 22.
ABC Ltd., a domestic company having a turnover of ₹ 350 crores has computed its total income for the year
2020- 21 of ₹ 102 lakh. The tax payable by the company on such income in A.Y. 2021- 22 shall be:
(A) ₹ 34,05,168
(B) ₹ 29,70,240
(C) ₹ 28,37,640
(D) ₹ 33,30,968 [Dec. 2019]
Hint:
Computation of Tax payable by ABC Ltd.
| Particulars | Amount (₹) |
| a. Tax @ 25% on ₹ 1,02,00,000 (Computed at 25% as assumed that Turnover given is for P.Y. 2018-19, which does not exceed ₹ 400 crores.) | 25,50,000 |
| b. Add: Surcharge @ 7%(As total income of company ex¬ceeds ₹ 1 crore but does not exceed ₹ 10 crore) | 1,78,500 |
| c. Sub-Total | 27,28,500 |
| d. Add: Health and Education Cess @ 4% | 1,09,140 |
| e. Therefore, Total Tax payable | 28,37,640 |
Answer:
(C) ₹ 28,37,640
Question 23.
Provisions of Minimum Alternate Tax (MAT) are applicable to the companies which are;
(i) Indian companies
(ii) Foreign companies
(iii) LLP
(A) (i) & (iii)
(B) (i) & (ii)
(C) All the three
(D) None of the above [Dec. 2019]
Answer:
(B) (i) & (ii)
Question 24.
The total income of XYZ Limited includes the income of dividends of ₹ 10 lakh paid by a U.K. base foreign company in which XYZ Limited holds 30% of the equity share capital. The dividend income so received by the company from the U.K. base foreign company in A.Y. 2021-22 shall be:
(A) Taxable @ 15% of such income
(B) Not taxable being exempt u/s 10 (34)
(C) Taxable at the normal rate applicable on a domestic company
(D) Taxable @ 10% of such income [Dec. 2019]
Answer:
(A) Taxable @ 15% of such income
Question 25.
RAJA Ltd. has earned income of ₹ 150 lakh inclusive of income of ₹ 50 lakh from the transfer of Carbon Credit during the year 2020-21. The company had incurred an amount of ₹ 5 lakh as transfer expenses on the transfer of Carbon Credit. The income received from the transfer of Carbon Credit in the A.Y. 2021 -22 shall be taxed as per section 115BBG of the Act and the amount of tax on such income payable shall be :
(A) ₹ 5,82,400
(B) ₹ 5,56,400
(C) ₹ 13,00,000
(D) ₹ 5,00,000 [Dec. 2019]
Answer:
(B) ₹ 5,56,400
Question 26.
Every person is a resident Indian who carries out the business/ profession or a non-resident who has a permanent establishment in India shall deduct equalization levy from the amount paid/payable to a non-resident in respect of specified services @whereas the aggregate amount of consideration for specified services in the previous year exceeds
(A) 8%, ₹ 10,00,000
(B) 8%, ₹ 1,00,000
(C) 6%, ₹ 1,00,000
(D) 10%, ₹ 1,00,000 [Dec. 2019]
Answer:
(C) 6%, ₹ 1,00,000
Question 27.
A transfer of a capital asset by a private company or unlisted public company shall not be treated as transfer u/s 47(xiii b) of the Act on Conversion into LLP on fulfillment of the conditions which inter alia include that the total value of assets as appearing in the books of account of the company in any of the three previous years preceding the previous year in which the conversion took place does not exceed
(A) ₹ 5,00,00,000
(B) ₹ 10,00,00,000
(C) ₹ 20,00,00,000
(D) ₹ 1,00,00,000 [Dec. 2019]
Answer:
(A) ₹ 5,00,00,000
General Note:
DDT u/s 115-0 of Income-tax Act is not applicable w.e.f. 1st April 2020. Hence questions based on DDT asked earlier are not included in this topic. It should be noted that now any dividend is to be taxed in hands of the recipient