CA Inter Taxation Income Tax Multiple Choice Questions (MCQs) – CA Inter Taxation Study Material is designed strictly as per the latest syllabus and exam pattern.
CA Inter Taxation Income Tax Multiple Choice Questions (MCQs) – CA Inter Taxation Study Material
Question 1.
Mr. X earned income of ₹ 5,00,000 from long term capital gain and lost ₹ 2,00,000 as short term capital loss. His taxable income as long term capital gain would be:
(a) ₹ 5,00,000
(b) ₹ 3,00,000
(c) ₹ 2,00,000
(d) Nil
Answer:
(b) ₹ 3,00,000
Question 2.
Mr. Ajay Sahu, proprietor of M/s Blue Bird Enterprises having turnover of ₹ 65 lakhs and not subject to tax audit under the Income-tax Act, 1961 during P.Y. 2019-20, has received two bills for payment. The first bill is for ₹ 42,00,000 from Vijay Associates, an advocate and property dealer firm, for his daughter’s hearing and ₹ 21,00,000 from same Vijay Associates for brokerage service provided in relation to purchase of one property. Both bills were raised on 21-12-2020 but payment were made in instalments.
1st Instalment of ₹ 5,00,000 as advance was payment on 15-11-2020, 2nd Instalment of ₹ 45,00,000 on 25-03-2021 and balance amount ₹ 13,00,000 on 11-05-2021. Determine the TDS liability for Mr. Ajay Sahu, if any, for A. Y. 2021 -22?
(a) ₹ 2,50,000
(b) ₹ 3,15,000
(c) ₹ 65,000
(d) Nil [ICAI Mock Test Paper: October 2020, 2 Marks]
Answer:
(b) ₹ 3,15,000
Question 3.
Sham Singh spends ₹ 1,00,000 on cultivation and harvesting of his agricultural produce. 50% of the production is sold for ₹ 1,10,000 and rest is stored for self-consumption. What is the amount of the agricultural income?
(a) ₹ 60,000
(b) ₹ 1,10,000
(c) ₹ 1,20,000
(d) ₹ 1,00,000 [ICAI Mock Test Paper: October 2020, 2 Marks]
Answer:
(a) ₹ 60,000
Question 4.
Mr. Square, an Indian citizen, currently resides in Dubai. He came to India on a visit and his total stay in India during the F.Y. 2020-21 was 135 days. He has no source of Income in India. Following is his details of stay in India in the preceding previous years:
| Financial Year | Days of stay in India |
| 2019-20 | 125 |
| 2018-19 | 106 |
| 2017-18 | 83 |
| 2016-17 | 78 |
| 2015-16 | 37 |
| 2014-15 | 40 |
| 2013-14 | 35 |
You are his tax consultant. Advise him on his residential status for the P. Y. 2020-21.
(a) Resident but Not Ordinary Resi-dent (RNOR)
(b) Resident and Ordinary Resident
(c) Non-Resident
(d) Resident but information incom-plete to know whether resident but not ordinarily resident or resident and ordinarily resident [ICAI Mock Test Paper: October 2020, 2 Marks]
Answer:
(c) Non-Resident
Question 5.
Ms. Dilar who is not required to furnish return u/s 139(1) as his gross total income itself is less than basic exemption limit, has incurred expenditure of X 2,00,000 for her daughter for travel to U.S.A. during P.Y. 2020-21. Is she required to file return for A.Y. 2021-22? If yes, what is the due date?
(a) Yes; 31st July, 2021
(b) Yes; 30th September, 2021
(c) Yes; 31 st August, 2021
(d) No, she is not required to file return of income for A.Y. 2021-22 [ICAI Mock Test Paper: October 2020, 2 Marks]
Answer:
(d) No, she is not required to file return of income for A.Y. 2021-22
Question 6.
A Ltd. is 100% holding company of B Ltd. A Ltd. transfers a capital asset (acquired in 2003 for ₹ 50,000) on 16.06.2020 for ₹ 3,70,000 to B Ltd. B Ltd. is an Indian company, while A Ltd. is a foreign company. The capital asset is transferred as stock-in-trade to B Ltd. Determine whether any capital gains shall be chargeable to tax in the instant case?
(a) Any transfer between a holding company and 100% subsidiary company is not treated as a transfer at all. Hence, no capital gains tax liability shall arise.
(b) Any transfer between a holding company and 100% subsidiary company is not treated as a transfer if the transferee company is an Indian company. Hence, no capital gains tax liability shall arise.
(c) A transfer between a holding company and 100% subsidiary company is treated as a “transfer” as there is no specific exclusion in this regard. Hence, capital gains tax liability shall arise.
(d) Any transfer between a holding company and 100% subsidiary company is not treated as a transfer if the transferee company is an Indian company. However, this rule is not applicable if the capital asset is transferred as stock-in-trade. Hence, capital gains tax liability shall arise.
Answer:
(d) Any transfer between a holding company and 100% subsidiary company is not treated as a transfer if the transferee company is an Indian company. However, this rule is not applicable if the capital asset is transferred as stock-in-trade. Hence, capital gains tax liability shall arise.
Question 7.
Mr. X, a businessman, whose total income (after allowing deduction under chapter VI-A except under section 80GG) for A.Y. 2021-22 is Rs.5,95,000. He does not own any house property and is staying in a rented accommodation in Lucknow for a monthly rent of ₹ 9,000. Deduction allowance under section 80GG for A.Y. 2021-22 is:
(a) ₹ 48,500
(b) ₹ 1,48,750
(c) ₹ 60,000
(d) ₹ 1,08,000
Answer:
(a) ₹ 48,500
Question 8.
Mr. X, a resident aged 45 years, has a total income of ₹ 4,95,000 for A.Y. 2021 – 22, his tax liability would be :
(a) ₹ 12,740
(b) ₹ 10,140
(c) ₹ 12,250
(d) Nil
Answer:
(d) Nil
Question 9.
Mr. X has agricultural income of Rs. 2,30,000 and business income of Rs. 2,45,000. Which of the following statements are correct?
(a) Agricultural income has to be ag-gregated with business income for tax rate purposes.
(b) No aggregation is required since agricultural income is less than basic exemption limit.
(c) No aggregation is required since business income is less than basic exemption limit.
(d) Agricultural income is exempt under section 10(1) but the same has to be aggregated with business income, since it exceeds Rs.5,000.
Answer:
(c) No aggregation is required since business income is less than basic exemption limit.
Question 10.
Mr. X, aged 40 years, earned total income of Rs.6,00,000 during P.Y. 2020-21 including interest from post office savings bank account, ₹ 5,000 his taxable income for A.Y. 2021-22 is:
(a) Rs.6,00,000
(b) Rs.5,95,000
(c) Rs.5,96,500
(d) Nil
Answer:
(c) Rs.5,96,500
Question 11.
In case of Revocable Transfer of asset its income will be taxable in the hands of:
(a) Transferee
(b) Transferor
(c) Transferor for 5 years
(d) Transferee for 5 years
Answer:
(b) Transferor
Question 12.
The benefit of payment of advance tax in one instalment on or before 15th March is available to assessee computing profits on presumptive basis:
(a) under section 44AD
(b) under section 44 AD A
(c) under section 44AE
(d) Above all sections
Answer:
(d) Above all sections
Question 13.
Provision of rent free accommodation by employer (Non-Govt.) to its employee during A.Y. 2021-22 is taxable at:
(a) Fair market rent
(b) Uniform rate at all plans
(c) Different percentages of salary on the basis of population
(d) Totally exempt
Answer:
(c) Different percentages of salary on the basis of population
Question 14.
Interest credited in Recognised Provident Fund is exempt upto rate:
(a) 9%
(b) 9.5%
(c) 10%
(d) 10.5%
Answer:
(b) 9.5%
Question 15.
Mr. X has invested in debt securities of a Pvt. Ltd., company deriving its main source of income from business of growing and processing organic vegetables and fruits. Thus, the company has 80% of income exempt as agricultural income and 20% is taxable as business income. During the P.Y. 2020-21, Jenny derived Rs.5,000 as interest income from the above investments. Which of the following statements are correct on taxability:
(a) 80% Interest is exempt from tax
(b) 20% Interest is exempt from tax
(c) Interest is fully taxable
(d) Interest is fully exempt
Answer:
(c) Interest is fully taxable
Question 16.
Mr. X’s total income (before allowing deduction under section 80GG) for AY. 2021-22 is ₹ 9,00,000, paid house rent ₹ 2,00,000 in respect of residential accommodation occupied by him. The deduction allowable to him under section 80GG for A.Y. 2021-22 is:
(a) ₹ 90,000
(b) ₹ 1,35,000
(c) ₹ 60,000
(d) ₹ 2,25,000
Answer:
(c) ₹ 60,000
Question 17.
Mr. X received gifts of ₹ 2,00,000 from his father, ₹ 1,00,000 from his friend and ₹ 1,00,000 on his marriage. Taxable amount for A.Y. 2021-22 is:
(a) ₹ 4,00,000
(b) ₹ 3,00,000
(c) ₹ 2,00,000
(d) ₹ 1,00,000
Answer:
(d) ₹ 1,00,000
Question 18.
When the following return of income can be revised under section 139(5)?
(a) Up to end of relevant A.Y.
(b) Up to date of assessment
(c) Up to date of assessment or at end of relevant A.Y. whichever is earlier
(d) Never
Answer:
(c) Up to date of assessment or at end of relevant A.Y. whichever is earlier
Question 19.
A firm pays salary and interest on capital to its resident partners. The salary and interest paid fall within the limits specified in section 40(b). Which of the following statements is true?
(a) The firm cannot claim these as expenditure
(b) These are exempt in hand of part-ners
(c) These are taxable in hands of part-ners
(d) No treatment
Answer:
(c) These are taxable in hands of part-ners
Question 20.
Mr. X donated ₹ 2,00,000 in National Defence Fund and ₹ 2,00,000 in Jawaharlal Memorial fund. Deduction u/s 80G A.Y. 2021-22 would be-
(a) ₹ 2,00,000
(b) ₹ 3,00,000
(c) ₹ 4,00,000
(d) Nothing
Answer:
(b) ₹ 3,00,000
Question 21.
In respect of loss from house property, which of the following statements are correct?
(a) While computing income from any house property, the maximum interest deduction allowable under section 24 is ₹ 3 lakhs.
(b) Loss from house property relating to a particular year can be set-off against income under any other head during that year only to the extent of Rs. 2 lakhs.
(c) The loss in excess of Rs. 2 lakh, which is not set-off during the year, cannot be carried forward for setoff.
(d) None of the above
Answer:
(b) Loss from house property relating to a particular year can be set-off against income under any other head during that year only to the extent of Rs. 2 lakhs.
Question 22.
Loss from owning and maintaining race- horses can be set-off:
(a) From income of any head in same P.Y.
(b) From business income in same P.Y.
(c) Can be carried forward for set-off from income of any head
(d) Can be carried forward upto 4 years for set-off from same source of income
Answer:
(d) Can be carried forward upto 4 years for set-off from same source of income
Question 23.
Mr. X celebrated his 50th marriage anniversary. On this occasion, his wife received a diamond necklace worth ₹ 5,00,000 from Kishore’s brother. Kishore’s son gifted him a luxurious car worth ₹ 15,00,000, His grandchildren gifted them a new furniture set worth ₹ 3,00,000. Also, he received cash gifts from his friends amounting collectively to ₹ 80,000.
(a) Neither Mr. X nor Mrs. X will be liable for tax for any gifts since they have been received on occasion of marriage anniversary.
(b) Both are liable to Pay tax on gifts
(c) Mr. X will be liable to pay tax on cash gifts only.
(d) None is taxable.
Answer:
(c) Mr. X will be liable to pay tax on cash gifts only.
Question 24.
Mr. X, a foreign national, working with a USA company, came to India during the P.Y. 2020-21 for rendering services on behalf of the employer. He wishes to claim his salary income earned during his stay in India as exempt because he is a foreign national. Answer whether:
(a) His income is exempt as desired
(b) His income is taxable in India
(c) His income to be conveyed to his country
(d) Taxable after allowing deduction if claimed
Answer:
(b) His income is taxable in India
Question 25.
X, a student, aged 16 years, received scholarship of ₹ 50,000 during the previous year 2020-21. Which of the following statements are true regarding taxability of such income:
(a) Such income shall be assessed in hands of X
(b) Such income to be included with the income of parent whose income before such clubbing is higher
(c) Such income is completely exempt from tax
(d) Such income to be clubbed with father’s income.
Answer:
(c) Such income is completely exempt from tax
Question 26.
Mr. X, an Indian citizen and a Government employee, left India for the first time on 31.01.2020 on account of his transfer to High Commission in United Kingdom. During P.Y. 2020-21, he visited India only for a week on occasion of his brother marriage. During A.Y. 2021-22, his income composition includes salary, foreign allowances, rent from property in Singapore and interest earned from fixed deposits maintained with SBI. His taxable income for P.Y. 2020-21 will include:
(a) All of them, since Mr. X is a resident in India, hence his global income will be taxable
(b) Only interest earned from fixed deposits maintained in India
(c) No income shall be taxable since Mr. X is a non-resident in India for P.Y. 2020-21
(d) Salary and interest income of fixed deposits with SBI
Answer:
(d) Salary and interest income of fixed deposits with SBI
Question 27.
₹ 5 lakh is paid to Mr. Vallish, a resident individual on 15.1.2021 by the government on compulsory acquisition of his urban agricultural land.
(a) No tax is deductible at source
(b) Tax is deductible @1%
(c) Tax is deductible @ 5%
(d) Tax is deductible @ 10%
Answer:
(a) No tax is deductible at source
Question 28.
Which of the following statements is true with respect to the A.Y. 2021-22:
(a) No exemption under section 80TTA would be available to resident se-nior citizens
(b) Share of profit will be exempt in § the hands of partner
(c) Exemption will not be available in respect of long term capital gains
(d) Exemption under section 10(32) on income of minor child is allowed for ₹ 5,000
Answer:
(b) Share of profit will be exempt in § the hands of partner
Question 29.
Mr. X income of ₹ 22 lakhs from manufacture and sale of coffee grown, cured, roasted and grounded by him in India. The business income chargeable to tax in his hands would be:
(a) ₹ 8,80,000
(b) ₹ 5,50,000
(c) ₹ 13,20,000
(d) ₹ 16,50,000
Answer:
(a) ₹ 8,80,000
Question 30.
Mr. X took possession of property on 31st August 2020 booked by him three years back at ₹ 25 lakhs, The Stamp Duty Value (SDV) of the property as on 31st August 2020 was ₹ 31 lakh and on date of booking it was ₹ 29 lakh. He had paid ₹ 2 lakh by A/c payee cheque as down payment on date of booking. Which of the following will be considered as income, if any, and in which previous year?
(a) ₹ 4 lakhs in P.Y. 2020-21
(b) ₹ 4 lakhs in P.Y. 2017-18
(c) ₹ 6 lakhs in P.Y. 2020-21
(d) No income shall be taxable
Answer:
(a) ₹ 4 lakhs in P.Y. 2020-21
Question 31.
A company wants 400 customized backpacks which will be distributed by the company to its employees on the annual event. He hires a local vendor for this task and informs the local vendor about its specifications for the backpacks. The local vendor procures its own raw material and supplies the required backpacks to the Company. He charges ₹ 1,00,000 for the backpacks from the company. While making payment to the p vendor, at what rate company is required to deduct tax at source?
(a) 1%
(b) 2%
(c) 10%
(d) No tax is required to be deducted at source.
Answer:
(d) No tax is required to be deducted at source.
Question 32.
Mr. X incurred loss of ₹ 2 lakhs in the A.Y.2021-22 in business. Against which of the following incomes earned during the same year, can he set-off such loss?
(a) profit of ₹ 3 lakh from wholesale cloth business
(b) long-term capital gains of ₹ 1.50 lakhs on sale of land
(c) speculative business income of ₹ 40,000
(d) None of the above
Answer:
(a) profit of ₹ 3 lakh from wholesale cloth business
Question 33.
Which of the following benefits are NOT allowable to a non-resident, while computing his total income and tax liability for A.Y. 2021-22 under the Income-tax Act, 1961?
(a) Deduction of 30% of gross annual value while computing her income from house property in Bangalore
(b) Tax rebate of ₹ 9,500 from tax payable on her total income of ₹ 4,40,000
(c) Deduction for donation made by her to Prime Minister’s National Relief Fund
(d) Deduction for interest earned by her on NRO savings account.
Answer:
(b) Tax rebate of ₹ 9,500 from tax payable on her total income of ₹ 4,40,000
Question 34.
Unexhausted basic exemption limit, if any, of a non-resident for A.Y. 2021 -22 can be adjusted against:
(a) Long-term capital gain
(b) Short-term capital gain
(c) Income from other sources
(d) None
Answer:
(d) None
Question 35.
During the P.Y. 2020-21, Mr. X, a non-resident, received ₹ 75,00,000 on account of sale of agricultural land in Mauritius. The money was first received in Mauritius and then remitted to his Indian bank account. Is the sum taxable in India?
(a) No, as agricultural income is ex-empt u/s 10(1).
(b) No, as the income has accrued and arisen outside India
(c) Yes, since it is remitted to India in the same year.
(d) Yes, as agricultural income earned outside India is not exempted in India in the hands of a non-resident.
Answer:
(b) No, as the income has accrued and arisen outside India
Question 36.
X Ltd. credits a sum of ₹ 45,000 as commission to Y Ltd., an Indian company on 25.06.2020 without deducting tax at source. Y Ltd. paid its entire tax liability on its income by way of advance payment of tax during P.Y. 2020- 21 and filed its return of income for A.Y. 2021-22 on 15.07.2020. X Ltd. also has a certificate in Form No. 26A from a chartered accountant. Compute the amount of deduction that shall be allowed to X Ltd. in respect of the commission credited to Y Ltd. assuming that X Ltd. follows mercantile system of accounting:
(a) ₹ 45,000
(b) Nil
(c) ₹ 13,500
(d) ₹ 31,500
Answer:
(a) ₹ 45,000
Question 37.
Mr. X (a non-resident and aged 70 years) is a retired person, earning rental income of ₹ 40,000 per month from a property located in Delhi. He is residing in Canada. Apart from rental income, he does not have any other source of income. Is he liable to pay advance tax in India?
(a) Yes, he is liable to pay advance tax in India as he is a non-resident and his tax liability in India exceeds ₹ 10,000.
(b) No, he is not liable to pay advance tax in India as his tax liability in India is less than ₹ 10,000
(c) No, he is not liable to pay advance tax in India as he has no income chargeable under the head “Profits and gains of business or profession”
(d) Both (b) and (c)
Answer:
(b) No, he is not liable to pay advance tax in India as his tax liability in India is less than ₹ 10,000
Question 38.
Mr. X sold his old residential house in April, 2020 for 7 28,00,000. Long-term capital gain arising on transfer of old house amounted to ₹ 8,40,000. In December, 2020, he purchased another residential house worth 7 5,00,000. The new house was however, sold in April, 2021 for ₹ 14,00,000 (stamp duty value of the new house was ₹ 12,00,000). What will be amount of taxable capital gains in the hands of Mr. X for the AY. 2021-22 and 2022-23?
(a) Long term capital gain of ₹ 3,40,000 in AY. 2021 -22 and short-term capital gain of ₹ 14,00,000 in AY. 2022-23
(b) Long term capital gain of ₹ 3,40,000 in A.Y. 2021 -22 and long term capital gain of ₹ 5,00,000 and short-term capital gain of ₹ 14,00,000 in AY. 2022-23
(c) Long term capital gain of ₹ 3,40,000 in AY. 2021-22 and long term capital gain of ₹ 5,00,000 and short-term capital gain of ₹ 9,00,000 in A.Y. 2022-23
(d) Long term capital gain of ₹ 3,40,000 in A.Y. 2021 -22 and long term capital gain of ₹ 5,00,000 and short-term capital gain of ₹ 7,00,000 in A.Y. 2022-23
Answer:
(a) Long term capital gain of ₹ 3,40,000 in AY. 2021 -22 and short-term capital gain of ₹ 14,00,000 in AY. 2022-23
Question 39.
Gross total income of Mr. X for P.Y. 2020-21 is ₹ 6,00,000. She had taken a loan of ₹ 7,20,000 in the financial year 2017-18 from a bank for her husband who is pursuing MBA course from IIM, Kolkata. On 02.04.2020, she paid the first instalment of loan of ₹ 45,000 and interest of ₹ 65,000. Compute her total income for A.Y. 2021-22
(a) ₹ 6,00,000
(b) ₹ 5,35,000
(c) ₹ 4,90,000
(d) ₹ 5,55,000
Answer:
(b) ₹ 5,35,000
Question 40.
X, aged 35 years, paid medical insurance premium of ₹ 35,000 to insure health of himself and his spouse. He also paid medical insurance premium of ₹ 43,000 to insure health of his father, aged 69 years, not dependant on him. He had also incurred ₹ 4,000 in cash on preventive health check up of his father. Total deduction admissible under section 80D is:
(a) ₹ 55,000
(b) ₹ 29,000
(c) ₹ 68,000
(d) ₹ 72,000
Answer:
(d) ₹ 72,000
Question 41.
Mr. X, a resident employee of Hindustan Company established in India, received a scholarship of ₹ 5,00,000 from his employer to meet the cost of education of his children. X actually spent an amount of ₹ 4,50,000 on education of his children. What will be the amount of income exempt in the hands of X?
(a) Nil
(b) ₹ 4,50,000
(c) ₹ 50,000
(d) ₹ 5,00,000
Answer:
(d) ₹ 5,00,000
Question 42.
Mr. X, aged 45 years, received interest on investment in following securities.-
5% Govt, securities for ₹ 70,000
7.5% Municipal bonds of ₹ 50,000
9% debentures of a company for ₹ 30,000
7% capital investment bonds for ₹ 20,000
Compute the amount of taxable income for A.Y. 2021-22.
(a) ₹ 9,000
(b) ₹ 10,500
(c) ₹ 9,950
(d) Nil
Answer:
(c) ₹ 9,950
Question 43.
A firm paid managerial remuneration to its partners. The same was in accordance permission. Partners are also entitled to interest on capital @ 11% as per partnership deed. Total interest paid during the year is ₹ 2,00,000. The book profit before interest on capital and remuneration is ₹ 25,00,000 allowable managerial remuneration is:
(a) ₹ 14,70,000
(b) ₹ 12,50,000
(c) ₹ 10,00,000
(d) ₹ 23,00,000
Answer:
(a) ₹ 14,70,000
Question 44.
Mr. X took a property on rent for his residential purpose on 1.4.2020. However, the property was not fully occupied by him. He let out the property to his friend at ₹ 15,000 p.m. from 01.04.2020 to 31.03.2021. Mr. X is of the view that income from subletting of property is taxable as Income from House Property. Find out whether his view is correct?
(a) Correct, as any income from a house property is taxable under the head Income from House Property.
(b) Incorrect, as Mr. X is not the owner of the property let out by him.
(c) Incorrect, as income from sublet-ting of a property is not taxable
(d) Incorrect, as income from sublet-ting shall be taxable under the head income from other sources.
Answer:
(d) Incorrect, as income from sublet-ting shall be taxable under the head income from other sources.
Question 45.
Mr. X, a US citizen, came to India during P.Y. 2016-17 to 2019-20 for 120 days every year and in P.Y. 2020-21 for 90 days. What is his residential status for A.Y. 2021-22
(a) Ordinary resident
(b) Not-ordinary resident
(c) Non-resident
(d) Not certain
Answer:
(a) Ordinary resident
Question 46.
A firm carrying on business, furnishes the following particulars for the P.Y. 2020-21
| Particulars | ₹ |
| Book profits (before setting of unabsorbed depreciation and brought forward business loss) | 2,70,000 |
| Unabsorbed depreciation of P.Y. 2013-14 | 1,20,000 |
| Brought forward business loss of P.Y. 2019-20 | 2,00,000 |
Compute the amount of remuneration allowable under section 40(b) from the book profit.
(a) ₹ 2,43,000
(b) ₹ 1,80,000
(c) ₹ 1,50,000
(d) Nil
Answer:
(c) ₹ 1,50,000
Question 47.
A foreign company non-resident in India for A.Y. 2021-22, engaged in the business of trading of tube-lights outside India. The principal officer of the company has approached you to enlighten him regarding the provisions of the Income-tax Act, 1961 pertaining to the person who is required to verify the return of income.
I. The return of income in case of can be verified by the managing director.
II. The return of income in case can be verified by any director.
III. The return of income in case may be verified by a person who holds a valid power of attorney from such company to do so.
(a) I or II or III
(b) Only I
(c) I or II depending upon the avail-ability of the managing director
(d) Only III
Answer:
(d) Only III
Question 48.
Mr. X acquires 1000 equity shares on 01.01.2018 at ₹ 200. The Fair Market Value of the said shares on 31.01.2019 is ₹ 500. He sold the said shares on 30.04.2020 at ₹ 400. Calculate the amount of capital gain assuming that securities transaction tax has been paid by Mr. X on acquisition and transfer of the said equity shares.
(a) Nil
(b) (-) ₹ 1,00,000
(c) ₹ 2,00,000
(d) ₹ 3,00,000
Answer:
(a) Nil
Question 49.
Mr. X owns 9 goods vehicle and declares profit on presumptive basis under section 44AE for A.Y. 2021-22.
He is:
(a) liable to pay advance tax in four instalments in June, September, December and March
(b) liable to pay advance tax in three instalments in September, December and March
(c) liable to pay advance tax in one instalment in March
(d) not liable to pay advance tax since he is declaring profit on presumptive basis.
Answer:
(a) liable to pay advance tax in four instalments in June, September, December and March
Question 50.
During the A.Y. 2020-21, Mr. X has a loss of ₹ 5 lakhs under the head “Income from house property” which could not be set off from any other head of income as per the provisions of section 71. The due date for filing return of income u/s 139(1) has already expired and Mr. X forgot to file his return of income within the said due date. However, he filed his belated return of income for alongwith return of income for A.Y. 2021-22, (P.Y. j 2020-21). Determine whether Mr. X can claim the said set-off?
(a) No, Mr. X cannot claim set-off of loss of ₹ 5 lakhs during A.Y. 2021-22 as he failed to file his return of income u/s 139(1) for A.Y. 2020-21.
(b) Yes, Mr. X can claim set-off of loss of ₹ 2 lakhs, out of ₹ 5 lakhs, from its income from house property during A.Y. 2021 -22, if any, and the balance has to be carried forward.
(c) Yes, Mr. X can claim set off a loss of ₹ 5 lakhs during A.Y. 2021-22 from its income from house property, if any, and the balance has to be carried forward.
(d) Yes, Mr. X can claim set off of loss of ₹ 2 lakhs, out of ₹ 5 lakhs, from its income from any head during A. Y. 2021-22 and the balance, if any, has to be carried forward.
Answer:
(c) Yes, Mr. X can claim set off a loss of ₹ 5 lakhs during A.Y. 2021-22 from its income from house property, if any, and the balance has to be carried forward.
Question 51.
Mr. X aged 64 years has filed his return of income for A.Y 2021-22 showing total income of ₹ 9 lakhs. The tax payable by him. He did not opt for new tax regime.
(a) ₹ 96,200
(b) ₹ 93,600
(c) ₹ 83,200
(d) Nil
Answer:
(b) ₹ 93,600
Question 52.
Mr. X, aged 57 years, has a total income of ₹ 36 lakhs for A.Y 2021-22. His tax liability with concessional slab rates would be-
(a) ₹ 8,50,200
(b) ₹ 10,80,00
(c) ₹ 8,63,200
(d) ₹ 9,00,000
Answer:
(a) ₹ 8,50,200
Question 53.
Mr. X has a house property whose Municipal value is ₹ 1,50,000 and the Fair Rental Value is ₹ 1,80,000. The standard rent is fixed at ₹ 1,20,000. It was self-occupied from 01.04.2020 to 1.05.2020 and from 01.06.2020, it was let out at ₹ 15,000 per month. Compute taxable income of the house property for A.Y. 2021-22. Municipal taxes paid by him during P.Y. 2020-21 were 20% of municipal valuation. Interest on loan 30,000.
(a) ₹ 1,20,000
(b) ₹ 84,000
(c) ₹ 66,000
(d) ₹ 54,000
Answer:
(d) ₹ 54,000
Question 54.
Mr. X purchased furniture worth ₹ 80,000 on 05.09.2020 and makes the payment of ₹ 45,000 by account payee cheque and ₹ 20,000 in cash on the same date. The balance of ₹ 15,000 is paid by the assessee by bearer cheque
on 06.09.2020 when the furniture is delivered in his office. Compute the amount of actual cost of furniture to the assessee
(a) ₹ 45,000
(b) ₹ 80,000
(c) ₹ 60,000
(d) ₹ 65,000
Answer:
(a) ₹ 45,000
Question 55.
On 20.10.2020, Pihu (minor child) gets a gift of ₹ 20,00,000 from his father’s friend. On the same day, the amount is deposited in his bank account. On the said deposit, interest of ₹ 13,000 was earned during the P.Y. 2020-21. In whose hands the income of Pihu shall be taxable?
(a) Income of ₹ 20,11,500 shall be taxable in the hands of Pihu’s father.
(b) Income of ₹ 20,13,000 shall be taxable in the hands of Pihu’s father.
(c) Income of ₹ 20,11,500 shall be taxable in the hands of Pihu’s father or mother, whose income before this clubbing is higher.
(d) Income of ₹ 20,13,000 shall be taxable in the hands of Pihu’s father or mother, whose income before this clubbing is higher.
Answer:
(c) Income of ₹ 20,11,500 shall be taxable in the hands of Pihu’s father or mother, whose income before this clubbing is higher.
Question 56.
Mr. X had bought 3,000 STT paid listed shares of a company on 25.02.2020 at ₹ 300 per share. The company announces and allots bonus shares in the ratio of 3:1 on 01.07.2020. After the allotment of bonus shares, the shares were sold on 10.03.2021 at ₹ 400 per share and STT was paid on it. Compute the amount of capital gain/loss in her hands for AY. 2021-22.
CII- F.Y. 2019-20: =289; F.Y. 2020- 21=301
(a) Long term capital gain of ₹ 7,00,000.
(b) Long term capital gain on sale of original shares of ₹ 3,00,000. Short term capital gain on sale of bonus shares of ₹ 4,00,000
(c) Long term capital of ₹ 6,62,630
(d) Long term capital gain on sale of original shares ₹ 2,62,500. Short term capital gain on sale of bonus shares of ₹ 4,00,000.
Answer:
(d) Long term capital gain on sale of original shares ₹ 2,62,500. Short term capital gain on sale of bonus shares of ₹ 4,00,000.
Question 57.
A partnership firm, owns a house property which is utilized by the partners for their residence. On 31.10.2020, the firm sells the property at a long-term capital gain of ₹ 6,00,000. Can the firm or partners claim exemption under section 54?
(a) Yes, the firm can claim exemption u/s 54 as the firm has earned long term capital gains from the transfer of a residential house.
(b) Yes, the partners can claim ex-emption u/s 54 as the property was used by them for residential purpose and the said property has been indirectly transferred by the partners only in the capacity of a firm.
(c) Neither the firm nor the partners can claim deduction u/s 54 as the said deduction is allowed only in case of a commercial property
(d) The firm cannot claim deduction u/s 54 as deduction under the said section is allowed only to an individual or HUF. Further, the partners cannot claim deduction u/s 54 as the transferor in the instant case is the firm.
Answer:
(d) The firm cannot claim deduction u/s 54 as deduction under the said section is allowed only to an individual or HUF. Further, the partners cannot claim deduction u/s 54 as the transferor in the instant case is the firm.
Question 58.
Which of the following persons is/ are liable to pay advance tax as per the provisions of Income-tax Act, 1961?
I. A resident individual aged 62 years having only income from capital gains of ₹ 20,00,000 (estimated) during P.Y. 2020-21.
II. A resident individual aged 58 years having only income from other sources of ₹ 2,00,000 (estimated) during P.Y. 2020-21.
III. A private company having estimated total income of ₹ 1,00,000 during P.Y. 2020-21.
IV. A partnership firm which has es-timated its total income to be Nil for P.Y. 2020-21.
V. A HUF having estimated total income of ₹ 6,00,000 during P.Y. 2020-21
(a) I, III, V
(b) I, II, III, IV, V
(c) III, V
(d) III, IV, V
Answer:
(c) III, V
Question 59.
Mr. X and his brother jointly own a bungalow. They had taken a housing loan to purchase the bungalow. The loan is sanctioned in the name of Mr. X and his brother in the year 2015. Interest on housing loan for the P.Y. 2020-21 amounted to ₹ 5,00,000 which is paid by Mr. X (₹ 2,50,000) and his brother (₹ 2 ,50,000). The bungalow is used by them for their residence. In this case, what will be the amount of deduction available under section 24(b) to Mr. X and his brother
(a) ₹ 30,000 each
(b) ₹ 2,00,000 each
(c) ₹ 2,50,000 each
(d) ₹ 5,00,000 each
Answer:
(b) ₹ 2,00,000 each
Question 60.
Mr. X filled his belated return of income u/s 139(4) on 5.02.2022 showing total income of ₹ 9,00,000. What is fee payment u/s 234
(a) ₹ 10,000
(b) ₹ 8,000
(c) ₹ 1,000
(d) ₹ 2,000
Answer:
(a) ₹ 10,000
Question 61.
A proprietorship firm following j cash system of accounting incurred the following expenditure during the P.Y. 2020-21:
- Customs duty of A.Y. 2021-22 : ₹ 75,000 paid on 15.5.2021
- Income tax for A.Y. 2020-21: ₹ 84,000 paid on 16.6.2021
Calculate the amount of expenditure allowable while computing its business income for A.Y. 2021-22
(a) ₹ 1,59,000
(b) ₹ 75,000
(c) Nil
(d) ₹ 84,000
Answer:
(c) Nil
Question 62.
ABC a partnership firm was dissolved on 1-5-2020. A machine acquired on 1-5-2018 for ₹ 3,50,000 was distributed amongst the partners on dissolution for ₹ 3,00,000. The value of machinery as per books of account and Fair Market Value on 1-5-2020 was ₹ 2,50,000 and ₹ 4,00,000, respectively. What will be the full value of consideration of this machine?
(a) ₹ 3,00,000
(b) ₹ 4,00,000
(c) ₹ 3,50,000 0
d) ₹ 2,50,000
Answer:
(b) ₹ 4,00,000
Question 63.
Mr. X purchased a house property valued at ₹ 42 lakhs as on 1.4.2020. The house was let out at ₹ 25,000 per month throughout the P.Y. Compute income from house property for A.Y.2021 -22 if Mr. X paid Municipal taxes 18,000 and spent 6,000 on minor repairs.
(a) ₹ 2,82,000
(b) ₹ 2,76,000
(c) ₹ 3,00,000
(d) ₹ 1,97,400
Answer:
(d) ₹ 1,97,400
Question 64.
Mr. X, a resident Indian, has incurred ₹ 60,000 for medical treatment of his dependent brother aged 37 years, who is a person with 40% disability and has deposited ₹ 20,000 with LIC for his maintenance. For A.Y. 2021-22, Rajan would be eligible for deduction under section 80DD of an amount equal to:
(a) ₹ 60,000
(b) ₹ 80,000
(c) ₹ 75,000
(d) ₹ 1,25,000
Answer:
(c) ₹ 75,000
Question 65.
In which of the following transactions, quoting of PAN is mandatory by the person entering into the said transaction?
I. Opening a Basic savings bank deposit account with a bank.
II. Applying to a bank for issue of a credit card.
III. Payment of ₹ 40,000 to mutual fund for purchase of its units.
IV. Cash deposit with a post office of ₹ 1,00,000 during a day.
V. A fixed deposit of ₹ 30,000 with a NBFC registered with RBI.
VI. Sale of shares of an unlisted com-pany for an amount of ₹ 60,000.
(a) II, IV
(b) II, III, IV
(c) I, II, III, V, VI
(d) II, IV, VI
Answer:
(a) II, IV
Question 66.
Mr. X incurred loss of X 4 lakh in the P.Y. 2020-21 in leather business. Against which of the following incomes earned during the same year, can he set-off such loss?
(i) Profit of ₹ 1 lakh from apparel business
(ii) Long-term capital gains of ₹ 2 lakhs on sale of jewellery
(iii) Salary income of ₹ 1 lakh
Choose the correct answer.
(a) Only (i)
(b) Only (ii)
(c) Only (iii)
(d) Both (i) and (ii)
Answer:
(d) Both (i) and (ii)
Question 67.
Mr. X acquired a building of ₹ 15 lakh in June, 2018 in addition to the cost of ₹ 3 lakh in respect of the land on which the building is situated. 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 A.Y. 2021-22 would be:
(a) ₹ 1,21,500
(b) ₹ 1,50,000
(c) ₹ 1,45,800
(d) ₹ 1,80,000
Answer:
(a) ₹ 1,21,500