Income from House Property – CS Executive Tax Laws MCQs

Students should practice Income from House Property – CS Executive Tax Laws MCQ Questions with Answers based on the latest syllabus.

Income from House Property – CS Executive Tax Laws MCQ Questions

Question 1.
Sajal is the owner of a house property covered under the Rent Control Act. Municipal value ₹ 30,000, actual rent ₹ 25,000, fair rent ₹ 36,000 and standard rent is ₹ 28,000. The gross annual value of the house property will be:
(A) ₹ 30,000
(B) ₹ 25,000
(C) ₹ 36,000
(D) ₹ 28,000 [Dec. 2014]
Answer:
(D) ₹ 28,000

Question 2.
Composite rent of let-out house property is taxable as:
(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 [Dec. 2014]
Answer:
(D) Either (A) or (B) above depending upon certain conditions

Question 3.
Suresh owns two house properties. The first property was used half for running his business and the other half was let out at ₹ 4,000 p.m. The second property was wholly used as a residence by Suresh. Municipal values of the two properties were the same at ₹ 72,000 each p.a. and local taxes @ 1096. Suresh’s income from house property for the PY 2020-21 will be:
(A) ₹ 33,600
(B) ₹ 31,080
(C) ₹ 28,560
(D) ₹ 62,160 [Dec. 2014]
Hint:
House I: Part I used for business and hence not liable to tax.
Part II: GAV = 4,000 X 12 = 48,000; NAV = 48,000 – 3,600 = 44,400
Income = 44,400 – 13,320 = 31,080
House II: Self occupied.
NAV = 0
Answer:
(B) ₹ 31,080

Question 4.
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 ₹ 20,000, fair rent ₹ 25,000, and standard rent ₹ 22,000. The reasonable expected rent will be computed with reference to the following amount p.m.
(A) ₹ 22,000
(B) ₹ 20,000
(C) ₹ 25,000
(D) None of the above [June 2015]
Answer:
(A) ₹ 22,000

Question 5.
When a house property is let-out throughout the year for a monthly rent of ₹ 22,000 and municipal tax paid for the current year is ₹ 24,000 and for the earlier year paid now is ₹ 16,000, the income from house property would be:
(A) ₹ 1,68,000
(B) ₹ 1,56,800
(C) ₹ 1,84,800
(D) ₹ 2,24,000 [Dec. 2015]
Hint:
22,000 × 12 – 24,000 – 16,000 – 67,200 = 1,56,800
Answer:
(B) ₹ 1,56,800

Question 6.
When a share of each co-owner in house property is not definite, the income from such property shall be:
(A) Taxed equally
(B) Exempt from tax
(C) Taxed as an association of persons
(D) Taxed as the body of individuals [Dec. 2015]
Answer:
(C) Taxed as an association of persons

Question 7.
Ramesh let out his house on 1.4.2020 on rent of ₹ 15,000 p.m. The fair rent and the municipal value of the house are ₹ 13,500 p.m. and ₹ 16,000 p.m. respectively. Municipal taxes paid for the year were ₹ 12,000. Income from house property for the AY 2021-22 will be:
(A) ₹ 1,26,000
(B) ₹ 1,76,000
(C) ₹ 1,05,000
(D) None of the above [Dec. 2015]
Hint:
16,000 × 12 – 12,000 – 54,000 = 1,26,000
Answer:
(A) ₹ 1,26,000

Question 8.
Ms. Padmaja let out a property for ₹ 20,000 per month during the year 2020-21. The municipal tax on the let-out property was enhanced retrospectively. Hence, she paid * 60,000 as municipal tax which included arrears of municipal tax of ₹ 45,000. Her income from house property is:
(A) ₹ 80,000
(B) ₹ 1,57,500
(C) ₹ 1,26,000
(D) ₹ 36,500 [June 2016]
Hint:
Income from House Property – CS Executive Tax Laws MCQs 1
Answer:
(C) ₹ 1,26,000

Question 9.
The construction of a house was completed on 31st January 2021. The owner of the house took a loan of ₹ 20,00,000 @ 696 p.a. on 1st May 2020 In this case the deduction allowable for the previous year 2020-21 towards interest on borrowings is:
(A) ₹ 22,000
(B) ₹ 24,000
(C) ₹ 1,10,000
(D) None of the above [June 2016]
Hint:
Construction of house is completed on 31.1.2020. Thus, deduction for interest on loan is allowed from PY 2019-2020. Deduction for interest = 20,00,000 × 696 × 11/12 = 1,10,000.
Answer:
(C) ₹ 1,10,000

Question 10.
The municipal value of a property is ₹ 2,10,000. Fair rent is ₹ 1,90,000 standard rent is ₹ 1,80,000 and the actual rent is * 2,40,000. The gross annual value of the property would be –
(A) ₹ 1,80,000
(B) ₹ 1,90,000
(C) ₹ 2,40,000
(D) ₹ 2,10,000 [Dec. 2016]
Answer:
(C) ₹ 2,40,000

Question 11.
Mr. Ahmed acquired a property in April 2020 for self-residential use. The loan interest payable to the State Bank of India for the financial year 2020-21 amounts to ₹ 2,10,000. The amount eligible for deduction under section 24 is:
(A) ₹ 30,000
(B) ₹ 2,00,000
(C) ₹ 2,10,000
(D) ₹ 1,50,000 [June 2017]
Answer:
(B) ₹ 2,00,000

Question 12.
A borrowed ₹ 5,00,000 @ 1296 p.a. on 1.4.2016 for construction of house property which was completed on 15.3.2020. The amount is still unpaid. The deduction of interest for previous year 2020-2021 shall be:
(A) ₹ 60,000
(B) ₹ 96,000
(C) ₹ 1,80,000
(D) ₹ 2,40,000 [June 2017]
Hint:
Interest payable for the various years:
2016 – 2017 (5,00,000 × 12%) 60,000
2017- 2018 (5,00,000 × 12%) 60,000
2018- 2019 (5,00,000 × 12%) 60,000
2019 – 2020 (5,00,000 × 12%) 60,000
2020-2021 (5,00,000 × 12%) 60,000
Since the construction of the house is completed on 15.3.2020 ie. in the year 2019¬2020, interest payable up to the year 2018-2019 will be pre-construction interest and 1 /5th of 1,80,000 ie. 36,000 will be allowed from PY 2019 – 2020 to 2023-2024 in five equal installments.
Total deduction for PY 2020-2021 = 60,000 + 36,000 = 96,000.
Answer:
(B) ₹ 96,000

Question 13.
When a house property is let out for a monthly rent of ₹ 25,000 during the financial year 2020-21 and maintenance expenses by way of salary to sweeper and watchman is ₹ 6,000
per month, the income from house property would be:
(A) ₹ 2,28,000
(B) ₹ 2,10,000
(C) ₹ 3,00,000
(D) ₹ 2,50,000 [Dec. 2017]
Hint:
Income from House Property – CS Executive Tax Laws MCQs 2
Answer:
(B) ₹ 2,10,000

Question 14.
Mr. Bala transferred his left out a residential property to his wife by way of gift settlement. During the financial year 2020-21, she earned a rental income of ₹ 30,000 per month. She made a fixed deposit in a bank out of such rental income and earned interest income during the year of ₹ 21,000. The total amount of income liable for clubbing in the hands of Mr. Bala for the assessment year 2020-21 is:
(A) Nil
(B) ₹ 21,000
(C) ₹ 2,52,000
(D) ₹ 2,73,000 [Dec. 2017]
Hint:
If an individual transfers any house property to his or her spouse otherwise than for adequate consideration he shall be deemed to be the owner. Hence rental income is taxable in the hands of Mr. Bala and clubbing provisions are not applicable.
Interest income of ₹ 21,000 will be taxable in the hands of Mrs. Bala and again clubbing provisions are not attracted.
Answer:
(A) Nil

Question 15.
Mr. Zen owns a flat in Mumbai which was let out by him in the previous year 2020-2021 on rent of ₹ 20,000 p.m. up to December 2020 and for ₹ 30,000 p.m. Thereafter, the annual municipal value is ₹ 3,00,000, Fair Rent is ₹ 2,50,000 and Standard Rent is ₹ 2,90,000. The Gross Annual Value of the flat shall be taken as:
(A) ₹ 2,70,000
(B) ₹ 3,00,000
(C) ₹ 2,50,000
(D) ₹ 2,90,000 [June 2018]
Answer:
(D) ₹ 2,90,000

Question 16.
Santhanam purchased in October 2020, a flat in Chennai, to be used for his own residential purposes with the financial assistance of a housing loan taken from PNB Housing Finance Ltd. He has paid interest on such loan till March 2021 of ₹ 1,78,780. The amount of interest paid on such loan allowed u/s 24 is:
(A) ₹ 1,25,000
(B) ₹ 1,78,780
(C) ₹ 1,50,000
(D) None of the above [June 2018]
Answer:
(B) ₹ 1,78,780

Question 17.
Find out from the following income derived from house property which is being exempt from Income Tax:
(A) Income from the property of a trust for charitable or religious purposes
(B) Income from the property of a housing society
(C) Income from the property of a trade association
(D) Income from the property of a sports association [June 2019]
Answer:
(A) Income from the property of a trust for charitable or religious purposes

Question 18.
Z an assessee incurs expenditure for acquisition of an asset in respect of which payment (or aggregate of payment made to a person in a day), otherwise than by an account payee cheque/draft or use of ECS through a bank, exceeds, such payment shall not be eligible for claiming the amount of depreciation on such asset.
(A) ₹ 50,000
(B) ₹ 20,000
(C) ₹ 10,000
(D) ₹ 2,00,000 [June 2019]
Answer:
(C) ₹ 10,000

Question 19.
Narendra engaged in retail trade let out his fully furnished house with lift, air conditioners, fridge, security staff, and gardener at a rent of ₹ 1,00,000 per month. The agreement did not provide for separate rent for various facilities but is a composite agreement. The amount received by him would be chargeable to tax under the head:
(A) Other Sources
(B) Business Income
(C) Income from House Property
(D) Capital Gains [June 2019]
Answer:
(C) Income from House Property

Question 20.
What will be the Gross Annual Value (GAV) of a house owned by Ramesh covered by Rent Control Act remained let out during the year 2020-21 of which;
(i) Municipal value is ₹ 3,50,000
(ii) Actual (De Facto) Rent is ₹ 3,20,000
(iii) Fair Rent is ₹ 3,00,000, and
(iv) Standard Rent is ₹ 3,60,000
(A) ₹ 3,60,000
(B) ₹ 3,20,000
(C) ₹ 3,50,000
(D) ₹ 3,00,000 [Dec. 2019]
Hint:
Computation of Gross Annual Value (GAY)
1. Reasonable Expected Rent (RER)
a. Municipal Value ₹ 3,50,000
b. Fair Rent ₹ 3,00,000
c. Higher of (a) and (b) ₹ 3,50,000
d. Standard Rent: ₹ 3,60,000
e. RER (Lower of c & d) ₹ 3,50,000

2. Actual Rent ₹ 3,20,000

3. Therefore, GAV
(Higher of 1 & 2) ₹ 3,50,000
Answer:
(C) ₹ 3,50,000

Question 21.
Santhanam purchased in October 2019 with financial assistance by way of a housing loan provided by PNB Housing Finance Ltd. a flat in Chennai to be used exclusively for his own residential purposes. Interest on the housing loan till March 2021 paid by him was ₹ 2,18,780. He wants to know the amount of deduction to be available to him in respect of interest so paid on the housing loan while computing his income or A. Y. 2021-22.
(A) ₹ 30,000
(B) ₹ 2,18,780
(C) ₹ 1,50,000
(D) ₹ 2,00,000 [Dec. 2019]
Answer:
(D) ₹ 2,00,000

Question 22.
House owned by Suresh was sold on 1st January 2021 and till the date of sale, the house was on rent of ₹ 7,000 p.m. The other relevant details of this house are (i) municipal value ₹ 72,000 p.a. (ii) fair rent ₹ 66,000 p.a. and standard rent ₹ 60,000 p.a. The income chargeable under the head House Property in A.Y. 2021-22 of this house shall be:
(A) ₹ 63,000
(B) ₹ 50,400
(C) ₹ 46,200
(D) ₹ 44,100 [Dec. 2019]
Answer:
(D) ₹ 44,100

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