CA Saumil Manglani

DT Bullet – MCQ’s
Index

Topics Topic Name Page Numbers

1 Basic Concepts 1.1 – 1.02

2 Residential Status and Scope of 2.1 – 2.16

Total Income
3 Exempted Income 3.1 – 3.06

4 Salaries 4.1 – 4.15

5 House Property 5.1 – 5.07

6 PGBP 6.1 – 6.28

7 Capital Gains 7.1 – 7.13

8 IOS 8.1 - 8.07

9 Clubbing 9.1 – 9.04

10 Set off - Carry Forward of losses 10.1 – 10.06

11 Deductions 11.1 – 11.08

12 PAN - Return Filing - Self 12.1- 12.08

assessment
13 TDS - TCS - Advance Tax 13.1 – 13.17

14 Various entities 14.1 – 14.08

15 Tax incidence on companies 15.1 – 15.08

16 Assessment – Appeals – Revision 16.1 – 16.13

- Penalties

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 Ch 1 - DT Bullet MCQ’s – June 22 & Dec 22 1.1

CHAPTER 1
DT At A GLANCE

1. 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 –NS)
(A) By Finance Minister (b) From IRS
(c) By Prime Minister (d) By Chief Justice of India Ans.(b)

2. 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 –NS)
(A) Constituted Authority (b) Revenue Administration Authority
(c) Statutory Authority (d)Central Authority Ans.(c)

3. Cannons of taxation as propounded by Adam Smith despite the modern development of

economic sciences still apply and hold good. These cannons of taxation refer to administrative
aspect of a tax. Find out from the following, which have been considered too under the Income
Tax Act as being the fundamental cannons of taxation: (Dec 20 –NS)
(i)Cannon of Equity; (ii) Cannon of Economy
(iii) Cannon of Uncertainty; (iv) Cannon of Non-convenience; (v) Cannon of Certainty
(A) (i), (ii) & (v)
(B) (ii), (iv) & (v)
(C) (i), (iii) & (iv)
(D) All the five above Ans-A

4. .The Central Board of Direct Taxes (CBDT) is a statutory authority for providing essential inputs
for policy and planning of direct taxes in India and is also responsible for administration of direct
tax laws through Income Tax Department and is functioning under the : (Dec 20 –NS)
(A) Income Tax Act, 1961
(B) Financial Action Task Force (FATF)
(C) Central Board of Revenue Act, 1924
(D) Central Board of Revenue Act, 1963 ANS-D
5. . Judicial decisions are being pronounced by various appellate authorities, tribunals, courts and by High
Courts on the disputed matters which are binding specifically whereas the decisions pronounced by
the Supreme Court become judicial precedent and are binding on ---------------------- (Dec 20 –
OS)
(A) All the Courts & Appellate Tribunals
(B) Income Tax Authorities
(C) An Assessee
(D) All in (A), (B) & (C) Ans. D

6. Taxes and duties referred to in the Union list except those referred to in Articles 268 and 269,
surcharge on taxes and duties and any cess levied by the ________for specific purpose are
to be collected by the Government of India and are to be distributed between the Union and the
States. (Dec 20 –OS)
A. Parliament
B. Central Board of Direct Taxes
C. Finance Minister
D. Revenue Administration Authority Ans. A

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 Ch 1 - DT Bullet MCQ’s – June 22 & Dec 22 1.2

7. .The Income Tax Department is governed by the -------------- and is a part of the ------------------
under the Ministry of Finance, Government of India. (Dec 20 –OS)
A. Central Board of Direct Taxes (CBDT), Taxation Cell
B. Central Board of Direct Taxes(CBDT), Department of Revenue
C. Department of Revenue, Central Board of Direct Taxes(CBDT)
D. Department of Revenue, Revenue Administration Authority Ans. B

8. Which of the following is not a merits of Direct Taxes ? (JUNE-21-NS)

(A) Equity (B) Simplicity
(C) Evasion (D) Certainty ANS-C

9. “-------------------” is a method of evading tax liability by dishonest means like suppression, showing
lower incomes, conscious violation of rules, inflation of expenses etc. (JUNE-21-OS)
(A) Tax Evasion (B) Tax Avoidance
(C) Tax Planning (D) Tax Management ANS-A

10. What is the legal implication of Tax Aviodance ? (JUNE-21-OS)

(A) It overrules of law (B) It uses loopholes in the law
(C) It uses benefits of the law (D) Advantages arise in the long run ANS-B

11. Which planning is based on the measures which circumvent the law : (JUNE-21-OS)
(A) Short range and long range tax planning (B) Permissive tax planning
(C) Presumptive tax planning (D) Purposive tax planning ANS-D

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.1

CHAPTER 2
Basics + Residential status
1. ABC Ltd., a domestic company having a turnover of Rs. 450 crore has computed its total income for
the year 2021-22 of Rs. 102 lakh. The tax payable by the company on such income in A.Y. 2022-23 shall
be : (Dec 19 –NS)
(a) Rs. 34,05,168 (b) Rs. 29,70,240
(c) Rs. 33,28,000 (d) Rs. 33,30,968 Ans.(c)

2. PQ Ltd. is a domestic company whose turnover for the assessment year 2020-21 was Rs. 250 crore
and for the assessment year 2021-22 Rs. 80 crore. Its turnover for the previous year 2021-22 is Rs. 110
crore. The rate of tax (excluding cess) applicable for the assessment year 2022-23 would be: (Dec 19
–OS)

(A) 40% (B) 30%

(C) 29% (D) 25% Ans.(d)

3. The tax rate applicable for a non-resident engaged in shipping business in India shall be : (December
17)
(A)5% (B)7.5%
(C)20% (D) 10% Answer – (B)

4. 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) Rs.12 lakh (d) Nil Ans.(b)

5. Income of a non-resident from shipping business in India is computed at the rate of - (Dec. 2016)
(a) 5% (b) 7.5%
(c) 10% (d) 30% Ans.(b)

6. The income of non-resident from the business of operation of aircraft in respect of carrying of cargo
or passenger in India shall be taxable as per section 44BBA @ - (Dec. 2015)
(a) 5% of the amount received/receivable (b) 10% of the amount received/receivable
(c) 15% of the amount received/receivable (d) 7.5% of the amount received/receivable Ans.(a)

7. The basic exemption limit in the case of a non-resident individual being super senior citizen is : (Dec 19 –OS)
(A) Rs. NIL (B) Rs. 2,50,000
(C) Rs. 3,00,000 (D) Rs. 5,00,000 Ans.(b)

8. Ginger Shippers is owned by a non-resident engaged in shipping business. It received Rs. 120 lakh for
carriage of goods shipped from Mumbai, India to Durban, South Africa. The presumptive income of the
assessee under section 44B would be : (Dec 19 –OS)
(A) Rs. 9,60,000 (B) Rs. 12,00,000
(C) Rs. 6,00,000 (D) Rs. 9,00,000 Ans – D

9. 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)

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.2

10. 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)

11. 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)

12. 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)

13. Dr. Ashok commenced medical practice on 1st September, 2021. The previous year for the profession
for the assessment year 2022-23 would be - (June 2016)
(a) 1st April, 2021 to 31st March, 2022 (b) 1st September, 2021 to 31st March, 2023
(c) 1st June, 2021 to 31st March, 2022 (d) 1st September, 2021 to 31st January, 2022 Ans.(b)

14. Income-tax in India is charged at the rates prescribed by - (Dec. 2014)

(a) The Finance Act of the assessment year (b) The Income-tax Act, 1961
(c) The Central Board of Direct Taxes (d) The Finance Act of the previous year. Ans.(a)

15. A new business was set-up on 1st July, 2021 and trading activity was commenced from 1st September,
2021, the previous year would be the period commencing from - (Dec. 2015)
(a) 1st April, 2021 to 31st March, 2022 (b) 1st July, 2021 to 31st March, 2021
(c) 1st September, 2021 to 31st March, 2022 (d) 1st October, 2021 to 31st March, 2022.
Ans.(b)
16. Normal rates of income-tax are prescribed in the - (Dec. 2016)
(a) Income-tax Act, 1961 (b) Income-tax Rules, 1962
(c) Finance Act of the current year (d) CBDT circulars Ans.(c)

17. According to section 2(24) definition of 'income' is - (Dec. 2014)

(a) Inclusive (b) Exhaustive
(c) Exclusive (d) Descriptive. Ans. (a)

18. 'Income' under section 2(24) includes - (June, 2015)

(i) The profits and gains of a banking business carried on by a co-operative society with its members.
(ii) Any advance money forfeited in the course of negotiations for transfer of capital asset.
Choose the correct option with reference to the above statements -
(a) Both (i) and (ii) (b) Only (i)
(c) Only (ii) (d) Neither (i) nor (ii). Ans.(a)

19. ABC Pvt. Ltd. has a business loss of Rs. 10 lakhs. There is unexplained share application money to
the tune of Rs. 25 lakhs. The total income of the company will be:
(A) Rs. 15lakh (B)Rs. 35lakh
(C)Rs. 25lakh (D)None of the above Ans C

20. The term 'income' includes the following types of incomes — (June, 2010)
(a) Legal (b) Illegal
(c) Legal and illegal both (d) None of the above. Ans.(c)

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.3

21. 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)
(a) Capital receipt and taxable (b) Capital receipt and not taxable
(c) Revenue receipt and taxable (d) Revenue receipt and not taxable Ans.(a)

22. 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 of Rs. 50,000 received in cash
(d) Income received in kind. Ans. (c)

23. As per section 176 of Income Tax Act, 1961 where any business or profession is discontinued
in any assessment year than as per section 176(3), person discontinuing their business or
profession shall give to the A.O. a notice of such discontinuance within ----------- thereof. (Dec
20 –OS)

(A)5 days (B)10 days

(C)15 days (D)30 days ANS C

24. Hindu Undivided Families (HUFs) according to Hindu law are governed by two schools being
Mitakshara and Dayabhaga. Mitakshara School applies to whole of India except the states of -------------
-----(Dec 20 –OS)
(A)West Bengal and Assam (B)Jammu and Kashmir
(C)West Bengal (D).Assam and Bihar ANS A
25. “Assessee” as per section 2(7) of the Income Tax Act, 1961, means a person by whom income
tax or super tax or any other sum of money is payable under this Act and includes : (DEC-21 NS)

(A) every person who is deemed to be an assessee in default under any provision of this Act
(B) every person in respect of whom any proceeding under this Act has been taken for assessment of his
income or income of any other person in respect of which he is assessable,
(C) every person who is deemed to be an assessee under any provision of this Act.
(D) All of the above ANS = D

26. Tax as per provisions of Income Tax Act, 1961 is charged both on revenue and capital receipts by taking
them as income. Find and state from the following items of receipts, which is specifically not included in the
income : (DEC-21 NS)

(A) Sum received under an agreement for not carrying out any activity in relation to any profession.
(B) Fair market value of inventory which is converted into capital asset.
(C) Amount of subsidy received which is taken into account for determination of the actual cost of the
depreciable asset.
(D) Compensation received by a person in connection with termination of his employment.
ANS = C

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.4

RESIDENTIAL STATUS
27. Atul is a foreign citizen. His father was born in Delhi in 1951 and mother was bom in England
in 1950. His grandfather was born in Delhi in 1922. Atul visited India to see Taj Mahal and visit
other historical places. He came to India on 1st November, 2021 for 200 days. He has never
come to India before. His residential status for assessment year 2022-23 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)

28. 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 yearprevious years immediately preceding
the relevant
(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)

29. (3) 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, 2022 on a visit and stayed for 4 months. His
residential status for the assessment year 2022-23 would be - (Dec.2014)
(a) Resident and ordinarily resident (b) Not ordinarily resident
(c) Nonresident (d) Resident. Ans.(c)

30. Paresh, a software engineer at ABC Ltd. left India on 10th August, 2021 for the treatment of his wife.
For income-tax purpose, his residential status for the assessment year 2022-23 will be - (June, 2015)
(a) Resident (b) Non-resident
(c) Not ordinarily resident (d) Cannot be determined from the given information.Ans.(a)

31. Ritesh, an Indian citizen, left India for U.K. on 1st September, 2021 to take up a job there. His residential
status for the assessment year 2022-23 would be -(Dec. 2016)
(a) Resident and ordinarily resident (b) Not ordinarily resident
(c) Non-resident (d) None of the above. Ans.(c)

32. Mr. Rajiv, born and brought up in India left for employment in Belgium on 15-10-2021. He has never
gone out of India, previously. What is his residential status for the assessment year 2022-23? (June,
2017)
(a) Non-resident (b) Not ordinarily resident
(c) Resident (d) Indian citizen Ans.(c)
33. 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 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 2022-23 is : (June, 2017)
(a) Non-resident (b) Resident
(c) Not ordinarily resident (d) None of the above Ans.(c)

34. 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) Non resident (d) Resident. Ans.(a)

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.5

35. 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)

36. Ram who was born and brought up in India left for employment in Dubai on 20th August, 2021. His
residential status in respect of the assessment year 2022-23 would be - (Dec. 2015)
(a) Resident and ordinarily resident (b) Non-resident
(c) Not ordinarily resident (d) None of the above. Ans.(b)

37. HUF of Ashwin consisting of himself, his wife and 2 sons is assessed to income-tax. The residential
status of HUF would be non-resident, when - (Dec. 2015)
(a) The management and control of its affairs is (b) The management and control of its affairs is
wholly in India wholly outside India
(c) The status of karta is non-resident for that year (d) When majority of the members are non
resident. Ans.(b)
38. 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)

39. Mr. Alok Chatterjee born and brought up in India since 1970, left for Singapore on 10-10-
2021 for the purpose of employment. His residential status would be : (Dec 17)
(A)resident (B)not ordinarily resident
(C) non-resident (D)none of the above Ans.(a)

40. John is a foreign citizen born in USA. His father was born in Delhi in 1960 and his grand-father
was born in Lahore in 1935 but his mother was born in UK in 1963. John came to India for the
first time on 1st June, 2021 and stayed in India for 183 days and then left for USA. His
residential status for the A.Y. 2022-23 shall be: ( June 18)
(A)Resident (B)Resident but not ordinary resident
(C) Non-resident (D)Foreign national Ans. B

41. The income earned during the previous year is subject to tax under the Act on the basis of
residential status of an assessee. However, the residential status of an assessee
........................ every year.
(A) will not change (B)will certainly change
(C)may change (D) None of the above Ans. C

42. Every year, the residential status of an assessee - (June 2010)

(a) May change (b) Will certainly change
(c) Will not change (d) None of the above. Ans.(a)

43. Thomas, an Indian citizen is living in Kerala since birth in 1955 and left for UAE on 13 th June 2015 for a
salaried employment contract for 4 years and came back on 7th July, 2021 to India and settled at Kerala. His
residential status for the Assessment Year 2022-23 shall be : (Dec 19 –NS)
(a) Resident (b) Non-resident
(c) Resident & Not Ordinary Resident (d) Resident & Ordinary Resident Ans.(d)

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.6

44. A person is deemed to be of Indian origin if he, or either of his parents or any of his grandparents, was born
in ____________.(Dec 19 –NS)
(a) India (b) India other than J&K
(c) Undivided India (d) Greater India Ans.(c)

45. Ms. Kapoor born in UK came to India for the first time on 10-5-2021 and remained in India till 31-08-
2021. Her maternal grandparents were born in Dhaka in the year 1941. Her residential status for the
assessment year 2022-23 would be : (Dec 19 –OS)
(A) Resident and ordinarily resident (B) Non-resident
(C) Resident but not ordinarily resident (D) None of the above Ans.(B)

46. Shane Warne, an Australian Cricketer coming to India regularly for plying different league matches
since April, 2013 and was staying in India in each of the financial year for 100 days. His residential
status for the previous year ended on 31.3.2022 relevant for A.Y. 2022-23 shall be: (Dec 20 –NS)
(A)Non-resident (B)Resident but not ordinary resident
(C)Resident (D)Resident and ordinary resident ANS-B

47. A company shall be said to be engaged in “active business outside India” (ABOI), if the passive
income is not of its total income and of its total assets are situated in India. (Dec 20 –NS)
(A)less than 50%; more than 50% (B)more than 50%; less than 50%
(C)less than 50%; less than 50% (D)more than 50%; more than 50% ANS – B

48. Which of the following may be a 'not ordinarily resident' in India - (Dec. 2012)
(a) Partnership firm (b) Joint stock company
(c) Association of persons (d) Hindu Undivided Family. Ans.(d)

49. Residential status of an Indian company is resident and ordinarily resident for the year 2021-22 -
(Dec. 2015)
(a) If the entire control and management is wholly in India
(b) If part of the control and management is in in India
(c) Regardless of the place of control and management
(d) If it is listed on recognised stock exchange. Ans.(c)
50. Alpha Ltd. is an Indian company, It carries its business in Delhi and London. Total control and
management of the company is situated in London. More than 85% of its business income is from the
business in England. If so, its residential status will be - (June 2016)
(a) Resident (b) Non-resident
(c) Not ordinarily resident (d) Foreign company Ans.(a)
51. A company incorporated outside India having its control and management fully situated in India in the
previous year will be treated as - (Dec. 2016)
(a) Resident (b) Not ordinarily resident
(c) Non-resident (d) None of the above Ans.(a)
52. Satish brought into India, in the previous year, past untaxed income which was earned in U.K.
The income will be taxable if Satish is - (Dec. 2016)
(a) An ordinarily resident (b) A not-ordinarily resident

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.7

(c) Anon-resident (d) None of the above Ans.(d)

53. Abhay earns the following income during the previous year ended 31st March, 2022: (Dec
2014)
> Interest on U.K. Development Bonds (l/4th being received in India): Rs. 2,00,000;
> 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 2022-2023 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)
54. 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)

55. Income accruing in India in previous year is taxable for - (Dec 2009)
(a) Resident (b) Not ordinarily resident
(c) Non-resident (d) All of the above. Ans.(d)
56. Income accruing from agriculture in a foreign country is taxable in the case of an assessee who
is — (Dec. 2010)
(a) Resident (b) Not-ordinarily resident
(c) Non-resident (d) None of the above. Ans.(a)
57. Foreign income received in India during the previous year is taxable in the case of — (Dec. 2010)
(a) Resident (b) Not-ordinarily resident
(c) Non-resident (d) All of the above. Ans.(d)
58. Income earned and received outside India but later on remitted to India, is taxable in the case
of- (June, 2012) [Assumed here – Later on means in the later years]
(a) All the assessees (b) Resident and ordinarily resident in India
(c) Non-resident (d) None of the above. Ans.(d)

59. Past untaxed profit of the financial year 2006-07 brought to India in 2022-23 is chargeable to tax in
the assessment year 2022-2023 in the hands of — (June 2013)
(a) All the assessees (b) Resident and ordinarily resident in India
(c) Non-resident in India (d) None of the above. Ans.(d)

60. In the case of an individual being not ordinarily resident the following income is chargeable to tax :
(Dec 17)
(A)business income accruing outside India (B)property income accruing outside India
(C)income accruing outside India if it is derived from a business controlled in India
(D) interest income accruing outside India Ans.(c)
61. The following income of Ms. Nargis who is a non-resident shall be included in her total
income : (Jun 18)
• Salary for 2 months received in Delhi Rs. 40,000.
• Interest on Savings Bank Account in Mumbai Rs.2,100.
• Agricultural income in Bangladesh and Invested in shares in Bangladesh.
• Amount brought into India out of past non-taxed profits earned in USA.
A. (i), (iii) and(iv)
B. (i) and(ii)

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.8

C. (i), (ii) and(iv)

D. All the four above Ans. B

62. Sita Raman born in U.K. is a foreign citizen. His father Radha Raman was born in Rajasthan in
1960 and mother Geeta was born in South Africa in 1965. His grandfather was also born in
Rajasthan in 1935. Sita Raman for the first time to see historical places comes to India on 25th
November, 2021 and remained till June, 2022 for 200 days. Residential status for assessment
year 2022-23 of Sita Raman shall be : (Dec 20 –OS)
a. Resident and Ordinarily Resident
b. Not Ordinarily Resident
c. Non-Resident
d. None of the above Ans. C
63. Determine the status of the following :- (JUNE-21-OS)
(i) Mohan Lal Sukhadia University
(ii) (ii) Bhilwara Municipal Corporation.
(A) An association of persons, Artificial juridical person
(B) Artificial juridical person, A local authority
(C) A local authority, Artificial juridical person
(D) An association of persons, A local authority ANS-B

64. Pankaj Kumar, a citizen of India having salaried employment received amount of dividend of
`42,725 from a Canadian Company credited in his bank account in Canada in March 2021. The
amount of dividend of `42,725 was remitted to India during the month of February, 2022. The
amount of dividend so received shall be taxable in A.Y. 2022-23 when the residential status of
Pankaj Kumar is: (DEC-21 NS)
(A) Resident and Ordinarily Resident
(B) Resident but Not-Ordinarily Resident
(C) Non-Resident
(D) Not included in any case ANS = D

65. The residential status of Raghav, born in Delhi and a citizen of India, who was staying in India during
the period September, 2021 to March, 2022 for 125 days, for the A.Y. 2022-23 would be, if Raghav
during the previous year 2021-22 was having income in India of `17,25,000 besides the income of `30
lacs from foreign sources which is not liable to tax in any other Country by reason of his domicile.
(DEC-21 NS)
(A) Resident and ordinarily resident
(B) Resident but not ordinarily resident
(C) Non-resident
(D) Deemed resident ANS = A/B/D

(Note - As per ICSI :- Option D is correct as the assessee will be considered as deemed resident u/s
6(1A) of the Income tax Act, 1961. Further, if we assume that Mr. Raghav was in India before PY
2020-21 and fulfill the conditions, he will be ROR in India , accordingly, Option A will be correct.
However, if we assume that Mr. Raghav was not in India before PY 2020-21 and does not fulfill the
conditions, he will be considered as RNOR in India, accordingly, Option B is correct.)

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.9

RATE/CALCULATION OF TAX & SRUCHARGE

66. A domestic company whose turnover for the previous year 2019-20 Rs. 4.20 crore; for previous
year 2019-20 Rs. 8 crore and for previous year Rs. 2021-22 Rs. 12 crore. Its total income
(computed) for the assessment year 2022-2023 is Rs. 3 crores. The rate of income tax
applicable for such company (without cess) would be : (Dec 17)
(A) 30% (B) 40%
(C) 29% (D) 25% Ans. D
67. The basic exemption limit in case of a non- resident individual being a senior citizen for
assessment year 2022-2023 is: (Jun 18)
(A) Rs.5,00,000 (B) Rs.3,00,000
(C) Rs.2,50,000 (D) Rs.1,80,000 Ans C
68. Total income-tax including Health and education cess payable in case of a resident individual aged 58
years, whose computed total income is 3,40,000 for assessment year 2022-2023 shall be : (Jun 18)
(A) Rs.4,500 (B) Rs.2,000
(C) Rs.2,080 (D) Rs. NIL Ans. D

69. A domestic company has total income of Rs. 120 lakhs. The rate of surcharge is applicable on income-
tax would be - (Dec 17)
(A)2% (B)5%
(C)7% (D)12% Ans C

70. A resident individual can avail the benefit of rebate of Rs. 12,500 or 100% of Income Tax whichever is
less under section 87A of Income Tax Act, 1961 for the assessment year 2021-2022s on fulfilling the
condition that total income does not exceed: (Jun 18)
(A)Rs.2,50,000 (B)Rs.3,50,000
(C)Rs.5,00,000 (D)Rs.3,00,000 Ans C
71. Surcharge on the amount of tax is to be levied at specified percentage when an individual is having
income exceeding specified limits: (Jun 18)
A. 7% having income exceedingRs.1 crore and @ 12% if the income exceeds Rs. 10crores
B. 2% having income exceedingRs.1 crore and @ 12% if the income exceeds Rs. 10crores
C. 15% having income exceeding Rs. 1 crore but does not exceed 2 crores and @ 10% if the
income exceeds Rs.50lakh but does not exceed Rs. 1 crore
D. None of the above Ans C
72. The basic exemption limit in case of a non- resident individual being a senior citizen for assessment
year 2022-2023 is: (Dec 18)
(A) Rs.5,00,000 (B) Rs.3,00,000
(C) Rs.2,50,000 (D) Rs.1,80,000 Ans C
73. Total income-tax including Health and education cess payable in case of a resident individual aged 58
years, whose computed total income is 3,40,000 for assessment year 2022-2023 shall be : (Dec
18)
(A) Rs. 4,500 (B) Rs. 2,000
(C) Rs. 2,080 (D) Rs. Nil Ans. D
74. Which out of the following criteria determines the Place of Effective Management (POEM) in order to
treat a foreign company as resident in India (resident company) during the previous year as per
guidelines issued by CBDT and the provisions contained under the Income Tax Act, 1961 ............... (Dec
18)
A. General Meeting held in India
B. Research and Development work is done in India

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.10

C. Board Meetings are held in India

D. None of the above Ans. C

75. 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)
(a) Rs. 22,880 (b) Nil
(c) Rs. 2,080 (d) Rs. 4,160 Ans.(d)
76. For the previous year 2021-22, taxable income of B Ltd., a domestic company (Turnover in 2019-20
was Rs. 399 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)

77. As per Income Tax Act, 1961 surcharge @ 12% is payable by a domestic company if the total income
exceeds : (Jun 19)
(A) Rs. 10 lakh (B) Rs. 1 crore
(C) Rs. 10 crore (D) Rs. 100 crore. Ans C

78. The total income of Mrs. Rose for the financial year 2021-22 is Rs. 3,40,000. Her tax liability for A.Y.
2021-2022 on the income of Rs. 3,40,000 shall be :(Jun 19)
(A) Rs. 2,080 (B) NIL
(C) Rs. 2,500 (D) Rs. 4,700. Ans. B

79. In the case of a non-resident, which of the following income is not taxable in his hand : (Jun 19)
(A) Interest received from Government of India
(B) Capital gain on transfer of capital assets situated in India
(C) Interest received from a person resident in India on money borrowed and used outside India for
carrying a business
(D) Royalty received from a person resident in India for the patent rights used in India. Ans C
80. In the case of an individual who is not an ordinarily resident in India, the income chargeable to tax in
India out of the following shall be : (Jun 19)
(A) Rental income in foreign country
(B) Interest income in foreign country
(C) Income from outside India from a business controlled in India
(D) All the three above in A, B & C. Ans C
81. Agriculture income from agriculture land located in a foreign country is taxable in the case of :
(Jun 19)
(A) Non-resident (B) Not ordinarily resident
(C) Resident (D) In all cases stated in A, B & C. Ans D

82. 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 - (June 2016)
(a) 2% (b) 7%
(c) 15% (d) 12% Ans.(d)
83. The tax exemption limit for a resident senior citizen is - (Dec. 2014)
(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)

84. The amount of Health and Education cess to be collected along with income-tax for AY 2022-2023
shall be - (June, 2009)

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.11

(a) 1% (b) 2%
(c) 4% (d) 3% Ans.(C)

85. In respect of a resident assessee, who is of the age of 60 years or more at any time during the previous
year but less than 80 years on the last day of Previous Year relevant to Assessment Year 2022-2023:
(June, 2008)
(a) Rebate of tax payable subject to a maximum of Rs. 20,000.(b) Higher basic exemption of. 1,50,000.
(c) Higher basic exemption of. 3,00,000. (d) Higher basic exemption of . 1,35,000.
Ans.(c)
86. Arun, a non-resident of India celebrated his 80th birthday on 10th October 2021. If his total
income for the previous year is Rs. 6,00,000, his income-tax liability for the previous year
2022-23 is - (June 2016)
(a) Rs. 33,800 (b) Rs. 41,600
(c) Rs. 20,800 (d) Nil Ans.(A)
87. An assessee, being an individual resident in India, is entitled to a deduction, from the amount of
income-tax on his total income which is chargeable for an assessment year, of an amount equal to
100% of such income-tax or a lesser amount. The maximum amount of total income qualifying for
such deduction and the maximum amount of deduction so available is - (Dec. 2014)
(a) Rs. 5 lakh and Rs. 12,500 respectively (b) Rs. 3 lakh and Rs. 2,000 respectively
(c) Rs. 3.5 lakh and Rs. 2,500 respectively (d) Rs. 3 lakh and Rs. 5,000 respectively Ans.(a)

88. 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)

89. For a domestic company, the minimum amount of total income liable for surcharge and the rate of
surcharge applicable therein are - (Dec. 2014)
(a) Rs. 10 crore and 7% respectively (b) Rs.1 crore and 7% respectively
(c) Rs. 1 crore and 12% respectively (d) Rs. 10 crore and 12% respectively Ans.(b)

90. 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)
91. For the previous year 2021-22, taxable income of A Ltd., a domestic company (Turnover in FY 2019-
20 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)

92. Employer’s contribution to Recognized Provident Fund (RPF) in excess of 12% of salary income of an
employee shall be treated as (June 19)
(A) Taxable income from salaries (B) Deemed income from salaries
(C) Exempted income (D) Income of other sources. Ans B

93. Xavier, a resident and ordinary resident had the income computed under the salary of
Rs.1,20,000; agriculture income of Rs.25,000 in Indonesia being invested there and income of a business in
Burma controlled from India of Rs.20,000 during the previous year ended on 31.3.2022. He has brought into

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.12

India Rs.45,000 in January, 2022 out of the past untaxed profits earned in UK. His total income for tax purpose
for Asst. Year 2022- 23 shall be: (Dec 20 –NS)
(A) Rs.1,65,000 (B) Rs.2,10,000
(C) Rs.1,40,000 (D) Rs.1,85,000 ANS-A

94. Chirag a resident individual of 67 years of age had total income earned from different sources during the
previous year 2021-22 being computed as per provisions of Income- tax Act, 1961 of Rs.4,75,000. His
tax liability on such income for the Asst. Year 2022- 23 will be --------- but tax payable shall be nil. (Dec
20 –NS)
(A) Rs.11,700 (B)Rs.8,750
(C) Rs.9,100 (D)Rs.11,250 ANS-B

95. BBG Pvt. Ltd is a domestic company engaged in the business of running and maintaining of hotels in
India had total turnover in Asst. Year 2021-22 of Rs.180 crores declared the total taxable income for
the year ended 31.03.2022 of Rs.12.5 crores. Tax payable on the income of Rs.12.5 crores in the Asst.
Year 2022-23 by the company shall be -------------(Dec 20 –NS)
(A) Rs.3.64 Cr. (B)Rs.3.4775 Cr.
(C)Rs.4.368 Cr. (D)Rs.4.173 Cr. ANS-C

96. Section 87A provides a rebate from the tax payable by an assessee, being an individual, whose total
income does not exceed for the assessment year 2022-23. (Dec 20 –OS)
(A)Rs. 2,50,000 ---- (B)Rs. 3,00,000
(C)Rs. 3,50,000 ---- (D)Rs. 5,00,000 Ans. D

97. A resident assessee, who is of the age of 60 years or more but less than 80 years at any time during the
previous year 2021-22 shall not be paying tax on income up to ------------------ but shall be paying
surcharge at the rate of --------------- of income tax where total income exceeds 1 crore. (Dec 20 –OS)
(A) 2,50,000, 10% (B) Rs. 3,00,000, 10%
(C)Rs.2,50,000,15% (D) Rs. 3,00,000, 15% Ans.D

98. The surcharge applicable to a foreign company for Assessment Year 2022-23 : (JUNE-21-OS)
(A) 5%, if the total income exceeds ` 1 crore
(B) 10%, if the total income exceeds ` 1 crore
(C) 2%, if the total income exceeds ` 10 crore
(D) 2%, if the total income exceeds ` 1 crore but does not exceed ` 10 crore ANS-D

99. The rate of Income Tax is mentioned in : (DEC-21 OS)

(A) The Income Tax Act, 1961 only
(B) Income Tax Rules, 1962 only
(C) The First Schedule to the Annual Finance Act
(D) Income Tax Act, 1961 and the First Schedule to the Annual Finance Act. ANS = D

100. Tax planning based on measures which circumvent the law is known as: (DEC-21 OS)
(A) Permissive tax planning (B) Purposive tax planning
(C) Short range tax planning (D) Long range tax planning ANS = B

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101. The amount of income tax shall be increased by a surcharge at the rate of 12% of such
Income tax in the case of a firm having total income exceeding : (DEC-21 OS)
(A) `40 lacs (B) `60 lacs (C) `100 lacs (D) `200 lacs ANS = C

102. Mr. A, an individual derived income of `1,00,000 from illegal activities related to the business
during the financial year 2021-22. He has incurred expenses of `50,000 to earn above income. What is
the tax treatment of the above transaction for the assessment year 2022-23? (DEC-21 OS)
(A) `50,000 chargeable to tax in income from other sources
(B) `50,000 chargeable to tax in income from business and profession
(C) `1,00,000 chargeable to tax in income from business and profession
(D) It is not chargeable to tax as the person who carried on the illegal activities is punishable
under the appropriate law ANS = B/C

(Note - Option B is correct if expenses would be considered as legal expenses. Option C is correct if
expenses would be considered as illegal expenses.)

103. Every year, the residential status of an assessee: (DEC-21 OS)

(A) Will not change
(B) Will certainly change
(C) May change
(D) None of the above ANS = C

104. What percentage of surcharge is applicable to foreign companies whose total income exceeds
`10 crore for the Assessment Year 2022-23? (DEC-21 OS)
(A) @ 2% (B) @ 5% (C) @ 7% (D) @ 12% ANS = B

105. Income tax as per section 4(1) of the Income Tax Act, 1961 shall be charged on the total
income of the previous year of every person. The definition of person given in section 2(31) of the Act
does not include in it : (DEC-21 NS)
(i) Association of person (ii) Association of firms (iii) Body of Individuals (iv) Notified Entities
(A) (i) and (ii)
(B) (ii) and (iv)
(C) (iii) and (iv)
(D) (i) and (ii) ANS = B

106. A company who discontinued a business are statutorily required to intimate to the assessing
officer within ..................... from the discontinuance. (DEC-21 OS)
(A) 15 days (B) 30 days (C) 45 days (D) 60 days ANS = A

Company & Others

107. The Apex Court in the case of CIT v. Saurashtra Cements Ltd. (2010) 233 CTR 209 (Gujarat) has
held that liquidated damages received from the supplier on account of delay in the supply of plant and
machinery shall be treated in the nature of: (Dec 19 –NS)
(a) Capital Receipt (b) Revenue Receipt
(c) Not a receipt but to be reduced from the cost of Plant & Machinery

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.14

(d) Compensation Ans.(a)

108. Which of the following income is not chargeable to tax in the case of Suresh who is resident but
not ordinarily resident ? (Dec 19 –OS)
(A) Income accruing outside India but received in India
(B) Income earned in India
(C) Past untaxed profit
(D) Income from business outside Indiabut controlled from India

109. Central Board of Direct Taxes (CBDT) vide Circular No. 8 of 2017 dated 23rd February, 2017 has
clarified that the Place of Effective Management (POEM) provisions shall not apply to a company having
turnover or gross receipts in a financial year of ____________.
(a) Rs. 30 crore or less (b) Rs. 10 crore or less
(c) Rs. 50 crore or less (d) Rs. 5 crore or less Ans.(c)

110. A company shall be said to be engaged in “active business outside India” (ABOI), if the
passive income is not of its total income and of its total assets are situated in India. (Dec 20 –
NS)
(A) less than 50%; more than 50%
(B) more than 50%; less than 50%
(C) less than 50%; less than 50%
(D) more than 50%; more than 50%
ANS - B

111. Incomes not actually received by the assessee during the relevant assessment year are also
included in the total income as income deemed to have been received. Find which out of the following
are the income deemed to have been received as per Income Tax Act, 1961 during the financial year:
(Dec 20 –NS)
a. Amount of unrecorded investment
b. All sums deducted by way of tax at source
c. Any dividend declared by a company
d. Transferred balance in Recognized PF
i. (ii) & (iii)
ii. (i), (ii) & (iii)
iii. (i) & (iv)
iv. (i), (ii), (iii) & (iv) ANS – D

112. Which of the following person’s income would not be taxed in the previous year itself but would be
taxed in the assessment year only ? (JUNE-21-NS)

(A) Income of non-resident from shipping business in India

(B) Income of person leaving India temporarily for a short stay outside India
(C) Income of bodies formed for short duration
(D) Income of discontinued business ANS-B

113. Dividend income from England company received in England in the year 2019, brought to
India during the previous year 2021-22 is taxable in the A.Y. 2022-23 in case of (JUNE-21-OS)
(A) Resident and ordinarily resident only

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.15

(B) Both resident & ordinarily resident and resident not ordinarily resident
(C) Non-resident
(D) None of the above ANS-D

114. As per section 6(3) of the Act, a company is said to be resident in India (resident company) in
any previous year if (JUNE-21-OS)
(A) It is an Indian Company
(B) Its place of effective management (POEM), in that year, is in India
(C) Either it is an Indian company or the POEM is in India
(D) It is both an Indian company and the POEM is in India ANS-C

Amendment Based MCQ’s

1. 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
Options:
a) i Only
b) i and ii both
c) i, ii, and iii
d) All of the above Answer:
(a)
(2) For the previous year 2021-22, taxable income of A Ltd., a domestic company (Turnover in FY 2019-20
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)
3) a person stayed in India for 181 days and 23 hours in the previous year. Determine his total stay in
accordance with judgement held in Manoj Kumar Reddy V. Income Tax Officer:

a. 181 days
b. 182 days Ans A

4)transaction in respect of any goods, services or property carried out by a non-resident with any person in
India including provision of download of data or software in India would amount to significant economic
presence of a non-resident in India if:

a. aggregate of payments arising from such transaction or transactions during the previous year ≥ 2
Crores
b. aggregate of payments arising from such transaction or transactions during the previous year ≥ 3
lacs
c. aggregate of payments arising from such transaction or transactions during the previous year >2
crores
d. aggregate of payments arising from such transaction or transactions during the previous year > 3
lacs
Ans C
5) which of the following transactions or activities shall constitute significant economic presence of a
non-resident in India

1. the agreement for such transactions or activities is entered in India;

2. the non-resident has a residence or place of business in India

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 Ch 2 – DT Bullet MCQ’s – June 22 & Dec 22 2.16

3. the non-resident renders services outside india

a. 1 and 2
b. 2 and 3
c. 3 and 1
d. All of above Ans A
6) X ltd (carrying business of contractor) sold a flat for 40,00,000 and received Rs 500000 as an advance at
the time of allotment i.e 28 -3-2019 and further consideration of Rs. 3500000 on 4-4-2019 on date when
possession of flat was given
Which of the following is correct in respect to above :

a. Rs. 500000 is accrued in AY 19-20 and Rs. 3500000 is accrued in AY 20-21

b. Rs 4000000 is accrued in AY 19-20
c. Rs 4000000 is accrues in AY 20-21
d. None Ans C

7) Y ltd follows mercantile system of accounting. In that case income from non performing assets to Y ltd. shall
be assessed on:

a. Cash basis
b. Mercantile basis
c. At the option of Y ltd
All of above Ans A

Questions for practice

(1) The income-tax payable by a Mr Bansal Resident Individual (aged 25 years) for A.Y. 2022-23 if his total
income is 4.50.000 will be:?
(a) Nil (b) Rs. 10,400
(c) Rs. 20,800 (d) Rs. 10,000 Ans.(a)
Hint – Rebate upto Rs. 12,500
(2) The income-tax payable by a Non Resident Individual (aged 32 years) for assessment year 2022-23 if his
total income is Rs. 5,00,000 will be :
(a) Rs. 25,750 (b) Rs. 13,000
(c) Rs. 12,875 (d) Nil Ans.(b)

(3) The income-tax payable by a Resident Individual (aged 72 years) for AY 2022-23 if his total income is Rs.
5,10,000 will be :
(a) Rs. 12,480 (b) Rs. 12,360
(c) Rs. 9,880 (d) Nil Ans.(a)

(4) For the previous year 2021-22, taxable income of B Ltd., a domestic company (Turnover in FY 2019-20
was Rs. 452 crores) is Rs. 10,86,920. Its tax liability would be (June, 2015)
(a) Rs. 2,82,600 (b) Rs. 4,47,811
(c)3,32,770 (d)3,39,120 Ans.(d)
(5) If a resident Individual's (41 years of age) wherein his total Income is Rs. 2,00,50,000, the marginal relief
available to the him is -
(a) Rs. 6,00,000 (b) Rs. 5,50,000
(c) Rs. 18,750 (d) Nil Ans.(b)
(6) If a resident Individual's (45 years of age) wherein his total Income is Rs. 5,01,00,000, the tax payable by
him is -
(a) Rs. 1,93,60,250 (b) Rs. 1,92,56,250
(c)1,85,15,625 (d)2,11,47,594 Ans.(a)

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Ch 3 – MCQ’s DT Bullet – Jun 22 & Dec 22 3.1

CHAPTER 3
EXEMPT INCOME

1. Which of the following income is not exempt under section 10 (Dec.- 2011)
(A) Share in total income of firm (b) Income from agriculture in Lahore
(c) Bonus on life insurance (d) Income from mutual funds Ans.(b)

2. A member of Parliament received Rs. 1,50,000 per month as salary and Rs. 4,50,000 as daily allowances
during previous year 2021-22. The taxable amount will be - (Dec. 2016)
(A)Salary Rs. 18,00,000
(B)Income from profession Rs. 22,50,000
(C)Income from other sources Rs. 18,00,000
(D) Nil Ans.(c)

3. Mr. Sankar received Rs. 50,000 as educational scholarship from Nehru Memorial Trust (a charitable trust). The
scholarship is to assist Mr. Sankar for pursuing M.A. (History) at Jawaharlal Nehru University, New Delhi. The
amount of scholarship liable to tax is : (June, 2017)
(a) Rs. 50,000 (b) Rs. 10,000
(c) Rs. 25,000 (d) Nil Ans.(d)

4. Any payment in commutation of pension received from a pension fund setup by the Life Insurance
Corporation of India in terms of section 10(23AAB) of the Income Tax Act, 1961, is : (June 2019)
(a) Liable for tax (b) Fully exempt from tax
(c) Partly liable for tax (d) Taxable @ 10% Ans.(b)

5. Find out from the following income derived from house property which is being exempt from Income Tax(June
2019)
(a) Income from property of a trust for charitable or religious purposes
(b) Income from property of a housing society
(c) Income from property of a trade association
(d) Income from property of a sports association Ans.(b)

6. Raghu traced a missing girl by spending Rs. 20,000. For this, he was awarded with a sum of Rs. 1,20,000. In
this case the award is taxable to the extent of - (June 2016)
(a) Rs. 1,00,000 (b) Rs. 1,20,000
(c) Rs. 1,15,000 (d) Nil. Ans.(a)

7. 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)
8. 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)

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9. A registered political party have income during the year 2021-22 of banks interest Rs. 5,00,000, rent from
letting of building Rs. 3,00,000 and voluntary contribution by cheque Rs. 8,00,000. Total income chargeable
to tax under section 13A of the Income Tax Act, 1961 for the A.Y. 2022-23 of the political party shall be :(June
2019)
(a) Rs. 5,00,000 (b) Rs. 8,00,000
(c) Rs. 16,00,000 (d) NIL Ans.(d)

10. Yadav leased his agricultural land in Meerut to Kailash. There is one dwelling house and storehouse in the
immediate vicinity of the land. He received lease rent for land Rs. 50,000. He also received Rs. 12,000 as rent
for dwelling house occupied by the tenant/cultivator and Rs. 18,000 as rent for the store house. The amount
of income to be treated as agricultural income would be: (Dec 19 –OS)
(A) Rs. 80,000
(B) Rs. 68,000
(C) Rs. 62,000
(D) Rs. 50,000 Ans.(A)
11. Which of the following activity is an agricultural activity? (Dec 19 –OS)
(A) Supply of water for irrigation purposes
(B) Production of salt from seawater
(C) Spontaneous growth of grass
(D) Cultivation of flowers Ans.(D)

12. Grow Green Tea Company having tea gardens in Assam engaged in growing and manufacturing of tea in India.
Total profits of the company from the business of growing/ plantation and manufacturing of tea for the year
ended 31.03.2022 are of Rs.2,50,000. Profits subject to tax as business income under Rule - 8 of the Income-
tax Rules for A.Y. 2022-23 shall be ----------(Dec 20 –NS)
(A) Rs.1,00,000
(B) Rs.1,50,000
(C) Rs.2,50,000
(D) Rs.1,25,000 ANS – A
13. Find out from the following incomes which shall not be taken as forming part of the total income of an assessee
for the purpose of taxation in any assessment year as per provisions of Income Tax Act, 1961: (Dec 20 –NS)
(a) Pension received by an awardee of Mahavir Chakra
(b) Income of a Notified News Agency
(c) Pension received by widow of a Major who died in Balakot attack
(d) Income received on behalf of any Regimental Fund
(A) (i), (ii), (iii) & (iv)
(B) (i), (iii) & (iv)
(C) (ii) & (iv)
(D) (ii) & (iii) ANS – A

14. Ramprasad engaged in turbine manufacturing business has a unit located in SEZ in Jodhpur. The unit in SEZ
was in its third year of operation during the financial year 2021-22. Summarized results of SEZ Unit are :
Domestic turnover Rs.200 lakh

Export turnover Rs.800 lakh

Net profit Rs.180 lakh

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Ch 3 – MCQ’s DT Bullet – Jun 22 & Dec 22 3.3

Income exempt under section 10AA for Asst. Year 2022-23 shall be ----(Dec 20 –NS)
(A) Rs.180 lakh
(B) Rs.90 lakh
(C) Rs.144 lakh
(D) Rs.135 lakh ANS-C

15. Kamal has established in the previous year 2019-20 two industrial undertakings, one in a SEZ and
one in a normal DTA. The summarized results for both the Units for previous year 2021-22 are :
Amount in Lakh (Rs.)

Item SEZ Normal (DTA)

Domestic turnover 100 200
Export turnover 300 0
Gross Profit 75 25
Expenses &
Depreciation 15 15q
Deduction available under section 10AA of the Act to Kamal in Asst. Year 2022-23 shall be of Rs. --
---- (Dec 20 –OS)
(A) 45
(B) 60
(C) 75
(D) 70 ANS-A
16. . Prabhudayal is engaged in the development and sale of computer software application. It has
started a new undertaking in a Special Economic Zone. He furnishes the following information and
request you to calculate the amount of deduction available u/s 10AA : (Assuming assessee has not
opted U/s 115BAC) (JUNE-21-OS)
Particulars ` in Lakh
Total profit 50
Total Turnover 500
Sale proceed by respect of export 300
Tele-com and insurance charges (related to export) 10
Staff cost and travel expenses (related to export) 40

(A) 25 Lakh (B) 30 Lakh (C) 50 Lakh (D) 300 Lakh ANS-B
(note:- Definition of Export turnover excludes Telecom and insurance charges (related to export) while calculating
export turnover and total turnover for claiming exemption u/s 10AA. Reference has been made to circular No.
4/2018 Dated 14.08.2018 to exclude the telecom and insurance charges from total turnover also. However, the
circular has been issued in view of section 10A and not section 10AA. Further, fright, telecommunication and
insurance charges is deducbile only in cases if the assessee (exporter) recover the same from importer in addition to
sale price. Further, the staff cost and travel expenses is not specifically be excluded while calculating export turnover
/ total turnover. Therefore, If the Tele-com and insurance expenses are deducted from total and export turnover, the
correct answer is 50*290/490 = 29.59 lakh. If the same is not deducted, the correct answer is Rs. 50*300/500 = 30
Lakh.)

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Ch 3 – MCQ’s DT Bullet – Jun 22 & Dec 22 3.4

17. Income derived from sale of coffee grown, cured, roasted and grounded in India as per Rule 7B (1A) of Income
Tax Rules shall be treated both as agricultural income and business income in the ratio of
--------------- of such income. (Dec 20 –OS)
(A) 60% & 40%
(B) 65% & 35%
(C) 75% & 25%
(D) 70% & 30% Ans. A

18. Barua & Co. is a partnership firm. The firm earned ` 8,00,000 for the year ended 31st March, 2022 from
sale of coffee grown and manufactured in India. How much of the income of the firm is chargeable to
income tax for the assessment year 2022-23 ? (JUNE-21-NS)
(A) ` 2,80,000
(B) ` 3,20,000
(C) ` 2,00,000
(D) ` 8,00,000 ANS-B/C
(note:- Both option B/C may be considered as correct. Question is mentioned sale of Coffee grown and manufactured.
If manufacturing is only limited to cured then Correct option is C i.e. Rs. 2,00,000. If manufacturing is related to cured,
roasted and grounded, then Option B i.e. Rs. 3,20,000 is correct.)

19. As per Rule 7B(1A) the _______ of income derived from the sale of coffee grown, cured, roasted and grounded
manufactured in India shall be exempt from tax and remaining ______ will be taxed as business income. (JUNE-
21-OS)
(A) 60%; 40%
(B) 75%; 25%
(C) 35%; 65%
(D) 40%; 60% ANS-A
20. Taxable income of Mohan Singh from different sources during the previous year was `10, 41,000.
His agriculture income for the period was `42,000. Find his tax liability for the A.Y. 2022-23.
(Assuming assessee has not opted for section 115BAC) (JUNE-21-OS)
(A) `3,12,300
(B) `1,37,400
(C) `1,42,896
(D) `1,40,710 ANS-D

21. The total Income earned and derived by an agriculturist Vijay Kumar during the P.Y. 2021-22
comprises of :
(i) from growing flowers and creepers (ii) from growing of bamboos
(iii) from dairy farming (iv) from rent received of land used for grazing of
cattle required for agricultural
Vijay Kumar asks you to state which out of the above shall be treated as agricultural income being
exempt from tax as per section 10(2) of the Act. (DEC-21 NS)
(A) (i), (ii) and (iv)
(B) (ii) and (iii)
(C) (i) and (ii)
(D) (i), (ii), (iii) and (iv) ANS = A

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Ch 3 – MCQ’s DT Bullet – Jun 22 & Dec 22 3.5

22. Certain income derived and earned by a Sikkimese individual are being exempt as per section 10(26AAA) of the
Income Tax Act, 1961. Find which out of the following income, would be exempt in the hands of a Sikkimese
individual in A.Y. 2022-23 : (DEC-21 NS)
(A) Income from any source in the State of Sikkim
(B) Income by way of dividend
(C) Income from interest on securities
(D) All of the above ANS = D

23. Simran Products Ltd having registered Office at Mumbai has setup two manufacturing Units, one unit at
Special Economic Zone (SEZ) and other unit at Domestic Tariff Area (DTA). The unit in SEZ was set up
and started manufacturing from 02.01.2013 and unit in DTA from 18.08.2016 Simran Products Ltd
provide that during the previous year ended on 31.03.2022 the total turnover of Unit in SEZ and in DTA
is `17,00,00,000 and `6,50,00,000 respectively. Export sales of unit in SEZ and DTA is `5,00,00,000 and
`2,50,00,000 respectively. Net profit of unit in SEZ and DTA is `1,60,00,000 and `90,00,000 respectively.
Simran Products Ltd, would be eligible to claim deduction under section 10AA for AY. 2022-23 of an
amount of : (DEC-21 NS)
(A) `79,19,048
(B) `38,09,524
(C) `47,05,882
(D) `23,52,942 ANS = D

24. What is the percentage of Income derived from sale of coffee grown and manufactured in India, as per Rule
7B(1) of the Income Tax rules, is not taxable (exempted) from the Income Tax ? (DEC-21 OS)
(A) 30% (B) 40% (C) 60% (D) 75% ANS = D

25. Which section of Income Tax Act, 1961 provides exemption from compensation received on account of any
disaster from Central Government ? (DEC-21 OS)
(A) Section 10(10B) (B) Section 10(10BB) (C) Section 10(10BC) (D) Section 10(10C) ANS = C

26. If you have established a unit in a Special Economic Zones for manufacture or produce articles or things or
provide any service during the previous year 2019- 2020, what is the maximum period for which deduction is
available under section 10AA ? (DEC-21 OS)
(A) 5 Assessment years
(B) 10 Assessment years
(C) 15 Assessment years
(D) 20 Assessment years ANS = C

27. Withdrawal of the accumulated balance lying in a Recognized Provident Fund (RPF) account, is exempt from
tax: (DEC-21 OS)
(A) If the employee renders continuous service with the employer for period of 5 years or more
(B) If the employee renders continuous service with the employer for period of 10 years or more
(C) If the employee renders continuous service with the employer for period of 3 years or more
(D) Withdrawal of the accumulated balance lying in an RPF account is always exempt from tax
ANS = A

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Ch 3 – MCQ’s DT Bullet – Jun 22 & Dec 22 3.6

New Amendment based MCQ’s Added

1. X( an educational society) stated in its MOA ( memorandum of association ) to impart

education along with ancillary objects as its main object but utilises its surplus for expansion of school
building, therefore assessing officer held that X do not exist solely for educational purpose, thus can’t avail
exemption under section 10(23C) :

a. Claim of assessing officer is correct thus can’t avail exemption

b. Claim of assessing officer is not correct but can’t avail exemption
c. Claim of assessing officer is correct but can avail exemption
d. Claim of assessing officer is not correct thus can avail exemption Ans D

2) Maturity amount of Unit linked insurance policy will be taxable if the premium amount exceeds a certain
amount if Unit linked policy is issued ____

a. after the 1st day of February, 2021

b. after the 1st day of march, 2021
c. on or after the 1st day of February, 2021
d. on or after the 1st day of march, 2021 Ans C

3) Maturity amount of Unit linked insurance policy will be taxable If the amount of premium payable for any
of the previous year during the term of such policy exceeds :

a. 2 lacs
b. 2.5 lacs
c. 3 lacs
d. 7.5lacs Ans B

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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.1

CHAPTER 4
SALARY

Basics
1. 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)

2. Pankaj joins service on 1st April, 2017 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, 2022 on the total salary of - (Dec. 2015)
(a) Rs. 1,76,000 (b) Rs. 1,90,000
(c) Rs. 2,24,000 (d) Rs. 1,40,000 Ans.(b)
Answer Hint: Standard deduction is allowed amounting Rs. 50,000 from Gross salary.
3. Anjan joins a service is the grade of Rs. 15,600 - 39,100 plus grade pay of Rs. 6,000 on 01-08-2021.
He also gets dearness allowance @ 107% of salary. His tax liability for assessment year 2022-23
will be - (Dec. 2014)
(a) Rs. 3,520 (b) Rs. 920
(C) Nil (d) Rs. 5,600 Ans.(C)
Note - Gross salary is 3,57,696. Standard deduction is allowed - Rs. 50,000. [Taxable salary Rs. 3,07,700 and tax
liability is nil after tax rebate of Rs. 2,885

4. What will be the amount of gross salary which shall be required to be declared in the return of income to
be filed for the previous year 2021-22 by Harun, who joined services as Manager Accounts on the salary of
Rs. 17,000 p.m. In XYZ Ltd. on 1st April, 2019 in the grade of 15,000 - 2000 -19,000 - 3,000 - 28,000? ((Dec
19 –NS)
(a) Rs. 3,00,000 (b) Rs. 2,28,000
(c) Rs. 2,64,000 (d) Rs. 2,52,000 Ans.(c)
5. Vignesh was appointed in XYZ Ltd on 01.12.2021 for a monthly salary of `80,000. He was not employed
prior to that date during the previous year 2021-22. Compute the salary income chargeable to tax for the
assessment year 2022-23 on the assumption that Vignesh opted for section 115BAC. (JUNE-21-NS)
(A) ` 3,20,000
(B) ` 2,70,000
(C) ` 9,10,000
(D) ` 1,70,000 ANS-A

6. Where there is a decision to increase the D.A. in March, 2022 with retrospective effect from 1st April,
2020, and increased D.A. is received in April, 2022, the increased portion of D.A. is taxable (JUNE-21-OS)
(A) In the Financial year 2020-21
(B) In the Financial year 2021-22
(C) In the Financial year 2022-23
(D) In the respective years to which they relate ANS-C

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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.2

Retirement Benefits

7. The maximum exemption under section 10(10AA) in case of leave encashment is - ( June, 2011)
(a) 13,50,000 (b) Rs. 3,00,000
(c) Rs. 10,00,000 (d) Rs. 5,00,000 Ans.(b)
8. Salary received in lieu of unavailed leave during service shall be - (Dec. 2012)
(a) Fully taxable (b) Fully exempted
(c) Partially taxable (d) None of the above. Ans.(a)
9. An employee of a public limited company received Rs. 3,00,000 as encashment of leave salary at
the time of retirement. He has 18 months' leave to his credit at the time of retirement and his
average salary for last 10 months is Rs. 24,000. The taxable amount of leave encashment would be
- (Dec. 2016)
(a) Rs. 2,40,000 (b) 13,00,000
(c) Rs. 60,000 (d) Nil Ans.(c)

10. Bimal is employed in a factory at a salary of Rs. 2,400 per month. He also gets dearness allowance @ Rs.
600 per month and bonus @ Rs. 200 per month. He retired on 31st December, 2021 and received Rs.
75,000 as gratuity under the Payment of Gratuity Act, 1972 after serving 31 years and 4 months in that
factory. The amount of gratuity exempt under the Income- tax Act, 1961 will be - (Dec. 2014)
(a) Rs. 75,000 (b) Rs. 53,654
(c) Rs. 21,346 (d) Rs. 10,00,000. Ans.(b)

11. 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 Rs. 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)

12. 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)

13. 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)

14. Rohan retires from private service on 30th April, 2021 and his pension has been fixed at Rs. 1,500
p.m. He gets 1/2 of his pension commuted during January, 2022 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)

15. .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
(c) Rs. 10,00,000 (d) The actual amount received as compensation. Ans.(b)
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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.3

16. Mr. Vijay employed in ABC Ltd opted for voluntary retirement and received Rs. 12 lakhs by way
of gratuity. The Payment of Gratuity Act, 1972 is applicable in his case. The monetary limit for
exemption under Section 10(10) is - (Dec 17)
(A) Rs. 3,50,000
(B) Rs. 20,00,000
(C) Rs. 10,00,000
(D) Rs. 3,00,000 Ans.(b)

17. The maximum amount eligible for exemption in respect of encashment of earned leave on
retirement is : (Dec 17)
(A) Rs. 3,00,000
(B) Rs.10,00,000
(C) Rs. 50,000
(D) Rs. 5,00,000 Ans.(a)
18. The maximum amount of gratuity exempt and the maximum amount of leave encashment exempt under
the Act respectively are : (June 17)
(A) Rs. 10,00,000 and Rs.3,00,000
(B) Rs. 20,00,000 and Rs.3,00,000
(C) Rs. 5,00,000 and Rs.2,50,000
(D) None of the above Ans. B
19. .Mohan, retried from Y & Company Ltd. on 31-08-2021 after rendering services for 31 years and 7 months.
He was paid Rs. 11 lakhs as gratuity under the Payment of Gratuity Act, 1972. His last drawn salary was
Rs. 52,000. How much of the amount of gratuity would be exempt ?
(June 19)
(A) Rs. 10,00,000
(B) Rs. 20,00,000
(C) Rs. 9,30,000
(D) Rs. 9,60,000. Ans D

20. John, who recently retired from service of a company on 31st March, 2021 is eligible for a monthly
pension of Rs. 20,000. He has received gratuity on his retirement also. He wants to commute 50% of his
pension for 6.00 lakh. How much amount of this commuted pension shall be subject to tax in A.Y. 2022-23
? (June 19)
(A) Rs. 6,00,000
(B) Rs. 2,00,000
(C) Rs. 3,00,000
(D) Rs. 3,50,000. Ans B
15.The maximum amount of any death-cum-retirement gratuity received by an employee not covered under
the payment of Gratuity Act, 1972 on Superannuation from the employer exempt from tax is of ____________. ((Dec
19 –NS)
(a) Rs. 20 lakh (b) Rs. 10 lakh
(c) Rs. 5 lakh (d) Rs. 15 lakh Ans.(a)
16. Malik retired from Mehbooba Ltd. after rendering service for 27 years and 8months. His 15 days
salary is Rs. 26,000. He received Rs. 11,50,000 as gratuity from the employer. He is covered under the
Payment of Gratuity Act, 1972.The amount of gratuity eligible for exemption under section 10(10)
would be: (Dec 19 –OS) [Good Que]☺
(A) Rs. 10,00,000
(B) Rs. 7,28,000
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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.4

(C) Rs. 11,50,000

(D) Rs. 7,02,000
Ans.(b)
17. No. of days in a month for purposes of computing taxable Gratuity in case the employee is covered under
the Payment of Gratuity Act, 1972, are : (DEC-21 NS)
(A) 25 Days (B) 28 Days (C) 31 Days (D) None of the above ANS = D

18. Under Clause 10AA of Section 10, the maximum amount of leave salary received which is not chargeable
to tax for non- governmental employees is ................... (DEC-21 OS)
(A) `2,00,000 (B) `3,00,000 (C) `5,00,000 (D) `1,00,000 ANS = B

Allowances
19. Murali employed in Megha Ltd., Delhi. He is paid house rent allowance of Rs. 9,000 per month in financial
year 2021-22. 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 if Murali has opted for Section 115BAC (June 2016)
(a) 1108,000 (b) Rs. 1,20,000
(c) Rs. 96,000 (d) Nil Ans.(d)

20. 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)
21. 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. 2014)
(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
orthopedically handicapped for commuting between the place of residence and the place of duty is
exempt upto Rs. 3,200 p.m.)
22. 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, 2 015)
(a) Only HRA (b) Only interest paid
(c) Either interest paid or HRA but not both (d) Both HRA and interest paid. Ans.(d)

23. 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 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)
24. 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
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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.5

(c) Nil (d) Rs. 1,800 per month Ans.(c)

25. The maximum exemption in respect of transport allowance granted to a 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)
26. 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)

27. Mr. Y is a visually impaired person. He is employed in a public sector undertaking since
01.06.2020. He was paid 30,000 for the financial year ended 2021-2022 by way of transport
allowance. How much of transport allowance is exempt from income-tax ? (JUNE-21-NS)
(A) ` 30,000
(B) ` 15,000
(C) ` 21,600
(D) Nil ANS-A

28. Chaturvedi is employed in a company at Delhi. He was paid monthly house rent allowance of `
15,000 during the previous year 2021-22. His Basic pay + DA (eligible for retirement benefits) for
the year ended 31st March, 2022 is ` 12 lakhs. Chaturvedi paid ` 20,000 as rent per month for the
accommodation occupied by him throughout the year. Compute the amount of HRA exempt from
tax (JUNE-21-NS).
(A) ` 1,80,000
(B) ` 1,20,000
(C) ` 2,40,000
(D) ` 60,000 ANS-B
29. Raja is employed in a company at Kanpur. His monthly salary is ` 5,000. He stayed in his father’s
house without paying any rent up to 31st December, 2021 and thereafter he took an
accommodation on monthly rent of ` 2,500. His employer pays him house rent allowance ` 500 per
month. Calculate the amount of house rent allowance exempt from tax for the A.Y. 2022-23 of Raja.
(Assuming assessee has not opted U/s 115BAC). (JUNE-21-OS).
(A) 1,500
(B) 6,000
(C) 7,500
(D) 5,000 ANS-A

30. 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)
31. Manav receives 50,000 as basic salary from the government during the financial year 2021-22 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)

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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.6

(a) Rs. 5,000 (b) Rs. 9,000

(c) Rs. 10,000 (d) None of the above. Ans.(a)
32. Mr. Murthy is employed in ABC Management Institute, Pune. He is eligible for Rs. 24,000 as
allowance for the year towards academic and research work. The amount of academic and
research allowance chargeable to tax is:(Dec 17)
(A)Rs. 10,000
(B)Rs. 24,000
(C)Nil
(D)Rs. 9,000 Ans.(c)

33. Mr. Amit employed in X Co Ltd, Salem received Rs. 10,000 per month as house rent allowance in the year
2021-22. His total salary is Rs.4 lakhs consisting of Basic pay +DA. He paid rent of Rs. 8,000 per month.
How much of HRA is exempt from tax? (Dec 17)
(A) Rs. 40,000
(B) Rs. 56,000
(C) Rs. 1,20,000
(D) Rs. 1,60,000 Ans.(b)
34. Rohan, an employee of State Government received Rs. 1,000 per month as entertainment allowance
during the financial year 2021-22. His salary excluding any allowance, benefit or other perquisite for the
year is Rs. 8,40,000. The amount of entertainment allowance eligible for deduction is (June 19)
(A) Rs. 12,000
(B) 1% of salary of Rs. 8,400
(C) Rs. 5,000
(D) (12000 – 8400) = 3600. Ans C
35. Ms. Bhavani, a blind employee, working in Beta Ltd. was paid transport allowance of Rs. 2,000 per
month from April, 2021 to September, 2021. She was paid Rs. 3,000 p.m. as transport allowance
from October, 2021 to March, 2022. The amount of transport allowance eligible for exemption u/s
10(14) would be: (Dec 19 –OS)
(A) Rs. 7,200
(B) Rs. 9,600
(C) Rs. 38,400
(D) Rs. 30,000 Ans.(d)
36. Charles Fried working in Coal Mines in Dhanbad was receiving ‘underground allowance for working in
uncongenial, unnatural climate in underground Coal Mines’ of an amount of Rs.2,000 per month from
the employer. Amount of Rs.-------- received per month shall be treated as exempt as per section 10(14)
of the Act. (Dec 20 –NS)
(A) 2000
(B) 800
(C) 1000
(D) 1500 ANS-B
37. Paresh, a Company Secretary working in Roly Poly Ltd Chennai besides Salary, HRA, DA and Bonus was
also getting fixed medical allowance of Rs.10,000 from the employer. He spent out of the medical
allowance so received an amount of Rs.6,000 on his treatment, Rs.2,000 on the treatment of his wife and
Rs.1,000 on the treatment of his major son not dependent on him. The amount of medical allowance
received and to be exempt for Asst. Year 2022-23 shall be(Dec 20 –NS)
(A) Rs.8,000
(B) NIL
(C) Rs.9,000
(D) Rs.5,000 ANS- B

38. .Nitesh, working in a factory at Kolkata received during the previous year 2021-22 Rs. 2,00,000 as basic
salary and 50,000 as house rent allowance. Rent paid by him for residence in Kolkata was 50,000. Amount

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of house rent allowance taxable in assessment year 2022-23 is ----------(Dec 20 –OS)

(A) 20,000
(B) 30,000
(C) 50,000
(D) 25,000 Ans. A

39. If an individual opts to be taxed under the new alternative tax regime, which of following
deduction will be allowed : (DEC-21 OS)
(A) Leave Travel Concession
(B) Tax on Employment
(C) HRA
(D) Special Allowances exempt u/s 10(14) ANS = D

Perquisites

RFA
40. Kapil gets salary of Rs. 12,000 p.m. and is provided with rent-free unfurnished accommodation at Pune
(population 20lakh). House is owned by employer, fair rental value of which is Rs. 1,400 p.m. House
was provided with effect from 1st July, 2021. Value of the perquisite of rent-free accommodation will be -
(Dec. 2015)
(a) Rs. 21,600 (b) Rs. 10,800
(c) Rs. 16,200 (d) Rs. 12,600 Ans.(b)
41. 2. Satish is employed as chief engineer in Gama Ltd., Chennai w.e.f. 1st April, 2021 for a consolidated
salary of Rs. 60,000 per month. He is provided with rent-free unfurnished accommodation owned by the
employer from 1st July, 2021 onwards. The value of taxable perquisite is - (June 2016)
(a) Rs. 1,08,000 (b) Rs. 81,000
(c) Rs. 72,000 (d) Rs.54,000 Ans.(b)
42. Mr. Arjun employed in KI (P) Ltd. at Mumbai was provided rent-free accommodation by the employer who
owned such accommodation. The salary income of Mr. Arjun for the purpose of computing the perquisite
value is Rs. 8 lakhs. The perquisite value of rent-free accommodation in the hands of Mr. Arjun is: (June,
2017)
(a) 10% of salary i.e. Rs. 80,000 (b) 7.5% of salary i.e. Rs. 60,000
(c) Nil (d) 15% of salary i.e. Rs. 1,20,000 Ans.(d)

43. State which of the following perquisite is not exempt perquisite for the assessment year 2022-23 ? (JUNE-
21-NS).
(A) Personal expenditure through credit card reimbursed to employee by the employer
(B) Telephone facility in the residence of employee
(C) Subsidised lunch provided to employee by employer on working days
(D) Laptop given to employee for official use (ownership is with employer) ANS-A
44. Ramesh, an employee of Gauri & Co. of Delhi, received the following payments during the previous year
ended 31st March, 2022: 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)

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45. The employee is provided with furniture costing Rs. 1,50,000 along with house w.e.f. 1-7-2021. 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)

46. Balan is employed in SS Ltd at Madurai. He is provided with a rent free accommodation owned by
the employer. The percentage of salary to be adopted for the purpose of valuation of perquisite
would be: (Dec 17)
(A) 15%
(B) 10%
(C) 7.5%
(D) 20% Ans.(b)

Motor Car
47. 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 2021-22. 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)
48. Car having cubic capacity of engine not exceeding 1.6 liters owned or hired by employer provided
to the employee for use wholly for private purposes of which running and maintenance expenses
are being borne/ met by the employee than find out from the following as to value chargeable to
tax in the hands of employee as a perquisite : (Dec 20 –OS)
(A) It is not a perquisite, hence not taxable
(B) Value of perquisite shall be 10% of the actual cost of car or hire charges if car is taken
on hire plus salary of chauffeur if any paid or payable by the employer.
(C) Value of perquisite shall be taken at 600 p.m. and at 900 p.m. if chauffeur is provided.
(D) Value of perquisite shall be the actual expenditure incurred by the employer plus
normal wear and tear @ 10% of the cost of car or hire charges if car is taken on hire.
Ans. B
49. Calculate the value of amenity of motor car provided by the employer in the following case assuming that
the employee is specified one :- Free use of employer’s car having engine of 2.0 litre cubic capacity for
personal as well as official purpose. Expenses relating to personal uses are borne by assessee. The car is
driven by the assessee himself. (Assuming assessee has not opted U/s 115BAC). (JUNE-21-OS).
(A) ` 10,800
(B) ` 7,200
(C) ` 21,600
(D) ` 28,800 ANS-A

50. Harsh (age 45 Years) is appointed as Vice President in High Hope India Ltd, Mumbai on
1/02/2021. He has been provided a car of 2000 cubic capacity (CC) which is exclusively used by
him for private and personal purposes only. The actual cost of the Car is `18,00,000 and the
monthly expenditure of Car of `5,000 is fully met by the employer. Perquisite value of Car subject
to tax in the hands of Harsh in A.Y. 2022-23 would be : (DEC-21 NS)
(A) `28,800
(B) `21,600
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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.9

(C) `60,000
(D) `2,40,000 ANS = D

51. When a car is owned or hired by the employer and its running and maintenance expenses for private use
are met by the employee and if the car is used to be partly for official duty and partly for private purposes
(where the cubic capacity of the engine exceeds 1.6 It) then how much perquisite is chargeable to tax in
the hand of the employee? (DEC-21 OS)

(A) `900 p.m. plus `900 p.m. if chauffeur is also provided.

(B) Value of the perquisite shall be 10% of the actual cost of car or hire charges if car is taken on
hire plus salary of chauffeur, if any, paid or payable by the employer.
(C) Value of perquisite shall be `600 p.m. plus `900 p.m. if chauffeur is provided
(D) Value of perquisite shall be actual expenditure incurred by the employer plus normal wear and
tear @10% or hire charges if car is taken on hire then deduct amount recovered from the
employer. ANS = A

Medical Allowance and Perquisite

52. Himalaya Ltd. reimburses the following expenditure on medical treatment of the son of an employee
Karan. The treatment was done at UK: (June 2005)
(i) Travelling expenses Rs. 1,15,000.
(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)
53. 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)
54. 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)
55. Sridhar employed as general manager in LMN Ltd. received Rs. 30,000 as medical reimbursement from
the employer by producing bills of a Government hospital. The amount of medical reimbursement taxable
as perquisite is: (Dec 19 –OS)
(A) NIL
(B) Rs.30,000
(C) Rs.15,000
(D) Rs.18,000 Ans.(a)

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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.10

56. Leave travel concession is given to Mr. Krishna, his wife and three children (one daughter aged 5
and twin sons aged 2). Cost of air tickets (Economy class) reimbursed by the employer `10,000 for
adults and lump sum of `15,000 for three children for the financial year 2021-22. Mr. Krishna is
eligible for exemption this year to the extent permissible under the Income Tax Act, 1961. You are
required to calculate taxable perquisite for the assessment year 2022-23 : (DEC-21 OS)

(A) Nil (B) `10,000 (C) `15,000 (D) `25,000 ANS = A

Education Perquisite & Loan

57. 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)
58. Mr. Bobby employed in PQR Ltd was permitted to admit his only son in the school run by the employer. No
fee was charged on such education provided to the son of Mr. Bobby. The cost of such education for other
children is Rs. 1,800 per month. The perquisite value of free education in the hands of Mr. Bobby would
be: (Dec 17)
(A) Rs. 21,600
(B) Rs. 12,000
(C) Rs. 36,000
(D) Rs. 9,600 Ans.(a)
59. 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)
(Hint – Amount is upto Rs. 20,000)
60. 4.Ms. Janhvi is provided with an interest free loan by her employer for the purchase of a house. The value
of the perquisites hall be- (June 2016)
(a) Simple interest computed at the rate charged by the Central Government to its employees on 1st
April of the previous year
(b) Simple interest computed at the rate charged by State Bank of India on 1st April of the previous
year
(c) Simple interest computed at the rate charged by RBI
(d) Simple interest computed at the rate National Housing Bank on 1st April (b)
61. The value of the perquisite to be included in the salary of employee if interest free loan is to be given to an
employee (for the purpose of medical treatment of specified diseases) by the employer : (DEC-21 OS)
(A) `10,000 (B) `20,000 (C) Nil (D) `50,000 ANS = C

Gift from Employer

62. 1.During the previous year 2021-22, 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.(b)

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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.11

Use of Movable Asset and Sale of Movable assets

63. 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)

64. A company acquired a motor car for Rs. 8 lakh on 30th June, 2020. It sold the and motor car to its
employee. Jayant, for Rs. 6 lakh on 10th June, 2021. The company claimed depreciation @ 15% for
the year ended 31st March, 2022. 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)

Provident Fund
65. The amount of any contribution to an approved superannuation fund by the employer in respect of the
employee is exempt from tax upto — (June, 2009)
(a) Rs. 1,00,000 (b) Rs. 1,50,000
(c) Rs. 7,50,000 (d) Nil Ans.(c)
66. Mrs. Meena retired from service with Sky Ltd. on 31st January, 2022. She received the following
amounts from unrecognised provident fund: (i) Own contributionRs.1,50,000; (ii) Interest on own
contributionRs.21,000 (iii) Employer's contribution Rs.1,10,000; and (iv) interest on employer's
contributionRs.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)
67. For the year ended 31st March, 2022 Paresh receives a salary of Rs.2,80,000. Paresh's contribution
to employee's recognised provident fund account is Rs.59,000 and matching contribution has been
made by employer. Taxable income of Paresh will be- (Dec. 2014)
(a)Rs.1,96,400 (b)Rs.2,55,400
(c)Rs.2,89,000 (d)Rs.2,06,400 Ans.(a)

68. .When interest on employee’s own contribution from unrecognized provident fund is received, it is : (Dec
17)
(A) taxable as income from other sources
(B) taxable as income from salary
(C) exempt from tax
(D) taxable if the interest exceeds Rs. 10,000 Ans.(a)
69. Employer’s contribution to Recognized Provident Fund (RPF) in excess of 12% of salary income of
an employee shall be treated as: (June 19)
(A) Taxable income from salaries
(B) Deemed income from salaries
(C) Exempted income
(D) Income of other sources. Ans B

Miscellaneous – Few Calculation Based exam questions

70. 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. 6,80,000 (b) Rs. 4,60,000
(c) Rs. 5,70,000 (d) Nil Ans.(b)

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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.12

71. Anil is employed in a company with annual salary of Rs. 8,60,000 (computed). The company paid
income-tax of Rs. 37,000 on his non-monetary perquisites. He paid Rs. 1,20,000 to recognised
provident fund during the year 2021-22. His total income would be - (Dec. 2015)
(a) Rs. 7,77,000 (b) Rs. 7,40,000
(c) Rs. 7,97,000 (d) Rs. 7,60,000 Ans.(b)
72. Allowances and perquisites allowed to an employee for services outside India are tax free in case of - (Dec.
2016)
(a) All types of employees (b) Government employees only
(c) Non-government employees only (d) None of the above Ans.(b)
73. Total income of Nand Kishore under the Head 'Salary' for the financial year 2021-22 of whose
basic salary and DA per month was of Rs. 40,000 and Rs. 3,000 respectively and who was also paid
leave salary of Rs. 6,000 and Rs. 1,000 of professional tax by the employer shall be ((Dec 19 –NS) .
(a) Rs. 4,72,000 (b) Rs. 4,76,000
(c) Rs. 5,23,000 (d) Rs. 5,16,000 Ans.(a)
74. A Central Government Officer received during the year 2021-22 salary excluding all allowances of Rs.
9,00,000 and amount of entertainment allowance of Rs. 12,000 @ Rs. 1,000 p.m. The maximum amount of
entertainment allowance so received by him being exempt under section 16(ii) of the Act is ____________. (Dec
19 –NS)
(a) 1/5th of salary (b) Rs. 1,000 p.m.
(c) Rs. 5,000 (d) Rs. 10,000 Ans.(c)
75. Philip who retired from Central Government service on 28-2-2021, received monthly pension of
Rs.42,000 upto 30-9-2021 and Rs.44,100 thereafter. His income from salary after standard
deduction would be: (Dec 19 –OS)
(A) Rs. 5,16,600

(B) Rs. 5,01,600

(C) Rs. 4,76,600
(D) Rs. 4,66,600 Ans.(d)

76. Ramavtar, an employee of GG Carriers provides the following details of his income received
from the employer for the year ended on 31.3.2022 :
Salary Rs. 1,20,000
DA Rs. 24,000
Leave Salary Rs. 5,000
Bonus Rs. 6,000
Professional
Tax paid by employer Rs. 1,000
Free Lunch Rs. 3,000
He has contributed Rs.9,000 in statutory PF and had also paid Rs.1,000 towards LIP
premium. His total income for Asst. Year 2022-23 shall be ----(Dec 20 –NS)
(A) Rs. 95,000
(B) Rs. 1,08,000
(C) Rs. 1,05,000
(D) Rs. 98,000
ANS - A
77. Subodh Kumar, IAS, a Central Government employee received total salary of Rs. 18,00,000 and Rs. 10,000
as entertainment allowance during the previous year 2021-22. Actual expenditure incurred by him on

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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.13

entertainment for the official purposes was Rs. 9,500. The deduction available for entertainment allowance
received or for actual amount spent on entertainment for the assessment year 2022-23 is -------------(Dec
20 –OS)
(A) 4,750
(B) 9,500
(C) 10,000
(D) 5,000 Ans. D

78. Manoj a salaried employee, provides the following information regarding his income for the
period 01.04.2021 to 31.03.2022 where he was employed by Ram Company up to 31st May, 2021
and by Shyam Company from 1st June, 2021. All the figures given in the table below are on per
month basis paid by the companies.
Particulars Ram Company Shyam Company
• Basic Salary 42,000.00 56,000.00
• D.A. (entire amount is part of 4000 -
salary for calculating pension)
• Commission on sales 7,500.00 8,000
• HRA (Rent paid for flat in Jaipur `8,000) - 9,000
Compute the amount of income of Manoj chargeable to tax for the A.Y. 2022-23 under the
head of salary. (DEC-21 NS)
(A) `8,06,200
(B) `8,13,000
(C) `7,97,000
(D) `7,63,000 ANS = D

Hint

Ram Shyam
Basic 84000 560000
DA 8000 -
Commission 15000 80000
HRA - 66000
Total 107000 706000 813000
Standard
Deduction -50,000
763000
79. Mr. Prakash, a non-Governmental employee has the following salary detail for the assessment year
2022-23 : Basic Salary `60,000 p.a., D.A. `24,000 p.a., Entertainment Allowance 3,600 p.a., LIC
Premium Paid by employer `3,600, Income Tax paid by employee ` 2,000, and Professional tax paid
by employer on behalf of employee `2,000. Find his taxable salary for the assessment year 2022-
23. (DEC-21 OS)
(A) `50,600 (B) `41,200 (C) `43,200 (D) `93,200 ANS = B/D
(NOTE Option B is correct if Mr. Prkash not opted for Section 115BAC of the Income tax Act, 1961. Option D
is correct if Mr. Prkash opted for Section 115BAC of the Income tax Act, 1961)

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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.14

New Amendment based MCQ’s Added

1) Salaries received by judges would be taxable under:
a. Salaries
b. PGBP
c. IOS
d. Not taxable Ans A

2)Income received by employees in the form of tips is taxable under which head:

a. Salaries
b. PGBP
c. IOS
d. Exempt Ans C

3) Mr. X who is director of the company received voluntary retirement compensation of Rs. 7,00,000 after
30 years 4 months of service. He still has 6 years of service left. At the time of voluntary retirement, he
was drawing basic salary Rs. 20,000 p.m.; Dearness allowance (which forms part of pay) Rs. 5,000 p.m.
Compute his taxable voluntary retirement compensation.

a. 200000
b. 500000
c. 700000
d. Zero Ans C

4) lump sum payment made to deputed employee was by way of conferring additional advantage in order
to make them to meet high cost towards accommodation and other personal expenditure would be treated
as:

a. Allowance
b. Profits in lieu of salary
c. Perquisites
d. None Ans C

5) cash equivalent of LTC, comprising Leave Encashment and LTC fare of the entitled LTC may be paid
by way of reimbursement provided :

a. The employee spends an amount equal to the value of leave encashment and an amount 3 times
of the cash equivalent of deemed fare on purchase of such items / availing of such services which carry a
GST rate of not less than 6%
b. The employee spends an amount equal to the value of leave encashment and an amount 2 times
of the cash equivalent of deemed fare on purchase of such items / availing of such services which carry a
GST rate of not less than 11%
c. The employee spends an amount equal to the value of leave encashment and an amount 3 times
of the cash equivalent of deemed fare on purchase of such items / availing of such services which carry a
GST rate of not less than 12%
d. The employee spends an amount equal to the value of leave encashment and an amount 6 times
of the cash equivalent of deemed fare on purchase of such items / availing of such services which carry a
GST rate of not less than 12%
Ans C
6)what will be the maximum limit of Deemed LTC fare per person (Round Trip) in case of employees of
public sector enterprises:

a. 6000
b. 20000
c. 36000
d. Any of above Ans C

7) what will be the maximum limit of Deemed LTC fare per person (Round Trip) in case of employees of
Central Government who are entitled to economy class of airfare:
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 Ch 4 – DT Bullet MCQ’s – June 22 & Dec 22 4.15

a. 6000
b. 20000
c. 36000
d. Any of above Ans B

8) in case of LTC cash voucher scheme Maximum amount exempt shall be lower of –

a. Rs. 36,000 per person Or 1/3rd of the specified expenditure

b. Rs. 20,000 per person Or 1/3rd of the specified expenditure
c. Rs. 6,000 per person Or 1/3rd of the specified expenditure
d. Any of above Ans A

9) John is employed in a public Company and is paid a sum of ₹ 6,00,000 on Voluntary Retirement from service. The
normal age of retirement in the Company is 60 and John, who was 45 at the time of retirement, has completed 20
years of service. His monthly salary at the time of retirement was as follows —
Basic Pay ₹ 10,000 House Rent Allowance ₹ 3,000
Dearness Allowance (50% includible for Pension) ₹ 6,000 Conveyance Allowance ₹ 800
What is the amount of compensation taxable under the Act?

(a) Rs. 1,00,000 (b) Rs. 3,00,000

(c) Rs. 2,00,000 (d) 4,00,000 Ans.(a)

10) To avail the benefit of LTC Voucher the employee needs to fulfil the following conditions –

(a) an amount equal to the value of leave encashment and;

(b) an amount 3 times of the cash equivalent of deemed fare, as given above on purchase of such items / availing of
such services
(c)which carry a GST rate of not less than 12%
(d)All of the above Ans.(d)
11) LTC Voucher maximum limit for other than Central Government employees is -
a. 6000
b. 20000
c. 36000
d. Any of above Ans C

Illustrations or Questions added in Module

1. Illustration added:

A pensioner from Maharashtra State government retired in December 2015 receiving an amount of Rs.
10,00,000 as gratuity. But thereafter, he received a further amount of Rs. 1.20 lakhs in April 2018 consequent
on revision of pay. At the time of his retirement the exemption limit was Rs. 10 lakh.
Is he eligible for the higher exemption limit under Section 10(10) available at the time of receipt. The higher
limit of Rs. 20 lakhs is raisedby dated 29.03.2018 S.O. 1420 (E) Notification.
Solution:
No, Higher limit won’t be available
Hence the limit on the date of retirement time would alone have to be considered, so exemption with reference to
the enhanced limit will not apply in this case.

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 Ch 5 – DT Bullet MCQ’s – Jun 22 & Dec 22 5.1

CHAPTER 5
House Property

Basics
1. Narendra engaged in retail trade let out his fully furnished house with lift, air conditioners, fridge,
security staff and gardener at a rent of Rs. 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: (June 2019)
(a) Other Sources (b) Business Income
(c) Income from House Property (d)CapitalGains Ans.(a)

2. 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
(c) Rs. 25,000 (d)Noneoftheabove. Ans.(a)

3. 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 rent: Rs. 36,000
(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)
4. Ramesh let-out his house on 1st April, 2021 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 2022-23
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)
5. 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 Ans.(c)

6. The construction of a house was completed on 31st January, 2022. The owner of the house took a
loan of Rs. 20,00,000 @ 6% p.a. on 1st May, 2021. In this case the deduction allowable for the
previous year 2021-22 towards interest on borrowings is (June 2016)
(a) Rs. 22,000 (b) Rs. 24,000
(c) Rs. 1,10,000 (d) None of the above Ans.(c)

7. Sandeep purchased a house for his residential purpose after taking a loan in January, 2020.
During the previous year 2021-22, he paid interest on loan Rs. 2,17,000. While computing
income from house property, the deduction is allowable to the extent of if the person has
opted for section 115BAC — (Dec. 2009)
(a) Rs. 30,000 (b) Nil
(c) Rs. 2,17,000 (d) Rs. 2,00,000 Ans.(b)

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 Ch 5 – DT Bullet MCQ’s – Jun 22 & Dec 22 5.2

8. Mr. Ahmed acquired two properties in April, 2021 for self-residential use. The loan interest
payable to State Bank of India for the financial year 2021-22 amounts to Rs. 2,10,000. The
amount eligible for deduction u/ s 24is :(June, 2017)
(a) Rs. 30,000 (b) Rs. 2,00,000
(c) Rs. 2,10,000 (d) Rs. 1,50,000 Ans.(b)

9. A borrowed Rs. 5,00,000 @ 12% p.a. On 1-4-2017 for construction of house property which
was completed on 15-3-2021. The amount is still unpaid. The deduction of interest for
Previous Year 2021-22 shall be : (June, 2017)
(a) Rs. 60,000 (b) Rs. 96,000
(c) Rs. 1,80,000 (d)Rs.2,40,000 Ans.(b)

10. When a house property is let-out throughout the year for a monthly rent of Rs. 22,000 and
municipal tax paid for current year is Rs. 24,000 and for the earlier year paid now is Rs. 16,000, the
income from house property would be - (Dec. 2015)
(a) Rs. 1,68,000 (b) Rs. 1,56,800
(c) Rs. 1,84,800 (d)Rs.2,24,000 Ans.(b)

11. Ms. Padmaja let out a property for Rs. 20,000 per month during the year 2021-22. 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)

12. 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 2021-22 will be - (Dec. 2014)
(a) Rs. 33,600 (b) Rs. 31,080
(c) Rs. 28,560 (d)Rs.62,160. Ans.(b)

13. 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)

14. Composite rent of let-out house property is taxable as - (Dec. 2014)

(a) Profits and gains from business or profession
(b) Capital Gains
(c) Income from house property
(d) Either (a) or (c) above depending upon certain conditions. Ans.(d)

15. Sejal 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)

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 Ch 5 – DT Bullet MCQ’s – Jun 22 & Dec 22 5.3

16. The municipal value of a property to Rs. 2,10,000; fair rant is Rs. 1,90,000; standard rant is
11,80,000 and the actual rent is Rs. 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. 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)

18. Rajendra a non-resident Indian in the previous year 2021-22 was in receipt of rent of
house property located in Dubai of Rs. 27,50,000. The amount of rent was transferred and
credited in the bank account of Rajendra maintained with SBI. Vadodara by the tenant
quarterly. The Annual Letting Value (ALV) of the house located in Dubai subject to tax
under the head Income from house property in A.Y. 2022-23 shall be . ((Dec 19 –
NS)
(a) Rs. 16,50,000
(b) Rs. 19,25,000
(c) Rs. 27,50,000
(d) Not taxable as property is in Dubai and he is non-resident

Note: Since the same is received in India. Ans.(b)

19. 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 2021-22 of which; ((Dec 19 –NS)
(i) Municipal value is Rs. 3,50,000
(ii) Actual (De Facto) Rent is Rs. 3,20,000
(iii) Fair Rent is Rs. 3,00,000
(iv) Standard Rent is Rs. 3,60,000
(a) Rs. 3,60,000 (b) Rs. 3,20,000
(c) Rs. 3,50,000 (d) Rs. 3,00,000 Ans.(c)

20. Santhnam purchased in October, 2020 with the financial assistance by way of 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, 2022 paid by him was of Rs.
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 for A.Y. 2022-23. ((Dec
19 –NS)
(a) Rs. 30,000 (b) Rs. 2,18,780
(c) Rs. 1,50,000 (d)Rs.2,00,000 Ans.(d)

21. House owned by Suresh was sold on 1st January, 2022 and till the date of sale,
the house was on rent of Rs. 7,000 p.m. The other relevant details of this house are
(i) municipal value Rs. 72,000 p.a. (ii) fair rent Rs. 66,000 p.a. And standard rent Rs.
60,000 p.a. The income chargeable under the head House Property in A.Y. 2022-23
of this house shall be : ((Dec 19 –NS)
(a) Rs. 63,000 (b) Rs. 50,400
(c) Rs. 46,200 (d)Rs. 44,100 Ans.(d)

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 Ch 5 – DT Bullet MCQ’s – Jun 22 & Dec 22 5.4
22. Goel completed the construction of a residential house properties on 30-6-2021.
He already owns two properties in the same town which is self-occupied. The new
construction is also self-occupied by him. He wants to treat the new construction as
deemed let out property. The relevant details of the new property are : (i) municipal
value Rs. 3,00,000; (ii) fair rent Rs. 3,60,000; and (iii) standard rent Rs. 2,80,000. The
gross annual value of the property would be : (Dec 19 –OS)
(A) Rs. 2,80,000
(B) Rs. 2,10,000
(C) Rs. 3,00,000
(D) Rs. 3,60,000 Ans – A

23. Pushpal, a non-resident Indian in the previous year 2021-22 was in receipt of rent of the house
property located in Singapore of Rs.30,00,000. The amount of rent was transferred and
credited in the bank account of Pushpal, maintained with SBI, New Delhi by the tenant quarterly.
However, the rent for the last quarter of Rs.7,50,000 was not transferred by the tenant in the
account of Pushpal till 31-03-2022. The Rental Income of the house located in Singapore which
will be subject to tax in India under the head Income from house property in A.Y. 2022-23
shall be-------------(Dec 20 –NS)
(A)Rs. 22,50,000
(B)Rs. 21,00,000
(C) Rs. 15,75,000
(D)Not taxable as property is in Singapore and he is non-resident ANS- C

24. Find out with the help of given details/ information, the gross annual value (GAV) of a house owned by
Ramnath covered by Rent Control Act remained let out during the year 01-04-2021 to 01-04-2022 :
a. Municipal value Rs.7,00,000
b. Actual (de facto) Rent Rs.6,48,000
c. Fair Rent Rs.6,60,000, and
d. Standard Rent Rs.7,20,000 (Dec 20 –NS)
(A) 7,20,000
(B) 6,48,000
(C) 7,00,000
(D) 6,60,000 ANS-C
25. Sonu had let out a house located at Jaipur to Monu since 1.4.2020 on a rent of Rs. 3,000 p.m. Monu
paid the rent regularly up to 30.11.20 and vacated the house on 31.3.2021 when it was sold by
Sonu to Ramu. Sonu after great persuasion could recover an amount of Rs.9,000 from Monu in July,
2021 The Income chargeable under House Property in A.Y. 2022-23 shall be -----(Dec 20 –NS)
(A) Rs.9,000
(B) Rs.6,300
(C) NIL
(D) Rs.6,750 ANS-B
26. Supreme Court in case of Chennai Properties and Investments Ltd vs. CIT (2015) has held that
income from letting of properties by a company whose main object as per the Memorandum of
Association (MOA) is to acquire and let out properties be taxable as : (Dec 20 –NS)
(A) Income under "House Property"
(B) Income under "Profits & Gains of business or profession"
(C) Income under "Other Sources"
(D) Income under "Capital Gains" ANS-B

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 Ch 5 – DT Bullet MCQ’s – Jun 22 & Dec 22 5.5

27. House property owned by Pankaj located at Ajmer having municipal valuation : 1,55,000,
fair rent: Rs. 1,40,000, standard rent: Rs. 1,24,000 was let out for the period 1st April,
2021 to 15th November, 2021 on a rent of Rs. 8,000 per month and from 16th Nov. 2021
to 31st January 2022 on a rent of Rs. 13,000 per month. Pankaj transferred the property
to Shyam on 1st February, 2022. The gross annual value (GAV)of the house property for
assessment year 2022-23 shall be taken at ----------(Dec 20 –OS)
(A) Rs. 1,03,333
(B) Rs. 92,500
(C) Rs. 1,24,000
(D) Rs. 1,30,000 Ans.A

28. Chandra owns a house property constructed with the borrowed capital on
31.03.2010 and since then used by him for own residential purposes. Municipal
value of the property is Rs. 1,00,000 whereas fair rent is Rs. 80,000 and standard
rent is Rs. 90,000. Expenses incurred by Chandra during the previous year 2021-22
for Municipal tax: Rs. 15,000, insurance : Rs. 2,000, interest on capital borrowed to
construct the property Rs. 70,000. Income/loss chargeable under the head house
property for the assessment year 2022-23 shall be-----------(Dec 20 –OS)
(A) (70,000)
(B) (85,000)
(C) (30,000)
(D) (2,00,000) Ans.A/C as per ICSI both are correct

29. The Gross Annual Value (GAV) as per section 23(1) of the Act of a house property owned by
Suresh covered by Rent Control Act, remained let out during the previous year 2021-22 for which (i)
Municipal Valuation is Rs. 3,00,000; (ii) Actual (de facto) Rent is Rs. 3,20,000; (iii) Fair rent is
Rs. 3,60,000 and (iv) Standard rent is Rs. 4,00,000 shall be taken at -------(Dec 20 –OS)
(A) Rs. 3,60,000
(B) Rs. 4,00,000
(C) Rs. 3,20,000
(D) Rs. 3,00,000 Ans.A

30. Sreelekha let out a property on rent from 01.08.2021 which was self-occupied previously for
residential purposes. The actual rent was ` 30,000 per month. The municipal value was `35,000
per month. The fair rent is ` 40,000 per month. Standard rent under the Rent Control Act is `
32,000 per month. What is her income under the head ‘‘house property’’ for the assessment
year 2022-23. (JUNE-21-NS).
(A) ` 2,24,000
(B) ` 2,68,800
(C) ` 1,96,000
(D) ` 1,79,200 ANS-B

31. Rajsekar owned three identical properties. He let out one property for a monthly rent of ` 50,000
during the financial year 2021-22. The other two properties are self-occupied by him. Compute his
income under the head house property for the assessment year 2022- 23. (JUNE-21-NS).
(A) ` 8,40,000
(B) ` 12,60,000
(C) ` 4,20,000
(D) ` 3,40,000 ANS-C

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 Ch 5 – DT Bullet MCQ’s – Jun 22 & Dec 22 5.6
32. Dr. Kumar gifted a property fetching monthly rental income of `1,00,000 to his son’s wife Divya
on 31.05.2021 by executing a gift settlement deed. She paid municipal tax of ` 30,000 on
10.12.2021. Based on court decree arrear rent of ` 4 lakhs was paid by ex-tenant to present
owner Divya on 01.03.2022. How much of income of Divya would be clubbed in the hands of Dr.
Kumar ? (JUNE-21-NS).
(A) ` 8.19 lakhs
(B) ` 10.99 lakhs
(C) ` 10.79 lakhs
(D) ` 9.59 lakhs ANS-D

33. Nitesh has let out his one of the house since 1st April, 2003 at a rent of `10,000 per month. On
1st May, 2021 he received `39,000 as arrear of rent because rent was increased by `3,000 per
month with effect from 1st April, 2020 as per decision of the Court. At the same time he
recovered `40,000 out of unrealized rent from his earlier tenant. Find taxable amount out of
this arrear received and recovery of unrealized rent for the A.Y. 2022-23. (Assuming assessee
has not opted U/s 115BAC). (JUNE-21-OS) – Good Que
(A) ` 53,200
(B) ` 76,000
(C) ` 79,000
(D) ` 55,300 ANS-A

34. If the assessee has more than two houses that are self-occupied, the choice of houses that should be
construed as self-occupied and for the others to be considered as deemed to be let out, lies with
(JUNE-21-OS):
(A) Assessing officer
(B) Assessee
(C) Either (A) or (B)
(D) Relevant Jurisdiction ITO where the house was situated ANS-B
35. Siddharth has 3 houses in different buildings in Mumbai kept and used for self occupation. Treatment
to be given in respect of income under the head house property relating to these 3 houses for A.Y.
2022-23 shall be : (DEC-21 NS)
(A) One house, at the option of Siddharth, will be treated as self-occupied.The other 2 houses will
be deemed to be let out.
(B) One house at the option of A.O. will be treated as self-occupied. The other 2 houses will be
deemed to be let out.
(C) Two houses, at the option of Siddharth, will be treated as self-occupied. The other house will
be deemed to be let out.
(D) Two houses at the option of A.O., would be considered as self-occupied. The other house will
be deemed to be let out. ANS = C

36. Rajneesh and Amarjeet are the co-owners of a house located at Delhi having 50% share each, which is
being used by both of them as self-occupied property. The house was purchased in the year 2005 by
taking the loan from SBI. The interest paid by each co-owner during the previous year 2021 - 22 on
loan (taken for acquisition of property during the year 2005) is `3,05,000. The amount of allowable
deduction in respect of interest paid to each of the co-owner when both of them do not opt for section
115BAC in A.Y. 2022-23 would be: DEC-21 NS)
(A) `3,05,000
(B) `1,52,500
(C) `2,00,000
(D) `30,000 ANS = C

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 Ch 5 – DT Bullet MCQ’s – Jun 22 & Dec 22 5.7
37. A House owned by Meghna and located at Jaipur was on rent till it was sold out in the month of March,
2021. She received an amount of `45,000 as arrears of rent from the tenant in the month of February,
2021. The taxable amount of arrears of rent so received by her in A.Y. 2022-23 would be : (DEC-21 NS)
(A) `31,500
(B) `22,500
(C) `45,000
(D) NIL ANS = A

38. Mr. Kumar owns a commercial building in Rajasthan, which is let out on 1st April, 2021 at a
monthly rent of `30,000. He paid for municipal taxes of `15,000 and `20,000 for the financial
year 2020-21 and 2021-22 on 31st March, 2022 and 1st May 2022 respectively. What is the net
income chargeable under income from house property for assessment year 2022-23? (DEC-21
OS)
(A) `2, 41,500 (B) `2, 27,500 (C) `2,38,000 (D) `2,52,000 ANS = A

New Amendment based MCQ’s Added

1) Under Principal CIT v. Karia Can Co. Ltd. it was held that where tenant gave security deposit to
landlord and interest earned on such deposit is shown as income under IOS by landlord in that
case:

a. Now the interest amount should not be taken into account to compute annual value of house
b. Now the interest amount must be taken into account to compute annual value of house
c. Either a or b depending on the clause added in rent agreement
d. None Ans A

2) Following income is exempt under the head house property –

a. Rent from Farm buildings around Agricultural Land

b. Income from HP of Political Parties
c. annual value of one palace possessed by an ex-ruler of Indian states where other places comes under taxation
d. All of the above
Ans D

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.1

CHAPTER 6
PGBP

Basics

1. Under the head ’profits and gains of business or profession’, the method of accounting that should be
followed by an assessee is- (June 2016)
(a) Cash system only (b) Mercantile system only
(c) Hybrid system only (d) Cash system or mercantile system only
Ans.(d)

2. Under the Income-tax Act, 1961, 'notional profit' from speculative business is - (June, 2015)
a. Taxable under the head 'income from profits
b. Taxable under the head 'income from other and gains of business and profession' sources'
c. Taxable either as income from other sources or as income from profits and gains of business
and profession
(d) Not taxable, Ans.(d)

3. .HSK, an LLP had taken keyman insurance policy on the life of its managing partner. The policy
got matured on 13th September, 2021 and an amount of Rs. 75 lakh was paid by the insurers to
the managing partner. The amount so received on maturity of the policy by the managing
partner is - (Dec. 2015)
(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)

4. HSP, a LLP had taken Key Man insurance policy on the life of its Managing Partner. The policy got
matured on 13th September, 2021 and amount of Rs. 75 lakh was paid by the insurers to the Managing
Partner. The amount so received on maturity of the policy by the managing partner: (June 18)
(A)is exempt in full u/s10(10D)
(B)50% of Rs. 75 lakh is exempt
(C)Rs. 75 lakh is taxable
(D)Rs. 25 lakh is exempt and balance is taxable Ans. C
5. 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)
(a) Tax-free under section 10(10D) (b) Fully taxable as income
(c) Rs. 2,70,000 is taxable (d) Rs. 2,30,000 is taxable Ans.(b)

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.2
6. DPM Ltd constructed staff quarters and let out the same during the financial year 2021-22. Its
rent received Rs. 7,50,000 by way of rent from employees during the year. The rental receipt is
taxable as :) (Dec 17)
(A) income from house property
(B) income from business
(C) perquisite in the hands of employees
(D) income from ‘other sources’ `Ans. B

7. When Mr. X retired from X & Co a partnership firm on 01-01-2022, he was paid Rs. 5 lakhs for
not doing a competing business for the next 5 years. The amount so received chargeable to
tax in the hands of Mr. X is : (Dec 17)
(A) Nil
(B) Rs. 5,00,000
(C) Rs. 1,00,000
(D) Rs. 2,50,000 Ans. B

8. Amount of Rs. 5,00,000 received by Ram & Co., as a compensation for premature termination of contract
of agency in the month of April 2021 is to be treated as: (June 18)
(A) Income from other sources
(B) Taxable under section28(ii)(c)
(C) Revenue receipt which is exempt
(D) Capital receipt which is not chargeable to tax Ans.B

9. Which out of the following elements you find are sufficient for bringing to tax as income from
business or profession: (June 18)
a. Ownership of the business is not necessary
b. Business must be legal
c. Income may be earned in cash or kind
d. Profit motive is the sole consideration
i. (i), (ii) and(iv)x
ii. All the four
iii. (i) and (iii)
iv. (ii), (iii) and (iv) Ans iii

10. Priti (age 61) a Chartered Accountant retired from SCG & Co. (a partnership firm) on 31-3-2022.
As per the deed of retirement, she is eligible for a sum of Rs. 20,000 every month in
consideration for not practicing the profession of chartered accountancy for the next 5 years. The
receipts is : (Dec 19 –OS)
(A) Taxable under the head ‘other sources’
(B) Taxable under the head ‘profits and gains of business or profession’
(C) Not taxable receipt
(D) Taxable as capital gain Ans – B

11. Which out of the following elements shall be considered for bringing to tax the income under the head
Income from Business & Profession ? (Dec 20 –NS)
(i) Ownership of the business is not necessary
(ii) Business must be legal
(iii) Income may be earned in cash or kind
(iv) Profit motive is not the sole consideration
(A) (iii) & (iv)
(B) (i), (iii) & (iv)
(C) (ii) & (iii)
(D) All the above four ANS-B

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.3

12. Mahadev (age 66) discontinued his wholesale trading business w.e.f. 10.09.2020. He wrote off a sum
of `2,70,000 due from Sankar in the previous year 2018-19 which was allowed as deduction in the tax
assessment. Now in March, 2022 Mahadev recovered ` 90,000 as final and full settlement from Sankar.
What is the tax consequence of the receipt of amount by Mahadev for the assessment year 2022-23 ?
(JUNE-21-NS)
(A) No tax implication
(B) ` 90,000 taxable as income from business
(C) ` 90,000 taxable as income from other sources
(D) ` 2,70,000 written off now chargeable to tax as income from business ANS-B

13. Which out of the following cases are capital receipt/expense ? (JUNE-21-OS)
(A) Sales-tax collected from the buyer of goods.
(B) A company instead of receiving royalty year by year, received it in advance in lump sum
(C) An employee director of a company was paid `1,50,000 as a lump sum consideration for not
resigning from the directorship.
(D) Payment of `50,000 as compensation for cancellation of a contract for the purchase of
machinery with a view to avoid an unnecessary expenditure. ANS-D

ICDS
14. Income Computation and Disclosure Standards (ICDS) are applicable for transactions under the
head of income : (Dec 19 –OS)
(A) Salaries
(B) Income from house property
(C) Profits and gains of business or profession
(D) Capital gains Ans – C

15. . As per ICDS, the unlisted securities shall be valued at : (Dec 19 –OS)
(A) Initial cost
(B) Market price as on 31st March of the previous year
(C) Cost or market price, whichever is less
(D) Average of cost plus market price
Ans – A
16. . The Income Computation and Disclosure Standards (ICDS) applicable from Asst. Year 2017-18
for the purpose of computation of Income under the head "Profits and gains of business or
Profession" and "Income from other Sources" shall not apply for computation of_______but shall
apply for computation of -----------(Dec 20 –NS)
(A) AMT; MAT
(B) Presumptive Income; MAT
(C) MAT; AMT
(D) AMT; Presumptive Income ANS-C

17. Amount of salary paid to a working partner by a partnership firm is taxable in the hands of partner in the
assessment year as per provisions of Income tax Act, 1961 under----------- (Dec 20 –OS)
(A) Salaries
(B) Profits & Gain of Business and Profession
(C) Income from other sources
(D) Personal Income Ans. B

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.4
18. Mark to market loss computed in accordance with income computation and disclosure
standards (ICDS) is being allowable as deduction from the Income computed under the head ---
---------------(Dec 20 –OS)
A. Profits and gains of business or profession
B. Income from other sources
C. Salaries
D. Capital Gains ANS. A

19. Mark to market loss computed in accordance with income computation and disclosure standards
(ICDS) shall be allowed as deduction from the Income under __________ . (JUNE-21-OS)
(A) Salaries
(B) Income from house property
(C) Profits and gains of business or profession
(D) Capital gains ANS-C

Section 32 - Depreciation

20. Under the Income-tax Act, 1961, depreciation on machinery is charged on — (Dec. 2009)
(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)
21. 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)

22. Adhu Ltd. owns machinery (rate of depreciation is 15%), the written down value of which as on
1st April, 2021 is Rs. 30,00,000. Due to fire, entire assets in the block were destroyed and the
insurer paid Rs. 25,00,000. The eligible depreciation in respect of this machinery is - (June
2016)
(a) Rs. 4,50,000 (b) Rs. 75,000
(c) Rs. 5,00,000 (d) Nil Ans.(d)
23. 20. Dr. Sen has surgical equipments whose WDV as on 1-4-2021 was Rs. 4,10,000. He acquired some
more equipments in December 2021 for Rs. 3,50,000. He sold equipment in March 2022 for Rs.
2,00,000 whose original cost was Rs. 1,70,000. The written down value of the block for the purpose of
computing depreciation for the A.Y. 2022-23 is : (June, 2017)
(a) Rs. 5,90,000 (b) Rs. 5,60,000
(c) Rs. 7,30,000 (d) Rs. 4,30,000 Ans.(b)

24. Vikram Mfg Co Ltd located in a backward area in the State of Andhra Pradesh acquired some
machinery for Rs. 20 lakhs on 10-08-2021. It was put to use from 01-09-2021. The applicable rate of
depreciation is 15%. How much would be the eligible additional depreciation for the assessment year
2022-23 in respect of the said machinery if the assessee has opted for section 115BAC ? (Dec 17)
(A) Rs. 3,00,000
(B) Rs. 4,00,000
(C) Rs. 7,00,000
(D) Nil Ans.(d)

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.5
25. Vaibhav, deriving business income, owns a car whose WDV as on 1st April, 2020 was Rs.
3,00,000. This is the only asset in the block of assets with rate of 15%. It is estimated that one-
third of the total usage of the car is for personal use in both years. The WDV of the block of
assets as on 31st March, 2022 would be - (June, 2015)
(a) Rs. 2,16,750 (b) Rs. 2,43,000
(c) Rs. 2,55,000 (d) None of the above. Ans.(b)

26. 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, 2021. Assume the rate of depreciation
at 15%. The eligible amount of depreciation will be - (Dec. 2016)
(a) Rs. 90,000 (b) Rs. 78,750
(c) Rs. 86,250 (d) Rs. 75,000 Ans.(b)
27. Ramson Industries acquired a factory building for self use in November, 2021. The value of land
underneath the building was Rs. 5 lakh and value of building was Rs. 10 lakh. The amount of
eligible depreciation allowable for assessment year 2022-23 is- (June 2016)
(a) Rs. 1,50,000 (b) Rs. 25,000
(c) Rs. 1,00,000 (d) Rs. 50,000 Ans.(d)
28. Ekta (Pvt.) Ltd., engaged in manufacturing activity, acquired new plant and machinery for Rs.
100 lakh for its manufacturing unit located in Bihar. The acquisition and unit was from 1st
June, 2021. The assessee is eligible for additional depreciation of - (Dec. 2016)
(a) Rs. 30 lakh (b) Rs. 20 lakh
(c) Rs. 35 lakh (d) Rs. 10 lakh Ans.(b)

29. The amount of depreciation not absorbed in the same year can be carried forward - (Dec. 2016)
(a) For a period of 4 years (b) For a period of 8 years
(c) For a period of 6 years (d) Indefinitely Ans.(d)
30. Ranga & Co had as on 01-04-2021 plant and machinery whose written down value was Rs.
12,00,000. It acquired 2 plants on 03-11-2021 for Rs. 6 lakhs. The applicable depreciation
rate is 15 %. The eligible depreciation for the asst. year 2022-23 would be : (Dec 17)
(A) Rs. 2,70,000
(B) Rs. 2,55,000
(C) Rs. 2,17,500
(D) Rs. 2,25,000 Ans. D

31. The WDV of a block of asset depreciated @ 15% as on 1stApril, 2021 was of 3,00,000. Out of
this block, on machine was sold forRs.2,00,000 on 1stJuly,2021 and a new machine of Rs.
6,00,000 added on 1st August, 2021 was put to use only from 1st Sept.,2021. The amount of
depreciation to be claimed (in the manner most beneficial to the assessee) in the A.Y. 2022-23
shall be: (June 18)
(A) Rs. 1,20,000
(B) Rs. 96,000
(C) Rs. 1,05,000
(D) Rs. 60,000 Ans. C
32. The additional depreciation on the factory building constructed during the P.Y.2021-22 and
put to use for manufacturing of garments on 1st Feb., 2022 having cost of Rs.100 lakh shall be
allowed in A.Y.2022 - 23 at a rate of: (June 18)
(A) 5%
(B) 10%

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.6
(C) 15%
(D) Nil Ans D
33. Hari Krishna Vidhyut Company Ltd. engaged in the business of generation and distribution of power
and electricity has opted WDV method for claiming depreciation on its assets. Opening balance of the
block of Plant and Machinery depreciated @ 15% on 1st April, 2021 was Rs. 15,00,000. New
machines of an amount of Rs. 25,00,000 were purchased on 15th Nov. 2021 but put to use from
1st December, 2021. Computers for Rs.2,00,000 were purchased on 9th Sept. 2021 and put to use
in business since that date. The depreciation including the additional depreciation available to the
company on plant and machinery and on the computers shall be of an amount of for A.Y.2022-23
(Dec 18)
(A) 4,92,500
(B) 5,32,500
(C) 7,82,500
(D) 7,42,500 ...................................................... Ans. C

34. Depreciation whether to be allowed on the purchase and installation of a fire extinguisher by a
practicing CS in his office, even when the same is not put to use or used during the year of
acquisition as stipulated under section 32 of Income Tax, 1961: (Dec 18)
a. No, Failure to use for the profession or business
b. Yes, Safety measures and kept stand by, treated as passive use and eligible for depreciation
c. Yes,Allowable@10%ofthecost
d. Yes,Allowable@50%ofthecost Ans B

35. A company engaged in manufacturing of steel balls acquired computers at a cost of Rs. 3 lakh
on 10th July, 2021. The depreciation allowance for the A.Y. 2022-23 under Income Tax, 1961
would be :(June 19)
(A) Rs. 1,80,000
(B) Rs. 1,20,000
(C) Rs. 3,00,000
(D) Rs. 45,000. Ans A
36. Zed Ltd. a domestic company engaged in manufacturing activity at Mumbai acquired a plant
for Rs. 5 lakh on 7th January, 2022 which is eligible for depreciation @ 15%. It paid Rs. 4 lakh
through ECS system from bank and balance Rs. 1 lakh in cash on 23rd February, 2022. The
plant was put to use on 12-03-2022. The amount of depreciation (normal and additional) on
this plant for A.Y. 2022-23 shall be: (June 19)
(A) Rs. 40,000
(B) Rs. 30,000
(C) Rs. 70,000
(D) Rs. 60,000. Ans C
37. Raghav Housing Finance Ltd., a NBFC is eligible to claim deduction in the case of provision made for
bad and doubtful debts to the extent of .................... total income. (June 19)
(A) 10%
(B) 5%
(C) 2%
(D) 1%. Ans B
(Note – Provisions allowed to banks 8.5%, for rural branches – 10%, for Financial institutions
and foreign banks – 5%)
38. Assets put to use in business for more than 180 days during the previous year consisting (i) Factory
Building, (ii) Computers, (iii) Motor Vehicles used for Commercial Purposes and (iv) Intangible Assets
shall be depreciated at the rate of respectively. ((Dec 19 –NS)
(a) 5%, 15%, 30%, 25% (b) 10%, 40%, 30%, 25%
(c) 10%, 15%, 25%,25% (d) 5%, 40%, 15%, 25% Ans.(b)

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.7
39. The WDV of the block of asset of plant & machinery depreciated @ 15% as on 1st April, 2021 was of Rs.
13,50,000. Out of this block, one machine was sold on 1st July, 2021 for Rs. 4,50,000 and a new machine
of Rs. 7,50,000 was purchased on 1st August, 2021 which could be put to use from 1st March, 2022. The
amount of depreciation to be claimed on the block of plant & machinery in the computation of income
from A.Y. 2022-23 shall be :(Dec 19 –NS)
(a) Rs. 1,35,000 (b) Rs. 2,47,500
(c) Rs. 1,91,250 (d) Rs. 2,53,125 ANS.(C)
40. Any asset, on which depreciation is claimed on the basis of Straight Line Method (SLM) is sold and the
amount by which money payable together with scrap value, fall short of the Written Down Value (WDV)
of such asset, the amount of such deficiency in value of asset is allowed to be written off in the year of
sale as (Dec 19 –NS) .
(a) Balancing charge (b) Terminal depreciation
(c) Loss on sale of asset (d) Residual value of asset Ans.(b)

41. An asset eligible for additional depreciation at 20% is entitled to only 50% of the additional
depreciation i.e. 10% as additional depreciation when it is put to use for less than number of days
and it is purchased and put to use in same year. (Dec 19 –OS)
(A) 180
(B) 183
(C) 182
(D) 270 Ans – A

42. The WDV of a block of asset of plant & machinery subject to depreciation @ 15% as on 1.4.2021
was of Rs.27,50,000. One machine out of this block, was sold on 01.07.2021 for Rs.4,50,000 and
a new machine of the value of Rs.17,50,000 purchased on 1.8.2021 was put to use from 01-03-
2022. The amount of depreciation to be claimed on the block of plant & machinery in the
computation of income for A.Y. 2022- 23 shall be:(Dec 20 –NS)
(A) Rs. 4,76,250
(B) Rs. 3,45,000
(C) Rs. 6,07,500
(D) Rs. 6,75,000 ANS-A
43. Rate at which depreciation shall be allowed in case of Ocean-going ships including dredgers, lugs,
barges, survey launches and other similar ships used mainly for dredging purposes and fishing vessels
with wooden hull as per Rule-5 under the Income Tax for Asst. Year 2022-23 is ---------(Dec 20 –OS)
(A) 15%
(B) 20%
(C) 30%
(D) 40% ANS. B

44. Red Mfg. Ltd. purchased a new motor car for ` 14 lakhs on 01.11.2020 and used the same w.e.f.
01.12.2020 How much is the amount of depreciation allowable on the car for the assessment
year 2022-23 ? (JUNE-21-NS)
(A) ` 2,10,000
(B) ` 1,05,000
(C) ` 3,15,000
(D) ` 3,57,000 ANS-D

(Hint – Special Case - 23 Aug 2019 to 31 March 2020 - Rate was 30%)
(Hint – Additional depreciation should have been taken)
45. .Larry Games Co. Ltd. engaged in medicine manufacture acquired on 22.11.2021 a patent from Andy
Roberts by paying ` 100 lakhs. This enabled Larry Games Co. Ltd. to manufacture ‘‘Garner’’ a product
for treatment of deadly contagious disease. How much is the eligible amount of depreciation on
acquisition of patent ? (JUNE-21-NS)

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.8
(A) ` 12.50 lakhs
(B) ` 25.00 lakhs
(C) ` 50.00 lakhs
(D) ` 100.00 lakhs ANS-A

46. What is the rate of depreciation that shall be allowable in case of fluidized bed type heat treatment
furnaces ? (JUNE-21-OS)
(A) 15%
(B) 25%
(C) 30%
(D) 40% ANS-D
47. Samode Power Generation Ltd an electricity company charging depreciation on straight line method
(SLM) on each asset separately, sells one of its machinery in June, 2021 for `3,40,000. The WDV of the
machinery at the beginning of the year on 1st April, 2021 is `3,70,000. No new machinery was
purchased or added during the year 2021-22. The shortfall of `30,000 between the sale value and the
WDV of the machine shall be treated as : (DEC-21 NS)
(A) Short-term capital loss
(B) Normal depreciation
(C) Terminal depreciation
(D) Business loss ANS = C

48. Narendra Singh, engaged in Retail Cloth business purchased furniture for Shop on 10.04.2021
for `7,500 in cash and again on 15.04.2021 for `30,000 and `50,000 by a bearer cheque and
account payee cheque, respectively. The furniture was fitted in the shop by 20.4.2021.
Depreciation allowable for A.Y. 2022-23 would be: (DEC-21 NS)
(A) `5,000
(B) `5,750
(C) `8,000
(D) `8,750 ANS =B

(Hint – Bearer cheque is equivalent to cash)

49. The W.D.V. of a block (Plant and Machinery, rate of depreciation 15%) as on 1.4.2021 is
`5,00,000. A second hand machinery costing `1,00,000 was acquired on 15.11.2021 through
account payee cheque but put to use on 01.12.2021. Part of this block was sold for `3,00,000 on
05.01.2022. The depreciation allowable as per section 32 of the Act for A.Y. 2022-23 would be:
(DEC-21 NS)
(A) `45,000
(B) `42,500
(C) `37,500
(D) `48,750 ANS = C

50. What is the rate of depreciation charged on Gas Cylinders for industrial use under Income Tax Act,
1961 ? (DEC-21 OS)
(A) 10% (B) 15% (C) 30% (D) 40% ANS = D

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.9

Composite income - Agriculture

51. Mrs. Rose derives Rs. 5,40,000 by way of income from sale of coffee grown and manufactured in
India. The income chargeable to income-tax would be - (Dec. 2016)
(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/c)
Note – Question is not clear
52. 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, 2022 was Rs. 4,60,000. The total income of Balu is - (June
2016)
(a) Rs. 6,40,000 (b) Rs. 5,15,000
(c) Rs. 4,85,000 (d) Rs. 5,60,000 Ans.(b)
53. Mr. Ramesh engaged in the business of growing and manufacturing tea in India received Rs. 2 lakhs from
Tea Board towards replacement of tea bushes destroyed by forest fire. The amount received from Tea
Board by Mr. Ramesh is: (June, 2017)
(a) Liable to tax (b) Exempt from tax
(c) 50% is exempt from tax (d) 25% is exempt from tax Ans.(a)
54. Income of an assessee engaged in the business of growing and manufacturing tea in India is taxable to the
extent of - (Dec. 2014)
(a) 40% of such income (b) 60% of such income
(c) 70% of such income (d) 30% of such income. Ans.(a)
55. 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 - (Dec. 2015)
(a) Rs. 1,75,000 (b) Rs. 2,00,000
(c) Rs. 1,25,000 (d) Nil Ans.(a)
56. If non-agricultural income is Rs. 2,52,000 and net agricultural income is Rs. 40,000, the tax liability
of an individual assessee will be - (Dec. 2014)
(a) Nil (b) Rs.200
(c) Rs. 208 (d) Rs. 4,368 Ans.(a)

32AD
57. Green Ltd is located in a notified backward area in the State of Bihar. It is engaged in manufacturing
activity. It acquired second hand plant and machinery by import from Japan for `100 lakhs on
01.05.2021. It also acquired new machinery from Chennai for ` 5 0 lakhs on 10.11.2021 Compute
eligible deduction under section 32AD in respect of the said plant and machineries acquired for the
assessment year 2022-23. (JUNE-21-NS)
(A) ` 15 lakhs
(B) ` 22.5 lakhs
(C) ` 7.5 lakhs
(D) Nil ANS-D
(Note – Section was made ineffective from 1.4.2020 onwards)
Scientific Research
58. A company incurred capital expenditure on scientific research viz., (i) land Rs. 5 lakh; (ii) building Rs.
10 lakh; and (iii) equipments Rs. 7 lakh. The amount of expenditure eligible for deduction under
section 35 would be - (Dec. 2016)
(a) Rs. 22 lakh (b) Rs.17Iakh
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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.10
(c) Rs. 15 lakh (d) Rs. 5 lakh Ans.(b)
59. Where an asset used for scientific research for more than three years is sold without having
been used for other purposes, then the sale proceeds to the extent of the cost of the asset
already allowed as deduction under section 35 in the past shall be treated as - (June 2016)
(a) Business income (b) Long-term capital gain
(c) Short-term capital gain (d) Exempted income. Ans.(a)

60. Where the assessee does not himself carry on scientific research but makes contributions to an
approved university, college or institution, to be used for scientific research related or unrelated to the
business of assessee, hence the amount of deduction from income of business shall be allowed on such
contribution to the extent of - (Dec. 2014)
(a) 125% (b) 150%
(c) 175% (d) 100% Ans.(d)
61. X Ltd. paid Rs. 10 lakh to an approved college to be used for scientific research unrelated to its
business. The amount eligible for deduction under section 35(l)(ii) if the assessee has opted for
section 115BAC - (Dec. 2015)
(a) Rs. 15 lakh (b) Rs. 10 lakh
(c) Rs. 17.50 lakh (d) Nil Ans.(d)
62. Donation to university for research in Social Science is eligible for deduction at : (Dec 17)
(A) 100%
(B) 125%
(C) 150%
(D) 175% Ans A
63. Radha engaged in the trading business and had contributed a sum of Rs. 1 lakh to an approved
university in July, 21 to be used for scientific research, which is not related to her business. The
amount of deduction for which she is eligible under section 35 of Income-Tax Act, 1961 for assessment
year 2022-23 would be: (Dec 18)
(A)Rs. 1lakh
(B)Rs. 1.5lakh
(C)Rs. 1.75lakh
(D)Rs. 2lakh Ans A

64. XYZ Ltd. paid Rs. 5 lakh on 22-1-2022 to a national level laboratory for carrying scientific research
unrelated to the business of the company. The amount of deduction eligible under section 35(2AA) of
the Income Tax Act, 1961 is :(June 19)
(A) Rs. 5,00,000 @ 100%
(B) Rs. 6,25,000 @ 125%
(C) Rs. 7,50,000 @ 150%
(D) Rs. 10,00,000 @ 200%. Ans A
65. Anirudh had made payment of (i) Rs. 30,000 to IIT, Kanpur for an approved scientific research
programme (ii) Rs. 45,000 revenue expenditure on in house R&D facility as approved by prescribed
authority and (iii) Rs. 1,00,000 to Indian Institute of Science, Bengaluru for scientific research, wants to
know about the deduction available while computing the income under "Profits and gains from
business"in the Assessment Year 2022-23. ((Dec 19 –NS)
(a) Rs. 2,40,000 (b) Rs. 1,75,000
(c) Rs. 2,62,500 (d) Rs. 2,65,000 Ans.(b)

66. Amitav had made payment of (i) Rs.60,000 to IIT, Kanpur for an approved scientific research
programme; (ii) Rs.90,000 revenue expenditure on in house R&D facility as approved by prescribed
authority and (iii) an amount of Rs.2,00,000 to Indian Institute of Science, Bengaluru for scientific
research. He wants to know about the total amount of deduction available as per provisions of the Act
while computing the income under "Profits and gains from business" in the Asst. Year 2022-23. (Dec
20 –NS)

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.11
(A) 4,80,000
(B) 3,50,000
(C) 5,25,000
(D) 5,30,000 ANS-B
67. XYZ limited commenced production on 1st December 2021 of paper boards made payments (i) on 1st
January 2022 of 1,00,000 to the Indian Agricultural Research Association, Jaipur being an approved
research association under section 35(1)(ii) for the purpose of carrying out scientific research in
natural science and (ii) on 15th January 2022 of Rs. 50,000 to the Indian Institute of Management,
Ahmadabad being an approved institute under section 35(1)(iii) for the purpose of carrying out
research in social or statistical science. The amount of deduction available to XYZ limited under
section 35(1) for the assessment year 2022-23, if the scientific research not related to the business of
the assessee-company is ---------(Dec 20 –OS)
(A) Rs. 2,00,000
(B) Rs. 2,25,000
(C) Rs. 1,50,000
(D) Rs. 1,62,500 ANS. C

68. Shruthi Herbals (P) Ltd engaged in manufacturing activity acquired an equipment for 5 lakhs
meant for scientific research purposes in the financial year 2018-19. It claimed 150% of the
cost of expenditure as deduction under section 35. The asset ceased to be used for scientific
research purposes subsequently and it was sold for ` 4 lakhs on 16.08.2021. How much is
taxable as a result of sale of such asset ? (JUNE-21-NS)
(A) `6,50,000
(B) ` 4,00,000
(C) ` 7,50,000
(D) ` 3,00,000 ANS-B

69. Vinod furnishes the following particulars for Financial Year 2021-22. You are required to arrive at the
deduction U/s 35 for A.Y. 2022-23, while computing the Income under head ‘‘Profits/Gains from
Business/ Profession’’.
Amount paid to Indian Institute of Science, West Bengal for Scientific Research `8,50,000
Capital Expenditure on In-house R&D facility as approved by prescribed authority `10,00,000
Assuming assessee has not opted U/s 115BAC. (JUNE-21-OS)

(A) ` 18,50,000 (B) ` 23,50,000 (C) ` 22,75,000 (D) ` 27,75,000 ANS-A

70. According to section 35 (2AA) of the Income Tax Act, 1961, the amount of deduction to be claimed for
the sum paid to a National Laboratory for carrying out scientific research under an approved program
in A.Y. 2022-23 would be : (DEC-21 NS)
(A) Actual amount of sum so paid
(B) 2 times of sum so paid
(C) 1.75 times of sum so paid
(D) 1.50 times of sum so paid ANS =A

35CCC/CCD
71. XYZ Ltd., engaged in manufacture of a product, has incurred an expenditure of 3 lakh on notified
skill development project u/s35CCD. The deduction available for such expenditure is
Rs……..lakh if the assessee has opted for section 15BAC (June 18)
(A) 3
(B) 3.75
(C) 4.5
(D) None of the above Ans. A

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.12

Section 35AD - Investment-linked tax deduction under section 35AD

72. Which of the following is a 'specified business' eligible for deduction under section 35AD ? (June,
2017)
(a) Operating warehousing facility for storage of agriculture produce
(b) Operating leather manufacturing unit
(c) Operating unit for manufacture of tooth paste
(d) Units operating in Jammu & Kashmir Ans.(a)

73. Which of the following business commenced during August 2021 will not be eligible for deduction
under section 35AD - (June, 2015)
(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)
74. DAS Pvt. Ltd. fulfilling all the conditions as being specified section 35AD of the Income Tax Act, 1961
has incurred capital expenditure of Rs.30 lakh on purchase of land, 80 lakh (Rs. 75 lakh by
cheque and Rs. 5 lakh in cash) on construction of building and 10 lakh on the plant and
machinery during the previous year 2021-22 for setting up and operating a warehouse for the
storage of sugar. The warehouse became operational on 1st March, 2021. The amount of deduction
which the company can claim for such capital expenditure as per section 35AD in A.Y. 2022-23 shall
be........... (Dec 18)
(A) Rs. 120lakh
(B) Rs. 180lakh
(C) Rs. 85lakh
(D) Rs. 90lakh Ans.C
Section 35D – Amortization of preliminary expenditure
75. Deccan Ltd. incurred an amount of Rs. 16 lakh as preliminary expenses for setting up a project
costing Rs. 100 lakh during financial year 2021-22. The amount of amortization available as
deduction during the A.Y. 2022-23 for the preliminary expenses would be : (June 19)
(A) Rs. 1,60,000
(B) Rs. 3,20,000
(C) Rs. 16,00,000
(D) Rs. 1,00,000. Ans D
76. Under section 35D, Indian companies, resident in India, would be entitled to amortization of certain
preliminary expenses incurred by them subject to the following limits: (DEC-21 OS)
(A) The deduction under section 35D is subject to maximum of `5,00,000
(B) The deduction under section 35D is maximum 5% of capital employed
(C) The deduction under section 35D is maximum 10% of cost of project.
(D) The deduction under section 35D is 1/5th of total preliminary expenses ANS = B

Expense allowed/ Disallowed

77. As per section 35DDA, total expenditure in a voluntary retirement scheme is deductible in - (Dec.
2016)
(a) 5 Equal instalments (b) 10 Equal instalments
(c) 2 Equal instalments (d) The same year Ans.(a)

78. Malick & Co. engaged in trading activity could not recover Rs. 5 lakhs from a customer. It claimed the
entire amount as bad debt by writing off in the books of account. The aggregate sale made during the
year to the party amounts to Rs. 30 lakhs. The amount eligible for deduction by way of bad debt is:
(June, 2017)
(a) Nil (b) Rs. 3 lakhs
(c) Rs. 5 lakhs (d) Rs. 60,000 Ans.(c)

79. 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
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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.13
(c) Equal to 1/4th in each year for 4 years (d) Equal to 1/10th in each year for 10 years.
Ans. (a)
80. Under the Income-tax Act, 1961, which of the following outlays incurred by Sun Ltd. during the
previous year ended 31st March, 2022 will not be admissible as deduction while computing its
business income - , (June, 2015)
(a) Contribution to a political party in cash (b) Interest on loan taken for payment of income-tax
(c) Capital expenditure on advertisement (d) All of the above. Ans.(d)
81. When ABC Ltd incurred Rs. 10 lakhs in F.Y. 2021-22 as capital expenditure for the purpose of
family planning amongst the employees, the expenditure allowable for the assessment year
2022-23 would be : (Dec 17)
(A) Nil
(B) Rs. 2,00,000
(C) Rs. 10,00,000
(D) Rs. 5,00,000 Ans b
82. Sakshita Pvt. Ltd., has spent a sum of 30 lakh towards meeting its Corporate Social Responsibility
(CSR) obligation. The amount of deduction available while computing the business income is Rs. :
(June 18)
(A) 30lakh (B) Nil
(C) 37.5lakh (D) 45 Lakh Ans B

83. Expenses not specifically being allowed under any of sections 30 to 36 and incurred for the
purpose of business or profession are allowable as per section 37(1) of the Act. The following
expenses are allowable under this section: (June 18)
a. Expenditure on issue of share capital
b. Expenses for the installation of new telephone
c. Annual listing fees paid to stock exchange
d. Loss caused by robbery or dacoity, incidental to business
(A) (i) and(iv)
(B) (ii), (iii) and(iv)
(C) (ii) and(iii)
(D) All the four Ans B

84. An employee director of a company was paid Rs. 5 lakh as a lump sum consideration for resigning
from the directorship by XYZ Ltd. The amount so paid shall be treated in the accounts of the company
as............. (Dec 18)
a. Deferred Revenue expenses
b. Revenue expenses
c. Capital expenses
d. Gift to employee director Ans.B
85. XAB Ltd. has incurred amount of Rs. 4,00,000 towards capital expenditure and Rs. 1,50,000 towards
bona fide revenue expenditure for the purpose of promoting family planning amongst its employees
during the year 2021-22. Company can claim deduction of an amount of _____ for such expenses in the
return to be filed for A.Y. 2022-23. (Dec 19 –NS)
(a) 50% of Rs. 5,50,000 (b) Rs. 2,30,000
(c) Such expenses are not allowed (d) 20% of Rs. 5,50,000 Ans.(b)

86. Dunlop Traders (P) Ltd. is engaged in trade of textile items. On the eve of the Diwali, it sold
suitings and shirting’s to its employees at cost. The market value of those goods was Rs. 1,60,000.
The cost price Rs. 1,20,000. The amount liable for adjustment in itstotal income would be : (Dec
19 –OS)
(A) NIL
(B) Rs. 1,60,000
(C) Rs. 1,20,000
(D) Rs. 40,000 Ans – A

87. Any expenditure incurred by an assessee on the activities relating to the corporate social reasonability
(CSR) referred to in section 135 of the Companies Act, 2013 for the purpose of allowability as
deduction under section 37(1) of the Income Tax Act, 1961----------------- for the purpose of the
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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.14
business. (Dec 20 –OS)
A. shall be deemed to be an expenditure incurred
B. shall not be deemed to be an expenditure incurred
C. shall be capitalized
D. shall be amortized in five equal installments ANS. B

Section 40 – Amounts not deductible

88. Which of the following is not deductible while calculating taxable income from business - (Dec. 2016)
(a) Goods and services tax (b) Income-tax
(c) Customs duty (d) Local taxes Ans. (b)
89. Andhra Traders a partnership firm paid Rs. 80,000 as contract charges to AKP & Co. (firm). No
tax was deducted at source for the above said payment. The amount liable for disallowance u/s
40(a)(ia) for the AY 2022-23 is : (June, 2017)
(a) Nil (b) Rs. 80,000
(c) Rs. 40,000 (d) Rs. 24,000 Ans.(d)
90. Varun Ltd. paid fees for technical services of Rs. 6 lakh but omitted to deduct tax at source and such
omission continued till the 'due date’ for filing the return of income specified in section 139(1). The
amount of expenditure liable or disallowance would be - (Dec. 2016)
(a) Rs. 1,80,000 (b) Rs. 6,00,000
(c) Rs. 1,20,000 (d) Nil Ans.(a)
91. Which of the following taxes are allowed as deduction while computing the business income - (June
2013)
(a) Wealth-tax (b) Income-tax
(c) Goods and services tax (d) None of the above. Ans.(c)

92. Manoj & Co. (partnership firm) paid monthly rent of Rs. 30,000 for its premises during the
previous year 2021-22. No tax was deducted at source for the rent paid up to 31-3-22. Total Tax
was deducted tax at source on 5-5-2022 and remitted on 10-9-2022. The return of income of the
firm for the assessment year 2022-23 was filed on 31-08-2022.The amount ofexpenditure liable
for disallowance under section 40(a)(ia) for the assessment year 2022-23 would be : (Dec 19 –OS)
(A) NIL (B) Rs. 3,60,000
(C) Rs. 1,08,000 (D) Rs. 30,000 Ans – C

93. XYZ Ltd paid an amount of 3,00,000 towards rent for the business premises to Ramavtar on
12.01.2022 and did not deduct tax at source. Ramavtar also had not paid the tax on such
income. Treatment according to provision under the Income Tax Act, 1961 in the hands of
XYZ Ltd in Assessment Year 2022-23 in respect of expenditure of rent be ----------(Dec 20 –
OS)
A. disallowance of 10% of such expenditure
B. disallowance of 20% of such expenditure
C. disallowance of 30% of such expenditure
D. disallowance of 100% of such expenditure ANS. C

94. Browny Processors (P) Ltd paid ` 4,50,000 as contract charges to Martin. It deducted tax at source @
1% for the expenditure incurred up to 30th April, 2021 of `1,50,000 and did not deduct tax on the
subsequent payments of ` 3,00,000 made during the previous year 2021-22. How much of the
expenditure would be added to its income while computing the income of Browny Processors (P) Ltd
of the assessment year 2022-23 ? (JUNE-21-NS)
(A) ` 4,50,000
(B) ` 3,00,000
(C) ` 1,50,000
(D) ` 90,000 ANS-B/D
(Note:- Both option B/D may be considered as correct. Option B is correct if Mr. Martin is
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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.15
Non-Resident. Option D is correct if Mr. Martin is Resident.)

95. Which of the following expenditure is liable for disallowance for contravention of section
40A(3) read with rule 6ABBA ? (JUNE-21-NS)
(A) Payment made in cash to Central or State Government exceeding ` 10,000 in a day
(B) Payment in cash in villages having no banking facility for purchase of raw material being
agricultural produce
(C) Retrenchment compensation paid to employee ` 40,000
(D) Deposit of cash of ` 22,000 directly into the bank account of the supplier for purchase of goods
ANS-D
(Allahabad HC)

96. What is the limit of cash payment under section 40A(3), where payment made for plying, hiring or
leasing goods carriages ? (JUNE-21-OS)
(A) `10,000
(B) ` 20,000
(C) ` 35,000
(D) ` 50,000 ANS-C

97. ABC Ltd. failed to deduct tax at source on rent payable of Rs. 2,50,000 to Mr. Ghanshyam, a resident
during the financial year 2021-22. Mr. Ghanshyam did not pay tax on such income. What is the amount
of disallowance to ABC Ltd. according to Income Tax Act, 1961 for the Assessment Year 2022-23?
(DEC-21 OS)
(A) Disallowance of 20% of such expenditure (B) Disallowance of 30% of such expenditure (C)
Disallowance of 50% of such expenditure (D) Disallowance of 100% of such expenditure
ANS = B

Calculations in case of partnership firm

98. Under the Income-tax Act, 1961, interest on capital received by a partner from a partnership firm is
chargeable under the head - (June, 2015)
(a) Profits and gains of business or profession (b) Income from other sources
(c) Capital gains (d) None of the above. Ans.(a)
99. The book profit of a partnership firm is Rs. 1,20,000. The actual remuneration paid to working
partners is Rs. 3,54,000. The allowable deduction under section 40(b) towards remuneration
to partners is - (June 2016)
(a) Rs. 1,50,000 (b) Rs. 3,54,000
(c) Rs. 1,08,000 (d) Rs. 1,20,000 Ans.(a)
100. 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
(c) Rs. 2,70,000 (d) None of the above. Ans.(a)
101. 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
(c) Rs. 1,26,000 (d) Rs. 50,000 Ans.(a)
102. 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
(c) Rs. 2,90,000 (d) Rs. 1,00,000 Ans.(b)
103. When an LLP has book profit of Rs. 6 lakh, the maximum amount allowable towards the salary
of working partners would be - (Dec. 2015)
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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.16
(a) Rs. 4,50,000 (b) Rs. 6,00,000
(c) Rs. 3,00,000 (d) Nil Ans.(a)
104. 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)

105. .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 31-3-2022. 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)
(a) Rs. 54,000 (b) Rs. 24,000
(c) Rs. 30,000 (d) Nil Ans.(b)
106. Murali & Co a partnership firm consisting of 3 partners is engaged in textile trade. It’s
Net Profit before allowing interest on capital and working partner salary to partners was Rs. 9
lakhs. The partnership deed does not provide for interest on capital. It provides for working
partner salary at Rs. 25,000 per month for all the 3 partners. The income of the firm after
allowance of working partner salary would be : (Dec 17)
(A) Rs. 90,000
(B) Rs. 2,70,000
(C) Nil
(D) Rs. 3,60,000 Ans.B
107. Ram & Co., a partnership firm, worked out total book profits for the year ended 31st March, 2022
at Rs. 5,00,000. The firm has made payment of salary of Rs. 4,60,000 authorized by the deed to the
working partners and wants to know that how much amount of salary paid to partners is allowable:
(June 18)
(A) Actual salary paid of Rs.4,60,000
(B) Rs.3,90,000
(C) Rs.2,70,000
(D) Rs.2,50,000 Ans. B
108. Ram & Co., a partnership firm worked out total book profits for the year ended 31st March, 2022
of Rs. 6,00,000 and has made payment of salary of Rs. 4,60,000 authorized by the partnership deed to
the working partners. Firm wants to know that how much amount of salary paid to partners be
allowable as deduction in A.Y. 2022-23 (Dec 19 –NS)
(a) Rs. 4,60,000 (b) Rs. 3,90,000
(c) Rs. 2,70,000 (d) Rs. 4,50,000 Ans.(d)

109. Ram & Company constituted by 2 partners sharing profits & loss equally declared net
loss of Rs.20,000 after charge of salary of Rs.10,000 p.m. paid to each of the working partners
as authorized by the deed during the previous year 1.4.2021 to 31.3.2022. The amount of
deduction in respect of payment of salary made to the partners while computing the income of
the firm for assessment year 2022-23 will be allowed of Rs.----------(Dec 20 –NS)
(A) 2,20,000
(B) 2,40,000
(C) 1,50,000
(D) 1,98,000 ANS-d
110. Excess of 12% interest on capital received by a partner from the firm is taxable in the hands of
partner under the head : (JUNE-21-OS)
(A) Salary
(B) Business and profession
(C) Income from other sources
(D) Exempt from tax ANS-D

111. Compute taxable income of a trading firm from the following details relating to the

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.17
previous year 2021-22 : Net loss before interest and salary paid to partners 11,000 Interest
paid to partner @ 12% p.a. 20,000 Salary paid to each of the two partners @ ` 2,500 p.m. =
60,000. The firm has no other income under any head. (JUNE-21-OS)
(A) ` 69,000
(B) ` 91,000
(C) (–) 31,000
(D) (–) 91,000 ANS-D

Section 40 - Expenses or payments not deductible in certain circumstances& RULE 6DD

112. Ravi & Co. paid Rs. 40,000 by cash to Mr. Balu a supplier on 5-9-2021. 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)
(a) Rs. 40,000
(b) Rs. 12,000
(c) Rs. 20,000
(d) Nil Ans.(a)
113. 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)
(a) Crossed cheque/ draft
(b) Account payee cheque/ account payee draft
(c) Account payee cheque
(d) Any mode other than cash Ans.(b)

114. Under section 40A(3) which of the following payment for an expenditure incurred would not
be admissible as deduction from business income — (June, 2015)
(a) Rs. 15,000 paid in cash to a transporter
(b) Rs. 8,000 paid in cash to a dealer in the morning and Rs. 7,000 paid in cash to the same dealer in
the evening
(c) Rs. 40,000 sent through NEFT to the bank account of the dealer for goods purchased
(d) Rs. 19,000 paid through account payee cheque to the dealer for goods purchased. Ans.(b)
115. When a cash payment of Rs. 15,000 is made on 10th May, 2021 towards purchase of raw
material effected in the earlier year, i.e., on 5th June, 2020, the amount liable for disallowance
under section 40A (3) would be - (Dec. 2015)
(a) Nil
(b) 100% of payment
(c) 20% of such payment
(d) 30% of such payment Ans.(b)
116. Mohan Ltd. purchased goods on credit from Sohan Ltd. on 6th May, 2021 for Rs. 86,000 which
is paid as Rs. 15,000 in cash on 11th May, 2021; Rs. 30,000 by a bearer cheque on 31st May, 2021; and Rs.
41,000 by an account payee cheque on 16th May, 2021. The amount of disallowance under section 40A(3)
is - (June, 2011)
(a) Rs. 15,000
(b) Rs. 45,000
(c) Rs. 41,000
(d) Rs. 30,000 Ans.(b)
117. Where an assessee doing a business incurs any expenditure in respect of which payments made to
a person in a day exceeds Rs. 10,000 should be paid through account payee cheque or demand draft to
claim deduction for such expenditure. This restriction does not apply to - (June 2 016)
(a) Payments made to RBI
(b) Payments made to cultivators
(c) Payment of terminal benefits to employees not exceeding Rs. 50,000
(d) All of the above Ans.(d)

118. Raju succeeded to the business of his father Ramu consequent to demise of Ramu on 1-2-
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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.18
2022. Raju recovered Rs. 30,000 due from a customer which was written off by late Ramu as bad
debt and allowed in the assessment year 2016-17. The amount recovered is: (June, 2017)
(a) Exempt from tax
(b) Fully taxable as business income
(c) Rs. 15,000 being 50% taxable as business income
(d) To be set off against current year bad debtsdebt recovered by the successor in business as his income.
Ans.(a)
119. Arul Industries got waiver of GST of Rs. 2,20,000 for the financial year 2021-22. The amount
of waiver is - (Dec. 2016)
(a) Exempt income
(b) Capital receipt
(c) Revenue receipt
(d) None of the above Ans.(c)
120. Biren discontinued wholesale trade in medicines from 1st July, 2017. He recovered Rs.
1,50,000 in October, 2021 being a bad debt which was written-off and allowed in assessment year
2016-17. He has eligible brought forward business loss of wholesale trade in medicines of Rs.
1,70,000. The consequence of bad debt recovery is that - (June 2016)
(a) It is chargeable to tax
(b) It is eligible for set-off against brought forward business loss
(c) The brought forward business loss is taxable now
(d) 50% of the amount recovered now is taxable Ans.(b)

121. Sameer sold goods worth Rs. 50,000 at credit on 1st April, 2017. However, he has written off
10,000 of it as bad debts and claimed deduction for the same during the year 2018-19. On 4th April,
2021, the defaulting debtor made payment of Rs. 45,000. The taxable amount of bad debts
recovered for the year 2021-22 would be — (June, 2015)
(a) Rs. 5,000
(b) 150,000
(c) Rs. 45,000
(d) Rs. 10,000 Ans.(a)
122. SH made three different cash payments of 10,000, Rs. 10,000 and of Rs. 11,500 to a supplier for purchase
of goods and material on 11th Sept., 2021. The payments were made during different times in the day.
Amount to be disallowed u/s 40A(3) is: (June 18)
(A) Rs.11,500 (B) Rs.31,500
(c )Rs.NIL (D) None of the above Ans. B

123. Welfare Charitable Trust (registeredunder section 12AA), paid monthly salary of Rs. 25,000 to its
manager. It paid Rs. 10,000 by account payee crossed cheque and Rs. 15,000 by cash on the first
day of every month during the previous year 2021-22. The amount of salary eligible for deduction while
computing the income of charitable trust for the assessment year 2022-23 would be : (Dec 19 –OS)
(A) Rs. 3,00,000
(B) Rs. 1,80,000
(C) Rs. 1,20,000
(D) Nil Ans – C

Section 43 B
124. Saraswath Ltd. made provision of Rs. 12 lakh for bonus payable for the year ended 31st
March, 2022. It paid Rs. 7 lakh on 31st July, 2022; Rs. 3 lakh on 30th September, 2022; and Rs. 2
lakh on 15th December, 2022. The amount eligible for deduction under section 43B would be -
(Dec. 2015)
(a) Rs. 10 lakh
(b) Rs. 12 lakh
(c) Rs. 7 lakh
(d) Rs. 3 lakh Ans.(a)

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.19
125. Net Profit of Honey Sugar Ltd Jalgaon for the year ended 31.03.2022 is `8,60,000 after
charge of the following expenses to Profit and Loss account :
(i) Interest on loan payable to SBI of `45,000 (shall be paid on 10.11.2022)
(ii) License fees to Maharashtra Government of `50,000 (was paid on 25.05.2022)

Honey Sugar Ltd during the previous year 2021-22, made payments of the following
expenses pertaining to earlier years which have not been debited to Profit & Loss Account
for the period 01.04.2021 to 31.03.2022 :
(i) Interest on loan payable to SBI of `30,000 for the P.Y. 2020-21 (was paid on 10.10.2021)
(ii) License fee to Maharashtra Government of `60,000 for the P.Y. 2020-21 (was paid on
25.05.2021)
Compute the total income of Honey Sugar Ltd for A.Y. 2022-23 by taking that due date for
submission of Return of Income (ROI) is 31st October of the A.Y. (DEC-21 NS)
(A) `8,15,000
(B) `8,75,000
(C) `9,25,000
(D) `8,65,000 ANS = B

Section 44 (AUDIT/Books of Accounts)

126. A person carrying specified profession will have to maintain books of account prescribed by
Rule 6F of the Income-tax Rule, 1962, if gross receipts are more than Rs. 1,50,000 for - (June, 2015)
(a) All preceding 5 years (b) Any of the preceding 5 years
(c) All preceding 3 years (d) Any of the preceding 3 years. Ans.(c)

127. A person carrying on profession is required to get his accounts compulsorily audited by a
Chartered Accountant if his gross receipts from profession for the previous year exceed - (Dec.
2012)
(a) Rs. 10,00,000 (b) Rs. 25,00,000
(c) Rs. 50,00,000 (d) Rs. 1,00,00,000 Ans.(c)

128. A person carrying on profession will also have to get his accounts audited before the specified
date, if gross receipts from the profession for a previous year or years relevant to assessment year
exceed - (Dec. 2014)
(a) Rs. 25 lakh (b) Rs. 10 lakh
(c) Rs. 1 crore (d) Rs. 50 lakh. Ans.(d)

129. The maximum penalty for failure to get accounts audited under section 44AB or furnish
audit report along with return of income is - (June, 2009)
(a) Rs. 10,000 (b) Rs. 20,000
(c) Rs. 50,000 (d) Rs. 1,50,000. Ans.(d)
(Penalty – 44AB (Audit) – 0.5% of Turnover or Rs.1.5 lacs, lower)
(Penalty – 44AA (Books of Accounts) – Upto Rs. Rs. 25,000

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.20
130. The maximum penalty leviable for failure to get accounts audited or to furnish report under
section 44AB is - (Dec. 2015)
(a) Rs. 75,000 (b) Rs. 1,00,000
(c) Rs. 1,50,000 (d) Rs. 3,00,000 Ans.(c)

131. Maintenance of books of accounts in the case of an HUF carrying business is mandatory, if the
turnover or gross receipts in any one of the three years immediately preceding the previous year
exceeds (June 19)
(A) Rs. 10 lakh
(B) Rs. 15 lakh
(C) Rs. 25 lakh
(D) Rs. 100 lakh. Ans C

132. A professional is required to get his accounts under section 44AB of the Income Tax Act, 1961
where the gross receipts from profession during the financial year 2021-22 : (June 19)
(A) exceeds Rs. 100 lakhs
(B) equals to or exceeds Rs. 50 lakh
(C) equals to or exceeds Rs. 100 lakh
(D) exceeds Rs. 50 lakhs. Ans D

133. Ganesh Traders (partnership firm) reported a turnover of Rs. 250 lakh for the assessment year
2022-23. It has not filed the tax audit report under section 44AB before specified date. The amount of
penalty leviable for such failure would be: (Dec 19 –OS)
(A) Rs. 25,000
(B) Rs. 1,00,000
(C) Rs. 1,25,000
(D) Rs. 1,50,000 Ans – C

134. X Co. (P) Ltd. having turnover of ` 220 lakhs for the previous year ended 31st March, 2021
failed to furnish tax audit report under section 44AB. How much could be levied as penalty on the
assessee for the failure to furnish audit report under section 44AB ? (JUNE-21-NS)
(A) ` 1,00,000
(B) ` 1,10,000
(C) ` 1,50,000
(D) ` 10,000 ANS-B

135. The requirement of audit u/s 44AB, doesn’t apply to a person who declares profits/gains on a
presumptive basis u/s 44AD and his total sales/turnover/ gross receipts doesn’t exceed ______ .
(JUNE-21-OS)
(A) One crore (B) Two crore (C) Five crore (D) 50 lakhs ANS-B

136. What is the minimum penalty u/s 271B in the case of Mr. S, an individual who has failed
to get his accounts audited under section 44AB or furnish audit report along with return of
income ? (DEC-21 OS)
(A) ½% of the total turnover
(B) 1/4% of the total turnover
(C) ½% of the tax payable
(D) 1/4% of the tax payable ANS = A

137. Which of the following statements for applicability of sec. 44AB for mandatory audit of
accounts of certain person is false? (DEC-21 OS)

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.21
(A) Every person carrying on business whose total sales turnover or gross receipts in business
exceeds 1 crore in any previous year
(B) Every person carrying on profession whose gross receipts in profession exceeds 1 crore in any
previous year
(C) Every person carrying on a business, where deemed profits are taxed on presumptive basis
under section 44AE or 44B or 44BBB whose income is claimed to be lower than the deemed
profits under the respective sections
(D) Every person carrying on a profession, where 50% of the gross receipts are deemed to be
profits under section 44ADA whose income is claimed to be lower than the deemed profits and
such income exceeds the basic exemption limit. ANS =B

138. Maintenance of accounts and other documents are compulsory as per Income Tax Act, 1961
when every person who is carrying on business or profession whose income from business or
profession exceeds `...………..or total sales, turnover or gross receipts exceeds `…………in any one of the
three immediately preceding previous year. (DEC-21 OS)
(A) `2,50,000 and `25,00,000
(B) `2,50,000 and `50,00,000
(C) `5,00,000 and `25,00,000
(D) `5,00,000 and `50,00,000 ANS =A

Presumptive Taxation (44AD/ADA/AE)

139. Provisions of section 44AD for computation of presumptive income are not applicable to -
(June, 2015)
(a) Limited liability partnership (b) Partnership firm
(c) Resident Hindu Undivided Family (d) Resident individual. Ans.(a)
140. 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) Rs. 4,92,000 (b) Rs. 3,60,000
(c) Rs. 3,30,000 (d) NIL Ans.(d)
141. When a person carries on the business of carrying goods for hire for the whole year
with 5 self-owned and 3 hire purchased other than heavy goods vehicles, the presumptive
income chargeable to tax under section 44AE would be - (Dec. 2015)
(a) Rs. 4,80,000 (b) Rs. 7,20,000
(c) Rs. 3,96,000 (d) Rs. 3,36,000 Ans.(b)
142. Anuj owns 6 goods carriage vehicles. Out of these 2 are heavy goods vehicle having
gross unladen weight of 15 tons acquired by him on 15th January, 2021. Find taxable income
under section 44AE will be - (Dec. 2014)
(a) Rs. 4,50,000 (b) Rs. 4,05,000
(c) Rs. 8,10,000 (d) Rs. 3,60,000. Ans.(a)
Answer Hint: Deemed Profits under Section 44AE = Rs. 7,500 x 4vehicles x 12months + (Rs. 1,000 x 15 x 2
vehicles x 3months )
143. Mr. Siraj engaged in retail trade reports a turnover of Rs. 43 lakhs for the previous year
2021-22. He deposited Rs. 30,000 in his PPF account held with SBI. His total income for the AY
2022-23 by applying Section 44AD provision is : (June, 2017)
(a) Rs. 1,85,000 (b) Rs. 3,44,000
(c) Rs. 3,14,000 (d) Rs. 4,00,000 Ans.(c)

144. 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)
(a) Rs. 5,60,000 (b) Rs. 4,32,000
(c) Rs. 1,28,000 (d) Rs. 3,50,000 Ans.(a)

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.22

145. Alpha & Co is a proprietary concern owned by Vimala. The total turnover for the year
_2021-22 is Rs. 52 lakhs which includes proceeds realized through banking channel before 31st
July, 2022 was Rs. 12 lakhs. The presumptive income under Section 44AD would be : (Dec 17)
(A) Rs. 4,16,000
(B) Rs. 2,60,000
(C) Rs. 3,92,000
(D) Rs. 5,20,000 Answer - C

146. Dr. Ravi practising medicine has gross receipt of Rs. 18,40,000 for the financial year 2021-22.
His presumptive income under Section 44ADA would be : (Dec 17)
(A) Rs. 1,47,200 @ 8%
(B) Rs. 92,000 @ 5%
(C) Rs. 9,20,000 @ 50%
(D) Rs. 4,60,000 @ 25% Answer - C

147. Rahim had 5 goods carriage vehicles on 01-04-2021. He acquired and used 3 vehicles from 01-
09-2021. What is the presumptive income under Section 44AE ? (Dec 17)
(A) Rs. 8,10,000
(B) Rs. 3,64,500
(C) Rs. 2,02,500
(D) Rs. 6,07,500 Answer – D

148. Books of account of an individual is liable for tax audit under section 44AB on
mandatory basis, if the annual turnover exceeds : (Dec 17)
(A) Rs. 40 lakhs
(B) Rs. 60 lakhs
(C) Rs. 100 lakhs
(D) Rs. 200 lakhs Answer – C

149. Padmaja Traders a partnership firm with turnover of Rs.140 lakhs omitted to get the
books of account audited under section 44AB. The amount of penalty leviable for failure to get
the accounts audited undersection 4AB is : (Dec 17)
(A) Rs. 10,000
(B) Rs. 70,000
(C) Rs. 1,50,000
(D) Rs. 20,000 Answer – B

150. Zing Zang is an individual, manufacturing a product. He has turnover of Rs. 98,50,000
which is inclusive of amount of Rs. 25 lakh received through electronic clearing system. The
accounts are not properly maintained and you have advised him to pay tax u/s 44AD of the
Act. On how much income he will pay tax for A.Y. 2022-23: (June 18)
(A) Rs.7,88,000 (B) 7,38,000
(C) Manufacturers not allowed u/s44AD (D) 5,91,000 Ans.B

151. Radhey a trader having turnover of 90,00,000 from textile business inclusive of turnover of
Rs.20,00,000 carried through banking channel by way of drafts and online payments had opted to pay tax
as per section 44AD of the Income Tax Act. The amount of income which shall be taken for the purpose
of tax for Asst. Year 2022-23 under the head income from business and profession is............. (Dec 18)
(A)Rs.9,00,000
(B)Rs.6,80,000
(C)Rs.7,20,000
(D)Rs.5,40,000 Ans. B

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.23
152. Where a non-resident/ foreign company is liable to tax at special rate of 10% on
account of royalty or fee for technical services, such assessee shall - (June 2016)
(a) Be eligible for deduction of any expenses from such income
(b) Eligibe for any deduction under such income u/s 28 to 44C but not for Chapter VI-A on account of such
income
(c) Neither be eligible for deduction of any u/s 28 to 44C nor for Chapter VI-A on account of such income
(d) Not be eligible for deduction of any expense expenses u/s 28 to 44C nor be under but shall eligible for any
deduction under Chapter VI-A Ans.(d)

153. Kant, is engaged in the business of purchase and sale of pieces of various lands. During
the F.Y. 2021-22, he sold pieces of lands for Rs. 32 lakh. All these sales were made through
cheques and Electronic Clearing System (ECS). The valuation of these pieces of lands for stamp
duty purpose was Rs. 41 lakh. He wants to pay tax on the income as per section 44AD. The
income as per this section for A.Y. 2022-23 shall be : (June 19)
(A) Rs. 2,46,000
(B) Rs. 3,28,000
(C) Rs. 2,56,000
(D) Rs. 1,92,000. Ans A

154. Tulip & Co. is a partnership firm of two partners. Total turnover of the firm during financial
year 2021-22 is Rs. 160 lakh inclusive of Rs. 60 lakh made through account payee cheques and ECS.
The partnership deed provided for monthly working salary of Rs. 30,000 to each of the partners. The
income of the firm by applying section 44AD for A.Y. 2022-23 would be : (June 19)
(A) Rs. 11,60,000
(B) Rs. 12,80,000
(C) Rs. 5,00,000
(D) Rs. 4,40,000. Ans A
155. The assessee opting to pay tax under the provisions of section 44ADA is not be required
to maintain books of accounts as per section 44AA and gets the accounts audited under section
44AB of the Income Tax Act, 1961 where................ (Dec 18)
a. It claims that the profit and gains from the profession is higher than the deemed profit and
gains
b. Total gross receipts should not exceed Rs. 60 lakh
c. Its income does not exceed the maximum amount which is not chargeable to
income tax
d. Both (A) and(C) Ans D

156. Ping Pong is a Proprietorship firm of Pinga, resident in India having turnover from
manufacturing and sale of Steel balls for the year 2021-22 of Rs. 148 lakh which is inclusive of amount
of Rs. 42 lakh received through electronic clearing system/ RTGS/ NEFT. The accounts are not properly
maintained by Pinga and therefore he wants to pay tax on the income computed under section 44AD of
Act. Advise Pinga, how much income he will be required to pay tax for A.Y2022-23 as per section 44AD:
(Dec 19 –NS)
(a) Rs. 11,84,000
(b) Not allowed to opt 44AD being turnover above Rs. 100 lakh
(c) Rs. 11,00,000
(d) Rs. 8,88,000 Ans.(c)

157. Mr. Ramanad, engaged in the business of plying, hiring or leasing of goods carriers as on 1st
April, 2021 was having 3 trucks of gross vehicles weight of less than 12,000 kgs each. One truck out of
these 3 trucks was sold by him on 23rd July, 2021 and after its sale, 2 more trucks (1 of less than 12,000
kgs. and 1 of 16,900 kgs) were purchased on 5th September, 2021. He wants to declare the income of
trucks as per provisions of section 44AE of the Act and be required to declare such income at Rs.
____________in the return for A.Y. 2022-23 from plying of these vehicles during the previous year ended
on 31st March, 2022. (Dec 19 –NS)

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.24
(a) Rs. 3,54,500 (b) Rs. 3,81,500
(c) Rs. 3,15,000 (d) Rs. 3,74,000 Ans.(b)

158. Ramesh owns two vehicles for the purpose of plying on hire. The gross vehicle weight or unladen
(without any goods) weight of one vehicle was 13 MT and of another vehicle 6 MT. The presumptive income
under section 44AE for the previous year would be : (Dec 19 –OS)
(A) Rs. 1,80,000
(B) Rs. 2,46,000
(C) Rs. 1,20,000
(D) Rs. 2,40,000 Ans – B

159. Ravinder has aggregate receipt from profession of Rs. 45 lakhs for the previous year 2021-
22. His income as per books of account is Rs. 20,50,000. He wants to declare income as per the
presumptive provisions contained in section 44ADA. The amount of income liable to tax would be: (Dec
19 –OS)
(A) Rs. 22,50,000
(B) Rs. 20,50,000
(C) Rs. 1,64,000
(D) Rs. 3,60,000 Ans – A

160. Dee & Co. is a partnership firm which filed its return of income by opting section 44AD for
the assessment year 2020-21. It filed its return of income as per regular provision by getting the
books of account audited u/s 44AB for the assessment year 2021-22 with profit of Rs. 70,000.
For the assessment year 2022-23 its income as per section 44AD is Rs. 4,80,000 and its income as
per regular provisions is Rs. 6,30,000. What would be the income which is chargeable to tax for
the assessment year 2022-23 ? (Dec 19 –OS)
(A) Rs. 6,30,000
(B) Rs. 4,80,000
(C) Rs. 3,45,000
(D) Rs. 3,00,000 Ans – A
161. Pink & Pink is a Proprietorship firm of Pingajee, resident in India having turnover from
manufacturing and sale of Toys for the financial year 2021-22 of Rs.160 lakh. The gross turnover of
Rs.160 lakh includes the amount of Rs.60 lakh received through electronic clearing system/RTGS/NEFT.
The accounts are being not properly maintained by Pingajee and therefore he wants to pay tax on the
income to be computed under section 44AD of Act. Advise Pingajee, as to the amount of income on which
he will be required to pay tax for A.Y. 2022-23 as per section 44AD: (Dec 20 –NS)
(A) Not allowed to opt 44AD being turnover above Rs.100 lakh
(B) Rs.11,60,000
(C) Rs.9,60,000
(D) Rs.12,80,000 Ans – B

162. Ram, engaged in the business of plying, hiring or leasing of goods carriages as on 1st April, 2021
was having 5 trucks of gross vehicles weight of each truck of less than 12,000 Kgs. One truck out of these
5 trucks was sold by him on 23rd July, 2021 and after sale of one truck; 2 more trucks (1 of less than
12,000 Kgs and 1 of 16,900 Kgs of gross vehicle weight) were purchased on 5th September, 2021 and
plied. He wants to declare the income of trucks as per provision of section 44AE of the Act. He shall be
required to declare an income of Rs. in the return for A.Y. 2022-23 from plying of these vehicles during
the previous year ended on 31.03.2022. (Dec 20 –NS)
(A) 5,29,500
(B) 4,95,000
(C) 5,61,500
(D) 5,54,000 ANS - C

163. Maintenance of such books of accounts and other documents is compulsory under
section 44AA of the Income Tax Act, 1961 when every person who is carrying on business or

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.25
profession and whose income from business and profession exceeds ---------or the total sales,
turnover or gross receipts exceeds _______ in any one of the 3 years immediately preceding
the previous year. (Dec 20 –OS)
A. 2,50,000 & 25,00,000
B. 2,50,000 & 10,00,000
C. 5,00,000 & 25,00,000
D.1,20,000 & 10,00,000 ANS. → A& D both are correct as the person is not specified

164. GG Goods Transporters engaged in the business of carriage of goods owns on 1st April, 2021
trucks consisting (i) 6 heavy goods vehicles having weight of each of 14 ton and (ii) 3 light goods
vehicles having weight of each of 5 ton. On 4th May, 2021 one of the heavy goods vehicle was
sold and 1 light goods vehicle was purchased on 15th May 2021. The newly purchased light
goods vehicle was put to use only from 25th June 2021. The assessee wants to declare the income
as per section 44AE of the Act; which for A.Y. 2022-23 is to be taken at ------------(Dec 20 –OS)
(A) Rs. 12,20,500
(B) Rs. 12,06,500
(C) Rs.12,13,000
(D) Rs.11,99,000 ANS. A

165. Dr. Kamlesh Pai is a cardiac surgeon. For the previous year 2021-22, his gross receipts from
profession was ` 36,40,000. He wants to declare income as per the applicable presumptive provision.
Determine the amount of income as per the applicable presumptive provision for the assessment year
2022-23. (JUNE-21-NS)
(A) ` 2,91,200
(B) ` 3,64,000
(C) ` 9,10,000
(D) ` 18,20,000 ANS-D
166. Ramnath has 4 heavy goods vehicle (gross un laden weight of each vehicle was 13,000
kilograms) and 1 light vehicles (gross weight was less than 12000 kilograms). He operated the
vehicles on contract basis to a paper manufacturing company throughout the previous year
2021-22 and received ` 90 lakhs as hire charges as per contract. How much is the income
chargeable to tax under applicable presumptive provision ? (JUNE-21-NS)
(A) ` 7,80,000
(B) ` 7,14,000
(C) ` 7,20,000
(D) ` 4,50,000 ANS-B

167. .Senthil & Co. is a partnership firm consisting of 2 partners with equal share. The
partnership deed provides for interest on capital @ 18% per annum on capital of ` 5 lakhs each
contributed by the partners. Both are working partners eligible for monthly salary of 10,000
each as per partnership deed. The firm has done total sales of ` 60 lakhs. Amounts realized by
cash was `10 lakhs and balance through account payee cheque/draft/ECS through a bank
account. How much is the presumptive income of the firm under section 44AD for the
assessment year 2022-23 ? (JUNE-21-NS)
(A) ` 64,000
(B) ` 44,000
(C) ` 4,60,000
(D) ` 3,80,000 ANS-D

168. In order to rationalize the presumptive taxation scheme and to reduce the compliance burden
of the small tax payers having income from profession and to facilitate the ease of doing business, a
new section 44ADA has been inserted to provide presumptive taxation regime for professionals
where, total gross receipts should not exceed ________(JUNE-21-OS)
(A) `25,00,000 (B) `50,00,000 (C) `75,00,000 (D) `1,00,00,000 ANS-B

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.26
169. HSP, an eligible assessee, following mercantile system of accounting and carrying on
eligible business as specified in section 44AD of the Act provides the following details relating
to the business carried out during the year ended on 31.3.2022 :
(i) Total turnover of business `120 lakh
(ii) Out of the total turnover of `120 lakh amount of `25 lakh received by account payee
cheques, `40 lakh received by cash up-to March, 22 but amount of `25 lakh received by
account payee bank drafts in May, 2022 and amount of `30 lakh would not be received till
due date of filing of return for A.Y. 2022-23.
The amount of deemed profits to be declared by HSP as per section 44AD(1) for A.Y. 2022-
23 shall be : (DEC-21 NS)
(A) `9.60 lakh
(B) `7.20 lakh
(C) `8.60 lakh
(D) `9.10 lakh ANS = C

170. Section 44ADA has been inserted in the Income Tax to provide for estimating the income of an
assessee @ ................ (DEC-21 OS)
(A) 20% of the Total Gross receipt
(B) 50% of the Total Gross receipt
(C) 60% of the Total Gross receipt
(D) 80% of the Total Gross receipt ANS = B

171. Computation of income on estimated basis under section 44AD is not applicable to businesses
carried on by: (DEC-21 OS)
(A) Resident individual
(B) Resident HUF
(C) Resident Partnership
(D) Resident LLP ANS = D

172. The following persons are not eligible to avail benefit under section 44AD: (DEC-21 OS)
(A) A person carrying on profession referred to in section 44AA (1)
(B) LIC agent
(C) A person who is in the business of plying, hiring or leasing goods carriages
(D) All of the above ANS = D

173. An assessee, who declares his income in accordance with Presumptive taxation regime under
Section 44ADA, is required to pay advance tax in : (DEC-21 OS)
(A) One installment
(B) Two installments
(C) Three installments
(D) Four installments ANS = A

Actual Cost of the Assets acquired for business

174. Sunil acquired a building for Rs. 15 lakh in June, 2019 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, 2021 and since then it was used for business purposes. The amount of depreciation
eligible in his case for the assessment year 2022-23 would be - (Dec. 2015)
(a) Rs. 1,50,000 (b) Rs. 75,000
(c) Rs. 37,500 (d) Rs. 1,21,500 Ans.(d)

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.27
175. Rosy Ltd. engaged in manufacture of bio-medicines in August, 2021 converted one
equipment which was used for scientific research purposes previously, for regular business
use. The original cost of the plant is Rs. 15 lakhs which was acquired in April, 2019. The
company had claimed deduction at 150% under section 35(2AB) in the assessment year 2021-
22. The plant used for scientific research would be included in the block of assets now at a
value of: (June, 2017)
(a) Nil (b) Rs. 15,00,000
(c) Rs. 30,00,000 (d) Rs. 12,75,000 Ans.(a)

176. 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 Rs. ..............., such payment shall not be eligible for claiming the
amount of depreciation on such asset. (June 19)
(A) Rs. 50,000
(B) Rs. 20,000
(C) Rs. 10,000
(D) Rs. 2,00,000. Ans C

Deductions u/s 33AB & 33ABA

177. ABC limited engaged in the business of growing and manufacturing tea in India
deposited Rs. 80 lakh in the “Special Account” during the previous year 2020-21 and claimed
the same as deduction under section 33AB (40% of business profits of 200lakh). During the
previous year 2021-22, company withdrawn 40 lakh from the “Special Account” which was
utilized as (i) Rs. 30lakh on 31st December, 2021 for the scheme framed by the Tea Board
(ii) Rs. 4 lakh on 25th January, 2022 for other purposes and 6 lakh was not utilized till 31st
March, 2022. The amount chargeable to tax in assessment year 2022-23 shall be (Dec 20 –
OS)
a. 6 lakh
b. 16 lakh (40% of 40 lakh)
c. 10 lakh
d. 40 lakh ANS. C

Expenditure for Spectrum (Sec. 35ABA) and for Telecom License Fees Sec. 35ABB
178. Any capital expenditure incurred on acquiring telecom license is deductible in - (Dec.
2016)
(a) 5 Equal installments (b) 10 Equal installmets
(c) 15 Equal installments (d) Equally over the period of the license Ans.(d)

Miscellaneous
179. John Miller & Co. of UK is maintaining and operating a branch in India for sale of its
garment products. The adjusted total income of the Indian branch for the year ended on 31-03-
2022 was of `80 lakh after charge of H.O. expenses of `20 lakh. The Indian branch intends to
claim the maximum amount of H.O. expenses which is being allowable while computing its
income to be declared in the return for A.Y. 2022-23. The amount of HO expenses allowable
shall be : (DEC-21 NS)
(A) 3% of the adjusted total income
(B) Nill as HO is a foreign company
(C) 20 lakh
(D) 5% of the adjusted total income ANS = D

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 Ch 6 – DT Bullet MCQ’ June 22 & Dec 22 6.28
Amendment Based MCQ’s
1) X ltd. purchased a plant and machinery worth Rs. 5 crore on 31st dec 2017 for the purpose of setting up
and operating cold chain facilities for specified products and claimed deduction under section 35 AD .
However from 1st april 2021 plant and machinery so purchased was put to use for some unspecified business.
What will be the profit chargeable to tax:

a. 5 crore
b. 2.84 crore
c. 2.61 crore
d. 2.39 crore Ans B
Solution

Year Purchase Depreciation Balance

17-18 50,000,000.00 3,750,000.00 46,250,000.00

18-19 6,937,500.00 39,312,500.00

19-20 5,896,875.00 33,415,625.00

20-21 5,012,343.75 28,403,281.25

2) A person is carrying on a business whose gross receipts in previous year is 5 crore rupees out of which 10
lakhs were received in cash and 20 lakhs were received through bearer cheque.
Is audit applicable?

a. No, since cash receipts is within 5% of total receipts and gross receipts does not exceed 10 crore
b. No , since cash receipts exceeds 5% of total receipts but gross receipts does not exceed 10 crore
c. yes, since cash receipts exceeds 5% of total receipts and gross receipts exceeds 1 crore
d. yes, since cash receipts is within 5% of total receipts and gross receipts exceeds
1 crore
Ans C

3) A person carrying on a business whose gross receipts in previous year 21-22 is 10 crore and all the
payments were made and received through banking channel only. Is audit applicable?

a. Yes , since gross receipts exceed 1 crore

b. No , since gross receipts doesn’t exceed 10 crore
c. Yes, since gross receipts are 10 crore
d. None Ans B

4) depreciation at goodwill of business or profession is charged at rate -

a. 25%
b. 30%
c. 40%
d. Not charged Ans D
5)for what period there is increase in differential from 10% to 20% (under section 43CA) for only primary
sale of residential units of value up to Rs 2 crores:
a. 23rd August 19 to 31st March 20
b. 12th November 2020 to 30th June 2021
c. 12th November 2021 to 30th June 2022
d. 23rd August 20 to 31st March 21 Ans B

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 Ch 7 MCQ’s - DT Bullet – Jun 22 & Dec 22 7.1

BASICS
1. 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)

2. Capital asset excludes all except - (Dec. 2014)

(a) Stock-in-trade (b) Personal effects
(c) Jewellery (d) Agricultural land in India. Ans.(c)

3. 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)
4. Rajat purchased a car for his personal use for Rs. 5,00,000 in April, 2021 and sold the same for Rs. 5,50,000
in July, 2021. The taxable capital gains would be - (Dec. 2 016)
(a) Nil
(b) Rs. 5,50,000
(c) Rs. 50,000
(d) Rs. 4,00,000 Ans.(a)
5. 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 Ans.(c)
6. Anuj owned land measuring 2 hectares and carried on agricultural operations. The land would be treated
as agricultural land and not capital asset if it is within the aerial distance of_____kms from the local limits of
municipality when its population exceeds 10 lakhs. (Dec 19 –OS)
(A) 2
(B) 4
(C) 6
(D) 8 Ans.(D)
7. Which of the following is not a capital asset? (Dec 19 –OS)
(A) Jewellery
(B) Equity shares
(C) Personal effects
(D) Land and building Ans. (C)

8. Land or building, or both, if transferred on or after 1st April, 2017 shall be treated as along
term capital asset, if it is being held immediately prior to the date of its transfer for more than:
(June 18)
(A) 36months
(B) 12months
(C) 24months
(D) None of the above Ans.(C)
9. Durafon (P) Ltd., engaged in steel industry, acquired a vacant piece of land on 15th May, 2018. The
company sold the said land in December, 2021. The profit earned on sale of vacant land of Rs. 10 lakh
shall be taxable as : (June 19)
(A) Business income
(B) Income from other sources
(C) Short term capital gain
(D) Long term capital gain. Ans.(D)

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 Ch 7 MCQ’s - DT Bullet – Jun 22 & Dec 22 7.2

10. 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)

Transactions not regarded as transfer

11. Nair, a retired person of 68 years of age obtained Rs. 10,000 per month from 1st April, 2021 on reverse
mortgage of his self occupied residential property from a bank. The fair rent of the property is Rs. 15,000 per
month. The income chargeable to tax in respect of amount received on reverse mortgage for his self-occupied
house property for the F.Y. 2021-22 would be :(June 19)
(A) Rs. 1,20,000
(B) Rs. 1,26,000
(C) NIL
(D) (15000 – 10000) × 12 = 60000. Ans.(C)

12. Mr. Chandan (age 70) received Rs. 30,000 every month during the financial year 2021-22 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)

13. 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

14.Ratan Lal, aged 55 years, resident in India having during the previous year 2021-22 income of winnings
from races: Rs. 20,000 (expenditure incurred : Rs. 200), Short Term Capital Gain : Rs. 1,75,000 (applicable STT
paid) Interest on Bank Fixed Deposits :2,31,000 and had made contribution in public provident fund: Rs.
1,14,000. Total income of Ratan Lal for assessment year 2022-23 shall be --------(Dec 20 –OS)
(A) Rs. 4,26,000
(B) Rs. 3,12,000
(C) Rs. 3,02,000
(D) Rs. 2,62,000 ANS. B

15. Venkat (age 63) received Rs. 25 lakh from State Bank of India under reverse mortgage scheme on 5-6-
2021. The house property under reverse mortgage was acquired on 1-4-1980 for Rs. 90,000. The fair
market value on 1-4-1981 was Rs. 1,50,000. The fair market value as on 1-4-2001 was Rs. 8,40,000. The
fair market value on 5-6-2021 was Rs. 21 lakh. The cost inflation index for the financial year 2021-22 is
317. The amount of capital gain liable to tax would be: (Dec 19 –OS)
(A) Long-term capital gain Rs. 12,48,000
(B) Long-term capital gain Rs. 10,80,000
(C) Long-term capital gain Rs. 1,48,000
(D) NIL Ans (D)
16. Richard acquired 1,000 preference shares of Rs. 100 each in Terry Ltd. on 10-4-2016 for Rs. 1,32,000. He
received 10,000 equity shares of Rs. 10 each on conversion of preference shares into equity shares. TheFair
Market Value (FMV) of equity shares on the date of such conversion was Rs. 2,20,000. (Dec 19 –OS)
Cost Inflation Index F.Y. 2016-17 = 264; F.Y. 2021-22= 317. The taxable long-term capital gain would be :
(A) NIL
(B) Rs. 70,000
(C) Rs. 10,000
(D) Rs. 15,000 Ans –(A)
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17. A transfer of capital asset by a private company or unlisted public company shall not be treated as transfer
u/s 47(xiiib) 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 year
preceding the previous year in which the conversion took place does not exceed (Dec 19 –NS) – Ch 15 .
(a) Rs. 5,00,00,000 (b) Rs. 10,00,00,000
(c) Rs. 20,00,00,000 (d) Rs. 1,00,00,000 Ans.(a)

18. Clean Air (P) Ltd. converted into a LLP on 30-4-2021. It is not liable to pay capital gains on conversion
if the total value of assets in any of the 3 previous years preceding the previous year in which conversion
took place, does not exceed : (Dec 19 –OS) Ch 15
(A) Rs. 1 crore
(B) Rs. 3 crore
(C) Rs. 5 crore
(D) Rs. 10 crore Ans – (C)

19.The essential requirement for the incidence of tax on capital gains is the transfer of a "Capital
Asset". Definition of transfer given under the Act is an inclusive definition. Find out which of the
following are being included under transfer: (Dec 20 –NS)
(i) Conversion of asset into stock in trade
(ii)Extinguishment of rights
(iii) Redemption of Sovereign Gold Bonds issued by RBI by an individual
(iv) Transfer of asset under reverse mortgage
(A) (i), (iii) & (iv)
(B) (i) & (ii)
(C) (i), (ii) & (iii)
(D) All the above four ANS-(B)

20. Base year for the purpose of calculation of indexed cost of acquisition or the cost of improvement in
respect of long term capital asset acquired prior to 1st April, 2001 shall be taken as: (June 18)
(A) 1981-82
(B) 2001-02
(C) 1991-92
(D) 2011-12 Ans (B)

21.Out of the following, which income is chargeable as capital gain: (June 18)
a. from transfer of self generated goodwill of profession
b. from transfer of personal jewellery
c. from transfer of paintings and art-work

d. from transfer of furniture utilized for personal use

(A) (i) and(ii)
(B) (ii) and(iii)
(C) (i), (ii) and(iii)
(D) All the four Ans (C)
22. The cost of improvement in relation to the capital asset being goodwill of the business shall be taken to be as:
(June 18)
(A) Cost incurred by the previous owner
(B) Actual cost incurred by the assessee
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(C) Incurred cost after indexation
(D) None of the above Ans (D)

23. Pankaj,a Company Secretary in practice for thepast 30 years,retired and gavehis practice to Chandra
in consideration for Rs. 15 lakh by way of goodwill. His income for the past 3 assessment years are Rs.
12 lakh, Rs. 10 lakh and Rs. 8 lakh respectively. The amount of goodwill chargeable to income-tax as
capital gain would be : (Dec 19 –OS)
(a) NIL
(b)Rs. 15,00,000
(c)Rs. 10,00,000
(d)Rs. 3,00,000 Ans –(B)

24.Manoj acquired 1,000 equity shares 110 each in a listed company for Rs. 35,000 on 1st July, 2012.
The company issued 1,000 rights shares in April, 2014 at Rs. 15 per share. The company issued
2,000 bonus shares in June, 2021. 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)

50C/43CA/56 (2) (x)

25. Radhey has sold his house on 11 th August , 2021 for Rs.80 lakh . The value applied by Stamp
Valuation Authority is Rs.100 lakh. He disputed this valuation and the departmental
valuation cell made the valuation at Rs. 110 lakh. The value to be taken for calculation of
capital gain as per section 50C is Rs.: (June 18)
(A) 80lakh
(B) 110lakh
(C) 100lakh
(D) None of the above ANS –(C)

26. X entered into an agreement for sale of his house located at Jaipur to Y on 1st April, 2018 for a total
sale consideration of Rs. 90 lakh. Y paid an amount of Rs. 20 lakh by account payee cheque to X on the
date of agreement and balance was to be paid at the time of registration of deed. However, the
conveyance deed could not be executed till 1st Sept., 2021. The Stamp Valuation Authority determined
the value of the property on the date of registration of conveyance deed at Rs. 120 lakh and the value
determined by the Stamp Valuation Authority on the date of agreement was Rs. 100 lakh. The value for the
purpose of capital gain u/s 50C shall be taken: (June 18)
(A) Rs. 90 lakh
(B) Rs. 12 lakh
(C) Rs. 20 lakh
(D) Rs. 100 lakh Ans. (D)

27. Radhey has sold his residential house on 11th Sept., 2019 for Rs.75 lakh. Value applied by the Stamp Valuation
Authority on the date of registration of the Conveyance Deed on 15th Sept., 2021 was of Rs. 115 lakh. Radhey
disputed the valuation made by the Stamp Valuation Authority and asked the departmental valuation officer
to determine the value of the house on the date of registration of deed. The departmental valuation officer
determined the value of the house on the date of registration of the deed at Rs. 120 lacs. Sale value of the house to
be taken for calculation of capital gain in A.Y. 2022-23 as per section shall be of ................. (Dec 18)
(A) 50C, Rs. 115lakh
(B) 50C, Rs. 120lakh
(C) 48, Rs. 75lakh
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(D) 45, Indexed cost of Rs. 75 lakh Ans (A)

28. Section 50C makes special provision for determining the full value of consideration in case of transfer of —
(June, 2015)
(a) Plant ah machinery
(b) Land or building
(c) All movable property other than plant & machinery and computers
(d) Computers. Ans.(B)

29. Mahesh Babu entered into an agreement for sale of his house property located at Jaipur to Yash on
1st August, 2019 for a total sale consideration of Rs. 95 lakh. Yash paid an amount of Rs. 20 lakh by
account payee cheque to Mahesh on 1st August, 2019 and balance was agreed to be paid at the time of
registration of the Conveyance Deed which could only be executed by Mahesh on 1st September 2021.

The Stamp Valuation Authority determined the value of the house property on the date of registration
of deed at Rs. 140 lakh. However, the value determined by the Stamp Valuation Authority of the house
on the date of agreement (1st August, 2019) was Rs. 110 lakh. The sale value for the purpose of
computing the capital gain of the property in A.Y. 2022-23 to be taken by Maheshshall be : (Dec 19 –
NS)
(a) Rs. 95 lakh (b) Rs. 110 lakh
(c) Rs. 140 lakh (d) Rs. 120 lakh Ans.(b)

30. Chiranjeevi entered into an agreement for sale of his house property located at Noida to
Yashashwi on 1st August, 2019 for a total sale consideration of Rs.125 lakh. Yashashwi paid an
amount of Rs.25 lakh by account payee cheque to Chiranjeevi on 1st August, 2019 and balance
was agreed to be paid at the time of registration of the Conveyance Deed which could only be
executed by Chiranjeevi on 1st October, 2021.The Stamp Valuation Authority determined the
value of the house property on the date of registration of deed at Rs.150 lacs. However, the value
determined by the Stamp Valuation Authority of the house on the date of agreement (1st August,
2019) was Rs.140 lacs. The amount of sale consideration for the purpose of computing the capital
gain of the property in A.Y. 2022-23 to be taken by Chiranjeevi shall be : (Dec 20 –NS)
(A) Rs.125 lacs
(B) Rs.150 lacs
(C) Rs.140 lacs
(D) Rs.(140-25) = 115 lacs ANS-(C)

31. Monika enters into an agreement on 7th April, 2021 to transfer a piece of land for an agreed consideration of Rs.
66,00,000 by taking an advance payment of Rs. 10,00,000 by an account payee cheque. Sale deed of the piece
of land executed on 28th December 2021. Indexed cost of acquisition of the piece of land as per provision of the
Act was is computed at Rs. 34,00,000. Stamp valuation Authority determined the value of land on
07.04.2021 at Rs. 68,50,000 and on 28.12.2021 at Rs. 71,00,000. Find out the amount of long- term capital
gain whichshall be chargeable to tax in the assessment year 2022-23. (Dec 20 –OS)
(A) Rs. 32,00,000
(B) Rs. 34,50,000
(C) Rs. 35,00,000
(D) Rs. 37,00,000 ANS. (B )

32.Rahim converted into stock in trade on10th May 2007 his capital asset which was acquired by him
on 15th June, 2002 for Rs. 70,000. Subsequently the stock in trade so converted was sold for Rs.
18,00,000 on 15th July 2021. Fair market value of the asset on 10th May 2007 was Rs. 4,80,000.
By taking the CII for the years 2002-03 as 105, 2007-2008 as 129 and of 2021-22 as 317;
determine the amount of capital gain taxable in assessment year 2022-23. (Dec 20 –OS)

(A) 3,94,000
(B) 13,20,000
(C) 2,87,333
(D) 4,10,000 ANS. A

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OTHER PROVISIONS

32. Ramesh received Rs. 7 lakh by way of enhanced compensation in March, 2022. A further
sum of Rs. 2 lakh decreed by the court is due but not received till 31st March, 2022. The
amount of income chargeable to tax for the assessment year 2022-23 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)

33.Cost of acquisition of securities held with depository in to be computed by - (Dec. 2016)

(a) Average cost method
(b) First in first out (FIFO) method
(c) Last in first out (FIFO) method
(d) Weighted average cost method Ans.(b)

34. XYZ Pvt. Ltd. had distributed income of Rs. 6 lakh to Rajesh for the reason of buyback of its shares (Not being
listed on a recognized stock exchange) from him on 1st February, 2022. The amount of Rs. 6 lakh received by
Rajesh in the A.Y. 2022- 23 shall be (Dec 19 –NS) .
(a) Taxable in full (b) Exempt u/s 10(34A)
(c) Taxable @20% (d) Taxable at normal rate of tax Ans.(b)

35. XYZ Pvt. Ltd. had distributed income of 9,00,000 to Rajesh for the reason of buyback of its
shares from him on 1st March, 2022. These shares were purchased by him for Rs. 5,00,000
on 1st March, 2015. The income out of the amount received by Rajesh against the buy back of
shares from the company XYZ Pvt. Ltd. Shall be subject to tax in A.Y.2022- 23 shall be of........... (Dec
2018)
(A) Rs. 4lakh
(B) Rs. 9lakh
(C) Nil being exempt u/s 10 (34A) of Act
(D) None of the above Ans (C)

36. ABC Ltd, a domestic company purchased on 14th October, 2021 its own unlisted shares. The
consideration for the buyback of shares amounted to Rs.50,00,000 which was paid by the
company on the very same day. Amount received for the issue of such shares by the company 2
years ago was of Rs.27,00,000. The company is required to make the payment of tax for the
buy-back of shares in assessment year 2022-23 of Rs.------------(Dec 20 –NS)(23.296% wali kaani)
(A) 5,35,810
(B) 6,87,700
(C) 6,69,760
(D) 5,50,160 ANS-A

EXEMPTION
37. Under which section, the assessee has to reinvest the entire net consideration to claim full
exemption for the long-term capital gains earned during a previous year - (June 2016)
(a) Section 54EC (b) Section 54F
(c) Section 54GA (d) Section 54D Ans.(b)

38. Capital Gains be invested in specified bonds within a period of _____________ from the date of transfer. (June,
2015)
(a) 36 Months (b) 4 Months
(c) 6 Months (d) 12 Months Ans.(c)

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39. Long-term capital gains on sale of a long-term capital asset in October, 2021 is Rs. 105 lakh. The
assessee invested Rs. 50 lakh in REC bonds in March, 2022 and Rs. 55 lakh in NHAI bonds in May, 2022.
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)
40. 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)
Answer Hint: The amount eligible for exemption u/s 54 would be Rs. 50 lakh because w.e.f AY 2020-21 the option
for investment in two residential house properties will be available when the amount of capital gain does not exceeds
Rs. 2 crore
41. Mr. Madan sold a vacant land for Rs. 120 lakhs on 10-10-2021. The indexed cost of acquisition
amounts to Rs. 18 lakhs. He deposited Rs. 50 lakhs in REC bonds in January 2022 and another Rs. 50
lakhs in March, 2022. 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)
42. For claiming exemption under section 54G, an assessee has to invest the resultant capital gains
within a specified period. Which of the following is not eligible for such investment - (June, 2015)
(a) Furniture (b) Land
(c) Building (d) Plant or machinery. Ans.(a)
43. If the assessee has exercised the option to make investment in two residential houses under section 54,
whether he can exercise the said option for the same assessment year or any subsequent assessment year.
(a) Yes
(b) No
(c) Not in same assessment year but can exercise the option in subsequent assessment years
(d) Yes, if amount of capital gain do not exceed Rs. 2crore in subsequent assessment years Ans.(b)

44. For the purpose of section 54GB, the eligible assessee must own more than___ of the share
capital or more than___ of the voting rights in the eligible company :
(a)50%; 75% (b) 50%; 50%
(c) 25%; 25% (d) 75%; 75%
Ans.(c)
112A/111A/112
45.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, 2021 from the company. She sold all the shares in January, 2022 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 2022-23 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)
46. When foreign institutional investor has long- term capital gain on sale of listed share (STT paid) of Rs. 5 lakhs, the
amount of tax payable on such capital gain would be : (Dec 19 –OS)
(A) NIL
(B) @ 20%
(C) @ 10%
(D) @ 30% Ans.(C)

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47.D transferred Zero Coupon Bonds on 20th August, 2021. These bonds were acquired during the
financial year 2012-13. The capital gain computed on the redemption with indexation benefit is Rs. 2
lakh an without indexation benefit is Rs. 3 lakh. The long term capital gain would be chargeable to tax
on such Zero Coupon Bonds in A.Y. 2022-23: (June 19)
(A) @ 5%
(B) @ 10%
(C) @ 20%
(D) @ 30%. Ans B

48. Long-term capital gains on zero coupon bonds are chargeable to tax - (June, 2015)
(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). Ans.(d)

49. 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)

MISC {-_-}
50. B joined Avtar & Co. as a partner on 1st June, 2021. He contributed his vacant land in the firm as his capital
which was recorded in the books of the firm at Rs. 5 lakh. The land was inherited by B from his father in April,
2011 and the Fair Market Value (FMV) on that date was Rs. 2 lakh. The land was originally acquired by his
father in August, 2006 for Rs. 1 lakh. The Fair Market Value (FMV) on 1st June, 2021 was Rs. 10 lakh. The full
value of consideration received as a result of transfer of land by B as capital would be taken as : (June 19)
(A) Rs. 1 lakh
(B) Rs. 2 lakh
(C) Rs. 5 lakh
(D) Rs. 10 lakh. Ans (C)
51. Aiyer gifted 100 shares to his wife on 1st August, 2014. She received 200 bonus shares from the
company in April, 2019. All the shares were sold to a friend for Rs. 1,50,000 in May, 2021. The 100
shares were originally acquired by Aiyer for Rs. 5,000. The capital gain on sale of shares in the month
of May, 2021 shall be chargeable to tax :. (June 19)
(A) fully in the hands of Aiyer
(B) fully in the hands of Mrs. Aiyer
(C) for 100 shares in the hands of Aiyer and balance 200 shares in the hands of Mrs. Aiyer
(D) for 200 shares in the hands of Aiyer and balance 100 shares in the hands of Mrs. Aiyer Ans (C)

53. When shares of a listed company held for more than 36 months are transferred privately for Rs. 8
lakh, with original cost of acquisition of Rs. 1 lakh whose indexed cost of acquisition is Rs. 2 lakh, the
income-tax payable would be - (Dec. 2015)
(a) Rs. 1,45,600 (b) Rs. 72,800
(c) Rs.1,24,800 (d) Rs. 61,800 Ans.(b)
54. Dr. Sam sold a vacant land to Mr. Roy for Rs. 36 lakhs. For stamp duty purpose, the value of land was Rs. 41
lakhs. The indexed cost of acquisition of land was computed at Rs. 20 lakhs. The taxable long-term capital gain
would be : (Dec 17)
(A) Rs. 21 lakhs
(B) Rs. 16 lakhs
(C) Rs. 5 lakhs
(D) Rs. 20 lakhs Ans.(A)
55. On 01-06-2021 Kamlesh transferred his vacant land to Rajesh for Rs. 12 lakhs. The land was
acquired on 01-09-2016 for Rs. 3 lakhs. If indexation is applied, the indexed cost of acquisition
would be Rs. 3.30 lakhs. The taxable capital gain would be: (Dec 17)
(A) long term capital gain Rs. 8.70 lakhs
(B) short-term capital gain Rs. 9 lakhs
(C) long-term capital gain Rs. 9 lakhs
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(D) short term capital gain Rs. 8.70 lakhs Ans.(A)

56 On 15th November, 2021, 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 2022-23 shall be - (Dec. 2014)
(a) Rs. 3,36,000 (b) Rs. 6,00,000
(c) Rs. (1,18,080) loss (d) Rs. (2,36,880) loss Ans.(d)

57. Indexed cost of acquisition of the house property purchased for Rs. 80 lakh in June, 1998 and was sold in
December, 2021 will be of Rs. ___________(worked out by taking the CII of 1998-99 as 351; of the year 2001-02 as
100; of the year 2022-23 as 317) and FMV of the house property as on 1st April, 2001 of Rs. 90 lakh. (Dec 19 –
NS)
(a) Rs. 63,81,766 (b) Rs. 90 lakh
(c) Rs. 285.30 lakh (d) Rs. 71,79,487 Ans.(c)

58. Compute the tax liability for assessment year 2022-23 of resident individual who is having long term capital gains
of Rs. 5,00,000 and has no other income – (Not an exam question)
(a) Rs. 1,04,000 (b) Rs. 39,000
(c) 51,500 (d)52,000
Note : Rebate under section 87A shall be admissible. Ans.(b)

59. Moti & Sons-HUF purchased a piece of land for Rs.1,05,000 in July, 2002. In July, 2006 the HUF was
partitioned and one of the coparcener Manak got this piece of land. The value of the land in July, 2006 was
of Rs.2,44,000 as assessed by Stamp Valuation Authority. Manak, after receipt of the land incurred
expenses in August, 2007 of Rs.2,58,000 on construction of room, boundary wall and kitchen. The land so
received was sold by him on 11.2.2022 for Rs.17,50,000. The amount of Capital Gain chargeable to tax in
A.Y. 2022-23 will be -------- (Take CII of 2002-03 as 105; 2006-07 as 122; 2007-08 as 129 and of 2021-22
as 317) (Dec 20 –NS)
(A) Rs.7,83,150
(B) Rs.7,99,000
(C) Rs.12,48,000
(D) Rs.9,28,000
ANS -B
60. The Apex Court in case of CIT vs. Equinox Solutions Pvt. Ltd, (2017) 393 ITR 563 has held that the sale of a
running business with all its assets and liabilities would be covered as under the Income-tax Act, 1961
for the purpose of tax thereon. (Dec 20 –NS)
(A) Normal sale
(B) Slump sale
(C) Transfer of business
(D) Conversion of business ANS - B

June 21 Questions
1. Ajit (age 62) received 25,000 per month from 01.07.2021 by entering into reverse mortgage transaction with
State Bank of India. The property mortgaged was acquired by him on 01.01.2002 for `30 lakhs. The fair market
value of the property as on 01.07.2021 was ` 70 lakhs. How much of the amount received by Ajit under reverse
mortgage is chargeable to tax for the assessment year 2022- 23? (JUNE-21-NS)
(A) 2,25,000
(B) Nil
(C) 3,00,000
(D) 3,60,000 ANS-B

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2. Manjula (age 62) sold a vacant land for ` 45,15,000 on 05.02.2022. The said land was acquired by her
on 07.01.2020 for ` 28,00,000. She deposited ` 5 lakhs in Rural Electrification Bond on 30.03.2022. Cost
inflation index : F Y 2019-20 = 289; FY 2021-22 = 317. Compute the capital gain chargeable to tax for
the assessment year 2022-23. (JUNE-21-NS)
(A) Short-term capital gain ` 17.15 lakhs
(B) Long-term capital gain ` 9.44lakhs
(C) Short-term capital gain ` 12.15 lakhs
(D) Long-term capital gain ` 12.15 lakhs ANS-B

3. Kapil Dev is engaged in manufacturing activity. The WDV of plant and machinery as on
01.04.2020 was ` 6,88,000. The entire plant and machinery were sold on 30.03.2021 for ` 7,80,000.
The original cost of plant and machinery amounted to ` 14,65,000 acquired on 05.04.2017. Cost
inflation index : FY 2017-18 = 272; 2021- 22 = 317. Compute capital gain and state its nature. (JUNE-
21-NS)
(A) Short-term capital gain `7,77,000
(B) Short-term capital gain ` 92,000
(C) Long-term capital gain ` 6,85,000
(D) Long-term capital gain `18,647 ANS-B

4. In the case of investment in eligible startups which of the following condition is not applicable for the
purpose of allowing exemption under section 54EE ? (JUNE-21-NS)
(A) Investment must be of long-term capital gain
(B) Investment to be made within 6 months after the transfer of capital asset
(C) Maximum investment is `50 lakhs
(D) The amount is to be invested in convertible debentures issued by a company ANS-D

5. Amin (age 68) sold on 12.05.2021 one vacant site at Baroda for ` 90 lakhs. The vacant site was
inherited by him from his father in July 1999 as per the ‘will’ of his father. The FMV of vacant site on
01.04.2001 was ` 5 lakhs. He acquired a residential apartment in Singapore for ` 70 lakhs on 15.10.2021.
Compute the capital gain chargeable to tax in the hands of Amin for the assessment year 2021.22. Cost
inflation index F.Y. 2001-02 = 100/ F.Y. 2021-22 = 317(JUNE-21-NS)
(A) Long-term capital gain `74.15 lakhs
(B) Long-term capital gain NIL
(C) Long-term capital gain `4.95 lakhs
(D) Long-term capital gain ` 65 lakhs ANS-A

6. Rama Devi (age 53) sold 100 equity shares for ` 8,40,000 (STT paid) on 20.05.2021. Those
shares were acquired on 21.03.2013 for ` 3 lakhs. The FMV as on 31.01.2018 was ` 5,50,000.
How much is taxable under section 112A ? What is nature of such gain/ loss ? Cost inflation
index FY 2012-13 = 200/2017- 18 = 272/2021-22 = 317. (JUNE-21-NS)
(A) ` 2,31,360/Long-term capital gain
(B) ` 3,88,500/Long-term capital gain
(C) ` 2,90,000/Long-term capital gain
(D) ` 12,250/Short-term capital gain Ans – C

7. Rahim purchased house on 1st April, 2001 for ` 2,00,000 and incurred ` 3,00,000 on improvement on
1st July, 2002. He further incurred ` 4,00,000 on 1st July, 2013 for improvement. The house was sold by
him on 1st July, 2021 for ` 2,00,00,000. He his entitled to deduction u/s 80C of `1,00,000. Compute the
total income of Rahim for the A.Y. 2022-23 assuming that Rahim opted for section 115BAC. (Cll 2001-
02=100, 2002-03=105, 2013-14=220).
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 Ch 7 MCQ’s - DT Bullet – Jun 22 & Dec 22 7.11
(JUNE-21-OS)

(A) ` 1,79,90,730 (B) ` 1,78,90,730 (C) ` 1,78,83,922 (D) ` 1,84,40,270

Ans – C
8. As per section 48 of Income Tax Act, 1961, it is provided that where the stamp duty value does not
exceed ______ of the consideration received or accruing as a result of the transfer, the consideration so
received or accruing as a result of the transfer shall, for the purpose for computing profits and gains
from transfer of such assets, be deemed to be the full value of the consideration. (JUNE-21-OS)
(A) 105% (B) 110% (C) 120% (D) 150% ANS-B

9. For claiming exemption u/s 54F, the amount to the extent of net consideration price is to be invested in the
purchase of residential house property in India within : (JUNE-21-OS)
(A) Two years from the date of transfer
(B) Three years from the date of transfer
(C) One year before or two years after the date of transfer
(D) One year before or three years after the date of transfer ANS-C

10. As per section 49 (2AA), where the capital gain arise from the transfer of specified security or sweat
equity shares referred to in section 17(2)(vi), the cost of acquisition of such security or shares shall be
the ________ which has been taken into account for perquisite valuation. (JUNE-21-OS)
(A) Fair market value
(B) Cost price
(C) Cost or Market price, whichever is higher
(D) Cost or Market price, whichever is lower ANS-A

11. Long-term capital gains on listed securities (other than units) and Zero coupon bonds are chargeable to tax :
(JUNE-21-OS)
(A) @ 20% computed after indexation of such bonds
(B) @ 10% computed without indexation of such bonds
(C) @ 20% computed without indexation of such bonds
(D) @ 10% computed after indexation of such bonds ANS-A/B
(note:- As per section 112 where the tax payable in respect of any income arising from the transfer of a
longterm capital asset, being listed securities (other than a unit) or zero coupon bond, exceeds 10% of the
amount of capital gains before giving effect to the provisions of the second proviso to section 48, then, such
excess shall be ignored for the purpose of computing the tax payable by the assesse)

12. Rupam has computed his gross total income of ` 5,60,000 for the Asessement Year 2022-23 which
includes ` 4,70,000 on account of long-term capital gain from sale of equity shares which are taxable us
112A of the lncome Tax Act. He paid ` 1,30,000 as premium of life insurance taken for his own life.
Compute the amount of total income of Rupam if he is a senior citizen. (Assuming assessee has not
opted for section 115BAC) (JUNE-21-OS)
(A) ` 4,70,000 (B) ` 4,30,000 (C) ` 90,000 (D) ` 4,10,000 ANS-A

13. Compute tax payable by Rajkumar for the Previous Year 2021-22: Taxable income of Rajkumar by
normal rates of income tax is ` 2,10,000, Long-term capital gain (with indexing benefit) `2,00,000 and
short term capital gain taxable u/s 111A is `4,00,000 (Securities Transaction Tax on such sale is paid).
(Assuming assessee has not opted for section 115BAC) (JUNE-21-OS)
(A) ` 2,10,000
(B) ` 1,00,000
(C) ` 95,680
(D) ` 60,000 ANS-C
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 Ch 7 MCQ’s - DT Bullet – Jun 22 & Dec 22 7.12

Dec 21 MCQ’s
1. Which out of the following transactions shall not be regarded as transfer as per provision of section 47 of the
Income Tax Act, 1961 for the purpose of working of amount of Capital Gains ? (DEC-21 NS)
(A) Transfer made outside India of Rupee Denominated Bond (RDB’s) an Indian company, issued outside
India by a non-resident to another non-resident.
(B) Compulsory acquisition of capital asset under any law.
(C) Extinguishment of rights in respect of Capital Asset.
(D) Conversion of Capital asset into stock in trade. ANS = A

2. Ganesh has sold a piece of land located at Jaipur for a consideration of `25 lakhs to Ram on 15-5-2021.
Ram paid stamp duty of `3,00,000 @ 10% of the value determined by the Stamp Valuation Authority of
the land. The land was purchased by Ganesh on 15.08.2020 for `12 lakh. Ganesh was not satisfied with
the value determined by the authority and therefore his case was referred to valuation officer. The
valuation officer determined the value of land at `26 lakhs. The taxable capital gains in hands of
Ganesh in A.Y. 2022-23 will be: (DEC-21 NS)
(A) `13 Lakh
(B) `14 Lakh
(C) `16 Lakh
(D) `18 Lakh ANS = B

3. Whenever there is a transfer of a capital asset by a partner to the firm by way of capital contribution or
otherwise, the consideration of such transferred capital asset as per Income Tax Act, 1961 would be taken as:
(DEC-21 NS)
(A) The market value of the Capital Asset on the date of transfer.
(B) The Cost less notional depreciation of the Capital asset.
(C) The value of the asset recorded in the books of the firm.
(D) Any of the above, at the option of the assessee. ANS = C

4. Section 54F of Income Tax Act, 1961 is applicable to ...................... (DEC-21 OS)
(A) Individual/HUF (B) Firm (C) Company (D) None of the above ANS = A

5. Y Ltd. acquired a building on 15th May 2019 for `4,00,000. The assessee, as a tenant, earlier used the
building for industrial purpose on rent since the past 3 years and even after purchase it is
continuously used for industrial purpose. Such building is compulsorily acquired by Government at an
agreed value of 6,00,000 as on 15th July, 2021. The compensation was received on 15th March, 2022.
The written down value of the building as on 1st April, 2021 is 3,42,000. The company acquired a new
building for industrial purpose for 3,00,000 as on 31st March,2022. Calculate taxable capital gain for
the assessment year 2022- 23. (DEC-21 OS)
(A) Nil (B) 3,42,000 (C) 2,00,000 (D) 1,00,000 ANS = A
6. Which among the following is false in case of ‘‘Reverse Mortgage’’ ? (DEC-21 OS)
(A) Under Reverse mortgage a person who owns a house property have the option to mortgage the property
with a scheduled bank or finance company to get a regular income in the form of periodical installments.
(B). This scheme is applicable for senior citizens who have a regular income
(C) Under this scheme, the lender will recover the amount paid i.e. principal and interest thereon by selling
the property after the death of borrower.
(D) The lender will have to give the option to the legal heirs of the borrower to repay the loan amount along
with interest for the release of property. ANS = B

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 Ch 7 MCQ’s - DT Bullet – Jun 22 & Dec 22 7.13

Amendment Based MCQ’s

1) Can exemption under section 54F be denied solely on the ground that the new residential house is
purchased by the assessee exclusively in the name of his wife?

a. Yes
b. No Ans B

2)In case of tenancy rights cost of improvement incurred before 1.4.2001 shall be taken as
a. Actual cost incurred
b. FMV for cost of improvement as on 1.4.2001
c. Nil
d. None of above Ans C

3)Cost of Acquisition in case of self generated Trademark or Brand name associated with a Business
is to be taken as:

a. FMV as on date of acquisition

b. Nil
c. FMV as on 1.4.2001
d. None Ans B

4. In case of slump sale the value of self generated goodwill is to be taken as –

a. Value as per books

b. Value as per the block of assets
c. Value after depreciation
d. Nil Ans - D

5. Where any person receives any amount, under a ULIP issued on or after 1.2.2021 to which
exemption under section 10(10D) does not apply on account of premium payable > Rs.
2,50,000 for any of the previous years during the term of such policy is taxable –

A. In the year of taking the policy

B. In the year of receiving the amount
C. Year on year on accrual basis
D. None of the above Ans – B

6. In case of equity oriented mutual fund if one fund invests in another mutual fud then the minimum
investment in such other fund required should be minimum -
A. 90%
B. 65%
C. 51%
D. 75% Ans – A

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8. MCQ’s – DT Bullet – Jun 22 & Dec 22 8.1

Chapter 8–Income fromOther Sources

Computation of Income under the Head Income from Other Sources

(1) John, engaged in fertiliser trade received rent by sub-letting a building. This will be taxable under the head -
(June, 2015)
(a) Income from house property
(b) Income from capital gains
(c) Income from profits and gains of business and profession
(d) Income from other sources Ans.(d)
(2) Under the Income-tax Act, 1961, dividend derived from the shares held as stock-in-trade are taxable
under the head - (June, 2015)
(a) Income from other sources
(b) Income from profits and gains of business or profession
(c) Capital gains
(d) Either capital gains or income from profits and gains of business or profession. Ans.(a)
(3) Aman entered into an agreement with Brij for sale of a building for Rs. 20 lakh in June, 2021. Aman
received advance of Rs. 2 lakh. Subsequently, the agreement was cancelled and Aman forfeited the
advance money. The advance money is - (Dec. 2015)
(a) To be reduced from the cost of acquisition
(b) To be reduced from indexed cost of acquisition
(c) Taxable as capital gains
(d) Taxable as income under the head 'income from other sources' Ans.(d)
(4) 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)
(5) Sameer received the following income during financial year 2021-22 : 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)
(6) 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, 2021, 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 2022-23 would be - (June,
2015)
(a) Rs. 12,000 (b) Rs. 6,000
(c) Rs. 3,40,000 (d) Rs. 1,70,000 Ans.(d)
(7) The amount deductible from family pension is upto if the assessee has opted for section 115BAC - (Dec.
2014)
(a) Rs. 15,000 or 1/3rd of family pension whichever is less
(b) Rs. 15,000 or 1/4th of family pension whichever isless
(c) Rs. 10,000 or 1/3rd of family pension whichever is less
(d) No deduction. Ans.(d)
(8) Ms. Mala received family pension of Rs. 15,000 per month during the previous year 2021-22. Also,
she was employed in a private firm where she got a monthly consolidated salary of Rs. 20,000 per
month. Her total income chargeable to tax is : (June, 2017)
(a) Rs. 4,20,000 (b) Rs. 3,65,000
(c) Rs. 3,55,000 (d) Rs. 4,05,000 Ans.(c)
(9) Ms. Sitara is in receipt for family pension of Rs. 15,000 p.m. during 2021-22. Income chargeable to tax for
assessment year 2022-23 of Ms. Sitara is - (Dec. 2015)
(a) Rs. 1,80,000 (b) Rs. 1,20,000
(c) Rs. 1,65,000 (d) Nil. Ans.(c)
(10) 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 2022-23 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)

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8. MCQ’s – DT Bullet – Jun 22 & Dec 22 8.2

(11). Suresh (age 65) won a prize on lottery ticket on 30-09-2021. The prize amount was Rs. 5,50,000. He had
bought lottery tickets for Rs. 75,000 during the year. Assuming that he had no other income chargeable to tax
for the year, his income tax liability (including cess @ 4%) would be :(Dec 2017)
(A) Rs. 1,69,950
(B) Rs. 1,71,600
(C) Rs.36,050
(D) Rs.10,300 Ans – B
12. In the hands of Mr. Sarath, a salaried employee, the following income shall be chargeable to tax
as income under the head “Income from other sources”: (Dec 2017)
(i) Dividend
(ii) Income from hiring of machinery
(iii) Winning from Lottery
(iv) Interest on securities

(A) (i) and(iii)

(B) (iii) and(iv)
(C) All the four above
(D) (i), (iii) and(iv) Ans C
13. Babu Lal won a prize of Rs. 1,00,000 in Rajasthan State Lottery and Lottery Department paid him an
amount ofRs. 70,000 after deduction of tax at source of 30,000. He had purchased lottery tickets
forRs.8,000. The amount chargeable to tax in the hands of Babu Lal under other sources shall be: (Dec
2017)
(A) Rs.70,000 (B) Rs.1,00,000
(C) Rs.92,000(D) None of the above Ans. B
14. Mr. Pankaj, a salaried employee, has taken a house on rent of Rs. 12,000 p.m. which was sub-let
by him for Rs. 15,000 p.m. He has incurred miscellaneous expenses in relation to sub-let of the
house of Rs. 1,000. How much income from the sub-letting of house shall be taxable in the A.Y.
2022- 23 where the house was taken on rent and also sub-let by him from 1st April, 2021 onwards:
(Dec 2017)
(A) Rs.36,000
(B) Rs.26,000
(C) Rs.1,44,000
(D) None of the above
Ans – D
15. Chatterjee received Rs. 1 lakh towards advance for sale of his residential house to Xavier on 10-11-
2021. As the buyer Xavier could not pay the balance amount of consideration within 3 months, Chatterjee
forfeited the advance money in accordance with the sale agreement. The advance money forfeited is: (Dec 19 –
OS)
(A) Deductible from cost of the asset
(B) Taxable as long-term capital gain
(C) Taxable as income from other sources
(D) Taxable as short-term capital gain Ans – C

16.Identify out of the following income which shall be chargeable to tax as income under the head -
Income from Other Sources: (Dec20–NS)
(i) Income of Dividend
(ii) Income from composite hiring of building with machinery
(iii) Income from speculative business
(iv) Income of a Jockey
(A) (i) &(ii)
(B) (iii) &(iv)
(C) (i), (ii), (iii) &(iv)
(D) (i), (iii) &(iv) ANS-A

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8. MCQ’s – DT Bullet – Jun 22 & Dec 22 8.3

17. Shivsagar (age 64) is a retired pensioner with pension of 3,20,000 received during the previous year 2021-22.
He has lottery winning of 6 lakhs on 23.03.2022. Compute his income tax liability for the assessment year 2022-23
.(JUNE-21-NS)

(A) ` 1,88,240
(B) ` 1,87,200
(C) ` 87,360
(D) ` 97,760 ANS-B

18. Which of the following income is not chargeable under the head ‘‘income from other sources’’ ? (JUNE-21-NS)

(A) Income from undisclosed sources

(B) Directors’ sitting fees received from company
(C) Working partner salary received from partnership firm
(D) Agricultural income from land situated outside India in the case of resident of India ANS-C

19. Family pension received by the family member of a deceased employee from the employer is taxable under
the head ‘‘Income from Other Sources’’. What is the standard deduction allowed under Income Tax Act,
1961 ? (DEC-21 OS)
(A) 1/3rd of such pension or `15,000 whichever is lower.
(B) 1/3rd of such pension or `15,000 whichever is higher.
(C) 2/3rd of such pension or `15,000 whichever is lower.
(D) 2/3rd of such pension or `15,000 whichever is higher ANS = A
20. Total income of Mr. K is `5,80,000 for the financial year 2021-22 (Including `80,000 for salary after
standard deduction and `5,00,000 for lottery winning gross). what will be tax liability for the Assessment
Year 2022-23? (DEC-21 OS)
(A) `29,640 (B) `1,02,960 (C) `1,56,000 (D) None of the above ANS = C

Deductions not allowable [Section 58]

1. Palak employed in a private company acquired a generator to be let out on hire for marriages and social
functions. He received hire charges of Rs. 8,50,000 and paid on 1st day of every month, salary to operator @
Rs. 35,000 by cash. He also paid interest in cash to SBI towards loan for acquisition of generator of Rs.
1,52,000. The income of Palak from the said activity liable to tax would be (without considering 44AD) :(Dec
19 –OS)
(A) Rs. 2,78,000
(B) Rs. 6,98,000
(C) Rs. 5,78,000
(D) Rs. 3,98,000 Ans – B

Dividend
1. 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)

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 8. MCQ’s – DT Bullet – Jun 22 & Dec 22 8.4

2. Libra P. Ltd. engaged in trading activity had accumulated profits of Rs. 15,00,000 as on 1-4-2021 , Mr.
Gautam having 30% of the equity shares and voting rights in the company received Rs. 5 lakhs as loan
on 1-6-2021 from the company. The loan was repaid by him on 30-11-2021. 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 (d) Rs. 1,50,000

shareholder under Section 10(34). Ans.(a)

3.. The provisions of ‘ deemed dividend’ under section 2(22)(e) of the Income Tax Act, 1961, in respect of
advances or loans to shareholders, or any payment on behalf of shareholders or any payment for the
individual benefit of a shareholder are applicable to: (Dec 2018)
(A) A Public Limited Listed Company
(B) A Public Limited Unlisted Company
(C) A Closely held Company
(D) None of the above Ans C
4. Ghosh having 25% of the share capital in Ghosh Mfg. Industries (P) Ltd. took loan of Rs. 3,50,000 on
15-9-2021 from the company. He repaid Rs. 1 lakh on 20-3-2022 The company has accumulated profitof
Rs. 8 lakh as on 1-4-2021 . It earned profit in the previous year 2021-22 also. The amount assessable as
deemed dividend in the hands of Ghosh wouldbe :(Dec 19 –OS)
(A) Rs.1,50,000
(B) Rs.2,50,000
(C) Rs.3,50,000
(D) NIL Ans – c

5. Ms. Anshu received dividend of Rs. 80,000 for her equity shareholding in MNO Ltd (a listed company).
She paid interest of Rs. 12,500 for the amounts borrowed for investment in those shares. The taxable
dividend income would be : (Dec 2017)

(A) Rs. 80,000

(B) Rs. Nil
(C) Rs. 67,500
(D) Rs. 92,500 Ans – C

6. Geeta aged, 66 years received dividend of `15,00,000 from ABC Ltd in P.Y. 2021-22. Share of the company were
purchased by her by taking loan of `50,00,000 from a financial institution. Interest paid on loan so taken for the
purpose of making investment in the shares of ABC Ltd for the year was of `6,00,000. State the income which
would be subject to tax under other sources in the hands of Geeta for A.Y. 2022-23: (DEC-21 NS)
(A) `15,00,000
(B) `12,00,000
(C) `9,00,000
(D) `5,00,000 ANS = B
7. The deduction for interest expense under section 57 of the Income tax act from dividend income shall not
exceed: (DEC-21 OS)
(A) 10% of Dividend Income
(B) 20% of Dividend Income
(C) 30% of Dividend Income
(D) 40% of Dividend Income ANS = B

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8. MCQ’s – DT Bullet – Jun 22 & Dec 22 8.5

8. Mr. Suyash, an individual received dividend of `15,00,000 as dividend income from listed domestic company for
the Assessment Year 2022-23. What is the dividend amount chargeable to tax : (DEC-21 OS)
(A) `5,00,000 (B) `10,00,000
(C) `15,00,000 (D) All dividend amount received by assessee is exempt from tax.
ANS = C

Purchase/Gifts received for inadequate consideration/ without consideration

1. 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.
2. 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 colleagues 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)
3. Akshay received a gift of Rs. 35,000 each on 22th May, 2021 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)
4. Which of the following income will be taxable as income from other sources -(June, 2015)
(a) Purchase of house from husband for inadequate consideration
(b) Purchase of painting from registered dealer at invoice value less than fair market value
(c) Cash gift from a non-resident friend on marriage anniversary
(d) All of the above.
Ans.(b&c)
5. On 5th February, 2022 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)
6. On 30th December, 2021, 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
(c) Rs. 20,00,000 (d) Nil. Ans.(a)
7. 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 after deducting causal income of
Ans.(c)
8.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)
9. 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)

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 8. MCQ’s – DT Bullet – Jun 22 & Dec 22 8.6

10. Suresh received a gift of `75,000 from a cousin of her mother on 31st December, 2021. How much amount is
taxable as income from other sources for the assessment year 2022-23? (DEC-21 OS)

(A) `25,000 (B) `50,000 (C) `75,000 (D) Nil ANS = C

11. Mr. Lachwani whose business income was `4,50,000 received a cash gift of `70,000 from a charitable trust
registered under section 12AB for meeting his medical expenses during the Previous year 2021-22. What is the
taxable income under the head ‘‘Income from Other Sources’’ for the Assessment Year 2022- 23? (DEC-21 OS)

(A) `20,000 (B) `50,000 (C) `70,000 (D) Not taxable ANS = D

12. Ram received Rs. 80,000 by way of gift from friends upon retirement from service in a privaté company.
The amount of gift chargeable to income-tax would be :(Dec 2017)
(A) Nil
(B) Rs. 30,000
(C) Rs. 70,000
(D) Rs. 80,000
Ans – D
13. Lokesh (age 62) received following gifts on the occasion of his birthday :
(i) cash gift from elder brother Rs. 30,000;
(ii) Gold chain from younger sister market value on the date of gift Rs. 38,000;
(iii) cash gifts from friends (non-relatives) Rs. 45,000;
(iv) Purchased shares from younger brother for Rs. 1 lakh when the market value of the shares was Rs.
1,35,000. Amount of income chargeable to tax in respect to the above transactions would be : (Dec
2017)
(A) Rs. 1,48,000
(B) Rs. 1,18,000
(C) Rs. 80,000
(D) Nil Ans - D
14. State which out of the following gifts received during the year by Girish from different persons shall be
subject to tax in the assessment year 2022-23: (Dec 2018)
(i) Wrist watch of Rs.75,000 given by a non-resident friend.
(ii) Cash of Rs. 51,000 given by elder brother.
(iii) Cash of Rs. 21,000 each given by 4 friends on his birthday.
(iv) Painting of Rs.30,000 given by employer on his birthday.

(A) (iii) and(iv)

(B) (i), (iii) and(iv)
(C) (ii) and(iii)
(D) All the four in (i),(ii),(iii)and(iv) Ans. A
15. All & All is a charitable trust registered under the Income-tax Act, 1961. It acquired a vacant land for Rs.
8,40,000 from Allen. The stamp duty value of the land was Rs. 10,20,000. How much will be added to the
income of the trust towards purchase of property for inadequate consideration ?(Dec 19 –OS)
(A) Rs. 27,000
(B) Rs. 1,80,000
(C) NIL
(D) Rs. 1,38,000 Ans – C

16.A flat in Jaipur was booked by Aditi for Rs.30 lakh with UDB Builders on 01.09.2019 and an amount of Rs.10
lakh was paid by account payee cheque. The possession of flat was given by the builder on13.01.2022. The Stamp
Valuation Authority have determined the value of the flat on the date of booking at Rs.35,00,000 and on the
date of possession given by the builder after execution of conveyance deed at Rs.45,00,000. Find out the
amount if any, chargeable to tax in respect of this flat in the hands of Aditi in the A.Y. 2022-23 under the head
‘Income from other sources’. (Dec20–NS)
(A) Rs.15,00,000
(B) NIL
(C) Rs.5,00,000
(D) Rs.10,00,000 ANS-C

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8. MCQ’s – DT Bullet – Jun 22 & Dec 22 8.7

17. Mrs. Vinita has reported the following transactions :

(i) Received Cash gifts on the occasion of her marriage on 23.01.2022 of `2,25,000. It includes
gift of `30,000 received from non-relatives.
(ii) On 02.12.2021, being her birthday, she received gift by account payee cheque of `81,000
from her mother’s brother.
(iii) On 01.10.2021, she acquired a vacant site from her friend for `8,15,000. The Stamp
Valuation Authority fixed the value of site at `9,50,000 for stamp duty purposes.
(iv) She bought 1000 equity shares of a listed company from Mona on 05.10.2021 for
`7,00,000. The value of such shares in the stock exchange on the date of purchase was of
`7,65,000
She asks you to determine and find out the amount chargeable to tax in her hands for A.Y.
2022-23: (DEC-21 NS)

(A) `2,00,000 (B) `2,81,000 (C) `3,11,000 (D) `3,71,000 ANS = A

Shares issued in excess of FMV

1. 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)

2. 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)

New Amendment based MCQ’s Added

1) Winning from lottery to an agent out of its unsold stock of lottery tickets shall be taxed under the head:

a. IOS @ 30%
b. IOS @ 60%
c. PGBP @ 30%
d. PGBP @ normally as per slab rates Ans C

2) Answer the following in reference to case Gopal & Sons (HUF) v.CIT:

In the above case ,a closely held Company had issued shares in the name of Shri Gopal Kumar Sanei,
Karta of the HUF, and not in the name of the assessee/HUF ,in that case would any loan to HUF
chargeable to tax as deemed dividend?

a. Being karta not HUF a registered shareholder , it shall not be taxable as deemed dividend
b. Being HUF a beneficial shareholder , it shall be taxable as deemed dividend
c. Being HUF a beneficial shareholder , it shall not be taxable as deemed dividend
d. None Ans B

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9.Clubbing – MCQ’s DT Bullet – Jun 22 & Dec 22 9.1

Chapter 9 – Clubbing
(1) 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)
(2) 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)
(3) 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)

(4) 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 if the assessee has opted for section 115BAC - (Dec. 2011)
(a)Nil (b) Rs.20,000
(c) Rs.18,500 (d)None of the above. Ans.(b)

(5) Aiyer gifted 100 shares to his wife on 1st August, 2014. She received 200 bonus shares from the
company in April, 2021.All the shares were sold to a friend for Rs. 1,50,000 in May, 2021. The 100
shares were originally acquired by Aiyer for Rs. 5,000. The capital gain on sale of shares in the month of
May, 2021 shall be chargeable to tax :(June 2019)
(a) fully in the hands of Aiyer
(b) fully in the hands of Mrs. Aiyer
(c) for 100 shares in the hands of Aiyer and balance 200 shares in the hands of Mrs. Aiyer
(d) for 200 shares in the hands of Aiyer and balance 100 shares in the hands of Mrs. Aiyer
Ans.(c)
(6) Incomes of two minor children are included in the income of their father. Father is entitled to exemption
under section10(32) upto - (Dec. 2014)
(a) Rs. 1,500 (b) Rs. 1,000
(c) Rs. 3,000 (d) Rs. 2,000. Ans.(c)
(7) Ram has gifted on 11th May, 2021 an amount of Rs. 10,00,000 to his wife Sita without consideration and
also for not to live apart. The gifted amount was invested by his wife in interest bearing security on which she
earned interest of Rs. 1,00,000 on 1st January, 2022. The amount of interest of Rs. 1,00,000 was further
invested by her in the business from which she earned a profit of Rs. 15,000 for the period ended on 31st
March, 2022. Specify the income which is to be included in the hands of Ram in A.Y. 2022-23 .(Dec 19 –NS)
(a) Rs. 1,15,000 (b) Rs. 1,00,000
(c) Rs. 15,000 (d) Nil Ans.(b)
(8)Rohit is working as Company Secretary in Raj Chem FVt. Ltd. on a salary of Rs. 20,000 p.m. He got married to
Pooja whoholds 25% shares of his Company. What will be the impact of salary paid to Rohit by the company in
the hands of Pooja?(Dec 19 –NS)
(a) No amount to be clubbed (b) Club 50% salary
(c) Club 100% salary (d)25% salary be clubbed Ans.(a)
(9) Chandni (age 14) received Rs. 70,000 as cash gift on her birthday from her parents’ friends. How much of
her income would be liable for clubbing in the hands of her parent ? (Dec 19 –OS)
(A) Rs. 70,000
(B) Rs. 40,000
(C) Rs. 20,000
(D) Rs. 1,08,500 Ans – A

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9.Clubbing – MCQ’s DT Bullet – Jun 22 & Dec 22 9.2

10. Revocable transfer of asset as per section 61 of the Income Tax Act, 1961 includes the transfer which gives
a right to ------- of the asset or the income from such asset or assets during the_____of transferee. (Dec20–NS)
(A) Re-assume power; Lifetime
(B) Revoke; Lifetime
(C) Transfer;Discretion
(D) Re-locate; Period of 10years ANS-A
11. Income from assets as per section 64(1)(iv) shall not be included in the income of transferor where any
individual transfers directly or indirectly any asset other than house property to the spouse when-----
(Dec20–NS)
(A) has received adequate consideration
(B) has been made with an agreement to live apart
(C) after the death of either transferor or transferee
(D) all in A, B &C ANS-D
12. Where the income of an individual includes any income of his minor child as per section 64(1A) of the Act;
such individual shall be entitled to claim exemption of a certain amount (not exceeding the income
clubbed) as per section 10(32). The amount of exemption available is--------(Dec20–OS)
a. 1,500 in respect to each minor child
b. 1,500 in respect of each minor child but maximum of two children
c. 2,000 in respect of each minor child
d. 3,000 in respect of each minor child ANS. A
13. Rajkamal has four minor children (2 daughters and 2 sons). The annual income of two
daughters was Rs. 9,000 and Rs. 4,500 and of two sons was Rs. 6,000 and Rs. 4,000 for the
financial year 2021-22. The income does not accrue or arise to any of the minor children on account
of any manual work done by them or activity involving application of their skill, talent or
specialized knowledge and experience. The daughter who has income of Rs. 4,500 was suffering
from a disabilityspecifiedundersection80U.The amount of income earned by all theminor children
to be clubbed as per section64(1A) of Act in the hands of Rajkamal for the assessment year 2022-
23 is ----------(Dec20–OS)
a. Rs. 23,500
b. Rs. 14,500
c. Rs. 17,500
d. Rs. 19,000 ANS.B

14. Income of interest received by a minorchild on a fixed deposit with a bank made out of/from the amount of
scholarship received from the State Government is-----------(Dec20–OS)
(A) exempt from tax
(B) tobe clubbed with the income of father
(C) to be assessed in the hands of the minor child
(D) to be clubbed with the income of that parent whose total income, before including minor’s income is
higher
ANS.D

15.Minor Shruti (age 13) has following incomes;

(i)Net income from Dancing ` 75,000;

(ii) Interest on bank fixed deposits ` 62,000 and

iii) Cash gift from friends of her parents (non-relatives) ` 45,000.

How much of her income would be clubbed with the income of her parents after deduction under section 10(32)
of the Act ?(JUNE-21-NS)

(A) 60,500
(B) 1,80,500
(C) 1,05,500
(D) 73,500 ANS-A

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9.Clubbing – MCQ’s DT Bullet – Jun 22 & Dec 22 9.3

16. On 31.10.2021, Raju (Minor child) gets a gift of ` 15,00,000 from his father’s friend. On the same day, the
amount is deposited as fixed deposit in Raju’s bank account. On the said deposit, interest of ` 15,000 was
earned during the F.Y. 2021-22 . ln whose hands the income of Raju shall be taxable ? (Assessee has not
opted for section 115BAC). (JUNE-21-OS)
(A) Income of `15,13,500 shall be taxable in the hands of Raju’s father.
(B) lncome of `15,15,000 shall be taxable in the hands of Raju’s father.
(C) lncome of `15,13,500 shall be taxable in the hands of Raju’s father or mother, whose income before this
clubbing is higher.
(D) lncome of `15,15,000 shall be taxable in the hands of Raju’s father or mother, whose income before this
clubbing is higher Ans C

17. Pinky (a minor child of age 5 years) gets a gift on 20.11.2021 of `10,00,000 from her father’s friend. On the
same day, the amount of `10,00,000 was deposited as fixed deposit for 3 years in SBI in the name of Pinky
by her father. Interest of `35,000 was credited on such fixed deposit during the P.Y. 2021-22. State the
amount of income and in whose hands the same will be subject to tax in A.Y. 2022-23. (DEC-21 NS)
(A) Income of `10,33,500 shall be taxable in the hands of father.
(B) Income of `33,500 shall be taxable in the hands of father
(C) Income of `10,33,500 shall be taxable in the hands of father or mother whose income before this
clubbing is higher.
(D) Income of `33,500 shall be taxable in the hands of father or mother, whose income before this
clubbing is higher ANS = C

18. B Gifted debentures of a company to Miss G on 15.09.2018. Miss. G married B’s son M on 11.04.2019.
Interest on debentures for the P.Y. 2021-22 paid by the company is `4,00,000. Such interest in the A.Y.
2022-23 shall be: (DEC-21 NS)
(A) Included in the total income of B u/s 64(1)(vi)
(B) Taxable in the hands of Mrs. M alone
(C) Included in the total income of M u/s 64(1)(vi)
(D) Included in the total income of M or B whose total income is more before including such interest
ANS = B

19. Two Children had separate income of `2,000 and `1,000 respectively which have to be clubbed to the
income of their father Mr. X for the assessment year 2022-23. What amount of Income will be exempted
from father’s income? (DEC-21 OS)
(A) `1,000 (B) `2,000 (C) `3,000 (D) `2,500 ANS = D

20. Xavier, citizen of India a resident individual engaged in salaried employment in Ahmedabad purchased
3000 shares on 03.07.2021 in CD Ltd, @ `75 per share. On 10.07.2021, these 3000 shares were gifted by
him to his wife. CD Ltd allotted 1000 bonus shares to Mrs. Xavier on 30.01.2022.
Mrs. Xavier on 05.03.2022 sold/transferred 4000 shares of CD Ltd for Rs. 150 per share to Rajeev outside
stock exchange.
On the date of sale (05.03.22), the lowest quotation of shares of CD Ltd at BSE was `250 per share. The tax
implication of the above transactions in the hands of Mr. and Mrs. Xavier for A.Y. 2022-23 will be: (DEC-21
NS)

(A) The LTCG arising on transfer of 4000 shares will be taxable in the hands of Xavier by virtue of sec.
64(1)(iv)
(B) The STCG arising on transfer of 4000 shares will be taxable in the hands of Xavier by virtue of sec.
64(1)(iv)

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9.Clubbing – MCQ’s DT Bullet – Jun 22 & Dec 22 9.4

(C) The STCG of Rs. 2,25,000 arising on transfer of original shares will be included in the income of
Xavier and STCG of `1,50,000 arising on transfer of bonus shares will be taxable as income of Mrs.
Xavier.
(D) The STCG of `5,25,000 arising on transfer of original shares will be included in the income of
Xavier and STCG of `2,50,000 arising on transfer of bonus shares will be taxable as income of Mrs.
Xavier
ANS = D
21. The notice of demand after completion of assessment as per section 156 of the Income Tax Act, 1961 in
respect of tax payable on the income of the transferred asset to be clubbed in the hands of transferor can be
served on ........................ (DEC-21 NS)
(A) Transferor
(B) Transferee
(C) Both (A) and (B)
(D) Neither (A) nor (B) ANS = C

12. Transfer of income is revocable in the following cases: (Dec 19 –NS) – Clubbing chapter
(a) Sale with a condition of re-purchase (b) Power to change beneficiary or trustees
(c) Both (a) and (b) (d) Neither (a) nor (b) Ans.(c)

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10. Set off & C/f – MCQ’s DT Bullet – Jun 22 & Dec 22 10.1
Past Exam MCQ’s

(1) Mr. Shahu has loss from house property of Rs.1,10,000 (computed) for the assessment year
2022-23 . He can carry forward such loss for subsequent assessment years. (June, 2017)
(a) 4 (b) Nil
(c) 8 (d) Indefinite Ans.(c)
(2) Business loss can be set off from income of any other business but cannot be set off from: (June
2019)
(a) Salary Income
(b) House Property Income
(c) Long Term Capital Gains
(d) Income from derivatives specified in Sec. 43(5) Ans.(a)

(3) 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)

(4) 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)

(5) 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)

(6) No loss can be set-off against -(Dec. 2016)

(a) Income from salaries (b) Income from house property
(c) Income from capital gains (d) Winnings from lotteries, etc. Ans.(d)

(7) Which of the following losses available after inter source set-off, cannot be set-off from incomes
in other heads in thesame 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)

(8) To carry forward and set-off losses, a loss return must be filed by the assessee within the
stipulated time and gets the lossdetermined 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)

(9) Ashwin has speculation business loss brought forward of the assessment years 2016-17
Rs. 1,00,000; 2017-18 Rs. 70,000 and 2018-19 Rs. 60,000. He has income from the same
speculation business for the assessment year 2022-23 Rs.5,40,000. His total income
chargeable to tax for assessment year 2022-23 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)

(10) Mathur Storage (P) Ltd. engaged in chain cold storage has brought forward business loss of Rs.
12 lakhs relating to A.Y.2021-22. During the previous year 2021-22, its income from the said
business is Rs. 9 lakhs. It also has profit from trade in food grains of Rs. 6 lakhs. The total income of
the company for the A.Y. 2022-23 is :(June, 2017)
(a) Rs. 15 lakhs (b) Rs. 9 lakhs
(c) Rs. 6 lakhs (d) Rs. 3 lakhs Ans.(c)

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10. Set off & C/f – MCQ’s DT Bullet – Jun 22 & Dec 22 10.2
[Note : If chain cold storage is a specified business u/s 35AD, the brought forward business loss can
be set-off only from profits of specified business is such case the brought forward business loss can
be set-off to the extent of Rs. 9 lakh and balance loss shall be carried forward and the answer will
be Rs. 6 lakh.]

(11) If an individual, having a sales turnover of Rs. 60 lakh files his return of income for the
assessment year 2022-23 after the due date, showing unabsorbed business loss of Rs. 23,000 and
unabsorbed depreciation of Rs. 45,000, he can carry forward to the subsequent assessment years -
(June, 2015)
(a) Both unabsorbed business loss of Rs. 23,000 and unabsorbed depreciation of Rs. 45,000
(b) Only unabsorbed business loss of Rs. 23,000
(c) Only unabsorbed depreciation of Rs. 45,000
(d) Neither unabsorbed business loss of Rs. 23,000nor unabsorbed depreciation of Rs. 45,000.
Ans.(c)
(12) Short term capital loss can be set-off as per provisions of section 72 of the Income Tax Act,
1961 from :(June 2019)
(a) Short term capital gain
(b) Short term capital gain and Long term capital gain
(c) Long term capital gain
(d) Short term capital gain and profit & gain from business Ans.(b)

(13) Short-term capital loss can be set-off from - (June, 2012)

(a) Short-term capital gains
(b) Long-term capital gains
(c) Both short-term and long-term capital gains
(d) Any income of the previous year. Ans.(c)

(14) 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 income
(b) Only against income under the head '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)

15. Section 79(b) of Income Tax Act, 1961 deals with : (DEC-21 OS)
(A) Carry forward and set off losses in case of change in constitution of firm
(B) Carry forward and set off losses in case of companies in which the public are not substantially
interested
(C) Carry forward and set off losses in case of eligible start up
(D) Carry forward and set off losses in case of succession of business or profession
ANS = B/C
(NOTE Option B as well as Option C both may be considered as correct as section 79 covered both the points.)

(16) The loss from activity of owning and maintaining race horses is eligible for carry forward and
set off for a maximum period of :(June 2019)
(a) 8 Assessment years (b) 6Assessment years
(c) 4 Assessment years (d) 2 Assessment years
Ans.(c)
(17) 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 2021-22. On 1st April, 2021, two
partners retired. The amount that assessee-firm can set-off against its income for the
assessment year 2022-23 would be - (Dec. 2015)

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10. Set off & C/f – MCQ’s DT Bullet – Jun 22 & Dec 22 10.3
(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 set-off.

(18) 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
(c) Rs. 2,40,000 (d) Rs. 1,10,000 Ans.(c)

(19) If a person is eligible to claim :(1) unabsorbed depreciation; (2) current scientific research
expenditure; (3) current depreciation; (4) brought forward business loss. The order of priority to
set-off would be - (Dec. 2015)
(a) (4), (3), (2) & (1) (b) (2), (3), (4) & (1)
(c) (3), (4), (1) & (2) (d) (1), (2), (3) & (4) Ans.(b)

(20) Annamalai has income from business of Rs. 5,50,000 and loss from horse race of Rs. 60,000 of
the previous year 2021-22. He has brought forward business loss of Rs. 1,10,000 of the assessment
year 2013-14 and regular business loss of Rs. 90,000 of assessment year 2020-21. His total
income for the assessment year 2022-23 after set off of eligible losses would be :(Dec 19 –OS)
(A) Rs. 2,90,000
(B) Rs. 3,50,000
(C) Rs. 4,60,000
(D) Rs. 4,10,000
Ans – C
(21) Kamal has eligible brought forward business loss relating to assessment year 2019-20 of Rs.
70,000. For the previous year 2021-22 he has
(i) loss from house property Rs. 3,10,000;
(ii) loss from business Rs. 90,000; and
(iii) loss under the head ‘other sources’ Rs. 1,00,000.
He filed the return of income for the assessment year 2022-23 on 5-9-2022 which is beyond the
‘due date’ specified in section 139(1). State the losses which are eligible for carry forward for
assessment year 2023-24. (Dec 19 –OS)
(A) All losses except loss under the head “other sources”
(B) Carried forward loss of Rs. 70,000 from AY 19-20
(C) Only loss from house property is eligible for carry forward
(D) All losses are eligible for carry forward including loss under the head “income from other
sources”
Ans – B
Note – The options given are incorrect. Exact answer would have been Both B&C. ICSI has given the
answer B.

24. Where the net result for any assessment year in respect of any source falling under any head of
income is a loss; the assessee is entitled to set-off the amount of such loss against his income
from any other source under the same head. However, certain losses are not being allowed to be
set-off as per General Rule. Find out from the following which are those: (Dec20–NS)

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10. Set off & C/f – MCQ’s DT Bullet – Jun 22 & Dec 22 10.4
(i) Speculative business loss
(ii) Long term capital loss
(iii) Casual income
(iv) Loss from an exempt source

(A) (i) & (ii)

(B) (i), (ii) & (iv)
(C) (i), (ii), (iii) & (iv)
(D) (i), (iii) & (iv)

ANS-C

25. Carried forward losses of normal business can be set off against any other income in subsequent
assessment year except-------(Dec20–OS)
a. income from speculation business
b. income under the head House Property
c. income under the head other sources
d. income under the head salaries
ANS - B/C/D (Given in ICSI’ suggested answers as well)

26. Padmaja has following income/loss for the previous year ended 31.03.2022 :
(I)income from lottery winning of ` 7,00,000;
(ii) loss from non-speculation business of ` 3,00,000; and
(iii) dividend from Indian companies of ` 50,000. What is her total income chargeable to tax for the
assessment year 2022-23 ?(JUNE-21-NS)
(A) ` 7,00,000
(B) ` 4,00,000
(C) ` 4,50,000
(D) ` 7,50,000 ANS-A

27. Which of the following is not eligible for carry forward and set off ? (JUNE-21-NS)
(A) Loss from activity of owning and maintaining race horses
(B) Loss under the head ‘other sources
(C) Loss under the head ‘house property’
(D) Loss from transfer of short-term capital assets ANS-B

28. For how many no. of years, losses of business mentioned in section 35AD can be carried forward ?
(Assessee has not opted for section 115BAC).(JUNE-21-OS)
(A) Eight Years (B) Four Years (C) Seven Years (D) No time limit ANS-D

29. According to section 80, no loss which has not been determined in pursuance of a return filed in
accordance with the provisions of section 139(3), shall be carried forward. The exceptions to this are
:(JUNE-21-OS)
(A) Loss from specified business under section 73A

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10. Set off & C/f – MCQ’s DT Bullet – Jun 22 & Dec 22 10.5
(B) Loss under the head ‘‘Capital Gains’’ and unabsorbed depreciation carried forward under section
32(2)
(C) Loss from house property and unabsorbed depreciation carried forward under section 32(2)
(D) Loss from speculation business under section 73 ANS-C

30. The details of income/loss of Keshav engaged upto 30.10.2021 in salaried employment and thereafter in
different businesses computed under various heads of income for the previous year 2021-22 are given
here under:
Particulars of Income/Loss. Amount (`)
Income from Salary 4,60,000
Loss from self-occupied house property 1,25,000
Loss from let-out house property 2,75,000
Loss from specified business u/s 35AD 80,000
Loss from Retail cloth business 1,70,000
Long term capital gain on sale of land 3,00,000
Income from other sources of Interest 1,20,000
The gross total income of Keshav for A.Y. 2022-23 after set off of the losses would be : (DEC-21 NS)
(A) `5,10,000 (B) `2,30,000 (C) `3,10,000 (D) `7,60,000 ANS = A

31. R & S are 2 partners of RS & Co. (a partnership firm). The firm was constituted on 01.04.2021 after the
death of M (father of R & S) to continue the business of M.
M carried a proprietary business of Food Grains and the accumulated losses up to 31.03.2021 were
`50,000. Particulars of income and loss of RS & Co. for the P.Y. 2021-22 are :
(i) Income from Grain business `4,00,000.
(ii) Loss in Cloth Business Rs. 60,000
(iii) Speculative business income `2,00,000
Against the income of `6,00,000 for the year partners of the firm want to set-off the following
(i) Loss in Cloth business of firm `60,000
(ii) Business Loss of `50,000 of M accumulated up to 31.03.2021
(iii) H.P. loss of R of `25,000
(iv) Speculative loss of S of `32,000
(v) Disputed sales tax liability of M of the financial year 2017-18 of `15,000

Which was paid by the firm on 01.12.2021 but not deducted from any of the Income given above. Determine
and find out the income of RS & Co. which will be subject to tax for A.Y. 2022-23: (DEC-21 NS)
(A) `4,90,000
(B) `5,25,000
(C) `5,35,000
(D) `4,75,000 ANS = D

32. If new tax regime is adopted, which of the following losses will not be carried forward in the hand of an
individual: (DEC-21 OS)
(A) Loss from activity of owning and maintaining race horses
(B) Loss in speculation business
(C) Loss on transfer of capital assets
(D) Loss under the head House property ANS = D

33. During the previous year 2021-22, Mr. Akhil has the following income and brought forward losses:
(1) Short-term capital gains on sale of shares of `1,00,000
(2) Long-term capital loss of A.Y. 2021-22 of `60,000
(3) Short-term capital loss of A.Y. 2020-21 of `35,000
(4) Long-term capital gain of `40,000.

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10. Set off & C/f – MCQ’s DT Bullet – Jun 22 & Dec 22 10.6
What is the capital gain taxable in the hands of Mr. Akhil for the Assessment Year 2022-23? (DEC-21
OS)
(A) `1,05,000 (B) `45,000 (C) `65,000 (D) `1,40,000 ANS = C

34. Compute the income from business and profession of Mr. B for the A.Y. 2022- 23 from the information
given below:
(1) Income from business (before providing for depreciation) of `1,00,000
(2) Income from tea business of `50,000
(3) Current year depreciation of `20,000
(4) Brought forward business loss (loss incurred six years ago) of `10,000 (Dec 21 - OS)

(A) `1,20,000 (B) `1,00,000 (C) `90,000 (D) `87,500 ANS = A/C

(Note Option A is correct if income from tea business is not related to manufacturing. Option C is
correct if income from Tea business is related to growing and manufacturing of Tea.)

(1) Where a change in shareholding has taken place during the previous year in the case of a
company, not being a company in which the public are substantially interested, no loss incurred
in any year prior to the previous year shall be carried forward and set off against the income of
the previous year, unless on the last day of the previous year, the shares of the company carrying
not less than of the voting power 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 or years in
which the loss was incurred.
(a) 25%, 25%
(b)51%, 51%
(c) 75%, 75%
(d) 50%, 50%

Ans.(b)

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 Ch 11. MCQ’s DT Bullet 11.1

CHAPTER 11 ( DEDUCTIONS)

Past Exam Questions

1) Deduction under section 80C can be claimed for fixed deposit made in any scheduled bank, if the
minimum period of deposit is- (June 2016)
(a) 5 Years (b) 8 Years
(c) 10 Years (d) 12 Years Ans.(a)
(2)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, 2022. Amount that can be
claimed by him as deduction out of income in assessment year 2022-23 is - (Dec. 2015)
(a) 50% of Rs.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)
(3)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
(4) Varun incurred medical expenditure of Rs. 32,000 towards cataract surgery of his mother (aged 70 years). She
also underwent a minor surgery for which he incurred an expenditure of Rs. 26,000. Deduction u/s 80D will be -
(Dec. 2016)
(a) Rs. 50,000 (b) Rs. 12,000
(c) Rs. 25,000 (d) Rs. 38,000 Ans.(a)
(5) Raghu's father is dependent on him and suffering with 90% disability. Raghu has incurred an amount of Rs.
72,500 in maintaining and medical treatment of his father. The deduction he can claim in his income-tax return for
assessment year 2022-23 is - (Dec. 2015)
(a) Rs. 72,500 (b) Rs. 75,000
(c) Rs. 1,25,000 (d) None of the above. Ans.(c)
(6) Rajan paid Rs. 25,000 to LIC of India for the maintenance of his disabled son and incurred Rs. 15,000
for the treatment of his handicapped wife who is working in State Bank of India. The deduction allowable
to him u/s 80DD is -' (June 2016)
(a) Rs. 15,000 (b) Rs. 25,000
(c) Rs. 50,000 (d) Rs. 75,000 . Ans.(d)
(7) 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. 2017)
(a) Rs. 40,000 (b) Rs.50,000
(c) Rs. 1,25,000 (d) None of the above. Ans.(c)
(8) Raghunath repaid during previous year 2021-22 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 2014-15 and the payment commenced from financial year 2014-15. The amount eligible for
deduction under section 80E for the assessment year 2022-23 is : (June, 2017)
(a) Rs. 60,000 (b) Rs. 78,000
(c) Rs. 18,000 (d) Nil Ans.(c)
(9) 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)
(10) Deduction in respect of donations to National Defence Fund is allowed under section - (June, 2015)
(a) 80G (b) 80CCG
(c) 80C (d) None of the above. Ans.(a)
(11) Deduction available under section 80GG in respect of rent paid cannot be more than - (Dec. 2016)
(a) Rs. 6,000 per month (b) Rs. 5,000 per month
(c) Rs. 2,000 per month (d) Rs. 10,000 per month Ans.(b)
(12) The maximum amount of deduction under section 80GG in respect of rent paid is - (June, 2011)
(a) Rs. 2,000 per month (b) Rs. 3,000 per month
(c) Rs. 5,000 per month (d) Rs. 10,000 per month. Ans.(c)
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 Ch 11. MCQ’s DT Bullet 11.2
(13) Bharat, engaged in business, claimed that he paid Rs. 10,000 per month by cheque as rent for his
residence. He does not own any residential building. His total income computed before deduction under
section 80GG is Rs. 3,40,000. The amount he can claim as deduction under section 80GG is - (June 2016)
(a) Rs. 24,000 (b) Rs. 34,000
(c) Rs. 1,20,000 (d) Rs. 60,000 Ans.(d)
(14) 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)
(a) Local authority (b) Individual
(c) Artificial juridical person (d) None of the above. Ans.(b)
(15) Under section 80QQB, the maximum deduction in respect of royalty is allowed upto - (Dec. 2 016)
(a) Rs. 1,00,000
(b) Rs. 1,50,000
(c) Rs. 2,50,000
(d) Rs. 3,00,000 Ans.(d)
(16)n 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 ismore. Ans.(c)
(17) Deduction available to an individual in respect of interest on saving bank account is - (Dec. 2011)
(a) Such Interest Income
(b) Rs. 10,000
(c) Such interest income or Rs. 10,000 which ever is less
(d) Such interest income or Rs. 10,000 which ever is more. Ans.(c)
(18) 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)
(19) 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)
(20) 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)
(21) 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)
(22) An amount upto a maximum of Rs. 10,000 is deductible under section 80TTA from the gross total income of -
(Dec. 2016)
(a) Individual only (b) HUF and individual only
(c) Company only (d) All assessees Ans.(b)
23. Mr. Mithun acquired a house property for Rs. 8 lakhs and paid stamp duty and registration fee of Rs. 80,000. He borrowed
housing loan and repaid principal of. Rs. 60,000 and interest of Rs. 20,000. The amount eligible for deduction under Section
80C would be : (Dec. 2017)
(A) Rs. 80,000
(B) Rs. 60,000
(C) Rs. 1,00,000
(D) Rs. 1,40,000 Ans.(d)
24. Mr. Uday is a resident individual having patent registered on 01-07-2013 under the Patents Act, 1970. He received Rs. 5
lakhs by way of royalty from ABC Ltd during the financial year 2021-22. The quantum of royalty eligible for deduction would
be : (Dec. 2017)
(A) Rs. 5 lakhs
(B) Rs. 3 lakhs
(C) Rs. 1 lakh
(D) Rs. 2 lakhs Ans.(b)
25. Mr. Veer earns monthly rental income of Rs. 60,000 from a house property. He suffers from severe disability and
has obtained certificate from the prescribed medical authority. He has not incurred any expenditure towards
treatment of severe disability. His total income chargeable to tax after deduction under Section 80U would be : (Dec.
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 Ch 11. MCQ’s DT Bullet 11.3
2017)
(A) Rs. 3,79,000
(B) Rs. 5,95,000
(C) Rs. 5,04,000
(D) Rs. 7,20,000 Ans.(a)
26. Mr. Baskar a person with disability referred to in Section 80U is employed in a bank. He paid Rs.
50,000 as premium on life insurance policy taken on himself and whose sum assured is Rs. 4 lakhs. The
amount of premium eligible for deduction under Section 80C would be : (Dec. 2017)
(A) Rs. 40,000 (10% of sum assured)
(B) Rs. 50,000
(C) Nil (since it exceeded 10%)
(D) None of the above Ans.(b)
27. Mr. Anand engaged in business wants to deposit in pension fund of Life Insurance Corporation of India. The
maximum amount of contribution eligible for deduction from total income is :(Dec. 2017)
(A) Rs. 10,000
(B) Rs. 50,000
(C) Rs. 1,00,000
(D) Rs. 1,50,000 Ans.(d)
28. Sudhan Ltd incorporated in April 2021 commenced commercial production from 01-06-2021. It deployed 100
employees who were employed for 260 days during the year and recruited 50 casual workmen who were employed
for 100 days during the financial year 2021-22. The salary paid to 100 employees was Rs. 25 lakhs and salary paid to
casual workmen was Rs. 6 lakhs. The quantum of deduction under section 80JJAA is: (Dec. 2017)
(A) Rs. 7.50 lakhs
(B) Rs. 9.30 lakhs
(C) Rs. 25 lakhs
(D) Rs. 6 lakhs Ans.(a)
29. Mr. Rath borrowed loan of Rs. 10 lakhs for higher education in India in the year 2007-08. He completed the
course study in 2010-11. He started repayment of the loan from April 2016: He paid interest of Rs. 41,000 and
principal of Rs. 1,20,000 during the financial year 2021-22. The amount eligible for deduction under section 80E
would be :(Dec. 2017)
(A) Rs. 1,20,000
(B) Rs. 1,61,000
(C) Rs. 41,000
(D) Rs. 1,00,000 (monetary limit) Ans.(c)
30 Mr. Ganesh gave donation by way of cheque of Rs. 40,000 and by cash Rs. 5,000 to an approved
charitable trust having recognition under section 80G. His gross total income for the assessment year
2022-23 is Rs. 5 lakhs. The quantum of deduction under section 80G would be :(Dec. 2017)
(A) Rs. 45,000
(B) Rs. 5,000
(C) Rs. 40,000
(D) Rs. 20,000 Ans.(D)
31. Mr. Sridhar employed in KL Ltd took voluntary retirement in December 2021 and received Rs.
2,00,000 from National Pension System Trust. The amount so received chargeable to income-tax is: (Dec.
2017)
(A) Nil as 100% is exempt
(B) Rs. 1,20,000 as 40% is exempt
(C) Rs. 1,00,000 as 50% is exempt
(D) Rs. 80,000 as 60% is exempt Ans.(D)
32. Deduction u/s 80C from the gross total income of an amount equal to the eligible investment made
subject to a maximum amount of Rs. 1,50,000 is allowed to the assessee who is: (June 2018)
(A) A Hindu Undivided Family
(B) Any person
(C) An individual
(D) Both (A) and(C) Ans. D
33. An assessee can avail the deduction in respect of rent paid u/s 80GG of the Act subject to a maximum amount of:
(June 2018)
(A)5,000p.m. (B) 25% of the adjusted total income
(C)3,000p.m. (D) None of the above Ans. A
34. Maximum amount of deduction (in terms of )in the case of an individual who is resident in India, a patentee and in
receipt of income by way of royalty in respect of a patent registered on or after first day of April,2003 under the
Patents Act, 1970 is allowed: (June 2018)
(A) 100% of such income
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 Ch 11. MCQ’s DT Bullet 11.4
(B) 50% of such income
(C) Rs. 3lakh
(D) No such deduction under the Act Ans. C
35. Contribution made or given other than by way of cash by an Indian company in the previous year to any
political party or to an electoral trust shall be allowed as deduction while computing its total income under section
80GGB of Income Tax Act, 1961 of an amount maximum or up to: (Dec 2018)
(A) 50,000 (B)1,50,000
(C) No monetary ceiling limit (D) None of the above Ans. C
36. SJG Ltd., a manufacturer of leather goods in a factory located at Noida having annual turnover of Rs. 50 crore.
The company, during the year, employed 200 new regular workers in the factory, which was 20% of the existing
work-force employed on the last day of the preceding year. It paid Rs. 30 lakh to the new workers during
the year as additional wages. All workmen were employed from 1st May, 2021. The eligible amount of
deduction which the company can claim under section 80 JJAA of Income-Tax Act, 1961 is: (Dec 2018)
a. Rs. 30lakh
b. Rs. 15lakh
c. Rs. 9lakh
d. Rs. 18lakh Ans C
37. Nargis during the previous year 1st April, 2021 to 31st March, 2022 had donated the amount of Rs.
50,000 each in Africa Fund, National Children Fund, National Illness Assistance Fund and further
amount of Rs. 30,000 in Rajiv Gandhi Foundation. The amount of deduction eligible to be claimed by
her as per section ................. in A.Y. 2022-23 shall be of................. (Dec 2018)
(A) 80GG,Rs.1,80,000
(B) 80G,Rs. 1,65,000
(C) 80GGB, Rs. 1,50,000
(D)80G,Rs.90,000 Ans B
38. Rao, carrying a business, contributed Rs. 40,000 in the National Pension Trust account. He also made
a tax saving deposit of Rs. 1,20,000 in his PPF account and Rs. 40,000 in LIC Premium. The total amount
eligible for deduction under various sections enumerated in Chapter VI-A shall be : (June 19)
(A) Rs. 1,90,000
(B) Rs. 1,50,000
(C) Rs. 1,20,000
(D) Rs. 2,00,000. Ans A
39. 100% deduction in respect of donations as per section 80G without any qualifying amount or limit is available
in the case of : (June 19)
(A) Prime Minister Drought Relief Fund
(B) Jawaharlal Nehru Memorial Fund
(C) Payment to local authority for promotion of family planning
(D) Africa Fund. Ans D
(40) ABC Limited fulfilling all the conditions of operating different infrastructure facilities for claiming deduction
u/s 80-IA. Find which are being not covered under infrastructure facility out of the following : (Dec 19 –NS)
(a) Developing of Toll-Road (b) Operating and maintaining of Highway
Project
(c) Operating and maintaining of an Air-port (d) Developing of industrial park
Ans.(d)`
41. Ramchand (age 62) is a pensioner with monthly pension of Rs. 49,000. His income from
interest on bank fixed deposit is Rs. 80,000. His income-tax liability for the assessment year 2022-
23 would be : (Dec 19 –OS)
(A) Rs. 34,940 (B) Rs. 45,340
(C) Rs. 43,260 (D) Rs. 41530 Ans – A
(Hint – Answer is given without standard deduction)
42. Mahadev (age 45) engaged in business paid Rs. 52,000 towards medical insurance of his parents who are
senior citizens. He also paid Rs. 30,000 towards medical insurance for himself, his wife and one daughter. The
premium amount was paid by account payee crossed cheque. The amount of deduction allowable under section
80D would be :(Dec 19 –OS)
(A) Rs. 55,000 (B) Rs. 75,000
(C) Rs. 80,000 (D) Rs. 82,000 Ans – B
43. M incurred Rs. 2 lakh as expenditure towards medical treatment of his father P (age 61) who suffered from
advanced stage of cancer. The amount of expenditure eligible for deduction under section 80DDB would be :(Dec
19 –OS)
(A) Rs. 30,000 (B) Rs. 60,000
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 Ch 11. MCQ’s DT Bullet 11.5
(C) Rs. 80,000 (D) Rs. 1,00,000 Ans – D
44. MNO Ltd. was incorporated in April, 2021 and its aggregate turnover for the previous year 2021-22 must
not exceed ................. in order to be eligible for deduction under section 80-IAC of the Act. (Dec 19 –OS)
A.Rs. 2 crores B. Rs. 5 crores
C. Rs. 100 crores D. 25 crores Ans – C
45. Rahul & Co. Ltd. paid Rs. 1,10,000 towards printing of pamphlets of a registered political party in
connection with state assembly elections. The expenditure incurred is :(Dec 19 –OS)
A. Inadmissible expenditure B. Deductible @ 50%
C. Deductible @ 100% D. Deductible U/s 80GGB Ans – D
46. Lal authored a text-book for school students of Malaysia. He received Royalty (in convertible foreign
exchange before 31-5-2021) of Rs. 5 lakh. He incurred expenditure such as Rs. 20,000 for reference books,
Rs. 60,000 for text proof readers and Rs. 1,00,000 for content assistants. How much of his income is
eligible for deduction under section 80QQB? (Dec 19 –OS)
A. NIL B. Rs. 3,20,000
C. Rs. 3,00,000 D. Rs. 1,60,000 ANS – A
47. Who can claim deduction under section 80GG in respect of rent paid for accommodation? (Dec 19 –OS)
A. Company B. Partnership firm
C. Individual D. Co-operative society Ans – C
48. Senthil employed in a nationalized bank incurred Rs. 60,000 towards medical expenditure of his
parent who is a senior citizen and dependent upon him. There is no health insurance policy to cover the
parent. The amount eligible for deduction under section 80D would be: (Dec 19 –OS)
A. Rs. 10,000 B. Rs. 25,000
C. Rs. 35,000 D. Rs. 50,000 ANS -D
49. Pankaj, fulfilling all the prescribed conditions for claiming deduction under section 80GG having adjusted total
income of Rs.1,84,000 before providing such deduction and was paying rent in respect of residential
accommodation occupied by him at Delhi @ Rs.4,800 p.m. He is entitled to claim the deduction for the house rent
so paid in assessment year 2022-23 while computing his taxable income of an amount of -----(Dec20–NS)
(A) Rs. 39,200
(B) Rs. 46,000
(C) Rs. 60,000
(D) Rs. 57,600 ANS -A
50. Babu Lal authored a book which is covered as per provision of section 80QQB and received an amount of
royalty of Rs.2,00,000 @ 20% during the year ended 31.3.2022. He had incurred an expenditure of
Rs.30,000 for earning the amount of royalty of Rs.2,00,000. The entire royalty was received by him
from abroad and amountof Rs.1,10,000 out of the royalty amount shall be remitted to India till
30.09.2022.He can claim deduction out of such royalty income in assessment year 2022-23 for an amount
of--------(Dec20–NS)
(A) Rs. 1,70,000
(B) Rs. 80,000
(C) Rs. 1,20,000
(D) Rs. 2,00,000 ANS -B
51. Rama Farm Pvt Ltd is a producer company as specified under section 581A(i) of the Companies Act, 1956. In
order to avail/ taking the benefit of deduction under section 80PA,the total turnover of the company is to be less than
in any previous year. (Dec20–OS)
(A) 100crores
(B) 200crores
(C) 300crores
(D) 500crores ANS– A

52. Zubin is intending/going to purchase agriculture lands in the rural area located in Gujrat for Rs.70,00,000 in
the previous year 2021-22. He wants to know whether there is any obligation on him to deduct tax at source from
the payment to be made and if so at what rate? (Dec20–OS)
A. deduct tax @1%
B. deduct tax @2%
C. deduct tax @5%
D. not to deduct tax atsource ANS– D
53 The maximum amount which can be donated in cash for claiming benefit of deduction under section 80G of the Act is--
-------(Dec20–OS)
(A)1,000
(B)2,000
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 Ch 11. MCQ’s DT Bullet 11.6
(C)5,000
(D)10,000 ANS - B

54. An individual resident senior citizen tax payer can claim an amount of as deduction in respect of specified income
of interest on bank deposits, post office deposits and deposits held in a banking cooperative society. (Dec20–OS)
(A)10,000
(B)30,000
(C)50,000
(D)75,000
ANS C
55. A deduction of an amount of Rs.--------- under section 80EEA in respect to interest paid on home loan for
acquisition of residential house under affordable housing is available to ----------- in A.Y. 2022-23. (Dec20–OS)
(A) 50,000;Individual
(B) 1,50,000; Individual &HUF
(C) 2,00,000;Individual
(D) 1,50,000;Individual
ANS D
56. Which of the following condition is not applicable for allowance of deduction for start-ups under section 80-IAC of
the Act ? (JUNE-21-NS)
(A) It is a company incorporated after 01.04.2016 but before 01.04.2022
(B) The total turnover does not exceed 100 crores and has not incurred loss in any previous year prior to the claim of
deduction under this section for the first time
(C) Holds a certificate of eligible business from Inter-Ministerial Board of Certification
(D) Eligible for deduction @ 50% of the profits and gains derived from such business for 3 consecutive assessment
years ANS-D

57. Ramachari (age 83) is a pensioner who received ` 7,46,000 by way of pension during the previous year 2021-22. His
only other income is interest of ` 65,000 from fixed deposit held in nationalized bank. What is the total income ?(JUNE-
21-NS)
(A) ` 8,01,000
(B) ` 7,11,000
(C) ` 7,61,000
(D) ` 7,21,000 ANS-B.

58. Shanti Lal has taken loan of ` 5,00,000 on 1st October, 2000 @ 10% p.a. for construction of a house which was
completed on 1st October, 2020 and the house remained self-occupied throughout the previous year 2021-22. The
assessee has income under the head salary of ` 4,00,000. Shanti Lal has paid life insurance premium of ` 30,000.
Compute total income for A.Y. 2022-23 . (Assuming assessee has opted U/s 115BAC).(JUNE-21-OS)
(A) ` 2,45,000
(B) ` 3,40,000
(C) ` 4,00,000
(D) ` 3,70,000 ANS-C

59. The legal heir of the deceased who receives family pension is entitled to take deduction from such family pension
(where option u/s 115BAC is not exercised) received to the extent of :(JUNE-21-OS)
(A) Allowed a standard deduction of 1/3rd of such pension subject to maximum of ` 20,000
(B) Allowed a standard deduction of 1/3rd of such pension or 15,000 whichever is less
(C) Allowed a standard deduction of 1/3rd of such pension or `12,000 whichever is less
(D) No deduction is allowed ANS-B

60. Heena is a self-employed lady. Her business income is `9,00,000 and other income is `2,00,000. She contributes
`20,000 per month towards National Pension Scheme. Besides, she deposited `20,000 in public provident fund, `5,000
in notified annuity plan of LIC. Compute total income of Heena for the Assessment Year 2022-23 . (Assuming assessee
has not opted for section 115BAC)(JUNE-21-OS)
(A) 8,05,000 (B) 9,00,000 (C) 7,85,000 (D) 9,50,000 ANS-B

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 Ch 11. MCQ’s DT Bullet 11.7
61. Ram is a resident individual and suffers from severe disability certified by the appropriate authority. He is mainly
dependent on his father Karan. Karan has to spend ` 4,000 per month on the treatment of Ram. The gross total
income of Ram and Karan is `50,000 and `1,50,000 respectively. Find out total income of Karan for the Assessment
Year 2022-23 . (Assuming assessee has not opted for section 115BAC) (JUNE-21-OS)
(A) ` 25,000 (B) ` 50,000 (C) ` 1,02,000 (D) Nil ANS-A

62. Maximum deduction available u/s 80 QQB in respect of royalty income of authors of certain books other than text-
books are: (Assuming assessee has not opted for section 115BAC)(JUNE-21-OS)
(A) Deduction of 100% of such income or `3,00,000, whichever is less
(B) Deduction of 100% of such income or `2,50,000, whichever is less
(C) Deduction of 50% of such income or `3,00,000, whichever is less
(D) Deduction of 50% of such income or `2,50,000, whichever is less ANS-A

63. Deduction under section 80GG is allowed only to :(JUNE-21-OS)

(A) HUF
(B) Partnership firm
(C) Company
(D) Individual ANS-D

64. Ankita gave a donation on 15.8.21 of `1,00,000 to PM Cares Fund by way of RTGS transfer, on 11.9.21 of
`25,000 to Rajiv Gandhi Foundation by account payee cheque and on 21.2.22 a cash donation of `11,000 to a
public charitable trust. The deduction allowable under section 80G for the various donations given during the
year out of the GTI for A.Y. 2022-23 for filing return of income would be: (DEC-21 NS)
(A) `1,36,000
(B) `1,25,000
(C) `1,12,500
(D) `62,500 ANS = C

65. Narendra has purchased a house in Ajmer for self-residence on 10.04.2021 for `45 lakh. (Stamp duty value
also the same). The house was purchased with assistance of bank loan which was sanctioned on 25.03.2021
and disbursed on 05.04.2021. Narendra has paid interest of `4.26 lakhs on such loan during the P.Y. 2021-22.
State the treatment of interest paid by him be given for claiming deduction as per provisions of Act, while
filing return of Income for A.Y. 2022- 23: (DEC-21 NS)
(A) Interest of `2 lakh allowable u/s 24
(B) Interest of `2 lakh allowable u/s 24 and `2.26 lakh allowable u/s 80 EEA
(C) Interest of `2 lakh allowable u/s 24 and `1.5 lakh allowable u/s 80 EEA
(D) Interest of `4.26 lakh allowable u/s 80 EEA ANS = C

66. For the Financial Year 2021-22, the Gross Total Income of Mr. G, who is 70 years old was `8,50,000. The Gross
Total Income included interest income of `12,000 from the savings bank deposit with banks and `40,000
interests on fixed deposit with banks. He has invested in PPF `1,20,000 and also paid a medical insurance
premium of 51,000 paid by cheque. Compute Total Income for the Assessment Year 2022-23 : (DEC-21 OS)
(A) `6,30,000 (B) `6,95,000 (C) `6,70,000 (D) `6,40,000 ANS =A/ C

(NOTE AS PER ICSI The computation of Total Income of Mr. G as follow: Gross Total Income Rs. 850000 Less:
Deduction u/s 80C 120000, Deduction u/s 80TTB 50000, Deduction u/s 80D 50000 = 630000. Option A is
correct. Further, option C is correct if Mr. G is non-resident.)

67. Mr. A an individual, aged 52, deposited in PPF `1,70,000. He paid medical insurance premium for wife and
dependent son of `31,000 and he earns an interest on savings bank account of `12,000 during the financial
year 2021-22. Calculate the amount he is eligible for deduction under chapter VI-A in the Assessment Year
2022-23. (DEC-21 OS)
(A) `1,85,000 (B) `2,13,000 (C) `1,90,000 (D) `1,87,00 0 ANS = A

68. Deduction under section 80GG is allowed only to : (DEC-21 OS)

(A) HUF (B) Firm (C) Company (D) Individual ANS = D
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New Amendment based MCQ’s Added

1) Can exemption under section 54F be denied solely on the ground that the new residential house is
purchased by the assessee exclusively in the name of his wife?

a. Yes
b. No Ans B
2)In case of tenancy rights cost of improvement incurred before 1.4.2001 shall be taken as
a. Actual cost incurred
b. FMV for cost of improvement as on 1.4.2001
c. Nil
d. None of above Ans C

3)Cost of Acquisition in case of self generated Trademark or Brand name associated with a Business is to
be taken as:

a. FMV as on date of acquisition

b. Nil
c. FMV as on 1.4.2001
d. None Ans B

4. In case of slump sale the value of self generated goodwill is to be taken as –

a. Value as per books

b. Value as per the block of assets
c. Value after depreciation
d. Nil Ans - D

5. Where any person receives any amount, under a ULIP issued on or after 1.2.2021 to which
exemption under section 10(10D) does not apply on account of premium payable > Rs. 2,50,000
for any of the previous years during the term of such policy is taxable –

A. In the year of taking the policy

B. In the year of receiving the amount
C. Year on year on accrual basis
D. None of the above Ans – B

6. In case of equity oriented mutual fund if one fund invests in another mutual fud then the minimum
investment in such other fund required should be minimum -
A. 90%
B. 65%
C. 51%
D. 75% Ans – A

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 12. MCQ’s DT Bullet – Jun 22 & Dec 22 12.1

Chapter – 12
PAN- Return Filing - Self Assessment– Refund
FILING OF RETURN OF INCOME:
(1) Zeet& Co. is a partnership firm whose turnover for the previous year 2021-22 was 220 lakhs. The 'due date’
for filing the return of income of the firm is : (June, 2017)
(a) 31st July, 2022
(b) 30th September, 2022
(c) 30th November, 2022
(d) 31st October 2022 Ans.(d)
(2) 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 of 7 crore. Zeet Ltd. disclosed total income of Rs. 10 crore for the assessment year
2022-23. The due date for filing return of income by Zeet Ltd. is- (June 2016)
(a) 31st July, 2022
(b) 30th September, 2022
(c) 31st October, 2022
(d) 30th November, 2022 Ans.(c)
(3) 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/s80C to 80U & 54/54B etc. exceeds Rs. 2,50,000
Ans.(d)

(4) The due date of filing the return of income for assessment year 2022-23 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) 31stOctober of the assessment year
(d) 30th November of the assessment year in case it is required to furnish report referred to in section 92E and
30th September of the assessment year in any other case Ans.(c)

(5) 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)
(6) 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)
(7) 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 business or profession'
(b) Loss under the head 'Income from other Sources'
(c) Loss under the head 'capital gains'
(d) Loss under the head 'income from house property'. Ans.(d)
(8)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 assessment year
(b) Before the completion of the assessment
(c) (a) or(b) above, whichever is earlier

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 12. MCQ’s DT Bullet – Jun 22 & Dec 22 12.2

(d) (a) or(b) above, whichever is later. Ans.(c)

(9) 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 2022-23 will be — (June,
2015)
(a) 31st July, 2022 (b) 30th September, 2022
(c) 31st October, 2022 (d) None of the above. Ans.(c)

(10) Chand Ltd. filed its return of income on 7th December, 2022 declaring loss of Rs. 3,50,000 for AY
2022-23. Later, it noticed a claim of expenditure omitted in the return filed. The revised return - (June
2016)
(a) must be filed before 31s' March, 2023 (b) cannot be filed
(c) must be filed before 31st December, 2023 (d) Can be filed after completion of the assessment.
Ans.(c)
(11) Chatterjee filed his return of income for the assessment year 2022-23 on 10-06-2022. He is
eligible to revise his return : (June, 2017)
(a) Upto the end of the assessment year 2022-23
(b) Before the end of 1 year from the end of the assessment year 2022-23
(c) Before completion of assessment u/s 153
(d) 3 months prior to the end of the AY Ans.(d)

12. Mandatory filing of return of income by individuals will apply when the total income before deduction
under the following section exceeds the basic limit chargeable to tax. (Dec. 2017)
(A) Deduction under chapter VI-A
(B)Deduction under section 35
(C) Deduction under section 86
(D) Deduction under section 37 Ans.(a)

13. Finance Act, 2017 has inserted the provision for charging of fees for delay in furnishing the return of
income and as per this section, be the amount of fee payable for the return declaring income of Rs. 25 lakh to be
filled by ‘X’ on 28th December, 2022 instead of due date of filing of return u/s 139(1) for A.Y. 2022-23: (Jun. 2018)
(A)Rs.1,000
(B)Rs.5,000
(C)Rs.10,000
(D)Rs.3,000 Ans. B

14. ABC Limited has filed its return of income for A.Y .2022-23 as per section 139 (1) but had failed to
make the payment of tax on the returned income as per section 140A. The return so filed by ABC
Limited shall be treated as: (Jun. 2018)
(A) A defective return u/s139(9)
(B) A valid return
(C) An invalid return
(D) None of the above Ans. B
15. 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)
(a) Investment income only (b) Long-term capital gains only
(c) Short-term capital gains only (d) Investment income and long-term capital
gainsonly
Ans.(d)
16. The assessee who has filed a return of income for A.Y. 2022-23 as per section 139(1)canfile revise
return any time: (Dec. 2018)
(A) before 1 year from the end of the relevant assessment year
(B) 3 months before the end of the relevant assessment year or before the completion
of assessment which ever is earlier
(C) before the expiry of the relevant assessment year or before the completion of
assessment which everis later
(D) before the completion of the assessment year Ans. B

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 12. MCQ’s DT Bullet – Jun 22 & Dec 22 12.3

17. The due date for e-filing of return of income by a Charitable Trust claiming exemption u/s 11 and 12
for assessment year 2022- 23 is: (Dec. 2018)
(A) 31st March,2022
(B) 30th September,2022
(C) 31st October,2022
(D) Between any time specified in (B) and(C) Ans C
18. Any person who has not filed the return within the time allowed under section 139(1) may file a belated
return: (Dec. 2018)
a. at any time before the end of the relevant previous year
b. at any time before the end of the relevant assessment year
c. before the completion of assessment
d. 3 months before the end of the relevant assessment year or before the completion of the
assessment whichever is earlier Ans d

19.The return of income for the previous year 2021-22 required to be filed by an individual who is not a
senior citizen as per section 139(1) of the Act by 31st October,2022. However ,the assessee finds that he
cannot file the return as per 139(1)within the due date. Can he file his return of income after the due
date and if yes, by which date/time? (Dec20–NS)

(A) On or before 31st December, 2022

(B) On or before 31st March,2023
(C) On or before 31st March,2024
(D) On or before 30th June,2023 ANS-A

20. For which of the following, the filing of return of income is mandatory? (JUNE-21-NS)

(A) Acquired jewellery for ` 2,10,000

(B) Made foreign travel and incurred expenditure of ` 2,05,000
(C) Made aggregate cash deposit in a savings bank account of `10,01,000 in the previous year
(D) Paid electricity bill of ` 56,000 in the previous year ANS-B

21. An assessee can file a revised return of income at any time before the completion of assessment or before expiry
of the following’ period, whichever is earlier. (JUNE-21-OS)
(A) 3 months prior to the end of relevant assessment year
(B) Six months from the end of the relevant assessment year
(C) One year from the end of the relevant assessment year
(D) Two months from the end of the relevant assessment year ANS-A

22. In case of an assessee being a company, which is required to furnish a report referred to in section 92E, what
is the due date? (DEC-21 OS)
(A) 31st July (B) 31st October (C) 30th November (D) 31st March ANS = C

INCOME TAX RETURN FORMS

1. An individual having income from proprietary business in required to file the return of income in - (June,
2015)

(a) ITR-2 (b) ITR-3

(c) ITR-3A (d) ITR-4 Ans.(b)

2. A partnership firm having 9 trucks engaged in the business of plying these trucks on hire is to file its
return of income for the assessment year 2022-23 on the basis of provisions of section 44AE. The
partnership firm is required to file its return of income in - (Dec. 2015)

(a) Form ITR-4

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 12. MCQ’s DT Bullet – Jun 22 & Dec 22 12.4

(b) Form 1TR-3

(c) Form ITR-2
(d) Form ITR-5 Ans.(a)
3. 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 attending to his affairs, by his guardian or any other person
competent to act on his behalf
(d) Spouse. Ans.(d)

4. 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. 2022-23 , Vinay was out of country. The return of
income of the HUF can be signed in this case by: (Jun. 2019)
a. Karta
b. Authorized Tax Consultant
c. Major Son
d. Minor Son
Ans C

5. 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)

6. 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)

7. . Which of the ITR Form is used by association of persons (AOP) for filling income tax return ? (JUNE-21-OS)
(A) ITR-4 (B) ITR-5 (C) ITR-6 (D) ITR-7 ANS-B

8. If you want to file income tax return for the Asst. Year 2022-23 of a Political Party registered with the Election
Commission of India, which ITR form will be used for filling of Income Tax Return. (DEC-21 OS)
(A) ITR Form-4
(B) ITR Form-5
(C) ITR Form-6
(D) ITR Form-7 ANS = D

FEE AND INTEREST :

1. Ram Nath a resident individual having income of salary and interest on deposits has computed his
total income at Rs.9,00,000 for assessment year 2022-23. He wants to furnish his return of income
for assessment year 2022-23 after the due date as prescribed under section 139(1) likely on or

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 12. MCQ’s DT Bullet – Jun 22 & Dec 22 12.5

by 30.12.2022. As per section 234F of Income Tax Act, 1961, he is liable topay fees of (Dec20–OS)
(A)Rs.1,000
(B)Rs.5,000
(C)Rs.10,000
(D)Rs.15,000 ANS B

2. Kayal employed in a private company, having only salary income, filed her return of income of
assessment year 2022-23 on 10-9-2022 . Her total income is Rs. 4,10,000. The amount of fee payable
by her under section 234F would be : (Dec 19 –OS)
(A)Rs. 10,000
(B)Rs. 5,000
(C) Rs. 1,000
(D) Nil Ans – C

3. What are the items taken into consideration by Assessing Officer (AO) while processing a return at
Centralized Processing Centre (CPC)? (Jun. 2019)
a. the total income or loss after making adjustments for any arithmetical error in the return
b. an incorrect claim, if such incorrect claim is apparent from any information in the return
c. the fee payable under section 234F(fee for default in furnishing return of income) in computing
the tax
d. All of the above Ans D
4. The total income of Ram isRs.4,90,000 and due date of filing the return of income for A.Y. 2022-23 is
31st July, 2022. The return by Ram shall be filed on 20th September, 2022.The late fee payable for late
filing of return of income shall be:(Jun. 2019)
(A) Rs.1,000
(B) Rs.5,000
(C) Rs. 10,000
(D) No late fee up to income of Rs. 5 lakh Ans A

SELF ASSESSMENT
1. The self-assessment tax computed u/s 140A by an individual assessee is Rs. 1,50,000
which includes Rs. 15,000 as interest for late filing of return as per section 234A. The assessee
has depositedRs.75,000 as self-assessment tax. In this case: (Dec. 2018)
a. Rs. 75,000 so deposited shall be adjusted in the proportion of 9 : 1 towards tax and
interest
b. Rs. 15,000 shall be adjusted towards interest due and balance of Rs.60,000 shall be
adjusted towards tax due
c. Rs. 75,000 so deposited shall be adjusted towards tax due
d. None of the above Ans B

9. A return of income where furnished after the due date than the period for which the interest is payable
under section 234A commences from -------- (Dec 20 –OS)
(A) first day of relevant Assessment Year to ending on the date of furnishing of the return
(B) the date immediately following the due date for filing the return and ending on the date of furnishing of
the return
(C) first day of relevant Assessment Year to due date for filing the return
(D) the date immediately following the date for filing the return and ending on the end of relevant
Assessment Year
ANS B
3.The self-assessment tax computed u/s 140A by Gaurav is `65,000 which includes `30,000 as interest for late filing of
return. The assessee deposited `35,000 as self assessment tax. In this case : (JUNE-21-OS)
(A) `35,000 shall be adjusted towards tax due
(B) `30,000 shall be adjusted towards interest due and balance 5,000 shall be adjusted towards tax due
(C) `35,000 shall be adjusted in the proportion towards tax and interest

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 12. MCQ’s DT Bullet – Jun 22 & Dec 22 12.6

(D) No adjustment of tax is possible ANS-B

4. Where a return of income is furnished after due date then period for which the interest is payable under
section 234A commences from : (DEC-21 OS)
(A) The date immediately following the due date for filing the return and ending on the date of
furnishing of the return
(B) First day of relevant Assessment Year to ending on the date of furnishing of the return
(C) First day of relevant Assessment Year to due date for filing the return
(D) The date immediately following the date of filing the return and ending on the end of relevant
Assessment Year. ANS = A

REFUNDS:.
1. Interest is payable to an assessee on the amount of refund under the Income Tax Act, 1961 where the
amount of refund is............ (Dec. 2018)

a. more than ten percent of the tax as determined on regular assessment

b. more than five percent of the tax as determined on regular assessment
c. more than fifteen percent of the tax as determined on regular assessment
d. more than twenty percent of the tax as determined on regular assessment Ans A

2. Section244A provideswheretherefundis out of any tax paid under section 140A, simple interest
shall be calculated at the rate of -------------- comprised in the period from the date of furnishing of
return or payment of tax, whichever is later, to the date on which the refund isgranted. (Dec20–OS)
(A) 1% for every month
(B) 1%foreverymonthorpartofamonth
(C) 1½% for every month
(D) ½% for every month or part of a month ANS D

3. Where the assessee obtained a refund out of any tax paid under section 140A, interest on such refund shall be
calculated at a rate of ............ from the date of furnishing of return of income or payment of tax, whichever is
later, to the date on which refund granted. (DEC-21 OS)
(A) ½% for every month or part of a month comprised in the period
(B) 1% for every month of part of a month
(C) 1½% for every month or part of a month
(D) 2% for every month or part of a month ANS = A

PAN APPLICABILITY
1. 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 belows(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)

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 12. MCQ’s DT Bullet – Jun 22 & Dec 22 12.7

2. For which of the following transactions, quoting of Permanent Account Number is mandatory? (Dec
19 –OS)
a. Payment to hotel Rs. 22,000 on any single day
b. Deposit of cash in saving bank account of Rs. 55,000 on any single day
c. Purchase of property valued at Rs. 3 lakhs
d. Payment of life insurance premium of Rs. 25,000
Ans –B
3.Quoting of PAN is compulsory/mandatory in respect of financial transactions undertaken during the year by an
assessee. Find from the following transactions in which quoting of PAN is compulsory/mandatory: (Dec20–NS)
(i) deposit of cash of Rs.60,000 on 11.06.2022 in bank account
(ii) payment of Rs.40,000 made to hotel Raj Palace in cash on 11.07. 2022
(iii) payment for purchase of travel ticket, to travel agent in cash of Rs.55,000 on10.05. 2022
(iv) payment of Rs.5,00,000 to RBI for purchase of Capital Gain Bonds asper section 54EC on5.05. 2022
(A) (i), &(iii)
(B) (i), (iii) &(iv)
(C) (i), (ii) &(iii)
(D) All the four in,(i),(ii),(iii)&(iv) ANS-B
4.State and find out in which of the following transactions quoting of PAN is not compulsory/mandatory?
(Dec20–OS)
(A) Payment in cash in connection with travel to any foreign country of an amount exceeding Rs.50,000 at
anyone time
(B) Contract for sale/purchase of securities exceeding Rs.1,00,000
(C) Sale/Purchase of any immovable property valued at Rs.10 lakhs or more and valued by the stamp
valuation authority under section 50C at an amount exceeding Rs.10lakhs
(D) Sale or purchase, by any person of goods or services of any nature other than those specified where
amount exceeding Rs.1,00,000 per transaction ANS D

5. For which of the following transactions, quoting of PAN is mandatory. (JUNE-21-NS)

(A) Deposit of ` 26,000 in one day in post office saving bank account
(B) Life insurance premium paid during the year ` 48,000
(C) Payment to hotel bills of ` 49,000
(D) Fixed deposit in SBI of ` 55,000 on 10.02.2022 ANS-D

6. Every person engaged in carrying on business is mandatorily required to apply for allotment of PAN, in case the
total sales exceed of `.................. during the previous year. (DEC-21 NS)
(A) 1 lakh
(B) 2 lakh
(C) 5 lakh
(D) 10 lakh ANS = C
7. Every person who has not been allotted any permanent account number, is obliged to obtain permanent
account number, if : (DEC-21 OS)
(A) Any person carrying on business or profession whose total sales turnover or gross receipts are or is
likely to exceed `3,00,000 in any previous year
(B) Any person carrying on business or profession whose total sales turnover or gross receipts are or is
likely to exceed `5,00,000 in any previous year
(C) Any person carrying on business or profession whose total sales turnover or gross receipts are or is
likely to exceed `10,00,000 in any previous year
(D) Any person carrying on business or profession whose total sales turnover or gross receipts are or is
likely to exceed `20,00,000 in any previous year ANS = B

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 12. MCQ’s DT Bullet – Jun 22 & Dec 22 12.8

New Amendment based MCQ’s Added

Additions
1. Interest on deferment of advance tax is levied under section:
a) Section 234A of the Income -tax Act, 1961
b) Section 234B of the Income-tax Act, 1961
c) Section 234C of the Income-tax Act, 1961
d) Section 201A of the Income-tax Act, 1961 Answer: (c)
2. 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)

3) if a Married Couple is governed by the Portuguese Civil Code of 1860 which of the following is true:
a. all the income is equally apportioned between the couple.
b. all the income except capital gains is equally apportioned between the couple.
c. all the income except Salary is equally apportioned between the couple.
d. All of above are correct Ans C

4) if a Married Couple is governed by the Portuguese Civil Code of 1860 , due date of filing return shall be:
a. 31st October to both the said assessee as well as his / her spouse, if either one of them is required to
get his / her books audited.
b. 31st October to both the said assessee as well as his / her spouse, if both of them are required to get his
/ her books audited.
c. 30th november to both the said assessee as well as his / her spouse, if either one of them is required to
get his / her books audited.
d. 30th november to both the said assessee as well as his / her spouse, if both of them is required to get
his / her books audited. Ans A

5)if Married Couple is governed by the Portuguese Civil Code of 1860 and the couple being partners of the firm
to whom the provisions of Section 92E are applicable then the due date of return filing for the couple shall be:
a. 31 st july
b. 30 th september
c. 31st October
d. 30 th november Ans D

6) which ITR form shall be applicable to an individual whose total income is 48 lakhs which includes income
from salaries , a house property , interest income and an agricultural income of Rs 3000.
a. ITR 1
b. ITR 2
c. ITR 3
d. ITR 4 Ans B

7) what is the last date for PAN-Aadhaar Linking -

a. September 30, 2021
b. September 30, 2022
c. March 31, 2021
d. March 31, 2022 Ans D

8)If Aadhaar is not intimated to the IT Department then the maximum fees charges can be -
a. 500
b. 1000
c. 5000
d. 10000 Ans B

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 CH 13 – DT Bullet MCQ’s – June 22 & Dec 22 13.1

Chapter - 13

TDS – TCS – Advance tax

TDS:
1. The payer as per section 194N of Income tax Act, 1961 is required to deduct tax at source at the
rate of ---------------- on the cash payments, if aggregate of withdrawals during the financial year from
any account maintained with a banking company or cooperative bank or post office exceeds-------------
---. (Dec20–OS)
(A) 1%, Rs. 1 crore
(B) 2%, Rs. 1 crore
(C) 1%, Rs. 2 crore
(D) 1%, Rs. 5 crore ANS B

2.Any person being an individual or a HUF (other than those who are not required to deduct tax
under section 194C or 194H or 194J) paying any sum to any resident contractor or professional
required to deduct tax at source under section 194M at the rate of -----------, if aggregate payment
during the year exceeds ------------ --. (Dec 20 –OS)

(A) 10%, 20 lakh

(B) 5%, 20 lakh
(C) 5%, 50 lakh
(D) 10%, 50 lakh
ANS C
.
3. DAB Builders entered into a registered agreement with LalluRam Yadav owning a land located at Jaipur
under Joint Development Agreement to develop a real estate project on such land and in
consideration of his share of being land in such project on the date of entering in the Joint Development
Agreement paid an amount of Rs.50 lakh by Account Payee Cheque in January, 2022. The amount of TDS
to be deducted by DAB Builders on such payment shall be Rs................ (Dec20–NS)
(A) 5,00,000
(B) 50,000
(C) 2,50,000
(D) 1,00,000 ANS-A

4. Wealth Maximization Fund Limited had paid an amount of interest of Rs. 20 lakh in respect of
money borrowed outside India on rupee denominated bonds to a foreign Institutional Investor.
Wealth Maximization Fund Limited is required to deduct tax at source out of such payment of
interest on these bonds at the rate of ____________. (Dec 19 –NS)
(a) 10% (b) 15%
(c)No TDS (d)5% Ans.(d)
Hint – 194LC

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5. Deduction of tax from salary as per section 192 shall be at - (June 2016)
(a) 10% of salary
(b) The average rate of income-tax computed on the basis of rates in force for the financial year in
which the payment is made
(c) The maximum marginal rate of 30%
(d) None of the above. Ans. (b)
6. Mr. Nitin after serving Lion Ltd. for 4 years resigned his job to commence a business of his
own. His provident fund account consisted of his own contribution Rs. 50,000; employer's
contribution Rs. 50,000 and interest of Rs. 20,000 being attributable equally to the said
contribution. How much would be the amount deductible at source under section 192A ? (June,
2017)
(a) Rs. 12,000 being 10% of total withdrawal
(b) Rs. 10,000 being 10% of total contributions
(c) Rs. 6,000 being 10% of employer's contribution and interest thereon
(d) Rs. 2,000 being 10% of interest on the contributions
Ans.(c)
7. Rohan won a State Government lottery of Rs. 1,00,000 on 11th October, 2021. The
government should deduct tax on such winning amounting to - (June 2016)
(a) Rs. 30,000 (b) 133,000
(c) Rs. 33,990 (d) Rs. 31,300 Ans.(a)
8. The person responsible for paying any income by way of winnings from lottery an amount
exceeding Rs. 10,000, shall deduct - (Dec. 2015)
(a) TDS @30% (b) TDS @ 31.4%
(c) TDS @10% (d) No TDS. Ans., (a)
9. 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
(c) Rs. 25,000 (d) Rs. 50,000 Ans.(b)
10. Mr. Ravi solved a crossword puzzle and received Rs. 84,000 after deduction of tax at
source. His income from crossword puzzle chargeable to tax would be: (June, 2017)
(a) Rs. 84,000 (b) Nil
(c) Rs. 72,000 (d) Rs. 1,20,000 Ans.(d)
11. 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
(c) Rs. 27,000 (d) Rs. 27,810. Ans.(a)
12. 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
(c) Nil (d) Rs. 11,000. Ans.(c)
13. The liability to deduct tax at source on insurance commission will arise when the commission
paid or payable to an agent for the year exceeds - (Dec. 2016)
(a) Rs. 5,000 (b) Rs. 10,000
(c) Rs. 15,000 (d) Rs. 20,000 Ans.(c)
14. An HUF, not subject to tax audit in the earlier year, paying fees of Rs. 35,000 to a Practising
Company Secretary shall - (June, 2015)
(a) Not deduct TDS (b) Deduct TDS @ 10%
(c) Deduct IDS @20% (d) Deduct TDS @ 10.3%. Ans.(a)
15. At what rate, will the tax be deducted at source by a banking company, responsible for
paying to a resident any incomeby way of interest other than interest on securities amounting
to more than Rs. 10,000, when the payee does not furnish his PAN to Deductor- (Dec. 2014)
(a) 10% (b) 20%
(c) 30% (d) 40%. Ans.(b)

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16. When an employee makes premature withdrawal from employee's provident fund account, the
requirement for tax deduction is attracted when the quantum of withdrawal exceeds - (Dec. 2016)
(a) Rs. 10,000 (b) Rs. 40,000
(c) Rs. 50,000 (d) None of the above. Ans.(c)
17. The maximum amount of rent payment where deduction of tax at source is not required in a
financial year is - (Dec. 2014)
(a) Rs. 1,20,000 (b) Rs. 1,80,000
(c). Rs. 2,40,000 (d) None of the above. Ans.(c)
18. Pradip acquired an urban land from Chitra for Rs. 70 lakh on 10th October, 2021. 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)
19. If a payee eligible for commission exceeding Rs. 15,000 does not furnish his PAN to the payer, tax
is deductible at source at- (Dec. 2016)
(a) Nil rate (b) 20%
(c) 10% (d) 30% Ans.(b)
20. LM, a co-operative society, has paid interest of Rs. 1,05,000 to PQ, another co operative
society. The tax to be deducted at source u/s 194A is: (June. 2018)
(A) Rs.10,500(B) Rs.10,815(C) Rs. 5,250 (D) Nil Ans. D
21. Mr. Rajesh had a turnover of Rs.3 Crore during the year ended 31st March, 2021. During the
F.Y. 2021-22, he paid a sum of Rs. 10 lakh to E, an Engineer for construction of his self-
occupied residence and Rs. 25 lakh to E, for construction of office building. The amount of tax to
be deducted at source from payments made to E is: (June. 2018)
(A) Rs. 3 lakh (B) 50,000
(C) Rs. 2.5lakh (D) None of the above Ans.C

22. Payment of Rs.2,00,000 was made to Krishna Road ways Pvt .Ltd. owning nine heavy goods carriages
and having PAN which was furnished by them to the payer of freight GG Carriers. The amount of tax to
be deducted by the payer on such amount is...............as per section .......... (Dec. 2018)
(A) 2,000, 194C
(B)10,000, 194C
(C)4,000,194C
(D) Nil because PAN furnished,194C(6)
Ans D

23. A Co Ltd made payments to B Co Ltd towards contracts executed during the financial year 2021-
22. They are (i) contract —1 Rs. 15,000 on 15-06-2021; (ii) contract — 2 Rs. 22,000 on 29-09-2021;
(iii) contract — 3 Rs. 27,000 on 30-12-2021; and (iv) contract -4 Rs. 29,000 on 13-03-2022. The tax
deductible at source would be:(Dec. 2017)
(A) Rs. 1,560 @ 2% on Rs. 78,000
(B) Rs. 1,860 @ 2% on Rs. 93,000
(C) Rs. 780 @ 1% on Rs. 78,000
(D) Nil Ans.(d)

24.. P & Co. a partnership firm whose turnover was Rs. 42,60,000 in the previous year 2020-21
and Rs. 1,01,30,000 in the previous year 2021-22 ,paid brokerage of Rs. 21,000 to Mr. Ashwin
during the financial year 2021-22. Mr. Ashwin furnished his PAN to the firm. The amount of tax
deductible at source on such brokerage payment would be :(Dec. 2017)
(A) Rs. 2,100 @ 10%
(B) Rs. 1,050 @ 5%
(C) Nil
(D)Rs. 4,200 @ 20% Ans.(b)

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25. Sagar engaged in a business, booked a marriage hall of Yash having PAN for conducting
mega sale during festival season of F.Y. 2021-22 and paid rent of Rs. 55,000 for 3 days period.
His total turnover for financial year 2020-21 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 : (June 2019)
(A) NIL
(B) Rs. 5,500
(C) Rs. 2,750
(D) Rs. 11,000.
Ans C
26. Ashish, director of PQR Ltd. is eligible for board sitting fees of Rs. 10,000 for every meeting
attended by him. During the year 2021-22, he had attended six meetings. The amount of tax required to
be deducted from such sitting fees to be paid to Ashish by the company shall be: (June 2019)
(A) Rs. 12,000 @ 20%
(B) Rs. 1,200 @ 2%
(C) Rs. 3,000 @ 5%
(D) Rs. 6,000 @ 10% Ans D

27.A house property owned by Nitin, a non-resident, at Delhi was agreed to be sold to Ramesh for a
consideration of Rs. 70,00,000. Ramesh has stated to Nitin that the payment of sale consideration shall
be subject to TDS and the amount of TDS on the sale consideration will be @ ____________as per section
____________of the Income-tax Act, 1961. (Dec 19 –NS)
(a) 34.32%, 195 (b) 10%, 194-IC
(c)5.72%, 194-LBA (d)1%,194-IA Ans.(a)

(Hint – 30% + 10% Sur + 4% Cess)

28 . Rakesh entered into a Joint Development Agreement with Reality Builders Pvt. Ltd. for developing
a project on the land owned by him during the previous year 2021-22 and the builder who agreed to
make the payment of Rs. 50 lakh to Rakesh paid the same to him on execution of the Joint
Development Agreement. The amount of TDS u/s 194-IC required to be deducted on the amount of Rs.
50 lakh shall be ____________. (Dec 19 –NS)
(a) Rs. 50,000 (b) Rs. 2,50,000
(c) Rs. 5,00,000 (d) Rs. 10,00,000 Ans.(c)
29. Kayal engaged in trading activity reported turnover of Rs. 210 lakh for the previous year 2020-
21 and Rs. 190 lakh for the previous year 2021-22. She paid brokerage of Rs. 40,000 to Padmaja in
October, 2021. Both the party are resident for tax purpose. The amount of tax deductible by Kayal
on the brokerage paid would be: (Dec 19 –OS)
(A) NIL
(B) Rs. 800
(C) Rs. 2,000
(D) Rs. 4,000 Ans – C
30. Anyway (P) Ltd. paid sitting fees to directors, who attended the Board Meeting. S was paid
Rs. 5,000 per meeting and he attended 7 meetings during the year. The amount of tax
deductible at source on the sitting fees would be .......................if S has not furnished his PAN.
(Dec 19 –OS)
(A) Rs. 7,000
(B) Rs. 3,500
(C) Rs. 1,750
(C) NIL Ans – A
31.XYZ Ltd during the previous year 2021-22 has made payments for Professional Services of Rs.
15,000 and of Rs. 20,000 towards Royalty to Mahesh Kumar. TDS required to be deducted by XYZ
Ltd for Assessment Year 2022-23 out of such payments shall be ---------- (Dec 20 –OS)

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 CH 13 – DT Bullet MCQ’s – June 22 & Dec 22 13.5

(A) NIL being not required

(B) 10% of Rs. 35,000
(C) 10% of Rs. 15,000
(D) 10% of Rs. 20,000 ANS A
32. If a person responsible for deduction of tax at source, after deduction, fails to deposit the same into
the Government treasury, he will be liable to pay interest @ - (Dec. 2016)
(a) 1% per month or part of the month (b) 1.5% per month or part of the month
(c) 2% per month or part of the month (d) 15% per annum Ans.(b)

33. 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)

34. The quarterly return of TDS relating to payments made to non-resident and the foreign company
being a unit holder of mutual funds is to be filed in return form number :(Dec 19 –NS)
(a) 24Q (b) 27Q
(c) 26Q (d) 22Q Ans.(b)

35. Botham Mfg. (P) Ltd paid ` 4,25,000 to LMN Services (P) Ltd who is engaged in operation of call centre
for the company for the period from 01.09.2021 to 31.03.2022. How much is the amount of tax deductible
at source by Botham Mfg (P) Ltd out of the amounts paid to LMN Services (P) Ltd ? (JUNE-21-NS)
(A) ` 42,500
(B) ` 6,375
(C) ` 8,500
(D) ` 4,250 ANS-C

36. Manoj (age 45) earned ` 5,20,000 from business and ` 32,000 as interest on fixed deposits held with
Canara Bank for the year ended 31st March, 2022. How much would be the amount of tax deductible at
source by the bank on the said deposit?(JUNE-21-NS)
(A) NIL
(B) ` 3,200
(C) ` 6,400
(D) ` 9,600 ANS-A

37. As per section 194N, if any assessee withdraw the amount of from banks, post office or co-operative
society engaged in banking business more than ______ during the previous year 2021-22 then the tax will
be deducted at rate ______on the amount in excess withdrawn. (JUNE-21-OS)
(A) One crore; 1%
(B) One crore; 2%
(C) Two crore; 1%
(D) Two crore; 2% ANS-B

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38. As per section 192A, where amount is payable to the employees from the Employee Provident fund,
1952 and such payable amount or aggregate amount which has become due is more than by ______, then
the tax will be deducted at source at the rate _______ on amount paid. (JUNE-21-OS)
(A) `50,000; 10%
(B) `50,000; 7.5%
(C) `1,00,000; 10%
(D) `1,00,000; 7.5% ANS-A

39. The person responsible for paying to any person any amount referred to in section 80CCA(2)(a) shall, at
the time of payment thereof, deduct income-tax at the rate of 20%. No deduction shall, however, be made
under section 194EE where the amount of such payment or the aggregate of such payment to the payee
during the financial year is less than _______. (JUNE-21-OS)
(A) `1,500 (B) `2,500 (C) `5,000 (D) `10,000 ANS-B

40. As per section 192A of the Income Tax Act, 1961 premature withdrawal made from recognized P.F. would
attract TDS at the rate of: (DEC-21 NS)
(A) 5%
(B) 20%
(C) 10%
(D) 0% ANS = C

41. Tax deducted is deemed to be income received for the purpose of computing the income of an
assessee as per section 198 of the Income Tax Act, 1961. However, tax deducted ................... is an
exception and would not be deemed to be an income received during the previous year chargeable
to tax under the Act. (DEC-21 NS)
(A) u/s 194 N
(B) u/s 194 M
(C) u/s 194 LA
(D) u/s 194 I ANS = A

42. The person responsible for paying the income/ amount which is subject to TDS/ TCS is under obligation
to deduct/collect the Tax at Source and therefore, as per provisions under the Income Tax Act is required
to apply for Tax Deduction Account Number (TAN) in the application to be filed online in Form No.
................................ (DEC-21 NS)
(A) 49A (B) 48A (C) 49B (D) 48B ANS = C

43. Quarterly return of TDS in Form No. 24Q, 26Q or 27Q is required mandatory to be filed as E-TDS return in
electronic media only where ......................... (DEC-21 NS)
(A) Deductor is an Office of the Government
(B) Deductor is a person not covered u/s 44AB
(C) The number of deductees record are less than 20
(D) None of the above ANS = A

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 CH 13 – DT Bullet MCQ’s – June 22 & Dec 22 13.7

44. TDS u/s 194 N is to be made by a bank from an account holder for cash withdrawal exceeding `20 lakhs if
the account holder has not furnished the return of income for last : (DEC-21 OS)
A) 1 assessment year (B) 2 assessment year (C) 3 assessment year (D) None of the above

ANS = C

45. ABC Ltd. pays the following amounts to Mr. J, a resident, during the previous year 2021-22: `16,000 for
Professional services and `20,000 as royalty. What percentage of TDS is to be deducted by ABC Ltd. for
Assessment Year 2022 - 23? (DEC-21 OS)
(A) 10% of `36,000
(B) 10% of `16,000
(C) 10% of `20,000
(D) No TDS is to be deducted ANS = D

46. Mr. R, an individual responsible for paying `20,000 to XYZ Private Limited by way of commission for
procuring insurance business. What rate of TDS is required to be deducted by Mr. R? (DEC-21 OS)
(A) 2% (B) 5% (C) 20% (D) No TDS is required to be deducted ANS = B

47. Mr. R whose accounts are not liable to audit u/s 44AB(a)/(b) in preceding financial year is required to
deduct TDS u/s 194-IB if he is responsible for paying to a resident rent for land or building in excess of
`............... per month or part of a month. (DEC-21 OS)
(A) 30,000 (B) 40,000 (C) 50,000 (D) 1,80,000 ANS = C

48. What is the applicability of TDS provision for `14,000 paid as sitting fees to director of a Company during
financial year 2021-22 ? (DEC-21 OS)
(A) 10% TDS
(B) Threshold limit of `30,000 up to which the provision of tax deducted at source are not
attracted
(C) It is of a contract nature so only 1% TDS deduction is required
(D) None of the above ANS = A

TCS
1. Mr. Rajan (a trader in furniture items) acquired a motor car for Rs. 11 lakhs by availing loan from a
nationalized bank. The amount was paid by demand draft. The amount of tax collectible at source by the
car dealer who sold the car is :(Dec. 2017)
(A) Nil
(B) Rs. 22,000 @ 2%
(C) Rs. 11,000 @ 1%
(D) Rs. 1,10,000 @ 10% Ans.(c)

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2. State whether tax is required to be collected at source (TCS) under the provision of section
206C of Income Act, 1961 by a person making............. (Dec. 2018)
a. Payment of dividend
b. Winning from horse races
c. Sale of motor vehicle of the value exceeding Rs. 10 lakh by a dealer to the customer
d. Payment to non-resident Ans C

3.CK & Company is engaged in the diversified business of sale of Indian made foreign liquor, tendu leaves,
forest produce neither being timber nor tendu leaves required to collect TCS as per section 206C of the
Income Tax Act on the amount of sale proceeds of these products/items during the previous year ended
on 31.03.2022 at the rate of -----------(Dec 20 –NS)
(A) 1% on all the three
(B) 1%, 5% & 2.5%
(C) 2.5%, 1% & 5%
(D) 5%, 1% & 2.5%
ANS-B

4.Person paying any sum on which tax is collectible at source as per provisions of section 206CC shall
furnish his PAN to the person responsible for collecting such tax at source. A lower tax collection certificate
under this section shall not be granted unless application in made contains his --. (Dec 20 –OS)
(A) Form no. 10, PAN
(B) Form no. 10, TAN
(C) Form no. 13, PAN
(D) Form no. 13, TAN ANS C

5. EXE Automobiles (P) Ltd a dealer in motor car sold one motor car to A (having PAN) for ` 12,60,000 on
05.03.2022. How much is the amount of tax collectible at source ?(JUNE-21-NS)
(A) NIL
(B) ` 9,450
(C) ` 12,600
(D) ` 63,000 ANS-C

6. TCS under sub-section (1H) of section 206(c) is applicable during 2021-22 if turnover during
previous year (2020-21) is : (DEC-21 OS)
(A) `5 crore (B) More than `5 crore (C) `10 crore (D) More than `10 crore ANS = D

7. For TCS, Collectee shall furnish his PAN to the person responsible for collecting such tax at source. If
PAN is not intimated, tax shall be collected at : (DEC-21 OS)
(A) Twice the normal rate or at the rate of 5%, whichever is lower
(B) Twice the normal rate or at the rate of 5%, whichever is higher
(C) Twice the normal rate or at the rate of 10%, whichever is lower
(D) Twice the normal rate or at the rate of 10%, whichever is higher ANS = B

8. The tax to be collected by an authorized dealer u/s 206C(1G) on the amount of remittance
exceeding `7 lakh from the buyer is: (DEC-21 OS)
(A) 1% (B) 5% (C) 10% (D) 20% ANS = B

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ADVANCE PAYMENT OF TAX

(1)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
(c) Profit and gains from business or profession (d) All of the above Ans.(c)

(2)Which of the following assessee is not liable to pay advance tax u/ s 207 during the FY 2021-22 -
(June, 2015)
(a) A senior citizen having income chargeable under the head 'profits and gains of business or
profession
(b) A senior citizen not having income chargeable under the head 'profits and gains of business or
profession
(c) A super senior citizen having income chargeable under the head 'profits and gains of business or
profession
(d) A resident individual not being senior citizen having income chargeable under the head 'profits
and gains of business or profession'. Ans.(b)

3. 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
(c) Rs. 5,000 or more (d) Rs. 8,000 or more. Ans.(a)

4. 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 2021-22 . How much amount he must have
paid as advance tax in September, 2021 - (June 2016)
(a) Rs. 12,000 (b) Rs. 10,000
(c) Rs. 30,000 (d) Nil Ans.(d)

5. An assessee liable to pay advance tax is not liable to pay interest under section 234B, if advance tax
paid by him is not less than - (Dec. 2014)
(a) 90% of advance tax payable by him (b) 80% of advance tax payable by him
(c) 100% of advance tax payable by him (d) 70% of advance tax payable by him.
Ans.(a)

6. Steam (P) Ltd. reports total income of Rs. 20 lakh for the year ended 31st March, 2022
(Turnover in FY 2019-20 is 480 crores).The total tax liability payable before 15th September,
2021 by way of advance tax is - (Dec. 2015)
(a) Rs. 93,600 (b) Rs. 2,80,800
(c) Rs. 1,87,200 (d) Rs. 3,12,000 Ans.(b)

7. The liability to pay interest under section 234B would arise when the advance tax plus TDS/TCS to
the credit of the assessee is less than - (Dec. 2016)
(a) 75% of the assessed tax (b) 90% of the assessed tax
(c) 60% of the assessed tax (d) 100% of the assessed tax Ans.(b)
8. Interest for default in payment of installment(s) of advance tax is levied under section - (June,
2015)
(a) 234A (b) 234B
(c) 234C (d) 234D. Ans.(c)
9. Interest for deferment in payment of advance tax u/ s 234C is calculated on the tax liability
computed on - (Dec. 2015)
(a) Assessed income (b) Returned income
(c) Disputed income (d) Appealed income Ans.(b)

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 CH 13 – DT Bullet MCQ’s – June 22 & Dec 22 13.10

10. An assessee is required to make payment of interest where he failed to make the payment, of
demand before the expiry of 30 days from the service of notice of demand @ - (Dec. 2015)
(a) 1% for every month or part thereof till the date
(b) 2% p.m. Till the date of paymentof payment
(c) 1.5% p.m. Till the date of payment
(d) 1.25% for every month or part thereof till thedate of payment. Ans.(a)

11. Where the advance tax paid on or before March, 2022 is less than 100% of the tax due on the total
income declared in the return of income, as reduced by tax deducted at source, the assessee shall be
making payment of interest on the amount of shortfall on the returned income so declared at the rate of
.................. per month for the period of delay. (June. 2018)
A. 2% B 1% C Nil D1.5% Ans. B
12. It is obligatory for an assesse to make payment of tax under section 208 of Income Tax Act,
1961............. (Dec. 2018)
a. Where the advance tax payable is 10,000 or more.
b.Where the advance tax payable is2,500 or more
c. Where the advance tax payable is5,000 or more.
d. Where the advance tax payable is1,000 or more
Ans A
13. Where the advance tax paid on or before March, 2022 is less than 100% of the tax due on the total
income declared in the return as reduced by the amount of tax deducted at source, the assessee shall
be making payment of interest on the amount of shortfall for the tax due on the returned income so
declared per month at the rate of (Dec 19 –NS) .
(a) 2% (b) 1%
(c) Nil (d) 1.50% Ans.(b)
14. per section 234B, where the advance tax paid during the previous year 01.04.2021 to 31.03.2022
on or before March, 2022 is less than 90% of the assessed tax as reduced by the amount of tax
deducted at source, the assessee shall be making payment of simple interest on the amount of
shortfall per month at the rate of ------------ --. (Dec 20 –OS)
a. 1%
b. 1.25%
c. 1.50%
d. 1.75% ANS A

15. Ramesh (age 75) engaged in business has total income of ` 8,00,000 for the year ended 31st March,
2022. How much of advance tax, he must have paid before 15th December, 2021 ? Ignore section
115BAC. (JUNE-21-NS)
(A) NIL
(B) ` 72,800
(C) ` 54,600
(D) ` 43,680 ANS-C

16. From the following information compute the amount of interest payable by the income tax
department u/s 244A: Tax paid by way of advance tax and tax deducted at source up to 31.03.2022
`13,000. Tax due as per assessment u/s 143(1) `12,000 .Date of refund granted 15.12.2022 (JUNE-21-OS)
(A) `45
(B) `40

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(C) `90
(D) No interest is payable ANS-D

17. Compute the advance tax payable by Banshi (not a senior citizen) for the Assessment year 2022-23 , if
he has not been assessed to tax previously. His estimated taxable income for the financial year 2021-22 is
`4,68,000(JUNE-21-OS)
(A) 10,900
(B) 11,336
(C) 65,400
(D) NIL ANS-B/D
(note:-Option B is correct if Mr. Banshi is non-resident as rebate u/s 87A is not allowed. If Mr. Banshi is
resident, Option D is correct.)
18. Who is entitled to refund in case of insolvency of the assessee ? (JUNE-21-OS)
(A) His legal representative
(B) The receiver
(C) The liquidator of the company
(D) His agent provided he has been duly authorized by the principal ANS-B
19. The estimated gross total income of Raja is `7,70,000 which includes `80,000 on account of long-term
capital gain earned on 16.09.2021. Compute the advance tax payable including long-term capital gain by
Raja assuming `5,000 has been deducted at source during the financial year 2021-22 ?(JUNE-21-OS)
(A)`66,500
(B) `69,160
(C) `64,160
(D) `61,500 ANS-C

20. Payment of advance tax is to be made in four installments on or before 15th June, 15th Sept., 15th Dec.
and 15th March by the assessee. However the benefit of payment of advance tax in one instalment on or
before 15th March is available to an assessee who is computing profits on presumptive basis ....................
of the Income Tax Act, 1961. (DEC-21 NS)
(A) Under section 44AD
(B) Under section 44AD and 44ADA and 44AE
(C) Under section 44AD and 44AE
(D) Under section 44AD and 44ADA ANS = D
21. Star Ltd in whose case the due date of filing the return of income for the A.Y. 2022-23 was
30.09.2022 failed to file its return of income despite of notices issued by the A.O. The A.O.
completed the assessment as per section 144 on 24.12.2023 and determined a tax liability of
`2,20,000 without giving credit of advance tax and TDS but before charge of interest as per
sections 234A, 234B and 234C. Star Ltd. had paid advance tax of `40,000 and TDS of Rs. 18,000.
Determine the amount of interest payable in this context as per section 234B of the Act, by
Star Ltd: (DEC-21 NS)
(A) `9,720 (B) `34,020 (C) `51,030 (D) `46,200 ANS = B

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New Amendment based MCQ’s Added

1)Specified person for the purpose of section 206AB means:

1. Not filed the returns of income for both of the two assessment years relevant to the two previous
years immediately prior to the previous year in which tax is required to be deducted, for which the
time limit of filing return of income has expired
2. Not filed the returns of income for both of the two assessment years relevant to the two previous
years immediately prior to the previous year in which tax is required to be deducted, for which the
time limit of filing return of income is yet to be expired
3. The aggregate of TDS and TCS in his case > Rs. 50,000 in each of these two previous years
4. The aggregate of TDS and TCS in his case ≥ Rs. 50,000 in each of these two previous years

a. 1 or 3
b. 2 and 4
c. 2 or 3
d. 1 and 4 Ans D

2) In case of section 194Q if deductee fails to funish PAN to deductor, deductor has to deduct tax at which
of the following rates:

1. at the rate specified in the relevant provision of the Income-tax Act,1961

2. at the rate or rates in force
3. at the rate of 20%
4. at the rate of 5%

a. Higher of 1,2,3
b. Lower of 1,2,3
c. Higher of 1,2,4
d. Lower of 1,2,4 Ans C

3) Is TDS required to be deducted by resident Indian on Amount paid to non-resident under end user
license agreement which imposes restrictions or conditions for the use of computer software and do not
grant any such right or interest to reproduce the computer software:

a. Yes , being a supply of service

b. No , being a supply of service
c. Yes , being a sale of goods
d. No , being a sale of goods Ans D

4) Section 206AB requires tax to be deducted at source at which of the following rates

1. at twice the rate prescribed in the relevant provisions of the Act

2. at twice the rate or rates in force
3. at 5%

a. Higher of 1 and 3
b. Higher of 2 and 3
c. Higher of 1,2 and 3

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d. 3 only Ans C

5)Section 206CCA requires tax to be collected at source at which of the following rates

1. at twice the rate prescribed in the relevant provisions of the Act

2. at twice the rate or rates in force
3. at 5%

a. Higher of 1 and 3
b. Higher of 2 and 3
c. Higher of 1,2 and 3
d. 3 only Ans A

6) Interest u/s 234C is applicable to

a. Dividend under sec 2(22) b

b. Dividend under sec 2(22) c
c. Dividend under sec 2(22) d
Dividend under sec 2(22) e Ans D

Few Illustrations on Amendments

Illustration 1

Mr. Sharma, a resident Indian aged 77 years, gets pension of ` 52,000 per month from the UP State
Government. The same is credited to his savings account in SBI, Lucknow Branch. In addition, he gets
interest@8% on fixed deposit of ` 20 lakh with the said bank. Out of the deposit of ` 20 lakh, ` 2 lakh
represents five year term deposit made by him on 1.4.2021. Interest on savings bank credited to his SBI savings
account for theP.Y.2021-22 is ` 9,500.

(1) From the above facts, compute the total income and tax liability of Mr. Sharma for the A.Y. 2022-23,
assuming that he has not opted for section 115BAC.
(2) What would be the amount of tax deductible at source by SBI, assuming that the same is a specified
bank? Is Mr. Sharma required to file his return of income for A.Y.2022-23, if tax deductible at source
has been fully deducted? Examine.
(3) Would your answer to Q.2 be different if the fixed deposit of ` 20 lakh was with Canara Bank instead
of SBI, other facts remaining the same?
SOLUTION

(1) Computation of total income of Mr. Sharma for A.Y.2022-23

Particulars ` `
I Salaries
Pension ( 52,000 x 12) 6,24,000
Less: Standard deduction u/s 16(ia) 50,000
5,74,000
II Income from Other Sources
Interest on fixed deposit (` 20 lakh x 8%) 1,60,000
Interest on savings account 9,500 1,69,500
Gross total income 7,43,500
Less: Deductions under Chapter VI-A
Under Section 80C

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Five year term deposit (` 2 lakh, restricted 1,50,000

to ` 1.5 lakh)
Under section 80TTB
Interest on fixed deposit and savings account,
restricted to 50,000, since Mr. Sharma is a
resident Indian of the age of 77 years. 50,000 2,00,000
Total Income 5,43,500

(1) SBI, being a specified bank, is required to deduct tax at source u/s 194P (after considering the tax, if
any, deducted on pension u/s 192) and remit the same to the Central Government. In such a
case, Mr. Sharma would not be required to file his return of income u/s 139.
(2) If the fixed deposit of ` 20 lakh is with a bank other than SBI, which is the bank where his pension
is credited, then, Mr. Sharma would not qualify as a “specified senior citizen”, consequent to which
SBI would not be liable to deduct tax under section 194P. In this case, Mr. Sharma would have to
file his return of income u/s 139, since his total income (without giving effect to deduction under
Chapter VI- A) exceeds the basic exemption limit.
It may be noted that in this case, TDS provisions u/s 192 would, in any case, be attracted in respect of pension
income. Further, Canara Bank would, be liable to deduct tax@10% under section 194-A on interest on fixed
deposit, since thesame exceeds ` 50,000

Illustration 2

Mr. Gupta, a resident Indian, is in retail business and his turnover for F.Y.2020-21 was ` 12 crores. He
regularly purchases goods from another resident, Mr. Agarwal, a wholesaler, and the aggregate
payments during the F.Y.2021-22 was ` 95 lakh (` 20 lakh on 1.6.2021, ` 25 lakh on 12.8.2021, ` 22 lakh
on 23.11.2021 and ` 28 lakh on 25.3.2022). Assume that the said amounts were credited to Mr.
Agarwal’s

account in the books of Mr. Gupta on the same date. Mr. Agarwal’s turnover forF.Y.2020-21 was ` 15
crores.

(1) Based on the above facts, examine the TDS/TCS implications, if any, under theIncome-tax Act,
1961.
(2) Would your answer be different if Mr. Gupta’s turnover for F.Y.2020-21 was ` 8crores, all other
facts remaining the same?
(3) Would your answer to (1) and (2) change, if PAN has not been furnished by thebuyer or seller, as
required?
SOLUTION
(1) Since Mr. Gupta’s turnover for F.Y.2020-21 exceeds 10 crores, and payments made by him to Mr.
Agarwal, a resident seller exceed ` 50 lakhs in the P.Y.2021-22, he is liable to deduct [email protected]%
of ` 45 lakhs (being the sum exceeding ` 50 lakhs) in the following manner –
No tax is to be deducted u/s 194Q on the payments made on 1.6.2021 and 12.8.2021, since the
aggregate payments till that date i.e. 45 lakhs, has not exceeded the threshold of ` 50 lakhs.
Tax of ` 1,700 (i.e., 0.1% of ` 17 lakhs) has to be deducted u/s 194Q from the payment/ credit
of ` 22 lakh on 23.11.2021 [` 22 lakh – ` 5 lakhs, being the balance unexhausted threshold
limit].
Tax of ` 2,800 (i.e., 0.1% of ` 28 lakhs) has to be deducted u/s 194Q fromthe payment/ credit
of ` 28 lakhs on 25.3.2022.
Note – In this case, since both section 194Q and 206C(1H) applies, tax has tobe deducted u/s 194Q.

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(2) If Mr. Gupta’s turnover for the F.Y.2020-21 was only ` 8 crores, TDS provisions under section
194Q would not be attracted. However, TCS provisions under section 206C(1H) would be
attracted in the hands of Mr. Agarwal, since his turnover exceeds ` 10 crores in the F.Y.2020-21
and his receipts from Mr. Gupta exceed ` 50 lakhs.
No tax is to be collected u/s 206C(1H) on 1.6.2021 and 12.8.2021, since the aggregate receipts
till that date i.e. 45 lakhs, has not exceeded the thresholdof ` 50 lakhs.

Tax of ` 1,700 (i.e., 0.1% of ` 17 lakhs) has to be collected u/s 206C(1H) on 23.11.2021 (` 22 lakh –
` 5 lakhs, being the balance unexhausted threshold limit). Tax of ` 2,800 (i.e., 0.1% of ` 28 lakhs)
has to be collected u/s 206C(1H) on 25.3.2022.

(3) In case (1), if PAN is not furnished by Mr. Agarwal to Mr. Gupta, then, Mr. Gupta has to
deduct tax@5%, instead of 0.1%. Accordingly, tax of
` 85,000 (i.e., 5% of ` 17 lakhs) and ` 1,40,000 (5% of ` 28 lakhs) has to be deducted by Mr.
Gupta u/s 194Q on 23.11.2021 and 25.3.2022, respectively.
In case (2), if PAN is not furnished by Mr. Gupta to Mr. Agarwal, then, Mr. Agarwal has to
collect tax@1% instead of 0.1%. Accordingly, tax of
` 17,000 (i.e., 1% of ` 17 lakhs) and ` 28,000 (1% of ` 28 lakhs) has to be collected by Mr.
Agarwal u/s 206C(1H) on 23.11.2021 and 25.3.2022,respectively.

ICSI Module Questions

Illustration 1 :
Calculate Advance Tax Payable by Mr. Arun from the following estimated incomes for the previous year
2021-22 :
• Business Income : Rs. 4,75,000;
• Rent from house property : Rs. 36,000 per month;
• Municipal taxes : Rs. 27,000;
• Winning from games : Rs. 70,000 (net of TDS);
• Life insurance premium paid for himself (sum assured : Rs. 5,00,000) : Rs. 30,000.

Solution:
Computation of Advance Tax payable by Mr. Arun - Previous Year 2021-22 (Assessment Year
2022-23)
Step 1 : Compute Estimated Total Income for the year :

Particulars Rs. Rs.

Income from house property :
Gross Annual Value [Rental Income (36,000 x 12)] 4,32,000

Less : Municipal taxes paid by owner (27,000)

Net Annual Value (NAV) 4,05,000
Less : Standard Deduction @ 30% of NAV (1,21,500) 2,83,500
Profits and gains of Business or Profession 4,75,000

Income from other sources :

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Winning from games (gross) [70000 x 100(100% - 30%] 1,00,000

Gross Total Income (GTI) 8,58,500

Less : Deductions under Section 80C (30,000)
Total Income 8,28,500

Step 2 : Computation Estimated of Tax Liability and Advance Tax Payable

Particulars Rs. Rs.

Tax on :

Winning from Games @ 30% [1,00,000 x 30%] 30,000

Balance Income @ Slab Rate [12,500 + 20% of (7,28,500 - 5,00,000)] 58,200

Tax Payable 88,200

Add : Surcharge, if any Nil

Add : Cess @ 4% 3,528
Tax Liability 91,728

Less : TDS (30,000)

Advance Tax Liability 61,728

Advance Tax (Rounded off) 61,730

Step 3 : Advance Tax Instalments - Advance tax is payable as follows :

Upto % (Rate) Cumulative (Rs.) Each Instalment

(Rs.)
15.06.2021 15 9,259 [61,730x15%] 9,259
15.09.2021 45 27,778 [61,730x45%] 18,519
15.12.2021 75 46,297 [61,730x75%] 18,519
15.03.2022 100 61,730 [61,730x100%] 15,433
Note: Assuming assessee has opted for section 115BAC of the Income Tax Act, 1961

Illustration 2 :
Red Ltd. (an Indian company) has estimated its income for previous year 2021-22. Calculate advance taxpayable by it
from the following :

• Business Income : Rs. 10,80,000;

Income from house property (after deduction under section 24) : Rs. 7,20,000

• Long term capital gain (LTCG) on transfer of immovable property on 1st November, 2021 : Rs. 3,60,000;
• Interest on bank deposits (other than saving bank account) : Rs. 45,000.;
• TDS on business income and interest was Rs. 60,000;
• Deduction under section 80G is Rs.1,00,000.

Solution:

Computation of advance tax payable by Red Ltd. for Previous Year 2021-22 (Assessment Year 2022-23) :
Step 1 – Estimate Total Income

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 CH 13 – DT Bullet MCQ’s – June 22 & Dec 22 13.17

Particulars Rs.

Profits and gains of Business or Profession 10,80,000

Income from house property 7,20,000

LTCG 3,60,000

Income from other sources :

Interest on bank deposits 45,000

Gross Total Income (GTI) 22,05,000

Less : Deductions under Section 80G (1,00,000)
Total Income 21,05,000
Step 2 : Computation of Estimated Tax Liability and Advance Tax Payable (It is presumed that Red Ltd
is a regular company which is not satisfying the conditions of 115BA, 115BAA and 115BAB and its
turnover/ Gross receipts during P.Yr. 2019-20 exceeds Rs 400 Crores, hence rate of tax is taken as
30%)

Particulars Rs. Rs.

Tax on :
LTCG @ 20% (3,60,000 x 20%) 72,000
Balance Income @ 30% [(21,05,000 - 3,60,000) x 30%] 5,23,500 5,95,500
Add : Surcharge, if any Nil
Add : Cess @ 4% 23,820
Tax Liability 6,19,320
Less : TDS (60,000)
Advance Tax Liability 5,59,320
Advance Tax (rounded off) 5,59,320

sStep 3 : Advance Tax Instalments - Advance Tax is payable as follows :

Note : Advance Tax is payable by all Assessee in four installments during the previous year, i.e., by
15th June (15%), 15th September (45%), 15th December (75%) and 15th March (100%). However, in
case of LTCG arising after one or more installments, advance tax on installments prior to date of LTCG
can be paid without including tax on LTCG and advance tax on installments after LTCG must be paid in
the remaining installments on the amount of total tax liability including that on LTCG.
Therefore, in this case, advance tax payable by 1st and 2nd installment would be based on Tax
excluding Tax on LTCG and advance tax payable by 3rd and 4th installment would be based on tax
including tax on LTCG.
Tax excluding tax on LTCG : Rs. 5,23,500 + Cess @ 4% =Rs. 5,44,440 -TDS Rs. 60,000 = Rs.4,84,440

Upto Cumulative % Cumulative (Rs.) Each installment (Rs.)

15.06.2021 15 72,666 [4,84,440x15%] 72,666
15.09.2021 45 2,17,998 [4,84,440x45%] 1,45,332
15.12.2021 75 4,19,490 [5,59,320x75%] 2,01,492
15.03.2022 100 5,59,320 1,39,830
[5,59,320x100%]

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14. Various Entities 14.1

Chapter – 14

Taxation of Various Entities

TAXABILITY OF AN INDIVIDUAL:

(1) Mr. Shiva gifted a let-out building which fetches rental income of Rs. 10,500 per month to his son's
wife on 1-11-2021. The municipal tax of Rs. 6,000 on the property was paid on 10-1-2022. The total
income from all other sources (computed) amounts to Rs. 2,60,000 except income from above said
property. His total income chargeable to tax is: (June, 2017)
(a) Rs. 3,11,450 (b) Rs. 3,44,000
(c) Rs. 3,80,000 (d) Rs. 3,33,500 Ans.(b)
(2) Mr. Robert aged 52 years received monthly pension of Rs. 30,000 during the financial year 2021-22.
His agricultural incomein India is Rs. 50,000. His net income-tax liability is : (June, 2017)
(a) Rs. 14,420 (b) Nil
(c) Rs. 1,040 (d) Rs. 11,330 Ans.(b)
Answer Hint: Salary Income - Rs. 3,60,000 - Rs. 50,000 = Rs. 3,10,000. Tax liability is computed after giving
rebate under Section 87A
(3) During the year 2021-22, 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 2022-23 will be
- (June, 2015)
(a) Rs. 1,24,800 (b) Rs. 15,450
(c) Nil (d) None of the above. Ans.(c)
(4) Arjun has a salary income (computed) of Rs. 4,60,000. He also received an interest of Rs. 18,000 on
his fixed deposit (afterdeducting 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 of Arjun for the assessment year 2022-
23 is - (June, 2015)
(a) Rs. 9,360 (b) Rs. 23,920
(c) Rs. 16,270 (d) None of the above. Ans.(d)
Note :Tax liability will be Nil because of rebate upto 12,500rs. He will get a refund if Rs. 2,000 deducted as TDS
(5) Rajiv (aged 28 years) received cash gift of Rs. 2 lakh on the occasion of his marriage. It includes gift
from non-relative ofRs. 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
(c) Rs. 12,480 (d) Rs. 26,000 Ans.(a)
6. Where the total income of an assessee, being a non-resident Indian includes income by way of long-
term capital gainsarising from transfer of unlisted securities, applicable income-tax rate on such
income is - (Dec. 2014)
(a) 10% (b) 20%
(c) 30% (d) 40% Ans. (a)

7. Mr. A (age 70) being a pensioner has total income (computed) of ` 5,50,000 for the previous year ended
31.03.2022. What would be his net tax liability payable by him including Higher Education Cess if opts for section
115BAC ? (JUNE-21-NS)
(A) ` 18200
(B) ` 5,600
(C) ` 15,600
(D) ` 8,320 ANS-A

8. Compute the gross total income (GTI) of Prashant, Resident of Mumbai for the A.Y. 2022-23, from
the information given below by taking that Prashant has not opted to pay tax on his income as
per section 115BAC of the Act : (DEC-21 NS)
Particulars Amount (`)
• Share of profit from a partnership firm 4,45,000.00
(Prashant is a sleeping partner in the firm and share of profit
includes amount of `2,00,000 of long-term Capital gain on transfer of plot of land)

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14. Various Entities 14.2

• Salary received from a private limited company engaged in cultivation and

manufacture of coffee in the state of Kerala 5,00,000.00
• Interest on accumulated balance of PPF Account 1,25,000.00
• Amount received on winning from Maharashtra State Lottery 2,06,400.00 (DEC-21
NS)
(A) `11,10,000
(B) `8,00,000
(C) `7,50,000
(D) `4,50,000 ANS = C
9. Total income computed under the head of Salary of `6,50,000 and of other sources of Sevak
Kumar, who have attained the age of 60 years on 01.04.2022 for the year ended on 31.03.2022 is
of `6,50,000 after claiming deduction of `60,000 under section 80C of the Act. The liability of
Sevak Kumar when he opts to pay tax under the provisions of section 115BAC and by availing the
benefit of CBDT Circular No. 28/2016 dated 27.07.2016 for A.Y. 2022-23 shall be : (DEC-21 NS)
(A) `34,840
(B) `40,560
(C) `28,600
(D) `44,200 ANS = A/B

(Note as per - ICSI :- The question is not specifically mentioned whether satndard deduction u/s
16(iia) of Rs. 50,000 has been deducted while computing salary income. Option A is correct as
follow: Total Income 650000 + 60000 (Section 80C) = 710000. Accordingly Tax will be 34,840 i.e.
Option A assuming Standard deduction u/s 16 (iia) of Rs. 50,000 has not been deducted while
computing Salary Income. Option B is correct as follow: Total Income 650000 + 60000 (Section
80C) + 50000 (Standard Deduction) = 760000. Accordingly Tax will be 40560. Assuming
Standard deduction u/s 16 (iia) of Rs. 50,000 has been deducted while computing Salary
Income.)

TAXABILITY OF HUF :

(1) Murali received Rs. 1 lakh from the HUF of which he is a coparcener. The HUF consists of four
coparceners including his father who is the Karta of the HUF. The amount paid was by way of debit to
the capital account of HUF engaged in textile business. Is the amount of receipt chargeable to tax - (Dec.
2016)

(a) Yes, full amount is taxable (b) 50%, i.e., Rs. 50,000 is taxable

(c) Nil, i.e., it is exempt from tax (d) 25%, i.e., Rs. 25,000 is taxable
Ans.(a)

2. RS HUF consists of R Karta, Y and S co- parceners, D, the daughter of a co-parcener and W, the wife
of Karta as members. The following can demand the partition of RS HUF: (June 2018)

(A) D

(B) R, Y and S

(C) W

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14. Various Entities 14.3

(D) (A) and (B) above Ans. D

3. Which out of the following income is not to be clubbed while computing income of the Hindu
Undivided Family (HUF) for the assessment year 2022-23? (Dec. 2018)

(A) Fees or remuneration received by the member as a director or a partner in the company or firm if
the funds of the HUF are invested in a company or firm
(B) Income from ‘stridhan’ and personal income of the members
(C) Income of minor sons out of the investments of the family funds
(D) None of the above Ans B
4. Which out of the following is the false statement for computation of income of the Hindu Undivided Family
(H.U.F.) ? (JUNE-21-OS)
(A) Income from 'stridhan' is included in the income of the family.
(B) Income from impartible estate is taxable in the hands of the holder of the estate and not in the hands the H.U.F.
(C) Under the Dayabhaga School of law, no son has any right in the ancestral property during the lifetime of his
father.
(D) Personal income of the member cannot be treated as income of H.U.F. ANS-A

FIRM:

1.From tax point of view, a limited liability partnership (LLP) is treated as - (Dec. 2015)

(a) Sole trader concern (b) General partnership firm

(c) Private limited company (d) Public limited company

Ans.(b)

TAX EXEMPTIONS FOR CHARITABLE TRUSTS AND INSTITUTIONS:

(1) Ray Charitable Trust (registered under section 12AB) 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? (June, 2017)
(a) Rs. 10 lakhs (b) Rs. 7 lakhs
(c) Rs. 5 lakhs (d) Rs. 3 lakhs Ans.(b)
2. Ramji Charitable Trust had sold a capital asset costing Rs. 70,000 on 13th June, 2021 for Rs. 1,50,000. It
purchased new asset on 1st July 2021 for Rs. 1,20,000. The amount taxable as capital gains for Ramji Charitable
Trust in A.Y.2022-23 is - (Dec. 2015)
(a) Rs. 80,000 (b) Nil, because of charitable trust
(c) Rs. 30,000 (d) Rs. 40,000 Ans.(c)
2. A charitable trust registered under section 12AB 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
(c) Rs. 6 lakh (d) Rs. 2 lakh Ans.(c)
3. A charitable trust acquired two air-conditioners for Rs. 1,40,000 on 10th June, 2021 . 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 2022-23 is- (Dec. 2015)
(a) Rs. 21,000 (b) Rs. 1,40,000
(c) Rs. 35,000 (d) Nil. Ans.(d)
4. A capital asset purchased on 11th Sept., 2016 for Rs. 2,00,000 was sold for 3,00,000 on 18th Dec.,
2021 by a Charitable Trust registered under section 12AB of the Income Tax Act. New capital assets
after the sale was purchased on 1st January, 2022 for 2,60,000. The amount of capital gain arising
from the sale of capital asset utilized in purchase of new asset for the A.Y.2022- 23 shall be _______and
taxable amount shall be ......... (Dec 18)
(A) Rs. 40,000 and Rs.60,000

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 14. Various Entities 14.4

(B) Rs. 1,00,000 and Rs.2,60,000

(C) Rs. 2,60,000 and Rs.1,00,000
(D) Rs. 60,000 and Rs.40,000 Ans. D
5. A charitable trust registered as per section 12AB of Income Tax Act, having capital asset purchased in June,
2017 for Rs.1,00,000 and used for the charitable purposes till the same was sold in December, 2021 for Rs.
1,50,000. The Trust, after sale of capital asset purchased a new capital asset for Rs. 1,20,000 which was also
used for charitable purposes of the Trust. The amount of capital gain utilized in purchase of new capital asset
by Trust shall be ____________. (Dec 19 –NS)
(a) Rs.20,000 (b)Rs. 50,000
(c) Rs. 30,000 (d)Nil Ans.(a)

6. In the case of a charitable trust registered under section 12Ab, which of the following investment is not contained
in section 11(5) of the Act for keeping the unspent incomes of the trust ? (JUNE-21-NS)
(A) Deposit in post office savings bank
(B) Debentures issued by domestic companies unconditionally guaranteed by State Government
(C) Investment in immovable property
(D) Equity shares of listed domestic companies in India ANS-D

POLITICAL PARTIES

1. Registered political parties have to maintain a record of the contributions and names and address of the
persons who have made such contribution where each contribution exceed: (Dec. 2017)
(A) Rs. 1,000
(B) Rs. 5,000
(C) Rs. 10,000
(D) Rs. 20,000 Ans.(d)
2. Any voluntary contributions received byan electoral trust not be included in the total income where such
electoral trust distributes to any political parties ------------- of the aggregate donations received by it duringthe
previous year along with the surplus, ifany, brought forward from any earlierprevious year. A political party, for
this purpose, means a political party registered under section of the Representation ofthe People Act, 1951.
(Dec20–OS)
(A)85%,29
(B)95%,29A
(C)95%,29B
(D)85%,29A ANS B

3. Political parties are liable to pay tax on their income and they are assessed as ______ , (JUNE-21-OS)
(A) Association of persons
(B) Company
(C) Firm
(D) Artificial juridical person ANS-A

4. What is the maximum limit prescribed by the Act for cash donation received by the Political Party registered with
the Election Commission of India? (DEC-21 OS)
(A) `10,000 (B) `1,500 (C) `2,000 (D) `20,000 ANS = C

5. Section-12AA has been replaced by : (DEC-21 OS)

(A) Section 12AD
(B) Section 11AB
(C) Section 12AB
(D) Section 10AC ANS = B

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14. Various Entities 14.5

ELECTORAL TRUST:

1. An electoral trust receiving voluntary contributions for the purpose of distributing to political parties
registered under Section 29A of the Representation of the People Act, 1951 must distribute .............. % of such
contributions. (Dec. 2017)
(A) 100
(B) 95
(C) 75
(D) 50 Ans.(d)

COOPERATIVE SOCIETY
1. In the case of a co-operative society, surcharge is levied, where its total income exceeds Rs.crore.
(June 2018)
(A) 1
(B) 5
(C) 10
(D) None of the above Ans. A
2. Which of the under mentioned incomes of a Co-operative Society is not eligible for deduction under
section 80 P of the Income Tax Act, 1961 when the gross total income of the society exceeds Rs. 20,000?
(Dec. 2018)
(A) Agency business
(B) Income from letting of godown
(C) Income from house property
(D) Dividend from other Co-operative Societies Ans C
3. The profits of a co-operative society engaged in (i) Carrying out the business of banking, (ii) A cottage industry
and (iii) Collective disposal of labours of its member are eligible for deduction u/s 80 Pup-to (June 2018)
(A) 75% of the profits
(B) 100% of the profits
(C) 50% of the profits
(D) None of the above Ans. B
4. In case of which of the following co-operative society, the deduction u/s 80P is restricted to Rs. 1,00,000 -
(June 2016)
(a) Consumers' co-operative society
(b) Society engaged in collection and disposal of labour
(c) Society engaged in fishing
(d) Society engaged in processing of agriculturalproduce without the aid of power
Ans. (a)
5. The profits of a Co-operative Society engaged in (i) Carrying out the business of banking, (ii) A cottage
industry and (iii) Collective disposal of labour of its members are exempt from the as per section 80P up-to :
(Dec 19 –NS)
(a) 75% of the profits (b) 100% of the profit
(c) 50% of the profits (d) 40% of the profits Ans.(b)

6. The total income of a co-operative society is Rs. 2,10,000 after claiming deduction under section 80P of the
Act. The total tax payable by the co-operative society on its total income, including cess, would be : (Dec 19 –
OS)
(A) NIL
(B) Rs. 52,000
(C) Rs. 62,400
(D) Rs. 64,890 Ans – C
7. Shanti Nagar Co-operative Society had derived the following income during the
previousyear1.4.2020to31.3.2021:

(i) Marketing ofagricultural

produce of its members 20,000

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14. Various Entities 14.6

(ii) Interest from memberson

delayed payment 2,000
(iii) Processing (without aidof
power) of agricultural
produce of its members 5,000
(iv) Supplying milk tothe
Government (raised by
its members) 25,000
(v) Agencybusiness 15,000
(vi) Dividends from
other Co- 15,000
operativeSocieties
The total income of the Society for the A.Y. 2022-23 shall be ----------(Dec20–NS)
(A) Rs. 22,000
(B) Rs. 37,000
(C) Rs. (82000 – 50000) = 32,000
(D) Rs. 2,000 ANS-D
8. The rates of income tax excluding Cess and surcharge if any applicable to a co-operative society for the
assessment year 2022-23 where the total income exceeds Rs. 20,000 be-----------(Dec20–OS)
A. 10% of the total income
B. 2,000 plus 20% of the amount by which the total income exceeds 20,000
C. 3,000 plus 30% of the amount by which the total income exceeds20,000
D. 3,000 plus 25% of the amount by which the total income exceeds 20,000
Ans C

9. Tax liability of Raj Co-operative Society (which opts to pay tax under section 115BAD) on the total income of `
90,000 for F.Y. 2021-22 is : (JUNE-21-OS)
(A) ` 24,960
(B) ` 20,592
(C) ` 22650
(D) `24,000 ANS-C

9. The tax liability of Raja Co-operative Society (does not opt to pay tax under section 115BAD) on the
total income of `1,20,000 for P.Y. 2021-22, is (DEC-21 NS)
(A) `24,960
(B) `37,440
(C) NIL
(D) `34,320 ANS = D
AOP / BOI

(1) When a non-domestic company is a member in an AOP and its share of profit is indeterminate, the tax on
total income ofthe AOP is charged at the - (June 2016)
(a) Nominal rate (b) Maximum marginal rate
(c) Rate applicable to the company (d) Least of the above three rates. Ans.(c)
2. Maruti & Co. is an AOP consisting of 4 members with equal share. None of the member has income exceeding
the taxable limit. The total income of the AOP is Rs. 5 lakhs. The income tax liability of the AOP would be : (June,
2017)
(a) Rs. 1,54,500
(b) Rs. 77,250
(c) Rs. 13,000

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14. Various Entities 14.7

(d) Rs. 20,600 Ans.(c)

3.. Tax shall be charged on the total income of the AOP at the maximum marginal rate under the
provisions of section 167B of IncomeTaxAct,1961:
(A) Where individual shares of the members of an association or body are indeterminable
or unknown in relation to the whole of income
(B) where members share equally
(C) where the individual shares of the members of an associate or body are indeterminable
or unknown relating to any part of income
(D) Both (A) and(C) Ans D

4. Vinod & Co. is an AOP consisting of three members E, F and G. The concern paid interest on capital to
member E Rs. 1,05,000 @ 15% per annum. It also received interest from the member E Rs. 90,000 on
the amount advanced @ 18% per annum. The total income of the AOP after including interest receipt
and deducting interest payment to E is Rs. 4,85,000. Its total income liable for income-tax assessment
would be : (Dec 19 –OS)
(A) Rs. 4,85,000
(B) Rs. 5,00,000
(C) Rs. 4,70,000
(D) Rs. 6,80,000
Ans – B
Miscellaneous
1. A municipal committee legally entitled to manage and control a municipal fund is chargeable to income-tax in
the status of :(Dec. 2017)
(A) individual
(B) association of persons
(C) local authority
(D) artificial juridical person Ans.(c)
2. Find out from the following income derived from house property which is being exempt from
Income Tax: (June 19)
(A) Income from property of a trust for charitable or religious purposes
(B) Income from property of a housing society
(C) Income from property of a trade association
(D) Income from property of a sports association Ans C

3. A non-resident (other than company) and a foreign company will pay tax on the income of interest
received from an infrastructure debt fund referred to in section 10(47) at the rate of: (June 19)
(A) 20%
(B) 5%
(C) 10%
(D) 7.5% Ans B

4. Which of the following is not a feature of Association of Persons (AOP) ? (JUNE-21-NS)

(A) Joining together of two or more persons
(B) To produce income, profits or gains
(C) The coming together is voluntary in other words not mandated by any event or situation
(D) Only individuals can be members ANS-D
5. There are three individual members Raja, Harshil and Gopal in an association of persons (AOP) sharing profits
and losses in equal proportion. AOP earned total taxable income `9,00,000 for the Assessment Year 2022-23 which
included ` 30,000 for long term capital gain. The net taxable income of members from their own business was `
30,000, ` 40,000 and ` 50,000 respectively before transferring share of profit from AOP. Find the tax liability of
AOP. (JUNE-21-OS)
(A) ` 89,960
(B) `6,000
(C) `3,78,110
(D) `96,200 ANS-D

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14. Various Entities 14.8

New Amendment based MCQ’s Added

(1) Where a trust or institution is provisionally registered under section 12AB an application to Principal
Commissioner or Commissioner is to be made :

a. at least 6 months prior to the expiry date of provisional registration

b. within 6 months of commencement of its activities
c. Earlier of a and b
d. Later of a and b Ans C

2. Provisional Registration to trust shall be granted :

a. For the period of 3 years , within 3 months from the end of the month in which application is made
b. For the period of 5 years , within 3 months from the date on which application is made
c. For the period of 5 years , within 6 months from the date on which application is made
d. For the period of 3 years , within 6 months from the end of the month in which application is made
Ans D

(3) Where a trust or institution is registered under section 12AB and the period of the said registration is
due to expire then application shall be made at least ____prior to the expiry date –

a. 1 Months
b. 6 Months
c. 9 Months
d. 3 Months Ans B

4) When objectives of a trust or institution is to be modified an application to Principal Commissioner or

Commissioner is to be made

a. Atleast 30 days prior to the date of such modification

b. Atleast 1 month prior to the date of such modification
c. within a period of 30 days from the date of such modification
d. within a period of 1 month from the date of such modification Ans C

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15. Tax incidence on companies 15.1

Chapter 15
Classification & Tax Incidence on Companies
Types of Company & Rate
1. A company shall be deemed to be one as per section 2(18) of the Income Tax Act, 1961 in
which public are substantially interested and is owned by the Government or Reserve Bank of
India (RBI) or in which not less than ________ of the shares whether singly or taken together
are being held by the Government or Reserve Bank of India or a Corporation owned by the RBI
(DEC-21 NS)
(A) 50%
(B) 40%
(C) 51%
(D) 45% ANS = B

2. What is concessional rate of income tax for income from the transfer of carbon credit ? (DEC-21
OS)
(A) 3% (Sur+Cess)
(B) 5% (Sur+Cess)
(C) 10% (Sur+Cess)
(D) 20% (Sur+Cess) ANS = C
3.What is the tax rate applicable for the manufacturing companies incorporated in India on or after 1st October,
2019, where it opted for section 115BAB ? (JUNE-21-OS)
(A) 22%
(B) 15%
(C) 25%
(D) 30% ANS-B

115JB & 115JC

(1) Provisions of section 115JB are applicable in case of - (Dec. 2016)
(a) Domestic companies only (b) Foreign companies
(c) All companies (d) Closely held companies Ans.(c)
2. For computing the Book Profit under section 115JB, which of the following is not added back to the
profits ? (June, 2017)
(a) Income-tax (b) Provision for Tax
(c) Dividend Distribution Tax U/s 115-0 (d) Securities Transaction Tax Ans.(d)
3. Number of years for which credit of MAT excess paid u/ s 115JB can be carried forward is - (Dec. 2014)
(a) 7 Assessment years (b) 8 Assessment years
(c) 15 Assessment years (d) 10 Assessment years. Ans.(c)
4.MAT credit in respect of excess taxes paid under section 115JB can be carried forward for - (June, 2015)
(a) 7 Assessment years (b) 10 Financial years
(c) 15 Assessment years (d) 7 Financial years. Ans.(c)
5. The provisions of Alternate Minimum Tax (AMT) will apply only when the adjusted total income computed
under section 115JC exceeds :(Dec, 2017)
(A) Rs. 5 lakhs
(B) Rs. 20 lakhs
(C) Rs. 50 lakhs
(D) Rs: 100 lakhs Ans.(b)
6. The provisions of AMT under Chapter XII- BA shall not apply to an individual, a HUF, etc., if the adjusted total
income of such person does not exceed: (June 2018)
(A) Rs.10,00,000
(B) Rs.25,00,000
(C) Rs. 5,00,000
(D) Rs. 20,00,000 Ans. D

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15. Tax incidence on companies 15.2

7. MAT credit can be carried forward for a period of following number of assessment years: (June 2018)
(A) 5
(B) 15
(C) 10
(D) No time limit Ans B
8. Provisions of Minimum Alternate Tax (MAT) are applicable to the companies which are: (June 2018)
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 Ans. B
9. Ram & Co., a proprietorship firm has paid tax for the assessment year 2022-23 as per section 115JC of the
Income Tax Act,1961. Credit of such paid tax can be carried forward by the proprietor for a period of following
number of assessment years immediately succeeding the assessment year 2022-23: (Dec 2018)
(A) 8years
(B) 5years
(C) 10years
(D) 15years Ans D
10. M Ltd. Has Minimum Alternative Tax (MAT) credit of Rs. 5,20,000 of the assessment year2022-23.It can carry
forward this MAT credit up to....................assessment Years immediately succeeding the assessment year2022-23.
(Jun 2019)
(A) 5
(B) 10
(C) 15
(D) 20 Ans C
11. Alternate minimum tax under section 115JC is not applicable to - (Dec. 2015)
(a) Company (b) Individual
(c) Partnership Firm (d) Association of persons. Ans.(a)

12. Provision of section 115JC are not at all applicable to - (June, 2015)
(a) LLPs (b) Companies
(c) Partnership firms (d) Individuals. Ans.(b)

13. The provisions of alternate minimum tax under section 115JC are applicable for limited liability
partnership when theadjusted total income exceeds : (June, 2017)
(a) Rs. 10 lakhs (b) Rs. 20 lakhs
(c) Rs. 100 lakhs (d) Rs. 5 lakhs Ans.b
Note: AMT is applicable in case of LLP irrespective of adjusted its total income. The limit of Rs.
20 lakhs apples to an individual or HUF or an AOP/BOI, whether incorporated or not, or an
artificial juridical person.
14.. Alternate Minimum Tax (AMT) under chapter XII-BA will not apply if the adjusted total income of an
individual does not exceeds : (Dec 19 –OS)
(A) Rs. 5,00,000
(B) Rs. 10,00,000
(C) Rs. 20,00,000
(D) Rs. 25,00,000 Ans – C
15. When a domestic company has paid tax on book profit which is higher than the normal tax payable on the
total income, such excess tax so paid is eligible for carry forward up to : (Dec 19 –OS)
(A) 5 succeeding assessment years
(B) 8 succeeding assessment years
(C) 10 succeeding assessment years
(D) 15 succeeding assessment years Ans – D
16.The total income of the partnership firm Xavier & Company for the assessment year 2022-23 of
Rs.8,15,000 arrived at after claiming deduction u/s 35AD of Rs.11,00,000, u/s 80-IB of
Rs.1,00,000, and donation paid to a registered political party by cheque of Rs.85,000. The adjusted
total income of the firm for payment of tax under section 115JC of the Act shall be Rs.--------------(Dec
20 –NS)

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15. Tax incidence on companies 15.3

(A) 20,15,000
(B) 21,00,000
(C) 10,00,000
(D) 19,15,000 ANS – A
17.Credit for tax (tax credit) paid by aperson on account of AMT under Chapter XII-BA shall be allowed which
can be carried forward upto ------------- immediately succeeding the assessment year in which such credit
becomes allowable. (Dec20–OS)
A. 20th assessmentyears
B. 15th assessmentyears
C. 10th assessmentyears
D. 5th assessmentyears ANS B
18.Provisions of section 115JC under Chapter XII-BA shall not apply to an Individualor a HUF or an AOP or a
body of Individual (whether incorporated or not) or anyartificial judicial person, if the adjusted total income of
such person does not exceed Rs.------(Dec20–OS)
(A) 5lakh
(B) 10lakh
(C) 20lakh
(D) 30lakh ANS C

19. Sam (P) Ltd has MAT credit of ` 10.50 lakhs belonging to the assessment year 2015-16. What is the maximum time
limit up to which the MAT credit can be carried forward by Sam (P) Ltd ? (JUNE-21-NS)
(A) Assessment Year 2025-26
(B) Assessment Year 2020-21
(C) Assessment Year 2030-31
(D) Assessment Year 2027-28 ANS-A
(note:- The credit of AMT/MAT is available for 15 A.Ys However prior to AY 2018-19 the said period is 10
A.Ys only

20. Alternate minimum tax (AMT) credit can be carried forward up to _______ immediately succeeding the
assessment year in which such credit become allowable. (JUNE-21-OS)
(A) 10th assessment year
(B) 12th assessment year
(C) 15th assessment year
(D) 20th assessment year ANS-C

21. For computing the book profit under section 115JB which of the following is not added back to the profits ?
(JUNE-21-OS)
(A) Provision for diminution in value of investment
(B) Securities Transaction Tax
(C) Proposed dividend
(D) Provision for deferred tax ANS-B
22. Utpal Dutt an individual assessee engaged in the business of Gold/Silver Jewellery at Kolkata
presents the following information and asks you to state the amount of tax required to be paid by him
for A.Y. 2022-23 (DEC-21 NS)
Particulars (` In Lakhs)
(i) Tax calculated on Total Income : –
As per regular provisions of Income-tax Act, 1961 18
As per section 115JC of the Act 14

(ii) AMT credit brought forward from A.Y. 2020-21 6

(A) 18 lakhs
(B) 14 lakhs
(C) 12 lakhs
(D) 8 lakhs ANS = B
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15. Tax incidence on companies 15.4

23. Which of the following is correct statement regarding MAT? (DEC-21 OS)
(A) MAT credit can be carried forward up to 7th Assessment Year immediately succeeding the
assessment year in which such credit becomes allowable
(B) MAT credit can be carried forward up to 15th Assessment Year immediately succeeding the
assessment year in which such credit becomes allowable
(C) MAT credit can be carried forward up to 15th Assessment Year immediately preceding the
assessment year in which such credit becomes allowable
(D) MAT credit can be carried forward up to 7th Assessment Year immediately preceding the
assessment year in which such credit becomes allowable ANS = B

Taxability of Dividend income of an Indian company from a Specified foreign company

(1) Radha Ltd. received dividend of Rs. 100 lakhs from King P. Ltd. of Singapore in December 2021. The
company declared interim dividend of Rs. 200 lakhs in January 2022. The dividend distribution tax
payable by Radha Ltd. would be ________ (June, 2017)
(a) On Rs. 200 lakhs (b) On Rs. 100 lakhs
(c) Nil since dividend declared is more than (d Nil Ans.(d)
Note :The concept of DDT is removed
2. 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)
3. 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 - (June, 2015)
(a) 10% (b) 25%
(c) 26% (d) 51%. Ans.(c)
4. . Total income of XYZ Limited includes the income of dividend of Rs. 10 lakh paid by a U.K.-based foreign
company in which XYZ Limited holds 30% of the equity share capital. Rs. 50,000 has been spent for earning such
dividend. The dividend income so received by the company from the U.K.-based foreign company and the tax rate
shall be: (Dec 2017)
(A) Not taxable being exempt u/s10(34)
(B) Taxable@15%of Rs.10lakh
(C) Taxable @ 15% of Rs.9.5 lakh
(D) Taxable@10%ofRs.9.5lakh Ans. B
5. A domestic company distributed a dividend of Rs. 30,00,000 to its shareholders. Out of this dividend,
Rs. 4,00,000 paid to a person on behalf of the New Pension System Trust and Rs. 1,00,000 paid to
another corporate shareholder. The company also received a dividend of Rs. 2,00,000 from its
subsidiary which paid dividend distribution tax under section 115-0. In this case, the amount of
dividend subject to dividend distribution tax for the domestic company will be - (June 2016)
(a) Rs. 24,00,000 (b) Rs. 27,00,000
(c) Rs. 28,00,000 (d) Nil Ans.(d)
6. DLF Limited, an Indian domestic company received an amount of Rs.15 lakh as dividend declared and
distributed on 18.11.2021 by John Miller Inc of UK in which it holds 30% in nominal value of equity share
capital. Indian company has paid interest of Rs.5 lakh on the amount invested in the shares of John Miller
Inc. The tax payable (rounded off in nearby two decimal points) on the amount of dividend received by the
Indian company in assessment year 2022-23 shall be----(Dec20–NS)
(A) Rs.3.12lakh
(B) Rs.2.50lakh
(C) Rs.2.34lakh
(D) Rs.2.68lakh ANS-C

7.As per section 115BBD where the total income of an Indian company includes any income by way of
dividends declared, distributed or paid by a specified foreign company, such income of divided shallbe
chargeable to tax at therateof with applicable surcharge and Cess (Dec20–OS)

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15. Tax incidence on companies 15.5
(E) 5%
(B) 10%
(C) 15%
(D) 20% ANS C

Equalization Levy

1. Every person being 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 ofspecified services @ ____________whereas the aggregate amount of consideration for
specified services in the previousyearexceeds ? ____________. (Dec 19 –NS)
(a) 8%, Rs. 10,00,000 (b) 8%, Rs. 1,00,000
(c) 6%, Rs. 1,00,000 (d) 10%, Rs. 1,00,000 Ans. (c)
2. An Indian resident availed services by way of online advertisement space provided by a foreign company
located in UK. The foreign company does not have a PE (Permanent Establishment) in India. The Indian
company has to pay equalization levy when the amount paid to the foreign company exceeds: (Dec 19 –OS)
(A) Rs. 50,000 in previous year
(B) Rs. 1,00,000 in previous year
(C) Rs. 5,00,000 in previous year
(D) Rs. 10,00,000 in previous year
Ans – B

Carbon Credit

(1) RAJA Ltd. has earned income of Rs. 150 lakh inclusive of income of Rs. 50 lakh from the transfer of Carbon
Credit during the year 2021-22. The company had incurred an amount of Rs. 5 lakh as transfer expenses on
transfer of Carbon Credit. The income received from transfer of Carbon Credit in the A.Y. 2022-23 shall be
taxed as per section 115BBG of the Act and the amount of tax on such income payable shall be : (Dec 19 –NS)
(a) Rs. 5,82,400 (b) Rs. 5,56,400
(c) Rs. 13,00,000 (d) Rs. 5,00,000 Ans.(b)

Hint – Surcharge @ 7%

24. Where the total income of an assessee includes any income by way of transfer of Carbon Credits, the
tax payable thereon in Asst. Year 2022-23 shall be at the rate of ------------ with applicable surcharge
and cess. (Dec20–OS)
a. 2%
b. 5%
c. 7%
(D) 10% ANS D

3. Ram Process (P) Ltd received ` 2,10,000 on transfer of Carbon Credit. The total income of the company is below
` 100 lakhs. How much is payable as income tax (including surcharge and higher education cess) on the said amount
received on transfer of carbon credit ? (JUNE-21-NS)
(A) NIL
(B) 21,840
(C) 43,680
(D) 65,520 ANS-B

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 15. Tax incidence on companies 15.6

Amalgamations , Mergers And Demergers:

(1) According to section 2(1B), "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 : (Dec. 2014).

(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. Ans.(d)

(2)Which of the following is not a requirement for amalgamation of two companies?

(June, 2017)
(a) All the assets are transferred from amalgamation 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 3/4 the in value of shares of the amalgamating company become shareholders of
the amalgamated company
Ans.(b)
Miscellaneous
1. Rahim has shown an air-conditioner installed at his residence as having been installed at his factory, and
claimed depreciation thereon. This is an act of: (June 2018)
(A) Tax planning
(B) Tax management
(C) Tax evasion
(D) None of the above Ans C
2. Income Tax Act, 1961 distinguished a closely held company from widely held company significantly from the
viewpoint of: (Dec 2018)
(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 condition specified in section 79 are
satisfied
(D) Both (B) and(C) Ans D

New Amendment based MCQ’s Added

Additions
1) income of X ltd. ( a domestic company ), where its turnover during the previous year is 500 crore rupees
and during the previous year 2018-19 is 380 crore rupees , is taxable at the rate of:

a. 15%
b. 22%
c. 25%
d. 30% Ans D

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15. Tax incidence on companies 15.7

2) income of X ltd. ( a domestic company ), where its turnover during the previous year is 500 crore rupees
and during the previous year 2019-20 is 380 crore rupees , is taxable at the rate of:

15%
a. 22%
b. 25%
c. 30% Ans C

3) Which of the following companies can exercise the option of paying taxes under section 115BAB:

(i) development of computer software in any form or in any media;

(ii) mining;
(iii) conversion of marble blocks or similar items into slabs;
(iv) bottling of gas into cylinder;
(v) printing of books or production of cinematograph film

a. 1,4,5
b. 2,3
c. None
d. All of above Ans C

4)in case of conversion of company into LLP to avail the exemption of capital gain total value of the assets as
appearing in the books of account in any of the last 3 Years of the company shall not:

a. ≥ 5 crore rupees
b. ≥ 60 lakh rupees
c. >5 crore rupees
d. >60 lakh rupees Ans C

5)In case of conversion of company into LLP to avail the exemption of capital gain, total sales, turnover or gross
receipts shall not:

a. ≥60 lakh rupees in any of the last 3 years

b. ≥60 lakh rupees in any of the last 5 years
c. >60 lakh rupees in any of the last 3 years
d. >60 lakh rupees in any of the last 5 years Ans C

6) in case of conversion of company into LLP to avail the exemption of capital gain, aggregate of profit
sharing ratio of shareholders of the company in the LLP :

a. Shall be less than 50% at any time during the period of 3 years from the date of conversion
b. Shall be less than 50% at any time during the period of 5 years from the date of conversion
c. Shall not be less than 50% at any time during the period of 3 years from the date of conversion
d. Shall not be less than 50% at any time during the period of 5 years from the date of
conversion
Ans D
7) A ltd. gets amalgamated with B ltd on 31st august 2020. Expenditure incurred on such amalgamation is
Rs. 500000 . How much deduction can be claimed by B ltd. ?

a. Rs. 100000 each in PY 2020-21 till PY 2024-25

b. Rs. 100000 each in PY 2021-22 till PY 2025-26
c. Rs. 50000 each in PY 2020-21 till PY 2024-25
d. Rs. 50000each in PY 2021-22 till PY 2025-26 Ans A

8)Business Losses & Unabsorbed Depreciation can be carried forward by the amalgamated company
subject to the following conditions :

Choose correct option

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15. Tax incidence on companies 15.8
1. the amalgamating company should have its own accumulated loss or unabsorbed depreciation
which it is minimum 5 years old.
2. the amalgamating company has held continuously as on date of the amalgamation < 3/4ths of the
book value of fixed assets 2 years prior to the date of amalgamation
3. the amalgamated company holds continuously for minimum 5 years from the date of
amalgamation, minimum 3/4ths of the book value of fixed assets of the amalgamating company so
acquired;
4. the amalgamated company continues the business of the amalgamating company for minimum 5
years from the date of amalgamation.

a. 1, 2 and 3
b. 2,3 and 4
c. 3 and 4
d. All are correct Ans C

9) Which of the following companies may choose to pay taxes under section 115BAB
a. Manufacturing co
b. Electricity generating co
c. Both
d. None Ans C
10) Tax rate applicable under section 115 BAB is :
a. 22% (plus surcharge@10% and HEC@4%)
b. 15% (plus surcharge@10% and HEC@4%)
c. 25%
d. None Ans B

11) Any transfer of shares in an Indian company held by a foreign company to another foreign company
No to be regarded as transfer if Minimum __ % of the shareholders of the amalgamating company
continue to remain shareholders of the amalgamated foreign company

a. 25
b. 51
c. 50
d. 75 Ans A

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 Ch 16 – DT Bullet MCQ’s – June 22 & Dec 22 16.1

Chapter 16
Assessment –Appeals – Revisions - Penalties
ASSESMENT PROCEDURES

(1) Rose Ltd. filed its return of income for the assessment year 2022-23 on 10th August, 2022. The notice under
section 143(2) for scrutiny assessment should be served on the assessee by - (June 2016)

(a) 31st March, 2023 (b) 30th june, 2023

(c) 10th may, 2022 (d) 30th September 2023
Ans.(b)
(2) XYZ Ltd. filed its return of income for the A.Y. 2022-23 on 1st February, 2023. 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) 30th september , 2024 (b) 30th june , 2023
(c)30th june 2024 (d) 30th September, 2023
Ans.(b)
3. The notice under section 143(2) must be served within -(June 2016)
(a) 9 months from the date of filing of return under section 139(1) or from the date of filing of return of income

(b) 9 months from the due date of filing the return

(c) 3 month from the end of the financial year in which the return was furnished
(d) 3 months from the end of month in which the return was furnished Ans.(c)
(4) 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)
(5)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)

6. The A.O. can complete the assessment u/s 144 of the Act even though there is no failure on the part of
assessee u/s 139(1), 139(4), 139(5), 142(1), 142(2A) or143(2) of the Act. Such powers by the A.O. may be
exercised in the following situations: (June 18)

a. Where the A.O. is not satisfied about the correctness or completeness of the accounts of the assessee.
b. Where the method of accounting has not been regularly followed by the assessee.
c. Where the income has not been computed in accordance with “ICDS” notified by the Central Government
u/s145(2).
d. Any of above three or in all three above situations. Ans. D

7. X filed his return of income for the A.Y. 2022-23 on 31st July, 2022. 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 june , 2023 (b) 31st December, 2023
(c) 31st October , 2022 (d) 31st march, 2023

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 Ch 16 – DT Bullet MCQ’s – June 22 & Dec 22 16.2

Ans.(a)
8. The Assessing Officer can complete the assessment under section 144 of the Act even though there is no
failure on the part of assessee under section 139(1), 139(4), 139(5), 142(1), 142(2A) or 143(2) of the Act. Such
powers by the A.O. May be exercised in which of the following situations: (Dec 19 –NS)
(a) Where the A.O. Is not satisfied about the
(b) Where the method of accounting has not been correctness or completeness of the account of regularly
followed by the assessee the assessee
(c) Where the income has not been computed in
(d)Any of above three or in all the three above accordance with "ICDS" notified by the Central situations
Government u/ s 145(2)
Ans.(d)
9.Srikant filed his return of income for the assessment year 2022-23 on 5-6-2022 declaring total
income of Rs. 7,40,000. What is the maximum time within which notice under section 143(2) is to be
served on the assessee? (Dec 19 –OS)
(A) 31-3-2023 (B) 31-9-2022
(C) 30-6-2023 (D) 31-12-2023 Ans – C

10. MNO (P) Ltd filed its return for assessment year 2022-23 on 10.05.2022. State the time limit within which a
notice under section 143(2) has to serve on the assessee. (JUNE-21-NS)
(A) 31.03.2023
(B) 30.06.2023
(C) 30.09.2022
(D) 31.12.2023
Ans - B
11. Mohan Singh filed ITR for the A.Y. 2022-23 on 31st May, 2022. Intimation under section 143(1) may be sent up to
: (JUNE-21-OS)
(A) 30th June , 2023
(B) 31st March, 2023
(C) 31st December , 2023
(D) No Time Limit ANS-C

153 - TIME LIMITS

1. The time limit prescribed u/s 153 for completion of the regular assessment u/s 143(3) and a best
judgment assessment u/s 144 is of_____months from the end of the assessment year in which the income
was first assessable. (June 18)
(A) 24
(B) 12
(C) 18
(D) 9 Ans D
2. The time limit for completion of Assessment / Re-assessment under section 143 and 144 of the Income Tax
Act, 1961 is........... (Dec 18)
a. 24 months from the end of relevant assessment year
b. 18 months from the end of relevant assessment year
c. 12 months from the end of relevant assessment year
d. 9 months from the end of relevant assessment year Ans D
3. .Time limit for completion of Assessment/ Re-assessment under section 147 of the Income Tax Act,
1961 is: (June 19)
(A) 9 months from the end of the financial year in which notice for re-assessment is served
(B) 6 months from the end of the financial year in which notice for re-assessment is served
(C) 12 months from the end of the financial year in which notice for re-assessment is served
(D) 15monthsfromtheendofthefinancial year in which notice for re-assessment is served
Ans C

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 Ch 16 – DT Bullet MCQ’s – June 22 & Dec 22 16.3

4. As per section 153(B)(1)(b), time limit of completion of assessment in respect of the assessment year relevant
to the previous year in which search is conducted under section 132 or requisition is made under section 132A
within a period of___________ from the end of the financial year in which the last authorizations for search
under section 132 or for requisition under section 132A was executed. (DEC-21 NS)
(A) 12 months (B) 21 months (C) 24 months (D) 36 months ANS = A

INCOME ESCAPING ASSESSMENT U/S 147

1. 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 assuming officer is deemed to have information : (June, 2017)
(a)31-03-2020 (b)31-03-2024
(c) 31-03-2019 (d)31-03-2025
Ans.(a)

2.A notice under section 148 for A.Y.2014- 15 in the case of Jockey Limited where the original assessment
was completed u/s143(3) of the Income Tax Act, 1961 and the escaped income is of Rs............... or more
can be issued before 31.03.2025 by the Assessing Officer only with the approval of...................... (Dec20–
NS)
(A) 5 lakh or more; Addl. Commissioner of IncomeTax
(B) 25 lakh or more; Principal Chief Commissioner or Principal Director General or Chief Commissioner
or Director General
(C) 50 lakh or more; Principal Chief Commissioner or Principal Director General or Chief Commissioner
or Director General
(D) 1lakh or more; Addl. Commissioner of Income Tax ANS-C

3. What is the time limit to get issued notice under section 149, if income escaping from return is less than by
`50,00,000 ? (JUNE-21-OS)
(A) Three years from the end of the related assessment year
(B) Four years from the end of the related assessment year
(C) Six years from the end of the related assessment year
(D) Ten years from the end of the related assessment year ANS-A

APPEALS AND REVISION

1. M/s XYZ Co. Ltd., Delhi filed appeal before Commissioner (Appeals) and succeeded in its appeal. Now the Revenue
wants top refer an appeal before the tribunal. For filing appeal by the Revenue before the tribunal, the tax effect must
exceed:(Dec 19 –OS)
(A) Rs. 10,00,000
(B) Rs. 20,00,000
(C) Rs. 25,00,000
(D) Rs. 50,00,000
Ans – D
2. Income-tax Department can also file an appeal before the Income Tax Appellate Tribunal, High Court and
Supreme Court only in those cases where the tax affected in appeal is exceeding certain mandatory limit. An appeal
by the Income Tax Department before the High Court can only be filed where the tax effect of appeal exceeds the
amount of Rs............. (Dec20–NS)
(A) 50lakh

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 Ch 16 – DT Bullet MCQ’s – June 22 & Dec 22 16.4

(B) 1 Crore
(C) 30lakh
(D) 10lakh
ANS-B

3.The Chief Commissioner or the Commissioner or an assessee aggrieved by any order passed by the
Income Tax Appellate Tribunal(ITAT) may file an appeal before the high court and such appeal shall be filed within
____of the date on which the order appealed against is received by the assessee or the chief commissioner.
(Dec20–OS)
(A) 120days
(B) 90days
(C) 60days
(D) 30days ANS A

4. Mr. Bimal received assessment order passed by the Assessing Officer on 10-01-2022. What is the time limit
within which the appeal has to be filed to CIT (Appeals) in case the assessee wants to challenge the order of the
Assessing Officer? (Dec 17)
(A) 10 days after the receipt of order
(B) 15 days after the receipt of order
(C) 30 days after the date of passing of order
(D) 30 days after the date of receipt of order Ans.(D)

5.. An appeal against the order passed by the Assessing Officer u/s143(3) read with section 148 can be
filed by an aggrieved assessee before the: (June 18)
a. Addl. Commissioner of Income Tax
b. Commissioner of Income Tax
c. ITAT
d. Commissioner of Income Tax (Appeals) Ans D

6. The Principal Commissioner of Income-tax is empowered to revise the assessment order of the
Assessing Officer when the same is found to be erroneous and pre-judicial to the interest of Revenue
Such power is vested in the Principal Commissioner of Income- tax u/s: (June 18)
(A) 263
(B) 246C
(C) 264
(D) Both 263 and 264 Ans A

7. First appeal can be filed by : (June 18)

a. Department only
b. Assessee only
c. (A) or(B)
d. None of the above Ans. B

8. The respondent is having right to file Memorandum of Cross Objections before the ITAT after receipt of the
Memorandum of Appeal filed by the appellant. Such Memorandum of Cross Objections is to be filed by the
respondent within a period of: (June 18)
(A) 45 Days
(B) 60 Days
(C) 30 Days
(D) 15 days
Ans C
9. Income-tax Appellate Tribunal cannot grant stay either under the original order or any other subsequent
order in aggregate beyond the period of: (June 18)

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 Ch 16 – DT Bullet MCQ’s – June 22 & Dec 22 16.5

a. 180days
b. 365days
c. 90days
d. 240days Ans B

10.. An appeal from the order of ITAT lies before the High Court and the same is to be filed within the period of
days from the date on which the order appeal against is received by the assessee or the CIT. (June 18)
(A) 60
(B) 90
(C) 120
(D) 180 Ans C

11. The time limit for filing an appeal by person denying liability to deduct tax in respect of payments
payable to non-resident or a foreign company as provided in section 249(2)(a) of the Income Tax Act
1961 is within: (Dec 18)
a. 30 days from the date of payment of tax deducted at source to the credit of Central Government
b. 35 days from the date of payment of tax deducted at source to the credit of Central Government
c. 45 days from the date of payment of tax deducted at source to the credit of Central Government
d. 60 days from the date of payment of tax deducted at source to the credit of Central Government Ans A

12. An application for stay of demand to be filed before the Income Tax Appeallate Tribunal (ITAT) has to be
accompanied by requisite fee of: (Dec 18)
(A) Rs.1,000
(B) Rs.500
(C) Rs.1,500
(D) Rs.10,000 Ans B

13. The rationale behind power of revision of orders prejudicial to the interest of revenue conferred on the
Commissioner of Income Tax under section 263 of Income Tax,Act, 1961 is that: (Dec 18)
a. The order passed is without inquiries or verification which should have been made
b. The order is passed allowing any relief without inquiring into the claim
c. The department has no right of appeal to the Commissioner (Appeals)against any order passed by the
Assessing Officer
d. the order has not been made in accordance with any order,direction or instruction issued by the Board under
section 119 Ans C

14. Appeal against the order of Appellate Tribunal (ITAT) can be filed in High Court within days. (June 19)
(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 the assessee
(D) 180 days from the date of order Ans C

15. 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)

16. Income Tax Appellete Tribunal (ITAT)as per section 254(2A) may hear and decide any appeal within a
period of: (June 19)
(A) 1 year from the end of financial year in which appeal is filed
(B) 2 years from the end of financial year in which appeal is filed
(C) 3 years from the end of financial year in which appeal is filed
(D) 4 years from the end of financial year in which appeal is filed Ans D

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 Ch 16 – DT Bullet MCQ’s – June 22 & Dec 22 16.6

17.The Commissioner of Income Tax can shall for the records of an assessee and by virtue of powers conferred
under the Act can make the revision of the order passed by the Assessing Officer after giving an opportunity of
being heard to the assessee. Such powers can be invoked by the CIT, when : (Dec 19 –NS)
(a) The order is erroneous
(b) The order is prejudicial to the interest of revenue
(c) When the return has not been filed by the assessee
(d) When both the conditions of (a) and (b) exist. Ans.(d)

18. The income tax assessment under section 143(3) of the Act of Jayant Co. Ltd. was completed by the Deputy
Commissioner of Income Tax. Before whom, should Jayant Co. Ltd file its appeal against assessment ? (JUNE-21-NS)
(A) Joint Commissioner
(B) Commissioner of Income Tax (Appeals)
(C) ITAT
(D) High Court ANS-B

19. As per section 249(1) of Income Tax Act, 1961 the appeal should be filed in the prescribed form and verified in
the prescribed manner. What is rate of fees when the assessed income is more than one hundred thousand rupees
but not more than two hundred thousand rupees? (JUNE-21-OS)
(A) `250
(B) `500
(C) `1,000
(D) `2000 ANS-B

20. Which of the Form number requires that the memorandum of appeal, statement of facts and the grounds of the
appeal must be in duplicate and should be accompanied by a copy of the order appealed against and the notice of
demand in original ? (JUNE-21-OS)
(A) Form 25
(B) Form 35
(C) Form 40
(D) Form 50 ANS-B

21. How much is the fee for filing an application for advance ruling ? (JUNE-21-OS)
(A) NIL
(B) ` 5,000
(C) ` 10,000
(D) ` 20,000 ANS-C
22. The Chief Commissioner or Commissioner or an assessee aggrieved by an order passed by the Appellate
Tribunal may file an appeal to the High Court within ............... of the date on which the order appealed against
is received by the Chief Commissioner or Commissioner or by Assessee by precisely stating the substantial
questions of law involved in memorandum of appeal. (DEC-21 NS)
(A) 60 days (B) 90 days (C) 120 days (D) 180 days ANS = C
23. An appeal against the order passed by the Assessing Officer under section 143(3) read with section 148 of the
Income Tax Act can be filed by an aggrieved assessee before the: (DEC-21 NS)
(A) Addl. Commissioner of Income Tax
(B) Commissioner of Income Tax (Appeals)
(C) ITAT
(D) Commissioner of Income Tax ANS = B
24. What Form number is required to file the memorandum of appeal, statement of facts and the grounds of the
appeal in duplicate and accompanied by a copy of the order appealed against and the notice of demand in
original ? (DEC-21 OS).
(A) Form 25 (B) Form 35 (C) Form 40 (D) Form 50 ANS = B

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 Ch 16 – DT Bullet MCQ’s – June 22 & Dec 22 16.7

25. Decisions pronounced by the High Courts on Income Tax matter become judicial precedent and are binding on:
(DEC-21 OS)
(A) All the High Courts
(B) Appellate Tribunal
(C) Income Tax Authorities under its jurisdiction
(D) All Assessee covered under Income Tax Act, 1961 ANS = B/C

(NOTE AS PER ICSI:- Option C is Correct. Further, Option B is also correct if Appellate Tribunal is under
the same jurisdiction of High Court )

PENALTIES

1. The Assessing Officer, while scrutinizing the return of an assessee, finds under-reporting of income for the
reason of misreporting of facts of such income. He can levy penalty on such under-reported income resulting
from misreporting of income up to___of tax payable on such under-reported or misreported income. (June 18)
(A) 50%
(B) 100%
(C) 200%
(D) 300% Ans. C
2. The maximum penalty leviable for under reporting of income which results from misreporting of income by
the assessee is: (Dec 18)
a. Two hundred percent of the tax payable
b. One hundred percent of the tax payable
c. Fifty percent of the tax payable
d. Three hundred percent of the tax payable Ans A
3.If there is an apparent error in the intimation dated 11th June, 2021 issued under section 143(1), the
time-limit for for rectification under section 154 is available up to -(Dec. 2016)
(a) 31st March, 2025 (b) 31st March, 2026
(c) 31st March, 2022 (d) 31stOctober, 2021 Ans.(b)
4. The amount specified in notice of demand must be paid within ….... days otherwise the assessee would be
treated as assessee in default. (Dec 17)
(A) 10
(B) 15
(C) 30
(D) 60 Ans.(C)
5. The Assessing Officer while scrutinizing the return of an assessee find under reporting of income for the
reason of misreporting of facts of such income and thus levied penalty on such under reported income resulting
from misreporting of income. The penalty to be imposed by the A.O. Shall be at the rate of ____ tax payable on
such misreported income. (Dec 19 –NS)
(a) 50% (b) 100%
(c) 200% (d) 300% Ans.(c)

6. Income tax assessment of Kuber was completed on 15-12-2020 for the assessment year
2018-19. There is an error apparent in the assessment order. The time limit for rectification of
mistake in the assessment order under section 154 is available up to: (Dec 19 –OS)
(A) 31-3-2021
(B) 31-3-2022
(C) 31-3-2023
(D) 31-3-2025 Ans – D
7. Zeet (P) Ltd. incurred loss of Rs. 1,10,000 for the assessment year 2022-23. It is planning not to file
return of loss and claim the loss for carry forward. The monetary limit of the tax amount for applying
prosecution provisions contained in section 276CC will apply when the tax liability exceeds:(Dec 19 –OS)

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 Ch 16 – DT Bullet MCQ’s – June 22 & Dec 22 16.8

(A) No monetary limit(NIL)

(B) Rs.3,000
(C) Rs.10,000
(D) Rs.25,000 Ans – C
8. A notice under section 142(1) was issued to Ashok Ghosh for filing the return of the assessment year 2022-
23. When he failed to file the return within the time specified in the notice, the amount of penalty leviable would
be:(Dec 19 –OS)
(A) Rs. 10,000
(B) Rs. 20,000
(C) Rs. 50,000
(D) Rs. 1,00,000 Ans – A
9. Natraj engaged in business repaid loan received from Narain of Rs. 50,000 by cash on 16-3-2022 (Sunday).
He also repaid the balance of Rs. 15,000 by cheque on 20-3-2022. The amount of penalty leviable for
repayment of loan would be : (Dec 19 –OS)
(A) Rs. 15,000
(B) Rs. 50,000
(C) NIL
(D) Rs. 65,000 Ans – b
Note – Read Section 271D/E

10.Prosecution as per section 276CC of the Income Tax Act, 1961 for willful failure to file return of income in
time undersection 139(1), or in response to notice issued under section 142(1) or section 148 shall not be
initiated where the tax payable on regular assessment as reduced by TDS and advance tax does not exceed----
------(Dec20–NS)
or
In case of failure to file the income tax return, prosecution proceeding may be initiated against the assessee under
section 276CC of the Act where the tax payable on the returned income exceedsDec20–OS)
(A) Rs.1,000
(B) Rs.3,000
(C) Rs.5,000
(D) Rs.10,000 ANS-D

11.Ram &Associates entered into an international transaction or specified domestic transaction failed to furnish
information and documents in respect of such international transaction or specified domestic transaction. State the
quantum of penalty to be imposed by Assessing Officer or Commissioner (appeals) for such failure on Ram
&Associates. (Dec20–OS)
(A) 1%ofthevalueofeachinternational transaction
(B) 2%ofthevalueofeachinternational transaction
(C) 3%ofthevalueofeachinternational transaction
(D) 4%ofthevalueofeachinternational transaction ANS B

12. Income tax assessment of Ajay was completed determining the income at Rs. 8,40,000 as against
the returned income of Rs. 5,40,000. The amount payable as fee for appeal before
Commissioner (Appeals) by him, would be : (Dec 19 –OS)
(A) Rs. 250
(B) Rs. 500
(C) Rs. 1,000
(D) Rs. 5,000 Ans – C

13. As per section 9A, an eligible off-shore investment fund shall furnish within 90 days from the end of the
financial year, a statement containing information relating to fulfillment of specified conditions and such other
information or documents as may be prescribed. Penalty of ____________to be levied, if investment fund failed to
comply with the requirements asper section 271FAB. (Dec 19 –NS)
(a) Rs. 1,00,000 (b) Rs. 500 per day

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(c) Rs. 5,00,000 (d) Rs. 10,00,000 Ans.(c)

14 .If any eligible investment fund is required to furnish statement or information ordocuments in respect of its
activities in a financial year as per section 9A; fails to furnish such statement/information ordocuments within
the time prescribed of ............. days shall be liable to pay by way of penalty a sumof
Rs................ (Dec20–NS)
A. 60 days; 1lakh
B. 90days; 1lakh
C. 90days; 5lakh
D. 60days; 5lakh ANS-C
15. J, an individual failed to keep and maintain information and document in respect of international transaction.
What penalty can be imposed by AO or Commissioner (appeals) ? (DEC-21 OS)
(A) 1% of the value of each international transaction
(B) 2% of the value of each international transaction
(C) 3% of the value of each international transaction
(D) 4% of the value of each international transaction ANS = B
16. The time limit for passing an order for rectification of mistakes u/s 154 of Income Tax Act, 1961 is a period of
................. from the end of financial year in which the order sought to be amended was passed (DEC-21 OS).
(A) 1, year (B) 2, years (C) 3, years (D) 4, years ANS = D

Additions
1) NFAC stands for

a. National faceless assessment corporation

b. National faceless assessment centre
c. National faceless assessment commission
d. National faceless assessment charge Ans B

2) Assessee is required to file his response to the notice of NFAC issued under section 143(2) within :

a. 30 days from receipt of notice

b. 7 days from receipt of notice
c. 15 days from receipt of notice
d. 1 month from receipt of notice Ans C

3) To facilitate the conduct of faceless assessment function of Assessment Units many functions are done
except :
a. identification of points or issues material for the determination of any liability (including refund)
under the Act,
b. analysis of the material furnished by the assessee or any other person
c. cross verification, examination of books of account, examination of witnesses and recording of
statements
d. seeking information or clarification on points or issues so identified Ans C

4) which of the following is the function of review units in order to facilitate the conduct of faceless
assessment:
1. whether the relevant and material evidence has been brought on record
2. whether the applicable judicial decisions have been considered and dealt with in the draft order
3. enquiry, cross verification, examination of books of account, examination of witnesses and
recording of statements
4. arithmetical correctness of variations proposed, if any

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5. analysis of the material furnished by the assessee or any other person

6. whether the relevant points of fact and law have been duly incorporated in the draft order

a. 1, 2, 5, 6
b. 1, 3,4 ,6
c. 1,2,4, 6
d. All of above except 3 Ans C

5) Revision order under section 263 can be made by:

1)Principal Chief Commissioner

2)Chief Commissioner
3) Principal Commissioner
4) Commissioner
a. 1 and 2
b. 1 and 3
c. All except 4
d. All of above Ans D

7.Under section 147 the year for which income is assessed is called as –

a. Previous year
b. Asssessment year
c. Relevant assessment year
d. Financial Year Ans C

8.Under section 148A the AO has to give notice to the assessee and time given for reply is –

a. 10 to 20 days
b. 7 to 30 days
c. 21 to 30 days
d. 11 days to 30 days Ans B

9.Under section 148A the AO has to issue order to the assessee within _____ from the end of the month
when the reply is received or the time provided to the assessee expires –

a. 1 month
b. 2 months
c. 3 months
d. 4 months Ans A

10 What is the penalty for Failure to furnish docs. 92D (4)(Documents relating to a group entities)

a. 2% of the value of each transaction.

b. 5 lacs
c. 1 lac
d. sum equal to the aggregate amount of each such transaction Ans B
11. For section 148 & 148A meaning of specified authority in case 3 years have not elapsed from the end of
relevant assessment year –

a. Principal Commissioner or Commissioner

b. Principal Director or Director
c. Both a & b
d. None of the above Ans – C

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 Ch 16 – DT Bullet MCQ’s – June 22 & Dec 22 16.11

12. For section 148 & 148A meaning of specified authority in case 3 years have elapsed from the end of
relevant assessment year –

a. Principal Chief Commissioner or Principal Director

b. Chief commissioner or Director General
c. Both a & b
d. None of the above Ans - C

13 The time limit given in section 149 for issue of notice under section 148 can be more than 3 years
but upto 10 years from the date of the relevant assessment year if the amount escaping the assessment
is –

a. 50 Lacs or More
b. more than 50 Lacs
c. 1 Crore or More
d. more than 1 crore Ans A

14. 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
15. Income Tax Authority below the rank of Deputy Commissioner of Income Tax:
(a) is appointed by the Central Board of Direct Taxes
(b) may be appointed by the Board/Director General/Chief Commissioner/Director/Commissioner ifauthorised
by Board
(c) is appointed only by the Central Govt.
(d) None of the above Answer: b
16. The assessee can object to the jurisdiction of Assessing Officer, if no return is filed:
(a) within 3 months of notice u/s 142(1) or 148 for filing the return of income or time allowed to showcause why
best judgment assessment u/s 144 should not be made, whichever is earlier.
(b) within one month of notice u/s 142(1) or 148 for filing the return of Income or time allowed to showcause u/s
144 whichever is earlier.
(c) within the time allowed in notice u/s 142(1) or 148 for filing return of Income or time allowed to showcause u/s
144 whichever is earlier.
d) None of the above Answer: c

Miscellaneous

1. Wherever any tax, interest, penalty or other sum under the I.T. Act is payable, the Assessing Officer has to
serve uponthe assessee a notice of demand as per Rule 15 and 38 under section ____________of the I.T. Act, 1961.
(Dec 19 –NS)
(a) 156 (b) 143(3)
(c) 153 (d)220 Ans.(a)
2. The premises of an assessee within the jurisdiction of an Assessing Officer can be surveyed during business
hours bysuch Income-tax Authority ____________. (Dec 19 –NS)
(a) After sunset and before sunrise (b) After sunrise but before sunset
(c) Any time during 24 hours (d)After 11 A.M. Ans.(b)

3. When the Advance Pricing Agreement (APA) has been entered into, it is valid for not more than
............................. consecutive previous years. (Dec 19 –OS)

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 Ch 16 – DT Bullet MCQ’s – June 22 & Dec 22 16.12

a. 7
b. 5
c. 3
d. 1 Ans – B
4. A resident having transaction with a non-resident who has filed form 35D for advance ruling, can withdraw
the application within : (Dec 19 –OS)
a. 15 days
b. 30 days
c. 45 days
d. 60 days Ans – B

5. What is the quantum of penalty under section of 272A(1)(d), in case of failure to comply with a notice under
section 142(1) or 143(2) or fails to comply with a direction issued under section 142(2A)? (JUNE-21-OS)
(A) `1,000
(B) `5,000
(C) `10,000
(D) `20,000 ANS-C

6.An assessee may at any stage of a case relating to him make an application in Form No___ to the Settlement
Commission to settle the case. Such application otherthan the case of specified person can be made to the
Settlement Commission only where the additional amount of income tax payable on the income disclosed in the
application as per section 245C(1A) exceeds (Dec20–OS)
(A) 34A; 5,00,000
(B) 34B; 10,00,000
(C) 34A; 25,00,000
(D) 34B; 50,00,000 ANS B

9.Instructions issued by CBDT as per section 119oftheActhavestatutoryforceandare equally binding on all

concerned. State which out of the following is the false statement in this context: (Dec20–OS)
(A) The instructions of the board are binding on the department and assessee both
(B) The instructions have to be followed by the department officers.
(C) In the exercise of its power, the board cannot impose a burden or put the assessee in a worse
position
(D) Instruction adverse to an assessees interest can be challenged by him ANS A

8.The Advance Pricing Agreement (APA)shall be valid for a period as specified in the Advance Pricing Agreement.
However this period will not be more than ---- --. (Dec20–OS)
(A) Six consecutive previous years
(B) Five consecutive previous years
(C) Four consecutive previous years
(D) Three consecutive previous years ANS B
9.The application for obtaining an advance ruling asper section 245Q (2) shall be made in--------------
and it should be accompanied by a fee of ----- or such fees as may be prescribed stating the question
on which the advance ruling is sought. (Dec20–OS)
A. Triplicate, Rs.10,000
B. Triplicate, Rs.20,000
C. Quadruplicate, Rs.10,000
D. Quadruplicate, Rs.20,000 ANS C

10.Statewhichamongstthefollowingisnota power of Authority for Advance Ruling

(AAR)undersection245UofIncomeTax Act, 1961: (Dec20–OS)
A. Compelling the production of books of account and other document specific Anti-Avoidance Rules
B. Power of arrest
C. Enforcing the attendance of any person, including any officer of a banking company and examining
him on oath.

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D. Issuing commissions ANS B

11What is the decision of Supreme Court in the case of Apollo Tyres Ltd. V. CIT (2002) 255 ITR 273(SC) that regarding
the power of Assessing Officer to examine correctness of net profits shown in P&L Account. (JUNE-21-OS)
(A) The Assessing Officer does not have the power to question correctness of P&L A/c prepared by assessee and
certified by the statutory auditors of the company as having been prepared in accordance with the provision of Parts
II and Schedule VI to the Companies Act.
(B) The Assessing Office has the power to question correctness of P&L A/c prepared by assessee and certified by the
statutory auditors of the company as having been prepared in accordance with the provision of Parts II and Schedule
VI to the Companies Act.
(C) After permission of the assessee, the Assessing Office has the power to question correctness of P&L A/c
(D) None of the above ANS-A

12. Which out of the following is the false statement regarding payment of tax before filing appeal ? (JUNE-21-OS)
(A) No appeal against any order passed by the Assessing Officer can be admitted by the Commissioner (Appeals)
unless at the time of filing of the appeal the assessee has paid tax due on the income returned by him.
(B) Where the assessee has not furnished the return of income, he has paid an amount to the amount of advance tax
which was payable by him.
(C) If the appellant wants exemption from the payment of such tax he has to make an application to the
commissioner (appeals) who is empowered to waive this requirement in appropriate cases if he is satisfied that there
are good and sufficient reasons for doing so.
(D) If may be noted that Income-tax law requires the payment of tax before the filing of the appeal and also payment
of penalty or any other sum payable by the assessee on the basis of the order appealed against.
ANS-D

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