Super 30 Questions for MAY-25 CA Inter

Question 1 [Topics Covered: Total Income - Indirect Method]

Statement of Profit and Loss account of Mr. BB, resident individual, age 34 years, engaged in production and
marketing of diversified products, shows a net profit (before tax) of `72,00,000 for the financial year ended 31st
March, 2025 after charge of the following items:
A: Items debited to the Statement of Profit and Loss:
(i) Depreciation as per Books of accounts: `24,00,000
(ii) Interest amounting to `60,000 for short payment of advance tax paid as per section 234B relating to
the assessment year 2023-24.
(iii) Expenditure of `41,000 paid in cash comprising of `22,000 directly paid to producer of dairy farming
products and `19,000 paid towards printing and stationery items to a trader.
(iv) `3,50,000 paid to a contractor for carrying out repair work at factory premises. Tax was not deducted
at source on this payment.
(v) Contribution to AAM Aadmi Party: `3,00,000 paid by way of cheque.
(vi) Expenditure towards advertising charges in a brochure of a political party registered u/s 29A of
Representation of People Act, 1951: `40,000 paid by way of cheque.
(vii) Interest on term loans obtained from Cooperative Bank is ` 2,60,000. Interest ` 1,60,000 not paid before
the due date of filing of return of income (due date being 30.10.2025) & on 12.12.24 Co. op bank
converted outstanding interest of 1,00,000 into loan and assessee deducted the said interest while
computing profits and gains of business of A.Y.2025-26.
(viii) Actual contribution to the pension scheme of employees: `1,50,000
(ix) The assessee has made provision for Gratuity based on actuarial valuation of ` 5 lacs. Actual gratuity
paid amounting to ` 1,20,000 during financial year 2024-25 was debited to provision of Gratuity
Account.
(x) Employer’s contribution to EPF of `2 lakhs for the month of March, 2025 were remitted on 8th June
2025.
(xi) Advertisement expenditure debited to profit and loss account includes the sum of `60,000 paid by
NEFT to the sister of assessee, the market value of which is `52,000.
(xii) The opening and closing stock for the year were ` 55 lakhs and ` 54 lakhs respectively. Opening stock
was overvalued by 10% and Closing stock was undervalued by 10%.
(xiii) ` 45,000 paid in cash to Mr. Raj employee of the company at the time of his retirement.
(xiv) Contribution of ` 2,50,000 to a scientific laboratory functioning at the national level with a specific
direction for use of the amount for scientific research programme approved by the prescribed authority.
(xv) An amount of ` 5 lakhs was paid to the manager of the company under Voluntary Retirement Scheme.
(xvi) Raw material of ` 5,00,000 purchased on 17th March, 2025 from Mr. Kuku (a small enterprise as per
MSME Act), payment made to Kuku on 15th April, 2025. There is no written agreement between
parties related to payments.
B: Items credited to the Statement of Profit and Loss:
(i) Unrealised rent of `3,80,000 pertaining to financial year 2021-22 & 2022-23 recovered during the year
in respect of a commercial property owned by the assessee, which was sold by the assessee on
23.03.2024.

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Super 30 Questions for CA Inter MAY 25 Exams
(ii) Dividends from a foreign company `1,60,000.
(iii) Interest from banks on fixed deposits net of TDS at 10% : `1,35,000
(iv) The assessee had made a sale of for ` 20 Lakhs to M/s A. Co Engineers a sole proprietary concern, on
10-10-2023. On 01-02-2024 ` 10 lakhs were written off in the books as bad debts. Due to the demise
of the sole proprietor, the assessee could collect only ` 7 Lakhs towards the final settlement on 01-03-
2025. The amount recovered was shown as Bad debts recovered and credited to Statement of Profit and
Loss.
(v) Trade creditors `5,00,000 were outstanding for more than 5 years and there is no business relationship
with them. The amount was unilaterally transferred to credit of statement of profit and loss.
Additional Information:
(1) Depreciation as per Income-tax Rules: `28,00,000
(2) Expenditure pertaining to previous financial year allowed on due basis, but paid in current financial
year in cash on 18.01.2025: `35,000
(3) Audit fee for the previous year 2023-24: `75,000. TDS deducted but not paid in the relevant previous
year. However, TDS was paid on 31.12.2024.
(4) The eligible salary and dearness allowance for the pension scheme referred to u/s 80CCD is `10,00,000.
(5) The assessee has obtained a loan of ` 5 lakhs from Manu Textiles Private Limited in which he holds
16% voting rights. The accumulated profits of Manu Textiles Private Limited on the date of receipt of
loan was ` 2 lacs.
(6) Grant received from State Government for acquisition of generator `10 lakhs. The generator was
acquired and put to use for printing business on 01.06.2024 for `35 lakhs. A sum of `5 lakhs was paid
as advance by cash to the supplier of generator.
Further following expenses related to acquisition of asset –
(a) Transportation charges paid of transporter ` 25,000 in cash
(b) Installation charges paid to Mr. Ali ` 35,000 through BHIM UPI
This adjustment is not recorded in books of account.
(7) An asset was purchased for ` 6,00,000 on 17-11-23 for conducting scientific research and the deduction
was claimed u/s 35 of the Income-tax Act, 1961. This asset was sold on 05-09-2024 for a consideration
of ` 8,00,000.
(8) Employees contribution to EPF of ` 2 lakhs recovered from their salaries for the month of March 2025
and shown in the Balance Sheet under the head Sundry Creditors was remitted on 31st May, 2025.
(9) During the year F.Y. 2024-25, the assessee has employed 56 additional employees for leather
manufacturing business. All these employees contribute to a recognized provident fund. 39 out of 56
employees joined on 1-6-2024 on a salary of ` 15,000 per month, 14 joined on 1-7-2024 on a salary of
` 45,700 per month, and 3 joined on 1-11-2024 on a salary of ` 22,000 per month. The salaries of 9
employees who joined on 1-6-2024 are being settled by bearer cheques every month. Audit u/s 44AB
has been done before the due date.
Compute the total income & tax liability of Mr. BB for assessment year 2025-26 under default tax regime and
optional tax regime and also advice the assessee that which option is more beneficial. Give brief reasons for the
treatment given to each of the items taken into consideration in computation of income of the assessee. [Ignore
AMT Provisions] Assume last year turnover of Mr. BB was more than 1 crore.
Answer
Computation of Total Income & Tax liability Mr. BB for the A.Y. 2025-26 as per default taxation regime
u/s 115BAC
Particulars Amount (`)
I Income from house property
Unrealised rent [Taxable u/s 25A, even if Mr. BB is no longer 3,80,000
the owner of commercial property]

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 Super 30 Questions for CA Inter MAY 25 Exams
Particulars Amount (`)
Less: 30% of above 1,14,000 2,66,000
II Profits and gains of business and profession
Net profit as per the statement of profit and loss 72,00,000
Add: Items debited but to be considered separately or to
be disallowed
(i) Depreciation as per Books 24,00,000
(ii) Interest u/s 234B for short payment of advance tax 60,000
[Any interest payable for default committed by assessee
for discharging his statutory obligations under Income-
tax Act, 1961 which is calculated with reference to the
tax on income is not allow- able as deduction u/s
40(a)(ii). Since the same has been debited to statement
of profit and loss, it has to be added back]
(iii) Cash payment in excess of `10,000 19,000
[Disallowance u/s 40A(3) is attracted in respect of
expenditure, for which payment exceeding `10,000 in a
day has been made in cash. Since expenditure of
`19,000 towards printing and stationery items is debited
to the statement of profit and loss, the same has to be
added back. However, payment of `22,000 to producer
for dairy farming products is not disallowed since it is
covered under the exceptions specified in Rule 6DD]
(iv) Repair work paid to contractor without deduction of 1,05,000
tax at source
[Disallowance of 30% of the amount of `3,50,000 paid
for carrying out repair work to a contractor without
deduction of tax at source would be attracted u/s
40(a)(ia)]
(v) Contribution to political party 3,00,000
[Contribution to political party is not allowable as
deduction while computing business profits. Since the
contribution has been debited to statement of profit and
loss, the same has to be added back while computing
business income]
(vi) Advertisement in brochure of a political party 40,000
[Advertisement charges paid in respect of brochure
published by a political party is not allowable as
deduction from business profits as per section 37. Since
the expenditure has been debited to statement of profit
and loss, the same has to be added back while computing
business income]
(vii) Interest to co-operative bank not paid before 260,000
31.10.2025 & Interest converted into loan
[Disallowance u/s 43B would be attracted for A.Y.2025-
26, since the interest was not paid on or before the due

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Particulars Amount (`)
date of filing of return] [1,60,000 + 1,00,000]
Section 43B clarifies that if any sum payable by the
assessee as interest on any such loan is converted into a
loan or borrowing or advance, the interest so converted
and not actually paid shall not be deemed as actual
payment, and hence, would not be allowed as deduction.
(viii) Contribution towards pension scheme of employees 10,000
[Contribution towards pension scheme, referred to in
section 80CCD, of employees is allowed only to the
extent of 14% of salary of the employee in the P.Y. i.e.,
`1,40,000 being 14% of `10,00,000. Therefore, the
excess contribution of `10,000 [i.e., `1,50,000 –
`1,40,000] is disallowed u/s 36(1)(iva).
(ix) Provision for gratuity 3,80,000
[Provision of ` 5 lakhs for gratuity based on the actuarial
valuation is not allowed as deduction as per section
40A(7). However, actual gratuity of ` 1,20,000 paid is
allowable as deduction. Hence, the difference has to be
added back to income (` 5,00,000 – ` 1,20,000)]
(x) Employers’ contribution to EPF -
[As per section 43B, employers’ contribution to EPF is
allowable as deduction since the same has been
deposited on or before the ‘due date’ of filing of return
u/s 139(1). Since the same has been debited to profit and
loss account, no further adjustment is necessary]
(xi) Advertisement expenses paid to sister 8,000
[As per section 40A(2) any payment made to relative
shall be disallowed to the extent unreasonable]
(xii) Stock Adjustment
Overvaluation of opening stock [` 55,00,000 x 10/110]
Undervaluation of closing stock [` 54,00,000 x 10/90] 11,00,000
(xiii) Payment to Mr. Raj, an employee, on his retirement Nil
[Section 40A(3) provides for disallowance@100% of
the expenditure incurred exceeding ` 10,000 otherwise
than by an account payee cheque drawn on a bank or an
account payee bank draft or use of electronic clearing
system through a bank account or through such other
electronic mode as may be prescribed. However, no
disallowance u/s 40A(3) is to be made as the amount
paid to Mr. Raj is on his retirement since such sum
payable does not exceed ` 50,000. This exception is
provided in Rule 6DD]
(xiv) Contribution to National Laboratory 2,50,000
[As per section 35(2AA) donation to National
Laboratory eligible for 100% deduction but when
assessee opted section 115BAC then this deduction not

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 Super 30 Questions for CA Inter MAY 25 Exams
Particulars Amount (`)
allowed]
(xv) Voluntary Retirement Scheme expenditure 4,00,000
[Only 1/5th of expenditure on voluntary retirement
scheme is allowable over a period of five years u/s
35DDA. Since whole amount of expenditure is debited
to statement of profit and loss, 4/5th has to be added
back [` 5,00,000 x 4/5]
(xvi) Salary paid to employees through bearer cheques 13,50,000
[Salary paid through bearer cheques (9 employees x
` 15,000 x 10 months) will attract disallowance u/s
40A(3) and hence, the same has to be added back]
(xvii) Payment made to Mr. Kuku 5,00,000
[Disallowance u/s 43B(h) would be attracted for
A.Y.2025-26, since the amount was not paid to small
enterprise within time limit of section 15 of MSMED
Act, 2006]
[As per section 15 of MSMED Act, 2006 Where any
person purchases goods/services, from a micro/small
enterprise, the payment shall be made before the date
agreed upon between him and supplier in writing. In no
case the period agreed upon between the supplier and the
buyer in writing shall more than 45 days. If, however,
there is no such agreement, the payment shall be made
within 15 days of acceptance or deemed acceptance of
goods/services. Since payment made after 15 days so 71,82,000
amount disallowed in PY 24-25]
1,43,82,000
Add: Amount taxable but not credited to statement of
profit and loss
Expenditure pertaining to previous financial year 35,000
[Cash payment in excess of `10,000 made in the current year
in respect of expenditure allowed on mercantile basis in the
previous year, would be deemed as income in the current year
as per section 40A(3A).]
Employees’ contribution to EPF 2,00,000
[Since employees’ contribution to EPF has not been deposited
on or before the due date under the PF Act, the same has to be
added for computing business income]
Sale of Scientific Research Asset 6,00,000
[Sale proceeds of asset acquired for conducting scientific
research taxable as business income u/s 41(3) in the year of
sale to the extent of lower of ` 6,00,000 (being the deduction
allowed u/s 35) and ` 8,00,000 being the excess of sale
proceeds and deduction allowed u/s 35 i.e., (` 8,00,000 + `
6,00,000) over the capital expenditure incurred of ` 6,00,000]

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Super 30 Questions for CA Inter MAY 25 Exams
Particulars Amount (`)
1,52,17,000
Less: Items credited to statement of profit and loss, but
not includible in business income/ permissible expenditure
and allowances
(i) Unrealised rent 3,80,000
[Unrealised rent in respect of commercial property is
taxable under the head “Income for house property”.
Since the said rent has been credited to the statement of
profit and loss, the same has to be deducted while
computing business income]
(ii) Dividend received from foreign company 1,60,000
[Dividend received from foreign company is taxable
under the head “Income from other sources”. Since the
said dividend has been credited to the statement of profit
and loss, the same has to be deducted while computing
business income]
(iii) Interest from bank fixed deposit 1,35,000
[Interest on fixed deposit is taxable under “Income from
Other Sources”. Since the said interest has been credited
to the statement of profit and loss, the same has to be
deducted while computing business income]
(iv) Audit fees of P.Y. 2023-24 22,500
[30% of `75,000, being the audit fees disallowed in the
P.Y. for non-remittance of TDS on or before due date of
filing for P.Y. 2023-24 would be allowed in the year of
payment of TDS i.e., P.Y. 2024-25]
(v) Bad debt recovered 7,00,000
[Since the deduction of bad debt allowed u/s 36 was `
10 lakhs out of the total debt of ` 20 lakhs; and the
amount recovered in respect of such debt is only ` 7
lakhs which is not more than the amount of ` 10 lakhs
not written off, no amount is chargeable to tax as
business income. Since the amount of ` 7 lakhs
recovered has been credited to the statement of profit
and loss, it has to be reduced while computing business
income.
(vi) Bad debts 3,00,000
[The assessee had written off ` 10 lakh earlier, and out
of the balance ` 10 lakhs, only ` 7 lakhs could be
collected towards final settlement. Therefore, the
balance ` 3 lakhs will be allowable as deduction,
provided it is written off in the books of account]
(vii) Cessation of a trading liability -
[Remission or cessation of a trading liability, allowed as
deduction in an earlier previous year, would be deemed
as income in the year of remission or cessation, as per
section 41(1)(a). Since the amount of `5 lakhs has
already been credited to statement of profit and loss, no 16,97,500
further adjustment is required]

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 Super 30 Questions for CA Inter MAY 25 Exams
Particulars Amount (`)
1,35,19,500
Less: Depreciation u/s 32 as per Income tax Rules 28,00,000
Depreciation on Generator
Normal Depreciation [` 20,35,000 x 15%] 3,05,250
Additional Deprecation [Not allowed in default tax regime] - 31,05,250
[As per explanation to section 43(1), any amount paid in single
day to single person more than ` 10,000 otherwise by account
payee cheque or DD or ECS then it should not be part of actual
cost, so advance paid to supplier and transportation charges
not part of actual cost. As per explanation 10 of sec 43(1),
Govt. grant related to acquisition of asset shall be reduced
while calculation actual cost]
Imp. BB’s Note – limit of cash payment ` 35,000 to
transporter is only for the purpose of revenue expenses u/s
40A(3) and not for capital expenditure.
Profits and gains from business or profession 1,04,14,250
III Capital Gain
Sale of asset acquired for conducting scientific research
Full Value of Consideration 8,00,000
Less: cost of acquisition 6,00,000
Short Term Capital Gain 2,00,000
IV Income from Other Sources
Dividend from foreign company 1,60,000
[No deduction is allowable in respect of expenditure incurred
on earning dividends except Interest]
Deemed dividend u/s 2(22)(e) 2,00,000
[Loan of ` 5 lakhs by Manu Textiles Pvt. Ltd., a company in
which the public are not substantially interested, to assessee,
who is holding 16% i.e., 10% or more of the voting power of
the company would be deemed to be dividend to the extent of
` 2 lakhs being the accumulated profits
Interest from banks on fixed deposits (Gross)
[Interest on banks on fixed deposits is taxable as “Income 1,50,000 5,10,000
from other sources”] [`1,35,000 x 100/90]

Gross Total Income 1,13,90,250

Less: Deduction under Chapter VI-A
Deduction u/s 80JJAA [See working note below the question] 14,49,000
[It is allowed even assessee follow default tax regime u/s
115BAC]
Total income 99,41,250

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Super 30 Questions for CA Inter MAY 25 Exams
Particulars Amount (`)
Computation of Tax Liability
Upto ` 3,00,000
` 3,00,001 - ` 7,00,000 @5% 20,000
` 7,00,001 - ` 10,00,000 @10% 30,000
` 10,00,001 - ` 12,00,000 @ 15% 30,000
` 12,00,001 - ` 15,00,000 @ 20% 60,000
` 15,00,001 - ` 99,41,250 @ 30% 25,32,375 26,72,375
Add: Surcharge @10% 2,67,238
29,39,613
Add: Health & Education cess @ 4% 1,17,585
Net Tax liability 30,57,198
Net Tax liability (rounded off) 30,57,200
Working Note - Computation of deduction u/s 80JJAA
No of eligible additional employees [56 (-) 14 = 42] 33
[14 employees who joined on 1.7.2024 do not qualify as “additional employees” since their
monthly emoluments exceed ` 25,000. However, 3 employees who joined on 1.11.2024
qualify as additional employees, since they have been employed for more than 150 days
during the P.Y.2024-25.]
Additional employee cost means the total emoluments paid or payable to additional
employees employed during the P.Y.2024-25. However, the additional employee cost in
respect of 9 employees who joined on 1.6.2024, whose salary is paid by bearer cheques would
be Nil.
Additional employee cost ` 48,30,000
[` 15,000 x 30 employees (39 - 9) x 10 months] + [` 22,000 x 3 employees x 5 months] =
` 45,00,000 + ` 3,30,000
Eligible deduction = 30% of ` 48,30,000 ` 14,49,000
Computation of Total Income & Tax liability Mr. BB for the A.Y. 2025-26 as per Normal Provisions
Particulars Amount (`)
Total Income as per 115BAC 99,41,250
Less: Donation to National Laboratory 2,50,000
Additional Depreciation on Generator 4,07,000
[` 20,35,000 x 20%]
Less: Deduction u/s 80GGC 3,00,000
[Contribution to pollical party is allowable as deduction, since payment is made
otherwise than by cash] Expenditure incurred on advertisement in brochure
published by political party not treated as contribution to such political party]
Total Income as per Normal Provision 89,84,250
Computation of Tax Liability
Upto ` 2,50,000 -
` 2,50,001 - ` 5,00,000 @5% 12,500

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 Super 30 Questions for CA Inter MAY 25 Exams
Particulars Amount (`)
` 5,00,001 - ` 10,00,000 @20% 1,00,000
` 10,00,001 - ` 89,84,250 @ 30% 23,95,275
25,07,775
Add: Surcharge @10% 2,50,778
27,58,553
Add: Health & Education Cess 1,10,342
Net Tax Liability 28,68,895
Net Tax liability (rounded off) 28,68,900
Conclusion: Tax as per normal provision is lower as compare to tax as per 115BAC, so assessee should opt
out from default tax regime u/s 115BAC and follow normal provisions.

Question 2 [Topics Covered: Total Income Indirect Method]

Ms. Purvi, aged 55 years, is a Chartered Accountant in practice. She maintains her accounts on
cash basis. Her Income and Expenditure account for the year ended March 31, 2025 reads as
follows:
Expenditure (`) Income (`) (`)
Salary to staff 15,50,000 Fees earned:
Stipend to articled 1,37,000 Audit 27,88,000
Assistants Taxation services 15,40,300
Incentive to articled 13,000 Consultancy 12,70,000 55,98,300
Assistants Dividend on shares of X Ltd., 10,524
an Indian company (Gross)
Office rent 12,24,000 Income from UTI (Gross) 7,600
Printing and stationery 12,22,000 Honorarium received from 15,800
various institutions for
valuation of answer
papers

Meeting, seminar and 31,600 Rent received from residential 85,600

conference flat let out
Purchase of car (for official 80,000
use)
Repair, maintenance and 4,000
petrol of car
Travelling expenses 5,25,000

Municipal tax paid in

respect of house property 3,000

Net Profit
9,28,224
57,17,824 57,17,824

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Other Information:
(i) Allowable rate of depreciation on motor car is 15%.
(ii) Value of benefits received from clients during the course of profession is ` 10,500.
(iii) Incentives to articled assistants represent amount paid to two articled assistants for passing
CA Intermediate Examination at first attempt.
(iv) Repairs and maintenance of car include ` 2,000 for the period from 1-10-2024 to 30-09-2025.
(v) Salary includes ` 30,000 to a computer specialist in cash for assisting Ms. Purvi in one
professional assignment.
(vi) The travelling expenses include expenditure incurred on foreign tour of ` 32,000 which was
within the RBI norms.
(vii) Medical Insurance Premium on the health of dependent brother and major son dependent on
her amounts to ` 5,000 and ` 10,000, respectively, paid in cash.
(viii) She invested an amount of ` 10,000 in National Saving Certificate.
(ix) She has paid ` 70,000 towards advance tax during the P.Y. 2024-25.
Compute the total income and tax payable by Ms. Purvi for the A.Y. 2025-26 in a most beneficial
manner.
Answer
Computation of total income and tax payable by Ms. Purvi for the A.Y. 2025-26 under default tax regime
u/s 115BAC
Particulars ` `
Income from house property (See Working Note 1) 57,820
Profit and gains of business or profession 9,20,200
(See Working Note 2)
Income from other sources (See Working Note 3) 33,924
Gross Total Income 10,11,944
Less: Deductions under Chapter VI-A [not allowable under default tax -
regime]
Total Income 10,11,944
Total Income (rounded off) 10,11,940
Tax on total income
Upto ` 3,00,000 Nil
` 3,00,001 - ` 7,00,000 @5% 20,000
` 7,00,001 - ` 10,00,000 @10% 30,000
` 10,00,001 - ` 10,11,940 @ 15% 1,791 51,791
Add: Health and Education cess @ 4% 2,072
Total tax liability
53,863
Less: Advance tax paid
70,000
Less: Tax deducted at source on dividend income from an Indian company u/s
1,052
194
Tax deducted at source on income from UTI u/s 194K 760 1,812
Tax Payable/(Refundable)
(17,949)
Tax Payable/(Refundable) (rounded off)
(17,950)

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 Super 30 Questions for CA Inter MAY 25 Exams

Computation of total income and tax payable under normal provisions of the Act
Particulars ` `
Gross Total Income 10,11,944
[Income under the “Income from house property” “Profits and gains from
business or profession” and “Income from other sources” would remain the
same even if Ms. Purvi opts out of the default tax regime u/s 115BAC]
Less: Deductions under Chapter VI-A (See Working Note 4) 10,000
Total Income 10,01,944
Total Income (rounded off)
10,01,940
Tax on total income
Upto ` 2,50,000 Nil
` 2,50,001 – ` 5,00,000 @5% 12,500
` 5,00,000 - ` 10,00,000 @20% 1,00,000
` 10,00,000 – ` 10,01,940 @ 30% 582
Add: Health and Education cess @ 4%
1,13,082
Total tax liability
Less: Advance tax paid 4,523
Less: TDS u/s 194 on dividend 1,052 1,17,605
TDS u/s 194K on income from UTI 760 70,000
Tax Payable
1,812
Tax Payable (rounded off)
45,793
45,790
Since there is tax refundable under default tax regime u/s 115BAC and tax payable under the regular provisions
of the Income-tax Act, 1961, it would be beneficial for Ms. Purvi to pay tax under default tax regime u/s
115BAC.
Working Notes:
(1) Income from House Property
Particulars ` `
Gross Annual Value u/s 23(1) 85,600
Less: Municipal taxes paid 3,000
Net Annual Value (NAV) 82,600
Less: Deduction u/s 24@30% of NAV 24,780 57,820
Note - Rent received has been taken as the Gross Annual Value in the absence of other information relating to
Municipal Value, Fair Rent and Standard Rent.
(2) Income under the head “Profits & Gains of Business or Profession”
Particulars ` `
Net profit as per Income and Expenditure account 9,28,224
Add: Expenses debited but not allowable
(i) Salary paid to computer specialist in cash disallowed u/s 40A(3), since such 30,000
cash payment exceeds ` 10,000
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Super 30 Questions for CA Inter MAY 25 Exams
Particulars ` `
(ii) Amount paid for purchase of car is not allowable u/s 37(1) since it is a 80,000
capital expenditure
(ii) Municipal taxes paid in respect of residential flat let out 3,000 1,13,000
10,41,224
Add: Value of benefit received from clients during the course of profession 10,500
[taxable as business income u/s 28(iv)]
10,51,724
Less: Income credited but not taxable under this head:
(i) Dividend on shares of X Ltd., an Indian company (taxable under the head 10,524
“Income from other sources")
(ii) Income from UTI (taxable under the head “Income from other sources") 7,600
(iii) Honorarium for valuation of answer papers 15,800
(iv) Rent received from letting out of residential flat 85,600 1,19,524
9,32,200
Less: Depreciation on motor car @15% (See Note (i) below) 12,000
9,20,200
Notes:
(i) It has been assumed that the motor car was put to use for more than 180 days during the previous year
and hence, full depreciation @ 15% has been provided for u/s 32(1)(ii).
Note: Alternatively, the question can be solved by assuming that motor car has been put to use for less
than 180 days and accordingly, only 50% of depreciation would be allowable as per the second proviso
below section 32(1)(ii).
(ii) Incentive to articled assistants for passing CA Intermediate examination in their first attempt is deductible
u/s 37(1).
(iii) Repairs and maintenance paid in advance for the period 1.4.2025 to 30.9.2025 i.e. for 6 months
amounting to ` 1,000 is allowable since Ms. Purvi is following the cash system of accounting.
(iv) ` 32,000 expended on foreign tour is allowable as deduction assuming that it was incurred in connection
with her professional work. Since it has already been debited to income and expenditure account, no
further adjustment is required.
(3) Income from other sources
Particulars `
Dividend on shares of X Ltd., an Indian company (taxable in the hands of shareholders) 10,524
Income from UTI (taxable in the hands of unit holders) 7,600
Honorarium for valuation of answer papers 15,800
33,924
(4) Deduction under Chapter VI-A :
Particulars `
Deduction u/s 80C (Investment in NSC) Deduction u/s 80D (See Notes (i) & (ii) below) 10,000
Total deduction under Chapter VI-A Nil

12 CA Bhanwar Borana
 Super 30 Questions for CA Inter MAY 25 Exams
10,000
Notes:
(i) Premium paid to insure the health of brother is not eligible for deduction u/s 80D, even though he
is a dependent, since brother is not included in the definition of “family” u/s 80D.
(ii) Premium paid to insure the health of major son is not eligible for deduction, even though he is a
dependent, since payment is made in cash.

Question 3 [Topics Covered : Total Income Direct Method]

Mr. Rajiv, aged 50 years, a resident individual and practicing Chartered Accountant, furnishes you
the receipts and payments account for the financial year 2024-25.
Receipts and Payments Account
Receipts ` Payments `
Opening balance (1.4.2024) Cash on 12,000 Staff salary, bonus and stipend to 21,50,000
hand and at Bank articled clerks
Fee from professional services 59,38,000 Other administrative expenses 11,48,000
(Gross)
Rent 50,000 Office rent 30,000
Motor car loan from Canara Bank (@ 2,50,000 Housing loan repaid to SBI (includes 1,88,000
9% p.a.) interest of ` 88,000)
Life insurance premium (10% of sum 24,000
assured)
Motor car (acquired in 4,25,000
Jan. 2025 by A/c payee cheque)

Medical insurance premium (for self 18,000

and wife)(paid by A/c Payee cheque)

Books bought on 20,000

1.07.2024 (annual publications by
A/c payee cheque)

Computer acquired on 1.11.2024 by 30,000

A/c payee cheque (for professional
use)

Domestic drawings 2,72,000

Public provident fund subscription 20,000
Motor car maintenance 10,000
Closing balance (31.3.2025) Cash on 19,15,000
hand and at Bank

62,50,000 62,50,000
Following further information is given to you:
(1) He occupies 50% of the building for own residence and let out the balance for residential use at
a monthly rent of ` 5,000. The building was constructed during the year 1997-98, when the

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Super 30 Questions for CA Inter MAY 25 Exams
housing loan was taken.
(2) Motor car was put to use both for official and personal purpose. One-fifth of the motor car use is
for personal purpose. No car loan interest was paid during the year.
(3) The written down value of assets as on 1-4-2024 are given below:
Furniture & Fittings ` 60,000
Plant & Machinery ` 80,000
(Air-conditioners, Photocopiers, etc.)
Computers ` 50,000
Note: Mr. Rajiv follows regularly the cash system of accounting.
Compute the total income of Mr. Rajiv for the assessment year 2025-26, assuming that he has shifted
out of the default tax regime u/s 115BAC.
Answer
Computation of total income of Mr. Rajiv for the assessment year 2025-26
Particulars ` ` `
Income from house property
Self-occupied
Annual value Nil
Less: Deduction u/s 24(b) Interest on housing loan
50% of ` 88,000 = 44,000 but limited to 30,000
Loss from self occupied property (30,000)
Let out property
Annual value (Rent receivable has been 60,000
taken as the annual value in the absence of other information)
Less: Deductions u/s 24
30% of Net Annual Value 18,000
Interest on housing loan (50% of ` 88,000) 44,000 62,000 (2,000)
Loss from house property (32,000)
Profits and gains of business or Profession
Fees from professional services 59,38,000
Less: Expenses allowable as deduction Staff salary, bonus and 21,50,000
stipend
Other administrative expenses 11,48,000
Office rent 30,000
Motor car maintenance (10,000 x 4/5) 8,000
Car loan interest – not allowable (since the same has not been Nil 33,36,000
paid and the assessee follows cash system of accounting)
26,02,000
Motor car Depreciation ` 4,25,000 x 7.5% x 4/5 25,500
Books being annual publications@40% 8,000
Furniture and fittings@10% of ` 60,000 6,000
Plant and machinery@15% of ` 80,000 12,000
Computer@40% of ` 50,000 20,000
Computer (New) ` 30,000 @ 40% x 50% 6,000 77,500 25,24,500
Gross Total income 24,92,500
Less: Deductions under Chapter VI-A
Deduction u/s 80C
Housing loan principal repayment 1,00,000

14 CA Bhanwar Borana
 Super 30 Questions for CA Inter MAY 25 Exams
Particulars ` ` `
PPF subscription 20,000
Life insurance premium 24,000
Total amount of ` 1,44,000 is allowed as deduction since it is 1,44,000
within the limit of ` 1,50,000
Deduction u/s 80D
Medical insurance premium paid ` 18,000 18,000 1,62,000
Total income 23,30,500

Question 4 [Topic Covered: PGBP Presumptive]

Mr. Naveen, aged 40 years, is engaged in the manufacturing business. He follows mercantile system of
accounting. The details pertaining to his business for the year ending on 31.3.2025 is as under –
Particulars Amount (`)
Capital receipts 1.20 crores
Turnover 2.80 crores
Amount received in cash [out of turnover] 8 lakhs
Amount received in cash [out of capital receipts] 2 lakhs
Amount received through account payee cheque/ NEFT and other prescribed mode on 2.50 crores
or before the specified date u/s 139(1) [out of turnover]
Total payment 1.60 crores
Cash payment [out of total payments] 9 lakhs
Net profit as per books of account 10.50 lakhs
An analysis of profit and loss for the year ended on 31.3.2025 revealed the following information
1. Salary incudes wages of ` 15,000 p.m. each paid to 1 security guard, 2 housekeeping staff in cash.
2. Other administration expenses include ` 70,000 paid in cash (Payment in a day is less than ` 8,000).
3. Interest charges includes interest payable on loan to Kamal of ` 70,000 on which TDS has not been
deducted. Loan was taken for the business purpose.
On the basis of the facts given above, choose the most appropriate answer to Q.1 to Q.5 below -
1. Is Mr. Naveen eligible to declare income on presumptive basis under the provisions of the Income-tax Act,
1961 for A.Y. 2025-26?
(a) No, since turnover of Mr. Naveen exceeds the threshold limit of ` 2 crores.
(b) Yes, since aggregate cash receipts during the year do not exceed 5% of total amount received.
(c) Yes, since amount received in cash during the year do not exceed 5% of turnover.
(d) No, as cash payments during the year exceed 5% of aggregate payments.
2. What would be your answer to MCQ 1, assuming for the purpose of answering this MCQ and MCQ 3 that
Mr. Naveen has additionally received ` 10 lakhs by way of crossed cheque [out of turnover] during the
P.Y. 2024-25?
(a) No, since turnover of Mr. Naveen exceeds the threshold limit of ` 2 crore.
(b) No, since the aggregate cash receipts during the year exceed 5% of turnover.
(c) No, as cash payments during the year exceed 5% of aggregate payments.
(d) No, due to both (a) and (b)
3. Is Mr. Naveen required to get his books of account audited during the P.Y. 2024-25?
(a) No, since turnover of Mr. Naveen does not exceed the threshold limit of ` 10 crores.
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Super 30 Questions for CA Inter MAY 25 Exams
(b) Yes, since amount received in cash during the year exceeds 5% of turnover.
(c) Yes, since cash payments during the year exceed 5% of aggregate payments.
(d) No, since the amount received in cash during the year does not exceed 5% of total amount received.
4. What is the amount of profits and gains of business chargeable to tax in the hands of Mr. Naveen as per
books of account?
(a) ` 10,50,000
(b) ` 16,11,000
(c) ` 16,81,000
(d) ` 16,60,000
5. What is the amount of profits and gains of business chargeable to tax in the hands of Mr. Naveen if he does
not want to get his books of account audited?
(a) ` 17,40,000
(b) ` 16,96,000
(c) ` 22,40,000
(d) ` 16,80,000
Answer
1. (c) 2. (d) 3. (c) 4. (b) 5. (a)

Question 5 [Topic Covered: Total Income & Tax Liability]

Mr. Rajesh is a working partner in M/s Sunflower Associates, a partnership firm. Mr. Rajesh has
contributed ` 15 lakhs as capital in the firm.
Partnership deed authorises payment of interest to partners @ 13% and also payment of
remuneration to partners @20,000 per month. Whole of the remuneration is allowable as deduction
to M/s Sunflower Associates.
Mr. Rajesh has set up a unit in SEZ in May, 2017. The total turnover, export turnover and net profit
for the year ended 31.3.2025 were ` 120 lakhs, ` 45 lakhs and ` 7.5 lakhs respectively. Out of the
export turnover of ` 45 lakhs, only ` 40 lakhs has been received in convertible foreign exchange by
30.9.2025.
During the P.Y. 2024-25, Mr. Rajesh has commenced a business of warehousing facility for storage
of edible oil. The net profit of this business as per profit & loss account is ` 7,50,000. The following
items are debited to Profit & Loss Account:
(i) Personal drawings ` 70,000
(ii) Advance income-tax paid ` 1,00,000
(iii) Purchase of warehouse building of ` 10 lakhs on 10.6.2024 for the purpose of storage of edible
oil.
The following items are credited to Profit & Loss account:
(i) Interest on saving bank account with post office ` 15,000
(ii) Interest on fixed deposit with SBI ` 20,000
(iii) Dividend from Indian companies (Gross) ` 32,000
He has paid the premium of ` 60,000 on life insurance policy in the name of her married daughter.
The policy was taken on 1.10.2018 and the sum assured being ` 5,00,000.
Compute the total income and tax payable by Mr. Rajesh for the A.Y. 2025-26 under default tax
regime and normal provisions of the Act.

16 CA Bhanwar Borana
 Super 30 Questions for CA Inter MAY 25 Exams
Answer
Computation of total income of Mr. Rajesh for the A.Y. 2025-26 under default tax regime u/s 115BAC
Particulars Amount (in `)
I Profits and gains of business and profession
Income from firm M/s Sunflower Associates
Interest on capital@13% p.a. on ` 15 lakhs, restricted to 12%, 1,80,000
which is the maximum deduction allowable in the hands of the firm
Salary to Mr. Rajesh as a working partner, which is allowable as 2,40,000 4,20,000
deduction in the hands of firm (` 20,000 x 12)
Profit from SEZ unit
Net profit from SEZ unit 7,50,000
Income from warehousing facility for storage of edible oil
Net profit as per profit and loss account 7,50,000
Less: Income credited to profit and loss account but taxable
under the head ‘Income from
Other Sources’
Interest on savings bank A/c with post office 15,000
Interest on fixed deposit with SBI 20,000
Dividend from Indian companies (Gross) 32,000
6,83,000
Add: Payments not allowable as deduction
Advance income-tax paid disallowed u/s 40(a)(ii) 1,00,000
Personal drawings disallowed u/s 37 70,000
Purchase of building 10,00,000
18,53,000
Less: Depreciation on building [` 10,00,000 x 10%] 1,00,000 17,53,000
II Income from Other Sources
Interest on savings bank A/c with post office 15,000
Less: Exempt u/s 10(15) 3,500 11,500
Interest on fixed deposit with SBI 20,000
Dividend from Indian companies (Gross) 32,000 63,500
Gross Total Income/ Total Income 29,86,500
[No deduction u/s 80C, 80TTA and 10AA would be allowable]
Computation of tax payable under default tax regime for A.Y. 2025-26
` `
Tax on total income of ` 29,86,500
On first ` 3,00,000 Nil

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Super 30 Questions for CA Inter MAY 25 Exams
` 3,00,001 – ` 7,00,000 [@5% of ` 4 lakhs] 20,000
` 7,00,001 – ` 10,00,000 [@10% of ` 3 lakhs] 30,000
` 9,00,001 – ` 12,00,000 [@15% of ` 2 lakhs] 30,000
` 12,00,001 – ` 15,00,000 [@20% of ` 3 lakhs] 60,000
` 15,00,001 - ` 29,86,500 [@30% of ` 14,86,500] 4,45,950
5,85,950
Add: Health and Education cess @4% 23,438
6,09,388
Less: Advance income-tax paid 1,00,000
Tax payable 5,09,388
Tax Payable (Rounded off) 5,09,788
Computation of total income of Mr. Rajesh for the A.Y. 2025-26 under normal provisions of the Act
Particulars Amount (in `)
Gross Total Income as per section 115BAC 29,86,500
Less: Deduction u/s 10AA 1,25,000 28,61,500
[` 7,50,000 x 40,00,000/ ` 1,20,00,000 x 50%, being eighth year of operation]
Less: Deduction under Chapter VI-A
Deduction u/s 80C
Life insurance premium [maximum 10% of sum assured] 50,000
Deduction u/s 80TTA
Interest on saving bank account with post office, restricted to 10,000 60,000
Total Income 28,01,500
Computation of tax payable by Mr. Rajesh for A.Y. 2025-26 under the regular provisions of the Act
Particulars ` `
Tax on total income of ` 28,01,500
Upto ` 2,50,000 Nil
` 2,50,001 – ` 5,00,000 [@5% of ` 2.50 lakhs] 12,500
` 5,00,001 – ` 10,00,000 [@20% of ` 5 lakhs] 1,00,000
` 10,00,001 - ` 28,01,500 [@30% of ` 18,01,500] 5,40,450 6,52,950
Add: Health and education cess@4% 26,118
Total tax liability 6,79,068
Less: Advance income-tax paid 1,00,000
Tax payable 5,79,068
Tax payable (rounded off) 5,79,070
Computation of adjusted total income and AMT of Mr. Rajesh for A.Y. 2024-25
Particulars ` `

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 Super 30 Questions for CA Inter MAY 25 Exams
Total Income (computed above as per regular provisions of income 28,01,500
tax)
Add: Deduction u/s 10AA 1,25,000
Adjusted Total Income 29,26,500
Alternative Minimum [email protected]% 5,41,403
Add: Health and education cess@4% 21,656
Total tax liability 5,63,059
Less: Advance income-tax paid 1,00,000
Tax payable 4,63,059
Tax payable (rounded off) 4,63,060
Since alternate minimum tax payable is less than the regular income-tax payable, tax payable under normal
provisions of the Act is ` 5,79,070.

Question 6 [Topic Covered: Total Income]

Mr. Sunil, aged 48 years, a resident Indian has furnished the following particulars for the year
ended 31.03.2025:
(i) He occupies ground floor of his residential building and has let out first floor for residential use
at an annual rent of ` 2,95,000. He has paid municipal taxes of ` 25,000 for the current financial
year. Both these floors are of equal size.
(ii) As per interest certificate from HDFC bank, he paid ` 1,50,000 as interest and ` 80,000 towards
principal repayment of housing loan borrowed for the above residential building in the year 2018.
(iii) He owns an industrial undertaking established in a SEZ and which had commenced operation
during the financial year 2020-21. Total turnover of the undertaking was ` 400 lakhs, which
includes ` 150 lakhs from export turnover. Out of ` 150 lakhs, only ` 120 lakhs have been
received in India in convertible foreign exchange on or before 30.9.2025. This industrial
undertaking fulfills all the conditions of section 10AA of the Income-tax Act, 1961. Profit from this
industry is ` 40 lakhs.
(iv) He employed 20 new employees for the said industrial undertaking during the previous year
2024-25. Out of 20 employees, 12 were employed on 1st May 2024 for monthly emoluments of
` 18,000 and remaining were employed on 1st September 2024 on monthly emoluments of `
12,000. All these employees participate in recognised provident fund and they are paid their
emoluments directly to their bank accounts.
(v) He earned ` 30,000 and ` 40,000 as interest on saving bank deposits and fixed deposits,
respectively.
(vi) He also sold his vacant land on 01.07.2024 for ` 15 lakhs. The stamp duty value of land at the
time of transfer was ` 16 lakhs. This land was acquired by him on 15.10.1998 for ` 2.80 lakhs.
The FMV of the land as on 1st April, 2001 was ` 4.8 lakhs and Stamp duty value on the said date
was ` 4 lakhs. He had incurred registration expenses of ` 12,000 at that time.
The cost of inflation index for the financial year 2024-25 and 2001-02 are 363 and 100,
respectively.
(vii) He paid insurance premium of ` 40,000 towards life insurance policy of his son, who is not
dependent on him.
You are requested to compute total income and tax liability of Mr. Sunil for the Assessment Year
2025-26, in the manner so that he can make maximum tax savings.

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Super 30 Questions for CA Inter MAY 25 Exams
Answer
Computation of total income of Mr. Sunil for A.Y. 2025-26 under default tax regime u/s 115BAC
Particulars ` ` `
I Income from house property Let out portion [First
floor]
Gross Annual Value [Rent received is taken as GAV, 2,95,000
in the absence of other information]
Less: Municipal taxes paid by him in the P.Y. 2024-25
pertaining to let out portion [` 25,000/2] 12,500
Net Annual Value (NAV) 2,82,500
Less: Deduction u/s 24
(a) 30% of ` 2,82,500 84,750
(b) Interest on housing loan [` 1,50,000/2] 75,000 1,59,750
1,22,750
Self-occupied portion [Ground Floor]
Annual Value Nil
[No deduction is allowable in respect of municipal
taxes paid] Nil
Less: Interest on housing loan [Not allowable u/s
115BAC]
Nil 1,22,750
Income from house property
II
Profits and gains of business or profession
Income from SEZ unit 40,00,000
III Capital Gains
Long-term capital gains on sale of land (since held
for more than 24 months)
Full Value of Consideration [Actual consideration of 15,00,000
` 15 lakhs, since stamp duty value of ` 16 lakhs does
not exceed actual consideration by more
than 10%]
Less: Indexed Cost of acquisition [` 4,00,000 x 14,52,000 48,000
363/100]
Cost of acquisition
Higher of -
- Actual cost ` 2.80 lakhs + ` 0.12 lakhs = ` 2.92
lakhs and
- Fair Market Value (FMV) as on 1.4.2001 = ` 4.8
lakhs but cannot exceed stamp duty value of ` 4
lakhs.
IV Income from Other Sources

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 Super 30 Questions for CA Inter MAY 25 Exams
Particulars ` ` `
Interest on savings bank deposits 30,000
Interest on fixed deposits 40,000 70,000
Gross Total Income 42,40,750
Less: Deduction under Chapter VI-A
Deduction u/s 80JJAA 7,12,800
30% of the employee cost of the new employees
employed during the P.Y. 2024-25 for 240 days or
more during the P.Y. 2024-25 allowable as deduction
[30% of ` 23,76,000 (12 x 18,000 x 11)]
As per section 115BAC, no deduction u/s 10AA or
under Chapter VI-A is allowable except u/s 80JJAA
Total Income 35,27,950
Computation of tax liability of Mr. Sunil u/s 115BAC
Particulars ` `
Tax on total income of ` 35,27,950
Tax on LTCG of ` 48,000@20% 9,600
Tax on remaining total income of ` 34,79,950
Upto ` 3,00,000 Nil
` 3,00,001 – ` 7,00,000 [@5% of ` 4 lakhs] 20,000
` 7,00,001 – ` 10,00,000 [@10% of ` 3 lakhs] 30,000
` 10,00,001 – ` 12,00,000 [@15% of ` 2 lakhs] 30,000
` 12,00,001 – ` 15,00,000 [@20% of ` 3 lakhs] 60,000
` 15,00,001 – ` 34,79,950 [@30% of ` 19,79,950] 5,93,985 7,33,985
7,43,585
Add: Health and education cess@4% 29,743
Total tax liability 7,73,328
Tax liability (rounded off) 7,73,330
Note - An individual paying tax u/s 115BAC is not liable to alternate minimum tax u/s 115JC.
Computation of total income of Mr. Sunil for A.Y. 2025-26 under normal provisions of the Act
Particulars ` `
Gross Total Income as per default tax regime u/s 115BAC 42,40,750
Less: Interest on borrowing in respect of self- occupied house property [` 75,000
1,50,000/2]
Gross Total Income as per section 115BAC 41,65,750
Less: Deduction u/s 10AA 12,00,000
[Since the industrial undertaking is established in SEZ, it is entitled to
deduction u/s 10AA@100% of export profits, since P.Y.2024-25 being the 5th
year of operations]

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Super 30 Questions for CA Inter MAY 25 Exams
Particulars ` `
[Profits of the SEZ x Export Turnover received in convertible foreign
exchange/Total Turnover] x 100% [` 40 lakhs x ` 120 lakhs/ ` 400 lakhs x
100%]
Less: Deduction under Chapter VI-A
Deduction u/s 80C
Repayment of principal amount of housing loan 80,000
Insurance premium paid on life insurance policy of son allowable, even though 40,000 1,20,000
not dependent on Mr. Sunil
Deduction u/s 80JJAA [As computed above] 7,12,800
Deduction u/s 80TTA 10,000
Interest on savings bank account, restricted to ` 10,000
Total Income as per regular provisions of the Act 21,22,950
Computation of tax liability of Mr. Sunil for A.Y. 2024-25 under the regular provisions of the Act
Particulars ` `
Tax on total income of ` 21,22,950
Tax on LTCG of ` 48,000@20% 9,600
Tax on remaining total income of ` 20,74,950
Upto ` 2,50,000 Nil
` 2,50,001 – ` 5,00,000[@5% of ` 2.50 lakhs] 12,500
` 5,00,001 – ` 10,00,000[@20% of ` 5 lakhs] 1,00,000
` 10,00,001 – ` 20,74,950[@30% of ` 10,74,950] 3,22,485 4,34,985
4,44,585
Add: Health and education cess@4% 17,783
Total tax liability 4,62,368
Tax liability (rounded off) 4,62,370
Computation of adjusted total income and AMT of Mr. Sunil for A.Y. 2025-26
Particulars `
Computation of adjusted total income
Total income as per the normal provisions of the Act 21,22,950
Add: Deduction u/s 10AA 12,00,000
Deduction u/s 80JJAA 7,12,800
Adjusted Total Income 40,35,750
Alternative Minimum [email protected]% 7,46,614
Add: Health and education cess@4% 29,865
AMT liability 7,76,478
AMT liability (rounded off) 7,76,480

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 Super 30 Questions for CA Inter MAY 25 Exams
Since the regular income-tax payable is less than the alternate minimum tax payable, the adjusted total income
shall be deemed to be the total income and tax is leviable @18.5% thereof plus cess@4%. Therefore, liability
as per section 115JC is ` 7,76,480.
Since, tax liability as per section 115BAC is lower than the tax liability of as per AMT, it is beneficial for Mr.
Sunil to exercise the option of the default tax regime u/s 115BAC.

Question 7 [Topics Covered: Residential Status]

Miss Charlie, an American national, got married to Mr. Radhey of India in USA on 2.03.2024 and
came to India for the first time on 16.03.2024. She left for USA on 19.9.2024. She returned to India
again on 27.03.2025. While in India, she had purchased a show room in Mumbai on 30.04.2024,
which was leased out to a company on a rent of ` 25,000 p.m. from 1.05.2024. She had taken loan
from a bank for purchase of this show room on which bank had charged interest of ` 97,500 upto
31.03.2025. She had received the following cash gifts from her relatives and friends during 1.4.2024
to 31.3.2025:
- From parents of husband ` 51,000
- From married sister of husband ` 11,000
- From two very close friends of her husband (` 1,51,000 and ` 21,000) ` 1,72,000
(a) Determine her residential status and compute the total income chargeable to tax along with the
amount of tax liability on such income for the Assessment Year 2025-26 if she opts out of the
default tax regime u/s 115BAC.
(b) Would her residential status undergo any change, assuming that she is a person of Indian origin
and her total income from Indian sources is `18,00,000 and she is not liable to tax in USA?
Answer
I. U/s 6(1), an individual is said to be resident in India in any previous year, if he/she satisfies any one of the
following conditions:
(i) He/she has been in India during the previous year for a total period of 182 days or more, or
(ii) He/she has been in India during the 4 years immediately preceding the previous year for a total period
of 365 days or more and has been in India for at least 60 days in the previous year.
If an individual satisfies any one of the conditions mentioned above, he/she is a resident. If both the above
conditions are not satisfied, the individual is a non-resident.
Therefore, the residential status of Miss Charlie, an American National, for A.Y.2025-26 has to be determined
on the basis of her stay in India during the previous year relevant to A.Y. 2025-26 i.e., P.Y.2024-25 and in the
preceding four assessment years.
Her stay in India during the previous year 2024-25 and in the preceding four years are as under:
P.Y. 2024-25
01.04.2024 to 19.09.2024 - 172 days
27.03.2025 to 31.03.2025 - 5 days
Total 177 days
Four preceding previous years
P.Y. 2023-24 [1.4.2023 to 31.3.2024] - 16 days
P.Y.2022-23 [1.4.2022 to 31.3.2023] - Nil
P.Y.2021-22 [1.4.2021 to 31.3.2022] - Nil
P.Y.2020-21 [1.4.2020 to 31.3.2021] - Nil
Total 16 days
The total stay of the assessee during the previous year in India was less than 182 days and during the four years

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Super 30 Questions for CA Inter MAY 25 Exams
preceding this year was for 16 days. Therefore, due to non-fulfillment of any of the two conditions for a resident,
she would be treated as non-resident for the Assessment Year 2025-26.

Computation of total income of Miss Charlie for the A.Y. 2025-26

Particulars ` `
Income from house property
Show room located in Mumbai remained on rent from 01.05.2024 to 31.03.2025 @ 2,75,000
` 25,000/- p.m.
Gross Annual Value [` 25,000 x 11] (See Note 1 below)
Less: Municipal taxes Nil
Net Annual Value (NAV) 2,75,000
Less: Deduction u/s 24
30% of NAV 82,500
Interest on loan 97,500 1,80,000 95,000
Income from other sources
Cash gifts received from non-relatives is chargeable to tax as per section 56(2)(x),
if the aggregate value of such gifts exceeds ` 50,000.
- `50,000 received from parents of husband would be exempt, since parents of
husband fall within the definition of ‘relative’ and gifts from a relative are not Nil
chargeable to tax.
- `11,000 received from married sister of husband is exempt, since sister-in-law
falls within the definition of relative and gifts from a relative are not chargeable Nil
to tax.
- Gift received from two friends of husband ` 1,51,000 and ` 21,000 aggregating
to ` 1,72,000 is taxable u/s 56(2)(x) since the aggregate of ` 1,72,000 exceeds
` 50,000. (See Note 2 below) 1,72,000 1,72,000
Total income 2,67,000
Computation of tax liability by Miss Charlie for the A.Y. 2025-26
Particulars `
Tax on total income of ` 2,67,000 850
Add: Health and Education cess@4% 34
Total tax liability 884
Total tax liability (rounded off)
880
Notes:
1. Actual rent received has been taken as the gross annual value in the absence of other information (i.e.
Municipal value, fair rental value and standard rent) in the question.
2. If the aggregate value of taxable gifts received from non-relatives exceed ` 50,000 during the year, the
entire amount received (i.e. the aggregate value of taxable gifts received) is taxable. Therefore, the entire
amount of ` 1,72,000 is taxable u/s 56(2)(x).
3. Since Miss Charlie is a non-resident for the A.Y. 2025-26, rebate u/s 87A would not be available to her,
even though her total income does not exceed ` 5 lacs.
4. The tax liability of Miss Charlie would be the same even if she opts to pay tax as per section 115BAC,
since she would be eligible for deduction u/s 24(b), for interest on housing loan in respect of let out
property under regular provisions as well as u/s 115BAC of the Income-tax Act, 1961.
24 CA Bhanwar Borana
 Super 30 Questions for CA Inter MAY 25 Exams

II. Residential status of Miss Charlie in case she is a person of Indian origin and her total income from
Indian sources exceeds ` 18,00,000
If she is a person of Indian origin and her total income from Indian sources exceeds ` 15,00,000 (` 18,00,000,
in her case), the condition of stay in India for a period exceeding 120 days during the previous year and 365
days during the four immediately preceding previous years would be applicable for being treated as a resident.
Since her stay in India exceeds 120 days in the P.Y.2024-25 but the period of her stay in India during the four
immediately preceding previous years is less than 365 days (only 16 days), her residential status as per section
6(1) would continue to be same i.e., non-resident in India.
Further, since she is not a citizen of India, the provisions of section 6(1A) deeming an individual to be a citizen
of India would not get attracted in her case, even though she is a person of Indian origin and her total income
from Indian sources exceeds ` 15,00,000 and she is not liable to pay tax in USA.
Therefore, her residential status would be non-resident in India for the previous year 2024-25.

Question 8 [Topic Covered: Residential Status]

Ms. Rita, an Indian citizen and an MBA from Howard University, was employed in AFL LLP of Country
A since June, 2017. She came to India on 15.11.2024 and joined as CEO of Autofit Ltd. Ms. Rita was
in India before she left for overseas education in May, 2013 and was subsequently employed outside
India and never visited India thereafter. There is no income-tax in Country A. She has earned interest
income of ` 2,40,000 (net) in Country A and salary income from AFL LLP of ` 15 lakhs up to the date
of her return to India in the financial year 2024-25.
Salary income (computed) of Ms. Rita from Autofit Ltd. up to 31.03.2025 is ` 13,50,000 and she
earned dividend of ` 3,00,000 from shares of an Indian company.
What would be the residential status of Ms. Rita and her total income for the A.Y. 2025-26?

Answer
Determination of residential status of Ms. Rita for the A.Y. 2025 -26
As per section 6(1), in order to be a resident of India in the P.Y.2024 -25, Ms. Rita should satisfy either of the
following two conditions -
(1) Her stay in India should be for a period of 182 days or more in the P.Y.2024-25; or
(2) Her stay in India should be for a period of 60 days or more in the P.Y.2024-25 and for a period of 365
days or more in the four immediately preceding previous years.
Ms. Rita’s stay in India in the P.Y.2024-25 is 137 days (i.e., 16 days + 31 days +31 days + 28 days + 31 days).
She left India in May, 2013 and never visited India thereafter. Her stay in India in the four immediately
preceding previous years would be Nil.
Therefore, she does not satisfy either condition (1) or condition (2) for being a resident.
As per section 6(1A), an individual who is a citizen of India would be deemed to be a resident of India if his
total income, other than income from foreign sources, exceed ` 15 lakh during the relevant previous year and
he is not liable to tax in any other country by reason of his domicile or residence or any other criteria of similar
nature.
Ms. Rita’s total income, other than income from foreign sources, would be ` 16,50,000 for A.Y.2025-26 as
shown below –
Particulars `
Salary income from Autofit Ltd. [Computed] [Accrues or arises in India] 13,50,000
Dividend from shares of an Indian company [Accrues or arises in India] 3,00,000

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Super 30 Questions for CA Inter MAY 25 Exams
16,50,000
Since Ms. Rita is a citizen of India who is not liable to pay income-tax in Country A and her total income, other
than income from foreign sources, exceed ` 15 lakhs, she would be deemed resident in India u/s 6(1A) for
A.Y.2025-26. A deemed resident is, by default, a resident but not ordinarily resident.
In case of a resident but not ordinarily resident, income accrues or arises, deemed to accrue or arise and received
or deemed to be received in India, is taxable. In addition, Income which accrues or arises outside India would
also be taxable if it is derived from a business controlled in or a profession set up in India.
Ms. Rita’s total income for A.Y. 2025-26
Particulars `
Salary income from AFL LLP [Not taxable since it accrues or arises outside India] -
Salary income from Autofit Ltd. [Computed] 13,50,000
Interest income in Country A [Not taxable since it accrues or arises outside India] -
Dividend from shares of an Indian company 3,00,000
Total Income 16,50,000

Question 9 [Topic Covered: Salary HRA & RFA]

Mr. Kashyap, aged 38 years, is entitled to a salary of ` 40,000 per month. He is given an option by
his employer either to take house rent allowance or a rent-free accommodation which is owned by
the company. The HRA amount payable was ` 8,000 per month. The rent for the hired
accommodation was ` 6,500 per month at New Delhi. Advice Mr. Kashyap whether it would be
beneficial for him to avail HRA or Rent-Free Accommodation. Give your advice on the basis of “Net
Take Home Cash benefits”. Assume Mr. Kashyap has opted option to shift out of the default tax
regime u/s 115BAC.
Answer
Computation of tax liability of Kashyap under both the options
Particulars Option I – Option II –
HRA (`) RFA(`)
Basic Salary (` 40,000 x 12 Months) 4,80,000 4,80,000
Perquisite value of rent-free accommodation (10% of ` 4,80,000) N.A. 48,000
House rent Allowance (` 8,000 x 12 Months) ` 96,000
Less: Exempt u/s 10(13A) – least of the following -
- 50% of Basic Salary ` 2,40,000
- Actual HRA received ` 96,000
- Rent paid less 10% of salary `30,000 ` 30,000 66,000
Gross Salary 5,46,000 5,28,000
Less: Standard deduction u/s 16(ia) 50,000 50,000
Net Salary 4,96,000 4,78,000
Less: Deduction under Chapter VI-A - -
Total Income 4,96,000 4,78,000
Tax on total income 12,300 11,400

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 Super 30 Questions for CA Inter MAY 25 Exams
Particulars Option I – Option II –
HRA (`) RFA(`)
Less: Rebate u/s 87A - Lower of ` 12,500 or income-tax of ` 12,300 & 11,900, 12,300 11,400
since total income does not exceed ` 5,00,000
Nil Nil
Cash Flow Statement
Particulars Option I – Option II
HRA – RFA
Inflow: Salary 5,76,000 4,80,000
Less: Outflow: Rent paid (78,000) -
Tax on total income Nil Nil
Net Inflow 4,98,000 4,80,000
Since the net cash inflow under Option I (HRA) is higher than in Option II (RFA), it is beneficial for Mr.
Kashyap to avail Option I, i.e., House Rent Allowance

Question 10 [Topic Covered: Salary]

Mr. Samaksh is a Marketing Manager in Smile Ltd. From the following information, you are required
to compute his income chargeable under the head salary for assessment year 2025-26. Assume he
has shifted out of default taxation regime u/s 115BAC
(i) Basic salary is ` 70,000 per month.
(ii) Dearness allowance @ 40% of basic salary
(iii) He is provided health insurance scheme approved by IRDA for which ` 20,000 incurred by
Smile Ltd.
(iv) Received ` 10,000 as gift voucher on the occasion of his marriage anniversary from Smile Ltd.
(v) Smile Ltd. allotted 800 sweat equity shares in August 2024. The shares were allotted at ` 450
per share and the fair market value on the date of exercising the option by Mr. Samaksh was `
700 per share.
(vi) He was provided with furniture during September 2020. The furniture is used at his residence
for personal purpose. The actual cost of the furniture was ` 1,10,000. On 31st March, 2025, the
company offered the furniture to him at free of cost. No amount was recovered from him towards
the furniture till date.
(vii) Received ` 10,000 towards entertainment allowance.
(viii) Housing Loan@ 4.5% p.a. provided by Smile Ltd., amount outstanding as on 01.04.2024 is `
15 Lakhs. ` 50,000 is paid by Mr. Samaksh every quarter towards principal starting from June
2023. The lending rate of SBI for similar loan as on 01.04.2024 was 8%.
(ix) Facility of laptop costing ` 50,000

Answer
Computation of income under the head “Salaries” of Mr. Samaksh for the A.Y.2025-26
Particulars ` `
Basic Salary [`70,000 x 12 months] 8,40,000
Dearness allowance [40% of `8,40,000] 3,36,000

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Super 30 Questions for CA Inter MAY 25 Exams
Particulars ` `
Entertainment allowance 10,000
Interest on housing loan given at concessional rate, would be perquisite, since 49,291
the amount of loan exceeds ` 20,000, For computation, the lending rate of SBI
on 1.4.2024 @8% has to be considered. Thus, perquisite value would be
determined @ 3.5% (8% - 4.5%) [See Working Note]
Health insurance premium paid by the employer [tax free perquisite] Nil
Gift voucher on the occasion of his marriage anniversary [As per Rule 3(7)(iv), 10,000
the value of any gift or voucher or token in lieu of gift received by the employee
or by member of his household exceeding ` 5,000 in aggregate during the
previous year is fully taxable] (See note below)
Allotment of sweat equity shares
Fair market value of 800 sweat equity shares @ ` 700 each 5,60,000
Less: Amount recovered @ ` 450 each 3,60,000 2,00,000
Use of furniture by employee
10% p.a. of the actual cost of ` 1,10,000 11,000
Use of Laptop
Facility of use of laptop is not a taxable perquisite Nil
Transfer of asset to employee
Value of furniture transferred to Mr. Samaksh 1,10,000
Less: Normal wear and tear @10% for each completed year of usage on SLM
basis [1,10,000 x 10% x 4 years (from September 2020 to September 2024)] 44,000 66,000
Gross Salary 15,22,291
Less: Standard deduction u/s 16 [Actual salary or ` 50,000, whichever is less]
50,000
Net Salary 14,72,291
Working Note:
Computation of perquisite value of loan given at concessional rate
For computation, the lending rate of SBI on 1.4.2024 @8% has to be considered. Thus, perquisite value would
be determined @ 3.5% (8% - 4.5%)
Month Maximum outstanding balance as on last date of month Perquisite value at
(`) 3.5% for the month (`)
April, 2024 15,00,000 4,375
May, 2024 15,00,000 4,375
June, 2024 14,50,000 4,229
July, 2024 14,50,000 4,229
August, 2024 14,50,000 4,229
September, 2024 14,00,000 4,083
October, 2024 14,00,000 4,083

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 Super 30 Questions for CA Inter MAY 25 Exams
November, 2024 14,00,000 4,083
December, 2024 13,50,000 3,937.50
January, 2025 13,50,000 3,937.50
February, 2025 13,50,000 3,937.50
March, 2025 13,00,000 3,792
Total value of this perquisite 49,290.50
Note: An alternate view possible is that only the sum in excess of ` 5,000 is taxable. In such a case, the value
of perquisite would be ` 5,000 and gross salary and net salary would be ` 15,17,291 and ` 14,67,291,
respectively.

Question 11 [Topic Covered: House Property]

Mr. Naveen and Mr. Vikas constructed their houses on a piece of land purchased by them at Delhi.
The built-up area of each house was 1,800 sq. ft. ground floor and an equal area in the first floor.
Naveen started construction on 1-04-2022 and completed on 1-04-2024. Vikas started the
construction on 1-04-2022 and completed the construction on 30-09-2024. Naveen occupied the
entire house on 01-04-2024. Vikas occupied the ground floor on 01-10-2024 and let out the first floor
for a rent of `20,000 per month. However, the tenant vacated the house on 31-12-2024 and Vikas
occupied the entire house during the period 01-01-2025 to 31-03-2025.
Following are the other information
(i) Fair rental value of each unit - ` 1,00,000 per annum (ground floor /first floor)
(ii) Municipal value of each unit (ground floor / first floor) - ` 72,000 per annum
(iii) Municipal taxes paid by
Naveen – ` 8,000
Vikas – ` 8,000
(iv) Repair and maintenance charges paid by
Naveen – ` 28,000
Vikas – ` 30,000
Naveen has availed a housing loan of ` 15 lakhs @ 12% p.a. on 01-04-2022. Vikas has availed a
housing loan of ` 10 lakhs @ 10% p.a. on 01-07-2022. No repayment was made by either of them till
31-03-2025. Compute income from house property for Naveen and Vikas for the previous year 2024-
25 if both exercise the option of shifting out of the default tax regime provided u/s 115BAC(1A).
Answer
Computation of income from house property of Mr. Naveen for A.Y. 2025-26
Particulars ` `
Annual value is nil (since house is self occupied) Nil
Less: Deduction u/s 24(b)
Interest paid on borrowed capital `15,00,000 @ 12% 1,80,000
Pre-construction interest `3,60,000/5 72,000
2,52,000
As per second proviso to section 24(b), interest deduction restricted to 2,00,000
Loss under the head “Income from house property” of Mr. Naveen (2,00,000)

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Super 30 Questions for CA Inter MAY 25 Exams

Computation of income from house property of Mr. Vikas for A.Y. 2025-26
Particulars Ground floor First floor
Self occupied)
Gross annual value (See Note below) Nil 60,000
Less: Municipal taxes (for first floor) 4,000
Net annual value(A) Nil 56,000
Less: Deduction u/s 24
(a) 30% of net annual value 16,800
(b) interest on borrowed capital
Current year interest
`10,00,000 x 10% = `1,00,000 50,000 50,000
Pre-construction interest
`10,00,000 x 10% x 21/12 = `1,75,000
`1,75,000 allowed in 5 equal installments
`1,75,000/5 = `35,000 per annum 17,500 17,500
Total deduction u/s 24 67,500 84,300
Income from house property (A)-(B) (67,500) (28,300)
Loss under the head “Income from house property” of Mr. Vikas (both (95,800)
ground floor and first floor)
Note: Computation of Gross Annual Value (GAV) of first floor of Vikas’s house
If a single unit of property (in this case the first floor of Vikas’s house) is let out for some months and self-
occupied for the other months, then the Expected Rent of the property shall be taken into account for
determining the annual value. The Expected Rent shall be compared with the actual rent and whichever is
higher shall be adopted as the annual value. In this case, the actual rent shall be the rent for the period for which
the property was let out during the previous year.

The Expected Rent is the higher of fair rent and municipal value. This should be considered for 6 months since
the construction of property was completed only on 30.9.2024.
Expected rent = `50,000 being higher of -
Fair rent = 1,00,000 x 6 /12 = `50,000 Municipal value = 72,000 x 6/12 = `36,000
Actual rent = `60,000 (`20,000 p.m. for 3 months from October to December, 2024)
Gross Annual Value = `60,000 (being higher of Expected Rent of `50,000 and actual rent of `60,000).

Question 12 [Topic Covered: House Property]

Two brothers Arun and Bimal are co-owners of a house property with equal share. The property was
constructed during the financial year 2016-2017. The property consists of eight identical units and is
situated at Cochin.
During the financial year 2024-25, each co-owner occupied one unit for residence and the balance
of six units were let out at a rent of ` 12,000 per month per unit. The municipal value of the house

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 Super 30 Questions for CA Inter MAY 25 Exams
property is ` 9,00,000 and the municipal taxes are 20% of municipal value, which were paid during
the year. The other expenses were as follows:
`
(i) Repairs 40,000
(ii) Insurance premium (paid) 15,000
(iii) Interest payable on loan taken for construction of house 3,00,000
One of the let out units remained vacant for four months during the year.
Arun could not occupy his unit for six months as he was transferred to Chennai. He does not own
any other house.
The other income of Mr. Arun and Mr. Bimal are ` 2,90,000 and ` 1,80,000, respectively, for the
financial year 2024-25.
Compute the income under the head ‘Income from House Property’ and the total income of two
brothers for the A.Y. 2025-26 if they pay tax under the default tax regime u/s 115BAC.
Also, show the computation of income under this head, if they both exercised the option of shifting
out of the default tax regime provided u/s 115BAC(1A).
Answer
(i) If Arun and Bimal pay tax under the default tax regime u/s 115BAC Computation of total income
for the A.Y. 2025-26
Particulars Arun (`) Bimal(`)
Income from house property
I. Self-occupied portion (25%)
Annual value Nil Nil
Less: Deduction u/s 24(b) Nil Nil
Loss from self-occupied property Nil Nil
II. Let-out portion (75%) – See Working Note below
1,25,850 1,25,850
Income from house property 1,25,850 1,25,850
Other Income 2,90,000 1,80,000
Total Income 4,15,850 3,05,850
Working Note – Computation of Income from Let-Out Portion of House Property
Particulars ` `
Let-out portion (75%)
Gross Annual Value
(a) Municipal value (75% of ` 9 lakh) 6,75,000
(b) Actual rent [(` 12000 x 6 x 12) – (` 12,000 x 1 x 4)] 8,16,000
= ` 8,64,000 - ` 48,000
- whichever is higher 8,16,000
Less: Municipal taxes 75% of ` 1,80,000 (20% of ` 9 lakh) 1,35,000
Net Annual Value (NAV) 6,81,000

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Less: Deduction u/s 24
(a) 30% of NAV 2,04,300
(b) Interest on loan taken for the house [75% of ` 3 lakh] 2,25,000 4,29,300
Income from let-out portion of house property 2,51,700
Share of each co-owner (50%) 1,25,850
(ii) If Arun and Bimal have exercised the option of shifting out of the default tax regime provided u/s
115BAC(1A)
Computation of total income for the A.Y. 2025-26
Particulars Arun (`) Bimal(`)
Income from house property
I. Self-occupied portion (25%)
Annual value Nil Nil
Less: Deduction u/s 24(b)
Interest on loan taken for construction ` 37,500 (being 25% of ` 1.5 lakh)
[Allowable since they have exercised the option of shifting out of the
default tax regime provided u/s 115BAC(1A)]
37,500 37,500
Loss from self occupied property
II. Let-out portion (75%) – See Working Note above (37,500) (37,500)
Income from house property 1,25,850 1,25,850
Other Income 88,350 88,350
2,90,000 1,80,000
Total Income
3,78,350 2,68,350

Question 13 [Topics Covered : Capital Gain Slump Sale]

Mr. Aditya is a proprietor of Star Stores having 2 units. On 1.4.2024, he has transferred Unit 2, which he started
in 2004-05, by way of slump sale for a total consideration of ` 18 lakhs. The professional fees & brokerage
paid for this transfer are ` 78,000. His Balance Sheet as on 31-03-2024 is as under:
Liabilities ` Assets Unit 1 ` Unit 2 ` Total
Own Capital 20,50,000 Land 12,75,000 7,50,000 20,25,000
Revaluation reserve 2,50,000 Furniture 2,00,000 5,00,000 7,00,000
Bank Loan (70% for Unit 1) 8,50,000 Debtors 2,00,000 3,50,000 5,50,000
Trade Creditors (20% for Unit 2) 4,50,000 Patents - 7,25,000 7,25,000
Unsecured Loan
(30% for Unit 2) 4,00,000

40,00,000 16,75,000 23,25,000 40,00,000

Other Information:
1. Land of Unit 2 was purchased at ` 5,00,000 in the year 2004 and revalued at ` 7,50,000 as on 31.3.2024.
2. No individual value of any asset is considered in the transfer deed.
3. Patents were acquired on 01-12-2022 on which no depreciation has been provided.
4. Furniture of Unit 2 of ` 5,00,000 were purchased on 01-12-2023 on which no depreciation has been

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provided.
5. Fair market value of capital asset transferred by way of slump sale of Unit 2 is ` 18,10,000.
Compute the capital gain for A.Y. 2025-26.
Answer
As per section 50B, any profits and gains arising from the slump sale effected in the previous year shall be
chargeable to income-tax as capital gains arising from the transfer of capital assets and shall be deemed to be
the income of the previous year in which the transfer took place.
If the assessee owned and held the undertaking transferred under slump sale for more than 36 months before
slump sale, the capital gain shall be deemed to be long-term capital gain. Indexation benefit is not available in
case of slump sale as per section 50B(2).
Computation of capital gain on slump sale of Unit 2
Particulars `
Full value of consideration for slump sale of Unit 2 [Fair market value of capital asset 18,10,000
transferred by way of slump sale (i.e., ` 18,10,000) or fair market value of the consideration
received (value of the monetary consideration received i.e., ` 18,00,000) whichever is
higher]
Less: Expenses on sale [professional fees & brokerage] 78,000
Net full value of consideration 17,32,000
Less: Cost of acquisition, being the net worth of Unit 2 (Note 1) 13,35,781
Long term capital gains arising on slump sale 3,96,219
(The capital gains is long-term as the Unit 2 is held for more than 36 months)
Notes
1. Computation of net worth of Unit 2
Particulars `
(1) Book value of non-depreciable assets
(i) Land (Revaluation not to be considered) 5,00,000
(ii) Debtors 3,50,000
(2) Written down value of depreciable assets u/s 43(6)
(i) Furniture (See Note 2) 4,75,000
(ii) Patents (See Note 3) 4,75,781
Aggregate value of total assets 18,00,781
Less: Current liabilities of Unit 2
Bank Loan [` 8,50,000 x 30%] 2,55,000
Trade Creditors [` 4,50,000 x 20%] 90,000
Unsecured Loan [` 4,00,000 x 30%] 1,20,000 4,65,000
Net worth of unit 2 13,35,781
2. Written down value of furniture as on 1.4.2024
Value of patents `
Cost as on 1.12.2023 5,00,000
Less: Depreciation @ 10% x 50% for Financial Year 2023-24 25,000
WDV as on 1.4.2024 4,75,000

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3. Written down value of patents as on 1.4.2024
Value of patents `
Cost as on 1.12.2022 7,25,000
Less: Depreciation @ 25% x 50% for Financial Year 2022-23 90,625
WDV as on 1.4.2023 6,34,375
Less: Depreciation@25% for Financial Year 2023-24 1,58,594
WDV as on 1.4.2024 4,75,781

Question 14 [Topic Covered: Capital Gain]

Mr. Rajkumar bought a residential house for ` 5 crores in March 2016. He entered into an agreement
for sale of the said residential house with Ms. Nikita (not a relative) in September 2024 for ` 17 crores.
The sale proceeds were to be paid in the following manner:
(i) 10% through account payee bank draft on the date of agreement.
(ii) 80% on the date of the possession of the property.
(iii) Balance after the completion of the registration of the title of the property.
Ms. Nikita was handed over the possession of the property on 10.11.2024 and the registration
process was completed on 05.02.2025. She paid the sale proceeds as per the sale agreement. Value
of property for stamp duty in September 2024 was ` 19 crores. Subsequently, the State stamp
valuation authority had revised the values, hence, the value of property for stamp duty purposes was
` 20 crores on 05.02.2025. Mr. Rajkumar paid 1% as brokerage on sale consideration received.
Subsequent to sale, he purchased another residential house for ` 13 crores in Mumbai in March
2025.
You are required to compute the capital gains chargeable to tax in the hands of Mr. Rajkumar for A.Y.
2025-26. What would be the capital gain, if any, in A.Y. 2026-27 if Mr. Rajkumar transfers the new
residential house in December 2025 for ` 15 crores?
CII: 2015-16: 254; 2024-25: 363
Answer
Computation of capital gains of Mr. Rajkumar for A.Y. 2025-26
Particulars ` (in crores)
Actual sale consideration ` 17 crores
Value adopted by Stamp Valuation Authority ` 19 crores
[Where the actual sale consideration is less than the value adopted by the Stamp Valuation
Authority for the purpose of charging stamp duty, and such stamp duty value exceeds 110%
of the actual sale consideration, then, the value adopted by the Stamp Valuation Authority
19
shall be taken to be the full value of consideration as per section 50C.
However, where the date of agreement is different from the date of registration, stamp duty
value on the date of agreement can be considered provided the whole or part of the
consideration is received by way of account payee cheque/bank draft or by way of ECS
through bank account or through prescribed electronic modes on or before the date of
agreement.
In this case, since advance of ` 1.7 crores is received by account payee bank draft, stamp duty
value on the date of agreement can be adopted as the full value of consideration.
Gross Sale consideration (Stamp duty value on the date of agreement, since it exceeds 110%
of the actual consideration)

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Particulars ` (in crores)
Less: Brokerage @1% of sale consideration (1% of ` 17 crores) 0.17
Net Sale consideration 18.83
Less: Cost of acquisition 5.00
Long term capital gains 13.83
[Since the residential house property was held by Mr. Rajkumar for more than 24 months
immediately preceding the date of its transfer, the resultant gain is a long-term capital gain]
Less: Exemption u/s 54 10
Where long-term capital gains exceed ` 2 crore, the capital gain arising on transfer of a long-
term residential property shall not be chargeable to tax to the extent such capital gain is
invested in the purchase of one residential house property in India, one year before or two
years after the date of transfer of original asset. However, if the cost of new residential house
exceeds ` 10 crores, the amount exceeding ` 10 crore would not be taken into account for
exemption.
Therefore, in the present case, the exemption would be available in respect of the residential
house acquired in Mumbai and to the extent of ` 10 crores only.
Long term capital gains chargeable to tax
3.83
As per proviso to section 112, this case while calculating tax liability, assessee is required to pay
tax at 12.5% without indexation or 20% with indexation, whichever is lower.

Computation of capital gains of Mr. Rajkumar for A.Y. 2025-26

Particulars ` (in crores)
Sale consideration 15
Less: Cost of acquisition (-) capital gains exempt in A.Y. 2025-26 (` 13 – ` 10) 3
Short term capital gains chargeable to tax 12
Since the residential house property was held by Mr. Rajkumar for not more than 24 months
immediately preceding the date of its transfer]

Question 15 [Topic Covered: Capital Gain]

Mr. Gopal resident Individual acquired a house property for ` 7,00,000 during PY 1982-83 & paid
stamp duty ` 1,50,000 at the time of registration of property. He incurred following expenses for
improvement of property,
PY 96-97 - ` 3,50,000
PY 12-13 - ` 4,00,000
PY 23-24 - ` 3,50,000
FMV as on 01/04/2001 of such property is ` 18,20,000 & Stamp Duty Value on same date is
`16,00,000.
Mr. Gopal sold this property as on 10/12/2024 for ` 1,25,00,000.
Mr. Gopal’s income from other sources is ` 10,00,000. Compute Total Income and Tax liability.
Assume he opted out from section 115BAC.
Cost Inflation Index for F.Y. 2001-02: 100; F.Y. 2012-13: 200, F.Y. 2023-24: 348, F.Y. 2024-25: 363

CA Bhanwar Borana 35
Super 30 Questions for CA Inter MAY 25 Exams
Answer
Computation of taxable capital gains for the A.Y.2025-26
Particulars ` `
Sale consideration 1,25,00,000
Less: Expenses incurred for transfer -
1,25,00,000
Less: (i) Cost of acquisition
(a) Cost 8,50,000
(b) - FMV on 1/4/01 18.2 lakhs
- SDV on 1/4/01 16.0 lakhs 16,00,000 16,00,000
(ii) Cost of improvement (12-13) 4,00,000
(iii) Cost of improvement (23-24) 3,50,000 23,50,000
Long term capital gains 1,01,50,000
Computation of Total Income & Tax Liability for the A.Y.2025-26
Particulars ` `
LTCG u/s 112 1,01,50,000
Income from other sources 10,00,000
Net Taxable Income 1,11,50,000
Computation of Tax Liability
1. Tax on LTCG u/s 112 [Note-2]
(a) Tax @ 12.5% without Index [1,01,50,000 x 12.5%] 12,68,750
(b) Tax @ 20% with Index (note -1) [56,00,914 x 20%] 11,20,183 11,20,183
Whichever is lower
2. Tax on Balance Income
Upto 2,50,000 -
> 2,50,000 upto 5,00,000 5% 12,500
> 5,00,000 upto 10,00,000 20% 1,00,000 1,12,500
12,32,683
Add: Surcharge @15% since Total Income more than 1 crore 1,84,902
14,17,585
Add: Health & Education cess @4% 56,703
Net Tax Liability 14,74,289
i.e. 14,74,290
Note: 1
Particulars Amount `
Full Value of Consideration 1,25,00,000
Less: Transfer Expenses — NIL
Net Consideration 1,25,00,000
Less: Indexed Cost of Acquisition — (58,08,0000)

36 CA Bhanwar Borana
 Super 30 Questions for CA Inter MAY 25 Exams
Particulars Amount `
16,00,000 × 363 [F.Y. 2024-25]
100 [F.Y. 2001-02]
Less: Indexed Cost of Improvement
4,00,000 × 363 [F.Y. 2024-25]
200 [F.Y. 2012-13] (7,26,000)
3,50,000 × 363 [F.Y. 2024-25]
348 [F.Y. 2023-24] (3,65,086)
Long Term Capital Loss 56,00,914
Note: 2
If a Resident Individual or HUF transfers any immovable property acquired before 23rd July, 2024, and the tax
calculated on LTCG at the new rate (12.5% without indexation) is higher than the tax calculated at the old rate
(20% with indexation), then the excess tax is ignored. In other words, the assessee is required to pay tax at
12.5% without indexation or 20% with indexation, whichever is lower.

Question 16 [Topic Covered: IFOS & Capital Gain]

Mr. A, a dealer in shares, received the following without consideration during the P.Y. 2024-25 from
his friend Mr. B, -
(1) Cash gift of ` 75,000 on his anniversary, 15th April, 2024.
(2) Bullion, the fair market value of which was ` 60,000, on his birthday, 19th June, 2024.
(3) A plot of land at Faridabad on 1st July, 2024, the stamp value of which is ` 5 lakh on that date.
Mr. B had purchased the land in April, 2009.
Mr. A purchased from his friend Mr. C, who is also a dealer in shares, 1000 shares of X Ltd. @ ` 400
each on 19th June, 2024, the fair market value of which was ` 600 each on that date. Mr. A sold
these shares in the course of his business on 23rd June, 2024.
Further, on 1st November, 2024, Mr. A took possession of property (office building) booked by him
two years back at ` 20 lakh. The stamp duty value of the property as on 1st November, 2024 was `
32 lakh and on the date of booking was ` 23 lakh. He had paid ` 1 lakh by account payee cheque as
down payment on the date of booking.
On 1st March, 2025, he sold the plot of land at Faridabad for ` 7 lakh.
Compute the income of Mr. A chargeable under the head “Income from other sources” and “Capital
Gains” for A.Y. 2025-26.
Answer
Computation of “Income from other sources” of Mr. A for the A.Y. 2025-26
Particulars `
(1) Cash gift is taxable u/s 56(2)(x), since it exceeds ` 50,000 75,000
(2) Since bullion is included in the definition of property, therefore, when bullion is received 60,000
without consideration, the same is taxable, since the aggregate fair market value exceeds
` 50,000
(3) Stamp value of plot of land at Faridabad, received without consideration, is taxable u/s 5,00,000
56(2)(x)
(4) Difference of ` 2 lakh in the value of shares of X Ltd. purchased from Mr. C, a dealer in -
shares, is not taxable as it represents the stock-in-trade of Mr. A. Since Mr. A is a dealer
in shares and it has been mentioned that the shares were subsequently sold in the course
of his business, such shares represent the stock-in-trade of Mr. A.
CA Bhanwar Borana 37
Super 30 Questions for CA Inter MAY 25 Exams
(5) Difference between the stamp duty value of ` 23 lakh on the date of booking and the actual 3,00,000
consideration of ` 20 lakh paid is taxable u/s 56(2)(x) since the difference exceeds `
2,00,000, being the higher of ` 50,000 and 10% of consideration
Income from Other Sources 9,35,000

Computation of “Capital Gains” of Mr. A for the A.Y.2025-26

Particulars `
Sale Consideration 7,00,000
Less: Cost of acquisition [deemed to be the stamp value charged to tax u/s 56(2)(x) as per 5,00,000
section 49(4)]
Short-term capital gains 2,00,000
Note – The resultant capital gains will be short-term capital gains since for calculating the period of holding,
the period of holding of previous owner is not to be considered.

Question 17 [Topic Covered: IFOS LIP & Mix]

Mr. Akash (aged 47 years) is a CEO of BAC Enterprises (P) Ltd. During the P.Y.2024-25, he has earned the
following income -
- Salary of ` 45 lakhs
- Long-term capital gain on sale of listed equity shares on 10th June 2024 (STT paid) amounting to ` 6,54,000
- Dividend of ` 12,00,000 from shares of Indian companies
- Interest on saving bank account with SBI of ` 16,000
- Interest on fixed deposits with BOB of ` 45,000
Mr. Akash has made the following payments towards medical insurance premium for health policies taken for
his family members:
- Medical premium for his spouse aged 43 years: ` 13,500 (by cheque)
- Medical premium for his mother aged 65 years: ` 26,670 (by cheque)
- Preventive health check-up of ` 5,500 each for his wife and mother in cash.
Mr. Akash also incurred medical expenses, by credit card, of ` 17,000 for the treatment of his mother and of `
27,000 for his father who is 67 years old.
He has multiple life insurance policies. The details of such policies are given hereunder:
Particulars X Y Z A B
(Term insurance
policy)
Date of issue 1.4.2017 1.4.2023 1.4.2025 1.4.2024 1.3.2023
Annual premium (excluding ` 40,000 ` 3,00,000 ` 2,00,000 ` 2,50,000 ` 80,000
GST)
GST@18% ` 7,200 ` 54,000 ` 36,000 ` 45,000 14,400
Total premium ` 47,200 ` 3,54,000 ` 2,36,000 ` 2,95,000 ` 94,400
Date of maturity 31.3.2026 31.3.2032 31.3.2034 31.3.2033 28.3.2056
Consideration received on ` 7,00,000 ` 36,00,000 ` 28,00,000 ` 30,00,000 -
maturity (including bonus)
Sum assured ` 5,00,000 ` 33,00,000 ` 25,00,000 ` 27,00,000 ` 2,00,00,000

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 Super 30 Questions for CA Inter MAY 25 Exams
On the basis of the facts given above, choose the most appropriate answer to Q.1 to Q.5 below, based on the
provisions of the Income-tax Act, 1961 -
1. Which are the life insurance policies in respect of which Mr. Akash would be eligible for exemption u/s
10(10D) in respect of maturity proceeds? Choose the option most beneficial to Mr. Akash.
(a) X, Y and Z
(b) X and Y
(c) X, Z and A
(d) Y and Z
2. What would be your answer to MCQ 1, if Mr. Akash surrendered LIC A in A.Y. 2026-27 and claimed
exemption u/s 10(10D) in respect of such LIC? This information is only for the purpose of this MCQ.
(a) X, Y and Z
(b) X and Y
(c) X, Z and A
(d) Y and Z
3. What would be the amount of deduction available to Mr. Akash under Chapter VI-A for the A.Y. 2025-26
if he has exercised the option to shift out of the default tax regime?
(a) ` 82,170
(b) ` 78,500
(c) ` 2,28,500
(d) ` 2,32,170
4. What is Mr. Akash’s tax liability for A.Y.2025-26 under the default tax regime u/s 115BAC?
(a) ` 16,97,350
(b) ` 16,57,310
(c) ` 18,41,270
(d) ` 18,84,170
5. What is Mr. Akash’s tax liability for A.Y.2025-26 if he has exercised the option to shift out of the default
tax regime?
(a) ` 17,27,610
(b) ` 18,93,720
(c) ` 17,29,210
(d) ` 17,27,500
Answer
1. (a) 2. (c) 3. (c) 4. (b) 5. (a)

Question 18 [Topic Covered: Clubbing “Cross Gift”]

Mr. Karan gifted a sum of ` 9 lakhs to his brother’s minor son on 1-5-2024. On the same date, his
brother gifted debentures worth ` 10 lakhs to Mrs. Karan. Son of Mr. Karan’s brother invested the
amount in fixed deposit with Canara Bank @ 9% p.a. interest and Mrs. Karan received interest of `
81,000 on these debentures during the previous year 2024-25. Discuss the tax implications under
the provisions of the Income- tax Act, 1961.
Answer
In the given case, Mr. Karan gifted a sum of ` 9 lakhs to his brother’s minor son on 1.5.2024 and simultaneously,
his brother gifted debentures worth ` 10 lakhs to Mr. Karan’s wife on the same date. Mr. Karan’s brother’s
minor son invested the gifted amount of ` 9 lakhs in fixed deposit with Canara Bank.
These transfers are in the nature of cross transfers. Accordingly, the income from the assets transferred would
be assessed in the hands of the deemed transferor because the transfers are so intimately connected to form part

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Super 30 Questions for CA Inter MAY 25 Exams
of a single transaction and each transfer constitutes consideration for the other by being mutual or otherwise.
If two transactions are inter-connected and are part of the same transaction in such a way that it can be said that
the circuitous method was adopted as a device to evade tax, the implication of clubbing provisions would be
attracted.
As per section 64(1A), all income of a minor child is includible in the hands of the parent, whose total income,
before including minor’s income is higher. Accordingly, the interest income arising to Mr. Karan’s brother’s
son from fixed deposits would be included in the total income of Mr. Karan’s brother, assuming that Mr.
Karan’s brother’s total income is higher than his wife’s total income, before including minor’s income. Mr.
Karan’s brother can claim exemption of ` 1,500 u/s 10(32).
Interest on debentures arising in the hands of Mrs. Karan would be taxable in the hands of Mr. Karan as per
section 64(1)(iv).
This is because both Mr. Karan and his brother are the indirect transferors of the income to their spouse and
minor son, respectively, with an intention to reduce their burden of taxation.
In the hands of Mr. Karan, interest received by his spouse on debentures of ` 9 lakhs alone would be included
and not the entire interest income on the debentures of `10 lakhs, since the cross transfer is only to the extent
of ` 9 lakhs.
Hence, only proportional interest (i.e., 9/10th of interest on debentures received)` 72,900 would be includible
in the hands of Mr. Karan.
The provisions of section 56(2)(x) are not attracted in respect of sum of money transferred or value of
debentures transferred, since in both the cases, the transfer is from a relative.

Question 19 [Topics Covered : Clubbing of Income]

Details of Income of Mr. R and his wife Mrs. R for the previous year 2024-25 are as under:
(i) Mr. R transferred his self-occupied property without any consideration to the HUF of which he is
a member. During the previous year 2024-25 the HUF earned an income of ` 50,000 from such
property.
(ii) Mr. R transferred ` 4,00,000 to his wife Mrs. R on 01.04.2009 without any consideration which
was given as a loan by her to Mr. Girish. She earned ` 3,50,000 as interest during the earlier
previous years which was also given as a loan to Mr. Girish. During the previous year 2024-25,
she earned interest @ 11% per annum.
(iii) Mr. R and Mrs. R both hold equity shares of 27% and 25% respectively in AMG Limited. They
are also working as employees in such Company. During the financial year 2024-25 they have
withdrawn a salary of ` 3,20,000 and 2,70,000 respectively.
(iv) Mrs. R transferred 5,000 equity shares of RSB Ltd. on 17.09.2016 to Mr. R without any
consideration. The Company issued 3,000 bonus shares to Mr. R in 2019. On 04.03.2025, Mr.
R sold entire share holdings and earned ` 5,20,000 as capital gains.
Apart from above income, Mr. R has income from commission ` 4,00,000 and Mrs. R has interest
income of ` 3,30,000.
Compute Gross Total income of Mr. R and Mrs. R for the assessment year 2025-26. Assume they
have opted out from default taxation regime u/s 115BAC.
Answer
Computation of Gross Total Income of Mr. R and Mrs. R for A.Y. 2025-26

Particulars Mr. R Mrs. R

Amount (`)
I. Income from house property Income from property transferred to
HUF without consideration

40 CA Bhanwar Borana
 Super 30 Questions for CA Inter MAY 25 Exams
Particulars Mr. R Mrs. R
Amount (`)
Since Mr. R has transferred his property to his HUF without consideration,
income of ` 50,0001 from such property would be included in the total 50,000
income of Mr. R as per section 64(2).
II. Capital Gains
Income from equity shares transferred by Mrs. R to Mr. R without
consideration
Capital gains arising to Mr. R from transfer of equity shares of RSB Ltd. 3,25,000
gifted to him by Mrs. R would be included in the hands of Mrs. R [`
5,20,000 x 5,000/8,000]
Capital gains arising to Mr. R from transfer of bonus shares issued by RSB 1,95,000
Ltd. on the basis of holding of the said equity shares would be included in
the income of Mr. R and not Mrs. R, since income derived from accretion
of the transferred asset cannot be clubbed with the income of transferor of
the original asset i.e., Mrs. R [` 5,20,000 x 3,000/8,000]3
III Income from Other Sources
Income from commission 4,00,000
Interest income 3,30,000
Interest income on ` 4 lakh transferred by Mr. R to Mrs. R without
consideration
Income of ` 44,000, i.e., 11% of `4,00,000, being the amount transferred 44,000
by Mr. R to Mrs. R without any consideration and loaned by her to Mr.
Girish, would be included in the income of Mr. R
Income of ` 38,500 i.e., 11% of ` 3,50,000, being the interest earned by 38,500
Mrs. R out of amount gifted by Mr. R and thereafter, given by her as loan
to Mr. Girish, would be included in the income of Mrs. R, as income
derived by Mrs. R from accretion of the amount gifted by Mr. R (i.e.,
interest income) cannot be included in the income of Mr. R.
Total income [before considering adjustment on account of item (iii) i.e., 6,89,000 6,93,500
salary income from a company in which both Mr. R and Mrs. R have
substantial interest]
IV. Salary income from a company in which both Mr. R and Mrs. R have
substantial interest
Since both Mr. R and Mrs. R have substantial interest in AMG Ltd. (on
account of holding equity shares carrying 20% or more of voting power)
and both are in receipt of income by way of salary from AMG Ltd., such
salary income would be includible in the hands of that spouse, whose
total income, before including such salary income, is higher.
Accordingly, the salary income of both Mr. R and Mrs. R would be
included in the hands of Mrs. R in this case, since her total income, before
including such income, is higher than that of Mr. R.
Salary income of Mr. R = ` 3,20,000 – ` 50,000 (standard deduction) 2,70,000

1 Assumed as computed figure.

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Super 30 Questions for CA Inter MAY 25 Exams
Particulars Mr. R Mrs. R
Amount (`)
Salary income of Mrs. R = ` 2,70,000 – ` 50,000 (standard deduction) 2,20,000
Gross Total Income 6,89,000 11,83,500

Question 20 [Topics Covered : Clubbing of Income]

Mr. Samrat and his wife, Mrs. Komal, holds 12% voting power each in ABC (P) Ltd. Mr. Samrat and Mrs.
Komal are working in ABC (P) Ltd. However, Mrs. Komal is not qualified for the job. From the following
information given in respect of F.Y. 2024-25, you are required to compute the gross total income of Mr. Samrat
and Mrs. Komal for the A.Y. 2025-26 as per default taxation regime of section 115BAC.
(i) Dividend of ` 22,500 and ` 45,000 is received by Mr. Samrat and Mrs. Komal, respectively, from ABC
(P) Ltd. Mr. Samrat has instructed the company to pay 50% of his dividend to Ms. Kajal, daughter of his
deceased brother.
(ii) Salary earned by Mr. Samrat and Mrs. Komal from ABC (P) Ltd. is ` 8,75,000 and ` 5,75,000,
respectively.
(iii) Business income earned by Mr. Samrat from his sole proprietary business is ` 15,60,000
(iv) Interest on fixed deposit earned by Mrs. Komal of ` 9,00,000.
(v) Their son, Akash, aged 10 years having PAN, received interest of ` 54,000 from bank on a fixed deposit
created by his grandfather in his name.

Answer
Computation of Gross Total Income of Mr. Samrat and Mrs. Komal for A.Y. 2025-26
Particulars Mr. Samrat Mrs. Komal
` ` ` `
Salary of Samrat 8,75,000 -
Less: Standard deduction u/s 16(ia) -
Salary of Komal 75,000 8,00,000
Less: Standard deduction u/s 16(ia) 5,75,000 -
[Salary earned by Mrs. Komal has to be included 75,000 5,00,000 -
in the total income of Mr. Samrat, since he has
substantial interest in the concern (i.e., having
24% voting power in ABC (P) Ltd., along with
his wife) and Mrs. Komal does not have any
professional qualification for the job.]
Business Income
Dividend income from ABC (P) Ltd. [Taxable
in the hands of Mr. Samrat as per section 60,
since he transferred the income i.e., dividend
15,60,000 -
without transferring the asset i.e., shares]
50,000 50,000
Interest on Fixed Deposit earned by Mrs. Komal [22,500/90 x [45,000/90
Total Income (before including minor’s 100 x 2]
income) x 100]
Income of minor child to be included in Mr.
Samrat’s income, since his total income before

42 CA Bhanwar Borana
 Super 30 Questions for CA Inter MAY 25 Exams
Particulars Mr. Samrat Mrs. Komal
` ` ` `
including minor’s income is higher than that of
Mrs. Komal. [` 54,000/90 x 100] - 9,00,000
[Exemption of ` 1,500 u/s 10(32) in respect of 60,000 29,10,000 9,50,000
the income of each child so included not 60,000
-
available under 115BAC]
Gross Total Income 29,70,000 9,50,000

Question 21 [Topic Covered: Set-off & C/F]

Mr. Mayank, a resident individual, furnished the following information in respect of income earned and losses
incurred by him for the F.Y. 2024-25
Particulars Amount (`)
Income from Salary (Computed) 27,40,000
Long term capital loss on sale of shares of Reliance Ltd. STT has been paid both at (1,25,000)
the time of acquisition and sale
Income from let out property in Kanpur 5,50,000
Loss from let out property in Delhi (3,75,000)
Interest on self-acquired property in Mumbai (1,50,000)
Net winnings from online games (Net of TDS) 35,000
Profit and gains from manufacturing business (after deducting normal depreciation 36,86,000
of ` 2,00,000 and additional depreciation of ` 50,000)

The other details of losses and unabsorbed depreciation pertaining to A.Y. 2024-25 are as follows:
Particulars Amount
Business loss from manufacturing business (5,35,000)
Unabsorbed normal depreciation (2,10,000)
Loss from the activity of owning and maintaining the race horses (1,50,000)
Loss from let out property in Delhi (2,10,000)
Mr. Mayank filed his return of income for A.Y. 2024-25 on 28.7.2024 and opted for section 115BAC. Compute
the Gross total income of Mr. Mayank for the A.Y. 2025-26 and the amount of loss, if any, that can be carried
forward if he wants to continue with the provisions u/s 115BAC.
Answer
Computation of gross total income of Mr. Mayank for A.Y. 2025-26
Particulars Amount (`) Amount (`)
Income from Salary (Computed) 27,40,000
Income from house property
Income from let out property in Kanpur 5,50,000
Less: Set off of loss from let out property in Delhi (3,75,000)

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Super 30 Questions for CA Inter MAY 25 Exams
Particulars Amount (`) Amount (`)
Less: Interest u/s 24(b) is not allowed in case of self-occupied property -
since Mr. Mayank is paying tax u/s 115BAC]
Less: Loss from let out property in Delhi of A.Y. 2024-25 cannot be -
set off against income from house property of A.Y. 2025-26 since Mr.
Mayank has paid tax u/s 115BAC during the A.Y. 2024-25 and no
deduction in respect of loss of house property of that year will be
allowed in any subsequent year. 1,75,000

Profits and gains from business or profession

Profits from manufacturing business 36,86,000
Add: Additional depreciation not allowable in case of section 115BAC 50,000
37,36,000
Less: Brought forward business loss of A.Y. 2024-25 (5,35,000)
Less: Unabsorbed normal depreciation (2,10,000)
Capital Gains 29,91,000
Long term capital loss on sale of shares of Reliance Ltd. on which STT (1,25,000)
has been paid can be set off only against long term capital gains.
Hence, it has to be carried forward -
Income from Other Sources
Net winnings from online games [` 35,000/70%]

50,000
Gross Total Income 59,56,000

Losses to be carried forward to A.Y. 2026-27

Particulars Amount
(`)
Brought forward loss from the activity of owning and maintaining the race horses of A.Y. 1,50,000
2023-24 can be set off only against the income from the activity of owning and
maintaining race horses. Hence, it has to be carried forward.
Long term capital loss on sale of shares of Reliance Ltd. on which STT has been paid 1,25,000

Question 22 [Topic Covered: TDS & TCS]

Kishore & Sons is a dealer of coal. Its turnover for the F.Y. 2023-24 was ` 12 crores. The State Government of
Hyderabad granted a lease of coal mine to Kishore & Sons on 1.5.2024 and charged ` 11 crores for the lease.
Kishore & Sons sold coal of ` 95 lakhs to M/s BAC Co. during the P.Y. 2024-25. M/s XYZ Ltd. purchased
coal of ` 55 lakhs from Kishore & Sons for trading purpose in July 2024. Turnover of M/s XYZ Ltd. during
the P.Y. 2023-24 was ` 12 crores. PAN is duly furnished by the buyer and seller to each other. Details of sale
to and payments from M/s BAC Co. by Kishore & Sons are as follows:
S. No. Date of sale Date of receipt/ Payment Amount (`)
1 29.05.2024 10.05.2024 35,00,000
2 30.06.2024 10.07.2024 25,00,000

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 Super 30 Questions for CA Inter MAY 25 Exams
3 25.11.2024 25.10.2024 8,00,000
4 20.01.2025 22.01.2025 15,00,000
5 01.03.2025 15.02.2025 12,00,000
Turnover of M/s BAC Co. during the P.Y. 2023-24 was ` 11 crores. The above amounts were credited to
Kishore & Sons account in the books of M/s BAC Co. on the date of sale. M/s BAC Co. furnishes a declaration
to Kishore & Sons that coal is to be utilised for generation of power.
Based on the above facts, choose the most appropriate answer to Q. No. 1 to 5 –
1. Who is required to deduct/collect tax at source in respect of lease of coal mine by the State Government of
Hyderabad to Kishore & Sons and at what rate?
(a) State Government of Hyderabad is liable to collect tax at source @ 2% on ` 11 crores
(b) State Government of Hyderabad is liable to collect tax at source @0.1% on ` 10.50 crores, being the
amount exceeding ` 50 lakhs
(c) Kishore & Sons is liable to deduct tax at source @0.1% on ` 10.50 crores, being the amount exceeding
` 50 lakhs
(d) Neither State Government of Hyderabad is liable to collect tax at source nor Kishore & Sons is liable
to deduct tax at source
2. Is Kishore & Sons required to collect tax at source in respect of the sale transactions with M/s BAC Co. If
yes, when and what is the amount of tax to be collected?
(a) Yes; ` 1,000 on 30.6.2024, ` 800 on 25.10.2024, ` 1,500 on 20.1.2025 and ` 1,200 on 15.2.2025
(b) Yes; ` 35,000 on 10.5.2024, ` 25,000 on 30.6.2024, ` 8,000 on 25.10.2024, ` 15,000 on 20.1.2025 and
` 12,000 on 15.2.2025
(c) Yes; ` 1,000 on 10.7.2024, ` 800 on 25.10.2024, ` 1,500 on 22.1.2025 and ` 1,200 on 15.2.2025
(d) No, Kishore & Sons is not liable to collect tax at source
3. Is Kishore & Sons required to collect tax at source in respect of the sale transaction with M/s XYZ Ltd. If
yes, what is the amount of tax to be collected?
(a) Yes; ` 55,000
(b) Yes; ` 5,500
(c) Yes; ` 500
(d) No, Kishore & Sons is not liable to collect tax at source
4. Is M/s BAC Co. required to deduct tax at source in respect of the purchase transactions with Kishore &
Sons. If yes, when and what is the amount of tax to be deducted?
(a) Yes; ` 1,000 on 30.6.2024, ` 800 on 25.10.2024, ` 1,500 on 20.1.2025 and ` 1,200 on 15.2.2025
(b) Yes; ` 3,500 on 10.5.2024, ` 2,500 on 30.6.2024, ` 800 on 25.10.2024, ` 1,500 on 20.1.2025 and `
1,200 on 15.2.2025
(c) Yes; ` 1,000 on 10.7.2024, ` 800 on 25.10.2024, ` 1,500 on 22.1.2025 and ` 1,200 on 15.2.2025
(d) No, M/s BAC Co. is not liable to deduct tax at source
5. Assume for the purpose of this MCQ, M/s BAC Co.’s turnover for the F.Y. 2023-24 was ` 9 crore, who
will be required to deduct/ collect tax at source in respect of transactions between Kishore & Sons and M/s
BAC Co. and at what rate?
(a) Kishore & Sons is liable to collect tax at source @1% of ` 95 lakhs
(b) Kishore & Sons is liable to collect tax at source @0.1% of ` 45 lakhs, being the sum exceeding ` 50
lakhs
(c) M/s BAC Co. is liable to deduct tax at source @0.1% of ` 45 lakhs, being the sum exceeding ` 50 lakhs
(d) Neither Kishore & Sons is liable to collect tax at source nor M/s BAC Co. is liable to deduct tax at
source
Answer

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1. (a) 2. (d) 3. (a) 4. (a) 5. (d)

Question 23 [Topic Covered: TDS & TCS]

Examine the TDS/TCS implications in the cases mentioned hereunder–
(i) On 1.6.2024, Mr. Ganesh made three nine months fixed deposits of ` 3 lakh each, carrying interest@9%
p.a. with Dwarka Branch, Janakpuri Branch and Rohini Branch of XYZ Bank, a bank which has adopted
CBS. The fixed deposits mature on 28.2.2025.
(ii) On 1.10.2024, Mr. Rajesh started a six months recurring deposit of ` 2,00,000 per month@8% p.a. with
PQR Bank. The recurring deposit matures on 31.3.2025
(iii) Mr. X, a resident, is due to receive ` 4.50 lakhs on 31.3.2025, towards maturity proceeds of LIC policy
taken on 1.4.2022, for which the sum assured is ` 4 lakhs and the annual premium is ` 1,25,000.
(iv) Mr. Y, a resident, is due to receive ` 3.95 lakhs on 31.3.2025 on LIC policy taken on 31.3.2012, for
which the sum assured is ` 3.50 lakhs and the annual premium is ` 30,100.
(v) Mr. Z, a resident, is due to receive ` 95,000 on 1.8.2024 towards maturity proceeds of LIC policy taken
on 1.8.2018 for which the sum assured is ` 90,000 and the annual premium was ` 10,000.
(vi) Mr. X, a salaried individual, pays rent of ` 55,000 per month to Mr. Y from June, 2024 for immovable
property. Is he required to deduct tax at source? If so, when is he required to deduct tax? Also, compute
the amount of tax to be deducted at source.
Would your answer change if Mr. X vacated the premises on 31st December, 2024? Also, what would
be your answer if Mr. Y does not provide his PAN to Mr. X?
(vii) XYZ Ltd. makes a payment of ` 28,000 to Mr. Ganesh on 2.8.2024 towards fees for professional services
and another payment of ` 25,000 to him on the same date towards fees for technical services. Discuss
whether TDS provisions u/s 194J are attracted.
(viii) Payment of ` 2,00,000 to Mr. R by S Ltd., a transporter who owns 8 goods carriages throughout the
previous year and furnishes a declaration to this effect alongwith his PAN.
(ix) ABC and Co. Ltd. paid ` 19,000 to one of its directors as sitting fees on 01-01-2025.
(x) Fee paid on 1.12.2024 to Dr. Srivatsan by Sundar (HUF) ` 35,000 for surgery performed on a member
of the family.
(xi) ` 2,00,000 paid to Mr. A, a resident individual, on 22-02-2025 by the State of Uttar Pradesh on
compulsory acquisition of his urban land.
(xii) Mr. Rohit transferred a residential house property to Mr. Arun for ` 45 lacs. The stamp duty value of
such property is ` 55 lacs.
(xiii) Rashi Limited is engaged by Jigar Limited for the sole purpose of business of operation of call centre.
On 18-03-2025, the total amount credited by Jigar Limited in the ledger account of Rashi Limited is `
70,000 regarding service charges of call centre. The amount is paid through cheque on 28-03-2025 by
Jigar Limited.
(xiv) Ms. Mohit won a lucky draw prize of ` 21,000. The lucky draw was organized by M/s. Maximus Retail
Ltd. for its customer.

Answer
(i) XYZ Bank has to deduct tax at source@10% u/s 194A, since the aggregate interest on fixed deposit with
the three branches of the bank is ` 60,750 [3,00,000 × 3 × 9% × 9/12], which exceeds the threshold limit
of ` 40,000. Since XYZ Bank has adopted CBS, the aggregate interest credited/paid by all branches has
to be considered. Since the aggregate interest of ` 60,750 exceeds the threshold limit of ` 40,000, tax has
to be deducted@10% u/s 194A.
(ii) No tax has to be deducted u/s 194A by PQR Bank on the interest of ` 28,000 falling due on recurring
deposit on 31.3.2025 to Mr. Rajesh, since such interest does not exceed the threshold limit of ` 40,000.

46 CA Bhanwar Borana
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(iii) Since the annual premium exceeds 10% of sum assured in respect of a policy taken after 31.3.2012, the
maturity proceeds of ` 4.50 lakhs due on 31.3.2025 are not exempt u/s 10(10D) in the hands of Mr. X.
Therefore, tax is required to be deducted@2% u/s 194DA on the amount of income comprised therein
i.e., on ` 75,000 (` 4,50,000, being maturity proceeds - ` 3,75,000, being the aggregate amount of
insurance premium paid).
(iv) Since the annual premium is less than 20% of sum assured in respect of a policy taken before 1.4.2012,
the sum of ` 3.95 lakhs due to Mr. Y would be exempt u/s 10(10D) in his hands. Hence, no tax is required
to be deducted at source u/s 194DA on such sum payable to Mr. Y.
(v) Even though the annual premium exceeds 10% of sum assured in respect of a policy taken after 31.3.2012,
and consequently, the maturity proceeds of ` 95,000 due on 1.8.2024 would not be exempt u/s 10(10D)
in the hands of Mr. Z, the tax deduction provisions u/s 194DA are not attracted since the maturity proceeds
are less than ` 1 lakh.
(vi) Since Mr. X pays rent exceeding ` 50,000 per month in the F.Y. 2024-25, he is liable to deduct tax at
source @2% of such rent for F.Y. 2024-25 u/s 194-IB. Thus, ` 11,000 [` 55,000 x 2% x 10] has to be
deducted from rent payable for March, 2025.
If Mr. X vacated the premises in December, 2024, then tax of ` 7,700 [` 55,000 x 2% x 7] has to be
deducted from rent payable for December, 2024.
In case Mr. Y does not provide his PAN to Mr. X, tax would be deductible@20%, instead of 2%.
In case 1 above, this would amount to ` 1,10,000 [` 55,000 x 20% x 10], but the same has to be restricted
to ` 55,000, being rent for March, 2025.
In case 2 above, this would amount to ` 77,000 [` 55,000 x 20% x 7], but the same has to be restricted to
` 55,000, being rent for December, 2024.
(vii) TDS provisions u/s 194J would not get attracted, since the limit of ` 30,000 is applicable for fees for
professional services and fees for technical services, separately. It is assumed that there is no other
payment to Mr. Ganesh towards fees for professional services and fees for technical services during the
P.Y.2024-25
(viii) No tax is required to be deducted at source u/s 194C by M/s S Ltd. on payment to transporter Mr. R, since
he satisfies the following conditions:
-He owns ten or less goods carriages at any time during the previous year.
-He is engaged in the business of plying, hiring or leasing goods carriages;
-He has furnished a declaration to this effect along with his PAN.
(ix) Section 194J provides for deduction of tax at source @10% from any sum paid by way of any
remuneration or fees or commission, by whatever name called, to a resident director, which is not in the
nature of salary on which tax is deductible u/s 192. The threshold limit of ` 30,000 upto which the
provisions of tax deduction at source are not attracted in respect of every other payment covered u/s 194J
is, however, not applicable in respect of sum paid to a director.
Therefore, tax@10% has to be deducted at source u/s 194J in respect of the sum of ` 19,000 paid by ABC
Ltd. to its director.
Therefore, the amount of tax to be deducted at source: = ` 19,000 x 10% = ` 1,900
(x) As per the provisions of section 194J, a Hindu Undivided Family is required to deduct tax at source on
fees paid for professional services only if the total sales, gross receipts or turnover form the business or
profession exceed ` 1 crore in case of business or ` 50 lakhs in case of profession, as the case may be, in
the financial year preceding the current financial year and such payment made for professional services
is not exclusively for the personal purpose of any member of Hindu Undivided Family.
Section 194M, provides for deduction of tax at source by a HUF (which is not required to deduct tax at
source u/s 194J) in respect of fees for professional service if such sum or aggregate of such sum exceeds
` 50 lakhs during the financial year.
In the given case, the fees for professional service to Dr. Srivatsan is paid on 1.12.2024 for a personal
purpose, therefore, section 194J is not attracted. Section 194M would have been attracted, if the payment

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Super 30 Questions for CA Inter MAY 25 Exams
or aggregate of payments exceeded ` 50 lakhs in the P.Y.2024-25. However, since the payment does not
exceed ` 50 lakh in this case, there is no liability to deduct tax at source u/s 194M also.
(xi) As per section 194LA, any person responsible for payment to a resident, any sum in the nature of
compensation or consideration on account of compulsory acquisition under any law, of any immovable
property, is required to deduct tax at source, if such payment or the aggregate amount of such payments
to the resident during the financial year exceeds ` 2,50,000.
In the given case, there is no liability to deduct tax at source as the payment made to Mr. A does not
exceed ` 2,50,000.
(xii) On payment of sale consideration for purchase of residential house property – As per section 194-IA if
consideration or SDV is 50 lakhs or more then TDS @1% applicable on consideration or SDV whichever
is higher. Mr. Arun is required to deduct tax at source u/s 194-IA on 55 lakhs i.e., 55,000.
(xiii) On payment of call centre service charges - Since Rashi Limited is engaged only in the business of
operation of call centre, Jigar Limited is required deduct tax at source@2% on the amount of ` 70,000 u/s
194J on 18.3.2025 i.e., at the time of credit of call centre service charges to the account of Rashi Limited,
since the said date is earlier than the payment date i.e., 28.3.2025.
(xiv) On payment of prize winnings of ` 21,000 -Tax is deductible @ 30% u/s 194B by M/s. Maximus Retail
Ltd.., from the prize money of ` 21,000 payable to the customer, since the winnings exceed ` 10,000.

Question 24 [Topic Covered: Return Filing]

Examine whether the following persons are required to file return of income for A.Y.2025-26, giving brief
reasons for your answer –
(i) Mr. Albert, aged 31 years, whose turnover from business is ` 70 lakhs for the P.Y.2024-25 and
whose total income computed as per books of account is ` 2 lakhs. This is the first year of his
business. He has no other income. He is not claiming any deduction under Chapter VI-A or section
10AA.
(ii) Mr. Ashish, aged 42 years, has gross receipts of ` 5 lakhs from profession and profits and gains of
` 2.50 lakhs (computed) from profession for the P.Y. 2024-25. In addition, he has interest of ` 4
lakhs on fixed deposits and ` 50,000 from savings bank account.
(iii) M/s. ABC & Co., a law firm, whose gross receipts from profession for the P.Y.2024-25 is ` 9 lakhs.
(iv) XYZ (P) Ltd. which has incurred expenditure of an amount of ` 95,000 towards consumption of
electricity in the F.Y.2024-25.
(v) Mr. Vallish, aged 58 years, who has deposited ` 50 lakhs in his savings bank account with SBI on
28th March, 2025. The said sum was received as a gift from his son, Mr. Rishi, aged 30 years, who
is employed in a company. Mr. Vallish used the said sum to purchase a flat for ` 30 lakhs on 25th
April, 2025 for self-residence. The balance money was transferred to a 1-year fixed deposit on 28th
April, 2025. Mr. Vallish does not maintain any other bank account. He is not in receipt of any other
source of income other than interest on this fixed deposit.
(vi) Mr. Ravi Prakash, a resident Indian aged 52 years, gifted a sum of ` 30 lakhs to his wife Mrs. Sudha
on the occasion of her 50th birthday. Out of the said sum, Mrs. Sudha purchased a car for ` 29,52,000
inclusive of RTO charges of ` 2,15,000, insurance of ` 51,575, extended warranty of ` 25,255 and
accessories charges of ` 35,460 during the P.Y. 2024-25. These charges were shown separately in
the invoice. Mrs. Sudha’s furnished her Aadhaar No. to the dealer. She is a housewife and does not
have any income except rental income of ` 25,000 p.m. in respect of a house property gifted to her
by her father.
Mr. Ravi Prakash is of the opinion that his wife is not required to furnish return of income, since
her total income does not exceed the basic exemption limit. Examine.
Answer

48 CA Bhanwar Borana
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Requirement of filing return of income
(i) Yes, Mr. Albert is required to file his return of income for A.Y.2025-26.
As per section 139(1)(b), an individual is required to file his return if his total income, without giving
effect to deductions under, inter alia, Chapter VI-A and section 10AA, exceeds the basic exemption
limit. In this case, Mr. Albert’s total income of ` 2,00,000 is lower than the basic exemption limit of
` 2,50,000 or ` 3,00,000. However, such person referred to in section 139(1)(b) who is not required
to file his return on account of his total income being lower than the basic exemption limit would be
required to file return of income if, inter alia, his turnover in business exceeds ` 60 lakhs. In this case,
since Mr. Albert’s turnover from business for the P.Y.2024-25 is ` 70 lakhs, he has to file return of
his income for A.Y.2025-26.
(ii) Yes, Mr. Ashish is required to file his return of income for A.Y.2025-26.
Mr. Ashish’s total income for A.Y.2025-26 without giving effect to Chapter VI-A deductions is ` 7
lakhs [` 2.50 lakhs from profession + ` 4 lakhs interest on fixed deposits + ` 0.50 lakhs interest on
savings bank account], which exceeds the basic exemption limit of ` 2,50,000. Hence, he is required
to file his return of income for A.Y.2025-26 as per section 139(1)(b).
Note - The threshold limit of ` 10 lakhs for gross receipts in profession has to be looked into only in
a case where an individual referred to in section 139(1)(b) is not required to file his return of income
thereunder i.e., only if Ashish’s total income without giving effect to Chapter VI-A deductions is lower
than the basic exemption limit.
(iii) Yes, M/s. ABC & Co. is required to file its return of income for A.Y.2025-26.
As per section 139(1)(a), a firm is compulsorily required to file its return of income. The threshold
limit of ` 10 lakhs for gross receipts in profession is relevant only for a person other than a company
or a firm.
(iv) Yes, XYZ (P) Ltd. is required to file its return of income for A.Y.2025-26.
As per section 139(1)(a), a company has to mandatorily file its return of income. The condition of
filing of return of income where expenditure towards consumption of electricity exceeds ` 1 lakh
applies to a person other than a company or a firm.
(v) Yes, Mr. Vallish is required to file his return of income for A.Y.2025-26.
Gift of ` 50 lakhs received from son is not taxable u/s 56(2)(x) in the hands of Mr. Vallish, since his
son is his relative, and gifts from a relative are excluded from the applicability of section 56(2)(x).
The only income of Mr. Vallish for the P.Y.2024-25 would be interest on savings account for a period
of 4 days from 28th March, 2025 to 31st March, 2025 on ` 50 lakhs, which would be lower than the
basic exemption limit. As per section 139(1)(b), an individual is required to file his return if his total
income exceeds the basic exemption limit. In this case, Mr. Vallish’s total income is lower than the
basic exemption limit of ` 2,50,000 or ` 3,00,000.
However, such person referred to in section 139(1)(b) who is not required to file his return on account
of his total income being lower than the basic exemption limit would be required to file return of
income if, inter alia, the deposit in his savings account is ` 50 lakhs or more during the previous year.
Since a deposit of ` 50 lakhs has been made in the savings account of Mr. Vallish in the P.Y.2024-25,
he is required to file his return of income for A.Y.2025-26.
(vi) Mrs. Sudha’s income from house property would be ` 2,10,000 (` 3,00,000 less 30% of net annual
value). Since this is her only source of income, her gross total income/total income for A.Y.2025-26
would be ` 2,10,000, which is lower than the basic exemption limit. Hence, she is not required file
her return of income for A.Y.2025-26 as per section 139(1)(b), since her gross total income/total
income does not exceed the basic exemption limit of ` 2,50,000.
However, proviso of section 139(1) provides that a person (other than a company or a firm) who is
not required to furnish a return u/s 139(1) has to furnish return on or before the due date if he/she
fulfills such other conditions as may be prescribed under Rule 12AB.

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Super 30 Questions for CA Inter MAY 25 Exams
Rule 12AB, inter alia, prescribes that any person other than a company or a firm, who is not required
to furnish a return u/s 139(1), has to file income-tax return in the prescribed form and manner on or
before the due date if, the aggregate of tax deducted at source and tax collected at source during the
previous year, in case of such person, is ` 25,000 or more.
Accordingly, it has to be examined whether, in Mrs. Sudha’s case, the requirement to file return for
A.Y.2025-26 arises due to TDS/TCS, in her case, exceeding ` 25,000 in the P.Y.2025-26.
As per section 206C(1F), every person, being a seller, who receives any amount as consideration for
sale of a motor vehicle of the value exceeding ` 10 lakhs, has to collect tax from the buyer @1% of
the sale consideration.
Accordingly, dealer of the car is required to collect tax at source of ` 26,247 @1% on ex-showroom
price i.e., ` 26,24,710 (` 29,52,000 – ` 2,15,000 – ` 51,575 – ` 25,255 – ` 35,460) from Mrs. Sudha,
being the buyer of the car.
Hence, as per the seventh proviso to section 139(1) read with Rule 12AB, Mrs. Sudha is required to
mandatorily file her return of income for A.Y.2025-26, even though her gross total income/total
income does not exceed the basic exemption limit, since tax collected at source during the P.Y. 2024
25, in her case is ` 26,247 which exceeds the threshold of ` 25,000.

Question 25 [Topic Covered: Return Filing]

(i) Mr. Sudarshan, due to inadvertent reasons, failed to file his Income-tax return for the assessment year
2025-26 on or before the due date of filing such return of income.
(a) Can he file the above return after due date of filing return of income? If yes, which is the last date for
filing the above return?
(b) What are the consequences of non-filing the return within the due date u/s 139(1)?
(ii) To whom the provisions of section 139AA relating to quoting of Aadhar Number do not apply?
(iii) Mrs. Hetal, an individual engaged in the business of Beauty Parlour, has got her books of account for the
financial year ended on 31st March, 2025 audited u/s 44AB. Her total income for the assessment year
2025-26 is ` 6,35,000. She wants to furnish her return of income for assessment year 2025-26 through a
tax return preparer. Can she do so?
Answer
(i) If any person fails to furnish a return within the time allowed to him u/s 139(1), he may furnish the belated
return for any previous year at any time -
(a) 3 months prior to the end of the relevant assessment year; or
(b) before the completion of the assessment,
whichever is earlier.
The last date for filing return of income for A.Y.2025-26, therefore, is 31st December 2025. Thereafter,
Mr. Sudarshan cannot furnish a belated return after this date.
Consequences for non-filing return of Income within the due date u/s 139(1)
Carry forward and set-off of certain losses: Business loss, speculation business loss, loss from specified
business u/s 35AD, loss under the head “Capital Gains”; and loss from the activity of owning and
maintaining race horses, would not be allowed to be carried forward for set-off against income of
subsequent years, where a return of income is not furnished within the time allowed u/s 139(1).
Interest u/s 234A: Interest u/s 234A@1% per month or part of the month for the period commencing from
the date immediately following the due date u/s 139(1) till the date of furnishing of return of income is
payable, where the return of income is furnished after the due date.
Fee u/s 234F: Fee of ` 5,000 would be payable u/s 234F, if the return of income is not filed on or before
the due date specified in section 139(1). However, such fee cannot exceed ` 1,000, if the total income does
not exceed` 5,00,000.
(ii) Persons to whom provisions of section 139AA relating to quoting of Aadhar Number does not apply

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The provisions of section 139AA relating to quoting of Aadhar Number would not apply to an individual
who does not possess the Aadhar number and is:
(i) residing in the States of Assam, Jammu & Kashmir and Meghalaya;
(ii) a non-resident as per Income-tax Act, 1961;
(iii) of the age of 80 years or more at any time during the previous year;
(iv) not a citizen of India
(iii) Section 139B provides a scheme for submission of return of income for any assessment year through a
Tax Return Preparer. However, it is not applicable to persons whose books of account are required to be
audited u/s 44AB. Therefore, Mrs. Hetal cannot furnish her return of income for A.Y.2024-25 through a
Tax Return Preparer.

Question 26 [Topic Covered: Residential Status, PAN & Adv Tax]

(a) Mr. Thomas, a citizen of Japan, comes to India for the first time during the P.Y. 2020-21. During the
financial years 2020-21, 2021-22, 2022-23, 2023-24 and 2024-25, he was in India for 50 days, 65 days, 95
days, 150 days and 75 days, respectively. Determine his residential status for the A.Y. 2025-26. Examine
the tax implications in the hands of Mr. Thomas for the Assessment Year 2025-26 of the following
transactions entered by him.
(1) Interest received from Mr. Michel, a non-resident outside India (The borrowed fund is used by Mr.
Michel for investing in Indian company's debt fund for earning interest).
(2) He is also engaged in the business of running news agency and earned income of ` 5 lakhs from
collection of news and views in India for transmission outside India.
(3) He entered into an agreement with ABC & Co., a partnership firm for transfer of technical documents
and design and for providing services relating thereto, to set up a Steel manufacturing plant, in India.
He charged ` 15 lakhs for these services from ABC & Co.
(b) Mr. Naksh has undertaken certain transactions during the F.Y.2024-25, which are listed below. You are
required to identify the transactions in respect of which quoting of PAN is mandatory in the related
documents –
S. No. Transaction
1. Payment of life insurance premium of ` 40,000 in the F.Y.2024-25 by account payee cheque
to LIC for insuring life of self and spouse
2. Payment of ` 1,10,000 to RBI for acquiring its bonds
3. Applied for issue of credit card to SBI
4. Payment of ` 1,00,000 by account payee cheque to travel agent for travel to Singapore for
3 days to visit
(c) Ms. Soha (aged 35 years), a resident individual, is a dealer of scooters. During the previous year 2024-25,
total turnover of her business was ` 110 lakhs (out of which ` 25 lakhs was received by way of account
payee cheques and balance in cash). Ms. Soha does not opt to pay tax as per the provisions of section
115BAC.
What would be your advice to Ms. Soha relating to the provisions of advance tax with its due date along
with the amount payable, assuming that she wishes to make maximum tax savings.
Answer
(a) U/s 6(1), an individual is said to be resident in India in any previous year, if he satisfies any one of the
following conditions:
(i) He has been in India during the previous year for a total period of 182 days or more, or
(ii) He has been in India during the 4 years immediately preceding the previous year for a total period of
365 days or more and has been in India for at least 60 days in the previous year.

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Super 30 Questions for CA Inter MAY 25 Exams
If an individual satisfies any one of the conditions mentioned above, he is a resident. If both the above
conditions are not satisfied, the individual is a non-resident.
During the previous year 2024-25, Mr. Thomas was in India for 75 days and during the 4 years preceding
the previous year 2024-25, he was in India for 360 days (i.e. 50+ 65+ 95+ 150 days).
The total stay of the Mr. Thomas during the previous year in India was less than 182 days and during the
four years preceding this year was for 360 days. Therefore, due to non-fulfillment of any of the two
conditions for a resident, he would be treated as non-resident for the Assessment Year 2025-26.
(1) Not taxable, since interest payable by a non-resident to another non-resident would be deemed to accrue
or arise in India only if the borrowed fund is used for the purposes of business or profession carried on
by him in India. In this case, it is used for investing in Indian company’s debt fund for earning interest
and not for the purposes of business or profession. Hence, it is not taxable in India.
(2) No income shall be deemed to accrue or arise to Mr. Thomas through or from activities which are
confined to the collection of news and views in India for transmission outside India. Hence, ` 10 lakhs
is not taxable in India in the hands of Mr. Thomas.
(3) ` 10 lakhs is deemed to accrue or arise in India to Mr. Thomas, a non-resident, since it represents
royalty/fees for technical services paid for services utilized in India, in this case, for setting up a Steel
manufacturing plant in India. Hence, the same would be taxable in India in the hands of Mr. Thomas.
(b)
Transaction Is quoting of PAN mandatory in related
documents?
1. Payment of life insurance premium of ` 40,000 No, since the amount paid does not exceed
in the F.Y.2024-25 by account payee cheque to ` 50,000 in the F.Y.2024-25.
LIC for insuring life of self and spouse
2. Payment of ` 1,10,000 to RBI for acquiring its Yes, since the amount paid exceeds ` 50,000
bonds
3. Applied to SBI for issue of credit card. Yes, quoting of PAN is mandatory on making an
application to a banking company for issue of
credit card.
4. Payment of ` 1,00,000 by account payee cheque No, since the amount was paid by account payee
to travel agent for travel to Dubai for 3 days to cheque, quoting of PAN is not mandatory even
visit though the payment exceeds ` 50,000
(c) Computation of advance tax of Ms. Soha under Presumptive Income scheme as per section 44AD
The total turnover of Ms. Soha, a dealer of scooter, is ` 110 lakhs. Since her total turnover from such business
is less than ` 200 lakhs and she does not wish to get his books of account audited, she can opt for presumptive
tax scheme u/s 44AD.
Profits and gains from business computed u/s 44AD:
Particulars `
6% of ` 25 lakhs, being turnover effected through account payee cheque 1,50,000
8% of ` 85 lakhs, being cash turnover 6,80,000
8,30,000
An eligible assessee opting for computation of profits and gains of business on presumptive basis u/s 44AD in
respect of eligible business is required to pay advance tax of the whole amount on or before 15th March of the
financial year.
Computation of tax liability of Ms. Soha as per normal provisions of Income-tax Act, 1961
Particulars Amount in `

52 CA Bhanwar Borana
 Super 30 Questions for CA Inter MAY 25 Exams
Total Income 8,30,000
Tax on 8,30,000
Upto ` 2,50,000 Nil
` 2,50,001 – ` 5,00,000@5% 12,500
` 5,00,001 – ` 8,30,000@20% 66,000 78,500
Add: Health and Education cess@4% 3,140
Tax liability 81,640
Accordingly, she is required to pay advance tax of ` 81,640 on or before 15th March of the financial year.
However, any amount by way of advance tax on or before 31st March of the financial year shall also be treated
as advance tax paid during the financial year ending on that day for all the purposes of the Act.

CA Bhanwar Borana 53
2
 Answer MRRaghav 1424 25742526
Computation
of TotalIncome as per default tax Regime VIS 715BAC

Income from
salary
Basic 170000mn Smonty
salary 1360000
DA Interns 80.000 smouts 640000
Commisting 320001 8m 256000
Transport Allowance 5000 8m 40.000
Medical Reimbursement 10000
Gratuity Reed 250.0000
Les ExemptV15 0110
i 1 2 AugswayAm Noofyears
1
ofservice
2 250000 loyens 1250000
117 ActualAmtReed
2500000
1 Max 20.00.000 0.000
200000 124 1250000

Goussaray 3516.000
Less Standard Dean vis 16 ia 75000
Netsalary 35.11.000
Profit Gain from Buiners or profering
Income from Hiring Vehicles
Heavy tenious 4 20.000 3 me 240000
Othervehicus UX 7500 4m 120000
TGBP 360000
CapitalGain on sale 60.000Shares
of
FOE 60.000 60 36.00.000
Lee CoA

stept Cost 604 40 249.0000

Step2 a Fmv on 31 1 18 301
b Fuel 361 3000000 30 00.000

TCG VISIIZA 60.0.000

Income from other sources

Giff from friend 200000

Interst on Bank FD 100000
900 100
9 14000
Intest on SB AC
3.14.000

Grass TotalIncome 47.8.5000

Leif Dean UIC III A N A

TotalIncome NettaxableIncome 478.5000

Cain of Taxliability
759 Vis 112A 12.5 in excess 125000 475000 12 57 59375
of
600000 125000
Tax on BalanceIncome 6185900
unto 300.000
300000 upto700.000 57 20.000
700000 Unto 10.0.0000 10 30.000
100.0000 Upto 1200.000 157 30,000
1200.000 upto 1500000 20 60,000
 1500000unto 30
41850.00 805501 945500
1004875

Add.HEC 4 40195
Net tax 1045070
liably

BEB Computation
of
Total Income asperNormalprov of IncomeTax optont
FromIISBAC

GTI asper see 115B 47.85.000

Add Dean VISIG As under Normalion dean 25.000

Allowedis
only 50.000
4010000

Les DeanuicVT A
110000
insurancepolicypremium 20000 130000
LIC Pension scheme 25000
DEC
155000
Aspersee DOICE Soc Soccc SOCCID
Restricted to 150000 150000 50000
80C medical 1ns Premium 60.000
Incaseof senior Citizen Max Allowed 50.000 50000

80GB Intent on Deposites 50000

Total income 45,60000

Cain of Taxliability
759 Vis 112A 12.5 in excess 125000 475000 12 57 59375
of
600000 125000
Tax on BalanceIncome
unto 300.000
300.000unto5000.00 5 100.08
7500000 Unto10.00.000 20 100000
1000000 unto 3960000 30 888000 998000
1057375
Add HEC 4 42295
Net tax Lab 10,99670
1
 MR Surem MY 24 25 Ap 25.26

of Total Income
Computation as per Normal prov
of IT
Particular

Income from House

Property
Rent Reed GrossAnnualvalue 720.000
Maffy

Lee Std dean 304

ofNAL 216000 504010

Prostfrom Business or Bopersion

IBP
Net profit as per Pbl Ale 73.52.815
Add Disalloned Items consider
separately
I Dep as per Boors Ace's 182000
1 Income tax paid of
for 142233 34.5.000
111
Income tax Fees VIS 234 F NotAllowed 1000
9 CASH
salaryPaid insingledaytosingleperson 30.000
Not Allowed due to see MOA 3
4 Interest on loan taken From MBFC
Personal Purpose 115000
71 23000
Burners Purpure 30 disallowed As725
27600
NotDeducted See 40 a ia 92000 307
1
Advtg in the SouvenirofPoliticalParty Not 25,000 633600
Allowed
7986415
Less Allowed Items considerseparatay
Divided from Indian companies 172.0000
111 Intent on 108000
FD
111
Rent Reed 7.20.000
N income
tax Refund 19.000
 V7 Dep as per Incometax Rutes 2.20.000 27 87000
5199415

Add stock Adjustment Closingstoneunderrated 55,000

PEEP 52.54.415

Income from other sources

Divided from Indian Companies 1720.000

Intent on 0 100 120000
1009

Intest on Incometax 2500 1842500

Refund
GrossTotalIncome GTI 76,00915
Lers Dedutin VIC II A
800 Health Insurance premium 35000
25000
man Alonded is 2500g
8049C in the souvenir
tag of
Politicalparty is not treatedas
Donation to political
party
NTI TotalIncome 7575,915

Computation
of Tax Payable
Unto 250.000
7250000Unto 500000 57 12500
500000 unto 1000.000 200 100000
1001000 Unto 7575915 30 1972775 2085276
Add Surcharge 10 208528
22,93804
HEC 4 91752
 Nettax liability 23,85556
Les TDS 12000

Advance 900000
Nettax Payable 14,73 556
if 14,731
60
 MR Alok 1424 25 742526

PGA Computation
of TotalIncome Taxliability asper DefaulttaxRegimeUis IBAC

Income from HorseProperty

Gras Annual rate ActualRent 35000 12m 420000
bers municipal taxes paid 8200
Net Annual rate 611800
Leg Federtion VIS 24
a Std dean 30 123540
OfNAV
b Intent on loan 201500 86760
Profit Gain fromBusiness or profession
Feesfrom legal service 49.60.000

Leif Exps Allowed VIS 301037

StaffSalay Boring 17.50.000

OtherGeneral Admin exps 22.00.008

Office Rent 148000

Motor CARMaint 72000 213 48000
Dep on Assets
motor CAR 950000 15 50 213 47500

Books 80000 Uat 32.000

Computer 52000 407 507 70400 4235900

PGP 724100

Income from speculative BusinessBusiness 12.0.000

20000
Is loss from speculateBusiness
speculateBuiners loss can besetoff onlyagainst
Spectate BusinessIncome so remainingloss
 ng of
60,000 Shall be CIF for Next YAYIS

ofCapitalGain
Computation

TCG on sale
oflistedshares VIS 112A
For 595.000

WE cost 121800
15800 75
11 a Fmv 31 1 18
435000
b tree 595000 435000 435000
169000

Incomefrom other sources

CASH
Gift from friends 21000 4 84000
Since in money morethan 50,000
gift
so it is Fully taxable
GrasTotallmome 1054860
NotAvailable
Leg DeanVIC VI A

TetedIncome 1054860

Computation
ofTaxliability
1 Tax on LT G vis 12.5 in excess of 125000
IIa
160000 125000 35000 12.57 4375

Taxon Balanceincome 1054860 160000 894860

Unto 3000.00
300000 Unto700.000 57 2,0000
700.000 Unto894860 10 19486 39486
43861
1754
AT HEC 4
Nettax 45,615
 1 45 20
if
IB Computer
ofTotalIncome Taxliabilyifasserseeopt.outfoms.ee isBAC

GrasTeted Income as computedAbove 1054860

Leg Deduction VIC VI A

IC i life insurancePremium 49000

1 Repayment 180000
ofHovingloan
111 PPF 50000
379000
Max Allowed is 150000 50000

806 Donahm to Pm CaresFend 121000

80466 Donation to Polihey 350000

party
Totellcome 433860

759 visita 12.5 in excess

of 125000 4375
35000 12 57
1 Tax on Bal Income 433860 160.000 273860
Unto 250000
7250000 Upto 273860 57 1193
5568
Less Rebate VIS OFA
1 Tax Amt 1193
1 12500 12500 1193
4375
Add HEC 4 175
4550
Nettax liability
Question : 30
Mr. Daksh acquire house property on 10 July 1996 for ₹ 25 Lakhs.
FMV of property as on 1 April 2001 is ₹ 50 Lakhs . He sold the
house property for ₹1 crore. He also sold some listed shares of
reliance industries Limited on 10 October 2024 and LTCG is ₹ 98
Lakhs. His income from House property is ₹ 15 lakhs.
Calculate total income and tax liability of Mr Daksh as per default
tax regime if he transfer house property:-
(A) 15th June 2024
(B) 14th Feb 2025.

A If HP Transfer on 15 6 2029

of Toted Income
Computation

Income from HouseProperly 150.0000

Income from capital

gain
1 416 on sale of listedshares
of RFC 90.00.000

1 LTCC on sale
ofHP on 151612024
Free 10.000,000
ICOA

Tilting 35099mm 36312ns

100 01 02
1.81.50.000
81.50.000 81,50000
LTIL
of sale ofHP of 8150000 Canbesetoff
against 1716 on sale ofShares
165
719 on sale of listedshares 01
 GrassTotal Income 3150000
Totalthrome
calm
of Tax liability
is 419 12.5 inexiers
on sale vis
ofshares 1121 of 125000J
1650000 125.000
1525000 12.57 190625
1 Bal NTI Tax
Upto 300000
300000 Unto700000 57 200.00
700000 Unto 10.00.000 10 300.00
100.0000unto 1200000 157 30,000
1200.000 upto 1500000 20 60001 140000
330625

Add HE 106 13225

343850
Nettentiably
3 If HPtransfer on 14 2 25
Computer Total Income
of
Income From Hp 1500.000
CapitalGain
HCG on sale 9800000
of shares
LTG on try of HP
Troe 10.0.00.000
500.0000
GA
419 5090000 5010000

Toteneme 1.63.00.000
Camoftax liability

Tax on 17190 s 112A fromshares 9800.000 125.000 1209375

9675000 12.57

Taxonceia of HP
9 12.57 Without Index 50.00000 12.57 625000
b 20 with Index 875.0000 201 Nil Nil

Tax on Bal home 140000

1500.000
Taxesbrete 1369375
202606
Add SECITE
1551781
Add HE 104 62671

Nettenliabity 1859s