tax mcqs.pdf

8/10/2019 TAX mcqS.pdf

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J M D T A X A T I O N & L A W C O D E P a g e | 0

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PREFACE TO MY FIRST EDITION

It gives me immense pleasure, in helping the student community in

particular by writing some notes in a simple, lucid manner.

Since, the book assumes no previous knowledge of the subject on the partof, the Reader, its aims complete clarity for the beginner and simplicity

which makes the text self-explanatory,

I express my sincere gratitude to, all those who have stood by me, in this

noble task.

I, take this opportunity, in thanking my parents, my friends, readers, my

well-wishers, and yes God for their blessings and support,

I feel confident that the notes will meet a real need. If it is widely read and

wisely used, I shall feel amply rewarded.

I shall gratefully acknowledge any suggestions to further increase the utility

of the book, and readily incorporate them for the betterment of my next

edition of notes

DONT COPY, RESPECT EFFORT BEHIND THIS.

Link to contact me:

@ Copyright: KETAN SARDANA;[email protected]:https://www.facebook.com/pages/Taxation-Law-CODES/185533964799625


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This Book is dedicated to LORD G NESH

and S R SW TI M


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DIRECT TAX

Multiple Choice Questions

1.The following is capital receipt:

(a) Dividend from investment;

(b) Bonus shares;(c) Sale of technological know- how;

(d) Compensation received for compulsory evacuation of place of business.

2. Following is not a capital receipt:

(a) Dividend on investment;

(b) Bonus shares;

(c) Sale of know-how;

(d) Compensation received for vacating business place.

3.An individual is said to be resident in India in a previous year (in which the February month has 29

days) if he is in India in that year for a period or periods amounting in all to 182 days or more,

[(a) 182, (b) 183, (c) 60, (d) 150]


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4 The assessee is charged to income-tax in the assessment year following the previous year:

(a) A non-resident business firm which shipped goods on 1.5.2013 at Visakhapatnam Port in

Andhra Pradesh

(b) An employee left India to USA on 1.8.2013 with no intention of returning

(c) ABC firm which discontinued its business on 1.9.2013

(d) An employee-assessee of a University who worked during 1.4.13 to 30.03.2014

5. Income received in India in previous year is taxable in the hands of:

(a) Resident;

(b) Not-resident;

(c) Non ordinarily resident;

(d) All above

6. Expenditure incurred by an employer on medical treatment and stayabroad of the employee

shall not be taxed in the case of ___________.

(a) an employee whose gross total income before including the said expendituredoes not exceed Rs. 2lakhs.

(b) an employee whose income under the head "Salaries" exclusive of all monetary perquisites does

not exceed Rs. 2 lakhs,

(c) an employee whose income under the head "Salaries" exclusive of allnon-monetary

perquisites does not exceed Rs. 2 lakhs,

(d) all employees irrespective of their amount of gross total income/the amountof income under the

head "Salaries".

7. If an employer transfers second hand motor car to the employee, the perquisite is valued at

(a) Actual cost less depreciation @ 30% for every completed year under straightline method

(b) Actual cost less depreciation @ 20% for every completed year under WDV method

(c) Actual cost less depreciation @ 30% for every completed year under WDV method

(d)Actual cost less depreciation @ 20% for every completed year under SLM method.

8.The following is exempt income :

(a) Travel concession to employee

(b) Remuneration received for valuation of answer scripts

(c) Encashment of leave salary whilst in service

(d)Perquisites in India

9. The following is not taxable as income under the head "Salaries":-

(a) Commission received by a full-time director;

(b) Remuneration received by a partner;

(c) Allowances received by an employee;

(d) Free accommodation given to an employee.


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10. If an assessee earns rent from a sub-tenant in respect to tenanted property let out as a residence,

the said rent is:

(a) Exempt under Section 10.

(b) Taxable under the head income from house property.

(c) Taxable as business income, as the letting out is a commercial activity.

(d) Taxable as income from other sources, unless the assessee is in the business of subletting

properties on a regular basis.

11. X Ltd. has failed to remit the tax deducted at source from annual rent of Rs. 6,60,000 paid to Mr.

A for its office building. Said rent is

(a)fully allowable as a business expenditure;

(b)not allowable in view of Section 40(a)(i);

(c)allowable to the extent of 50%;

(d)none of the above.

12. A partnership firm's profit as per the profit and loss account is Rs. 10,00,000. Its total income

determined according to the provisions of the Income-tax Act, 1961 is Rs. 9,00,000. A partner who

has 20% share in the firm can claim exemption of amount of Rs. __________under Section 10(2A).

(a) 2,00,000,(b) 1,80,000, (c) 20,000 (d) None of the above

13. Expenditure incurred in carrying out illegal business is

(a) Not allowed as deduction in any case.

(b) Allowable as deduction, if gross total income is less than Rs. 5 lakhs.

(c) Allowable as deduction in all cases.(d) Allowable as deduction, if income from illegal business is offered to tax.

14. if any expenditure is incurred by an Indian company wholly and exclusively for purpose of

amalgamation or demerger, the said expenditure is

(a) not allowable as a deduction as a deduction in computing "Profits and gains from business or

profession"

(b) Fully deductible as revenue expenditure in the year in which it is incurred.

(c) allowable as a deduction, spread over eight successive previous years beginning if the previous year

in which the amalgamation or demerger taken place.

(d) allowable as a deduction, spread over five successive years beginning with the previous year in

which the amalgamation or demerger taken place


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15. If any expenditure is incurred by an Indian company wholly and exclusively for the purpose of

amalgamation or demerger, the said expenditure is

(a) Not allowable as a deduction in computing profits and gains of business or profession.

(b) Fully deductible as revenue expenditure in the year in which it is incurred.

(c) Not deductible but is eligible to be treated as an intangible asset in respect of which depreciation

can be claimed.

(d) Allowed as a deduction spread over five successive previous year beginning with the previous year

in which the amalgamation or demerger takes place.

16. Deduction for bad debts is allowed to an assessee carrying on business

(a) In the year in which the debt is written off as bad.

(b) In the year in which the debt first arose.

(c) In the year in which provisions was made in respect of the bad debt.

(d) In the year in which the debt becomes irrecoverable by operation of law

17. Under Section 41(4) of the Income-tax Act, 1961, where a bad debt allowed as a deduction underSection 36(1)(vii) in an earlier year is subsequently recovered

(a) It is taxable to the extent of 50% of recovery, in the year of receipt, as business income.

(b) It is taxable as business income in the year of recovery.

(c) It is added back to the income of the year when it was written off and taxable business income.

(d)It is taxable as income from other sources in the year of receipt.

18. Payment of interest to partners of partnership firm assessed as firm is allowable as deduction

under Section 40(b) of the Income Tax Act, 1961.

(a) If the rate of interest does not exceed 8% p.a.

(b) If the interest is paid on the minimum balance of capital account between10 thand the end of

every month.

(c) If it is calculated on quarterly balance.

(d) If it is authorized by and in accordance with the partnership deed, pertains to period after the deed

and does not exceed 12 percent simple interest per annum.

19. The following is not 'plant' u/s 43(3) of the Income-Tax Act, 1961

(a) Books

(b) Know-how(c) Road in the factory building

(d) Electrical fittings


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20. Mr. L Singhused it in his business. This is the only asset in the block. 20% of the usage is for

personal purposes. The WDV of the block as on 31.3.2014 is

(a) Rs. 2,70,000;

(b) Rs. 2,55,000;

(c) Rs. 2,10,000;

(d) None of the above.

.

21. Long-term capital gains arising on compulsory acquisition of agricultural land held by a domestic

company within specified urban limits is

(a) not exempt under Section 10(37);

(b) exempt under Section 10(37) in full;

(c) 50% of the receipt is exempt under Section 10(37);

(d) 25% of the receipt is exempt under Section 10(37).

22. In case of an investor in shares, in respect of shares sold, securities transactions tax paid (at the

time of purchase of the said shares earlier), is

(a) to be added to the cost of acquisition;

(b) to be deducted as an expenditure connected with transfer;

(c) not deductible at all while computing capital gains;

(d) none of the above.

23. In respect of listed shares held for 10 months sold on 12.8.2010, the rate of tax in respect of

capital gains is

(a) 10%;(b) 20%;

(c) 15%;

(d) not determinable, as the capital gains will form part of the total incomewhose other

components are not known.

24. Capital gains arising to an individual/HUF is exempt from tax under section 10(37) if the land

was being used for agriculture purposes by such HUFor individual or parent of his during a period

of or more immediately preceding the date of transfer.

(a)2 years,(c) 12 months,

(b)36months,(d)6months


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25. Long term capital gain arising to an assessee on the sale of a capital asset is exempt under Section

54EC of the Income-tax Act, 1961

(a) To the extent of investment in specified bonds up to a limit of X 100 lakhs.

(b) To the extent of 50% of investment in certain bonds up to a limit of Rs. 50 lakhs.

(c) To the extent of investment of capital gain in specified bonds not exceeding Rs. 50 lakhs.

(d) Proportionate to the extent of investment of net sale proceeds in specified

bonds, not exceeding Rs. 50 lakhs.

26.(A)Gift received from one or more unrelated person(s) during the previous year shall form part of

an individual's income, if the aggregate of gifts exceeds

(a) Rs. 50,000

(b) Rs. 1,00,000

(c) Rs. 1,35,000

(d) Rs.1,65,000

27. Cash gift received under Section 56(2)(vii) from non relatives are not taxable upto

(a) Rs. 1,00,000;

(b) 175,000;

(c) Rs. 50,000;

(d) Rs. 25,00

28 Mr. X gifts Rs.60,000 to the HUF of which he is member; said amount will be treated as income

of

(a) Mr. X;

(b) The HUF;

(c) None, as it is exempt;(d) None of the above.

29. Mr. A has three minor children deriving interest from bank deposits to of the tune of Rs.2,000,

Rs.1,300 and Rs.1,600 respectively. Exemption available under Section 10(32) of the Income-tax Act,

1961 is-

(a) Rs. 4,900;(c)Rs. 4,500;

(b) Rs. 4,300;(d)None of above

30. Miss Femina, aged 17, is married to Mr. Masculine. Her mother alone is alive. Income by way

of interest on loans, of Miss Femina will be -

(a) Assessed to tax in the hands of Mr. Masculine;

(b) Assessed to tax in the hands of her mother;

(c) Taxable in own hands;



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31. Government's contribution to the new pension scheme referred to in Section 80CCD is -

(a) an exempt income;

(b) income chargeable to tax as "Salaries" in full;

(c) 50% thereof is income chargeable to tax as "Salaries";

(d) Income chargeable to tax as "Income from other sources" in full.

32. In case of a hospital built in specified area after 31.3.2014 fulfilling the required conditions laid

down in Section 80IB-(11C), the profits and gains derived from running the hospital are

(a) deductible in full;

(b) deductible to the extent of 50%;

(c) deductible to the extent of 75%;

(d) taxable in full.

33. The registration of a charitable trust can be cancelled under Section 12AA of the Income-tax

Act, 1961 by '

(a) Assessing Office;

(b) Commissioner of Income-tax;

(c) Chief Commissioner of Income-tax;

(d) Central Board of Direct Taxes.

34. The income of any university or other educational institution existingsolely for educational

purposes and not for the purposes of profit is exempt underclause (iiiad) of Section 10(23C) if the

aggregate annual receipts'of such university or educational institution do not exceed Rs.

(a) Rs.100crores,(c) Rs. 10crores,

(b) Rs.1 crore,(d) Rs. 10 lakhs

35. Any income chargeable under the based "Salaries" is exempt fromtax under Section 10(6)(viii),

if it is received by any non resident individual asremuneration for services rendered in connection

with his employment in a foreign ship where his total stay in India does not exceed a perioddays

in that previous year.

(a) 90

(b) 182

(c) 60

(d) 120

36. The following is not a venture capital undertaking for the purposes of Sec.10(23F), if

engaged in business of-

(a) Generation of power

(b) Telecommunications

(c) Providing infrastructural facility

(d) Dairy farming whose shares are not listed in a recognized stock exchange


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37. In case of companies deriving loss for any assessment year, filling of return of income within the

due date laid down in Section 139(1) is compulsory

(a) only where the Department issues notice to the assessee-company;

(b) for domestic companies only;

(c) for foreign companies only;

(d) for all companies

38. Where assessment has not been completed, belated income -tax return for assessment year

2014-15 can be filed upto

(a) 31-03-2016

(b) 31-12-2014

(c) 31-03-2015

(d) 31-12-2013

39. The due date for filing return of net wealth of an individual, who is a partner in a firm, whose turnover

for the year ended 31-03-2014 exceeds Rs. 60 lacs, is

(a) 30thJune, 2014

(b) 31stJuly, 2014

(c) 31stOctober, 2014

(d) None of the above

40. Where the karta is not available, the return of wealth of a HUF can be signed by:

(a) Any adult member of the family;

(b) Any adult coparcener of the family:

(c) The male member who is next in seniority to the karta;(d) None of the above.

41. Following Form Number is to be used for filing the return of income by an individual having

business income:

(a) Form No. 1;

(b) Form No. 2;

(c) Form No. 4;

(d) Form No. 4A.

42. Surcharge of 2.5% is payable in the case of companies, by

(a) domestic companies only;

(b) companies other than domestic companies;

(c) all companies;



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43. Which one of the following is an "asset" as per Section 2(ea) of the Wealth-tax Act?

(a) Any residential property forming part of stock-in-trade

(b) Any residential house that has been let out for a minimum period of 180days during the

previous year

(c) Commercial complex

(d) House occupied for the purpose of assessee's business.

44. Under the Wealth Tax Act, 1957 the time limit for completion of regular assessment ismonths

from the end of relevant assessment year.

(a) 21

(b) 12

(c) 24

(d) None of the above

45. In valuation of immovable property in Bangalore, the specified area means of the

aggregate area, for wealth-tax purpose.

(a) 60%

(b) 65%

(c) 70%

(d) 75%

46.The following is not an asset as envisaged by Sec.2(ea) of the Wealth-tax Act.

(a) Bullion

(b) Urban Land

(c)Jeep used in business of manufacture of medicines

(d) Motor boats of fishing business

47. Surcharge of 10 per cent is payable by an individual where the total income exceeds:

a) Rs.7,50,000 b) Rs.8,50,000 c) Rs.10,00,000 d) None of the three

48. Additional surcharge (education cess) of 3% per cent is payable on

a) Income tax b) Income tax plus surcharge c) Surcharge

49. Family pension received by a widow of a member of the armed forces where the death of the

member has occurred in the course of the operational duties, isa) Exempt up to Rs.3,00,000 b) Exempt up to Rs. 3,50,000

c) Totally exempt under section 10(19) d) Totally chargeable to tax


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50. In respect of shares held as investment, while computing the capital gains, securities

transaction tax paid in respect of sale of listed shares sold in a recognized stock exchange,

a) Is deductible up to Rs.1,00,000 b) Is deductible up to Rs.2,00,000

c) Is deductible if C.G.s is < 5,00,000 d) Is not deductible at all

51. Gift of Rs 5,00,000 received on 10 July, 2008 through account payee cheque from a non-relative

regularly assessed to income-tax, is

a) A capital receipt not chargeable to tax b) Chargeable as other sources

c) Chargeable to tax as business income

d) Exempt up to Rs.50,000 and balance chargeable to tax as income from other source

52. The rate of tax that is leivable on STCG arising from transfer of Equity shares of a Company or

units of an Equity oriented fund is

a) 10% b) 15% c) 20%

53. For an employee in receipt of hostel expenditure allowance for his three children, themaximum annual allowance exempt under section 10(14) is

a) Rs.10, 800 b) Rs.7,200 c) Rs.9,600 d) Rs.3,600

54. For an industrial undertaking fulfilling the conditions, additional depreciation in respect of

machinery costing Rs.10 lakh acquired and installed on October 3, 2005 is

a) Rs.75,000 b) Rs.1,50,000 c) Rs.1,00,000 d) None of the above

55. Assessee is always a person but a person may or may not be an assessee.

a) True b) False

56. A person may not have assessable income but may still be assessee.

a) True b) False

57. In some cases assessment year and previous year can be same financial year.

a) True b) False

58. A.O.P should consist of :

a) Individual only b) Persons other than individual only c) Both the above

59. Body of individual should consist of:

a) Individual only b) Persons other than individual only c) Both the above


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71. The TI of the assessee has been computed as Rs.2,53,494.90. For rounding off ,the TI will

betaken as:

a) Rs.2,53,500 b) Rs.2,53,490 c) Rs.2,53,495

72. Income tax is rounded off to:

a) Nearest ten rupees b) Nearest one rupee c) No rounding off of tax is done

73. As TI for the A.Yr.2014-15 is Rs.12,00,000.His tax liability shall be

a) 1,80,000 b) 1,90,000 c) 1,91,330

74. Residential status to be determined for :

a) Previous year b) Assessment year c) Accounting year

75. Incomes which accrue or arise outside India but are received directly into India are taxable in

case of

a) Resident only b) Both ordinarily resident and NOR c) Non-resident d) All the assesses

76. Income deemed to accrue or arise in India is taxable in case of :

a) Resident only b) Both ordinarily resident and NOR c) Non-resident d) All the assesses

77. Income which accrue outside India from a business controlled from India is taxable in case of:

a) Resident only b) Not ordinarily resident only

c) Both ordinarily resident and NOR d) Non-resident

78. Income which accrue or arise outside India and also received outside India taxable in case of:

a) resident only b) not ordinarily resident

c) both ordinarily resident and NOR d) none of the above

79. TI of a person is determined on the basis of his:

a) residential status in India b) citizenship in India c) none d) both of the above

80. Once a person is a resident in a P.Yr. he shall be deemed to be resident for subsequent P. Yr.

a) True b) False

82. R Ltd., is an Indian company whose entire control and management of its affairs is situated

outside India. R Ltd., shall be :

a) Resident in India b) Non-resident in India c) Not ordinarily resident in India


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83. R Ltd., is registered in U.K. The control and management of its affairs is situated in India .R Ltd

shall be :

a) Resident in India b) Non-resident c) Not ordinarily resident in India

84. R, a foreign national visited India during previous year 2013-14 for 180 days. Earlier to this he

never visited India. R in this case shall be:

a) Resident in India b) Non-resident c) Not ordinarily resident in India

85. An Indian company is always resident in India

a) True b) False

86. Dividend paid by an Indian company is:

a) Taxable in India in the hands of the recipient b) Exempt in the hands of recipient

c) Taxable in the hands of the company and exempt in the hands of the recipient

87. Agricultural income is exempt provided the:a) Land is situated in India b)Land is situated in any rural area India

c) Land is situated whether in India or outside India.

88. If the assessee is engaged in the business of growing and manufacturing tea in India

,theagricultural income in that case shall be:

a) 40% of the income from such business b) 60% of the income from such business

c) Market value of the agricultural produce minus expenses on cultivation of such produce

89. Agricultural income is :

a) Fully exempt b) Partially exempt c) Fully taxable

90. The partial integration of agricultural income, is done to compute tax on:

a) Agricultural income b) non agricultural income

c) Both agricultural and non agricultural income

91. There will be no partial integration of agricultural income with non agricultural income, if the

non agricultural income does not exceed:

a) Rs.2,00,000 b) Rs. 1,00,000 c) Rs.1,10,000

92. There will be no partial integration, if the agricultural income does not exceed:

a) Rs.40,000 b) Rs.50,000 c) Rs.5,000


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93. A local authority has earned income from the supply of commodities outside its own

jurisdictional area. It is :

a) Exempt b) Taxable

94. R, a chartered accountant is employed with R Ltd., as an internal auditor and requests the

employer to call the remuneration as internal audit fee. R shall be chargeable to tax for such fee

under the head.

a) Income from salaries b) Profit and gains from Business and Profession

c) Income from other sources.

95. R who is entitled to a salary of Rs.10,000 p.m. took an advance of Rs.20,000 against the salary

in the month of March 2013.The gross salary of R for assessment year 2014-15 shall be:

a) Rs.1,40,000 b) Rs.1,20,000 c) None of these two

96. A is entitled to children education allowance @ Rs. 80 p.m. per child for 3 children amounting

Rs. 240 p.m. It will be exempt to the extent of :a) Rs.200 p.m. b) Rs.160 p.m. c) Rs. 240 p.m.

97. R gifted his house property to his wife in 2000. R has let out the house property @ Rs.5,000

p.m. The income from such house property will be taxable in the hands of :

a) Mrs. R

b) R. However , income will be computed first as Mrs. Rs income and thereafter clubbed in the

income of R

c) R as he will be treated as deemed owner & liable to tax

98. R transferred his house property to his wife under an agreement to live apart. Income from

such house property shall be taxable in the hands of :

a) R as deemed owner

b) R. However, it will be first computed as Mrs. R income & Thereafter clubbed in the hands of R

c) Mrs. R

99. R gifted his house property to his married minor daughter. The income from such house

property shall be taxable in the hands of :

a) R as deemed owner.b) R. However, it will be first computed as minor daughters income & clubbed in the income of R.

c) Income of married minor daughter.


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101. A has two house properties. Both are self-occupied. The annual value of

a) Both house shall be nil b) One house shall be nil c) No house shall be nil

102. An assessee has borrowed money for purchase of a house & Interest is payable outside

India. Such interest shall:

a) Be allowed as deduction b) Not to be allowed on deduction

c) Be allowed as deduction if the tax is deducted at source

103. Salary, bonus, commission or remuneration due to or received by a working partner

from the firm is taxable under the head.

a) Income from salaries b) Other sources c) PGBP

104. Perquisite received by the assessee during the course of carrying on his business or

profession is taxable under the head.

a) Salary b) Other sources c) PGBP

105. Interest on capital or loan received by a partner from a firm is:

a) Exempt U/S 10(2A) b) Taxable U/H business and profession

c) Taxable U/H income from other sources

106. Under the head Business or Profession, the method of accounting which an assessee can

follow shall be :

a) Mercantile system only b) Cash system only c) Mercantile or cash system only d)

Hybrid system

107. An asset which was acquired for Rs. 5, 00, 000 was earlier used for scientific research.

After there search was completed, the machinery was brought into the business of the

assessee. The actual cost of the asset for the purpose of inclusion in the block of asset shall be

a) Rs.5,00,000 b) Nil

c) Market value of the asset on the date it was brought into business

108. A car is imported after 1- 4- 2005 by R Ltd. from London to be used by its employee. R

Ltd. Shall be allowed depreciation on such car at:

a) 15% b) 40% c) Nil

109. Unabsorbed depreciation which could not be set off in the same assessment year, can be

carried forward for:

a) 8 Years b) Indefinitely c) 4Years
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110. Certain revenue and capital expenditure on scientific research are allowed as deduction

in the previous year of commencement of business even if these are incurred:

a) Five years immediately before the commencement of business

b) 3 years immediately before the commencement of the business

c) Any time prior to the commencement of the business.

111. If any amount is donate for research, such research should be in nature of:

a) Scientific research only b) Social or statistical research only

c) Scientific or social or statistical research

112. Preliminary expenses incurred are allowed deduction in:

a) 10 equal annual installments b) 5 equal annual installments c) full

113. In case the assessee follows mercantile system of accounting, bonus or commission to

the

employee are allowed as deduction on:

a) Due basis b) Payment basis c) Due basis but subject to section 43B

114. Interest on money borrowed for the purpose of acquiring a capital asset pertaining to

the period after the asset is put to use is to be:

a) Capitalized b) Treated as revenue expenditure

115. Expenditure incurred on purchase of animals to be used by the assessee for the purpose

of carrying on his business& profession is subject to

a) Depreciation

b) Deduction in the previous year in which animal dies or become permanently useless

c) Nil deduction

116. Expenditure incurred on family planning amongst the employees is allowed to

a) Any assessee b) A company assessee c) An assessee which is a company or cooperative

society

117. Interest on capital of or loan from partner of a firm is allowed as deduction to the firm to

the extent of:a) 18% p.a. b) 12% p.a. even if it is not mentioned in partnership deed

c) 12% p.a. or at the rate mentioned in partnership deed whichever is less.


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118. Deduction under section 40(b) shall be allowed on account of salary /remuneration paid

to :

a) Any partner b) Major partner only c) Working partner only

119. Remuneration paid to working partner shall be allowed as deduction to a firm:

a) In full b) Subject to limits specified in section 40(b) c) None of these two

120. A firm business income is nil /negative. It shall still be allowed as deduction on account

of

remuneration to working partner to the maximum extent of:

a) Actual remuneration paid as specified in partnership deed b) Rs.50,000 c) Nil

121. For person carrying on profession, tax audit is compulsory, if the gross receipts of the

previous year exceeds:

a) Rs.50 lakhs b) Rs.40 lakhs c) Rs.25 lakh

122. Tax audit is compulsory in case a person is carrying on business whose gross

turnover/sales/receipts, as the case may be, exceeds:

a) Rs. 10 lakhs b) Rs. 40 lakhs c) 1 crore

123. In case an assessee is engaged in the business of civil construction, presumptive income

schemes applicable if the gross receipts paid or payable to him in the previous year does not

exceed:

a) Rs.10 lakhs b) Rs. 1 crore c) Rs. 50 lakhs

124. In the aforesaid case ,the income shall be presumed to be :

a) 5% of gross receipts b) 8% of gross receipts c) 10% of gross receipts

125. In case an assessee is engaged in the business of plying hiring or leasing goods carriage,

presumption income scheme under section 44AE is applicable if the assessee is the owner of

maximum of :

a) 8 goods carriages b) 10 goods carriages c) 12 goods carriages

126. In case an assessee is engaged in the business of retail trade, presumptive income

scheme is applicable if the total turnover of such retail trade of goods does not exceed:

a) Rs.10 lakhs b) Rs.30 lakhs c) Rs. 1 crore lakhs d) Rs.50 lakhs


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127. In the above case the income to be presumed under section 44AF shall be :

a) 8% of total turnover b) 5% of total turnover c) 10% of total turnover

128. If the assessee opts for section 44AD or 44AF or 44AE,then the assessee shall:

a) Not be entitled to any deduction under sections 30 to 37

b) Be entitled to deduction under sections 30 to 37

c) Not be entitled to deduction under sections 30 to 37except for interest on capital or loan

from partner and remuneration to a working partner subject to conditions laid down under

section 40(b)

129. The period of holding of shares acquired in exchange of convertible debentures shall be

reckoned from:

a) The date of holding of debentures

b) The date of when the debentures were converted into shares

c) None of these two

130. Securities transaction tax paid by the seller of shares and units shall

a) Be allowed as deduction as expenses of transfer b) Not be allowed as deduction

131. The cost inflation index number of the P.Yr.2013-14 is :

a) 480 b) 519 c) 551 d) 939

132. Conversion of capital asset into stock in trade will result into capital gain of the previous

year:

a) In which such conversion took placeb) In which such converted asset is sold or otherwise transferred c) None of these two

133. Where a partner transfers any capital asset into the business of firm ,the sale

consideration of such asset to the partner shall be :

a) Market value of such asset on the date of such transfer

b) Price at which it was recorded in the books of the firm

c) Cost of such asset to the partner

134. Where the entire block of the depreciable asset is transferred after 36 months, there will

be:a) Short-term capital gain b) Long-term capital gain

c) Short-term capital gain or loss d) Long-term capital gain or loss


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135. In the case of compulsory acquisition, the indexation of cost of acquisition or

improvement shall be done till the :

a) Previous year of compulsory acquisition b) In which the full compensation received

c) In which part or full consideration is received

136. If good will of a profession which is self generated is transferred, there will:

a) Be capital gain b) Not be any capital gain c) Be a short-term capital gain

137. Exemption under section 54 is available to :

a) All assesses b) Individuals only c) Individual + HUF.

138. The exemption under section 54 ,shall be available:

a) To the extent of capital gain invested in the HP

b) Proportionate to the net consideration price invested

c) To the extent of amount actually invested

139. The exemption u/s 54B, is allowed to :

a) Any assessee b) Individual only c) Individual or HUF

140. For claiming exemption under section 54B the assessee should acquire:

a) Urban agricultural land b) Rural agricultural land c) Any agricultural land

141. New assets acquired for claiming exemption u/s 54, 54B or 54D,if transferred within 3

years, will result in:

a) Short-term capital gain b) long-term capital gainc) ST or LTCG depending upon original transfer

142. Loss from a speculation business of a particular A. Yr. can be set off in the same A. Yr.

from:

a) Profit and gains from any business

b) Profit and gains from any business other than speculation business

c) Income of speculation business

143. Loss under the head capital gain in a particular assessment year can:

a) Be set off from other head of income in the same assessment year.b) Be carried forward c) Neither be set off nor carried forward


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144. The loss is allowed to be carried forward only when as assessee has furnished:

a) Return of loss b) Return of loss before the due date mentioned u/s 139(1)

c) Or not furnished the return of loss

145. Loss under the head income from house property can be carried forward:

a) Only if the return is furnished before the due date mentioned u/s 139(1)

b) Even if the return is not furnished c) Even if the return is furnished after the due date

146. Deduction u/s 80C in respect of LIP, Contribution to provident fund, etc. is allowed to :

a) Any assessee b) An individual

c) An individual of HUF d) An individual or HUF who is resident in India

147. Deduction under section 80C is allowed from:

a) Gross total income b) Total income c) Tax on total income

148. An assessee has paid life insurance premium of Rs.25,000 during the previous year for apolicy of Rs.1,00,000.He shall:

a) Not be allowed deduction u/s 80C

b) Be allowed Deduction u/s 80C to the extent of 10% of the capital sum assured i.e.Rs.10,000

c) Be allowed Deduction for the entire premium as per the provisions of section 80C

149. For claiming Deduction u/s 80C, the payment or deposit should be made:

a) Out of any income b) Out of any income chargeable to income tax

c) During the current year out of any source

150. Deduction under section 80C shall be allowed for :

a) Any education fee

b) Tuition fee exclusive of any payment towards any development fee or donation or payment

of similar nature c) Tuition fee and annual charges

151. Deduction under section 80CCC is allowed to the extent of :

a) Rs. 2,00,000 b) Rs. 1,00,000 c) Rs. 4,00,000

152. Deduction under section 80D in respect of medical insurance premium is allowed to:

a) Any assessee b) An individual or HUF

c) Individual or HUF who is resident in India d) Individual only

153. Deduction u/s 80D is allowed if the premium is paid to :

a) Life insurance Corporation

b) General insurance Corporation or any other insurer approved by IRDA

c) Life insurance or General insurance corporation


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154. The payment for Insurance premium under section 80D should be paid:

a) In cash b) By any mode other than cash c) Cash/by cheque

155. The maximum deduction allowed under section 80D shall be limited to:

a) Rs.20,000 b) Rs.10,000 c) Rs. 15,000

156. Deduction U/s 80G on account of donation is allowed to:

a) A business assessee only b) Any assessee c) Individual or HUF only

157. The maximum deduction u/s 80GG shall be limited to:

a) Rs. 1,000 p.m. b) Rs. 2,000 p.m. c) Rs. 3,000 p.m.

158. Deduction u/s 80GGA in respect of certain donation for scientific research or rural

development allowed to:

a) any assessee b) non corporate business assessee

c) an assessee whose income does not include PGBP income.

159. Deduction under section 80DD shall be allowed:

a) To the extent of actual expenditure/deposit or Rs.40,000 whichever is less

b) For a sum of Rs.50,000 irrespective of actual expenditure or deposit

c) For a sum of Rs.40,000 irrespective of any expenditure incurred or actual deposited

160. The deduction u/s 80E is allowed for repayment of interest to the extent of :

a) Rs.25,000 b) Rs.40,000 c) Any amount repaid

161. The quantum of deduction allowed u/s 80U is :

a) Rs. 40,000 b) Rs. 50,000 c) Rs. 60,000

162. As per Sec.139(1), a company shall have to file return of income:

a) When its total income exceeds Rs.50,000

b) When its total income exceeds the maximum amount which is not chargeable to income tax

c) In all cases irrespective of any income or loss earned by it.

163. The last date of filing the return of income u/s 139(1) for A. Yr. 2014-15 in case of a

company assessee is

a) 30th November of the assessment year b) 30th September of the assessment year

c) 31st July of the assessment year d) 31st October of the assessment year


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164. The last date of filing the return of income u/s 139(1) for assessment year 2014-15 in

case of anon corporate business assessee whose accounts re not liable to be audited shall be:

a) 31st July of the assessment year b) 30th June of assessment year

c) 31st October of the assessment year d) 30th September of the assessment year

165. For the P.Y. 2013-14 the business income of the assessee before providing C.Yr.

depreciation of Rs. 3,50,000 is Rs. 1,50,000. His due date of return was 30-09-2014 but he

submitted the return on 16-12-2013, the assessee in this case:

a)Be allowed to carry forward unabsorbed depreciation of Rs. 2,00,000

b)Not allowed to carry forward unabsorbed depreciation of Rs.2,00,000

166. K finds some mistake in the return of income submitted by him on 05-06-2013 for

assessment year 2014-15, he wishes to revised such return. No assessment has been done in

this case. K can revise such return till

a)31-03-2013

b)31-03-2016

c)31-03-2014

167.In case of assesses other than companies, the following is advance tax rate to be payable

on or before of 15lhSeptember:

(a) 15 per cent(c)45 per cent

(b) 30 per cent(d)60 per cent


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Fill in the Blanks

1. The basic exemption limit in case of a non-resident individual being a senior citizen of

Rs_______

2. Income-tax rates are not prescribed by the ______ Act, but by the ____ of each year.

3. The term business would include _______and accordingly the term business used in Section

________ would also include a professional connection.

4. Compensation received from an insurer on account of damage to the crops is _______

5. Receipts from TV serial shooting in farm house _______agricultural income.

6. Expenditure on free meals to employee in excess of Rs.___ per meal will be treated as

perquisite of employee.

7.Gift to employee upto Rs______per annum will not be treated as perquisite taxable in the

hands of employee.

8. Death-cum-retirement gratuity received by an employee of Central Government is wholly

exempt ____________

9.If loan granted by employer to employee does not exceeds Rs._______, it is not treated as

perquisite to employee for purpose of income tax.

10.Where an employer gifts a second hand motor car to an employee, the perquisite value is

actual cost less depreciation at ____for every completed year under ________method of

computing depreciation.

11.Any commission due or received by a partner of a firm from the firm shall not be regarded

as _____under section __

12._______salary is taxable, while _____against salary is not taxable.

13.Interest on capital borrowed for acquisition or construction of property is deductible subject

to limit of Rs. ____ per year, if capital is borrowed on or after ____. This is allowable if acquisition

or construction is completed within __years from ________

14. For a self-occupied house property occupied on 1.7.2013, for which housing loan was availed,

if the interest up to 31.3.2013 is Rs. 90,000 and thereafter the interest payable is Rs. 3,000 per

month, the deduction available under section 24 in respect of interest for the year ended31.3.2014 is Rs______

15.An assessee, after sale of house property, receiving arrears of rent is (is\is not) chargeable to

tax; the same computed in the stipulated manner, is chargeable to tax as ___


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16.The basis of chargeability under the head 'income from house property' is________

17.Arrear rent is taxable after deducting ___ as per Section 25B of the Income-tax Act, 1961.

18. In case of an existing industrial undertaking, to be eligible for additional depreciation,

increase in installed capacity as compared to the installed capacity as on 31.3.2014 is __per cent.

[Note: As criteria of increment in installed capacity for allowing additional depreciation isnow omitted]

19.The due date for filling return of net wealth by an individual who is a non-working partner

in a firm whose accounts are audited under Section 44AB of the Income-tax Act. 1961 is _____

20.A person owns 4 heavy goods vehicles. His estimated annual income U/S. 44AE is ______

21. According to Section 44AB, every person, carrying on business shall, if his total sales,

turnover or gross receipts, as the case may be, in business exceed or exceeds Rs._____ in any

previous year, inter alia, get his accounts of such previous year audited by a Chartered

Accountant.

22.Additional depreciation of 20% of the actual cost of any new machinery or plant which has

been acquired or installed 31.03.2005 is available to an assessee engaged in the business of ___

23. According to Section 40A(3), where the assessee incurs any expenditure in respect of which

payment is made in a sum exceeding Rs. __ otherwise than by a crossed cheque or crossed bank

draft. 100 percent of such expenditure shall not be allowed as a deduction.

24.The additional or accelerated depreciation, for an eligible assessee, for machinery installed and

used after 31.03.2014 is ________of the machinery.

25. Where an Indian company incurs any expenditure in connection with amalgamation or

demerger, the same is allowable as deduction, spread over 5 successive previous years

beginning with the _____

26. 44BBB(i) of the Income-tax Act, 1961, the presumptive income is taken as ___ of the eligible

receipts in the hands of eligible assessee.

27.The deduction for amortization of preliminary expenses under section 35D is allowable at

________of the qualifying expenditure in each of the ___successive years beginning with the

year in which business commences.

28. ________is a non-recurring expenditure whereas revenue expenses is normally a recurringone.

29..______ defines various income which are chargeable to tax under the head "Profits and

gains of business or profession".

30. Expenditure incurred towards demerger is deductible in __ equal annual installments under

Section 35DD of the Income-tax Act, 1961.


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31. 2010 - The cost of acquisition of 100 bonus shares, where the original shares (100 nos.)

were acquired for Rs.30,000 is ___

32. Interest on refund on Income-tax paid in excess is a _____receipt.

33. Amount received towards permission for putting up hoarding at the top of the building is

taxable under the head _________

34. Exemption u/s. 10(32) of IT Act 1961 in respect of income of minor child included in

the hands of assesses under Section 64(1A) is restricted to Rs. ___per child.

35. Assets held by minor married daughter ________(will/will not) be clubbed in the hands of

the individual.

36. For the applicability of clubbing provisions of the Wealth Tax Act, 1957, the expression

'child' includes _____child and _____child.

37.Accumulated losses of amalgamating company shall be allowed to be set off or carried

forward by amalgamates company, if the amalgamated company holds continuously for aminimum period of 5 years from date of amalgamation at least three-fourths of _________ of

the amalgamating company. A. For a person suffering from server physical disability,

deduction available under Section 80U is Rs. _______

38. The tax rebate available under Section 80E to a Hindu Undivided Family resident in India

is Rs___

39. The maximum amount of permissible deduction under Section 80C,subject to overall ceiling

of Rs. ____, for repayment of principal part of eligible housing loan in Rs. any amount

subject to max of Rs.________ and that of interest is Rs.________

40..From out of his agricultural income, X has paid interest of Rs._____on education loan taken

from nationalized bank last year. Deduction available u/s80E of the Income Tax Act, 1961 is

Rs. NIL

41. Medical insurance premium paid otherwise than in cash is eligible for deduction under

Section ___ of the Income-tax Act, 1961.

42. To claim the benefit under Section 10A, SEZ undertaking having a turnover of rupees two crores,

should file the return of income on or before __________

43. Exemption under Section 10B of the Income-tax Act, 1961 is available till assessment year

________.While effecting the tax deduction at source, education cess and special higher

education cess totalling 3% need not (should/need not) be also deducted from the amount due

or payable to the deductee.

44. Belated return of income for the assessment year 2014-15 can be filed on or before

31st________. where no assessment has been made.


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45. The due date for filling wealth-tax return by a closely held company, whose turnover is below

Rs. 40 lakhs, is 30thSeptember.

46. Electronic furnishing of income-tax return in approved computerreadable media can be

furnished under sub-section (1B) of section ______ of theIncome-tax Act, 1961.

47. 2009 - Time limit for filling revised return when assessment has not beencompleted is

one year from the end of the relevant ___________.

48. Sec.________ applies to all persons whether they are resident ornon-resident.

49.. For the assessment year 2014-15, tax on distributed profits (dividend distribution tax) is

payable at _________

50. The rate of Minimum Alternate Tax has been increased from ______of book profits with

effect from assessment year 2014 -15.

51. Long term capital gain which are exempt u/s. _____ credited to profit an d loss accou nt

are subject to (subject to/not subject to) Minimum Alternate Tax, from assessment year2014-15.

52. A ______ company means a Company which is not a domestic company.

53. The rate of tax in case of Minimum Alternate Tax has been increased to _____ with effect

from Assessment year 2014 -15.

54. For a self-occupied house property occupied on July 1, 20013 for which housing loan was

availed, if the interest up to March 31,2013 is Rs.90,000 and thereafter the interest payable is

Rs.3,000 per month, the deduction available under section 24 in respect of interest for the year

ended March 31, 2004 is Rs. .

55. For a person suffering from severe physical disability, deduction available under section 80U

is

Rs..

56. Accumulated losses of amalgamating company shall be allowed to be set off or carried

forward by amalgamated company, if the amalgamated company holds continuously for a

minimum period of .. years from date of amalgamation at least three-fourth of

.of the amalgamating company.

57. An author of a work of literacy, artistic or scientific nature is entitled to deduction to certain

amount from his income. State the amount and section number under which he is entitled to

deduction .


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58. Interest on capital borrowed for acquisition or construction of property is deductible

subject to limit of Rs. per year, if capital is borrowed on or after . This is

allowable if acquisition or construction is completed within . Years from

59. For the assessment year 2014-15, tax on distributed profits (divided distribution tax) is

payable at% plus surcharge of if domestic company distributes dividend

on or after..

60. The due date for filing of return under section 139(1) by a company having a turnover of

less than Rs.1 crore is ..

61. Deduction under section 80GGC in respect of contribution to approved political parties

given by a local authority partly funded by the Government is ..

62. Where a person transfers capital asset to a firm in which he becomes partner the full value

of consideration in the context of capital gain computation, will be .

63. For availing exemption under section 10A, return of income should be filed by a corporate

assessee on or before ..

64. In case of an eligible assessee, imported second hand machinery never put to use by any

personin India before, additional or accelerated depreciation is allowable at the rate of .

on theactual cost of machinery.

65. Fringe benefit tax . an allowable item of business expenditure

66. Where an individual has repaid in the second year, Rs.20,000 towards principal and

Rs.60,000towards eligible education loan from an approved bank, the deduction available

under Section80E is Rs

67. As per section 2(47) ., or .. of a zero coupon bond will be treated as transfer

for the purpose of capital gains tax

68. An Assessee, after sale of house property, receiving arrears of rent, (is/isnot)

chargeable to tax; the same computed in the stipulated manner, shall be chargeable to tax as

(income from other sources / income from house property / question does not arise since

there is no chargeability to tax)

69. A motor car is the only Asset in a block. Cost Rs.2,00,000. Rate of depreciation is 15%. 20%

isdisallowed for estimated personal use. WDV of the block is Rs

70. Mr. A gifts cash Rs.1,00,000 to his brothers wife Mrs.B, Mr.B gifts cash Rs.1,00,000 to Mrs


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A.from cash gifted to her, Mrs.B invests in a fixed deposit, income there from is Rs.10,000. A

foresaid Rs.10,000 will be included in the total income of

71. The time limit for filing revised return where assessment has not been completed is

72. The quantum of maximum deduction allowed u/s 80D for preventive health checkup shall

be limited to


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TRUE OR FALSE (WITH REASONS)

1. Where an urban agricultural land owned by an individual, continuously used by him for

agricultural purposes for a period of two years prior to the date of transfer, is compulsorily,

acquired under law and the compensation is fixed by the state Government, resultant capital

gain is exempt.

2. Where an individual repays a sum of Rs.30,000 towards principal and Rs.14,000 as interest in

respect of loan taken from a bank for pursuing eligible higher studies ,the deduction allowable

under section 80E is Rs.40,000 and not Rs.30,000 ( principal component only)

3. Business loss can be set off against salary income;

4. A has received gift to Rs.1,50,000 on December 12, 2005 from his close friend who is

assessed to income-tax . The same is taxable at the hands of A.

5. Long term capital gains arising from units of debt-oriented equity funds for which securities

transactions tax has been paid in a recognized stock exchange is exempt.

6. Under Section 35DDA, amortization of expenditure incurred under eligible Voluntary

Retirement Scheme at the time of retirement alone, can be done

7. Value of fringe benefit chargeable to tax under Chapter XII-H in the hands of the employer, is

not to be treated as a perquisite under Section 17(2), in the hands of the employee.

8. Zero coupon bonds of Eligible Corporation, held for more than 12 months, will be long-term

capital assets.

9. In the case of a dealer in shares, income by way of dividend is taxable under the head profits

and gains of business or profession.

10. Mr. Y who is a physically handicapped minor (suffering from a disability of the nature

specified in Section 80U) earns bank interest of Rs.50,000 and Rs.60,000 from making bags

manually by himself. The total income of Mr. Y shall be computed in his hands separatal

11. Only individuals and HUFs can be resident, but not ordinarily resident in India; firms can be

either a resident or non-resident.


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12. In respect of voluntary contributions in excess of Rs.20,000 received by a political party,

exemption under section 13A is available where proper details about the donations are

maintained; there is no need to maintain books of account.

13. Depreciation is allowed only when it is claimed.

14. For grant of deduction under section 80-IB, filing of audit report in prescribed form is must

for a corporate assessee; filing of return within the due date laid down in section 139(1) is not

required.

15. From 1.6.2013 onwards, the Assessing Officer has the power, inter alia, to allot PAN to any

person by whom no tax is payable

16. Where the Karta of a HUF is absent from India, the return of income can be signed by any

male member of the family.

17. It is a condition precedent to write off in the books of account, the amount due from debtor

to claim deduction for bad debt.

18. Tax on fringe benefits provided for employment is payable by all employers

19. Failure to deduct tax at source in accordance with the provisions of chapter XVII-B, inter

alia, from the amounts payable to a resident as rent or royalty, will result in disallowance while

computing the business income.

20. Compensation on account of disaster received from local authority by an individual or

his/her legal heir is taxable.

21. Rural branches of the cooperative banks are not allowed to claim provision for bad and

doubtful debts.

22. Income to a non- resident by way of interest, royalty and fee for technical services deemed

to accrue or arise in India is taxable in India irrespective of territorial nexus.

23. Capital gain of Rs.75 lakh arising from transfer of long term capital assets will be exemptfrom tax if such capital gain is invested in the bonds redeemable after three years, issued by

NHAI u/s 54EC of the Act.


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24. X, Ltd. follows mercantile system of accounting. After negotiations with the bank, interest of

Rs.4lakhs (including interest of Rs.1.2lakhs pertaining to year ended 31.03.2007) has been

converted into loan. Can the interest of Rs.1.2lakhs so capitalized be claimed as business

expenditure.

25. Can a Primary cooperative Agricultural and Rural Development Bank claim deduction under

Sec.80P in respect of income derived from the business of banking

26. The total income of a University without giving effect to exemption under Sec.10(23C) is

Rs.46lakhs. Its total income however is nil. Should the university file its return of income

27. Ms. Vasudha contends that sale of work of art held by her is not eligible to capital gains tax.

28. Will a charitable trust forfeit the exemption granted to it, if it holds shares in a Public Sector

Company

29. Deduction u/s 80CCD is available only to individuals employed by C.G.

30. Mrs. Hemalatha has made payments of Rs.5lakhs to a contractor ( for business purposes)

during the last Quarters of the year ended 31.03.2014. Her turnover for the year ended

31.03.2014 wasRs.45lakhs. Is there any obligation to deduct tax at source

31. Can an individual who is not in India, sign the return of income from outside India.

32.'Gross Total Income' means aggregate of income computed under various heads and afterallowing deduction under Chapter Vl-A.

33. If a person is resident and ordinarily resident of India, his income earned outside India is

taxable in the country in which he earned that income.

34. Where a person does basic operations in lands and later sells the saplings grown by him in

a nursery owned by him, the same will be agricultural income. If the basic operations are not

done by the assessee and the saplings are sold in his nursery, the same will still be regarded as

agricultural income.

35. Any income derived from saplings or seedlings grown in a nursery shall be deemed to be

agricultural income.

36. Vivitha, a Cost Accountant, is employed in Hema Plastics Ltd. The company pays the annual

Cost accountant membership fee. The fee so paid by the company is not to be treated as a

perquisite in the hands of Vivitha.


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37. X is employed in Complex Ltd. as a Chartered Accountant. The annual membership fee of X

paid by Complex Ltd. is not a perquisite and hence not chargeable to tax.

38. Rental income from re

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