CA Inter Taxation MCQs Set I

The tax liability of Mr. Saral, who attained the age of 60 years on 01.04.2021 and does not opt for the provisions of section 115BAC for the P.Y. 2020-21, on the total income of ` 5,60,000, comprising of salary income and interest on fixed deposits, would be –

The tax liability of Nirlep Co-operative Society (does not opt to pay tax under section 115BAD) on the total income of ` 90,000 for P.Y. 2020- 21, is –

What is the amount of marginal relief available to Sadvichar Ltd., a domestic company on the total income of ` 10,03,50,000 for P.Y. 2020-21 (comprising only of business income) whose turnover in P.Y. 2018-19 is ` 450 crore, paying tax as per regular provisions of Income-tax Act? Assume that the company does not exercise option under section 115BAA.

The tax payable by Dharma LLP on total income of ` 1,01,00,000 for P.Y. 2020-21, is –

Mr. Raman, aged 64 years, was not able to provide satisfactory explanation to the Assessing Officer for the investments of ` 7 lakhs not recorded in the books of accounts. What shall be the tax payable by him on the value of such investments considered to be deemed income as per section 69?

If Anirudh, a citizen of India, has stayed in India in the P.Y. 2020-21 for
181 days, and he is non-resident in 9 out of 10 years immediately preceding the current previous year and he has stayed in India for 365 days in all in the 4 years immediately preceding the current previous year and 420 days in all in the 7 years immediately preceding the current previous year, his residential status for the A.Y. 2021-22 would be –

Mr. Ajay is found to be the owner of two gold chains of 50 gms each (market value of which is ` 1,45,000 each) during the financial year ending 31.3.2021 but he could offer satisfactory explanation to the Assessing Officer for ` 50,000 spent on acquiring these gold chains. As per section 115BBE, Mr. Ajay would be liable to pay tax of –

Mr. Ajay is a recently qualified doctor. He joined a reputed hospital in Delhi on 01.01.2021. He earned total income of ` 3,40,000 till 31.03.2021. His employer advised him to claim rebate u/s 87A while filing return of income for A.Y. 2021-22. He approached his father, a tax professional, to enquire regarding what is rebate u/s 87A of the Act. What would have his father told him?
(i) An individual who is resident in India and whose total income does not exceed ` 5,00,000 is entitled to claim rebate under section 87A.
(ii) An individual who is resident in India and whose total income does not exceed ` 3,50,000 is entitled to claim rebate under section 87A.
(iii) Maximum rebate allowable under section 87A is ` 5,000.
(iv) Rebate under section 87A is available in the form of exemption from total income.
(v) Maximum rebate allowable under section 87A is ` 12,500.
(vi) Rebate under section 87A is available in the form of deduction from basic tax liability.
Choose the correct option from the following:

Raman, a citizen of India, was employed in Hindustan Lever Ltd. He resigned on 27.09.2020. He received a salary of ` 40,000 p.m. from 1.4.2020 to 27.9.2020 from Hindustan Lever Ltd. Thereafter he left for Dubai for the first time on 1.10.2020 and got salary of rupee equivalent of ` 80,000 p.m. from 1.10.2020 to 31.3.2021 in Dubai. His salary for October to December 2020 was credited in his Dubai bank account and the salary for January to March 2021 was credited in his Mumbai account directly. He is liable to tax in respect of –

Mr. Suhaan (aged 35 years), a non-resident earned dividend income of` 12,50,000 from an Indian Company which was declared on 30.09.2020 and credited directly to its bank account on 05.10.2020 in France and ` 15,000 as interest in Saving A/c from State Bank of India for the previous year 2020-21. Assuming that he has no other income, what will be amount of income chargeable to tax in his hands in India for A.Y. 2021-22?

Aashish earns the following income during the P.Y. 2020-21:
Interest on U.K. Development Bonds (1/4th being received in India): ` 4,00,000
Capital gain on sale of a building located in India but received in Holland: ` 6,00,000
If Aashish is a resident but not ordinarily resident in India, then what will be amount of income chargeable to tax in India for A.Y. 2021-22?

Mr. Sumit is an Indian citizen and a member of the crew of an America bound Indian ship engaged in carriage of freight in international traffic departing from Chennai on 25th April, 2020. From the following details for the P.Y. 2020-21, What would be the residential status of Mr. Sumit for A.Y. 2021-22, assuming that his stay in India in the last
4 previous years preceding P.Y. 2020-21 is 365 days and last seven previous years preceding P.Y. 2020-21 is 730 days?
Date entered in the Continuous Discharge Certificate in respect of joining the ship by Mr. Sumit: 25th April, 2020
Date entered in the Continuous Discharge Certificate in respect of signing off the ship by Mr. Sumit: 24th October, 2020
Mr. Sumit has been filing his income tax return in India as a Resident for the preceding 2 previous years.

Dividend income from Australian company received in Australia in the year 2019, brought to India during the previous year 2020-21 is taxable in the A.Y.2021-22 in the case of –

Mr. Ramesh, a citizen of India, is employed in the Indian embassy in Australia. He is a non-resident for A.Y. 2021-22. He received salary and allowances in the Australia from the Government of India for the year ended 31.03.2021 for services rendered by him in Australia. In addition, he was allowed perquisites by the Government. Which of the following statements are correct?

Mr. Nishant, a resident but not ordinarily resident for the previous year 2019-20 and resident and ordinarily resident for the previous year 2020-21 has received rent from property in Canada amounting to` 1,00,000 during the P.Y. 2019-20 in a bank in Canada. During the financial year 2020-21, he remitted this amount to India through approved banking channels. Is such rent taxable in India, and if so, how much and in which year?

Who among the following will qualify as non-resident for the previous year 2020-21?
– Mr. Joey, an Italian designer came on visit to India to explore Indian handloom on 03.09.2020 and left on 15.12.2020. For past four years, he visited India for fashion shows and stayed in India for 100 days each year.
Mr. Sanjay born and settled in Canada, visits India each year for three months to meet his parents and grandparents, born in India in 1946, living in Mumbai. His Indian income is` 15,20,000.
Mr. Chang, a Korean scientist left India to his home country for fixed employment there. He stayed in India for study and research in medicines from 01.01.2016 till 01.07.2020.
Choose the correct answer:

Which of the following income would be exempt in the hands of a Sikkimese Individual?

Which of the following statements is/are true in respect of taxability of agricultural income under the Income-tax Act, 1961?
(i) Any income derived from saplings or seedlings grown in a nursery is agricultural income exempt from tax u/s 10(1).
(ii) 60% of dividend received from shares held in a tea company is agricultural income exempt from tax u/s 10(1).
(iii) While computing income tax liability of an assessee aged 50 years, agricultural income is required to be added to total income only if net agricultural income for the P.Y. exceeds
` 5,000 and the total income (including net agricultural income) exceeds ` 2,50,000.
(iv) While computing income tax liability of an assessee aged 50 years, agricultural income is required to be added to total income only if net agricultural income for the P.Y. exceeds
` 5,000 and the total income (excluding net agricultural income) exceeds ` 2,50,000.
Choose the correct answer:

XYZ Ltd. has two units, one unit at Special Economic Zone (SEZ) and other unit at Domestic Tariff Area (DTA). The unit in SEZ was set up and started manufacturing from 12.3.2012 and unit in DTA from 15.6.2015. Total turnover of XYZ Ltd. and Unit in DTA is` 8,50,00,000 and ` 3,25,00,000, respectively. Export sales of unit in SEZ and DTA is ` 2,50,00,000 and ` 1,25,00,000, respectively and net profit of Unit in SEZ and DTA is ` 80,00,000 and ` 45,00,000, respectively. XYZ Ltd. would be eligible for deduction under section 10AA for P.Y. 2020-21 for-

Income derived from farm building situated in the immediate vicinity of an agricultural land (not assessed to land revenue) would be treated as agricultural income if such land is situated in –

Anirudh stays in New Delhi. His basic salary is ` 10,000 p.m., D.A. (60% of which forms part of pay) is ` 6,000 p.m., HRA is ` 5,000 p.m. and he is entitled to a commission of 1% on the turnover achieved by him. Anirudh pays a rent of ` 5,500 p.m. The turnover achieved by him during the current year is ` 12 lakhs. The amount of HRA exempt under section 10(13A) is –

Where there is a decision to increase the D.A. in March, 2021 with retrospective effect from 1.4.2019, and the increased D.A. is received in April, 2021, the increase is taxable –

Anand is provided with furniture to the value of ` 70,000 along with house from February, 2020. The actual hire charges paid by his employer for hire of furniture is ` 5,000 p.a.. The value of furniture to be included along with value of unfurnished house for A.Y.2021-22 is-

Mr. Kashyap received basic salary of ` 20,000 p.m. from his employer. He also received children education allowance of ` 3,000 for three children and transport allowance of ` 1,800 p.m. Assume he is not opting to pay tax under section 115BAC. The amount of salary chargeable to tax for P.Y. 2020-21 is –

Mr. Jagat is an employee in accounts department of Bharat Ltd., a cellular company operating in the regions of eastern India. It is engaged in manufacturing of cellular devices. During F.Y. 2020-21, following transactions were undertaken by Mr. Jagat:
(i) He attended a seminar on “Perquisite Valuation”. Seminar fees of ` 12,500 was paid by Bharat Ltd.
(ii) Tuition fees of Mr. Himanshu (son of Mr. Jagat) paid to private coaching classes (not having any tie-up with Bharat Ltd.) was reimbursed by Bharat Ltd. Amount of fees was ` 25,000.
(ii) Ms. Sapna (daughter of Mr. Jagat) studies in DPS Public School (owned and maintained by Bharat Ltd.). Tuition fees paid for Ms. Sapna was ` 750 per month by Mr. Jagat. Cost of education in similar institution is ` 5,250 per month.
What shall be the amount which is chargeable to tax under the head “Salaries” in hands of Mr. Jagat for A.Y. 2021-22?

Vidya received ` 90,000 in May, 2020 towards recovery of unrealised rent, which was deducted from actual rent during the P.Y. 2018-19 for determining annual value. Legal expense incurred in relation to unrealized rent is ` 20,000. The amount taxable under section 25A for A.Y. 2021-22 would be –

Ganesh and Rajesh are co-owners of a self-occupied property. They own 50% share each. The interest paid by each co-owner during the previous year on loan (taken for acquisition of property during the year 2004) is ` 2,05,000. The amount of allowable deduction in respect of each co-owner is –

Mr. Raghav has three houses for self-occupation. What would be the tax treatment for A.Y.2021-22 in respect of income from house property?

An electricity company charging depreciation on straight line method on each asset separately, sells one of its machinery in April, 2020 at` 1,20,000. The WDV of the machinery at the beginning of the year i.e., on 1st April, 2020 is ` 1,35,000. No new machinery was purchased during the year. The shortfall of ` 15,000 is treated as –

Mr. X acquires an asset in the year 2015-16 for the use for scientific research for ` 2,75,000. He claimed deduction under section 35(1)(iv) in the previous year 2015-16. The asset was brought into use for the business of Mr. X in the P.Y.2020-21, after the research was completed. The actual cost of the asset to be included in the block of assets is –

Mr. X, a retailer acquired furniture on 10th May 2020 for ` 10,000 in cash and on 15th May 2020, for ` 15,000 and ` 20,000 by a bearer cheque and account payee cheque, respectively. Depreciation allowable for A.Y. 2021-22 would be –

The W.D.V. of a block (Plant and Machinery, rate of depreciation 15%) as on 1.4.2020 is ` 3,20,000. A second hand ‘machinery costing` 50,000 was acquired on 1.9.2020 through account payee cheque but put to use on 1.11.2020. During Jan 2021, part of this block was sold for ` 2,00,000. The depreciation for A.Y.2021-22 would be –

M/s ABC, an eligible assessee, following mercantile system of accounting, carrying on eligible business under section 44AD provides the following details:
Total turnover for the financial year 2020-21 is ` 130 lakh
Out of the above:
` 25 lakh received by A/c payee cheque during the financial year 2020-21;
` 50 lakh received by cash during the financial year 2020-21;
` 25 lakh received by A/c payee bank draft before the due date of filing of return;
` 30 lakh not received till due date of filing of return.
What shall be the amount of deemed profits of M/s ABC under section 44AD(1) for A.Y. 2021-22?

Mr. Shahid, a wholesale supplier of dyes, provides you with the details of the following cash payments he made throughout the year –
(i) 12.06.2020: loan repayment of ` 27,000 taken for business purpose from his friend Kunal. The repayment also includes interest of ` 5,000.
(ii) 19.08.2020: Portable dye machinery purchased for ` 15,000. The payment was made in cash in three weekly instalments.
(iii) 26.01.2021: Payment of ` 10,000 made to electrician due to unforeseen electric circuit at shop
(iv) 28.02.2021: Purchases made from unregistered dealer for` 13,500
What will be disallowance under 40A(3), if any, if Mr. Shahid opts to declare his income as per the provisions of section 44AD?

For an assessee, who is a salaried employee who invests in equity shares, what is the benefit available in respect of securities transaction tax paid by him on sale and acquisition of 100 listed shares of X Ltd. which has been held by him for 14 months before sale?

Under section 54EC, capital gains on transfer of land or building or both are exempted if invested in the bonds issued by NHAI & RECL or other notified bond-

Mr. A (aged 45 years) sold an agricultural land for ` 52 lakhs on 04.10.2020 acquired at a cost of ` 49.25 lakhs on 13.09.2019 situated at 7 kms from the jurisdiction of municipality having population of 4,00,000 and also sold another agricultural land for ` 53 lakhs on 12.12.2020 acquired at a cost of ` 46 lakhs on 15.02.2019 situated at 1.5 kms from the jurisdiction of municipality having population of 12,000. What would be the amount of capital gain chargeable to tax in the hands of Mr. A for the assessment year 2021-22? Cost inflation index for F.Y. 2018-19: 280; 2019-20:289; 2020-21: 301.

Mr. Kashyap has acquired a building from his friend on 10.10.2020 for` 15,00,000. The stamp duty value of the building on the date of purchase is ` 16,20,000. Income chargeable to tax in the hands of Mr. Kashyap is

Mr. X aged, 61 years, received dividend of ` 12,00,000 from ABC Ltd. in P.Y. 2020-21. Interest on loan taken for the purpose of investment in ABC Ltd., is ` 3,00,000. Income included in the hands of Mr. X for P.Y. 2020-21 would be –

Mr. Mayank has received a sum of ` 75,000 on 24.10.2020 from his friend on the occasion of his marriage anniversary. What would be the taxability of the said sum in the hands of Mr. Mayank?

If the converted property is subsequently partitioned among the members of the family, the income derived from such converted property as is received by the spouse of the transferor will be taxable –

Mr. Aarav gifted a house property valued at ` 50 lakhs to his wife, Geetha, who in turn has gifted the same to her daughter-in-law Deepa. The house was let out at ` 25,000 per month throughout the P.Y.2020-21. Compute income from house property for A.Y.2021-22. In whose hands is the income from house property chargeable to tax?

Ram owns 500, 15% debentures of Reliance Industries Ltd. of ` 500 each. Annual interest of ` 37,500 was declared on these debentures for P.Y. 2020-21. He transfers interest income to his friend Shyam, without transferring the ownership of these debentures. While filing return of income for A.Y. 2021-22, Shyam showed ` 37,500 as his income from debentures. As tax advisor of Shyam, do you agree with the tax treatment done by Shyam in his return of income?

Mrs. Shivani, wife of Mr. Anurag, is a partner in a firm. Her capital contribution of ` 5 lakhs to the firm as on 1.4.2020 included ` 3.5 lakhs contributed out of gift received from Anurag. The firm paid interest on capital of ` 50,000 and share of profit of ` 60,000 during the F.Y.2020-21. The entire interest has been allowed as deduction in the hands of the firm. Which of the following statements is correct?

Mr. Arvind gifted a house property to his wife, Ms. Meena and a flat to his daughter-in law, Ms. Seetha. Both the properties were let out. Which of the following statements is correct?

On 20.10.2020, Pihu (minor child) gets a gift of ` 20,00,000 from her father’s friend. On the same day, the amount is deposited as fixed deposit in Pihu’s bank account. On the said deposit, interest of` 13,000 was earned during the P.Y. 2020-21. In whose hands the income of Pihu shall be taxable? Also, compute the amount of income that shall be taxable.

Mr. A incurred short-term capital loss of ` 10,000 on sale of shares through the National Stock Exchange. Such loss -?

According to section 80, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of section 139(3), shall be carried forward. The exceptions to this are –

Brought forward loss from house property of ` 3,10,000 of A.Y. 2020- 21 is allowed to be set-off against income from house property of A.Y. 2021-22 of ` 5,00,000 to the extent of –

Mr. Rohan incurred loss of ` 3 lakh in the P.Y. 2020-21 in retail trade business. Against which of the following income during the same year, can he set-off such loss?