CA INTER MAY/ NOV 2024 - ICAI MCQ – INCOME TAX

CHAPTER 1 – BASIC CONCEPTS

SIMPLE:

Question - 1 :
The Gupta HUF in Maharashtra comprises of Mr. Harsh Gupta, his wife Mrs. Nidhi Gupta, his
son Mr. Deepak Gupta, his daughter-in-law Mrs. Deepti Gupta, his daughter Miss Preeti Gupta
and his unmarried brother Mr. Gautam Gupta. Which of the members of the HUF are eligible
for co-parcenary rights?
Answer - 1 : Only Mr. Harsh Gupta, Mr. Gautam Gupta and Mr. Deepak Gupta
Answer - 2 : Only Mr. Harsh Gupta, Mr. Gautam Gupta, Mr. Deepak Gupta and Miss Preeti
Gupta
Answer - 3 : Only Mr. Harsh Gupta, Mr. Gautam Gupta, Mr. Deepak Gupta, Mrs. Nidhi Gupta and Mrs.
Deepti Gupta
Answer - 4 : All the members are co-parceners
Description: Refer Mitakshara school of Hindu Law

Question - 2 :
Ms. Sowmya has three farm buildings situated in the immediate vicinity of a rural agricultural
land. In the P.Y.2023-24, she earned Rs. 3 lakh from letting out her farm building 1 for storage
of food grains, Rs. 10 lakh from letting out her farm building 2 for storage of dairy products and
Rs.15 lakh from letting out her farm building 3 for residential purposes of Mr. Sumanth, whose
food grain produce is stored in farm building 1. What is the amount of agricultural income
exempt from income-tax?
Answer - 1 : Nil
Answer - 2 : Rs. 3,00,000
Answer - 3 : Rs. 13,00,000
Answer - 4 : Rs. 18,00,000
Description: Refer sections 2(1A) and 10(1)

Question - 3 :
Which of the following is agriculture income?
Answer - 1 : Income from breeding of livestock
Answer - 2 : Income from fisheries
Answer - 3 : Income from juice centre
Answer - 4 : Income derived from saplings or seedlings grown in a nursery
Description: Refer Explanation 3 to section 2(1A).

Question - 4 :
The rates of income-tax are mentioned in -
Answer - 1 : The Income-tax Act, 1961 only
Answer - 2 : The First Schedule to the Annual Finance Act
Answer - 3 : Both Income-tax Act, 1961 and the First Schedule to the Annual Finance Act
Answer - 4 : Both Income-tax Act, 1961 and Income-tax Rules, 1962

Question - 5 :
For A.Y. 2024-25, Mr. Hari, a resident Indian, earns income of Rs. 10 lakhs from sale of rubber
manufactured from latex obtained from rubber plants grown by him in India and Rs. 15 lakhs
from sale of rubber manufactured from latex obtained from rubber plants grown by him in
Malaysia. What would be his business income chargeable to tax in India, assuming he has no
other business?

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Answer - 1 : Rs. 3,50,000
Answer - 2 : Rs. 4,00,000
Answer - 3 : Rs. 8,75,000
Answer - 4 : Rs. 18,50,000
Description: Refer Rule 7A

MEDIUM:

Question - 1 :

Mr. Raman, aged 64 years, was not able to provide satisfactory explanation to the Assessing
Officer for the investments of Rs. 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?
Answer - 1 : Rs. 2,18,400
Answer - 2 : Rs. 55,000
Answer - 3 : Rs. 5,46,000
Answer - 4 : Rs. 54,600
Description: Refer section 115BBE

Question - 2 :
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 Rs.
5,000 and the total income (including net agricultural income) exceeds the basic exemption
limit.
(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 Rs.
5,000 and the total income (excluding net agricultural income) exceeds the basic
exemption limit.
Answer - 1 : (i) and (iii)
Answer - 2 : (ii) and(iii)
Answer - 3 : (i) and (iv)
Answer - 4 : (i),(ii) and (iv)
Description: Refer section 2(1A) and partial integration of agricultural income with
nonagricultural income.

Question - 3 :
For A.Y.2024-25, Mr. Rajesh, a resident Indian, earns income of Rs.12 lakhs from sale of coffee
grown and cured in India. His friend, Mr. Ganesh, a resident Indian, earns income of Rs. 25
lakhs from sale of coffee grown, cured, roasted and grounded by him in India. What would be
the business income chargeable to tax in India of Mr. Rajesh and Mr. Ganesh?
Answer - 1 : Rs. 3,00,000 and Rs. 6,25,000, respectively
Answer - 2 : Rs. 3,00,000 and Rs. 10,00,000,
respectively
Answer - 3 : Rs. 4,80,000 and Rs. 10,00,000, respectively
Answer - 4 : Rs. 9,00,000 and Rs. 15,00,000, respectively
Description: Refer Rule 7B

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Question - 4 :
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?
Answer - 1 : an area at a distance of 3 kms from the local limits of a municipality and has a
population of 80,000 as per last census
Answer - 2 : an area within 1.5 kms from the local limits of a municipality and has a population
of12,000 as per last census
Answer - 3 : an area within 2 kms from the local limits of a municipality and has a population
of11,00,000 as per last census
Answer - 4 : an area within 8 kms from the local limits of a municipality and has a population
of10,50,000 as per last census
Description: Refer section 2(1A)

DIFFICULT:

Question - 1 :
Mr. Nekinsaan, aged 43 years, provides the following income details for P.Y. 2023-24 as
follows:
Particular Rs.
s
Capital Gains under section 112A 120 Lakhs
Capital Gains under section 111A 110 Lakhs
Other Income 520 Lakhs
What shall be the tax liability of Mr. Nekinsaan under optional tax regime as per
normal provisions of the Income-tax Act, 1961 for A.Y. 2024-25?
Answer - 1 : Rs. 260.06 Lakhs
Answer - 2 : Rs. 253.68 lakhs
Answer – 3 : Rs. 256.52 lakhs
Answer - 4 : Rs. 253.56 lakhs

Question - 2 :
Miss Nisha (45 years) is a non resident individual. For the A.Y.2024-25, she has following
income: Long-term capital gain on transfer of listed equity shares (STT has been paid on
acquisition and transfer of the said shares) - Rs.1,80,000
Other income - Rs. 2,75,000
Calculate the tax liability of Miss Nisha for A.Y. 2024-25 under default tax regime.
Answer - 1 : Nil
Answer - 2 : Rs. 9,620
Answer - 3 : Rs. 5,720
Answer - 4 : Rs. 8,320
Description: Refer section 115BAC and 87A

Question - 3 :
Mr. Ashutosh, aged 65 years and a resident in India, has a total income of Rs. 3,20,00,000,
comprising long term capital gain taxable under section 112 of Rs. 57,00,000, long term
capital gain taxable under section 112A of Rs. 65,00,000 and other income of Rs. 1,98,00,000.
What would be his tax liability for
A.Y. 2024-25 under default tax regime.
Answer - 1 : Rs. 88,74,320
Answer - 2 : Rs. 89,19,170
Answer - 3 : Rs. 96,46,000
Answer - 4 : Rs. 94,60,880

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 CHAPTER 2 – Residence and Scope Of Total Income

SIMPLE:
Question - 1:
Aashish earns the following income during the P.Y. 2023-24:
Interest on U.K. Development Bonds (1/4th being received in India): Rs. 4,00,000 Capital
gain on sale of a building located in India but received in Holland: Rs. 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. 2024-25?
Answer - 1 : Rs. 7,00,000
Answer - 2 : Rs. 10,00,000
Answer - 3 : Rs. 6,00,000
Answer - 4 : Rs. 1,00,000
Description: Refer sections 5 and 9(1).

Question - 2:
Raman, a citizen of India, was employed in Hindustan Lever Ltd. He resigned on 27.09.2023.
He received a salary of Rs. 40,000 p.m. from 1.4.2023 to 27.9.2023 from Hindustan Lever Ltd.
Thereafter he left for Dubai for the first time on 1.10.2023 and got salary of rupee equivalent
of Rs. 80,000 p.m. from 1.10.2023 to 31.3.2024 in Dubai. His salary for October to December
2023 was credited in his Dubai bank account and the salary for January to March 2024 was
credited in his Mumbai account directly. He is liable to tax in respect of –
Answer - 1 : income received in India from Hindustan Lever Ltd.
Answer - 2 : income received in India and in Dubai.
Answer - 3 : income received in India from Hindustan Lever Ltd. and income directly credited in
India.
Answer - 4 : income received in Dubai.
Description: Refer section 5

Question - 3 :
Determine residential status of Sundaram (HUF) which carries out its transactions in
Malaysia. Its affairs are partly controlled from India. The Karta of HUF, Mr. Sundaram who is
from Chennai visits India on 01.06.2023 and leaves for Malaysia on 10.02.2024.
He has not visited India for the past 11 years.
Answer - 1 : Non-resident
Answer - 2 : Resident but not ordinarily resident
Answer - 3 : Deemed resident
Answer - 4 : Resident and ordinarily resident
Description: Refer sections 6(2) and 6(6).

Question - 4 : Income from a business in Australia, controlled from Australia is taxable in

case of
Answer - 1 : resident and ordinarily resident only
Answer - 2 : resident and ordinarily resident and resident but not ordinarily resident
Answer - 3 : non-resident
Answer - 4 : All the above
Description: Refer section 5

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 MEDIUM:

Question - 1 :
If Anirudh, a citizen of India, has stayed in India in the P.Y. 2023-24 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. 2024-25 would be –
Answer - 1 : Resident and ordinarily
resident
Answer - 2 : Resident but not
ordinarily resident
Answer - 3 : Non-resident
Answer - 4 : Deemed resident but not ordinarily resident
Description: Refer sections 6(1) and 6(6)

Question - 2 :
Mr. Tejas, an Indian Citizen, left India permanently with his wife and two children, for
extending his retail trade business of toys in Canada in the year 2016. From Canada,
he is managing his retail business of toys in India. For the purpose of his Indian
business, he visits India every year from 1st September to 31st January. His business
income is Rs. 23.50 lakhs and Rs. 18 lakhs from retail trade business in Canada and in
India, respectively for the F.Y. 2023-24. He has no other income during the P.Y. 2023-
24. Determine his residential status and income taxable in his hands for the A.Y. 2024-
25.
Answer - 1 : Resident and ordinarily resident in India
and income of Rs. 18 lakhs and Rs. 23.50 lakhs would be taxable.
Answer - 2 : Non-Resident and Rs. 18 lakhs from Indian retail trade business would only
be taxable.
Answer - 3 : Resident but not ordinarily Resident and Rs. 18 lakhs from Indian
retail trade business would only be taxable
Answer - 4 : Deemed resident and Rs. 18 lakhs from Indian retail trade business would only be
taxable
Description: Refer sections 6(1) and 5

Question - 3 :
Mr. Rajesh, aged 53 years, and his wife, Mrs. Sowmya, aged 50 years, are citizens of
Country X. They are living in Country X since birth. They are not liable to tax in
Country X. Both of them have keen interest in Indian Culture. Mr. Rajesh’s parents
and grandparents were born in Country X. Mrs. Sowmya visits India along with Mr.
Rajesh for four months every year to be with her parents, who were born in Delhi
and have always lived in Delhi. During their stay in India, they organize Cultural
Programme in Delhi- NCR. Income of Mr. Rajesh and Mrs. Sowmya from the Indian
sources for the P.Y. 2023-24 is Rs. 18 lakhs and Rs. 16 lakhs, respectively. What is the
residential status of Mr. Rajesh and Mrs. Sowmya for A.Y. 2024-25?
Answer - 1 : Both are resident and ordinarily resident in India
Answer - 2 : Both are non-resident in India
Answer - 3 : Mr. Rajesh is resident but not ordinarily resident in India and Mrs. Sowmya is
non-resident
Answer - 4 : Mrs. Sowmya is resident but not ordinarily resident in India and Mr.
Rajesh is resident and ordinarily resident in India
Description: Refer sections 6(1) and 6(6)

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Question - 4 :
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, 2023. From the following details for the P.Y. 2023-24, what would be the
residential status of Mr. Sumit for A.Y. 2024-25, assuming that his stay in India in the
last 4 previous years preceding P.Y. 2023- 24 is 365 days and last seven previous years
preceding P.Y. 2023-24 is 730 days?
Date entered in the Continuous Discharge Certificate in respect of joining the ship by
Mr. Sumit: 25th April, 2023 Date entered in the Continuous Discharge Certificate in
respect of signing off the ship by
Mr. Sumit: 24th October, 2023
Mr. Sumit has been filing his income tax return in
India as a resident for the preceding 2 previous
years.
Answer - 1 : Resident and ordinarily resident
Answer - 2 : Resident but not-ordinarily resident
Answer - 3 : Non-resident
Answer - 4 : Deemed resident but not-ordinarily Resident
Description: Refer illustration 1

DIFFICULT :

Question - 1 :
Mr. Square, an Indian citizen, currently resides in Dubai. He came to India on a visit and his
total stay in India during the F.Y. 2023-24 was 135 days. He is not liable to pay any tax in
Dubai. Following is his details of stay in India in the preceding previous years:
Financial Days of Stays in
Year India
2022-23 100
2021-22 125
2020-21 106
2019-20 83
2018-19 78
2017-18 37
2016-17 40
What shall be his residential status for the P.Y. 2023- 24 if his total income (other than
income from foreign sources) is Rs. 10 lakhs?
Answer - 1 : Resident but not ordinary resident
Answer - 2 : Resident and ordinary resident
Answer - 3 : Non-resident
Answer - 4 : Deemed resident but not ordinarily resident
Description: Refer sections 6(1) and 6(1A).

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Question - 2 :
Mr. Sushant is a person of Indian origin, residing in Canada. During P.Y. 2023-24, he visited
India on several occasions and his period of stay, in total, amounted to 129 days during P.Y.
2023- 24 and his period of stay in India during P.Y. 2022-23, P.Y.2021- 22, P.Y. 2020-21 and
P.Y. 2019- 20 was 135 days, 115 days, 95 days and 125 days, respectively. He earned the
following incomes during the P.Y. 2023-24:
Source of Income Amount (Rs.)
Income received or deemed to be received in India 2,50.000
Income accruing or arising or which is deemed to accrue or arise in 3,75,000
India
Income accruing or arising and received outside India from business 5,50,000
controlled from India
Income accruing or arising and received outside India from business 6,50,000
controlled outside India
What is the residential status of Mr. Sushant for A.Y. 2024-25 and his income liable to
tax in India during A.Y. 2024-25?
Answer - 1 : Non-Resident; Rs. 6,25,000 is liable to tax in India
Answer - 2 : Resident and ordinary resident; Rs.18,25,000 is liable to tax in
India Answer - 3 : Resident but not ordinarily resident; Rs. 11,75,000 is
liable to tax in India Answer - 4 : Non-Resident; Rs. 11,75,000 is liable to tax
in India
Description: Refer sections 6(1A) and 5

Question - 3 :
Who among the following will qualify as non-resident for the P.Y. 2023-24?
Mr. Bob, an Italian dancer, came on visit to India to explore Indian dance on 15.09.2023 and
left on 25.12.2023. For past four years, he visited India for dance competition and stayed in
India for 120 days each year.
Mr. Samrat born and settled in USA, visits India each year for 100 days to meet his parents and
grandparents, born in India in 1946, living in Delhi. His Indian income is Rs. 15,20,000
Mr. Joseph, an American scientist, left India to his home country for fixed employment there.
He stayed in India for study and research in medicines from 01.01.2018 till 01.07.2023
Choose the correct answer
Answer - 1 : Mr. Bob and Mr. Joseph
Answer - 2 : Mr. Samrat
Answer - 3 : Mr. Bob, Mr. Samrat and Mr. Joseph
Answer - 4 : None of the three
Description: Refer section 6(1)

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 CHAPTER 3 – Heads Of Income

SIMPLE :

Question - 1 :
The HRA paid to an employee residing in Patna is exempt up to the lower of actual
HRA, excess of rent paid over 10% of salary and –
Answer - 1 : 30% of salary
Answer - 2 : 40% of salary
Answer - 3 : 50% of salary
Answer - 4 : 60% of salary
Description: Refer section 10(13A)

Question - 2 : Mr. Kashyap received basic salary of Rs. 20,000 p.m. from his employer.
He also received children education allowance of Rs. 3,000 for three children and
transport allowance of Rs. 1,800 p.m. Assume he exercises the option of shifting out of
the default regime provided under section 115BAC(1A). The amount of salary
chargeable to tax for P.Y. 2023-24 is –
Answer - 1 : Rs. 2,62,600
Answer - 2 : Rs. 2,12,600
Answer - 3 : Rs. 2,11,600
Answer - 4 : Rs. 2,12,200
Description: Refer illustration 2 of Unit 1

Question - 3 : 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 2023-24 on loan
(taken for acquisition of property during the year 2004) is Rs. 2,05,000. The amount of
allowable deduction in respect of each co-owner, if they have exercised the option of shifting
out of the default regime provided under section 115BAC(1A), is -
Answer - 1 : Rs. 2,05,000
Answer - 2 : Rs. 1,02,500
Answer - 3 : Rs. 2,00,000
Answer - 4 : Rs. 1,00,000
Description: Refer section 26

Question - 4 : Mr. Hari received voluntary retirement compensation of Rs. 8,00,000 after 30
years 2 months of service. He still has 5 years of service left. At the time of voluntary retirement,
he was drawing basic salary Rs. 15,000 p.m.;
Dearness allowance (which forms part of pay) Rs. 3,000 p.m. Compute his taxable voluntary
retirement compensation, assuming that he does not claim any relief under section 89 -
Answer - 1 : Rs. 8,00,000
Answer - 2 : Rs. 5,00,000
Answer - 3 : Rs. 3,00,000
Answer - 4 : Nil
Description: Refer section 10(10C)

Question - 5 : Mr. Vikas received a gold ring worth Rs. 60,000 on the occasion of his daughter’s
wedding from his best friend Mr. Vishnu. Mr. Vishnu also gifted a gold chain to Kavya, daughter
of Mr. Vikas, worth Rs. 80,000 on the said occasion. Would such gifts be taxable in the hands
of Mr. Vikas and Ms. Kavya?
Answer - 1 : Yes, the gift of gold ring and gold chain is taxable in the hands of Mr. Vikas and Ms.
Kavya, respectively
Answer - 2 : Such gifts are not taxable in the hands of Mr. Vikas nor in the hands of Ms. Kavya

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Answer - 3 : Value of gold ring is taxable in the hands of Mr. Vikas but value of gold chain is
not taxable in the hands of Ms. Kavya
Answer - 4 : Value of gold chain is taxable in the hands of Ms. Kavya but value of gold ring is
not taxable in the hands of Mr. Vikas
Description: Refer section 56(2)(x)

Question - 6 : Mr. Kashyap has acquired a building from his friend on 10.10.2023 forRs.
15,00,000. The stamp duty value of the building on the date of purchase is Rs. 16,20,000.
Income chargeable to tax in the hands of Mr. Kashyap is
Answer - 1 : Rs. 70,000
Answer - 2 : Rs. 50,000
Answer - 3 : Nil
Answer - 4 : Rs. 1,20,000
Description: Refer section 56(2)(x)

Question - 7 : 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 100listed shares of X Ltd. which has been held by him for 14 months
before sale?
Answer - 1 : Rebate under section 88E is allowable in respect of securities transaction tax
paid
Answer - 2 : Securities transaction tax paid is treated as expenses of transfer and
deducted from sale consideration.
Answer - 3 : Capital gains without deducting STT paid is taxable at a concessional
rate of 10% on such capital gains exceeding Rs. 1 lakh
Answer - 4 : Capital gains without deducting STT paid is taxable at concessional rate of 15%.

Question - 8 :
Mr. Mayank has received a sum of Rs. 75,000 on 24.10.2023 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?
Answer - 1 : Entire Rs. 75,000 is chargeable to tax
Answer - 2 : Entire Rs. 75,000 is exempt from tax
Answer - 3 : Only Rs. 25,000 is chargeable to tax
Answer - 4 : Only 50% i.e., Rs. 37,500 is chargeable to tax
Description: Refer section 56(2)(x)

Question - 9 : Mr. Raghav has three houses for self-occupation. What would be the
tax treatment for A.Y.2024-25 in respect of income from house property?
Answer - 1 : One house, at the option of Mr. Raghav, would be treated as self-occupied.
The other twohouses would be deemed to be let out.
Answer - 2 : Two houses, at the option of Mr. Raghav, would be treated as self-
occupied. The other house would be deemed to be let out.
Answer - 3 : One house, at the option of Assessing Officer, would be treated as self-occupied.
The other two houses would be deemed to be let out.
Answer - 4 : Two houses, at the option of Assessing Officer, would be treated as self-
occupied. The other house would be deemed to be let out.

Question - 10 : Mr. Ramesh, a citizen of India, is employed in the Indian embassy in

Australia. He is a non-resident for A.Y. 2024-25. He received salary and allowances in
Australia from the Government of India for the year ended 31.03.2024 for services
rendered by him in Australia. In addition, he was allowed perquisites by the
Government. Which of the following statements are correct?

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Answer - 1 : Salary, allowances and perquisites received outside India are not taxable in
the hands ofMr. Ramesh, since he is non-resident.
Answer - 2 : Salary, allowances and perquisites received outside India by Mr. Ramesh
are taxable in India since they are deemed to accrue or arise in India.
Answer - 3 : Salary received by Mr. Ramesh is taxable in India but allowances
and perquisites are exempt.
Answer - 4 : Salary received by Mr. Ramesh is exempt in India but allowances and
perquisites aretaxable.
Description: Refer section 10(7)

Question - 11 : 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 -
Answer - 1 : within a period of 6 months after the date of such transfer
Answer - 2 : within a period of 6 months from the end of the relevant previous year
Answer - 3 : within a period of 6 months from the end of the previous year or the due date
for filing the return of income under section 139(1), whichever is earlier
Answer - 4 : At any time before the end of the relevant previous year.

Question - 12 : Mr. X, a retailer, acquired furniture on 10th May 2023 for Rs. 10,000 in cash
and on 15th May 2023, for Rs. 15,000 and Rs. 20,000 by a bearer cheque and account payee
cheque, respectively. Depreciation allowable for A.Y. 2024-25 would be -
Answer - 1 : Rs. 2,000
Answer - 2 : Rs. 3,000
Answer - 3 : Rs. 3,500
Answer - 4 : Rs. 4,500
Description: Refer sections 43(1) and 32(1)(ii)

Question - 13 :
In case of a Member of Parliament -
Answer - 1 : Daily allowance is exempt but constituency allowance received as per applicable Rules
istaxable.
Answer - 2 : Constituency allowance received as per applicable Rules is exempt but daily allowance
istaxable.
Answer - 3 : Both daily allowance and constituency allowance received as per applicable Rules
aretaxable.
Answer - 4 : Both daily allowance and constituency allowance received as per applicable
Rules are exempt.
Description: Refer section 10(17)

Question - 14 :
For the purpose of determining the perquisite value of loan at concessional rate given to
the employee, the lending rate of State Bank of India as on is required;
Answer - 1 : 1st day of the relevant previous
year
Answer - 2 : Last day of the relevant previous year
Answer - 3 : the day the loan is given
Answer - 4 : 1st day of the relevant assessment year
Description: Refer perquisite valuation Rules

Question - 15 : An electricity company charging depreciation on straight line method on each

asset separately, sells one of its machinery in April, 2023 at Rs. 1,20,000. The WDV of the
machinery at the beginning of the year i.e., on 1st April, 2023 is Rs. 1,35,000. No new
machinery was purchased during the year. The shortfall of Rs. 15,000 would be –

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Answer - 1 : Terminal depreciation
Answer - 2 : Normal depreciation
Answer - 3 : Always a short-term capital loss
Answer - 4 : Short-term capital loss or long-term capital loss, depending upon the period of holding
Description: Refer section 32(1)(iii)

Question - 16 : Mr. X acquires an asset in the year 2017-18 for the use for scientific research
for Rs.2,75,000. He claimed deduction under section 35(1)(iv) in the previous year 2017-18.
The asset was brought into use for the business of Mr. X in the P.Y.2023-24, after the research
was completed. The actual cost of the asset to be included in the block of assets is -
Answer - 1 : Nil
Answer - 2 : Market value of the asset on the date of transfer to business
Answer - 3 : Rs. 2,75,000 less notional depreciation under section 32 upto the date of transfer
Answer - 4 : Actual cost of the asset i.e., Rs. 2,75,000
Description: Refer section 43(1)

Question - 17 : Unexhausted basic exemption limit of a resident individual can be adjusted

against
Answer - 1 : only LTCG taxable @20% u/s 112
Answer - 2 : only STCG taxable @15% u/s 111A
Answer - 3 : both (a) and (b)
Answer - 4 : casual income taxable @30% u/s 115BB
Description: Refer section 112, 111A and section 115BB

Question - 18 : Anirudh stays in New Delhi. His basic salary is Rs. 10,000 p.m., D.A.
(60% of which forms part of pay) is Rs. 6,000 p.m., HRA is Rs. 5,000 p.m. and he is
entitled to a commission of 1% on the turnover achieved by him. Anirudh pays a rent
of Rs. 5,500 p.m. The turnover achieved by him during the current year is Rs. 12
lakhs. The amount of HRA exempt under section 10(13A), if he exercises the option
of shifting out of the default regime provided under section 115BAC(1A), is -
Answer - 1 : Rs. 48,480
Answer - 2 : Rs. 45,600
Answer - 3 : Rs. 49,680
Answer - 4 : Rs. 46,800
Description: Refer section 10(13A)

Question - 19 :
Anand is provided with furniture to the value of Rs. 70,000 along with house from
1st April, 2023. The actual hire charges paid by his employer for hire of furniture is
Rs. 5,000 p.a.
The value of furniture to be included along with value of unfurnished house for A.Y.2024-25
is-
Answer - 1 : Rs. 5,000
Answer - 2 : Rs. 7,000
Answer - 3 : Rs. 10,000
Answer - 4 : Rs. 14,000
Description: Refer perquisite valuation rules on rent free accommodation

Question - 20 : Vidya received Rs. 90,000 in May, 2023 towards recovery of unrealised
rent, which was deducted from actual rent during the P.Y. 2021-22 for determining
annual value. Legal expense incurred in relation to unrealized rent is Rs. 20,000. The
amount taxable under section 25A for A.Y. 2024-25 would be -

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 Answer - 1 : Rs. 70,000
Answer - 2 : Rs. 63,000
Answer - 3 : Rs. 90,000
Answer - 4 : Rs. 49,000
Description: Refer illustration 10 of Unit 2

MEDIUM :

Question - 1 :
Mr. A, an eligible assessee, following mercantile system of accounting, carrying on
eligible business u/s 44AD provides the following details:
- Total turnover for the F.Y.2023-24 is Rs. 130 lakh
- Out of the above:
Rs. 25 lakh received by A/c payee cheque during the F.Y.2023-
24; Rs. 50 lakh received by cash during the F.Y.2023-24;
Rs. 25 lakh received by A/c payee bank draft before the due date of filing of
return; Rs. 30 lakh not received till due date of filing of return.
What shall be the amount of deemed profits of Mr.
A under section 44AD(1) for A.Y. 2024-25?
Answer - 1 : Rs. 10.4 lakh
Answer - 2 : Rs. 7.0 lakh
Answer - 3 : Rs. 5.5 lakh
Answer - 4 : Rs. 9.4 lakh
Description: Refer section 44AD

Question - 2 : Mr. X, aged 61 years, earned dividend of Rs. 12,00,000 from ABC Ltd. in P.Y.
2023-24. Interest on loan taken for the purpose of investment in ABC Ltd., is Rs. 3,00,000.
Income includible in the hands of Mr. X for P.Y. 2023-24 would be -
Answer - 1 : Rs. 12,00,000
Answer - 2 : Rs. 9,60,000
Answer - 3 : Rs. 9,00,000
Answer - 4 : Rs. 2,00,000
Description: Refer section 57

Question - 3 : Mr. Harry and Mr. Sujoy, resident and Indian citizens, have been appointed as
senior officials of County A embassy and County B embassy, respectively, in India in October,
2023. Mr. Harry and Mr. Sujoy are subjects of Country A and County B, respectively, and are
not engaged in any other business or profession in India. The remuneration received by
Indian officials working in Indian embassy in County A is exempt but in County B is taxable.
The tax treatment of remuneration received by Mr. Harry and Mr. Sujoy from embassies of
Country A and Country B, respectively, in India for the P.Y. 2023-24 is -
Answer - 1 : Exempt from income-tax under
section 10
Answer - 2 : Taxable under the Income-tax
Act, 1961
Answer - 3 : Remuneration received by Mr. Harry is exempt but remuneration received by
Mr. Sujoy is taxable
Answer - 4 : Remuneration received by Mr. Sujoy is exempt but remuneration received by
Mr. Harry is taxable
Description: Refer section 10(6)(ii)

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Question - 4 : The W.D.V. of a block (Plant and Machinery, rate of depreciation 15%)
as on 1.4.2023 is Rs. 3,20,000. A second-hand machinery costing Rs. 50,000 was
acquired on 1.9.2023 through account payee cheque but put to use on 1.11.2023.
During January 2024, part of this block was sold for Rs. 2,00,000. The depreciation
for A.Y.2024-25 would be -
Answer - 1 : Rs. 21,750
Answer - 2 : Rs. 25,500
Answer - 3 : Rs. 21,125
Answer - 4 : Rs. 12,750
Description: Refer section 32(1)(ii)

Question - 5 : Unexhausted basic exemption limit of a non-resident individual can

be adjusted against –
Answer - 1 : only LTCG taxable @20% u/s 112
Answer - 2 : only STCG taxable @15% u/s 111A
Answer - 3 : both (a) and (b)
Answer - 4 : neither (a) nor (b)

Question - 6 : Mr. Virat has a house property in Chennai which he let out to Mr. Sumit.
For acquisition of this house, Mr. Virat has taken a loan of Rs. 30,00,000 @10% p.a.
on 1-4-2017. Hehas further taken a loan of Rs. 5 lakhs @12% p.a. on 1.7.2023 towards
repairs of the house. He has not repaid any amount of loan so far. The amount of
interest deduction u/s 24(b) to Mr. Virat for A.Y. 2024-25 is -
Answer - 1 : Rs. 2,00,000
Answer - 2 : Rs. 2,30,000
Answer - 3 : Rs. 3,45,000
Answer - 4 : Rs. 3,60,000
Description: Refer section 24(b)

Question - 7 :
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. 2023- 24, following transactions were undertaken by Mr. Jagat:
(i) He attended a seminar on "Perquisite Valuation". Seminar fees of Rs. 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 Rs. 25,000.
(iii) Ms. Sapna (daughter of Mr. Jagat) studies in Bharat Public School (owned and
maintained by Bharat Ltd.). Tuition fees paid for Ms. Sapna was Rs. 750 per month
by Mr. Jagat. Cost of education in similar institution is Rs. 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. 2024-25?
Answer - 1 : Rs. 25,000
Answer - 2 : Rs. 37,500
Answer - 3 : Rs. 66,500
Answer - 4 : Rs. 79,000

Question - 8 : XYZ Pvt. Ltd. provides a car (below 1.6 ltr cc) along with a driver to Mr. Sanjay,
employee of XYZ Pvt. Ltd., partly for official and partly for personal purpose. The expenses
incurred by the company are: Running and maintenance expenses - Rs. 32,000 and driver’s
salary- Rs. 36,000. The taxable value of car facility for A.Y. 2024-25 will be -
Answer - 1 : Rs. 21,600

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Answer - 2 : Rs. 10,800
Answer - 3 : Rs. 32,400
Answer - 4 : Rs. 39,600
Description: Refer perquisite valuation rules on car

Question - 9 : Mr. Vikas transferred 600 unlisted shares of XYZ (P) Ltd. to ABC (P) Ltd. on
15.12.2023 for Rs. 3,50,000 when its fair market value was Rs. 5,15,000. The indexed cost of
acquisition of shares for Mr. Vikas was computed at Rs. 4,25,000. Determine the income
chargeable to tax in the hands of Mr. Vikas and ABC (P) Ltd. in respect of the above transaction.
Answer - 1 : Rs. 90,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and
nothing is taxable in the hands of ABC (P) Ltd.
Answer - 2 : Rs. 75,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and
nothing is taxable in the hands of ABC (P) Ltd.
Answer - 3 : Rs. 90,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains
and Rs. 1,65,000 is taxable under the head “Income from other sources” in the hands of ABC
(P) Ltd.
Answer - 4 : Rs. 75,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and
Rs.1,65,000 is taxable under the head “Income from other sources” in the hands of ABC (P) Ltd.
Description: Refer section 56(2)(viib)

Question - 10 : Mr. Vikas took a loan of Rs. 5,00,000 @10% p.a. on 1-4-2021 for the
construction of residential house for self occupation. The construction of the house began in
June, 2021 and was completed on 30-6-2023. He has not repaid any amount of loan so far. The
amount of interest deduction u/s 24(b) for A.Y. 2024-25, if he has exercised the option of
shifting out of the default regime provided under section 115BAC(1A), is -
Answer - 1 : Rs. 1,50,000
Answer - 2 : Rs. 1,80,000
Answer - 3 : Rs. 2,00,000
Answer - 4 : Rs. 2,10,000
Description: Refer section 24(b)

Question - 11 : K is a working partner in a firm on behalf of his HUF and the HUF has
contributed Rs. 3,00,000 as its capital contribution. Apart from this, K has given a loan of
Rs. 50,000 to the firm in his individual capacity. The firm pays interest as per market rate
of 15% per annum on capital as well as loan. Compute the amount of interest that shall be
allowed to the firm while calculating its business income assuming that the interest is
authorized by the partnership deed.
Answer - 1 : Rs. 42,000
Answer - 2 : Rs. 51,000
Answer - 3 : Rs. 52,500
Answer - 4 : Rs. 43,500
Description: Refer section 40(b)

Question - 12 : Mr. A purchased equity shares of a listed company on 01.05.2023

through BombayStock Exchange. He will sell the said shares after holding them for 18
months on BSE. Mr. A is predicting that he will make a profit of Rs. 1,20,000 by selling
the equity shares and further, is of the view that the said profit shall be exempt from
income-tax. Determine whether Mr. A’s view is correct in the light of the tax
implications that shall arise in his hands in the year of transfer of the said equity
shares.
Answer - 1 : Mr. A’s view is correct. The resultant gain would be a long-term capital gain
arising from sale of STT paid listed equity shares, which is fully exempt from tax.
Answer - 2 : Mr. A’s view is incorrect. The resultant gain would be a long-term capital gain,

CA PRATEEK BHADANI | EDUNANBAN.COM 14

chargeable to tax in his hands at the rate of 20%.
Answer - 3 : Mr. A’s view is incorrect. The resultant gain would be a short term capital gain,
chargeable to tax in his hands at the rate of 15%.
Answer - 4 : Mr. A’s view is partially correct. The resultant gain would be a long term
capital gain, exempt to the extent of Rs. 1,00,000. The long term capital gain in excess
of Rs. 1,00,000 would be taxable @10%.

Question - 13 :
A building was acquired on 1.4.1995 for Rs. 20,00,000 and sold for Rs. 80,00,000 on
01.06.2023. The fair market value of the building on 1.4.2001 was Rs. 25,00,000. Its
stamp duty value on the same date was Rs. 22,00,000.
Determine the capital gains on sale of such building for the A.Y.
2024-25? CII for F.Y. 2001-02: 100; F.Y. 2023-24: 348
Answer - 1 : Rs. 3,44,000
Answer - 2 : Rs. 10,40,000
Answer - 3 : Rs. 60,00,000
Answer - 4 : (Rs. 7,00,000)

Difficult :

Question - 1 : Mr. Raja, a proprietor, commenced operation of the business of a

new three star hotel in Mumbai on 1.7.2023. He had made a total investment of Rs.
7.58 crores till 30.6.2023. Out
of total investment of Rs. 7.58 crores, Rs. 1.58 crores was used for purchase of land in P.Y.2022-
23. Rs. 4.70 crores was used for constructing Hotel and balance of Rs. 1.30 used for purchasing
the furniture in P.Y. 2023-24. He wants to avail the benefit of deduction under section 35AD
as he satisfied with all the conditions prescribed u/s 35AD and has exercised the option of
shifting out of the default regime provided under section 115BAC(1A). His profit and gains
from the business for P.Y. 2023-24 is Rs. 50 lakhs before claiming deduction u/s 35AD. He
wants to file his income-tax return on 12.12.2024. How much deduction Mr. Raja can claim for
A.Y. 2024-25 and the losses which he can carry forward to A.Y. 2025-26?
Answer - 1 : He can claim the deduction of Rs. 7.58 crores from his business income but he would
not be able to carry forward the business loss of Rs. 7.08 crores
Answer - 2 : He can claim the deduction of Rs. 6.00 crores from his business income and can
carry forward the business loss of Rs. 5.50
Answer - 3 : He can claim the deduction of Rs. 6.00 crores from his business income but
cannot carry forward the business loss of Rs. 5.50
Answer - 4 : He can claim the deduction of Rs. 7.58 crores from his business income and can
carry forward the business loss of Rs. 7.08 crores
Description: Refer sections 35AD and 73A

Question - 2 : Mr. A (aged 45 years) sold an agricultural land for Rs. 52 lakhs on 04.10.2023
acquired at a cost of Rs. 49.25 lakhs on 13.09.2022 situated at 7 kms from the jurisdiction of
municipality having population of 4,00,000 and also sold another agricultural land for Rs. 53
lakhs on 12.12.2023 acquired at a cost of Rs. 46 lakhs on 15.02.2022 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 A.Y. 2024-25? CII for F.Y. 2021-22:
317; 2022-23: 331; 2023-24: 348.
Answer - 1 : Short-term capital gain of Rs. 9.75 lakhs
Answer - 2 : Short-term capital gain of Rs. 7 lakhs
Answer - 3 : Long-term capital gain of Rs. 2,72,212
Answer - 4 : Long-term capital gain of Rs. 2,50,158
Description: Refer definition of capital asset

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Question - 3 : Mr. Vishal and Mr. Guha sold their residential house property in Pune for Rs. 3
crore and Rs. 4 crore, respectively, in January, 2024.
The house property was purchased by them 25 months back. The indexed cost of acquisition
is Rs. 1 crore and Rs. 1.75 crore, respectively. Mr. Vishal purchased two residential flats, one
in Delhi and one in Agra for Rs. 70 lakhs and Rs. 80 lakhs, respectively, in April, 2024. On the
same date, Mr. Guha also purchased two residential flats, one in Mumbai and the other in Pune,
for Rs. 80 lakhs and Rs. 75 lakhs, respectively. Both of them invested Rs. 30 lakhs in bonds of
NHAI in March, 2024 and Rs. 30 lakhs in bonds of RECL in April, 2024. What is the income
taxable under the head “Capital Gains” for A.Y.2024-25 in the hands of Mr. Vishal and Mr.
Guha?
Answer - 1 : Rs. 70 lakhs and Rs. 95 lakhs, respectively
Answer - 2 : Rs. 60 lakhs and Rs. 85 lakhs, respectively
Answer - 3 : Nil and Rs. 95 lakhs, respectively
Answer - 4 : Nil and Rs. 20 lakhs, respectively

Question - 4 :
In P.Y. 2023-204, Mr. A has transferred the following assets:
Asset transferred Full Value of Indexed Cost of Transfer Date
Consideration Acquisition (Rs.)
(Rs.)
Residential house 8 crores 6 crores 25.11.20
property 23
Jewellery 3 crores 2 05.01.20
crores 24
Mr. A bought a new residential house property on 01.04.2022 for Rs. 1 crore and on
28.02.2024 deposited Rs. 3 crores in a capital gains deposit account scheme.
On 30.07.2024, Mr. A has withdrawn Rs. 3 crores from capital gains deposit account
and acquired a residential house property worth Rs. 2.5 crore. Mr. A filed his return
of income on 31.7.2024 for A.Y. 2024-25. What would be the capital gains in the
hands of Mr. A for A.Y. 2024-25, if the expenses in connection with transfer of
jewellery were Rs. 2,00,000?
Answer - 1 : Rs. 80,50,000
Answer - 2 : Rs. 81,55,705
Answer - 3 : Rs. 98,00,000
Answer - 4 : Rs. 48,00,000

Question - 5 :
Mr. Ram, an Indian resident, purchased a residential house property at Gwalior on
28.05.1999 for Rs. 28.5 lakhs. The fair market value and the stamp duty value of such
house property as on 1.4.2001 was Rs. 33.5 lakhs and Rs. 32.4 lakhs, respectively. On
05.02.2012, Mr.Ram entered into an agreement with Mr. Byomkesh for sale of such
property for Rs. 74 lakhs and received an amount of Rs. 3.9 lakhs as advance. However,
as Mr. Byomkesh did not pay the balance amount, Mr. Ram forfeited the advance.
What would be the indexed cost of acquisition of Mr. Ram if he sells the property in
F.Y. 2023-24? Cost Inflation Index for F.Y. 2001-02: 100; F.Y. 2023-24: 348
Answer - 1 : Rs. 1,16,58,000
Answer - 2 : Rs. 1,12,75,200
Answer - 3 : Rs. 1,03,00,800
Answer - 4 : Rs. 99,18,000

Question - 6 : Mr. Kumar, engaged in wholesale business of clothes and speculative

business, discontinued its operations on 19.10.2023 and 30.09.2023, respectively.
The cloth business loss upto 19.10.2023 for P.Y. 2023-24 is Rs. 8,000 and speculative

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business loss upto 30.09.2023 for P.Y. 2023-24 was Rs. 40,000. Out of total bad debts
of Rs. 1,00,000 that were claimed by Mr. Kumar in respect of a particular debtor, Rs.
60,000 was allowed by the Assessing Officer in P.Y. 2022-23. On 29.01.2024, Mr.
Kumar received a sum of Rs. 68,000 from the debtor in full and final settlement of cloth
business. How much amount would be taxable in the hands of Mr. Kumar forA.Y. 2024-
25?
Answer - 1 : Rs. 28,000
Answer - 2 : Rs. 20,000
Answer - 3 : Rs. 60,000
Answer - 4 : Rs. 68,000

Question - 7 : Mr. Karan completed his MBA in April 2023 and joined XYZ Ltd from
01.05.2023. His basic salary is Rs. 2,25,000 p.m. He is paid 12% of basic salary as D.A
forming part of retirement benefits. He contributed 11% of his pay and D.A. towards
recognized provident fund and the company contributes the same amount.
Accumulated interest on provident fund as on 31.3.2024 is Rs. 49,325. What would be
the income chargeable to tax under the head “Salaries” of Mr. Karan for the A.Y. 2024-
25, if he exercises the option of shifting out of the default regime provided under
section 115BAC(1A)?
Answer - 1 : Rs. 27,26,442
Answer - 2 : Rs. 27,30,884
Answer - 3 : Rs. 27,22,000
Answer - 4 : Rs. 27,71,325
Description: Refer section 10(11)

Question - 8 : Mr. Shahid, a wholesale supplier of dyes, provides you with the details of the
following cash payments made throughout the year - 12.06.2023: loan repayment of Rs.
27,000 taken for business purpose from his friend Kunal. The repayment also includes
interest of Rs. 5,000. 19.08.2023: Portable dye machinery purchased for Rs. 15,000. The
payment was made in cash in three weekly instalments. 26.01.2024: Payment of Rs. 10,000
made to electrician due to unforeseen electric circuit at shop. 28.02.2024: Purchases made
from unregistered dealer for Rs. 13,500. What will be disallowance under 40A(3), if any, if Mr.
Shahid declares his income as per the provisions of section 44AD?
Answer - 1 : Rs. 18,500
Answer - 2 : Rs. 28,500
Answer - 3 : Rs. 13,500
Answer - 4 : Nil
Description: Refer section 44AD

Question - 9 :
Mr. C aged 35 years is a working partner in M/s BCD, a partnership firm, with equal
profit sharing ratio. During the P.Y. 2023-24, the firm has paid remuneration to Mr. B, Mr. C
and Mr. D, being the working partners of the firm, of Rs. 2,00,000 each. The firm has paid
interest on capital of Rs. 1,20,000 in total to all the three partners and the same is within the
prescribed limit of 12%. The firm had a loss of Rs. 1,12,000 after debiting remuneration and
interest on capital. Note - Remuneration and interest on capital is authorized by the
partnership deed. You, being the CA of Mr. C, are in the process of computing his total
income. What would be his taxable remuneration from the firm?
Answer - 1 : Rs. 2,00,000
Answer - 2 : Rs. 1,51,600
Answer - 3 : Rs. 1,27,600
Answer - 4 : Rs. 1,50,000
Description: Refer section 40(b)

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 CHAPTER 4 – CLUBBING OF INCOME

SIMPLE:

Question - 1 : On 20.10.2023, Pihu (minor child) gets a gift of Rs. 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 Rs. 13,000 was earned during the P.Y.
2023-24. In whose hands the income of Pihu shall be taxable? Also, compute the
amount of income that shall be taxable under default regime under section 115BAC
Answer - 1 : Income of Rs. 20,11,500 shall be taxable in the hands of
Pihu’s father
Answer - 2 : Income of Rs. 20,13,000 shall be taxable in the hands of
Pihu’s father
Answer - 3 : Income of Rs. 20,11,500 shall be taxable in the hands of Pihu’s father or
mother, whose income before this clubbing is higher
Answer - 4 : Income of Rs. 20,13,000 shall be taxable in the hands of Pihu’s father
or mother, whose income before this clubbing is higher
Description: Refer section 64(1A)

Question - 2 : Mr. Aarav gifted a house property valued at Rs. 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 Rs. 20,000 per month throughout the P.Y.2023-24. Compute income from
house property for A.Y.2024-25. In whose hands is the income from house property
chargeable to tax?
Answer - 1 : Rs. 2,40,000 in the hands of Mr. Aarav
Answer - 2 : Rs. 1,68,000 in the hands of Mr. Aarav
Answer - 3 : Rs. 1,68,000 in the hands of Geetha
Answer - 4 : Rs. 1,68,000 in the hands of Deepa
Description: Description: Refer question 3 of Test your knowledge

Question - 3 : Mr. Arvind gifted a house property to his wife, Mrs. Meena and a flat to
his daughter in law, Mrs. Seetha. Both the properties were let out. Which of the
following statements is correct?
Answer - 1 : Income from both properties is to be
included in the hands of Mr. Arvind by virtue of section 64
Answer - 2 : Income from property gifted to wife alone
is to be included in Mr. Arvind’s hands by virtue of section 64
Answer - 3 : Mr. Arvind is the deemed owner of house property gifted to Mrs. Meena and
Mrs. Seetha
Answer - 4 : Mr. Arvind is the deemed owner of property gifted to Mrs. Meena. Income
from property gifted to Mrs. Seetha would be included in his hands by virtue of S. 64
Description: Refer question 3 of Test your knowledge

Question - 4 : Mr. A, a member of his father, Mr. C's HUF, converts his individual
property into property of the HUF. If the converted property is subsequently
partitioned among the members of the HUF, the income derived from such converted
property as is received by Mrs. A will be taxable –
Answer - 1 : as the income of Mr. C
Answer - 2 : as the income of Mrs. A
Answer - 3 : as the income of the HUF
Answer - 4 : as the income of Mr. A
Description: Refer section 64(2)

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 MEDIUM:

Question - 1 : Mr. Vishal started a proprietary business on 01.04.2022 with a capital of Rs.
5,00,000. He incurred a loss of Rs. 1,00,000 during the year 2022-23. To overcome the
financial position, his wife Mrs. Kamini, a Chartered Accountant, gave a gift of Rs. 4,00,000 on
01.04.2023, which was immediately invested in the business by Mr. Vishal. He earned a profit
of Rs. 2,00,000during the year 2023-24. What is the amount to be clubbed in the hands of Mrs.
Kamini for the Assessment Year 2024-25?
Answer - 1 : Rs. 88,888
Answer - 2 : Rs. 1,00,000
Answer-3: Rs.2,00,000
Answer - 4 : Nil
Description: Refer illustration 5

Question - 2 :
Mrs. Shivani, wife of Mr. Anurag, is a partner in a firm. Her capital contribution is Rs. 5 lakhs
to the firm as on 1.4.2023 which includes Rs. 3.5 lakhs contributed out of gift received from
Anurag. The firm paid interest on capital of Rs. 50,000 and share of profit of Rs. 60,000 during
the F.Y.2023-24. The entire interest has been allowed as deduction in the hands of the firm.
Which of the following statements is correct?
Answer - 1 : Share of profit is exempt but interest on capital is taxable in the hands of Mrs. Shivani.
Answer - 2 : Share of profit is exempt but interest of Rs. 39,286 is includible in the income of
Mr. Anurag and interest of Rs. 10,714 is includible in the income of Mrs. Shivani.
Answer - 3 : Share of profit is exempt but interest of Rs. 35,000 is includible in the
income of Mr.Anurag and interest of Rs. 15,000 is includible in the income of Mrs.
Shivani.
Answer - 4 : Share of profit to the extent of Rs. 42,000 and interest on capital to the extent of Rs.
35,000 is includible in the hands of Mr. Anurag.
Description: Refer illustration 5

Question 3:
Mrs. Bhawna, wife of Mr. Sonu, is a partner in a firm. Her capital contribution of Rs. 10 lakhs
to the firm as on 31.3.2023 included Rs. 6 lakhs contributed out of gift received from Sonu. On
1.4.2023, she further invested Rs. 2 lakh out of gift received from Sonu. The firm paid interest
oncapital of Rs. 1,20,000 and share of profit of Rs. 1,00,000 during the F.Y.2023- 24. The entire
interest has been allowed as deduction in the hands of the firm. Which of the following
statements is correct?
Answer - 1 : Share of profit is exempt but interest on capital is taxable in the hands of Mrs. Bhawna
Answer - 2 : Share of profit is exempt but interest of Rs. 80,000 is includible in the income of
Mr. Sonu and interest of Rs. 40,000 is includible in the income of Mrs. Bhawna
Answer - 3 : Share of profit is exempt but interest of Rs. 72,000 is includible in the income of Mr.
Sonu and interest of Rs. 48,000 is includible in the income of Mrs. Bhawna
Answer - 4 : Share of profit to the extent of Rs. 60,000 and interest on capital to the extent of Rs.
72,000 is includible in the hands of Mr. Sonu
Description: Refer sections 64(1)(iv) and 10(2A)

Question 4:
Ram owns 500, 15% debentures of R Industries Ltd. of Rs. 500 each. Annual interest of Rs.
37,500 was payable on these debentures for P.Y. 2023-24. He transfers interest income to
his friend Shyam, without transferring the ownership of these debentures. While filing return
of income for A.Y. 2024-25, Shyam showed Rs. 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?
Answer - 1 : Yes, since interest income was transferred to Shyam, therefore, after

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transfer, it becomes his income.
Answer - 2 : No, since Ram has not transferred debentures to Shyam, interest income on
the debentures is not taxable income of Shyam. It would be included in the hands of Ram.
Answer - 3 : Yes, if debentures are not transferred,
interest income on debentures can be declared by anyone, Ram or Shyam, as taxable income
depending upon their discretion.
Answer - 4 : No, since Shyam should have shown the income as interest income received
from Mr. Ram and not as interest income earned on debentures.
Description: Refer illustration 1

DIFFICULT:

Question - 1 : Mr. Raj makes a gift of Rs. 25,000 to his wife, Mrs. Rama, on 27.03.2023.
Mrs. Rama, on 1.4.2023, invests Rs. 75,000 (Rs. 25,000 out of gift and Rs. 50,000 of
her own) in a partnership firm as capital which is her total capital contribution in the
firm. During the year ended 31.03.2024 she earns an interest of Rs.12,000 and salary
of Rs. 1,20,000 from the firm, both of which are approved by the partnership deed.
What amount shall form part of total income of Mr. Raj for the previous year 2023-
24?
Answer - 1 : Rs. 3,000 as interest on
capital from firm
Answer - 2 : Rs. 4,000 as interest on capital
from firm
Answer - 3 : Rs. 3,000 as interest on capital from firm and Rs. 40,000 as salary
from firm
Answer - 4 : Rs. 4,000 as interest on capital from firm and Rs. 40,000 as salary
from firm
Description: Refer illustration 5

Question - 2 : Pankaj gifted an amount of Rs.3,00,000 to his wife, Pinky and Rs.
2,00,000 to his daughter, Rinky aged 20 years, on 1st April 2020. Both Pinky and
Rinky invested the amounts on the same date in Government of India 11% Taxable
Bonds. The interest accrues yearly and is reinvested in the same bonds. Determine
what will be the amount taxable in hands of Pinky for A.Y.2024-25.
Answer - 1 : Rs. 4,473
Answer - 2 : Rs. 12,132
Answer - 3 : Rs. 33,000
Answer - 4 : Rs. 36,630
Description: Refer section 64(1A)

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 CHAPTER 5 – AGGREGATION OF INCOME, SET – OFF & CARRY FORWARD OF LOSSES

SIMPLE:
Question - 1 :
Brought forward loss from house property of Rs. 3,10,000 of A.Y. 2023-24 is allowed to be
set-off against income from house property of A.Y. 2024-25 of Rs. 5,00,000 to the extent of -
Answer - 1 : Rs. 2,00,000
Answer - 2 : Rs. 3,10,000
Answer - 3 : Rs. 2,50,000
Answer - 4 : Rs. 1,00,000
Description: Refer section 71B

Question - 2 :
A Ltd. has unabsorbed depreciation of Rs. 4,50,000 for the P.Y.2023-24. This can be
carried forward -
Answer - 1 : for a maximum period of 8 years and set off against business
income.
Answer - 2 : indefinitely and set-off against business income.
Answer - 3 : indefinitely and set-off against any head of income
Answer - 4 : indefinitely and set-off against any head of income except salary.
Description: Refer section 32(2)

Question - 3 :
During the A.Y.2023-24, Mr. A, exercising the option of shifting out of the default tax regime
provided under section 115BAC(1A), has a loss of Rs. 8 lakhs under the head “Income from
house property” which could not be set off against any other head of income as per the
provisions of section 71. The due date for filing return of income u/s 139(1) in case of Mr. A
has already expired and Mr. A forgot to file his return of income within the said due date.
However, Mr. A filed his belated return of income for A.Y.2023-24. Now, while filing return of
income for A.Y.2024-25, Mr. A wishes to set off the said loss against income from house
property for the P.Y. 2023-24. His income from house property (computed) for the P.Y. 2023-
24 is Rs. 5 lakhs and interest on bank fixed deposits is Rs. 1 lakh.
Determine whether Mr. A can claim the said set off.
Answer - 1 : No, Mr. A cannot claim set off of loss of Rs. 8 lakhs during A.Y. 2024-25 as he failed to
file his return of income u/s 139(1) for A.Y. 2023-24.
Answer - 2 : Yes, Mr. A can claim set off of loss of Rs. 2 lakhs, out of Rs. 8 lakhs, from his income from
house property during A.Y. 2024-25 and the balance loss of Rs. 6 lakhs has to be carried forward to
A.Y.2025-26.
Answer - 3 : Yes, Mr. A can claim set off of loss of Rs. 2 lakhs, out of Rs. 8 lakhs, from his income from
any head during A.Y. 2024-25 and the balance loss of Rs. 6 lakhs has to be carried forward to
A.Y.2025-26.
Answer - 4 : Yes, Mr. A can claim set off of loss of Rs. 5 lakhs during A.Y. 2024-25 from his
income of Rs. 5 lakhs from house property and the balance loss of Rs. 3 lakhs has to be carried
forward to A.Y.2025-26.
Description: Refer section 71B

Question - 4 :
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 -
Answer - 1 : Loss from specified business under section 73A
Answer - 2 : Loss under the head “Capital Gains” and unabsorbed depreciation carried
forward undersection 32(2)
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Answer - 3 : Loss from house property and unabsorbed depreciation carried forward
under section 32(2)
Answer - 4 : Loss from speculation business under section 73
Description: Refer section 80

Question - 5 :
Mr. Ravi incurred loss of Rs. 4 lakh in the P.Y.2023-24 in leather business. Against
which of the following incomes earned during the same year, can he set-off such
loss?
(i) Profit of Rs. 1 lakh from apparel business
(ii) Long-term capital gains of Rs. 2 lakhs on sale of jewellery
(iii) Salary income of Rs. 1 lakh
Answer - 1 : First from (ii) and thereafter from (i); the remaining loss has to be
carried forward.
Answer - 2 : First from (i) and thereafter from (ii) and (iii)
Answer - 3 : First from (i) and thereafter from (iii); the remaining loss has to be
carried forward
Answer - 4 : First from (i) and thereafter from (ii); the remaining loss has to be
carried forward
Description: Refer section 70

Question - 6 :
Mr. Rohan incurred loss of Rs. 3 lakh in the P.Y. 2023-24 in retail trade business.
Against which of the following income during the same year, can he set-off such loss?
Answer - 1 : profit of Rs. 1 lakh from wholesale cloth business
Answer - 2 : long-term capital gains of Rs. 1.50 lakhs on sale of land
Answer - 3 : speculative business income of Rs. 40,000
Answer - 4 : all of the above
Description: Refer section 70

Question - 7 :
Mr. A incurred short-term capital loss of Rs. 10,000 on sale of shares through the
National Stock Exchange - Such loss -
Answer - 1 : can be set-off only against short-term capital gains.
Answer - 2 : can be set-off against both short-term capital gains and long-
term capital gains.
Answer - 3 : can be set-off against any head of income.
Answer - 4 : not allowed to be set-off.
Description: Refer section 70

Question - 8 :
Virat runs a business of manufacturing of shoes since the P.Y. 2021-22. During the
P.Y. 2021-22 and P.Y. 2022-23, Virat had incurred business losses. He also has
unabsorbed depreciation. For
P.Y. 2023-24, he earned business profit (computed) of Rs. 3 lakhs. Considering he
may/may not have sufficient business income to set off his earlier losses and
unabsorbed depreciation, which of the following order of set off shall be considered:
(He does not have income from any other source)
Answer - 1 : First adjustment for loss of P.Y. 2021-22, then loss for P.Y. 2022-23 and then
unabsorbed depreciation.
Answer - 2 : First adjustment for loss of P.Y. 2022-23, then loss for P.Y. 2021-22 and then
unabsorbed depreciation.
Answer - 3 : First adjustment for unabsorbed depreciation, then loss of P.Y. 2022-23 and

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then loss for P.Y. 2021-22.
Answer - 4 : First adjustment for unabsorbed depreciation, then loss of P.Y. 2021-22 and
then loss for P.Y. 2022-23.
Description: Refer order off set of losses.’

MEDIUM:

Question - 1 : During the A.Y. 2024-25, Mr. Kabir has a loss of Rs. 6 lakhs under the head “Income
from house property”, loss of Rs. 5 lakhs from business of profession and income of Rs. 3
lakhs from long term capital gains. He filed his return of income for the A.Y. 2024-25 on
31.12.2024.
Determine the total income of Mr. Kabir for A.Y. 2024-25 assuming that he has exercised the
option of shifting out of the default regime provided under section 115BAC(1A) and the
amount of loss which can be carried forward in a manner most beneficial to him?
Answer - 1 : Total income Nil; loss of Rs. 4,00,000 from house property and loss of Rs. 4,00,000 from
business or profession.
Answer - 2 : Total income Rs. 1,00,000; loss of Rs. 4,00,000 from house property.
Answer - 3 : Total income Nil; No loss is allowed to be carried forward.
Answer - 4 : Total income Nil; loss of Rs. 6,00,000 from house property.
Description: Refer sections 70 and 80

DIFFICULT:

Question - 1 :
Mr. Arpan (aged 35 years) submits the following particulars for the purpose of computing
his total income:
Particulars (Rs.)
Income from salary (computed)
Loss from let-out house property
Brought forward loss from let-out house property
Business loss
Bank interest (FD) received
Compute the total income of Mr. Arpan for the A.Y.2024-25 and the amount of loss
that can be carried forward for the subsequent assessment year if he pays tax under
section 115BAC?
Answer - 1 : Total income Rs. 2,00,000 and loss from house property of Rs. 2,50,000 and
business lossof Rs. 20,000 to be carried forward to subsequent assessment year.
Answer - 2 : Total income Rs. 1,60,000 and loss from house property of Rs. 2,30,000 to
be carried forward to subsequent assessment year.
Answer - 3 : Total income Rs. 4,00,000 and loss from house property of Rs. 4,50,000
and business loss of Rs. 20,000 to be carried forward to subsequent assessment year.
Answer - 4 : Total income is Nil and loss from house property of Rs. 70,000 to be carried forward
tosubsequent assessment year.

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Question - 2 :
The details of income/loss of Mr. Kumar for P.Y.2023-24 are as follows:
Particulars (Rs.)
Income from Salary (computed)
Loss from self-occupied house property
Loss from let-out house property
Loss from specified business u/s 35AD
Loss from medical business
Long term capital gain
Income from other sources
What shall be the gross total income of Mr. Kumar for A.Y. 2024-25 assuming
that he has exercised the option of shifting out of the default regime provided
under section 115BAC(1A)?
Answer - 1 : Rs. 4,40,000
Answer - 2 : Rs. 3,20,000
Answer - 3 : Rs. 1,60,000
Answer - 4 : Rs. 4,80,000

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 CHAPTER 6 – DEDUCTIONS FROM GROSS TOTAL INCOME

SIMPLE:
Question - 1 : An individual has paid life insurance premium of Rs. 25,000 - during
the previous year for a policy of Rs. 1,00,000 taken on 1.4.2019. If he pays tax under
default tax regime under section 115BAC, he shall -
Answer - 1 : not be allowed deduction u/s 80C
Answer - 2 : be allowed deduction of Rs. 20,000
u/s 80C
Answer - 3 : be allowed deduction of Rs. 25,000
u/s 80C
Answer - 4 : be allowed deduction of Rs. 10,000
u/s 80C
Description: Refer section 115BAC

MEDIUM:
Question - 1 : Mr. Shiva made a donation of Rs. 50,000 to PM Cares Fund and Rs. 20,000 to
Prime Minister’s Drought Relief Fund by cheque. He made a cash donation of Rs. 10,000 to a
public charitable trust registered under section 80G. If Mr. Shiva has exercised the option of
shifting out of the default regime provided under section 115BAC(1A), the deduction
allowable to him under section 80G for A.Y.2024-25 would be –
Answer - 1 : Rs. 80,000
Answer - 2 : Rs. 70,000
Answer - 3 : Rs. 60,000
Answer - 4 : Rs. 35,000
Description: Refer section 80G

Question - 2 : Mr. Suhaan (aged 35 years), a nonresident, earned dividend income of Rs.
12,50,000 from an Indian company which was declared on 30.09.2023 and credited directly
to his bank account on 05.10.2023 in France and Rs. 15,000 as interest on savings A/c from
State Bank of India for the P.Y. 2023-24. Assuming that he has no other income, what will be
amount of income chargeable to tax in his hands in India for A.Y. 2024-25 if Mr. Suhaan has
exercised the option of shifting out of the default regime provided under section 115BAC?
Answer - 1 : Nil
Answer - 2 : Rs. 12,65,000
Answer - 3 : Rs. 12,50,000
Answer - 4 : Rs. 12,55,000
Description: Refer section 115BAC

Question - 3 : Gross total income of Arpita for P.Y. 2023-24 is Rs. 6,00,000. She had taken a
loanof Rs. 7,20,000 in the financial year 2020-21 from a bank for her husband who is pursuing
MBA course from IIM, Kolkata. On 02.04.2023, she paid the first installment of loan of Rs.
45,000 and interest of Rs. 65,000. Compute her total income for A.Y. 2024-25, if she has
exercised the option of shifting out of the default regime provided under section 115BAC(1A)
Answer - 1 : Rs. 6,00,000
Answer - 2 : Rs. 5,35,000
Answer - 3 : Rs. 4,90,000
Answer - 4 : Rs. 5,55,000
Description: Refer section 80E

Question - 4 : Mr. X 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
12.3.2016 and unit in DTA from 15.6.2017. Total turnover of Mr. X and Unit in DTA is Rs.
CA PRATEEK BHADANI | EDUNANBAN.COM 25
8,50,00,000 and Rs.3,25,00,000, respectively. Export sales of unit in SEZ and DTA is Rs.
3,50,00,000 and Rs.1,25,00,000, respectively and net profit of Unit in SEZ and DTA is Rs.
80,00,000 and Rs.45,00,000, respectively. Proceeds from export sales in SEZ received in
convertible foreign exchange by 30.9.2024 is Rs. 2,50,00,000.
Assuming that Mr. X would file his return on or before 31.10.2024 exercising the option of
shifting out of the default tax regime provided under section 115BAC(1A), he would be eligible
for deduction under section 10AA for P.Y. 2023-24 of an amount equal to
Answer - 1 : Rs. 38,09,524
Answer - 2 : Rs. 19,04,762
Answer - 3 : Rs. 23,52,941
Answer - 4 : Rs. 11,76,471
Description: Refer section 10AA

Question - 5 : Mr. Ramesh pays a rent of Rs. 5,000 per month. His total income is Rs.
2,80,000 (i.e., Gross Total Income as reduced by deductions under Chapter VI-A
except section 80GG). Heis also in receipt of HRA. If he exercises the option of shifting
out of the default tax regime u/s 115BAC, he would be eligible for a deduction under
section 80GG of an amount of-
Answer - 1 : Rs. 60,000
Answer - 2 : Rs. 32,000
Answer - 3 : Rs.
70,000
Answer - 4 : Nil
Description: Refer section 80GG

Question - 6 : Mr. Srivastav, aged 72 years, paid medical insurance premium of Rs.
52,000 by cheque and Rs. 4,000 by cash during May, 2023 under a Medical Insurance
Scheme of the General Insurance Corporation. The above sum was paid for insurance
of his own health. If he has exercised the option of shifting out of the default tax regime
provided under section 115BAC(1A), he would be entitled to a deduction under
section 80D of a sum of -
Answer - 1 : Rs. 30,000
Answer - 2 : Rs. 50,000
Answer - 3 : Rs. 52,000
Answer - 4 : Rs. 56,000
Description: Refer section 80D

Question - 7 : Rajan, a resident Indian, has incurred Rs. 15,000 for medical treatment
of his dependent brother, who is a person with severe disability and has deposited
Rs. 20,000 with LIC for his maintenance. For A.Y.2024-25, if Mr. Rajan exercises the
option of shifting out of the default regime provided under section 115BAC(1A), he
would be eligible for deduction under section 80DD of an amount equal to -
Answer - 1 : Rs. 15,000
Answer - 2 : Rs. 35,000
Answer - 3 : Rs. 75,000
Answer - 4 : Rs. 1,25,000
Description: Refer section 80DD

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 DIFFICULT:

Question - 1 : Mr. Krishna, a resident Indian aged 61 years, maintains a saving account with a
cooperative land development bank and he earns Rs. 20,000 as interest on saving account for
the Financial Year 2023-24. Mr. Krishna also maintains a fixed deposit and recurring deposit
account with Mani Finance (A Non-Banking Finance Company) and earns Rs. 25,000 and Rs.
10,000 as interest on fixed deposit and recurring deposit, respectively. What would be the
deduction allowable to Mr. Krishna under Chapter VI-A if he has exercised the option of
shifting out of the default regime provided under section 115BAC(1A) for the A.Y. 2024-25?
Answer - 1 : Rs. 55,000
Answer - 2 : Rs. 10,000
Answer - 3 : Rs. 20,000
Answer - 4 : Rs. 50,000
Description: Refer section 80TTB

Question - 2 : Mr. Arpit, an employee of MNO Ltd. has contributed Rs. 1,61,280 towards NPS
and similar amount is contributed by his employer. His basic salary is Rs. 80,000 p.m. and
dearness allowance is 40% of basic salary which forms part of retirement benefits. He also
paid Rs. 55,000 towards LIC premium for himself and his wife and medical insurance premium
of Rs.35,000 by crossed cheque for his mother, being a senior citizen during the previous year
2023-24. How much deduction is available under Chapter VI-A while computing total income
of Mr. Arpit for the A.Y. 2024-25 if he exercises the option of shifting out of the default regime
provided under section 115BAC(1A)?
Answer - 1 : Rs. 3,46,280
Answer - 2 : Rs. 3,69,400
Answer - 3 : Rs. 3,19,400
Answer - 4 : Rs. 3,96,280
Description: Refer section 80C, 80CCD and 80D

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CHAPTER 7 – ADVANCE TAX , TAX DEDUCTION AT SOURCE AND TAX COLLECTION AT SOURCE:

SIMPLE:

Question - 1 : The benefit of payment of advance tax in one installment on or before 15th
March is available to assessees computing profits on presumptive basis
Answer - 1 : only under section 44AD
Answer - 2 : under section 44AD and
44ADA
Answer - 3 : under section 44AD and 44AE
Answer - 4 : under section 44AD, 44ADA and 44AE
Description: Refer section 234C

Question - 2 : An interior decorator declares profits from profession under

presumptive taxation scheme under section 44ADA for A.Y. 2024-25. -
Answer - 1 : He is liable to pay advance tax on or
before 15.3.2024
Answer - 2 : He is not liable to advance tax
Answer - 3 : He is liable to pay advance tax in three instalments i.e., on or before 15.9.2023,
15.12.2023 and 15.3.2024
Answer - 4 : He is liable to pay advance tax in four instalments i.e., on or before 15.6.2023,
15.9.2023, 15.12.2023 and 15.3.2024
Description: Refer section 234C

Question - 3 : Mr. P is a professional who is responsible for paying a sum of Rs.

2,00,000 as rent for use of building to Mr. Harshit, a resident, for the month of
February, 2024. The gross receipts of Mr. P are as under: From 01.04.2022 to
31.03.2023: Rs. 55,00,000 From 01.04.2023 to 28.02.2024: Rs. 45,00,000 Whether Mr.
P is responsible for deducting any tax at source from the rent of Rs. 2,00,000 payable
to Mr. Harshit?
Answer - 1 : Tax at source is required to be deducted u/s 194-I at the
rate of 10%.
Answer - 2 : Tax at source is required to be deducted u/s 194-IB at the
rate of 5%.
Answer - 3 : Tax at source is required to be deducted u/s 194-IB at the
rate of 10%.
Answer - 4 : No tax is required to be deducted at source.
Description: Refer section 194-I

Question - 4 : Mr. Prakash is employed with XYZ Ltd. from 05.11.2019. He resigned on
31.03.2024 and wants to withdraw the accumulated balance of employer’s
contribution in his EPF Account i.e., Rs. 55,000. The tax deducted on such withdrawal
would be
Answer - 1 : Rs. 500 u/s 192
Answer - 2 : Rs. 5,500 u/s 192
Answer - 3 : Rs. 4,125 u/s 192A
Answer - 4 : Rs. 5,500 u/s 192A
Description: Refer section 192A

Question - 5 : Mr. T, an Indian Citizen and resident of India, earned dividend income of
Rs. 4,500 from an Indian company, which was declared on 1.10.2023 and paid in cash
to Mr. T. What are the tax implications with respect to the dividend in the hands of

CA PRATEEK BHADANI | EDUNANBAN.COM 28

Mr. T and Indian Company?
Answer - 1 : Such dividend is taxable in the hands of Mr. T and Indian company is required
to deduct tax at source @5%.
Answer - 2 : Such dividend is taxable in the hands of Mr. T and Indian company is
required to deduct tax at source @10%.
Answer - 3 : Such dividend is taxable in the hands of Mr. T. However, Indian company is not
required to deduct tax at source since it does not exceed Rs. 5,000.
Answer - 4 : Such dividend is exempt in the hands of Mr. T. Hence, Indian company is not
required todeduct tax at source.
Description: Refer section 194

Question - 6 : Mr. X paid fees for professional services of Rs. 40,000 to Mr. Y, who is
engaged only in the business of operation of call centre, on 15.7.2023. Tax is to be
deducted by Mr. X at the rate of -
Answer - 1 : 10%
Answer - 2 : 5%
Answer - 3 : 2%
Answer - 4 : 1%
Description: Refer section 194J

Question - 7 : Mr. X, a resident Indian, wins - Rs.10,000 in a lottery. Which of the statement
is true?
Answer - 1 : Tax is deductible u/s 194B@30%
Answer - 2 : Tax is deductible u/s 194B@30.9%
Answer - 3 : No tax is deductible at source
Answer - 4 : Tax is deductible u/s 194BB@30%
Description: Refer section 194B

MEDIUM:

Question - 1 : Mr. Vyas, aged 80, is a retired government employee. On 1st April 2023, he
received the maturity amount of his LIC policy amounting to Rs. 3,50,000. This policy was
taken by Mr. Vyas on 1st April 2016 on which the sum assured was Rs. 3,00,000 and the annual
premium was Rs. 40,000. His other income comprised of pension amounting to Rs. 85,000.
Mr. Vyas furnishes a declaration in Form 15H for non-deduction of tax at source to the
insurance company stating that his net tax liability for the year is NIL. Choose the correct
statement from below:
Answer - 1 : The declaration made by Mr. Vyas is wrong and the insurance company has to deduct
taxof Rs.3,500 under section 194DA
Answer - 2 : The claim by Vyas is right and insurance company is not required to deduct tax
at source.
Answer - 3 : The insurance company has to deduct tax under section 194DA since declaration in
Form 15H cannot be made for tax deduction under section 194DA
Answer - 4 : The declaration made by Mr. Vyas is wrong and the insurance company has to deduct
taxof Rs. 1,000 under section 194DA
Description: Refer section 197A

Question - 2 : A firm pays salary and interest on capital to its resident partners. The salary
and interest paid fall within the limits specified in section 40(b). Which of the following
statements is true?
Answer - 1 : Tax has to be deducted u/s 192 on salary and u/s 194A on interest
Answer - 2 : Tax has to be deducted u/s 192 on salary but no tax needs to be deducted on
interest
CA PRATEEK BHADANI | EDUNANBAN.COM 29
Answer - 3 : No tax has to be deducted on salary but tax has to be deducted u/s 194A on
interest
Answer - 4 : No tax has to be deducted at source on either salary or interest
Description: Refer section 194A

Question - 3 :
Mr. Nihar maintains a savings A/c and a current A/c in Mera Bank Ltd. The details of
withdrawals on various dates during the previous year 2023-24 are as follows:
Date of Cash Saving Current Account
withdrawal Account
05.04.2023 15,00,000
10.05.2023 -- 22,00,000
25.06.2023 20,00,000
17.07.2023 -- 5,00,000
28.10.2023 35,00,000
10.11.2023 -- 38,00,000
12.12.2023 25,00,000
Mr. Nihar regularly files his return of income. Is Mera Bank Limited required to
deduct tax at source on the withdrawals made by Mr. Nihar during the previous year
2023-24? If yes, what would the amount of tax deducted at source?
Answer - 1 : TDS of Rs. 3,20,000 is required to be deducted
Answer - 2 : No, TDS is not required to be deducted as the cash withdrawal does not exceed
Rs. 1 crore neither in saving account nor in current account
Answer - 3 : TDS of Rs. 3,00,000 is required to be
deducted
Answer - 4 : TDS of Rs. 1,20,000 is required to
be deducted
Description: Refer section 194N

Question - 4 : Mr. A has two bank accounts maintained with ICICI Bank and HDFC Bank.
From 01.04.2023 till 31.03.2024, Mr. A withdrew the following amounts as cash from
both the said accounts; HDFC Bank: Rs. 50 lakh on 1.2.2024 ICICI Bank: Rs. 120 lakh
on 1.3.2024 What shall be the amount of tax to be deducted at source u/s 194N by
HDFC Bank and ICICI Bank, respectively, while making payment in cash to Mr.A
assuming Mr. A has filed his return of income for P.Y. 2020-21, P.Y. 2021-22 and P.Y.
2022-23?
Answer - 1 : Rs. 1,00,000 and Rs. 2,40,000
Answer - 2 : Nil and Rs. 40,000
Answer - 3 : Rs. 60,000 and Rs. 1,00,000
Answer - 4 : Rs. 50,000 and Rs. 1,20,000
Description: Refer section 194N

Question - 5 : Mr. X, a resident, is due to receive Rs. 6 lakhs on 31.3.2024, towards

maturity proceeds of LIC policy taken on 1.4.2021, for which the sum assured is Rs. 5
lakhs and the annual premium is Rs. 1,50,000. Mr. Z, a resident, is due to receive Rs.
99,000 on 1.10.2023 towards maturity proceeds of LIC policy taken on 1.10.2015 for
which the sum assured is Rs. 90,000 and the annual premium is Rs. 10,000.
Answer - 1 : Tax is required to be deducted on income comprised in maturity proceeds
payable to Mr. X and Mr. Z
Answer - 2 : Tax is required to be deducted on income comprised in maturity
proceeds payable to Mr.X
Answer - 3 : Tax is required to be deducted on income comprised in maturity proceeds
payable to Mr. Z

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Answer - 4 : No tax is required to be deducted on income comprised in maturity
proceeds payable toeither Mr. X or Mr. Z
Description: Refer section 194DA

Question - 6 : Mr. Raj (a non-resident and aged 65 years) is a retired person,

earning rental income of Rs. 40,000 per month from a property located in Delhi. He is
residing in Canada. Apart from rental income, he does not have any other source of
income. Is he liable to pay advance tax in India? Assume that he pays tax under the
default regime u/s 115BAC.
Answer - 1 : Yes, he is liable to pay advance tax in India as he is a non-resident and is not eligible
for rebate under section 87A
Answer - 2 : No, he is not liable to pay advance tax in India as his tax liability in India is less
than Rs. 10,000
Answer - 3 : No, he is not liable to pay advance tax in India as he has no income chargeable under
the head “Profits and gains of business or profession” and he is of the age of 65 years
Answer - 4 : Both (b) and (c)
Description: Refer section 208

DIFFICULT:
Question - 1 : Mr. Jha, an employee of FX Ltd, attained 60 years of age on 15.05.2023. He is
resident in India during F.Y. 2023-24 and earned salary income of Rs. 5 lakhs (computed).
During the year, he earned Rs. 7 lakhs from winning of lotteries. What shall be his advance tax
liability for A.Y. 2024-25, if all tax deductible at source has been duly deducted and remitted
to the credit of Central Government on time? Assume that he pays tax under the default regime
u/s 115BAC.
Answer - 1 : Rs. 2,20,000 + Cess Rs. 8,800 = Rs. 2,28,800, being the tax payable on total income of Rs.
12 lakhs
Answer - 2 : Rs. 2,10,000 + Cess Rs. 8,400 = Rs.2,18,400, being the tax payable on lottery income of
Rs. 7 lakhs
Answer - 3 : Rs. 10,000 + Cess Rs. 8,800 = Rs.18,800, being the net tax payable on salary
income
Answer - 4 : Nil
Description: Refer section 208 and section 115BAC. Also note that health and education cess
not applicable on TDS in case of resident deductees.

Question - 2 : Mr. Ram acquired a house property at Chennai from Mr. Satyam, a resident, for
a consideration of Rs. 85 lakhs, on 23.8.2023. On the same day, Mr. Ram made two separate
transactions, thereby acquiring an urban plot in Gwalior from Mr. Vipun, a resident, for a sum
of Rs. 50 lakhs and rural agricultural land from Mr. Danish, a resident, for a consideration of
Rs. 75 lakhs. Which of the following statements are correct assuming that in the consideration
amounts as aforementioned all the charges incidental to transfer of the immovable property
are included and there is no difference between the stamp duty value and actual
consideration?
Answer - 1 : No tax deduction at source is required in respect of any of the three
payments.
Answer - 2 : TDS@1% is attracted on all the three payments.
Answer - 3 : TDS@1% on Rs. 85 lakhs and Rs. 50 lakhs are attracted. No TDS on payment of
Rs. 75 lakhs for acquisition of rural agricultural land.
Answer - 4 : TDS@1% on Rs. 85 lakhs is attracted. No TDS on payments of Rs. 50 lakhs
and Rs. 75lakhs.
Description: Refer section 194-IA

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 CHAPTER 8 – PROVISIONS FOR FILING RETURN OF INCOME AND SELF – ASSESMENT :

SIMPLE:
Question - 1 : Mr. Kumar, aged 62 years resident and ordinarily resident, is a retired
employee with a monthly pension of Rs. 22,000. He has no other source of income. He
has a house property in Bhatinda and his only son is living in London and has a house
over there. His son met with an accident and died and thereby leaving the house at
London in the name of Mr. Kumar. Mr. Kumar seeks your advice, as to whether he is
required to file his income-tax return u/s 139?
Answer - 1 : Yes, he is mandatorily required to file his income-tax return as he is a
resident and ordinarily resident in India and has asset located outside India
Answer - 2 : No, he is not required to file return of income as his income is below basic
exemption limit Answer - 3 : Yes, he is required to file his return of income as his income
exceeds the basic exemption limit
Answer - 4 : No, he is not required to file his return of income as he is a senior citizen and
retired employee
Description: Refer section 139(1)

Question - 2 :
Which of the following returns can be revised under section 139(5)?
(i) A return of income filed u/s 139(1)
(ii) A belated return of income filed u/s 139(4)
(iv) A return of loss filed u/s 139(3) Choose the correct answer:
Answer - 1 : Only (i)
Answer - 2 : Only (i) and (ii)
Answer - 3 : Only (i) and (iii)
Answer - 4 : (i), (ii) and (iii)
Description: Refer section 139(5)

Question - 3 : Mr. Z, a salaried individual, has a total income of Rs. 8 lakhs for A.Y.
2024-25. He furnishes his return of income for A.Y. 2024-25 on 28th August, 2024.
He is liable to pay fee of
Answer - 1 : upto Rs. 1,000 under section 234F
Answer - 2 : Rs. 5,000 under section 234F
Answer - 3 : Rs. 10,000 under section 234F
Answer - 4 : Not liable to pay any fee
Description: Refer section 234F

Question - 4 : Arun’s gross total income of P.Y. 2023-24 is Rs. 2,45,000. He exercises
the option of shifting out of the default regime provided under section 115BAC(1A).
He deposits Rs. 45,000 in PPF. He pays electricity bills aggregating to Rs. 1.20 lakhs
in the P.Y.2023-24. Which of the statements is correct?
Answer - 1 : Arun is not required to file his return of income u/s 139(1) for P.Y. 2023-24, since his
total income before giving effect to deduction under section 80C does not exceed the basic exemption
limit.
Answer - 2 : Arun is not required to file his return of income u/s 139(1) for P.Y. 2023-24, since his
electricity bills do not exceed Rs. 2,00,000 for the P.Y.2023-24.
Answer - 3 : Arun is not required to file his return of income u/s 139(1) for P.Y. 2023-24, since
neither his total income before giving effect to deduction under section 80C exceeds the basic
exemption limit nor his electricity bills exceed Rs. 2 lakh for the P.Y. 2023-24.
Answer - 4 : Arun is required to file his return of income u/s 139(1) for P.Y. 2023-24,
since his electricity bills exceed Rs. 1 lakh for the P.Y.2023- 24.
Description: Refer section 139(1)
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Question - 5 : Mr. Pawan is engaged in the business of roasting and grinding coffee beans. During
F.Y. 2023-24, his total income is Rs. 4.5 lakhs. Mr. Pawan filed his return of income for A.Y.
2024- 25 on 3rd December, 2024. What shall be the fee payable for default in furnishing in
return of income for A.Y. 2024-25?
Answer - 1 : Rs. 5,000
Answer - 2 : Not exceeding Rs. 1,000
Answer - 3 : No fee is payable as tax on total income is Nil
Answer - 4 : No fees payable as total income is below Rs. 5,00,000
Description: Refer section 234F

Question - 6 : Mr. Dinesh, a resident in India, has gross total income of Rs. 2,30,000 comprising
of interest on saving A/c and rental income during the previous year 2023-24. He incurred
expenditure of Rs. 2,00,000 for his son for a study tour to Europe. Whether he is required to
file return of income for the assessment year 2024-25? If yes, what is the due date?
Answer - 1 : Yes, 31st July of A.Y
Answer - 2 : Yes, 30th September of A.Y
Answer - 3 : Yes, 31st October of A.Y
Answer - 4 : No, he is not required to file return of income
Description: Refer section 139(1)

Question - 7 : Mr. X is a working partner and Mr. Y is a non-working partner of XYZ partnership
firm. XYZ Partnership firm is subject to tax audit under section 44AB for the P.Y. 2023-24. What
is the due date for filing return of income for Mr. X and Mr. Y for the A.Y. 2024-25?
Answer - 1 : 31st July, 2024 for both Mr. X and Mr. Y
Answer - 2 : 31st October, 2024 for both Mr. X and Mr.Y
Answer - 3 : 31st July, 2024 for Mr. X and 31st October, 2024 for Mr. Y
Answer - 4 : 31st July, 2024 for Mr. Y and 31st October, 2024 for Mr. X
Description: Refer section 139(1)

Question - 8 : An individual client has consulted you on the matter of PAN. He is carrying on
the business of sale & purchase of electronic appliances. His turnover is Rs. 3,00,000 and the
profit is Rs. 75,000 for the P.Y. 2023-24. He has asked you to provide him threshold of
turnover, if any, exceeding which he has to apply for PAN.
Answer - 1 : Rs. 2,00,000
Answer - 2 : Rs. 2,50,000
Answer - 3 : Rs. 3,00,000
Answer - 4 : Rs. 5,00,000
Description: Refer section 139A

Medium:

Question - 1 :
In which of the following transactions, quoting of PAN is mandatory by the person entering
into the said transaction?
I Opening a Basic savings bank deposit account with a bank
II Applying to a bank for issue of a credit card.
III Payment of Rs. 40,000 to mutual fund for purchase of its units
IV Cash deposit with a post office of Rs. 1,00,000 during a day.
V A fixed deposit of Rs. 30,000 with a NBFC registered with RBI aggregating the total deposits
to Rs. 3,50,000 for the F.Y upto to the date of this deposit made.
VI Sale of shares of an unlisted company for an amount of Rs. 60,000 Choose the correct

CA PRATEEK BHADANI | EDUNANBAN.COM 33

answer:
Answer - 1 : II, IV
Answer - 2 : II, III, IV
Answer - 3 : I, II, III, V, VI
Answer - 4 : II, IV, VI
Description: Refer section 139A

Difficult:

Question - 1 :
Iskon Inc., a foreign company and non-resident in India for A.Y. 2024-25, engaged in
the business of trading of tube-lights outside India. The principal officer of the
company has approached you to enlighten him regarding the provisions of the
Income-tax Act, 1961 pertaining to the person who is required to verify the return
of income in case of Iskon Inc. Advise him as to which of the following statements are
correct, assuming that the company has a managing director-
I The return of income in case of Iskon Inc. can be verified by the managing director.
II The return of income in case of Iskon Inc. can be verified by any director, irrespective of the
availability or otherwise of the managing director.
III The return of income in case of Iskon Inc. may be verified by a person who holds a valid
power of attorney from such company to do so, irrespective of the availability or otherwise of
the managing director. Choose the correct answer:
Answer - 1 : I or II or III
Answer - 2 : Only I
Answer - 3 : I or III
Answer - 4 : Only III
Description: Refer section 140

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 CHAPTER 9 – INCOME TAX LIABILITY – COMPUTATION AND OPTIMISATION:

SIMPLE:
Question - 1 :
Mr. X, who has opted out of the default tax regime under section 115BAC and pays tax under
the optional tax regime, can carry forward the AMT credit for
Answer - 1 : 8 assessment years
Answer - 2 : 10 assessment years
Answer - 3 : 12 assessment years
Answer - 4 : 15 assessment years
Description: Refer section 115JD

MEDIUM:

Question - 1 :
Mr. Raj, aged 32 years, presents you the following data for A.Y. 2024-25:
Particular Rs.
s
Gross receipts from business conducted entirely banking channels 70 Lakhs
(opted for section 44AD)
Capital gains under section 112A 5 Lakhs
Capital gains under section 111A 3 Lakhs
Winnings from horse races 1 Lakh
What would be the tax liability under optional tax regime as per the regular provisions of
the Income-tax Act, 1961 of Mr. Raj for the A.Y.2024-25?
Answer - 1 : Rs. 1,28,440
Answer - 2 : Rs. 1,05,560
Answer - 3 : Rs. 1,38,840
Answer - 4 : Rs. 1,45,080
Description: Refer section 44AD for presumptive income, CG u/s 112A exceeding Rs.
1,00,000 taxable @10%, STCG u/s 111A taxable @ 15% and winning from horse races
taxable u/s 115BB @30%.

Question - 2 :
Mr. Uttam presents you the following data related to his tax liability for A.Y. 2024-25:
Particular (Rs.)
s
Tax Liability as per regular provisions of Income-tax Act 15 Lakhs
Tax Liability as per section 115JC 12 Lakhs
AMT credit brought forward from A.Y. 2023-24 5 Lakhs
What shall be the tax liability of Mr. Uttam for A.Y. 2024-25?
Answer - 1 : Rs. 12 lakhs
Answer - 2 : Rs. 15 lakhs
Answer - 3 : Rs. 10 lakhs
Answer - 4 : Rs. 7 lakhs
Description:Refer section 115JD.

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 DIFFICULT:

Question - 1 :
Mr. Bandu, aged 37 years, provides the following details for P.Y. 2023-24:
Particular (Rs.)
s
Textile business income 22 Lakhs
Speculative business loss (4 Lakhs)
Textile business loss b/f from P.Y. 2019-20 (5 Lakhs)
Business income of spouse included in the income Mr. Bandu 2 Lakhs
as per section 64(1)(iv)
Deductions available under Chapter VI-A 3 Lakhs
TDS 1 Lakh
TCS 0.5 Lakh
Advance tax paid 1.3 Lakh
What shall be the net tax payable/(refundable) under optional tax regime as per
regular provisions of the Income-tax Act, 1961 for A.Y. 2024-25 for Mr. Bandu?
Ignore interest.
Answer - 1 : Rs. 24,200
Answer - 2 : (Rs. 1,00,600)
Answer - 3 : Rs. 2,11,400
Answer - 4 : Rs. 12,500
Description: Refer section 72 relating to carry forward and set off of business losses, section
73 relating to losses in speculation business discussed in chapter 5 and section 64(1)(iv)
discussed in chapter 4.

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 CASE SCENARIO MCQ’S
CASE SCENARIO MCQ’S - 1

Mr. Rajesh Sharma, aged 54 years, an Indian citizen, is working as Assistant Manager in
ABC India Ltd. he is getting basic salary of Rs.58,000 per month. He used to travel frequently
out of India for his office work. He left India from Delhi Airport on 5th October, 2023 and
returned to India on 2nd April, 2024.
For previous year 2023-24, following information are relevant;
(a) Dearness Allowance – 10% of Basic Pay (considered for retirement purposes)
(b) Bonus – Rs.98,000
(c) Medical allowance paid during P.Y. 2023-24 amounting to Rs.60,000
(d) He was also reimbursed medical bill of his mother amounting to Rs.15,000
(e) He was also transferred a laptop by company for Rs.15,000 on 31st December, 2023.
The laptop was acquired by company on 1st October, 2020 for Rs.1,00,000. Company
was charging depreciation at 31.666% assuming useful life of laptop as 3 years
(f) He was also reimbursed salary of house servant of Rs.4,000 per month
(g) Professional Tax paid by employer amounting to Rs.2,400
(h) 400 equity shares allotted by ABC India Ltd. at the rate of Rs.250 per share against
fair market value of share of Rs.350 on the date of exercise of option
(i) Short-term capital gain on sale of shares of listed company on which STT is paid
amountingto Rs. 94,000
(j) Mr. Rajesh has exercised the option of shifting out of the default tax regime under
section 115BAC
Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

MCQ-1
Question - 1 :
What is Mr. Rajesh Sharma’s residential status for the A.Y. 2024-25?
Answer - 1 : Resident but can’t determine resident and ordinarily resident or
resident but not ordinarily resident from the given information
Answer - 2 : Non-Resident
Answer - 3 : Resident but not ordinarily
resident Answer - 4 : Resident and
ordinarily resident

Question - 2 :
What are his taxable perquisites for A.Y. 2024-25?
Answer - 1 : Rs. 55,000
Answer - 2 : Rs. 90,400
Answer - 3 : Rs. 1,05,400
Answer - 4 : Rs. 1,03,000

Description:
Medical bills + House servant salary + professional tax + equity shares

Question - 3 :
What is the income chargeable under the head “Salaries” in the hands of Mr. Rajesh
Sharma for A.Y. 2024-25?
Answer - 1 : Rs. 9,76,600
Answer - 2 : Rs. 9,79,000
Answer - 3 : Rs. 9,74,200
CA PRATEEK BHADANI | EDUNANBAN.COM 37
Answer - 4 : Rs. 10,26,600
Description:
Basic salary + D.A. + Bonus + Medical allowances + taxable Perquisite value computed in MCQ
2 - Standard deduction - Professional tax

Question - 4 :
The total tax liability of Mr. Rajesh Sharma for A.Y. 2024-25 is:
Answer - 1 : Rs. 1,26,800
Answer - 2 : Rs. 1,54,630
Answer - 3 : Rs. 1,12,130
Answer - 4 : Rs. 1,39,960
Description:
Tax liability on total income of Rs. 10,70,600 (Salary of Rs. 9,76,600 and STCG u/s 111A of
Rs. 94,000)

Question - 5 :
What would be the total tax liability of Mr. Rajesh Sharma for A.Y. 2024-25 if he does not
exercise the option of shifting out of the default tax regime under section 115BAC and pays
tax under default tax regime under section 115BAC.
Answer - 1 : Rs. 81,590
Answer - 2 : Rs. 73,790
Answer - 3 : Rs. 89,390
Answer - 4 : Rs. 98,700
Description:
Tax liability as per section 115BAC on total income of Rs. 10,73,000 (Salary of Rs. 9,79,000
and STCG u/s 111A of Rs. 94,000)

CASE SCENARIO MCQ’S - 2

Mr. Hardik (age 45 years) is appointed as senior executive officer in Sky India Limited, Mumbai on
01.02.2023 in the scale of Rs.35,000-3500-65,000. He is paid dearness allowance @ 40% of basic
payforming part of retirement benefits.
He is given rent free unfurnished accommodation from 01.10.2023. The company pays lease rent of
Rs.5,000 p.m.
He has been provided a car of above 1.6 liters capacity which is used by him for private purposes
only. The actual cost of the car is Rs.8,00,000. The monthly expenditure of car is Rs.5,000, which is
fully met by the employer. Car is owned by his employer.
He pays lumpsum premium of Rs.1,20,000 towards health insurance for self and his wife (age 43
years) for 48 months on 01.10.2023 by account payee cheque. He also contributes Rs.1,50,000
towards PPF. Mr. Hardik wants to pay tax under default tax regime under section 115BAC.
Based on the facts of the case scenario given above, choose the most appropriate answer to the
following questions:

Question - 1 :
What would be the value of rent-free accommodation chargeable to tax in the
hands of Mr. Hardik?
Answer - 1 : Rs. 30,380
Answer - 2 : Rs. 44,100
Answer - 3 : Rs. 45,570
Answer - 4 : Rs. 30,000
Description:
Rent free accommodation perquisite value rules

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Question - 2 :
What amount of health insurance premium paid during the previous year 2023-24 by
Mr. Hardik can be claimed as deduction while computing total income, if he exercises
the option to shift out of the default tax regime under section 115BAC?
Answer - 1 : Rs. 30,000
Answer - 2 : Rs. 15,000
Answer - 3 : Rs. 24,000
Answer - 4 : Rs. 25,000
Description:
Section 80D

Question - 3 :
What would be perquisite value of car chargeable to tax in the hands of Mr. Hardik?
Answer - 1 : Rs. 28,800
Answer - 2 : Rs. 21,600
Answer - 3 : Rs. 60,000
Answer - 4 : Rs. 1,40,000
Description:
Motor car perquisite value rules

Question - 4 :
Would you advise Mr. Hardik to exercise the option of shifting out of the default tax
regime under section 115BAC?
Answer - 1 : Yes, Mr. Hardik should exercise the option of shifting out of the default tax
regime and pays tax under normal provisions of the Act, since in such case his tax liability
would be Rs. 53,310, being lower than the tax liability under default tax regime under
section 115BAC
Answer - 2 : Yes, Mr. Hardik should exercise the option of shifting out of the default tax
regime and pays tax under normal provisions of the Act, since in such case his tax liability
would be Rs. 53,100, being lower than the tax liability default tax regime under section
115BAC
Answer - 3 : No, Mr. Hardik should not exercise the option of shifting out of the
default tax regime, since as per default tax regime, his tax liability would be Rs.
18,510, being lower than the tax liability under normal provisions of the Act
Answer - 4 : No, Mr. Hardik should not exercise the option of shifting out of the default tax
regime, since as per default tax regime, his tax liability would be Rs. 27,850, being lower
than the tax liability under normal provisions of the Act

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 CASE SCENARIO MCQ’S - 3

Mr. Rajan, aged 62 years, an Indian citizen, resides in Delhi. His wife Sheetal and daughter Riya also
reside with him. Riya, aged 16 years is studying in 12th Standard in DAV school at New Delhi. Mr.
Rajan left for employment to Dubai on 15th September, 2023 but his family did not accompany him.
He returned to India on 25th March 2024. Mr. Rajan had gone outside India for the first time in his
life. During April, 2023 to September, 2023, he was working with a multinational company in Delhi.
He earned salary of Rs.14,00,000 from his job in India. He paid Tuition Fee of Rs.1,80,000 for Riya’s
education in DAV school.
Apart from that, Mr. Rajan also earned professional income of Rs.60,00,000 (Gross Receipts – Rs.90
lakhs) from India. During the year, he also earned interest from his Indian savings bank account to
the tune of Rs.12,000 and interest from fixed deposits with nationalized banks of Rs.45,000. Mr. Rajan
also earned a salary income equivalent to Rs.6,00,000 for his job in Dubai, on which no tax is paid or
payable in Dubai, which was deposited in his bank account in Dubai and later on remitted to India.
Mr. Rajan has exercised the option to shift out of the default tax regime under section 115BAC.
Based on the facts of the case scenario given above, choose the most appropriate answer to the
following questions:-

Question - 1 :
What is the residential status of Mr. Rajan for the previous year 2023-24?
Answer - 1 : Resident and ordinarily in India
Answer - 2 : Resident but not ordinarily resident in India
Answer - 3 : Non-resident in India
Answer - 4 : Deemed resident but not ordinarily resident in India

Question - 2 :
What would be the income chargeable to tax under the head “Salaries” in the hands of
Mr. Rajan in India for P.Y. 2023-24?
Answer - 1 : Rs. 20,00,000
Answer - 2 : Rs. 19,50,000
Answer - 3 : Rs. 13,50,000
Answer - 4 : Rs. 19,60,000

Question - 3 :
How much deduction is available under Chapter VI-A from the Gross Total Income of Mr.
Rajan?
Answer - 1 : Rs. 2,30,000
Answer - 2 : Rs. 1,95,000
Answer - 3 : Rs. 1,60,000
Answer - 4 : Rs. 2,00,000

Question - 4 :
What shall be the tax liability of Mr. Rajan for the A.Y. 2024-25?
Answer - 1 : Rs. 22,69,810
Answer - 2 : Rs. 22,58,940
Answer - 3 : Rs. 22,56,080
Answer - 4 : Rs. 22,72,670

Question - 5 :
What would be the due date for filing income-tax return of Mr. Rajan for the P.Y. 2023-24?
Answer - 1 : 31st July, 2024
Answer - 2 : 31st October, 2024
Answer - 3 : 30th November, 2024
Answer - 4 : 31st March, 2025
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 CASE SCENARIO MCQ’S - 4

Mr. X wanted to file his return of income for the previous year 2023-24. He required
assistance for which he has approached you. He has shared the following details relevant
to the P.Y. 2023-24.
Mr. X owned a house property in Mumbai and the same was rented out for Rs.70,000 p.m.
He claims that this was the only income which he earned during the P.Y. 2023-24. However,
when you had sought for his bank statement, you observed the following information
additionally.
There is a credit for Rs.23,975 towards income-tax refund which includes Rs.5,775 towards
interest on income-tax refund. On 15th August, 2023, the bank statement showed a credit
of Rs.55,000 which he claimed to have received as a gift from his grandchildren on his 60th
birthday. On further assessment you were able to understand that Mr. X and his wife had
travelled to Australia during the P.Y. 2023-24to spend some time with their daughter, who
is staying in Australia, since her marriage. On scrutiny of their passport and relevant
documents you conclude that they had left India on 27th September, 2023 and returned on
30th March, 2024. During the 4 years preceding previous year 2023-24, both had stayed in
India for 320 days. Prior to that, they had been staying only in India.
Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

Question - 1 :
What is the residential status of Mr. X for the P.Y. 2023-24?
Answer - 1 : Resident and ordinarily
resident
Answer - 2 : Resident but not
ordinarily resident
Answer - 3 : Non-resident
Answer - 4 : Deemed resident but not ordinarily Resident

Question - 2 :
Mr. X requests you to compute his tax liability for the A.Y. 2024-25 in a manner
such that his tax liability is minimum. Accordingly, his tax liability would be
Answer - 1 : Rs. 22,750
Answer - 2 : Rs. 29,910
Answer - 3 : Rs.
32,510
Answer - 4 : Nil

Question - 3 :
Mr. X had given the house property at Mumbai on rent to Mr. Y, a salaried employee.
Is there any requirement to deduct tax at source on such rent by Mr. Y, if yes, what
would be the amount of TDS to be deducted?
Answer - 1 : No, there is no requirement to deduct tax at source, since Mr. Y is a salaried
employee
Answer - 2 : Yes, Mr. Y is required to deduct tax at source of Rs. 42,000
Answer - 3 : Yes, Mr. Y is required to deduct tax at source of Rs. 31,500
Answer - 4 : No, there is no requirement to deduct tax at source, since Mr. X is a non-resident

Question - 4 :
Which of the following statements is correct with respect to advance tax liability of Mr. X for
P.Y. 2023-24?
Answer - 1 : Advance tax liability shall not arise to Mr. X since he is a non-resident

CA PRATEEK BHADANI | EDUNANBAN.COM 41

Answer - 2 : Advance tax liability shall not arise, since Mr. X is a resident senior citizen and
he has no income chargeable under the head “Profits and gains of business or profession
Answer - 3 : Advance tax liability shall arise, since he is a non-resident
Answer - 4 : Advance tax liability shall arise, since his tax liability is not less than Rs. 10,000

CASE SCENARIO MCQ’S - 5

Mr. Zukaro, aged 42 years, a Singapore citizen, visits India for business purpose on a regular basis.
He was in India for the first time in the year 2019-20 for 270 days, in the year 2020-21 for 190 days,
in the year 2021-22 for 145 days and in the year 2022-23 for 155 days. In the current financial year
2023-24, he along with his family had come to India on 10th August, 2023 for a pleasure trip. His family
returned to Singapore on 31st August, 2023, however he stayed back to complete some business
commitments and then returned to Singapore on 17th November, 2023.
Mr. Zukaro owns a manufacturing unit in Singapore. He basically comes to India for procurement of
raw material. He has appointed Mr. Manish, as a dependent agent in Mumbai, who procures raw
material from India and then exports it to Singapore to his manufacturing unit and then sells the
finished product there. An income of Rs.8,75,000 was received in Singapore out of this activity in the
P.Y. 2023-24. He had purchased a residential property for Rs.17,50,000 in Indore in April 2020. On
getting an attractive deal in November, 2023, he sold the property for Rs.26,25,000. He also paid
brokerage @ 2% on sales consideration.
Mr. Zukaro had also purchased an agricultural land in India and leased it out to a tenant. The tenant
shares a portion of his agricultural income with Mr. Zukaro as a consideration for rent of land every
year. The share in the income from the land for the previous year 2023-24 was Rs.6,50,000.
Cost inflation index (CII) for the Financial Year (F.Y.) 2020-21: 301; F.Y. 2023-24: 348
Based on the facts of the case scenario given above, choose the most appropriate answer to the
following questions:-

Question - 1 :
What is the Residential Status of Mr. Zukaro for the assessment year 2024-25?
Answer - 1 : Resident and ordinarily resident
Answer - 2 : Resident but not ordinarily resident
Answer - 3 : Non-resident
Answer - 4 : Deemed resident but not ordinarily Resident
Description:
Since Mr. Zukaro's stay in India during the P.Y. 2023-24 exceeds 60 days i.e., 100 days and in last
4years exceeds 365 days i.e., 760 days, he is a resident in India. Since he is a resident in P.Y. 2021-
22 and P.Y. 2022-23 owning to the same reason and his stay in India during the last 7 years is 760
days, he is a Resident and ordinarily resident in India during P.Y. 2023-24

Question - 2 :
Assume for the purpose of answering this question only, that Mr. Zukaro is a non-
resident in India for the P.Y. 2023-24, would income of Rs. 8,75,000 earned though
activity of procuring raw material for manufacturing unit in Singapore be taxable in
India?
Answer - 1 : Yes, since it is deemed to accrue or arise in India through a business
connection in India
Answer - 2 : No, as it is confined to purchase of goods in India for further export
and hence not an income deemed to accrue or arise in India
Answer - 3 : Yes, as business is controlled from India
Answer - 4 : No, as income is received outside India
Description: Refer (b) of Explanation 1 to section 9(1)(i)

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Question - 3 :
Would income arising from transfer of residential property in Indore is chargeable to
tax in India in the hands of Mr. Zukaro? If yes, compute the amount of capital gains
chargeable to tax.
Answer - 1 : Yes, long term capital gain of Rs. 5,49,244 is chargeable to tax, since income is
deemed toaccrue or arise in India and hence taxable in his hands though he is non-resident
in India
Answer - 2 : Yes, long term capital gain of Rs. 6,01,755 is chargeable to tax, since he is resident
in India
Answer - 3 : Yes, long term capital gain of Rs.5,49,244 is chargeable to tax, since he is
resident in India
Answer - 4 : Yes, long term capital gain of Rs. 6,01,744 is chargeable to tax, since income is
deemed toaccrue or arise in India and hence taxable in his hands though he is non-resident
in India
Description:
Full value of consideration = Rs. 26,25,000
Less: Brokerage = 52,500
Net consideration = 25,72,500
Less: Indexed cost of acquisition = 17,50,000 x 348/301 = 20,23,256
Long term capital gains = 5,49,244

Question - 4 :
Would income earned from agricultural land given on lease is taxable in the hands of Mr.
Zukaro?
Answer - 1 : No, such income is exempt, since it is agricultural income
Answer - 2 : Yes, such income is taxable as income from house property, since land is
given on lease
Answer - 3 : Yes, such income is taxable as income from other sources, since land is given
on lease
Answer - 4 : Yes, such income is taxable since he is non-resident even though it is an
agricultural income
Description: Refer agricultural income in chapter 1

Question - 5 :
What is the tax liability of Mr. Zukaro for A.Y. 2024-25 assuming that he has
exercised the option to shift out of the default tax regime and pays tax under normal
provisions of the Act?
Answer - 1 : Rs. 2,05,240
Answer - 2 : Rs. 3,95,040
Answer - 3 : Rs. 2,87,350
Answer - 4 : Rs. 2,98,840
Description:
Partial integration Agricultural income = 6,50,000 Total Income = 14,24,240
Total Income with agricultural income = 20,74,240 (A)
Tax on (A) = 3,79,849 (C)
Agricultural income with basic exemption limit = 9,00,000 (B)
Tax on (B) = 92,500 (D)
Tax (C) - (D) = 2,87,349
Add: HEC@4% = 11,494
Tax liability = 2,98,843
Tax liability (Rounded off) = 2,98,840

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 CASE SCENARIO MCQ’S - 6

Mr. Animesh, an Indian citizen, aged 61 years, has set-up his business in Canada and is residing in
Canada since 2011. He owns a house property in Canada, half of which is used by him for his
residence and half is given on rent (converted into INR is Rs.12,00,000 p.a.)
He purchased a flat in Delhi on 13.10.2021 for Rs.42,00,000. The stamp duty value of the flat was
Rs.35,00,000. He has taken a loan from Canara Bank in India of Rs.34,00,000 for purchase of this
flat. The interest on such loan for the F.Y. 2023-24 was Rs.3,14,000 and principal repayment was
Rs.80,000. Mr. Animesh has given this flat on monthly rent of Rs.32,500 since April, 2023. The
annual property tax of Delhi flat is Rs.40,000 which is paid by Mr. Animesh, whenever he comes to
India to meet his parents. Mr. Animesh visited India for 124 days during the previous year 2023-24.
Before that he visited India in total for 366 days during the period 1.4.2019 to 31.3.2023.
He had a house in Ranchi which was sold in May 2020. In respect of this house, he received arrears
of rent of Rs.2,96,000 in February 2024 (not taxed earlier).
He also derived some other incomes during the F.Y. 2023-24 which are as follows:
(i) Profit from business in Canada Rs.2,75,000
(ii) Interest on bonds of a Canadian Co. Rs.6,20,000 out of which 50% was received in
India

He had a house in Ranchi which was sold in May 2020. In respect of this house, he received arrears
of rent of Rs.2,96,000 in February 2024 (not taxed earlier).
He also derived some other incomes during the F.Y. 2023-24 which are as follows:
(i) Profit from business in Canada Rs.2,75,000
(ii) Interest on bonds of a Canadian Co. Rs.6,20,000 out of which 50% was received in
India
(iii) Income from Apple Orchid in Nepal given on contract and the yearly contract fee of
Rs.5,00,000 for F.Y. 2023-24, was received by Animesh in Nepal

Mr. Animesh has sold 10,000 listed shares @ Rs.480 per share of A Ltd., an Indian company, on
15.9.2023, which he acquired on 05-04-2017 @ Rs.100 per share. STT was paid both at the time of
acquisition as well as at the time of transfer of such shares.
On 31-01-2018, the shares of A Ltd. were traded on a recognized stock exchange as under: Highest
price – Rs.300 per share
Average price – Rs.290 per share Lowest price – Rs.280 per share
Based on the facts of the case scenario given above, choose the most appropriate answer to the
following questions:-

Question - 1 :
What would be the residential status of Mr. Animesh for the A.Y. 2024-25?
Answer - 1 : Resident and ordinarily resident in
India
Answer - 2 : Resident but not ordinarily
resident in India
Answer - 3 : Non-resident
Answer - 4 : Deemed resident
Description:
Indian citizen comes on a visit in India. Since he stays in India for 120 days or more during
the P.Y. 2023-24 and more than 365 days in last 4 years and having income from Indian
source exceeding Rs. 15 lakhs, resident during P.Y. 2023-24.
Accordingly, he is RNOR.

CA PRATEEK BHADANI | EDUNANBAN.COM 44

Question - 2 :
What would be amount of income taxable under the head “Income from house
property” in the hands of Mr. Animesh for the A.Y. 2024-25?
Answer - 1 : Rs. 2,52,200
Answer - 2 : Rs. 1,38,200
Answer - 3 : Rs. 9,78,200
Answer - 4 : Rs. 10,92,200
Description:
Rent received/ receivable = 32,500 x 12 = 3,90,000
Municipal tax paid = 40,000
NAV = 3,50,000
Less: 30% of NAV = 1,05,000
Less: Interest on housing loan = 3,14,000
Loss = 69,000
Arrear of rent = 2,96,000
Less: 30% = 88,800
Taxable rent = 2,07,200
Income under the head house property =2,07,200 - 69,000 = 1,38,200

Question - 3 :
What amount of capital gain would arise in the hands of Mr. Animesh on transfer of
shares of A Ltd?
Answer - 1 : Rs. 18,00,000
Answer - 2 : Rs. 19,00,000
Answer - 3 : Rs. 20,00,000
Answer - 4 : Rs. 38,00,000
Description:
Full Value of Consideration 10,000 x 480 = 48,00,000
Less: Cost of acquisition = 30,00,000
Higher of
(i) actual cost of Rs. 10,00,000 and
(ii) lower of (a) FMV of Rs. 30 lakhs and (b) FVC of Rs. 48 lakhs
Long term capital gains = 18,00,000

Question - 4 :
What would be total income of Mr. Animesh for the A.Y. 2024-25, if he has exercised
the option to shift out of the default tax regime and pays tax under normal
provisions of the Act?
Answer - 1 : Rs. 22,82,200
Answer - 2 : Rs. 22,68,200
Answer - 3 : Rs. 22,48,200
Answer - 4 : Rs. 21,68,200
Description:
House Property = 1,38,200
Long term Capital gains taxable u/s 112A =
18,00,000 Other sources (Interest received in
India) = 3,10,000 Gross Total Income = 22,48,200
Less: Deduction u/s 80C = 80,000
Total Income = 21,68,200

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Question - 5 :
What would be the tax liability (computed in the manner so as to minimise his tax liability) of
Mr. Animesh for the A.Y. 2024-25?
Answer - 1 : Rs. 1,82,950
Answer - 2 : Rs. 1,87,110
Answer - 3 : Rs. 1,80,350
Answer - 4 : Rs. 1,84,510
Description:
Under default tax regime u/s 115BAC
Total Income = 22,48,200 (Deduction u/s 80C would not be available)
Tax @10% on Rs. 17 lakhs = 1,70,000
Tax on balance income of Rs. 4,48,200 = 7,410 (Basic exemption limit Rs. 3 lakhs)
Total Tax = 1,77,410
Add: HEC @4% = 7,096
Tax liability = 1,84,506
Tax liability (rounded off) = 1,84,510
Under normal provisions of the Act
Total Income = 21,68,200
Tax @10% on Rs. 17 lakhs = 1,70,000
Tax on balance income of Rs. 3,68,200 = 3,410 (Basic exemption limit Rs. 3 lakhs)
Total Tax = 1,73,410
Add: HEC @4% = 6,936
Tax liability = 1,80,346
Tax liability (rounded off) = 1,80,350

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