BBA IV Semester (Taxation And Law) Unit

Latest Income Tax MCQ Objective Questions

Income Tax Question 1:

Which of the following Act is replaced with the Direct Tax Code (DTC)?

(a) The Income Tax Act, 1961

(b) The Central Sales Tax Act, 1956

(d) The Central Goods and Services Act, 2017

Only (d)
Only (a)
Only (a) and (d)
Only (b) and (c)
None of the above/More than one of the above.

Answer (Detailed Solution Below)

Option 2 : Only (a)

The correct answer is Only (a)

Key Points

Person under section 2(31) of Income Tax Act 1961:

In terms of Section 2 (31) of the Income Tax Act, 1961, a person has been defined to include
(i) an individual,
(ii) a Hindu undivided family,
(iii) a company,
(iv) a firm,
(v) an association of person or a body of individuals, whether incorporated or not,
(vi) a local authority, and
(vii) every artificial juridical person, not falling with any of the preceding sub-clauses.

Income Tax Question 2:

Match List I with List II:

List I (Income Tax Return)		List II (Relationship with)
A.	ITR-2	I.	For a company other than a company claiming exemption under section 11.
B.	ITR-6	II.	For presumptive business income covered u/s 44 AD and 44 AE.
C.	ITR-7	III.	For a person (including a company who are required to furnish return u/s 139 (4A) or 139 (4B) or 139 (4C) or 139 (4D).
D.	ITR-4 (Sugam)	IV.	For individual and HUF not having income for business and profession.

Choose the correct answer from the options given below:

A- IV, B- I, C- II, D- III
A- IV, B- I, C- III, D- II
A- III, B- II, C- IV, D- I
A- II, B- I, C- IV, D- III

Answer (Detailed Solution Below)

Option 2 : A- IV, B- I, C- III, D- II

The correct answer is A- IV, B- I, C- III, D- II.

Key Points A. ITR-2 - IV. For individual and HUF not having income for business and profession.
ITR-2 is the income tax return form applicable to individuals and Hindu Undivided Families (HUF) who do not have income from business or profession.

B. ITR-6 - I. For a company other than a company claiming exemption under section 11.
ITR-6 is the income tax return form applicable to companies, except those claiming exemption under section 11 of the Income Tax Act.

C. ITR-7 - III. For a person (including a company who are required to furnish return u/s 139 (4A) or 139 (4B) or 139 (4C) or 139 (4D).
ITR-7 is the income tax return form applicable to individuals, companies, and entities that are required to furnish returns under specific sections of the Income Tax Act.

D. ITR-4 (Sugam) - II. For presumptive business income covered u/s 44 AD and 44 AE.
ITR-4 (Sugam) is the income tax return form applicable to individuals and HUFs who have presumptive income from business or profession under section 44 AD and 44 AE of the Income Tax Act.

List I (Income Tax Return)		List II (Relationship with)
A.	ITR-2	IV.	For individual and HUF not having income for business and profession.
B.	ITR-6	I.	For a company other than a company claiming exemption under section 11.
C.	ITR-7	III.	For a person (including a company who are required to furnish return u/s 139 (4A) or 139 (4B) or 139 (4C) or 139 (4D).
D.	ITR-4 (Sugam)	II.	For presumptive business income covered u/s 44 AD and 44 AE.

Therefore, the correct matching is:. A-IV, B-I, C-III, D-II.

Income Tax Question 3:

Which one of the following is NOT related to Income Tax in India?

Taxpayer Identification Number (TIN)
Dearness Allowance (DA)
Leave Travel Allowance (LTA)
Tax Deduction and Collection Account Number (TAN)

Answer (Detailed Solution Below)

Option 1 : Taxpayer Identification Number (TIN)

The correct answer is Taxpayer Identification Number (TIN).

Key PointsTIN:

In India, the term "TIN" or Taxpayer Identification Number is not directly related to income tax. Instead, it is commonly used to refer to the Taxpayer Identification Number issued under the Goods and Services Tax (GST) regime.
Under the GST system in India, businesses are required to obtain a unique identification number known as the Goods and Services Tax Identification Number (GSTIN). The GSTIN is a 15-digit alphanumeric number assigned to registered taxpayers for the purpose of identification and compliance with GST laws. It is used to track and monitor various aspects of a taxpayer's transactions and tax liabilities under the GST regime.
The GSTIN is unique to each registered entity and is used for filing GST returns, claiming input tax credits, and conducting other GST-related activities. It is issued by the Goods and Services Tax Network (GSTN), which is the technology backbone of the GST system in India.
On the other hand, for income tax purposes in India, individuals and entities are typically identified by their Permanent Account Number (PAN), which is a unique 10-digit alphanumeric identifier issued by the Income Tax Department. PAN is used for various income tax-related activities, such as filing income tax returns, making tax payments, and conducting financial transaction.

Income Tax Question 4:

Section 80 GGC of Income Tax Act is related with which one of the following?

Deduction in respect of contribution given by any company to political parties.
Deduction in respect of contribution given by any person to political parties.
Deduction in respect of rent paid.
Deduction in respect of certain donation for scientific research.

Answer (Detailed Solution Below)

Option 2 : Deduction in respect of contribution given by any person to political parties.

The correct answer is Deduction in respect of contribution given by any person to political parties.

Key PointsSection 80GGC:

Section 80GGC allows for a deduction in respect of any amount contributed by an individual to a political party or an electoral trust. The deduction is available to all individuals, including salaried individuals and non-salaried taxpayers. However, it is important to note that this deduction is not available for contributions made by companies or any other type of taxpayer.
The deduction under Section 80GGC is subject to certain conditions and limits. The contribution must be made through a mode other than cash, and the individual must retain a receipt or document evidencing the contribution. The maximum amount eligible for deduction is up to 10% of the individual's total income.

Hence, the correct answer is Deduction in respect of contribution given by any person to political parties.

Income Tax Question 5:

On which of the following income, direct tax is not applicable?

household property
agricultural income
business income
property tax

Answer (Detailed Solution Below)

Option 2 : agricultural income

Important Points

Direct Tax - The country's supreme tax body imposes direct taxes on individuals and businesses. Direct taxes are paid directly by those who are subject to them. Taxpayers, for example, pay income tax, property tax, asset tax, and gifts to the government directly. The burden must be borne by the person on whom the tax is levied and cannot be transferred to another person. The Central Board of Direct Taxes governs and administers direct tax (CBDT).

Income Tax -The most common type of direct tax is income tax. It is a tax levied by the central government on income earned by individuals and businesses during a fiscal year. However, the amount payable for income tax is determined by how much money person earn under different heads of income, one of which is income from household property.

Property tax - The tax paid by a property owner to the municipal corporation is known as property tax. It is a direct tax because it is non-transferable and must be paid by the property owner.

Business income - Tax on business income is called business Tax. Business tax, also known as Corporation tax, is a type of direct tax. Corporate tax is levied on a company's profits, whether they are foreign or domestic. Corporate tax rates range between 15% and 40%

Agricultural income is not subject to income tax in India. According to the Income Tax Act, agricultural income is exempt from income tax, and therefore, no tax is levied on agricultural income earned by individuals or entries.

Top Income Tax MCQ Objective Questions

Income Tax Question 6

Capital gains

means :

An increase in the value of an asset.
An increase in the stock of capital.
An increase in the yield of an asset.
An increase in the amount of foreign capital.

Answer (Detailed Solution Below)

Option 1 : An increase in the value of an asset.

The correct answer is An increase in the value of an asset.

Key Points Capital gains:

A capital gain is an increase in an asset's or investment's value as a result of the asset's or investment's price appreciation.
In other terms, a gain happens when an asset's current or selling price exceeds its original purchase price.
All kinds of capital assets, including but not restricted to stocks, bonds, goodwill, and real estate, are attributed with capital gains.

Important Points Classifications of Capital Gain:

Capital gain can be realized or unrealized.
The realized gain is the gain from the final sale of an asset or investment.
Conversely, an unrealized gain arises when the current price of an asset or investment exceeds its purchase price, but the asset or investment is still unsold.
Realized capital gains are usually classified as short-term gains or long-term gains.
Short-term (capital) gains occur if an asset or investment was held for less than a year.
Long-term (capital) gains are gains from an asset or investment that was held for more than one year.

Income Tax Question 7

Which of the following income is generally chargeable under the head of income from other sources?

(A) Income from subletting house property

(B) Director fee

(D) Agricultural Income from outside India

(E) Insurance commission

(F) Income from sale of securities

Choose the most appropriate answer from the options given below:

(A), (B), (D), (E) only
(B), (C), (D), (E), (F) only
(A), (B), (C), (E), (F) only
(A), (B), (C), (D), (E) only

Answer (Detailed Solution Below)

Option 4 : (A), (B), (C), (D), (E) only

The correct answer is (A), (B), (C), (D), (E) only

Key Points Income from other sources:

Income from other sources is income that is not exempt from taxation and cannot be deducted for tax purposes under the categories of salary, income from House property, profits and gains from businesses or professions, or capital gains.

Important Points Income chargeable under the head of income from other sources:

Income from subletting house property
Director fee
Ground Rent
Agricultural Income from outside India
Insurance commission
Dividend
Interest income etc.

Mistake Points

Do note that Income from subletting house property by a tenant is only charged under "Income from Other Sources".

Income from subletting house property by the owner is charged under "Income from House Property".

Income Tax Question 8

Any planning of tax which aims at reducing tax liability in a legally recognised permissible way can be termed as an instance of:

Tax planning
Tax avoidance
Tax evasion
Tax management

Answer (Detailed Solution Below)

Option 1 : Tax planning

The correct answer is Tax Planning.

Key Points

Tax planning: Tax planning is the practise of efficiently examining one's financial condition. One can lower their tax liability by using tax planning. It entails legally structuring one's income to take advantage of several exemptions and deductions.

Additional Information

Tax Avoidance:

Tax avoidance is the practise of reducing one's tax liability using legal means. In other terms, it is the act of utilising the tax laws in a single area for one's own advantages in order to lower one's tax liability. Tax avoidance is a legal strategy, but it is not recommended because it can be utilised to one's own benefit to lower the amount of tax that is owed.

Tax evasion: Tax evasion is the criminal practise of intentionally understating taxable income or exaggerating expenses in order to reduce tax obligations. It is an illegal effort to lessen one's tax liability.

Tax Management: The administration of money for the purpose of paying taxes is referred to as tax management. Tax management deals with timely filing of Returns, having the accounts audited, withholding tax at source, and other related issues. Tax management aids in preventing the payment of interest, penalties, and legal fees.

Which of the following provident fund is approved by the provident fund commissioner?

Statutory provident fund
Recognised provident fund
Unrecognised provident fund
Public provident fund

Answer (Detailed Solution Below)

Option 2 : Recognised provident fund

The correct answer Recognised Provident Fund

Key Points Provident Fund:

A provident fund is an investment fund that is voluntarily established by Employer and employees to serve as long term savings to support an employee’s retirement.

Employee’s contribution: The amount deducted from the employee’s salary at a rate of 2% – 15%.
Employer’s contribution: Besides the usual salary payment made to the employer, an employer will also pay 2% - 15% of employee’s salary into the fund. It is also considered a part of employment welfare.

Important Points Recognised Provident Fund:

Any establishment which is recognised by the Commissioner of Income Tax is called as recognised provident fund.
To be recognised, an organization of 20 or more members shall invest funds as per the guidelines of PF Act, 1952, and can get an approval from the PF Commissioner of Income-tax.

Additional Information
Statutory Provident Fund (SPF):

This Provident Fund is managed by local governments, government organisations, railways, universities, and other institutions.
The Insurance Funds Act of 1925 is applicable to this lawsuit.
Employer donations may be tax-free, whereas employee contributions are taxable under Section 80c.
The interest provided has no tax implications because it is not considered part of the income.

Unrecognised Provident Fund –

If the commissioner of income tax does not approve the provident fund scheme created by the employer and employee (as mentioned above), then such scheme is an unrecognised provident fund scheme.

Public Provident Fund (PPF) -

The Public Provident Fund (PPF) is an Indian savings and tax-savings mechanism established in 1968 by the Ministry of Finance's National Savings Institute. The scheme's principal goal is to encourage people to save small amounts of money by providing a safe investment with tax benefits.

Income Tax Question 10

Which form is used to file an application for obtaining Permanent Account Number(PAN) by an Indian resident ?

Form 49B
Form 49A
Form 49
Form 49AA

Answer (Detailed Solution Below)

Option 2 : Form 49A

1. Income- Tax Act extends to –

(a) whole of India

(b) whole of India except Jammu & Kashmir

(d) option(a) except Jammu & Kashmir and Sikkim

2. Finance Bill becomes Finance Act when it is passed by –

(a) the Lok Sabha

(b) both Lok Sabha and Rajya Sabha

(d) Rajya Sabha

3. A person follows calendar year for accounting. For taxation, he has to follow –

(a) Calendar year only 1st Januay to 31st December

(b) Financial year only 1st April to 31st March

(d) He will follow extended year from 1st January to next 31st March (a period of 15

months)

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

(a) True (b) False

5. A Person may not have assessable income but may still be assessee.

(a) True (b) False

6. Wlhich one of the following is not treated as Deemed Assessee

(a) Legal representative of deceased person

(b) Agent of a Non-resident

(d) None of the above

7. Person u/s 2(31) does not include

(a) Minor (b) Local Authority

8. In some cases Assessment Year and Previous Year can be the same financial year.

(a) True (b) False

9. Which of the following are Revenue Receipts?

(a) Bonus Shares received by a dealer of shares

(b) Money received by a tyre manufacturing Company for sale of technical know-

how regarding manufacturing of tyres

(d) All of the above

10. Which of the following are Revenue Receipts?

(a) Interest from investments

(b) A claim of Rs. 1,50,000 received from Insurance Company for loss of profits

(d) All of the above.

11. Which of the following is a Capital Receipt?

(a) Perquisites received by a professional during the course of carrying on profession

(b) Compensation received in respect of permanent disablement due to an accident

(d) All of the above

12. Which of the following is not a Capital Expenditure?

(a) Expenditure incurred in connection with the acquisition or installation of a Fixed

Asset

(b) Expenditure incurred in raising capital

(d) Expenditure incurred for repairing an asset

13. Which of the following is a revenue Expenditure?

(a) Lumpsum payment made by a employer as a gratuity to the employee

(b) Legal expenses incurred by a person in defending or maintaining his right or title

to the propert used for business

(d) All of the above

14. Which of the following is a Revenue Expenditure?

(a) Assessee took over the business of another & paid bonus to staff of that business

in respect of period before takeover

(b) Fee paid for increasing the Authorized Capital of the Company

wish to purchase that asset.

(d) Advance paid for purchase of goods for resale, later on forfeited as the assessee

did not wish to purchase those goods.

15. Which of the following is a Capital receipt?

(a) Compensation received for loss of profit

(b) Profit from sale of trading asset

(d) Amount received by outgoing partner

16. Which of the following is a revenue receipt?

(a) Receipt towards substitution of Income

(b) Amount received towards fixed capital

(d) Liquidated damages

17. Which of the following is not a capital receipt?

(a) Insurance claim received on truck destroyed by accident

(b) Lumpsum received on shares

(d) Settlement amount received on termination of contract

18. Compensation for cancellation of a licence by the Government resulting in cessation of

business is

(a) Business receipt (b) Capital receipt

19. Receipt of amount on maturity of LIC policy is

(a) Capital Receipt (b) Casual Receipts

20. Part I of Schedule I of the Finance Act, 2020 gives rates of income tax for the

assessment year –

(a) 2019 – 20 (b) 2020 – 21

21. Part II of Schedule I of the Finance Act, 2020 gives the rates of TDS for the financial

year –

(a) 2020 – 21 (b) 2019 – 20

22. Part III of Schedule I of the Finance Act, 2020 gives the rates of Advance Tax & tax to

be deducted in case of Salary for the assessment year –

(a) 2021 – 22 (b) 2020 – 21

23. The Circulars issued by CBDT are binding on –

(a) Assessee (b) Income – Tax Authorities

24. Chennai Corporation falls under the category –

(a) Artificial Juridical Person (b) Local Authroity

25. AOP should consist of –

(a) Individual only (b) Persons other than individual only

26. Body of Individuals (BOI) should consist of –

(a) Individual only (b) Persons other than individual only.

27. A new business was set up on 15.10.2020 and it commenced its business from

1.12.2020. The first previous year in this case shall be –

(a) 15.10.2020 to 31.3.2021 (b) 1.12.2020 to 31.3.2021

28. Mr. A set up his new business on 01.06.2020 after completing his higher studies in

Management in April 2020. Determine the relevant previous year for Mr. A for the

purpose of computing his business income.

(a) 01.04.2020 to 31.03.2021 (b) 01.05.2020 to 31.03.2021

29. In continuation of the above facts given in Q.28, determine the relevant Assessment

Year for Mr. A.

(a) 01.04.2020 to 31.03.2021 (b) 01.06.2020 to 31.03.2021

30. A person leaves India permanently on 15.11.2020. The income earned till 15.11.2020 in

this case shall be assessed u/s 174 during –

(a) 2021 – 22 (b) 2019 – 20

31. Charging of Income of the Previous year in the same year is not mandatory for

(a) Shipping business of Non-resident

(b) Persons leaving India

(d) Discontinuation of business

32. Surcharge on Income Tax is payable by –

(a) Foreign Company (b) Individual and HUF

33. The maximum amount on which Income-Tax is not chargeable in case of H.U.F. for

A.Y 2021-22 is –

(a) Rs. 2,50,000 (b) Rs. 5,00,000

34. The maximum amount on which Income-Tax is not chargeable in case of Firm is –

(a) Rs. 2,50,000 (b) Rs. 5,00,000

35. The maximum amount on which Income-Tax is not chargeable in case of a Co-

Operative Society is –

(a) Rs. 2,50,000 (b) Rs. 3,00,000

36. A Local Authority is taxable at flat rate of Income-Tax.

(a) True (b) False

37. A Co-Operative Society is taxable at flat rate of 30% on Total Income.

(a) True (b) False

38. Health and Education Cess is not leviable in case of -

(a) An Individual and HUF (b) Indian Company

39. Health and Education Cess is leviable on -

(a) Income-Tax (b) Income-Tax + Surcharge

40. Health and Education Cess is leviable at -

(a) 4% (b) 5%

41. In case of an Individual and HUF, Health and Educaton Cess is leviable only when the

Total Income of such assessee -

(a) Exceeds Rs. 5,00,000 (b) Exceeds Rs. 2,50,000

42. For AY 2021-22, a Firm is subject to IT at a rate of -

(a) 30% + HEC 4%

(b) 30% + 12% Surcharge (if T.I.> Rs. 1 Crore) + HEC 4%

(d) 40% + 12% Surcharge (it T.I > Rs. 1 Crore) + HEC 4%

43. The Total Income of the assessee has been computed as Rs. 2,53,494.90. For rounding

off, the Total Income will be taken as –

(a) Rs. 2,53,500 (b) Rs. 2,53,490

44. Income-Tax is rounded off to -

(a) nearest ten Rupees (b) nearest one Rupees

45. A’s Total Income for the AY 2021-2022 is Rs. 5,00,000. His tax liability shall be -

(a) Rs. 12,500 (b) NIL

46. A’s Total Income for the AY 2021-2022 is Rs. 10,55,000. His tax liability shall be -

(a) Rs. 1,29,500 (b) Rs. 1,20,500

47. Where the Total Income of an Artificial Huridical Person is Rs. 3,10,000, the Income-

Tax Payable is

(a) Rs. 3,120 (b) Rs. 3,000

48. An example of Casual Income is

(a) Interest Income (b) Winning from lotteries

49. Which of the following is not included in the term Income under the Income Tax Act,

1961?

(a) Reimbursement of travelling expense

(b) Dividends

(d) Profits from Business

50. Value of unexplained money, Bullion or Jewel is taxed under

(a) Capital Gains (b) Business Income

51. Undisclosed income u/s 68 to 69D are charged to tax at

(a) 30% (b) 60%

52. The way of tax liability by taking full advantage provided by the Act is ________.

(a) Tax management (b) Tax avoidance

53. Mr. P, a resident individual, has total income of Rs. 75,00,000 for P.Y. 2020-21. What

is the rate of surcharge, if any, applicable to him for A.Y. 2021-22?

(a) No surcharge as the income does not exceed Rs. 1 crore

(b) 5%

(d) 15%

54. Mrs. Priyanka Chopra who is a non-resident, has total income of Rs. 3,20,000 for P.Y.

2020-21. Determine the amount of rebate u/s 87A, if any, available to her for A.Y.

2021-22.

(a) Not applicable (b) Rs. 12,500

55. A proviso is inserted in any section, so as to provide the;

(a) Clarification on the provisions contained in that section

(b) Explanation regarding the provisions contained in that section

(d) None of the above

56. Mr. Ram, a resident individual aged 85 years, has total income of Rs. 7,50,000 for P.Y.

2020-21 which includes pension income from his employer as well as interest income.

Determine tax payable for A.Y. 2021-22.

(a) Rs. 51,500 (b) Rs. 52,000

57. Circular issued by CBDT clarifying doubt regarding the scope and meaning of the

provisions of the Act, is binding on;

(a) Assessee as well as Department (b) Department only

58. Z Ltd. is incorporated on 20.03.2018. It is engaged in manufacture of consmetic items

for domestic market. Determine the income tax rate of the said company for A.Y. 2021-

22, if the turnover of the company was Rs. 380 crores in FY 2018-19 and total income

is Rs. 60 crores for PY 2020-21.

(a) 25% (plus surcharge @7% + HEC@4%)

(b) 30% (plus surcharge @12% + HEC@4%)

(d) 30% (plus surcharge @7% + HEC@4%)

59. Mr. Ram, resident individual, earned following incomes during the F.Y. 2020-21.

(i) Agriculture income in Indonesia of Rs. 25,000.

(ii) Income from business in Bangladesh of Rs. 35,000.

What would be total income of Mr. Ram from A.Y. 2021-22?

(a) Nil (b) Rs. 25,000

60. The amendments made in the Income-tax Act, 1961 by the Finance Act, 2020, unless

otherwise provided in the Act, is applicable from -

(a) First day of financial year 2019-20

(b) First day of financial year 2020-21

(d) From 1

st February, 2020

61. Which of the following is NOT TRUE in respect of provisons of Alternate Minimum

Tax (AMT):

(i) AMT provisions are not applicable to an individual, Hindu Undivided Family

(HUF) and firm (including LLP) person whose adjusted total income does not

exceed Rs. 20,00,000.

(ii) The provisions of AMT will apply to every non-corporate taxpayer who has

claimed deduction under section 35AD

(iii) Every non-corporate taxpayer to whom the provsons of AMT apply is required to

obtain a report from a Chartered Accountant in Form No. 29Con or before the due

date of filing the return of income

(a) (i) only (b) (i) & (ii)

62. For the Prevous Year 2020-21, the taxable income of Mr. Khurana (resident and aged

49 years) computed as per the provisions of Income-tax Act is Rs. 30,40,000. The

taxable income has been computed after deduction of Rs. 3,00,000 under section

80QQB in respect of royalty on books. Will provisons of Alternate Minimum Tax

(“AMT”) apply to Mr. Khurana for A.Y. 2021-22? What will be his tax liability for the

said A.Y.?

(a) Yes, provisions of AMT will apply to Mr. Khurana and his tax liability for A.Y.

2021-22 shall be Rs. 6,42,616.

(b) No, provisions of AMT will not apply to Mr. Khurana and his tax liability for

A.Y. 2021-22 shall be Rs. 7,53,480.

2021-22 shall be Rs. 7,53,480.

(d) Yes, provisions of AMT will apply to Mr. Khurana and his tax liability for A.Y.

2021-22 shall be Rs. 8,47,080.

63. A domestic company is taxable at concessional rate in the ___________ situations

(a) Where TT/GR in PY 2018-19 < 400 Crores

(b) Opting for taxability u/s 115BA

(d) Either (a) or (b)

64. Simple Ltd. is ncorporated on 15.01.2018. It is a manufacturing company for domestic

market. Determine the income tax rate of the said company for A.Y. 2021-22, if the

turnover of the company was Rs. 450 crores in FY 2018-19 and total income was Rs.

50 crores

(a) 25% (plus surcharge @ 7% + HEC@4%)

(b) 30% (plus surcharge @ 12% + HEC@4%)

(d) 30% (plus surcharge @ 7% + HEC@4%)

65. Flourish Ltd. is incorporated on 18.10.2020. It is a new manufacturing Domestic

company u/s 115BAB. Determine the income tax rate of the said company for A.Y.

2021-22, where the company’s income is computed without providing for specified

exemption, deduction or incentive available under the Act.

(a) 15% (plus surcharge @10% + HEC@4%)

(b) 30% (plus surcharge @12% + HEC@4%)

(d) 22% (plus surcharge @7% + HEC@4%)

66. Girl Ltd is a Domestic Company, opting for taxability u/s 115BAA so as to get benefit

of concessional rate of tax as 22% instead of 30% for the FY 2020-21 and to opt back

to normal rate of taxation after 3 years. Can the company do so?

(a) Yes, Company having the option to go back to normal rate of taxation for

subsequent years

(b) No, once opted for concessional rate of tax cannot change for subsequent years.

67. In course of Scrutiny Assessment of Mr. X, the Assessing Officer, on the basis of

information available with him sought an explanation for the source of the expenditure

of Rs. 20 lakhs incurred on the wedding of his daughter. The said expenditure was

neither recorded in the books of account maintained nor was the explanation offered by

Mr. X satisfactory. The undisclosed income shall be chargeable at ---------?

(a) 30% + Surcharge 15% HEC

(b) 60% + Surcharge 25%+HEC

(d) 100% + Surcharge 22%+HEC

68. Income derived by Mr. Sudhan in foreign currency having a Business unit located in

IFSC shall be liable to AMT at ------------ rate.

(a) 18.5% (b) 12.5%

69. AMT Credit shall be carried forward and set-off for ------------- immediately succeeding

the Assessment Year for which Tax Credit becomes allowable.

(a) 8 Years (b) 10 Years

70. Marginal relief shall be computed where total income exceeds Rs. 50 lakhs -------------

(a) Tax on TI including Surchaarge less (TI-Rs. 50 lakhs) less (tax on Rs. 50 lakhs)

(b) Tax on TI including Surchaarge less (TI-Rs. 50 lakhs) less (tax on Rs. 50 lakhs)

(d) Tax on TI including Surchaarge less (tax on Rs. 50 lakhs)

71. Mr. Arun having total income of Rs. 1.01 crores, what shall be his Marginal relief?

(a) 1,00,000 (b) 75,125

ANSWERS

1.a 2.c 3.b 4.a 5.a 6.d 7.d 8.a 9.a 10.d 11.b 12.d 13.d 14.d 15.c

16.a 17.c 18.b 19.a 20.b 21.a 22.a 23.b 24.b 25.c 26.a 27.a 28.c 29.c 30c

31.d 32.d 33.a 34.d 35.c 36.a 37.b 38.d 39.b 40.a 41.d 42.b 43.b 44.a 45.b

46.c 47.a 48.b 49.a 50.c 51.b 52.c 53.c 54.a 55.c 56.b 57.b 58.c 59.d 60.b

61.a 62.c 63.c 64.b 65.a 66.b 67.b 68.d 69.c 70.a 71.b

1. Any income from HUF received by member of HUF shall be -

(a)

Fully Taxable

(b) Fully Exempt

2. In case of a Partner, the share of Profits from the Firm is -

(a) Fully Taxable

(b) Fully Exempt

be allowed

3. Share of Profit of Mr. Abhishek who is a Partner in M/s. Amar & Co. is -

(a) Exempt from tax

(b) Taxable as his Business Income

(d) Taxable as Income from Other Sources

4. Casual Income received by the Assessee is -

(a) Fully Exempt

(b) Exempt upto Rs. 5,000

5. A Cricket Match organized by the Cricket Control Board of India for the benefit of

Sunil Gavaskar wherein he received Rs. 5 Lakhs is -

(a) Casual Income taxable under other sources

(b) Exempt Income (because retired from profession)

6. S traced a missing person and was awarded a sum of Rs. 1,00,000 although there was

no stipulation to that effect. Such receipt shall be -

(a) Casual Income and fully taxable

(b) Casual Income and exempt upto Rs. 5,000

7. Scholarship received by a student to meet the cost of education is -

(a) Casual Income

(b) Taxable subject to exemption

(c)

Fully Exempt

8. Scholarship received by a student was Rs. 1,000 p.m. He spends Rs. 8,000 for meeting

the cost of education. The balance Rs. 4,000 is -

(a) Taxable

(b) Exempt

9. An Author was awarded by CBDT a sum of Rs. 50,000 for writing a book in Hindi as

first prize. Such award is fully exempt.

(a)

False

(b) True

10. A Local Authority has earned income from the supply of commodities outside its own

jurisdictional area. It is exempt -

False

(b) True

11. A Local Authority has earned income from the supply of water or electricity outside its

own jurisdictional area. It is -

(a) Exempt

(b) Taxable

12. Income under the head CG to a Local Authority is -

(a) Exempt

(b) Taxable

13. Income under the head CG to a Trade Union is -

(a) Exempt

(b)

Taxable

14. A Subsidy received from the Tea Board by an assessee carrying on the business of

growing and manufacturing tea for re-plantation or replacement of tea bushes is -

(a) Exempt

(b) Taxable

15. Dividend received by a Co. from a domestic Co. is -

(a) Exempt

(b) Taxable

16. Dividend received by a Foreign Company from a Domestic Company is-

(a) Exempt

(b) Taxable

17. Subsidy received by the Assessee from Rubber Board for re-plantation or replacement

of rubber plant is -

(a) Exempt

(b) Taxable

18. Income arising from the transfer of units of the UTI or Mutual Fund covered u/c

10(23D) shall

(a) be exempt

(b) not be exempt

19. Any sum received under a Life Insurance Policy including bonus is exempt -

(a) In all kinds of policies

(b) In all kinds of policies except when received under Keyman Policy.

exceeds 10%/15% of actual capital sum assured, except on death.

20. Any pension received by an Individual or family pension received by any member of

his family where such individual is in the service of Central or State Govt and was

awarded Paramvir Chakra, Mahavir Chakra or VirChakra or any other notified gallantry

award shall be -

(a) Exempt

(b) Taxable

21. Venture Capital Company or Venture Capital Fund are given exemption from IncomeTax for -

(a) Any Income by way of dividend or LTCG from investments made by way of

Equity Shares in a Venture Capital Undertaking (VCU)

(b) Any Income from investment in a VCU

22. Where the income of an individual includes the income of minor children, such income

shall be exempt up to -

(a) Rs. 1,500

b) Rs. 1,500 per minor child

the Total Income of the assessee whichever is less.

23. Income of a newly Established undertaking in a Free Trade Zone is –

(a) Exempt

(b) Exempt for 5 years in a block of 8 AY.

24. Income from unit of UTI of Mutual Fund covered u/s 10(23D) is -

(a) Exempt

(b) Taxable

25. Family Pension received by the legal heir of an army personnel who died during

operational duties shall be -

(a) Fully Exempt

(b) Taxable

26. CG arising from compulsory acquisition of urban agricultural land is -

(a)

Taxable

(b) Exempt

27. In respect of voluntary contributions in excess of Rs. 20,000 received by a Political

Party, exemption u/s 13A is available where proper details about the donations are

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

(a) True

(b)

False

28. Incomes that do not form part of the total Income are called

(a) Exempt Income

(b) Deductions

(d)

None of the above

29. Which of the following exemption is available for a Foreign Citizen u/s 10(6)?

(a) Remuneration of Foreign Diplomats

(b) Remuneration of employee of a Foreign enterprise

(d) All of the above

30. Exemptions related to defence purpose u/s 10(6C) is not specific about this condition.

(a) Royalty and Fees for Technical Services should be received for defence and

security purpose

(b) Should be in pursuance of Government to Government agreement

(d) Exemption is applicable only to Income of Notified Foreign Companies

31. Gulf Oil Corporation, a foreign Company is interested in carrying on business of crude

oil in India. Which of its activities would be exempt u/s 10? (i) Sale of Crude Oil, (ii)

Storage of Crude Oil in a facility in India and sale therefrom, (iii) Income from sale of

leftover crude oil from the facility in India after the expiry of agreement or

arrangement, and (iv) Any other activity other than crude oil business carried on by the

Foreign Company is also exempt.

(a) (ii)

(b) (i), (ii), and (iii)

(d) Only (i)

32. Compensation received on account of disaster is exempt u/s 10(10BC) if it is received

from

(a) Central Government

(b) State Government

(d) All of the above

33. Which of the following News Agency is notified u/s 10(22B)?

(a) Hindustan Samachar

(b) Press Trust of India

(d) All of the above

34. Which of the following income is not exempt under Section 10?

(a) Share in total income of firm

(b) Bonus on life insurance

35. Mr. X received compensation of Rs. 2,60,000 from the Central Government on account

of disaster. He claimed Rs. 1,20,000 as a deduction on account of loss or damage

caused by such disaster under this Act. What amount of compensation received shall be

exempt?

(a) Rs. 2,60,000

(b) Rs. 1,20,000

(d)

Nil

36. Incomes from Investments made by way of Equity Shares in a VCC are exempt if they

are by way of -

(a) Dvidends

(b) Long Term Capital Gans

(d) None of the above

37. Receipt of Income by a Married Daughter/Window, from Father’s HUF, is -

(a) Exempt from tax

(b) Partly exempt

38. Which of the following is not a condition for claiming exemption u/s 10AA?

(a) Bar on use of old machines from India

(b) Bar on use of old machines imported from a Foreign Country

Machinery.

39. Sec. 10AA exemption is applicable for -

(a) Specal Economic Zone only

(b) Specal Economic Zone and Domestic Tariff Area

(d) None of the above

40. Where a deduction under section 10AA is clamed and allowed in respect of profits of

any of the specified business, referred to in section 35AD, for any assessment year, then

______shall be allowed under the provisions of section 35AD in relation to such

specified business for the same or any other assessment year.

(a) No deduction

(b) 75% deduction

(d) 50% deduction

41. ‘Mr. Gaitonde’ born and brought up in the State of Sikkim had Net Profit of Rs.

2,25,000 from the business located in Sikkim and Interest of Rs. 55,000 on the

Securities / Bonds issued by the Government of Rajasthan. Calculate his taxable

Income.

(a) Rs. 55,000

(b) Rs. 2,25,000

(d) Rs. 2,80,000

42. Ms. J, a Sikkimese woman married Mr. K, a Non-Sikkimese on 1st January, 2009

Durng the Previous Year 2020-2021, she received rent of Rs. 7 Lakhs from letting out

house properties situated in the State of Sikkim. Is she liable to Income Tax for the

Assessment Year 2021-2022?

(a) Ms. J is elgible for exemption u/s 10(26AAA)

(b) Ms. J is not elgible for exemption u/s (26AAA)

(d) None of the above

43. Which of the following Statement is not true about Income from NRI Bonds?

(a)

The exemption is also available to the donee who received from the non-resident.

(b) This benefit continues to apply even after the non-resident becomes a resident.

(d) None of the above.

44. Alpha institution was existing solely for educational purposes and not for purposes of

profit. The institution was wholly or substantially financed by the Government. The

annual receipts of the institution was Rs. 54,00,000. It earned income of Rs. 3,50,000

during the previous year 2020-21. Calculate the amount of income taxable.

(a) Rs. 3,00,000

(b) Rs. 3,50,000

(d)

Nil

45. Family pension received on death of member of armed forces where the death occurred

in course of operational duties and in prescribed conditions shall be exempt if received

by:

(a) Widow of the member

(b) Nominated heirs of the member.

(d) All of the above.

ANSWERS

1.b

2.b

3.a

4.c

5.b

6.a

7.c

8.b

9.b

10.b

11.a

12.a

13.b

14.a

15.b

16.b

17.a

18.b

19.c

20.a

21.b

22.c

23.c

24.b

25.a

26.c

27.b

28.a

29.d

30.c

31.b

32.d

33.b

34.c

35.c

36.b

37.c

38.b

39.c

40.a

41.c

42.a

43.d

44.d

45.d

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