M4 Tax Planning Practice Questions

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 1

Module 5: TModule 5: TModule 5: TModule 5: TModule 5: Tax planning and Estate planningax planning and Estate planningax planning and Estate planningax planning and Estate planningax planning and Estate planningTTTTTax Planningax Planningax Planningax Planningax Planning

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Instructions to candidatesInstructions to candidatesInstructions to candidatesInstructions to candidatesInstructions to candidates

a) Tick the answer which you feel is closest to the correct answerb) Each Question carries one mark

c) Negative marking to the extent of 20% is applicable i.e. for every wrong answer you will lose 0.2marks.

For Questions 1 to 15For Questions 1 to 15For Questions 1 to 15For Questions 1 to 15For Questions 1 to 15S had been working with F. Ltd, in a tribal area since 1-10-1990. He was entitled to the following emoluments:

1. Basic salary w.e.f. 1-1-2003 Rs 6,000 p.m.2. D.A. 40% of basic salary (50% of which forms part of salary for retirement benefits)3. Medical Allowance Rs. 500. p.m. (entire amount is spent on his own medical treatment)4. Entertainment Allowance Rs. 400 p.m.5. Children Education Allowance Rs. 40 p.m. per child for three children6. Hostel expenditure allowance Rs.100 p.m. per child for three children.7. Tribal Area Allowance Rs. 300 p.m.8. Uniform Allowance Rs.250 p.m. (He spends Rs. 1,500 on the purchase and maintenance of the uniform)9. House Rent Allowance Rs. 750 p.m. He pays Rs. 1,000 p.m. as rent.10. He contributes Rs. 900 p.m. to a recognised providend fund to which his employer contributes equal

amount.He retired from his job on 1-1-2004 and shifted to Delhi. He was entitled to the following benefits at the time of hisretirement:

(a) Gratuity Rs. 1,15,000(b) Pension from 1-1-2004 Rs. 2,000 p.m.(c) Payment of recognised providend fund Rs. 3,00,000(d) Encashment of earned leave for 150 days Rs. 36,000.

He was entitled to 40 days leave for every completed year of service. He got 50% of his pension commuted in lumpsum w.e.f. 1-3-2004 and received Rs. 1,20,000 as commuted pension.He joined P Ltd. at Delhi w.e.f. 1-2-2004. And was entitled to the following emoluments:

(1) Basic salary Rs. 5,000 p.m.(2) D.A. (forming part of salary) 20% of basic salary(3) Rent- free unfurnished accommodation in Delhi which is owned by the employer and whose fair rental

value is Rs. 48,000 p.a.He was also given the following facilities by the employer:

(a) Motor car (1.4 ltr engine capacity) with driver, which he uses partly for official and partly for personalpurposes.

(b) The monthly expenses incurred by ‘S’ on gas and electricity was Rs.500, which were reimbursed by theemployer.

(c) Reimbursement of educational expenses of his two children which amounted to Rs. 350 p.m.(d) On 4-3-2004 his wife fell ill and the employer reimbursed the expenditure of medical treatment amounting

to Rs. 17,500.(e) A watchman, a sweeper, a cook and a gardener have been provided to whom the company pays a salary of

Rs. 400 p.m. each.(f) Loan of Rs. 1,00,000 @ 12% p.a. for construction of his own house was given by the company. Normal rate

of interest is 18%.He made the following payments during the year:

(1) Professional tax Rs. 500(2) LIC Premium of Rs. 15,000(sum assured Rs. 2,00,000)(3) Deposit in PPF account Rs. 60,000

2 © copyright 2003 International College of Financial Planning Ltd. All rights reserved

Q.1Q.1Q.1Q.1Q.1.The exempt amount of Children Education Allowance from F Ltd will be:(a) Rs. 1,080(b) Rs. 720(c) Rs. 360(d) NIL

Q.2Q.2Q.2Q.2Q.2. The taxable amount of Hostel Expenditure Allowance from F Ltd will be:(a) Rs. 900(b) Rs. 2,700(c) Rs. 1,800(d) None of the above

Q.3.Q.3.Q.3.Q.3.Q.3. Medical Allowance from F Ltd will be taxable to the extent of(a) Rs. 4,500(b) Rs. 1,500(c) NIL(d) None of the above

Q.4Q.4Q.4Q.4Q.4. Exempt amount of HRA from F Ltd. will be:(a) Rs. 6,750(b) Rs. 2,520(c) Rs. 1,000(d) Rs. 4,230

Q.5Q.5Q.5Q.5Q.5 The taxable amount of commuted pension from F Ltd will be:(a) Rs. 1,20,000(b) Rs. 80,000(c) Rs. 40,000(d) Rs. 5,000

Q. 6Q. 6Q. 6Q. 6Q. 6. Taxable value of interest on loan from P Ltd will be(a) Rs. 12,000(b) Rs. 18,000(c) Rs. 6,000(d) NIL

Q7Q7Q7Q7Q7. The perquisites value of rent-free accommodation from PLtd will be:(a) Rs. 1,500(b) Rs, 15,000(c) Rs. 10,000(d) Rs 1,000

Q.8Q.8Q.8Q.8Q.8. The aggregate amount of standard deduction that will be allowed to S will be:(a) Rs. 25,000(b) Rs. 30,000(c) NIL(d) None of the above

Q 9.Q 9.Q 9.Q 9.Q 9. Amount of deduction under chapter VIA will be:(a) Rs. 60,000(b) Rs. 70,000(c) Rs, 2,29,564(d) NIL


Q. 10Q. 10Q. 10Q. 10Q. 10. Rebate u/s 88 will be:(a) Rs.14, 000(b) Rs. 15,000(c) Rs. 10,500(d) None of the above

Q.1Q.1Q.1Q.1Q.111111 If the deposit in PPF is Rs. 50,000, rebate u/s 88 will be:(a) Rs. 14,000(b) Rs. 15,000(c) Rs. 10,500(d) None of the above

Q. 12.Q. 12.Q. 12.Q. 12.Q. 12. The amount of tax payable is:(a) Rs. 42,868(b) Rs. 32,368(c) Rs. 35,605(d) NIL

Q 13Q 13Q 13Q 13Q 13. Medical reimbursement from P Ltd will be taxable to the extent of:(a) Rs. 17,500(b) Rs. 15,000(c) Rs. 2,500(d) None of the above

Q 14.Q 14.Q 14.Q 14.Q 14. The taxable income of S is:(a) Rs. 2,29,564(b) Rs. 2,29,560(c) Rs. 2,32,368(d) None of the above

Q 15Q 15Q 15Q 15Q 15 If S invests Rs. 30,000 in infrastructure bonds, the tax liability(a) Will remain unchanged(b) Will reduce by Rs. 6,000(c) Will reduce by Rs.4,500(d) Will reduce by Rs.3,750

For Questions 16 to 25For Questions 16 to 25For Questions 16 to 25For Questions 16 to 25For Questions 16 to 25The following information is submitted by S for the assessment year 2004-05:

Rs.1. Gross salary 1,70,0002. Royalty (Gross) 27,0003.Expenses allowable from royalty 5,0004. Interest on bank deposits 13,0005. Donation to an approved charitable institution 15,0006. LIP on his own life (sum assured Rs. 20,000) 6,0007. LIP on life of his wife 2,0008. LIP on the life of his major son(not dependent on S) 2,5009.LIP on the life dependent brother 2,00010. Contribution to a Recognised PF 20,00011. Amount deposited in PPF 15,00012. Contribution ULIP 3,00013. Repayment of housing loan taken fromLIC (principal amount Rs. 23,000, interest Rs. 40,000) 63,00014.Subscription to units of a Mutual Fundnotified u/s 10(23D) which will subscribe to


eligible issue of capital 45,000

15. Amount incurred on the education of:(a) Child A Rs. 14,000(b) Child B Rs. 7,000(c) Child C Rs. 5,000

He had taken the loan from LIC for construction of a residential house property which was completed in 1994 andwas being utilized him for his own residence.

Q.16 Taxable income from salary will be:(a) Rs. 1,70,000(b) Rs. 1,40,000(c) Rs. 1,45,000(d) None of the above

Q.17.Q.17.Q.17.Q.17.Q.17. Taxable income from house property will be:(a) Rs. 30,000(b) (-) Rs. 30,000(c) (-) Rs.1,50,000(d) NIL

Q 18Q 18Q 18Q 18Q 18. Gross Total Income is(a) Rs. 1,75,000(b) Rs. 2,05,000(c) Rs. 1,45,000(d) Rs 1,26,350

Q. 19Q. 19Q. 19Q. 19Q. 19. Deduction u/s 80 G will be:(a) Rs. 13,300(b) Rs. 14,500(c) Rs. 6,650(d) Rs. 7,250

Q. 20Q. 20Q. 20Q. 20Q. 20. Total Income is:(a) Rs. 1,45,000(b) Rs. 1,26,350(c) Rs. 1,33,000(d) None of the above

Q. 21Q. 21Q. 21Q. 21Q. 21. The eligible amount of repayment of housing loan for rebate u/s 88 is:(a) Rs. 10,000(b) Rs. 20,000(c) Rs. 23,000(d) NIL

Q. 22Q. 22Q. 22Q. 22Q. 22. The eligible amount of tuition fee of children for rebate u/s 88 is:(a) Rs. 24,000(b) Rs. 12,000(c) Rs. 26,000(d) Rs. 19,000

Q. 23.Q. 23.Q. 23.Q. 23.Q. 23. Rebate u/s 88 will be:(a) Rs. 15,000(b) Rs. 20,000(c) NIL(d) None of the above


Q.24Q.24Q.24Q.24Q.24.If the gross income from royalty is Rs. 82,000, deduction u/s 80G will be:(a) Rs. 15,000(b) Rs. 7,500(c) Rs. 6,650(d) None of the above

Q. 25.Q. 25.Q. 25.Q. 25.Q. 25. In Q. 24 above, the rebate u/s 88 will be:(a) Rs. 15,000(b) Rs. 20,000(c) Rs. 14,000(d) NIL

For Questions 26 to 31.For Questions 26 to 31.For Questions 26 to 31.For Questions 26 to 31.For Questions 26 to 31.The following information is provided by S, who is employed by P Ltd. during the previous year 2003-04

Rs.(i) Basic salary 1,16.000(ii) D.A. 28,000(iii) High cost of living allowance 30,000(iv) HRA (actual rent paid is Rs. 60,000 in Delhi) 48,000(v) Commission (at 2% of turnover achieved by S) 18,000(vi) Profits from dairy farming 30,000(vii) Profits from business of growing mushrooms 28,000(viii) Expenses on filing income tax appeals 16,600(ix) Insurance premium on policy in thename of Mrs. S (sum assured Rs. 2,80,600) 44,000(x) Independent Income of a minor son (age 14 years) 35,000On 10-3-2004, P Ltd offers equity shares to employees at the rate of Rs. 410 per share (market price Rs.600 per shareon 10-3-2004). S accepts the offer and as per terms of the offer applies for 500 shares on 20-3-2004(market price on20-3-2004 Rs. 590 per share).Q 26.Q 26.Q 26.Q 26.Q 26. The taxable amount of HRA is:

(a) Rs. 48,000(b) Rs. 43,800(c) Rs. 4,200(d) NIL

Q. 27Q. 27Q. 27Q. 27Q. 27. The taxable value of ESOP will be:(a) Rs. 3,00,000(b) Rs. 95,000(c) Rs. 5,000(d) NIL

Q. 28Q. 28Q. 28Q. 28Q. 28 Income from PGBP will be(a) Rs. 58,000(b) Rs. 41,400(c) Rs. 30,000(d) None of the above

Q.29.Q.29.Q.29.Q.29.Q.29. The taxable amount of Minor’s income in the hands of S is:(a) Rs. 1,500(b) Rs. 35,000(c) Rs. 33,500(d) NIL


Q.30Q.30Q.30Q.30Q.30 Total income is:(a) Rs. 1,66,200(b) Rs. 2,46,100(c) Rs. 2,07,600(d) None of the above

Q31.Q31.Q31.Q31.Q31. Tax rebate u/s 88 is:(a) Rs. 8,800(b) Rs. 6,600( c) NIL(d)None of the above

For Questions 32 to 43For Questions 32 to 43For Questions 32 to 43For Questions 32 to 43For Questions 32 to 43

Mrs. S an employee- director of FHL Ltd., submits the following information relevant for the assessment year 2004-05.Salary: Rs. 86,000; entertainment allowance (date of joining 1st May, 1965); Rs.8,000; bonus: Rs 10,200; educationallowance: Rs.4,000 (for her grandchildren); income tax penalty paid by employer: Rs. 2,000; medical expensesreimbursed by employer; Rs. 2,000; leave travel concession:Rs.1,000 ; free residential telephone: Rs. 4,000, freerefreshment during office hours; Rs. 4,000; payment of electricity bills by employer: Rs. 1,060; reimbursement of gasbills: Rs.1,000; professional tax paid by the employer: Rs. 300; professional tax paid by Mrs. S Rs. 150.Mrs. S owns two houses, particulars of which are as under:

House I House IIRs. Rs.

Municipal value 43,000 80,000Rent 46,000 NIL

(Self-occupied)Standard rent 50,000 60,000Municipal taxes paid 4,800 8,000Insurance 500 1,500Interest on capital borrowed for purchase of house property 4,000 16,000Repayment of loan taken from LICFor the purpose of purchasing house I 15,000Date of completion of construction 15-4-1990 15-5-1967Other incomes:Agriculture income for the previous year 2003-04 2,00,000Dividend from Indian private limited companies 17,000Payments and investments:Own contribution to unrecognized providend fund 1,500Contribution to public providend fund 16,000Donation to the P.M. National Relief Fund 2,000

Q 32.Q 32.Q 32.Q 32.Q 32. Deduction allowed u/s 16 is:(a) Rs. 30,000(b) Rs. 450(c) Rs. 30,450(d) None of the above

Q. 33Q. 33Q. 33Q. 33Q. 33 Which of the following will be exempt from tax:(a) Medical reimbursement(b) LTC(c) Free Residential Telephone(d) All of the above


Q.34Q.34Q.34Q.34Q.34. The taxable amount of education allowance will be:(a) Rs. 4,000(b) Rs. 2,200(c) Rs. 400(d) None of the above

Q.35.Q.35.Q.35.Q.35.Q.35. Taxable income from House I is:(a) Rs. 41,200(b) Rs, 46,000(c) Rs. 16,360(d) Rs. 24,840

Q.36.Q.36.Q.36.Q.36.Q.36. Taxable income from House II is:(a) (-) Rs. 16,000(b) Rs. 16,000(c) (-) Rs. 1,50,000(d) NIL

Q. 37Q. 37Q. 37Q. 37Q. 37. Taxable income u/h IFOS is:(a) Rs. 2,00,000(b) Rs. 17,000(c) Rs. 2,17,000(d) NIL

Q. 38Q. 38Q. 38Q. 38Q. 38 Deduction u/s 80 G is:(a) Rs. 2,000(b) Rs. 1,000(c ) NIL(d) None of the above

Q. 39Q. 39Q. 39Q. 39Q. 39. Rebate u/s 88 is:(a) Rs. 5,200(b) Rs. 3,900(c) Rs. 7,800(d) None of the above

Q. 40Q. 40Q. 40Q. 40Q. 40. The tax payable is:(a) Rs 6,790(b) Rs.1,790(c) Rs 1,590(d) Rs. 1,485

Q. 41Q. 41Q. 41Q. 41Q. 41 If the providend fund is recognised, the tax liability:(a) will be reduced by Rs. 300(b) will be reduced by Rs. 225(c) will be reduced by Rs. 450(d) will remain same.

Q. 42Q. 42Q. 42Q. 42Q. 42.If the deduction to PM National Relief Fund is Rs.10, 000,deduction u/s 80G will be:(a) Rs. 10,000(b) Rs. 5,000(c) Rs. 9,095(d) NIL


Q. 43Q. 43Q. 43Q. 43Q. 43. If the dividend is received from a foreign company, the taxable income u/h IFOS will be:(a) Rs. 2,00,000(b) Rs. 2,17,000(c) Rs. 17,000(d) Rs. 5,000

Q 44.Q 44.Q 44.Q 44.Q 44. S deposits Rs 50,000 in NSC so as to reduce his tax liability. It is a case of:(a) Tax Planning(b) Tax Management(c) Tax Evasion(d) Tax Avoidance

Q 45Q 45Q 45Q 45Q 45. S Ltd maintains register of tax deduction effected by it to enable timely compliance. It is a case of:(a) Tax Planning(b) Tax Management(c) Tax Evasion(d) Tax Avoidance

Q 46.Q 46.Q 46.Q 46.Q 46.S Ltd. issues a credit note for Rs. 50,000 for brokerage payable to Mohan, who is son of S, managing directorof the company. The purpose is to increase his income from Rs. 10,000 to 60,000 and reduce its income correspond-ingly. It is case of

(a) Tax Planning(b) Tax Management(c ) Tax Evasion(d) Tax Avoidance

Q. 47.Q. 47.Q. 47.Q. 47.Q. 47. S. is a working partner of Reliance Industries. In such capacity, he is entitled to a salary of Rs. 10,000 p.m. hetreats this as salary so that he can claim deduction u/s 16. It is a case of

(a) Tax Planning(b) Tax Avoidance(c) Tax Management(d) Tax Evasion

Q 48Q 48Q 48Q 48Q 48. If the rate of interest / dividend is same, which one is cheapest source of raising finance:(a) Debt(b) Equity shares(c) Preference shares(d) All are equally costly

Q 49Q 49Q 49Q 49Q 49. Which one is more tax effective for an employee:(a) To take medical allowance of Rs. 1,250 p.m.(b) To take medical reimbursement of Rs. 15,000 p.a.(c) Both are equally tax effective(d) None is tax effective

Q.50.Q.50.Q.50.Q.50.Q.50. Which one is more tax effective:(a) To encash leave on an annual basis(b) To accumulate leave and encash at the time of retirement(c) To avail leave(d) Both (a) and (b) are equally tax effective

Q51Q51Q51Q51Q51. Which one is more tax effective:(a) Transport allowance of Rs. 800 p.m.(b) D.A. of Rs. 800 p.m.(c) Lunch allowance of Rs.800 p.m.(d) Children Education Allowance of Rs. 800 p.m.


Q.52Q.52Q.52Q.52Q.52. Which one is more tax effective:(a) Consolidated pay of Rs. 10,000 p.m.(b) Basic salary of Rs. 7,500 p.m. and HRA of Rs. 2,500 p.m. (Rent paid 6,000p.m.)(c) Basic salary of Rs. 4,000 p.m. and HRA of Rs. 6,000 p.m. (Rent paid 6.000p.m.)(d) Basic salary of Rs. 2,800 p.m. and HRA of Rs. 7,200 p.m. (Rent paid 6,000p.m.)

Q. 53Q. 53Q. 53Q. 53Q. 53. Tax liability is maximum for:(a) Non-Residents(b) Resident but not ordinary residents(c) Residents and ordinary residents(d) Same for all the three

For Questions 54 to 60For Questions 54 to 60For Questions 54 to 60For Questions 54 to 60For Questions 54 to 60Suresh has purchased a house property on 7-7-2000 for Rs. 5,00,000. He was planning to sell his house on 5-7-2003. However, one of his friend advised him to wait for a few days and sell the property on 8-7-2003 so that theresulting capital gain is converted into LTCG. Suresh adhered to the advice and sold the house on 8-7-2003 for Rs.6,50,000. Expense on transfer amounted to Rs. 5,000. Suresh invested Rs. 1,00,000 in infrastructure bonds out of theproceeds of house on 9-9-2003. He has also paid Mediclaim of Rs. 30,000 on 11-11-2003. He has no intention ofinvesting the proceed in another house/ securities, etc. as he needs this money for his business.

Q 54Q 54Q 54Q 54Q 54 When the resulting capital gain is long- term, ICOA will be:(a) Rs. 5,00,000(b) Rs. 5,70,197(c) Rs. 5,80,197(d) None of the above

Q. 55Q. 55Q. 55Q. 55Q. 55.Taxable LTCG is:(a) Rs. 6,50,000(b) Rs. 69,803(c) Rs. 79,803(d) None of the above

Q. 56Q. 56Q. 56Q. 56Q. 56. Rebate u/s 88, in case of LTCG will be:(a) Rs. 15,000(b) Rs. 20,000(c) Rs. 3,960(d) NIL

Q.57Q.57Q.57Q.57Q.57.Tax liability in case of LTCG will be:(a) Rs. 13,960(b) Rs. 3,960(c) NIL(d) None of the above

58.58.58.58.58. When the resulting capital gain is short-term, deduction u/s 80D will be:(a) Rs. 10,000(b) Rs. 15,000(c) Rs. 30,000(d) NIL

Q.59.Q.59.Q.59.Q.59.Q.59. When the resulting capital gain is long-term, deduction u/s 80D will be:(a) Rs. 10,000(b) Rs. 15,000(c) Rs. 30,000(d) NIL


Q.60Q.60Q.60Q.60Q.60 Tax liability in case of STCG is:(a) Rs. 15,000(b) Rs. 5,000(c) NIL(d) None of the above

Q. 61Q. 61Q. 61Q. 61Q. 61. Income tax Act 1961 extends to;(a) Entire India(b) Whole of India except Jammu and Kashmir(c) Whole of India except Sikkim(d) Whole of India except Jammu and Kashmir and Sikkim

Q. 62.Q. 62.Q. 62.Q. 62.Q. 62. Finance Bill becomes the Finance Act when it is passed by:(a) The Lok Sabha(b) The Rajya Sabha(c) Both Lok Sabha and Rajya Sabha(d) Both Houses of Parliament and given the assent of the President(e) Both houses of Parliament and given the assent of the Prime Minister / Finance Minister

Q. 63Q. 63Q. 63Q. 63Q. 63. Income Tax is rounded off to:(a) Nearest ten rupees(b) Nearest one rupee(c) Nearest one hundred rupees(d) No rounding off of tax is done

Q. 64Q. 64Q. 64Q. 64Q. 64. Surcharge in case of an individual for assessment year 2004-05 is payable at the rate of:(a) 10% of the income tax payable if the total income exceeds Rs. 8,50,000(b) 5% of the income tax payable provided the total income exceeds Rs. 60,000(c) 2% of the tax payable if the total income exceeds Rs. 60,000(d) None of the above.

Q. 65Q. 65Q. 65Q. 65Q. 65 Residential status is to be determined for:(a) Previous year(b) Assessment year(c) Accounting year(d) All of the above

Q. 66Q. 66Q. 66Q. 66Q. 66.Incomes which accrue or arise outside India but are received directly in to India are taxable in case of:(a) Resident only(b) Both ordinarily and not ordinarily resident(c) Non-resident(d) All the assesses

Q. 67.Q. 67.Q. 67.Q. 67.Q. 67. Taxable income of a person is determined on the basis of his:(a) Residential status in India(b) Citizenship in India(c) None of the above(d) Both (a) and (b)

Q. 68.Q. 68.Q. 68.Q. 68.Q. 68. Income which accrue or arise outside India and also received outside India is taxable in case of:(a) Ordinary resident only(b) Not ordinary resident(c) Both (a) and (b)(d) None of the above


Q. 69Q. 69Q. 69Q. 69Q. 69. The cost of acquisition of the right shares to a person who purchased the right to acquire the share from theexisting shareholder shall be:

(a) Market value of the right share on the date of allotment(b) Price at which shares are offered(c) Price at which shares are offered plus amount paid to the person renouncing the right(d) None of the above

Q. 70 If the bonus shares are acquired before 1-4-1981, the cost of acquisition of such bonus shares shall be:(a) Market value of such shares on the date of allotment(b) Nil(c) Market value as on 1-4-1981(d) None of the above

For Questions 71 to 75For Questions 71 to 75For Questions 71 to 75For Questions 71 to 75For Questions 71 to 75S Ltd. is a closely held company engaged in manufacturing of insecticides and fertilizers. The value of plant andmachinery owned by the company is Rs. 55lakhs. Its Profit and Loss Account for the year ended 31-3-2004 is asunder:

Rs. Rs.Domestic sales 22,23,900Export sales 5,76,100Other receipts 2,00,000 30,00,000Less: ExpensesDepreciation 4,16,000Salary and wages 1,34,500Entertainment expenses 10,000Traveling expenses 36,000Miscellaneous expenses 5,000Income tax 3,50,000Wealth tax 8,000Outstanding custom duty 17,500Provision for unascertained liabilities 70,000Proposed dividends 60,000Loss of subsidiary company 30,000Consultation fees paid to a consultant 21,000Salary and perquisites of managing director 1,80,000Excise duty of 2001-02 75,000 14,13,500Net profit 15,86,500

The assessee claims the following as deductions:(a) Deduction u/s 80 HHC, foreign exchange remittance being Rs. 50,000(b) Deduction u/s 80-IB (30% of Rs.15,86,500)(c) Excise duty pertaining to 2001-2002 paid during 2003-04 of Rs.75,500(d) Depreciation u/s 32 is Rs. 5,36,000.(e) The following further particulars are furnished————————————————————————————————————————————————

For tax purposes For accountingpurposes

Rs. Rs.

Brought forward loss of 2001-02 11,80,000 9,10,000Unabsorbed depreciation NIL 2,45,000


Q. 71Q. 71Q. 71Q. 71Q. 71. Book Profits of S. Ltd. will be:(a) Rs. 20,96,500(b) Rs. 18,40,775(c) Rs. 2,55,725(d) None of the above

Q.72. Deduction u/s 80-I B will be:(a) Rs. 8,22,000(b) Rs. 4,11,000(c) Rs. 2,46,600(d) None of the above

Q.73Q.73Q.73Q.73Q.73 Deduction u/s 80 HHC will be:(a) Rs. 20,02,000(b) Rs. 10,725(c) Rs. 50,000(d) None of the above

Q. 74Q. 74Q. 74Q. 74Q. 74 For computation of Book-Profits, which of the following deduction shall be allowed:(a) 80 -IB(b) 80 HHC(c) Both 80 -IB and 80 HHC(d) None of the above

Q. 75.Q. 75.Q. 75.Q. 75.Q. 75. Tax liability of S. Ltd. will be:(a) Rs. 1,41,510(b) Rs. 2,02,579(c) Rs. 1,38,059(d) Rs. 1,97,638

For Questions 76 to 80.For Questions 76 to 80.For Questions 76 to 80.For Questions 76 to 80.For Questions 76 to 80.S,V and P are partners in a firm sharing profits and losses equally. For the assessment year 2004-05 followingparticulars are available:

(i) Loss as per Profit and Loss account ( after debiting Partner’s remuneration and interest on capital) Rs.2,44,000

(ii) Remuneration to partnersS Rs. 90,000V Rs. 60,000P Rs. 30,000 1,80,000Interest on capital

Capital on 1-4-2003 InterestRs. Rs.

S 1,00,000 12,000V 1,00,000 12,000P 1,00,000 12,000

Q. 76.Q. 76.Q. 76.Q. 76.Q. 76. The amount of Book Profits is(a) Rs. 64,000(b) (-) Rs. 64,000(c) Rs. 2,44,000(d) (-) Rs. 2,44,000


Q.77Q.77Q.77Q.77Q.77. The firm can pay a remuneration of:(a) Rs. 64,000(b) Rs. 50,000(c) Rs. 57,600(d) NIL

Q. 78.Q. 78.Q. 78.Q. 78.Q. 78. Remuneration to S is:(a) Rs. 50,000(b) Rs. 25,000(c) Rs. 16,667(d) NIL

Q. 79Q. 79Q. 79Q. 79Q. 79. Taxable income of firm is:(a) (-) Rs. 64,000(b) Rs. 50,000(c) (-) Rs. 1,14,000(d) Rs. 1,14,000

Q. 80Q. 80Q. 80Q. 80Q. 80 Taxable income of V is:(a) Rs. 37,000(b) Rs. 12,000(c) Rs. 28,870(d) None of the above

For Questions Q.81 to 85.For Questions Q.81 to 85.For Questions Q.81 to 85.For Questions Q.81 to 85.For Questions Q.81 to 85.V, a reputed vocal musician, furnishes the following particulars of his income and expenditure for the year ending31-3-2004: -

(i) Salary paid to servant who was utilized for domestic as well as official purpose Rs. 1,200(ii) Doctor’s bills for treating his throat so as to improves his voice Rs. 2,000(iii) Cost of two instruments purchased on 1-1-04 Rs. 1,000 (Rs 500 each)(iv) His gross receipts during the year amounted to Rs. 50,000. This includes Rs. 6,000 for performance in

America during the year. He claims that this receipts of Rs. 6,000 is exempt from tax.(v) He owns a house in which he lives. Annual letting value of this house as per municipal assessment is Rs.

2,400 (municipal tax Rs. 650). An identical house next to his house fetches a rent of Rs. 500 per month. Hehas spent Rs. 1,000 on repairs, Rs. 52 on urban land tax and Rs. 40 on insurance of the house

(vi) A purse of Rs. 50,000 was presented to him at function to commemorate his completion of 50 years as tokenof appreciation of the meritorious service

rendered by him to the cause of music(vii)LIP paid Rs. 40,000 which includes premium of Rs. 9,000 on one policy of Rs. 75,000, gross total income is

Rs. 6,00,000(viii)Agricultural income is Rs. 6,000. Agricultural income of his minor child Rs. 10,000 from lands gifted by

him some years back.

Q.81.Q.81.Q.81.Q.81.Q.81. The amount allowed as deduction in respect of salary paid to servant is:(a) Rs. 1,200(b) Rs. 6,00(c) Rs. 800(d) NIL

Q.82.Q.82.Q.82.Q.82.Q.82. Amount of Rs. 50,000 under item (vi) will be taxed as:(a) PGBP(b) IFOS(c) Capital gain(d) Exempt from tax


Q. 83Q. 83Q. 83Q. 83Q. 83. Taxable value of house under item (v) is:(a) Rs. 6,000(b) Rs. 2,400(c) NIL(d) None of the above

Q. 84.Q. 84.Q. 84.Q. 84.Q. 84. Rebate u/s 88 will be:(a) Rs. 8,000(b) Rs. 6,000(c) Rs, 12,000(d) NIL

Q. 85Q. 85Q. 85Q. 85Q. 85. Depreciation on instruments will be:(a) Rs. 1,000(b) Rs. 500(c) Rs. 250(d) Rs. 125

For Questions Q. 86 to 90.For Questions Q. 86 to 90.For Questions Q. 86 to 90.For Questions Q. 86 to 90.For Questions Q. 86 to 90.S and P, two doctors, are partners of a clinic Sanjivani. They are sharing profits and losses equally. Both havecontributed capital of Rs. 2,00,000 each for the PY 2003-04, they are expecting net profit of Rs. 5,00,000 (beforeconsidering interest and remuneration). They want to withdraw Rs. 1,80,000 each from the firm to meet the house-hold expenses. The firm is assessed as FAS.

Q. 86.Q. 86.Q. 86.Q. 86.Q. 86. If interest is allowed @ 12% p.a. the maximum amount of remuneration that can be paid is:(a) Rs. 2,64,000(b) Rs. 2,50,800(c) Rs. 4,52,000(d) None of the above.

Q. 87Q. 87Q. 87Q. 87Q. 87. If interest is allowed @ 10% p.a. the maximum amount of remuneration that can be paid is:(a) Rs. 2,54,000(b) Rs. 4,60,000(c) Rs. 4,14,000(d) NIL

Q. 88Q. 88Q. 88Q. 88Q. 88. In Q. 87 above, the tax liability of the firm will be:(a) Rs. 72,100(b) Rs. 73,903(c) Rs. 2,06,000(d) NIL

Q. 89Q. 89Q. 89Q. 89Q. 89. In Q.87 above, the tax liability of S will be:(a) Rs. 14,400(b) Rs. 18,400(c) Rs, 13,400(d) NIL

Q. 90.Q. 90.Q. 90.Q. 90.Q. 90. If no interest is allowed and the maximum possible remuneration is paid, tax liability of S:(a) Will increase by Rs. 2,400(b) Will decrease by Rs. 2,400(c) Will decrease by Rs. 3,000(d) Will remain same


For Questions 91 to 96For Questions 91 to 96For Questions 91 to 96For Questions 91 to 96For Questions 91 to 96S purchases 1,200 equity shares in P Ltd. at the rate of Rs. 15 per share (brokerage1%) on 11-12-1978. He has got 300bonus shares (by virtue of his holding of 1,200 shares) on 21-1-1980. Fair market value of shares of P. Ltd. as on 1-4-1981 is Rs. 30On 7-3-2004, S transfers all the 1,500 shares at the rate of Rs. 84 per share (brokerage 1.5%). S paid a medicalinsurance premium Rs. 5,000.

Q. 91.Q. 91.Q. 91.Q. 91.Q. 91. ICOA of original shares will be:(a) Rs. 36,000(b) Rs. 1,66,680(c) Rs. 1,68,192(d) None of the above.

Q. 92Q. 92Q. 92Q. 92Q. 92. LTCG on sale of original shares is:(a) Rs. 67,392(b) (-) Rs. 67,392(c) Rs. 68,904(d) (-) Rs. 68,904

Q. 93.Q. 93.Q. 93.Q. 93.Q. 93. ICOA of bonus shares will be:(a) Rs. 9,000(b) Rs. 41,670(c) NIL(d) None of the above

Q. 94Q. 94Q. 94Q. 94Q. 94. LTCG on sale of bonus shares is:(a) Rs. 16,848(b) (-) Rs. 16,848(c) Rs, 25,200(d) Rs. 24,822

Q. 95.Q. 95.Q. 95.Q. 95.Q. 95. If S has a taxable LTCG of Rs. 1,00,000, the deduction u/s 80D will be:(a) Rs. 5,000(b) Rs. 10,000(c) Rs. 15,000(d) NIL

Q. 96.Q. 96.Q. 96.Q. 96.Q. 96. Long-term capital loss can be carried forward up to(a) 8 assessment years(b) 4 assessment years(c) Can’t be carried forward(d) Can be carried forward without any time limit.

Q. 97.Q. 97.Q. 97.Q. 97.Q. 97. Loss from the activity of owning and maintaining racehorses can be carried forward up to(a) 8 assessment years(b) 4 assessment years(c) Can’t be carried forward(d) Can be carried forward without any time limit

Q. 98Q. 98Q. 98Q. 98Q. 98. Which of the following losses can be carried forward without any time limit:(a) Unabsorbed depreciation(b) Unabsorbed capital expenditure on scientific research(c) Unabsorbed expenditure on family planning(d) All of the above(e) None of the above


Q. 99Q. 99Q. 99Q. 99Q. 99. Which of the following losses can be carried forward even when no return of income has been filed withinthe due date:

(a) Capital loss(b) Business loss(c) House property loss(d) All of the above(e) None of the above

Q. 100Q. 100Q. 100Q. 100Q. 100. For which of the following losses, intra head adjustment is not allowed:(a) Speculation loss(b) Loss on account of card games(c) Loss from a source which is exempt(d) All of the above

Q. 101Q. 101Q. 101Q. 101Q. 101. If a firm earns agricultural income, it will be exempt:(a) In the hands of firm but taxable in the hands of partners(b) In the hands of firm as well as its partners(c) In the hands of firm only(d) In the hands of the firm as well as partners but would be included in the other income of partners for

computation of tax on his other incomes.

For Questions 102 to 108For Questions 102 to 108For Questions 102 to 108For Questions 102 to 108For Questions 102 to 108 S owns a house property at Metro City. The fair rental value per annum is Rs. 27,000 and the Municipal value is Rs.24,000.The house was let out from 1-4-2003 to 31-8-2003 at a monthly rent of Rs. 2,100. From 1-9-2003 S occupies for hisresidence (self).Expenditure incurred on property and paid:

(a) Municipal tax Rs. 4,000(b) Fire insurance Rs. 2,500(c) Land revenue Rs.4,600(d) Repairs Rs. 1,000

Interest paid on borrowing for construction;(a) For the year Rs.21,600(b) Proportionate pre-construction interest Rs. 12,960.

Income from Firm (FAS) as partner:Salary 25,000Interest on capital 20,000Share income 35,000

Q. 102.Gross annual value of house is:(a) Rs. 27,000(b) Rs. 23,000(c) Rs. 24,000(d) None of the above.

Q. 103.Q. 103.Q. 103.Q. 103.Q. 103. Statutory deduction in respect of house property is:(a) Rs. 7,200(b) Rs. 6,900(c) Rs. 8,100(d) NIL


Q. 104.Q. 104.Q. 104.Q. 104.Q. 104. Deduction in respect of interest on borrowed capital is:(a) Rs. 21,600(b) Rs. 30,000(c) Rs. 41,460(d) None of the above

Q. 105Q. 105Q. 105Q. 105Q. 105. Income from house property is:(a) Rs. 18,460(b) Rs. 18,640(c) (-) Rs. 18,460(d) NIL

Q. 106Q. 106Q. 106Q. 106Q. 106. Total income of S will be:(a) Rs. 45,000(b) Rs. 68,000(c) Rs. 26,540(d) NIL

For Questions 107 to 112For Questions 107 to 112For Questions 107 to 112For Questions 107 to 112For Questions 107 to 112 S and Co., a FAS as such, furnishes the following Profit And Loss account for the previous year ending on 31-3-2004.To cost of goods sold 2,80,000 By sales 2,92,000To other expenses 91,000 By net loss 1,72,000To interest to partners 25,000To remuneration to partners 68,000

—————— ———————4,64,000 4,64,000

The other expenses debited include Rs. 13,600 not allowed u/s 37; interest to partners is in excess by Rs. 7,100 (notallowable).

Q. 107Q. 107Q. 107Q. 107Q. 107.Book profits of the firm are:(a) (-) Rs. 1,72,000(b) Rs. 83,300(c) (-) Rs. 83,300(d) None of the above

Q. 108Q. 108Q. 108Q. 108Q. 108.Maximum remuneration permissible is:(a) Rs. 83,300(b) Rs. 50,000

(c) Rs. 67,500(d) Nil

Q. 109.Q. 109.Q. 109.Q. 109.Q. 109. Total income of the firm is:(a) (-) Rs. 1,72,000(b) Rs. 83,300(c) (-) Rs. 1,33,300(d) None of the above

Q. 110. The firm can carry forward the loss for a period of:(a) 8 assessment years(b) 4 assessment years(c) as long as the firm continues(d) can’t carry forward it.


Q. 1Q. 1Q. 1Q. 1Q. 11111111111. If the firm is carrying on medical profession, maximum remuneration permissible will be:(a) Rs. 50,000(b) Rs. 90,000(c) NIL(d) None of the above.

Q. 1Q. 1Q. 1Q. 1Q. 11212121212 Remuneration received by partners will be taxed in their hands as:(a) PGBP(b) Salary(c) IFOS(d) Will be exempt

For Questions 113 to 116For Questions 113 to 116For Questions 113 to 116For Questions 113 to 116For Questions 113 to 116 S, a writer and a professional furnishes the following particulars for the previous year ended 31-3-2004:(a) Royalty on books 42,000(b) Expenditure on books 8,000( c) Income from Profession 1,30,000(d) Deposited in PPF (15-3-2004) 60,000

Q. 1Q. 1Q. 1Q. 1Q. 113.13.13.13.13. The taxable royalty income of S will be:(a) Rs. 42,000(b) Rs. 34,000(c) NIL(d) None of the above

Q. 1Q. 1Q. 1Q. 1Q. 11414141414. Total income of S will be:(a) Rs. 1,72,000(b) Rs. 1,64,000(c) Rs. 1,30,000(d) None of the above.

Q. 1Q. 1Q. 1Q. 1Q. 11515151515. Rebate u/s 88 is:(a) Rs. 12,000(b) Rs. 18,000(c) Rs. 9,000(d) NIL

Q. 1Q. 1Q. 1Q. 1Q. 11616161616. If S also has a LTCG of Rs. 1,00,000, his tax liability will be:(a) Rs. 14,200(b) Rs. 23,200(c) Rs. 34,200(d) Rs. 44,200

For Questions 117 to 121For Questions 117 to 121For Questions 117 to 121For Questions 117 to 121For Questions 117 to 121S is employed in a public company and is paid a sum of Rs. 6,00,000 on VRS. The normal retirement age is 60 yearsand S who was 45 years at the time of retirement had completed 20 years of service. His monthly salary at the timeof retirement was as follows:

Rs.Basic salary 10,000DA (50% considered for pension) 6,000HRA 3,000Conveyance allowance 800


Q. 1Q. 1Q. 1Q. 1Q. 117 17 17 17 17 .The amount of VRS compensation exempt will be:(a) Rs. 7,80,000(b) Rs. 6,00,000(c) Rs. 5,00,000(d) Rs.1,00,000

Q. 1Q. 1Q. 1Q. 1Q. 11818181818 if during the previous year 2003-04, S has no other income except for VRS compensation and monthlypension of Rs. 10,000 p.m., his tax liability will be:

(a) Rs. 31,000(b) Rs. 40,000(c) Rs.1, 36,000(d) None of the above.

Q. 1Q. 1Q. 1Q. 1Q. 11919191919. In Q. 118, if S has deposited Rs. 1,00,000 in PPF, his tax liability will be:(a) Rs. 16,000(b) Rs. 20,500(c) Rs. 31,000(d) Rs. 11,000

Q. 120Q. 120Q. 120Q. 120Q. 120. In Q. 118, if S has deposited Rs. 70,000 in PPF and Rs. 30,000 in infrastructure bonds, his tax liability willbe:

(a) Rs. 16,000(b) Rs. 20,500(c) Rs. 31,000(d) Rs. 11,000

Q. 121Q. 121Q. 121Q. 121Q. 121. In Q. 118, if S has deposited Rs. 1,00,000 in infrastructure bonds, his tax liability will be:(a) Rs. 16,000(b) Rs. 31,000(c) Rs. 11,000(d) Rs. 20,500

For Questions 122 to 127For Questions 122 to 127For Questions 122 to 127For Questions 122 to 127For Questions 122 to 127During the previous year 2003-04, P.S. Foundation, a charitable trust derived following incomes: -

(i) Income from property held under trust Rs. 5,50,000 (Rs. 2,25,000 received in cash and the remainingbalance of Rs. 3,25,000 is to be received in 2005-06.

(ii) Voluntary contribution Rs. 3,00,000 (out of which Rs. 2,00,000 is with specific direction that it shall formpart of corpus of the trust).

During the previous year the trust spent Rs.90, 000 for charitable purposes. The trust has obtained the extension oftime for applying the unrealised income of Rs. 3,25,000 in year of receipts.

Q122Q122Q122Q122Q122 The exempted amount of voluntary contribution will be: -(a) Rs.3, 00,000.(b) Rs.2, 00,000.(c) Rs.1, 00,000.(d) None of the above

Q 123Q 123Q 123Q 123Q 123 The maximum amount which can be accumulated will be: -(a) Rs. 82,500.(b) Rs. 15,000.(c) Rs. 1,62,500.(d) Rs. 97,500.


Q124.Q124.Q124.Q124.Q124. The taxable income for assessment year 2004-05 will be: -(a) Rs. 3,25,000.(b) Rs. 4,62,500.(c) Rs. 1,37,500.(d) None of the above

Q125.Q125.Q125.Q125.Q125. If the trust spent Rs. 80,000 in year 2005-06 and Rs. 90,000 in year 2006-07 out of unrealised amount, i.e., Rs.3,25,000 of previous year 2003-04, then the amount of deemed income of the assessment year 2007-08 will be: -

(a) Rs. 1,55,000.(b) Rs. 3,25,000.(c) Rs. 1,70,000.(d) None of the above

Q126.Q126.Q126.Q126.Q126. The amount of tax for assessment year 2004-05 will be: -(a) Rs. 41,250.(b) Rs. 16,500.(c) Rs. 45,375.(d) Rs. 18,150.

Q127.Q127.Q127.Q127.Q127. The amount of tax for assessment year 2007-08, on the assumption that the trust have no other taxableincome will be: -

(a) Rs. 71,500.(b) Rs. 25,000.(c) Rs. 20,500.(d) None of the above

For Questions 128 to 135For Questions 128 to 135For Questions 128 to 135For Questions 128 to 135For Questions 128 to 135Alka purchased a car on 17-12-2000 for Rs 4,50,000. Rate of depreciation 20%. She sold the same to Shipra on 1-2-2002 for Rs 4,25,000. FMV on that date is Rs 3,80,000. Shipra used the car for her business purposes and sold it backto Alka on 1-3-2003 for Rs. 4,15,000.

Q 128. Q 128. Q 128. Q 128. Q 128. Depreciation to Alka for assessment year 2001-02 would be(a) Rs. 90,000(b) Rs. 45,000(c) Rs 78,000(d) Rs NIL(e) None of the above

Q 129. Q 129. Q 129. Q 129. Q 129. For the assessment year 2002-03, Alka will be allowed a depreciation of(a) Rs. 40,500(b) Rs. 81,000(c) NIL(d) None of above

Q 130.Q 130.Q 130.Q 130.Q 130. Who will get depreciation for assessment year 2002-03(a) Alka(b) Shipra(c) Both of them(d) Neither of them


Q. 131Q. 131Q. 131Q. 131Q. 131 Shipra will be allowed a depreciation of(a) Rs. 40,500(b) Rs. 81,000(c) Rs. 42,500(d) Rs. 85,000(e) Rs. 38,000

Q.132Q.132Q.132Q.132Q.132 On account of sale of car during the assessment year 2002-03 in the hand of Alka, there will be(a) STCG of Rs. 20,000(b) STCL of Rs. 20,000(c) LTCG of Rs. 20,000(d) LTCL of Rs. 25,000(e) None of the above.

Q133.Q133.Q133.Q133.Q133. For assessment year 2003-04, Shipra will be allowed a depreciation of(a) NIL(b) Rs 34,200(c) Rs 68,400(d) None of the above

Q 134.Q 134.Q 134.Q 134.Q 134. On account of sale of car during the assessment year 2003-04, in the hands of Shipra, there will be(a) STCG of Rs. 63,000(b) STCL of Rs. 8,000(c) LTCG of Rs. 8,000(d) STCL of Rs.37,000(e) None of the above

Q 135.Q 135.Q 135.Q 135.Q 135. Who will get depreciation for AY 2003-04(a) Alka(b) Shipra(c) Both of them(d) Neither of them

For Questions 136 to 138For Questions 136 to 138For Questions 136 to 138For Questions 136 to 138For Questions 136 to 138For the assessment year 2004-05, Deepak has submitted a return of income for Rs. 2,00,000.The Assessing Officerhas made intangible additions of Rs.1,00,000 to it.

Q.136Q.136Q.136Q.136Q.136 The amount of tax sought to be evaded is(a) Rs.34,000(b) Rs.30,000(c) Rs.64,000(d) Nil

Q.137Q.137Q.137Q.137Q.137 The minimum penalty u/s 271(1)(c ) is(a) Rs.90,000(b) Rs.30,000(c) Rs.64,000(d) Rs.34,000(e) None of the above

Q.138Q.138Q.138Q.138Q.138 The maximum penalty u/s 271(1)(c ) is(a) Rs.90,000(b) Rs.1,02,000


(c) Rs.1,92,000(d) Rs.60,000(e) None of the above

For Questions 139 to 142For Questions 139 to 142For Questions 139 to 142For Questions 139 to 142For Questions 139 to 142Dr. Ravi Gupta, a non- resident remitted $ 50,000 to India to purchase shares in HLL . At the time of purchase ofshares the TT buying rate was 42 and TT selling rate was 44. Dr. Gupta sold the shares after 4 years from the dateof purchase for Rs. 48,50,000. He paid a brokerage of Rs. 50,000. The TT buying and selling rate on the date of saleare Rs. 47 and Rs. 49 respectively

Q139.Q139.Q139.Q139.Q139. Full value of consideration will be taken(a) Rs. 48,50,000(b) Rs. 48,00,000(c) Rs. 1,01,042(d) Rs. 1,00,000

Q 140.Q 140.Q 140.Q 140.Q 140. Expenses on transfer will be converted in the foreign currency using the(a) TT buying rate on the date of sale(b) TT selling rate on the date of sale(c) Average of TT buying and selling on the date of sale(d) Need not be converted into foreign currency

Q 141.Q 141.Q 141.Q 141.Q 141. Capital Gain in foreign currency will be(a) Rs. 50,000(b) Rs. 51,042(c) Rs. 1,00,000(d) Rs. 1,01,042

Q 142.Q 142.Q 142.Q 142.Q 142. Capital gain computed in Indian Currency will be(a) Rs. 23,50,000(b) Rs. 24,00,000(c) Rs. 24,50,000(d) Rs. 47,00,000

Q.143Q.143Q.143Q.143Q.143 Deduction of tax from salary as per section 192 shall be:(a) 10.5% of salary(b) at the average rate of income tax computed on the basis of rates in force for the financial year in which

payment is made(c ) @ 30% plus applicable surcharge(d) @30%(e) None of the above

Q.144Q.144Q.144Q.144Q.144 No tax is to credited at source if the amount credited/paid to the contractor during the relevant previousyear does not exceed

(a) Rs.2,500(b) Rs.5,000(c) Rs.20,000(d) Rs.10,000

Q.145Q.145Q.145Q.145Q.145 P Ltd. has taken a house on rent on 1.1. 2004 @Rs.20,000 p.m. from S Ltd. For the financial year 2003-04, PLtd. should deduct tax at source amounting to:

(a) Nil(b) Rs.6,000


(c) Rs.12,000(d) Rs.18,000(e) None of the above

Q. 146Q. 146Q. 146Q. 146Q. 146 No TDS is required in respect of any dividends declared , distributed or paid on or after 1- 4- 2003 by(a) A domestic company(b) A foreign company(c) Any company

Q 147. Q 147. Q 147. Q 147. Q 147. A foreign enterprise enters into a contract for the fabrication and supply of components for machinery withPS and Co., an Indian firm. PS and Co, in turn sub- contracts the work to P and Co and pays it Rs.50 lakhs duringthe financial year 2003-04. PS and Co is

(a) Not required to deduct TDS.(b) Required to make TDS @ 1 % plus surcharge.(c) Required to make TDS @ 2% plus surcharge.

Q.148.Q.148.Q.148.Q.148.Q.148. Interest shall be payable u/s 234 B if the advance tax paid by the assessee during the financial year(a) less than the assessed tax(b) less than 75% of the assessed tax(c ) less than 90% of the assessed tax(d) less than 90% of tax payable on the returned income

Q.149 Q.149 Q.149 Q.149 Q.149 X Ltd., a company covered under Sec.25 of the Companies Act, 1956 is required to file return of its income forthe previous year 2003-04 in Form No.

(a) 1(b) 2(c) 3A(d) 2E(e) 3

Q150.Q150.Q150.Q150.Q150.V. M. Mathur, an individual, having a long term capital gain in the previous year 2003-04 but not having anybusiness income or professional income , should file his return in Form No.

(a) 2C(b) 2(c) 2D SARAL(d) 3(e) 3 or 2D SARAL, as he may choose.

Q151.Q151.Q151.Q151.Q151. If the total income of an assessee does not exceed the maximum exemption limit, it will still be obligatory forhim to file return of income if he:

(a) satisfies any one of the six economic indictors(b) satisfies any two out of the six economic indicators(c ) resides in such area as may be specified by the Board(d) resides in such area as may be specified by the Board and satisfies any one out of the six economic

indicators

Q 152.Q 152.Q 152.Q 152.Q 152. For satisfying the economic criteria for filing obligatory return of income under the First Proviso to Sec139(1), the immovable property should be occupied for

(a) Commercial purpose only(b) Residential purpose only(c) Commercial and residential purpose and must have ownership(d) Commercial or residential purposes for the previous year


Q153. Q153. Q153. Q153. Q153. X Ltd has a loss under the head ‘ Capital Gains’ while Y Ltd has NIL income.(a) Only X Ltd is required to file its return of income for the previous year 2003-04(b) Only Y Ltd is required to file its return of income for the previous year 2003-04(c) Both X Ltd and Y Ltd are required to file its return of income for the previous year 2003-04

For Questions 154 to 160For Questions 154 to 160For Questions 154 to 160For Questions 154 to 160For Questions 154 to 160S.K. Jain transferred his self-acquired property being 12% debentures of Rs. 15,00,000 to his HUF without anyconsideration on 1-4-1998. On 1-4-2002, the HUF undergoes complete partition and the converted property isdistributed amongst the members of the HUF in the following manner:

Members Shares in converted property.S. K. Jain 1,00,000Mrs. K. Jain 2,00,000S. C. Jain (major son of S. C. Jain) 3,00,000Mrs. C. Jain 4,00,000Parag (minor son of S. C. Jain) 5,00,000

(Date of birth: 15-11-96)

Q 154.Q 154.Q 154.Q 154.Q 154. For AY 1999-2000 the following amount will be taxed in the hands of Mr. S. K. Jain(a) Rs.1,80,000(b) Rs.12,000(c) Rs.36,000(d) None of the above.

Q 155. Q 155. Q 155. Q 155. Q 155. The taxable income of Mrs. S. K. Jain for AY 2001-02 will be:(a) Rs.24,000(b) Rs.6,000(c) Rs.1,80,000(d) NIL(e) None of the above.

Q 156.Q 156.Q 156.Q 156.Q 156. The taxable income of Parag for AY 2002-03 will be:(a) Rs.60,000(b) Rs.96,000(c) NIL(d) None of the above.

Q 157. Q 157. Q 157. Q 157. Q 157. For AY 04-05, the taxable income of Mr. S. K. Jain will be(a) Rs.12,000(b) Rs.36,000(c) Rs.1,80,000(d) NIL(e) None of the above.

Q 158.Q 158.Q 158.Q 158.Q 158. For AY 03-04, the taxable income of Mrs. S. K. Jain will be.(a) Rs.12,000(b) Rs.36,000(c) Rs.24,000(d) NIL(e) None of the above.

Q 159.Q 159.Q 159.Q 159.Q 159. For AY 03-04, income of Parag will be taxed in the hands of(a) Parag(b) Mr. S. C. Jain(c) Mrs. S. C. Jain


(d) Mr. or Mrs. S. C. Jain whose income from all other sources is greater.(e) None of the above.

Q 160.Q 160.Q 160.Q 160.Q 160. Taxable income of Mrs. S. C. Jain for AY 02-03 will be(a) Rs.48,000(b) Rs.1,08,000(c) NIL(d) None of the above.

For Questions 161 to 166For Questions 161 to 166For Questions 161 to 166For Questions 161 to 166For Questions 161 to 166S Ltd. owns the following assets as on 1-4-2003:Asset Rate of Depreciation Depreciated Value on 1-4-2003

Rs.Plant A 25% 4,05,000Plant B 25% 1,95,000Plant C 25% 7,05,700

The company acquired on 10-6-2003, Plant D at a cost of Rs. 20,000 ( Rate of Depreciation 25%). During theprevious year ended 31-3-2004, the company sold the following assets:

Asset Sale ConsiderationRs. Expenses on TransferRs.Plant A 2,12,000 12,000Plant B 6,17,500 -Plant C 4,30,000 -Plant D 95,000 200

Q. 161Q. 161Q. 161Q. 161Q. 161. Depreciation for AY 2004-05 will be:(a) Rs. 3,31,425(b) Rs. 1,65,713(c) Rs. NIL(d) None of the above

Q. 162Q. 162Q. 162Q. 162Q. 162. On sale of plant, there will be:(a) LTCG(b) STCG(c) PGBP(d) None of the above

Q. 163Q. 163Q. 163Q. 163Q. 163. The amount of capital gain will be:(a) Rs. 16,600(b) Rs. 28,800(c) NIL(d) None of the above.

Q. 164.Q. 164.Q. 164.Q. 164.Q. 164. If S Ltd purchases a plant costing Rs. 16,600 on 31-3-2004(and puts it to use on the same day), capital gainwill be:

(a) Rs. 16,600(b) Rs 8,300(c) NIL(d) None of the above.

Q. 165.Q. 165.Q. 165.Q. 165.Q. 165. If in Q. 164 above, the plant is purchased on 1-4-04, capital gain will be:(a) Rs. 16,600(b) Rs. 8,300(c) NIL(d) None of the above.


Q. 166.Q. 166.Q. 166.Q. 166.Q. 166. If in Q.164 above, the plant is purchased for Rs. 14,600, capital gain will be:(a) Rs.16, 600(b) Rs. 2,000(c) NIL(d) None of the above.

For Questions 167 to 170For Questions 167 to 170For Questions 167 to 170For Questions 167 to 170For Questions 167 to 170SVP, a FAS furnishes the following information for previous year 2003-04.

Rs.Business loss 50,00,000Property income 45,00,000Income from other sources 1,00,000Capital gain:Short-term 3,00,000Long-term 10,00,000

Q. 167.Q. 167.Q. 167.Q. 167.Q. 167. If business loss is first set off against LTCG, the taxable income will be:(a) Rs. 59,00,000(b) Rs. 9,00,000(c) NIL(d) None of the above.

Q. 168Q. 168Q. 168Q. 168Q. 168. In Q. 167 above, tax liability of firm will be:(a) Rs. 3,15,000(b) Rs. 3,22,875(c) Rs. 1,80,000(d) Rs. 1,84,500

Q. 169.Q. 169.Q. 169.Q. 169.Q. 169. If the business loss is first set off against income other than LTCG, taxable income will be:(a) Rs. 59,00,000(b) Rs. 9,00,000(c) NIL(d) None of the above

Q. 170Q. 170Q. 170Q. 170Q. 170. In Q 169 above, tax liability of the firm will be:(a) Rs. 3,15,000(b) Rs. 3,22,875(c) Rs. 1,80,000(d) Rs. 1,84,500

Q. 171.Q. 171.Q. 171.Q. 171.Q. 171.Partial integration of agriculture income with non-agricultural income is not done if the non-agriculturalincome doesn’t exceed:

(a) Rs. 50,000(b) Rs. 5,000(c) Rs. 1,00,000(d) Rs. 600

For Questions 172 to 175.For Questions 172 to 175.For Questions 172 to 175.For Questions 172 to 175.For Questions 172 to 175.Total income of S for the previous year 2003-04 is Rs. 2,00,000. He has deposited Rs. 1,00,000 in PPF account.

Q. 172Q. 172Q. 172Q. 172Q. 172. If the agricultural income of S is NIL, his tax liability will be:(a) Rs.34, 000(b) Rs. 19,000(c) Rs. 23,500(d) None of the above.


Q. 173Q. 173Q. 173Q. 173Q. 173 If the agricultural income of S is Rs. 5,000, his tax liability will be:(a) Rs. 34,000(b) Rs. 19,000(c) Rs. 23,500(d) None of the above

Q. 174Q. 174Q. 174Q. 174Q. 174. If the agricultural income of S is Rs. 60,000, his tax liability will be:(a) Rs. 26,500(b) Rs. 37,000(c) Rs. 22,000(d) None of the above.

Q. 175Q. 175Q. 175Q. 175Q. 175. S can reduce his tax liability by:(a) Investing Rs. 70,000 in PPF and Rs. 30,000 in infrastructure bonds.(b) Investing Rs. 80,000 in PPF and Rs. 20,000 in infrastructure bonds.(c) Investing Rs. 60,000 in PPF, Rs. 20,000, in NSC and Rs. 20,000 in infrastructure bonds.(d) Tax liability can’t be reduced further.

Q 176.Q 176.Q 176.Q 176.Q 176. Rebate u/s 88 is allowed to:(a) Any assessee(b) An individual(c) An individual or HUF who is resident in India(d) An individual or HUF

Q. 177.Q. 177.Q. 177.Q. 177.Q. 177. Rebate u/s 88 is allowed from:(a) Gross total income(b) Total income(c) Tax on total income(d) None of the above.

Q. 178.Q. 178.Q. 178.Q. 178.Q. 178. For claiming rebate u/s 88 in respect of L.I.P., premium can be paid by assessee for:(a) Himself only(b) Himself or spouse(c) Himself, spouse and minor children(d) Himself, spouse and any child.(e) Himself, spouse and dependent children

Q. 179.Q. 179.Q. 179.Q. 179.Q. 179. For claiming rebate u/s 88,for L I C premium if the payment is made by the assessee for his child, then thechild:

(a) Should be dependent on assessee(b) May or may not be dependent(c) May be married or unmarried and dependent or not dependent.(d) Rebate is not allowed at all

Q. 180Q. 180Q. 180Q. 180Q. 180. Shyam has taken a single premium life insurance policy during the PY 2003-04. He has paid a premium ofRs. 1,00,000 on the sum assured of Rs. 1,00,000. Assuming his gross total income is Rs. 6,00,000, he shall get arebate u/s 88 to the extent of:

(a) Rs. 3,000(b) Rs. 10,500(c) NIL(d) None of the above

Q. 181Q. 181Q. 181Q. 181Q. 181. In Q. 180 above, if the gross total income is Rs. 4,50,000 Shyam shall get a rebate u/s 88 to the extent of:(a) Rs. 3,000(b) Rs. 4,000


(c) Rs. 10,500(d) Rs. 15,000

Q. 182.Q. 182.Q. 182.Q. 182.Q. 182. In Q. 180 above if Shyam is entitled to claim a deduction of Rs. 1,05,000 u/s 80G, the amount of rebate u/s 88 will be:

(a) Rs. 3,000(b) Rs. 10,500(c) NIL(d) None of the above.

Q.183Q.183Q.183Q.183Q.183. If an assessee discontinues the life policy before the premium of 2 years have been paid then:(a) No rebate shall be allowed in respect of the payment made in the year of termination(b) Besides what is mentioned in (a) the tax rebate allowed in the past shall be tax payable by assessee in the

previous year of termination of LIP.(c) Besides what is mentioned in (a) in the case of previous year in which rebate was earlier allowed shall be

reopened and the tax will be recomputed, the balance tax be so payable for that previous year(d) None of the above.

Q. 184Q. 184Q. 184Q. 184Q. 184. The annual interest accrued on NSCs VIII issue shall be:(a) exempt(b) taxable but deduction shall be allowed u/s 80L up to Rs. 12,000(c) Besides what is mentioned in(b) the interest so accrued shall also be eligible for rebate u/s 88.(d) Fully taxable.

For Questions 185 to 192.For Questions 185 to 192.For Questions 185 to 192.For Questions 185 to 192.For Questions 185 to 192.S had the following assets, which were sold/ compulsorily acquired during the previous year 2003-04.

He purchased a residential house property on 20-2-2003 by investing Rs.5, 50,000.He purchased an agriculturalland on 13-4-2004 for Rs 1,80,000. He also purchased a building for Rs.1, 50,000 on 31-7-2004 to be used forindustrial undertaking .He deposited Rs 1,00,000 under the Capital Gain Scheme on 30-7-2004-to be utilized forthe construction of a residential property.

Particulars Dt. Of acquisition

Mode of Acquisition

Dt of sale/ compulsorily acquisition

Sale price/ Compensation Rs.

Cost of acquisition by assessee or previous owner Rs.

Residential house property

1982-83 Self 15-102003 22,40,000 5,00,000

Gold 1981-82 Self 31-102003 4,80,000 1,00,000 Urban agricultural Land

1986-87 Gift from father

15-11-2003 10,00,000 2,00,000 on 1-5-82

Rural agricultural land

1978-79 Do 15-12-2003 4,00,000 50,000

Motor car for personal use

1990-91 Self 15-1-2004 1,50,000 80,000

Land and building forming part of industrial undertaking

15-10-1995 Self 15-2-2004 compulsorily acquired

6,00,000 4,00,000 W.D.V. as on 1-4-2003


Q.185Q.185Q.185Q.185Q.185. Resulting capital gain on sale of residential house property is(a) STCG(b) LTCG(c) There is no capital gain(d) None of the above

Q186.Q186.Q186.Q186.Q186.Capital gain on sale is gold is(a) LTCG Rs 17,000(b) STCG Rs 3,80,000(c) STCG Rs 17,000(d) None of the above

Q187Q187Q187Q187Q187.Captial gain on sale of urban agriculture land is(a) LTCG Rs 3,38,571(b) STCG Rs 8,00,000(c) STCG Rs 3,38,571(e) LTCG Rs 8,00,000

Q.188Q.188Q.188Q.188Q.188. Capital gain on sale of rural agricultural land is:(a) LTCG Rs. 3,50,000(b) LTCG Rs. 1,68,500(c) NIL(d) None of the above

Q. 189Q. 189Q. 189Q. 189Q. 189 Capital gain on sale of car is:(a) LTCG Rs. 70,000(b) STCG Rs. 70,000(c) NIL(d) None of the above

Q. 190Q. 190Q. 190Q. 190Q. 190. Exemption u/s 54D in respect of compulsory acquisition of land and building is:(a) Rs.1, 50,000(b) Rs.2,00,000(c) Rs. 50,000(d) NIL

Q.191.Q.191.Q.191.Q.191.Q.191. Exemption u/s 54B is:(a) Rs. 3,38,571(b) Rs. 1,80,000(c) NIL(d) None of the above

Q. 192Q. 192Q. 192Q. 192Q. 192. Total taxable LTCG is:(a) Rs. 17,000(b) Rs. 33,147(c) Rs. 16,147(d) NIL

For Questions 193 to 195.For Questions 193 to 195.For Questions 193 to 195.For Questions 193 to 195.For Questions 193 to 195.S acquired a plot of land on 16-7-93 for Rs. 10,00,000. He sold it on 6-2-2004 for Rs. 41,00,000. Expenses on transferamounted to Rs. 1,00,000.

Q. 193.Q. 193.Q. 193.Q. 193.Q. 193. Taxable capital gain is:(a) Rs. 41,00,000(b) Rs. 22,02,459(c) Rs. 21,02,459(d) None of the above.


Q. 194Q. 194Q. 194Q. 194Q. 194. S wants to invest Rs. 12,00,000 in bonds of National Highway Authority of India on 6-3-2004. The bondsare redeemable after a period of 3 years. If he invests this amount, he shall:

(a) Get exemption u/s 54 EC for Rs. 12,00,000(b) Get exemption u/s 54F for Rs. 12,00,000(c) Get exemption u/s 54 for Rs. 12,00,000(d) Not get any exemption

Q. 195Q. 195Q. 195Q. 195Q. 195. If he deposits Rs. 8,00,000 in capital gain scheme on 5-5-04, he shall get exemption:(a) u/s 54 F for Rs. 8,00,000(b) u/s54 F for Rs. 4,20,492(c) u/s 54 for Rs. 8,00,000(d) Not get any exemption

Q. 196Q. 196Q. 196Q. 196Q. 196. Winning from lotteries is taxable as:(a) PGBP(b) IFOS(c) Capital gains(d) Exempt from tax

Q. 197Q. 197Q. 197Q. 197Q. 197. Which of the following expenses shall be allowed as deduction is computing PGBP:(a) Diwali expenses(b) Deposit under ‘Tatkal’ telephone scheme(c) Payment for Telex connection(d) All of the above(e) None of the above

Q. 198Q. 198Q. 198Q. 198Q. 198. Which of the following shall not be allowed as a deduction in computing PGBP(a) Employers contribution to unrecognized PF(b) Employers contribution to unrecognized gratuity fund(c) Employers contribution to unrecognized superannuation fund(d) All of the above(e) None of the above

Q. 199.Q. 199.Q. 199.Q. 199.Q. 199. Girish, a CFP, wants to know which of the following expenses shall be allowed to him in computing PGBP(a) Depreciation on personal car(b) Depreciation on personal computer(c) Depreciation on business car(d) All of the above(e) None of the above

Q. 200Q. 200Q. 200Q. 200Q. 200. In which of the following cases, cash payments exceeding Rs. 20,000 shall be fully allowed in computingPGBP:

(a) Payment made to SBI(b) Payment for purchase of raw material(c) Payment of salary to an employee(d) All of the above(e) None of the above


AnswersAnswersAnswersAnswersAnswers

1. (b) 2. (a) 3.(a) 4.(b) 5. (c) 6 (d)

7. (a) 8. (b) 9.(d) 10.(d) 11.(c) 12.(b)

13. (c) 14.(b) 15.(c ) 16.(b) 17.(b) 18 .(c )

19. (c ) 20.(b) 21.(b) 22.(d) 23 .(d) 24.(b)

25. (a) 26.( c) 27.(d) 28.(b) 29.(c) 30.(b)

31.(b) 32.(c) 33.(d) 34.(a) 35.(d) 36.(a)

37. (d) 38.(a) 39.(a) 40.(d) 41.(a) 42.(a)

43. (c) 44.(a) 45.(b) 46.(c) 47.(b) 48.(a)

49. (b) 50.(b) 51.(a) 52.(b) 53.(c) 54.(b)

55. (b) 56.(d) 57.(b) 58.(a) 59.(d) 60.(c)

61.(a) 62.(d) 63.(b) 64.(a) 65.(a) 66.(d)

67.(b) 68.(b) 69.(c) 70.(c) 71.(b) 72.(c)

73.(b) 74.(b) 75.(b) 76.(b) 77.(b) 78.(b)

79.(c) 80.(c) 81.(b) 82.(a) 83.(c) 84.(d)

85.(d) 86.(b) 87.(a) 88.(b) 89.(b) 90.(b)

91.(b) 92.(b) 93.(b) 94.(b) 95.(d) 96.(a)

97.(b) 98.(d) 99.(c)‘ 100.(d) 101.(d) 102.(a)

103.(b) 104.(c) 105.(c) 106.(c) 107.(c) 108.(b)

109.(c) 110.(a) 111.(a) 112.(a) 113.(b) 114.(b)

115.(c) 116.(c) 117.(c) 118.(a) 119.(b) 120.(a)

121.(a) 122.(b) 123.(d) 124.(c) 125.(a) 126.(b)

127.(c) 128.(b) 129.(c) 130.(b) 131.(e) 132.(a)

133.(a) 134.(a) 135.(a) 136.(b) 137.(b) 138.(a)

139.(c) 140.(c) 141.(a) 142.(a) 143.(b) 144.(c)

145.(a) 146.(a) 147.(b) 148.(c) 149.(c) 150.(e)

151.(d) 152.(d). 153.(c) 154.(a) 155.(d) 156.(c)


157.(b) 158.(d) 159.(d) 160.(c) 161.(c) 162.(b)

163.(a) 164.(c) 165.(a) 166.(b) 167.(b) 168.(d)

169(b) 170.(b) 171.(a) 172.(c) 173.(c) 174.(a)

175.(a) 176.(d) 177.(c) 178.(d) 179.(c) 180.(c)

181.(a) 182.(c) 183.(c) 184.(c) 185.(b) 186.(a)

187.(a) 188.(c) 189.(c) 190.(a) 191.(b) 192.(b)

193.(c ) 194.(a) 195.(b) 196.(b) 197.(d) 198.(d)

199.(c) 200.(a)

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