MCQ's - Basic Concepts

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UDESH REGULAR May 24

TAXATION (INCOME TAX)

CHAPTER 1BASIC CONCEPT

M15. The Assessing Officer followed a view stated by the CBDT and added Rs. 1 lakh to the
income of the assessee. Assessee claimed that the view was contrary to the provisions of the Act
and appealed against the order in the Court. The Court upheld the view of the assessee and
deleted the addition. Whose word will be final?
(a) Assessee (b) Assessing Officer
(c) CBDT (d) Court

M5. Section 2(24)(ix) of the Act provides that winnings from lotteries will be included within the
scope of 'income'. Explanation to section 2(24)(ix) states that 'lottery' includes winnings from
prizes awarded to any person by draw of lots or by chance or in any other manner. What is the
purpose of the Explanation?
(a) Explain or clarify the provision (b) Provide exception or exclusion
(c) Define meaning of a term (d) Prescribe a procedure

Ml. A person has derived income of Rs. 10 lakh from retail business, Rs. 20 lakh from agriculture
and Rs. 1 lakh from interest on deposits. His gross receipts are Rs. 15 lakh from retail business
and Rs. 35 lakh from agriculture. Parliament can levy income tax on:
(a) 31 lakh (b) 15 lakh
(c) 11 lakh (d) 10 lakh

ASSESSMENT YEAR & PREVIOUS YEAR

M19. Mr. Y has filed his return of income for the assessment year 2024-25. Income for which year
has been disclosed in the return of income?
(a) Financial year 2023-24 (b) Financial year 2024-25
(c) Calendar year 2023 (d) Calendar year 2024

M4. Section 80GG of the Act allows deduction in respect of rent paid by the assessee in respect
of accommodation occupied by him for his residence. The proviso to this section provides that
the deduction will not be available where the accommodation is owned by the assessee or a
family member in certain cases. What is the purpose of the proviso?
(a) Explain or clarify the provision (b) Provide exception or exclusion
(c) Define meaning of a term (d) Prescribe a procedure
M27. On the basis of information received, the AO wants to cases. Which of the following actions
is valid?
(a) Mr. Run may leave for Finland after 3 months for a 6 month assignment after which he will
return.
(b) Three firms have joined together to conduct a mega entertainment event to be held after 2
months, post which the association will dissolve.
(c) Mr. Sincere, estimating a huge tax demand, is going to sell one of his many properties, in
the ordinary course of business.
(d) Mr. Busy has discontinued his Business A but continues with Business B

M21. Mr. Z decided to start his manufacturing business. He acquired plant and machinery on
5.3.2023 which were installed on 10.3.2023. The business was set up on 15.4.2023 and was
finally commenced on 15.5.2023. What would be the first previous year for this business?
(a) 15.4.2023 to 31.3.2024 (b) 15.5.2023 to 31.3.2024
(c) 10.3.2023 to 31.3.2024 (d) 1.4.2023 to 31.3.2024
M18. Mr. X, employed with Z Ltd., resigned on 31.12.2023. He earned salary for the period of
service. He has no other source of income. Assessment Year for the income earned during this
period will commence on: .
(a) 1.1.2024 (b) 1.4.2024
(c) 1.4.2023 (d) At the discretion of Mr. X

M30. When can accelerated assessment be made u/s 176?


(a) Where any person commences a business during AY
(b) Where any business or profession is discontinued during AY
(c) Where any profession is suspended during AY
(d) Where any business is temporarily halted during AY the usual AY in case of:

M33. Mr. V invested Rs. 50 lakh in shares of UB Pvt. Ltd. This amount was not recorded in the
books of account. He could provide satisfactory explanation to the Assessing Officer in respect of
Rs. 20 lakh. How much amount can be taxed as income of Mr. V?
(a) 50 lakh (b) 30 lakh
(c) 20 lakh (d) Nil

M28. U/s 174A, income of which entity can be taxed in the current year itself and for the period
up to which date?
(a) Company; up to the 31 March of the FY
(b) Company; up to the date of dissolution
(c) AOP/BOI/AJP; up to the date of dissolution
(d) AOP/BOI; up to the date of event for which it is formed
M22. Mr. Busy is running grocery business since 2008. What would be the PY for AY 2024-25?
(a) 2024-25 (b) Calendar year 2024
(c) 2023-24 (d) Accounting year from July 2023 to June 2024

M31. AO has discretion to either charge income in the PY itself or in


(a) Person leaving India with no intention to return
(b) BOI formed for an event and likely to be dissolved shortly thereafter
(c) Person likely to transfer property to avoid tax
(d) Business or profession which is discontinued

M26. Mr. US, a citizen of US, is residing in India since the last 10 years. During the assessment
proceedings for the PY 2023- 24, the AO comes to know on 1 January 2025 that Mr. US would
permanently leave India on 15 May 2025. Which of the following assessments can the AO make?
(a) Regular assessment for PY 2023-24 in AY 2024-25
(b) Regular assessment for PY 2023-24 and accelerated assessments for the periods 1 April
2024 to 31 March 2025 in AY 2024-25
(c) Regular assessment for PY 2023-24 and accelerated assessments for the periods 1 April
2024 to 31 March 2025 and 1 April 2025 to 15 May 2025 in AY 2025-26
(d) Regular assessment for PY 2023-24 and accelerated assessments for the periods 1 April
2024 to 31 March 2025 to 15 May 2025 in AY 2024-25

M34. During a search, Mr. C, carrying on a business, was found to be the owner of jewellery
whose market value was Rs. 75 lakh. He had not recorded the jewellery in the books of account.
During the assessment, he offered detailed explanation about its nature and source of acquisition
with which the Assessing Officer was satisfied. How much amount can be taxed as income of Mr.
C?
(a) 75 lakh (b) 150 lakh
(c) Nil (d) At the discretion of AO

M29. U/s 175, income of which person can be taxed in the current
(a) Company; up to the date of payment of tax
(b) AOP/BOI/AJP; up to the date of filing of return
(c) Any person; up to the date of commencement ofproceeding by AO
(d) Any person; up to 31 March of the FY

M36. During the FY 2023-24, Mr. K incurred Rs. 1 crore as expenditure on marriage ceremony of
his son. Upon inquiry regarding the source of such expenditure, Mr. K could provide satisfactory
explanation in respect of Rs. 60 lakh. How much amount can be taxed as income of Mr. K?
(a) 1 crore (b) 60 lakh
(c) 40 lakh (d) Nil
PERSON & ASSESSEE

M44. Which of the following persons is not an assessee?


(a) Mr. Z, in whose income, the income of P, his minor daughter, has been clubbed under
the provisions of the Act
(b) Mr. K, the agent of Mr. X (a non-resident), who is assessed as a representative assessee
of Mr. X and is, thus, deemed to be an assessee under the Act
(c) Mr. Y, who has not deducted tax at source as required under the Act and is, thus, deemed
to be an assessee in default
(d) Master V, a student aged 10 years, who does not have any source of income and is not
required to comply with any obligation under the Act

M42. Which of the following assessments is valid?


(a) Assessment of JK Pvt. Ltd. can be made on Mr. C, its majority shareholder
(b) Assessment of Ramesh HUF can be made on Ramesh, Suresh and Kanti who are its
members, by apportioning its income amongst the members
(c) Assessment of BM LLP can be made on A, B, C, D and (d) E, who are its members, by
apportioning its income amongst the members
(d) Assessment of Rajat, 10 years, can be made on Mr. Bhagat, his guardian

M45. Which'of the following persons is not an assessee?


(a) Mr. Exempt is not required to pay tax. However, he fails to deduct tax on salary paid to
his employee
(b) Flop Ltd. has incurred huge losses. It files return of income to claim carry forward of the
losses
(c) Mr. Senior is not liable to tax but files return of (d) income to claim refund of TDS
(d) Income of Mr. Poor is below the tax threshold and he does not file his return of income
INCOME

M54. Rahul computed income of Rs. 50,000 under eachof the five heads of income, after
allowing exemption of Rs.10,000 under the provisions of each head. From the gross totalincome
so arrived of Rs. 2,50,000, he allowed deduction of Rs.50,000 and arrived at the total income of
Rs. 2,00,000. On what amount will he need to compute income-tax?
(a) On 2,00,000 (b) On 2,50,000
(c) On 50,000 for each head of income (d) On 3,00,000

M50. Which of the following cannot be characterized as income on grounds of mutuality?


(a) Surplus funds of Rs. 3 lakh of XYZ club which is taking moly fee of Rs. 1,000 from its
members and incurring expenses on running the club
(b) Monthly maintenance charges taken by Resident Welfare Association of a Housing
Society from its resident members for providing common facilities and services to the
members
(c) Goods transferred by V-Mart Ltd. from Head Office (Delhi) to Branch Office (Kanpur)
after adding margin
(d) All the above

M52. For computing the total income of PY 2023-24, Rahul had to classify his incomes into various
heads of income, club income of his minor child with his own income, provide permissible
deductions from his gross his total income and determine his residential status. Which of the
following steps would he apply as the last step?
(a) Classification into heads of income (b) Determining the residential status
(c) Deductions from Gross Total Income (d) Clubbing of income

M49. Which of the following is income?


(a) Mr. C incurred taxi expenses for official travel which were reimbursed to him by his
employer
(b) Mrs. Keshav received Rs. 1,000 p.m. from Mr. Keshav as pin money for meeting
household expenses
(c) Rotary Club received Rs. 500 p.m. as membership fee from its members which it used to
provide various services to the members
(d) Mr. Rony received Rs. 10,000 as fee for providing consultancy services, which was
accounted as loan in the books of account

M53. Rohit earned Rs. 20,000 as interest on his savings bank account with State Bank of India.
Under which head of income would this income fall?
(a) Income from house property (b) Capital gains
(c) Profits and gains of business or profession (d) Income from other sources
Answer Key
M15. (d) M5. (a)
M1. (c) M19. (a)
M4. (b) M27. (b)
M21. (a) M18. (b)
M30. (b) M33. (b)
M28. (c) M22. (c)
M31. (d) M26. (d)
M34. (c) M29. (c)
M36. (c) M44. (d)
M42. (d) M45. (d)
M54. (a) M50. (d)
M52. (c)
M49. (d)
M53. (d)

M16. Roma, aged 35 years, has a total income of Rs. 6.5 crore which includes dividend
income and income u/s 111A and 112A of Rs. 1 crore. She wants to know the rate of
surcharge that will be levied for AY 2024-25 under optional tax regime. Please advise her.
(a) 15% on tax on total income
(b) 37% on tax on total income
(c) 15% on tax on dividend/lllA/112A income; 37% on tax on the other income
(d) Nil on tax on dividend/lllA/112A income; 37% on tax on other income

M6. Mrs. Sharma is a resident in India of age 80 years. She wants to know the maximum
total income she can have to keep her tax liability Nil under the optional tax regime.
(a) 3,00,000 (b) 5,00,000
(c) 2,50,000 (d) Nil

M25. Compute the tax liability under optional tax regime of Mr. Y, a resident of age 65 years,
having a total income of Rs. 2,08,00,000 for PY 2023-24 comprising incomes from salary
and house property.
(a) 78,65,000 (b) 72,35,800
(c) 69,21,200 (d) 77,80,760

M10. Ruma, an individual of age 40 years having total income of Rs. 3 lakh, wants to know
the highest tax rate slab applicable to her total income for AY 2024-25 under the default
tax regime. Please advise her.
(a) Nil (b) 5%
(c) 20% (d) 30%
M38. Mr. Swindle is found to be the owner of two gold chains of 30 gms each (market value
of both Rs. 2,90,000) during the financial year 2023-24. Flowever, he could offer
satisfactory explanation in respect of Rs. 50,000 spent on acquiring these chains. What is
the amount of tax he would be liable to pay as per section 115BBE?
(a) 1,87,200 (b) 2,26,200
(c) 1,49,760 (d) 1,80,960

M13. Mr. Jain is an elderly individual resident in India. He wants to know whether, based
on his date of birth, he would be eligible to avail the basic exemption limit of Rs. 3,00,000
or above for PY 2023-24 under the optional tax regime. Please advise him on the date of
birth.
(a) 1.4.1964 or before (b) 2.4.1964 or before
(c) 31.3.1964orbefore (d) 1.4.1944 or before

M5. Romit is a resident in India of age 60 years. He wants to know the maximum total
income he can have to keep his tax liability Nil under the optional tax regime. Advise Romit.
(a) 3,00,000 (b) 5,00,000
(c) 2,50,000 (d) Nil

M7. Mr. John is a non-resident individual of age 70 years as on 31.3.2024. He wants to know
the maximum total income he can have in India to keep his tax liability Nil under the
optional tax regime.
(a) 2,50,000 (b) 3,00,000
(c) 5,00,000 (d) No basic exemption

M17. Rishi, aged 50 years, has a total income of 5 crore, comprising business income, for
the PY 2023-24. Compute his tax liability under the default tax regime.
(a) 2,11,04,850 (b) 1,92,56,250
(c) 2,09,44,560 (d) 1,91,10,000

M36. Mr. Q, a resident of age 55 years, has total income for AY 2024-25 comprising short
term capital gain u/s 111A of Rs. 6 crore and income from house property of Rs. 10 lakh.
Compute his tax liability under the optional tax regime.
(a) 1,08,98,550 (b) 91,12,500
(c) 1,24,84,125 (d)
1,13,90,625

M22. Kapil, resident of age 55 years, has a total income of Rs. 55 lakh for PY 2023-24.
Compute the amount of HEC that he will need to pay under the optional tax regime?
(a) 58,500 (b) 64,350
(c) 5,850 (d) 2,20,000
M28. Total income of an artificial juridical person is Rs. 4,10,000 for PY 2023-24. Income-
tax, rebate u/s 87A and surcharge for AY 2024-25 under the default tax regime would be:
(a) 5,500; nil; nil (b) 16,000; 8,000; nil
(c) Nil; nil; nil (d) 8,000; 8,000; nil

M24. Compute the tax liability under default tax regime of Mrs. Z, a resident of age 55 years,
having a total income of Rs. 102 lakh for PY 2023-24 comprising profits and gains of
business or profession.
(a) 34,25,500 (b) 32,96,800
(c) 34.45,650 (d) 34,65,500

M26. Compute the amount of marginal relief from surcharge available under the optional
tax regime to Mr. Q, a resident of age 85 years, having a total income of Rs. 5,30,00,000 for
PY 2023-24 comprising incomes from house property and short term capital gain from sale
of plots of land.
(a) 9,000 (b) 10,000
(c) 8,000 (d) Nil

M14. Rashmi, aged 40 years, has total income of Rs. 50 lakh for PY 2023-24. Her tax liability
under optional tax regime will be:
(a) 13,12,500 (b) 14,43,750
(c) 15,01,500 (d) 13,65,000

M27. Compute the amount of marginal relief from surcharge under the default tax regime
available to Mr. T, a resident of age 45 years, having a total income of Rs. 52,50,000 for PY
2023-24 comprising incomes from salary and house property.
(a) 7,500 (b) 8,000
(c) Nil (d) 24,850

M33. Delhi Municipal Corporation, BNP & Co. partnership firm and Vadodara co-operative
society are your clients. They want to ascertain the rate at which surcharge will be levied
on tax computed on their total income of Rs. 11 crore.
(a) 10% (b) 12%
(c) 7% (d) 15%

M12. Mr. Jagan is a resident individual of age 80 years having total income of Rs. 10 lakh
for the PY 2023-24. He wants to know the maximum rate of tax at which he will be
chargeable under the default tax regime. Please advise.
(a) Nil (b) 5%
(c) 15% (d) 30%
M35. Mr. Y, a resident of age 75 years, won a lottery prize of Rs. 60 lakh on 15.9.2023. Fie
has no other source of income. Compute his tax liability for AY 2024-25. Mr. Y has decided
to move out of the default tax regime.
(a) 19,80,000 (b) 18,41,840
(c) 20,59,200 (d) 18,72,000
M11. Rocky is a non-resident individual of age 60 years having total income of Rs. 3 lakh
for the PY 2023-24. What will be the highest tax rate slab applicable to his income under
the optional tax regime?
(a) Nil (b) 5%
(c) 20% (d) 30%

Answer Key

M16. (c) M6. (b)


M25. (d) M10. (a)
M38. (a) M13. (a)
M5. (b) M7. (a)
M17. (d) M36. (a)
M22. (b) M28. (a)
M24. (b) M26. (a)
M14. (d) M27. (c)
M33. (b) M12. (c)
M35. (c) M11. (b)

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