It - Objective

MULTIPLE CHOICE QUESTIONS ON

MULTIPLE CHOICE QUESTIONS ON

INCOME TAX FOR RECAPITULATION

1) The Income-tax Act extends to:

(A) whole of India

(B) whole of India except Jammu and Kashmir

(C) whole of India except Sikkim

(D) whole of India except Jammu & Kashmir and Sikkim.

(A)

2) Finance Bill becomes the Finance Act when it is passed by:

(A) the Lok Sabha

(B) both Lok Sabha and Rajya Sabha

(C) both Houses of Parliament and given assent to by the President

(D) both Houses of Parliament and given assent to by the Prime Minister/ Finance Minister

(C)

3) Part-I of Schedule I of the Finance Act, 2006 has given the rates of Income-tax for the assessment year:

(A) 2006-07

(B) 2007-08

(C) 2008-09

(A)

4) Part-II of Schedule I of the Finance Act, 2006 has given the rates of tax deductible at source for the financial year:

(A) 2005-06

(B) 2006-07

(C) 2007-08

(B)

5) Part-III of Schedule I of the Finance Act, 2006 has given the rates of advance tax and tax to be deducted in case of salary for the assessment year:

(A) 2006-07

(B) 2007-08

(C) 2008-09

(B)

6)The circulars issued by CBDT are binding on:

(A) Assessee

(B) Income-tax authorities

(C) Both the above

(B)

7)AOP should consist of:

(A) individuals only

(B) persons other than individuals only

(C) both the above

(C)

8)Body of individuals should consist of:

(A) individuals only

(B) persons other than individuals only

(C) both the above

(A)

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9)A new business was set up on 15.10.2006 and it commenced its business from 1.12.2006. The first previous year in this case shall be:

(A) 15.10.2006 to 31.03.2007

(B) 01.12.2006 to 31.03.2007

(C) 2006-07

(A)

10)A person leaves India permanently on 15.11.2006. The assessment year for income earned till 15.11.2006 in this case shall be:

(A) 2005-06

(B) 2006-07

(C) 2007-08

(B)

11)There is a a surcharge on income-tax if the total income of the assessment year 2007-08 of an individual or HUF exceeds:

(A) Rs.1,00,000

(B) Rs.10,00,000

(C) Rs.8,50,000

(B)

12)Surcharge in case of an individual or HUF for assessment year 2007-08 is payable at the rate of:

(A) 2.5 % of the income-tax payable provided the total income exceeds Rs.10,00,000

(B)10 % of the income-tax payable provided the total income exceeds Rs.10,00,000

(C)5 % of the income-tax payable if the total income exceeds Rs.10,00,000

(B)

13)Surcharge in case of a firm for assessment year 2007-08 is payable at the rate:

(A)10 % of income-tax payable

(B)10 % of income-tax payable provided the income exceeds Rs.60,000

(C)2.5 % of income-tax payable

(A)

14)Surcharge on income-tax is payable by:

(A) All assessees except a foreign company

(B)Individual and HUF only

(C)A Domestic Company

(D) All assessees except local authority or co-operative society

(E)All assessees

(D)

15)The maximum amount on which income-tax is not chargeable in case of HUF for assessment year 2007-08 is:

(A)Rs.50,000

(B)Rs.1,00,000

(C)Rs.1,35,000

(B)

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16)The maximum amount on which income-tax is not chargeable for the assessment year 2007-08 of an individual other than a woman or an individual less than 65 years old is:

(A)Rs.50,000

(B)Rs.1,00,000

(C)Rs.1,35,000

(D)Rs.1,50,000

(B)

17)The maximum amount on which income-tax is not chargeable for the assessment year 2007-08 in case of a woman who is less than 65 years old is:

(A)Rs.1,00,000

(B)Rs.1,35,000

(C)Rs.1,85,000

(D)Rs.1,50,000

(B)

18)The maximum amount on which income-tax is not chargeable for the assessment year 2007-08 in case of an individual who is resident in India and 65 years old is:

(A)Rs.1,00,000

(B)Rs.1,35,000

(C)Rs.1,85,000

(D)Rs.2,50,000

(C)

19)The maximum amount on which income-tax is not chargeable in case of a firm is:

(A)Rs.50,000

(B)Rs.30,000

(C)Rs.60,000

(D)NIL

(D)

20)The maximum amount on which income-tax is not chargeable in case of a co-operative society is:

(A)Rs.50,000

(B)Rs.30,000

(C)Rs.NIL

(C)

21)Education cess is leviable on:

(A)Income-tax

(B)Income-tax + surcharge

(C)Surcharge

(B)

22)Education cess is leviable @:

(A)2 %

(B)5 %

(C)2.5 %

(A)

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23)Education cess is leviable in case of:

(A)an individual assessee only

(B)an individual and HUF

(C)a company assessee only

(D)all assessees

(E)all assessees except co-operative society or local authority

(D)

24)In case of an individual and HUF education cess is leviable only when the total income of such assessee:

(A)Exceeds Rs.10,00.000

(B)Whether it is less than or exceeds Rs.10,00,000

(B)

25)For the assessment year 2007-08, a firm is subject to income-tax at a flat rate of:

(A)35 % + education cess @ 2 %

(B)35 % + 10 % surcharge + education cess @ 2 %

(C)30 % + 10 % surcharge + education cess @ 2 %

(D)30 % + 2.5 % surcharge + education cess @ 2 %

(C)

26)The total income of the assessee has been computed at Rs.1,53,494.90. For rounding off, the total income will be taken as:

(A)Rs.1,53,500

(B)Rs.1,53,490

(C)Rs.1,53,495

(B)

27)The total income of the assessee has been computed as Rs.1,53,499. For rounding of the total income will be taken as:

(A)Rs.1,53,500

(B)Rs.1,53,490

(C)Rs.1,53,495

(A)

28)Income-tax is rounded off to:

(A)nearest ten rupees

(B)nearest one rupee

(C)no rounding off of tax is done

(A)

29)A is 60 years old. His total income for the assessment year 2007-08 is Rs.1,50,000. His tax liability shall be:

(A)Rs.5,100

(B)Rs.5,000

(C)Rs.5,500

(D)Rs.5,610

(A)

30) A is 66 years old. His total income for the assessment year 2007-08 is Rs.2,50,000. His tax liability shall be:

(A) Rs.25,500

(B) Rs.21,930

(C) Rs.13,260

(D) Rs.14,586 (C)- 5

31)Mrs. A is 60 years old. Her total income for the assessment year 2007-08 is Rs.2,00,000. Her tax liability shall be:

(A)Rs.15,300

(B)Rs.11,730

(C)Rs.3,060

(D)Rs.13,093

(B)

32)Mrs. A is 65 years old. Her total income for the assessment year 2007-08 is Rs.3,00,000. Her tax liability shall be:

(A)Rs.40,800

(B)Rs.37,320

(C)Rs.28,560

(C)

33)As total income for the assessment year 2007-08 is Rs.10,30,000. His tax liability shall be:

(A)Rs.2,84,900

(B)Rs.2,80,000

(C)Rs.2,85,600

(D)Rs.2,90,600

(D)

34)Residential status is to be determined for:

(A)previous year

(B)assessment year

(C)accounting year

(A)

35)Incomes which accrue or arise outside India but are received directly into India are taxable in case of:

(A)resident only

(B)both ordinarily resident and not ordinarily resident

(C)non-resident

(D)all the assessees

(D)

36)Income deemed to accrue or arise in India is taxable in case of:

(A)resident only

(B)both ordinarily resident and not ordinarily resident

(C)non-resident

(D)all the assessees

(D)

37)Income which accrue or arise outside India from a business controlled from India is taxable in case of:

(A)resident only

(B)non-resident only

(C)both ordinarily resident and not ordinarily resident

(D)non-resident

(E)all the assessees

(C)

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38)Income which accrue or arise outside India and also received outside India is taxable in case of:

(A)resident only

(B)non-resident only

(C)both ordinarily and not ordinarily resident

(D)none of the above

(A)

39)Total 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 of the above

(A)

40)R was born on 5th April, 1995 in India & he later on took the citizenship of U.S.A. Neither his parents nor his grand parents were born in divided/ undivided India. R in this case shall be:

(A)citizen of India

(B)person of Indian origin

(C)a foreign national

(C)

41)R was born in England. His parents were born in India in 1951. His grand parents were born in South Africa. R shall be:

(A)a person of Indian origin

(B)a foreign national

(C)none of these

(B)

42)R was born in India in 1995. His father was born in India in 1949 and his mother was born in England. His grand father was born in England & his grand mother was born in South Africa. The parents of R along with R took the citizenship of England. R is:

(A)citizen of India


(C)none of these

(C)

43)R was born in India in 1995. His parents were born in India in 1951. His grand father was born in Lahore in 1936 but his grand mother was born in England in 1940. R will be:

(A)a citizen of India

(B)a person of Indian origin

(C)none of these

(A)

44)R was born in India in 1995. His parents were born in India in 1951. The parents of R along with R have taken the citizenship of England. His grand father was born in Lahore in 1936 but his grand mother was born in England in 1940. R will be:

(A)a citizen of Indian


(C)none of these

(B)

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45)R, a person of Indian origin visited India on 2.10.2006 and plans to stay here for 185 days. During 4 years prior to previous year 2006-07, he was in India for 750 days. Earlier to that he was never in India. For assessment year 2007-08, R shall be:

(A)resident and ordinarily resident in India

(B)resident but not ordinarily resident in India

(C)non-resident

(C)

46)R, a citizen of India left India for U.S. on 16.08.2006 for booking orders on behalf of an Indian Company for exporting goods to U.S. He came back to India on 5.5.2007. He had been resident in India for the past 10 years. For assessment year 2007-08, R shall be:



(C)non-resident in India

(A)

47)R, a citizen of India is employed on an Indian Ship. During the previous year 2006-07 he leaves India for Germany on 15.09.2006 for holidays and returned on 1.4.2007. He had been non-resident for the past 3 years. Earlier to that he was permanently in India. For assessment year 2007-08, R shall be:



(C)non-resident in India

(A)

48)R Ltd., is an Indian Company the entire control and management of its affairs is situated outside India. R Ltd., shall be:

(A)resident in India

(B)non-resident in India

(C)not ordinarily resident in India

(A)

49)R Ltd., is registered in U.K. The control and management of its affairs is wholly situated in India. R Ltd., shall be:




(A)

50)R, a foreign national visited India during the previous year 2006-07 for 180 days. Earlier to this he never visited India. R in this case shall be:




(B)

51)R, a foreign national but a person of Indian origin visited India during the previous year 2006-0 for 182 days. During 4 preceding previous years he was in India for 400 days, R shall be:




(B)

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52)Dividend paid by an Indian Company outside India is:

(A)taxable in India in the hands of the recipient

(B)exempt in the hands of the recipient

(C)taxable in the hands of the company and exempt in the hands of the recipient

(C)

53)Any receipt by a member of HUF from the HUF shall be:

(A)Fully taxable

(B)Fully exempt

(C)Included in the total income of the member for rate purpose

(B)

54)In the case of a partner, the share of the profits from the firm shall be:

(A) fully taxable

(B)fully exempt

(C)included in the total income of the partner and relief of income-tax u/s 86 shall be allowed

(B)

55)Casual income received by the assessee is:

(A)fully exempt

(B)exempt up to Rs.5,000

(C)fully taxable

(C)

56)A cricket match organised by the Cricket Control Board of India for the benefit of Sunil Gavaskar where he received Rs.5 lakh is:

(A)Casual income

(B)Exempt income

(C)Fully taxable

(B)

57) R 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 up to Rs.5,000

(C) fully exempt

(A)

58)An award of Rs.1,00,000 was announced for tracing a missing person. R traced the person and received the award amount. Such receipt shall be:

(A)casual income

(B)fully exempt

(C)fully taxable

(C)

59)Scholarship received by a student to meet the cost of education is:

(A)casual income

(B)fully taxable

(C)fully exempt

(C)

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60)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)a casual income

(C)exempt

(C)

61)An author was awarded by Central Board of Direct Taxes a sum of Rs.50,000 for writing a book in Hindi as first prize. Such award is:

(A)casual income

(B)fully exempt

(C)fully taxable

(B)

62)A local authority has earned income from the supply of water or electricity outside its own jurisdictional area. Such income is:

(A)exempt

(B)taxable

(C)casual income

(A)

63)A local authority has earned income from the supply of commodities outside its own jurisdictional area. Such income is:

(A)exempt

(B)taxable

(A)

64)An income under the head capital gain to a local authority is:

(A)exempt

(B)taxable

(A)

65)An income under the head capital gain to a trade union is:

(A)exempt

(B)taxable

(B)

66)A subsidy received from the Tea Board by an assessee carrying on business of growing and manufacturing tea for re-plantation or replacement of tea bushes is:

(A)taxable

(B)exempt

(B)

67)The daily allowance received by a Member of Parliament is:

(A)exempt

(B)taxable

(C)included in total income for rate purposes

(A)

68)The daily allowance received by an MLA is:

(A)exempt

(B)taxable

(C)included in total income for rate purposes

(D)Exempt up to Rs.2,000

(A)

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69)The constituency allowance received is:

(A)fully exempt in the hands of MLAs only

(B)fully exempt in the hands of both MLAs and MLCs

(C)exempt up to Rs.2,000 p.m. in the hands of MLAs and MLCs

(B)

70)Dividend received by a company from a domestic company is:

(A)exempt

(B)taxable

(A)

71)Dividend received by a foreign company from a domestic company is:

(A)exempt

(B)taxable

(B)

72)Subsidy received by the assessee from Rubber Board for re-plantation or replacement of rubber plant is:

(A)exempt

(B) taxable

(A)

73)Income arising from the transfer of units of the Unit Trust of India or of mutual fund covered under section 10(23D) shall:

(A)be exempt

(B)not be exempt

(B)

74) Any sum received under a Life Insurance Policy including bonus shall be exempt:

(A) in all kinds of policies

(B) in all kinds of policies except when received under a Keyman Insurance Policy

(C) in all kinds of policies except when received under Keyman Insurance Policy or under a policy covered under section 80DDA(3)

(D) in all kinds of policies except when received under Keyman Insurance Policy or such policy as is covered under section 80DD(3) or policy issued on or after 1.4.2003, if the premium paid for any year exceeds 20 % of actual sum assured, except on death

(D)

75)Any pension received by an individual or family 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 Government and was awarded Paramvir Chakra, Mahavir Chakra or Vir Chakra or any other notified gallantry award shall be:

(A)exempt

(B)taxable

(A)

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76)Venture capital company or venture capital fund are given exemption from income-tax for:

(A)any income by way of dividend or long-term capital gain from investments made by way of equity shares in a venture capital undertaking

(B)any income from investment in a venture capital undertaking

(C)any income wherever invested

(B)

77)Where a venture capital company or venture capital funds makes any investment in a venture capital undertaking then its:

(A)any income from investment in venture capital undertaking shall be exempt

(B)dividend income shall be exempt

(C)interest income from such investment shall be exempt

(A)

78)Where the income of an individual includes the income of minor children, such individual shall be entitled to an exemption of:

(A)Rs.1,500

(B)Rs.1,500 per minor child

(C)Rs.1,500 per minor child to the extent of income of the minor child included in the total income of the assessee whichever is less

(C)

79)Income of newly Established undertaking in a Free Trade Zone is:

(A)exempt

(B)exempt for 5 years in a block of eight assessment years

(C)exempt for 10 years but not beyond assessment year 2009-10

(C)

80)Income from units of UTI or Mutual Fund covered under section 10(23D) shall be:

(A)exempt

(B)taxable

(A)

81)Family pension received by the legal heir of army personnel who died during operational duties shall be:

(A)fully exempt

(B)taxable

(A)

82)Capital gain arising from compulsory acquisition of urban agricultural land shall be:

(A)taxable

(B)exempt

(C)exempt if certain conditions are satisfied

(C)

83)Any capital gain whether short-term or long-term shall be exempt if:

(A)it is from the transfer of urban agricultural land

(B)it is from the compulsory acquisition by law or urban agricultural land

(B)

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84)Income from long-term capital gain from transfer of equity shares shall be exempt if:

(A)such shares are sold through National Stock Exchange

(B)such shares are sold through any Recognised Stock Exchange in India

(C)such shares are sold through any Recognised Stock Exchange in India and such transaction is subject to Securities Transactions Tax

(C)

85)In case of an individual, any income by way of interest on any money standing to his credit in a Non-Resident (External) Account in any bank in India shall be

(A)exempt

(B)fully taxable

(C) exempt up to Rs.13,000

(A)

86)R, a chartered accountant is employed with R Ltd., as an internal auditor and requests the employer to call the remuneration as internal audit fee. R shall be chargeable to tax for such fee under the head:

(A) Income from salaries

(B)Profits and gains from Business or Profession

(C)Income from other sources

(A)

87)R Ltd., pays a salary of Rs.1,50,000 to his employee G and undertakes to pay the Income Tax amounting to Rs.5,100 during the previous year 2006-07 on behalf of G. The gross salary of G shall be:

(A)Rs.1,50,000

(B)Rs.1,55,100

(C)Rs.1,55,600

(B)

88) R was employed on 1.4.2000 in the grade of Rs.15,000-400-17,000- 500-22,000. His gross salary for the assessment year 2007-08 shall be:

(A) Rs.1,99,200

(B) Rs.2,04,000

(C) Rs.2,10,000

(D) Rs.2,16,000

(C)

89)R was employed from 1.8.2004 in the grade of Rs.15,000-400-17,000- 500-22,000 and his salary was fixed at Rs.16,600 from the date of joining. His gross salary for the assessment year 2007-08 shall be:

(A)Rs.1,99,200

(B)Rs.2,04,000

(C)Rs.2,08,000

(D)Rs.2,10,000

(C)

90)R, who is entitled to a Salary of Rs.10,000 p.m., took an advance of Rs.20,000 against the salary in the month of March 2007. The gross salary of R for the assessment year 2007-08 shall be:

(A)Rs.1,40,000

(B)Rs.1,20,000

(C)None of these two (B)

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91)R, who is entitled to Salary of Rs.10,000 p.m., took advance salary from his employer for the months of April and May 2007 along with salary for March 2007 on 31.03.2007. The gross salary of R for assessment year 2007-08 shall be:

(A)Rs.1,20,000

(B)Rs.1,40,000

(C)None of these two

(B)

92)R is employed with G Ltd., at a salary of Rs.10,000 p.m. As G Ltd., was in financial crisis, it paid the salary of January 2007 to March 2007 to R only in July 2007. The gross salary of R for the assessment year 2007-08 shall be:

(A)Rs.1,20,000

(B)Rs.90,000


(A)

93)Salary of R is Rs.10,000 p.m. R had taken Salary in advance for the months of April 2006 to June 2006 in March 2006 itself. The gross salary of R for the assessment year 2007-08 shall be:

(A)Rs.1,20,000

(B)Rs.90,000


(B)

94)Salary of R becomes due on 1st of next month and it is paid on 7th of that month. For assessment year 2007-08, the salary of R shall be taken from:

(A)April 2006 to March 2007

(B)March 2006 to February 2007

(C)None of these

(B)

95)R who was working with another company joined the present employer w.e.f. 1.5.2006 at a Salary of Rs.10,000 p.m. His salary becomes due on first of next month. He was also entitled to a pension of Rs.4,000 p.m. from his former employer. His gross salary for the assessment year 2007-08 shall be:

(A)Rs.1,10,000

(B)Rs.1,58,000

(C)Rs.1,48,000

(C)

96)The Government of India announced increase in the D.A. on 15.03.2006 with retrospective effect from 1.5.2002 and the same were paid on6.4.2006. The arrears of D.A. shall be taxable in the previous year:

(A)2005-06

(B)2006-07

(C)in respective previous years to which these relate

(B)

97)Gratuity shall be fully exempt in the case of:

(A)Central and State Government employee

(B) Central and State Government employees and employees of local authorities

(C)Central and State Government employees and employees of local authorities and employees of statutory corporation (B)

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98)An employee is covered under Payment of Gratuity Act, 1972

(i) Salary for the purpose of calculating 15 days salary for each completed year of service shall be:

(A) last drawn Salary

(B) average Salary of last 10 months

(C) average Salary of last 3 completed years

(A)

(ii) Salary for the above purpose shall:

(A) include dearness allowance

(B) not include dearness allowance

(C) include dearness allowance to the extent the terms of employment provide

(A)

(iii) If the employee has completed service of 16 years 6 months and 5 days, the number of completed years shall be taken as:

(A) 16 years

(B) 17 years

(C) 16 years 6 months and 5 days

(B)

(iv) If he has completed exactly 16 years and 6 months, the completed year shall be:

(A) 16 years

(B) 17 years

(C) 16 years and 6 months

(A)

(v) For the purpose of computing 15 days salary, the number of days in a month shall be taken as:

(A) 30 days

(B) 26 days

(C) 31 days

(B)

(vi) The maximum exemption of gratuity shall be:

(A) Rs.2,40,000

(B) Rs.2,50,000

(C) Rs.3,50,000

(D) Twenty months Salary

(C)

99)An employee is neither a Government employee nor covered under Payment of Gratuity Act, 1972.

(i) Salary for the purpose of calculating half month shall be taken as:

(A) last drawn salary

(B) average salary of 10 months preceding the month of retirement

(C) average salary of each completed year

(B)

(ii) Salary for the above purpose shall:

(A) include dearness allowance

(B) not include dearness allowance

(C) include dearness allowance to the extent the terms of employment so provide (C)- 15 -

(iii) If the employee has completed 16 years and 8 months of service, the number of completed years shall be taken as:

(A) 17 years

(B) 16 years

(C) 16 years and 8 months

(B)

(iv) The maximum exemption of gratuity shall be:

(A) Rs.2,40,000

(B) Rs.2,50,000

(C) Rs.3,50,000

(D) 20 months salary

(C)

100) R who claimed the exemption of gratuity in the post to the extent of Rs.2,50,000, was entitled to the gratuity from the present/second employer amounting to Rs.2,00,000 in the previous year 2006-07. R shall be entitled to exemption to the maximum extent of:

(A)Rs.2,00,000

(B)NIL

(C)Rs.1,00,000

(C)

101) R worked with a previous employer for 3 years but was not entitled to any gratuity. He worked with the present employer for 8 years and 7 months. The completed years of service for calculating exemption of gratuity shall be taken as:

(A) 11 years

(B) 8 years

(C)9 years

(D) 12 years

(A)

102) For the purpose of calculating exemption of gratuity, salary shall include:

(A) fixed commission

(B)commission if it is a fixed percentage on turnover

(C) none of these two

(B)

103) Pension received by a Government employee is:

(A)exempt

(B)taxable

(C)partially taxable

(B)

104) Commuted pension received shall be fully exempt in case of:

(A)Government employee

(B)Government employee or an employee of local authority

(C)Government employee or an employee of local authority or an employee of statutory corporation

(C)

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105) (i) An employee was also entitled to gratuity. He got 60 % of his pension commuted and received a sum of Rs.1,20,000 as commuted pension. The exemption in his case shall be:

(A)Rs.1,20,000

(B)Rs.40,000

(C)Rs.66,667

(D)80,000

(C)

(ii) What shall be the exemption if he was not entitled to gratuity in the above case?

(A) Rs.1,20,000

(B) Rs.40,000

(C) Rs.66,667

(D) Rs.1,00,000

(D)

106) An employee who was not entitled to gratuity, got 30 % of his total pension commuted in the past. He wishes to commute another 25 % of his total pension in the previous year. He shall be allowed exemption to the extent of:

(A)NIL

(B)20 %

(C)25 %

(B)

107) Encashment of leave salary at the time of retirement is fully exempt in the case of:

(A)Central Government Employee

(B)State Government Employee

(C)Both Central and State Government Employees

(D)Government employee and employees of local authority

(C)

108) Salary for exemption of leave encashment shall be taken as:

(A)last drawn salary

(B)average salary of 10 months immediately preceding the month of retirement

(C)average salary of 10 months immediately preceding the date of retirement

(C)

109) The maximum exemption in case of leave encashment shall be:

(A)Rs.2,40,000

(B)Rs.3,50,000

(C)Rs.3,00,000

(C)

110) An employee availed the exemption of leave encashment of Rs.1,00,000 in the past. He received from the second employer a sum of Rs.2,50,000 as encashment of leave. He will be entitled to exemption to the extent of:

(A)NIL

(B)Rs.2,50,000

(C)Rs.2,00,000

(D)Rs.1,40,000

(C)

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111) Compensation received on voluntary retirement is exempt under section 10(10C) to the maximum extent of:

(A)Rs.2,40,000

(B)Rs.3,50,000

(C)Rs.5,00,000

(C)

112) (i) If rent is paid for a house situated in Delhi, the house rent allowance shall be exempt to the maximum extent of:

(A)40 % of salary

(B)50 % of salary

(C)60 % of salary

(B)

(ii) What shall be the exemption if the rent is paid for a house in Ghaziabad.

(A) 40 % of salary

(B) 50 % of salary

(C) 60 % of salary

(A)

113) A is entitled to children education allowance @ Rs.80 p.m. per child for 3 children amounting to Rs.240 p.m. It will be exempt to the extent of:

(A)Rs.200 p.m.

(B)Rs.160 p.m.

(C)Rs.240 p.m.

(B)

114) R is entitled to Hostel expenditure allowance of Rs.600 p.m. for his 3 children @ Rs.200 per child. The exemption in this case shall be:

(A)Rs.600 p.m.

(B)Rs.400 p.m.

(C)Rs.300 p.m.

(B)

115) R is entitled to a transport allowance of Rs.1,000 p.m. for commuting from his residence to office and back. He spends Rs.600 p.m. The exemption shall be:

(A)Rs.1,000 p.m.

(B)Rs.800 p.m.

(C)Rs.600 p.m.

(B)

116) R is entitled to Rs.6,000 as medical allowance. He spends Rs.4,000 on his medical treatment and Rs.1,000 on the medical treatment of his major son not dependent on him. The exemption in this case shall be:

(A)Rs.4,000

(B)Rs.5,000

(C)Rs.NIL

(C)

117) R is an employee of a Transport Company. He is entitled to transport allowance of Rs.6,000 p.m. He spends Rs.4,000 every month. The exemption shall be:

(A)Rs.6,000 p.m.

(B)Rs.4,000 p.m.

(C)Rs.4,200 (C)

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118) Entertainment allowance in case of Government employee is:

(A)fully exempt

(B)fully taxable

(C)exempt up to certain limits mentioned in section 16(ii)

(D)first included in full gross salary and thereafter deduction allowed from gross salary under section 16(ii)

(D)

119) For claiming deduction of entertainment allowance Government employee includes:

(A)Central and State Government employee

(B)State Government employee

(C) Central and State Government employees and employees of local authority

(D)Central and State Government employees, employees of local authority and employees of statutory corporation

(A)

120) During the previous year, the employee was reimbursed Rs.24,000 as medical expenses incurred by him which includes Rs.7,000 spent in Government hospital. The taxable perquisite in this case shall be:

(A)Rs.9,000

(B)Rs.NIL

(C) Rs.2,000

(D)Rs.24,000

(C)

121) Mrs. R, wife of R who is employed in G Ltd. went for bypass surgery in England along with her husband. Expenses on medical treatment of wife and stay outside India of wife and R amounted to Rs.7,00,000 as against Rs.6,50,000 permitted by RBI. The travel expenses amounted to Rs.1,50,000. All expenses were reimbursed by the employer. Assume the gross salary and income from other sources of the employee are Rs.1,40,000 and Rs.40,000 respectively. The taxable perquisite in this case shall be:

(A)Rs.NIL

(B)Rs.50,000

(C)Rs.2,00,000

(D)Rs.1,50,000

(C)

122) Leave travel concession is a tax free perquisite:

(A)for one journey in a block of 4 years

(B)one journey per year

(C)two journeys in a block of 4 years

(C)

123) Salary of employee is Rs.2,00,000. Fair rent of the unfurnished house given to employee is Rs.1,30,000. The valuation of the perquisite of the house

(i) In case of Government Employee shall be:

(A)Rs.20,000

(B)License fee determined by the Government

(C)Rs.50,000

(D)Rs.1,30,000

(B)

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(ii) In case of any other employee:

(A) Rs.40,000

(B) Rs.20,000

(C) Rs.1,30,000

(A)

124) The employee is provided with furniture costing Rs.1,50,000 along with house w.e.f. 1.4.2006. The value of the furniture to be included in the valuation of unfurnished house shall be:

(A)Rs.15,000

(B)Rs.12,500

(C)Rs.18,750

(D)Rs.22,500

(A)

125) Salary of an employee is Rs.2,00,000. Rent paid by the employer for the unfurnished house provided to employee at Moradabad is Rs.3,000 p.m. The employer charges Rs.2,000 p.m. as rent from the employee. The valuation of this perquisite shall be:

(A)Rs.16,000

(B)Rs.12,000

(C)Rs.NIL

(B)

126) A car of 1500 CC is provided by the employer to the employee whose salary is Rs.20,000 p.m. The car is used by him partly for official and partly for his personal purposes. The expenses of running and maintenance for official purpose are met by the employer and the expenses of running and maintenance for private use is met by employee himself. The valuation of this perquisite shall be:

(A)Rs.NIL

(B)Rs.1,200 p.m.

(C) Rs.400 p.m.

(A)

127) An employer has provided a motor car of 1.5 litre capacity to his employee which the employee is allowed to use for official purpose and for travelling from office to residence and back. The expenses of running and maintenance of Motor Car are met by the employer. The value of this perquisite shall be:

(A)Rs.1,200 p.m.

(B)Rs.400 p.m.

(C) Rs.NIL

(D)Rs.1,600 p.m.

(C)

128) R is provided with a car of 1.6 litre capacity by the employer along with driver. The expenses of running and maintenance of car are met by R himself. Besides using the car for official purposes, R uses the car for his personal purposes also. The valuation of the perquisite of car shall be:

(A)NIL

(B)Rs.12,000

(C)Rs.8,000

(D)Rs.10,400

(A)

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129) R an employee owns a car which he uses for his private as well as official purposes. The expense of running and maintenance of the car is met by the employer. The perquisite shall:

(A)be taxable in case of specified employee only

(B)be taxable in case of an employee other than specified employees

(C)be taxable in case of specified and non-specified employee

(D)not be taxable

(D)

130) R is an employee of Indian Oil Corporation Ltd. He is provided with free gas for his personal purposes by the employer. The value of this perquisite shall be:

(A)NIL

(B)6 1/4 % of the salary

(C)Manufacturing cost per unit

(D)Market rate of gas

(C)

131) R owns a house in which he lives. His employer reimburses to him the electricity bill amounting to Rs.5,000. It shall be a perquisite for:

(A)specified employees only

(B)employee other than specified employees

(C)both specified and other employees

(C)

132) An employer provides free facility of gas, electricity to his employee which he uses partly for Official and partly for his personal purposes. The actual amount spent by the employee is Rs.10,000 and the salary of the employer is Rs.2,00,000. The valuation of this perquisite shall be:

(A)Rs.10,000

(B)Rs.6,250

(C)Proportionate amount for personal use

(C)

133) The employer provides free facility of watchman, Sweeper and Gardener to his employees. It will be a perquisite for:

(A)specified employee only

(B)employees other than specified employees

(C)specified as well as other employees

(A)

134) The valuation of the perquisite in the above case shall be:

(A)actual wages paid to each servant

(B)Rs.120 p.m. per servant

(C)Rs.60 p.m.

(A)

135) R Ltd., provides the facility of cook to its employee for which it paid Rs.1,000 p.m. as salary to the cook. The valuation of this perquisite shall be:

(A)Rs.120 p.m.

(B)Rs.1,000 p.m.

(C)Rs.60 p.m.

(B)

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136) The Gardener, Sweeper and the Watchman are employed by the employee but their salary of Rs.500 p.m. per person is paid by the employer. The valuation of their perquisite shall be:

(A)Rs.4,320

(B)Rs.18,000

(C)Rs.1,960

(B)

137) R Ltd., own a house which has been provided to its employee along with the Gardener. The Gardeners salary paid shall be:

(A)tax free perquisite

(B)taxable to the extent of Rs.120 p.m.

(C)fully taxable

(D)tax-free perquisite but will be added to the fair rental value

(C)

138) Employers contribution to statutory fund shall be:

(A)fully exempt

(B)exempt up to 12 % of salary

(C)exempt up to 10 % of salary

(A)

139) Interest credited to statutory provident fund shall be:

(A)fully exempt

(B)exempt up to 12 % p.a.

(C)fully taxable

(D)exempt up to 9.5 % p.a.

(A)

140) Employers contribution to recognized provident fund shall be:

(A)fully exempt

(B)fully taxable


(C)

141) Interest credited to recognized provident fund shall be:

(A)fully exempt

(B)fully taxable

(C)exempt up to 9.5 %

(D)exempt up to 12 %

(C)

142) Employers contribution to unrecognized provident fund shall be:

(A)fully taxable

(B)fully exempt


(D)neither exempt nor taxable in the year of contribution

(D)

143) Interest credited to unrecognized provident fund shall be:

(A)fully taxable

(B)fully exempt

(C)exempt up to 9.5 % of salary

(D)neither exempt nor taxable in the year of accrual

(D)

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144) Employees/assessees own contribution to statutory provident fund or recognized provident fund or public provident fund shall be subject to:

(A)deduction under section 80C

(B)deduction under section 80CCC

(C)deduction under section 16 from gross salary

(D)rebate under section 88

(A)

145) Employees contribution to unrecognized fund shall be subject to:

(A)deduction u/s 80C

(B)deduction u/s 80CCC

(C)NIL deduction

(C)

146) Payment from statutory fund and public provident fund shall be:

(A)taxable

(B)fully exempt

(C)taxable to the extent of employers contribution and interest thereon

(B)

147) Payment from recognized provident fund after 5 years of service shall be:

(A)taxable

(B)fully exempt


(B)

148) Payment from recognized provident fund before 5 years shall be:

(A)fully taxable

(B) fully exempt

(C)shall be treated as if the fund was unrecognized right from the beginning

(C)

149) Payment from unrecognized provident fund shall be:

(A)fully taxable

(B)fully exempt


(D)same as (C) and the interest on employers contribution shall be taxable under the head income from other sources

(D)

150) The year in which unrecognized provident fund is recognized:

(A)the employers contribution till date and interest thereon shall be taxable

(B)the employers contribution till date shall be taxable

(C)it will be assumed as if the provident fund was recognized right from the beginning and excess amount of employers contribution and interest thereon shall be chargeable to tax

(C)

151) R is entitled to a watchman allowance of Rs.600 p.m. for the security of his residence. He pays Rs.500 p.m. to the watchman employed by him. The taxable allowance shall be:

(A)Rs.120 p.m.

(B)Rs.100 p.m.

(C)Rs.600 p.m. (B)

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152)(i) R is provided with a rent free accommodation owned by his employer in Delhi. The value of this perquisite shall be:

(A)20 % of salary

(B)15 % of salary

(C)20 % of salary plus excess of FRV over 50 % of salary

(D)20 % of salary plus excess of FRV over 60 % of salary

(E)10 % of salary

(A)

(ii) What will be your answer if the accommodation is provided in a city having a population of 3,00,000 as per 1991 census?

(B)

153)(i) R is provided with a rent free accommodation in Delhi which has been taken on rent by the employer. The value of this perquisite shall be:

(A)20 % of salary

(B)20 % of salary or rent paid or payable whichever is less

(C)15 % of salary

(D)15 % of salary or rent paid or payable whichever is less

(B)

(ii) What shall be your answer if the accommodation is provided in a city having population of 3,00,000 as per 1991 census?

(A)20 % of salary

(B)20 % of salary or rent paid or payable whichever is lower

(C)15 % of salary

(D)15 % of salary or rent paid or payable whichever is less

(B)

154)(i) R is provided with interest free loan by the employer for purchase of a house. The value of this perquisite shall be determined as the sum equal to:

(A)simple interest computed @ 10 % p.a.

(B)simple interest computed @ 13 % p.a.

(C)simple interest computed at the rate charged by SBI on the 1st of the relevant previous year on the maximum outstanding monthly balance

(D)simple interest computed at the rate charged by SBI on the last day of the relevant previous year on the maximum outstanding monthly balance

(E)NIL

(C)

(ii) What shall be your answer if the loan is given for purchase of a car?

(C)

(iii) What shall be your answer if the loan is given for marriage of Rs Son?

(C)

(iv) What shall be your answer if the loan is given for medical treatment of disease specified in rule 3A?

(E)

(v) What shall be your answer if the amount of loan does not exceed Rs.20,000 in aggregate?

(E)

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155)(i) Tea and snacks are provided to employees in the office during office hours. The value of the perquisite shall be:

(A)NIL

(B)NIL, if it up to Rs.50 per meal

(C)Actual amount spent by the employer

(A)

(ii) What will be your answer if tea and snacks are provided in the office after office hours?

(A)

(iii) What will be your answer if instead of tea and snacks, meal is provided in the office or factory?

(A)

156)(i) The employer gives a gift (in kind) on the marriage of the Son of the employee. Gift so made shall not be perquisite if the value of the gift is:

(A)Rs.6,000 or less

(B) Below Rs.5,000

(C)Rs.10,000 or less

(D)Below Rs.10,000

(E)Any amount

(E)

(ii) What will be your answer if the gift is made to the employee on the silver jubilee of the company?

(E)

157)(i) The employer has a given a lap top computer for the personal use of the employee. The value of the perquisite shall be:

(A)NIL

(B)10 % p.a. of the cost of the asset

(C)10 % p.a. of the W.D.V. of the asset

(A)

(ii) What will be your answer if this lap top is given for the personal use of the son of the employee?

(A)

(iii) What will be your answer if instead of a computer a video camera is given for the personal use of employer or any member of his house?

(C)

158)(i) The employer has purchased a car for Rs.3,00,000 which was being used for official purposes. After 2 years and 6 months of its use, the car is sold to R, the employee, for Rs.1,20,000. The value of this perquisite shall be:

(A)Rs.72,000

(B)Rs.60,000

(C)NIL

(D)Rs.1,23,000

(E)Rs.1,20,000

(A)

(ii) What will be your answer if instead of a car, the asset purchased is a computer?

(C)

(iii) What will be your answer if the asset is neither a car nor any computer?

(E)

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159) R gifted his house property to his wife in 2001. Mrs. R has let out the house property @ Rs.5,000 p.m. The income from such house property will be taxable in the hands of:

(A)Mrs. R

(B)R. However, income will be computed first as Mrs. Rs income and thereafter clubbed in the income of R.

(C)R, as he will be treated as deemed owner and liable to tax

(C)

160) R gifted the house property to his minor son which was let out @ Rs.5,000 p.m. Income from such house property shall be taxable in the hands of:

(A)Minor son

(B)R. However, it will be first computed as minors income and thereafter clubbed in the income of R

(C)R, as he will be the deemed owner of such house property and liable to tax

(C)

161)R transferred his house property to his wife under an agreement to live apart. Income from such house property shall be taxable in the hands of:

(A)R as deemed owner

(B)R. However, it will be computed first as Mrs. Rs income and thereafter clubbed in the hands of R

(C)Mrs. R

(C)

162)(i) R has taken a house property on lease for 15 years from G and let out the same to S. Income from such house to R shall be taxable as:

(A)income under the head other sources

(B)income from house property as R is deemed owner

(B)

(ii) What shall be the answer if R had taken it on lease for 10 years.

(A)

163) R gifted his house property to his married minor daughter. The income from such house property shall be taxable in the hands of:

(A)R as deemed owner

(B)R. However, it will be first computed as minor daughters income and clubbed in the income of R

(C)income of married minor daughter

(B)

164) R is a member of house building Co-operative Society who is the owner of flats constructed by it. One of the flats is allotted to R. The income from such house property shall be taxable in the hands of:

(A)Co-operative Society

(B)R as deemed owner

(B)

165) R is owner of superstructure although the land was taken by him on lease. The income from such house property shall be taxable under the head:

(A)income from other sources

(B)income from house property

(B)

- 26 -

166) R has taken a house on rent and sublets the same to G. Income from such house property shall be taxable under the head:

(A)income from house property

(B) income from other sources

(B)

167) Municipal valuation of the house is Rs.1,00,000; whereas the fair rent of house property Rs.1,20,000 and standard rent is Rs.1,10,000; actual rent received or receivable is Rs.1,40,000; municipal taxes paid 10 %. The annual value in this case shall be:

(A)Rs.90,000

(B)Rs.1,00,000

(C)Rs.1,30,000

(C)

168) Municipal valuation of the house is Rs.1,20,000, fair rent is Rs.1,40,000; standard rent is Rs.1,30,000; whereas actual rent received or receivable is Rs.1,25,000; municipal taxes paid are Rs.40,000. The annual value in this case shall be:

(A)Rs.1,00,000

(B) Rs.85,000

(C)Rs.90,000

(C)

169) Fair rental value of a house is Rs.1,50,000; standard rent Rs.1,20,000; actual rent Rs.1,30,000. Municipal taxes paid during the previous year for the past 7 years is Rs.1,40,000. The annual value shall be:

(A)Rs.20,000

(B) Rs.NIL

(C)(-) Rs.10,000

(C)

170) A has two house properties. Both are self-occupied. The annual value:

(A)of both the houses shall be nil

(B)of one house shall be nil

(C)of no house shall be nil

(B)

171) If the annual value of the let house property is negative then tick the deduction which shall be allowed u/s 24.

(A)All deductions

(B)No deduction

(C)Deduction on account of interest of money borrowed

(C)

172) Municipal tax is a deduction from:

(A)Gross annual value

(B)Net annual value

(A)

173) In case the property is owned by co-owners and it is let, income from such property shall be computed:

(A)separately for each co-owner

(B)it will be first computed ignoring the co-ownership and then distributed amongst co-owners

(B)

- 27

174) In case the property is owned by co-owners and it is self-occupied by all the co-owners, the annual value of:

(A)such house property

(B)for each co-owner shall be nil

(B)

175) In the above case, interest on money borrowed shall be allowed:

(A)to the extent of Rs.30,000/Rs.1,50,000 as the case may be

(B)to each owner to the extent of Rs.30,000/Rs.1,50,000 as the case may be

(B)

176)(i) A borrowed Rs.5,00,000 @ 12 % p.a. pm 1.4.2002 for construction of house property which was completed on 15.03.2006. The amount is still unpaid. The deduction of interest for previous year 2006-07 shall be:

(A)Rs.60,000

(B)Rs.96,000

(C)Rs.1,80,000

(D)Rs.2,40,000

(B)

(ii) What shall be the amount of deduction if the house is completed on 2.4.2007.

(A) Rs.60,000

(B) Rs.96,000

(C) Rs.2,40,000

(D) Rs.1,08,000

(D)

177)(i) A borrowed a sum of Rs.5,00,000 @ 12 % p.a. on 1.4.1997 for construction of a house which was completed on 15.3.2002. What shall be the amount of deduction allowed on account of interest for the assessment year 2007-08:

(A)Rs.96,000

(B)Rs.60,000

(C)Rs.1,08,000

(B)

(ii) What shall be the deduction if the loan is repaid on 31.08.2006?

(A) Rs.60,000

(B) Rs.25,000

(C) Rs.1,08,000

(B)

178) A house property whose fair rent is Rs.1,20,000 is neither let out nor self-occupied throughout the previous year. Its annual value shall be:

(A)Rs.1,20,000

(B)Rs.NIL

(A)

179) Unrealized rent is a deduction from:

(A)Gross annual value

(B)Net annual value

(C)Income from the head house property

(A)

- 28

180) An assessee was allowed deduction of unrealized rent to the extent of Rs.40,000 in the past although the total unrealized rent was Rs.60,000. He is able to recover from the tenant Rs.45,000 during the previous year on account of such unrealized rent. He shall be liable to tax to the extent of:

(A)Rs.45,000

(B)Rs.NIL

(C)Rs.25,000

(C)

181) An assessee has borrowed money for purchase of a house and interest is payable outside India. Such interest shall:

(A)be allowed as deduction

(B)not be allowed as deduction

(C)be allowed as deduction if the tax is deducted at source

(C)

182) Salary, bonus, commission or remuneration due to or received by a working partner from the firm is taxable under the head:

(A)Income from salaries

(B)Income from other sources

(C)Income from business or profession

(C)

183) Perquisite received by the assessee during the course of carrying on his business or profession is taxable under the head.

(A)Salary

(B)Other sources

(C)Business or Profession

(C)

184) Export incentives received by an assessee are:

(A)exempt

(B)taxable under section 28

(C)exempt up to certain limits

(B)

185) Income of a trade or professional association, from specific services performed for its members shall be:

(A)exempt

(B)taxable u/H business and profession

(C)taxable u/H income from other sources

(B)

186) Interest on capital or loan received by a partner from a firm is:

(A)exempt u/s 10(2A)

(B)taxable u/H business and profession

(C)taxable u/H income from other sources

(D)taxable u/H business and profession on account of interest on capital and income from other sources on account of loan to the firm

(B)

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187) Under the head Business & Profession, the method of accounting which an assessee can follow shall be:

(A)Merchantile system only

(B)Cash system only

(C)Merchantile or Cash system only

(D)Hybrid system

(E) any of these systems

(C)

188) For computation of business income, the assessee has to follow:

(A)Auditing standards prescribed by I.C.A.I.

(B)Accounting standards notified by the Central Government

(C)No accounting standards

(B)

189) Any sum received by an employer from Keyman insurance policy taken on the life of the employee shall be:

(A)exempt

(B)taxable under the head business and profession

(C)taxable under the head other sources

(D)taxable in the hands of employee

(B)

190) R, who was carrying on agency business received a sum of Rs.5,00,000 from his principal for termination of agency. Compensation amount so received shall be:

(A)exempt as it is a capital receipt

(B)fully taxable under the head business and profession

(C)taxable under the head other sources

(B)

191) Where the machinery, plant and furniture is used by the assessee for the purpose of carrying on business and profession, he shall be entitled to deduction under section 31 on account of:

(A)current repairs other than expenditure in the nature of capital expenditure

(B)revenue and capital expenditure on repairs

(C)any repairs

(A)

192) Depreciation is allowed in case of:

(A) tangible assets only

(B)intangible assets only

(C)tangible and intangible assets

(C)

193) The depreciation is allowed to:

(A)the owner of asset

(B)owner including fractional owner of the asset

(C)lessee

(B)

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194) Electricity companies are allowed depreciation on the basis of:

(A)block of asset

(B)each asset separately

(C)each asset separately unless the assessee opts for block of asset system in the first previous year of its commencement

(D)either on block of asset or each asset separately provided the option is exercised in the first previous year.

(C)

195)(i) If the asset of a particular block is acquired and put to use during the previous year for less than 180 days, the assessee shall be entitled to depreciation:

(A)at normal rate

(B)at 50 % of normal rate

(C)proportionate period for which it is first put to use.

(B)

(ii) What will be your answer in the above case if the asset is acquired by the electricity company which is claiming depreciation on straight line method:

(A) at normal rate

(B) at 50 % of normal rate

(C) proportionate period for which it is put to use

(B)

196)(i) W.D.V. of block of 15 % as on 1.4.2006 is Rs.5,00,000. An asset amounting to Rs.1,00,000 was acquired on 1.11.2006 and put to use on 1.12.2006. During the previous year 2006-07 a part of the block (other than the new asset) is sold for Rs.5,40,000. The depreciation to be allowed for this block is:

(A)Rs.9,000

(B)Rs.4,500

(C)Rs.5,000

(B)

(ii) In the above case, this part of the block is sold for Rs.4,80,000 instead of Rs.5,40,000, the depreciation allowed shall be:

(A) Rs.10,500

(B) Rs.18,000

(C) Rs.9,000

(A)

(iii) What will be your answer in case of (i) above if the part of the block sold includes the new asset acquired during the year:

(A)Rs.9,000

(B)Rs.4,500

(C)Rs.5,000

(A)

197) Where a part of block of assets is sold for a price more than the opening W.D.V. plus cost of asset acquired during the year, if any, the assessee shall be subject to:

(A)balancing charge

(B)short-term capital gain

(C)short-term or long-term capital gain depending upon the period after which the block is transferred (B)

- 31 -

198) Where a part of a block of asset is sold for a price less than the opening W.D.V. plus cost of assets, if any, acquired during the year, the balance amount shall be treated as:

(A)Short-term capital loss

(B)terminal/balancing depreciation

(C)written down value for purpose of charging current year depreciation

(C)

199) Where the entire block of the asset is sold for a price more than the opening W.D.V. and asset, if any, acquired during the year, the excess amount shall be subject to:

(A)balancing charge


(C)long-term or short-term capital gain depending upon the period for which block is held

(B)

200) Where an electricity company claiming depreciation on straight line method on each asset separately sells such asset for a price more than its W.D.V. then the excess amount shall be taxable:

(A)as short-term capital gain

(B)balancing charge under business head

(C)balancing charge to the extent of depreciation allowed in the past and the balance, if any, short-term capital gain

(D)balancing charge to the extent of depreciation allowed in the past and the balance, if any, long-term or short-term capital gain depending upon the period for which such asset was held

(D)

201) Where the entire block is sold for a price less than the opening W.D.V. and the cost of asset, if any, acquired during the previous year, the balance amount shall be treated as:

(A)terminal/balancing depreciation

(B)short-term capital loss

(C)written down value

(D)short-term or long-term capital loss depending on the period for which the block was held

(B)

202) Where the electricity company charging depreciation on straight line method on each asset separately, sells any asset for a price less than the opening W.D.V. the balance amount shall be treated as:

(A)short-term capital loss

(B)terminal depreciation

(C)written down value

(B)

203) R acquired an asset for Rs.5,22,000 which includes Rs.72,000 as excise duty for which the assessee has claimed CENVAT Credit. The actual cost of acquisition to be included in the block of asset shall be:

(A)Rs.5,22,000

(B)Rs.4,50,000


(B)

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204) An asset which was acquired for Rs.5,00,000 was earlier used for scientific research. After the research was completed the machinery was brought into the business of the assessee. The actual cost of the asset for the purpose of inclusion in the block of asset shall be:

(A)Rs.5,00,000

(B)Rs.NIL

(C)market value of the asset on the date it was brought into business

(B)

205) R had been using an asset for his business and its W.D.V. as on 1.4.2006 was Rs.3,50,000. He sold this asset to G for Rs.5,00,000 and G leased back this asset to R. The market value of this asset on the date of sale was Rs.4,00,000; in this case, the actual cost of this asset to G for charging depreciation shall be:

(A)Rs.5,00,000

(B)Rs.3,50,000

(C)Rs.4,00,000

(B)

206) A car is imported after 1.4.2006 by R Ltd., from London to be used by its employee. R Ltd. shall be allowed depreciation on such car at:

(A)15 %

(B)20 %

(C)40 %

(A)

207) Unabsorbed depreciation which could not be set off in the same assessment year can be carried forward for:

(A)8 years

(B)indefinitely

(C)4 years

(B)

208) Unabsorbed depreciation brought forward from an earlier year of a particular business can be set off from:

(A)the same business

(B)any head of income

(C)any business income

(D)any head of income but first from business income

(D)

209) For claiming deduction for Tea Development, Coffee development or Rubber development u/s 33AB the assessee should deposit the money with NABARD or in the Deposit Account:

(A)before the expiry of the previous year

(B)within six months from the end of the relevant previous year

(C)within six months from the end of the relevant previous year or before the due date of furnishing the return of income which ever is earlier

(D)before the due date of furnishing the return of income

(C)

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210) Deduction of Tea/Coffee/Rubber Development Account shall be allowed to:

(A)any assessee

(B)a company assessee only who is engaged in the business of growing and manufacturing tea/coffee/rubber in India

(C)any assessee who is engaged in the business of growing and manufacturing tea/coffee/rubber in India

(D)any assessee who is engaged in the business of manufacturing tea/coffee/rubber in India

(C)

211) The maximum deduction to be allowed under Tea Development Account, Coffee Development Account or Rubber Development Account shall be:

(A)actual amount deposited in the scheme

(B)20 % of the profits of such business

(C)20 % of the amount deposited in the scheme

(D)40 % of the profits of such business

(D)

212) For claiming deduction for Site Restoration Fund u/s 33ABA, the assessee should deposit the money with State Bank of India or Site Restoration Account:

(A)before the end of the previous year

(B)before the expiry of six months from the end of the previous year

(C)before the expiry of six months from the end of the relevant previous year or before the due date of return whichever is earlier

(A)

213) Deduction on account of Site Restoration Fund shall be allowed to:

(A)any assessee

(B)company assessee engaged in the business of prospecting for or extraction or production of petroleum or natural gas or both

(C)any assessee engaged in the business mentioned in clause (b) above

(C)

214) The maximum deduction for Site Restoration Fund under section 33ABA shall be:

(A)the amount deposited in the scheme

(B)20 % of the profits from such business

(C)20 % of the amount deposited in the scheme

(B)

215) Tick the case where the amount withdrawn from Site Restoration Account shall not be taxable:

(A)amount withdrawn for the purpose specified in the scheme

(B)closure of business

(C)death of an assessee

(D)partition of HUF

(E)dissolution of a firm

(F)liquidation of a company

(A)

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216) Expenditure on scientific research incurred by the assessee shall be allowed if such research:

(A)is related to the business of the assessee

(B)may or may not relate to the business of the assessee

(C)is related to the research specified by the Government

(A)

217) If an assessee carries on any scientific research related to his business, he shall be allowed deduction u/s 35 on account of:

(A)revenue expenditure

(B)capital expenditure

(C)both revenue and capital expenditure

(D)both revenue and capital expenditure excepting expenditure incurred on acquisition of land

(D)

218) Certain revenue and capital expenditure on scientific research are allowed as deduction in the previous year of commencement of business even if these are incurred:

(A)5 years immediately before the commencement of the business

(B)3 years immediately before the commencement of the business

(C)any time prior to the commencement of the business

(B)

219) Where a scientific research asset is sold without having been used for other purpose then the sale price to the extent of the cost of the asset already allowed as deduction in the past shall be treated as:

(A)business income


(C)long-term capital gain

(D)long-term or short-term capital gain depending upon the period for which such asset was held

(A)

220) Where the sale price in the above exceeds the cost of acquisition of such asset, such excess shall be treated as:

(A)business income


(C)long-term capital gain

(D)long-term or short-term capital gain depending upon the period for which such asset was held

(D)

221) If the income of a business before claiming revenue expenditure on scientific research is Rs.50,000 and the revenue expenditure incurred on scientific research related to the business of the assessee is Rs.80,000, then Rs.30,000 shall be:

(A)business loss

(B)unabsorbed capital expenditure on scientific research

(C)none of these two

(A)

- 35

222) If the income of a business before claiming capital expenditure on scientific research is Rs.50,000 and the capital expenditure incurred on scientific research related to the business of the assessee is Rs.80,000, then Rs.30,000 shall be:

(A)business loss

(B)unabsorbed capital expenditure on scientific research


(B)

223) Brought forward unabsorbed capital expenditure on scientific research can be carried forward:

(A)for any number of years

(B)for 8 years

(C)for 10 years

(A)

324) If any amount is donated for research, such research should be in the nature of:

(A)scientific research only

(B)social or statistical research only

(C)scientific or social or statistical research

(C)

325) If donation is made for scientific or social or statistical research, such research:

(A)must relate to the business of the assessee

(B)may or may not relate to the business of the assessee

(C)none of these

(B)

326) Donation for scientific or social or statistical research shall be allowed as deduction to the extent of:

(A)50 % of the donation so made

(B)100 % of the donation so made

(C)125 % of the donation so made

(D)150 % of the donation so made

(C)

327) If donation is made to a National Laboratory or a University or IIT with the specific direction that scientific research should be for an approved programme, the amount of deduction shall be:

(A)50 % of the donation so made

(B)100 % of the donation so made

(C)125 % of the donation so made

(D)150 % of the donation so made

(C)

328)(i) Weighted deduction of 150 % for in-house research in some cases is allowed to:

(A)any assessee

(B)company assessee

(C)a scientific research association

(B)

- 36 -

(ii) Weighted deduction of 150 % for in-house research in some cases shall be allowed for the purchase of:

(A) any assets

(B) any assets other than land

(C) any assets other than land and buildings

(C)

329) Expenditure incurred on acquisition of patents and copyrights after 31.03.1998 are subject to:

(A)deduction in 14 equal instalments

(B)deduction in 10 equal instalments

(C)depreciation u/s 32

(C)

330) Lumpsum payment for acquisition of technical know-how after 31.03.1998 shall be subject to:

(A)deduction in 6 equal instalments

(B)deduction in 3 equal instalments

(C)depreciation u/s 32

(C)

331) Expenditure incurred for obtaining licence to operate telecommunication services shall be allowed in:

(A)10 equal instalments

(B)14 equal instalments

(C)in equal instalments over the period for which the licence remains in force

(C)

332) R Ltd., paid Rs.1,10,00,000 during the previous year 2005-06 for acquiring the telecommunication rights which were effective for 11 years. It commenced the business of operating the telecommunication service with effect from previous year 2006-07. R Ltd., shall be entitled to a deduction of:

(A)Rs.10 lakhs w.e.f. previous year 2005-06

(B)Rs.11 lakhs w.e.f. previous year 2006-07


(B)

333) R had acquired a licence to operate telecommunication service in the previous year 2004-05 for Rs.2 crores and its life was 10 years. During the previous year 2006-07 it had sold the licence for Rs.1,50,00,000. It shall be allowed a deduction under section 35ABB during the previous year 2006-07 to the extent of:

(A)Rs.20 lakh

(B)Rs.10 lakh

(C)None of the above two

(B)

334) For claiming deduction under section 35AC, the payment for eligible project and scheme should be made to:

(A)a public sector company

(B)a local authority

(C)to an institution or an association approved by the National Committee

(D)to any of the three mentioned in (A), (B) and (C)

(D)

- 37

335) A company assessee shall be allowed deduction under section 35AC on

account of eligible project and scheme if:

(A)the payment is made to the specified institution

(B)if it incurs expenditure itself

(C)both for payment made to specified institution and for direct expenditure incurred by itself

(C)

336) Preliminary expenses incurred are allowed deduction in:



(C)full

(B)

337) In the case of non-company assessee, the total preliminary expenses incurred are allowed deduction to the extent of:

(A)2 % of the cost of the project

(B)5 % of the cost of the project

(C)10 % of the cost of the project

(B)

338) In case of company assessee, the total preliminary expenses incurred are allowed as deduction to extent of 5 % of:

(A)the cost of the project

(B)the aggregate capital employed

(C)the cost of project or capital employed

(C)

339) Expenditure incurred on prospecting, etc., of minerals shall be allowed as deduction in:



(C)full

(B)

340) In case the assessee follows merchantile system of accounting, bonus or commission to the employee are allowed as deduction on:

(A)due basis

(B)payment basis

(C)due basis but subject to section 43B

(C)

341) Interest accrued before the commencement of the production is to be:

(A)capitalised

(B)treated as revenue expenditure

(C)either capitalized or treated as revenue expenditure

(A)

342) Interest on money borrowed for acquiring an asset by an existing concern for expansion of the existing business, pertaining to a period prior to the date on which the asset is put to use is to be:

(A)capitalised


(C)either capitalised or treated as revenue expenditure at the option of the assessee till the asset is put to use

(A)

- 38

343) Interest on money borrowed for the purpose of acquiring a capital asset pertaining to the period after the asset is put to use is to be:

((A)capitalised


(C)either capitalized or treated as revenue expenditure

(B)

344) Expenditure incurred on purchase of animals to be used by the assessee for the purpose of carrying on his business and profession is subject to:

(A)depreciation

(B)deduction in the previous year in which animal dies or becomes permanently useless

(C)nil deduction

(B)

345) Expenditure incurred on family planning amongst the employees is allowed to:

(A)any assessee

(B)a company assessee

(C)an assessee which is a company or co-operative society

(B)

346) Capital expenditure incurred on family planning amongst employees of the company assessee is allowed as deduction:

(A)in full

(B)in 5 equal instalments

(C)in 10 equal instalments

(B)

347)(i) The business income of a company assessee before claiming Rs.60,000 being 1/5 th of capital expenditure on family planning is Rs.40,000. The balance Rs.20,000 shall be treated as:

(A)business loss

(B)unabsorbed expenditure on family planning


(B)

(ii) The business income of a company before claiming Rs.60,000 being revenue expenditure on family planning is Rs.40,000. The balance of Rs.20,000 shall be treated as:

(A) business loss

(B) unabsorbed expenditure on family planning

(C) none of these two

(B)

(iii) The business income of a company assessee before claiming deduction of revenue and capital expenditure is Rs.6,00,000. The revenue and capital expenditure incurred during the year are Rs.7,00,000 and Rs.10,00,000 respectively. The unabsorbed expenditure on family planning in this case shall be:

(A) Rs.3,00,000

(B) Rs.11,00,000

(C) Rs.2,00,000 and Rs.1,00,000 shall be business loss

(A)

- 39

348) Deduction u/s 37(1) shall be allowed of those expenditure which are of:

(A)revenue nature

(B) capital nature

(C)both revenue and capital nature

(A)

349) Interest on capital of or loan from partner of a firm is allowed as deduction to the firm to the extent of:

(A)18 % p.a.

(B)12 % p.a. even if it is not mentioned in partnership deed

(C)12 % p.a. or at the rate mentioned in partnership deed whichever is less

(C)

350) Deduction u/s 40(b) shall be allowed on account of salary/remuneration paid to:

(A)any partner

(B)major partner only

(C) working partner only

(C)

351) Remuneration paid to working partner shall be allowed as deduction to a firm:

(A)in full

(B)subject to limits specified in section 40(b)


(B)

352) A firms business income is nil/negative. It shall still be allowed as deduction on account of remuneration to working partner to the maximum extent of:

(A)actual remuneration paid as specified in partnership deed

(B)Rs.50,000

(C)NIL

(B)

353)(i) A person carrying on specified profession is:

(A)required to maintain books of account

(B)required to maintain prescribed books of account

(C)not required to maintain books of account

(B)

(ii) A person carrying on specified profession is required to maintain the prescribed books of account of the current previous year if the gross receipts of such profession in all the three preceding previous years exceed:

(A) Rs.40,00,000

(B) Rs.10,00,000

(C) Rs.1,50,000

(D) Rs.60,000

(C)

- 40 -

(iii) A person carrying on specified profession is required to maintain:

(A) prescribed books of account in all cases

(B) prescribed books of account if the gross receipts of all the three preceding previous years exceeds Rs.1,50,000 otherwise no books of account are to be maintained

(C) prescribed books of account if the gross receipts of all the preceding previous years exceeds Rs.1,50,000 otherwise such books of account as will enable the Assessing Officer to compute his business income

(C)

354) If a person sets up a specified profession during the current previous year, he is:

(A)required to maintain prescribed books of account

(B)not required to maintain prescribed books of account

(C)required to maintain prescribed books of account if the gross receipts of such profession is likely to exceed Rs.1,50,000 otherwise such books of account which will enable the Assessing Officer to compute his total income

(C)

355) A person who has been carrying on non-specified profession is:

(A)not required to maintain any books of account

(B)required to maintain books of account of the current previous year if the gross receipts of such profession exceeds Rs.1,50,000

(C)required to maintain books of account of the current previous year if the gross receipts of such profession of any of the preceding previous year exceeded Rs.10 lakh

(D)required to maintain books of account of the current previous year if in any of the preceding 3 previous years his total income exceeded Rs.1,20,000 or gross receipts exceeded Rs.10 lakh

(D)

356)(i) A person, who has been carrying on business is required to maintain books of account of the current previous year if:

(A)his total income of any 3 preceding previous years exceeded Rs.1,20,000

(B)his gross turnover or sales of any of 3 preceding previous year exceeded Rs.10 lakh

(C) if condition mentioned either in (a) or (b) is satisfied

(C)

(ii) A person who sets up a non-specified profession or commences a business during the current previous year is required to maintain books of account if his:

(A) total income of the current year exceeds or is likely to exceed Rs.1,20,000

(B) his gross turnover or sales of any of 3 preceding previous year exceeded Rs.10 lakh

(C) if condition mentioned either in (a) or (b) is satisfied

(C)

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357) For persons carrying on business or non-specified profession, the books of account to be maintained have been:

(A)prescribed

(B)not prescribed

(C)none of these

(B)

358) For persons carrying on profession, tax audit is compulsory, if the gross receipts of the previous year exceeds:

(A)Rs.50 lakh

(B)Rs.40 lakh

(C)Rs.10 lakh

(C)

359) Tax audit is compulsory in a case a person is carrying on business whose gross turnover/sales/receipts, as the case may be exceeds:

(A)Rs.10 lakh

(B)Rs.40 lakh

(C)Rs.1 crore

(B)

360) In case an assessee is engaged in the business of civil construction, presumptive income scheme is applicable if the gross receipts paid or payable to him in the previous year does not exceed:

(A)Rs.10 lakh

(B)Rs.40 lakh

(C)Rs.50 lakh

(B)

361) In the aforesaid case, the income shall be presumed to be:

(A)5 % of gross receipts

(B)8 % of gross receipts

(C) 10 % of gross receipts

(B)

362) If an assessee is engaged in the business of civil construction and he had opted for presumptive income scheme under section 44AD, the assessee shall:

(A)be entitled to deduction u/s 30 to 37

(B)not be entitled to any deduction u/s 30 to 37

(C)not be entitled to deduction u/s 30 to 37 except on account of interest on capital and loan from a partner and remuneration to working partner as per section 40(b)

(C)

363) In case an assessee is engaged in the business of plying hiring or lease goods carriage, presumptive income scheme under section 44 AE is applicable if the assessee is the owner of maximum of:

(A)8 goods carriages

(B)10 goods carriages

(C)12 goods carriages

(B)

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364) As per presumptive income scheme under section 44AE, the presumed income shall be:

(A)Rs.3,000 p.m. per goods carriage

(B)Rs.3,500 p.m. per heavy goods vehicle and Rs.3,150 p.m. per vehicle other than heavy goods vehicle

(C)Rs.3,500 p.m. per heavy goods vehicle; Rs.3,150 p.m. for medium goods vehicle and Rs.2,000 p.m. per light commercial vehicle

(B)

365) In case an assessee is engaged in the business of retail trade, presumptive income scheme is applicable if the total turnover of such retail trade of goods does not exceed:

(A)Rs.10 lakh

(B)Rs.30 lakh

(C)Rs.40 lakh

(D)Rs.50 lakh

(C)

366) In the above case, the income to be presumed under section 44AF shall be:

(A)8 % of total turnover

(B)5 % of total turnover

(C)10 % of total turnover

(B)

367) If the assessee opts for presumptive income scheme under section 44AD or 44AF or 44AE, then the assessee shall:

(A)not be entitled to any deduction u/ss 30 to 37

(B)be entitled to deduction under sections 30 to 37

(C)not be entitled to deduction u/ss 30 to 37 except for interest or capital or loan from partner and remuneration to a working partner subject to conditions laid down under section 40(b)

(C)

368) In case of non-resident, who is carrying on shipping business, his Indian income shall be presumed to be:

(A)5 % of certain amount received

(B)7 % of certain amount received

(C)10 % of certain amount received

(B)

369) The income of a non-resident from shipping business under section 44B shall be presumed to be 7 % of:

(A)the amount paid or payable whether in India or out of India to the assessee on account of carriage of passengers, livestock, mail or goods shipped at any port in India

(B)the amount received or deemed to be received in India on account of carriage of passengers, livestock, mail or goods shipped at any port outside India

(C)both the amount mentioned in (A) & (B) above

(C)

- 43 - 370) In case of non-resident, who is engaged in the business of operation of aircraft, his income shall be presumed to be:

(A)7 % of certain amount

(B)5 % of certain amount

(C)10 % of certain amount

(B)

371) The expenditure incurred on payment under voluntary retirement scheme shall be allowed as deduction in:

(A)the previous year it is paid

(B)equal instalments in 5 assessment years starting from the assessment year in which it is paid

(C)Not allowed at all

(B)

372) Capital gain arises from the transfer of:

(A)any asset

(B)any capital asset

(C)land and buildings and shares only

(B)

373) Short-term capital gain is a gain arising from the transfer of an asset which is held by the assessee for not more than:

(A)36 months from the date of its acquisition

(B)12 months from the date of its acquisition

(C)12 months from the date of its acquisition in case of shares, units and any other listed securities and for not more than 36 months in the case of other assets

(C)

374) Period of holding bonus shares or any other financial asset allotted without any payment shall be reckoned from:

(A)the date of holding of original shares/financial asset

(B)the date of offer of bonus shares/financial asset

(C)the date of allotment of such bonus shares/financial assets

(C)

375) Period of holding of right shares or any other security shall be reckoned from:

(A)the date of the right share/any other securities are offered

(B)the date of right shares/such securities are applied by the assessee

(C)the date of allotment of right shares/such securities

(C)

376) If physical shares are sold through brokers, the date of transfer shall be:

(A)the date on which shares are transferred by the company

(B)the date of brokers note book

(C)the date of brokers note boo

Documents

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