www.vipulshah.org 75591 73787 Page 1 CHAPTER 8
„O
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MCQs
Q1: Income from letting of machinery, plant and furniture is—
(a) always chargeable to tax under the head “Profits and gains of business and profession” (b) always chargeable to tax under the head “Income from other sources”
(c) chargeable under the head “Income from other sources” only if not chargeable under the head “Profits and gains of business and profession”
(d) chargeable to tax under the head “Income from house property”
Q2: In respect of winnings from lottery, crossword puzzle or race including horse race or card game etc.
(a) no deduction under Chapter VI-A is allowed and basic exemption limit cannot be exhausted (b) no deduction under Chapter VI-A is allowed but unexhausted basic exemption can be
exhausted
(c) Both deduction under Chapter VI-A and basic exemption are allowed
(d) deduction under Chapter VI-A is allowed but basic exemption limit cannot be exhausted
Q3: The deduction allowable in respect of family pension taxable under “Income from other sources” is
(a) Rs. 15,000 or l/3rd of family pension whichever is less
(b) Rs. 15,000 or 1/2 of family pension whichever is less (c) Rs. 10,000 or l/3rd of family pension whichever is less
(d) No deduction is allowed
Q4: MR. V has acquired a building from his friend on 10/10/2020 for Rs. 15,00,000. The stamp duty value of the building on the date of purchase is Rs. 15,70,000. Income chargeable to tax in the hands of MR. V is
(a) Rs. 70,000 (b) Rs. 50,000 (c) Nil
(d) Rs. 20,000
Q5: MR. V received Rs. 60,000 from his friend on the occasion of his birthday
(a) The entire amount of Rs. 60,000 is taxable (b) Rs. 50,000 is taxable
(c) The entire amount is exempt (d) Rs. 10,000 is taxable
www.vipulshah.org 75591 73787 Page 2 Q6: MR. V aged, 61 years, received dividend of Rs. 12,00,000 from a domestic company in
AY 2021- 2022 i.e. PY 2020-2021. Tax chargeable under section 115BBDA is @ 10% on
(a) The entire amount of Rs. 12,00,000 (b) Rs. 2,00,000
(c) Nil
(d) Rs. 9,00,000
Q7: MR. V has received a sum of Rs. 51,000 on 24/10/2020 from relatives on the occasion of his marriage.
(a) Entire Rs. 51,000 is chargeable to tax. (b) Only Rs. 1,000 is chargeable to tax (c) Entire Rs. 51,000 is exempt from tax
(d) Only 50% i.e. Rs. 25,500 is chargeable to tax
Q8: MR. V has received a sum of Rs. 75,000 on 24/10/2020 from his friend on the occasion of his marriage anniversary.
(a) Entire Rs. 75,000 is chargeable to tax. (b) Entire Rs. 75,000 is exempt from tax (c) Only Rs. 25,000 is chargeable to tax
(d) Only 50% i.e. Rs. 37,500 is chargeable to tax
Q9: The deduction in respect of interest on enhanced compensation of Rs. 1,50,000 received during the AY 2021-2022 i.e. PY 2020-2021, would be
(a) Rs. 1,50,000, being 100% of Rs. 1,50,000 (b) Rs. 75,000, being 50% of Rs. 1,50,000 (c) Rs. 45,000, being 30% of Rs. 1,50,000 (d) Nil
Q10: MR. V received the following income during AY 2021-2022 i.e. PY 2020-2021. Determine his Income from other sources:
1) Director‟s fees Rs. 5,000
2) Income from agricultural land in Pakistan Rs. 15,000 3) Rent from let-out land in Jaipur Rs. 20,000
4) Interest on deposit with HDFC Bank Rs. 1,000 5) Divided from Indian company Rs. 5,000.
(a) Rs. 21,000 (b) Rs. 46,000
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(c) Rs. 31,000 (d) Rs. 26,000
Q11: MR. V received a gift of Rs. 35,000 30/8/20 from each of his three friends. The amount chargeable to tax in this case would be:
(a) Rs. 50,000 (b) Rs. 1,05,000 (c) Nil
(d) Rs. 55,000
Q12: Which of the following income will be taxable as income from other sources
(a) Purchase of house from husband for inadequate consideration
(b) Purchase of painting from registered dealer at invoice value less than fair market value (c) Cash gift from a non-resident friend on marriage anniversary
(d) All of the above
Q13: MR. V is engaged in fertilizer trade, received rent by sub-letting of a building. This will be taxable under the head
(a) Income from house property (b) Income from capital gains
(c) Income from profits and gains of business and profession (d) Income from other sources
Q14: MR. V is in receipt of family pension of Rs. 15,000 p.m. AY 2021-2022 i.e. PY 2020-2021. Income chargeable to tax for MR. V is:
(a) Rs. 1,80,000 (b) Rs. 1,20,000 (c) Rs. 1,65,000 (d) Nil
Q15: A private limited company engaged in manufacturing activity had general reserve of Rs. 20 lakh. It granted a loan of Rs. 5 lakh to a director who held 13% shareholding cum voting rights in the company. The said loan was re-paid by him before the end of the year. The amount of deemed dividend arising out of the above transaction is:
(a) Rs. 2,60,000 (b) Rs. 2,40,000 (c) Rs. 5,00,000 (d) Nil
www.vipulshah.org 75591 73787 Page 4 Q16: MR. V received cash gift of Rs. 2 lakh on the occasion of his marriage. It includes
gift from non- relative of Rs. 80,000. His income by way of lottery winnings is Rs. 3 lakh on which TDS has been done at 30%. He would be liable to pay tax of:
(a) Rs. 87,500 (b) Rs. 90,000
(c) NIL
(d) Rs. 92,700
Q17: MR. V traced a missing girl by spending Rs. 20,000. For this, he was awarded with a sum of Rs. 1,20,000. In this case the award is taxable to the extent of
(a) Rs. 1,00,000 (b) Rs. 1,20,000 (c) Rs. 1,15,000 (d) Nil
Q18: MR. V died in a train accident and after his death his family members were paid compensation of Rs. 5,00,000 by Central Government. They have spent Rs. 89,000 on collecting this amount. In this case the compensation is taxable to the extent of
(a) Rs. 5,00,000 (b) Rs. 4,11,000 (c) Rs. 5,89,000 (d) Nil
Q19: MR. V received the following gifts during the AY 2021-2022 i.e. PY 2020-2021. Determine the amount of taxable gift under the head „income from other sources‟ (i) Rs. 50,000 from his employer
(ii) Rs. 1,00,000 from mother‟s sister
(iii) Rs. 10,000 from his friend on the occasion of his marriage
(iv) Rs. 60,000 in the form of scholarship from a registered charitable trust
(a) Nil
(b) Rs. 50,000 (c) Rs. 1,50,000 (d) Rs. 2,10,000
Q20: A lady received gifts worth Rs. 1,00,000 from her relatives and Rs. 60,000 from her office colleagues on her marriage anniversary. The taxable amount of gifts would be
(a) Rs. 1,60,000 (b) Rs. 10,000
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(c) Rs. 60,000 (d) Rs. 1,10,000
Q21: MR. V has taken a house on rent and sublets the same to Mr. D. Income from such house property shall be taxable under the head:
(a) Income from house property (b) Income from other sources
(c) Income from house property or income from other sources as decided by MR. V (d) None of the above
Q22: MR. V acquired a motor car for Rs. 3,00,000 from his friend (non-relative) when the fair market value of the motor car was Rs. 5,00,000. The amount liable to tax in the hands of MR. V from the transaction is:
(a) Rs. 3,00,000 (b) Rs. 2,00,000 (c) Rs. 1,50,000 (d) Nil
Q23: GGC Pvt. Ltd. is a closely held company and has received from MR. V shares of another closely held company but without any consideration
(a) The whole of the fair market value of the shares shall be taxable (b) The whole of the FMV shall is taxable if it exceeds Rs. 50,000 (c) The whole of FMV shall be exempt
(d) The whole of the cost of such shares shall be exempt
Q24: MR. V received cash gift of Rs. 51,000 from Mr. S on the occasion of his 50th birthday. Mr. S is not his relative. The amount liable to tax in the hands of MR. V would be:
(a) Nil (b) Rs. 1,000 (c) Rs. 51,000
(d) Rs. 46,000 after deducting casual income of Rs. 5,000
Q25: MR. V received cash gift of Rs. 51,000 from Mr. S on the occasion of his 50th birthday. Mr. S is his son. The amount liable to tax in the hands of MR. V would be:
(a) Nil (b) Rs. 1,000 (c) Rs. 51,000
www.vipulshah.org 75591 73787 Page 6 Q26: GGC Pvt. Ltd. issued equity shares of Rs. 10 each at Rs. 40 per share. The fair market value of the share on the date of issue was ascertained as Rs. 25 per share. The company issued 1,00,000 equity shares. The amount liable to tax in the hands of the company would be:
(a) Rs. 15,00,000 (b) Rs. 30,00,000 (c) Nil
(d) Rs. 40,00,000
Q27: MR. V received Rs. 80,000 by way of gift from friends upon retirement from service. The amount of gift chargeable to income-tax would be
(a) Nil
(b) Rs. 30,000 (c) Rs. 70,000 (d) Rs. 80,000
Q28: Ms. V received dividend of Rs. 80,000 for her equity shareholding in VVC Ltd. (a listed domestic company). She paid interest of Rs. 12,500 for the amounts borrowed for investment in those shares.
The taxable dividend income in hands of Ms. V would be:
(a) Rs. 80,000 (b) Nil
(c) Rs. 67,500 (d) Rs. 92,500
Q29: MR. V received following gifts on the occasion of his birthday. Determine the amount taxable as Income from other sources
(i) cash gift from elder brother Rs. 30,000
(ii) Gold chain from younger sister which has market value of Rs. 38,000 (iii) cash gifts from friends Rs. 45,000
(iv) purchased shares from younger brother for Rs. 1,00,000 when the market value of the shares was Rs. 1,35,000.
(a) Rs. 1,48,000 (b) Rs. 1,18,000 (c) Rs. 80,000 (d) Nil
Q30: MR. V is non resident of India and has age of 65 years. He won a prize on lottery ticket on 30/8/2020. The prize amount was Rs. 5,50,000. He had bought lottery
www.vipulshah.org 75591 73787 Page 7 tickets for Rs. 75,000 during the year. Assuming that he had no other income chargeable to tax for the year determine his income tax liability for the AY 2021-2022 i.e. PY 2020-2021
(a) Rs. 1,69,950 (b) Rs. 1,71,600 (c) Rs. 1,65,000 (d) Rs. 23,400
Q31: When MR. V retired from GGC Ltd. on 1/1/2021, he was paid Rs. 5,00,000 for not doing a competing business for the next 5 years. The amount so received chargeable to tax in the hands of MR. V is:
(a) Nil
(b) Rs. 5,00,000 (c) Rs. 1,00,000 (d) Rs. 2,50,000
Q32: Income under the head income from other sources is taxable on:
(a) Due basis (b) Receipt basis
(c) On the basis of method of accounting regularly employed by the assesses (d) None of the above
Q33: Dividend declared by a domestic company is:
(a) Fully exempt in the hands of shareholders but taxable for the company as CDT (corporate dividend tax)
(b) Fully exempt in the hands of shareholders (c) Fully taxable in the hands of shareholder (d) None of the above is correct
Q34: Dividends declared by Unit Trust of India or mutual fund is:
(a) Fully exempt in the hands of unit holders (b) Fully taxable in the hands of unit holders
(c) Taxable but deduction is allowed under section 80C from GTI
(d) Fully exempt in the hands of the unit holders except when it is chargeable to tax under the provisions of section 115BBDA
Q35: Deemed dividend referred under section 2(22) is:
(a) Fully exempt in the hands of shareholders but taxable for the company as CDT (corporate dividend tax)
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(b) Fully exempt in the hands of shareholders (c) Fully taxable in the hands of shareholder (d) None of the above is correct
Q36: Where a closely held company gives an loan/advance to a shareholder who has 10% voting power in the company then amount of loan/advance so given shall be deemed divided to the maximum extent of:
(a) Accumulated profits whether capitalized or not (b) Accumulated profits excluding capitalized profits (c) The loan or advance so paid
(d) None of the above
Q37: Loan & advance paid by the closely held company to its shareholder having 10% voting power in the ordinary course of money leading business shall:
(a) Be treated as deemed divided and taxable in the hands of the shareholder (b) Be treated as deemed divided and taxable in the hands of the comply
(c) Not be treated as deemed divided and thus not taxable for shareholder or for the company
(d) Be treated as deemed divided and taxable at the special rate of 10%
Q38: Winning from lotteries, crossword puzzles, horse races & other races, card game, etc. are casual income & hence:
(a) Fully exempt
(b) Exempt up to Rs. 5,000 (c) Fully taxable
(d) Exempt up to Rs. 10,000
Q39: For computing lottery, crossword puzzles races, card games income etc., the assesses shall:
(a) Be entitled to deduction for any expenditure incurred for earning such income (b) Not entitled to any deduction for any expenditure
(c) Be entitled to deduction up to certain limits
(d) Be entitled to deduction to the extent of Rs. 10,000
Q40: The lottery, crossword puzzle, races, card games incomes, etc. are taxable at:
(a) Normal slab rate of income tax like any other income (b) Flat rate of 20% plus health and education cess @ 4% (c) Flat rate of 30% plus health and education cess @ 4%
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(d) Flat rate of 30% plus health and education cess @ 4% after the initial exemption of Rs. 2,50,000
Q41: If no regular system of accounting is followed by the assessee then interest on securities is taxable on:
(a) Due basis (b) Receipts basis
(c) Due or receipt basis at the option of the assesses (d) None of the above
Q42: The legal heir of the deceased who receives family pension is allowed a deduction from such family pension:
(a) Under section 16(ia) for the amount of Rs. 40,000
(b) Under section 16(ia) for the amount of Rs. 40,000 or the amount of family pension , whichever is lower
(c) l/3rd of family pension or Rs. 15,000 whichever is lower
(d) Rs. 40,000 or Rs. 15,000 at the choice of assessee
Q43: When any sum of money which exceeds Rs. 50,000 is received without consideration then the whole of such sum shall be taxable:
(a) In the hands of all assesses (b) In the hands of an individual
(c) In the hands of an individual or HUF
(d) In the hands of all assesses other than a company
Q44: Any immovable property received by any person without consideration shall be taxable to the extent of
(a) Market value of the immovable property
(b) Stamp duty value fixed by the stamp duty authority
(c) Stamp duty value fixed by the stamp duty authority provided it exceeds Rs. 50,000 (d) Stamp duty value minus Rs. 50,000
Q45: Any immovable property acquired by any person for a price less than the stamp duty value is taxable
(a) If stamp duty value exceeds the purchase price by 15% of stamp duty value (b) If stamp duty value exceeds the purchase price by more than Rs. 50,000 (c) In all situations
www.vipulshah.org 75591 73787 Page 10 Q46: Gift of movable properties received by Individual or HUF shall be taxable in the
hands of the recipient
(a) If the aggregate market value of all such specified movable properties exceeds Rs. 50,000
(b) If the market value of each of such movable property exceeds Rs. 50,000 (c) If the stamp duty of each of such moveable property exceeds Rs. 50,000
(d) If the aggregate stamp duty value of all such specified movable properties exceed Rs. 50,000
Q47: Gift, whether in cash or kind, received by an individual on the occasion of his / her marriage shall be:
(a) Fully exempt even if it exceeds Rs. 50,000 (b) Fully taxable if it exceeds Rs. 50,000
(c) Exempt up to Rs. 50,000 and balance taxable (d) Fully exempt only if received from relatives
Q48: Gift exceeding Rs. 50,000 received by HUF from relative of the member of HUF shall be:
(a) Fully taxable (b) Fully exempt
(c) Taxable to the extent it exceeds Rs. 50,000 (d) None of the above
Q49: Gift exceeding Rs. 50,000 received by MR. V from his spouse Mrs. J shall be:
(a) Fully exempt (b) Fully taxable
(c) Exempt up to Rs. 50,000 and the balance shall be taxable (d) None of the above
Q50: Gift received by HUF from its members shall be:
(a) Fully exempt (b) Fully taxable
(c) Taxable to the extent it exceeds Rs. 50,000 (d) None of the above
www.vipulshah.org 75591 73787 Page 11 1 c 2 a 3 b 4 c 5 a 6 b 7 b 8 c 9 a 10 b 11 a 12 b 13 c 14 d 15 c 16 c 17 c 18 d 19 d 20 a 21 c 22 c 23 d 24 b 25 c 26 a 27 a 28 d 29 b 30 a 31 c 32 b 33 b 34 c 35 c 36 a 37 a 38 a 39 b 40 c 41 c 42 b 43 c 44 a 45 c 46 a 47 b 48 c 49 d 50 a
