UNIVERSITY OF CALICUT

SCHOOL OF DISTANCE EDUCATION

BBA SEMESTER V
(2019 Admn. Onwards)
BBA5B10 (Elective 1) INCOME TAX
QUESTION BANK

BASIC CONCEPTS
1. Income- Tax Act extends to –
(a) whole of India
(b) whole of India except Jammu & Kashmir
(c) whole of India except Sikkim
(d) option(a) except Jammu & Kashmir and Sikkim
2. Finance Bill becomes Finance Act when it is passed by –
(a) the Lok Sabha
(b) both Lok Sabha and Rajya Sabha
(c) both Houses of parliament and given the assent of the President
(d) Rajya Sabha
3. A person follows calendar year for accounting. For taxation, he has to follow –
(a) Calendar year only 1st Januay to 31st December
(b) Financial year only 1st April to 31st March
(c) Any of the Calendar or Financial year as per his choice
(d) He will follow extended year from 1st January to next 31st March (a period of 15
months)
4. Which one of the following is not treated as Deemed Assessee
(a) Legal representative of deceased person (b) Agent of a Non-resident
(c) Trustee of a Trust (d) None of the above
5. Person u/s 2(31) does not include
(a) Minor (b) Local Authority
(c) Unsound Person (d) None of the above
6. Which of the following are Revenue Receipts?
(a) Bonus Shares received by a dealer of shares
 (b) Money received by a tyre manufacturing Company for sale of technical knowhow
regarding manufacturing of tyres
(c) Premium on issue of new shares
(d) All of the above
7. Which of the following are Revenue Receipts?
(a) Interest from investments
(b) A claim of Rs. 1,50,000 received from Insurance Company for loss of profits
(c) Annuity received from former employer
(d) All of the above.
8. Which of the following is a Capital Receipt?
(a) Perquisites received by a professional during the course of carrying on profession
(b) Compensation received in respect of permanent disablement due to an accident
(c) Compensation received in respect of temporary disablement due to an accident
(d) All of the above
9. Which of the following is not a Capital Expenditure?
(a) Expenditure incurred in connection with the acquisition or installation of a Fixed
Asset
(b) Expenditure incurred in raising capital
(c) Expenditure incurred for improving the profit earning capacity of an asset
(d) Expenditure incurred for repairing an asset
10. Which of the following is a revenue Expenditure?
(a) Lumpsum payment made by an employer as a gratuity to the employee
(b) Legal expenses incurred by a person in defending or maintaining his right or title to
the property used for business
(c) Expenditure incurred for the purchase of goods for resale
(d) All of the above
11. Which of the following is a Revenue Expenditure?
(a) Assessee took over the business of another & paid bonus to staff of that business in
respect of period before takeover
(b) Fee paid for increasing the Authorized Capital of the Company
(c) Advance paid for purchase of an asset, later on forfeited as the assessee did not wish
to purchase that asset.
 (d) Advance paid for purchase of goods for resale, later on forfeited as the assessee did
not wish to purchase those goods.
12. Which of the following is a Capital receipt?
(a) Compensation received for loss of profit
(b) Profit from sale of trading asset
(c) Compensation received for surrendering rights of ownership
(d) Amount received by outgoing partner
13. Which of the following is a revenue receipt?
(a) Receipt towards substitution of Income
(b) Amount received towards fixed capital
(c) Receipt towards substitution of source of Income
(d) Liquidated damages
14. The Circulars issued by CBDT are binding on –
(a) Assessee (b) Income – Tax Authorities
(c) Both the above (d) Assessee and Court
15. Chennai Corporation falls under the category –
(a) Artificial Juridical Person (b) Local Authority
(c) Association of Persons (d) None of the above
16. AOP should consist of –
(a) Individual only (b) Persons other than individual only
(c) Both the above (d) Any Person
17. Body of Individuals (BOI) should consist of –
(a) Individual only (b) Persons other than individual only
(c) Both the above (d) Any Person
18. A new business was set up on 15.10.2020 and it commenced its business from 1.12.2020.
The first previous year in this case shall be –
(a) 15.10.2020 to 31.3.2021 (b) 1.12.2020 to 31.3.2021
(c) 2020 – 2021 (d) 2021 – 2022
19. Mr. A set up his new business on 01.06.2020 after completing his higher studies in
Management in April 2020. Determine the relevant previous year for Mr. A for the purpose of
computing his business income.
(a) 01.04.2020 to 31.03.2021 (b) 01.05.2020 to 31.03.2021
 (c) 01.06.2020 to 31.03.2021 (d) 01.04.2021 to 31.03.2022
20. In continuation of the above facts given in Q.19, determine the relevant Assessment Year
for Mr. A.
(a) 01.04.2020 to 31.03.2021 (b) 01.06.2020 to 31.03.2021
(c) 01.04.2021 to 31.03.2022 (d) 01.06.2021 to 31.03.2022
21. A person leaves India permanently on 15.11.2020. The income earned till 15.11.2020 in
this case shall be assessed u/s 174 during –
(a) 2021 – 22 (b) 2019 – 20
(c) 2020 – 21 (d) None of the above
22. Charging of Income of the Previous year in the same year is not mandatory for
(a) Shipping business of Non-resident (b) Persons leaving India
(c) Association formed for a particular event (d) Discontinuation of business
23. Surcharge on Income Tax is payable by –
(a) Foreign Company (b) Individual and HUF
(c) A Domestic Company (d) All of the above
24. The maximum amount on which Income-Tax is not chargeable in case of H.U.F. for A.Y
2021-22 is –
(a) Rs. 2,50,000 (b) Rs. 5,00,000
(c) Rs. 3,00,000 (d) Rs. 2,00,000
25. The maximum amount on which Income-Tax is not chargeable in case of Firm is –
(a) Rs. 2,50,000 (b) Rs. 5,00,000
(c) Rs. 90,000 (d) Nil
26. The maximum amount on which Income-Tax is not chargeable in case of a Cooperative
Society is –
(a) Rs. 2,50,000 (b) Rs. 3,00,000
(c) Nil (d) Rs. 10,000
27. Health and Education Cess is not leviable in case of –
(a) An Individual and HUF (b) Indian Company
(c) Foreign Company (d) None of the above
28. Health and Education Cess is leviable on –
(a) Income-Tax (b) Income-Tax + Surcharge
(c) Surcharge (d) None of the above
29. Health and Education Cess is leviable at –
(a) 4% (b) 5% (c) 3% (d) 1%
30. In case of an Individual and HUF, Health and Education Cess is leviable only when the
Total Income of such assessee –
(a) Exceeds Rs. 5,00,000 (b) Exceeds Rs. 2,50,000
(c) Exceeds Rs. 10,00,000 (d) No income limit
31. The Total Income of the assessee has been computed as Rs. 2,53,494.90. For rounding off,
the Total Income will be taken as –
(a) Rs. 2,53,500 (b) Rs. 2,53,490
(c) Rs. 2,53,495 (d) Rs. 2,53,400
32. Income-Tax is rounded off to –
(a) nearest ten Rupees (b) nearest one Rupees
(c) nearest 5 Rupees (d) no rounding off of tax is done
33. A’s Total Income for the AY 2021-2022 is Rs. 5,00,000. His tax liability shall be –
(a) Rs. 12,500 (b) NIL
(c) Rs. 10,000 (d) Rs. 13,000
34. A’s Total Income for the AY 2021-2022 is Rs. 10,55,000. His tax liability shall be –
(a) Rs. 1,29,500 (b) Rs. 1,20,500
(c) Rs. 1,34,160 (d) Rs. 1,34,000
35. An example of Casual Income is
(a) Interest Income (b) Winning from lotteries
(c) Pension Income (d) Dividend Income
36. Which of the following is not included in the term Income under the Income Tax Act, 1961?
(a) Reimbursement of travelling expense (b) Dividends
(c) Profits in lieu of Salary (d) Profits from Business
37. Mr. P, a resident individual, has total income of Rs. 75,00,000 for P.Y. 2020-21. What is
the rate of surcharge, if any, applicable to him for A.Y. 2021-22?
(a) No surcharge as the income does not exceed Rs. 1 crore
(b) 5%
(c) 10%
(d) 15%
38. Mrs. Priyanka Chopra who is a non-resident, has total income of Rs. 3,20,000 for P.Y.
2020-21. Determine the amount of rebate u/s 87A, if any, available to her for A.Y. 2021-22.
(a) Not applicable (b) Rs. 12,500
(c) Rs. 3,500 (d) Rs. 5,000
39. A proviso is inserted in any section, so as to provide the;
(a) Clarification on the provisions contained in that section
(b) Explanation regarding the provisions contained in that section
(c) Exception to the provisions contained in that section
(d) None of the above
40. Circular issued by CBDT clarifying doubt regarding the scope and meaning of the
provisions of the Act, is binding on;
(a) Assessee as well as Department (b) Department only
(c) Assessee only (d) Neither assessee nor department
41. Mr. Ram, resident individual, earned following incomes during the F.Y. 2020-21.
(i) Agriculture income in Indonesia of Rs. 25,000.
(ii) Income from business in Bangladesh of Rs. 35,000.
What would be total income of Mr. Ram from A.Y. 2021-22?
(a) Nil (b) Rs. 25,000
(c) Rs. 35,000 (d) Rs. 60,000
42. Marginal relief shall be computed where total income exceeds Rs. 50 lakhs _________
(a) Tax on TI including Surcharge less (TI-Rs. 50 lakhs) less (tax on Rs. 50 lakhs)
(b) Tax on TI including Surcharge less (TI-Rs. 50 lakhs) less (tax on Rs. 50 lakhs)
(c) Tax on TI including Surcharge less (tax on Rs. 50 lakhs)
(d) Tax on TI including Surcharge less (tax on Rs. 50 lakhs)

RESIDENTIAL STATUS
43. The onus of responsibility to prove the residential status of a person lies with
(a) Assessee (b) Government
(c) Income tax Department (d) Court
44. A Person may be Resident of
(a) Only one country always
 (b) More than one country for any previous year.
(c) Only one country for any previous year
(d) No specific rule
45. Residential Status is to be determined for –
(a) Previous Year (b) Assessment Year
(c) Financial Year (d) Accounting Year
46. Residential Status of a Person is determined for
(a) Each Previous Year (b) Set of Previous years
(c) The year the person resides in India (d) None of the above
47. Income 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 NOR
(c) Non-Resident (d) All Assessees
48. Income deemed to accrue or arise in India is taxable in case of –
(a) Resident only (b) Both Ordinarily Resident and NOR
(c) Non-Resident (d) All Assessees
49. Income which accrue or arise outside India from a business controlled from India is taxable
in case of –
(a) Resident only (b) Not Ordinarily Resident only
(c) Both Ordinarily Resident and NOR (d) Non-Resident
50. Income which accrue or arise outside India and also received outside India is taxable in
case of –
(a) Resident only (b) Not Ordinarily Resident
(c) Both Ordinarily Resident and NOR (d) None of the above
51. Total Income of a person is determined on the basis of his –
(a) Residential Status in India (b) Citizenship in India
(c) Residential Status and Citizenship in India (d) None of the above
52. ABC Ltd is an Indian Company whose entire control and management of its affairs is
situated outside India. ABC Ltd shall be –
(a) Resident in India (b) Non-Resident in India
(c) Not Ordinarily Resident in India (c) None of these
53. XYZ Ltd is registered in U.K. The entire control and management of its affairs is situated
in India. XYZ Ltd shall be –
(a) Resident in India (b) Non-Resident in India
(c) Not Ordinarily Resident in India (c) None of these
54. Ronald, a Foreign National, visited India during previous year 2020-2021 for 180 days.
Earlier to this he never visited India. Ronald in this case shall be –
(a) Resident in India (b) Non-Resident in India
(c) Not Ordinarily Resident in India (c) None of these
55. 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 recipient
(c) Taxable in the hands of the Company and exempt in the hands of the recipient.
(c) None of the above
56. An Individual is said to be a Resident and Ordinarily Resident if
(a) He is a Resident in any 2 out of the last 10 years preceding the relevant previous
year
(b) His total stay in India in the last 7 years preceding the relevant previous year is 730
days or more
(c) Both (a) and (b)
(d) Either (a) or (b)
57. Which of the following statement is true for determining the residential status of person?
(a) Stay in India should be for a continuous period.
(b) Stay should be in any one place in India.
(c) Both (a) nor (b)
(d) Neither (a) nor (b)
58. How is Residential Status of a HUF determined?
(a) No. of days of stay of the Karta
(b) Control and Management of the affairs of the HUF
(c) Both (a) and (b)
(d) HUF can only be Resident
59. Place of Effective Management of a Company for deciding the residential status, shall not
apply to a Company having
 (a) Turnover of Gross receipts of Rs. 50 Crores or less in a financial year.
(b) Turnover of Gross receipts of Rs. 50 Lakhs or less in a financial year.
(c) Turnover of Gross receipts of Rs. 5 Crores or less in a financial year.
(d) Turnover of Gross receipts of Rs. 50 Lakhs or less in a financial year.
60. A Firm is said to be a Resident of India
(a) If control and management of its affairs is wholly inside India
(b) If all the Partners are resident in India
(c) If control and management of its affairs is wholly or partly inside India
(d) None of the above
61. The following Income is taxable for-
(i) Income received or deemed to be received in India during the current financial year,
irrespective of place of accrual. And
(ii) Income accruing or arising or deemed to accrue or arise in India during the current
financial year, irrespective of place of receipt
(a) Resident (b) Non-Resident
(c) Resident and Not Ordinary Resident (d) All of the above
62. Income from business which is situated outside India but controlled from India is taxable
for
(a) Non-Resident (b) Resident and Ordinary Resident
(c) Resident and Not Ordinary Resident (d) Both (b) and (c)

EXEMPTIONS
63. Incomes that do not form part of the total Income are called
(a) Exempt Income (b) Deductions
(c) Excluded Income (d) None of the above
64. Where the income of an individual includes the income of minor children, such income
shall be exempt up to –
(a) Rs. 1,500
(b) Rs. 1,500 per minor child
(c) Rs. 1,500 per minor child or to extent of income of the minor child included in the
Total Income of the assessee whichever is less.
(c) None of these
AGRICULTURAL INCOME
65. Agricultural income defined u/s ________.
(a) Sec 2 (1A) (b) Sec 2 (2A)
(c) Sec 1 (2A) (d) None of these
66. Agricultural income includes
(a) Cultivation (b) Farm house building
(c) Agricultural activities (d) All of these
67. Agricultural income formulas = M.V. agricultural produce used as raw material – cost of
cultivation
(a) True (b) False
(c) Doubt (d) None of these
68. Income from coffee manufacturing has been divided as
(a) 75% as agricultural income & 25% as business income
(b) 25% as agricultural income & 75% as business income
(c) 40% as agricultural income & 60% as business income
(d) None of the above
69. Profit from tea manufacturing has been divided as
(a) 40% as agricultural income & 60% as business income
(b) 60% as agricultural income & 40% as business income
(c) 75% as agricultural income & 25% as business income
(d) None of the above
70. Income from rubber manufacturing has been divided as
(a) 35% as agricultural income & 65% as business income
(b) 75% as agricultural income & 25% as business income
(c) 65% as agricultural income & 35% as business income
(d) None of the above
71. Agricultural income is considered while calculating tax if it is
(a) more than 10,000
(b) more than 5,000
(c) more than 5,000 and the non-agricultural exceed the basic income exemption limit
(d) none of the above
SALARIES
72. Which of the following is not true about charging Income under the head Salaries?
(a) Salary comprises only of monetary benefits
(b) There should be Employer and Employee Relationship.
(c) Employment should be full time.
(d) Both (a) and (c)
73. Salary received by the Partner of a Firm is charged under the head
(a) Salaries (b) Business Income
(c) Other Sources (d) Its exempt from tax
74. Salary paid to MLAs and MPs are charged under the head
(a) Salaries (b) Business Income
(c) Other Sources (d) Its exempt from tax
75. Commission received by a Director of the Company is charged under the head
(a) Salaries (b) Business Income
(c) Other Sources (d) Its exempt from tax
76. Salary is taxable on
(a) receipt basis
(b) due basis
(c) due or receipt basis whichever is earlier
(d) due or receipt basis whichever is later
77. Arrears of Pension is taxable on
(a) receipt basis
(b) due basis
(c) due or receipt basis whichever is earlier
(d) due or receipt basis whichever is later
78. For a Government Employee, the entire gratuity received is exempt
(a) on his death
(b) on his retirement
(c) Both (a) and (b)
(d) only if covered under the Payment of Gratuity Act
79. The Notified amount of Gratuity that is exempt
(a) Rs. 10,00,000 (b) Rs. 20,00,000
(c) Rs. 2,00,000 (d) Rs. 5,00,000
80. Where an Individual receives Retirement Gratuity from more than one employer, he can
claim exemption
(a) In respect of both of them. Maximum amount not exceeding Rs. 10,00,000 for each
employer.
(b) Only from the First employer
(c) In respect of both of them. Maximum amount not exceeding Rs. 20,00,000 for each
employer.
(d) In respect of both of them. Maximum amount not exceeding Rs. 20,00,000 both put
together.
81. Gratuity received during the period of service is
(a) fully taxable (b) partly taxable
(c) fully exempt (d) depends on agreement with employer
82. Gratuity shall be fully exempt in the case of –
(a) Central and State Government Employees
(b) Central and State Government Employees, Employees of Local Authorities and
Employees of Statutory Corporation
(c) Central and State Government Employees and Employees of Local Authorities.
(d) None of the above
83. An Employee is covered under Payment of Gratuity Act, 1972. If the Employee has
completed service of 16 years 6 months and 5 days, the number of completed year shall be
taken as –
(a) 16 years (b) 17 years
(c) 16 years 6 months and 5 days (d) None of these
84. An Employee is neither a Government Employee not covered under Payment of Gratuity
Act, 1972. If the Employee has completed 16 years and 8 months of service, the number of
completed years is –
(a) 17 years (b) 16 years
(c) 16 years and 8 months (d) None of these
85. Uncommuted Pension received by a Government Employee is –
(a) Exempt (b) Taxable
(c) Partially Taxable (d) None of these
86. Commuted Pension received shall be fully exempt in case of –
(a) Government Employee
(b) Govt. Employee or an Employee of Local Authority or an Employee of Statutory
Corporation
(c) All employees
(d) None of the above
87. For a Non Government Employee who is in receipt of Gratuity, commuted Pension is
(a) fully taxable
(b) Fully exempt
(c) Exempt upto 1/3rd of Full Value of Pension he is entitled to receive
(d) Exempt upto 1/2 of Full Value of Pension he is entitled to receive
88. 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 (d) Rs. 4,00,000
89. Which of the following payments can be received by an employee only once in a life time
(a) Gratuity (b) VRS Compensation
(c) Leave Encashment Compensation (d) All of the above
90. If rent is paid for a house situated in Mumbai, the HRA shall be exempt to the maximum
extent of –
(a) 40% of Salary (b) 50% of Salary
(c) 60% of Salary (d) 70% of Salary
91. Entertainment Allowance in case of Govt. Employee is –
(a) fully exempt
(b) exempt upto limits mentioned in sec. 16(ii)
(c) first included fully in Gross Salary and thereafter deduction allowed from Gross
Salary u/s 16(ii)
(d) None of the above
92. An 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
 (d) None of the above
93. Employer’s Contribution to Recognized Provident Fund shall be –
(a) Fully Taxable (b) Fully Exempt
(c) Exempt upto 12% of Salary (d) Exempt upto 15% of Salary
94. Interest credited to Recognized Provident Fund is –
(a) Fully Taxable (b) Fully Exempt
(c) Exempt upto 12% of Salary (d) Exempt upto 9.5% p.a.
95. Q is provided with a Rent Free Accommodation owned by his Employer in Delhi
(Population>25 lakhs). The value of this perquisite shall be –
(a) 15% of Salary
(b) 7.5% of Salary
(c) 10% of Salary plus excess of FRV over 50% of Salary
(d) 10% of Salary plus excess of FRV over 60% of salary

HOUSE PROPERTY
96. The basis of chargeability of Income under the head Income from House Property is –
(a) Rental Value (b) Annual Value
(c) Value fixed by the Government (d) None of the above
97. Income from vacant plot is taxable under the head –
(a) Income from House Property (b) Income from Other Sources
(c) Profits & Gains of Business or Profession (d) Capital Gains
98. Which of following conditions need to be satisfied in order to tax any income under the
head Income from house property?
(a) The property must consist of building or land appurtenant thereto.
(b) The property must not be used for business or profession carried on by assessee.
(c) The assessee must be the owner of such house property.
(d) All of the above.
99. If the property constitutes Stock-in-Trade of a business or the business of the Assessee is
to let-out house properties, the Income is to be charged only under the head –
(a) Income from House Property (b) Income from House Property
(c) Profits and Gains of Business or Profession (d) Capital Gains
100. For a Company is Real Estate Business, with the object of buying and developing landed
properties, the Income from unsold property let-out is taxable under the head
(a) Income from House Property (b) Business Income
(c) Income from other Sources (d) Capital Gains
101. Rent charged in cases where the assessee let-outs a property, along with other facilities
like Furniture, Plant and Machinery, Lift, Security, Power Back-up, etc. is called –
(a) Composite Rent (b) Sub-letting
(c) Rent for Amenities (d) None of the above
102. Income from letting out of Godowns and providing warehousing services by a Company
engaged in Warehousing, Handling and Transport Business would fall under the head –
(a) Income from other sources
(b) Profits and Gains of Business or Profession
(c) Income from House Property
(d) None of the above
103. House Property Income is exempt for –
(a) Local Authority (b) Charitable Trust
(c) Political Property (d) All of the above
104. The value that the Municipal Authorities deem as the value of the property for the purpose
of assessment of Property Taxes.
(a) Municipal Value (b) Fair Market Value
(c) Fair Rent (d) Standard Rent
105. Standard Deduction u/s 24(a) is not applicable to –
(a) Let out Property (b) Deemed to be let out property
(c) Self Occupied Property (d) None of the above
106. An Assessee has taken a loan on 01.06.2018, and completed the construction on
01.06.2020. For the PY 2020-2021, Prior Period interest shall be calculated for the period –
(a) 01.04.2018 to 31.03.2020 (b) 01.06.2018 to 01.06.2020
(c) 01.06.2018 to 31.03.2020 (d) 01.04.2018 to 01.06.2020
107. A has two house properties. Both are self – occupied. The annual Value –
(a) of both house shall be Nil (b) one house shall be Nil
(c) of no house shall be Nil (d) Both (a) & (b)
108. Deductions which shall be allowed in the case of Two Self Occupied House Property
whose Annual Value is Nil:
(a) Repairs and Collection Charges, 30% of NAV
(b) Insurance Premium
(c) Interest on money borrowed upto Rs. 30,000 or Rs. 2,00,000 as the case may be
(d) Both (a) & (c)
109. Unrealized Rent is a deduction from –
(a) Actual Rent (b) Net Annual Value
(c) Income from the head House Property (d) None of these
110. In a case where letting out of building and letting out of other assets are separable, rent of
building will be charged to tax under the head __________ and rent of other assets will be
charged to tax under the head _________.
(a) Income from House Property, Income from House Property
(b) Profits and gains of business Income from House Property
(c) Income from House Property, Profits and gains of business and profession” or
“Income from other sources” (as the case may be)
(d) Profits and gains of business or profession, Income from other sources

PROFITS AND GAINS FROM BUSINESS OR PROFESSION

111. Business has been defined
(a) u/s 2 (13) (b) u/s 13 (2)
(c) u/s 10 (2) (d) None of these
112. Chartered accountant is a __________.
(a) Profession (b) Vocation
(c) Business (d) None of these
113. Singer is a _________.
(a) Profession (b) Vocation
(c) Business (d) None of these
114. Expenses allowed as a deduction u/s …. Under the head of profit and gain of business and
profession
(a) Sec 20 to 25 (b) Sec 15 to 27
(c) Sec 30 to 37 (d) None of these
115. Depreciation comes u/s…. under the head of business profession
(a) Sec 32 (b) Sec 42
(c) Sec 22 (d) None of these
116. Repairs & maintenance of machinery, plant & furniture come under the sec. _____.
(a) Sec 34 (b) Sec 33
(c) Sec 31 (d) None of these
117. Rent rates and taxes, repair & insurance for building come under section ___.
(a) Sec 40 (b) Sec 30
(c) Sec 20 (d) None of these
118. Salary, Bonus, Commission or Remuneration due to or received by a Working Partner
from the Firm is taxable under the head –
(a) Salaries
(b) Income from Other Sources
(c) Profits and Gains of Business or Profession
(d) None of the above
119. Under the head Business & Profession, the method of accounting which an assessee can
follow shall be –
(a) Mercantile System only
(b) Cash System only
(c) Mercantile or Cash System at the assessee’s discretion
(d) Hybrid System
120. Sums 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 the employee
121. 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.

CAPITAL GAINS
122. Capital Gain arises from the transfer of –
(a) any Asset (b) any Capital Asset
(c) Land and Building and Shares only (d) none of these
123. STCG 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 listed shares, units, Zero coupon
Bonds and any other listed securities, 24 Months in case of Unlisted shares, land and
Building and not more than 36 months in case of other assets.
(d) None of the above
124. Period of holding of Bonus Shares or any other financial asset allotted without any
payment shall be reckoned from –
(a) the date of holding of the original Shares / Financial Asset
(b) the date of offer of bonus shares / financial asset
(c) the date of allotment of such Bonus Shares / Financial Asset
(d) none of the above
125. Period of holding of Right Shares or any other security shall be reckoned from –
(a) the date on which the right shares / any other securities are offered
(b) the date on which the right shares/such securities are applied by the assessee
(c) the date of allotment of right shares / such securities.
(d) none of the above
126. In case of Long-Term Capital Gain, the amount to be deducted from price consideration
shall be –
(a) Cost of Acquisition (b) Indexed Cost of Acquisition
(c) Market Value as on 1-4-2001 (d) None of these
127. Where the entire block of the depreciable asset is transferred after 36 months, there will
be –
(a) Short-Term Capital Gain (b) Long-Term Capital Gain
(c) Short-Term Capital Gain or Loss (d) Long-Term Capital Gain or Loss
128. If Goodwill of a profession which is self-generated is transferred, there will –
(a) be Capital Gain (b) not be any Capital Gain
(c) be a Short-Term Capital Gain (d) be a Long Term Capital Gain
129. New assets acquired for claiming exemption u/s 54, 54B or 54D, if transferred within 3
years, will result in –
(a) Short-Term Capital Gain
(b) Long-Term Capital Gain
(c) ST or LTCG depending upon original transfer
(d) None of the above

INCOME FROM OTHER SOURCES

130. 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 Assessee
(d) Due or receipt basis whichever is earlier
131. Dividend declared by a Domestic Company –
(a) is fully exempt subject to Section 115BBDA
(b) fully taxable
(c) taxable but a deduction is allowed under Section 80L on account of such dividend.
(d) partially taxable
132. Dividends declared by Unit Trust of India is –
(a) fully exempt in the hands of Unit holders
(b) fully taxable
(c) taxable but a deduction is allowed u/s 80L
(d) partially taxable
133. Deemed Dividend is –
(a) Exempt in all cases subject to Section 115BBDA
(b) exempt in all cases except where a loan/advance is given to a shareholder/concern
by an Indian Company
(c) taxable in all cases.
(d) partially taxable
134. Winning from Lotteries, Crossword Puzzles, Horse Races & Other Races, Card Game,
etc. are casual income & hence –
(a) fully exempt (b) exempt upto Rs. 5,000
(c) fully taxable (d) exempt upto Rs. 10,000
135. Income from Lottery, Crossword Puzzle, Races, Card Games etc. are taxable at:
(a) Normal Slab Rate of Income Tax like any other income
(b) Flat Rate of 20%
(c) Flat Rate of 30% plus Surcharge, if applicable,
(d) Flat Rate of 30% plus Surcharge of 10%
136. The legal heir of the deceased who receives family pension is allowed a standard deduction
from such family pension received to the extent of:
(a) 1/3rd of such pension subject to maximum of Rs. 20,000
(b) 1/3rd of such pension or Rs. 15,000 whichever is less
(c) 1/3rd of such pension or Rs. 12,000 whichever is less
(d) 1/3rd of such pension or Rs. 10,000 whichever is less
137. Gift of Rs. 5,00,000 received on 10th July 2020 through Account Payee Cheque from a
non-relative regularly assessed to income-tax, is ______ .
(a) A Capital Receipt not chargeable to tax
(b) Chargeable to tax as Income from Other Sources
(c) Chargeable to tax as Business Income
(d) Exempt up to Rs. 50,000 & balance chargeable to tax under Other Sources
138. Sum of money received by an individual or HUF without consideration the aggregate
value of which exceeds ________ during the year will be charged to tax.
(a) Rs. 50,000 (b) Rs 1,00,000
(c) Rs. 10,000 (d) None of the above

INCOME OF OTHER PERSONS INCLUDED IN ASSESSEE'S TOTAL

INCOME
139. If there is a transfer of income by a person to another person without the transfer of the
asset from which the income arises, such income shall be included in the income of –
(a) Transferor (b) Transferee
(c) Transferor, if transfer is revocable (d) Both Transferor & Transferee
140. If there is revocable transfer of an asset by any person to another person, any income
arising from such asset shall be included in the income of –
 (a) Transferor (b) Transferee
(c) Both Transferor & Transferee (d) None of these
141. If there is a transfer of asset to the transferee which is not revocable during his life time
to the transferee, income arising from such asset shall be included in the income of –
(a) Transferor
(b) Transferee
(c) Transferee till his death and thereafter in the hands of the Transferor
(d) Both Transferor & Transferee
142. Where an individual has substantial interest in a concern, there shall be included in his
Total Income any remuneration paid by such concern to –
(a) the wife of such individual
(b) the husband of such individual
(c) the spouse of such individual
(d) none of these
143. Substantial Interest for the purpose of clubbing provision u/s 64(i)(ii) shall be of –
(a) the individual only
(b) the individual & his spouse taken together
(c) the individual along with his relatives
(d) none of the above
144. As per Sec. 64(i)(iv), there shall be included in the income of an individual, any income
arising from the gift to the spouse of –
(a) any Capital Asset (b) any Asset
(c) any Asset other than House Property (d) none of these
145. As per Sec. 64(1A), income accruing to a minor shall be clubbed in the income of –
(a) Father
(b) Mother
(c) Father or Mother at their option
(d) Parent whose income before this clubbing is greater
146. When income of minor child is clubbed in the income of the parent concerned, such parent
will be allowed exemption of –
(a) Rs. 1,500
(b) Rs. 1,500 per minor child
 (c) To the extent of actual income clubbed or Rs. 1,500 per minor child whichever is
less
(d) Rs. 2,000

SET-OFF AND CARRY FORWARD OF LOSSES

147. The process of adjustment of loss from a source under a particular head of income against
income from other source under the same head of income is called _______.
(a) Inter head adjustment (b) Intra head adjustment
(c) Clubbing of income (d) Carry forward
148. Loss from a speculation business of a particular A.Y. can be set-off in the same A.Y. from
____.
(a) Profits and gains from any business
(b) profits and gains from any business other than speculation business
(c) income of speculation business
(d) none of the above
149. Loss on account of owning & maintaining the race horses of particular assessment year
can be set-off in the same assessment year from –
(a) any business income
(b) any income under the head Other Sources
(c) income from race horses
(d) none of the above
150. Short-Term Capital Loss of particular asst. year can be set-off in the same assessment year
from –
(a) Short-Term Capital Gain only
(b) Long-Term Capital Gain only
(c) Short-Term or Long-Term Capital Gain only
(d) any business income
151. Long-Term Capital Loss of a particular asst. year can be set-off in the same assessment
year from –
(a) Short-Term or Long-Term Capital Gain
(b) Long-Term Capital Gain only
(c) Short -Term Capital Gain only
(d) any other income
152. Loss under the head Business or Profession can be set-off in the same assessment year
from –
(a) Income under any other head
(b) Income under any other head except “Salary”
(c) Income under any other head except “Income from House Property”
(d) Capital Gain
153. The business loss is allowed to be carried forward only when an assessee has furnished-
(a) Return of loss
(b) Return of loss before due date u/s 139(1)
(c) Whether or not furnished the return of loss
(d) none of the above
154. Loss under the head Income from House Property can be carried forward –
(a) only if the return is furnished before the due date mentioned u/s 139(1)
(b) even if the return is not furnished
(c) even if the return is furnished after the due date
(d) none of the above
155. A Business Loss can be carried forward and set-off in the subsequent assessment year
when the business on account of which this loss has arisen –
(a) is continued in the assessment year in which the such loss is set-off
(b) is continued or not
(c) is continued for any part of the previous year
(d) none of the above
156. Loss from the business of owning and maintaining race horses can be set off against –
(a) Income from winnings from lotteries
(b) Income from crossword puzzles
(c) Income from card game
(d) None of the above
157. Loss under the head House Property –
(a) can be carried forward for 8 years
(b) cannot be carried forward
(c) can be carried forward for only 4 years.
 (d) can be carried forward for 6 years
158. The maximum period for which Speculation Loss can be carried forward is
(a) 4 Years (b) 8 Years
(c) Nil (d) Any number of years
159. The first item in the order of priority of set-off as between current year capital expenditure
on Scientific Research, current year depreciation and brought forward business loss is
(a) Current year Depreciation
(b) Brought Forward Business Loss
(c) Current year Capital Expenditure on Scientific Research
(d) None of the Above

DEDUCTIONS UNDER CHAPTER VI-A

160. Deduction u/s 80C in respect of LIP, contribution to provident fund, etc., is allowed to –
(a) any assessee
(b) an individual
(c) an individual or HUF
(d) an individual or HUF who is resident in India
161. For claiming deduction u/s 80C, Life Insurance Premium may be paid by the assessee for_
(a) himself only (b) himself or the spouse
(c) himself, spouse and minor children (d) himself, spouse and children
162. Deduction u/s 80CCC is allowed to the extent of –
(a) Rs. 20,000 (b) Rs. 1,50,000
(c) Rs. 40,000 (d) Rs. 1,00,000
163. Deduction under Section 80D in respect of Medical Insurance Premium is allowed to –
(a) Any Assessee (b) an Individual or HUF
(c) Individual or HUF who is resident in India (d) Individual only
164. The maximum deduction that can be claimed by the assessee under Section 80D is –
(a) Rs. 6,000 (b) Rs. 10,000
(c) Rs. 25,000 (d) Rs. 20,000
165. Deduction u/s 80G on account of donation is allowed to –
(a) a business assessee only (b) any assessee
(c) individual or HUF only (d) none of these
166. Deduction in respect of rent paid u/s 80GG is allowed to –
(a) any individual
(b) any individual who is self employed
(c) any individual who is self employed or who is an employee but not entitled to
H.R.A. or rent free accommodation
(d) same as (c) and who pays rent for his residential accommodation
167. Maximum deduction u/s 80GG shall be limited to –
(a) Rs. 1,000 p.m. (b) Rs. 5,000 p.m.
(c) Rs. 3,000 p.m. (d) Rs. 4,000 p.m.
168. Deduction u/s 80GGA shall be allowed to the extent of –
(a) 100% of the donation so made
(b) 1 ¼ times of the donation so made
(c) 1 ½ times of the donation so made
(d) 200% of the donation so made
169. Deduction u/s 80E is allowed for repayment of interest to the extent of –
(a) Rs. 25,000 (b) Rs. 40,000
(c) Any Amount Repaid (d) Rs. 50,000
170. The quantum of deduction allowed u/s 80U is –
(a) Rs. 40,000 (b) Rs. 50,000 or Rs. 1,00,000
(c) Rs. 75,000 (d) Rs. 1,00,000
Answers
1 a 26 c 51 a 76 c 101 a 126 b 151 b
2 c 27 d 52 b 77 b 102 b 127 c 152 b
3 b 28 b 53 a 78 c 103 d 128 b 153 b
4 d 29 a 54 b 79 b 104 a 129 c 154 c
5 d 30 d 55 a 80 d 105 c 130 c 155 b
6 a 31 b 56 c 81 a 106 c 131 b 156 d
7 d 32 a 57 d 82 c 107 a 132 b 157 a

8 b 33 b 58 c 83 b 108 d 133 c 158 a

9 d 34 c 59 a 84 b 109 a 134 c 159 c

10 d 35 b 60 a 85 b 110 c 135 c 160 c

11 d 36 a 61 d 86 b 111 a 136 b 161 d
12 c 37 c 62 d 87 c 112 a 137 b 162 b
13 a 38 a 63 a 88 c 113 b 138 a 163 b
14 b 39 c 64 c 89 b 114 c 139 a 164 c
15 b 40 b 65 a 90 b 115 a 140 a 165 b
16 c 41 d 66 d 91 c 116 c 141 c 166 d
17 a 42 a 67 a 92 a 117 b 142 c 167 b
18 a 43 c 68 a 93 c 118 c 143 c 168 a
19 c 44 b 69 b 94 d 119 c 144 c 169 c
20 c 45 a 70 c 95 a 120 b 145 d 170 c
21 c 46 a 71 c 96 b 121 d 146 c
22 d 47 d 72 d 97 b 122 b 147 b
23 d 48 d 73 b 98 d 123 c 148 c
24 a 49 c 74 c 99 a 124 c 149 c
25 d 50 a 75 a 100 a 125 c 150 c
Prepared by:
Dr. Sudheesh S
Assistant Professor on Contract
SDE, University of Calicut

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