Questions on Profits and Gains from Business and Profession (PGBP)
Question No. 1
X owns the following assets:
Asset Rates of Depreciation WDV as on 1.4.2024 (₹)
Building A 10% 70,000
Building B 10% 1,10,000
Building C 5% 2,20,000
Building D 10% 60,000
Machinery P 15% 30,000
Machinery Q 15% 40,000
Machinery R 30% 70,000
Car X 15% 1,50,000
The following assets were acquired during the previous year 2024-25:
Asset Rates of Depreciation Cost of acquisition (₹)
Car Y 15% 2,50,000
Machinery S 15% 20,000
Machinery T 30% 60,000
Patents 25% 80,000
Know-how 25% 60,000
Machinery Y acquired on
5.9.2024 and put to use 30% 5,00,000
immediately
The following assets have been sold during the previous year 2024-25:
Assets Sale Consideration (₹)
Building B 1,20,000
Machinery P 10,000
Calculate the written down value for claiming depreciation of various blocks of assets.
Question No. 2 (Homework)
M Ltd. owns the following assets on 1.4.2024:
Assets WDV as on 1.4.2020 (₹) Rates of Depreciation (%)
Building A 10,20,000 10
Building B 5,40,000 10
Building C 6,35,000 10
Building D 2,60,000 5
Building E 3,10,000 5
Machinery A 60,000 15
Machinery B 1,82,000 15
Machinery C 1,65,000 30
Machinery D 4,000 30
Machinery E 50,000 30
Furniture A 1,10,000 10
Furniture B 8,000 10
The following assets are acquired by the company during the previous year 2024-25:
Assets Actual Cost (₹) Rate of Depreciation (%) Date of Acquisition
Building F 5,40,000 10 14.5.2024
Machinery F 1,12,000 15 15.5.2024
Machinery G 4,000 15 16.7.2024
Machinery H 62,000 15 21.9.2024
Machinery I 16,000 30 21.9.2024
Patents 40,000 25 15.4.2024
Technical Know-how 60,000 25 17.5.2024
Acquired on 5.9.2024
Machinery Y 5,00,000 30 and put to use
immediately
The following assets are sold by the company during the previous year 2024-25:
Assets Sale Consideration (₹) Date of Sale
Machinery C 1,10,000 2.9.2024
Building D 4,00,000 21.10.2024
Machinery E 80,000 28.3.2025
Determine the amount of depreciation for the assessment year 2025-26.
Question No. 3
The WDV of 4 machines at the beginning of the previous year 2024-25, forming part of a block
of assets carrying 15% rate of depreciation was ₹ 5,00,000. The following 4 machines of the
same block were acquired:
Machines Date of Purchase Date when put to use Cost (₹)
P 5.1.2024 14.1.2025 50,000
Q 5.4.2024 15.5.2024 1,00,000
R 15.5.2024 31.1.2025 2,00,000
S 15.11.2024 27.3.2025 1,50,000
Four machines of this block (other than those which were acquired and put to use for less
than 180 days) were sold for ₹ 4,00,000.
(a) Calculate the depreciation for the assessment year 2025-26.
(b) What will be the answer if four machines were sold for ₹ 7,00,000 instead of
₹ 4,00,000.
Question No. 4
The WDV of a block of asset as on 1.4.2024 was ₹ 8,00,000. An asset of the same block was
acquired during the year for ₹ 3,00,000. Thereafter, all the assets were sold for ₹ 12,00,000.
Compute the depreciation for the assessment year 2025-26 and also compute the amount of
short-term capital gain or loss, if any.
What will be your answer if the entire block is sold for ₹ 9,00,000?
Question No. 5
A block consists of two buildings – Building A and Building B – whose WDVs are on 1.4.2024 is
₹ 2,20,000. Building A is sold during the previous year for ₹ 2,50,000. Calculate the total
amount of depreciation, and indicate the amount of short-term capital gain or loss, if any.
What will be your answer, if Building A is sold for ₹ 1,80,000?
Question No. 6
An existing industrial undertaking has acquired the following assets during the previous year
2024-25:
Date of Date when out to Cost of
Asset
Acquisition use acquisition (₹)
Factory Buildings 4.4.2024 1.9.2024 50,00,000
Plant & Machinery
Air pollution control equipment 4.5.2024 1.9.2024 4,00,000
Machinery A 5.5.2024 1.9.2024 2,00,000
Machinery B 7.6.2024 1.9.2024 5,00,000
Machinery C 30.8.2024 1.9.2024 10,00,000
Machinery D 1.9.2024 31.10.2024 4,00,000
Machinery E 1.1.2025 28.2.2025 3,00,000
Machinery F (second-hand) 11.1.2025 13.1.2025 2,00,000
Motor car 1.2.2025 1.2.2025 5,00,000
Air-conditioner (installed in office) 1.2.2025 2.2.2025 1,00,000
Compute the depreciation allowable for the assessment year 2024-25 and the WDV as on
1.4.2025, assuming that the WDV of the block of factory building and plant & machinery
carrying depreciation @ 15% was ₹ 10,00,000 and ₹ 6,00,000 respectively.
Question No. 7
R purchased an asset for scientific research for ₹ 15,00,000 in the previous year 2017-18.
During the previous year 2024-25, the said asset ceased to be used for scientific research.
The following information is also submitted to you:
Profit from business before depreciation ₹ 5,00,000
WDV of block of assets as on 1.4.2024 is ₹ 10,00,000
The scientific research asset, if used for business, shall be eligible for depreciation @ 15%.
Compute the total income if the scientific research asset is sold for ₹ 30,00,000 on 24.8.2024,
assuming:
(a) It is sold without using it for business.
(b) It is sold after being used for business.
Question No. 8
From the following information submitted by R, a sole proprietor whose due date for filing
return of income is 31.10.2024, compute the amount to be disallowed u/s 40(a)(ia). Further,
determine in which year the amount so disallowed will be allowed as a deduction.
(a) Salary ₹ 6,00,000 which includes ₹ 2,00,000 paid on 16.4.2025 from which tax was
deducted at source on 31.3.2025 but the same was deposited on 15.11.2025.
(b) Interest on loan ₹ 4,40,000 credited on 31.3.2025. Tax @ 10% was deducted at source
on 5.4.2025 and the same was deposited on 31.5.2025.
(c) Payment to contractor ₹ 3,40,000 on 15.7.2024. Tax was deducted at source on
31.3.2025 and the same was deposited on 18.10.2025.
(d) Commission and brokerage ₹ 6,40,000. Tax was deducted at source on 15.3.2025
amounting to ₹ 64,000. Out of this, ₹ 32,000 was deposited on 18.10.2025, ₹ 19,200
was deposited on 15.2.2026 and balance ₹ 12,800 was deposited on 5.4.2026.
(e) Rent ₹ 3,60,000 credited on 31.3.2025, which includes ₹ 2,50,000 from which tax was
deducted at source on 5.6.2025 and the same was deposited on 30.6.2025.
Question No. 9
Explain whether or not the provisions of section 40A(3) will be attracted in the following cases:
(a) R purchases goods worth ₹ 30,000 from G against one bill but makes payment of
₹ 18,000 and ₹ 12,000 at different times on the same date.
(b) R makes a payment of ₹ 40,000 as donation by cheque to National Defence Fund.
(c) R makes a purchase of goods of ₹ 60,000 and makes payment of ₹ 45,000 by account
payee cheque and ₹ 15,000 by way of cash.
(d) R makes a purchase of goods of ₹ 60,000 on 14.2.2025 and makes the payment as
follows: ₹ 30,000 by account payee cheque on 15.2.2025, ₹ 15,000 in cash on
15.2.2025 and ₹ 15,000 in cash on 16.2.2025.
(e) R purchases a machine for ₹ 1,20,000 and makes the payment of ₹ 70,000 by account
payee cheque and ₹ 50,000 in cash.
(f) R, a dealer of machines, purchases a machine for ₹ 1,20,000 and makes the payment
by crossed cheque.
(g) R makes an advance payment of ₹ 30,000 on 14.8.2024 by crossed cheque for purchase
of goods and the delivery of the goods is made on 20.9.2024.
(h) R pays a salary of ₹ 14,000 by crossed cheque to an employee.
(i) R purchases goods in cash from his brother for ₹ 40,000, whose market value is
₹ 35,000.
(j) R purchases goods in cash from his brother for ₹ 21,000 whose market value is
₹ 19,000.
(k) R is a consignee agent and makes payment of ₹ 5,00,000 in cash for goods received by
him for sale on commission or consignment basis.
(l) R is a commission agent, and makes purchase of goods in cash for ₹ 40,000 on his own
account and not on commission basis.
(m) R purchases goods in cash for ₹ 40,000 from X, a villager and makes payment to X in
his village where no banking facility is available. What will be your answer if payment
is made in a village in which banking facility is available?
(n) R makes a payment in cash amounting to ₹ 35,000 to a transporter on 5.10.2024.
(o) Payment made in cash during the day for ₹ 45,000 of 3 different bills. Each bill amount
is less than ₹ 20,000 but more than ₹ 10,000.
Question No. 10
Mr. Inder Kumar Vasudeva furnishes the following Manufacturing A/c and Profit & Loss A/c for
the previous year ending 31.3.2025:
Dr. Manufacturing A/c Cr.
Particulars (₹) Particulars (₹)
To Stock 2,11,000 By Sales 2,62,84,300
To Purchases 2,03,80,000 By Stock 2,26,600
To Manufacturing wages 3,65,900
To Factory Rent Rates Taxes 2,30,000
To Depreciation on
15,000
machinery and building
To Gross Profit 53,09,000
2,65,10,900 2,65,10,900
Dr. Profit & Loss A/c Cr.
Particulars (₹) Particulars (₹)
To Office salaries 46,27,000 By Gross profit b/d 53,09,000
To Establishment expenses 6,100 By Rent of staff quarters 19,000
By Refund of income tax
To Interest on capital 3,300 2,000
penalty
To Fire insurance 200 By Sale of machinery 25,000
By Recovery of bad debts, not
To Bad debts 7,000 allowed as deduction in 6,000
earlier years
By Sundry receipts of
To Income Tax 6,000 35,000
business
To Expenses on GST
2,000
proceedings
To Expenses on Income Tax
13,000
proceedings
To Diwali expenses 4,000
To Audit fee 7,000
To Medical expenses of the
3,000
proprietor
To Staff welfare expenses 12,000
To Repair of staff quarters 4,000
To Bonus payable to
2,20,000
employees
To Provision for tax: GST 25,000
To Municipal taxes for staff
4,000
quarters
To General Reserve 26,000
To Entertainment expenses 16,000
To Net profit 4,10,400
53,96,000 53,96,000
You are required to compute taxable profits from business after taking the following into
consideration:
(a) Purchases include a petty purchase of ₹ 21,000. Its payment was made by a crossed
cheque.
(b) Assessee has always valued the stock at cost price but on 31.3.2025, he has valued
closing stock at market price which was in excess of the cost price by 10%.
(c) Office salaries paid include ₹ 10,400 to proprietor of the business.
(d) Diwali expenses include gifts of ₹ 1,000 made to the relatives.
(e) The WDV of the block consisting of machinery as on 1.4.2024 is ₹ 59,000. One machine
whose WDV as on 1.4.2024 was ₹ 5,000 was sold for ₹ 25,000 during the year.
(f) The WDV of the block consisting of factory buildings as on 1.4.2024 is ₹ 90,000.
(g) GST amounting to only ₹ 20,000 was paid on or before 25.6.2024.
(h) Office salary includes ₹ 4,00,000 on which tax was deducted at source on 5.6.2025 and
the same was deposited on 16.7.2025.
Assume he has made payment of expenses more than 5% in cash, and as such, he has to get
his accounts audited by a chartered accountant.
