Profits and Gains from Business and Profession

(b)Compute the income chargeable under the head of “Profits and Gains from Business and Profession” for Karan for the Assessment Year 2025-26.

(a)Rakesh, a resident individual, provides the following Profit & Loss Account for the year ending 31st March 2025, from his business. You are required to compute income under the head “Profits and Gains from Business or Profession” for A.Y. 2025-26, considering the applicable provisions of the Income-Tax Act, 1961, and ICDS (if relevant). He maintains books of account on a mercantile basis.

Profit and Loss Account of Rakesh for the year ending 31.03.2025

Additional Information :

(1)Depreciation (other than Car) as per Income Tax Act amounts to ₹ 10 lakhs.

(2)Commission to agents includes ₹ 2 lakhs was paid to Mr. Hari without deducting TDS.

(3)Cash payment to contractor ₹ 30,000 was made on a single day.

(4)Car sold was used for business and forms part of the block (Sale value of Car = ₹ 6 lakhs, WDV of block before sale = ₹ 2 lakhs). There are no other assets in this block.

(5)Donation to political party was made to a registered political party via account payee cheque.

(6)Assume that Rakesh has opted out of presumptive taxation scheme u/s 44AD.

The provision of Presumptive taxation under Section 44AD shall be applicable where the total turnover of Gross Receipts does not exceed :

(A)₹ 1,00,00,000

(B)₹ 2,00,00,000

(C)₹ 3,00,00,000

(D)₹ 5,00,00,000

Dr. Chow Mow is a medical practitioner, has gross receipt of ₹ 51,50,000 for the F.Y. 2023-24, his total receipts consists 75% cash receipts and balance through the bank. His presumptive income u/s 44ADA would be :

(A)25,25,000

(B)25,75,000

(C)4,12,000

(D)None of the above

(e)Compute the Income chargeable under the head of Profits and Gains from Business & Profession, if firm opts to pay tax under presumptive taxation scheme u/s 44ADA of the Income Tax Act, 1961 for the assessment year 2024-25.

(g)In case G & Co. does not opt for presumptive taxation scheme u/s 44ADA, what are the obligations under the Income Tax Act, 196l ?

Mr. S a wholesale supplier of dyes, provides you with the details of the following cash payments made throughout the year :

l 15-06-2023 : Loan repayment of ₹ 27,000 taken for business purpose from his friend Kunal. The repayment also includes interest of ₹ 5,000.

l 22-08-2023 : Portable dye machinery purchased for ₹ 15,000. The payment was made in cash in three weekly instalments.

l 29-01-2024 : Payment of ₹ 10,000 made to electrician due to unforeseen electric circuit at shop.

l 28-02-2024 : Purchases made from unregistered dealer for ₹ 13,500.

What will be disallowance under 40A(3), if any, if Mr. S opts to declare his income as per the provisions of section 44AD ?

(A)₹ 18,500

(B)₹ 28,500

(C)₹ 13,500

(D)Nil

(c)Following details are provided for 2 (two) individuals Umesh and Suresh for the previous year 2023-24 :

Compute total income of Umesh and Suresh for the assessment year 2024-25 by applying the relevant presumptive provisions under section 44AD and 44AE, assuming none opted to pay tax under section 115 BAC.

An assessee who declares his income in accordance with presumptive taxation under Section 44ADA of the Income Tax Act, 1961 for Assessment Year 2023-24 is liable to pay advance tax :

(A)In four instalments

(B)In two instalments

(C)In one instalment on or before 15 th March of the Financial Year

(D)In one instalment on or before 31 st March of the Financial Year

Dave & Co. made a turnover of ₹ 160 lakh during the financial year 2022 - 23. It received ₹ 90 lakh by way of RTGS and net banking. The balance of sale proceeds was realized in cash before 31st March, 2023. Dave & Co. wants to admit income under section 44AD of the Income Tax Act, 1961. How much is the presumptive income of Dave and Co. for the assessment year 2022-23?

(A)₹ 9, 60,000

(B)₹ 12, 80,000

(C)₹ 11, 00,000

(D)₹ 11, 90,000

PQR, an eligible assessee, following mercantile system of accounting, carrying on eligible business under section 44AD provides the following details :

Total turnover for the financial year 2021- 22 is ₹ 65 lakh. Which includes following:

₹ 12.5 lakh received by A/c payee cheque during the financial year 2021- 22; – ₹ 25 lakh received by cash during the financial year 2021-22; ₹ 12.5 lakh received by A/c payee bank draft before the due date of filing of return; ₹ 15 lakh not received till due date of filing of return

What shall be the amount of deemed profits of PQR under section 44AD(1) for A.Y. 2022-23 ?

(A)₹ 5,20,000

(B)₹ 3,50,000

(C)₹ 2,75,000

(D)₹ 4,70,000

The benefit of payment of advance tax in one instalment on or before 15th March is available to assessees computing profits on presumptive basis :

(A)Only under Section 44AD

(B)Under section 44AD and 44ADA

(C)Under section 44AD and 44AE

(D)Under section 44AD, 44ADA and 44AE

PQR, an eligible assessee, following mercantile system of accounting, carrying on eligible business under sec 44AD provides the following details. Total turnover for the financial year 2021-22 is ₹ 180 lakhs out of the above:

(i)30 lakhs received by cash during the financial year

(ii)80 lakhs not received till due date of filing of the return

(iii)70 lakhs received by account payee draft before the date of filing of return

What will be the amount of deemed profit of PQR under section 44AD(1) of Income Tax Act, 1961 for Assessment Year 2022-23 :

(A)₹ 14.4 lakhs

(B)₹ 10.8 lakhs

(C)₹ 12.4 lakhs

(D)₹ 13 lakhs

Which of the following statements for applicability of sec. 44AB for mandatory audit of accounts of certain person is false?

(A)Every person carrying on business whose total sales turnover or gross receipts in business exceeds 1 crore in any previous year

(B)Every person carrying on profession whose gross receipts in profession exceeds 1 crore in any previous year

(C)Every person carrying on a business, where deemed profits are taxed on presumptive basis under section 44AE or 44B or 44BBB whose income is claimed to be lower than the deemed profits under the respective sections

(D)Every person carrying on a profession, where 50% of the gross receipts are deemed to be profits under section 44ADA whose income is claimed to be lower than the deemed profits and such income exceeds the basic exemption limit.

Section 44ADA has been inserted in the Income Tax to provide for estimating the income of an assessee @ ................

(A)20% of the Total Gross receipt

(B)50% of the Total Gross receipt

(C)60% of the Total Gross receipt

(D)80% of the Total Gross receipt

Computation of income on estimated basis under section 44AD is not applicable to businesses carried on by :

(A)Resident individual

(B)Resident HUF

(C)Resident Partnership

(D)Resident LLP

The following persons are not eligible to avail benefit under section 44AD :

(A)A person carrying on profession referred to in section 44AA (1)

(B)LIC agent

(C)A person who is in the business of plying, hiring or leasing goods carriages

(D)All of the above

An assessee, who declares his income in accordance with Presumptive taxation regime under Section 44ADA, is required to pay advance tax in :

(A)One installment

(B)Two installments

(C)Three installments

(D)Four installments

HSP, an eligible assessee, following mercantile system of accounting and carrying on eligible business as specified in section 44AD of the Act provides the following details relating to the business carried out during the year ended on 31.3.2021 :

(i)Total turnover of business ₹ 120 lakh

(ii)Out of the total turnover of ₹ 120 lakh amount of ₹ 25 lakh received by account payee cheques, ₹ 40 lakh received by cash up-to March, 21 but amount of ₹ 25 lakh received by account payee bank drafts in May, 2021 and amount of ₹ 30 lakh would not be received till due date of filing of return for A.Y. 2021-22.

The amount of deemed profits to be declared by HSP as per section 44AD(1) for A.Y. 2021-22 shall be :

(A)₹ 9.60 lakh

(B)₹ 7.20 lakh

(C)₹ 8.60 lakh

(D)₹ 9.10 lakh

Payment of advance tax is to be made in four installments on or before 15th June, 15th Sept., 15th Dec. and 15th March by the assessee. However the benefit of payment of advance tax in one instalment on or before 15th March is available to an assessee who is computing profits on presumptive basis .................... of the Income Tax Act, 1961.

(A)Under section 44AD

(B)Under section 44AD and 44ADA and 44AE

(C)Under section 44AD and 44AE

(D)Under section 44AD and 44ADA

The requirement of audit u/s 44AB, doesn’t apply to a person who declares profits/gains on a presumptive basis u/s 44AD and his total sales/turnover/ gross receipts doesn’t exceed ______ .

(A)One crore

(B)Two crore

(C)Five crore

(D)50 lakhs

In order to rationalize the presumptive taxation scheme and to reduce the compliance burden of the small tax payers having income from profession and to facilitate the ease of doing business, a new section 44ADA has been inserted to provide presumptive taxation regime for professionals where, total gross receipts should not exceed ________

(A)₹ 25,00,000

(B)₹ 50,00,000

(C)₹ 75,00,000

(D)₹ 1,00,00,000

Dr. Kamlesh Pai is a cardiac surgeon. For the previous year 2020-21, his gross receipts from profession was ₹ 36,40,000. He wants to declare income as per the applicable presumptive provision. Determine the amount of income as per the applicable presumptive provision for the assessment year 2021-22.

(A)₹ 2,91,200

(B)₹ 3,64,000

(C)₹ 9,10,000

(D)₹ 18,20,000

Ramnath has 4 heavy goods vehicle (gross un laden weight of each vehicle was 13,000 kilograms) and 1 light vehicles (gross weight was less than 12000 kilograms). He operated the vehicles on contract basis to a paper manufacturing company throughout the previous year 2020-21 and received ₹ 90 lakhs as hire charges as per contract. How much is the income chargeable to tax under applicable presumptive provision ?

(A)₹ 7,80,000

(B)₹ 7,14,000

(C)₹ 7,20,000

(D)₹ 4,50,000

Senthil & Co. is a partnership firm consisting of 2 partners with equal share. The partnership deed provides for interest on capital @ 18% per annum on capital of ₹ 5 lakhs each contributed by the partners. Both are working partners eligible for monthly salary of 10,000 each as per partnership deed. The firm has done total sales of ₹ 60 lakhs. Amounts realized by cash was ₹ 10 lakhs and balance through account payee cheque/draft/ECS through a bank account. How much is the presumptive income of the firm under section 44AD for the assessment year 2021-22 ?

(A)₹ 64,000

(B)₹ 44,000

(C)₹ 4,60,000

(D)₹ 4,80,000

GG Goods Transporters engaged in the business of carriage of goods owns on 1st April, 2019 trucks consisting (i) 6 heavy goods vehicles having weight of each of 14 ton and (ii) 3 light goods vehicles having weight of each of 5 ton. On 4th May, 2019 one of the heavy goods vehicle was sold and 1 light goods vehicle was purchased on 15th May 2019. The newly purchased light goods vehicle was put to use only from 25th June 2019. The assessee wants to declare the income as per section 44AE of the Act; which for A.Y. 2020-21 is to be taken at ___________

(A)₹ 12,20,500

(B)₹ 12,06,500

(C)₹ 12,13,000

(D)₹ 11,99,000

The Income Computation and Disclosure Standards (ICDS) applicable from Asst. Year 2017-18 for the purpose of computation of Income under the head "Profits and gains of business or Profession" and "Income from other Sources" shall not apply for computation of -------- but shall apply for computation of -----------

(A)AMT; MAT

(B)Presumptive Income; MAT

(C)MAT; AMT

(D)AMT; Presumptive Income

Pink & Pink is a Proprietorship firm of Pingajee, resident in India having turnover from manufacturing and sale of Toys for the financial year 2019-20 of ₹ 160 lakh. The gross turnover of ₹ 160 lakh includes the amount of ₹ 60 lakh received through electronic clearing system/RTGS/NEFT. The accounts are being not properly maintained by Pingajee and therefore he wants to pay tax on the income to be computed under section 44AD of Act. Advise Pingajee, as to the amount of income on which he will be required to pay tax for A.Y. 2020-21 as per section 44AD :

(A)Not allowed to opt 44AD being turnover above ₹ 100 lakh

(B)₹ 11,60,000

(C)₹ 9,60,000

(D)₹ 12,80,000

Ram, engaged in the business of plying, hiring or leasing of goods carriages as on 1st April, 2019 was having 5 trucks of gross vehicles weight of each truck of less than 12,000 Kgs. One truck out of these 5 trucks was sold by him on 23rd July, 2019 and after sale of one truck; 2 more trucks (1of less than 12,000 Kgs and 1 of 16,900 Kgs of gross vehicle weight) were purchased on 5th September, 2019 and plied. He wants to declare the income of trucks as per provision of section 44 AE of the Act. He shall be required to declare an income of ₹_______ in the return for A.Y. 2020-21 from plying of these vehicles during the previous year ended on 31.03.2020.

(A)5,29,500

(B)4,95,000

(C)5,61,500

(D)5,54,000

Ramesh owns two vehicles for the purpose of plying on hire. The gross vehicle weight or unladen (without any goods) weight of one vehicle was 13 MT and of another vehicle 6 MT. The presumptive income under section 44AE for the previous year would be :

(A)₹ 1,80,000

(B)₹ 2,46,000

(C)₹ 1,20,000

(D)₹ 2,40,000

Ginger Shippers is owned by a non-resident engaged in shipping business. It received ₹ 120 lakh for carriage of goods shipped from Mumbai, India to Durban, South Africa. The presumptive income of the assessee under section 44B would be :

(A)₹ 9,60,000

(B)₹ 12,00,000

(C)₹ 6,00,000

(D)₹ 9,00,000

Ravinder has aggregate receipt from profession of ₹ 45 lakhs for the previous year 2018-19. His income as per books of account is ₹ 20,50,000. He wants to declare income as per the presumptive provisions contained in section 44ADA. The amount of income liable to tax would be :

(A)₹ 22,50,000

(B)₹ 20,50,000

(C)₹ 1,64,000

(D)₹ 3,60,000

Palak employed in a private company acquired a generator to be let out on hire for marriages and social functions. He received hire charges of ₹ 8,50,000 and paid on 1st day of every month, salary to operator @ ₹ 35,000 by cash. He also paid interest in cash to SBI towards loan for acquisition of generator of ₹ 1,52,000. The income of Palak from the said activity liable to tax would be (without considering 44AD) :

(A)₹ 2,78,000

(B)₹ 6,98,000

(C)₹ 5,78,000

(D)₹ 3,98,000

Dee & Co. is a partnership firm which filed its return of income by opting section 44AD for the assessment year 2017-18. It filed its return of income as per regular provision by getting the books of account audited u/s 44AB for the assessment year 2018-19 with profit of ₹ 70,000. For the assessment year 2019- 20 its income as per section 44AD is ₹ 4,80,000 and its income as per regular provisions is ₹ 6,30,000. What would be the income which is chargeable to tax for the assessment year 2019-20 ?

(A)₹ 6,30,000

(B)₹ 4,80,000

(C)₹ 3,45,000

(D)₹ 3,00,000

Ping Pong is a Proprietorship firm of Pinga, resident in India having turnover from manufacturing and sale of Steel balls for the year 2018-19 of ₹ 148 lakh which is inclusive of amount of ₹ 42 lakh received through electronic clearing system/RTGS/NEFT. The accounts are not properly maintained by Pinga and therefore he wants to pay tax on the income computed under section 44AD of Act. Advise Pinga, how much income he will be required to pay tax for A.Y. 2019-20 as per section 44AD :

(A)₹ 11,84,000

(B)Not allowed to opt 44AD being turnover above ₹ 100 lakh

(C)₹ 11,00,000

(D)₹ 8,88,000

Mr. Ramanad, engaged in the business of plying, hiring or leasing of goods carriers as on 1st April, 2018 was having 3 trucks of gross vehicles weight of less than 12,000 kgs each. One truck out of these 3 trucks was sold by him on 23rd July, 2018 and after its sale, 2 more trucks (1 of less than 12,000 kgs. and 1 of 16,900 kgs) were purchased on 5th September, 2018. He wants to declare the income of trucks as per provisions of section 44AE of the Act and be required to declare such income at ₹ ...................... in the return for A.Y. 2019- 20 from plying of these vehicles during theprevious year ended on 31st March, 2019.

(A)₹ 3,54,500

(B)₹ 3,81,500

(C)₹ 3,15,000

(D)₹ 3,74,000

Tulip & Co. is a partnership firm of two partners. Total turnover of the firm during financial year 2018-19 is ₹ 160 lakh inclusive of ₹ 60 lakh made through account payee cheques and ECS. The partnership deed provided for monthly working salary of ₹ 30,000 to each of the partners. The income of the firm by applying section 44AD for A.Y. 2019-20 would be :

(A)₹ 11,60,000

(B)₹ 12,80,000

(C)₹ 5,00,000

(D)₹ 4,40,000

'A' Transport company engaged in the business of plying goods carriage with 4 heavy vehicles and 3 non-heavy vehicles. All the non-heavy vehicles were sold on 10th May, 2018 and 2 heavy vehicles were acquired on the same date. Transporter wants to declare its income for A.Y. 2019-20 as per provisions of section 44AE and the same would be :

(A)₹ 5,70,000

(B)₹ 5,47,500

(C)₹ 5,55,000

(D)₹ 3,60,000

Kant, is engaged in the business of purchase and sale of pieces of various lands. During the F.Y. 2018-19, he sold pieces of lands for ₹ 32 lakh. All these sales were made through cheques and Electronic Clearing System (ECS). The valuation of these pieces of lands for stamp duty purpose was ₹ 41 lakh. He wants to pay tax on the income as per section 44AD. The income as per this section for A.Y. 2019-20 shall be :

(A)₹ 2,46,000

(B)₹ 3,28,000

(C)₹ 2,56,000

(D)₹ 1,92,000

Radhey a trader having turnover of ₹ 90,00,000 from textile business inclusive of turnover of ₹ 20,00,000 carried through banking channel by way of drafts and online payments had opted to pay tax as per section 44AD of the Income Tax Act. The amount of income which shall be taken for the purpose of tax for Asst. Year 2018-19 under the head income from business and profession is .............

(A)₹ 9,00,000

(B)₹ 6,80,000

(C)₹ 7,20,000

(D)₹ 5,40,000

Sardar Sukhdev Singh engaged in the business of plying, hiring or leasing of heavy goods carriages owned 6 vehicles during the period 1st April, 2017 to 31st March, 2018 which were given on lease for plying to GS Transport Company on a fixed rate of ₹ 5,000 p.m. per truck for whole year. He had opted to pay tax as per section 44AE of the Income Tax Act. The amount of income which shall be taken for all such trucks for the purpose of tax for Asst. Year 2018-19 is.............

(A)₹ 5,40,000

(B)₹ 3,60,000

(C)₹ 6,48,000

(D)₹ 6,84,000

The assessee opting to pay tax under the provisions of section 44ADA is not be required to maintain books of accounts as per section 44AA and gets the accounts audited under section 44AB of the Income Tax Act, 1961 where ................

(A)It claims that the profit and gains from the profession is higher than the deemed profit and gains

(B)Total gross receipts should not exceed ₹ 60 lakh

(C)Its income does not exceed the maximum amount which is not chargeable to income tax

(D)Both (A) and (C)

The lock in period under the scheme of presumptive taxation based on the tonnage of the ship, in case of Shipping Company, under the provisions of sections 115 to 115 V2C is :

(A)5 years

(B)7 years

(C)10 years

(D)3 years

Income of a non-resident from airline business under section 44BBA of Income Tax Act, 1961 is calculated at the rate of ............... percentage of the aggregate amounts specified, on presumptive basis.

(A)7.5%

(B)5%

(C)10%

(D)15%

(b)Compute the total depreciation allowable as per Income Tax Act, 1961 under the head of Profits and Gains from Business & Profession for Ankita for the assessment year 2025-26.

(c)Compute the total income chargeable under the head of Profits and Gains from Business & Profession for Ankita for the assessment year 2025-26.

Calculate the total Depreciation that can be claimed under the Income Tax in the following case :

(1)Asset 1 purchased on 01.04.2023 for ₹ 4,00,000 and put to use instantly

(2)Asset 2 purchased on 01.08.2023 for ₹ 3,00,000 and put to use on 10th March 2024

(3)Asset 3 purchased on 01.11.2023 for ₹ 3,00,000 and put to use on 01.05.2024

(Rate of Depreciation in all cases is 10%)

(A)₹ 50,000

(B)₹ 55,000

(C)₹ 70,000

(D)₹ 1,00,000

According to section 80, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of section 139(3), shall be carried forward. The exceptions to this are :

(A)Loss from specified business under section 73A

(B)Loss under the head “Capital Gains” and unabsorbed depreciation carried forward under section 32(2)

(C)Loss from h ouse prope rty and unabsorbed depreciation carried forward under section 32(2)

(D)Loss from speculation business under section 73

The rate of depreciation specified for intangible assets is :

(A)25%

(B)30%

(C)40%

(D)15%

(b)M/s WE & Co., is a proprietorship firm engaged in manufacture of an engineering product, at Chennai. On 12th January, 2023, it had purchased a new machinery for ₹ 10,00,000, which was immediately put to use.

During the previous year 2023-24, it purchased the following assets for business purposes, from Indian sellers :

The opening WDV of the block of plant and machinery, as on 1st April, 2023 was ₹ 32,00,000 (include the machinery purchase on 12th January, 2023).

Compute the total depreciation allowable as per the provisions of section 32 for the assessment year 2024-25. All the assets were put to use immediately after purchase. Normal rate of depreciation for all these assets may be taken as 15%. The firm has not opted the scheme of section 115 BAC.

( i )Following is the Profit and Loss account of Vinod for the year ended 31st March, 2024 :

Other Information :

(1)Depreciation allowable as per section 32 is ₹ 52,000.

(2)No tax was deducted on interest paid to non-resident.

(3)Amount of ₹ 25,000 due to MSME relating to purchase of goods in December, 2023 was outstanding as on 31st March 2024. It is pending beyond the time period under MSMED Act, 2006.

Compute the Total Income of Vinod for the assessment year 2024-25, on the assumption that he has not opted for section 115 BAC.

Motor buses, motor lorries and motor taxies used in a business of running them on hire acquired on or after 23.08.2019 but before 01.04.2021 and is put to use before 1.04.2021 will be entitled to a Depreciation @ ............. .

(A)15%

(B)30%

(C)40%

(D)45%

AB Ltd is in trading business. It bought out a new machinery for the purpose of its business on 15.09.2022. The additional amount of depreciation available to AB Ltd. will be :

(A)Nil

(B)3,00,000

(C)1,50,000

(D)75,000

AB Ltd has a building purchased on 12.03.2009 and that building was used for the company’s business. The WDV of the building was 45,250 (Depreciation rate 10%) and sold for 1,10,000. Calculate the Capital Gain in this case ? (The building is the only assets in the block) :

(A)LTCG 64,750

(B)LTCG 55,000

(C)STCG 64,750

(D)Nil being business Assets

(b)SM Services, a partnership firm consists of 2 working partners, Sunil and Murthy with 60% and 40% share, respectively. As per the partnership deed, they are eligible for interest on capital @ 15% p.a. on their capital contribution of ₹ 18 lakh each and remuneration of ₹ 55,000 p.m. to Sunil and ₹ 45,000 p.m. to Murthy. The firm is engaged in manufacturing business. During the year ended 31st March, 2023 the net profit as per profit and loss account was ₹ 25,36,000 before considering interest on capital and remuneration to partners as well as the following items :

You are required to compute the total income of SM Services for the assessment year 2023-24 after considering the above items.

X & Co. acquired a know- how on 10th November, 2022 for ₹ 5 lakh. How much is the amount of depreciation allowable under section 32 of the Income Tax Act, 1961 for the assessment year 2023-24?

(A)₹ 50,000

(B)₹ 62,500

(C)₹ 1, 25,000

(D)₹ 75,000

Harshit acquired following intangible assets in his business during the financial year 2021-22. (1) On 25th June, 2021 he purchased goodwill of business : Cost of acquisition ₹ 50 crore (2) On 7th October, 2021 he purchased Tenancy rights: Cost of acquisition ₹ 25 crore No other assets are in this block. Compute the allowed depreciation for assessment year 2022-23.

(A)₹ 18.75 Crore

(B)₹ 15.625 Crore

(C)₹ 3.125 Crore

(D)₹ 12.5 Crore

Girdhari, a retail businessman, acquired furniture on 12th May, 2021 for ₹ 10,000 in cash and on 18th May, 2021, for ₹ 35,000 and ₹ 40,000 by a bearer cheque and account payee cheque, respectively. Depreciation allowable for A.Y. 2022- 23 would be :

(A)₹ 4,000

(B)₹ 5,000

(C)₹ 7,500

(D)₹ 8,500

A partnership firm with 3 equal partners has brought forward depreciation of ₹ 3 lakh and business loss of ₹ 6 lakh relating to assessment year 2021-2022. On 1st April, 2021, one partner retired. The amount that assessee firm can set-off against its income for the assessment year 2022-23 would be :

(A)Unabsorbed depreciation of ₹ 3 lakh plus brought forward business loss of ₹ 6 lakh

(B)Unabsorbed depreciation of ₹ 2 lakh plus brought forward business loss ₹ 4 lakh

(C)Unabsorbed depreciation ₹ 2 lakh plus brought forward business Loss ₹ 6 lakh

(D)Unabsorbed depreciation ₹ 3 lakh plus brought forward business loss of ₹ 4 lakh

The rate of depreciation for fluidized bed type heat treatment furnaces is:

(A)15%

(B)20%

(C)40%

(D)30%

Y Ltd. acquired a building on 15th May 2018 for ₹ 4,00,000. The assessee, as a tenant, earlier used the building for industrial purpose on rent since the past 3 years and even after purchase it is continuously used for industrial purpose. Such building is compulsorily acquired by Government at an agreed value of 6,00,000 as on 15th July, 2020. The compensation was received on 15th March, 2021. The written down value of the building as on 1st April, 2020 is 3,42,000. The company acquired a new building for industrial purpose for 3,00,000 as on 31st March,2021. Calculate taxable capital gain for the assessment year 2021- 22.

(A)Nil

(B)3,42,000

(C)2,00,000

(D)1,00,000

What is the rate of depreciation charged on Gas Cylinders for industrial use under Income Tax Act, 1961 ?

(A)10%

(B)15%

(C)30%

(D)40%

Compute the income from business and profession of Mr. B for the A.Y. 2021- 22 from the information given below :

(1)Income from business (before providing for depreciation) of ₹ 1,00,000

(2)Income from tea business of ₹ 50,000

(3)Current year depreciation of ₹ 20,000

(4)Brought forward business loss (loss incurred six years ago) of ₹ 10,000.

(A)₹ 1,20,000

(B)₹ 1,00,000

(C)₹ 90,000

(D)₹ 87,500

Samode Power Generation Ltd an electricity company charging depreciation on straight line method (SLM) on each asset separately, sells one of its machinery in June, 2020 for ₹ 3,40,000. The WDV of the machinery at the beginning of the year on 1st April, 2020 is ₹ 3,70,000. No new machinery was purchased or added during the year 2020-21. The shortfall of ₹ 30,000 between the sale value and the WDV of the machine shall be treated as :

(A)Short-term capital loss

(B)Normal depreciation

(C)Terminal depreciation

(D)Business loss

Narendra Singh, engaged in Retail Cloth business purchased furniture for Shop on 10.04.2020 for ₹ 7,500 in cash and again on 15.04.2020 for ₹ 30,000 and ₹ 50,000 by a bearer cheque and account payee cheque, respectively. The furniture was fitted in the shop by 20.4.2020. Depreciation allowable for A.Y. 2021-22 would be :

(A)₹ 5,000

(B)₹ 5,750

(C)₹ 8,000

(D)₹ 8,750

The W.D.V. of a block (Plant and Machinery, rate of depreciation 15%) as on 1.4.2020 is ₹ 5,00,000. A second hand machinery costing ₹ 1,00,000 was acquired on 15.11.2020 through account payee cheque but put to use on 01.12.2020. Part of this block was sold for ₹ 3,00,000 on 05.01.2021. The depreciation allowable as per section 32 of the Act for A.Y. 2021-22 would be :

(A)₹ 45,000

(B)₹ 42,500

(C)₹ 37,500

(D)₹ 48,750

What is the rate of depreciation that shall be allowable in case of fluidized bed type heat treatment furnaces ?

(A)15%

(B)25%

(C)30%

(D)40%

According to section 80, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of section 139(3), shall be carried forward. The exceptions to this are :

(A)Loss from specified business under section 73A

(B)Loss under the head ‘‘Capital Gains’’ and unabsorbed depreciation carried forward under section 32(2)

(C)Loss from house property and unabsorbed depreciation carried forward under section 32(2)

(D)Loss from speculation business under section 73

Red Mfg. Ltd. purchased a new motor car for ₹ 14 lakhs on 01.11.2019 and used the same w.e.f. 01.12.2019. How much is the amount of depreciation allowable on the car for the assessment year 2021-22 ?

(A)₹ 2,10,000

(B)₹ 1,05,000

(C)₹ 3,15,000

(D)₹ 3,57,000

Larry Games Co. Ltd. engaged in medicine manufacture acquired on 22.11.2020 a patent from Andy Roberts by paying ₹ 100 lakhs. This enabled Larry Games Co. Ltd. to manufacture ‘‘Garner’’ a product for treatment of deadly contagious disease. How much is the eligible amount of depreciation on acquisition of patent ?

(A)₹ 12.50 lakhs

(B)₹ 25.00 lakhs

(C)₹ 50.00 lakhs

(D)₹ 100.00 lakhs

Rate at which depreciation shall be allowed in case of Ocean-going ships including dredgers, lugs, barges, survey launches and other similar ships used mainly for dredging purposes and fishing vessels with wooden hull as per Rule-5 under the Income Tax for Asst. Year 2020-21 is ________

(A)15%

(B)20%

(C)30%

(D)40%

The WDV of a block of asset of plant & machinery subject to depreciation @ 15% as on 1.4.2019 was of ₹ 27,50,000. One machine out of this block, was sold on 01.07.2019 for ₹ 4,50,000 and a new machine of the value of ₹ 17,50,000 purchased on 1.8.2019 was put to use from 01-03-2020. The amount of depreciation to be claimed on the block of plant & machinery in the computation of income for A.Y. 2020-21 shall be :

(A)₹ 4,76,250

(B)₹ 3,45,000

(C)₹ 6,07,500

(D)₹ 6,75,000

Additional Investment allowance of an amount equal to ---------- of the cost of the new asset acquired and installed for manufacture or production of any article or thing in any notified backward areas in the State of ------------- and the state of ------------- during the period 1.4.2015 to 31.3.2020 is allowed in addition of the amount of deduction under section 32 AC of the Act.

(A)15%; Andhra Pradesh; Karnataka

(B)25%; Andhra Pradesh; Telangana

(C)15%; Andhra Pradesh; Telangana

(D)25%; Andhra Pradesh; Karnataka

An asset eligible for additional depreciation at 20% is entitled to only 50% of the additional depreciation i.e. 10% as additional depreciation when it is put to use for less than ........................ number of days and it is purchased and put to use in same year.

(A)180

(B)183

(C)182

(D)270

The WDV of the block of asset of plant & machinery depreciated @ 15% as on 1st April, 2018 was of ₹ 13,50,000. Out of this block, one machine was sold 1st July, 2018 for ₹ 4,50,000 and a new machine of ₹ 7,50,000 was purchased on 1st August, 2018 which could be put to use from 1st March, 2019. The amount of depreciation to be claimed on the block of plant & machinery in the computation of income for A.Y. 2019-20 shall be :

(A)₹ 1,35,000

(B)₹ 2,47,500

(C)₹ 1,91,250

(D)₹ 2,53,125

A machine owned by AB & Co. was transferred to XYZ & Co. on 1st January, 2019 for ₹ 5 lakh of which actual cost and WDV was of ₹ 3 lakh and 2 lakh respectively. However, the fair market value on the date of transfer of machine was of ₹ 4 lakh. XYZ & Co. will be allowed depreciation on such machine by taking value thereof at ₹ .................... .

(A)5 lakh

(B)2 lakh

(C)3 lakh

(D)4 lakh

Any asset, on which depreciation is claimed on the basis of Straight Line Method (SLM) is sold and the amount by which money payable together with scrap value, fall short of the Written Down Value (WDV) of such asset, the amount of such deficiency in value of asset is allowed to be written off in the year of sale as ......................... .

(A)Balancing charge

(B)Terminal depreciation

(C)Loss on sale of asset

(D)Residual value of asset

Zed Ltd. a domestic company engaged in manufacturing activity at Mumbai acquired a plant for ₹ 5 lakh on 7th January, 2019 which is eligible for depreciation @ 15%. It paid ₹ 4 lakh through ECS system from bank and balance ₹ 1 lakh in cash on 23rd February, 2019. The plant was put to use on 12-03-2019. The amount of depreciation (normal and additional) on this plant for A.Y. 2019-20 shall be :

(A)₹ 40,000

(B)₹ 30,000

(C)₹ 70,000

(D)₹ 60,000

A company engaged in manufacturing of steel balls acquired computers at a cost of ₹ 3 lakh on 10th July, 2018. The depreciation allowance for the A.Y. 2019-20 under Income Tax, 1961 would be :

(A)₹ 1,80,000

(B)₹ 1,20,000

(C)₹ 3,00,000

(D)₹ 45,000

Z an assessee incurs expenditure for acquisition of an asset in respect of which payment (or aggregate of payment made to a person in a day), otherwise than by an account payee cheque/draft or use of ECS through a bank, exceeds ₹ __________ such payment shall not be eligible for claiming the amount of depreciation on such asset.

(A)₹ 50,000

(B)₹ 20,000

(C)₹ 10,000

(D)₹ 2,00,000

Hari Krishna Vidhyut Company Ltd. engaged in the business of generation and distribution of power and electricity has opted WDV method for claiming depreciation on its assets. Opening balance of the block of Plant and Machinery depreciated @ 15% on 1st April, 2017 was ₹ 15,00,000. New machines of an amount of ₹ 25,00,000 were purchased on 15th Nov. 2017 but put to use from 1st December, 2017. Computers for ₹ 2,00,000 were purchased on 9th Sept. 2017 and put to use in business since that date. The depreciation including the additional depreciation available to the company on plant and machinery and on the computers shall be of an amount of ..................... for A.Y. 2018-19.

(A)₹ 4,92,500

(B)₹ 5,32,500

(C)₹ 7,82,500

(D)₹ 7,42,500

Depreciation whether to be allowed on the purchase and installation of a fire extinguisher by a practicing CS in his office, even when the same is not put to use or used during the year of acquisition as stipulated under section 32 of Income Tax, 1961 :

(A)No, Failure to use for the profession or business

(B)Yes, Safety measures and kept stand by, treated as passive use and eligible for depreciation

(C)Yes, Allowable @ 10% of the cost

(D)Yes, Allowable @ 50% of the cost

(e)Give answer as per provisions contained under the Income-tax Act, 1961 in respect of each of the following questions for the assessment year as 2018-19:

[Only the end answer is needed, no working is required]

(i)WDV as on 1st April, 2017 of the block of asset of Plant and Machinery depreciated @ 15% was of ₹ 6,00,000. Out of this block, one machine was sold for ₹ 2,00,000 on 1st July, 2017 and a new machine costing of ₹ 9,00,000 was added on 1st September, 2017 but put to use only from 1st November, 2017. What will be the amount of normal depreciation which can be claimed against such block of Plant and Machinery ?

(ii)DAF Pvt. Ltd. fulfilling all the conditions specified in section 35AD of the Income-tax Act, 1961 has incurred capital expenditure of ₹ 50 lakh on purchase of land, ₹ 100 lakh ( ₹ 90 lakh by cheque and ₹ 10 lakh in cash) on construction of building and ₹ 30 lakh on plant & machinery during the previous year for setting up and operating a warehousing facility for storage of sugar. The warehouse become operational on 1st March, 2018. How much amount of deduction can the company claim for such capital expenditure as per section 35AD ?

(iii)Mr. Anirudh, a resident individual, has computed for the previous year 2017- 18, his business loss at ₹ 80,000, short-term capital gain on sale of gold of ₹ 60,000 long-term capital gain on sale of house of ₹ 3,00,000. State the amount of total income which shall be subject to tax in relevant assessment year.

(iv)State the amounts subject to tax out of the following gifts received during the previous year 2017-18 by Mr. Girish :

(a)Wrist watch of ₹ 70,000 given by a non-resident friend.

(b)Cash of ₹ 51,000 given by elder brother.

( a )How far is ownership of a business essential for considering the taxability arising from such business ? In case a business is tainted with illegality, can it be said that such income cannot be taxed, in view of the illegality involved ?

P Ltd an infra company issued Zero Coupon Bonds the Face value of which is 5,00,000 for 3,60,000 which will be matured after 4 years. What will be the deduction p.a. be available to the company ?

(A)1,25,000

(B)90,000

(C)35,000

(D)2,15,000

Mr. X sold a building for 5,00,000 as part of his business. The stamp duty authority valued that building for 5,20,000. The valuation officer determines the value for 5,70,000. Assessing officer at the time of assessment took the value as per his discretion as 6,00,000. What will be the correct value for sale consideration for the purpose of computation of business Income ?

(A)5,00,000

(B)5,20,000

(C)5,70,000

(D)6,00,000

Mishra Enterprises a partnership firm paid ₹ 40,000 by way of interest on loan taken from one of the friends of a partner. No tax was deducted at source for the interest payment. How much of interest expenditure is liable for disallowance for non-deduction of tax at source?

(A)₹ 40,000

(B)₹ 20,000

(C)₹ 12,000

(D)Nil

URG & Co. is engaged in construction and sale of residential apartments. It sold 4 identical apartments in December, 2022 for₹ 110 lakh and the guideline value of the ap artments as per stamp valuation authority was ₹ 120 lakh. How much would be added to its income under section 43CA of the Income Tax Act, 1961?

(A)Nil

(B)₹ 10 lakh

(C)₹ 5 lakh

(D)₹ 20 lakh

Chetan Co. (P) Ltd. commenced a new unit for manufacture of its products. The amount of preliminary expenses eligible for deduction was computed @ ₹ 7 lakh. In how many instalments the eligible preliminary expenditure would be amortized?

(A)3 years

(B)5 years

(C)7 years

(D)8 years

Under section 35D, Indian companies, resident in India, would be entitled to amortization of certain preliminary expenses incurred by them subject to the following limits :

(A)The deduction under section 35D is subject to maximum of ₹ 5,00,000

(B)The deduction under section 35D is maximum 5% of capital employed

(C)The deduction under section 35D is maximum 10% of cost of project.

(D)The deduction under section 35D is 1/5th of total preliminary expenses

Maintenance of accounts and other documents are compulsory as per Income Tax Act, 1961 when every person who is carrying on business or profession whose income from business or profession exceeds ₹ ...………..or total sales, turnover or gross receipts exceeds ₹ …………in any one of the three immediately preceding previous year.

(A)₹ 2,50,000 and ₹ 25,00,000

(B)₹ 2,50,000 and ₹ 50,00,000

(C)₹ 5,00,000 and ₹ 25,00,000

(D)₹ 5,00,000 and ₹ 50,00,000

Mahadev (age 66) discontinued his wholesale trading business w.e.f. 10.09.2019. He wrote off a sum of ₹ 2,70,000 due from Sankar in the previous year 2017-18 which was allowed as deduction in the tax assessment. Now in March, 2021 Mahadev recovered ₹ 90,000 as final and full settlement from Sankar. What is the tax consequence of the receipt of amount by Mahadev for the assessment year 2021-22 ?

(A)No tax implication

(B)₹ 90,000 taxable as income from business

(C)₹ 90,000 taxable as income from other sources

(D)₹ 2,70,000 written off now chargeable to tax as income from business

As per section 176 of Income Tax Act, 1961 where any business or profession is discontinued in any assessment year than as per section 176(3), person discontinuing their business or profession shall give to the A.O. a notice of such discontinuance within __________ thereof.

(A)5 days

(B)10 days

(C)15 days

(D)30 days

Which out of the following elements shall be considered for bringing to tax the income under the head Income from Business & Profession ?

(i)Ownership of the business is not necessary

(ii)Business must be legal

(iii)Income may be earned in cash or kind

(iv)Profit motive is not the sole consideration

(A)(iii) & (iv)

(B)(i), (iii) & (iv)

(C)(ii) & (iii)

(D)All the above four

Assets put to use in business for more than 180 days during the previous year consisting (i) Factory Building, (ii) Computers, (iii) Motor Vehicles used for Commercial Purposes and (iv) Intangible Assets shall be depreciated at the rate of ..................... respectively.

(A)5%, 15%, 30%, 25%

(B)10%, 40%, 30%, 25%

(C)10%, 15%, 25%, 25%

(D)5%, 40%, 15%, 25%

Raghav Housing Finance Ltd., a NBFC is eligible to claim deduction in the case of provision made for bad and doubtful debts to the extent of _______ total income.

(A)10%

(B)5%

(C)2%

(D)1%

Deccan Ltd. incurred an amount of ₹ 16 lakh as preliminary expenses for setting up a project costing ₹ 100 lakh during financial year 2018-19. The amount of amortization available as deduction during the A.Y. 2019-20 for the preliminary expenses would be :

(A)₹ 1,60,000

(B)₹ 3,20,000

(C)₹ 16,00,000

(D)₹ 1,00,000

(d)Discuss giving reason regarding admissibility or otherwise of the following expenditures while computing income under the head Income from Business or Profession :

(i)Expenses incurred in connection with a branch, the business of which was discontinued during the previous year.

(ii)Penalty paid to customs authorities for importing prohibited goods which gave a huge profit to the business.

(iii)Interest paid on an amount borrowed to acquire a plant for business use upto the date on which the plant is put to use.

(iv)Rent paid on daughter of the assessee for her building used as office premises of the business. The building was actually gifted to her by the assessee (father) at the time of her marriage.

(You need not rewrite the statements. Write only admissible / Not admissible with reasons)

Income Computation and Disclosure Standards (ICDS) notified by the Central Government are compulsorily required to be maintained by all assessees following mercantile system of accounting while computing Income under the head ‘‘Profits and Gains from Business or Profession’’ and ‘‘Income from Other Sources’’ except :

(A)Individual

(B)HUF

(C)Individuals and HUF who are not covered under the tax audit provisions under Section 44AB

(D)Individuals and HUF who are covered under the tax audit provisions under Section 44AB

For claiming deduction under Section 80JJAA the assessee must obtain audit report in Form Number 10DA from a Chartered Accountant on or before the :

(A)End of Previous Year

(B)Due date of filing Return

(C)Due date of filing of Tax Audit Report under Section 44AB of the Income Tax Act, 1961

(D)31st of December of the relevant Assessemt Year

(a)BAC & Co. is a partnership firm, which sets up a new industrial unit in Noida. It incurs following expenditure in connection with the new unit :

Following further informations are available :

Compute the deduction admissible to the firm u/s 35D of the Income Tax Act, 1961 for the assessment year 2023-24.

What is the minimum penalty u/s 271B in the case of Mr. S, an individual who has failed to get his accounts audited under section 44AB or furnish audit report along with return of income ?

(A)½% of the total turnover

(B)1/4% of the total turnover

(C)½% of the tax payable

(D)1/4% of the tax payable

X Co. (P) Ltd. having turnover of ₹ 220 lakhs for the previous year ended 31st March, 2021 failed to furnish tax audit report under section 44AB. How much could be levied as penalty on the assessee for the failure to furnish audit report under section 44AB ?

(A)₹ 1,00,000

(B)₹ 1,10,000

(C)₹ 1,50,000

(D)₹ 10,000

Kayal engaged in trading activity reported turnover of ₹ 210 lakh for the previous year 2017-18 and ₹ 190 lakh for the previous year 2018-19. She paid brokerage of ₹ 40,000 to Padmaja in October, 2018. Both the party are resident for tax purpose. The amount of tax deductible by Kayal on the brokerage paid would be:

(A)NIL

(B)₹ 800

(C)₹ 2,000

(D)₹ 4,000

Ganesh Traders (partnership firm) reported a turnover of ₹ 250 lakh for the assessment year 2019-20. It has not filed the tax audit report under section 44AB before specified date. The amount of penalty leviable for such failure would be :

(A)₹ 25,000

(B)₹ 1,00,000

(C)₹ 1,25,000

(D)₹ 1,50,000

A professional is required to get his accounts audited under section 44AB of the Income Tax Act, 1961 where the gross receipts from profession during the financial year 2018-19 :

(A)exceeds ₹ 100 lakhs

(B)equals to or exceeds ₹ 50 lakh

(C)equals to or exceeds ₹ 100 lakh

(D)exceeds ₹ 50 lakhs

More (P) Ltd. is engaged in manufacture of garments. Its turnover always exceeded ₹ 10 crore. It has not maintained books of account for the financial year 2022-23. During survey under section 133A of the Income Tax Act, 1961, it was found that it has not maintained books of account. How much would be the penalty leviable for failure to maintain books of account?

(A)₹ 10,000

(B)₹ 25,000

(C)₹ 1, 00,000

(D)₹ 5, 00,000

Yadav & Co. is engaged in wholesale trade. 98% of all receipts and expenses are through net banking. The assessee wants to know the turnover limit up to which its books of account need not to be audited under section 44AB of the Income Tax Act, 1961 and is eligible to admit the income as per books of account ?

(A)₹ 10 crore

(B)₹ 5 crore

(C)₹ 2 crore

(D)₹ 1 crore

Maintenance of such books of accounts and other documents is compulsory under section 44AA of the Income Tax Act, 1961 when every person who is carrying on business or profession and whose income from business and profession exceeds _________ or the total sales, turnover or gross receipts exceeds _________ in any one of the three years immediately preceding the previous year.

(A)₹ 2,50,000, ₹ 25,00,000

(B)₹ 2,50,000, ₹ 10,00,000

(C)₹ 5,00,000, ₹ 25,00,000

(D)₹ 1,20,000, ₹ 10,00,000

A transfer of capital asset by a private company or unlisted public company shall not be treated as transfer u/s 47 (xiiib) of the Act on Conversion into LLP on fulfillment of the conditions which inter-alia include that the total value of assets as appearing in the books of account of the company in any of the three previous years preceding the previous year in which the conversion took place does not exceed ................ .

(A)₹ 5,00,00,000

(B)₹ 10,00,00,000

(C)₹ 20,00,00,000

(D)₹ 1,00,00,000

Maintenance of books of accounts in the case of an HUF carrying business is mandatory, if the turnover or gross receipts in any one of the three years immediately preceding the previous year exceeds :

(A)₹ 10 lakh

(B)₹ 15 lakh

(C)₹ 25 lakh

(D)₹ 100 lakh

According to section 35 (2AA) of the Income Tax Act, 1961, the amount of deduction to be claimed for the sum paid to a National Laboratory for carrying out scientific research under an approved program in A.Y. 2021-22 would be :

(A)Actual amount of sum so paid

(B)2 times of sum so paid

(C)1.75 times of sum so paid

(D)1.50 times of sum so paid

Vinod furnishes the following particulars for Financial Year 2020-21. You are required to arrive at the deduction U/s 35 for A.Y. 2021-22, while computing the Income under head ‘‘Profits/Gains from Business/ Profession’’.

Amount paid to Indian Institute of Science,

Assuming assessee has not opted U/s 115BAC.

(A)₹ 18,50,000

(B)₹ 23,50,000

(C)₹ 22,75,000

(D)₹ 27,75,000

Shruthi Herbals (P) Ltd engaged in manufacturing activity acquired an equipment for 5 lakhs meant for scientific research purposes in the financial year 2017-18. It claimed 150% of the cost of expenditure as deduction under section 35. The asset ceased to be used for scientific research purposes subsequently and it was sold for ₹ 4 lakhs on 16.08.2020. How much is taxable as a result of sale of such asset ?

(A)₹ 6,50,000

(B)₹ 4,00,000

(C)₹ 7,50,000

(D)₹ 3,00,000

XYZ limited commenced production on 1st December 2019 of paper boards made payments (i) on 1st January 2020 of ₹ 1,00,000 to the Indian Agricultural Research Association, Jaipur being an approved research association under section 35(1)(ii) for the purpose of carrying out scientific research in natural science and (ii) on 15th January 2020 of ₹ 50,000 to the Indian Institute of Management, Ahmadabad being an approved institute under section 35(1)(iii) for the purpose of carrying out research in social or statistical science. The amount of deduction available to XYZ limited under section 35(1) for the assessment year 2020-21, if the scientific research not related to the business of the assessee-company is _________

(A)₹ 2,00,000

(B)₹ 2,25,000

(C)₹ 1,50,000

(D)₹ 1,62,500

Amitav had made payment of (i) ₹ 60,000 to IIT, Kanpur for an approved scientific research programme; (ii) ₹ 90,000 revenue expenditure on in house R&D facility as approved by prescribed authority and (iii) an amount of ₹ 2,00,000 to Indian Institute of Science, Bengaluru for scientific research. He wants to know about the total amount of deduction available as per provisions of the Act while computing the income under "Profits and gains from business" in the Asst. Year 2020-21.

(A)4,80,000

(B)3,50,000

(C)5,25,000

(D)5,30,000

Anirudh had made payment of (i) ₹ 30,000 to IIT, Kanpur for an approved scientific research programme (ii) ₹ 45,000 revenue expenditure on in house R&D facility as approved by prescribed authority and (iii) ₹ 1,00,000 to Indian Institute of Science, Bengaluru for scientific research, wants to know about the deduction available while computing the income under “Profits and gains from business” in the Assessment Year 2019-20.

(A)₹ 2,40,000

(B)₹ 1,75,000

(C)₹ 2,62,500

(D)₹ 2,65,000

XYZ Ltd. paid ₹ 5 lakh on 22-1-2019 to a national level laboratory for carrying scientific research unrelated to the business of the company. The amount of deduction eligible under section 35(2AA) of the Income Tax Act, 1961 is :

(A)₹ 5,00,000 @ 100%

(B)₹ 6,25,000 @ 125%

(C)₹ 7,50,000 @ 150%

(D)₹ 10,00,000 @ 200%

Radha engaged in the trading business and had contributed a sum of ₹ 1 lakh to an approved university in July, 17 to be used for scientific research, which is not related to her business. The amount of deduction for which she is eligible under section 35 of Income-Tax Act, 1961 for assessment year 2018-19 would be :

(A)₹ 1 lakh

(B)₹ 1.5 lakh

(C)₹ 1.75 lakh

(D)₹ 2 lakh

(c)Pratap, aged 40 years, is a salaried employee with Lalit Limited. He has furnished the following details for the financial year 2024-25 :

You are required to compute the gross total income of Pratap for the Assessment Year 2025-26, assuming that he has shifted out of the default tax regime under section 115BAC of Income Tax Act, 1961.

Loss from the activity of owning and maintaining race horses can be set off against .......... of the same assessment year.

(A)Speculation profits

(B)Specified business profits

(C)Any business profits

(D)Income from owning and maintaining race horses

A Ltd. started its production in the year 2014 in fertilisers in India which will be used for agricultural purposes. It incurred capital expenditure in the year 2014-15 for ₹ 150 Lakhs out of which ₹ 70 Lakhs was used for acquisition of Land. How much amount it can claimed as a deduction under section 35AD of the Income Tax Act, 1961 for the Assessment Year 2024-25 ?

(A)₹ 150 Lakhs

(B)₹ 70 Lakhs

(C)₹ 80 Lakhs

(D)₹ Nil

For how many no. of years, losses of business mentioned in section 35AD can be carried forward ? (Assessee has not opted for section 115BAC).

(A)Eight Years

(B)Four Years

(C)Seven Years

(D)No time limit

DAS Pvt. Ltd. fulfilling all the conditions as being specified in section 35AD of the Income Tax Act, 1961 has incurred capital expenditure of ₹ 30 lakh on purchase of land, ₹ 80 lakh ( ₹ 75 lakh by cheque and ₹ 5 lakh in cash) on construction of building and ₹ 10 lakh on the plant and machinery during the previous year 2017-18 for setting up and operating a warehouse for the storage of sugar. The warehouse became operational on 1st March, 2018. The amount of deduction which the company can claim for such capital expenditure as per section 35AD in A.Y. 2018-19 shall be ...........

(A)₹ 120 lakh

(B)₹ 180 lakh

(C)₹ 85 lakh

(D)₹ 90 lakh

Mark to market loss computed in accordance with income computation and disclosure standards (ICDS) shall be allowed as deduction from the Income under __________ .

(A)Salaries

(B)Income from house property

(C)Profits and gains of business or profession

(D)Capital gains

Mark to market loss computed in accordance with income computation and disclosure standards (ICDS) is being allowable as deduction from the Income computed under the head ______________

(A)Profits and gains of business or profession

(B)Income from other sources

(C)Salaries

(D)Capital Gains

Identify and find out which in the following is the false statement regarding applicability of ICDS.

(A)ICDS provisions shall apply for computation of MAT

(B)ICDS apply to tax payers following mercantile system of accounting

(C)ICDS also apply to the person computing Income under the relevant presumptive taxation schemes

(D)ICDS applies to all tax payers except individual and HUF who are not covered under the tax audit provision under section 44AB

Income Computation and Disclosure Standards (ICDS) are applicable for transactions under the head of income :

(A)Salaries

(B)Income from house property

(C)Profits and gains of business or profession

(D)Capital gains

As per ICDS, the unlisted securities shall be valued at :

(A)Initial cost

(B)Market price as on 31st March of the previous year

(C)Cost or market price, whichever is less

(D)Average of cost plus market price

A Ltd. paid ₹ 40,000 by cash to Mr. Q a supplier on 5/9/2023 on which the Nationalised bank was on strike. The amount of expenditure liable for disallowance u/s 40A(3) is :

(A)₹ 12,000

(B)₹ 40,000

(C)₹ 30,000

(D)NIL

What is the limit of cash payment under section 40A(3), where payment made for plying, hiring or leasing goods carriages ?

(A)₹ 10,000

(B)₹ 20,000

(C)₹ 35,000

(D)₹ 50,000

Which of the following expenditure is liable for disallowance for contravention of section 40A(3) read with rule 6ABBA ?

(A)Payment made in cash to Central or State Government exceeding ₹ 10,000 in a day

(B)Payment in cash in villages having no banking facility for purchase of raw material being agricultural produce

(C)Retrenchment compensation paid to employee ₹ 40,000

(D)Deposit of cash of ₹ 22,000 directly into the bank account of the supplier for purchase of goods

Patel, a textile dealer, purchases goods worth ₹ 65,000 from Anand and made the payments : (i) ₹ 12,000 by account payee cheque on 5th June, 2018, (ii) ₹ 8,000 by cash on 16th August, 2018, (iii) ₹ 15,000 by bearer cheque on 7th November, 2018 and (iv) ₹ 30,000 by ECS on 21st March, 2019. The amount of expenditure not allowable as per provisions of section 40A(3) would be :

(A)NIL

(B)₹ 8,000

(C)₹ 23,000

(D)₹ 38,000

Green Ltd is located in a notified backward area in the State of Bihar. It is engaged in manufacturing activity. It acquired second hand plant and machinery by import from Japan for ₹ 100 lakhs on 01.05.2020. It also acquired new machinery from Chennai for ₹ 5 0 lakhs on 10.11.2020 Compute eligible deduction under section 32AD in respect of the said plant and machineries acquired for the assessment year 2021-22.

(A)₹ 15 lakhs

(B)₹ 22.5 lakhs

(C)₹ 7.5 lakhs

(D)Nil

Which out of the following transactions are deemed to be speculative transactions?

(A)Purchase and Sale of shares otherwise than by actual delivery

(B)Forward contracts

(C)Trading in derivatives or commodity derivatives

(D)Hedging Contract in respect of Raw Materials or Merchandise

Browny Processors (P) Ltd paid ₹ 4,50,000 as contract charges to Martin. It deducted tax at source @ 1% for the expenditure incurred up to 30th April, 2020 of ₹ 1,50,000 and did not deduct tax on the subsequent payments of ₹ 3,00,000 made during the previous year 2020-21. How much of the expenditure would be added to its income while computing the income of Browny Processors (P) Ltd of the assessment year 2021-22 ?

(A)₹ 4,50,000

(B)₹ 3,00,000

(C)₹ 1,50,000

(D)₹ 90,000

XYZ Ltd paid an amount of ₹ 2,00,000 towards rent for the business premises to Ramavtar on 12.01.2020 and did not deduct tax at source. Ramavtar also had not paid the tax on such income. Treatment according to provision under the Income Tax Act, 1961 in the hands of XYZ Ltd in Assessment Year 2020-21 in respect of expenditure of rent be __________

(A)disallowance of 10% of such expenditure

(B)disallowance of 20% of such expenditure

(C)disallowance of 30% of such expenditure

(D)disallowance of 100% of such expenditure

Manoj & Co. (partnership firm) paid monthly rent of ₹ 30,000 for its premises during the previous year 2018-19. No tax was deducted at source for the rent paid up to 31-3-2019. Total Tax was deducted tax at source on 5-5-2019 and remitted on 10-9-2019. The return of income of the firm for the assessment year 2019-20 was filed on 31-08-2019, the due date. The amount of expenditure liable for disallowance under section 40(a)(ia) for the assessment year 2019-20 would be :

(A)NIL

(B)₹ 3,60,000

(C)₹ 1,08,000

(D)₹ 30,000

Any expenditure incurred by an assessee on the activities relating to the corporate social reasonability (CSR) referred to in section 135 of the Companies Act, 2013 for the purpose of allowability as deduction under section 37(1) of the Income Tax Act, 1961 _________ for the purpose of the business.

(A)shall be deemed to be an expenditure incurred

(B)shall not be deemed to be an expenditure incurred

(C)shall be capitalized

(D)shall be amortized in five equal installments

(c)State with brief reasons whether the following losses sustained during the year while carrying a business be allowable while computing the income under the head “Profits and gains of business or profession” :

(i)Robbery or dacoity and loss of money in a bank branch;

(ii)Embezzlement of cash by the cashier;

(iii)Loss due to non-recovery of advance given for supplies.