TAXATION & LAW CODE'S PRESENT'S CS-EXECUTIVE TAX LAWS MCQ's

84 Pages·2014·2.11 MB·English

JM D TA XA TI ON & L A W C ODE P age | 0

For CA, CS & OTHER PROFESSIONAL
2014
COURSES
CS-EXECUTIVE TAX
LAWS MCQ’s

TAXATION & LAW CODE’S
PRESENT’S
BY: - KETAN SARDANA
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PREFACE TO MY FIRST EDITION
It gives me immense pleasure, in helping the student community in
particular by writing some notes in a simple, lucid manner.
Since, the book assumes no previous knowledge of the subject on the part
of, the Reader, its aims complete clarity for the beginner and simplicity
which makes the text self-explanatory,
I express my sincere gratitude to, all those who have stood by me, in this
noble task.
I, take this opportunity, in thanking my parents, my friends, readers, my
well-wishers, and yes God for their blessings and support,
I feel confident that the notes will meet a real need. If it is widely read and
wisely used, I shall feel amply rewarded.
I shall gratefully acknowledge any suggestions to further increase the utility
of the book, and readily incorporate them for the betterment of my next
edition of notes

DON’T COPY, RESPECT EFFORT BEHIND THIS.
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This Book is dedicated to LORD GANESHA
and SARASWATI MAA

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DIRECT TAX

Multiple Choice Questions
1.The following is capital receipt:
(a) Dividend from investment;
(b) Bonus shares;
(c) Sale of technological know- how;
(d) Compensation received for compulsory evacuation of place of business.

2. Following is not a capital receipt:
(a) Dividend on investment;
(b) Bonus shares;
(c) Sale of know-how;
(d) Compensation received for vacating business place.

3.An individual is said to be resident in India in a previous year (in which the February month has 29
days) if he is in India in that year for a period or periods amounting in all to 182 days or more,
[(a) 182, (b) 183, (c) 60, (d) 150]

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4 The assessee is charged to income-tax in the assessment year following the previous year:
(a) A non-resident business firm which shipped goods on 1.5.2013 at Visakhapatnam Port in
Andhra Pradesh
(b) An employee left India to USA on 1.8.2013 with no intention of returning
(c) ABC firm which discontinued its business on 1.9.2013
(d) An employee-assessee of a University who worked during 1.4.13 to 30.03.2014
5. Income received in India in previous year is taxable in the hands of:
(a) Resident;
(b) Not-resident;
(c) Non ordinarily resident;
(d) All above

6. Expenditure incurred by an employer on medical treatment and stayabroad of the employee
shall not be taxed in the case of ___________.
(a) an employee whose gross total income before including the said expendituredoes not exceed Rs. 2
lakhs.
(b) an employee whose income under the head "Salaries" exclusive of all monetary perquisites does
not exceed Rs. 2 lakhs,
(c) an employee whose income under the head "Salaries" exclusive of allnon-monetary
perquisites does not exceed Rs. 2 lakhs,
(d) all employees irrespective of their amount of gross total income/the amountof income under the
head "Salaries".

7. If an employer transfers second hand motor car to the employee, the perquisite is valued at –
(a) Actual cost less depreciation @ 30% for every completed year under straightline method
(b) Actual cost less depreciation @ 20% for every completed year under WDV method
(c) Actual cost less depreciation @ 30% for every completed year under WDV method
(d)Actual cost less depreciation @ 20% for every completed year under SLM method.
8.The following is exempt income :—
(a) Travel concession to employee
(b) Remuneration received for valuation of answer scripts
(c) Encashment of leave salary whilst in service
(d) Perquisites in India

9. The following is not taxable as income under the head "Salaries":-
(a) Commission received by a full-time director;
(b) Remuneration received by a partner;
(c) Allowances received by an employee;
(d) Free accommodation given to an employee.
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10. If an assessee earns rent from a sub-tenant in respect to tenanted property let out as a residence,
the said rent is:
(a) Exempt under Section 10.
(b) Taxable under the head income from house property.
(c) Taxable as business income, as the letting out is a commercial activity.
(d) Taxable as income from other sources, unless the assessee is in the business of subletting
properties on a regular basis.

11. X Ltd. has failed to remit the tax deducted at source from annual rent of Rs. 6,60,000 paid to Mr.
A for its office building. Said rent is —
(a)fully allowable as a business expenditure;
(b)not allowable in view of Section 40(a)(i);
(c)allowable to the extent of 50%;
(d)none of the above.
12. A partnership firm's profit as per the profit and loss account is Rs. 10,00,000. Its total income
determined according to the provisions of the Income-tax Act, 1961 is Rs. 9,00,000. A partner who
has 20% share in the firm can claim exemption of amount of Rs. __________under Section 10(2A).
(a) 2,00,000,(b) 1,80,000, (c) 20,000 (d) None of the above

13. Expenditure incurred in carrying out illegal business is—
(a) Not allowed as deduction in any case.
(b) Allowable as deduction, if gross total income is less than Rs. 5 lakhs.
(c) Allowable as deduction in all cases.
(d) Allowable as deduction, if income from illegal business is offered to tax.

14. if any expenditure is incurred by an Indian company wholly and exclusively for purpose of
amalgamation or demerger, the said expenditure is —
(a) not allowable as a deduction as a deduction in computing "Profits and gains from business or
profession"
(b) Fully deductible as revenue expenditure in the year in which it is incurred.
(c) allowable as a deduction, spread over eight successive previous years beginning if the previous year
in which the amalgamation or demerger taken place.
(d) allowable as a deduction, spread over five successive years beginning with the previous year in
which the amalgamation or demerger taken place

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15. If any expenditure is incurred by an Indian company wholly and exclusively for the purpose of
amalgamation or demerger, the said expenditure is —
(a) Not allowable as a deduction in computing profits and gains of business or profession.
(b) Fully deductible as revenue expenditure in the year in which it is incurred.
(c) Not deductible but is eligible to be treated as an intangible asset in respect of which depreciation
can be claimed.
(d) Allowed as a deduction spread over five successive previous year beginning with the previous year
in which the amalgamation or demerger takes place.

16. Deduction for bad debts is allowed to an assessee carrying on business —
(a) In the year in which the debt is written off as bad.
(b) In the year in which the debt first arose.
(c) In the year in which provisions was made in respect of the bad debt.
(d) In the year in which the debt becomes irrecoverable by operation of law

17. Under Section 41(4) of the Income-tax Act, 1961, where a bad debt allowed as a deduction under
Section 36(1)(vii) in an earlier year is subsequently recovered —
(a) It is taxable to the extent of 50% of recovery, in the year of receipt, as business income.
(b) It is taxable as business income in the year of recovery.
(c) It is added back to the income of the year when it was written off and taxable business income.
(d)It is taxable as income from other sources in the year of receipt.

18. Payment of interest to partners of partnership firm assessed as firm is allowable as deduction
under Section 40(b) of the Income Tax Act, 1961.
(a) If the rate of interest does not exceed 8% p.a.
(b) If the interest is paid on the minimum balance of capital account between10th and the end of
every month.
(c) If it is calculated on quarterly balance.
(d) If it is authorized by and in accordance with the partnership deed, pertains to period after the deed
and does not exceed 12 percent simple interest per annum.

19. The following is not 'plant' u/s 43(3) of the Income-Tax Act, 1961 —
(a) Books
(b) Know-how
(c) Road in the factory building
(d) Electrical fittings

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20. Mr. L Singhused it in his business. This is the only asset in the block. 20% of the usage is for
personal purposes. The WDV of the block as on 31.3.2014 is —
(a) Rs. 2,70,000;
(b) Rs. 2,55,000;
(c) Rs. 2,10,000;
(d) None of the above.
.
21. Long-term capital gains arising on compulsory acquisition of agricultural land held by a domestic
company within specified urban limits is —
(a) not exempt under Section 10(37);
(b) exempt under Section 10(37) in full;
(c) 50% of the receipt is exempt under Section 10(37);
(d) 25% of the receipt is exempt under Section 10(37).

22. In case of an investor in shares, in respect of shares sold, securities transactions tax paid (at the
time of purchase of the said shares earlier), is —

(a) to be added to the cost of acquisition;
(b) to be deducted as an expenditure connected with transfer;
(c) not deductible at all while computing capital gains;
(d) none of the above.

23. In respect of listed shares held for 10 months sold on 12.8.2010, the rate of tax in respect of
capital gains is —
(a) 10%;
(b) 20%;
(c) 15%;
(d) not determinable, as the capital gains will form part of the total incomewhose other
components are not known.

24. Capital gains arising to an individual/HUF is exempt from tax under section 10(37) if the land
was being used for agriculture purposes by such HUFor individual or parent of his during a period
of or more immediately preceding the date of transfer.
(a)2 years,(c) 12 months,
(b)36months,(d)6months

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25. Long term capital gain arising to an assessee on the sale of a capital asset is exempt under Section
54EC of the Income-tax Act, 1961 —
(a) To the extent of investment in specified bonds up to a limit of X 100 lakhs.
(b) To the extent of 50% of investment in certain bonds up to a limit of Rs. 50 lakhs.
(c) To the extent of investment of capital gain in specified bonds not exceeding Rs. 50 lakhs.
(d) Proportionate to the extent of investment of net sale proceeds in specified
bonds, not exceeding Rs. 50 lakhs.

26.(A)Gift received from one or more unrelated person(s) during the previous year shall form part of
an individual's income, if the aggregate of gifts exceeds —
(a) Rs. 50,000
(b) Rs. 1,00,000
(c) Rs. 1,35,000
(d) Rs.1,65,000

27. Cash gift received under Section 56(2)(vii) from non relatives are not taxable upto —
(a) Rs. 1,00,000;
(b) 175,000;
(c) Rs. 50,000;
(d) Rs. 25,00

28 Mr. X gifts Rs.60,000 to the HUF of which he is member; said amount will be treated as income
of —
(a) Mr. X;
(b) The HUF;
(c) None, as it is exempt;
(d) None of the above.

29. Mr. A has three minor children deriving interest from bank deposits to of the tune of Rs.2,000,
Rs.1,300 and Rs.1,600 respectively. Exemption available under Section 10(32) of the Income-tax Act,
1961 is-
(a) Rs. 4,900;(c)Rs. 4,500;
(b) Rs. 4,300;(d)None of above

30. Miss Femina, aged 17, is married to Mr. Masculine. Her mother alone is alive. Income by way
of interest on loans, of Miss Femina will be -
(a) Assessed to tax in the hands of Mr. Masculine;
(b) Assessed to tax in the hands of her mother;
(c) Taxable in own hands;
(d) None of the above.

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31. Government's contribution to the new pension scheme referred to inSection 80CCD is -
(a) an exempt income;
(b) income chargeable to tax as "Salaries" in full;
(c) 50% thereof is income chargeable to tax as "Salaries";
(d) Income chargeable to tax as "Income from other sources" in full.

32. In case of a hospital built in specified area after 31.3.2014 fulfilling the required conditions laid
down in Section 80IB-(11C), the profits and gains derived from running the hospital are
(a) deductible in full;
(b) deductible to the extent of 50%;
(c) deductible to the extent of 75%;
(d) taxable in full.

33. The registration of a charitable trust can be cancelled under Section 12AA of the Income-tax
Act, 1961 by —'
(a) Assessing Office;
(b) Commissioner of Income-tax;
(c) Chief Commissioner of Income-tax;
(d) Central Board of Direct Taxes.

34. The income of any university or other educational institution existingsolely for educational
purposes and not for the purposes of profit is exempt underclause (iiiad) of Section 10(23C) if the
aggregate annual receipts'of such university or educational institution do not exceed Rs.
(a) Rs.100crores,(c) Rs. 10crores,
(b) Rs.1 crore,(d) Rs. 10 lakhs

35. Any income chargeable under the based "Salaries" is exempt fromtax under Section 10(6)(viii),
if it is received by any non resident individual asremuneration for services rendered in connection
with his employment in a foreign ship where his total stay in India does not exceed a perioddays
in that previous year.
(a) 90
(b) 182
(c) 60
(d) 120

36. The following is not a venture capital undertaking for the purposes of Sec.10(23F), if
engaged in business of-
(a) Generation of power
(b) Telecommunications
(c) Providing infrastructural facility
(d) Dairy farming whose shares are not listed in a recognized stock exchange
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