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“QUESTIONS”
Q 1. Air India Ltd. paid Rs.20 lakhs in year ended 31.3.2019 to Airports Authority of India towards
landing and parking charges.

A) No tax is deductible at source from such payment

B) Tax is deductible at source@2% u/s 194C on such payment
C) Tax is deductible at source@2% u/s 194-I on such payment
D) Tax is deductible at source@10% u/s 194-I on such payment

Q 2. A Ltd. credited Rs.28,000 towards fees for professional services and Rs.27,000 towards fees
for technical services to account of Ram in its books of account on 12.11.2018. total sum of Rs.55,000
was paid by cheque to Ram on same date.

A) No tax deduct at source from such payment

B) Tax is deduct at source@10% on entire payment of Rs.55,000
C) Tax deduct at source@10% on Rs.25,000 (Rs.55,000 - Rs.30,000)
D) Tax is deduct at source@2% Rs.25,000 (Rs.55,000 - Rs.30,000)

Q 3. Mr. Hari, a salaried individual, pays rent of Rs.55,000 per month to Mr. Raghav from June,
2018. Which is correct?

A) No tax is required to be deducted for F.Y.2018-19 since Mr. Hari is not subject to tax audit u/s 44AB
B) Mr. Hari has to deduct tax@5% from rent paid every month
C) Mr. Hari has to deduct tax@5% on entire rent paid for F.Y.2018-19 from rent payable for March, 2019
D) Mr. Hari has to deduct tax of Rs.55,000 from rent payable for March, 2019

Q 4. A Ltd., an Indian company, has a wholly owned subsidiary in Sri Lanka, and it extends
corporate guarantee to said non-resident subsidiary. If amount guaranteed is Rs.90 crore, Assessing
Officer has to accept guarantee fee declared by A Ltd. for F.Y.2018-19, if guarantee fee declared is –

A) Rs.45 lakhs
B) Rs.80 lakhs
C) Rs.90 lakhs
D) Either (a) or (b)

Q 5. ABC Ltd. an Indian company paid dividend distribution tax under section 115-O in respect of
dividend distributed by it to its resident and non-resident shareholders. Mr. John, a shareholder of
ABC Ltd. and a resident of Country X, has to pay tax in Country X on dividend received by him
from ABC Ltd., as per domestic tax laws of Country X. This is example of: -

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A) Juridical double taxation

B) Economic double taxation
C) Territorial double taxation
D) Municipal double taxation

Q 6. Music Academy, as per its rules, pays a fixed honorarium per concert to each musician
performing in concerts organised by it. Hari, a violinist, however, refuses to accept this sum. If he
requests Music Academy to pay such sum directly to Aid Us, an unregistered institution providing
relief to poor and needy in rural India, what would be tax consequence?

A) No chargeable to tax in hands of Mr. Hari, since its diversion of income at source by overriding title.
B) Amt payable to Aid Us chargeable to tax only in hands of Mr. Hari, since its application of income
C) Amt payable to Aid Us chargeable to tax only in hands of institution which has received amt
D) Amt payable to Aid Us chargeable to tax both in hands of Mr. Hari and in hands of institution.

Q 7. An application for advance ruling was made on 31.05.2018 in relation to a transaction proposed
to be undertaken by Mr. Andrew, a resident of Germany. On 07.07.2018, he decides to withdraw
said application.

A) Application cannot be withdrawn once filed

B) Application can be withdrawn on 07.07.2018 only with special permission of PCC
C) Application cannot be withdrawn since 30 days from date of application have passed
D) Application can be withdrawn on 07.07.2018 with permission of AAR, if circumstances so justify

Q 8. X Ltd., a company engaged in business of manufacturing, paid Rs.2 lakh to IISc, Bangalore (an
approved and notified institution) for scientific research. It also incurred capital expenditure of
Rs.12 lakh (including cost of acquisition of land Rs.5 lakh) on in-house research and development
facility as approved by prescribed authority. Deduction u/s 35 for A.Y.2019-20 would be: -

A) Rs.9,00,000
B) Rs.13,50,000
C) Rs14,00,000
D) Rs.10,00,000

Q 9. Mr. X, set up a manufacturing unit in Warangal in state of Telangana on 01.06.2018. It invested

Rs.30 crore in new plant and machinery on 1.6.2018. Further, it invested Rs.25 crore in plant and
machinery on 01.11.2018, out of which Rs. 5 crore was second hand plant and machinery.
depreciation allowable under section 32 for A.Y.2019-20 is: -

A) Rs.15.375 crore
B) Rs.20.375 crore
C) Rs.14.875 crore
D) Rs.11.375 crore

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Q 10. Y Ltd. purchased computers of value of Rs.10 lakhs in November, 2018 and installed same in
its office. depreciation allowable under section 32 for A.Y.2019-20 is respect of same is –

A) Rs.6 lakhs
B) Rs.3 lakhs
C) Rs.4 lakhs
D) Rs.2 lakhs

Q 11. Mr. Arvind, engaged in business of wholesale trade, has a turnover of Rs.90 lakhs for
P.Y.2017-18 and Rs.210 lakhs for P.Y.2018-19. In P.Y.2018-19, he paid salary of Rs.3 lakhs to Mr.
Hari, a resident, without deduction of tax at source and commission of Rs.25,000 to Mr. Rajesh, a
resident, without deduction of tax at source. disallowance under section 40(a)(ia) while computing
business income of A.Y.2019-20 would be: –

A) Rs.3,25,000
B) Rs.97,500
C) Rs.90,000
D) Nil

Q 12. A public charitable trust registered under section 12AA for previous year ended 31.3.2019,
derived income of Rs.10 lakhs from properties held by trust and voluntary contributions from
public 15 lakhs, out of which Rs.8 lakhs was applied for charitable purposes and Rs.4 lakhs towards
repayment of loan taken for construction of orphanage. Total income of trust for A.Y.2019-20 is –

A) Rs.13 lakhs
B) Rs.9.25 lakhs
C) Rs.13.25 lakhs
D) Rs.17 lakhs

Q 13. If Country A is NJA, then, rate at which interest receivable from a infrastructure debt fund
notified u/s 10(47) is taxable in hands of Mr. Ram, a resident of Country A, & rate at which tax to be
deducted at source on such income are, respectively: -

A) 30% and 5%
B) 5% and 5%
C) 30% and 30%
D) 5% and 30%

Q 14. In October, 2014, Mr. Raghav, an Indian citizen who is a non-resident, bought 500 Global
Depository Receipts of A Ltd, India, issued in accordance with notified scheme of CG against
company’s initial issue of shares in foreign currency. In January, 2019, he sold 300 GDRs outside
India to Mr. Joe, a citizen and resident of a country outside India and 200 GDRs to Mr. Kamal, a
Resident but not ordinarily resident in India. Tax consequences of such sale transaction?

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A) Capital gains on sale of 500 GDRs shall be subject to tax @20% with indexation benefit in India
B) No capital gains on sale of 500 GDRs in India, since GDRs are purchased in foreign currency
C) No capital gains on sale of 300 GDRs, but capital gain on sale of 200 GDRs shall be taxed in
India@10% without indexation
D) No capital gains on sale of 300 GDRs, but capital gains arising on sale of 200 GDRs shall be taxed
@20% with indexation benefit in India

Q 15. If ABC Ltd. has two Units, Unit 1 is engaged in power generation business and Unit 2 is
engaged in manufacture of wires. Both units were set up in Karnataka in year 2014. In year 2018-
19, twenty lakh metres of wire are transferred from Unit 2 to Unit 1 at Rs.125 per metre when
market price per metre was Rs.180. Which of following statements is correct?

A) Transfer pricing provisions would be attracted in this case

B) Transfer pricing provisions not be attracted in this case since Unit 1 and Unit 2 belong to same
company and aren’t associated enterprises.
C) Transfer pricing provisions would not be attracted in this case as it is not an international transaction
since both Units are in India. However, for Chapter VIA deduction, profits of power generation
business shall,be computed as if transfer made at market value of Rs.180 per MT.
D) Transfer pricing not be attracted in this case due to reasons mentioned in both (b) and (c) above.

Q 16. Which is not eligible international transaction for application of safe harbor Rule?
(i) Preparation of user documentation
(ii) Receipt of intra-group loans where amount of loan is denominated in INR
(iii) Providing implicit corporate guarantee
(iv) Purchase and export of core auto components
(v) Receipt of intra-group services from group member .
Choose correct option

A) Only (ii)
B) (ii) & (v)
C) (ii), (iv) & (v)
D) (ii), (iii), (iv) & (v)

Q 17. XYZ Ltd. has failed to report an international transaction entered by it with PQR Inc., which
is a specified foreign company in relation to XYZ Ltd. What would be penalty leviable in this case?
(i) 2% of value of transaction
(ii) 50% of tax payable on under-reported income
(iii) 200% of tax payable on under-reported income Choose correct option

A) Only (i)
B) Only (iii)
C) (i) & (ii)
D) (i) & (iii)

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Q 18. Alpha Ltd.’s Total Income of A.Y.2019-20 has increased by Rs.34 lakhs due to application of
arm’s length price by AO on transactions of purchase of goods from its foreign holding company in
respect of a retail trade business carried on by it, and same has been accepted by Alpha Ltd., then: -

A) Business loss of A.Y.2015-16 cannot be set-off against enhanced income

B) Deductions under Chapter VI-A cannot be claimed in respect of enhanced income
C) Unabsorbed depreciation of A.Y.2010-11 cannot be set-off against enhanced income
D) Business loss referred to in (a), deductions referred to in (b) and unabsorbed depreciation
referred to in (c) cannot be set-off against enhanced income.

Q 19. Mr. Anjan, a property dealer, sold a flat in Mumbai, stamp duty of which is Rs.2 crores for
Rs.1.80 crores to his friend Mr. Ashwin, a college lecturer. Mr. Anjan had purchased flat one year
back for Rs.1.50 crores and stamp duty value on that date was also Rs.1.50 crores. What are tax
implications of such sale?

A) Rs.50 lakhs would be taxable as short-term capital gains in hands of Mr. Anjan. No tax implication in
hands of Mr. Ashwin
B) Rs.50 lakhs would be taxable as business income in hands of Mr. Anjan. There would be no tax
implication in hands of Mr. Ashwin
C) Rs.50 lakhs would be taxable as business income in hands of Mr. Anjan and Rs.20 lakhs would be
taxable as income from other sources in hands of Mr. Ashwin.
D) Rs.50 lakhs would be taxable as short-term capital gains in hands of Mr. Anjan and Rs.20 lakhs would
be taxable as income from other sources in hands of Mr. Ashwin.

Q 20. Dividend received by a real estate investment trust (REIT) from special purpose vehicle (SPV)
and distributed to its unit holders is: -

A) Exempt in hands of both REIT and unit holders unconditionally

B) Exempt in hands of REIT only if SPV is a specified domestic company; exempt in hands of unit
holders only if taxable in hands of REIT
C) Exempt in hands of REIT only if SPV is a specified domestic company; exempt in hands of unit
holders only if exempt in hands of REIT
D) Exempt in hands of REIT only if SPV is a specified domestic company; exempt unconditionally in
hands of unit holders

Q 21. Which of treated as "profits derived from" business or undertaking for deduction in 80‐IB?
(i) Transport subsidy (ii) Duty drawback receipts (iii)Interest subsidy (iv) Power subsidy

A) Only (ii)
B) (ii) & (iii)
C) (i), (iii) & (iv)
D) All above

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Q 22. ABC Ltd., Indian company engaged in manufacture of steel, has incurred expenditure on
advertisement in a souvenir of political party. Which of following statements are correct?

A) Such expenditure is allowable as deduction while computing its business income.

B) Such expenditure is not allowable as deduction while computing its total income.
C) Such expenditure is not allowable as deduction while computing its business income but is allowable as
deduction from gross total income.
D) Such expenditure is neither allowable as deduction from business income nor allowable as deduction
from gross total income

Q 23. Rental income earned from business of letting out of properties is –

A) Always taxable as income from house property

B) Always taxable as business income
C) Taxable as business income or income from house property, at option of assessee. However, practice
should be followed consistently.
D) Taxable as business income only if entire or substantial income of assessee was from letting out of
property. Otherwise, same would be taxable as income from house property.

Q 24. ABC Ltd., Indian company commenced business on 1.2.2019. It incurred preliminary expenses
of Rs.35 lakhs during period from 1.4.2018 to 31.1.2019. cost of project is Rs.5 crore. following are
details as on 31.3.2019: Issued Share Capital ‐ Rs.3 crore; Share Premium ‐ Rs.50 lakhs; Debentures
‐ Rs.1 crore; Long‐term borrowings ‐ Rs.2 crore. deduction u/s 35D for P.Y.2018‐19 is: -

A) Rs.5 lakhs
B) Rs.6 lakhs
C) Rs.6.50 lakhs
D) Rs.7 lakhs

Q 25. Himalaya Ltd. is an eligible start‐up engaged in eligible business. Its gross total income
included profits of Rs.25 lakhs from such business. Assessing Officer made disallowance of Rs.3
lakhs under 40(a)(ia) and of Rs.2 lakhs under 43B. deduction allowable under 80‐IAC would be –

A) Rs.25 lakhs
B) Rs.28 lakhs
C) Rs.30 lakhs
D) Rs.20 lakhs

Q 26. Delta Limited is engaged in growing and manufacturing rubber in India. It commenced its
operations from 1st April, 2018. It acquired plant and machinery (second hand), factory building
and furniture at a cost of Rs.62 lakhs, Rs.37 lakhs and Rs.8 lakhs, respectively, in P.Y. 2018‐19 by
way of ECS through bank account. Assuming that all assets were put to use for more than 180 days
in P.Y. 2018‐19, you are required to compute written down value of each block as on 1st April, 2019.

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A) Rs.52.70 lakhs; Rs.33.30 lakhs & Rs.7.20 lakhs

B) Rs.58.75 lakhs; Rs.35.71 lakhs & Rs.7.72 lakhs
C) Rs.58.28 lakhs;Rs.35.52 lakhs & Rs.7.68 lakhs
D) Rs.59.675 lakhs; Rs.36.075 lakhs & Rs.7.8 lakhs

Q 27. AO entered a hotel run by a person, in respect of whom he exercises jurisdiction, at 8.30 p.m.
for purpose of collecting information, which may be useful for purposes of Act. hotel is kept open for
business every day between 8 a.m. and 10 p.m. As per provisions of section 133B,

A) A.O. cannot enter premises at 8.30 p.m. since it is after sunset

B) A.O. can enter premises at 8.30 p.m. and take away books of account kept at hotel after taking prior
approval of PCC/ CC
C) A.O. can enter premises at 8.30 p.m. and take books of account kept at hotel after recording reasons.
D) A.O. can enter premises at 8.30 p.m. but cannot take away books of account kept at hotel

Q 28. In course of search operations under section 132 in month of May, 2019, Mr. Aakash makes
a declaration under section 132(4) on earning of income not disclosed in respect of P.Y. 2018. He also
explains manner in which he has derived such income and he pays tax together with interest on such
income and declares such income in return of income filed by him in month of July, 2019. Is penalty
leviable in this case?

A) No penalty is attracted since Mr. Aakash has voluntarily made a declaration under section 132(4).
B) Penalty@10% of undisclosed income would be attracted even if Mr. Aakash has voluntarily made a
declaration 132(4).
C) Penalty@30% of undisclosed income would be attracted even if Mr. Aakash has voluntarily made a
declaration 132(4).
D) Penalty@60% of undisclosed income would be attracted even if Mr. Aakash has voluntarily made a
declaration 132(4).

Q 29. ABC Ltd. took on sub‐lease a building from Ms. Jhanvi with effect from 1.7.2018 on a rent of
Rs.20,000 per month. It also took on hire machinery from Ms. Jhanvi with effect from 1.10.2018 on
hire charges of Rs.15,000 per month. ABC Ltd. entered into two separate agreements with Ms.
Jhanvi for sub‐lease of building and hiring of machinery. Which of following statements are correct
with reference to ABC Ltd.'s liability to deduct tax at source, assuming that one‐month's rent was
received as security deposit, which is refundable at end of lease period?

A) No tax to deduct at source since rent for building does not >1,80,000 p.a. and rent for machinery not
>1,80,000 p.a. Security deposit refundable at end of lease term is not rent for purpose of TDS
B) Tax to be deducted@10% on rent of Rs.2,00,000 (including security deposit) for building, but no tax be
deducted on rent for machinery (including security deposit), since same does not exceed Rs.1,80,000.
C) Tax be deducted@10% on Rs.2,00,000 and @2% on Rs.1,05,000 (i.e. rent including security deposit)
D) Tax be deducted@10% on Rs.1,80,000 and @2% on Rs.90,000. Security deposit refundable at end of
lease period is not rent.

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Q 30. Mudra Adco Ltd., an advertising company, has retained a sum of Rs.15 lakhs, towards
charges for procuring and canvassing advertisements, from payment of Rs.1 crore due to Cloud TV,
TV channel & remitted balance 85 lakhs to TV channel. Which of following statements are correct?

A) No TDS is attracted Rs.15 lakhs retained by Mudra Adco Ltd.

B) TDS@2% is attracted on Rs.15 lakhs retained by Mudra Adco Ltd
C) TDS@5% is attracted on Rs.15 lakhs retained by Mudra Adco Ltd.
D) TDS@10% is attracted on Rs.15 lakhs retained by Mudra Adco Ltd.

Q 31. Mr. X acquired a house property at Mumbai from Mr. Y, a resident, for a consideration of
Rs.90 lakhs, on 20.6.2018. On same day, Mr. X made two separate transactions, thereby acquiring
an urban plot in Kolkata from Mr. C for a sum of Rs.49,50,000 and rural agricultural land from
Mr. D for a consideration of Rs.60 lakhs. Which of following statements are correct?

A) No tax deduction at source is required in respect of any of three payments.

B) TDS@1% is attracted on all three payments.
C) TDS@1% on Rs.90 lakhs and Rs.49,50,000 are attracted. No TDS on payment of Rs.60,00,000 for
acquisition of rural agricultural land
D) TDS@1% on Rs.90 lakhs is attracted. No TDS on payments of Rs.49,50,000 and 60,00,000

Q 32. A notified infrastructure debt fund eligible for exemption under section 10(47) of Income‐tax
Act, 1961 pays interest of Rs.5 lakhs to a company incorporated in a foreign country. foreign
company incurred expenditure of Rs.12,000 for earning such interest. fund also pays interest of Rs.3
lakhs to Mr. Frank, who is a resident of Country A, a notified jurisdictional area. Which of
following statements are correct?

A) No tax deduction at source is required in respect of both payments.

B) No TDS is required in respect of payment of Rs.5 lakhs to foreign company. However payment of
interest to Frank attracts TDS@31.2%
C) TDS@5.20% is attracted on Rs.4,88,000 to foreign company. TDS@31.2% is attracted on interest
payment of Rs.3 lakhs to Mr. Frank
D) TDS@5.20% is attracted on interest payment of Rs.5 lakhs to foreign company. TDS@31.2% is
attracted on interest payment of Rs.3 lakhs to Mr. Frank

Q 33. Mr. Ram, a resident individual aged 55 years, has not furnished his return of income for
A.Y.2018‐19. Total income assessed wrt such year under 144 is Rs.12 lakh. Determine penalty 270A.

A) Penalty leviable is Rs.1,79,400, being tax payable on total income of Rs.12 lakh
B) Penalty leviable is Rs.89,700, being 50% of tax payable on Rs.12 lakh
C) Penalty leviable under section 270A is Rs.53,300, being 50% of tax payable on under‐reported income
of Rs.9.50 lakhs (i.e., Rs.12 lakhs ‐ basic exemption limit of Rs.2.50 lakhs
D) Penalty leviable under section 270A is Rs.1,06,600, being tax payable on under‐reported income of
Rs.9.50 lakhs (i.e., Rs.12 lakhs ‐ basic exemption limit of Rs.2.50 lakhs)

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Q 34. A private bank has not filed its statement of financial transaction or reportable account in
relation to specified financial transactions for financial year 2018‐19. A notice was issued by
prescribed income‐tax authority on 1st October, 2019 requiring bank to furnish statement by 31st
October, 2019. bank, however, furnished statement only on 15th November, 2019. What would be
penalty leviable under section 271FA?

A) Rs.91,500
B) Rs.13,600
C) Rs.16,800
D) Rs.22,800

Q 35. Raman & Associates had made payment of Rs.2 lakh to contractors for carrying out labour
job work at various sites, but had not deducted tax at source. What are tax consequences?

A) Rs.2,00,000 has to be added back while computing business income. However, no penalty is leviable
B) Rs.60,000 has to be added back while computing business income. However, no penalty is leviable
C) Penalty equal to amount of tax which has not been deducted is leviable in this case. Also, Rs.2,00,000
has to be added back while computing business income.
D) Penalty equal to amount of tax which has not been deducted is leviable in this case. Also, Rs.60,000
has to be added back while computing business income

Q 36. Mr. Aryan is constructing a residential house property in Mumbai for self‐occupation. He
has taken a loan of Rs.35 lakhs on 30.3.2018 for this purpose. He pays interest of Rs.3 lakhs during
P.Y.2018‐19. He repays Rs.3 lakhs towards principal on 31.3.2019. construction is completed in
April, 2019. This is only house property of Mr. Aryan. For A.Y.2019‐20: -

A) Mr. Aryan is entitled for deduction of Rs.2 lakhs under section 24 and Rs.1.50 lakhs under 80C
B) Mr. Aryan entitled for deduction of Rs.2 lakhs under section 24, Rs.50,000 under section 80EE and
Rs.1.50 lakhs u/s 80C.
C) Mr. Aryan neither entitled for deduction u/s 24 nor under section 80C. He is, however, entitled for
deduction of Rs.50,000 in 80EE.
D) Mr. Aryan is not entitled for deduction under section 24, section 80C and section 80EE.

Q 37. PQR Ltd., a domestic company, has distributed on 15/10/2018, dividend of Rs.230 lakh to its
shareholders. On 17/9/2018, PQR Ltd. has received dividend of Rs.60 lakh from its domestic
subsidiary company XYZ Ltd., on which XYZ Ltd. has paid dividend distribution tax under section
115‐0. Additional income‐tax payable by PQR Ltd. under section 115‐O is: –

A) Rs.29.70 lakhs
B) Rs.34.944 lakhs
C) Rs.34.608 lakhs
D) Rs.29.42 lakhs

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Q 38. Lima Ltd., a domestic company, purchases its own unlisted shares on 13th August, 2018.
consideration for buyback amounted to Rs.23 lakh, which was paid on same day. amount received
by company two years back for issue of such shares determined in manner specified in Rule 40BB
was Rs.17 lakh. additional income‐tax payable by Lima Ltd. Is: –

A) Rs.1,03,824
B) Rs.1,04,832
C) Rs.1,39,776
D) Rs.1,38,432

Q 39. A REIT derives rental income of Rs.2 crore from real estate property directly owned by it and
short term capital gains of Rs.1 crore on sale of developmental properties. It also receives interest
income of Rs.3 crore from Gamma Ltd., an Indian company, in which it holds controlling interest.
REIT holds 80% of shareholding of Gamma Ltd. Which of following statements is correct?

A) All above income are taxable in hands of REIT

B) REIT enjoys pass through status wrt above income & such income are taxable in hands of unit holders.
C) REIT enjoys pass through status wrt interest income from Gamma Ltd. and hence, such income is
taxable in hands of unit holders. Rental income and short‐term capital gains taxable in hands of REIT
D) REIT enjoys pass through status in respect of interest income from Gamma Ltd. and rental income
from directly owned real estate property and hence, such income are taxable in hands of unit holders.
Short‐term capital gains is taxable in hands of REIT

Q 40. Mr. Hari has income of Rs.52 lakhs under head “Profits and gains of business or profession”.
One of his businesses is eligible for deduction@100% of profits under section 80‐IB for A.Y.
2019‐20. profit from such business included in business income is Rs.20 lakhs. tax payable by Mr.
Hari (rounded off), assuming that he has no other income during P.Y.2018‐19, is –

A) Rs.8,03,400
B) Rs.10,89,950
C) Rs.9,90,860
D) Rs.11,00,530

Q 41. The assessment of Satpura Ltd. was completed under section 143(3) with an addition of Rs.18
lakhs to returned income. Satpura Ltd. preferred appeal before Commissioner (Appeals) which is
pending now. Which of following statements is incorrect?

A) A.O. can initiate reassessment proceedings in respect of income chargeable to tax which has escaped
assessment, provided such income which has escaped assessment does not form part of additions of
Rs.18 lakhs to returned income, which is subject matter of appeal.
B) A.O. can pass order154(1) to rectify mistake apparent from record, provided rectification on matter,
other than matter which has been considered and decided in appeal before Commissioner (Appeals).

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C) Under 264, Commissioner can revise order pending before Commissioner (Appeals), if revision
pertains to a matter, other than matter(s) covered in appeal before Commissioner (Appeals)
D) Under 263, if order is prejudicial to interests of revenue, Commissioner can revise order pending
before Commissioner (Appeals), if revision pertains to a matter, other than matter(s) covered in appeal
before Commissioner (Appeals)

Q 42. Kamala charitable trust, registered u/s 12AA, having its main object as medical relief, earned
dividend income of Rs.3 lakhs, income of Rs.2 lakhs from mutual funds registered under section
10(23D) and agricultural income of Rs.4 lakhs during P.Y.2018‐19. Which of following is correct?

A) Trust has to apply such income for charitable purposes as per provisions of section 11 to claim
exemption in respect of such income.
B) Trust can claim exemption 10(1), 10(34) and 10(35) in respect of its agricultural income, dividend
and income from mutual funds, respectively, without applying such income for charitable purposes.
C) Trust can claim exemption10(34) and 10(35) in respect of its dividend and income from mutual funds,
without applying such income for charitable purposes. However, it cannot claim exemption under
section 10(1) wrt agricultural income without applying such income for charitable purposes.
D) Trust can claim exemption 10(1) wrt its agricultural income without applying such income for
charitable purposes. It cannot claim exemption on its income from mutual funds registered under
10(23D) and dividend income of Rs.3 lakhs without applying such income for charitable purposes.

Q 43. Delta Ltd., a domestic company, declared dividend of Rs.85 lakh for year F.Y.2018‐19 and
distributed same on 27.6.2019. Mr. Ganesh, holding 15% shares in Delta Ltd., receives dividend of
Rs.12.75 lakh in June, 2019. Mr. Rajesh, holding 10% shares in Delta Ltd., receives dividend of
Rs.8.50 lakh. Which of following statements is correct?

A) DDT u/s 115‐O is attracted in hands of Delta Ltd. No tax on dividend received by Mr. Ganesh and Mr.
Rajesh in their individual hands.
B) DDT u/s 115‐O is attracted in hands of Delta Ltd. Dividend received by Mr. Ganesh and Mr. Rajesh is
also taxable in their individual hands
C) DDT payable by Delta Ltd. u/s 115‐O. Dividend received by Mr.Ganesh is taxable in his hands@10%.
D) Dividend distribution tax is payable by Delta Ltd. u/s 115‐O. Also, Mr. Ganesh to pay tax@10% on
dividend of Rs.2.75 lakhs received.

Q 44. Which of following individuals entitled to opt for presumptive taxation for A.Y.2019‐20?
(i) A retail trader having turnover of Rs.2 crore during previous year 2018‐19
(ii) A practising CA having gross receipts of Rs.92 lakhs during previous year 2018‐19.
(iii) A wholesale trader having turnover of Rs.1.96 crore during previous year 2018‐19.
(iv) A doctor having gross receipts of Rs.50 lakhs during previous year 2018‐19
(v) Individual owning 8 goods carriages on 1.4.2018. He sold 2 goods carriages on 1.5.2018 &
purchased 4 carriages on 1.7.2018.

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A) Only (iii)
B) (iii) & (v)
C) (i), (iii), (iv) & (v)
D) (i), (ii), (iii), (iv) & (v)

Q 45. Mr. Arjun’s, aged 40 years, total income comprises of LTCG on sale of land Rs.5 lakhs; STCG
on sale of STT paid listed equity shares Rs.2 lakhs; income from lottery Rs.1 lakh and savings
bank interest Rs.30,000. He invests Rs.1.50 lakhs in PPF. His tax liability for A.Y.2019‐20 is –

A) Rs.1,64,800
B) Rs.1,66,400
C) Rs.1,14,400
D) Rs.1,13,300

Q 46. Mrs. Kavitha, wife of Mr. Sundar, is a partner in a firm. Her capital contribution of Rs.5
lakhs to firm as on 1.4.2018 included Rs.3 lakhs contributed out of gift received from Sundar. On
2.4.2018, she further invested Rs.1 lakh out of gift received from Sundar. firm paid interest on
capital of Rs.60,000 and share of profit of Rs.50,000 during F.Y.2018‐19. entire interest has been
allowed as deduction in hands of firm. Which of following statements is correct?

A) Share of profit is exempt but interest on capital is taxable in hands of Mrs. Kavitha
B) Share of profit is exempt but interest of 40,000 includible in income of Mr. Sundar & interest 20,000 is
includible in income of Mrs. Kavitha
C) Share of profit is exempt but interest of Rs.36,000 is includible in income of Mr. Sundar and interest of
Rs.24,000 is includible in income of Mrs. Kavitha
D) Share of profit upto 30,000 and interest on capital upto 36,000 is includible in hands of Mr. Sundar

Q 47. X Ltd., a domestic company, has a total income of Rs.10,01,00,000 for A.Y.2019‐20. Gross
receipts of X Ltd. for P.Y.2016‐17 is Rs.240 crore. Tax liability of X Ltd. for A.Y.2019‐20 is: -

A) Rs.2,79,24,000
B) Rs.2,89,20,000
C) Rs.2,99,71,000
D) Rs.2,69,83,000

Q 48. M/s. Atlanta Airlines, incorporated as a company in USA, operated its flights to India and vice
versa in yr 18‐19 and collected charges of Rs.280 crores for carriage of passengers and cargo, out of
which Rs.100 crores were received in US Dollars for passenger fare from Atlanta to Delhi. Out of
Rs.100 crores, US dollars equivalent to Rs.40 crores received in India. Total expenses for year on
operation of such flights were Rs.11 crores. Effective rate of income‐tax on total income of M/s.
Atlanta Airlines is: -

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A) 42.432%
B) 43.68%
C) 43.26%
D) 42.024%

Q 49. Abhinav, Individual aged 52 years resident in India, bought 3,000 equity shares of Rs.10 each
of Theta Ltd. at Rs.70 per share on 1.6.2018. He sold 1,800 equity shares at Rs.50 per share on
3.11.2018 and remaining 1,200 shares at Rs.60 per share on 23.3.2019. Theta Ltd. declared a
dividend of 40%, record date being 14.8.2018. On 15.3.2019, Abhinav sold a house from which he
derived a long‐term capital gain of Rs.1,25,000. Assuming Abhinav’s interest income from bank
fixed deposit is Rs.3,00,000, his tax liability (rounded off) for A.Y.2018‐19 would be: -

A) Rs.18,620
B) Rs.19,920
C) Rs.20,110
D) Rs.18,440

Q 50. Ms Geetha, born in USA, comes to India for first time on 5.1.2019 and left India on 28.5.2019.
She was born and bought up in USA but her grandparents were born in Karachi before year 1940.
In December, 2015, she bought, in foreign currency, 500 Global Depository Receipts of PQR Ltd, an
Indian Company, which were issued in accordance with notified scheme of Central Govt against
initial issue of shares of PQR Ltd. In January, 2018, she sold 300 GDRs outside India to Mr. Frank,
citizen & resident of Country ‘X’ & 200 GDRs to Mr. Kamal, a Resident but not ordinarily
resident in India. Comment tax consequences of such sale transaction in Income-tax Act, 1961: –

A) Capital gains arising on sale of 500 GDRs shall be subject to tax @20% with indexation benefit in
India
B) No capital gains would arise on sale of 500 GDRs in India, since GDRs are purchased in foreign
currency
C) No capital gains on sale of 300 GDRs, but capital gains arising on sale of 200 GDRs taxed in India
@10% without indexation benefit
D) No capital gains on sale of 300 GDRs, but capital gains arising on sale of 200 GDRs shall be taxed
@20% with indexation benefit in India

Q 51. Where a person, resident in India, derives income from a nation with which India does not
have a DTAA, such person is given credit in India in following manner:

A) Entire tax paid in foreign country is allowed as deduction

B) Tax paid in foreign country on income which is doubly taxed, is allowed as deduction
C) Tax paid on income which is doubly taxed, is allowed as deduction, at Indian rate of tax only
D) Tax paid on income which is doubly taxed, is allowed as deduction, at Indian rate of tax or rate of tax
of foreign country, whichever is lower

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Q 52. Interest income earned by non-resident in P.Y. 2018-19 on bonds, issued by ABC Ltd., Indian
company, under a scheme by CG, which were purchased by him in convertible foreign currency, is –

A) Taxable @10%
B) Taxable @15%
C) Taxable @20%
D) Not taxable

Q 53. Zinc Ltd. owns following assets on 01.04.2018: -

Assets Rate of Depreciation WDV on 01.04.2018

Plant A 15% 4,05,000
Plant B 15% 1,95,000

On 10.06.2018, company acquires Plant C for Rs. 20,000 (rate of depreciation is 15%). Company
sells following assets during previous year 2018-19: -
Assets Sale consideration Expenses on transfer
Plant A 2,00,000 12,000
Plant B 3,72,000 -
Plant C 85,000 200
Determine depreciation and CG for A.Y. 2019-20 in hands of Zinc Ltd. Further, is it possible for
Zinc Ltd. to avoid tax on CG?

A) Depreciation: Nil and Short term capital gain: Rs.24,800. Further, it is not possible for Zinc Ltd. to
avoid tax on capital gains.
B) Depreciation: Rs.93,000 and Short term CG: Rs.1,17,800. Further, it is not possible for Zinc Ltd. to
avoid tax on capital gains.
C) Depreciation: Nil and Short term capital gain: Rs. 24,800. Further, Zinc Ltd. can avoid tax on capital
gains if it purchases another plant (eligible for depreciation @15%) during previous year 2018-19 of
Rs. 24,800 or more.
D) Depreciation: Rs. 93,000 and Short term capital gain: Rs.1,17,800. Further, Zinc Ltd. can avoid tax on
capital gains if it purchases another plant (eligible for depreciation @15%) during previous year 2018-
19 of Rs.1,17,800 or more.

Q 54. Nikhil, an individual whose age is 35 years incurs following expenses for benefit of his family
(i.e., Nikhil, Mrs. Nikhil and dependent children) and parents [father (80 years), mother (76 years)]
during previous year 2018-19: -

BENEFIT: - Mediclaim premium Preventive check- up Medical exp

(by cheque) (in cash) (by cheque)
For Nikhil, Mrs. Nikhil and children Rs.20,000 Rs.7,000 Rs.2,000
For benefit of father Nil Nil Rs.32,000
For benefit of mother 6,000 Nil Nil
Compute amount of deduction allowable to Nikhil for assessment year 2019-20.

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A) Rs.63,000
B) Rs.55,000
C) Rs.67,000
D) Rs.65,000

Q 55. Mr. X took a loan from SBI on 31.03.2011 of Rs.10,00,000. During previous year 2018-19,
interest actually paid on such loan was Rs.1,00,000. However, amount of interest unpaid on such
loan from 01.04.2011 upto 31.03.2019 is Rs.2,00,000. As Mr. X was making continuous defaults in
making payment of interest, a restructuring arrangement was entered wherein unpaid interest was
converted into Funded Interest Term Loan (FITL) which is shown separately from original loan and
no interest is chargeable on FITL. This converted interest is to be paid 4 annual equal installments
from 01.04.2022. Mr. X is of view that for A.Y. 2019-20, following deductions allowed to him while
computing his business income: - * Interest of Rs.1,00,000 on original principal of Rs.10,00,000.
* Converted interest of Rs.2,00,000. Whether X’s view is correct?

A) Correct, total deduction of Rs.3,00,000 shall be allowed to Mr. X in A.Y. 2019-20.

B) Incorrect, no deduction shall be allowed to Mr. X in A.Y. 2019-20.
C) Partially correct, interest of Rs.1,00,000 shall be fully allowed, however, proportionate amount of
converted interest for period 01.04.2018 to 31.03.2019 shall be allowed.
D) Incorrect, only deduction of Rs.1,00,000 shall be allowed to Mr. X in A.Y. 2019-20.

Q 56. A search u/s 132 of Income-tax Act, 1961 was carried out in case of Mr. M on 20.12.2016.
During course of search, assessee admitted additional income of Rs.50 crore as additional sales for
financial year 2016-17. While filing his return of income in response to notice u/s 153A, M did not
declare said income. Determine penalty excluding surcharge and cess payable by M on it.

A) Rs.5 Crore
B) Rs.10 Crore
C) Rs.15 Crore
D) Rs.30 Crore

Q 57. Mr. Harry and Mr. Sujoy, resident and Indian citizens, have been appointed as senior officials
of County A embassy and County B embassy, respectively, in India in October, 2018. Mr. Harry and
Mr. Sujoy are subjects of Country A and County B, respectively, and are not engaged in any other
business or profession in India. remuneration received by Indian officials working in Indian
embassy in County A is exempt but in County B is taxable. tax treatment of remuneration received
by Mr. Harry and Mr. Sujoy from embassies of Country A and B in India for P.Y. 2018-19 is:

A) Exempt from income-tax under section 10

B) Taxable under Income-tax Act, 1961
C) Remuneration received by Mr. Harry is exempt but remuneration received by Mr. Sujoy is taxable
D) Remuneration received by Mr. Sujoy is exempt but remuneration received by Mr. Harry is taxable

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Q 58. The total turnover of Sunshine Ltd. during financial year 2017-18 was Rs.10 crore. It is liable
to get its accounts audited u/s 44AB of Income-tax Act, 1961 by 30.09.2018. However, due to some
disputes between directors, process of audit of accounts u/s 44AB will not be completed by
30.09.2018. Directors of company have approached you to know consequences of not complying with
provisions of Section 44AB. Which of following are consequences of said non-compliance?

A) Fine may be charged, which shall be lower of Rs.1,50,000/- or 0.5% of total turnover.
B) Penalty may be charged, which shall be lower of Rs.1,50,000/- or 0.5% of total turnover.
C) Fine as per option (a) and imprisonment of directors responsible for non-compliance.
D) Penalty as per option (b) and imprisonment of directors responsible for non-compliance.

Q 59. Y is a foreign company having permanent establishment in India namely X. Z, a non-resident

associated enterprise, has invested Rs.900 crore through debt in X. Earnings before interest, taxes,
depreciation and amortisation (EBITDA) of X during financial year was Rs.150 crore. Compute
amount of interest allowable in respect of debt assuming that debt was invested on first day of
financial year & rate of interest is 10% pa.

A) Rs.45 cr
B) Rs.90 cr
C) Rs.30 cr
D) Rs.15 cr

Q 60. A Pvt. Ltd., Indian company, is engaged in business of generation of power. It installed a Wind
Power Project on 30.04.2016 and claimed a deduction of 100% of profits derived from generation of
power in A.Y. 2017-18 and A.Y. 2018-19 u/s 80-IA of Income-tax Act, 1961. During previous year
2018-19, A Pvt. Ltd. got amalgamated with B Pvt. Ltd. which is also an Indian company. Determine
whether B Pvt. Ltd. shall be eligible to take deduction in respect of profits/gains from generation of
power u/s 80-IA? If yes, then for how many assessment years?

A) Yes, B Pvt. Ltd. shall be eligible to take deduction in respect of profits/gains from generation of power
u/s 80-IA for unexpired period of 8 consecutive assessment years.
B) Yes, B Pvt. Ltd. shall be eligible to take deduction in respect of profits/gains from generation of power
u/s 80-IA for a fresh period of 10 consecutive assessment years.
C) No, B Pvt. Ltd. shall not be eligible to take deduction in respect of profits/gains from generation of
power u/s 80-IA as deduction u/s 80-IA is not allowed at all to an amalgamated company.
D) No, B Pvt. Ltd. shall not be eligible to take deduction in respect of profits/gains from generation of
power u/s 80-IA as deduction u/s 80-IA is not allowed to an amalgamated company if amalgamation
has taken place on or after 01.04.2007.

Q 61. In P.Y. 2018-19, R & Partners, a partnership firm, purchased following assets on 05.05.2018:-

• Machine A for Rs.10,00,000 (Rs.5,00,000 paid in cash and balance transferred through NEFT)
• Machine B for Rs.5,00,000 (Rs.2,00,000 paid through a bearer cheque and balance amount paid
through account payee cheque)

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• Machine C for Rs.8,00,000 (Rs.3,00,000 paid through account payee bank draft and balance
amount paid in cash)
• Machine D for Rs.7,00,000 (whole amount transferred through RTGS). For Machine B, a cash
subsidy of Rs.50,000 was received by firm from Government. Compute total amount of actual cost
of block of machinery in hands of firm.

A) Rs.29,50,000
B) Rs.18,00,000
C) Rs.17,50,000
D) Rs.19,50,000

Q 62. A Foreign Institutional Investor (FIl) has total income which includes short-term capital gains
on sale of preference shares of Rs.50 lakh. rate of tax for charging such income to tax is: -

A) 10%
B) 15%
C) 30%
D) 40%

Q 63. On 05.04.2018, A (P) Ltd. issued 20,000 shares to X at Rs.40 per share. face value per share is
Rs.10 and fair market value of each share as determined u/s 56(2)(viib) is Rs.30 per share. X was not
in India from date of issue of shares to him up till 02.09.2018 but he came back to India on
03.09.2018. Whether any tax implications shall arise in hands of A (P) Ltd. on account of said
transaction? If yes, compute amount taxable in hands of A (P) Ltd.?

A) No tax implications in hands of A (P) Ltd. as X was non-resident in India at time of issue of shares
B) The amt chargeable to tax in hands of A (P) Ltd., irrespective of residential status of X
C) Yes, amt chargeable to tax in hands of A (P) Ltd. as income from other sources shall be Rs.2,00,000
D) Yes, amt chargeable to tax in hands of A (P) Ltd. as income from other sources shall be Rs.6,00,000

Q 64. Z Ltd. purchased a plant for Rs.50,00,000 (depreciation rate: 15%) on 20.05.2018. Before
commencement of commercial production, expenses of Rs.50,000 were incurred by Z Ltd. for trial
run of plant. What will be treatment of expenditure incurred on said trial run as per provisions of
ICDS-V which deals with tangible fixed assets?

A) Expenditure of Rs.50,000 is required to be capitalized as commercial production has not commenced.

B) Expenditure of Rs.50,000 can be claimed as a revenue expenditure by company.
C) Expenditure of Rs.50,000 has to be treated as deferred revenue expenditure.
D) No treatment provided in ICDS-V in relation to expenditure incurred on trial run by assessee.

Q 65. Where primary adjustment to transfer price is made suo moto by Indian company, time limit
for repatriation of “excess money” is: -

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A) 60 days from 30th September of A.Y.

B) 90 days from 30th September of A.Y.
C) 60 days from 30th November of A.Y.
D) 90 days from 30th November of A.Y.

Q 66. Provision relating to limitation of interest deduction in respect of debt issued by non-resident
associated enterprise would not apply where exp by way of interest or similar nature is: -

A) Rs.2.10 crore
B) Rs.2 crore
C) Rs.1.50 crore
D) Rs.1 crore

Q 67. In respect of any payment made to a person located in a Notified Jurisdictional Area (NJA),
tax is deductible at higher of rate specified in Income-tax Act, 1961 or rates in force or –

A) 10%
B) 15%
C) 20%
D) 30%

Q 68. Mr. A failed to comply with provisions of section 203A for which penalty of Rs.10,000 was
levied under section 272BB. Mr. A approached his consultant and asked him to file an appeal before
Commissioner of Income-tax (Appeals) against Penalty Order. Determine appeal fee that is required
to be paid by Mr. A for filing said appeal.

A) Rs.500
B) Rs.250
C) Rs.1,000
D) Rs.750

Q 69. Interest paid to non-resident associated enterprise disallowed under relevant provision of
Income-tax Act, 1961, during A.Y. 2019-20 can be carried forward upto –

A) A.Y. 2023-24
B) A.Y. 2024-25
C) A.Y. 2027-28
D) Indefinitely

Q 70. Fly Ltd., an Indian company, has to make secondary adjustment in A.Y. 2019-20, if primary
adjustment to transfer price, made by it suo moto in its return of income, is in respect of –

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A) A.Y. 2016-17 and amount of primary adjustment is Rs.2 crore

B) A.Y. 2018-19 and amount of primary adjustment is Rs.1 crore
C) A.Y. 2018-19 and amount of primary adjustment is Rs.1.05 cr
D) A.Y. 2019-20 and amount of primary adjustment is Rs.1 crore

Q 71. Mr. Akhilesh, a non-resident Indian citizen, is an enthusiastic sports person and is keen on
contributing an article on a game of Hockey in a leading newspaper in India. He approaches you to
enquire on taxability of such income for A.Y. 2019-20. As per provisions of Income-tax Act, 1961,
such income shall be taxable in his hands at – (Note: - rates are excluding cess & surcharge)

A) 5%
B) 10%
C) 20%
D) Normal tax slab rates

Q 72. Benefit of presumptive taxation under Income-tax Act, 1961 would not be available to Akash,
a non- resident, in A.Y. 2019-20, in respect of related Indian income, if he is engaged in business of:-

A) Operation of ships
B) Operation of Aircraft
C) Civil construction in connection with an approved turnkey project
D) Plying, hiring or leasing of goods carriages

Q 73. Salary paid by M/s AK & Co. to its partner falls within limits prescribed under section
40(b)(v). Does AK & Co. have to deduct tax on salary paid to its partner?

A) Yes; tax is deductible at source under section 192 on salary paid to its partners
B) No; salary paid to partner is not subject to tax deductible at source
C) Yes; tax is deductible at source under 192 on salary paid to resident partners but under section 195 on
salary paid to non-resident partner
D) Salary paid to resident partner is not subject to tax deduction at source; but tax to be deducted in 195 on
salary paid to non-resident partner

Q 74. If an Indian company has entered into an advance pricing agreement (APA) in respect of its
international transaction with associated enterprise for P.Y. 2018-19. company decides to make an
application for roll back of said APA. However, rollback provision shall not be available in respect
of said transaction for a rollback year, if –
(i) Such application has effect of reducing total income declared in return of income of said year
(ii) Determination of arm’s length price of said transaction for said year has been subject matter of
appeal before Commissioner (Appeals) and Commissioner (Appeals) has passed an order disposing
of such appeal at any time before signing of agreement
(iii) Determination of arm’s length price of said transaction for said year subject matter of appeal
before AT and AT passed order disposing of such appeal at any time before signing of agreement
(iv) ROI for relevant rollback year been furnished by company 139(4).
BEST answer is: –

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A) (i) and (ii) above

B) (i) and (iii) above
C) (i), (ii) and (iv) above
D) (i), (iii) and (iv) above

Q 75. Mr. X receives following gifts during previous year 2018-19:

• On occasion of marriage of X, he gets Rs.2,90,000 as gift on 02.04.2018.
• On 20.09.2018, he gets a gift of Rs.7,00,000 from his grandmother.
• On 30.12.2018, he gets by way of gift a commercial flat from elder brother of his father-in-law
(stamp duty value is Rs.25,00,000).
• On 20.01.2019, he gets a wrist watch by gift from his friend B (Fair market value: Rs.1,00,000).
• On 10.02.2019, he gets by way of gift a plot of land in Pune from a partnership firm. partnership
firm has only two partners- father of Mr. X and Mrs. X. stamp duty value of plot of land is
Rs.19,00,000. Compute amt chargeable to tax in hands of X u/h “IOS” for A.Y. 2019-20.

A) Rs.44,00,000
B) Rs.45,00,000
C) Rs.52,00,000
D) Rs.54,90,000

Q 76. M/s Beautiful Homes, an interior decorator proprietorship concern, submitted following
details of three years immediately preceding P.Y. 2018-19.
Previous Year Gross Receipts Income from Profession Total Income
2015-16 Rs. 1,39,000 Rs. 91,000 Rs. 3,10,000
2016-17 Rs. 2,02,000 Rs. 1,35,000 Rs. 4,07,000
2017-18 Rs. 3,85,000 Rs. 2,49,000 Rs. 6,83,000
Comment upon applicability of section 44AA and Rule 6F regarding maintenance of books of
account and documents for P. Y. 18-19

A) The assessee is required to maintain books of account as per section 44AA(1) as interior decorator is a
notified profession and consequentially under Rule 6F also
B) The assessee not required to maintain books as per 44AA(1) and hence not covered under Rule 6F
C) The assessee is required to maintain books of account as per section 44AA(1),but, is exempted under
Rule 6F since his gross receipts do not exceed Rs.1,50,000 in P.Y. 2015-16
D) Rule 6F shall be applicable, even though assessee does not meet criteria for gross receipts/income from
business/total income, as case may be, as per section 44AA

Q 77. In order to claim relief under tax treaty in India, a non-resident –

A) Should have a business presence in India

B) Should produce his Permanent Account Number
C) Should produce Tax Residency Certificate (TRC)
D) Should produce his income-tax return filed in home country

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Q 78. Samraat, resident in India, earned Income of Rs.4 lakh by way of lump sum consideration for
copyright of book from a publisher in Country E, with which India does not have a DTAA. same has
been taxed at a flat rate of 5% in Country E. In India, his gross total income is Rs.7 lakhs. double
taxation relief available is: -

A) Rs.20,000
B) Rs.7,725
C) Rs.1,931
D) Rs.1,95

Q 79. Mr. Ganesh is running a steel factory. total turnover of factory during F.Y. 2017-18 amounted
to Rs.1.95 crores and he opts for presumptive tax scheme under section 44AD. estimated turnover
for F.Y. 2018-19 is likely to exceed Rs.2 crore. On 10-04-2018, he took consultancy of a Delhi based
Chartered Accountant. consultancy fees amounted to Rs.1,84,000. Should Mr. Ganesh deduct tax
from consultancy fees of Rs.1,84,000? If yes, then what shall be amount of tax to be deducted and by
when same should be deposited with Government?

A) Yes; Rs.18,400 to be deposited by 07.05.2018

B) Yes; Rs.18,400 to be deposited by 07.07.2018
C) Yes; Rs.15,400 to be deposited by 07.05.2018
D) He is not liable to deduct tax in respect of professional fees paid

Q 80. Suppose Mr. Naveen is an employee working in a public sector. What consequence of
following transaction for A.Y. 19-20? He repaid a loan in cash of Rs.24,000 (including interest of
Rs.5,000), which he took from his friend for higher studies.

A) Disallowance under section 40A(3) of Rs.24,000

B) Penalty under section 271E of Rs.24,000 due to violation of section 269T
C) Penalty under section 271E of Rs.19,000 due to violation of section 269T
D) No disallowance or Penalty under section 271E, since principal loan amount is less than Rs.20,000

Q 81. XYZ Ltd. has entered into a specified domestic transaction during previous year 2018-19.
company failed to obtain a report from a Chartered Accountant and furnish such report under
section 92E on or before due date for furnishing return of income under section 139(1). Is any
penalty imposable on XYZ ltd? If yes, what will be quantum of penalty?

A) Penalty is not imposable, as report is to be furnished only in case of an assessee who has entered into
an international transaction.
B) Penalty of Rs.1 lakh is imposable
C) Penalty @2% of value of specified domestic transaction is imposable
D) Penalty @2% of value of transaction or Rs.1 lakh, whichever is higher, is imposable

Q 82. Mr. Sam (aged 40 years), a US football match referee, has earned income from football
tournaments in India for A.Y. 2019-20. What TDS provisions applicable in making payment to him?

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A) TDS @20.8% as per section 194E

B) TDS @5.2% as per section 194E
C) TDS under section 195
D) No tax is deductible at source

Q 83. Assessment Order under section 143(3) in case of Mr. Z was passed on 31.03.2019 and notice
of demand was served on assessee on 02.04.2019 for levy of tax and interest. Mr. Z paid tax and
interest due on 12.4.2019. Application was filed by Mr. Z under Section 270AA on 27.04.2019 before
AO to grant immunity from imposition of penalty and said application was rejected by Assessing
Officer vide order dated 14.05.2019. said order was served on Mr. Z on 15.05.2019. By what date an
appeal against Assessment Order should be presented by Mr. Z before CIT (Appeals)?

A) 02.05.2019
B) 22.05.2019
C) 21.05.2019
D) 30.04.2019

Q 84. P is a salaried employee. On 01.06.2018, he gets a gift of house property situated in Mumbai
(stamp duty value Rs.80,00,000) from Q. On 02.08.2018, P gets a gift of house property in Pune
(Stamp duty value Rs. 50,000) from R. On 03.09.2018, P also gets a gift of house property in Delhi
from R, stamp duty value of which is Rs.1,00,000. What will be tax implications in hands of P, Q&R.

A) Rs.81,00,000 shall be chargeable to tax in hands of P as income from other sources and capital gains
shall arise in hands of Q and R respectively on account of transfer of capital asset.
B) Rs.81,50,000 shall be chargeable to tax in hands of P as income from other sources and capital gains
shall arise in hands of Q and R respectively on account of transfer of capital asset.
C) Rs.81,00,000 shall be chargeable to tax in hands of P as income from other sources and no capital gains
shall arise in hands of Q and R respectively as gift does not constitutes “transfer”.
D) Rs.81,50,000 shall be chargeable to tax in hands of P as income from other sources and no capital gains
shall arise in hands of Q and R respectively as gift does not constitutes “transfer”.

Q 85. Which of following cannot be corrected while processing return of income for A.Y.2019-20
under section 143(1)?

A) Arithmetical error in return

B) An incorrect claim apparent from any information in return
C) Disallowance of expenditure indicated in audit report but not taken into account in computing total
income in return.
D) Addition of income appearing in 26AS which hasn’t been included in computing total income in return

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Q 86. A Pvt. Ltd. is closely held Indian company. It is subsidiary of foreign company Y Inc. which
had already issued 5,00,000 shares to its shareholders. During P.Y. 2017 -18, it incurred a loss of
10 crores which couldn’t be set off & was carried forward. Further, there was also unabsorbed
depreciation of 1 Crore. During P.Y. 2018-19, Y Inc. amalgamated with Z Inc. and persons
holding 2,45,000 shares of Y Inc. became shareholders of Z Inc. Whether brought forward loss of 10
Crores and unabsorbed depreciation of 1 crore can be set off by A Pvt. Ltd. during P.Y. 2018-19.

A) Loss cannot be set off but unabsorbed depreciation can be set off.
B) Loss can be set off but unabsorbed depreciation cannot be set off.
C) Both loss and unabsorbed depreciation can be set off.
D) Both loss and unabsorbed depreciation cannot be set off

Q 87. Mr. Shiv was travelling from Delhi to Jodhpur on 05.07.2018 carrying FDRs of ` 20 Lakhs.
said FDRs were seized by police authorities and subsequently, requisitioned by income-tax
authorities u/s 132A. requisition was made on 20.07.2018. Now, Assessing Officer has issued notices
to Shiv u/s 153A for A.Y. 2009-10 to A.Y. 2018-19. Whether said notices issued by Assessing
Officer u/s 153A are valid?

A) Notices are valid for A.Y. 2013-14 to A.Y. 2018-19. However, for A.Y. 2009-10 to A.Y. 2012-13,
notices can be issued u/s 153A only if Assessing Officer has any evidence which reveals that income,
represented in form of asset is greater than or equal to 50 lakhs.
B) Notices are valid for A.Y. 2009-10 to A.Y. 2018-19 as notices in case of requisition can be issued
for 10 assessment years immediately preceding A.Y. relevant to P.Y. in which requisition is made.
C) Invalid. Notices can be issued u/s 153A in present case by Assessing Officer only for A.Y. 2013-
14 to A.Y. 2018-19, since FDRs do not constitute an asset for purpose of section 153A.
D) Invalid. Notices can be issued u/s 153A in present case by Assessing Officer for A.Y. 2013-14 to
A.Y. 2019-20.

Q 88. XYZ is a charitable trust registered u/s 12AA w.e.f 01.04.2010. During P.Y. 2017-18, it
received a specific corpus donation for construction of building which was claimed as exempt u/s 11
during said previous year. Now, during P.Y. 2018-19, it desires to claim depreciation on such
building as application of its income. Comment upon validity of said claim of depreciation.

A) Depreciation can be claimed as acquisition of building was not claimed as application of income u/s
11(1)(a).
B) Depreciation cannot be claimed as specific corpus donation was already claimed as exempt during
P.Y. 2017-18.
C) Depreciation can be claimed as it is a statutory deduction and no restriction regarding same has been
provided in section 11.
D) Its on discretion of XYZ to either claim specific corpus donation for construction of building as
exempt in yr of receipt or claim depreciation on building as application of income in various yrs.

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Q 89. A is a resident individual aged 45 years. Find out his tax liability for A.Y. 2019-20 on basis of
following particulars:
* Dividend from different domestic companies (dividend distribution tax paid by these companies)
G Ltd. = 40,00,000 & H Ltd. = 10,000 & I Ltd. = 11,90,000
* Business income = 5,00,000
* Expenditure for earning dividend income = 2,60,000

A) 4,49,800
B) 6,09,180
C) 4,22,760
D) 13,000

Q 90. The tax liability of Mr. Sunil for financial year 2018-19 came to ` 1,54,000. He has paid
advance tax of ` 1,38,000 and there was a TDS credit of ` 44,000 in his account. He filed his return
of income on 30th July, 2019 claiming refund due. His assessment was completed under section
143(1) and he was granted refund on 15th February, 2020. Subsequently, his case was selected for
scrutiny and his income was assessed under section 143(3). As per assessment order dated 25th
August, 2020, his income was recomputed after making certain additions and his revised tax
liability was computed at ` 1,76,000. Whether he will be liable to pay any interest on excess refund
granted to him? If yes, then for what period?

A) Sunil liable to pay interest on excess refund of ` 22,000 at rate of ½ percent for a period of 7 months.
B) Sunil not liable to pay any interest on excess refund granted to him.
C) Sunil liable to pay interest on excess refund of ` 22,000 at rate of 1 percent for a period of 6 months.
D) Sunil liable to pay interest on total refund of ` 28,000 at rate of ½ percent for a period of 7 months.

Q 91. P Ltd. is a domestic company which filed its return of income for A.Y. 2019 -20 declaring a
total income of ` 1,15,00,000. assessment in its case was opened by Assessing Officer by issuing
notice u/s 143(2). AO doubted genuineness of loans taken by company and added an amount of `
5,00,000 to total income u/s 68 as cash credits. What shall be effective rate at which said income of `
5,00,000 shall be taxable in hands of P Ltd.?

A) 77.25 %
B) 66.768 %
C) 78 %
D) 33.384 %

Q 92. Mr. A who is tax consultant of X Pvt. Ltd. is computing income from business of company for
A.Y. 2018-19 for determining tax liability. X Pvt. Ltd. is not liable for tax audit u/s 44AB during said
year. While computing business income under normal provisions of Income-tax Act, 1961, Mr. A has
duly considered provisions of Income Computation and Disclosure Standards (“ICDS”) wherever
applicable. However, Mr. A is confused regarding applicability of ICDS while computing book
profits for determining MAT liabilityof companyu/s 115JB. Advise Mr. A regarding same.

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A) Provisions of ICDS will not apply while computing “book profits” for purposes of MAT as ICDS are
applicable only for computation of income under regular provisions of Income-tax Act, 1961.
B) Provisions of ICDS will apply while computing “book profits” for purposes of MAT as ICDS are
applicable for computing income under “Profits and gains of business or profession”, whether
computed under normal provisions or on basis of book profits under MAT provisions.
C) Provisions of ICDS will not apply while computing “book profits” for purposes of MAT as ICDS are
not applicable in case of an assessee not liable for tax audit.
D) Provisions of ICDS will apply while computing “book profits” for purposes of MAT as no
exception regarding same has been carved out in notification with respect to ICDS.

Q 93. Mr. X purchases 1,000 unlisted equity shares of ` 10 each in A Ltd. on 10.05.2018 @ `
60. On 20.10.2018, he transfers 800 equity shares @` 30 per share and remaining 200 shares are
transferred on 20.12.2018 @` 20 per share. A Ltd. declares 50 percent dividend (record date:
03.08.2018). Also, during previous year 2018-19, X has earned long term capital gain of ` 96,000 on
sale of a capital asset. Compute amount of Short Term Capital Loss on sale of shares in question
that can be set off from LT Capital Gain of 96,000.

A) 28,000
B) 32,000
C) 27,000
D) 8,000

Q 94. Mr. Gagan, aged 67 years and resident, is a retired person earning a monthly pension of
12,000 from his employer. He purchased a piece of land in Delhi in December, 2010 and sold same
in April, 2018. Taxable LTCG amounted to 2,80,000. Apart from pension income and gain on sale of
land, he isn’t having any other income. His tax liability (rounded off) for year 2018-19?

A) 25,790
B) 6,450
C) 4,370
D) 17,470

Q 95. ABC India Pvt. Ltd and XYZ India Pvt. Ltd are related parties, as defined under section
40A(2)(b), who have entered into a transaction for purchase of goods for ` 25 lacs on 2nd April,
2018. Arm Length Price for such goods is ` 15 lacs. Aggregate value of such transactions in previous
year 2018-19 is ` 22.5 crores. Can transaction be considered as a specified domestic transaction to
attract transfer pricing provisions?

A) Yes, as aggregate transaction value > 20 crores

B) Yes, as parties are related parties.
C) No, transfer pricing provisions N/A in this case
D) Yes, since parties are related parties and aggregate transaction value > 20 crores

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Q96. Which of the following amounts, if debited to the statement of profit or loss, are required to
be added while computing book profits for MAT?
I. Income-tax II. Proposed dividend
III. Depreciation IV. Interest on Income-tax
V. Amt transferred to general reserve VI. Provision for losses of subsidiary company
VII. Dividend paid

A) I, III, V, VI, VII

B) I, II, V, VII
C) I, II, III, IV, V, VI, VII
D) I, II, III, V, VI, VII

Q97. Z Ltd., a company providing telecommunication service, obtains a telecom license on

01.04.2017 for a period of 10 years which ends on 31.03.2027 (license fee being Rs.27 lakh). Find out
the amount of deduction allowable to Z Ltd. in respect of such license fee during the A.Y. 2019-20 if
the entire amount of license fee is paid on 01.04.2018.

A) Nil
B) Rs.27 lakh
C) Rs.3 lakh
D) Rs.2.7 lakh

Q98. Following are details given in case of PQR, which is partnership firm for A.Y. 2019-20: -
* Returned total income = 1,00,00,000
* Total income determined u/s 143(1)(a) = 1,10,00,000
* Total income assessed u/s 143(3) = 1,50,00,000
* Total income reassessed u/s 147 = 2,00,00,000
Compute amount of under-reported income, on which penalty be leviable on reassessment u/s 147.

A) Rs.90,00,000
B) Rs.1,00,00,000
C) Nil
D) Rs.50,00,000

Q99. A Ltd. deducted tax at source u/s 194J in respect of fees of Rs.10 lac paid to an Indian law
firm for legal and professional services. After deduction of tax at source, A Ltd. failed to pay the said
amount to the credit of the Central Government on or before the due date of filing return of income.
Which of following are consequences of non-deposit of tax at source after deduction of same?
I. Disallowance of Rs.3 lac u/s 40(a)(ia).
II. Levy of interest @ 1.5% per month or part of month from date of deduction till date of payment.
III. Levy of interest @ 1% per month or part of a month from date of deduction till date of payment.
IV. Rigorous imprisonment for not less than 3 months but which may extend to 7 years and fine.
V. Penalty as directed by AO u/s 221 upto a maximum of tax in arrears i.e., Rs.1 lac in instant case.
VI. Penalty u/s 271C of Rs.1 lac.

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A) I, III, VI
B) I, III, V, VI
C) I, II, IV, V, VI
D) I, II, IV, V

Q100. PQR Ltd. is a company which already possesses a TAN and uses same for purpose of TDS.
Now, PQR Ltd. wants to sell some scrap of his business to A Ltd. on which it is required to collect
tax at source @1%. Whether PQR Ltd. is required to apply for a separate TAN for purpose of TCS?

A) No, PQR Ltd. not to apply for separate TAN for TCS as TAN allotted for TDS used for TCS too.
B) Yes, PQR Ltd. to apply for a separate TAN for purpose of TCS as tax deduction account number and
tax collection account number are different account numbers.
C) No, PQR Ltd. not to apply for a separate TAN for purpose of TCS as there is no requirement of
obtaining TAN for purpose of TCS.
D) No, PQR Ltd. not to apply for separate TAN for TCS as in TCS, PAN can be quoted in place of TAN.

Q101. In which of following transfers, benefit of indexation is available in case asset is a LTCA?

A) Transfer of securities by a foreign institutional investor u/s 115AD.

B) Transfer of undertaking or division in a slump sale u/s 50B.
C) Transfer of shares in Indian Company purchased in foreign currency by non-resident assessee
D) None of above

Q102. In case of Reema & Sons, a partnership firm, assessment proceedings were completed by
Assessing Officer u/s 148 of Income-tax Act, 1961 at a total income of Rs.2,50,000 for A.Y. 2016-17.
Aggrieved by assessment order, Assessee preferred an appeal before CIT(A) which also confirmed
action of Assessing Officer and provided no relief to Assessee. Thereafter, Assessee is desirous of
filing an appeal against order of CIT(A) before Hon’ble ITAT. Guide him regarding amount of fee
that is required to be paid by him in respect of appeal to be filed before ITAT.

A) Rs.500
B) Rs.1,500
C) Rs.2,500
D) Rs.10,000

Q103. Ms. Neha is a working partner in Ramaiya & Associates. As per terms of partnership deed,
she is paid a fixed monthly salary of Rs.39,800. In this case, salary of Rs.39,800 shall be charged to
tax in hands of Neha in which head of income and to what extent?

A) Salaries
B) Profits and gains of business or profession, to extent of amount allowed to Firm u/s 40(b).
C) Profits and gains of business or profession, to extent of amount not allowed to Firm u/s 40(b).
D) Income from other sources

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Q104. Written down value of 4 machines at beginning of previous year 2018-19 forming part of
block of assets carrying 15% rate of depreciation was Rs.6,00,000. following 3 machines of same
block were bought (not included in WDV above):
Machines Date of Purchase Date when put to use Cost (Rs.)
A 5.1.18 14.1.19 50,000
B 5.4.18 15.5.18 1,00,000
C 15.5.18 31.1.19 2,00,000
4 machines of this block (other than those which were acquired & put to use for less than 180 days)
were sold for Rs.4,00,000. Calculate depreciation for A.Y. 2019-20. Ignore additional depreciation.

A) Rs.67,500
B) Rs.82,500
C) Rs.60,000
D) Rs.63,750

Q105. On 05.04.2018, A (P) Ltd. issued 20,000 shares to X at Rs.40 per share. face value per share is
Rs.10 and fair market value of each share as determined u/s 56(2)(viib) is Rs.30 per share. X was not
in India from date of issue of shares to him up till 02.09.2018 but he came back to India on
03.09.2018. Whether any tax implications shall arise in hands of A (P) Ltd. on account of said
transaction? If yes, compute amount taxable in hands of A (P) Ltd.?

A) No tax implications shall arise in hands of A (P) Ltd. as X was non-resident in India at time of issue of
shares.
B) The amount would be chargeable to tax in hands of A (P) Ltd., irrespective of residential status of X.
C) Yes, amount chargeable to tax in hands of A (P) Ltd. as income from other sources shall be
Rs.2,00,000
D) Yes, amount chargeable to tax in hands of A (P) Ltd. as income from other sources shall be
Rs.6,00,000

Q106. The rate of deduction of tax from interest payable to a foreign company (located in a country
with which there is no DTAA) by an Indian company on borrowing made by it from said foreign
company by way of issue of rupee denominated bonds on 31.03.2019 is: -

A) Nil
B) 5% + HEC
C) 5% + Surcharge (if applicable) + HEC
D) 20% + HEC

Q107. At time of computation of taxable income of Star Pvt. Ltd., its tax consultant found that
company won a lottery of Rs.5 crore on 20.12.2018. Apart from lottery receipt, there were no other
receipts in hands of company during year 2018-19. company follows mercantile system of
accounting. tax consultant was of view that income of company for A.Y. 2019-20 shall be computed
as per provisions of ICDS IV which deals with Revenue Recognition. In light of these facts, which of
following statements is true?

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A) View of tax consultant is correct as for computing business income or income from other sources, any
revenue is to be recognized as per provisions of ICDS IV.
B) View of tax consultant is incorrect as ICDS IV is not applicable on recognition of lottery receipts.
C) View of tax consultant is correct as for any person following mercantile system of accounting, all ICDS
are to be mandatorily followed for computing income.
D) View of tax consultant is incorrect as ICDS are not applicable for FY 2018-19.

Q108. Mr. X received an assessment order dated 11.11.2018 on 15.11.2018 wherein his total income
was assessed at Rs.20 lakh. returned income of X was Rs.5 lakh. However, Mr. X did not accept
assessment order and filed an appeal against same before Commissioner of Income Tax (Appeals).
Now, while contesting appeal, he wishes to submit some evidences that were not submitted by him
before Assessing Officer. As Tax Consultant of Mr. X, what will be your advise to him regarding
submission of said evidences?

A) Commissioner of Income Tax (Appeals) has no power to accept any evidences other than evidences
already submitted before Assessing Officer.
B) Commissioner of Income Tax (Appeals) may accept additional evidences if conditions given in Rule
46A(1) of Income-tax Rules, 1962 are satisfied
C) Commissioner of Income Tax (Appeals) may accept additional evidences if conditions given in Rule 46
(1) of Income-tax Rules, 1962 are satisfied
D) Commissioner of Income Tax (Appeals) has no power to reject any evidences which Appellant wishes
to submit before him during appellate proceedings.

Q109. A Pvt. Ltd. is a company engaged in business of trading of household appliances. directors of
said company are desirous of converting it into a LLP. After conversion, all assets and liabilities of
company shall be transferred to LLP. conversion of company into LLP shall take place in financial
year 2018-19. details of total sales and total value of assets of company are as follows:
Previous Year Total Sales (in Rs.) Total value of assets (in Rs.)
2014-15 78,00,000 1,88,00,000
2015-16 50,00,000 3,56,00,000
2016-17 45,78,000 4,78,00,000
2017-18 60,00,000 5,00,00,000
2018-19 85,00,000 10,00,00,000
The directors have approached you to determine whether any capital gains shall arise in hands of
company on its conversion to LLP. Advise them.

A) No capital gains shall arise in hands of company as transaction under consideration is not a ‘transfer’ as
per provisions of Section 47.
B) Capital gains in hands of company as conversion of company to LLP amt to transfer of capital asset.
C) No capital gains shall arise in hands of company as any kind of conversion such as conversion of firm
into LLP, conversion of company into firm, conversion of company into LLP, etc. does not amount to
transfer of capital asset.
D) Capital gains shall arise in hands of company as amount of total sales and total value of assets in P.Y.
2018-19 exceeds prescribed limits mentioned in Section 47(xiiib).

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Q110. A Bench of Authority for Advance Rulings (“AAR”) consists of a Chairman/Vice-chairman,

one revenue member and one law member. An Assessee filed an application before AAR pertaining
to interpretation of certain provisions of Income-tax Act, 1961. Determine which of following
persons can be a revenue member of AAR for purpose of adjudicating said application?

A) Person from Indian Revenue Service who is qualified to be a member of CBDT

B) Person from Indian Customs & Central Excise Service qualified to be member of CBEC
C) A member from Indian Legal Service
D) Any person from Indian Revenue Service

Q111. ABC Ltd. owns following assets on 01.04.2018: -

Assets Rate of Depreciation WDV on 01.04.2018
Plant A 15% 3,50,000
Plant B 15% 1,75,000
On 10.06.2018, company acquires Plant C for Rs. 25,000 (rate of depreciation is 15%). company sells
following assets during previous year 2018-19:-
Assets Sale consideration Expenses on transfer
Plant A 2,25,000 12,000
Plant B 3,50,000 -
Plant C 85,000 200
Determine amount of depreciation and capital gains for A.Y. 2019 -20 in hands of ABC Ltd.
Further, is it possible for ABC Ltd. to avoid tax on capital gains?

A) Depreciation: Nil and Short term capital gain: Rs.97,800. Further, it is not possible for ABC Ltd. to
avoid tax on capital gains.
B) Depreciation: Rs.82,500 and Short term capital gain: Rs.1,80,300. Further, it is not possible for ABC
Ltd. to avoid tax on capital gains.
C) Depreciation: Nil and Short term capital gain: Rs.97,800. Further, ABC Ltd. can avoid tax on capital
gains if it purchases another plant (eligible for depreciation @15%) during previous year 2018 -19 of
Rs.97,800 or more.
D) Depreciation: Nil and Short term capital gain: Rs.1,10,000. Further, ABC Ltd. can avoid tax on capital
gains if it purchases another plant (eligible for depreciation @15%) during previous year 2018 -19 of
Rs.1,80,300 or more. (2 Marks)

Q112. During P.Y. 2018-19, R & Partners, partnership firm, purchased assets on 15.06.2018: -
• Machine A for Rs.8,00,000 (Rs.4,50,000 paid in cash and balance transferred through NEFT)
• Machine B for Rs.4,00,000 (Rs.2,00,000 paid through a bearer cheque and balance amount paid
through account payee cheque)
• Machine C for Rs.7,00,000 (Rs.2,50,000 paid through account payee bank draft and balance
amount paid in cash)
• Machine D for Rs.6,50,000 (whole amount transferred through RTGS)
For Machine B, a cash subsidy of Rs.40,000 was received by firm from Government. Compute total
amount of actual cost of block of machinery in hands of firm.

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A) Rs.25,10,000
B) Rs.14,50,000
C) Rs.14,10,000
D) Rs.16,10,000

Q113. Ashiyana Ltd., a domestic company, has distributed on 15/11/2018, dividend of Rs.350 lakh to
its shareholders. On 20/10/2018, Ashiyana Ltd. has received dividend of Rs.90 lakh from its
domestic subsidiary company Luxury Ltd., on which Luxury Ltd. has paid dividend distribution
tax under section 115-O. Additional income-tax payable by Ashiyana Ltd. under section 115-O is –

A) Rs.45.4272 lakhs
B) Rs.53.4438 lakhs
C) Rs.52.9299 lakhs
D) Rs.44.9904 lakhs

Q114. Which of following individuals would be entitled to opt for presumptive taxation schemes
under Income-tax Act, 1961 for A.Y.2019-20?

(i) A retail trader having turnover of Rs.2 crore during previous year 2018 -19
(ii) A practising CA having gross receipts of Rs.92 lakhs during previous year 2018 -19.
(iii) A wholesale trader having turnover of Rs.1.96 crore during previous year 2018 -19.
(iv) A doctor having gross receipts of Rs.50 lakhs during previous year 2018 -19
(v) Individual owning 8 goods carriages as on 1.4.2018. He purchased 4 goods carriages on
1.5.2018 and sold 2 goods carriages on 1.7.2018.

A) (i), (iii) & (iv)

B) (iii) & (v)
C) (i), (iii), (iv) & (v)
D) (i), (ii), (iii), (iv) & (v)

Q115. Mr. Akash and Mr. Manish are partners in AM & Co. They were engaged in business of
selling packaging material in state of UP. In order to save tax, they sold goods to their respective
HUFs. HUFs further sold goods to their customers. This arrangement led to tax saving of Rs. 2 lac
for A.Y. 2019-20 by AM & Co.
Revenue took a stand that this is a case of “Tax Evasion” and issued notice u/s 148 to firm AM &
Co. On basis of judicial decisions, what is correct nature of this arrangement undertaken by Mr.
Akash and Mr. Manish: -

A) Tax Planning
B) Tax Avoidance
C) Tax Evasion
D) Tax Management

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Q116. PQR Ltd. took on sub-lease a building from Ms. Sara with effect from 1.7.2018 on a rent of
Rs.20,000 per month. It also took on hire machinery from Ms. Sara with effect from 1.10.2018 on
hire charges of Rs.15,000 per month. PQR Ltd. entered into two separate agreements with Ms.
Sara for sub-lease of building and hiring of machinery. Which of following statements are correct
with reference to PQR Ltd.'s liability to deduct tax at source, assuming that one-month's rent was
received as security deposit, which is refundable at end of lease period?

A) No tax needs to be deducted at source since rent for building does not exceed Rs.1,80,000 p.a. and rent
for machinery also does not exceed Rs.1,80,000 p.a. Security deposit refundable at end of lease term
is not rent for purpose of TDS
B) Tax be deducted@10% on rent of Rs.2,00,000 (including security deposit) for building, but no tax
needs to be deducted on rent for machinery (including security deposit), since same not >Rs.1,80,000.
C) Tax be deducted@10% on Rs.2,00,000 & @2% on Rs.1,05,000 (i.e. rent including security deposit)
D) Tax be deducted@10% on Rs.1,80,000 & @2% on Rs.90,000. Security deposit refundable at end of
lease period is not rent

Q117. Mr. X acquired a house property at Delhi from Mr. Y, a resident, for a consideration of Rs.85
lakhs, on 21.7.2018. On same day, Mr. X made two separate transactions, thereby acquiring an
urban plot in Gwalior from Mr. C for a sum of Rs.50,00,000 and rural agricultural land from Mr. D
for a consideration of Rs.60 lakhs. Which of following statements are correct?

A) No tax deduction at source is required in respect of any of three payments.

B) TDS@1% is attracted on all three payments.
C) TDS@1% on Rs.85 lakhs and Rs.50,00,000 are attracted. No TDS on payment of Rs.60,00,000 for
acquisition of rural agricultural land
D) TDS@1% on Rs.85 lakhs is attracted. No TDS on payments of Rs.50,00,000 and Rs.60,00,000.

Q118. Mr. Rakesh, a non-resident individual aged 61 years, has not furnished his return of income
for A.Y.2019-20. However, total income assessed in respect of such year under section 144 is Rs.13
lakh. Determine quantum of penalty leviable under section 270A?

A) Penalty leviable is Rs.2,10,600, being tax payable on total income of Rs.13 lakh
B) Penalty leviable is Rs.1,05,300, being 50% of tax payable on Rs.13 lakh
C) Penalty leviable under section 270A is Rs.66,300, being 50% of tax payable on under-reported
income of Rs.10.50 lakhs (i.e., Rs.13 lakhs - basic exemption limit of Rs.2.50 lakhs)
D) Penalty leviable under section 270A is Rs.58,500, being 50% of tax payable on under-reported
income of Rs.10 lakhs (i.e., Rs.13 lakhs - basic exemption limit of Rs.3 lakhs)

Q119. Mr. X received an assessment order dated 11.11.2018 on 15.11.2018 wherein his total income
was assessed at Rs.20 lakh. returned income of X was Rs.5 lakh. However, Mr. X did not accept
assessment order and filed an appeal against same before Commissioner of Income Tax (Appeals).
Now, while contesting appeal, he wishes to submit some evidences that were not submitted by him
before Assessing Officer. As Tax Consultant of Mr. X, what will be your advise to him regarding
submission of said evidences?

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A) Commissioner of Income Tax (Appeals) has no power to accept any evidences other than evidences
already submitted before Assessing Officer.
B) Commissioner of Income Tax (Appeals) may accept additional evidences if conditi ons given in Rule
46A(1) of Income-tax Rules, 1962 are satisfied.
C) Commissioner of Income Tax (Appeals) may accept additional evidences if conditions given in Rule
46(1) of Income-tax Rules, 1962 are satisfied.
D) Commissioner of Income Tax (Appeals) has no power to reject any evidences which Appellant wishes
to submit before him during appellate proceedings. (2 Marks)

Q120. For A.Y. 2017-18, XYZ Ltd. filed its return of income on 14.09.2017 declaring total income of
Rs.80 Lakhs. Assessing Officer issued notice under Section 143(2) to XYZ Ltd. on 23.09.2018 stating
that there are certain points in connection with return of income submitted by Company on which
he would like to seek some other information. Company attended assessment proceedings and
Assessment Order for A.Y. 2017-18 was passed under Section 143(3) by Assessing Officer on
31.05.2020. Determine whether said Assessment Order is barred by limitation.

A) Yes, Assessment Order is barred by limitation as time limit for passing Assessment Order expired on
31.12.2019.
B) Yes, Assessment Order is barred by limitation as time limit for passing Assessment Order expired on
31.03.2020.
C) No, Assessment Order is not barred by limitation as time limit for passing Assessment Order expires on
31.12.2020.
D) No, Assessment Order is not barred by limitation as time limit for passing Assessment Order expires on
31.03.2021.

Q121. AO entered a hotel run by a person, in respect of whom he exercises jurisdiction, at 8.30 p.m.
for purpose of collecting info, which may be useful for purposes of Act. Hotel is kept open for
business every day between 8 a.m. and 10 p.m. As per provisions of section 133B: -

A) A.O. cannot enter premises at 8.30 p.m. since it is after sunset

B) A.O. can enter premises at 8.30 p.m. and take away books of account kept at hotel after taking prior
approval of Principal Chief Commissioner or Chief Commissioner.
C) A.O. can enter premises at 8.30 p.m. and take away books of account kept at hotel after recording
reasons for doing so.
D) A.O. can enter premises at 8.30 p.m. but cannot take away books of account kept at hotel.

Q122. In course of search operations under section 132 in month of May, 2019, Mr. Anurag makes a
declaration under section 132(4) on earning of income not disclosed in respect of P.Y. 2018 -19. He
also explains manner in which he has derived such income and he pays tax together with interest
on such income and declares such income in return of income filed by him in month of July, 2019.
Is penalty leviable in this case?

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A) No penalty is attracted since Mr. Anurag has voluntarily made a declaration under section 132(4).
B) Penalty@10% of undisclosed income would be attracted even if Mr. Anurag has voluntarily made a
declaration under section 132(4).
C) Penalty@30% of undisclosed income would be attracted even if Mr. Anurag has voluntarily made a
declaration under section 132(4).
D) Penalty@60% of undisclosed income would be attracted even if Mr. Anurag has voluntarily made a
declaration under section 132(4).

Q123. After serving proper notice under respective sections, which of following assessments can be
concluded without giving opportunity of being heard to assessee?

A) Assessment under section 143(3)

B) Re-assessment under section 147
C) Assessment under section 144
D) Assessment under 153A in conformity with directions issued under section 144C(5)

Q124. What is time limit for completion of assessment where reference is made to TPO during
course of proceeding for reassessment u/s 147, where notice is served on 28.3.2019?

A) 31.12.2021
B) 30.09.2021
C) 31.03.2021
D) 31.12.2020

Q125. A Foreign Institutional Investor (FIl) has total income which includes short-term capital gains
on sale of preference shares of Rs.50 lakh. rate of tax for charging such income to tax is: -

A) 10%
B) 15%
C) 30%
D) 40%

Q126. Provision relating to limitation of interest deduction wrt debt issued by a non-resident
associated enterprise would not apply where expenditure by way of interest or similar nature is –

A) Rs.2.10 Crore
B) Rs.2 Crore
C) Rs.1.50 Crore
D) Rs.1 Crore

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Q127.
Q12 A Bench of Authority for Advance Rulings (“AAR”) consists of a Chairman/Vice
Chairman/Vice-chairman,
chairman,
one revenue member and one law member. An Assessee filed an application before AAR pertaining
to interpretation of certain provisions of Income-tax
Income tax Act, 1961. Determine which of following
persons can be a revenue member of AAR for purpose of adjudicating said application?

A) Person
Person from Indian Revenue Service who is qualified to be a member of CBDT
B) Person
Person from Indian Customs and Central Excise Service who is qualified to be a member of CBEC
C) Member
Member from Indian Legal Service
D) Person
Person from Indian Revenue Servic
Servicee

Q128.
Q12 In order to claim relief under tax treaty in Indi
India,
a, a non-resident
non resident:
resident: –

A) Should have a business presence in India

B) Should produce his Permanent Account Number
C) Should produce Tax Residency Certificate (TRC)
D) Should produce his income
income--tax
tax return filed in home country

Q129.
Q12 Interest income earned by a non-resident
non resident during P.Y. 2018
2018--19
19 on bonds, issued by ABC
Ltd., an Indian company, under a scheme notified by Central Government, which were purchased
by him in convertible foreign currency, is
is: –

A) Taxable @10%
B) Taxable @15%
C) Taxable @20%
D) Not taxable

Q120.
Q1 20. A Ltd., an Indian company, has a wholly owned subsidiary in Sri Lanka, and it extends
corporate guarantee to said non-
non-resident
resident subsidiary. If amount guaranteed is Rs.190 crore, AO has
to accept guarantee fee declared by A Ltd. for F.Y.2018 --19,
19, if guarantee fee declared is:
is:–

A) Rs.95 lakhs
B) Rs.1 crore
C) Rs.1.9 crore
D) Either (a) or (b)

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“SOLUTIONS”
SN. Answer SN. Answer SN. Answer SN. Answer
1. B 34. A 67. D 100. AD
2. A 35. D 68. B 101. D
3. C 36. D 69. C 102. C
4. C 37. B 70. C 103. B
5. B 38. C 71. D 104. A
6. D 39. D 72. C 105. C
7. D 40. D 73. D 106. A
8. B 41. C 74. D 107. B
9. B 42. D 75. A 108. B
10. D 43. D 76. C 109. A
11. C 44. C 77. C 110. A
12. B 45. C 78. D 111. C
13. D 46. C 79. A 112. C
14. C 47. A 80. C 113. B
15. A 48. C 81. B 114. A
16. D 49. C 82. C 115. B
17. D 50. C 83. C 116. D
18. B 51. D 84. C 117. C
19. C 52. A 85. D 118. B
20. D 53. C 86. A 119. B
21. C 54. A 87. A 120. A
22. C 55. D 88. A 121. D
23. D 56. D 89. A 122. C
24. C 57. B 90. A 123. D
25. C 58. B 91. C 124. D
26. A 59. A 92. A 125. C
27. D 60. D 93. A 126. D
28. C 61. C 94. D 127. A
29. D 62. C 95. C 128. C
30. A 63. C 96. C 129. A
31. D 64. A 97. D 130. C
32. D 65. D 98. D
33. B 66. D 99. A
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