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Module 5: TTax

ax planning and Estate planning


Tax Planning
Practice Questions

Instructions to candidates

a) Tick the answer which you feel is closest to the correct answer
b) Each Question carries one mark
c) Negative marking to the extent of 20% is applicable i.e. for every wrong answer you will lose 0.2
marks.

For Questions 1 to 15
S had been working with F. Ltd, in a tribal area since 1-10-1990. He was entitled to the following emoluments:
1. Basic salary w.e.f. 1-1-2003 Rs 6,000 p.m.
2. D.A. 40% of basic salary (50% of which forms part of salary for retirement benefits)
3. Medical Allowance Rs. 500. p.m. (entire amount is spent on his own medical treatment)
4. Entertainment Allowance Rs. 400 p.m.
5. Children Education Allowance Rs. 40 p.m. per child for three children
6. Hostel expenditure allowance Rs.100 p.m. per child for three children.
7. Tribal Area Allowance Rs. 300 p.m.
8. Uniform Allowance Rs.250 p.m. (He spends Rs. 1,500 on the purchase and maintenance of the uniform)
9. House Rent Allowance Rs. 750 p.m. He pays Rs. 1,000 p.m. as rent.
10. He contributes Rs. 900 p.m. to a recognised providend fund to which his employer contributes equal
amount.
He retired from his job on 1-1-2004 and shifted to Delhi. He was entitled to the following benefits at the time of his
retirement:
(a) Gratuity Rs. 1,15,000
(b) Pension from 1-1-2004 Rs. 2,000 p.m.
(c) Payment of recognised providend fund Rs. 3,00,000
(d) Encashment of earned leave for 150 days Rs. 36,000.
He was entitled to 40 days leave for every completed year of service. He got 50% of his pension commuted in lump
sum w.e.f. 1-3-2004 and received Rs. 1,20,000 as commuted pension.
He joined P Ltd. at Delhi w.e.f. 1-2-2004. And was entitled to the following emoluments:
(1) Basic salary Rs. 5,000 p.m.
(2) D.A. (forming part of salary) 20% of basic salary
(3) Rent- free unfurnished accommodation in Delhi which is owned by the employer and whose fair rental
value is Rs. 48,000 p.a.
He was also given the following facilities by the employer:
(a) Motor car (1.4 ltr engine capacity) with driver, which he uses partly for official and partly for personal
purposes.
(b) The monthly expenses incurred by ‘S’ on gas and electricity was Rs.500, which were reimbursed by the
employer.
(c) Reimbursement of educational expenses of his two children which amounted to Rs. 350 p.m.
(d) On 4-3-2004 his wife fell ill and the employer reimbursed the expenditure of medical treatment amounting
to Rs. 17,500.
(e) A watchman, a sweeper, a cook and a gardener have been provided to whom the company pays a salary of
Rs. 400 p.m. each.
(f) Loan of Rs. 1,00,000 @ 12% p.a. for construction of his own house was given by the company. Normal rate
of interest is 18%.
He made the following payments during the year:
(1) Professional tax Rs. 500
(2) LIC Premium of Rs. 15,000(sum assured Rs. 2,00,000)
(3) Deposit in PPF account Rs. 60,000

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 1
Q.1
Q.1.The exempt amount of Children Education Allowance from F Ltd will be:
(a) Rs. 1,080
(b) Rs. 720
(c) Rs. 360
(d) NIL

Q.2
Q.2. The taxable amount of Hostel Expenditure Allowance from F Ltd will be:
(a) Rs. 900
(b) Rs. 2,700
(c) Rs. 1,800
(d) None of the above

Q.3. Medical Allowance from F Ltd will be taxable to the extent of


(a) Rs. 4,500
(b) Rs. 1,500
(c) NIL
(d) None of the above

Q.4
Q.4. Exempt amount of HRA from F Ltd. will be:
(a) Rs. 6,750
(b) Rs. 2,520
(c) Rs. 1,000
(d) Rs. 4,230

Q.5 The taxable amount of commuted pension from F Ltd will be:
(a) Rs. 1,20,000
(b) Rs. 80,000
(c) Rs. 40,000
(d) Rs. 5,000

Q. 66. Taxable value of interest on loan from P Ltd will be


(a) Rs. 12,000
(b) Rs. 18,000
(c) Rs. 6,000
(d) NIL

Q7
Q7. The perquisites value of rent-free accommodation from PLtd will be:
(a) Rs. 1,500
(b) Rs, 15,000
(c) Rs. 10,000
(d) Rs 1,000

Q.8
Q.8. The aggregate amount of standard deduction that will be allowed to S will be:
(a) Rs. 25,000
(b) Rs. 30,000
(c) NIL
(d) None of the above

Q 9. Amount of deduction under chapter VIA will be:


(a) Rs. 60,000
(b) Rs. 70,000
(c) Rs, 2,29,564
(d) NIL

2 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q. 10
10. Rebate u/s 88 will be:
(a) Rs.14, 000
(b) Rs. 15,000
(c) Rs. 10,500
(d) None of the above

Q.11 If the deposit in PPF is Rs. 50,000, rebate u/s 88 will be:
Q.11
(a) Rs. 14,000
(b) Rs. 15,000
(c) Rs. 10,500
(d) None of the above

Q. 12. The amount of tax payable is:


(a) Rs. 42,868
(b) Rs. 32,368
(c) Rs. 35,605
(d) NIL

Q 13
13. Medical reimbursement from P Ltd will be taxable to the extent of:
(a) Rs. 17,500
(b) Rs. 15,000
(c) Rs. 2,500
(d) None of the above

Q 14. The taxable income of S is:


(a) Rs. 2,29,564
(b) Rs. 2,29,560
(c) Rs. 2,32,368
(d) None of the above

Q 15 If S invests Rs. 30,000 in infrastructure bonds, the tax liability


(a) Will remain unchanged
(b) Will reduce by Rs. 6,000
(c) Will reduce by Rs.4,500
(d) Will reduce by Rs.3,750

For Questions 16 to 25
The following information is submitted by S for the assessment year 2004-05:
Rs.
1. Gross salary 1,70,000
2. Royalty (Gross) 27,000
3.Expenses allowable from royalty 5,000
4. Interest on bank deposits 13,000
5. Donation to an approved charitable institution 15,000
6. LIP on his own life (sum assured Rs. 20,000) 6,000
7. LIP on life of his wife 2,000
8. LIP on the life of his major son(not dependent on S) 2,500
9.LIP on the life dependent brother 2,000
10. Contribution to a Recognised PF 20,000
11. Amount deposited in PPF 15,000
12. Contribution ULIP 3,000
13. Repayment of housing loan taken from
LIC (principal amount Rs. 23,000, interest Rs. 40,000) 63,000
14.Subscription to units of a Mutual Fund
notified u/s 10(23D) which will subscribe to

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 3
eligible issue of capital 45,000

15. Amount incurred on the education of:


(a) Child A Rs. 14,000
(b) Child B Rs. 7,000
(c) Child C Rs. 5,000
He had taken the loan from LIC for construction of a residential house property which was completed in 1994 and
was being utilized him for his own residence.

Q.16 Taxable income from salary will be:


(a) Rs. 1,70,000
(b) Rs. 1,40,000
(c) Rs. 1,45,000
(d) None of the above

Q.17. Taxable income from house property will be:


(a) Rs. 30,000
(b) (-) Rs. 30,000
(c) (-) Rs.1,50,000
(d) NIL

Q 18
18. Gross Total Income is
(a) Rs. 1,75,000
(b) Rs. 2,05,000
(c) Rs. 1,45,000
(d) Rs 1,26,350

Q. 19
19. Deduction u/s 80 G will be:
(a) Rs. 13,300
(b) Rs. 14,500
(c) Rs. 6,650
(d) Rs. 7,250

Q. 20
20. Total Income is:
(a) Rs. 1,45,000
(b) Rs. 1,26,350
(c) Rs. 1,33,000
(d) None of the above

Q. 21
21. The eligible amount of repayment of housing loan for rebate u/s 88 is:
(a) Rs. 10,000
(b) Rs. 20,000
(c) Rs. 23,000
(d) NIL

Q. 22
22. The eligible amount of tuition fee of children for rebate u/s 88 is:
(a) Rs. 24,000
(b) Rs. 12,000
(c) Rs. 26,000
(d) Rs. 19,000

Q. 23. Rebate u/s 88 will be:


(a) Rs. 15,000
(b) Rs. 20,000
(c) NIL
(d) None of the above

4 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q.24
Q.24.If the gross income from royalty is Rs. 82,000, deduction u/s 80G will be:
(a) Rs. 15,000
(b) Rs. 7,500
(c) Rs. 6,650
(d) None of the above

Q. 25. In Q. 24 above, the rebate u/s 88 will be:


(a) Rs. 15,000
(b) Rs. 20,000
(c) Rs. 14,000
(d) NIL

For Questions 26 to 31.


The following information is provided by S, who is employed by P Ltd. during the previous year 2003-04

Rs.
(i) Basic salary 1,16.000
(ii) D.A. 28,000
(iii) High cost of living allowance 30,000
(iv) HRA (actual rent paid is Rs. 60,000 in Delhi) 48,000
(v) Commission (at 2% of turnover achieved by S) 18,000
(vi) Profits from dairy farming 30,000
(vii) Profits from business of growing mushrooms 28,000
(viii) Expenses on filing income tax appeals 16,600
(ix) Insurance premium on policy in the
name of Mrs. S (sum assured Rs. 2,80,600) 44,000
(x) Independent Income of a minor son (age 14 years) 35,000
On 10-3-2004, P Ltd offers equity shares to employees at the rate of Rs. 410 per share (market price Rs.600 per share
on 10-3-2004). S accepts the offer and as per terms of the offer applies for 500 shares on 20-3-2004(market price on
20-3-2004 Rs. 590 per share)
.
Q 26. The taxable amount of HRA is:
(a) Rs. 48,000
(b) Rs. 43,800
(c) Rs. 4,200
(d) NIL

Q. 27
27. The taxable value of ESOP will be:
(a) Rs. 3,00,000
(b) Rs. 95,000
(c) Rs. 5,000
(d) NIL

Q. 28 Income from PGBP will be


(a) Rs. 58,000
(b) Rs. 41,400
(c) Rs. 30,000
(d) None of the above

Q.29. The taxable amount of Minor’s income in the hands of S is:


(a) Rs. 1,500
(b) Rs. 35,000
(c) Rs. 33,500
(d) NIL

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 5
Q.30 Total income is:
(a) Rs. 1,66,200
(b) Rs. 2,46,100
(c) Rs. 2,07,600
(d) None of the above

Q31. Tax rebate u/s 88 is:


(a) Rs. 8,800
(b) Rs. 6,600
( c) NIL
(d)None of the above

For Questions 32 to 43

Mrs. S an employee- director of FHL Ltd., submits the following information relevant for the assessment year 2004-
05.
Salary: Rs. 86,000; entertainment allowance (date of joining 1st May, 1965); Rs.8,000; bonus: Rs 10,200; education
allowance: Rs.4,000 (for her grandchildren); income tax penalty paid by employer: Rs. 2,000; medical expenses
reimbursed by employer; Rs. 2,000; leave travel concession:Rs.1,000 ; free residential telephone: Rs. 4,000, free
refreshment during office hours; Rs. 4,000; payment of electricity bills by employer: Rs. 1,060; reimbursement of gas
bills: Rs.1,000; professional tax paid by the employer: Rs. 300; professional tax paid by Mrs. S Rs. 150.
Mrs. S owns two houses, particulars of which are as under:
House I House II
Rs. Rs.
Municipal value 43,000 80,000
Rent 46,000 NIL

(Self-occupied)
Standard rent 50,000 60,000
Municipal taxes paid 4,800 8,000
Insurance 500 1,500
Interest on capital borrowed for purchase of
house property 4,000 16,000
Repayment of loan taken from LIC
For the purpose of purchasing house I 15,000
Date of completion of construction 15-4-1990 15-5-1967
Other incomes:
Agriculture income for the previous year 2003-04 2,00,000
Dividend from Indian private limited companies 17,000
Payments and investments:
Own contribution to unrecognized providend fund 1,500
Contribution to public providend fund 16,000
Donation to the P.M. National Relief Fund 2,000

Q 32. Deduction allowed u/s 16 is:


(a) Rs. 30,000
(b) Rs. 450
(c) Rs. 30,450
(d) None of the above

Q. 33 Which of the following will be exempt from tax:


(a) Medical reimbursement
(b) LTC
(c) Free Residential Telephone
(d) All of the above

6 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q.34
Q.34. The taxable amount of education allowance will be:
(a) Rs. 4,000
(b) Rs. 2,200
(c) Rs. 400
(d) None of the above

Q.35. Taxable income from House I is:


(a) Rs. 41,200
(b) Rs, 46,000
(c) Rs. 16,360
(d) Rs. 24,840

Q.36. Taxable income from House II is:


(a) (-) Rs. 16,000
(b) Rs. 16,000
(c) (-) Rs. 1,50,000
(d) NIL

Q. 37
37. Taxable income u/h IFOS is:
(a) Rs. 2,00,000
(b) Rs. 17,000
(c) Rs. 2,17,000
(d) NIL

Q. 38 Deduction u/s 80 G is:


(a) Rs. 2,000
(b) Rs. 1,000
(c ) NIL
(d) None of the above

Q. 39
39. Rebate u/s 88 is:
(a) Rs. 5,200
(b) Rs. 3,900
(c) Rs. 7,800
(d) None of the above

Q. 40
40. The tax payable is:
(a) Rs 6,790
(b) Rs.1,790
(c) Rs 1,590
(d) Rs. 1,485

Q. 41 If the providend fund is recognised, the tax liability:


(a) will be reduced by Rs. 300
(b) will be reduced by Rs. 225
(c) will be reduced by Rs. 450
(d) will remain same.

Q. 42
42.If the deduction to PM National Relief Fund is Rs.10, 000,deduction u/s 80G will be:
(a) Rs. 10,000
(b) Rs. 5,000
(c) Rs. 9,095
(d) NIL

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 7
Q. 43
43. If the dividend is received from a foreign company, the taxable income u/h IFOS will be:
(a) Rs. 2,00,000
(b) Rs. 2,17,000
(c) Rs. 17,000
(d) Rs. 5,000

Q 44. S deposits Rs 50,000 in NSC so as to reduce his tax liability. It is a case of:
(a) Tax Planning
(b) Tax Management
(c) Tax Evasion
(d) Tax Avoidance

Q 45
45. S Ltd maintains register of tax deduction effected by it to enable timely compliance. It is a case of:
(a) Tax Planning
(b) Tax Management
(c) Tax Evasion
(d) Tax Avoidance

Q 46.
46.S Ltd. issues a credit note for Rs. 50,000 for brokerage payable to Mohan, who is son of S, managing director
of the company. The purpose is to increase his income from Rs. 10,000 to 60,000 and reduce its income correspond-
ingly. It is case of
(a) Tax Planning
(b) Tax Management
(c ) Tax Evasion
(d) Tax Avoidance

Q. 47. S. is a working partner of Reliance Industries. In such capacity, he is entitled to a salary of Rs. 10,000 p.m. he
treats this as salary so that he can claim deduction u/s 16. It is a case of
(a) Tax Planning
(b) Tax Avoidance
(c) Tax Management
(d) Tax Evasion

Q 48
48. If the rate of interest / dividend is same, which one is cheapest source of raising finance:
(a) Debt
(b) Equity shares
(c) Preference shares
(d) All are equally costly

Q 49
49. Which one is more tax effective for an employee:
(a) To take medical allowance of Rs. 1,250 p.m.
(b) To take medical reimbursement of Rs. 15,000 p.a.
(c) Both are equally tax effective
(d) None is tax effective

Q.50. Which one is more tax effective:


(a) To encash leave on an annual basis
(b) To accumulate leave and encash at the time of retirement
(c) To avail leave
(d) Both (a) and (b) are equally tax effective

Q51
Q51. Which one is more tax effective:
(a) Transport allowance of Rs. 800 p.m.
(b) D.A. of Rs. 800 p.m.
(c) Lunch allowance of Rs.800 p.m.
(d) Children Education Allowance of Rs. 800 p.m.

8 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q.52
Q.52. Which one is more tax effective:
(a) Consolidated pay of Rs. 10,000 p.m.
(b) Basic salary of Rs. 7,500 p.m. and HRA of Rs. 2,500 p.m. (Rent paid 6,000p.m.)
(c) Basic salary of Rs. 4,000 p.m. and HRA of Rs. 6,000 p.m. (Rent paid 6.000p.m.)
(d) Basic salary of Rs. 2,800 p.m. and HRA of Rs. 7,200 p.m. (Rent paid 6,000p.m.)

Q. 53
53. Tax liability is maximum for:
(a) Non-Residents
(b) Resident but not ordinary residents
(c) Residents and ordinary residents
(d) Same for all the three

For Questions 54 to 60
Suresh has purchased a house property on 7-7-2000 for Rs. 5,00,000. He was planning to sell his house on 5-7-
2003. However, one of his friend advised him to wait for a few days and sell the property on 8-7-2003 so that the
resulting capital gain is converted into LTCG. Suresh adhered to the advice and sold the house on 8-7-2003 for Rs.
6,50,000. Expense on transfer amounted to Rs. 5,000. Suresh invested Rs. 1,00,000 in infrastructure bonds out of the
proceeds of house on 9-9-2003. He has also paid Mediclaim of Rs. 30,000 on 11-11-2003. He has no intention of
investing the proceed in another house/ securities, etc. as he needs this money for his business.

Q 54 When the resulting capital gain is long- term, ICOA will be:
(a) Rs. 5,00,000
(b) Rs. 5,70,197
(c) Rs. 5,80,197
(d) None of the above

Q. 55
55.Taxable LTCG is:
(a) Rs. 6,50,000
(b) Rs. 69,803
(c) Rs. 79,803
(d) None of the above

Q. 56
56. Rebate u/s 88, in case of LTCG will be:
(a) Rs. 15,000
(b) Rs. 20,000
(c) Rs. 3,960
(d) NIL

Q.57
Q.57.Tax liability in case of LTCG will be:
(a) Rs. 13,960
(b) Rs. 3,960
(c) NIL
(d) None of the above

58. When the resulting capital gain is short-term, deduction u/s 80D will be:
(a) Rs. 10,000
(b) Rs. 15,000
(c) Rs. 30,000
(d) NIL

Q.59. When the resulting capital gain is long-term, deduction u/s 80D will be:
(a) Rs. 10,000
(b) Rs. 15,000
(c) Rs. 30,000
(d) NIL

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 9
Q.60 Tax liability in case of STCG is:
(a) Rs. 15,000
(b) Rs. 5,000
(c) NIL
(d) None of the above

Q. 61
61. Income tax Act 1961 extends to;
(a) Entire India
(b) Whole of India except Jammu and Kashmir
(c) Whole of India except Sikkim
(d) Whole of India except Jammu and Kashmir and Sikkim

Q. 62. Finance Bill becomes the Finance Act when it is passed by:
(a) The Lok Sabha
(b) The Rajya Sabha
(c) Both Lok Sabha and Rajya Sabha
(d) Both Houses of Parliament and given the assent of the President
(e) Both houses of Parliament and given the assent of the Prime Minister / Finance Minister

Q. 63
63. Income Tax is rounded off to:
(a) Nearest ten rupees
(b) Nearest one rupee
(c) Nearest one hundred rupees
(d) No rounding off of tax is done

Q. 64
64. Surcharge in case of an individual for assessment year 2004-05 is payable at the rate of:
(a) 10% of the income tax payable if the total income exceeds Rs. 8,50,000
(b) 5% of the income tax payable provided the total income exceeds Rs. 60,000
(c) 2% of the tax payable if the total income exceeds Rs. 60,000
(d) None of the above.

Q. 65 Residential status is to be determined for:


(a) Previous year
(b) Assessment year
(c) Accounting year
(d) All of the above

Q. 66
66.Incomes which accrue or arise outside India but are received directly in to India are taxable in case of:
(a) Resident only
(b) Both ordinarily and not ordinarily resident
(c) Non-resident
(d) All the assesses

Q. 67. Taxable income of a person is determined on the basis of his:


(a) Residential status in India
(b) Citizenship in India
(c) None of the above
(d) Both (a) and (b)

Q. 68. Income which accrue or arise outside India and also received outside India is taxable in case of:
(a) Ordinary resident only
(b) Not ordinary resident
(c) Both (a) and (b)
(d) None of the above

10 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q. 69
69. The cost of acquisition of the right shares to a person who purchased the right to acquire the share from the
existing shareholder shall be:
(a) Market value of the right share on the date of allotment
(b) Price at which shares are offered
(c) Price at which shares are offered plus amount paid to the person renouncing the right
(d) None of the above

Q. 70 If the bonus shares are acquired before 1-4-1981, the cost of acquisition of such bonus shares shall be:
(a) Market value of such shares on the date of allotment
(b) Nil
(c) Market value as on 1-4-1981
(d) None of the above

For Questions 71 to 75
S Ltd. is a closely held company engaged in manufacturing of insecticides and fertilizers. The value of plant and
machinery owned by the company is Rs. 55lakhs. Its Profit and Loss Account for the year ended 31-3-2004 is as
under:
Rs. Rs.
Domestic sales 22,23,900
Export sales 5,76,100
Other receipts 2,00,000 30,00,000
Less: Expenses
Depreciation 4,16,000
Salary and wages 1,34,500
Entertainment expenses 10,000
Traveling expenses 36,000
Miscellaneous expenses 5,000
Income tax 3,50,000
Wealth tax 8,000
Outstanding custom duty 17,500
Provision for unascertained liabilities 70,000
Proposed dividends 60,000
Loss of subsidiary company 30,000
Consultation fees paid to a consultant 21,000
Salary and perquisites of managing director 1,80,000
Excise duty of 2001-02 75,000 14,13,500
Net profit 15,86,500

The assessee claims the following as deductions:


(a) Deduction u/s 80 HHC, foreign exchange remittance being Rs. 50,000
(b) Deduction u/s 80-IB (30% of Rs.15,86,500)
(c) Excise duty pertaining to 2001-2002 paid during 2003-04 of Rs.75,500
(d) Depreciation u/s 32 is Rs. 5,36,000.
(e) The following further particulars are furnished
———————————————————————————————————————
—————————
For tax purposes For accounting
purposes
Rs. Rs.

Brought forward loss of 2001-02 11,80,000 9,10,000


Unabsorbed depreciation NIL 2,45,000

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 11
Q. 71
71. Book Profits of S. Ltd. will be:
(a) Rs. 20,96,500
(b) Rs. 18,40,775
(c) Rs. 2,55,725
(d) None of the above

Q.72. Deduction u/s 80-I B will be:


(a) Rs. 8,22,000
(b) Rs. 4,11,000
(c) Rs. 2,46,600
(d) None of the above

Q.73 Deduction u/s 80 HHC will be:


(a) Rs. 20,02,000
(b) Rs. 10,725
(c) Rs. 50,000
(d) None of the above

Q. 74 For computation of Book-Profits, which of the following deduction shall be allowed:


(a) 80 -IB
(b) 80 HHC
(c) Both 80 -IB and 80 HHC
(d) None of the above

Q. 75. Tax liability of S. Ltd. will be:


(a) Rs. 1,41,510
(b) Rs. 2,02,579
(c) Rs. 1,38,059
(d) Rs. 1,97,638

For Questions 76 to 80.


S,V and P are partners in a firm sharing profits and losses equally. For the assessment year 2004-05 following
particulars are available:
(i) Loss as per Profit and Loss account ( after debiting Partner’s remuneration and interest on capital) Rs.
2,44,000
(ii) Remuneration to partners
S Rs. 90,000
V Rs. 60,000
P Rs. 30,000 1,80,000
Interest on capital
Capital on 1-4-2003 Interest
Rs. Rs.
S 1,00,000 12,000
V 1,00,000 12,000
P 1,00,000 12,000

Q. 76. The amount of Book Profits is


(a) Rs. 64,000
(b) (-) Rs. 64,000
(c) Rs. 2,44,000
(d) (-) Rs. 2,44,000

12 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q.77
Q.77. The firm can pay a remuneration of:
(a) Rs. 64,000
(b) Rs. 50,000
(c) Rs. 57,600
(d) NIL

Q. 78. Remuneration to S is:


(a) Rs. 50,000
(b) Rs. 25,000
(c) Rs. 16,667
(d) NIL

Q. 79
79. Taxable income of firm is:
(a) (-) Rs. 64,000
(b) Rs. 50,000
(c) (-) Rs. 1,14,000
(d) Rs. 1,14,000

Q. 80 Taxable income of V is:


(a) Rs. 37,000
(b) Rs. 12,000
(c) Rs. 28,870
(d) None of the above

For Questions Q.81 to 85.


V, a reputed vocal musician, furnishes the following particulars of his income and expenditure for the year ending
31-3-2004: -
(i) Salary paid to servant who was utilized for domestic as well as official purpose Rs. 1,200
(ii) Doctor’s bills for treating his throat so as to improves his voice Rs. 2,000
(iii) Cost of two instruments purchased on 1-1-04 Rs. 1,000 (Rs 500 each)
(iv) His gross receipts during the year amounted to Rs. 50,000. This includes Rs. 6,000 for performance in
America during the year. He claims that this receipts of Rs. 6,000 is exempt from tax.
(v) He owns a house in which he lives. Annual letting value of this house as per municipal assessment is Rs.
2,400 (municipal tax Rs. 650). An identical house next to his house fetches a rent of Rs. 500 per month. He
has spent Rs. 1,000 on repairs, Rs. 52 on urban land tax and Rs. 40 on insurance of the house
(vi) A purse of Rs. 50,000 was presented to him at function to commemorate his completion of 50 years as token
of appreciation of the meritorious service
rendered by him to the cause of music
(vii)LIP paid Rs. 40,000 which includes premium of Rs. 9,000 on one policy of Rs. 75,000, gross total income is
Rs. 6,00,000
(viii)Agricultural income is Rs. 6,000. Agricultural income of his minor child Rs. 10,000 from lands gifted by
him some years back.

Q.81. The amount allowed as deduction in respect of salary paid to servant is:
(a) Rs. 1,200
(b) Rs. 6,00
(c) Rs. 800
(d) NIL

Q.82. Amount of Rs. 50,000 under item (vi) will be taxed as:
(a) PGBP
(b) IFOS
(c) Capital gain
(d) Exempt from tax

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 13
Q. 83
83. Taxable value of house under item (v) is:
(a) Rs. 6,000
(b) Rs. 2,400
(c) NIL
(d) None of the above

Q. 84. Rebate u/s 88 will be:


(a) Rs. 8,000
(b) Rs. 6,000
(c) Rs, 12,000
(d) NIL

Q. 85
85. Depreciation on instruments will be:
(a) Rs. 1,000
(b) Rs. 500
(c) Rs. 250
(d) Rs. 125

For Questions Q. 86 to 90.


S and P, two doctors, are partners of a clinic Sanjivani. They are sharing profits and losses equally. Both have
contributed capital of Rs. 2,00,000 each for the PY 2003-04, they are expecting net profit of Rs. 5,00,000 (before
considering interest and remuneration). They want to withdraw Rs. 1,80,000 each from the firm to meet the house-
hold expenses. The firm is assessed as FAS.

Q. 86. If interest is allowed @ 12% p.a. the maximum amount of remuneration that can be paid is:
(a) Rs. 2,64,000
(b) Rs. 2,50,800
(c) Rs. 4,52,000
(d) None of the above.

Q. 87
87. If interest is allowed @ 10% p.a. the maximum amount of remuneration that can be paid is:
(a) Rs. 2,54,000
(b) Rs. 4,60,000
(c) Rs. 4,14,000
(d) NIL

Q. 88
88. In Q. 87 above, the tax liability of the firm will be:
(a) Rs. 72,100
(b) Rs. 73,903
(c) Rs. 2,06,000
(d) NIL

Q. 89
89. In Q.87 above, the tax liability of S will be:
(a) Rs. 14,400
(b) Rs. 18,400
(c) Rs, 13,400
(d) NIL

Q. 90. If no interest is allowed and the maximum possible remuneration is paid, tax liability of S:
(a) Will increase by Rs. 2,400
(b) Will decrease by Rs. 2,400
(c) Will decrease by Rs. 3,000
(d) Will remain same

14 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
For Questions 91 to 96
S purchases 1,200 equity shares in P Ltd. at the rate of Rs. 15 per share (brokerage1%) on 11-12-1978. He has got 300
bonus shares (by virtue of his holding of 1,200 shares) on 21-1-1980. Fair market value of shares of P. Ltd. as on 1-
4-1981 is Rs. 30
On 7-3-2004, S transfers all the 1,500 shares at the rate of Rs. 84 per share (brokerage 1.5%). S paid a medical
insurance premium Rs. 5,000.

Q. 91. ICOA of original shares will be:


(a) Rs. 36,000
(b) Rs. 1,66,680
(c) Rs. 1,68,192
(d) None of the above.

Q. 92
92. LTCG on sale of original shares is:
(a) Rs. 67,392
(b) (-) Rs. 67,392
(c) Rs. 68,904
(d) (-) Rs. 68,904

Q. 93. ICOA of bonus shares will be:


(a) Rs. 9,000
(b) Rs. 41,670
(c) NIL
(d) None of the above

Q. 94
94. LTCG on sale of bonus shares is:
(a) Rs. 16,848
(b) (-) Rs. 16,848
(c) Rs, 25,200
(d) Rs. 24,822

Q. 95. If S has a taxable LTCG of Rs. 1,00,000, the deduction u/s 80D will be:
(a) Rs. 5,000
(b) Rs. 10,000
(c) Rs. 15,000
(d) NIL

Q. 96. Long-term capital loss can be carried forward up to


(a) 8 assessment years
(b) 4 assessment years
(c) Can’t be carried forward
(d) Can be carried forward without any time limit.

Q. 97. Loss from the activity of owning and maintaining racehorses can be carried forward up to
(a) 8 assessment years
(b) 4 assessment years
(c) Can’t be carried forward
(d) Can be carried forward without any time limit

Q. 98
98. Which of the following losses can be carried forward without any time limit:
(a) Unabsorbed depreciation
(b) Unabsorbed capital expenditure on scientific research
(c) Unabsorbed expenditure on family planning
(d) All of the above
(e) None of the above

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 15
Q. 99
99. Which of the following losses can be carried forward even when no return of income has been filed within
the due date:
(a) Capital loss
(b) Business loss
(c) House property loss
(d) All of the above
(e) None of the above

Q. 100
100. For which of the following losses, intra head adjustment is not allowed:
(a) Speculation loss
(b) Loss on account of card games
(c) Loss from a source which is exempt
(d) All of the above

Q. 101
101. If a firm earns agricultural income, it will be exempt:
(a) In the hands of firm but taxable in the hands of partners
(b) In the hands of firm as well as its partners
(c) In the hands of firm only
(d) In the hands of the firm as well as partners but would be included in the other income of partners for
computation of tax on his other incomes.

For Questions 102 to 108


S owns a house property at Metro City. The fair rental value per annum is Rs. 27,000 and the Municipal value is Rs.
24,000.
The house was let out from 1-4-2003 to 31-8-2003 at a monthly rent of Rs. 2,100. From 1-9-2003 S occupies for his
residence (self).
Expenditure incurred on property and paid:
(a) Municipal tax Rs. 4,000
(b) Fire insurance Rs. 2,500
(c) Land revenue Rs.4,600
(d) Repairs Rs. 1,000

Interest paid on borrowing for construction;


(a) For the year Rs.21,600
(b) Proportionate pre-construction interest Rs. 12,960.

Income from Firm (FAS) as partner:


Salary 25,000
Interest on capital 20,000
Share income 35,000

Q. 102.Gross annual value of house is:


(a) Rs. 27,000
(b) Rs. 23,000
(c) Rs. 24,000
(d) None of the above.

Q. 103. Statutory deduction in respect of house property is:


(a) Rs. 7,200
(b) Rs. 6,900
(c) Rs. 8,100
(d) NIL

16 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q. 104. Deduction in respect of interest on borrowed capital is:
(a) Rs. 21,600
(b) Rs. 30,000
(c) Rs. 41,460
(d) None of the above

Q. 105
105. Income from house property is:
(a) Rs. 18,460
(b) Rs. 18,640
(c) (-) Rs. 18,460
(d) NIL

Q. 106
106. Total income of S will be:
(a) Rs. 45,000
(b) Rs. 68,000
(c) Rs. 26,540
(d) NIL

For Questions 107 to 112


S and Co., a FAS as such, furnishes the following Profit And Loss account for the previous year ending on 31-3-
2004.
To cost of goods sold 2,80,000 By sales 2,92,000
To other expenses 91,000 By net loss 1,72,000
To interest to partners 25,000
To remuneration to partners 68,000
—————— ———————
4,64,000 4,64,000

The other expenses debited include Rs. 13,600 not allowed u/s 37; interest to partners is in excess by Rs. 7,100 (not
allowable).

Q. 107
107.Book profits of the firm are:
(a) (-) Rs. 1,72,000
(b) Rs. 83,300
(c) (-) Rs. 83,300
(d) None of the above

Q. 108
108.Maximum remuneration permissible is:
(a) Rs. 83,300
(b) Rs. 50,000
(c) Rs. 67,500
(d) Nil

Q. 109. Total income of the firm is:


(a) (-) Rs. 1,72,000
(b) Rs. 83,300
(c) (-) Rs. 1,33,300
(d) None of the above

Q. 110. The firm can carry forward the loss for a period of:
(a) 8 assessment years
(b) 4 assessment years
(c) as long as the firm continues
(d) can’t carry forward it.

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 17
Q. 111
11. If the firm is carrying on medical profession, maximum remuneration permissible will be:
(a) Rs. 50,000
(b) Rs. 90,000
(c) NIL
(d) None of the above.

Q. 1112
12 Remuneration received by partners will be taxed in their hands as:
(a) PGBP
(b) Salary
(c) IFOS
(d) Will be exempt

For Questions 113 to 116


S, a writer and a professional furnishes the following particulars for the previous year ended 31-3-2004:
(a) Royalty on books 42,000
(b) Expenditure on books 8,000
( c) Income from Profession 1,30,000
(d) Deposited in PPF (15-3-2004) 60,000

Q. 1113.
13. The taxable royalty income of S will be:
(a) Rs. 42,000
(b) Rs. 34,000
(c) NIL
(d) None of the above

Q. 1114
14
14. Total income of S will be:
(a) Rs. 1,72,000
(b) Rs. 1,64,000
(c) Rs. 1,30,000
(d) None of the above.

Q. 1115
15
15. Rebate u/s 88 is:
(a) Rs. 12,000
(b) Rs. 18,000
(c) Rs. 9,000
(d) NIL

Q. 1116
16
16. If S also has a LTCG of Rs. 1,00,000, his tax liability will be:
(a) Rs. 14,200
(b) Rs. 23,200
(c) Rs. 34,200
(d) Rs. 44,200

For Questions 117 to 121


S is employed in a public company and is paid a sum of Rs. 6,00,000 on VRS. The normal retirement age is 60 years
and S who was 45 years at the time of retirement had completed 20 years of service. His monthly salary at the time
of retirement was as follows:
Rs.
Basic salary 10,000
DA (50% considered for pension) 6,000
HRA 3,000
Conveyance allowance 800

18 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q. 1117
17 .The amount of VRS compensation exempt will be:
(a) Rs. 7,80,000
(b) Rs. 6,00,000
(c) Rs. 5,00,000
(d) Rs.1,00,000

Q. 1118
18 if during the previous year 2003-04, S has no other income except for VRS compensation and monthly
pension of Rs. 10,000 p.m., his tax liability will be:
(a) Rs. 31,000
(b) Rs. 40,000
(c) Rs.1, 36,000
(d) None of the above.

Q. 1119
19
19. In Q. 118, if S has deposited Rs. 1,00,000 in PPF, his tax liability will be:
(a) Rs. 16,000
(b) Rs. 20,500
(c) Rs. 31,000
(d) Rs. 11,000

Q. 120
120. In Q. 118, if S has deposited Rs. 70,000 in PPF and Rs. 30,000 in infrastructure bonds, his tax liability will
be:
(a) Rs. 16,000
(b) Rs. 20,500
(c) Rs. 31,000
(d) Rs. 11,000

Q. 121
121. In Q. 118, if S has deposited Rs. 1,00,000 in infrastructure bonds, his tax liability will be:
(a) Rs. 16,000
(b) Rs. 31,000
(c) Rs. 11,000
(d) Rs. 20,500

For Questions 122 to 127


During the previous year 2003-04, P.S. Foundation, a charitable trust derived following incomes: -
(i) Income from property held under trust Rs. 5,50,000 (Rs. 2,25,000 received in cash and the remaining
balance of Rs. 3,25,000 is to be received in 2005-06.
(ii) Voluntary contribution Rs. 3,00,000 (out of which Rs. 2,00,000 is with specific direction that it shall form
part of corpus of the trust).
During the previous year the trust spent Rs.90, 000 for charitable purposes. The trust has obtained the extension of
time for applying the unrealised income of Rs. 3,25,000 in year of receipts.

Q122 The exempted amount of voluntary contribution will be: -


(a) Rs.3, 00,000.
(b) Rs.2, 00,000.
(c) Rs.1, 00,000.
(d) None of the above

Q 123 The maximum amount which can be accumulated will be: -


(a) Rs. 82,500.
(b) Rs. 15,000.
(c) Rs. 1,62,500.
(d) Rs. 97,500.

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 19
Q124. The taxable income for assessment year 2004-05 will be: -
(a) Rs. 3,25,000.
(b) Rs. 4,62,500.
(c) Rs. 1,37,500.
(d) None of the above

Q125. If the trust spent Rs. 80,000 in year 2005-06 and Rs. 90,000 in year 2006-07 out of unrealised amount, i.e., Rs.
3,25,000 of previous year 2003-04, then the amount of deemed income of the assessment year 2007-08 will be: -
(a) Rs. 1,55,000.
(b) Rs. 3,25,000.
(c) Rs. 1,70,000.
(d) None of the above

Q126. The amount of tax for assessment year 2004-05 will be: -
(a) Rs. 41,250.
(b) Rs. 16,500.
(c) Rs. 45,375.
(d) Rs. 18,150.

Q127. The amount of tax for assessment year 2007-08, on the assumption that the trust have no other taxable
income will be: -
(a) Rs. 71,500.
(b) Rs. 25,000.
(c) Rs. 20,500.
(d) None of the above

For Questions 128 to 135


Alka purchased a car on 17-12-2000 for Rs 4,50,000. Rate of depreciation 20%. She sold the same to Shipra on 1-2-
2002 for Rs 4,25,000. FMV on that date is Rs 3,80,000. Shipra used the car for her business purposes and sold it back
to Alka on 1-3-2003 for Rs. 4,15,000.

Q 128. Depreciation to Alka for assessment year 2001-02 would be


(a) Rs. 90,000
(b) Rs. 45,000
(c) Rs 78,000
(d) Rs NIL
(e) None of the above

Q 129. For the assessment year 2002-03, Alka will be allowed a depreciation of
(a) Rs. 40,500
(b) Rs. 81,000
(c) NIL
(d) None of above

Q 130. Who will get depreciation for assessment year 2002-03


(a) Alka
(b) Shipra
(c) Both of them
(d) Neither of them

20 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q. 131 Shipra will be allowed a depreciation of
(a) Rs. 40,500
(b) Rs. 81,000
(c) Rs. 42,500
(d) Rs. 85,000
(e) Rs. 38,000

Q.132 On account of sale of car during the assessment year 2002-03 in the hand of Alka, there will be
(a) STCG of Rs. 20,000
(b) STCL of Rs. 20,000
(c) LTCG of Rs. 20,000
(d) LTCL of Rs. 25,000
(e) None of the above.

Q133. For assessment year 2003-04, Shipra will be allowed a depreciation of


(a) NIL
(b) Rs 34,200
(c) Rs 68,400
(d) None of the above

Q 134. On account of sale of car during the assessment year 2003-04, in the hands of Shipra, there will be
(a) STCG of Rs. 63,000
(b) STCL of Rs. 8,000
(c) LTCG of Rs. 8,000
(d) STCL of Rs.37,000
(e) None of the above

Q 135. Who will get depreciation for AY 2003-04


(a) Alka
(b) Shipra
(c) Both of them
(d) Neither of them

For Questions 136 to 138


For the assessment year 2004-05, Deepak has submitted a return of income for Rs. 2,00,000.The Assessing Officer
has made intangible additions of Rs.1,00,000 to it.

Q.136 The amount of tax sought to be evaded is


(a) Rs.34,000
(b) Rs.30,000
(c) Rs.64,000
(d) Nil

Q.137 The minimum penalty u/s 271(1)(c ) is


(a) Rs.90,000
(b) Rs.30,000
(c) Rs.64,000
(d) Rs.34,000
(e) None of the above

Q.138 The maximum penalty u/s 271(1)(c ) is


(a) Rs.90,000
(b) Rs.1,02,000

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 21
(c) Rs.1,92,000
(d) Rs.60,000
(e) None of the above

For Questions 139 to 142


Dr. Ravi Gupta, a non- resident remitted $ 50,000 to India to purchase shares in HLL . At the time of purchase of
shares the TT buying rate was 42 and TT selling rate was 44. Dr. Gupta sold the shares after 4 years from the date
of purchase for Rs. 48,50,000. He paid a brokerage of Rs. 50,000. The TT buying and selling rate on the date of sale
are Rs. 47 and Rs. 49 respectively

Q139. Full value of consideration will be taken


(a) Rs. 48,50,000
(b) Rs. 48,00,000
(c) Rs. 1,01,042
(d) Rs. 1,00,000

Q 140. Expenses on transfer will be converted in the foreign currency using the
(a) TT buying rate on the date of sale
(b) TT selling rate on the date of sale
(c) Average of TT buying and selling on the date of sale
(d) Need not be converted into foreign currency

Q 141. Capital Gain in foreign currency will be


(a) Rs. 50,000
(b) Rs. 51,042
(c) Rs. 1,00,000
(d) Rs. 1,01,042

Q 142. Capital gain computed in Indian Currency will be


(a) Rs. 23,50,000
(b) Rs. 24,00,000
(c) Rs. 24,50,000
(d) Rs. 47,00,000

Q.143 Deduction of tax from salary as per section 192 shall be:
(a) 10.5% of salary
(b) at the average rate of income tax computed on the basis of rates in force for the financial year in which
payment is made
(c ) @ 30% plus applicable surcharge
(d) @30%
(e) None of the above

Q.144 No tax is to credited at source if the amount credited/paid to the contractor during the relevant previous
year does not exceed
(a) Rs.2,500
(b) Rs.5,000
(c) Rs.20,000
(d) Rs.10,000

Q.145 P Ltd. has taken a house on rent on 1.1. 2004 @Rs.20,000 p.m. from S Ltd. For the financial year 2003-04, P
Ltd. should deduct tax at source amounting to:
(a) Nil
(b) Rs.6,000

22 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
(c) Rs.12,000
(d) Rs.18,000
(e) None of the above

Q. 146 No TDS is required in respect of any dividends declared , distributed or paid on or after 1- 4- 2003 by
(a) A domestic company
(b) A foreign company
(c) Any company

Q 147. A foreign enterprise enters into a contract for the fabrication and supply of components for machinery with
PS and Co., an Indian firm. PS and Co, in turn sub- contracts the work to P and Co and pays it Rs.50 lakhs during
the financial year 2003-04. PS and Co is
(a) Not required to deduct TDS.
(b) Required to make TDS @ 1 % plus surcharge.
(c) Required to make TDS @ 2% plus surcharge.

Q.148. Interest shall be payable u/s 234 B if the advance tax paid by the assessee during the financial year
(a) less than the assessed tax
(b) less than 75% of the assessed tax
(c ) less than 90% of the assessed tax
(d) less than 90% of tax payable on the returned income

Q.149 X Ltd., a company covered under Sec.25 of the Companies Act, 1956 is required to file return of its income for
the previous year 2003-04 in Form No.
(a) 1
(b) 2
(c) 3A
(d) 2E
(e) 3

Q150.
Q150.V. M. Mathur, an individual, having a long term capital gain in the previous year 2003-04 but not having any
business income or professional income , should file his return in Form No.
(a) 2C
(b) 2
(c) 2D SARAL
(d) 3
(e) 3 or 2D SARAL, as he may choose.

Q151. If the total income of an assessee does not exceed the maximum exemption limit, it will still be obligatory for
him to file return of income if he:
(a) satisfies any one of the six economic indictors
(b) satisfies any two out of the six economic indicators
(c ) resides in such area as may be specified by the Board
(d) resides in such area as may be specified by the Board and satisfies any one out of the six economic
indicators

Q 152. For satisfying the economic criteria for filing obligatory return of income under the First Proviso to Sec
139(1), the immovable property should be occupied for
(a) Commercial purpose only
(b) Residential purpose only
(c) Commercial and residential purpose and must have ownership
(d) Commercial or residential purposes for the previous year

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 23
Q153. X Ltd has a loss under the head ‘ Capital Gains’ while Y Ltd has NIL income.
(a) Only X Ltd is required to file its return of income for the previous year 2003-04
(b) Only Y Ltd is required to file its return of income for the previous year 2003-04
(c) Both X Ltd and Y Ltd are required to file its return of income for the previous year 2003-04

For Questions 154 to 160


S.K. Jain transferred his self-acquired property being 12% debentures of Rs. 15,00,000 to his HUF without any
consideration on 1-4-1998. On 1-4-2002, the HUF undergoes complete partition and the converted property is
distributed amongst the members of the HUF in the following manner:
Members Shares in converted property.
S. K. Jain 1,00,000
Mrs. K. Jain 2,00,000
S. C. Jain (major son of S. C. Jain) 3,00,000
Mrs. C. Jain 4,00,000
Parag (minor son of S. C. Jain) 5,00,000
(Date of birth: 15-11-96)

Q 154. For AY 1999-2000 the following amount will be taxed in the hands of Mr. S. K. Jain
(a) Rs.1,80,000
(b) Rs.12,000
(c) Rs.36,000
(d) None of the above.

Q 155. The taxable income of Mrs. S. K. Jain for AY 2001-02 will be:
(a) Rs.24,000
(b) Rs.6,000
(c) Rs.1,80,000
(d) NIL
(e) None of the above.

Q 156. The taxable income of Parag for AY 2002-03 will be:


(a) Rs.60,000
(b) Rs.96,000
(c) NIL
(d) None of the above.

Q 157. For AY 04-05, the taxable income of Mr. S. K. Jain will be


(a) Rs.12,000
(b) Rs.36,000
(c) Rs.1,80,000
(d) NIL
(e) None of the above.

Q 158. For AY 03-04, the taxable income of Mrs. S. K. Jain will be.
(a) Rs.12,000
(b) Rs.36,000
(c) Rs.24,000
(d) NIL
(e) None of the above.

Q 159. For AY 03-04, income of Parag will be taxed in the hands of


(a) Parag
(b) Mr. S. C. Jain
(c) Mrs. S. C. Jain

24 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
(d) Mr. or Mrs. S. C. Jain whose income from all other sources is greater.
(e) None of the above.

Q 160. Taxable income of Mrs. S. C. Jain for AY 02-03 will be


(a) Rs.48,000
(b) Rs.1,08,000
(c) NIL
(d) None of the above.

For Questions 161 to 166


S Ltd. owns the following assets as on 1-4-2003:
Asset Rate of Depreciation Depreciated Value on 1-4-2003
Rs.
Plant A 25% 4,05,000
Plant B 25% 1,95,000
Plant C 25% 7,05,700

The company acquired on 10-6-2003, Plant D at a cost of Rs. 20,000 ( Rate of Depreciation 25%). During the
previous year ended 31-3-2004, the company sold the following assets:

Asset Sale ConsiderationRs. Expenses on TransferRs.


Plant A 2,12,000 12,000
Plant B 6,17,500 -
Plant C 4,30,000 -
Plant D 95,000 200

Q. 161
161. Depreciation for AY 2004-05 will be:
(a) Rs. 3,31,425
(b) Rs. 1,65,713
(c) Rs. NIL
(d) None of the above

Q. 162
162. On sale of plant, there will be:
(a) LTCG
(b) STCG
(c) PGBP
(d) None of the above

Q. 163
163. The amount of capital gain will be:
(a) Rs. 16,600
(b) Rs. 28,800
(c) NIL
(d) None of the above.

Q. 164. If S Ltd purchases a plant costing Rs. 16,600 on 31-3-2004(and puts it to use on the same day), capital gain
will be:
(a) Rs. 16,600
(b) Rs 8,300
(c) NIL
(d) None of the above.

Q. 165. If in Q. 164 above, the plant is purchased on 1-4-04, capital gain will be:
(a) Rs. 16,600
(b) Rs. 8,300
(c) NIL
(d) None of the above.

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 25
Q. 166. If in Q.164 above, the plant is purchased for Rs. 14,600, capital gain will be:
(a) Rs.16, 600
(b) Rs. 2,000
(c) NIL
(d) None of the above.

For Questions 167 to 170


SVP, a FAS furnishes the following information for previous year 2003-04.
Rs.
Business loss 50,00,000
Property income 45,00,000
Income from other sources 1,00,000
Capital gain:
Short-term 3,00,000
Long-term 10,00,000

Q. 167. If business loss is first set off against LTCG, the taxable income will be:
(a) Rs. 59,00,000
(b) Rs. 9,00,000
(c) NIL
(d) None of the above.

Q. 168
168. In Q. 167 above, tax liability of firm will be:
(a) Rs. 3,15,000
(b) Rs. 3,22,875
(c) Rs. 1,80,000
(d) Rs. 1,84,500

Q. 169. If the business loss is first set off against income other than LTCG, taxable income will be:
(a) Rs. 59,00,000
(b) Rs. 9,00,000
(c) NIL
(d) None of the above

Q. 170
170. In Q 169 above, tax liability of the firm will be:
(a) Rs. 3,15,000
(b) Rs. 3,22,875
(c) Rs. 1,80,000
(d) Rs. 1,84,500

Q. 171.
171.Partial integration of agriculture income with non-agricultural income is not done if the non-agricultural
income doesn’t exceed:
(a) Rs. 50,000
(b) Rs. 5,000
(c) Rs. 1,00,000
(d) Rs. 600

For Questions 172 to 175.


Total income of S for the previous year 2003-04 is Rs. 2,00,000. He has deposited Rs. 1,00,000 in PPF account.

Q. 172
172. If the agricultural income of S is NIL, his tax liability will be:
(a) Rs.34, 000
(b) Rs. 19,000
(c) Rs. 23,500
(d) None of the above.

26 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q. 173 If the agricultural income of S is Rs. 5,000, his tax liability will be:
(a) Rs. 34,000
(b) Rs. 19,000
(c) Rs. 23,500
(d) None of the above

Q. 174
174. If the agricultural income of S is Rs. 60,000, his tax liability will be:
(a) Rs. 26,500
(b) Rs. 37,000
(c) Rs. 22,000
(d) None of the above.

Q. 175
175. S can reduce his tax liability by:
(a) Investing Rs. 70,000 in PPF and Rs. 30,000 in infrastructure bonds.
(b) Investing Rs. 80,000 in PPF and Rs. 20,000 in infrastructure bonds.
(c) Investing Rs. 60,000 in PPF, Rs. 20,000, in NSC and Rs. 20,000 in infrastructure bonds.
(d) Tax liability can’t be reduced further.

Q 176. Rebate u/s 88 is allowed to:


(a) Any assessee
(b) An individual
(c) An individual or HUF who is resident in India
(d) An individual or HUF

Q. 177. Rebate u/s 88 is allowed from:


(a) Gross total income
(b) Total income
(c) Tax on total income
(d) None of the above.

Q. 178. For claiming rebate u/s 88 in respect of L.I.P., premium can be paid by assessee for:
(a) Himself only
(b) Himself or spouse
(c) Himself, spouse and minor children
(d) Himself, spouse and any child.
(e) Himself, spouse and dependent children

Q. 179. For claiming rebate u/s 88,for L I C premium if the payment is made by the assessee for his child, then the
child:
(a) Should be dependent on assessee
(b) May or may not be dependent
(c) May be married or unmarried and dependent or not dependent.
(d) Rebate is not allowed at all

Q. 180
180. Shyam has taken a single premium life insurance policy during the PY 2003-04. He has paid a premium of
Rs. 1,00,000 on the sum assured of Rs. 1,00,000. Assuming his gross total income is Rs. 6,00,000, he shall get a
rebate u/s 88 to the extent of:
(a) Rs. 3,000
(b) Rs. 10,500
(c) NIL
(d) None of the above

Q. 181
181. In Q. 180 above, if the gross total income is Rs. 4,50,000 Shyam shall get a rebate u/s 88 to the extent of:
(a) Rs. 3,000
(b) Rs. 4,000

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 27
(c) Rs. 10,500
(d) Rs. 15,000

Q. 182. In Q. 180 above if Shyam is entitled to claim a deduction of Rs. 1,05,000 u/s 80G, the amount of rebate u/
s 88 will be:
(a) Rs. 3,000
(b) Rs. 10,500
(c) NIL
(d) None of the above.

Q.183
Q.183. If an assessee discontinues the life policy before the premium of 2 years have been paid then:
(a) No rebate shall be allowed in respect of the payment made in the year of termination
(b) Besides what is mentioned in (a) the tax rebate allowed in the past shall be tax payable by assessee in the
previous year of termination of LIP.
(c) Besides what is mentioned in (a) in the case of previous year in which rebate was earlier allowed shall be
reopened and the tax will be recomputed, the balance tax be so payable for that previous year
(d) None of the above.

Q. 184
184. The annual interest accrued on NSCs VIII issue shall be:
(a) exempt
(b) taxable but deduction shall be allowed u/s 80L up to Rs. 12,000
(c) Besides what is mentioned in(b) the interest so accrued shall also be eligible for rebate u/s 88.
(d) Fully taxable.

For Questions 185 to 192.


S had the following assets, which were sold/ compulsorily acquired during the previous year 2003-04.

Particulars Dt. Of Mode of Dt of sale/ Sale price/ Cost of


compulsorily acquisition by
acquisition Acquisition acquisition Compensation assessee or
Rs. previous owner
Rs.
Residential 1982-83 Self 15-102003 22,40,000 5,00,000
house
property
Gold 1981-82 Self 31-102003 4,80,000 1,00,000
Urban 1986-87 Gift from 15-11-2003 10,00,000 2,00,000 on 1-5-82
agricultural
father
Land
Rural 1978-79 Do 15-12-2003 4,00,000 50,000
agricultural
land
Motor car for 1990-91 Self 15-1-2004 1,50,000 80,000
personal use
Land and 15-10-1995 Self 15-2-2004 6,00,000 4,00,000
building
compulsorily W.D.V. as on
forming part of
industrial acquired 1-4-2003
undertaking

He purchased a residential house property on 20-2-2003 by investing Rs.5, 50,000.He purchased an agricultural
land on 13-4-2004 for Rs 1,80,000. He also purchased a building for Rs.1, 50,000 on 31-7-2004 to be used for
industrial undertaking .He deposited Rs 1,00,000 under the Capital Gain Scheme on 30-7-2004-to be utilized for
the construction of a residential property.

28 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Q.185
Q.185. Resulting capital gain on sale of residential house property is
(a) STCG
(b) LTCG
(c) There is no capital gain
(d) None of the above

Q186.
Q186.Capital gain on sale is gold is
(a) LTCG Rs 17,000
(b) STCG Rs 3,80,000
(c) STCG Rs 17,000
(d) None of the above

Q187
Q187.Captial gain on sale of urban agriculture land is
(a) LTCG Rs 3,38,571
(b) STCG Rs 8,00,000
(c) STCG Rs 3,38,571
(e) LTCG Rs 8,00,000

Q.188
Q.188. Capital gain on sale of rural agricultural land is:
(a) LTCG Rs. 3,50,000
(b) LTCG Rs. 1,68,500
(c) NIL
(d) None of the above

Q. 189 Capital gain on sale of car is:


(a) LTCG Rs. 70,000
(b) STCG Rs. 70,000
(c) NIL
(d) None of the above

Q. 190
190. Exemption u/s 54D in respect of compulsory acquisition of land and building is:
(a) Rs.1, 50,000
(b) Rs.2,00,000
(c) Rs. 50,000
(d) NIL

Q.191. Exemption u/s 54B is:


(a) Rs. 3,38,571
(b) Rs. 1,80,000
(c) NIL
(d) None of the above

Q. 192
192. Total taxable LTCG is:
(a) Rs. 17,000
(b) Rs. 33,147
(c) Rs. 16,147
(d) NIL

For Questions 193 to 195.


S acquired a plot of land on 16-7-93 for Rs. 10,00,000. He sold it on 6-2-2004 for Rs. 41,00,000. Expenses on transfer
amounted to Rs. 1,00,000.

Q. 193. Taxable capital gain is:


(a) Rs. 41,00,000
(b) Rs. 22,02,459
(c) Rs. 21,02,459
(d) None of the above.

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 29
Q. 194
194. S wants to invest Rs. 12,00,000 in bonds of National Highway Authority of India on 6-3-2004. The bonds
are redeemable after a period of 3 years. If he invests this amount, he shall:
(a) Get exemption u/s 54 EC for Rs. 12,00,000
(b) Get exemption u/s 54F for Rs. 12,00,000
(c) Get exemption u/s 54 for Rs. 12,00,000
(d) Not get any exemption

Q. 195
195. If he deposits Rs. 8,00,000 in capital gain scheme on 5-5-04, he shall get exemption:
(a) u/s 54 F for Rs. 8,00,000
(b) u/s54 F for Rs. 4,20,492
(c) u/s 54 for Rs. 8,00,000
(d) Not get any exemption

Q. 196
196. Winning from lotteries is taxable as:
(a) PGBP
(b) IFOS
(c) Capital gains
(d) Exempt from tax

Q. 197
197. Which of the following expenses shall be allowed as deduction is computing PGBP:
(a) Diwali expenses
(b) Deposit under ‘Tatkal’ telephone scheme
(c) Payment for Telex connection
(d) All of the above
(e) None of the above

Q. 198
198. Which of the following shall not be allowed as a deduction in computing PGBP
(a) Employers contribution to unrecognized PF
(b) Employers contribution to unrecognized gratuity fund
(c) Employers contribution to unrecognized superannuation fund
(d) All of the above
(e) None of the above

Q. 199. Girish, a CFP, wants to know which of the following expenses shall be allowed to him in computing PGBP
(a) Depreciation on personal car
(b) Depreciation on personal computer
(c) Depreciation on business car
(d) All of the above
(e) None of the above

Q. 200
200. In which of the following cases, cash payments exceeding Rs. 20,000 shall be fully allowed in computing
PGBP:
(a) Payment made to SBI
(b) Payment for purchase of raw material
(c) Payment of salary to an employee
(d) All of the above
(e) None of the above

30 © copyright 2003 International College of Financial Planning Ltd. All rights reserved
Answers

1. (b) 2. (a) 3.(a) 4.(b) 5. (c) 6 (d)

7. (a) 8. (b) 9.(d) 10.(d) 11.(c) 12.(b)

13. (c) 14.(b) 15.(c ) 16.(b) 17.(b) 18 .(c )

19. (c ) 20.(b) 21.(b) 22.(d) 23 .(d) 24.(b)

25. (a) 26.( c) 27.(d) 28.(b) 29.(c) 30.(b)

31.(b) 32.(c) 33.(d) 34.(a) 35.(d) 36.(a)

37. (d) 38.(a) 39.(a) 40.(d) 41.(a) 42.(a)

43. (c) 44.(a) 45.(b) 46.(c) 47.(b) 48.(a)

49. (b) 50.(b) 51.(a) 52.(b) 53.(c) 54.(b)

55. (b) 56.(d) 57.(b) 58.(a) 59.(d) 60.(c)

61.(a) 62.(d) 63.(b) 64.(a) 65.(a) 66.(d)

67.(b) 68.(b) 69.(c) 70.(c) 71.(b) 72.(c)

73.(b) 74.(b) 75.(b) 76.(b) 77.(b) 78.(b)

79.(c) 80.(c) 81.(b) 82.(a) 83.(c) 84.(d)

85.(d) 86.(b) 87.(a) 88.(b) 89.(b) 90.(b)

91.(b) 92.(b) 93.(b) 94.(b) 95.(d) 96.(a)

97.(b) 98.(d) 99.(c)‘ 100.(d) 101.(d) 102.(a)

103.(b) 104.(c) 105.(c) 106.(c) 107.(c) 108.(b)

109.(c) 110.(a) 111.(a) 112.(a) 113.(b) 114.(b)

115.(c) 116.(c) 117.(c) 118.(a) 119.(b) 120.(a)

121.(a) 122.(b) 123.(d) 124.(c) 125.(a) 126.(b)

127.(c) 128.(b) 129.(c) 130.(b) 131.(e) 132.(a)

133.(a) 134.(a) 135.(a) 136.(b) 137.(b) 138.(a)

139.(c) 140.(c) 141.(a) 142.(a) 143.(b) 144.(c)

145.(a) 146.(a) 147.(b) 148.(c) 149.(c) 150.(e)

151.(d) 152.(d). 153.(c) 154.(a) 155.(d) 156.(c)

© copyright 2003 International College of Financial Planning Ltd. All rights reserved 31
157.(b) 158.(d) 159.(d) 160.(c) 161.(c) 162.(b)

163.(a) 164.(c) 165.(a) 166.(b) 167.(b) 168.(d)

169(b) 170.(b) 171.(a) 172.(c) 173.(c) 174.(a)

175.(a) 176.(d) 177.(c) 178.(d) 179.(c) 180.(c)

181.(a) 182.(c) 183.(c) 184.(c) 185.(b) 186.(a)

187.(a) 188.(c) 189.(c) 190.(a) 191.(b) 192.(b)

193.(c ) 194.(a) 195.(b) 196.(b) 197.(d) 198.(d)

199.(c) 200.(a)

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