M.K.

GUPTA CA EDUCATION
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MOCK TEST INCOME TAX VOL - 1

100 Marks
Time allowed 3 hours
All questions are compulsory
Question 1(a) Marks 7
Mrs. Disha Khanna, a resident of India, owns a house property at Bhiwani in Haryana. The Municipal
value of the property is `7,50,000, Fair Rent of the property is `6,30,000 and Standard Rent is
`7,20,000 per annum.

The property was let out for `75,000 per month for the period April 2018 to December 2018.

Thereafter, the tenant vacated the property and Mrs. Disha Khanna used the house for self-occupation. Rent
for the months of November and December 2018 could not be realize from the tenant. The tenancy was
bonafide but the defaulting tenant was in occupation of another property of the assessee, paying rent
regularly.

She paid municipal taxes @ 12% during the year and paid interest of `35,000 during the year for amount
borrowed towards repairs of the house property.

You are required to compute her income from "House Property” for the A.Y. 2019-20.

Question 1(b) Marks 3

Explain the quantum of late fees under section 234F for delay in furnishing return of income within the
prescribed time limit under section 139 (1) for A.Y. 2019-20.

Question 2(a) Marks 5

Mr. Surya, an Indian citizen, travelled frequently out of India for his business trip as well as for his outings.
He left India from Mumbai airport on 15th May 2018 as stamped in the passport. He has been in India for
less than 365 days during the 4 years immediately preceding the previous year and has not been in India for
at least 60 days in the previous year.

Determine:
(i) Residential status of Mr. Surya and
(ii) Total income for the assessment year 2019-20 from the following information:

(1) Dividend amounting to `20,000 received from sassy Ltd., a switzerland based company, which was
transferred to his Swiss bank account. He had borrowed money from Mr. sundarlal, a non-resident
Indian, for the above mentioned investment on 2nd April, 2018. Interest on the borrowed money for
the previous year 2018-19 amounted to `2,500.

(2) Short term capital gain on the sale of shares of Trena India Ltd. a listed Indian company amounting
to `35,000. The sale proceeds were credited to his swiss bank account.

(3) Interest on fixed deposit with State Bank of India (Mumbai) amounting to `8,000 was credited to
his saving account.
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Question 2(b) Marks 5

Mr. Chakrobarty, a resident, aged 35 years, works as a deputy manager in Dews Limited, located in Noida
since April 2011. He own two houses and uses it for self-purpose. The following information relates to the
houses for the previous year 2018 -2019:

Location House-1 House-II

Noida Gurgaon
(He and his family reside) (His parents reside)
Municipal value per annum (`) 8,00,000 9,00,000
Fair rent (`) 9,20,000 8,80,000
Standard rent per annum (`) 8,40,000 9,20,000
Actual rent (per month) (`) - -
Municipal taxes paid during the year 8% 10%
st st
Date of completion of construction of properties 31 March, 2011 1 April, 2018

He had taken a loan of `18,00,000 for the construction of the House-II on 1st April, 2016. Interest was payable
@ 10% per annum. Till date, no payment was made towards the principal amount and assessee has submitted
a certificate confirming the amount of interest.

Mr. Chakrobarty, seeks your professional advice to plan his tax liability. Give suggestions to Mr.
Chakrobarty which house should be considered and treated as a self-occupied property so that his house
property income is minimum for the assessment year 2019-2020.

Question 3(a) Marks 5

Following incomes are derived by Mr. Krishna Kumar during the year ended 31-3-2019:
Pension received from the US Government 3,20,000
Agricultural income from lands in Malaysia 2,70,000
Rent received from let out property in Colombo, Sri Lanka 4,20,000
Discuss the taxability of the above items where the assessee is (i) Resident, (ii) Non-Resident

Question 3(b) Marks 5

Mr. Sharma, a resident individual, aged 40 years, suffers from severe disability as certified by medical
authority. He gives the following information for the previous year 2018-2019:
(i) He had written a book for Himalaya Publication on "Yoga and its benefits". A lump sum amount of royalty
income earned in the previous year 2018-2019 amounted to `6,00,000. Expenses incurred for writing the
book amounted to `20,000.
(ii) His friends gifted a statue of Lord Ganesh to his daughter Ms. Diya (aged 14 years) on the successful
completion of her secondary school. Fair market value of the statue is `55,000.
(iii) Gold chain worth `35,000 was received from in-laws on the occasion of his son's (aged 10 years) thread
ceremony.
(iv) He had deposited `50,000 in fixed deposit with Bank of Baroda in the name of his son in March 2017.
Interest earned on such deposit `5000.
(v) He donated `5,000 in cash to Swabhiman, a NGO set up for the destitute (the association was registered
under section 80G of the Income Tax Act, 1961).
(vi) He paid life insurance premium on his life `10,000 (sum assured `1,00,000)

Compute the gross total income of Mr. Sharma for the assessment year 2019-2020.
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Question 4(a) Marks 5

Mr. Rakesh Gupta has derived the following income/loss, as computed below, for the previous year 2018-
19:

Loss from let out house property 2,50,000

Loss from non-speculation business 3,20,000

Income from speculation business 12,45,000

Loss from specified business covered u/s 35AD 4,10,000

Winnings from lotteries (Gross) 1,50,000

Winnings from bettings 90,000

Loss from card games 3,40,000

You are required to compute the total income of the assessee for the assessment year 2019-20, showing
clearly the manner of set-off and the items eligible for carry forward. The return of income has been filed on
30-7-2019

Question 4(b) Marks 5

Mrs. and Mr. Vinod Amin have two minor children M and N. The following are the receipts in the hands of
M and N during the year ended 31-3-2019:

(i) M received ·a gift of `70,000 from her friend’s father on the occasion of her birthday.

(ii) M won a prize money of `3,00,000 in National Quiz competition.

This was invested in debentures of a company, from which interest of `19,000 (gross) accrued during the
year.

(iii) N won prize in a lottery. The net amount received after deduction of tax at source was `1,05,000.

Mr. Vinod Amin's income before considering clubbing provisions is higher than that of his wife. Discuss
how these items will be considered for taxation under the provisions of the Income Tax Act, 1961. Detailed
computation of income is not required.

Question 5 (a) Marks 6

Mrs. Vibha Gupta, a resident individual is running a SEZ unit, as well as a unit in Domestic Tariff Area
(DTA). She furnishes the following details relating to the year ended 31-3-2019, pertaining to these two
units (` in lakhs)

DTA Unit SEZ Unit

Export turnover 100 1000

Total turnover 400 1100

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Net profit 50 220

Compute the deduction available u/s 10AA:

(i) When the SEZ unit had been set up on 12-3-2011, and

(ii) When the SEZ unit had been set up on 12-8-2016

Question 5 (b) Marks 4

Every person is required to file a return of income on or before due date in the prescribed form and manner
as per section 139 (1). What is the meaning of due date of filing Income Tax Returns for different categories
of assessees as per Section 139 (1) of the Income Tax Act 1961?

Question 6 (a) Marks 5

Mr. X is a retired Government officer aged 65 years, who derived the following income in respect of
financial year 2018-19. He resides in Cochin: `

Pension 1,95,000

Interest from bank deposits (fixed deposits) 1,52,000

Total income 3,47,000

He has paid `18,000 as premium to effect an insurance on his health and his dependant parents and it was
paid by a cheque. He pays a rent of `3,000 per month in respect of furnished accommodation. What is his
eligibility for deduction under Section 80GG? Compute his total income and tax liability for assessment year
2019-20.

What are the conditions to be satisfied by him to qualify for the deduction?

Question 6 (b) Marks 5

Ashwin a resident Individual carrying on business, furnishes you the following information:

Total turnover for the financial year `

2017-18 120,00,000

2018-19 98,00,000

State whether tax deduction at source provisions are attracted for the under - mentioned expenses incurred
during the financial year 2018-19:

Particulars `

Commission paid to Babloo 18,500

Payment to Vijay for repair of office building 23,000

Payment of fees for Technical Services, to Vivek 35,000

All payments are made to residents.

If Tax has to be deducted at source, state the amount of tax to be deducted at source.
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Question 7(a) Marks 5

Mr. Rajat Saini, aged 32 years, furnishes the following details of his total income for the A.Y. 2019-20:

Income from Salaries 27,88,000

Income from House Property (computed) 15,80,000

Interest Income from FDR’s 7,22,000

He has not claimed any deduction under chapter VIA. You are required to compute tax liability of Mr. Rajat
Saini as per the provisions of Income Tax Act, 1961.

Question 7 (b) Marks 5

Mr. X has estates in Rubber, Tea and Coffee. He derives income from them. He has also a nursery wherein
he grows plants and sells. For the previous year ending 31.03.2019, he furnishes the following particulars of
his sources of income from estates and sale of Plants.

You are requested to compute the taxable income and tax liability for the assessment year 2019-20. `

(i) Manufacture of rubber 5,00,000

(ii) Manufacture of coffee grown and cured 3,50,000
(iii) Manufacture of tea 7,00,000
(iv) Sale of plants from nursery 1,00,000

8. Multiple Choice Questions (1 Mark x 30 = 30 Marks)

(i). Tax Liability of a resident individual having only STCG 111A ` 3.5 Lakh shall be (1 Mark)
(a) `15,600
(b) `13,000
(c) `54,600
(d) `52,000
(ii). Tax Liability of a resident individual having only casual income ` 3.5 Lakh shall be (1 Mark)
(a) `1,06,600
(b) `28,600
(c) `31,200
(d) `1,09,200
(iii). Ganesh received `60,000 from his friend on the occasion of his birthday (1 Mark)
(a) The entire amount of `60,000 is taxable
(b) `50,000 is taxable
(c) The entire amount is exempt
(d) `10,000 is taxable
(iv). Mr. Y has received a sum of `51,000 on 24.10.2018 from relatives on the occasion of his marriage.
(1 Mark)
(a) Entire `51,000 is chargeable to tax.
(b) Only ` 1,000 is chargeable to tax
(c) Entire ` 51,000 is exempt from tax
(d) Only 50% i.e., ` 25,500 is chargeable to tax
(v). Advance tax is payable by a senior citizen only when (1 Mark)
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(a) he has income u/h capital gains

(b) he has income u/h house property
(c) he has income u/h business/profession
(d) he has income u/h casual income
(vi). Incomes which accrue or arise outside India but received directly in India are taxable in case of-
(1 Mark)
(a) resident and ordinarily resident only
(b) both resident and ordinarily resident and resident but not ordinarily resident
(c) non-resident
(d) All the above
(vii). The ceiling limit of deduction under section 24(b) in respect of interest on loan taken on 1.4.2018
for repairs of a self-occupied house is (1 Mark)
(a) `30,000 p.a.
(b) `1,50,000 p.a.
(c) `2,00,000 p.a.
(d) No limit
(viii). Mr. Devansh has agricultural income of `2,30,000 and business income of `2,45,000. Which of
the following statements are correct? (1 Mark)
(a) Agricultural income has to be aggregated with business income for tax rate purposes
(b) No aggregation is required since agricultural income is less than basic exemption limit.
(c) No aggregation is required since business income is less than basic exemption limit.
(d) Agricultural income is exempt under section 10(1) but the same has to be aggregated with business
income, since it exceeds `5,000
(ix). Additional income tax is payable in case of (1 Mark)
(a) Dividend from domestic company
(b) Interest income from domestic company
(c) Income from mutual fund
(d) (a) & (b)
(e) (a) & (c)
(f) none of these
(x). Mr. X purchased one house property for ` 3,00,000 market value ` 7,00,000 stamp duty value
`3,40,000, in this case taxable amount shall be (1 Mark)
(a) ` 4,00,000
(b) ` 40,000
(c) Nil
(d) ` 3,40,000
(e) none of these
(xi). Assessing Officer can issue a notice for payment of advance tax (1 Mark)
(a) to any assessee
(b) any assessee who has been assessed through regular assessment
(c) any assessee who paid tax of `10 lakh or more in the earlier years
(d) any assessee who has not paid advance tax for last three year
(xii). Alpha Ltd. is an Indian company. It carries its business in Delhi and London. Total control and
management of the company is situated in London. More than 85% of its business income is from the
business in England. If so, its residential status will be — (1 Mark)
(a) Resident
(b) Non-resident
(c) Not ordinarily resident
(d) Foreign company.
(xiii). Loss from house property is not allowed to be set off from (1 Mark)
(a) Income under the head Salary
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(b) Income under the head Business/Profession

(c) Income under the head Capital Gains
(d) Casual Income
(xiv). If loan has been taken on 01.04.2017 and house was completed on 31.03.2018, in this case
(a) no prior period installment in p.y. 2018-19 (1 Mark)
(b) there is prior period installment in p.y. 2018-19
(xv). Deduction u/s 80E in case of payment of interest on loan taken for pursuing higher education is
allowed for maximum period of: (1 Mark)
(a) 5 years
(b) 1 year
(c) 10 years
(d) 8 years
(xvi). Which of the following statements is not correct? (1 Mark)
(a) If an individual has income from salary ` 2,50,000 and agricultural income ` 2,00,000, partial
integration is applicable
(b) If an individual has income from salary ` 5,00,000 and agricultural income ` 50,000, partial integration
is applicable
(c) If an individual has income from salary ` 2,00,000 and agricultural income ` 10,00,000, partial
integration is applicable
(d) If an individual has income from salary ` 3,00,000 and agricultural income ` 5,000, partial integration is
applicable
(e) (b) & (c)
(f) (c) & (d)
(g) none of these
(xvii). Mr. Aarav gifted a house property valued at `50 lakhs to his wife, Geetha, who in turn has
gifted the same to her daughter-in-law Deepa. The house was let out at `25,000 per month throughout
the P.Y.2018-19. Compute income from house property for A.Y.2019-20.
In whose hands is the income from house property chargeable to tax? (1 Mark)
(a) `3,00,000 in the hands of Mr. Aarav
(b) `2,10,000 in the hands of Mr. Aarav
(c) `2,10,000 in the hands of Geetha
(d) `2,10,000 in the hands of Deepa
(xviii). Mr. X received a cell phone as a gift from his friend valued ` 1,00,000, in this case (1 Mark)
(a) It is taxable under the head Other Sources
(b) It is taxable under the head Salary
(c) It is taxable under the head Business/Profession
(d) It is not taxable
(e) None of these
(xix). M/S Mohan & Sons paid `35,000 to Mr. Goel on 01.05.2018 towards fee for legal advisory
services without deduction of tax at source. Another payment of `47,000 was due to Mr. Goel on
31.07.2018 and TDS on entire amount (i.e. `35,000 plus `47,000) was deducted and then the net
amount was paid. However, the total tax deducted was deposited on 15.11.2018. The interest
chargeable under section 201(1A) will be: (1 Mark)
(a) `650
(b) `433
(c) `486
(d) `597
(xx). Loss from speculative business (1 Mark)
(a) can be set off from income of owning and maintaining of race horses
(b) can be set off from income of house property
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(c) can be set off from income under the head business/profession
(d) none of these
(xxi). An assesse is allowed to file late return of income maximum (1 Mark)
(a) Upto 31st Dec of assessment year
(b) Upto end of assessment year
(c) Within 3 months from the late date of filing return of income
(d) None of these
(xxii). In case of defective return of income, assesse shall be allowed (1 Mark)
(a) time period of 15 days from the date of intimation
(b) 20 days from the date of receiving the intimation
(c) within one month from the end of assessment year
(d) none of these
(xxiii). Mr. X has unadjusted loss from house property `10,00,000 of the previous year 2009-10 and
income from house property of previous year 2018-19 `10,00,000, in this case (1 Mark)
(a) loss cannot be set off and it will lapse
(b) loss will be set off from income from house property
(c) loss shall be carried forward to subsequent years
(d) none of these
(xxiv). A registered firm pays salary and interest on capital to its resident partners. Which of the
following statements is true? (1 Mark)
(a) Tax has to be deducted u/s 192 on salary and u/s 194A on interest
(b) Tax has to be deducted u/s 192 on salary but no tax needs to be deducted on interest
(c) No tax has to be deducted on salary but tax has to be deducted u/s 194A on interest
(d) No tax has to be deducted at source on either salary or interest
(xxv). Mr. X has taken a loan and the amount was given as deposit to a company and interest received
is less than interest paid, in this case loss can be (1 Mark)
(a) Set off within the same head including casual income
(b) Set off within the same head excluding casual income and also its carry forward is allowed
(c) Set off within the same head excluding casual income or it can be set off from the income of other heads
but its carry forward is not allowed
(d) None of these
(xxvi). Interest from a fixed deposit received by a minor married daughter is – (1 Mark)
(a) to be assessed in the hands of the minor child
(b) to be clubbed with the income of that parent whose total income, before including minor’s income, is
higher
(c) completely exempt from tax
(d) to be clubbed with the income of her husband
(xxvii). Which of the following statements is not correct? (1 Mark)
(a) Income from animal husbandry or fisheries etc. shall be considered to be agriculture income
(b) Income from sale of sapling or seeding grown in nursery shall be considered to be agriculture income
(c) Income from sale of agricultural land is taxable under the head capital gains
(d) Rent received for letting out agriculture land for a movie shooting shall not be considered to be
agriculture income
(e) none of these
(xxviii). Deduction u/s 80U in case of blind or physically handicapped persons is allowed to: (1 Mark)
(a) Any assessee
(b) an individual
(c) An individual or HUF
(d) An individual who is resident in India
(xxix). Deduction u/s 80E in case of payment of interest on loan taken for pursuing higher education is
allowed to: (1 Mark)
(a) Any assessee
(b) an individual
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(c) An individual or HUF

(d) An individual who is resident in India
(xxx). If any person is engaged in the business of letting out of house property, income shall be taxable
under the head (1 Mark)
(a) Business/profession
(b) House property
(c) Other sources
(d) Capital gains
(e) None of these

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