Q1: An assessee uses plant and machinery for the purpose of carrying on his business.

Under section
31, he shall be eligible for deduction on account of—
(a) both capital and revenue expenditure on repairs
(b) revenue expenditure on repairs
(c) revenue expenditure on repairs plus l/5th of capital expenditure on repairs.
(d) both (a) & (b)

Q2: An electricity company charging depreciation on straight line method on each asset separately,
sells one of its machinery in April, 2020 at Rs. 1,20,000. The WDV of the machinery at the
beginning of the year i.e. on 1st April, 2020 is Rs. 1,35,000. No new machinery was purchased
during the year. The shortfall of Rs. 15,000 is treated as—
(a) Terminal depreciation
(b) Short-term capital loss
(c) Normal depreciation.
(d) Any of the above, at the option of the assessee

Q3: Mr. V, acquires an asset which was previously used for scientific research for Rs. 2,75,000.
Deduction under section 35(l)(iv) was claimed in the previous year 2020-2021. The asset was
brought into use for the business of Mr. V, after the research was completed. The actual cost of
the asset to be included in the block of assets is
(a) Nil
(b) Market value of the asset on the date of transfer to business
(c) Rs. 2,75,000 less notional depreciation under section 32 upto the date of transfer.
(d) Actual cost of the asset Rs. 2,75,000

Q4: A Ltd. has unabsorbed depreciation of Rs. 4,50,000 for the AY 2021-2022 i.e. PY
2020-2021. This can be carried forward—
(a) for a maximum period of 8 years and set-off against business income.
(b) Indefinitely and set-off against business income.
(c) Indefinitely and set-off against any head of income
(d) Indefinitely and set-off against any head of income except salary.

Q5: Mr. V, a retailer acquired furniture on 10th May 2020 for Rs. 10,000 in cash and on 15th May
2020, for Rs. 15,000 and Rs. 20,000 by a bearer cheque and account payee cheque, respectively.
Depreciation allowable for AY 2021-2022 i.e. PY 2020-2021 would be
(a) Rs. 2,000
(b) Rs. 3,000
(c) Rs. 3,500
(d) Rs. 4,500

Q6: GGC Ltd. incurred capital expenditure of Rs. 1,50,000 on 1/4/2020 for acquisition of patents and
copyrights. Such expenditure is
(a) Eligible for deduction in 14 years from AY 2021-2022 i.e. PY 2020-2021
(b) Eligible for deduction in 5 years from AY 2021-2022 i.e. PY 2020-2021
(c) Subject to depreciation @ 25% under section 32
(d) Subject to depreciation @ 15% under section 32
Q7: Under section 44AE, presumptive taxation is applicable at a particular rate provided the assessee
is the owner of a maximum of certain number of goods carriages. The rate per month or part
of the month relevant for AY 2021-2022 i.e. PY 2020- 2021 and the maximum number specified
under the section are—
(a) Rs. 7,500 for each goods carriage in the case of an assessee owning not more than 10 goods carriages
at any time during the year
(b) Rs. 7,500 for each goods carriage in the case of an assessee owning less than 10 goods carriages at
any time during the year
(c) Rs. 1,000 per ton of gross vehicle weight for per month or part of a month for a goods carriage for an
assessee owning not more than 10 goods carriages at the end of the previous year
(d) Rs. 1,000 per ton of gross vehicle weight or unladen weight, as the case may be, for per month or
part of a month for a heavy goods carriage and Rs. 7,500 per month or part of a month for other
goods carriages in the case of an assessee owning not more than 10 goods carriages at any time
during the previous year

Q8: Where the total turnover of an assessee, eligible for presumptive taxation u/s 44AD, is received
entirely by account payee cheque during AY 2021- 2022 i.e. PY 2020-2021, the specified rate of
presumptive business income is—
(a) 5% of total turnover
(b) 6% of total turnover
(c) 7% of total turnover
(d) 8% of total turnover

Q9: The W.D.V. of a block (Plant and Machinery, rate of depreciation 15%) as on 1/4/2020 is Rs.
3,20,000. A second hand „machinery costing Rs. 50,000 was acquired on 1/9/2020 but put to use
on 1/11/2019. During Jan 2021, part of this block was sold for Rs. 2,00,000. The depreciation for
AY 2021- 2022 i.e. PY 2020-2021 would be—
(a) Rs. 21,750
(b) Rs. 25,500
(c) Rs. 21,125
(d) Rs. 12,750

Q10: Employer‟s contribution to provident fund / superannuation fund / gratuity fund is allowed as
deduction in computing income under the head “Profits and gains of business or profession”,
provided it has been paid-
(a) before the end of the previous year
(b) on or before the due date by which the employer is required to credit an employee’s contribution to
the employee’s account in the relevant fund.
(c) on or before the due date for filing the return of income under section 139(1).
(d) before the end of the relevant assessment year

Q11: According to section 145 an assessee can follow:

(a) only cash basis of accounting
(b) only accrual basis of accounting
(c) any of (a) or (b)
(d) both (a) and (b)
Q12: Any payment received by the employer on the maturity of the Keyman Insurance Policy for
which premium was paid by such employer shall be considered to be income of the employer
under the head:
(a) Business and profession.
(b) Salary
(c) Other sources
(d) None of the above

Q13: Perquisite received by the assessee during the course of carrying on his business or profession is
taxable under the head.
(a) Business and profession.
(b) Salary
(c) Other sources
(d) None of the above

Q14: Which of the following income is not chargeable as income of business or profession?
(a) Profits and gains of business carried by an assessee during the previous year
(b) Income derived by a trade, professional or similar association from specific services performed for
its members
(c) Winnings from horse races
(d) Salary received by a partner of a firm from the firm in which he is a partner

Q15: Mr. V who was carrying on agency business, received a sum of Rs. 5,00,000 from his principal
for termination of agency. Compensation amount so received shall be:
(a) Exempt as it is capital receipt
(b) Exempt as it is ex-gratia payment
(c) Fully taxable under the head business and profession
(d) Taxable under the head other sources

Q16: Rate of depreciation of furniture and fitting is:

(a) 15%
(b) 10%
(c) 18%
(d) 20%

Q17: Computation of depreciation is given under section:

(a) 30
(b) 31
(c) 32
(d) 33

Q18: If a new machinery is purchased on 15/4/2020 and put to use for the purpose of the business on
2/1/2021, depreciation would be allowable at the rate of:
(a) 7.5%
(b) 15%
(c) 10%
(d) 20%

Q19: The rates of depreciation given under section 32 and rule 5 are:
(a) Minimum rates for depreciation
(b) Maximum rates for depreciation
(c) Only rates of deprecation
(d) Can’t say

Q20: The depreciation is allowed to:

(a) The owner of asset
(b) The owner of asset, whether fully owned or partially owned
(c) The lessee of the asset
(d) The tenant of the asset

Q21: Depreciation can be computed on a single asset rather than group of asset.
(a) False
(b) True

Q22: “Put to use” mean actual use of the asset rather making on asset ready to use.
(a) False
(b) True

Q23: If asset is purchased during the year and put to use for less than 180 days depreciation is
allowed:
(a) for whole of the year
(b) not at all allowed
(c) allowed for only for 180 days
(d) depreciation is allowed at half the normal rates

Q24: Depreciation is allowed in case of:

(a) tangible assets only
(b) intangible assets only
(c) both (a) and (b)
(d) None of (a) or (b)
Q25: In case of electricity companies charging depreciation on SLM basis on a single
asset if such assets is sold for a price more than its value but less than its historical cost
then the assessee shall be chargeable for:
(a) balancing charge
(b) short-term capital gain
(c) short-term or long-term capital gain depending upon the period after which the block
is transferred
(d) balancing charge or capital gains at the choice of the assessee

Q26: Electricity companies are allowed depreciation on the basis of:

(a) Block of asset
(b) Each asset separately
(c) Each asset separately unless the assessee opts for block of asset system in the first
previous year of its commencement.
(d) Either on block of asset or each asset separately provided the option is exercised in
the first previous year.

Q27: Where the entire block of the asset is sold for a price more than the value of the
block then excess amount shall be treated as:
(a) balancing charge
(b) short-term capital gain u/s 50
(c) balancing charge or capital gains at the choice of the assessee
(d) long-term on short term capital gain depending upon the period for which block is
held

Q28: Power generating/power generating and distributing company can claim

depreciation according to SLM method
(a) True
(b) False

Q29: Additional Depreciation is at the rate of:

(a) 20% of actual cost of machinery
(b) 15% of actual cost of machinery
(c) 18% of actual cost of machinery
(d) Nil

Q30: Additional depreciation is allowed to an assessee:

(a) Which is an industrial undertaking
(b) Which is an industrial undertaking or an assessee who is engaged in the business of
generation or generation and distribution of power.
(c) Which is engaged in any kind of business
(d) Which is an electricity undertaking and is engaged in the business of generation or
generation and distribution of power.
Q1: Income from letting of machinery, plant and furniture is—
(d) always chargeable to tax under the head “Profits and gains of business and
profession”
(e) always chargeable to tax under the head “Income from other sources”
(f) chargeable under the head “Income from other sources” only if not chargeable under
the head “Profits and gains of business and profession”
(g) chargeable to tax under the head “Income from house property”

Q2: In respect of winnings from lottery, crossword puzzle or race including horse race
or card game etc.
(e) no deduction under Chapter VI-A is allowed and basic exemption limit cannot be
exhausted
(f) no deduction under Chapter VI-A is allowed but unexhausted basic exemption can be
exhausted
(g) Both deduction under Chapter VI-A and basic exemption are allowed
(h) deduction under Chapter VI-A is allowed but basic exemption limit cannot be
exhausted

Q3: The deduction allowable in respect of family pension taxable under “Income from
other sources” is
(e) Rs. 15,000 or l/3rd of family pension whichever is less
(f) Rs. 15,000 or 1/2 of family pension whichever is less
(g) Rs. 10,000 or l/3rd of family pension whichever is less
(h) No deduction is allowed

Q4: MR. V has acquired a building from his friend on 10/10/2020 for Rs. 15,00,000. The
stamp duty value of the building on the date of purchase is Rs. 15,70,000. Income
chargeable to tax in the hands of MR. V is
(e) Rs. 70,000
(f) Rs. 50,000
(g) Nil
(h) Rs. 20,000

Q5: MR. V received Rs. 60,000 from his friend on the occasion of his birthday
(e) The entire amount of Rs. 60,000 is taxable
(f) Rs. 50,000 is taxable
(g) The entire amount is exempt
(h) Rs. 10,000 is taxable
Q6: MR. V aged, 61 years, received dividend of Rs. 12,00,000 from a domestic company
in AY 2021- 2022 i.e. PY 2020-2021. Tax chargeable under section 115BBDA is
@ 10% on
(e) The entire amount of Rs. 12,00,000
(f) Rs. 2,00,000
(g) Nil
(h) Rs. 9,00,000

Q7: MR. V has received a sum of Rs. 51,000 on 24/10/2020 from relatives on the
occasion of his marriage.

(e) Entire Rs. 51,000 is chargeable to tax.

(f) Only Rs. 1,000 is chargeable to tax
(g) Entire Rs. 51,000 is exempt from tax
(h) Only 50% i.e. Rs. 25,500 is chargeable to tax

Q8: MR. V has received a sum of Rs. 75,000 on 24/10/2020 from his friend on the
occasion of his marriage anniversary.
(e) Entire Rs. 75,000 is chargeable to tax.
(f) Entire Rs. 75,000 is exempt from tax
(g) Only Rs. 25,000 is chargeable to tax
(h) Only 50% i.e. Rs. 37,500 is chargeable to tax

Q9: The deduction in respect of interest on enhanced compensation of Rs. 1,50,000

received during the AY 2021-2022 i.e. PY 2020-2021, would be
(e) Rs. 1,50,000, being 100% of Rs. 1,50,000
(f) Rs. 75,000, being 50% of Rs. 1,50,000
(g) Rs. 45,000, being 30% of Rs. 1,50,000
(h) Nil

Q10: MR. V received the following income during AY 2021-2022 i.e. PY

2020-2021.
Determine his Income from other sources:
(e) Director‟s fees Rs. 5,000
(f) Income from agricultural land in Pakistan Rs. 15,000
(g) Rent from let-out land in Jaipur Rs. 20,000
(h) Interest on deposit with HDFC Bank Rs. 1,000
(i) Divided from Indian company Rs. 5,000.
(d) Rs. 21,000
(e) Rs. 46,000
(e) Rs. 31,000
(f) Rs. 26,000

Q11: MR. V received a gift of Rs. 35,000 30/8/20 from each of his three friends. The
amount chargeable to tax in this case would be:
(e) Rs. 50,000
(f) Rs. 1,05,000
(g) Nil
(h) Rs. 55,000

Q12: Which of the following income will be taxable as income from other sources
(c) Purchase of house from husband for inadequate consideration
(d) Purchase of painting from registered dealer at invoice value less than fair market
value
(e) Cash gift from a non-resident friend on marriage anniversary
(f) All of the above

Q13: MR. V is engaged in fertilizer trade, received rent by sub-letting of a building.

This will be taxable under the head
(e) Income from house property
(f) Income from capital gains
(g) Income from profits and gains of business and profession
(h) Income from other sources

Q14: MR. V is in receipt of family pension of Rs. 15,000 p.m. AY 2021-2022 i.e.
PY
2020-2021. Income chargeable to tax for MR. V is:
(e) Rs. 1,80,000
(f) Rs. 1,20,000
(g) Rs. 1,65,000
(h) Nil

Q15: A private limited company engaged in manufacturing activity had general reserve
of Rs. 20 lakh. It granted a loan of Rs. 5 lakh to a director who held 13%
shareholding cum voting rights in the company. The said loan was re-paid by
him before the end of the year. The amount of deemed dividend arising out of
the above transaction is:
(e) Rs. 2,60,000
(f) Rs. 2,40,000
(g) Rs. 5,00,000
(h) Nil

Q16: MR. V received cash gift of Rs. 2 lakh on the occasion of his marriage. It includes
gift from non- relative of Rs. 80,000. His income by way of lottery winnings is Rs.
3 lakh on which TDS has been done at 30%. He would be liable to pay tax of:
(e) Rs. 87,500
(f) Rs. 90,000
(g) NIL
(h) Rs. 92,700

Q17: MR. V traced a missing girl by spending Rs. 20,000. For this, he was awarded
with a sum of Rs. 1,20,000. In this case the award is taxable to the extent of
(e) Rs. 1,00,000
(f) Rs. 1,20,000
(g) Rs. 1,15,000
(h) Nil

Q18: MR. V died in a train accident and after his death his family members were paid
compensation of Rs. 5,00,000 by Central Government. They have spent Rs.
89,000 on collecting this amount. In this case the compensation is taxable to the
extent of
(e) Rs. 5,00,000
(f) Rs. 4,11,000
(g) Rs. 5,89,000
(h) Nil

Q19: MR. V received the following gifts during the AY 2021-2022 i.e. PY 2020-2021.
Determine the amount of taxable gift under the head „income from other
sources‟
(c) Rs. 50,000 from his employer
(d) Rs. 1,00,000 from mother‟s sister
(e) Rs. 10,000 from his friend on the occasion of his marriage
(f) Rs. 60,000 in the form of scholarship from a registered charitable trust
(e) Nil
(f) Rs. 50,000
(g) Rs. 1,50,000
(h) Rs. 2,10,000

Q20: A lady received gifts worth Rs. 1,00,000 from her relatives and Rs. 60,000 from
her office colleagues on her marriage anniversary. The taxable amount of gifts
would be
(c) Rs. 1,60,000
(d) Rs. 10,000
(c) Rs. 60,000
(d) Rs. 1,10,000