Income Tax Quesion Bank

DEPARTMENT OF COMMERCE (SHIFT – II))
LOYOLA COLLEGE (AUTONOMOUS),

CHENNAI – 600 034.
UCO 5502 – INCOME TAX LAW & PRACTICE
QUESTION BANK
UNIT I
PART A (2 MARKS EACH)
1. Explain the term Person.

2. Define the term Previous Year.
3. Explain the term Assessment Year.
4. Explain the term Gross Total Income.
5. For the assessment year 2021-22 find out the previous year:
i. A new business is set up on 1st May 2020.
ii. An employee joins his job on 10th September 2020.
6. Find out the Assessment Year for the following previous years:
i. Income Previous Year
ii. Newly set up business on 12/5/2020
iii. Newly set up business on Diwali 2020
7. Compute tax liability of an individual who has fulfilled the conditions laid out in section
115 BAC i.e. he has not claimed various exemptions and deductions given in section
115BAC. Total income of the individual is Rs.4,80,000.
8. What will be the previous year in relation to assessment year 2021-22 in following
cases:
i. A newly started business commencing its operations on 1/1/2021.
ii. A person giving Rs.1,00,000 as loan @ 12% p.a. interest (on monthly
basis) on 1/9/2020.
9. Give 2 examples for Capital Expenditure.
10. Mention whether it is a capital loss or revenue loss:
a. Loss due to embezzlement.
b. Loss due to sale of assets.
11. Who is a resident?
12. What is meant by deemed income?
13. Mr. Lalu who is a not ordinary resident furnishes the following particulars:
i. Income from agriculture from Pakistan Rs. 20,000
ii. Dividend from Indian company Rs. 5,000
Compute total taxable income of Mr. Lalu.
14. Ascertain the residential status of the assesses in the following cases for the assessment
year2021-2022. Mr. Mohan left for U S A on 10th March 2018 after having lived in
India for 20 years. He returned to India on 10th September 2020.
Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prof. Shankar Subbiah & Prof. Vinayagamoorthy
CHENNAI – 600 034.
QUESTION BANK
UNIT II
15. What is gratuity?

16. Write a short note on House Rent Allowances.
17. What is Leave encashment?
18. What is Retrenchment Compensation?
19. What do you mean by Perquisites?
20. What is Rebate under section 87A?
21. Determine the Taxable portion of HRA Mr. A the A.Y.2021-22. Mr.A, resides in
Salam is a government employee and gets the following emoluments in Previous year
2020-21. Basic salary -Rs.50,000 p.a. D.A - Rs.30,000 p.a., Bonus Rs.10,000 p.a.
medical allowance Rs.2,800 p.a. H.R.A - Rs.2,500 P.A He residing in a house, for
which no rent is paid by him throughout the year.
22. What is the tax treatment for rent free accommodation?
23. What is Dearness allowance and Dearness Pay?
24. What is Professional Tax?
UNIT III
25. What is Annual Value?
26. What is unrealised rent?
27. From the particulars below compute the Gross Annual Value
Municipal Rental value 72,000

Fair rental value 90,000
Real Rent 80,000
Standard Rent 84,000
28. From the particulars below compute the gross annual value (GAV)
Municipal Rental value 60,000

Fair rental value 65,000
Actual Rent 72,000
Standard Rent 59,500
Loss due to vacancy 6,000
29. X owns a house. Municipal valuation Rs.60,000 p.a; Fair rent Rs.72,000 p.a; The house
is let out for Rs.7,000 p.m. for 8 months and for the remaining period it remained self-
occupied. What will be the gross annual value of the property? What would be answer
if the house is let for Rs.10,000 p.m instead of Rs.7,000?

CHENNAI – 600 034.
QUESTION BANK
UNIT IV
30. Define profession.

31. Define the term business.
32. List out any two impact of deduction of depreciation in computation of business
income.
33. Who will be eligible to claim deduction in respect of running cold chain facility
business?
34. Closing stock of medicine Rs. 12,000 and opening stock of medicines Rs. 4,000. Cost
of medicine purchased during the year Rs. 38,000, Sale of medicine during the year
Rs. 42,000. Compute the purchase value of medicine if books are maintained on cash
basis by Dr. Xavier.
35. The business income before adjusting the following information is Rs. 15,00,000 .
For setting up of own research laboratory, land was purchased for Rs. 3 Lakhs and
during the year spent Rs 5 Lakhs in the construction of laboratory building. Compute
taxable business income.
UNIT V
36. Define Capital Asset.
37. Define the term Capital Gain.
38. Write short note on Transfer.
39. Compute the taxable capital gain from particulars given below:
(i)Net consideration of a residential house Rs.10,00,000(2/6/2020)[C.I.I: 301]
(ii)Cost of acquisition of this house Rs.2,10,000(1/5/2007)[C.I.I:129]
(iii)New House acquired on 1/9/2020 for Rs.2,00,000.
40. Compute long term capital gains covered U/s 112A for Asst Year 2021-22.
Actual cost of acquisition on 1st April, 2016 Rs.100
st
FMV as on 31 January 2018 Rs.200
th
Sale price as on 15 April 2020 Rs.250
41. Compute long term capital gain U/s 112 A for Asst Year 2021-22.
Actual cost of acquisition as on 1st April 2016 Rs.100
FMV as on 31st January 2018 Rs.200
th
Sale price as on 17 May 2020 Rs.150
st
42. Mr. David sold the following assets during the year ended 31 March 2021.
a) Shop purchased in 2005-06(C.I.I. :117) for Rs.48,000; Sale
Proceeds Rs.1,80,000.
b) Machinery purchased in 2003-04 (C.I.I.:109) for Rs.50,000 (W.D.V. on
1/4/2020 Rs.35,000); Sale Proceeds Rs.60,000.

CHENNAI – 600 034.
QUESTION BANK
43. Mr.S converts his plot of land purchased in the year 2001-02 for Rs.40,000
Into stock in trade on 31/3/2008. The FMV ON 31//3/2008 is Rs.1,80,000.
The stock in trade is sold for Rs.2,20,000 in the month of January 2021.
Find out the taxable income if any, and if so under which head of income
and for which assessment year?
44. What is meant by bond washing transaction?
45. What is casual income?
46. Mr. Shiv has the following investments in the PY 2020– 21:
i. Income from Agriculture in Sri Lanka – Rs. 10,000;
ii. Winnings from Horse Race – Rs. 15,000;
Find out his taxable income from other sources for the Assessment Year 2021 – 22.
PART B (10 MARKS EACH)
UNIT I
47. Who is an Assessee? Explain the various types of assesses.

48. Define the terms Previous Year and Assessment Year. What are the exceptions to the
rule that income of a previous year is assessed to tax in the assessment year?
49. Explain the conditions to determine the residential status of the company.
50. X a foreign citizen, comes to India for the first time on June 20, 2020. On September
6, 2020, he leaves India for Srilanka on a business trip. He comes back on January1,
2021. He maintains a dwelling place in India from the date of his arrival in India (i.e.,
June 20,2020) till January 15, 2021 when he leaves for Kuwait. Determine the
residential status for the assessment year 2021-22. Does it make any difference if X is
a person of Indian origin?
51. Mr. X an Italian citizen (not being a person of Indian origin). During the financial
year 2020-21, he came to India for 70 days. Determine residential status for the
assessment year 2021 – 22 on the assumption that during the financial years 2009 –
10 to 2019 – 20, he was present in Italy as follows:-
Year Number of days Year Number of days
stay in Italy stay in Italy
2019 – 20 100 days 2013 – 14 23 days
2018 – 19 80 days 2012 – 13 181 days
2017 – 18 60 days 2011 - 12 90 days
2016 – 17 126 days 2010 – 11 71 days

CHENNAI – 600 034.
QUESTION BANK
2015 – 16 80 days 2009 – 10 4 days

2014 - 15 37days
52. X is a foreign citizen but his maternal grandfather was born in a village near Madurai
and his annual income for the previous year 2020-21 is Rs. 21,60,000. Mr. X is
resident and ordinarily resident in India for the previous year 2020 – 21 and gives the
following information in respect of his income for the previous year 2020 - 21
Capital gain on sale of a house situated in Pune (sale consideration is
received in Nepal) 10,00,000
Salary received in Sri Lanka for rendering service in Tamilnadu 1,60,000
Interest received from Government of India (it is paid to him in Sri

Lanka, the money is utilized by the Government outside 2,56,000
India)
Royalty received from A Ltd., (a foreign company which is non-

resident in India) outside India (royalty is paid for 92,00,000
manufacturing business situated outside India)
Find out the taxable income and tax liability for the assessment year 2021 – 22.
53. Discuss the incomes which are not included in total income nor income tax is payable
on them
54. Give ten examples of incomes which are totally exempt from income tax.
UNIT II
56. Explain Profits in Lieu of Salary under section 17(3) in details.
57. What is Provident Fund? Explain its types in brief.
58. (A)Mr. Sharma retires on 30-09-2021 after 20 years of service and received Rs.96,000 as
leave encashment for 12 months. His employer allows him11/2 month leave for every
one year of service. He has already Encash leave for 18 months. His salary for 2020-21
was Rs.6,000 and from 1-4-2021 it was raised to Rs.8,000 p.m.
Compute the amount of taxable leave encashment and Gross Salary., if Mr. Sharma is a
a. Govt. employee b. . Non-govt. employee.
(B) Mr. Vijayan retires from his employment after rendering service of 23 years and 8
months. At the time of retirement, he received Rs.4,00,000 as leave salary. His salary at

CHENNAI – 600 034.
QUESTION BANK
the time of retirement was Rs.14,000 p.m. He was entitled to take 40 days of leave for
every year but he availed only 4 months leave in his service. Calculate taxable leave
salary.
59. Enumerate the 1. Allowances 2. Pension in details.
60. Mr. Raju, a house surgeon in a government hospital, retired on 31-7-20. He joined as
advisor (part time) from 1-9-20. His other particulars for the year ending 31-3-21 are:
Salary during government services 5,76,000
House Rent allowances (Own house) 96,000
Gratuity received 5,72,000
Leave encashment on retirement 1,20,000
Commuted value of Pension 1,50,000
Expenses on book and journal 15,000
Pension 2,16,000
Amount received as adviser 1,50,000
Compute his income under heads of salary.
UNIT III
Particulars H-I H-II H-III H-IV
Fair rental value 33,000 31,200 45,500 62,000
Municipal value 39,600 33,600 49,000 50,400
Standard rent 33,000 42,000 46,800 56,000
Actual Rent received 44,000 36,000 41,600 44,800
Particulars H-I H-II H-III H-IV
Fair rental value 33,000 31,200 45,500 62,000
Municipal value 39,600 33,600 49,000 50,400
Standard rent 33,000 42,000 46,800 56,000
Actual Rent received 44,000 36,000 41,600 44,800
62. Mr X has three house properties which he uses for his own residential purposes
Particulars I II III
Municipal value 40,000 60,000 80,000
Fair Rental Value 50,000 70,000 65,000

CHENNAI – 600 034.
QUESTION BANK
Standard Rent 60,000 84,000 72,000
Municipal Taxes 4,000 6,000 9,000
Expenses on repairs 2,000 4,000 3,000
Insurance Premium 1,000 2,500 3,000
Year in which loan taken for purchase of the 1998 2002 2007
house
Interest on loan paid during the previous year 35,000 40,000 25,000
2020-21
Find out income from house property as a tax expert.
63. Explain tax treatment of interest on housing loan while calculating ‘Income under the
head House Property’.
64. Explain the conditions to be satisfied for claiming unrealised rent?
UNIT IV
65. What do you mean by the term “depreciation” as used in the Income-tax Act? Discuss
the different types of depreciation allowances admissible under the Act.
66. Discuss briefly the provisions relating to allowance of the expenditure on scientific
research while computing income under the head “profit and gains of business or
profession.
67. Mr. Raj an advocate, furnishes the following receipts and payments for the previous
year 2020-21:
Receipts and Payments Account

Rs. Rs.
To Balance b/d 6,540 By Rent 2,400
To Legal fees 84,400 By Telephone 3,000
To Salary 3,600 By Salaries 2,400
(as a part time law By Subscription of law journal 240
lecturer)
To Interest on debentures 2,700 By Travelling expenses 560
(non listed) By Office expenses 600
To Gifts from clients 10,000 By Purchase of stamp paper 1,600
To Rent 6,000 By Interest on loan 870
To Interest on foreign 8,000 By Donation to a school 5,000
security
To Refund of company 2,000 By Income tax paid 8,420
deposit
By Municipal tax 600

CHENNAI – 600 034.
QUESTION BANK
By LIC premium 6,000
By Wealth tax 1,600
By Balance c/d 89,950
1,23,240 1,23,240
a) The loan was borrowed for constructing his residential house. Its rental value is Rs.
300 per month.
b) School is recognised for I.T. purposes
c). Gifts firm clients include Rs. 2,000 received from his father.
Compute the professional income
68. Dr.Panner a medical practitioner, furnishes the following Receipts and Payments
Account for the year ended 31st March, 2021. Compute his Professional Income for
the A.Y 2021-22.
Particulars Rs Particulars Rs
To Balance b/d 12,970 By rent of the clinic 3,000
To Consultation fees 9,000 By Cost of Medicines 6,000
To Visiting fees 15,000 By car purchased 30,000
To gifts from patients 4,000 By Surgical Equipment 900
To sale of Medicine 13,500 By salary to Compounder 2,000
To Sales Tax on sale of Medicines 500 By LIC Premium 2,000
To profit on sale of Securities 1,000 By gift to Daughter 1,000
To interest on Govt. Securities 800 By subscription to Medical 100
(listed) Magazine
To Dividend- Gross 1,580 By Car Expenses 3,000
To interest on P.O. Savings account 150 By Sales Tax 500
To interest on F.D 1,500 By Donation to a School 3,000
By Balance c/d 8,500
60,000 60,000
Additional Information:
(i) Rate of Depreciation allowable on Car is 15% and Surgical Equipment 15%.
(ii) 1/3 of the car expenses are attributed to personal use.

CHENNAI – 600 034.
QUESTION BANK
69. From the P & L account of Mr. Kalyan for the year ending 31 / 03 / 2021, ascertain his
total income and tax liability for the assessment year 2020- 21:
Particulars ₹ Particulars ₹
To General Expenses 13,400 By Gross Profit 14,15,500
To Bad Debts 22,000 By Commission 8,600
To Advance Tax 2,000 By Brokerage 37,000
To Insurance 600 By Sundry Receipts 2,500
To Salary To Kalyan 26,000 By Bad Debt Recovered (Earlier
To Salary To Mr. Kalyan 51,000 Allowed As Deduction) 11,000
To Interest On Overdraft 4,000 By Interest On Debentures (Net
To Interest On Loan To Mrs. Kalyan 42,000 Amount – Rs.22,500 + TDS – 25,000
2,500)
To Interest On Capital of Mr. 23,000 By Interest On Deposit With A
Kalyan Company (Non-Trade)
To Depreciation 48,000 (Net – 11,700 + TDS – 1,300) 13,000
To Advertisement Expenditure 7,000
To Contribution To Employee RPF 13,000
To Net Profit 12,60,600
15,12,600 15,12,600
Adjustments:-
a) The amount of depreciation allowable is ₹ 37,300 as per the Income Tax Rules
and includes depreciation on permanent sign board;
b) Advertisement expenses includes ₹ 3,000 cost of permanent sign board fixed on
office premises;
c) Income of ₹ 4,500 accrued during the previous year, is not recorded in P & L
a/c;
d) X pays ₹ 6,000 as premium on own life insurance of ₹ 70,000;
e) General expenses include (i) ₹ 500 given to Mrs. Kalyan for arranging a party
in honour of a friend who has recently come from Canada (ii) ₹ 1,000 being contribution
to a political party;
f) Loan was taken from Mrs. Kalyan for payment of arrears of Income Tax.
g) Ignore section 115BAC pertaining to alternative tax regime.

CHENNAI – 600 034.
QUESTION BANK
UNIT V
70. What is not included in capital asset?

71. Explain the types of Capital assets.
72. Explain the exemptions available u/s 54 with regard to Capital Gains.
73. X purchases a house property for Rs.26,000 MAY 10, 1982. He gets the first floor of
the house constructed in 1987-88 by spending Rs.40,000. He dies on September
12,1988. The property transferred to Mrs. X by his will. Mrs.X spends Rs,30,000 and
Rs,26,700 during 1999-2000 and 2005-06 respectively for renewals reconstruction of
the property. Mrs. X sells the house property for Rs.21,50,000 on March 15,2021
(brokerage paid by Mrs.X is Rs.11,500). The fair market value of the house on April 1,
2001 is Rs.1,60,000. Compute his taxable capital gain for the asst year 2021-22. C.I.I.
for 2020-21 is 301; 2001-02 is 100; 2005-06 is 117.
74. What are income from other sources? Sate any five such incomes and deductions
allowed while calculating income from other sources.
75. Sri Mukundan furnishes the following particulars of the incomes for the PY
2020 – 21 from which compute his total income:-
Dividend Equity (Gross) from Indian Company Rs. 600;
Dividend on Preference shares from Indian Company Rs. 3,200;
Income from letting on hire of building & machinery (composite) Rs.17,000;
Interest on Bank Deposits Rs. 2,500;
Directors Sitting Fees Rs. 1,200;
Ground Rent Rs. 600;
Income from Undisclosed Sources Rs. 10,000;
Income from Lotteries (Gross) Rs. 10,000.
The following deductions are claimed by him:-
a. Collection charges of dividend – Rs. 20;
b. Allowable depreciation on building and machinery – Rs. 4,000;
c. Fire insurance on building and machinery – Rs. 100.

CHENNAI – 600 034.
QUESTION BANK
PART C (20 MARKS EACH)
UNIT I
76. Mr. X a foreign national (not being a person of Indian Origin), comes to India for the
first time on April 15, 2016. During the financial year 2016 – 17, 2017 – 18, 2018 –
19, 2019- 20 & 2020 - 21 he was India for 130 days, 80 days, 13 days, 210 days and
75 days respectively. Determine the residential status and gross total income of Mr.
X for the assessment year 2021 – 22. He furnishes the following particulars of his
income relevant for the previous year 2020 - 2021 :-
Profit on sale of Plant at London (one-half is received in 1,46,000

India)
Interest on UK development bonds (entire amount is 40,000

received in London)
Income from agriculture in London received there, half of

which is used for meeting hostel expenses of Mr.X’s Son in 25,000
England and remaining amount is later remitted to India
Rental Income from a property in Nepal deposited by the 12,000

tenant in a foreign branch of an Indian Bank operating there
Gift in foreign currency received on September 20, 2020 3,70,000

from a friend (one-third of which is received in Indian and
remaining amount is received outside India and utilized for
meeting education expenses of Mr.X’s son in USA)
UNIT II
77. From the particulars given below, compute the salary income of Mr. Imran.
Salary @40,000 per month 4,80,000
Bonus equal to 1 month’s salary 40,000
Entertainment allowance @5,000 per month 60,000 \
Free Gas and water supply 5,000
He is provided with the Rent-free accommodation in Delhi owned by employer the
FRV of which is Rs. 10,000 P.M (population of Delhi is above 25 lakhs).

CHENNAI – 600 034.
QUESTION BANK
He is provided with the capacity of 18 cubic capacity car which he uses both for
private and official purposes.
He has engaged a domestic servant @Rs.1000 P.M and his salary is being paid by the
employer.
He is provided the facility of free lunch in the office during lunch break valued at
Rs.100 per day for 250 days in the previous year.
The employer is maintaining a holiday home at Shimla and employee stayed there for
10 days free of cost. Its cost to the employer shall be Rs. 10,000.
During the year employee and his wife travelled by Air to Bombay to attend a family
function and air tickets worth Rs. 24,000 were purchased by him through credit card
provided to him by the employer.
Employer and employee both are contributing @14% in employee’s recognized
provident fund.
78. Following details are furnished by R an Indian citizen for the year ending
31-03-2021.
Salary (net of Professional tax, Rent of house provided by employer
and R’s Contribution to Provident Fund) 2,48,000
R’s Contribution to Provident Fund 40,000
Employer’s Contribution to Provident Fund 40,000
Rent of residential house provided by Employer
and deducted out of salary 9,600
Professional Tax deducted at source 2,400
Interest Credited to Provident Fund @8.75% per annum 44,000
Leave travel allowance received 7,800
Rent free house provided to employee
at Hyderabad [ Population 30 lakhs]
Rent of house paid by employer 66,000
Bonus equal to one month salary
Remote Locality Allowance @Rs.3000. P.M [Notified to
be exempted upto Rs200 P.M]
Running Allowances Rs.2000 Per Month.
Children education allowance for 3 children @400 P.M. each.
(one of his son living in hostel)
Entertainment allowance is 700 Per Month.
Amount credited to 1,30,000.
Compute his income from salary.

CHENNAI – 600 034.
QUESTION BANK
79. During the Previous year 2020-21, X (45 years) is employed by pharmaceuticals
company situated at Kanpur. He gets the following from the employer.
Basic salary – Rs. 34000 per month. Dearness allowances: 30% of the basic salary(40%
is considered for retirement benefit like gratuity and pensions), Dearness pay : Rs. 5000
per month (Nothing is considered for retirement benefit), Fixed Compensation Rs. 4000
per month, Commission as incentives: 5% of Turnover (an extra commission of 2% if
annual turnover exceeds Rs. 15,00,000), House rent allowances – Rs. 15,000 per
month(rent paid 17,000 per month up to June 30,2020 and after that he shifts in his own
house but house rent allowance is received throughout the Previous year), employers
contribution towards recognised provident fund Rs. 5400per month, Interest credited in
PF account : 56,000 (11% Rate of Interest).
X has been provided health club facility at a 4-star hotel in Kanpur by the employer
company. This facility is available to all employees of the company. Annual expenditure
for providing this facility is Rs.7000 per month (which is borne by the employer). The
employer company also provides tea and light snacks to all employees during tea break
(expenditure incurred by the company is approximately Rs.60 per day for 310 working
days.)
X contributes annually Rs.5500 per month towards recognized provident fund (an
additional sum of Rs.7000 is contributed on March 11, 2021.). Income from other sources
is Rs. 1,25,000. Determine the net income and tax liability of X for the assessment year
2021-22 on the assumption of the monthly turnover achieved by X is Rs. 1,00,000.
UNIT III
80. Mr G owns following four house properties. Other particulars are as follows:-
Particulars House – I House – II House – III House – IV
Self Self Occupied Let out to a Being used in
Occupied business own business
house
Municipal Valuation 20,000 50,000 70,000 45,000
Standard Rent - - 72,000 48,000
FRV 26,000 60,000 80,000 50,000
Vacancy NIL NIL 1 month NIL
Unrealized Rent - - 16,000 -
Municipal Taxes 2000 2000 6000 4000
Repairs 4000 2000 8000 5000

CHENNAI – 600 034.
QUESTION BANK
Interest on borrowed 8000 10,000 - -
money
Mr G borrowed Rs.2,00,000 @ 12% for the construction of House No.III on 1st
October 2016 and the house was completed in October 2018 and since then it is
letout. A part of the loan of Rs.50,000 was repayed on 15th October 2019.
Determine the house property income of Mr G
81. Following are the particulars of two houses of Mr S

Particulars House –I House – II
Municipal Valuation 96000 90000
Fair Rent 88000. 96000
Standard Rent 90000 108000
Actual Rent Received 9000p.m 10000 pm
Self Occupied 1-4-20 – 30-11-20 1-12-20 to 31-3-21
Let out 1-12-20 – 31-03-20 1-4-20 to 30-11-20
Municipal Taxes – Due 6000 8,000
Paid 3000 NIL
Interest on borrowed money 10,000 42,000
Loan taken to construct House – II is still outstanding. Loan was taken in 1998.
Find out Mr S income from house property.
83. Mr X owns two houses at Chennai. Compute his income from house property for the
assessment year 2021-22.
F.R.V 1,36,000 p.a 1,20,000 p.a
Actual Rent 4,000 p.m 12,000 p.m
Municipal Rental 40,000 p.a 1,30,000p.a
Value
Standard Rent 38,000 p.a N.A
Municipal Tax 10% of MRV + 2% of 10% of MRV + 2% of
Municipal Tax as sewerage Municipal Tax as sewerage
Cess cess
Actual Repair 4,000 12,000
Expenses
Ground Rent 2,000 2,500
Collection 500 1,200
charges
Interest on loan 12,000 48,000
Vacancy Period 3 months -

CHENNAI – 600 034.
QUESTION BANK
Bonafide - 36,000
unrealized rent of
current year
Construction of house II started on 1st November 2016 and he borrowed Rs.4,00,000
@ 12% on 1st July 2017 for the completion of construction. The hose was completed
on 30th November 2019 and since then it is let out.
84. A house was completed on April 1,2020 and following information is available about
this house:
Municipal value of the house Rs.30,000 p.a
Fair Rental Value of the House Rs.32,000 p.a
Actual Rent Rs.4,000 p.m
Municipal Taxes Rs.6,000 p.a
Let out for the period 01-04-2020 to 31-12-2020 and self-occupied from 01-01-2021
on wards
Fire Insurance Premium 3,600
Land Revenue 6,000
Interest on Loan for the period
a)01-04-2017 to 31-03-2020 45,000
b)01-04-2020 to 31-03-2021 15,000
Calculate income from house property for the previous year ending 31-03-2021
UNIT IV
85. The following is the profit and loss account of Mr. Selva for the year ending 31.3.2021
Debits Rs Credits Rs
To salary 3,00,000 By Gross profit 10,85,000
To office expenses 48,000 By bad debt recovered 15,000
To Depreciation 80,000 By commission 22,000
To Audit fees 25,000 By Sundry receipts 13,000
To Repairs 48,000 By custom duty recovered 30,000
(disallowed earlier)
To amount transpired to special 90,000
reserve
To expenses on Diwali festival 10,000
To contribution to unapproved 18,000
gratuity fund
To interest 70,000

CHENNAI – 600 034.
QUESTION BANK
To interest on loan from Mr. Selva 20,000

To Expenses n research 50,000
To provision for income tax 60,000
To Bonus 18,000
To Provision for GST 15,000
To Employers contribution to 11,000
employees PF
To Legal expenses 10,000
To Net profit 2,92,000
11,65,000 11,65,000
Other information is:
a. Depreciation includes Rs. 20,000 being unabsorbed deprecation of earlier years.
b. Repairs include Rs 18,000 being expenditure in construction of wash rooms which
were completed in 31.12.2020.
c. Research expenses include Rs 30,000 being cost of a computer acquired for
research, which is not connected to assessess field of business.
d. GST is actually paid on 10.04.2021.
e. Salary includes payment of Rs 40,000 given as compensation to the widow of a
deceased employee.
f. Out of bad debts recovered only Rs 10,000 were allowed as deduction earlier.
g. Loan was taken from Mrs. Saleva for the payment of Income tax.
From the information given above calculate the business income of Mr. Selva for the
86. Mr. Sridheran (29 Years) furnishes the following information relevant for the PY 2020-
21:
Profit and Loss Account for the year ending 31st March, 2021
Office expenses 45,000 Gross Profit 8,03,000
Sundry expenses 39,000 Sundry Receipts 11,000
Entertainment expenditure 5,000 Bad Debts Recovered
Audit fees 12,000 (Not allowed as 7,100
deduction earlier)
Legal charges 4,000 Customs Duties
Extension of Building 6,000 Recovered from
32,500
Depreciation on plant & 23,000 Government (earlier
machinery allowed as deduction)
Salary to staff 43,000 Gift received from father 43,000

CHENNAI – 600 034.
QUESTION BANK
Bonus to staff 36,000
Contribution towards 15,000
employees RPF
Contribution towards 4,000
unapproved gratuity fund
GST 38,000
Provision for GST 25,000
Payment to an approved 19,000
research association for
carrying scientific research
Net profit 5,82,600
8,96,600 8,96,600
Other Information:
a. As shown in the P & L a/c ₹ 19,000 is paid to a research association for the
purpose of carrying on approved scientific research in natural science, not related to
business of Mr. Sridheran. Besides, he purchases a plant of ₹ 30,000/- for the purpose
of carrying on scientific research related to her business. Neither cost of plant nor
depreciation thereon is debited to P & L a/c.
b. Out of bonus of ₹ 36,000/-, ₹ 4,000/- is paid during 2020-21 and ₹ 26,000/- is
paid by July, 31 2021. The balance of ₹ 6,000/- is however, paid on November 11,
2021.
c. Depreciation on plant and machinery and extension of building as per IT
provisions is ₹ 19,000.
d. GST of Rs.38,000/- includes ₹ 1,200/- interest for late payment of GST and
penalty for evading GST ₹ 10,000/-.
e. Provision for GST represents outstanding GST liability, which is, however
paid on july 10, 2021.
f. Salary to staff includes a payment of pension of ₹ 5,000/- to the widow of a
former employee.
Ascertain the net income and tax liability of Mr. Sridheran for the AY 2021-22
assuming that she deposits ₹ 1,20,000/- in PPF during the PY 2020-21 and his income
from other sources is ₹ 196500.

CHENNAI – 600 034.
QUESTION BANK
87. Mr. Chrienjvee has 52 years old, a resident individual gives the following info for the
previous year 2020-21
Profit & Loss Account
Salary To Staff 13,000 Gross Profit 15,49,700
Staff Welfare Expenses 6,000 Sundry Receipts 4,400
General Expenses 6,500 Short Term Capital 3,000
Gain
Bad Debts 3,000
Advance Tax For AY 2021-22 400
Fire Insurance 4,000
Advertisement Expenses 11,000
Interest On Charles’s Capital 3,600
And Loan
Expenditure on acquisition of
copyright incurred on march 1, 2,800
2021 (put to use on same day)
Lump sum consideration on
acquiring know-how incurred on
march 10, 2021 (put to use on 12,000
April 1, 2021)
Depreciation On Other Business 6,000
Assets
Provision For Income Tax 2,000
Contribution To Political Party 1,000
Net Profit 14,85,800
15,57,100 15,57,100
General Information:-
a) Salary to staff includes salary paid to a relative which is unreasonable to the extent of
₹ 3,400
b) Advertisement expenses include ₹ 8,000 being cost of diaries gifted to customers;
c) Depreciation on other assets according to income tax rules is ₹ 9,600;
d) Provision for income tax is excessive to the extent of ₹ 600;
e) During the year 2020-21, Mr Chrienjvee purchased NSC VIII issue ₹ 1,10,000 during
the year;
f) General expenses include an expenditure of ₹ 1,780 for arranging a long term loan;

CHENNAI – 600 034.
QUESTION BANK
g) ₹ 7,000 paid on May 5, 2020 on account of outstanding customs duty of the PY 19-
20;
h) ₹ 5,000 paid on January 3, 2021 on account of outstanding GST of the PY 19-20;
Find out the taxable income and tax liability (net of advance tax) of Mr. Chrienjvee for the
88. Mr. Xavier (aged 62 Years) a business man in Mumbai. Determine his net income
and tax liability on the basis of the P & L a/c for the year ending 31 / 03 / 2021:
Profit & Loss Account

Opening Stock 1,04,000 Sales 92,51,000
Purchases 80,08,750 Closing Stock 2,10,000
Salaries & Wages 1,75,000
Rent & Rates 1,31,000
Commission 21,500
Household Expenses 20,000
Income Tax For 2020-21 36,100
Advertisement 5,000
Postage & Telegram 4,000
Interest On Own Capital 84,000
Reserve For Bad Debts 3,400
Depreciation On Furniture 18,000
Net Profit 8,50,250
94,61,000 94,61,000
Other Information:
a) Closing stock and opening stock has consistently been valued at 10% below cost price;
b) Depreciation on furniture, as per IT ACT is ₹ 17,200;
c) Amount of sales include a sum of ₹ 41,250 representing the value of goods withdrawn
for the use of Xavier’s family members. These goods were purchased at cost of ₹ 27,850.
Market value of these goods is ₹ 45,240;
d) Purchases include a consultancy bill of ₹ 1,00,000 (out of ₹ 1,00,000 tax of Rs.10,000
was deducted at source but it is to be deposited on 10th January, 2022).
e) Household expenses include a contribution of ₹ 6,000 towards PPF;
f) On 20th September, 2019, Xavier has received a gift of ₹ 96,000 from a friend settled in
UK. The entire amount is invested in NSC IX issue;
g) Xavier purchases notified bonds of an infrastructure company on 2nd April 2021 for ₹
1,06,000

CHENNAI – 600 034.
QUESTION BANK
UNIT V
89. Mr. Atul sold the following assets during the previous year 2020-21[C.I.I.:301]
Asset Securities Silver Jewellery Shop
Listed
Date of 1/1/2009 1/1/1999 1/9/2006 1/3/2003
Acquisition
[C.I.I. = 137] [C.I.I. = 122] [C.I.I. = 105]
Date of Sale 1/6/2020 1/12/2020 11/3/2021 31/3/2021
Cost/FMV on Rs.1,80,000 Rs.30,000 Rs.1,50,000 Rs.3,30,000
1/4/2001
FMV
Rs.4,00,000
Sale Price Rs.2,60,000 Rs.16,00,000 Rs.6,00,000 Rs.12,00,000
He purchased a house for Rs.24,00,000 on 1/6/2021. He did not own any other house
on this date. Compute his taxable capital gain.
90. Mr. X owns 2 acres of agricultural land in an urban area of Ludhiana which he sold on
30th Nov 2020 @ Rs.50 lacs. Per acre. Other particulars are:
(i)Cost of 2 acres of land purchased in 1997 Rs.6 lacs.
(ii)F.M.V. as on 1/4/2001 Rs.24.50 lacs.
(iii)Selling Expenses Rs.1 lac.
(iv)He owns one residential house on 30/11/2020.
(v)Date of filing of return of income is 31st July, 2021.
(vi) Mr. X purchased 10 acres of agricultural land in a rural area for Rs.8 lacs on 10th
June,2021.
(vii) Mr. X purchased a piece of plot to construct a residential building for Rs.6 lacs at
Ludhiana.
(viii)He deposits Rs.15 lacs in a Scheduled bank in a Capital Gain Deposit Account
Scheme on 30th July,2021 to construct a residential house.
(ix)Amount invested in Bonds of National Highwvlay Authority of India Rs.8 lacs on
31st March 2021.
Assume that he actually withdraws Rs.12 lacs from the deposit account to complete
his Residential house.
91. Mr. Siddaramaiah sold the following assets during the year 2020-21 as he has
discontinued his business:

CHENNAI – 600 034.
QUESTION BANK
a) Land purchased in 2001-02 (C.I.I.: 100) situated at Mysore for Rs.80,000; Sale
b) Machinery purchased for Rs.12,000 in 2004 (written down value on 1/4/2020
Rs.6,000); Sale Proceeds Rs.21,000.
c) Office furniture purchased in April 2020 for Rs.1,200; Sale Proceeds Rs.1,700.
d) Shop purchased in 2004-05 (C.I.I.:113) for Rs.90,000 (kept as investment); Sale
e) Residential house purchased in 2001-02 for Rs.70,000 sold on 15/4/2020; Sale
f) Rs.10,000: 10% Debentures purchased on 1/5/2020 sold on 16th March 2021;
Sale Proceeds Rs.3,50,000.(Interest is payable in June and December every year)
He purchased another residential house on 15/3/2021 for Rs.6,50,000 during the
Year. Compute his taxable income under the head Capital Gains for 2020-21 is 301.
92. Mr. X owns two residential houses – one at Ludhiana and other at Chandigarh. He
submits the following information about the sale of assets during the previous year
2020-21[C.I.I.:301]
Asset Residential Plot Jewellery
House
Date of acquisition 1/3/1979 1/11/2002 3/4/2004
Cost of acquisition 1,10,000 3,50,000 80,000
FMV on 1/4/2021 6,80,000
C.I.I. 100 105 113
Date of sale 15/6/2020 16/6/2020 17/6/2020
Sale Price 25,00,000 12,90,000 4,00,000
Investments Date of acquisition Amount invested
Residential House 19/12/2020 13,00,000
Bonds of NHAI 12/12/2020 1,00,000
93. Mrs. Lakshmi has the following investments and incomes in the previous year
ended 31 / 03 / 2021. Calculate her income from other sources:
a. Dividend from an Indian Company Rs.9,000
b. Examinership remuneration Rs. 5,000;
c. Royalty by the publication of a book Rs. 48,000;
d. Rent from letting out of building along with plant and machinery
Rs. 25,000 p.m
e. Winning form Lottery (Net) received on 01 / 03 / 2021 Rs. 35,000;
f. Rs. 40,000, 10% debentures of a company (unlisted);

CHENNAI – 600 034.
QUESTION BANK
g. Rs. 40,000, 12% Punjab Govt. Securities;
h. Rs. 50,000, 13% Less Tax Commercial Securities (unlisted);
i. Rs. 40,000, 10% Tax-Free debentures of a company (unlisted);
j. Rs. 5,400, as interest on Tax-Free debentures (listed) received on
01/03/2021;
In October 2020, she sold the above Rs. 40,000, 10% (Tax Free) debentures of
a company for Rs. 45,000. In December 2020, she inherited Rs. 63,000, 10%,
(Tax-Free) debentures (listed) of XY Co Ltd., from her father. Interest on the
above securities falls due on December 31st every year.
She claims the following deductions:
i. Collection charges for interest and dividend @ 2% of net amount realized;
ii. Purchase of lottery tickets ` 2,000.
iii. He claims to have spent Rs. 2,000 on writing these books.
iv. Depreciation on building Rs. 4,000.


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DEPARTMENT OF COMMERCE (SHIFT – II))

LOYOLA COLLEGE (AUTONOMOUS),

PART A (2 MARKS EACH)

1. Explain the term Person.

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

15. What is gratuity?

Municipal Rental value 72,000

Municipal Rental value 60,000

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

30. Define profession.

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

PART B (10 MARKS EACH)

47. Who is an Assessee? Explain the various types of assesses.

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

2015 – 16 80 days 2009 – 10 4 days

Salary received in Sri Lanka for rendering service in Tamilnadu 1,60,000

Interest received from Government of India (it is paid to him in Sri

Royalty received from A Ltd., (a foreign company which is non-

56. Explain Profits in Lieu of Salary under section 17(3) in details.

57. What is Provident Fund? Explain its types in brief.

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

59. Enumerate the 1. Allowances 2. Pension in details.

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Receipts and Payments Account

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

70. What is not included in capital asset?

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Profit on sale of Plant at London (one-half is received in 1,46,000

Interest on UK development bonds (entire amount is 40,000

Income from agriculture in London received there, half of

Rental Income from a property in Nepal deposited by the 12,000

Gift in foreign currency received on September 20, 2020 3,70,000

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

81. Following are the particulars of two houses of Mr S

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

To interest on loan from Mr. Selva 20,000

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Profit & Loss Account

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

Prepared by - Dr Mini Mathew, Prof. Hermina Corera, Dr Sivakumar,

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