Income Tax Quesion Bank
Income Tax Quesion Bank
UNIT III
25. What is Annual Value?
26. What is unrealised rent?
27. From the particulars below compute the Gross Annual Value
28. From the particulars below compute the gross annual value (GAV)
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?
UNIT IV
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.
UNIT I
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
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
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
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
61. From the particulars below compute the gross annual value (GAV)
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. From the particulars below compute the gross annual value (GAV)
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
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:
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.
UNIT V
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.
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 :-
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).
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.
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
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 -
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
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.
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;
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:
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:
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);