Taxation - A02

Multiple Choice Single Answer
Question Income earned in previous year is subjected to tax in :-
Correct Answer Assessment year

Multiple Choice Single Answer
Question Mediclaim premium u/s Section 80D should be paid by
Correct Answer Cheque

True/False
Question Any sum payable by the assessee by way of tax, duty, cess or fee is
allowed as deduction even though they are not actually paid.
Correct Answer False

True/False
Question As per section 2(11) of the Income Tax Act, Block of Assets includes both tangible as well as intangible assets.
Correct Answer True

Multiple Choice Multiple Answer
Question What is the tax treatment of Statutory Provident Fund?
Correct Answer Employer's Contribution to PF is not liable for any tax payment , Interest credited to the employee's account is not liable for any tax payment. , The lump sum received at the time of retirement or resignation or death is also exempt under section 10(11) and 10(12).

Select The Blank
Question The aggregate amount of all the expenditure falling under the head
preliminary expenses incurred under section 3________, for an Indian company the aggregate of all the expenditure can be 5% of the cost of project or 5% of capital employed whichever is higher.
Correct Answer 5% of the cost of project or 5% of capital employed

Multiple Choice Single Answer
Question Combined total of five heads of income equals :-
Correct Answer Gross total income

Multiple Choice Single Answer
Question Previous year always ends on :-
Correct Answer 31st March

Multiple Choice Single Answer
Question Rates of income tax are prescribed by :-
Correct Answer The Finance Act

Select The Blank
Question If assessee owns more than one house properties, he can get benefit of nil annual value for any one house property ________.
Correct Answer As per his choice

Multiple Choice Single Answer
Question Tax liability of a person is based on :-
Correct Answer Residential status

Multiple Choice Multiple Answer
Question Choose capital expenditure from the following list :-
Correct Answer Purchase of Building , Purchase of machinery

Multiple Choice Multiple Answer
Question Rebate is allowed on any subscription made to National Saving Scheme by :-
Correct Answer An individual , A HUF

Multiple Choice Single Answer
Question In respect of leave travel concession If Mr. A has availed the exemption only once or has not availed any exemption at all, in the block of four years i.e. 1998- 2001 then :-
Correct Answer He can carry over the exemption to the next block of four years i.e. 2002-2005 provided that he avails the exemption of LTC in the first calendar year of the next block i.e. 2002.

True/False
Question Loss under the head Profits from Business or Profession can be adjusted against the Income from Salaries.
Correct Answer False

Multiple Choice Single Answer
Question The amount paid by the employer to the employee on his retirement is taxed as :-
Correct Answer Income from Salaries

Select The Blank
Question For an individual as a citizen of India who leaves India in the relevant previous year for the purpose of employment has to be in India for ________ days or more during previous year.
Correct Answer 182

True/False
Question Bad Debts recovered not allowed as deduction in earlier years is not
taxable in any year.
Correct Answer True

Multiple Choice Multiple Answer
Question Short Term Capital Loss can be adjusted against :-
Correct Answer Short Term Capital Gains. , Long term Capital Gains

Multiple Choice Single Answer
Question The amount of advance tax payable by non corporate assessees before 15th March of Previous year is :-
Correct Answer 100% of advance tax payable

Multiple Choice Multiple Answer
Question An assessee can claim deduction under section 35 in relation to the
expenditure incurred on scientific research in the field of natural gas or applied sciences if :-
Correct Answer Any revenue expenses incurred by the assessee for carrying out the scientific research provided that such research is related to his business , Any capital expenses incurred by the assesse himself for carrying out the scientific research provided that such research is related to his business , The assesse is a company engaged in the business of bio-technology or any other notified product a weighted deduction of 150% is
allowed in respect of in-house research and development expensed, till 31st March, 2005

Select The Blank
Question Registration charges in connection with the increasing of ________ share capital of the company is not allowed as revenue expenditure.
Correct Answer Authorized

True/False
Question If a person is required to quote the PAN and he quotes or intimates a false number then he may be liable to pay a penalty of Rs. 25000.
Correct Answer False

Multiple Choice Multiple Answer
Question What is the tax treatment of the Lump sum received from unrecognized provident fund on the retirement or resignation or death of the employee?
Correct Answer Employee's contribution to PF is exempt from tax , Interest on
employee's contribution is taxable as "Income from Other Sources" , Employer's Contribution to PF and interest thereon is taxable as "Income from salaries"

Select The Blank
Question If the person responsible for deducting the tax at source and paying the same to the credit of Central Government has not been allotted the Tax Deduction Account Number (TAN), he shall within ________ from the end of the month in which the tax was deducted, apply for the allotment of TAN Number.
Correct Answer One month


Match The Following
Question- Correct Answer

Deduction in case of permanent physical disability- Section 80U
Deductions for Donations Paid -Section 80G
Deduction for Rent Paid- Section 80GG
Deduction in respect of Interest on Bank Deposits -Section 80L


True/False
Question If the capital asset becomes the property of the assessee by virtue of gift or will, the period for which the capital asset is held by the previous owner should be excluded while deciding the holding period.
Correct Answer False

True/False
Question Amount paid by the employer in respect of any leave standing to the credit of the employee after the date of furnishing return of income, this sum was payable in the previous year is allowed as deduction.
Correct Answer False

Select The Blank
Question Under section 43B, Clause N0-21 provides that the details of various
payments are allowed as deductions only if they are actually paid but, where if the assessee follows the ________, the payments can be claimed on due basis.
Correct Answer Mercantile system of accounting

True/False
Question A woman assessee below the age of 65 years is also entitled to rebate u/s 88.
Correct Answer True

Multiple Choice Multiple Answer
Question Income received by following assesses is taxable in India :-
Correct Answer Resident , Non resident , Resident but not ordinary resident

Multiple Choice Single Answer
Question Any premium paid by the assessee by Cheque as an employer to effect or keep in force an insurance on the health of his employees is :-
Correct Answer Allowed as expenses while calculating profits from business and profession

Select The Blank
Question Where an assessee files or submits the returns as per provisions of section 139 or in response to the notice under section 142, the assessment officer undertakes ________ as per section 143(2) and section 143(3).
Correct Answer Scrutiny Assessment

Multiple Choice Multiple Answer
Question Assessee gets deduction of interest paid on borrowed capital even if he :-
Correct Answer Takes possession later on , Acquires later on

Match The Following
Question -Correct Answer

Perquisites -Indicate benefits or amenities provided by the employer to the employee, either free of cost or at the concessional rate
House Rent Allowance -This indicates the amount paid by the employer to the
employee to meet the expenditure for residential accommodation occupied by the employee
Retrenchment Compensation -Compensation received by a worker at the time of retrenchment
Traveling Allowance- Any allowance granted to meet the cost of travel on tour or on transfer of duty.


Select The Blank
Question Mrs. X of 45 years has received salary of Rs 5,50,000 she can claim tax rebate of ________u/s 88C of the IT Act.
Correct Answer Rs. 5,000

Multiple Choice Single Answer
Question Assessment year is the period of 12 months starting from :-
Correct Answer 1st April to 31st March

Multiple Choice Single Answer
Question If notified news agency distributes its income amongst its members then :-
Correct Answer Whole of its income will be taxable

Multiple Choice Single Answer
Question Deduction in respect of Contribution to certain pension funds u/s 80CCC is available to :-
Correct Answer Individuals

True/False
Question Income from subletting is treated as income from house property.
Correct Answer False

Multiple Choice Multiple Answer
Question In case of Payment of Interest on Securities no tax is required to be
deducted under the following circumstances :-
Correct Answer If the debentures are issued by a widely held company and the
debentures are listed on a stock exchange and if the amount of interest does not exceed
Rs. 2,500 during the financial year. , If the interest paid is on State or Central
Government Securities, If the debentures are issued by an institution, authority, Public
Sector Company or cooperative society as the Central Government may notify.

Select The Blank
Question Expenditure incurred by an assessee on advertisement in any brochure, tract, pamphlet or like published by a ________shall not be allowed as business expenditure.
Correct Answer Political party

http://scdlexampapers.blogspot.com

Multiple Choice Multiple Answer
Question The entertainment allowance received by the Government employees is included in their salaries and the deduction is allowed to the extent of least of the following amounts :-
Correct Answer Actual amount of Entertainment Allowance received. , Rs. 5,000 , 1/5th of Salary

True/False
Question Income Tax Act, 1961 recognizes Written Down Value (WDV) method as well as straight line method for the computation of depreciation u/s 32 this act.
Correct Answer False

Multiple Choice Multiple Answer
Question Profits earned by an Industrial Undertaking engaged in other than
infrastructure development is available under Section 80IB for :-
Correct Answer Operation of Ship , Hotels situated in hilly area, rural area or place of pilgrimage , Company engaged in scientific and industrial research

Multiple Choice Single Answer
Question Which of the following expenditure is in the nature of revenue
expenditure?
Correct Answer Expenditure incurred as discount on issue of debentures

Select The Blank
Question If sum received is net of TDS then it is ________ to include in income from other sources.
Correct Answer Grossed up

True/False
Question Interest paid on the loan for acquiring a capital asset will be considered to be a part of cost of acquisition.
Correct Answer True

Multiple Choice Single Answer
Question Mr. A whose Gross Total Income, before allowing deductions under
Chapter VI-A is Rs. 1,45,000, wants to make the investments in the following alternative forms Rs. 80,000 in PPF and Rs. 20,000 in Infrastructure Bonds. The amount of rebate available to him u/s 88 is :-
Correct Answer Rs. 18,000

Multiple Choice Single Answer
Question Interest on specified securities or premium on redemption is exempt for :-
Correct Answer Non resident Indian

True/False
Question As per section 2(11) of the Income Tax Act, Block of Assets includes both tangible as well as intangible assets.
Correct Answer True

Multiple Choice Multiple Answer
Question Deductions in respect of Certain Incomes received under Section 80L is available in respect of
Correct Answer Interest on Central or State Government Securities , Interest on National Saving Certificates (NSCs) Interest on National Saving Scheme, 1992 (NSS) , Bank Interest

Multiple Choice Single Answer
Question Tax liability of a person is based on :-
Correct Answer Residential status

Multiple Choice Multiple Answer
Question For the purpose of income tax, the perquisites can be classified into :-
Correct Answer Perquisites which are taxable in case of all types of employees ,Perquisites which are taxable only in the hands of specified employee

Select The Blank
Question For an individual as a citizen of India who leaves India in the relevant previous year for the purpose of employment has to be in India for ________ days or more during previous year.
Correct Answer 182

Multiple Choice Single Answer
Question Income earned in previous year is subjected to tax in :-
Correct Answer Assessment year

Multiple Choice Multiple Answer
Question Following professional institutions have their incomes exempt from tax :-
Correct Answer Town planning , Company secretary , Accounting

Select The Blank
Question ________ of the Tax Audit Report refers to the details of various
payments which are allowed as deduction only if they are actually paid for.
Correct Answer Section 43B Clause No-21

Multiple Choice Multiple Answer
Question Short Term Capital Loss can be adjusted against :-
Correct Answer Short Term Capital Gains. , Long term Capital Gains

Select The Blank
Question To claim sec 10A deduction unit must be established in ________.
Correct Answer Free Trade Zone

Multiple Choice Single Answer
Question Assessment year is the period of 12 months starting from :-
Correct Answer 1st April to 31st March

Multiple Choice Single Answer
Question Combined total of five heads of income equals :-
Correct Answer Gross total income

Multiple Choice Single Answer
Question If an employee does not avail of this leave travel concession or assistance during a block of four calendar years :-
Correct Answer Only one journey can be carried forward to the next block.

Select The Blank
Question To acquire PAN, a person shall apply in ________ to the assessing officer.
Correct Answer Form No. 49A

Multiple Choice Single Answer
Question Deduction from Capital Gains under Section 54F is for Capital Gains
arising from transfer of :-
Correct Answer Any Long Term Capital Asset

Select The Blank
Question Where an assessee files or submits the returns as per provisions of section 139 or in response to the notice under section 142, the assessment officer undertakes
________ as per section 143(2) and section 143(3).
Correct Answer Scrutiny Assessment

Multiple Choice Multiple Answer
Question Income of a professional association is exempt if its objectives are :-
Correct Answer Supervision , Control , Encouragement

True/False
Question While computing the profits from Business and profession, the business or
profession must be carried out during the previous year.
Correct Answer True

Multiple Choice Single Answer
Question In respect of leave travel concession If Mr. A has availed the exemption only once or has not availed any exemption at all, in the block of four years i.e. 1998- 2001 then :-
Correct Answer He can carry over the exemption to the next block of four years i.e. 2002-2005 provided that he avails the exemption of LTC in the first calendar year of the next block i.e. 2002.

Multiple Choice Multiple Answer
Question The amount accumulated to the credit of the employee's provident fund account is paid at the time of :-
Correct Answer Retirement , Resignation

Multiple Choice Multiple Answer
Question From annual value, following deductions are allowed :-
Correct Answer Standard deduction , Interest on borrowed capital , Municipal taxes

Multiple Choice Single Answer
Question As a general principle, the Basic Salary or Wages, Dearness Allowance and Bonus / Commission is :-
Correct Answer Fully taxable.

Multiple Choice Multiple Answer
Question From GTI of a company following deductions under chapter VI A are
allowed
Correct Answer 80 G Donations , 80 HHB profits and gains from projects outside India , 80 IA profits and gains of infrastructure companies

Multiple Choice Single Answer
Question Annual value of any one palace in possession of a former ruler is :-
Correct Answer Exempt

Select The Blank
Question If the Salary is more than Rs. 5,00,000, Standard Deduction will be
Rs.________.
Correct Answer 20000

Multiple Choice Single Answer
Question The amount of accumulated interest on NSCs purchased in the earlier
years is assumed to be reinvested :-
Correct Answer And qualifies for tax rebate under section 88.

Select The Blank
Question Deduction u/s ________B is available for 10 consequent assessment years from the year of commencement of production.
Correct Answer 10

True/False
Question Income from subletting is treated as income from house property.
Correct Answer False

Select The Blank
Question Section 80U allows the deduction in respect of the ________ .
Correct Answer Permanent physical disability

Match The Following
Question- Correct Answer
Disallowable Expenditure -Litigation Expenses in connection with recovery of a debt which is not a trading debt
Business Includes trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture Includes trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce or manufacture

Profession- Includes vocation

Capital Expenditure -Expenditure incurred by a company with the issue of rights shares

True/False
Question Any recreational facility provided by the employer to a group of
employees (not being restricted to a select few employees) is not exempt from tax.
Correct Answer False

True/False
Question In case of deductions for medical treatment under Section 80DDB the amount of deduction will be reduced by the amount received under an insurance policy or the amount reimbursed by the employer.
Correct Answer True

True/False
Question Any advance tax paid before 31st March is treated as advance tax paid during the previous year.
Correct Answer True

Multiple Choice Single Answer
Question Municipal taxes paid is allowed as deduction from :-
Correct Answer Gross annual value

True/False
Question Entertainment Allowance received by the employees from the private sector is taxable in the hands of the employee.
Correct Answer True

Match The Following
Question -Correct Answer

Any subscription made to National Saving Scheme -By an individual or a HUF is eligible for rebate u/s 88

Mr. A, a 70 years old Senior Citizen, has the Gross Total Income of Rs. 2,50,000 during the Assessment Year 2005-2006. He invested Rs. 50,000 in the tax saving bonds of ICICI on 10th June 2004. His tax liability for the A Y 2005-2006. RS.12,500 RS.12,500

During the Assessment Year 2005-2006, Mrs. A, age 58 years, has the Gross Total Income of Rs. 1,45,000 including the dividend from Indian companies amounting to Rs. 10,000. She invests Rs. 50,000 in PPF during the said Assessment Year. her tax liabilit is Rs. 1,000 Rs. 1,000

Any contribution made to a Public Provident Fund Is eligible for rebate u/s 88 Is eligible for rebate u/s 88

Multiple Choice Multiple Answer
Question Following incomes of local authorities are exempt :-
Correct Answer Capital gains , Other income , House property

Multiple Choice Multiple Answer
Question For Deduction u/s 54EC from Capital Gains the asessee should invest the whole or part of the capital gains in the specified assets :-
Correct Answer Within six months from the date of transfer of the long-term
capital asset

True/False
Question Income from partnership firms is exempt from taxation for the partners
Correct Answer True