R4RIN – MCQs, Mock Tests | CBES Board Class 11 CS Executive Tax Laws MCQs Set-7

Which of the following income will be taxable as income from other sources?

1. Purchase of house from husband for inadequate consideration
2. Purchase of painting from the registered dealer at invoice value less than fair market value
3. Cash gift from a non-resident friend on marriage anniversary
4. All of the above

✅ Correct Answer: 3

Akshay received a gift of ₹ 35,000 each on 22nd May 2020 from his three friends. The amount chargeable to tax, in this case, would be

1. ₹ 50,000
2. ₹ 1,05,000
3. Nil
4. ₹ 55,000

✅ Correct Answer: 2

Sameer received the following income during PY 2020-21: Director’s fees ₹ 5,000 Income from agricultural land in Pakistan ₹ 15,000 Rent from let-out of land in Jaipur ₹ 20,000 Interest on deposit with HDFC Bank ₹ 1,000 Dividend from Indian company ₹ 5,000. His income from other sources is

1. ₹ 41,000
2. ₹ 46,000
3. ₹ 31,000
4. ₹ 26,000

✅ Correct Answer: 2

John, engaged in fertilizer trade, received rent by sub-letting a building. This will be taxable under the head

1. Income from house property
2. Income from capital gains
3. Income from profits and gains of business and profession
4. Income from other sources

✅ Correct Answer: 4

A private limited company engaged in manufacturing activity had a general reserve of ₹ 20 lakhs. It granted a loan of ₹ 5 lakhs 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

1. ₹ 2,60,000
2. ₹ 2,40,000
3. ₹ 5,00,000
4. Nil

✅ Correct Answer: 3

Rajiv (aged 28 years) received a cash gift of ₹ 2 lakhs on the occasion of his marriage. It includes gifts from non¬relative of ₹ 80,000. His income by way of lottery winnings is ₹ 3 lakhs. His net income tax liability (ignoring TDS) would be

1. ₹ 93,600
2. ₹ 22,660
3. ₹ 12,360
4. ₹ 25,750

✅ Correct Answer: 1

Ms. Sitara is in receipt of family pension of ₹ 15,000 p.m. during 2020-2021. Income chargeable to tax for AY 2021-22 of Ms. Sitara is

1. ₹ 1,80,000
2. ₹ 1,20,000
3. ₹ 1,65,000
4. Nil

✅ Correct Answer: 3

Where a foreign institutional investor received income in respect of securities other than income by way of dividend referred to in section 115- O or received in respect of securities other than units referred to in section 115AB, such income is taxable @

1. 15%
2. 10%
3. 20%
4. 30%

✅ Correct Answer: 3

Rishabh received the following gifts during the previous year: (i) ₹ 50,000 from his employer. (ii) ₹ 1,00,000 from mother’s sister. (iii) ₹ 10,000 from his friend on the occasion of his marriage. (iv) ₹ 60,000 in the form of scholarship from a registered charitable trust. The amount of taxable gift under the head ‘Income from other sources is

1. Nil
2. ₹ 50,000
3. ₹ 1,50,000
4. ₹ 2,10,000

✅ Correct Answer: 1

Comfort (Pvt.) Ltd. issued 10,000 equity shares to Pawan at ₹ 18 per share when the fair market value of each share was determined at ₹ 11 per share. The tax implication of the transaction is

1. ₹ 70,000 taxable as income for Comfort (Pvt.) Ltd.
2. ₹ 20,000 taxable as income for Pawan
3. ₹ 10,000 taxable as income for Pawan
4. Nil

✅ Correct Answer: 1

While making payment of winnings from horse race, the tax will be deducted at source, if the payment exceeds

1. ₹ 5,000
2. ₹ 10,000
3. ₹ 25,000
4. ₹ 50,000

✅ Correct Answer: 2

A member of Parliament received ₹ 1,50,000 per month as salary and ₹ 4,50,000 as daily allowances during PY 2020-21. The taxable amount will be

1. Salary ₹ 18,00,000
2. Income from profession ₹ 22,50,000
3. Income from other sources ₹ 18,00,000
4. Nil

✅ Correct Answer: 3

A lady received gifts worth ₹ 1,00,000 from her relatives as defined under the Income-tax Act, 1961, and ₹ 60,000 from her office colleagues on her marriage anniversary. The taxable amount of gifts would be

1. ₹ 1,60,000
2. ₹ 60,000
3. ₹ 10,000
4. ₹ 1,10,000

✅ Correct Answer: 2

Amit received ₹ 70,000 being winnings from lottery after deduction of tax at source. His gross winnings from the lottery to be included in the total income is

1. Nil
2. ₹ 1,00,000
3. ₹ 70,000
4. ₹ 30,000

✅ Correct Answer: 2

Mr. Ram received a cash gift of ₹ 51,000 from his friends on the occasion of his 50th birthday. None of the friends are relatives. The amount liable to tax in the hands of Mr. Ram would be:

1. Nil
2. ₹ 1,000
3. ₹ 51,000
4. ₹ 46,000 after deducting causal income of ₹ 5,000

✅ Correct Answer: 3

Agni (P.) Ltd. issued equity shares of ₹ 10 each at ₹ 40 per share. The fair market value of the share on the date of issue was ascertained as ₹ 25 per share. The company issued 1,00,000 equity shares. The amount liable to tax in the hands of the company would be:

1. ₹ 15,00,000
2. ₹ 30,00,000
3. Nil
4. ₹ 40,00,000

✅ Correct Answer: 1

R has taken a house on rent and sublets the same to G. Income from such house property shall be taxable under the head:

1. Income from house property
2. Income from other sources
3. Income from house property or income from other sources as decided by R
4. None of the above

✅ Correct Answer: 2

Ms. Mala received a family pension of ₹ 15,000 per month during the previous year 2020-21. Also, she was employed in a private firm where she got a monthly consolidated salary of ₹ 20,000 per month. Her total income chargeable to tax is:

1. ₹ 4,20,000
2. ₹ 2,40,000
3. ₹ 3,60,000
4. ₹ 3,55,000

✅ Correct Answer: 4

Libra P. Ltd. engaged in trading activity had accumulated profits of ₹ 15,00,000 as of 1.4.2020, Mr. Gautam having 30% of the equity shares and voting rights in the company received ₹ 5 lakhs as loan on 1-6-2020 from the company. The loan was repaid by him on 30-11-2020. The amount liable to tax in the hands of Mr. Gautam as deemed dividend is:

1. ₹ 4,50,000
2. ₹ 15,00,000
3. ₹ 5,00,000
4. ₹ 1,50,000

✅ Correct Answer: 3

Rakesh acquired a motor car for ₹ 3,00,000 from his friend (non-relative) when the fair market value of the motor car was ₹ 5,00,000. The amount liable to tax in the hands of Rakesh from the transaction is:

1. ₹ 3,00,000
2. ₹ 2,00,000
3. ₹ 1,50,000
4. Nil

✅ Correct Answer: 4

Where a firm or closely held company received from any person any property being shares of the closely held company without consideration:

1. the whole of the fair market value of the shares shall be taxable
2. the whole of the FMV shall be taxable if it exceeds ₹ 50,000
3. the whole of FMV shall be exempt
4. the whole of the cost of such shares shall be exempt

✅ Correct Answer: 2

Mr. Ravi solved a crossword puzzle and received ₹ 84,000 after deduction of tax at source. His income from crossword puzzle chargeable to tax would be:

1. ₹ 84,000
2. Nil
3. ₹ 72,000
4. ₹ 1,20,000

✅ Correct Answer: 4

Ram received ₹ 80,000 by way of gifts from friends upon retirement from service in a private company. The amount of gift chargeable to income-tax would be:

1. Nil
2. ₹ 30,000
3. ₹ 70,000
4. ₹ 80,000

✅ Correct Answer: 4

Ms. Laxmi received ₹ 60,000 by way of family pension from the State Government. The amount of family pension eligible for exemption under section 10(79) is:

1. ₹ 60,000
2. ₹ 40,000
3. ₹ 20,000
4. ₹ 15,000

✅ Correct Answer: 4

Ms. Anshu received a dividend of ₹ 80,000 for her equity shareholding in MNO Ltd. (a listed company). She paid an interest of ₹ 12,500 for the amounts borrowed for investment in those shares. The taxable dividend income would be:

1. ₹ 80,000
2. ₹ Nil
3. ₹ 67,500
4. ₹ 92,500

✅ Correct Answer: 3

Lokesh (age 62) received the following gifts on the occasion of his birthday: (i) Cash gift from elder brother ₹ 30,000; (ii) Gold chain from younger sister market value on the date of gift I. ₹ 38,000; (iii) Cash gifts from friends (non-relatives) ₹ 45,000; (iv) Purchased shares from younger brother for ₹ 1 lakh when the market value of the shares was ₹ 1,35,000. The amount of income chargeable to tax in respect to the above transactions would be:

1. ₹ 1,48,000
2. ₹ 1,18,000
3. 180,000
4. Nil

✅ Correct Answer: 4

Suresh (age 65) won a prize on a lottery ticket on 30.9.2020. The prize amount was ₹ 5,50,000. He had bought lottery tickets for 175,000 during the year. Assuming that he had no other income chargeable to tax for the year, his income-tax liability (including cess @ 496) would be:

1. ₹ 1,71,600
2. ₹ 30900
3. ₹ 36,050
4. ₹ 10,300

✅ Correct Answer: 1

In the hands of Mr. Sarath, a salaried employee, the following income shall be chargeable to tax as income under the head “Income from other sources”: (i) Dividend (ii) Income from the hiring of machinery (iii) Winning from Lottery (iv) Interest on securities Select the correct answer from the options given below:

1. (i) and (iii)
2. (iii) and (iv)
3. All the four above
4. (i), (iii) and (iv)

✅ Correct Answer: 3

Babu Lai won a prize of ₹ 1,00,000 in Rajasthan State Lottery and the Lottery Department paid him an amount of ₹ 70,000 after deduction of tax at source of 130,000. He had purchased lottery tickets for ₹ 8,000. The amount chargeable to tax in the hands of Babu Lai under other sources shall be:

1. ₹ 70,000
2. ₹ 1,00,000
3. ₹ 92,000
4. None of the above

✅ Correct Answer: 2

Mr. Pankaj, a salaried employee, has taken a house on rent of ₹ 12,000 p.m. which was sub-let by him for ₹ 15,000 p.m. He has incurred miscellaneous expenses in relation to the sub-let of the house of ₹ 1,000. How much income from the sub-letting of the house shall be taxable in the AY 2021-22 where the house was taken on rent and also sublet by him from 1 st April 2020 onwards:

1. ₹ 36,000
2. ₹ 26,000
3. ₹ 1,44,000
4. None of the above

✅ Correct Answer: 4

ABC Pvt. Ltd. has a business loss of ₹ 10 lakhs. There is unexplained share application money to the tune of ₹ 25 lakhs. The total income of the company will be:

1. 15 lakhs
2. 35 lakhs
3. 25 lakhs
4. None of the above

✅ Correct Answer: 3

State which out of the following gifts received during the year by Girish from different persons shall be subject to tax in the assessment year 2021-22: (i) Wristwatch of ₹ 75,000 given by a non-resident friend. (ii) Cash of ₹ 51,000 given by her elder brother. (ii) Cash of ₹ 21,000 each given by 4 friends on his birthday. (iv) Painting of ₹ 30,000 given by employer on his birthday. Select the correct answer from the options given below:

1. (iii) and (iv)
2. (i), (in) and (iv)
3. (ii) and (iii)
4. All the four in (i), (ii), (iii) and (iv)

✅ Correct Answer: 1

Shyam transferred 2,000 shares of X Ltd. to Ms. Babita without any consideration. Later, Shyam and Ms. Babita got married to each other. The dividend income from the shares transferred would be

1. Taxable in the hands of Shyam both before and after marriage
2. Taxable in the hands of Shyam before marriage but not after marriage
3. Taxable in the hands of Shyam after marriage but not before marriage
4. Never taxable in the hands of Shyam

✅ Correct Answer: 4

Rohit (a Chartered Accountant) is working as Accounts Officer in Raj (P) Ltd. on a salary of ₹ 20,000 p.m. He got married to Ms. Pooja who holds 25% shares of this company. What will be the impact of salary paid to Rohit by the company in the hands of Ms. Pooja

1. 100% salary to be clubbed
2. 50% salary to be clubbed
3. No amount be clubbed
4. 25% salary be clubbed

✅ Correct Answer: 3

Mr. Shiva gifted a let-out building that fetches rental income of ₹ 10,500 per month to his son’s wife on 1-11-2020. The municipal tax of ₹ 6,000 on the property was paid on 10-1-2021. The total income from all other sources (computed) amounts to ₹ 2,60,000 except income from the above-said property. His total income chargeable to tax is:

1. ₹ 3,11,450
2. ₹ 3,44,000
3. ₹ 3,80,000
4. ₹ 3,33,500

✅ Correct Answer: 2

Baby Meena (age 12) a child artist acted in feature films and earned ₹ 3,50,000. The total income of her father is ₹ 5,20,000 and her mother is ₹ 4,80,000. The minor’s income would be:

1. Chargeable to tax in the hands of father
2. Chargeable to tax in the hands of mother
3. Chargeable to tax in her own hands
4. Fully exempt from tax

✅ Correct Answer: 3

Ram has gifted an amount of ₹ 10,00,000 to his wife Sita without consideration (but not to live apart), which was invested by his wife in interest-bearing security. She earned an interest of ₹ 1,00,000. The interest of ₹ 1,00,000 was further invested by her in the business from which she earned a profit of ₹ 15,000. The income which is to be included out of this gifted amount in the hands of Ram is:

1. ₹ 1,15,000
2. ₹ 15,000
3. ₹ 1,00,000
4. Nil, because the gift is too relative

✅ Correct Answer: 3

Kapoor gifted ₹ 10,00,000 to his wife Sunita Kapoor on 15th May 2020. The amount of gift of ₹ 10,00,000 was invested by his wife in debentures of a company on 1st June 2020 earning interest @12% p.a. The income of interest from the debentures earned by Sunita Kapoor shall be with the income of Kapoor in AY 2020-21.

1. 1,20,000, not clubbed
2. 1,00,000, clubbed
3. 1,00,000, not clubbed
4. 1,20,000, clubbed

✅ Correct Answer: 2

All income which arises or accrues to the minor child (not suffering from any disability as specified in section 80U) shall be clubbed with the income of parent whose total income excluding the income to be included of the minor not derived from any activity involving application of his skill, talent or specialized knowledge:

1. in the hands of the father only
2. in the hands of a mother only
3. equally in the hands of both mother and father
4. with the income of that parent whose total income is greater before clubbing of such income

✅ Correct Answer: 4

Which out of the following income is not to be clubbed while computing income of the Hindu Undivided Family (HUF) for the assessment year 2021-22?

1. Fees or remuneration received by the member as a director or a partner in the company or firm if the funds of the HUF are invested in a company or firm.
2. Income from ‘strident and personal income of the members.
3. Income of minor sons out of the investments of the family funds.
4. None of the above

✅ Correct Answer: 2

Aiyer gifted 100 shares to his wife on 1st August 2015. She received 200 bonus shares from the company in April 2019. All the shares were sold to a friend for ₹ 1,50,000 in May 2020. The 100 shares were originally acquired by Aiyer for ₹ 5,000. The capital gain on sale of shares in the month of May 2020 shall be chargeable to tax:

1. Fully in the hands of Aiyer
2. Fully in the hands of Mrs. Aiyer
3. For 100 shares in the hands of Aiyer and balance 200 shares in the hands of Mrs. Aiyer
4. For 200 shares in the hands of Aiyer and balance 100 shares in the hands of Mrs. Aiyer

✅ Correct Answer: 3

Rohit is working as Company Secretary in Raj Chem Pvt. Ltd. on a salary of ₹ 20,000 p.m. He got married to Pooja who holds 25% shares of this Company. What will be the impact of salary paid to Rohit by the company in the hands of Pooja?

1. No amount to be clubbed
2. Club 50% salary
3. Club 100% salary
4. 25% salary be clubbed

✅ Correct Answer: 1

Transfer of income is revocable in the following cases :

1. Sale with a condition of re-purchase
2. Power to change beneficiary or trustees
3. Both (A) and (B)
4. Neither (A) nor (B)

✅ Correct Answer: 3

Ram has gifted on 11th May 2020 an amount of ₹ 10,00,000to his wife Sita without consideration and also for not to live apart. The gifted amount was invested by his wife in interest-bearing security on which she earned interest of ₹ 1,00,000 on 1st January 2020. The amount of interest of ₹ 1,00,000 was further invested by her in the business from which she earned a profit of ₹ 15,000 for the period ended on 31st March 2020. Specify the income which is to be included in the hands of Ram in A. Y. 2021-22.

1. ₹ 1,15,000
2. ₹ 1,00,000
3. ₹ 15,000
4. Nil

✅ Correct Answer: 2

If an individual, having a sales turnover of ₹ 60 lakhs files his return of income for the AY 2021 -22 after the due date, showing unabsorbed business loss of ₹ 23,000 and unabsorbed depreciation of ₹ 45,000, he can carry forward to the subsequent assessment years

1. Both unabsorbed business loss of ₹ 23,000 and unabsorbed depreciation of ₹ 45,000
2. Only unabsorbed business loss of ₹ 23,000
3. Only unabsorbed depreciation of ₹ 45,000
4. Neither unabsorbed business loss of ₹ 23,000 nor unabsorbed depreciation of ₹ 45,000.

✅ Correct Answer: 3

Loss from the activity of owning and maintaining race horses could be set-off

1. Against income under any of the five heads of income
2. Only against income under the head “Income from other sources
3. Only against income under the head ‘Profits and gains of business or profession’
4. Only against income from the same activity.

✅ Correct Answer: 4

If a person is eligible to claim: (1) Unabsorbed depreciation (2) Current scientific research expenditure (3) Current depreciation (4) Brought forward business loss The order of priority to set-off would be

1. (4), (3), (2) & (1)
2. (2), (3), (4) & (1)
3. (3), (4), (1) & (2)
4. (1), (2), (3) & (4)

✅ Correct Answer: 2

A partnership firm with 4 equal partners brought forward depreciation of ₹ 3 lakhs and business loss of ₹ 3 lakhs relating to AY 2019-2020. On 1st April 2020, two partners retired. The amount that assessee-firm can set off against its income for the AY 2021-22 would be

1. Unabsorbed depreciation of ₹ 3 lakhs plus brought forward business loss of ₹ 3 lakhs
2. Unabsorbed depreciation ‘nil’ plus brought forward business loss of ₹ 3 lakhs
3. Unabsorbed depreciation ₹ 3 lakhs plus brought forward business loss ‘nil’.
4. Unabsorbed depreciation ₹ 3 lakhs plus brought forward business loss of ₹ 1.50 lakhs.

✅ Correct Answer: 4

Which of the following losses available after inter source set-off, cannot be set-off from incomes in other heads in the same assessment year

1. Speculation losses
2. Loss from specified business
3. Loss under the head ‘Capital gains’
4. All of the above

✅ Correct Answer: 4

To carry forward and set off losses, a loss return must be filed by the assessee within the stipulated time and gets the loss determined by the Assessing Officer. However, this condition is not applicable to

1. Loss from house property
2. Loss from speculation
3. Loss from discontinued business
4. Loss from capital assets

✅ Correct Answer: 1