R4RIN – MCQs, Mock Tests | CBES Board Class 11 CS Executive Tax Laws MCQs Set-1

As per Section 2(31) of the Income-tax Act, 1961, the following is not included in the definition of ‘person’:

1. An individual
2. A Hindu undivided family
3. A company
4. A minor

✅ Correct Answer: 4

Tax exemption limit for a resident senior citizen having age below 80 years is (between 60 to 80 yrs.):

1. Up to 7 2,00,000
2. Up to 7 5,00,000
3. Up to 7 1,80,000
4. Up to 7 3,00,000

✅ Correct Answer: 4

AB & Co. received 7 2,00,000 as compensation from CD & Co. for premature termination of the contract of the agency. The amount so received is

1. Capital receipt and taxable
2. Capital receipt and not taxable
3. Revenue receipt and taxable
4. Revenue receipt and not taxable

✅ Correct Answer: 3

For a domestic company whose turnover never been above ₹ 400 Crore, the minimum amount of total income liable for a surcharge and the rate of surcharge applicable therein are:

1. ₹ 10 Crore and 10% respectively
2. ₹ 1 Crore and 7% respectively
3. ₹ 1 Crore and 12% respectively
4. ₹ 10 Crore and 5% respectively

✅ Correct Answer: 2

According to Section 2(24) definition of ‘income’ is:

1. Inclusive
2. Exhaustive
3. Exclusive
4. Descriptive

✅ Correct Answer: 1

If Karta is resident and ordinarily resident in India but control and management of HUF are situated partly outside India in the previous year, the HUF is:

1. Resident and ordinarily resident
2. Not ordinarily resident
3. Non-resident
4. Resident

✅ Correct Answer: 1

Abhay earns the following income during the previous year ended 31st March 2021: Interest on UK Development Bonds: ₹ 2,00,000 (1 /4th being received in India) Profits on sale of a building in India: ₹ 2,00,000 (Received in Holland) Income liable to tax for the AY 2021-22 if Abhay is resident and not ordinarily resident in India, is:

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

✅ Correct Answer: 1

Following additional conditions are to be satisfied by a person to be resident and ordinarily resident in India:

1. He is a resident in India at least any two out of the ten previous years immediately preceding the relevant previous year
2. He has been in India for 730 days or more during the seven previous years immediately preceding the relevant previous year
3. Both (A) and (B) or above
4. None of the above.

✅ Correct Answer: 3

Paresh, a software engineer at ABC Ltd. left India on 10th August 2020 for the treatment of his wife. For income- tax purpose, his residential status for the AY 2021-22 will be:

1. Resident
2. Non-resident
3. Not ordinarily resident
4. Cannot be determined from the given information

✅ Correct Answer: 1

The residential status of an Indian company is resident for the year

1. If the entire control and management is wholly in India
2. If part of the control and management is in India
3. Regardless of the place of control and management
4. If it is listed on the recognised stock exchange.

✅ Correct Answer: 3

HUF of Ashwin consisting of himself, his wife and 2 sons are assessed to income-tax. The residential status of HUF would be non-resident, when:

1. The management and control of its affairs is wholly in India
2. The management and control of its affairs is wholly outside India
3. The status of Karta is non-resident for that year
4. When the majority of the members are non-residents.

✅ Correct Answer: 2

Income of non-resident, when attributed from operations in India relating to the following, is taxable in India: (1) Profits of business (2) Fee for technical services (3) Royalty (4) Income from house property in India Select the correct answer from the options given below:

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

✅ Correct Answer: 4

Arun, a non-resident of India celebrated his 80th birthday on 10th October 2020. If his total income for the previous year is ₹ 6,00,000 his income-tax liability for the previous year 2020-21 is:

1. ₹ 33,800
2. ₹ 41,200
3. ₹ 33,475
4. Nil

✅ Correct Answer: 1

Alpha Ltd. is an Indian company. It carries its business in Delhi and London. Total control and management of the company is situated in London. More than 85% of its business income is from the business in England. If so, its residential status will be:

1. Resident
2. Non-resident
3. Not ordinarily resident
4. Foreign company

✅ Correct Answer: 1

A company incorporated outside India having its place of effective management situated in India in the previous year will be treated as:

1. Resident
2. Not ordinarily resident
3. Non-resident
4. None of the above

✅ Correct Answer: 1

Satish brought into India, in the previous year, past untaxed income which was earned in the UK The income will be taxable if Satish is:

1. An ordinarily resident
2. A not ordinarily resident
3. A non-resident
4. None of the above

✅ Correct Answer: 4

Mr Rajiv, born and brought up in India left for employment in Belgium on 15.10.2020 He has never gone out of India, previously. What is his residential status for the Assessment Year 2021-22?

1. Non-resident
2. Not ordinarily resident
3. Resident
4. Indian citizen

✅ Correct Answer: 3

Mr Ramji (age 55) is Karta of HUF doing the textile business at Nagpur. Mr Ramji is residing in Dubai for the past 10 years and visited India for 20 days every year for filing the income tax return of HUF. His two major sons take care of the day to day affairs of the business in India. The residential status of HUF for the Assessment Year 2021-22 is:

1. Non-resident
2. Resident
3. Not ordinarily resident
4. None of the above

✅ Correct Answer: 1

When a capital asset located in India is sold by a non-resident to another non-resident at a place outside India, the capital gain is taxable:

1. at the place of the transferor
2. at the place of the transferee
3. at the place of location of asset
4. at the place of both transferor and transferee

✅ Correct Answer: 3

Thomas Inc. of Australia borrowed money from various companies in Australia for doing business in India by the name ANS Co. Ltd., Mumbai. Thomas Inc. paid interest of ₹ 500 lakhs (converted) to various lenders. The amount of interest paid:

1. has accrued in India
2. is exempt from tax
3. does not accrue in India
4. is taxable in Australia

✅ Correct Answer: 1

Mr Alok Chatterjee born and brought up in India since 1972, left for Singapore on 10.10.2019 for the purpose of employment. His residential status would be:

1. Resident
2. Not ordinarily resident
3. Non-resident
4. None of the above

✅ Correct Answer: 1

In the case of an individual who is not ordinarily resident the following income is chargeable to tax:

1. Business income accruing outside India
2. Property income accruing outside India
3. Income accruing outside India if it is derived from a business controlled in India
4. Interest income accruing outside India

✅ Correct Answer: 3

Mr Ajay (age 40) resident of India earned an agricultural income of ₹ 1 lakh from land situated in Sri Lanka. His total income in India amounts to ₹ 7 lakhs. The tax liability would be:

1. ₹ 77,250
2. ₹ 75,400
3. ₹ 74,675
4. ₹ 56,650

✅ Correct Answer: 2

John is a foreign citizen born in the USA. His father was born in Delhi in 1961 and his grandfather was born in Lahore in 1936 but his mother was born in the UK in 1964. John came to India for the first time on 1st June 2019 and stayed in India for 183 days and then left for the USA. His residential status for the AY 2020-2021 shall be:

1. Resident
2. Resident but not ordinary resident
3. Non-resident
4. Foreign national

✅ Correct Answer: 2

The following income of Ms Nargis who is a non-resident shall be included in her total income: (i) Salary for 2 months received in Delhi ₹ 40,000. (ii) Interest in Savings Bank Account in Mumbai ₹ 2,100. (iii) Agricultural income in Bangladesh and Invested in shares in Bangladesh. (iv) Amount brought into India out of past non-taxed profits earned in the USA. Select the correct answer from the options given below:

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

✅ Correct Answer: 2

The income earned during the previous year is subject to tax under the Act on the basis of the residential status of an assessee. However, the residential status of an assessee every year.

1. Will not change
2. Will certainly change
3. May change
4. None of the above

✅ Correct Answer: 3

Which out of the following criteria determines the Place of Effective Management (POEM) in order to treat a foreign company as a resident in India (resident company) during the previous year as per guidelines issued by CBDT and the provisions contained under the Income-tax Act, 1961

1. General Meeting held in India
2. Research and Development work is done in India
3. Board Meetings are held in India
4. None of the above

✅ Correct Answer: 3

In the case of an individual who is not an ordinarily resident in India, the income chargeable to tax in India out of the following shall be:

1. Rental income in a foreign country
2. Interest income in a foreign country
3. Income from outside India from a business controlled in India
4. All the three above in (A), (B) & (C)

✅ Correct Answer: 3

Agriculture income from agricultural land located in a foreign country is taxable in the case of:

1. Non-resident
2. Not ordinarily resident
3. Resident
4. In all cases stated in A, B & C

✅ Correct Answer: 3

In the case of a non-resident, which of the following income is not taxable in his hand:

1. Interest received from Government of India
2. Capital gain on transfer of capital assets situated in India
3. Interest received from a person resident in India on money borrowed and used outside India for carrying a business
4. Royalty received from a person resident in India for the patent rights used in India

✅ Correct Answer: 3

A person is deemed to be of Indian origin if he, or either of his parents or any of his grandparents, was born in

1. India
2. India other than J & K
3. Undivided India
4. Greater India

✅ Correct Answer: 3

Central Board of Direct Taxes (CBDT) vide Circular No. 8 of 2017, dated 23rd February 2017 has clarified that the Place of Effective Management (POEM) provisions shall not apply to a company having turnover or gross receipts in a financial year of

1. ₹ 30 crores or less
2. ₹ 10 crores or less
3. ₹ 50 crores or less
4. ₹ 5 crores or less

✅ Correct Answer: 3

Rajendra a non-resident Indian in the previous year 2020-21 was in receipt of rent of house property located in Dubai of ₹ 27,50,000. The amount of rent was transferred and credited in the bank account of Rajendra maintained with SBI, Vadodara by the tenant quarterly. The Annual Letting Value (ALV) of the house located in Dubai subject to tax under the head Income from house property in A.Y. 2021 -22 shall be

1. ₹ 16,50,000
2. ₹ 19,25,000
3. ₹ 27,50,000
4. Not taxable as property is in Dubai and he is non-resident

✅ Correct Answer: 2

An assessee, being an individual resident in India, is entitled to a deduction, from the amount of income tax on his total income which is chargeable for an assessment year, of an amount equal to 100% of such income tax or a lesser amount. The maximum amount of total income qualifying for such deduction and the maximum amount of deduction so available is:

1. ₹ 5 lakh and ₹ 12,500 respectively
2. ₹ 3.5 lakh and ₹ 2,500 respectively
3. ₹ 5 lakh and ₹ 7,500 respectively
4. ₹ 3.5 lakh and ₹ 5,000 respectively

✅ Correct Answer: 1

The year in which the income is earned is known as:

1. Previous year
2. Financial year
3. Both (A) and (B)
4. None of the above

✅ Correct Answer: 1

For the AY2021 -2022, taxable income of A Ltd., a Domestic Manufacturing Company claiming benefit of Section 115BAB is ₹ 10,86,920. Its tax liability would be:

1. ₹ 2,79,880
2. ₹ 2,82,600
3. ₹ 3,35,860
4. ₹ 1,69,560

✅ Correct Answer: 4

The total income of Atul, a resident individual, is ₹ 4,90,000. The rebate allowable u/s 87A would be:

1. ₹ 2,500
2. Nil
3. ₹ 12,000
4. ₹ 12,500

✅ Correct Answer: 3

‘Income’ u/s 2(24) includes: (i) The profits and gains of a banking business carried on by a cooperative society with its members. (ii) Any advance money forfeited in the course of negotiations for the transfer of capital asset. Choose the correct option with reference to the above statements:

1. Both (i) and (ii)
2. Only (i)
3. Only (ii)
4. Neither (i) nor (ii)

✅ Correct Answer: 1

alit, a resident individual of 81 years works as a consultant. If his taxable income is ? 5,20,000, the tax payable by him would be:

1. ₹ 22,660
2. ₹ 4,120
3. ₹ 2,080
4. ₹ 4,160

✅ Correct Answer: 4

A new business was set up on 1st July 2020 and trading activity was commenced from 1st September 2020, the previous year would be the period commencing from:

1. 1st April 2020 to 31st March 2021
2. 1st July 2020 to 31st March 2021
3. 1st September 2020 to 31st March 2021
4. 1st October 2020 to 31st March 2021

✅ Correct Answer: 2

X Marine Lines Inc., a Singapore company engaged in shipping business collected ₹ 150 lakhs towards carrying goods from Chennai Port. Its presumptive income chargeable to tax in India would be:

1. ₹ 15 lakh
2. ₹ 11.25 lakh
3. ₹ 12 lakh
4. Nil

✅ Correct Answer: 2

HSK, an LLP had taken keyman insurance policy on the life of its managing partner. The policy got matured on 13th September 2020 and an amount of ₹ 75 lakh was paid by the insurers to the managing partner. The amount so received on maturity of the policy by the managing partner is:

1. Fully exempt u/s 10 (10D)
2. 50% of ₹ 75 lakh exempt
3. ₹ 75 lakh taxable
4. ₹ 25 lakh exempt and ₹ 50 lakh taxable.

✅ Correct Answer: 3

Raghu traced a missing girl by spending ₹ 20,000. For this, he was awarded a sum of ₹ 1,20,000; In this case, the award is taxable to the extent of:

1. ₹ 1,00,000
2. ₹ 1,20,000
3. ₹ 1,15,000
4. Nil

✅ Correct Answer: 2

Raman & Co., a partnership firm, received ₹ 5,00,000 from an insurance company under the keyman insurance policy consequent to the demise of partner Pramod. The amount of premium ₹ 2,30,000 paid earlier was claimed as a deduction under Section 37 by the firm. The amount received from the insurance company is:

1. Tax-free under section 10(10D)
2. Fully-taxable as income
3. ₹ 2,70,000 is taxable
4. ₹ 2,30,000 is taxable

✅ Correct Answer: 2

Metro Ltd., a domestic company, is assessed with a total income of ₹ 11.25 Crore. The surcharge payable by the company shall be at the rate of:

1. 2%
2. 596
3. 1096
4. 1296

✅ Correct Answer: 4

Dr. Ashok commenced medical practice on 1st September 2020. The previous year for the profession for the assessment year 2021-2022 would be

1. 1st April 2020 to 31st March 2021
2. 1st September 2020 to 31st March 2021
3. 1st June 2020 to 31st March 2021
4. 1st September 2020 to 31st January 2021

✅ Correct Answer: 2

Under the Income-tax Act, 1961 the term ‘assessee’ means a person:

1. Who is an assessee in default
2. From whom tax is due
3. Against whom any proceeding under the Act has been taken
4. All of the above

✅ Correct Answer: 4

Normal rates of income tax are prescribed in the:

1. Income-tax Act, 1961
2. Income-tax Rules, 1962
3. Finance Act of the current year
4. CBDT circulars

✅ Correct Answer: 3

Arul Industries got a waiver of Goods & Services Tax (GST) of ₹ 2,20,000 for the current financial year. The amount of waiver is

1. Exempt income
2. Capital receipt
3. Revenue receipt
4. None of the above

✅ Correct Answer: 3

Maruti & Co. is an AOP consisting of 4 members with equal share. None of the members has income exceeding the taxable limit. The total income of the AOP is ₹ 5 lakh. The income-tax liability of the AOP would be:

1. ₹ 12,880
2. ₹ 77,250
3. ₹ 13,000
4. ₹ 20,600

✅ Correct Answer: 3