Taxation - 1

TAXATION
1
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Select The Blank
Question 1 Mr X a salaried employee has received total educational allowance of Rs 8,000
for his four children, the maximum allowance exempt is ________ u/s 10(14) of
the IT Act.
Correct Answer Rs 2,400
Your Answer Rs 2,400
Multiple Choice Multiple Answer
Question2 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"
Your Answer 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" , Employee's contribution to PF is exempt from tax
True/False
Question 3 Software technology park means set up according to Software Technology Park
Scheme framed by Ministry of Commerce & Industries.
Correct Answer True
Your Answer True
Select The Blank
Question 4 It is mandatory for ________ to file a return even if there is loss or the income is
nil.
Correct Answer A company
Your Answer Persons under "One by Six" scheme
Multiple Choice Multiple Answer
Question 5 Following professional institutions have their incomes exempt from tax :-
Correct Answer Town planning , Company secretary , Accounting
Your Answer Town planning , Company secretary , Accounting
Multiple Choice Multiple Answer
Question 6 Which of the following amounts credited to P & L Account but not taxable from
Income tax Purposes as Profits from Business and Profession?
Correct Answer Refund of Income tax , Capital Gains , Dividend Income
Your Answer Refund of Income tax , Capital Gains , Dividend Income
Select The Blank

Question 7 ________ is the tax payable on the manufacturing of goods.
Correct Answer Excise duty
Your Answer Excise duty
Select The Blank
Question 8 The amount paid by the employer to the employee to meet the expenditure for
residential accommodation occupied by the employee is called ________.
Correct Answer House rent allowance
Your Answer House rent allowance
Multiple Choice Multiple Answer
Question 9 Any amount deposited by an Individual or a HUF in 10 year or 15 year account
under the Post Office Saving Bank (CTD) Rules, 1959. The account can be in
the name of :-
Correct Answer The individual himself , A minor of whom he is the guardian.
Your Answer The individual himself , A minor of whom he is the guardian.
Select The Blank
Question 10 Section 80U allows the deduction in respect of the ________ .
Correct Answer Permanent physical disability
Your Answer Permanent physical disability
Multiple Choice Single Answer
Question 11 Income of notified news agencies is exempt provided :-
Correct Answer They apply their income for collection & distribution of news
Your Answer They apply their income for collection & distribution of news
Multiple Choice Single Answer
Question 12 The total amount of rebates under Section 88, Section 88B, Section 88C and
Section 88D of the Act. shall :-
Correct Answer Not exceed the amount of tax calculated on the total income.
Your Answer Not exceed the amount of tax calculated on the total income.
Multiple Choice Single Answer
Question 13 What is the treatment of Uncommuted Pension?
Correct Answer It is taxable as Income from Salaries.
Your Answer It is taxable as Income from Salaries.

Multiple Choice Multiple Answer
Question 14 Perquisites which are taxable only in the hands of specified employee include
the following categories of perquisites :-
Correct Answer Motor Car , Services of sweeper, gardener, watchman or personal attendant ,
Gas, electricity and water provided for personal consumption
Your Answer Motor Car , Services of sweeper, gardener, watchman or personal attendant ,
Gas, electricity and water provided for personal consumption
Multiple Choice Single Answer
Question 15 The Central Government has introduced a new pension scheme for the
employees employed on or after 15th January, 2004. These employees are
required to contribute 10% of their salaries to this pension scheme. How much
will the Central Government contribute to the Fund?
Correct Answer Equal amount
Your Answer Equal amount
True/False
Question 16 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
Your Answer True
Multiple Choice Single Answer
Question 17 If any person fails to get the accounts audited by a Chartered Accountant and
fails to submit the copy of such report under section 44AB, he will be liable to
pay the penalty equal to :-
Correct Answer 0.5% of sales turnover/gross receipts or Rs.1lakh whichever is less
Your Answer 0.5% of sales turnover/gross receipts or Rs.1lakh whichever is less
Select The Blank
Question 18 Section 35E of the Act applies to all the ________ engaged in the business of
prospecting for or extraction or production of certain specified minerals.
Correct Answer Resident assessees
Your Answer Non-ordinary resident assessees
Multiple Choice Multiple Answer
Question 19 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
Your Answer Operation of Ship , Hotels situated in hilly area, rural area or place of pilgrimage
, Company engaged in scientific and industrial research
True/False
Question 20 Jewellery held by the assessee is not a Capital Asset.


Correct Answer False
Your Answer False
Select The Blank
Question 21 House rent allowance is exempt from the heading ________.
Correct Answer Income from salaries
Your Answer Income from salaries
Multiple Choice Multiple Answer
Question 22 The various payments which are referred as deductions under section 43B,
Clause No-21 are :-
Correct Answer Any employees contribution payable by the assessee towards any Provident
Fund or Superannuation Fund or Gratuity Fund for the welfare of the employees
, Any sum payable by the assessee by way of tax duty, cess or fee , Any sum
payable by the assessee as interest on any loan or borrowing made by him from
any public financial institution or state financial corporation as per the terms of
the agreement
Your Answer Any employees contribution payable by the assessee towards any Provident
Fund or Superannuation Fund or Gratuity Fund for the welfare of the employees
, Any sum payable by the assessee by way of tax duty, cess or fee , Any sum
payable by the assessee as interest on any loan or borrowing made by him from
any public financial institution or state financial corporation as per the terms of
the agreement
Select The Blank
Question 23 The rebate u/s ________ is available to a woman assessee below the age of 65
years at any time during the previous years.
Correct Answer 88C
Your Answer 88B
True/False
Question 24 An deduction is allowed to an assesse as an employer in respect of contribution
made to any non-statutory fund under the section 40A(9).
Correct Answer False
Your Answer True
True/False
Question 25 Dividend received by the shareholder is treated as income chargeable to tax u/s
10(34) of the IT Act.
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer
Question 26 The assessee is required to quote PAN in :-


Correct Answer All returns to or correspondence with the Income Tax Authorities , All the
challans for the payment of any amount under the Act , All the documents
pertaining to purchase, sale and bank transactions
Your Answer All returns to or correspondence with the Income Tax Authorities , All the
challans for the payment of any amount under the Act , All the documents
pertaining to purchase, sale and bank transactions
Multiple Choice Single Answer
Question 27 Any person carrying on business or profession has to submit the Audit Report in
prescribed form, signed by Chartered Accountant before 31st October of the
assessment year, whether the return of income is filed or not. This is in
compliance with :-
Correct Answer Section 44AB of the Act
Your Answer Section 44AB of the Act
Multiple Choice Single Answer
Question 28 In case of the individual or HUF whose Gross Total Income, before deductions
under Chapter VI-A, is more than Rs. 5,00,000, then :-
Correct Answer No rebate will be available u/s 88.
Your Answer Rebate will be available u/s 88
Multiple Choice Single Answer
Question 29 If firm fails to submit copy of deed along with return of income :-
Correct Answer It will not constitute a separate taxable entity
Your Answer It will not constitute a separate taxable entity
Multiple Choice Single Answer
Question 30 In order to avoid the cases of tax evasion on the part of the assessees, the Act
has provided for :-
Correct Answer Tax deduction at source
Your Answer Tax deduction at source
Multiple Choice Multiple Answer
Question 31 Which of the following expenditures are expressly disallowed to be deducted
while computing the profits from business and profession
Correct Answer Income Tax , Wealth Tax
Your Answer Income Tax , Wealth Tax
True/False
Question 32 Section 80QQB is applicable to the individual resident who is an author of text
books.
Correct Answer False
Your Answer False

Select The Blank
Question 33 Section 35AC of the Act applies to any sum paid by the assessee to a public
sector company or a local authority or an association approved by the national
committee for ________ for carrying out any project in upliftment of public.
Correct Answer Promotion of social and economic welfare
Your Answer Promotion of social and economic welfare
Multiple Choice Single Answer
Question 34 Income from sub-letting of a house property is income from :-
Correct Answer Other sources
Your Answer Subletting
Multiple Choice Multiple Answer
Question 35 Income of a professional association is exempt if its objectives are :-
Correct Answer Supervision , Control , Encouragement
Your Answer Supervision , Control , Encouragement
Multiple Choice Multiple Answer
Question 36 Choose capital expenditure from the following list :-
Correct Answer Purchase of Building , Purchase of machinery
Your Answer Purchase of Building , Construction of temporary structures , Purchase of
machinery
True/False
Question 37 Loss under the head Profits from Business or Profession can be adjusted
against the Income from Salaries.
Correct Answer False
Your Answer False
Select The Blank
Question 38 Deduction u/s 10A is ________ of export proportion of profits.
Correct Answer 0.9
Your Answer 0.9
True/False
Question 39 Rebates as per the provisions of Section 88C of the Act are not available from
the tax on long-term capital gains.
Correct Answer False

Your Answer False
True/False
Question 40 Dividend received from domestic company to its shareholders is taxable in the
hands of the shareholder.
Correct Answer False
Your Answer True
Match The Following
Question 41 Correct Answer Your Answer
Super Annuation Fund This is an employee welfare
scheme which is usually
applicable in case of very
senior employees
This is an employee welfare
scheme which is usually
applicable in case of very senior
employees
Statutory Provident Fund This is set up as per the
provisions of Provident Fund
Act, 1925. This is maintained
by Government organizations,
local authorities, universities
and educational institutions.
This is set up as per the
provisions of Provident Fund
Act, 1925. This is maintained by
Government organizations, local
authorities, universities and
educational institutions.
Recognised Provident Fund This is the provident fund to
which the provisions of
Employees Provident Fund and
Miscellaneous Provisions Act,
1952 apply.
This is the provident fund to
which the provisions of
Employees Provident Fund and
Miscellaneous Provisions Act,
1952 apply.
Unrecognised Provident Fund The provident fund which is not
recognized by the income tax
authorities is called as
unrecognized provident fund.
The provident fund which is not
recognized by the income tax
authorities is called as
unrecognized provident fund.
Multiple Choice Single Answer
Question 42 Tax liability of a person is based on :-
Correct Answer Residential status
Your Answer Residential status
Select The Blank
Question 43 The amount of compensation received or receivable by the employee from the
employer at the time of termination of his employment or at the time of
modification of terms and conditions in connection with the employment is called
as ________.
Correct Answer Terminal compensation.
Your Answer Terminal compensation.
Match The Following

Question 44 Correct Answer Your Answer
Intangible Capital Asset Tenancy Rights Tenancy Rights
Excluded from ambit of term
Capital Asset
Stock in Trade Land held for a period of 36
months or more
Short Term Capital Asset Equity Shares held for a period
of Less than 36 months
Stock in Trade
Long Term Capital Asset Land held for a period of 36
months or more
Building
Multiple Choice Multiple Answer
Question 45 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 Rs. 5,000 , 1/5th of Salary , Actual amount of Entertainment Allowance
received.
Your Answer Rs. 5,000 , 1/5th of Salary , Actual amount of Entertainment Allowance
received.
True/False
Question 46 Annual premium paid by the employer for the accident insurance policy taken by
the employer in the name of the employee is chargeable to tax.
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question 47 Following condition needs to be satisfied for claiming the exemption under
Section 54F :-
Correct Answer The assessee is an individual or a HUF
Your Answer The assesse is Firm