SECTION A – ALL 15 questions are compulsory and MUST be attempted

15 questions worth 2 marks each.

Note: All references to sections in Section A relate to the Income-tax Act, 1961 and relevant Assessment
Year 2018 - 19 unless stated otherwise.

1. Every assessee should be a person, and

A. Every person is also an assessee

B. Every person need not be an assessee
C. An individual is always an assessee
D. Insufficient data to answer

2. C died in the year 2018 and A and B carry on his business without entering into a partnership.
Determine the status of A and B, who are legal heirs of C.

A. Firm
B. Limited Liability Partnership
C. Company
D. Body of Individual

3. In case of Mrs. X female individual, who is of 59 years of age, what is the maximum exemption
limit for AY 2018-19?

A. Rs. 2,00,000
B. Rs. 2,50,000
C. Rs. 3,00,000
D. Rs. 5,00,000

4. Calculate the amount of rebate under section 87A in case of a resident individual having total
income of Rs. 3,50,000.

A. Rs. 3,500
B. Rs. 2,500
C. Rs. 2,000
D. Rs. 5,000

5. Out of the following, which of the income is not taxable?

A. Short Term Capital Gains of Rs. 1,00,000

B. Amount of Rs. 3,20,000 won by way of Winnings from Horse Races
C. Amount of Rs. 1,50,000 received by way of gift from relative
D. Amount of Rs. 2,00,000 received by way of gift from a friend on marriage anniversary

6. Gross Total Income is arrived after:

A. Only adding Income under five heads of Income

B. Adding Income under five heads of Income excluding losses
C. Adding Income under five heads of Income, after applying clubbing provisions and making
adjustment of set off and carry forward of losses
D. Adding Income under five heads of Income, after applying clubbing provisions and making
adjustment of set off and carry forward of losses and after allowing deduction under section
80C to 80U
7. Mr. P is entitled to a basic salary of Rs. 50,000 p.m. and dearness allowance of Rs. 10,000 p.m., 40%
of which forms part of retirement benefits. He is also entitled to HRA of Rs. 20,000 pm. He lives with
his parents in Delhi and does not pay any rent. Market rent of that house is Rs. 20,000 pm in Delhi.

Calculate the exempt HRA.

A. Nil
B. Rs. 1,75,200
C. Rs. 64,800
D. Rs. 2,40,000

8. Mr. D retired on 1st April 2017 from a company. He was entitled to a pension of Rs. 4,000 p.m. But at
the time of retirement, he got 75% of the pension commuted and received Rs. 1,20,000 as commuted
pension.

Compute the taxable portion of the commuted pension if he is entitled to gratuity.

A. Rs. 66,667
B. Rs. 53,333
C. Rs. 1,20,000
D. Rs. 78,667

9. ICICI has advanced an interest free loan of Rs. 4,30,000 to Mr. B its employee for purchase of car on
1st June 2017.

Compute the value of perquisite on account of interest assuming the interest charged by ICICI
is 12% p.a. while by SBI is 9% p.a.

A. Rs. 43,000
B. Rs. 32,250
C. Rs. 51,600
D. Rs. 38,700

10. Municipal Value - Rs. 45,000, Fair rental value - Rs. 50,000, Standard rent - Rs. 48,000 Annual Rent -
Rs. 49,000, Loss due to Vacancy Rs. 2,000, Unrealised Rent Rs. 2,500.

Calculate the Gross Annual value.

A. Rs. 44,500
B. Rs. 48,000
C. Rs. 45,000
D. Rs. 46,000

11. Which out of the following is not a case of deemed ownership of house property?

A. Transfer to a spouse for inadequate consideration

B. Transfer to a minor child for inadequate consideration
C. Holder of an impartible estate
D. Co-owner of a property

12. Mr. G took a loan of Rs. 6,00,000 on 1st April 2015 from a bank for construction of a house. The loan
carries an interest @ 10% p.a. The construction is completed on 1st June 2017. The entire loan is still
outstanding.

Compute the interest allowable for the AY 2018-19.

A. Rs. 60,000
B. Rs. 1,80,000
C. Rs. 84,000
D. Rs. 24,000
13. Which of the following income is not chargeable as income of business or profession?

A. Profits and gains of business carried by an assessee during the previous year
B. Income derived by a trade, professional or similar association from specific services
performed for its members
C. Income from the activity of owning and maintaining race horses
D. Salary received by a partner of a firm from the firm in which he is a partner

14. Which of the following expenditure on scientific research is not allowed as deduction?

A. Revenue expenses incurred during the previous year

B. Revenue expenses on payment of salary to employees engaged in scientific research and
purchase of material used in scientific research incurred for three years immediately
preceding the commencement of business
C. Capital expenditure incurred on scientific research during the year related to the business
D. Expenditure incurred on acquisition of land during the year for scientific research

15. Indexation benefit on cost of acquisition is available on the long-term capital asset. However, in
certain cases, indexation benefit is not available.

In which of the following cases, indexation benefit is allowed?

A. Debentures issued by a company

B. Capital Asset in Foreign Currency
C. Depreciable Long-Term Capital Asset
D. Jewellery

(Total 30 marks)
SECTION B – ALL 15 questions are compulsory and MUST be Attempted

The following scenario relates to questions 16 - 20

Mr. A is a businessman having properties in different cities in India. He has one self-occupied house
property in Mumbai for residence and another house property in Goa. The house in Mumbai was
constructed on 1st December 2016 with a 12% loan of Rs. 12,00,000 from a bank taken on 1st April 2014.
During the previous year 2017-18, the loan is still outstanding. Other details of the two houses are as
follows:

Particulars Mumbai Goa

(in Rs.) (in Rs.)
Fair rent 56,000 p.a. 56,000 p.m.
Municipal valuation 28,000 p.a. 58,000 p.m.
Standard rent - 57,000 p.m.
Actual rent - 59,000 p.m.
Municipal taxes 5,000 p.a. 15,000 p.a.
(1/3 borne by tenant)
Loss due to vacancy - Half Month
Insurance Premium - 750 p.m.
Unrealised rent (during the year) - 4,000
Repair expenses (during the year) - 10,000

16. Determine Income from House Property in Mumbai?

A. Loss of Rs. 2,01,600

B. Loss of Rs. 2,00,000
C. Loss of Rs. 30,000
D. No gain or loss

17. Suggest how losses from House Property should be dealt in the AY 2018-2019?

A. Can neither be carried forward nor can be set-off

B. Can be set-off against the income from other House Property to the extent of profit
C. Can be carried forward for a maximum of Eight years and no set-off is allowed
D. Can be set-off against income from house property and business only

18. What is the Gross Annual Value for Goa house?

A. Rs. 6,54,500
B. Rs. 6,74,500
C. Rs. 6,84,000
D. Rs. 7,08,000

19. What is the income from House Property for Goa House?

A. Rs. 4,65,150
B. Rs. 4,47,650
C. Rs. 4,61,650
D. Rs. 4,51,150

20. What is the net taxable income / loss for Mr. A if he had no other income in the same year?

A. Rs. 2,47,650
B. Rs. 2,65,150
C. Rs. 2,63,550
D. Rs. 2,46,050
(10 marks)
The following scenario relates to questions 21 – 25

Mr. Atul is already a resident in China as per its laws. Neither Atul nor his parents were born in India.
However, his grandmother is born in Karachi. Mr. Atul comes to visit India every year. The following is the
income of Mr. Atul for the PY 2017-18:

(i) Profits from business in China received in India Rs. 5,00,000

(ii) Income from house property in Dubai received in India Rs. 1,20,000
(iii) Income from house property in Ghana deposited in a bank there Rs. 1,80,000
(iv) Profits of business established in China deposited in a bank there, this business is controlled in India
(out of Rs. 2,00,000 a sum of Rs. 1,00,000 is remitted in India) Rs. 2,00,000
(v) Income from profession in India but received in London Rs. 2,40,000
(vi) Profits earned from business in Nagpur Rs. 1,60,000
(vii) Income from agriculture in London, it is all spent on the education of children in London Rs. 2,70,000

21. Calculate the taxable amount if Mr. Atul was Resident And Ordinarily Resident.

A. Rs. 14,00,000
B. Rs. 16,70,000
C. Rs. 12,70,000
D. Rs. 15,50,000

22. Calculate the taxable amount if Mr. Atul was Resident But Not Ordinarily Resident.

A. Rs. 12,20,000
B. Rs. 14,00,000
C. Rs. 16,70,000
D. Rs. 11,00,000

23. Calculate the taxable amount if Mr. Atul was Non-Resident.

A. Rs. 6,00,000
B. Rs. 11,00,000
C. Rs. 10,20,000
D. Nothing is Taxable since he is a non-resident

24. Since Mr. Atul is already a resident of China and he is staying for more than 182 days in India in
current year, he can have residential status of?

A. Only China
B. Only India
C. Both India & China
D. Neither India nor China

25. What type of a person is Mr. Atul considered to be for determining residential status?

A. Indian Citizen
B. Person of Indian Origin
C. Person visiting India
D. Chinese Citizen

(10 marks)
The following scenario relates to questions 26 – 30

Mr. T, a Director of PQR Pvt. Ltd. based in Kochi is offered an employment with the following
emoluments:

(i) Basic Pay per annum Rs. 1,38,000

(ii) Conveyance allowance for private use Rs. 9,000
(iii) Motor car (more than 1600 cc) facility with driver for private use amounting to Rs. 9,000
(iv) Entertainment Allowance Rs. 18,000
(v) Children Education Allowance (for 2 children) Rs. 9,700
(vi) Rent Free unfurnished house with fair rental value Rs. 30,000
(vii) It is assumed that both employer and employee will contribute 20% of the basic pay towards an
unrecognised provident fund

As per census of 2001, the population of Kochi is more than 25 lakhs.

26. What is the taxable amount of contribution to unrecognised provident Fund?

A. 20 % of Basic Pay of Rs. 1,38,000

B. 12% of Basic Pay of Rs. 1,38,000
C. Fully Taxable
D. Fully Exempt

27. What is taxable allowance for Car facility?

A. Rs. 2,400 pm for car plus 900 per month for driver
B. Rs. 1,800 pm for car plus 900 per month for driver
C. Rs. 900 pm for car plus 900 per month for driver
D. Rs. 9,000

28. Calculate the amount of taxable children education allowance?

A. Rs. 9,700
B. Rs. 2,400
C. Rs. 7,300
D. Nil

29. Calculate the amount of taxable value of rent free unfurnished accommodation?

A. Rs. 30,000
B. Rs. 27,195
C. Rs. 25,845
D. Rs. 20,700

30. What is the total value of taxable salary?

A. Rs. 1,90,495
B. Rs. 1,85,700
C. Rs. 2,08,495
D. Rs. 1,98,145

(10 marks)

(Total 30 marks)
Section C – ALL THREE questions (31 – 33) are compulsory and MUST be attempted

31. Mr. Sanket is practicing as a Chartered Accountant in Delhi. Following is the analysis of his bank
account for the year ending 31st March 2018:

Receipts Rs. Payments Rs.

Balance b/d 7,250 Salaries 30,14,000
Professional Receipts 51,40,000 Rent of Chamber 6,84,500
Dividend from U.T.I. 8,000 Professional Expenses 23,000
House Rent 22,500 Telephone Expenses 51,000
Horse race Income (Gross) 12,000 Misc. Office Expenses 55,500
Share of Income in HUF 6,750 Motor car Expenses 8,000
Loan from wife for purchase of car 1,00,000 Purchase of car 1,15,000
Advance Income-tax 40,000
Donation to Delhi University 10,000
Personal Expenses 45,500
House Property Taxes 5,000
Repairs 1,500
Insurance 1,500
Collection Charges 2,000
Balance c/d 12,40,000

(i) 1/4th of the motor car expenses relate to personal use

(i) Car was purchased on 15th June 2017 and rate of depreciation on car is 15%

(ii) He stays in his house, the municipal value of which is Rs. 8,000. Following are the expenses which
have been included in the above account in respect of this house: Insurance premium Rs. 500,
Municipal tax Rs. 2,400.

Required:

(i) From the above details, you are required to compute the Total Income of Mr. Sanket for the year
ended 31st March 2018.
(12 marks)
(ii) Calculate the income tax payable and also comment whether the Tax Liability would be different for a
female individual.
(3 marks)

(Total 15 Marks)

32. Mrs. Akshata is a consultant for a firm in Delhi. Following are the details of her income for the
Assessment Year 2018-19:

(i) Basic pay Rs. 60,000 p.m.

(ii) Dearness allowance @ 30% of salary
(iii) House Rent allowance 30% of basic salary
(iv) Medical Allowance Rs. 500 p.m. (amount actually spent on her own treatment is Rs. 2,000)
(v) Wardenship Allowance Rs. 1,000 p.m.
(vi) Rent from House property Rs. 2,000 p.m.
(vii) Interest received from Government securities Rs. 5,000
(viii) Dividend received from an Indian company Rs. 1,200
 (ix) Interest on Saving Bank Deposits Rs. 12,000
(x) Contribution to Recognised Provident Fund 10% of basic salary
(xi) Premium paid by cheque on medical insurance policy on health of dependent mother Rs.
5,000, Rs.2,000 for dependent mother in law and Rs. 1,000 for dependent brother
(xii) Donation to an approved charitable institution Rs. 1,00,000
(xiii) House rent paid Rs. 28,000 p.m.

Required:

(i) Determine the Net Income of Mrs. Akshata for AY 2018-19

(13 marks)
(ii) Compute the Tax Liability of Mrs. Akshata for AY 2018-19
(2 marks)

(Total 15 marks)

33. Mr. Sandeep is a resident of India and a consultant for a firm in Delhi. He has given the following details
of the transactions during the year.
(i) He purchased 1000 listed equity shares of Rs. 10 each at Rs. 115 per share from a broker on 5 th April
2001. He paid Rs. 2,000 as brokerage. On 2nd March 2003 he was given bonus shares by the company
based on one share for every 2 shares held. On 24 th Feb 2017 he was given a right to acquire 1,000
right shares @ Rs. 60 per share. He acquired 50% of the right shares offered and sold the balance
50% of the right for a sum of Rs. 60,000 on 3rd April 2017. The right shares were allotted to him on 20th
April 2017. All the shares held by him were sold on 24th March 2018 @ Rs. 400 per shares

(ii) Income from other sources is Rs. 1,12,000

(iii) Gift Received from other employees is Rs. 52,000 and gift received from relatives is Rs. 75,000

(iv) He has made contribution to RPF Rs. 76,000

(v) He has a medical insurance policy of Rs. 32,000 in his own name while in fathers name worth Rs.
35,000

Indexation:

Year Index
FY 2001-02: 100
FY 2002-03: 105
FY 2003-04: 109
FY 2016-17: 264
FY 2017-18: 272

Required:

(i) Compute Capital Gain for the Assessment Year 2018-19.

(5 marks)
(ii) Compute Net Taxable Income and Tax Liability assuming Mr. Sandeep is 37 years old.
(5 marks)

(Total 10 marks)

End of Question Paper