Case Based MCQs - DT

AR
Case Based MCQs – Direct Tax – May/

September 2024/January 2025
Question 1
UM
Mr. Shashikant, aged 45 years, is an Indian citizen and a member of the crew of a Singapore bound
Indian ship engaged in carriage of passengers in international traffic departing from Chennai port on
29th May, 2023.
Particulars Date
Date entered into the Continuous Discharge Certificate in respect of joining the 29th May, 2023
ship by Mr. Shashikant
Date entered into the Continuous Discharge Certificate in respect of signing off 19th December,
the ship by Mr. Shashikant 2023
TK
He stayed in India in the last 4 previous years preceding the P.Y. 2023-24 for 400 days and for a period
of 750 days in the last 7 previous years preceding to P.Y. 2023-24. He received salary of ₹7,20,000 in his
NRE account maintained with State Bank of India, Chennai Branch.
He also furnished details of other income earned by him during the previous year 2023-24:
S. Amount
Particulars
No. (₹)
1. Dividend declared in the month of April, 2023 by X limited, a Singapore 1,00,000
company. The same was received by him in Singapore
AN
2. Agriculture income from land in Pakistan received in India 2,50,000
3. Rent received from house property in Chennai 3,60,000
Based on the facts of the case scenario given above, choose the most appropriate answer to the
following questions:
1. What is Mr. Shashikant’s residential status for the P.Y 2023-24?

a. Resident and ordinarily resident
b. Resident but not ordinarily resident
SH
c. Non-resident
d. Deemed resident
2. What would be the total income of Mr. Shashikant for A.Y. 2024-25 assuming that he opts out
of the default tax regime u/s 115BAC(1A)?
a. ₹7,10,000
b. ₹12,72,000
c. ₹5,02,000
NI
d. ₹6,02,000
3. Assume for the purpose of answering this question that Mr. Shashikant has transferred his
house property in Chennai to his minor married daughter on 1st April, 2023 and his wife is a
housewife and does not have any income. The minor married daughter receives the rent from
house property. In such case, his total income as per normal provisions of the Act would be -
a. ₹5,00,500
b. ₹6,00,500
CA
c. ₹5,02,000
d. ₹6,02,000
CA NISHANT KUMAR 1
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4. Mr. Shashikant would like to minimize his tax liability and consulted you to compute the
amount of same for the P.Y. 2023-24. Accordingly, his tax liability (rounded off) would be -
a. ₹13,420
b. ₹10,504
c. ₹0
d. ₹34,220
UM
Solution
1. (c)
If an Indian citizen leaves India during the relevant previous year for the purpose of
employment, or as a member of crew in an Indian ship, he needs to have stayed for at least
182 days in the previous year to be called a Resident. For this purpose, the number of days for
which he was on the ship needs to be deducted from the total number of days in a year.
In the present case, the dates mentioned in the continuous discharge certificate are 29th May,
2023, and 19th December, 2023. Therefore, number of days = 3 + 30 + 31 + 31 + 30 + 31 + 30 +
TK
19 = 205. Therefore, he stayed in India for 366 days – 205 days = 161 days. Since his period of
stay is less than 182 days, he would be a Non-Resident for the P.Y. 2023-24.
2. (c)
For non-residents, only the income which has accrued or arisen, or deemed to have accrued
or arisen in India, or has been received or deemed to have been received in India is taxable.
In the present case, the total income is calculated as follows:
Computation of Total Income

AN
Particulars ₹
Dividend declared in the month of April, 2023 by X limited, a -
Singapore company. The same was received by him in Singapore.
(Since the same has neither accrued, arisen, or received in India, it
won't be taxable.)
Agriculture income from land in Pakistan received in India 2,50,000
Rent received from house property in Chennai 3,60,000
Less: Deduction u/s 24(a) (30% × ₹3,60,000) 1,08,000 2,52,000
Total Taxable Income 5,02,000
SH
3. (a)
If the house property is transferred to minor married daughter, the transferor is not treated as
deemed owner u/s 27. Instead, clubbing provisions are attracted. Since the wife has no income,
the income of the minor married daughter from the transferred property will be clubbed in the
hands of Mr. Shashikant only. However, exemption u/s 10(32) shall be available of ₹1,500.
Therefore, the total taxable income would be:

NI
Particulars ₹
Dividend declared in the month of April, 2023 by X limited, a
Singapore company. The same was received by him in Singapore.
(Since the same has neither accrued, arisen, or received in India, it
won't be taxable.) -
Agriculture income from land in Pakistan received in India 2,50,000
Rent received from house property in Chennai (clubbed in the
CA
hands of Mr. Shashikant) 3,60,000

Less: Deduction u/s 24(a) (30% × ₹3,60,000) 1,08,000
2,52,000
CA NISHANT KUMAR 2
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Less: Exemption u/s 10(32) 1,500 2,50,500
4. (c)
Total income is ₹5,02,000. In the third question, it is specifically written that assumption is to
be made for solving that particular question only, so transfer to minor married daughter shall
not be considered while answering any other question.
UM
Computation of Tax Liability as per Normal Provisions
Particulars ₹
First ₹2,50,000 -
From ₹2,50,000 to ₹5,00,000 (5% × ₹2,50,000) 12,500
From ₹5,00,000 to ₹5,02,000 (20% × ₹2,000) 400
12,900
Add: Health and Education Cess @ 4% 516
Tax Liability 13,416
Tax Liability (Rounded Off) 13,420
Particulars
First ₹3,00,000 TK
Computation of Tax Liability as per Section 115BAC
From ₹3,00,000 to ₹5,02,000 (5% × ₹2,02,000)
Less: Rebate u/s 87A: Lower of:

₹
-
10,100
10,100
Less: Tax Liability 10,100

AN
Less: ₹25,000 25,000 10,100
Tax Liability (Rounded Off) -
Therefore, tax liability is less in the new tax regime, and hence, Mr. Shashikant would opt for
this. Therefore, the tax liability is ₹0.
Question 2
SH
Mr. Suraj (aged 48 years) furnishes the following particulars for the previous year 2023-24 in respect of
an industrial undertaking established in "Special Economic Zone" in March 2017. It began
manufacturing in April 2017.
Particulars ₹
Total sales 85,00,000
Export sales [proceeds received in India] 45,00,000
Domestic sales 40,00,000
NI
Profit from the above undertaking 20,00,000

Export Sales of F.Y. of 2023-24 include freight and insurance of ₹5 lakhs for delivery of goods outside
India. He received rent of ₹25,000 per month for a commercial property let out to Mr. Sudhir, a salaried
individual. He earned interest on savings bank A/c of ₹12,500 and interest on Post Office savings A/c of
₹5,500 during the P.Y. 2023-24.
CA
1. Compute the amount of export turnover and total turnover for purpose of computing
deduction under section 10AA for A.Y. 2024-25.
CA NISHANT KUMAR 3
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a. ₹45,00,000 and ₹85,00,000, respectively
b. ₹40,00,000 and ₹80,00,000, respectively
c. ₹45,00,000 and ₹80,00,000, respectively
d. ₹40,00,000 and ₹85,00,000, respectively
2. Compute the amount of deduction available under section 10AA to Mr. Suraj under section
10AA for A.Y. 2024-25.
UM
a. ₹10,00,000
b. ₹4,70,588
c. ₹5,62,500
d. ₹5,00,000
3. Assume for the purpose of this question only that Mr. Suraj established SEZ Unit and began
manufacturing in April, 2019. Compute the amount of deduction available under section 10AA
for A.Y. 2024-25.
a. ₹10,00,000
b. ₹9,41,176
TK
c. ₹11,25,000
d. ₹5,00,000
4. Compute the total income of Mr. Suraj for the previous year 2023-24, assuming that he opts
out of the default tax regime u/s 115BAC(1A).
a. ₹12,14,500
b. ₹17,18,000
c. ₹17,14,500
d. ₹17,28,000
AN
Solution
1. (b)
Freight is not considered as a part of turnover. Therefore, the freight of ₹5,00,000 shall be
deducted from the export turnover of ₹45,00,000. Obviously, the total turnover would also get
reduced by ₹5,00,000. Hence, the export turnover would be ₹40,00,000, and the total turnover
would be ₹80,00,000.
2. (d)
SH
The operations started in the P.Y. 2017-18. Therefore, this is the 7th year of operation. So, 50%
of Export Profits shall be allowed as deduction u/s 10AA.
𝐸𝑥𝑝𝑜𝑟𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
𝐸𝑥𝑝𝑜𝑟𝑡 𝑃𝑟𝑜𝑓𝑖𝑡𝑠 = 𝑃𝑟𝑜𝑓𝑖𝑡𝑠 ×
𝑇𝑜𝑡𝑎𝑙 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
40,00,000
𝐸𝑥𝑝𝑜𝑟𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 = ₹20,00,000 × = ₹10,00,000
80,00,000
Deduction u/s 10AA = 50% × Export Profit = 50% × ₹10,00,000 = ₹5,00,000.
3. (a)
NI
If the operations started in the P.Y. 2019-20, this would be the 5th year of operation, and hence
100% of Export Profits would be allowed as deduction u/s 10AA. Therefore, deduction allowed
= ₹10,00,000.
4. (c)

Particulars ₹
CA
Income from House Property

Rent Received (GAV) (₹25,000 × 12) 3,00,000
Less: Deduction u/s 24(a) (30% × ₹3,00,000) 90,000
CA NISHANT KUMAR 4
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Income from House Property (A) 2,10,000
Profits and Gains from Business or Profession
Profit from SEZ undertaking 20,00,000
Less: Deduction u/s 10AA 5,00,000
Profits and Gains from Business or Profession (B) 15,00,000
Income from Other Sources
UM
Interest from Savings Bank A/c 12,500
Interest on Post Office savings A/c 5,500
Less: Exempt u/s 10(15) 3,500 2,000
Income from Other Sources (C) 14,500
.
Gross Total Income (A) + (B) + (C) 17,24,500
Less: Deductions under Chapter VI-A
Less: Section 80TTA: Deduction in respect of interest from savings 10,000
bank account restricted to
TK
Total Income 17,14,500
Question 3
Mr. Kishan is engaged in the following activities on agricultural land situated in India, total area of land
is 5 acres.
Activity A: He grows saplings or seedlings in a nursery spreading over on one acre land, the sale
proceeds of which is ₹5,00,000. Cost of plantation is ₹1,40,000. Basic operations are not performed for
AN
growing saplings or seedlings.
Activity B: He grows cotton on 3 acres land. 40% of cotton produce is sold for ₹4,00,000, the cost of
cultivation of which is ₹2,25,000. The cost of cultivation of balance 60% cotton is ₹3,37,500 and the
market value of the same is ₹6,00,000, which is used for the purpose of manufacturing yarn. After
incurring manufacturing expenses of ₹1,00,000, yarn is sold for ₹8,50,000
Activity C: Land measuring 1 acres is let out to Mr. Ramesh on monthly rental of ₹15,000 which is used
by Mr. Ramesh as follows:
SH
• 50% of land is used for agricultural purpose

• 50% of land is used for non-agricultural purpose.
1. What amount of income arising from activity A would constitute agricultural income in the
hands of Mr. Kishan?
NI
a. ₹5,00,000
b. Nil
c. ₹3,60,000
d. ₹1,40,000
2. What amount of income from activity B with respect to sale of cotton would constitute
agricultural income or/and business income in the hands of Mr. Kishan?
a. ₹1,75,000 as agricultural income
CA
b. ₹1,75,000 as business income

c. ₹1,75,000 as agricultural income and ₹2,62,500 as business income
CA NISHANT KUMAR 5
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d. ₹4,00,000 as agricultural income
3. What amount of the income from activity B with respect to sale of yarn constitute agricultural
income or/and business income in the hands of Mr. Kishan?
a. ₹1,50,000 as agricultural income
b. ₹2,62,500 as agricultural income and ₹1,50,000 as business income
c. ₹3,37,500 as agricultural income and ₹1,50,000 as business income
UM
d. ₹4,12,500 as business income
4. What amount of income arising from activity C constitute agricultural income or otherwise in
the hands of Mr. Kishan?
a. Whole amount of ₹1,80,000 would be agricultural income
b. Whole amount of ₹1,80,000 would be business income.
c. ₹90,000 would be agricultural income and ₹63,000 is chargeable to tax as income from
house property
d. ₹90,000 would be agricultural income and ₹90,000 is chargeable to tax under the head
“Income from Other Sources”
TK
5. Compute the gross total income of Mr. Kishan for the P.Y. 2023-24, assuming he has no other
source of income.
a. ₹2,40,000
b. ₹3,30,000
c. ₹5,02,500
d. ₹2,13,000
Solution
AN
1. (c)
Any income from saplings or seedlings grown in a nursery shall be treated as agricultural
income even if the basic operations are not carried out on land. Therefore, the entire income
of ₹5,00,000 – ₹1,40,000 = ₹3,60,000 shall be treated as agricultural income.
2. (a)
With respect to sale of cotton, the agricultural income would be ₹4,00,000 – ₹2,25,000 =
₹1,75,000.
Note: The question hasn’t asked the agricultural income of all the transactions. It has only
SH
asked the agricultural income with respect to sale of cotton.

3. (b)
Computation of Business Income and Agricultural Income of Mr. Kishan

Particulars ₹
Agricultural Income
Market Value of Cotton (60%) 6,00,000
Less: Cost of Cultivation 3,37,500
NI
Agricultural Income 2,62,500

Business Income
Sale Proceeds of Yarn 8,50,000
Less: Market Value of Cotton 6,00,000
Less: Cost of Manufacturing 1,00,000 7,00,000
Business Income 1,50,000
4. (d)
CA
Total income from Activity C would be ₹15,000 × 12 = ₹1,80,000. Since 50% of it is used for
agricultural purposes, 50% × ₹1,80,000 = ₹90,000 would be treated as agricultural income, and
CA NISHANT KUMAR 6
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the balance ₹90,000 would be treated as income from other sources. Since there is no house
property, no income shall be chargeable to tax as income from house property.
5. (a)
Computation of Gross Total Income

Particulars ₹
UM
Business Income from Sale of Yarn 1,50,000
Profits and Gains from Business or Profession (A) 1,50,000
Rental Income from Land 90,000
Income from Other Sources (B) 90,000
Gross Total Income 2,40,000
Question 4
TK
Mr. Rajesh Sharma, aged 54 years, an Indian citizen, is working as Assistant Manager in ABC India Ltd.
He is getting basic salary of ₹58,000 per month. He used to travel frequently out of India for his office
work. He left India from Delhi Airport on 5th October, 2023 and returned to India on 2nd April, 2024. For
previous year 2023-24, following information are relevant:
1.
2.
Dearness Allowance - 10% of Basic Pay (considered for retirement purposes)
Bonus - ₹98,000
3. Medical allowance paid during P.Y. 2023-24 amounting to ₹60,000
AN
4. He was also reimbursed medical bill of his mother amounting to ₹15,000.
5. He was also transferred a laptop by company for ₹15,000 on 31st December, 2023. The laptop
was acquired by company on 1st October, 2020 for ₹1,00,000. Company was charging
depreciation at 31.666% assuming useful life of laptop as 3 years.
6. He was also reimbursed salary of house servant of ₹4,000 per month.
7. Professional Tax paid by employer amounting to ₹2,400.
8. 400 equity shares allotted by ABC India Ltd. at the rate of ₹250 per share against fair market
value of share of ₹350 on the date of exercise of option.
SH
9. Short-term capital gain on sale of shares of listed company on which STT is paid amounting to
₹94,000.
10. Mr. Rajesh wishes to opt out of the default tax regime u/s 115BAC(1A).
1. What is Mr. Rajesh Sharma’s residential status for the A.Y. 2024-25?
NI
a. Resident but can’t determine resident and ordinarily resident or resident but not
ordinarily resident from the given information
b. Non-Resident
c. Resident but not ordinarily resident
d. Resident and ordinarily resident
2. What are his taxable perquisites for A.Y. 2024-25?
a. ₹55,000
CA
b. ₹90,400
c. ₹1,05,400
d. ₹1,03,000
CA NISHANT KUMAR 7
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3. What is the income chargeable under the head “Salaries” in the hands of Mr. Rajesh Sharma
for A.Y. 2024-25?
a. ₹9,76,600
b. ₹9,86,600
c. ₹9,71,600
d. ₹9,61,600
UM
4. The total tax liability of Mr. Rajesh Sharma for A.Y. 2024-25 is:
a. ₹1,26,800
b. ₹1,40,710
c. ₹1,12,130
d. ₹1,39,960
5. Assume for the purpose of this question only, that Mr. Rajesh was found owner of ₹5 lakh
worth jewellery acquired in F.Y. 2023-24, of which he could not provide any satisfactory
explanation about source of income. What would be the tax liability (without considering
surcharge and Health and education cess, if any) of Mr. Rajesh Sharma towards such
TK
unexplained expenditure:
a. ₹1,00,000
b. ₹1,50,000
c. ₹3,00,000
d. ₹3,90,000
Solution
1. (a)
AN
If a person, being an Indian citizen, leaves India during the relevant previous year for the
purpose of employment, he needs to have stayed India for at least 182 days to be a resident.
In the present case, Mr. Rajesh left India on 5th October, 2023, and returned in the next previous
year. For the P.Y. 2023-24, his period of stay in India was 30 + 31 + 30 + 31 + 31 + 30 + 5 = 188
days. Therefore, he is a resident in India for the P.Y. 2023-24. However, since no information is
given regarding his stay in India during the 10 previous years preceding the relevant previous
year, it is not possible to determine whether he is an ordinarily resident, or a not ordinarily
resident.
SH
2. (c)
Calculation of Taxable Perquisites

Particulars ₹
Reimbursement of medical bill 15,000
Laptop (Note)
Cost as on 01-10-2020 1,00,000
Less: Depreciation from 01-10-2020 to 30-09-2021 (50% × ₹1,00,000) 50,000
NI
50,000
Less: Depreciation from 01-10-2021 to 30-09-2022 (50% × ₹50,000) 25,000
25,000
Less: Depreciation from 01-10-2022 to 30-09-2023 (50% × ₹25,000) 12,500
12,500
Less: Amount at which it was transferred 15,000 -
Salary of House Servant (₹4,000 × 12) 48,000
CA
Issue of Sweat Equity Shares [(₹350 – ₹250) × 400] 40,000

Professional Tax 2,400
Taxable Perquisites 1,05,400
CA NISHANT KUMAR 8
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Note: Since the laptop has been transferred at a cost higher than the WDV, the taxable value
of this perquisite will be NIL.
3. (a)
Computation of Income from Salaries of Mr. Rajesh Sharma

Particulars ₹
Basic Salary (₹58,000 × 12) 6,96,000
UM
Dearness Allowance (10% × ₹6,96,000) 69,600
Bonus 98,000
Medical Allowance 60,000
Reimbursement of Medical Bill of Mother 15,000
Transfer of Laptop (See Part 2 for explanation) -
Salary of House Servant (₹4,000 × 12) 48,000
Professional Tax 2,400
Issue of Sweat Equity Shares [(₹350 – ₹250) × 400] 40,000
Gross Salary 10,29,000
TK
Less: Standard Deduction 50,000
Less: Professional Tax 2,400 52,400
Income from Salaries 9,76,600
4. (a)

Particulars ₹
Income from Salaries (As Computed in Part 3) 9,76,600
Short Term Capital Gains on sale of equity shares 94,000
AN
Computation of Tax Liability

Particulars ₹
15% on Short Term Capital Gains u/s 111A (15% × ₹94,000) 14,100
Tax at normal slab rates on ₹9,76,600
First ₹2,50,000 -
SH
From ₹2,50,000 to ₹5,00,000 (5% × ₹2,50,000) 12,500

From ₹5,00,000 to ₹9,76,600 (20% × ₹4,76,600) 95,320 1,07,820
1,21,920
Add: Health and Education Cess @ 4% 4,877
Tax Liability 1,26,797
Tax Liability (Rounded Off) 1,26,800
5. (c)
As per Section 69, if a person has made investments in a previous year, but hasn't recorded
NI
them in their account books and cannot explain where the money for the investments came
from, or the explanation is not satisfactory to the tax authority, then the value of the
investments will be treated as taxable income of that person for the previous year.
As per Section 115BBE, to prevent illegal money from being hidden, the government charges a
high tax rate of 60% on any unexplained income, investments, or expenses that are deemed
taxable under different sections (including section 69) of the tax laws. Additionally, a surcharge
of 25% and a cess of 4% are added to this tax rate, resulting in an effective tax rate of 78%.
CA
In this question, we are asked to calculate only the tax liability ignoring the surcharge and cess.
Therefore, tax = 60% × ₹5,00,000 = ₹3,00,000.
CA NISHANT KUMAR 9
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Question 5
Mr. Hardik (age 45 years) is appointed as senior executive officer in Sky India Limited, Mumbai on
01.02.2023 in the scale of ₹35,000-3,500-65,000. He is paid dearness allowance @ 40% of basic pay
forming part of retirement benefits.
UM
He is given rent free unfurnished accommodation on 01.5.2023 which he occupied only from
01.10.2023. The company pays lease rent of ₹5,000 p.m.
He has been provided a car of above 1.6 liters capacity which is used by him for private purposes only.
The actual cost of the car is ₹8,00,000. The monthly expenditure of car is ₹5,000, which is fully met by
the employer. Car is owned by his employer.
He pays lumpsum premium of ₹1,20,000 towards health insurance for self and his wife (age 43 years)
for 48 months on 01.10.2023 by account payee cheque. He also contributes ₹1,50,000 towards PPF.
TK
Mr. Hardik is interested to opt for concessional tax regime available under section 115BAC.
1. What would be the value of rent-free accommodation chargeable to tax in the hands of Mr.
Hardik?
a. ₹44,835
b. ₹44,100
AN
c. ₹45,570
d. ₹30,000
2. What amount of health insurance premium paid during the previous year 2023-24 by Mr.
Hardik can be claimed as deduction while computing total income, if he does not opt to pay
tax under section 115BAC?
a. ₹30,000
b. ₹15,000
SH
c. ₹24,000
d. ₹25,000
3. What would be perquisite value of car chargeable to tax in the hands of Mr. Hardik?
a. ₹28,800
b. ₹21,600
c. ₹60,000
d. ₹1,40,000
4. Would you advise Mr. Hardik to opt out of the default tax regime u/s 115BAC(1A)?
NI
a. No, Mr. Hardik should go for section 115BAC, since in such case his tax liability would
be ₹22,760, being lower than the tax liability under normal provisions of the Act
b. No, Mr. Hardik should go for concessional tax regime, since in such case his tax liability
would be ₹17,560 being lower than the tax liability under normal provisions of the Act.
c. Yes, Mr. Hardik should opt out, since as per normal provisions of the Act, his tax liability
would be ₹32,510, being lower than the tax liability under section 115BAC
d. No, Mr. Hardik should not opt out of the default tax regime u/s 115BAC(1A), since as
CA
per normal provisions of the Act, his tax liability would be ₹22,110, being higher than
the tax liability under section 115BAC, which would be ₹18,510.
CA NISHANT KUMAR 10
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Solution
1. (d)
Value of rent free unfurnished accommodation would be the rent paid by the employer, i.e.,
₹5,000 p.m. Since the accommodation was occupied by Mr. Hardik from 01-10-2023, the
perquisite is provided for 6 months only. Therefore, the value of rent free unfurnished
accommodation would be ₹5,000 × 6 = ₹30,000.
UM
2. (c)
The lumpsum amount of ₹1,20,000 will be divided by the number of years during which the
policy is valid. 48 months from 01-10-2023 will end on 30-09-2027. This covers the Financial
Years 2023-24, 2024-25, 2025-26, 2026-27, and 2027-28. Therefore, the entire amount of
₹1,20,000 will be divided by 5 years, and hence, the value for each year comes out to be
₹1,20,000 ÷ 5 = ₹24,000. Since this is within the permissible limit of ₹25,000, the entire amount
of ₹24,000 shall be allowed as deduction u/s 80D.
3. (d)
TK
When a motor car is given by the employer to the employee which is owned by the employer,
for private purposes of the employee, the value of perquisite = Maintenance Charges +
Chauffer’s Salary + 10% of Cost – Amount recovered from employee. Therefore, perquisite
value of car would be = (₹5,000 × 12) + 0 + (10% × ₹8,00,000) – 0 = ₹1,40,000.
4. (d)
Computation of Total Income as per Normal Provisions

Particulars ₹
Basic Salary [(₹35,000 × 10) + {(₹35,000 + ₹3,500) × 2}] 4,27,000
AN
Dearness Allowance (40% × ₹4,27,000) 1,70,800
Rent Free Unfurnished Accommodation (₹5,000 × 6) 30,000
Perquisite Value of Car (As computed in Part 3) 1,40,000
Taxable Salary (Gross Total Income) 7,17,800
Less: Section 80C: Contribution to PPF 1,50,000
SH
Less: Section 80D: Health Insurance Premium 24,000 1,74,000


Particulars ₹
First ₹2,50,000 -
From ₹2,50,000 to ₹5,00,000 (5% × ₹2,50,000) 12,500
From ₹5,00,000 to ₹5,43,800 (20% × ₹43,800) 8,760 21,260
NI

Computation of Total Income as per Section 115BAC

Particulars ₹
Total Taxable Income as per Normal Provisions 5,43,800
CA
Add: Deductions under Chapter VI-A 1,74,000

Total Taxable Income as per Section 115BAC 7,17,800
CA NISHANT KUMAR 11
AR
Computation of Tax Liability under the Default Tax Regime
Particulars ₹
Step 1 Total Income of ₹7,17,800 – ₹7,00,000 (A) 17,800
Step 2 Tax on Total Income
First ₹3,00,000 NIL -
Next ₹3,00,001 to ₹6,00,000 5% of ₹3,00,000 15,000
UM
Next ₹6,00,001 to ₹7,17,800 10% of ₹1,17,800 11,780
Total (B) 26,780
Step 3 Since B > A, rebate u/s 87A would be B – A [₹26,780 8,980

– ₹17,800]
Tax on ₹7,17,800 26,780

Less: Rebate u/s 87A 8,980
17,800
TK
Tax Liability (Rounded Off) 18,510
Since tax liability is coming out to be less under the default scheme, Mr. Hardik should not opt
out of the default tax regime.
Question 6
AN
Ananya Gupta, a citizen of India, lives with her family in New York since the year 2001. She visited India
from 21st March, 2023 to 28th September, 2023 to take care of her ailing mother. In the last four years,
she has been visiting India for 100 days every year to be with her mother. She owns an apartment at
New York, which is used as her residence. The expected rent of the house is $32,000 p.a. The value of
one USD ($) may be taken as ₹75. Municipal taxes paid in New York in January, 2023 are $2,000.
She took ownership and possession of her house in New Delhi on 25th March, 2023, for self-occupation,
while she is in India. The municipal valuation is ₹4,20,000 p.a. and the fair rent is ₹4,50,000 p.a. She
SH
paid property tax of ₹22,000 to Delhi Municipal Corporation on 21st March, 2024. She had taken a loan
of ₹16 lakhs @ 10% p.a. from IDBI Bank on 1st April, 2019 for constructing this house and the
construction got completed on 20th March, 2023. No amount has been paid towards principal
repayment so far. The house is vacant for the rest of the year i.e., from October 2023 to March 2024.
She had a house property in Mumbai, which was sold on 28th March, 2023. In respect of this house,
she received arrears of rent of ₹3,00,000 on 4th February, 2024. This amount has not been charged to
tax earlier.
NI
She does not have any income under any other source in India during previous year in 2023-24.
Ananya Gupta wants to opt out of the default tax regime u/s 115BAC(1A) for A.Y. 2024-25.
CA
1. What would be the residential status of Ananya Gupta for A.Y. 2024-25?
CA NISHANT KUMAR 12
AR
c. Deemed resident but not ordinarily resident in India
d. Non-resident
2. Ms. Ananya Gupta can claim benefit of “Nil” Annual Value under section 23(2) in respect of –
a. Her Delhi house
b. Her New York house, since it is more beneficial; her Delhi house will be deemed to be
let out and expected rent would be the annual value.
UM
c. Her Delhi house alone; her New York house will be deemed to be let out and expected
rent would be the annual value.
d. Both her Delhi house and New York house, since benefit of Nil Annual value u/s 23(2)
is available in respect of two house properties.
3. What is the income chargeable under the head “Income from house property” of Ananya
Gupta for A.Y. 2024-25?
a. ₹15,65,000
b. ₹3,09,600
c. ₹1,00,000
TK
d. ₹10,000
4. Assuming that, for the purpose of this question alone, Ananya Gupta has let out her flat in New
York during the six months (April to September) when she is in India, for a sum of $ 6,000 p.m.
Such rent was received in a bank account in New York and then remitted to India through
approved banking channels. What would be the income from house property chargeable to tax
in her hands in India for A.Y. 2024-25?
a. ₹10,000
b. ₹17,85,000
AN
c. ₹17,95,000
d. ₹18,85,000
Solution
1. (d)
We’ll first need to calculate the income from Indian sources of Ananya Gupta to determine her
residential status.
SH
Computation of Income of Ananya Gupta

Particulars ₹
NAV -
Less: Deductions u/s 24
Less: 30% of NAV -
Less: Interest on Loan (See Note) 2,00,000 2,00,000
Income from Self Occupied Property (2,00,000)
Arrears of rent received 3,00,000
NI
Less: Deduction u/s 24 @ 30% 90,000 2,10,000

Income from House Property 10,000
Note - Computation of Interest

Particulars ₹
F.Y. 2019-20 (10% × ₹16,00,000) 1,60,000
F.Y. 2020-21 (10% × ₹16,00,000) 1,60,000
CA
F.Y. 2021-22 (10% × ₹16,00,000) 1,60,000

Pre-Construction Period Interest 4,80,000
This will be allowed in 5 equal instalments.
CA NISHANT KUMAR 13
AR
Amount allowed in P.Y. 2023-24 (₹4,80,000 ÷ 5) 96,000
Interest for P.Y. 2023-24 (10% × ₹16,00,000) 1,60,000
Total Interest for the period 2,56,000
Restricted to 2,00,000
Since her income from Indian sources does not exceed ₹15 lakhs, she would be resident only
if she stays for at least 182 days in India in P.Y. 2023-24. Her duration of stay in P.Y. 2023-24 = 30
UM
+ 31 + 30 + 31 + 31 + 28 = 181 days. Therefore, she is a Non-Resident.
2. (a)
For non-residents, only the income which is accrued/arisen/received or deemed to
accrue/arise/received in India is chargeable to tax. Therefore, only the income from Delhi
house will be taxable. Hence, she can claim NIL NAV only for her Delhi house.
3. (d)
See computation done in part 1.
4. (a)
Since the income from New York property is received in the bank of New York only, it has no
TK
connection with India. It is irrelevant that the income received in New York has been remitted
to India later on.
Question 7
Ram Builders & Developers is the sole proprietorship concern of Mr. Ram. The main business of the
concern is construction, development, and sale of residential and commercial units. Ram Builders &
Developers developed a project named Luxuria Heaven, which has both residential and commercial
AN
units with its own funds. It obtained certificate of completion for the said project with effect from
31/03/2023. Ram sold the majority of its residential units and commercial units in the F.Y. 2023-24.
However, around 30 residential units and 15 commercial units were held by him as stock in trade as on
31.3.2024. During this period, there was a slump in the real estate sector. In order to earn some income
from these units, Ram incidentally let out some of the units held as stock-in-trade. The details of units
constructed, sold and held as stock-in-trade are given hereunder:
Particulars Total Units Units Units Held Units Let Units Actual rent per
SH
Constructed Sold as Stock in Out vacant unit per month

Trade as During P.Y. during the [in respect of let
on 31-03- 2023-24 whole of out units
2024 [(2) – out of (4) P.Y. 2023-24 mentioned in (5)]
(3)] [(4) – (5)]
(1) (2) (3) (4) (5) (6) (7)
Residential 100 70 30 10 20 10,000 p.m.
units
NI
Commercial 40 25 15 5 10 18,000 p.m.

units
140 95 45 15 30
Out of the residential units sold, 5 residential units were sold to his friend, Mr. Gaurav, who is also a
real estate developer, on 15.2.2024, for ₹20 lakhs each. The stamp duty value on the date of sale was
₹23 lakhs each. However, the agreement of sale was entered into on 1.11.2023, on which date the
stamp duty value was ₹22 lakhs. Mr. Ram received ₹1 lakh by way of account payee bank draft on
CA
1.11.2023 from Mr. Gaurav.
CA NISHANT KUMAR 14
AR
1. While computing the total income of Mr. Ram, the income from residential and commercial
units let out during the P.Y. 2023-24 will be taxed under head:
a. Income from house property
b. Profits and gains of business or profession
UM
c. Income from let out residential units will be taxed under the head “Income from house
property” and income from let out commercial units will be taxed under the head
“Profits and gains of business or profession”
d. Income from other source
2. What would be the tax treatment of vacant residential and commercial units held as stock in
trade as on 31.3.2024?
a. The vacant residential units would be deemed to be let out and expected rent would
be deemed as the annual value chargeable to tax under the head “Income from house
TK
property” for A.Y. 2024-25.
b. The vacant units, both residential and commercial, would be deemed to be let out and
expected rent would be deemed as the annual value chargeable to tax under the head
“Income from house property” for A.Y. 2024-25.
c. The annual value of both vacant residential and commercial units would be Nil for A.Y.
2024-25. Hence, no income is chargeable for such units under the head “Income from
house property” for A.Y. 2024-25.
d. Vacant units held as stock-in-trade can never be deemed as let out at any point of time
3. What would be the full value of consideration in respect of sale of units to Mr. Gaurav for the
AN
purpose of computing profits and gains from transfer of units?
a. ₹1,00,00,000
b. ₹1,15,00,000
c. ₹1,10,00,000
d. ₹99,00,000
4. Assume that ₹1 lakh was paid in cash by Mr. Gaurav to Mr. Ram on 1.11.2023 instead of by way
of account payee bank draft, what would be the income chargeable under section 56(2)(x) in
SH
the hands of Mr. Gaurav?

a. ₹15 lakh
b. ₹10 lakh
c. Nil, since the stamp duty value is within the permissible deviation limit
d. Nil, since section 56(2)(x) is not applicable in this case
Solution
1. (a)
NI
In case of house property held as stock in trade by builders, the income from sale of house
properties is taxable under the head PGBP, while the income from letting out of house
properties is taxable under the head Income from House Property.
Therefore, in the present case, the income shall be taxable under the head “Income from House
Property”.
2. (c)
Where the House Property is held as Stock-in-Trade and not let out during the Previous Year,
CA
then NAV shall be treated as NIL for the period of 2 years from the end of F.Y. in which
construction is completed.
CA NISHANT KUMAR 15
AR
In the present case, the construction got completed on 31-03-2023, i.e., in P.Y. 2022-23.
Therefore, for the P.Y. 2023-24, and the P.Y. 2024-25, the NAV of the unsold units shall be treated
as NIL.
3. (a)
As per Section 43CA, if the property held as stock in trade is sold for a consideration, and the
Stamp Duty Value of that property exceeds 110% of the consideration, then the SDV is taken
UM
to be the full value of consideration. In case where the date of registration is different from the
date of agreement, the SDV of the date of agreement can be taken provided some amount is
received by the seller by way of A/c Payee Cheque, or by use of electronic clearance system
through a bank account.
In the present case, Mr. Ram received ₹1,00,000 on the date of agreement, and therefore, the
SDV as on the date of agreement shall be considered. The stamp duty value on the date of
agreement is ₹22,00,000, and the actual sale consideration is ₹20,00,000 per unit. Since the
SDV does not exceed 110% of the consideration, the actual consideration, i.e., ₹20,00,000 will
only be the full value of consideration. Hence, the full value of consideration = ₹20,00,000 × 5
TK
= ₹1,00,00,000.
4. (d)
Since the property is acquired by Mr. Gaurav as stock in trade, section 56(2)(x) won’t be
applicable.
Question 8
AN
For the assessment year 2024-25, Mr. Sonu submits the following information:
Particulars Building at Building at

Chennai (₹) Kochi (₹)
Municipal Valuation 35,000 80,000
Standard Rent 36,000 70,000
Fair Rent 31,000 82,000
Rent Received 38,000 68,000
Municipal taxes paid by tenant Mr. Ramu for building at 3,000 4,000
SH
Chennai and paid by Mr. Sonu for Building at Kochi.

Repairs paid by tenant Mr. Ramu for Chennai building and Mr. 500 18,000
Sonu paid for Kochi building
Land revenue paid 2,000 16,000
Insurance premium paid 500 2,000
Interest on loan borrowed for payment of municipal tax of 200 400
house property
Nature of occupation Let out for Let out for
NI
residence business
Date of completion of construction 01-04-1997 01-07-2009
Mr. Sonu is constructing one more building in Mumbai during the previous year 2023-24. Mr. Raju, a
film director, took on rent the building under construction in Mumbai at ₹5,000 per month for his film
shooting. The construction of the said building would be completed by April 2024. Mr. Sonu is a real
estate developer and letting out properties is not the business of Mr. Sonu. Based on the facts of the
case scenario given above, choose the most appropriate answer to the following questions:
CA
1. Which of the building’s income is chargeable to tax under the head “Income from house
property” in the hands of Mr. Sonu?
CA NISHANT KUMAR 16
AR
a. Building at Chennai only
b. Building at Kochi only
c. Both buildings at Chennai and Kochi
d. All the three buildings at Chennai, Kochi and Mumbai
2. Which of the following payments/expenditure is allowable as deduction while computing
income under the head “Income from house property” incurred in respect of the building at
UM
Chennai and Kochi?
a. Municipal taxes paid by Mr. Sonu and Mr. Ramu
b. Municipal tax, land revenue, insurance premium, interest on loan borrowed for
payment of Municipal tax paid by Mr. Sonu
c. Only municipal tax paid by Mr. Sonu
d. Both Municipal tax and repairs paid by Mr. Sonu
3. Under which head of income, the amount received from Mr. Raju would be chargeable to tax?
a. Income from house property
b. Profits and gains from business or profession
TK
c. Income from other sources
d. Income from house property or Income from other sources, at the option of Mr. Sonu
4. What is the amount chargeable to tax under the head “Income from house property” in the
hands of Mr. Sonu for the P.Y. 2023-24?
a. ₹72,800
b. ₹81,200
c. ₹1,14,800
d. ₹70,700
AN
Solution
1. (c)
When a building is let out, the income is charged under the head “Income from House
Property” irrespective of the purpose for which the building has been let out. Therefore,
income from both the buildings at Chennai and Kochi will be chargeable to tax under the head
“Income from House Property”.
As far as the building at Mumbai is concerned, it is not a house property as it is still under
SH
construction, and therefore, income from letting it out won’t be taxed under the head “Income
from House Property”.
2. (c)
The deduction of municipal taxes paid by the owner is allowed as deduction from the Gross
Annual Value. No other deduction is allowed, because for everything else, the standard
deduction of 30% is allowed u/s 24(a).
3. (c)
NI
The income from letting out the under-construction building will be taxable under the head
“Income from Other Sources” because it cannot be taxed in any of the other four heads.
4. (a)
Computation of Income from House Property

Particulars Chennai Kochi
(i) Municipal Value 35,000 80,000
(ii) Fair Rent 31,000 82,000
CA
(iii) Higher of (i) and (ii) 35,000 82,000

(iv) Standard Rent 36,000 70,000
(v) Expected Rent [Lower of (iii) and (iv)] 35,000 70,000
CA NISHANT KUMAR 17
AR
(vi) Actual Rent Received/Receivable 38,000 68,000
GAV [Higher of (v) and (vi)] 38,000 70,000
Less: Municipal Taxes - 4,000
NAV 38,000 66,000
Less: 30% of NAV 11,400 19,800
UM
Less: Interest on Loan - -
Income from House Property 26,600 46,200
Total Income from House Property = ₹26,600 + ₹46,200 = ₹72,800
Question 9
Mr. Ganesha (a salaried person) has three houses. One in Thane (Maharashtra), second in Jaipur
TK
(Rajasthan) and third in Ratlam (Madhya Pradesh). Details of the flats/houses are as follows:
• Thane flat: 3 BHK flat purchased in April, 2003 for ₹90 lakhs. Afterwards, interior work done in
2006 of ₹15 lakhs. Mr. Ganesha took loan of ₹65 lakhs for purchase of this flat in 2001 and
settled full loan in 2019.
• Jaipur house: Purchased in July, 2019 of ₹62 lakhs and interior work done in September, 2020
of ₹15 lakhs. Loan taken for purchase of this house of ₹15 lakhs in June, 2019. As per interest
certificate, he paid ₹12,00,500 and ₹43,500 towards principal and interest, respectively, during
the P.Y. 2023-24.
AN
• Ratlam House: Purchased in December 2020 for ₹70 lakhs (stamp duty value of ₹65 lakhs). For
acquiring this house, he took loan of ₹40 lakhs from Canara Bank. Loan was sanctioned on
1.8.2020. He pays EMI of ₹38,100 per month. As per interest certificate, for the previous year
2023-24, he paid ₹60,900 and ₹3,96,300 towards principal and interest, respectively.
Thane Jaipur House (Apr-23 to Dec- Ratlam

Particulars
House 23) House
Municipal Taxes paid by Mr. Ganesha 18,574 8,090 6,909
SH
Municipal value (per month) 30,500 6,800 7,200

Fair Rent (per month) 33,000 7,000 7,500
Standard Rent (per month) 32,000 8,000 7,300
Other details are as follows:-
• He has sold Jaipur house on 1st January, 2024 for ₹105 lakhs and invested ₹15 lakh in RECL
bonds issued by the Central Government on 10th August 2024.
• Mr. Ganesha is working in WinDoor Exports Pvt Ltd, Mumbai and self-occupied Thane flat. He
earned salary of ₹22,50,350 for the previous year 2023-24.
NI
• He has no other income from any source for the P.Y. 2023-24.
• He has given Ratlam house on rent for F.Y. 2023-24 to Mr. Pratap on a monthly rent of ₹8,500.
• He has given Jaipur house on rent for the period of April, 2023 to June, 2023 to Mrs. Madhura
Mahto on monthly rent of ₹7,100 and vacant for remaining period from July, 2023 to
December, 2023.
Mr. Ganesha would like to opt out of the default tax regime u/s 115BAC(1A).
CA
Cost inflation index (CII) for the Financial Year (F.Y.) 2019-20 is 289; 2020-21: 301; F.Y. 2023-24: 348.
CA NISHANT KUMAR 18
AR
1. What would be Net Annual Value of each house for the previous year 2023-24?
a. Thane – Nil; Jaipur – ₹13,210; Ratlam – ₹95,091
b. Thane – Nil; Jaipur – ₹54,910; Ratlam – ₹95,091
c. Thane – Nil; Jaipur – ₹21,300; Ratlam – ₹1,02,000
UM
d. Thane – Nil; Jaipur – ₹13,210; Ratlam – ₹80,691
2. What would be income/loss under the head “Income from house property” in the hands of Mr.
Ganesha?
a. Loss of ₹1,67,689
b. Loss of ₹2,86,236
c. Loss of ₹3,20,489
d. Loss of ₹3,63,989
3. How much amount will be carried forward as loss from house property for the subsequent
TK
assessment year 2025-26?
a. ₹3,63,989
b. ₹1,63,989
c. ₹2,00,000
d. ₹1,50,000
4. What would the amount of capital gains chargeable to tax in the hands of Mr. Ganesha during
the previous year 2023-24?
a. Short-term capital gains of ₹13,00,000
b. Long-term capital gains of ₹18,98,962
AN
c. Long-term capital gain of ₹13,00,037
d. Long-term capital gain of Nil, since he is eligible for deduction u/s 54EC in respect of
amount invested in RECL bonds issued by Central Government
5. What would be the gross total income of Mr. Ganesha for the A.Y. 2024-25?
a. ₹22,99,810
b. ₹20,99,810
c. ₹33,00,386
SH
d. ₹38,99,312
Solution
1. (a)
Computation of NAV of Ganesh for A.Y. 2024-25

Particulars Thane Jaipur Ratlam
(i) Municipal Value - 61,200 86,400
NI
(ii) Fair Rent - 63,000 90,000

(iii) Higher of (i) and (ii) - 63,000 90,000
(iv) Standard Rent - 72,000 87,600
(v) Expected Rent [Lower of (iii) and (iv)] - 63,000 87,600
(vi) Actual Rent Received/Receivable - 21,300 1,02,000
GAV [Higher of (v) and (vi)] - 21,300 1,02,000
Less: Municipal Taxes - 8,090 6,909
NAV - 13,210 95,091
CA
W.N. 1 - Calculation of GAV of Jaipur House
CA NISHANT KUMAR 19
AR
Particulars ₹
Expected Rent 63,000
Actual Rent (₹7,100 × 3) 21,300
Vacancy Rent (₹7,100 × 6) 42,600
AR + VR 63,900
GAV (Since AR + VR = ER, GAV = AR) 21,300
UM
2. (d)
Computation of Income from House Property of Ganesh for A.Y. 2024-25

Particulars Thane Jaipur Ratlam
NAV - 13,210 95,091
Less: 30% of NAV - 3,963 28,527
Less: Interest on Loan - 43,500 3,96,300
Income from House Property - (34,253) (3,29,736)
TK
Total loss = ₹34,253 + ₹3,29,736 = ₹3,63,989
3. (b)
Loss from house property to the extent of ₹2,00,000 can be set off against the salary income.
The remaining loss of ₹1,63,989 will be carried forward.
4. (c)
Calculation of Capital Gains

Particulars ₹
Full Value of Consideration 1,05,00,000
AN
Less: Expenses on Transfer -
Net Consideration 1,05,00,000
Less: Indexed Cost of Acquisition (₹62,00,000 × 348 ÷ 289) 74,65,744
Less: Indexed Cost of Improvement (₹15,00,000 × 348 ÷ 301) 17,34,219 91,99,963
13,00,037
Less: Exemption u/s 54EC (Not Available since investment is
done after 6 months) -
Taxable Long Term Capital Gains 13,00,037
SH
5. (c)
Computation of Gross Total Income of Mr. Ganesh for A.Y. 2024-25

Particulars ₹
Income from Salaries
Income from Salaries 22,50,350
22,00,350
NI
Less: Set off of House Property Loss 2,00,000

Income from Salaries (A) 20,00,350

Income from House Property (From Part 2) (3,63,989)
Less: Set off from Salaries 2,00,000
(1,63,989)
CA
Less: Carried Forward 1,63,989

Income from House Property (B) (0)
CA NISHANT KUMAR 20
AR
Capital Gains
Long Term Capital Gains (From Part 4) 13,00,037
Capital Gains (C) 13,00,037
Gross Total Income (A) + (B) + (C) 33,00,386
UM
Question 10
“LUX Enterprise” a proprietorship firm of Mr. Lucifer Mornigstar, a resident individual, in Maharashtra
engaged in business of printing and publishing. The following details pertain to the assets of the
business:
Particulars Date of Date of Put to Amount

Purchase Use
Office building superstructure constructed on 30-09-2023 30-12-2023 1,85,00,000
TK
leased land
BMW M4 convertible car 23-08-2021 25-08-2021 94,80,000
Machineries used in printing and publishing 25-09-2023 15-10-2023 9,12,500
process
Notes:
1. Car is also used for personal purposes; disallowance for personal use may be taken at 20%.
2. Written down value of Plant & Machinery (Depreciable @15%) as on 1.4.2023 is ₹1,45,00,000.
AN
following questions, assuming all the aforementioned assets are purchased through account payee
cheque:
1. What would be the amount of depreciation allowable on plant and machinery (@15%) for the
previous year 2023-24 assuming he opts out of the default tax regime u/s 115BAC(1A)?
a. ₹24,25,938
b. ₹23,34,688
c. ₹24,94,375
SH
d. ₹24,03,125
2. What would be the WDV of plant and machinery (Depreciable @ 15%) as on 1.4.2024?
a. ₹1,29,86,562
b. ₹1,29,18,125
c. ₹1,30,77,812
d. ₹1,30,09,375
3. What would the WDV of Office building superstructure constructed on leased land as on
1.4.2024?
NI
a. ₹1,85,00,000
b. ₹1,66,50,000
c. ₹1,75,75,000
d. ₹1,57,25,000
4. What would be the amount of depreciation allowable on BMW M4 convertible car for the
previous year 2023-24?
a. ₹13,93,560
CA
b. ₹10,27,395
c. ₹8,80,957
CA NISHANT KUMAR 21
AR
d. ₹13,14,156
Solution
1. (b)
Calculation of Depreciation on Plant and Machinery
UM
Particulars ₹
Normal Depreciation on New Machinery (50% × 15% × ₹9,12,500) 68,438
Additional Depreciation on New Machinery (50% × 20% × ₹9,12,500) 91,250
Depreciation on Opening WDV (15% × ₹1,45,00,000) 21,75,000
Total Depreciation 23,34,688
2. (c)
Computation of WDV of Plant and Machinery

Particulars ₹
Opening WDV 1,45,00,000
TK
Add: Purchases During the Year 9,12,500
1,54,12,500
Less: Sales During the Year -
WDV for Depreciation 1,54,12,500
Less: Depreciation (From Part 1) 23,34,688
Closing WDV 1,30,77,812
3. (c)
Computation of WDV of the Office Building

AN
Particulars ₹
Opening WDV -
Add: Purchases During the Year 1,85,00,000
1,85,00,000
WDV for Depreciation 1,85,00,000
Less: Depreciation (50% × 10% × ₹1,85,00,000) 9,25,000
Closing WDV 1,75,75,000
SH
4. (c)
Computation of Depreciation on Car

Particulars ₹
WDV as on 01-04-2021 -
Add: Purchases During the Year 94,80,000
94,80,000
NI
WDV for Depreciation 94,80,000

Less: Depreciation (15% × 80% × ₹94,80,000) 11,37,600
WDV as on 31-03-2022 83,42,400
Less: Depreciation for P.Y. 2022-23 (15% × 80% × ₹83,42,400) 10,01,088
WDV as on 31-03-2023 73,41,312
Less: Depreciation for P.Y. 2023-24 (15% × 80% × ₹73,41,312) 8,80,957
WDV as on 31-03-2024 64,60,355
CA
Question 11
CA NISHANT KUMAR 22
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Mr. X has set up a manufacturing unit in Chittor, Andhra Pradesh on 1st April 2022.
During the previous year 2022-23 and 2023-24, Mr. X has purchased following assets:
Date of Put to Use Asset Amount (₹)

7 Jun 2022 Plant & Machinery “X” 14,75,340
25 Jul 2022 Office Furniture 7,65,400
UM
14 Jan 2023 Plant & machinery “Y” 5,00,000
15 May 2023 Plant & machinery “Z” 8,00,000
He has paid professional fees of ₹35,000 each to Mr. A, Mr. B and Mr. C on 10th September 2023 credited
in the books on the same day, to discuss some legal matter related to business.
The net profit computed in accordance with “Chapter IV-D - Computation of business income” of the
Income-tax Act, 1961 for the previous year 2022-23 is ₹1.2 crore.
Mr. X has 2,000 equity shares of MNO Pvt. Ltd. On 21st October 2023, MNO Pvt. Ltd has bought back
50% shares from its shareholders amounting to ₹13,50,000 which were issued for ₹5,70,000 which
TK
includes ₹1,15,000 towards premium.
1. What would be the amount of depreciation in respect of Plant & Machinery “Y” allowable as
deduction while computing income under the head “Profit & Gains from business or
profession” for the previous year 2023-24?
a. ₹61,875
AN
b. ₹1,11,875
c. ₹69,375
d. ₹63,750
2. What shall be the total amount of depreciation for the previous year 2023-24 allowable as
deduction while computing profits and gains from business or profession?
a. ₹3,77,481
b. ₹3,71,856
c. ₹5,54,607
SH
d. ₹6,04,607
3. Mr. X wanted to know from you, whether tax is required to be deducted on professional fees
paid to Mr. A, Mr. B and Mr. C. If tax has to be deducted, then what would be the rate and
amount of tax to be deducted at source?
a. Yes, TDS amounting to ₹7,875 @7.5% on ₹1,05,000 is to be deducted
b. Yes, TDS amounting to ₹1,575 @1.5% on ₹1,05,000 is to be deducted
c. No, tax is to be deducted, since amount does not exceed the threshold limit
NI
d. Yes, TDS amounting to ₹10,500 @10% on ₹1,05,000 is to be deducted

4. What shall be the amount of tax payable by MNO Private Limited on buy-back of its shares?
a. ₹2,08,500
b. ₹1,81,710
c. ₹3,14,496
d. ₹1,62,240
Solution
CA
1. (b)
CA NISHANT KUMAR 23
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Computation of Depreciation on Plant and Machinery Y
Particulars ₹
For P.Y. 2022-23
Cost 5,00,000
Less: Normal Depreciation (50% × 15% × ₹5,00,000) 37,500
Less: Additional Depreciation (50% × 20% × ₹5,00,000) 50,000 87,500
UM
WDV as on 31-03-2023 4,12,500
Less: Normal Depreciation (15% × ₹4,12,500) 61,875
Less: Additional Depreciation (50% × 20% × ₹5,00,000) 50,000 1,11,875
WDV as on 31-03-2024 3,00,625
2. (d)
1 - Computation of Total Depreciation

Particulars Plant and Machinery Furniture
For P.Y. 2022-23
Normal Depreciation (15% × ₹14,75,340) 2,21,301
TK
Normal Depreciation (50% × 15% × ₹5,00,000) 37,500
Normal Depreciation (10% × ₹7,65,400) 76,540
Additional Depreciation (20% × ₹14,75,340) 2,95,068
Additional Depreciation (50% × 20% × ₹5,00,000) 50,000
Total Depreciation for P.Y. 2022-23 6,03,869 76,540
For P.Y. 2023-24

Normal Depreciation (15% × ₹21,71,471) 3,25,721
Normal Depreciation (10% × ₹6,88,860) 68,886
AN
Additional Depreciation (20% × ₹8,00,000) 1,60,000
Additional Depreciation (50% × 20% × ₹5,00,000) 50,000
Total Depreciation for P.Y. 2023-24 5,35,721 68,886
Total Depreciation = ₹5,35,721 + ₹68,886 = ₹6,04,607
2 - Computation of WDV for Depreciation

Particulars Plant and Machinery Furniture
Opening WDV as on 01-04-2022 - -
SH
Add: Purchases During the Year

Add: Plant and Machinery "X" 14,75,340
Add: Plant and Machinery "Y" 5,00,000
Add: Office Furniture 7,65,400
19,75,340 7,65,400
Less: Sale Proceeds - -
WDV for Depreciation 19,75,340 7,65,400
Less: Depreciation (From 1) 6,03,869 76,540
NI
WDV as on 01-04-2023 13,71,471 6,88,860

Add: Purchases During the Year
Add: Plant and Machinery "Z" 8,00,000
WDV for Depreciation 21,71,471 6,88,860
Less: Depreciation (From 1) 5,35,721 68,886
WDV as on 01-04-2024 16,35,750 6,19,974
3. (d)
As per Section 194J, tax is to be deducted at source @ 10% on professional fees paid, if the
CA
amount of professional fees exceeds ₹30,000. However, if the payer is an Individual/HUF, he is

required to deduct tax at source only if his turnover from business in the preceding previous
CA NISHANT KUMAR 24
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year exceeds ₹1 crore, or the gross receipts from profession in the preceding previous year
exceeds ₹50 lakhs.
In the present case, since the net profit exceeds ₹1 crore in the P.Y. 2022-23, it is obvious that
turnover would be more than this. Therefore, section 194J is applicable in this case. Also, since
the payment exceeds ₹30,000, tax is required to be deducted @ 10%. Therefore, for each
payment of ₹35,000, tax is required to be deducted @ 10%, i.e., ₹3,500. Thus, the total tax
UM
deducted would be ₹3,500 × 3 = ₹10,500.
4. (b)
In case of buyback of shares (whether listed or unlisted) by domestic companies, additional
income-tax @ 20% (plus surcharge @12% and cess @ 4%) is leviable in the hands of the
company. Consequently, the income arising to the shareholders in respect of such buyback of
shares by the domestic company would be exempt under section 10(34A), since the domestic
company is liable to pay additional income-tax on the buy back of shares.
Computation of Tax to be Paid by MNO Pvt. Ltd.
TK
Particulars ₹
Amount paid at the time of buy back 13,50,000
Less: Amount received at the time of issue 5,70,000
Income 7,80,000
Tax @ 20% 1,56,000

Add: Surcharge @ 12% 18,720
1,74,720
AN
Tax 1,81,709
Question 12
ABC & Co. is a partnership firm engaged in the business of sale of footwear. The partnership firm
consists of three partners – A, B & C. A & B are working partners and C is a sleeping partner. The firm
is liable to tax audit under section 44AB of the Act. It has a book profit of ₹11,50,000.
SH
Following payments were made to partners as authorised by the partnership deed:
• Remuneration to A & B - ₹32,000 p.m. to each partner

• Remuneration to C - ₹10,000 p.m.
• Interest on capital @ 19.5% to A & B - ₹18,500 p.a. to each partner
• Interest on capital @ 17% to C - ₹10,540 p.a.
The firm has following brought forward losses of past years:

NI
A.Y. Business Loss Unabsorbed Depreciation Long-Term Capital Loss

2021-22 26,000 17,600 5,300
2022-23 78,000 29,860 -
2023-24 1,05,670 54,180 13,470
CA
1. What amount of interest is allowable as deduction in the hands of firm while computing profits
and gains from business or profession?
a. ₹29,040
CA NISHANT KUMAR 25
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b. ₹22,770
c. ₹47,540
d. ₹30,210
2. What amount of remuneration is not allowable as deduction in the hands of firm while
computing profits and gains from business or profession?
a. ₹1,20,000
UM
b. Nil
c. ₹1,08,000
d. ₹78,000
3. What is the due date of filing of return of income for Mr. A and Mr. C for the A.Y. 2024-25?
a. 31st July 2024 for Mr. C and 30th September 2024 for Mr. A
b. 31st July 2024 for Mr. C and 31st October 2024 for Mr. A
c. 31st October 2024 for both Mr. A and Mr. C
d. 31st October 2024 for Mr. C and 31st July 2024 for Mr. A
4. What would be the income under the head “Profits and gains from business or profession” in
TK
the hands of ABC & Co. for the A.Y. 2024-25?
a. ₹70,690
b. ₹1,72,330
c. ₹51,920
d. ₹1,53,560
Solution
1. (d)
AN
Interest on capital is allowed to the extent of 12% of the capital. Interest on capital is allowed
even to sleeping partner.
Computation of Allowable Interest on Capital

Particulars ₹
Interest on Capital to A @ 19.5% 18,500
Interest on Capital to B @ 19.5% 18,500
Total Interest @ 19.5% 37,000
SH
Capital of A and B (₹37,000 ÷ 19.5%) (A) 1,89,744
Interest on Capital to C @ 17% 10,540

Capital of C (₹10,540 ÷ 17%) (B) 62,000
Total Capital (A) + (B) 2,51,744

Interest on Capital Allowed (12% × ₹2,51,744) 30,209
NI
2. (a)
Remuneration to Partners is allowed to the firm as follows:
On first ₹3,00,000 of the book profits: Higher of ₹1,50,000 or 90% of Book Profit
On the remaining book profits: 60%
Remuneration is allowed only to the working partners.
Computation of Remuneration Not Allowable

Particulars ₹
CA
Remuneration Paid to A and B (Working Partners) (₹32,000 × 2 × 12) 7,68,000

Remuneration Paid to C (Sleeping Partner) (₹10,000 × 12) 1,20,000
Total Remuneration Paid 8,88,000
CA NISHANT KUMAR 26
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Remuneration Allowable to Working Partners:
On first ₹3,00,000 of Book Profits (90% × ₹3,00,000) 2,70,000
On Remaining Book Profits {60% × (₹11,50,000 – ₹3,00,000)} 5,10,000
7,80,000
UM
Since the remuneration paid to working partners is within the allowable limit,
the entire remuneration of ₹7,68,000 shall be allowed.
Since remuneration paid to sleeping partners is not allowed, the amount 1,20,000
disallowed will be
3. (c)
When a person is a partner in a partnership firm that is subject to tax audit u/s 44AB, the due
date of return filing of the partners is also 31st October. Therefore, the due date of return filing
of both the partners A and C will be 31st October.
4. (b)
TK
Computation of PGBP Income of the Firm
Particulars ₹
Book Profit 11,50,000
Less: Allowable Remuneration 7,68,000
3,82,000
Less: Brought Forward Losses (₹26,000 + ₹78,000 + ₹1,05,670) 2,09,670
Profits and Gains from Business or Profession 1,72,330
Notes:
1. Book profit is computed after deduction of allowable interest on capital, so we don’t need
AN
to subtract the interest on capital from the book profit.
2. All the other expenses u/s 30 to 38 are deemed to be allowed while arriving at book profits.
Therefore, the unabsorbed depreciations are deemed to be allowed while arriving at book
profits. Therefore, we don’t need to deduct the unabsorbed depreciation again.
Question 13
SH
Mr. Sarthak (aged 37 years) a share broker, sold a building to his friend Anay, who is a dealer in
automobile spare parts, for ₹120 lakh on 10.11.2023, when the stamp duty value was ₹150 lakh. The
agreement was, however, entered into on 1.9.2023 when the stamp duty value was ₹140 lakh. Mr.
Sarthak had received a down payment of ₹15 lakh by a crossed cheque from Anay on the date of
agreement. Mr. Sarthak purchased the building for ₹95 lakh on 10.5.2018. Further, Mr. Sarthak also
sold an agricultural land (situated in a village which has a population of 5,800) for ₹60 lakhs to Mr. Vivek
on 01.03.2024, which he acquired on 15.06.2015 for ₹45 lakhs. Stamp duty value of agricultural land
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as on 1.3.2024 is ₹65 lakhs.
CII for F.Y. 2015-16; 254; F.Y. 2018-19: 280; F.Y. 2023-24: 348.
1. What is the amount of tax to be deducted by Mr. Anay and Mr. Vivek, if any, on consideration
CA
paid or payable for transfer of building and agricultural land?

a. ₹1,20,000 by Mr. Anay and Nil by Mr. Vivek
b. ₹1,50,000 by Mr. Anay and Nil by Mr. Vivek
CA NISHANT KUMAR 27
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c. ₹1,50,000 by Mr. Anay and ₹65,000 by Mr. Vivek
d. ₹1,20,000 by Mr. Anay and ₹60,000 by Mr. Vivek
2. What amount of capital gains is chargeable to tax in the hands of Mr. Sarthak in respect of
transfer of building?
a. Long-term capital gains of ₹31,92,857
b. Long-term capital gains of ₹27,69,643
UM
c. Long-term capital gains of ₹7,69,643
d. Short-term capital gains of ₹55,00,000
3. Assuming that Mr. Sarthak has other income exceeding basic exemption limit, the tax liability
(excluding surcharge and health and education cess) on transfer of building and agricultural
land, would be
a. ₹5,53,930
b. ₹1,53,930
c. ₹6,38,571
d. ₹16,50,000
TK
4. What amount of income is chargeable to tax in the hands of Mr. Anay in respect of transfer of
building?
a. ₹20 lakh
b. ₹30 lakhs
c. ₹15 lakhs
d. Nil
Solution
AN
1. (b)
As per Section 194IA, when an immovable property (other than agricultural land) is purchased,
the payer is supposed to deduct tax at source @ 1% on the consideration or the SDV whichever
is higher. The provisions of this section are applicable only if both the consideration as well as
the SDV is greater than ₹50 lakhs.
In the present case, since the consideration as well as the SDV is more than ₹50 lakhs, the
provisions of Section 194IA are applicable. SDV on the date of agreement shall not be
considered as the down payment has been made by crossed cheque and not account payee
SH
cheque. Therefore, SDV on the date of registration shall be considered.

Since SDV on the date of registration is greater than the consideration, tax will be deducted on
the SDV on the date of registration.
Therefore, tax will be deducted by Mr. Anay @ 1% of ₹1,50,00,000 = ₹1,50,000.
No tax is required to be deducted by Mr. Vivek, since he has purchased an agricultural land.
2. (a)
Computation of Capital Gains

NI
Particulars ₹
Full Value of Consideration (Note) 1,50,00,000
Less: Expenses on Transfer -
Net Consideration 1,50,00,000
Less: Indexed Cost of Acquisition (₹95,00,000 × 348 ÷ 280) 1,18,07,143
Long Term Capital Gain 31,92,857
Note: Since the SDV exceeds 110% of the consideration, SDV shall be taken to be the full value
CA
of consideration. The SDV on the date of agreement shall not be considered as the amount of
down payment has been paid by crossed cheque and not account payee cheque.
3. (c)
CA NISHANT KUMAR 28
AR
Rural Agricultural Land is not a capital asset. An agricultural land which is situated in an area
with population upto 10,000 is said to be a rural agricultural land. Therefore, the land situated
in the village with population of 5,800 is a rural agricultural land. Therefore, capital gains won’t
arise on the sale of this land.
Long term capital gains are taxed @ 20%. Therefore, the tax on transfer of building would be
20% × ₹31,92,857 = ₹6,38,571.
UM
4. (b)
Section 56(2)(x) would be applicable in this case. Since SDV exceeds 110% of the consideration,
and the difference between the SDV and the consideration exceeds ₹50,000, the difference
between SDV and consideration shall be taxable under the head “Income from Other Sources”.
Therefore, ₹30,00,000 (being ₹1,50,00,000 – ₹1,20,00,000) shall be taxable in the hands of Mr.
Anay under the head “Income from Other Sources”.
TK
Question 14
Mr. Narendra Sharma, aged 54 years, an Indian citizen, carrying on retail business in Dubai. He
frequently visits India for business purpose. Details of his visits in India are as follows:
1. Came to India on 03.12.2018 and left India on 26.04.2019

2. Again came to India on 09.09.2021 and left India on 10.01.2022
3. Again came to India on 27.12.2022 and left India on 20.02.2023
Afterwards he decided to shift permanently in India and closed his business in Dubai. So, he came to
AN
India on 27.11.2023 and joined Indian Company “Cosmos Heritage India Limited” at registered office
in Mumbai from 01.12.2023. From December 2023, he has taken a flat on rent for ₹60,000 per month
from Mr. Sarthak, an Indian resident, and Mr. Sarthak has provided his PAN No. to Mr. Narendra Sharma.
Following details of his salary income earned in India:
• Basic Salary – ₹2,75,675 per month

• COLA (Cost of Living Allowance) (forms part of retirement benefits) – ₹1,20,200 per month
• HRA – ₹1,37,838 per month
SH
• Other Allowances – ₹1,56,000 per month
For the period from April 2023 to November 2023, his business income arising in Dubai is ₹26,00,000
and his turnover for the P.Y. 2022-23 was ₹95,00,000. He is not liable to pay any tax in Dubai. Such
business was controlled from Dubai.
He is active in equity share trading after coming to India. Following are the details of his portfolio:
S. Date of
NI
Sale/ Purchase Company Qty Price per Share (₹) Brokerage

No Purchase/ Sale
1 Purchase First Smile Ltd 10.12.2023 250 203 1.50%
2 Purchase Rainbow Ltd 10.12.2023 50 503 1.50%
3 Purchase Mega Service Ltd 12.12.2023 150 82 1.50%
4 Sale First Smile Ltd 18.12.2023 100 325 1.80%
5 Purchase Mega Service Ltd 15.12.2023 110 110 1.50%
6 Sale Mega Service Ltd 26.12.2023 150 100 1.80%
CA

9 Sale First Smile Ltd 23.03.2024 150 250 1.80%
CA NISHANT KUMAR 29
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10 Sale Mega Service Ltd 26.03.2024 110 110 1.80%
Rainbow Limited declared an interim dividend of 200% on 28.02.2024 (face value of each share is ₹10).
The record date was 31.1.2024.
He opts out of the default tax regime u/s 115BAC(1A).
UM
1. What is the residential status of Mr. Narendra for the previous year 2023-24?
a. Resident
b. Resident and ordinary resident
c. Non-resident
d. Deemed resident
2. Which of the following statements is correct, in respect of dividend paid by Rainbow Ltd. to Mr.
Narendra?
TK
a. Dividend from Rainbow Ltd is exempt in the hands of Mr. Narendra. Hence, no tax is
required to be deducted at source.
b. Dividend from Rainbow Ltd is taxable in the hands of Mr. Narendra but, since the
dividend is less than ₹10,000, no tax is required to be deducted at source.
c. Dividend from Rainbow Ltd is taxable in the hands of Mr. Narendra. Tax of ₹525 is
d. Dividend from Rainbow Ltd is taxable in the hands of Mr. Narendra. Tax of ₹700 is
AN
3. What shall be the TDS liability of Mr. Narendra for rent paid to Mr. Sarthak?
a. There is no TDS liability of Mr. Narendra, since he is a salaried individual.
b. Mr. Narendra is liable to deduct TDS u/s 194-I of ₹6,000 for each month.
c. Mr. Narendra is liable to deduct TDS u/s 194-IB of ₹3,000 for each month
d. Mr. Narendra is liable to deduct TDS u/s 194-IB of ₹12,000 in the month of March 2024.
4. What would be income chargeable to tax under the head “Income from Salaries” in the hands
of Mr. Narendra for the A.Y. 2024-25:
a. ₹26,27,202
SH
b. ₹26,77,202
c. ₹27,08,852
d. ₹26,58,852
5. What is the amount of short-term capital gain chargeable to tax in the hands of Mr. Narendra
on sale of shares for the P.Y. 2023-24:
a. ₹20,202.20
b. ₹21,950
c. ₹19,474,25
NI
d. ₹19,074.95
Solution
1. (d)
An individual, being an Indian citizen, having total income, other than the income from foreign
sources, exceeding ₹15 lakhs during the previous year would be deemed to be resident but not
ordinarily resident in India in that previous year, if he is not liable to tax in any other country
CA
or territory by reason of his domicile or residence or any other criteria of similar nature.
His salary in India is calculated as follows:
CA NISHANT KUMAR 30
AR
Computation of Income from Indian Sources
Particulars ₹
Basic Salary (₹2,75,675 × 4) 11,02,700
Cost of Living Allowance (₹1,20,200 × 4) 4,80,800
HRA (₹1,37,838 × 4) 5,51,352
Less: Exempt: Least of the following:
UM
Less: Actual HRA Received 5,51,352
Less: Rent Paid – 10% of Salary 81,650
Less: [(₹60,000 × 4) – {10% × (₹11,02,700 + ₹4,80,800)}]
Less: 50% of Salary {50% × (₹11,02,700 + ₹4,80,800)} 7,91,750 81,650 4,69,702
Other Allowances (₹1,56,000 × 4) 6,24,000
Taxable Salary 26,27,202
Since his income from Indian sources exceeds ₹15,00,000, and he is not liable to pay tax at
TK
Dubai, he shall be a deemed resident in India.
2. (d)
Dividend income is taxable in the hands of the shareholder under the head “Income from Other
Sources”. Tax @ 10% is deducted at source u/s 194 if the dividend payable exceeds ₹5,000 to
an Individual/HUF.
In the present case, the dividend declared is 200% on the face value of ₹10. Therefore, dividend
per share would be 200% × ₹10 = ₹20. Total dividend = ₹20 × (50 + 200 + 100) = ₹7,000.
Therefore, tax @ 10% would be deducted on ₹7,000. TDS = 10% × ₹7,000 = ₹700.
3. (d)
AN
As per Section 194IB, when an Individual pays rent exceeding ₹50,000 per month, then tax is
to be deducted at source @ 5% on the entire amount at the time of credit/payment of rent for
the last month of the year.
In the present case, since the rent paid is ₹60,000, i.e., more than ₹50,000, tax would have to
be deducted at source @ 5% on the entire amount in the month of March, 2023.
Therefore, TDS = 5% × (₹60,000 × 4) = ₹12,000.
4. (a)
SH
Refer Part 1.
5. (d)
Calculation of Capital Gains

Particulars ₹
First Smile Ltd.
On 100 Shares
Full Value of Consideration (100 × ₹325) 32,500.00
Less: Expenses on Transfer (1.8% × ₹32,500) 585.00
NI
Net Consideration 31,915.00

Less: Cost of Acquisition [100 × {₹203 + (1.5% × ₹203)}] 20,604.50
Short Term Capital Gain (A) 11,310.50
On 150 Shares
CA

Short Term Capital Gain (B) 5,918.25
CA NISHANT KUMAR 31
AR
Mega Service Ltd.
On 150 Shares
UM
Short Term Capital Gain (C) 2,245.50
On 110 Shares
Short Term Capital Gain (D) (399.30)
TK
Short Term Capital Gains (A) + (B) + (C) + (D) 19,074.95
Question 15
Mr. Akshaya Biyani celebrated his 26th birthday on 15th May 2023 and arranged a grand party at
Radisson Blu hotel. On this occasion, he invited his friends, blood relatives and distant relatives to
attend the party. The ceremony was very grand, the feast was also very spectacular. All the
arrangements and decorations were absolutely wonderful. At the end of party, Mr. Akshaya was
AN
awarded by gifts and flower’s bouquet as infra:
Type of
Gifts received from Remarks
Gift
One 22K
Mother She purchased on the same day for ₹37,822
Gold Chain
One 22K
Father Gold He purchased on the same day for ₹56,075
SH
Bracelet
4 Gold She purchased these rings on 15.5.2022 for ₹35,500 each.
Wife
Rings Fair market value on 15th May 2023 is ₹37,429 each.
Sister Painting This painting is made by her. Fair market value is ₹45,000.
Cousin brother (Father’s One Gold
He purchased it on the same day for ₹18,200.
brother’s son) chain
Closest cousins (mother’s
I-20 Car Value of ₹4,10,000
sister’s sons/daughters)
NI
Friends and other distant

Cash ₹1,51,000
relatives
Mr. Akshaya desires to set up a new manufacturing unit with his friend in partnership on 1.12.2023.
For making investment in the firm, he sold following jewellery which he has received on his 26th
birthday celebration as gifts:
• Mother’s gifted Gold Chain for ₹42,150

• Father’s gifted Gold Bracelet for ₹60,180
CA
• Cousin brother’s gifted Gold Chain for ₹20,600
CA NISHANT KUMAR 32
AR
His wife gave him ₹1 lakh as a gift so that he could invest sufficient money in the unit. On 1st December
2023, he invested ₹6,00,000 (including the amount received on sale of above gifts and amount received
from his wife) and his friend invested ₹4,00,000 in the firm.
On 1st February 2024, his wife again gave him ₹1 lakh as a gift to invest such money in the firm and
apart from that he invested ₹50,000 more from his individual savings. On this day, his friend also
invested ₹1,00,000 in the firm.
UM
Since the firm is a manufacturing unit and at initial stage, the firm requires sufficient fund so Mr.
Akshaya sold his wife’s gifted Gold Rings for ₹40,250 each as on 31st March 2024 and he deployed the
funds as partner’s capital in the firm on 1st April, 2024.
1. What is the amount of capital gain taxable in the hands of Mr. Akshaya for P.Y. 2023-24?
TK
a. Short term capital gains ₹10,833
b. Short term capital gains ₹29,833
c. Short term capital gains ₹22,117
d. No, capital gains is taxable in his hands, since he received the capital assets as gift.
2. What is the gift amount not considered as income under section 56(2)(x) for P.Y. 2023-24?
a. ₹8,98,613
b. ₹3,06,813
c. ₹9,16,813
d. ₹7,16,813
AN
3. What is the gift amount taxable in the hands of Mr. Akshaya for P.Y. 2023-24?
a. ₹1,51,000
b. ₹1,69,200
c. ₹5,79,200
d. ₹5,61,000
4. Is any amount taxable in the hands of Akshaya’s wife in respect of the sale of jewellery by Mr.
Akshaya, if yes, what shall be the taxable amount in her hands for P.Y. 2023-24?
SH
a. No
b. Yes; ₹15,284
c. Yes; ₹19,000
d. Yes; ₹11,284
Solution
1. (a)
NI

Particulars ₹
Sale Proceeds of Mother's Gold Chain 42,150
Less: Cost of Acquisition 37,822
Short Term Capital Gains (A) 4,328
Sale Proceeds of Father's Gold Bracelet 60,180

CA
Short Term Capital Gains (B) 4,105
Sale Proceeds of Cousin Brother's Gold Chain 20,600
CA NISHANT KUMAR 33
AR
Short Term Capital Gains (C) 2,400
Short Term Capital Gains (A) + (B) + (C) 10,833

2. (c)
Computation of Gift Amounts Not Considered as Income
UM
Particulars ₹
Mother's Gold Chain (Mother is a relative) 37,822
Father's Gold Bracelet (Father is a relative) 56,075
Wife's Gold Rings (₹37,429 × 4) (Wife is a relative) 1,49,716
Sister's Painting (Sister is a relative) 45,000
Cousin Brother's Gold Chain (Amount does not exceed ₹50,000) 18,200
I-20 Car by cousins (Car is not covered in the definition of movable property) 4,10,000
Wife's investment in firm on 01-12-2023 (Wife is a relative) 1,00,000
Wife's investment in firm on 01-02-2024 (Wife is a relative) 1,00,000
TK
Total 9,16,813
3. (a)
The gift amount taxable in the hands of Mr. Akshaya in the P.Y. 2023-24 is ₹1,51,000 cash
received from friends and other distant relatives.
4. (c)
When a person gifts an asset to his/her spouse, any income generated from that gift is clubbed
in the hands of the transferor.
In the present case, Mr. Akshaya’s wife gifted her husband the gold rings, which she purchased
AN
for ₹35,500 each, i.e., ₹35,500 × 4 = ₹1,42,000. Mr. Akshaya sold these rings for ₹40,250 each,
i.e., ₹40,250 × 4 = ₹1,61,000. Therefore, the income of ₹1,61,000 – ₹1,42,000 = ₹19,000 shall
be clubbed in the hands of Mr. Akshaya’s wife.
Question 16
Mr. Rajesh gifted ₹15 lakhs to his wife, Raavi, on her birthday on 23rd February, 2023. Raavi lent
SH
₹6,00,000 out of the gifted amount to Karuna on 1st April, 2023 for six months on which she received
interest of ₹30,000. The said sum of ₹30,000 was invested in shares of a listed company on 18th October,
2023, which were sold for ₹66,000 on 25th March, 2024. Securities transactions tax was paid on
purchase and sale of such shares. The balance amount of gift was invested on 1st April 2023, as capital
by Raavi in her new business. She suffered loss of ₹22,000 in the business in Financial Year 2023-24.
Raavi is working with a Private company as sales executive at a salary of ₹62,000 p.m. She paid ₹3,500
p.m. towards tuition fees for her daughter Riya studying in St. Thomas School, Mumbai.
NI
Rajesh is working with an MNC on a monthly salary of ₹64,000. He has gifted ₹1,25,000 to Riya on her
13th Birthday. This amount is deposited as 2 years term deposits with SBI bank in her name. On which
interest of ₹11,500 is earned during the previous year 2023-24. Both Mr. Rajesh and Mrs. Raavi pay tax
under section 115BAC.
CA
1. In whose hands, the interest income received from Karuna and interest on fixed deposits in the
name of Riya would be included?
a. both interest income to be included in the hands of Mr. Rajesh
CA NISHANT KUMAR 34
AR
b. both interest income to be included in the hands of Mrs. Raavi
c. interest income from Karuna to be included in the hands of Mrs. Raavi and interest on
two years term deposits to be included in the hands of Mr. Rajesh.
d. interest income from Karuna to be included in the hands of Mr. Rajesh and interest on
two years term deposits to be included in the hands of Mrs. Raavi.
2. In whose hand’s loss from business and capital gains would be included in Assessment Year
UM
2024-25? Assume that capital invested in the business was entirely out of the funds gifted by
her husband.
a. Both loss from business and capital gains would be included in the hands of Mr. Rajesh
b. Both loss from business and capital gains would be included in the hands of Mrs. Raavi
c. Loss from business included in the hands of Mr. Rajesh and capital gains included in
the hands of Mrs. Raavi
d. Loss from business included in the hands of Mrs. Raavi and capital gains included in
the hands of Mr. Rajesh
3. What would be the total income of Mrs. Raavi for the previous year 2023-24?
TK
a. ₹6,88,000
b. ₹7,80,000
c. ₹7,41,500
d. ₹7,90,000
4. What would be total income of Mr. Rajesh for the previous year 2023-24?
a. ₹7,26,000
b. ₹8,09,500
c. ₹8,08,000
AN
d. ₹7,98,000
Solution
1. (d)
When a person transfers some asset to his spouse without consideration, any income earned
from such asset is clubbed in the hands of the transferor.
In the present case, Mr. Rajesh transferred ₹15,00,000 to his spouse, Mrs. Raavi, and she lent
₹6,00,000 out of the gifted amount to Karuna. Therefore, any interest received from Karuna
SH
will be clubbed in the hands of Mr. Rajesh.

The income of minor child is clubbed in the hands of that parent whose total income before
such clubbing is greater. As seen from the computation below, the income earned by Riya will
be clubbed in the hands of Mrs. Raavi.
Computation of Total Income of Mr. Rajesh and Mrs. Raavi

Particulars Rajesh Raavi
NI
Rajesh's Salary (₹64,000 × 12) 7,68,000

Raavi's Salary (₹62,000 × 12) 7,44,000
7,68,000 7,44,000
Less: Standard Deduction 50,000 50,000
Income from Salaries (A) 7,18,000 6,94,000

CA
Income from Business of Mrs. Raavi, clubbed in the hands of Mr. (22,000)
Rajesh (as the business was started from the amount gifted by Mr.
Rajesh)
CA NISHANT KUMAR 35
AR
Less: Set off against Income from other sources 22,000
Profits and Gains from Business or Profession (B) - -
Capital Gains
Full Value of Consideration from sale of shares 66,000
UM
Capital Gains (C) (This won't be clubbed in the hands of Mr. Rajesh, 36,000
as second-generation income is not clubbed.)

Interest Received from Karuna (clubbed in the hands of Mr. Rajesh) 30,000
Less: Set off of business loss 22,000
Income from Other Sources (D) 8,000
Total Income before clubbing of minor child's income 7,26,000 7,30,000
TK
Add: Interest earned by Riya (to be clubbed in the hands of Mrs. Raavi 11,500
as her income exceeds that of Mr. Rajesh) (Exemption u/s 10(32) is
not available u/s 115BAC)
Gross Total Income 7,26,000 7,41,500
Less: Deduction under Chapter VI-A (Not available u/s 115BAC) - -
Total Income 7,26,000 7,41,500
2. (c)
Refer Part 1
3. (c)
AN
Refer Part 1
4. (a)
Refer Part 1
Question 17
Miss Hetal transferred to her husband, Mr. Hemant, a residential property worth ₹45 lakhs located in
SH
Nagpur without any consideration. The expected rent of such property is ₹5 lakhs. Municipal tax of
₹5,000 is paid by Miss Hetal for this property during the previous year 2023-24. Miss Hetal has three
residential properties in Mumbai. The expected rent from the 3 properties situated in Mumbai is ₹10
lakhs, ₹11 lakhs, and ₹12 lakhs respectively. She purchased the properties out of her own funds.
Municipal taxes due are ₹15,000, ₹20,000, and ₹25,000. The same have, however, not been paid this
year in respect of the three properties. The expected rent is less than the standard rent in the case of
all the aforementioned properties. Miss Hetal does not have any income from any other source.
NI
Miss Hetal’s father, aged 58 years, had capital gains of ₹5 crores from the sale of house property. He
reinvested the proceeds from sale in another residential house of ₹4.98 crores and the remaining sale
proceeds were deposited in his savings bank account. He has paid ₹1,50,000 towards LIC premium. He
has no other source of income.
Miss Hetal’s grandfather is aged 81 years and has interest income on fixed deposits of ₹6 lakhs. He has
no other income for the P.Y. 2023- 24. He has to fly to the USA for his treatment of cancer on 31st July,
2024 and his return of income is not filed before his flying to USA.
CA
CA NISHANT KUMAR 36
AR
1. What is the amount of income liable to be taxed in the hands of Miss Hetal under the head
“Income from House Property” for A.Y. 2024-25?
a. ₹7,00,000
b. ₹10,46,500
c. ₹10,50,000
d. ₹13,76,500
UM
2. What would be tax liability of Miss Hetal for the assessment year 2024-25? Compute in a
manner so that her tax liability is minimum.
a. ₹66,300
b. ₹88,400
c. ₹69,650
d. ₹1,31,510
3. Is Hetal’s father required to furnish his return of income in India for the A.Y. 2024-25?
a. No, he is not required, since his income does not exceed basic exemption limit
b. Yes, he is required to furnish return of income on or before 31st July, 2024
TK
c. Yes, he is required to furnish return of income on or before 30th September, 2024
d. Yes, he is required to furnish return of income on or before 31st October, 2024
4. Is Miss Hetal’s grandfather required to pay advance tax during the previous year 2023-24?
a. No, he is not required to pay advance tax, since he is a senior citizen
b. Yes, he is required to pay advance tax, since his tax liability exceeds ₹10,000
c. No, he is not required to pay advance tax, since he is a senior citizen and he is not
having any income under the head “Profits and gains from business or profession”
d. Yes, he is required to pay advance tax, since his total income exceeds basic exemption
AN
limit of ₹5,00,000
Solution
1. (b)
Miss Hetal is the deemed owner of the property transferred to her husband. Any income from
such house property will be taxed in the hands of Miss Hetal. Thus, Miss Hetal has 4 house
properties, and all of them are self-occupied. Two of them shall be considered to be self-
occupied at the option of Miss Hetal, and the remaining two shall be treated as deemed let out
SH
properties. Obviously, the properties whose expected rent is more will be considered to be
self-occupied properties. Therefore, the properties whose expected rent is 11 lakhs and 12
lakhs shall be considered as self-occupied properties, and the income from these properties
will be NIL.
The income from house properties of the remaining two properties is computed as under:
Computation of Income from House Properties

Particulars Nagpur Mumbai
NI
Gross Annual Value (Expected Rent) 5,00,000 10,00,000

Less: Municipal Taxes Paid 5,000 -
Net Annual Value 4,95,000 10,00,000
Less: Standard Deduction @ 30% 1,48,500 3,00,000
Income from House Property 3,46,500 7,00,000
Therefore, income from house property = ₹3,46,500 + ₹7,00,000 = ₹10,46,500.
2. (c)
CA

Particulars ₹
CA NISHANT KUMAR 37
AR
First ₹2,50,000 -
From ₹2,50,000 to ₹5,00,000 (5% × ₹2,50,000) 12,500
From ₹5,00,000 to ₹10,00,000 (20% × ₹5,00,000) 1,00,000
From ₹10,00,000 to ₹10,46,500 (30% × ₹46,500) 13,950
Total 1,26,450
UM
Total Tax Liability 1,31,508
Total Tax Liability (Rounded Off) 1,31,510
Computation of Tax Liability as per Section 115BAC

Particulars ₹
First ₹3,00,000 -
From ₹3,00,000 to ₹6,00,000 (5% × ₹3,00,000) 15,000
From ₹6,00,000 to ₹9,00,000 (10% × ₹3,00,000) 30,000
From ₹9,00,000 to ₹10,46,500 (15% × ₹1,46,500) 21,975
TK
Total 66,975
Total Tax Liability 69,654
Total Tax Liability (Rounded Off) 69,650
3. (b)
Computation of Total Income of Miss Hetal's Father

Particulars ₹
Capital Gains 5,00,00,000
AN
Less: Exemption u/s 54 4,98,00,000
Long Term Capital Gains 2,00,000
Gross Total Income 2,00,000
Less: Deductions under Chapter VI-A (Not available against Long Term Capital -
Gains)
Even though the total taxable income of Miss Hetal’s father is below the basic exemption limit
of ₹2,50,000, he would still be required to file the return of income as his total income before
SH
exemption u/s 54 exceeds the basic exemption limit. The due date for filing the return of
income would be 31st July, 2024.
4. (c)
As per Section 208, a person is obligated to pay advance tax only if the advance tax payable is
₹10,000 or more.
Resident senior citizens who are 60 years or older and have only passive income like rent or
interest, and no income from business or profession, may find it difficult to comply with this
requirement. To make it easier for them, the government has given an exemption to senior
NI
citizens from paying advance tax. Instead, they can pay their tax liability (excluding TDS) by self-
assessment tax at the end of the financial year.
In the present case, since Miss Hetal’s grandfather does not have any income from business or
profession, he is not required to pay advance tax.
CA
Question 18
Ms. Chanchal, aged 45, provides the following data of her gross receipts for the financial year 2022-23
and 2023-24. She is engaged in agency business along with providing services as tarot card reader.
CA NISHANT KUMAR 38
AR
She is generally engaged in cash payments and cash receipts.
F.Y. Receipts from Business (₹) Receipts from Profession (₹) Total Gross Receipts
2022-23 1,05,00,000 47,00,000 1,52,00,000
2023-24 98,00,000 49,00,000 1,47,00,000
She paid an amount of ₹12,00,000 to a contractor for polishing her old furniture in her self-occupied
residential house property on 12.04.2023. Further on 05.06.2023, she has taken services from
UM
renowned interior designer for the same residential house property for which she paid ₹2,50,000.
On 28.05.2023, she sold one commercial property for ₹50,00,000. The stamp duty value on the date of
registration is ₹58,00,000. The value adopted for stamp duty was ₹54,00,000 on the date of agreement
(part payment by account payee cheque was received on the date of agreement). It was purchased for
₹40,00,000 on 28.06.2021. (Cost Inflation Index for F.Y. 2023-24: 348, F.Y. 2022-23: 331).
The brought forward long-term capital loss from unlisted shares of F.Y. 2022-23 is ₹5,50,000.
TK
During the year, Ms. Chanchal incurred a loss of ₹70,00,000 while trading in the agricultural commodity
derivatives (no CTT paid).
Ms. Chanchal wants to opt out of the default tax regime u/s 115BAC(1A) for A.Y. 2023-24.
1. Is Ms. Chanchal liable to tax audit under the Income-tax Act, 1961 for the P.Y. 2023-24?
a. Yes, as the total gross receipts exceeds ₹1,00,00,000
AN
b. No, as the gross receipts from business or profession are below the specified threshold
limits.
c. Yes, as the gross receipts from business exceeds ₹50,00,000
d. Yes, as the gross receipts from profession exceeds ₹25,00,000
2. With respect to payment made to contractor and to the interior designer during the P.Y. 2023-
24, Ms. Chanchal consulted various persons and they have the following views:
1. She is required to deduct tax at source under section 194C and 194J, since her
turnover from business for the previous year 2022-23 exceeds ₹1,00,00,000
SH
2. She is required to deduct tax at source under section 194M on both the payments
3. She is not required to deduct tax at source neither under section 194C nor under
section 194J, since such amounts are paid for personal purposes
4. She is not required to deduct tax at source under section 194M, since payment to
each individual does not exceed ₹50,00,000
Which views are correct?
a. (3) and (4) views are correct
NI
b. (1) view is correct

c. (2) view is correct
d. (1) and (4) views are correct
3. What is the amount and nature of Capital gain chargeable to tax in the hands of Ms. Chanchal?
a. ₹14,00,000 and Short-term capital gain
b. ₹10,00,000 and Short-term capital gain
c. ₹14,01,329 and Long-term capital gain
CA
d. ₹6,01,329 and Long-term capital gain

4. What is the amount of losses which can be carried forward to A.Y. 2025-26, assuming that
business income is ₹45,00,000 and income from profession is ₹25,00,000 for the P.Y. 2023-24?
CA NISHANT KUMAR 39
AR
a. ₹5,50,000 under section 74
b. ₹70,00,000 under section 73
c. No loss is required to be carried forward, since brought forward loss and current year
loss are set-off against current year’s income
d. ₹5,50,000 under section 74 and ₹70,00,000 under section 73
Solution
UM
1. (b)
A person is required to get his books of accounts audited only if his turnover from the business
exceeds ₹1 crore, or gross receipts from profession exceeds ₹50 lakhs.
Therefore, in the present case, books of accounts are not required to be audited.
2. (a)
View (1) is incorrect because the payments are made for personal purposes, and hence liability
to deduct tax at source won’t arise u/s 194C and 194J.
TK
View (2) is incorrect because the liability to deduct tax at source arises u/s 194M if the payment
exceeds ₹50,00,000.
3. (b)

Particulars ₹
Full Value of Consideration 50,00,000
(Since part payment was made on the date of agreement, SDV of the date of
agreement shall be considered. Since the SDV on the date of agreement doesn't
exceed 110% of the consideration, the consideration will only be the FVOC.)
AN
Less: Cost of Acquisition 40,00,000
Short Term Capital Gains (Since the property was transferred within 24 months 10,00,000
from the date of purchase)
4. (a)
Income from Business = ₹45,00,000; Income from Profession = ₹25,00,000. Total income under
the head PGBP = ₹70,00,000. Loss from trading in commodity derivatives can be set off against
this business income as it is not considered to be a speculative activity. Therefore, the loss of
₹70,00,000 can be set off against this income.
SH
The brought forward long-term capital loss on sale of shares cannot be set off against short
term capital gains, and hence will be carried forward. Therefore, the amount to be carried
forward = ₹5,50,000.
Question 19
NI
Mr. Abhishek Seth, aged 42 years, is working as a CEO of Soil Limited. He provides you the following
information for preparation and filing of his income-tax return for the year ended 31st March 2024:
• Salary, allowances and perquisites from Soil Limited - ₹1,35,00,000

• Dividend from ABC Ltd. which was declared in February, 2023 and received in April, 2023 -
₹4,55,000
• Dividend from PRQ Ltd. declared and received in July, 2023 - ₹5,90,000 (Gross)
• Interest income on saving bank account in SBI – ₹24,530
CA
• Long term capital gains on transfer of residential house in Mumbai on 15th December, 2023 -
₹1,73,540
CA NISHANT KUMAR 40
AR
• Short term capital gain on transfer of listed equity shares (STT paid both at the time of transfer
and acquisition) of Ind Ltd. - ₹73,00,000
He also furnished the following details of investment/payments made by him during the P.Y. 2023-24:
1. Three-year post office time deposit - ₹25,000

2. Contribution to PPF - ₹35,000
UM
3. Tuition fees of three children in Bharti Sr. Sec. School in Delhi - ₹20,000 per annum per children
4. Subscription to NHAI redeemable bonds after 5 years on 16th March, 2023 - ₹2,00,000.
Further, his son Mr. Dhaval, aged 15 years, has also earned the following income:
1. Income from a quiz competition - ₹25,000

2. Interest on bank fixed deposit - ₹9,500
Assuming that the tax has been deducted on time, wherever applicable. Mr. Abhishek wants to opt out
of the default tax regime u/s 115BAC(1A).
TK
1. What is the quantum of income of Mr. Dhaval which is to be clubbed with the income of Mr.
Abhishek, if any, assuming that income of Mr. Abhishek is greater than the income of his
spouse?
a. ₹34,500
b. ₹8,000
AN
c. ₹33,000
d. ₹9,500
2. What is the gross total income of Mr. Abhishek for A.Y. 2024-25?
a. ₹2,13,72,530
b. ₹2,14,22,530
c. ₹2,13,64,530
d. ₹2,15,46,070
3. What is the amount of deduction allowable under section 80C to Mr. Abhishek?
SH
a. ₹1,00,000
b. ₹1,20,000
c. ₹95,000
d. ₹75,000
4. What shall be the tax liability of Mr. Abhishek for A.Y. 2024-25?
a. ₹62,67,350
b. ₹61,04,100
NI
c. ₹59,60,050
d. ₹61,45,610
Solution
1. (b)
Income from Quiz Competition won’t be clubbed as it is earned by application of skill by Mr.
Dhaval. Interest income from bank fixed deposit of ₹9,500 shall be clubbed. Exemption u/s
CA
10(32) of ₹1,500 shall also be available, and hence ₹9,500 – ₹1,500 = ₹8,000 shall be clubbed.
2. (a)
CA NISHANT KUMAR 41
AR
Computation of Gross Total Income of Mr. Abhishek
Particulars ₹
Salary, Allowances and Perquisites 1,35,00,000
Income from Salaries (A) 1,34,50,000
UM
Capital Gains
Short Term Capital Gains on transfer of listed equity shares 73,00,000
Long Term Capital Gains on transfer of residential house in 1,73,540
Mumbai
Less: Exemption u/s 54EC 1,73,540 -
Capital Gains (B) 73,00,000
Dividend from ABC Ltd. (Declared in P.Y. 2022-23, so not -
taxable)
TK
Dividend from PRQ Ltd. 5,90,000
Interest on Savings Bank Account 24,530
Interest on Bank Deposit earned by Mr. Dhaval, clubbed (See 8,000
Part 1)
Income from Other Sources (C) 6,22,530
Gross Total Income (A) + (B) + (C) 2,13,72,530
3. (d)
Computation of Deduction Available u/s 80C

Particulars ₹
AN
Three-year post office time deposit (Not available u/s 80C) -
Contribution to PPF 35,000
Tuition fees of two children (₹20,000 × 2) 40,000
Total Deduction u/s 80C 75,000
4. (b)

Particulars ₹
SH
Gross Total Income (Part 2) 2,13,72,530

Less: Under Section 80C (See Part 3) 75,000
Less: Under Section 80TTA 10,000 85,000
Total Income 2,12,87,530
Computation of Tax Liability

NI
Particulars ₹
On Short Term Capital Gains @ 15% (15% × ₹73,00,000) 10,95,000
On Balance Income of ₹1,39,87,530
On First ₹2,50,000 -
From ₹2,50,000 to ₹5,00,000 (5% × ₹2,50,000) 12,500
From ₹5,00,000 to ₹10,00,000 (20% × ₹5,00,000) 1,00,000
From ₹10,00,000 to ₹1,39,97,530 (30% × ₹1,29,87,530) 38,96,259 40,08,759
51,03,759
CA
Add: Surcharge @ 15% 7,65,564

58,69,323
Add: Health and Education Cess @ 4% 2,34,773
CA NISHANT KUMAR 42
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Question 20
M/s Abhinav & sons, a sole proprietorship is engaged in the business of manufacturing pharmaceutical
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products and it had started its business on 20th June 2019. Tax head of M/s Abhinav & sons furnishes
you the following particulars for the year ended 31 March 2024:
• Income under the head PGBP - ₹5,75,22,750

• Interest on fixed deposits (Gross) - ₹12,50,000 [The same was received on 30th April, 2023 after
deduction of tax at source]
• Donation to PM Cares Fund - ₹2,50,000
• Turnover during the previous year 2023-24 - ₹15,50,00,000
TK
M/s Abhinav & sons wants to opt out of the default tax regime u/s 115BAC(1A). It has employed total
150 employees during the P.Y. 2022-23 with an annual increment of 10% in their monthly emoluments.
Details of the same are as under:
Date of No. of Employee Monthly Emoluments Participate in Recognised

Joining Employees Category Per Employee (₹) Provident Fund
01-05-2022 50 Regular 26,500 Yes
01-06-2022 65 Casual 23,000 No
01-07-2022 35 Regular 22,500 Yes
AN
Casual employees do not participate in the recognised provident fund. It has employed further 50
employees during the P.Y. 2023-24. Details of the same are as under:
Date of No. of Employee Monthly Emoluments Participate in Recognised

Joining Employees Category Per Employee (₹) Provident Fund
01-04-2023 20 Regular 21,000 Yes
01-08-2023 30 Regular 26,000 Yes
Emoluments to all the employees are being paid by way of account payee cheque only. No employees
have left the job during P.Y. 2022-23 as well as during P.Y. 2023-24.
SH
1. What is the due date of filing of return of income of M/s Abhinav & sons for A.Y. 2024-25?
a. 31st July, 2024
b. 30th November, 2024
c. 30th September, 2024
NI
d. 31st October, 2024

2. What shall be the amount of deduction available to M/s Abhinav & sons under section 80JJAA
for A.Y. 2024-25?
a. ₹36,38,250
b. ₹15,12,000
c. ₹46,30,500
d. ₹33,84,000
CA
3. What would be the total income of M/s Abhinav & sons for the A.Y. 2024-25?
a. ₹5,70,10,750
b. ₹5,48,84,500
CA NISHANT KUMAR 43
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c. ₹5,57,60,750
d. ₹5,52,64,250
4. What would be the tax payable of M/s Abhinav & sons for the A.Y. 2024-25?
a. ₹2,47,47,810
b. ₹1,94,68,310
c. ₹2,31,92,680
UM
d. ₹2,30,67,680
Solution
1. (d)
Since the turnover exceeds ₹1 crore, M/s Abhinav and Sons are required to get their books of
accounts audited u/s 44AB. Therefore, the due date of filing the return of income is 31 st
October.
2. (a)
TK
Section 80JJAA allows eligible assessee, to whom section 44AB applies and whose gross total
income includes business profits and gains, to claim a deduction of 30% on the additional cost
of employing new employees for a period of 3 assessment years.
Computation of Deduction Available u/s 80JJAA

Particulars ₹
50 Regular employees joined on 01-05-2022 (Note 1) -
65 Casual employees joined on 01-06-2022 (Note 2) -
35 Regular employees joined on 1-07-2022 (₹22,500 × 35 × 9) 70,87,500
20 Regular employees joined on 01-04-2023 (₹21,000 × 20 × 12) 50,40,000
AN
30 Regular employees joined on 01-08-2023 (Note 1) -
Additional Employee Cost 1,21,27,500
Deduction u/s 80JJAA @ 30% 36,38,250
Notes:
1. Since their monthly emoluments exceed ₹25,000, deduction u/s 80JJAA won't be available.
2. Since these are casual employees, deduction u/s 80JJAA won't be available.
3. (b)
SH

Particulars ₹
Profits and Gains from Business or Profession 5,75,22,750
Income from Other Sources (Interest on Fixed Deposit) 12,50,000
Gross Total Income 5,87,72,750
Less: Under Section 80G: PM Cares Fund 2,50,000
Less: Under Section 80JJAA (See Part 2) 36,38,250 38,88,250
NI
Total Income 5,48,84,500

4. (d)
Computation of Tax Payable

Particulars ₹
On First ₹2,50,000 -
From ₹2,50,000 to ₹5,00,000 (5% × ₹2,50,000) 12,500
From ₹5,00,000 to ₹10,00,000 (20% × ₹5,00,000) 1,00,000
CA
From ₹10,00,000 to ₹5,48,84,500 (30% × ₹5,38,84,500) 1,61,65,350

1,62,77,850
CA NISHANT KUMAR 44
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Add: Surcharge @ 37% 60,22,805
2,23,00,655
Add: Health and Education Cess @ 4% 8,92,026
Tax Liability 2,31,92,681
Less: TDS (10% × ₹12,50,000) 1,25,000
Tax Payable 2,30,67,681
UM
Tax Payable (Rounded Off) 2,30,67,680
Question 21
Mr. Kamal, an Indian citizen, aged 61 years, has set-up his business in Canada and is residing in Canada
since 2010. He owns a house property in Canada, half of which is used by him for his residence and half
is given on rent (converted into INR is ₹12,00,000 p.a.).
He purchased a flat in Delhi on 13.10.2020 for ₹42,00,000. The stamp duty value of the flat was
TK
₹35,00,000. He has taken a loan from Canara Bank in India of ₹34,00,000 for purchase of this flat. The
interest on such loan for the F.Y. 2023-24 was ₹3,14,000 and principal repayment was ₹80,000. Mr.
Kamal has given this flat on monthly rent of ₹32,500 since April, 2023. The annual property tax of Delhi
flat is ₹40,000 which is paid by Mr. Kamal, whenever he comes to India to meet his parents. Mr. Kamal
visited India for 124 days during the previous year 2023-24. Before that he visited India in total for 366
days during the period 1.4.2019 to 31.3.2023.
He had a house in Ranchi which was sold in May 2020. In respect of this house, he received arrears of
rent of ₹2,96,000 in February 2024 (not taxed earlier).
AN
He also derived some other incomes during the F.Y. 2023-24 which are as follows:
1. Profit from business in Canada ₹2,75,000

2. Interest on bonds of a Canadian Co. ₹6,20,000 out of which 50% was received in India.
3. Income from Apple Orchid in Nepal given on contract and the yearly contract fee of ₹5,00,000
for F.Y. 2023-24, was received by Kamal in Nepal.
Mr. Kamal has sold 10,000 listed shares @ ₹480 per share of A Ltd., an Indian company, on 15.9.2023,
SH
which he acquired on 05-04-2017 @₹100 per share. STT was paid both at the time of acquisition as
well as at the time of transfer of such shares.
On 31-01-2018, the shares of A Ltd. were traded on a recognized stock exchange as under:
Highest price - ₹300 per share

Average price - ₹290 per share
Lowest price - ₹280 per share
NI
1. What would be the residential status of Mr. Kamal for the A.Y. 2024-25?
a. Resident and ordinarily resident in India
b. Resident but not ordinarily resident in India
c. Non-resident
d. Deemed resident
CA
2. What would be the amount of income taxable under the head “Income from house property”
in the hands of Mr. Kamal for the A.Y. 2024-25?
CA NISHANT KUMAR 45
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a. ₹2,52,200
b. ₹1,38,200
c. ₹9,78,200
d. ₹10,92,200
3. What amount of capital gain would arise in the hands of Mr. Kamal on transfer of shares of A
Ltd.?
UM
a. ₹18,00,000
b. ₹19,00,000
c. ₹20,00,000
d. ₹38,00,000
4. What would be the total income of Mr. Kamal for the A.Y. 2024-25, if he wishes to opt out of
the default tax regime u/s 115BAC(1A)?
a. ₹22,82,200
b. ₹22,68,200
c. ₹22,48,200
TK
d. ₹21,68,200
5. What would be the tax liability (computed in the manner so as to minimize his tax liability) of
Mr. Kamal for the A.Y. 2024-25?
a. ₹1,82,950
b. ₹1,87,110
c. ₹1,80,350
d. ₹1,84,510
Solution
AN
1. (b)
Since Mr. Kaman is an Indian Citizen who visits India during the previous year 2023-24, his
residential status would depend upon his earnings from Indian sources.
Computation of Total Income from Indian Sources

Particulars ₹
SH
Gross Annual Value of Let Out Property (₹32,500 × 12) 3,90,000

Less: Municipal Taxes 40,000
Net Annual Value 3,50,000
Less: Standard Deduction (30% × ₹3,50,000) 1,05,000
Less: Interest on Loan 3,14,000 4,19,000
Income from Let Out Property (A) (69,000)
.
Arrears of Rent Received 2,96,000
NI
Less: Standard Deduction (30% × ₹2,96,000) 88,800

Income Chargeable to Tax (B) 2,07,200
.
Income from House Property (C) = (A) + (B) 1,38,200
.
Capital Gains
Full Value of Consideration (10,000 × ₹480) 48,00,000
Less: Cost of Acquisition:
CA
Less: FMV as on 31-01-2018 (Highest Price) (10,000 × ₹300) 30,00,000

Less: Full Value of Consideration 48,00,000
CA NISHANT KUMAR 46
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Less: Whichever is Lower 30,00,000
Less: Actual Cost of Acquisition (10,000 × ₹100) 10,00,000
Less: Whichever is Higher 30,00,000
Long Term Capital Gains (D) 18,00,000
.
Gross Total Income (C) + (D) 19,38,200
UM
Less: Principal Repayment of Home Loan (80C) 80,000
Since his total income from Indian sources exceeds ₹15,00,000, he would be said to be a
resident if he stays in India for 182 days or more during the previous year; or he stays in India
for 120 days or more in the previous year AND stays in India for 365 days or more during the 4
years immediately preceding the relevant previous year.
In the present case, Mr. Kamal stayed in India for 124 days in the previous year, which exceeds
120 days, AND he stayed for 366 days during the 4 years immediately preceding the P.Y. 2023-
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24. Therefore, he is a resident. When a person who is a citizen of India, or a person of Indian
origin, having total income, other than the income from foreign sources, exceeding ₹15 lakh
during the previous year, has been in India for a period or periods amounting in all to 120 days
or more but less than 182 days in the relevant previous year, he is said to be a resident but not
ordinarily resident.
Therefore, option (b) is the answer.
2. Refer Part 1 above. Option (b) is the answer.
3. Refer Part 1 above. Option (a) is the answer.
4. Total income is as under:
AN
Particulars ₹
Gross Annual Value of Let Out Property (₹32,500 × 12) 3,90,000
Less: Municipal Taxes 40,000
Net Annual Value 3,50,000
Less: Standard Deduction (30% × ₹3,50,000) 1,05,000
SH
Less: Interest on Loan 3,14,000 4,19,000

Income from Let Out Property (A) (69,000)
.
Arrears of Rent Received 2,96,000
Less: Standard Deduction (30% × ₹2,96,000) 88,800
Income Chargeable to Tax (B) 2,07,200
.
Income from House Property (C) = (A) + (B) 1,38,200
NI
.
Capital Gains
Full Value of Consideration (10,000 × ₹480) 48,00,000
Less: Cost of Acquisition:
Less: FMV as on 31-01-2018 (Highest Price) (10,000 × ₹300) 30,00,000
Less: Full Value of Consideration 48,00,000
Less: Whichever is Lower 30,00,000
CA
Less: Actual Cost of Acquisition (10,000 × ₹100) 10,00,000

Less: Whichever is Higher 30,00,000
Long Term Capital Gains (D) 18,00,000
CA NISHANT KUMAR 47
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.
Interest on Bonds of a Canadian Co. (50% Received in India) 3,10,000
Income from Other Sources (E) 3,10,000
.
Gross Total Income (C) + (D) + (E) 22,48,200
UM
Less: Principal Repayment of Home Loan (80C) 80,000
Therefore, option (d) is the answer.
5. Tax Liability as per Normal Provisions:
Computation of Tax Liability under Normal Provisions

Particulars ₹
On Capital Gains {10% × ₹17,00,000 (being the excess of ₹1,00,000)} 1,70,000
On Balance Income of ₹3,68,200 (₹21,68,200 – ₹18,00,000)
TK
First ₹3,00,000 -
From ₹3,00,000 to ₹3,68,000 (5% × ₹68,000) 3,410 3,410
1,73,410
Computation of Income u/s 115BAC

AN
Particulars ₹
Add: Deductions under Chapter VI-A 80,000
Total Income for Section 115 BAC 22,48,200
Computation of Tax Liability under the provisions of Section 115BAC

Particulars ₹
SH
On Capital Gains {10% × ₹17,00,000 (being the excess of ₹1,00,000)} 1,70,000

On Balance Income of ₹4,48,200 (₹22,48,200 – ₹18,00,000)
First ₹3,00,000 -
From ₹3,00,000 to ₹4,48,200 (5% × ₹1,48,200) 7,410 7,410
1,77,410
NI
Clearly, old scheme is better, and the minimum tax liability is ₹1,80,350. Therefore, option (c)
is the answer.
Question 22
Mr. Kamal, aged 45 years, commenced operations of the business of a new three-star hotel in Delhi on
1.4.2023. He incurred capital expenditure of ₹50 lakhs on land in March, 2023 exclusively for the above
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business, and capitalized the same in his books of account as on 1st April, 2023. Further, during the P.Y.
2023-24, he incurred capital expenditure of ₹2 crores (out of which ₹50 lakhs was for acquisition of
CA NISHANT KUMAR 48
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land and ₹1.50 crore was for acquisition of building) exclusively for the above business. The payments
in respect of the above expenditure were made by account payee cheque. The profits from the business
of running this hotel (before claiming deduction under section 35AD) for the A.Y. 2024-25 is ₹85 lakhs.
He has employed 220 new employees during the P.Y. 2023-24, the details of whom are as follows:
No. of Date of Regular/ Total monthly emoluments per
UM
Employees Employment Casual employee (₹)
(i) 40 01-06-2023 Regular 24,000
(ii) 80 01-07-2023 Regular 24,500
(iii) 50 01-07-2023 Casual 25,500
(iv) 30 01-09-2023 Regular 25,000
(v) 20 01-12-2023 Casual 24,000
All regular employees participate in recognized provident fund and their emoluments are paid by
account payee cheque. His gross revenue from the hotel is ₹11 crores. Mr. Kamal has opted out of the
default tax regime under section 115BAC.
TK
Mr. Kamal also has another existing business of running a four-star hotel in Ahmedabad, which
commenced operations twenty years back, the profits from which are ₹140 lakhs for the A.Y. 2024-25
1. Assuming that Mr. Kamal has fulfilled all the conditions specified for claim of deduction under
section 35AD and has not claimed any deduction under Chapter VI-A under the heading "C. -
Deductions in respect of certain incomes", what would be the quantum of deduction under
AN
section 35AD, which he is eligible to claim as deduction for A.Y. 2024-25?
a. ₹250 lakhs
b. ₹200 lakhs
c. ₹100 lakhs
d. ₹150 lakhs
2. What would be the income chargeable/loss under the head "Profits and gains of business or
profession" for the A.Y. 2024-25 in the hands of Mr. Kamal?
SH
a. ₹75 lakhs
b. ₹140 lakhs
c. ₹25 lakhs
d. (₹10 lakhs)
3. Would Mr. Kamal be eligible for deduction under section 80JJAA in the A.Y. 2024-25? If so, what
is the quantum of deduction?
a. No, he would not be eligible for deduction u/s 80JJAA
b. Yes; ₹75,00,000
NI
c. Yes; ₹81,72,000
d. Yes; ₹99,72,000
Solution
1. (d)
To determine the quantum of deduction under section 35AD that Mr. Kamal is eligible to claim
for the A.Y. 2024-25, we need to consider the specified conditions and the nature of
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expenditures eligible under this section. Section 35AD provides a deduction for the whole of
CA NISHANT KUMAR 49
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any expenditure of a capital nature incurred, wholly and exclusively, for the purposes of certain
specified businesses.
In Mr. Kamal's case, the relevant expenditures for the newly started three-star hotel in Delhi
include:
o Capital expenditure incurred during P.Y. 2023-24 amounting to ₹2 crores.
▪ ₹50 lakhs for acquisition of land (not eligible for deduction under section
UM
35AD).
▪ ₹1.50 crores for acquisition of building (eligible for deduction under section
35AD).
The land cost is typically not eligible for deduction under section 35AD, but expenditures
related to the construction or acquisition of a new building for the business can be considered.
Therefore, the eligible expenditure under section 35AD in this case would be the ₹1.50 crores
spent on the acquisition of the building. Hence, the deduction he can claim under section 35AD
for A.Y. 2024-25 is ₹150 lakhs.
So, the correct answer is option (d): ₹150 lakhs
TK
2. (a)
Profits from the new three-star hotel before deduction under section 35AD: ₹85 lakhs.
Deduction under section 35AD for the new hotel: ₹150 lakhs.
The unutilized deduction of ₹65 lakhs (₹150 lakhs – ₹85 lakhs) represents a loss that can be set
off against other business income of the specified business.
Profits from the existing four-star hotel in Ahmedabad are ₹140 lakhs.
After setting off the loss from the three-star hotel:
Net taxable profit from both hotels combined = ₹140 lakhs (profit from the four-star hotel) –
AN
₹65 lakhs (loss from the three-star hotel) = ₹75 lakhs.
Thus, the income chargeable under the head “Profits and gains of business or profession” for
the A.Y. 2024-25 is option (a): ₹75 lakhs.
3. (b)
Since Mr. Kamal’s gross revenue is ₹11 crore, i.e., more than ₹10 crore, he is subject to tax audit
u/s 44AB for A.Y. 2024-25. Therefore, he is eligible for deduction under section 80JJAA since he
is subject to tax audit under section 44AB for A.Y. 2024-25 and he has employed “additional
employees” during the P.Y. 2023-24.
SH
Number of Additional Employees:
Particulars No. of
Workmen
Total number of employees employed during the year 220
Less: Casual employees employed on 1.7.2023 who do not participate in 50
recognized provident fund
Regular employees employed on 1.9.2023 since they have been 30
NI
employed for less than 240 days in the P.Y. 2023-24.

Casual employees employed on 1.12.2023 who do not participate in 20 100
recognized provident fund
No. of “Additional Employees” 120
Additional Employee Cost = (₹24,000 × 10 × 40) + (₹24,500 × 9 × 80) = ₹2,72,40,000
Deduction under section 80JJAA = 30% of ₹2,72,40,000 = ₹81,72,000.
Since Mr. Kamal doesn’t have any income, it’s safe to assume that his gross total income
CA
constitutes only the business income. Therefore, the Gross total income is ₹75 lakhs.
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The deduction u/s 80JJAA is restricted to the gross total income, i.e., ₹75,00,000, as the
deductions from Gross Total Income cannot exceed the Gross Total Income, therefore, total
deduction u/s 80JJAA would be ₹75,00,000 only.
Therefore, option (b) is the correct answer.
UM
Question 23
Mr. Arvind, an Indian citizen, wants to file his return of income for the previous year 2023-24. He
required assistance for which he has approached you. He has shared the following details relevant to
the P.Y. 2023-24.
Mr. Arvind owned a house property in Bangalore and the same was rented out for ₹65,000 p.m. to Mr.
Arjun, a salaried employee. He claims that this was the only income which he earned during the P.Y.
2023-24. However, when you had sought for his bank statement, you observed the following
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information additionally.
There is a credit for ₹23,975 towards income-tax refund which includes ₹5,775 towards interest on
income-tax refund. On 15th August, 2023, the bank statement showed a credit of ₹55,000 which he
claimed to have received as a gift from his grandchildren on his 60th birthday. On further assessment
you were able to understand that Mr. Arvind and his wife had travelled to Mauritius during the P.Y.
2023-24 to spend some time with their son, who is staying in Mauritius. On scrutiny of their passport
and relevant documents you conclude that they had left India on 27th September, 2023 and retuned
on 31st March, 2024. During the 4 years preceding previous year 2023-24, both had stayed in India for
AN
320 days. Prior to that, they had been staying only in India.
1. What is the residential status of Mr. Arvind for the P.Y. 2023-24?
c. Non-resident
SH
d. Deemed resident but not ordinarily resident

2. Is there any requirement to deduct tax at source under section 194-IB on such rent by Mr.
Arjun? If yes, what would be the amount of TDS to be deducted?
a. No, there is no requirement to deduct tax at source under section 194-IB, since Mr.
Arjun is a salaried employee
b. Yes, Mr. Arjun is required to deduct tax at source of ₹39,000 under section 194-IB
c. Yes, Mr. Arjun is required to deduct tax at source of ₹78,000 under section 194-IB
NI
d. No, there is no requirement to deduct tax at source under section 194-IB, since Mr.
Arvind is a non-resident
3. Which of the following statements is correct with respect to advance tax liability of Mr. Arvind
for P.Y. 2023-24?
a. Advance tax liability shall not arise to Mr. Arvind since he is a non-resident
b. Advance tax liability shall not arise, since Mr. Arvind is a resident senior citizen and he
has no income chargeable under the head "Profits and gains of business or profession
CA
c. Advance tax liability shall arise, since he is a non-resident

d. Advance tax liability shall arise, since his tax liability is not less than ₹10,000
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Solution
1. (c)
To determine the residential status of Mr. Arvind for the P.Y. 2023-24, we need to review the
rules specified under the Income Tax Act, 1961, concerning the residential status of an
individual. The residential status determines how a person's income is taxed in India. The
conditions for determining the residential status are:
UM
• Resident: An individual is considered a resident in India if they meet any one of the
following conditions:
o Stay in India for 182 days or more during the relevant previous year, or
o Stay in India for 365 days or more during the 4 years preceding the previous year
and at least 60 days in the previous year.
• Resident but not Ordinarily Resident (RNOR): A resident individual will be treated as RNOR
if they meet any one of the following conditions:
o They have been a non-resident in India in 9 out of the 10 previous years preceding
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the relevant previous year, or
o They have been in India for 729 days or less during the 7 years preceding the
relevant previous year.
• Non-resident: An individual who does not meet the criteria for residency.
Considering the details provided:
• Mr. Arvind and his wife were in India until 27th September 2023 and returned on 31st
March 2024. For the P.Y. 2023-24, the duration they were in India is calculated from 1st
AN
April 2023 to 27th September 2023, and then from 31st March 2024, which sums to 181
days.
• Over the past 4 years (P.Y. 2019-20 to P.Y. 2022-23), they stayed in India for 320 days.
Given this information:
• Mr. Arvind does not meet the first condition for residency as he did not stay in India for
182 days or more during P.Y. 2023-24.
• Mr. Arvind stayed for more than 60 days in the previous year, but he didn’t stay for 365
SH
days in the preceding four previous years.
Thus, given that Mr. Arvind did not fulfill the residency requirement of staying in India for at
least 182 days during the P.Y. 2023-24, or of staying for at least 60 days in the previous year
AND for at least 365 days in the preceding four previous years. Therefore, for the P.Y. 2023-24,
he is considered a Non-Resident. Therefore, option (c) is the answer.
2. (d)
NI
Under section 194-IB of the Income Tax Act, an individual paying rent to a resident landlord is
required to deduct tax at source if the monthly rent exceeds ₹50,000. The section mandates
TDS deduction at the rate of 5% on the rent paid by individuals or HUFs who are not subject to
tax audit under section 44AB.
Since Mr. Arvind is a non-resident, the provisions of Section 194-IB, which apply to payments
made to resident landlords, do not apply here.
Given this, the correct answer is option (d): No, there is no requirement to deduct tax at source
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under section 194-IB, since Mr. Arvind is a non-resident.

3. (d)
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To determine the correct statement regarding the advance tax liability of Mr. Arvind for P.Y.
2023-24, we must consider his residential status, income types, and any exemptions applicable
under the Income Tax Act.
Given that Mr. Arvind is classified as a non-resident for the P.Y. 2023-24, here are the
considerations:
• Advance Tax Requirement: In general, advance tax is payable if the tax liability for the year
UM
exceeds ₹10,000. This applies to both residents and non-residents.
• Income Source: Mr. Arvind's primary source of income is from renting out property. Rent
income from property situated in India is taxable in India, regardless of the taxpayer's
residency status.
• Exemption for Senior Citizens: Typically, resident senior citizens who do not have income
from business or profession are exempt from paying advance tax. However, this exemption
does not apply to non-residents.
Given these points, the statements can be evaluated as:
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a. Advance tax liability shall not arise to Mr. Arvind since he is a non-resident: This statement
is incorrect because being a non-resident does not exempt one from advance tax if the tax
liability exceeds ₹10,000.
b. Advance tax liability shall not arise, since Mr. Arvind is a resident senior citizen and he has
no income chargeable under the head “Profits and gains of business or profession”: This
statement is incorrect as it falsely claims Mr. Arvind is a resident. He is a non-resident.
c. Advance tax liability shall arise, since he is a non-resident: The non-resident status itself is
not a criterion for the arising of advance tax liability. It's the income amount and tax liability
that determine this.
AN
d. Advance tax liability shall arise, since his tax liability is not less than ₹10,000: This is correct
if his tax liability on rental income (or other incomes, including interest on the income tax
refund) exceeds ₹10,000, which is likely given the monthly rent of ₹65,000.
Thus, the correct answer is option (d): Advance tax liability shall arise, since his tax liability is
not less than ₹10,000.
SH
NI
CA
CA NISHANT KUMAR 53

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Case Based MCQs – Direct Tax – May/

1. What is Mr. Shashikant’s residential status for the P.Y 2023-24?

Computation of Total Income

Computation of Total Income

hands of Mr. Shashikant) 3,60,000

From ₹3,00,000 to ₹5,02,000 (5% × ₹2,02,000)

Less: Rebate u/s 87A: Lower of:

Less: Tax Liability 10,100

Profit from the above undertaking 20,00,000

Computation of Total Income

Income from House Property

• 50% of land is used for agricultural purpose

b. ₹1,75,000 as business income

asked the agricultural income with respect to sale of cotton.

Computation of Business Income and Agricultural Income of Mr. Kishan

Agricultural Income 2,62,500

Computation of Gross Total Income

Calculation of Taxable Perquisites

Issue of Sweat Equity Shares [(₹350 – ₹250) × 400] 40,000

Computation of Income from Salaries of Mr. Rajesh Sharma

Computation of Total Income

Computation of Tax Liability

From ₹2,50,000 to ₹5,00,000 (5% × ₹2,50,000) 12,500

Computation of Total Income as per Normal Provisions

Less: Section 80D: Health Insurance Premium 24,000 1,74,000

Computation of Tax Liability as per Normal Provisions

Add: Health and Education Cess @ 4% 850

Computation of Total Income as per Section 115BAC

Add: Deductions under Chapter VI-A 1,74,000

Step 3 Since B > A, rebate u/s 87A would be B – A [₹26,780 8,980

Tax on ₹7,17,800 26,780

Computation of Income of Ananya Gupta

Less: Deduction u/s 24 @ 30% 90,000 2,10,000

Note - Computation of Interest

F.Y. 2021-22 (10% × ₹16,00,000) 1,60,000

Constructed Sold as Stock in Out vacant unit per month

Commercial 40 25 15 5 10 18,000 p.m.

1.11.2023 from Mr. Gaurav.

the hands of Mr. Gaurav?

Particulars Building at Building at

Chennai and paid by Mr. Sonu for Building at Kochi.

Computation of Income from House Property

(iii) Higher of (i) and (ii) 35,000 82,000

Total Income from House Property = ₹26,600 + ₹46,200 = ₹72,800

Thane Jaipur House (Apr-23 to Dec- Ratlam

Municipal value (per month) 30,500 6,800 7,200

Computation of NAV of Ganesh for A.Y. 2024-25

(ii) Fair Rent - 63,000 90,000

W.N. 1 - Calculation of GAV of Jaipur House

Computation of Income from House Property of Ganesh for A.Y. 2024-25

Calculation of Capital Gains

Computation of Gross Total Income of Mr. Ganesh for A.Y. 2024-25

Less: Set off of House Property Loss 2,00,000

Income from House Property

Less: Carried Forward 1,63,989

Gross Total Income (A) + (B) + (C) 33,00,386

Particulars Date of Date of Put to Amount

Calculation of Depreciation on Plant and Machinery

Computation of WDV of Plant and Machinery