PGBP Mock Test IGP-CS CA Vivek Gaba

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1 1. A Company purchased plant and machinery for Rs. 2 Crores for a specified business and claimed deduction under section 35AD. However the very next year the machinery purchased put to use for unspecified business. Calculate taxable amount in hands of companya) Rs. 2 Crores b) Rs. 1.7 Crores c) Rs. 0.3 Crore d) None of the above. 2. From the following figures, you are required to ascertain the depreciation allowed in the assessment year WDV as on (Machinery) 5,00,000 Additions during the year 6,00,000 Sale during the year 12,00,000 Rate of depreciation 15% a) 75,000 b) 1,65,000 c) 15,000 d) Nil 3. Income of non-residents from shipping business under section 172 is rate of the carriage received in India on presumptive basis a) 2.5% b) 5% c) 7.5% d) 10% 4. From the following figures, you are required to ascertain the depreciation allowed in the assessment year WDV as on (Building) 5,00,000 Additions during the year 6,00,000 Sale during the year 4,00,000 Rate of depreciation 10% a) 70,000 b) 50,000 c) 1,10,000 d) Nil 5. Presumptive income of resident from the business of under section 44AD shall be rate of a) 8% b) 5% c) 7.5% d) 10% 6. Long-term capital gains on transfer of bonds/ GDR purchased in foreign currency is rate of under section 115AC a) 5% b) 10% c) 7.5% d) 20% 7. Income generated by off shore funds is taxable under section 115AB is a) 5% b) 10% c) 15% d) 20% 8. Where the entire block of the asset is sold for a price more than the opening W.D.V. and Cost of asset, if any, acquired during the year, the excess amount shall be subject to: a) Balancing charge b) Short-term capital gain c) LT or STCG depending upon the period for which block is held d) Any of the above 9. Preliminary expenses incurred are allowed deduction in: a) 10 equal instalments b) 5 equal instalments c) 8 equal instalments d) full 15. Depreciation allowance charged on intangibles (know-how, patent etc.) % of WDV a) 15% b) 25% c) 20% d) 30%

2 16. An assessee paid an amount of ` 10,00,000 to a research association having an object the undertaking of scientific research. The research is not related to his business. What amount of deduction shall be allowed under section 35(1)(ii) a) ` 17,50,000 b) Nil c) ` 15,00,000 d) ` 12,50, Deduction under section 35CCC is allowed in respect of a) expenditure on agricultural extension project notified by Board b) expenditure on skill development project notified by the Board c) any of the above d) none of the above 18. What is the amount of deduction allowed under section 35CCD? a) 150 % of the expenditure b) 200 % of the expenditure c) 175 % of the expenditure d) 125 % of the expenditure 19. If an amount of ` 1,00,000 is incurred by the assessee on skill development project notified by the Board, deduction of. is allowed under section a) ` 1,00,000, 35CCC b) ` 1,50,000, 35CCD c) ` 1,50,000, 35CCC d) ` 2,00,000, 35CCD 20. Deduction under section 35(2AA) is allowed for an amount equal to a) 175 % of the expenditure b) 200 % of the expenditure c) 150 % of the expenditure d) 125 % of the expenditure 21. An assessee paid an amount of ` 5,00,000 to IIT for conducting scientific research, what amount of deduction shall be allowed and under which section? a. ` 5,00,000, 35CCC b) ` 7,50,000, 35(2AA) c) ` 10,00,000, 35(2AA) d) ` 10,00,000, 35CCD 22. What is the amount of deduction available under section 35(2AB)? a. 175 % of the expenditure b) 200 % of the expenditure c) 150 % of the expenditure d) 125 % of the expenditure 23. Deduction of expenditure under section 35D is allowed in how many years a. four successive previous years b) ten successive previous years c) five successive previous years d) infinite number of years 24. The maximum penalty for failure to get accounts audited u/s 44AB or furnish audit report along with the return of income is a) ` 1,25,000 b) ` 1,20,000 c) ` 1,50,000 d) ` 1,00, If an asset is put to use for less than. days in the previous year, the depreciation is charged at... of normal rates. a) 90 days, 75% b) 180 days, 60% c) 180 days, 50% d) 100 days, 50% 26. M Ltd. purchased goods on credit from N Ltd. on 7 th May 2016 for ` 86,000 for which payment of ` 15,000 is made in cash on 12 th May; ` 30,000 by bearer cheque on 30 th May; & ` 41,000 by account payee cheque on 13 th June. The amount of disallowance u/s 40A(3) is a) ` 15,000 b) ` 30,000 c) Nil d) ` 86,000

3 27. A person carrying on Profession is required to get his accounts audited by a Chartered Accountant if his gross receipts from business for the previous year exceed a) ` 1,00,00,000 b) 50,00,000 c) ` 40,00,000 d) ` 60,00, Which of the following income is not chargeable as income of business or profession? a) Profits and gains of business carried by an assessee during the previous year b) Income derived by a trade, professional or similar association from specific services performed for its members c) Income from sale of house property d) Salary received by a partner of a firm from the firm in which he is a partner 29. If a new machinery is purchased on and put to use for the purpose of business on , Normal depreciation would be allowable at the rate of: a) 7.5 % b) 15 % c) 10 % d) 20 % 30. Financial statement of A on reveals that the following expenses were due during year ended but have been paid after : Employer s contribution to provident fund: ` 55,000 (` 25,000 paid on , ` 10,000 paid on and ` 20,000 paid on ) The due date of filing return is What would be the deduction for AY ? a) ` 55,000 b) ` 35,000 c) ` 10,000 d) ` 45, M owns the following commercial vehicles: (i) 2 light commercial vehicles: one for 9 months and two days and the other for 12 months (ii) 2 heavy good vehicles: one for 6 months & 25 days and other for 11 months & 12 days. (iii) 2 medium goods vehicles: one for 6 months and the other for 8 months and 15 days Compute the income from business of M if he opts for the scheme under section 44AE. a) ` 3,90,000 b) ` 4,20,000 c) ` 4,05,000 d) ` 3,90, M owns 2 machineries eligible for 15%. WDV of these machines as on was ` 25,000 and ` 40,000 respectively. No other asset was acquired in this block during year. One of these machines was sold during previous year for ` 75,000. Compute capital gain. a) Short term capital gain of ` 10,000 b) Short term capital loss of ` 10,000 c) Long-term capital gain of ` 10,000 d) None of the above d) No capital gain as depreciation would be allowed on one of the machines left with M 33. For an industrial undertaking fulfilling the conditions, additional depreciation in respect of a machinery costing ` 10 lakh acquired and installed on November 3, 2016 is a) `75,000 b) ` 1,50,000 c) ` 1,00,000 d) None of the above 34. An asset which was acquired for ` 5,00,000 was earlier used for scientific research. After the research was completed, the machinery was brought into the business of the assessee. The actual cost of the asset for the purpose of inclusion in the block of asset shall be : a) ` 5,00,000 b) Nil c) Market value of the asset on the date it was brought into business d) None of the above

4 35. Weighted deduction of 200 % for in-house research u/s 35(2AB) in some cases shall be allowed for the purchase of: a. any assets (B) any assets other than land (C) any assets other than land and buildings (D) Any of the above 36. Brought forward unabsorbed capital expenditure on scientific research can be carried forward: a. for any number of years (B) for 8 years (C) for 10 years (D) for 4 years 37. If the income of a business before claiming capital expenditure on scientific research is `50,000 and the capital expenditure incurred on scientific research related to the business of the assessee is `80,000, then `30,000 shall be: a. business loss b. unabsorbed capital expenditure on scientific research c. none of these two 38. Where an electricity company charging depreciation on straight line method on each asset separately, sells any asset for a price less than the opening W.D.V. the balance amount shall be treated as: a. short-term capital loss (B) terminal depreciation (C) written down value (D) long term capital loss 39. Where an assessee is carrying on a specified business referred to in section 35AD, he shall be allowed deduction : a. Only for revenue expenditure b. Both the revenue and capital expenditure c. Both for revenue and capital expenditure other than goodwill, land and financial instruments. d. Both for revenue and capital expenditure other than land, building and good will 40. Where the payment of an expenditure claimed as deduction by any assessee carrying on business or profession other than who is in transport business exceeds Rs 20,000, it should be paid by: a. Crossed Cheque/draft b. Account Payee cheque/account payee draft c. Account payee cheque d. Any mode other than cash 41. Which of the following taxes are allowed as deduction while computing the business income a. Wealth Tax (B) Income Tax (C) Sales Tax & Securities transaction tax (D) none of the above 42. In case of non-resident, who is engaged in the business of operation of aircraft, his income shall be presumed to be: a. 7 ½ % of certain amount (B) 5 % of certain amount (C) 10 % of certain amount (D) None of the above 43. As per presumptive income scheme under section 44AE, the presumed income shall be: a. Rs.7500 p.m. or part of month per goods carriage

5 b. Rs.5,000 p.m. or part of month per heavy goods vehicle and Rs.4,500 p.m. or part of month per vehicle other than heavy goods vehicle c. Rs.3,500 p.m. per heavy goods vehicle; Rs.3,150 p.m. for medium goods vehicle and Rs.2,000 p.m. per light commercial vehicle d. None of the above 44. Remuneration paid to working partner shall be allowed as deduction to a firm: a. in full (B) subject to limits specified in section 40(b) (C) none of these two (D) none of the above 45. The business income of a company assessee before claiming deduction of revenue and capital expenditure is Rs.6,00,000. The revenue and capital expenditure incurred during the year are Rs.7,00,000 and Rs.10,00,000 respectively. The unabsorbed expenditure on family planning in this case shall be: (A) Rs.3,00,000 (B) Rs.11,00,000 (C) Rs.2,00,000 and Rs.1,00,000 shall be business loss (D) None of the above 46. Expenditure incurred on prospecting, etc., of minerals shall be allowed as deduction in: a. 5 equal instalments (B) 10 equal instalments (C) Full (D) None of the above 47. In the case of non-company assessee, the total preliminary expenses incurred are allowed deduction to the extent of: a. 2 % of the cost of the project (B) 5 % of the cost of the project (C) 10 % of the cost of the project (D None of the above 48. Export incentives received by an assessee are: a. exempt (B) taxable u/h PGBP under section 28 (C) exempt up to certain limits (D) taxable under head Salary 49. W.D.V. of block of 15% as on is `5,00,000. An asset amounting to `1,00,000 was acquired on and put to use on During the previous year a part of the block is sold for `5,40,000. The depreciation to be allowed for this block is: (A) `9,000 (B) `4,500 (C) `5,000 (D) Nil 50. If in the above case, this part of the block is sold for `4,80,000 instead of `5,40,000, the depreciation allowed shall be: a. `10,500 (B) `18,000 (C) `9,000 (D) Nil 51. If the income of a business before claiming capital expenditure on scientific research is ` 50,000 and the capital expenditure incurred on scientific research related to the business of the assessee is `80,000, then ` 30,000 shall be: (A) business loss (B) unabsorbed capital expenditure on scientific research (C) none of these two (D) any of the above 52. If donation is made to a National Laboratory or a University or IIT with the specific direction that scientific research should be for an approved programme, the amount of deduction

6 shall be: (A) 50 % of the donation so made (C) 125 % of the donation so made (B) 100 % of the donation so made (D) 200 % of the donation so made 53. An assessee paid an amount of ` 5,00,000 to IIT for conducting scientific research, what amount of deduction shall be allowed and under which section? (A) ` 5,00,000, 35CCC (B) ` 7,50,000, 35(2AA) (C) ` 10,00,000, 35(2AA) (D) ` 10,00,000, 35CCD 54. What is the amount of deduction available under section 35(2AB)? (A) 175 % of the expenditure (C) 150 % of the expenditure (B) 200 of the expenditure (D) 125 of the expenditure 55. Naveen contributed a sum of ` 30,000 to an approved institution for research in social science, which is not related to his business. The amount of deduction eligible u/s35 would be: a) ` 30,000 b) ` 45,000 c) ` 37,500 d) No deduction as it is unrelated to his business 56. Under the Income tax Act 1961, depreciation on machinery is charged on: a) purchase price of the machinery b) market price of the machinery c) written down value of the machinery d) All of the above 57. Under section 44AB, specified date means of the assessment year. a) 30 th Sep of AY b) 31 st July of AY c) 30 th Sep of PY d) 30 th Nov of AY 58. Depreciation allowance charged on intangibles (know-how, patent etc.) % of WDV a) 15% b) 25% c) 20% d) 30% 59. Rate of depreciation charges on fully temporary wooden structure for the AY is: a) 5% b) 10% c) 100% d) none of the above 60. For an assessee engaged in business and profession, any compensation received for not producing CFC and HCFC from Govt. of India under multilateral fund of Montreal Protocol a. is taxable under head Other Sources b) is taxable under head PGBP c) is not taxable under head PGBP d) None of the above 61. When shall depreciation be restricted to 50% of depreciation allowed? a. If asset is put to use for less than 180 days in any year b. If asset is put to use for less than 180 days in year of acquisition c. If asset is put to use for less than 200 days in year of acquisition d. None of the above 62. An assessee paid an amount to a research association having an object the undertaking of scientific research. The research is related to his business. What amount of deduction shall be allowed under section 35(1)(ii) a. 175% of the amount paid b. Nil, since research is related to the business of the assessee c. 125% of the amount paid d. None of the above

7 63. If assessee purchases land and building through composite agreement, cost of the land is. and that of building is.. a. not allowable as deduction, allowed as deduction u/s 35(1)(iv) b. allowed as deduction u/s 35(1)(iv), allowed as deduction u/s 35(1)(iv) c. not allowable as deduction, not allowable as deduction d. allowed as deduction u/s 35(1)(iv), not allowable as deduction 64. M owns 2 machineries eligible for 15%. WDV of these machines as on was ` 25,000 and ` 60,000 respectively. No other asset was acquired in this block during year. One of these machines was sold during previous year for ` 75,000. Compute capital gain. a) Short term capital gain of ` 10,000 b) Short term capital loss of ` 10,000 c) Long-term capital gain of ` 10,000 d) No capital gain as depreciation would be allowed on one of the machines left with M 65. Assessee has an asset on which deduction is claimed under section 35AD. The asset is sold during the previous year. The sum received shall be taxable under head a) Capital gain since an asset is sold b) PGBP c) Other sources d) exempt from tax 66. Depreciation under section 32(1)(ii) is allowed as per SLM method. Is the statement valid? a) Valid, depreciation is allowed as per SLM method b) Invalid, depreciation is allowed as per WDV method c) Invalid, depreciation can be claimed as per any method of depreciation d) None of the above 67. An assessee purchased a machinery and plant and the same was installed in office premises, residential accommodation and guest house. He contends that additional depreciation shall be allowed on same. Is the contention of assessee correct? a) Valid b) Invalid, no additional depreciation shall be allowed c) partly valid d) None of the above 68. To avail deduction under section 35AC, donation must be paid to a. Public sector company not carrying out eligible/ approved project or scheme b. Local authority carrying out not eligible/ approved project or scheme c. Institution approved by government carrying out eligible/ approved project or scheme d. Any of the above 69. Which of the following expenditure on scientific research is not allowed as deduction? a) Revenue expenses incurred during the previous year b) Revenue expenses on payment of salary to employees engaged in scientific research and purchase of material used in scientific research incurred during three years immediately preceding the commencement of business c) Capital expenditure incurred on scientific research during the year related to the business d) Expenditure incurred on acquisition of land during the year for scientific research 70. Under the head Business or Profession, the method of accounting which an assessee can follow shall be

8 a) Mercantile system only b) Cash system only c) Mercantile or cash system only d) Hybrid system 71. Income under head PGBP shall be computed as per a. provisions contained in Section 30 to 43D b) provisions contained in Section 30 to 36 c) provisions contained in Section 30 to 4 d) None of the above 72. Deduction of how much amount is allowed under section 35(1)(i) a. 100 % b) 150 % c) 125 % d) 175 % 73. B Ltd. is getting demerged to form a new company, V Ltd. An expense of ` 5,00,000 is incurred by B Ltd. how much deduction shall be allowed to B Ltd for this year and future year? a. B Ltd. shall be allowed deduction of ` 1,00,000 for this year and future years b. B Ltd. shall be allowed deduction of ` 1,00,000 for this year and no deduction in future year since B Ltd. does not exist c. Nil during this year and future year d. None of the above 74. An assessee who has a block of ` 100 lakh of plant and machinery. He sold an asset of the block for ` 120 lakh, no asset were acquired during the year. On what amount should he charge depreciation and what shall be the amount of capital gain. a. Nil, 10 b) (20), Nil c) 20, Nil d) Nil, M Ltd. purchased goods on credit from N Ltd. on 7 th May 2016 for ` 1,06,000 for which payment of ` 25,000 is made in cash on 12 th May; ` 30,000 by bearer cheque on 30 th May; & ` 51,000 by account payee cheque on 13 th June. The amount of disallowance u/s 40A(3) is a) ` 55,000 b) ` 30,000 c) 25,000 d)1,06, A person carrying on business is required to get his accounts audited by a Chartered Accountant if his gross receipts from business for the previous year exceed a) ` 1,00,00,000 b) ` 25,00,000 c) ` 40,00,000 d) ` 60,00, Financial statement of A on reveals that the following expenses were due during year ended but have been paid after : Employer s contribution to provident fund: ` 75,000 (` 45,000 paid on , ` 10,000 paid on and ` 20,000 paid on ) The due date of filing return is What would be the deduction for AY ? a) ` 55,000 b) ` 35,000 c) ` 10,000 d) ` 45, If an assessee carries on any Scientific Research related to his business, he shall be allowed deduction under section 35 on account of a) Revenue expenditure b) Capital expenditure c) Partially as Revenue expenditure and partially as Capital expenditure d) Both Revenue and Capital expenditure except expenditure incurred on acquisition on land 79. Brought forward unabsorbed capital expenditure on Scientific Research can be carried forward for a) any number of years b) 8 years c) 10 years d) 4 years

9 80. If donation is made for Scientific or Social or Statistical Research, such research a) must be related to the business of the assessee b) may or may not relate to business of the assessee c) either of above d) none of the above 81. Expenditure incurred for obtaining licence to operate Telecommunication Services shall be: a) 10 equal installments b) 8 equal installments c) in equal installments over the period for which licence remains in force d) 14 equal installments 82. MNO Ltd. paid ` 1,10,00,000 during the P.Y for acquiring the telecommunication rights which were effective for 11 years. It commenced the business of operating the telecommunication service with effect from previous year MNO Ltd. shall be entitled to a deduction of: a) ` 10 Lakhs w.e.f. previous year b) ` 10 Lakhs w.e.f. previous year c) ` 10.5 Lakhs w.e.f. previous year d) None of the above 83. Preliminary expenses incurred are allowed deduction in: a) 10 equal installments b) 8 equal installments c) 5 equal installments d) None of the above 84. In case of a Non-corporate assessee, the total preliminary expenses incurred are allowed as deduction to the extent of: a) 2% of total cost of project b) 10% of total cost of project c) 5% of total cost of project d) None of the above 85. In case of a Corporate assesse, the total preliminary expenses incurred are allowed as deduction to the extent of: a) cost of the project b) aggregate capital employed c) any of the above d) None of the above 86. Electricity companies are allowed depreciation on the basis of a) block of assets b) each asset separately unless the assessee opts for block of asset system in the first year of its commencement c) Any of the above d) None of the above 87. The maximum deduction to be allowed under Tea/ Coffee/ Rubber Development Account shall be: a) Actual amount deposited in the scheme b) 20% of profits of such business c) 20% of the amount deposited in the scheme d) 40% of profits of such business 88. An assessee is engaged in the business of growing and manufacturing tea in India, the agricultural income in this case shall be: a) 40% of income from such business b) Market value of agricultural products minus expenses on cultivation of such products

10 c) 60% of income from such business d) None of the above 89. An assessee is engaged in the business of growing and curing of coffee, the agricultural income will be: a) 65% of income from such business b) Market value of agricultural products minus expenses on cultivation of such products c) 75% of income from such business d) 60% of income from such business 90. For person carrying on profession, tax audit is compulsory, if the gross receipts of the previous year exceeds a) ` 50 Lakhs b) ` 10 Lakhs c) ` 25 Lakhs d) ` 40 Lakhs 91. In case an assessee is engaged in the business of plying, hiring or leasing goods carriage, presumption income scheme u/s 44AE is applicable if the assessee is the owner maximum of: a) 8 goods carriage b) 12 goods carriage c) 10 goods carriage d) any number of goods carriage 92. If the assessee opts for presumptive income scheme u/s 44AD or 44AE, the assessee shall: a) not be entitled to any deduction u/s 30 to 37 b) be entitled to any deduction u/s 30 to 37 c) not be entitled to any deduction u/s 30 to 37 Include on account of interest on capital and loan from a partner and remuneration to working partner as per section 40(b) d) not be entitled to any deduction u/s 30 to 37 Except on account of interest on capital and loan from a partner and remuneration to working partner as per section 40(b) For Any Doubt you can whatsapp or message at Love CA Vivek Gaba (CS Tax Faculty) Target 90+ in Tax Laws All The Very Best.