Q17. Section 32AD provides a deduction of 15% of the actual cost of some P&M. If that P&M is used only for 25 days in the PY, how much deeuction will be available to assessee?

a) 15%
b) 7.5%
c) Usage is not relevant for this deduction
d) None of these

[Answer will be uploaded with the next question]

Q18. Mr. A gets his business valued and finds that the goodwill of his business is worth Rs. 2 Crores in current times. He accounts for this goodwill in his books?. What will be the rate of depreciation for this goodwill?

a) 10%
b) 25%
c) 15%
d) None of these

[Answer to Q17 is part (a). Deduction of 15% u/s 32AD is available upon INSTALLATION of the new P&M irrespective of whether it is put to use or not. Since the question tells us that the P&M was put to use for 25 days, it clearly indicates that the P&M was Installed since P&M cannot be used without installation

Also, this is not depreciation, hence, the condition of checking 180 days usage limit is not applicable here]

Answer to Q18 is part (d). Only ACQUIRED intangible assets are eligible for depreciation u/s 32. Self-generated intangibles are not eligible for any depreciation

Q19. Amongst the following, what is the order of set off? 1. Current Year's Depreciation 2. Brought Forward Business Loss 3. Unabsorbed Depreciation
public poll

c) 1,2,3 – 79
👍👍👍👍👍👍👍 78%

a) 3,2,1 – 11
👍 11%

b) 1,3,2 – 8
👍 8%

d) 2,3,1 – 3
▫️ 3%

👥 101 people voted so far.

Answer to Q19 is part (c). Good to see most students answering correctly

Mr. A gave a loan of Rs. 7 lacs to Mr.B in PY 16-17. In the PY 18-19, Mr.A waived his rights to receive the money back from Mr. A. What is the taxability of these transactions?
anonymous poll

d) This is a loan and not an income. Hence, no taxability arises – 24
👍👍👍👍👍👍👍 44%

c) Loan waived will be taxed in hands of Mr.B in PY 18-19 – 16
👍👍👍👍👍 30%

a) Loan received will be taxed in the hands of Mr.B in PY16-17 – 10
👍👍👍 19%

b) Loan waived will be taxed in hands of Mr.A in PY 18-19 – 4
👍 7%

👥 54 people voted so far.

Q20 was a trick question and is not expected in exams because it is subject to a lot of different opinions and thus has no single answer

If this loan was received from any govt body or agency, its waiver is taxed as per section 2(24)(xviii)

However, in our case, it is given by an individual. There are many conflicting judgements giving various opinions depending upon what the loan was for and other factors

I asked this question just to clarify that section 2(24)(xviii) is not applicable to all waivers of loan

Q22. Which statement is incorrect?
anonymous poll

e) None of these – 30
👍👍👍👍👍👍👍 54%

a) Tax rates are mentioned in both Income Tax Act & Finance Act – 17
👍👍👍👍 30%

b) IT Act rates are applied to specified incomes, remaining incomes are taxed at Fin. Act rates – 5
👍 9%

c) Finance Act Tax Rates can be amended – 3
👍 5%

d) Rates in Income Tax Act can be amended – 1
▫️ 2%

👥 56 people voted so far.

The correct answer to Q22 is (e) since all the statements from (a) to (d) are true

Q23. Mr. A was caught smuggling gold into India. He was put into jail for this. A.O. sent him a notice raising demand of Rs. 7crores, which is the tax on his smuggling business' income. Is A.O's action correct?
anonymous poll

b) Yes, the tax demand can be raised – 58
👍👍👍👍👍👍👍 85%

a) No, smuggling is illegal, hence, such activities are subject to prosecution – 8
👍 12%

c) Tax demand could've been raised only if he was allowed to continue smuggling business – 2
▫️ 3%

👥 68 people voted so far.

Answer to Q23 is (b) since even illegal incomes are subject to tax. Taxability of an income is not effected by whether the income is legal or illegal

Q24. What is the period for which MAT credit can be carried forward?
anonymous poll

c) 15 yrs – 55
👍👍👍👍👍👍👍 86%

d) Infinite period – 6
👍 9%

a) 5 yrs – 2
▫️ 3%

b) 10 yrs – 1
▫️ 2%

👥 64 people voted so far.

Answer to Q24 is (c) as per Section 115JAA

Q25. Mr. A receives a watch worth Rs. 75,000 from his cousin brother on the occasion of Mr. A's birthday. Determine its taxability
anonymous poll

a) 75,000 taxable as gift u/h other sources – 41
👍👍👍👍👍👍👍 53%

d) None of these – 32
👍👍👍👍👍 42%

b) 25,000 taxable as gift u/h other sources – 4
👍 5%

c) 75,000 taxable as PGBP Income
▫️ 0%

👥 77 people voted so far.

Answer to Q25 is (d) since "Watch" is not one of the assets covered under the scope of section 56(2)(x)

Q26. Which section in the Income Tax Act deals with tax audit?
anonymous poll

b) Section 44AB – 70
👍👍👍👍👍👍👍 91%

a) Section 44AA – 5
👍 6%

d) Section 44AD – 1
▫️ 1%

e) None of these – 1
▫️ 1%

c) Section 44AC
▫️ 0%

👥 77 people voted so far.

Answer to Q26 is (b). Section 44AB deals with the provisions related to Tax Audit of an assessee