Income Tax and Corporate Tax MCQ Questions and Solutions with Explanations

41.
Which of the following is not included in the term Income under the Income Tax Act, 1961?

A. Reimbursement of travelling expenses

B. Profits and gains of business or profession

C. Dividend

D. Profit in lieu of salary

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42.
Which of the following is not a head of Income as prescribed by the Income Tax Act?

A. Income from Salary

B. Income from House Property

C. Income from Foreign Earnings

D. Income from Business and Profession

E. Income from Capital Gains

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43.
Which of the following will be considered as tax planning effort?
1. Mr. A purchased a house for self-residence of Rs. 8 lakh by taking a loan of Rs. 60 lakh from SBI at 10% interest, instead of using his own funds.
2. Mr. A made investment in purchasing 12% redeemable debentures of TISCO worth Rs. 1.50 lakh.
3. Mr. A purchased 100 gm gold biscuits of Rs. 2.5 lakh from SBI on the occasion of Diwali.
4. Mr. A invested Rs. 1 crore in purchasing 5 acres of agricultural land in his native village in Gaya.

A. Both 1 and 2

B. Both 2 and 3

C. Both 1 and 4

D. Both 3 and 4

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44.
Match the items of List-I with the items of List-II and choose the correct answer:

List-I (Types of Income) List-II (Heads of Income)

a. Salary, bonus, commission, etc., received by a working partner from the firm 1. Income from other Sources

b. Pension received by the widow of a government employee 2. Income from (short term) Capital Gains

c. Profits on the sale of machinery used in business 3. Income from Capital Gains

d. Compensation received from the government on compulsory acquisition of land and profit earned 4. Income from Business and Profession

5. Income from Salaries

A. a-5, b-2, c-1, d-3

B. a-4, b-2, c-3, d-5

C. a-5, b-4, c-3, d-2

D. a-4, b-1, c-2, d-3

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45.
Which of the following amount of penalty is imposable under section 272BB?

A. Rs. 50,000

B. Rs. 25,000

C. Rs. 10,000

D. Rs. 5,000

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46.
Agriculture income is exempted from income tax under the following section of Income Tax Act, 1961

A. 2 (1A)

B. 10 (1)

C. 10 (2)

D. 10 (4)

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47.
Assertion (A): If the interest is payable outside India, tax must be deducted at source.
Reason (R): If tax has not been deducted at source, the amount paid as interest will not be allowed as a deduction in computing business income.
Select the correct answer:

A. Both (A) and (R) are correct and (R) is the correct explanation of (A)

B. Both (A) and (R) are correct, but (R) is not the correct explanation of (A)

C. (A) is correct, but (R) is wrong

D. (A) is wrong, but (R) is correct

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48.
Which of the following components are true about tax planning?
1. Tax planning is the process of analyzing a financial plan or a situation from a tax perspective.
2. The objective of tax planning is to make sure there is tax efficiency. With the help of tax planning, one can ensure that all elements of a financial plan can function together with maximum tax-efficiency.
3. Reducing tax liability and increasing the ability to make contributions towards retirement plans are critical for success.
4. Tax planning comprises various considerations such as size, the timing of income, timing of purchases, and planning are concerned with other kinds of expenditures.
5. The chosen investments and the various retirement plans should go hand-in-hand with the tax filing status as well as the deductions in order to create the best possible outcome.

A. 1, 2 and 3

B. 2, 3 and 4

C. 3, 4 and 5

D. All of the above

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49.
In own or leasean asset, which of the following point/s is/are important?

A. The assessee should follow such a method for obtaining an asset which reduces his tax liability and profits after tax are greater

B. Own funds should not be used in purchase of an asset because interest on owned fund is not deductible in computing total income, whereas interest on borrowed funds is deductible

C. We can invest the own fund outside the business and the interest earned will offset the interest payment of outside loan

D. All of the above

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50.
Under Sec. 194 1B of the Income Tax Act, 1961 an individual or HUF (who is not required to get his accounts audited u/s 44 AB) who is responsible for paying to a resident any rent, shall deduct income tax, for the use of any land and building or both, if the rent exceeds:

A. 50,000 per month

B. 15,000 per month

C. 25,000 per month

D. 40,000 per month

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List-I (Types of Income)	List-II (Heads of Income)
a. Salary, bonus, commission, etc., received by a working partner from the firm	1. Income from other Sources
b. Pension received by the widow of a government employee	2. Income from (short term) Capital Gains
c. Profits on the sale of machinery used in business	3. Income from Capital Gains
d. Compensation received from the government on compulsory acquisition of land and profit earned	4. Income from Business and Profession
	5. Income from Salaries

Income Tax and Corporate Tax MCQ Questions and Solutions with Explanations | Commerce

41. Which of the following is not included in the term Income under the Income Tax Act, 1961?

Answer & Solution

42. Which of the following is not a head of Income as prescribed by the Income Tax Act?

Answer & Solution

Answer & Solution

Answer & Solution

45. Which of the following amount of penalty is imposable under section 272BB?

Answer & Solution

46. Agriculture income is exempted from income tax under the following section of Income Tax Act, 1961

Answer & Solution

47. Assertion (A): If the interest is payable outside India, tax must be deducted at source. Reason (R): If tax has not been deducted at source, the amount paid as interest will not be allowed as a deduction in computing business income. Select the correct answer:

Answer & Solution

Answer & Solution

49. In own or leasean asset, which of the following point/s is/are important?

Answer & Solution

50. Under Sec. 194 1B of the Income Tax Act, 1961 an individual or HUF (who is not required to get his accounts audited u/s 44 AB) who is responsible for paying to a resident any rent, shall deduct income tax, for the use of any land and building or both, if the rent exceeds:

Answer & Solution

41.
Which of the following is not included in the term Income under the Income Tax Act, 1961?

42.
Which of the following is not a head of Income as prescribed by the Income Tax Act?

45.
Which of the following amount of penalty is imposable under section 272BB?

46.
Agriculture income is exempted from income tax under the following section of Income Tax Act, 1961

47.
Assertion (A): If the interest is payable outside India, tax must be deducted at source.
Reason (R): If tax has not been deducted at source, the amount paid as interest will not be allowed as a deduction in computing business income.
Select the correct answer:

49.
In own or leasean asset, which of the following point/s is/are important?

50.
Under Sec. 194 1B of the Income Tax Act, 1961 an individual or HUF (who is not required to get his accounts audited u/s 44 AB) who is responsible for paying to a resident any rent, shall deduct income tax, for the use of any land and building or both, if the rent exceeds: