Income Tax and Corporate Tax MCQ Questions and Solutions with Explanations

21.
Which one of the following items is not allowed as deduction while computing income from business and profession?

A. Fees paid to the lawyer for drafting partnership deed

B. Loss due to embezzlement by an employee

C. Legal expenses paid to protect the building of the business

D. Cost of installing a new telephone

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22.
Exemption, under Sec. 54 F of the Income Tax Act, 1961, shall not be allowed if the assessee, on the date of transfer owns:

A. Any residential house

B. A residential house which is let out

C. A house which is self occupied

D. More than one residential house

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23.
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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24.
Section 80C provides for deduction in respect of tuition fee to . . . . . . . . children.

A. One

B. two

C. Three

D. None

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25.
Given below are two statements. One is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A): Tax should not be charged on dividend income from the shareholders.
Reason (R): Some economists are of the opinion that when tax has already been paid on the profit of the company and balance is distributed as dividend to the owners, tax need not be levied on them.
In the light of the above two statements, choose the correct answer from the options given below.

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

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

C. (A) is true, but (R) is false

D. (A) is false, but (R) is true

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26.
Minimum Alternate Tax (MAT) is imposed on

A. All companies

B. Public limited companies only

C. Private limited companies only

D. Partnership firms and companies

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27.
Which one of the following statements is not correct with reference to the assessment of firms?

A. All partnership firms formed under the Indian Partnership Act, 1932, are assessed as firms under the Income Tax Act, 1961

B. Income of a firm is taxable at a flat rate of 30% without any exemption

C. Partners' share in the income of a firm is not chargeable to tax in the hands of partners

D. Remuneration paid to partners of a firm (assessed as such) is allowed as deduction subject to statutory limit

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28.
Which one of the following is agricultural income under the Income Tax Act, 1961 ?

A. Interest on arrears of rent in respect of agricultural land

B. Interest received by a money-lender in the form of agricultural produce

C. Income from sale of trees of forest which are of spontaneous growth and in relation to which forestry operations alone are performed

D. Interest on capital received by a partner from the firm engaged in agricultural operations

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29.
Any amount of money received in excess of Rs. 50,000 without consideration is fully taxable in the hands of

A. Individuals

B. Individuals and HUF

C. Individuals, HUF and Comany

D. All of the above

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30.
Which of the following deductions will not come under Sec. 80 of the Income Tax Act?

A. Deduction in the case of a person with disability

B. Deduction for interest paid on loan taken for pursuing higher education

C. Deduction for interest on loan taken for the construction / purchase of house property

D. Deduction for repayment of any installment of principal amount borrowed for the purchase / construction of house property

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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

21. Which one of the following items is not allowed as deduction while computing income from business and profession?

Answer & Solution

22. Exemption, under Sec. 54 F of the Income Tax Act, 1961, shall not be allowed if the assessee, on the date of transfer owns:

Answer & Solution

Answer & Solution

24. Section 80C provides for deduction in respect of tuition fee to . . . . . . . . children.

Answer & Solution

Answer & Solution

26. Minimum Alternate Tax (MAT) is imposed on

Answer & Solution

27. Which one of the following statements is not correct with reference to the assessment of firms?

Answer & Solution

28. Which one of the following is agricultural income under the Income Tax Act, 1961 ?

Answer & Solution

29. Any amount of money received in excess of Rs. 50,000 without consideration is fully taxable in the hands of

Answer & Solution

30. Which of the following deductions will not come under Sec. 80 of the Income Tax Act?

Answer & Solution

21.
Which one of the following items is not allowed as deduction while computing income from business and profession?

22.
Exemption, under Sec. 54 F of the Income Tax Act, 1961, shall not be allowed if the assessee, on the date of transfer owns:

24.
Section 80C provides for deduction in respect of tuition fee to . . . . . . . . children.

26.
Minimum Alternate Tax (MAT) is imposed on

27.
Which one of the following statements is not correct with reference to the assessment of firms?

28.
Which one of the following is agricultural income under the Income Tax Act, 1961 ?

29.
Any amount of money received in excess of Rs. 50,000 without consideration is fully taxable in the hands of

30.
Which of the following deductions will not come under Sec. 80 of the Income Tax Act?