MKG

MOCK TEST-1
NOV 23
TAXATION
COMPUTATION OF TOTAL INCOME AND TAX
LIABILTY AND TAXABILITY OF GIFT
ATTEMPT ALL QUESTIONS
Roll No …154876…………… Time allowed: 3 hours
Maximum Marks: 100

MCQ BOOKLET NO. 1032023

PAPER CODE- MKG

MULTIPLE CHOICE QUESTIONS (30 Marks)

1. The basic source of income-tax law is -

(a) Income-tax Act, 1961
(b) Income-tax Rules, 1962
(c) Circulars/Notifications issued by CBDT
(d) Judgments of Courts

2. A domestic company means -

(a) Only an Indian company
(b) Both Indian company and a foreign company having a branch in India
(c) Both Indian company and a foreign company having business connection in India
(d) Both Indian company and a foreign company which has made the prescribed arrangement for declaration
and payment of dividends in India out of the income chargeable to tax in India

3. The surcharge applicable in the case of an individual is -

(a) 10% of tax payable if total income exceeds ₹50 lakhs but does not exceed ₹1 crore
(b) 10% of tax payable if total income exceeds ₹1 crore but does not exceed ₹2 crore
(c) 15% of tax payable if total income exceeds ₹1 crore but does not exceed ₹2 crore
(d) Both (a) and (c), as the case may be.
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4. The surcharge applicable to a domestic company for A.Y. 2023-24 is -

(a) 5%, if total income exceeds ₹1 crore.
(b) 10%, if the total income exceeds ₹1 crore
(c) 7%, if the total income exceeds ₹1 crore but does not exceed ₹10 crore, and 15%, if the total income
exceeds ₹10 crore.
(d) 7%, if the total income exceeds ₹1 crore but does not exceed ₹10 crore, and 12%, if the total income
exceeds ₹10 crore.

5. The surcharge applicable to a foreign company for A.Y. 2023-24 is -

(a) 5%, if the total income exceeds ₹1 crore.
(b) 10%, if the total income exceeds ₹1 crore.
(c) 2%, if the total income exceeds ₹1 crore but does not exceed ₹10 crore and 5% if the total income exceeds
₹10 crore.
(d) 2%, if the total income exceeds ₹10 crore.

6. Where the total income of an artificial juridical person is ₹3,10,000, the income-tax before cess
payable is ₹............... and surcharge payable is ₹..............
(a) ₹3,000; surcharge – nil.
(b) ₹6,000; surcharge – nil.
(c) ₹500; surcharge – nil
(d) ₹93,000; surcharge – ₹4650

7. What is the basic exemption limit for a woman assessee for A.Y. 2023-24, who turned 60 years on
31.03.2023?
(a) ₹2,00,000
(b) ₹3,00,000
(c) ₹2,50,000
(d) ₹5,00,000

8. Tax Liability of a resident individual having LTCG 3.5 Lakh shall be

(a) ₹7,800
(b) ₹72,800
(c) ₹18,200
(d) ₹20,800

9. The maximum amount of rebate allowable under section 87A for A.Y. 2023-24 is -
(a) ₹2,000, if the total income does not exceed ₹5 lakh
(b) ₹5,000, if the total income does not exceed ₹5 lakh
(c) ₹12,500, if the total income does not exceed ₹5 lakh
(d) ₹2,500, if the total income does not exceed ₹3.5 lakh

10. If Mr. Y’s total income for A.Y. 2023-24 is ₹52 Lakhs, surcharge is payable at the rate of -
(a) 15%
(b) 12%
(c) 10%
(d) 2%

11. Rebate u/s 87A shall be allowed if total income is

(a) less than ₹5,00,000
(b) less than ₹3,50,000
(c) upto ₹5,00,000
(d) upto ₹3,50,000
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12. Marginal relief shall be allowed to

(a) all persons
(b) only individual
(c) individual & HUF
(d) non -resident

13. Mr. X has agricultural Income of ₹4,900 and non – agricultural income of ₹2,65,000. Tax Payable
shall be
(a) Nil
(b) ₹780
(c) ₹1,030
(d) ₹14,030

14. Mr. X has agricultural Income of ₹1,00,000 and non – agricultural income of ₹2,45,000. Tax Payable
shall be
(a) Nil
(b) ₹4,940
(c) ₹2,340
(d) ₹17,940

15. Tax Liability of a resident individual having only STCG 111A 3.5 Lakh shall be
(a) ₹2,600
(b) ₹15,600
(c) ₹54,600
(d) ₹13,000

16. Tax Liability of a resident individual having only casual income 3.5 Lakh shall be
(a) ₹96,200
(b) ₹18,200
(c) ₹31,200
(d) ₹1,09,200

17. Tax Liability of a non - resident individual having only STCG 111A 3.5 Lakh shall be
(a) ₹15,600
(b) ₹2,600
(c) ₹54,600
(d) ₹52,000

18. The rate of tax applicable to a limited liability partnership (LLP) for A.Y. 2023- 24 is -
(a) 25%
(b) 30%
(c) 40%
(d) at slab rate

19. Mr. Devansh has agricultural income of ₹2,30,000 and business income of ₹2,45,000. Which of the
following statements are correct?
(a) Agricultural income has to be aggregated with business income for tax rate purposes
(b) No aggregation is required since agricultural income is less than basic exemption limit.
(c) No aggregation is required since business income is less than basic exemption limit.
(d) Agricultural income is exempt under section 10(1) but the same has to be aggregated with business
income, since it exceeds ₹5,000

20. For the purpose of gift, the term relative shall include
(a) grand father of individual
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(b) bother’s son of individual

(c) brother of father of spouse
(d) all the above

21. Property for the purpose of gift shall include

(a) shares and securities
(b) jewellery
(c) mobile phone
(d) (a) and (b)

22. Which of the statement is correct

(a) scholarship received by any person is exempt u/s 10(17A)
(b) award or reward of central government is taxable u/s 28
(c) gift received by a professional from his client is taxable as per section 28
(d) gift received by an employee exceeding ₹5,000 is taxable u/h other sources

23. Mr. Kashyap has acquired a building from his friend on 10.10.2022 for ₹15,00,000. The stamp duty
value of the building on the date of purchase is ₹15,70,000. Income chargeable to tax in the hands of
Mr. Kashyap is
(a) ₹ 70,000
(b) ₹ 50,000
(c) Nil
(d) ₹ 20,000

24. Mr. Y has received a sum of ₹51,000 on 24.10.2022 from relatives on the occasion of his marriage.
(a) Entire ₹51,000 is chargeable to tax.
(b) Only ₹ 1,000 is chargeable to tax
(c) Entire ₹ 51,000 is exempt from tax
(d) Only 50% i.e., ₹ 25,500 is chargeable to tax

25. Mr. Mayank has received a sum of ₹ 75,000 on 24.10.2022 from his friend on the occasion of his
marriage anniversary.
(a) Entire ₹ 75,000 is chargeable to tax.
(b) Entire ₹75,000 is exempt from tax
(c) Only ₹ 25,000 is chargeable to tax
(d) Only 50% i.e., ₹ 37,500 is chargeable to tax

26. Ashok took possession of property on 31st August 2022 booked by him three years back at ₹25 lakhs,
The Stamp Duty Value (SDV) of the property as on 31st August 2022 was ₹31 lakh and on date of
booking it was ₹29 lakh. He had paid ₹2 lakh by A/c payee cheque as down payment on date of booking.
Which of the following will be considered as income, if any, and in which previous year
(a) ₹4 lakhs in P.Y. 2022-23
(b) ₹4 lakhs in P.Y. 2019-20
(c) ₹6 lakhs in P.Y. 2021-22
(d) No income shall be taxable, since down payment was paid by A/c cheque while booking the property

27. Sujata, aged 16 years, received scholarship of ₹50,000 during the previous year 2022-23. Which of
the following statements are true regarding taxability of such income:
(a) Such income shall be assessed in hands of Sujata
(b) Such income to be included with the income of parent whose income before such clubbing is higher
(c) Such income is completely exempt from tax
(d) Such income to be clubbed with father's income
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28. Mr. X received cash gift ₹ 51,000 and gift of jewelry valued ₹ 49,000, in this case taxable amount
shall be
(a) ₹ 51,000
(b) ₹ 49,000
(c) ₹ 1,00,000
(d) Nil
(e) none of these

29. Mr. X received cash gift ₹ 40,000, gift of land stamp duty value ₹ 40,000 and gift of building stamp
duty value ₹ 40,000, in this case taxable amount shall be
(a) ₹ 40,000
(b) ₹ 80,000
(c) ₹ 1,20,000
(d) Nil
(e) none of these

30. Mr. X purchased one house property for ₹ 3,00,000 market value ₹ 7,00,000 stamp duty value ₹
3,40,000, in this case taxable amount shall be
(a) ₹ 4,00,000
(b) ₹ 40,000
(c) Nil
(d) ₹ 3,40,000
(e) none of these

ANSWERS
1. (a); 2. (d); 3. (d); 4. (d); 5. (c); 6. (a); 7.(b); 8.(a); 9.(c);10.(c); 11 (c); 12 (a); 13 (a); 14 (a); 15 (a); 16 (a);
17 (c); 18 (b); 19 (c); 20. (a); 21. (d); 22. (c); 23.(c); 24.(c); 25. (a) 26. (a) ; 27. (c); 28. (a); 29. (d); 30. (c)

Hint for answer 2. As per rule 27, meaning of making prescribed arrangement for declaration and payment
of dividends in India means that the company has compiled with the following conditions:
1. The share-register of the company for all shareholders shall be regularly maintained at its principal place of
business within India, in respect of any assessment year from a date not later than the 1st day of April of such
year.
2. The general meeting for passing the accounts of the previous year relevant to the assessment year and for
declaring any dividends in respect thereof shall be held only at a place within India.
3. The dividends declared, if any, shall be payable only within India to all shareholders.
Hint for answer 6.
Total income 3,10,000
On first ₹2,50,000 Nil
On next ₹60,000 @ 5% 3,000
Tax before health and education cess 3,000
Hint for answer 8.
Computation of Tax Liability
Tax on LTCG (3,50,000 – 2,50,000) @ 20% u/s 112 20,000
Tax before Rebate u/s 87A 20,000
Less: Rebate u/s 87A (12,500)
Tax before health & education cess 7,500
Add: HEC @ 4% 300
Tax Liability 7,800
Hint for answer 15.
Computation of Tax Liability
Tax on STCG (3,50,000 – 2,50,000) @ 15% u/s 111A 15,000
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Tax before Rebate u/s 87A 15,000

Less: Rebate u/s 87A (12,500)
Tax before health & education cess 2,500
Add: HEC @ 4% 100
Tax Liability 2,600
Hint for answer 16.
Computation of Tax Liability
Tax on Casual Income 3,50,000 30% u/s 115BB 1,05,000
Tax before Rebate u/s 87A 1,05,000
Less: Rebate u/s 87A (12,500)
Tax before health & education cess 92,500
Add: HEC @ 4% 3,700
Tax Liability 96,200

Hint for answer 17.

Computation of Tax Liability
Tax on STCG 3,50,000 @ 15% u/s 111A 52,500
Tax before Rebate u/s 87A 52,500
Less: Rebate u/s 87A Nil
Tax before health & education cess 52,500
Add: HEC @ 4% 2,100
Tax Liability 54,600
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SUBJECTIVE TYPE QUESTIONS (70 Marks)

Question 1 (a). (5 Marks)
Mrs. X has received the following gifts during previous year 2022-23.
(i) On the occasion of her marriage on 14.08.2022, she has received ₹90,000 as gift out of which ₹70,000 are
from relatives and balance from friends.
(ii) On 12.09.2022, she has received gift of ₹18,000 from cousin of her mother.
(iii) A cell phone of ₹71,000 is gifted by her employer on 15.08.2022.
(iv) She gets a gift of ₹25,000 from the elder brother of her husband's grandfather on 25.10.2022.
(v) She has received a gift of ₹2,000 from her friend on 14.04.2022.
(vi) She has won ₹4 lakh from a game show on electronic media.
Compute her tax liability for assessment year 2023-24.
Answer:
Computation of taxable income of Mrs. X from gifts for A.Y. 2023-24
Particulars Taxable amount Reason for taxability or
₹ otherwise of each gift
• Relatives and friends Nil Gifts received on the occasion of
marriage are not taxable.
• Cousin of Mrs. X’s mother 18,000 Cousin of Mrs. X’s mother is
not a relative. Hence, the gift is taxable.
• Elder brother of husband’s grandfather 25,000 Brother of husband’s grandfather is
not a relative. Hence, the gift is taxable.
• Friend 2,000 Gift from friend is taxable.
Aggregate value of gifts 45,000
Since the aggregate value of gifts received by Mrs. X during the previous year 2022-23 does not exceed
₹50,000, the same is not chargeable to tax under section 56(2)(x) of the Income-Tax Act, 1961.
Gift received from the employer in kind upto ₹5,000 is exempt from income tax but excess over it is taxable
hence in this case taxable amount of gift shall be ₹66,000 (71,000 – 5,000) and it will be taxable under the
head Salary.
Gross Salary 66,000
Less: Standard deduction u/s 16(ia) (50,000)
Income under the head Salary 16,000

Income under the head Other Sources 4,00,000

Gross Total Income 4,16,000
Less: Deduction u/s 80C to 80U Nil
Total Income 4,16,000
Computation of Tax Liability
Tax on ₹16,000 at slab rate Nil
Tax on ₹4,00,000 @ 30% 1,20,000
Less: Rebate u/s 87A (12,500)
Tax before HEC 1,07,500
Add: HEC @ 4% 4,300
Tax Liability 1,11,800

Question 1 (b). (5 Marks)

Briefly Explain taxability of gift.
Answer:
Gift received by any person shall be taxable and the gifts shall be divided into 3 parts.
1. Gift of sum of money
2. Gift of any property other than immovable property
3. Gift of immovable property
Taxability is as given below:
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1. Gift of sum of money

If any person has received any sum of money from one or more persons without consideration and the
aggregate value of all such gifts received during the year exceeds fifty thousand rupees, the whole of the
aggregate value of such sum shall be taxable under the head Other Sources but if the aggregate value is upto
₹50,000, entire amount shall be exempt from income tax.
2. Gift of any property other than immovable property
If any person has received gift of any property other than immovable property without consideration and the
aggregate fair market value of such properties received during a particular year exceeds ₹50,000, it will be
taxable under the head Other Sources but if aggregate value of all such properties is upto ₹50,000, it will be
exempt from income tax.
If the consideration is less than the aggregate fair market value of such properties by an amount exceeding
₹50,000, aggregate fair market value as exceeds such consideration shall be taxable under the head Other
Sources. Further it will be considered to be normal income.
3. Gift of immovable property
If any person has received any immovable property without consideration, it will be exempt if stamp duty
value is upto ₹50,000 but if the stamp duty value exceeds fifty thousand rupees, entire stamp duty value shall
be taxable under the head Other Sources. Value of individual immovable property shall be taken into
consideration instead of aggregate value of all such properties.
(If any person is selling immovable property, its Conveyance Deed shall be prepared in the office of Registrar
and some tax has to be paid to the State Government for transferring the property and it is called stamp duty
and the value on which such duty is charged is called stamp duty value (also called circle rate). A person may
not disclose the right value hence the value is determined by State Government.)
If immovable property has been received for a consideration which is less than the stamp duty value of the
property by an amount exceeding fifty thousand rupees and also stamp duty value is exceeding by more than
10% of the actual consideration, in such cases taxable amount shall be the stamp duty value of such property
as exceeds such consideration.

If the date of the agreement fixing the amount of consideration for the transfer of immovable property and the
date of registration are not the same and in such cases, the stamp duty value on the date of the agreement shall
be taken into consideration but part of consideration should have been paid by account payee cheque, an
account payee bank draft or by use of electronic clearing system through a bank account or through such
other electronic modes as may be prescribed. (Other electronic mode means Credit Card, Debit Card, Net
Banking, IMPS (Immediate Payment Service), UPI (Unified Payment Interface), RTGS (Real Time Gross
Settlement), NEFT (National Electronic Funds Transfer), and BHIM (Bharat Interface for Money)
Aadhaar Pay) on or before the date of agreement.

Question 2 (a) (5 Marks)

Mr. X has income as given below:
Income under the head PGBP ₹505,00,000
LTCG 112A ₹101,00,000
STCG 111A ₹100,00,000
Compute his tax liability for A.Y. 2023-24.

Solution:
Computation of Total Income and Tax Liability of Mr. X ₹
Income under the head PGBP 505,00,000
LTCG 112A 101,00,000
STCG 111A 100,00,000
Gross Total Income 706,00,000
Less: Deductions u/s 80C to 80U Nil
Total Income 706,00,000
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Computation of Tax Liability

Tax on LTCG 100,00,000 (101,00,000-1,00,000) @ 10% u/s 112A 10,00,000.00
Tax on STCG 100,00,000 @ 15% u/s 111A 15,00,000.00
Tax on 5,05,00,000 at slab rate 1,49,62,500.00
Add: Surcharge on PGBP Income (1,49,62,500) X 37% 55,36,125.00
Add: Surcharge @ 15% on 25,00,000 3,75,000.00
Less: Marginal Relief (14,83,000)
Working Note:
Tax + surcharge @ 37% on income of ₹505,00,000 204,98,625
Tax + surcharge @25% on income of ₹500,00,000 (185,15,625)
Increase in tax 19,83,000
Increase in income 5,00,000
Marginal Relief (19,83,000 – 5,00,000) 14,83,000
Tax Before cess 218,90,625.00
Add: Health and education cess @ 4% 8,75,625.00
Tax Liability 227,66,250.00

Question 2 (b) (5 Marks)

(i) Mr. X aged 59 years has gross total income ₹5,60,000 and deduction allowed under section 80C
to 80U are ₹60,000. Compute his tax liability previous year 2022-23, assessment year 2023-24.
(ii) Presume he is a resident and is aged 62 years.

Solution (i):
Computation of Tax Liability
Gross Total Income 5,60,000
Less: Deduction u/s 80C to 80U (60,000)
Total Income 5,00,000
Tax on ₹5,00,000 at slab rate 12,500
Less: Rebate u/s 87A (12,500)
Tax before health & education cess Nil
Add: HEC @ 4% Nil
Tax Liability Nil

Solution(ii):
Computation of Tax Liability
Gross Total Income 5,60,000
Less: Deduction u/s 80C to 80U (60,000)
Total Income 5,00,000
Tax on ₹5,00,000 at slab rate 10,000
Less: Rebate u/s 87A (10,000)
Tax before health & education cess Nil
Add: HEC @ 4% Nil
Tax Liability Nil

Question 3. (a) (5 Marks)

Compute tax liability in the following cases for the assessment year 2023-24.
(i) Mr. X (non-resident) has total income of ₹4,20,000
(ii) Mrs. X (resident), aged 60 years has total income of ₹105,00,000
(iii) Mr. X (non-resident), aged 60 years has total income of ₹70,00,000
(iv) Mrs. X (resident), aged 80 years has total income of ₹103,00,000
(v) Mr. X (non-resident), aged 80 years has total income of ₹12,00,000
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Solution: ₹
(i) Computation of Tax Liability
Total Income 4,20,000
Tax on ₹4,20,000 at slab rate 8,500
Add: HEC @ 4% 340
Tax Liability 8,840
Note: Rebate under section 87A is not allowed to non-resident.

(ii) Computation of Tax Liability

Total Income 105,00,000
Tax on ₹105,00,000 at slab rate 29,60,000
Add: Surcharge @ 15% 4,44,000
Tax before health & education cess 34,04,000
Add: HEC @ 4% 1,36,160
Tax Liability 35,40,160

(iii) Computation of Tax Liability

Total Income 70,00,000
Tax on ₹70,00,000 at slab rate 19,12,500
Add: Surcharge @ 10% 1,91,250
Tax before health & education cess 21,03,750
Add: HEC @ 4% 84,150
Tax Liability 21,87,900

(iv) Computation of Tax Liability

Total Income 103,00,000
Tax on ₹103,00,000 at slab rate 28,90,000
Add: Surcharge @ 15% 4,33,500
Tax before health & education cess 33,23,500
Add: HEC @ 4% 1,32,940
Tax Liability 34,56,440

(v) Computation of Tax Liability

Total Income 12,00,000
Tax on ₹12,00,000 at slab rate 1,72,500
Add: HEC @ 4% 6,900
Tax Liability 1,79,400

Question 3 (b). (5 Marks)

Define the circumstances in which gift is exempt without any limit.
Answer: The gift is exempt in the following cases
(a) If any individual has received any gift from any of his relative, it will be exempt from income tax.
(b) If any individual has received any gift from any person of any amount on the occasion of his/her marriage.
If gift is received by the parents of such individual, in that case it will be taxable. If any individual has received
gift on the occasion of anniversary, it will be taxable.
(c) If any person has received any gift under a will/ inheritance, it will be exempt from income tax.
(d) in contemplation of death of the payer or donor (Contemplation of Death means the apprehension of an
individual that his life will end in the immediate future by a particular illness etc.)
(e) from any local authority or charitable hospital or charitable educational institution or charitable trust or
other similar organisation.
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(f) If an individual has received from any person in respect of any expenditure actually incurred by him on his
medical treatment or treatment of any member of his family, for any illness related to COVID-19 subject to
such conditions, as the Central Government may, by notification in the Official Gazette, specify in this behalf.
(g) If a member of the family of a deceased person has received,—
(A) from the employer of the deceased person; or
(B) from any other person or persons to the extent that such sum or aggregate of such sums does not exceed
ten lakh rupees,
where the cause of death of such person is illness related to COVID-19 and the payment is—
(i) received within twelve months from the date of death of such person; and
(ii) subject to such other conditions, as the Central Government may, by notification in the Official Gazette,
specify in this behalf.

Question 4 (a). (5 Marks)

(i) Mr. X has income under the head Salary ₹5,00,000 and casual income ₹3,00,000 and deduction under
section 80C to 80U ₹2,00,000, Compute his tax liability for the Assessment year 2023-24.

(ii) If in the above case deduction allowed under section 80C to 80U is ₹6,00,000.

Solution (i)
Computation of Total Income of Mr. X
Previous Year 2022-23, Assessment Year 2023-24
₹
Income under the head Salary 5,00,000.00
Income under the Other Sources (Casual income) 3,00,000.00
Gross Total Income 8,00,000.00
Less: Deduction u/s 80C to 80U (2,00,000.00)
Total Income 6,00,000.00

Computation of Tax Liability

Tax on casual income ₹3,00,000 @ 30% 90,000.00
Tax on normal income ₹3,00,000 at slab rate 2,500.00
Tax before health & education cess 92,500.00
Add: HEC @ 4% 3,700.00
Tax Liability 96,200.00

Solution (ii)
Computation of Total Income of Mr. X
Previous Year 2022-23, Assessment Year 2023-24
₹
Income under the head Salary 5,00,000.00
Income under the Other Sources (Casual income) 3,00,000.00
Gross Total Income 8,00,000.00
Less: Deduction u/s 80C to 80U (5,00,000.00)
Total Income 3,00,000.00
Computation of Tax Liability
Tax on casual income ₹3,00,000 @ 30% 90,000.00
Less: Rebate u/s 87A (12,500.00)
Tax before health & education cess 77,500.00
Add: HEC @ 4% 3,100.00
Tax Liability 80,600.00
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Question 4 (b). (5 Marks)

(i) Mr. X is a Non- Resident and has incomes as given below:
• Income under the head salary 35,000
• Income under the head house property 45,000
• Income under the head business/profession 30,000
• Long term capital gains 1,10,000
• Long term capital gains u/s 112A 5,00,000
• Short term capital gains 25,000
• Short term capital gains u/s 111A 7,00,000
• Casual Income (winnings of lottery) 55,000
• Other income 3,000
Deductions allowed under section 80C to 80U 2,00,000
Compute his tax liability for the assessment year 2023-24.

(ii) Presume he is resident and is aged 82 years.

Solution: ₹
Computation of Total Income
• Income under the head salary 35,000
• Income under the head house property 45,000
• Income under the head business/profession 30,000
• Long term capital gains 1,10,000
• Long term capital gains u/s 112A 5,00,000
• Short term capital gains 25,000
• Short term capital gains u/s 111A 7,00,000
• Casual Income (winnings of lottery) 55,000
• Other income 3,000
Gross Total Income 15,03,000
Less: Deduction u/s 80C to 80U (1,38,000)
Total Income 13,65,000

Computation of Tax Liability

Tax on Long term capital gains ₹1,10,000 @ 20% u/s 112 22,000
Tax on Short term capital gains ₹7,00,000 @ 15% u/s 111A 1,05,000
Tax on Long term capital gains ₹4,00,000 (5,00,000-1,00,000) @ 10% u/s 112A 40,000
Tax on Casual Income ₹55,000 @ 30% u/s 115BB 16,500
Tax on normal income Nil
Tax before health & education cess 1,83,500
Add: HEC @ 4% 7,340
Tax Liability 1,90,840

Solution (ii): ₹
Computation of Total Income
• Income under the head salary 35,000
• Income under the head house property 45,000
• Income under the head business/profession 30,000
• Long term capital gains 1,10,000
• Long term capital gains u/s 112A 5,00,000
• Short term capital gains 25,000
• Short term capital gains u/s 111A 7,00,000
• Casual Income (winnings of lottery) 55,000
• Other income 3,000
 13

Gross Total Income 15,03,000

Less: Deduction u/s 80C to 80U (1,38,000)
Total Income 13,65,000

Computation of Tax Liability

Tax on Long term capital gains (₹1,10,000 – 1,10,000)@ 20% u/s 112 Nil
Tax on Short term capital gains (₹7,00,000 – 3,90,000)@ 15% u/s 111A 46,500
Tax on Long term capital gains ₹4,00,000 (5,00,000-1,00,000) @ 10% u/s 112A 40,000
Tax on Casual Income ₹55,000 @ 30% u/s 115BB 16,500
Tax on normal income Nil
Tax before health & education cess 1,03,000
Add: HEC @ 4% 4,120
Tax Liability 1,07,120

Question 5 (a). (5 Marks)

Mr. X has income from business ₹ 203 lakhs and short term capital gain under section 111A ₹ 30 lakhs and
long term capital gains under section 112A ₹ 41 lakhs. Compute his total income and tax liability for the
assessment year 2023-24.
Solution:
Computation of Total Income
Income under the head business/profession from business 203,00,000
Income under the head capital gains
Short term capital gains under section 111A 30,00,000
Long term capital gains under section 112A 41,00,000
Gross total income/total income 274,00,000

Computation of Tax liability

Tax liability on 203,00,000 at slab rate 59,02,500

Add: Surcharge @ 25% 14,75,625
Total 73,78,125

Marginal Relief
Tax on ₹ 203 lakhs at slab rate + surcharge 25% 73,78,125
Tax on ₹ 200 lakhs at slab rate + surcharge 15% 66,84,375
Increase in Tax Liability 6,93,750
Increase in income 3,00,000
Marginal Relief (3,93,750)
69,84,375
Tax on short term capital gain under section 111A 30,00,000 X 15% 4,50,000
Add: Surcharge @ 15% 67,500
Tax on long term capital gain under section 112A (41,00,000 – 1,00,000) X 10% 4,00,000
Add: Surcharge @ 15% 60,000
79,61,875
Add: HEC @ 4% 3,18,475
Tax liability 82,80,350

Question 5 (b). (5 Marks)

Compute tax liability of ABC Ltd. a domestic company in the following situations:
(i) The company has income under the head Business/Profession ₹500,00,000.
(ii) The company has income under the head Business/Profession ₹100,00,000.
(iii) The company has long term capital gains of ₹200,00,000.
(iv) The company has long term capital gains of ₹10,20,000.
(v) The company has income under the head Business/Profession ₹11 crore.
 14

Solution: ₹
(i) Computation of Tax Liability
Income under the head Business/Profession 500,00,000
Total Income 500,00,000
Tax on ₹500,00,000 @ 30% 150,00,000
Add: Surcharge @ 7% 10,50,000
Add: HEC @ 4% 6,42,000
Tax Liability 166,92,000

(ii) Computation of Tax Liability

Income under the head Business/Profession 100,00,000
Total Income 100,00,000
Tax on ₹100,00,000 @ 30% 30,00,000
Add: HEC @ 4% 1,20,000
Tax Liability 31,20,000

(iii) Computation of Tax Liability

Income under the head Capital Gains (long term capital gains) 200,00,000
Total Income 200,00,000
Tax on ₹200,00,000 @ 20% 40,00,000
Add: Surcharge @ 7% 2,80,000
Add: HEC @ 4% 1,71,200
Tax Liability 44,51,200

(iv) Computation of Tax Liability

Income under the head Capital Gains (long term capital gains) 10,20,000
Total Income 10,20,000
Tax on ₹10,20,000 @ 20% 2,04,000
Add: HEC @ 4% 8,160
Tax Liability 2,12,160

(v) Computation of Tax Liability

Income under the head Business/profession 11,00,00,000
Total Income 11,00,00,000
Tax on ₹11,00,00,000 @ 30% 330,00,000
Add: Surcharge @ 12% 39,60,000
Tax before health & education cess 369,60,000
Add: HEC @ 4% 14,78,400
Tax Liability 384,38,400

Question 6 (a). (5 Marks)

Mr. X, aged 68 years, has income under the head House Property ₹5,25,000, agricultural income of ₹1,00,000,
Long term capital gain amounting to ₹45,000 and casual income ₹35,000. He is eligible for deduction under
section 80C ₹20,000. Compute tax liability of Mr. X for assessment year 2023-24.
Solution: ₹
Computation of Total Income
Income under the head House Property 5,25,000
Income under the head Capital Gains (Long term capital gain) 45,000
Income under the head Other Sources (Casual Income) 35,000
Gross Total Income 6,05,000
Less: Deduction u/s 80C (20,000)
Total Income 5,85,000
Agricultural Income 1,00,000
 15

Computation of Tax Liability

Tax on casual income ₹35,000 @ 30% u/s 115BB 10,500.00
Tax on long term capital gain ₹45,000 @ 20% u/s 112 9,000.00
Normal income 5,05,000
Step 1. Tax on (5,05,000 + 1,00,000) at slab rate 31,000.00
Step 2. Tax on (₹3,00,000 + 1,00,000) at slab rates (5,000.00)
Step 3. Deduct Tax at Step 2 from Tax at Step 1 26,000.00
Tax before health & education cess 45,500.00
Add: HEC @ 4% 1,820.00
Tax Liability 47,320.00

Question 6 (b). (5 Marks)

Compute Tax Liability as per section 115BAC in the following independent cases.
(i) Mr. X has total income of ₹6,00,000
(ii) Mr. X has total income of ₹8,00,000
(iii) Mr. X has total income of ₹10,00,000
(iv) Mr. X has total income of ₹12,00,000
(v) Mr. X has total income of ₹20,00,000
Solution:
(i)Tax liability as per section 115BAC
Total income 6,00,000
On first ₹2,50,000 Nil
On next ₹2,50,000 @ 5% 12,500
On balance ₹1,00,000 @ 10% 10,000
Tax before health and education cess 22,500
Add: health & education cess @ 4% 900
Tax Liability 23,400

(ii) Tax liability as per section 115BAC

Total income 8,00,000
On first ₹2,50,000 Nil
On next ₹2,50,000 @ 5% 12,500
On next ₹2,50,000 @ 10% 25,000
On balance ₹50,000 @ 15% 7,500
Tax before health and education cess 45,000
Add: health & education cess @ 4% 1,800
Tax Liability 46,800

(iii) Tax liability as per section 115BAC

Total income 10,00,000
On first ₹2,50,000 Nil
On next ₹2,50,000 @ 5% 12,500
On next ₹2,50,000 @ 10% 25,000
On balance ₹2,50,000 @ 15% 37,500
Tax before health and education cess 75,000
Add: health & education cess @ 4% 3,000
Tax Liability 78,000

(iv) Tax liability as per section 115BAC

Total income 12,00,000
On first ₹2,50,000 Nil
On next ₹2,50,000 @ 5% 12,500
 16

On next ₹2,50,000 @ 10% 25,000

On next ₹2,50,000 @ 15% 37,500
On balance ₹2,00,000 @ 20% 40,000
Tax before health and education cess 1,15,000
Add: health & education cess @ 4% 4,600
Tax Liability 1,19,600

(v) Tax liability as per section 115BAC

Total income 20,00,000
On first ₹2,50,000 Nil
On next ₹2,50,000 @ 5% 12,500
On next ₹2,50,000 @ 10% 25,000
On next ₹2,50,000 @ 15% 37,500
On next ₹2,50,000 @ 20% 50,000
On next ₹2,50,000 @ 25% 62,500
On balance ₹5,00,000 @ 30% 1,50,000
Tax before health and education cess 3,37,500
Add: health & education cess @ 4% 13,500
Tax Liability 3,51,000

Question 7 (a). (5 Marks)

Discuss the taxability of agricultural income under the Income Tax Act, 1961. How will income be computed
where an individual derives agricultural and non-agricultural income?
Answer: Under section 10(1), any agricultural income in India is fully exempt from income tax but if the
agricultural income is from outside India, it is chargeable to tax.
Indirect taxing of agricultural income or partial integration of agricultural income (Under the
constitution, the power to levy a tax on agricultural income vests in the states. However, parliament has
also levied a tax on such income. Explain how this has been achieved?)
If any person has agricultural income as well as non-agricultural income, his tax liability shall be computed
in the manner given below:
1. Compute tax on the total of agricultural income and non- agricultural income considering it to be total
income of the assessee.
2. Compute tax on exemption limit (₹2,50,000 / 3,00,000 / 5,00,000) and agricultural income considering
it to be total income.
3. Deduct tax computed under Step 2 from Step 1 and apply health & education cess.
4. Long term capital gain, casual income and short term capital gain u/s 111A shall not be taken into
consideration for the purpose of partial integration
5. If Agricultural income is upto ₹5,000, or non-agricultural income is upto the limit not chargeable to tax
(₹2,50,000/3,00,000/5,00,000), partial integration is not applicable.
6. Partial integration is not applicable in case of a partnership firm or a company.

Question 7 (b). (5 Marks)

Define the following
(i) Meaning of Property
(ii) Meaning of Relative

Answer:
(i) "PROPERTY" means the following capital asset of the assessee, namely:—
(i) immovable property being land or building or both;
(ii) shares and securities;
(iii) jewellery;
 17

(iv) archaeological collections (relating to past/ ancient)

(v) drawings (a picture or diagram made with a pencil, pen, or crayon without paint.)
(vi) paintings;
(vii) sculptures;
(viii) any work of art; or
(ix) bullion (Gold and silver in the form of biscuits / bricks / bars)

(ii)
The term Relative shall include
(a) spouse of the individual;
(b) brother or sister of the individual;
(c) brother or sister of the spouse of the individual;
(d) brother or sister of either of the parents of the individual;
(e) any lineal ascendant or descendant of the individual; (ascendant means mother/ father/ grand mother /
grand father and so on: Descendant means son / daughter / grand son / grand daughter etc.
(f) any lineal ascendant or descendant of the spouse of the individual;
(g) spouse of the person referred to in items (b) to (f)