1

Chapter wise test series-4

Taxation (A)

Basics + Residential Status + Salary + HP + TDS

Time: 54 minutes

Part -1 (Case Scenario questions – 6 Marks)

2.

3.

(3 x 2 = 6 Marks)
Part 2 (Descriptive type questions – 24 Marks)
1. Mr. Kabra is engaged in the business of growing and curing (further processing) coffee in the
state of Karnataka. The whole of coffee grown in his plantation is cured. Relevant information
pertaining to the year ended 31-03-2025 are given hereunder:

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The car is
used for the agricultural operations and the machine was used for coffee curing business
operations. Compute the income arising from the above activities for the assessment year 2025-
26 and the written down value as on 01·04-202S (WDV: as on 31-03-2025 less depreciation for
the P.Y. 2024-25).

(4 Marks)

2. Mrs. Smita, an Indian citizen, is in employment with an overseas company located in UAE.
She is not liable to tax in UAE. During the P.Y. 2024-25, she comes to India for 121 days. She
was in India for 50 days, 100 days, 76 days and 145 days in the financial years 2020-21,
2021-22, 2022-23 and 2023-24, respectively. Her annual income for the previous year 2024-
25 is as follows:

Mrs. Smita wants to pay tax under default tax regime under section 115BAC. From the
information given above, you are required to determine the residential status of Mrs. Smita for
the A.Y. 2025-26.
(3 Marks)
3. Examine & explain the TDS implications in the following cases along with reasons thereof,
assuming that the deductees are residents and having a PAN which they have duly furnished
to the respective deductors.
(i) Akash (P) Limited pays the following amounts to Mr. Santosh during previous year
2024-25:
a. ₹22,000 towards fee for professional services
b. ₹18,000 towards royalty.
(ii) Payment of ₹1,75,000 made to Mr. Ankit for purchase of bag according to
specifications of M/s. Packaging Limited. However, no material was supplied for such
bag by M/s. Packaging Limited or its associates to Mr. Ankit.
(4 Marks)
4. Mr. Rishabh, a salaried employee in a private company, provides you with the following
information for the year ended on 31-03-2025:
(i) Basic salary ₹75,000 p.m.
(ii) From 1st February 2025, basic salary increased to 85,000 p.m.
(iii) Dearness allowance @50% of basic salary (40% of D.A. forms part of salary for
retirement benefits).
(iv) Contribution of employer to recognized provident fund account of the employee
@18% of basic salary. Employees also contribute an equivalent amount.
(v) Professional tax paid ₹2,200 of which ₹1,800 was paid by the employer.

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(vi) House rent allowance of ₹16,000 p.m. He paid rent of ₹17,000 p.m. for
accommodation in Bangalore.
(vii) Loan of ₹2,00,000 was taken from the employer on 1.7.2024 for medical treatment of
his brother for tuberculosis treatment. Interest charged on such loan is 5%. The entire
loan is outstanding as on 31.3.2025. No medical insurance has been taken for his
brother. SBI rate of interest on 1.4.2024 was 11%.
(viii) Leave travel concession given to Rishabh, his wife and three children (one daughter
aged 6 and twin sons aged 4). Cost of air tickets (economy class) reimbursed by the
employer ₹20,000 for adults and lumpsum of ₹25,000 for three children. Rishabh is
eligible for availing exemption this year to the extent it is permissible under the
Income-tax Act, 1961.

Compute the taxable salary of Mr. Rishabh if he has shifted out of the default tax regime under
section 115BAC.

(5 Marks)

5. Mr. Ravi, a resident in India, owns two house property, one in Delhi and another in Kanpur.
The property in Kanpur is self-occupied by Mr. Ravi, however, the property in Delhi is let out
throughout the year. The particulars of the Delhi house for the P.Y. 2024-25 are as under:

Municipal tax paid by Mr. Ravi on 10.6.2024 for Kanpur house is ₹3,500. Mr. Ravi had taken
a loan from SBI of ₹35 lakhs@12 p.a. in April 2021 for purchase of Delhi house. The stamp
duty value of this house was ₹40 lakhs. Mr. Ravi purchased a plot in Kanpur in May 2021 and
the construction of the Kanpur house was began in June 2021 and was completed on December,
2022. Mr. Ravi took a loan of ₹25,00,000@10% on 1-7-2021 for the construction of this house.
No repayment has been done so far for both the loans.

During the P.Y. 2024-25, Mr. Ravi has earned a salary income of ₹18,00,000.

Compute total income of Mr. Ravi for the A.Y. 2025-26 under default tax regime.
(5 Marks)
6. Mr. X a resident, aged 56 years, till recently was a successful businessman filing: his return of
income regularly and promptly ever since he obtained PAN card. During the COVID· Pandemic
period his business suffered severely, and he incurred huge losses. He was not able to continue
his business and finally on 1st January 2024 he decided to wind-up his business which he also
promptly intimated to the jurisdictional Assessing Officer about the closure of his business.
The Assessing Officer sent him a notice to tax income of A.Y. 2025-26 during the A.Y. 2024-
25 itself. Does the Assessing Officer have the power to do so? Are there any exceptions to the
general rule "Income of the previous year is assessed in the assessment year following the
previous year"?
(3 Marks)

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