Income Tax Law (Group I) Model Test Paper - 1 (Questions) - CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 1 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 3: TAXATION 
Time Allowed – 3 Hours Maximum Marks – 100 
SECTION – A: INCOME TAX LAW (50 MARKS) 
Working Notes should form part of the answer. Wherever necessary, suitable 
assumptions may be made by the candidates and disclosed by way of a note. 
However, in answers to Questions in Division A, working notes are not 
required. 
The relevant assessment year is A.Y.2025-26. 
Division A – Multiple Choice Questions 
Write the most appropriate answer to each of the following multiple choice 
questions by choosing one of the four options given. All questions are 
compulsory. 
1. Mr. Kamal, aged 45 years, commenced operations of the business of a new 
three-star hotel in Delhi on 1.4.2024. He incurred capital expenditure of ? 50 
lakhs on land in March, 2024 exclusively for the above business, and 
capitalized the same in his books of account as on 1
st
 April, 2024. Further, 
during the P.Y. 2024-25, he incurred capital expenditure of ? 2 crores (out of 
which ? 50 lakhs was for acquisition of land and ? 1.50 crore was for 
acquisition of building) exclusively for the above business. The payments in 
respect of the above expenditure were made by account payee cheque. The 
profits from the business of running this hotel (before claiming deduction 
under section 35AD) for the A.Y.2025-26 is ? 85 lakhs.  
 He has employed 220 new employees during the P.Y.2024-25, the details of 
whom are as follows – 
 No. of 
employees 
Date of 
employment 
Regular/ 
Casual 
Total monthly 
emoluments per 
employee ( ?) 
(i) 40 1.6.2024 Regular 24,000 
(ii) 80 1.7.2024 Regular 24,500 
(iii) 50 1.7.2024 Casual 25,500 
(iv) 30 1.9.2024 Regular 25,000 
(v) 20 1.12.2024 Casual 24,000 
 All regular employees participate in recognized provident fund and their 
emoluments are paid by account payee cheque. His gross revenue from the 
hotel is ? 11 crores. Mr. Kamal has opted out of the default tax regime under 
section 115BAC. 
178
Page 2


MODEL TEST PAPER 1 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 3: TAXATION 
Time Allowed – 3 Hours Maximum Marks – 100 
SECTION – A: INCOME TAX LAW (50 MARKS) 
Working Notes should form part of the answer. Wherever necessary, suitable 
assumptions may be made by the candidates and disclosed by way of a note. 
However, in answers to Questions in Division A, working notes are not 
required. 
The relevant assessment year is A.Y.2025-26. 
Division A – Multiple Choice Questions 
Write the most appropriate answer to each of the following multiple choice 
questions by choosing one of the four options given. All questions are 
compulsory. 
1. Mr. Kamal, aged 45 years, commenced operations of the business of a new 
three-star hotel in Delhi on 1.4.2024. He incurred capital expenditure of ? 50 
lakhs on land in March, 2024 exclusively for the above business, and 
capitalized the same in his books of account as on 1
st
 April, 2024. Further, 
during the P.Y. 2024-25, he incurred capital expenditure of ? 2 crores (out of 
which ? 50 lakhs was for acquisition of land and ? 1.50 crore was for 
acquisition of building) exclusively for the above business. The payments in 
respect of the above expenditure were made by account payee cheque. The 
profits from the business of running this hotel (before claiming deduction 
under section 35AD) for the A.Y.2025-26 is ? 85 lakhs.  
 He has employed 220 new employees during the P.Y.2024-25, the details of 
whom are as follows – 
 No. of 
employees 
Date of 
employment 
Regular/ 
Casual 
Total monthly 
emoluments per 
employee ( ?) 
(i) 40 1.6.2024 Regular 24,000 
(ii) 80 1.7.2024 Regular 24,500 
(iii) 50 1.7.2024 Casual 25,500 
(iv) 30 1.9.2024 Regular 25,000 
(v) 20 1.12.2024 Casual 24,000 
 All regular employees participate in recognized provident fund and their 
emoluments are paid by account payee cheque. His gross revenue from the 
hotel is ? 11 crores. Mr. Kamal has opted out of the default tax regime under 
section 115BAC. 
178
Mr. Kamal also has another existing business of running a four-star hotel in 
Ahmedabad, which commenced operations twenty years back, the profits 
from which are ? 140 lakhs for the A.Y.2025-26. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i)  Assuming that Mr. Kamal has fulfilled all the conditions specified for 
claim of deduction under section 35AD and has not claimed any 
deduction under Chapter VI-A under the heading “C. – Deductions in 
respect of certain incomes”, what would be the quantum of deduction 
under section 35AD, which he is eligible to claim as deduction for 
A.Y.2025-26? 
(a)  ? 250 lakhs 
(b)  ? 200 lakhs 
(c)  ? 100 lakhs  
(d)  ? 150 lakhs 
(ii)  What would be the income chargeable/loss under the head “Profits and 
gains of business or profession” for the A.Y.2025-26 in the hands of 
Mr. Kamal? 
(a)  ? 75 lakhs 
(b)  ? 140 lakhs 
(c)  ? 25 lakhs 
(d)  ( ? 10 lakhs) 
(iii)  Would Mr. Kamal be eligible for deduction under section 80JJAA in the 
A.Y.2025-26? If so, what is the quantum of deduction? 
(a) No, he would not be eligible for deduction u/s 80JJAA 
(b) Yes; ? 75,00,000 
(c) Yes; ? 81,72,000 
(d) Yes; ? 99,72,000 (3 x 2 = 6 Marks)  
2. Mr. Arvind, an Indian citizen, wants to file his return of income for the 
previous year 2024-25. He required assistance for which he has approached 
you. He has shared the following details relevant to the P.Y. 2024-25.  
Mr. Arvind owned a house property in Bangalore and the same was rented 
out for ? 65,000 p.m. to Mr. Arjun, a salaried employee. He claims that this 
was the only income which he earned during the P.Y. 2024-25. However, 
when you had sought for his bank statement, you observed the following 
information additionally.  
There is a credit for ? 23,975 towards income-tax refund which includes  
? 5,775 towards interest on income-tax refund. On 15th August, 2024, the 
bank statement showed a credit of ? 55,000 which he claimed to have 
received as a gift from his grandchildren on his 60th birthday. On further 
assessment you were able to understand that Mr. Arvind and his wife had 
179
Page 3


MODEL TEST PAPER 1 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 3: TAXATION 
Time Allowed – 3 Hours Maximum Marks – 100 
SECTION – A: INCOME TAX LAW (50 MARKS) 
Working Notes should form part of the answer. Wherever necessary, suitable 
assumptions may be made by the candidates and disclosed by way of a note. 
However, in answers to Questions in Division A, working notes are not 
required. 
The relevant assessment year is A.Y.2025-26. 
Division A – Multiple Choice Questions 
Write the most appropriate answer to each of the following multiple choice 
questions by choosing one of the four options given. All questions are 
compulsory. 
1. Mr. Kamal, aged 45 years, commenced operations of the business of a new 
three-star hotel in Delhi on 1.4.2024. He incurred capital expenditure of ? 50 
lakhs on land in March, 2024 exclusively for the above business, and 
capitalized the same in his books of account as on 1
st
 April, 2024. Further, 
during the P.Y. 2024-25, he incurred capital expenditure of ? 2 crores (out of 
which ? 50 lakhs was for acquisition of land and ? 1.50 crore was for 
acquisition of building) exclusively for the above business. The payments in 
respect of the above expenditure were made by account payee cheque. The 
profits from the business of running this hotel (before claiming deduction 
under section 35AD) for the A.Y.2025-26 is ? 85 lakhs.  
 He has employed 220 new employees during the P.Y.2024-25, the details of 
whom are as follows – 
 No. of 
employees 
Date of 
employment 
Regular/ 
Casual 
Total monthly 
emoluments per 
employee ( ?) 
(i) 40 1.6.2024 Regular 24,000 
(ii) 80 1.7.2024 Regular 24,500 
(iii) 50 1.7.2024 Casual 25,500 
(iv) 30 1.9.2024 Regular 25,000 
(v) 20 1.12.2024 Casual 24,000 
 All regular employees participate in recognized provident fund and their 
emoluments are paid by account payee cheque. His gross revenue from the 
hotel is ? 11 crores. Mr. Kamal has opted out of the default tax regime under 
section 115BAC. 
178
Mr. Kamal also has another existing business of running a four-star hotel in 
Ahmedabad, which commenced operations twenty years back, the profits 
from which are ? 140 lakhs for the A.Y.2025-26. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i)  Assuming that Mr. Kamal has fulfilled all the conditions specified for 
claim of deduction under section 35AD and has not claimed any 
deduction under Chapter VI-A under the heading “C. – Deductions in 
respect of certain incomes”, what would be the quantum of deduction 
under section 35AD, which he is eligible to claim as deduction for 
A.Y.2025-26? 
(a)  ? 250 lakhs 
(b)  ? 200 lakhs 
(c)  ? 100 lakhs  
(d)  ? 150 lakhs 
(ii)  What would be the income chargeable/loss under the head “Profits and 
gains of business or profession” for the A.Y.2025-26 in the hands of 
Mr. Kamal? 
(a)  ? 75 lakhs 
(b)  ? 140 lakhs 
(c)  ? 25 lakhs 
(d)  ( ? 10 lakhs) 
(iii)  Would Mr. Kamal be eligible for deduction under section 80JJAA in the 
A.Y.2025-26? If so, what is the quantum of deduction? 
(a) No, he would not be eligible for deduction u/s 80JJAA 
(b) Yes; ? 75,00,000 
(c) Yes; ? 81,72,000 
(d) Yes; ? 99,72,000 (3 x 2 = 6 Marks)  
2. Mr. Arvind, an Indian citizen, wants to file his return of income for the 
previous year 2024-25. He required assistance for which he has approached 
you. He has shared the following details relevant to the P.Y. 2024-25.  
Mr. Arvind owned a house property in Bangalore and the same was rented 
out for ? 65,000 p.m. to Mr. Arjun, a salaried employee. He claims that this 
was the only income which he earned during the P.Y. 2024-25. However, 
when you had sought for his bank statement, you observed the following 
information additionally.  
There is a credit for ? 23,975 towards income-tax refund which includes  
? 5,775 towards interest on income-tax refund. On 15th August, 2024, the 
bank statement showed a credit of ? 55,000 which he claimed to have 
received as a gift from his grandchildren on his 60th birthday. On further 
assessment you were able to understand that Mr. Arvind and his wife had 
179
travelled to Mauritius during the P.Y. 2024-25 to spend some time with their 
son, who is staying in Mauritius. On scrutiny of their passport and relevant 
documents you conclude that they had left India on 27th September, 2024 
and retuned on 31st March, 2025. During the 4 years preceding previous 
year 2024-25, both had stayed in India for 320 days. Prior to that, they had 
been staying only in India.  
Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i)  What is the residential status of Mr. Arvind for the P.Y. 2024-25?  
(a)  Resident and ordinarily resident  
(b)  Resident but not ordinarily resident  
(c)  Non-resident  
(d)  Deemed resident but not ordinarily resident 
(ii) Is there any requirement to deduct tax at source under section 194-IB 
on such rent by Mr. Arjun? If yes, what would be the amount of TDS to 
be deducted?  
(a)  No, there is no requirement to deduct tax at source under section 
194-IB, since Mr. Arjun is a salaried employee  
(b)  Yes, Mr. Arjun is required to deduct tax at source of ? 39,000 
under section 194-IB  
(c)  Yes, Mr. Arjun is required to deduct tax at source of ? 15,600 
under section 194-IB  
(d)  No, there is no requirement to deduct tax at source under section 
194-IB, since Mr. Arvind is a non-resident  
(iii)  Which of the following statements is correct with respect to advance 
tax liability of Mr. Arvind for P.Y. 2024-25?  
(a)  Advance tax liability shall not arise to Mr. Arvind since he is a 
non-resident  
(b)  Advance tax liability shall not arise, since Mr. Arvind is a resident 
senior citizen and he has no income chargeable under the head 
“Profits and gains of business or profession  
(c)  Advance tax liability shall arise, since he is a non-resident  
(d)  Advance tax liability shall arise, since his tax liability is not less 
than ? 10,000 (3 x 2 = 6 Marks)  
3. Roshini Ltd. has two units, one unit at Special Economic Zone (SEZ) and 
other unit at Domestic Tariff Area (DTA). The unit in SEZ was set up and 
started manufacturing from 12.5.2015 and unit in DTA from 15.6.2018. Total 
turnover of Roshini Ltd. and Unit in DTA is ? 12,50,00,000 and 4,50,00,000, 
respectively. Export sales of units in SEZ and DTA is ? 3,50,00,000 and  
? 2,25,00,000, respectively and net profit of Unit in SEZ and DTA is  
? 95,00,000 and ? 80,00,000, respectively. Out of the export sales of  
? 3,50,00,000, ? 2,00,00,000 have been received in convertible foreign 
180
Page 4


MODEL TEST PAPER 1 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 3: TAXATION 
Time Allowed – 3 Hours Maximum Marks – 100 
SECTION – A: INCOME TAX LAW (50 MARKS) 
Working Notes should form part of the answer. Wherever necessary, suitable 
assumptions may be made by the candidates and disclosed by way of a note. 
However, in answers to Questions in Division A, working notes are not 
required. 
The relevant assessment year is A.Y.2025-26. 
Division A – Multiple Choice Questions 
Write the most appropriate answer to each of the following multiple choice 
questions by choosing one of the four options given. All questions are 
compulsory. 
1. Mr. Kamal, aged 45 years, commenced operations of the business of a new 
three-star hotel in Delhi on 1.4.2024. He incurred capital expenditure of ? 50 
lakhs on land in March, 2024 exclusively for the above business, and 
capitalized the same in his books of account as on 1
st
 April, 2024. Further, 
during the P.Y. 2024-25, he incurred capital expenditure of ? 2 crores (out of 
which ? 50 lakhs was for acquisition of land and ? 1.50 crore was for 
acquisition of building) exclusively for the above business. The payments in 
respect of the above expenditure were made by account payee cheque. The 
profits from the business of running this hotel (before claiming deduction 
under section 35AD) for the A.Y.2025-26 is ? 85 lakhs.  
 He has employed 220 new employees during the P.Y.2024-25, the details of 
whom are as follows – 
 No. of 
employees 
Date of 
employment 
Regular/ 
Casual 
Total monthly 
emoluments per 
employee ( ?) 
(i) 40 1.6.2024 Regular 24,000 
(ii) 80 1.7.2024 Regular 24,500 
(iii) 50 1.7.2024 Casual 25,500 
(iv) 30 1.9.2024 Regular 25,000 
(v) 20 1.12.2024 Casual 24,000 
 All regular employees participate in recognized provident fund and their 
emoluments are paid by account payee cheque. His gross revenue from the 
hotel is ? 11 crores. Mr. Kamal has opted out of the default tax regime under 
section 115BAC. 
178
Mr. Kamal also has another existing business of running a four-star hotel in 
Ahmedabad, which commenced operations twenty years back, the profits 
from which are ? 140 lakhs for the A.Y.2025-26. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i)  Assuming that Mr. Kamal has fulfilled all the conditions specified for 
claim of deduction under section 35AD and has not claimed any 
deduction under Chapter VI-A under the heading “C. – Deductions in 
respect of certain incomes”, what would be the quantum of deduction 
under section 35AD, which he is eligible to claim as deduction for 
A.Y.2025-26? 
(a)  ? 250 lakhs 
(b)  ? 200 lakhs 
(c)  ? 100 lakhs  
(d)  ? 150 lakhs 
(ii)  What would be the income chargeable/loss under the head “Profits and 
gains of business or profession” for the A.Y.2025-26 in the hands of 
Mr. Kamal? 
(a)  ? 75 lakhs 
(b)  ? 140 lakhs 
(c)  ? 25 lakhs 
(d)  ( ? 10 lakhs) 
(iii)  Would Mr. Kamal be eligible for deduction under section 80JJAA in the 
A.Y.2025-26? If so, what is the quantum of deduction? 
(a) No, he would not be eligible for deduction u/s 80JJAA 
(b) Yes; ? 75,00,000 
(c) Yes; ? 81,72,000 
(d) Yes; ? 99,72,000 (3 x 2 = 6 Marks)  
2. Mr. Arvind, an Indian citizen, wants to file his return of income for the 
previous year 2024-25. He required assistance for which he has approached 
you. He has shared the following details relevant to the P.Y. 2024-25.  
Mr. Arvind owned a house property in Bangalore and the same was rented 
out for ? 65,000 p.m. to Mr. Arjun, a salaried employee. He claims that this 
was the only income which he earned during the P.Y. 2024-25. However, 
when you had sought for his bank statement, you observed the following 
information additionally.  
There is a credit for ? 23,975 towards income-tax refund which includes  
? 5,775 towards interest on income-tax refund. On 15th August, 2024, the 
bank statement showed a credit of ? 55,000 which he claimed to have 
received as a gift from his grandchildren on his 60th birthday. On further 
assessment you were able to understand that Mr. Arvind and his wife had 
179
travelled to Mauritius during the P.Y. 2024-25 to spend some time with their 
son, who is staying in Mauritius. On scrutiny of their passport and relevant 
documents you conclude that they had left India on 27th September, 2024 
and retuned on 31st March, 2025. During the 4 years preceding previous 
year 2024-25, both had stayed in India for 320 days. Prior to that, they had 
been staying only in India.  
Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i)  What is the residential status of Mr. Arvind for the P.Y. 2024-25?  
(a)  Resident and ordinarily resident  
(b)  Resident but not ordinarily resident  
(c)  Non-resident  
(d)  Deemed resident but not ordinarily resident 
(ii) Is there any requirement to deduct tax at source under section 194-IB 
on such rent by Mr. Arjun? If yes, what would be the amount of TDS to 
be deducted?  
(a)  No, there is no requirement to deduct tax at source under section 
194-IB, since Mr. Arjun is a salaried employee  
(b)  Yes, Mr. Arjun is required to deduct tax at source of ? 39,000 
under section 194-IB  
(c)  Yes, Mr. Arjun is required to deduct tax at source of ? 15,600 
under section 194-IB  
(d)  No, there is no requirement to deduct tax at source under section 
194-IB, since Mr. Arvind is a non-resident  
(iii)  Which of the following statements is correct with respect to advance 
tax liability of Mr. Arvind for P.Y. 2024-25?  
(a)  Advance tax liability shall not arise to Mr. Arvind since he is a 
non-resident  
(b)  Advance tax liability shall not arise, since Mr. Arvind is a resident 
senior citizen and he has no income chargeable under the head 
“Profits and gains of business or profession  
(c)  Advance tax liability shall arise, since he is a non-resident  
(d)  Advance tax liability shall arise, since his tax liability is not less 
than ? 10,000 (3 x 2 = 6 Marks)  
3. Roshini Ltd. has two units, one unit at Special Economic Zone (SEZ) and 
other unit at Domestic Tariff Area (DTA). The unit in SEZ was set up and 
started manufacturing from 12.5.2015 and unit in DTA from 15.6.2018. Total 
turnover of Roshini Ltd. and Unit in DTA is ? 12,50,00,000 and 4,50,00,000, 
respectively. Export sales of units in SEZ and DTA is ? 3,50,00,000 and  
? 2,25,00,000, respectively and net profit of Unit in SEZ and DTA is  
? 95,00,000 and ? 80,00,000, respectively. Out of the export sales of  
? 3,50,00,000, ? 2,00,00,000 have been received in convertible foreign 
180
exchange by 30.9.2025. Roshini Ltd. would be eligible for deduction under 
section 10AA for - 
(a) ? 20,78,125  
(b) ? 41,56,250 
(c) ? 11,87,500 
(d) ? 23,75,000 (2 Marks) 
4. What would be the tax liability of Ms. Savita, a resident, who attained the 
age of 60 years on 01.04.2025 on the total income of ? 7,25,000, comprising 
of salary income and interest on fixed deposits under default tax regime 
under section 115BAC?  
(a)  ? 28,600 
(b)  ? 26,000 
(c)  ? 23,400 
(d)  ? 2,600   (1 Mark) 
 
Division B – Descriptive Questions 
Question No. 1 is compulsory 
Attempt any two questions from the remaining three questions 
1. Mr. Amit, having business of manufacturing of furniture, gives the following 
Trading and Profit & Loss Account for the year ended 31.03.2025: 
Trading and Profit & Loss Account 
Particulars ? Particulars ? 
Opening Stock 5,62,500 Sales  2,33,25,000 
Purchases  1,88,62,500 Closing Stock 6,75,000 
Freight & Cartage 1,89,000   
Gross profit   43,86,000    
 2,40,00,000  2,40,00,000 
Bonus to staff 71,250 Gross profit  43,86,000 
Rent of premises 80,250 Income-tax refund 30,000 
Advertisement 7,500 Warehousing 
charges  
22,50,000 
Bad Debts 1,12,500   
Interest on loans 2,51,250   
Depreciation 1,07,250   
Goods and Services tax 
demand paid 
1,62,525   
181
Page 5


MODEL TEST PAPER 1 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 3: TAXATION 
Time Allowed – 3 Hours Maximum Marks – 100 
SECTION – A: INCOME TAX LAW (50 MARKS) 
Working Notes should form part of the answer. Wherever necessary, suitable 
assumptions may be made by the candidates and disclosed by way of a note. 
However, in answers to Questions in Division A, working notes are not 
required. 
The relevant assessment year is A.Y.2025-26. 
Division A – Multiple Choice Questions 
Write the most appropriate answer to each of the following multiple choice 
questions by choosing one of the four options given. All questions are 
compulsory. 
1. Mr. Kamal, aged 45 years, commenced operations of the business of a new 
three-star hotel in Delhi on 1.4.2024. He incurred capital expenditure of ? 50 
lakhs on land in March, 2024 exclusively for the above business, and 
capitalized the same in his books of account as on 1
st
 April, 2024. Further, 
during the P.Y. 2024-25, he incurred capital expenditure of ? 2 crores (out of 
which ? 50 lakhs was for acquisition of land and ? 1.50 crore was for 
acquisition of building) exclusively for the above business. The payments in 
respect of the above expenditure were made by account payee cheque. The 
profits from the business of running this hotel (before claiming deduction 
under section 35AD) for the A.Y.2025-26 is ? 85 lakhs.  
 He has employed 220 new employees during the P.Y.2024-25, the details of 
whom are as follows – 
 No. of 
employees 
Date of 
employment 
Regular/ 
Casual 
Total monthly 
emoluments per 
employee ( ?) 
(i) 40 1.6.2024 Regular 24,000 
(ii) 80 1.7.2024 Regular 24,500 
(iii) 50 1.7.2024 Casual 25,500 
(iv) 30 1.9.2024 Regular 25,000 
(v) 20 1.12.2024 Casual 24,000 
 All regular employees participate in recognized provident fund and their 
emoluments are paid by account payee cheque. His gross revenue from the 
hotel is ? 11 crores. Mr. Kamal has opted out of the default tax regime under 
section 115BAC. 
178
Mr. Kamal also has another existing business of running a four-star hotel in 
Ahmedabad, which commenced operations twenty years back, the profits 
from which are ? 140 lakhs for the A.Y.2025-26. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i)  Assuming that Mr. Kamal has fulfilled all the conditions specified for 
claim of deduction under section 35AD and has not claimed any 
deduction under Chapter VI-A under the heading “C. – Deductions in 
respect of certain incomes”, what would be the quantum of deduction 
under section 35AD, which he is eligible to claim as deduction for 
A.Y.2025-26? 
(a)  ? 250 lakhs 
(b)  ? 200 lakhs 
(c)  ? 100 lakhs  
(d)  ? 150 lakhs 
(ii)  What would be the income chargeable/loss under the head “Profits and 
gains of business or profession” for the A.Y.2025-26 in the hands of 
Mr. Kamal? 
(a)  ? 75 lakhs 
(b)  ? 140 lakhs 
(c)  ? 25 lakhs 
(d)  ( ? 10 lakhs) 
(iii)  Would Mr. Kamal be eligible for deduction under section 80JJAA in the 
A.Y.2025-26? If so, what is the quantum of deduction? 
(a) No, he would not be eligible for deduction u/s 80JJAA 
(b) Yes; ? 75,00,000 
(c) Yes; ? 81,72,000 
(d) Yes; ? 99,72,000 (3 x 2 = 6 Marks)  
2. Mr. Arvind, an Indian citizen, wants to file his return of income for the 
previous year 2024-25. He required assistance for which he has approached 
you. He has shared the following details relevant to the P.Y. 2024-25.  
Mr. Arvind owned a house property in Bangalore and the same was rented 
out for ? 65,000 p.m. to Mr. Arjun, a salaried employee. He claims that this 
was the only income which he earned during the P.Y. 2024-25. However, 
when you had sought for his bank statement, you observed the following 
information additionally.  
There is a credit for ? 23,975 towards income-tax refund which includes  
? 5,775 towards interest on income-tax refund. On 15th August, 2024, the 
bank statement showed a credit of ? 55,000 which he claimed to have 
received as a gift from his grandchildren on his 60th birthday. On further 
assessment you were able to understand that Mr. Arvind and his wife had 
179
travelled to Mauritius during the P.Y. 2024-25 to spend some time with their 
son, who is staying in Mauritius. On scrutiny of their passport and relevant 
documents you conclude that they had left India on 27th September, 2024 
and retuned on 31st March, 2025. During the 4 years preceding previous 
year 2024-25, both had stayed in India for 320 days. Prior to that, they had 
been staying only in India.  
Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i)  What is the residential status of Mr. Arvind for the P.Y. 2024-25?  
(a)  Resident and ordinarily resident  
(b)  Resident but not ordinarily resident  
(c)  Non-resident  
(d)  Deemed resident but not ordinarily resident 
(ii) Is there any requirement to deduct tax at source under section 194-IB 
on such rent by Mr. Arjun? If yes, what would be the amount of TDS to 
be deducted?  
(a)  No, there is no requirement to deduct tax at source under section 
194-IB, since Mr. Arjun is a salaried employee  
(b)  Yes, Mr. Arjun is required to deduct tax at source of ? 39,000 
under section 194-IB  
(c)  Yes, Mr. Arjun is required to deduct tax at source of ? 15,600 
under section 194-IB  
(d)  No, there is no requirement to deduct tax at source under section 
194-IB, since Mr. Arvind is a non-resident  
(iii)  Which of the following statements is correct with respect to advance 
tax liability of Mr. Arvind for P.Y. 2024-25?  
(a)  Advance tax liability shall not arise to Mr. Arvind since he is a 
non-resident  
(b)  Advance tax liability shall not arise, since Mr. Arvind is a resident 
senior citizen and he has no income chargeable under the head 
“Profits and gains of business or profession  
(c)  Advance tax liability shall arise, since he is a non-resident  
(d)  Advance tax liability shall arise, since his tax liability is not less 
than ? 10,000 (3 x 2 = 6 Marks)  
3. Roshini Ltd. has two units, one unit at Special Economic Zone (SEZ) and 
other unit at Domestic Tariff Area (DTA). The unit in SEZ was set up and 
started manufacturing from 12.5.2015 and unit in DTA from 15.6.2018. Total 
turnover of Roshini Ltd. and Unit in DTA is ? 12,50,00,000 and 4,50,00,000, 
respectively. Export sales of units in SEZ and DTA is ? 3,50,00,000 and  
? 2,25,00,000, respectively and net profit of Unit in SEZ and DTA is  
? 95,00,000 and ? 80,00,000, respectively. Out of the export sales of  
? 3,50,00,000, ? 2,00,00,000 have been received in convertible foreign 
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exchange by 30.9.2025. Roshini Ltd. would be eligible for deduction under 
section 10AA for - 
(a) ? 20,78,125  
(b) ? 41,56,250 
(c) ? 11,87,500 
(d) ? 23,75,000 (2 Marks) 
4. What would be the tax liability of Ms. Savita, a resident, who attained the 
age of 60 years on 01.04.2025 on the total income of ? 7,25,000, comprising 
of salary income and interest on fixed deposits under default tax regime 
under section 115BAC?  
(a)  ? 28,600 
(b)  ? 26,000 
(c)  ? 23,400 
(d)  ? 2,600   (1 Mark) 
 
Division B – Descriptive Questions 
Question No. 1 is compulsory 
Attempt any two questions from the remaining three questions 
1. Mr. Amit, having business of manufacturing of furniture, gives the following 
Trading and Profit & Loss Account for the year ended 31.03.2025: 
Trading and Profit & Loss Account 
Particulars ? Particulars ? 
Opening Stock 5,62,500 Sales  2,33,25,000 
Purchases  1,88,62,500 Closing Stock 6,75,000 
Freight & Cartage 1,89,000   
Gross profit   43,86,000    
 2,40,00,000  2,40,00,000 
Bonus to staff 71,250 Gross profit  43,86,000 
Rent of premises 80,250 Income-tax refund 30,000 
Advertisement 7,500 Warehousing 
charges  
22,50,000 
Bad Debts 1,12,500   
Interest on loans 2,51,250   
Depreciation 1,07,250   
Goods and Services tax 
demand paid 
1,62,525   
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Salary 5,50,000   
Miscellaneous 
expenses 
2,38,475   
Net profit  50,85,000   
 66,66,000  66,66,000 
Following are the further information relating to the financial year 2024-25: 
(i) Income-tax refund includes amount of ? 4,570 of interest allowed 
thereon. 
(ii) Salary includes ? 30,000 paid to his brother which is unreasonable to 
the extent of ? 5,000. 
(iii)  Advertisement expenses include an amount of ? 2,500 paid for 
advertisement published in the souvenir issued by a political party. The 
payment is made by way of an account payee cheque. 
(iv) Miscellaneous expenses include an amount of ? 1,00,000 paid to 
Political Party by cheque. 
(v) Goods and Services Tax demand paid includes an amount of ? 5,300 
charged as penalty for delayed filing of returns and ? 12,750 towards 
interest for delay in deposit of tax.  
(vi) Mr. Amiit had purchased a warehouse building of ? 20 lakhs in rural 
area for the purpose of storage of agricultural produce. This was made 
available for use from 15.07.2024 and the income from this activity is 
credited in the Profit and Loss account under the head “Warehousing 
charges”. 
(vii) Depreciation under the Income-tax Act, 1961 works out at ? 65,000 
excluding depreciation on warehouse building. 
(viii) Interest on loans includes an amount of ? 80,000 paid to Mr. Mohit, a 
resident, on which tax was not deducted. 
 Compute the total income and tax liability of Mr. Amit for the A.Y. 2025-26 in 
a most beneficial manner. (15 Marks) 
2. (a) Mr. Akash, an Indian citizen aged 45 years, worked in XYZ Ltd. in 
Delhi. He got a job offer from ABC Inc., California on 01.06.2023. He 
left India for the first time on 31.07.2023 and joined ABC Inc. on 
08.08.2023. During the P.Y. 2024-25, Mr. Akash visited India from 
25.05.2024 to 22.09.2024. He has received the following income for the 
previous year 2024-25: 
Particulars ? 
Salary from ABC Inc., California received in California 
(Computed) 
7,00,000 
Dividend from Indian companies 5,00,000 
Agricultural income from land situated in Nepal, received 
in Nepal 
4,00,000 
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