Income Tax Law (Group I) Model Test Paper - 2 (Questions) | Model Test Papers for CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 2 
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. Pankaj, an Indian resident, purchased a residential house property at 
Kanpur on 20.08.1998 for ? 20.5 lakhs. The fair market value and the stamp 
duty value of such house property as on 1.4.2001 was ? 28.5 lakhs and ? 25 
lakhs, respectively. On 05.02.2016, Mr. Pankaj entered into an agreement 
with Mr. Gyan for the sale of such property for ? 61 lakhs and received an 
amount of ? 2.5 lakhs as advance. However, as Mr. Gyan did not pay the 
balance amount, Mr. Pankaj forfeited the advance.  
 On 10.05.2024, Mr. Pankaj sold the house property to Mr. Rohan for ? 1.50 
crores, when the stamp duty value of the property was ? 2 crores. Further, 
he purchased two residential house properties at Delhi and Mumbai for ? 57 
lakhs each on 28.09.2025. Mr. Pankaj has no other income during the  
P.Y. 2024-25. The due date for filing return of income for Mr. Pankaj is  
31
st
 July, 2025. 
 On 31.01.2026, Mr. Pankaj decided to sell the house property at Mumbai to 
his brother, Mr. Gaurav, for ? 58 lakhs, from whom ? 25,000 was received in 
cash on 15.01.2026 as advance for signing the agreement to sale. Sale 
deed was registered on 30.03.2026 on receipt of the balance amount 
through account payee cheque from Mr. Gaurav. The stamp duty value of 
house property at Mumbai on 31.01.2026 and 30.03.2026 was ? 61 lakhs 
and ? 64 lakhs, respectively.  
 Cost inflation index – 
 P.Y. 2024-25: 363; P.Y. 2015-16: 254; P.Y. 2001-02: 100  
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i) What shall be the indexed cost of acquisition of residential house 
property at Kanpur for computation of capital gains in the hands of  
Mr. Pankaj? 
186
Page 2


MODEL TEST PAPER 2 
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. Pankaj, an Indian resident, purchased a residential house property at 
Kanpur on 20.08.1998 for ? 20.5 lakhs. The fair market value and the stamp 
duty value of such house property as on 1.4.2001 was ? 28.5 lakhs and ? 25 
lakhs, respectively. On 05.02.2016, Mr. Pankaj entered into an agreement 
with Mr. Gyan for the sale of such property for ? 61 lakhs and received an 
amount of ? 2.5 lakhs as advance. However, as Mr. Gyan did not pay the 
balance amount, Mr. Pankaj forfeited the advance.  
 On 10.05.2024, Mr. Pankaj sold the house property to Mr. Rohan for ? 1.50 
crores, when the stamp duty value of the property was ? 2 crores. Further, 
he purchased two residential house properties at Delhi and Mumbai for ? 57 
lakhs each on 28.09.2025. Mr. Pankaj has no other income during the  
P.Y. 2024-25. The due date for filing return of income for Mr. Pankaj is  
31
st
 July, 2025. 
 On 31.01.2026, Mr. Pankaj decided to sell the house property at Mumbai to 
his brother, Mr. Gaurav, for ? 58 lakhs, from whom ? 25,000 was received in 
cash on 15.01.2026 as advance for signing the agreement to sale. Sale 
deed was registered on 30.03.2026 on receipt of the balance amount 
through account payee cheque from Mr. Gaurav. The stamp duty value of 
house property at Mumbai on 31.01.2026 and 30.03.2026 was ? 61 lakhs 
and ? 64 lakhs, respectively.  
 Cost inflation index – 
 P.Y. 2024-25: 363; P.Y. 2015-16: 254; P.Y. 2001-02: 100  
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i) What shall be the indexed cost of acquisition of residential house 
property at Kanpur for computation of capital gains in the hands of  
Mr. Pankaj? 
186
(a) ? 81,67,500  
(b) ? 90,75,000 
(c) ? 94,38,000 
(d) ? 1,03,45,500 
(ii) The amount of capital gains taxable for A.Y. 2025-26 in the hands of 
Mr. Pankaj for sale of residential house property at Kanpur is -  
(a) Nil 
(b) ? 81,67,500 
(c) ? 52,25,000 
(d) ? 1,09,25,000 
(iii) The amount of capital gains taxable for A.Y. 2026-27 in the hands of 
Mr. Pankaj for sale of residential house property at Mumbai is - 
(a) ? 8 lakhs 
(b) ? 7 lakhs 
(c) ? 64 lakhs 
(d) ? 1 lakh 
(iv) The amount taxable under section 56(2)(x) in the hands of Mr. Gaurav, 
if any, is - 
(a) Nil 
(b) ? 1 lakh 
(c) ? 3 lakhs 
(d) ? 6 lakhs 
(v) What shall be the tax credit available with Mr. Pankaj with respect to 
sale of property at Kanpur during P.Y. 2024-25 assuming the tax was  
fully deducted by Mr. Rohan? 
(a) ? 2,00,000  
(b) ? 1,50,000 
(c) ? 1,00,000 
(d) ? 87,000 
(vi)  Is Mr. Pankaj required to file his return of income for A.Y. 2025-26? 
(a) Yes, since his total income exceeds the basic exemption limit 
(b) No, since his total income does not exceed the basic exemption 
limit 
(c) Yes, since tax deducted in his case exceeds ? 25,000  
(d) Yes, since his total income before exemption under section 54 
exceeds the basic exemption limit  (6 x 2 = 12 Marks)  
187
Page 3


MODEL TEST PAPER 2 
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. Pankaj, an Indian resident, purchased a residential house property at 
Kanpur on 20.08.1998 for ? 20.5 lakhs. The fair market value and the stamp 
duty value of such house property as on 1.4.2001 was ? 28.5 lakhs and ? 25 
lakhs, respectively. On 05.02.2016, Mr. Pankaj entered into an agreement 
with Mr. Gyan for the sale of such property for ? 61 lakhs and received an 
amount of ? 2.5 lakhs as advance. However, as Mr. Gyan did not pay the 
balance amount, Mr. Pankaj forfeited the advance.  
 On 10.05.2024, Mr. Pankaj sold the house property to Mr. Rohan for ? 1.50 
crores, when the stamp duty value of the property was ? 2 crores. Further, 
he purchased two residential house properties at Delhi and Mumbai for ? 57 
lakhs each on 28.09.2025. Mr. Pankaj has no other income during the  
P.Y. 2024-25. The due date for filing return of income for Mr. Pankaj is  
31
st
 July, 2025. 
 On 31.01.2026, Mr. Pankaj decided to sell the house property at Mumbai to 
his brother, Mr. Gaurav, for ? 58 lakhs, from whom ? 25,000 was received in 
cash on 15.01.2026 as advance for signing the agreement to sale. Sale 
deed was registered on 30.03.2026 on receipt of the balance amount 
through account payee cheque from Mr. Gaurav. The stamp duty value of 
house property at Mumbai on 31.01.2026 and 30.03.2026 was ? 61 lakhs 
and ? 64 lakhs, respectively.  
 Cost inflation index – 
 P.Y. 2024-25: 363; P.Y. 2015-16: 254; P.Y. 2001-02: 100  
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i) What shall be the indexed cost of acquisition of residential house 
property at Kanpur for computation of capital gains in the hands of  
Mr. Pankaj? 
186
(a) ? 81,67,500  
(b) ? 90,75,000 
(c) ? 94,38,000 
(d) ? 1,03,45,500 
(ii) The amount of capital gains taxable for A.Y. 2025-26 in the hands of 
Mr. Pankaj for sale of residential house property at Kanpur is -  
(a) Nil 
(b) ? 81,67,500 
(c) ? 52,25,000 
(d) ? 1,09,25,000 
(iii) The amount of capital gains taxable for A.Y. 2026-27 in the hands of 
Mr. Pankaj for sale of residential house property at Mumbai is - 
(a) ? 8 lakhs 
(b) ? 7 lakhs 
(c) ? 64 lakhs 
(d) ? 1 lakh 
(iv) The amount taxable under section 56(2)(x) in the hands of Mr. Gaurav, 
if any, is - 
(a) Nil 
(b) ? 1 lakh 
(c) ? 3 lakhs 
(d) ? 6 lakhs 
(v) What shall be the tax credit available with Mr. Pankaj with respect to 
sale of property at Kanpur during P.Y. 2024-25 assuming the tax was  
fully deducted by Mr. Rohan? 
(a) ? 2,00,000  
(b) ? 1,50,000 
(c) ? 1,00,000 
(d) ? 87,000 
(vi)  Is Mr. Pankaj required to file his return of income for A.Y. 2025-26? 
(a) Yes, since his total income exceeds the basic exemption limit 
(b) No, since his total income does not exceed the basic exemption 
limit 
(c) Yes, since tax deducted in his case exceeds ? 25,000  
(d) Yes, since his total income before exemption under section 54 
exceeds the basic exemption limit  (6 x 2 = 12 Marks)  
187
2. Mrs. Deepika, wife of Mr. Santosh, started a business of trading in beauty 
products on 15.7.2024. She invested ? 5 lakhs in the business on 15.7.2024 
out of gift received from her husband, Mr. Santosh. She invested ? 4 lakhs 
from her own savings on the same date. She earned profits of ? 9,00,000 
from her business for the financial year 2024-25. Which of the following 
statements is correct? 
(a) Share of profit of ? 9,00,000 is includible in the hands of Mrs. Deepika  
(b) Share of profit of ? 5,00,00 is includible in the hands of Mr. Santosh 
and share of profit of ? 4,00,000 is includible in the hands of  
Mrs. Deepika 
(c) Share of profit of ? 4,00,000 is includible in the hands of Mr. Santosh 
and share of profit of ? 5,00,000 is includible in the hands of  
Mrs. Deepika 
(d) Share of profit of ? 9,00,000 is includible in the hands of Mr. Santosh  
(2 Marks) 
3. Mr. X, a resident 47 years, has salary income (computed) of ? 7,25,000 and 
agricultural income of ? 1,00,000 for the P.Y. 2024-25. Compute his tax 
liability for A.Y. 2025-26 if he has opted out of the default tax regime under 
section 115BAC.   
(a) ? 59,800 
(b) ? 72,500 
(c) ? 75,400 
(d) ? 80,600 (1 Mark) 
 
Division B – Descriptive Questions 
Question No. 1 is compulsory. 
Attempt any two questions from the remaining three questions. 
1. Mr. Sunil, aged 48 years, a resident Indian has furnished the following 
particulars for the year ended 31.03.2025:  
(i)  He occupies ground floor of his residential building and has let out first 
floor for residential use at an annual rent of ? 2,95,000. He has paid 
municipal taxes of ? 25,000 for the current financial year. Both these 
floors are of equal size. 
(ii) As per interest certificate from HDFC bank, he paid ? 1,50,000 as 
interest and ? 80,000 towards principal repayment of housing loan 
borrowed for the above residential building in the year 2018. 
(iii)  He owns an industrial undertaking established in a SEZ and which had 
commenced operation during the financial year 2019-20. Total turnover 
of the undertaking was ? 400 lakhs, which includes ? 150 lakhs from 
export turnover. Out of ? 150 lakhs, only ? 120 lakhs have been 
received in India in convertible foreign exchange on or before 
188
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MODEL TEST PAPER 2 
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. Pankaj, an Indian resident, purchased a residential house property at 
Kanpur on 20.08.1998 for ? 20.5 lakhs. The fair market value and the stamp 
duty value of such house property as on 1.4.2001 was ? 28.5 lakhs and ? 25 
lakhs, respectively. On 05.02.2016, Mr. Pankaj entered into an agreement 
with Mr. Gyan for the sale of such property for ? 61 lakhs and received an 
amount of ? 2.5 lakhs as advance. However, as Mr. Gyan did not pay the 
balance amount, Mr. Pankaj forfeited the advance.  
 On 10.05.2024, Mr. Pankaj sold the house property to Mr. Rohan for ? 1.50 
crores, when the stamp duty value of the property was ? 2 crores. Further, 
he purchased two residential house properties at Delhi and Mumbai for ? 57 
lakhs each on 28.09.2025. Mr. Pankaj has no other income during the  
P.Y. 2024-25. The due date for filing return of income for Mr. Pankaj is  
31
st
 July, 2025. 
 On 31.01.2026, Mr. Pankaj decided to sell the house property at Mumbai to 
his brother, Mr. Gaurav, for ? 58 lakhs, from whom ? 25,000 was received in 
cash on 15.01.2026 as advance for signing the agreement to sale. Sale 
deed was registered on 30.03.2026 on receipt of the balance amount 
through account payee cheque from Mr. Gaurav. The stamp duty value of 
house property at Mumbai on 31.01.2026 and 30.03.2026 was ? 61 lakhs 
and ? 64 lakhs, respectively.  
 Cost inflation index – 
 P.Y. 2024-25: 363; P.Y. 2015-16: 254; P.Y. 2001-02: 100  
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i) What shall be the indexed cost of acquisition of residential house 
property at Kanpur for computation of capital gains in the hands of  
Mr. Pankaj? 
186
(a) ? 81,67,500  
(b) ? 90,75,000 
(c) ? 94,38,000 
(d) ? 1,03,45,500 
(ii) The amount of capital gains taxable for A.Y. 2025-26 in the hands of 
Mr. Pankaj for sale of residential house property at Kanpur is -  
(a) Nil 
(b) ? 81,67,500 
(c) ? 52,25,000 
(d) ? 1,09,25,000 
(iii) The amount of capital gains taxable for A.Y. 2026-27 in the hands of 
Mr. Pankaj for sale of residential house property at Mumbai is - 
(a) ? 8 lakhs 
(b) ? 7 lakhs 
(c) ? 64 lakhs 
(d) ? 1 lakh 
(iv) The amount taxable under section 56(2)(x) in the hands of Mr. Gaurav, 
if any, is - 
(a) Nil 
(b) ? 1 lakh 
(c) ? 3 lakhs 
(d) ? 6 lakhs 
(v) What shall be the tax credit available with Mr. Pankaj with respect to 
sale of property at Kanpur during P.Y. 2024-25 assuming the tax was  
fully deducted by Mr. Rohan? 
(a) ? 2,00,000  
(b) ? 1,50,000 
(c) ? 1,00,000 
(d) ? 87,000 
(vi)  Is Mr. Pankaj required to file his return of income for A.Y. 2025-26? 
(a) Yes, since his total income exceeds the basic exemption limit 
(b) No, since his total income does not exceed the basic exemption 
limit 
(c) Yes, since tax deducted in his case exceeds ? 25,000  
(d) Yes, since his total income before exemption under section 54 
exceeds the basic exemption limit  (6 x 2 = 12 Marks)  
187
2. Mrs. Deepika, wife of Mr. Santosh, started a business of trading in beauty 
products on 15.7.2024. She invested ? 5 lakhs in the business on 15.7.2024 
out of gift received from her husband, Mr. Santosh. She invested ? 4 lakhs 
from her own savings on the same date. She earned profits of ? 9,00,000 
from her business for the financial year 2024-25. Which of the following 
statements is correct? 
(a) Share of profit of ? 9,00,000 is includible in the hands of Mrs. Deepika  
(b) Share of profit of ? 5,00,00 is includible in the hands of Mr. Santosh 
and share of profit of ? 4,00,000 is includible in the hands of  
Mrs. Deepika 
(c) Share of profit of ? 4,00,000 is includible in the hands of Mr. Santosh 
and share of profit of ? 5,00,000 is includible in the hands of  
Mrs. Deepika 
(d) Share of profit of ? 9,00,000 is includible in the hands of Mr. Santosh  
(2 Marks) 
3. Mr. X, a resident 47 years, has salary income (computed) of ? 7,25,000 and 
agricultural income of ? 1,00,000 for the P.Y. 2024-25. Compute his tax 
liability for A.Y. 2025-26 if he has opted out of the default tax regime under 
section 115BAC.   
(a) ? 59,800 
(b) ? 72,500 
(c) ? 75,400 
(d) ? 80,600 (1 Mark) 
 
Division B – Descriptive Questions 
Question No. 1 is compulsory. 
Attempt any two questions from the remaining three questions. 
1. Mr. Sunil, aged 48 years, a resident Indian has furnished the following 
particulars for the year ended 31.03.2025:  
(i)  He occupies ground floor of his residential building and has let out first 
floor for residential use at an annual rent of ? 2,95,000. He has paid 
municipal taxes of ? 25,000 for the current financial year. Both these 
floors are of equal size. 
(ii) As per interest certificate from HDFC bank, he paid ? 1,50,000 as 
interest and ? 80,000 towards principal repayment of housing loan 
borrowed for the above residential building in the year 2018. 
(iii)  He owns an industrial undertaking established in a SEZ and which had 
commenced operation during the financial year 2019-20. Total turnover 
of the undertaking was ? 400 lakhs, which includes ? 150 lakhs from 
export turnover. Out of ? 150 lakhs, only ? 120 lakhs have been 
received in India in convertible foreign exchange on or before 
188
30.9.2025. This industrial undertaking fulfills all the conditions of 
section 10AA of the Income-tax Act, 1961. Profit from this industry is  
? 40 lakhs. 
(iv)  He employed 20 new employees for the said industrial undertaking 
during the previous year 2024-25. Out of 20 employees, 12 were 
employed on 1
st
 May 2024 for monthly emoluments of ? 18,000 and 
remaining were employed on 1
st
 September 2024 on monthly 
emoluments of ? 12,000. All these employees participate in recognised 
provident fund and they are paid their emoluments directly to their bank 
accounts.  
(v) He earned ? 30,000 and ? 40,000 as interest on saving bank deposits 
and fixed deposits, respectively. 
(vi)  He also sold his vacant land on 01.12.2024 for ? 15 lakhs. The stamp 
duty value of land at the time of transfer was ? 16 lakhs. This land was 
acquired by him on 15.10.1998 for ? 2.80 lakhs. The FMV of the land 
as on 1
st
 April, 2001 was ? 4.8 lakhs and Stamp duty value on the said 
date was ? 4 lakhs. He had incurred registration expenses of  
? 12,000 at that time.  
The cost of inflation index for the financial year 2024-25 and 2001-02 
are 363 and 100, respectively. 
(vii)  He paid insurance premium of ? 40,000 towards life insurance policy of 
his son, who is not dependent on him.  
You are requested to compute total income and tax liability of  
Mr. Sunil for the Assessment Year 2025-26 under default tax regime.  
 (15 Marks) 
2. (a) Mrs. Sia D’Souza is an American, got married to Mr. Kabir of India in 
New York on 14.02.2024 and came to India for the first time on 
18.03.2024. She left for Australia on 16.08.2024. She returned to India 
again on 23.03.2025.  
 On 01.04.2024, she had purchased a Flat in Mumbai, which was let out 
to Mr. Sameer on a rent of ? 26,000 p.m. from 1.6.2024. She had taken 
loan from an Indian bank for purchase of this flat on which bank had 
charged interest of ? 2,05,000 upto 31.03.2025.  
 While in India, during the previous year 2024-25, she had received a 
gold chain from her in laws worth ? 1,50,000 and ? 1,65,000 from very 
close friends of her husband. 
 From the information given above, you are required to determine her 
the residential status and compute her total income chargeable to tax 
for the Assessment Year 2025-26 assuming she has shifted out of the 
default tax regime under section 115BAC. (6 Marks) 
(b)  Briefly discuss the provisions of tax deduction/collection at source 
under the Income-tax Act, 1961 and determine the amount, if any, of 
TDS and TCS in respect of the following payments: 
189
Page 5


MODEL TEST PAPER 2 
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. Pankaj, an Indian resident, purchased a residential house property at 
Kanpur on 20.08.1998 for ? 20.5 lakhs. The fair market value and the stamp 
duty value of such house property as on 1.4.2001 was ? 28.5 lakhs and ? 25 
lakhs, respectively. On 05.02.2016, Mr. Pankaj entered into an agreement 
with Mr. Gyan for the sale of such property for ? 61 lakhs and received an 
amount of ? 2.5 lakhs as advance. However, as Mr. Gyan did not pay the 
balance amount, Mr. Pankaj forfeited the advance.  
 On 10.05.2024, Mr. Pankaj sold the house property to Mr. Rohan for ? 1.50 
crores, when the stamp duty value of the property was ? 2 crores. Further, 
he purchased two residential house properties at Delhi and Mumbai for ? 57 
lakhs each on 28.09.2025. Mr. Pankaj has no other income during the  
P.Y. 2024-25. The due date for filing return of income for Mr. Pankaj is  
31
st
 July, 2025. 
 On 31.01.2026, Mr. Pankaj decided to sell the house property at Mumbai to 
his brother, Mr. Gaurav, for ? 58 lakhs, from whom ? 25,000 was received in 
cash on 15.01.2026 as advance for signing the agreement to sale. Sale 
deed was registered on 30.03.2026 on receipt of the balance amount 
through account payee cheque from Mr. Gaurav. The stamp duty value of 
house property at Mumbai on 31.01.2026 and 30.03.2026 was ? 61 lakhs 
and ? 64 lakhs, respectively.  
 Cost inflation index – 
 P.Y. 2024-25: 363; P.Y. 2015-16: 254; P.Y. 2001-02: 100  
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i) What shall be the indexed cost of acquisition of residential house 
property at Kanpur for computation of capital gains in the hands of  
Mr. Pankaj? 
186
(a) ? 81,67,500  
(b) ? 90,75,000 
(c) ? 94,38,000 
(d) ? 1,03,45,500 
(ii) The amount of capital gains taxable for A.Y. 2025-26 in the hands of 
Mr. Pankaj for sale of residential house property at Kanpur is -  
(a) Nil 
(b) ? 81,67,500 
(c) ? 52,25,000 
(d) ? 1,09,25,000 
(iii) The amount of capital gains taxable for A.Y. 2026-27 in the hands of 
Mr. Pankaj for sale of residential house property at Mumbai is - 
(a) ? 8 lakhs 
(b) ? 7 lakhs 
(c) ? 64 lakhs 
(d) ? 1 lakh 
(iv) The amount taxable under section 56(2)(x) in the hands of Mr. Gaurav, 
if any, is - 
(a) Nil 
(b) ? 1 lakh 
(c) ? 3 lakhs 
(d) ? 6 lakhs 
(v) What shall be the tax credit available with Mr. Pankaj with respect to 
sale of property at Kanpur during P.Y. 2024-25 assuming the tax was  
fully deducted by Mr. Rohan? 
(a) ? 2,00,000  
(b) ? 1,50,000 
(c) ? 1,00,000 
(d) ? 87,000 
(vi)  Is Mr. Pankaj required to file his return of income for A.Y. 2025-26? 
(a) Yes, since his total income exceeds the basic exemption limit 
(b) No, since his total income does not exceed the basic exemption 
limit 
(c) Yes, since tax deducted in his case exceeds ? 25,000  
(d) Yes, since his total income before exemption under section 54 
exceeds the basic exemption limit  (6 x 2 = 12 Marks)  
187
2. Mrs. Deepika, wife of Mr. Santosh, started a business of trading in beauty 
products on 15.7.2024. She invested ? 5 lakhs in the business on 15.7.2024 
out of gift received from her husband, Mr. Santosh. She invested ? 4 lakhs 
from her own savings on the same date. She earned profits of ? 9,00,000 
from her business for the financial year 2024-25. Which of the following 
statements is correct? 
(a) Share of profit of ? 9,00,000 is includible in the hands of Mrs. Deepika  
(b) Share of profit of ? 5,00,00 is includible in the hands of Mr. Santosh 
and share of profit of ? 4,00,000 is includible in the hands of  
Mrs. Deepika 
(c) Share of profit of ? 4,00,000 is includible in the hands of Mr. Santosh 
and share of profit of ? 5,00,000 is includible in the hands of  
Mrs. Deepika 
(d) Share of profit of ? 9,00,000 is includible in the hands of Mr. Santosh  
(2 Marks) 
3. Mr. X, a resident 47 years, has salary income (computed) of ? 7,25,000 and 
agricultural income of ? 1,00,000 for the P.Y. 2024-25. Compute his tax 
liability for A.Y. 2025-26 if he has opted out of the default tax regime under 
section 115BAC.   
(a) ? 59,800 
(b) ? 72,500 
(c) ? 75,400 
(d) ? 80,600 (1 Mark) 
 
Division B – Descriptive Questions 
Question No. 1 is compulsory. 
Attempt any two questions from the remaining three questions. 
1. Mr. Sunil, aged 48 years, a resident Indian has furnished the following 
particulars for the year ended 31.03.2025:  
(i)  He occupies ground floor of his residential building and has let out first 
floor for residential use at an annual rent of ? 2,95,000. He has paid 
municipal taxes of ? 25,000 for the current financial year. Both these 
floors are of equal size. 
(ii) As per interest certificate from HDFC bank, he paid ? 1,50,000 as 
interest and ? 80,000 towards principal repayment of housing loan 
borrowed for the above residential building in the year 2018. 
(iii)  He owns an industrial undertaking established in a SEZ and which had 
commenced operation during the financial year 2019-20. Total turnover 
of the undertaking was ? 400 lakhs, which includes ? 150 lakhs from 
export turnover. Out of ? 150 lakhs, only ? 120 lakhs have been 
received in India in convertible foreign exchange on or before 
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30.9.2025. This industrial undertaking fulfills all the conditions of 
section 10AA of the Income-tax Act, 1961. Profit from this industry is  
? 40 lakhs. 
(iv)  He employed 20 new employees for the said industrial undertaking 
during the previous year 2024-25. Out of 20 employees, 12 were 
employed on 1
st
 May 2024 for monthly emoluments of ? 18,000 and 
remaining were employed on 1
st
 September 2024 on monthly 
emoluments of ? 12,000. All these employees participate in recognised 
provident fund and they are paid their emoluments directly to their bank 
accounts.  
(v) He earned ? 30,000 and ? 40,000 as interest on saving bank deposits 
and fixed deposits, respectively. 
(vi)  He also sold his vacant land on 01.12.2024 for ? 15 lakhs. The stamp 
duty value of land at the time of transfer was ? 16 lakhs. This land was 
acquired by him on 15.10.1998 for ? 2.80 lakhs. The FMV of the land 
as on 1
st
 April, 2001 was ? 4.8 lakhs and Stamp duty value on the said 
date was ? 4 lakhs. He had incurred registration expenses of  
? 12,000 at that time.  
The cost of inflation index for the financial year 2024-25 and 2001-02 
are 363 and 100, respectively. 
(vii)  He paid insurance premium of ? 40,000 towards life insurance policy of 
his son, who is not dependent on him.  
You are requested to compute total income and tax liability of  
Mr. Sunil for the Assessment Year 2025-26 under default tax regime.  
 (15 Marks) 
2. (a) Mrs. Sia D’Souza is an American, got married to Mr. Kabir of India in 
New York on 14.02.2024 and came to India for the first time on 
18.03.2024. She left for Australia on 16.08.2024. She returned to India 
again on 23.03.2025.  
 On 01.04.2024, she had purchased a Flat in Mumbai, which was let out 
to Mr. Sameer on a rent of ? 26,000 p.m. from 1.6.2024. She had taken 
loan from an Indian bank for purchase of this flat on which bank had 
charged interest of ? 2,05,000 upto 31.03.2025.  
 While in India, during the previous year 2024-25, she had received a 
gold chain from her in laws worth ? 1,50,000 and ? 1,65,000 from very 
close friends of her husband. 
 From the information given above, you are required to determine her 
the residential status and compute her total income chargeable to tax 
for the Assessment Year 2025-26 assuming she has shifted out of the 
default tax regime under section 115BAC. (6 Marks) 
(b)  Briefly discuss the provisions of tax deduction/collection at source 
under the Income-tax Act, 1961 and determine the amount, if any, of 
TDS and TCS in respect of the following payments: 
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(i)  Mr. Harish bought an overseas tour programme package for 
Switzerland for himself and his family of ? 10 lakhs on 01-11-2024 
from an agent who is engaged in organising foreign tours in 
course of his business. He made the payment by an account 
payee cheque and provided the permanent account number to the 
seller.  
(ii)  Mr. Aditya pays ? 55,00,000 during April 2024 to Mr. Naresh, for 
supply of labour, for carrying out the construction work of his 
factory. During the P.Y. 2023-24, Mr. Aditya’s turnover was ? 95 
lakhs.  (4 Marks) 
3. (a) Ms. Priyanka, General Manager of ABC Ltd., Mumbai, furnishes the 
following particulars for the financial year 2024-25: 
(i) Salary ? 40,000 per month 
(ii) Value of medical facility in a hospital maintained by the company 
? 10,000 
(iii) Rent free accommodation owned by the company during  
P.Y. 2024-25 
(iv) Housing loan of ? 7,00,000 given on 01.04.2024 at the interest 
rate of 6% p.a. (No repayment made during the year). The rate of 
interest charged by State Bank of India (SBI) as on 01.04.2024 in 
respect of housing loan is 9.5%. 
(v) A dining table was provided to Ms. Priyanka at her residence. This 
was purchased on 1.6.2021 for ? 60,000 and sold to Ms. Priyanka 
on 1.5.2024 for ? 30,000. 
(vi) Personal purchases through credit card provided by the company 
amounting to ? 10,000 was paid by the company. No part of the 
amount was recovered from Ms. Priyanka. 
(vii) A Maruti Suzuki car which was purchased by the company on 
16.7.2022 for ? 2,50,000 was sold to the assessee on 14.7.2024 
for ? 1,60,000. 
Other income received by the assessee during the previous year  
2024-25: 
 Particulars ? 
(a) Interest on Fixed Deposits with a company  7,000 
(b) Income from specified mutual fund  3,000 
(c) Interest on bank fixed deposits of a minor married 
daughter  
4,000 
(viii)  Deposit in PPF Account made during the year 2024-25  ?40,000 
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