Income Tax Law (Group I) Model Test Paper - 3 (Questions) | Model Test Papers for CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 3 
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. Rudra is engaged in the business of trading since 2018. His turnover for 
the P.Y. 2023-24 was ? 6 crores. His minor daughter’s marriage is fixed in 
December, 2024. He planned destination wedding in Goa for his minor 
daughter. For the wedding, he withdrew ? 40,00,000 cash in the month of 
September, 2024 and ? 65,00,000 cash in the month of October, 2024 from 
Hamara Paisa Bank.  
 He booked 30 rooms for 5 days for the accommodation of his relatives in 
Raho Hotel and paid ? 40,000 in cash as advance and balance by account 
payee cheque. He took the catering services of Tasty Caterers, a sole 
Proprietor, for the wedding for which he paid ? 10,20,000 on 15.10.2024. For 
her wedding, he gifted his daughter a house property, purchased from SK 
Builders on 10.10.2024 by account payee cheque for ? 15,00,000. The 
stamp duty value of the property on 10.10.2024 is ? 16,00,000 and on the 
date of transfer to minor daughter is ? 20,00,000.  
 Mr. Rudra paid ? 45,000 in cash and balance in cheque to travel agent for 
the return ticket of some of his relatives to US. He regularly files his return of 
income. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i) The amount of tax to be deducted by Hamara Paisa Bank on cash 
withdrawals by Mr. Rudra is - 
(a) ? 10,000 
(b) ? 25,000  
(c) ? 1,70,000 
(d) ? 1,85,000   
 
193
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MODEL TEST PAPER 3 
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. Rudra is engaged in the business of trading since 2018. His turnover for 
the P.Y. 2023-24 was ? 6 crores. His minor daughter’s marriage is fixed in 
December, 2024. He planned destination wedding in Goa for his minor 
daughter. For the wedding, he withdrew ? 40,00,000 cash in the month of 
September, 2024 and ? 65,00,000 cash in the month of October, 2024 from 
Hamara Paisa Bank.  
 He booked 30 rooms for 5 days for the accommodation of his relatives in 
Raho Hotel and paid ? 40,000 in cash as advance and balance by account 
payee cheque. He took the catering services of Tasty Caterers, a sole 
Proprietor, for the wedding for which he paid ? 10,20,000 on 15.10.2024. For 
her wedding, he gifted his daughter a house property, purchased from SK 
Builders on 10.10.2024 by account payee cheque for ? 15,00,000. The 
stamp duty value of the property on 10.10.2024 is ? 16,00,000 and on the 
date of transfer to minor daughter is ? 20,00,000.  
 Mr. Rudra paid ? 45,000 in cash and balance in cheque to travel agent for 
the return ticket of some of his relatives to US. He regularly files his return of 
income. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i) The amount of tax to be deducted by Hamara Paisa Bank on cash 
withdrawals by Mr. Rudra is - 
(a) ? 10,000 
(b) ? 25,000  
(c) ? 1,70,000 
(d) ? 1,85,000   
 
193
(ii) The amount of tax to be deducted by Mr. Rudra on payment made to 
Tasty Caterers is - 
(a) ? 10,200 
(b) ? 20,400 
(c) ? 51,000 
(d) Nil  
(iii) What shall be the amount taxable and in whose hands with respect to 
purchase of immovable property by Mr. Rudra from SK Builders and 
gift of the same to his daughter? 
(a) ? 1,00,000 in the hands of Mr. Rudra and ? 20,00,000 in the 
hands of minor daughter 
(b) Nothing is taxable in the hands of Mr. Rudra and Minor daughter 
(c) ? 1,00,000 in the hands of Mr. Rudra and nothing is taxable in the 
hands of minor daughter 
(d) Nothing is taxable in the hands of Mr. Rudra but ? 20,00,000 is 
taxable in the hands of minor daughter  (3 x 2 = 6 Marks) 
2. Mr. Mayank had bought a residential house worth ? 2.5 crores at South 
Extension, Delhi in 2018 and let out the house on rent to Mr. Rihaan. The 
property was funded through loan from PNB. The interest due for  
F.Y. 2024-25 to PNB is ? 25 lakhs, out of which he paid only ? 20 lakhs 
during the year. Mr. Mayank then took a loan of ? 1.5 crores from SBI on 
1.7.2024 for construction of first floor in that house for self-occupation. The 
construction is in progress as on 31.3.2025. Mr. Mayank started repaying 
EMIs due to SBI. During the P.Y. 2024-25, he repaid principal amount of  
? 25 lakhs and ? 5 lakhs to PNB and SBI, respectively. He also paid interest 
of ? 8 lakhs to SBI out of ? 10 lakhs, being interest due for the period from 
1.7.2024 to 31.3.2025. 
 Mr. Mayank owns another house in Haryana. He transferred that house to 
his minor daughter Miss Sia on her birthday as her birthday gift. Miss Sia 
gave the said house to the local Panchayat from September, 2024 at a rent 
of ? 5,000 per month. Mrs. Mayank’s total income for A.Y.2025-26 is higher 
than that of Mr. Mayank. This is the first year when Miss Sia has any source 
of income.  
 Mr. Mayank bought electric vehicle worth ? 50 lakhs on loan from BSM Bank 
which it sanctioned on 1.4.2022. BSM Bank charged interest of ? 7 lakhs on 
electric vehicle for the P.Y.2024-25. Mr. Mayank has also taken loan from 
ABC Bank for his daughter’s higher education. He paid ? 50,000 as interest 
to ABC Bank. He also paid mediclaim of ? 20,000 to New India Assurance 
Scheme for insuring his health. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:  
(i) What is the amount of interest allowable as deduction u/s 24 to  
Mr. Mayank for A.Y.2025-26?  
194
Page 3


MODEL TEST PAPER 3 
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. Rudra is engaged in the business of trading since 2018. His turnover for 
the P.Y. 2023-24 was ? 6 crores. His minor daughter’s marriage is fixed in 
December, 2024. He planned destination wedding in Goa for his minor 
daughter. For the wedding, he withdrew ? 40,00,000 cash in the month of 
September, 2024 and ? 65,00,000 cash in the month of October, 2024 from 
Hamara Paisa Bank.  
 He booked 30 rooms for 5 days for the accommodation of his relatives in 
Raho Hotel and paid ? 40,000 in cash as advance and balance by account 
payee cheque. He took the catering services of Tasty Caterers, a sole 
Proprietor, for the wedding for which he paid ? 10,20,000 on 15.10.2024. For 
her wedding, he gifted his daughter a house property, purchased from SK 
Builders on 10.10.2024 by account payee cheque for ? 15,00,000. The 
stamp duty value of the property on 10.10.2024 is ? 16,00,000 and on the 
date of transfer to minor daughter is ? 20,00,000.  
 Mr. Rudra paid ? 45,000 in cash and balance in cheque to travel agent for 
the return ticket of some of his relatives to US. He regularly files his return of 
income. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i) The amount of tax to be deducted by Hamara Paisa Bank on cash 
withdrawals by Mr. Rudra is - 
(a) ? 10,000 
(b) ? 25,000  
(c) ? 1,70,000 
(d) ? 1,85,000   
 
193
(ii) The amount of tax to be deducted by Mr. Rudra on payment made to 
Tasty Caterers is - 
(a) ? 10,200 
(b) ? 20,400 
(c) ? 51,000 
(d) Nil  
(iii) What shall be the amount taxable and in whose hands with respect to 
purchase of immovable property by Mr. Rudra from SK Builders and 
gift of the same to his daughter? 
(a) ? 1,00,000 in the hands of Mr. Rudra and ? 20,00,000 in the 
hands of minor daughter 
(b) Nothing is taxable in the hands of Mr. Rudra and Minor daughter 
(c) ? 1,00,000 in the hands of Mr. Rudra and nothing is taxable in the 
hands of minor daughter 
(d) Nothing is taxable in the hands of Mr. Rudra but ? 20,00,000 is 
taxable in the hands of minor daughter  (3 x 2 = 6 Marks) 
2. Mr. Mayank had bought a residential house worth ? 2.5 crores at South 
Extension, Delhi in 2018 and let out the house on rent to Mr. Rihaan. The 
property was funded through loan from PNB. The interest due for  
F.Y. 2024-25 to PNB is ? 25 lakhs, out of which he paid only ? 20 lakhs 
during the year. Mr. Mayank then took a loan of ? 1.5 crores from SBI on 
1.7.2024 for construction of first floor in that house for self-occupation. The 
construction is in progress as on 31.3.2025. Mr. Mayank started repaying 
EMIs due to SBI. During the P.Y. 2024-25, he repaid principal amount of  
? 25 lakhs and ? 5 lakhs to PNB and SBI, respectively. He also paid interest 
of ? 8 lakhs to SBI out of ? 10 lakhs, being interest due for the period from 
1.7.2024 to 31.3.2025. 
 Mr. Mayank owns another house in Haryana. He transferred that house to 
his minor daughter Miss Sia on her birthday as her birthday gift. Miss Sia 
gave the said house to the local Panchayat from September, 2024 at a rent 
of ? 5,000 per month. Mrs. Mayank’s total income for A.Y.2025-26 is higher 
than that of Mr. Mayank. This is the first year when Miss Sia has any source 
of income.  
 Mr. Mayank bought electric vehicle worth ? 50 lakhs on loan from BSM Bank 
which it sanctioned on 1.4.2022. BSM Bank charged interest of ? 7 lakhs on 
electric vehicle for the P.Y.2024-25. Mr. Mayank has also taken loan from 
ABC Bank for his daughter’s higher education. He paid ? 50,000 as interest 
to ABC Bank. He also paid mediclaim of ? 20,000 to New India Assurance 
Scheme for insuring his health. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:  
(i) What is the amount of interest allowable as deduction u/s 24 to  
Mr. Mayank for A.Y.2025-26?  
194
(a) ? 2 lakhs 
(b) ? 25 lakhs 
(c) ? 28 lakhs 
(d) ? 35 lakhs   
(ii) What is the amount of deduction permissible to Mr. Mayank under 
Chapter VI-A of Income-tax Act, 1961 for A.Y. 2025-26 if he has opted 
out of the default tax regime?     
(a) ? 1,70,000 
(b) ? 2,20,000 
(c) ? 3,70,000 
(d) ? 9,20,000   
(iii)  In whose hands would Sia’s rental income from house property at 
Haryana be taxable and how much income would be taxable?  
(a) In Sia’s hands; ? 24,500 
(b) In Mr. Mayank’s hands; ? 24,500 
(c) In Mrs. Mayank’s hands; ? 23,000 
(d) It would change every year depending on the parent whose 
income is higher in that year.  (3 x 2 = 6 Marks) 
3. Mr. Arpan (aged 35 years) submits the following particulars for the purpose 
of computing his total income: 
Particulars ? 
Income from salary (computed) 4,00,000 
Loss from let-out house property  (-) 2,20,000 
Brought forward loss from let-out house property for the 
A.Y. 2024-25 
(-)2,30,000 
Business loss  (-)1,00,000 
Bank interest (FD) 80,000 
 Compute the total income of Mr. Arpan for the A.Y.2025-26 and the amount 
of loss that can be carried forward for the subsequent assessment year 
under normal provisions of the Act? 
(a)  Total income ? 2,00,000 and loss from house property of ? 2,50,000 
and business loss of ? 20,000 to be carried forward to subsequent 
assessment year. 
(b)  Total income ? 1,60,000 and loss from house property of ? 2,30,000 to 
be carried forward to subsequent assessment year. 
(c)  Total income ? 4,00,000 and business loss of ? 20,000 to be carried 
forward to subsequent assessment year. 
(d)  Total income is Nil and loss from house property of ? 70,000 to be 
carried forward to subsequent assessment year.  (2 Marks) 
195
Page 4


MODEL TEST PAPER 3 
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. Rudra is engaged in the business of trading since 2018. His turnover for 
the P.Y. 2023-24 was ? 6 crores. His minor daughter’s marriage is fixed in 
December, 2024. He planned destination wedding in Goa for his minor 
daughter. For the wedding, he withdrew ? 40,00,000 cash in the month of 
September, 2024 and ? 65,00,000 cash in the month of October, 2024 from 
Hamara Paisa Bank.  
 He booked 30 rooms for 5 days for the accommodation of his relatives in 
Raho Hotel and paid ? 40,000 in cash as advance and balance by account 
payee cheque. He took the catering services of Tasty Caterers, a sole 
Proprietor, for the wedding for which he paid ? 10,20,000 on 15.10.2024. For 
her wedding, he gifted his daughter a house property, purchased from SK 
Builders on 10.10.2024 by account payee cheque for ? 15,00,000. The 
stamp duty value of the property on 10.10.2024 is ? 16,00,000 and on the 
date of transfer to minor daughter is ? 20,00,000.  
 Mr. Rudra paid ? 45,000 in cash and balance in cheque to travel agent for 
the return ticket of some of his relatives to US. He regularly files his return of 
income. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i) The amount of tax to be deducted by Hamara Paisa Bank on cash 
withdrawals by Mr. Rudra is - 
(a) ? 10,000 
(b) ? 25,000  
(c) ? 1,70,000 
(d) ? 1,85,000   
 
193
(ii) The amount of tax to be deducted by Mr. Rudra on payment made to 
Tasty Caterers is - 
(a) ? 10,200 
(b) ? 20,400 
(c) ? 51,000 
(d) Nil  
(iii) What shall be the amount taxable and in whose hands with respect to 
purchase of immovable property by Mr. Rudra from SK Builders and 
gift of the same to his daughter? 
(a) ? 1,00,000 in the hands of Mr. Rudra and ? 20,00,000 in the 
hands of minor daughter 
(b) Nothing is taxable in the hands of Mr. Rudra and Minor daughter 
(c) ? 1,00,000 in the hands of Mr. Rudra and nothing is taxable in the 
hands of minor daughter 
(d) Nothing is taxable in the hands of Mr. Rudra but ? 20,00,000 is 
taxable in the hands of minor daughter  (3 x 2 = 6 Marks) 
2. Mr. Mayank had bought a residential house worth ? 2.5 crores at South 
Extension, Delhi in 2018 and let out the house on rent to Mr. Rihaan. The 
property was funded through loan from PNB. The interest due for  
F.Y. 2024-25 to PNB is ? 25 lakhs, out of which he paid only ? 20 lakhs 
during the year. Mr. Mayank then took a loan of ? 1.5 crores from SBI on 
1.7.2024 for construction of first floor in that house for self-occupation. The 
construction is in progress as on 31.3.2025. Mr. Mayank started repaying 
EMIs due to SBI. During the P.Y. 2024-25, he repaid principal amount of  
? 25 lakhs and ? 5 lakhs to PNB and SBI, respectively. He also paid interest 
of ? 8 lakhs to SBI out of ? 10 lakhs, being interest due for the period from 
1.7.2024 to 31.3.2025. 
 Mr. Mayank owns another house in Haryana. He transferred that house to 
his minor daughter Miss Sia on her birthday as her birthday gift. Miss Sia 
gave the said house to the local Panchayat from September, 2024 at a rent 
of ? 5,000 per month. Mrs. Mayank’s total income for A.Y.2025-26 is higher 
than that of Mr. Mayank. This is the first year when Miss Sia has any source 
of income.  
 Mr. Mayank bought electric vehicle worth ? 50 lakhs on loan from BSM Bank 
which it sanctioned on 1.4.2022. BSM Bank charged interest of ? 7 lakhs on 
electric vehicle for the P.Y.2024-25. Mr. Mayank has also taken loan from 
ABC Bank for his daughter’s higher education. He paid ? 50,000 as interest 
to ABC Bank. He also paid mediclaim of ? 20,000 to New India Assurance 
Scheme for insuring his health. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:  
(i) What is the amount of interest allowable as deduction u/s 24 to  
Mr. Mayank for A.Y.2025-26?  
194
(a) ? 2 lakhs 
(b) ? 25 lakhs 
(c) ? 28 lakhs 
(d) ? 35 lakhs   
(ii) What is the amount of deduction permissible to Mr. Mayank under 
Chapter VI-A of Income-tax Act, 1961 for A.Y. 2025-26 if he has opted 
out of the default tax regime?     
(a) ? 1,70,000 
(b) ? 2,20,000 
(c) ? 3,70,000 
(d) ? 9,20,000   
(iii)  In whose hands would Sia’s rental income from house property at 
Haryana be taxable and how much income would be taxable?  
(a) In Sia’s hands; ? 24,500 
(b) In Mr. Mayank’s hands; ? 24,500 
(c) In Mrs. Mayank’s hands; ? 23,000 
(d) It would change every year depending on the parent whose 
income is higher in that year.  (3 x 2 = 6 Marks) 
3. Mr. Arpan (aged 35 years) submits the following particulars for the purpose 
of computing his total income: 
Particulars ? 
Income from salary (computed) 4,00,000 
Loss from let-out house property  (-) 2,20,000 
Brought forward loss from let-out house property for the 
A.Y. 2024-25 
(-)2,30,000 
Business loss  (-)1,00,000 
Bank interest (FD) 80,000 
 Compute the total income of Mr. Arpan for the A.Y.2025-26 and the amount 
of loss that can be carried forward for the subsequent assessment year 
under normal provisions of the Act? 
(a)  Total income ? 2,00,000 and loss from house property of ? 2,50,000 
and business loss of ? 20,000 to be carried forward to subsequent 
assessment year. 
(b)  Total income ? 1,60,000 and loss from house property of ? 2,30,000 to 
be carried forward to subsequent assessment year. 
(c)  Total income ? 4,00,000 and business loss of ? 20,000 to be carried 
forward to subsequent assessment year. 
(d)  Total income is Nil and loss from house property of ? 70,000 to be 
carried forward to subsequent assessment year.  (2 Marks) 
195
4. Mr. Raja, aged 64 years, was not able to provide satisfactory explanation to 
the Assessing Officer for the investments of ? 7 lakhs not recorded in the 
books of accounts. What shall be the tax payable by him on the value of 
such investments considered to be deemed income as per section 69?  
(a) ? 2,18,400 
(b) ? 55,000 
(c) ? 5,46,000 
(d) ? 54,600 (1 Mark) 
 
Division B – Descriptive Questions 
Question No. 1 is compulsory. 
Attempt any two questions from the remaining three questions. 
1. Mr. Ayush, a resident individual, aged 54 years, is engaged in the business 
of manufacturing textiles. He earned profit of ? 82,45,000 as per profit and 
loss account after debiting and crediting the following items: 
(i) Depreciation ? 15,40,000 
(ii) Short term capital gains on 01.05.2024 on transfer of listed equity 
shares in a company on which STT is paid ? 10,00,000 
(iii) He received income-tax refund of ? 15,550 which includes interest on 
refund of ? 4,550. 
(iv) Dividend income from Indian companies ? 15,00,000. Dividend 
received from each company is less than ? 5,000. 
Additional information – 
(i) Mr. Ayush installed new plant and machinery for ? 65 lakhs on 
1.10.2024 which was put to use on 1.1.2025. Depreciation (including 
additional depreciation) on this amount of ? 65 lakhs is included in the 
depreciation debited to profit and loss account which has been 
computed as per Income-tax Rules, 1962. 
(ii) Mr. Ayush took a loan from SBI of ? 50 lakhs on 1.9.2024 @10.5% p.a. 
to purchase such plant and machinery. Total interest upto 31.3.2025 
has been paid on 31.3.2025 and the same has been debited to profit 
and loss account. 
(iii) Advance tax paid during the year is ?17,50,000 
(iv) Ayush purchased goods for ? 40 lakhs from Mr. Ram, his brother. The 
market value of the goods is ? 35 lakhs.    
(v) He paid ? 40,000 as life insurance premium taken on the life of his 
married daughter who is not dependent on him. The sum assured is  
? 5,00,000 and the policy was taken on 1.4.2017. 
(vi) He paid ? 45,000 by cheque towards health insurance policy covering 
himself, his spouse and his children. 
196
Page 5


MODEL TEST PAPER 3 
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. Rudra is engaged in the business of trading since 2018. His turnover for 
the P.Y. 2023-24 was ? 6 crores. His minor daughter’s marriage is fixed in 
December, 2024. He planned destination wedding in Goa for his minor 
daughter. For the wedding, he withdrew ? 40,00,000 cash in the month of 
September, 2024 and ? 65,00,000 cash in the month of October, 2024 from 
Hamara Paisa Bank.  
 He booked 30 rooms for 5 days for the accommodation of his relatives in 
Raho Hotel and paid ? 40,000 in cash as advance and balance by account 
payee cheque. He took the catering services of Tasty Caterers, a sole 
Proprietor, for the wedding for which he paid ? 10,20,000 on 15.10.2024. For 
her wedding, he gifted his daughter a house property, purchased from SK 
Builders on 10.10.2024 by account payee cheque for ? 15,00,000. The 
stamp duty value of the property on 10.10.2024 is ? 16,00,000 and on the 
date of transfer to minor daughter is ? 20,00,000.  
 Mr. Rudra paid ? 45,000 in cash and balance in cheque to travel agent for 
the return ticket of some of his relatives to US. He regularly files his return of 
income. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions: 
(i) The amount of tax to be deducted by Hamara Paisa Bank on cash 
withdrawals by Mr. Rudra is - 
(a) ? 10,000 
(b) ? 25,000  
(c) ? 1,70,000 
(d) ? 1,85,000   
 
193
(ii) The amount of tax to be deducted by Mr. Rudra on payment made to 
Tasty Caterers is - 
(a) ? 10,200 
(b) ? 20,400 
(c) ? 51,000 
(d) Nil  
(iii) What shall be the amount taxable and in whose hands with respect to 
purchase of immovable property by Mr. Rudra from SK Builders and 
gift of the same to his daughter? 
(a) ? 1,00,000 in the hands of Mr. Rudra and ? 20,00,000 in the 
hands of minor daughter 
(b) Nothing is taxable in the hands of Mr. Rudra and Minor daughter 
(c) ? 1,00,000 in the hands of Mr. Rudra and nothing is taxable in the 
hands of minor daughter 
(d) Nothing is taxable in the hands of Mr. Rudra but ? 20,00,000 is 
taxable in the hands of minor daughter  (3 x 2 = 6 Marks) 
2. Mr. Mayank had bought a residential house worth ? 2.5 crores at South 
Extension, Delhi in 2018 and let out the house on rent to Mr. Rihaan. The 
property was funded through loan from PNB. The interest due for  
F.Y. 2024-25 to PNB is ? 25 lakhs, out of which he paid only ? 20 lakhs 
during the year. Mr. Mayank then took a loan of ? 1.5 crores from SBI on 
1.7.2024 for construction of first floor in that house for self-occupation. The 
construction is in progress as on 31.3.2025. Mr. Mayank started repaying 
EMIs due to SBI. During the P.Y. 2024-25, he repaid principal amount of  
? 25 lakhs and ? 5 lakhs to PNB and SBI, respectively. He also paid interest 
of ? 8 lakhs to SBI out of ? 10 lakhs, being interest due for the period from 
1.7.2024 to 31.3.2025. 
 Mr. Mayank owns another house in Haryana. He transferred that house to 
his minor daughter Miss Sia on her birthday as her birthday gift. Miss Sia 
gave the said house to the local Panchayat from September, 2024 at a rent 
of ? 5,000 per month. Mrs. Mayank’s total income for A.Y.2025-26 is higher 
than that of Mr. Mayank. This is the first year when Miss Sia has any source 
of income.  
 Mr. Mayank bought electric vehicle worth ? 50 lakhs on loan from BSM Bank 
which it sanctioned on 1.4.2022. BSM Bank charged interest of ? 7 lakhs on 
electric vehicle for the P.Y.2024-25. Mr. Mayank has also taken loan from 
ABC Bank for his daughter’s higher education. He paid ? 50,000 as interest 
to ABC Bank. He also paid mediclaim of ? 20,000 to New India Assurance 
Scheme for insuring his health. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:  
(i) What is the amount of interest allowable as deduction u/s 24 to  
Mr. Mayank for A.Y.2025-26?  
194
(a) ? 2 lakhs 
(b) ? 25 lakhs 
(c) ? 28 lakhs 
(d) ? 35 lakhs   
(ii) What is the amount of deduction permissible to Mr. Mayank under 
Chapter VI-A of Income-tax Act, 1961 for A.Y. 2025-26 if he has opted 
out of the default tax regime?     
(a) ? 1,70,000 
(b) ? 2,20,000 
(c) ? 3,70,000 
(d) ? 9,20,000   
(iii)  In whose hands would Sia’s rental income from house property at 
Haryana be taxable and how much income would be taxable?  
(a) In Sia’s hands; ? 24,500 
(b) In Mr. Mayank’s hands; ? 24,500 
(c) In Mrs. Mayank’s hands; ? 23,000 
(d) It would change every year depending on the parent whose 
income is higher in that year.  (3 x 2 = 6 Marks) 
3. Mr. Arpan (aged 35 years) submits the following particulars for the purpose 
of computing his total income: 
Particulars ? 
Income from salary (computed) 4,00,000 
Loss from let-out house property  (-) 2,20,000 
Brought forward loss from let-out house property for the 
A.Y. 2024-25 
(-)2,30,000 
Business loss  (-)1,00,000 
Bank interest (FD) 80,000 
 Compute the total income of Mr. Arpan for the A.Y.2025-26 and the amount 
of loss that can be carried forward for the subsequent assessment year 
under normal provisions of the Act? 
(a)  Total income ? 2,00,000 and loss from house property of ? 2,50,000 
and business loss of ? 20,000 to be carried forward to subsequent 
assessment year. 
(b)  Total income ? 1,60,000 and loss from house property of ? 2,30,000 to 
be carried forward to subsequent assessment year. 
(c)  Total income ? 4,00,000 and business loss of ? 20,000 to be carried 
forward to subsequent assessment year. 
(d)  Total income is Nil and loss from house property of ? 70,000 to be 
carried forward to subsequent assessment year.  (2 Marks) 
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4. Mr. Raja, aged 64 years, was not able to provide satisfactory explanation to 
the Assessing Officer for the investments of ? 7 lakhs not recorded in the 
books of accounts. What shall be the tax payable by him on the value of 
such investments considered to be deemed income as per section 69?  
(a) ? 2,18,400 
(b) ? 55,000 
(c) ? 5,46,000 
(d) ? 54,600 (1 Mark) 
 
Division B – Descriptive Questions 
Question No. 1 is compulsory. 
Attempt any two questions from the remaining three questions. 
1. Mr. Ayush, a resident individual, aged 54 years, is engaged in the business 
of manufacturing textiles. He earned profit of ? 82,45,000 as per profit and 
loss account after debiting and crediting the following items: 
(i) Depreciation ? 15,40,000 
(ii) Short term capital gains on 01.05.2024 on transfer of listed equity 
shares in a company on which STT is paid ? 10,00,000 
(iii) He received income-tax refund of ? 15,550 which includes interest on 
refund of ? 4,550. 
(iv) Dividend income from Indian companies ? 15,00,000. Dividend 
received from each company is less than ? 5,000. 
Additional information – 
(i) Mr. Ayush installed new plant and machinery for ? 65 lakhs on 
1.10.2024 which was put to use on 1.1.2025. Depreciation (including 
additional depreciation) on this amount of ? 65 lakhs is included in the 
depreciation debited to profit and loss account which has been 
computed as per Income-tax Rules, 1962. 
(ii) Mr. Ayush took a loan from SBI of ? 50 lakhs on 1.9.2024 @10.5% p.a. 
to purchase such plant and machinery. Total interest upto 31.3.2025 
has been paid on 31.3.2025 and the same has been debited to profit 
and loss account. 
(iii) Advance tax paid during the year is ?17,50,000 
(iv) Ayush purchased goods for ? 40 lakhs from Mr. Ram, his brother. The 
market value of the goods is ? 35 lakhs.    
(v) He paid ? 40,000 as life insurance premium taken on the life of his 
married daughter who is not dependent on him. The sum assured is  
? 5,00,000 and the policy was taken on 1.4.2017. 
(vi) He paid ? 45,000 by cheque towards health insurance policy covering 
himself, his spouse and his children. 
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(vii) On 1.7.2024, Mr. Ayush withdrew ? 1.5 crores in cash from three 
current accounts maintained by him with SBI. There are no other 
withdrawals during the year. He regularly files his return of income. 
You are required to compute the total income and tax payable by Mr. Ayush 
for the A.Y. 2025-26 assuming that he has shifted out of the default tax 
regime under section 115BAC. (15 Marks) 
2. (a) Miss Geeta, a citizen of India, got married to Mr. Peter of Australia and 
left India for the first time on 20.8.2024. She has not visited India again 
during the P.Y. 2024-25. She has derived the following income for the 
year ended 31-3-2025:  
 Particulars ? 
(i) Income from sale of centrifuged latex processed 
from rubber plants grown in kanyakumari.  
1,50,000 
(ii) Income from sale of coffee grown, cured, roasted 
and grounded in Colombo. Sale consideration was 
received in Chennai.  
5,00,000  
(iii) Income from sale of tea grown and manufactured in 
West Bengal.  
12,00,000  
(iv) Income from sapling and seedling grown in a 
nursery at Cochin. Basic operations were not 
carried out by her on land.  
2,00,000  
  You are required to determine the residential status of Miss Geeta and 
compute the business income and agricultural income of Miss. Geeta 
for the Assessment Year 2025-26.  (6 Marks) 
(b)  Briefly discuss the provisions of tax deduction at source under the 
Income-tax Act, 1961 and determine the amount, if any, of TDS in 
respect of the following payments: 
(i) Mr. Vikas received a sum of ? 10,20,000 on 28.02.2025 as pre-
mature withdrawal from Employees Provident Fund Scheme 
before continuous service of 5 years on account of termination of 
employment due to ill-health. 
(ii)  Indian Bank sanctioned and disbursed a loan of ? 12 crores to B 
Ltd. on 31-12-2024. B Ltd. paid a sum of ? 1,20,000 as service fee 
to Indian Bank for processing the loan application. (4 Marks) 
3. (a) Mr. Jain and his wife Mrs. Jain are partners in a partnership firm 
holding 25% share each. During the F.Y. 2024-25, the firm paid  
? 2,50,000 to each of them as remuneration. Apart from this, they 
provide you the following information in respect of F.Y. 2024-25: 
(i) Salary received by Mr. Jain from his employer ? 12,50,000. 
(ii)  Interest on fixed deposit earned by Mrs. Jain ? 14,00,000. (The 
fixed deposit was opened by using her "Stridhan") 
(iii)  Income of their three minor children Neeta, Meeta and Seeta was 
? 15,000; ? 10,000 and ? 2,000 respectively. 
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