Income Tax Law (Group I) Model Test Paper - 4 (Questions) | Model Test Papers for CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 4 
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. Sambhav (aged 48 years) furnishes the following particulars for the 
previous year 2024-25 in respect of an industrial undertaking established in 
"Special Economic Zone" in March 2018. It began manufacturing in April 
2018. 
Particulars ( ?) 
Total sales 85,00,000 
Export sales [proceeds received in India by 30.9.2025] 45,00,000 
Domestic sales 40,00,000 
Profit from the above undertaking 20,00,000 
 Export Sales of F.Y. of 2024-25 include freight and insurance of ? 5 lakhs for 
delivery of goods outside India.  
 He received rent of ? 30,000 per month for a commercial property let out to 
Mr. Akash, a salaried individual. He earned interest on savings bank A/c of  
? 15,000 and interest on Post Office savings A/c of ? 7,000 during the  
P.Y. 2024-25. 
 Mr. Sambhav has shifted out of the default tax regime under section 
115BAC. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:   
(i) Compute the amount of export turnover and total turnover for purpose 
of computing deduction under section 10AA for A.Y. 2025-26. 
(a)  ? 45,00,000 and ? 85,00,000, respectively 
(b)  ? 40,00,000 and ? 80,00,000, respectively 
(c)  ? 45,00,000 and ? 80,00,000, respectively 
(d)  ? 40,00,000 and ? 85,00,000, respectively 
201
Page 2


MODEL TEST PAPER 4 
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. Sambhav (aged 48 years) furnishes the following particulars for the 
previous year 2024-25 in respect of an industrial undertaking established in 
"Special Economic Zone" in March 2018. It began manufacturing in April 
2018. 
Particulars ( ?) 
Total sales 85,00,000 
Export sales [proceeds received in India by 30.9.2025] 45,00,000 
Domestic sales 40,00,000 
Profit from the above undertaking 20,00,000 
 Export Sales of F.Y. of 2024-25 include freight and insurance of ? 5 lakhs for 
delivery of goods outside India.  
 He received rent of ? 30,000 per month for a commercial property let out to 
Mr. Akash, a salaried individual. He earned interest on savings bank A/c of  
? 15,000 and interest on Post Office savings A/c of ? 7,000 during the  
P.Y. 2024-25. 
 Mr. Sambhav has shifted out of the default tax regime under section 
115BAC. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:   
(i) Compute the amount of export turnover and total turnover for purpose 
of computing deduction under section 10AA for A.Y. 2025-26. 
(a)  ? 45,00,000 and ? 85,00,000, respectively 
(b)  ? 40,00,000 and ? 80,00,000, respectively 
(c)  ? 45,00,000 and ? 80,00,000, respectively 
(d)  ? 40,00,000 and ? 85,00,000, respectively 
201
(ii) Compute the amount of deduction available to Mr. Sambhav under 
section 10AA for A.Y. 2025-26. 
(a)  ? 10,00,000 
(b)  ? 4,70,577 
(c)  ? 5,62,500 
(d)  ? 5,00,000 
(iii) Compute the total income of Mr. Sambhav for A.Y. 2025-26. 
(a)  ? 17,60,500 
(b)  ? 12,60,500 
(c)  ? 18,72,000 
(d)  ? 17,64,000 (3 x 2 = 6 Marks) 
2. Mr. Anshul, aged 54 years, an Indian citizen, is working as Assistant 
Manager in ABC India Ltd. He is getting basic salary of  
? 58,000 per month. He used to travel frequently out of India for his office 
work. He left India from Delhi Airport on 5
th
 October, 2024 and returned to 
India on 2
nd
 April, 2025.  
 For previous year 2024-25, following information are relevant; 
(a) Dearness Allowance - 10% of Basic Pay (considered for retirement 
purposes) 
(b) Bonus - ? 98,000 
(c) Medical allowance paid during P.Y. 2024-25 amounting to ? 60,000 
(d) He was also reimbursed medical bill of his mother amounting to  
? 15,000. 
(e) He was also reimbursed salary of house servant of ? 4,000 per month. 
(f) Professional tax paid by employer amounting to ? 2,400. 
(g) 400 equity shares allotted by ABC India Ltd. at the rate of  
? 250 per share against fair market value of share of ? 350 on the date 
of exercise of option. 
(h) Mr. Anshul has exercised the option to shift out of the default tax 
regime under section 115BAC. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:   
(i) What is Mr. Anshul’s residential status for the A.Y. 2025-26? 
(a) Resident but can’t determine resident and ordinarily resident or 
resident but not ordinarily resident from the given information 
(b) Non-Resident  
(c) Resident but not ordinarily resident  
(d) Resident and ordinarily resident 
202
Page 3


MODEL TEST PAPER 4 
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. Sambhav (aged 48 years) furnishes the following particulars for the 
previous year 2024-25 in respect of an industrial undertaking established in 
"Special Economic Zone" in March 2018. It began manufacturing in April 
2018. 
Particulars ( ?) 
Total sales 85,00,000 
Export sales [proceeds received in India by 30.9.2025] 45,00,000 
Domestic sales 40,00,000 
Profit from the above undertaking 20,00,000 
 Export Sales of F.Y. of 2024-25 include freight and insurance of ? 5 lakhs for 
delivery of goods outside India.  
 He received rent of ? 30,000 per month for a commercial property let out to 
Mr. Akash, a salaried individual. He earned interest on savings bank A/c of  
? 15,000 and interest on Post Office savings A/c of ? 7,000 during the  
P.Y. 2024-25. 
 Mr. Sambhav has shifted out of the default tax regime under section 
115BAC. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:   
(i) Compute the amount of export turnover and total turnover for purpose 
of computing deduction under section 10AA for A.Y. 2025-26. 
(a)  ? 45,00,000 and ? 85,00,000, respectively 
(b)  ? 40,00,000 and ? 80,00,000, respectively 
(c)  ? 45,00,000 and ? 80,00,000, respectively 
(d)  ? 40,00,000 and ? 85,00,000, respectively 
201
(ii) Compute the amount of deduction available to Mr. Sambhav under 
section 10AA for A.Y. 2025-26. 
(a)  ? 10,00,000 
(b)  ? 4,70,577 
(c)  ? 5,62,500 
(d)  ? 5,00,000 
(iii) Compute the total income of Mr. Sambhav for A.Y. 2025-26. 
(a)  ? 17,60,500 
(b)  ? 12,60,500 
(c)  ? 18,72,000 
(d)  ? 17,64,000 (3 x 2 = 6 Marks) 
2. Mr. Anshul, aged 54 years, an Indian citizen, is working as Assistant 
Manager in ABC India Ltd. He is getting basic salary of  
? 58,000 per month. He used to travel frequently out of India for his office 
work. He left India from Delhi Airport on 5
th
 October, 2024 and returned to 
India on 2
nd
 April, 2025.  
 For previous year 2024-25, following information are relevant; 
(a) Dearness Allowance - 10% of Basic Pay (considered for retirement 
purposes) 
(b) Bonus - ? 98,000 
(c) Medical allowance paid during P.Y. 2024-25 amounting to ? 60,000 
(d) He was also reimbursed medical bill of his mother amounting to  
? 15,000. 
(e) He was also reimbursed salary of house servant of ? 4,000 per month. 
(f) Professional tax paid by employer amounting to ? 2,400. 
(g) 400 equity shares allotted by ABC India Ltd. at the rate of  
? 250 per share against fair market value of share of ? 350 on the date 
of exercise of option. 
(h) Mr. Anshul has exercised the option to shift out of the default tax 
regime under section 115BAC. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:   
(i) What is Mr. Anshul’s residential status for the A.Y. 2025-26? 
(a) Resident but can’t determine resident and ordinarily resident or 
resident but not ordinarily resident from the given information 
(b) Non-Resident  
(c) Resident but not ordinarily resident  
(d) Resident and ordinarily resident 
202
(ii) What are his taxable perquisites for A.Y. 2025-26?  
(a) ? 55,000 
(b) ? 90,400 
(c) ? 1,05,400 
(d) ? 1,03,000 
(iii) What is the income chargeable under the head “Salaries” in the hands 
of Mr. Anshul for A.Y. 2025-26? 
(a) ? 9,76,600                                  
(b) ? 9,86,600 
(c) ? 9,71,600 
(d) ? 9,61,600  (3 x 2 = 6 Marks) 
3. Mr. Ross, an Australian citizen, is employed in the Indian embassy in 
Australia. He is a non-resident in India for A.Y. 2025-26. He received salary 
and allowances in Australia from the Government of India for the year ended 
31.03.2025 for services rendered by him in Australia. In addition, he was 
allowed perquisites by the Government. Which of the following statements 
are correct? 
(a) Salary, allowances and perquisites received outside India are not 
taxable in the hands of Mr. Ross, since he is non-resident 
(b) Salary, allowances and perquisites received outside India by  
Mr. Ross are taxable in India since they are deemed to accrue or arise 
in India 
(c)  Salary received by Mr. Ross is taxable in India but allowances and 
perquisites are exempt 
(d)  Salary received by Mr. Ross is exempt in India but allowances and 
perquisites are taxable (2 Marks) 
4. Which of the following returns can be revised under section 139(5)? 
(i) A return of income filed u/s 139(1) 
(ii)   A belated return of income filed u/s 139(4) 
(iii)   A return of loss filed u/s 139(3) 
Choose the correct answer: 
(a)  Only (i) 
(b)  Only (i) and (ii) 
(c)  Only (i) and (iii) 
(d)  (i), (ii) and (iii) (1 Mark)  
203
Page 4


MODEL TEST PAPER 4 
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. Sambhav (aged 48 years) furnishes the following particulars for the 
previous year 2024-25 in respect of an industrial undertaking established in 
"Special Economic Zone" in March 2018. It began manufacturing in April 
2018. 
Particulars ( ?) 
Total sales 85,00,000 
Export sales [proceeds received in India by 30.9.2025] 45,00,000 
Domestic sales 40,00,000 
Profit from the above undertaking 20,00,000 
 Export Sales of F.Y. of 2024-25 include freight and insurance of ? 5 lakhs for 
delivery of goods outside India.  
 He received rent of ? 30,000 per month for a commercial property let out to 
Mr. Akash, a salaried individual. He earned interest on savings bank A/c of  
? 15,000 and interest on Post Office savings A/c of ? 7,000 during the  
P.Y. 2024-25. 
 Mr. Sambhav has shifted out of the default tax regime under section 
115BAC. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:   
(i) Compute the amount of export turnover and total turnover for purpose 
of computing deduction under section 10AA for A.Y. 2025-26. 
(a)  ? 45,00,000 and ? 85,00,000, respectively 
(b)  ? 40,00,000 and ? 80,00,000, respectively 
(c)  ? 45,00,000 and ? 80,00,000, respectively 
(d)  ? 40,00,000 and ? 85,00,000, respectively 
201
(ii) Compute the amount of deduction available to Mr. Sambhav under 
section 10AA for A.Y. 2025-26. 
(a)  ? 10,00,000 
(b)  ? 4,70,577 
(c)  ? 5,62,500 
(d)  ? 5,00,000 
(iii) Compute the total income of Mr. Sambhav for A.Y. 2025-26. 
(a)  ? 17,60,500 
(b)  ? 12,60,500 
(c)  ? 18,72,000 
(d)  ? 17,64,000 (3 x 2 = 6 Marks) 
2. Mr. Anshul, aged 54 years, an Indian citizen, is working as Assistant 
Manager in ABC India Ltd. He is getting basic salary of  
? 58,000 per month. He used to travel frequently out of India for his office 
work. He left India from Delhi Airport on 5
th
 October, 2024 and returned to 
India on 2
nd
 April, 2025.  
 For previous year 2024-25, following information are relevant; 
(a) Dearness Allowance - 10% of Basic Pay (considered for retirement 
purposes) 
(b) Bonus - ? 98,000 
(c) Medical allowance paid during P.Y. 2024-25 amounting to ? 60,000 
(d) He was also reimbursed medical bill of his mother amounting to  
? 15,000. 
(e) He was also reimbursed salary of house servant of ? 4,000 per month. 
(f) Professional tax paid by employer amounting to ? 2,400. 
(g) 400 equity shares allotted by ABC India Ltd. at the rate of  
? 250 per share against fair market value of share of ? 350 on the date 
of exercise of option. 
(h) Mr. Anshul has exercised the option to shift out of the default tax 
regime under section 115BAC. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:   
(i) What is Mr. Anshul’s residential status for the A.Y. 2025-26? 
(a) Resident but can’t determine resident and ordinarily resident or 
resident but not ordinarily resident from the given information 
(b) Non-Resident  
(c) Resident but not ordinarily resident  
(d) Resident and ordinarily resident 
202
(ii) What are his taxable perquisites for A.Y. 2025-26?  
(a) ? 55,000 
(b) ? 90,400 
(c) ? 1,05,400 
(d) ? 1,03,000 
(iii) What is the income chargeable under the head “Salaries” in the hands 
of Mr. Anshul for A.Y. 2025-26? 
(a) ? 9,76,600                                  
(b) ? 9,86,600 
(c) ? 9,71,600 
(d) ? 9,61,600  (3 x 2 = 6 Marks) 
3. Mr. Ross, an Australian citizen, is employed in the Indian embassy in 
Australia. He is a non-resident in India for A.Y. 2025-26. He received salary 
and allowances in Australia from the Government of India for the year ended 
31.03.2025 for services rendered by him in Australia. In addition, he was 
allowed perquisites by the Government. Which of the following statements 
are correct? 
(a) Salary, allowances and perquisites received outside India are not 
taxable in the hands of Mr. Ross, since he is non-resident 
(b) Salary, allowances and perquisites received outside India by  
Mr. Ross are taxable in India since they are deemed to accrue or arise 
in India 
(c)  Salary received by Mr. Ross is taxable in India but allowances and 
perquisites are exempt 
(d)  Salary received by Mr. Ross is exempt in India but allowances and 
perquisites are taxable (2 Marks) 
4. Which of the following returns can be revised under section 139(5)? 
(i) A return of income filed u/s 139(1) 
(ii)   A belated return of income filed u/s 139(4) 
(iii)   A return of loss filed u/s 139(3) 
Choose the correct answer: 
(a)  Only (i) 
(b)  Only (i) and (ii) 
(c)  Only (i) and (iii) 
(d)  (i), (ii) and (iii) (1 Mark)  
203
Division B – Descriptive Questions 
Question No. 1 is compulsory. 
Attempt any two questions from the remaining three questions. 
1. Ms. Farah, aged 40 years, is an advocate (Taxation). She keeps her books 
of accounts on accrual basis. Her profit & loss account for the year ended on 
March 31, 2025 is as follows:  
Profit & Loss Account for the year ending March 31, 2025 
 Amount 
( ?) 
 Amount 
( ?) 
Staff salary  40,10,000 Fees Earned from:  
Rent  9,00,000  Taxation services 50,00,000  
Administrative 
expenses 
6,50,000  Appeals  16,00,000   
Incentives to office 
staff  
2,00,000  Consultancy  15,00,000  81,00,000  
Meetings, 
Seminars and 
conferences 
1,70,000  Dividend from an Indian 
company (gross) 
11,00,000 
Purchase of car 
(for official use) on 
01.07.2024 
3,00,000 Interest on deposit 
certificates issued under gold 
monetization scheme, 2015 
25,000 
Repairs and 
Maintenance of car 
35,000 Honorarium received for 
valuation of answer papers 
50,000 
Travelling 
Expenses  
5,00,000 Rent received in respect of 
house property  
90,000  
Municipal tax paid 
in respect of house 
property 
9,000   
Net profit 25,91,000     
 93,65,000   93,65,000  
Other information:  
(i)  Administrative expenses include ? 50,000 paid to a tax consultant in 
cash for assisting Ms. Farah in one of the professional assignments.  
(ii)  The traveling expenses include expenditure incurred on foreign 
professional tour of ? 50,000 which was within the RBI norms.  
(iii)  Ms. Farah paid medical insurance premium for her parents (senior 
citizens and not dependent on her) online amounting ? 47,000. She 
also paid ? 8,500 by cash towards preventive health check-up for 
herself and her spouse.  
(iv)  Repairs and maintenance of car is for the period from 1-10-2024 to  
30-09-2025.  
204
Page 5


MODEL TEST PAPER 4 
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. Sambhav (aged 48 years) furnishes the following particulars for the 
previous year 2024-25 in respect of an industrial undertaking established in 
"Special Economic Zone" in March 2018. It began manufacturing in April 
2018. 
Particulars ( ?) 
Total sales 85,00,000 
Export sales [proceeds received in India by 30.9.2025] 45,00,000 
Domestic sales 40,00,000 
Profit from the above undertaking 20,00,000 
 Export Sales of F.Y. of 2024-25 include freight and insurance of ? 5 lakhs for 
delivery of goods outside India.  
 He received rent of ? 30,000 per month for a commercial property let out to 
Mr. Akash, a salaried individual. He earned interest on savings bank A/c of  
? 15,000 and interest on Post Office savings A/c of ? 7,000 during the  
P.Y. 2024-25. 
 Mr. Sambhav has shifted out of the default tax regime under section 
115BAC. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:   
(i) Compute the amount of export turnover and total turnover for purpose 
of computing deduction under section 10AA for A.Y. 2025-26. 
(a)  ? 45,00,000 and ? 85,00,000, respectively 
(b)  ? 40,00,000 and ? 80,00,000, respectively 
(c)  ? 45,00,000 and ? 80,00,000, respectively 
(d)  ? 40,00,000 and ? 85,00,000, respectively 
201
(ii) Compute the amount of deduction available to Mr. Sambhav under 
section 10AA for A.Y. 2025-26. 
(a)  ? 10,00,000 
(b)  ? 4,70,577 
(c)  ? 5,62,500 
(d)  ? 5,00,000 
(iii) Compute the total income of Mr. Sambhav for A.Y. 2025-26. 
(a)  ? 17,60,500 
(b)  ? 12,60,500 
(c)  ? 18,72,000 
(d)  ? 17,64,000 (3 x 2 = 6 Marks) 
2. Mr. Anshul, aged 54 years, an Indian citizen, is working as Assistant 
Manager in ABC India Ltd. He is getting basic salary of  
? 58,000 per month. He used to travel frequently out of India for his office 
work. He left India from Delhi Airport on 5
th
 October, 2024 and returned to 
India on 2
nd
 April, 2025.  
 For previous year 2024-25, following information are relevant; 
(a) Dearness Allowance - 10% of Basic Pay (considered for retirement 
purposes) 
(b) Bonus - ? 98,000 
(c) Medical allowance paid during P.Y. 2024-25 amounting to ? 60,000 
(d) He was also reimbursed medical bill of his mother amounting to  
? 15,000. 
(e) He was also reimbursed salary of house servant of ? 4,000 per month. 
(f) Professional tax paid by employer amounting to ? 2,400. 
(g) 400 equity shares allotted by ABC India Ltd. at the rate of  
? 250 per share against fair market value of share of ? 350 on the date 
of exercise of option. 
(h) Mr. Anshul has exercised the option to shift out of the default tax 
regime under section 115BAC. 
 Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:   
(i) What is Mr. Anshul’s residential status for the A.Y. 2025-26? 
(a) Resident but can’t determine resident and ordinarily resident or 
resident but not ordinarily resident from the given information 
(b) Non-Resident  
(c) Resident but not ordinarily resident  
(d) Resident and ordinarily resident 
202
(ii) What are his taxable perquisites for A.Y. 2025-26?  
(a) ? 55,000 
(b) ? 90,400 
(c) ? 1,05,400 
(d) ? 1,03,000 
(iii) What is the income chargeable under the head “Salaries” in the hands 
of Mr. Anshul for A.Y. 2025-26? 
(a) ? 9,76,600                                  
(b) ? 9,86,600 
(c) ? 9,71,600 
(d) ? 9,61,600  (3 x 2 = 6 Marks) 
3. Mr. Ross, an Australian citizen, is employed in the Indian embassy in 
Australia. He is a non-resident in India for A.Y. 2025-26. He received salary 
and allowances in Australia from the Government of India for the year ended 
31.03.2025 for services rendered by him in Australia. In addition, he was 
allowed perquisites by the Government. Which of the following statements 
are correct? 
(a) Salary, allowances and perquisites received outside India are not 
taxable in the hands of Mr. Ross, since he is non-resident 
(b) Salary, allowances and perquisites received outside India by  
Mr. Ross are taxable in India since they are deemed to accrue or arise 
in India 
(c)  Salary received by Mr. Ross is taxable in India but allowances and 
perquisites are exempt 
(d)  Salary received by Mr. Ross is exempt in India but allowances and 
perquisites are taxable (2 Marks) 
4. Which of the following returns can be revised under section 139(5)? 
(i) A return of income filed u/s 139(1) 
(ii)   A belated return of income filed u/s 139(4) 
(iii)   A return of loss filed u/s 139(3) 
Choose the correct answer: 
(a)  Only (i) 
(b)  Only (i) and (ii) 
(c)  Only (i) and (iii) 
(d)  (i), (ii) and (iii) (1 Mark)  
203
Division B – Descriptive Questions 
Question No. 1 is compulsory. 
Attempt any two questions from the remaining three questions. 
1. Ms. Farah, aged 40 years, is an advocate (Taxation). She keeps her books 
of accounts on accrual basis. Her profit & loss account for the year ended on 
March 31, 2025 is as follows:  
Profit & Loss Account for the year ending March 31, 2025 
 Amount 
( ?) 
 Amount 
( ?) 
Staff salary  40,10,000 Fees Earned from:  
Rent  9,00,000  Taxation services 50,00,000  
Administrative 
expenses 
6,50,000  Appeals  16,00,000   
Incentives to office 
staff  
2,00,000  Consultancy  15,00,000  81,00,000  
Meetings, 
Seminars and 
conferences 
1,70,000  Dividend from an Indian 
company (gross) 
11,00,000 
Purchase of car 
(for official use) on 
01.07.2024 
3,00,000 Interest on deposit 
certificates issued under gold 
monetization scheme, 2015 
25,000 
Repairs and 
Maintenance of car 
35,000 Honorarium received for 
valuation of answer papers 
50,000 
Travelling 
Expenses  
5,00,000 Rent received in respect of 
house property  
90,000  
Municipal tax paid 
in respect of house 
property 
9,000   
Net profit 25,91,000     
 93,65,000   93,65,000  
Other information:  
(i)  Administrative expenses include ? 50,000 paid to a tax consultant in 
cash for assisting Ms. Farah in one of the professional assignments.  
(ii)  The traveling expenses include expenditure incurred on foreign 
professional tour of ? 50,000 which was within the RBI norms.  
(iii)  Ms. Farah paid medical insurance premium for her parents (senior 
citizens and not dependent on her) online amounting ? 47,000. She 
also paid ? 8,500 by cash towards preventive health check-up for 
herself and her spouse.  
(iv)  Repairs and maintenance of car is for the period from 1-10-2024 to  
30-09-2025.  
204
(v)  She has paid ? 1,00,000 towards advance tax during the P.Y. 2024-25.  
Compute Total Income and Net tax payable as per the most beneficial 
taxation scheme for Ms. Farah for the A.Y. 2025-26.  (15 Marks) 
2. (a) Sagar, a Chartered Accountant, is presently working in a firm in India. 
He has received an offer for the post of Chief Financial Officer from a 
company at New York. As per the offer letter, he should join the 
company at any time between 1st September, 2024 and 31st October, 
2024. He approaches you for your advice on the following issues to 
mitigate his tax liability in India:  
(i) Date by which he should leave India to join the company; 
(ii) Direct credit of part of his salary to his bank account in Delhi 
maintained jointly with his mother to meet requirement of his 
family. (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: 
(i)  Mr. Deepak wishes to purchase a residential house costing ? 60 
lakhs from Ms. Priya. The house is situated at Chennai and its 
stamp duty value is ? 65 lakhs. He also wants to purchase 
agricultural lands in a rural area for ? 65 lakhs. Both the buyer as 
well as the sellers are residents in India.   
(ii)  ABC & Co., a partnership firm is having a car dealership show-
room – 2. They have purchased cars for ? 2 crores from XYZ Ltd., 
car manufacturers, the cost of each car being more than ?12 
lakhs. They sell the cars to individual buyers at a price yielding 
10% margin on cost. Turnover of ABC & Co. and XYZ Ltd. was 
less than ? 10 crores during the P.Y. 2023-24. (4 Marks) 
3. (a) Mr. Kamal, a resident but not ordinarily resident in India during the 
Assessment Year 2025-26. He owns two houses, one in Dubai and the 
other in Mumbai. The house in Dubai is let out there at a rent of DHS 
20,000 p.m. (1DHS=INR 22). The entire rent is received in India. He 
paid property tax of DHS 2,500 and Sewerage Tax DHS 1,500 there, 
for the Financial Year 2024-25. The house in Mumbai is self-occupied. 
He had taken a loan of ? 10,00,000 to construct the house on 1
st
 June, 
2021 @12%. The construction was completed on 31
st
 May, 2023 and 
he occupied the house on 1
st
 June, 2023. The entire loan is 
outstanding as on 31
st
 March, 2025. Property tax paid in respect of the 
second house is ? 2,400 for the Financial Year 2024-25. Compute the 
income chargeable under the head "Income from House property" in 
the hands of Mr. Kamal for the Assessment Year 2025-26 under 
regular provisions of the Act.  (5 Marks)  
(b) Mr. Ashish entered into an agreement with Mr. Dhaval to sell his 
residential house located at Navi Mumbai on 16.08.2024 for  
? 80,00,000.  
  
205