Income Tax Law (Group I) Model Test Paper - 5 (Questions) | Model Test Papers for CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 5 
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. Raja, an Indian citizen, aged 61 years, has set-up his business in 
Canada and is residing in Canada since 2009. He owns a house property in 
Canada, half of which is used by him for his residence and half is given on 
rent (converted into INR is ?
 
12,00,000 p.a.).  
 He purchased a flat in Delhi on 13.10.2019. He has taken a loan from 
Canara Bank in India of ? 34,00,000 for purchase of this flat. The interest on 
such loan for the F.Y. 2024-25 was ? 3,14,000 and principal repayment was 
? 80,000. Mr. Raja has given this flat on monthly rent of ? 32,500 since April, 
2024. The annual property tax of Delhi flat is ? 40,000 which is paid by  
Mr. Raja, whenever he comes to India to meet his parents. Mr. Raja visited 
India for 124 days during the previous year 2024-25. Before that he visited 
India in total for 366 days during the period 1.4.2020 to 31.3.2024. 
 He had a house in Ranchi which was sold in May 2021. In respect of this 
house, he received arrears of rent of ? 2,96,000 in February 2025 (not taxed 
earlier). 
 Mr. Raja has sold 10,000 listed shares @ ? 480 per share of A Ltd., an 
Indian company, on 15.9.2024, which he acquired on 05-04-2017 @ ? 100 
per share. STT was paid both at the time of acquisition as well as at the time 
of transfer of such shares. 
 On 31-01-2018, the shares of A Ltd. were traded on a recognized stock 
exchange as under: 
Highest price - ? 300 per share 
Average price - ? 290 per share 
Lowest price - ? 280 per share 
Mr. Raja wants to pay tax under default tax regime under section 115BAC. 
 
208
Page 2


MODEL TEST PAPER 5 
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. Raja, an Indian citizen, aged 61 years, has set-up his business in 
Canada and is residing in Canada since 2009. He owns a house property in 
Canada, half of which is used by him for his residence and half is given on 
rent (converted into INR is ?
 
12,00,000 p.a.).  
 He purchased a flat in Delhi on 13.10.2019. He has taken a loan from 
Canara Bank in India of ? 34,00,000 for purchase of this flat. The interest on 
such loan for the F.Y. 2024-25 was ? 3,14,000 and principal repayment was 
? 80,000. Mr. Raja has given this flat on monthly rent of ? 32,500 since April, 
2024. The annual property tax of Delhi flat is ? 40,000 which is paid by  
Mr. Raja, whenever he comes to India to meet his parents. Mr. Raja visited 
India for 124 days during the previous year 2024-25. Before that he visited 
India in total for 366 days during the period 1.4.2020 to 31.3.2024. 
 He had a house in Ranchi which was sold in May 2021. In respect of this 
house, he received arrears of rent of ? 2,96,000 in February 2025 (not taxed 
earlier). 
 Mr. Raja has sold 10,000 listed shares @ ? 480 per share of A Ltd., an 
Indian company, on 15.9.2024, which he acquired on 05-04-2017 @ ? 100 
per share. STT was paid both at the time of acquisition as well as at the time 
of transfer of such shares. 
 On 31-01-2018, the shares of A Ltd. were traded on a recognized stock 
exchange as under: 
Highest price - ? 300 per share 
Average price - ? 290 per share 
Lowest price - ? 280 per share 
Mr. Raja wants to pay tax under default tax regime under section 115BAC. 
 
208
Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:-  
(i)  What would be the residential status of Mr. Raja for the A.Y. 2025-26? 
(a)  Resident and ordinarily resident in India 
(b)  Resident but not ordinarily resident in India 
(c)  Non-resident  
(d)  Deemed resident 
(ii)  What would be amount of income taxable under the head “Income from 
house property” in the hands of Mr. Raja for the A.Y. 2025-26?  
(a)  ? 2,52,200 
(b)  ? 1,38,200 
(c)  ? 9,78,200 
(d)  ? 10,92,200 
(iii)  What amount of capital gain would arise in the hands of Mr. Raja on 
transfer of shares of A Ltd?  
(a)  ? 18,00,000 
(b)  ? 19,00,000 
(c)  ? 20,00,000 
(d)  ? 38,00,000 (3 x 2 = 6 Marks) 
2.  Mr. Anay (aged 52 years), is a CEO of XYZ Enterprise Limited. During the 
previous year 2024-25, he earned salary of ? 1,65,00,000 and long-term 
capital gain on sale of listed equity shares (STT paid) amounting to  
? 1,06,500. He earned interest of ? 4,82,778 on saving bank account.  
 Further, he has provided the following other information for filing his return of 
income: 
 He does not receive house rent allowance from his employer. Mr. Anay took 
a loan from State Bank of India on 27
th
 October 2021 for repairing his house 
(self-occupied) at Delhi and paid interest on such borrowings of ? 80,000 
and ? 1,50,000 towards principal amount during the previous year 2024-25. 
 Mr. Anay has made the following payments towards medical insurance 
premium for health policies taken for his family members: 
 Medical premium for his brother: ? 13,500 (by cheque) 
 Medical premium for his parents: ? 17,670 (by cheque) 
 Medical premium for self and his wife: ? 21,000 (by cheque). 
 He also incurred ? 6,400 towards preventive health check-up of his wife in 
cash. He deposited ? 1,00,000 towards PPF. He also deposited ? 50,000 
and ? 2,50,000 towards Tier I and Tier II NPS A/c, respectively. 
209
Page 3


MODEL TEST PAPER 5 
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. Raja, an Indian citizen, aged 61 years, has set-up his business in 
Canada and is residing in Canada since 2009. He owns a house property in 
Canada, half of which is used by him for his residence and half is given on 
rent (converted into INR is ?
 
12,00,000 p.a.).  
 He purchased a flat in Delhi on 13.10.2019. He has taken a loan from 
Canara Bank in India of ? 34,00,000 for purchase of this flat. The interest on 
such loan for the F.Y. 2024-25 was ? 3,14,000 and principal repayment was 
? 80,000. Mr. Raja has given this flat on monthly rent of ? 32,500 since April, 
2024. The annual property tax of Delhi flat is ? 40,000 which is paid by  
Mr. Raja, whenever he comes to India to meet his parents. Mr. Raja visited 
India for 124 days during the previous year 2024-25. Before that he visited 
India in total for 366 days during the period 1.4.2020 to 31.3.2024. 
 He had a house in Ranchi which was sold in May 2021. In respect of this 
house, he received arrears of rent of ? 2,96,000 in February 2025 (not taxed 
earlier). 
 Mr. Raja has sold 10,000 listed shares @ ? 480 per share of A Ltd., an 
Indian company, on 15.9.2024, which he acquired on 05-04-2017 @ ? 100 
per share. STT was paid both at the time of acquisition as well as at the time 
of transfer of such shares. 
 On 31-01-2018, the shares of A Ltd. were traded on a recognized stock 
exchange as under: 
Highest price - ? 300 per share 
Average price - ? 290 per share 
Lowest price - ? 280 per share 
Mr. Raja wants to pay tax under default tax regime under section 115BAC. 
 
208
Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:-  
(i)  What would be the residential status of Mr. Raja for the A.Y. 2025-26? 
(a)  Resident and ordinarily resident in India 
(b)  Resident but not ordinarily resident in India 
(c)  Non-resident  
(d)  Deemed resident 
(ii)  What would be amount of income taxable under the head “Income from 
house property” in the hands of Mr. Raja for the A.Y. 2025-26?  
(a)  ? 2,52,200 
(b)  ? 1,38,200 
(c)  ? 9,78,200 
(d)  ? 10,92,200 
(iii)  What amount of capital gain would arise in the hands of Mr. Raja on 
transfer of shares of A Ltd?  
(a)  ? 18,00,000 
(b)  ? 19,00,000 
(c)  ? 20,00,000 
(d)  ? 38,00,000 (3 x 2 = 6 Marks) 
2.  Mr. Anay (aged 52 years), is a CEO of XYZ Enterprise Limited. During the 
previous year 2024-25, he earned salary of ? 1,65,00,000 and long-term 
capital gain on sale of listed equity shares (STT paid) amounting to  
? 1,06,500. He earned interest of ? 4,82,778 on saving bank account.  
 Further, he has provided the following other information for filing his return of 
income: 
 He does not receive house rent allowance from his employer. Mr. Anay took 
a loan from State Bank of India on 27
th
 October 2021 for repairing his house 
(self-occupied) at Delhi and paid interest on such borrowings of ? 80,000 
and ? 1,50,000 towards principal amount during the previous year 2024-25. 
 Mr. Anay has made the following payments towards medical insurance 
premium for health policies taken for his family members: 
 Medical premium for his brother: ? 13,500 (by cheque) 
 Medical premium for his parents: ? 17,670 (by cheque) 
 Medical premium for self and his wife: ? 21,000 (by cheque). 
 He also incurred ? 6,400 towards preventive health check-up of his wife in 
cash. He deposited ? 1,00,000 towards PPF. He also deposited ? 50,000 
and ? 2,50,000 towards Tier I and Tier II NPS A/c, respectively. 
209
 He has paid ? 5,30,000 as advance tax. His employer has deducted tax at 
source of ? 51,89,000. He is of the opinion that the balance amount of tax, if 
any, he will pay on 27
th
 July 2025. 
 Mr. Anay 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 would be the amount of deduction available to Mr. Anay under 
Chapter VI-A for the assessment year 2025-26? 
(a)  ? 2,04,070 
(b)  ? 2,42,670 
(c)  ? 2,52,670 
(d)  ? 2,02,670 
(ii)  Assume that, for the purpose of answering this question alone, that  
Mr. Anay pays rent of ? 65,000 per month for his rented house at 
Mumbai to Mr. C, a resident individual. Is Mr. Anay liable to deduct 
TDS on such rent? If so, what would be the rate and amount of TDS? 
(a)  Yes, Mr. Anay is liable to deduct TDS @ 3.75% amounting to  
? 2,438 every month i.e., at the time of payment of such rent 
(b)  Yes, Mr. Anay is liable to deduct TDS @2% amounting to  
? 15,600 in the month of March 2025 
(c) Yes, Mr. Anay is liable to deduct TDS @5% amounting to  
? 39,000 in the month of March 2025 
(d)  No, Mr. Anay is not liable to deduct TDS, since he is a salaried 
person 
(iii)  What would be the amount of interest chargeable under section 234B 
on account of short payment of advance tax? 
(a)  ? 1,980 
(b)  Nil 
(c) ? 3,130 
(d)  ? 2,410 (3 x 2 = 6 Marks) 
3. On 20.10.2024, Piya (minor child) gets a gift of ? 20,00,000 from her father’s 
friend. On the same day, the amount is deposited as fixed deposit in Piya’s 
bank account. On the said deposit, interest of ? 13,000 was earned during 
the P.Y. 2024-25. In whose hands the income of Piya shall be taxable? Also, 
compute the amount of income that shall be taxable if both parents pay tax 
under default tax regime. 
(a) Income of ? 20,11,500 shall be taxable in the hands of Piya’s father. 
(b)  Income of ? 20,13,000 shall be taxable in the hands of Piya’s father. 
(c)  Income of ? 20,11,500 shall be taxable in the hands of Piya’s father or 
mother, whose income before this clubbing is higher. 
210
Page 4


MODEL TEST PAPER 5 
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. Raja, an Indian citizen, aged 61 years, has set-up his business in 
Canada and is residing in Canada since 2009. He owns a house property in 
Canada, half of which is used by him for his residence and half is given on 
rent (converted into INR is ?
 
12,00,000 p.a.).  
 He purchased a flat in Delhi on 13.10.2019. He has taken a loan from 
Canara Bank in India of ? 34,00,000 for purchase of this flat. The interest on 
such loan for the F.Y. 2024-25 was ? 3,14,000 and principal repayment was 
? 80,000. Mr. Raja has given this flat on monthly rent of ? 32,500 since April, 
2024. The annual property tax of Delhi flat is ? 40,000 which is paid by  
Mr. Raja, whenever he comes to India to meet his parents. Mr. Raja visited 
India for 124 days during the previous year 2024-25. Before that he visited 
India in total for 366 days during the period 1.4.2020 to 31.3.2024. 
 He had a house in Ranchi which was sold in May 2021. In respect of this 
house, he received arrears of rent of ? 2,96,000 in February 2025 (not taxed 
earlier). 
 Mr. Raja has sold 10,000 listed shares @ ? 480 per share of A Ltd., an 
Indian company, on 15.9.2024, which he acquired on 05-04-2017 @ ? 100 
per share. STT was paid both at the time of acquisition as well as at the time 
of transfer of such shares. 
 On 31-01-2018, the shares of A Ltd. were traded on a recognized stock 
exchange as under: 
Highest price - ? 300 per share 
Average price - ? 290 per share 
Lowest price - ? 280 per share 
Mr. Raja wants to pay tax under default tax regime under section 115BAC. 
 
208
Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:-  
(i)  What would be the residential status of Mr. Raja for the A.Y. 2025-26? 
(a)  Resident and ordinarily resident in India 
(b)  Resident but not ordinarily resident in India 
(c)  Non-resident  
(d)  Deemed resident 
(ii)  What would be amount of income taxable under the head “Income from 
house property” in the hands of Mr. Raja for the A.Y. 2025-26?  
(a)  ? 2,52,200 
(b)  ? 1,38,200 
(c)  ? 9,78,200 
(d)  ? 10,92,200 
(iii)  What amount of capital gain would arise in the hands of Mr. Raja on 
transfer of shares of A Ltd?  
(a)  ? 18,00,000 
(b)  ? 19,00,000 
(c)  ? 20,00,000 
(d)  ? 38,00,000 (3 x 2 = 6 Marks) 
2.  Mr. Anay (aged 52 years), is a CEO of XYZ Enterprise Limited. During the 
previous year 2024-25, he earned salary of ? 1,65,00,000 and long-term 
capital gain on sale of listed equity shares (STT paid) amounting to  
? 1,06,500. He earned interest of ? 4,82,778 on saving bank account.  
 Further, he has provided the following other information for filing his return of 
income: 
 He does not receive house rent allowance from his employer. Mr. Anay took 
a loan from State Bank of India on 27
th
 October 2021 for repairing his house 
(self-occupied) at Delhi and paid interest on such borrowings of ? 80,000 
and ? 1,50,000 towards principal amount during the previous year 2024-25. 
 Mr. Anay has made the following payments towards medical insurance 
premium for health policies taken for his family members: 
 Medical premium for his brother: ? 13,500 (by cheque) 
 Medical premium for his parents: ? 17,670 (by cheque) 
 Medical premium for self and his wife: ? 21,000 (by cheque). 
 He also incurred ? 6,400 towards preventive health check-up of his wife in 
cash. He deposited ? 1,00,000 towards PPF. He also deposited ? 50,000 
and ? 2,50,000 towards Tier I and Tier II NPS A/c, respectively. 
209
 He has paid ? 5,30,000 as advance tax. His employer has deducted tax at 
source of ? 51,89,000. He is of the opinion that the balance amount of tax, if 
any, he will pay on 27
th
 July 2025. 
 Mr. Anay 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 would be the amount of deduction available to Mr. Anay under 
Chapter VI-A for the assessment year 2025-26? 
(a)  ? 2,04,070 
(b)  ? 2,42,670 
(c)  ? 2,52,670 
(d)  ? 2,02,670 
(ii)  Assume that, for the purpose of answering this question alone, that  
Mr. Anay pays rent of ? 65,000 per month for his rented house at 
Mumbai to Mr. C, a resident individual. Is Mr. Anay liable to deduct 
TDS on such rent? If so, what would be the rate and amount of TDS? 
(a)  Yes, Mr. Anay is liable to deduct TDS @ 3.75% amounting to  
? 2,438 every month i.e., at the time of payment of such rent 
(b)  Yes, Mr. Anay is liable to deduct TDS @2% amounting to  
? 15,600 in the month of March 2025 
(c) Yes, Mr. Anay is liable to deduct TDS @5% amounting to  
? 39,000 in the month of March 2025 
(d)  No, Mr. Anay is not liable to deduct TDS, since he is a salaried 
person 
(iii)  What would be the amount of interest chargeable under section 234B 
on account of short payment of advance tax? 
(a)  ? 1,980 
(b)  Nil 
(c) ? 3,130 
(d)  ? 2,410 (3 x 2 = 6 Marks) 
3. On 20.10.2024, Piya (minor child) gets a gift of ? 20,00,000 from her father’s 
friend. On the same day, the amount is deposited as fixed deposit in Piya’s 
bank account. On the said deposit, interest of ? 13,000 was earned during 
the P.Y. 2024-25. In whose hands the income of Piya shall be taxable? Also, 
compute the amount of income that shall be taxable if both parents pay tax 
under default tax regime. 
(a) Income of ? 20,11,500 shall be taxable in the hands of Piya’s father. 
(b)  Income of ? 20,13,000 shall be taxable in the hands of Piya’s father. 
(c)  Income of ? 20,11,500 shall be taxable in the hands of Piya’s father or 
mother, whose income before this clubbing is higher. 
210
(d) Income of ? 20,13,000 shall be taxable in the hands of Piya’s father or 
mother, whose income before this clubbing is higher.  (2 Marks) 
4. Rohit, a resident Indian, has incurred ? 15,000 for medical treatment of his 
dependent brother, who is a person with severe disability and has deposited 
? 20,000 with LIC for his maintenance. Rohit shifts out of the default tax 
regime for A.Y. 2025-26. Rohit would be eligible for deduction under section 
80DD of an amount equal to – 
(a) ? 15,000 
(b) ? 35,000 
(c) ? 75,000 
(d) ? 1,25,000 (1 Mark) 
 
Division B – Descriptive Questions 
Question No. 1 is compulsory. 
Attempt any two questions from the remaining three questions. 
1. Mr. Amit, aged 45 years, a resident Indian has provided you the following 
information for the previous year ended 31.03.2025 
(i)  He received royalty of ? 2,88,000 from abroad for a book authored by 
him in the nature of artistic. The rate of royalty as 18% of value of 
books and expenditure made for earning this royalty was ? 40,000. The 
amount remitted to India till 30th September, 2025 is ? 2,30,000. 
(ii)  He owns an industrial undertaking established in a SEZ and which had 
commenced operation during the financial year 2021-22. Total turnover 
of the undertaking was ? 200 lakhs, which includes ?140 lakhs from 
export turnover which have been received in India in convertible foreign 
exchange on or before 30.9.2025. Profit from this industry is ? 20 lakhs.  
(iii)  He was holding 30% equity shares in TSP (P) Ltd., an Indian company. 
Company allotted shares to shareholders on 1st October, 2020. The 
paid up share capital of company is ? 20 lakh divided into 2 lakh shares 
of ? 10 each which were issued at a premium of ? 30 each.  
 He sold all these shares on 30th April, 2024 for ? 60 per share. Equity 
shares of TSP (P) Ltd. are listed on National Stock Exchange and  
Mr. Amit has paid STT both at the time of acquisition and transfer of 
such shares. FMV on 31.1.2018 was ? 50 per share.  
(iv)  Received ? 30,000 as savings bank deposits.  
(v)  He occupies ground floor of his residential building and has let out first 
floor for residential use at an annual rent of ? 2,28,000. He has paid 
municipal taxes of ? 60,000 for the current financial year. Both floor are 
of equal size. 
211
Page 5


MODEL TEST PAPER 5 
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. Raja, an Indian citizen, aged 61 years, has set-up his business in 
Canada and is residing in Canada since 2009. He owns a house property in 
Canada, half of which is used by him for his residence and half is given on 
rent (converted into INR is ?
 
12,00,000 p.a.).  
 He purchased a flat in Delhi on 13.10.2019. He has taken a loan from 
Canara Bank in India of ? 34,00,000 for purchase of this flat. The interest on 
such loan for the F.Y. 2024-25 was ? 3,14,000 and principal repayment was 
? 80,000. Mr. Raja has given this flat on monthly rent of ? 32,500 since April, 
2024. The annual property tax of Delhi flat is ? 40,000 which is paid by  
Mr. Raja, whenever he comes to India to meet his parents. Mr. Raja visited 
India for 124 days during the previous year 2024-25. Before that he visited 
India in total for 366 days during the period 1.4.2020 to 31.3.2024. 
 He had a house in Ranchi which was sold in May 2021. In respect of this 
house, he received arrears of rent of ? 2,96,000 in February 2025 (not taxed 
earlier). 
 Mr. Raja has sold 10,000 listed shares @ ? 480 per share of A Ltd., an 
Indian company, on 15.9.2024, which he acquired on 05-04-2017 @ ? 100 
per share. STT was paid both at the time of acquisition as well as at the time 
of transfer of such shares. 
 On 31-01-2018, the shares of A Ltd. were traded on a recognized stock 
exchange as under: 
Highest price - ? 300 per share 
Average price - ? 290 per share 
Lowest price - ? 280 per share 
Mr. Raja wants to pay tax under default tax regime under section 115BAC. 
 
208
Based on the facts of the case scenario given above, choose the most 
appropriate answer to the following questions:-  
(i)  What would be the residential status of Mr. Raja for the A.Y. 2025-26? 
(a)  Resident and ordinarily resident in India 
(b)  Resident but not ordinarily resident in India 
(c)  Non-resident  
(d)  Deemed resident 
(ii)  What would be amount of income taxable under the head “Income from 
house property” in the hands of Mr. Raja for the A.Y. 2025-26?  
(a)  ? 2,52,200 
(b)  ? 1,38,200 
(c)  ? 9,78,200 
(d)  ? 10,92,200 
(iii)  What amount of capital gain would arise in the hands of Mr. Raja on 
transfer of shares of A Ltd?  
(a)  ? 18,00,000 
(b)  ? 19,00,000 
(c)  ? 20,00,000 
(d)  ? 38,00,000 (3 x 2 = 6 Marks) 
2.  Mr. Anay (aged 52 years), is a CEO of XYZ Enterprise Limited. During the 
previous year 2024-25, he earned salary of ? 1,65,00,000 and long-term 
capital gain on sale of listed equity shares (STT paid) amounting to  
? 1,06,500. He earned interest of ? 4,82,778 on saving bank account.  
 Further, he has provided the following other information for filing his return of 
income: 
 He does not receive house rent allowance from his employer. Mr. Anay took 
a loan from State Bank of India on 27
th
 October 2021 for repairing his house 
(self-occupied) at Delhi and paid interest on such borrowings of ? 80,000 
and ? 1,50,000 towards principal amount during the previous year 2024-25. 
 Mr. Anay has made the following payments towards medical insurance 
premium for health policies taken for his family members: 
 Medical premium for his brother: ? 13,500 (by cheque) 
 Medical premium for his parents: ? 17,670 (by cheque) 
 Medical premium for self and his wife: ? 21,000 (by cheque). 
 He also incurred ? 6,400 towards preventive health check-up of his wife in 
cash. He deposited ? 1,00,000 towards PPF. He also deposited ? 50,000 
and ? 2,50,000 towards Tier I and Tier II NPS A/c, respectively. 
209
 He has paid ? 5,30,000 as advance tax. His employer has deducted tax at 
source of ? 51,89,000. He is of the opinion that the balance amount of tax, if 
any, he will pay on 27
th
 July 2025. 
 Mr. Anay 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 would be the amount of deduction available to Mr. Anay under 
Chapter VI-A for the assessment year 2025-26? 
(a)  ? 2,04,070 
(b)  ? 2,42,670 
(c)  ? 2,52,670 
(d)  ? 2,02,670 
(ii)  Assume that, for the purpose of answering this question alone, that  
Mr. Anay pays rent of ? 65,000 per month for his rented house at 
Mumbai to Mr. C, a resident individual. Is Mr. Anay liable to deduct 
TDS on such rent? If so, what would be the rate and amount of TDS? 
(a)  Yes, Mr. Anay is liable to deduct TDS @ 3.75% amounting to  
? 2,438 every month i.e., at the time of payment of such rent 
(b)  Yes, Mr. Anay is liable to deduct TDS @2% amounting to  
? 15,600 in the month of March 2025 
(c) Yes, Mr. Anay is liable to deduct TDS @5% amounting to  
? 39,000 in the month of March 2025 
(d)  No, Mr. Anay is not liable to deduct TDS, since he is a salaried 
person 
(iii)  What would be the amount of interest chargeable under section 234B 
on account of short payment of advance tax? 
(a)  ? 1,980 
(b)  Nil 
(c) ? 3,130 
(d)  ? 2,410 (3 x 2 = 6 Marks) 
3. On 20.10.2024, Piya (minor child) gets a gift of ? 20,00,000 from her father’s 
friend. On the same day, the amount is deposited as fixed deposit in Piya’s 
bank account. On the said deposit, interest of ? 13,000 was earned during 
the P.Y. 2024-25. In whose hands the income of Piya shall be taxable? Also, 
compute the amount of income that shall be taxable if both parents pay tax 
under default tax regime. 
(a) Income of ? 20,11,500 shall be taxable in the hands of Piya’s father. 
(b)  Income of ? 20,13,000 shall be taxable in the hands of Piya’s father. 
(c)  Income of ? 20,11,500 shall be taxable in the hands of Piya’s father or 
mother, whose income before this clubbing is higher. 
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(d) Income of ? 20,13,000 shall be taxable in the hands of Piya’s father or 
mother, whose income before this clubbing is higher.  (2 Marks) 
4. Rohit, a resident Indian, has incurred ? 15,000 for medical treatment of his 
dependent brother, who is a person with severe disability and has deposited 
? 20,000 with LIC for his maintenance. Rohit shifts out of the default tax 
regime for A.Y. 2025-26. Rohit would be eligible for deduction under section 
80DD of an amount equal to – 
(a) ? 15,000 
(b) ? 35,000 
(c) ? 75,000 
(d) ? 1,25,000 (1 Mark) 
 
Division B – Descriptive Questions 
Question No. 1 is compulsory. 
Attempt any two questions from the remaining three questions. 
1. Mr. Amit, aged 45 years, a resident Indian has provided you the following 
information for the previous year ended 31.03.2025 
(i)  He received royalty of ? 2,88,000 from abroad for a book authored by 
him in the nature of artistic. The rate of royalty as 18% of value of 
books and expenditure made for earning this royalty was ? 40,000. The 
amount remitted to India till 30th September, 2025 is ? 2,30,000. 
(ii)  He owns an industrial undertaking established in a SEZ and which had 
commenced operation during the financial year 2021-22. Total turnover 
of the undertaking was ? 200 lakhs, which includes ?140 lakhs from 
export turnover which have been received in India in convertible foreign 
exchange on or before 30.9.2025. Profit from this industry is ? 20 lakhs.  
(iii)  He was holding 30% equity shares in TSP (P) Ltd., an Indian company. 
Company allotted shares to shareholders on 1st October, 2020. The 
paid up share capital of company is ? 20 lakh divided into 2 lakh shares 
of ? 10 each which were issued at a premium of ? 30 each.  
 He sold all these shares on 30th April, 2024 for ? 60 per share. Equity 
shares of TSP (P) Ltd. are listed on National Stock Exchange and  
Mr. Amit has paid STT both at the time of acquisition and transfer of 
such shares. FMV on 31.1.2018 was ? 50 per share.  
(iv)  Received ? 30,000 as savings bank deposits.  
(v)  He occupies ground floor of his residential building and has let out first 
floor for residential use at an annual rent of ? 2,28,000. He has paid 
municipal taxes of ? 60,000 for the current financial year. Both floor are 
of equal size. 
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(vi)  He paid insurance premium of ? 39,000 on life insurance policy of son, 
who is not dependent on him and ? 48,000 on life insurance policy of 
his dependent father. 
(vii)  He paid tuition fees of ? 42,000 for his three children to a school. The 
fees being ? 14,000 p.a. per child.  
 You are required to compute the total income and tax liability of Mr. Amit 
under normal provisions for the A.Y. 2025-26.  (15 Marks) 
2. (a)  Mrs. Riya, aged 62 years, was born and brought up in New Delhi. She 
got married in Russia in 1996 and settled there since then. Since her 
marriage, she visits India for 60 days each year during her summer 
break. The following are the details of her income for the previous year 
ended 31.03.2025: 
S. 
No.  
Particulars  Amount  
(in ?)  
1.  Pension received from Russian Government  65,000  
2.  Long-term capital gain on sale of land at New Delhi 
(computed)  
3,00,000  
3.  Short-term capital gain on sale of shares of Indian 
listed companies in respect of which STT was paid 
both at the time of acquisition as well as at the 
time of sale (computed)  
60,000  
4.  Premium paid for self to Russian Life Insurance 
Corporation at Russia  
75,000  
5.  Rent received (equivalent to Annual Value) in 
respect of house property in New Delhi  
90,000  
 You are required to ascertain the residential status of Mrs. Riya and 
compute her total income in India for Assessment Year 2025-26 under 
default tax regime. (6 Marks) 
(b)  Mr. Sameer, aged 52 years, provides you the following information and 
requests you to determine his advance tax liability with due dates for 
the financial year 2024-25. 
Estimated tax liability for the financial year 2024-25 ? 80,000 
Tax deducted at source for this year ? 12,000 
 (4 Marks) 
3. (a)  Mr. Piyush runs a sole proprietorship firm and owns four machines 
which was put in use for business in March, 2023. The depreciation on 
these machines is charged @ 15%. The written down value of these 
machines as on 1
st
 April, 2024 was ? 7,70,000. Two of the old 
machines were sold on 15th July, 2024 for ? 10,00,000. A second hand 
plant was bought for ? 6,10,000 on 30th December, 2024.  
  Further, Mr. Piyush has furnished the following particulars relating to 
payments made and expenditure incurred towards scientific research 
for the year ended 31.3.2025: 
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