Income Tax Law (Group I) Model Test Paper - 7 (Questions) | Model Test Papers for CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 7 
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. Amit, an Indian citizen, aged 61 years, has set-up his business in France 
and is residing in France since 2010. He owns a house property in France, 
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.).  
 Mr. Amit visited India for 65 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 derived some other incomes during the F.Y. 2024-25 which are as follows: 
(i) Profit from business in France ` 2,75,000 
(ii) Interest on bonds of a Co. in France ` 6,20,000 out of which 50% was 
received in India. 
(iii) Income from Apple Orchid in Nepal given on contract and the yearly 
contract fee of ` 5,00,000 for F.Y. 2024-25, was received by Amit in 
Nepal.  
 Mr. Amit has sold 10,000 listed shares @ ` 480 per share of ABC Ltd., an 
Indian company, on 15.9.2024, which he acquired on 05-04-2021 @ ` 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 ABC 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 
  
223
Page 2


MODEL TEST PAPER 7 
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. Amit, an Indian citizen, aged 61 years, has set-up his business in France 
and is residing in France since 2010. He owns a house property in France, 
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.).  
 Mr. Amit visited India for 65 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 derived some other incomes during the F.Y. 2024-25 which are as follows: 
(i) Profit from business in France ` 2,75,000 
(ii) Interest on bonds of a Co. in France ` 6,20,000 out of which 50% was 
received in India. 
(iii) Income from Apple Orchid in Nepal given on contract and the yearly 
contract fee of ` 5,00,000 for F.Y. 2024-25, was received by Amit in 
Nepal.  
 Mr. Amit has sold 10,000 listed shares @ ` 480 per share of ABC Ltd., an 
Indian company, on 15.9.2024, which he acquired on 05-04-2021 @ ` 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 ABC 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 
  
223
 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. Amit 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 amount of capital gain would arise in the hands of  
Mr. Amit on transfer of shares of ABC Ltd?  
(a)  ` 18,00,000 
(b)  ` 19,00,000 
(c)  ` 20,00,000 
(d)  ` 38,00,000  
(iii)  What would be the total income of Mr. Amit for the A.Y. 2025-26?  
(a)  ` 41,10,000 
(b)  ` 38,00,000 
(c)  ` 21,10,000 
(d)  ` 49,50,000 (3 x 2 = 6 Marks) 
2. Miss Himani transferred to his husband, Mr. Hemant, a residential property 
worth ` 45 lakhs located in Nagpur without any consideration. The expected 
rent of such property is ` 5 lakhs. Municipal tax of ` 5,000 paid by Miss Himani 
for this property during the previous year 2024-25. Miss Himani has three 
residential properties in Mumbai. The expected rent from the 3 properties 
situated in Mumbai is ` 10 lakhs, ` 11 lakhs and ` 12 lakhs respectively. She 
purchased the properties out of her own funds. Municipal taxes due are  
` 15,000, ` 20,000 and ` 25,000. The same have, however, not been paid this 
year in respect of the three properties. The expected rent is lesser than the 
standard rent in case of all the aforementioned properties. Miss Himani does 
not have any income from any other source. 
 Miss Himani’s father, aged 58 years had capital gains of ` 5 crores from sale 
of house property. He reinvested the proceeds from sale in another residential 
house of ` 4.98 crores and the remaining sale proceeds were deposited in his 
savings bank account. He has paid ` 1,50,000 towards LIC premium. He has 
no other source of income. 
 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 income liable to be taxed in the hands of Miss 
Himani under the head “Income from House Property” for A.Y.2025-26? 
(a)  ` 7,00,000 
(b)  ` 10,46,500 
224
Page 3


MODEL TEST PAPER 7 
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. Amit, an Indian citizen, aged 61 years, has set-up his business in France 
and is residing in France since 2010. He owns a house property in France, 
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.).  
 Mr. Amit visited India for 65 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 derived some other incomes during the F.Y. 2024-25 which are as follows: 
(i) Profit from business in France ` 2,75,000 
(ii) Interest on bonds of a Co. in France ` 6,20,000 out of which 50% was 
received in India. 
(iii) Income from Apple Orchid in Nepal given on contract and the yearly 
contract fee of ` 5,00,000 for F.Y. 2024-25, was received by Amit in 
Nepal.  
 Mr. Amit has sold 10,000 listed shares @ ` 480 per share of ABC Ltd., an 
Indian company, on 15.9.2024, which he acquired on 05-04-2021 @ ` 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 ABC 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 
  
223
 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. Amit 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 amount of capital gain would arise in the hands of  
Mr. Amit on transfer of shares of ABC Ltd?  
(a)  ` 18,00,000 
(b)  ` 19,00,000 
(c)  ` 20,00,000 
(d)  ` 38,00,000  
(iii)  What would be the total income of Mr. Amit for the A.Y. 2025-26?  
(a)  ` 41,10,000 
(b)  ` 38,00,000 
(c)  ` 21,10,000 
(d)  ` 49,50,000 (3 x 2 = 6 Marks) 
2. Miss Himani transferred to his husband, Mr. Hemant, a residential property 
worth ` 45 lakhs located in Nagpur without any consideration. The expected 
rent of such property is ` 5 lakhs. Municipal tax of ` 5,000 paid by Miss Himani 
for this property during the previous year 2024-25. Miss Himani has three 
residential properties in Mumbai. The expected rent from the 3 properties 
situated in Mumbai is ` 10 lakhs, ` 11 lakhs and ` 12 lakhs respectively. She 
purchased the properties out of her own funds. Municipal taxes due are  
` 15,000, ` 20,000 and ` 25,000. The same have, however, not been paid this 
year in respect of the three properties. The expected rent is lesser than the 
standard rent in case of all the aforementioned properties. Miss Himani does 
not have any income from any other source. 
 Miss Himani’s father, aged 58 years had capital gains of ` 5 crores from sale 
of house property. He reinvested the proceeds from sale in another residential 
house of ` 4.98 crores and the remaining sale proceeds were deposited in his 
savings bank account. He has paid ` 1,50,000 towards LIC premium. He has 
no other source of income. 
 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 income liable to be taxed in the hands of Miss 
Himani under the head “Income from House Property” for A.Y.2025-26? 
(a)  ` 7,00,000 
(b)  ` 10,46,500 
224
 
(c)  ` 10,50,000 
(d)  ` 13,76,500 
(ii)  What would be tax liability of Miss Himanil for the A.Y. 2025-26? 
Compute in a manner so that her tax liability is minimum. 
(a)  ` 66,300 
(b)  ` 59,250 
(c)  ` 69,650 
(d)  ` 1,31,510 
(iii)  Is Himani’s father required to furnish his return of income in India for the 
A.Y.2025-26? 
(a)  No, he is not required, since his income does not exceed basic 
exemption limit 
(b)  Yes, he is required to furnish return of income on or before 31
st
 
July, 2025 
(c)  Yes, he is required to furnish return of income on or before 30
th
 
September, 2025 
(d)  Yes, he is required to furnish return of income on or before 31
st
 
October, 2025  
(3 x 2 = 6 Marks) 
3.  During the P.Y.2024-25, Mr. Ranjit has short-term capital gains of ` 95 lakhs 
taxable under section 111A, long-term capital gains of ` 110 lakhs taxable 
under section 112A and business income of ` 90 lakhs.  Which of the following 
statements is correct if Mr. Ranjit is paying tax under default tax regime? 
(a)  Surcharge @15% is leviable on income-tax computed on total income of 
` 2.95 crore. 
(b)  Surcharge @25% is leviable on income-tax computed on total income of 
` 2.95 crore, since total income exceeds ` 2 crore. 
(c)  Surcharge @15% is leviable in respect of income-tax computed on 
capital gains of ` 2.05 crore; in respect of business income, surcharge 
is leviable @25% on income-tax, since total income exceeds ` 2 crore.  
(d)  Surcharge @15% is leviable in respect of income-tax computed on 
capital gains of ` 2.05 crore; surcharge @10% is leviable on income-tax 
computed on business income, since the same exceeds ` 50 lakhs but 
is less than ` 1 crore. (2 Marks) 
4.  Mr. Raj incurred short-term capital loss of ` 10,000 on sale of shares through 
the National Stock Exchange. Such loss - 
(a) can be set-off only against short-term capital gains   
(b) can be set-off against both short-term capital gains and long-term capital 
gains. 
225
Page 4


MODEL TEST PAPER 7 
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. Amit, an Indian citizen, aged 61 years, has set-up his business in France 
and is residing in France since 2010. He owns a house property in France, 
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.).  
 Mr. Amit visited India for 65 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 derived some other incomes during the F.Y. 2024-25 which are as follows: 
(i) Profit from business in France ` 2,75,000 
(ii) Interest on bonds of a Co. in France ` 6,20,000 out of which 50% was 
received in India. 
(iii) Income from Apple Orchid in Nepal given on contract and the yearly 
contract fee of ` 5,00,000 for F.Y. 2024-25, was received by Amit in 
Nepal.  
 Mr. Amit has sold 10,000 listed shares @ ` 480 per share of ABC Ltd., an 
Indian company, on 15.9.2024, which he acquired on 05-04-2021 @ ` 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 ABC 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 
  
223
 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. Amit 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 amount of capital gain would arise in the hands of  
Mr. Amit on transfer of shares of ABC Ltd?  
(a)  ` 18,00,000 
(b)  ` 19,00,000 
(c)  ` 20,00,000 
(d)  ` 38,00,000  
(iii)  What would be the total income of Mr. Amit for the A.Y. 2025-26?  
(a)  ` 41,10,000 
(b)  ` 38,00,000 
(c)  ` 21,10,000 
(d)  ` 49,50,000 (3 x 2 = 6 Marks) 
2. Miss Himani transferred to his husband, Mr. Hemant, a residential property 
worth ` 45 lakhs located in Nagpur without any consideration. The expected 
rent of such property is ` 5 lakhs. Municipal tax of ` 5,000 paid by Miss Himani 
for this property during the previous year 2024-25. Miss Himani has three 
residential properties in Mumbai. The expected rent from the 3 properties 
situated in Mumbai is ` 10 lakhs, ` 11 lakhs and ` 12 lakhs respectively. She 
purchased the properties out of her own funds. Municipal taxes due are  
` 15,000, ` 20,000 and ` 25,000. The same have, however, not been paid this 
year in respect of the three properties. The expected rent is lesser than the 
standard rent in case of all the aforementioned properties. Miss Himani does 
not have any income from any other source. 
 Miss Himani’s father, aged 58 years had capital gains of ` 5 crores from sale 
of house property. He reinvested the proceeds from sale in another residential 
house of ` 4.98 crores and the remaining sale proceeds were deposited in his 
savings bank account. He has paid ` 1,50,000 towards LIC premium. He has 
no other source of income. 
 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 income liable to be taxed in the hands of Miss 
Himani under the head “Income from House Property” for A.Y.2025-26? 
(a)  ` 7,00,000 
(b)  ` 10,46,500 
224
 
(c)  ` 10,50,000 
(d)  ` 13,76,500 
(ii)  What would be tax liability of Miss Himanil for the A.Y. 2025-26? 
Compute in a manner so that her tax liability is minimum. 
(a)  ` 66,300 
(b)  ` 59,250 
(c)  ` 69,650 
(d)  ` 1,31,510 
(iii)  Is Himani’s father required to furnish his return of income in India for the 
A.Y.2025-26? 
(a)  No, he is not required, since his income does not exceed basic 
exemption limit 
(b)  Yes, he is required to furnish return of income on or before 31
st
 
July, 2025 
(c)  Yes, he is required to furnish return of income on or before 30
th
 
September, 2025 
(d)  Yes, he is required to furnish return of income on or before 31
st
 
October, 2025  
(3 x 2 = 6 Marks) 
3.  During the P.Y.2024-25, Mr. Ranjit has short-term capital gains of ` 95 lakhs 
taxable under section 111A, long-term capital gains of ` 110 lakhs taxable 
under section 112A and business income of ` 90 lakhs.  Which of the following 
statements is correct if Mr. Ranjit is paying tax under default tax regime? 
(a)  Surcharge @15% is leviable on income-tax computed on total income of 
` 2.95 crore. 
(b)  Surcharge @25% is leviable on income-tax computed on total income of 
` 2.95 crore, since total income exceeds ` 2 crore. 
(c)  Surcharge @15% is leviable in respect of income-tax computed on 
capital gains of ` 2.05 crore; in respect of business income, surcharge 
is leviable @25% on income-tax, since total income exceeds ` 2 crore.  
(d)  Surcharge @15% is leviable in respect of income-tax computed on 
capital gains of ` 2.05 crore; surcharge @10% is leviable on income-tax 
computed on business income, since the same exceeds ` 50 lakhs but 
is less than ` 1 crore. (2 Marks) 
4.  Mr. Raj incurred short-term capital loss of ` 10,000 on sale of shares through 
the National Stock Exchange. Such loss - 
(a) can be set-off only against short-term capital gains   
(b) can be set-off against both short-term capital gains and long-term capital 
gains. 
225
(c) can be set-off against any head of income.  
(d) not allowed to be set-off.  
 (1 Mark) 
Division B – Descriptive Questions 
Question No. 1 is compulsory 
Attempt any two questions from the remaining three questions 
1. (a) Mr. Sahil, resident Indian aged 40 years, a Manufacturer at Chennai, 
gives the following Manufacturing, Trading and Profit & Loss Account for 
the year ended 31.03.2025.  
Manufacturing, Trading and Profit & Loss Account  
for the year ended 31.03.2025 
Particulars ` Particulars ` 
To Opening Stock 4,97,000 By Sales 3,04,50,000 
To Purchase of Raw  By Closing Stock 14,00,000 
Materials 1,20,43,500   
To Manufacturing    
Wages & Expenses 40,63,500   
To Gross Profit  1,52,46,000   
Total 3,18,50,000 Total 3,18,50,000 
To Administrative  By Gross Profit  1,52,46,000 
Charges 20,30,000 By Dividend From  
To SGST Penalty 
Paid 
 Domestic 
Companies 
1,05,000 
(It is not 
compensatory nature) 
49,000 By Winning from   
To GST Paid 7,70,000 Lotteries (Net of 
TDS) (TDS 31,500) 
73,500 
To General Expenses 3,85,000 By Profit on Sale of   
To Miscellaneous 
Expenses 
 
10,53,500 
Shares 3,15,000 
To Loss on Sale of 
Shares 
1,40,000   
To Interest to Bank for 
term loan 
4,20,000   
To Depreciation  14,00,000   
To Net Profit  94,92,000   
Total 1,57,39,500 Total 1,57,39,500 
226
Page 5


MODEL TEST PAPER 7 
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. Amit, an Indian citizen, aged 61 years, has set-up his business in France 
and is residing in France since 2010. He owns a house property in France, 
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.).  
 Mr. Amit visited India for 65 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 derived some other incomes during the F.Y. 2024-25 which are as follows: 
(i) Profit from business in France ` 2,75,000 
(ii) Interest on bonds of a Co. in France ` 6,20,000 out of which 50% was 
received in India. 
(iii) Income from Apple Orchid in Nepal given on contract and the yearly 
contract fee of ` 5,00,000 for F.Y. 2024-25, was received by Amit in 
Nepal.  
 Mr. Amit has sold 10,000 listed shares @ ` 480 per share of ABC Ltd., an 
Indian company, on 15.9.2024, which he acquired on 05-04-2021 @ ` 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 ABC 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 
  
223
 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. Amit 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 amount of capital gain would arise in the hands of  
Mr. Amit on transfer of shares of ABC Ltd?  
(a)  ` 18,00,000 
(b)  ` 19,00,000 
(c)  ` 20,00,000 
(d)  ` 38,00,000  
(iii)  What would be the total income of Mr. Amit for the A.Y. 2025-26?  
(a)  ` 41,10,000 
(b)  ` 38,00,000 
(c)  ` 21,10,000 
(d)  ` 49,50,000 (3 x 2 = 6 Marks) 
2. Miss Himani transferred to his husband, Mr. Hemant, a residential property 
worth ` 45 lakhs located in Nagpur without any consideration. The expected 
rent of such property is ` 5 lakhs. Municipal tax of ` 5,000 paid by Miss Himani 
for this property during the previous year 2024-25. Miss Himani has three 
residential properties in Mumbai. The expected rent from the 3 properties 
situated in Mumbai is ` 10 lakhs, ` 11 lakhs and ` 12 lakhs respectively. She 
purchased the properties out of her own funds. Municipal taxes due are  
` 15,000, ` 20,000 and ` 25,000. The same have, however, not been paid this 
year in respect of the three properties. The expected rent is lesser than the 
standard rent in case of all the aforementioned properties. Miss Himani does 
not have any income from any other source. 
 Miss Himani’s father, aged 58 years had capital gains of ` 5 crores from sale 
of house property. He reinvested the proceeds from sale in another residential 
house of ` 4.98 crores and the remaining sale proceeds were deposited in his 
savings bank account. He has paid ` 1,50,000 towards LIC premium. He has 
no other source of income. 
 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 income liable to be taxed in the hands of Miss 
Himani under the head “Income from House Property” for A.Y.2025-26? 
(a)  ` 7,00,000 
(b)  ` 10,46,500 
224
 
(c)  ` 10,50,000 
(d)  ` 13,76,500 
(ii)  What would be tax liability of Miss Himanil for the A.Y. 2025-26? 
Compute in a manner so that her tax liability is minimum. 
(a)  ` 66,300 
(b)  ` 59,250 
(c)  ` 69,650 
(d)  ` 1,31,510 
(iii)  Is Himani’s father required to furnish his return of income in India for the 
A.Y.2025-26? 
(a)  No, he is not required, since his income does not exceed basic 
exemption limit 
(b)  Yes, he is required to furnish return of income on or before 31
st
 
July, 2025 
(c)  Yes, he is required to furnish return of income on or before 30
th
 
September, 2025 
(d)  Yes, he is required to furnish return of income on or before 31
st
 
October, 2025  
(3 x 2 = 6 Marks) 
3.  During the P.Y.2024-25, Mr. Ranjit has short-term capital gains of ` 95 lakhs 
taxable under section 111A, long-term capital gains of ` 110 lakhs taxable 
under section 112A and business income of ` 90 lakhs.  Which of the following 
statements is correct if Mr. Ranjit is paying tax under default tax regime? 
(a)  Surcharge @15% is leviable on income-tax computed on total income of 
` 2.95 crore. 
(b)  Surcharge @25% is leviable on income-tax computed on total income of 
` 2.95 crore, since total income exceeds ` 2 crore. 
(c)  Surcharge @15% is leviable in respect of income-tax computed on 
capital gains of ` 2.05 crore; in respect of business income, surcharge 
is leviable @25% on income-tax, since total income exceeds ` 2 crore.  
(d)  Surcharge @15% is leviable in respect of income-tax computed on 
capital gains of ` 2.05 crore; surcharge @10% is leviable on income-tax 
computed on business income, since the same exceeds ` 50 lakhs but 
is less than ` 1 crore. (2 Marks) 
4.  Mr. Raj incurred short-term capital loss of ` 10,000 on sale of shares through 
the National Stock Exchange. Such loss - 
(a) can be set-off only against short-term capital gains   
(b) can be set-off against both short-term capital gains and long-term capital 
gains. 
225
(c) can be set-off against any head of income.  
(d) not allowed to be set-off.  
 (1 Mark) 
Division B – Descriptive Questions 
Question No. 1 is compulsory 
Attempt any two questions from the remaining three questions 
1. (a) Mr. Sahil, resident Indian aged 40 years, a Manufacturer at Chennai, 
gives the following Manufacturing, Trading and Profit & Loss Account for 
the year ended 31.03.2025.  
Manufacturing, Trading and Profit & Loss Account  
for the year ended 31.03.2025 
Particulars ` Particulars ` 
To Opening Stock 4,97,000 By Sales 3,04,50,000 
To Purchase of Raw  By Closing Stock 14,00,000 
Materials 1,20,43,500   
To Manufacturing    
Wages & Expenses 40,63,500   
To Gross Profit  1,52,46,000   
Total 3,18,50,000 Total 3,18,50,000 
To Administrative  By Gross Profit  1,52,46,000 
Charges 20,30,000 By Dividend From  
To SGST Penalty 
Paid 
 Domestic 
Companies 
1,05,000 
(It is not 
compensatory nature) 
49,000 By Winning from   
To GST Paid 7,70,000 Lotteries (Net of 
TDS) (TDS 31,500) 
73,500 
To General Expenses 3,85,000 By Profit on Sale of   
To Miscellaneous 
Expenses 
 
10,53,500 
Shares 3,15,000 
To Loss on Sale of 
Shares 
1,40,000   
To Interest to Bank for 
term loan 
4,20,000   
To Depreciation  14,00,000   
To Net Profit  94,92,000   
Total 1,57,39,500 Total 1,57,39,500 
226
 
 Following are the further information relating to Financial Year 2024-
2025: 
(i)  Administrative Charges include ` 46,000 paid as commission to 
brother of the assessee. The Commission amount at the market 
rate in ` 36,000. 
(ii)  The assessee paid ` 33,000 in cash to a Transport Carrier on 
26.12.2024. This amount is included in Manufacturing Expenses. 
(Assume that the provisions relating to TDS are not applicable on 
this payment.) 
(iii)  Bank Term Loan Interest actually paid upto 31.03.2025 was  
` 1,40,000 and the balance was paid in October 2025. 
(iv)  Miscellaneous Expenses include ` 10,000 contributed to Prime 
Minister's Relief Fund by account payee cheque. 
(v)  Loss on Sale of Shares represents shares sold within a period of 6 
months from the date of purchase. 
(vi)  Profit on Sale of Shares represents shares sold in December 2024 
and held for 2 years & Securities Transaction Tax was paid on it. 
(vii) Housing Loan Principal repaid during the year was ` 50,000 and it 
relates to residential property occupied by him. Interest on Housing 
Loan was ` 2,60,000. Housing Loan was taken from Canara Bank. 
(Value of house property is ` 45 lakhs, loan value ` 25 lakhs and 
sanction date 31.03.2020). These amounts were not dealt with in 
the Profit and Loss Account given above. 
(ix)  Deprecation allowable under the Act to be computed on the basis 
of following information: 
Plant & Machinery (Depreciation Rate @15%) ` 
Opening WDV (as on 01.04.2024) 84,00,000 
Additions During the year (Used for more than 180 
Days) 
14,00,000 
Total Additions during the year 28,00,000 
Note: Ignore Additional Depreciation u/s 32(1)(iia)  
 Compute the total income and tax liability of Mr. Sahil for the  
A.Y. 2025-26 if he has exercised the option of shifting out of the default 
tax regime provided under section 115BAC(1A). (15 Marks) 
2. (a) Mr. Tilak aged 35 years, furnishes the following information regarding 
his income for the assessment year 2025-26. Compute the total income 
if he is:  
(1)  Resident and Ordinarily Resident. 
(2)  Resident but Not Ordinarily Resident 
 (Ignore the provisions of Section 115BAC). 
227