Income Tax Law (Group I) Model Test Paper - 1 (Answers) | Model Test Papers for CA Intermediate PDF Download

 Page 1


 
ANSWERS OF MODEL TEST PAPER 1 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 3: TAXATION 
SECTION – A: INCOME TAX LAW 
Division A – Multiple Choice Questions 
MCQ 
No. 
Sub-
part 
Most Appropriate 
Answer 
 MCQ 
No. 
Most Appropriate 
Answer 
1. (i) (d)  3. (c) 
 (ii) (a)  4. (c) 
 (iii) (a)    
2. (i) (c)    
 (ii) (d)    
 (iii) (d)    
Division B – Descriptive Questions 
1.  Computation of total income of Mr. Amit as per section 115BAC  
for A.Y. 2025-26 
Particulars ?  
Net profit as per profit and loss account 50,85,000 
Less: Income-tax refund credited in the profit and loss 
account, out of which interest on such refund is only 
taxable, which is to be considered separately under the 
head “Income from other sources” 
 
 
             
 30,000 
  50,55,000 
Add: Expenses either not allowable or to be considered 
separately but charged in the profit & loss account 
 
 - Salary paid to brother disallowed to the extent 
considered unreasonable [Section 40A(2)] 
5,000 
 - Advertisement in the souvenir of political party not 
allowable as per section 37(2B) (See Note 1) 
2,500 
 - Payment made to political party by cheque (See 
Note 2) 
1,00,000 
 - Penalty levied by the Goods and Services tax 
department for delayed filing of returns not allowable 
as being paid for infraction of law (See Note 3) 
5,300 
 - Depreciation as per books 1,07,250 
  - 30% of interest paid on loan paid to Mr. Mohit, a 
resident, without deduction of tax at source not 
allowable as per section 40(a)(ia) 
 
    24,000 
  52,99,050 
  
478
Page 2


 
ANSWERS OF MODEL TEST PAPER 1 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 3: TAXATION 
SECTION – A: INCOME TAX LAW 
Division A – Multiple Choice Questions 
MCQ 
No. 
Sub-
part 
Most Appropriate 
Answer 
 MCQ 
No. 
Most Appropriate 
Answer 
1. (i) (d)  3. (c) 
 (ii) (a)  4. (c) 
 (iii) (a)    
2. (i) (c)    
 (ii) (d)    
 (iii) (d)    
Division B – Descriptive Questions 
1.  Computation of total income of Mr. Amit as per section 115BAC  
for A.Y. 2025-26 
Particulars ?  
Net profit as per profit and loss account 50,85,000 
Less: Income-tax refund credited in the profit and loss 
account, out of which interest on such refund is only 
taxable, which is to be considered separately under the 
head “Income from other sources” 
 
 
             
 30,000 
  50,55,000 
Add: Expenses either not allowable or to be considered 
separately but charged in the profit & loss account 
 
 - Salary paid to brother disallowed to the extent 
considered unreasonable [Section 40A(2)] 
5,000 
 - Advertisement in the souvenir of political party not 
allowable as per section 37(2B) (See Note 1) 
2,500 
 - Payment made to political party by cheque (See 
Note 2) 
1,00,000 
 - Penalty levied by the Goods and Services tax 
department for delayed filing of returns not allowable 
as being paid for infraction of law (See Note 3) 
5,300 
 - Depreciation as per books 1,07,250 
  - 30% of interest paid on loan paid to Mr. Mohit, a 
resident, without deduction of tax at source not 
allowable as per section 40(a)(ia) 
 
    24,000 
  52,99,050 
  
478
 
Less:  Depreciation allowable as per Income-tax 
Act, 1961 
     65,000  
  Depreciation on building [ ? 20 lakhs x 
10%] 
2,00,000 2,65,000 
Profits and gains from business or profession 50,34,050 
Income from Other Sources  
Interest on income-tax refund        4,570 
Gross Total Income 50,38,620 
Less: Deduction under section 80GGC [Contribution to 
Political Party] [Not allowable] 
Nil 
Total Income 50,38,620 
Notes – 
(1) The amount of ? 2,500 paid for advertisement in the souvenir issued by 
a political party attracts disallowance under section 37(2B).  
(2) Payment to political party is not an expenditure incurred wholly and 
exclusively for business purpose and hence not allowance under 
section 37(1). Since the amount has been debited to profit and loss 
account, the same has to be added back for computing business 
income. 
(3)  The interest of ? 12,750 paid on the delayed deposit of goods and 
services tax is for breach of contract and hence, is allowable as 
deduction. However, penalty of ? 5,300 for delay in filing of returns is 
not allowable since it is for breach of law. 
(4) Deduction under section 35AD is not allowable as per section 
115BAC(2). However, normal depreciation u/s 32 is allowable. 
Computation of tax liability as per section 115BAC 
Particulars ? ? 
Tax on total income of ? 50,38,620   
Upto ? 3,00,000 Nil  
? 3,00,001 – ? 7,00,000 [@5% of ? 4 lakhs] 20,000  
? 7,00,001 – ? 10,00,000 [@10% of ? 3 lakhs] 30,000  
? 10,00,001 – ? 12,00,000 [@15% of ? 2 lakhs] 30,000  
? 12,00,001 – ? 15,00,000 [@20% of ? 3 lakhs] 60,000  
? 15,00,001 – ? 50,38,620 [@30% of  
? 35,38,620] 
10,61,586 
 
  12,01,586 
Add: Surcharge @10% [Since, the total 
income exceeds ? 50 lakhs but does not 
exceed ? 1 crore] 
  
 
 1,20,159 
  13,21,745 
479
Page 3


 
ANSWERS OF MODEL TEST PAPER 1 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 3: TAXATION 
SECTION – A: INCOME TAX LAW 
Division A – Multiple Choice Questions 
MCQ 
No. 
Sub-
part 
Most Appropriate 
Answer 
 MCQ 
No. 
Most Appropriate 
Answer 
1. (i) (d)  3. (c) 
 (ii) (a)  4. (c) 
 (iii) (a)    
2. (i) (c)    
 (ii) (d)    
 (iii) (d)    
Division B – Descriptive Questions 
1.  Computation of total income of Mr. Amit as per section 115BAC  
for A.Y. 2025-26 
Particulars ?  
Net profit as per profit and loss account 50,85,000 
Less: Income-tax refund credited in the profit and loss 
account, out of which interest on such refund is only 
taxable, which is to be considered separately under the 
head “Income from other sources” 
 
 
             
 30,000 
  50,55,000 
Add: Expenses either not allowable or to be considered 
separately but charged in the profit & loss account 
 
 - Salary paid to brother disallowed to the extent 
considered unreasonable [Section 40A(2)] 
5,000 
 - Advertisement in the souvenir of political party not 
allowable as per section 37(2B) (See Note 1) 
2,500 
 - Payment made to political party by cheque (See 
Note 2) 
1,00,000 
 - Penalty levied by the Goods and Services tax 
department for delayed filing of returns not allowable 
as being paid for infraction of law (See Note 3) 
5,300 
 - Depreciation as per books 1,07,250 
  - 30% of interest paid on loan paid to Mr. Mohit, a 
resident, without deduction of tax at source not 
allowable as per section 40(a)(ia) 
 
    24,000 
  52,99,050 
  
478
 
Less:  Depreciation allowable as per Income-tax 
Act, 1961 
     65,000  
  Depreciation on building [ ? 20 lakhs x 
10%] 
2,00,000 2,65,000 
Profits and gains from business or profession 50,34,050 
Income from Other Sources  
Interest on income-tax refund        4,570 
Gross Total Income 50,38,620 
Less: Deduction under section 80GGC [Contribution to 
Political Party] [Not allowable] 
Nil 
Total Income 50,38,620 
Notes – 
(1) The amount of ? 2,500 paid for advertisement in the souvenir issued by 
a political party attracts disallowance under section 37(2B).  
(2) Payment to political party is not an expenditure incurred wholly and 
exclusively for business purpose and hence not allowance under 
section 37(1). Since the amount has been debited to profit and loss 
account, the same has to be added back for computing business 
income. 
(3)  The interest of ? 12,750 paid on the delayed deposit of goods and 
services tax is for breach of contract and hence, is allowable as 
deduction. However, penalty of ? 5,300 for delay in filing of returns is 
not allowable since it is for breach of law. 
(4) Deduction under section 35AD is not allowable as per section 
115BAC(2). However, normal depreciation u/s 32 is allowable. 
Computation of tax liability as per section 115BAC 
Particulars ? ? 
Tax on total income of ? 50,38,620   
Upto ? 3,00,000 Nil  
? 3,00,001 – ? 7,00,000 [@5% of ? 4 lakhs] 20,000  
? 7,00,001 – ? 10,00,000 [@10% of ? 3 lakhs] 30,000  
? 10,00,001 – ? 12,00,000 [@15% of ? 2 lakhs] 30,000  
? 12,00,001 – ? 15,00,000 [@20% of ? 3 lakhs] 60,000  
? 15,00,001 – ? 50,38,620 [@30% of  
? 35,38,620] 
10,61,586 
 
  12,01,586 
Add: Surcharge @10% [Since, the total 
income exceeds ? 50 lakhs but does not 
exceed ? 1 crore] 
  
 
 1,20,159 
  13,21,745 
479
 
Less: Marginal relief (See computation 
below) 
    93,125 
  12,28,620 
Add: Health and education cess@4%      49,145 
Total tax liability  12,77,765 
Total tax liability (Rounded off)  12,77,770 
Computation of marginal relief 
Particulars ? 
(A) Tax payable including surcharge on total income of  
? 50,38,620 as per section 115BAC 
13,21,745 
(B) Tax payable on total income of ? 50 lakhs as per 
section 115BAC 
11,90,000 
(C) Excess tax payable (A-B) 1,31,745 
(D) Marginal relief ( ?1,31,745 – ? 38,620, being the amount 
of income in excess of ? 50 lakhs) 
 
93,125 
Note - An individual paying tax u/s 115BAC is not liable to alternate 
minimum tax u/s 115JC. 
Computation of total income of Mr. Amit for A.Y. 2025-26 under normal 
provisions of the Act 
Particulars ? ? 
Gross Total Income as per default tax regime 
under section 115BAC 
 50,38,620 
Add: Depreciation on building [ ? 20 lakhs x 10%]   2,00,000 
  52,38,620 
Less: Warehousing charges  22,50,000 
Gross Total Income excluding profits and 
gains from specified business under section 
35AD 
 29,88,620 
Profits and gains from specified business 
under section 35AD 
  
Warehousing charges 22,50,000  
Less: Deduction under section 35AD (See Note 1) 20,00,000  2,50,000 
Gross Total Income as per normal provisions 
of the Act 
 32,38,620 
Less: Deduction under section 80GGC for 
contribution to Political Party (See Note 2) 
 1,00,000 
Total Income as per regular provisions of the 
Act 
 31,38,620 
  
480
Page 4


 
ANSWERS OF MODEL TEST PAPER 1 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 3: TAXATION 
SECTION – A: INCOME TAX LAW 
Division A – Multiple Choice Questions 
MCQ 
No. 
Sub-
part 
Most Appropriate 
Answer 
 MCQ 
No. 
Most Appropriate 
Answer 
1. (i) (d)  3. (c) 
 (ii) (a)  4. (c) 
 (iii) (a)    
2. (i) (c)    
 (ii) (d)    
 (iii) (d)    
Division B – Descriptive Questions 
1.  Computation of total income of Mr. Amit as per section 115BAC  
for A.Y. 2025-26 
Particulars ?  
Net profit as per profit and loss account 50,85,000 
Less: Income-tax refund credited in the profit and loss 
account, out of which interest on such refund is only 
taxable, which is to be considered separately under the 
head “Income from other sources” 
 
 
             
 30,000 
  50,55,000 
Add: Expenses either not allowable or to be considered 
separately but charged in the profit & loss account 
 
 - Salary paid to brother disallowed to the extent 
considered unreasonable [Section 40A(2)] 
5,000 
 - Advertisement in the souvenir of political party not 
allowable as per section 37(2B) (See Note 1) 
2,500 
 - Payment made to political party by cheque (See 
Note 2) 
1,00,000 
 - Penalty levied by the Goods and Services tax 
department for delayed filing of returns not allowable 
as being paid for infraction of law (See Note 3) 
5,300 
 - Depreciation as per books 1,07,250 
  - 30% of interest paid on loan paid to Mr. Mohit, a 
resident, without deduction of tax at source not 
allowable as per section 40(a)(ia) 
 
    24,000 
  52,99,050 
  
478
 
Less:  Depreciation allowable as per Income-tax 
Act, 1961 
     65,000  
  Depreciation on building [ ? 20 lakhs x 
10%] 
2,00,000 2,65,000 
Profits and gains from business or profession 50,34,050 
Income from Other Sources  
Interest on income-tax refund        4,570 
Gross Total Income 50,38,620 
Less: Deduction under section 80GGC [Contribution to 
Political Party] [Not allowable] 
Nil 
Total Income 50,38,620 
Notes – 
(1) The amount of ? 2,500 paid for advertisement in the souvenir issued by 
a political party attracts disallowance under section 37(2B).  
(2) Payment to political party is not an expenditure incurred wholly and 
exclusively for business purpose and hence not allowance under 
section 37(1). Since the amount has been debited to profit and loss 
account, the same has to be added back for computing business 
income. 
(3)  The interest of ? 12,750 paid on the delayed deposit of goods and 
services tax is for breach of contract and hence, is allowable as 
deduction. However, penalty of ? 5,300 for delay in filing of returns is 
not allowable since it is for breach of law. 
(4) Deduction under section 35AD is not allowable as per section 
115BAC(2). However, normal depreciation u/s 32 is allowable. 
Computation of tax liability as per section 115BAC 
Particulars ? ? 
Tax on total income of ? 50,38,620   
Upto ? 3,00,000 Nil  
? 3,00,001 – ? 7,00,000 [@5% of ? 4 lakhs] 20,000  
? 7,00,001 – ? 10,00,000 [@10% of ? 3 lakhs] 30,000  
? 10,00,001 – ? 12,00,000 [@15% of ? 2 lakhs] 30,000  
? 12,00,001 – ? 15,00,000 [@20% of ? 3 lakhs] 60,000  
? 15,00,001 – ? 50,38,620 [@30% of  
? 35,38,620] 
10,61,586 
 
  12,01,586 
Add: Surcharge @10% [Since, the total 
income exceeds ? 50 lakhs but does not 
exceed ? 1 crore] 
  
 
 1,20,159 
  13,21,745 
479
 
Less: Marginal relief (See computation 
below) 
    93,125 
  12,28,620 
Add: Health and education cess@4%      49,145 
Total tax liability  12,77,765 
Total tax liability (Rounded off)  12,77,770 
Computation of marginal relief 
Particulars ? 
(A) Tax payable including surcharge on total income of  
? 50,38,620 as per section 115BAC 
13,21,745 
(B) Tax payable on total income of ? 50 lakhs as per 
section 115BAC 
11,90,000 
(C) Excess tax payable (A-B) 1,31,745 
(D) Marginal relief ( ?1,31,745 – ? 38,620, being the amount 
of income in excess of ? 50 lakhs) 
 
93,125 
Note - An individual paying tax u/s 115BAC is not liable to alternate 
minimum tax u/s 115JC. 
Computation of total income of Mr. Amit for A.Y. 2025-26 under normal 
provisions of the Act 
Particulars ? ? 
Gross Total Income as per default tax regime 
under section 115BAC 
 50,38,620 
Add: Depreciation on building [ ? 20 lakhs x 10%]   2,00,000 
  52,38,620 
Less: Warehousing charges  22,50,000 
Gross Total Income excluding profits and 
gains from specified business under section 
35AD 
 29,88,620 
Profits and gains from specified business 
under section 35AD 
  
Warehousing charges 22,50,000  
Less: Deduction under section 35AD (See Note 1) 20,00,000  2,50,000 
Gross Total Income as per normal provisions 
of the Act 
 32,38,620 
Less: Deduction under section 80GGC for 
contribution to Political Party (See Note 2) 
 1,00,000 
Total Income as per regular provisions of the 
Act 
 31,38,620 
  
480
 
Notes –  
(1) Deduction @100% of the capital expenditure is available under section 
35AD in respect of specified business of setting up and operating a 
warehouse facility for storage of agricultural produce which 
commences operation on or after 1.04.2009. 
(2)  Payment to political party qualifies for deduction under section 80GGC 
since the payment is made by way of a cheque. 
  Computation of tax liability of Mr. Amit for A.Y. 2025-26 under the 
regular provisions of the Act 
Particulars ? ? 
Tax on total income of ? 31,38,620   
Upto ? 2,50,000 Nil  
? 2,50,001 – ? 5,00,000 [@5% of ? 2.50 lakh] 12,500  
? 5,00,001 – ? 10,00,000 [@20% of ? 5,00,000] 1,00,000  
? 10,00,001- ? 31,38,620 [@30% of ? 21,38,620] 6,41,586 7,54,086 
Add: Health and education cess@4%     30,163 
Total tax liability  7,84,249 
Total tax liability (rounded off)  7,84,250 
Computation of adjusted total income and AMT of Mr. Amit for  
A.Y. 2025-26 
Particulars ? ? 
Total Income (computed above as per regular 
provisions of income tax) 
 31,38,620 
Add: Deduction under section 35AD 20,00,000  
Less: Depreciation under section 32 on building 
[ ? 20 lakhs x 10%] 
(2,00,000) 18,00,000 
Adjusted Total Income   49,38,620 
Alternative Minimum Tax@18.5%  9,13,645 
Add: Health and education cess@4%      36,546 
Total tax liability  9,50,191 
Total tax liability (rounded off)  9,50,190 
Since the regular income-tax payable is less than the alternate minimum tax 
payable, the adjusted total income shall be deemed to be the total income 
and tax is leviable @18.5% thereof plus cess@4%. Therefore, liability as per 
section 115JC is ? 9,50,190. 
Since the tax liability of Mr. Amit under section 115JC is lower than the tax 
liability as computed u/s 115BAC, it would be beneficial for him to opt out of 
the default tax regime under section 115BAC for A.Y. 2025-26 and pays tax 
481
Page 5


 
ANSWERS OF MODEL TEST PAPER 1 
INTERMEDIATE COURSE: GROUP - I 
PAPER – 3: TAXATION 
SECTION – A: INCOME TAX LAW 
Division A – Multiple Choice Questions 
MCQ 
No. 
Sub-
part 
Most Appropriate 
Answer 
 MCQ 
No. 
Most Appropriate 
Answer 
1. (i) (d)  3. (c) 
 (ii) (a)  4. (c) 
 (iii) (a)    
2. (i) (c)    
 (ii) (d)    
 (iii) (d)    
Division B – Descriptive Questions 
1.  Computation of total income of Mr. Amit as per section 115BAC  
for A.Y. 2025-26 
Particulars ?  
Net profit as per profit and loss account 50,85,000 
Less: Income-tax refund credited in the profit and loss 
account, out of which interest on such refund is only 
taxable, which is to be considered separately under the 
head “Income from other sources” 
 
 
             
 30,000 
  50,55,000 
Add: Expenses either not allowable or to be considered 
separately but charged in the profit & loss account 
 
 - Salary paid to brother disallowed to the extent 
considered unreasonable [Section 40A(2)] 
5,000 
 - Advertisement in the souvenir of political party not 
allowable as per section 37(2B) (See Note 1) 
2,500 
 - Payment made to political party by cheque (See 
Note 2) 
1,00,000 
 - Penalty levied by the Goods and Services tax 
department for delayed filing of returns not allowable 
as being paid for infraction of law (See Note 3) 
5,300 
 - Depreciation as per books 1,07,250 
  - 30% of interest paid on loan paid to Mr. Mohit, a 
resident, without deduction of tax at source not 
allowable as per section 40(a)(ia) 
 
    24,000 
  52,99,050 
  
478
 
Less:  Depreciation allowable as per Income-tax 
Act, 1961 
     65,000  
  Depreciation on building [ ? 20 lakhs x 
10%] 
2,00,000 2,65,000 
Profits and gains from business or profession 50,34,050 
Income from Other Sources  
Interest on income-tax refund        4,570 
Gross Total Income 50,38,620 
Less: Deduction under section 80GGC [Contribution to 
Political Party] [Not allowable] 
Nil 
Total Income 50,38,620 
Notes – 
(1) The amount of ? 2,500 paid for advertisement in the souvenir issued by 
a political party attracts disallowance under section 37(2B).  
(2) Payment to political party is not an expenditure incurred wholly and 
exclusively for business purpose and hence not allowance under 
section 37(1). Since the amount has been debited to profit and loss 
account, the same has to be added back for computing business 
income. 
(3)  The interest of ? 12,750 paid on the delayed deposit of goods and 
services tax is for breach of contract and hence, is allowable as 
deduction. However, penalty of ? 5,300 for delay in filing of returns is 
not allowable since it is for breach of law. 
(4) Deduction under section 35AD is not allowable as per section 
115BAC(2). However, normal depreciation u/s 32 is allowable. 
Computation of tax liability as per section 115BAC 
Particulars ? ? 
Tax on total income of ? 50,38,620   
Upto ? 3,00,000 Nil  
? 3,00,001 – ? 7,00,000 [@5% of ? 4 lakhs] 20,000  
? 7,00,001 – ? 10,00,000 [@10% of ? 3 lakhs] 30,000  
? 10,00,001 – ? 12,00,000 [@15% of ? 2 lakhs] 30,000  
? 12,00,001 – ? 15,00,000 [@20% of ? 3 lakhs] 60,000  
? 15,00,001 – ? 50,38,620 [@30% of  
? 35,38,620] 
10,61,586 
 
  12,01,586 
Add: Surcharge @10% [Since, the total 
income exceeds ? 50 lakhs but does not 
exceed ? 1 crore] 
  
 
 1,20,159 
  13,21,745 
479
 
Less: Marginal relief (See computation 
below) 
    93,125 
  12,28,620 
Add: Health and education cess@4%      49,145 
Total tax liability  12,77,765 
Total tax liability (Rounded off)  12,77,770 
Computation of marginal relief 
Particulars ? 
(A) Tax payable including surcharge on total income of  
? 50,38,620 as per section 115BAC 
13,21,745 
(B) Tax payable on total income of ? 50 lakhs as per 
section 115BAC 
11,90,000 
(C) Excess tax payable (A-B) 1,31,745 
(D) Marginal relief ( ?1,31,745 – ? 38,620, being the amount 
of income in excess of ? 50 lakhs) 
 
93,125 
Note - An individual paying tax u/s 115BAC is not liable to alternate 
minimum tax u/s 115JC. 
Computation of total income of Mr. Amit for A.Y. 2025-26 under normal 
provisions of the Act 
Particulars ? ? 
Gross Total Income as per default tax regime 
under section 115BAC 
 50,38,620 
Add: Depreciation on building [ ? 20 lakhs x 10%]   2,00,000 
  52,38,620 
Less: Warehousing charges  22,50,000 
Gross Total Income excluding profits and 
gains from specified business under section 
35AD 
 29,88,620 
Profits and gains from specified business 
under section 35AD 
  
Warehousing charges 22,50,000  
Less: Deduction under section 35AD (See Note 1) 20,00,000  2,50,000 
Gross Total Income as per normal provisions 
of the Act 
 32,38,620 
Less: Deduction under section 80GGC for 
contribution to Political Party (See Note 2) 
 1,00,000 
Total Income as per regular provisions of the 
Act 
 31,38,620 
  
480
 
Notes –  
(1) Deduction @100% of the capital expenditure is available under section 
35AD in respect of specified business of setting up and operating a 
warehouse facility for storage of agricultural produce which 
commences operation on or after 1.04.2009. 
(2)  Payment to political party qualifies for deduction under section 80GGC 
since the payment is made by way of a cheque. 
  Computation of tax liability of Mr. Amit for A.Y. 2025-26 under the 
regular provisions of the Act 
Particulars ? ? 
Tax on total income of ? 31,38,620   
Upto ? 2,50,000 Nil  
? 2,50,001 – ? 5,00,000 [@5% of ? 2.50 lakh] 12,500  
? 5,00,001 – ? 10,00,000 [@20% of ? 5,00,000] 1,00,000  
? 10,00,001- ? 31,38,620 [@30% of ? 21,38,620] 6,41,586 7,54,086 
Add: Health and education cess@4%     30,163 
Total tax liability  7,84,249 
Total tax liability (rounded off)  7,84,250 
Computation of adjusted total income and AMT of Mr. Amit for  
A.Y. 2025-26 
Particulars ? ? 
Total Income (computed above as per regular 
provisions of income tax) 
 31,38,620 
Add: Deduction under section 35AD 20,00,000  
Less: Depreciation under section 32 on building 
[ ? 20 lakhs x 10%] 
(2,00,000) 18,00,000 
Adjusted Total Income   49,38,620 
Alternative Minimum Tax@18.5%  9,13,645 
Add: Health and education cess@4%      36,546 
Total tax liability  9,50,191 
Total tax liability (rounded off)  9,50,190 
Since the regular income-tax payable is less than the alternate minimum tax 
payable, the adjusted total income shall be deemed to be the total income 
and tax is leviable @18.5% thereof plus cess@4%. Therefore, liability as per 
section 115JC is ? 9,50,190. 
Since the tax liability of Mr. Amit under section 115JC is lower than the tax 
liability as computed u/s 115BAC, it would be beneficial for him to opt out of 
the default tax regime under section 115BAC for A.Y. 2025-26 and pays tax 
481
 
under regular provisions of the Act. Moreover, benefit of alternate minimum 
tax credit is also available to the extent of tax paid in excess of regular tax.  
AMT credit to be carried forward under section 115JEE 
Particulars ? 
Tax liability under section 115JC 9,50,190 
Less: Tax liability under the regular provisions of the 
Income-tax Act, 1961 
7,84,250 
 1,65,940 
2. (a)  As per section 6(1), an Indian citizen or a person of Indian origin who, 
being outside India, comes on a visit to India would be resident in India 
if he or she stays in India for a period of 182 days or more during the 
relevant previous year in case such person has total income, other than 
the income from foreign sources, not exceeding ? 15 lakhs. However, if 
such person has total income, other than the income from foreign 
sources, exceeding ? 15 lakhs, he would also be a resident if he has 
been in India for at least 120 days during the relevant previous year 
and has been in India during the 4 years immediately preceding the 
previous year for a total period of 365 days or more. In such a case, he 
would be resident but not ordinarily resident in India. 
  Income from foreign sources means income which accrues or arises 
outside India (except income derived from a business controlled in or a 
profession set up in India) and which is not deemed to accrue or arise 
in India. 
  In this case, total income, other than the income from foreign sources, 
of Mr. Akash for P.Y. 2024-25 would be 
Particulars Amount ( ?) 
Salary from ABC Inc., California received in California 
(Computed) (Not included in total income, since it is 
income from foreign source) 
- 
Dividend from Indian companies (Included in total 
income, since it is deemed to accrue or arise in India)  
5,00,000 
Agricultural income from land situated in Nepal (Not 
included in total income, since it is accrued or arisen 
outside India and received outside India) 
- 
Rent received/receivable from house 
property in Delhi (Included in total income, 
since it is deemed to accrue or arise in India) 
5,50,000  
Less: 30% of ? 5.50 lakhs 1,65,000 3,85,000 
Profits from a profession in California, which was set up in 
India, received there 
6,00,000 
Total income, other than the income from foreign 
sources 
14,85,000 
482