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

 Page 1


ANSWERS OF MODEL TEST PAPER 5 
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) (b)  3. (d) 
 (ii) (b)  4. (d) 
 (iii) (a)    
2. (i) (d)    
 (ii) (b)    
 (iii) (b)    
Division B – Descriptive Questions 
1.                 Computation of total income of Mr. Amit for A.Y. 2025-26 
 Particulars ?  ?  ?  
I Income from house property    
 Let out portion [First floor]    
 Gross Annual Value [Rent 
received is taken as GAV, in 
the absence of other 
information] 
 2,28,000  
 Less: Municipal taxes paid by 
him in the P.Y. 2024-25 
pertaining to let out portion  
[ ? 60,000/2] 
 30,000  
 Net Annual Value (NAV)  1,98,000  
 Less: Deduction u/s 24    
 (a) 30% of ? 1,98,000  59,400  
   1,38,600  
 Self-occupied portion 
[Ground Floor] 
   
 Annual Value  Nil  
 [No deduction is allowable in 
respect of municipal taxes 
paid] 
  1,38,600 
II Profits and gains of business 
or profession 
   
 Income from SEZ unit   20,00,000 
  
518
Page 2


ANSWERS OF MODEL TEST PAPER 5 
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) (b)  3. (d) 
 (ii) (b)  4. (d) 
 (iii) (a)    
2. (i) (d)    
 (ii) (b)    
 (iii) (b)    
Division B – Descriptive Questions 
1.                 Computation of total income of Mr. Amit for A.Y. 2025-26 
 Particulars ?  ?  ?  
I Income from house property    
 Let out portion [First floor]    
 Gross Annual Value [Rent 
received is taken as GAV, in 
the absence of other 
information] 
 2,28,000  
 Less: Municipal taxes paid by 
him in the P.Y. 2024-25 
pertaining to let out portion  
[ ? 60,000/2] 
 30,000  
 Net Annual Value (NAV)  1,98,000  
 Less: Deduction u/s 24    
 (a) 30% of ? 1,98,000  59,400  
   1,38,600  
 Self-occupied portion 
[Ground Floor] 
   
 Annual Value  Nil  
 [No deduction is allowable in 
respect of municipal taxes 
paid] 
  1,38,600 
II Profits and gains of business 
or profession 
   
 Income from SEZ unit   20,00,000 
  
518
III Capital Gains    
 On transfer of 60,000 shares 
(2,00,000 x 30%) 
   
 Sales consideration [60,000 x  
? 60 per share] 
 36,00,000  
 Less: Cost of acquisition 
[60,000 x 40] 
 24,00,000  
 Long-term capital gains u/s 
112A (since shares are held for 
a period of more than 12 
months before transfer) 
  12,00,000 
IV Income from Other Sources    
 Royalty from artistic book  2,88,000  
 Less: Expenses incurred for 
earning royalty 
 40,000  
   2,48,000  
 Interest on savings bank 
deposits 
 30,000  
    2,78,000 
 Gross Total Income   36,16,600 
 Less: Deduction u/s 10AA 
[Not available, since he 
commenced operation in  
P.Y. 2021-22] 
  - 
 Less: Deduction under 
Chapter VI-A 
   
 Deduction under section 80C    
 Tuition fee paid for maximum 
of two children is allowable  
( ? 14,000 x 2) 
28,000   
 Insurance premium paid on life 
insurance policy of son 
allowable, even though not 
dependent on Mr. Amit 
39,000   
 Insurance premium paid on life 
insurance policy of father not 
allowable, even though father 
is dependent on Mr. Amit 
- 67,000  
 Deduction under section 
80QQB 
 1,90,000  
 Royalty [ ? 2,88,000 x 15/18 =  
? 2,40,000, restricted to 
amount brought into India in 
convertible foreign exchange  
   
519
Page 3


ANSWERS OF MODEL TEST PAPER 5 
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) (b)  3. (d) 
 (ii) (b)  4. (d) 
 (iii) (a)    
2. (i) (d)    
 (ii) (b)    
 (iii) (b)    
Division B – Descriptive Questions 
1.                 Computation of total income of Mr. Amit for A.Y. 2025-26 
 Particulars ?  ?  ?  
I Income from house property    
 Let out portion [First floor]    
 Gross Annual Value [Rent 
received is taken as GAV, in 
the absence of other 
information] 
 2,28,000  
 Less: Municipal taxes paid by 
him in the P.Y. 2024-25 
pertaining to let out portion  
[ ? 60,000/2] 
 30,000  
 Net Annual Value (NAV)  1,98,000  
 Less: Deduction u/s 24    
 (a) 30% of ? 1,98,000  59,400  
   1,38,600  
 Self-occupied portion 
[Ground Floor] 
   
 Annual Value  Nil  
 [No deduction is allowable in 
respect of municipal taxes 
paid] 
  1,38,600 
II Profits and gains of business 
or profession 
   
 Income from SEZ unit   20,00,000 
  
518
III Capital Gains    
 On transfer of 60,000 shares 
(2,00,000 x 30%) 
   
 Sales consideration [60,000 x  
? 60 per share] 
 36,00,000  
 Less: Cost of acquisition 
[60,000 x 40] 
 24,00,000  
 Long-term capital gains u/s 
112A (since shares are held for 
a period of more than 12 
months before transfer) 
  12,00,000 
IV Income from Other Sources    
 Royalty from artistic book  2,88,000  
 Less: Expenses incurred for 
earning royalty 
 40,000  
   2,48,000  
 Interest on savings bank 
deposits 
 30,000  
    2,78,000 
 Gross Total Income   36,16,600 
 Less: Deduction u/s 10AA 
[Not available, since he 
commenced operation in  
P.Y. 2021-22] 
  - 
 Less: Deduction under 
Chapter VI-A 
   
 Deduction under section 80C    
 Tuition fee paid for maximum 
of two children is allowable  
( ? 14,000 x 2) 
28,000   
 Insurance premium paid on life 
insurance policy of son 
allowable, even though not 
dependent on Mr. Amit 
39,000   
 Insurance premium paid on life 
insurance policy of father not 
allowable, even though father 
is dependent on Mr. Amit 
- 67,000  
 Deduction under section 
80QQB 
 1,90,000  
 Royalty [ ? 2,88,000 x 15/18 =  
? 2,40,000, restricted to 
amount brought into India in 
convertible foreign exchange  
   
519
? 2,30,000 minus ? 40,000 
expenses already allowed as 
deduction while computing 
royalty income] 
 Deduction under section 
80TTA 
 10,000  
 Interest on savings bank 
account, restricted to ? 10,000 
   
    2,67,000 
 Total Income   33,49,600 
Computation of tax liability of Mr. Amit for A.Y.2025-26 under 
the normal provisions of the Act 
Particulars ?  ?  
Tax on total income of ? 33,49,600   
Tax on LTCG of ? 10,75,000, being the sum 
exceeding ? 1.25 lakh @10% u/s 112A 
  
1,07,500 
Tax on remaining total income of ? 21,49,600   
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 – ? 21,49,600 [@30% of ? 11,49,600] 3,44,880 4,57,380 
  5,64,880 
Add: Health and education cess@4%  22,595 
Total tax liability   5,87,475  
Tax liability (rounded off)   5,87,480  
Computation of adjusted total income and AMT of Mr. Amit for  
A.Y. 2025-26  
Particulars ?  
Computation of adjusted total income  
Total income as per the normal provisions of the Act 33,49,600 
Add: Deduction u/s 80QQB 1,90,000 
Adjusted Total Income 35,39,600 
Alternative Minimum Tax@18.5% 6,54,826 
Add: Health and education cess@4%  26,193 
AMT liability  6,81,019 
AMT liability (Rounded off)   6,81,020 
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 ? 6,81,020. 
520
Page 4


ANSWERS OF MODEL TEST PAPER 5 
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) (b)  3. (d) 
 (ii) (b)  4. (d) 
 (iii) (a)    
2. (i) (d)    
 (ii) (b)    
 (iii) (b)    
Division B – Descriptive Questions 
1.                 Computation of total income of Mr. Amit for A.Y. 2025-26 
 Particulars ?  ?  ?  
I Income from house property    
 Let out portion [First floor]    
 Gross Annual Value [Rent 
received is taken as GAV, in 
the absence of other 
information] 
 2,28,000  
 Less: Municipal taxes paid by 
him in the P.Y. 2024-25 
pertaining to let out portion  
[ ? 60,000/2] 
 30,000  
 Net Annual Value (NAV)  1,98,000  
 Less: Deduction u/s 24    
 (a) 30% of ? 1,98,000  59,400  
   1,38,600  
 Self-occupied portion 
[Ground Floor] 
   
 Annual Value  Nil  
 [No deduction is allowable in 
respect of municipal taxes 
paid] 
  1,38,600 
II Profits and gains of business 
or profession 
   
 Income from SEZ unit   20,00,000 
  
518
III Capital Gains    
 On transfer of 60,000 shares 
(2,00,000 x 30%) 
   
 Sales consideration [60,000 x  
? 60 per share] 
 36,00,000  
 Less: Cost of acquisition 
[60,000 x 40] 
 24,00,000  
 Long-term capital gains u/s 
112A (since shares are held for 
a period of more than 12 
months before transfer) 
  12,00,000 
IV Income from Other Sources    
 Royalty from artistic book  2,88,000  
 Less: Expenses incurred for 
earning royalty 
 40,000  
   2,48,000  
 Interest on savings bank 
deposits 
 30,000  
    2,78,000 
 Gross Total Income   36,16,600 
 Less: Deduction u/s 10AA 
[Not available, since he 
commenced operation in  
P.Y. 2021-22] 
  - 
 Less: Deduction under 
Chapter VI-A 
   
 Deduction under section 80C    
 Tuition fee paid for maximum 
of two children is allowable  
( ? 14,000 x 2) 
28,000   
 Insurance premium paid on life 
insurance policy of son 
allowable, even though not 
dependent on Mr. Amit 
39,000   
 Insurance premium paid on life 
insurance policy of father not 
allowable, even though father 
is dependent on Mr. Amit 
- 67,000  
 Deduction under section 
80QQB 
 1,90,000  
 Royalty [ ? 2,88,000 x 15/18 =  
? 2,40,000, restricted to 
amount brought into India in 
convertible foreign exchange  
   
519
? 2,30,000 minus ? 40,000 
expenses already allowed as 
deduction while computing 
royalty income] 
 Deduction under section 
80TTA 
 10,000  
 Interest on savings bank 
account, restricted to ? 10,000 
   
    2,67,000 
 Total Income   33,49,600 
Computation of tax liability of Mr. Amit for A.Y.2025-26 under 
the normal provisions of the Act 
Particulars ?  ?  
Tax on total income of ? 33,49,600   
Tax on LTCG of ? 10,75,000, being the sum 
exceeding ? 1.25 lakh @10% u/s 112A 
  
1,07,500 
Tax on remaining total income of ? 21,49,600   
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 – ? 21,49,600 [@30% of ? 11,49,600] 3,44,880 4,57,380 
  5,64,880 
Add: Health and education cess@4%  22,595 
Total tax liability   5,87,475  
Tax liability (rounded off)   5,87,480  
Computation of adjusted total income and AMT of Mr. Amit for  
A.Y. 2025-26  
Particulars ?  
Computation of adjusted total income  
Total income as per the normal provisions of the Act 33,49,600 
Add: Deduction u/s 80QQB 1,90,000 
Adjusted Total Income 35,39,600 
Alternative Minimum Tax@18.5% 6,54,826 
Add: Health and education cess@4%  26,193 
AMT liability  6,81,019 
AMT liability (Rounded off)   6,81,020 
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 ? 6,81,020. 
520
AMT credit to be carried forward under section 115JEE 
Particulars ? 
Tax liability under section 115JC 6,81,020 
Less: Tax liability under the regular provisions of the 
Income-tax Act, 1961 
5,87,480 
 93,540 
2. (a)  An Indian citizen or a person of Indian origin who, being outside India, 
comes on a visit to India (and whose total income, other than from 
foreign sources, does not exceed ? 15,00,000) would be resident in 
India only if he or she stays in India for a period of 182 days or more 
during the previous year. Even if his total income, other than from 
foreign sources, exceeds ? 15,00,000, he would be resident in India if 
stays in India for 120 days or more during the relevant previous year 
and 365 days or more during the 4 previous years immediately 
preceding the relevant previous year. 
 Since Mrs. Riya is a person of Indian origin who comes on a visit to 
India only for 60 days in the P.Y.2024-25, she is non-resident for the 
A.Y. 2025-26.  
 A non-resident is chargeable to tax in respect of income received or 
deemed to be received in India and income which accrues or arises or 
is deemed to accrue or arise to her in India. Accordingly, her total 
income and tax liability would be determined in the following manner:  
Computation of total income and tax liability of Mrs. Riya for  
A.Y. 2025-26 
Particulars Amt ( ?) 
Salaries   
Pension received from Russian Government [Not taxable, 
since it neither accrues or arises in India nor it is received 
in India] 
Nil 
Income from House Property  
Annual Value [Rental Income from house 
property in New Delhi is taxable, since it is 
deemed to accrue or arise in India, as it accrues 
or arises from a property situated in India] 
90,000  
Less: Deduction u/s 24(a) @ 30% 27,000 63,000 
Capital Gains  
Long-term capital gains on sale of land at New Delhi 
[Taxable, since it is deemed to accrue or arise in India as 
it is arising from transfer of land situated in India] 
3,00,000 
Short-term capital gains on sale of shares of Indian listed 
companies in respect of which STT was paid [Taxable, 
since it is deemed to accrue or arise in India, as such 
60,000 
521
Page 5


ANSWERS OF MODEL TEST PAPER 5 
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) (b)  3. (d) 
 (ii) (b)  4. (d) 
 (iii) (a)    
2. (i) (d)    
 (ii) (b)    
 (iii) (b)    
Division B – Descriptive Questions 
1.                 Computation of total income of Mr. Amit for A.Y. 2025-26 
 Particulars ?  ?  ?  
I Income from house property    
 Let out portion [First floor]    
 Gross Annual Value [Rent 
received is taken as GAV, in 
the absence of other 
information] 
 2,28,000  
 Less: Municipal taxes paid by 
him in the P.Y. 2024-25 
pertaining to let out portion  
[ ? 60,000/2] 
 30,000  
 Net Annual Value (NAV)  1,98,000  
 Less: Deduction u/s 24    
 (a) 30% of ? 1,98,000  59,400  
   1,38,600  
 Self-occupied portion 
[Ground Floor] 
   
 Annual Value  Nil  
 [No deduction is allowable in 
respect of municipal taxes 
paid] 
  1,38,600 
II Profits and gains of business 
or profession 
   
 Income from SEZ unit   20,00,000 
  
518
III Capital Gains    
 On transfer of 60,000 shares 
(2,00,000 x 30%) 
   
 Sales consideration [60,000 x  
? 60 per share] 
 36,00,000  
 Less: Cost of acquisition 
[60,000 x 40] 
 24,00,000  
 Long-term capital gains u/s 
112A (since shares are held for 
a period of more than 12 
months before transfer) 
  12,00,000 
IV Income from Other Sources    
 Royalty from artistic book  2,88,000  
 Less: Expenses incurred for 
earning royalty 
 40,000  
   2,48,000  
 Interest on savings bank 
deposits 
 30,000  
    2,78,000 
 Gross Total Income   36,16,600 
 Less: Deduction u/s 10AA 
[Not available, since he 
commenced operation in  
P.Y. 2021-22] 
  - 
 Less: Deduction under 
Chapter VI-A 
   
 Deduction under section 80C    
 Tuition fee paid for maximum 
of two children is allowable  
( ? 14,000 x 2) 
28,000   
 Insurance premium paid on life 
insurance policy of son 
allowable, even though not 
dependent on Mr. Amit 
39,000   
 Insurance premium paid on life 
insurance policy of father not 
allowable, even though father 
is dependent on Mr. Amit 
- 67,000  
 Deduction under section 
80QQB 
 1,90,000  
 Royalty [ ? 2,88,000 x 15/18 =  
? 2,40,000, restricted to 
amount brought into India in 
convertible foreign exchange  
   
519
? 2,30,000 minus ? 40,000 
expenses already allowed as 
deduction while computing 
royalty income] 
 Deduction under section 
80TTA 
 10,000  
 Interest on savings bank 
account, restricted to ? 10,000 
   
    2,67,000 
 Total Income   33,49,600 
Computation of tax liability of Mr. Amit for A.Y.2025-26 under 
the normal provisions of the Act 
Particulars ?  ?  
Tax on total income of ? 33,49,600   
Tax on LTCG of ? 10,75,000, being the sum 
exceeding ? 1.25 lakh @10% u/s 112A 
  
1,07,500 
Tax on remaining total income of ? 21,49,600   
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 – ? 21,49,600 [@30% of ? 11,49,600] 3,44,880 4,57,380 
  5,64,880 
Add: Health and education cess@4%  22,595 
Total tax liability   5,87,475  
Tax liability (rounded off)   5,87,480  
Computation of adjusted total income and AMT of Mr. Amit for  
A.Y. 2025-26  
Particulars ?  
Computation of adjusted total income  
Total income as per the normal provisions of the Act 33,49,600 
Add: Deduction u/s 80QQB 1,90,000 
Adjusted Total Income 35,39,600 
Alternative Minimum Tax@18.5% 6,54,826 
Add: Health and education cess@4%  26,193 
AMT liability  6,81,019 
AMT liability (Rounded off)   6,81,020 
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 ? 6,81,020. 
520
AMT credit to be carried forward under section 115JEE 
Particulars ? 
Tax liability under section 115JC 6,81,020 
Less: Tax liability under the regular provisions of the 
Income-tax Act, 1961 
5,87,480 
 93,540 
2. (a)  An Indian citizen or a person of Indian origin who, being outside India, 
comes on a visit to India (and whose total income, other than from 
foreign sources, does not exceed ? 15,00,000) would be resident in 
India only if he or she stays in India for a period of 182 days or more 
during the previous year. Even if his total income, other than from 
foreign sources, exceeds ? 15,00,000, he would be resident in India if 
stays in India for 120 days or more during the relevant previous year 
and 365 days or more during the 4 previous years immediately 
preceding the relevant previous year. 
 Since Mrs. Riya is a person of Indian origin who comes on a visit to 
India only for 60 days in the P.Y.2024-25, she is non-resident for the 
A.Y. 2025-26.  
 A non-resident is chargeable to tax in respect of income received or 
deemed to be received in India and income which accrues or arises or 
is deemed to accrue or arise to her in India. Accordingly, her total 
income and tax liability would be determined in the following manner:  
Computation of total income and tax liability of Mrs. Riya for  
A.Y. 2025-26 
Particulars Amt ( ?) 
Salaries   
Pension received from Russian Government [Not taxable, 
since it neither accrues or arises in India nor it is received 
in India] 
Nil 
Income from House Property  
Annual Value [Rental Income from house 
property in New Delhi is taxable, since it is 
deemed to accrue or arise in India, as it accrues 
or arises from a property situated in India] 
90,000  
Less: Deduction u/s 24(a) @ 30% 27,000 63,000 
Capital Gains  
Long-term capital gains on sale of land at New Delhi 
[Taxable, since it is deemed to accrue or arise in India as 
it is arising from transfer of land situated in India] 
3,00,000 
Short-term capital gains on sale of shares of Indian listed 
companies in respect of which STT was paid [Taxable, 
since it is deemed to accrue or arise in India, as such 
60,000 
521
income arises on transfer of shares of Indian listed 
companies] 
Gross Total Income 4,23,000 
Less: Deduction under Chapter VI-A   
Deduction under section 80C [Not available under default 
tax regime] 
Nil 
Total Income 4,23,000 
(b)  Determination of Advance Tax Liability of Mr. Sameer 
Particulars ? 
Estimated tax liability for the financial year 2024-25  
Less: Tax deducted at source  
Tax payable  
80,000 
12,000 
68,000 
Due Date of 
installment 
Amount payable ? 
On or before 
15
th
 June, 2024 
Not less than 15% of 
advance tax liability 
 
10,200 
On or before 
15
th
 September, 
2024 
Not less than 45% of 
advance tax liability 
less amount paid in 
earlier installment 
20,400 
( ? 30,600, being 45% of 
? 68,000 - ? 10,200) 
On or before 
15
th
 December, 
2024 
Not less than 75% of 
advance tax liability 
less amount paid in 
earlier installment(s) 
20,400 
(51,000, being 75% of  
? 68,000 - ? 30,600) 
On or before 
15
th
 March, 
2025 
Whole of the advance 
tax liability less 
amount paid in earlier 
installment(s) 
17,000                     
(68,000, being 100% of 
? 68,000 - ? 51,000) 
 
3.  (a) (i) Computation of depreciation for A.Y.2025-26 
Particulars ? 
W.D.V. of the block as on 1.4.2024 7,70,000 
Add: Purchase of second hand plant during the 
year [in December, 2024] 
 
 6,10,000 
 13,80,000 
Less: Sale consideration of old machinery during 
the year [in July, 2024] 
10,00,000 
W.D.V of the block as on 31.03.2025   3,80,000 
Depreciation @ 15% but restricted to 50% 
thereon. ? 3,80,000 X 7.5% 
[Since the value of the block as on 31.3.2025 
represents part of actual cost of second hand 
plant purchased in December, 2024, which has 
28,500 
522