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ANSWERS OF MODEL TEST PAPER 6 
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) (c)  3. (a) 
 (ii) (c)  4. (c) 
 (iii) (c)    
2. (i) (b)    
 (ii) (c)    
 (iii) (a)    
B – Descriptive Questions 
1.   Computation of total income of Mr. Ashok for the A.Y.2025-26 
Particulars ?  ?  
Income from house property   
Arrears of rent  
(Taxable under section 25A even if Mr. Ashok is not 
the owner of the house property in the P.Y.2024-25) 
1,35,000  
Less: Deduction@30% 
40,500 94,500 
Profits and gains of business or profession   
Income from wholesale business   
Net profit as per books 6,60,000  
Add: Amount debited to P & L A/c, not allowable as 
deduction 
  
- Depreciation as per books 34,000  
- Disallowance of municipal taxes paid for the second 
half-year under section 43B, since the same was 
paid after the due date of filing of return of income 
( ? 7,000/2) 
 
 
3,500 
 
- Disallowance under section 40A(3) in respect of 
salary paid in cash since the same exceeds  
? 10,000  
 
22,000 
 
-  20% of car expenses for personal use     8,000  
 7,27,500  
Less: Depreciation allowable (Note 1) 1,96,800  
 5,30,700  
  
528
Page 2


ANSWERS OF MODEL TEST PAPER 6 
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) (c)  3. (a) 
 (ii) (c)  4. (c) 
 (iii) (c)    
2. (i) (b)    
 (ii) (c)    
 (iii) (a)    
B – Descriptive Questions 
1.   Computation of total income of Mr. Ashok for the A.Y.2025-26 
Particulars ?  ?  
Income from house property   
Arrears of rent  
(Taxable under section 25A even if Mr. Ashok is not 
the owner of the house property in the P.Y.2024-25) 
1,35,000  
Less: Deduction@30% 
40,500 94,500 
Profits and gains of business or profession   
Income from wholesale business   
Net profit as per books 6,60,000  
Add: Amount debited to P & L A/c, not allowable as 
deduction 
  
- Depreciation as per books 34,000  
- Disallowance of municipal taxes paid for the second 
half-year under section 43B, since the same was 
paid after the due date of filing of return of income 
( ? 7,000/2) 
 
 
3,500 
 
- Disallowance under section 40A(3) in respect of 
salary paid in cash since the same exceeds  
? 10,000  
 
22,000 
 
-  20% of car expenses for personal use     8,000  
 7,27,500  
Less: Depreciation allowable (Note 1) 1,96,800  
 5,30,700  
  
528
Income from firm   
Share of profit from the firm is exempt 
under section 10(2A) 
-   
Interest on capital from partnership firm 
(Note 2) 
1,20,000   
Salary as working partner fully taxable  1,00,000 2,20,000 7,50,700 
Income from other sources   
Interest on bank fixed deposit (Gross) [ ? 49,500 x 
100/90] 
55,000  
Interest on saving bank account 13,300  
Interest on income-tax refund   1,400   69,700 
Gross total income  9,14,900 
Less: Deduction under Chapter VIA (Note 3)  2,65,000 
Total Income  6,49,900 
Computation of tax liability of Mr. Ashok for the A.Y.2025-26 
Particulars ? 
Upto ? 3,00,000   Nil 
? 3,00,001 – ? 5,00,000 [i.e., ? 2,00,000@5%]  10,000 
? 5,00,001 – ? 6,49,900 [i.e., ? 1,49,900@20%]  29,980 
 39,980 
Add:  Health and Education cess@4%    1,599 
Tax liability  41,579 
Tax liability (Rounded off)  41,580 
Notes: 
(1) Depreciation allowable under the Income-tax Rules, 1962 
  Opening 
WDV/ 
Actual cost 
Rate  Depreciation 
Block 1 Computers  2,40,000 40%  96,000 
 Computer 
printer 
1,50,000 40%  60,000 
Block 2 Motor Car 6,80,000 15% 
 
 
 
 
 
51,000  
[50% of 15% 
is allowable, 
since it is put 
to use for 
less than 
180 days] 
40,800 
 Less: 20% disallowance for 
personal use 
10,200  
   1,96,800 
529
Page 3


ANSWERS OF MODEL TEST PAPER 6 
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) (c)  3. (a) 
 (ii) (c)  4. (c) 
 (iii) (c)    
2. (i) (b)    
 (ii) (c)    
 (iii) (a)    
B – Descriptive Questions 
1.   Computation of total income of Mr. Ashok for the A.Y.2025-26 
Particulars ?  ?  
Income from house property   
Arrears of rent  
(Taxable under section 25A even if Mr. Ashok is not 
the owner of the house property in the P.Y.2024-25) 
1,35,000  
Less: Deduction@30% 
40,500 94,500 
Profits and gains of business or profession   
Income from wholesale business   
Net profit as per books 6,60,000  
Add: Amount debited to P & L A/c, not allowable as 
deduction 
  
- Depreciation as per books 34,000  
- Disallowance of municipal taxes paid for the second 
half-year under section 43B, since the same was 
paid after the due date of filing of return of income 
( ? 7,000/2) 
 
 
3,500 
 
- Disallowance under section 40A(3) in respect of 
salary paid in cash since the same exceeds  
? 10,000  
 
22,000 
 
-  20% of car expenses for personal use     8,000  
 7,27,500  
Less: Depreciation allowable (Note 1) 1,96,800  
 5,30,700  
  
528
Income from firm   
Share of profit from the firm is exempt 
under section 10(2A) 
-   
Interest on capital from partnership firm 
(Note 2) 
1,20,000   
Salary as working partner fully taxable  1,00,000 2,20,000 7,50,700 
Income from other sources   
Interest on bank fixed deposit (Gross) [ ? 49,500 x 
100/90] 
55,000  
Interest on saving bank account 13,300  
Interest on income-tax refund   1,400   69,700 
Gross total income  9,14,900 
Less: Deduction under Chapter VIA (Note 3)  2,65,000 
Total Income  6,49,900 
Computation of tax liability of Mr. Ashok for the A.Y.2025-26 
Particulars ? 
Upto ? 3,00,000   Nil 
? 3,00,001 – ? 5,00,000 [i.e., ? 2,00,000@5%]  10,000 
? 5,00,001 – ? 6,49,900 [i.e., ? 1,49,900@20%]  29,980 
 39,980 
Add:  Health and Education cess@4%    1,599 
Tax liability  41,579 
Tax liability (Rounded off)  41,580 
Notes: 
(1) Depreciation allowable under the Income-tax Rules, 1962 
  Opening 
WDV/ 
Actual cost 
Rate  Depreciation 
Block 1 Computers  2,40,000 40%  96,000 
 Computer 
printer 
1,50,000 40%  60,000 
Block 2 Motor Car 6,80,000 15% 
 
 
 
 
 
51,000  
[50% of 15% 
is allowable, 
since it is put 
to use for 
less than 
180 days] 
40,800 
 Less: 20% disallowance for 
personal use 
10,200  
   1,96,800 
529
(2) Only to the extent the interest is allowed as deduction in the hands of 
the firm, the same is includible as business income in the hands of the 
partner. Since interest is paid in accordance with partnership deed, 
maximum interest allowable as deduction in the hands of the firm is  
12% p.a. Therefore, interest @12% p.a. amounting to ? 1,20,000 would 
be treated as the business income of Mr. Ashok.  
(3) Deduction under Chapter VI-A 
Particulars ?  ?  
Under section 80C   
LIP for independent son 60,000  
PPF paid in wife’s name  70,000  
  1,30,000 
Under section 80D   
Health insurance premium taken for himself is 
fully allowable as deduction, since he is a 
senior citizen 
 35,000 
Under section 80G   
Contribution towards PM National Relief Fund 
eligible for 100% deduction without any 
qualifying limit  
 50,000 
Under section 80TTB   
Interest on deposits in case of senior citizen, 
restricted to  
 50,000 
Total deduction  2,65,000 
2. (a) Mr. Sudesh is a non-resident for the A.Y.2025-26, since he was not 
present in India at any time during the previous year 2024-25.  
 As per section 5(2), a non-resident is chargeable to tax in India only in 
respect of following incomes: 
(i)  Income received or deemed to be received in India; and 
(ii) Income accruing or arising or income deemed to accrue or arise 
in India. 
Computation of Total Income of Mr. Sudesh for A.Y. 2025-26  
(As per default regime) 
Particulars ? 
Salaries 
Salary from Government of India   
(Income chargeable under the head ‘Salaries’ payable by 
the Government to a citizen of India for services rendered 
outside India is deemed to accrue or arise in India under 
section 9(1)(iii). Hence, such income is taxable in the hands 
of Mr. Sudesh, a citizen of India, even though he is a non-
resident and rendering services outside India) 
 
9,25,000 
530
Page 4


ANSWERS OF MODEL TEST PAPER 6 
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) (c)  3. (a) 
 (ii) (c)  4. (c) 
 (iii) (c)    
2. (i) (b)    
 (ii) (c)    
 (iii) (a)    
B – Descriptive Questions 
1.   Computation of total income of Mr. Ashok for the A.Y.2025-26 
Particulars ?  ?  
Income from house property   
Arrears of rent  
(Taxable under section 25A even if Mr. Ashok is not 
the owner of the house property in the P.Y.2024-25) 
1,35,000  
Less: Deduction@30% 
40,500 94,500 
Profits and gains of business or profession   
Income from wholesale business   
Net profit as per books 6,60,000  
Add: Amount debited to P & L A/c, not allowable as 
deduction 
  
- Depreciation as per books 34,000  
- Disallowance of municipal taxes paid for the second 
half-year under section 43B, since the same was 
paid after the due date of filing of return of income 
( ? 7,000/2) 
 
 
3,500 
 
- Disallowance under section 40A(3) in respect of 
salary paid in cash since the same exceeds  
? 10,000  
 
22,000 
 
-  20% of car expenses for personal use     8,000  
 7,27,500  
Less: Depreciation allowable (Note 1) 1,96,800  
 5,30,700  
  
528
Income from firm   
Share of profit from the firm is exempt 
under section 10(2A) 
-   
Interest on capital from partnership firm 
(Note 2) 
1,20,000   
Salary as working partner fully taxable  1,00,000 2,20,000 7,50,700 
Income from other sources   
Interest on bank fixed deposit (Gross) [ ? 49,500 x 
100/90] 
55,000  
Interest on saving bank account 13,300  
Interest on income-tax refund   1,400   69,700 
Gross total income  9,14,900 
Less: Deduction under Chapter VIA (Note 3)  2,65,000 
Total Income  6,49,900 
Computation of tax liability of Mr. Ashok for the A.Y.2025-26 
Particulars ? 
Upto ? 3,00,000   Nil 
? 3,00,001 – ? 5,00,000 [i.e., ? 2,00,000@5%]  10,000 
? 5,00,001 – ? 6,49,900 [i.e., ? 1,49,900@20%]  29,980 
 39,980 
Add:  Health and Education cess@4%    1,599 
Tax liability  41,579 
Tax liability (Rounded off)  41,580 
Notes: 
(1) Depreciation allowable under the Income-tax Rules, 1962 
  Opening 
WDV/ 
Actual cost 
Rate  Depreciation 
Block 1 Computers  2,40,000 40%  96,000 
 Computer 
printer 
1,50,000 40%  60,000 
Block 2 Motor Car 6,80,000 15% 
 
 
 
 
 
51,000  
[50% of 15% 
is allowable, 
since it is put 
to use for 
less than 
180 days] 
40,800 
 Less: 20% disallowance for 
personal use 
10,200  
   1,96,800 
529
(2) Only to the extent the interest is allowed as deduction in the hands of 
the firm, the same is includible as business income in the hands of the 
partner. Since interest is paid in accordance with partnership deed, 
maximum interest allowable as deduction in the hands of the firm is  
12% p.a. Therefore, interest @12% p.a. amounting to ? 1,20,000 would 
be treated as the business income of Mr. Ashok.  
(3) Deduction under Chapter VI-A 
Particulars ?  ?  
Under section 80C   
LIP for independent son 60,000  
PPF paid in wife’s name  70,000  
  1,30,000 
Under section 80D   
Health insurance premium taken for himself is 
fully allowable as deduction, since he is a 
senior citizen 
 35,000 
Under section 80G   
Contribution towards PM National Relief Fund 
eligible for 100% deduction without any 
qualifying limit  
 50,000 
Under section 80TTB   
Interest on deposits in case of senior citizen, 
restricted to  
 50,000 
Total deduction  2,65,000 
2. (a) Mr. Sudesh is a non-resident for the A.Y.2025-26, since he was not 
present in India at any time during the previous year 2024-25.  
 As per section 5(2), a non-resident is chargeable to tax in India only in 
respect of following incomes: 
(i)  Income received or deemed to be received in India; and 
(ii) Income accruing or arising or income deemed to accrue or arise 
in India. 
Computation of Total Income of Mr. Sudesh for A.Y. 2025-26  
(As per default regime) 
Particulars ? 
Salaries 
Salary from Government of India   
(Income chargeable under the head ‘Salaries’ payable by 
the Government to a citizen of India for services rendered 
outside India is deemed to accrue or arise in India under 
section 9(1)(iii). Hence, such income is taxable in the hands 
of Mr. Sudesh, a citizen of India, even though he is a non-
resident and rendering services outside India) 
 
9,25,000 
530
Foreign Allowance from Government of India 
[Any allowances or perquisites paid or allowed as such 
outside India by the Government to a citizen of India for 
rendering service outside India is exempt under section 
10(7)]. 
 
 
                        
Nil 
Gross Salary 9,25,000 
Less: Standard Deduction under section 16(ia) of ? 75,000, 
being lower of gross salary or ? 75,000  
   
75,000 
 8,50,000 
Income from House Property  
Rent from a house situated at UK, received in UK  Nil 
(Income from property situated outside India would not be 
taxable in India in the hands of a non-resident, since it 
neither accrues or arises in India nor is it deemed to accrue 
or arise in India nor is it received in India) 
 
Gross Total Income/ Total Income 8,50,000 
(b) Mr. Sumit has furnished his return of income under default tax regime 
for A.Y.2025-26 on 22.10.2025, i.e., after the due date specified under 
section 139(1) i.e., 31
st
 July 2025. Hence, the return is a belated return 
under section 139(4). 
 As per section 80 read with section 139(3), specified losses, which 
have not been determined in pursuance of a return of loss filed within 
the time specified in section 139(1), cannot be carried forward to the 
subsequent year for set-off against income of that year. The specified 
losses include, inter alia, business loss but does not include loss from 
house property and unabsorbed depreciation. 
 Accordingly, business loss of ? 10,80,000 of Mr. Sumit for A.Y. 2025-26, 
not determined in pursuance of a return of loss filed within the time 
specified in section 139(1), cannot be carried forward to A.Y. 2026-27. 
The loss of ? 2,50,000 from let out house property cannot be carried 
forward since Mr. Sumit is paying tax under default tax regime. 
 However, unabsorbed depreciation of ? 2,00,000 pertaining to 
A.Y.2025-26, can be carried forward to A.Y.2026-27 for set-off, even 
though Mr. Sumit has filed the return of loss for A.Y.2025-26 belatedly. 
 (c) (i)  HFC Bank is not required to deduct tax at source under section 
194A, since the aggregate interest on fixed deposit with the two 
branches of the bank ? 49,000 does not exceed the threshold limit 
of ? 50,000, applicable in case of senior citizen. Since HFC Bank 
has adopted core banking solution (CBS), the aggregate interest 
paid by both branches has to be considered. 
(ii)  TDS provisions under section 194C are not attracted in this case, 
since Mr. Chetan is a pensioner. However, Mr. Chetan has to 
deduct tax at source@2% u/s 194M, since the payment to 
contractor, Mr. Gopi, exceeds ? 50 lakhs. 
531
Page 5


ANSWERS OF MODEL TEST PAPER 6 
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) (c)  3. (a) 
 (ii) (c)  4. (c) 
 (iii) (c)    
2. (i) (b)    
 (ii) (c)    
 (iii) (a)    
B – Descriptive Questions 
1.   Computation of total income of Mr. Ashok for the A.Y.2025-26 
Particulars ?  ?  
Income from house property   
Arrears of rent  
(Taxable under section 25A even if Mr. Ashok is not 
the owner of the house property in the P.Y.2024-25) 
1,35,000  
Less: Deduction@30% 
40,500 94,500 
Profits and gains of business or profession   
Income from wholesale business   
Net profit as per books 6,60,000  
Add: Amount debited to P & L A/c, not allowable as 
deduction 
  
- Depreciation as per books 34,000  
- Disallowance of municipal taxes paid for the second 
half-year under section 43B, since the same was 
paid after the due date of filing of return of income 
( ? 7,000/2) 
 
 
3,500 
 
- Disallowance under section 40A(3) in respect of 
salary paid in cash since the same exceeds  
? 10,000  
 
22,000 
 
-  20% of car expenses for personal use     8,000  
 7,27,500  
Less: Depreciation allowable (Note 1) 1,96,800  
 5,30,700  
  
528
Income from firm   
Share of profit from the firm is exempt 
under section 10(2A) 
-   
Interest on capital from partnership firm 
(Note 2) 
1,20,000   
Salary as working partner fully taxable  1,00,000 2,20,000 7,50,700 
Income from other sources   
Interest on bank fixed deposit (Gross) [ ? 49,500 x 
100/90] 
55,000  
Interest on saving bank account 13,300  
Interest on income-tax refund   1,400   69,700 
Gross total income  9,14,900 
Less: Deduction under Chapter VIA (Note 3)  2,65,000 
Total Income  6,49,900 
Computation of tax liability of Mr. Ashok for the A.Y.2025-26 
Particulars ? 
Upto ? 3,00,000   Nil 
? 3,00,001 – ? 5,00,000 [i.e., ? 2,00,000@5%]  10,000 
? 5,00,001 – ? 6,49,900 [i.e., ? 1,49,900@20%]  29,980 
 39,980 
Add:  Health and Education cess@4%    1,599 
Tax liability  41,579 
Tax liability (Rounded off)  41,580 
Notes: 
(1) Depreciation allowable under the Income-tax Rules, 1962 
  Opening 
WDV/ 
Actual cost 
Rate  Depreciation 
Block 1 Computers  2,40,000 40%  96,000 
 Computer 
printer 
1,50,000 40%  60,000 
Block 2 Motor Car 6,80,000 15% 
 
 
 
 
 
51,000  
[50% of 15% 
is allowable, 
since it is put 
to use for 
less than 
180 days] 
40,800 
 Less: 20% disallowance for 
personal use 
10,200  
   1,96,800 
529
(2) Only to the extent the interest is allowed as deduction in the hands of 
the firm, the same is includible as business income in the hands of the 
partner. Since interest is paid in accordance with partnership deed, 
maximum interest allowable as deduction in the hands of the firm is  
12% p.a. Therefore, interest @12% p.a. amounting to ? 1,20,000 would 
be treated as the business income of Mr. Ashok.  
(3) Deduction under Chapter VI-A 
Particulars ?  ?  
Under section 80C   
LIP for independent son 60,000  
PPF paid in wife’s name  70,000  
  1,30,000 
Under section 80D   
Health insurance premium taken for himself is 
fully allowable as deduction, since he is a 
senior citizen 
 35,000 
Under section 80G   
Contribution towards PM National Relief Fund 
eligible for 100% deduction without any 
qualifying limit  
 50,000 
Under section 80TTB   
Interest on deposits in case of senior citizen, 
restricted to  
 50,000 
Total deduction  2,65,000 
2. (a) Mr. Sudesh is a non-resident for the A.Y.2025-26, since he was not 
present in India at any time during the previous year 2024-25.  
 As per section 5(2), a non-resident is chargeable to tax in India only in 
respect of following incomes: 
(i)  Income received or deemed to be received in India; and 
(ii) Income accruing or arising or income deemed to accrue or arise 
in India. 
Computation of Total Income of Mr. Sudesh for A.Y. 2025-26  
(As per default regime) 
Particulars ? 
Salaries 
Salary from Government of India   
(Income chargeable under the head ‘Salaries’ payable by 
the Government to a citizen of India for services rendered 
outside India is deemed to accrue or arise in India under 
section 9(1)(iii). Hence, such income is taxable in the hands 
of Mr. Sudesh, a citizen of India, even though he is a non-
resident and rendering services outside India) 
 
9,25,000 
530
Foreign Allowance from Government of India 
[Any allowances or perquisites paid or allowed as such 
outside India by the Government to a citizen of India for 
rendering service outside India is exempt under section 
10(7)]. 
 
 
                        
Nil 
Gross Salary 9,25,000 
Less: Standard Deduction under section 16(ia) of ? 75,000, 
being lower of gross salary or ? 75,000  
   
75,000 
 8,50,000 
Income from House Property  
Rent from a house situated at UK, received in UK  Nil 
(Income from property situated outside India would not be 
taxable in India in the hands of a non-resident, since it 
neither accrues or arises in India nor is it deemed to accrue 
or arise in India nor is it received in India) 
 
Gross Total Income/ Total Income 8,50,000 
(b) Mr. Sumit has furnished his return of income under default tax regime 
for A.Y.2025-26 on 22.10.2025, i.e., after the due date specified under 
section 139(1) i.e., 31
st
 July 2025. Hence, the return is a belated return 
under section 139(4). 
 As per section 80 read with section 139(3), specified losses, which 
have not been determined in pursuance of a return of loss filed within 
the time specified in section 139(1), cannot be carried forward to the 
subsequent year for set-off against income of that year. The specified 
losses include, inter alia, business loss but does not include loss from 
house property and unabsorbed depreciation. 
 Accordingly, business loss of ? 10,80,000 of Mr. Sumit for A.Y. 2025-26, 
not determined in pursuance of a return of loss filed within the time 
specified in section 139(1), cannot be carried forward to A.Y. 2026-27. 
The loss of ? 2,50,000 from let out house property cannot be carried 
forward since Mr. Sumit is paying tax under default tax regime. 
 However, unabsorbed depreciation of ? 2,00,000 pertaining to 
A.Y.2025-26, can be carried forward to A.Y.2026-27 for set-off, even 
though Mr. Sumit has filed the return of loss for A.Y.2025-26 belatedly. 
 (c) (i)  HFC Bank is not required to deduct tax at source under section 
194A, since the aggregate interest on fixed deposit with the two 
branches of the bank ? 49,000 does not exceed the threshold limit 
of ? 50,000, applicable in case of senior citizen. Since HFC Bank 
has adopted core banking solution (CBS), the aggregate interest 
paid by both branches has to be considered. 
(ii)  TDS provisions under section 194C are not attracted in this case, 
since Mr. Chetan is a pensioner. However, Mr. Chetan has to 
deduct tax at source@2% u/s 194M, since the payment to 
contractor, Mr. Gopi, exceeds ? 50 lakhs. 
531
3. (a) Computation of taxable income of Mr. Yogesh for A.Y. 2025-26  
Particulars Amount 
( ?) 
Amount 
( ?) 
Income from house property (A)   
Unit - 1 [50% of floor area - Let out]   
Gross Annual Value, higher of   
-  Expected rent ? 1,39,000 [Higher of 
Municipal Value of ? 1,44,000 p.a. and 
Fair Rent of ? 1,49,000 p.a., but restricted 
to Standard Rent of ? 1,39,000 p.a.] 
  
-  Actual rent ? 1,80,000 i.e., [ ? 20,000 x 10] 
less unrealized rent of January, 2025  
? 20,000 
  
Gross Annual Value 1,80,000  
Less: Municipal taxes [50% of ? 30,000]   15,000  
Net Annual Value 1,65,000  
Less: Deductions from Net Annual Value   
(a) 30% of Net Annual Value 49,500  
(b) Interest on loan [50% of ? 90,000]   45,000 70,500 
Unit – 3 [25% of floor area – Self occupied]   
Net Annual Value -  
Less: Interest on loan [Not allowed as Mr. 
Yogesh is paying tax under section 115BAC.] 
   -           - 
  70,500 
Profits and gains from business or 
profession (B) 
  
Business Income [without deducting 
expenditure of Unit – 2, 25% floor area used 
for business purposes] 
2,40,000  
Less: Expenditure in respect of Unit -2   
- Municipal taxes [25% of  
? 30,000] 
7,500   
-  Repairs [25% of ? 7,000] 1,750   
-  Interest on loan [25% of  
? 90,000] 
22,500   
-  Ground rent [25% of ? 6,000] 1,500   
-  Fire Insurance premium 
[25% of ? 60,000] 
15,000 48,250 1,91,750 
Taxable Income (A+B)  2,62,250 
 Note: Alternatively, if as per income-tax returns, unrealised rent is 
deducted from GAV, then GAV would be ? 2,00,000, being higher of 
unexpected rent of ? 1,39,000 and actual rent of ? 2,00,000. 
Thereafter, unrealized rent of ? 20,000 and municipal taxes of ? 15,000 
532
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