PGBP Profits and Gains from Business and Profession Multiple Choice Questions
1. Methods of accounting is irrelevant for which head of income?
A. Income from salary.
B. Income from house property
B. Capital gains.
D. All of the above
Answer: D. All of the above
2. Salary received by a partner from the firm in which he is a partner is taxable under the head:
A. Income from salary.
B. Capital gains.
C. Profits and gains of business or profession.
D. Income from other sources.
Answer: C. Profits and gains of business or profession.
3. Perquisites received by the assessee during the course of carrying on his business or profession is taxable under the head:
A. Income from salary.
B. Capital gains.
C. Profits and gains of business or profession.
D. Income from other sources.
Answer: C. Profits and gains of business or profession.
4. Any some received under key man insurance policy taken on the life of the employee shall be:
A. Income from salary.
B. Capital gains.
C. Profits and gains of business or profession.
D. Income from other sources.
Answer: C. Profits and gains of business or profession.
5. Under the head business and profession, the method of accounting which an assessee can follow shall be:
A. Mercantile System
B. Cash System
C. Mercantile or cash system only
D. Hybrid system
Answer: C. Mercantile or cash system only
6. Depreciation is allowed in case of:
A. Tangible assets
B. Intangible assets
C. Tangible and intangible assets
D. Deferred revenue expenditure
Answer: C. Tangible and intangible assets
7. Under Income Tax Act depreciation is allowed on:
A. Cost price.
B. Market price.
C. W D V.
D. Face value.
Answer: C. W D V.
8. For which company depreciation is allowed on SLM basis under Income Tax Act?
A. Banking Companies
B. Insurance Companies
C. Electricity undertakings
D. None of the above
Answer: C. Electricity undertakings
9. Rate of depreciation on residential building is:
A. 5%.
B. 10%.
C. 15%.
D. 20%.
Answer: A. 5%.
10. Rate of depreciation on non-residential building is:
A. 10%.
B. 15%.
C. 20%.
D. 25%.
Answer: A. 10%.
11. Rate of depreciation on furniture is:
A. 10%.
B. 15%.
C. 20%.
D. 25%.
Answer: A. 10%.
12. New plant and machinery acquired and put to use by an assessee engaged in transmission of power is eligible for additional depreciation at ____ of actual cost.
A. 10%
B. 12.5%
C. 15%
D. 20%
Answer: D. 20%
13. Additional depreciation is allowed at half the rate, if the asset is used in the initial year for:
A. 195 days.
B. 199 days.
C. 360 days.
D. Less than 180 days.
Answer: D. Less than 180 days.
14. The rate of depreciation on intangible asset is:
A. 5%.
B. 15%.
C. 20%.
D. 25%.
Answer: D. 25%.
15. Preliminary expenses shall be allowed as deduction in:
A. 5 Instalments.
B. 10 Instalments.
C. 15 Instalments.
D. 12 Instalments.
Answer: A. 5 Instalments.
16. Technical know-how acquired after 1.4.98 is eligible for depreciation at:
A. 10% p.a.
B. 20% p.a.
C. 25% p.a.
D. 40% p.a.
Answer: C. 25% p.a.
17. Rate of depreciation on Books owned by assessee carrying on profession not being annual publications:
A. 10% p.a.
B. 20% p.a.
C. 25% p.a.
D. 60% p.a.
Answer: D. 60% p.a.
18. Rate of depreciation on Books owned by assessee carrying on profession being annual publications:
A. 10% p.a.
B. 20% p.a.
C. 25% p.a.
D. 100% p.a.
Answer: D. 100% p.a.
19. Rate of depreciation on Franchise, trademark, patents, license, copyright, know-how or other commercial or business rights of similar nature:
A. 10% p.a.
B. 20% p.a.
C. 25% p.a.
D. 40% p.a.
Answer: C. 25% p.a.
20. Rate of depreciation on Computers and computer software:
A. 10% p.a.
B. 20% p.a.
C. 25% p.a.
D. 40% p.a.
Answer: D. 40% p.a.
21. Rate of depreciation on Books owned by assessee carrying on business in running lending libraries:
A. 10% p.a.
B. 20% p.a.
C. 25% p.a.
D. 100% p.a.
Answer: D. 100% p.a.
22. In case of an assessee engaged in the business of manufacturing of tea, his agricultural income is:
A. 60% of total receipt of the business
B. 60% of income of the business
C. Nil
D. Total business income
Answer: C. Nil
23. Ramesh Tea Ltd., acquired a motor car for Rs. 6,20,000 on 30.08.2018. The company is engaged in manufacture of tea in India. The amount of depreciation allowable on such motor car would be:
A. Rs. 93,000
B. Rs. 37,200
C. Rs. 46,500
D. Nil
Answer: A. Rs. 93,000
24. Contribution made to an approved research association is eligible for deduction up to:
A. 50%.
B. 80%.
C. 100%.
D. 125%.
Answer: D. 125%.
25. Unabsorbed capital expenditure on scientific research can be carried forward for:
A. 15 years.
B. 14 years.
C. 8 years.
D. 10.
Answer: C. 8 years.
26. Capital expenditure on scientific research which cannot be absorbed on account of insufficiency of profit in any accounting year can be carried forward for:
A. 16.
B. 8.
C. indefinite.
D. 12.
Answer: C. indefinite.
27. Contribution to approved research (not scientifiC. institution in case of a business man is:
A. 100% of such amount
B. 125% of such amount
C. 175% of such amount
D. None of above
Answer: A. 100% of such amount
28. Which of the following is not allowed as a deduction for computation of business Income?
A. Loss incurred due to theft in factory after working hours
B. Anticipated future losses
C. Loss caused by white ants
D. Loss due to accidental fire in stock-in-trade
Answer: B. Anticipated future losses
29. Preliminary expenses are incurred in every business. What are the expenses that qualify for deduction u/s.35D?
A. Expenses for drafting memorandum and articles of association
B. Payment of duty at the office of Registrar of Companies
C. Expenditure incurred in preparation of project report
D. All of the above
Answer: D. All of the above
30. Expenditure incurred by a company for the purpose of promoting family planning among its employees, being of a capital nature:
A. Is not allowed as a deduction
B. Allowed as deduction in 4 equal installments in 4 years
C. 1/5 of expenditure is allowed as deduction in the previous year
D. 4/5 of expenditure is allowed as deduction in 4 equal installments in 4 years after the previous year
Answer: C. 1/5 of expenditure is allowed as deduction in the previous year
31. Expenditure on promotion of family planning is an allowance as deduction u/s. 36(1)(ix) of the Income Tax Act, 1961 in case of:
A. Individual
B. Firm
C. HUF
D. Company
Answer: D. Company
32. Deduction u/s 35AD is available in respect of expenditure on specified business, one of them is:
A. Setting up and operating a cold chain facility
B. Setting up and operating a power plant
C. Setting up and operating an industrial unit
D. All of the above
Answer: A. Setting up and operating a cold chain facility
33. Block of asset is required to be increased by an amount which is actual cost of the asset being covered u/s 35AD that amount is:
A. Actual expenditure
B. Nil
C. 50% of actual expenditure
D. None of the above.
Answer: B. Nil
34. Loss from specified business covered u/s 35AD can be adjusted against the income of:
A. Any other business income
B. Cannot be adjusted
C. Any income other than salary
D. Income from other specified business
Answer: D. Income from other specified business
35. Bad debts allowed earlier and recovered latter on is:
A. Business income.
B. Non-business income.
C. Exempted income.
D. Income from other sources.
Answer: A. Business income.
36. Which one of the following is not an admissible expense?
A. Income tax.
B. Excise duty.
C. Bad debt.
D. Sales tax.
Answer: A. Income tax.
37. Under valuation of opening stock is:
A. Deducted from net profit.
B. Added to net profit.
C. Credited to P & L A/c.
D. None of these.
Answer: A. Deducted from net profit.
38. Over valuation of Closing stock is:
A. Deducted from net profit.
B. Added to net profit.
C. Credited to P & L A/c.
D. None of these.
Answer: A. Deducted from net profit.
39. Under valuation of closing stock is:
A. Deducted from net profit.
B. Added to net profit.
C. Credited to P & L A/c.
D. None of these.
Answer: B. Added to net profit.
40. Over valuation of opening stock is:
A. Deducted from net profit.
B. Added to net profit.
C. Credited to P & L A/c.
D. None of these.
Answer: B. Added to net profit.
41. Additional depreciation is allowed to an assessee:
A. Which is an industrial undertaking
B. Which is an industrial undertaking or an assessee who is engaged in the business of generation or generation and distribution of power
C. Which is engaged in any business
D. Which is an electricity undertaking
Answer: B. Which is an industrial undertaking or an assessee who is engaged in the business of generation or generation and distribution of power
42. Additional depreciation is allowed in case of:
A. All assets acquired by the specified assessee
B. Eligible plant and machinery acquired by the assessee
C. New eligible plant and machinery acquired by the specified assessee
D. New eligible plant and machinery and furniture acquired by the specified assessee
Answer: C. New eligible plant and machinery acquired by the specified assessee
43. If a depreciable asset is acquired and used for less than 180 days in a financial year, depreciation allowed on it is:
A. Normal Rate.
B. 50% of Normal Rate.
C. Nil.
D. None of these.
Answer: B. 50% of Normal Rate.
44. Under section 44AB the audit of accounts is compulsory if total sales exceed:
A. Rs: 40 lakhs.
B. Rs: 50 lakhs.
C. Rs: one crore.
D. Rs: five crores.
Answer: C. Rs: one crore.
45. Gifts from clients are:
A. Professional income.
B. Income from other sources.
C. Non-taxable item.
D. None of these.
Answer: A. Professional income.
46. Repairs incurred before installation of an assets is:
A. Capital expenditure.
B. Revenue expenditure.
C. Non-business expenditure.
D. None of these.
Answer: A. Capital expenditure.
47. Under section 44AB ‘specified date’ means
A. 30th June.
B. 30th September.
C. 30th November.
D. 31st December.
Answer: B. 30th September.
48. Tax audit is not compulsory in which one of the following cases?
A. Any assessee who derive income from section 44B.
B. Any assessee who derive income from section 44BBA.
C. Where Assessee declares profit under section 44AD (1) and his total sales/turnover/gross receipts as the case may be does not exceeds Rs. 2crores.
D. All of the above
Answer: D. All of the above
49. In case of profession, tax audit is compulsory if gross fee received exceeds:
A. Rs. 50 Lakhs
B. Rs. 1 Crore
C. Rs. 5 Crores
D. Rs. 10 Crores
Answer: A. Rs. 50 Lakhs
50. In case of business, tax audit is compulsory if gross turnover received exceeds:
A. Rs. 50 Lakhs
B. Rs. 1 Crore
C. Rs. 5 Crores
D. Rs. 10 Crores
Answer: B. Rs. 1 Crore
51. Which of the following taxes are allowed as deduction while computing the business income?
A. Wealth Tax
B. Income Tax
C. Sales Tax
D. Securities Transaction Tax
Answer: C. Sales Tax
52. Where the payment of any expenditure claimed as deduction by an assessee carrying on business or profession exceeds Rs. 10,000; it should be paid by:
A. Crossed cheque or draft
B. Account payee cheque or draft
C. Payment made using debit or credit card
D. All of the above
Answer: D. All of the above
53. Last date of filling audit report under Sec. 44AB shall be:
A. 31st July of the relevant assessment year
B. 30th September of the relevant assessment year
C. 30th November of the relevant assessment year
D. 31st December of the relevant assessment year
Answer: B. 30th September of the relevant assessment year
54. Contribution made to an approved research association is eligible for deduction up to:
A. 50%.
B. 80%.
C. 100%.
D. 125%.
Answer: D. 125%.
55. Which of the following is eligible for 100% deduction?
A. Contribution to National Laboratory for Scientific research
B. Capital expenditure on in-house scientific research
C. Contribution to approved scientific research company
D. All of the above
Answer: D. All of the above