CA IPCC Income Tax Important Questions For May 2019 (By Tax Expert)

Check CA IPCC Income Tax Important Questions For May 2019 By Tax Expert. In the previous articles, we have given CA IPCC Accounting and Costing & FM chapter wise important questions for May 2019 attempt. Today we are providing CA IPCC income tax most important questions for May 2019 attempt (सीए आई.पी.सी.सी इनकम टैक्स इम्पोर्टेन्ट प्रश्न). With only a few days left for the CA IPCC exam May 2019, students have very less time to cement their learnings and get well prepared to write the perfect exams. During these days before the exams, students should avoid studying anything new. They must focus on practising and revising what they have studied until now.

Moreover, they must go through the important topics and practice the questions related to those topics. This will help to fine-tune your preparations for the board exams. It’s very essential that students pick reliable study material and practice manual, which provide only important and meaningful stuff so that students are able to make an effective preparation for the exam.

Download the CA IPCC Income Tax Important Questions in this article. Here we have provided all the important question on Income Tax Paper. Here we have mainly given the expected guess questions for Income Tax theory Questions and Practical Questions. People who are preparing for the CA IPCC Income Tax Exam can follow these questions for their exam preparation. If you don’t have time, here we have given all 4 marks important questions, 8 marks important questions and 16 marks important questions. So prepare all these short answers questions and long answers questions.

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CA IPCC Income Tax Important Questions May 2019 (THEORY)

Here we have given the CA IPCC Income Tax important Theory Questions. The below-given Questions are the Guess questions for Income Tax exam. Here we have given CA IPCC Income Tax Expected Questions related on 4 Marks, 8 Marks and 16 Marks. Please Have a Look!

INTRODUCTION TO INCOME TAX

  1. Explain the concept of marginal relief under the I.T Act, 1961.
  2. Describe the average rate of tax and maximum marginal rate under section 2(10) and 2(29C) of the Income-tax Act,1961.
  3. State any four instances where the income of the previous year is assessable in the previous year itself instead of the assessment year.
  4. Write a short note on “Income accruing” and “Income due”. Can an income which has been taxed on accrual basis be assessed again on receipt basis?
  5. An employee instructs his employer to pay a certain portion of his salary to a charity and claims it as exempt as it is diverted by overriding charge/title – Comment.
  6. Who is an “Assessee”? Who is a “Deemed Assessee”? Who is an “Assessee in Default”? Explain with suitable examples.
  7. Write short notes on ” Year of accrual of dividend.

RESIDENTIAL STATUS I & II

  1. Distinguish between Application of Income and Diversion of Income.
  2. Discuss the provisions relating to the determination of the residential status of Hindu undivided family, partnership firm and company.
  3. State with reasons whether the following receipts are taxable or not under the provisions of Income-tax Act, 1961?
  • MR Suri received a sum of Rs.5,00,000 as compensation, from “Yatra Foundation”, towards the loss of property on account of Flood Disaster at Chennai during December 2018.
  • Mr Suman received an advance of Rs.3 lakhs on 06-06-2018 to transfer his residential house property. Since the transfer was not affected during the previous year due to failure in negotiations, he deducted the advance money forfeited from the cost of acquisition of the property.
  • Federer, a non-resident residing in Sweden, has received rent from Mr Nadal, also a non-resident residing in France in respect of property taken on lease at Mumbai. Since this income is received outside India from a non-resident, Federer claims that his income is not chargeable to tax in India
  • TDS is not applicable in respect of payment of Rs.1,00,000 to Mr Pandey a resident, being interest on recurring deposit with SBI.

4. Explain the term “Business Connection” under section 9(1)

5. Examine the correctness or otherwise of the statement- “Income deemed to accrue or arise in India to a non­resident by way of interest, royalty and fees for technical services is to be taxed irrespective of territorial nexus”.

6. An individual, who is an Indian resident, is allowed to hold two different citizenships simultaneously. Is the citizenship a determining factor for the residential status of an individual?

7. State the activities and operations, income from which is not deemed to accrue or arise in India.

8. When is an individual and HUF said to be “Resident and Ordinarily Resident” under the Income-tax Act, 1961?

Important Topics From Income From Salaries

  1. Distinguish between foregoing of salary and surrender of salary.
  2. Flow is advance salary taxed in the hands of an employee? Is the tax treatment the same for loan or advance against salary?

Write short notes on –

a) Profits in lieu of salary b) Specified employees c) lO(LOC)

3. Is retrenchment compensation received by workmen taxable under the Act? If yes, to what extent is it taxable?

4. When is the provision of medical facilities or assistance by emmer not treated as a prerequisite in the hands of the employee? Discuss.

Important Questions From Income From House Property

1. Explain briefly the applicability of section 22 for ch large ability of income-tax for:

  1. Flouse property situated in a foreign country
  2. Flouse property with disputed owners

2. Ownership itself is the criteria for assessm|tt|jjnder the head income from house property. Discuss.

3. Discuss the following issues relating to Income from house property:

  1. Income earned by residents from house properties situated in foreign countries.
  2. Properties which are used for agricultural purposes.

4. X let out his property to Y. Y sublets it. Flow is a sub-letting receipt to be assessed in the hands of Y?

  1. Y has built a house on leasehold land. Fie has let out the property and claims that the income therefrom is chargeable under the head “Income from other sources”. Fie has deducted expenses on repairs, security charges, insurance and collection charges in all amounting to 40% of receipts. Is Mr Y’s claim valid?
  2. Z uses his property for his own business. Would the annual value be subject to tax under the head “Income from house property”?
  3. Ravan was an assessee who is engaged in the business of real estate, he lets out a building (stock in trade) to Ram for the period May 2018 to November 2018 due to his worst business conditions. Fie wants to claim avail a benefit under the head income from house properties. Fie needs your advice in this regard as an Income tax practitioner.

5. Write about Taxability of recovery of unrealized rent & arrears of rent received U/S 25A?

6. What do you understand by “Composite Rent”? What is the tax treatment of Composite Rent under the Income-tax Act, 1961?

Important Questions From PGBP (Profits and Gains of Business or Profession)

  1. What are intangible assets? Give four examples. What is the rate of depreciation on a block of intangible assets?
  2. Discuss the concept of “block of assets” under the Income-tax Act, 1961.
  3. List out the applicable depreciation rates as per sec. 32 of the Income Tax Act, 191.
  4. State whether the deduction under Sec.35AD is applicable to an assessee who is engaged in the business of developing the infrastructural facilities and commenced his business on 14.05.2017 in pursuance to an agreement with A.P government.
  5. Would your answer be the same if the assessee pays a sum of Rs? 12,000 in a cheque in respect of the same business?
  6. Write a short note on Sec.35CCC, 35CCD
  7. SBI ltd has claimed a provision of bad debts of Rs.17 crores under Sec.36(l) (viia). The bank submits you the following information
    • Gross total income is Rs.200 crores
    • No advances have been given by its rural branches

    But the chairman seeks your advice that it can do so as far as the Income Tax Act is concerned.

  8. What are the conditions to be satisfied for the allowability of expenditure under section 37 of the Income-tax Act, 1961?

State with reasons, for the following sub-divisions, whether the following statements are true or false having regard to the provisions of the Income-tax Act, 1961:

  1. For a dealer in shares and securities, securities transaction tax paid in a recognized stock exchange is permissible business expenditure.
  2. Where a person follows the mercantile system of accounting, an expenditure of Rs. 15,000 has been allowed on the accrual basis and in a later year, in respect of the said expenditure, assessee makes the payment of Rs. 15,000 through a cheque crossed. The disallowance of Rs. 15,000 under section 40A(3) can be attracted in the year of payment.
  3. It is mandatory to provide for depreciation under section 32 of the Income-tax Act, 1961 while computing income under the head “Profits and Gains of Business Profession”
  4. Under section 35DDA, amortization of expenditure incurred under eligible Voluntary Retirement Scheme at the time of retirement alone can be done.
    The medical premium paid to GIC by Mr Lomesh for his employees, by a draft, on 27.12.2018 is a deductible expenditure under section 36.
  5. An existing assessee engaged in tradin©amytfies can claim additional depreciation under Section 32(1)(iia) in respect of new plant acquired and installed in the trading concern, where the increase in the value of such plant as compared to the approved base year is more than 10%.

10.  Answer the following with reference to the provisions of the Income-tax Act, 1961:

  1. Bad debt claim disallowed in an earlier assessment year, recovered subsequently. Is the sum recovered chargeable to tax?
  2. Tax deducted at source on salary paid to employees not remitted till the ‘due date’ for filing the return prescribed in section 139. Is the expenditure to be disallowed under section 40(a)(ia)?
  3. X Co. Ltd. paid Rs. 120 lakhs as compensation as per approved Voluntary Retirement Scheme (VRS) during the financial year 2018-19. How much is deductible under section 35DDA for the assessment year 2019-20?
  4. A bad debt of Rs. 50,000 written off and allowed in the financial year 2015-16 recovered in the financial year 2018-19

10. Write short notes on:

  • Restrictions on deductions allowable to the partnership firm in respect of salary and interest to its partners under section 40(b) of the Income-tax Act, 1961.
  • Carry forward and set off of unabsorbed depreciation.
  • Additional depreciation.
  1. X Ltd. follows the mercantile system of accounting. After negotiations with the bank, interest of Rs.4 lakhs (including interest of Rs.1.2 lakhs pertaining to the year ended 31.03.2019 has been converted into a loan. Can the interest of Rs.1.2 lakhs so capitalized be claimed as business expenditure?
  2. List items of expenses which otherwise are deductible shall be disallowed unless payments are actually made within the due date for furnishing the return of income under Section 139(1). When can the deduction be claimed, if paid after the said date?
  3. Raghav Industries Ltd. furnishes you the following information for the year ended 31-03-2019:
  • Scientific research expenditure related to its business Rs.2,40,000 fully revenue in nature.
  • Building acquired for scientific research (including cost of land Rs.5,00,000) in June 2018 for Rs.12,00,000.
  • Amount paid to Indian Institute of Science, Bangalore for scientific research Rs. 50,000.
  • Demerger expenses incurred in financial year 2017-18 Rs.5,00,000.
  • Contribution to the account of employees as per pension scheme referred to in section 80CCD amounted to Rs.30,00,000. The amount above 10% of the salary of employees is Rs.7,00,000.
  • Amount recovered from employees towards provident fund contribution Rs.12,00,000 of which amount remitted up to the end of the year was Rs.7,00,000 and the balance was remitted before the ‘due date’ for filing the return prescribed in Section 139(1).
  • Tax on non-monetary perquisites provided to the employees, borne by the employer Rs.4,50,000.
  • Gain due to change in the rate of exchange of foreign currency Rs.1,00,000 related to the import of machinery. The machinery was acquired two years ago and put to regular use since then.

Explain in brief how the above-said items would be dealt with for the A.Y. 2019-20.

    1. Explain the tax treatment of Limited Liability Partnership under the Income-tax Act, 1961.
    2. Write about Sec.44AD, 44ADA and 35ABA.

State the validity of the below statement in accordance with the Income-tax Act, 1961

“It is mandatory to get the books of accounts audited for an assessee who is paying tax under Sec.44AA and whose total income is Rs.1.98 crores”

  1. Discuss, on the basis of the provisions of Income-tax Act, 1961 as amended by the Finance Act, 2018, the correctness or otherwise of the following statements:
  2. Where new plant and machinery acquired during the P.Y. 2018-19 is put to use for less than 180 days in that year, additional depreciation allowable under section 32(l)(iia) for A.Y.2019-20 is restricted to 10% (i.e., 50% of 20%). The balance additional depreciation cannot be claimed in future.
  • A piece of new machinery has been purchased for Rs.3,00,00 which was paid in by way of a bearer cheque and the assessee can claim the depreciation on the same as same was not in violation with Sec.43(l) to
  • A manufacturing company set up in Vaishali a notified backward area in the State of Bihar, acquires and installs new plant and machinery for RS 30 crores in the P.Y. 2018-19. For A.Y.2019-20, it is entitled to deduction either under section 32AC or Section 32AD, but not both.
  • Interest paid in respect of capital borrowed for acquisition of an asset, for the period up to the date on which the asset is first put to use must not be capitalized if the acquisition of the asset is not for the extension of existing business or profession.
  1. Discuss the deductibility or otherwise of the following expenditure incurred by Purnit Agro Industries, while computing its business income for the year ended 31-03-2019:
  • Revenue expenditure of Rs. 5,65,000 on scientific research related to its business.
  • Land & Building acquired for scientific research (cost of land is Rs. 9,50,000) in September 2018 for Rs. 22,00,000.
  • Contribution to the account of employees as per pension scheme referred to in section 80CCD amounted to Rs. 45,00,000. The amount above 10% of the salary of employees is Rs. 6,80,000.
  • Tax on non-monetary perquisites provided to the employees, borne by the employer Rs. 5,50,000.

19. Comment on the allowability of the following claim made by the assessee:

Mr Achal, a hotelier, claimed expenditure on replacement of linen and carpets in his hotel as revenue expenditure.

  1. Which are the deductions allowable only on actual payment under section 43B?
  2. Write short notes on –
  • Enhanced depreciation
  • Set-off and carry forward of unabsorbed depreciation.

Check Important Topics From Capital Gains

  1. State the validity of the following statements –
  • The provisions of capital gains will not attract in a case where a non-resident transferred rupee-denominated bonds held by him to another non-resident outside India.
  • The provisions of capital gains will not attract in a case where a transfer has been made by way of conversion of preference shares of a company into equity shares of that company.
  • In case of non-resident assessees, any gains arising on account of rupee appreciation against a foreign currency at the time of redemption of the rupee-denominated bond of an Indian company held by him shall not be included in the computation of the full value of consideration.

2. “The consideration shall be deemed to be the FMV in a case where unlisted shares were transferred at a consideration which is less than the FMV”. Is this statement valid?

3. Discuss the provision under the Income-tax Act, 1961 for payment of advance tax in case of capital gains.

4. What is the difference between 43CA and 50C?

5. Write about Sec.45(5A), 54EE.

6. Write a short note on the reverse mortgage.

7. Mr Abhishek a senior citizen pledged his residential house with a bank, under a notified reverse mortgage scheme. Fie was getting a loan from the bank in monthly instalments. Mr Abhishek did not repay the loan on maturity and hence gave possession of the house to the bank, to discharge his loan. The flow will the treatment of long-term capital gain be on such reverse mortgage transaction?

8. How will you calculate the cost of acquisition in case of the following assets?

a) equity shares received at the time of conversion of preference shares    c) units acquired under the consolidated plan of  Mutual Fund

b) capital asset, being share in the project referred under section 45(5A)

9.  Discuss the tax implications arising consequent to the conversion of a capital asset into stock-in-trade of business and its subsequent sale.

10. What is the cost of acquisition of self-generated assets, for the purpose of computation of capital gains?

11. List ten transactions which are not regarded as transfer for the purpose of capital gains. Discuss the provisions relating to the same.

12. Ms Vasudha contends that sale of a work of art held by her is not eligible to capital gains tax. Is she correct?

13. State, with reasons, whether the following statement True or False.

  • Alienation of a residential house in a transaction of the reverse mortgage under a scheme made and notified by the Central Government is treated as ” Transfer” for the purpose of capital gains.
  • Zero coupon bonds of the eligible corporation, held for more than 12 months, will be long-term capital assets.
  • In the case of a dealer in shares, income by way of dividend is taxable under the head “Profits and gains of business or profession”.
  • Where an urban agricultural land owned by an individual, continuously used by him for agricultural purposes for a period of two years prior to the date of transfer, is compulsorily acquired under the law and the compensation is fixed by the State Government, the resultant capital gain is exempt.
  • Zero Coupon Bond means a bond on which no payment and benefits are received or receivable before maturity or redemption.
  • Income from growing and manufacturing tea in India is treated as agricultural income wholly.

14. How will you calculate the period of holding in case of the following assets?

  • Shares held in a company in liquidation
  • Bonus sharesFlat in a co-operative society
  • Transfer of a security by a depository (i.e., demat account)

15. Write short notes on –

  • Provisions relating to Capital gains in the case of slump sale under section 50B
  • Provisions relating to Reference to Valuation Officer under section 55A

Important Questions From Income From Other Sources

  1. State with proper reasons whether the following statements are True/False with regard to provisions of Income-tax Act, 1961.

a) “A” receives Rs 2 lakh from his friends on the occasion of his marriage on 22.04.2018 and Rs 1 lakh from his brother of his father-in-law on 31.12.2018. A’s income includible under “other sources” for the previous year 2018-19 would be Rs 3 lakh.

B) Dividend received (on which no Dividend Distribution Tax has been paid) by a dealer in shares or one engaged in buying/selling of shares, is chargeable under the head “Income from other sources”.

C) Any amount received by an individual or his legal heir as compensation for natural disaster from the Government is taxable.

2. When would the dividend income be taxed in the hands of a shareholder?

3. Write short notes on –

  • Bond washing transactions
  •  Deduction under 57
  • Dividend stripping

4. Write about Sec.11 5BBDA.

5.State the incomes which are chargeable only under the head “Income from other sources”.

6. What are the deductions allowable under section 57 of the Income-tax Act, 1961 in respect of “Income from other sources”?

We hope with the help of this article, now you know the what are the important topics in CA IPCC income tax for May 2019 (सीए आई.पी.सी.सी इनकम टैक्स इम्पोर्टेन्ट प्रश्न) attempt. Students should understand that it is not recommended to skip some topics and read only a few important ones. Try to cover entire IPCC syllabus and that’s what ICAI expects from you and even IPCC question papers are based on that. These important questions are for those students who don’t prepare well for the exam and try to get at least 40 marks. So don’t depend on these questions if you have so much time for the exams. If you have any doubts the comment below. We will try to help you. And don’t forget to share this article with your friends who are going to write CA IPCC exams in May 2019.

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