265390892.

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RAE I
INCOME TAX (THEORY)
November 2007
Time: 2 hours
Max. marks 100
Note:
1. This question paper contains 100 questions and has 13 pages.
2. Each question carries 1 mark.
*
*
Choose the correct answer:
1. The amount of any compensation received by an assessee from his former
employer in connection with the termination of his employment is to be
considered as part of:
(a) Salary
(b) Perquisite
(c) Profits in lieu of salary
(d) Fringe benefits
(c)
2. Unrealised rent in respect of house property, which is realized subsequently by
the assessee, is to be charged to Income Tax as the income of:
(a) The year in which the rent was due
(b) That previous year in which in which the rent is realized
(c) That previous year in which the property was let out
(b)
3. Special provisions in respect of certain undertakings in certain special
category states is dealt with under Section:
(a) 80 IC
(b) 10 B
(c) 33 AB
(d) 10 C
(a)
4. Deduction in respect of a professional sportsman resident in India having
professional income from foreign sources is to be limited to:
(a) 15 per cent of such income for assessment year 2004-05
(b) 35 per cent of such income for assessment year 2004-05
(c) 45 per cent of such income for assessment year 2004-05
(d) 60 per cent of such income for assessment year 2004-05
(a)
5. For deriving the book profit of a company for the purpose of MAT, the net
profit as per the Profit & Loss Account should not be increased by:
(a) Provision for income tax payable
(b) Provision for losses of subsidiary companies
(c) Amount withdrawn from any reserves
(d) Amount of dividend paid
(c)

2.
-26. The period for carry forward of MAT credit pertaining to section 115 JB for
any assessment year on or after 1st April 2006 shall be limited to:
(a) Second succeeding assessment year
(b) Fifth succeeding assessment year
(c) Third succeeding assessment year
(d) Seventh succeeding assessment year
(d)
7. Subject to other conditions, the TDS on payment of compensation on
acquisition of certain immovable property shall equal:
(a) 20 per cent of the compensation
(b) 2 per cent of the compensation
(c) 10 per cent of the compensation
(d) 30 per cent of the compensation
(c)
8. The TCS collected from the licensee is to be limited to 2 per cent of the
amount payable by the licensee in respect of:
(a) Parking lot
(b) Toll Plaza
(c) Both a & b
(d) Neither (a) nor (b)
(c)
9. Commission on sale of lottery tickets and TDS thereto, is dealt with under
Section:
(a) 194 I
(b) 194 G
(c) 195
(d) 206
(b)
10. Advance Tax is payable by an assessee in case such tax computed and payable
for that year exceeds rupees:
(a) 5,000
(b) 50,000
(c) 20,000
(d) 1,00,000
(a)
11. Penalty is imposable for failure to maintain books of account under section:
(a) 271
(b) 271 A
(c) 271 AA
(d) 271 AAA
(b)
12. Penalty for failure to deduct tax at source is equal to:
(a) 50 per cent of the amount not deducted
(b) The amount not deducted
(c) Double the amount not deducted
(d) No penalty
(b)

3.
-313. Penalty for failure to furnish return of fringe benefits is applicable from:
(a) Assessment year 2004-05
(b) Assessment year 2007-08
(c) Assessment year 2006-07
(d) Assessment year 2005-06
(b)
14. Wilful attempt to evade tax is punishable under Section:
(a) 276 C
(b) 276
(c) 278 A
(d) Both a & c
(a)
15. Obligation to furnish Annual information return rests on some specified:
(a) Assessing officers
(b) Assessees
(c) Local authorities
(d) a & b
(e) b & c
(e)
16. Rules for carrying out the purposes of the Income Tax Act are notified by:
(a) CBDT
(b) Parliament
(c) Prime Minister
(d) Finance Minister
(a)
17. Interest for deferment of advance tax is payable under section 234 C:
(a) Yes
(b) No
(a)
18. Under Section 234 A, an assessee is liable to pay simple interest on the
amount of tax on the total income with effect from 8.9.2003 the rate of interest
payable per month is:
(a) 1 per cent
(b) 1.25 per cent
(c) 1.5 per cent
(d) 1.75 per cent
(a)
19. Provisions of Section 234 B are applicable in respect of assessments for the
assessment year 2000-01 and onwards:
(a) Yes
(b) No
(b)

4.
-420. Attachment and sale of an assessees immovable property is a permissible
means for recovery by a TRO.
(a) Yes
(b) No
(a)
21. Previous year means:
(a) The Calendar year immediately preceding the assessment year
(b) The financial year immediately preceding the assessment year
(c) The Calendar year overlapping with the assessment year
(b)
22. An individual is said to be resident in India in any previous year if his total
stay in India during that year aggregates to at least:
(a) 365 days
(b) 82 days
(c) 282 days
(d) 182 days
(d)
23. The amount paid on account of current repairs of machinery, plant and
furniture being used in a business is:
(a) Deductible
(b) Not deductible
(c) Part deductible
(a)
24. Profits and gains of business or profession is dealt with under Section:
(a) 15
(b) 18
(c) 28
(d) 22
(c)
25. Which of the following heads of income are no longer operational?
(a) Salaries
(b) Capital gains
(c) Income from other sources
(d) Interest on securities
(d)
26. With effect from assessment year 2006-07, the rate of depreciation admissible
on aeroplanes is:
(a) 20 per cent
(b) 40 per cent
(c) 60 per cent
(d) 10 per cent
(b)

5.
-5
27. With effect from assessment year 2006-07, the rate of depreciation admissible
on Computer software is:
(a) 60 per cent
(b) 20 per cent
(c) 40 per cent
(d) 30 per cent
(a)
28. Depreciation under section 32 is allowable in respect of:
(a) Tangible assets
(b) Intangible assets
(c) Both a & b
(d) Neither a & b
(c)
29. Speculative transactions carried on by an assessee being of a nature to
constitute a Speculation business shall be considered as a part of the
assessees main business.
(a) Yes
(b) No
(b)
30. Carried forward depreciation is to be treated differently from current
depreciation for allowing deduction.
(a) Yes
(b) No
(a)
31. Under Rule 8, an assessee engaged in the business of growing and
manufacturing tea, subject to other conditions shall be allowed a deduction of
..from the income for deriving the income liable to tax.
(a) 60 per cent
(b) 40 per cent
(c) 30 per cent
(d) 20 per cent
(a)
32. Deduction by way of Rehabilitation allowance is admissible to an assessee
under section:
(a) 32 AB
(b) 33 B
(c) 35 D
(d) 35 A
(b)
33. Expenditure on Scientific Research is admissible under Section:
(a) 35
(b) 80 IB
(c) Either a or b
(d) None of the above
(a)

6.
-634. In respect of a single assessee operating two different businesses, it may be
possible that only one of the businesses is eligible for deduction under section
80 IA:
(a) Yes
(b) No
(a)
35. Deduction under section 80 IB is admissible in case of a business undertaking
formed by splitting up or reconstruction of a business already in existence.
(a) Yes
(b) No
(b)
36. Deduction in respect of profits and gains by an undertaking engaged in
development of special Economic Zone is admissible under Section:
(a) 80 I AB
(b) 10 AA
(c) Both a & b
(d) 10 A
(b)
37. The amount of deduction in the case of an undertaking deriving profits from
the business of operating and maintaining a hospital in a rural area shall
be.of the profits for 5 initial assessment years.
(a) 50 per cent
(b) 60 per cent
(c) 100 per cent
(d) 70 per cent
(c)
38. Deduction under Section 80 Q in respect of profits from the business of
publication of books is to be allowed on the income as reduced by deduction,
if any, admissible under section 80 IB:
(a) Yes
(b) No.
(b)
39. Deduction in respect of tax paid by an assessee in a country with which there is
no DTAA shall be regulated in terms of Section:
(a) 90 A
(b) 92
(c) 92 A
(d) 91
(d)
40. Which of the following is not a method for computing arms length price?
(a) The resale price method
(b) The cost plus method
(c) The profit split method
(d) The sale price method
(d)

7.
-741. The total undisclosed income of the block period determined under Section 158
BC shall be chargeable at the rate of:
(a) 40 per cent
(b) 30 per cent
(c) 60 per cent
(d) 20 per cent
(c)
42. If TDS has been deducted from investment income as well as long term Capital
gains of a non-resident Indian who does not have any other income, such
assessee is:
(a) Required to file a return
(b) Not required
(b)
43. The Tonnage Tax Scheme is in respect of Shipping
companies.
(a) Voluntary
(b) Mandatory
(a)
44. Under the Power of Survey an Income Tax authority can enter a business
premises within its jurisdiction during any time of the day:
(a) Yes
(b) No
(a)
45. For making enquiry before assessment in respect of assessees who have
furnished returns, an assessing officer can call for information by issuing a
notice under Section:
(a) 139
(b) 142
(c) 142 A
(d) 143
(b)
46. In order to carry out a Best judgement assessment in respect of an assessee,
the assessing officer needs to ensure that:
(a) Assessee has failed to comply with terms of a notice under Section 142
(b) Assessee has failed to comply with terms of a notice under Section
143(2)
(c) Both a & b
(d) Either a or b
(c)
47. Under normal circumstances, no action is to be taken by an assessing officer
under section 147 after the expiry of..from the end of the relevant
assessment year.
(a) 2 years
(b) 4 years
(c) 6 years
(d) 8 years
(b)

...8.
-848. A firm shall be assessed as one if:
(a) The partnership is evidence by an instrument
(b) The individual shares of the partners are specified in that instrument
(c) Either a or b
(d) Both a & b
(c)
49. Quoting ones PAN is mandatory in course of correspondence with any Income
Tax Authority.
(a) Yes
(b) No.
(a)
50. TRP stands for:
(a) Tax Refund Procedure
(b) Tax Review Plan
(c) Tax Return Preparer
(d) Total Refund Processed
(c)
51. TIN has been hosted online by:
(a) IT Department
(b) NSDL
(c) NIC
(d) APTECH
(b)
52. With effect from June 1, 2003 filing eTDS returns is mandatory for:
(a) Government deductors
(b) Corporate deductors
(c) All deductors
(b)
53. eTCS return is to be filed in:
(a) Form 24
(b) Form 27
(c) Form 27 A
(d) Form 27 B
(c)
54. TIN Facilitation Centres are meant for:
(a) Issuing PAN Cards
(b) Accepting Tax Payments
(c) Accepting e TDS Returns
(d) Accepting W.T. Returns
(c)
55. For the assessment year 2007-08, return for Fringe benefits is to be filed in:
(a) ITR 2
(b) ITR 4
(c) ITR 6
(d) ITR 8
(d)

9.
-9
56. Sampark-2004 refers to:
(a) A Software prepared by IT Department
(b) A Training programme of the IT Department
(c) An awareness programme of the IT Department
(a)
57. TAN stands for:
(a) Tax Deduction Account Number
(b) Tax Audit Network
(c) Tax Affected Notionally
(a)
58. Paper TDS returns are digitized by NSDL:
(a) Yes
(b) No
(a)
59. Securities Transaction Tax Rules have been framed under:
(a) Finance Act 2003
(b) Finance Act 2004
(c) Finance Act 2005
(d) Finance Act 2006
(b)
60. The following Section has been inserted vide Finance Act 2007:
(a) 139
(b) 139 A
(c) 139 B
(d) 139 C
(d)
61. In Section 40 A(3) of the IT Act as per Finance Act 1995, a sum not exceeding
if expenditure exceeding Rs.20,000 made otherwise than an
Account payee cheque/DD shall be allowed as deduction.
(a) 10 per cent
(b) 20 per cent
(c) 80 per cent
(d) 100 per cent
(b)
62. With reference to Q 61 above, the admissible deduction subject to other
conditions has been amended to.through Finance Act 2007.
(a) Nil
(b) 30 per cent
(c) 40 per cent
(d) 60 per cent
(a)
63. Section QQB was inserted by:
(a) Finance Act 2001
(b) Finance Act 2002
(c) Finance Act 2003
(d) Finance Act 2004
(c)

10.
- 10 64. Finance Act 2005 has inserted Section:
(a) 80 A
(b) 80 B
(c) 80 C
(d) 80 D
(c)
65. In respect of tax in the case of block assessment of search cases, Finance Act
2002 has enabled the levy of:
(a) Surcharge
(b) Educational cess
(c) Interest
(a)
66. Section 206 CA, inserted by Finance Act 2002, deals with:
(a) TAN
(b) PAN
(c) TCAN
(d) None
(c)
67. Which of the following application system is a part of the computerisation plan
of the Income Tax Department?
(a) AIS
(b) TAS
(c) IRLA
(d) All of the above
(d)
68. AST means:
(a) Assessee Information System
(b) Assessment Information System
(c) Assessment Software Technique
(d) None of the above
(b)
69. Which of the following is true in respect of the Return Receipt Register?
(a) It is generated on line where network is available
(b) It is prepared by using separate software when network is not
available
(c) Both a & b
(d) None
(b)
70. Which of the following is correct in respect of objectives of the computerisation
plan?
(a) To provide better services to the taxpayers
(b) To reduce the cost of collection
(c) Both a & b
(d) Only b
(c)

11.
- 11 71. The National Computer Centre is responsible for maintaining the back up of
critical data of all RCCs:
(a) Yes
(b) No
(a)
72. OLTAS means:
(a) Online Tax Assessment System
(b) Online Tax Accounting System
(c) Online Tabulating and Arranging System
(d) None of the above
(b)
73. The Chief Vigilance Officer of the Income Tax Department is:
(a) The Chief Commissioner of Income Tax
(b) The Director General of Income Tax (Investigation)
(c) The Director General of Income Tax (Vigilance)
(d) None of the above
(c)
74. Challans are posted only after the designated officers confirmation:
(a) Yes
(b) No
(b)
75. With regard to making queries on Challans/refunds the Assessing Officer..
ascertain the details of encashment of refunds issued by him.
(a) Can
(b) Cannot
(b)
76. An assessing officer can access both AST and TMS Packages using the same
login details.
(a) Yes
(b) No
(a)
77. Deduction in respect of Banking Cash Transaction Tax paid by an assessee is
allowable in computing the business profits as per Finance Act 2005:
(a) Yes
(b) No
(a)
78. Finance Act 2005 has increased the rate of MAT credit to 10 per cent:
(a) Yes
(b) No
(b)
79. The following deduction shall be admissible while determining the income
chargeable under the head Income from house property.
(a) 30 per cent of the annual value
(b) 40 per cent of the annual value
(c) 50 per cent of the annual value
(d) 60 per cent of the annual value
(a)

12.
- 12 80. Perquisite includes:
(a) Value of rent free accommodation provided to the assessee by the
Employer
(b) Value of any benefit provided by a Company free of cost to its
employees by way of allotment of shares under employees stock option
plan.
(c) Both a & b
(d) None of the above
(d)
81. Under Section 35 CCA of the Income Tax Act, deduction of expenditure by
way of payment to associations for carrying out rural development
programmes is allowable.
(a) Yes
(b) No
(a)
82. The following expenses may be admissible as deduction, under amortisation
of certain preliminary expenses.
(a) Preparation of feasibility report
(b) Preparation of Project Report
(c) Both a & b
(d) None
(c)
83. Amortisation of expenditure incurred under voluntary retirement scheme is
dealt under Section:
(a) 35
(b) 35 AD
(c) 35 DD
(d) 35 DDA
(d)
84. Any sum paid on account of Wealth Tax is deductible while computing the
income chargeable under the head Profits and gains of business of
profession.
(a) Yes
(b) No
(b)
85. Specific definitions and explanations regarding income from profits and gains
of business or profession have been given in Section:
(a) 28
(b) 41
(c) 43
(d) 44
(c)

13.
- 13 86. Provision for tax is admissible as a deduction under Section 43 B even if the
same is not paid:
(a) Yes
(b) No
(b)
87. Audit of accounts of a person carrying on business is compulsory if his total
sales, turnover or gross receipts exceed:
(a) Rs.10 lakh
(b) Rs.20 lakh
(c) Rs.30 lakh
(d) Rs.40 lakh
(a)
88. Audit of accounts of certain persons carrying on a profession is compulsory in
case his gross receipts from the profession exceed:
(a) Rs.10 lakh
(b) Rs.20 lakh
(c) Rs.30 lakh
(d) Rs.40 lakh
(a)
89. In case of firms, for any loss to be carried forward and set off, the same should
be determined through a duly filed return:
(a) Yes
(b) No
(a)
90. Unexplained expenditure of an assessee is dealt under section:
(a) 69 A
(b) 69 B
(c) 69 C
(d) 69 D
(c)
91. Section 54 GA deals with the exemption of capital gains on transfer of assets in
cases of shifting of an industrial undertaking to a:
(a) Rural Area
(b) Special Category State
(c) Special Economic Zone
(d) North-Eastern State
(c)
92. Computation of capital gains in case of slump sale is calculated in terms of:
(a) Section 50
(b) Section 50 A
(c) Section 50 B
(d) Section 50 D
(c)

14.
- 14 93. Subject to other conditions the minimum deemed profit in respect of an
assessee engaged in retail business shall be ..of the turnover.
(a) 2 per cent
(b) 5 per cent
(c) 8 per cent
(d) 10 per cent
(b)
94. Income from property held for charitable or religious purposes is dealt under
Section:
(a) 10
(b) 11
(c) 12
(d) 13
(b)
95. Application for registration of a trust is to be made to:
(a) Chief Commissioner
(b) Commissioner
(c) Additional Commissioner
(d) Deputy Commissioner of Income Tax
(b)
96. Deduction in respect of certain incomes of offshore Banking Units and
International Financial Services Centre is dealt under Section:
(a) 80 IA
(b) 80 IB
(c) 80 IC
(d) 80 LA
(d)
97. Income accruing to a resident from whatever source outside India during the
year shall form part of his total income:
(a) Yes
(b) No
(a)
98. For the assessment year 2007-08 the basic exemption for women below
65 years is:
(a) Rs.1,00,000
(b) Rs.1,25,000
(c) Rs.1,35,000
(d) Rs.1,85,000
(c)
99. For the assessment year 2007-08, the surcharge for companies and Firms is:
(a) 5 per cent
(b) 10 per cent
(c) 15 per cent
(d) 20 per cent
(b)
15.

- 15 100. The Income Tax Act 1961 extends to the whole of India:
(a) Without exception
(b) Except J & K
(c) Except Sikkim
(d) Except Goa
(a)