WORKOUT BATCH NOV 2023

QUESTION 1 PGBP – PARTNERS SALARY MTP MAY 2018 (5 MARKS)

Kapil & Sons, a partnership firm consisting of two working partners, reports a net profit of Rs 6,00,000 before
deduction of the following items:
(1) Salary of Rs 20,000 each per month payable to two working partners of the firm (as authorized by the deed
of partnership).
(2) Depreciation on plant and machinery purchased on 15.7.2017 by a bearer cheque in single payment for Rs
1,50,000.
(3) Interest on capital at 18% per annum (as per the deed of partnership). The amount of capital eligible for
interest Rs 5,00,000.
You are required to compute:
(i) Book-profit of the firm under section 40(b) of the Income-tax Act, 1961.
(ii) Allowable working partner salary for the assessment year 2018-19 as per section 40(b).

QUESTION 2 MCQ MTP MAY 2019 (1 MARK)

A, a resident individual, is engaged in the business of money lending. For the purpose of lending money to
various persons, A borrows money from other persons. As a part of his business, A took a loan from B of an
amount of Rs.10 lacs. B is a non-resident. On the said loan, A paid an amount of Rs.1 lac as interest during the
P.Y. 2018-19 to B in India. A did not deduct tax at source while crediting/paying the interest amount to B. A is
of the view that the amount of Rs.1 lac shall be allowed to him as a deduction under the Income-tax Act, 1961.
Whether A‟s view is correct?
(a) Correct, interest expenses incurred for business are allowed as deduction u/s 36(1)(iii).
(b) Incorrect, as tax at source has not been deducted by A on the interest amount, full amount of interest of Rs.1
lac shall be disallowed in A.Y. 2019-20.
(c) Incorrect, as tax at source has not been deducted by A on the interest amount, amount of interest of
Rs.30,000 shall be disallowed in A.Y. 2019-20.
(d) Correct, interest expenses incurred for business are allowed as deduction u/s 37(1).

QUESTION 3 MCQ MTP MAY 2019 (2 MARKS)

Which of the following persons are compulsorily required to get their accounts audited u/s 44AB of the
Income-tax Act, 1961?
(i) An assessee, who has not opted for presumptive taxation and his turnover during the P.Y. is Rs.2 crore.
(ii) A professional whose gross receipts during the previous year amounts to Rs.50 lakh, who declares his
profits and gains from profession u/s 44ADA.
(iii) An assessee having turnover of Rs.1.5 crore, who declares his profits and gains from business u/s 44AD.
(iv) A lawyer having gross receipts of Rs.40 lakhs during the P.Y. who claims his profits and gains from the
legal profession to be 40% of the gross receipts.
(v) An individual who opts out of the presumptive taxation scheme u/s 44AD during the P.Y., however, his
total income for the said year is Rs.2,00,000.
(a) (i), (iv)
(b) (i), (iv), (v)
(c) (i), (ii), (iv)
(d) (iv), (v)

QUESTION 4 PGBP – S. 44AE MTP MAY 2019 (5 MARKS)

Mr. Satinder is engaged in the business of plying goods carriages. On 1 st April, 2018, he owns 10 trucks (out
of which 5 are heavy goods vehicles, the gross vehicle weight of such goods vehicle is 17,000 kg each). On 5th
May, 2018, he sold one of the heavy goods vehicles and purchased a light goods vehicle on 8th May, 2018.
This new vehicle could however be put to use only on 15th July, 2018.
Compute the total income of Mr. Satinder for the assessment year 2019-20, taking note of the following data:

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 WORKOUT BATCH NOV 2023

QUESTION 5 PGBP MCQ MTP MAY 2019 (2 MARKS)

QUESTION 6 PGBP MCQ MTP MAY 2021 (2 MARKS)

Mr. C aged 35 years is a working partner in M/s BCD, a partnership firm, with equal profit sharing ratio.
During the P.Y. 2020-21, the firm has paid remuneration to Mr. B, Mr. C and Mr. D, being the working
partners of the firm, of Rs. 2,00,000 each. The firm has paid interest on capital of Rs. 1,20,000 in toto to all the
three partners and the same is within the prescribed limit of 12%. The firm had a loss of Rs. 1,12,000 after
debiting remuneration and interest on capital. Note – Remuneration and interest on capital is authorized by the
partnership deed
You, being the CA of Mr. C, are in the process of computing his total income. What would be his taxable
remuneration from the firm?
(a) Rs. 2,00,000 (b) Rs. 1,51,600 (c) Rs. 1,27,600 (d) Rs. 1,50,000

QUESTION 7 PGBP MTP MAY 2021 (4 MARKS)

M/s. Moksh Enterprises, a sole proprietorship owns four machines, put in use for business in March, 2019. The
depreciation on these machines is charged @ 15%. The written down value of these machines as on 1st April,
2020 was Rs. 7,70,000. Two of the old machines were sold on 15th July, 2020 for Rs. 10,00,000. A second
hand plant was bought for Rs. 6,10,000 on 30th December, 2020. You are required to:
(i) Determine the claim of depreciation for Assessment Year 2021-22. (ii) Compute the capital gains liable to
tax for Assessment Year 2021-22.
(iii) If Moksh Enterprises had sold the two machines in July, 2020 for Rs. 15,00,000, explain, will there be any
difference in your above workings

QUESTION 8 PGBP MTP MAY 2021 (3 MARKS), NOV 2019 (4 MARKS)

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 WORKOUT BATCH NOV 2023
QUESTION 9 PGBP MTP NOV 2019 (1 MARK)

QUESTION 10 PGBP MTP NOV 2019 (1 MARK)

Mr. Kunal is a doctor by profession engaged in his medical practice from last 15 years. His gross receipts from
the profession in FY 2015-16, 2016-17, 2017-18 were Rs.2,00,000, Rs.16,00,000 and Rs.18,50,000
respectively. Further, Kunal follows cash system of accounting. Determine which of the following books of
accounts and documents are required to be kept and maintained by Kunal.
(i) Cash Book
(ii) Journal
(iii) Inventory of the stock of drugs, medicines, etc.
(iv) A daily case register

(a) (i) and (ii)

(b) (i), (ii), (iii) & (iv)
(c) (i), (iii) & (iv)
(d) None of the above

QUESTION 11 PGBP MTP NOV 2019 (2 MARKS)

Mr. Shahid, a wholesale supplier of dyes, provides you with the details of the following cash payments he made
throughout the year
– 12.06.2018: loan repayment of Rs. 27,000 taken for business purpose from his friend Kunal. The repayment
also includes interest of Rs.5,000.
- 19.08.2018: Portable dye machinery purchased for Rs. 15,000. The payment was made in cash in three
weekly instalments.
- 26.01.2019: Payment of Rs. 10,000 made to electrician due to unforeseen electric circuit at shop
- 28.02.2019: Purchases made from unregistered dealer for Rs. 13,500
What will be disallowance under 40A(3), if any, if Mr. Shahid opts to declare his income as per the provisions
of section 44AD?
(a) Rs. 18,500 (b) Rs.28,500 (c) Rs.13,500 (d) NIL

QUESTION 12 PGBP MTP NOV 2020 (4 MARKS), RTP MAY 2018

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 WORKOUT BATCH NOV 2023

QUESTION 13 PGBP JAN 2021 (OS) (3 MARKS)

QUESTION 14 PGBP JAN 2021 (OS) (4 MARKS)

QUESTION 15 PGBP MAY 2018 (OS) (10 MARKS)

Mr. Querashi is a business man. During the year ended 31-03-2018, he was engaged in the business of
Hypermarket and Super Market. He maintains proper books of accounts for both businesses in mercantile
system. Sales from Hypermarket achieved a turnover of Rs 75 Lakhs and all receipts were in cash. However,
Supermarket business is through online and entire receipts of Rs 50 lakhs during the year were received online
in his bank account. The expenses were incurred in the ratio 65:35.

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 WORKOUT BATCH NOV 2023

(also try normal method – without presumptive taxation - 653950)

QUESTION 16 PGBP RTP MAY 2019 - ignore

Ans: Rs 5,77,500

QUESTION 17 PGBP MAY 2019 (OS) (4 MARKS) - ignore

M/s. Keshav Enterprises, a sole proprietorship own four machines, put in use for business in March, 2017. The
depreciation on these machines is charged @ 15%. The written down value of these machines as on 1st April,
2018 was Rs 7,70,000. Two of the old machines were sold on 15th July, 2018 for Rs 10,00,000. A second hand
plant was bought for Rs 6,10,000 on 30th December, 2018. You are required to:
(i) Determine the claim of depreciation for Assessment Year 2019-20.
(ii) Compute the capital gains liable to tax for Assessment Year 2019-20.
(iii) If Keshav Enterprises had sold the two machines in July, 2018 for Rs 15,00,000, explain, will there be any
difference in your above workings?

QUESTION 18 PGBP NOV 2018 (OS) (5 MARKS)

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 WORKOUT BATCH NOV 2023
QUESTION 19 PGBP NOV 2018 (4 MARKS), RTP MAY 2020

QUESTION 20 PGBP NOV 2018 (4 MARKS), MTP 2 MAY 2023

M/s ABC, an eligible assessee, following mercantile system of accounting, carrying on eligible business under
section 44AD provides the following details:
♦ Total turnover for the financial year 2018-19 is Rs 130 lakh
♦ Out of the above: • Rs 25 lakh received by A/c payee cheque during the financial year 2018-19;
• Rs 50 lakh received by cash during the financial year 2018-19; Rs 25 lakh received by A/c payee bank
draft before the due date of filing of return;
• Rs 30 lakh not received till due date of filing of return.
Compute the amount of deemed profits of M/s ABC under section 44AD(1) for A.Y. 2019-20.
(a) Rs 10.4 lakh (b) Rs 7.0 lakh (c) Rs 5.5 lakh (d) Rs 9.4 lakh

QUESTION 21 PGBP RTP NOV 2018

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 WORKOUT BATCH NOV 2023

QN 22 JULY 2021 OS (5 MARKS)

It purchased a vehicle weighing 15000 kg on 6th June, 2020 which was put to use only on 10th July, 2020. Net
profits of the firm [after claiming partners remuneration of Rs 1,50,000 and within the limits prescribed under
section 40(b)] from the above business, as per books of accounts amounted to Rs 6,50,000. The firm has
declared its income for the Assessment Year 2021-22 in accordance with the provisions of presumptive income
under section 44AE.
(i) Compute the income of the firm if it opts for the provisions of section 44AE for the Assessment Year 2021-
22.
(ii) If the firm wants to claim its income as per books of accounts for the Assessment Year 2021-22, what are its
obligations under the Income-tax Act, 1961?
(iii) What is the due date for filing its return of income under both the options?

QUESTION 23 MTP 2 NOV 2021

K is a working partner in a firm on behalf of his HUF and the HUF has contributed Rs.3,00,000 as its capital
contribution. Apart from this, K has given a loan of Rs.50,000 to the firm in his individual capacity. The firm
pays interest as per market rate of 15% per annum on capital as well as loan. Compute the amount of interest
that shall be allowed to the firm while calculating its business income assuming that the interest is authorized
by the partnership deed.
(a) Rs.42,000 (b) Rs.51,000 (c) Rs.52,500 (d) Rs.43,500
QUESTION 24 MTP MAY 2022
Mr. Kumar, engaged in wholesale business of clothes and speculative business, discontinued its operations on
19.10.2021 and 30.09.2021, respectively. The cloth business loss upto 19.10.2021 for P.Y. 2021-22 was Rs
8,000 and speculative business loss upto 30.09.2021 for P.Y. 2021-22 was Rs 40,000. Out of total bad debts of
Rs 1,00,000 that were claimed by Mr. Kumar in respect of a particular debtor of cloth business, Rs 60,000 was
allowed by the Assessing Officer in P.Y. 2020-21. On 29.01.2022, Mr. Kumar received a sum of Rs 68,000
from the debtor in full and final settlement. How much amount would be taxable in the hands of Mr. Kumar for
A.Y. 2022-23?
(a) Rs 28,000 (b) Rs 20,000 (c) Rs 60,000 (d) Rs 68,000
QUESTION 25 MTP MAY 2022
Mr. Raja, a proprietor, commenced operation of the business of a new three star hotel in Mumbai on 1.7.2021.
He had made a total investment of Rs 7.58 crores till 30.6.2021. Out of total investment of Rs 7.58 crores, Rs
1.58 crores was used for purchase of land in P.Y.2020-21. Rs 4.70 crores was used for constructing Hotel and
balance of Rs 1.30 used for purchasing the furniture in P.Y. 2021-22. He wants to avail the benefit of deduction
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 WORKOUT BATCH NOV 2023
under section 35AD as he satisfied with all the conditions prescribed u/s 35AD. His profit and gains from the
business for P.Y. 2021-22 is Rs 50 lakhs before claiming deduction u/s 35AD. He wants to file his income-tax
return on 12.12.2022. How much deduction Mr. Raja can claim for A.Y. 2022-23 and the losses which he can
carry forward to A.Y. 2023-24?
(a) He can claim the deduction of Rs 7.58 crores from his business income but he would not be able to carry
forward the business loss of Rs 7.08 crores
(b) He can claim the deduction of Rs 6.00 crores from his business income and can carry forward the business
loss of Rs 5.50
(c) He can claim the deduction of Rs 6.00 crores from his business income but cannot carry forward the
business loss of Rs 5.50
(d) He can claim the deduction of Rs7.58 crores from his business income and can carry forward the business
loss of Rs 7.08 crores
C

QUESTION 26 RTP MAY 2023

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