1.Check your understanding
1. General deductions for Business or Profession are covered in the I.T.Act 1961 under.
(a) Sec. 20 (b) Sec. 31
(c) Sec. 37 (d) Sec. 45
2. Specific disallowances while computing profits and gains of business or profession are included in the I.T. Act 1961.
(a) Sec. 20 (b) Sec. 40
(c) Sec. 60 (d) Sec. 80
3. What is the limit beyond which expenses should be paid by crossed cheque or draft only otherwise the payment is folly disallowed?
(a) ` 5,000 (b) ` 10,000
(c) ` 15,000 (d) ` 20,000
4. Preliminary expenses shall be allowed as deduction in .
(a) 5 Instalments (b) 10 Instalments
(c) 15 Instalments (d) 12 Instalments
5. Bad debts allowed earlier and recovered latter on is . Notes
(a) Business income (b) Non-business income
(c) Exempted income (d) Income from other sources
6. 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
7. Over valuation of closing stock is .
(a) Deducted from net profit (b) Added to net profit
(c) Adjusted in P & L A/c (d) None of these
8. Persons in specified professions have to maintain prescribed books of account
if their professional income exceeds .
(a) ` 1,50,000 (b) ` 3,00,000
(c) ` 5,00,000 (d) ` 10,00,000
9. Professional expenses are allowed on .
(a) Accrual basis (b) Payment basis
(c) Accrual or payment basis (d) None of these
10. Gifts from clients are .
(a) Professional income (b) Income from other sources
(c) Non taxable item (d) None of these
11. Business Accounts should be compulsorily audited if the turnover exceeds
.
(a) ` 10,00,000 (b) ` 20,00,000
(c) ` 40,00,000 (d) ` 80,00,000
12. Provisions for allowing depreciation are included in Sec.32 of I.T Act and are
Regulated under .
(a) Rule 1 (b) Rule 3
(c) Rule 5 (d) Rule 7
13. Intangible assets are .
(a) Not eligible for depreciation
(b) Eligible for depreciation
(c) Can be fully written-off in the year of acquisition
(d) None of these
14. Interest on loan borrowed for acquisition of an asset till the date of installation
is .
(a) Revenue expenditure (b) Capital expenditure
(c) Non-business expenditure (d) None of these
15. Repairs incurred before installation of an assets is .
(a) Capital expenditure (b) Revenue expenditure
(c) Non-business expenditure (d) None of
these
16. Apart from normal depreciation, additional depreciation is permitted for certain
assets at the rate of .
(a) 10% (b) 20%
(c) 25% (d) 30%
17. Net annual value is calculated from in GAV at .
(a) 23% (b) 24%
(c) 22% (d) 30%
18. 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
19. Fringe benefits are taxable in the hands of .
(a) All the employees (b) If employer is subject to FBT
(c) If employer is not subject to FBT (d) None of these
20. Statutory limit of exemption of leave encashment is .
(a) ` 3,50,000 (b) ` 3,00,000
(c) ` 5,00,000 (d) ` 2,50,000
21. Deduction from gross Total income is allowed under Sec. 80C upto lower of
the Qualifying amount or a maximum of .
(a) ` 50,000 (b) ` 80,000
(c) ` 1,00,000 (d) ` 2,00,000
22. Profits earned from an illegal business are .
(a) Taxable (b) Tax free
(c) Ignored by Tax Authorities (d) Treated as other income
23. Contribution made to an approved research association is eligible for deduction
upto
(a) 50% (b) 80%
(c) 100% (d) 125%
24. Unabsorbed capital expenditure on scientific research can be carried forward
for .
(a) 15 years (b) 14 years
(c) 8 years (d) 10 years
25. Pre commencement period expenses upto 3 years spent for research are
.
(a) Ignored
(b) Allowed as expenses in the year of commencement of business
(c) Treated as capital expenses
(d) None of these
26. Any expenditure incurred on the purchase of patent rights is allowed as Notes
deduction in equal installments over a period of .
(a) 10 years (b) 14 years
(c) 5 years (d) It qualifies for depreciation
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