cma vipul shah test - 6 pgbp

CMA VIPUL SHAH TEST - 6 PGBP

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CHAPTER 6

PGBP

MCQs of PGBP

Q1: An assessee uses plant and machinery for the purpose of carrying on his business.

Under section 31, he shall be eligible for deduction on account of—

(a) both capital and revenue expenditure on repairs

(b) revenue expenditure on repairs

(c) revenue expenditure on repairs plus l/5th of capital expenditure on repairs.

(d) both (a) & (b)

Q2: An electricity company charging depreciation on straight line method on each asset

separately, sells one of its machinery in April, 2020 at Rs. 1,20,000. The WDV of

the machinery at the beginning of the year i.e. on 1st April, 2020 is Rs. 1,35,000.

No new machinery was purchased during the year. The shortfall of Rs. 15,000 is

treated as—

(a) Terminal depreciation

(b) Short-term capital loss

(c) Normal depreciation.

(d) Any of the above, at the option of the assessee

Q3: Mr. V, acquires an asset which was previously used for scientific research for Rs.

2,75,000. Deduction under section 35(l)(iv) was claimed in the previous year 2020-

2021. The asset was brought into use for the business of Mr. V, after the research

was completed. The actual cost of the asset to be included in the block of assets is

(a) Nil

(b) Market value of the asset on the date of transfer to business

(c) Rs. 2,75,000 less notional depreciation under section 32 upto the date of transfer.

(d) Actual cost of the asset Rs. 2,75,000

Q4: A Ltd. has unabsorbed depreciation of Rs. 4,50,000 for the AY 2021-2022 i.e. PY

2020-2021. This can be carried forward—

(a) for a maximum period of 8 years and set-off against business income.

(b) Indefinitely and set-off against business income.

(c) Indefinitely and set-off against any head of income

(d) Indefinitely and set-off against any head of income except salary.

Q5: Mr. V, a retailer acquired furniture on 10th May 2020 for Rs. 10,000 in cash and on

15th May 2020, for Rs. 15,000 and Rs. 20,000 by a bearer cheque and account

payee cheque, respectively. Depreciation allowable for AY 2021-2022 i.e. PY 2020-

2021 would be



(a) Rs. 2,000

(b) Rs. 3,000

(c) Rs. 3,500

(d) Rs. 4,500

Q6: GGC Ltd. incurred capital expenditure of Rs. 1,50,000 on 1/4/2020 for acquisition of

patents and copyrights. Such expenditure is

(a) Eligible for deduction in 14 years from AY 2021-2022 i.e. PY 2020-2021

(b) Eligible for deduction in 5 years from AY 2021-2022 i.e. PY 2020-2021

(c) Subject to depreciation @ 25% under section 32

(d) Subject to depreciation @ 15% under section 32

Q7: Under section 44AE, presumptive taxation is applicable at a particular rate provided

the assessee is the owner of a maximum of certain number of goods carriages. The

rate per month or part of the month relevant for AY 2021-2022 i.e. PY 2020- 2021

and the maximum number specified under the section are—

(a) Rs. 7,500 for each goods carriage in the case of an assessee owning not more than 10

goods carriages at any time during the year

(b) Rs. 7,500 for each goods carriage in the case of an assessee owning less than 10 goods

carriages at any time during the year

(c) Rs. 1,000 per ton of gross vehicle weight for per month or part of a month for a goods

carriage for an assessee owning not more than 10 goods carriages at the end of the

previous year

(d) Rs. 1,000 per ton of gross vehicle weight or unladen weight, as the case may be, for per

month or part of a month for a heavy goods carriage and Rs. 7,500 per month or part of a

month for other goods carriages in the case of an assessee owning not more than 10 goods

carriages at any time during the previous year

Q8: Where the total turnover of an assessee, eligible for presumptive taxation u/s 44AD,

is received entirely by account payee cheque during AY 2021- 2022 i.e. PY 2020-

2021, the specified rate of presumptive business income is—

(a) 5% of total turnover

(b) 6% of total turnover

(c) 7% of total turnover

(d) 8% of total turnover

Q9: The W.D.V. of a block (Plant and Machinery, rate of depreciation 15%) as on

1/4/2020 is Rs. 3,20,000. A second hand „machinery costing Rs. 50,000 was

acquired on 1/9/2020 but put to use on 1/11/2019. During Jan 2021, part of this

block was sold for Rs. 2,00,000. The depreciation for AY 2021- 2022 i.e. PY 2020-

2021 would be—



(a) Rs. 21,750

(b) Rs. 25,500

(c) Rs. 21,125

(d) Rs. 12,750

Q10: Employer‟s contribution to provident fund / superannuation fund / gratuity fund is

allowed as deduction in computing income under the head “Profits and gains of

business or profession”, provided it has been paid-

(a) before the end of the previous year

(b) on or before the due date by which the employer is required to credit an employee’s

contribution to the employee’s account in the relevant fund.

(c) on or before the due date for filing the return of income under section 139(1).

(d) before the end of the relevant assessment year

Q11: According to section 145 an assessee can follow:

(a) only cash basis of accounting

(b) only accrual basis of accounting

(c) any of (a) or (b)

(d) both (a) and (b)

Q12: Any payment received by the employer on the maturity of the Keyman Insurance

Policy for which premium was paid by such employer shall be considered to be income

of the employer under the head:

(a) Business and profession.

(b) Salary

(c) Other sources

(d) None of the above

Q13: Perquisite received by the assessee during the course of carrying on his business or

profession is taxable under the head.

(a) Business and profession.

(b) Salary

(c) Other sources


Q14: Which of the following income is not chargeable as income of business or profession?

(a) Profits and gains of business carried by an assessee during the previous year

(b) Income derived by a trade, professional or similar association from specific services

performed for its members



(c) Winnings from horse races

(d) Salary received by a partner of a firm from the firm in which he is a partner

Q15: Mr. V who was carrying on agency business, received a sum of Rs. 5,00,000 from his

principal for termination of agency. Compensation amount so received shall be:

(a) Exempt as it is capital receipt

(b) Exempt as it is ex-gratia payment

(c) Fully taxable under the head business and profession

(d) Taxable under the head other sources

Q16: Rate of depreciation of furniture and fitting is:

(a) 15%

(b) 10%

(c) 18%

(d) 20%

Q17: Computation of depreciation is given under section:

(a) 30

(b) 31

(c) 32

(d) 33

Q18: If a new machinery is purchased on 15/4/2020 and put to use for the purpose of the

business on 2/1/2021, depreciation would be allowable at the rate of:

(a) 7.5%

(b) 15%

(c) 10%

(d) 20%

Q19: The rates of depreciation given under section 32 and rule 5 are:

(a) Minimum rates for depreciation

(b) Maximum rates for depreciation

(c) Only rates of deprecation

(d) Can’t say

Q20: The depreciation is allowed to:

(a) The owner of asset

(b) The owner of asset, whether fully owned or partially owned



(c) The lessee of the asset

(d) The tenant of the asset

Q21: Depreciation can be computed on a single asset rather than group of asset.

(a) False

(b) True

Q22: “Put to use” mean actual use of the asset rather making on asset ready to use.

(a) False

(b) True

Q23: If asset is purchased during the year and put to use for less than 180 days

depreciation is allowed:

(a) for whole of the year

(b) not at all allowed

(c) allowed for only for 180 days

(d) depreciation is allowed at half the normal rates

Q24: Depreciation is allowed in case of:

(a) tangible assets only

(b) intangible assets only

(c) both (a) and (b)

(d) None of (a) or (b)

Q25: In case of electricity companies charging depreciation on SLM basis on a single asset

if such assets is sold for a price more than its value but less than its historical cost

then the assessee shall be chargeable for:

(a) balancing charge

(b) short-term capital gain

(c) short-term or long-term capital gain depending upon the period after which the block is

transferred

(d) balancing charge or capital gains at the choice of the assessee

Q26: Electricity companies are allowed depreciation on the basis of:

(a) Block of asset

(b) Each asset separately

(c) Each asset separately unless the assessee opts for block of asset system in the first

previous year of its commencement.



(d) Either on block of asset or each asset separately provided the option is exercised in the

first previous year.

Q27: Where the entire block of the asset is sold for a price more than the value of the

block then excess amount shall be treated as:

(a) balancing charge

(b) short-term capital gain u/s 50

(c) balancing charge or capital gains at the choice of the assessee

(d) long-term on short term capital gain depending upon the period for which block is held

Q28: Power generating/power generating and distributing company can claim depreciation

according to SLM method

(a) True

(b) False

Q29: Additional Depreciation is at the rate of:

(a) 20% of actual cost of machinery

(b) 15% of actual cost of machinery

(c) 18% of actual cost of machinery

(d) Nil

Q30: 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 kind of business

(d) Which is an electricity undertaking and is engaged in the business of generation or

generation and distribution of power.

Q31: 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

Q32: Additional depreciation shall ...................... ...................... if could not be

fully charged due to asset put to use for less than 180 days

(a) be deductible while computing WDV of the next previous year



(b) not be deductible while computing WDV of the next previous year.

Q33: It is mandatory to claim depreciation

(a) True

(b) False

Q34: If assessee is following cash basis of accounting then he can‟t claim depreciation since

it is a non cash item

(a) True

(b) False

Q35: W.D.V. of block having 5 machines for which depreciation rate is 15% as on

1/4/2020 is Rs. 5,00,000. 1 new machine amounting to Rs. 1,00,000 was acquired on

1/1/2021 and put to use on 1/2/2021 . During the AY 2021-2022 i.e. PY 2020-

2021, 2 old machinery are sold for Rs. 5,40,000. The depreciation to be allowed for

this block shall be:

(a) Rs. 9,000

(b) Rs. 4,500

(c) Rs. 5,000

(d) Rs. 5,400

Q36: Unabsorbed depreciation which could not be set off in the same assessment year can

be carried forward for:

(a) 8 Years

(b) Indefinite period of time

(c) 4 Years

(d) 12 years

Q37: Unabsorbed depreciation brought forward from an earlier year of a particular

business can be set off from:

(a) the same business

(b) any head of income

(c) any business income

(d) any head of income except income from salary

Q38: Export incentives received by an assessee are—

(a) Exempt

(b) Taxable as PGBP income

(c) Exempt up to certain limits and balance is taxable as PGBP income



(d) Taxable as income from other sources

Q39: Income of a trade or professional association, from specific services performed for

its members shall be:

(a) Exempt

(b) Taxable as income of business and profession

(c) Taxable as income of other sources

(d) Partly taxable and partly exempt

Q40: Which of the following are allowed as deduction while computing the business income?

(a) Wealth tax paid

(b) Income-tax paid

(c) CDT tax paid


Q41: Mr. V acquired an asset for Rs. 5,00,000 which includes Rs. 80,000 as GST for

which Mr. V has claimed Input Tax credit. The actual cost of acquisition to be

included in the block of asset shall be:

(a) Rs. 5,00,000

(b) Rs. 5,80,000

(c) Rs. 4,20,000

(d) none of the above

Q42: A car is imported on 1/4/2020 by J ltd. for the use by its employee. J ltd shall be

allowed depreciation on such car at:

(a) 15%

(b) 20%

(c) 40%

(d) Nil

Q43: Bad debts incurred are allowed to be debited in the profit and loss account:

(a) True

(b) False

Q44: Bad debt of a business are allowed to be debited as per section

(a) 36

(b) 37

(c) 35



(d) 32

Q45: Provision for Bad debt is allowed to be debited to profit and loss account:

(a) True

(b) False

Q46: A microscope which was acquired for Rs. 15,00,000 was earlier used for scientific

research and the cost was allowed as deduction us/ 35. After the research was

completed, this microscope was brought into the business of the assessee. The actual

cost of this for inclusion in the block shall be:

(a) Rs. 15,00,000

(b) Nil

(c) Market value of the asset


Q47: If an assessee carries on any scientific research related to his business, he shall be

allowed deduction u/s 35 for:

(a) revenue expenditure only

(b) capital expenditure only (except land)

(c) both revenue and capital expenditure (except land)

(d) neither revenue nor capital expenditure

Q48: Brought forward unabsorbed capital

expenditure on scientific research can be carried forward:

(a) indefinite period of time

(b) 8 years

(c) 5 years

(d) 10 years

Q49: Expenditure on scientific research incurred by the assessee shall be allowed if such

research

(a) is related to the business of the assessee

(b) may or may not related to the business of the assesssee

(c) is related to the research specified by the government

(d) none of the above

Q50: If an assessee carries on any scientific research related to his business, he shall be

allowed deduction u\s 35 on account of:



(a) revenue expenditure

(b) capital expenditure

(c) both revenue and capital expenditure

(d) both revenue and capital expenditure excepting expenditure incurred on acquisition of

land.

ANSWER TO ALL QUESTIONS

1 b 2 a 3 a 4 d 5 b 6 c 7 d 8 b 9 a 10 c

11 c 12 a 13 a 14 c 15 c 16 b 17 c 18 a 19 a 20 b

21 a 22 b 23 d 24 c 25 a 26 d 27 b 28 a 29 a 30 b

31 c 32 a 33 a 34 b 35 b 36 b 37 d 38 b 39 b 40 d

41 c 42 a 43 a 44 a 45 b 46 b 47 c 48 a 49 a 50 d

cma vipul shah test - 6 pgbp

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