Question 1

Salary, bonus commission or remuneration due to or received by a working partner from the firm is taxable under the head_______&#10;A)Income from Salaries&#10;B)Other sources&#10;C)Business income&#10;D)Salary

Accepted Answer

Salary, bonus, commission, or remuneration due to or received by a working partner from the firm is taxable under the head "Business income." This is because these earnings are considered part of the profits from the business operations in which the partner is actively involved.

Question 2

Perquisite received by the assesses during the course of carrying on his business or profession is taxable under the head _______&#10;A)Salary&#10;B)Other Sources&#10;C)Business / Professional Income&#10;D)Professional income

Accepted Answer

Perquisites received by the assessee during the course of carrying on his business or profession are taxable under the head "Business / Professional Income" as they are considered earnings generated from the business or professional activities.

Question 3

Interest on capital or loan received by a partner from a firm is __________&#10;A)Exempt u/s 10 (2A)&#10;B)Taxable as business and profession income&#10;C)Taxable as income from other sources&#10;D)None of the above

Accepted Answer

Interest on capital or loan received by a partner from a firm is taxable as business and profession income because it is considered as part of the partner's share of profits from the firm.

Question 4

Export incentives received by an assessee are __________&#10;A)Exempt&#10;B)Taxable as business income&#10;C)Exempt up to certain limits&#10;D)Unexempt

Accepted Answer

Export incentives are considered taxable as business income because they are earnings generated from business activities related to exports.

Question 5

M.Who was carrying on agency business, received a sum of Rs.5,00,000 from his principal for termination of agency. Compensation so received shall be _________-&#10;A)Exempt as it is capital receipt&#10;B)Fully taxable as business income&#10;C)Taxable as income from other sources&#10;D)Intangible asset

Accepted Answer

The compensation received by M for the termination of agency business is considered as revenue in nature because it is in connection with the cessation of business activities. Therefore, it is fully taxable as business income under the Income Tax Act.

Question 6

Depreciation is allowed in case of __________&#10;A)Tangible fixed assets only&#10;B)Intangible assets only&#10;C)Tangible and intangible assets&#10;D)Wasting assets only

Accepted Answer

Depreciation is a method of allocating the cost of a tangible or intangible asset over its useful life. For tangible assets, this reflects the wear and tear over time, while for intangible assets, it reflects the consumption or obsolescence of the asset. Therefore, both tangible and intangible assets can be depreciated, although the methods and reasons for depreciation might differ between the two types of assets.

Question 7

If the asset of a particular block is acquired and put to use during the previous year for less than 180 days, the assessee shall be entitled to depreciation___________&#10;A)At normal rate&#10;B)At 50% of normal rate&#10;C)No depreciation is allowed&#10;D)Depreciation

Accepted Answer

When an asset is acquired and put to use for less than 180 days in a financial year, the assessee is entitled to claim depreciation at 50% of the normal rate for that year. This rule is designed to account for the reduced usage period of the asset within that financial year.

Question 8

Which of the following tax is allowed as deduction while computing the business income________&#10;A)Wealth Tax&#10;B)Income Tax&#10;C)GST&#10;D)TDS

Accepted Answer

GST (Goods and Services Tax) is allowed as a deduction while computing business income because it is considered an indirect tax that businesses pay on their inputs and can claim as input tax credit, which is not the case with Wealth Tax, Income Tax, or TDS (Tax Deducted at Source), which are not deductible expenses for the purpose of calculating business income.

Question 9

where the amount of an expenditure claimed as deduction exceeds Rs.10,000, it should be paid by ______&#10;A)Crossed cheque&#10;B)Account payee cheque / draft&#10;C)Cash&#10;D)None of these

Accepted Answer

For expenditures exceeding Rs.10,000 to be claimed as deductions, they must be paid through an account payee cheque or draft according to tax laws to ensure traceability and compliance. Cash payments for such amounts do not qualify for deductions.

Deck 3: Taxation and Business Income: Understanding the Taxable Headings and Deductions