Question 1

Subletting is assessable under the head …………………

Accepted Answer

Subletting income is considered as "Income from Other Sources" as it does not fall under the primary income heads like House Property, Capital Gains, etc.

Question 2

Preliminary expenses incurred are allowed deduction in:

Accepted Answer

Preliminary expenses are allowed to be deducted in 5 equal annual instalments according to tax regulations in many jurisdictions. This allows businesses to spread the cost over a period, aiding in financial planning and tax management.

Question 3

Educational cess is levied in case of ………..

Accepted Answer

Educational cess is levied on all assesses, including individuals, HUFs, and companies, as a part of the tax structure in India to fund educational programs.

Question 4

As per section 2(31), the following is not included in the definition of 'person'

Accepted Answer

A minor is not included in the definition of 'person' under section 2(31) as this section typically includes entities capable of entering into legal contracts and a minor (a person under the age of majority) does not have the legal capacity to enter into contracts.

Question 5

Amendments by the finance act are made applicable from

Accepted Answer

Amendments by the finance act are generally made applicable from the first day of the next financial year to allow for a clear and organized implementation of new financial regulations and tax laws.

Question 6

Assessee is having stock existing in the business. Valuation of stock will be at:

Accepted Answer

The correct method for valuing stock in a business is "Cost or market price, whichever is less." This principle ensures that the inventory is not overvalued on the balance sheet, adhering to the conservative approach of accounting.

Question 7

Which is the charging section of income under the head profits and gains of business or profession?

Accepted Answer

Section 28 of the Income Tax Act, 1961, is the charging section for income under the head "Profits and Gains of Business or Profession."

Question 8

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

Accepted Answer

Sales tax is allowed as a deduction while computing business income because it is considered a part of the cost of goods sold or an operating expense related to the sale of goods or services.

Question 9

As per section 30, which expenditure incurred for a building used for the business or profession shall not be allowed as deduction?

Accepted Answer

Capital expenditure is not allowed as a deduction under section 30 because it is not an expense for the current period but an investment in the asset, which is expected to provide benefits over several years.

Question 10

.Group of assets falling within a class of assets comprising of tangible & intangible assets is known as :

Accepted Answer

Block of assets is the term used to describe a group of assets falling within a class of assets comprising both tangible and intangible assets, for purposes such as accounting and taxation.

Question 11

-------- are treated as agricultural income

Accepted Answer

All of these options are considered as agricultural income. Income from poultry farming, beekeeping, and the purchase of standing crops are all categorized under agricultural income for tax purposes in many jurisdictions.

Question 12

Long term capital loss can be set off against -----

Accepted Answer

Long term capital loss can only be set off against long term capital gain as per tax regulations.

Question 13

Clubbing of income means

Accepted Answer

Clubbing of income refers to the inclusion of income of another person (such as a spouse or minor child) in the assessee's income under certain conditions, as per tax laws, to prevent tax evasion.

Question 14

Income from horse race falls under the head

Accepted Answer

Income from horse racing is categorized under "Income from Other Sources" according to the Income Tax Act.

Question 15

Which of the following is not taxable under the head income from other sources?

Accepted Answer

Rent received on letting of business is taxable under the head income from house property.

Question 16

PAN stands for

Accepted Answer

PAN stands for Permanent Account Number. It is a unique identifier issued by the Indian Income Tax Department to individuals, companies, and entities, facilitating tax payments and filings.

Question 17

Donation is deductible under section

Accepted Answer

Donations made to certain prescribed funds, charitable institutions, or for a philanthropic purpose are eligible for deduction under Section 80G of the Income Tax Act.

Question 18

Return filed after the due date is called

Accepted Answer

A belated return refers to the tax return filed after the due date specified by the tax authorities. It is still accepted but may come with certain restrictions or penalties, unlike a revised return which is filed to correct any mistakes in a previously filed return within the allowed time frame. "Best return" and "Defective return" do not refer to returns filed after the due date.

Question 19

Tax deduction available to certain industries for the initial few years is called-----

Accepted Answer

A Tax Holiday is a government incentive program that offers a tax reduction or elimination to businesses for a certain period. This is often used to attract investments in specific sectors or regions.

Question 20

An assessee was engaged in the business of cattle rearing. He incurred a loss in respect of animals which were used for the purposes of his business (otherwise than as stock-in trade) and which have died. Such expenditure shall be considered as

Accepted Answer

The loss incurred due to the death of animals used for the purposes of a business (and not as stock-in-trade) is considered as a revenue expenditure. This is because it relates to the day-to-day operations of the business and does not provide a long-term benefit, unlike capital expenditures.

Quiz 2: Income Tax and Business Expenses