50+ Profits and Gains from
Business and Profession (PGBP) MCQs
Income Tax MCQs 2022 – 23
In this page you get 50+ Profits and Gains from Business and Profession (PGBP) MCQs which are asked in various exams of Mumbai University, Dibrugarh University, Gauhati University, Kolkata University and Assam University.
Also, these questions are useful for B. Com exams of various universities covered under CBCS pattern.
Also, these income tax objective type questions and answers are also useful for NTA Net Commerce Exam, CMA, CA, CS and other competitive exams.
Introduction to Business and Profession
Business: “Business” simply means any economic activity carried on for earning profits. Sec. 2(3) has defined the term as “ any trade, commerce, manufacturing activity or any adventure or concern in the nature of trade, commerce and manufacture”.
Profession: Section 2(36) defines “Profession’’ to include vocation. Therefore, even if a person carries on any activity, not on the basis of ability and knowledge acquired out of a carries on any activity, not on the basis of ability and knowledge acquired out of a professed study, degree or diploma but on account in inborn talent, skill and attributes, any income derived there from shall also be considered as professional income.
Example, income earned by rendering services by C.A., Lawyer, Doctor, Engineer, Architect, photographer etc. So profession refers to those activities where the livelihood is earned by the persons through their intellectual or manual skill.
1. Salary received by a partner from the firm in which
he is a partner is taxable under the head:
a) Income from
salary.
b) Capital
gains.
c) Profits and
gains of business or profession.
d) Income from
other sources.
Ans: c) Profits and gains of
business or profession.
2. Perquisites received by
the assessee during the course of carrying on his business or profession is
taxable under the head:
a) Income from
salary.
b) Capital
gains.
c) Profits and
gains of business or profession.
d) Income from
other sources.
Ans: c) Profits and gains of
business or profession.
3. Any some received under key man insurance policy
taken on the life of the employee shall be:
a) Income from
salary.
b) Capital
gains.
c) Profits and
gains of business or profession.
d) Income from
other sources.
Ans: c) Profits and gains of
business or profession.
4. Methods of accounting is irrelevant for which head
of income?
a) Income from
salary.
b) Income from house
property
b) Capital
gains.
d) All of the
above
Ans: d) All of the above
5. Under the head business and profession, the method
of accounting which an assessee can follow shall be:
a) Mercantile
System
b) Cash System
c) Mercantile
or cash system only
d) Hybrid
system
Ans: c) Mercantile or cash
system only
6. Depreciation is allowed in case of:
a) Tangible
assets
b) Intangible
assets
c) Tangible and
intangible assets
d) Deferred
revenue expenditure
Ans: c) Tangible and intangible
assets
7. Under Income Tax Act depreciation is allowed on:
a) Cost price.
b) Market
price.
c) W D V.
d) Face value.
Ans: c) W D V.
8. For which company depreciation is allowed on SLM
basis under Income Tax Act?
a) Banking
Companies
b) Insurance
Companies
c) Electricity undertakings
d) None of the
above
Ans: c) Electricity undertakings
9. Rate of depreciation on residential building is:
a) 5%.
b) 10%.
c) 15%.
d) 20%.
Ans: a) 5%.
10. Rate of depreciation on non-residential building
is:
a) 10%.
b) 15%.
c) 20%.
d) 25%.
Ans: a) 10%.
11. Rate of depreciation on furniture is:
a) 10%.
b) 15%.
c) 20%.
d) 25%.
Ans: a) 10%.
12. New plant and machinery acquired and put to use by
an assessee engaged in transmission of power is eligible for additional
depreciation at ____ of actual cost.
a) 10%
b) 12.5%
c) 15%
d) 20%
Ans: d) 20%
13. 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.
Ans: d) Less than 180 days.
14. The rate of depreciation on intangible asset is:
a) 5%.
b) 15%.
c) 20%.
d) 25%.
Ans: d) 25%.
15. Preliminary expenses shall be allowed as deduction
in:
a) 5
Instalments.
b) 10
Instalments.
c) 15
Instalments.
d) 12
Instalments.
Ans: a) 5 Instalments.
16. Technical know-how acquired after 1.4.98 is
eligible for depreciation at:
a) 10% p.a.
b) 20% p.a.
c) 25% p.a.
d) 40% p.a.
Ans: c) 25% p.a.
Also Read: Income Tax Chapterwise MCQs (2022 - 2023)
1. 700+ Income Tax MCQs 2022-23 [Free PDF], Income Tax Laws and Practice MCQs
2. 50+ MCQ on Residential Status, Income Tax MCQs 2022 - 23 [Free PDF]
3. 100+ MCQs on Income From Salary, Income Tax MCQs 2022 - 23 [Free PDF]
4. 50 Income from House Property MCQ, Income Tax MCQs 2022 - 23 [Free PDF]
6. 50 MCQ on Capital Gains, Income Tax MCQs 2022 - 23 [Free PDF]
8. 25+ Income Tax Deductions MCQs (80C to 80 U), Income Tax MCQs 2022 – 23 [Free PDF]
**********************
17. Rate of depreciation on Books owned by assessee
carrying on profession not being annual publications:
a) 10% p.a.
b) 20% p.a.
c) 25% p.a.
d) 60% p.a.
Ans: d) 60% p.a.
18. Rate of depreciation on Books owned by assessee
carrying on profession being annual publications:
a) 10% p.a.
b) 20% p.a.
c) 25% p.a.
d) 100% p.a.
Ans: d) 100% p.a.
19. Rate of depreciation on Franchise, trademark,
patents, license, copyright, know-how or other commercial or business rights of
similar nature:
a) 10% p.a.
b) 20% p.a.
c) 25% p.a.
d) 40% p.a.
Ans: c) 25% p.a.
20. Rate of depreciation on Computers and computer
software:
a) 10% p.a.
b) 20% p.a.
c) 25% p.a.
d) 40% p.a.
Ans: d) 40% p.a.
21. Rate of depreciation on Books owned by assessee
carrying on business in running lending libraries:
a) 10% p.a.
b) 20% p.a.
c) 25% p.a.
d) 100% p.a.
Ans: d) 100% p.a.
22. In case of an assessee engaged in the business of
manufacturing of tea, his agricultural income is:
a) 60% of total
receipt of the business
b) 60% of
income of the business
c) Nil
d) Total
business income
Ans: c) Nil
Download PDF File
23. Ramesh Tea Ltd., acquired a motor car for Rs. 6,20,000
on 30.08.2018. The company is engaged in manufacture of tea in India. The
amount of depreciation allowable on such motor car would be:
a) Rs. 93,000
b) Rs. 37,200
c) Rs. 46,500
d) Nil
Ans: a) Rs. 93,000
24. Contribution made to an approved research association is eligible
for deduction up to:
a) 50%.
b) 80%.
c) 100%.
d) 125%.
Ans: d) 125%.
25. Unabsorbed capital expenditure on scientific research can be
carried forward for:
a) 15 years.
b) 14 years.
c) 8 years.
d) 10.
Ans: c) 8 years.
26. Capital expenditure on scientific research which cannot be
absorbed on account of insufficiency of profit in any accounting year can be
carried forward for:
a) 16.
b) 8.
c) indefinite.
d) 12.
Ans: c) indefinite.
27. Contribution to approved research (not
scientific) institution in case of a business man is:
a) 100% of
such amount
b) 125% of
such amount
c) 175% of
such amount
d) None of
above
Ans: a) 100% of such amount
28. Which of the following is not allowed
as a deduction for computation of business Income?
a) Loss
incurred due to theft in factory after working hours
b)
Anticipated future losses
c) Loss
caused by white ants
d) Loss due
to accidental fire in stock-in-trade
Ans: b) Anticipated future losses
29. Preliminary expenses are incurred in
every business. What are the expenses that qualify for deduction u/s.35D?
a) Expenses
for drafting memorandum and articles of association
b) Payment
of duty at the office of Registrar of Companies
c)
Expenditure incurred in preparation of project report
d) All of
the above
Ans: d) All of the above
30. Expenditure incurred by a company for
the purpose of promoting family planning among its employees, being of a
capital nature:
a) Is not
allowed as a deduction
b) Allowed
as deduction in 4 equal installments in 4 years
c) 1/5 of
expenditure is allowed as deduction in the previous year
d) 4/5 of
expenditure is allowed as deduction in 4 equal installments in 4 years after
the previous year
Ans: c) 1/5 of expenditure is allowed as deduction in the previous year
31. Expenditure on promotion of family
planning is an allowance as deduction u/s. 36(1)(ix) of the Income Tax Act, 1961
in case of:
a)
Individual
b) Firm
c) HUF
d) Company
Ans: d) Company
32. Deduction u/s 35AD is available in
respect of expenditure on specified business, one of them is:
a) Setting
up and operating a cold chain facility
b) Setting
up and operating a power plant
c) Setting
up and operating an industrial unit
d) All of
the above
Ans: a) Setting up and operating a cold chain facility
33. Block of asset is required to be
increased by an amount which is actual cost of the asset being covered u/s 35AD
that amount is:
a) Actual
expenditure
b) Nil
c) 50% of
actual expenditure
d) None of
the above.
Ans: b) Nil
34. Loss from specified business covered
u/s 35AD can be adjusted against the income of:
a) Any
other business income
b) Cannot
be adjusted
c) Any
income other than salary
d) Income
from other specified business
Ans: d) Income from other specified business
35. Bad debts allowed earlier and recovered latter on
is:
a) Business
income.
b) Non-business
income.
c) Exempted
income.
d) Income from
other sources.
Ans: a) Business income.
36. Which one of the following is not an admissible expense?
a) Income tax.
b) Excise duty.
c) Bad debt.
d) Sales tax.
Ans: a) Income tax.
37. 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.
Ans: a) Deducted from net
profit.
38. Over valuation of Closing stock is:
a) Deducted
from net profit.
b) Added to net
profit.
c) Credited to
P & L A/c.
d) None of
these.
Ans: a) Deducted from net
profit.
39. Under valuation of closing stock is:
a) Deducted
from net profit.
b) Added to net
profit.
c) Credited to
P & L A/c.
d) None of
these.
Ans: b) Added to net profit.
40. Over 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.
Ans: b) Added to net profit.
41. 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 business
d) Which is an
electricity undertaking
Ans: b) Which is an industrial
undertaking or an assessee who is engaged in the business of generation or
generation and distribution of power
42. 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
Ans: c) New eligible plant and
machinery acquired by the specified assessee
43. If a depreciable asset is acquired and used for
less than 180 days in a financial year, depreciation allowed on it is:
a) Normal Rate.
b) 50% of
Normal Rate.
c) Nil.
d) None of
these.
Ans: b) 50% of Normal Rate.
44. Under section 44AB the audit of accounts is
compulsory if total sales exceed:
a) Rs: 40
lakhs.
b) Rs: 50
lakhs.
c) Rs: one
crore.
d) Rs: five
crores.
Ans: c) Rs: one crore.
45. Gifts from clients are:
a) Professional
income.
b) Income from
other sources.
c) Non-taxable
item.
d) None of these.
Ans: a) Professional income.
46. Repairs incurred before installation of an assets
is:
a) Capital
expenditure.
b) Revenue
expenditure.
c) Non-business
expenditure.
d) None of
these.
Ans: a) Capital expenditure.
47. Under section 44AB ‘specified date’ means:
a) 30th June.
b) 30th
September.
c) 30th
November.
d) 31st
December.
Ans: b) 30th September.
48. Tax audit is not compulsory in which one of the
following cases?
a) Any assessee
who derive income from section 44B.
b) Any assessee
who derive income from section 44BBA.
c) Where
Assessee declares profit under section 44AD (1) and his total
sales/turnover/gross receipts as the case may be does not exceeds Rs. 2crores.
d) All of the
above
Ans: d) All of the above
49. In case of profession, tax audit is compulsory if
gross fee received exceeds:
a) Rs. 50 Lakhs
b) Rs. 1 Crore
c) Rs. 5 Crores
d) Rs. 10
Crores
Ans: a) Rs. 50 Lakhs
50. In case of business, tax audit is compulsory if
gross turnover received exceeds:
a) Rs. 50 Lakhs
b) Rs. 1 Crore
c) Rs. 5 Crores
d) Rs. 10
Crores
Ans: b) Rs. 1 Crore
51. Which of the following taxes are allowed as
deduction while computing the business income?
a) Wealth Tax
b) Income Tax
c) Sales Tax
d) Securities
Transaction Tax
Ans: c) Sales Tax
52. Where the payment of any expenditure claimed as
deduction by an assessee carrying on business or profession exceeds Rs. 10,000;
it should be paid by:
a) Crossed
cheque or draft
b) Account
payee cheque or draft
c) Payment made
using debit or credit card
d) All of the
above
Ans: d) All of the above
53. Last date of filling audit report under Sec. 44AB
shall be:
a) 31st
July of the relevant assessment year
b) 30th
September of the relevant assessment year
c) 30th
November of the relevant assessment year
d) 31st
December of the relevant assessment year
Ans: b) 30th September of the
relevant assessment year
54. Contribution made to an approved research association is eligible
for deduction up to:
a) 50%.
b) 80%.
c) 100%.
d) 125%.
Ans: d) 125%.
55. Which of the following is eligible for 100% deduction?
a) Contribution
to National Laboratory for Scientific research
b) Capital
expenditure on in-house scientific research
c) Contribution
to approved scientific research company
d) All of the
above
Ans: d) All of the above
Post a Comment
Kindly give your valuable feedback to improve this website.