Mock Test Paper - Series II: April, 2025

Date of Paper: 01st April, 2025

Time of Paper: 10 A.M. to 1 P.M.

INTERMEDIATE COURSE: GROUP-I

PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
SOLUTIONS
Division A – Multiple Choice Questions
MCQ Sub-part Most Appropriate MCQ Most Appropriate
No. Answer No. Answer
1. (i) (c) 3. (a)
(ii) (c) 4. (d)
(iii) (b)
2. (i) (d)
(ii) (c)
(iii) (d)

Division B – Descriptive Questions

1. Computation of total income and tax liability of Mr. Vivek for A.Y. 2025-26
Particulars ` ` `
Income from house property
Gross annual value 1 (` 35,000 x 12) 4,20,000
Less: Municipal taxes paid by Mr. Vivek 8,200
Net annual value 4,11,800
Less: Deductions under section 24
(a) 30% of Net Annual Value 1,23,540
(b) Interest on house borrowing (allowed in
full in case of let out property) 2,01,500
86,760

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Rent receivable has been taken as the gross annual value in the absence of other information.

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Profits and gains of business or profession
Income from profession
Fees from legal services 49,60,000
Less: Expenses allowable as deduction
- Staff salary and bonus 17,50,000
- Other general and administrative expenses 22,00,000
- Office rent 1,48,000
- Motor car maintenance (` 72,000 x 2/3) 48,000
- Car loan interest – not allowable, since
Mr. Vivek follows cash system of accounting
and no interest is paid during the previous
year) - 41,46,000
8,14,000
Less: Depreciation u/s 32
- Motor car ` 9,50,000 x 15% x 50% x 2/3, 47,500
being put to use for less than 180 days
- Books being annual publications [` 80,000 x 32,000
40%]
- Computer @40% of ` 52,000 x 50%, since
the same is put to use for less than 180 10,400 89,900
days
7,24,100
For the P.Y. 2024-25, the gross receipts of
Mr. Vivek is ` 49,60,000. Since, it does not
exceed ` 50,00,000, he is eligible to pay tax
under presumptive tax scheme under section
44ADA.
In such case, his professional income would be
` 24,80,000, being 50% of ` 49,60,000.
It is more beneficial for Mr. Vivek to declare profit
of ` 7,24,100 as per books of accounts which is
lower than the profits computed on presumptive
basis under section 44ADA. However, for
declaring lower profits, he has to maintain books
of account under section 44AA and get the same
audited under section 44AB

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Income from share speculation business 1,20,000
Less: Loss from commodity speculation business
set off against income from share speculation
business. Balance loss of ` 60,000 from
commodity speculation business to be carried 1,20,000 Nil 7,24,100
forward to A.Y. 2026-27
Capital Gains
Long-term capital gains on sale of 5,275 listed
shares
Sale consideration 5,95,000
Less: Cost of acquisition is higher of 4,22,000 1,73,000
- Cost of acquisition 1,21,800
- Lower of ` 4,22,000 (` 80 x 5,275), 4,22,000
being fair market value as on 31.1.2018
and ` 5,95,000, being full value of
consideration on transfer
Income from other sources
Cash Gift of ` 84,000 i.e., ` 21,000 x 4, received
from his four friends is taxable u/s 56(2)(x), since
aggregate amount of cash gifts exceeds ` 50,000 84,000
Gross Total Income 10,67,860
Less: Deductions under Chapter VI-A
Section 80C
Life insurance premium 49,000
Repayment of housing loan 1,80,000
PPF subscription 1,50,000
3,79,000
Restricted to ` 1,50,000 1,50,000
Section 80G
Contribution to PM Cares Fund (100% of 1,21,000
` 1,21,000) by way of bank draft
Section 80GGC
Donation to registered political party made by 3,50,000
way of cheque
6,21,000
Total Income 4,46,860

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 Tax liability
Tax @12.5% under section 112A on long-term 6,000
capital gains exceeding ` 1,25,000 i.e. on
` 48,000
Tax @5% on ` 23,860 [` 2,73,860 (total income
excluding LTCG u/s 112A) - ` 2,50,000, being 1,193
basic exemption limit]
7,193
Less: Rebate u/s 87A [Since the total income
does not exceed ` 5 lakhs, rebate u/s 87A would
be available. Rebate u/s 87A is not available on 1,193
tax on LTCG taxable u/s 112A]
6,000
Add: Health and Education cess@4% 240
Tax liability 6,240

2 (a) Under section 6(1), an individual is said to be a resident in India in any previous
year if he satisfies any one of the following conditions -
(i) He has been in India during the previous year for a total period of 182
days or more, or
(ii) He has been in India for at least 60 days in the previous year and during
the 4 years immediately preceding the previous year for a total period of
365 days or more.
In case of Indian citizen leaving India for the purpose of employment, the only
condition for being a resident in India is to stay in India during the previous year
for 182 days or more.
During the previous year 2024-25, Mr. Prabhjot, an Indian citizen, was in India
for 175 days only (i.e., 30+31+30+31+31+22 days). Thereafter, he left India for
employment purposes.
Since he does not satisfy the minimum criteria of 182 days, he is a non-resident
for the A.Y. 2025-26.
As per section 5(2), in case of a non-resident, only the following incomes are
chargeable to tax in India:
(i) Income received or deemed to be received in India; and
(ii) Income accruing or arising or deemed to accrue or arise in India.

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 Computation of total income of Mr. Prabhjot for the A.Y. 2025-26
S. Particulars Amount
No. (`)
1. Salary (computed) from company in Australia (Not taxable, -
since it neither received in India nor accrue or arise in
India)
2. Dividend from South African Company received in South -
Africa (Not taxable, since it neither received in India nor
accrue or arise in India)
3. Interest received from South Indian Bank, India (Taxable, 21,000
since it is deemed to accrue or arise in India)
4. Loss from business in South Africa (controlled from India) -
(Not taxable, since it neither received in India nor accrue
or arise in India)
5. Agricultural income from a land in Gujarat [Exempt u/s 10(1)] -
Gross Total income 21,000
Less: Deduction under Chapter VI-A
Section 80TTA (Interest on saving bank account upto 10,000
` 10,000)
Total Income 11,000

(b) (i) As per section 194-IA, if a person (transferor) transfers any immovable
property whose consideration for transfer or stamp duty value is not less
than ` 50 lakh to a person (transferee), then transferee is required to
deduct tax at source @1% of consideration for transfer or stamp duty
value, whichever is higher.
In case there are multiple transferee or transferor in respect of any
immovable property, consideration shall be the aggregate of the amounts
paid or payable by all the transferees to the transferor or all the
transferors for transfer of such immovable property.
Accordingly, in the present case, Ms. Shashi and Ms. Sujata are required
to deduct tax at source @1% on ` 75 lakhs, being the amount higher of
consideration of ` 60 lakhs and stamp duty value of ` 75 lakhs.
(ii) As per section 194R, if any person (other than an individual or HUF
whose total sales or gross receipts does not exceed ` 1 crore or ` 50
lakhs, as the case may be, during the immediately preceding previous
year) provides any benefit or perquisite to a resident arising from his

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 business or profession and the total value of such benefits exceeds
` 20,000 in a financial year, then such person is required to deduct tax at
source @10% of the total value of the benefit or perquisite. Where the
benefit or perquisite is in kind, the person has to ensure before releasing
such benefit or perquisite that the tax required to be deducted has been
paid in respect of such benefit or perquisite.
In the present case, M/s XYZ Ltd. provided a luxury car worth ` 15 lakh
to Mr. A, as an incentive which qualifies as a perquisite u/s 194R.
Therefore, M/s XYZ Ltd. has to ensure before releasing the car that the
tax of ` 1,50,000 i.e., 10% of ` 15 lakhs has been paid by Mr. A.
3. (a) Computation of capital gains on slump sale of Bawana Unit
Particulars `
Full value of consideration [Higher of FMV of capital assets of 90,00,000
Bawana unit on 1.4.2024 or FMV of monetary consideration
received]
Less: Expenses for transfer 28,000
89,72,000
Less: Net worth (Refer Note below) 35,92,500
Long-term capital gain [Since the Unit is held for more than 53,79,500
36 months. Indexation benefit is not available in case of slump
sale.]

Note:
Computation of net worth of Bawana unit of Amit Enterprises
Particulars ` `
Land (excluding ` 9 lakhs on account of 27,00,000
revaluation)
Building 9,00,000
Machinery 3,00,000
Other assets 4,50,000
Total assets 43,50,000
Less: Creditors (75% of ` 4,50,000) 3,37,500
Bank Loan (70% of ` 6,00,000) 4,20,000 7,57,500
Net worth 35,92,500

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(b) Since Mrs. Anjali is a resident and ordinarily resident in India, her global income
would form part of her total income i.e., income earned in India as well as
outside India will form part of her total income.
She possesses a self-occupied house at Chicago as well as at Surat. She can
take the benefit of "Nil" Annual Value in respect of both the house properties.
As regards the Ranchi house, arrears of rent will be chargeable to tax as income
from house property in the year of receipt under section 25A. It is not essential
that the assessee should continue to be the owner. 30% of the arrears of rent
shall be allowed as deduction as per section 25A(2).
Accordingly, the income from house property of Mrs. Anjali for A.Y.2025-26 will
be calculated as under:
Particulars ` `
Self-occupied house at Chicago
Annual Value Nil
Less: Deduction under section 24 Nil
Nil
Self-occupied house property at Surat
Annual Value Nil
Less: Deduction under section 24
Interest on borrowed capital (Refer note below) (1,91,940)
(1,91,940)
Arrears in respect of Ranchi property (Section
25A) 60,000
Arrears of rent received 18,000
Less: Deduction @30% u/s 25A(2) 42,000
Loss under the head "Income from house property" (1,49,940)

Note: Interest on borrowed capital

Particulars `
Interest for the current year (` 50,800 + ` 1,31,300) 1,82,100
Add: 1/5th of pre-construction interest (` 49,200 x 1/5) 9,840
Interest deduction allowable under section 24 1,91,940

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4. (a) Computation of total income of Mr. Mayank for the A.Y.2025-26 under
normal provision of the Act
Particulars ` `
Income under the head “Salaries”
Pension 6,60,000
Less: Standard deduction u/s 16(ia) 50,000 6,10,000
Profits and gains of business or profession
Income from speculation business 40,000 40,000
Capital gains
Long-term capital gains from sale of urban land 2,50,000
Less: Long term capital loss on sale of listed shares on 1,10,000 1,40,000
which STT is paid can be set off as per section 74(1),
since long-term capital gain arising on sale of such
shares is taxable under section 112A
Income from other sources
Interest from bank on fixed deposit (Gross) 55,000
Loss from card games can neither be set off against any Nil
other income, nor can it be carried forward
Income from betting 45,000 1,00,000
Gross total income 8,90,000
Less: Deduction under Chapter VI-A
Deduction under section 80C
LIC premium of ` 22,500 (restricted to 10% of 20,000
` 2,00,000, being the sum assured, as the policy is
taken after 31.3.2012)
Deduction under section 80D
Premium for health insurance for self and his wife paid
by cheque, allowed upto ` 50,000 since Mr. Mayank is a
senior citizen 26,000
Deduction under section 80G
Donation to an approved institution for promoting family
planning not allowed since the amount exceeding
Nil
` 2,000 is paid in cash

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 Deduction under section 80TTB
Interest on fixed deposit with bank allowable as
deduction upto ` 50,000, since Mr. Mayank is a senior
citizen 50,000 96,000
Total income 7,94,000

(b)
Assessee Authorised person to verify return
of income
(i) Local authority The principal officer
(ii) Firm, having no managing Any partner of the firm, not being a
partner minor
(iii) Foreign Company • The managing director of the
company (or)
• a person who holds a valid
power of attorney from such
company to do so (such power
of attorney should be attached
to the return)
(iv) HUF where the karta is absent Any other adult member of the HUF
from India
OR
(b) The provision of updated return is not applicable, if the updated return of any
person for that assessment year
• is a loss return; or
• has the effect of decreasing the total tax liability determined on the basis
of return furnished under section 139(1) or section 139(4) or section
139(5); or
• results in refund or increases the refund due on the basis of return
furnished under section 139(1) or section 139(4) or section 139(5).
An updated return cannot be furnished by any person for the relevant
assessment year, where
• an updated return already been furnished under section 139(8A) for the
relevant assessment year; or
• any proceeding for assessment, reassessment, recomputation, or revision
of income is pending or has been completed for the relevant assessment
year

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 SECTION B – GOODS AND SERVICES TAX (50 MARKS)
Division A - Multiple Choice Questions

Question Answer
No.
1 (a) The rate of GST on rent and maintenance material related recovery
shall be 18%.
2 (c) in the nature of CGST and SGST
3 (a) The amount of ITC related to such procurement of goods is not
available to PMC Ltd.
4 (b) 1st October
5 (a) 30th September
6 (a) Part B need not be filed in respect of transport of consignment from
Godown of Aanya & Co. to transporter location.
7 (b) ` 1,00,000
8 (c) 20th December

Division B - Descriptive Questions

1. (a) Computation of net GST payable in cash
Particulars Value of CGST SGST IGST
supply @ 9% @ 9% @ 18%
(`) (`) (`) (`)
Supply of machinery [Refer Working 15,75,000 2,83,500
Note]
Less: ITC available 2,18,000
Net GST payable in cash 65,500

Note: IGST is payable on the inter-State transactions.

Computation of total value of taxable supply made by Amaze Ltd. during the
month of March
Particulars Amount
(`)
List price of the machinery 10,00,000
Subsidy amounting to ` 2,10,000 received from the Central Nil
Government

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 [Since the subsidy is received from the Government, the same is
not includible in the value in terms of section 15(2)(e) of the
CGST Act, 2017]
Subsidy received from NGO 2,00,000
[Since the subsidy is received from a non-Government body and
directly linked to the supply, the same is includible in the value in
terms of section 15(2)(e) of the CGST Act, 2017]
Tax levied by the Municipal Authority 2,50,000
[Includible in the value as per section 15(2)(a) of the CGST Act,
2017]
Packing charges 1,25,000
[Being incidental expenses, the same are includible in the value
as per section 15(2)(c) of the CGST Act, 2017]
Total value of taxable supplies 15,75,000

Computation of ITC that can be availed by Amaze Ltd. for the month of
March.
Particulars ITC (`)
(i) Raw Material Nil
[ITC not available as raw material is not received in March]
(ii) Membership of a club availed for employees working in the Nil
factory (not obligatory to be provided under any law)
[ITC is blocked in terms of section 17(5) of the CGST Act,
2017]
(iii) Inputs to be received in 6 lots, out of which 1st lot was Nil
received during the month
[In case of goods received in lots, ITC can be taken only
upon receipt of the last lot]
(iv) Trucks used for transport of raw material 1,50,000
[ITC of GST paid on motor vehicles used for transportation
of goods is allowed unconditionally]
(v) Capital goods 68,000
[ITC can be availed only on the basis of a valid document
(invoice). Thus, GST paid on items for which invoice is
missing, i.e. ` 2,82,000, is not available.]
Total ITC 2,18,000

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 (b) Computation of value of taxable supply made by Strap Ltd. to Defend Ltd.
Particulars Amount
(`)
Price of machinery (exclusive of taxes and discounts) 5,50,000
Amount paid by Defend Ltd. directly to the supplier for the part 20,000
fitted in the machinery
[Any amount that the supplier is liable to pay in relation to a
supply but which has been incurred by the recipient of the
supply and not included in the price actually paid or payable for
the goods is includible in the value of supply in terms of section
15(2)(b).]
Installation and testing charges 25,000
[Any amount charged for anything done by the supplier in
respect of the supply of goods at the time of/before delivery of
goods is includible in the value of supply in terms of section
15(2)(c).]
Less: Discount @ 2% on the price of machinery 11,000
[` 5,50,000 x 2%]
[Since discount is given at the time of supply of machinery and
recorded in the invoice, the same is deductible from the value
of the supply in terms of section 15(3)(a).]
Less: Additional 1% discount at year end Nil
[Though the additional discount is established before/at the time
of supply, it is not deductible from the value of supply in terms
of section 15(3)(b) as the same is not linked to any specific
transaction and is adjusted by the parties at the end of the
financial year.]
Value of taxable supply 5,84,000

2. (a) (i) Schedule I of the CGST Act, 2017, inter alia, stipulates that import of
services by a taxable person from a related person located outside India,
without consideration is treated as supply only if it is provided in the course
or furtherance of business. Explanation to section 15 of the CGST Act,
2017, inter alia, provides that persons shall be deemed to be “related
persons” if they are members of the same family. Further, as per section
2(49), family means, —
(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they

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 are wholly or mainly dependent on the said person.
In the given case, Miss Shanaya has received interior decoration services
from her brother. In view of section 2(49)(ii) of the CGST Act, 2017 above,
Miss Shanaya and her brother shall be considered to be related as Miss
Shanaya’s brother is wholly dependent on her.
However, Miss Shanya has taken interior decoration services for her
residence and not in course or furtherance of business. Consequently,
services provided by Miss Shanya’s brother to her would not be treated as
supply under section 7 read with Schedule I of the CGST Act, 2017.
(ii) In the above case, if Miss Shanaya has taken interior decoration services
with regard to her business premises, services provided by Miss Shanaya’s
brother to her would be treated as supply under section 7 read with
Schedule I of the CGST Act, 2017, as the same are provided in course or
furtherance of business.
(b) (i) Services provided by a GTA to an unregistered person, including an
unregistered casual taxable person other than, inter alia, any partnership
firm whether registered or not under any law including association of
persons is exempt under GST. Thus, GTA services provided to partnership
firm including AOP – whether or not registered under GST law, are liable
to tax. Hence, consideration of ` 8,000 paid by Taneja & Taneja Co. is
taxable under GST.
(ii) The services provided by a clinical establishment by way of providing room
[other than Intensive Care Unit (ICU)/Critical Care Unit (CCU)/Intensive
Cardiac Care Unit (ICCU)/Neo natal Intensive Care Unit (NICU)] having
room charges exceeding ` 5,000 per day to a person receiving health care
services is taxable under GST. Since, in the given case Ameyash Hospital
provided services in Sky natal Intensive Care, so the entire amount of `
12,000 charged from Mr. Chaman is exempt under GST law.
3. (a) (i) Section 13(2) of the CGST Act, 2017 stipulates that the time of supply of
services shall be the earliest of the following dates, namely:-
(a) the date of issue of invoice by the supplier, if the invoice is issued
within the period prescribed under section 31 or the date of receipt
of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the
period prescribed under section 31 or the date of receipt of payment,
whichever is earlier; or

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 (c) the date on which the recipient shows the receipt of services in his
books of account, in a case where above two cases do not apply.
In this case, neither the invoice has been issued nor the date of provision
of service is available. The date of receipt of payment in the books of the
supplier is also not available.
Therefore, the time of supply will be the date on which the recipient of
service shows receipt of the service in his books of account.
Thus, time of supply will be 4th April, the date on which the Apartment
Owners’ Association records the receipt of service in its books of account.
(ii) As per Notification No. 66/2017 CT dated 15.11.2017, a registered person
(excluding composition supplier and registered persons making supply of
specified actionable claims) has to pay GST on the outward supply of
goods at the time of supply as specified in section 12(2)(a) of the CGST
Act, 2017, i.e. date of issue of invoice or the last date on which invoice
ought to have been issued in terms of section 31 of the CGST Act, 2017.
As per section 31(4) of the CGST Act, 2017, in case of continuous supply
of goods, where successive statements of accounts or successive
payments are involved, the invoice is issued before or at the time of each
such statement is issued or, as the case may be, each such payment is
received.
Therefore, invoices should be issued for ` 2 lakh each on or before July 5,
August 5 and September 5, when monthly payments of ` 2 lakh are
received.
Thus, assuming that the invoice is issued on July 5, August 5 and
September 5, the time of supply for the purpose of payment of tax will be
July 5, August 5 and September 5 respectively for goods valued at ` 2 lakh
each.
(b) (i) Section 24 of the CGST Act, 2017 provides that persons making any inter-
State taxable supply of goods are required to obtain registration
compulsorily under GST laws irrespective of the quantum of aggregate
turnover.
However, as per section 23 of the CGST Act, 2017, an agriculturist, to the
extent of supply of produce out of cultivation of land, is not liable to
registration.

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 Sunena is exclusively engaged in cultivation and supply of potatoes. Thus,
she is not liable to registration irrespective of the fact that she is engaged
in making inter-State supply of goods. Further, Sunena will not be liable to
registration, in the given case, even if her turnover exceeds the threshold
limit.
(ii) Section 24 of the CGST Act, 2017 provides that persons who make taxable
supply of goods and/or services on behalf of other taxable persons whether
as an agent or otherwise are required to obtain registration compulsorily
under GST laws irrespective of the quantum of aggregate turnover.
Therefore, Fenil will be mandatorily required to obtain registration.
4. (a) Section 49(3) of the CGST Act, 2017 provides that the amount available in the
electronic cash ledger may be used for making any payment towards tax, interest,
penalty, fees or any other amount payable under the provisions of this Act or the
rules made there under in prescribed manner.
Further, section 49(4) of the CGST Act, 2017 provides that the amount available
in the electronic credit ledger may be used for making any payment towards output
tax under this Act or under the Integrated Goods and Services Tax Act in
prescribed manner.
Accordingly, as per the combined reading of the above provisions, late fees shall
be paid only through electronic cash ledger and not possible through electronic
credit ledger. Thus, contention of the accountant of M/s SME & Co., is not correct
and the above amount shown on the common portal has to be deposited in
Electronic Cash Ledger under appropriate minor head, through any of the
specified modes.
Or
(a) The provisions relating to accounts and records required to be maintained under
GST are contained in sections 35 and 36 of the CGST Act, 2017.
A true and correct account of following is to be maintained:
i. production or manufacture of goods;
ii. inward and outward supply of goods or services or both;
iii. stock of goods;
iv. input tax credit availed;
v. output tax payable and paid

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 vi. such other particulars as may be prescribed
The Commissioner may notify a class of taxable persons to maintain additional
accounts or documents for such purpose as may be specified therein.
Where the Commissioner considers that any class of taxable persons is not in a
position to keep and maintain accounts in accordance with the provisions of this
section, he may, for reasons to be recorded in writing, permit such class of taxable
persons to maintain accounts in such manner as may be prescribed.
(b) (i) Details of outward supplies which can be furnished using IFF are as
follows:
(a) invoice wise details of inter-State and intra-State supplies made to
the registered persons;
(b) debit and credit notes, if any, issued during the month for such
invoices issued previously.
(ii) Constitution defines the Goods and Services tax (GST) as a tax on supply
of goods or services or both, except supply of alcoholic liquor for human
consumption. Therefore, alcohol for human consumption is kept out of GST
by way of definition of GST in the Constitution.
Five petroleum products viz. petroleum crude, motor spirit (petrol), high
speed diesel, natural gas and aviation turbine fuel have temporarily been
kept out of the purview of GST; GST Council shall decide the date from
which they shall be included in GST. The erstwhile taxation system
(CST/VAT & central excise) still continues in respect of the said
commodities.

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