CA FINAL - DIRECT TAX LAWS

AND INTERNATIONAL TAXATION

MCQ's
PAPER PRACTICE

1 CA Yash Khandelwal
 DIRECT TAX LAWS AND INTERNATIONAL
TAXA

INDEX

CHAPTER NO. CHAPTER NAME PAGE

NO.
1 BASIC CONCEPT 3
2 PROFITS AND GAINS OF BUSINESS OR PROFESSION 4
3 CAPITAL GAINS 6
4 INCOME FROM OTHER SOURCES 8
5 INCOME OF OTHER PERSONS INCLUDED IN 9
ASSESSEE’S TOTAL INCOME
6 DEDUCTIONS FROM GROSS TOTAL INCOME 10
7 ASSESSMENT OF VARIOUS ENTITIES 12
8 ASSESSMENT OF TRUSTS AND INSTITUTIONS, 13
POLITICAL PARTIES AND OTHER SPECIAL ENTITIES
9 TAXATION OF DIGITAL TRANSACTIONS 17
10 DEDUCTION, COLLECTION AND RECOVERY OF TAX 19
11 INCOME TAX AUTHORITIES 20
12 ASSESSMENT PROCEDURE 22
13 APPEALS AND REVISION 24
14 DISPUTE RESOLUTION 27
15 MISCELLANEOUS PROVISIONS 28
16 PROVISIONS TO COUNTERACT UNETHICAL TAX 31
PRACTICES
17 NON-RESIDENT TAXATION 33
18 DOUBLE TAXATION RELIEF 34
19 ADVANCE RULINGS 35
20 TRANSFER PRICING 36
21 FUNDAMENTALS OF BEPS 39
22 APPLICATION AND INTERPRETATION OF TAX 40
TREATIES
23 LATEST DEVELOPMENTS IN INTERNATIONAL 41
TAXATION
24 CASE STUDY 42

Diversion 8 Income Application of Income

apply
Obligation to
obligation to apply has
a particular income which
income in to
accrued or arisen
way before it hasto the assesser
accrued or arisen
the
the assence in thehands of
in the Table
2
Not TalkAssese as it assesseeas it is
CA Yash Khandelwal
hands of already accrued
not accrued
 CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 1 BASIC CONCEPTS

MULTIPLE CHOICE QUESTIONS

1. Music Academy, as per its rules, pays a fixed honorarium per concert to each musician
performing in the concerts organised by it. Hari, a violinist, however, refuses to accept this
sum. If he requests Music Academy to pay such sum directly to Aid Us, an unregistered
institution providing relief to the poor and needy in rural India, what would be the tax
consequence?
a) No amount would be chargeable to tax in the hands of Mr. Hari, since this is a case of diversion
of income at source by overriding title
b) The amount payable to Aid Us would be chargeable to tax only in the hands of Mr. Hari, since it is
a case of application of income
c) The amount payable to Aid Us would be chargeable to tax only in the hands of the institution
which has received the amount
d) The amount payable to Aid Us would be chargeable to tax both in the hands of Mr. Hari and in
the hands of the institution
2. X Ltd., a domestic company not opting for the provisions of section 115BAA, has a total income
of 10,01,00,000 for A.Y.2024-25. The gross receipts of X Ltd. for P.Y.2021-22 is 260 crore.
The tax liability of X Ltd. for A.Y.2024-25 is –
10,0100,000
(a) 2,68,50,000
251Oh MYsurcharge 2,8028,000
(b) 2,68,50,000 25 Tae 7 Surcharge
2167,50000
2,91,49,120 Tax on 10crore baaki
(c)
1 00.000 sirfimapayKarge
(d) 3,34,88,000 Marginalrelief wit jayega
2,6850,000
3. During the P.Y.2023-24, Mr. Aakash has 80 lakhs of short-term capital gains taxable u/s
111A,70 lakhs of long-term capital gains taxable u/s 112A and business income of 90 lakhs.
Which of the following statements is correct assuming that Mr. Akash pays tax under default
tax regime under section 115BAC?
(a) Surcharge@25% is leviable on income-tax computed on total income of 2.40 crore, since the total
income exceeds 2 crores
(b) Surcharge@15% is leviable on income-tax computed on total income of 2.40 crore
(c) Surcharge@15% is leviable in respect of income-tax computed on capital gains of 1.50 crore, since
such income exceeds 1 crore but is less than 2 crores; in respect of business income of 90 lakhs,
surcharge is leviable@25% on income-tax, since the total income exceeds 2 crores
Answer Key:

1.
(D) The amount payable to Aid Us would be chargeable to tax both in the hands of
Mr. Hari and in the hands of the institution
2.
(B) 2,68,50,000

3.
(b)Surcharge@15% is leviable on income-tax computed on total income of 2.40 crore
manis
3 Ia 959ham
15
CA Yash Khandelwal
PGBP so lakhs otherImome 2cr
2.40crores
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 2 Profits and Gains of Business or Profession

MULTIPLE CHOICE QUESTIONS

1. Mr. Arvind, engaged in the business of wholesale trade, has a turnover of 90 lakhs for
P.Y.2022-23 and 210 lakhs for P.Y.2023-24. In the P.Y.2023-24, he paid salary of 3
lakhs to Mr. Hari, a resident, without deduction of tax at source and commission of 51
lakhs to Mr. Rajesh, a resident, without deduction of tax at source. The disallowance
TDS
under section 40(a)(ia) while computing business income of A.Y.2024-25 would be –
(a) 54,00,000 TDS US
194M
(b) 16,20,000 disallowance
51100,000 shallbe
(c) 15,30,000 01 40191cias deducted
30
(d) Nil 15,301000

2. Y Ltd. purchased computers for 10 lakhs on 5th October, 2023, installed the same in its
office and put the said computers to use on the same date. The depreciation allowable
under section 32 for A.Y.2024-25 is respect of the said computers is –
(a) 1.5 lakhs
(b) 3 lakhs Less than 180 days use
(c) 4 lakhs
(d) 2 lakhs
Itd lettingout

3. X Ltd. is engaged in the business of letting out of properties. As per the memorandum of
association of X Ltd., letting out of properties is its main objective. The total income of
X Ltd. comprises only of rental income from the business of letting out of properties. Y
Ltd. is engaged in the construction and sale of properties, which is also its main objective
as per its memorandum of association. Incidentally, it lets out some properties which are
held as stock-in-trade and earns rental income therefrom. Which of the following
statements is correct?

(a) Rental income from letting out of properties by X Ltd. and Y Ltd. is taxable under the head
"Income from house property"
(b) Rental income from letting out of properties by X Ltd. and Y Ltd. is taxable under the head
"Profits and gains of business or profession"
(c) Rental income from letting out of properties by X Ltd. is taxable under the head "Income from
house property" and by Y Ltd. is taxable under the head "Profits and gains of business or
profession"
(d) Rental income from letting out of properties by Y Ltd. is taxable under the head "Income from
house property" and X Ltd. is taxable under the head "Profits and gains of business or profession"

Ltd Rental Income PGBP

4Ltd Rental Income House property

4 As main objective CA Yash Khandelwal

isconstruction
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 2 Profits and Gains of Business or Profession

MULTIPLE CHOICE QUESTIONS

4. The turnover of Mr. Aarav, engaged in wholesale trading business, for the P.Y.2023-24
is 2 crore and the gross receipts of Mr. Vishal, engaged in legal profession is 50 lakhs.
Mr. Aarav has been regularly following mercantile system of accounting and Mr. Vishal
regularly follows cash basis of accounting. Out of the turnover of Mr. Aarav, he receives
1.20 crores through ECS through bank account during the P.Y.2023-24. He receives
another 60 lakhs through ECS through bank account on or before 31.7.2024. Mr. Vishal
receives 30 lakhs by account payee bank draft and 20 lakhs by crossed cheque during the
P.Y.2023-24. What would be the income chargeable to tax under the head "Profits and
Gains of Business and Profession", if they want to minimize their tax liability? Both of
them maintain books of account as per section 44AA. Income computed as per the regular
provisions of Income-tax Act, 1961 is 11,50,000 and 24,75,000 in the hands of Aarav
and Vishal, respectively. However, they have not got the books of account audited and do
not intend to do so in future.
Mr Aaron Mr Vishal
50 lakhs
(a) 16,00,000 and 25,00,000, respectively 710 GR 24
(b) 13,60,000 and 25,00,000, respectively
Alcpayee
(c) 11,50,000 and 24,75,000, respectively cheque 1Eur
(d) 12,40,000 and 25,00,000, respectively easy
DD

Answer Key:
mom
am
EEn
1.
(c)15,30,000
2.
(d) 2 lakhs
3.
(d) Rental income from letting out of properties by Y Ltd. is taxable under the head
"Income from house property" and X Ltd. is taxable under the head "Profits and
gains of business or profession"
4.
(d) 12,40,000 and 25,00,000, respectively

5 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 3 Capital Gains

MULTIPLE CHOICE QUESTIONS

1. A Ltd., an Indian company, bought back its listed shares from its shareholders and B (P)
Ltd., an Indian company, bought back its unlisted shares from its shareholders in the
month of March, 2024. What are the tax consequences of such buyback in the hands of
A Ltd., B (P) Ltd. and the shareholders? Diverse co has to pay tae
9 159
(a) Additional [email protected]% of the distributed income is leviable in the hands of A Ltd. and
B (P) Ltd.; income arising to shareholders is exempt Weather
stuffed
(b) Income arising to shareholders from buyback is taxable in their individual hands; No
distribution tax is leviable in the hands of A Ltd. and B (P) Ltd.
(c) Additional [email protected]% of the distributed income is leviable in the hands of A Ltd.;
income arising to shareholders of B (P) Ltd. is taxable in their individual hands
(d) Additional [email protected]% of the distributed income is leviable in the hands of B (P) Ltd.;
income arising to shareholders of A Ltd. is taxable in their individual hands
2. Mr. Rajan purchased 300 shares in Vaigai Ltd. on 12.1.2017 at a cost of 2,500 per
share. The Fair Market Value (FMV) of the share as on 31.1.2018 is 1,800. Mr. Rajan
sold all the shares of Vaigai Ltd. on 15.7.2023 for 3,200. Mr. Rajan's brother Mr. Ravi
purchased 600 shares in Tapti Ltd. on 25.1.2017 at a cost of 1,900 per share. The FMV
of the share as on 31.1.2018 is 2,400. Mr. Ravi sold all the shares of Tapti Ltd. on
31.1.2024 for 1,700 per share. What is the chargeable capital gains on sale of shares
of Vaigai Ltd. and Tapti Ltd. in the hands of Mr. Rajan and Mr. Ravi, respectively, for
A.Y.2024-25, assuming that STT was paid at the time of acquisition and sale?
(a) Long-term capital gains of Mr. Rajan 2,10,000; Long-term capital loss of Mr. Ravi 4,20,000
(b) Long-term capital gains of Mr. Rajan 4,20,000; Long-term capital loss of Mr. Ravi 4,20,000
(c) Long-term capital gains of Mr. Rajan 4,20,000; Long-term capital loss of Mr. Ravi 1,20,000
(d) Long-term capital gains of Mr. Rajan 2,10,000; Long-term capital loss of Mr. Ravi 1,20,000

3. Ms. Aparna and Ms. Dimple, Indian citizens residing in California since the year 2010,
visit India for 60 days every year. On 1.3.2024, Ms. Aparna transferred to Ms. Dimple
in California, for consideration of dollar equivalent to 15 lakhs, rupee denominated bonds
(issued outside India) of X Ltd., a company incorporated in India, which were acquired
by her on 1.3.2022 for a price of dollar equivalent to 10 lakhs. What are the capital
gains tax implications of such transfer in the hands of Ms. Aparna?
(a) Ms. Aparna is liable to capital gains tax on long-term capital gains arising on transfer of rupee
denominated bonds; indexation benefit is not available
(b) Ms. Aparna is liable to capital gains tax on long-term capital gains arising on transfer of rupee
denominated bonds; indexation benefit is available
(c) Ms. Aparna is liable to capital gains tax on short-term capital gains arising on transfer of rupee
denominated bonds
(d) There is no capital gains tax implication in the hands of Ms. Aparna in respect of this transaction

6 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 3 Capital Gains

MULTIPLE CHOICE QUESTIONS

4. Mr. Vishal and Mr. Guha sold their residential house property in Pune for 3 crore and 4
crores, respectively, in January, 2024. The house property was purchased by them 25
months back. The indexed cost of acquisition is 1 crore and1.75 crore, respectively. Mr.
Vishal purchased two residential flats, one in Delhi and one in Agra for 70 lakhs and 80
lakhs, respectively, in April, 2024. On the same date, Mr. Guha also purchased two
residential flats, one in Mumbai and the other in Pune, for 80 lakhs and 75 lakhs,
respectively. Both of them invested 30 lakhs in bonds of NHAI in March, 2024 and 30
lakhs in bonds of RECL in April, 2024. What is the income taxable under the head "Capital
Gains" for A.Y.2024-25 in the hands of Mr. Vishal and Mr. Guha?
(a) 70 lakhs and 95 lakhs, respectively
Mr Vishal A Guha
(b) 60 lakhs and 85 lakhs, respectively
300 for
(c) Nil and 95 lakhs, respectively Froc
1.754
(d) Nil and 20 lakhs, respectively IOA
2.25W
CG 80 labs
1.5 7081

Answer Key:
Seeff 501ms 50951
1
0
1.
(a) Additional [email protected]% of the distributed income is leviable in the
hands of A Ltd. and B (P) Ltd.; income arising to shareholders is exempt
2. (d) Long-term capital gains of Mr. Rajan 2,10,000; Long-term capital loss of Mr.
Ravi1,20,000
3.
(d) There is no capital gains tax implication in the hands of Ms. Aparna in respect
of this transaction
4.
(c) Nil and 95 lakhs, respectively

Q2 IRA
mn Ravi
Mr Rajan
3200 Proc 1700
FOOL
CoA
0A
ff.fm
shares
a
211.0100
3988121900 1 1 178
2 2,101000
19 898
18690

7 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 4 Income from Other Sources

MULTIPLE CHOICE QUESTIONS

1. P is a salaried employee. On 1.6.2023, he gets a gift of house property situated in Mumbai

(stamp duty value 80,00,000) from Q. On 2.8.2023, P gets a gift of house property in a
small town near Pune (stamp duty value 50,000) from R. On 3.9.2023, P also gets a gift of
house property in a small town near Kanpur in Uttar Pradesh from R, the stamp duty value
of which is 1,00,000. What will be the tax implications in the hands of P, Q and R, assuming
that they are not related to each other?
80,00000 50000
1,00 000
8100,000
(a) 81,00,000 shall be chargeable to tax in the hands of P as income from other sources and capital
gains shall arise in the hands of Q and R respectively on account of transfer of capital asset in
Mumbai and Kanpur, respectively
(b) 80,00,000 shall be chargeable to tax in the hands of P as income from other sources and capital
gains shall arise in the hands of Q on account of transfer of capital asset in Mumbai
(c) 81,00,000 shall be chargeable to tax in the hands of P as income from other sources and no capital
gains shall arise in the hands of Q and R respectively as gift does not constitute “transfer”
(d) 81,50,000 shall be chargeable to tax in the hands of P as income from other sources and no capital
gains shall arise in the hands of Q and R respectively as gift does not constitute “transfer”
Immovableproperty
50.00
2.
Fatih hyponers
Mr. Anjan, a property dealer, sold a flat in Mumbai, the stamp duty of which is 2 crores
for 1.80 crores to his friend Mr. Ashwin, a college lecturer. Mr. Anjan had purchased the
flat one year back for 1.50 crores and the stamp duty value on that date was also 1.50
crores. What are the tax implications of such sale?
(a) 50 lakhs would be taxable as short-term capital gains in the hands of Mr. Anjan. There would be
no tax implication in the hands of Mr. Ashwin
(b) 50 lakhs would be taxable as business income in the hands of Mr. Anjan. There would be no tax
implication in the hands of Mr. Ashwin
(c) 50 lakhs would be taxable as business income in the hands of Mr. Anjan and 20 lakhs would be
taxable as income from other sources in the hands of Mr. Ashwin
(d) 50 lakhs would be taxable as short-term capital gains in the hands of Mr. Anjan and 20 lakhs would
be taxable as income from other sources in the hands of Mr. Ashwin

Answer Key:

1.
(c) 81,00,000 shall be chargeable to tax in the hands of P as income from other
sources and no capital gains shall arise in the hands of Q and R respectively as gift
does not constitute “transfer”
2.
(c) 50 lakhs would be taxable as business income in the hands of Mr. Anjan and 20lakhs
would be taxable as income from other sources in the hands of Mr. Ashwin

8 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 5 Income of Other Persons included in Assessee’s Total Income

MULTIPLE CHOICE QUESTIONS

1. Mrs. Kavitha, wife of Mr. Sundar, is a partner in a firm. Her capital contribution of 5
lakhs to the firm as on 1.4.2023 included 3 lakhs contributed out of gift received from
Sundar. On 2.4.2023, she further invested 1 lakh out of gift received from Sundar. The
firm paid interest on capital of 60,000 and share of profit of 50,000 during the F.Y.2023-
24. The entire interest has been allowed as deduction in the hands of the firm. Which of
the following statements is correct?
(a) Share of profit is exempt but interest on capital is taxable in the hands of Mrs. Kavitha
(b) Share of profit is exempt but interest of 40,000 is includible in the income of Mr. Sundar and
interest of 20,000 is includible in the income of Mrs. Kavitha
(c) Share of profit is exempt but interest of 36,000 is includible in the income of Mr. Sundar and
interest of 24,000 is includible in the income of Mrs. Kavitha
(d) Share of profit to the extent of 30,000 and interest on capital to the extent of 36,000 is
includible in the hands of Mr. Sundar

Answer Key:

1.
(c)Share of profit is exempt but interest of 36,000 is includible in the income
of Mr. Sundar and interest of 24,000 is includible in the income of Mrs. Kavitha

Sunden
3100,000
capital given by
Intereston 300,000 to be clubbed
in the hands 9

60,000
5 8 8
Sundar
36000
6
IS kavithf

9 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 6 Deductions from Gross Total Income

MULTIPLE CHOICE QUESTIONS

1. Gamma Ltd. has distributed on 30.6.2024, dividend of 130 lakhs to its shareholders. During
the F.Y.2023-24, Gamma Ltd. has received dividend of 108 lakhs (Net of TDS) from
domestic companies and 30 lakhs (gross) from a foreign company in which it has 5%
shareholding. What is the deduction, if any, available to Gamma Ltd. in respect of such
dividend?
(a) 138 lakhs Dividend reed labs
30talk 150
(b) 120 lakhs 10 100
120lakh
(c) 130 lakhs 0 130 tables
(d) 150 lakhs
801 paid
or Div

2. Nikhil, an individual aged 35 years, incurs the following expenses for the benefit of his
family (i.e., Self, Mrs. Nikhil and dependent children) and parents [father (80 years),
mother (76 years)] during the previous year 2023-24:
Particulars Medical Preventive health Medical expenditure
insurance check- up (by cheque) ()
premium (by expenditure (in cash)
cheque) () ()
For the benefit of his 20,000 7,000 2,000
family
5001
For the benefit of his Nil Nil 32,000
father 0
For the benefit of his 6,000 Nil Nil
mother
What is the amount of deduction allowable u/s 80D to Nikhil for the A.Y. 2024-25 if he
exercises the option to shift out of the default tax regime under section 115BAC?
(a) 63,000
38000 parents
(b) 55,000
m
(c) 67,000
(d) 65,000
3. In the P.Y.2023-24, Mr. Ganguly, a resident individual aged 60 years, earned income from
profession (computed) 1,45,000, winnings from card games 1,50,000 (gross). He also has
interest of 40,000 on fixed deposit with banks and 9,000 on savings account with bank. He
deposited 1,50,000 in PPF. What is the total income of Mr. Ganguly for P.Y.2023-24,
assuming that he exercises the option to shift out of the default tax regime under section
115BAC?
(a) 1,45,000
(b) 1,50,000

10 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 6 Deductions from Gross Total Income

MULTIPLE CHOICE QUESTIONS

PGBP 145,000
1,50000
Ffos winuys
(c) 1,85,000 40,000
FDIut 9000
(d) 1,90,000 Bank
Saving 3.44.000
1.451000
49,000
8077B 000
Answer Key::
PPF 1,501000

1.
(c) 130 lakhs

2.
(a) 63,000

3.
(b) 1,50,000

11 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 7 Assessment of Various Entities

MULTIPLE CHOICE QUESTIONS

1. Two tonnage tax companies X Ltd. and Y Ltd. are amalgamated to form a new tonnage
company Z Ltd., a qualifying company and the option for tonnage tax scheme of X Ltd. has
an unexpired period of 8 years and Y Ltd. has an unexpired period of 6 years. For what
period the special provisions of Chapter XII-G relating taxation of income shipping companies
would apply to the new company Z Ltd.?
(a) 8 years amalgamate
when two tonnage Companies
(b) 6 years will be available
(c) 7 years
the special provision
tonnage company for
longest
(d) 10 years to the
unexpired period ie 8year

2. Mr. Hari has income of 52 lakhs under the head “Profits and gains of business or profession”.
One of his businesses is eligible for deduction@100% of profits u/s 80-IA for A.Y.2024-
25. The profit from such business included in the business income is 35 lakhs. What would
be the tax liability (rounded off) of Mr. Devam for A.Y.2024-25, assuming that he has no
other income during the P.Y.2023-24 and exercises the option to shift out of the default
tax regime under section 115BAC?
Affair
52 1am
(a) 3,35,400 35
(b) 10,00,480
(c) 11,00,530
80A 38 1am
17 lakhs 44 Amy

The 9 62000
(d) 11,50,550 7009 1 a can 10 surchart
eaten
3,35 400
11,00 528
Answer Key:
1100,530
1.
(a) 8 years

2.
(c) 11,00,530

Divided
opted
go
18hAM

sittin
under
normal
the
scheme parable in
hands 8
Exempt use
12 CA Yash Khandelwal
interim
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 8 Assessment of Trusts and Institutions, Political Parties and Other Special Entities

MULTIPLE CHOICE QUESTIONS

1. Dividend received by a real estate investment trust (REIT) from special purpose vehicle
(SPV) and distributed to its unit holders
(a) exempt in the hands of both the REIT and the unit holders unconditionally
(b) exempt in the hands of the REIT only if the SPV is a specified domestic company; taxable in the
hands of unit holders only if SPV does not exercise option under section 115BAA
(c) exempt in the hands of the REIT; exempt in the hands of unit holders only if SPV does not
exercise option under section 115BAA
(d) taxable in the hands of the REIT; exempt unconditionally in the hands of unitholders

2. Kamla charitable trust, registered u/s 12AB, having its main object as medical relief,
earned income of 2 lakhs as interest on bonds issued by local authority and agricultural
income of 4 lakhs during the P.Y.2023-24. Which of the following statements is correct?
(a) The trust has to apply such income for charitable purposes as per the provisions of section 11 to
claim exemption in respect of such income.
(b) The trust can claim exemption u/s 10(1) and 10(15) in respect of its agricultural income and
income from bonds of local authority, respectively, without applying such income for charitable
purposes.
(c) The trust can claim exemption u/s 10(15) in respect of its interest income from bonds of local
authority, without applying such income for charitable purposes. However, it cannot claim
exemption u/s 10(1) in respect of agricultural income without applying such income for
charitable purposes.
(d) The trust can claim exemption u/s 10(1) in respect of its agricultural income. However,
exemption u/s 10(15) in respect of its interest income from bonds of local authority is not
available if it is claiming the benefit of section 11 and 12

3. For the previous year ended 31.3.2024, a public charitable trust, registered under section
12AB, derived income of 10 lakhs from properties held under trust and 15 lakhs, being
voluntary contributions from public, out of which 8 lakhs was applied for charitable purposes
and 4 lakhs towards repayment of loan taken for construction of orphanage. The amount of
4 lakhs was not claimed as application in any earlier previous year. The total income of the
trust for A.Y.2024-25 is –
(a) 13,00,000 101am
(b) 9,25,000 15lakh
(c) 13,25,000 2510th
(d) 17,00,000 15 7.75lakh
21.25lakhs
Glamis
applied
lakh
13
report 4 CA Yash Khandelwal
g a lakhs
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 8 Assessment of Trusts and Institutions, Political Parties and Other Special Entities

MULTIPLE CHOICE QUESTIONS

4. During the P.Y.2023-24, Sarvasewa, a charitable trust, made voluntary contributions,

not being corpus donations, to –
(a) another charitable trust registered u/s 12AB out of its current year income derived from
property held under trust
(b) an educational institution referred to in section 10(23C) (vi) out of its current year income
derived from property held under trust
(c) another charitable trust registered u/s 12AB out of the accumulated income of the trust
(d) Which of the above voluntary contributions are permitted as application of income for
charitable purposes for A.Y.2024- 25 under the provisions of the Income-tax Act, 1961?
(a) None of the above
(b) Only (i) above
(c) (i) and (ii) above
(d) (i) and (iii) above
5. A REIT has distributed 2 crores to its unitholders, which comprises of –
(a) Rental income from real estate property directly held by it 80 lakhs UH
(b) Interest income from special purpose vehicle 50 lakhs UH
(c) Dividend income from special purpose vehicle 40 lakhs Exempt
(d) Capital gains on disposal of assets 30 lakhs 3T dividedempt
In this case, the special purpose vehicle is an Indian company, A Ltd., in which REIT
holds 100% of shares. A Ltd. does not exercise option to pay tax u/s 115BAA. Which
of the following statements relating to taxability of the above income are correct?
(1) All the above income are taxable in the hands of REIT. The said income are
exempt in the hands of unit holders.
(2) Only income referred to in (i) and (ii) are taxable in the hands of REIT. Income
referred to in (iii) and (iv) are taxable in the hands of unit holders.
(3) Only income referred to in (i) and (ii) are taxable in the hands of REIT. Income
referred to in (iii) is taxable in the hands of unit holders. Income referred to in
(iii) is exempt both in the hands of REIT and unitholders.
(4) Only income referred to in (iv) is taxable in the hands of REIT. Income referred
to in (i) and (ii) is taxable in the hands of unit holders. Income referred to in (iii) is
exempt both in the hands of REIT and unitholders.
(5) Tax is deductible by REIT from income referred to in (i) and (ii).
(6) Tax is deductible by REIT from income referred to in (iii) and (iv).
(7) Tax is deductible by REIT only from income referred to in (iv).
(8) No tax is deductible by REIT since the entire income is taxable in its hand

14 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 8 Assessment of Trusts and Institutions, Political Parties and Other Special Entities

MULTIPLE CHOICE QUESTIONS

The correct option is –

(a) (1) and (8) above
(b) (2) and (6) above
(c) (3) and (7) above
(d) (4) and (5) above
6. Mr. B has been holding 10% units in Real Estate Investment Trust, 7.5% units in
Securitisation Trust and 5% units in Investment Fund for more than 15 months. The
following incomes were earned by the Trust/Fund during the P.Y.2024- 25:
5 7.57
101
Particulars Investment Real Est Securitisation
Fund (Rs.) Investment (Rs.) Trust (Rs.)
Rental Income from directly held real - 10,00,000 -
estate property 101 1,00000
Interest income from Special Purpose - 8,00,000 -
Vehicle 10 80,000
Profit from Business 5,00,000 - 6,00,000
Other Income (not in the nature of 2,00,000 1,00,000 -
dividend) 57 10.000 14 00
Long-term capital loss (12,50,000) 51 4500
- -
What would be the total income of Mr. B for P.Y. 2023-24, assuming that apart from share in
above income, Mr. B had only long-term capital gains of 2,70,000?
(a) 4,42,500
10,000
(b) 4,67,500 80,000
100,000
(c) 4,52,500
45000 3 888
(d) 5,05,000
4 42,500

15 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 8 Assessment of Trusts and Institutions, Political Parties and Other Special Entities

MULTIPLE CHOICE QUESTIONS

MULTIPLE CHOICE QUESTION

Answer Key:

1.
(c) exempt in the hands of the REIT; exempt in the hands of unit holders only if
SPV does not exercise option under section 115BAA
2.
(d) The trust can claim exemption u/s 10(1) in respect of its agricultural income.
However, exemption u/s 10(15) in respect of its interest income from bonds of
local authority is not available if it is claiming the benefit of section 11 and 12.
3.
(b) 9,25,000

4.
(c) (i) and (ii) above

5.
(d) (4) and (5) above

6.
(a) 4,42,500

16 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 9 Taxation of Digital Transactions

MULTIPLE CHOICE QUESTIONS

1. ABC & Co. and PQR & Co. are two non-resident entities based in Country A and Country
P, respectively. Both the entities own and operate an electronic facility through which
they effect online sale of organic products manufactured by them. The details of their
receipts from such sale during the P.Y.2023-24 are

Particulars ABC & Co., Country PQR & Co., Country

A P
(a) Receipts from sale of organic 138 Lakhs 126 lakhs
products to persons resident in India
(b) Receipts from sale of organic products 285 Lakhs 377 Lakhs
to persons resident in other parts of
the world
138 63 12673
Out of the sum mentioned in (b), the 201 lakhs 199
receipts from persons using internet
protocol address located in India 63 Lakhs 73 Lakhs

Is equalisation levy attracted in the hands of ABC & Co. and PQR & Co., assuming that both the
entities do not have a permanent establishment in India?

(a) Equalisation levy is attracted in the hands of both ABC & Co. and PQR & Co.
(b) No equalisation levy is attracted in the hands of either ABC & Co. and PQR & Co.
(c) Equalisation levy is attracted in the hands of ABC & Co. but not PQR & Co.
(d) Equalisation levy is attracted in the hands of PQR & Co. but not ABC & Co

2. Mr. Rajesh, a resident Indian, is an employee of M/s. ABC Ltd., Bangalore. In addition
to the salary income from M/s. ABC Ltd., he also earns interest from fixed deposits.
M/s. PQR Inc., a foreign company not having permanent establishment in India, whose
gross receipts are equivalent to 1.80 crores, rendered online advertisement services to
Mr. Rajesh, for which Mr. Rajesh made a payment of 2 lakhs in the F.Y.2023-24.
(i) The transaction is subject to equalisation levy since payment exceeding 1 lakh has
been made for online advertisement services.
(ii) The transaction is subject to equalisation levy since payment is made by a resident to a
non- resident not having permanent establishment in India.
(iii) Equalisation levy has to be deducted and paid by Mr. Rajesh.

17 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 9 Taxation of Digital Transactions

MULTIPLE CHOICE QUESTIONS

(i) civ Equalisation levy has to be paid by M/s ABC Ltd.

(ii) a The rate of equalization levy is 6%.
(iii)WDThe rate of equlisation levy is 2%.
(iv) ViiThe transaction is not subject to equalization levy.

Which of the statements is correct?

(a) (i), (ii), (iii) and (v)
(b) (i), (ii), (iv) and (vi)
(c) (i), (ii), (iv) and (v)
(d) Only (vii)

Answer Key:

1.
(c) Equalisation levy is attracted in the hands of ABC & Co. but not PQR & Co.

2.
(d) Only (vii)

18 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 10 Deduction, Collection and Recovery of Tax

MULTIPLE CHOICE QUESTIONS

for sec hut 50,000

1. Mr. Vallish, employed as Manager with ABC Ltd., pays rent of 50,000 per month to his
landlord. Which of the following statements is correct?
(a) Mr. Vallish is liable to deduct tax@10% u/s 194-I, since his annual rent exceeds 2,40,000
(b) Mr. Vallish is liable to deduct tax@5% u/s 194-IB every month, since he pays rent of 50,000
per month
(c) Mr. Vallish is liable to deduct tax@5% u/s 194-IB on the annual rent in the month of March,
since he pays rent of 50,000 per month
180,000 10
(d) Mr. Vallish is not liable to deduct tax at source 7
90,000
9000
201000191,80000 15000
6
2. ABC Ltd. took on sub-lease a building from Ms. Jhanvi with effect from 1.7.2023 on a
rent of 20,000 per month. It also took on hire machinery from Ms. Jhanvi with effect from
1.10.2023 on hire charges of 15,000 per month. ABC Ltd. entered into two separate
agreements with Ms. Jhanvi for sub-lease of building and hiring of machinery. Which of
the following statements is correct with reference to ABC Ltd.'s liability to deduct tax at
source, assuming that one month's rent was received as security deposit, which is refundable
at the end of the lease period?
(a) No tax needs to be deducted at source since rent for building does not exceed 2,40,000 p.a. and
rent for machinery also does not exceed 2,40,000 p.a. Security deposit refundable at the end
of the lease term is not rent for the purpose of TDS
(b) Tax has to be deducted@10% on 2,00,000 and @2% on 1,05,000 (i.e., rent including security
deposit)
(c) Tax has to be deducted@10% on 1,80,000 and @2% on 90,000 (i.e., rent excluding security
deposit)
(d) Tax has to be deducted@10% on 2,00,000 (i.e., rent including security deposit). However, no tax
is to be deducted on rent of 1,05,000 (i.e., rent including security deposit) for machinery, since
the same does not exceed 1,80,000
Answer Key:

1.
(d) Mr. Vallish is not liable to deduct tax at source

2.
(c) Tax has to be deducted@10% on 1,80,000 and @2% on 90,000 (i.e., rent
excluding security deposit)

19 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 11 Income Tax Authorities

MULTIPLE CHOICE QUESTIONS

1. In the course of search operations under section 132 in the month of May, 2023, Mr.
Aakash makes a declaration under section 132(4) on the earning of income not disclosed in
respect of P.Y. 2022-23. He also explains the manner in which he has derived such income
and he pays the tax together with interest on such income and declares such income in
the return of income filed by him in the month of July, 2023. Is penalty leviable in this
case? If so, how much?
(a) No penalty is attracted since Mr. Aakash has voluntarily made a declaration under section
132(4)
(b) Yes; Penalty@10% of undisclosed income would be attracted even if Mr. Aakash has voluntarily
made a declaration under section 132(4)
(c) Yes; Penalty@30% of undisclosed income would be attracted even if Mr. Aakash has voluntarily
made a declaration under section 132(4)
(d) Yes; Penalty@60% of undisclosed income would be attracted even if Mr. Aakash has voluntarily
made a declaration under section 132(4)
2. Which of the following statements are correct in relation to the power of an income-tax
authority to collect information which may be useful for the purposes of the Income-tax
Act, 1961?– 1330 impounding
no
(a) The income-tax authority can enter the place of business of the assessee only after sunrise and
before sunset.
(b) The income-tax authority may enter the place of business only during the hours at which such
place is open for conduct of business.
(c) The income-tax authority may impound and retain in his custody, for a period not exceeding 15
days, books of account or other documents inspected by him. If he wishes to retain for a period
exceeding 15 days, he has to take the prior approval of Principal Chief Commissioner or Chief
Commissioner.
(d) The income-tax authority can on no account remove or cause to be removed from the building or
place he has entered any books of account or other documents.
IMYTHI
133A
3. The Assessing Officer within his jurisdiction surveyed a popular Cyber Café at 1 a.m. in
night for the purpose of collecting information which may be useful for the purposes of
the Income-tax Act, 1961. The Cyber Café is kept open for business every day between
2 p.m. and 2 a.m. He impounded and retained in his custody, books of account and other
documents inspected by him, after recording his reasons for doing so, for 12 days. Which
of the following statements is correct?
(a) The Assessing Officer’s action in entering the cybercafé at 1 a.m. and impounding books of
account and documents inspected by him is in order
(b) The Assessing Officer’s action in entering the cyber café at 1 a.m. is not in order, since he can
enter the cyber café only after sunrise but before sunset

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CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 1 I Income Tax Authorities

MULTIPLE CHOICE QUESTIONS

(c) The Assessing Officer’s action in entering the cyber café at 1 a.m. and in impounding books of
account and documents inspected by him are not in order, since he can enter the cyber café
only after sunrise but before sunset and he does not have the power to impound books of
account under section 133B
(d) The Assessing Officer’s action in entering the cyber café at 1 a.m. is in order but impounding
books of account and documents inspected by him is not in order, since he does not have the
power to impound books of account under section 133B

4. In the course of search operations under section 132 in May, 2024, Mr. Hari makes a
declaration under section 132(4) on the earning of income in respect of P.Y.2023-24 not
disclosed in the books of account. Mr. Hari explains the manner in which income was
derived and pays the tax, together with interest in respect of such income. However, he
does not disclose such income in his return of income filed on 31.7.2024. Is penalty leviable
in this case, and if so, what is the quantum of penalty?
(a) No penalty is leviable since Mr. Hari has made a declaration under section 132(4)
(b) Yes; penalty@10% is leviable
(c) Yes; penalty@30% is leviable
(d) Yes; penalty@60% is leviable

Answer Key:

1.
(c) Yes; Penalty@30% of undisclosed income would be attracted even if Mr.
Aakash has voluntarily made a declaration under section 132(4)
2.
(b) and (d)

3.
(a) The Assessing Officer’s action in entering the cybercafé at 1 a.m. and impounding
books of account and documents inspected by him is in order.
4.
(d) Yes; penalty@60% is leviable

21 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 12 Assessment Procedure

MULTIPLE CHOICE QUESTIONS

1. A survey is conducted u/s 133A in the premises of Mr. Aarav and a search is conducted
u/s 132 in the premises of his friend, Mr. Arjun, on 1.5.2023. The Assessing Officer
issued notices under section 148 for A.Y. 2021-22, A.Y.2022-23 and A.Y. 2023-24 to
Mr. Aarav and Mr. Arjun. However, such notices were not accompanied by the copy of an
order passed under section 148A. Is the action of the Assessing Officer in issuing such
notices under section 148 to Mr. Aarav and Mr. Arjun valid?
(a) No; the action of the Assessing Officer in issuing such notices under section 148 is not valid in
both cases.
(b) Yes; the action of the Assessing Officer in issuing such notices under section 148 is valid in
both cases.
(c) Yes, the action of the Assessing Officer in issuing such notice under section 148 is valid in the
case of Mr. Arjun, but not in the case of Mr. Aarav.
(d) Yes, the action of the Assessing Officer in issuing such notice under section 148 is valid in the
case of Mr. Aarav, but not in the case of Mr. Arjun.
2. Mayank, aged 50 years, sold his residential house for 30 lakhs during the previous year
2020-21, whereas the stamp duty value of the same was 38 lakhs. He computed a longterm
capital gain of 5 lakhs by taking the full value of consideration as 30 lakhs and paid tax
accordingly by filing his return of income under section 139(1). During the previous year
2023-24, he wants to correct the full value of consideration by filing an updated return
under section 139(8A) for A.Y. 2021-22. In this case, what would be the additional tax
liability (ignore interest) as per section 140B? (Assume that capital gain was the only income
of Mayank for A.Y. 2021-22).
(a) 57,200 Ethyne 8,001000

(b) 83,200
Tae ro
(c) 1,66,400
83,200
(d) 1,14,400 Additionthe 2
A
31,3
31.3.221
3. Who among the following is not mandated to file the return of income under section 139
for A.Y. 2024-25?
(a) XYZ Pvt. Ltd., having incurred a loss of 1,50,000 during the year.
(b) Mr. Manohar, aged 66 years, having a total income of 3,50,000 before deduction under section
80C of 1,50,000.
(c) Mr Jay, who travelled to Dubai during the year, spent 4,50,000 on his travel and hotel stay.
(d) Ms Mona, a non-resident having assets worth 2 crores in India and 5 crores outside India. She
has not earned or received any income in India.

22 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 12 Assessment Procedure

MULTIPLE CHOICE QUESTIONS

4. Mr. Ram, born on 1.4.1964, has a gross total income of 2,90,000 for A.Y.2024-25
comprising of his salary income. He does not claim any deduction under Chapter VI-A. He
pays electricity bills of 10,000 per month. He visited to Melbourne along with his wife for
a month in February, 2024 for which he incurred to and fro flight charges of 1.20 lakhs.
The remaining expenditure for his visa, stay and sightseeing amounting to 80,000 was met
by his son residing in Melbourne. Is Mr. Ram required to file return of income for A.Y.2024-
25, and if so, why?
(a) No, Ram is not required to file his return of income
(b) Yes, Ram is required to file his return of income, since his gross total income/total income
exceeds the basic exemption limit
(c) Yes, Ram is required to file his return of income since he pays electricity bills of 10,000 per
month, which exceeds the prescribed annual threshold
(d) Yes, Ram is required to file his return of income since he has incurred foreign travel
expenditure exceeding 1 lakh

5. Which of the following cannot be adjusted in computation of total income while processing
the return of income for A.Y. 2024-25 under section 143(1)?
(a) any arithmetical error in the return
(b) an incorrect claim apparent from any information in the retur
(c) disallowance of expenditure indicated in the audit report but not taken into account in
computing total income in the return
(d) addition of income appearing in Form 26AS which has not been included in computing total
income in the return
Answer Key:

1.
(c)Yes, the action of the Assessing Officer in issuing such notice under section 148 is
valid in the case of Mr. Arjun, but not in the case of Mr. Aarav.
2.
(b) 83,200

3.
(d) Ms Mona, a non-resident having assets worth 2 crores in India and 5 crores
outside India. She has not earned or received any income in India.
4. (c) Yes, Ram is required to file his return of income since he pays electricity bills of
10,000 per month, which exceeds the prescribed annual threshold
5. (d) addition of income appearing in Form 26AS which has not been included in
computing total income in the return

23 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 13 Appeals and Revision

MULTIPLE CHOICE QUESTIONS

1. Mr. Rajesh is aggrieved by an order passed by the Commissioner of Income-tax imposing

penalty under section 270A for under-reporting of income. What is the appellate remedy
available to him under the Income-tax Act, 1961 and the specified time limit within which
he has to file an appeal?
(a) He can file an appeal to Commissioner (Appeals) u/s 246A within 30 days from the date on which
the order is communicated to him
(b) He can file an appeal to Commissioner (Appeals) u/s 246A within 60 days from the date on which
the order is communicated to him
(c) He can file an appeal to Appellate Tribunal u/s 253 within 30 days from the date on which the
order is communicated to him
(d) He can file an appeal to Appellate Tribunal u/s 253 within 60 days from the date on which the
order is communicated to him
2. Which of the following orders can be revised by the Principal Commissioner under section
263, where such order is erroneous in so far as it is prejudicial to the interests of the
Revenue?
(a) An order passed by the Assessing Officer enhancing or modifying the assessment or cancelling
the assessment and directing a fresh assessment
(b) An order modifying the order passed by the Transfer Pricing Officer under section 92CA or
cancelling the said order and directing a fresh order
What is the time limit for revision under section 263?
(a) Only (i) above; the time limit for revision is 2 years from the end of the financial year
in which such order was passed.
(b) Only (ii) above; the time limit for revision is 3 years from the end of the financial year
in which such order was passed.
(c) Both (i) and (ii); the time limit for revision is 2 years from the end of the financial year
in which such order was passed.
(d) Both (i) and (ii); the time limit for revision is 3 years from the end of the financial year
in which such order was passed

3. The assessment of M/s. Epsilon Associates for A.Y.2023-24 was made u/s 143(3) on 28
December, 2024. The Assessing Officer added 3 lakh being 30% of 10 lakh, for non-
deduction of tax at source and 4 lakh on account of unexplained investments. The assessee
contested the addition on account of unexplained investments in appeal before Commissioner
(Appeals). The appeal was decided against the assessee in June, 2025. What is remedy
available to the assessee in respect of disallowance under section 40(a)?

2634154 partial merger applies

264 Total Merger applies
24 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 13 Appeals and Revision

MULTIPLE CHOICE QUESTIONS

a) The assessee can file an application for revision to the Commissioner under section 264
b) The assessee can file an application for rectification under section 154, if it is a mistake
apparent from the record
c) The assessee can opt for either (a) or (b)
d) The assessee can neither opt for remedy stated in (a) nor for remedy stated in (b)

4. Which of the following orders is not appealable before Commissioner (Appeals)?

(a) An order of penalty under section 271B for failure to get accounts audited
(b) An order made under section 163 treating the assessee as an agent of a non-resident
(c) An order of assessment passed by the Assessing Officer in pursuance of directions of Dispute
Resolution Panel
(d) An order made under section 201 deeming a person to be an assessee-in-default for non-
deduction of tax at source

5. Mr. X is aggrieved by an order passed under section 143(3) by the Assessing Officer. Mr.
Y is aggrieved by an order passed under section 272A by the Director General. What is the
remedy available to Mr. X and Mr. Y and the time limit within which they should exercise
the remedy?
(a) Both Mr. X and Mr. Y have to file an appeal before Commissioner (Appeals) u/s 246A within 30
days of the date on which the order sought to be appealed against is communicated to them
(b) Both Mr. X and Mr. Y have to file an appeal before the Appellate Tribunal u/s 253 within 60 days
of the date on which the order sought to be appealed against is communicated to them
(c) Mr. X has to file an appeal u/s 246A before Commissioner
JCIICAS
or (Appeals) within 30 days of the date
of service of the notice of demand relating to the assessment. Mr. Y has to file an appeal u/s 253
before the Appellate Tribunal within 60 days of the date on which the order sought to be appealed
against is communicated to him
(d) Mr. Y has to file an appeal before Commissioner (Appeals) u/s 246A within 60 days of the date
on which the order sought to be appealed against is communicated to him. Mr. X has to file an
appeal u/s 253 before the Appellate Tribunal within 30 days of the date of service of the notice
of demand relating to the assessment

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CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 13 Appeals and Revision

MULTIPLE CHOICE QUESTIONS

Answer Key:

1 (d) He can file an appeal to Appellate Tribunal u/s 253 within 60 days from the
date on which the order is communicated to him.
2 (c) Both (i) and (ii); the time limit for revision is 2 years from the end of the
financial year in which such order was passed.

3 (b) The assessee can file an application for rectification under section 154, if
it is a mistake apparent from the record
4 (c) An order of assessment passed by the Assessing Officer in pursuance of
directions of Dispute Resolution Panel
5 (c) Mr. X has to file an appeal u/s 246A before Commissioner (Appeals) within
30 days of the date of service of the notice of demand relating to the
assessment. Mr. Y has to file an appeal u/s 253 before the Appellate Tribunal
within 60 days of the date on which the order sought to be appealed against is
communicated to him.

26 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 14 Dispute Resolution

MULTIPLE CHOICE QUESTIONS

1. Which of the following is not a specified order in relation to a dispute under section 245MA?
(i) Assessment order based on search initiated under section 132
(ii) Assessment order in the case of survey carried out under section 133A
(iii) Assessment order on the basis of information received under an agreement referred to
in section 90 or 90A
The correct answer is –
(a) Only (i) above
(b) (i) and (ii) above
(c) (i) and (iii) above
(d) (i), (ii) and (iii) above

2. Who amongst the following has not satisfied the specified condition for making an application
before the Dispute Resolution Committee?
(i) Mr. X, who is convicted of an offence punishable under the Prohibition of Benami
Transactions Act, 1988
(ii) Mr.Y, who is convicted of any offence punishable under the Income-tax Act, 1961
(iii) Mr. Z, in respect of whom proceedings under the Black Money (Undisclosed Foreign Income
and Assets) and Imposition of Tax Act, 2015 have been initiated for the assessment
year for which resolution of dispute is sought
(iv) Mr. A, in respect of whom penalty under section 271D has been levied for failure to
comply with the provisions of section 269SS of the Income-tax Act, 1961
The correct answer is –
(a) Mr. Y and Mr. A
(b) Mr. X and Mr. Y
(c) Mr. X, Mr. Y and Mr. A
(d) Mr. X, Mr. Y and Mr. Z

Answer Key:

1 (d) (i), (ii) and (iii) above

2 (d) Mr. X, Mr. Y and Mr. Z.

27 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 15 Miscellaneous Provisions

MULTIPLE CHOICE QUESTIONS

1. Can the Assessing Officer accept bank guarantee in lieu of provisional attachment of
property by an order in writing?
(a) No, he cannot do so
(b) Yes, he can do so with the prior approval of the Principal Chief Commissioner or Chief Commissioner
(c) Yes, he can do so where the assessee furnishes a guarantee from a scheduled bank, for an amount
not less than the fair market value of such provisionally attached property or for an amount which
is sufficient to protect the interests of the revenue.
(d) Yes, he can do so where the assessee furnishes a guarantee from a bank, for an amount not less
than the stamp duty value of such provisionally attached property or for an amount which is
sufficient to protect the interests of the revenue.

2. Which of the following transactions should a bank report in its statement of financial
transaction? to all
lessthan
(i) Cash payment in aggregate of 6 lakh by Mr. X for purchase of bank drafts during the
F.Y. 2023- 24
(ii) Cash deposits aggregating to 26 lakhs by Mr. Y in his current account during the
F.Y.2023-24
savingstotalk
(iii) Cash deposits aggregating to 12 lakhs by Mr. Z in his savings bank account during the
F.Y.2023- 24
Morethan50Aes
(iv) Withdrawals of 55 lakhs through bearer cheque by Mr. A from his current account
during the F.Y.2023-24 tolaes
morethan
(v) Credit card payment of 12 lakh during F.Y.2023-24 made by Mr. B by account payee
cheque
(vi) Credit card payment of 80,000 made by cash during F.Y.2023-24 by Mr. C
The correct answer is – lessthan 100,000
(a) (ii), (iv) and (vi)
(b) (iii), (iv) and (v)
(c) (ii), (iii), (iv) and (vi)
(d) (i), (ii), (iv) and (vi)

28 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 15 Miscellaneous Provisions

MULTIPLE CHOICE QUESTIONS

lolath from in
Py ant raised Repgff
the shareholder
3. For raising money from the public ABC Ltd. issued 10 lakh equity shares of100 each. During
the P.Y.2023-24, it received share application money of 2 lakhs from Mr. V,5 lakhs from
Mr. W,8 lakhs from Mr. X,10 lakhs from Mr. Y and12 lakhs from Mr. Z, in addition to
amounts of less than1 lakh from other applicants. Which of the above receipts is the
company required to report in its statement of financial transaction?
(a) Only 12 lakhs from Mr. Z
(b) Only10 lakhs from Mr. Y and12 lakhs from Mr. Z
(c) 5 lakhs from Mr. W,8 lakhs from Mr. X,10 lakhs from Mr. Y and12 lakhs from Mr. Z Answer
(d) 2 lakhs from Mr. V,5 lakhs from Mr. W,8 lakhs from Mr. X,10 lakhs from Mr. Y and 12 lakhs from
Mr. Z

4. The Assessing Officer imposed penalty of 50 lakhs under section 271AAD on Mr. Rajesh.
Can he provisionally attach the property of Mr. Rajesh to protect the interest of the
Revenue?
(a) No, he cannot do so Ifthe aunt 24
(b) Yes, he can do so in the manner provided in the Second Schedule then
(c) Yes, he can do so with the prior approval of the prescribed higher authorities addthis.ve
(d) Yes, he can do so in the manner provided in the Second Schedule with the prior approval of the
prescribed higher authorities

5. ABC (P) Ltd. engaged in trading goods availed the following interest-free loans from XYZ
(P) Ltd. –
(i) 8 lakh by ECS through bank account on 10.4.2023
(ii) 18,000 by cash on 18.8.2023
(iii) 12,000 by cash on 19.9.2023
During the year, ABC (P) Ltd. repaid the following loans to XYZ(P) Ltd. –
(i) 6 lakh by account payee cheque on 15.6.2023
(ii) 50,000 by cash on 3.7.2023
(iii) 150,000 by ECS through bank account on 3.8.2023
(iv) 15,000 by cash on 1.9.2023 (v) `15,000 by cash on 1.10.2023

What is the amount of penalty leviable on ABC (P) Ltd. for availing and repaying loan in
cash?
(a) 30,000 under section 271D and80,000 under section 271E
(b) 18,000 under section 271D and 50,000 under section 271E
(c) 12,000 under section 271D and80,000 under section 271E
(d) 50,000 under section 271E

29 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 15 Miscellaneous Provisions

MULTIPLE CHOICE QUESTIONS

Answer Key:

1 (c) Yes, he can do so where the assessee furnishes a guarantee from a scheduled
bank, for an amount not less than the fair market value of such provisionally
attached property or for an amount which is sufficient to protect the interests
of the revenue.
2 (b) (iii), (iv) and (v)

3 (b) Only10 lakhs from Mr. Y and12 lakhs from Mr. Z

4 (a) No, he cannot do so

5 (d)50,000 under section 271E

loan Taken Repaid

Balois
8 00,00
10.4.23 8,001000
6,001000 2100,000
15.6.23 150,000
50,000
soon
18000 18000
18.9.23
15000 2000
1.9.23
15000
19.9.23 12000
15000
1.10.23

80Years
60years Rajesh
per
Mr
Ganesh 5 lakh
8 lakh staff

poor

30 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 16 Provisions to Counteract Unethical Tax Practices

MULTIPLE CHOICE QUESTIONS

60 8
1. Mr. Ganesh and Mr. Rajesh, resident Indians born on 1.7.1963 and 1.4.1944,
respectively, have not furnished their returns of income for the P.Y.2023-24. However,
the total income assessed in respect of such year under section 144 is 8 lakhs and 5 lakhs,
respectively. Is penalty leviable under section 270A, and if so, what is the quantum of
penalty?
(a) No penalty is leviable under section 270A in the hands of either Mr. Ganesh or Mr. Rajesh
(b) Penalty of 37,400 leviable in the hands of Mr. Ganesh; No penalty leviable in the hands of Mr.
Rajesh
(c) Yes; 36,400 and 6,500, respectively
(d) Penalty of 18,200 leviable in the hands of Mr. Ganesh; No penalty leviable in the hands of Mr.
Rajesh
2. Mr. Mahesh is found to be the owner of two gold chains of 50 gms each (value of which is
1,45,000 each) during the financial year ending 31.3.2024 which are not recorded in his
books of account and he could not offer satisfactory explanation for the amount spent on
acquiring these gold chains. As per section 115BBE, Mr. Mahesh would be liable to pay tax
of –
(a) 1,80,960 1145129 2,901000 41
(b) 2,26,200
60 25
78
(c) 90,480 2,26200
(d) 1,23,958

3. Mr. Arvind acquired a flat in Country “P” in the P.Y.2018-19 for 50 lakhs. Out of the said
sum, 20 lakhs was assessed to tax in total income of the P.Y.2018-19 and earlier years.
This asset comes to the notice of the Assessing Officer in the previous year 2023-24. If
the value of the flat on 1.4.2023 is 90 lakhs, the amount chargeable to tax under the
Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in
the year 2023-24 would be:
(a) 90 lakhs
(b) 70 lakhs
90 lakh 901
(c) 54 lakhs
later
(d) 30 lakhs 901 36
84 lakh

30 9 0
31 CA Yash Khandelwal
59
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 16 Provisions to Counteract Unethical Tax Practices

MULTIPLE CHOICE QUESTIONS

4. Dinesh, a resident individual of age of 47 years, has not furnished his return of income for
the A.Y. 2024-25. However, his total income for such year as assessed u/s 144 is 18
lakhs. Is penalty under section 270A attracted and if so, what is the quantum of penalty?
(a) No; penalty under section 270A is not attracted since he has not filed his return of income,
hence, this is not a case of underreporting or misreporting of income.
(b) Yes; penalty is 3,66,600
18 lakh 150,000
30
1T
(c) Yes; penalty is 1,24,800 3100,000
2 On
(d) Yes; penalty is 1,83,300 290,000 4

1 800 2.49.600
5. Mr. Arvind opened a bank account in Country “P” on 1.7.2020. He has made deposits of
foreign currency equivalent to 5 lakhs on 1.7.2020, 7 lakhs on 1.10.2020, 12 lakhs on
1.9.2022 and 25 lakhs on 1.3.2024, in that bank, out of Indian income which has not been
assessed to tax in India. The deposit of 12 lakhs on 1.9.2022 is made out of the withdrawal
of earlier deposits made on 1.7.2020 and 1.10.2020 with the said bank. Further, out of
25 lakhs deposited by him on 1.3.2024, Mr. Arvind withdrew 2 lakhs on 31.3.2024. The
value of an undisclosed asset in form of bank account under the Black Money (Undisclosed
Foreign Income and Assets) and Imposition of Tax Act, 2015 will be taken as:
(a) 49 lakhs withdrawl
deposits
(b) 47 lakhs
(c) 37 lakhs slabh
(d) 35 lakhs Flabh

Answer Key:
Etan
1 (d) Penalty of 18,200 leviable in the hands of Mr. Ganesh; No penalty leviable in
the hands of Mr. Rajesh.
2 (b) 2,26,200
3 (c) 54 lakhs

4 (c) Yes; penalty is 1,24,800

5 (c) 37 lakhs

32 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 17 Non Resident Taxation

MULTIPLE CHOICE QUESTIONS

1. M Ltd. and N Ltd. are Indian companies which have to pay interest of 2 lakhs and 1 lakh
outside India to Mr. P, a non-resident, during the P.Y.2023-24 on rupee denominated
bonds listed on a recognized stock exchange located in IFSC, issued in May, 2023 and
August, 2023, respectively. Which of the following statements is correct relating to liability
of M Ltd. and N Ltd. to deduct tax at source on such interest payable to Mr. P?
(a) M Ltd. has to deduct tax at [email protected]% and N Ltd. has to deduct tax at source @9.36%
(b) Both M Ltd. and N Ltd. have to deduct tax at source @ 5.2%
(c) M Ltd. does not have to deduct tax at source but N Ltd. has to deduct tax at [email protected]%
(d) N Ltd. does not have to deduct tax at source but M Ltd. has to deduct tax at [email protected]%

2. Mr. Ranveer, a non-resident, earned interest income of 6,20,000 during the P.Y. 2023-
24 on bonds, issued by Tilt Ltd., an Indian company, under a scheme notified by the Central
Government, which were purchased by him in foreign currency. Such interest is
(a) Not taxable
(b) [email protected]%
(c) [email protected]%
(d) [email protected]%

3. Shipcargo Inc., a company based in Netherlands operating its ships to and from Cochin
port, collected freight of 85 lakhs, demurrage of 5 lakhs and handling charges of 2 lakhs
in respect of goods shipped at Cochin port. It incurred expenses of 35 lakhs during the
year for operating its fleet. In respect of goods shipped at Rotterdam, Netherlands, it
received 50 lakhs in India. Its tax liability (rounded off) for the A.Y.2024-25 is –
(a) 4,21,200
Shipping Income
(b) 4,43,040 19654 9 0 85 5 2 50ᵗʰ
75
(c) 3,12,000 4,4310 1426Wh
(d) 1,77,840 10,651000
4. Mr. X, a foreign national and citizen of USA, working with M Inc., a US based company,
came to India during the P.Y. 2023-24 for rendering services on behalf of the employer.
He wishes to claim his salary income earned during his stay in India as exempt. Which of
the following is not a condition to be fulfilled to claim such remuneration as exempt income
under the Income-tax Act, 1961?
(a) M Inc. should not be engaged in any trade or business in India
(b) Mr. X should not be engaged in any trade or business in India

33 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 17 Non Resident Taxation

MULTIPLE CHOICE QUESTIONS

(c) Mr. Xs stay in India should not exceed 90 days in aggregate during the P.Y. 2023-24
(d) Remuneration received by Mr. X should not liable to be deducted from M Inc.s income
chargeable to tax under the Incometax Act, 1961

5. Mr. Ganesh, a citizen of India, is employed in the Indian embassy in the USA. He is a
non-resident for A.Y.2024-He received salary and allowances in the USA from the
Government of India for the year ended 31.3.2024 for services rendered by him in the
USA. In addition, he was allowed perquisites by the Government. Which of the following
statements is correct?
(a) Salary, allowances and perquisites received outside India are not taxable in the hands of Mr.
Ganesh, since he is a nonresident
(b) Salary, allowances and perquisites received outside India by Mr. Ganesh is taxable in India since
such income is deemed to accrue or arise in India
(c) Salary received by Mr. Ganesh is taxable in India but allowances and perquisites are exempt
(d) Salary received by Mr. Ganesh is exempt but allowances and perquisites are taxable in India

Answer Key:

1 (a) M Ltd. has to deduct tax at [email protected]% and N Ltd. has to deduct tax at
source @9.36%
2 (b) [email protected]%

3 (b) 4,43,040
4 (b) Mr. X should not be engaged in any trade or business in India

5 (c) Salary received by Mr. Ganesh is taxable in India but allowances and
perquisites are exempt.

34 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 18 Double Taxation Relief

MULTIPLE CHOICE QUESTIONS

1. Samraat, a resident Indian, has earned an income of US dollars equivalent to 4 lakh in the
P.Y.2023-24 by way of lump sum consideration for copyright of a book, being a work of
literary nature, from a publisher in Country E, with which India does not have a DTAA. The
same has been taxed at a flat rate of 5% in Country E. The amount has been remitted to
India in March, 2024. His gross total income as per the Income-tax Act, 1961 for
A.Y.2024-25 is 7 lakhs. What would be the deduction available under section 91 for
A.Y.2024-25 assuming that Samraat exercises the option to shift out of the default tax
regime under section 115BAC?
(a) 20,000 Flae incl 4lae Royalty
GTI
(b) 7,725
(c) 1,950
(d) Nil
809 aw

0
Rebate wit jayya
Taa
Answer Key:

1 (d) Nil

35 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 19 Advance Rulings

] MULTIPLE CHOICE QUESTIONS

1. As per section 245N(a)(iv), advance ruling means determination or decision by the

Board for Advance Rulings as to whether an arrangement, which is proposed to be
undertaken by a person is an impermissible avoidance arrangement as referred to in
Chapter X-A or not. For making an application in this regard, the applicant has to be
–
(a) Only a Non-resident
(b) Only a Resident
(c) Only a Resident falling within such class or category of persons as notified by the Central
Government
(d) Either a resident or a non-resident
s

Answer Key:

1 (d) Either a resident or a non-resident

36 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 20 Transfer Pricing

MULTIPLE CHOICE QUESTIONS

1. A notified infrastructure debt fund eligible for exemption under section 10(47) of the Income-
tax Act, 1961 has to pay interest of 5 lakhs to a company incorporated in a foreign country.
The foreign company incurred expenditure of 12,000 for earning such interest. The fund also
has to pay interest of 3 lakhs to Mr. Frank, who is a resident of Country A, a notified
jurisdictional area. Which of the following statements is correct?
(a) No tax deduction at source is required in respect of both the payments
(b) No TDS is required in respect of 5 lakhs payable to the foreign company. However, payment
of interest to Frank attracts [email protected]%
(c) [email protected]% is attracted on 4,88,000 payable to the foreign company. [email protected]% is
attracted on interest payment of 3 lakhs to Mr. Frank
(d) [email protected]% is attracted on interest of 5 lakhs payable to the foreign company.
[email protected]% is attracted on interest of 3 lakhs payable to Mr. Frank

2. If ABC Ltd. has two Units, Unit 1 is engaged in power generation business and Unit 2 is
engaged in manufacture of wires. Both the units were set up in Karnataka in the year 2015.
In the year 2023-24, twenty lakh metres of wire are transferred from Unit 2 to Unit 1 at
125 per metre when the market price per metre was 180. Which of the following statements
is correct?
20 lakhx 1257201
(a) Transfer pricing provisions would be attracted in this case
(b) Transfer pricing provisions would not be attracted in this case since Unit 1 and Unit 2 belong to
the same company and are not associated enterprises Answer - 3 :
(c) Transfer pricing provisions would not be attracted in this case as it is not an international
transaction since both Units are in India. For the purpose of Chapter VI-A deduction, the profits
of power generation business shall, however, be computed as if the transfer has been made at the
market value of 180 per MT
(d) Transfer pricing provisions would not be attracted in this case due to reasons mentioned in both
(b) and (c) above

3. Under which of the following methods, arm's length price shall be the arithmetical mean of
all values included in the dataset, irrespective of the number of entries in the dataset. It
may be assumed that the variation between the arm's length price computed and the
transaction price is 15%.
(a) Profit split method
(b) Resale price method
(c) Cost plus method
(d) Transactional net margin method

37 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 20 Transfer Pricing

MULTIPLE CHOICE QUESTIONS

4. Y is a foreign company having permanent establishment in India namely X. Z, a non-

resident associated enterprise, has invested 900 crore through debt in X. Earnings before
interest, taxes, depreciation and amortisation (EBITDA) of X during the financial year was
150 crore. What is the amount of interest allowable in respect of the debt assuming that
the debt was invested on the first day of the financial year and the rate of interest is
10% p.a.?
(a) 45 crore
150 301
(b) 90 crore a 81
(c) 30 crore
(d) 27 crore

5. Alpha Ltd.'s total income of A.Y. 2024-25 has increased by 34 lakhs due to application of
arm's length price by the Assessing Officer on transactions of purchase of goods from its
foreign holding company in respect of a retail trade business carried on by it, and the same
has been accepted by Alpha Ltd., then, -
(e) business loss of A.Y.2020-21 cannot be set-off against the enhanced income
(a) deductions under Chapter VI-A cannot be claimed in respect of the enhanced income

C(b) unabsorbed depreciation of A.Y.2014-15 cannot be setoff against the enhanced income
(c) Business loss referred to in (a), deductions referred to in (b) and unabsorbed depreciation
referred to in (c) cannot be set- off against the enhanced income

e would not be attracted in this case due to reasons mentioned in both (b) and (c) above
(d)

6. XYZ Ltd. has failed to report an international transaction entered into by it with PQR
Inc., which is a specified foreign company in relation to XYZ Ltd. What would be the
penalty leviable in this case?
(a) 2% of the value of the international transaction
(b) 50% of tax payable on under-reported income
(c) 200% of tax payable on under-reported income
(d) Both (a) and (c)

38 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 20 Transfer Pricing

MULTIPLE CHOICE QUESTIONS

Answer Key:

1 (d) [email protected]% is attracted on interest of 5 lakhs payable to the

foreign company. [email protected]% is attracted on interest of 3 lakhs payable to
Mr. Frank
2 (a) Transfer pricing provisions would be attracted in this case
3 (a) Profit split method
4 (a) 45 crore
5 (b) deductions under Chapter VI-A cannot be claimed in respect of the
enhanced income
6 (d) Both (a) and (c)

39 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 21 Fundamentals of BEPS

MULTIPLE CHOICE QUESTIONS

1. Which action plan deals with developing a multilateral instrument on tax treaty measures to
tackle BEPS?
(a) Action Plan 12
(b) Action Plan 13
(c) Action Plan 14
(d) Action Plan 15

2. Which are the forms of hybrid mismatch arrangements?

(i) Participation exemption regimes
(ii) Misuse of foreign tax credit
(iii) Creation of two deductions for a single borrowal
(iv) Generation of deductions without corresponding income inclusions.
(a) Only (i) and (ii) above
(b) Only (i) and (iii) above
(c) (i), (ii) and (iii) above
(d) (i), (ii), (iii) and (iv) above
3. Which are the BEPS action plans based on the fundamental pillar of transparency?
(a) BEPS Action Plan 5 (1st component -Preferential tax regimes), 11, 12 and 13
(b) BEPS Action Plan 5 (2nd component – Exchange of information on tax rulings), 6, 11, 12 and 14
(c) BEPS Action Plan 5 (2nd component – Exchange of information on tax rulings), 11, 12, 13 and 14
(d) BEPS Action Plan 5 (1st component -Preferential tax regimes), 12, 13 and 14

Answer Key:

1 (d) Action Plan 15

2 (d) (i), (ii), (iii) and (iv) above

3 (c) BEPS Action Plan 5 (2nd component – Exchange of information on tax

rulings), 11, 12, 13 and 14

40 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 22 Application and Interpretation of Tax Treaties

MULTIPLE CHOICE QUESTIONS

1. While interpreting the treaty entered into by India with Country “P”, the Budget Speech
of the finance minister was relied upon to understand the intent at the time of signing the
treaty. Which law of interpretation has been followed in this case?
(a) Liberal Interpretation
(b) Subjective Interpretation
(c) Purposive Interpretation
(d) Objective Interpretation

Answer Key:

1 (b) Subjective Interpretation

41 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 23 Latest Developments in International Taxation

MULTIPLE CHOICE QUESTIONS

1. Pillar Two consists of –

(a) the Global Anti-Base Erosion (GloBE) Rules and a treaty-based Subject to Tax Rule (STTR)
(b) Only Income Inclusion Rule (IIR) and Undertaxed Payment Rule (UTPR)
(c) Only Income Inclusion Rule (IIR) and Qualified Domestic Minimum Tax (QDMT)
(d) Only Qualified Domestic Minimum Tax (QDMT) and Undertaxed Payment Rule (UTPR)

2. In Scope companies are MNCs with –

(a) Global turnover of above 10 billion euros and profitability above 10% (i.e., profit after
tax/revenue)
(b) Global turnover of above 10 billion euros and profitability above 20% (i.e., profit before
tax/revenue
(c) Global turnover of above 20 billion euros and profitability above 10% (i.e., profit before
tax/revenue)
(d) Global turnover of above 20 billion euros and profitability above 10% (i.e., profit after
tax/revenue)
3. Minimum tax rates prescribed by Pillar Two is –
(a) 15% under GloBE rules and STTR
(b) 9% under GloBE rules and STTR
(c) 9% under GloBE rules and 15% under STTR
(d) 15% under GloBE rules and 9% under STTR

4. Which Rule imposes a top-up tax on a parent entity in respect of the constituent entity
located in low-taxed jurisdiction?
(a) Treaty-based Subject to Tax Rule (STTR)
(b) Income Inclusion Rule (IIR)
(c) Undertaxed Payment Rule (UTPR)
(d) Qualified Domestic Minimum Tax (QDMT)
5. Amount A is –
(a) 10% of residual profit that will be allocated to market jurisdictions Answer - 2 :
(b) 15% of residual profit that will be allocated to market jurisdictions
(c) 20% of residual profit that will be allocated to market jurisdictions
(d) 25% of residual profit that will be allocated to market jurisdictions

42 CA Yash Khandelwal
CA FINAL DIRECT TAX LAWS AND INTERNATIONAL TAXATION

CHAPTER 23 Latest Developments in International Taxation

MULTIPLE CHOICE QUESTIONS

Answer Key:

1 (a) the Global Anti-Base Erosion (GloBE) Rules and a treaty-based Subject
to Tax Rule (STTR)
2 (c) Global turnover of above 20 billion euros and profitability above 10% (i.e.,
profit before tax/revenue)
3 (d) 15% under GloBE rules and 9% under STTR

4 (b) Income Inclusion Rule (IIR)

5 (d) 25% of residual profit that will be allocated to market jurisdictions

43 CA Yash Khandelwal