Kalpesh Classes

Multiple Choice Questions (MCQ)

Multiple Choice Question ​​ (ID ​​ MCQ-0001)​​ 

Mr. Abhinav, a citizen of India, aged 48 years, for the first time, moved for employment purpose to Country X, a country outside India, on 1 September, 2013. He was employed with a consulting firm in Country X. Since then, he has visited India during the P.Y. 2013-14, 2014-15. 2015-16. 2016-17, 2017-18 for 30 days, 50 days, 50 days, 170 days and 150 days. respectively, for both personal​​ and professional purposes. His family consist of himself, his spouse Mrs. Archana aged 45 years; his mother, Mrs. Kamala (aged 81 years); and his two sons, Rohan and Kapil, aged 19 years and 15 years, respectively. In addition, Mr. Abhinavs unmarried sister Ms. Geetha, aged 42 years, is living with his family in Country X since September, 2013, Ms. Geetha and Mrs. Kamala have been visiting India during the P.Y. 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 for 50 days, 50 days, 120 days, 150 days and 150 days, respectively.

Based on the above facts, Mr. Abhinav’s residential status in India for P.Y. 2017-18 and P.Y. 2013-14 is –

(a) Non-resident for both the years

(b) Non-resident for P.Y.2017-18 and Resident but not ordinarily resident for P.Y.2013-14

(c)​​ Resident but not ordinarily resident for P.Y.2017-18 and Resident for P.Y.2013-14

(d) Non-resident for P.Y.2017-18 and Resident and ordinarily resident for P.Y.2013-14.

(Note — Assume that the rules for determining residential status for all the years is same as that of PY.)

Multiple Choice Question ​​ (ID ​​ MCQ-0002)​​ 

Based on the facts of MCQ-0001,​​ 

Which of the following benefits are not allowable to Ms. Geetha, while computing her total income and tax liability under the Income-tax Act ?

(a) Deduction of​​ 30 % of gross annual value while computing her income from house property in Bangalore, India

(b) Tax rebate of NR 2,500 from tax payable on her total income of INR 340,000

(c) Deduction for donation made by her to Prime Minister’s National Relief Fund

(d)​​ Deduction for interest earned by her on NRO savings account.

Multiple Choice Question ​​ (ID ​​ MCQ-0003)​​ 

Unexhausted basic exemption limit, if any, of Mr. Thomas who stay in India for 36 days for every year since last 10 years, for can be adjusted against​​ —

(a) Only LTCG taxable@20%

(b) Only STCG taxable@15%

(c) Both (a) and (b)

(d) Neither (a) nor (b)

Multiple Choice Question ​​ (ID ​​ MCQ-0004)​​ 

Based on the facts of MCQ-0001,​​ 

Had Ms. Geetha been seconded on employment outside India by the Indian​​ Government, which of the following emoluments paid to her by the Indian Government shell be taxable under the income tax Act, 1961:

(a) Basic Salary paid outside India

(b) Allowances and Perquisites paid outside India

(c) Both (a) and (b), since emoluments​​ are paid to her by the Indian Government

(d) Neither (a) nor (b), since she has rendered services outside India

Multiple Choice Question ​​ (ID ​​ MCQ-0005)​​ 

Based on the facts of MCQ-0001,​​ 

Ms. Geetha is an enthusiastic sports person and is keen on contributing an article on a game of Soccer in a leading newspaper in India. She approaches you to enquire on taxability of such income. As per the provisions of Income-tax Act, 1961, such income shall be taxable in her hands at -

(a) 5%

(b) 10%

(c) 20%

(d) Normal​​ tax slab rates

(Note — The above tax rates are excluding cess and surcharge. if any)

Multiple Choice Question ​​ (ID ​​ MCQ-0006)​​ 

Based on the facts of MCQ-0001,​​ 

Ms. Geetha shall be mandatorily required to file return of income in India -​​ 

(a) if she holds​​ assets outside India even though she does not have taxable income in India

(b) if she has income exceeding the basic exemption limit but after taking into account deduction under Chapter VI-A, her income falls below the basic exemption limit

(c) if she has income, without giving effect to deduction under Chapter VI-A, below the basic exemption limit and tax credit appearing in Form 26AS, in respect of which she does not wish to claim the refund

(d) in all the above situations

Multiple Choice Question ​​ (ID ​​ MCQ-0007)​​ 

Based on the facts of MCQ-0001,​​ 

In December 4 years back Ms. Geetha bought, in foreign currency, 500 Global Depository Receipts of PQR Ltd. an Indian Company, which were issued in accordance with the notified scheme of the Central Government. In January, ​​ she sold 300 GDRs outside India to Mr Frank, a citizen and resident of Country ‘X’ and 200 GDRs to Mr. Kamal, a Resident but not ordinarily resident in India Comment on the tax consequences of such sale transaction under the Income-tax Act,​​ 1961 -

(a) Capital gains arising on sale of 500 GDRs shall be subject to tax @20% with indexation benefit in India

(b) No capital gains would arise on sale of 500 GDRs in India. since the GDRs are purchased in foreign currency

(c) No capital gains would​​ arise on sale of 300 GDRs, but capital gains arising on sale of 200 GDRs shall be taxed in India @10% without indexation benefit

(d) No capital gains would arise on sale of 300 GDRs, but capital gains arising on sale of 200 GDRs shall be taxed @20% with indexation benefit in India

Multiple Choice Question ​​ (ID ​​ MCQ-0008)​​ 

Benefit of presumptive taxation under the Income-tax Act, 1961 would not be available to Mr. George (non-resident) for, in respect of the related Indian income, if he is engaged in the business of -

(a) Operation of Ships

(b) Operation of Aircrafts

(c) Civil Construction in connection with an approved turnkey project

(d) Plying, hiring or leasing of goods carriages.

Multiple Choice Question ​​ (ID ​​ MCQ-0009)​​ 

Interest income earned by Mr. George (non-resident) on bonds, issued by MNO Ltd., an Indian company, under a scheme notified by the Central Government. which were purchased by him in convertible foreign currency, is -

(a) taxable@10%

(b) taxable@15%

(c) taxabie@20%

(d) not taxable

(Note​​ — the above tax rates are excluding cess and surcharge, if any)

Multiple Choice Question (ID ​​ MCQ-0010)

An agent, in relation to income which is deemed to accrue or arise in India to a non-resident, is considered as a representative assessee. However, an​​ agent, in relation to a non-resident person does not include -

(a) An employed in India of the non-resident

(b) A trustee in India of the non-resident

(c) A broker in India dealing with the non-resident person only through a non-resident broker, where both non-residents carry on transactions in the ordinary course of business

(d) A person in India having business connection with the non-resident

Multiple Choice Question (ID ​​ MCQ-0011)

The provisions relating to limitation of interest deduction in respect​​ of debt issued by a non-resident associated enterprise are not applicable to an Indian company engaged in the business of:

(a) Information Technology

(b) Banking and Insurance

(c) Bio-technology

(d) Aviation

Multiple Choice Question (ID ​​ MCQ-0012)

The​​ provisions relating to limitation of interest deduction in respect of debt issued by a non-resident associated enterprise would not apply where the expenditure by way of interest or similar nature is –

(a) 2.10 crore

(b) ​​ 2 crore

(c) ​​ 1.50 crore

(d) ​​ 1 crore

Multiple Choice Question (ID ​​ MCQ-0013)

A Ltd. an Indian company was incorporated in the year 2008. It is a wholly owned subsidiary of A Inc., USA. A Ltd. is engaged in the business of manufacturing and selling virtual reality cameras. During the previous year, A Ltd. entered into various transactions with the following enterprises for purchase of raw materials, use of technology and sale of finished goods, The earnings before interest, dividend, tax and amortization of A Ltd for Financial year is ​​ 100​​ crores. The details of the transactions entered into by A Ltd. During the year are given hereunder:

Prior to financial year, A Ltd. had obtained loan of 200 crores @ 8% from A LLC, Cyprus in April 2 years back. Interest of ​​ 16 crores paid to A LLC, Cyprus on the loan of ​​ 200 crores, which constituted 52% of the total​​ assets of A Ltd. A Ltd. obtained loan of ​​ 100 crores from Bank of Chennai, India based on a guarantee provided by A Inc., USA. Interest of ​​ 8 crores paid on such loan and guarantee fee of ​​ 50 lacs paid to A Inc., USA. 90% of raw materials required by A Ltd. is supplied by AA Ltd., China.

Which of the following enterprises are associated enterprises or deemed associated enterprises of A Ltd.?

(a) A Inc., USA: A LLC. Cyprus; and AAA Ltd., Taiwan.

(b) A Inc., USA: A LLC. Cyprus; and A Pty. Singapore.

(c) A Inc., USA: A LLC. Cyprus; and AA Ltd., China.

(d) A Inc., USA: AA Ltd., China: and A Pty, Singapore,

Multiple Choice Question (ID ​​ MCQ-0014)

In respect of any payment made to a person located in a Notified Jurisdictional Area (NJA) tax is deductible at​​ higher of the rate specified in the Income-tax Act 1961 or rates in force or-

(a) 10%

(b) 15%

(c) 20%

(d) 30%

Multiple Choice Question (ID ​​ MCQ-0015)

A Ltd. has a wholly owned subsidiary in Sri Lanka, and it extends corporate guarantee to the said non-resident subsidiary. If the amount guaranteed is ​​ 95 crore, the Assessing Officer has to accept the guarantee fee declared by A Ltd, if the guarantee fee declared is -

(a) ​​ 47.50 lakhs

(b) ​​ 90 Lakhs

(c) ​​ 95 Lakhs

(d) Either (a) or (b)

Multiple Choice Question (ID ​​ MCQ-0016)

If A Ltd. does not furnish transfer pricing report, what would be the quantum of penalty imposable under the Income-tax Act, 1961 for such a failure ?

(a) 1% of the value of international transaction

(b) 2% of the value of international transaction

(e) ​​ 1 crore — fixed penalty

(d) ​​ 1 lakh—fixed penalty

Multiple Choice Question (ID ​​ MCQ-0017)

Interest paid to non-resident associated enterprise disallowed under the relevant provision of the Income-tax Act. 1961, during the A.Y. 2018-19 can be carried forward up to​​ 

(a) A.Y.2022-23

(b) A.Y.2023-24

(c) A.Y.2026-27

(d) Indefinitely

Multiple Choice Question (ID ​​ MCQ-0018)

In a case where primary adjustment to transfer price is made suo moto by A Ltd. the time limit for repatriation of “excess​​ money” is -

(a) 60 days from 30th September of the Assessment Year

(b) 90 days from 30th September of the Assessment Year

(c) 60 days from 30th November of the Assessment Year

(d) 90 days from 30th November of the Assessment Year

Multiple Choice Question​​ (ID ​​ MCQ-0019)

If the excess money is not repatriated. A Ltd. has to make secondary adjustment in A.Y. 2018-19, if the primary adjustment to transfer price, made by it suo moto in its return of income, is in respect of-

(a) A.Y.2016-17 and the amount of primary adjustment is ​​ 2 crores.

(b) A.Y.2017-18 and the amount of primary adjustment is 1 crore

(c) A.Y.2017-18 and the amount of primary adjustment s ​​ 1.05 crore

(d) A.Y.2018-19 and the amount of primary adjustment is ​​ 1 crore.

Multiple Choice Question (ID ​​ MCQ-0020)

Which of the following approaches does India follow in relation to secondary adjustments?

(a) Deemed equity approach

(b) Deemed dividend approach

(c) Deemed loan approach

(d) Either (a) or (c)

Multiple Choice Question (ID ​​ MCQ-0021)

Mr.​​ Harry Smith, a citizen and resident of Country Y and a swimmer came to India for participation in international swimming competition held in New Delhi. He came to New Delhi on 5th ​​​​ February and left on 30th ​​​​ March, for Country Y. He received Rs. 15 lakhs for participation in competitions in India. He also received Rs. 2 Lakh from XYZ Ltd. for advertisement of a product, namely shaving cream, on television, He contributed articles related to swimming in a newspaper for which he received Rs. 20,000. He incurred Rs.1 lakh as his travel costs to India. All other expenses were met by his sponsors. When he stayed in India, he also won a prize of Rs. 25,000 from horse racing in Mumbai. He has no other income in India during the year. He wants to know his tax liability in India. He also wants to know whether he has to file return of income in India.

Mr. Harry Smith has a sister Ms. Rita Smith and a brother Mr. Austin Smith, who are also citizens and residents of Country Y. Ms. Rita Smith is a pop singer who accompanied Mr. Harry Smith to India in February-March,. She earned Rs. 2 Lakhs from music performances given by her in India during that period. She has no other Income In India during the year. Mr. Harry Smith wants to know Ms. Rita Smith’s tax liability in India​​ and whether she has to file her return of income in India.

In respect of income earned by Mr. Harry Smith in India —

(a) Tax is deductible at source at the rates in force under section 195

(b) Tax is deductible at source @30% plus cess on income from horse races and at the rates in force under section 195 on other income.

(c) Tax is deductible at source @30% plus cess on income from horse races and @20% plus cess on other income

(d) Tax is deductible at source@30% plus cess on income from horse races and​​ income from advertisement of a product on TV, 20% plus cess on income from participation in international swimming competition in India and no tax is deductible at source on income from contribution of articles relatin9 to swimming in India.

Multiple Choice Question (ID ​​ MCQ-0022)

Based on Facts of MCQ-0021

Assuming that the tax deductible at source. If any, has been fully deducted, does Mr. Harry Smith and Ms. Rita Smith have to file return of income in India?

(a) Yes, because they have earned income in​​ India which is chargeable to tax as per the provisions of the Income-tax Act, 1981.

(b) No, because tax deductible at source has been fully deducted from income earned by them in India

(c) Harry Smith has to file his return of income but Rita Smith need not file her return of income

(d) Rita Smith has to file her return of income but Harry Smith need not file his return of income

Multiple Choice Question (ID ​​ MCQ-0023)

Based on Facts of MCQ-0021

If Harry Smith had been a match referee instead of a​​ swimmer, then, in respect of income earned by him in India (assuming the other facts remain the Same) -

(a) Tax is deductible at source at the rates in force under section 195

(b) Tax is deductible at source @ 30% plus cess on income from horse races and​​ at the rates in force under section 195 on other income,

(c) Tax is deductible at source@ 30% plus cess on income from horse races and @20% plus cess on other income

(d) Tax is deductible at source 30% plus cess on income from horse races and advertisement​​ of a product on TV, 20% plus cess on Income from participation in international swimming competition in India and no tax is deductible at source on income from contribution of articles in India.

Multiple Choice Question (ID ​​ MCQ-0024)

MNO Ltd., a company​​ having registered head office in Country X, for the first time, carried out operations during the year of purchase of goods in India on three occasions. Immediately after purchase, the company exported the same to China. The total value of such exports was Rs. 85 lakhs, on which it earned profits of Rs. 15 lakhs, before the expenses of Rs. 8 lakhs, which were directly paid by H.O. The company does not carry on any other operation in India and its board meetings are held in Country X and key management and​​ commercial decisions for the conduct of the company’s business as a whole are taken in such board meetings. The company wants to know its tax liability in India.​​ 

(a) resident in India, since it has carried on the operation of purchase of goods in India

(b) non-resident in India. since its registered head office is in Country X

(c) non-resident in India. since key management decisions are taken in Country X

(d) non-resident in India, due to reasons stated in (b) and (c) above.

Multiple Choice Question (ID ​​ MCQ-0025)

M/s. Pacific Airlines, incorporated as a company in Country Y. operated its flights to India and vice versa during the year and collected charges of Rs. 280 crores for carnage of passengers and cargo out of which Rs. 100 crores were received in Country Y Dollars for the passenger fare from Country Y to Delhi. Out of Rs. 100 crores, Country Y dollars equivalent to Rs. 40 crores is received in India. The total expenses for the year on operation of such flights were Rs. 11 crores. The company wants to know its income chargeable to tax in India and the rate at which such income would be subject to tax.

The effective rate of income-tax applicable on total income of M/s. Pacific Airlines is —

(a) 42.024%

(b) 44.084%

(c) 43.960%

(d) none of the above

Multiple Choice Question (ID ​​ MCQ-0026)

M/s. Hari om & Co.. an Indian firm, is a leading tax consultant with headquarters in Mumbai. The firm has four resident partners, Mr. Shivakumar, Mr. Hari Prakash, Mr. om Prakash and Mr. Narayan and one non-resident​​ partner, Mr. Vallish. As per the partnership deed, the profits and losses are shared equally amongst partners. All partners are working partners and salary is paid to all partners as per the terms of the ​​ partnership deed.​​ 

Salary paid by M/s. Hari Om & Co. to its partners falls within the limits prescribed under section 40(b)(v). Does Hari om & Co. have to deduct tax on salary paid to its partners?

(a) Yes; tax is deductible at source under section 192 on salary paid to its partners.

(b) No; salary paid to partners is not subject to tax deduction at source

(c) Yes; tax is deductible at source under section 192 on salary paid to resident partners and under section 195 on salary paid to the non-resident partner

(d) Salary paid to resident partners is not subject to tax deduction at source; but tax has to be deducted under section 195 on salary paid to the non-resident partner

Multiple Choice Question (ID ​​ MCQ-0027)

Country L is a notified jurisdictional area (NJA), then, the rate at which interest receivable​​ from India lnfradebt Ltd. is taxable in the hands of Mr. Vallish and the rate at which tax has to be deducted at source on such income are —

Note — The above rates are exclusive of cess,

Multiple Choice Question (ID ​​ MCQ-0028)

Mr. Harish and Mr. Austin Smith have been appointed as senior officials of Country L embassy and Country Y embassy, respectively, in India in October. Mr. Harish and Mr. Austin Smith are subjects of Country L and Country Y, respectively, and are not engaged in any other business or profession in India. The remuneration received by Indian officials working in Indian embassy in Country L is exempt but in Country Y is taxable. The tax treatment of remuneration received by Mr. Harish and Mr. Austin Smith from embassies of Country L and Country Y, respectively, in India is:​​ 

(a) Exempt from income-tax under section 10

(b) Taxable under the Income-tax Act, 1961

(c) Remuneration received by Mr. Harish is exempt but remuneration received by Mr. Austin Smith is taxable

(d) Remuneration received by Mr. Harish is taxable but remuneration received by Mr. Austin Smith is exempt.

Multiple Choice Question (ID ​​ MCQ-0029)

On the subject of principles of interpretation of tax treaties,​​ match the principles given in Column A with the description examples given in Column B and choose the correct option:

Multiple Choice Question (ID ​​ MCQ-0030)

On the subject of BEPS Action Plans,​​ match the BEPS Action Plans given in Column A with the description examples given in Column B and choose the correct option:

Multiple Choice Question (ID ​​ MCQ-0031)

If Fulcrum Ltd. an Indian Company had entered into an agreement for sale of 1000 units of non-core auto components to Mr. Rajiv, an unrelated party, on 13th​​ July and Mr. Rajiv had entered​​ into an agreement for sale of such components with Gigo Inc. on 8th​​ July, Fulcrum Ltd and Gigo Inc are associated enterprise. Which of the following statements is correct?

(a) Transfer pricing provisions would not be attracted since Fulcrum Ltd. and Mr. Rajiv are not associated enterprises

(b) Transaction between Fulcrum Ltd. and Mr. Rajiv would be deemed to be an international transaction between associated enterprises, only if Mr. Rajiv is a non-resident.

(c) Transaction between Gigo Inc. and Mr. Rajiv​​ would be deemed to be an international transaction between associated enterprises, only if Mr. Rajiv is a non-resident.

(d) Transaction between Fulcrum Ltd. and Mr. Rajiv would be deemed to be an international transaction between associated enterprises, whether or not Mr. Rajiv is a non-resident

Multiple Choice Question (ID ​​ MCQ-0032)

In respect of the transaction referred to in MCQ-0031 above, what would be the penalty leviable if Fulcrum Ltd. fails to report the above transaction?

(i) 2% of the value of​​ transaction

(ii) 50% of tax payable on under-reported income

(iii) 200% of tax payable on under-reported income

(a) Only (i) above

(b) (i) and (ii) above

(c) (i) and (iii) above

(d) No penalty is leviable since Fulcrum Ltd. and Rajiv are not associated enterprises

Multiple Choice Question (ID ​​ MCQ-0033)

Let us suppose Alpha Ltd. has entered into an advance pricing agreement (APA) in respect of its transactions with Xylo Inc. for the year. The company decides to make an application for roll back of the said APA. However, rollback provision shall not be available in respect of the said transaction for a rollback year, if —

(i) such application has the effect of reducing total income declared in the return of income of the said year

(ii) Determination of the​​ arm’s length price of the said transactions for the said year has been the subject matter of appeal before Commissioner (Appeals) and the Commissioner (Appeals) has passed an order disposing of such appeal at any time before signing of the agreement​​ 

(iii)​​ determination of the arm’s length price of the said transactions for the said year has been the subject matter of appeal before the Appellate Tribunal and the Appellate Tribunal has passed an order disposing of such appeal at any time before signing of the agreement

(iv) return of income for the relevant roll back year has been furnished by the company under section 139(4)

The most appropriate answer is -

(a) (i) and (ii) above.

(b) (i) and (iii) above

(c) (i), (ii) and (iv) above

(d) (i), (iii) and (iv)​​ above.

Multiple Choice Question (ID ​​ MCQ-0034)

Assuming that Fulcrum Ltd. an Indian Company business income of has increased by Rs. 2 crores due to application of arm’s length price by the Assessing Officer, and the same has been accepted by Fulcrum Ltd., then, -

(a) business loss cannot be set-off against the enhanced income

(b) deductions under Chapter VI-A cannot be claimed in respect of the enhanced income.

(c) unabsorbed depreciation of A.Y.2012-13 cannot be set-off against the enhanced income

(d) business loss referred to in (a) above, deductions referred to in (b) above and unabsorbed depreciation referred to n (c) above cannot be set-off against the enhanced income.

Multiple Choice Question (ID ​​ MCQ-0035)

Assuming that there has been an increase in the total income of Alpha Ltd. by Rs 3 crores due to application of arm’s length price, and the same has been accepted by Alpha Ltd., the said sum of Rs.3 crores

(a) Is not required to be repatriated if the said increase is as per the safe harbour rules

(b) is not required to be repatriated if the said increase is determined by an advance price agreement

(c) need not be repatriated in both cases (a) and (b) mentioned above. However, had the increase been made by the Assessing Officer during the course of​​ assessment, the same has to be repatriated failing which it would be treated as a deemed advance.

(d) has to be repatriated in both cases (a) and (b) mentioned above, failing which the same would be treated as a deemed advance.

Multiple Choice Question (ID ​​ MCQ-0036)

Shareholding pattern of ABC Ltd

Shareholding pattern of PQR Inc.

Details relating​​ to XYZ Motors Ltd.

(2) Total book value of its assets. as on year end :​​ Rs 12,000 crore​​ 

(3) XYZ Motors Ltd. has neither entered into advance pricing agreement nor has it opted for safe harbour rules.

(4) The manufacture of vans by XYZ Motors Ltd is wholly dependent on the use of know-how owned by RST Ltd. RST Ltd. is the sole owner of such technical knowhow,

(5) The value of Country C $ and of 1 EURO was Rs, 80 and Rs.81, receptively. Throughout the year.

Which of the following pairs of companies are Associated Enterprises / deemed to be associated enterprises?

(i) ABC Ltd.​​ & ABC Inc.

(ii) Satpura Ltd. & Sigma Ltd.

(iii) XYZ Motors Ltd. & RST Ltd.

(iv) XYZ Motors Ltd. & HIT Ltd.

The correct answer is -

(a) Only (i) above

(b) (i) and (ii) above

(c) (i) and (iii) above

(d) (i), (iii) and (iv) above.

Multiple Choice Question (ID ​​ MCQ-0037)

If Himalaya 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 Himachal Pradesh in the year 2014. In the year, fourteen lakh metres of wire are transferred from Unit 2 to Unit 1 at Rs. 150 per meter when the market price per metre was Rs.200. Which of the following statements is correct?

(a) Transfer pricing provisions would be attracted in this case

(b) Transfer pricing provisions would not be attracted in this case, since Unit I and Unit 2 belong to the same company and are not associated enterprises

(c) Transfer pricing provisions would not be attracted in this case as it is not an international transaction as both the Units are in India. For the purpose of Chapter VIA deduction, the profits of power generation business shall, however, be computed as if the transfer has been made at the market value of Rs.200 per MT.

(d) Transfer pricing provisions would not be attracted in this case due to reasons mentioned in both (b) arid (c) above

Multiple Choice Question (ID ​​ MCQ-0038)

Ram, an individual aged 35 years resident in India, bought 3,000 equity shares of Rs. 10 each of ABC Ltd. at Rs. 70 per share on 1.6. He sold 1800 equity shares at Rs.50 per share​​ on 3.11. and the remaining 1200 shares at Rs.60 per share on 23.3. ABC Ltd. declared a dividend of 40%, the record date being 14.8. Ram sold a house from which he derived a long-term capital gain of Rs.1,25,000 Assuming Ram’s interest income from bank fixed deposit is Rs. 3,00,000, his tax liability would be -

(a) 18,440

(b) 18,810

(c) 19,920

(d) None of the above

Multiple Choice Question (ID ​​ MCQ-0039)

Which of the following is not an eligible international transaction for application of safe harbour​​ rules?

(i) Preparation of user documentation

(ii) Receipt of intra-group loans where the amount of loan is denominated in Indian rupees

(iii) Providing implicit corporate guarantee

(iv) Purchase and export of core auto components

(v) Receipt of intra-group​​ services from group member

(a) Only (ii)

(b) (ii) and (v)

(c) (ii), (iv) and (v)

(d) (ii), (iii), (iv) and (v)

Multiple Choice Question (ID ​​ MCQ-0040)

Let us consider two hypothetical cases -

Case 1: Ganga Ltd. Yamuna Ltd. and Saraswati Ltd. amalgamate​​ to form Ganga Ltd.

Case 2: Ganga Ltd., Yamuna Ltd. and Saraswati Ltd. merge to form new company, Triveni Sangam Ltd.

Which companies are eligible to apply for rollback provisions post amalgamation / merger in the above cases, assuming that all other conditions are satisfied?

(a) In Cases 1 & 2: Ganga Ltd. Yamuna Ltd. and Saraswati Ltd.

(b) In Case 1: Ganga Ltd and in Case 2 : Ganga Ltd., Yamuna Ltd. and Saraswati Ltd.

(c) In Case 1: Ganga Ltd. Yamuna Ltd. and Saraswati Ltd. and in Case 2, None.

(d) In Case 1: Ganga Ltd. and in Case 2. None.

Multiple Choice Question (ID ​​ MCQ-0041)

Athena Ltd. incorporated in Country Q (DTAA is as per OCED Model) will hire three professionals residing in India based on prescribed qualifications. It would be ideal for the team to comprise one lawyer, one accountant and one business professional up to December as part of their business expansion plan in India.​​ 

The agent Mr. Shyam can hold the first round of discussions and negotiations with any such interested party. Based on such discussions, the agent must convey the expectations of the interested party to Athena Ltd. While the agent can enter into any such preliminary negotiations with the advisors / investors, local partners, the desired terms of relationship would be subject to the consideration, confirmation and final approval of Athena Ltd. Appointment of Mr. Shyam is for the period June to December.

The income earned by Athena Ltd. from sale of hair straighteners and hair curlers in India during the period from June to​​ December​​ 

• Would not be taxable in India , since no business connection is established on account Of Mr. Shyam not having authority to conclude contracts on behalf Of Athena Ltd.​​ 

• Would be taxable in India, since business connection would be established on account Of Mr. Shyam securing orders in India wholly for Athena Ltd,​​ 

• Would not be taxable in India, since Athena Ltd. does not have a PE in India​​ 

• Would be taxable in India, since Athena Ltd. has a PE in India​​ 

Multiple Choice Question (ID ​​ MCQ-0042)

Dividend from an Indian company is exempt in the hands of a non -resident shareholder by virtue of section 10(34). Can such income be subject to tax in his hands in accordance with the provisions of the tax treaty?​​ 

(a) Yes, since the provisions of the treaty override the domestic law​​ 

(b) No, due to the non-aggravation principle​​ 

(c) No, due to the equivalent beneficiary principle​​ 

(d) No, due to allocation of taxing rights principle

Multiple Choice Question (ID ​​ MCQ-0043)

Which of the following may be viewed by the tax authorities as a tax avoidance measure undertaken by​​ 

Athena Ltd. (foreign company)?​​ 

(a) Choosing Google Inc., a company not having a PE in India, for advertising its products.​​ 

(b) Hosting the website on a server based in Cayman islands​​ 

(c) both (a) and (b)​​ 

(d) Entering into limited period engagements with persons resident in India.​​ 

Multiple Choice Question (ID ​​ MCQ-0044)

In respect of remuneration per month paid by Athena Ltd. (foreign company) to Mr. Shyam, which of the following​​ statements is correct, having regard to the provisions of the Income-tax Act, 1961 (provisions of DTAA may be ignored)​​ 

• No tax is deductible at source as per the provisions of the Income-tax Act, 1961 since Athena Ltd is a foreign company and is not​​ resident in India​​ 

• Tax has to be deducted at source under section 192 at the average rate of income-tax computed on the basis of the rates in force.​​ 

• Tax has to be deducted at source at the rates in force under section 195​​ 

• Tax has to be deducted at source​​ as per 194J

Multiple Choice Question (ID ​​ MCQ-0045)

As per the provisions of the Income-tax Act, 1961 , who can act as a representative assessee in respect of​​ 

the income deemed to accrue or arise in India in the hands of Athena Ltd (foreign company).

(a) Only an employee of Athena Ltd.​​ 

(b) Only a trustee of Athena Ltd.​​ 

(c) Only an agent of Athena Ltd.​​ 

(d) All the above​​ 

Multiple Choice Question (ID ​​ MCQ-0046)

As per the DTAA (OCED model of tax treaty) with Country A, which of the following statements​​ is correct?​​ 

• The DTAA applies only to taxes on income​​ 

• The DTAA applies both in respect Of taxes on income and capital​​ 

• The DTAA applies only to persons who are resident of Country A in respect of taxes on income and capital​​ 

• The DTAA applies only to persons who are resident of India in respect of taxes on income.​​ 

Multiple Choice Question (ID ​​ MCQ-0047)

Which of the following is ordinarily not a function served by a tax treaty (OCED model of tax treaty)?​​ 

(a) Relieving economic double taxation​​ 

(b) Imposing a fresh tax liability​​ 

(c ) Boosting mutual trade and investment in the two Contracting States​​ 

(d) Allocating taxing rights​​ 

Multiple Choice Question (ID ​​ MCQ-0048)

Which of the following statements reflects the incorrect position?​​ 

• Domestic tax​​ laws are irrelevant while considering application of the provisions of a DTAA​​ 

• provisions of Income-tax Act, 1961 empower be union Government to enter into tax treaties for relieving double taxation​​ 

• Provisions of a DTAA overrides the provisions of domestic laws unless the latter are more beneficial for a taxpayer​​ 

• In the absence of DTAA, domestic law provide unilateral relief to tackle the double taxation.​​ 

Multiple Choice Question (ID ​​ MCQ-0049)

In the absence of a DTAA, domestic tax laws provide unilateral relief to tackle double taxation Which of the following is not a principle incorporated in the Vienna Convention on Law of Treaties ?​​ 

• preparatory work of the treaty can be used as a supplementary means Of interpretation​​ 

• A State Which is a third party​​ cannot be bound by the terms Of a bilateral tax treaty without its consent​​ 

• Violation of any term of the tax treaty by one Contracting State entitles the other Contracting State to terminate the treaty​​ 

• Ordinarily, each authenticated version of a treaty​​ in more than one language carries equal force​​ 

Multiple Choice Question (ID ​​ MCQ-0050)

Which article has been introduced in the India-Mauritius tax treaty to specifically target the practice of treaty shopping?​​ 

(a) Elimination of double taxation​​ 

(b) Limitation of benefits​​ 

(c ) Most Favoured Nation clause​​ 

(d) Non-discrimination​​ 

Multiple Choice Question (ID ​​ MCQ-0051)

Delhi Tamil Sangam a charitable trust in India, as per its rules, pays a fixed honorarium per concert to each musician performing in the​​ concerts organised by it. Shivam, however, refuses to accept this sum. If he requests Delhi Tamil Sangam to pay such sum directly to Help All, an unregistered institution providing relief to the poor and needy in rural India, what would be the tax consequence?​​ 

• No amount would be chargeable to tax in the hands of Mr. Shivam, since this is a case of diversion of income at source by overriding title​​ 

• The amount payable to Help All would be chargeable to tax only in the hands of Mr. Shivam, since it is a case​​ of application of income.​​ 

• The amount payable to Help All would be chargeable to tax only in the hands of the institution which has received the amount.​​ 

• The amount payable to Help All would be chargeable to tax both in the hands of Mr. Shivam and in the​​ hands of the institution.​​ 

Multiple Choice Question (ID ​​ MCQ-0052)

Mr. Arvind resident in India opened a bank account in Country P on 1st​​ July 2 years back ​​ he has made deposits of foreign currency equivalent to INR 5 lakhs and ​​ INR 7 lakhs and ​​ INR 12 lakhs on 1.9.PY and INR 25 lakhs on 1.3.PY, that bank, out of Indian income which has not been assessed to tax in India. The deposit of INR 12 lakhs on 1.9.PY is made out of the withdrawal of earlier deposits made 2 years back with the said bank. Further, out of INR 25 lakhs deposited by him on 1.3.PY Mr. Arvind withdrew INR 2 lakh on 31.3.PY. The value of an undisclosed asset in form of bank account is:​​ 

(a) INR 49 lakhs​​ 

(b) INR47 lakhs​​ 

(c) INR371akhs​​ 

(d) INR351akhs​​ 

Multiple Choice Question (ID ​​ MCQ-0053)

Which of the following statements does not hold good in the case of OECD Model Convention? :​​ 

(a) OECD Model lays emphasis on the right of the State of Residence to tax​​ 

(b) The relevant article of the Convention providing for determination of business profits of a PE, does not provide for deduction of expenses​​ 

(c) The relevant article relating to PE of the Convention explicitly deals with mechanism of Service PE​​ 

(d) It is essentially a model treaty between two developed nations​​ 

Multiple Choice Question (ID ​​ MCQ-0054)

To address the problem of dual residency, under OECD Model Convention, certain rules are provided. The rules are to be applied:​​ 

• At the discretion of competent authority Of the respective countries based on permanent home and nationality of the assessee​​ 

• Sequentially in order of nationality, permanent home , centre of vital interest and habitual abode​​ 

• Sequentially in order of permanent home, centre of vital interest, habitual abode and nationality​​ 

• Only if an assessee is not able to​​ produce Tax Residency Certificate from the respective country.​​ 

Multiple Choice Question (ID ​​ MCQ-0055)

If Cure House Inc. opts for advance ruling for the projects of providing consultancy in field of medicine, such ruling shall be binding on​​ 

• Cure House​​ Inc., in relation to the abovementioned project​​ 

• Jurisdictional Assessing Officer of Cure House​​ 

• both (a) and (b)​​ 

• Cure House Inc. and Jurisdictional Assessing Officer in relation to the above mentioned project and for any future transaction of similar nature in India​​ 

Multiple Choice Question (ID ​​ MCQ-0056)

Which of the following would not be considered as a permanent home of Mr. Shivam in context of the relevant rule in the DTAA with Country Q for dual residency?​​ 

(i) House in Defence Colony, Delhi where​​ his family lives​​ 

(ii) Own house in Mumbai which has been let out​​ 

(iii) Rent-free accommodation provided by his employer in Country Q​​ 

The correct answer is -​​ 

(a) Only (i) above​​ 

(b) Only (ii) above​​ 

(c) Only (iii) above​​ 

(d) Both (i) and (iii) above​​ 

Multiple Choice Question (ID ​​ MCQ-0057)

Form 67 has to be filed mandatorily on or before due date of fling of return of income​​ 

(i) If the assessee claims foreign tax credit in his return of income for the year in which such corresponding​​ 

income was​​ offered to tax​​ 

(ii) if the assessee owns directly, or a beneficial owner, any foreign assets​​ 

(iii) if there is a carry backward of loss of the current year resulting in refund of foreign tax for has been claimed in an earlier previous year.​​ 

The correct​​ answer is​​ 

(a) Only (i) above​​ 

(b) Both (i) and (ii) above​​ 

(c) Both (i) and (iii) above​​ 

(d) (i), (ii) and (iii) above.​​ 

Multiple Choice Question (ID ​​ MCQ-0058)

While interpreting the treaty entered into by India with Country P, the Budget Speech of Shri​​ Arun Jaitley​​ 

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​​ 

Multiple Choice Question (ID ​​ MCQ-0059)

An application for advance ruling was made on 31.05.PY in relation to a transaction proposed to be undertaken by Mr. James, a resident of County P. On 07.07.PY he decides to withdraw the said application such application:​​ 

(a) cannot be withdrawn once filed​​ 

(b) can be withdrawn on 07.07.PY only with special permission of Principal Chief Commissioner​​ 

(c ) cannot be withdrawn since 30 days from date of application have passed​​ 

(d) Can be withdrawn on​​ 07.07.PY with permission of the AAR, if the circumstances of the case so justify​​ 

Multiple Choice Question (ID ​​ MCQ-0060)

Mr Arvind resident in India acquired a flat in Country P in for INR 50 lakhs out of his Indian income out of the said sum, INR 20 lakhs was assessed to tax in India during the P.Y 2013-14 and earlier years. This asset comes to the notice of the Assessing Officer in the previous year. If the value of the flat on 1.4.PY is INR 90 lakhs, the amount chargeable to tax in the previous year would be:​​ 

• INR 90 lakhs​​ 

• INR 70 lakhs​​ 

• INR 54 lakh​​ 

• INR 30 lakhs​​ 

Multiple Choice Question (ID ​​ MCQ-0061)

ABC Ltd. an Indian company paid dividend distribution tax under section 115-0 in respect of dividend distributed by it to its resident and​​ non-resident shareholders. Mr. John, a shareholder of ABC Ltd. and a resident of Country X, has to pay tax in Country X on dividend received by him from ABC Ltd., as per the domestic tax laws of Country X. This is an example of:​​ 

(a) Juridical double taxation​​ 

(b) Territorial double taxation​​ 

(c) Economic double taxation​​ 

(d) Municipal double taxation​​ 

Multiple Choice Question (ID ​​ MCQ-0062)

Tax treaty is part of international law; hence its interpretation should be based on a certain set of principles and​​ rules of interpretation. Which convention is used globally for interpretation of tax treaties?​​ 

(a) The UN Model Convention​​ 

(b) The OECD Model Convention​​ 

(c) Either (a) or (b) (Except in case of USA, where US Model Convention is used)​​ 

(d) The Vienna Convention​​ 

Multiple Choice Question (ID ​​ MCQ-0063)

Can benefit of India-Country X tax treaty be availed by M/S Gryffindor’s LLP ('the firm'), Country X in respect of income earned by it in India from Assignment A, which is taxable in both India and Country​​ X, by virtue of the respective domestic tax laws?​​ 

• Yes, since the income is subject to tax in both countries​​ 

• No, since as per the laws of Country X, the firm is a fiscally transparent entity. Hence, there is no double taxation of income in its hands.​​ 

• Yes, since the firm's employees and partners stayed in India for more than 100 days. Hence, the requisite condition for availing treaty benefit under the DTAA is satisfied.​​ 

• Yes, since the execution of work was done partly from India and partly rom Country​​ X. Hence, treaty benefit can be availed.​​ 

Multiple Choice Question (ID ​​ MCQ-0064)

A fiscally transparent entity means —​​ 

(a) An entity entitled to concessional rate Of tax​​ 

(b) An entity enjoying tax pass through status​​ 

(c) An entity entitled to benefits​​ of DTAA​​ 

(d) An entity which is subject to distribution tax on profits distributed by it.​​ 

Multiple Choice Question (ID ​​ MCQ-0065)

What are the tax implications under the Income-tax Act, 1961 respect of income earned from assignment A by M/s. Gryffindor’s LLP, a Country X based partnership firm (You may ignore the provisions of DTAA for the purpose of answering this question) -​​ 

• the entire income from the assignment is taxable in India​​ 

• Only income attributable to the services rendered in India is taxable​​ in India​​ 

• No part of the income is taxable in India since the firm does not have a permanent establishment in India​​ 

• No part of the income is taxable in India since the income was received outside India.​​ 

Multiple Choice Question (ID ​​ MCQ-0066)

In order​​ to claim relief under the tax treaty in India , a non-resident -​​ 

(a) should have a business presence in India​​ 

(b) should produce his Permanent Account Number​​ 

(c) should produce Tax Residency Certificate (TRC)​​ 

(d) should produce the income-tax return filed in the home country.​​ 

Multiple Choice Question (ID ​​ MCQ-0067)

As per the provisions of the Income-tax Act. 1961, which of the following is not an objective of the Central Government to enter into tax treaty with another Country:​​ 

(a) For granting​​ relief in respect of income tax chargeable to tax in India and the offer country​​ 

(b) For enabling round tripping of unaccounted money into India​​ 

(c) For recovery of income-tax​​ 

(d) For exchange or information for prevention of evasion or avoidance of income tax​​ 

Multiple Choice Question (ID ​​ MCQ-0068)

When a term used in a tax treaty is not defined in the tax treaty or in the Act, but the same is defined subsequently through a notification in the Official Gazette by the Central Government, then, in such​​ a case:​​ 

(a) The notification shall take effect from the date of its publication in the Official Gazette​​ 

(b) The notification shall be deemed to be effective from the date when the tax treaty came into force​​ 

(c) The notification shall be deemed to be effective from the date when the tax treaty was last modified​​ 

(d) The notification shall take effect from 1st​​ April and be effective from the current assessment year.​​ 

Multiple Choice Question (ID ​​ MCQ-0069)

In order to invoke the tax treaty for a person who is a dual resident i.e. tax resident in both he countries,​​ 

which rule may be applied under the relevant article of the tax treaties to resolve the issue?​​ 

(a) Force Of Attraction​​ 

(b) Tie-breaker​​ 

(c) Equivalent beneficiary​​ 

(d) Non-discrimination​​ 

Multiple Choice Question (ID ​​ MCQ-0070)

Under the provisions Of the Income-tax Act, 1961, the term person would not include:​​ 

• A body corporate incorporated in a country outside India​​ 

• A Limited Liability Partnership (LLP)​​ 

• Indian branch of a foreign company​​ 

• A co-operative society​​ 

Multiple Choice Question (ID ​​ MCQ-0071)

Two methods were found suitable for determination of the Arm’s Length Price (ALP). As per CUP methods, it was found to be Rs. 1,200 per unit and as per resale price method, it was Rs. 1,250​​ per unit. The ALP per unit will be taken as

(A) Rs. 1,200 since it is more favourable to the assesse

(B) Rs. 1,250 since it is more favourable to the Department

(C) Rs. 1,225

(D) None of the above

Multiple Choice Question (ID ​​ MCQ-0072)

An assesse having​​ specified domestic transactions covered by section 92BA, should furnish audit report, if the value of such transactions exceeds

(A) Rs.2 crores

(B) Rs. 20 crores

(C) Rs.10 crores

(D) None of the above

Multiple Choice Question (ID ​​ MCQ-0073)

An assesse deriving income from profits of business of an eligible industrial undertaking for which 100% deduction is available u/s 80-1B has entered into international transactions with an associated enterprise for Rs. 200 crores. The TPO has made an addition of Rs. 15​​ crores in respect of the ALP. The normal GP margin is 10%. The additional deduction u/s 80-IB which can be claimed by the assesse on account of the increase in the ALP is​​ 

(A) Nil

(B) Rs. 20 crores

(C) Rs.25 crores

(D) Rs.15 crores

Multiple Choice​​ Question (ID ​​ MCQ-0074)

The OECD member countries have accepted the concept of Arm’s Length Price (ALP) for reaping the following benefit:

(A) Minimises double taxation

(B) Real taxable profits can be determined

(C) Artificial price distortion is reduced

(D) All the three above

Multiple Choice Question (ID ​​ MCQ-0075)

In the context of transfer pricing provisions, international transaction should be in the nature of

(A) Purchase, sale or lease of tangible or intangible property

(B) Provision of service​​ 

(C) Lending or borrowing money

(D) Any of the above

Multiple Choice Question (ID ​​ MCQ-0076)

Mr. Dhanush holds shares in both L Ltd., and M Ltd. In the context of transfer pricing provisions,

(A) L Ltd. and M Ltd. can never be associated enterprises.

(B) L​​ Ltd. and M Ltd. are deemed associated enterprises if ​​ Mr.Dhanush holds ​​ 26% or more of voting power in each of these companies.

(C) L Ltd. and M Ltd. are deemed associated enterprises if ​​ Mr.Dhanush holds ​​ 26% or more of voting power in L Ltd., which in turn holds 26% or more of voting power in M Ltd.

(D) L Ltd. and M Ltd. are deemed associated enterprises if Mr. Dhanush holds totally 52% or more combined voting power in both these companies.

Multiple Choice Question (ID ​​ MCQ-0077)

The book value of assets of SCL is Rs. 200 crores, whereas the market value of the said assets is Rs. 80 crores. Sun Ltd. has advanced a loan of Rs. 45 crores. In the context of transfer pricing provisions, SCL and Sun Ltd. are

(A) Not associated enterprises

(B) Associated enterprises, considering the book value of assets of SCL and its borrowing from Sun Ltd.

(C) Deemed to be associated enterprises, considering the book value of assets of SCL and its borrowing from Sun Ltd.

(D) Deemed to be associated enterprises considering the​​ market value of assets of SCL and its borrowings from Sun Ltd.

Multiple Choice Question (ID ​​ MCQ-0078)

J Ltd. is controlled by Rajeev (HUF). K Ltd. is controlled by Raghav ​​ (sole proprietor of RR & Co.,), a close relative of Rajeev, a member of Rajeev (HUF). For the purpose of transfer pricing provisions.

(A) J Ltd. and K Ltd. are deemed associated enterprises.

(B) Rajeev HUF, J Ltd. and K Ltd. are deemed associated enterprises.

(C) RR & Co., Rajeev HUF, J Ltd. and K Ltd. are deemed associated enterprises.

(D) There is no associate enterprises relationship involved in this.

Multiple Choice Question (ID ​​ MCQ-0079)

There is an arrangement between SCL and Q Ltd., which are associated enterprises. Such arrangement is oral and is also not intended to be​​ legally enforced. For transfer pricing purposes, such arrangement-

(A) is not treated as a “transaction” because it is not in writing.

(B) is not treated as a “transaction” because it is not intended to be legally enforced.

(C) is treated as a “transaction”.

(D) is not treated as a “transaction” for (A) and (B) above.

Multiple Choice Question (ID ​​ MCQ-0080)

The ALP determined by the TPO for some product is Rs. 2,000 per unit sold by SCL. Considering the tolerance band permitted by the CBDT, the tolerated​​ international transaction price for a transaction with an associated enterprise can be up to

(A) Rs. 1,960

(B) Rs. 2,040

(C) Rs. 2,060

(D) None of the above

Multiple Choice Question (ID ​​ MCQ-0081)

Following can be an applicant for advance ruling:

(A) Non-resident entering into a transaction

(B) Resident entering into a transaction with a non-resident

(C) Resident entering into a transaction with another resident

(D) (A) or (B)

Multiple Choice Question (ID ​​ MCQ-0082)

An applicant for advance ruling may withdraw an application within days from the date of the application.

(A) 30

(B) 60

(C) 90

(D) 120

Multiple Choice Question (ID ​​ MCQ-0083)

Composition of AAR is as under:

(A) A Chairman, Vice-chairman and Revenue Member

(B) A Chairman, Vice-Chairman and Law​​ Member

(C) A Chairman and such number of Vice-Chairman, Revenue Members and Law Members as the Central Government may, by notification, appoint.

(D) Chairman, Vice-Chairman, Law Member and Revenue Member

Multiple Choice Question (ID ​​ MCQ-0084)

Following​​ can make an application for advance ruling:

(A) Department

(B) Applicant

(C) Central Government

(D) All above

Multiple Choice Question (ID ​​ MCQ-0085)

Application for advance ruling is not allowed in the following situations:

(A) When the question involved​​ is already pending before any income-tax authority.

(B) Where it is for determining the fair market value of a property

(C) Excepting in exceptions, where the transaction in question is designed for avoidance of tax.

(D) Any one of the above

Multiple Choice Question (ID ​​ MCQ-0086 TO MCQ-0090)

Fill in blanks:

(1) The applicant desiring roll back of the APA may furnish the request for rollback provision in Form No. 3CEDA with proof of payment of an additional fee of ________________.

(2) The transfer​​ pricing provisions contained in section 92 shall not apply if the same has the effect of ________________ chargeable to tax.

(3) If there is an arrangement between SCL and TFL (an associate enterprise) for mark up of a semi-finished product and safe thereafter, the ideal method for determining the ALP is _____________ method.

(4) In a case where the aggregate value of international transactions exceeds Rs. ___________ it will be obligatory for the assesse to maintain the stipulated information and documents required for transfer pricing purposes.

(5) Where SCL has maintained proper records and documents, and the TPO has made some adjustments to the ALP, thereby increasing the total income by, say, Rs. 2.68 crores, the penalty leviable u/s 270Awill be Rupees ______________

Multiple Choice Question (ID ​​ MCQ-0091)

The person responsible for making payment of income by way of interest or dividends in respect of bonds or Global Depository Receipts referred to in section 115AC, shall deduct tax at the rate of

• 10%

• 10 % plus cess

• 20%

• ​​ (B) or at the rate specified in the DTAA, whichever is lower.

Multiple Choice Question (ID ​​ MCQ-0092)

The rate of deduction of tax from interest payable to a foreign company (located in a country with which there is no DTAA) by an​​ Indian company on borrowing made on 12-6 in foreign currency from sources outside India is​​ 

• 5 % plus cess

• 10 % ​​ plus cess

• 15 % plus cess

• None of above

Multiple Choice Question (ID ​​ MCQ-0093)

Surcharge applicable to a foreign company whose total income is​​ Rs. 1.2 crores is​​ 

• Nil

• 2%

• ​​ 7%

• ​​ None of the above

Multiple Choice Question (ID ​​ MCQ-0094)

Following income which is accruing or arising outside India, directly or indirectly, is not deemed to be income accruing or arising in India:

• Through or from any business connection in India.

• Through or from any property in India.

• Through transfer of capital asset located outside India.

• Through or from any asset or sources of income in India.

Multiple Choice Question (ID ​​ MCQ-0095)

Remuneration received for services rendered in India by a foreign national employed by foreign enterprise is exempt, if the number of days stay in India of such foreign national does not exceed

• 60 days

• 90 days

• 30 days

• None of the above

Multiple Choice Question (ID ​​ MCQ-0096)

A resident in​​ relation to his tax liability arising out of one or more transactions valuing Rs. ________ in total which has been undertaken or is proposed to be undertaken would be eligible to be an applicant for advance ruling:

• 60 crores or more

• 80 crores or more

• 100​​ crores or more

• 200 crores or more

Multiple Choice Question (ID ​​ MCQ-0097)

An applicant, who has sought for an advance ruling, may withdraw the application within ______________

• 30 days from the date of the application

• 30 days from the end of the month in​​ which the application has been made

• 60 days from the date of the application.

• 60 days from the end of the month in which the application has been made

Multiple Choice Question (ID ​​ MCQ-0098)

In case of a non-notified resident, the AAR will not allow an application in respect of certain matters. The following is not covered in the hit list:

• Matter pending with income-tax authorities/tribunal/court.

• Determination of fair market value of a property.

• Relates to a transaction or issue which is designed prima facie for avoidance of income-tax.

• Whether an arrangement, which is proposed to be undertaken by any person being a resident or a non-resident, is an impermissible avoidance arrangement as referred to in chapter x-A or not.

Multiple Choice Question (ID ​​ MCQ-0099)

The advance ruling given by the Authority for Advance Ruling (AAR) is not binding on the following person(s) :

• On the applicant who sought the ruling.

• On the other person to the transaction entered into by the applicant, if it is a non-resident.

• On​​ the other person to the transaction entered into by the applicant, whether it is resident or non-resident.

• On the principal commissioner or commissioner and the income-tax authorities subordinate to the principal commissioner or commissioner who has jurisdiction over the application.

Multiple Choice Question (ID ​​ MCQ-0100)

Following income from ‘salaries’ which is payable by ___________ would be deemed to accrue or arise in India :​​ 

• The government to a citizen of India for services rendered outside India.

• The government to a non-resident for services rendered outside India.

• The government to a non-citizen or non-resident for services rendered outside India.

• ​​ The government or any other person to a non-citizen or non-resident for services rendered outside India. (1x10= 10 marks)

Multiple Choice Question (ID ​​ MCQ-0101 to MCQ-0103)

State with reasons, whether the following statements are true or false:

• When interest payable to a non-resident by the Government or a public sector bank within the meaning of section 10(23D), deduction of tax shall be made at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, or at the time of credit of such interest to the account of the non-resident, whichever is earlier. (2 marks)

• Where payment is made to a non-resident, even if such non-residents falls within the specified class notified by the CBDT, even if the payment is not chargeable to tax in India, the payer has to be make an application to the Assessing Officer ,before making​​ the impugned payment. (5 marks)

• Where any interest is payable by a person resident in India, the same is deemed to accrue or arise in India (3 marks)

Multiple Choice Question (ID ​​ MCQ-0104)

A shopping complex was purchased by the assesse in Colombo for​​ Rs. 5 crores on 12-3-2015. Out of this, investment of Rs. 3 crores is from disclosed sources, which had been offered for tax. This asset comes to the knowledge of the Assessing Officer on 27-12-PY. If the fair market of the house as on the relevant date to​​ be adopted is Rs. 8 crores, the undisclosed foreign income under the Black Money (undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BM Act) will be taken as (Rs. Crores)

• 5

• 3.2

• 3.8

• ​​ None of the above

Multiple Choice Question (ID ​​ MCQ-0105)

Under the BM Act, the rate of exchange to be adopted for conversion purposes will be the rate specified by

• RBI

• SBI

• Central Government

• ​​ CBDT

Multiple Choice Question (ID ​​ MCQ-0106)

The Assessing Officer has detected undisclosed foreign income of​​ Rs. 3 crores earned during the year ended 31-3-2017. There is foreign loss of Rs. 1.2 crores also, hitherto not shown in the income-tax return filed for the Year. The quantum of undisclosed foreign income assessed under the BM Act will be

• Rs. 1.8 crores

• ​​ Rs. 1.2 crores

• Rs. 3 crores

• ​​ None of the above

Multiple Choice Question (ID ​​ MCQ-0107)

Unquoted shares acquired in Tokyo on 21-3-2016 came to the notice of the Assessing Officer on 13-3-PY. There is no explanation of the source for the same. The converted​​ value of the shares on 21-3-2016, 1-4-2016, 1-4-PY, 1-4-N1 are Rs. 12, 13, 14 and 15 crores, respectively. The undisclosed foreign income representing the value of the undisclosed foreign asset, as per the BM Act is​​ 

• Rs. 12 crores

• ​​ Rs. 13 crores

• ​​ Rs. 14​​ crores

• ​​ Rs. 15 crores

Multiple Choice Question (ID ​​ MCQ-0108)

Under the BM Act, a tax authority below the rank of Commissioner can retain the impounded books normally for a period of

• ​​ 120 days

• ​​ 90 days

• ​​ 60 days

• ​​ 30 days

Multiple Choice Question (ID ​​ MCQ-0109)

In a typical Tax Convention based on OECD model or UN model, the definition of the term “national” is primarily relevant to the Article dealing with ______________.

• ​​ Persons covered/General scope

• Non-discrimination

• ​​ Resident

• ​​ Credit Method

Multiple​​ Choice Question (ID ​​ MCQ-0110)

Controlled Foreign Corporations (CFCs) are _________entities incorporated in an overseas low tax jurisdiction.

• Corporate

• ​​ Non-Corporate

• ​​ Both corporate and Non-corporate

• None of the above

Multiple Choice Question (ID ​​ MCQ-0111)

Existence of a __________ in a jurisdiction is a pre-requisite for the purpose of taxation of business profit of an enterprise in that jurisdiction major Tax Convention:​​ 

• Business connection

• ​​ Permanent establishment

• ​​ Business or professional connection

• ​​ Any connection giving rise to the said profit

Multiple Choice Question (ID ​​ MCQ-0112)

For the purpose of equalization levy, “specified service” means

• ​​ Online advertisement

• Any provision for digital advertising space or any other facility or service for the purpose of online advertisement.

• ​​ Specified Service also includes any other service as may be notified by the Central Government.

• ​​ All of the above.

Multiple Choice Question (ID ​​ MCQ-0113)

Following is not an anti-tax avoidance measure in the context of international taxation:​​ 

• ​​ TIEAS (Tax information exchange agreements)

• ​​ POEM

• ​​ GAAP

• ​​ Transfer pricing provisions​​ 

Multiple Choice Question (ID ​​ MCQ-0114 to MCQ-0117)

Test the correctness of the following statements, with brief reasons:

• A tax​​ authority under the BM Act shall be deemed to be a civil court for all intents and purposes. ​​ (3 marks)

• Any payment received for online advertisement will attract equalization levy of 6% ​​ (3 marks)

• ABC Ltd. is a domestic company. It has a foreign subsidiary FGH Inc., in a tax haven. If the place of effective management is found to be in India, under the CFC legislation, the entire income of can be taxed in India and FGH Inc., can be treated as a domestic company for several other purposes as well. (4 marks)​​ 

Answers to MCQ’s