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Created on March 31, 2026 By

CA Sonal Saboo

CMA Final

Final DIT PN-15 Quiz 7

This quiz is based on the CMA Direct Tax Laws and International Taxation paper.
Each question is multiple-choice with 4 options, and only 1 option is correct.
Attempt the quiz to test your understanding of CMA DIT concepts.

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Category: Direct Tax Laws and International Taxation PN-15

1. ABC Co. Ltd. received Rs.24 lakh as Government grant in respect of a machinery (capital asset) in the previous year 2023-24. The said grant became refundable in July, 2025. What would be the consequence of such refund of grant as per ICDS?

a. It is a capital receipt and hence no income tax implication would arise on refund of grant

b. It would be allowed on the resultant value from assessment year 2025-26 onwards

c. It is taxable as income of assessment year 2025- 26

d. It is a loss incidental to business allowable under section 37

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Category: Direct Tax Laws and International Taxation PN-15

2. Range concept principle is applied under Transfer Pricing if there is

a. One reasonable price

b. more than one reasonable price but not more than five

c. More than five reasonable prices

d. None of the above

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Category: Direct Tax Laws and International Taxation PN-15

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

a. An order of penalty u/s 271B for failure to get accounts audited

b. An order of penalty u/s 271B for failure to get accounts audited

c. An order of assessment passed by the Assessing Officer in pursuance of directions of Dispute Resolution Panel

d. An order made u/s 201 deeming a person to be an assessee-in-default for non-deduction of tax at source

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Category: Direct Tax Laws and International Taxation PN-15

4. If income is taxed twice in more than one country but in the hands of different tax payers is called

a. Treaty Double Taxation

b. Deemed Double Taxation

c. Juridical Double Taxation

d. Economic Double Taxation

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Category: Direct Tax Laws and International Taxation PN-15

5. Sec. 91 deals with

a. Unilateral Relief

b. Bilateral Relief

c. Both (a) and (b)

d. None of the above

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Category: Direct Tax Laws and International Taxation PN-15

6. Which of the following power is not vested with CBDT u/s 119(2) of the Act

a. Relaxation of time limit for filing income- tax return

b. Relaxation of provisions relating to deductions under Chapter VI-A

c. Relaxation of provisions in relation to set-off of losses

d. All of the above

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Category: Direct Tax Laws and International Taxation PN-15

7. Mr. Arvind, Managing Director of Arvind Construction Private Ltd, holds 70% of its paid up capital of Rs.20 lakhs. The balance as at 31.03.2025 in General Reserve was Rs.7 lakhs. The company on 01.04.2025 gave an interest free loan of Rs.8.50 lakhs to its Supervisor having salary of Rs.15,500 p.m., who in turn on 25.04.2025, advanced the said amount of loan so taken from the company to Mr. Arvind What amount would be treated as deemed dividend u/s 2(22)(e)

a. Nil

b. Rs.850000

c. Rs.700000

d. Rs.800000

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Category: Direct Tax Laws and International Taxation PN-15

8. XYZ Ltd. has debited a sum of Rs.800 lakhs towards income-tax in its Statement of Profit and Loss for the year ended 31-3-2025. It includes Rs.40 lakhs towards surcharge and Rs.8 lakhs towards HEC. How much would be the amount of disallowance of income- tax under section 40(a)(ii)?

a. Rs. 40 Lakhs

b. Rs. 800 Lakhs

c. Rs. 48 Lakhs

d. Rs. 8 Lakhs

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Category: Direct Tax Laws and International Taxation PN-15

9. While computing book profit u/s 115JB, which one of the following is required to be reduced from the net profit?

a. Brought forward business loss as per books of account

b. Unabsorbed Depreciation as per books of account

c. Income-tax paid or payable if not already debited to the Statement of Profit and Loss.

d. Brought forward loss or unabsorbed depreciation, whichever is less as per books of account

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Category: Direct Tax Laws and International Taxation PN-15

10. Anurag Ltd. Myusuru exported goods to its holding company Brave Ltd., China for crore and it has failed to keep and maintain information and documents in respect of Rs.5 crore. How much is the quantum of penalty leviable for such failure in the hands of Anurag Ltd.?

a. Rs.2500000

b. Rs.1500000

c. Rs.1000000

d. Rs.150000

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Category: Direct Tax Laws and International Taxation PN-15

11. B is a foreign company having permanent establishment in India namely A. C, a non-resident associated enterprise, has invested Rs.900 crores through debt in A. Earnings before interest, taxes, depreciation and amortisation (EBITDA) of A during the financial year was Rs.150 crores. 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. Rs. 27 Crores

b. Rs. 45 Crores

c. Rs. 90 Crores

d. Rs.30 Crores

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Category: Direct Tax Laws and International Taxation PN-15

12. Vijay (P) Ltd. filed its return of income with suo moto adjustment of Rs.300 lakhs in respect of ALP of its transactions with its associated enterprise. Within how many days the amount of secondary adjustment must be repatriated to India in order to avoid interest under section 92CE read with rule 10CB?

a. Within 90 days from the end of the assessment year

b. Within 90 days from the ‘due date’ specified in section 139(1)

c. Within 120 days from the date of filing ITR

d. Within 30 days from the end of the assessment year

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Category: Direct Tax Laws and International Taxation PN-15

13. Book profit for the purposes of section 115JB means net profit as shown in the Statement of the Profit and Loss prepared in accordance with of the Companies Act as increased and decreased by certain items prescribed in this regard.

a. Schedule II

b. Schedule III

c. Schedule IV

d. Schedule V

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Category: Direct Tax Laws and International Taxation PN-15

14. The total income of Construction (P) Ltd. a trading company, computed as per the normal provisions of Income-tax Act is Rs.8,40,000 for the year ended 31st March, 2025. The annual turnover of Construction (P) Ltd. was always less than Rs.10 crores. Book profit of the company computed as per the provisions of section 115JB is Rs.18,40,000. What would be the final tax liability of the company for the assessment year 2025-26? Note: Ignore surcharge and cess.

a. Rs.840000

b. Rs.252000

c. Rs.1000000

d. Rs.276000

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Category: Direct Tax Laws and International Taxation PN-15

15. 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. Resale price method

b. Profit split method

c. Resale price method

d. Resale price method

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Category: Direct Tax Laws and International Taxation PN-15

16. Shivam, a resident individual of age of 38 years, has not furnished his return of income for the A.Y. 2025-26. However, his total income for such year as assessed u/s 144 is Rs.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 Rs.1,19,600

c. Yes; penalty is Rs.2,27,500

d. Yes; penalty is Rs.1,59,600

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Category: Direct Tax Laws and International Taxation PN-15

17. Specified Domestic Transactions are covered under Transfer Pricing Provisions if aggregate value of such transactions exceeds

a. Rs. 20 Crores

b. Rs. 2 Crores

c. Rs. 200 Crores

d. Nil

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Category: Direct Tax Laws and International Taxation PN-15

18. Mr. Mark (aged 45 year) a Australian Cricket Umpire, has earned income from Cricket tournaments in India for AY 2025-2026. Are TDS provisions applicable while making payment to him and if so, under which section?

a. No, TDS provision are not applicable

b. Yes, TDS under section 195

c. Yes, TDS @ 5.2% as per section 194E

d. Yes, TDS @ 20.8% as per section 194E

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Category: Direct Tax Laws and International Taxation PN-15

19. Avinash (P) Ltd, a resident Indian company, received royalty Rs.8 Lakhs from a resident in India in respect of a patent developed and registered in India. The income-tax payable. on the royalty shall be at (ignore cess and surcharge)

a. 10%

b. 15%

c. 20%

d. 30%

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Category: Direct Tax Laws and International Taxation PN-15

20. PQR Ltd. an Indian company deducted Rs.1,20,000 from various payments as TDS for the first quarter of financial year 2024-25. However, it has failed to file TDS return for the said quarter. How much shall be the amount of fee payable by it for default in furnishing TDS return?

a. Rs. 100 for every day during which the failure continues subject to a maximum of Rs. 1,20,000

b. Rs. 100 for every day during which the failure continues subject to a maximum of Rs.1,00,000

c. Rs. 200 for every day during which the failure continues subject to a maximum of Rs.1,00,000

d. Rs. 200 for every day during which the failure continues subject to a maximum of Rs.1,20,000

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Category: Direct Tax Laws and International Taxation PN-15

21. For Bradd Inc. of Spain which of the following would mean that it has a Permanent Establishment (PE) in India?

a. Use of facilities solely for the purpose of storage or display of goods belonging to the enterprise

b. Operating a factory in India

c. Maintenance of goods belonging to the enterprise solely for the purpose of processing by another enterprise.

d. Maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise

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Category: Direct Tax Laws and International Taxation PN-15

22. Prakash Industries (P) Ltd. was subjected to a search under section 132 and a sum of Rs.250 lakhs by way of cash was found as undisclosed income. Prakash Industries (P) Ltd. has unabsorbed depreciation of Rs.180 lakhs. How much of the unabsorbed depreciation is eligible for set off against cash found as a result of search, representing undisclosed income?

a. Nil

b. Rs. 180 Lakhs

c. Rs. 70 Lakhs

d. Rs. 90 Lakhs

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Category: Direct Tax Laws and International Taxation PN-15

23. Advance Pricing Agreement is entered between the

a. Unilateral Advance Pricing Agreement

b. Bilateral Advance Pricing Agreement

c. Multilateral Advance Pricing Agreement

d. None of the above

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Final PN-15 DIT Quiz 7

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