Income from Other Sources (UNIT III) || Costing & Taxation || Most Expected Questions for 2026 Semester III H. S. Examination || Sanjay Agarwala || PART-II || WBCHSE ||

Income from Other Sources (UNIT III) || Costing & Taxation || Most Expected Questions for 2026 Semester III H. S. Examination || Sanjay Agarwala || PART-II || WBCHSE ||

B. True/False Assessment MCQs

Q. 1. Consider the following statements regarding Section 56:

(i) It is the charging section for Income from Other Sources.

(ii) Every receipt of money is automatically taxable under this section.

(iii) Income falling under another specific head is not assessed under this residuary head.

(iv) Exempt income becomes taxable merely because it is received by the assessee.

(A) (i), (iii) are True; (ii), (iv) are False

(B) (i), (ii) are True; (iii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 2. Consider the following statements about lottery winnings:

(i) Lottery winnings are taxable under Income from Other Sources.

(ii) Tax deducted at source changes the character of the gross lottery income.

(iii) The amount of lottery winnings is considered before giving effect to TDS.

(iv) Lottery winnings are treated as ordinary salary income.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (B)

Q. 3. Dividends received from Indian companies are fully taxable.

(i) Dividend is an unexpected income.

(ii) Dividend income is fully tax-free under Section 10(34).

(iii) Dividend income is fully taxable.

(iv) Dividend received from shares is a capital gain.

(A) (iii) is true; (i), (ii) and (iv) are false

(B) (i), (iii) and (iv) are true; (ii) is false

(C) (iv) is true; (i), (ii) and (iii) are false

(D) (ii) and (iii) are true; (i) and (iv) are false

Correct Option: (A)

Q. 4. Consider the following statements regarding winnings from horse races:

(i) Horse-race winnings are specifically covered in the Income from Other Sources syllabus.

(ii) Such winnings are treated in the same manner as salary.

(iii) Expenditure incurred for earning such specified winnings is generally not allowed as deduction.

(iv) Horse-race winnings are completely exempt from tax.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iv) are True; (i), (iii) are False

(D) (i), (ii), (iv) are True; (iii) is False

Correct Option: (B)

Q. 5. Consider the following statements about crossword-puzzle winnings:

(i) Crossword-puzzle winnings are included in the specified category of winnings.

(ii) Such winnings may be taxable under Income from Other Sources.

(iii) Expenses incurred in earning such winnings are freely deductible.

(iv) Crossword-puzzle winnings are taxable under the head Income from Salary.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 6. Consider the following statements regarding card-game winnings:

(i) Card-game winnings are specifically mentioned in the syllabus.

(ii) Such winnings can be taxable under Income from Other Sources.

(iii) They are necessarily treated as business profits in every case.

(iv) They are exempt merely because they arise from a game.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iv) are True; (i), (iii) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 7. Consider the following statements about interest on securities:

(i) Interest on securities is included in the Income from Other Sources syllabus.

(ii) Section 56(2)(i)(d) is associated with interest on securities.

(iii) Interest on securities can never be taxable under any other head.

(iv) The circumstances of holding the securities may be relevant for classification.

(A) (i), (ii), (iv) are True; (iii) is False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 8. The conditions for an income to be taxable under the head "Income from Other Sources" according to Section 56(1) of the Income Tax Act are:

(i) The receipt must be considered as income.

(ii) The income must necessarily be generated in India.

(iii) The income must not be taxable under any of the first four heads.

(iv) The income must not be exempt from tax.

(A) (i) and (iv) are true; (ii) and (iii) are false

(B) (i), (iii) and (iv) are true; (ii) is false

(C) (ii), (iii) and (iv) are true; (i) is false

(D) (ii) and (iii) are true; (i) and (iv) are false

Correct Option: (B)

Q. 9. As per the Income Tax Act, which of the following persons are considered relatives?

(i) Grandfather's younger brother

(ii) Spouse of the person

(iii) Friend's father

(iv) Brother of the person's father or mother

(A) (i) and (iv) are true; (ii) and (iii) are false

(B) (i), (iii) and (iv) are true; (ii) is false

(C) (i), (ii) and (iv) are true; (iii) is false

(D) (ii), (iii) and (iv) are true; (i) is false

Correct Option: (C)

Q. 10. Consider the following statements:

(i) TDS is a method of collecting tax at source.

(ii) TDS necessarily represents an expenditure incurred to earn income.

(iii) Deduction of TDS does not by itself reduce the gross amount of income.

(iv) Net receipt after TDS and taxable income are always identical.

(A) (i), (iii) are True; (ii), (iv) are False

(B) (i), (ii) are True; (iii), (iv) are False

(C) (ii), (iv) are True; (i), (iii) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 11. Consider the following statements regarding the residuary nature of Other Sources:

(i) It is used when income does not fall under the other specified heads.

(ii) It is not a substitute for every other head of income.

(iii) Business income must always be shifted to Other Sources.

(iv) Salary income can be assessed under Other Sources simply because it is received in cash.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 12. Consider the following statements:

(i) The nature of an income is relevant for determining its head of assessment.

(ii) The same receipt cannot be classified without considering the applicable provisions.

(iii) Every receipt is necessarily income for income-tax purposes.

(iv) Capital receipts and taxable income are synonymous.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 13. Consider the following statements about specified winnings:

(i) Lottery winnings are included in the specified winnings category.

(ii) Horse-race winnings are included in the specified winnings category.

(iii) Card-game winnings are included in the specified winnings category.

(iv) Interest on securities is itself a form of lottery winning.

(A) (i), (ii), (iii) are True; (iv) is False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iv) are True; (i), (iii) are False

(D) (i), (ii), (iv) are True; (iii) is False

Correct Option: (A)

Q. 14. Consider the following statements:

(i) Income from Other Sources is one of the heads of income under the Income Tax Act.

(ii) Section 56 is relevant to this head.

(iii) The head includes only interest income.

(iv) The head includes only casual winnings.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 15. Consider the following statements concerning tax treatment of winnings:

(i) Specified winnings are taxable income.

(ii) The amount actually retained after payment of tax is not necessarily the gross taxable income.

(iii) TDS converts taxable winnings into exempt income.

(iv) A deduction for personal expenditure can automatically be claimed against specified winnings.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 16. Which of the following incomes are taxable under the head "Income from Other Sources"?

(i) Income received from house rent

(ii) Interest from bank deposits

(iii) Dividends received from companies outside India

(iv) Family pension

(A) (i) and (iv) are true; (ii) and (iii) are false

(B) (i), (iii) and (iv) are true; (ii) is false

(C) (ii), (iii) and (iv) are true; (i) is false

(D) (ii), (iii) and (iv) are false; (i) is true

Correct Option: (C)

Q. 17. Consider the following statements regarding interest on securities:

(i) It is specifically included in the prescribed syllabus for Other Sources.

(ii) Section 56(2)(i)(d) is relevant to it.

(iii) Interest on securities is always treated as capital gain.

(iv) Interest on securities is itself a capital asset.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 18. Consider the following statements:

(i) An income may be taxable under Other Sources even if it is not earned from a regular business.

(ii) Casual nature of income alone is not the sole test for classification under Other Sources.

(iii) All casual receipts are automatically exempt.

(iv) Every non-business receipt is necessarily taxable under Other Sources.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 19. Consider the following statements:

(i) Section 56 deals with the basis of charge for Income from Other Sources.

(ii) The section is relevant for identifying taxable income under the residuary head.

(iii) Section 56 means that every receipt of an assessee is taxable.

(iv) Section 56 makes exempt income taxable.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 20. Consider the following statements:

(i) Basis of charge under Section 56 is included.

(ii) Generally taxable incomes under Other Sources are included.

(iii) Tax treatment of lottery, horse race, card games and crossword puzzles is included.

(iv) Interest on securities is excluded from the syllabus.

(A) (i), (ii), (iii) are True; (iv) is False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iv) are True; (i), (iii) are False

(D) (i), (ii), (iv) are True; (iii) is False

Correct Option: (A)

Q. 21. Consider the following statements regarding income from Other Sources:

(i) It is a separate head of income under the Income Tax Act.

(ii) It is applicable only to individuals having no salary income.

(iii) It may apply to taxable receipts not falling under another specific head.

(iv) It is limited only to interest income.

(A) (i), (iii) are True; (ii), (iv) are False

(B) (i), (ii) are True; (iii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 22. Consider the following statements about Section 56:

(i) Section 56 is relevant to the basis of charge under Other Sources.

(ii) It identifies certain incomes specifically taxable under this head.

(iii) It makes every receipt of money taxable without exception.

(iv) It is relevant only for companies.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 23. Consider the following statements about income from games:

(i) Winnings from specified games can be taxable under Other Sources.

(ii) Card-game winnings are included in the prescribed syllabus.

(iii) Every amount spent on playing a game is automatically deductible.

(iv) Game winnings are always treated as salary income.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 24. Consider the following statements regarding lottery income:

(i) Lottery winnings are included in the prescribed Other Sources syllabus.

(ii) Lottery winnings are taxable irrespective of whether they constitute regular employment income.

(iii) Lottery winnings are classified as income from salary.

(iv) Lottery winnings are always treated as agricultural income.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 25. Consider the following statements about horse-race winnings:

(i) Horse-race winnings are specifically covered in the syllabus.

(ii) They are one of the specified categories of winnings.

(iii) They are necessarily treated as income from house property.

(iv) They are exempt merely because the assessee does not participate regularly.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iv) are True; (iii) is False

Correct Option: (A)

Q. 26. Consider the following statements regarding crossword-puzzle winnings:

(i) Crossword-puzzle winnings are included in the prescribed syllabus.

(ii) Such winnings can be taxable under Other Sources.

(iii) They are automatically exempt if the winning amount is received in cash.

(iv) They are classified as capital gains merely because they are one-time receipts.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 27. Consider the following statements regarding interest on securities:

(i) Interest on securities is specifically included in the syllabus.

(ii) It may be taxable under Other Sources.

(iii) Interest on securities is itself a capital gain.

(iv) Interest on securities is excluded from Section 56.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 28. Consider the following statements:

(i) Interest from a bank deposit may generally be taxable under Other Sources.

(ii) The fact that interest is received periodically does not make it salary.

(iii) Every bank deposit interest is automatically exempt from tax.

(iv) Bank interest is necessarily treated as capital gain.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 29. Consider the following statements:

(i) The source of income is relevant in determining its tax treatment.

(ii) A receipt described as "income" is not necessarily taxable under Other Sources.

(iii) All receipts other than salary must be assessed under Other Sources.

(iv) Business income must always be assessed under Other Sources.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 30. Consider the following statements regarding classification of income:

(i) Income from a specific head should generally be assessed under that appropriate head.

(ii) Other Sources operates as a residuary head.

(iii) Income from salary can be shifted to Other Sources at the option of the assessee.

(iv) Capital gains are always assessed under Other Sources.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 31. Consider the following statements:

(i) Tax treatment of specified winnings forms part of the Semester III syllabus.

(ii) The syllabus includes lottery winnings.

(iii) The syllabus includes horse-race winnings.

(iv) The syllabus excludes card-game winnings.

(A) (i), (ii), (iii) are True; (iv) is False

(B) (i), (iii), (iv) are True; (ii) is False

(C) (i), (ii), (iv) are True; (iii) is False

(D) (ii), (iii), (iv) are True; (i) is False

Correct Option: (A)

Q. 32. Consider the following statements:

(i) Interest on securities is included under the Other Sources portion of the syllabus.

(ii) The statutory provision relating to interest on securities is Section 56(2)(i)(d) in the prescribed syllabus.

(iii) Interest on securities is dealt with exclusively under capital gains.

(iv) The syllabus does not mention interest on securities.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 33. Consider the following statements:

(i) A single assessee may have several different incomes taxable under Other Sources.

(ii) Different taxable receipts can arise from different sources.

(iii) The existence of multiple sources means that each receipt must be assessed under a different head.

(iv) Interest and specified winnings can never coexist under Other Sources.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 34. Consider the following statements:

(i) A prize from a crossword puzzle may constitute taxable income.

(ii) The manner in which the prize is received does not by itself make it tax-free.

(iii) A crossword-puzzle prize is necessarily a gift.

(iv) Such prize income is necessarily agricultural income.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 35. Consider the following statements:

(i) The head Other Sources is not restricted to one particular type of receipt.

(ii) It may cover different categories of taxable income specified by law.

(iii) It includes only income received from investments.

(iv) It excludes all winnings from games.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 36. Consider the following statements about statutory classification:

(i) Section 56 is important for determining the chargeability of income under Other Sources.

(ii) Section 56 does not mean that every receipt is taxable.

(iii) Section 56 overrides all exemptions automatically.

(iv) Section 56 makes agricultural income taxable under Other Sources merely because it is received by an assessee.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 37. Consider the following statements:

(i) The tax treatment of winnings is an important part of the Other Sources syllabus.

(ii) The syllabus specifically mentions lotteries.

(iii) The syllabus specifically mentions horse races.

(iv) The syllabus specifically mentions only lotteries and excludes crossword puzzles.

(A) (i), (ii), (iii) are True; (iv) is False

(B) (i), (iii), (iv) are True; (ii) is False

(C) (i), (ii), (iv) are True; (iii) is False

(D) (ii), (iii), (iv) are True; (i) is False

Correct Option: (A)

Q. 38. Consider the following statements:

(i) Interest on securities and winnings are distinct categories of income.

(ii) Both are relevant to the prescribed Other Sources syllabus.

(iii) Interest on securities is itself a lottery winning.

(iv) Horse-race winnings are treated as interest on securities.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii) are True; (i), (iv) are False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 39. Consider the following statements:

(i) Income from Other Sources is relevant even when the assessee earns no income from Salary.

(ii) It can also apply to an assessee who has income under other heads.

(iii) Having salary income automatically prevents an assessee from having Other Sources income.

(iv) An assessee can have only one head of taxable income.

(A) (i), (ii) are True; (iii), (iv) are False

(B) (i), (iii) are True; (ii), (iv) are False

(C) (ii), (iii), (iv) are True; (i) is False

(D) (i), (ii), (iii) are True; (iv) is False

Correct Option: (A)

Q. 40. Consider the following statements about the scope of the prescribed unit:

(i) Basis of charge under Section 56 is included.

(ii) Examples of income generally taxable under Other Sources are included.

(iii) Winnings from lotteries, horse races, card games and crossword puzzles are included.

(iv) Interest on securities is outside the prescribed unit.

(A) (i), (ii), (iii) are True; (iv) is False

(B) (i), (iii), (iv) are True; (ii) is False

(C) (i), (ii), (iv) are True; (iii) is False

(D) (ii), (iii), (iv) are True; (i) is False

Correct Option: (A)

C. Statement and Explanation Based MCQ

Q. 1. Statement: Income from Other Sources is called the residuary head of income.

Explanation: Income which is taxable but does not fall under any of the other specified heads may be assessed under this head.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 2. Statement: Section 56 provides the basis for charging income under the head "Income from Other Sources".

Explanation: Every income taxable under the Income Tax Act must necessarily be assessed under the head "Income from Other Sources".

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (C)

Q. 3. Statement: Winning from a crossword puzzle is taxable under the head "Income from Other Sources".

Explanation: Such winnings are specifically covered under the provisions relating to winnings from lotteries, horse races, card games and crossword puzzles.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 4. Statement: If a person spends ₹ 6,000 on purchasing lottery tickets and wins ₹ 80,000, the taxable lottery income can be reduced by ₹ 6,000.

Explanation: Expenses incurred for earning lottery winnings are not allowed as a deduction while computing such winnings.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (D)

Q. 5. Statement: A person receives ₹ 90,000 from a horse race after spending ₹ 10,000 for participating in the race. The taxable winning is ₹ 80,000.

Explanation: Expenditure incurred in relation to such winnings is deductible from the gross winning.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (D)

Q. 6. Statement: Lottery winnings are included in taxable income on their gross amount even when tax has already been deducted at source.

Explanation: TDS reduces the amount actually received but does not reduce the amount of income chargeable to tax.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 7. Statement: Interest on securities may be taxable under the head "Income from Other Sources".

Explanation: Interest on securities is covered under Section 56 when it is not chargeable under the head "Profits and Gains of Business or Profession".

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 8. Statement: Interest on securities held as part of a business may not be taxable under Other Sources.

Explanation: The same income may be taxable under the business head when the securities are held as business assets.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 9. Statement: If ₹ 18,000 is received as interest on securities after deduction of ₹ 2,000 as TDS, the taxable interest is ₹ 16,000.

Explanation: TDS deducted from interest represents a reduction in taxable interest income.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (D)

Q. 10. Statement: If interest on securities of ₹ 25,000 is received after TDS of ₹ 2,500, the amount of interest chargeable to tax is ₹ 25,000.

Explanation: Tax deducted at source is not a deduction from the gross amount of income for determining the taxable interest.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 11. Statement: Income from card games is generally taxable under the head "Income from Other Sources".

Explanation: Card-game winnings are specifically included among the winnings covered by Section 56.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 12. Statement: The nature of an income determines the head under which it is taxable.

Explanation: The same receipt can never be taxable under different heads under any circumstances.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (C)

Q. 13. Statement: Remuneration received for examination work by a person who is not an employee of the examining institution may be taxable under Other Sources.

Explanation: The receipt does not necessarily constitute salary merely because it is received for performing a service.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 14. Statement: A director's fee received by an individual is generally assessable under Income from Other Sources when there is no employer-employee relationship.

Explanation: Director's fee is always taxable under the head "Income from Salary".

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (C)

Q. 15. Statement: Income from sub-letting a property by a tenant can be taxable under Other Sources.

Explanation: A tenant who sub-lets a property is not necessarily the owner of the property.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 16. Statement: A person receiving ₹ 40,000 as interest on securities and ₹ 20,000 as lottery winnings may have ₹ 60,000 included under Other Sources before considering any applicable adjustments.

Explanation: Both interest on securities and lottery winnings are specifically recognised under the Income from Other Sources provisions when applicable.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 17. Statement: Income from horse racing and income from a normal business activity are treated identically under the Income Tax Act merely because both generate profits.

Explanation: Horse-race winnings are specifically dealt with under the provisions relating to winnings.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (D)

Q. 18. Statement: If ₹ 30,000 is won from a card game and ₹ 20,000 is earned as interest on securities, the two receipts can be considered under the same head of income when the securities are held as an investment.

Explanation: Both types of income are recognised as examples of income taxable under Other Sources in appropriate circumstances.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 19. Statement: An income cannot be classified under Other Sources merely because the assessee has no business income.

Explanation: Section 56 applies to income which is chargeable to tax but does not fall under another specific head of income.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 20. Statement: Interest of ₹ 6,000 is received from a Joint Savings Deposit at the Post Office. The taxable amount under the head "Income from Other Sources" is Nil.

Explanation: The interest received from a Joint Savings Deposit at the Post Office is exempt up to ₹ 7,000 under Section 10(15) of the Income Tax Act.

(A) The statement is correct, and the explanation is the correct reason.

(B) The statement is incorrect because interest on savings deposits is tax-free only for persons below 60 years of age.

(C) The statement is incorrect because only ₹3,500 is exempt under Section 10(15) of the Income Tax Act.

(D) The statement is correct because ₹7,000 is exempt under Section 10(15) of the Income Tax Act.

Correct Option: (A)

Q. 21. Statement: Income from Other Sources can include income from a source that is not specifically covered under the other four heads of income.

Explanation: It is a residuary head used for taxable income that does not fall under Salary, House Property, Business or Profession, or Capital Gains.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 22. Statement: Bank interest received by an individual may be taxable under Income from Other Sources.

Explanation: Interest income is one of the common examples of income generally taxable under this residuary head.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 23. Statement: Income from a crossword puzzle is treated in the same manner as ordinary interest income for tax purposes.

Explanation: Crossword-puzzle winnings are specifically dealt with separately from ordinary interest income under the Income Tax provisions.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (D)

Q. 24. Statement: A prize received from a lucky draw conducted through a game may be taxable even though it is not salary.

Explanation: Certain winnings are taxable as income from Other Sources when they are covered by the provisions relating to winnings.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 25. Statement: The head under which an income is assessed depends upon the nature and legal character of the income.

Explanation: Every receipt received by an assessee is automatically taxable under Income from Other Sources.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (C)

Q. 26. Statement: A receipt cannot be brought under Income from Other Sources if it is already specifically chargeable under another head.

Explanation: The residuary head applies only when the income does not fall under another specific head.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 27. Statement: Interest on securities can be taxable under Income from Other Sources even when the assessee does not carry on any business.

Explanation: Interest on securities held as an investment may be assessed under the residuary head when it is not taxable as business income.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 28. Statement: The taxability of interest on securities is determined solely by the fact that the securities are issued by a government authority.

Explanation: The nature of holding and the applicable charging provisions are relevant in determining the appropriate head of income.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (D)

Q. 29. Statement: Winnings from horse racing are specifically mentioned in the Income Tax provisions relating to Income from Other Sources.

Explanation: Horse-race winnings are treated as ordinary business profits of the horse owner in every case.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (C)

Q. 30. Statement: Winnings from card games can form part of taxable income under Other Sources.

Explanation: Card games are specifically included among the categories of winnings referred to in the syllabus under Section 56.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 31. Statement: The amount actually received from a lottery after deduction of tax is always the amount to be included as taxable lottery income.

Explanation: Tax deducted at source is a mechanism for collection of tax and does not by itself convert gross income into a lower amount of taxable income.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (D)

Q. 32. Statement: Expenses incurred for purchasing a lottery ticket cannot normally be deducted from the lottery winnings while computing such income.

Explanation: The Income Tax provisions restrict deductions in respect of expenditure incurred in connection with specified winnings.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 33. Statement: A person may have more than one source of income taxable under Other Sources during the same previous year.

Explanation: The head includes different types of taxable receipts such as interest and specified winnings, subject to the applicable provisions.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 34. Statement: If a person receives ₹ 15,000 as interest on securities and ₹ 12,000 as another taxable receipt under Other Sources, the gross amount under this head, before applicable deductions, is ₹ 27,000.

Explanation: Separate taxable receipts falling under the same head are aggregated for computing income under that head, subject to the relevant provisions.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 35. Statement: A person receiving interest on securities as an investment cannot automatically treat the interest as business income merely because the securities generate regular income.

Explanation: Classification depends upon the circumstances and the nature of the holding rather than merely on the regularity of the receipt.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 36. Statement: The provisions relating to winnings from lotteries and crossword puzzles are part of the Income from Other Sources syllabus.

Explanation: The syllabus specifically includes the tax treatment of winnings from lotteries, horse races, card games and crossword puzzles.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 37. Statement: Section 56 is relevant for determining the basis of charge under Income from Other Sources.

Explanation: Section 56 is the principal charging provision for income taxable under this head.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 38. Statement: If an income is specifically exempt from tax, it cannot become taxable merely because it is otherwise capable of being classified under Other Sources.

Explanation: Exemption provisions operate independently of the classification of taxable income under the different heads.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 39. Statement: The same type of receipt may require different tax treatment depending upon the circumstances in which it is earned.

Explanation: The Income Tax Act classifies income according to the relevant statutory heads and applicable provisions rather than merely according to the name of the receipt.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)

Q. 40. Statement: Knowledge of Section 56 is important for identifying income taxable under the residuary head.

Explanation: The Semester III syllabus specifically prescribes the basis of charge under Section 56 and examples of income generally taxable under Other Sources.

(A) Both the statement and the explanation are true, and the explanation correctly explains the statement.

(B) Both the statement and the explanation are true, but the explanation does not correctly explain the statement.

(C) The statement is true, but the explanation is false.

(D) The statement is false, but the explanation is true.

Correct Option: (A)