Income from Other Sources (UNIT III) || Costing & Taxation || Most Expected Questions for 2026 Semester III H. S. Examination || Sanjay Agarwala || PART-III || WBCHSE ||
D. Statement–I & Statement–II Based MCQs
Q. 1. Statement–I: Income from letting machinery or plant may be taxable under the head Income from Other Sources.
Statement–II: Such income can fall under Other Sources when the conditions for charging it under the specified provisions are satisfied.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 2. Statement–I: Letting of plant, machinery or furniture can give rise to income taxable under Other Sources.
Statement–II: Every income arising from the use of a plant or machinery is necessarily business income.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (A)
Q. 3. Statement–I: Composite letting of building along with plant or machinery may be taxable under Other Sources in specified circumstances.
Statement–II: The building and the plant or machinery must be inseparably let for the relevant provision to apply.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 4. Statement–I: Income from inseparable letting of a building together with plant or machinery may be assessed under Other Sources.
Statement–II: The tax treatment depends on the nature of the letting and the conditions prescribed by the Act.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 5. Statement–I: Income from letting furniture may, in specified circumstances, be chargeable under Other Sources.
Statement–II: Furniture can never be a source of taxable income under Section 56.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (A)
Q. 6. Statement–I: The mere fact that an income is received periodically does not by itself make it salary income.
Statement–II: The character of income is determined according to the applicable provisions and the nature of the source.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 7. Statement–I: Income from Other Sources can arise from more than one legally recognised type of source.
Statement–II: Section 56 contains specific provisions identifying certain incomes chargeable under this head.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 8. Statement–I: If an income is specifically chargeable under Business or Profession, it cannot simply be assessed under Other Sources at the assessee's choice.
Statement–II: The heads of income prescribed by the Income Tax Act determine the appropriate classification of taxable income.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 9. Statement–I: Interest on securities is specifically recognised in the prescribed Income from Other Sources syllabus.
Statement–II: Therefore, every receipt arising from ownership of securities must necessarily be treated as interest on securities.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (A)
Q. 10. Statement–I: The taxability of interest on securities depends upon the applicable statutory provisions rather than merely upon the name of the security.
Statement–II: All receipts connected with securities are automatically capital gains.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (A)
Q. 11. Statement-1: As per Section 10(15) of the Income Tax Act, interest received on certain specified investments or deposits is tax-free.
Statement-2: Interest earned from a 12-year National Savings Annuity Deposit is tax-free.
(A) Statement-1 is true, but Statement-2 is false.
(B) Statement-2 is the reason for Statement-1.
(C) Statement-2 is true, but Statement-1 is false.
(D) Both Statement-1 and Statement-2 are false.
Correct Option: (A)
Q. 12. Statement–I: A receipt may be taxable under Other Sources even when it is not generated from a regular employment relationship.
Statement–II: The existence of an employer–employee relationship is not a compulsory condition for every income taxable under Other Sources.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 13. Statement-1: No expense is deductible from income earned from lottery, horse racing, card games, etc. under the head Income from Other Sources.
Statement-2: Expenses incurred for the maintenance of horses by the owner for horse racing are deductible.
(A) Statement-1 is true, but Statement-2 is false.
(B) Statement-2 is the reason for Statement-1.
(C) Statement-2 is true, but Statement-1 is false.
(D) Both Statement-1 and Statement-2 are false.
Correct Option: (C)
Q. 14. Statement–I: Income from Other Sources is called a residuary head of income.
Statement–II: It can cover taxable income which is not chargeable under the other specified heads, subject to the Act.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 15. Statement–I: The classification of an income under Other Sources is a matter of statutory assessment and not merely a matter of choice by the taxpayer.
Statement–II: An assessee cannot select any head of income solely to obtain a more favourable tax treatment.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 16. Statement–I: Income from letting a building together with machinery may fall under Other Sources when the letting is inseparable.
Statement–II: The existence of machinery along with a building automatically makes the entire receipt business income.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (A)
Q. 17. Statement–I: Interest on securities is different in nature from winnings from lotteries or horse races.
Statement–II: The syllabus separately identifies interest on securities and specified winnings as different categories.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 18. Statement–I: The expression “Other Sources” does not mean that the assessee can include every miscellaneous receipt under this head.
Statement–II: Only receipts having the character of taxable income and falling within the relevant statutory provisions can be assessed under this head.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 19. Statement–I: If a receipt is exempt under a specific provision of the Income Tax Act, its exemption is not lost merely because the receipt is capable of being described as miscellaneous income.
Statement–II: Chargeability and exemption are separate aspects of income-tax treatment.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 20. Statement–I: The Income from Other Sources unit of Semester III includes both conceptual and category-specific provisions.
Statement–II: The prescribed syllabus covers Section 56, generally taxable incomes, specified winnings and interest on securities.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 21. Statement–I: Income from Other Sources is the last and residuary head among the five heads of income.
Statement–II: An income which is not chargeable under any of the other specific heads may be considered under this residuary head, subject to the provisions of the Act.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 22. Statement–I: Income from Other Sources cannot be used to assess income which is specifically chargeable under the head Capital Gains.
Statement–II: The same income should not ordinarily be assessed under two different heads merely according to the choice of the assessee.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 23. Statement–I: Winnings from a game of chance may have a different tax treatment from ordinary investment income.
Statement–II: The Income Tax Act contains special provisions for certain specified winnings.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 24. Statement–I: Income from crossword puzzles is expressly recognised in the prescribed Income from Other Sources portion.
Statement–II: Crossword-puzzle winnings are included along with certain other specified winnings for tax treatment.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 25. Statement–I: Horse-race winnings and interest on securities represent two different types of income covered in the prescribed unit.
Statement–II: The syllabus separately mentions specified winnings and interest on securities.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 26. Statement–I: Interest on securities is not treated as lottery income merely because the security generates a return.
Statement–II: Interest on securities is separately recognised under the provisions relating to Income from Other Sources.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 27. Statement–I: A receipt described as a “prize” is not automatically exempt from income tax.
Statement–II: The taxability of a prize depends upon the nature of the receipt and the applicable provisions of the Income Tax Act.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 28. Statement–I: The fact that an income is received only once does not by itself make the receipt non-taxable.
Statement–II: Certain one-time or casual receipts, including specified winnings, may be taxable under the Income Tax Act.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 29. Statement–I: The words “Other Sources” do not mean that the head covers only miscellaneous cash receipts.
Statement–II: The Act specifically identifies particular categories of income that are chargeable under this head.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 30. Statement–I: The source from which an amount arises is relevant while determining its tax treatment.
Statement–II: The Income Tax Act classifies taxable income under specified heads according to the nature and statutory treatment of the income.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 31. Statement–I: A taxpayer cannot treat lottery winnings as exempt merely because the winning is accidental.
Statement–II: Accidental or casual nature of specified winnings does not by itself create a general exemption from tax.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 32. Statement–I: Interest on securities is a return arising from holding a financial security and is distinct from a capital gain arising on transfer of that security.
Statement–II: Receipt of interest and transfer of a capital asset are conceptually different taxable events.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 33. Statement–I: The taxability of specified winnings does not depend upon the existence of an employer–employee relationship.
Statement–II: Specified winnings are not remuneration received from an employer for services rendered.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 34. Statement–I: Income from Other Sources may contain both recurring and non-recurring taxable receipts.
Statement–II: The classification under this head is not determined solely by whether the receipt is regular or irregular.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 35. Statement–I: A person can simultaneously have income under Salary and Income from Other Sources.
Statement–II: Having income under one head does not prevent an assessee from earning taxable income under another head.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 36. Statement–I: Income from Other Sources is not restricted to income earned by individuals alone.
Statement–II: The head of income is determined by the nature of taxable income and the applicable provisions, rather than merely by the assessee being an individual.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 37. Statement–I: A receipt can be taxable under Other Sources even if it does not arise from the sale of goods.
Statement–II: The scope of Other Sources includes several types of income other than trading receipts.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 38. Statement–I: Interest on securities is specifically mentioned in the WBCHSE Costing and Taxation Semester III syllabus.
Statement–II: Therefore, questions relating to the basic tax treatment of interest on securities are relevant for Semester III preparation.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 39. Statement–I: The provisions relating to specified winnings form an important part of the Income from Other Sources unit.
Statement–II: The prescribed syllabus expressly mentions lotteries, horse races, card games and crossword puzzles.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
Q. 40. Statement–I: Section 56 is important for deciding whether certain income is chargeable under Income from Other Sources.
Statement–II: The WBCHSE syllabus specifically prescribes “Basis of charge (Section 56)” under this unit.
(A) Statement–I is true, but Statement–II is false.
(B) Statement–II is true, but Statement–I is false.
(C) Both Statement–I and Statement–II are true, and Statement–II correctly explains Statement–I.
(D) Both Statement–I and Statement–II are false.
Correct Option: (C)
E. Statement-Reason Analysis MCQs
Q. 1. Statement: Family pension is taxable under the head "Income from Other Sources".
Reason: Family pension is not received by an employee from his employer as salary.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 2. Statement: Interest received from a Post Office Single Savings Account is ₹ 10,000. The taxable income under the head "Income from Other Sources" will be ₹ 6,500.
Reason: Interest from a Post Office Savings Account is exempt up to ₹ 3,500 under the applicable provision.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 3. Statement: A deduction is available from taxable family pension under Section 57.
Reason: Family pension is taxable under the head "Income from Other Sources".
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 4. Statement: Gifts received from specified relatives are not taxable under Section 56(2)(x).
Reason: Gifts from specified relatives are exempt, whereas gifts received from non-relatives exceeding ₹ 50,000 are generally taxable.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 5. Statement: Income from letting machinery, plant or furniture may be taxable under the head "Income from Other Sources".
Reason: Such income is assessed under Other Sources when it is not chargeable to tax under the head "Profits and Gains of Business or Profession".
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 6. Statement: Income from inseparable letting of a building along with machinery may be taxable under "Income from Other Sources".
Reason: In such a case, the letting of the building and the machinery is inseparable.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 7. Statement: An Indian citizen earned ₹ 40,000 from horse racing and spent ₹ 4,000 for earning this income. His taxable income will be ₹ 40,000.
Reason: Expenses incurred for earning income from horse racing are not deductible.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 8. Statement: Interest received on securities held as an investment is generally taxable under "Income from Other Sources".
Reason: Interest on securities is specifically included among the incomes taxable under Section 56.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 9. Statement: A person won ₹ 1,00,000 in a lottery but actually received ₹ 70,000.
Reason: Under Section 115BB, lottery winnings are taxable at a special rate of 30%.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 10. Statement: If securities are held as stock-in-trade of a business, the interest income must always be assessed under "Income from Other Sources".
Reason: The head of income is determined without considering the nature and purpose of holding the securities.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (B)
Q. 11. Statement: Winnings from a crossword puzzle are taxable under "Income from Other Sources".
Reason: Such winnings are specifically covered by the provisions relating to winnings from specified games and activities.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 12. Statement: Expenses incurred for purchasing a lottery ticket can be deducted while computing taxable lottery winnings.
Reason: Every expenditure incurred to earn income from Other Sources is automatically deductible.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (B)
Q. 13. Statement: Income from Other Sources is known as the residuary head of income.
Reason: Income which does not fall under any of the other specific heads may be assessed under this head.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 14. Statement: Dividend income can be taxable under the head "Income from Other Sources".
Reason: Dividend is not ordinarily treated as salary or income from house property.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 15. Statement: Interest received from a bank fixed deposit is generally taxable under "Income from Other Sources".
Reason: Interest on a bank deposit does not ordinarily arise from employment or ownership of a house property.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 16. Statement: A prize received from a crossword puzzle can be reduced by the actual expenditure incurred in purchasing the crossword puzzle before determining taxable winnings.
Reason: All expenses incurred in connection with winnings are allowable deductions under Section 57.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (B)
Q. 17. Statement: A gift received by an individual on the occasion of his own marriage is excluded from the normal gift-taxability provisions under Section 56(2)(x).
Reason: The marriage occasion is one of the specifically recognised exceptions under the gift provisions.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 18. Statement: A gift received under a will is generally not taxable under Section 56(2)(x).
Reason: Receipt under a will is specifically excluded from the scope of the gift-taxability provision.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 19. Statement: A cash gift of ₹50,000 received from a non-relative is generally not taxable merely because it is a gift.
Reason: The threshold for aggregate monetary gifts from non-relatives is ₹50,000.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 20. Statement: Income from agricultural land in India amounting to ₹ 45,000 is exempt from tax under the head "Income from Other Sources".
Reason: Agricultural income is exempt from tax under Section 10(1) of the Income Tax Act.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (C)
Q. 21. Statement: If the aggregate value of monetary gifts from non-relatives exceeds ₹ 50,000 during the previous year, the entire aggregate amount may become taxable.
Reason: The ₹ 50,000 limit applies to the aggregate value of such gifts rather than separately to each gift.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 22. Statement: A gift received from a person who falls within the statutory definition of "relative" is generally outside the scope of Section 56(2)(x).
Reason: The gift provisions specifically provide an exception for sums of money or property received from a relative.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 23. Statement: Family pension cannot be treated in the same manner as salary received by an employee.
Reason: Family pension is received by the legal heirs or family members after the death of the employee.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 24. Statement: The amount of tax deducted from lottery winnings does not reduce the amount of income originally chargeable to tax.
Reason: TDS is a mechanism for collection of tax and is not a deduction from the gross income for determining the taxable winnings.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 25. Statement: A receipt which is specifically taxable under another head of income cannot simply be assessed under "Income from Other Sources".
Reason: Section 56 operates as a residuary provision after considering whether the income is chargeable under another specific head.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 26. Statement: Income from Other Sources is chargeable under Section 56 when it is not chargeable under any other specific head of income.
Reason: Section 56 is generally regarded as the residuary charging provision for income-tax.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 27. Statement: Winnings from a lottery are taxable even if the winner has incurred expenses for purchasing the lottery ticket.
Reason: The expenditure incurred for obtaining lottery winnings is not allowed as a deduction while computing such winnings.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 28. Statement: Winnings from horse racing are included in taxable income under the head "Income from Other Sources".
Reason: Horse-racing winnings are specifically covered by the provisions relating to specified winnings.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 29. Statement: A person cannot claim the normal deduction for expenses incurred in earning lottery winnings.
Reason: The special tax treatment of lottery winnings does not permit deduction of expenditure incurred in relation to such winnings.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 30. Statement: Interest received on securities may form part of income taxable under "Income from Other Sources".
Reason: Interest on securities is expressly recognised as an income falling within the scope of Section 56 in the prescribed syllabus.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 31. Statement: Income from a crossword puzzle is treated in the same manner as ordinary interest income for determining its tax treatment.
Reason: Crossword-puzzle winnings are specifically covered by the provisions relating to winnings from specified activities.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (D)
Q. 32. Statement: A receipt cannot be assessed under "Income from Other Sources" merely because it is not salary income.
Reason: Before applying Section 56, it must be considered whether the receipt is taxable under another specific head of income.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 33. Statement: A prize received from a card game can be taxable even when the recipient has no regular business activity.
Reason: The taxability of specified winnings does not depend upon the recipient carrying on a business.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 34. Statement: Interest on securities and winnings from lotteries are both capable of being assessed under the head "Income from Other Sources".
Reason: Both categories are specifically recognised in the syllabus as examples of income taxable under this head.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 35. Statement: The source of a receipt is irrelevant while determining whether it is taxable under "Income from Other Sources".
Reason: The nature and source of income must be examined to determine the appropriate head of income.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (D)
Q. 36. Statement: A taxpayer cannot reduce lottery winnings by claiming personal expenditure as a business expense.
Reason: Personal expenditure is not an allowable deduction for computing taxable income from lottery winnings.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 37. Statement: Income from a card game can fall under "Income from Other Sources" even when the amount received is only a single receipt.
Reason: Taxability under this head does not necessarily require the income to be received periodically.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 38. Statement: Interest on securities cannot automatically be treated as salary merely because the recipient is an employee.
Reason: The head of income depends on the nature of the receipt and its source, not merely on the occupation of the recipient.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 39. Statement: The taxable amount of specified winnings is not reduced merely because the taxpayer has incurred other personal expenses during the year.
Reason: Personal expenses have no connection with the computation of taxable winnings under the special provisions.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
Q. 40. Statement: Lottery, horse-racing and card-game winnings are important examination areas under Income from Other Sources.
Reason: The WBCHSE syllabus specifically mentions the tax treatment of winnings from lotteries, horse races, card games and crossword puzzles.
(A) Both the statement and the reason are true.
(B) Both the statement and the reason are false.
(C) The statement is true, but the reason is false.
(D) The statement is false, but the reason is true.
Correct Option: (A)
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