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CA-Inter New Course

Case Studies Book

Index
Sr. No. Subjects Page

1 Audit & Assurance 2-18

2 EIS-SM 18-110

3 Corporate & Other Laws 110-127

4 Tax 128-231

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CA Inter- New Course

Case Studies Book

AUDIT

Case Study-1

M/s JJ & associates having office in Chennai are statutory auditors under Companies Act, 2013
of a company viz. Sweet Aroma Private Limited engaged in business of obtaining and
manufacturing rice from paddy catering to both domestic as well as international market
mainly in Gulf nations the company has a huge plant capacity for rice extraction in one of the
states in Northern India. Needless to state that inventories are in huge quantity in such type
of business consisting of raw material, work in progress and finished goods the auditors want
to obtain sufficient appropriate audit evidence regarding inventories.

In above context, answer the following questions: -

1. Which of the following is most likely correct in relation to obtaining of sufficient

appropriate audit evidence regarding existence and condition of inventory?

(a) It is mandatory for the auditor to attend physical inventory counting on the date of
financial statements in all circumstances.

(b) Physical inventory counting may be attended by auditor on the date of financial
statement or at a date other than date of financial statements in his discretion
mandatorily in all circumstances.

(c) The attendance of auditors at physical inventory counting is impracticable due to

time and costs involved because of auditor’s office location vis-à-vis company’s plant
location. Hence, attendance at physical inventory counting may be skipped and
alternative audit procedures may be performed to obtain sufficient appropriate
evidence.

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(d) The auditor shall attend at physical inventory counting unless impracticable.
However, issue of time and costs involved because of auditor’s office location vis-à-
vis company’s plant location is not a valid basis for skipping physical inventory
counting.

2. Below are given certain cluster of matters which are relevant in planning attendance of
auditor at physical inventory counting. Which of the following clusters consists of a
likely inappropriate combination?

(a) Nature of inventory, timing of physical inventory counting and stages of

completion of work in progress

(b) Nature of inventory, timing of physical inventory counting and valuation method
of inventory

(c) Nature of inventory, timing of physical inventory counting, considerations

regarding maintenance of a perpetual inventory system

(d) Risks of material misstatements related to inventory, nature of internal control

pertaining to inventory, considerations regarding maintenance of a perpetual
inventory system

3. Which of the following is the most likely logical sequence of steps in relation to
attendance at physical inventory counting by auditor?

(a) Observance of performance of management’s count procedures, inspection of

inventory, performing test counts and evaluation of management’s procedures
for recording and controlling results of physical inventory counting

(b) Observance of performance of management’s count procedures, performing

test counts, inspection of inventory and evaluation of management’s procedures

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for recording and controlling results of physical inventory counting

(c) Performing test counts, inspection of inventory, Observance of performance of

management’s count procedures and evaluation of management’s procedures
for recording and controlling results of physical inventory counting

(d) Evaluation of management’s procedures for recording and controlling results of

physical inventory counting, Observance of performance of management’s
count procedures, inspection of inventory and performing test counts

4. During attendance at physical inventory counting, the auditor inspects inventory.

Following outcomes stated as I, II & III are given below of this inspection procedure: -

Outcome I Existence of inventory

Outcome II Ownership of inventory

Outcome III Condition of inventory

Which of following statements is most likely true?

(a) Outcomes I, II and III are all necessarily established after inspection.

(b) Only Outcomes I and III are established after inspection and Outcome II is never
established.

(c) Outcomes I and III are established after inspection. However, outcome II may
not be necessarily established.

(d) Outcome II and III are established after inspection. However, outcome I may not
be necessarily established.

5. It was observed by auditors that, out of total rice physically counted on 31 st March,

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2020 about 67 quintals of rice belonged to M/s PQR, a proprietary concern which had
sent paddy to this company’s plant for extraction of rice. What would be treatment of
this item in financial statements of company?

(a) The value of 67 quintals rice would be reflected in company’s financial

statements as per method of valuation adopted by the company.

(b) The value of 67 quintals rice would be reflected in company’s financial

statements as per method of valuation adopted by the proprietary concern.

(c) The value of 67 quintals rice would not be reflected in company’s financial
statements.

(d) The value of 67 quintals rice would be reflected in proprietary concern’s

financial statements as per method of valuation adopted by the company

Case Study-2

A partnership firm of Chartered Accountants, YZ and Associates were appointed as auditor of

company UV Private Limited. The financial year for which YZ and Associates were to audit
books of accounts of UV Private Limited began on 1 April, 2018 and ended on 31 March,
2019.

YZ and Associates consisted of four partners namely Mr. Y, Mr. Z, Mr. G and Mr. H.

While auditing books of accounts of UV Private Limited for the period beginning on 1 April,
2018 and ending on 31 March, 2019, one of the partners of YZ and Associates namely Mr. H
took up the expenses part for the purpose of audit.
The management of UV Private Limited had adopted various accounting policies and principles
related to expenses which Mr. H as auditor of UV Private Limited was unable to understand.
Some of the issues which Mr. H was unable to understand are mentioned as follows:

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(1) Power and Fuel expenses paid for the months of April, 2019 and May, 2019 have been
included and shown as Power and Fuel expenses for the period beginning 1 April, 2018
and ending 31 March, 2019.

(2) Personal Rent Expenses of the son of one of the director, Mr. T of UV Private Limited have
been shown as Rent Expenses of business of UV Private Limited.

(3) Repair and Maintenance Expenses for the months of February 2019 and March 2019
were still outstanding and were not shown in Balance Sheet of UV Private Limited.

(4) Repair and Maintenance Expenses for the financial year 1 April, 2018 to 31 March, 2019
were very high as compared to financial year 1 April, 2017 to 31 March, 2018. The auditor
Mr. H asked the appropriate authority about the reasons for such huge differences in
amounts of two financial years.

(5) While verifying the insurance expenses, the insurance policies were not shown to auditor
Mr. H.

The above mentioned five points were some of the issues which Mr. H was unable to
understand.

Answer the following questions:

1. As per the point number (1) mentioned in the above case, the Power and Fuel Expenses
paid for the months of April 2019 and May 2019 must be shown under asset side of
balance sheet of UV Private Limited as on 31 March, 2019 as:

(a) Outstanding Power and Fuel Expenses

(b) Prepaid Power and Fuel Expenses

(c) Power and Fuel Expenses

(d) Power and Fuel Expenses Payable

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2. As per point number (2) mentioned above in the case, the Personal Rent Expenses of
the son of one of the director Mr. T were added to Rent Expenses of business of UV
Private Limited. The amount of personal rent expenses of the son of the director Mr. T
must be:

(a) Subtracted from Rent Expenses of business of UV Private Limited

(b) Remain Added to Rent Expenses of business of UV Private Limited

(c) Again Added to Rent Expenses of business of UV Private Limited

(d) Subtracted twice from Rent Expenses of business of UV Private Limited

3. As per point number (3) mentioned above in the case, the Repair and Maintenance
Expenses outstanding for the months of February 2019 and March 2019 must be shown
under liability side of balance sheet of UV Private Limited as on 31 March, 2019 as:

(a) Prepaid Repair and Maintenance Expenses

(b) Repair and Maintenance Expenses

(c) Repair and Maintenance Expenses paid in advance

(d) Repair and Maintenance Expenses Payable

4. As per point number (4) mentioned in the case above, the auditor Mr. H asked the
appropriate authority for reasons of huge differences in the amount of two financial
years of repair and maintenance expenses. By appropriate authority Mr. H was
referring to:

(a) All employees of UV Private Limited

(b) Management of UV Private Limited

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(c) Members of UV Private Limited

(d) Any one director of UV Private Limited

5. As per point number (5) mentioned in the case above, in verifying insurance expenses
the insurance policies would provide auditor Mr. H as:

(a) Invalid Supporting

(b) No Supporting

(c) Lack of proper Supporting

(d) Valid Supporting

Case Study-3

M/s NSG & Associates have been appointed as auditors of Viaan Ltd. for the financial year
2019-20. The processes, operations, accounting and decisions are carried out by using
computers in Viaan Ltd. The auditors understand that there are several aspects that they
should consider to determine the level of automation and complexity in the business
environment of Viaan Ltd. While planning the audit work, the engagement partners discussed
with the audit staff about the various types of controls in the automated environment.

The different types of audit tests that can be used in audit of an automated business
environment were also discussed within the engagement team. The responsibility regarding
the Internal Financial Controls was also discussed in detail. Further the tools and techniques
that can be used to deal with the enormous data and information of Viaan Ltd. were briefed to
the audit staff by the engagement partners.

Based on the above facts, answer the following:-

1. Are the manual controls that make use of some form of data or information or report

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produced from the IT systems and applications?

a) Application Controls

b) IT dependent Controls

c) Automated Controls

d) General IT Controls

2. Statement 1: Application controls include both manual and automated controls that
operate at a business process level.

Statement 2: General IT Controls apply to mainframe, miniframe as well as end user

environment.

a) Only Statement 1 is correct

b) Only Statement 2 is correct

c) Both Statements 1 & 2 are correct

d) Both Statements 1 & 2 are incorrect

3. …………. are also known as pervasive or indirect controls :-

a) General IT Controls

b) Application Controls

c) IT dependent Controls

d) None of the above

4. Which of the following are not the types of audit tests that can be used in the audit in an
automated environment?

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a) Observation

b) Inspection

c) Re performance

d) None of the above

5. ………. is the combination of processes, tools and techniques that are used to tap vast
amounts of electronic data to obtain meaningful information:-

a) Computer Assisted Audit Techniques

b) Automated Controls

c) Data Analytics

d) None of the above

Case Study-4

M/s JK & Associates have been appointed as auditors of Venus Ltd. for the financial year 2019-
20. The team consist of Mr. J & Mr. K both Chartered Accountants as also the engagement
partners and the audit staff consisting of 2 article assistants. While starting the audit work of
Venus Ltd, the engagement partners briefed the audit staff about the audit work, areas to be
covered and the various auditing concepts and their application in the audit of Venus Ltd along
with applicable Standard on Auditing.

Various topics like audit planning, overall audit strategy, and audit programme were
discussed in detail. The team was told about the purpose and implication of various
statements and guidance notes issued by the Institute of Chartered Accountants of India
(ICAI) from time to time. Mr. K also briefed the team about the concept of materiality to be

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applied while planning and performing audit. The team was also explained in detail about the
area where benchmark materiality can be applied in case of Venus Ltd.

Based on the above facts, answer the following:-

1. ………. sets the scope, timing & direction of the audit and guides the development of
the more detailed plan.

(a) Audit Programme

(b) Overall Audit Strategy

(c) Completion Memorandum

(d) Audit Plan

2. Statement 1: The establishment of the overall audit strategy and the detailed audit plan
are not necessarily discrete or sequential process but are closely inter -related.

Statement 2: The auditor shall establish an overall audit strategy that guides the
development of audit plan.

a) Only Statement 1 is correct

b) Only Statement 2 is correct

c) Both Statements 1 & 2 are correct

d) Both Statements 1 & 2 are incorrect

3. ………………… means the amount set by the auditor at less than materiality for the financial
statements as a whole to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatement exceeds materiality for the
financial statements as a whole :-

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a) Benchmark Materiality

b) Materiality in Planning

c) Performance Materiality

d) Materiality

4. Which of the following is not an example of benchmark that can be used in determining
the materiality in the case of financial statements:-

a) Total Revenue

b) Profit before tax

c) Net Asset Value

d) None of the above

5.

i) Guidance notes issued by ICAI provide guidance to members on matters which may arise
in the course of their professional work.

ii) Statements are issued by ICAI with a view to secure compliance by members on some
matters.

iii) Guidance notes are recommendatory in nature.

iv) Statements are mandatory in nature.

a) All the above statements are correct.

b) Statements 1 & 2 are correct

c) Statements 1, 2 & 3 are correct

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d) Statements 1,2 & 4 are correct

Case Study-5

 M/s TPR & Associates have been appointed as the auditors of Octopus Ltd. for the
Financial Year 2019-20.

 During the course of audit, the auditor notices that there is significant change in the
number of debtors of the company. The auditor decided to check the debtors account
in detail.

 Further the company has made various provisions like the provisions for taxation,
provision for bad & doubtful debts.

 Also during the current Financial Year, the auditor attended the physical verification of
the inventory being carried out by the management.

 The auditor notices that there is no substantial change in the bifurcation of amount of
items representing the liabilities side of the balance sheet of Octopus Ltd. Still the
auditor understands that he needs to check the liability side in detail.

 Further the company has also recognised various income like interest income and
dividend income which auditor understands need to be checked in detail.

 The auditor is of the understanding that certain matters need to be reported under
Companies Auditors Report Order (CARO).

Based on the above facts, answer the following:-

1. is a possible obligation that arises from the past events and whose existence will be
confirmed only by the occurrence/ non occurrence of one or more uncertain future
events not wholly within the control of the entity:-

(a) Provision

(b) Reserve

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(c) Contingent Liability

(d) Liability

2. Which of the following is not correct with respect to the inventory held by Octopus
Limited:-

(a) All inventory units held by the company should have been recorded and recognized
in the financial statements.

(b) Any inventory held by a third party on behalf of the company should not be
included as part of the inventory balance.

(c) Inventory should be recognized at cost or net realizable value whichever is lower.

(d) Inventory balance as at the yearend does not include any element of next year

3. If the management of Octopus Ltd. refuses to allow the auditor, to send the
confirmation request to the debtors, the auditor should:-

(a) Withdraw from the engagement.

(b) Not listen at all to any requests of the management.

(c) Consider the management’s request for refusal and assess its validity and decide
the nature, timing, extent of his audit procedures accordingly.

(d) Agree to management request and proceed with audit of other items of the
financial statements.

4. Which of the following statements is not true so far as the liabilities of a company
are concerned:-

(a) Liabilities are the financial obligations of a company including owner’s funds.

(b) Liabilities include borrowing, trade payable and other current liabilities and

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provisions.

(c) Verification of liabilities is an important as that of assets.

(d) All of the above.

5. Statement 1: Confirmations as well as undelivered letters should be given/ returned to

the auditor and not to the client

Statement 2: When no reply is received, the auditor should perform alternate procedures
regarding the balances:-

(a) Only statement 1 is correct

(b) Only statement 2 is correct

(c) Both 1 & 2 are correct

(d) Both 1 & 2 are incorrect

Case Study-6

ABC Ltd. is a company dealing in products namely chocolate and coffee. ABC Ltd. Approached
audit firm XYZ & Associates for the statutory audit of its financial statements for the year
ended 31.03.2019. The Gross turnover of the company is Rs.105 crores, out of which turnover
from one of its product namely coffee is of Rs.95 crores during the immediate preceding
Financial Year.

During the course of Audit, XYZ & Associates found certain delay in the payment of the
Employees Provident Fund by ABC Ltd. They understand that the same need to be reported
under the relevant provisions of Companies (Auditors Report) Order 2016.

During the FY 2018-2019, Mrs. X wife of CA Mr. X who is partner in XYZ & Associates acquires

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certain shares of ABC Ltd. The audit firm is of the opinion that this may call for a disqualification
for the firm for being working as the auditor of the company under the relevant provisions of
the Companies Act 2013.

Further, ABC Ltd. also approached the auditors to provide them the Investment Banking service
to which the auditors denied as per the provisions of Companies Act 2013.

During the course of audit, XYZ & Associates has reason to believe that an offence of fraud
involving some amount has been committed in the ABC Ltd. by its General Manager. The
auditors understand that there is a requirement for reporting of fraud by the auditors under
the Companies Act and the relevant rules.

Based on the above facts, answer the following:-

1. After the appointment of XYZ & Associates, ABC Ltd. should inform the auditor and file
a notice of such appointment with registrar within:-

(a) 60 days

(b) 30 days

(c) 15 days

(d) 20 days

2. If Mrs. X acquires security exceeding the prescribed limit in the ABC Ltd., then XYZ &
Associates shall take corrective actions within… days. What is the prescribed limit:-

(a) 100 days, Market Value Rs 1,00,000

(b) 60 days, Face value Rs 1,00,000

(c) 90 days, Face value Rs 1,00,000

(d) 15 days, Market Value Rs 1,00,000

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3. Under which section reporting of fraud by an auditor to the Central Government is

required and what is the amount of fraud:-

(a) Section 143(12), 1 crore & above

(b) Section 139(12), 1 crore & above

(c) Section 143(12), 2 crore & above

(d) None of the above

4. What is the requirement for ABC Ltd as per the relevant provisions regarding
maintenance of cost records:-

(a) Maintenance of cost records is mandatory, in form CRA 1.

(b) Maintenance of cost records is mandatory, in form CRA 2.

(c) Maintenance of cost records is mandatory, in any general format.

(d) No requirement of maintenance of cost records\

5. Under relevant clause of CARO,2016, XYZ & Associates is required to report the extent
of arrears of Employees Provident Fund as at the balance sheet date:-

(a) Exceeding 9 months

(b) Exceeding 3 months

(c) Exceeding 6 months

(d) Exceeding 12 months

SUGGESTED ANSWERS / HINTS

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Case Study-1

1 2 3 4 5
D B D C C

Case Study-2

1 2 3 4 5
B A D B D

Case Study-3

1 2 3 4 5
B C A D C

Case Study-4

1 2 3 4 5
B C C D A

Case Study-5

1 2 3 4 5
C B C A C

Case Study-6

1 2 3 4 5
C B A A C

EIS & SM
EIS

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Case Study 1

Ind Milk Dairy is an Indian based Asia's largest dairy product company in year 2014-15 that
targeted a turnover of Rs 50,000/- Crores by 2020-21. By the Financial year 2018-19, the
company had achieved a turnover of Rs 33,150/- Crores. The Company procures milk through
various collection centers created at the level of different villages state-wise. Each collection
center is run by co-operatives created in each district of the state. The total members of these
co-operatives are more than 1.5 Crores as on April 2020. Other than retail sales, a few other
major revenue sources of the company are as follows:

- Department of Defence, Government of India

- Corporate Customers
- Export Customers

To achieve the target company's turnover of Rs 50,000/- Crores by 2020-21; Board of Directors
of the company decides a two-prong strategy - Business Strategy and System Strategy which
are as follows.

The Business Strategy includes the following:

- Launch new products.

- Get into new markets for existing products.
- Increase per capita consumption of products in existing market.

The System Strategy includes the following:

- Company needs to create infrastructure that could cater to ever changing needs of
business. This includes robust network infrastructure as well as database configuration also.
- The proposed database structure needs to cater to needs of business and to store complex
data like identification of animals through their images, health-card system etc.
- Creates a system to keep track of target on monthly basis.

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- At village level, Company shall install a computer system at each milk collection center.
These systems shall be connected to main server of the company. There are 50,000 villages
to be covered.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

The company Ind Milk Dairy decides to have a database structure where each member of the
district level cooperative society shall be part of database defined as "OWNER". Each Owner
record shall have images of their milk giving animals with its health cards. Identify the best
database structure the company may use to store such complex data.

(a) Hierarchical Database Model

(b) Network Database Model
(c) Object Oriented Database Model
(d) Relational Database Model

Question 2

The company Ind Milk Dairy decides to have a system to track its target on monthly basis.
This can be achieved using ___________.

(a) Big Data

(b) Artificial Intelligence
(c) Management Information System
(d) Knowledge Management System

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Question 3

The company Ind Milk Dairy decides to have systems in the collection centres at village level
that requires updating of data into central server in online / real time basis. This will
improve_________ business cycle of the company.

(a) Order to Cash (02C)

(b) Procure to Pay (P2P)
(c) Raw Material to Finished Goods
(d) Debtors Management

Question 4

The Ind Milk Dairy company's decision to increase its turnover to Rs 50,000/- crores by 2020-
21 is a strategic decision. Which ERP functional module supports this type of decision
making?

(a) Project Management

(b) Sales and Distribution
(c) Financial Accounting
(d) Materials Management

Question 5

In purview of above case scenario, the company’s central server shall keep the data of each
milk collection center and shall also perform the task of backup, archiving and recovery.
Which of the following technology can be useful in this case?

(a) Storage Virtualization

(b) Network Virtualization
(c) Hardware Virtualization

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(d) Software Virtualization

Case Study 2

M/s. XY & Co. the IS auditors of Mahadevi Bank, a multi-state scheduled bank operating in
Mumbai have issued a comprehensive systems and control audit report, of which points of
special interest to the audit committee are extracted and put forth as hereunder:

 M/s. BA Child Welfare Association is an NGO that is operating from Bangalore since last
three years. It had opened a current account with the bank's Panjim branch on 12th
December 2017.
 The auditors noted that several small value cash deposits have been made from NGO's Bank
account to a current account over the past one year, the ledger summation being Rs 29.49
Lakhs for the year. There have been two instances of high value RTGS (Real-Time Gross
Settlement) transfers from this account to another account of a nationalized bank's branch
located at Delhi, the first executed for Rs 12 Lakhs on 07th March 2018 and the second for
Rs 10 Lakhs on 29th March 2018. The bank manager initiated an email on 29th March 2018
to NGO's email-id available with the branch, requesting for the details of the parties to
whom the transactions were initiated and the reason for the same. The NGO's Bangalore
office replied that though it cannot share specific party details, the transactions were
initiated for fund remittances to another Delhi based NGO having similar philanthropic
purposes. The auditors suspect this as case of money laundering.
 The auditors recommended that the bank should initiate integration to BHIM (Bharat
Interface for Money) application to provide better services to its account holders.
 The auditors suggested that a separate automated control report to be generated in bank
for each day- end closure which will total all the centralized printed cheque book count and
cross-check the printed cheque book dispatch register.
 Letter of Credits (LCs) are currently set in the bank to auto renew on expiry date.

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 The auditor found that there are five thumb impression based biometric units that are
connected to terminals but are not working.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 6.

Question 1

For monitoring of suspected money laundering within a banking environment, the bank will
be required to maintain records of which type of following nature and time frame?

(a) All transaction details of the NGO for five years starting from 12th December 2017.
(b) All transaction details of the NGO for five years starting from 29th March 2018.
(c) All transaction details of the NGO for five years starting from 07th March 2018.
(d) All transaction details of the NGO and other beneficiaries for eight years starting from 07th
March 2018.

Question 2

Which of the following legal implications will be entailed on the denial by the NGO for not
sharing third party specific information?

(a) It will be treated as a case of proven money laundering, and the bank can immediately
suspend the operations of the account.
(b) Invoking of Section 13 of the PMLA that states of penalty in the farm of fine ranging from
ten thousand to one lakh per failure to report on the bank.
(c) Know Your Customer non-compliance.
(d) The NGO is right not to share information as it is private information. It has explained the
nature of the transactions being a philanthropic entity and that ensures compliance with
AML guidelines from RBI.

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Question 3

The IS auditors of the Mahadevi bank recommended that the bank should initiate its
integration with 381M application to provide better services to its account holders, Which of
the following option, in the context of BHIM application, is not correct?

(a) BHIM application requires the account holder to create a VPA (Virtual Payment Address) or
UPI (Unified Payment Interface) ID.
(b) BHIM application can be used for bank transfers even with non-UPI based platform.
(c) BHIM application is built on the immediate payment infrastructure, and hence any person
can transfer funds between two bank accounts instantly.
(d) BHIM application can be used by both United Payment Interface (UPI) users as well as non-
UPI users.

Question 4

The auditor's suggestion of a separate control report is generated in Banking System for each
day-end closure that will provide the total of all the centralized printed cheque book counts.
Which of the following control will solve the purpose as suggested by auditors?

(a) Input Validation control

(b) Batch control
(c) Data coding control
(d) Data Validation control

Question 5

Identify the appropriate risk management from the following on the finding of the auditor on
'The Letter of Credits (LCs) getting auto renewed on the expiry date’.

(a) Eliminate the risk by purging these LC records.

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(b) Mitigate the risk by transferring the LCs back to the suppliers.
(c) Tolerate the risk by ignoring the risk as these LCs will get expired.
(d) Accept the risk and make adequate provision in the books of accounts till the expiry date.

Question 6

The auditor's observation that having five non-operational biometric thumb impression units
would be an indication of having a control lapse in an ERP module. Identify the module in
which the lapse could have occurred.

(a) Human Resource Module

(b) Controlling Module
(c) Credit and Risk Module
(d) Customer Relationship Management module

Case Study 3

Kartikeyan LLP (KKLP) is an online start-up registered in 2018 under the URL
www.onlinescrap.com with the intention of bringing together small entrepreneurs engaged in
scrap sale of core metals. It has garnered tremendous response with almost five thousand small
vendors registered on its site. The management wants to now monetize the platform and roll
out a partnership model where premium vendors can buy and later also sell core scrap metals
under the brand name of KKLP an the website www.onlinescrap.com to external parties as well
as registered vendors. The management defined following parameters for the growth of
company:

i. An Order to Cash (02C) process implementation which will start with the tracking of
availability of required scrap to receiving payments on tender basis.

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ii. Decision to either go for an own ERP or to sign an SLA (Services Level Agreement) with a
cloud service provider who will be required to host the entire portal on its cloud servers.
iii. Hiring of an IT manager who will help to create and maintain various control aspects.
iv. Defining proper IT related policies.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

In purview of above case scenario, which of the following e-market business model is
implemented by the management of KKLP?

(a) E-auction
(b) Buyer Aggregator
(c) Virtual Community
(d) E-Shop

Question 2

KKLP is in the process of implementing 'Order to Cash (O2C)'cycle that involves following sub-
processes:

i. Order enquiry
ii. Order booking
iii. Order fulfilment
iv. Invoice generation
v. Delivery GRN
vi. General Ledger Accounting
vii. Collections

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Which of the following represents the correct sequence flow of sub-processes for O2C, in
your opinion, for the present scenario?

(a) i-ii-iii-iv-v-vi-vii
(b) ii-iii-iv-v-vii-vi-i
(c) ii-iii-v-iv-vii-vi
(d) ii-iii-v-iv-vi-viii-i

Question 3

Which of the following clause will not be a part of the KKLP's Service Level Agreement (SLA) in
case SaaS (Software as a Service) model is provided to them by the cloud service provider?

(a) The responsibility of the service provider to maintain data connectivity 24x7.
(b) The responsibility of the service provider for providing alternative data recovery plan.
(c) The rights and responsibilities of both KKLP and service provider towards the SLA.
(d) The responsibility of the service provider for storage of data and data security.

Question 4

The management of KKLP requires its IT manager to generate an exception report on daily
basis for those vendors who have placed orders in excess to their permissible account limits
and to trigger a lock on their accounts from further operations, which can be unlocked only
by remitting funds to the extent of the excess in limit. This activity can be done by the IT
Manager by _____________.

(a) Introducing a detective control for monitoring limits versus order balances at account level
for each vendor.
(b) Introducing a preventive control for past due accounts report on each day end basis at
account level for each vendor.

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(c) Introducing a detective control for variance reporting and auto emailing system to all
exception flagged vendors.
(d) Introducing a preventive control based on hash totals between permissible account limits
and order placed values where the excess will be reported for hash total violation rules.

Question 5

The IT manager is responsible to ensure that a premium registered vendor does not
download, copy or extract any information from its website. If someone does this, he shall be
liable to penalty. Which of following section of IT Act, 2000 would be helpful for this?

(a) Section 66D

(b) Section 43A
(c) Section 43
(d) Section 65

Case Study 4

XYZ Ltd. started as a small business company that in early years; sold homemade organic soaps,
serums, face washes and creams. With time, the company added more beauty products in its
list and grew as a big brand in the market. All the business processes of the company are
automated and therefore all the related data is stored in various database tables are managed
at the backend in database. The company hired more employees to promote and to sell its
products across the country and initiated selling its products through online mode to reach
customers worldwide. Hence, the company started e-3usiness through website and started
receiving orders from worldwide customers.

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To make optimal use and quick sharing of data, the company started keeping all its data on
Google cloud. Now the marketing employees and salespersons of the company have readily
available data related to inventory and online orders anywhere, anytime. Also, they can update
their status and targets achieved on company's website instantly. Initially the company got
15G3 free space on cloud, but in due course of time, the demand for the data storage increased
so, it subscribed for more space on cloud. The company is satisfied with the cloud service as it
isolates the company completely from server failures and needs to pay for only amount of
storage it uses.

The company uses digital mode of payment for both the customers and suppliers and also uses
modules of Enterprise Resource Planning system. The organization has some controls in the
system that restricts unauthorized entry into the premises. Some controls also have been
designed to detect errors, omissions and malicious act occurrence and report that occurrence.
The company also appointed an IS auditor to ensure the completeness, accuracy and validity of
data.

One day, IT Manager of the company observed that while accessing the home page of
company's website; some pornographic content was displayed on its home page. The manager
informed the management of the company which in turn reported about this to cyber security
cell. On investigation, it was found that Mr. A, a team member of IT Department, intentionally
hosted the objectionable content on the company’s website and also concealed some
important information

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

Google Cloud frees XYZ Ltd. completely from the issues related to server in terms of its
maintenance, failure, storage capacity etc. Which of the following feature of cloud computing
does it represent?

(a) Virtualization

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(b) Reliability
(c) Resiliency
(d) Scalability

Question 2

In purview of above case scenario, identify the kind of cyber-attack faced by XYZ Ltd.

(a) Web defacement

(b) Denial of service
(c) Cyber Pornography
(d) Virus

Question 3

According to the case scenario, what could be the main objective for which an IS auditor has
been appointed b xyz Ltd.?

(a) Asset Safeguarding

(b) Data Integrity
(c) System Efficiency
(d) System Effectiveness

Question 4

XYZ Ltd. uses Enterprise Resource Planning system which integrates all the modules with
Financial and Accounting System of the organization. Which of following point is not valid
with the integration of modules?

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(a) Master data across all the modules must be same and must be shared with other modules
whenever required.
(b) Common transactions must be shared with other modules whenever required.
(c) There is no need of separate voucher types to be used for each module.
(d) Figures and transaction may flow across the department.

Question 5

In purview of above case scenario, under which section of Information Technology Act 2000,
is Mr. A punishable?

(a) Section 65
(b) Section 66B
(c) Section 66C
(d) Section 66D

Case Study 5

PQR Ltd. is a grocery store that has multiple outlets in various cities across the country. It has
automated all its data processing activities and maintains its entire data in an integrated data
center. All data processing activities, servers, backup and recovery is managed by IT
department of PQR Ltd. All the devices are connected to company's network and communicate
with each other using Unique Identification Number. The regular customers of grocery store
have been provided a membership number and a membership card. When a purchase is made
by a customer; all the details related to purchase are recorded in database against that
membership number. As a part of promotional campaign activity, the PQR Ltd. offers various
discounts and schemes to draw attention of new customers and provide satisfactory services to
its existing customers. These schemes are developed by top management based on purchase

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patterns, market trends and association of purchases done by customers. The company is using
software for this, which provides the details that enable the top management in efficient
decision making.

PQR Ltd. maintains all the data in database. The setting of parameters and menu options to be
displayed in the software is done first time when the software is installed. A specific menu
option can be viewed or activated by authorized employees only. These access restrictions are
applied in software so that no user of software can access data which he is not authorized to
use. This is done to maintain the security of the system.

The IS auditor appointed by the management, reviews the information system and
recommends using real time audit which may help the company to close the gap between
occurrence of transaction and review of transaction. This real time audit will also help in timely,
comprehensive and cost-effective audit of the transactions. Based on the recommendation of IS
auditor, the company implements the concurrent audit technique which tends to review all the
updates in database and replica in the system. It also traps exceptions in the database
management system.

Management of PQR Ltd. establishes the formal mechanisms to monitor the working of
software on regular basis. The company finds some issues in processing and connectivity in the
software. To resolve these problems, the company modifies the programs according to various
reliable processing requirements. Latest changes made in the software are according to up
gradation of Operating system from Windows 7 to Windows 10 in all its systems because some
of the modules of software were not compatible with windows 7.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

Which type of maintenance is done by the PQR Ltd. while upgrading the Operating System
from Windows 7 to Windows 10?

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(a) Perfective Maintenance

(b) Corrective Maintenance
(c) Adaptive Maintenance
(d) Preventive Maintenance

Question 2

To remain competitive in the market; PQR Ltd. needs to extract the relevant information
regarding the purchase patterns and market trends from the huge data that is available from its
competitors. It also helps PQR Ltd. to offer various discounts and schemes. Which of the
following methodology of data analysis can be used to identify such a trend?

(a) Exploratory Data Analysis

(b) Quantitative Data Analysis
(c) Qualitative Data Analysis
(d) Confirmatory Data Analysis

Question 3

Assume that you are appointed as an IS auditor of PQR Ltd. to review the security mechanism
of its system. While performing your duty, at which level of Information System will you
review the controls to ensure that users can see only particular menu options according to
job assigned to them?

(a) Master
(b) Transaction
(c) Risk
(d) Configuration

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Question 4

In PQR Ltd., the customers have been provided a membership number and a membership
card and all purchase details of customer are recorded in database against that membership
number. Identify the incorrect statement from following that does not support the above
comment.

(a) Membership number is unique.

(b) In company's database, Membership number represents a primary key in the member
table.
(c) Membership number can be same for two customers.
(d) Membership number can be used to see all the purchases done by the customer.

Question 5

According to the case scenario, which audit tool has been implemented by company to trap
exceptions in its Database Management System?

(a) Audit Hook

(b) Continuous and Intermittent Simulation
(c) Audit trail
(d) Integrated Test Facility

Case Study 6

XYZ is a life insurance company which offers various innovative products keeping in mind the
different needs of the people. It has more than 300 branches in India and all branches are
computerized. The company has a wide variety of insurance plans like protection, retirement,
health, saving and investment, child education and travel insurance plans etc., which cater to

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the risk management and insurance requirements of individuals as well as groups. Each plan
offers adequate risk coverage at law rates through a simple application process. It offers
rewards for healthy life style at relatively low premium and certain tax benefits as per the
applicable Tax Laws.

With the goal to grow, the company has given the facility to buyers to purchase its plans online.
All the data related to investors, claims, policies and marketing agents are stored in a database
which can be accessed online. All data and website of the company are hosted on a cloud.

The performance of the XYZ insurance company about planning, implementation and
monitoring of computerization process was reviewed by IS auditor since last 5 years. The audit
of Data Centre and Information System department was conducted with a view to obtain a
reasonable assurance on accuracy and consistency of data. Existence and adequacy of IT
controls and network controls are also reviewed. The audit was conducted at 12 various
branches selected on random basis.

The audit was performed against various frameworks, standards, laws, guidelines and policies
relevant to insurance business as well as IT.

Audit findings and recommendations reported to Management were as follows:

i. All computers should be provided indirect network connections with other networking
services or servers.
ii. There is a need to make huge volumes of data availability from cloud at peak time.
iii. The controls that ensure the availability of system in case of data loss due to unauthorized
access and equipment failure etc. are not adequate.
iv. There is a need to establish a mechanism to transfer the data in an encrypted form so that it
would be safe and other users who are not authenticated cannot access that data.
v. Mr. A dishonestly used electronic signature of the branch manager of Z branch of Company
and passed the false claim of one of the buyers and allowed him to withdraw the funds. The
legal action must be taken against him.

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vi. Special audit routines are advised to highlight and notify suspicious records with frequent
change in name and address so that policyholder system becomes less vulnerable to frauds
like funds withdrawal because of false claims.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

According to IS Auditor, some controls need improvement to ensure the availability of system
in case of data loss due to unauthorized access and equipment failure etc. so that the company
can retrieve the files. Which of the following strategies should be adopted by XYZ Company for
this purpose?

(a) Grouping the similar transactions

(b) Logging input transactions
(c) Dual recording of data
(d) Periodic dumping of data

Question 2

The IS auditor has found that Mr. A dishonestly made use of electronic signature of the
branch manager of Z branch of the company and passed the false claim of one of the buyers.
Under which section of IT Act, 2000 is Mr. A punishable?

(a) Section 66B

(b) Section 66C
(c) Section 66D
(d) Section 43

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Question 3

What kind of server has been recommended by IS auditor to provide networking services to
all computers of XYZ com an?

(a) Proxy Server

(b) Web Server
(c) Database Server
(d) Application Server

Question 4

In purview of above case scenario, which type of audit routines can be recommended by IS
auditor to avoid withdrawal of funds due to false claims?

(a) Continuous and Intermittent Simulation

(b) Snapshot
(c) System Control and Review File
(d) Audit Hook

Question 5

The company started using wearable smart watches and bands that provide the medical
condition of individual who wishes to buy life insurance. This initiative of the company is a
part of their risk management strategy. Identify it.

(a) Tolerate the risk

(b) Terminate the risk
(c) Transfer the risk
(d) Treat the risk

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Case Study 7

ABC is a car rental company running its business through m-commerce. Its mobile app is very
popular amongst the people who can book a car online through it and the company is earning a
good profit. It collects the information of large number of taxi providers, makes them its
partner and sells their rental services to large number of buyers under its name. The company
follows its employees' health and safety regulations and pays all the taxes on time.

Because of the growing competition in the market, the ABC Company wants to use some
technology on sustainable position in comparison to others, and to reveal its capabilities and
market conditions so that it can take good strategic and tactical decisions to maintain its repute
in the market.

The company uses controls to protect its data and information on its private network from the
outside network by filtering the information, thus allowing only authorized traffic to pass
through the network.

Despite of all its functioning and care, a case has been reported where two drivers of the
company had transported the cash of Rs 12 lakhs from Delhi to Jaipur without any bill or proof
while taking the passengers in the company's cab without the notification of the company's
higher authority. There is a need of legal action against them.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

Under which section of Prevention of Money Laundering Act, the two reported drivers of the
ABC Company are liable?

(a) Punishment of cheating by personation

(b) Punishment to give false information Agarwal
(c) Offence of money laundering
(d) Punishment of theft

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Question 2

In purview of above case scenario, ABC Company wants to use some technologies to be on
sustainable position. Which technology can help the company to make well-informed
business decision and be the source of competitive advantage?

(a) Artificial Intelligence

(b) Extensible Business Reporting Language (XBRL)
(c) Internet of Things
(d) Business Intelligence

Question 3

According to case scenario, what kind of business risk A3C Company tries to avoid by giving
health safety facilities to employees?

(a) Regulatory risks

(b) Financial risks
(c) Hazard risks
(d) Technology risks

Question 4

In purview of above case scenario, what kind of business market model is being followed by
ABC Company?

(a) E-shop
(b) Buyer Aggregator
(c) Virtual community
(d) E-market

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Question 5

What kind of network access controls are being used by the ABC Company to ensure network
security?

(a) Firewall
(b) Call back device
(c) Encryption
(d) Enforced Path

Case Study 8

ABC is a multispecialty hospital that provides best known healthcare facilities to large number
of patients. The hospital has three more branches at 3 different states. However, all the
branches record their related data including personal data about the patient and other
comprehensive medical data; medical services provided to the patient such as investigations,
diagnoses, treatments, follow up reports and important medical decisions. These branches
have been managing all the operations related to administrative, financial, clinical aspects and
health care facilities manually. But, now the management of the hospital wants to streamline
and optimize all its business operations in its branches. After consulting the experts, the
hospital decides a strategy to implement a comprehensive, integrated and specialized system
which is designed to manage the administrative, financial and clinical aspects of hospital and
healthcare facilities of all its departments in single software and maintains a centralized
database for all the relevant data.

• This proposed system is planned to be developed in-house during which an IS Auditor Mr.
Kamal is responsible to provide his valuable inputs and supervise the development and
working of the system from auditor's aspects.

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 The proposed software or system would make available up-to-date data that bring
workflow efficiency in hospital management.
 All its branches would be interconnected with each other through intranet and share data
with each other.
 Also, the administrative staff could track the status of funds, patients, doctors and facilities
etc. very easily just on the click of a button.
 Each employee shall have a unique login Id and certain access privileges depending on
his/her job profile and designation.
 The proposed software has facility of Electronic funds transfer for its various stakeholders
like vendors, doctors and patients in order to provide them more satisfaction.
 With the implementation of the new system, the security of the confidential data of its
patients that is being stored, processed and maintained in the centralized database is a
serious concern for the top management of the hospital.

Recently, the hospital is also facing many connectivity and security issues in its intranet due to
which the data transmission between its branches has become unreliable. Hospital
management considers various risks associated with this, including cyber risks and infringe of
various IT laws and also puts controls in place in response to these risks. It puts controls in place
to ensure that either failures do not impact or have a minimum impact on hospital operations
and services. It also keeps a check that no unlawful activity can take place.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

Which strategy is used by ABC hospital that streamlined and optimized its operations?

(a) Database Management System

(b) Business Process Reengineering
(c) Business Process Automation
(d) Bring Your Own Device

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Question 2

Which type of control mechanism is implemented by ABC hospital to restrict its system access
to authorized users only?

(a) Segregation of Duties

(b) Rule Based Access Control
(c) Privacy policy
(d) Role Based Access Control

Question 3

ABC hospital considers various laws related to system automation with the main objective of
securing the confidential data of its patients. Which of the following is not included in
Sensitive Personal Data Information for ABC hospital?

(a) Patient history

(b) Doctor's Experience
(c) Medical reports
(d) Staff details

Question 4

In purview of above case scenario, identify the type of audit which Mr. Kamal is/can be
involved in.

(a) Post Implementation Audit

(b) Concurrent Audit
(c) General Audit
(d) Control Audit

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Question 5

In your opinion, which of the following is a secondary process of ABC hospital?

(a) Recruitment and staffing

(b) Management of infrastructure
(c) Accounting
(d) Budgeting

Case Study 9

HAK Systems Private Limited (abbreviated hereafter as 'HAI<PL') has two distinct business lines
— viz. Engineering Services and Cloud-based server solutions. The Chief Operating Officer
(COO) has observed that the company is facing many problems by keeping data on disparate
systems which now needs to be centralized. As a preliminary exercise, the IT Manager has
written the operational rules as follows:

i. Central database for the engineering business line to be modelled on a relational database
model deploying RDB - Oracle. This software can be installed on each system to maintain
the database.
ii. The rules pertaining to a sale invoice is written as:
a. Invoice Amount: Primary Key
b. Invoice Date: Attribute
c. Product Name in Invoice: Relation
iii. Access controls to be based on user preference basis.
iv. Running a backup procedure each day at 22:00 hours.
v. Internally created ERP software to be deployed, which will be efficient in terms of cost and
performance.

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vi. Accounts Payable Module will be code written auto-rules for payment cheque creation.
vii. The COO wants to implement a VOIP (Voice over IP) system for efficient time management.
viii.The COO also wants to have a penalty enforced for any employee who misuses company
data stored in the company servers and computers.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

In context with the case scenario, the statement ‘Access controls to be based on user
preference basis'; in your opinion is

(a) False, as access controls are defined on need-to-know basis.

(b) False as access controls are defined on need to know and need to do basis.
(c) False, as access controls are defined on need to know and compliance basis.
(d) True, as access controls are defined on user reference and utility basis.

Question 2

Which control is adopted in the case of HAK Systems Private Limited running a backup
procedure each day at 22:00 hours?

(a) Preventive control

(b) Corrective control
(c) Detective control
(d) Application and monitoring system access control

Question 3

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One of the business lines of HAK Systems Private Limited is that of Cloud-based server
solutions. In this context identify, which of the following statement is correct for an installed
application software?

(a) Installed application software will be more efficient than a cloud-based application based
on performance parameter.
(b) The CAPEX (Capital Expenditure) spent for an internal software application will be higher to
the CAPEX for a cloud-based application, but OPEX spend will be lower than the cloud-based
application.
(c) Definite service agreement is recommended in installed software application.
(d) Maintenance will be the defined liability of the installed application service provider.

Question 4

In purview of above case scenario, Accounts Payable Module is suggested to be used. Which
of the following is one of the fundamental rules adopted in an Accounts Payable automation
set up for payment to vendor?

(a) Vendor Invoice, PO and GRN to be matched to PO terms and rates, and vendor master table
for payment cheques preparation.
(b) Vendor PO, Invoice to be matched to the GRN for terms and rates for payment cheque
preparation.
(c) Vendor Master Table to be checked with the PO and supply terms to be matched to the
GRN for payment cheque preparation.
(d) Vendor Invoice to be matched to Vendor master table, and if validated, the ledger table to
be matched to invoice value and then the GRN to be validated for payment cheque
preparation.

Question 5

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HAKPL has Cloud based server solution business line. As per suggestion of the COO, which of
the following Service Model of cloud computing will be used in e-VoIP?

(a) Platform as a Service (PAAS)

(b) API as a Service (APIaaS)
(c) Software as a Service (SaaS)
(d) Communication as a Service (CaaS)

Question 6

Referring to the IT Act 2000, the COO suggested the penalty for a person who extracts or
copies any data from the computer system of the company without prior approval. What is
the penalty defined under which section of IT Act, 2000 for such an offence?

(a) Imprisonment for a term up to 3 years and penalty up to 5 lakh or with both under Section
66.
(b) Imprisonment for a term upto 5 years and penalty upto 51akh under Section 43A.
(c) Imprisonment for a term upto 3 years and penalty upto 10 lakh under Section 66.
(d) Imprisonment for a term upto 5 years and penalty upto 3 lakh under Section 43A.

Case Study 10

Small Bank Limited (S3L), Bhopal (MP) is a registered as a Small Finance Bank (SF3) with Reserve
Bank of India (RBI), New Delhi. S3L has been provided license under the Government of India's
initiative to promote financial inclusion. SBL has started operations in the April 2018 and has
100 branches spread across three states including MP, Rajasthan and Tamilnadu.

SBL balance sheet as on 31/03/2019 shows following key performance parameters.

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1. Advances: Rs 550/- Crores: 75% in category of agricultural

Advances
2. Gross NPA (In %): 2.5%
3. Net NPA (In %): 0.5%
4. Deposits under Current & Savings Account (CASA) 1,000/- Crores
Accounts
5. No. of CASA account holders Rs. 2,50,000 Lakhs
6. Employees 450

ISSUE

SBL started their business operations immediately after getting the RBI License. They started
using a banking ERP by the name SmICBS (Small Core Bank Solution System), launched by a
company named V Bank Limited (VBL), Pune (Maharashtra). VBL has been selling it products to
various co-operative banks across India since 2005.

The software was purchased by bank without going through the formal process of
benchmarking the software to bank's strategic and future business needs. SBL had launched its
operations with lot of publicity and fanfare.

Few systems related issues came up when an article in a national daily newspaper got
published. The article claimed that the SBL systems were not correctly crediting the interest to
all the account holders' saving bank accounts. The article highlighted the details of few account
holders of bank and published a detailed report. The key facts published were as follows:

Example 1:

1. Name of Customer: Mr. X, Satna (MP)

2. Account details: The newspaper published the account statement for month of June 2018.
3. Interest credited by bank: Rs 150.70
4. Interest as per calculation: Rs 150.75

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Example 2:

1. Name of Customer: Mr. J, Salem (Tamilnadu)

2. Account details: The newspaper published account Statement for the month of July 2018.
3. Interest credited by bank: Rs 3,825.20
4. Interest as per calculation: Rs 3,825.25

The newspaper article ended by stating that bank has 2,50,000 account holders. If each
customer loses Rs 0.05 (Five Paisa) each month, that means bank is gaining Rs 12,500/- per
month meaning Rs 1,50,000 per year.

MANAGEMENT ACTION ON ISSUE

As soon as the matter came in public domain, the management of S3L realized that some swift
action is needed on urgent basis. SBL board called for a high-profile meeting and discussed the
matter. At the end of the meeting, the management took a decision to get the bank's system
audited by a system expert. Subsequently, Mr. A was hired to conduct the audit which he
completed and submitted a report stating that;

i. Many important reports like Asset - Liability Management (ALM) Report, Cash Reserve Ratio
(CRR), and Statutory Liquidity Ratio (SIR) reports are not being provided by the CBS. SmlCBS
does have capability to add a new report that may be needed in future, if RBI mandates the
same.
ii. SmlCBS does not have any backup facility in case of any disaster or natural calamity.
iii. SmlCBS does not have its m-banking facility.
iv. Finally the system auditor suggested that SBL needs to go for a new CBS.

SBL board immediately decided to change the software. SBL this time went through the due
process of software selection and implemented new software. Having done this, SBL Board had
organized a public launch function for the new software by inviting ministers of technology
from all three states where bank has its operation.

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Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

CBS Implementation needs to be controlled and monitored. S3L board's decision to

implement C3S lacks which critical aspect of CBS deployment?

(a) Approval
(b) Selection
(c) Planning
(d) Testing

Question 2

ALM, CRR and SLR are not being generated from SmICBS. These reports are important for
management decision making. All these reports shall be classified as _____________.

(a) Daily Reports

(b) MIS reports
(c) Exception Reports
(d) Balance Sheet Report

Question 3

In purview of above case scenario, the published key facts in the newspaper represented a
fraudulent way of interest calculation which was due to inherent weakness in system. This
would be classified as a__________

(a) Risk
(b) Vulnerability

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(c) Threat
(d) Impact

Question 4

The newspaper national daily pointed the error in interest calculation where each customer
loses Rs 0.05 (Five Paisa) each month. It is most likely to be classified as__________.

(a) Spoofing
(b) Bomb
(c) Piggybacking
(d) Rounding Down

Question 5

System Auditor's report highlighted that SmICBS does not have a live back up. In case of
disaster, the bank may be subject to grave risk. These types of risk are addressed through
having __________.

(a) Data Management Control

(b) Programming Management Control
(c) System Development Control
(d) Security Management Control

Case Study 11

LMN Co. manufactures home decorative products since 2006. Over the past few years, since
2014 rising manufacturing costs have significantly eroded the company's operating profit

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margins. Currently, the machined manufacturing process and manual labour process represent
30 percent and 70 percent of the total production costs, respectively.

In order to combat this negative operating trend, company's management hired ENY Co. a
consulting firm to consider both Business Process Management and Business Process
Reengineering and asses the benefits, risks, and control objectives.

After performing due diligence, the consulting firm recommended a Business Process
Management (BPM) plan that involved cutting 10 percent of the production workforce over the
next three years and replacing 15 percent of the manual production process with newly
designed machines.

The firm also completed an analysis on Business Process Reengineering plan that would
eliminate 80 percent of the current production workforce over the next three years and fully
automate the production process over cloud server, with the exception of the Quality control
function and packaging supervision, along with adoption of E-commerce environment and
implementation of information system to integrate all the functions. Upfront cost to implement
the Business Process Reengineering program is more significant than the BPM.

The ENY Co. submitted both the plans to LMN Co. management, highlighting the
recommendations for general controls for computerized systems and other IT related Internal
controls, who must decide whether incremental change or radical change is more appropriate
given the upfront costs to execute the plans and the expected annual cost savings associated
with each plan.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

During the Board meeting of LMN Co., the management reviewed both the plans submitted
by ENY Co. and noticed that unlike business process reengineering, the business process

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management works on 3E's for business process. Which of the following does not belong to
this category?

(a) Employee
(b) Effectiveness
(c) Efficiency
(d) Economy

Question 2

In purview of above case scenario, if the management of LMN Co. would like to implement an
information system that integrate all functional areas within the company and allow
information exchange and collaboration among all parties involved in business operations.
Identify from the following the most effective system for this application.

(a) A Decision Support System

(b) An Executive Support System
(c) An Office Automation System
(d) An Enterprise Resource Planning System

Question 3

ENY Co. recommended general controls for implementation of IT Systems in LMN Co. Which
of the following statements represents an example of a general control for a computerized
system?

(a) Limiting entry of sales transactions to only valid credit customers.

(b) Creating hash totals from Unique ID numbers for the weekly payroll.
(c) Restricting entry of accounts payable transactions to only authorized users.
(d) Restricting access to the computer center by use of biometric devices.

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Question 4

While discussing both the plans submitted by ENY Co., If L MN Co. Management opined that
they would implement e-commerce environment that require Information Technology (IT)
system to be available on a continuous basis. This decision of management requires to put
more emphasis on which of the following aspects of the planning than in a traditional
business?

(a) Maintain appropriate written source documents 50 the data can be re-entered if it is lost or
compromised.
(b) Maintain redundant systems for instant availability to assure the flow of transactions.
(c) Review additional expenses to obtain the required amount of business interruption
insurance coverage for the organization.
(d) Assure that appropriate data backups are stored in an off-site location.

Question 5

As per the recommendations of ENY Co. on IT related Internal controls, the management of
LMN Co. decided to implement segregation of duties as one of the primary IT Internal
Control. Which of the following statements best describes the importance of segregation of
duties.

(a) Within the IT department, the duties of system analysts, computer programmers, computer
operators, and security administrators should all be the responsibility of one individual.
(b) Good internal control requires that no single employee be given too much responsibility
over business transactions or processes. An employee should not be in a position to commit
and conceal fraud.

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(c) Segregation of duties is defined as dividing responsibilities for different portions of a

transaction (authorization, recording, and custody) for those employees who are on
probation.
(d) The objective is to encourage any one person from having total control over all aspects of
the transaction.

Case Study 12

Ridonix, a Pune based data analytics firm specializing in finance and costing analytics with a
workforce of fifteen data scientists and fifty analysts. It has served all major hotel chains of the
country and has been successful since its inception.

A client of Ridonix, Ghoomo Hotels was going through a huge cash crunch and on the verge of
closure. They approached Ridonix to find solutions to reduce costs and implement effective
pricing models to lure customers. The objective given to Ridonix is to bring the hotel chain at
break-even point in next two years. The analysts' team from Ridonix gathered relevant
information from Ghoomo's operations team, and found many genuine loop holes in their
systems. Followings are the observations of Ridonix.

 There were multiple online booking partners to book rooms to wham high commissions
were being paid, and no proper checks on payouts to these booking partners were in place.
 Further, there were three banking gateway partners associated and they charged higher
than industry standards as their convenience fees.
 The booking system was also internally flawed as it could not manage cancellations,
wherein the system reported rooms as booked, while they had actually been cancelled
online.

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 A major confidentiality breach was also reported, where two employees had access to
confidential data of customers and their preferences, and they were selling that data to
Ghoomo's competitors.
 The entire internal reporting system was redundant and needed a corrective update.

The system advisory report from Ridonix suggested Ghoomo:

a. To setup a new information system, i.e. to call in change management of the existing
reporting software.
b. To implement a strong ERP system to keep a track of room inventory.
c. To save costs in banking transactions, Ghoomo was advised to go for an integrated
payments systems rather than relying on multiple gateways of multiple banks.
d. To reflect timely and accurate cancellation of rooms in the system, Ridonix advised putting
an audit tool in place and executing it frequently to keep a check on errors.

To safeguard the business from data privacy litigations in future, Ridonix also advised Ghoomo
to get legal contracts drafted by legal experts and put them up on their website and application.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

Which of the following could be cheapest and most effective in implementing integrated
payments channel for Ghoomo's payments?

(a) Aadhar Enabled Payment Services (AEPS)

(b) UPI based application integration
(c) Crypto Currency
(d) Mobile Wallets

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Question 2

RIDONIX advised its client to focus on change management as the first and foremost step by
strengthening its Information System. What kind of an IT control have they advised Ghoomo
to focus on here?

(a) Information Technology General Control

(b) Application Control
(c) Residual Risk Control
(d) Data Privacy Control

Question 3

One of the biggest challenges for Ghoomo is auto-cancellation of rooms and no

corresponding update in the system, which leads to huge loss of revenue. Which of the
following would be best suited for Ridonix's suggested advice to keep a check in new system?

(a) SCARF (System Control Audit Review File)

(b) Audit Hooks
(c) Audit Trail
(d) Integrated Test Facility (ITF)

Question 4

With a strong ERP System in place as suggested by Ridonix, which of the following controls
would best curb the confidential data misuse by its employees?

(a) Server Back Up Arrangement

(b) Firewall to restrict access to online portals
(c) Role Based Access Controls
(d) Physical Access Controls

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Question 5

Mr. Rajesh who is an employee of Ghoomo misused the data of customers. Under which
section of IT Act 2000 can he be punished for misusing and selling confidential data he had
access to?

(a) Section 66 of IT Act, 2000

(b) Section "C of IT Act, 2000
(c) Section 66) of IT Act, 2000
(d) Section 66E of IT Act 2000

Case Study 13

1K Pvt. Ltd. is a new generation sports drink manufacturer company. The company recently
took a loan of Rs 1.50 crores from Dhan Bank, its banking partner for the e-commerce portal, to
double-up their manufacturing unit in Aurangabad. The business is focused on a niche target
market with immense potential in India. The owners are quite satisfied with the results so far,
but also face a few challenges as they plan to scale up.

Kumari G. , the founder of the 1k Pvt. Ltd., hired a market research firm to ratify her gut feeling,
that the teenage segment in India is increasingly focused on sports and fitness, and has
available disposable income to spend on themselves. The market firm did an in-depth data
analysis and reported that it was indeed a potential market with 10X growth visibility in coming
5 years.

The Company has been quite adamant in finding internal flaws and with recent plans of scaling
up operations; a special meeting was called on to find solid solutions of identified concerns. The
major concern of the management was regarding the Purchase Department. Firstly, delays in
posting accurate raw material inventory position were creating undue pressure on the
production line. Proper reporting mechanism was suggested to be put in place. Second, major

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concern was cash leakage from the system. Internal Audit experts were notified to put in strong
audit trails to mark red flag transactions and further, block those transaction owners
temporarily.

1k Pvt. Ltd.'s core essence of being of new age company focused on teenagers is also mandated
in its office campus. The employees are encouraged to bring their own devices at work and are
even reimbursed the cost of internet if they use their personal hotspots. It creates an
environment of individuality and freedom amongst workers. It has also helped the company in
saving good amount of money in IT infrastructure and network provider costs.

The company reported revenue of Rs 3.00 crores last year, and with scale up of operations, it is
projected that numbers would cross Rs 10.00 crores in the coming year.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

Which of the following methodology of Data Analysis, the market research firm adopted to
validate using statistical techniques on whether the teenage segment was indeed a potential
for 1k Pvt. Ltd.?

(a) Exploratory Data Analysis

(b) Confirmatory Data Analysis
(c) Qualitative Data Analysis
(d) Quantitative Data Analysis

Question 2

To save on IT infrastructure costs, 1K Pvt. Ltd. encouraged some modern practices for its
employees. Which of the following would not be a risk associated with those practices?

(a) Network Security Risk

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(b) Loss of Device Risk

(c) Reduced IT Support Risk
(d) Application Malware Risk

Question 3

Which of the following Phase in Inventory Management is the pressure point for 1K Pvt. Ltd.?

(a) Production Phase

(b) Ordering Phase
(c) Delivery Phase
(d) Sales Return Phase

Question 4

The flow of transactions between the Dhan bank's server and 1k Pvt. Ltd.’s server, when a
customer initiates a purchase on the company's website include the following steps.

(i) Customer Places Order on Website

(ii) Request flows to Payment Gateway
(iii) Request for Bank's confirmation
(iv) Request flows to Merchant's Server
(v) Updated status on Merchant's Server
(vi) Confirmation sent to Payment Gateway
(vii) Request accepted and approved
(viii) User is notified about payment and order is placed

What would be the correct sequence of the aforementioned steps?

(a) (i), (iv), (iii), (ii), (v), (vii), (vi), (viii)

(b) (i), (v), (iii), (ii), (vii), (iv), (vi), (viii)

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(c) (i). (iv). (ii). (iii). (vii). (vi). (v). (viii)

(d) (i), (ii), (iii), (iv), (v), (vi), (vii), (viii)

Question 5

The tool to be used to protect 1k Pvt Ltd. from cash leakage in the system would not be able
to ensure which of the following?

(a) Detect Unauthorized Access

(b) Block Cash Outflow Ledgers
(c) Reconstruct flow of Events
(d) Monitor unauthorized /authorised user activity

Case Study 14

ABC Ltd. a leading manufacturer of the Water Purifiers all over the country having ERP System
decided to launch a new Wi-Fi enabled water purifier "Purity" with Ultra VioIet Filters and
advance technology. Purity can be connected with the home Wi-Fi and when the purifying
agents deplete, may inform the service agents of the company. The management decided to
outsource the service agent work to different local agencies. The company was facing financial
difficulties in launching the product. For this, they had taken a bank guarantee from the Amy
Bank, for making the payment of raw material purchased from the supplier. The company also
changed the collection of payment policy for debtors and giving more payment options as well
as introducing the discount policies on bulk purchases and timing of the payments. Additionally,
the company adopted online marketing rather than paper-based marketing and online invoicing
to cut down the paper wastage as well as to make an addition to the cost-saving.

To increase the awareness of Purity and ease to its customers to use Purity, the company
decided to register itself on famous shopping applications to deliver the product to customers

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at their doorsteps. Now, the customer can purchase Purity online as well as offline. They also
decided to open cash on delivery option for its customers.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

In the purview of the above case, the advertisement and sale of product can be made using
either online or offline means. The order will be fulfilled; invoice, created, payment received
and then accounting will be done. These multiple sub-processes are part of which business
process?

(a) Customer Order Fulfillment

(b) Order to Cash
(c) Purchase to Pay
(d) Fixed Assets

Question 2

As the Bank Guarantee is taken by the company, ABC Ltd., it is required to pay certain
amount to the Amy Bank which is the income for the Bank. The amount which the Bank
receives from the ABC Ltd., can be termed as-

(a) Interest Income

(b) Discounting Income
(c) Commission Income
(d) Guarantee Charges

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Question 3

Since ABC Ltd. decided to outsource the working of the service agents, the company is
required to establish the controls. Under which Managerial Control, the monitoring of the
outsource contracts can be done?

(a) Data Resource Management Controls

(b) Quality Assurance Management Controls
(c) Security Management Controls
(d) Operations Management Controls

Question 4

As ABC Ltd. is having ERP system, which among the following department may help ABC Ltd.
in forecasting sales and production plans of the product "Purity"?

(a) Master Data

(b) Material Requirements Planning (MRP)
(c) Distribution Resource Planning (DRP)
(d) Sales and Operations Planning (SOP)

Question 5

ABC Ltd. had adopted online marketing rather than paper-based marketing and online
invoicing to their customers. Which one of the following works on this practice?

(a) Grid Computing

(b) BYOD
(c) Mobile Computing
(d) Green Commuting

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Case Study 15

KPL Bank the new entrant in the banking sector, established in 2019, after getting approval
from the Reserve Bank of India for setting up a universal bank. The directors decided to change
the regular banking style by adopting some of the new ideas which will assist in catering to the
market and gain competitive advantage over other banks.

The bank decided to adopt the Core Banking System that will help in assessing the same bank
data by all the branches and ATMs.

The management of KPL Bank decided to introduce "tab banking< wherein the bank officials
would go to the customer's place and open the bank account at their premise by clicking the
customer's photographs and scanning the required documents using tab.

They decided to provide doorstep banking services to senior citizens and differently - abled
customers, wherein the, the bank may help these people in deposit and withdrawal of the cash,
and other banking services at their doorstep.

A google application named "MKPL" would be created that may allow the customers to make
financial transactions, check balance, transfer money, and perform other banking operations
using their smart phones or tablets.

Banks being the backbone of the economy, KPL Bank decided to be better equipped with
technology to minimize fraud and control exposure risks. Hence the management also aimed to
strengthen its Information Technology department with proper segregation of duties among
personnel. This step will help in establishing proper controls with risk management.

They worked towards the establishment of branches in rural areas all over the country and
providing the farmers with different loans and savings options.

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Now, the bank is ready to adhere with all the regulatory and compliance requirements
applicable to them. Their focus is on using IT in the best possible ways and achieves higher
customer satisfaction by rendering them all the products and services.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

The Reserve Bank of India has given approval to "KPL Bank" to start operations as universal
bank. Which among the following Act gives the power to the Reserve Bank of India to license
new banks to start operations?

(a) Reserve Bank of India Act, 1934

(b) Banking Regulation Act. 1949
(c) Negotiable Instrument Act, 1881
(d) Information Technology Act, 2000

Question 2

As a part of risk management, the KPL Bank is deploying a separate Information Technology
organization structure with proper segregation. This type of risk management comes under
which control?

(a) Application Control

(b) Internal Control
(c) Semi-Automated Control
(d) Infrastructure Control

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Question 3

In the purview of the above case, KPL Bank wants to be better equipped to minimize frauds
and control exposure risks. Which technology will help in examining those data sets?

(a) XBRL
(b) MIS Report
(c) Data Analytics
(d) Grid Computing

Question 4

As per the above, the Google application of KPL Bank named "MKPL" is created to help the
customers to perform the transactions at their convenience. Identify the emerging
technology on which "M KPL" works?

(a) Cloud Computing

(b) Grid Computing
(c) Mobile Computing
(d) Green Computing

Question 5

KPL Bank is using the Core Banking System, in this system the bank data can be accessed from
a server by all the branches as well as the ATMs. In which part of the system, bank data is
stored?

(a) Proxy Server

(b) Central Server
(c) Local Server
(d) Back end Application

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Case Study 16

New India Global Healthcare Private Limited (NIGHPL) is a medical insurance service provider
company in India. Presently, the company is working on its software called "Nirogaya" to
maintain all records such as detail of all policyholder, premium collection, outstanding
premium, and various reports that may require further customization on manual basis.
However, due to system vulnerability and lack in appropriate controls, recently an incident took
place wherein an employee Mr. R was caught sharing confidential records of Mr. Z (who was
insured under Mediclaim Policy) to Satyam Cell Marketing Global Private Limited.

Mr. S, appointed as an IS auditor of NIGH?L, conducted it's IS audit and highlighted some key
control weakness issues and comments on company's password policy that was prepared but
not implemented by the Information Technology (IT) Department. He submitted his audit
report to Board of Directors and recommended an immediate attention of Management of the
NIGPL to address the issues as specified in the report.

After considering the recent incident of Mr. R and recommendations of IS auditor Mr. S; Board
of Directors of NIGHPL held a meeting with its' senior members of the management including
Chief Information Officer, Chief Financial Officer and Chief Executive Officer. The decisions of
the meeting were as follows:

 Company will approach Big 4 System Development & Service Provider to develop ERP
system and its implementation at various locations across the country with in-built effective
and efficient IT Controls in place.
 Company also decided to implement Balance Scorecard, a strategy performance
management tool to identify and improve various internal business functions and their
resulting external outcomes.
 None of the employee can access detail Of customer without prior permission of IT head.

Mr. SK an employee of Big 4 system development and service provider was assigned the job to
understand the requirements for the proposed system of NIGHPL. For that, he frequently
visited the company and interacted with users of the computer system. The Company also

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approached to Amazon Web Services to provide them access to Virtual Machines for data
processing. The company went-live with new ERP system. Company had also prepared the
backup strategy whereby the data is taken from the live environment to backup drive.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 4.

Question 1

In the light of IT Act, 2000; who will be responsible for paying compensation to Mr. Z for
failure to protect his data?

(a) Directors of Satyam Cell Marketing Global Private Limited

(b) Directors of New India Global Healthcare Private Limited
(c) Shareholders of New India Global Healthcare Private Limited
(d) Directors of Big 4 system development and service provider

Question 2

IS auditor has observed that the NIGHPL has not implemented password policy properly and
allowed users to keep short-length login passwords for system access and not aware for
frequently changing it. This refers to ___________ in purview of Information System
Concepts.

(a) Exposure
(b) Threat
(c) Vulnerability
(d) Attack

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Question 3

NIGHPL approached to Amazon Web Services to provide them access to Virtual Machines for
data processing. Which of the following Cloud Computing Service Model will be useful for
this?

(a) Network as a Service (NaaS)

(b) Infrastructure as a Service (laaS)
(c) Platform as a Service (PaaS)
(d) Software as a Service (SaaS)

Question 4

If you were requested to advice NIGHPL's management on its Password Policy to be followed
by its users to protect its data, which of the following feature will you recommend to make
the password control strong?

(a) Password length should at least be of 4 characters.

(b) Password should be changed once in a year.
(c) Password should always be in numeric form.
(d) Password of user should be blocked after three unsuccessful login attempts.

Case Study 17

CBZ Singapore Global Insurance Limited is a reputed Insurance Company with its Head Office
located in Singapore. With an aim to expand its business, the company started a subsidiary
company in India in the year 2019 and obtained the license from Insurance Regulatory and

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Development Authority (IRDA). In India, IRDA is an autonomous statutory body tasked with
regulating and promoting the insurance and re- insurance industries in India. It protects the
interest of policy holders, regulates, promotes and ensures orderly growth of the insurance in
India. Information Systems Audit has a significant role in the emerging insurance sector.

CBZ Singapore Global Insurance Limited has framed and setup a committee of ten personnel for
implementation of ERP to automate all business processes in their company and also
responsible for the compliance of various rules and regulations of IRDA and other applicable
laws.

The Company adopts Mobile Computing to sell its insurance products online. Also, the company
establishes 50 branches throughout India to appoint agents to promote the selling of their
insurance products. Company uses a Wide Area Network to allow its agents away from home
office to obtain current rates and client information and to submit approved claim using
notebook computers and dial in modems.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 3.

Question 1

In the given case scenario, the technology Mobile computing adopted by C3Z Singapore
Global Insurance Limited will has its own limitation. Which of the following however will fall
under the list of limitations of Mobile Computing?

(a) Ensuring reduced travel time for employees.

(b) Ensuring mobile workforce with remote access to work order details.
(c) Increased information flow enables in improving management effectiveness.
(d) The users' disrupted access of information due to insufficient bandwidth.

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Question 2

In the given scenario, suppose if there is a leakage of sensitive/confidential data of a policy

holder; under IT Act, 2000, who will be held liable to pay compensation for failure to protect
policy holder's data?

(a) Directors of CBZ Singapore Global Insurance Limited

(b) Shareholders of CBZ Singapore Global Insurance Limited
(c) Officer of Telecom Regulatory Authority of India
(d) Agents of CBZ Singapore Global Insurance Limited

Question 3

Suppose you are appointed as an IS auditor of CBZ Singapore Global Insurance Limited. When
you are going to audit the physical access controls, which of the following activity are not
undertaken by you?

(a) You must check that the risk assessment procedure adequately covers periodic and timely
assessment of all physical access threats.
(b) You must check whether the physical access controls are adequately in place.
(c) You must examine the relevant documents such as security policies and procedures are
prepared.
(d) You must develop and document an overall audit plan describing the expected scope and
conduct of the audit.

Case Study 18

M/s X TC LTD., a FMCG company dealing home care, human care, health care and stomach care
products. The company has been seeing drop in sales over past few years. Company has

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traditional distribution channels which include wholesale dealers, retailers and agents.
Company has been using a legacy integrated system since 2004. To get better understanding
for the reasons for such decline in sales, XTC decides to appoint a consultant. XTC appoints Ms.
Venus Andromida (Ms.VA) as business consultant.

Ms.VA has more than a decade of experience and is a MBA from IIMA plus qualified CISA, CISM
expert. Ms.VA has been given in six months to submit the report. Ms.VA, submits her reports in
two parts. Part one deals with identification of key reasons for business decline. Part two is
solutions to identified problems.

Ms.VA found that, Customer order execution (turnaround time: TAT) is twice the market
norms, In the present system retailers' orders are accepted by sales representatives, who send
the same to HO on email. Sales head at HO takes gives the necessary instructions. This process
is having many human interfaces leading to delay in supply of material once email has been
sent for orders, and many times the received goods and ordered goods do not match.

Ms. VA applied the principles of risk management and suggested following solutions:

TC needs to implement a new system. The proposed system shall integrate all departments of
the company including key departments; Sales and Distribution & Material Management &
Financial Management & Production, Planning and Costing and Human Resources. This shall
help optimize resource utilization and increase profitability.

1. The proposed system shall have an online mobile APP enabled system of order acceptance
from retailers and wholesalers. Mobile APP to be installed on all sales representative
systems.
2. In the new system, XTC limited plans to preload reorders levels for various products for
each wholesaler individually. This will help better inventory management. As soon inventory
level of a product will reach reorder level, system will send a purchase order for Re-order
Quantity/Economic Order Quantity to vendor. This shall significantly reduce the Turnaround
Time.

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Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 3.

Question 1

Expert used risk management principles to suggest a solution. Risk management

terminologies include all except………………..

(a) Vulnerability Assessment

(b) Threat Assessment
(c) Risk Sharing
(d) Exposure

Question 2

Use of Mobile APP by employee is convergence OE two emerging technologies referred to as

Mobile Computing and BYOD. The common risk associated with both technologies include

(a) Security Risk

(b) Bandwidth
(c) Application Risk
(d) Health Hazard

Question 3

Ms. VA proposed a system that shall integrate all key departments of the company. Identify
from the following which type of system she is proposing?

(a) Business Process Reengineering

(b) Enterprise Resource Planning
(c) Business Research Automation

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(d) Business Continuity Planning

Case Study 19

VK Textile Cotton Fabrics Private Limited is an export-oriented unit established in the year 2016.
Company manufactures Cotton Fabrics in India and exports it to some foreign countries also. In
December, 2019; Company acquired a manufacturing unit of Dubai (IJAE). Presently, Company
is going in the process of listing in Bombay Stock Exchange and National Stock Exchange for
listing its securities. Mr. Sameer Jain joined the Company as Chief Executive Officer (CEO) with
effect from 01st January, 2020. After taking his duty charge; he held various meetings with the
company's management and stakeholders and presented a unified proposal on future of the
company in meeting which are as given below:

 Expansion of the company business in other foreign countries includes European Countries
and Gulf Countries and Asia-Pacific Countries.
 With best quality product under reasonable price i.e., called value for money for its
customers worldwide.
 Spreading out e-commerce business activities and online presence worldwide.
 Development & Implementation of IS security policy.
 Adoption of new and emerging IT technologies includes Cloud Computing, Mobile
Computing, Green Computing etc. for the company.
 Upgrading to all business processes through latest technology & trends & keeping all
records and documents in electronic digitalized form.
 Reciprocal agreement for disaster recovery with another company called G.K. Global Textile
and Cotton Fabrics Limited (already a listed entity in Bombay Stock Exchange) w.e.f. 5th
January, 2020.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 3.

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Question 1

VK Textile Cotton Fabrics Private Limited has entered into reciprocal agreement as one of the
strategies of Disaster Recovery Planning. Which of the following risk treatment approach
does it indicate?

(a) Risk Transfer

(b) Risk Avoidance
(c) Risk Mitigation
(d) Risk Acceptance

Question 2

Which of the following is a practice of using computers and IT resources in a more efficient
environmentally friendly and responsible way?

(a) Grid Computing

(b) Cloud Computing
(c) Virtualization
(d) Green Computing

Question 3

Under which sub process of Information Security, the company can implement security at
various aspects of application of any transaction?

(a) Database Security

(b) Network Security
(c) Application Security
(d) Operating System Security

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Case Study 20

KD Health and Medical Care Limited provides a medical health check and other medical
outsource services to its various its clients/customers that includes pharmacists, physicians,
patients, educational institutions, day care establishments, government agencies and insurance
companies. The company is located in Agra with all its 100 employees living on the private land
space situated at Agra.

The Company has a policy of allocating the super-user password to General Manager in Finance
Department. The same is defined in the Job Profile of GM (Finance) who is responsible to
supervise the allocation, deletion, modification and suspension of user rights based on
approvals made by HR Department. On 26th September, 2018; the General Manager (Finance)
resigned from the Company and on 1st October, 2018; a new joinee who joined the company as
GM was given another super-user password.

In due course of time, the Company hired Mr. J as its internal auditor in the month of March
2019. After the due procedure, he submitted his Draft IS Audit Report to Chief Executive Officer
(CEO) and Managing Director highlighting following key control issues:

 All employees of Accounts Departments have been using the Super-user Password of the
previous General Manager (Finance). For past six months, after the new joinee has joined,
the audit logs of some dates are missing and not available.
 There is no basic configuration in the accounting system to restrict cash payment in excess
of? Rs 10,000/- that result in the expense being disallowed as a business expense. That shall
lead to increase in the tax liability of the company.
 There is no effective internal control system regarding user management, creation and
modification of accounting voucher.
 Company has no emergency plan with an outdated list of names to contact in case there is
some type of emergency within the company.
 There are unused computer systems lying idle. There is no antivirus or security mechanism
existing in the computer systems of the employees carrying out day to day transactions.

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 There are versions of unauthorized software installed on numerous computer systems.

 There is no physical and environmental control policy for safeguarding of company assets.

IS auditor recommended a proposed solution to overcome the aforementioned issues. To

implement the same, he recommended a strategy to adopt new accounting system with the old
and new systems both being used alongside each other, both being able to operate
independently. If all goes well, the old system is stopped and new system carries on as only
system.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 3.

Question 1

An accountant has rights to create as well as modify accounting vouchers. Which of the
following principle has not been followed by the company in the given scenario?

(a) Confidentiality
(b) Availability
(c) Integrity
(d) Segregation of Duties

Question 2

In the given case scenario, IS auditor using concurrent audit technique to check whether the
accounting system restricting the cash payment in excess of 10000/- or not. Identify from the
following concurrent audit techniques which will be useful in above case.

(a) Use of System Control Audit Review File (SCARF)

(b) Use of Integrated Test Facility (ITF)
(c) Use of Continuous and Intermittent Simulation (CIS)
(d) Use of Snapshot

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Question 3

In the given case scenario, if a junior employee Mr. AB from finance department sends email
to banker for request for money transfer and pertained to be as GM (Finance) of Company.
Under which of the following section of Information Technology Act, 2000 Mr. AB will be
punished?

(a) Section 66A

(b) Section 663
(c) Section 66C
(d) Section 66D

Case Study 21

SMS Limited is a multinational company engaged in providing financial services in all over India.
Most of the transactions are done online. Presently, SMS Limited has Centralized Data Server
which is accessed by users from various geographical locations anywhere. However, it's current
system is unable to cope up with the growing volume of transactions. Frequent connectivity
problems, slow processing and a few instances of phishing attacks and virus attacks were also
reported. Hence the Company has decided to develop more comprehensive robust in-house
software for providing good governance and sufficient use of computer and IT resources with
implementation of effective and efficient controls provided in the system to ensure the data
integrity, confidentiality and availability.

Also, an updated backup plan is to be prepared for SMS Limited in order to specify the type of
backup to be kept, frequency with which backup is to be undertaken, procedures for making a
backup, location of backup resources, site where these resources can be assembled and
operations restarted, personnel who are responsible for gathering backup resources and

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restarting operations, priorities to be assigned to recover various systems and a time frame for
the recovery of each system. SMS Limited is also planning to take various types of insurance
coverage for safeguarding of their assets and to avoid unexpected future liabilities due to
uninterrupted event or disaster.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 4.

Question 1

A few instances of phishing attacks were also reported in SMS Limited. Which of the following
section of Information Technology Act, 2000 fixes liability SU Limited to data of their
customers?

(a) Section 43A

(b) Section 46
(c) Section 66D
(d) Section 75

Question 2

Agarwal Suppose you are appointed as an IS auditor of SMS limited for auditing the
Information System. You are determining what controls are exercised to maintain data
integrity. You might also interview database users to determine their level of awareness of
these controls. Which of the following Control are our working on?

(a) Data Resource Management Control

(b) Security Management Control
(c) Operation Management Control
(d) Quality Assurance Control

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Question 3

SMS Limited is also planning to take various types of insurance coverage for safeguarding of
their assets and to avoid unexpected future liabilities due to uninterrupted event or disaster.
These Insurance Coverage falls under which type of a specific risk mitigation strategy?

(a) Terminate/Eliminate the Risk

(b) Treat/Mitigate the Risk
(c) Tolerate/Accept the Risk
(d) Transfer/Share the Risk

Case Study 22

SMS Limited is a multinational company engaged in providing financial services in all over India.
Most of the transactions are done online. Presently, SMS Limited has Centralized Data Server
which is accessed by users from various geographical locations anywhere. However, it's current
system is unable to cope up with the growing volume of transactions. Frequent connectivity
problems, slow processing and a few instances of phishing attacks and virus attacks were also
reported. Hence the Company has decided to develop more comprehensive robust in-house
software for providing good governance and sufficient use of computer and IT resources with
implementation of effective and efficient controls provided in the system to ensure the data
integrity, confidentiality and availability.

Also, an updated backup plan is to be prepared for SMS Limited in order to specify the type of
backup to be kept, frequency with which backup is to be undertaken, procedures for making a
backup, location of backup resources, site where these resources can be assembled and
operations restarted, personnel who are responsible for gathering backup resources and
restarting operations, priorities to be assigned to recover various systems and a time frame for
the recovery of each system. SMS Limited is also planning to take various types of insurance

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coverage for safeguarding of their assets and to avoid unexpected future liabilities due to
uninterrupted event or disaster.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 4.

Question 1

A few instances of phishing attacks were also reported in SMS Limited. Which of the following
section of Information Technology Act, 2000 fixes liability on SMS Limited to secure data of
their customers?

(a) Section 43A

(b) Section 46
(c) Section 66D
(d) Section 75

Question 2

Agarwal Suppose you are appointed as an IS auditor of SMS limited for auditing the
Information System. You are determining what controls are exercised to maintain data
integrity. You might also interview database users to determine their level of awareness of
these controls. Which of the following Control are you working on?

(a) Data Resource Management Control

(b) Security Management Control
(c) Operation Management Control
(d) Quality Assurance Control

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Question 3

SMS Limited is also planning to take various types of insurance coverage for safeguarding of
their assets and to avoid unexpected future liabilities due to uninterrupted event or disaster.
These Insurance Coverage falls under which type of a specific risk mitigation strategy?

(a) Terminate/Eliminate the Risk

(b) Treat/Mitigate the Risk
(c) Tolerate/Accept the Risk
(d) Transfer/Share the Risk

Question 4

Due to virus attack and phishing attack on Information System of SMS Limited, in order to
protect its critical data from virus attack; it is decided that in future the access to the social
networking site by its employees need to be limited. What type of risk response has the SMS
Limited exercised?

(a) Terminate/EIiminate the Risk

(b) Treat/Mitigate the Risk
(c) Tolerate/Accept the Risk
(d) Transfer/Share the Risk

Case Study 23

Ms. Queen was appointed as Manager — Operational Risk and Compliance in ABC Company. HR
of ABC Company had completed all the formalities for her appointment. Mr. Maharana, the
Head of Human Resource (HR) Department had signed her joining letter through black ink pen
and delivered the same to her. On her joining, she was handed over a well written document by

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the HR Department that provided instructions to its employees briefing upon what kind of
behavior or resource usage is required and acceptable in the Company. It also contained
detailed information on how to protect company's information asset and instruction regarding
acceptable practices and behavior. In a week's time, she got to meet Mr. Raja, Chief Executive
Officer (CEO) of the ABC Company. Mr. Raja instructed her to conduct broad review of Human
Resource Department Process to determine the probable risks and to analyze the effectiveness
and efficiency of existing controls in HR process.

Based on that, Ms. Queen started to review HR processes and controls implemented in the
company and highlighted following key matters in her report submitted to CEO:

 Absence of rotation of duties control

 Absence of Segregation of duties control
 Lack of maker and checker concept
 Manual authorization procedure exists
 Key Man policies not implemented
 Manual attendance registers and leaves record.
 Invalid data in Human Resource Computer System.
 Using of Social Networking Website like Facebook, Twitter etc. in office timings using
computer resources of HR Department.
 Plan & Budget approved for development Of Robust & Fully Automated Payroll Software
but not implemented till date.
 Suggested to implementation of BYOD concept.

The CEO Mr. Raja appreciated the detailed report of Ms. Queen and started taking corrective
steps for improvement.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 3.

Question 1

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Which of the following would BEST provide assurance of the integrity of Ms. Queen (new
staff) that will be treated as preventive control measure for A3C Company?

(a) Employing qualifies personnel

(b) References
(c) Bonding
(d) Qualifications listed on a resume

Question 2

During review, Ms. Queen found that an employee Mr. X is using social networking websites
like Facebook and Twitter after Office hours. Under which of the following section of
Information Technology Act, 2000; shall he be punishable?

(a) Under section 43

(b) Under Section 66A
(c) Unser Section 66D
(d) Not be punishable unless they come under the provisions of the Indian Penal Code, 1860

Question 3

In the given case scenario, implementation of 3ring Your Device (BYOD) policy makes the ABC
Company's systems vulnerable to related threats. Any lost or stolen device could result in an
enormous financial and reputational embarrassment to the company. Which of the risk does
this refer to?

(a) Device Risk

(b) Implementation Risk
(c) Confidentiality Risk
(d) Application Risk

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Case Study 24

Gold Silver Watch India Limited (CSWIL) is a company domiciled in India, with its registered
office situated at Mumbai. The Company has been incorporated under the provisions of the
Indian Companies Act and its equity shares are listed on the National Stock Exchange (NSE) and
Bombay Stock Exchange (BSE) in India. The Company is primarily involved in manufacturing and
sale of Gold and Silver Watches, Jewellery, Eyewear and other related accessories and products.
Company located 200 retail stores all aver India and launched Loyalty Card for its customers in
which the customer data for the loyalty card issued by a retail store is picked from a form filed
by the customer. The data from the form is entered into the software by data entry operators
who report to a manager. In order to protect customer data, Segregation of Duties are built in
the software in such a way that the operators have permission only to enter data. Any editing
or modification can be done only by the manager. The retail store across India collecting
customer data for loyalty programs consolidated into one database and accessible in from
centralized IT server anytime anywhere and also Company maintained a separate fully
equipped facility where the company can move immediately after disaster and resume
business. Company Data Centre Housing about 350 employees are involved in handling
business processes of the Company and for security reasons, Management decides to shift its
network server and mail server to a secluded room with restricted entry.

On the recommendation of Chief Information Officer of the Company, existing system of the
company is being extensively enhanced by extracting and reusing design and program
components.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 4.

Question 1

Gold Silver Watch India Limited (GSWIL) decides to control the access to a software
application by segregating entry level and updating level duties: What type of internal
Control does this amount to?

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(a) Physical Implementation of a Control

(b) Corrective Control
(c) Detective Control
(d) Preventive Control

Question 2

Gold Silver Watch India Limited (GSWIL) has a data centre housing about 350 employees
involved in handling businesses processes of company. For security reasons, it decides to shift
its network server and mail server to a secluded room with restricted entry. What kind of
internal control is applied by the Company in this situation?

(a) Manual Preventive Control

(b) Manual Detective Control
(c) Computerized Preventive Control
(d) Computerized Corrective Control

Question 3

In Gold Silver Watch India Limited (GSWIL), an IS auditor wants to collect evidences based on
system user profiles. Which of the following can be used by the IS auditor to achieve this
objective?

(a) Continuous and intermittent Solution (CIS)

(b) Audit Hooks
(c) System Control Audit Review File (SCARF)
(d) Integrated Test Facility (ITF)

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Question 4

If Gold Silver Watch India Limited (GSWIL) has been found negligent in handling personal
information of customers then company's liability to damages is covered under___________.

(a) Information Technology Act, 2000, Section 67

(b) Right to Information Act, 2006, Section 43A
(c) Information Technology Act. 2000. Section 43A
(d) Information Technology Act, 2000, Section 66B

Case Study 25

ABC Capital Finance Limited (the Company or 'ACFL') was inaugurated on 21stJuly 2019. The
Company is registered with the Reserve Bank of India (RBI) as a Non-Banking Financial Company
vide. Certificate No. N 13.14.2019, Head Office/Corporate Office of the Company situated at
Mumbai. The Company is primarily engaged in Lending Business. There are 10 Regional offices
and 255 branches located all over the country that use various types of remote access
information systems for smooth and fast processing of different types of loan applications all
over branches & regional offices.

Company has adopted an internal control work in line with section 134(5) (e) of the Companies
Act, 2013 and as per Clause 49 V (C) and (D) of SEBI, Equity Listing Agreement ensuring the
orderly and efficient conduct of its business, including adherence to the Company's policies,
safeguarding of its assets and prevention and detection of frauds and errors, accuracy and
completeness of Information to various stakeholders. Company is hosted on a robust Data
Centre (DR) and Disaster Recovery Centre has designed on fundamental principles — data
security, data integrity, data availability and data scalability and has strict information security
procedures. Company also entered into a reciprocal agreement with TBJ Capital Finance Limited
(i.e., Internal Business Group Company) as one of its strategists in Disaster Recovery Planning.

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The Management of Company appointed a reputed Mumbai-based Chartered Accountancy

Firm called as DKT specialized in IS audit for conducting Information System Audit of the
Company.

Further, the Company is now gearing up to enhance its technology capabilities across other
areas such as mobile computing, cloud computing, and BYOD.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 4.

Question 1

IS auditor requires to check whether the Application System is calculating correct interest on
loan provided by ABC Capital Finance Limited using creation of a dummy entity in the
application system. Identify which of the following auditing technique is this process referring
to so that authenticity and accuracy of the processes can be verified?

(a) Snapshot
(b) Integrated Test Facility (ITF)
(c) Audit Hooks
(d) Audit Trail

Question 2

ABC Capital Finance Limited entered into a reciprocal agreement with TBJ Capital Finance
Limited (i.e., Internal Business Group Company) as one of strategy of Disaster Recovery
Planning. Identify which of the following risk treatment approach does it indicate?

(a) Transfer/Share the risk or Risk Transfer

(b) Terminate/Eliminate the risk or Risk Avoidance
(c) Treat/Mitigate the risk or Risk Mitigation
(d) Tolerate/Accept the Risk or Risk Acceptance

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Question 3

XYZ Limited is engaged in providing Data Processing Service. It received a big contract from
A3C Capital Finance Limited (Non-Banking Financial Company) for its various loan processing
activities. XYZ Limited has limited Personal Computers at its office, so it approached Amazon
Web Service to provide them access to Virtual Machines for data processing. XYZ Limited is
using which Cloud Computing Service Model?

(a) Software as a Service (SaaS)

(b) Platform as a Service (PaaS)
(c) Infrastructure as a Service (laaS)
(d) Network as a Service (NaaS)

Question 4

ABC Capital Finance Limited has effective internal control system that includes Segregation of
Duties. Is Segregation of duties useful for Company? Why?

(a) Yes, it reduces employee cost.

(b) No, it complicates the role of the manager who has to manage more employees.
(c) Yes, it reduces fraud risk & facilitates accuracy check of one person's work by another.
(d) No, it is not an advantage; it increases employee cost.

Case Study 26

Great India Gramin Co-Operative Society Bank Limited established in the year 2000. It is a single
state scheduled rural cooperative bank that provides banking facility to some villages of
Rajasthan only. In 2001, an internal review was conducted by a team of inspection and

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supervision department of National Bank for Agriculture & Rural Development (NABARD) that
highlighted certain key controls issues that are as follows:

 The password policies were prescribed but not implemented by the bank.
 Branches use out dated security manual or documentation of security procedures.
 There was only one ATM machine near Bank Premises which had deposits as well as
withdrawal facility. Its maintenance was outsourced through at third party. The service level
agreement was not renewed since last three years and also there is no security guard since
last six month.
 During the inspection, it was observed that while refilling cash in ATM machine, the
presence of security guard was not mandatory.
 Illegal and unauthorized software were installed on few computer systems of the Bank.
 Antivirus software was not updated on few computers of the bank's branches.
 Disaster Recovery Plan existed but was not tested by the employees.
 During inspection, Inspection and Supervision team observed a fraud where an employee
Mr. X had transferred a small amount of money from various account holders to his own
account while rounding off in computerized banking system. That fraud turned around to be
of Rs 2,49,587/-.

After review report, the NABARD instructed the Great India Gramin Co-Operative Society Bank
Limited to sort out the security control weakness and demanded a reasonable assurance for
better security control in future in effective and efficient manner.

Subsequently, Bank worked on all the observation made by NABARD and established the
following controls:

 Highly qualified IT personnel were appointed in every branch.

 Strict follow up and compliance of Information Security and Password Policy for all users.
 Fulfilled the mandatory requirement of two personnel for accessing and refilling cash in the
ATM machine.
 Predefined role and responsibility of each employee.

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 Regular training on risk awareness was to be given to every employee on periodically basis.
 Updated Antivirus software, Intrusion Detection System and firewall on all computers.
 CCTV cameras were installed in every branch of the Bank.
 Bio-metric attendance system was made compulsory for every employee of the Bank.
 New service level agreement with ATM Caretaker Company was renewed to provide ATM
security guard.

Based on the facts of the case scenario given above, choose the most appropriate answer to
Q. Nos 1. to 5.

Question 1

Inspection team observed a fraud of Rs 2,49,587/- of Mr. X. Identify the appropriate example
of Rounding down Technique from given below which might have been used by Mr. X.

(a) Turning Rs 102.02 to Rs 102.00

(b) Turning Rs 102.02 to Rs 102.10
(c) Turning Rs 102.02 to Rs 102.50
(d) Turning Rs 102.02 to Rs 102.05

Question 2

In the given case scenario, cashier had also the right to authorize the withdrawal cheque of
account holder. Which type of issue related to Operational control in bank is covered under
this?

(a) Lack of appropriate segregation of duties

(b) Lack of password control policy
(c) Lack of supervision of branch manager
(d) Lack of detection control over operation

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Question 3

From the given case scenario, it is observed that proper division of work and responsibility
are necessary to ensure that one person cannot single-handedly commit a fraud. This can be
achieved by using the concept of ___________.

(a) Access Control

(b) Segregation of Duties
(c) Need to know
(d) Least privilege

Question 4

Great India Gramin Co-Operative Society Bank Limited has password policy but not
implemented properly, therefore, users were able to keep short length passwords for their
convenience to access the banking system. It refers to __________ under Information System
concepts.

(a) Threat
(b) Exposure
(c) Vulnerability
(d) Attack

Question 5

Great India Gramin Co-Operative Society Bank Limited implemented a new and strict
password policy where users have to keep minimum 8 characters alpha-numeric login
password and that password must be reset after 30 days to get access in the Banking System.
As per classification of the Information System controls, which type of control is this?

(a) Preventive Control

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(b) Detective Control

(c) Corrective Control
(d) Compensatory Control

Case Study-27

XYZ is the well- established food chain with five branches at different locations within Delhi. The
company wants to come out with an IPO (Initial Public Offering). The Management asked the
financial Manager to present a report pertaining the benefits, risks and control objective and
above all if there is any change required in the working of food chain.

To maintain the list of its regular customers, the data management teams of XYZ implements
certain changes in database design of their billing software. Now the billing system is
centralized and it is mandatory to add customers’ phone number and name on each bill. XYZ
has decided to buy software which will be an online assistant to customers and will provide
them complete detail about the IPO and solve their queries. XYZ wants a safe and secure
working environment for their customers as well as their employees therefore, takes the
decision to implement certain key provision of IT Act to avoid any unlawful activity. XYZ
follows Customer Relationship Management practices hence; it is famous to take care of its
customers and provides them good services.

1. In purview of case scenario, XYZ follows CRM practices to manage its relationship with
its customers. Which of the following is not the key benefit of CRM module?

(a) Helps to take action needed to measure quality.

(b) Gives an idea to company about customer wants, needs and patterns of purchase.

(c) Sharing of customer data between different departments will enable them to work
as a team.

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(d) Enables the company to identify the correct time to market its product to
customers.

2. The financial manager of XYZ prepared a document wherein he needs to define the
business process of the food chain in diagrammatic form. Which of the following
symbol will he use to present Pre- defined process?

3. The database management team of XYZ food chain is working to implement changes in
database design as per the requirement of management. Which of the following
person will carry out routine data maintenance and monitor the task?

(a) Database Administrator

(b) Database Architect

(c) Database Analyst

(d) Database Advisor

4. The management of food chain has shown its concern over the condition in case any
of its employees dishonestly make use of electronic signature of the customer.
Identify the section from IT Act, 2000that will help XYZ to deal with this situation.

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(a) Section 43

(b) Section 66-C

(c) Section 66-E

(d) Section 66-B

5. Mr. Anuj has started his own e-Commerce based start up with an objective to bring
together large number of individual buyer. He collects the information about
goods/service providers, makes the providers it partners, and sells their services
under the name of his own start up. Under which category of e-market his start up
comes?

(a) Virtual Community

(b) Buyer Aggregator

(c) e-Shops

(d) e-Auctions

Case Study-28

Sweet & Sour is an established food chain with five branches at different locations within
Delhi. In 2018, the management decided to start a tiffin services with 24x7 availability on
regular basis To do so, they decided to acquire a software which would be an online assistant
to its customers by providing them a complete detail about their services. The Management
asked its manager to present them a report mentioning the benefits, risks, control objectives
and above all highlighting any changes that are required in the working of food chain.

The management settled on a plan to benefit all its customers by providing them discounted

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coupons in case they recommend their services to others and customer ensuring to provide
the food chain of three new customers. Also, the management decided for a centralized
billing system that mandatorily requires customer’s name and phone number to be filled for
each bill that system generates. To maintain these necessary details of its customers, the data
management team of Sweet & Sour implemented major changes in the database design of its
billing software. Subsequently, the security and database maintenance has become essential
to protect the system against any unlawful activity as the database now contains the personal
details of its customers.

1. The software which food chain decided to buy, to help their customer and provide them
online help, falls under which of the following technology?

(a) Artificial Intelligence

(b) Data Mining

(c) Cloud Computing

(d) Mobile Computing

2. The Manager of the food chain prepared a document wherein he depicted various
business processes of the food chain in diagrammatic form. Which of the following
diagram will he use to present pre-defined process?

a)

b)

c)

d)

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3. The data management team of Sweet & Sour food chain was working to implement
changes in database design of its billing software. Which of the following person will
carry out routine data maintenance and monitor this task?

(a) Database Administrator

(b) Database Architect

(c) Database Analyst

(d) Database Advisor

4. The management of Sweet & Sour has shown its concern what would happen if any of its
employees dishonestly make use of personal information of customer. Which of the
following Section of IT Act, 2000 will help Sweet & Sour to deal with this situation?

a) Section 43A

b) Section 43

c) Section 66E

d) Section 66B

5. The Management Information System of SVE Ltd. enterprise develops MIS reports only
when required. It does not generate MIS reports for each and every day. Identify from
following the type of MIS report generated by SVE Ltd.

a) Off Demand MIS Reports

b) Demand MIS Reports

c) Required MIS Reports

d) On-Demand MIS Reports

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Case Study-29

A Cooperative society in Ghaziabad decides to open a bank named ABC Bank with its two
branches located in Noida, Uttar Pradesh. The branches of banks are proposed to be
connected to each other and all the processing and transactions being computerized with a
centralized database. Further, to avoid manual working and proceed with advance
technology, and at the same time to enhance functionality within branch; all the computer
systems within all the departments in each branch would have connection-oriented network.
The bank proposes to abide by all the regulations and compliance prevailing in India with
respect to banking sector.

Mr. A is appointed as an IT - Head to carry out the Feasibility study of the proposed system
and submit the report to top management of the Cooperative Society. After the report is
submitted to the Top Management, following issues are raised by the management:

 There may be a conflict for some common resources in the network.

 Since the data is centrally located, it may create a possibility of access to non-relevant
data by other departments.

 What would happen, if any employee intentionally destroys or alters the information
residing in any of computer of any branch?

 Network security related issues between both branches of bank. Based on the above case
scenario, answer the following questions:
1. In purview of above case, under which legal provision of IT Act, 2000; the management
can prove an employee guilty if (s) he intentionally destroys or alters the information
residing in a computer resource of a branch?

(a) Section 43

(b) Section 65

(c) Section 66 E

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(d) Section 66 C

2. Which of the following control shall be implemented in both the branches of ABC bank
to suppress the risk of possibility of access to non-relevant data by other
departments?

a) Proper training of the users with well documented manuals.

b) Clear defining of change control procedures and holding everyone to them.

c) Back up arrangement needs to be very strong.

d) Access rights need to be defined very carefully and to be given on “Need to know”
and “Need to do” basis only.

3. The feature of Internet banking through ABC Banks’ website allows ease and
convenience to its customers. Which of the following is not the limitation of Internet
banking?

(a) Difficult for a non-technical person

(b) Risk of data theft

(c) Written Record not to be maintained

(d) Overspending

4. The Top management of cooperative society raised its concern over an issue related to
conflict of sharing of common resources in network between its two branches. Select
the terminology referring to the above concern.

(a) Resilience

(b) Contention

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(c) Bandwidth

(d) Routing

5. In both branches of ABC bank, all the fixed asset acquisitions will be recorded as the
control objective related to certain risk. Under which category this control objective
falls?

(a) Configuration general ledger

(b) Transaction Fixed asset

(c) Master fixed asset

e) Transaction general ledger

SUGGESTED ANSWERS / HINTS

Case Study 1

1 2 3 4 5
C C B C A

Case Study 2

1 2 3 4 5
A C B B C

Case Study 2

1 2 3 4 5 6
A C B B C A

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Case Study 3

1 2 3 4 5
B C A A C

Case Study 4

1 2 3 4 5
C A B C A

Case Study 5

1 2 3 4 5
C B D C B

Case Study 6

1 2 3 4 5
D B A D B

Case Study 7

1 2 3 4 5
C D A B A

Case Study 8

1 2 3 4 5
C D B B A

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Case Study 9

1 2 3 4 5 6
B B A B D A

Case Study 10

1 2 3 4 5
C B B D D

Case Study 11

1 2 3 4 5
A D D B B

Case Study 12

1 2 3 4 5
B A D C D

Case Study 13

1 2 3 4 5
B C B C B

Case Study 14

1 2 3 4 5
B C D D D

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Case Study 15

1 2 3 4 5
B D C A B

Case Study 16

1 2 3 4
B C B D

Case Study 17

1 2 3
D A D

Case Study 18

1 2 3
C A B

Case Study 19

1 2 3
C D C

Case Study 20

1 2 3
D B D

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Case Study 21

1 2 3
A A D

Case Study 22

1 2 3 4 5
A A D B

Case Study 23

1 2 3
A D A

Case Study 24

1 2 3
D A C

Case Study 25

1 2 3 4
B C C C

Case Study 26

1 2 3 4 5
A A B C A

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Case Study-27

1 2 3 4 5
A C C B B

Case Study-28

1 2 3 4 5
A C C A D

Case Study-29

1 2 3 4 5
A D C B B

SM Case Studies

Case Study-1

Trepsico Trito Company is one of the most famous brands in food and beverages industry in the
world. Itm has seventeen food and beverage brands worth more than 100 crores. Trepsico
Trito, Crisppy Chips (subsidiary), Tasty Chips (acquisition), Tangy (joint venture), Twisters
(acquisition), and Threshold drink are just some of the household names that Trepsico Trito
Company manages.

Trepsico Trito’s mission is to provide consumers around the world with delicious, affordable,
convenient and complementary foods and beverages from wholesome breakfasts to healthy
and fun daytime snacks and beverages to evening treats. Convenient F&B defines Trepsico
Trito’s business. Trepsico Trito’s vision is articulated as achieving business and financial success
while leaving a positive imprint on society – delivering what it calls Performance with Purpose.
For example, Trepsico Trito India’s Agri program presently benefits over 24,000 farmers across

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14 states through various Agri and sourcing initiatives. All the potato used in Crisppy Chips and
Tasty Chips is grown in India and sourced from Indian farmers. Through its 360-degree farmer
connect initiatives for potato cultivation, Trepsico Trito provides training and seed support,
advanced plant protection programs, and assured buy-back with reasonable returns. Besides
backward integration with farmers it has invested in cold storages along its supply chain. Since
2009 it has been Water Positive by conserving, utilizing and managing this important resource
in a sustainable manner.

The company is geographically diverse too. Trepsico Trito operates all around the world- only
50 per cent of its sales come from the United States and Canada.

Given this breadth of business and market scope, Trepsico Trito faces a variety of strategic
scenarios: capitalizing on scale advantage in its core brand where it is a global leader; building
businesses in fast-developing and unpredictable markets, categories, and products more so on
account of shifts in consumer behavior such as a greater focus on healthy living away from its
“star” carbonated beverages and “cash cow” fried snacks businesses; the need for greater
experimentation and innovation, for example in new flavours of chips to create and capitalize
on newer sources of growth.

It is not inconceivable that Trepsico Trito’s different businesses at different times go through
different stages of strategy thus necessitating a portfolio approach to strategy formulation with
reference to market /business growth and market share such as BCG Matrix. While it competes
fiercely with Chilled drink in different countries, it proactively fosters strategic partnerships
with quick service restaurants and multiplex players.

Based on the above Case Scenario, answer the Multiple Choice Questions which are as
follows:

1. Match the columns in respect of the following elements of the strategic intent and their
descriptions:

Column A Column B

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(i) Vision (a) Product-Market Configuration

(ii) Business Model (b) The way business is conducted
(iii) Business Definition (c) Aspiration for a desired future
(iv) Mission (d) The scope of Business

a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

b) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)

c) (i)-(c); (ii)-(b); (iii)-(d); (iv)-(a)

d) (i)-(d); (ii)-(c): (iii)-(b); (iv)-(a)

2. State the two dimensions implied by portfolio approach to strategy formulation in

Trepsico Trito’s experiences are:

(a) Vision and Mission

(b) Food Business and Beverages Business

(c) Market Growth and Relative Market Share

(d) Performance and Purpose

3. The business/ product portfolio classification implied by BCG Matrix comprises which of
the following combinations?

a) Growth; Stability; Retrenchment; Turnaround

b) Weakness-Threat; Weakness-Opportunity; Strength-Opportunity; Strength-Threat

c) Cash-Cows; Stars; Question Marks; Dogs

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d) Market Penetration; Product Development; Market Development; Diversification

4. Which of the following may be cited as instances of collaborative approach/ strategic

alliance Trepsico Trito follows in its strategy?

a) Diversification from carbonated drinks to fruit juices

b) Diversification from fried to baked chips

c) Partnerships with quick service restaurants and multiplexes

d) Diversification into breakfast cereals

5. Which of the following is the most correct corporate level strategic alternative by the
overall strategic direction evident from Trepsico Trito’s corporate strategy?

a) Growth/Expansion strategy

b) Stability strategy

c) Retrenchment strategy

d) Turnaround strategy

Case Study-2

Connect Private Limited; a Mumbai based company is launching a smartphone, under the
brand name of Poppy. The company recognizes plethora of options that customers have from
Chinese manufacturers flooding the smartphone landscape. With recent COVID-19 pandemic
hurting the global sentiment towards Chinese products, the company plans to play on the
patriotic card and advertise Poppy as the “Desi” smartphone of India.

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Strategic Arm of the company undertook an industry analysis and reported, that, budget
phone segment was overtaken by the Chinese brands completely; however, the low segment
of smart phones was still open for exploration. Thus, the company planned to enter the
market with two models, Poppy A and Poppy B, priced at Rs 4,499 and Rs 5,499.

The company is also aware that their product can easily be imitated at same costing as well as
pricing, and thus the very essence of their product can be lost. A team of marketing
professionals was hired to tackle this issue. The solution they suggested was to take the first
mover advantage by spending huge sums in advertising and promotion.

Based on sound consciousness of the competition from huge money backed international
players, the company decided to manufacture Smartphone covers and accessories with the
same “Desi” tag, along with Poppy smart phones. This shall help them mitigate the risk of
being completely thrown out of business. Consequently, they invested a fairly good amount in
manufacturing of these accessories.

The investors made it an objective for the team to reach an annual sales volume of 15,000
handsets and 70,000 pieces of accessories. The accessories sales surpassed the expectations
by a fairly good margin. However, Poppy A and Poppy B did not receive the much anticipated
response and the leadership decided to reduce the scope and focus purely on accessories
business going forward.

With a new focus on accessories production, the “Desi” tag will still play an important part in
the success. However, they need to ensure creation of strong barriers to entry for domestic
players, and for that, they have plans to increase the production to enormous levels. This shall
reduce their unit cost, thus, eliminating the new entrants due to extremely competitive
pricing.

Based on the above case scenario, answer the multiple choice questions which are as follows:

1. Connect Private Limited, entered a saturated market of smartphones, after a due

market study of understanding the competitive landscape. Put the below steps in
correct sequence of understanding the competitive landscape.

(I) Understanding the competitors

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(II) Determining strengths and weaknesses of the competitors

(III) Identify the competitors

(IV) Put all information gathered together

a) (I),(III),(II),(IV)

b) (III),(I),(II),(IV)

c) (II),(III),(IV),(I)

d) (I),(III),(II),(IV)

2. Annual sales volume as an objective by the investors was crucial to establish the
company in the market. In which stage of strategic management are such annual
objectives especially important?

(a) Formulation

(b) Control

(c) Evaluation

(d) Implementation

3. Following the sales numbers reported at the end of year, the leadership took a serious
strategic stand point to move forward and shift to a new core business which was more
profitable. Under which of the following category of business strategy can this decision
be categorized?

(a) Retrenchment strategy

(b) Strategic alliance

(c) Diversification strategy

(d) Market development

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4. After getting results from the market, accessories business of the company can be
classified under which category of BCG’s growth share matrix?

(a) Star

(b) Question mark

(c) Cash cow

(d) Dog

5. In the second phase of shifting the business focus to peripheral accessories production,
Connect Private Limited has planned setting up entries to barrier for its potential
competitors. Which of the following barrier have they planned to implement?

a) Capital requirement

b) Product differentiation

c) Access to distribution channels

d) Economies of scale

SUGGESTED ANSWERS / HINTS

Case Study-1

1 2 3 4 5
C C C C A

Case Study-2

1 2 3 4 5
B D A C D

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Corporate and Other Laws

Case Study-1

Vishal Crockery Limited was incorporated on 24th September, 2010 under the jurisdiction of
Registrar of Companies, Rajasthan with its registered office located in Jaipur and its
manufacturing units spread out in Mumbai, Kanpur, Delhi and Ludhiana. Under the dynamic
leadership of Hans Rajpal, the Chairman and Managing Director (CMD) of the company, it
could easily be ascertained that the company had reached the new heights of success. The
directors of the company numbered eight including CMD of which two were the independent
directors.

The turnover of the company for the Financial Year 2018-2019 was Rs. 750.00crores – a
whopping rise of more than 20% from the previous year and net profit stood at a prestigious
figure of Rs. 6.60crores – also increased by Rs. 1.80 crores as compared to the net profit of
previous year. The company had a net worth of Rs. 250.00 crores; and it was noticed that the
net worth had also registered a northern trend by more than 15%. The authorized and paid-
up share capital of the company was Rs. 8.00 crores. Keeping in view the applicability of
forming a CSR Committee for the current financial year 2019-20, a CSR Committee was
formed with four directors as members of which one was the independent member. The
Committee was, among others, given the responsibility to formulate and recommend to the
Board, a Corporate Social Responsibility Policy which shall indicate the activities to be
undertaken by the company as specified in Schedule VII.

The company plans to diversify its business by adding another segment to manufacture steel
utensils and therefore, is desirous to shift its registered office to Mumbai from the present
one at Jaipur which will help the company in easing out the new business. Another
strategically important segment which the company tapped earlier and now wishes to engage
itself on a large scale relates to manufacturing of stationery items-

The company hopes that with the shifting of registered office to Mumbai, it shall be able to
target international markets to export its quality products. As on date, the export turnover of
the company is not that much significant. The directors, Janardan Mittal (Finance) and Ratish

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Jain (Marketing), however, have in-depth knowledge of export markets, particularly those
existing in UK and Singapore, where they can place their products successfully and achieve
laurels for the company in terms of wealth maximization.
During the current Financial Year 2019-20, the company under the CSR activities provided
ample support for improvement of infrastructure in schools established at Mumbai, Kanpur,
Delhi and Ludhiana. Not only this, the company contributed towards establishment of Digital
Smart Classroom, Libraries and computer labs in these cities. The company also deployed
mobile medical units equipped with medical facilities and qualified doctors. In addition to
this, a large number of public health and sanitation activities had been initiated under Swachh
Bharat Abhiyan. The total amount spent on these activities was, till date, almost equal to the
minimum spendable amount and it is hoped that as the current Financial Year 2019-20
approaches its end, the total spending on CSR activities will certainly exceed the budgeted
figure.

Multiple Choice Questions

1. Which of the following criterion prompted Vishal Crockery Limited to mandatorily form
a Corporate Social Responsibility (CSR) Committee for the current financial year?

a) The net profit had increased to Rs. 6.60crores and it was more by Rs. 1.80 crores in
comparison to previous year’s net profit.

b) The turnover was Rs. 750.00 crores which was increased by more than 20% as
compared to the previous year.

c) The net worth was Rs. 250.00 crores which when compared to the previous year
had registered an increase by more than 15%.

d) The paid-up share capital was Rs. 8.00 crores.

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2. What is the minimum amount (in percentage form) that Vishal Crockery Limited is
required to spend during the Financial Year 2019-20 on the CSR activities after it
formed a Corporate Social Responsibility Committee.

a) Minimum 2% of the average net profits made during the two immediately preceding
financial years.

b) Minimum 2% of the average net profits made during the three immediately
preceding financial years.

c) Minimum 2.5% of the average net profits made during the two immediately
preceding financial years.

d) Minimum 2.5% of the average net profits made during the three immediately
preceding financial years.

3. In the given case scenario, Vishal Crockery Limited decided to undertake CSR activities
at its own. In case, it had decided to engage an external Section 8 company for
undertaking its CSR activities and such charitable company is not established by Vishal
nor it is established by the Central/State Government or by any entity established
under an Act of Parliament or a State Legislature, then what should be the established
track which this Section 8 company should have in undertaking similar programs or
projects which Vishal Crockery Limited wants it to accomplish?

a) Track record of minimum one year

b) Track record of minimum two years

c) Track record of minimum three years

d) None of the above

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Case Study-2

Vivek Shah is the Chief Finance Officer (CFO) and Sachin Bhatt is the Company Secretary of
Jitendra Iron Works Private Ltd (JIWPL), in Manipal, Karnataka. JIWPL is an integrated set up
of foundries and machine shops that add value by machining more than 75% of the castings
manufactured to fully finished condition. JIWPL is one of the largest jobbing foundries
producing grey iron castings required for automobile, farm equipment sector and diesel
engines industry. JIWPL serves customers globally. The turnover of JIWPL is about Rs. 600
Crores, including export turnover of about Rs. 250 Crores.

During the year 2019, JIWPL planned expansion to enhance its production capacity to meet
the increasing demand from its customers, by importing fully automatic plant and equipment
from Germany for the unit at Manipal. The means of finance of the expansion project:-

(a) JIWPL received an amount of Rs 25 Crores from Malini Shetty, wife of one of the promoter
director of JIWPL, Mahesh Shetty. Mahesh Shetty wanted to know from Sachin Bhatt any
compliance needed from the perspective of acceptance of Deposits.
(b) The Board and the CFO also approached the main banker of the company viz., Bank of
Baroda. The Bank after proper credit analysis sanctioned an amount of Rs. 50 Crores for
meeting the working capital needs of the expansion project, which included
interchangeable limits of cash credit, foreign and inland bills for negotiation and
acceptance. The security cover was floating charge on the book debts, inventory and
other current assets of the expansion project in Manipal of JIWPL.

The CFO and the CS together coordinated with the legal department of the Bank on
procedures relating to creation of security and registration of charges.

The registered office of JIWPL is located in Manipal. Out of the company’s 180 members, 20
members, who are entered in the Register of Members reside in Mangaluru, a nearby city,
requested the company for some reasons to maintain the Register of Members in the
company’s liaison office in Mangaluru, instead of Manipal henceforth.

Multiple Choice Questions

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1. JIWPL received an amount of Rs 25 Crores from Malini Shetty, wife of one of the
promoter directors Mahesh Shetty of JIWPL. Mahesh Shetty wanted to know from
Sachin Bhatt any compliance needed from the perspective of acceptance of deposits.
The CS has to ensure -:

a) That the particulars of amount received are immediately entered in the register of
deposits maintained in such manner and in such format as prescribed;

b) To issue immediately a circular to the members of the company with a statement of

deposits accepted as on date with the names of each depositor, amount(s) received
as on date, the due date(s) and the liability(ies) on the due date(s) in respect of each
depositor

c) That a declaration is to be obtained to the effect that the amount given is not
sourced from borrowed funds or accepting loans or deposits from others and
disclose the details in the Board’s Report;

d) To file the particulars of deposits received within 30 days from the date of its receipt
with the Registrar.

2. JIWPL was also sanctioned an additional amount of Rs. 50 Crores for meeting the
working capital needs of the expansion project., which included interchangeable limits
of cash credit, foreign and Inland bills for negotiation and acceptance. The security
cover was floating charge on the book debts, Inventory and other current assets of the
expansion project of JIWPL. A floating Charge, in general is created by way of :

a) Passing a board resolution

b) Signing and acknowledging the Credit Sanction letter

c) Mortgage

d) Hypothecation or lien.

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3. The registered office of JIWPL is located in Manipal. Out of the company’s 180
Members, 20 members, who are entered in the register of members (ROM) reside in
Mangaluru, a nearby city. These members requested the company for some reasons to
maintain the Register of members (ROM) in the company’s liaison office in Mangaluru,
instead of Manipal henceforth.

a) The ROM shall be maintained only at the registered office in Manipal and
maintaining in a place other than the registered office is not permitted under the
Companies Act 2013 and the relevant Rules there under

b) By passing a Special Resolution in a General Meeting, the ROM can be maintained in

Mangaluru.

c) The Board of Directors by passing a Board Resolution in one of its meetings, may
direct the Company Secretary to maintain the ROM in Mangaluru.

d) If more than 1/3rd of the members, whose names are entered in the ROM request
for the change, then only the ROM can be maintained at Mangaluru after passing a
Special Resolution in a General Meeting

Case Study-3

Mr. B R Mohanty, around two-decade back; along with two of his elder brothers and few
friends, who are pharma and chemical engineers by profession promoted two companies;
first being Well-Mount Limited (WML) dealing in wellness products and pharmaceuticals ;
whereas other is Tex-Mount Limited (TML) dealing in textile products. During these two
decades, both WML and TML has grown magnificently as both the sectors expanded beyond
imagination. Both companies went public and stock of same listed on leading stock exchanges
of countries.

TML did well in the past and emerged as a major export unit but in recent years the textile
sector witness stiff competition due to new entrants. The increased cost of the workforce and

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other input materials is also made sector unprofitable and recent lockdown hit the sector
further adversely. TML’s bottom line for the current financial year is red. TML was declaring
dividends since the very first year of operation and willing to continue the tradition
considering dividend as signaling effect to an investor for valuation purpose. Rate of dividend
for the recent five years was 9%, 10%, 8%, 5% and 2% (9% being five years ago and 2% being
the previous year) respectively. The management at TML decided to declare dividends out of
the profit of previous years. TML deals in export hence came under the scanner of
enforcement authority, who seeks financial statements and books of accounts of TML for
scrutiny for the last 10 preceding financial years. In response to notice, TML furnish financial
statements and books of accounts for last 8 immediately preceding financial years only,
stating as per its Article of Association; TML is required to maintain and keep the books of
accounts for 8 immediately preceding financial years only and that too without any record of
vouchers pertaining to such accounts.

WML is doing well, it seizes outbreak of COVID-19 as a business opportunity and registers
significant growth in both top and bottom line. For the past many years, WML declare a
dividend at a constant rate of 20%. During the financial year 2019-20, WML earns a profit of
580 Crores. Board of directors of WML declares 25% dividend without transferring any % to
reserve on 15th June, 2020. On 14th July, 2020 some of the amount remaining unpaid, due to
operation of law; has been transferred to unpaid dividend account on 20th July, 2020. CA.
Dev was appointed as auditor under section 139 of Companies Act, 2013 of WML in individual
capacity during 17th AGM for against the financial year 2018-19.

MCQs

1. In case of TML, which of the following statements are correct regarding the declaration
of dividend?
a) TML can’t declare the dividend because it earns a loss in the current financial year
b) TML can declare the dividend but only up to 9%

c) TML can declare the dividend but only up to 5%

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d) TML can declare the dividend but only up to 6.8%

2. CA. Dev, who is the auditor of WML have to vacate the office of the auditor in and can
be reappointed again only in
a) 22nd AGM and 27th AGM
b) 27th AGM and 32nd AGM
c) 22nd AGM and 23rd AGM
d) 22nd AGM and can’t be re-appointed again.

3. In case of WML, which of the following statements is correct regarding the declaration
of dividend?
a) WML can’t declare the dividend at a rate more than 20%
b) WML can declare the dividend out current year’s profit but it needs to transfer sum
equal to 20% to reserve first.
c) WML can declare the dividend out current year’s profit but it needs to transfer sum
equal to 10% of paid-up share capital to reserve first.
d) WML can declare the dividend out of current years’ profit without transferring any %
to reserve.

4. In case of TML, regarding maintenance and keeping the books of account; which of the
following statements hold truth?
a) TML needs to maintain and keep the books of account for 10 preceding financial
years, hence TML violate the law.
b) TML doesn’t violate the provision of law because it keeps the books of account for 8
immediate preceding financial years.
c) TML violate the provision of law because it keeps the books of account for 8
immediately preceding financial years without keeping relevant vouchers in the
record pertaining to such books of account.

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d) TML doesn’t violate the provision of law because it is complying to its Article of
Association.

5. Regarding declaration and distribution of dividend by WML, which of the following

statements are correct from the view of the timeline?

a) WML violates the law, because some of the dividend remain unpaid; irrespective of
reason for non-payment

b) WML violates the law, because unpaid dividend needs to transfer to unpaid dividend
account by 19th July 2020.

c) WML doesn’t violate the law, because an unpaid dividend transferred to unpaid
dividend account prior to 21st July 2020.

d) WML doesn’t violate the law, because an unpaid dividend can be transferred to
unpaid dividend account at any time within 90 days from the date of declaration.

Case Study-4

Mr. Purshottam Prasad, a business graduate from leading B-School, running the chain of
restaurants; as sole proprietor concern; based in Chennai. Mr. Prasad being dynamic
businessman, in order to develop the business; decided to give corporate form to his
business; but concerned with dilution of the control over business decisions.

Mr. Prasad, during some journey met Mr. Chinmay Dass; who is school days friend of Mr.
Prasad and presently working in one of leading corporate advisory firm. Mr. Prasad seeks advice
from Mr. Dass, regarding conversion of sole proprietorship concern to company and also
explain his intention to keep the entire control in his hand. Mr. Dass told, about new type of
company; which can be formed under Companies Act, 2013; One Person Company (OPC). Mr.

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Dass quoted section 2 (62), which define 'one person company’, a company which has only one
person as a member.

Mr. Prasad, felt OPC is correct form of business for him, hence promotes an OPC ‘Casa

Hangout Private Limited’ (One Person Company) on 14th September 2019, to which he sold
his sole proprietor business and himself became sole member. Mr. Prasad appointed his
younger son Mr. Vijay, who was 21 year old then; as Nominee to OPC. Mr. Anand who is old
friend of Mr. Prasad was appointed as director of OPC, Mr. Prasad himself also become
director of company.

Mr. Vijay is professional photographer, and for some certification course went to abroad on

23rd October 2019. He came back on 1st of March 2020. He established photo-studio in form

of OPC ‘Best Click (OPC) Private Limited’ on 20th March 2020, in which Mr. Prasad is nominee
and he became sole member. In mean time, Mr. Vijay also gave his consent as nominee to
another OPC in which his elder brother Mr. Shankar is sole member.

Mr. Prasad met an accident on 25th March, 2020, in which he lost his life. Nomination clause
invoked, resultantly Mr. Vijay has to take charge over ‘Casa Hangout (OPC) Private Limited’

(One Person Company) as member with immediate effect. On 30 th March, 2020 Mr. Shankar
was appointed as new nominee to ‘Casa Hangout (OPC) Private Limited’, who gave written

consent on 31st March 2020. Mr. Shankar, who is investment banker by profession, is of
opinion that ‘Casa Hangout (OPC) Private Limited’ need to amend its object clause and add
‘carry out investment in securities of body corporate’ as one of object.

Financial Period closed on 31st March 2020. Financial statements of ‘Casa Hangout (OPC)
Private Limited’, which is not containing cash flow statement; signed by Mr. Anand (who left
as only director after death of Mr. Prasad).

1. With reference to appointment of Mr. Vijay and Mr. Shankar as nominee to ‘Casa
Hangout (OPC) Private Limited’, out of followings, who is eligible to be nominee of
OPC?

a) Any natural person excluding minor

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b) Any legal person excluding minor

c) Any natural person, who is resident of India; but excluding minor

d) Any natural person, who is resident as well as citizen of India; but excluding minor

2. Mr. Shankar if wish to withdraw his consent as nominee, can do so; by giving written
notice to

a) Director of OPC and to sole member of company

b) Director of OPC and to Registrar of companies

c) Sole member of company and to OPC

d) Sole member of company and to Registrar of companies

3. With reference to legal position of Mr. Vijay as member/s and nominee/s to various
OPCs, Which of the following statement is correct in reference to ceiling limit in relation
to membership and being nominee to OPC? A person, other than minor; at specific
point of time;

a) Can be member in any number of OPCs but nominee in one OPC

b) Can be member in one OPC and nominee in any number of OPCs

c) Can be member in one OPC and nominee in another one OPCs

d) Can be member and nominee both in any number of OPCs

4. Which of following statement is correct, in reference to requirement for financial

Statements of ‘Casa Hangout (OPC) Private Limited’

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a) Must be signed by one director

b) Must be signed by at-least by two directors

c) Must contain cash flow statement as part of financial statements

d) None of the above

5. With reference to opinion of Mr. Shankar to add ‘carry out investment in securities of
body corporate’ object, ‘Casa Hangout (OPC) Private Limited’

a) Can’t carry out non-banking financial investment activities & investment in securities
of body corporate

b) Can’t carry out non-banking financial investment, but can invest in securities of body
corporate’

c) Can carry-out non-banking financial investment & invest in securities of body

corporate’

d) None of the above

Case Study-5

A private company by the name of Neha Pvt. Limited was incorporated in the year 2002. The
registered office of the company Neha Pvt. Limited was situated in city K of state Y.

During the financial year beginning on 01/04/2018 and ending on 31/03/2019 the turnover of
the company Neha Pvt. Limited was Rs 1010 crore. The net profit of the company Neha Pvt.
Limited for the financial year 2018-19 was Rs 4 crore.

The Board of Directors of Neha Pvt. Limited consisted of only two directors namely Mr. M and
Mr. N. Mr. M and Mr. N were the only directors of company Neha Pvt. Limited since its
incorporation in the year 2002.

Mr. M one of the two directors of Neha Pvt. Limited was of the opinion that no Corporate Social
Responsibility Committee of the Board was required to be formed as for the financial year 2019

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– 20 due to the reason that net profit of the company Neha Pvt. Limited for financial year 2018-
19 was Rs 4 crore which was less than Rs 5 crore.

Mr. N the other director of Neha Pvt. Limited was not having the same opinion as Mr. M. He
was of the opinion that Corporate Social Responsibility Committee of the Board must be
formed for the company Neha Pvt. Limited.

The net profit of the company Neha Pvt. Limited for the financial year 2015-16, 2016-17 and
2017-18 were Rs1 crore, Rs2 crore and Rs3 crore respectively.

Keeping the basic provisions of Companies Act in mind answer the following multiple choice
questions:

1. Mr. M one of the director of Neha Pvt. Limited was of the opinion that no Corporate
Social Responsibility Committee of Board was required to be formed for financial year
2019-20 but Mr. N other director was of opinion that it was required to be formed.
According to your understanding which one of the two directors is right and why?

(a) Mr. M because net profit of Neha Pvt. Limited for financial year 2018-19 was less
than Rs 5 crore.

(b) Mr. N because turnover of Neha Pvt. Limited for financial year 2018-19 was more
than Rs 1,000 crore.

(c) Mr. N because net profit of Neha Pvt. Limited for financial year 2018-19 was more
than Rs 2 crore.

(d) Mr. M because turnover of Neha Pvt. Limited for financial year 2019-19 was less than
Rs 1,500 crore.

2. The company Neha Pvt. Limited must give preference to spend the amount of
contribution towards Corporate Social Responsibility in area of:

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(a) City O of State Y

(b) City A of State Z

(c) City G of State Z

(d) City K of State Y

3. According to law Corporate Social Responsibility Committee shall consist of three or

more directors, so for company Neha Pvt. Limited the Corporate Social Responsibility
Committee will:

(a) Not be formed as it has only two directors namely Mr. M and Mr. N

(b) Be formed only after appointing one more director apart from Mr. M and Mr. N

(c) Be formed with two directors only namely Mr. M and Mr. N

(d) Be formed only after appointing two more directors apart from Mr. M and Mr. N

4. The company Neha Pvt. Limited shall spend during financial year 2018-19 on Corporate
Social Responsibility an amount of at least:

(a) Rs 0.04 crore

(b) Rs 0.12 crore

(c) Rs 0.18 crore

(d) Rs 0.06 crore

Case Study-6

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GHWX Private Limited was incorporated in the year 2009. The registered office of the company
GHWX Private Limited was situated in city T of state V. The Board of Directors of GHWX Private
Limited comprised of five directors namely Mr. K, Mr. N, Mr. R, Mr. U and Mr. W.

During the financial year beginning on 01/04/2018 and ending on 31/03/2019 the second
meeting of Board of Directors of GHWX Private Limited was held on 7 September, 2018.

Out of 5 directors, Mr. K, Mr. N, Mr. R and Mr. W were present for the said meeting. During
the meeting of Board of Directors a resolution on one of the important matters was passed.
While three directors namely Mr. K, Mr. N and Mr. R agreed with the resolution and voted in
favour of resolution, however, Mr. W did not agree with the resolution and voted against the
resolution.

The minutes of the second meeting of Board of Directors of GHWX Private Limited held on 7
September, 2018 were prepared and they were entered in Minutes Book of meeting of Board
of Directors of GHWX Private Limited. One of the directors Mr. K was of the opinion those
minutes of second meeting of Board of Directors of GHWX Private Limited must be prepared
and entered in Minute Book of meeting of Board of Directors of GHWX Private Limited by end
of October, 2018. The remaining four directors namely Mr. N, Mr. R, Mr. U and Mr. W did not
agree with the opinion of Mr. K because they thought that it was not within the time limit as
prescribed by the law.
One of the directors, Mr. N. opined that minute books of meetings of Board of Directors of
GHWX Private Limited for the years starting with 2009 to 2015 should be shredded to ruins as
these papers were taking a lot of space. He further added that since the Companies Act, 2013
is silent as to maintaining the minute book of meetings of Board of Directors, it is not
necessary to maintain such minute books.

The Board of Directors of GHWX Private Limited did not decide any place where minute book of
meetings of Board of Directors of GHWX Private Limited will be kept.
Keeping the provisions of the Companies Act, 2013, in mind answer the following multiple
choice questions:

1. The second meeting of Board of Directors of GHWX Private Limited was held on 7

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September, 2018 for the financial year 2018-19. The minutes of second meeting of
Board of Directors of GHWX Private Limited for financial year 2018 -19 must contain:

(a) Name of director Mr. U who was absent from the meeting of Board of Directors held
on 7 September, 2018.

(b) Names of all the directors Mr. K, Mr. N, Mr. R, Mr. U and Mr. W comprising Board of
Directors of GHWX Private Limited.

(c) Name of one director Mr. U who was absent and at least one director who was
present in the meeting of Board of Directors held on 7 September, 2018.

(d) Names of directors Mr. K, Mr. N, Mr. R and Mr. W who were present in the meeting of
Board of Directors held on 7 September, 2018.

2. In case of the resolution talked in the case study, the minutes of second meeting of
Board of Directors of GHWX Private Limited for financial year 2018 -19 held on 7
September, 2018 must contain:

(a) Name of any two directors who were present in meeting and voted in the resolution.

(b) Name of director Mr. W who voted against the resolution.

(c) Name of directors Mr. K, Mr. N and Mr. R who voted in favour of the resolution

(d) Names of all the directors Mr. K, Mr. N, Mr. R, Mr. U and Mr. W who all had the right
to attend the meeting and vote in the resolution.

3. The opinion of one of the director, Mr. K was that minutes of second meeting of Board of
Directors of GHWX Private Limited for financial year 2018-19 must be prepared and
entered in minutes book of meeting of Board of Directors of GHWX Private Limited by the
end of October, 2018 is incorrect. The opinion of Mr. K is incorrect because:

(a) Minutes of second meeting of Board of Directors of GHWX Private Limited for
financial year 2018-19 must be entered in minute book of meeting of Board of

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Directors within thirty days of the conclusion of meeting on 7 September, 2018.

(b) Minutes of second meeting of Board of Directors of GHWX Private Limited for the
financial year 2018-19 must be entered in minute book of meeting of Board of
Directors within sixty days of the conclusion of meeting on 7 September, 2018.

(c) Minutes of second meeting of Board of Directors of GHWX Private Limited for the
financial year 2018-19 must be entered in minute book of meeting of Board of
Directors within ninety days of the conclusion of meeting on 7 September, 2018.

(d) Minutes of second meeting of Board of Directors of GHWX Private Limited for financial
year 2018-19 must be entered in minute book of meeting of Board of Directors within
one twenty days of the conclusion of meeting on 7 September, 2018.

SUGGESTED ANSWERS / HINTS

Case Study-1

1 2 3 4 5
A B C

Case Study-2

1 2 3 4 5
C D B

Case Study-3

1 2 3 4 5
C A D C C

Case Study-4

1 2 3 4 5
D C C A A

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Case Study-5

1 2 3 4 5
B D C A

Case Study-6

1 2 3 4 5
D B A

TAXATION

Case Study-1

Ananya Gupta, a citizen of India, lives with her family in New York since the year 2000. She
visited India from 23rd March, 2019 to 28th September, 2019 to take care of her ailing mother.
In the last four years, she has been visiting India for 100 days every year to be with her mother.
She owns an apartment at New York, which is used as her residence. The expected rent of the
house is $ 32,000 p.a. The value of one USD ($) may be taken as Rs.75. Municipal taxes paid in
New York in January, 2020 is $ 2,000.

She took ownership and possession of her house in New Delhi on 25th March, 2019, for self-
occupation, while she is in India. The municipal valuation is 4,20,000 p.a. And the fair rent
is Rs. 4,50,000 p.a. She paid property tax of Rs. 22,000 to Delhi Municipal Corporation. She had
taken a loan of Rs.16 lakhs@10% p.a. from IDBI Bank on 1st April, 2016 for constructing this
house. No amount has been paid towards principal repayment so far. The house is vacant for
the rest of the year i.e., from October 2019 to March 2020.

She had a house property in Mumbai, which was sold on 28th March, 2019. In respect of this
house, she received arrears of rent of Rs. 3,00,000 on 4th February, 2020. This amount has not
been charged to tax earlier.

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Based on the above information, choose the most appropriate option of the following Multiple
Choice Questions (MCQs) for A.Y. 2020-21:-

1. What would be the residential status of Ananya Gupta for A.Y.2020-21?

(a) Resident and ordinarily resident

(b) Resident but not ordinarily resident

(c) Resident; Not possible to determine whether she is ordinarily resident or not since
number of days of stay in the last seven years is not given in the question

(d) Non-resident

2. Ms. Ananya Gupta can claim benefit of “Nil” Annual Value under section 23(2) in respect
of -

(a) Her Delhi house

(b) Her New York house, since it is more beneficial; her Delhi house will be deemed to be
let out and expected rent would be the annual value.

(c) Her Delhi house alone; her New York house will be deemed to be let out and
expected rent would be the annual value

(d) Both her Delhi house and New York house, since benefit of Nil Annual value u/s 23(2)
is available in respect of two house properties.

3. What is the income chargeable under the head “Income from house property” of Ananya
Gupta for A.Y.2020-21?

(a) Rs.15,85,000

(b) Rs.3,09,600

(c) Rs.1,00,000

(d) Rs.10,000

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4. Assuming that, for the purpose of this MCQ alone, Ananya Gupta has let out her flat in
New York during the six months (April to September) when she is in India, for a sum of $
6,000 p.m. Such rent was received in a bank account in New York and then remitted to
India through approved banking channels. What would be the income from house
property chargeable to tax in her hands in India for A.Y.2020-21?

(a) Rs.10,000

(b) Rs.17,85,000

(c) Rs.17,95,000

(d) Rs.18,85,000

Case Study-2

Ms. Chanchal, aged 45, provides the following data of her gross receipts for the financial year
2018-19 and 2019-20. She is engaged in agency business along with providing services as tarot
card reader

F.Y. Receipts from business (Rs) Receipts from profession (Rs Total Gross Receipts (Rs
) )

2018-19 78,00,000 43,00,000 1,21,00,000

2019-20 85,00,000 47,00,000 1,32,00,000

During the F.Y. 2019-20, she paid an amount of Rs 1,20,000 to a contractor for polishing her
old furniture. She has taken services from renowned interior designers for her self- occupied
residential house property for which she paid Rs 2,50,000.

Further, on 28.05.2019 she sold one commercial property for Rs 50,00,000. The value
adopted for stamp duty was Rs 52,00,000. It was purchased for Rs 40,00,000 on 28.04.2017.

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(Cost Inflation Index for F.Y. 2019-20: 289, F.Y. 2017-18: 272).

The brought forward long-term capital loss from unlisted shares of F.Y. 2018-19 is Rs 7,80,000.

During the year, Ms. Chanchal incurred a loss of Rs 70,00,000 while trading in the agricultural
commodity derivatives (no CTT paid).

From the details given above, choose the most appropriate option to the questions given
below:

1. Is Ms. Chanchal liable to tax audit under the Income-tax Act, 1961 for the P.Y. 2019- 20?

(a) Yes, as the total gross receipts exceeds Rs 1,00,00,000

(b) No, as the gross receipts from business or profession are below the specified
threshold limits.

(c) Yes, as the gross receipts from business exceed Rs50,00,000

(d) Yes, as the gross receipts from profession exceed Rs25,00,000

2. What is the total amount of tax to be deducted by Ms. Chanchal for P.Y. 2019-20?

(a) Rs 1,200

(b) Rs 26,200

(c) Nil

(d) Rs 27,400

3. What is the amount and nature of Capital gain chargeable to tax in the hands of Ms.
Chanchal?

(a) Rs 10,00,000 and Short-term capital gain.

(b) Rs 12,00,000 and Short-term capital gain.

(c) Rs 7,50,000 and Long-term capital gain.

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(d) Rs 9,50,000 and Long-term capital gain.

4. What is the amount of losses which can be carried forward to A.Y. 2021-22, assuming
that business income is Rs 45,00,000 and income from profession is Rs 25,00,000 for the
P.Y. 2019-20?

(a) Rs 7,80,000 under section 74

(b) Rs 70,00,000 under section 73

(c) Rs 30,000 under section 74

(d) Rs 30,000 under section 74 and Rs 70,00,000 under section 73

Case Study-3

Mr. Sarthak (age 37 years) a share broker, sold a building to his friend Anay, who is a dealer in
automobile spare parts, for Rs 120 lakh on 10.11.2019, when the stamp duty value was Rs 150
lakh. The agreement was, however, entered into on 1.9.2019 when the stamp duty value was
Rs 140 lakh. Mr. Sarthak had received a down payment of Rs 15 lakh by a crossed cheque
from Anay on the date of agreement. Mr. Sarthak purchased the building for Rs 95 lakh on
10.5.2017. Further, Mr. Sarthak also sold an agricultural land (situated in a village which has a
population of 5,800) for Rs 60 lakhs to Mr. Vivek on 01.03.2020, which he acquired on
15.06.2014 for Rs 45 lakhs. Stamp duty value of agricultural land as on 1.3.2020 is Rs 75 lakhs

CII for F.Y. 2014-15; 240; F.Y. 2017-18: 272; F.Y. 2019-20: 289.
In the light of the above facts, you are required to answer the following

1. Is there any requirement to deduct tax at source on consideration paid or payable on

transfer of building and agricultural land?

(a) No; no tax is required to be deducted at source on transfer of any capital asset

(b) Yes; Mr. Anay is required to deduct tax at source under section 194-IA.

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(c) Yes; Mr. Vivek is required to deduct tax at source under section 194-IA.

(d) Yes; Mr. Sarthak is required to deduct tax at source under section 194-IA.

2. In respect of transfer of building, capital gains chargeable to tax in the hands of Mr.
Sarthak would be -

(a) long-term capital gains of Rs 49,06,250

(b) long-term capital gains of Rs 39,06,250

(c) short-term capital gains of Rs 45,00,000

(d) short-term capital gains of Rs 55,00,000

3. Assuming that Mr. Sarthak has other income exceeding basic exemption limit, the tax
payable (excluding surcharge and health and education cess) on transfer of building
and agricultural land, would be -

(a) Rs 7,81,250

(b) Rs 13,97,500

(c) Rs 9,81,250

(d) Rs 10,97,500

4. In respect of purchase of building from Mr. Sarthak, income chargeable to tax in the
hands of Mr. Anay would be –

(a) Rs 20 lakh

(b) Rs 30 lakhs

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(c) Rs 15 lakh

(d) Nil

Case Study-4

Mr. Hardik (age 45 years) is appointed as senior executive officer in Sky India Limited,
Mumbai on 01.02.2019 in the scale of Rs 35,000-3500-65,000. He is paid dearness allowance
@40% of salary forming part of retirement benefits.

He is given rent free unfurnished accommodation on 01.5.2019 which he occupied only from
01.10.2019. The company pays lease rent of Rs 5,000 p.m.

He has been provided a car of 2000 cc capacity which is used by him for private purposes only.
The actual cost of the car is Rs 8,00,000. The monthly expenditure of car is Rs 5,000, which is
fully met by the employer.

He pays lumpsum premium of Rs 1,50,000 towards health insurance for self and his wife for 48
months on 01.10.2019 by account payee cheque. He also contributes Rs 1,50,000 towards PPF.

In the light of above facts, you are required to answer the following:

1. Value of rent-free accommodation chargeable to tax in the hands of Mr. Hardik, would
be -

a) Rs 44,835

b) Rs 44,100

c) Rs 45,570

d) Rs 30,000

2. Mr. Hardik would be eligible for deduction in respect of health insurance premium

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paid during the previous year 2019-20, for –

a) Rs 30,000

b) Rs 18,750

c) Rs 25,000

d) Rs 37,500

3. Perquisite value of car chargeable to tax in the hands of Mr. Hardik would be –

a) Rs 28,800

b) Rs 21,600

c) Rs 60,000

d) Rs 1,40,000

SUGGESTED ANSWERS / HINTS

Case Study-1

1 2 3 4 5
D A D A

Case Study-2

1 2 3 4 5
B C C C

Case Study-3

1 2 3 4 5
B A C B

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Case Study-4

1 2 3 4 5
D C D

Taxation

SECTION-A

INCOME TAX LAW

Case Study-1

Mr. Shashikant, aged 35 years, is an Indian citizen and a member of the crew of a Singapore
bound Indian ship engaged in carriage of passengers in international traffic departing from
Chennai port on 29th May, 2020.

Particulars Date
Date entered into the Continuous Discharge Certificate in respect of 29th May, 2020
joining the ship by Mr. Shashikant
Date entered into the Continuous Discharge Certificate in respect of 19th December, 2020
signing off the ship by Mr. Shashikant

He stayed in India in the last 4 previous years preceding the P.Y. 2020-21 for 400 days and for a
period of 750 days in the last 7 previous years preceding to P.Y. 2020-21. He received salary of
Rs 7,20,000 in his N RE account maintained with State Bank of India, Chennai Branch. He also
furnished details of other income earned during the previous year 2020-21:

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S. no Particulars Amount (Rs)

1. Dividend declared and received in the month of April, 2020 from X 90,000
limited, an Indian company
2. Agriculture income from land in Pakistan received in India 2,50,000
3. Rental income from house property in Chennai 3,60,000

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What is Mr. Shashikant's residential status for the P.Y 2020-21?

(a) Resident and ordinarily resident

(b) Resident but not ordinarily resident
(c) Non-resident
(d) Deemed resident but not ordinarily resident

2. What would be the total income of Mr. Shashikant for A.Y. 2021-22 assume that he does
not opt to pay tax under section 115BAC?

(a) Rs 6,70,000
(b) Rs 12,72,000
(c) Rs 6 02 000
(d) Rs 5,92,000

3. Assume for the purpose of answering this question that Mr. Shashikant has transferred his
house property in Chennai to his minor son on 1st April, 2020 and his wife is a housewife and
does not have any income. In such case, his total income would be –

(a) Rs 6,00,500

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(b) Rs 5,90,500
(c) Rs 6,02,000
(d) Rs 6,70,000

4. Mr. Shashikant would like to minimize his tax liability and consulted you to compute the
amount of same for the P.Y. 2020-21. Accordingly, his tax liability would be -

(a) Rs 13,610
(b) Rs 23,610
(c) Rs 22,570
(d) Rs 12,570

Case Study-2

Mr. Suraj (aged 48 years) furnishes the following particulars for the previous year 2020-21 in
respect of an industrial undertaking established in "Special Economic Zone" in March 2015. It
began manufacturing in April 2015.

Particulars (Rs)
Total sales 85,00,000
Export sales [proceeds received in India] 45,00,000
Domestic sales 40,00,000
Profit from the above undertaking 20,00,000

Export Sales of F.Y. of 2020-21 include freight and insurance of Rs 5 lacs for delivery of goods
outside India. He received rent of Rs 25,000 per month for a commercial property let out to Mr.

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Sudhir, a salaried individual. He earned interest on Savings Bank A/c of Rs 12,500 and interest
on Post Office Savings A/c of Rs 5,500 during the P.Y. 2020-21.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following

1. Compute the amount of export turnover and total turnover for purpose of computing
deduction under section 10AA for A.Y. 2021-22.

(a) Rs 45,00,000 and Rs 85,00,000, respectively

(b) Rs 40,00,000 and Rs 80,00,000, respectively
(c) Rs 45,00,000 and Rs 80,00,000, respectively
(d) Rs 40,00,000 and Rs 85,00,000, respectively

2. Compute the amount of deduction available under section 10AA to Mr. Suraj under section
10AA for A.Y. 2021-22.

(a) Rs 10,00,000
(a) Rs 4,70,577
(b) Rs 5,62,500
(c) Rs 5,00,000

3. Assume for the purpose of this question only that Mr. Suraj established SEZ Unit and began
manufacturing in April, 2017. Compute the amount of deduction available under section
10AA for A.Y. 2021-22.

(a) Rs 10,00,000
(b) Rs 9,41,154
(c) Rs 11,25,000
(a) Rs 5,00,000

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4. Compute the total income of Mr. Suraj for the previous year 2020-21, assuming that he
does not opt to pay tax under section 115BAC.

(a) Rs 12,14,500
(b) Rs 17,18,000
(c) Rs 17,14,500
(d) Rs 17,28,000

Case Study-3

Mr. Kishan is engaged in the following activities on agricultural land situated in India, total area
of land is 5 acres.

Activity A: He grows saplings or seedlings in a nursery spreading over on one acre land, the
sale proceeds of which is Rs 5,00,000. Cost of plantation is Rs 1,40,000. Basic operations are
not performed for growing saplings or seedlings.

Activity B: He grows cotton on 3 acres land. 40% of cotton produce is sold for Rs 4,00,000,
the cost of cultivation of which is Rs 2,25,000. The cost of cultivation of balance 60% cotton is
Rs 3,37,500 and the market value of the same is Rs 6,00,000, which is used for the
purpose of manufacturing yarn. After incurring manufacturing expenses of Rs 1,00,000, yarn
is sold for Rs 8,50,000

Activity C: Land measuring 1 acres is let out to Mr. Ramesh on monthly rental of Rs 15,000
which is used by Mr. Ramesh as follows:

 50% of land is used for agricultural purpose

 50% of land is used for non-agricultural purpose.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

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1. What amount of income arising from activity A would constitute agricultural income in
the hands of Mr. Kishan?

(a) Rs 5,00,000
(b) Nil
(c) Rs 3,60,000
(d) Rs 1,40,000

2. What amount of income from activity B with respect to sale of cotton would constitute
agricultural income or/and business income in the hands of Mr. Kishan?

(a) Rs 1,75,000 as agricultural income

(b) Rs 1,75,000 as business income
(c) Rs 1,75,000 as agricultural income and Rs 2,62,500 as business income
(d) Rs 4,00,000 as agricultural income

3. What amount of the income from activity B with respect to sale of yarn constitute
agricultural income or/and business income in the hands of Mr. Kishan?

(a) Rs 1,50,000 as agricultural income

(b) Rs 2,62,500 as agricultural income and Rs 1,50,000 as business income
(c) Rs 3,37,500 as agricultural income and Rs 1,50,000 as business income
(d) Rs 4,12,500 as business income

4. What amount of income arising from activity C constitute agricultural income or otherwise
in the hands of Mr. Kishan?

(a) Whole amount of Rs 1,80,000 would be agricultural income

(b) Whole amount of Rs 1,80,000 would be business income.

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(c) Rs 90,000 would be agricultural income and Rs 63,000 is chargeable to tax as income from
house property
(d) Rs 90,000 would be agricultural income and Rs 90,000 is chargeable to tax under the head
”Income from Other Sources”

5. Compute the gross total income of Mr. Kishan for the P.Y. 2020-21, assuming he has no
other source of income.

(a) Rs 2,40,000
(b) Rs 3,30,000
(c) Rs 5,02,500
(d) Rs 2,13,000

Case Study-4

Mr. Rajesh Sharma, aged 54 years, an Indian citizen, is working as Assistant Manager in ABC
India Ltd. He is getting basic salary of Rs 58,000 per month. He used to travel frequently out of
India for his office work. He left India from Delhi Airport on 5th October, 2020 and returned to
India on 2nd ApriI,2021.

For previous year 2020-21, following information's are relevant;

(a) Dearness Allowance - 10% of Basic Pay (considered for retirement purposes)
(b) Bonus - Rs 98,000
(c) Medical allowance paid during P.Y. 2020-21 amounting to Rs 60,000
(d) He was also reimbursed medical bill of his mother amounting to Rs 15,000.

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(e) He was also transferred a laptop by company for Rs 15,000 on 31st December, 2020.
The laptop was acquired by company on 1st October, 2017 for Rs 1,00,000. Company
was charging depreciation at 31.666% assuming useful life of laptop as 3 years.
(f) He was also reimbursed salary of house servant of Rs 4,000 per month.
(g) Professional Tax paid by employer amounting to Rs 2,400.
(h) 400 equity shares allotted by ABC India Ltd. at the rate of Rs 250 per share against fair
market value of share of Rs 350 on the date of exercise of option.
(i) Short-term capital gain on sale of shares of listed company on which STT is paid amounting
to Rs 94,000.
(j) Mr. Rajesh does not opt to pay tax under section 115BAC.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What is Mr. Rajesh Sharma's residential status for the A.Y. 2021-22?

(a) Resident but can't determine resident and ordinarily resident or resident but not
ordinarily resident, from the given information
(b) Non-Resident
(c) Resident but not ordinarily resident
(d) Resident and ordinarily resident

2. What are his taxable perquisites for A.Y. 2021-22?

(a) Rs 55,000
(b) Rs 90,400
(c) Rs 1,05,400
(d) Rs 1,03,000

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3. What is the income chargeable under the head “Salaries” in the hands of Mr. Rajesh
Sharma for A.Y. 2021- 22?

(a) Rs 9,76,600
(b) Rs 9,86,600
(c) Rs 9,71,600
(d) Rs 9,61,600

4. The total tax liability of Mr. Rajesh Sharma for A.Y. 2021-22 is:

(a) Rs 1,26,800
(b) Rs 1,40,710
(c) Rs 1,12,130
(d) Rs 1,39,960

5. Assume for the purpose of this question only, that Mr. Rajesh was found owner of Rs 5
lakh worth jewellery acquired in F.Y. 2020-21, of which he could not provide any satisfactory
explanation about source of income. What would be the tax liability (without considering
surcharge and Health and education cess, if any) of Mr. Rajesh Sharma towards such
unexplained expenditure:

(a) Rs 1,00,000
(b) Rs 1,50,000
(c) Rs 3,00,000
(d) Rs 3,90,000

Case Study-5

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Ram Builders & Developers is the sole-proprietorship concern of Mr. Ram. The main business of
the concern is the construction, development and sale of residential and commercial units.
Ram Builders& Developers developed a project named Luxuria Heaven, which has both
residential and commercial units with its own funds. It obtained certificate of completion for
the said project with effect from31/03/2020. Ram sold majority of its residential units and
commercial units in the F.Y.2020-21. However, around 30 residential units and 15commercial
units were held by him as stock in trade as on 31.3.2021. During this period, there was a slump
in the real estate sector. In order to earn some income from these units, Ram incidentally lets
out some of the units held as stock-in-trade. The details of units constructed, sold and held as
stock-in-trade are given hereunder:

Particulars Total Units Units Units held Units let Unit vacant Actual rent per
constructed sold as stock- out during the unit per month
in-trade during whole of P.Y. [in respect of let
as on P.Y. 2020-21 out units
31.3.2021 2020-21 [(4) – (5)] mentioned in (5)]
[(2) – (3)] out of (4)
(1) (2) (3) (4) (5) (6) (7)
Residential 100 70 30 10 20 10,000 pm.
units
Commercial 40 25 15 5 10 18,000 pm.
units
140 95 45 15 30

Out of the residential units sold, 5 residential units were sold to his friend, Mr. Gaurav, who is
also a real estate developer, on 15.2.2021, for Rs 20 lakhs each. The stamp duty value on the
date of sale was Rs 23 lakhs each. However, the agreement of sale was entered into on
1.11.2020, on which the date the stamp duty value was 22 lakhs. Mr. Ram received Rs 1 lakh
by way of account payee bank draft on 1.11.2020 from Mr. Gaurav.

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Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. While computing the total income of Mr. Ram, the income from residential and
commercial units let out during the P.Y.2020-21 will be taxed under head:

(a) Income from house property

(b) Profits and gains of business or profession
(c) Income from let out residential units will be taxed under the head “Income from
house property” and income from let out commercial units will be taxed under the
head “Profits and gains of business or profession”
(d) Income from other source.

2. What would be the tax treatment of vacant residential and commercial units held as stock
in trade as on 31.3.2021?

(a) The vacant residential units would be deemed to be let out and expected rent would
be deemed as the annual value chargeable to tax under the head “Income from house
property” for A.Y. 2021-22.
(b) The vacant units, both residential and commercial, would be deemed to be let out and
expected rent would be deemed as the annual value chargeable to tax under the head
“Income from house property” for A.Y. 2021-22.
(c) The annual value of both vacant residential and commercial units would be Nil
for A.Y.2021-22. Hence, no income is chargeable for such units under the head
“Income from house property” for A.Y. 2021-22.
(d) Vacant units held as stock-in-trade can never be deemed as let out at any point of
time

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3. What would be the full value of consideration in respect of sale of units to Mr. Gaurav for
the purpose of computing profits and gains from transfer of units?

(a) Rs 1,00,00,000
(b) Rs 1,15,00,000
(c) Rs 1,10,00,000
(d) Rs 99,00,000

4. Assume that Rs 1 lakh was paid in cash by Mr. Gaurav to Mr. Ram on 1.11.2020 instead of
by way of account payee bank draft, what would be the income chargeable under section
56(2)(x) in the hands of Mr. Gaurav?

(a) Rs 15 lakh
(b) Rs 10 lakh
(c) Nil, since the stamp duty value is within the permissible deviation limit
(d) Nil, since section 56(2)(x) is not applicable in this case

Case Study-6

For the assessment year 2021-22, Mr. Sonu submits the following information:

Particulars Building at Building at

Chennai (£) Kochi (Rs)

Municipal valuation 35,000 80,000

Standard Rent 36,000 70,000
Fair Rent 31,000 82,000
Rent received 38,000 68,000

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Municipal taxes paid by tenant Mr. Ramu for building at 3,000 4,000
Chennai and paid by Mr. Sonu for Building at Kochi.
Repairs paid by tenant Mr. Ramu for Chennai building and 500 18,000
Mr. Sonu paid for Kochi buildings
Land revenue paid 2,000 16,000
Insurance premium paid 500 2,000
Interest on loan borrowed for payment of municipal 200 400
tax of house property
Nature of occupation Let out for Let out for
residence business
Date of completion of construction 1.4.1996 1.7.2008

Mr. Sonu is constructing one more building in Mumbai during the previous year. Mr. Raju, a film
director, took on rent the building under construction in Mumbai at Rs 5,000 per month for his
film shooting. The construction of the said building would be completed by April 2021. Mr.
Sonu is a real estate developer and letting out properties is not the business of Mr. Sonu.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. Which of the building's income is chargeable to tax under the head “Income from house
property” in the hands of Mr. Son?

(a) Building at Chennai only

(b) Building at Kochi only
(c) Both buildings at Chennai and Kochi
(d) All the three buildings at Chennai, Kochi and Mumbai

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2. Which of the following payments/expenditure is allowable as deduction while computing

income under the head “Income from house property” incurred in respect of the building at
Chennai and Kochi?

(a) Municipal taxes paid by Mr. Sonu and Mr. Ramu

(b) Municipal tax, land revenue, insurance premium, interest on loan borrowed for
payment of Municipal tax paid by Mr. Sonu
(c) Only municipal tax paid by Mr. Sonu
(d) Both Municipal tax and repairs paid by Mr. Sonu

3. Under which head of income, the amount received from Mr. Raju would be chargeable to
tax?

(a) Income from house property

(b) Profits and gains from business or profession
(c) Income from other sources
(d) Income from house property or Income from other sources, at the option of Mr. Sonu

4. What is the amount chargeable to tax under the Income from house property in the hands
of Mr. Sonu for the P.Y. 2020-21?

(a) Rs 72,800
(b) Rs 81,200
(c) Rs 1,14,800
(d) Rs 70,700

Case Study-7

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Mr. Ganesha (a salaried person) has three houses. One in Thane (Maharashtra), second in
Jaipur (Rajasthan) and third in Ratlam (Madhya Pradesh). Details of the flats/houses are as
follows:

Thane flat: 3 BHK flat purchased in April, 2002 for Rs 90 lakhs. Afterwards, interior work done in
2005 of Rs 15 lakhs. Mr. Ganesha took loan of Rs 65 Lakhs for purchase of this flat in 2001 and
settled full loan in 2018.

Jaipur house: Purchased in July, 2018 of Rs 62 Lakhs and interior work done in September,
2019 of Rs 15 Lakhs. Loan taken for purchase of this house of Rs 15 Lakhs in June, 2018. As per
interest certificate, he paid Rs 12,00,500 and Rs 43,500 towards principal and interest,
respectively.

Ratlam House: Purchased in December 2019 for Rs 70 lakhs (stamp duty value of Rs 65
lakhs). For acquiring this house, he took loan of Rs 40 Lakhs from Canara Bank. Loan was
sanctioned on 1.8.2019. He pays EMI of Rs 38,100 per month. As per interest certificate, for the
previous year 2020-21, he paid Rs 60,900 and Rs 3,96,300 towards principal and interest,
respectively.

Particulars Thane House Jaipur House Ratlam House

(Apr-20 to Dec-20)
Municipal Taxes paid 18,574 8,090 6,909
Municipal value (per month) 30,500 6,800 7,200

Fair Rent (per month) 33,000 7,000 7,500

Standard Rent (per month) 32,000 8,000 7,300

Other details are as follows:

 He has sold Jaipur house on 5th January 2021 for Rs 90 Lakhs and invested Rs 15 Lakh in
RECL bonds issuedby the Central Government on 10th August 2021.

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 Mr. Ganesha is working in WinDoor Exports Pvt Ltd, Mumbai and self-occupied Thane
flat. He earned salary of Rs 22,50,350 for the previous year 2020-21.
 He has no other income from any source for the P.Y. 2020-21.
 He has given Ratlam house on rent for F.Y. 2020-21 to Mr. Pratap on a monthly rent of Rs
8,500.
 He has given Jaipur house on rent for the period of ApriI,2020 to June, 2020 to Mrs.
Madhura Mahto on monthly rent of Rs 7,100and vacant for remaining period from July,
2020 to December,2020.

Mr. Ganesha would not like to opt concessional tax rates available under section 115BAC.Cost
inflation index (CII) for the Financial Year (F.Y.) 2018-19 is 280; 2019-20: 289; F.Y. 2020-21:
301.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What would be Net Annual Value of each house for the previous year 2020-21?

(a) Thane — Nil ; Jaipur — Rs 13,210 ; Ratlam — Rs 95,091

(b) Thane — Nil ; Jaipur — Rs 54,910 ; Ratlam — Rs 95,091
(c) Thane — Nil ; Jaipur — Rs 21,300 ; Ratlam — Rs 1,02,000
(d) Thane — Nil ; Jaipur — Rs 13,210 ; Ratlam — Rs 80,691

2. What would be income/loss under the head “Income from house property” in the hands of
Mr. Ganesha?

(a) Loss of Rs 1,67,689

(b) Loss of Rs 2,86,236
(c) Loss of Rs 3,20,489
(d) Loss of Rs 3,63,989

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3. How much amount will be carried forward as loss from house property for the subsequent
assessment year 2022-23?

(a) Rs 3,63,989
(b) Rs 1,63,989
(c) Rs 2,00,000
(d) Rs 1,50,000

4. What would the amount of capital gains chargeable to tax in the hands of Mr. Ganesha
during the previous year 2020-21?

(a) Short-term capital gains of Rs 15,00,000

(b) Long-term capital gains of Rs 23,35,000
(c) Long-term capital gain of Rs 7,72,716
(d) Long-term capital gain of Rs Nil, since he is eligible for deduction u/s 54EC in respect of
amount invested in RECL bonds issued by Central Government

5. What would be the gross total income of Mr. Ganesh for the A.Y. 2021-22?

(a) Rs 28,23,070
(b) Rs 26,23,070
(c) Rs 27,73,070
(d) Rs 43,85,350

Case Study-8

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“LUX Enterprise” a proprietorship firm of Mr. Lucifer Morningstar, are resident individual, in
Maharashtra engaged in business of printing and publishing. The following details pertain to
the assets of the business:

Particulars Date of purchase Date of put to Amount

use
Office building superstructure 30.09.2020 30.12.2020 1,85,00,000
constructed on leased land
BMW M4 convertible car 13.08.2019 25.09.2020 94,80,000
Machineries used in printing and 25.08.2019 15.10.2020 9,12,500
publishing process

Notes:

(1) Car is also used for personal purposes; disallowance for personal use may be taken at 20%.

(2)Written down value of Plant & Machinery (Depreciable @15%) as on 1.4.2020 is Rs

1,45,00,000.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions, assuming all the aforementioned assets are purchased through
account payee cheque:

1. What would be the amount of depreciation allowable on plant and machinery (@15%) for
the previous year2020-2 1?

(a) Rs 24,25,938
(b) Rs 23,34,688
(c) Rs 24,94,376
(d) Rs 24,03,126

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2. What would be the WDV of plant and machinery (Depreciable@ 15%) as on 1.4.2021?

(a) Rs 1,29,86,562
(b) Rs 1,29,18,124
(c) Rs 1,30,77,812
(d) Rs 1,21,65,312

3. What would the WDV of Office building superstructure constructed on leased land as on
1.4.2021?

(a) Rs 1,85,00,000
(b) Rs 1,66,50,000
(c) Rs 1,75,75,000
(d) Rs 1,57,25,000

4. What would be the amount of depreciation allowable on BMW M4 convertible car for
the previous year 2020-2 1?

(a) Rs 22,75,200
(b) Rs 11,37,600
(c) Rs 10,01,088
(d) Rs 17,29,152

Case Study-9

Mr. X has set up a manufacturing unit in Chittor, Andhra Pradesh on 1 ApriI 2019. Chittor,
Andhra Pradesh is notified backward area and eligible to claim deduction under section 32AD.

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During the previous year 2019-20 and 2020-21, Mr. X has purchased following assets:

Date of put to use Asset Amount (£)

7 Jun 2019 Plant & machinery “X” 14,75,340
25 Jul 2019 Office Furniture 7,65,400
14 Jan 2020 Plant & machinery “Y” 5,00,000
15 May 2020 Plant & machinery “Z” 8,00,000

He has paid professional fees of Rs 35,000 each to Mr. A, Mr. B and Mr. C respectively on 10th
September 2020 credited in the books on the same day, to discuss some legal matter related to
business. The net profit computed in accordance with “Chapter IV-D - Computation of
business income” of the Income-tax Act, 1961 for the previous year 2020-21 is T 1.2 crore.

Mr. X has 2,000 equity shares of MNO Pvt. Ltd. On 21 October 2020, MNO Pvt. Ltd has bought
back 50% shares from its shareholders amounting to Rs 13,50,000 which were issued for Rs
5,70,000 which include Rs 1,15,000 towards premium.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What would be the amount of depreciation in respect of Plant & Machinery “Y”
allowable as deduction while computing income under the head “Profit & Gains from
business or profession” for the previous year 2020-2 1?

(a) Rs 56,250
(b) Rs 1,11,875
(c) Rs 1,43,750
(d) Rs 1,06,250

2. What shall be the total amount of depreciation for the previous year 2020-21 allowable as
deduction while computing profits and gains from business or profession?

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(a) Rs 4,43,287
(b) Rs 5,65,787
(c) Rs 5,15,787
(d) Rs 6,03,287

3. Mr. X wanted to know from you, whether tax is required to be deducted on professional
fees paid to Mr. A, Mr. B and Mr. C respectively. If tax has to be deducted, then what would
be the rate and amount of tax to be deducted at source?

(a) Yes, TDS amounting to Rs 7,875 @7.5% on Rs 1,05,000 is to be deducted

(b) Yes, TDS amounting to Rs 1,575 @1.5% on Rs 1,05,000 is to be deducted
(c) No, tax is to be deducted, since amount does not exceed the threshold limit
(d) Yes, TDS amounting to Rs 10,500 @10% on Rs 1,05,000 is to be deducted

4. What shall be the amount of tax payable by MNO Private Limited on buy-back of its
shares?

(a) Rs 2,08,500
(b) Rs 1,81,710
(c) Rs 3,14,496
(d) Rs 1,62,240

Case Study-10

ABC & Co. is a partnership firm engaged in the business of sale of footwear. The partnership
firm consist of three partners — A, B & C. A &B are working partners and C is a sleeping

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partner. The firm is liable to tax audit under section 44AB of the Act. It has a book profit of Rs
11,50,000.

Following payments were made to partners as authorised by the partnership deed:

• Remuneration to A & B - Rs 32,000 p. m. to each partner

• Remuneration to C - Rs 10,000 p. m.
• Interest on capital @ 19.5% to A & B - Rs 18,500 p. a. to each partner
• Interest on capital @ 17% to C - Rs 10,540 p. a.

The firm has following brought forward losses of past years:

A.Y. Business loss Unabsorbed depreciation Long-term capital loss

2018-19 26,000 17,600 5,300
2019-20 78,000 29,860 -
2020-21 1,05,670 54,180 13,470

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What amount of interest is allowable as deduction in the hands of firm while computing
profits and gains from business or profession?

(a) Rs 29,040
(b) Rs 22,769
(c) Rs 47,540
(d) Rs 30,209

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2. What amount of remuneration not allowable as deduction in the hands of firm while
computing profits and gains from business or profession?

(a) Rs 1,20,000
(b) Nil
(c) Rs 1,08,000
(d) Rs 78,000

3. What is the due date of filing of return of income for Mr. A and Mr. C for the A.Y. 2021-22?

(a) 31st July 2021 for Mr. C and 30th September 2021 for Mr. A
(b) 31st July 2021 for Mr. C and 31st October 2021 for Mr. A
(c) 31st October 2021 for both Mr. A and Mr. C
(d) 31st October 2021 for Mr. C and 31st July 2021 for Mr. A

4. What would be the income under the head “Profits and gains from business or profession”
in the hands of ABC & Co. for the A.Y. 2021-22?

(a) Rs 70,690
(b) Rs 1,72,330
(c) Rs 51,920
(d) Rs 1,53,560

Case Study-11

Mr. Sarthak (age 37 years) a share broker, sold a building to his friend Anay, who is a dealer in
automobile spare parts, for Rs 120 lakh on10.11.2020, when the stamp duty value was Rs 150

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lakh. The agreement was, however, entered into on 1.9.2020 when the stamp duty value wash
140 lakh. Mr. Sarthak had received a down payment of Rs 15 lakh by a crossed cheque
from Anay on the date of agreement. Mr. Sarthak purchased the building for Rs 95 lakh on
10.5.2017.

Further, Mr. Sarthak also sold an agricultural land (situated in a village which has a
population of 5,800) for Rs 60 lakhs to Mr. Vivek on 01.03.2021, which he acquired on
15.06.2014 for Rs 45 lakhs. Stamp duty value of agricultural land as on 1.3.2021 is Rs 65 lakhs
CII for F.Y. 2014-15; 240; F.Y. 2017-18: 272; F.Y. 2020-21: 301.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. Is there any requirement to deduct tax at source on consideration paid or payable for
transfer of building and agricultural land?

(a) Yes; Mr. Anay and Mr. Vivek both required to deduct tax at source under section 194-
IA
(b) Yes; Mr. Anay is required to deduct tax at source undersection 194-IA.
(c) Yes; Mr. Vivek is required to deduct tax at source undersection 194-IA.
(d) Yes; Mr. Sarthak is required to deduct tax at source undersection 194-IA.

2. What amount of capital gains are chargeable to tax in the hands of Mr. Sarthak in respect
of transfer of building?

(a) long-term capital gains of Rs 44,87,132

(b) long-term capital gains of Rs 34,87,132
(c) long-term capital gains of Rs 14,87,132
(d) short-term capital gains of Rs 55,00,000

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3. Assuming that Mr. Sarthak has other income exceeding basic exemption limit, the tax
payable (excluding surcharge and health and education cess) on transfer of building and
agricultural land, would be -

(a) Rs 6,97,430
(b) Rs 2,97,430
(c) Rs 8,97,430
(d) Rs 11,01,470

4. What amount of income is chargeable to tax in the hands of Mr. Anay in respect of transfer
of building?

(a) Rs 20 lakh
(b) Rs 30 lakhs
(c) Rs 15 lakhs
(d) Nil

Case Study-12

Mr. Narendra Sharma, aged 54 years, an Indian citizen, carrying on retail business in Dubai. He
frequently visits India for business purpose. Details of his visits in India are as follows:

1) Came to India on 03.12.2015 and left India on 26.04.2016

2) Again came to India on 09.09.2018 and left India on 10.01.2019

3) Again came to India on 27.12.2019 and left India on 20.02.2020

Afterwards he decided to shift permanently in India and closed his business in Dubai. So, he
came to India on 27.11.2020 and joined Indian Company “Cosmos Heritage India Limited” at

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registered office in Mumbai from 01.12.2020. From December 2020, he has taken a flat on rent
for Rs 60,000 per month from Mr. Sarthak, an Indian resident, and Mr. Sarthak has provided his
PAN No. to Mr. Narendra Sharma.

Following details of his salary income earned in India:

 Basic Salary — Rs 2,75,675 per month

 COLA (Cost of Living Allowance) (forms part of retirement benefits) — Rs 1,20,200 per
month HRA — Rs 1,37,838 per month
 Other Allowances — Rs 1,56,000 per month

For the period from April 2020 to November 2020, his business income arising in Dubai is Rs
26,00,000. He is not liable to pay any tax in Dubai. Such business is controlled from Dubai. He is
active in equity share trading after coming to India. Following are the details of his portfolio:

S. No Sale/ Company Date of Qty Price per Brokerage

Purchase Purchase/Sale Share (Rs)
1. Purchase First smile Ltd 10.12.2020 250 203 1.5%
2. Purchase Rainbow Ltd 10.12.2020 50 503 1.5%
3. Purchase Merge service Ltd 12.12.2020 150 82 1.5%
4. Sale First smile Ltd 18.12.2020 100 325 1.8%
5. Purchase Merge service Ltd 15.12.2020 110 110 1.5%
6. Sale Merge service Ltd 26.12.2020 150 100 1.8%
7. Purchase Rainbow Ltd 28.12.2020 200 385 1.5%
8. Purchase Rainbow Ltd 03.01.2021 100 465 1.5%
9. Sale First smile Ltd 23.03.2021 200 150 1.8%
10. Sale Merge service Ltd 26.03.2021 110 110 1.8%

Following additional details is also given by Mr. Narendra:

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First Smile Limited issued bonus shares 1:1 on 01.02.2021 and credited the shares in his
account on 10.02.2021.

Rainbow Limited declared an interim dividend of 200% on 28.02.2021 (face value of each share
is Rs 10).

The record date was 31.1.2021.

He does not opt to pay tax as per section 115BAC.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What is the residential status of Mr. Narendra for the previous year 2020-21?

(a) Resident
(b) Resident but not ordinary resident
(c) Non-resident
(d) Deemed resident but not ordinarily resident in India

2. Which of the following statement is correct, in respect of dividend paid by Rainbow Ltd. to
Mr. Narendra?

(a) Dividend received from Rainbow Ltd is exempt in the hands of Mr. Narendra. Hence,
no tax is required to be deducted at source.
(b) Dividend received from Rainbow Ltd is taxable in the hands of Mr. Narendra but, since
the dividend is less than Rs 10,000, no tax is required to be deducted at source.
(c) Dividend received from Rainbow Ltd is taxable in the hands of Mr. Narendra. Tax of Rs
525 is required to be deducted at source.
(d) Dividend received from Rainbow Ltd is taxable in the hands of Mr. Narendra. Tax of Rs
700 is required to be deducted at source.

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3. What shall be the TDS liability of Mr. Narendra for rent paid to Mr. Sarthak?

(a) There is no TDS liability of Mr. Narendra, since he is a salaried individual.

(b) Mr. Narendra is liable to deduct TDS u/s 194-I of Rs 6,000for each month.
(c) Mr. Narendra is liable to deduct TDS u/s 194IB of Rs 3,000 for each month
(d) Mr. Narendra is liable to deduct TDS u/s 194IB of Rs 9,000 in the month of March 2021

4. What would be income chargeable to tax under the head “Income from Salaries” in
the hands of Mr. Narendra for the A.Y. 2021-22:

(a) 7 26,27,202
(b) Rs 26,77,202
(c) Rs 27,08,852
(d) Rs 26,58,852

5. What is the amount of short-term capital gain chargeable to tax in the hands of Mr.
Narendra on sale of shares for the P.Y. 2020-21:

(a) Rs 21,860
(b) Rs 13,556
(c) Rs 8,018
(d) Rs 11,708

Case Study-13

Mr. Akshaya Biyani celebrated his 26th birthday on 15th May 2020 and arranged a grand party
at Radisson Blu hotel. On this occasion, he invited his friends, blood relatives and distant

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relatives to attend the party. The ceremony was very grand, the feast was also very spectacular.
All the arrangements and decorations were absolutely wonderful. At the end of party, Mr.
Akshaya was awarded by gifts and flower's bouquet as infra:

Gift received from Type of Gift Remarks

Mother One 22k Gold Chain She purchased on the same day for Rs
37,822
Father One 22k Gold He purchased on the same day for Rs
Bracelet 56,075
Wife 4 Gold Rings She purchased these rings on
15.5.2019for Rs 35,500 each. Fair market
value on 15th May 2020 is Rs 37,429 each
Sister Painting This painting is made by her. Fair market
value is Rs 45,000.
Cousin brother One Gold chain He purchased it on the same day for Rs
(father’s brother’s son) 18,200
Closets cousins 1-20 Car Value of Rs 4,10,000
(mother’s sister’s
sons/daughters)
Friends and other distant Cash Rs 1,51,000
relatives

Mr. Akshaya desires to set up a new manufacturing unit with his friend in partnership on
1.12.2020. For making investment in the firm, he sold following jewellery which he has
received on his 26th birthday celebration as gifts:

Mother's gifted Gold Chain for Rs 42,150

Father's gifted Gold Bracelet for Rs 60,180

Cousin brother's gifted Gold Chain for Rs 20,600

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His wife gave him Rs 1 lakh as a gift so that he could invest sufficient money in the unit. On 1st
December 2020, he invested Rs 6,00,000 (including the amount received on sale of above
gifts and amount received from his wife) and his friend invested Rs 4,00,000 in the firm. On 1st
February 2021, his wife again gave him Rs 1 lakh as a gift to invest such money in the firm and
apart from that he invested Rs 50,000 more from his individual savings. On this day, his
friend also invested Rs 1,00,000 in the firm. Since the firm is a manufacturing unit and at initial
stage, the firm requires sufficient fund so Mr. Akshaya sold his wife's gifted Gold Rings for Rs
40,250 each as on 31st March 2021 and he deployed the funds as partner's capital in the
firm on 01st April, 2021.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What is the amount of capital gain taxable in the hand of Mr. Akshaya for P.Y. 2020-21?

(a) Short term capital gains Rs 10,833

(b) Short term capital gains Rs 29,833
(c) Short term capital gains Rs 22,117
(d) No, capital gains is taxable in his hands, since he received the capital assets as gift.

2. What is the gift amount not considered as income under section 56(2)(x) for P.Y. 2020-21?

(a) Rs 8,98,613
(b) Rs 3,06,8 13
(c) Rs 9,16,813
(d) Rs 7,16,8 13

3. What is the gift amount taxable in the hands of Mr. Akshaya for P.Y. 2020-21?

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(a) Rs 1,51,000
(b) Rs 1,69,200
(c) Rs 5,79,200
(d) Rs 5,61,000

4. Is any amount taxable in the hands of Akshaya's wife in respect of sale of jewellery by Mr.
Akshaya, if yes, what shall be the taxable amount in her hands for P.Y. 2020-21?

(a) No
(b) Yes; Rs 15,284
(c) Yes; Rs 19,000
(d) Yes; Rs 11,284

Case Study-14

Mr. Rajesh gifted Rs 15 lakhs to his wife, Raavi on her birthday on, 23rdFebruary, 2020. Raavi
lent Rs 6,00,000 out of the gifted amount to Karuna on 1st April, 2020 for six months on
which she received interest of Rs 30,000. The said sum of Rs 30,000 was invested in shares of
a listed company on 18th October, 2020, which were sold for Rs 66,000 on 25th March, 2021.
Securities transactions tax was paid on purchase and sale of such shares. The balance amount
of gift was invested on 1st April2020, as capital by Raavi in her new business. She
suffered loss of Rs 22,000 in the business in Financial Year 2020-21. Raavi is working with a
Private company as sales executive at a salary of Rs 62,000 p.m. She paid Rs 3,500 p.m.
towards tuition fees for her daughter Riya studying in St. Thomas School, Mumbai. Rajesh is
working with an MNC on a monthly salary of Rs 64,000. He has gifted Rs 1,25,000 to Riya on her
13th Birthday. This amount is deposited as 2 years term deposits with SBI bank in her name.

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On which interest of Rs 11,500 is earned during the previous year 2020-21. Both Mr. Rajesh and
Mrs. Raavi opt to pay tax under section 115BAC.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. In whose hands, the interest income received from Karuna and interest on fixed deposits in
the name of Riya would be included?

(a) both interest income to be included in the hands of Mr. Rajesh

(b) both interest income to be included in the hands of Mrs. Raavi
(c) Interest income from Karuna to be included in the hands of Mrs. Raavi and interest on
two years terms deposits to be included in the hands of Mr. Rajesh.
(d) interest income from Karuna to be included in the hands of Mr. Ratesh and
interest on two years terms deposits to be included in the hands of Mrs. Raavi.

2. In whose hand's loss from business and capital gains would be included in
Assessment Year 2021-22? Assume that capital invested in the business was entirely out of
the funds gifted by her husband.

(a) Both loss from business and capital gains would be included in the hands of Mr. Rajesh
(b) Both loss from business and capital gains would be included in the hands of Mrs. Raavi
(c) Loss from business included in the hands of Mr. Ratesh and capital gains included in the
hands of Mrs. Raavi
(d) Loss from business included in the hands of Mrs. Raavi and capital gains included in the
hands of Mr. Rajesh

3. What would be the total income of Mrs. Raavi for the previous year 2020-21?

(a) Rs 6,88,000

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(b) Rs 7,80,000
(c) Rs 7,91,500
(d) Rs 7,90,000

4. What would be total income of Mr. Rajesh for the previous year 2020-21?

(a) Rs 7,76,000
(b) Rs 8,09,500
(c) Rs 8,08,000
(d) Rs 7,98,000

Case Study-15

Miss Hetal transferred to his husband Mr. Hemant, a residential property worth Rs 45 lakhs
located in Nagpur without any consideration. The expected rent of such property is Rs 5 lakhs.
Municipal tax of Rs 5,000 paid for this property during the previous year 2020-21. Miss Hetal
has three residential properties in Mumbai. The expected rent from the 3 properties situated in
Mumbai is Rs 10 lakhs, Rs 11 lakhs and Rs 12 lakhs respectively. She purchased the properties
out of her own funds. Municipal taxes due are Rs 15,000, Rs 20,000 and Rs 25,000. The same
have, however, not been paid this year in respect of the three properties. The expected rent is
lesser than the standard rent in case of all the aforementioned properties. Miss Hetal does not
have any income from any other source. Miss Hetal's father, aged 58 years had capital gains of
Rs 5 crores from sale of house property. He reinvested the proceeds from sale in another
residential house of Rs 4.98 crores and the remaining sale proceeds were deposited in his
savings bank account. He has paid Rs 1,50,000 towards LIC premium. He has no other source of
income. Miss Hetal's grandfather is aged 81 years and has interest income on fixed deposits of
Rs 6 lakhs. He has to fly to USA for his treatment of cancer on 31st July, 2021 and his return of
income is not filed before his flying to USA.

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Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What is the amount of income liable to be taxed in the hands of Miss Hetal under the head
“Income from House Property” for A.Y.2021-22?

(a) Rs 7,00,000
(b) Rs 10,46,500
(c) Rs 10,50,000
(d) Rs 13,76,500

2. What would be tax liability of Miss Hetal for the assessment year 2021-22? Compute in a
manner so that her tax liability is minimum.

(a) Rs 66,300
(b) Rs 88,400
(c) Rs 87,670
(d) Rs 1,31,510

3. Is Hetal's father required to furnish return of income in India for the A.Y.2021-22?

(a) No, he is not required, since his income does not exceed basic exemption limit
(b) Yes, he is required to furnish return of income on or before 31st July,2021
(c) Yes, he is required to furnish return of income on or before 30th September, 2021
(d) Yes, he is required to furnish return of income on or before 31st October, 2021

4. Is Miss Hetal's grandfather required to pay advance tax during the previous year 2020-21?

(a) No, he is not required to pay advance tax, since he is a senior citizen

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(b) Yes, he is required to pay advance tax, since his tax liability exceeds Rs 10,000
(c) No, he is not required to pay advance tax, since he is a senior citizen and he is not
having any income under the head ”Profits and gains from business or profession”
(d) Yes, he is required to pay advance tax, since his total income exceeds basic exemption
limit of Rs 5,00,000

Case Study-16

Ms. Chanchal, aged 45, provides the following data of her gross receipts for the financial year
2019-20 and 2020-21. She is engaged in agency business along with providing services as tarot
card reader.

F.Y. Receipts from business (Rs) Receipts from profession Total Gross Receipts
(Rs) (Rs)
2019-20 1,05,00,000 47,00,000 1,52,00,000
2020-21 98,00,000 49,00,000 1,47,00,000

She paid an amount of Rs 12,00,000 to a contractor for polishing her old furniture in her
self-occupied residential house property on 12.04.2020. Further on 05.06.2020, she has
taken services from renowned interior designer for the same residential house property for
which she paid Rs 2,50,000.

Further, on 28.05.2020 she sold one commercial property for Rs 50,00,000. The stamp duty
value on the date of registration is Rs 58,00,000. The value adopted for stamp duty was Rs
54,00,000 on the date of agreement (part payment by account payee cheque was received
on the date of agreement). It was purchased for Rs 40,00,000 on 28.06.2018. (Cost Inflation
Index for F.Y. 2020-2 1: 301, F.Y. 2018-19: 280).

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The brought forward long-term capital loss from unlisted shares of F.Y. 2019-20 is Rs 5,50,000.
During the year, Ms. Chanchal incurred a loss of Rs 70,00,000 while trading in the agricultural
commodity derivatives (no CTT paid).

Ms. Chanchal does not want to opt for the new tax regime available under section 115BAC
for A.Y. 2021- 22.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. Is Ms. Chanchal liable to tax audit under the Income-tax Act, 1961 for the P.Y. 2020-21?

(a) Yes, as the total gross receipts exceeds Rs 1,00,00,000

(b) No, as the gross receipts from business or profession are below the specified threshold
limits.
(c) Yes, as the gross receipts from business exceeds Rs 50,00,000
(d) Yes, as the gross receipts from profession exceeds Rs 25,00,000

2. With respect to payment made to contractor and to the interior designer during the
P.Y. 2020-21, Ms. Chanchal consulted various persons and they have the following views —

(i) She is required to deduct tax at source under section 194C and 194J, since her turnover
from business for the previous year 2019-20 exceeds Rs 1,00,00,000

(ii) She is required to deduct tax at source under section 194M on both the payments

(iii) She is not required to deduct tax at source neither under section 194C nor under
section 194J, since such amounts are paid for personal purposes

(iv) She is not required to deduct tax at source under section 194M, since payment to each
individual does not exceed Rs 50,00,000

Which views are correct?

(a) (iii) and (iv) views are correct

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(b) (i) view is correct

(c) (ii) view is correct
(d) (i) and (iv) views are correct

3. What is the amount and nature of Capital gain chargeable to tax in the hands of Ms.
Chanchal?

(a) Rs 14,00,000 and Short-term capital gain.

(b) Rs 10,00,000 and Short-term capital gain.
(c) Rs 11,00,000 and Long-term capital gain.
(d) Rs 7,00,000 and Long-term capital gain.

4. What is the amount of losses which can be carried forward to A.Y. 2022-23, assuming that
business income is Rs 45,00,000 and income from profession is Rs 25,00,000 for the P.Y.
2020-2 1?

(a) Rs 5,50,000 under section 74

(b) Rs 70,00,000 under section 73
(c) Rs No loss is required to be carried forward, since brought forward loss and current year
loss are set-off against current years income
(d) Rs 5,50,000 under section 74 and Rs 70,00,000 under section 73

Case Study-17

Mr. Abhishek Seth, aged 42 years, is working as a CEO of Soil Limited. He provides you
the following information for preparation and filing of his income-tax return for the year
ended 31 March 2021:

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• Salary, allowances and perquisites from Soil Limited - Rs 1,35,00,000

• Dividend from ABC Ltd. which was declared in February, 2020and received in April, 2020 -
Rs 4,55,000
• Dividend from PRQ Ltd. declared and received in July, 2020 - Rs 5,90,000 (Gross)
• Interest income on saving bank account in SBI — Rs 24,530
• Long term capital gains on transfer of residential house in Mumbai on 15th December,
2020 - Rs 1,73,540
• Short term capital gain on transfer of listed equity shares (STT paid both at the
time of transfer and acquisition) of Ind Ltd. - Rs 73,00,000

He also furnished the following details of investment / payments made by him during the P.Y.
2020-21:

(a) Three-year post office time deposit - Rs 25,000

(b) Contribution to PPF - Rs 35,000
(c) Tuition fees of three children in Bharti Sr. Sec. School in Delhi -Rs 20,000 per annum per
children
(d) Subscription to NHAI redeemable bonds after 5 years on 16 th March, 2021- Rs 2,00,000.

Further, his son Mr. Dhaval, aged 15 years, has also earned the following income:

(a) Income from a quiz competition - Rs 25,000

(b) Interest on bank fixed deposit - Rs 9,500

Mr. Abhishek does not want to opt for the provision of section 115BAC.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What is the quantum of income of Mr. Dhaval which is to be clubbed with income of Mr.
Abhishek, if any, assuming that income of Mr. Abhishek is greater than the income of his
spouse?

(a) Rs 34,500

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(b) Rs 8,000
(c) Rs 33,000
(d) Rs 9,500

2. What is the gross total income of Mr. Abhishek for A.Y. 2021-22?

(a) Rs 2,13,72,530
(b) Rs 2,14,22,530
(c) Rs 2,13,64,530
(d) Rs 2,15,46,070

3. What is the amount of deduction allowable under section 80C to Mr. Abhishek?

(a) Rs 1,00,000
(b) Rs 1,20,000
(c) Rs 95,000
(d) Rs 75,000

4. What shall be the tax liability of Mr. Abhishek for A.Y. 2021-22?

(a) Rs 62,67,350
(b) Rs 61,04,100
(c) Rs 59,60,050
(d) Rs 61,45,610

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Case Study-18

M/s Abhinav & sons, a sole proprietorship is engaged in the business of manufacturing
pharmaceutical products and it had started its business on 20th June 2016. Tax head of M/s
Abhinav & sons furnishes you the following particulars for the year ended 31 March 2021:

• Income under the head PGBP - Rs 5,75,22,750

• Interest on fixed deposits credited and received on 30th April, 2020 (Gross) - Rs 12,50,000

• Donation to PM Cares Fund - Rs 2,50,000

M/s Abhinav & sons does not want to opt for the provisions of section 115BAC. It has employed
total 150 employees during the P.Y. 2019-20 with an annual increment of 10% in their monthly
emoluments. Details of the same are as under:

Date of No. of Employee Monthly emoluments Participate in recognised

joining employees category per employee (Rs) provident fund
1.5.2019 50 Regular 26,500 Yes
1.6.2019 65 Casual 23,000 No
1.7.2019 35 Regular 22,500 Yes

It has employed further 50 employees during the P.Y. 2020-21. Details of the same are as
under:

Date of No. of Employee Monthly emoluments Participate in recognised

joining employees category per employee (Rs) provident fund
1.4.2020 20 Regular 21,000 Yes
1.8.2020 30 Regular 26,000 Yes

Emoluments to all the employees are being paid by way of account payee cheque only. No
employees have left the job during P.Y. 2019.20 as well during P.Y. 2020-21.

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Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What is the due date of filing of return of income of M/s Abhinav & sons for A.Y. 2021-22?

(a) 31st July, 2021

(b) 30th November, 2021
(c) 30th September, 2021
(d) 31st October, 2021

2. What shall be the amount of deduction available to M/s Abhinav & sons under section
80JJAA for A.Y. 2021- 22?

(a) Rs 36,38,250
(b) Rs 15,12,000
(c) Rs 46,30,500
(d) Rs 33,84,000

3. What would be the total income of M/s Abhinav & sons for the A.Y. 2021-22?

(a) Rs 5,70,10,750
(b) Rs 5,48,84,500
(c) Rs 5,57,60,750
(d) Rs 5,52,64,250

4. What would be the tax payable of M/s Abhinav & sons for the A.Y. 2021-22?

(a) Rs 2,47,47,810
(b) Rs 1,94,68,310

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(c) Rs 2,31,92,680
(d) Rs 2,30,67,680

Case Study-19

Mr. X wanted to file his return of income for the previous year 2020-21. He required assistance
for which he has approached you. He has shared the following details relevant to the P.Y. 2020-
21. Mr. X, owned a house property in Mumbai and the same was rented out for Rs 70,000 p.m.
He claims that this was the only income which he earned during the P.Y. 2020-21. However,
when you had sought for his bank statement, you observed the following information
additionally.

There is a credit for Rs 23,975/- towards income-tax refund which included Rs 5,775
towards interest on income-tax refund. On 15th August, 2020, the bank statement showed a
credit of Rs 55,000 which he claimed to have received as a gift from his grandchildren on his
60thbirthday. On further assessment you were able to understand that Mr. X and his wife had
travelled to Australia during the P.Y. 2020-21 to spend some time with their daughter, who is
staying in Australia, since her marriage. On scrutiny of their passport and relevant
documents you conclude that they had left India on 27th September, 2020 and returned on
30th March, 2021. During the 4 years preceding previous year 2020-21, both had stayed
in India for 320 days. Prior to that, they had been staying only in India.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What is the residential status of Mr. X for the P.Y. 2020-21?

(a) Resident and ordinarily resident

(b) Resident but not ordinarily resident
(c) Non-resident

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(d) Deemed resident but not ordinarily resident

2. Mr. X requests you to compute his tax liability for the A.Y. 2021-22 in a manner such that
his tax liability is minimum. Accordingly, his tax liability would be

(a) Rs 22,750
(b) Rs 29,910
(c) Rs 32,510
(d) Rs 20,150

3. In continuation to question 21.2, what would be tax liability of Mr. X for the A.Y. 2021-22,
if he had paid Rs 1,00,000 towards life insurance premium for self?

(a) Rs 20,150
(b) Rs 29,910
(c) Rs 10,400
(d) Nil

4. Mr. X had given the house property at Mumbai on rent to Mr. Y, a salaried employee.
Is there any requirement to deduct tax at source on such rent by Mr. Y, if yes, what would be
the amount of TDS to be deducted?

(a) No, there is no requirement to deduct tax at source, since Mr. Y is a salaried employee
(b) Yes, Mr. Y is required to deduct tax at source of Rs 42,000
(c) Yes, Mr. Y is required to deduct tax at source of Rs 31,500
(d) No, there is no requirement to deduct tax at source, since Mr. X is a non-resident

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5. Which of the following statements is correct with respect to advance tax liability of Mr. X
for P.Y. 2020-21?

(a) Advance tax liability shall not arise to Mr. X since he is a non-resident
(b) Advance tax liability shall not arise, since Mr. X is a resident senior citizen and he has
no income chargeable under the head ”Profits and gains of business or profession
(c) Advance tax liability shall arise, since he is a non-resident
(d) Advance tax liability shall arise, since his tax liability is not less than Rs 10,000.

Case Study-20

Mrs. Seetha is a retired Government employee. She was born on 20.04.1943 in India. She is
residing in Bangalore. She has stayed with her elder daughter Mrs. Sakhshi from 4th April,
2020 to 18th December, 2020, who is residing in Singapore. She stayed in India for 360 days
during the 4 previous years preceding the previous year 2020-21. During the previous year
2020-21, pension of Rs 8,14,592 (Net of TDS) is credited in her account with State Bank of
India, Town Hall Branch, Bangalore after deducting tax at source of Rs 16,031. She
received interest of Rs 5,945 on her Saving A/c with SBI during the previous year 2020-21. She
also received interest of Rs 58,500 on Fixed Deposits in the month of April, 2020.

She has purchased two life insurance policies for her son Mr. Sohan and married daughter Mrs.
Shobha, the details of which are as follows:

Person insured Policy purchased Date of payment Sum Assured Premium paid
of premium
Mr. Sohan 23.10.2020 23.10.2020 Rs 9,64,655 Rs 1,05,388
(39 year old)
Mrs. Shobha 17.10.2020 17.10.2020 Rs 2,00,000 Rs 20,000
(41 year old)

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She has taken a medical insurance for herself for which she paid an amount of Rs
12,000 towards health insurance premium by A/c payee cheque. She incurred Rs 6,500
towards preventive health check-up of herself and her husband in cash. She also incurred
medical expenditure of Rs 18,000 in cash in the month of January 2021 for her husband. In the
month of March 2021, she incurred medical expenditure of Rs 5,500 for herself, which is paid
by account payee cheque. She has given a wristwatch of Rs 6,000 on her husband's 80th
birthday. Her husband is resident in India for the P.Y. 2020-21. Mrs. Seetha does not opt to pay
tax under section 115BAC.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What would be amount of deduction Chapter VI-A available to Mrs. Seetha for the A.Y.
2021-22?

(a) Rs 1,39,410
(b) Rs 1,43,465
(c) Rs 1,48,333
(d) Rs 1,88,333

2. What would be Gross total income of Mrs. Seetha for the assessment year 2021-22?

(a) Rs 9,01,570
(b) Rs 8,51,570
(c) Rs 8,45,070
(d) Rs 8,35,540

3. What is amount of net tax payable/refundable of Mrs. Seetha for the A.Y. 2021-22?

(a) Rs 50,630
(b) Rs 57,130
(c) Rs 34,600

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(d) Rs 33,760

4. What would be total income of Mrs. Seetha for the assessment year 2021-22, if she opts to
pay tax under section 115BAC?

(a) Rs 9,01,570
(b) Rs 8,51,570
(c) Rs 8,95,070
(d) Rs 8,45,540

5. What is amount of net tax payable/refundable of Mrs. Seetha for the A.Y. 2021-22, if she
opts to pay tax under section 115BAC?

(a) Rs 62,650
(b) Rs 46,610
(c) Rs 12,530
(d) Rs 40,110

Case Study-21

Mr. Zukaro, aged 42 years, a Singapore citizen, visits India for business purpose on a regular
basis. He was in India for the first time in the year2016-17 for 270 days, in the year 2017-18 for
190 days, in the year2018- 19 for 145 days and in the year 2019-20 for 155 days. In the current
financial year 2020-21, he along with his family had come to India on 10th August, 2020 for a
pleasure trip. His family returned to Singapore on 31st August, 2020, however he stayed back
to complete some business commitments and then returned to Singapore on 17thNovember,
2020. Mr. Zukaro owns a manufacturing unit in Singapore. He basically comes to India for

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procurement of raw material. He has appointed Mr. Manish, as a dependent agent in Mumbai,
who procures raw material from India and then exports it to Singapore to its manufacturing
unit and then sells the finished product there. An income of Rs 8,75,000 was received in
Singapore out of this activity in the P.Y. 2020-21. He had purchased a residential property for
Rs17,50,000 in Indore in April 2017. On getting an attractive deal in November, 2020, he sold
the property for Rs 26,25,000. He also paid brokerage @2% on sales consideration.

Mr. Zukaro had also purchased an agricultural land in India and leased it out to a tenant. The
tenant shares a portion of his agricultural income with Mr. Zukaro as a consideration for rent of
land every year. The share in the income from the land for the previous year 2020-21 was Rs
6,50,000.

Cost inflation index (CII) for the Financial Year (F.Y.) 2017-18 is 272; F.Y. 2020-21: 301

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What is the Residential Status of Mr. Zukaro for the assessment year 2021-22?

(a) Resident and ordinarily resident

(b) Resident but not ordinarily resident
(c) Non-resident
(d) Deemed resident but not ordinarily resident

2. Assume for the purpose of answering this question only, that Mr. Zukaro is a non-resident
in India for the P.Y. 2020-21, would income of Rs 8,75,000 earned though activity
of procuring raw material for manufacturing unit in Singapore be taxable in India?

(a) Yes, since it is deemed to accrue or arise in India through a business connection in India

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(b) No, as it is confined to purchase of goods in India for further export and hence not an
income deemed to accrue or arise in India
(c) Yes, as business is controlled from India
(d) No, as income is received outside India

3. Would income arising from transfer of residential property in Indore is chargeable to

tax in India in the hands of Mr. Zukaro? If yes, compute the amount of capital gains
chargeable to tax.

(a) Yes, long term capital gain of Rs 6,35,919 is chargeable to tax, since income is deemed
to accrue or arise in India and hence taxable in his hands though he is non-resident in
India
(b) Yes, long term capital gain of Rs 6,88,419 is chargeable to tax, since he is resident in
India
(c) Yes, long term capital gain of Rs 6,35,919 is chargeable to tax, since he is resident in
India
(d) Yes, long term capital gain of Rs 6,88,419 is chargeable to tax, since income is deemed
to accrue or arise in India and hence taxable in his hands though he is non-resident in
India

4. Would income earned from agricultural land given on lease is taxable in the hands of Mr.
Zukaro?

(a) No, such income is exempt, since it is agricultural income

(b) Yes, such income is taxable as income from house property, since land is given on lease
(c) Yes, such income is taxable as income from other sources, since land is given on lease
(d) Yes, such income is taxable since he is non-resident even though it is an agricultural
income.

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5. What is the tax liability of Mr. Zukaro for A.Y. 2021-22 assuming he does not opt to pay tax
under section 115BAC?

(a) Rs 2,14,680
(b) Rs 2,23,270
(c) Rs 3,04,680
(d) Rs 3,16,870

Case Study-22

Mr. Rajan, aged 62 years, an Indian citizen resides in Delhi. His wife Sheetal and daughter Riya
also reside with him. Riya, aged 16 years, is studying in 12th Standard in DAV school at New
Delhi. Mr. Rajan left for employment to the United States of America on 15'ʰ September,
2020 but his family did not accompany him. He returned to India on 25'ʰ March 2021. Mr.
Rajan had gone outside India for the first time in his life. During April, 2020 to September,
2020, he was working with a multinational company in Delhi. He earned salary of Rs 14,00,000
from his job in India. He paid Tuition Fee of Rs 1,80,000 for Riya's education in DAV
school. Apart from that, Mr. Rajan also earned professional income of Rs 60,00,000 (Gross
Receipts — Rs 90 lakhs) from India. During the year, he also earned interest from his Indian
savings bank account to the tune of Rs 12,000 and interest from fixed deposits with
nationalized banks of Rs 45,000. Mr. Rajan also earned a salary income equivalent to Rs
6,00,000 from USA for his job, on which no tax is paid or payable in USA, which was deposited
in his bank account in USA and later on remitted to India. Mr. Rajan decides not to opt to pay
tax under section 115BAC.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What is the residential status of Mr. Rajan for the previous year 2020-21?

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(a) Resident and ordinarily in India

(b) Resident but not ordinarily resident in India
(c) Non-resident in India
(d) Deemed resident but not ordinarily resident in India

2. What would be the income chargeable to tax under the head “Salaries” in the hands of Mr?
Rajan in India for F.Y. 2020-21?

(a) Rs 20,00,000
(b) Rs 19,50,000
(c) Rs 13,50,000
(d) Rs 19,60,000

3. How much deduction is available under Chapter VI-A from the Gross Total Income of Mr.
Rajan?

(a) Rs 2,30,000
(b) Rs 1,95,000
(c) Rs 1,60,000
(d) Rs 2,00,000

4. What shall be the tax liability of Mr. Rajan for the A.Y. 2021-22?

(a) Rs 22,69,810
(b) Rs 22,58,940
(c) Rs 22,56,010
(d) Rs 22,72,670

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5. What would be the due date for filing income-tax return of Mr. Rajan for the P.Y. 2020-21?

(a) 31st July, 2021

(b) 31st October, 2021
(c) 30th November, 2021
(d) 31st March, 2022

Case Study-23

Mr. A (aged 52 years), is a CEO of XYZ Enterprise Limited. During the previous year 2020-21, he
earned salary of Rs 1,65,00,000 and long-term capital gain on sale of listed equity shares
amounting to Rs 1,06,500. He earned interest of Rs 4,82,778 on saving bank account. Further,
he has provided the following other information for filing his return of income:

He does not receive house rent allowance from his employer. Mr. A took a loan from State
Bank of India on 27th October 2018 for repairing his house (self-occupied) at Delhi and paid
interest on such borrowings of Rs 80,000 and Rs 1,50,000 towards principal amount during the
previous year 2020-21.

Mr. A has made the following payments towards medical insurance premium for health policies
taken for his family members:

Medical premium for his brother: Rs 13,500 (by cheque) Medical premium for his parents: Rs
17,670 (by cheque) Medical premium for self and his wife: Rs 21,000 (by cheque).

He also incurred Rs 6,400 towards preventive health check-up of his wife in cash. He deposited
Rs 1,00,000 towards PPF. He also deposited Rs 50,000 and 2,50,000 towards Tier I and Tier II
NPS

A/c, respectively. He has paid Rs 5,30,000 as advance tax. His employer has deducted tax at
source of Rs 51,89,000. He is of the opinion the balance amount of tax, if any he will pay on

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27th July 2021 (i.e. before the due date for filing of return of income). Mr. A does not want to
opt for section 115BAC.

Based on the facts of the case scenario given above, choose the most appropriate answer to
the following questions:

1. What would be the amount of deduction available to Mr. A under Chapter VI-A for the
assessment year 2021-22?

(a) Rs 2,04,070
(b) Rs 2,42,670
(c) Rs 2,52,670
(d) Rs 2,02,670

2. Assume that, for the purpose of answering this question alone, that Mr. A pays rent of Rs
65,000 per month for his rented house at Mumbai to Mr. C, a resident individual, is Mr. A
liable to deduct TDS on such rent. If so, what would be the rate and amount of TDS?

(a) Yes, Mr. A is liable to deduct TDS @ 3.75% amounting to Rs 2,438 every month i.e., at
the time of payment of such rent
(b) Yes, Mr. A is liable to deduct TDS @5% amounting to Rs 3,250 every month i.e., at the
time of payment of such rent
(c) Yes, Mr. A is liable to deduct TDS @3.75% amounting to Rs 29,250 in the month of
March 2021
(d) No, Mr. A is not liable to deduct TDS, since he is a salaried person

3. What would be the amount of net tax payable for the assessment year 2021-22 in the
hands of Mr. A?

(a) Tax payable of Rs 78,230

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(b) Tax payable of Rs 60,290

(c) Tax payable of Rs 49,530
(d) Tax payable of Rs 67,470

4. What would be the amount of interest chargeable under section 234B on account of
short payment of advance tax?

(a) Rs 1,980
(b) Nil
(c) Rs 3,130
(d) Rs 2,410

Suggested answers

Case Study-1

1. 2. 3. 4.
C C A B

Case Study-2

1. 2. 3. 4.
B C A C

Case Study-3

1. 2. 3. 4. 5.

C A B D A

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Case Study-4

1. 2. 3. 4. 5.
A C A A C

Case Study-5

1. 2. 3. 4.
A C A D

Case Study-6

1. 2. 3. 4.
C C C A

Case Study-7

1. 2. 3. 4. 5.
A D B C C

Case Study-8

1. 2. 3. 4.
B C C D

Case Study-9

1. 2. 3. 4.
C D A B

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Case Study-10

1. 2. 3. 4.
D A C B

Case Study-11

1. 2. 3. 4.
B A C B

Case Study-12

1. 2. 3. 4. 5.
D C D A D

Case Study-13

1. 2. 3. 4.
A C A C

Case Study-14

1. 2. 3. 4.
D C C A

Case Study-15

1. 2. 3. 4.
B C B C

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Case Study-16

1. 2. 3. 4.
B A B A

Case Study-17

1. 2. 3. 4.
B A D B

Case Study-18

1. 2. 3. 4.
D A B D

Case Study-19

1. 2. 3. 4. 5.
A A D C B

Case Study-20

1. 2. 3. 4. 5.
A B C A D

Case Study-21

1. 2. 3. 4. 5.
A B C A D

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Case Study-22

1. 2. 3. 4. 5.
D C D C B

Case Study-23

1. 2. 3. 4.
D C C B

SECTION-B

INDIRECT TAXES

Case Study-1

Mr. Pasupathi, registered taxpayer under GST, is engaged in trading of various types of
consumer goods. His turnover in the preceding financial year was below the threshold limit
liable for registration. He has issued various bill of exchange, unsecured debentures, and
promissory notes in course of his business activity. Further, he is also engaged in betting
activities.

During the month of April in the current year, he availed the following services-

(a) GTA services from XYZ Transports (GST was charged @ 5%) — Rs 35,000

(b) Renting of Godown premises from Local Municipality— Rs 40,000

(c) Legal service availed from a Firm of Advocates — Rs 50,000

He sold a car used for his personal purposes for Rs 1,00,000. He disposed off his old computers
for Rs 60,000 on which no ITC was claimed. He also gave away his stock of old consumer goods

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amounting to Rs 75,000 (on which he had claimed ITC) to an Orphanage Home. He received
goods on 1st May that are liable to tax under reverse charge. Invoice was issued on 5th May
and payment for the same was made on 6th June. He paid repair expenses for truck used for
transportation of goods of his business. GST component involved thereon was Rs 13,000. He
arranged for catering on Labour Day function and paid bill in which GST component was
Rs 15,000. He received first lot of certain goods having GST component of Rs 25,000. All the
amounts given above are exclusive of taxes, wherever applicable. All the supply referred above
is intra-State unless specified otherwise. Conditions necessary for claiming

ITC have been fulfilled subject to the information given above.

Based on the choose the most for questions:-

1. Which of the following is not considered as a supply as per the provisions of CGST Act,
2017?

(i) Bill of Exchange

(ii) Unsecured debentures

(iii) Betting

(iv) Promissory Note

(a) i, ii
(b) i, ii and iii
(c) ii, iii and iv
(d) i, ii and iv

2. Determine the value of services taxable under reverse charge mechanism?

(a) Rs 35,000
(b) Rs 75,000

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(c) Rs 85,000
(d) Rs 1,25,000

3. In respect of sale of personal car and disposal of computer and stock of goods,
value of supply will be

(a) Rs 60,000
(b) Rs 75,000
(c) Rs 1,35,000
(d) Rs 2,35,000

4. Time of Supply of goods received by Mr. Pasupathi is

(a) 1st May

(b) 5sth May
(c) 5th June
(d) 6th June

5. Compute the amount of input tax credit (except ITC on services taxable under reverse
charge mechanism) that can be claimed by Mr. Pasupathi?

(a) Rs 28,000
(b) Rs 38,000
(c) Rs 40,000
(d) Rs 13,000

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Case Study-2

M/s. Vittal & Co., a registered supplier under GST, is dealing in supply of taxable goods
in the State of Karnataka. The firm opted for Composition Scheme since April. It's turnover
crossed Rs 1.50 Crores on 9th May and has opted for withdrawal of composition scheme on the
said date. Vittal & Co. sent goods on 10th June to Suri & Co. on ‘Sale or Return Basis’. Suri & Co.
accepted the goods vide its confirmation mail dated 15th December.

The firm has paid GST for various items during the month of August. It comprised of the
following-

(a) GST paid on input services intended to be used for personal purposes — Rs 12,000

(b) GST paid on purchase of Motor Vehicle for business use (being a two-wheeler having
engine capacity of 25CC) — Rs 9,000

(c) GST paid on purchase of computer — Rs 19,000

(GST portion was included as part of cost to claim depreciation under Income-tax Act, 1961)
During May, Vittal and Co. had reversed ITC of Rs 10,000 for not making payment to Vendors
within the time prescribed under CGST Act, 2017. This pending payment was cleared in the
month of August. Out of purchases made and ITC availed during earlier months, the following
information is made available as on September:

Supplier Name Payment is due for (Number of days) Related ITC Component
XYZ 165 7 13,000
ABC 199 7 15,000
PQR 99 7 20,000

Vittal & Co received accounting services from Raghu & Co., an associated enterprise, located in
Sri Lanka. Raghu & Co. issued invoice for the service on 1st September, which was entered by
Vittal & Co. in its book on 10th October. But payment was made on 30th September. All the

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supply referred above is intra-State unless specified otherwise. Conditions applicable for
availment of ITC are fulfilled subject to the information given above.

Based on the information provided above, choose the most appropriate answer for the
following questions-

1. Vittal & Co. needs to furnish a statement containing details of stock of inputs/ inputs held
in finished goods on the withdrawal of composition scheme by

(a) 9th May

(b) 23rd May
(c) 8th June
(d) 7th July

2. In respect of the goods sent on sale or return basis, Vittal & Co. shall issue the invoice by

(a) 10th June

(b) 10th September
(c) 10th December
(d) 15th December

3. Determine the amount of eligible input tax credit that can be availed by Vittal & Co for the
month of August?

(a) Nil
(b) Rs 19,000
(c) Rs 22,000
(d) Rs 50,000

4. Compute the amount of ITC to be reversed for the month of September?

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(a) Nil
(b) Rs 28,000
(c) Rs 15,000
(d) Rs 13,000

5. Time of supply in respect of service imported by Vittal & Co from its Associated Enterprise
is

(a) 1st September

(b) 30th September
(c) 1st October
(d) 10th October

Case Study-3

M/s. Triambak & Co., a LLP registered dealer under GST is engaged in various types of business
activities. It provided GTA services to Government Department, registered under GST for
providing various services. The firm provided services of Direct Selling Agency (DSA Services) to
NBFC located in Mumbai. The firm also provided gift to each of its employees valuing Rs 50,000
once in a financial year. M/s Triambak & Co let out its warehouse to Mr. Grushnesh, who in
turn let out to an Agriculturist for warehousing of agri produce. The firm also undertakes milling
of paddy into rice for various agriculturists. The firm was served with an order by the GST
authority demanding to pay GST on two counts-

(a) Demand to pay GST of Rs 45,000 for suppression of sales figures in monthly returns

(b) Demand to pay GST Rs 55,000 for fraudulently obtaining refund of GST. Further, in a
particular month, the GST liability of the firm was Rs 20,000 IGST; Rs 10,000 CGST; Rs 10,000
SGST. The following credits were available in the said month-

IGST: Rs 8,000

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CGST: Rs 12,000

SGST: Rs 5,000

All the amounts given above are exclusive of taxes, wherever applicable. All the supply referred
above is intra-State unless specified otherwise. Conditions for availing ITC are fulfilled subject to
the information given above.

Based on the information provided above, choose the most appropriate answer for the
following questions-

1. Choose the correct statement(s).

(i) For GTA services, Government is liable to pay GST under reverse charge

(ii) For DSA services, NBFC is liable to pay GST under reverse charge

(iii) For GTA services, Triambak & Co is liable to pay GST under forward charge

(iv) For DSA services, Triambak & Co is liable to pay GST under forward charge

(a) i & ii
(b) iii & iv
(c) i & iv
(d) ii & iv

2. Gift of T 50,000 in value provided by Triambak & Co to each of its employee will be

(a) Supply of goods

(b) Supply of services
(c) Both supply of goods and services
(d) Neither supply of goods nor supply of services

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3. Which of the following statement is correct:-

(i) Letting out of warehouse to Grushnesh is exempt

(ii) Milling of paddy into rice is exempt

(iii) Letting out of warehouse to Grushnesh is not exempt

(iv) Milling of paddy into rice is not exempt

(a) i & ii
(b) iii & iv
(c) i & iv
(d) ii & iii

4. M/s Triambak & Co is eligible to claim input tax credit of

(a) Rs 45,000
(b) Rs 55,000
(c) Rs 1,00,000
(d) Nil

5. Compute the GST liability of the firm to be paid in cash?

(a) IGST: Rs 10,000; CGST: Nil, SGST: Rs 5000

(b) IGST: Rs 12,000; CGST: Nil; SGST: Rs 5000
(c) IGST: Nil; CGST: Rs 10,000, SGST: Rs 5000
(d) IGST: 5,000; CGST: Nil, SGST: Rs 10,000

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Case Study-4

Ms. Chanchala, a Doctor having in-patient facility in her hospital is a registered person under
GST. She availed interior decoration services from her spouse without any consideration
being paid. She also availed IT related services from her sister-in-law without any
consideration. Both services were for the purpose of her profession. Ms. Chanchala provided
treatment of various diseases in her hospital and apart from that she also provided the
following services in her hospital-

(a) Plastic surgery to enhance the beauty of the face

(b) Ambulance service for transportation of patients

(c) Renting of space to run medical store in hospital premises

She is also a consultant in other hospitals and received Rs 40,00,000 as consultancy fee
from the other hospitals. Further, she also provides canteen facility and received Rs 55,000
from in-patients, Rs 35,000 from patients who are not admitted and Rs 25,000 from visitors for
the same facility. She filed GSTR-3B for the month of June with some errors. She filed the
Annual return for the said financial year on 31st October of the next year, whereas due date for
the said Annual return is 31st December of the next year. Proper Officer of the department
cancelled the registration certificate of Ms. Chanchala suo-motu on 31st July. Order of
cancellation was served on 5th August. However, she applied for revocation of the same and
got her registration certificate revoked. All the amounts given above are exclusive of taxes,
wherever applicable. All the supply referred above is intra-State unless specified otherwise.

From the information given above, choose the most appropriate answer for the following
questions-

1. Which of the following is a correct statement as per the provisions of CGST Act, 2017?

(i) Service availed from her Spouse is a deemed supply

(ii) Service availed from her Sister-in-Law is a deemed supply

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(iii) Service availed from her Spouse is not a deemed supply

(iv) Service availed from her Sister-in-Law is not a deemed supply

(a) i and iv
(b) (iii) and (iv)
(c) (ii) and (iii)
(d) (i) and (ii)

2. Compute the taxable value of supply of canteen service provided by Ms. Chanchala?

(a) Rs 25,000
(b) Rs 35,000
(c) Rs 60,000
(d) Rs 80,000

3. Ms. Chanchala should have applied for revocation of cancellation of registration certificate
by

(a) 5th August

(b) 20th August
(c) 30th August
(d) 4th September

4. Maximum time permissible for rectification of error committed in monthIy return of June is

(a) 20th July

(b) 20th October of the next 'year
(c) 31st October of the next year

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(d) 31st December of the next year

5. Determine which of the following services provided by Ms. Chanchala and her hospital is
exempt from GST?

(i) Plastic surgery to enhance the beauty of the face

(ii) Ambulance service for transportation of patients

(iii) Renting of space to run medical store in hospital premises

(iv) Consultancy service by Ms. Chanchal a in other hospitals

(a) (i), (ii) & (iv)

(b) (i), (ii)
(c) ii & iv
(d) (i) & (iii)

Case Study-5

M/s. Visali & Co, a Partnership firm, is engaged in manufacturing of equipments in the State of
Kerala. The firm became liable for registration on 10th July. It applied for registration on 10th
August and was granted registration certificate by 14th August. The firm received sponsorship
services from “Leisure Treat Bay Private limited" for conducting a business expo. It received a
consignment from M/s. Safe Logistics, a GTA, which charged 6% each CGST and SGST for its
services. It also received security services from Prompt Security Agency Pvt. Ltd.

The firm had opted for composition levy and its turnover for the quarter ending September was
Rs 14 lakh, out of which taxable supply amounted to Rs 10 Lakh and exempt supply amounted
to Rs 4 Lakh. The firm made a supply of equipments to an unrelated limited company in the

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month of October having market value of Rs 12 Lakh, wholesale value of Rs 13 Lakh and
maximum retail price was Rs 14 lakh. However, the transaction was made at Rs 11 lakh.

The firm belatedly paid the tax amounting to Rs 40,000 for the quarter ending December on
09th February of the succeeding year.

All the amounts given above are exclusive of taxes, wherever applicable. All the supply referred
above is intra-State unless specified otherwise.

Based on above, choose the most appropriate for the questions:-

1. The effective date of registration of M/s. Visali & Co is

(a) 10th July

(b) 9th August
(c) 10th August
(d) 14th August

2. Amongst the services availed by M/s. Visali & Co, which of the following services are
taxable under reverse charge mechanism?

(i) Sponsorship services received from Leisure Treat Bay Pvt. Ltd. Co.

(ii) GTA Services received from Safe Logistics

(iii) Security Services received from Prompt Security Agency Pvt. Ltd.

(a) i
(b) i & ii
(c) i & iii
(d) ii & iii

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3. Determine the value of supply of equipments under section 15(1) of CGST Act, 2017 made
by M/s. Visali & Co. in the month of October?

(a) Rs 14 lakh
(b) Rs 13 lakh
(c) Rs 12 lakh
(d) Rs 11 lakh

4. Compute the tax payable by the firm for the quarter ending September under CGST and
SGST?

(a) Rs 5,000 each

(b) Rs 7,000 each
(c) Rs 10,000 each
(d) Rs 35,000 each

5. Compute the interest payable by the firm for the belated payment of tax?

(a) Rs 395
(b) Rs 434
(c) Rs 414
(d) Rs 552

Case Study-6

Mr Mandeep, a registered dealer, is engaged in the business of supplying construction material

in the State of Assam. He availed architect services for his business from his friend in London

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free of cost. He also availed designing services from his brother in London for Rs 5 lakh for his
personal purposes. He availed services which are liable to tax under reverse charge for which
date of invoice was 1st September, payment date as per his books of account and as per
his bank account was 15th November and 18th November respectively.

His turnover for the current financial year is as follows-

Taxable supply of goods — Rs 55 lakh

Exempt supply of goods — Rs 16 lakh

Inward supply liable to tax under reverse charge — Rs 8 Lakh

He intends to start providing services also from the next financial year and also to avail
composition scheme under section 10(1) of the CGST Act, 2017. He also wishes to make
supplies to the Government. All the amounts given above are exclusive of taxes, wherever
applicable. All the supply referred above is intra-State unless specified otherwise.

Based on the information give above, choose the most appropriate answer for the following
questions:-

1. In respect of services imported by Mr. Mandeep, which of the following is a correct

statement?

i. Architect services for his business from his friend in London free of cost is considered as a
supply

ii. Designing services from his brother in London for Rs 5 Lakh for his personal purposes is
considered as a supply.

iii. Architect services for his business from his friend in London free of cost is not considered
as a supply

iv. Designing services from his brother in London for' 5 Lakh for his personal purposes is not
considered as a supply.

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(a) i & ii
(b) i & iv
(c) ii & iii
(d) iii & iv

2. Determine the time of supply of services, received by Mr. Mandeep and taxable under
reverse charge?

(a) 1st September

(b) 1st November
(c) 15th November
(d) 18th November

3. Compute the aggregate turnover of Mr. Mandeep for the given financial year?

(a) Rs 63 lakh
(b) Rs 79 lakh
(c) Rs 71 lakh
(d) Rs 55 lakh

4. Mr Mandeep will be eligible for composition scheme under section 10(1) of the CGST Act,
2017, in the next financial year, but he can supply services only upto

(a) Rs 5.00 lakh

(b) Rs 6.3 lakh
(c) Rs 7.90 lakh
(d) Rs 7.10 lakh

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5. In case he supplies services to State Government by way of any activity in relation to any
function entrusted to a Municipality under Article 243W of the Constitution, in the next
financial year, which of the following will be exempt?

i. Pure Services

ii. Composite supply of goods and services in which value of supply of goods constitutes not
more than 25% of value of said composite supply

iii. Composite supply of goods and services in which value of supply of service constitutes not
more than 25% of value of said composite supply

(a) i & iii

(b) ii & iii
(c) i ,ii & iii
(d) i & ii

Case Study-7

Ms. Riya is a multi-faceted business personality. She is registered under GST from April, this
year She supplied a package consisting of stapler, calculator and charger at a single price of Rs
300/. Rate of GST for stapler, calculator and charger is 5%, 12% and 18% respectively. She
wants to opt for composition levy. She received following payments during the month of May:

 earned Rs 160,000 by performing a western music in a cultural event at a Resort

 Earned Rs 50,000 by providing services by way of renting of residential dwelling for use as
boutique.
 received Rs 70,000 by way of rent for letting of agro machinery

Ms. Riya made a supply during June, details of which are as follows-

 Basic price of the product before TCS under Income Tax Act, 1961— Rs 45,000
 Tax collected at source under Income-tax Act, 1961 — Rs 2,500

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 She received a subsidy of Rs 3,500 from Green Foundation Pvt. Ltd for usage of green
energy and the subsidy was linked to saving energy

Ms. Riya provides the following information regarding receipt of inward supply during July-

 Received invoice for goods having GST component of Rs 30,000. Goods were to be
delivered in 5 lots, out of which three lots were received in the current month.
 purchased a car having GST component of Rs 1,50,000 for the usage in a driving school
owned by her
 availed health insurance service for her employees on her own and paid GST of Rs 7,000
thereon

All the amounts given above are exclusive of taxes, wherever applicable. All the supply referred
above is intra-State unless specified otherwise. Conditions necessary for claiming input tax
credit (ITC) have been fulfilled subject to the information given above.

From the information given above, choose the most appropriate answer for the following
questions:-

1. What would be the nature of supply and the applicable rate of GST for the supply of
package made by Ms. Riya (when not registered under composition scheme):-

(a) composite Supply & applicable rate 12%

(b) mixed Supply & applicable rate 18%
(c) composite Supply & applicable rate 18%
(d) mixed Supply & applicable rate 12%

2. Ms. Riya can opt for composition scheme if she does not undertake the supply of

(i) Aerated water

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(ii) Tobacco

(iii) Pan masala

(iv) Milk

(a) i & ii
(b) iii & iv
(c) i, ii & iii
(d) ii, iii & iv

3. Out of payments received by Ms. Riya in month of May , exempt Supply amounts to

(a) Rs 50,000
(b) Rs 70,000
(c) Rs 1,20,000
(d) Rs 1,60,000

4. Compute the value of supply under section 15 of CGST Act, 2017 made by Ms Riya?

(a) Rs 45,000
(b) Rs 47,500
(c) Rs 48,500
(d) Rs 51,000

5. Compute the amount of input tax credit that can be claimed by Ms. Riya?

(a) Rs 30,000
(b) Rs 37,000
(c) Rs 1,50,000
(d) Rs 1,57,000

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Case Study-8

M/s. Shanky Consultants, a partnership firm registered in Delhi, renders following services
during the year:

(i) Security services: Rs 2,00,00,000/ to registered business entities.

(ii) Manpower services (Accountants): Rs 5,00,000/-

(iii) Auditing services: Rs 1,00,00,000/-

Other Information:

(i) Shanky Consultants also paid sponsorship fees of Rs 70,000/- at seminar organized by a
private NGO (a partnership firm) in Delhi.

(ii) Shanky Consultant pays rent amounting to Rs 6,00,000/- for a building owned by MCD.

(iii) Assume all services are taxable at 18% and all transactions to be intra-State supplies.

Based on the above information, answer the following questions:

1. What is the aggregate turnover of Shanky Consultants?

(a) Rs 3,05,00,000/-
(b) Rs 3,05,70,000/-
(c) Rs 1,05,00,000/-
(d) Rs 1,05,70,000/-

2. GST liability paid under reverse charge by Shanky Consultants is?

(a) CGST: Rs 60,300/-, SGST: Rs 60,300/-

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(b) CGST: Rs 6,300/-, SGST: Rs 6,300/-

(c) CGST: Rs 54,000/-, SGST: Rs 54,000/-
(d) None of the above

3. State which of the following statement is true in respect of security services provided by
Shanky Consultants to registered business entities:

(a) Shanky Consultants shall issue GST compliant tax invoice.

(b) Shanky Consultants shall issue bill of supply stating “Tax to be paid by service recipient
under reverse charge”.
(c) Shanky Consultants can issue any document in lieu of tax invoice.
(d) Shanky Consultants shall issue receipt voucher every time Shanky Consultants receives
payment.

Case Study-9

PTL Pvt. Ltd. is a retail store of merchandise located in 25 States and/or UTs in the country. For
the purpose of clearance of stock of merchandise and to attract consumers, PTL Pvt. Ltd.
launched scheme of “Buy One Get One Free” for the same type of merchandise, for instance,
one shirt to be given free with purchase of one shirt. For saving cost, PTL Pvt. Ltd. directly
purchases merchandise from the manufacturers.

In the month of May, in order to save employee cost, PTL Pvt. Ltd. purchased a tempo
traveller worth Rs 12,00,000 with seating capacity of 25 persons (including driver) for
transportation of its employees. Further, for ensuring the well-being of its employees, PTL Pvt.
Ltd. voluntarily obtained the health insurance cover of Rs 2,00,000 for each employee in the
same month. The premium of Rs 1,500 per employee has been paid by the company for 100
employees. In the month of July, Mr. Raghav, a customer of the company, filed a law

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suit in the Court, against the company for not supplying goods of the value of Rs
1,00,000. PTL Pvt. Ltd. engaged Mr. Ram, an advocate, to represent it in Court for an agreed
consideration of Rs 25,000. As per the terms of the contract, Mr. Ram issued an invoice on
Sth July. However, consideration was not paid till February next year. All the amounts given
above are excluding taxes and all transactions are intra-state transactions. Rates of tax are
CGST - 9% and SGST — 9%. However, for tempo traveller, the rates of taxes are CGST - 14%
and SGST— 14%.

In relation to the above, answer the following questions:

1. With respect to “Buy One, Get One free” offer, which of the following statements is true:

(a) It will not be considered as supply at all since no consideration is involved in one of the
items.
(b) Supply of item for which consideration is charged is a supply under section 7 of the
CGST Act, 2017 while supply of the other item supplied free of cost is not a supply.
(c) These are two individual supplies where a single price is charged for the entire
supply. Since a single price is charged, the same will always be taxed as a mixed
supply.
(d) These are two individual supplies where a single price is charged for the entire supply.
Their taxability will depend upon as to whether the supply is a composite supply or a
mixed supply.

2. Eligible input tax credit for the month of May (i) on the purchase of tempo traveller
and (ii) on health insurance premium paid (assuming that all other conditions, for availing
input tax credit have been complied with) is:

(a) (i) CGST - Nil, SGST - Nil and (ii) CGST - Nil, SGST - Nil
(b) (i) CGST - Rs 1,68,000, SGST - Rs 1,68,000 and (ii) CGST - Nil, SGST - Nil
(c) (i) CGST - Nil, SGST - Nil and (ii) CGST - Rs 18,000, SGST - Rs 18,000
(d) (i) CGST - Rs 1,68,000, SGST - Rs 1,68,000 and (ii) CGST - Rs 18,000, SGST - Rs 18,000

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3. Which of the following statements is true in respect of the services of advocate availed by
the company?

(a) CGST-T 2,250 and SGST- Rs 2,250 on advocate services are payable by PTL Pvt Ltd. ITC
availed thereon is to be added to its output tax liability with interest as consideration
along with tax is not paid within 180 days of the issuance of invoice.
(b) CGST- Rs 2,250 and SGST- Rs 2,250 on advocate services are payable by Mr. Ram. ITC
availed thereon is to be added to output tax liability of PTL Pvt Ltd. with interest as
consideration along with tax is not paid within 180 days of the issuance of invoice.
(c) CGST- Rs 2,250 and SGST- Rs 2,250 on advocate services are payable by PTL Pvt. Ltd.
The condition of payment of consideration along with tax within 180 days of the
issuance of invoice does not apply in the given case.
(d) CGST- Rs 2,250 and SGST- Rs 2,250 on advocate services are payable by Mr. Ram. The
condition of payment of consideration along with tax within 180 days of the issuance
of invoice does not apply in the given case.

Case Study-10

Mr. Kumar started interior designing practice from the month of January. His turnover up to
the month of March was Rs 12,50,000. On 30th June, his turnover exceeded Rs 20,00,000 &
reached to Rs 20,05,000. Mr. Kumar applied for GST registration (as regular taxpayer) on
15th July and registration was granted to him on 25th July. On 16th July, he entered into a
contract for designing the flat of Mr. Shyam. The service was completed on 22nd July and Mr.
Kumar issued invoice on the same day for Rs 6,00,000. On Sth July, Mr. Kumar purchased
capital goods amounting to Rs 4,50,000 and from 25th July to 31st July, he availed services
amounting to Rs 1,75,000 for the purpose of completing the service. On 1st August, Mr. Kumar
got another contract for interior designing from Mr. Ram, which he accepted on 2nd August.

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The service was completed on 6th August and invoice was issued on 7th August for Rs 5,00,000.
Payment was received on 29th August. All values are excluding taxes, unless specifically
mentioned. Mr. Kumar makes only intra-State outward supplies and all purchases are also
intra-State. Rates of tax are CGST - 9% and SGST — 9%.

In relation to the above, answer the following questions:

1. The effective date of registration for Mr. Kumar is-

(a) 30th June

(b) 15th July
(c) 25th July
(d) 16th July

2. Mr. Kumar can issue a revised tax invoice till-

(a) 23rd October

(b) 8th September
(c) 25th September
(d) 25th August

3. Eligible input tax credit available with Mr. Kumar for the month of July is-

(a) CGST Rs 40,500 & SGST Rs 40,500

(b) CGST Rs 15,750 & SGST Rs 15,750
(c) CGST Rs 56,250 & SGST Rs 56,250
(d) CGST Rs 36,000 & SGST Rs 36,000

4. The time of supply of services provided by Mr. Kumar to Mr. Ram is-

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(a) 7th August

(b) 1st August
(c) 29th August
(d) 6th August

5. If instead of opting for regular scheme, Mr. Kumar opts to pay tax under section 10(2A)
of the CGST Act, 2017, the tax liability for the month of July will be-

(a) CGST Nil and SGST Nil

(b) CGST Rs 54,000 & SGST Rs 54,000
(c) CGST Rs 18,000 & SGST Rs 18,000
(d) CGST Rs 78,150 & SGST Rs 78,150

Case Study-11

Ms. Neha is engaged in supply of services. She is registered under GST and has opted to
pay tax under composition scheme for service provider under section 10(2A) of the CGST Act.
The turnover for the quarter ending June was Rs 12,00,000.

During July, she crossed the aggregate turnover of Rs 50 lakh and opted out of composition
scheme.

She also started trading of goods in July.

She supplied an order to Breathe Well LLP on ex factory basis, the details of which are as
follows-

Particulars Rs
i. Basic price of the product 53,000
Ii Outward freight 12,000
iii. Packing charges 5,000
iv. Discount given on receiving payment – (not included in invoice) 2,000

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For supplies, provided to Breathe Well LLP, she received half of the amount in advance on 22nd
July. The goods were dispatched from her factory on 25th July and delivered on 28th July. She
raised the invoice on 30th July and the balance payment was also received on the same date.
Ms. Neha received 25 invoices from various suppliers involving GST of Rs 1,50,000 for
the month of July. While filing GSTR-3B for the said month on 20th August, she found that only
20 invoices involving GST of Rs 1,00,000 were uploaded by the suppliers.

Ms. Neha supplied goods to the following persons-

Receipt Value of supply

1 Mr. Pawan- an unregistered person Rs 150
2 Mr. Umesh, a registered person Rs 110
3 Rains Trust, an unregistered entity Rs 250

None of the above persons requires a tax invoice.

All the amounts given above are exclusive of taxes, wherever applicable. All the supply referred
above is intra-state unless specified otherwise. Conditions applicable for availment of ITC are
fulfilled subject to the information given above.

1. Compute the tax liability for the quarter ending June under CGST and SGST?

(a) Rs 30,000 each

(b) Rs 12,000 each
(c) Rs 6,000 each
(d) Rs 36,000 each

2. Compute the value of Supply made by Ms. Neha to Breathe Wall LLP?

(a) Rs 56,000

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(b) Rs 58,000
(c) Rs 68,000
(d) Rs 75,000

3. Determine the amount of ITC that can be claimed by Ms. Neha for the month of July?

(a) Rs 1,00,000
(b) Rs 1,10,000
(c) Rs 1,20,000
(d) Rs 1,50,000

4. Determine the time of supply made to Breathe Wall LLP?

(a) 22nd July

(b) 25th July
(c) 28th July
(d) 30th July

5. Ms. Neha need not issue invoice to which of the following persons?

(a) Mr. Pawan

(b) Mr. Pawan and Umesh
(c) Mr. Pawan and Rains Trust
(d) Need not issue invoice to all the three persons

Case Study-12

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Poorva Logistics is a Goods Transport Agency registered under GST. It provided GTA services
(taxable @ 5%) to the following persons-

(a) Kunal Traders, an unregistered Partnership firm

(b) Mr. Amar, a casual taxable person, who is not registered under GST

(c) Small Traders co-operative society registered under Societies Registration Act

In a particular consignment, Poorva Logistics transported the following-

(a) Defence Equipments

(b) Railway Equipments

(c) Organic Manure

Poorva Logistics opted to charge GST @ 12% from October. It provided GTA Services to Bama
Steels Pvt. Ltd. on 1st October and issued an invoice dated 5th November. Payment was
received on 6th November. It provided both inter-State and intra-State service to various
registered as well as unregistered persons.

Based on the information provide above, choose the most appropriate answer for the following
questions:

1. Which of the following persons are liable to pay GST on reverse charge in respect
of the GTA services (taxable @5%) provided by Poorva Logistics

(i) Kunal Traders

(ii) Mr. Amar

(iii) Small Traders Co-operative society

(a) i & ii
(b) ii & iii
(c) i & iii

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(d) i, ii & iii

2. Out of items transported by Poorva Logistics, which of the following is/ are exempt from
GST?

i. Defence Equipments

ii. Railway Equipments

iii. Organic Manure

(a) i
(b) i & ii
(c) i & iii
(d) i, ii & iii

3. What will be the time of supply in respect of the services provided by Poorva Logistics to
Bama Steels Pvt. Ltd.?

(a) 6th November

(b) 5th November
(c) 30th November
(d) 1st October

4. Which of the following statements is correct in respect of services provided by Poorva

Logistics to Bama Steels Pvt. Ltd.

(a) Barna Steels Pvt. Ltd. is liable to pay GST

(b) Poorva Logistics is liable to pa'y GST
(c) Service provided by Poorva Logistics to Barna Steels Pvt. Ltd. is exempt under GST

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(d) Barna Steels Pvt. Ltd. is liable to pay 50% GST and remaining 50% will be paid by Poorva
Logistics

5. In respect of which of the following supplies, Poorva Logistics has to provide invoice-wise
details in GSTR- 1?

i. Inter-State supplies to registered person with invoice value not exceeding Rs 250,000

ii. Inter-State supplies to unregistered person with invoice value not exceeding Rs 250,000

iii. Inter-State supplies to unregistered person with invoice value exceeding Rs 250,000

iv. Intra-State supplies to registered person with invoice value not exceeding Rs 2,50,000

(a) i & iv
(b) i & ii
(c) ii & iii
(d) i, iii & iv

Case Study-13

Vedanshi & Co., a partnership firm, is engaged in retail trade since 1st April. The firm
became liable for registration on 1st October. However, it applied for registration on 10th
October. It had inputs held in stock, semi finished and finished goods. The firm was granted
certificate of registration on 5th November. Vedanshi & Co. needs to transport one
consignment to the transporter and then to the consignee. The distance between godown
of the firm and the transporter is 20 kms and from the place of transporter to consignee is 99
kms. In the month of November, the firm received 80 invoices for various inward supplies
on which total GST paid was Rs 8 lakh. However, only 60 invoices involving GST of Rs 7.50

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lakh was uploaded in GSTR-1 by the respective suppliers. Also, while filing return for the
month of November, the firm generated E-ChaIIan on 5th December for making payment
of GST through RTGS of their bank. All the supply referred above is intra-State unless specified
otherwise. Conditions applicable for availment of ITC are fulfilled subject to the information
given above.

From the information provided above, choose the most appropriate answer for the following
questions:-

1. Determine the effective date of registration of Vedanshi & Co.?

(a) 1st April

(b) 1st October
(c) 10th October
(d) 5th November

2. Vedanshi & Co. is eligible to claim ITC in respect of inputs held in stock as on-

(a) 30th September

(b) 1st October
(c) 10th October
(d) Not eligible to claim ITC

3. Which of the following statements is true in respect of furnishing of details of conveyance

in Part B of e way bill?

(a) Part B need not be filed in respect of transport of consignment from Godown to
transporter location.
(b) Part B need not be filed in respect of transport of consignment from transporter
location to consignee's location.

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(c) Information in Part-B is neither required in transport of consignment from

Godown to transporter location nor from transporter location to consignee's
location.
(d) Information in Part-B is mandatory in in transport of consignment from Godown to
transporter location and from transporter location to consignee’s location.

4. Compute the amount of ITC that can be claimed by Vedanshi & Co for the month of
November?

(a) Rs 7,50,000
(b) Rs 8,00,000
(c) Rs 8,25,000
(d) Rs 6,75,000

5. Determine the validity of E-ChaIIan generated by Vedanshi & Co. for payment of taxes for
the month of November?

(a) 5th December

(b) 15th December
(c) 20th December
(d) 31st December

Case Study-14

M/s. Safe Bank Ltd., a small finance bank, was incorporated in April this year. The bank got
registered under GST immediately on its incorporation as a banking company. M/s. Safe Bank
Ltd. received software support service from its Head office (HO) located in United Kingdom. No

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amount was charged by HO for the said service. Value of the said service was Rs 4,10,000. M/s.
Safe Bank Ltd. provided one high end laptop worth Rs 50,000 to its new Managing Director as a
gift for discharge of his duties. Initially the bank opened 125 branches across India covering
various States. In order to secure business, the bank appointed ‘Quick Loan Providers LLP,’ a
direct selling agent, on PAN India basis. The bank was in need of services of recovery agents for
various retail and personal loans granted by its branches. For this purpose, the bank appointed
‘Fast Recovery Services Pvt. Ltd.’, a recovery agent, on PAN India basis. M/s. Safe Bank Ltd.
provided the following details for the month of May-

SI. No Nature of receipt Amount in Rs

i. Interest received on term loan 10,75,000
ii. Interest received on credit card transactions 6,20,000
iii. Interest received on fixed deposit held SBI, Mumbai 25,00,000
iv. Commission received on letter of credit issued 3,00,000
v. Documentation charges collected from borrowers 1,25,000
vi. Sale of foreign exchange to Authorized dealers of bank of Rajasthan 15,60,000

17(4) of CGST Act, 2017, for claiming input tax credit in respect of its operations. For the month
of May, the relevant details are as follows-

i. GST paid on eligible input services — Rs 12,00,000

ii. GST paid on eligible capital goods — Rs 6,00,000

iii. GST paid on items whose credit is blocked under section 17(5) of CGST Act — Rs 4,00,000

iv. GST paid on services availed from within the same Bank having distinct registration — Rs
2,00,000

All the amounts given above are exclusive of taxes wherever applicable. All the supply referred
above is intra-state unless specified otherwise.

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Based on the information given above, choose the most appropriate answer for the following
questions:-

1. Determine the value of deemed supply in the case study given above?

(a) Rs Nil
(b) Rs 50,000
(c) Rs 4,10,000
(d) Rs 4,60,000

2. In respect of services availed by M/s. Safe Bank Ltd., the bank shall pay tax under reverse
charge for which of the following services?

(a) Service availed from ‘Quick Loan Providers LLP’

(b) Service availed from ‘Fast Recovery Services Pvt. Ltd.’
(c) Both (a) and (b)
(d) None of the services availed attracts RCM

3. Compute the value of exempt supply provided by M/s. Safe Bank Ltd. for the month of
May?

(a) Rs 15,00,000
(b) Rs 41,95,000
(c) Rs 51,35,000
(d) Rs 66,95,000

4. Compute the value of taxable supply made by M/s. Safe Bank Ltd. for the month of May?

(a) Rs 10,45,000

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(b) Rs 21,20,000
(c) Rs 36,80,000
(d) Rs 61,80,000

5. Determine the amount of ITC that can be claimed by M/s. Safe Bank Ltd.?

(a) Rs 11,00,000
(b) Rs 18,00,000
(c) Rs 20,00,000
(d) Rs 24,00,000

Case Study-15

M/s. KBC Insurance Ltd., is an insurance company providing life and non-life products
across India. The company is carrying on its business for the past three years with the approval
of IRDA.

M/s. KBC Insurance Ltd. secure its business through various insurance agents spread across
India. Those agents include individuals, firm, LLP and private limited company also. However,
all of them are licensed under Insurance Act.

The company availed services of renting of motor vehicles for its employees in PAN India
through ‘RR Travels Private Limited’, where cost of fuel is included in the consideration charged.
The service provider charged 5% GST and informed the company that it is claiming ITC only in
respect of the same line of business. M/s. KBC Insurance Ltd. provided the following details of
insurance business for the month of May-

SI. No. Nature of receipt Amount in Rs

i. Premium received on Pradhan Mantri Jan dhan Yojana 5,00,000
ii. Premium received on Aam Aadmi Bima Yojana 3,00,000
iii. Premium received on life micro-insurance product having a sum 4,00,000

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assured of Rs 2.50 lakh

iv. Premium received on reinsurance of Group personal accident policy 1,00,000
for self-employed women
v. Premium received on Fire and special perils policy of various 7,00,000
business units
vi. Premium received on Money-back policies issued 12,00,000

M/s. KBC Insurance Ltd. received a proposal for pandemic Insurance for IPL matches from the
franchisees. Sum assured for said insurance was Rs 250 Crores with a premium of Rs 50 lakh.
The company issued the said policy on 1st July. Invoice for the same was issued on 5th August.
Premium was received on 14th August. Invoice dated 5th August issued by the company
contained the following information,

i. Serial Number

ii. Name of the Recipient

iii. Address of the recipient

iv. Taxable value

v. Date of its issue

vi. Amount of tax charged

M/s. KBC Insurance Ltd. received the following supplies in the month of May and the details of
GST paid on such supplies are as follows-

i. GST paid on purchase of car for use of Managing Director — Rs 5,00,000

ii. GST paid on bus (seating capacity for 14 persons) purchased by the company for
transportation of its employees from their residence to office and back — Rs 3,00,000

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iii. GST of Rs 80,000 was paid on general insurance taken from Amity Insurance Ltd. for motor
vehicles for transportation of persons with seating capacity 13 persons (including the driver)
which were used in transportation of staff of the company. All the amounts given above are
exclusive of taxes wherever applicable.

All the supply referred above is intra-State unless specified otherwise. Aggregate turnover of
the company is not less than Rs 10 crores for the past three years. Conditions necessary for
availment of ITC are fulfilled subject to the information given.

Based on the information given above, choose the most appropriate answer
for the following questions:-

1. Determine the services on which the company is liable to pay tax under reverse charge?

(a) Service availed from insurance agents

(b) Service availed from RR Travels Private Limited
(c) None of the services availed attracts RCM
(d) Both (a) & (b)

2. Compute the value of exempt supply provided by M/s. KBC Insurance Ltd. for the month of
May?

(a) Rs 9,00,000
(b) Rs 13,00,000
(c) Rs 20,00,000
(d) Rs 32,00,000

3. Compute the value of taxable Supply made by M/s. KBC Insurance Ltd. for the month of
May?

(a) Rs 4,00,000

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(b) Rs 12,00,000
(c) Rs 23,00,000
(d) Rs 32,00,000

4. Determine the amount of ITC that can be claimed by M/s. KBC Insurance Ltd?

(a) Rs 80,000
(b) Rs 3,00,000
(c) Rs 3,80,000
(d) Rs 8,80,000

5. Determine the time of supply of service provided to IPL franchisees?

(a) 1st July

(b) 16th August
(c) 5th August
(d) 14th August

6. Which of the following details are not mandatorily required to be mentioned in the invoice
issued by the company?

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

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Suggested answers

Case Study-1

1. 2. 3. 4. 5.
D B B A D

Case Study-2

1. 2. 3. 4. 5.
C C B C B

Case Study-3

1. 2. 3. 4. 5.

C D B D A

Case Study-4

1. 2. 3. 4. 5.
A C D B C

Case Study-5

1. 2. 3. 4. 5.
D A D B B

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Case Study-6

1. 2. 3. 4. 5.
C B C D D

Case Study-7

1. 2. 3. 4. 5.
B C B A C

Case Study-8

1. 2. 3.
A A A

Case Study-9

1. 2. 3.
D B C

Case Study-10

1. 2. 3. 4. 5.
A D C A C

Case Study-11

1. 2. 3. 4. 5.
D B C B A

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Case Study-12

1. 2. 3. 4. 5.
C C D B D

Case Study-13

1. 2. 3. 4. 5.
B A A B C

Case Study-14

1. 2. 3. 4. 5.
C B C A A

Case Study-15

1. 2. 3. 4. 5. 6.
A A C C C B

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