Practice Test

Q1) Methods for determining Arm's Length price is given under Section: Show Answer

Q2) Transfer Pricing officer means: Show Answer

Q3) The following method as per section 2C are used in determination of arms length prices for international transactions and specified domestic transaction except- Show Answer

Q4) The income tax Act 1961 empowers the central government to enter into double taxation avoidance agreements with other countries under section Show Answer

Q5) Which of the following double taxation avoidance agreement (DTAA) emphasizes on residence principle Show Answer

Q6) The provision of transfer pricing are applicable with effect from 1st April 2012 to specified domestic transactions entered into by the assessee in the previous year in aggregate of: Show Answer

Q7) The validity period of advance pricing agreement (APA) is- Show Answer

Q8) One of the benefits of advance pricing agreement is Show Answer

Q9) Assessees who are eligible to approach dispute resolution panel regardless of the transfer pricing adjustment are Show Answer

Q10) The monetary limit for aggregate transaction between two enterprises to fail in the category of specified domestic transaction is Show Answer

Q11) When an assesee fails to furnish any information relating to a specified domestic transaction the quantum of penalty as a percentage of value of the transaction would be Show Answer

Q12) Two enterprises will be said to be associated if one enterprise holds voting rights in enterprise of at least- Show Answer

Q13) Transaction between 2 enterprises where one is non-resident is

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Q14) What is tax heaven? Show Answer

Q15) Transfer pricing officer means Show Answer

Q16) Doing business through tax haven countries is always profitable. Show Answer

Q17) Which of the following is not a method followed in doing business through tax havens? Show Answer

Q18) OECD in May 1998 issued a report on Harmful Tax Competition and has made _________ specific recommendations. Show Answer

Q19) Double Tax Avoidance Agreement is a kind of __________ treaty or agreement, between Government of India and any other foreign country or specified territory outside India. Show Answer

Q20) India has entered into bilateral agreements with many countries regarding avoidance of double taxation including ___________ issues. Show Answer

Q21) _________ in relation to companies means, the merger of one or more companies with another company or the merger of two or more companies to form one company. Show Answer

Q22) No tax is to be charged on capital gain arising on Scheme of Amalgamation. Show Answer

Q23) A professional earned Rs 8,00,000 from a foreign country where no DATA exists with that country and tax deducted at source is Rs 60,000 the assessee in an Indian citizen and resides in Indian his other income in India are Rs 2,67,000 tax relief u/s 91 will be

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Q24) According to section 2(1B) " amalgamation in relation to companies means the merger of one or more companies with another company or the merger of two or more companies to form one company provided all conditions except the following are satisfied: Show Answer

Q25) Ramesh sold machine to Suresh ( associated enterprise ) and in turn Suresh sold the same machinery to Mitesh ( an independent party ) at sale margin of 30% for Rs 4,00,000 but Suresh has incurred Rs 4,000 in sending the machine to Mitesh From the above data determine arm's length price Show Answer

Q26) XYZ sold a machine to ABC (associate enterprise) for Rs 3 lakh which was sold by ABC to PQR an unrelated party on the sale margin of 30% for 5,00,000 and has also incurred an amount of Rs 10,000 in sending the machine to PQR the arm length price of this transaction will be:

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Q27) Acryling Ltd sourced its new materials from breeze Ltd the relationship of associated enterprises would be established when acrylic Ltd buys raw material from Breeze Ltd exceeding- Show Answer

Q28) The last date for filling return by a company which is required to furnish a report referred to bin section 92E is Show Answer

Q29) XYZ sold a machine to ABC (associate enterprise) which was sold by ABC to PQR an unrelated party on the sale margin of 40% for 8,00,000 and has also incurred an amount of Rs 30,000 in sending the machine to PQR the arm length price of this transaction will be: Show Answer

Q30) Which of The following factors to be considered in taking decision whether a country is tax haven or not? Show Answer

Q31) Which of The following factors to be considered in taking decision whether a country is tax haven or not? Show Answer

Q32) Worldwide income of the Indian Resident’s is taxable in India though section 91 of the Act provides relief by way of credit in respect of the tax paid on their foreign income if, the source is in the country with which –

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Q33) The CFC rules may also be termed as ___________. Show Answer

Q34) The benefit of double taxation agreement or tax treaty shall be applicable only when a ___________ is obtained of his residence in any country outside India or specified territory outside India from the Government of that country or specified territory. Show Answer

Q35) Mr. Ankit earned income from a country with which India don not have DTAA, He paid Rs 35,000 tax in foreign whereas according to Indian tax the tax liability on same income is Rs 10,000. What amount of relief Mr. Ankit can claim in India? Show Answer

Q36) Mr. Punit earned income from a country with which India don not have DTAA, He paid Rs 86,000 tax in foreign whereas according to Indian tax the tax liability on same income is Rs 1,00,000. What amount of relief Mr. Punit can claim in India? Show Answer

Q37) An Indian resident is entitled to a deduction from the Indian income-tax of a sum calculated on such doubly taxed income earned in the country where no DTAA exist, at – Show Answer

Q38) As per Section 92A(2), two enterprises shall be deemed to be associated enterprises if, at any time during the previous year,– Show Answer

Q39) A sold a machine to B (Associated enterprise) and in turn B sold the same machinery to C (an independent party) at sale margin of 30% for `2,10,000 but without making any additional expenses and change. Here Arm’s length price would be- Show Answer

Q40) DTAA refers to _________. Show Answer

Q41) Compute the ‘arm length price’ (ALP) in the following case
Medical Instruments Ltd. is a 100% Indian subsidiary of a US company. The parent company sells one of its products to the Indian subsidiary at a price of US$ 100 per unit. The US parent company sells the same product to an unrelated company in India @ US$ 80 per unit.
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Q42) Gross profit can be defined as ___________. Show Answer

Q43) Anand a resident in India has a total income of Rs 10,00,000 during the previous year 206-17 this income includes foreign income of Rs 3,00,000 from a country with which india does not have agreement to avoid double taxation tax levied the foreign country on that foreign income was Rs 40,000 and the payable as per the Indian rate on the total income amount Rs 2,50,000 the double taxation relief allowable to Anand shall be- Show Answer

Q44) If the two countries do not have DTAA then in such a case, the _________ law of the country will apply.

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Q45) DTA agreements give the right of taxation in respect of the income of the nature of interest, dividend, royalty and fees for technical services to the country of__________.

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Q46) Related Party transaction means the transaction between/among the parties which are associated by reason of ____________. Show Answer

Q47) XYZ Co. is expert in providing electrical and electronic services. It is engaged in providing support to its associated company as well as it is engaged in outsourcing contract. XYZ Co. provides some services to its associated company.
State whether transfer pricing is applicable?
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Q48) Which of the following is not an advantage of transfer pricing?

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Q49) The fundamental of transfer pricing provision is that transfer price should represent the __________ price of goods transferred and services rendered from one unit to another unit. Show Answer

Q50) The transfer price should represent the price which could be charged from an __________ party in uncontrolled conditions. Show Answer

Q51) As per Section 92A (2), two enterprises shall be deemed to be associated enterprises if, at any time during the previous year,– Show Answer

Q52) Which of the following is not a method of transfer pricing? Show Answer

Q53) Which is the most direct method for the determination of the Arms’ length price? Show Answer

Q54) If the COGS in a transaction between two associated enterprises is Rs 50,000 and Gross profit markup is 50%. Calculate the transfer price under Cost plus method. Show Answer

Q55) Which of the following factors shall not be taken into account In selecting a most appropriate method of transfer pricing? Show Answer

Q56) Compute the ‘arm length price’ (ALP) in the following case
Medical Instruments Ltd. is a 100% Indian subsidiary of a US company. The parent company sells one of its products to the Indian subsidiary at a price of US$ 100 per unit. The same product is sold to unrelated buyers in India at a price of US$ 125 per unit.
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Q57) Under the _________ Method, an arm’s-length price equals the controlled party’s cost of producing the tangible property plus an appropriate gross profit mark-up. Show Answer