CA Final May 2025 Suggested Answers Paper 4 Direct Tax Laws and International Taxation

FOR CA FINAL EXAM PREPARATION

CA Final 2025
Suggested Answers ·
Paper 4 Direct Tax
Laws and International
Taxation
EXAM YEAR TYPE

CA Final 2025 Suggested Answers
SUBJECT DATE

Paper 4 Direct Tax Laws and International Taxation May 2025

Notes · Sample Papers · Previous Year Papers · Mock Tests

m
m .co
c. o

e m
em l a s
s a g

PAPER – 4: DIRECT TAX LAWS &
INTERNATIONAL TAXATION
m
m c. o
.co s em
m a
a se relate to Assessment Year 2025-26, unless stated otherwise in the ag l
PART – I Multiple Choice Questions
All lquestions
ag question
Integrated Case Study - I
M/s. ABC Limited is an Indian company which has made investment in shares of
Indian and foreign companies. During the financial year 2024-25, ABC Limited
received dividends from different companies as follows:
Name of Status of Shareholding Date of Gross Interest

m
co
the the held by ABC declaration amount Expenditure

.
company company Limited of dividend of on loan

em
by the dividend borrowed for

a s
company in ` investment in

g l shares by ABC

P Ltd Indian
a12% 01.07.2024 3,00,000
Limited
66,000
Company
Q Ltd Indian 21% 01.11.2024 5,00,000 80,000
Company
X lnc. Foreign 15% 10.02.2025 4,80,000 1,20,000
company

m
co
ABC Limited distributed dividend to its shareholders amounting to ` 2,50,000

m .
for the financial year 2023-24 in December 2024 and dividend of ` 4,50,000 for

c. o the financial year 2024-25 in March 2025. Assume that all the amounts of
se
m
em l a
dividends on investment in shares by ABC Limited have been received before

las 31st March 2025.
g
a Act, 1961 on
ag A search was made under section 132 of the Income-tax
M/s. ABC Limited. The search was initiated on 26.02.2025 and concluded on
06.03.2025 when the last of authorizations executed.

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 1 of 39

FINAL EXAMINATION: MAY 2025

M/s. ABC Limited received a notice under section 143(2) for A.Y. 2023-24, the
assessment proceedings for which in the faceless manner was ongoing at the
time of search. A notice under section 148 was also issued for A.Y. 2020-21 to
the company as per the provisions of the Act, the proceedings for which were
also pending on the date of search.
The company has made an appeal before the Commissioner of Income-tax
(Appeals) for the A.Y. 2015-16 for a matter relating to a business deduction,
which was dismissed by the CIT (Appeals) on 20.12.2024 and order u/s 250 was
communicated on the same date to the company. The company decided to go
for further appeal on this matter in the ITAT.
Please answer the following questions no. 1 to 5 with regard to above
facts and Income-tax Act, 1961.
1. What is the amount of dividend to be included under the head "Income
from Other sources" for the A.Y. 2025-26 for ABC Limited?
(A) ` 10,44,000
(B) ` 10,14,000
(C) ` 10,24,000
(D) ` 5,74,000 (2 Marks)
2. What will be the amount of deduction allowable to M/s. ABC Limited under
section 80M for dividend income for A.Y. 2025-26, assuming that the
company has opted special tax regime u/s 115BAA?
(A) ` 4,50,000
(B) ` 7,00,000
(C) ` 2,50,000
(D) NIL (2 Marks)
3. What would be considered as the "Block period" as per special provisions
for Assessment of search cases under section 158B to 158BI in case of
M/s. ABC Limited?
(A) Assessment years relevant to previous years 2018-19 to 2023-24 and
the period from 1 st April, 2024 to 06.03.2025.
(B) Assessment years relevant to previous years 2018-19 to 2023-24-and
the period from 1 st April, 2024 to 25.02.2025.

2

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 2 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

(C) Assessment years relevant to previous years 2018-19 to 2023-24 and
the period from 1 st April, 2024 to 26.02.2025.

m
c. o
(D) Assessment years relevant to previous years 2018-19 to 2024-25.

o m m
.c
(2 Marks)

s e
emon the basis of the above facts: l a
4. As per information provided relating to ABC Limited, Choose the correct

s
a The assessment proceedings for A.Y. 2023-24 shall be deemed to havea
option
l(A) g
g
a abated but assessment proceedings under section 148 shall continue.
(B) The assessment proceedings for both A.Y. 2020-21 and A.Y. 2023-24
shall abate on the date of initiation of search under section 132.
(C) The assessment proceedings for A.Y. 2020-21 shall abate but the
Assessment proceedings for A.Y. 2023-24 will continue.
(D) The assessment proceedings for both A.Y. 2020-21 and A.Y. 2023-24

m
shall continue and these two periods will be excluded from assessment
of block period.
. c o (2 Marks)
5. What would be the prescribed timem
e of the Act on the matter relating to
the time limit given in sections253(3)
limit for filing appeal before ITAT as per

a
l (Ignore condonation of delay allowable by
ag
A.Y. 2015-16 for the company.
ITAT)?
(A) On or before 18.02.2025
(B) On or before 28.02.2025
(C) On or before 19.01.2025
(D) On or before 31.01.2025 (2 Marks)

m
Integrated Case Study - II

m
Mr. Ramakant Gupta, a practicing Chartered Accountant in Delhi, is engaged in
.co
c. o Taxation planning and consultancy for his clients. His client GBR Inc., a country

se
m
em la
M based foreign company, is carrying on the business of manufacture and sale

las a g
of artificial jewellery under the brand name "Kangan". For expansion in Indian

g
market, it used the online advertisement services of M/s. Lima Inc., a country Z
a based foreign company. During the previous year 2024-25, GBR Inc. paid ` 7
lakhs to Lima Inc. for such services. GBR Inc. has a permanent establishment in
India but Lima Inc. has no permanent establishment in India.

3

m .
.co s e m
m
e Accountants of India l a
l a s ag
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 3 of 39

FINAL EXAMINATION: MAY 2025

Mr. Ramakant Gupta is a member of Kikli Foundation, an education institution
and a registered trust under section 12AB of the Income-tax Act, 1961. The trust
has made payment to an advocate of ` 5,90,000 (including GST of ` 90,000) for
providing services relating to a pending case of the Trust at High Court on
20.12.2024.
The trust is following mercantile system of accounting. In May 2024, the trust
paid salary payable for March 2024 amounting to ` 15,00,000 and Electricity
Bill payable for the months of February and March 2024 amounting to
` 3,60,000.
Mr. Ramakant Gupta sold 1000 Mitcoins, a virtual digital asset to Mr. Priyal on
20.11.2024 for a consideration of ` 340 per Mitcoin. Mr. Priyal is employed in
ABC Limited at monthly salary of ` 1,20,000 per month during F.Y. 2024-25.
Mr. Priyal has no other source of income.
Please answer the following questions 6 to 9 with regard to above facts
and Income-tax Act, 1961.
6. Whether GBR Inc. is required to charge and deduct Equalisation Levy on the
amount of ` 7 lakhs paid to Lima Inc.?
(A) Yes, GBR Inc. is required to charge and deduct Equalisation Levy on the
amount of ` 7 lakhs paid to Lima Inc., since GBR Inc. is having PE in
India.
(B) No, GBR Inc. is not required to charge and deduct Equalisation Levy on
the amount of ` 7 lakhs paid to Lima Inc., since GBR Inc. is a foreign
company.
(C) No, GBR Inc. is not required to charge and deduct Equalisation Levy on
the amount of ` 7 lakhs paid to Lima Inc., since Equalisation Levy is not
applicable when the amount of payment is less than ` 10 lakhs during
the previous year.
(D) No, GBR Inc. is not required to charge and deduct Equalisation Levy on
the amount of ` 7 lakhs paid to Lima Inc., since Equalisation Levy is not
applicable on or after August 1, 2024 on such payments. (2 Marks)
7. Identify the correct statement in respect of payment made by the trust to an
advocate for High court case.
(A) Kikli Foundation, the trust need not to deduct any TDS from payment
made to advocate, being a registered trust u/s 12AB.
4

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 4 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

(B) Kikli Foundation, the trust needs to deduct an amount of TDS of
` 50,000 as per section 194J of the Act from payment made to

m
c. o
advocate, and deposit it before due date of filing Income Tax Return u/s

m
139(1) to avail the sum paid as application of income for

c o m
(C) Kikli. Foundation, the trust need to deduct an amount of TDS of e
F.Y. 2024-25.

e`m59,000 as per section 194J of the Act from payment made to gla s
s
la advocate, and deposit it before due date of filing Income Tax Return u/sa
g
a 139(1) to avail the sum paid as application of income for
F.Y. 2024-25.
(D) Kikli Foundation, the trust need to deduct an amount of TDS of
` 50,000 as per section 194J of the Act from payment made to
advocate, and deposit it before the end of Assessment year 2025-26 to
avail the sum paid as application of income for Previous year
2024-25. (2 Marks)

m
c. o
8. In respect of salary paid of ` 15,00,000 and Electricity bill paid of ` 3,60,000

em will be treated as application of
by the trust, Identify the correct statement:

s
a P.Y. 2023-24 and Electricity bill amounting
(A) Salary amounting to ` 15,00,000
income for the trust forlthe
g
to ` 3,60,000 will bea treated as application of income for the trust for
the P.Y. 2024-25 as per Act.
(B) Both Salary and Electricity bill amounting to ` 18,60,000 will be treated
as application of income for the trust for the P.Y. 2023-24 in which sum
is actually incurred since the trust is following mercantile system of
accounting.
(C) Salary amounting to ` 15,00,000 will be treated as application of

m
c. o
income for the trust for the P.Y. 2024-25 and Electricity bill amounting

m
c. o
to ` 3,60,000 will be treated as application of income for the trust for

s ewillmbe treated
the P.Y. 2023-24 as per Act.

s em g la in which sum
(D) Both Salary and Electricity bill amounting to ` 18,60,000

gla a
as application of income for the trust for the P.Y. 2024-25

a is actually paid.
9. In respect of Virtual Digital Assets (VDA) sold by Mr. Gupta to Mr. Priyal,
(2 Marks)

Whether Mr. Priyal is required to deduct TDS in respect of consideration
payable for VDA?
5

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 5 of 39

FINAL EXAMINATION: MAY 2025

(A) Yes, Mr. Priyal needs to deduct TDS u/s 194S @1% of consideration of
VDA of ` 3,40,000, since the consideration payable exceeds ` 50,000.
(B) No, Mr. Priyal need not to deduct TDS u/s 194S, being a salaried person
during F.Y. 2024-25
(C) No, Mr. Priyal need not to deduct TDS u/s 194S, being a specified
person as per provisions of the section 194S and the consideration
payable is less than ` 5,00,000.
(D) No, TDS provisions u/s 194S are not applicable when transaction takes
place between two individuals directly and having no involvement of
any Exchange. (2 Marks)
Integrated Case Study - III
Relish Pvt. Ltd. (“R”) is an Indian company. Solar Inc (“S”) is a company
incorporated in U.S.A. and its income is not chargeable to tax in India. Both are
promoted by Mr. Pawan who holds 51% equity share capital and voting power
in both Rand S. The balance sheet of R as on 31 st March, 2025 is as follows:

Liabilities Amount Assets Amount
(` million) (` million)
Paid up capital and 160 Fixed Assets 370
reserves
Loans: Current Assets 210
From S 302 Cash and bank balance 20
From others 98 400
Current liabilities 40
Total 600 Total 600

Additional information:
The loan was advanced by S to R on 1 st July, 2024 in rupee terms and carries 7%
p.a. rate of interest. For borrowers with similar risk profile, S advances loan at
6% p.a. interest rate.
R does not make any adjustment to its total income of ` 15 crores on account of
application of provisions of Chapter X of the Income-tax Act, 1961 in its return
of income for A.Y. 2025-26.

6

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 6 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

From the information given above, choose the most appropriate answer
to the following questions No. 10 to 12 -

m
c. o
10. Identify whether R and S are associated enterprises as per provisions

m
co m
relating to Transfer Pricing under Income-tax Act,1961? If so, why?

m . s e
a
(A) Yes, R and S are associated enterprises as not less than 75% of R's total

se l
ag
loans have been availed from S.

l a
ag
(B) Yes, R and S are associated enterprises since the loan advanced by S to
R is more than 50% of the book value of R's total assets.
(C) Yes, R and S are associated enterprises because Mr. Pawan holds voting
power of 51% in both the companies.
(D) No, R and S are not associated enterprises. (2 Marks)
11. What is the amount of primary adjustment required to be made to the total
income of R for A.Y.2025-26 assuming that "R" and "S" are associated

m
enterprises?
(A) ` 30,20,000
. co
(B) NIL
s em
(C) ` 25,16,667
g l a
(D) ` 22,65,000 a (2 Marks)
12. In case the excess money arises due to Primary adjustments and it has not
been repatriated within the prescribed time limit given in Rule 10CB(1) and
R chooses to pay additional income tax on such excess money, what would
be the amount of additional tax payable by R ? (Ignore Interest)
(A) ` 4,24,008

m
(B) ` 5,27,654

m (D) ` 4,74,889
(C) NIL
c(2. oMarks)
c. o se
m
s em Independent MCQs
g l a
gla 13. ABC Bank Limited, a private bank in India has notafiled its statement of
a financial transaction or reportable account in relation to the specified
financial transaction for the financial year 2023-24 as required under
section 285BA. A notice was issued by the prescribed income-tax authority

7

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 7 of 39

FINAL EXAMINATION: MAY 2025

on 1st September, 2024 requiring the bank to furnish the statement by
30th September, 2024. The bank, however, furnished the statement on
10th October, 2024. Calculate the penalty leviable on bank under the
provision of section 271FA of the Income-tax Act 1961, assuming that bank
fails to provide any sufficient cause for delay.
(A) ` 5,000
(B) ` 71,000
(C) ` 61,000
(D) ` 10,000 (2 Marks)
14. M/s. Optima Corporation is an Investment fund, regulated by SEBI
(Alternative Investment Fund) Regulations, 2012, made under the SEBI Act,
1992. The following are the particulars of income of Optima Corporation for
F.Y. 2024-25:
Particulars Amount in `
Business Income 4,00,000
Capital Gains 28,00,000
Income from other sources 8,00,000
Assume that Optima Corporation has 8 unitholders each having one unit
held by them for a period exceeding 24 months, and income from
investment in the fund is the only income of the unitholder.
What would be the total income of the investment fund and each unit
holder for A.Y. 2025-26?
(A) Total Income of Investment Fund will be ` 4,00,000 and Total income of
each unitholder will be ` 4,50,000.
(B) Total Income of Investment Fund will be ` 12,00,000 and Total income
of each unitholder will be ` 3,50,000.
(C) Total Income of Investment Fund will be ` 40,00,000 and Total income
of each unitholder will be NIL.
(D) Total Income of Investment Fund will be NIL and Total income of each
unitholder will be ` 5,00,000. (2 Marks)
15. Mr. B acquired 1000 Equity shares of PQR Limited for ` 400 each in
May 2020. The company buyback 200 Equity shares of Mr. B, as per the

8

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 8 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

scheme of buyback, in January 2025 at a price of ` 550 per share. The
buyback was completed in January 2025 and Mr. B received the payment as

m
c. o
per scheme. He did not sell any other capital asset during F.Y. 2024 -25.

m
What amount will be included in the Gross Total Income of Mr. B and what

.co
will be the amount of loss to be carried forward (if any) for A.Y. 2025-26 as
s em
e m
per the Income-tax Act, 1961?
l a
l a s a g
(A) Long Term Capital Gain of ` 30,000 will be included under the head

ag (B) Dividend of ` 30,000 will be included under the head “Income from
“Capital Gains” only. No loss to be carried forward.

other sources” and a long-term capital loss off ` 80,000 will be carried
forward.
(C) Dividend of ` 1,10,000 will be included under the head “Income from
other sources” and a long-term capital loss of ` 80,000 will be carried
forward.

m
(D) The company will pay additional tax of 23.296% of ` 25,625 for

. co
buyback made from Mr. B and the amount of ` 1,10,000 will not be

em
taxable in the hands of Mr. B. (2 Marks)
ANSWER KEYS
l a s
MCQ No.
a g
Correct Option
1. (A) or (C)
2. (B)
3. (A)
4. (B)
5. (B)
6. (A)

m
co
7. (B)

m .
c. o
8. (D)

m
se
9. (A)

s em 10. (C)
g la
la a
11. (D)

ag 12.
13.
(C)
(B)
14. (A)
15. (C)

9

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 9 of 39

FINAL EXAMINATION: MAY 2025

PART – II Descriptive Questions
Question No.1 is compulsory.
Answer any four questions out of the remaining five questions.
Working notes should form part of the answer.
All questions relate to Assessment Year 2025-26, unless stated otherwise in the
question.
Question 1
Krisha, Kinara and Komal were three partners in a partnership firm, KKK
Enterprises. The firm carried on the business of running banquet halls for
marriages and other parties or events purposes from the date of its formation
i.e. 20.12.2015 till 31.03.2020. The partners converted the firm into a company
from 01.04.2020 by the name KKK Private Ltd. and transferred the entire
business to the company. All the partners of the firm became the shareholders
of the company in the same proportion as per their capital balance stood in the
books of the firm. No other consideration was paid to the partners.
The company earned a net profit of ` 1,19,25,000 after debiting/ crediting the
following items in its Statement of Profit and Loss for the year ended
31.03.2025:
(i) During the Financial year 2024-25, a sum of ` 1,17,000 was paid to a
resident transport operator, Mr. Milan, for transporting necessary goods to
the banquet halls. The payments were made in cash as follows:

Date Amount in `
th
4 May, 2024 26,000
23rd July, 2024 37,000
14th September, 2024 22,000
16th February, 2025 32,000

The company did not deduct tax at source from such payment as Mr. Milan
submitted a certificate under section 197(1) issued to him by the Assessing
Officer for no deduction of tax at source.
(ii) Depreciation as per books - ` 13,56,000

10

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 10 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

(iii) Out of the debtors that were transferred to the company, one debtor, M/s. M
Travels LLP, from whom ` 6 lakhs were due since F.Y. 2019-20, went

m
c. o
bankrupt on 01.12.2024 and nothing could be recovered from them. The

m
company debited the amount of ` 6 lakhs in the Statement of Profit and

c o m
(iv) Dividend. received from listed companies - ` 5,40,000. e
Loss.

e m l a s
l a s a g
g
Additional Information:

a During the F.Y. 2024-25, the company paid ` 1,25,000 to its resident stock
(i) The company invested in shares of listed companies through a stock broker.

broker as commission for the purchase of shares. No shares were sold
during the year. No TDS was deducted on such payment.
(ii) Depreciation as per Income-tax Rules, 1962 - ` 15,78,000. A machinery
(HYC) that the firm had used earlier was transferred to the company at the
time of succession. The machinery formed part of 15% depreciation block.

m
The WDV of the machinery was ` 12 lakhs as on 01.04.2024. On

. co
01.09.2024, the machinery was discarded. The amount of depreciation as

em
per Income-tax Rules given above ( ` 15,78,000) includes depreciation on
this machine as well.
l a s
a g
(iii) The share-holding structure of the company at the start of the F.Y., i.e.
01.04.2024 was as follows:
Krisha 30%
Kinara 25%
Komal 20%
Others 25%

o m
During F.Y. 2024-25, Krisha sold 95% of her holdings to her daughter-in-

m
law, Keerat.
.c
c. o (iv) Brought forward business loss - ` 14 lakhs (relating to A.Y. 2020-21)
s
m
e Pvt. Ltd., a
em l a took a loan
s g
(v) The company holds 65% stake in Adar Hospitality Services

gla closely held Indian company. On 12th April 2024, the
acompany

a of ` 15 lakhs from Adar Hospitality Services Pvt. Ltd. Accumulated profits of
Adar Hospitality Services Pvt. Ltd. was ` 31 lakhs on 01.04.2024. The
company repaid the loan in full on 25 th March, 2025.

11

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 11 of 39

FINAL EXAMINATION: MAY 2025

(vi) The long-term capital gains on transfer of capital assets amounting to
` 55 lakhs which arose at the time of succession of firm to company was
exempt at the time of conversion of firm into company in the hands of the
firm as per conditions laid under section 47(xiii).
The turnover of the company for the previous year 2023-24 was ` 390 crores and
for the previous year 2022-23 was ` 408 crores. You are required to compute the
total income and tax payable of the company for A.Y. 2025-26 by giving brief
reasons for the treatment of each item.
Would it be beneficial for the company to opt for the concessional tax regime
under section 115BAA of the Act for the A.Y. 2025-26? Examine. Ignore the
provisions relating to MAT. (14 Marks)
Answer
Computation of Total Income and tax payable by KKK Pvt. Ltd. for the
A.Y. 2025-26

Particulars Amount (in `)
I Profits and gains of business or
profession
Net profit as per statement of profit and 1,19,25,000
loss
Add: Item debited but to be
considered separately or to be
disallowed
(i) Cash payment to transporter 37,000
[Cash payment to transporter
exceeding ` 35,000 would be
disallowed under section 40A(3).
Since the same has been debited to
the statement of profit and loss, the
same has to be added back while
computing business income.]
(ii) Payment to transporter without NIL
deducting tax at source
[Since Mr. Milan, a transporter
submitted certificate u/s 197(1) for

12

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 12 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

no deduction of tax at source, KKK
Pvt. is not required to deduct tax at

m
c. o
source on payment made for

m
transporter. Hence, no disallowance

.co
for non-deduction of tax would be
s em
e mattracted under section 40(a)(ia).
l a
l a s Since the same has been debited to
ag
ag
the statement of profit and loss, no
adjustment is required to be made]
(iii) Depreciation as per books 13,56,000
(iv) Bad debt of erstwhile firm NIL
[Where the business of the firm has
been transferred to the company
and the successor has suffered loss
on account of it turning bad, the

m
co
successor would be entitled to
deduction, if the required conditions
.
s em
are complied with. Since the same

l a
has been debited to the statement of

g
a
profit and loss, no further
adjustment is required.]
AI(i) Commission for purchase of shares NIL 13,93,000
without deduction of TDS
[Commission for purchase of shares
will form part of cost of acquisition
of listed shares and not allowable as
deduction from business income.

m
co
Further, no tax is required to be

m .
c. o
deducted under section 194H in
m
se
respect of commission on securities.

em la
Moreover, commission for purchase

las of shares is not in relation to
a g
ag business, non-deduction of tax will
not impact the business income.
Since the same has not been debited
to the statement of profit and loss,

13

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 13 of 39

FINAL EXAMINATION: MAY 2025

no further adjustment is required to
be made.]
1,33,18,000
Less: Items credited but not taxable or
chargeable to tax under another head
(ii) Dividend received from listed 5,40,000
companies
[Dividend received from listed
companies is taxable under the head
“Income from Other Sources”. Since
the same has been credited to the
statement of profit and loss, the
same has to be deducted while
computing business income.]
1,27,78,000
Less: Depreciation as per the Income- 15,78,000
tax Rules, 1961
[Depreciation on discarded machinery will
be allowed assuming that this machinery is
not the only asset in that block and that
the dissertation is not permanent in nature.
Under the block concept, since no amount
has been received or receivable due to
such dissertation, no amount needs to be
deducted.]
1,12,00,000
Less: Brought forward business loss of NIL
A.Y. 2020-21
[Not allowed since one of the conditions
of section 47(xiii) of being shareholding
of partners of the firm in the company
should not be less than 50% of the total
voting power for 5 years from the date of
succession is violated.]
1,12,00,000

14

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 14 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

II Capital Gains
Long term capital gain on transfer of 55,00,000
m
c. o
capital assets at the time of succession

m
co m
Since Krisha sold 95% of her holding i.e.,

m .
28.5% shares in the company, the
s e
s e l a
ag
shareholding of partners of the firm i.e.,

l a
ag
Krisha, Kinara and Komal in the company
becomes less than 50% of the total
voting power i.e., 46.5% within a period
of 5 years from the date of succession. In
such a case, the LTCG would be taxable
in the year of violation of this condition.
III Income from Other Sources
Dividend received from listed companies 5,40,000

m
Deemed dividend 15,00,000 20,40,000
[Since the company holds 10% or more
. co
em
voting power of the Adar Hospitality

a s
Services Pvt. Ltd., loan of ` 15 lakhs received
l
g
from such company would be deemed as
a
dividend under section 2(22)(e) to the
extent of accumulated profit even if the
loan is repaid in the same F.Y.]
Gross total income/ Total income 1,87,40,000
Computation of tax payable
Tax on long term capital gains of 11,00,000
` 55,00,000 @20%

m
co
Tax on other income of ` 1,32,40,000 39,72,000

m .
c. o m
@30%, since the turnover of the

se
company for the previous year 2022-23

s em exceeds ` 400 crores
g la
gla a 50,72,000

a Add: Surcharge @7%, since total income
exceeds ` 1 crore. 3,55,040
54,27,040

15

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 15 of 39

FINAL EXAMINATION: MAY 2025

Add: Health and education cess @4% 2,17,082
Tax liability 56,44,122
Less: TDS u/s 194 2,04,000
Tax payable 54,40,122
Tax payable (Rounded off) 54,40,120

Computation of Total Income and tax payable by KKK Pvt. Ltd. for the
A.Y. 2025-26 under concessional regime u/s 115BAA

Particulars Amount (in `)
Total Income under regular provisions of the 1,87,40,000
Act/ Total Income as per section 115BAA
Computation of tax payable
Tax on long term capital gains of ` 55,00,000 11,00,000
@20%
Tax on other income of ` 1,32,40,000 @22% 29,12,800
40,12,800
Add: Surcharge @10% 4,01,280
44,14,080
Add: Health and education cess @4% 1,76,563
Tax liability 45,90,643
Less: TDS u/s 194 2,04,000
Tax payable 43,86,643
Tax payable (Rounded off) 43,86,640
Conclusion
Since the tax payable of KKK Pvt. Ltd. computed under section 115BAA is
lower than the tax payable computed under regular provisions of the Act,
it is beneficial for KKK Pvt. Ltd. to opt for the special provisions under
section 115BAA for A.Y. 2025-26. However, once it opted for the
concessional tax regime u/s 115BAA, it cannot withdraw such option in
subsequent years.

16

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 16 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

Question 2

m
(a) M/s Mittal Metals is a Limited Liability Partnership firm (LLP) consisting of

m c. o
three partners J, K and L. Mr. J and Mr. K are working partners as per deed.

.co m
Partnership deed authorizes interest to partners @14% p.a. The deed also

m s e
a
authorizes remuneration to the working partners @ ` 75,000 per month.
It s e a unit in SEZ which started its operations w.e.f. 01.06.2019. Its total gl
g a
lturnover, export turnover and net profits for the F.Y. 2024-25 area
has

a ` 120 lakhs, ` 90 lakhs and ` 24 lakhs, respectively. The unit fulfills all the
conditions of section 10AA of Income-tax Act, 1961.
The firm has commenced the operations of a warehousing facility for
storage of sugar on 01.05.2024. It incurred capital expenditure of ` 60 lakhs
on purchase of land and construction of building during the period January
2024 to April 2024 (It includes ` 35 lakhs for cost of land) for such

m
co
warehouse. This expenditure has been capitalized in the books of accounts,

.
but no depreciation has been charged on the same. The warehousing

s em
facility fulfills all the conditions of section 35AD.

g l a
Profits from operation of warehousing facility are ` 30 lakhs, before

a
considering deduction u/s 35AD, for the F.Y. 2024-25 and after debiting the
following items:
1. Interest on capital @14% ` 11,48,000
2. Salary credited to all 3 partners ` 9,00,000 each
(i) Compute the total income and income tax payable by the firm Mittal
Metals for the A.Y. 2025-26 giving explanations for each item. (Ignore

m
co
AMT provisions and tax payable as per AMT u/s 115JC)

m .
c. o m
(ii) Assuming that the LLP filed its return of income for A.Y. 2025-26 in

em
December, 2025 i.e. after the due date of filing return of income as
la se
las prescribed under the Act, Will it make any impact on deduction under
a g
g
section l0AA or deduction u/s 35AD for A.Y. 2025-26? (No need to
a recompute total income and tax payable) (8 Marks)

17

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 17 of 39

FINAL EXAMINATION: MAY 2025

(b) Mr. Joseph, a non-resident and a person of Indian origin (aged 49 years),
furnished following information for the previous year ended 31 st March,
2025:

Particulars Amount in `
Sale proceeds of listed equity shares in A Limited, an 6,00,000
Indian company on 31.05.2024
Cost of acquisition (in convertible foreign exchange) of 1,10,000
equity shares of A Limited acquired on 01.06.2020
Expenditure wholly and exclusively incurred in 50,000
connection with transfer of listed equity shares of A
Limited
Interest on Government Securities (net of TDS) 81,000
(Acquired in convertible foreign exchange)
Interest on deposits with pubic limited companies 3,25,000
(Gross)
(Acquired in convertible foreign exchange)
Expenditure incurred in earning such income ` 7,500
Interest on deposits held with Private limited companies
(Gross)
(These deposits were made when Mr. Joseph was 5,55,000
resident in India out of his taxable income in India
during F.Y. 2014-15)
Fresh Investment in shares of Indian public limited 2,20,000
companies on 11.11.2024

You are required to compute the total income of Mr. Joseph and Gross
amount of tax payable for assessment year 2025-26 in accordance with
special provisions prescribed under chapter XII-A applicable to
non-residents and other provisions of the Act. Mr. Joseph has opted to shift
out of default tax regime provided under section 115BAC(1A). He has no
other income. The applicable tax was deducted at source from interest
income. Ignore interest calculations u/s 234A, 234B and 234C and the
effect of first proviso to section 48.
(Cost Inflation Index F.Y. 2020-21: 301, F.Y. 2024-25: 363) (6 Marks)

18

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 18 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

Answer
(a) (i) Computation of Total income and income tax payable by
m
c. o
M/s Mittal Metals for A.Y. 2025-26

o m Particulars m
c
. and gains of business or e
` `

m a s
seprofession l
Profits

g la Unit in SEZ ag
a
24,00,000
Profit from operation of warehousing facility 30,00,000
Add: Interest on capital @14% 11,48,000
Salary credited to all partners 27,00,000
[` 9,00,000 x 3]
68,48,000
Less: Deduction under section 35AD 25,00,000

m
[Capital expenditure incurred prior to

. co
commencement of business and

em
capitalised in the books of account 43,48,000

a s
excluding the expenditure incurred for

l
g
cost of land] [` 60 lakhs – ` 35 lakhs]
a 67,48,000
Less: Interest to partners on capital 9,84,000
[Maximum interest@12% is allowed as per
section 40(b)] [`11,48,000/14%*12%]
Book profits 57,64,000
Less: Partners’ remuneration allowable
under section 40(b)(v)
(i) As per limit prescribed in section
o m
m .c
c. o
40(b)
5,40,000 m
On first ` 6,00,000 Higher of
s e
s em ` 3,00,000 or 90% of ` 6 lakhs
g la
gla a
On the balance ` 51,64,000 @60% 30,98,400

a (ii) Remuneration actually
36,38,400
paid or 18,00,000
payable to working partners
[` 9,00,000 x 2]
19

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 19 of 39

FINAL EXAMINATION: MAY 2025

Whichever is less is allowed 18,00,000
PGBP/Gross total income 39,64,000
Less: Deduction u/s 10AA [` 24 lakhs x 90 9,00,000
lakhs/120 lakhs x 50%, since this is the
sixth year]
Total income 30,64,000
Computation of tax liability
Tax @ 30% on ` 30,64,000 9,19,200
Add: Health and Education cess @ 4% 36,768
Tax liability 9,55,968
Tax liability (Rounded off) 9,55,970

(ii) As per proviso to section 10AA(1), no deduction under section 10AA
shall be allowed to an assessee who does not furnish a return of
income on or before the ‘due date’ specified in section 139(1).
However, there is no such condition for claiming deduction under
section 35AD.

Since M/s Mittal Metals files its return of income for A.Y. 2025-26 in
December, 2025 i.e., after the due date of filing return of income, it
cannot claim deduction under section 10AA in respect of profits
derived from unit in SEZ. It will be eligible to claim the deduction
under section 35AD.
(b) Computation of total income and gross tax payable by Mr. Joseph for
A.Y. 2025-26 as per Chapter XII-A and other provisions of the
Income-tax Act, 1961
Particulars Amount Amount
(`) (`)
Capital Gains
Long term capital gain on sale
of listed equity shares of A Ltd.
Full value of consideration 6,00,000
Less: Expenditure on Transfer 50,000
Net consideration 5,50,000

20

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 20 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

Less: Cost of Acquisition 1,10,000
[Indexation benefit is not

m
c. o
available]

m
co m
4,40,000

m .
Less: Exemption under section 1,76,000
s e
s e l a
ag
115F [ 4,40,000 x 2,20,000/ 2,64,000

l a
ag Income
5,50,000]
from Other Sources
Interest on Government Securities 1,02,273
[` 81,000/79.20% x 100%]
Interest on deposits with public 3,25,000
limited companies
Less: Expenses incurred [Not NIL
allowed under section 115D] 3,25,000

om
Interest on deposits with private 5,55,000
limited companies
Gross total income/ Total incomem
.c 9,82,273

s e 12,46,273

l a
ag tax
Total income (Rounded off) 12,46,270
Computation of gross
payable
Tax on LTCG of ` 2,64,000 @10% 26,400
Tax on investment income of 85,455
` 4,27,273 @20% [` 1,02,273 +
` 3,25,000]
Tax on other income of ` 5,55,000 23,500

m
at slab rate

m c. o
c. o
1,35,355
m
em se 5,414
Add: Health and education

s
cess@4%
g la
gla Gross tax payable
a 1,40,769

a Gross tax payable (Rounded off) 1,40,770

21

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 21 of 39

FINAL EXAMINATION: MAY 2025

Question 3
(a) Examine and discuss each of the following independent cases of charitable
trust/institutions based on the relevant provisions of Income-tax Act, 1961
and judicial pronouncements for the assessment year 2025-26:
(i) KRA Foundation is a charitable trust registered under section 12AB
engaged in the activity of providing old-age homes to senior citizens.
The total receipts of the trust for the financial year 2024-25 was ` 145
lakhs. This receipt of ` 145 lakhs includes a voluntary contribution
received from Mr. Keshav, a resident individual, amounting to ` 70,000.
During F.Y. 2024-25, out of the total receipts, the trust gave an
unsecured loan of ` 5 lakhs to Mr. Keshav at an interest rate of 12%
p.a. The scheduled banks charge interest at the rate of 11.50% for a
similar kind of loan. The trust has always applied 85% of the total
receipts for its objects. Discuss the implications in the hands of the trust
as per the provision of the Income-tax Act, 1961. (4 Marks)
(ii) M/s Medi Care Foundation, a trust registered u/s 12AB of the Income-
tax Act, 1961, runs a hospital. During the financial year 2023-24, it
received a voluntary contribution of ` 95 lakhs with a specific direction
that it should form part of the corpus of the trust. The trust invested
such amount in the shares of M/s Healthy Care Ltd., a public sector
company.
On March 31, 2025, due to disinvestment by the Government,
M/s Healthy Care Ltd. ceases to be a public sector company. (2 Marks)
(iii) M/s Medi Care Foundation, a trust registered u/s 12AB of the Income-
tax Act, 1961, which runs a hospital also paid consultancy fees
` 1,00,000 to Mr. Suresh, a doctor on 31.08.2024. The trust did not
deduct the TDS on consultancy fees paid to doctors. The accountant of
the trust claims that the trust is not liable to tax audit under section
44AB (being a trust), therefore it is out of the purview of section 194J.
(2 Marks)
(b) Miss. Meera, aged 28 years, a resident individual, provides management
consultancy to small and medium-sized corporations in India and abroad.
She regularly travels to country K for providing consultancy services to her
clients. It provides the following information to you in respect of its income
during the F.Y. 2024-25:

22

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 22 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

(i) Amount received from providing consultancy:
In India- ` 35,70,000
m
m c. o
In Country K - ` 12,00,000

.c o
(ii) Amount spent in earning these incomes:
em
Inm
a s
seIn Country K - ` 2,50,000 l
India - ` 9,60,000

g a
l(iii) ag
a Rent received from a shop in Country K- ` 55,000 p.m.
(iv) Expenses incurred in earing this rental income in Country K -
` 1,20,000
Additional information
(i) Country K provides 2 options to the assessee as far as taxation of
income from management consultancy is concerned -

m
co
Option 1 - at a flat rate of 20% without deduction of any expenses; or

.
Option 2 - at the rate of 37% after deduction of expenses in earning
the income.
s em
g l a
(ii) Country K taxes rental incomes at a flat rate of 27% after giving a

a
standard deduction of 20% for regular expenses. No other expense is
allowed to be deducted.
(iii) Country K does not have any tax deduction regulations at the source.
Miss Meera will opt for lowest possible tax in country K.
You are required to compute the total income and tax payable by Miss
Meera in India for A.Y. 2025-26 assuming she chooses to pay tax as per
default tax regime as per section 115BAC(lA). Ignore the provisions of

m
co
section 44ADA. India does not have any Double Taxation Avoidance

m .
Agreement with country K. Your calculations should be made upto 2

c. o Answer decimal points. (6 Marks)

se
m
s em g l a property of the
gla (a) (i) As per section 13(2), if any part of the income
a
or the

a trust or institution is or continues to be lent to any “specified person”
referred to in section 13(3) for any period during the previous year
without either adequate security or adequate interest or both, such
income or property is to be deemed to have been used or applied for

23

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 23 of 39

FINAL EXAMINATION: MAY 2025

the benefit of a person referred to in section 13(3).
In the present case, Mr. Keshav has made a substantial contribution of
` 70,000 which exceeds the limit of ` 50,000 to KRA Foundation, he
would fall within the category of persons specified under section
13(3).
KRA Foundation trust gave loan of ` 5 lakhs out of the income of the
trust without any security to Mr. Keshav though rate of interest i.e.,
12% is higher than the market rate of 11.50%, such income/loan
amount of ` 5 lakhs is deemed to have been used or applied for the
benefit of Mr. Keshav, being a person specified u/s 13(3). By virtue of
section 13(1)(c), the provisions of section 11 or 12 would not apply to
such income to exclude from the total income of the P.Y. 2024-25.
Consequently, the income of ` 5 lakhs would be considered as
specified income u/s 115BBI and be taxable @30%.
Further, in terms of section 271AAE, penalty of ` 5 lakhs would also
be leviable, calculated at 100% of income provided as a benefit,
where the violation is noticed for the first time during any previous
year.
(ii) Voluntary contribution of ` 95 lakhs received with a specific direction
that it should form part of the corpus of the trust, would be eligible
for exemption, since investment in shares of M/s Healthy Care Ltd. a
public sector company is permissible mode of investment under
section 11(5).
However as per provisions of section 11(5), where an investment is
made in the shares of any public sector company and such public
sector company ceases to be a public sector company, the investment
so made shall be deemed to be an investment made for a period of
three years from the date of such cessation.
Therefore, it would continue to be eligible for exemption for a period
of 3 years from the cessation date i.e., 31.3.2025 on which M/s
Healthy Care Ltd., ceases to be a public sector company due to the
disinvestment.
(iii) A trust is required to deduct tax at source u/s 194J even if it is not
subjected to tax audit u/s 44AB. Moreover, as per Explanation 3 to
section 11(1), where tax has not been deducted at source on any
24

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 24 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

expenditure, 30% of disallowance of expenditure for non-deduction
of tax at source under section 40(a)(ia) would mutatis mutandis apply

m
c. o
to a trust in determining application of income.

m
co m
Accordingly, ` 30,000 being 30% of ` 1,00,000 would not be treated

.
as application of income for non-deduction of tax at source on the
m s e
se consultancy fees paid to Mr. Suresh by M/s Medi Care Foundation.
l a
l a ag
ag
(b) Computation of total income and tax payable by Miss Meera for
A.Y. 2025-26 under the default tax regime under section 115BAC

Particulars ` `
Income from House Property
Annual Value [` 55,000 x 12] 6,60,000
Less: Deduction under section 24(a) @30% 1,98,000
4,62,000

m
co
Profits and Gains of Business or Profession

.
em
Amount for consultancy in India 35,70,000
Less: Expenses
a s K
Amount for consultancy inlCountry
9,60,000 26,10,000

ag
12,00,000
Less: Expenses 2,50,000 9,50,000
Gross total income/ Total income 40,22,000
Tax liability on ` 40,22,000
Tax on total income [30% of ` 25,22,000 + 8,96,600
` 1,40,000]
Add: Health and Education cess@4% 35,864

m
c. o
9,32,464

m
c. o m
Less: Deduction u/s 91 (See Working Note 3,12,617

em se 6,19,847
below)

s g la
la
Tax payable

g a
a
Tax payable (Rounded off) 6,19,850
Working Note: Calculation of deduction
under section 91

25

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 25 of 39

FINAL EXAMINATION: MAY 2025

Average Rate of tax in Country K
Tax on consultancy
Option 1 - Tax @20% on ` 12 lakhs
= ` 2,40,000
Option 2 – Tax @37% on ` 9,50,000
= ` 3,51,500
Option 1 is beneficial for Ms. Meera
= ` 2,40,000
Tax on rental income
27% on ` 5,28,000 [` 6,60,000 – 20%] =
` 1,42,560
Total Tax Liability in Country K = ` 3,82,560
Total Income in Country K = ` 12,00,000 +
` 5,28,000 = ` 17,28,000
Average Rate of tax in Country K
= 3,82,560/17,28,000 x 100 = 22.14%
Indian Rate of tax = 9,32,464/40,22,000 x
100 = 23.18%
Doubly taxed income pertaining to
Country K = Consultancy income of
` 9,50,000 [` 12,00,000 – ` 2,50,000] +
Income of house property of ` 4,62,000
= ` 14,12,000
Deduction u/s 91= Lower of average rate of 3,12,617
tax in Country K and Indian rate of tax rate of
tax x Doubly taxed income = [22.14% x
` 14,12,000]

Question 4
(a) Examine the applicability of tax deducted at source/tax collected at source
and calculate the amount of TDS/TCS in the following independent cases as
per the provisions applicable for A.Y. 2025-26:

26

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 26 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

(i) Ubclick Inc., a non-resident company (incorporated in Country Y) is
engaged in the manufacturing of paints and has factories across the

m
c. o
world including India. The factory in India produces paints and sells in

m
the Indian market as well as worldwide since past 10 years. Its turnover

.co
for the last 3 years in India was F.Y. 2021-22 ` 200 crores, F.Y. 2022-23
s em
em
` 490 crores and F.Y. 2023-24 ` 540 crores. On 1.5.2024, it bought raw
l a
l a s materials from Colours Private Ltd., a domestic company for ` 1 crore.
ag
ag
Colours Private Ltd.'s turnover for the F.Y. 2021-22 was ` 5 crores,
F.Y. 2022-23 was ` 8 crores and F.Y. 2023-24 was ` 9 crores. India does
not have a DTAA with Country Y. Discuss the TDS/ TCS implications of
this transaction. (2 Marks)
(ii) M/s Seal India Pvt. Ltd., a domestic company, engaged in business of
manufacturing and selling of washing powder and bars. For the
purpose of promoting and to boost sales of its products it hires agents,
to whom incentives and commission is paid on the basis of percentage

m
of sales made through them. During the P.Y. 2024-25, Mr. Prakash, a

. co
resident individual, is working as an agent for the company. The

em
company paid him following commissions and incentives on the basis
of target achieved by him:
l a s
Date of
payment/ credit a g Particulars Amount
(` )
13-07-2024 Commission for achieving sales 1,75,000
target of Quarter 1
10-01-2025 Commission for achieving sales 1,60,000
target of Quarter 3
15-01-2025 Other Incentives 1,60,000

m
co
The figure of other incentives includes reimbursement of expenses of
m .
c. o m
` 1,00,000 incurred on booking of air tickets for an event in Singapore

em se
for Mr. Prakash and his family members who accompany him. The

s
company has also given Mr. Prakash laptop worth ` 60,000 for
g la
la a
achieving sales target for the month of September, 2024 in October

ag 2024. (4 Marks)
(iii) AntiqueMasters.com is an online portal that provides e-auction for
antique items like coins, artifacts etc. and operates only in India. The
owners list their items on the portal and interested buyers place bids

27

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 27 of 39

FINAL EXAMINATION: MAY 2025

for them on the portal itself. The portal provides the details of the
buyers who make the top 3 bids. The seller chooses the buyer and
intimates the portal. The portal takes money from the buyer and
transfers the amount to the seller's bank account after deducting the
agreed commission. The seller then delivers the item directly to the
buyer's address. What will be the TDS obligations on the portal with
respect to a sale amounting to ` 11 lakhs made by Mr. Sonu, an Indian
resident, on the portal on 28 th February 2025? (2 Marks)
(b) Indiana Ltd., an Indian company engaged in the manufacturing and trading
of electronic projectors. Indiana Ltd. has the following stakes in different
foreign entities:
It holds 30% voting rights in Star GmbH, a German company.
It appoints 6 directors in Moon Inc., an American company. Moon Inc. has
15 directors on its board.
It has given guarantee for a loan amounting to Euro 12 million taken by
Astroid Ltd. of the UK. The value of total borrowing of Astroid Ltd. is Euro
150 million and the book value of total assets of Astroid Ltd. is Euro 160
million.
Indiana Ltd. entered into the following transactions with these entities
during the F.Y. 2024-25:
Transaction with Star GmbH
Indiana Ltd. bought 1,000 units of electronic projectors from Star GmbH for
` 15,000 per unit for the purpose of resale in India. It sold these projectors
in India without doing any modification thereon. The gross profit margin
earned from such resale was 20% of Sale price. Star GmbH provided after-
sales warrantee of 1 year. The cost of warrantee is 3% of sale price.
Transaction with Moon Inc.
Indiana Ltd. bought 1,000 units of similar electronic projectors (as
purchased from Star GmbH) from Moon Inc. for ` 14,000 per unit for the
purpose of resale in India. It sold these projectors in India without doing any
modification and earned gross profit margin of 30% of sale price. Moon Inc.
provided after-sales warrantee of 9 months. The cost of warrantee is 3% of
sale price.

28

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 28 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

Transaction with Astroid Ltd.
Indian Ltd. provided consultancy services to Astroid Ltd. for ` 8,000 per hour
m
c. o
for 5,000 hours. It provided similar services to M/s Comet Ltd., an unrelated

m
co m
Indian company for ` 9000 per hour.

m . s e
a
You are required to discuss:
(i) eWhether Star GmbH, Moon Inc. and Astroid Ltd. are associated l
l a s enterprises/deemed associated enterprises of Indiana Ltd. as per sectionag
ag 92A of the Act.
(ii) Compute the Arm Length Price (ALP) of the international transactions
made between them, wherever applicable. (6 Marks)
Answer
(a) (i) Ubclick Inc., a non-resident company has to deduct tax at source
under section 194Q @ 0.1% on ` 50 lakhs being the sum exceeding

m
` 50 lakhs on purchase of raw material of ` 1 crore from Colours

. co
Private Ltd. since its turnover exceeds ` 10 crores during the

em
P.Y. 2023-24 and purchase of raw material from Colours Private Ltd. is

a s
effectively connected with its factory, being a permanent

l
=g
establishment in India.
Tax to be deducted a ` 50,00,000 x 0.1% = ` 5,000
(ii) M/s Seal India Pvt. Ltd. is required to deduct tax at source on
commission paid to Mr. Prakash under section 194H @5% till
30.9.2024 and @2% from 1.10.2024, being sum exceeding ` 15,000.
Reimbursement of expenses of ` 1 lakh for booking air tickets for
Mr. Prakash and his family other incentive of ` 60,000 and laptop of
` 60,000 for achieving sale target is benefit or perquisite arising to
m
c. o
Mr. Prakash from his business or the exercise of his profession, being

m
c. o m
sum exceeding ` 20,000. Accordingly, M/s Seal India Pvt. Ltd. is

s e
required to deduct tax at source under section 194R @10%.

s em l a
la ag
Tax to be deducted under section 194H = 5% on ` 1,75,000 + 2% on

g
` 1,60,000 = ` 11,950

a Tax to be deducted under section 194R = 10% on ` 1,00,000 (Air
tickets) + ` 60,000 (other incentive) + ` 60,000 (laptop) = ` 22,000

29

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 29 of 39

FINAL EXAMINATION: MAY 2025

(iii) As per section 194-O, AntiqueMasters.com, an e-commerce operator,
is required to deduct tax at source @0.1% on ` 11,00,000, being the
gross amount of sale of products of Mr. Sonu, an e-commerce
participant, since such sale of goods is facilitated by
AntiqueMasters.com through its digital facility.
Thus, AntiqueMasters.com is required to deduct tax of ` 1,100, being
0.1% of ` 11,00,000.
(b) (i) Indiana Ltd., an Indian company and Star GmbH, a German company
are deemed to be associated enterprises as per section 92A(2), since
Indiana Ltd. holds more than 26% of voting power i.e., 30% in Star
GmbH.
Indiana Ltd. and Moon Inc., an American company are not deemed to
be associated enterprises as per section 92A(2), since Indiana Ltd.
appoints less than half of the directors of Moon Inc. i.e., only 6 out of
15 directors.
Indiana Ltd. and Astroid Ltd., UK are not deemed to be associated
enterprises as per section 92A(2), since Indiana Ltd. guarantees less
than 10% i.e., 8%, in this case (Euro 12 million/ Euro 150 million) of
the total borrowing of Astroid Ltd.
(ii) The transaction of purchasing electronic projectors from Star GmbH
falls within the meaning of “international transaction”. Hence, transfer
pricing provisions would be attracted in this case. Indiana Ltd.
purchases similar electronic projectors from Moon Inc., the
transaction would be uncontrolled transaction.
Computation of Arm’s length price
`
Resale price of electronic projectors purchased from 1,87,50,000
Star GmbH [(` 15,000 + 20/80 of ` 15,000) x 1,000
unit]
Less: Profit margin with reference to uncontrolled 56,25,000
transaction between Indiana Ltd. and Moon Inc.
[30% on sale price]
1,31,25,000
Add: Cost of warranty [Star GmbH provides warranty 1,40,625

30

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 30 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

for 1 year whereas Moon Inc. has provided warranty
of 9 months. Therefore, adjustment for the cost of

m
c. o
such warranty has to be carried out for 3 months

m
co
@3% of sales price. [ ` 1,87,50,000 x 3% x 3/12]

. em
s
Arm’s length price 1,32,65,625

em l a
a s
Question 5
(a) lAnswer any two out of the following three sub-parts viz (i), (ii) and (iii): a g
ag (i) Mr. Rajneesh, a resident individual, during the course of assessment
proceedings, was found guilty of making false entries in his books of
accounts to evade payment of taxes. The assessing officer initiated
penalty proceedings against him under section 271AAD. The penalty
that is likely to be levied is ` 3 crores. The assessing officer passed an
order to provisionally attach the properties of the assessee on 31 st May
2024, since the AO is of the opinion that it is necessary to do so to

m
c. o
protect the interest of the revenue. AO also took prior approval from
the Principal Commissioner of Income-tax for passing such order. You

em Officer valid? Is there any monetary
are required to answer the following questions in this regard:

a s
tol the provisional attachment of properties in the
(A) Is the action of the Assessing
limit with respect g
present case? a
(B) Assume all the procedural aspects of the provisional attachment
have been met, discuss the validity period of such provisional
attachment. Can it be extended?
(C) Is there any option available to Mr. Rajneesh where such
provisional attachment of property can be avoided? If, yes, explain

m
the relevant provisions in this regard. (4 Marks)

m .co
c. o
(ii) Please answer the following question covering aspects relating to Issue

m
se
Involved, Provision applicable, Analysis and Conclusion as per latest

em la
Court rulings.

las The assessee, M/s TQR LLP, a registered LLP, is engaged in the
a g
ag wholesale and retail trade of beverages. The assessee debited ` 5 crores
to the Profit & Loss account in respect of surcharge on sales tax and
turnover tax paid to the State Government. In the assessment order
under section 143(3) of the Income-tax Act, 1961 the Assessing Officer

31

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 31 of 39

FINAL EXAMINATION: MAY 2025

made an addition of ` 5 crores on account of disallowance of surcharge
on sales tax and turnover tax to the returned income.
The assessee contends that the order of the assessment is bad in law as
no notice was issued under section 143(2) even though the assessee
had participated in the assessment proceedings. The assessing officer,
relying on section 292BB, contends that when assessee has participated
in assessment proceedings, now he cannot raise any objection on the
assessment order. On the basis of relevant case laws and provisions of
the Act, Examine the validity of the contentions of both. (4 Marks)
(iii) Mr. Baljit, a resident individual, e-filed his return of income for
assessment year 2024-25 on 30.07.2024, offered entire interest income
of ` 25 lakhs received from M/s Sanjay Finance Ltd., Delhi (deductor)
and claimed the credit for Tax Deducted at source (TDS) by the said
deductor.
TDS credit was not allowed by the department, pursuant to intimation
issued u/s 143(1). The application filed under section 154 was also
rejected for the reason that TDS credit is not reflected in Form 26AS
and consequently, the said tax was recovered from the assessee itself.
Advice, Mr. Baljit, on the basis of latest Court rulings, whether the
department can recover tax due from him. Discuss the relevant
Provisions and give conclusion. (4 Marks)
(b) (i) Under BEPS Action Plan 13, BEPS report recommends that countries
adopt a standardized approach to transfer pricing documentation,
wherein it mandates the three-tier structure of (i) Master File (ii) Local
File and (iii) Country-by-Country report. What are the advantages of
the three-tier structure mandated by BEPS Action Plan 13? (3 Marks)
(ii) Explain "Static approach" and "Ambulatory approach" with regard to
meaning of a term as per the domestic law, not defined in the
International Tax treaty. (3 Marks)
Answer
(a) (i) (A) Yes, the action of the Assessing Officer is valid, since the
Assessing Officer is empowered to provisionally attach any
property of the assessee, by an order in writing, during the
pendency of assessment or reassessment proceedings of any
income which has escaped assessment or for imposition of

32

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 32 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

penalty under section 271AAD (penalty leviable for false entry
etc. in books of accounts) with the prior approval of the PCC or

m
c. o
CC or PC or C or PDG or DG or PD or D of Income-tax, if he is of

om
the opinion that it is necessary to do so for the purpose of

c.Such
protecting the interests of the revenue.
e m
em aggregate of amounts of penalty likely to be imposed under gla s
s
provisional attachment can be made where the amount or

g la section 271AAD exceeds ` 2 crores. a
a (B) The provisional attachment shall be valid till 30.11.2024 for a
period of 6 months from the date of the order. The said period
may be extended for a total period not exceeding two years or
sixty days after the date of assessment or reassessment,
whichever is later.
(C) If Mr. Rajneesh furnishes a guarantee from a scheduled bank, for

m
an amount not less than the fair market value of such

co
provisionally attached property or for an amount which is
.
em
sufficient to protect the interests of the Revenue, such provisional

s
attachment can be revoked.

g l a
(ii) Issue Involved: The issue under consideration is whether the
a
participation by the assessee in assessment proceedings would make
the omission to issue notice under section 143(2) a curable defect on
account of the deeming provision under section 292BB.
Provision applicable: As per section 292BB, any notice which is
required to be served upon an assessee shall be deemed to have
been duly served and the assessee would be precluded from taking
any objection that the notice was -

m
co
(a) not served upon him; or

m .
c. o m
(b) not served upon him in time; or

em
(c) served upon him in an improper manner,
la se
las a
if he had appeared in any proceedings or co-operated in any enquiry
g
ag relating to assessment or re-assessment.
Where any scrutiny proceeding is proposed to be taken for
completion of assessment u/s 143(3), notice u/s 143(2) should be
served on the assessee, within the prescribed time.

33

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 33 of 39

FINAL EXAMINATION: MAY 2025

Analysis: Issue of notice under section 143(2) is mandatory for
making a regular assessment under section 143(3). Section 292BB is a
deeming provision that seeks to cure defects in any notice issued
under any provision of the Income-tax Act, 1961, if the assessee has
participated in the proceedings.
For section 292BB to apply, the notice must have emanated from the
Department. It is only the infirmities in the manner of service of
notice that the section seeks to cure. The section is not intended to
cure the complete absence of notice itself. Accordingly, non-issuance
of notice under section 143(2) is not a curable defect under section
292BB in spite of participation by the assessee in assessment
proceedings.
Conclusion: In the present case, since the assessment of M/s TQR LLP
was completed u/s 143(3) without issuing notice u/s 143(2), the
assessment is bad in law and not a curable defect u/s 292BB.
Therefore, the contention of M/s TQR LLP is valid and the contention
of the Assessing Officer is invalid in spite of the fact that M/s TQR LLP
participated in the assessment proceedings.
Note – The facts given in the question are similar to the facts in CIT v.
Laxman Das Khandelwal (2019) 417 ITR 325 (SC). The above answer is
based on the rationale of the Apex Court ruling in the said case.
(iii) Deduction of taxes at source is one of the methods of collecting tax.
The tax deducted at source is part of the assessee's income and
therefore, the gross amount is included in the total income and
offered to tax. It is on this premise that the tax deducted at source
would have to be treated as tax paid on behalf of the assessee.
Section 205 provides for restriction against direct demand on
assessee to the extent to which tax has been deducted from that
income. Thus, no recovery of TDS can be made from the deductee.
Further, the amount retained against remittance made by the payer is
nothing but tax which the assessee/deductee has offered for tax by
grossing up the remittance. If credit is not given, the Department
would end up doing indirectly what they cannot do directly i.e.,
recover tax directly from the deductee.

34

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 34 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

The assessee had followed the regime put in place in the Act for
collecting tax albeit, through an agent (deductor) of the Government.

m
c. o
The recovery proceedings could only be initiated against the

m
deductor, as the deductor, an agent for collecting tax, had failed to

.co
deposit the tax with the Government. Therefore, the deductee should
s em
e m
be given credit for TDS though it was not reflected in Form 26AS and
l a
l a s a g
no recovery towards TDS could be made from the assessee in terms

ag Thus, in the present case, the Department’s action in recovering the
of the provisions of section 205.

tax due from Mr. Baljit on the ground that it is not reflected in Form
26AS, is bad in law
Note – The facts given in the question are similar to the facts in BDR
Finvest Pvt. Ltd. v. DCIT [2024] 462 ITR 141 (Delhi). The above answer is
based on the rationale of the Delhi High Court ruling in the said case.

m
(b) (i) Advantages of the three-tier structure mandated by BEPS Action
Plan 13:
c o
. articulate consistent transfer pricing
e m
(a) Taxpayers will be required to
positions;
a s
gl would get useful information to assess
transfer pricingarisks;
(b) Tax administrations

(c) Tax administrations would be able to make determinations about
where their resources can most effectively be deployed, and, in
the event audits are called for, provide information to commence
and target audit enquiries;
(ii) Static Approach – Under static approach, a term not defined in the

m
treaty to be assigned the meaning as per the domestic law which

m
prevailed on the date of signing the international tax treaty.
Ambulatory Approach – Under Ambulatory approach, a .term not c o
c. o m domestic
defined in the treaty to be assigned the meaning as perethe
s
s em law which is prevailing on the date of application ofathe international
l
gla tax treaty. ag
a All Model Commentaries favour ambulatory approach, however with
one caution that such approach cannot be applied when there is a

35

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 35 of 39

FINAL EXAMINATION: MAY 2025

radical amendment in the domestic law thereby changing the sum
and substance of the said term.
Question 6
(a) (i) Mr. Ram is engaged in trading of mobiles and is the proprietor of 6
M/s. Narang Mobiles. His turnover and aggregate receipts for the
financial year 2024-25 are ` 5,12,00,000. He received ` 22,00,000 from
sundry debtors in cash and remaining ` 4.90 crores were received
through online banking channel before 31.03.2025. He also made a
total business payment of ` 5,50,00,000 against purchase of goods,
rent; salary and other business expenses during the previous year
2024-25, out of which total cash payments amounted to ` 28,00,000
and remaining all kind of payments made through online banking
channel. No other amount received or paid during the year on business
account. He has no other business in his name.
Whether Mr. Ram is required to get books of accounts of Narang
Mobiles compulsory audited for the A.Y. 2025-26 as per section 44AB of
the Income-tax Act, 1961? Discuss.
Assuming Mr. Ram is required to get his accounts audited and in the
light of the Tax Audit applicability u/s 44AB of the Act, Also discuss
whether the following issue need to be reported by the Chartered
Accountant of Mr. Ram in the tax audit report as applicable for
A.Y. 2025-26 u/s 44AB in relation to Tax audit of M/s. Narang' Mobiles
in view of section 269ST. You need to give the relevant provisions of law
in support of your answer.
Narang Mobiles issued an invoice of ` 3,50,000 to M/s. XYZ and Co. for
sale of mobiles on 10.02.2025. M/s. XYZ and Co. made payment of
` 2,50,000 through account payee cheque. The balance of ` 1,00,000
has been paid on 10 different dates in cash, through payment of
` 10,000 on each day before 31.03.2025.
Ignore the Clause numbers given in Form 3CD prescribed for Tax Audit
Report u/s 44AB for such reporting. (6 Marks)
(ii) M/s RH Steels Ltd. is a company incorporated in India. It sets up two
units, one in a Special Economic Zone (SEZ) and another in non-SEZ
area for manufacturing of steel bottles. The company transfers the
product of non-SEZ unit to SEZ unit at a price lower than the fair

36

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 36 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

market value. In respect of such products transferred from non-SEZ
unit, only insignificant manufacturing activity takes place in the SEZ

m
c. o
unit. In this way, the company is able to show higher profits in SEZ unit

m
than in non-SEZ unit, and consequently claims higher deduction in

.co
computation of income. The sales from bottles transferred from non-
s em
e m
SEZ unit constitute 15% of the total turnover of SEZ unit. Can
l a
a s
(b) lABC Ltd., an Indian company has entered into an agreement for providinga
provisions of GAAR be invoked?
g
(4 Marks)

ag technical knowhow with PQR Inc., a company registered in Country A. PQR
Inc. has a sister concern, XYZ LLC., in Country A, which has obtained
Advance Ruling on an identical technical know-how agreement with
another Indian company, MNC Ltd.
The agreement is expected to be of ` 500 crores and expected tax liability
would be ` 150 crores. ABC Ltd. wants to make use of this advance ruling
for its assessment proceedings. So, it applied to Board for Advance Rulings

m
co
to issue same ruling for ABC Limited, being identical ruling. To verify the

.
transaction between ABC Ltd and PQR Inc., the Board for Advance Rulings

s
compel the production of books of accounts.
em
g l a
Can ABC Ltd make an application for advance ruling with Board for

a
Advance Rulings as per the Act. Also Examine whether the Board can ask for
production of books of accounts when ruling on similar issue has already
been given. Examine in the context of the provisions of the Income-tax Act,
1961? (4 Marks)
Answer
(a) (i) As per section 44AB, every person carrying on business or profession
is required to get his accounts audited before the “specified date” by

o
a Chartered Accountant, if the total sales, turnover or gross receipts
m
m
in business exceeds ` 1 crore in any previous year.
.c
c. o However, tax audit is not required in case of such personm
s e in business
carrying on

s em ≤ ` 10 crore in the relevant previous year (P.Y.), if - l
business whose total sales, turnover or gross receipts
g a
gla a
a - aggregate cash receipts including amount received for sales,
turnover, gross receipts in the relevant previous year ≤ 5% of
such receipts; and

37

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 37 of 39

FINAL EXAMINATION: MAY 2025

- aggregate cash payments including amount incurred for
expenditure in the relevant P.Y. ≤ 5% of such payments
In this case, the percentage of cash receipts of ` 22 lakhs to
aggregate receipts of ` 5.12 crore is 4.30% and the percentage of
cash payments of ` 28 lakhs to aggregate payments of ` 5.50 crore is
5.09%.
Since the cash payments made during the year exceed 5% of
aggregate payments, the M/s Narang Mobiles is required to get its
accounts audited under section 44AB and furnish audit report before
the specified date, irrespective of the fact that its turnover does not
exceed ` 10 crores and its cash receipts do not exceed 5% of total
receipts.
Further, particulars of each receipt in an amount exceeding the limit
specified in section 269ST i.e., ` 2 lakhs, in aggregate from a person in
a day or in respect of a single transaction or in respect of transactions
relating to one event or occasion from a person, during the previous
year, where such receipt is otherwise than by a cheque or bank draft
or use of electronic clearing system through a bank account is to be
reported in Form 3CD.
In this case, M/s XYZ made payment of ` 2.5 lakhs by account payee
cheque and the balance of ` 1 lakh in cash in aggregate during the P.Y.
2024-25 to M/s Narang Mobile. Since the amount received in cash by
M/s Narang Mobiles is less than ` 2 lakhs and the transaction is not
covered u/s 269ST, there is no need to report this transaction in the tax
audit report of M/s Narang Mobiles by his Chartered Accountant.
(ii) M/s RH Steels Ltd. has tried to take advantage of tax provisions by
diverting profits from non-SEZ unit to SEZ unit. This is not the
intention of the SEZ legislation.
However, such tax avoidance is specifically dealt with through the
provisions contained in section 10AA(9), as per which provisions of
section 80-IA(8) would get attracted in such a case.
Further, if the aggregate of such transactions entered into in the
relevant previous year exceed the threshold of ` 20 crore, domestic
transfer pricing regulations under section 92BA would be attracted.

38

©The Institute of Chartered Accountants of India
For more Question Papers, Sample Papers, Notes & Syllabus visit Page 38 of 39

m
m .co
c. o

e m
em l a s
s a g
DIRECT TAX LAWS & INTERNATIONAL TAXATION

Thus, in this case, due to application of specific anti-avoidance
provisions, no tax benefit can be derived by M/ RH Steels Ltd. by

m
c. o
transferring the products from non-SEZ unit to SEZ unit at less than

m
fair market value.

.co
Hence, the Revenue need not invoke GAAR in such a case, though GAAR
s em
e m l a
s
and SAAR can co-exist as per clarification given in the CBDT Circular.

l a ag
ag
(b) A resident can make an application for advance ruling in relation to his tax
liability arising out of one or more transactions valuing ` 100 crore or
more in total which has been undertaken or is proposed to be
undertaken.
Since the value of transactions between M/s ABC Ltd and M/s PQR Inc for
providing technical knowhow exceeds ` 100 crores, ABC Ltd. can make an
application for advance ruling with the Board for Advance Rulings.
As per section 245U, the Board for Advance Rulings shall have all the

m
powers of the Civil Court in respect of discovery and inspection, enforcing

. co
the attendance of any person, including any officer of a banking company

em
and examining on oath, issuing commissions and compelling the

a s
production of books of accounts and other documents.
l
a g
Accordingly, the Board can ask for the production of books of accounts
before passing advance ruling for ABC Ltd.

m
m .co
c. o se
m
s em g la
gla a
a

39

m .
.co s e m
m
e Accountants of India l a
l a s a g
g
©The Institute of Chartered
a For more Question Papers, Sample Papers, Notes & Syllabus visit Page 39 of 39