ITI Departmental Examination 2025 (Paper I): Solved Previous Year Question Paper with Answers & Explanations (Part-2)

The overwhelming response to Part 1 (Questions 1–50) of this solved previous year question paper series has reinforced the importance of practicing authentic departmental examination questions while preparing for the ITI Departmental Examination. Previous years’ papers not only help candidates understand the pattern of examination but also provide valuable insight into the type of legal, procedural, and computational questions frequently asked by the Department.

Continuing the series, this article covers Questions 51 to 100 from Paper I – Income Tax Law and Computation of the Income Tax Inspector (ITI) Departmental Examination 2025. The questions included in this part test candidates’ knowledge of several important provisions of the Income Tax Act, 1961, including capital gains, deductions under Chapter VI-A, international taxation, assessment procedures, reassessment, appeals, rectification, TDS, taxpayer obligations, and other practical aspects of Income Tax administration.

As in Part 1, each question has been reproduced from the original examination paper and is accompanied by:

• The correct answer.
• A concise explanation highlighting the relevant legal provision or principle.
• References to the applicable sections of the Income Tax Act, wherever relevant.

The explanations are intentionally brief to facilitate quick revision while preserving the conceptual clarity required for objective-type departmental examinations. Candidates are advised to refer to the Bare Act and the relevant Rules for a detailed understanding of the underlying statutory provisions.

What This Part Covers

In this article, you will find:

• Questions 51 to 100 of the original ITI Departmental Examination 2025.
• Correct answers based on the official question paper.
• One-line conceptual explanations for quick revision.
• Coverage of frequently tested provisions of the Income Tax Act, 1961.
• A practical revision resource for departmental examination aspirants.

Whether you are appearing for the examination for the first time or revising before the next departmental examination, this solved paper will help you identify important topics, strengthen your conceptual understanding, and improve your speed and accuracy in objective-type questions.

Let’s continue with Questions 51–100 of Paper I – Income Tax Law and Computation.

Question 51. Please match the following sections with their relevant provisions:

(i) Section 74
(ii) Section 74A
(iii) Section 75
(iv) Section 78

a) (i)-b, (ii)-d, (iii)-a, (iv)-c | b) (i)-c, (ii)-d, (iii)-b, (iv)-a | c) (i)-c, (ii)-a, (iii)-d, (iv)-b | d) (i)-a, (ii)-b, (iii)-d, (iv)-c

Correct Answer: (b)

Explanation: Sections 74, 74A, 75 and 78 respectively deal with capital losses, specified source losses, firm’s losses and change in constitution/succession.

Question 52. What happens in case of change in constitution of a partnership firm due to death or retirement of a partner?

a) The share of loss attributable to the outgoing partner cannot be carried forward and set off by the firm. | b) Restriction applies only to business loss and not to unabsorbed depreciation/scientific research/family planning expenditure. | c) Both (a) and (b) | d) Neither (a) nor (b)

Correct Answer: (c)

Explanation: Section 78 restricts carry forward of the outgoing partner’s share of loss but not unabsorbed depreciation and certain specified allowances.

Question 53. Match the following Sections with their relevant provisions:

(i) Section 80A
(ii) Section 80AB
(iii) Section 80AC
(iv) Section 80B

a) (i)-b, (ii)-d, (iii)-a, (iv)-c | b) (i)-c, (ii)-d, (iii)-b, (iv)-a | c) (i)-c, (ii)-a, (iii)-d, (iv)-b | d) (i)-d, (ii)-a, (iii)-b, (iv)-c

Correct Answer: (d)

Explanation: These sections respectively deal with deductions, computation of deductions, mandatory filing of return and definitions under Chapter VI-A.

Question 54. An Indian company can claim deduction under Section 80GGB for contribution to a political party subject to:

a) Political party registered under Section 29A of the Representation of the People Act, 1951. | b) Contribution made through prescribed banking modes. | c) Company need not obtain Income Tax Department approval. | d) (a) and (b) only

Correct Answer: (d)

Explanation: Deduction is allowed only when the political party is registered and the contribution is made through permissible non-cash modes.

Question 55. Section 80-IA deals with:

a) Deduction for industrial undertakings after a certain date. | b) Deduction in respect of profits from infrastructure undertakings and enterprises. | c) Special Economic Zones. | d) Specified business.

Correct Answer: (b)

Explanation: Section 80-IA grants deduction for eligible infrastructure development undertakings.

Question 56. As per Section 69D, repayment of a hundi loan otherwise than through an account payee cheque or bank draft is:

a) Allowed as expenditure. | b) Deemed income of the assessee in the year of repayment. | c) Taxed at concessional rate. | d) Exempt if obtained from a relative.

Correct Answer: (b)

Explanation: Section 69D deems such repayment as income in the year of repayment.

Question 57. Who is NOT deemed owner of a house property?

a) Transferor to spouse/minor child without adequate consideration. | b) Holder of impartible estate. | c) Member allotted property by co-operative society. | d) Person acquiring lease rights for less than 12 years.

Correct Answer: (d)

Explanation: A lease for less than twelve years does not create deemed ownership under Section 27.

Question 58. Business loss carried forward under Section 72 cannot be set off when:

a) Business restarted under same ownership. | b) Same owner continues business with changed activity. | c) Business continues under different owner due to succession (except inheritance). | d) Business merged.

Correct Answer: (c)

Explanation: Carry forward is generally denied where ownership changes except in specified cases like inheritance.

Question 59. Who is eligible for rebate under Section 87A?

a) HUF | b) Partnership Firm | c) Resident Individual having total income within the prescribed limit. | d) Non-resident Individual.

Correct Answer: (c)

Explanation: Section 87A rebate is available only to eligible resident individuals.

Question 60. Section 79 permits carry forward of losses by a closely held company if:

a) More than 51% voting power continues with the same shareholders. | b) Company is engaged in manufacturing. | c) Dividend declared. | d) Company exists for five years.

Correct Answer: (a)

Explanation: Continuity of beneficial voting power exceeding 51% is the primary condition under Section 79.

Question 61. Which contribution is NOT eligible under Section 80CCC?

a) LIC Pension Plan | b) Private Pension Fund | c) National Pension System (NPS) | d) Atal Pension Yojana

Correct Answer: (c)

Explanation: Contribution to NPS is governed by Section 80CCD and not Section 80CCC.

Question 62. Relief under Section 89 for arrears of salary is based on:

a) Difference in tax with and without spreading arrears over relevant years. | b) Fixed deduction of 30%. | c) Previous year’s income only. | d) Employer’s discretion.

Correct Answer: (a)

Explanation: Relief is computed by comparing tax liability before and after spreading the arrears.

Question 63. Mr. X has carried forward business loss of Rs.25 lakh. In the next year he has only income from other sources of Rs.20 lakh. His total income will be:

a) Rs.5 lakh | b) Rs.20 lakh | c) Rs.25 lakh | d) Rs.30 lakh

Explanation: Brought forward business loss cannot be set off against income from other sources.

Question 64. Deduction available under Section 80D is:

a) Rs.77,000 | b) Rs.25,000 | c) Rs.30,000 | d) Rs.72,000

Correct Answer: (d)

Explanation: Deduction comprises Rs.25,000 for self/family and Rs.47,000 for senior citizen parent, totaling Rs.72,000.

Question 65. Deduction available to Ms. Sugandha under Section 80TTB is:

a) Rs.10,000 | b) Rs.60,000 | c) Rs.50,000 | d) Rs.40,000

Correct Answer: (c)

Explanation: Senior citizens can claim deduction up to Rs.50,000 under Section 80TTB.

Question 66. Disability under Section 80U includes:

a) Autism | b) Cerebral Palsy | c) Both (a) and (b) | d) None

Correct Answer: (c)

Explanation: Both autism and cerebral palsy are recognised disabilities under the Act.

Question 67. Section 90 authorises agreements with foreign countries for:

a) 1 & 2 | b) 1,2 & 3 | c) 1,2 & 4 | d) 1,2,3 & 4

Correct Answer: (c)

Explanation: Section 90 covers avoidance of double taxation, relief from double taxation and recovery of taxes.

Question 68. A company opting for Section 115BAA cannot claim:

a) Depreciation | b) Additional depreciation | c) Scientific research deduction | d) Both (b) and (c)

Correct Answer: (d)

Explanation: Additional depreciation and specified deductions are not available under Section 115BAA.

Question 69. Deduction under Section 35E is allowable as:

a) Nil | b) 1/5th of eligible expenditure for five years | c) 1/10th for ten years | d) 1/20th for twenty years

Correct Answer: (b)

Explanation: Section 35E allows amortisation of eligible expenditure in five equal annual instalments.

Question 70. Under Section 115BBJ, tax at 30% on online gaming winnings is charged on:

a) Gross winnings | b) Net winnings | c) Aggregate of the absolute amount of net winnings from each game during the year | d) Gross transaction amount

Correct Answer: (c)

Explanation: Section 115BBJ taxes the aggregate net winnings computed in the prescribed manner.

Question 71. Based on the facts given, the disallowance under Section 40 for A.Y. 2024-25 is:

a) Rs.14,25,000 | b) Rs.10,75,000 | c) Rs.10,00,000 | d) Rs.9,50,000

Correct Answer: (b)

Explanation: Disallowance includes TDS default, Income Tax and employees’ PF not deposited within the prescribed time; cess is allowable after judicial developments applicable to the examination pattern.

Question 72. For computation of MAT under Section 115JB, Book Profit means profit as per Profit & Loss Account:

a) 1, 2 and 5 | b) 1, 2, 4 and 5 | c) 2, 3, 4 and 5 | d) 1, 3 and 4

Correct Answer: (a)

Explanation: Book profit is adjusted by specified additions and deductions prescribed under Explanation 1 to Section 115JB.

Question 73. A resident having income in Algeria on which tax has been paid can claim relief under:

a) Section 90 | b) Section 90A | c) Section 91 | d) Section 91A

Correct Answer: (a)

Explanation: Section 90 provides relief where India has entered into a Double Taxation Avoidance Agreement (DTAA).

Question 74. Which section prescribes the tax rate for income from Virtual Digital Assets (Cryptocurrency)?

a) Section 115BBH | b) Section 115BBG | c) Section 115BBI | d) Section 115BBJ

Correct Answer: (a)

Explanation: Section 115BBH taxes income from transfer of Virtual Digital Assets at the prescribed rate.

Question 75. To qualify under Section 115BAB, a new domestic manufacturing company should:

a) Set up from 01.10.2019 and commence production before 31.03.2024. | b) Set up from 01.10.2019 and commence production before 31.03.2025. | c) Set up from 01.10.2020 and commence production before 31.03.2024. | d) Set up from 01.10.2020 and commence production before 31.03.2025.

Correct Answer: (b)

Explanation: Section 115BAB prescribes the specified date for incorporation and commencement of manufacturing.

Question 76. Which arrangement does NOT constitute an Impermissible Avoidance Arrangement (GAAR)?

a) Creates non-arm’s length rights or obligations. | b) Causes base erosion and profit shifting. | c) Misuses provisions of the Act. | d) None of the above.

Correct Answer: (d)

Explanation: All the arrangements mentioned are covered within the definition of an Impermissible Avoidance Arrangement under Chapter X-A.

Question 77. Who is eligible for indexation benefit on transfer of land/building acquired before 23.07.2024 and transferred on or after that date?

a) Only I & II | b) Only II, III & IV | c) Only I & IV | d) Only II & III

Correct Answer: (b)

Explanation: Indexation benefit is available to specified resident taxpayers as provided by the amended capital gains provisions.

Question 78. Tax rate under Section 115BBA for a non-resident sportsman/sports association/entertainer is:

a) 25% | b) 20% | c) 30% | d) 35%

Correct Answer: (d) 20%

Explanation: Section 115BBA levies tax at 20% on specified income of non-resident sportsmen and entertainers.

Question 79. Which statements regarding Section 115BBE are correct?

a) Only I | b) Both I and II | c) Only II | d) Neither I nor II

Correct Answer: (b)

Explanation: Income under Sections 68 to 69D is taxable at 60% and no deduction or set-off is allowable.

Question 80. Section 115BBJ taxes online gaming winnings at 30% on:

a) Gross winnings | b) Net winnings | c) Aggregate of the absolute amount of net winnings from each game during the year | d) Gross transaction amount

Correct Answer: (c)

Explanation: Tax is computed on the aggregate net winnings determined in the prescribed manner.

Question 81. Under Section 90, relief under a tax treaty is available where:

a) The Act applies if more beneficial. | b) Chapter X-A overrides treaty benefits wherever applicable. | c) Both (a) and (b) | d) None

Correct Answer: (c)

Explanation: Treaty benefits are available subject to Section 90(2) and the overriding provisions of GAAR.

Question 82. Which section provides concessional tax rate for new domestic manufacturing companies?

a) Section 115BAA | b) Section 115BAB | c) Section 115BBE | d) Section 115BBDA

Correct Answer: (b)

Explanation: Section 115BAB provides concessional taxation for eligible new domestic manufacturing companies.

Question 83. Additional tax on distributed income on buy-back of shares under Section 115QA is:

a) 10% | b) 20% | c) 22% | d) 30%

Correct Answer: (b)

Explanation: Section 115QA imposes additional tax at 20% on distributed income arising from buy-back of shares.

Question 84. For Section 92E, “Specified Date” means:

a) Due date under Section 139(1) | b) One month before due date | c) One month after due date | d) None

Correct Answer: (a)

Explanation: The accountant’s report under Section 92E is to be furnished by the due date under Section 139(1).

Question 85. Which statement regarding Section 115BBDA is correct?

a) Dividend exceeding Rs.10 lakh is taxable at 10% for specified taxpayers. | b) Dividend exceeding Rs.5 lakh taxed at 15%. | c) Dividend always exempt. | d) Applicable only to companies.

Correct Answer: (a)

Explanation: Section 115BBDA (as applicable for the relevant period) taxed specified dividend income exceeding Rs.10 lakh.

Question 86. Authority empowered under Section 132B to adjust seized assets against tax liability is:

a) Assessing Officer | b) DGIT (Inv.) | c) Principal Chief Commissioner | d) CBDT

Correct Answer: (a)

Explanation: Adjustment of seized assets is made by the Assessing Officer under Section 132B.

Question 87. Cash found during search is explained as advance from friends without confirmation. The Authorised Officer should:

a) Accept explanation. | b) Seize cash unless satisfactory evidence is produced. | c) Refer to ROC. | d) Send to Enforcement Directorate.

Correct Answer: (b)

Explanation: Mere explanation without supporting evidence is insufficient during search proceedings.

Question 88. Section 132(4A) presumes that:

a) Books/assets belong to the person. | b) Contents are true. | c) Neither. | d) Both (a) and (b).

Correct Answer: (d)

Explanation: Section 132(4A) creates statutory presumptions regarding ownership and correctness of seized material.

Question 89. Jurisdiction under Section 120(3) may be assigned with reference to:

a) Territorial area | b) Persons or classes of persons | c) Income or classes of income | d) All of the above

Correct Answer: (d)

Explanation: Jurisdiction may be assigned based on territory, persons, income or cases.

Question 90. If a pen drive containing unaccounted sales data is found during search, the AO should:

a) Ignore data. | b) Verify authorship and corroborate with other evidence. | c) Add entire amount. | d) Send for prosecution.

Correct Answer: (b)

Explanation: Electronic evidence should be corroborated before making additions.

Question 91. Assets requisitioned under Section 132A retained beyond 120 days without approval are:

a) Valid | b) Invalid beyond the prescribed period without approval | c) Irrelevant | d) No time limit

Correct Answer: (b)

Explanation: Continued retention beyond the statutory period requires valid approval.

Question 92. The Taxpayer’s Charter is contained in:

a) 116A | b) 117A | c) 118A | d) 119A

Correct Answer: (d)

Explanation: Section 119A incorporates the Taxpayer’s Charter into the Income Tax Act.

Question 93. Powers of an Authorised Officer under Section 132 include:

a) Search buildings | b) Break open locks | c) Search persons and seize valuables | d) All of the above

Correct Answer: (d)

Explanation: Section 132 confers all these powers during a lawful search.

Question 94. If stock-in-trade is found during search, the Authorised Officer should:

a) Seize stock | b) Prepare inventory of stock | c) Ignore stock | d) Return stock immediately

Correct Answer: (b)

Explanation: Stock-in-trade is generally inventoried and not seized.

Question 95. Which statement regarding disclosure of information under Section 138 is incorrect?

a) Disclosure only to Supreme Court/High Courts. | b) AO must obtain assessee’s consent. | c) All authorities may disclose information at will. | d) All of the above

Correct Answer: (d)

Explanation: All the statements are incorrect because disclosure is governed strictly by Section 138.

Question 96. Updated Return under Section 139(8A) can be filed even if:

a) Assessment pending | b) Search initiated | c) Scrutiny completed | d) None of the above

Correct Answer: (d)

Explanation: An Updated Return cannot be filed in the situations specifically prohibited under Section 139(8A).

Question 97. Select the incorrect statement regarding assessment of firms:

a) Assessment after change in constitution. | b) No assessment on predecessor firm after succession. | c) Assessment continues despite dissolution/discontinuance. | d) Partners are jointly and severally liable.

Correct Answer: (b)

Explanation: The statement is inconsistent with the statutory provisions governing succession and assessment of firms.

Question 98. Match the following (ITR Forms):

a) (i)-a, (ii)-b, (iii)-d, (iv)-c | b) (i)-b, (ii)-a, (iii)-d, (iv)-c | c) (i)-b, (ii)-a, (iii)-c, (iv)-d | d) (i)-a, (ii)-b, (iii)-c, (iv)-d

Correct Answer: (a)

Explanation: The matching corresponds to the applicability of ITR-2, ITR-3, ITR-5 and ITR-6.

Question 99. Match the following (Due Dates):

a) (i)-a, (ii)-b, (iii)-c, (iv)-d | b) (i)-b, (ii)-a, (iii)-d, (iv)-c | c) (i)-b, (ii)-a, (iii)-c, (iv)-d | d) (i)-a, (ii)-b, (iii)-d, (iv)-c

Correct Answer: (b)

Explanation: The due dates correspond to salaried taxpayers, transfer pricing cases, belated returns and audited companies respectively.

Question 100. An assessment order under Section 143(3) dated 15.12.2023 contains an apparent mistake. The last date for seeking rectification is:

a) 31.03.2028 | b) 31.03.2027 | c) 31.03.2026 | d) 31.03.2029

Correct Answer: (a)

Explanation: Under Section 154, rectification can generally be sought within four years from the end of the financial year in which the order sought to be amended was passed.

Conclusion

With this article, we have completed the first 100 questions of Paper I – Income Tax Law and Computation from the Income Tax Inspector (ITI) Departmental Examination held on 8 September 2025. This part covered several important areas of the Income Tax Act, 1961, including carry forward and set-off of losses, deductions under Chapter VI-A, international taxation, special tax rates, corporate taxation, search and seizure provisions, jurisdiction of Income Tax authorities, return filing, assessment procedures, and rectification of mistakes.

A review of these questions clearly indicates that the Departmental Examination increasingly focuses on the practical application of statutory provisions rather than mere recollection of section numbers. Candidates should therefore develop a sound conceptual understanding of the law, stay updated with legislative amendments, and regularly practice previous years’ question papers to improve both accuracy and speed in objective-type examinations.

Readers are advised to revise the relevant provisions of the Income Tax Act, 1961, the Income Tax Rules, 1962, and important amendments introduced by the Finance Acts. Attempting these questions independently before referring to the answers and explanations will significantly strengthen conceptual clarity and examination readiness.

In Part 3 of this series, we will cover Questions 101–150, which include several important topics relating to assessment and reassessment proceedings, appeals and revisions, penalties, prosecution, TDS and TCS provisions, survey and search procedures, powers of Income Tax authorities, faceless proceedings, and other practical aspects of Income Tax administration. These topics continue to be of considerable importance in the Income Tax Inspector Departmental Examination.

If you found this article helpful, consider bookmarking it for future revision and sharing it with your colleagues preparing for the Departmental Examination. Stay connected with Simple Income Tax for more solved previous year papers, topic-wise practice question banks, mock tests, revision notes, and comprehensive study material specially designed for Income Tax Departmental Examination aspirants.

ITI Departmental Examination 2025 (Paper I): Solved Previous Year Question Paper with Answers & Explanations (PART-1)

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G Bhardwaj is an independent Income Tax researcher and author with a keen interest in Indian taxation, CBDT developments and matters relating to Central Government employees. The articles published on this website are based on research, analysis of official sources and publicly available information.

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