Taxation - DT Ch 07: Other Sources - Test 1: answer key

Question 1 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. Smt. Anuradha Sen, a resident individual, has furnished the following receipts and acquisitions for the previous year 2026-27. On 12.04.2026, she received ₹75,000 by bank transfer from Mr. Rohan, a friend. On 15.05.2026, she received ₹40,000 in cash from her cousin, Mr. Dev. On 01.07.2026, she purchased a plot of land from a non-relative for ₹48,00,000, while the stamp duty value of the plot on that date was ₹55,00,000. On 10.08.2026, she received a gold necklace from her maternal aunt, being her mother's sister; the fair market value of the necklace was ₹2,60,000. On 05.09.2026, she received ₹1,50,000 under the will of her grandfather. She has not received any other sum of money or property without consideration or for inadequate consideration during the year. Smt. Sen is assessed under the default tax regime under Section 115BAC. You are required to answer the following questions based on the provisions governing income from other sources.

What is the amount taxable as income from other sources under Section 56(2)(x)(a) in respect of the sums of money received by Smt. Anuradha Sen during the previous year 2026-27?

1. ₹75,000, being the transfer received from the friend alone
2. ₹1,15,000, being the aggregate of both non-relative receipts (correct answer)
3. ₹40,000, being the cash receipt from the cousin alone
4. Nil, since each receipt is below the ₹50,000 limit

Answer: B — ₹1,15,000, being the aggregate of both non-relative receipts

Explanation. A cousin is not included in the definition of relative for an individual. Therefore, receipts from Mr. Rohan and Mr. Dev are aggregated: ₹75,000 + ₹40,000 = ₹1,15,000. Since the aggregate exceeds ₹50,000, the whole amount of ₹1,15,000 is taxable under Section 56(2)(x)(a). The ₹1,50,000 received under the will is exempt, and the necklace is received from a specified relative.

Where it goes wrong. Students often exclude the cousin receipt by treating every family acquaintance as a relative, or tax only the excess over ₹50,000 instead of the whole aggregate.

Authority. Section 56(2)(x)(a) of the Income-tax Act, 1961; Explanation to Section 56(2)(x)

Question 2 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

What is the amount chargeable to tax in the hands of Smt. Anuradha Sen on the purchase of the plot of land for ₹48,00,000 when its stamp duty value is ₹55,00,000?

1. Nil, since the difference is below ₹10,00,000
2. ₹7,00,000, being the difference between SDV and consideration (correct answer)
3. ₹4,80,000, being ten per cent of the consideration
4. ₹55,00,000, being the stamp duty value of the plot

Answer: B — ₹7,00,000, being the difference between SDV and consideration

Explanation. For immovable property received for inadequate consideration, the difference between stamp duty value and consideration is taxable if it exceeds the higher of ₹50,000 or 10% of consideration. Here, the difference is ₹55,00,000 - ₹48,00,000 = ₹7,00,000. The higher threshold is ₹4,80,000, being 10% of ₹48,00,000. Since ₹7,00,000 exceeds ₹4,80,000, the taxable amount is ₹7,00,000.

Where it goes wrong. Students may tax only the amount above the 10% threshold, or apply a flat ₹50,000 threshold without comparing it with 10% of consideration.

Authority. Section 56(2)(x)(b) of the Income-tax Act, 1961

Question 3 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

How much is taxable under Section 56(2)(x) on account of the gold necklace received from Smt. Anuradha Sen's maternal aunt, whose fair market value is ₹2,60,000?

1. Nil, since the maternal aunt is a specified relative (correct answer)
2. ₹2,60,000, being the fair market value of the necklace
3. ₹2,10,000, being the value exceeding the threshold
4. ₹50,000, being the threshold for movable property

Answer: A — Nil, since the maternal aunt is a specified relative

Explanation. For an individual, the definition of relative includes the brother or sister of the mother. The maternal aunt is therefore a specified relative. Any sum of money or property received from a relative without consideration is outside the charge under Section 56(2)(x). Hence, the fair market value of ₹2,60,000 is not taxable under this provision.

Where it goes wrong. Students may treat only parents and siblings as relatives and may tax the necklace because the amount is substantial.

Authority. Section 56(2)(x) of the Income-tax Act, 1961; Explanation to Section 56(2)(x)

Question 4 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

What is the total amount taxable in the hands of Smt. Anuradha Sen under Section 56(2)(x) for the previous year 2026-27, considering all the receipts and the plot purchase given in the scenario?

1. ₹7,00,000
2. ₹1,15,000
3. ₹10,75,000
4. ₹8,15,000 (correct answer)

Answer: D — ₹8,15,000

Explanation. The taxable money gifts are ₹75,000 + ₹40,000 = ₹1,15,000. The plot purchase gives a taxable difference of ₹7,00,000. The necklace from the maternal aunt is exempt as a relative receipt, and the inheritance under the will is exempt. Total taxable amount = ₹1,15,000 + ₹7,00,000 = ₹8,15,000.

Where it goes wrong. Students may add the exempt inheritance or the relative gift, or omit the money gifts while computing the total.

Authority. Section 56(2)(x) of the Income-tax Act, 1961

Question 5 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. Suryavanshi HUF, a resident HUF, has furnished the following particulars for the previous year 2026-27. On 20.04.2026, it received ₹90,000 by cheque from its karta, who is a member of the HUF. On 25.05.2026, it received ₹70,000 by bank transfer from Mr. Neel, who is not a member of the HUF. On 18.06.2026, the HUF purchased commercial land from a non-member for ₹90,00,000; the stamp duty value of the land on that date was ₹1,05,00,000. On 12.08.2026, it received 5,000 listed equity shares from a member of the HUF; the fair market value of these shares was ₹4,00,000. On 30.09.2026, it received ₹1,00,000 by way of gift from a local authority. The HUF has not received any other sum of money or property without consideration or for inadequate consideration during the year. The HUF is assessed under the default tax regime under Section 115BAC. You are required to answer the following questions based on the provisions governing income from other sources.

What amount is taxable under Section 56(2)(x)(a) in the hands of Suryavanshi HUF on account of the sums of money received during the previous year 2026-27?

1. ₹1,60,000, being all receipts other than the land
2. ₹90,000, being the receipt from the karta
3. ₹70,000, being the receipt from the non-member (correct answer)
4. Nil, since a HUF is not covered by Section 56(2)(x)

Answer: C — ₹70,000, being the receipt from the non-member

Explanation. For a HUF, any member of the HUF is a relative. The ₹90,000 received from the karta is therefore exempt. The ₹1,00,000 received from a local authority is also exempt. The ₹70,000 received from Mr. Neel, a non-member, exceeds ₹50,000 and is taxable in full under Section 56(2)(x)(a).

Where it goes wrong. Students may aggregate the member receipt with the non-member receipt, or assume that a HUF cannot be taxed for gifts.

Authority. Section 56(2)(x)(a) of the Income-tax Act, 1961; Explanation to Section 56(2)(x)

Question 6 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

What is the amount chargeable to tax in the hands of Suryavanshi HUF on the purchase of commercial land for ₹90,00,000 when its stamp duty value is ₹1,05,00,000?

1. ₹15,00,000, being the difference between SDV and consideration (correct answer)
2. ₹9,00,000, being ten per cent of consideration
3. ₹1,05,00,000, being the stamp duty value
4. Nil, since the difference is below the threshold

Answer: A — ₹15,00,000, being the difference between SDV and consideration

Explanation. The difference between stamp duty value and consideration is ₹1,05,00,000 - ₹90,00,000 = ₹15,00,000. The higher threshold is the greater of ₹50,000 and 10% of consideration, i.e. ₹9,00,000. Since ₹15,00,000 exceeds ₹9,00,000, the whole difference of ₹15,00,000 is taxable under Section 56(2)(x)(b).

Where it goes wrong. Students may tax only ₹6,00,000, being the excess over the 10% threshold, instead of taxing the full difference.

Authority. Section 56(2)(x)(b) of the Income-tax Act, 1961

Question 7 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

How is the receipt of 5,000 listed equity shares, having fair market value of ₹4,00,000, from a member of Suryavanshi HUF to be treated under Section 56(2)(x)?

1. ₹4,00,000, being the fair market value of the shares
2. ₹3,50,000, being the fair market value after threshold
3. ₹50,000, being the movable property threshold
4. Nil, since a member is a relative of the HUF (correct answer)

Answer: D — Nil, since a member is a relative of the HUF

Explanation. In the case of a HUF, any member of the HUF is treated as a relative. Shares received without consideration from a member are therefore outside the charge under Section 56(2)(x). The fair market value of ₹4,00,000 is not taxable under this provision.

Where it goes wrong. Students may apply the ₹50,000 movable property threshold to a relative gift and tax the FMV.

Authority. Section 56(2)(x) of the Income-tax Act, 1961; Explanation to Section 56(2)(x)

Question 8 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

What is the total amount taxable in the hands of Suryavanshi HUF under Section 56(2)(x) for the previous year 2026-27, considering all the receipts and the land purchase given in the scenario?

1. ₹15,00,000
2. ₹15,70,000 (correct answer)
3. ₹16,60,000
4. ₹70,000

Answer: B — ₹15,70,000

Explanation. The taxable non-member money receipt is ₹70,000. The land purchase gives a taxable difference of ₹15,00,000. The karta receipt, member shares and local authority gift are exempt. Total taxable amount = ₹70,000 + ₹15,00,000 = ₹15,70,000.

Where it goes wrong. Students may include the local authority gift or the member receipts, or omit the ₹70,000 non-member receipt.

Authority. Section 56(2)(x) of the Income-tax Act, 1961

Question 9 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Karan received ₹30,000 on 01.05.2026 from a friend, ₹25,000 on 01.09.2026 from the same friend, and ₹10,000 on 01.03.2027 from another friend. None of these receipts is from a relative and no consideration was paid. What is the amount taxable under Section 56(2)(x)(a) for the previous year 2026-27?

1. Nil, since each receipt is below ₹50,000
2. ₹55,000, being the first two receipts
3. ₹65,000, being the aggregate of all non-relative receipts (correct answer)
4. ₹10,000, being the last receipt only

Answer: C — ₹65,000, being the aggregate of all non-relative receipts

Explanation. Sums of money received without consideration from non-relatives are aggregated for the previous year. The aggregate is ₹30,000 + ₹25,000 + ₹10,000 = ₹65,000. Since ₹65,000 exceeds ₹50,000, the entire aggregate of ₹65,000 is taxable, not merely the excess over ₹50,000.

Where it goes wrong. Students may apply the threshold receipt-by-receipt and conclude that no amount is taxable.

Authority. Section 56(2)(x)(a) of the Income-tax Act, 1961

Question 10 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Isha received ₹1,50,000 from a friend on 12.12.2026 on the occasion of her marriage, ₹80,000 from another friend on 15.12.2026 at the marriage reception, and ₹51,000 from a non-relative on 12.12.2027 on her first marriage anniversary. What amount is taxable under Section 56(2)(x) for the previous year 2026-27?

1. ₹51,000, being the anniversary gift (correct answer)
2. ₹1,50,000, being the marriage gift from a friend
3. ₹2,30,000, being all gifts received
4. Nil, since all gifts are exempt

Answer: A — ₹51,000, being the anniversary gift

Explanation. Receipts on the occasion of the individual's marriage are exempt, whether received before, during or after the marriage ceremony as part of the occasion. The ₹1,50,000 and ₹80,000 are therefore exempt. The ₹51,000 received on a marriage anniversary is not covered by the marriage exemption and exceeds ₹50,000, so it is taxable.

Where it goes wrong. Students may treat the reception receipt as taxable or exempt the anniversary gift by confusing it with the marriage occasion.

Authority. Section 56(2)(x) of the Income-tax Act, 1961

Question 11 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Om received a vacant plot from a non-relative without consideration on 10.08.2026. The stamp duty value of the plot on that date was ₹45,000. He also received ₹20,000 in cash from another non-relative on 15.09.2026. What is the amount taxable under Section 56(2)(x) for the previous year 2026-27?

1. ₹45,000, being the stamp duty value
2. ₹50,000, being the threshold
3. ₹20,000, being the cash receipt
4. Nil, since the stamp duty value does not exceed ₹50,000 (correct answer)

Answer: D — Nil, since the stamp duty value does not exceed ₹50,000

Explanation. For immovable property received without consideration, the stamp duty value is taxable only if it exceeds ₹50,000. Here, the SDV is ₹45,000, so it is not taxable. The cash receipt of ₹20,000 is below ₹50,000 and is also not taxable. The two receipts are not aggregated because they fall under different clauses.

Where it goes wrong. Students may aggregate cash and immovable property values or tax the plot because any property receipt is assumed taxable.

Authority. Section 56(2)(x)(a) and (b) of the Income-tax Act, 1961

Question 12 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Priya purchased a car from a non-relative friend on 01.10.2026 for ₹2,40,000. The fair market value of the car on that date was ₹3,00,000. What is the amount taxable under Section 56(2)(x)(c) for the previous year 2026-27?

1. Nil, since the difference does not exceed ₹1,00,000
2. ₹60,000, being the difference between FMV and consideration (correct answer)
3. ₹3,00,000, being the FMV of the car
4. ₹50,000, being the threshold

Answer: B — ₹60,000, being the difference between FMV and consideration

Explanation. For movable property received for inadequate consideration, the difference between fair market value and consideration is taxable if it exceeds ₹50,000. The difference is ₹3,00,000 - ₹2,40,000 = ₹60,000. Since ₹60,000 exceeds ₹50,000, the taxable amount is ₹60,000.

Where it goes wrong. Students may tax the full fair market value or apply a 10% threshold applicable to immovable property.

Authority. Section 56(2)(x)(c) of the Income-tax Act, 1961

Question 13 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Aryan received ₹1,00,000 from the brother of his spouse on 01.06.2026 and ₹75,000 from his cousin on 01.12.2026. Both receipts were without consideration. What amount is taxable under Section 56(2)(x) for the previous year 2026-27?

1. ₹1,75,000, being all gifts received
2. ₹1,00,000, being the gift from spouse's brother
3. ₹75,000, being the gift from the cousin (correct answer)
4. Nil, since both are relatives

Answer: C — ₹75,000, being the gift from the cousin

Explanation. The brother of the spouse is a specified relative, so ₹1,00,000 is exempt. A cousin is not included in the definition of relative. The ₹75,000 received from the cousin exceeds ₹50,000 and is taxable in full under Section 56(2)(x)(a).

Where it goes wrong. Students may treat a cousin as a relative or aggregate the exempt relative gift with the taxable receipt.

Authority. Section 56(2)(x) of the Income-tax Act, 1961; Explanation to Section 56(2)(x)

Question 14 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Nisha received ₹5,00,000 on 01.07.2026 under the will of her uncle and ₹60,000 from a friend on 01.11.2026 without consideration. What amount is taxable under Section 56(2)(x) for the previous year 2026-27?

1. ₹60,000, being the gift from the friend (correct answer)
2. ₹5,00,000, being the inheritance
3. ₹5,60,000, being all receipts
4. Nil, since inheritance is exempt

Answer: A — ₹60,000, being the gift from the friend

Explanation. Any sum received under a will or by way of inheritance is exempt under Section 56(2)(x). The ₹5,00,000 is therefore not taxable. The ₹60,000 received from a friend exceeds ₹50,000 and is taxable in full under Section 56(2)(x)(a).

Where it goes wrong. Students may tax the inheritance or exempt the friend's gift because the inheritance is also present.

Authority. Section 56(2)(x) of the Income-tax Act, 1961

Question 15 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Vikram received ₹1,20,000 by way of gift from a local authority on 01.08.2026 and ₹55,000 from a non-relative on 01.09.2026 without consideration. What amount is taxable under Section 56(2)(x) for the previous year 2026-27?

1. ₹1,20,000, being the local authority receipt
2. ₹1,75,000, being all receipts
3. ₹55,000, being the receipt from the non-relative (correct answer)
4. Nil, since both receipts are exempt

Answer: C — ₹55,000, being the receipt from the non-relative

Explanation. Receipts from a local authority are exempt under Section 56(2)(x). The ₹1,20,000 is therefore not taxable. The ₹55,000 from a non-relative exceeds ₹50,000 and is taxable in full.

Where it goes wrong. Students may aggregate the exempt local authority receipt with the non-relative receipt or tax only the excess over ₹50,000.

Authority. Section 56(2)(x) of the Income-tax Act, 1961

Question 16 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ganesh HUF received ₹1,00,000 from one of its members on 01.05.2026 and ₹45,000 from a non-member on 01.10.2026, both without consideration. What amount is taxable under Section 56(2)(x) for the previous year 2026-27?

1. ₹1,00,000, being the member receipt
2. ₹45,000, being the non-member receipt
3. ₹1,45,000, being all receipts
4. Nil, since the non-member receipt does not exceed ₹50,000 (correct answer)

Answer: D — Nil, since the non-member receipt does not exceed ₹50,000

Explanation. For a HUF, a member is a relative, so the ₹1,00,000 receipt is exempt. The ₹45,000 received from a non-member is below the ₹50,000 threshold and is not taxable. The two receipts are not aggregated because the member receipt is exempt.

Where it goes wrong. Students may aggregate the exempt member receipt with the non-member receipt and cross the threshold.

Authority. Section 56(2)(x) of the Income-tax Act, 1961; Explanation to Section 56(2)(x)

Question 17 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Riya purchased immovable property from a non-relative on 01.12.2026 for ₹20,00,000. The stamp duty value on that date was ₹21,50,000. What is the amount taxable under Section 56(2)(x)(b) for the previous year 2026-27?

1. Nil, since the difference does not exceed the higher threshold (correct answer)
2. ₹1,50,000, being the difference
3. ₹2,00,000, being ten per cent of consideration
4. ₹50,000, being the statutory floor

Answer: A — Nil, since the difference does not exceed the higher threshold

Explanation. The difference between SDV and consideration is ₹21,50,000 - ₹20,00,000 = ₹1,50,000. The higher threshold is the greater of ₹50,000 and 10% of consideration, i.e. ₹2,00,000. Since the difference of ₹1,50,000 does not exceed ₹2,00,000, no amount is taxable.

Where it goes wrong. Students may apply only the ₹50,000 threshold and tax ₹1,50,000, ignoring the 10% comparison.

Authority. Section 56(2)(x)(b) of the Income-tax Act, 1961

Question 18 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Kabir received a plot of land from a non-relative without consideration on 01.07.2026. The stamp duty value of the plot was ₹60,000. He also received ₹40,000 in cash from another non-relative on 01.08.2026. What amount is taxable under Section 56(2)(x) for the previous year 2026-27?

1. ₹1,00,000, being all receipts
2. ₹40,000, being the cash receipt
3. ₹60,000, being the SDV of the plot (correct answer)
4. Nil, since both receipts are below ₹50,000

Answer: C — ₹60,000, being the SDV of the plot

Explanation. The plot received without consideration is taxable because its stamp duty value of ₹60,000 exceeds ₹50,000. The cash receipt of ₹40,000 is not taxable because the aggregate sum of money from non-relatives does not exceed ₹50,000. The taxable amount is therefore ₹60,000.

Where it goes wrong. Students may aggregate the plot value and cash, or tax the cash while exempting the plot.

Authority. Section 56(2)(x)(a) and (b) of the Income-tax Act, 1961

Question 19 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Simran received listed shares having fair market value of ₹5,00,000 from her brother on 01.05.2026 and jewellery having fair market value of ₹75,000 from a friend on 01.09.2026. Both were received without consideration. What amount is taxable under Section 56(2)(x) for the previous year 2026-27?

1. ₹5,75,000, being all receipts
2. ₹75,000, being the jewellery from the friend (correct answer)
3. ₹5,00,000, being the shares from the brother
4. Nil, since both are exempt

Answer: B — ₹75,000, being the jewellery from the friend

Explanation. A brother is a specified relative, so the shares worth ₹5,00,000 are exempt. The jewellery received from a friend is movable property without consideration, and its fair market value of ₹75,000 exceeds ₹50,000. Hence, ₹75,000 is taxable under Section 56(2)(x)(c).

Where it goes wrong. Students may tax the relative gift or apply the threshold to the aggregate of exempt and taxable receipts.

Authority. Section 56(2)(x)(c) of the Income-tax Act, 1961; Explanation to Section 56(2)(x)

Question 20 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Rehan received ₹3,00,000 on 01.06.2026 from a non-relative in contemplation of the payer's death and ₹80,000 on 01.08.2026 from another non-relative as a birthday gift. What amount is taxable under Section 56(2)(x) for the previous year 2026-27?

1. ₹3,80,000, being the aggregate of all receipts
2. ₹3,00,000, being the receipt in contemplation of death
3. Nil, since both receipts are exempt
4. ₹80,000, since only the birthday gift is taxable (correct answer)

Answer: D — ₹80,000, since only the birthday gift is taxable

Explanation. A receipt in contemplation of the death of the payer is exempt under Section 56(2)(x). The birthday gift of ₹80,000 from a non-relative is not covered by any exemption and exceeds ₹50,000, so it is taxable in full.

Where it goes wrong. Students may tax the contemplation-of-death receipt or exempt the birthday gift because the larger receipt is exempt.

Authority. Section 56(2)(x) of the Income-tax Act, 1961