Tax Book 2023

Capital Gains Chapter- 12

Solution

Rs. Rs.

Shares of ABC (Pvt.) Limited:

Consideration received 625,000

Less: Transferor cost on date of gift deemed as cost of transferee (5,000 x 100) 500 ,000

(A)

Sale of rights in the plot

Consideration received 250,000

Less payments made 14 0,000

Taxable capital gain (B)

125,000

11 0,000

Stamps:

Consideration received 500,000

Less: Cost 275,000

Taxable capital gain (C) 225,000

Taxable capital gain

(A+B+C)

225,00 0

Capital gain on shares of XYZ Limited (Separate Block of Income):

Consideration received 40,000

Higher of: Actual or fair market value (30,000 or 40,000)

Less: cost (10 x 2,000) 20,000

(Assumed that fair market value on date of transfer is Rs.10 per share)

20,000

Q # 3 Mr. Shahbaz a resident individual earned Rs 650,000 from the sale of assets as shown below:

PURCHASE SALE GAIN / (LOSS)

DATE PRICE (Rs) DATE PRICE (Rs) Rs^

Shares of Listed Company 10 - 12 - 21 350,000 31 - 7 - 22 200,000 (150,000)

Shares of Unlisted Company 15 - 7 - 21 500,000 30 - 11 - 22 900,000 400,000

Jewellery 15 - 5 - 21 750,000 20 - 12 - 22 1,400,000 650,000

Sculpture 01 - 7 - 20 400,000 31 - 01 - 23 300,000 (100,000)

Shares of private company 01 - 01 - 21 1,300,000 15 - 02 - 23 1,200,000 (100,000)

Shares of Listed Company 31 - 12 - 21 250,000 30 - 6 - 23 200,000 (50,000)

Required: Discuss the treatment and implications of each of above transaction under the ITO, 2001.

Solution

Capital assets u/s 37A Rs.

Loss on shares of listed companies (150,000 + 50,000) (200,000)

Loss (200,000)

Capital loss u/s 37A can neither be adjusted against gain realized u/s 37 however the same may be carried
forward for subsequent three tax years.

Capital assets u/s 37

Gain on shares of unlisted company 4 00,000

Gain on jewellery 650,0 00

Loss on sculpture (Loss of this capital asset is not recognized) -

Loss on shares of private company (100,000)

Total gain u/s 37 950,0 00

Q # 4 Explain the following with reference to Income Tax Ordinance, 2001.

(i) Capital assets (ii) Valuation of Capital assets (iii) Capital gains (iv) Adjustment of capital loss against

capital gains.