Tax Book 2023

Chapter 21 ___ Solved Past Papers Income Tax Numericals of CA Module C - (2001 to 2022)

Answer

Farheen

For tax year 2023

Rupees

Income from property - u/s 15 & 16

Rent from Bungalow - Abbas [175,000×9] 1,575,000

Rent from Bungalow - Zafar [175,000×3] 525,000

Non-adjustable security deposit - Zafar (W-1) 150,000

Forfeiture of deposit for sale of building 220,000

Computation of total income, taxable income and net tax payable/refundable

(^484) ____ _ _Conceptual Approach to Taxes
Forfeiture of deposit for sale of building 220,000
Less: Legal charges for preparation of agreement -
Total income from property 2,470,000
Less: 1/5th repair allowance (494,000)
1,976,000
Income from other sources - u/s 39
Security guard's salary - [50,000×12] 600,000
Deposit for vacating the office [(2,400,000-2,000,000)/10] 40,000
Rentals from lease of factory with machinery [500,000×7] 3,500,000
Additional payment of delayed refund [S.39(cc)] 30,000
Less: Payment for security services [40,000×12] (480,000)
Total income from other sources 3,690,000
Total income 5,666,000
W-1:W-1: RupeesRupees
Non-adjustable security deposit received from Zafar 2,500,000
Less: Amount charged to tax till tax year 2020 [(2,500,000/10)×4] (1,000,000)
1,500,000
Amount chargeable to tax this year [1,500,000/10] 150,000
For the purpose of this question, assume that the date today is 31 August 2023.
Rs. in '000
Sales 29,058
Cost of goods sold (18,724)
Q.1 Spring 2020
Shahid is engaged in the business of manufacturing and supplying of auto parts. Following is the
extract of his profit or loss statement for the tax year 2023:
Cost of goods sold (18,724)
Gross profit 10,334
Operating expenses (3,137)
Financial charges (2,030)
Other income 1,260
Profit before tax 6,427
Additional information:
Opening balances Closing balances
Stock-in-trade using prime cost method 1,800 2,800
(i) The above accounts have been prepared on cash basis and stock-in-trade has been valued on prime cost method.
However, Shahid wants to change the method of accounting from cash basis to accrual basis. In this respect, following
information has been gathered:
--------- Rs. in '000 ---------
Stock-in-trade using prime cost method 1,800 2,800
Stock-in-trade using absorption cost method 2,300 3,200
(ii) Cost of goods sold includes:
(b) freight charges of Rs. 85,000. These were paid in cash for transporting goods from suppliers.
(iii) Operating expenses include:
 salary of Rs. 80,000 per month paid to Shahid’s brother who handles administrative matters of the business.
 penalty of Rs. 15,000 for late filing of income tax return.
(v) Other income includes:
(a)  purchase of packing material of Rs. 440,000 from Nasir Traders. No withholding tax was deducted at the time of
payment.
 expenditure of Rs. 950,000 incurred on the development of a product which is expected to generate revenue for five
years.
(iv) Financial charges include profit on debt of Rs. 450,000 earned on fixed deposit account maintained with a bank.
The bank withheld income tax and Zakat amounting to Rs. 45,000 and Rs. 93,750 respectively.
(^484) __ ___ _Conceptual Approach to Taxes