Tax Book 2023

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

Required:

ANSWER:

Taxable income of Dawood Rupees Rupees

Compute taxable income of Dawood and Dewan under appropriate heads of income for the tax year 2023.

Rs.75,000permonthforutilities,cleaningandsecurity.ForprovidingtheseservicesDawoodandDewanpaid

Rs.35,000permonth.Duringthetaxyear 2023 theyalsopaidRs.10,000ascollectionchargesandRs.

230,000 for administering the property.

Conceptual Approach to Taxes ___ 507

Taxable income of Dawood Rupees Rupees

Income from property (Rs. 3,600,000 (W-1) × 65% share) 2,340,000

Less: 20% repair allowance (468,000)

(234,000)

(93,600) 1,544,400

Add: Income from other sources [Rs. 480,000 (W-2) × 65% share] 312,000 312,000

Taxable income of Mr. Dawood (including share from AoP for rate purposes) 1,856,400

Taxable income of Dewan

Income from property [Rs. 3,600,000 (W-1) × 35% share] 1,260,000

Admin & collection expenses [admisible lower of 4% of rent

chageable to tax (Rs. 2,340,000 x 4%) and actual amount of Rs.

240,000 x 65%) hence Rs. 93,600 shall be admissible

Mark up on loan for acquistion of property (Rs.3,000,000 x 12%

x 65%)

Income from property [Rs. 3,600,000 (W-1) × 35% share] 1,260,000

Less: 20% repair allowance (252,000)

(126,000)

(50,400) 831,600

Add: Income from other sources [Rs. 480,000 (W-2) × 35% share] 168,000 168,000

Taxable income of Mr. Dewan (including share from AoP for rate purposes) 999,600

W-1: Computation of joint taxable income under income from property

Rent received by joint owners for 12 months 4,500,000

Less: Amount received on account of utilities, cleanliness & security

(75,000×12) 900,000

Admin & collection expenses [admisible lower of 4% of rent

chageable to tax (Rs. 1,260,000 x 4%) and actual amount of Rs.

240,000 x 35%) hence Rs. 50,400 shall be admissible

Mark up on loan for acquistion of property (Rs.3,000,000 x 12%

x 35%)

(75,000×12) 900,000

Rent chargeable to tax 3,600,000

W-2: Computation of income from other sources

Amount received on account of utilities, cleanliness & security

(Rs.75,000 × 12 months) 900,000

Less: Actual expenses incurred (Rs. 35,000 × 12 months) 420,000

Net income from other sources 480,000

Q # 6 MARCH 2017

(i) Assets and liabilities disclosed in the wealth statement for the tax year 2022 were as follows:

Zahid,thesoleproprietorofFGandcompany,isaresidentindividualandisintheprocessoffilinghiswealth

statement for the tax year 2023. The relevant information is as under:

Rupees

Assets

Agriculture land in Hyderabad 5,000,000

Residential property in DHA Karachi 3,000,000

Investment in shares of listed companies 1,100,000

Business capital – FG & Co. 4,000,000

Motor vehicle 1,540,000

Cash at bank 600,000

Cash in hand 300,000

15,540,000

Liabilities

Bank loan (1,500,000)

Net assets 14,040,000

(ii) Details relating to FG & Co. are as follows:

Rupees

Conceptual Approach to Taxes ___ 507