Tax Book 2023

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

Note:

Your computation should commence with the profit before tax figure of Rs. 5,488,000.

ANSWER.

Show all relevant exemptions, exclusions and disallowances.

Underthe provisions ofthe IncomeTaxOrdinance, 2001 and Rules madethereunder,computethe

taxableincome,nettaxpayablebyBARandtheamounttobecarriedforward,ifany,fortaxyear2023.

Assume tax and accounting depreciation is same.

BAR (AOP)

Conceptual Approach to Taxes ___ 513

Rupees Rupees

Accounting profit before taxation 5,488,000

Add: Inadmissible expenses:

Closing stock-in-trade adj. [1,950,000 -

1,820,000]

130,000

Provision for slow moving stock 75,000

Freight charges paid in cash -

Commission paid to Baqir 290,000

Annual performance award - Rahi (Partner) 310,000

Bank loan of Asad paid by BAR 455,000

Provision for bad debts 735,000

Computation of taxable income and income tax liability

BAR (AOP)

For the tax year 2023

Provision for bad debts 735,000

Sales promotion expenses (through

personal bank account)

275,000

Employee training and facilities (FG run

institution)

• Loss from Tehran branch 1,800,000
  Profit from Dubai branch (1,500,000)

300,000

2,270,000

7,758,000

(120,000)

Net taxable income 7,638,000

Less: Admissible expenses:

Net loss from foreign source (to be

carried forward for adjustment against

foreign source income of the following six

tax years, if any.)

Bad debts written off

(W-1) 7,638,000

Computation of tax liability:

1,330,000

573,300

1,903,300

Rupees

Opening balance of provision for

bad debt account

1,100,000

Add: provision during the year 735,000

1,835,000

Net taxable income

On balance Rs. 1,638,000 tax @ 35%

Tax on Rs. 6,000,000

Net Liability

W-1: Computation of bad debts written off:

As the tax liability of the AOP under NTR is more than the minimum tax under

section 113 hence the same is payable by the AOP.

1,835,000

Less: Closing balance of provision

for bad debt A/c

(1,435,000)

Debts written off during the year 400,000

(280,000)

120,000

Q. NO. 1 SPRING 2016

Rupees

Basic salary 70,000

Dearness allowance 10,000

Bad debt written off allowed for tax purpose

Wajahat, aged 48 years, is a marketing manager in Nayaab (Pvt.) Limited (NPL), acompany

engagedinthemanufactureandsupplyoftissuepapers.Thedetailsofhismonthlyemolumentsduringthe

year ended 30 June 2023 are as under:

Less: loan to supplier written off [W-1(a)]

Conceptual Approach to Taxes ___ 513