Chapter 21 ___ Solved Past Papers Income Tax Numericals of CA Module C - (2001 to 2022)
[60,000 + (1,956,090 - 1,200,000) x 17.5%] (A) 192,316(B) -Higher of (A) or (B) tax is chargeable 192,316
No tax credit of rabate on purchase of listed company shares or
payment of life insurance premium is available.
Tax Payable 192,316Minimum tax liability u/s 113 @1.25% of
turnover of Rs. 49,330,000 is not
applicable(^518) ____ _ _Conceptual Approach to Taxes
Tax Payable 192,316
Working - 1
Income from Business
Profit before taxation 1,057,000
Add: Accounting Depreciation 225,000
Pre-commencement Expenses 250,000
Computer software 975,000
Depreciation on Lease Asset 260,000
Lease charges 80,000
Vehicle used for private purpose 59,090
Provision for bad debts 25,000 1,874,090
2,931,090
Less: Amortization of software (975,000 / 12 ) 81,250
Lease rentals paid during the year 300,000
20% Amortization of pre-commencement Expense 20% Amortization of pre-commencement Expense 50,00050,000
Tax Depreciation (W-2) 543,750 (975,000)
Taxable income from business 1,956,090
Working - 2
Depreciations WDV Depreciation
Cost of Machinery 1,500,000
Less: 25% Initial allowance (375,000) 375,000
1,125,000
Less: 15% normal depreciation (168,750) 168,750
Total 956,250 543,750
Note - 2 No treatment of gain on disposal of house has been made as the same is not taxable due to its
Note -1 As the taxpayer is a returning expatriate hence no treatment of foreign source salary has been made
as the same is exempt under section 51 of the Income tax ordinance, 2001.
Q.NO.4(b) Spring 2015
Fahim also incurred the following expenses in respect of the above house:
(i) property tax of Rs. 15,000.
(iii) insurance premium of Rs. 110,000.
On 1 July2022,FahimagreedtorentoutahousetoMirzaatamonthlyrentofRs.180,000witheffect
from 1 August 2022 andreceivedoneyear’srentinadvance. HealsoreceivedRs.800,000asasecurity
depositwhichwaspartlyusedtorepaythesecuritydepositamountingtoRs.400,000receivedfromthe
previous tenant in July 2018 and partly used for renovation of the house.
Note - 2 No treatment of gain on disposal of house has been made as the same is not taxable due to its
disposal after four years from the date of its inheritence.
(ii) payment of interest amounting to Rs. 200,000 to his friend against amount borrowed for renovation of
the house.
(iii) insurance premium of Rs. 110,000.
(iv) Rs. 5,000 per month to Wasif for collection of rent.
Required:
Solution:
Mr. Fahim
Tax Year 2023
Computation of taxable income
Rupees Rupees
Income from Property
Rent (180,000 x 11) 1,980,000
Unadjustable advance (W-1) 64,000
2,044,000
UndertheprovisionsoftheIncomeTaxOrdinance, 2001 computethetaxableincomeofFahimfortaxyear
2023 assuming he has no other income.
(^518) __ ___ _Conceptual Approach to Taxes