Tax Book 2023

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

Q. NO. 4 Spring 2014

Rupees

Utilities, cleaning and security 650,000

BasherandJamiljointlyownahouseinKarachi.Basherhas75%shareinthehouse.On 1 September2022,

thehousewasletoutatanannualrentalofvalueofRs.6,500,000.ThisamountincludesRs.186,000per

month for utilities, cleaning and security.

During the tax year 2023, owners incurred the following expenditures in relation to the house:

Conceptual Approach to Taxes ___ 523

Utilities, cleaning and security 650,000

Repair and maintenance 810,000

Insurance premium 240,000

Collection charges 25,400

Mark-uponamountborrowedforextension

of the house

840,000

Required

Calculate taxable income of Basher and Jameel under appropriate heads of income for the tax year 2023.

Answer:

COMPUTATION OF TAXABLE INCOME

FOR THE TAX YEAR 2023

Basher and Jameel have no other sources of income. All the above expenses were incurred by them jointly.

FOR THE TAX YEAR 2023

INCOME FROM PROPERTY U/S 15: Rs. Rs.

Rent [(Rs. 6,500,000 / 12 x 10) - 1,860,000] 3,556,667

20% repair allowance (711,333)

Insurance premium (240,000)

(25,400)

Mark-uponamountborrowedforextension

of the house

(840,000)

(1,816,733)

Net income from property of Co-owners 1,739,934

INCOME FROM OTHER SOURCES U/S 39:

Admin & collection charges (lower of actual & 4% of rent

chargeable to tax)

Income from utilities, cleaning & securities (Rs. 186,000 x 10) 1,860,000

Less expenses of utilities, cleaning and securities (650,000) 1,210,000

Taxable income as AOP 1,210,000

COMPUTATION OF TAX LIABILITY AS AOP:

Tax on Rs. 1,210,000 [60,000 + (Rs.1,210,000 - Rs. 1,200,000) x 17.5%] 61,750

Divisible income afer tax 1,148,250

Taxable income of Co-owners: Income from Total

other sources

before tax (N - 1)

Rs. Rs. Rs.

Bashir 75% 1,304,950 907,500 2,212,450

Jameel 25% 434,983 302,500 737,483

Share in joint

rented property

Jameel 25% 434,983 302,500 737,483

Total taxable income 1,739,934 1,210,000 2,949,934

Q.1 Autumn 2013

(i) In July 2022, she received following amounts from SL in final settlement:

Mrs.AslamwasemployedwithSahalLimited(SL)asaMarketingManager.On 30 June 2021 sheresigned

fromheremploymentwithSL.On 1 July 2022 shejoinedHassanPakistanLimited(HPL),aquotedcompany,

as a Marketing Director. She has provided you the following information in respect of the tax year 2023:

(N-1)ShareofboththemembersinincomefromothersourcesoftheAOPhasbeenincludedintheincome

fromproerty,tocomputethetotalincomeofboththemembers.Howeverforthecomputationoftaxliabilitythe

propertyincomeofboththemembersshallbetaxedunderNTRwhereasthesharefromAOPbeforetaxshall

beincludedforratepurposesinthehandsofboththemembersastheyhaveincomefrompropertytaxable

under Normal tax regime.

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