Tax Book 2023

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

1st Year Rs. Rs.

Business Income -

Add: Inadmissible deductions

Depreciation (Rs. 225,000 x 33%) 74,250

41,513

115,763

115,763

Less:Admissible deductions

Security deposit as lease rental to claim after the expiry of lease -

Interest Rs.(225,000 - 22,500) x 20.5%

Conceptual Approach to Taxes ___ 567

• Lease rental 96,890
  (96,890)
  Taxable income 18,873

2nd Year

Business Income -

Add: Inadmissible deductions

Depreciation 74,250

30,160 104,410

Taxable income 104,410

Less:Admissible deductions

Lease rental 96,890 96,890

In every year Lease rental only is allowable as deduction.

Security deposit as lease rental to claim after the expiry of lease

period

Interest (225,000 - 22,500 - 96,890 + 41,513) x 20.5%

Lease rental 96,890 96,890

Taxable income 7,520

3rd Year

Business Income -

Add: Inadmissible deductions

Depreciation 74,250

16,480 90,730

90,730

Less:Admissible deductions

Lease rental 96,890 96,890

Taxable (income) (6,160)

Q.NO.4 (b) Spring 2003

Sun and Moon have recently registered as partnership. They have incurred the following expenditure.

Interest (225,000 - 22,500 - 96,890 - 96,890 + 30,160 + 41,513)

x 20.5%

Sun and Moon have recently registered as partnership. They have incurred the following expenditure.

· Fees paid to consultants for preparation of registration deed Rs.50,000

· Preparation of feasibility report Rs.100,000

· Purchase of office equipment Rs.150,000

· Purchase of machinery Rs.1,000,000

· Trial run cost Rs.200,000

· Installation cost Rs.50,000

Required: You are required to explain the tax treatment by computing the amount allowable as deduction in

accordance with the provisions of Income Tax Ordinance 2001.

Solution of Q.NO.4 (b) Spring 2003

Rs. Rs.

Amount allowable as deduction

Business IncomeBusiness Income - -

Less: Pre-commencement expenditure

written off

(N - 1) 70,000

Initial allowance on fixed Assets (N - 2) 262,500

Depreciation on fixed Assets (N - 3) 140,625

Taxable income 473,125

NOTES

N-1 Precommencement expenditure written off @ 20%

Fees paid to consultant for preparation of registeration deed 50,000

Preparation of feasibility report 100,000

Trial-run cost 200,000

350,000

Written off (350,000 @ 20%) 70,000

N-2 Initial allowance on Fixed Assets @ 25%

Conceptual Approach to Taxes ___ 567