Chapter 30 Solved Past Papers Income Tax Numericals of ICMAP Stage IV - (2003 to 2018)
Rupees
Income Income Tax Paid Losses
Normal Business 1,540,000 225,000 175,000
Capital gain 1,100,000 67,000 1,600,000
Speculation business 700,000 15,000 450,000
Other sources 1,375,000 - -
Required:Answer 2 Summer 2018
(a) Deduction and Appropriate Treatment as per the Income Tax Ordinance, 2001:In addition to above. He also received following incomes from United Kingdom (UK), tax
paid thereon and brought forward foreign losses for tax yar 2022:Under the provision of the income Tax Ordinance, 2001 and Rules made thereunder, compute the
taxable income, net tax payable by or refundable to Mr. Haider for the tax year 2023 and the
amount of foreign losses of foreign tax credit, if any, to be carried forward.742___ Conceptual Approach to Taxes
.....The donation paid to karachi University established by the Federal Government is not a
deductible expenditure, However, DE is entitled to a tax credit at average rate of tax in
respect of donation paid to the hospital.
Initial allowance is only admissible on such plant and machinery which was not
previously used in pakistan.Since in the case, the equipment was previously used in pakistan, the initial allowacne is
not admissible.
Only those bad debts are allowed as admissible deductions which have previously been
included in the taxpayer's business income chargeable to tax.
Since the staff loan was not previously offered to tax as business income, it would not be
admissible.Entire lease rentals paid during the year, on leased assets, i.e. Rs. 325,000 shall be
allowed as admissible dediction.
Following expenditures however, would not be admissbile:
> Finance charges of Rs. 90,000.
> Depreciation of Rs. 275,000.
Any expenditure that provides an advantage or benefit for a period of more than one year
is included in the definition of intangibles and is required to be amortized over the period
of expected benefit or 25 years whichever is less..(b) Taxability of the Commission under section 233 of the Income Tax Ordinance, 2001:of expected benefit or 25 years whichever is less.As such DE would be allowed to charge only 1/14th of the expense i.e. Rs. 24,286 in tax
year 2023.The late delivery damages paid to the client is an expense connected and incidental to
the carrying of firm's business. The expenditure incurred is wholly and exclusively for the
purpose of the business and should not have been added back.742___ Conceptual Approach to Taxes