Tax Book 2023

Chapter 30 Solved Past Papers Income Tax Numericals of ICMAP Stage IV - (2003 to 2018)

(iv)

Answer 4 Fall 2017

Computation of Taxable Income and Tax Liability

For the tax year 2023

Rupees Rupees

Income from property:

Normal rent (2,400,000 / 12 x 8) 1,600,000

Non-adjustable deposit (7,200,000 / 10) 720,000

2,320,000

Income from business:

On February 15, 2023 Mr. Salam discarded a machine, which he had imported from

japan for Rs. 2,000,000 on January 01, 2023 to start the business. However, the

machine was badly demaged during the shipment, rendering it unfit for use. The shipping

company paid him Rs. 1,050,000 as damages. The scrap value of the machine, on the

date it was discarded, was estimated to be Rs. 300,000. The documentation chagres,

incurred in connection with the claim for damages, were Rs. 35,000.

Mr. Faraz

750___ Conceptual Approach to Taxes

Income from business:

Profit before tax 3,445,000

Add:

Financial Charges 90,000

Accounting depreciation 320,000

360,000

Vehicle running expense (345,000 x 40%) 138,000

Provision for bad debts 33,000

Salary of Mr. Faraz (Rs. 65,000 x 12) 780,000

Salary of Mr. Faraz's brother -

Gifts to clients -

Gifts to wife 45,000

Donation to the citizens Foundation 375,000 2,141,000

Less: 5,586,000

Lease rental paid 290,000

Tax depreciation machinery:

• Initial allowance (2,400,000 x 25%) 600,000
  270,000
  1,160,000
  Income from business 4,426,000
  Less: Unabsorded brought forward losses


• Business losses 720,000

Accounting depreciation in cost of sales (2,400,000

x 15%)

• Normal depreciation (2,400,000 - 600,000) x
  15%


• Business losses 720,000


• Depreciation losses 655,000 1,375,000
  Income from business after adjustment of losses 3,051,000

Income from property:

Actual rent of First floor (Rs. 200,000 x 8) 1,600,000

Add: forfeited deposit 6,000,000

750___ Conceptual Approach to Taxes