Tax Book 2023

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

0

50

50

Initial allowance (500 x 15%)

Normal depreciation 10% x 500

Total

N-4In the year of acquisitionthe amortization isbased on the numberof days the asset is

available for use during the tax year.

DonationtoauniversityestablishedunderaProvinciallawisnotanadmissiblededuction;rather,

shallbeeligible forataxcredit tobeallowed attheaverage rateoftax.Theamountoftaxcredit

shall be:

N-3Where the useful life of the software is more than one year, it shall be treated as

intangibleandamortizedovertheyearsthesoftwarehasusefullife.Inothercase,itwillbetreated

as an expense and shall be allowed as deduction in the year it is purchased.

Costofcomputersoftwarehavingusefullifeoffiveyearswillbetreatedasanintangiblesocannot

bechargedtoprofitandlossaccountintheyearofacquisition,thusrenderedasinadmissible. On

the other hand amortization, based on the useful life of the asset, shall be computed as below:

Rs. (4,000,000 / 5 / 364) x 122 = Rs. 268

Conceptual Approach to Taxes _____765

N-10 AsthetaxunderNTRishigherthantheminimumtaxu/s 113 oralternativecorporatetax

under section 113C, so the same shall be the tax liability of the company for the year.

Maximum amount ofdonation forcompanies isrestricted upto20%oftaxable incomewhich

comes to Rs.33,459 (i.e.20%of167,294).Asthedonations are within thepermittedlimit,tax

credit shall be computed on the actual amount of donation, i.e., Rs.10,000 (in thousand).

N-5 Gain on sale of scrap is a part of business income thus allowed for tax purpose.

N-6 According to clause (3) of Part-II of the Second Schedule remuneration for services

rendered outsidePakistanistaxableasaseparateblockofincome@1%u/s154Aofthegross

receipts. Hence, it should not be included in income under NTR.

N-7 Payment of utility bills in cash is admissible deduction.

N-8 UnadjustedbusinesslossofRs.40,200cannotbeadjustedasitisbeyondthepermittedlimit

of six(6) taxyears.However,the unabsorbeddepreciationand amortizationshallbeadjusted

against current year's income.

N-9 Taxcredit@10%oftheamountinvestedbyacompanyinpurchaseofplantandmachinery

forBMRisnomoreavailablefromtaxyear2021.Theadditioninbuildingisalreadynotentitledto

tax credit u/s 65B of the Income Tax Ordinance, 2001.

shall be:

under section 113C, so the same shall be the tax liability of the company for the year.

N-11 ExpenditureofRs.60,000onrefreshmentfordirectorsatboardofdirectorsmeetingofthe

company is admissible being for the purpose of business.

Conceptual Approach to Taxes _____765