Tax Book 2023

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

(a)

(b)

(c)

(d)

CalculatetaxableincomeandtaxpayablebyI refundabletoMPLforthetaxyear 2023

bygivingall necessary notes to support your calculations. Also calculate minimum

tax payable on the basis of turnover.

AsMPLisplanningtoimportsecond-hand machinery,discusshowthedepreciationwill

becalculatedforsuchmachinefortaxpurpose?Whatwouldbethetreatmentofincome

tax paid on import of such machinery? Briefly state.

Mr. lftikhar is of the opinion that Tax Laws allow whole amount of research

development expenditure asadmissible deduction inataxyear inwhich itisincurred

Explain him about the appropriate tax treatment of the research and expenditure

whichthe MPL is planning toincur fordeveloping anew design ofkraft paperand

Afterprovidingalloftheaboveinformation,Mr.lftikharhasaskedtheTaxConsultanttoguidehim

in respect of the following queries in the light of the Income Tax Laws:

MPL is planning to invest Rs.500,000 in the purchase of plant and machinery for

replacement of the plant and machinery already installed. Discuss the provision

regardingthe tax credit allowed for investment to MPLas per section 65B ofthe

Income Tax Ordinance, 2001. How much tax credit will be available to MPL in this case?

Conceptual Approach to Taxes _____769

(e)

(f)

ANSWER. (a) Tax Credit for Investment:

(b) Calculation of Income Tax Liability:

Where a taxpayer being a company invests any amount in the purchase of plant and machinery, for

the purposes of extension, expansion or balancing, modernization and replacement of the plant

and machinery already installed therein, in an industrial undertaking set up in Pakistan and owned

by it, no tax credit of the amount so invested is available in the tax year 2023 against the tax

payable including on account of minimum tax and final taxes payable under any of the provisions of

this Ordinance.

whichthe MPL is planning toincur fordeveloping anew design ofkraft paperand

polypropylene products.

Since the management ofMPL is ofthe viewthat inordertoclaim the expense as

deductible, remittance to foreign advertising agent should be made through

normalbankingchanneland notaxshouldbededucted, asforeignadvertising agent

theentireservicesoutsidePakistan.Brieflystatethetaxtreatmentundertheprovisionof

Income Tax Ordinance, 2001 in such case.

Thecompany'slong-termgoalsincludeacquiringvarioussubsidiarycompaniesinorder

toexpand itsbusiness. In this regard, prepare a presentation for board ofdirectors

byelaborating the provisions of Section59AA of the Income Tax Ordinance, 2001

regarding group taxation of companies.

Name : Maxo Packaging Limited

National Tax Number : XXX

Tax year ended on : June 30, 2023

Tax year : 2023

Rs. Rs.

3,020,000

Add:

Accounting depreciation 1,750,000

Profit before tax

Conceptual Approach to Taxes _____769