Income From Business Chapter- 09
Q. No. 3(a) February 2013 Write short answers of the following questions:
(iii) Whether the income of a university or an educational institution established for educational purpose
and making profit is exempt from income tax or not?
(iv) Upto what period the income from export of computer software of IT Services or IT enabled services
are exempt from income tax?
Q. No. 3(b) February 2013 M/s. Kotton Limited, a holding company of five companies is engaged in the
business of cotton farming, ginning, spinning, weaving and trading. Approximately 60% of the output of
each company is consumed by the next follower, The remaining 40% is being sold in the open market
through the trading company out of which 60% is exported and 40% is sold in the market. Mr. Zaidi,
Director Finance of the group of companies has received a notice from tax department regarding
applicability of section 108 of the Income Tax Ordinance, 2001' transactions between associates' Mr. Zaidi
approached you to seek advice about the following:
(i) What are the methods which may be applied to determine arm's length results under the Income Tax
Rules, 2002?
(ii) Which method will be used where the arm's length results cannot be reliably determined under any of
the methods as mentioned at (i) above?
Q. No. 3 (a) August 2012 As per section 20 of the Income Tax Ordinance, 2001 a deduction is allowed in
computing the income of a person chargeable to tax under the head Income from Business for a tax year
for any expenditure incurred wholly and exclusively for the purpose of business. Rule 10 of the Income Tax
Rules, 2001 laid down some conditions on a deduction for entertainment expenditure incurred by a person.
Required:
(i) What are the conditions laid down in the rule 10 of the Income Tax Rules, 2002 for the deduction of
entertainment expenditures?
(ii) What is the benchmark for the allow-ability of the entertainment expenditures under the above rule?
(iii) Define the term entertainment under the rule 10 of the Income Tax Rules, 2002.
Q.3 (a) SUMMER 2012 As per Section 29 of the Income Tax Ordinance, 2001 relating to Bad Debt reply
the following:
(i) Under what conditions a person shall be allowed deduction for bad debts in a tax year?
(ii) What will be the maximum amount of deduction?
(iii) Where a person was allowed a deduction in a tax year for bad debt and in a subsequent tax year the
person receives in cash or kind any amount in respect of that debt, how this amount shall be treated?
Q. NO. 3 (a) SUMMER 2010 As per Rule 10 of the Income Tax Rules, 2002:
(i) Define the term entertainment expenditure.
(ii) What is the condition of admissibility of entertainment expenditure?
(iii) What are the limitations on the deduction of entertainment expenditure?
Q. NO. 3 (a) WINTER 2009 Explain the provisions of section 29 of the ITO, 2001 with regard to recovery of
bad debts in subsequent years.
Q. NO. 2 (a) SUMMER 2007 Discuss the provisions u/s 29 of the ITO, 2001, regarding deduction of bad
debts.
Q. NO. 2 (b) SUMMER 2006 State the expenses, which are not allowed as deduction while calculating the
income under the head “Income from business” under ITO, 2001.
Q. NO. 2 WINTER 2005 What are the incomes of a person for a tax year other than income exempt
from tax & chargeable to tax under head “Income from Business”
Q. NO. 3 SUMMER 2003 Discuss the deductions not allowed in computing income chargeable under the
head “Income from Business”.