Income From Business Chapter- 09
CA CAF- 6 PAST PAPERS THEORECTICAL QUESTIONS
Q.NO 3 Spring 2020 Under the provisions of the Income Tax Ordinance, 2001 and Rules made there under, discuss:
a) the prescribed limits / conditions for the deduction of entertainment expenditure.Q. NO. 2(c) Autumn 2017
Determine the amount of deductible allowance that a resident individual can claim on account of education
expenses, if his taxable income for the year was Rs. 800,000 and he paid monthly fee of Rs. 6,000 per
child for his three children.
Q. NO. 2 Spring 2016
Akram has recently established an advertising agency in the name and style of Azad Advertising. For
introducing his business to both international and local clients, he has allocated considerable chunk of his
marketing budget to entertainment expenditures.
Under the Income Tax Ordinance, 2001 and Rules made there under, advise Akram about the prescribed
limits/conditions for the deduction of entertainment expenditure.
Q.No.2 (b) Autumn 2014 Briefly discuss the provisions of Income Tax Ordinance, 2001 in respect of the
following situations:
ABC (Private) Limited has decided to provide a loan of Rs. 5 million to one of its shareholders, for the
purchase of a house.
Q. No. 5 (a) Spring 2012 Tamba Pakistan (Pvt.) Limited is engaged in the manufacture of pharmaceutical
products. Its board of directors has approved a 3-year loan to one of its major shareholders.
Required: Explain the tax implications of the above transaction on the company as well as the
shareholder.
Q.3 Spring 2011 Carrot Ltd (CL) is engaged in the manufacture, import and sale of electronic appliances
for the past twenty years. When reviewing the company’s tax provisions, you noticed the following amounts
appearing in the tax calculation for the year ended June 30, 20X2.
(i) Profit on debt of Rs. 500,000 paid on a working capital loan obtained from a foreign bank. CL did not
deduct withholding tax while paying profit on debt considering the bank does not have a Permanent
Establishment in Pakistan.
(ii) Expenditure of Rs. 450,000 on promotion of a product which is expected to generate revenue for
twelve years.
(iii) Bad debt in respect of a staff loan, Rs. 25,000.
(iv) Reimbursement of expenses of Rs. 300,000 to CL by the parent company. This amount was incurred
by CL in 20X1 on marketing a new product imported from Dubai.
(v) Initial allowance of Rs. 4,000,000 on a used equipment acquired locally from MSD Limited.
(vi) Financial charges amounting to Rs. 100,000 and depreciation amounting to Rs. 300,000 on a vehicle
acquired on finance lease from Radish Leasing. Lease rentals paid during the year amounted to Rs.
400,000.
Required: Under the provisions of ITO, 2001 discuss the admissibility of the above amounts for tax
purposes.
Q.NO. 4(a) Spring 2008 Discuss the taxability of the following under the Income Tax Ordinance, 2001:
(i) Bad debts