Tax Book 2023

Assets and Depreciation Chapter- 10

CA CAF- 6 PAST PAPERS THEORECTICAL QUESTIONS

Q. NO. 2 (a)(i) Spring 2022

Under the provisions of the Income Tax Ordinance, 2001 discuss the tax
implication/treatment in each of the following independent matters:

Purchase of immovable property in cash.

Q. NO. 5 (a) Autumn 2019
Identify any three situations in which the fair market value of the assets shall be treated to be the cost of the
asset.

Q. NO. 3 (c) Autumn 2019
Sikandar has revalued his factory building in accordance with International Financial Reporting Standards
and consequently charged depreciation on the revalued amount. Explain the tax implication of the
revaluation.

Q. NO. 3 (d) Autumn 2019
Shahbaz has acquired machinery for his new factory against a loan repayable in USD. Discuss what would
be the cost of machinery for the purpose of depreciation deduction

Q. NO. 2 (a) Spring 2019
Haider, a filer, was carrying on business as a cloth trader. On 28 October 20X7 there was a fire
in his shop and the entire stock of clothes costing Rs. 1,550,000 was destroyed. The insurance
company refused to pay the claim. Consequently, Haider ceased his business on 31 January
20X8.

After cessation of business, Haider filed an appeal against the insurance company and was able

to recover Rs. 1,300,000 as full and final settlement from the insurance company in tax year

20X9.

Required: Under the Income Tax Ordinance, 2001:

i. state the requirements that Haider should comply with, on cessation of his business on 31

January 20X8.

ii. briefly discuss the treatment of the recovered amount in the tax year 20X9

Q. NO. 3(c & d) Autumn 2017

Under the provisions of the Income Tax Ordinance, 2001 compute taxable income or loss, under the
correct head of income for tax year 2017, in each of the following cases:

(c) Sarwar Enterprises sold an immovable property for Rs. 50 million. The cost of the immovable
property was Rs. 30 million. Tax depreciation of Rs. 6 million had been allowed on the immovable
property up to the tax year 2016.

(d) Shams Industries Limited (SIL) sold and exported one of its plants to a Nigerian Company. The sale
proceeds received in SIL’s account amounted to Rs. 25 million. The cost and tax written down value
of the plant was Rs. 20 million and Rs. 7 million respectively.

Q.NO.2 (a) Spring 2017 Explain the term ‘disposal of assets’ as referred to in the Income Tax Ordinance,
2001.

Q. 2 September 2015 Under the provisions of the Income Tax Ordinance, 2001 what would be the
cost of an asset for the purpose of depreciation deduction in each of the following circumstances?

(a) Mr. Aamir acquired a new machine partly in exchange for an old machine. He paid freight to
bring the old machine to the seller’s location and also purchased cooling equipment which was
attached to the new machine for its smooth functioning.