Income From Other Sources Chapter- 13
(iii) funds from which expenditure was made; or
(iv) suppression of any production, sales, or any amount chargeable to tax; or
(v) suppression of any item of receipt liable to tax in whole or in part has been
confronted to the taxpayer through a notice under sub-section (9) of section 122 of
the Ordinance.Example
Following is the computation of taxable income provided by Mr. A.
Rs.
Sales 400,000
Cost of sales 200,000
Gross profit 200,000
Other profit and loss expenses 100,000
Taxable income from business 100,000Following further information is available:
Sales include Rs. 10,000 received from a person. There was no invoice against this
amount and no explanation was provided by Mr. Ali about this amount.
Sales value is understated by Rs. 100,000 in computation of taxable income.
He purchased a car for personal use and declared the value of this car in his wealth
statement to be Rs.200,000. The reasonable value of car determined by the
Commissioner is Rs. 500,000.
Required:
Compute correct taxable income and tax liability of the taxpayer for the tax year 20 23.Solution:
Mr. Ali
Computation of taxable income tax liability: Rs.
Income from business
Incorrect taxable income (given above) 100,000
Add:
Un-declared sales 100,000
Less:
Unexplained income (10,000)
Correct taxable income from business 190,000
Income from other sources
Unexplained income 10,000
Difference between the reasonable and declared values of the car 300,000
310,000
Total taxable income 500,000
Computation of tax liability
Tax on Rs. 500,000 x 0 % ---- 0 ------- Valuation of assets [Rule 228(1), (2) & (3)]
After the amendment by Finance Act, 2016 in the definition of Fair Market value under section 68 for
valuation of immoveable property the valuation prescribed under Rule 228 to the extent of
immoveable property will become useless. However the immoveable properties for which valuation
not fixed / notified by the Board shall remain within the Rule 228 and valuation of the same shall be
made under this Rule.
But as per income tax rules the valuation of immovable property U/R 228(1) for the purposes of
section 111 shall be taken to be-