Tax Book 2023

Chapter 21 ___ Solved Past Papers Income Tax Numericals of CA Module C - (2001 to 2022)

Rupees Rupees Rupees

Gross sales [ 18,240 x 500] & [13,000,000

+ 680,000]

9,120,000 13,680,000 22,800,000

Less: Discount - (680,000) (680,000)

Net sales 9,120,000 13,000,000 22,120,000

Gross profit [9,120,000 - 7,900,000] &

[13,680,000 x 25%]

1,220,000 3,420,000 4,640,000

Less: Exp. - Direct

Scientific research (Note - 1) - (600,000) (600,000)

Expenditure in respect of future contract (25,000) - (25,000)

(^512) ____ _ _Conceptual Approach to Taxes
Expenditure in respect of future contract
(Note - 2)
(25,000) - (25,000)
Less: Exp.- Common [gross sales basis
i.e. 40:60]
Admin., selling and distrib.
2,500,000
Less: inadmissible - penalty
(45,000)
Allowable common expenses
2,455,000
Admin., selling and distrib. [2,455,000 x
40% & 60%]
(982,000) (1,473,000) (2,455,000)
Net business income 213,000 1,347,000 1,560,000
Brought forward losses (300,000) (550,000)
Taxable income/(loss) for the year (87,000) 797,000
(Note 2) Speculation loss cannot be set off against trading business income of Rs. 797,000.
Q. NO. 2 SPRING 2016
Rupees
Sales 30,000,000
Baqir,AsadandRahiaremembersofanassociationofpersons(BAR)andshareprofitsandlossesinthe
ratioof5:3:2respectively.BARisengagedinthebusinessoftradingconsumerelectronicsandhastwo
independentbranchesoneeachinTehranandDubai.FollowinginformationhasbeenextractedfromBAR’s
profit and loss account for the year ended
(Note-3)SimilarlycapitallossofRs.250,000wouldbecarriedforwardtonextyearasitcannot besetoff
against any other heads of income.
(Note 1) Speculation loss of Rs. 87,000 would be carried forward to next year for adjustment against
speculation income.
Sales 30,000,000
Cost of sales (20,500,000)
Gross profit 9,500,000
Administrative and selling expenses (4,732,000)
Financial charges (980,000)
Other income 1,700,000
Profit before taxation 5,488,000
Additional information:
Cost of sales includes:
Administrative and selling expenses include:
(ii) FreightchargesofRs.160,000.ThesewerepaidincashtoMominGoods Transportfortransporting
goods to customers in Multan.
(i) ClosingstockwhichhasbeenvaluedatnetrealizablevalueofRs.1,820,000.Thecostofclosingstock
underabsorptioncostingwasRs.1,950,000.(ii) ProvisionofRs.75,000againstslowmovingstoresand
spares.
Administrative and selling expenses include:
Further information:
Required:
Fortheyearended 31 December 2022 DubaibranchmadeaprofitofRs.1,500,000andTehranbranch
made a loss of Rs. 1,800,000. These figures are not included in the above profit and loss account.
(iii) Sales promotion expenses of Rs. 275,000. These expenses were paid by Rahi through his personal credit
card.
(iv) Rs. 86,000 paid to an institution operated by Federal Government for the training of industrial workers in
Punjab.
(i)CommissionofRs.290,000paidtoBaqir,annualperformanceawardofRs.310,000paidtoRahiandRs.
455,000paidtoABBankLimitedinfinalsettlementofaloanobtainedbyAsadfortheconstructionofhis
house in Muree.
(ii) Provision for bad debts of Rs. 735,000. The opening and closing balances of provision for bad
debts amounted to Rs. 1,100,000 and Rs. 1,435,000 respectively. Bad debts written off include a loan of Rs.
280,000 provided to a supplier.
(^512) __ ___ _Conceptual Approach to Taxes