Tax Book 2023

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

Solution

Hameeda (Resident)

Computation of taxable income and tax liability

For the tax year 2023

CAPITAL GAINS U/S 37 Rupees Rupees

Paintings:

Sale price 2,000,000

(^532) ____ ___ _Conceptual Approach to Taxes
Sale price 2,000,000
Cost of painting at the date of inheritance u/s 79 1,000,000 1,000,000
Gain on sale of painting is covered under section 38(5) hence
the same has been considered for computation of taxable gain.
Jewellery:
Sale price 5,000,000
Cost at the date of gift u/s 79 3,000,000
2,000,000
2,000,000
Plot in DHA: (Separate block of income)
Sale price 10,000,000
Cost at the date of inheritance 4,000,000
6,000,000

As holding period of plot is more than 6 years therefore gain is

taxable at 0% under Separate Block of income. - -

Taxable income under normal law 3,000,000

COMPUTATION OF TAX LIABILITY:

Tax on Rs. 3,000,000 [270,000 + 22.5% x (3,000,000 - 2,400,000)] 405,000

• Tax liability 405,000

Q.5 (b) Autumn 2012

On 1 July2022,KashmalaandShumailaformedanAssociationofPersons(AOP)withtheobjectiveof

providinginformationtechnologysupportservicestocorporateclients.TheycontributedRs.1.2millionandRs.

0.8millionrespectivelyintheircapitalaccountsandagreedtoshareprofitsandlossesintheratiooftheir

taxable at 0% under Separate Block of income.

Tax on capital gain of Rs. 6,000,000 on sale of plot after six

years @ 0%

(ii) Accounting depreciation on office assets amounted to Rs. 0.3 million.

0.8millionrespectivelyintheircapitalaccountsandagreedtoshareprofitsandlossesintheratiooftheir

capitals.

(i) Salaries amounting to Rs. 0.5 million and Rs. 0.3 million were paid to Kashmala and Shumaila respectively.

During the year ended 30 June 2023, the AOP incurred a net loss of Rs. 0.8 million on a turnover of Rs. 50

million. The cost for the year was arrived after adjustment of the following:

The taxes withheld by the clients, for the year ended 30 June 2023 amounted to Rs. 0.55 million. AOP is

entitled to claim tax depreciation of Rs. 0.25 million in respect of the office assets.

Fortheyearended 30 June2022,businesslossandunabsorbeddepreciationofRs.0.4millionandRs.0.3

millionrespectivelywereassessedandcarriedforward.ThetotalturnoveroftheAOPin 2022 wasRs. 40

million.

Solution

AOP

Computation of taxable income and tax liability

For the tax year 2023

INCOME FROM BUSINESS U/S 18 Rs.

Accounting loss 800,000

Add:

Salaries paid to partners (500,000 + 300,000) 800,000

Accounting depreciation 300,000

Required:Calculatethetaxableincome,nettaxpayableandunabsorbedlosses(includingunabsorbed

depreciation), if any , to be carried forward by the AOP for the year ended 30 June 2023.

(^532) ____ ___ _Conceptual Approach to Taxes