Tax Book 2023

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

Balance tax payable 221,591

Q.NO. 2(a): Spring 2007

Explain the correct tax treatment in each of the following situations:

(ii) In December 2022, Mr. Yahya entered into an agreement for sale of his residential plot to Mr. Moosa, who

paid an advance of Rs. 500,000. According to the agreement, Mr. Moosa was required to pay the balance by

(i) In 2012, Mr. Hamid inherited a rare sculpture of Buddha which had a fair market value of Rs. 200,000 on

the date of inheritance. In February 2023, the sculpture was sold by him at Rs. 500,000.

Conceptual Approach to Taxes ___ 555

Mr.Zubairprovidedconsultancyservicestoalistedcompany.Inconsiderationforhisservices,hereceiveda

net amount of Rs. 47,000 after tax deduction of Rs. 3,000.

paid an advance of Rs. 500,000. According to the agreement, Mr. Moosa was required to pay the balance by

February 28, 2023. However, instead of paying the balance amount, he terminated the sale agreement.Mr.

Yahya forfeited the advance of Rs. 500,000 in accordance with the terms of the agreement.

(iii) In September 2022, Mr. Saleem sold his personal car, Toyota Corolla, to one of his cousins at a price of

Rs. 50,000 whereas the fair market value of the car was Rs. 200,000. The car was purchased by him in the

year 2015 at a cost of Rs. '300,000

(iv) Mr. Ibrahim was working as a Chief Financial Officer in Dawood Pakistan (Pvt.) Limited, which is a wholly

owned subsidiary of Dawood AG, Germany. According to the Company’s policy, Mr. Ibrahim was sent on

secondment to Germany on January 1, 2023 for a period of five years. During this period, half of his salary will

be credited to his bank account in Pakistan, whereas the remaining portion will be received by him in

Germany.

Solution of Q.NO. 2(a): Spring 2007

i) Gain on sale of Sculpture Rs. Rs.

Consideration received 500,000

Less: Cost (assumed equal to FMV) at the

time of inheritance

(200,000)

300,000

300,000

500,000

net amount of Rs. 47,000 after tax deduction of Rs. 3,000.

ii) Any forfeited money as advance against sale agreement of land and building is

included in the definition of "Rent". So, the amount of forfeited money shall be

chargeable to tax.

iii) As the sale of personal car is neither a business transaction nor a capital asset. There will be no tax

Q.NO. 3(b) Spring 2007

TheincomeofMr.Yousufduringthetaxyear 2023 amountedtoRs. 120 millionwhichincludedcapitalgainsof

Rs. 10 millionanddividendincomeofRs. 12 million.Thetaxliabilityfor 2022 wasRs. 32 millionoutofwhich

Rs. 4 millionrelatedtotaxoncapitalgainsanddividendincome.Thefollowinginformationisavailableforthe

quarter ended December 31, 2022:

iv) Mr. Ibrahim's salary income is taxable in Pakistan in 2023 and foreign source income in next 5 years as his

employment based in Pakistan according to section 101.

v) Any tax deductible at source @ 10% of gross receipt of Rs. 50,000 on consultancy services shall be treated

as minimum tax however the tax under normal law shall be computed and higher from both is to be paid by Mr.

Zubair.

iii) As the sale of personal car is neither a business transaction nor a capital asset. There will be no tax

treatment on the disposal of personal asset. So, the cost, FMV or consideration are irrelevant.

Rs. in million

Tax deducted at source by the customers 3

Tax paid on import 2

Compute advance tax liability for the quarter ended December 31, 2022.

Solution of Q.NO. 3(b) Spring 2007

Income year ended : June 30, 2023

Rs. (in millions) Rs. (in millions)

quarter ended December 31, 2022:

Name of Taxpayer : Mr. Yousaf

National Tax Number :

Tax Year : 2023

Personal Status : Individual

Residential Status : Resident

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