Tax Book 2023

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

4,500

iii) Amount of loss that can be:

460,000

As there is loss under normal law and information regarding turnover under normal

law has not been given, hence tax only on dividend income is to be computed as

under.

Tax on dividend income (Rs. 30,000 x 15%) assumed from shares to be taxed @

15%)

(a) adjusted against any other head of income

Loss under the head income from other sources and total business loss (including

Conceptual Approach to Taxes ___ 559

(b) Carried forward for maximum 6 years

140,000

(c) Carried forward for indefinite period.

290,000

Q.NO. 2 Autumn 2005

Mr.ImranisacitizenofPakistan.Duringthefirstninemonthsofthetaxyear2018,heworkedasfinancial

controllerofaPakistanbasedsubsidiaryofamultinationalgroup.Afterthathewastransferredandemployed

asHeadofFinanceoftheUAEbasedsubsidiaryoftheGroup.Mr.Imran’sfamilystayedinDubaithroughout

the year. The detail of income earned by him during the tax year 2023 is given below:

depreciation) may be adjusted against profit from any other head of income.

Unabsorbed depreciation loss shall be carried forward for indefinite period.

Unadjusted business loss (excluding depreciation loss) shall be carried forward for

6 years.

From the UAE company:

From Pakistan subsidiary:

(a) Basic salary Rs. 500,000 p.m.

Mr.ImranearnedUS$30,000duringthethree-month’semploymentintheUAE.Notaxisdeductedfrom

salaryearnedandpaidintheUAE.TorelocateMr.ImraninUAE,theUAECompanyincurredonetime

miscellaneous cost of Rs. 100,000 to move the household items of Mr. Imran from Pakistan to Dubai.

(b) Medical allowance Rs. 45,000 p.m (no free medical or hospitalization facility is given to Mr. Imran under

the terms of employment).

(c) The company has provided Mr. Imran a TV and VCR costing Rs. 40,000 on which the company charges

depreciation at the rate of 20% in its books of accounts.

the year. The detail of income earned by him during the tax year 2023 is given below:

(e) His family’s housing cost in Dubai, borne by the company amounts to Rs. 30,000 p.m.

depreciation at the rate of 20% in its books of accounts.

(f) Mr. Imran’s travelling and related cost borne by the Pakistan subsidiary to meet his family, amounts to

Rs. 30,000 p.m.

(d) Company has provided interest free loan to Mr. Imran amounting to Rs. 5 million which remained

outstanding throughout his employment with the company. Mr. Imran acquired a flat from the amount of loan

and rented it out at the rate of Rs. 50,000 p.m. for a period of seven months. He also paid Rs. 35,000 as

property tax during the period.

(g) During the employment with the Pakistan subsidiary, Mr. Imran had exercised option to acquire 300

shares of the parent company at the rate of US $ 8 per share. At the time when the option was exercised, the

value of the share was US $ 10 (Rs.58) per share. Furthermore, during the year Mr. Imran sold 200 options

previously received by him at a price of US $ 3 per option (Rs. 171) after holding it for more than a year.

Neither the Pakistan subsidiary nor Mr. Imran incurred any cost in this regard.

Required:

Compute the taxable income of Mr. Imran for the tax year 2023 based on the data provided above.

Solution of Q.NO. 2 Autumn 2005

Income year ended : June 30, 2023

SALARY FROM UAE COMPANY Rupees Rupees

Basic salary ($30,000 x Rs.90 assumed) 2,700,000

Name of Taxpayer : Mr. Imran

National Tax Number :

Neither the Pakistan subsidiary nor Mr. Imran incurred any cost in this regard.

Tax Year : 2023

Personal Status : Individual

Residential Status : Resident

Conceptual Approach to Taxes ___ 559