Tax Book 2023

Chapter 30 Solved Past Papers Income Tax Numericals of ICMAP Stage IV - (2003 to 2018)

Rs.

Sales 4,500,000

Gross profit 1,800,000

Selling and admin expenses 1,520,000

Further Notes are as under:

entitledtoreceive5%interestonhiscapitalemployed,besideshissharefromprofit.Mr.Hadiis

entitledtoreceivecommissionof1%inrecognitionofhiseffortstopromotesales.Theprofitisto

bedistributedequallyamongstthemembers.DuringtheyearendedJune30,2023,thebooksof

accounts of M/s BHM Associates showed following results:

1. An asset, which has a written down value of Rs. 100,000 on July 1, 2022 was disposed of for Rs.
   150,000 on May 30, 2023. Neither depreciation nor gain on its disposal was recorded in the books
   of accounts (Assets are depreciated at rates given in the third schedule to the Income Tax
   Ordinance, 2001).


2. Interest on capital employed and commission on sales were properly recorded in the books of
   accounts and paid to Mr. Baqar and Mr. Hadi.

816___ Conceptual Approach to Taxes

4. Capital employed by each member of AOP is as under:
   Rs.
   Mr. Baqar 1,000,000
   Mr. Hadi 200,000
   Mr. Mikdad 300,000


5. Other incomes of members were as under


6. Provision for bad debts charged to profit and loss account was 6% of sales. During the year
   actual bad debts written off amounted to Rs. 150,000.

(A) Mr. Baqar received salary of Rs. 300,000 (inclusive of house rent allowance of Rs. 120,000)

from another company during the year. The employer deducted Rs. 21,000 tax at source from

salary. He also earned profit of Rs. 20,000 on his bank deposits on which 10% tax was withheld by

the bank.

(B) Mr. Hadi in addition to his commission and share of AOP income has also received agricultural

income of Rs. 120,000 during the year. His income from his own buniness for the year ended June

30, 2023 was Rs. 100,000.

(C) Mr. Mikdad during the year supplied goods to government departments worth Rs. 1,500,000 on

accounts and paid to Mr. Baqar and Mr. Hadi.

Required:

Work out the following:

(i) Taxable income of M/s BHM Associates (AOP), for the year, 2023.

(ii) Taxable income of each of its members and their tax liabilities for the tax year, 2023.

Solution

(C) Mr. Mikdad during the year supplied goods to government departments worth Rs. 1,500,000 on

which Income Tax @ 4.5% was withheld by those departments

816___ Conceptual Approach to Taxes