CAF-02 Lecture 114
LECTURE 114 Part A,B,C,D,E
Sr. Chapter Description
1. 1 Q.9 (Already done)
2. 2 Q.9 (i) (Ignore)
3. 5 1. Accumulated profits definition
2. Q.18 (Page 66)
4. 17 1. Q.4 ,6,7,8 (Page 395-397)
2. Page 401
5. 13 Q.7,8 (Page 304)
6. 10 1. Past Paper Q.5
2. Section 75A
3. Notional amount (Page 238) (Market Based Transaction)
- On listed company shares and other listed securities
- Not applicable on unlisted company which fall under definition
of public company
7. 14 1. Q.7 (Page 319)
2. Ex.9 (Page 314)
8. 7 1. Q.9,12 (Page 118)
2. Allowance point revision (Page 86)
9. 12 On which figure to take 75% (Ziada wali income)
10. 15 1. Summary – Chapter 19 (Page 499)
2. Q.17, 3, 4
11. Sales tax 1. S.11B (Page 520)
2. Q. 31, Q. 50(3) , 47(2), 46 (2), 44, 39(b), 15, 13(a), 4
12. 8 1. Section 21(r)
2. Page 134 (e) (ea) (f) [Will be done later]
3. PP Q.48
13 Discussion of 2 attempts
- Q.7 Autumn 2024
1. Over all discussion
a. Student scripts
i. Name of person at start of numerical
ii. Show workings on next page
iii. Refer figures with workings
iv. Show main answer on first page
v. Solve each part on separate page
2. May be tested by ICAP
a. Section 175B (Chapter 16)
b. AOP Last sections (Section 90, 98A, 98B, 98C)
c. Section 25 (Page 523)
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CAF-02 Lecture 114
QUESTION -1
KT is engaged in the business of manufacturing and supply of paper products. Following information is
available from KT’s records for the month of February 2022:
Purchases Rs. in million
Taxable goods from registered persons 180
Electrical and sanitary fittings 17
Supplies
Taxable goods to registered persons 200
Taxable goods to un-registered persons (including Rs. 15 million sale to a single party who
95
has provided NIC)
Exports 98
Sale to exporter who is a retailer 10
Exempt sales 12
An amount of Rs. 13 million on account of purchases is outstanding since 12 August 2021. The related
input tax was accounted for in the relevant tax period.
All the above figures are exclusive of sales tax, except where it is specified otherwise. Sales tax is payable
at the rate of 18%.
Required:
In the light of the provisions of the Sales Tax Act, 1990 and Rules made thereunder, compute sales tax
payable by or refundable to KT and input tax to be carried forward, for February 2022.
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CAF-02 Lecture 114
QUESTION-2
For the purpose of this question, assume today is 31 August 2022.
Shabana, a senior manager at Master Limited (ML), resigned on 31 January 2022 after completion of three
and a half year of service. During, the tax year 2022, she received the following emoluments from ML:
(i) Salary of Rs. 610,000 per month.
(ii) On 15 February 2022, she received the following payments from ML, as final settlement:
• Rs. 2,200,000 under golden handshake scheme.
• Previous 3 years average tax rate is 4%
Other information:
1. During the year, she contributed Rs. 500,000 to an approved pension fund under Voluntary Pension
System Rules, 2005. (Note: It is different from employer contribution to pension fund)
2. She sustained a loss on renting out building together with plant and machinery of Rs. 2,200,000.
3. In addition to her own house she has a vacant plot in Murree having a fair value of Rs. 22,000,000.
4. She has 3 farm houses relating to her agricultural land:
Area Total area Covered area Value
Rs in million.
In Multan 2,200 sq yards 8,000 sq feet 8,000,000
In Ghotki 1,600 sq yards 4,000 sq feet 4,000,000
In Chiniot 2,300 sq yards 4,200 sq feet 3,000,000
5. During the year ended 30 June 2022, she started a new business in Pakistan. Following information
is available:
• Her sales stood at Rs. 20 million
• Her miscellaneous expenses stood at Rs. 23 million
• A furniture having a tax WDV of Rs. 600,000 is disposed of. The fair value of furniture
was at time of disposal was Rs. 900,000 however entity received Rs. 400,000 cash and
printer having a fair value of Rs. 520,000.
• Incurred Rs. 2 million on feasibility study of the project.
• Obtained a 3% loan of AED 0.4 million from a UAE bank on 1 January 2022 for the
purchase of computer. The interest is payable annually and principal amount is repayable
at the end of third year.
• Installed the computer at a cost of Rs. 10 million on 14 March 2022. 10% of computer is
used for personal purpose.
The exchange rates of 1 AED to PKR on different dates are as follows:
1-Jan-2022 30-Jun-2022 Average between 1-Jan-2022 to 30-Jun-2022
Rs. 50 Rs. 55 Rs. 53
6. Received 5,000 bonus shares having fair value of Rs. 37 each.
Required: Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder compute
the total income, taxable income and net tax payable by or refundable to Basit for the tax year 2022.
Read this Note after Lecture 114 Part-E
No exchange gain/(loss) is adjusted in cost of asset because as per law it is recorded when it will occur
and there is a view that occur means repayment.
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CAF-02 Lecture 114
Question-3
For the purpose of this question, assume that the date today is 31 August 2023.
Faith Brothers (FB) is engaged in the business of manufacturing tools and equipment. Following
information has been extracted from FB’s records for the year ended 30 June 2023:
Rs. in million
Revenue 1,400
Expenses (1,270)
Other income 47
Net profit 177
Additional information:
(i) Expenses include:
• accounting depreciation of Rs. 188 million.
• cash payment of Rs. 1 million for purchasing the ten air tickets.
• payment of Rs. 4 million to shipping line on account of demurrages for containers blocked at
port. Moreover, penalties of Rs. 9 million were also paid to various clients on delaying their
orders because of closure of production plant for two weeks during the year.
• payment of Rs. 50 million to a builder for the construction of a building. The work is still in
progress at the year end.
• payment of AED 100,000 equivalent to Rs. 5 million to a research institute in UAE for the
purpose of developing a new product.
• a foreign exchange loss of Rs. 15.8 million in respect of amount payable to FB’s associated
company in Qatar. This liability arose on 1 January 2022 from the import of a second-hand
plant at a cost of QAR 400,000. As per the agreement, the payment would be made equally on
30 June 2022, 30 June 2023, 30 June 2024 and 30 June 2025. Relevant exchange rates:
1 January 2022 30 June 2022 30 June 2023
Rs. per QAR 45 40 79.5
(ii) Other income comprises of:
• capital gain of Rs. 40 million on sale of following securities on 1 March 2023:
Capital gain
Date of purchase
(Rs. in million)
Modaraba certificates 10 July 2022 8
Shares of an unlisted company 20 February 2022 12
Shares of a listed company 15 January 2019 20
• a loss of Rs. 9 million in respect of an insurance claim. The claim was lodged against damage
of a new machinery during the shipment that rendered it unfit for use.
(iii) Tax depreciation for the year on all fixed assets, other than imported second-hand plant, amounted
to Rs. 214 million.
(iv) Following are the details of losses brought forward from previous years:
Rs. in million
Loss from business relating to tax year 2021 52
Loss from speculation business relating to tax year 2022 14
Unabsorbed tax depreciation 168
Capital losses on sale of listed securities relating to:
• tax year 2019 8
• tax year 2020 6
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CAF-02 Lecture 114
Required:
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder:
(a) compute total income, taxable income and income tax liability of FB for the tax year 2023. (17)
• Consider minimum tax under section 113.
• Show all relevant exemptions, exclusions and disallowances.
(b) Determine the amount of FB’s remaining unutilized tax losses along with the tax year upto which
such losses may be carried forward. (03)
Question-4
Solve Q.6 of September 2024 attempt
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