TAXATION (MARKS 100)
Module C (3 hours)
Q.1 Ms. Fatima Hasan was working as a Marketing Head with Consumer Products
Limited (CPL) at following emoluments:
(i) Basic salary Rs. 100,000 per month
(ii) House rent allowance Rs. 40,000 per month
(iii) Utilities allowance Rs. 15,000 per month
In addition to the above cash emoluments, she was provided with a Honda Civic car,
exclusively for official use. The cost of car to the Company was Rs. 1,000,000. As
per Company’s policy, the car was sold to Fatima in January 2005 at the written
down value of Rs. 100,000 whereas the fair market value of the same at the time of
sale was Rs. 300,000.
In May 2005, Fatima was approached by Pharma Industries (Pvt.) Limited (PIL).
They offered her employment at a higher salary and some extra benefits, alongwith
a one time payment of Rs. 200,000 as an inducement to accept their offer. Fatima
accepted PIL’s offer by resigning from CPL with effect from June 1, 2005. She
joined PIL from July 1, 2005. The amount of Rs 200,000 was, however, paid to her
on June 29, 2005.
During the year, Fatima has also undertaken the following transactions:
(i) Shares in Queens Pakistan (Pvt.) Limited were sold for Rs. 500,000. These
shares were acquired in the year 1999 at a cost of Rs. 200,000.
(ii) A residential plot inherited in the year 2000 was sold for Rs. 1,000,000. The
fair market value of the plot at the time of inheritance was Rs. 200,000.
(iii) A painting purchased at a cost of Rs. 100,000 was sold for Rs. 75,000.
(iv) She had won a cash prize of Rs. 250,000 in a quiz show. Tax of Rs. 50,000
was deducted from the prize money under section 156.
(v) Dividend of Rs. 50,000 was received on account of shareholding in a listed
Company. Tax of Rs. 5,000 was deducted under section 150.
(vi) She received a fee of Rs. 100,000 in consideration for preparing a research
paper for a foreign University. Fatima incurred Rs. 10,000 on the printing of
research paper and courier charges for sending the paper abroad.
(vii) An amount of Rs. 50,000 was donated to an approved charitable institution.
In the light of above information, compute the taxable income of Ms. Fatima for the
tax year 2005 by giving brief explanation for the items not included in the taxable
income.
(15)
Q.2 Define the following with reference to the Income Tax Ordinance, 2001:
(a) Depreciable Assets
(b) Turnover for the purpose of computing minimum tax liability (05)
(05)
docsity.com
