INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF PAKISTAN

Fall (Winter) 2009 Examinations

Tuesday, the 17th November 2009

BUSINESS TAXATION – (S-302)

STAGE – 3

Time Allowed – 2 Hours 45 Minutes Maximum Marks – 80

(i) Attempt ALL questions.
(ii) Answers must be neat, relevant and brief.
(iii) In marking the question paper, the examiners take into account clarity of exposition, logic of arguments,
effective presentation, language and use of clear diagram / chart, where appropriate.
(iv) Read the instructions printed on the top cover of answer script CAREFULLY before attempting the paper.
(v) Use of non-programmable scientific calculators of any model is allowed.
(vi) DO NOT write your Name, Reg. No. or Roll No. anywhere inside the answer script.
(vii) Question No.1 – “Multiple Choice Question” printed separately, is an integral part of this question paper.

Marks
Q. 2 (a) M/s. Z. Attari Ltd., has a tax year ending on 30th June, is feeling difficulty in filing the
return in time. You are required to advice the management on the following issues:

(i) Who is responsible to file return on behalf of the company and what conditions
shall be applicable to the return? 6
(ii) What procedure the company has to follow if extension in filing is required? 5
(iii) What penalties shall be applicable in respect of the following contraventions of
the law:
(a) Failure in furnishing a return; 1
(b) Non-payment of tax or failure in payment of tax; and 1
(c) Concealment of Income. 1
(b) Mr. Nasir has received a notice from the tax authorities declaring him a ‘legal
representative’ of his deceased uncle, Dr. Yawer. Mr. Nasir has approached you and
sought your expert advice on the following issues:
(i) What does the term ‘legal representative’ mean? 1
(ii) Taxation of income earned by Dr. Yawar prior to his death and the extent of tax
liability of Mr. Nasir in respect of such income. 2
(iii) Legality of the tax assessment proceeding pending against Dr. Yawar at the time
of his death. 3

Q. 3 (a) Explain the provisions of section 29 of the Income Tax Ordinance, 2001 with regard to
recovery of bad debts in subsequent years. 5

(b) Discuss the provision of sections 170 & 171 for claiming “refund” under the Income Tax
Ordinance, 2001. Also narrate that who is entitled to a refund and how it becomes due. 6

(c) Enumerate “the prescribed qualification for registration as an income tax practitioner”
as provided under Rules 86 of the Income Tax Rules, 2002. 6

(d) What is the duration of registration for income tax practitioner as per Rule 88 of the
Income Tax Rules, 2002? 3

PTO
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 Marks
Q. 4 The following is the Profit & Loss Account of M/s. Fast Track Company (Pvt) Limited
for the year ended on 30th June.
Rs. Rs.
Sundry expenses 8,000 Gross Profit 840,000
Office salaries 104,000 Casual income 2,000
Rent, rates & taxes 32,000 Premium on issue of debentures 40,000
Income tax 10,400 Recovered bad debts
Legal charges 7,200 (allowed in the past) 1,600
Advertisement 20,000 Dividend 8,000
Auditor's fees 24,000
Cost of issue of debentures 20,000
Loss on sales of furniture 8,000
P. F. contribution 28,000
Bad debts 16,000
Vehicle expenses 32,000
Fire insurance premium 28,000
Communication 3,600
Provision for taxes 36,000
Provision for bad debts 16,000
Liquidated damages 12,000
Depreciation 160,000
Net Profit 326,400
891,600 891,600

Required:

Compute the net taxable income of the company for the tax year 2010 from the
above data after keeping in view the following notes: 20
(i) Sundry expenses include Rs.1,600 paid to an institution not recognized under
section 61.
(ii) Office salaries include Rs.20,000 paid to one of the directors.
(iii) Provident Fund is recognized by the Income Tax Department.
(iv) Vehicle expenses are not vouched and verifiable to the extent of Rs.6,000.
(v) Actual depreciation works out to Rs.136,000 only.

Q. 5 (a) Describe the records required to be maintained by registered persons under

section 22 of the Sales Tax Act, 1990. 5

(b) An officer of Sales Tax obtains authority under section 38 of the Sales Tax Act, 1990
for access to premises, stocks and records. Explain the legal provisions in this regard. 5

Q. 6 (a) Discuss the following matters with reference to the Customs Act, 1969:

(i) Customs duty on Goods Dutiable 3

(ii) Deferment of Collection of Duty 3

(b) How would Federal Excise Officer proceed for recovery of arrears of duty or any other
sum under the Federal Excise Act. 2005? 4

THE END
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