Program Name: M.

com
Punjab College (Gojra Campus)

Course Name

Tax management

Program

M.com

Exam

Final Term

Semester

S-15

Total Points

40

Time Allowed

90 Minutes

Instructor

Ali Haider

Name:.
Reg.No

Q No. 1. Choose the most appropriate word from the options given below.
(Marks 09)
1. For tax purposes the term business includes all of the following except
a) Any trade
b) An employment
c) Manufacture
d) Commerce
2. Profit on debt, is chargeable to tax under the head ___________ if Profit on debt is
routine course of business of the taxpayer.
a) Income from salary
b) Income from other sources
c) Income from capital Gains
d) Income from Business
3. Income from Speculation businesses are treated as Under __________
a) Normal tax regime (NTR)
b) Final tax regime (FTR)
c) Separate block of income (SBI)
d) All of the above.
4. Any tax, cess or rate levied on the profits or gains of the business is an _______
deduction.
a) Admissible
b) Inadmissible
c) Tax credit
d) None of the above.

5. Builders
are required to pay minimum
tax at the rate of Rs _____ per square foot actually sold or booked for sale during
a year
a) 40
b) 35
c) 25
d) 30
6. Minimum tax or turnover tax applies on certain persons under Section 113, This
section shall apply upon the following persons Except
a) A nonresident company
b) An individual having turnover of fifty million rupees or above.
c) An association of persons having turnover of fifty million rupees
d) A resident company

7. In which of the following heads of income No deductions are allowed.

a) Salary Income
b) Income from property
c) Income from business
d) Capital Gains
8. A painting, sculpture, drawing or other work of art; is an example of
a) Depreciable asset
b) Intangible asset
c) Capital asset
d) Pre-commencement expenditure

9. Where a
capital asset is disposed of after
one year of its acquisition then the gain for income tax purposes shall be taken
________ of the actual gain on disposal.
a) 70%
b) 75%
c) 65%
d) 25%
10.

Under section (37A) securities means the following assets Except

a) Shares of Public company

b) Any instrument of redeemable capital
c) Derivative products
d) Partners share in an AOP

11. Capital Gain arising from the disposal of securities under section (37A) shall
be treated as a

a) Normal tax regime (NTR)

b) Separate block of Income (SBI)
c) Final tax regime (FTR)
d) Minimum tax liability

12. Profit on debt shall be chargeable to tax under the head _________ if profit on
debt is not the prime business of the taxpayer.

a)

Income from capital Gains

b) Income from property

c) Income from other sources
d) Income from business

13. Goods specified under the third Schedule of Sales tax act 1990, shall be
chargeable to tax at the rate of _______ Retail price

a) 15%
b) 16%
c) 18%
d) 17%

14.

Speculation losses:

a) Are adjusted against income from other sources

b) Are adjusted against other speculation gains of the taxpayer

c) Can
be carried forward upto six
years for adjustment against income from other sources.
d) None of the above.

15. Appeals against the order of the Commissioner Inland Revenue ( Appeals), to
revise the assessment order under income tax ordinance, 2001 lies before:

a) Commissioner Inland Revenue ( Appeals)

b) Appellate Tribunal
c) High court
d) Supreme court

16. Any person who is required to apply for registration under Income tax
ordinance 2001, but fails to make an application for registration, such person
shall pay a penalty of Rs. __________
a) 5% of the tax payable
b) 3% of the tax payable
c) 7000
d) 5000

17. Any person who fails to collect or deduct tax as required under the Income
tax ordinance 2001, or fails to pay the tax collected or deducted as required
under section 160, shall pay a penalty of
a) Twenty five thousand rupees or 10% of the amount of tax whichever is
higher
b) Twenty thousand rupees or 10% of the amount of tax whichever is higher

c)

Twenty five thousand rupees or

5% of the amount of tax whichever is higher

d) Twenty five thousand rupees or 10% of the amount of tax whichever is lower

18.

Sale of irrigation water for agriculture is chargeable to tax under the head

a) Income from business

b) Income from property
c) Income from other sources
d) Income from capital Gains

19. A taxpayer may file appeal within _________ of the receipt of the order to the
commissioner appeals against the orders passed by commissioner.
a)
b)
c)
d)

35
30
40
90

days
days
days
days

20. Ground rent to be treated under the under which of the following head of
income?

a) Income from property

b)

Income from other sources

c) Income from Salary

d) Income from business

21. The Punjab sales tax on services act, 2012 contains thirteen chapters and
______ sections.

a) 86
b) 88
c) 89
d) 87

22. The rate of levy shall be ______ on net moveable wealth in excess of Rs. 1
million.
a) 0.6%
b) 0.7%
c) 0.5%
d) 0.9%

23)
The taxpayer or the Commissioner Inland Revenue, if not satisfied with the
decision given by appellate tribunal may file a reference application to the

a) Commissioner Appeals
b) Supreme court

c) High

court

d) Alternate Dispute resolution

24)

Under the sales tax act 1990, output tax means

a) Sales tax on supplies made by a registered person

b) Tax deducted at source from the payments made
c) Sales tax on goods exported
d) Sales on supplies after reducing by input tax

25)

Short declaration of value under Section 111(3) is chargeable to tax under

a) Income from business

b) Income from property
c) Income from other sources
d) Income from capital Gains

26)
Any
person who fails to notify the
changes of material nature in the particulars of registration, such person shall
pay a penalty of

a) Rs 4000
b) Rs 5000
c) Rs 6000
d) Rs 7000

27)
Any rent received or receivable by a person in respect of the lease of a
building together with plant and machinery shall chargeable to tax under the
head

a) Income from business

b) Income from property
c) Income from other sources
d) None of the above.

Q No. 2
Explain the following as
specified in the Income Tax Ordinance, 2001 and sales tax act 1990.
(Marks 06)
1) Capital Asset
2) Retail price
3) Cottage industry
4) Input tax and output tax
5) Speculation Business
Q.No.3 (a)

Comment whether the following persons are required to be registered under the Sales Tax
Act, 1990.
1) Mr. Ali is a wholesaler and his annual business turnover is Rs. 4.9 million.
2) Mr. Fazal is operating a general store and his monthly average turnover is Rs. 0.4
million. Mr. Ishaq is planning to import raw materials for business use. The annual
imports are estimated at Rs. 3.0 million.
3) Mr. Pervez is a commercial exporter. All his business purchases are either exempt
supplies or from unregistered suppliers.
4) Mr. Farooq is a distributor of consumer goods and his annual turnover is Rs. 15
million.
CH#12 (Sales Tax)

(Marks 04)

(b) Under the provisions of Income Tax Ordinance, 2001, certain persons are
required to pay minimum tax at the rate of 1% of their turnover.
Required: List the persons who are required to pay minimum tax.
CH#7 (Income from Business)
(Marks 03)

Q.No.4 (a)
State at least Sixteen (16)
different examples of incomes which are chargeable to tax under the head income
from other sources.
CH#9 (Income from other sources)

(Marks 04)

Beena Sikandar is a lawyer and owns a law firm under the name Beena & Co. She is
also Director Legal Affairs at Ayesha Foods Limited. Details of her income for the tax
year 2012 are as follows:
Income Statement

Revenue

Note
(i)

Less: Expenses
Salaries

(ii)

Gifts and donations

Lease charges
Professional fee
Property expenses
Travel expenses
Other expenses
Tax withheld by clients

Net profit
Notes to the Income Statement

(iii)
(iv)
(v)
(vi)
(vii)

Rupees
8,500,00
0
2,000,00
0
400,000
900,000
400,000
350,000
150,000
600,000
200,000
5,000,00
0
3,500,00
0

i.

Revenue includes Rs. 750,000

recovered from Mehak in respect of bad debts that had been written off while
calculating the taxable income for the tax year 2010. The amount was
receivable against professional services rendered to Mehak.

ii.

Salary expenses include amounts of Rs. 50,000 and Rs. 75,000 per month
paid to Beena and her brother respectively. Her brother looks after
administration and financial matters of the firm.

iii.

Gifts and donations include gifts to clients, gift to her son and
donation to Edhi Foundation amounting to Rs. 100,000, Rs. 50,000 and Rs.
250,000 respectively.

iv.

A vehicle was obtained solely for official purposes on operating lease, from a
bank. The lease commenced on 1 March 2012. Lease charges include Rs.
500,000 paid as security deposit to the bank.

v.

The professional fee includes an amount of Rs. 150,000 paid to a legal firm
for defending a law suit filed against Beena, in a family court.

vi.

Beena lives in an apartment situated above her office, and two-fifths of the
total property expenses relates to this apartment.

vii.

Other expenses include an amount of Rs. 150,000 paid for Beenas Golf Club
membership which she exclusively used to promote her business interests.
The payment to the club was made in cash.
Required:
Compute the taxable income, under the head income from business by Beena
Sikandar for the tax year 2012. Provide appropriate comments on the items
appearing in the notes which are not considered by you in your computations.
CH#7(Income from Business) (Marks 06)