TAXATION-I

Time allowed–3hours
Total Marks–100

[N.B :The figures in the margin indicate full marks.Questions must be answered in English.Examiner will take account of the
quality of language and the answer in which the answers are presented.Different parts, if any, of the same question
must be answered in one place in order of sequence.]

Marks

1. Describe in brief the benefit principle of tax. 3

2. Mr. Rahim, a director of a company at Rajshahi,had to attend a regional management conference arranged by the
group in Hong Kong and has been paid Tk.300,000 by the company to meet his weeklong expenses in abroad. He
actually spent Tk.310,000. How much amount will be added with his income from salary? 3

3. a) Explain, in brief, provision of Return of Withholding tax as per Section 75A of the I.T. Ordinance, 1984. 3
b) Explain classes of income/receipts where taxes are deducted at source under settled liability scheme as per
Section 82C. 8

4. a) Who can file appeal before the Appellate Tribunal? 2

b) Explain the procedure of settlement of appeal by the Tribunal. 4

5. Mr. Morshed has a house at Nasirabad, Chittagong. The house is let out at Tk.10,000/- per month. He spent the
following amounts for the house for the income year 2013-2014: 7
a) White wash of the house Tk. 5,000
b) Mosaic Tk.10,000
c) Rent collection expenses Tk.4,000
d) City corporationtax Tk. 5,000
e) Land revenue Tk. 2,000(Tk. 2,000 still due)
f) Salary of guard Tk.12,000
g) Loan repayment to HBFC Tk.8,000 (In it Tk. 2,000 is interest)
h) Fire insurance premium Tk. 2,000
The owner bears the water and gas bill of the tenant which amounted to Tk.6,000 for the year. From the above
information compute taxable income of Mr.Morshed for the house.

6. Following are the particulars of the interest on securities received by Mr. QuddusChowdhury for the year ended
on 30th June, 2014: 9

a) Interest on Tax Free Govt. Securities Tk.20,000

b) Interest on Port Trust Debenture Tk.40,000
c) Interest on securities on a private hospital Tk. 25,000
d) Interest on securities of a Foreign Govt. Tk. 30,000
e) Interest on 15% commercial securities-
Face value of securities, approved by BSEC Tk. 1,20,000
f) Interest on 8% Govt. securities, Value of securities Tk. 1,50,000
g) Interest on 10% commercial securities, payable
half yearly on 30th June & 31st December,
Value of Securities (Int. receivable on 30th
June yet to be received) Tk. 1,00,000
h) Interest on Treasury bill Tk. 5,000
10% commercial securities were purchased by
bank loan carrying 8% interest.
Bank charge for collection of interest on securities amounted to Tk. 1,000
From the above information compute taxable income on interest on securities.

7. X & Co. purchased a machine at Tk.1,60,000/- on 1st July, 2013. In December 2013,an amount of Tk.25,000 was
spent to increase its capacity. On 30th June 2014 its written down value stood at Tk.80,000/-. This machine was
sold on the same date at Tk. 2,15,000 and the cost incurred for this sale amounted to Tk.5,000/-. 6
Compute capital gain and tax to be paid on the same.

8. The following are the particulars of Income of Mr.Fazal for the year ended 30th June, 2014. 15
a) Salary Tk.12,000/- per month (basic)
b) Dearness Allowance -40% of basic pay but maximum of Tk.4,000 per month
c) Entertainment Allowance Tk.400 per month.
d) Bonus-equivalent to basic salary of two months.
e) Income from Commercial Securities Tk.6,098/-.
f) Honorarium as part time advisor Tk.20,000/-
g) Income from Partnership Business Tk.50,000/-(taxed).
h) Income from Agricultural Land (sale of product) Tk.10,000/-
i) Royalty from books Tk.7,000.
j) Received birth day presentation Tk.5,000.
k) Interest on pensioner saving certificate Tk.10,000.
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 Mr. Fazal was provided with a free-furnished quarter. He also owns a house which is let out at Tk.10,000 per
month. The Municipal Value of the house is Tk.1,00,000. He spent Tk.7,500/- for repair and Tk.30,000 for
alternation. He also paid Tk.4,000 forMunicipal Tax, Tk.2,000 for fire insurance premium, Tk.3,000 for
collection charges.Other Particulars of Mr. Fazal are as follows:
i. He contributed 10% of his basic salary to a recognized provident fund to which his employer contributed
equal sums.
ii. He insured his own life for Tk.75,000 and for the life of his wife for Tk.50,000. He paid insurance premiums
on the above policies Tk.6,000 and Tk.4,000 respectively.
iii. Purchased PratirakhyaSanchayPatra for Tk.20,000.
iv. He spent Tk.8,000 on education for two college going children.
Required to calculate:
i) The total taxable income
ii) Investment tax credit for the year ended 30thJune 2014.
Iii) Tax to be paid.

9. The profit and loss account of Star Ltd. is given below for the income year 2013-2014. 20
Star Ltd.
Profit and Loss Account
For the year ended on June 30, 2014
Particulars Tk. Particulars Tk.
Cost of goods sold 1,500,000 Sales 3,500,000
Salaries 700,000 Dividend 120,000
Rent 150,000 Interest 30,000
Advertisement 200,000 Gain on sale of Asset 40,000
Interest on Loan 80,000 Interest on Tax-Free Securities 15,000
Utility Expenses 60,000 Interest on Foreign Investment 20,000
Donation 150,000
Transportation 110,000
Audit Fee 200,000
Bad Debt 90,000
Contribution to RPF 70,000
Income Tax paid in Advance 30,000
Fines paid to Customs 20,000
Annual Membership 15,000
Legal Expenses 25,000
Insurance Premium 35,000
Sundry Expenses 12,000
Depreciation 65,000
Net Profit 2,13,000
Total 3,725,000 Total 3,725,000

Determine the taxable income of the company and net tax liability thereof. Consider the given data below and
assume that:
Star Ltd. is a Public Limited Company. Salaries are paid in cash without any chequeor bank transfer. Tk.450,000
of salaries from Tk.700,000 falls under the category of gross salary more than Tk.15,000; tax depreciation
amounts toTk.50,000; legal expenses are paid due to the infringement of trademarks and the company has sold an
asset for Tk.100,000 that the company has purchased 4 years back at a cost of Tk.80,000 with a written down
value of Tk.60,000 to date.

10. a) Explain tax base of VAT in Bangladesh. 4

b) Write down the names of ten goods and services which are subject to VAT in Bangladesh. 3
c) As per VAT Law define commercial documents. 3

11. An importer imported 100 pieces of motor cycle at CIF price of Tk.80,000 per piece. The clearing and incidental
charge amounted to Tk.90,000 for the lot. He sold 90 pieces of cycle to a wholesaler at a margin of 10% exclusive
of VAT which is 15% on the value of sale price. The wholesaler charged 5% commission to sell it to retailer to be
sold from their sale centre. The retailer incurs cost @ Tk.1,000/- for maintenance & salary of persons of sale
centre & chargecost plus 10% margin.
Compute VAT to be borne by the consumer assuming that retailer sold 70 pieces of cycle in the month of June
2014. 10

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