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Perquisite-Related Problem-1

Items of Salary
Basic Salary [BS]
House Rent Allowance
Medical Allowance
Conveyance Allowance
Entertainment Allowance
Telephone Bill
Other Utility Bill
Domestic Travel Allowance
Foreign Travel Allowance**
(spent by employer)
Festival Bonus
Incentive Bonus**
Leave Encashment
Leave Fare Assistance
Overtime
Employer's Contribution to RPF (10% of BS)
Transport (for office & personal use)
Rent-free Accommodation
Accommodation at Concessional Rent
TOTAL
Employee's Contribution to:
Recognized Provident Fund (RPF)
Approved Superannuation Fund (ASF)
Disclosed profit by Employer
Actual foreign travel expense
(spent by employee)
Actual rental value
Rent paid by Employee
Actual Medical Expenses
Foreign Travel Allowance (last year)

Mr. A
900,000
30,000
32,000
25,000
5,000
7,500
25,000

Expenditure by Employer
Mr. B
Mr. C
Mr. D
840,000
720,000
600,000
240,000
216,000
30,000
25,000
20,000
32,000
25,000
25,000
20,000
18,000
4,000
3,500
3,000
6,500
6,000
5,500
23,000
21,000
19,000

250,000

225,000

150,000
125,000

140,000
100,000

90,000
70,000
420,000
2,129,500
10% of BS

Mr. E
480,000
168,000
15,000
17,000
10,000
1,500
4,000
17,000

120,000

100,000

50,000

40,000

84,000
65,000

72,000
55,000

60,000

20,000
30,000
10,000
48,000

300,000
1,874,500

1,332,500

1,106,500

900,500

10% of BS

10% of BS

10% of BS

80,000

10% of BS

2% of BS
1,200,000
240,000

150,000

400,000

324,000
24,000
25,000
Taxable

40,000
Exempted

23,000

21,500

13,800

Solution:
Perquisite Expenditure by Employer
Items of Salary
Basic Salary [BS]
House Rent Allowance
Medical Allowance
Conveyance Allowance
Entertainment Allowance
Telephone Bill
Other Utility Bill
Domestic Travel Allowance
Foreign Travel Allowance**
Festival Bonus
Incentive Bonus**
Leave Encashment
Leave Fare Assistance
Overtime

Mr. A

Perquisite by Employer
Mr. B
Mr. C
Mr. D

30,000
32,000
25,000
5,000
7,500
25,000
187,500

30,000
32,000
25,000
4,000
6,500
23,000
168,750

5,000

70,000
420,000

65,000

55,000

300,000
654,250
250,000
404,250
56,250

370,500
250,000
120,500

240,000
25,000
20,000
3,500
6,000
21,000

Mr. E

216,000
20,000
25,000
18,000
3,000
5,500
19,000

168,000
15,000
17,000
10,000
1,500
4,000
17,000

306,500
250,000
56,500

232,500
250,000
nil

Employer's Contribution to RPF (10% of BS)

Transport (for office & personal use)


Rent-free Accommodation
Accommodation at Concessional Rent
TOTAL
Maximum Perquisite per Employee
Perquisite disallowed u/s 30(e)
Foreign Travel Allowance disallowed u/r 65

807,000
250,000
557,000
62,500

Problems on Corporate Taxation: AY 2011-12


Problem # CT-1
The trading and profit and loss accounts of Khan & Co. Ltd., a private limited company not
enlisted with any stock exchanges for the last income year were as follows:
Trading Account for the last income year
Taka
5,00,000 By Sales
50,00,000 Closing stock
15,00,000
30,00,000
1,00,00,000

To Opening stock
Purchases
Wages
Gross profit c/d

Taka
92,50,000
7,50,000
1,00,00,000

Profit and Loss Account for the last income year


To Salaries and allowances
Rent, rates and taxes
Law charges
Donation
Bad debts
Provision for bad debts
Depreciation
Miscellaneous expenses
Net profit

Taka
5,00,000 By Gross profit b/d
1,75,000 Compensation from
1,00,000
insurance company
2,00,000
1,00,000
50,000
3,00,000
2,50,000
20,25,000
37,00,000

Taka
30,00,000
7,00,000

37,00,000

The following further information has been furnished:


(1) Depreciation on fixed assets granted as per Third Schedule Tk. 1,50,000.

(2) Law charges include Tk. 35,000 paid as compensation for injury received by a person run over by
one of the directors of the company while coming to the office. The car belongs to the company.
Tax authority treated it as the directors personal expense.
(3) Donation was made to a Milad Celebration Committee.
(4) Bad debts include a loan of Tk. 80,000 made to a friend of one of the directors six years ago. Tax
authority treated the loan not related to business.
(5) Miscellaneous expenses include entertainment expenses of Tk. 1,50,000.
Required: Calculate the total income and tax payable by the company.

Problem # CT-2
Rupon Glass Manufacturing Ltd. is a publicly traded company enlisted with the stock
exchanges of Bangladesh having a paid up share capital of Tk. 5,000,000. Its Profit and Loss
Account for the last income year was as follows:
To Opening stock
Purchase of raw materials
Purchase of coal
Wages
Salaries and allowances
Entertainment expenses
General expenses
Income tax
Technical know-how fees
Interest on loan
Directors remuneration
Stock damaged in fire
Bonus to employees
Depreciation on fixed assets
Net profit

Taka
1,200,000 By Sales
4,000,000 Closing stock
920,000 Share transfer fees
390,000 Sale proceed of old machine
550,000 Rental income from office
100,000
space let out
300,000 Dividends
100,000
200,000
50,000
125,000
265,000
300,000
500,000
2,313,500
11,313,500

Taka
9,000,000
1,100,000
11,500
1,100,000
8,500
93,500

11,313,500

On examination of the books of account of the company, the following additional information was revealed:
(1)
The company has valued the closing stock of Tk. 1,100,000 at cost price and opening stock would
have been Tk. 10,00,000, if valued at cost price.
(2)
Dividend received from a public limited company having its registered office in Bangladesh. Tax has
been deducted at source u/s 54 @ applicable to a company (i.e. @ 20%.)
(3)
General expenses of Tk. 300,000 consists of:
Tk.
Employee club building construction
50,000
Opening of night school for the workers
10,000
Legal fees related to other taxes
15,000
Embezzlement of cash by cashier
5,000
Distribution of free sample
150,000
Donations to NGOs engaged in projects on accommodation for the slum-dwellers
65,750*
Repair and maintenance expenses for office space let out
4,250
*

Allowed as CSR expenditure subject to 10% tax rebate [SRO No. 229-Ain/Aykar/2011, dated 04.7.2011].

(4)
(5)
(6)
(7)

The cost price of the machine sold was Tk. 1,000,000 whereas its written down value was Tk. 370,740.
The machine was bought 6 years back and the sale proceeds have been utilized to buy similar machine
acquired just after sale of the old machine.
Interest on loan was paid to a non-resident; the company did not deduct tax at source while making the
payment thereon.
Depreciation on fixed assets granted as per Third Schedule Tk. 4,50,000.
The company disclosed total income in its return Tk. 2,313,500 and paid Tk. 633,875 as tax on the
basis of return (including the income tax shown in the Profit & Loss A/C) as follows:

Source of income
Dividend income
Other income
Total income
(8)

Amount (Taka)
93,500
22,20,000
23,13,500

Tax (Taka)
@ 20% [paid at source]
23,375
@ 27.5% [paid as advance]
610,500
Total tax payable u/s 74
633,875
Tax paid on the basis of return
633,875
The company paid dividend @ 12% with respect to the last income year. Its accumulated profit and
free reserve up to the end of the last income year were Tk. 251,278 and Tk. 3,700,000 respectively.

Required: Calculate total income and tax payable by the company for the relevant assessment year.

Problem # CT-3
Green Bangladesh Ltd. is a publicly traded company having paid-up capital of Tk. 9,000,000. The net
profit of the company was Tk. 1,850,000 for the last income year. On scrutiny, the following facts were
revealed:
(1) Accounting depreciation as per audited accounts was Tk. 540,000, but it should be Tk.
499,200 as per Third Schedule.
(2) Telephone Expenses included Tk. 54,000 and Car Maintenance Expenses included Tk.
100,500 as of personal nature.
(3) General Expenses included entertainment expenses Tk. 120,000.
(4) Cost of distribution of free sample was Tk. 650,000.
(5) Provision of bad and doubtful debts was Tk. 100,000.
(6) Dividend income received from investment in listed companies shares Tk. 85,000 (net of tax
@ 20% u/s 54).
(7) During this income year, the company had sold some of its furniture at Tk. 2,00,000. The cost
of the furniture was Tk. 1,50,000 while it was purchased 8 years back. As per Third Schedule,
depreciation is allowed for 7 years on this furniture sold from the year of acquisition to the
year preceding to the last income year. The surplus after deducting a capital loss of Tk.
15,000 occurred in the year preceding the last income year was directly credited to capital
reserve. There was no purchase of any new furniture within one year before or after the date
of sale of the old furniture.
(8) The company paid Tk. 2,295,000 as dividend to its shareholders in last income year.
(9) In the last income year, the turnover of the company was Tk. 30,258,000 of which Tk.
22,693,500 from export sales. Export income was in proportion to sales.
Required: Compute total income and tax liability of the company for the relevant assessment year.