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 of the way 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. a. Write in brief the role of taxation for managing the economy of a country. 4

b. What do you understand by progressive principles of tax? 4

2. a) Present the organisational structure of Income Tax Authorities. 3

b) Enumerate the powers and duties of Deputy Commissioner of Taxes. 5
c) Who can file appeal before the Taxes Appellate Tribunal? 2

3. a) What is meant by withholding Tax? State seven sources alongwith relevant provisions from which
taxes are withheld. 7

b) Write down the dates on which the withholders of tax are required to submit return to the tax
authority. 3

4. a) Mr Rahim in his financial statements submitted with tax return disclosed that a machine was purchased
at Tk 500,000. But the Deputy commissioner of taxes has reason to believe that the machine was
purchased at Tk 800,000. How will DCT treat this difference? 5

b) Mr ABC has cultivated two pieces of land. One is his own land and the other is on a crop sharing basis.
During the financial year 2012-13 Mr ABC received Tk 1,200,000 by selling crops derived from his
own land and Tk 600,000 received by selling crops derived from the land under sharing system. Mr
ABC does not maintain any books of account. Calculate Agricultural Income of Mr ABC. 5

5. PQR Ltd.’s books revealed the following information:

Assessment year Business Depreciation for Income/(loss) Income/(loss)
income/(loss) the year from other from
before charging sources Agriculture
depreciation
2010-11 (1,200,000) (100,000) 300,000 250,000
2011-12 500,000 (300,000) (600,000) 350,000
2012-13 500,000 (500,000) 250,000 350,000
2013-14 850,000 (300,000) 250,000 (100,000)
Calculate total income of PQR Ltd. for the assessment years 2010-11, 2011-12, 2012-13 and 2013-14. 14

6. Under which circumstances following expenses may be considered as Revenue Expenditure as well as 3
Capital Expenditure.
a. Wages
b. Carrying cost
c. Freight expenses

7. a) Write the consequences as per income tax ordinance if the assessee failed to pay advance tax. 4

b) Who is required to submit revised return under section 78 of income tax ordinance 1984? 4

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8. Following is the income statement of Mr. Saroj Shaha for the year ended on 30-06- 2013.
Account Title Taka Taka
Sales : 5,00,000
Less: Cost of Sales 1,60,000
Gross Profit 3,40,000
Less Operating Expenses :
Salary 84,000
Office Expenses 41,000
Bad debt 8,000
Bad debt provision 6,000
Depreciation 4,000
Legal expenses 10,000
Loss of stock 12,000
Income tax 15,000
Travelling expenses (Tour to Cox’s Bazar) 10,000
Loss on Sale of security 5,000
Entertainment expenses 12,000
Accounting expenses 15,000
Misc. expenses 3,000 2,25,000
1,15,000
Add : Non-operating Income :
Profit on sale of Investment 40,000
Interest on Tax free Govt. Security 20,000
Bank Interest 12,000
Bad debt recovered 3,000 75,000
Net Income before tax 1,90,000

Investigation disclosed the following :

i) Salary & wages include Tk. 25,000 paid to the proprietor as his remuneration for service.
ii) Depreciation as per Income tax rule allowable is Tk. 2,500.
iii) Legal expenses include Tk. 5,000 related with violation of traffic rule and Tk. 5,000 for protecting
trade mark.
iv) Stock was not insured.
v) Commission received & paid Tk. 3,000 & 2,000 respectively has not been recorded.
Compute the Taxable Income and Income Tax payable by Mr. Saroj Shaha for the assessment year 2013-2014. 10

9. The Profit and Loss A/C for the year ended 31st Dec. 2011 of Eastern Traders Ltd. (not publicly traded) was
as follows:
Particulars Taka Particulars Taka
Office Expenses 90,000 Gross Profit 8,65,000
Salaries 1,27,000 Profit on sale of shares of listed company 6,000
Travelling Expenses 33,000 Profit on Sale of Machinery 24,000
Audit fees 25,000 Share Premium 15,000
Legal Expenses 12,000 Interest on Tax-free Govt. Securities 15,000
Repairs (residence of Employees) 16,500 Sundry Income 45,000
Compensation (families of the Staff) 15,500
Robbery of Cash 23,000
Bad debt Provision 25,000
Commission 13,000
Renewal of Trade Mark Registration 10,000
Bonus to Staff 70,000
Managing Agent’s Commission 50,000
Net Profit 4,60,000
9,70,000 9,70,000

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Investigation disclosed the following information:

1) Salaries included Tk. 20,000 paid to the Retired Manager for house rent and Tk. 30,000 contribution to
the Pension Fund.
2) Compensation to the family of a Staff included Tk. 5,000 paid for a peon who was injured in a road
accident while bringing breakfast for the Manager & Tk. 10,500 paid for the termination of a certain
employee.
3) Bad debt of Tk. 4,000 and Tk. 3,000 provision for the last year were written off.
4) Commission paid to a certain member of Staff Tk. 3,000.
Determine the Taxable Income & tax to be paid by the company for the assessment year 2013-2014. 12

10. a) Under what circumstances registration may be cancelled for the purpose of VAT?. 5
b) SOS Company provides the following information about its production and sales:
Purchase of Raw Materials Tk. 20,00,000
Direct wages Tk. 2,50,000
Administrative expenses Tk. 70,000
Selling expenses Tk. 20,000
Depreciation of Machinery Tk. 30,000
The company sells its products by adding 25% margin on cost. The opening and closing stock of Raw
Materials recorded at Tk. 50,000 and Tk. 40,000 respectively.
Det ermi ne VAT if th e rat e i s 15% assu mi ng t hat op ening an d closi ng st o ck of
fini shed good s were Tk.30 , 000 and Tk .20 ,000 resp e ctively. 10

The End