TAXATION-I

Time allowed - 3 hours

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 manner 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) Explain Government’s taxation objectives and its importance in the context of economic, social
5
and environmental issues.
(b) Describe the sources of national tax laws and practices and their relative importance. 5
(c) What are the differences between avoidance of double taxation and double taxation relief as
5
provided in Sections 144 and 145 respectively of the Income Tax Ordinance 1984?
(d) Mr. Nazim, a Bangladeshi resident, received interest income of Tk. 450,000 from Indonesia after
deduction of 10% of tax at source during the year ended on 30 June 2016. His other income in 5
Bangladesh amounts to Tk. 300,000 for the same year. Compute the net tax liability of Mr. Nazim.

2. (a) What is the difference between Tax Evasion and Tax Avoidance? 3
(b) How does a professional accountant maintain confidentiality in a social environment? 7

3. (a) Discuss Universal Self-Assessment and Best Judgment Assessment. 7

(b) What is the due date of Submission of Return of Income? 4
(c) What is the provision in Section 78 in respect of filing of a Revised Return? 3

4. The Trading and Profit and Loss Account of Basic Enterprise for the year ended 30 June 2016 is :
Debit Taka Credit Taka
Opening Stock 120,000 Sales 1,480,000
Purchase 490,000 Closing Stock 51,000
Depreciation on Plant and Machinery 14,000
Electricity and Fuel 17,000
Gross Profit c/d 890,000
1,531,000 1,531,000

Salaries and wages 124,000 Gross Profit b/d 890,000

Repairs and Maintenance 19,000 Bad Debt Recovered 25,000
Travelling and Conveyance 17,000 Interest Received 28,000
Professional Expenses 18,000 Interest on Commercial Securities 38,000
Commission and Brokerage 42,000 Dividend on Shares of a listed Company 63,000
Bad Debts 26,000
Legal Fees 20,000
Depreciation on Building 38,000
Donation 23,000
Retirement benefits to Employees 96,000
Advance Income Tax 37,000
Loss on Sale of old Computer 6,000
Miscellaneous Expenses 85,000
Net Profit 493,000
1,044,000 1,044,000
Important Information:
1. Salary and wages include Tk. 26,000 as salaries paid to the owner.
2. Recovered amount of bad debt was previously allowed as bad debt expenses.
3. Miscellaneous expenses includes Tk.15,000 as fines and penalties which were due to avoidance of tax payment
at an earlier period and Tk.30,000 that was incurred for purchasing one computer for the business.
4. Tax depreciation was calculated as Depreciation on Plant and Machinery Tk.28,000 and Deprecation on
Building Tk.30,000.
Mr. Zaman is the Proprietor of Basic Enterprise. Compute the Income from Business or Profession and
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Total Income of Mr. Zaman for the year ended 30 June 2016.

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5. Mr. Kamal has a two storied building at Motijheel C/A. He had started construction of the house on
1st July, 2013 and completed the construction on 30th June, 2015. After the construction, he let out the
full building to a branch of ABC Bank at a monthly rent of Tk.2,50,000 effective from 1st July, 2015. He
has also taken Tk.2,500,000 as advance from ABC Bank. The municipal value of the house is
Tk.3,200,000.

Expenses incurred in the income year 2015-2016 for that house were:
(a) Repair expense Tk.600,000
(b) City Corporation tax Tk.60,000
(c) Fire insurance premium Tk.26,000
(d) Installation of Generator Tk.100,000
Mr. Kamal borrowed Tk.1,800,000 from ABC Bank Motijheel Branch @7.5% interest on 1st July, 2013.
Per year installment of the loan is Tk.350,000.
Total interest expense during the construction period of 2 years Tk.270,000 (assuming simple interest).
Calculate income of Mr. Kamal under section 24 of the income tax Ordinance 1984. 12

6. As per tax law how does a Deputy Commissioner of Taxes may obtain assistance during the course of
his proceedings? 4

7. Write the name of persons who are responsible to deduct VAT at source 6

8. The following information has been taken from the accounting records of MNO Limited for the year 2015:

Raw materials inventory, January 1 Tk.75,000

Raw materials inventory, December 31 Tk.45,000
Work in process inventory, January 1 Tk.160,000
Work in process inventory, December 31, Tk.80,000
Finished goods inventory, January 1, Tk.210,000
Finished goods inventory, December 31, Tk.160,000

Purchase of raw materials Tk.700,000; Wages Tk.120,000; Production overhead Tk.560,000;

Marketing expenses Tk.120,000; and Administrative and other expenses Tk.240,000. The company
sells its product by adding 16% profit on cost. Determine the amount of VAT if the rate is 15%. 14

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