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  BT-MP    1 of 2 PTO (Note: The number of questions and their marks may vary in the examination paper) ICM Pakistan   MODEL PAPER BUSINESS TAXATION  –   (LA-402) SEMESTER-4   Time Allowed: 02 Hours 30 Minutes Maximum Marks: 80 Roll No.: (i) Attempt all questions. (ii) Answers must be neat, relevant and brief. (iii) In marking the question paper, the examiners take into account clarity of exposition, logic of arguments, effective presentation, language and use of clear diagram/ chart, where appropriate. (iv) Read the instructions printed inside the top cover of answer script CAREFULLY before attempting the paper. (v) Use of non-programmable scientific calculators of any model is allowed. (vi) DO NOT write your Name, Reg. No. or Roll No., or any irrelevant information inside the answer script. (vii) Question Paper must be returned to invigilator before leaving the examination hall. Marks Q. 1 The first question printed separately comprises 20 MCQs of one (1) mark each having allowed time of 30 minutes is an integral part of this question paper. Q. 2 (a) Rule-128 of the Income Tax Rules, 2002 provides exemptions on certain articles and income streams of the taxpayers with reference to attachment in the context of recovery proceedings. Specify any ten clauses of Rule-128 of the Income Tax Rules, 2002. 10 (b) In the light of section 104 of the Income Tax Ordinance, 2001 answer the following: 04 (i) Can a resident person set off his foreign losses? If yes, then under which head of income? (ii) What would be the treatment of unadjusted foreign losses under the aforesaid provision of law? (iii) Where a resident person has a foreign loss carried forward for the last three years, which year ’ s  loss will be set off first? Q. 3 (a) Section 119 of the Income Tax Ordinance, 2001 deals with the extension of time for furnishing returns and other documents. Specify the documents and grounds in respect of which extension can be requested. 08 (b) Enumerate the entitlement of a resident person to claim tax credit on investment in shares and insurance and how this tax credit is computed under Section 62 of the Income Tax Ordinance, 2001. 08 Q.4 M/s. Wilson Pharma Limited (WPL) is a private limited company. The company manufactures and supplies medicines. WPL sells its medicines through various distributors in Karachi, Lahore and Islamabad. The following is the profit and loss account of WPL for the year ended on June 30, 2013: Rs. ‘ 000 ’  Rs. ‘ 000 ’   Sundry expenses 2,240 Gross Profit 235,200 Office salaries 29,120 Interest on bank deposit 300 Rent, rates & taxes 8,960 Recovered bad debts Legal charges 2,016 (allowed in the past) 448 Finance charges on leased assets 350 Dividend 672 Advertisement 5,600 Auditor's fees 6,720 Cost of issue of debentures 5,600  BT-MP    2 of 2 (Note: The number of questions and their marks may vary in the examination paper) Marks Loss on sales of furniture 2,240 Provident fund contribution 7,840 Bad debts 4,480 Vehicle expenses 8,960 Fire insurance premium 7,840 Preliminary expenses 1,008 Provision for taxes 10,080 Provision for bad debts 4,480 Liquidated damages 3,360 Depreciation 44,800 Net Profit 80,926 236,620 236,620 Additional Information: The following information is available: (i) Sundry expenses include donation of Rs. 502,000 paid to an unrecognized charitable institution. (ii) Office salaries include Rs.6,000,000 paid to one of the directors. (iii) Provident Fund is recognized by the Income Tax Department. (iv) Vehicle expenses are not vouched and verifiable to the extent of Rs.1,881,000. (v) Actual depreciation works out to Rs.32,650,000 only. (vi) Lease rental for the year are Rs.1,750,000. Required: Calculate the taxable income and tax liability of the company for the tax year 2013 from the above data. 20 Q. 5 (a) Elaborate the procedure for applying and grant of approval for change of year from ‘ normal tax year ’  to ‘ special tax year ’  under Section 74 of the Income Tax Ordinance, 2001. 08 (b) Briefly state the provisions of Section 102 of the Income Tax Ordinance, 2001 regarding “ foreign source salary of resident individuals ” .   03 Q. 6 (a) Under the provisions of the Customs Act, 1969, the imported goods can be stored in the bonded warehouses. Enumerate the benefit that importer seeks under the facility of bonded warehouse. 06 (b)   (i)  ABC Company is engaged in trading of imported goods and is registered as an importer and distributor. The company has provided following information with relation to imports and local sales of taxable supplies for the month of May-2013: Import / assessed value of taxable goods Rs.2,400,000 Rate of customs duty 25% Local sales of taxable goods in the month of May-2013 Rs.4,000,000 Required: Keeping in view of the value addition sales tax regime applicable for commercial importers under Chapter X of the Sales Tax Special Procedure Rules, 2007, work out the sales tax liability of ABC company for the month of May-2013 (Assume that no local purchases of taxable goods involved). 07 (ii) List down the persons who are required to get themselves registered under the rule-4 of the Sales Tax Rules, 2006. 06 THE END  
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