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 of 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. Write short notes on the following: 3x3=9
(a) Set off of losses as per Section 37;
(b) Scope of the total income under Section 17:
(c) Income Tax Authorities as set forth in Section 3.

2. Discuss the following issues from the perspective of the amendments made by the Finance Act, 2011: 3x3=9
(a) Return of withholding tax (Section 75A);
(b) Amount received by a company as loan from any other company (Section 19);
(c) Audit of return of income filed under Universal Self-Assessment (Section 82BB).

3. Mr. Khan submitted the following information for the income year 2010-2011: 16
Monthly basic salary Tk.50,000/=
Annual festival bonus 2 months’ basic salary
Monthly house rent allowance Tk.20,000/=
Monthly conveyance allowance Tk.5,000/=
Annual medical allowance Tk.60,000/=
Employer of Mr. Khan provides him with a car partly for private use. Mr. Khan is a member of the
recognized provident fund. He contributes 10% of his basic salary to the recognized provident fund in
which the employer also contributes the equal sum. Mr. Khan owns a two-storied building located at
bananI in Dhaka, one floor of which is used by him as his residence and the other floor is let out at a
monthly rent of Tk.50,000/=. The tenant uses the flat for residential purpose. In connection with the
building, the following expenditures were incurred by Mr. Khan in the income year 2010-2011:
Land development tax Tk.10,000/=
Repairs Tk.15,000/=
Expenditure for collection of rent Tk.5,000/=
Water and sewerage Tk.12,000/=
Electricity Tk.12,000/=
Salary of guard and caretaker Tk.30,000/=
Insurance premium Tk.15,000/=
The building was constructed in the year 2008 with borrowed capital, balance of which stands at
Tk.10,00,000/= as of 1st July 2010. Mr. Khan paid interest of Tk.1,00,000 on the said borrowing for the
income year 2010-2011. The flat let out was vacant for 1 month in the aforementioned income year.
Mr. Khan invested Tk.84,000/= in a deposit pension scheme sponsored by a bank. He also paid
Tk.50,000/= as life insurance premium.
Calculate the total income and the tax liability of Mr. Khan on the basis of above information for the
assessment year 2011-2012.

4. X Ltd., a private limited company, reports net profit (before tax) of Tk.20,00,000/= for the year ended
30 June 2011. The following information as regards income year 2010-2011 has been extracted from
the books of account of X Ltd.: 16
(i) Profit from sale of shares of companies listed on stock exchanges Tk.5,00,000/=
(ii) Income from Dividend Tk.1,00,000/=
(iii) Payment made by way of Technical Know-how fee Tk.5,00,000/=
(iv) Payment of office rent for which VAT has not been deposited in government treasury Tk.1,00,000/=

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(v) Provisions for Gratuity Tk.1,00,000/=

(vi) Gratuity Paid Tk.50,000/=
(vii) Financial Depreciation Tk.3,00,000/=
(viii) Depreciation as per 3rd Schedule of the ITO, 1984 Tk.1,50,000/=
(ix) Tax deducted at source from the dividend income Tk.20,000/=
(x) Expenditure incurred on account of Corporate Social Responsibility Tk.1,00,000/=
(xi) Loan received from Y Ltd. otherwise than by crossed cheque or by bank transfer Tk.3,00,000/=
(xii) Trading liability, which was incurred in the income year 2006-2007 Tk.50,000/=
Compute the tax liability of the company based on the aforementioned information for the
assessment year 2011-2012.

5. Identify the penalty in the following cases:

i) For not maintaining the accounts in the prescribed manner. 2
ii) For failure to file return, certificate, statements, accounts or information. 2
iii) For failure to pay advance tax. 2
iv) For non-compliance of notices and concealment of income. 2
v) For failure or for default in payment of tax. 2

6. a ABC Ltd. purchased a machine in the year 2006 at Tk.5,00,000 and sold the same in November 2010 at
Tk.3,50,000. The written down value is Tk.3,00,000. The year end of the company is December.
Calculate business profit or loss and also the capital profit or loss, if any, for the relevant
assessment year. 5
b) Data in respect of Mr. Kamal for the year ended on 30 June 2011 is as under:
Salary Income Tk.1,76,000
Other Income Tk. 10,000
Total Income Tk.1,86,000
Investment in Shares of listed companies Tk. 30,000
Calculate tax payable by Mr. Kamal. 5

7. ABC Ltd., a private limited company, filed its Income Tax Return showing net income of Tk.6,75,300 for
the year ended 30 June 2011. On examination of papers submitted at the time of hearing, the Deputy
Commissioner of Taxes comes across the following information:
a) Salary claimed at Tk.2,000,000 includes an amount paid to Production Manager at Tk.4,00,000
against which no tax has been deducted.
b) An amount of private loan of Tk.2,000,000 which was added to income in the assessment of the
immediate proceeding year on the ground of the same being not paid within three years has been
paid in the income year.
c) Tk.2,000,000 for staff welfare fund, Tk.75,000 for sinking fund and Tk.3,30,000 for taxation reserve
fund debited to profit & loss account.
d) Bank charges claimed at Tk.76,306 includes Tk.10,000 in respect of expenditure for loan
procurement.
e) Amount of depreciation charged to the accounts was Tk.2,56,700 whereas amount allowable
against depreciation was Tk.4,70,900.
f) Entertainment expenses claimed was Tk.7,000,000.
From the above, compute the total income and tax liability of the company. 10

8. a) Why VAT is an indirect tax? Give an example showing the VAT payable at different stages. 3
b) What do you mean by taxable goods and services? 3
c) Who are required to register for the purposes of VAT? Who are required to pay VAT? 3

9. a) Define truncated value. Mention six items with rate of VAT under truncated value system. 5
b) Define input tax and supplementary duty. 3
c) Differentiate between VAT and turnover tax. 3

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