TAXATION-II

Time allowed – 2½ 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
01. Discuss the conditions relevant to charging tax on house property. What deductions are allowed for 10
determining taxable amount for charging income tax ?

02. Write short notes on the following in relation to Income Tax Ordinance 1984 10
a) Double taxation avoidance agreement
b) Best Judgment assessment
c) Refund of tax
d) Capital gain

03. Discuss the provisions of ITO 1984 regarding penalties for the following defaults : 05
a) Failure to file return of income under section 75
b) Failure to pay advance tax under section 64
c) Failure to deduct tax at source
d) Failure to comply with notices for production of accounts under section 79
e) Failure to pay tax on the basis of the return of income under section 74
04. Wahab & Co. Limited, a listed public limited company with its registered office in Dhaka, has shown 15
net profit of Tk. 837,413 in the audited accounts for the income year ended June 30, 2011.
You are required to compute total income and tax payable on correct return u/s 82 of the ITO 1984
indicating the assessment year and after considering the following facts :
a) Excess perquisites calculated u/s 30(e) Tk. 145,000
b) Salaries and allowances of Tk. 176,000 paid without complying with the provisions of section 30(a)
c) Registration expenses and fees include Tk. 215,701 found to be personal entertainment in nature.
d) Advertisement and publicity expenses include Tk. 125,000 as donation to a local sports club.
e) Gratuity provision during the year is Tk. 677,937 but actual payment is 276,434.
f) Rent, rates and taxes claimed at Tk. 368,212 out of which Tk. 21,640 paid as rent complied
with the provision of section 53A of the ITO 1984.
g) Accounting depreciation as per audited accounts is Tk. 2,979,211 and tax depreciation as
calculated with reference to previous year assessment is Tk. 3,727,422.
h) Technical fee of Tk. 210,000 paid to foreign collaborators charged in the accounts.
i) Export turnover was 10% of the total sales of the company.
j) The company declared 60% dividend for the year.
05. Given below is the Profit & Loss A/C of NYZ Textiles Ltd., for the year ended June 30,2011 25
Particulars Taka Particulars Taka
Cotton 11,417,950 Sale of Yarn 10,811,956
Stores 1,835,648 Sale of Textile Products 10,926,425
Mills Salaries & Wages 3,831,984 Export Subsidy / Incentive received in Cash 407,687
General Expenses 29,010 Sale of Waste 121,508
Replacement of Plant & Machinery 2,039,000 Rent of Bungalows 57,902
Stamp Duty, Registration, Legal Fees etc. 250,000 Dividend 17,400
Motor Car Overhauling Expenses 15,000 Interest on PSP 15,000
Purchase of two Paintings for MD’s Office 30,000
X-Mas Gift given to the Foreign Contractor 10,000
Refreshment, Food, Drinks etc., at one of 25,400
its Business Meetings
Expenditure incurred on Catering and 50,600
refreshments for shareholders and guests
at general body meeting
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Particulars Taka Particulars Taka
Donation 10,000
Rates & Insurance 40,376
Office Expenses 240,694
Directors’ Fees 9,000
Auditors Fees 30,000
Interest 211,850
Repairs to Building & Machinery 124,556
Trade Penalties, Legal Expenses & 120,000
Professional Charges
Entertainment 249,700
Workmen’s Welfare Expenditure 55,184
Contribution to Staff Provident Fund 75,500
Provision for Gratuity 150,000
Reserve for Meeting Contingent Liability 30,000
Loss for Discarding Ageing Machinery 205,397
Selling Agent’s Commission 201,690
Net Profit (Subject to Depreciation) 1,069,339
22,357,878 22,357,878
From the foregoing, compute the company’s taxable income from business, the total income
(computation should include necessary reasons), and tax liability for the assessment year, 2011 – 2012
taking into account;
i) Sale of textile products includes Tk. 89,249 from export.
ii) Payment of Mills Salaries includes Tk. 75,000 for payment of tax for a foreign technician engaged
by the company;
iii) Expenses for stamp duty, registration, legal fees, etc. amounting 250,000 have been incurred in
raising loans;
iv) Rates Tk. 1,800, insurance Tk. 2,500 and repairs to building Tk.7,544 in respect of bungalows;
v) The break-up of trade penalties, legal expenses and professional charges for Tk. 120,000 is as follows:
a) Trade penalties and law expenses constitute Tk. 20,000.
b) Assessee company has spent Tk. 50,000 for successfully defending the allegation of black
marketing.
c) Professional charges include Tk. 20,000 paid to an Income tax practitioner to represent the
cases to the Deputy Commissioner of Taxes and Tk. 30,000 to represent an Income tax Appeal
before Appellate Tribunal.
vi) Donation includes Tk. 5,000 contribution to Zakat Fund;
vii) The Staff Provident Fund is a recognized one;
viii) It is found that the amount of gratuity actually paid during the year was Tk. 100,000;
ix) Dividend income has been subject to dividend distribution tax;
x) The amount of depreciation allowable for assets used for the company’s business is worked out at
Tk. 551,710;
xi) It is revealed that outstanding trading liabilities amount to Tk. 1,100,000. The date of origin of the
trading liabilities are as follows:
a) Assessment year 2007 – 2008 350,000
b) Assessment year 2008 – 2009 300,000
c) Assessment year 2009 – 2010 150,000
d) Assessment year 2010 – 2011 300,000
1,100,000

06 Define money laundering. Is it a tax related offence? Discuss. 08

07 ABC Limited, a Bank in Bangladesh has submitted an income statement showing profit of Tk. 10
2,58,000 for the year ended 31st December 2010. You are required to find out the amount of-
(a) 1% of unclassified loan
(b) Admissible entertainment allowance
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(c) Calculation of excess profits under section 16(C)

(d) Revised Income
On the basis of the additional information as given under:
(i) Loans and Advances
- Unclassified advances Tk. 21,00,000
- Sub-standard advances Tk. 8,50,000
- Bad and Loss Tk. 1,02,50,000
- Doubtful Debts Tk. 11,45,000
(ii) Capital Structure
- Paid-up Capital Tk. 20,00,000
- Statutory Reserve Tk. 7,50,000
- Retained Earnings Tk. 2,50,000
- Dividend Equalization Fund Tk. 2,00,000
(iii) Depreciation
- Accounting depreciation Tk. 50,000
- Tax depreciation Tk. 80,000
(iv) Perquisites and Allowances
- Excess perquisite Tk. 50,000
-Printing and Advertisement Expenses Tk. 40,000
(Capitalized)
- Entertainment Allowances Tk. 65,000
- Other Expenses on which TDS are not applied Tk. 10,000
Compute the Taxable income and tax liability of the above bank for the assessment year 2011-2012.

08. What are the conditions to be fulfilled in order to claim delivery of goods as deemed export under 05
Rule 31 of the VAT Rule 1991?

09. How do you maintain a VAT current register (VAT – 18) as per VAT Act and Rules 1991? 05

10. Abul & Co. Ltd. incurred the following transactions in September 2010 10
Raw materials aggregating to Tk. 500,000 were purchased on 5 September 2010, VAT on the same
paid and the VAT challan along with the goods were received on 10 September 2010

8 September 2010 Tk. 300,000

9 September 2010 Tk. 200,000
10 September 2010 Tk. 500,000
15 September 2010 Tk. 600,000
The following deposits were made to the Govt. Exchequer through treasury challan :
7 September 2010 Tk. 20,000
12 September 2010 Tk. 30,000
15 September 2010 Tk. 70,000

Balance of deposit at 1 September 2010 in VAT – 18 was Tk. 50,000

You are required to:
Enter the above transactions in VAT – 18 of the company;
Write a letter to the management on the irregularities noted by you in completing the VAT current
register (VAT – 18) and implications of the same on the company.

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