Taxation -II

Time allowed-3 hours

Maximum marks-100

[N.B.- Questions must be answered in English. The figures in the margin indicate full marks. 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. Write short notes on, and tax implications of, the following items: 10
(a) Technical know-how
(b) Final discharge
(c) Accelerated depreciation
(d) Fair market value
(e) Unabsorbed depreciation

2. Write only salient points pertaining to the following items:

(a) Deeming income 2
(b) Tax incentives allowable to:
(i) EPZ Enterprise 2
(ii) Private Power Generation Company 2
(iii) New hospital 2
(iv) Agro processing 2
(v) Farming 2

3. (a) What is the basis of taxation in respect of house property income? How is annual 8
value of house property determined? What expenses are allowed in determining
income from house property?

(c) From the following particulars of Mr. X compute taxable income and tax to be 10
paid for the year 2007-2008.
(i) Sale of rice 200 mds @ Tk 600 per md.
(ii) Sale of rabi crops Tk 25,000
(iii) Yearly lease of agricultural land Tk. 40,000
(iv) Income from sale of bamboo Tk. 20,000
(v) Income from tea garden & tea sale Tk 60,000
(vi) Income from Sale of palm juice Tk. 18,000
(vii) Income from cattle rearing Tk. 40,000

Mr. X does not keep proper books of accounts. He, however, claims Tk. 80,000 as cost of
cultivation. He had a pump machine which was purchased at Tk. 25,000. It has become obsolete
and has been discarded at Tk. 12,000. The written down value after charging depreciation
at ITO prescribed rate is estimated at Tk. 10,000. He has taken agricultural loan Tk. 50,000 @ 8%
interest p.a and paid UP tax & land revenue Tk. 2,000 & Tk. 1,000 respectively. During the
year he paid life insurance premium of Tk. 4,000 and purchased share of a company for Tk. 5,000.

4. Mr. Rahman is a Chartered Accountant. Following is his Income and Expenditure Account
for year ended on 30th June, 2007.

[Please Turn over]

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Income and Expenditure Account

Dr. Cr.
Particulars Tk. Particulars Tk.
Honorarium to articled 2,00,000 Profession fees:
students From audit 3,00,000
Salary to Staff 1,20,000 From Tax account 2,00,000
Office Expenses 48,000 From Accounts
Rent of Premise 80,000 preparation 1,50,000
Entertainment 10,000 Dividend form private
Loan to client 40,000 Ltd. Company 50,000
Purchase of books and 12,000 Interest on tax-free govt.
periodicals Securities 40,000
Traveling Expenses 25,000 Rent from sub-let of
Fines for breaking custom 20,000 premise 36,000
rule
Loss on investment in 18,000
shares
Misc. Expenses 10,000
Surplus of income over 1,93,000
expenditure 7,76,000 7,76,000

Compute Professional Income and tax to be paid. 6

5. You are given the following Profit and Loss Account of ABC Company for the year
ended 31st March, 2007:

Dr. Cr.

Particulars Taka Particulars Taka

To Cost of Goods Sold 35,00,000 By Sales 49,80,000
” Salaries & Allowances 2,50,000 ” Dividend 20,000
” Rent & Electricity 1,90,000 ” Interest on Bank deposit 12,000
” Telephone and Postage 30,000 ” Profit on Sale on 30,000
” Interest on loan 35,000 Machineries
” Conveyance Allowance 25,000 ” Interest on Tax-free Govt. 10,000
” Legal Expenses 14,000 Securities
” Advertisement 31,000 ” Sundry Income 5,000
” Charity 10,000 ” Refund of Income Tax 30,000
” Audit Fees 25,000 ” Interest received form 20,000
” Income Tax paid in Investment outside
Advance 2,00,000 Bangladesh
” Fines paid to the Custom 20,000
Authority
” Contribution to Provident 20,000
Fund
” Sundry Expenses 4,000
” Depreciation 1,80,000
” Net Profit 5,73,000
51,07,000 Tk. 51,07,000

[Please Turn over]

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Investigation disclosed the following Information:

1) Depreciation allowed by Income tax Authority Tk. 1,15,000.

2) Salaries & Expenses include Tk. 50,000 from which taxes are not deducted at
source.
3) Excess Perquisites over allowable income tax rate paid Tk. 20,000 instead of Salary
of Tk. 1,72,000.
4) Legal expenses include Tk. 10,000 paid for Income Tax Appeal.
5) Conveyance allowance includes Tk. 20,000 paid to the General Manager for
overseas traveling as the representative of the Chamber of Commerce.
6) The sold machine was purchased six years ago and it’s book value was Tk. 40,000
but it’s book value as per Income Tax Rate was zero. The cost price of the machine
was Tk. 60,000.

Determine the Tax Liability of the Company assuming it to be a public limited company. 14

6. (a) What are the restrictions in claiming input VAT adjustment against output VAT. 4
(b) Briefly describe the appeal procedures and requirements under VAT regulations. 4
(c) Name the Service – Providers on account of whom the Service – Receivers need to 4
deduct VAT at source.

7. (a) Mention the gifts which are exempted from gist tax 4
(b) Explain how escaped gifts are valued. 3

8. (a) Indicate the rate & basis at which Share transfer attracts stamp-duty 2
(b) Which Share transfer is exempt from such stamp duty 2
(c) Define the following in relation to The Stamps Act 1899 - 3
(i) Bill of exchange
(ii) Power of Attorney
(iii) Marketable Security

9. (a) Indicate the basic (minimum & maximum) rate(s) of : 5

(i) Court fee(s)
(ii) Stamps-duty
(iii) Registration fee(s)
(iv) Motor Vehicle tax
(v) Supplementary-duty

(b) Define the following under the Customs Act: 4

(i) Anti-dumping duty
(ii) Draw back
(iii) Provisional assessment
(iv) PSI and rate therefor

10. What is meant by Recognised Provident Fund? What conditions are required to be 5
fulfilled for getting recognition of the Fund under Income Tax Law?

THE END