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PAPER 3 MARKS 50

LEGAL FRAMEWORK

CONSTITUTION OF ISLAMIC REPUBLIC OF PAKISTAN 1973

The constitution of Pakistan is the source document / legislation from where all the organs of the state
derive their powers / functions / jurisdiction. The Auditor General of Pakistan is a constitutional post the
relevant articles of the constitution are reproduced below for understanding.

Article 168 (Audit & Accounts)

1) There shall be an Auditor General of Pakistan, who shall be appointed by the President.

2) Before entering upon office, the Auditor General shall make before the Chief Justice of
Pakistan Oath in the form set out in the third schedule.

3) The terms and conditions of service, including the term of office, of the Auditor General shall
be determined by the Act of (Majlis-e-Shoora) the Parliament and until so determined, by the
order of the President.

4) A person who has held office as Auditor General shall not be eligible for further appointment
in the service of Pakistan before the expiation of two years after he has ceased to hold that
office

5) The Auditor General shall not be removed from office except in the like manner and on the
like grounds as a Judge of the Supreme Court.

6) At any time when the office of the Auditor General is vacant or the Auditor General is absent
or is unable to perform the functions of his office due to any cause, such other person as the
President may direct shall act as Auditor General and perform the functions of that office.

Article 169 Functions and Powers of Auditor General

The Auditor General shall in relation to :-
a. The accounts of the Federation and of the Provinces and;
b. The accounts of any authority or body established by the Federation or Province

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Perform such functions and exercise such powers as may be determined by or under Act of (Majlis-e-
shoora) the Parliament and, until so determined, by order of the President.

Article 170 Power of Auditor General to give directions as to Accounts

The accounts of the Federation and of the Provinces shall be kept in such form and in
accordance with such principles and methods as the Auditor General may, with the approval of the
President, prescribe.

Article 171 Report of Auditor General

The reports of the Auditor General relating to the accounts of the Federation shall be submitted
to the President, who shall cause them to be laid before the National Assembly and the reports of the
auditor General relating to the accounts of the Province, shall be submitted to the Governor of the
Province, who shall cause them to be laid before the Provincial Assembly.

Explanation:-
Under the Proclamation of emergency of the fourteenth day of the October 1999, the Ordinance
of The Pakistan (Audit & Accounts) Order – 2001 and Ordinance of Controller General of Accounts was
promulgated. These ordinance extend the mandate of the Auditor General which was primarily given to
him under the Constitution. The other ordinance creates the Controller General of Accounts and thus
separate the Audit and Accounts function. However the Auditor General will remain supreme. Both the
ordinances are as under:-

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THE PAKISTAN (AUDIT AND ACCOUNTS) ORDER – 2001

(Gazette of Pakistan Part-I PAGE No.289 dated 17th May 2001) F.No.2 (1) /2001-Pub. The
following Ordinance made by the President is herby published for general information.

ORDINANCE NO. XXIII OF 2001

Whereas it is expedient to determine, the terms and conditions of service, the term of office and
the powers and functions of the Auditor General of Pakistan and for matters connected therewith or
incidental thereto.

AND WHEREAS The National Assembly and the Senate stand suspended in pursuance of
Proclamation of emergency of the fourteen day of October, 1999 and the Provisional Constitution order
No. 1 of 1999.
AND WHEREAS the President is satisfied that circumstances exists which render it necessary
to take immediate action;

Now, THEREFORE, in pursuance of the proclamation of emergency of the fourteenth day of

October, 1999, and the Provisional Constitution Order No.1 of 1999, read with the Provisional
Constitution (Amendment) Order No. 9 of 1999 and in exercise of all powers enabling him in that
behalf, the president of the Islamic Republic of Pakistan is pleased to make and promulgate the
following ordinance.

Section 1. Short title, extent and commencement

1) This Ordinance may be called the Auditor General’s (Functions, Powers and Terms and
Conditions of Service) Ordinance 2001

2) It extends to the whole of Pakistan

3) It shall come into force on the first day of July, 2001

Section 2. Definitions:-

1) In this Ordinance, unless there is anything repugnant in the subject or context

a) “Account” in relation to commercial undertaking of a Government includes trading,

manufacturing and profit and loss accounts and balance sheet and other subsidiary
accounts.

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b) “Auditor General” means the Auditor General of Pakistan appointed under Article 168 of
the Constitution of the Islamic Republic of Pakistan;
c) “Controller General of Accounts” means the Controller General of Accounts appointed
under the Controller General of Accounts (Appointment, Functions and Powers)
Ordinance 2001;
d) “Regulations” means regulation made under this Ordinance; and
e) “Rules” means rules made under this Ordinance.

Section 3. Salary, Pension etc.

The salary, pension and other terms and conditions of service of the Auditor General
shall be as provided in the schedule to this Ordinance.

Section 4. Term of Office.

The Auditor General shall, unless he sooner resigns or is removed from office in
accordance with the Constitution, hold office for fixed terms of five years from the date on which he
assumes such office or he attains the age of sixty five years whichever is earlier.

Explanation:- For the purpose of this section the term of five years in respect the Auditor General
holding office immediately before the commencement of this Ordinance shall be computed from the
date on which he had assumed office.
Section 5. Resignation.
The Auditor General may, at any time, by writing under his hand addressed to the
President resign his office.
Section 6. Leave
1) The Auditor General may be granted leave on such terms and conditions
as the President may, by order published in the Official Gazettee,
prescribe.
2) The power to grant or refuse leave to the Auditor General and revoke or
curtail leave granted to him, shall vest in the President.
Section 7. Auditor General to certify Accounts
The Auditor General shall, on the basis of such audit as he may consider appropriate
and necessary, certify the accounts, compiled and prepared by Controller General of Accounts or any
other person authorized in that behalf, for each financial year, showing under the respective heads the
annual receipts and disbursements for the purpose of the federation, of each Province and of each
district, and shall submit the certified accounts with such notes, comments or recommendations as he

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may consider necessary to the President or to the Governor of Province or the designated District
Authority, as the case may be

Section 8. The Auditor General shall:-

a) Audit all expenditure from the consolidated fund of the federation and of each province
and to ascertain whether the moneys shown in the accounts as having been disbursed
were legally available for, and applicable to, the service or purpose to which they have
been applied or charged and whether the expenditure conforms to the authority which
governs it;
b) Audit all transactions of the federation and of the provinces relating to public accounts;
c) Audit all trading, manufacturing, profit and loss accounts and balance sheets and other
subsidiary accounts kept by order of the President or of the Governor of a Province in
any federal provincial department and;
d) Audit, subject to the provisions of this Ordinance, the accounts of any authority or body
established by the federation or a province and in each case to report on the
expenditure, transactions or accounts so Audited by him;
Section 9. Audit of Receipts and Expenditure of holders of authorities
substantially financed by loans and grants
Where any body or authority is substantially financed by loans or grants from
consolidated fund of Federal Government or of any province or of any district, the Auditor General shall,
subject to the provisions of any law for the time being in force applicable to the body or authority, as the
case may be, audit the accounts of that body or authority.

Explanation:- Where the loans or grant to a body or authority from the consolidated fund of federal
Government or of any province or of any district in a financial year is not less than five million rupees
and the amount of such grant or loan is not less than fifty percent of the total expenditure of that body
or authority, such body or authority shall be, deemed, for the purpose of this section, to be substantially
financed by such loans or grants as the case may be.

Section 10. Auditor General to give information and undertake studies etc.
The Auditor General shall, in so far as the accounts enable him so to do, give to the
Federal Government, the Provincial Government and the District Government, as the case may be
such information and to undertake such studies and analysis as they may, from time to time require.

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Section 11. Functions of Auditor General in the case of grants or loans given to other
authorities or bodies.
1) Where any grant or loan is given for any specific purpose from the Consolidated Fund of
Federal Government or of any province or of any district to any authority or body, not
being a foreign state or international organization, the Auditor General may scrutinize the
accounts by which the sanctioning authority satisfies itself as to the fulfilment of the
conditions subject to which such grants or loans were given and for this purpose have
the right to access, after giving reasonable previous notice, to the books and accounts of
that authority or body.
Provided that the President, the Governor of a Province or the authority of a District, as
the case may be, is of the opinion that it is not necessary to do so in the public interest.
2) While exercising the powers conferred on him by sub section (1) the Auditor General
shall not have right to access to the books and accounts of any authority or body if the
law, by or under which such authority or body has been established, provides for the
audit or the accounts of such authority or body by an agency other than the Auditor
General.
Section 12. Audit of receipts of federation or provinces or of districts.
The Auditor General shall audit all receipts which are payable into the consolidated fund
or public account of the Federal Government and of such province and in the accounts of each district
and to satisfy himself that all such receipts which are payable into the consolidated fund, public account
or any district account have been properly and correctly deposited and rules and procedures relating to
which receipts are being fully observed and the system are in place to ensure proper assessment and
collection of Government receipts.

Section 13. Audit on account of stores and stock

The Auditor General shall have authority to audit and report on the accounts of stores
and stock kept in any office or department of the federation or of a province or of a district.

Section 14. Powers of Auditor General in connection with audit of accounts.

1) the Auditor General shall in connection with the performance of his duties under this
Ordinance, have authority

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a. To inspect any office of accounts, under the control of the Federation or of a Province or
of a district, including treasuries, and such offices responsible for the keeping of initial or
subsidiary accounts.
b. To require that any accounts, books, papers and other documents which deal with, or
form, the basis of or otherwise relevant to the transactions to which his duties in respect
of audit shall extend, shall be sent to such place as he may direct for his inspection; and
c. To enquire or make such observations as he may consider necessary, and to call for
such information as he may require for the purpose of the audit.
2) The officer incharge of any office or department shall afford all facilities and provide
record for audit inspection and comply with requests for information in as complete a form as
possible and with all reasonable expedition.
3) Any person or authority hindering the auditorial functions of the Auditor General
regarding inspection of accounts shall be subject to disciplinary action under relevant Efficiency
and Discipline Rules, applicable to such person.
Section 15. Audit of Companies and Corporations Established in the Public Sector
1) The Auditor General shall perform functions and exercise powers in relation to the audit
including supplementary audit of the accounts of the public sector companies in
accordance with the provisions of the Companies Ordinance 1984 (XLVII of 1984)
2) The duties and powers of the Auditor General in relation to the Audit of the accounts of
corporations (not being companies) established by, or under law shall be performed and
exercised by him in accordance with the provision of the respective laws.
3) The Governor of a Province or the district authority may, where he is of opinion that it is
necessary in the public interest so to do, request the Auditor General to audit the
accounts of a corporation established under provincial law and where such request has
been made, the Auditor General shall audit the accounts of such corporation and shall
have, for the purposes of such audit, right of access to the books and accounts of such
corporation.
Section 16. Audit of accounts of certain authorities or bodies.
Save otherwise provided, in section 11 where the audit of the accounts of any body or
authority has not been entrusted to the Auditor General by or under any law, he shall, if requested so to
do by the President, or the Governor of a Province, as the case may, undertake the audit of the
accounts of such body or authority shall have, for the purposes of such audit, right of access to the
books and accounts of that body or authority.

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Section 17. Power to dispense with detailed audit

The Auditor General may dispense with, when circumstances so warrant, any part of
detailed audit or any accounts or the transactions and to apply such limited check in relation to such
accounts or transactions as he may determine.

Section 18. Delegation of Powers.

Any power exercisable by the Auditor General under the provisions of this Ordinance, or
any other law may exercised by such officer of his department as may be authorized by him in this
behalf general or special.

Section 19. Budgetary Provisions

The Auditor General shall have the full powers to incur expenditures within the
budgetary provisions.

Section 20. Power to amend the schedules

The Federal Government may, by notification in the official Gazette, amend the schedule
so as to add any entry hereto or modify or omit any entry therein.

Section 21. Power to make rules

The President may be notification in the official Gazette make rules for carrying out the
purpose of this Ordinance.

Section 22. Power to make regulations.

The Auditor General may, with the previous approval of the Federal Government, by
notification in the official Gazette, make such regulations, not inconsistent with the provisions of this
Ordinance and the rules made thereunder as he may consider necessary or expedient for carrying out
the purpose of this Ordinance.

Section 23. Repeal

The Pakistan (Audit & Accounts) Order 1973 (P.O. 21 of 1973) is hereby repealed.

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The Schedule
(See Section 3)

PAY, ALLOWANCES AND PENSION

The Auditor General shall be:-

a) Paid a salary which is twenty per cent higher than the maximum salary payable
to an officer in basic pay scale 22.
b) Entitled to all such benefits including entitlement pertaining to travel, as are
admissible to a Minster of State; and
c) Paid, for each completed year of service, a pension at the rate of twelve
thousand rupees per annum.
Provided that a person entering into the office of Auditor General of Pakistan who was previously under
Government service, shall stand retired from Government service and shall be entitled to pension
earned during that service.

Provided further that no provision herein contained shall have effect so as to give a person who,
immediately before the date of assuming office as the Auditor General was in the service of
Government less favourable terms in respect of any of the matters aforesaid than those to which he
would be entitled as a member of the service to which he belonged.

Provided also that the Auditor General holding office immediately before the commencement of the
Ordinance may opt for the provisions of Pakistan (Audit & Accounts Order 1973) (P.O. 21 of 1973)
pertaining to pension, leave, retirement from service, or entitlements if they are more favourable to him
and the provisions of the said order shall accordingly apply.

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ORDINANCE NO. XXIV OF 2001

AN ORDINANCE

To provide for separation of accounting functions and appointment of Controller General of Accounts.

WHEREAS it is expedient to provide for separation of accounting functions and appointment of

Controller General of Accounts and for matters connected therewith or incidental thereto,

AND WHEREAS the National Assembly and the Senate stand suspended in pursuance of the
Proclamation of Emergency of the Fourteenth day of October 1999 and the Provisional Constitutional
Order No.1 of 1999

AND WHEREAS the President is satisfied that circumstances exists which render it necessary
to take immediate action;

NOW, THEREFORE, in pursuance of the Proclamation of Emergency of the fourteenth day of

October, 1999, and the Provisional Constitutional Order No. 1 of 1999 read with the Provisional
Constitution (Amendment) Order No. 9 of 1999, and in exercise of all powers enabling him in that
behalf, the president of the Islamic Republic of Pakistan is pleased to make and promulgate the
following Ordinance.

Section 1. Short tile, extent and commencement

1) This Ordinance may be called the Controller General of Accounts (Appointment,
Functions, and Powers) Ordinance, 2001
2) It extends to the whole of Pakistan
3) It shall come into force on the first day of July 2001
Section 2. Definitions
In this Ordinance, unless there is anything repugnant in the subject or context

a) “Appropriation Accounts” means accounts relating to expenditure brought into account

during a financial year to several items specified in the schedules of expenditure
authenticated under the Budgetary Provisions Order 2000 (Chief Executive’s Order No.
6 of 2000)

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b) “Auditor General” means the Auditor General of Pakistan appointed under Article 168 of
the Constitution of the Islamic Republic of Pakistan.
c) “Controller General” means the Controller General of Accounts appointed under Section
4 and
d) “Finance Accounts” means the accounts exhibiting annual receipts and disbursements
as well as balances of assets and liabilities of the Federal Governments as on the
thirtieth June of a financial year.
Section 3. Transfer of Accounting Functions
On the commencement of this Ordinance, the Auditor General shall, by order published
in the official gazettee, transfer accounting functions to the Controller General of Accounts.

Section 4. Controller General of Accounts

There shall be a Controller General of Accounts who shall be appointed by the President
from amongst the officer of the accounts group and shall be a BPS 22 Officer.
Section 5. Functions of the Controller General
The functions of the Controller General shall be;
a) To prepare and maintain the accounts of the federation, the provinces and district
governments in such forms and in accordance with such methods and principles as the
Auditor General may, with the approval of the President, prescribe from time to time.
b) To authorize payments and withdrawals from the consolidated fund and public accounts
of the federal and provincial Government against approved budgetary provisions after
pre-audited checks as the auditor general may, from time to time, prescribe;
c) To prepare and maintain accounts of such organizations and authorities established,
setup or controlled by the federation or provinces as may be assigned to him by the
President or, as the case may be, the Governor of a Province.
d) To lay down the principles governing the internal financial control for Government
departments in consultation with the Ministry of Finance and the Provincial Finance
departments as the case may be;
e) To render advice on accounting procedure for new scheme, programmes or activities
undertaken by the Government;
f) To submit accounts complied by him or any other responsible in that behalf, after the
close of each financial year, to the Auditor General, showing under the respective heads
the annual receipts and disbursements for the purpose of federation and of each
province within the time frame prescribed by the Auditor General.

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g) To provide, in so far as the accounts compiled by him permit, to the federal Government
or, as the case be, the provincial government or, district government such information as
such governments may from time to time require;
h) Develop and maintain an efficient system of pension, provident funds and other
retirements benefits in consultation with the concerned government.
j) To co-ordinate and ensure resolution of audit observation of the Audit Department with
the concerned departments; and
k) To prescribe syllabus, standards and provide facilities for the training of officer and staff
under his administrative control.

Section 6. Certain offices to work under the control of the Controller General
1) The Controller General shall have such offices at the Federal, Provincial and district
levels and such offices working in these offices as may be notified for this purpose by
the Federal Government and the respective Provincial Government.
2) Until such time the offices of the Controller General specified in sub-section (1) are
notified the following accounting organizations shall work under the Controller General,
namely;
a. The Accountant General of Pakistan Revenues and its sub offices.
b. The Military Accountant General and its sub offices.
c. The Offices of the Provincial Accountants General of each Province and the
offices subordinate to them;
d. The Chief Accounts Officers of the departmentalized accounting offices and;
e. Any other departmentalized accounting organizations as well as their sub offices.
3) The Controller General shall be the administrative head of all the offices subordinate to
him with full authority for transfer and posting within his organization.
Section 7. Reports From the accounts directly kept or maintained by him or by accounts officers
subordinate to him, and from the accounts kept and maintained by other entities, including self
accounting entities, the Controller General shall :-
a) Prepare each year the appropriation and finance accounts and such other
accounts as may be prescribed by rules for submission to the Auditor General on
such dates as may be specified by him;
b) Prepare and submit to the Auditor General for each financial year a consolidated
and general financial statement incorporating the summary of the accounts of the
federation all provinces and district authorities. The Auditor General, after

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authentication, shall forward the same to the federal government, provincial

government and district authorities;
c) Prepare and submit to the Federal, the respective provincial government and the
Auditor General statements and summaries of monthly or quarterly accounts as
on such formats as may be prescribed by rules.

Section 8. All accounting offices to assist and afford facilities

All accounting offices shall afford all necessary facilities for efficient discharge and
functioning of the office of Controller General

Section 9. Delegation of Powers

The Controller General may, by general or special order, direct that all or any of his
powers under this Ordinance shall, under such conditions, if any, as may be specified, be exercisable
by any officer or officers of his organization.

Section 10. Terms and conditions of services of Provincial Employees

not to be adversely effected
Nothing contained in this Ordinance shall be construed in any manner to impair or
adversely affect the terms and conditions of service of the Provincial Government employees working in
the provincial and district accounts offices.

Section 11. Power to make Rules

The federal government may, by notification in the official gazette, make rules for
carrying out the purposes of this ordinance.

Section 12. Power to make regulations

The Controller General may, with the previous approval of the federal government, by
notification in the official gazette, make such regulations not inconsistent with the provisions of this
ordinance and the rules made there under, as he may consider necessary or expedient for carrying out
the purposes of this ordinance.

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Section 13. Removal of Difficulties

If any difficulty arises in giving effect to any provisions of this ordinance, the President
may make such order, not inconsistent with the provisions of this ordinance, as may appear to him to
be necessary for the purpose of removing difficulty.

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ORGANIZATION OF PAKISTAN MILITARY ACCOUNTS DEPARTMENT

Under the revised system of Financial Management 1981, the administrative and functional
responsibilities of the M.A.G. are as under:- Circulated vide Ministry of Defence letter No. F.1/33581/D-
21 (Budget) dated 26 December 1981.
1. Head of Military Accounts Department
2. Compilation of Defence Services Receipts / Expenditure
3. Conduct of Local Audit of Defence Services Expenditure and rendition of General statement of
Accounts reports
4. Consolidation and submission of appropriation accounts, annual review of balances, finance
and revenue accounts, consolidated balanced accounts and other annual accounts as here to
force.
5. Assisting Secretary Defence before Public Account Committee
6. Preparation of Pension budgetary figures in respect of three services and civilian pensioners of
Defence services and submission thereof to Ministry of Defence.
7. Rendition of audit reports on cases referred by Ministry of Defence, Finance and Service
Headquarters
8. Audit Interpretations
9. Framing, auditing and revision of Accounts Codes and manuals.
10. Monitoring of Controllers’ working through reports and returns and inspections
11. Coordination of accounting & audit matters of three services.
12. Recruitment, Training, Promotion and Departmental Examination for all grades
13. Administration of Military Accounts element of Accounts Group
14. Welfare measures for PMAD
15. Preparation / submission of PMAD budget to Ministry of Defence.

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CONTRACT ACT (1872) (Marks 15)

Before starting with the Act We must know that contract Act was promulgated in 1872, and all
the Business/Commercial transactions are determined under this act. Now for the purposes of
understanding of words/phrases used in this act we refer to section 2 of the Act. This section is an
interpretation clause, and will provide the interpretation of the words/phrases which have been used in
the act.

Section-2:- Interpretation Clause:- In this act following words & expressions are used in the
following senses unless a contrary intention appears from the context.

(a) Proposal:- When one person signifies to another his willingness to do or the abstain from
doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to
make a proposal.

(b) Promise:- When the person the whom the proposed is made signifies his assent thereto the
proposal is said to be accepted. A proposal, when accepted, becomes a promise.

(c) Promisor & Promisee:- The person making the proposal is called the promisor and the
person accepting the proposal is called the promise.

(d) Consideration:- when, at the desire of the promisor, the promisee or any other person has
done or abstained from doing or does or abstains from doing, or promisee to do or to abstains form
doing something, such act or abstinence or promise is called a consideration for the promise.

(e) Agreement:- Every promise and every set of promises, forming the consideration for each
other, is an agreement.

(f) Reciprocal Promised:- Promises which form the consideration or part of consideration for
each other are called reciprocal promises.

(g) Void Agreement:- An agreement not enforceable by law is said to be void.

(h) Contract:- An agreement enforceable by law is a contract.

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(i) Voidable Contract:- An agreement which is enforceable by law at the option of one or more of
the parties thereto, but not at the option of the other or others is a voidable contract.

(j) Void Contract:- A contract which ceases to be enforceable by law becomes void when it
ceases to be enforceable.

Now we proceed with the “Contract”, first and foremost is the definition of contract which is as per
section 2, h, “An agreement enforceable by law is a contract”. It means that prior to an contract there
must be an agreement, now this shows that agreements are of two kinds from which one kind of
agreement possess the quality of enforceability and the other kind is simple and possess no quality of
enforceability. Thus an agreement of social nature enjoys no option of enforceability. Now for this
satisfaction there are some prescribed essentials of a valid contract, these essentials are as follows,
and these essentials are mentioned in section-10.

(1) Offer & Acceptance:- The first constituent of an agreement. The offer means proposal and the
word proposal has been defined in section 2 (a) “When one person signifies to another his willingness
to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or
abstinence, he is said to make a proposal. It is clear from the definition that proposal or offer is made by
one person to a particular person or class of person and the very proposal carries the intention of doing
or abstaining from some act and assent of the other person is required for such act. Corresponding to
this proposal there is an acceptance which is formally called promise, which has been defined in
Section-2 (b) when the person to whom the proposal is made signifies his assent there to the proposal
is said to accepted, a proposal when accepted becomes a promise. So acceptance comes into
existence when the corresponding or other party accepts the proposal. This also constitute promise.

2. Legal Relationship:- The legal relationship means that parties bind themselves for the
fulfilment of the promise which is an outcome of the proposal & Acceptance, this is also known as
obligation. In all business transactions it is presumed that the parties intend to creae legal relations so
all business agreements are in other words contracts.

3. Lawful Consideration:- The third essential of a varied contract is a lawful consideration.

Consideration has been defined is Section-2 (d), and means that some thing in return of the promise,
and may be understood as price paid by one party to the other for the promise, and all considerations
are lawful except provided in section 23, which says that “the consideration of an agreement is lawful if

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it is not forbidden by law, fraudulent, Involves injury to the person or property of another, immoral or
apposed to public policy”.

4. Capacity of Parties:- Simply states about the capacity of the parties, and for this determination
section-11 says “That every person is competent to contract who is of the age of majority according to
the law to which he is subject, and is not disqualified from contracting by any law to which he is
subject”, it means that one should be major so for as the age is concerned, and age of majority is
determined by majority act, and is 18 years, the other condition is soundness of mind, means that no
lunatic or un-sound person is competent to contract, and the last one is about the disqualification
imposed by law. Like a bankrupt, or insolvent persons. So agreements made by a person who is minor,
or unsound mind, or who have been declared insolvent by the due process of law, are the persons who
lacks the capacity and agreement made by them are void. (abinitio void) means void from the
beginning.

5. The other essential is free consent for which we will refer to section 13 & 14 respectively which
are as follows:-

i) Consent:- “Two or more persons are said to consent when they agree upon the same thing
in the same sense”.

ii) Free Consent:- “Consent is said to be free when it is not caused by:-
a) Coercion Section 15
b) Undue influence 16
c) Fraud 17
d) Misrepresentation 18
e) Mistake 20, 21 and 22,

So from the above the parties must be agreed upon the same thing is same sense, means that they
know about the subject matter of the contract and there must be no ambiguity between them regarding
the thing / subject matter of the contract, similarly this very consent must be free from above five
mentioned in (ii)
6. Lawful Object:- The other essential is lawful object, the object of agreement must not be
unlawful or illegal, and regarding this section 23 says that “every agreement of which the object or
consideration is unlawful, is illegal and therefore void”. So only lawful object are permissible.

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7. Writing & Registration:- Verbal contracts are lawful and can proved through evidence,
however it is in the interest of parties that a written document in shape of contract deed must be
prepared and get it registered with the registrar, so that the enforceability can be ensured.

8. Possibility of Performance:- Section-56 binds us that a contract must be one which can easily
be performed “An agreement to do an act impossible is itself void”. So performance must be
ascertained by the parties.

9. Not Expressly Declared Void:- Void agreements are explained is section 24-30 and these
types of agreements are void and must not be constituted, e.g. Agreement in restraint of trade,
business and in restraint of legal proceedings void, and in restraint of marriage are void.

As per section-10 an agreement must possess the essentials of a valid contract, and consideration is
one of them, however section-25, provides certain exception to this principle, and in this case the
contracts made by the parties will not become void, these exceptions are as under:
(1) Agreement on account of Natural love & Affection
(2) Agreement to compensate for past voluntary service
(3) Agreement to pay a time barred debt
(4) Agreement to Act as agent.

CONTRACT OF INDEMNITY
As per section, 124 “A contract by which one panty promises to save the other from loss caused to him
by the conduct of the promisor himself or by the conduct of any other person, is called a contract of
indemnity.”

This contract belongs to the typical nature of contracts, and in this contract one party who was known
formally as promisor will be known as indemnifier, and the other who was formally known as promisee,
will be known indemnity holder.
The contract of indemnity is made in order to compensate the indemnity holder in case of anticipated
loss, and like other routine contracts, it must possess the essentials of a valid contract. This contract
will only be executed in case of loss, and basically it is a promise which is for the protection of
indemnity holder.

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RIGHT OF INDEMNITY HOLDER

The following are the rights of the indemnity holder, u/s 125 of the contract Act.
1) Indemnity holder can recover all damages which he may be compelled to pay in respect of
any suit filed against him.
2) He can recover all expenses in respects of any suit filed by him with the authority of
indemnifier .
3) Indemnity holder can recover all expenses which he may have paid under the terms of any
compromise of any such suit, provided the compromise was made with the consent of the
indemnifier.

Right of the Indemnifier:- There is no express provision in the contract Act for the rights of the
indemnifier, however on the Principles of equity and justice, indemnifier is not the chosen one to bear
the lose, but he can redress himself by availing the equity Principles.

Contract of Guarantee:- Section-126 “A contract of guarantee is a contract to perform the promise

or discharge the liability of a third person in case of his default”.

This contract enables a person to get loan or take goods on credit and three contracts at a time
involves. One is between the Principal debtor and the creditor, second is between the surety and the
creditor, and third is between the surety and the Principal debtor. This is a secondary kind of contract
and the Primary contract lies between the Principal debtor and the creditor, surety or guarantor will be
asked only on the default of the Principal debtor. All essentials of a contract must be followed in the
contract of guarantee.
Contract of Bailment:-
“Section-148 “A bailment is the delivery of goods by one person to another for some purpose, upon a
contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of
according to the direction of the person delivering them”.
ESSENTIALS OF BAILMENT
(1) Contract (2) Specific Purpose (3) Delivery of Goods (4) No change in ownership
(5) Return of same Goods.
CHIEF DUTIES OF BAILEE
(1) Duty to take Reasonable care (2) Duty not to make un-authorized use
(3) Duty to Return be Goods

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CHIEF DUTIES OF BAILOR

(1) Duty to Disclose faults (2) Duty to repay necessary expenses
(3) Duty to indemnify for Defective title & Demanding Back
RIGHTS OF THE BAILOR
(1) Right to claim Damages (2) Right to terminate Bailment
(3) Right to sue bailee
TERMINATION OF BAILMENT:- In following cases the termination of bailment is presumed.
(1) Expiry of time (2) Accomplishment of purpose
(3) Unauthorized use of Goods by bailee (4) On Death of either party
(5) Termination of Bailment by Bailer.

CONTRACT OF AGENCY:-
As per section-182, “An Agent is a person employed to do any act for another or to represent another in
dealing with third persons, the person for whom such act is done or who is so represented is called the
Principal”.
So agent is an person who represents the Principal, and enjoys delegated authority from the Principal,
the contract which creates the relationship of Principal & Agent is called the contract of agency. Agent
just bridges the Principal & the third party and ceases to be party.
Now who can be an agent, the law does not restrict anybody to be an agent, it depends upon the
Principal, he can employ anybody e.g. an minor, or an insane person, but Principal must be capacitated
in all reports that is age, and mental capacity.
PURPOSE OF AGENCY:-
Any thing which is lawful and can be done by yourself is also permissible to be done by your agent. So
the object of creation of agency must not be criminal, or constancy to public policy or fraudulent or
anything which is illegal. Similarly some acts cannot be done by the agent, e.g. voting, swearing the
oath, or contract of Marriage.
CREATION OF AGENCY
(1) By Express Agreement (2) By implied Agreement
(3) By Estoppel (4) By Ratification
DUTIES OF AGENT
(1) Duty to follow Principal Direction (2) Duty to work with reasonable care & Diligence
(3) Duty not to deal from his own account (4) Duty not to make any Secret Profit
(5) Duty not to Delegate authority

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RIGHT OF AGENT
(1) Right to retain (2) Right to receive remuneration (3) Right of lien
(4) Right to be indemnified (5) Right of stoppage of Goods in team sit

DUTIES OF PRINCIPAL
(1) Duty to indemnity for lawful Acts (2) Duty to indemnify for Acts done in Good faith

TERMINATION OF AGENCY:- Agency may be terminated in the following ways:

(1) By an Agreement (2) Revocation by Principal or by Agent
(3) Completion of Business (4) Expiry of time
(5) Death of either party (6) Insolvency of Principal

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COMPANIES LAW ORDINANCE (1984) (Marks 10)

The companies law ordinance was promulgated in 1984; it deals with the formation &
Registration of companies. It provides the provisions for the protection of share holders, creditors and
investor. It carries the aim for the growth and enhancement of corporate culture. So company is a legal
entity and can sue, and similarly can be sued by others like, natural person although it is an artificial
creation, company can enter into a contract just like natural person, similarly company can acquire land
estates etc and have a perpetual succession.

(1) Private Company:- Means a company which by its articles:

(i) Restricts the right to transfer its shares, if any
(ii) Limit the number of its members to 50, not including persons who are
in the employment of the company, and
(iii) Prohibits any invitation to the public to subscribe for the shares, if any,
or debenture of the company.

Provided that, where two or more persons hold one or more shares in a company, they shall for the
purpose of this definition, be treated as a single member.
Section-2 (28)

2. Public Company:- Public company means a company which is not a private company.
Section-2 (30)

Let’s examine both the definitions and understand it in simple manner both are the chief kinds of
company. For the formation of private company the minimum requirement is 2 persons, and maximum
limit is 50, and up to this extent this will be recognized as private company and to form a public
company there must be at least 7 members and maximum no limit. So if the maximum number of
members increases from 50, it will be recognized as a public limited company. So there is only strength
of member which affects the company. The points of differences b/w the public & private are as under.

(1) The private company must have at least two members where as a public company must
have at least Seven members.
(2) The maximum number of members in a private company is 50, whereas in public company
the members must be more than 50.

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(3) Minimum numbers of directors are two in case of private company and seven in case of
public company.
(4) A private company can commence business room after its incorporation but a public
company has to wait & obtain a “Certificate of incorporation”. For the commencement of the
business.
(5) A private company is not required to hold a statutory meeting, whereas a public company is
bound to hold a statutory meeting and sending a report thereof.
(6) The Articles of the private company must impose restriction on transfer of shares, but it is
not necessary in case of public company.
(7) The private company is not bound to recruit qualified Auditor’s i.e. chartered accountant
whereas public company is bound to recruit qualified Auditors i.e. chartered Accountants.

Now we have to understand the “incorporation” because nothing can be said as company
unless it is “incorporated” so incorporation means registration with the securities & Exchange
commission of Pakistan. The SECP is a Department of Federal Govt. and empowered to conduct the
registrations of the companies, and registration can be applied by the promoters of the company, and
promoters are the minimum members of the company.

Process of Incorporation:- For the purpose of incorporation/registration, the promoters or the initial
members who want to form a company are required to submit the following documents to the SECP.

(1) Memorandum of Association

(2) Articles of Association
(3) Seek the availability of Name for the Company.

After scrutinizing the aforesaid documents, the registrar will issue a certificate of incorporation or
registration to the promoters concerned, and then company’s business will be recognized and legal.
The private company may commence business after receiving acknowledgement, certificate of
incorporation/registration actually gives birth to the company.

Memorandum of Association:- As per section-16 of the ordinance memorandum means the

memorandum of association of a company as originally framed or as altered in pursuance of the
provisions of this ordinance.

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The memorandum of Association is like the constitution of the company, it defines the organs of
the company, it defines the powers and the limitations of the company, it defects the charter of the
company, and enables the shareholders to know what is its permitted range of business or enterprise it
is the main document which informs all the persons who are dealing with the company.

Chief contents of the memorandum of Association

(1) The name of the company with the word limited as the last word
(2) The province in which the registered office of the company is to be situated.
(3) The object of the company
(4) The extent of the liability of the company
(5) The capital of the company

This document must be signed by the minimum number of persons, so required and each
subscribes must hold one share at least, but he can hold more share. This document must be printed,
divided into paragraph and numbered consecutively and signed by each subscriber.

Article of Association:-
Article of Association means the Articles of a company as originally framed or as altered by a
special resolution, and the regulations contained in table-A in the first schedule annexed to this
ordinance.

Chief Contents of the Article of Association:

(1) Mode of transfer of shares
(2) Meeting and their notices & Proceedings
(3) The duties & Powers of the Directors
(4) Mode of filling of Vacancies
(5) Indemnification & Secrecy
(6) Votes of Members

Article of Association is the subordinate document of the memorandum of Association, and

provision of the Article of Association if conflict with the provision of Memorandum of Association is to
be deemed void. Article of association is the procedural law of the company and is in elaborative form,
and will lay down the manners in which the object of the company is to be achieved. Alteration in the

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Article of Association can be made through a special resolution and thus it is a flexible document.
Promoters are also bound to sign this document.

Prospectus:- Prospectus is an instrument / Document which invites the offers from the public for the
subscription of shares, inviting deposits from the public, other than deposits invited by a bank.

So prospectus is a document which introduce the company, and by introducing itself, it invitees
subscription from public by offering shares. A public limited company must publish its prospectus in one
leading means paper and a listed company must publish its prospectus in two leading newspapers. So
shares of the company cannot be offered without the publication of a prospectus. A date of subscription
is also mandatory to be announced in a prospectus.

Essentials of Prospectus:-
(1) Present status of the company
(2) Last five years achievements, e.g. balance sheets, Land Acquisition, Reserves, Executed
Contracts.
(3) Directors profile their qualifications etc
(4) Liability clause & capital clause
(5) Future planning with feasibility reports etc/immediate objectives.

So without publication of prospectus no commencement of business is deemed, & before

publication its presentation to the Registrar for sacking the permission of its publication.

Allotment of Shares:-
(1) If over and above applications for shares received, then it will be known as “Issue over
subscribe”.
(2) If less applications for shares received then it will be known as “issue under subscribe”.

In the first case company has no tension and allot the shares as much as it need. But in the
second case company need to refund the moneys of the people but actually this does not happen and
company prior to publication of prospectus enter into an “Under Writing Agreement” with some
Financial Institutions. Financial institutions provide Guarantee for the deficiency.

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MANAGEMENT & ADMINISTRATION

As per ordinance, Public company must possess 7 directors and may possess more than 7,
whereas a private company must have at least 2 Directors. Promoters or signatories are deemed to be
the directors of the company at the time of inception of the company. First directors will continue to hold
the office from date of registration to the holding of “Annual General Meeting” Next directors are to be
elected through election conducted in General Meeting. Any person who want to contest for election,
shall file with the company at least 14 days before the date of meeting, at which elections are to be
held, a notice of his intention to offer himself for election as a director, First directors will hold office up
to 18 months or till the holding of Annual General Meeting which ever is earlier.
Eligibility to become director:-

(1) Should be major according to the law to which he is subject

(2) Should be of sound Mind
(3) Should not be insolvent
(4) Should be a share Holder, other words must be a member
(5) Should not be convicted on moral turpitude

Manner of Election:-
(1) A member shall have such number of votes as is equal to the product of the number of voting
shares held by him and the number of Director to be elected

(2) A member may give all his votes to a single candidate or divide them between more them one
of the candidates in such manner as he may choose.

(3) The candidates who get the highest number of votes shall be declared elected as director and
then the candidates who get the next highest number of votes shall be so declared and so on until the
total number of directors to be elected has so elected.

Removal of Directors:- It can be done only in Annual General Meeting, and minimum number of
votes are required which were poled in the election of the directors.

Retirement:- All the director are deemed to be retire after the expiry of 3 years which is the tenure of
post u/s 180 of the ordinance, but continue to function until their successors are elected.

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Kind of Directors:- Regular Directors, substitute Director, Director for Reminder term, Nominated
Director, Representative Director.

When A Person Become Ceases To Be A Director:-

(1) Insolvent (2) Insane or unsoundness of Mind (3) Resign (4) If sale out whole of the Shares
(5) If convicted for a moral turpitude (6) Who Gets loan or Guarantee of his Company
Powers of the Directors:-
The Directors possess very large scale of Powers:
(1) To call Meetings
(2) To appoint workers
(3) To invest Money
(4) To borrow money
(5) To purchase shares of other company
(6) To pay remuneration to others
(7) To sue other
(8) To Defend the suits filed by other
(9) To acquire property
(10) To mortgage property
(11) To issue shares
(12) To transfer shares
(13) To contract with company

But director can not lend money similarly cannot Guarantee for others, this is within the powers
of General Body Meeting. But Directors have the power to appoint Chief Executive or Managing
Director of the Company.
Chief Executive:- First Chief Executive will be mentioned in the Article or Memorandum of
Association, Director are bound to appoint a Chief Executive within 14 days the tenure is the same 3
years, Chief Executive can be removed by the directors by simple Majority, Chief Executive cannot
enter into a contract with the company, but a Director can. All other eligibilities are same.
MEETINGS
Following are the kinds of Meeting:-
(1) Statutory Meeting
(2) Annual General Meeting
(3) Extra Ordinary General Meeting

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(1) Statutory Meeting:- Every public Ltd company is bound to conduct statutory meeting within
the 6 months of its incorporation u/s 157 of the ordinance. The notice regarding conduction of meeting
must be issued to the share holders before 21 days, along with a copy of statutory report, when will be
sent to registrar after the conclusion of the meeting. The director has the power to convene the
meeting.
In statutory meeting the expenditure incurred on incorporation, distribution of shares,
consideration for shares, and the business carried out has to be depicted in “Statutory Report”.

(2) First Annual General Meeting:- It must be held by a public limited company and private
limited company within eighteen months of the incorporation and in every calendar year. A notice
regarding holding of the meeting must be issued before 21 days Directors of the company has the
power to all the meetings. In third annual general meeting the election for the directors must be
arranged.

(3) Extra Ordinary General Meeting:- May be convened by the directors at any time. If any
important issue arises after the annual general meeting. A notice regarding holding of meeting must be
issued before 21 days, along with a copy of agenda resolution.

Auditors:- Under the ordinance every company must have at least one auditor. First auditor may be
appointed by the first directors before the holding of statutory meeting. Subsequent auditors may be
appointed in annual general meeting. Directors are empowered to fix the salary or remuneration for the
auditor. Any person having reasonable knowledge of auditing/accounting can be appointed as auditor.

Bars to the Appointment of Auditors:-

(1) A director or officer of the company
(2) A partner of such director or officer
(3) A public limited company must have an auditor having qualification of chartered accountant.

Auditors:- Every company after the incorporation shall appoint Auditor or auditors within 60 days
and they shall continue till first Annual General Meeting. These auditors shall be nominated by the
members; a notice of their nomination shall be served to them before 14 days of the meeting. However
SECP have the power to appoint any person as auditor of the company the tenure of the Auditors in
one year.

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Qualification of Auditor:- A public company and its subsidiary company a chartered accountant
shall be the auditor within the meanings of “Chartered Accountant Ordinance 1961”.

Dis-qualification of Auditors:-
- If any person who was an Director during the preceding three years
- Any partner of the Director
- Spouse of the Director
- A person who does not qualify the requisites of “Chartered Accountant Ordinance 1961”.

Powers of the Auditor:-

Auditor possesses the following powers:-
(1) To access all the records all the time
(2) Auditor will work impartially
(3) Auditor to ensure that all the registers of accounts are properly maintained by the company
staff
(4) Auditor has the power to raise observations/objections and settle than under the ordinance
(5) Auditor has the power to Audit all the transactions
(6) Auditor has the power to sign the Balance Sheet and this signed Account/Sheet will be valid
for presenting in Annual General Meeting etc.
(7) To conduct Audit ordinarily or specially
(8) To Conduct the Audit of Assets
(9) To render Reports which will be read in annual General Meeting.

Circumstances in which company may be wound up by Court:-

1. If the company has by special resolution, resolved that the company be wound up by the
court.
2. If default is made in delivering the Statutory Report to the Registrar or in holding the
Statutory Meeting or any two consecutive Annual General Meeting.
3. If the company does not commence business within a year from its incorporation or
suspends its business for a whole year.
4. If the number of the member is reduced in the case of private company below two or in the
case of any other company below seven
5. If the company is unable to pay it debts
6. If the company is

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- Involved or carrying on unlawful or fraudulent.

- Carrying on business not authorised by the memorandum
- Managed by persons who fail to maintain proper and true accounts
- Managed by persons who refuses to act according to the requirements of the Memorandum
or Articles or decisions given by the Registrar.
7. if being a listed company, cease to be such company
8. If the court is of the opinion that it is just and equitable that the company should be wound
up
9. if the company cease to have a member

Modes of Winding up:-

1. Compulsory winding up by the Court
2. Voluntary winding up
3. Winding up under the supervision of the Court

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JULY 2002
DEFENCE AUDIT

Q.No.1. Write short notes on any four of the following

a) Powers of the Auditor General with regard to Audit of receipts.

b) Reports to be submitted by the Controller General of Accounts
c) A “Proposal” as defined by Contract Act 1872
d) A “Resident” as defined by Income Tax Ordinance 1979
e) Mode of forming a Company

Q.No.2. What “Financial Procedure” is prescribed by the 1973 Constitution

Q.No.3. What conditions are listed companies required to follow under Company law in
Pakistan for the issue of bonus shares.

Q.No.4. What allowances and deductions are admissible under Income Tax Ordinance 1979
in the computing of “Income from business or profession”
------------------------------------------------------------------
OCTOBER - 2003
APE XIX (A)
Legal Framework of Public Sector
Marks:- 50

Attempt Five Questions. All questions carry equal marks.

Q.No.1. What are the powers of the Auditor General of Pakistan in connection with the audit of
Accounts under the Auditor General’s (Functions, Powers & Terms & Condition
of Service) Ordinance 2001?

Q.No.2. What are the functions of the Controller General of Accounts under the Controller
General of Accounts (Appointment, Function and Powers) Ordinance 2001

Q.No.3. Define the following terms under the Contract Act.

i) Pledge ii) Bailment iii) Agreement

iv) Voidable Contract v) Revocation of Proposal

Q.No.4. Describe the Contract of Indemnity. What rights the indemnity holder have when sued.

Q.No.5. What are the power, liabilities and duties of the Auditors of the Companies
under Company Ordinance.

Q.No.6. Describe the bars to the appointment of the Auditors under the Companies Ordinance.

Q.No.7. Define the following terms.

i) Direct Tax ii) Indirect Tax iii) Proportional Tax

iv) Progressive Tax v) Regressive Tax

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OCTOBER - 2005
APE XIX (A)
Legal Framework of Public Sector
Marks:- 50

Attempt Five Questions in all however Q.No.1 is compulsory

Q.No.1. Who appoints the Auditor General of Pakistan ? 10

Wherefrom does he drive his powers and how long he hold the office ?

Q.No.2. Which reports are required to be prepared by the CGA and submitted to 10
whom under the CGA (Appointment, Functions & Powers) Ordinance 2001

Q.No.3. What do you know of the following terms ?

i) Appropriation Accounts 5
ii) Finance Accounts 5

Q.No.4. Define contract of Indemnity and also specify rights of indemnity holder 10

Q.No.5 What is meant by following terms 10

i) Proposal ii) Promise iii) Void Contract
iv) Contingent Contract v) Consideration

Q.No.6 What are the deductions in computing income chargeable 10

under head “Income from Property”

Q.No.7. What are the characteristics of a “Company” under the Company’s Law ? 10

Q.No.8. What is meant by Memorandum of Association (MOA) 10

and what are the contents of Memorandum ?
------------------------------------------------------------------
MAY - 2006
APE XIX (A)
Legal Framework of Public Sector
Marks:- 50

Note:- Attempt five questions in all

Q.No.1. a) Under which ordinance the accounting functions has been separated from audit
and what are the functions of CGA under this ordinance. 10
b) what is meant by dividend ? are there some special features of dividend 05

Q.No.2. State briefly :-

a) What agreements are contracts ? 2
who are competent to enter into a contract
b) Whether a minor can enter into a contract 2
c) Define consent / coercion 2
d) What is the distinction between memorandum and article of association 4

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Q.No.3. Define briefly :- 5

a) Nominal authorized or Registered Capital
b) Issued Capital c) Subscribed Capital
d) Called up Capital e) Reserved Capital

Q.No.4. What acre an agent signing an instrument must take to avoid personal liability 10
OR
Write brief notes on the following :-
a) Bill of Exchange b) Cheque c) Holder
d) Negotiation e) Endorsement

Q.No.5. What deductions are allowed while computing income chargeable under the head
“Income from Property”
------------------------------------------------------------------
DECEMBER - 2006
APE XIX (A)
Legal Framework of Public Sector
Marks:- 50

Q.No. 1 is compulsory, attempt any two questions from the rest

Q.No.1. The mandate of the Auditor General of Pakistan is governed by the 10

provisions of AGP Ordinance 2001.
you are required to explain the following provisions of the ordinance ?

i) Provisions relating to Audit 5

ii) Powers of the Auditor General of Pakistan in connection with audit 5
of accounts

Q.No.2. a) Explain a voidable contract and distinguish it from a void contract

b) Explain five ground for revocation of proposal

Q.No.3. Explain the following terms as defined in the Income Tax Ordinance 2001
i) Accumulated Profits ii) Assessment iii) Banking Company
iv) Business v) Dividend

Q.No.4. a) In the light of section 305 of the Companies Ordinance 1984

quote five circumstances in which a company may be wound up by Court
b) In the light of Section 89 of Company Ordinance 1984
explain the nature of shares and certificates of shares.

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JANUARY - 2008
APE XIX (A)
Legal Framework of Public Sector
Marks:- 50

Q.No.1. Articles 168-171 of the 1973 Constitution of Islamic Republic of

Pakistan relate to the institution of the Auditor General of Pakistan (AGP)
you are required to provide a summary of the following
provisions.
a. Appointment of AGP (Article 168) 5
b. Functions and powers of AGP (Article 168) 5
c. Power of AGP to give directions as to accounts (Article 170) 5
d. Report of AGP (Article 171) 5

Q.No.2. Explain five essentials of a valid contract. Please also provide illustrations to
make your point clear 15

Q.No.3. Memorandum of Association is the most important document in relation to a company.

You are required to provide a summary of the following in the light of provision of
Companies Ordinance.

a. Memorandum of company limited by shares (sec. 16) 5

b. Memorandum of company limited by guarantee (sec. 17) 5
c. Memorandum of unlimited company (sec. 18) 5

Q.No.4. Section 12 of the Income Tax Ordinance 2001 explains the provisions relating to “Salary”
as read of Income Section 12 sub section 2 defines the various items which may fall in
the definition of “Salary” for tax purposes.

You are required to provide a summary of the provisions of

the sub section 12 (2) (a) to 12 ((2) (g). 15

Q.No.5. Please explain the provision of section 18 of Income Tax Ordinance 2001
relating to “Income from Business” 15

Q.No.6. Section 44-46 of the companies ordinance relate to conversion of Public

Company into Private Company and vice versa. Please provide a summary
of these provisions. 15

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