FEDERAL URDU UNIVERSITY OF ARTS, SCIENCE AND

TECHNOLOGY, ISLAMABAD
DEPARTMENT OF COMMERCE
MID-TERM EXAM B.COM-4TH SEMESTER AUTUMN-2020

Subject: Business Taxation Total Marks: 30

Time Allowed: 3 Hours Exam Date: 23-07-2020
Google Class Room Code: 6kb442l
Email:fmanagementfuu@gmail.com
Section: A Shift: Evening
Q. No. 1 2 3 4 5 6 7 8 9 1 Marks Obtained/total Marks
0
To Marks /30 be
Obtaine
d
Total Marks in Words: Thirty Marks Only.
Name of the Teacher: Miss. Sadia Akhtar
Who taught the course: Signature of Teacher/Examiner:
filled by Student
Student’s MIS ID: 21075 Class Section: Repeater
Session: Evening
Enrolment No: NIl Student’s Name_____Mohammad Ahmed
Farooq___
Student’s Email: sunny.baber.1994@gmail.com
WhatsApp No.________0313-6752627

Instruction to attempt the Midterm paper.

 Submit your answer sheet (in pdf) well in time.
 Late submissions will not be entertained.
 You cannot make changes once the answer sheets are submitted.
 The amended copy of your answer sheet will not be accepted at all.
 Do not discuss your answers with others during the paper.
 PAPER ON NEXT PAGE

Attempt all 3 questions. All questions carry

equal marks
Q...1 Define the following by giving example of each
(10)
 Accumulated profit
Accumulated profit is a profit set aside as reserve. All profits accumulated in
whatever shape whether capitalized or cash is termed as accumulated profit before
distribution as profit.\

Example :- A company earns a profit of Rs.1000,000 and retains Rs.400,000 for

future use. The set aside Rs.400,000 will be termed as accumulated profit.

 Appellate Tribunal
Appellate Tribunal is the second court of appeal. If a person or a tax department is not
satisfied with the decision of Commissioner Inland Revenue (appeals) they can make
an appeal to Appellate Tribunal.
Appellate Tribunal consist of two members i.e. Judicial and Accountant
 Approved Gratuity Fund
The fund in which amount is contributed by the employer only and is paid in lump
sum at the time of retirement to the employee is called approved Gratuity Fund. In
case of death of employee Gratuity is paid to the family of the employee

 Approved Superannuation Fund

This is a fund maintained by the organisation to provide benefit to its employees
at the time of retirement. In this fund amount is continuously contributed by the
employer. The amount of the fund is paid to the employees on annuity basis.

It is paid at the time of retirement or in the case of disability. In case of death

amount is paid to the family of the deceased employee.

Approval of the Superannuation Fund is necessary for getting some benefits.

For getting approval an application is submitted to the Commissioner. For this
fund 90% of the employees should be based in Pakistan.

 Association of Person
As per income tax ordinance Association of persons include Firm, a hindu
undivided family, any artificial judicial person and any body of persons formed
under the foreign law does not include a Company.

Example of AoP are WAPDA, Quaid-e-Azam University

Q…2 Write a detailed note on Agriculture income, types of agriculture income…Non-
agriculture income….and Partly Agriculture and Partly Non-agriculture income with
examples. (10)
Agriculture income,
As per section 41 of the Income Tax ordinance Agriculture income means inc0me:
i. Derived from land
ii. Land is located in Pakistan
iii. Land is used for agriculture purpose

This means that income generated from a Pakistani land as rent revenue or sale of produce of
such land is called agriculture income. Land must be used for agriculture with some human
laboure. This means wild growth on land is not termed as agriculture income.
e.g. income from forest grown in the wild is not included as Agriculture income however if a
farmer grows some trees on his land and derives income from them it will be termed as
agriculture income.
Similarly income derived from a land owned in foreign country is not an agriculture income.
Agriculture income may be in the shape of cash or kind.

Types of agriculture income

1. Income derived from land by cultivation
2. Rent received from agriculture land
3. Income received from the sale of produces by cultivator or rent receiver in kind.
4. Income derived from a building required for agriculture purpose. Such building
should be on agriculture land and used as store room or other activities related with
agriculture.
Examples of Agriculture income are
1. Rent received from lessor
2. Income received from lessee
3. Income from sale of cultivated crops like wheat, sugarcane, wheat, rice, maize etc.

Non –Agriculture Income

Income which do not fall under the category fo agriculture income is called Non-agriculture income
from LAnd. Example of such incomes are:-

1. Income from mining

2. Income of a flour mill
3. Income of cottong ginning factory
4. Income from land used as markets
5. Income from sale of earth used for brick making

Partly agriculture income and partly non-agricultural income.

If a person cultivates a crop on his land and then uses the same as raw material for
manufacturing a product it is termed as partly agriculture and partly non-agriculture income.

Example

1. A person or company growing sugarecane and manufacturing Sugar from it.

2. Income of textile mill from growing cotton and producing textile related products.
3. Savour producing rice and then making pulao anad selling the same in the market.

Market value of the agriculture produce will be treated as “Income from Agriculture” and
sale proceed from selling of finished products like Sugar, Cloth, Pulao, Tea etc. will be
treated as “Income from Business.
…Non-agriculture income….and Partly Agriculture and Partly Non-agriculture income with
examples
Q…3 Sodhi Company Limited has a paid up capital of Rs. 500,000 consisting of 50,000
shares of Rs. 10 each. on 31.12.2012, company's balance sheet shows accumulated
profits of Rs. 150,000. The company has to be liquidated. The official liquidator realized
Rs. 450,000 and distribution among the shareholders was made at the rate of Rs. 9 per
share. Mr. Akram had 20,000 shares in the company.
 Required. How much of the amount received by Mr. Akram is dividend? Why?
Paid up Capital is Rs. 500,000 (50,000 shares @ Rs. 10 each
Accumulated Profit Rs. 1,50,000
Shares of Mr. Akram 20,000
Amount received by Mr. Akram = 20,000 X 9 = Rs.180,000

Rate of Dividend = Accumulated Profit / No. of Shares = 150,000/50,000 = Rs.3

Hence Dividend received by Mr. Akram is = Rs.3 x 20,000 = Rs.60,000

Because Dividend is to be paid from Accumulated profit