CHAPTER-4

Lecture:01

Classwork
Chapter-4
1. Section 74

Lecture:02

Classwork
Chapter-4
1. Section 74 and Section 82 (a) (c) and Rule 14
2. Q.17 (i)

Home Work
Chapter-4
1. Q.17 (i),(ii),(iv) and Q.11 (i)(iii)

Lecture:03

Classwork
Chapter-4
1. Section 83,84, 81
2. Person Company, AOP, Firm, Member
3. Section 4
4. Table 1 and 2

Lecture:04

Classwork
Chapter-4
1. Past Paper Q.11,17
2. Trust, Unit Trust
3. Section 9,10,11,60
4. Q.1 (Page 14)

Home Work
Chapter-4
1. Past Paper Q.7(b),24

Lecture:05

Classwork
Chapter-4
1. Section 86,87,89,91,67
Lecture:06

Classwork
Chapter-4
1. Rule 13
2. Section 68,70,71,72
3. Q.19,21,22,28,25,10(a)
 CHAPTER-9
Lecture:07

Classwork
Chapter-4
1. Section 73,5,8
2. Past Paper Q.5(a), Q.12
Chapter 9
1. Section 15
2. Q.1 on Last Page (Page 16)

Lecture:08

Classwork
Chapter-9
1. Section 15A
2. Example-2 (Page 6)
3. Past Paper Q.5 (Page 8)
 CHAPTER-11
Lecture:09

Classwork
Chapter-9
1. Section 16,66
2. Past Paper Q.13
3. Hone Work (Example-2 below Section 16)
Chapter-11
1. Section 39 (a,b,c,cc,d,e,f,fa,g)

Lecture:10

Classwork
Chapter-11
1. Section 39 (h,I,j,k,l,la,lb)
2. Section 39 (3)
Chapter-9
1. Past Paper Q.6

Lecture:11

Classwork
Chapter-11
1. Section 39 (h,I,j,k,l,la,lb)
2. Section 39 (4),(4A),(4B),(5)
3. Section 40
4. Section 7B (With 2 examples)
Chapter-9
1. Past Paper Q.14 (Page 10)
 CHAPTER-10
Lecture:12

Classwork
Chapter-10
1. Section 37,38
2. Question-1 (Page 229)
Chapter-5
1. Public Company Definition
Chapter-9
1. Past Paper Q.9 (Page 9)

Lecture:13

Classwork
Chapter-10
1. Section 37A
2. Q.2,2A (Page 232)

Lecture:14

Classwork
Chapter-10
1. Page 232-233
Chapter-18
1. Q.33 (Farheen) (Page 408)
 CHAPTER-6
Lecture:15

Classwork
Chapter-10
1. Section 7E
2. Section 75A
3. Q.7(b) (Page 240)
Chapter-6
1. Section 61
2. Example-4 (Page 75)

Lecture:16

Classwork
Chapter-6
1. Section 63
2. Section 60D
3. Section 103
4. Example-3 (Page 74)

Lecture:17

Classwork
Chapter-6
1. Section 65
2. Section 65F
3. Section 65G (1)(2)(3)(a)
4. Section 64D
5. Full Time Teacher
6. Women Enterprise
Chapter-10
1. Q.8,9,10,11 (Page 240)
 CHAPTER-7 (Part-1)
Lecture:18

Classwork
Chapter-6
1. Section 65G
2. Past Paper Q.5,6,7,8,9,10,11
Chapter-7
1. Page 82-83

Lecture:19

Classwork
Chapter-7
1. Page 84,85,87,88
Chapter-18
1. Q.30 (Page 405)

Lecture:20

Classwork
Chapter-7
1. Page 89
2. Page 82 Point (c)
Chapter-5
1. Associates Definition

Lecture:21

Classwork
Chapter-7
1. Section 13 (3)(5)(6)(7)(9)(10)
2. Page 128 Q.1
Chapter-5
1. Industrial undertaking and Fee for technical Services Definition

Lecture:22

Classwork
Chapter-7
1. Section 13 (8)
2. Section 13 (11)
3. Box At End of Page 95
4. Section 13 (12) Example 1,2,3
Chapter-3
1. First Page (9 Cannons of Taxation)
 CHAPTER-1
Lecture:23

Classwork
Chapter-1
Chapter 1 (Complete)
 CHAPTER-7 (Part-2)
Lecture:24

Classwork
Chapter-7
1. Page 93 (12)
2. Page 95 (Self hiring and (13))
3. Page 103 (Complete)
4. Page 104 (8)
5. Page 105
6. Page 129 (Q.2)

Lecture:25

Classwork
Chapter-7
1. Page 104,105
2. Page 106 (Medical)
3. Page 108
4. Page 110-113

Lecture:26

Classwork
Chapter-7
1. Page 86,87
2. Section 14 (2)(5)(1)
3. 3 self made examples of Employee share scheme

Home Work
Chapter-7
1. Q.3 (Page 109)
2. Q.4 (Page 87)
3. Q.7 (Page 114)

Lecture:27

Classwork
Chapter-7
1. Page 101 (Q.2,1,3)
2. Section 14 (4)(3)
3. Q.17 (Adjustment iii) (Chapter 18) (Page 394)
Chapter 18
1. Started Q.32

Home Work
Chapter-7
1. Page 101 (all Questions)
Lecture:28

Classwork
Chapter-18
1. Q.32
 CHAPTER-5
Lecture:29

Classwork
Chapter-5
1. Page 60
2. Page 59 (except i and iii)
Chapter 18
1. Q.36 (Adjustment i to vi) (Chapter 18) (Page 411)

Lecture:30

Classwork
Chapter-5
1. Dividend
2. Page 61 (except i and iii)
3. Page 62 (First 3 points)
Chapter 18
1. Q.36 (Completed) (Chapter 18) (Page 411)
Lecture:31

Classwork
Chapter-7
1. Page 106(24)(53A)
Chapter 5
1. Page 59(Accumulated Profits)
2. Page 62 (PE)
3. Test 4
4. Q.1 (Taqi)
 CHAPTER-13
Lecture:32

Classwork
Chapter-13
1. Page 287
2. Page 397 (Q.21 (b))
3. Page 293 (Q.6)

Home Work
Chapter-13
1. Page 397 (Q.21)

Lecture:33

Classwork
Chapter-13
1. Section 44,45,46,47,48,49,50,51
2. Page 293 (Q.5,8)
 CHAPTER-15 (Part-1)
Lecture:34

Classwork
Chapter-13
1. Section 53,54,55
2. Page 292 (Q.3,4)
Chapter 15
1. Section 114(1)

Lecture:35

Classwork
Chapter-15
1. Section 114(2)(2A)(3)(4)(5)(6)(7)
2. Section 114A, 114B
Chapter 13
1. Page 293 (Q.7)

Lecture:36

Classwork
Chapter-15
1. Section 115,116,116A,117
Chapter 18
1. Page 412 (Q.37)

Lecture:37

Classwork
Chapter-18
1. Page 12 (Q.37)
Chapter 15
1. Page 327 (Example-1)
2. Section 119
 CHAPTER-8 (Part-1)
Lecture:38

Classwork
Chapter-15
1. Section 118
2. Q.39 (ii)(iii)
Chapter 8
1. Section 18
Chapter 18
1. Q.21

Home work
Chapter-15
1. Page 389 (Q.10)
 CHAPTER-3
Lecture:39

Classwork
Chapter-3
1. Page 22,23,20
Chapter 18
1. Page 389 (Q.10)

Home work
Chapter-18
1. Page 394 (Q.17)

Lecture:40

Classwork
Chapter-3
1. Page 21
Chapter 16
1. Section 174
2. Rule 32,33
3. Section 177
Chapter 18
1. Page 394 (Q.17) (Discussed)
 CHAPTER-8 (Part-2)
Lecture:41

Classwork
Chapter-16
1. Page 374 and 375
2. Rule 28-31 (Page 369-372)
3. Page 376
4. Diagram at last Page
Chapter 3
1. Page 27 (Except Q.9)
Chapter 8
1. Section 35 (Page 152)
2. Section 28 (b)(a)(c)(i) ( h )(Page 153)

Lecture:42

Classwork
Chapter-8
1. Section 28 (d)(j)(e)(f)(g)(Page 153)
Chapter 3
1. Page 24-25

Lecture:43

Classwork
Chapter-3
1. Page 25-26
Chapter 8
1. Section 18 (3) (4)
2. Section 20
3. Section 21 (a)(b)
Chapter 18
1. Started Q.40

Lecture:44

Classwork
Chapter-18
1. Completed Q.40
Chapter 8
1. Page 25-26
2. Section 21 (c ) (ca) (d )( g ) ( h ) ( i ) ( j )
3. 3 Self Made Examples at end of lecture

Lecture:45

Classwork
Chapter-8
1. Section 21 (L) (m) (n) (o) (p)(r )
2. Section 22 (15) (1) (2)(5) (8)
3. Q.1,1A(Page 142)
Lecture:46

Classwork
Chapter-8
1. Section 22 (3) (6) (9) (7) (13 a,b,c) (14)
2. Section 23
3. Q.2-Q.5 (Page 142-143)
4. Q.1 (Page 199)

Home Work
Chapter-8
1. Q.2 (Page 201)

Lecture:47

Classwork
Chapter-8
1. Section 22 (13) (d) and Question-6,7
2. Section 24, 25
Chapter 18
1. Started Q.22 (Page 398)

Lecture:48

Classwork
Chapter-8
1. Section 26,27,29,32,33,34 (1)(2)(3)(5A)
Chapter 18
1. Completed Q.22 (Page 398)

Lecture:49

Classwork
Chapter-8
1. Section 34 (5)(6)
2. Section 75, 76 (1)(2)(3)(4)(5)(6)(10)
3. Q.1-5 (Page 157-158)
4. Q.33 (Page 168), Q.37 (Page 169)

Lecture:50

Classwork
Chapter-8
1. Q.34 (Page 168)
2. Q.3 (Page 203)
3. Page 202 (1,2,3,5,6)

Home Work
Chapter-8
1. Q.3 (Page 204)
Lecture:51

Classwork
Chapter-8
1. Section 76 (7) (8) (9)
2. Section 77 (1) (2) (3)
3. Q.47 (Page 171)
4. Q.43,44 (Page 170)

Lecture:52

Classwork
Chapter-8
1. Section 77 (5)
2. Example on Page 160
3. Q.7 (Page 208)
4. Section 77(4)
Chapter-12
1. Section 90 (1) (2)
 CHAPTER-12(Part-1)
Lecture:53

Classwork
Chapter-12
1. Section 90, 98A, 98B, 98C
Chapter-8
1. Q.6 (Page 208)
2. Section 19 (Page 160)
3. Q.45, 41 (Page 170)

Home Work
Chapter-8
1. Q.40(i), 42 (Page 170)
Chapter-18
1. Q.20 (Page 396)
 CHAPTER-8 (Part-3)
Lecture:54

Classwork
Chapter-8
1. Q.32,30,26 (iii)(iv)(v) (Page 167-168)
2. Section 19
3. Started Section 113
4. Example-6 (Page 163)
Chapter-18
1. Q.20 (Page 396)
 CHAPTER-12(Part-2)
Lecture:55

Classwork
Chapter-18
1. Q.20 (Page 396)
Chapter-8
1. Page 161,162
2. Q.36 (Page 169)
Chapter-12
1. Q.1 (Page 277)
2. Page 256 (Selected provisions)

Lecture:56

Classwork
Chapter-8
1. Q.40 (ii) (Page 170)
2. Q.39 (a) (Page 169)
Chapter-12
1. Q.1 (Page 285)
2. Page 256 (Completed)
3. Q.1,2,3 (Page 259)
4. Test 7 Question (Sweet Bakers)
 Sales Tax
Lecture:57

Classwork
Chapter-12
1. Q.4 (Page 259)
2. Q.5 (Page 264)
Chapter-20
1. Page 517
2. Page 518 (Manufacturer)

Lecture:58

Classwork
Chapter-12
1. Q.5 (Page 264)
Chapter-20
1. Input,Output (Page 472)
1. Retailer, Wholesaler (Page 471)

Lecture:59

Classwork
Chapter-20
1. Page 471 - 474
2. Time of supply (Page 475)
Chapter-12
1. Q.7 (Page 265)

Lecture:60

Chapter-20
1. Page 475
2. Page 476 (Till point ix)
Chapter-12
1. Q.2 (Page 262)

Lecture:61

Classwork
Chapter-20
1. page 476-480
2. Q.4(page 501)
Lecture:62

Classwork
Chapter-20
1. Page 480 - 481
2. Page 482 (Section 3B)
3. Page 515 Q.1

Home work
Chapter-20
1. Page 553 Q.1

Lecture:63

Classwork
Chapter-20
1. Section 4,5,6
2. Box at page 479
Chapter-8
1. Q.9 (Page 209)
Chapter-18
1. Q.13

Lecture:64

Classwork
Chapter-22
1. Section 63(a),46
Chapter-20
1. Section 7
2. Section 8 (1) (a) (b) (c)
3. Page 474 (Point c)
Chapter-18
1. Q.14 (Page 390)

Lecture:65

Classwork
Chapter-20
1. Section 8 (1) (e) (f) (g) (h )
Chapter-21
1. Q.2 (Page 516)

Lecture:66

Classwork
Chapter-20
1. Section 8 completed
2. Section 73 started
Chapter-21
1. Q.3 (Page 517)
Lecture:67

Classwork
Chapter-20
1. Section 73,8A,8B
Chapter-21
1. Q.4 (Page 518)
Chapter-22
1. Q.45

Home Work
Chapter-23
1. Q.8, Q.10

Lecture:68

Classwork
Chapter-20
1. Section 10,11(1)
Chapter-18
1. Q.39

Home Work
Chapter-23
1. Q.14

Lecture:69

Classwork
Chapter-20
1. Section 11,11A
Term Test
1. Q.1

Home Work
Chapter-20
1. Q.18

Lecture:70

Classwork
Chapter-20
1. Section 13,14AB,22,23,24,25 (1)(2)(2A)(4)
Chapter-23
1. Q.21
Lecture:71

Classwork
Chapter-20
1. Section 25,25A,25AA, 26,26AB,27,28,29
Chapter-15
1. Page 325 (6A)
Chapter-23
1. Q.24
Chapter-22
1. Q.74(b), 70(a), 68(b)

Home Work
Chapter-23
1. Q.23

Lecture:72

Classwork
Chapter-21
1. Rule 4,5
Chapter-22
1. Q.71(i-v), 72(all except ii), 67(i,ii), 66(a), 64 (ii)(iii), 62 (a,b,c,e), 57 (b,c), 56(a), 55(a), 54 (a,b,c),
53(a)(ii), 52, 50(a),45, 46, 44 (b)(i,ii), 43(a), 42(a,c)
Chapter-23
1. Q.23

Lecture:73

Classwork
Chapter-22
1. Q.71(vi-viii), 47(b)
Chapter-21
1. Rule 5A (Page 503)
2. Q.5 (Page 519)

Lecture:74

Classwork
Chapter-21
1. Rule 6,7,8,9,10,11,14,17,18
Chapter-23
1. Q.29 (Page 572)

HOME WORK
Chapter-23
1. Q.25 (Page 568)
Lecture:75

Classwork
Chapter-21
1. Page 506,507
Chapter-23
1. Q.29 (b) (Page 572)
Chapter-22
1. Q.74 (a)
2. Q.73 (a)

HOME WORK
Chapter-23
1. Q.28 (Page 571)

Lecture:76

Classwork
Chapter-21
1. Rule 20,21
Chapter-22
1. 69,64(b),66 (c),64 (a)(i),63 (b),56 (b),61 (b),55(b),73(b),51 (a),39(a)(b),49

HOME WORK
Chapter-23
1. Q.22 (Page 566)

Lecture:77

Classwork
Chapter-21
1. Rule 22,23,25, Residual input definition (Page 502)
Chapter-22
1. 70(b), 67 (iii), 66(b), 58(b), 57(a)

HOME WORK
Chapter-23
1. Q.20
 CHAPTER-2
Lecture:78

Classwork
Chapter-22
1. 71(b), 70 (a), 65, 62(d), 58(a) , 53(b), 50 (b), 48, 47(a), 43(b)
Chapter-2
1. First Page
Test 10
1. Q.1

Lecture:79

Classwork
Test 10
1. Q.1,2
Chapter-23
1. Q.20
Chapter-22
1. 42(b), 39 (c), 34(b), 24, 72(ii)
Chapter-2
1. 83,84,85,86,87,88,118-127

Lecture:80

Classwork
Chapter-22
1. Q.26, 28
Chapter-23
1. Q.27
Chapter-2
1. Article 160

HOME WORK
Chapter-23
1. Q.26

Lecture:81

Classwork
Chapter-22
1. Page 520
Chapter-2
1. Page 13-15
Chapter-8
1. Page 137

HOME WORK
Chapter-23
1. Q.19
 CHAPTER-14
Lecture:82

Classwork
Chapter-2
1. Full revision
Chapter-22
1. Q.7 (Page 521)
Chapter-14
1. Page 318-319 (Example 1-6)

HOME WORK
Chapter-23
1. Q.16,17

Lecture:83

Classwork
Chapter-14
1. Page 318-320 (Example 1-9)
2. Page 300-301 (Example 1,3,4,5)
3. Section 56,57 (except 4,5), 58,59
Chapter-18
1. Q41 (a)

Lecture:84

Classwork
Chapter-14
1. Page 302-303 (Example 6-9)
2. Page 320 (Example 10-11)
3. Example-1 (Page 299)
4. Section 59A,104
5. Q.9 (Page 308)
Chapter-18
1. Q33 (b)

HOME WORK
Chapter-23
1. Q.13,15
Lecture:85

Classwork
Chapter-14
1. Q.14 (Page 309),Q.8 (Page 307),Page 321,Page 306
2. Section 57 (4)(5)
3. Page 298 Example
Chapter-18
1. Q33 (b) (Start from sale)
Chapter-8
1. Page 134 (ca)

HOME WORK
Chapter-23
1. Q.9,11

Lecture:86

Classwork
Chapter-12
1. Q.2 (Page 286)
Chapter-18
1. Q.18
Chapter-23
1. Q.9 (New concept)

HOME WORK
Chapter-23
1. Q.5
 CHAPTER-15 (Part-2)
Lecture:87

Classwork
Chapter-15
1. Section 122
Chapter-14
1. Q.11 (Page 308)

HOME WORK
Chapter-14
1. Q.9,11 (Page 308)
Chapter-23
1. Q.6,7

Lecture:88

Classwork
Chapter-15
1. Section 121,122 (1)(2)(3)
Chapter-14
1. Q.12 (Page 309)

HOME WORK
Chapter-14
1. Q.15 (Page 310)

Lecture:89

Classwork
Chapter-15
1. Section 122
Chapter-14
1. Q.16 (Page 310)

HOME WORK
Chapter-18
1. Q.41 (b)

Lecture:90

Classwork
Chapter-15
1. Section 122A,122B,122D,123,125,126
2. Past Paper Q.20,30
Lecture:91

Classwork
Chapter-15
1. Section 127,128,129,130
2. Past Paper Q.42,40,36,34,41,38

Lecture:92

Classwork
Chapter-15
1. Section 131,132,133
2. Past Paper Q.35(a),33,32,37,35(b),29,16,19

Lecture:93

Classwork
Chapter-15
1. Section 133A(1-4)
Chapter-18
1. Past Paper Q. 38

Lecture:94

Classwork
Chapter-15
1. Section 134A,136
Chapter-18
1. Past Paper Q. 35

Home Work
Chapter-18
1. Past Paper Q. 34

Lecture:95

Classwork
Chapter-15
1. Section 124
2. Past Paper Q. 27,31
Chapter-12
1. Q. 8 (Page 266)
Lecture:96

Classwork
Chapter-15
1. Past Paper Q. 39 (i)(iv)
Chapter-18
1. Q. 34
Revise
1. IFCG
2. IFP
3. IFOS

Lecture:97

Classwork
Chapter-15
1. S.114 (6)(c )(6A)
2. S.116 (3)
3. S.117(4)
4. Q.26,25,24
Class notes (Lecture 97)(below)
1. Page 2 Numerical (Kashif)
Revise
1. CHAPTER-14 - Section 114-119
 CAF-02 CHAPTER-13 Section 44A

Exemption under Foreign Investment (Promotion and Protection) Act, 2022 [Sec. 44A]
The ‘Foreign Investment (Promotion and Protection) Act, 2022 [‘FIPPA’] was passed with a
view to encourage and protect, large scale investments in Pakistan.

The Federal Government can notify as ‘Qualified Investment’ , any :

(i) investment,
(ii) sector,
(iii) industry; or
(iv) project.

Presently, the Reko Diq Project in the Province of Balochistan, (including the Reko Diq Mining
Company (Private) Limited and its associated companies), have been listed in the First
Schedule (of FIPPA) as Qualified Investment.

The FIPPA defines the term ‘Investment Incentive’ to include exemptions from and
reduction/concessions in the rates of any Federal, Provincial or local duties, charges, taxes,
levies, fees and cesses as may be mutually agreed in an investment agreement between an
investor and a concerned government.

All income tax concessions are now incorporated in Income Tax Ordinance, 2001 as Sec 44A:

The following shall be shall be exempted or subject to tax at the rate and in the manner
specified in the 2nd and 3rd Schedule to the FIPPA.

(1) Taxes on income (including capital gains), advance tax, withholding taxes, minimum
and final taxes under ITO in respect of qualified investment.
(2) All investors and shareholders of the qualified investment, their associates and
companies specified in the Second and Third Schedules to FIPPA, including third
party lenders on account of any loan.

In respect of persons/amounts mentioned in sub-sections (1) and (2).

(3) Provisions relating to Anti-Avoidance, for the period and to the extent specified in
FIPPA, including sections 106, 106A, 108, 109 and 109A, shall not apply.

(4) Rates of depreciation, initial allowance and pre-commencement expenditure under

sections 22, 23 and 25 as on the 20th day of March, 2022 shall continue to be applicable
for 30 years.

Page 1
September 2023 Attempt

Question-2
Kashif is a resident filer who owns a single-storey bungalow in Karachi, including a basement. He solely uses the
basement portion of the bungalow which constitutes 20% of the total bungalow area, for storing his personal
belongings.
On 1 October 2019, he rented his bungalow, excluding the basement portion, to Ahmed under a three-year rental
agreement. Other details of the rental agreement are given below:

Rupees
Monthly rent 300,000
Non Adjustable security deposit 3,500,000
Monthly security charges 40,000

In addition to the above, Kashif also provides Ahmed with backup electricity from a generator during load shedding
at a fixed monthly charge of Rs. 50,000. The electricity connection of the basement is separate from the rest of the
bungalow.
On 30 September 2022, the rental agreement concluded, and Kashif agreed to sell the entire bungalow to Ahmed.
The non-adjustable security deposit was retained as a down payment for the purchase.
On 25 October 2022, Ahmed backed out of the deal and declined to purchase the bungalow. As per the agreement,
Kashif forfeited the non-adjustable security deposit.
On 1 November 2022, Kashif rented the bungalow to a new tenant, Rashid, under a rental agreement with the same
terms as above.
During the year, Kashif paid salary of Rs. 360,000 to the security guard of the bungalow and incurred Rs. 450,000
for running the electricity generator.
Required:
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder, compute the total income of
Kashif under appropriate heads of income for the tax year 2023. (08)

Question-3
(a)
Masoom is the sole owner of a business that is engaged in the trading of furniture. During the year, the following
transactions took place:
(i) He withdrew a furniture set worth Rs. 3 million, from his business to present it to his daughter on the
occasion of her wedding. The cost of the furniture set was Rs. 2.5 million.
(ii) He sold an antique table for Rs. 1 million. The table had been gifted to him by his father back in 2012. Its
fair market value at the time of gift was Rs. 2.2 million. His father originally purchased the table for Rs. 0.5
million.
Required:
Under the provisions of the Income Tax Ordinance, 2001 and the Rules made thereunder, discuss the tax treatment
of the above transactions for Masoom. (05)
(b)
Under the provisions of the Income Tax Ordinance, 2001, if a person sustains a loss under any head of income in a
tax year, the same can be set-off against the income from any other head of income. State four exceptions to this
principle. (04)

2
September 2023 Attempt

Answer-2
Kashif
Computation of Income
For TY 2022
Rupees
Income from property (W-1) 5,636,000
Income from other sources (W-3) 252,000
Total income 5,888,000

(W-1) Income from property

Rent from Bungalow - Ahmed [300,000 x 3] 900,000
Rent from Bungalow – Rashid [300,000 x 8] 2,400,000
Non-adjustable security deposit – Rashid (W-2) 245,000
Forfeiture of deposit for sale of bungalow 3,500,000
Gross rent chargeable to tax 7,045,000
Less: Admissible deductions
Repair allowance [7,045,000 x 1/5] (1,409,000)
5,636,000

(W-2) Non-adjustable advance

Received from Rashid 3,500,000
Less: Already taxed
- In TY 2020 (3,500,000/10) (350,000)
- In TY 2021 (3,500,000/10) (350,000)
- In TY 2022 (3,500,000/10) (350,000)
2,450,000 /10 245,000
(W-3) Income from other sources
Security charges [40,000 x 11] 440,000
Electricity charges [50,000 x 11] 550,000
Less: Deductions allowed
Security guard salary (360,000 x 80%) (288,000)
Electricity expense (450,000)
252,000

3
September 2023 Attempt

Answer-3
a)
i)
The application of a business asset to personal use will be considered as disposal when asset is put to personal
use. Therefore, withdrawing the furniture set from stock for personal use is treated as a disposal.
If a business asset (stock) is put to personal use its consideration received shall be the fair market value on the
date the event took place.
The cost of furniture can be claimed as deduction against the consideration received.
Consequently, the income from business is calculated as below:
Rupees in mill.
Consideration received (Fair market value) 3
Less: Cost (2.5)
0.5

ii)
Antique is a capital asset. During the year, it is sold therefore gain or loss on its disposal shall be computed as
follows:
Rupees in mill.
Consideration received (Fair market value) 1
Less: Cost (0.5)
0.5

b)
Following are exceptions to the given rule:
(i) Loss from any head of income cannot be set-off against salary.
(ii) Loss in speculation business cannot be set-off against any other income.
(iii) Capital loss cannot be set-off against any other income.
(iv) Loss under final tax regime cannot be set off with income subject to normal tax regime.
(v) Loss in a case where the income would have been an exempt income e.g. loss of agriculture income
cannot be set-off against any taxable income.
(vi) Loss from foreign source of income cannot be set-off with Pakistan source income and vice versa.

4
Lecture:98

Classwork
Chapter-15
1. Notices by Commissioner
2. Page 467
3. S.124A(Page 347)
4. Q.21,15,14
Chapter-7
1. Q.12 (Page 115)
Revise
1. Income from salary

Lecture:99

Classwork
Chapter-15
1. Q.7 (a)
Class notes (Lecture 97)(above)
1. Section 44A
Class notes (Lecture 99)(Below)
1. Q.1
Revise
1. Income from business till Section 29

Home work
Chapter-7
1. Q.7 (Page 114 of book)
CAF-2 Tax Practices Lecture-99 and onwards

Practice Questions
Question-1
For the purpose of this question, assume today is 31 August 2022.
Basit, a senior manager at Master Limited (ML), resigned on 31 January 2022 after completion of three
and a half year of service. During, the tax year 2022, he received the following emoluments from ML:
(i) Salary of Rs. 610,000 per month.
(ii) Allowance equal to 5% of salary solely expended in the performance of his duties of employment.
(iii) On 15 February 2022, he received the following payments from ML, as final settlement:
 Rs. 320,000 on account of leave encashment.
 Rs. 2,200,000 under golden handshake scheme.
 Previous 3 years average tax rate is 4%
Other information:
(i) On 31 January 2022, he received gold worth Rs. 200,000 as a gift from his old friend.
(ii) He rented out a building alongwith plant and machinery and sustained a loss of Rs. 450,000.
(iii) On 1 April 2022, he left for United Kingdom and joined Oliver Limited (OL) as an employee at a monthly
salary of GBP 3,200. He remained abroad till end of the tax year 2022. No withholding tax was deducted
by OL from his salary.
(iv) While residing in UK, Basit served as a visiting faculty member at a University. He earned GBP 1,500
from the university and incurred an expenditure of GBP 500 for providing services at the university.
Withholding tax deducted by the university amounted to GBP 225.
(v) Average exchange rate during 1 April 2022 to 30 June 2022 was GBP 1 = Rs. 250.
(vi) During the year, he contributed Rs. 500,000 to an approved pension fund under the Voluntary Pension
System Rules, 2005. (Note: It is different from employer contribution to pension fund)
(vii) During the year ended 30 June 2022, Basit started a new business in Pakistan. Following information is
available:
 His sales stood at Rs. 20 million
 His miscellaneous expenses stood at Rs. 0.7 million
 Incurred Rs. 2 million on feasibility study of the project.
 Obtained a 3% loan of AED 0.4 million from a UAE bank on 1 January 2022 for the purchase of plant
and machinery. The interest is payable annually and principal amount is repayable at the end of third
year.
 Installed the plant and machinery at a cost of Rs. 10 million on 14 March 2022.
The exchange rates of 1 AED to PKR on different dates are as follows:
Average between
1-Jan-2022 30-Jun-2022 1-Jan-2022 to
30-Jun-2022
Rs. 50 Rs. 55 Rs. 53

Required:
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder compute the total
income, taxable income and net tax payable by or refundable to Basit for the tax year 2022. (Show all
relevant exemptions, exclusions and disallowances)

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CAF-2 Tax Practices Lecture-99 and onwards

Question-2
Nasir has been working as head of finance in Asaaish (Private) Limited (APL). He received following monthly
emoluments from APL during the year ended 30 June 2022:
Rupees
Basic salary 800,000
In addition to the above, APL also provided him the following benefits:
1) An option was granted to Nasir in August 2021 to acquire 2,500 shares in APL’s parent company, Mamoo plc.
(MP), listed on Hong Kong stock exchange. However, the option was exercisable after completion of 6 month.
Nasir paid an amount equivalent to PKR 200,000 to acquire the option when the fair market value of the option
was PKR 250,000.
On 1 Feb 2022 he paid an amount equivalent to PKR 300,000 to acquire the shares in MP. The shares were
issued to him on 15 Feb 2022 when the market value of each share was equivalent to PKR 375.
On 15 June 2022 Nasir sold 2,000 shares in MP and received net proceeds equivalent to PKR 875,000 in his
bank account in Pakistan. This amount was received after deduction of bank charges of PKR 5,000 and
brokerage commission equivalent to PKR 10,000.
2) Ad-hoc relief allowance equal to one month’s basic salary keeping in view the increase in inflation Withholding
tax of Rs. 1,244,000 deducted from his salary was reimbursed to him.
Other information:
1) On 1 November 2021 Nasir fell ill and was admitted to Sultan Hospital Limited. The hospital incurred Rs.
65,000 on his treatment but did not charge anything to Nasir. He was an employee at Sultan Hospital 5 years
back.
2) He paid a cash donation of Rs. 480,000 to a non-profit organization listed in the Thirteenth Schedule.
3) He received dividend income of Rs. 600,000 form UAE.
4) During the year, he redeemed 4,000 units of an open-end mutual fund at Rs. 58.60 per unit. These units were
purchased three and a half years back at Rs. 50 per unit.
5) Nasir is also a part time singer and owns a studio. He sold the premises in which the studio was situated for Rs.
10 million and shifted his musical instruments to new premises which he purchased for Rs. 74.82 million. He
received Rs. 2.5 million from his father in cash as loan to pay for his new studio. The previous premises was
purchased several years ago for Rs. 1.4 million and had a tax written down value of Rs.600,000 at the time of
disposal. The net income from the studio for tax year 2022 was Rs. 990,000. The expenses include salaries of
two workers at Rs. 25,000 and Rs. 36,000 per month and utility bills amounting to Rs. 110,000. All expenses
were paid in cash.
Required:
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder compute the total income,
taxable income and net tax payable by or refundable to Nasir for the tax year 2022. (Show all relevant exemptions,
exclusions and disallowances)

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CAF-2 Tax Practices Lecture-99 and onwards

September 2023 Attempt

Question-5
(b)
Consider the following independent situations:
(i) Hasan, a Pakistani citizen, has been working in the UK since 2015. In tax year 2022, Hasan invested in
shares of a company, listed on the Pakistan Stock Exchange. Within the same tax year, he subsequently sold
these shares and realized a gain of Rs.500,000. However during the tax year 2023, he did not earn any
Pakistan source income.
(ii) Mehjabeen, a US citizen, got married in Pakistan five years ago and has since been residing in the country.
In January 2023, Mehjabeen’s father passed away in the USA, bequeathing her a property worth USD
400,000, situated within the USA. She neither earns income nor holds any assets in Pakistan in her name,
which has resulted in her not being required to file a return of income until tax year 2022.
(iii) XYZ (Pvt.) Limited ceased its business operations indefinitely on 31 August 2022. XYZ submitted a notice
of discontinued business to the Commissioner in accordance with regulatory requirements. XYZ’s year-end
falls on 31 December.
Required:
Discuss whether the above persons are required to furnish the return of income for the tax year 2023 under the
provisions of the Income Tax Ordinance, 2001. (05)

(c)
Under the provisions of the Income Tax Ordinance, 2001, specify the time period within which the Commissioner
may amend an assessment order. (03)
(September 2023, Q.5(b)(c))
Answer-5
b)
i. Although Hasan did not earn any Pakistan source income during tax year 2023, he had been charged to tax
in respect of his capital gain income in tax year 2022. Therefore, he is required to furnish a return of
income for tax year 2023.
ii. In tax year 2023, Mehjabeen, a resident individual, has become an owner of foreign assets worth USD
400,000, which is above the threshold of USD 100,000, requiring her to file a foreign income and assets
statement.
Consequently, Mehjabeen is required to file a return of income in tax year 2023.
iii. XYZ (Pvt.) Ltd is required to furnish a return of income for the period from 1 January 2022 to 31 August
2022.
This period will be considered a separate tax year.
c)
An assessment order can be amended within 5 years from the end of the financial year in which the
Commissioner has issued or is treated to have issued the original assessment order.

If an assessment order has been amended, Commissioner may further amend, as many times as may be necessary,
the original assessment within the later of –
(a) 5 years from the end of the financial year in which the Commissioner has issued or is treated as
having issued the original assessment order; or
(b) 1 year from the end of the financial year in which amendment was passed.

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CAF-2 Tax Practices Lecture-99 and onwards

Question-6
(a)
Sarfraz is a sole proprietor. Under the provisions of the Sales Tax Act, 1990, discuss whether each of the following
individuals/entities is an associate of Sarfraz:
(i) Jehanzeb: He has been working as an accountant for the past twenty years and has been responsible for
filing the tax returns of both Sarfraz and his business.
(ii) Falah Limited (FL): Sarfraz owns 20% shares in FL, while his mother owns 30% shares in FL.
(iii) Sarah: She is the adopted daughter of Sarfraz’s wife, Fatima. Sarah was adopted by Fatima before her
marriage to Sarfraz.
(iv) Umeed Trust (UT): Sarfraz is one of the trustees of UT. The trust was established to oversee the operations
of an orphanage. (06)

(b)
Under the provisions of the Sales Tax Act, 1990 and the Rules made thereunder, list different types of returns
alongwith the due dates for filing of such returns. (05)
(September 2023, Q.6 (a)(b))
Answer-6
a)
i. Two persons shall not be associates solely by reason of the fact that one is employee of another. Therefore,
Jahanzeb is not an associate of Sarfraz.
ii. A shareholder in a company and the company can be associates where the shareholder either alone or
together with an associate controls 50% percent or more of the voting power in the company.
In the given scenario, Sarfraz together with his mother holds 50% shareholding in FL so FL is the
associates of Sarfraz.
iii. Adopted child falls under the definition of relative. Therefore. Sarah is the associate of Sarfraz.
iv. Trust and any person who benefits or may benefit under the trust shall be associates. In the given scenario,
although the beneficiaries are orphans, UT may be an associate of Sarfaraz, if he is deriving any benefit
from the trust.
b)
Monthly return 15th of next month following any tax period (Electronic filing – 18th of next month, but
sales tax payable will be paid by 15th)
Annual return 30th of September following the year end
Special return On the date specified by the commissioner in its notice calling for such return
Final return On the date specified by the commissioner

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CAF-2 Tax Practices Lecture-99 and onwards

Question-8
(a)
Discuss the principles of a sound tax system. (04)

(b)
List the fundamental principles of ethics for tax practitioners. Also, describe any two of the principles. (04)
(September 2023, Q.8 (a)(b))

Answer-8
a) Refer heading 2.5 in Chapter-1
b) Same as Answer-8 but explain the two principles.

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CAF-2 Tax Practices Lecture-99 and onwards

March 2023 Attempt

Question-1
For the purpose of this question, assume that the date today is 30 September 2023.
Cheng, a Chinese citizen, has been in Pakistan since the year 2015. For career growth, he left his employment with
Hope Limited (HL), an unlisted FMCG, on 30 September 2022 and joined a leading chain of hotels namely Desire
Hotels (DH) on 1 October 2022. The details of his emoluments during the year ended 30 June 2023 are as follows:
HL DH
Particulars
Rupees
Basic salary per month 350,000 450,000
Medical allowance per month 35,000 60,000
Utilities allowance per month 20,000 30,000
Lunch provided by the employer at subsidized rate - per month cost to
10,000 25,000
employer
Company maintained car (for both official as well as personal purposes):
 cost 3,000,000 5,000,000
 fair market value as on 30 June 2023 2,500,000 6,000,000
Annual bonus related to the tax year 2022 350,000 -
Gratuity under an unapproved scheme 1,225,000 -

Additional information (other benefits provided by DH):

(i) Two return air tickets to China to the extent of Rs. 600,000 for Cheng and his spouse. During the year, he
incurred Rs. 550,000 on account of his traveling to China.
(ii) Rs. 750,000 received for signing a bond with DH, according to which Cheng cannot leave the organization
before 30 June 2024.
(iii) Rs. 400,000 received from DH as commission for securing a large contract.
(iv) Payment of the outstanding loan of Rs. 3,800,000 by DH as per the terms of the employment contract.
Cheng had obtained this interest free loan from HL, for the construction of a house. On 1 July 2019, the
house was given on rent under a 5-year rental agreement at an annual rental of Rs. 800,000.
Other information:
(i) During the year, he received CNY 31,500 (net of 30% tax) equivalent to Rs. 1,260,000 in his Pakistani
bank account being a share of profit from a business in China.
(ii) During the year, he received cash dividend of Rs. 97,750 (net of withholding tax at the rate of 15%) and
bonus dividend of 2,000 shares from Ambitious Limited (AL), a company listed on the Pakistan Stock
Exchange. The fair market value of AL’s share on the date of entitlement of bonus shares and on 30 June
2023 were Rs. 25 and Rs. 20 respectively.
(iii) He transferred an amount of Rs. 600,000 to the bank account of a non-profit organization as donation for
the flood affectees.
(iv) On 25 June 2023, he paid an annual premium of Rs. 300,000 on a life insurance policy.
Required:
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder, compute total income, taxable
income and tax payable by or refundable to Cheng for the tax year 2023. (Show all relevant exemptions, exclusions
and disallowances) (19)

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CAF-2 Tax Practices Lecture-99 and onwards

Answer-1
Mr. Cheng
Calculation of taxable income and tax liability
TY2023
Income from salary
- From HL (W-1) 2,772,500
- From DH (W-1) 10,142,500 12,915,000
Income from property (W-2) 545,000
Income from business-FSI (W-3) 1,800,000
Income from other source - Dividend income-FTR (97,750/85 x 100) 115,000
Income from other source – Bonus shares-FTR (2,000 x 25) 50,000
Total Income 15,425,000
Less: Dividend income-FTR (115,000)
Less: Bonus shares-FTR (50,000)
Taxable income 15,260,000
Gross Tax liability (1,095,000+35%x9,260,000) 4,336,000
Less: Foreign tax credit
-Foreign (1,800,000 x 30%) 540,000
-Pakistani (4,336,000/15,260,000) x1,800,000 511,455 (511,455)
3,824,545
Less: Tax credit on charitable donation (3,824,545/15,260,000) x 600,000
C is lower of
- 600,000
- 30 % of 15,260,000 = 4,578,000 (150,375)
Less: Tax credit on insurance -
Tax liability-NTR 3,674,170
Add: Tax on dividend-FTR (115,000 x 15%) 17,250
Add: Tax on Bonus shares-FTR (50,000 x 10%) 5,000
Net Tax liability 3,696,420
Less: Tax already paid on dividend-FTR (17,250)
Less: Tax on Bonus Shares-FTR (5,000)
Payable to Government 3,674,170

(W-1) Income from salary Rs

From HL
Basic Salary [S.12(2)(a)] (350,000×3) 1,050,000
Medical allowance [S.12(2)(c)] (35,000×3) 105,000
Less: Exempt upto 10% of basic salary (10% of 1,050,000) (105,000) -
Utilities allowance (20,000×3) 60,000
Subsidized food provided by the employer (10,000×3) 30,000
Company maintained car (3,000,000 ×5%)×3/12 37,500
Annual bonus 350,000
Gratuity under an unapproved scheme 1,225,000
Less: Exempt upto lower of:
- 75,000
- 50% of 1,225,000 = 612,500 (75,000) 1,150,000
Profit on loan (3,800,000×10%)×3/12 95,000
2,772,500

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CAF-2 Tax Practices Lecture-99 and onwards

From DH
Basic Salary [S.12(2)(a)] (450,000×9) 4,050,000
Medical allowance [S.12(2)(c)] (60,000×9) 540,000
Less: Exempt upto 10% of basic salary (10% of 4,050,000) (405,000) 135,000
Utilities allowance (30,000×9) 270,000
Subsidized food provided by the employer Exempt -
Company maintained car (5,000,000 ×5%)×9/12 187,500
Return tickets to China 550,000
Amount received for signing a bond 750,000
Commission for securing a contract 400,000
Loan paid of by DH 3,800,000
10,142,500

(W-2) Income from property

Rent 800,000
Less: Repair allowance 800,000x1/5 (160,000)
Less: Profit on loan (3,800,000 x 10% x 3/12) (95,000)
545,000

(W-3) Income from business-FSI

Share of profit in business (1,260,000/70 x 100) 1,800,000

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CAF-2 Tax Practices Lecture-99 and onwards

Question-2
Taha who has recently joined a tax consultancy firm, prepares the following table with regard to taxability of interest
income earned by various persons during the tax year 2023:
Amount of Taxability of interest income
Name of interest Mode of Admissibility
Status Head of Tax
person income (Rs. in investment of related
income regime
million) expense
Resident Term Deposit Income from
Aatif 1.1 FTR Yes
Individual Receipts of a bank other sources
Resident Term Deposit Income from
Bilal 5.5 NTR Yes
Individual Receipts of a bank other sources
Resident Bahbood Savings Income from
Seema 5.2 Exempt No
Individual Certificate other sources
Non
Securities issued by Income from
Kamal resident *3.3 NTR Yes
the resident person other sources
Individual
Loan agreement
Resident with Association of Income from
Sikandar 4.4 NTR Yes
Individual Persons being its business
member
Dream Resident Term Finance
Income from
Bank Banking 10.1 Certificates of a NTR Yes
other sources
Limited Company company

* Profit was paid outside Pakistan on approved securities which were widely issued outside Pakistan.
Required:
Prepare the corrected ‘Taxability of interest income’ columns in the table. (07)

Answer-2

Name of person Head of income Tax regime Admissibility of related

expenses
Atif [S.7B] - FTR No
Bilal [S.7B] Income from other sources NTR Yes
Seema [S.7B] Income from other sources NTR Yes
Kamal [S. 46] - Exempt No
Sikandar - Exempt (Include in income No
just for rate purpose)
Dream Bank [S.18(2)] Income from business NTR Yes

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CAF-2 Tax Practices Lecture-99 and onwards

Question-4
(a)
Mujtaba Hussain is engaged in the business of cashew nut processing. On 31 July 2022, he entered into a six-month
forward contract for the purchase of raw materials used in his business to safeguard against losses due to price
fluctuations. On 31 January 2023 i.e. the maturity date of the forward contract, he took the delivery of the raw
materials and settled the contract by making the due payment.
Required:
Under the provisions of the Income Tax Ordinance, 2001 discuss the tax treatment of the above transaction. (03)

(b)
For the purpose of this part of the question, assume that the date today is 30 September 2023.
On 1 July 2022, Kulsoom, a widow, established an online garment retail business and employs various ecommerce
platforms to market a diverse range of garments to customers throughout Pakistan. She operates the business from
her residential house.
During the year, the sales from online business were Rs. 6,000,000 and total expenditures including her personal
expenses were Rs. 5,800,000.
At the year end, her sole assets consisted of a 1300cc personal car and Rs. 800,000 as cash on hand.
Required:
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder, advise the requirement of
filing of return of income and tax treatment of the above to Kulsoom. (Calculation of taxable income and tax
liability is not required) (05)

Answer-4
(a)
The forward contract entered into by Mujtaba Hussian for the purchase of raw materials used in his business is in the
nature of a hedging contract. He entered into this contract to safeguard against losses due to price fluctuation. Such
contracts have specifically been excluded from the definition of speculative business. Consequently, payment to
settle the forward contract is an expenditure incurred in the normal course of business and is a deductible
expenditure.
(b)
As a widow, she has been exempt from filing an income tax return despite owning a 1300 cc car. However, starting
a new business during the tax year 2023 obligates her to file an income tax return if her income from business
exceeds Rs. 300,000. Although the reported figures in the question depict income of Rs. 200,000, which is below the
threshold limit of Rs. 300,000, the expenditure amount is comprised of both personal as well as business expenses.
However, for computing taxable income, only business expenses shall be allowed. Therefore, by considering
business expenses only, her income may exceed Rs. 300,000 and consequently, she will be required to file the
income tax return.
Moreover, if her taxable income from business exceeds Rs. 600,000, she is required to pay tax based on rates given
in the First Schedule of the Income Tax Ordinance

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CAF-2 Tax Practices Lecture-99 and onwards

Question-5
(a)
Assurance & Co., a partnership firm, has filed an appeal against the order of the Commissioner (Appeals) to the
Appellate Tribunal Inland Revenue (ATIR) which is pending before ATIR. Recently, the firm has appointed a new
tax adviser who proposed seeking relief through Alternative Dispute Resolution (ADR) mechanism provided by the
Income Tax Ordinance, 2001.
Required:
Under the provisions of the Income Tax Ordinance, 2001, advise Assurance & Co. in respect of the following
matters:
(i) Cases eligible for settlement through ADR mechanism (02)
(ii) Composition of the ADR committee (03)

(b)
State the provisions of the Income Tax Ordinance, 2001 relating to the filing of revised return of income by a
taxpayer. (04)

(c)
Under the provisions of the Income Tax Ordinance, 2001 who is required to furnish the foreign income and assets
statement. Also list the particulars to be mentioned in the said statement. (03)

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CAF-2 Tax Practices Lecture-99 and onwards

Answer-5
a)
i)
An aggrieved person may apply to Board for appointing committee to resolve dispute of:
(a) tax liability of Rs. 100 million or more, or admissibility of refunds,
(b) waiver of default surcharge and penalty; or
(c) any other relief,
The case should already be in litigation in any court/appellate authority.
A case will not be referred to the Board where criminal proceedings have been initiated.

ii)
In 15 days of application, the Board may appoint a committee comprising:
(i) a retired judge not below the rank of a judge of a High Court, who shall also be the Chairperson of the
Committee, to be nominated by the Board from a panel notified by the Law and Justice Division;
(ii) Chief Commissioner Inland Revenue having jurisdiction over the case
(iii) person to be nominated by taxpayer from panel notified by Board comprising:
(a) chartered accountants, cost and management accountants and advocates having a minimum of 10
years’ experience in the field of taxation.
The taxpayer shall not nominate a CA or an advocate if the said CA or the advocate is or has been an
auditor/authorized representative of taxpayer
(b) officers of the Inland Revenue Service who have retired in BS 21 or above
(c) reputable businessmen nominated by Chambers of Commerce and Industry

b)
If a person discovers any omission or wrong statement in a return, he may revise it by fulfilling the following
conditions:
(a) it is accompanied by the revised accounts or revised audited accounts. However, Commissioner may waive
this condition if he is satisfied that filing of these accounts is not necessary.
(b) the taxpayer files the reason for revision, in writing, signed by him,
(ba) it is accompanied by approval of the Commissioner however this condition shall not apply if revised return is
filed within 60 days of filing of return;
Further where the Commissioner has not passed an order of approval in writing, for revision of return, with in
60 days from the date revision was required, it will be assumed that Commissioner has given the approval.
Further no approval of the Commissioner is required if taxable income declared is more than or the loss
declared is less than determined u/s 120. and
(c) - taxable income in revised return is greater than the income determined in previous order issued by tax
or appellate authority (u/s 121,122,122A,129,132,or 133)and
- loss in revised return is less than loss determined in previous order issued by tax or appellate authority
If any of above condition is not fulfilled, the return shall be considered as an invalid.
The mode and manner for seeking the revision shall be prescribed by the Board.

c)
Foreign income and assets statement [S. 116A]
(1) Every resident individual having:
 foreign income equal to or greater than 10,000 United States dollars or
 having foreign assets with a value equal to or greater than 100,000 United States dollars
shall furnish a foreign income and assets statement. It shall be in the prescribed form and verified in the
prescribed manner. It will give particulars of:
(a) the person’s total foreign assets and liabilities as on the last day of the tax year;
(b) any foreign assets transferred by the person to any other person during the tax year and the
consideration received; and
(c) complete particulars of foreign income derived and the expenditure incurred during the tax year
and that the expenditure wholly and necessarily for the purposes of deriving the said income.

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Qusetion-8
Give two examples, each of tax avoidance and tax evasion. Also suggest the appropriate tax measures to prevent that
tax evasion. (06)

Answer-8
Tax Avoidance:
 Make donations to an approved charity organization to claim a tax credit.
 A partnership firm may be converted into a small company to avail benefit in tax rate of such company.

Tax Evasion Measures to prevent tax evasion

Mr. B earned an income of Rs. 10 million. However, he
only declared Rs. 6 million which is verifiable from the
banks. He has hidden the remaining amount in a
separate bank account.
Mr. C earned a turnover of Rs. 10 million. However, he
kept it as cash in his locker and hid it from tax
authorities. He paid all related expenses from this cash.
Cash inflow/outflow shall be made through a declared
bank account.
Only those expenses shall be admissible which are paid
through banking channel / Cash expenses shall not be
admissible.

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Qusetion-3
For the purpose of this question, assume that the date today is 31 August 2023.
Faith Brothers (FB) is engaged in the business of manufacturing tools and equipment. Following information has
been extracted from FB’s records for the year ended 30 June 2023:
Rs. in million
Revenue 1,400
Expenses (1,270)
Other income 47
Net profit 177

Additional information:
(i) Expenses include:
 accounting depreciation of Rs. 188 million.
 cash payment of Rs. 1 million for purchasing the ten air tickets.
 payment of Rs. 4 million to shipping line on account of demurrages for containers blocked at port.
Moreover, penalties of Rs. 9 million were also paid to various clients on delaying their orders because
of closure of production plant for two weeks during the year.
 payment of Rs. 50 million to a builder for the construction of a building. The work is still in progress at
the year end.
 payment of AED 100,000 equivalent to Rs. 5 million to a research institute in UAE for the purpose of
developing a new product.
 a foreign exchange loss of Rs. 15.8 million in respect of amount payable to FB’s associated company
in Qatar. This liability arose on 1 January 2022 from the import of a second-hand plant at a cost of
QAR 400,000. Repayment of QAR 100,000 each is made on 30 June 2022 and 30 June 2023
respectively. Relevant exchange rates are as follows:
1 January 2022 30 June 2022 30 June 2023
Rs. per QAR 45 40 79.5

(ii) Other income comprises of:

 recovery of bad debts of Rs. 16 million. The amount of Rs. 30 million was written off three years ago,
out of which only Rs. 10 million was allowed by the tax authorities.
 capital gain of Rs. 40 million on sale of following securities on 1 March 2023:
Capital gain
Date of purchase
(Rs. in million)
Modaraba certificates 10 July 2022 8
Shares of an unlisted company 20 February 2022 12
Shares of a listed company 15 January 2019 20
 a loss of Rs. 9 million in respect of an insurance claim. The claim was lodged against damage of a new
machinery during the shipment that rendered it unfit for use.
(iii) Tax depreciation for the year on all fixed assets, other than imported second-hand plant, amounted to Rs.
214 million.
(iv) Following are the details of losses brought forward from previous years:

Rs. in million
Loss from business relating to tax year 2021 52
Loss from speculation business relating to tax year 2022 14
Unabsorbed tax depreciation 168
Capital losses on sale of listed securities relating to:
 tax year 2019 8
 tax year 2020 6

Page 14
CAF-2 Tax Practices Lecture-99 and onwards

Required:
Under the provisions of the Income Tax Ordinance, 2001 and Rules made thereunder:
(a) compute total income, taxable income and income tax liability of FB for the tax year 2023. (17)
 Ignore minimum tax under section 113.
 Show all relevant exemptions, exclusions and disallowances.
(b) Determine the amount of FB’s remaining unutilized tax losses along with the tax year upto which such
losses may be carried forward. (03)

Page 15
Lecture:100

Classwork
Class notes (Lecture 97)(above)
1. Q.3
Class notes (Lecture 99)(above)
1. Q.2 (Page 2)
Revise
1. Income from business after Section 29
2. Chapter 3

Home work
Chapter 18
1. Q.31,29

Lecture:101

Classwork
Class notes (Lecture 99)(above)
1. Page 3,4,5,6,11,13
Revise
Chapter 1,2

Home work
Chapter 18
1. Q.27,28

Lecture:102

Classwork
Chapter-20
1. Section 11B(Page 490)
Chapter-23
1. Q.29 (Purchase return and sale return adjustment)
Class notes (Lecture 102)(below)
1. Q.7 on first page
Revise
1. Chapter 2

Home work
Chapter 18
1. Q.23
CAF-02 Lecture 102
Question-7
Zeenat Enterprises (ZE), a sole proprietorship, is registered under the Sales Tax Act, 1990. ZE is engaged in the
business of manufacturing and supplying cosmetic products. The following information has been extracted from the
records of ZE for the month of August 2023:
Rs. in million
Purchases
Taxable goods from registered persons 44
Taxable goods from unregistered persons 9

Supplies
Taxable goods to registered persons 30
Taxable goods to unregistered persons 8
Exports 12

Additional information:
(i) Purchases of taxable goods from registered persons include:
 raw material of Rs.9.2 million (net of special discount of Rs.1.2 million) from an associated
undertaking.
 glass bottles worth Rs.4 million. Among these, 20% of the total cost corresponds to bottles that
sustained damage in transit due to an accident. As a goodwill gesture, the supplier provided
replacement bottles without any additional consideration, accompanied by a sales tax invoice.
 a machine of Rs.15 million procured from an importer. 60% of the payment was made during the
month, while the remaining amount is scheduled to be paid in equal instalments over the next
three months.
 pigments in retail packing, listed in the Third Schedule, for Rs.7.5 million. The retail price of these
pigments is Rs.7.9 million.
(ii) Purchases of taxable goods from unregistered persons comprise of beeswax obtained from a bee farmer.
(iii) Supplies of taxable goods to registered persons include various cosmetics products, listed in the Third
Schedule, sold to a distributor for Rs.23 million. The retail price of these products were Rs.25 million.
During the month, the distributor returned 10% of the goods. Corresponding debit/credit notes were issued
on 5 September 2023.
(iv) Supplies of taxable goods to unregistered persons comprise of various cosmetic products, listed in the Third
Schedule, to unregistered Tier-1 retailers.
(v) Exports comprise of various cosmetic products shipped to the UAE.
(vi) Packaging material worth Rs. 6 million were returned to the supplier on 10 August 2023, and
corresponding debit/credit notes were issued on the same date. These returned materials were purchased on
2 February 2023.
(vii) A purchase of raw material from a registered person for Rs. 2.9 million on 10 February 2023, was
inadvertently omitted in the sales tax returns for the month of February 2023 and onwards.
(viii) Perfumes having the retail price of Rs.1 million were provided to the marketing staff as part of a
promotional campaign, allowing walk-in-customers at malls and kiosks to try the fragrances for free.
All the above figures are exclusive of sales tax, except where it is specified otherwise. Sales tax is payable at the rate
of 18%.
Required:
In light of the provisions of the Sales Tax Act, 1990 and the Rules made thereunder, compute the amount of sales
tax payable by or refundable to ZE and input tax to be carried forward, if any, for the tax period August 2023. (Show
all relevant exemptions, exclusions and disallowances) (17)
(September 2023)

Page 1
CAF-02 Lecture 102
Answer-7
Zeenat Enterprise
Sales tax payable (Refundable)
for the tax period August 2023
Rupees
Output tax (41 x 18%) 7.38
Less: Input tax (lower of:)
- Actual 3.82
- 90% x 7.38 6.64 (3.82)
3.56
Less: Input on machine (2.09)
1.47
Add: Further tax @4% on un-registered sales (Not applicable as item is of 3rd Schedule) -
Payable to government 1.47

Refundable against exports (W-2.1) (1.12 + 0.61) 1.73

Input tax to be carried forward -
(W-1) Calculation of Input tax
Input tax other than fixed assets
Taxable goods from registered suppliers (44 – 9.2 – 4 – 15 – 7.5) x 18% 1.49
Taxable goods purchased from unregistered person of Rs. 9 -
Purchase from associated (9.2 + 1.2) = 10.4 x 18% 1.87
Purchase of glass bottles (4 x 18%) 0.72
Purchase of pigments (7.9 x 18%) 1.42
Less: Purchase return (6 x 18%) (Can be recorded after 180 days) (1.08)
Purchase not recorded in February (2.9 x 18%) 0.52
4.94
Input tax on machine (15 x 18%) 2.7
(W-2) Apportionment of input tax
Common Machine
Turnover Input input
Local supplies 41 3.82 2.09
Export to UAE 12 1.12 0.61
53 4.94 2.7
(W-3) Taxable sales
Sales to un-registered persons
Taxable goods to un-registered persons 8
Sales to persons other than un-registered
Taxable goods to registered persons (30 – 23) 7
Sale of 3rd Schedule Items 25
Sale Return (Note is issued in next month) -
Supply of perfumes 1
33
41

Page 2
Lecture:103

Classwork
Chapter-8
1. Q.46
Class notes (Lecture 99)(above)
1. Q.3 on Page 14

Revise
1. Chapter 12,14

Home work
Chapter 12
1. Q.6 (Page 265)

Lecture:104

Classwork
Chapter 12
1. Q.3 (Page 263)
Class notes (Lecture 99)(above)
1. Page 14 Numerical with minimum tax
2. Page 8,9
Class notes (Lecture 104)(below)
1. Page 3 and Page 1 (Example-1)
Revise
1. Chapter 13

Home work
Chapter 12
1. Q.3 (Page 263)
CAF-02 Lecture 104

Section 82 Resident Individual (Chapter 4)

(d) is a citizen of Pakistan and
o is not present in any other country for more than 182 days during the tax year or
o who is not a resident taxpayer of any other country.
Example-1
Mr. Kamran is citizen of Pakistan. He stayed in China for 100 days and stayed in Germany for 100 days.
His stay in Pakistan is for 165 days. He is not resident of China or Germany.
Solution
He is resident individual because
- he is citizen of Pakistan and
- he is not present in one foreign country for more than 182 days and
- he is not resident of any other country
Example-2
Mr. Taimoor is citizen of Pakistan. He stayed in China for 185 days. He stayed in Pakistan for 180 days.
Solution
He is non-resident individual. Though he is a citizen of Pakistan but he is present in one foreign country
for more than 182 days.

Question-5
Akbar, a Pakistani citizen, worked at ABC Pakistan Limited, an unlisted public company and a wholly
owned subsidiary of ABC International, which is based in the USA. Akbar’s engagement was formed
through a two-year agreement, with the provision that at the end of this period, he had the option to
continue his employment with ABC International in USA.
The two-year period ended on 30 September 2022 and Akbar left for USA on 1 October 2022 to continue
his employment in USA as per the agreement.
On 15 February 2023, he resigned from ABC International, USA, and joined DEF Limited in the UK
under an employment agreement. However, due to his family problems, he resigned from DEF Limited
and returned to Pakistan on 30 April 2023.
Required:
Under the provisions of the Income Tax Ordinance, 2001, discuss the tax treatment Akbar’s foreign
source salary income earned during the tax year 2023. (06)
(September 2023) (Q.5 (a))
Answer-05
(a) Under the ITO-2001, where a citizen of Pakistan leaves Pakistan during a tax year and remains
abroad during that tax year, any salary income earned by him outside Pakistan during that year
shall be exempt from tax.
Since Akbar returned to Pakistan before the end of tax year, his foreign source salary will not be
exempt from tax in Pakistan.
However, if he paid foreign income tax in respect of his foreign salary, his foreign- source salary
will be exempt from tax. This exemption is only available if he is a resident.

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CAF-02 Lecture 104

His residency determination is based on his presence in different countries during the tax year
2023, as depicted below:
Country Period Days
Pakistan 1 July - 1 Oct 22 93
30 April - 30 June 23 62
155
USA 2 Oct 22 - 15 Feb 23 137
UK 16 Feb 22 - 29 April 23 73

First criterion for residency

As the above table shows that Akbar was present in Pakistan for 155 days, which is less than 183
days, he does not fulfill the first criterion for residency.
Second criterion for residency
With respect to the second criterion, Akbar
- is a citizen of Pakistan,
- was not present in any other country for more than 182 days.
If he was not a resident taxpayer in USA or UK, he was to be recognised in Pakistan as a resident
for the tax year 2023 so his income will be exempt.
If Akbar is classified as resident of other countries then he would be classified as a non-resident
in Pakistan, and therefore his foreign source salary would not be subject to tax in Pakistan.

Page 2
 Yes Resident

Stayed in Pakistan Govt employee

No Yes Resident
for 183 days posted abroad
or more
Present in
He is any other Yes Non resident
No Citizen country for No Resident
(Yes) more than 182 Resident of any
No
days other country Yes Non resident
Lecture:105

Classwork
Chapter 12
1. Q.3 (Page 263) (Provision adjustment)
Class notes (Lecture 104)(above)
1. Complete
Book pages
1. Page 380 Q.6(c)
2. Page 412 Q.37 Other information (ii)
3. Page 239 Q.5(b)
Revise
1. Chapter 3

Home work
Chapter 18
1. Q.25 (Page 401)

Lecture:106

Classwork
From Book
Chapter-10
1. Q.5 (Page 239)
2. Table on (Page 228)
Chapter 4
1. Q.17 (i) (Page 48)
2. 2 self made examples of resident/non-resident
Chapter 13
1. Diagram at end of chapter
Chapter 17
1. Q. 6 (Page 380)
Chapter 12
1. Q.4 (Page 263)
Chapter 18
1. Q.25 (adjustment iii) (Page 401)
Revise
1. Chapter 4,5,6

Home work
Chapter 13
1. Q.4,7
Test 13
Chapter 18
1. Q.24,15
Lecture:107

Classwork
Chapter 18
1. Q.25,24,15 Board meeting
Chapter 15
1. Appeals revision
2. Past Paper Q.1
3. Time limits Pg 468
Chapter 10
1. Gift/inheritance - class example
2. Page 253 Q.3
3. Q.4 (Page 238)
4. Assessment 1 Q.4 (Last adjustment)
Test 13

Home Work
Q.13 on Page 309 (After revising Q.9 on page 308)

Lecture:108

Classwork
Class notes (Lecture 108)(below)
Lecture 108 CAF-02

Lecture 108
1. Over all discussion
a. Student scripts
i. Name of person at start of numerical
ii. Show workings on next page
iii. Refer figures with workings
iv. Show main answer on first page
v. Solve each part on separate page
b. Discussion of 2-3 Attempts
c. Page 383
d. Pages after Page 384 - Frequently tested areas
2. There is no concept of apportionment of initial allowance between personal use and business use.
3. Section 75 A is also applicable for building/plot/house/flat
4. Income (Exempt or taxable)
5. Deductions/ Tax credits (Allowed and not allowed) Admissible and inadmissible
6. Yet not tested by ICAP
a. Section 175B (Chapter 16)
b. AOP Last sections (Section 90, 98A, 98B, 98C)
7. Input – Tax Credit
Output – Tax Debit
Chapter 2 Q.9 Part (i) (ignore)
Chapter 3 Past Paper Q.9
Chapter 4 Past Paper Q.29,31
Chapter 6 Women Enterprise Tax credit of 25% on tax calculated on gross tax liability
Chapter 8 Section 21(r)
Page 134 (e) (ea) (f)
Chapter 10 Notional amount (Page 231)
- On listed company shares and other listed securities
- Not applicable on unlisted company which fall under definition of public
company
Chapter 14 Q.7 (Page 307)
Chapter 15 Section 121 (3)
Chapter 18 Q.17 (Home work)
Chapter 20,21 Ch.20 Filing of return and
Ch.21 Electronic filing

Page 1
Lecture 108 CAF-02

IMPORTANT NUMERICALS
CHAPTERS QUESTIONS
7 Q.12 (Page 115)
8 Q.9 (Pg. 209)
9 ICAP Past papers Q. 5,6,7,9,14 (Pg. 218,219,220)
12 Q.2 and 3 (Pg. 262-263) , Q.5 (Pg. 264) Q.7,8 (Pg. 265-266)
14 1. ICAP Past papers Q. 9,11,12, 16 (Pg. 308-310),
2. Example 3 on Page 306
3. Pg. 301-303 (Example 4,5,9)
18 Q. 13,18,21,22,26,30,32,33,35,36,38,39,40
23 Q. 17,19,21,24,25,26,27,29
Q.7 (Page 521)
Questions done from Lecture 99 and onwards

Page 2