Solution: Problem - (January 2020)

Hilton & Company

TIN: xxxxxxxxxxxx
Income Year: 2018-2019
Assessment Year: 2019-2020
Taka Taka
Net profit before tax as per income statement 1,307,000
Adjustments for subsequent/separate consideration
Deduct: Non business income
Recovery of bad debts 25,000
Share premium (liability to the shareholders, can't be income) 400,000
Refund of income tax 15,000
Dividend 6,000
Revenue gain on sale of assets (Sale vale Tk. 100,000 - Cost Taka. 80,000-WDV Taka 60,000) 20,000
Capital gain on sale of assets (Sale vale Tk. 100,000 - Cost Taka. 80,000) 20,000
Interest on Government Securities 22,000 508,000
799,000
Add: Expenses charged to profit & loss statement
Accounting depreciation 80,000
80,000
879,000
Adjustments for statutory disallowances and allowances
Add: Inadmissible expenses incurred
Extention of building (Capital expenditure in nature) 450,000
Donation to a organization which is not approved by NBR 25,000
Loss on stock due to fire (not covered by insurance) 120,000
Penalty inadmissible 25,000
Bad debt allowance (provision) 25,000 645,000
1,524,000
Deduct: Expenses admissible as per ITO 1984
Provision for bad and doubtful debt allowed (weite-off) 10,000
Tax depreciation 100,000 110,000
Business income before consideration of entertainment 1,414,000
Less: Admissible entertainment -
Business income after before consideration of entertainment 1,414,000
Add: Non business income deducted earlier
Recovery of bad debts 25,000
Revenue gain on sale of assets (Sale vale Tk. 100,000 - Cost Taka. 80,000-WDV Taka 60,000) 20,000 45,000
Interest on Government Securities 22,000
Dividend 6,000
Capital gain on sale of assets (Sale vale Tk. 100,000 - Cost Taka. 80,000) 20,000
Business income & Non-business income 93,000
Composition of Income
Business & non business income (since tax rate is same) 1,459,000
Dividend income 6,000
Interest on government security 22,000
Capital gain on sale of assets (Sale vale Tk. 100,000 - Cost Taka. 80,000) 20,000
Total taxable income 1,507,000

Calculation of Tax Liability

Tax on business and non-business income @ 25% 1,459,000 364,750
Tax on dividend @ 20% 6,000 1,200
Tax on interest on government security @10% (SP) 22,000 2,200
Tax on capital gain @15% 20,000 3,000
Net tax liability 1,507,000 371,150
i) Income tax comes 371,150
ii) Minimum tax @.60% on gross receipts Tk. 8,153,000 48,918
- Minimum tax liability comes lower of actual tax liability, therefore, actual tax liability 371,150
Add: Tax liability u/s 16F (Stock dividend paid Tk. 218,000, which is more than cash dividend and
21,800
as such tax to pay @ 10% on stock dividend amount)
Add: Tax liability u/s 16F (1,227,000-82,0000=1,145,000 distributable profit, distributed 298,000
84,700
less than 30% tax to pay @ 10% on undistributed portion)
477,650
Less : - Advance tax paid by the company
- Admitted tax refund/Refund claim 15,000
- Tax paid in advance 40,000
- TDS on Dividend 1,200
- TDS on Govt Securities 2,200
- Tax paid @10% on stock dividend Tk. 218,000) 106,500
Total tax paid in advance 164,900
Balance tax payable with the return 312,750

Notes:

Note-1: Sales , cost of sales accepted as disclosed in the financial staements

Note-2: Salary, repair, Legal expenses, audit fee incurred in compliance with the relevant provisions of the ITO 1984.
Note-3: Interest on debenture, loss on sale of investment arrived in compliance with the relevant provisions of the ITO 1984.
Note-4: Gross receipts
Sales 8,000,000
Recovery of bad debts 25,000
Dividend 6,000
Sale of assets 100,000
Interest on Government Securities 22,000
8,153,000
Note-5: All epenses are supported by TDS documents/challan