FIN623 Midterm Solved Paper 2010 -4

MIDTERM EXAMINATION

Spring 2010 Paper

FIN623- Taxation Management (Session - 3)

Time: 60 min

M a r k s: 44

(M a r k s: 1 )   http://vuzs.net

Taxes are important instrument of which one of the following policy?

► Monetary policy

► Fiscal policy 

► Trade Policy

► Economic Policy

Question No: 2   ( M a r k s: 1 )   - Please choose vuzs one

Which of the following canon of taxation suggests that there should not be any arbitrariness or ambiguity in respect of amount of tax paid?

► Capacity to Pay

► Certainty 

► Simplicity

► Convenience

Question No: 3   ( M a r k s: 1 )   http://vuzs.net

Taxation management is a strategy where by a person manages its business in such a way so as to maximize the utilization of which of the following?

► All of the given options 

► Tax holidays

► Exemption, Rebates & Concession

► Tax credits

Question No: 4   ( M a r k s: 1 )   - Please choose vuzs one

Which of the following tax is paid in relation to how much you earn?

► Sales Tax

► Income Tax 

► Inheritance Tax

► Value added Tax

Question No: 5   ( M a r k s: 1 )   http://vuzs.net

Under which of the following sections of Income Tax Ordinance 2001 vested the powers to CBR in order to formulate the IT rule 2002?

► Section 206

► Section 213

► Section 237 

► Section 238

Question No: 6   ( M a r k s: 1 )

   http://vuzs.net

Law making is the prime responsibility of which of the following authorities?

► Parliament 

► Supreme Court

► High Court

► City Court

Question No: 7   ( M a r k s: 1 )   http://vuzs.net

Section 2(5A) of Income Tax Ordinance 2001 defined:

“assessment year” means assessment year as defined in the repealed Ordinance.

In which criteria the above definition falls?

► Exclusive definition

► Inclusive definition

► Both Exclusive and Inclusive definitions

► Statutory definition

Question No: 8   ( M a r k s: 1 )   http://vuzs.net

Which of the following is the Special Accounting Year of Insurance Companies?

► 1^st January to 31^st December 

► 1^st July to 30^th June

► 1^st October to 30^th September

► 1^st September to 31^st August 

Question No: 9   ( M a r k s: 1 )   http://vuzs.net

Which of the following is the Special Accounting Year of Sugar Companies?

► 1^st July to 30^th June

► 1^st October to 30^th September 

► 1^st September to 31^st August

► 1^st January to 31^st December

Question No: 10   ( M a r k s: 1 )   - Please choose vuzs one

If the accounting year of Mr. Aslam, a rice exporter is started from 01 January 2005 and ending on 31^st December 2005. What will be its tax year?

► Tax year 2003

► Tax year 2004

► Tax year 2005

► Tax year 2006 

SOL, MAQSOOM RAZA

Question No: 11   ( M a r k s: 1 )   http://vuzs.net

Certain incomes those are excluded from tax are called as:

► Perquisites

► Exemptions 

► Allowances

► Deductions

Question No: 12   ( M a r k s: 1 )   - Please choose vuzs one

If the land situated in Pakistan and used for agriculture purposes then which of the following factor make distinction between agriculture and non-Agriculture Income?

► Nationality of Pakistan

► Quantity of the product

► Time period

► Human effort

SOL ,MAQSOOM RAZA

Question No: 13   ( M a r k s: 1 )   http://vuzs.net

Suppose a Profit acquired by a cultivator from the sale of standing crops or the produce after harvesting.

The profit of the cultivator will be treated in which of the following way?

► Income from Business

► Agriculture Income

► Income from Property

► Capital Gain

Question No: 14   ( M a r k s: 1 )   http://vuzs.net

Land revenue rent (Lagan) is received by which of the following authority?

► High Court

► Supreme Court

► Income Tax Department

► Provincial Government

SOL, MAQSOOM RAZ

Question No: 15   ( M a r k s: 1 )  http://vuzs.net

What is the tax treatment of Donation to the President’s Relief Fund for Earthquake Victims 2005?

► Wholly Taxable

► Wholly Exempt 

► Partly Exempt

► Not mention in Ordinance

Question No: 16   ( M a r k s: 1 )   http://vuzs.net

Rate charged under presumptive tax regime to non resident shipping firm 8% on its gross receipt is quite low as compare to other business. This is an example of which type of tax concession?

► Reduction in total taxable income

► None of the given options

► Reduction in tax liability

► Reduction in tax rate

Question No: 17   ( M a r k s: 1 )   http://vuzs.net

Which of the following section deals with the residential status of Company?

► Section 81 

► Section 82

► Section 83 

► Section 84

83. Resident company.-

(a) it is incorporated or formed by or under any law in force in

Pakistan;

(b) the control and management of the affairs of the company is

situated wholly 1[ ] in Pakistan at any time in the year; or

(c) it is a Provincial Government or 2[Local Government] in Pakistan.

Question No: 18   ( M a r k s: 1 )   http://vuzs.net

M/s ABC & Co. has been incorporated under Pakistan Companies Ordinance 1984. However it’s most of the branched and control and management of affairs wholly situated out of Pakistan? What will be the residential status of M/s ABC & Co.?

► Resident Company  

► Non-Resident Company

► Resident Individual

► Resident AOP

RF, COMPANY 2(21)   80(2)

A body corporate formed by or under the law of pakistan will be treated as resident company but its control and management is out of Pakistan. See next mcq for ref also

SOL MAQSOOM RAZA

Question No: 19   ( M a r k s: 1 )   http://vuzs.net

For a resident AOP which of the following condition must be satisfied?

► Control and management of affairs of AOP is situated partly in Pakistan

► Control and management of affairs of AOP is situated wholly in Pakistan

► Control and management of affairs of AOP is situated wholly or partly in Pakistan

► None of the given options

Question No: 20   ( M a r k s: 1 )   http://vuzs.net

Any gain arising on the disposal of shares in a non-resident company belongs to which of the following?

► Pakistan- source income

► Foreign source of income

► Both Pakistan and foreign source of income

► None of the given option

SOL MAQSOOM RAZA

Question No: 21   ( M a r k s: 1 )   http://vuzs.net

Any amount shall be Pakistan-source income if it is paid by:

► Resident person

► Non-resident person

► Citizen of Pakistan

► All of the given options

Question No: 22   ( M a r k s: 1 )   http://vuzs.net

Any business carried by Non-resident person in Pakistan through permanent establishment (PE) the general and admin expenditure incurred. What will be the tax treatment of such expenditure?

► Exempt from tax due to non-resident

► Wholly taxable due to PE

► Allowed as deduction from the income of Non-resident

► None of the given options

Ref: No deduction shall be allowed in computing the income of a permanent establishment in Pakistan of a non-resident person chargeable to tax under the head “Income from Business” for a tax year for head office expenditure in excess of the amount as bears to the turnover of the permanent establishment in Pakistan the same proportion as the non-resident’s total head office expenditure bears to its worldwide turnover.

Question No: 23   ( M a r k s: 1 )   http://vuzs.net

The definition of Employment under Sec. 2(22) of the ordinance is categorized in:

► Inclusive Definition 

► Exclusive Definition

► Both Inclusive and Exclusive

► None of the given options

Question No: 24   ( M a r k s: 1 )   http://vuzs.

Tax year for the salaried individuals is called as:

► Special Tax Year

► Normal Tax Year 

► Fiscal Year

► Financial Year

Question No: 25   ( M a r k s: 1 )   http://vuzs.net

Which of the following section of Income Tax Ordinance 2001 deals with perquisites of Income from Salary and its treatment?

► Section 11

► Section 13

► Section 14

► Section 12 

Ref: Sub Sec (1) for the purpose of computing the income of an employee for a tax year, chargeable to tax under the head “salary”, the value of any perquisite provided by an employer to the employee in that year that is included in the employee’s salary under section 12 shall be determined in accordance with this section.

Question No: 26   ( M a r k s: 1 )   http://vuzs.net

Mr. A employed in Pakistan received dividend amounting Rs. 10,000 in UK from Pakistani resident company. What is the treatment of dividend in calculating his gross total income?

► Added in total income

► Subtracted from the total income

► Added in income after tax

► Exempt from tax

Question No: 27   ( M a r k s: 1 )   http://vuzs.net

Mr. Kishan Kumar during his yearly tour in Pakistan spends 155 working days, 26 off-working days 1 strike day and 1 Public Holiday in a tax year 2008-09? What will be the status of the individual?

► Resident Individual 

► Non Resident Individual

► Resident Person

► Resident HUF

Question No: 28   ( M a r k s: 1 )   http://vuzs.net

A firm ABC maintaining its account in accrual basis, at June 27, 2008 it is entitled to receive Rs. 10,000 but actual payments made at 01 August 2008. It would be charge to tax into the tax year:

► 2009

► 2006

► 2007

► 2008

Question No: 29   ( M a r k s: 3 )

What exemption granted under section 46 of IT Ordinance 2001?

Question No: 30   ( M a r k s: 3 )

Under which conditions any royalty is treated as Pakistan source income if it is paid by:

1. Resident person
2. Non-resident person

Question No: 31   ( M a r k s: 5 )

Under which conditions any business income by non-resident is treated as Pakistan source income?

Question No: 32   ( M a r k s: 5 )

Determine total income of Mr. Sharif, a non-resident individual for tax year 2009. Relevant data is given below:

1. Share of profit received in Singapore from a business controlled through a permanent establishment in Pakistan Rs 200,000.
2. Salary income of Mr. Sharif from an employment in Pakistan Rs600,000
3. Remittance received from China Rs 400,000
4. Profit on debt received on deposits kept with a bank in Pakistan Rs 50,000