2a Tax Computation of Business Entities

2 Tax Computation of Business Entities and Individuals (25%)
2a. Tax Computation of Business Entities

S. Question Year
L
1 The following adjusted accounts appeared in the records of ABC Ltd. for the year ended Nov Dec
December 31, 2016. Numbers in brackets refer to the items in Additional Information. 2010
Revenues and Gains
Tk. 000
Net sales 126,500
Interest 1,000 (1)
Gain on sale of shares . 2,500 (2)
Total 1,30,000
Costs and Expenses
Cost of goods sold 65,300
Salaries and wages 26,000 (3)
Security services 300 (4)
Audit and taxation services 500
Office rent 600
Donations 1,800 (5)
Board meeting attendance fee 300 (6)
Other expenses 3,000 (7)
Depreciation 8,000 (8)
Corporate income tax . 4,500 (9)
Total 110,300
Net profit . 19,700
Dividends paid . 9,000 (10)
Additional Information
(1) Interest revenue comprises interest on government bonds issued in 200
and purchased by ABC Ltd. in 2016.
(2) Gain on sale of shares arose from the following purchase and sale of shares of a
company listed with DSE and CSE:
Bought in 2014 cost Tk.12,00,000

Sold in 2016 proceeds of sale Tk.37,00,000
(3) Salaries and wages include inter alia salary of Finance Manager
Tk.6,00,000 (consolidated) paid in cash (not by cheque or bank transfer),
gratuity (unapproved) provision of Tk.15,00,000 and gratuity payment of
Tk.10,00,000.
(4) Security services include payments to a private security company. No
VAT was deducted at source from such payments.
(5) Donations were all paid in 2016 to ICAB, specially designated for the
purchase of library books, computers and training materials.
(6) No income tax or VAT was deducted at source from Board meeting
attendance fee paid to 10 (ten) directors.
(7) Other expenses include inter alia:
(a) Entertainment expenses of Tk.5,00,000 spent on MD‘s birthday party; and
(b) Four foreign travels of MD, each costing Tk.2,00,000. All foreign
trips were for business purposes.
(8) ABC Ltd. has always used written down value depreciation and same
depreciation rates for both accounts and tax purposes.
(9) Corporate income tax is the amount estimated before preparation of the
tax return. 60% of the estimated amount of tax has been paid as advance
tax during the year 2016.
(10) Dividend has been paid at the rate of 25%.
The company has a capital loss of Tk.10,00,000 carried forward from the assessment year
2017-2018.
Courtesy: Saiful Islam Mozumder, ShirazkhanBasak& Co. smozumder@outlook.com cell-01711-981920

ABC Ltd. is a publicly traded company.
Required:
Comp Compute the total income and the total income tax liability of ABC Ltd. while
making the above computations, any non-compliances of the relevant provisions of the tax
laws (income tax as well as VAT) by the company are to be considered strictly in
accordance with the legal provisions for such non-compliances. If considered necessary,
you may make assumptions in the light of the relevant tax provisions.
ABC Ltd
Computation of Total Income
Assessment year 2017-2018
Income year 2016-2017
Note Taka Taka
000 000
Income from Interest on Securities (u/s-22):
Interest on govt bond 1,000 1,000
Income from Interest from Securities 1,000

Income from business or Profession (u/s-28):
Profit before tax as per profit and loss account 19,700
Less: Non-business income included in P&L A/c for consideration at appropriate heads of income:
ii Interest income (for consideration at interest on securities) 1,000

ii Capital gain on sale of shares 2,500
(3,500)
Add: Inadmissible expenses:
a Salary to finance manager 1 600
b Gratuity Provision 2 1,500
c Security service disallowed u/s-30(aa) 300
d Audit, accountancy & advisory services disallowed u/s-30(aa) 500
e Office rent disallowed u/s-30(aa) 600
f Donation to ICAB 3 1,800
g Board meeting attendance fee. 4 300
h Entertainment: This is personal expenditure not related to business as per rule -65 500
i Corporate income tax 6 4,500
j Dividend paid (disallowed u/s-30(aa) for non deduction of TDS. 9,000
19,600
Income from business or Profession (u/s-28): 35,800
Income from Capital Gain (u/s-31)

Gain on Sale of Shares 2,500
2,500
Total income 39,300
Break up of total income
Interest on Securities(u/s-22): 1,000

Income from business or Profession (u/s-28): 35,800
Income from Capital Gain(u/s-33) 2,500
Capital loss carry forward from 2014-15 (1,000)

Capital gain after setting off previous loss 1,500
Total income 38,300
Computation of tax liabilities
On total income excluding Capital Gain. (38,300-
1 1,500)=36,800X24.75% 9,108
2 On Capital gain @15% 150
Net tax
liability 9,258
or However, Minimum Tax: 0.50% on gross
receipts 130,000 650
Whichever is higher 9,258
Notes:
1 The total income & tax liability of ABC Ltd are computed in the light of the
provision of Finance Act-2017
2 Salary of finance manager TK. 600,000 disallowed fully as per sect 30(i) as it was
not paid through crossed cheque or balance transfer
3 No such provision either recognized or unrecognized is allowable expenditure so disallowed fully
4 Donation to ICAB is disallowed being unapproved institution
5 VAT deduction is applicable as VAT was not deducted at source it is disallowed U/S 30 (aa)
6 Allowable U/S 30(k) up to 1% of disclosed turnover
7 Corporate Income tax is not an expense rather than appropriation of profit so it is not an item of
P/L account . So disallowed fully.
8 Depreciation To 8,000,000(depreciation claims as per 3rd schedule so nothing to be added back.)
9 As the ABC Ltd is a publicly traded company and declared 25% dividend, hence tax rate would be 24.75%
10 As per SRO 269-2010, the tax rate on the capital gain of selling listed company‘s stock is 10%
2 ABC Ltd. is a publicly traded company carrying on the business of manufacture and sale of May Jun
jute products. Accounts are maintained on mercantile basis. The audited profit and loss 2011
account for the year ended December 31, 2016 disclosed a net profit of Tk.2,510,000.
Examination of the books of accounts revealed the following facts:
a) A preliminary expenses Tk.50,000 was written off to the profit and loss account.
b) One vehicle was purchased during the year for Tk.2,500,000. Depreciation
@20% was charged on the cost of the vehicle.
c) Depreciation claimed at Tk.1,200,000 including depreciation on a leasehold
asset of Tk.1,000,000. The company claimed depreciation on leasehold
assets Tk.200,000. The lease rental for the year was Tk.150,000 in respect
of the leasehold assets.
d) Depreciation in respect of all other assets has been claimed as per Income Tax
Law.
e) Interest on loan aggregating to Tk.400,000 has been waived by IFIC Bank
during the year which has been credited to the profit and loss account.
f) Over provision for certain expenses as well as under provision for certain
expenses in respect of previous year amounting to Tk.500,000 and
Tk.300,000 respectively have been adjusted with the retained earnings
brought forward from previous year.
g) Net profit includes Tk.800,000 representing income from sale of imported
products. The company suffered AIT aggregating to Tk.200,000 at import
stage at the time of import of jute products.
h) Entertainment expenses of Tk.120,000 debited to the profit and loss account.
i) Technical knowhow fee of Tk.300,000 paid to foreign collaborators charged in
the accounts.
j) 50% of sale of manufactured goods is exports.
You are required to compute total income and tax payable by the company for the income
year ended December 31, 2016.
Answer:
ABC Ltd.
(A publicly traded company)
Assessment Year-2017-2018
Income Year-2016-2017
Income from Business or Profession: U/S 28-30

—
Amount (Tk.)
Net profit as per Accounts 2,510,000
Less: Interest waived by the bank wrongly credited to the P/L 400,000
{This is exempted as per section 19 (11)}
Less: Income from imported jute products (shall be considered U/S- 82C) 800,000
Add: Entertainment expenses (to be considered separately) 120,000
Add: Technical knowhow fee (to be considered separately) 300,000
1,730,000
Depreciation over charged on vehicle 100,000
{ As per 3rd sch. Clause 6(a)}
Depreciation charged on leasehold assets 200,000
(As it is assumed to be under operating lease and paid rental on the same)
Income before charging entertainment & technical knowhow fees 2,030,000
Less: Admissible expenses:

Entertainment (As per rule 65)-Note-2 60,600
Technical knowhow fees (As per section 30, clause -h)-Note-3 162,400
Income from manufacturing business including exports 1,807,000

Less: 50% exempted on exports (as per 6th sch. Para-28) 903,500
Income from manufacturing business 903,500

Income from imported jute products (U/S- 82C) 727,273
(AIT 200,000/27.5%)
Total Income 1,630,773
Calculation of Tax Payable:

Less: Income U/S 82C 727,273
Income other than 82C 903,500
Tax Payable: 903,500 X 27.5% 248,463
Workings & Necessary Notes: 01

Notes:-1
 The total income and tax liability of ABC Ltd., is computed in the light of the provisions of
Finance Act-2017 i.e. Assessment Year 2017-2018;
 Writing off preliminary expenses is allowed;
 Over provision, under provision for certain expenses and adjusted in opening retained earnings
are not relevant in this income year;
Note:-2
Calculation of Entertainment-Rule 65
On first 10 lac profit@4% Tk. 40,000
On balance profit .i.e Tk. 1,030,000@2% Tk. 20,600
Total Tk. 60,600

Note:-3
Technical Know How Fees: 8% on Tk. 2,030,000 Tk. 162,400
3 RFL Co. Ltd. owns and maintains 10 tea estates in Chittagong. It sells the tea after Nov Dec
processing in its manufacturing plans within the estates. For the financial year ending 2011
December 31, 2016 it has produced the following information:
Taka
Opening stock of tea (Valued at the net sales prices) 80,00,000
Closing stock of tea (Valued at the net sales prices) 90,00,000
Sales (30% domestic,70% export) 12,40,00,000
Sales of bamboos and other bushes 20,00,000
Sales of old shade and other trees 90,00,000
Common expenditure apportioned between agriculture and business on the basis
of workers employed are:
Agriculture Business
Taka Taka
Manufacturing expenses 7,50,00,000 1,60,00,000
Administrative expenses 50,00,000 80,00,000
Besides, selling expenses of Tk.18,60,000 have been incurred during the year.
Depreciation on plant and machinery, furniture, factory and office buildings including
banglows have been included in above manufacturing expenses of Tk.80,00,000 and
Tk.20,00,000 relate to agriculture and business respectively. The company spent
Tk.30,00,000 during the year to bring new areas under its cultivation while nothing has
been spent on replacement of bushes. It is company policy to capitalize those
expenditure. There are no other inadmissible expenses. Tax WDV of fixed assets are as
follows:
Taka Taka
Banglows and other structure 2,30,00,000 1,50,00,000
Plant and machinery 3,50,00,000 6,90,00,000
Furniture, Equipment etc. 30,00,000 60,00,000
Vehicles and Tanks 1,05,00,000 60,00,000
Tubewell 23,00,000 -----
Pucca Irrigation works 8,00,000 ----
Pucca pumping machine 30,00,000 -----

Calculate the taxable income of RFL Co. Ltd. for the relevant assessment year
assuming that it has no brought forward agriculture or business losses but has
unabsorbed depreciation of Tk.2,44,00,000 under the head agriculture.
Taka
Sales 12,40,00,000
Closing stocks 90,00,000
Opening stocks (80,00,000)
Value of produce 12,50,00,000
Apportionment between agriculture and business in the ration 60:40 (Rules 31)
Taka Taka
Sales 7,50,00,000 Taka
5,00,00,000
Sale of Bamboos etc. - 20,00,000
Sale of Shade trees etc. 90,00,000 -
Taka
8,40,00,000 5,20,00,000
80,00,000 20,00,000
9,20,00,000 5,40,00,000
Deduct: Manufacturing expenses 6,70,00,000 1,40,00,000

Administrative expenses 50,00,000 80,00,000
Development expenses 30,00,000 -
Selling expenses - 18,60,000
Depreciation (calculation below) 86,35,000 2,08,00,000
Adjusted profit 83,65,000 93,40,000
Banglows Equipment Tanks Tubewell Irrigation Pumps Total Allowances

Plant
Tk. Tk. Tk. Tk. Tk. Tk. Tk. Tk.
10% 10% 25% 10% 15% 5% 20% -
WDV SF 2,30,00,000 3,50,00,000 30,00,000 1,05,00,0 23,00,000 18,00,000 30,00,000
WDA 23,00,000 35,00,000 7,50,000 00
10,50,000 3,45,000 90,000 6,00,000 86,35,000
WDA 2,07,00,000 3,15,00,000 22,50,000 94,50,000 19,55,000 17,10,000 24,00,000
Carried Forward
Depreciation Allowances-Business
Structures Plant Furniture Vehicles Total Allowances
Tk. Tk. Tk. Tk. Tk.
20% 20% 10% 20%
WDV SF 1,50,00,000 6,90,00,000 60,00,000 1,70,00,000
WDA 30,00,000 1,38,00,000 6,00,000 34,00,000 2,08,00,000
2WDA 1,20,00,000 5,52,00,000 54,00,000 1,36,00,000
Carried Forward
Summary of assessments- Assessment year 2017-2018

Taka
Agricultural income 83,65,000
Unabsorbed depreciation carried forward 83,65 ,000
Agricultural Income 0

Business income 93,40,000
Unabsorbed depreciation Brought Forward 2,44,00,000
Set off (83,65,000)
Remains 1,60,35,000
Notes:
(1) Valuation of closing stock in the case of plantation companies on net realizable basis is an acceptable
method as per IAS-2 (Inventories).
(2) Bamboos and other bushes naturally grown without any agricultural effort or skill employed and the
income thereon being treated as business income.
(3) Shade and other trees in tea garden are systematically planted and nurtured for growth and as such
full agricultural skill is employed.
(4) Expenditure in respect of developing new area for future tea cultivation is fully allowable as per rule 31,
though the company has capitalized this.
(5) Unabsorbed depreciation of previous year‘s agricultural loss can only be carried forward and set off
against this year‘s agricultural income
(6) Rule 31 provide the apportionment mechanism for income but not the expenditure which are generally not
separated in the tea garden between agriculture and business. However, for the sake of convenience
apportionment for these expenditure not on the basis of employees / workers has been made.
4 XYZ Bank Ltd. has shown a net profit before tax amounting to Tk.390 million for the year May Jun
Ended December 31,2016 2012
You are required to compute the tax liability of the bank for the assessment year
2017-2018 considering the following facts:
i) Accounting depreciation charged in the accounts was Tk.14 million whereas tax
depreciation has been calculated as Tk.25 million.
ii) Inadmissible expenses have been found to be as follows:
Particulars Tk. In Million
Perquisites 4.00
Subscriptions and Donations 0.25
Printing, Advertisement etc. 1.00
Sundry Expenses 0.45
iii) Extracted from the Balance Sheet

Paid up capital 408
Statutory Reserve 130
Retained profit-Opening 42
Retained profit- Closing 148
Exchange Equalization fund 1
iv) Classification of Loans and Advances including Bills discounted and purchased.
Unclassified 8,065
Sub-Standard 25
Doubtful 15
Bad 5
v) Unclassified Loans and Advances include staff loan of Tk.45 million.
Other expenses include entertainment expenses of Tk.4 million.
vi) Provision for bad and doubtful debts shown in the profit and loss account
includes.
Specific Provision 1
General Provision 10
vii) Other income includes dividend of Tk. 5 million received from a publicly listed
company.
ABC Bank Ltd.
Income year ended December 31,2016
Assessment year 2017- 2018
Particulars Notes Tk. In Tk. In

Million Million
Net Profit as per Profit and Loss A/C
390.00
Separate Considerable Items:
Dividend (5.00)
Accounting depreciation -fiscal depreciation is allowable 14.00 9.00
399.00
Add: Inadmissible Items:
Excess Perquisites 4.00
Subscriptions and Donations 0.25
Printing, Advertisement etc. 1.00
Sundry Expenses 0.45
Other Expenses Entertainment (for considering as per rule-65) 4.00
Bad and Doubtful debt Provision (General plus specific) 2 11.00 20.70
419.70
Deduct: Allowable or Deductible Items:
Fiscal Depreciation 25.00
Entertainment as per Rule-65 1 4.00
Bad debt 5.00 34.00
Income from Business 385.70
Income from Other Sources

Dividend 4 5.00
Total Income 390.70
Tax thereon
Income Tax @ 42.5% on (390.70-5) = 385.70 163.92
Excess Profit Tax 3 15.03
178.95
On dividend @ 20% on Tk. 5.00 1.00
Tax Payable 179.95
Note-1: Entertainment Allowance:
On First one Million @ 4% .040
On Balance 398.7 Million @ 2% 7.974
8.014
But restricted upto actual claimTk.4 million
Note-2: Bad and Doubtful Debts:

No provision for bad and doubtful debt is allowable as per section 29 other than actual bad debt of
Tk. 5 million
Note-3: Excess Profit Tax
Capital and Reserve:
Paid up Capital 408.00
Statutory Reserve 130.00
Retained Profit - Opening 42.00
Exchange Equalization Fund 1.00
Total 581.00
50% thereof 290.50
Total Income 390.70
Excess Profit (390.70 - 290.50) 100.20
Excess Profit Tax @ 15% 15.03
Note -4 : Dividend :
Rate of tax on divided is 20%
5 Given below is the Profit & Loss A/C of NYZ Textiles Ltd., for the year Nov Dec
ended June 30,2017 2012
Particulars Taka Particulars Taka
Cotton 11,417,950 Sale of Yarn 10,811,956
Stores 1,835,648 Sale of Textile Products 10,926,425
Export Subsidy / Incentive
Mills Salaries & Wages 3,831,984 received in Cash 407,687
General Expenses 29,010 Sale of Waste 121,508
Replacement of Plant & Machinery 2,039,000 Rent of Bungalows 57,902
Stamp Duty, Registration, Legal Fees etc. 250,000 Dividend 17,400
Motor Car Overhauling Expenses 15,000 Interest on PSP 15,000
Purchase of two Paintings for MD’s Office 30,000
X-Mas Gift given to the Foreign Contractor 10,000
Refreshment, Food, Drinks etc., at one of
its Business Meetings 25,400
Expenditure incurred on Catering and
refreshments for shareholders and guests
at general body meeting 50,600
Donation 10,000
Rates & Insurance 40,376
Office Expenses 240,694
Directors’ Fees 9,000
Auditors Fees 30,000
Interest 211,850
Repairs to Building & Machinery 124,556
Trade Penalties, Legal Expenses &
Professional Charges 120,000
Entertainment 249,700
Workmen’s Welfare Expenditure 55,184
Contribution to Staff Provident Fund 75,500
Provision for Gratuity 150,000
Reserve for Meeting Contingent Liability 30,000
Loss for Discarding Ageing Machinery 205,397
Selling Agent’s Commission 201,690
Net Profit (Subject to Depreciation) 1,069,339
22,357,878 22,357,878
22,357, ,878
From the foregoing, compute the company’s taxable income from business, the total
income (computation should include necessary reasons), and tax liability for the
assessment year, 2017 – 2018 taking into account;
i) Sale of textile products includes Tk. 89,249 from export.
ii) Payment of Mills Salaries includes Tk. 75,000 for payment of tax for a foreign
technician engaged by the company;
iii) Expenses for stamp duty, registration, legal fees, etc. amounting 250,000 have
been incurred in raising loans;
iv) Rates Tk. 1,800, insurance Tk. 2,500 and repairs to building Tk.7,544 in respect of
bungalows;
v) The break-up of trade penalties, legal expenses and professional charges for Tk.
120,000 is as follows:
a) Trade penalties and law expenses constitute Tk. 20,000.
b) Assessee company has spent Tk. 50,000 for successfully defending the
allegation of black marketing.

c) Professional charges include Tk. 20,000 paid to an Income tax practitioner
to represent the cases to the Deputy Commissioner of Taxes and Tk.
30,000 to represent an Income tax Appeal before Appellate Tribunal.
vi) Donation includes Tk. 5,000 contribution to Zakat Fund;
vii) The Staff Provident Fund is a recognized one;
viii) It is found that the amount of gratuity actually paid during the year was Tk.
100,000;
ix) Dividend income has been subject to dividend distribution tax;
x) The amount of depreciation allowable for assets used for the company’s
business is worked out at Tk. 551,710;
xi) It is revealed that outstanding trading liabilities amount to Tk. 1,100,000. The
date of origin of the trading liabilities are as follows:
a) Assessment year 2011 – 2012 350,000
b) Assessment year 2012 – 2013 300,000
c) Assessment year 2014 – 2015 150,000
d) Assessment year 2016 – 2017 300,000
1,100,000
NYZ Textiles Ltd.,
Income year 2016 – 2017
Assessment year 2017- 2018
Computation of Taxable Income Taka Taka
Net Profit 1,069,339
Less:
Export Subsidy / Incentive for separate consideration 407,687
Rent of bungalows (income from house property) 57,902
Dividend 17,400
Interest on PSP 15,000
497,989 571,350

X-Mas Gift Given to the Foreign Contractor 10,000
Donation 5,000
Rates, insurance & repairs (1,800 + 2,500 + 7,544) 11,844
Trade penalties law expenses 20,000
Provision for Gratuity 150,000
Reserved for meeting contingent liability 30,000
Entertainment Expenses 249,000
Outstanding Liabilities not paid within 3 years 350,000
Replacement of Plant &Machinery being capital expenditure 2,039,000
2,865,544
3,436,894
Less. :Gratuity Paid: 100,000
Tax depreciation 551,710
651,710
2,785,194
Less:
Entertainment Expenses
First 1,000,000 @ 4% 40,000
Next 1,785,194 @ 2% 35,704 75,704
Business Income 2,709,490
Income from Export Incentive 407,687 / 95x5/0.15 143,047
Total Business Income 2,852,537
Total
Tax on Business income of Tk. 2,709,490 @ 15% 406,424
(SRO : 218 -11/2003 of 19.07.2003)
Tax on cash Subsidy (Final Settlement) 82C 21,457
Other Income:
Income from dividend of Tk. 17,400 tax@ 20% deducted and the tax rate is also 20% 3,480
Interest on PSP (assuming it was purchased before10/06/1999) 15,000
Less: Exemption 15,000
Income from House Property:
Rental income that is annual value 57,902
Less: Rates and insurance 4,300
Less: repairs 25% 14,475 39,127
Notes:
(i) Payment of employee's tax for Tk. 75,000 paid by the employer is allowable expenditure and such tax is exempted
from payment of tax in the hand of employee- SRO: 182-L/99 of 01, July 1999.
(ii) Expense for stamp duty, registration legal fees amounting to Tk. 250,000 is allowable expenses u/s 29 (xvii)
(iii) Professional & legal fees are allowable but fine & penalties for Tk. 20,000 are not considered.
(iv) Donation to Zakat fund is an allowable expense.
(v) Replacement of plant & machinery is capital nature of expenditure.
(vi) Purchase of two paintings for MD's office is a decoration expenses is allowable expenditure u/s 29.
(vii) Since the company is paying tax at reduced rate, tax rebate for export of Tk. 89,249 could not be allowed (clause 28
Part A of 6th schedule).
(viii) Gift is an allowable expenditure if given for business purpose. However, in absence of specific indication regarding
purpose, one given to foreign contractor has been disallowed.
(ix) The trading liability not paid within 3 years of the expiration of income year is being considered as an income u/s 19 (15)
(c) of ITO 1984.
(x) The amount ofTk. 50,000 being spent for defending the allegation of black marketing is allowable expenses.
6 ABC Limited, a Bank in Bangladesh has submitted an income statement showing profit of Nov Dec
st
Tk.2,58,000 for the year ended 31 December 2016. You are required to find out the 2012
amount of-
(a) 1% of unclassified loan
(b) Admissible entertainment allowance
(c) Calculation of excess profits under section 16(C)
(d) Revised Income
On the basis of the additional information as given under:
(i) Loans and Advances
- Unclassified advances Tk. 21,00,000
- Sub-standard advances Tk. 8,50,000
- Bad and Loss Tk. 1,02,50,000
- Doubtful Debts Tk. 11,45,000
(ii) Capital Structure
- Paid-up Capital Tk. 20,00,000
- Statutory Reserve Tk. 7,50,000
- Retained Earnings Tk. 2,50,000
- Dividend Equalization Fund Tk. 2,00,000
(iii) Depreciation
- Accounting depreciation Tk. 50,000
- Tax depreciation Tk. 80,000
(iv) Perquisites and Allowances
- Excess perquisite Tk. 50,000
-Printing and Advertisement Expenses Tk. 40,000 (Capitalized)
- Entertainment Allowances Tk. 65,000
- Other Expenses on which TDS are not applied Tk. 10,000
Compute the Taxable income and tax liability of the above bank for the assessment year
2017-2018.
ABC Bank Ltd.

Computation of Income Tax Liability
Net Profit as per account 258,000

Less: income from Investment 100,000
158.000
Add: Expenses to be considered separately 50,000
( a) Accounting Depreciation 42,000
(b) Provision for Bad & Doubtful Debts 65.000

(c) Entertainment allowance 157,000
315.000
Add: Inadmissible Expenses

(i)Excess perquisites 50,000
(ii) Printing & Advertisement (Capitalized) 40,000
(iii) Other Expenses 10,000
100,000
415,000
Less: Tax depreciation 80,000
335,000
Add: Income from investment 100,000
Less: Entertainment allowance 435,000
Revised Income 17,400
417,600
Working Notes:
(a) Loans and Advances 14,345,000
1% on unclassified Advance 143,450
b) Actual provision for Bad Debts 42,000
(c) Entertainment allowance allowable
@ 4% upto Tk. 10,00.000 and balance
@ 2% on business income Tk. 4,35,000 14.400
(d) Calculation of excess profit under section 16C
(a) Tire-1 Core capital
Paid up Capital 2,000,000
Statutory Reserve 750,000
Retained Earnings 250,000
3,000,000
(b) Tire-2 Supplementary Capital:
General Provision on unclassified loan @ 1% 21, 000
Dividend Equalization fund 200,000
221,000
Total (a+b) 3,221,000
5 0 % of Profit 1,610,500
Actual profit 417, 600
Excess profit Tax Nil
Taxable income is Tk 4,17,600 and tax is @42.5% which is Tk. 1,77,480

7 XYZ Limited, a Private Limited Company, is engaged in Deep Sea fishing business for
May Jun
th 2013
last few years. For the Income year ended on 30 June 2017 the company has
submitted to you a statement of accounts consisting of Trading and Profit and Loss
Account for filing income tax return, As a Manager finance, of the company you
have examined the accounts which are as follows :
XYZ Limited
Trading Account
For the year ended June 30, 2017
Cost of Diesel 59,416,425 Sales :
Crew, Captain Salary and
Export 94,465,822
allowances 20,928,739 Local 59,817,456 154,283,278
Catch Incentive & Festival
Bonus 4,677,749
Carrying and Forwarding 99,254
Packing & Processing 4,204,789
Fishing Gear 2,947,474
Vessel Operational Expenses 5,601,743
Loading & Unloading
Expenses 373,350
Export Expenses 7,656,229
Fee & Taxes 319,400
Insurance 7,724,583
Repairs & Maintenance
Expenses 6,810,438
Gross Profit 33,523,105
154,283,278 154,283,278
XYZ Limited
Profit and Loss Account
For the year ended June 30, 2017

Directors Remuneration 300,000 Gross Profit 33,523,105
Income from
Staff Salary 9,344,035 Dividend 646,646
Staff Bonus 1,530,965 Add : AIT 114,114 760,760
Staff Overtime 121,974
Contribution to recognized P.F 286,547
License & Renewal 672,787
Traveling Expenses 427,548
Conveyance 125,321
Entertainment 125,321
Advertisement 54,875
Telephone Expenses 494,637
Car Maintenance 311,458
Electricity Expenses 401,578
Printing & Stationery 161,587
Canteen Subsidy 115,487
Canteen Gas Expenses 45,154
Office Decoration 1,377,903
Office Rent 1,026,647
Postage & Photocopies 135,487
Paper & Periodicals 102,154
Telex & Telegram 120,248
Security Bills 71,125
Agency Commission 2,52,000
WASA 60,548
Deferred Revenue Written off 1,01,879
Bank Interest 8,65,128
Staff Welfare Expenses 4,58,796
Miscellaneous Expenses 1,48,845
Depreciation 4,681,665
Net Profit 10,362,924
34,283,865 34,283,865
(1) The company has paid VAT of Tk. 80,02241 against the payment of cost of
diesel which has been refunded for Export earning of Tk. 9,44,65,822.
(2) There was eleven taxable employees. The company has disbursed total
Tk. 35,40,000 out of Tk. 93,44,035 without complying with the provision
of section 30 (a).
(3) The Company has imported packing materials and fishing gear from Korea.
The custom authority has collected income tax of Tk. 2,40,500 from this
consignment at the time of delivery of goods.
(4) Wasa bill includes Tk. 30,000 for director’s personal residence.
(5) Excess perquisites of Tk. 360,300 paid to technical staff of the company.
(6) Crew, Captain salary and allowance include Tk. 360,300 as Income Tax of 5
Engineers engaged on contract basis paid on behalf of the Company to
Government Account.
(7) Insurance expenses charges in Trading Account include Tk. 2,18,500 found
to be director’s personal yearly premium.
(8) Miscellaneous expenses include Tk. 25,000 as donation to Local Orphanage
Center approved by NBR.
(9) Office Rent Claimed at Tk. 10,26,647 out of which rent @ Tk. 60,000 per
month paid without complying with the provision of section 53A of Income
Tax Ordinance 1984.
(10) Tk. 1,50,000 paid as picnic expenses of sister concern of the Company out
of Tk. 4,58,796 debited to staff welfare expenses.
(11) Export turnover tax rebate will be allowed for the company.
(12) Tax depreciation as calculated with reference to previous year final assessment
is Tk.33,90,000.
You are required to compute total Income, final tax liability allowing credit of
tax paid at Custom stage and tax paid on dividend income after considering
the above fact supplied by the Management.
XYZ Limited
Computation of total income and tax thereon
Income year ended on June 30, 2017
Particulars Note Amount Tk. Amount Tk.
Net profit as per profit and loss account 10,362,924
Less : Gross dividend income to be considered separately
(760,760)
Add : Refund of VAT against export sales Note - 1 8,002,241
Add : Accounting depreciation 4,681,665
Income from business 22,286,070
Add : Inadmissible Expenses :
Salary Note - 2 3,540,000
WASA bill Note - 3 30,000
Excess perquisite Note - 4 360,300
Insurance expenses Note - 5 218,500
Office rent Note - 6 720,000
Staff welfare expenses Note - 7 150,000
Entertainment expenses Note - 8 -
Misc. Expense (donation to orphanage) 25,000
5,043,800
Less : Fiscal depreciation (3,390,000)
Business income 23,939,870
Add : Income from other sources - Dividend 760,760
Total income 24,700,630
Computation of Tax liability
On business income of Tk. 23,939,870 @37.5% 8,977,451
On dividend income of Tk. 760,760 @ 20% 152,152
Total Tax liability 9,129,603
Less : Tax rebate on export earning Note - 9 2,748,394
Less : Tax rebate on donation to orphanage Note -10 2,500
Less : AIT collected by customs authority 240,500
Less : AIT on Dividend Income 114,114 (3,105,508)
Tax Payable u/s 74 of ITO 1984 6,024,095

Note - 1 : Refund of VAT against export sales.
Since the rate of VAT on export is zero, relevant input VAT turned into cost unless drawn back from the
Government. Therefore, the refund of VAT has been added to income.
Note - 2 : Inadmissible Salary.
In pursuance with sec 30 (a) of ITO 1984, payment of salary without deduction of tax at source is an
inadmissible expense.
Note - 3 : Inadmissible WASA bill.
The WASA bill relating to director's personal residence is not a business expenditure and therefore
disallowed.
Note - 4 : Excess perquisites.
The perquisite in excess of the limit prescribed u/s 30(e) is an inadmissible expense and therefore
added back to fiscal income.
Note -5 : Inadmissible insurance expenses.
The personal insurance premium of the director is not a business expenditure and therefore disallowed.
Note -6 : Inadmissible office rent.
In pursuance with Sec 30 (aa) of ITO 1984, payment of rent without deduction of tax at source u/s
53A is an inadmissible expense.
Note -7 : Staff welfare expenses.
The amount spent for the picnic of sister concern is not a business expenses of the assessee and therefore
disallowed.
Note -8 : Computation of allowable entertainment expenses u/s 30(f) of ITO 1984 read with rule 65 ofITR
1984 :
Business profit before entertainment expenses Tk. 23,914,870
st
Allowed on 1 Tk. 1,000,000 @ 4% Tk. 40,000
On the balance Tk. 22,914,870 @ 2% Tk. 458,298
Total Tk. 498,298
But restricted to actual expenditure of Tk. 125,321
Note — 9 : Computation of export turnover tax rebate as per clause 28 part A of the 6th Schedule :
Sales Tk. 154,283,278
Fiscal Profit Tk. 23,939,870
Fiscal profit on export sales Tk. 23,939,870/ 154,283,278 X 94,465,822
Tk. 14,658,099
Tax on the fiscal profit out of export sales 37.5% of 14,658.099= Tk. 5.496,787
Rebate 50% of Tk. 5,496,787= Tk. 2,748,394
Note — 10 In accordance with SRO # 229 of 04.07.2011, donation to an organization approved by

Board is considered as CSR expenses and against such CSR expenses, 10% rebate is allowed.
[25000X10% =2,500]
8 Nov
st
ABC Telecom Ltd. is a listed telecom company Enjoying Tax holiday since 1 Dec
September 2014 declared dividend 10% for the year and no dividend was paid last 2013
year. Statement of Financial position of the company as at June 30, 2017 is given
below:
Particulars 2016-2017 2015-2016
Non Current assets
Property, Plant and Equipment (net of 1,469,055,265 1,745,945,621
accumulated depreciation)
License fees 433,333,333 466,666,667
Investment 45,000,000 -
1,947,388,598 2,212,612,288
Current Assets
Receivables 56,734,179 54,512,957
Advances, Deposits and Prepayments 12,364,972 12,543,768
69,099,151 67,056,725
Total assets 2,016,487,749 2,279,669,013
Equity and Capital
Paid up Capital 500,000,000 500,000,000
Tax Holiday Reserve 424,409,174 137,061,174
Retained Earnings 636,613,761 205,591,761
Total Equity and Capital 1,561,022,935 842,652,935
Non Current liability
Loan (net of current maturity) 102,632,982 442,632,982
Current liability
Loan current portion 340,000,000 978,390,964
Payables, accruals and provisions 12,831,832 15,992,132
Total Current liability 352,831,832 994,383,096
Total Liability 2,016,487,749 2,279,669,013
Month wise income before tax is given below: Figures in million

Month International Access Network Dividend Income
Gate way (IGW) Services (ANS)
July '16 30,250,000 11,340,000
August '16 44,190,000 14,510,000
September '16 34,820,000 15,930,000 3,950,000
October '16 47,000,000 18,100,000
November '16 48,250,000 19,360,000
December '16 44,090,000 14,100,000 3,870,000
January '17 41,020,000 12,130,000
February '17 44,890,000 14,900,000
March '17 45,670,000 15,780,000 3,800,000
April '17 49,440,000 19,550,000
May '17 41,110,000 17,230,000
June '17 40,210,000 19,320,000 3,560,000
Total 510,940,000 192,250,000 15,180,000
Other information:
1. tax deducted at source Tk. 81,236,721 which includes Tk. 1,518,000

deducted from Dividend income and the balance from IGW bill;
2. excess perquisite given by the company Tk. 3,782,925;
3. entertainment expenses Tk. 24,572,890;
4. depreciation charged Tk. 231,890,356 but as per third schedule
depreciation is BDT 312,098,563;
5. amortization of license fees Tk. 33,333,333;
6. provision for gratuity Tk. 1,000,000;
7. provision for bad debts Tk. 5,000,000;
8. business promotion expenses Tk. 1,345,308; and
9. advertisement Tk. 650,000
10. Directors‘ Remuneration Tk. 25,000,000.
11. The company has deducted tax and VAT except on Business promotion
expenses of Tk. 1,345,308, advertisement Tk. 150,000 and Directors‘
remuneration of Tk. 25,000,000. The company paid withhold tax and
VAT with penalty against directors‘ remuneration before submission of
return.
Requirements 5
1. Compute total taxable income and net tax payable.
ABC Limited
Income Year 2016-2017
Month IGW ANS Dividend Total

Income
July' 16 30,250,000 11,340,000 41,590,000
August '16 44,190,000 14,510,000 58,700,000
September' 16 34,820,000 15,930,000 3,950,000 54,700,000
October '16 47,000,000 18,100,000 65,100,000
November 16 48,250,000 19,360,000 67,610,000
December '16 44,090,000 14,100,000 3,870,000 62,060,000
January '17 41,020,000 12,130,000 53,150,000
February '17 44,890,000 14,900,000 59,790,000
March '17 45,670,000 15,780,000 3,800,000 65,250,000
April '17 49,440,000 19,550,000 68,990,000
May '17 41,110,000 17,230,000 58,340,000
June '17 _ 19,320,000 3,560,000 63,090,000
40,210,000
Total 510,940,000 192,2500,000 15,180,000
15,180,000
718,370,000
Less: Income of July '16 & August
100,290,000
'16 being 100% tax holiday u/s-46B 74,440,000 25,850,000 -
436,500,000 166,400,000 15,180,000 618,080,000
Less: On balance 60% tax holiday 261,900,000 2 99,840,000 - 361,740.000
u/s-46B 5
Less: Dividend Income-exempted as per 10,000 10,000
11 A of 6th schedule part A
Taxable Income 174,600,000 66,560,000 15,170,000 256,330,000

Add: Disallowances for separate
consideration -
-Depreciation as per accounts 168,492,240 63,398,116 231,890,356
-Entertainment expenses 17,854,737 6,718,153 - 24,572,890
-Provision for gratuity 726,603 273,397 - 1,000,000
-Provision for bad debts 3,633,015 1.366,985 - 5,000,000
Add: Disallowed expenses
-Excess perquisite 2,748,685 1,034,240 - 3,782,925
-Business promotion expenses 977,505 367,803 - 1,345,308
-Advertisement 108,990 41,010 - 150,000
369,141,775 139,759,704 15,170,000 524,071,479
Less: Allowable expenses separate
consideration

Depreciation as per Third Schedule 226,771,768 85,326,795 - 312,098,563
142,370,007 54,432,909 15,170,000 211,972,916
Entertainment expenses (4% on 1st (2,867,400) (1,108,658) -
1,000,000+2% on balance amount) (3,976,058)
Total Taxable Income 139,502,607 53,324,251 15,170,000 207,996,868

Income tax 79,718,721 14,664,169 3,034,000 97,416,890
Add: Additional Charge U/S 16B 21,489,311 - 21,489,311
Advance tax 79,718,721 - 1,518,000 81,236,721
Net tax payable - 36,153,480 1,516,000 37,669,480
Notes :
1. It is assumed that ABC Telecom is not a Mobile Company.
2. Tax on IGW Tk-79,718,721(Tk-81,236,721-15,18,000) as TDS u/s-82C,related with
Section-52R.
3. Expenses are allocated on the basis of revenue.
4. Tax deducted from IGW considered u/s 82c, tax rate for ANS income 27.5% and
Dividend income 20%
5. Additional tax U/S 16B shall be payable as the Company declared dividend less than 15%.
Accumulated profit as on June 30, 2017 342,652,935

Add: Profit for the year as per accounts 718,370,000
Total Accumulated profit 1,061,022,935
Less: Paid up Capital (500,000,000)
Less: Dividend paid (50,000,000)
Less: Tax paid U/S 74 (81,236,721)
Undistributed profit 429,786,214
Additional Tax 21,489,311
9 X Ltd. is engaged in civil construction business. The profit and loss account of the May Jun
2014
company for the year ended 30 June, 2017 is given below:
Profit and Loss Account
For the year ended 30 June 2017
(Figures in
Revenues and gains Tk.)
Receipt from Civil Construction 47,60,000
Rent of godown 80,000
Claim against loss of plant & machinery by fire from Insurance Company (1) 2,00,000
Interest on company deposit 25,000
Dividend from Companies(Net) (2) 50,000
51,15,000
Costs and expenses
Opening Stock of building materials 40,000
Less Closing Stock of building materials (25,000)
Salary to Employees (3) 9,90,000
Incentive Bonus 3,00,000
Excess Perquisites 80,000
Purchase of building materials (4) 24,00,000
Donation (5) 90,000

Interest on Loan 3,20,000
Other administrative Expenses 2,47,000
Technical Service fees 13,000
Travelling Expenses (6) 1,40,000
Municipal Tax on godown (7) 12,000
Insurance Premium of Godown 8,000
Directors Remuneration (8) 2,53,000
Depreciation on Plant and Machinery (9) 65,000
Provision for Tax (10) 1,43,000
Total 50,76,000
Net Profit for the year 39,000
51,15,000
The following additional information are also available:-
(1) Claim was received against fire insurance taken for the plant and machinery at
book value of Tk. 4,20,000/-. The written down value was Tk. 1,85,000/-. The
plant and machinery destroyed in the fire was scrapped and disposed of at no
consideration.
(2) Dividend received Tk. 50,000/- net of Tax.
(3) Salary includes Tk. 20,000/= gratuity paid to employees during the year on
cessation of their employment. The company does not have any separate gratuity
fund.
(4) The entire building materials were purchased from a firm in which Managing
Director of the company was a partner. The fair market value of the materials
purchased was Tk. 20,00,000/-.
(5) Donation includes Tk. 50,000/= paid to Bangladesh Cricket Control Board,
Tk. 20,000/= to Zakat Fund and Tk. 20,000/= to ICAB
(6) Travelling expenses include costs incurred for Tk. 1,40,000/- against
overseas travelling by a director.
(7) Municipal Tax on godown includes other tax of Tk. 3,000/- not paid.
(8) Directors remuneration includes board meeting attendance fee of Tk. 50,000/= on
which no VAT has been deducted and deposited to the government treasury.
(9) The rate of depreciation on plant and machinery is 15% under the Third Schedule
of Income Tax Ordinance, 1984. The tax written down value of the plant and
machinery (still in use) brought forward on 1 July 2016 was Tk. 1,60,000/=. In
addition a new plant and machinery was purchased for Tk. 23,333/= during the
year.
(10) Tax provision is to be made as per law, based on the Profit and Loss
Account and the additional information provided here.
(11) The company issued 1,00,000 shares of Tk. 10/ each, at a premium of Tk. 3
each during the year.
Compute the total income of X Ltd. for the assessment year 2017-2018 and Tax liability.
You answer should include explanation of your treatment of various items.
X Limited
Income Year: 2016-17
Assessment Year: 2017-2018
Computation of total taxable Income and tax thereon
Taka Taka
Income from business and professional u/s 28
Net income as per books of accounts 39,000

Less: Income to be considered other heads
- Claim on insurance premium 200,000
- Interest income or deposit 25,000
- Dividend income 50,000
- Rent of godown 80,000
(3,55,000)

Add: Expenses to be considered as per ITO. 1984
- Depreciation 65,000
- Technical service fees 13,000
- Incentive bonus 300,000
- Foreign travelling 140,000
518,000
Add : Expenses to be considered under different head

Municipal tax on godown 12,000
Insurance premium on godown 8,000
20,000
Add : Expenses disallowed as per ITO-
Excess of fair value of building materials (2,400,000-2,000,000) 400,000
Donation Note:1 65,000
Director remuneration on which VAT has not been deducted 50,000
Tax provision as per accounts 143,000
Excess perquisites 80,000
738,000
Income against insurance claim in excess of WDV as deemed income u/s 19
15,000
Income before considering depreciation expense
975,000
Depreciation as per 3rd Schedule (160,000+23,333 @15%) (27,500)
Income after considering depreciation expense
947,500
Incentive bonus 10% of disclosed profit before provision for income tax (3,900)
Foreign travel 1% of total turnover but the actual will be considered as it is lower. (140,000)
Technical service fee @8% of assessed profit after depreciation or actual whichever (13,000) (1,56,900)
is lower
Taxable income from business or profession 790,600
Income from House property u/s 24-
Amount value of godown rent higher of -
(a) Rent received 80,000
(b) Municipal value - 80,000
Less: Allowable deduction u/s 25-
Municipal tax on godown excluding the Tk.3,000 which is other tax payable (9,000)
Insurance Premium paid on godown (8,000)
Repair and maintenance 30% of annual value (24,000) (41,000)
Income from House property 39,000
Income from other sources-
Dividend income exempted up to Tk. 10,000 as per 6th Schedule Part B. So
Grossed up taxable income (50,000/0.80) - 10,000 52,500
Interest on deposit (gross) 25,000/0.9 27,778
Total income from other sources 80,278
Total taxable income 909,878
Computation of tax liability-
Tax liability on income from business or profession @37.5% 296,475
Tax liability on income from house property @ 37.5% 14,625
Tax liability on income from other sources except dividend @ 37.5% 10,417
Tax liability on dividend 52,500 @20% 10,500
Total tax liability 332,017
Less: TDS on dividend (12,500)
TDS on interest on deposit (2,778)
Net tax liability 316,739
Notes:

1. As per SRO # 337/AIN/99 dated 17 November 1999, donation to Bangladesh Cricket Board is exempted up to
50%.
2. As per third schedule of the ITO 1984, depreciation on plant and machinery is allowed @ 20%. However. 15% is
considered in accordance with the question.
3. Payment of gratuity to employee is an allowable expenditure irrespective of having gratuity fund.
10 TWS Ltd. has been in the business of manufacturing office furniture since 2002. For the Nov
year ended December 31, 2017, its profit and loss account is as follows: Dec
Notes Tk. ‘000 Tk. ‘000 2014
Sales 4,800
Less: Cost of sales 1 2,600
Gross profit 2,200
Less: Operating expenditure:
Payroll costs 2 1,500
Directors’ remuneration 3 300
Freight and insurance 4 150
Finance charges 5 100
Donations 6 50
Utilities 7 75
Professional fees and subscriptions 8 85
Training and research 9 60
Entertainment 10 120
Foreign exchange loss 11 40
Provision for doubtful debts (trade) 12 30
2,510
( 310)
Add: Other income 13 400
Profit before taxation 90
Notes:
1. Cost of Sales Tk. ‘000
Included under cost of sales are:
Depreciation of fixed assets 300
Provision for stock obsolescence 74
Damaged stocks written off 26
2. Payroll Costs
Included under payroll costs are:
Provision for retirement benefits 80
Medical expenses of staff and family 46
Contribution to an overseas provident fund (unapproved) for an expatriate employee 16
3. Directors’ Remuneration
The directors’ remuneration comprises:
Directors’ salaries and fees 255
Leave passages 20
Entertainment allowances (utilized to entertain customers and dealers) 25
300
4. Freight and Insurance
Included under the above is an amount of Tk.3,000 paid to Safe Insurance Ltd.,
a company incorporated in Bangladesh, for insuring imported goods.
5. Finance Charges
Included under the above is an interest subsidy of Tk.16,000 paid by the
company in relation to loans taken by the employees from a bank.
6. Donations
The above comprise:
Cash donations to approved institutions 30
Donations of 5 television sets to approved institutions 15
Advertisement in souvenirs 5
50

7. Utilities
Included in the above are deposits of Tk.3,000 for water and electricity in connection
with the expatriate employee’s house.
8. Professional Fees and Subscriptions
The above comprise:
Audit and tax fees 35
Registration of trademarks 20
Legal fees in obtaining a term loan 17
Legal fees on recovery of trade debts 13
85
9. Training and Research
Included under the above expenses are:
Routine product testing and quality control expenses 16
Payments to an approved research and development company for the use of its
services. 33
10. Entertainment
The above comprises:
Dinners and lunches provided to suppliers 54
Meals and refreshments provided to employees during promotional campaigns 6
Salesman entertainment allowances (utilized to entertain customers and dealers) 60
120
11. Foreign Exchange Loss
The above comprises:
Foreign exchange loss on settlement of trade debts 27
Foreign exchange loss on purchase of machinery 13
40
12. Provision for Doubtful Debts (trade)
The above provision comprises:
Specific provision for doubtful debts 8
General provision for doubtful debts 15
Bad debts written off 7
30
13. Other Income
This comprises income derived from Bangladesh as follows:
Tax exempt dividend 154
Interest income 86
Dividend income (gross) 160
400
14. Additional Information
(i) The balances of the following provision accounts are as shown below:
December 31
2016 2015
Tk. ‘000 Tk. ‘000
Provision for stock obsolescence 180 120
Provision for retirement benefits 302 254
Provision for doubtful debts (trade)
- Specific 32 25
- General 72 60
(ii) TWS Ltd. has unabsorbed tax losses and unabsorbed depreciation allowances
brought forward from the assessment year 2016-2017 of Tk.162,000 and
Tk.103,000 respectively. The depreciation allowances claim for the assessment
year 2017-2018 is Tk.124,000.
Required:
Compute the total income and tax liability of TWS Ltd. for the assessment year
2017-2018.

TWS Ltd.
Assessment year: 2017-18
Accounting year ending on 31 December 2016.
Particulars Note Taka 000 Taka 000

Net Profit / (Loss) before tax as per audited financial statements 90
Income to be considered separately under appropriate head:
Other income 400
Profit from business as per audited financial statements (310)
Items of expenditure added for later consideration:
Depreciation of fixed assets as per audited financial statements 300
Provision for stock obsolescence 1 74
Provision for retirement benefit 2 80
Director's remuneration (entertainment allowance) 3 25
Donation to approved institutions 4 45
Entertainment allowance 3 120
Provision for doubtful debts (trade) 5 23 667
Inadmissible expenses:
Contribution to unapproved overseas provident fund 6 16
Interest expense of staff loan borne by the company 7 16
Deposit for water and electricity with expatriate employee house 8 3 35
392
Admissible income/ (expenses):
Written off provision for doubtful debts 5 (4)
Written off provision for obsolescence of stock 1 (14)
Retirement benefit paid 2 (32) (50)
Income from business or profession before considering depreciation, 342
Entertainment allowance, unabsorbed tax loss and unabsorbed depreciation
Tax depreciation for the assessment year 2017 - 18 (124)
Profit after depreciation 218
Entertainment allowance On Tk. 218,000 @4% 3 (8.72)
Business income after entertainment allowance 209.28
Set off unabsorbed tax loss 9 (162)
Set off unabsorbed fiscal depreciation 10 (47.28)
Income from business or profession -
Income from other sources

Dividend income 154 -
Exempted in full (since as per question it is tax exempt) (154)
Interest income 86
Dividend income (gross) 160
Income from other sources 246
Total taxable income 246
Income Tax Payable on Total Income Note Taka’000
Tax payable on dividend income of Tk.86,000@20% 17.20
Tax payable on other income of Tk.160,000@35% 56.00
73.20
Investment tax credit 4 (6.75)
66.45
Advance income tax paid -

Net tax payable 66.45
Notes:
1. Provision for stock obsolescence is disallowed in income tax assessment and direct write off of
stock is allowed as deduction. Further write off of provision for stock obsolescence tantamount to
actual write off and as such is considered as deductible expenses as determined below:
Particulars Taka
Opening provision for stock obsolescence 120

Provision made during the year 74
Provision written off (balancing figure) (14)
Closing provision ( 14)
180
2. Provision for retirement benefit is disallowed in income tax assessment and actual payment
is allowed as deduction as determined below:
Particulars Taka
Opening provision for retirement benefit 254
Payment made (balancing figure) (32)
Closing provision for retirement benefit 302
3. Entertainment allowance is separately considered as per rule 65 of the Income Tax Rules ,1984;
4. Donation to approved institutions (30+ 15) is considered for investment tax credit as per
paragraph 22 of Part B of the Sixth Schedule of the income Tax Ordinance, 1984. 15% on Tk. 45,000
=Tk.6,750;
5. Provision for doubtful debt is disallowed in income tax assessment and direct write off of receivable is
allowed as deduction. Further written off provision for doubtful debt tantamount to actual write
off and as such is considered as allowable deduction as determined below:
Particulars Taka
Opening provision for doubtful debts (specific & general) 85
Provision written off (balancing figure) (4)
Closing provision 104
6. Contribution to unapproved overseas provident fund is disallowed as per section 30(d) of the ITO,
1984;
7. Interest expense of staff loan borne by the company is considered as non business expense;
8. Deposit for water and electricity is considered as security deposit and recoverable at the end of
tenancy;
9. Carry forwarded tax loss is adjusted before unabsorbed depreciation as per section 42(6) and 42 (7)
of the ITO. 1984;
10.Unabsorbed fiscal depreciation up to Tk.47, 280 has been adjusted this year and remaining Tk.55,720 has
been carried forwarded.
11 May
ABC Ltd., a publicly traded company incorporated and operating in Bangladesh, is Jun
70% Bangladeshi owned and is a manufacturer of refrigerators, freezers and air- 2015
conditioners under the brand name ABC which is registered as a trade mark in
Bangladesh. The company is the owner of the brand. The profit and loss account for
the year ended 31 December 2016 is as follows:
Notes Tk.‘000 Tk.‘000

Turnover 161,596
Add: Interest income (1) 308
161,904
Less: Cost of sales (2) 115,416
46,488
Less: Salaries, wages, and bonuses (3) 7,040
Employees Provident fund (4) 1,536
Donation (5) 20
Advertising (6) 7,398
Rental of premises (7) 1,858
Travelling (8) 1,500
Foreign exchange loss (9) 280
Maintenance of plant and
machinery (10) 232
Bad and doubtful debts (11) 2,038
Freight and insurance 3,044
Depreciation 1,880
Motor vehicles expenses 582
27,408
Net profit before taxation 19,080
Notes:
(1) Interest income is from a fixed deposit placed with a bank in
Bangladesh. The interest was received during the year and has been
grossed up in the accounts. Interest income includes Tk.28,000 (gross)
earned but received by ABC Ltd. after 31 December, 2016.
(2) Cost of sales is arrived at after crediting Tk.80,000 in respect of the cost
of goods manufactured by the company, which were withdrawn from
stock for use of fixed assets by the company. The normal selling price
was Tk.120,000.
(3) Salaries, wages, and bonuses include basic salary of Tk.64,000 paid to
CFO in cash for month of January 2016,pension of Tk.20,000 and
contribution to the Gratuity (unapproved) Fund.
(4) The Employees Provident Fund contributionsby the employer and
employee each are at the rate of 10% for staff and 12% for executives.
(5) Donation is in respect of contributions made to a fund-raising campaign
organized by a distributor of the ABC brand of goods.
(6) Advertising:
Included is a sum of Tk.54,000 incurred on advertising the ABC brand
of goods on the internet via a host website located in Dhaka. The goods
are of export quality standard. No income tax and VAT were deducted
from the payment, as the company was not sure about the requirements
of such deduction.
(7) Rental of premises:
Included in the rental is a sum Tk.50,000 paid in respect of the early
termination of the lease of a building which the company vacated in
September 2016. The lease was to haverun for another 5 years. The
building was no longer suitable as a showroom for the company‘s
goods due to the construction of a toll plaza.
(8) Travelling includes:
(i) Vacation airfare and hotel accommodation costing Tk.36,000 for
important overseas customers.
(ii) Reimbursement to the directors of the company of salaries of
Tk.200,000 and Employees Provident Fund contributions of
Tk.25,000 in respect of drivers employed by the directors.
(9) The foreign exchange loss is in respect of the purchase of component
parts for manufacture. The realized loss amounts to Tk.14,000 only.
(10) Maintenance of plant and machinery includes the installation cost of a
machine amounting to Tk.34,000.
(11) Bad and doubtful debts comprise: Tk.
Bad debts recovered (238,000)

Specific provision brought forward (1,902,000)
General provision brought forward (2,410,000)
Bad debts written off 240,000
Specific provision carried forward 2,750,000
General provision carried forward 3,598,000
2,038,000
The specific provision carried forward includes a sum of Tk.26,000,

being the balance of a personal loan granted to a director who has now
resigned from the Board.
(12) Depreciation allowances have been computed at Tk.1,644,000 for the
assessment year 2017-18, but without taking into account the following
acquisitions:
Machine:
On 14 August 2016 the company purchased a machine at a cost of
Tk.366,000. The sum of Tk.34,000 mentioned in note (10) was incurred
on preparing the site for installation of this machine. The machine
commenced to be used for the business two weeks after acquisition.
Motor car:
A new car costing Tk.4,400,000 was purchased on 9 July 2016 for the general
manager.
(13) Dividend has been paid at the rate of 30% (20% cash, 10% bonus) for
the year ended 31 December 2015.
(14) The company has a capital loss Tk.1,000,000 carried forward from the
assessment years as follows:
2009-10 Tk. 200,000
2010-11 Tk. 300,000
2011-12 Tk. 400,000
2012-13 Tk. 100,000
Tk. 1,000,000
The loss carried forward from the assessment years includes:
(i) 2009-10: Tk.100,000 depreciation allowance.
(ii) 2012-13: Tk.50,000 loss under the head ―Capital gain‖.
All other losses carried forward relate to business income.
Requirements:
a) To Compute the total income for the Income year ended 31 December 2016
Corresponding to assessment year 2017-2018.
b) To compute total tax liability for the year.
While making the above computations any non-compliance of the relevant provisions
of the tax laws (Income Tax as well as VAT) by the Company are to be considered
strictly in accordance with the legal provisions for such non compliance. Use the
current income tax provisions, ignoring the proposals given in the Finance Bill, 2018.
If considered necessary, you may make assumptions in the light of the relevant tax
provision.
ABC Ltd.
Assessment Year: 2017-18
Accounting Year ended on 31 December 2016
Note Taka’000 Taka

Particulars '000
Net Profit before tax as per audited statement of accounts 19,080
Less. Income to be considered separately under appropriate head:
Interest income (308)
Net Profit from business as per audited statement of accounts 18,772

Add: Items of expenditure for separate consideration:
Depreciation as per audited financial statements 1,880.00
Foreign exchange loss 280.00
Inadmissible expenses:
Salary paid in cash 64
Donation to unapproved sector 20
Advertising expense paid without deduction of income tax and vat 54
Contributions
VatVVAT to unrecognized provident fund 4 1,536
Reimbursement of director's driver salary and provident fund
225
contribution
Installation cost of plant and machinery (being capital nature) 34
Provision for bad and doubtful debts 5 2,276
4,209
25,141
Bad debts recovered 238
Admissible income/(expenses): 25,379
Written off provision for doubtful debts (240)
Realized foreign exchange loss (14) (254)
Income from business or profession before considering depreciation,

unabsorbed business loss and unabsorbed tax depreciation loss 25,125
Tax depreciation for the Assessment Year 2017-18 6 (2,224)
Profit after depreciation 22,901
Set off unabsorbed tax depreciation loss 7 (100)
Set off unabsorbed business loss 8 (450)
Income from business or profession 22,351
Income from other sources
Interest income 308
Total income 22,659
Income tax payable on total income @27.5% 6,231.23

Income tax deducted at source 10 (28.00)
Net tax payable L

6,203.23
Notes:
1 Taxable income and income tax payable thereon has been computed considering the provisions of the
Finance Act 2017;
2 It is assumed that no revenue is recognized for cost of goods transferred as fixed assets since there was
no gross inflow of economic benefit.
3 Pension is exempt from income tax in the hand of the recipient by paragraph 8 of the Sixth Schedule Part
A of the ITO, 1984 and hence the provision of Section 30 (d) is not applicable here. Since Gratuity Fund is
un-approved., contribution to such fund will be inadmissible. However, since the question does not
mention about amount of contribution to such Fund, no amount has been disallowed here.
4 Provident Fund
It is assumed that the provident fund is not recognized by the Commissioner of Taxes
5. Provision for bad and doubtful debts: Taka '000
Total provision brought forward (Tk. 1,902+ Tk. 2,410) 4,312

Provision written off during the year (240)

Provision made during the year (balancing figure) 2,276
Total provision carried forward (Tk. 2,750+ Tk. 3,598) 6,348
6. Tax depreciation Taka '000

Depreciation allowance computed 1,644
Normal depreciation on machinery (Tk. 366 + Tk. 34)x20% 80
Initial depreciation on machinery (Tk. 366 + Tk.34)x25% 100
*Normal depreciation on new car (Tk. 2,000)x20% 400
2,224
* As per Para 11 (6) (a) of the Third schedule of the ITO 1984, the actual cost of the motor car, not
plying for hire, shall not exceed Tk.20,00,000/. As the purchase price of the motor car exceeds the
said limit, depreciation has been calculated on deemed purchase price (i.e. twenty lakh taka).
7 As per Section 42 (6) of the ITO, 1984 unabsorbed depreciation loss can be carried forward for set
off with business income for unlimited period of time;
8 Unabsorbed business loss:

Total Loss 1,000
Depreciation allowance carried forward AY 2009-10 (100)
Loss carried forward under the head "Capital Gain" (50)
Business loss not eligible for set off under Section 38 (b) of the ITO, 1984:
For the AY 2009-10 (200-100) (100)
For the AY 2012-13 (300) (400)
450
9 The company did not pay cash dividend of 30% or more and hence not eligible for any income tax
rebate;
10 Income tax deducted at source: Taka ‗000

Gross interest income 308
Accrued interest (28)
Realized interest income 280
Income tax deducted at source @ 10% 28
12 Mr. SMART (Bangladeshi), a civil engineer, is the MD of four operational entities, popularly Nov
nd
called SMART group. His first unit is Smart Constructions Ltd. (SCL) in Dhaka, 2 one is Smart Dec
rd
Re-rolling Mills Ltd.(SRML) in Savar, the 3 unit is Smart Trading Limited(STL) in Dhaka and 2015
4th one is a trading arm(a branch of STL) in Italy engaged in sourcing EU-origin construction
materials for Bangladeshi market including Smart construction projects. His wife, an architect,
holds 10% with him in the limited companies. All units of Smart group follow accounting
periodicity ‗July-June‘.
Key information from SCL financial statements for the period ended 30.06.2017 are (amount
in Taka): Revenue Tk.500,000,000/=, Gross Income Tk.179,500,000/=. Other income
Tk.1,500,000/=, Admin expense Tk.150,000,000/=, Financial expense Tk.11,000,000/=,
Profit before tax Tk.20,000,000/=, Equity (share capital plus accumulated surplus)
Tk.40,000,000/=.
Information gathered from SCL Financials (For consideration when computing total income)
1. Other income includes the following:
i) Two units of Excavator (original cost Tk.1,000,000/=, tax WDV Tk.700,000/=)
sold for Tk.1,200,000/=. Company bought a replacement excavator for
Tk.600,000/= on 25.06.17 under intimation to DCT. The new excavator was
purchased by a bank loan.
ii) Loss of Tk.300,000/= on sale of one unit Loader (Cost Tk.1,000,000/=, tax
WDV Tk.400,000, Sale Tk.100,000/=.
iii) Tk.1,200,000/= on sale of old vehicles (Cost Tk.900,000, tax WDV nil, fully
depreciated)
iv) Drop in market price of the shares (of a listed company) Tk.100,000/= charged.
v) A unit of used bulldozer sold for Tk.1,000,000 (Normal profit Tk.200,000/= tax
WDV in book Tk.800,000). This bulldozer was bought three years ago to replace a
similar asset which was then sold at a capital gain of Tk.300,000/= on which
capital gain tax was not paid u/s 31, 32(5)(b), being the capital gain on that sale
was less than the replacement cost of the present bulldozer.
2. Admin expense include the following:

i) Depreciation on a SUV car depreciated at 20% p.a. on its purchase price of
Tk.4,500,000/=(bought on 01.01.2017).
ii) Salary and allowances paid to Chief Engineer total Tk.7,500,000 (including
Tk.750,000/= as house rent allowance, being less than 50% of the total basic
salary paid). Salary and allowance include basic salary, housing allowance,
festival bonus and leave allowance).
iii) Overseas traveling expense Tk.4,500,000/= including Tk.700,000/= incurred on
a/c of CFO‘s trip to Rome on five-day company business accompanied by his
spouse (BoD approved this on the principle of commercial expediency). Couple
stayed with family of CFO‘s friend when in Rome.
iv) Office common service charge paid to the lessor Tk.1,500,000/= (VAT has not
been paid thereon by SCL as it doesn‘t constitute ‗office rent‘ to the lessor under
Service Code S074).
v) Guest house rent Tk.1,200,000/= (which is rented for providing accommodation to
an expatriate engineering consultant on three-year contract). Expat consultant
holds work permit with disclosed ‗basic and ‗overseas allowance‘ plus tax on
expat salary and allowances payable by company (tax assessed per work permit
disclosure and cleared).
vi) Tk.500,000/= paid as commission to MD‘s spouse for her hands in getting a
Government building project for SCL. Company maintains a policy of paying
broking commission on securing construction projects.
3. Financial expense includes interest paid to a developer company for the defaulted
installment on a/c of purchase of an office floor for the company. Purchase price is
Tk.3,000,000/=, 75% paid off, balance delayed on which an interest paid to the
developer Tk.250,000/= per agreement.
4. Further information on Smart Construction Ltd. for the year ended June 30,
2017:
i) SUV bought for MD for Tk.4,500,000/=. Section 19(27) of the Ordinance
skipped attention.
ii) SCL has significant borrowings from banks. SCL lent interest-free
nd
Tk.2,500,000/= to its sister concern(the 2 unit). Proportionate interest cost
350,000/=.
The Branch in Italy and Smart Trading Ltd. :The trading arm in Italy is a branch of STL,
nd
a PE in Italy. STL investment of Italian branch has regulatory approvals. The 2
company of Smart group (the steel re-rolling unit) was in financial strain a year ago when
the Italian arm had idle funds. Having been approved by Regulators, Mr. Smart managed
a foreign loan from the Italian arm to his re-rolling unit in Savar at 5% p.a on which the
Italian branch received an interest earnings of net Tk.4,000,000/= after deducting tax at
20% (u/s 56(1)). Italian branch closed accounts on 30.06.2015 showing a tax adjusted
‗trading business profit‘ of eqvt Tk.10,000,000 (tax paid in Italy taka equivalent
Tk.2,750,000/= at 27.50%). Bangladesh corporate tax rate is 35%. According to
Bangladesh-Italy DTAA, interest income may also be taxed in the Contracting State in
which it arises and according to the laws of that state, but if the recipient is the beneficial
owner of the interest income, the tax so charged shall not exceed 15% of the gross
amount of the interest. Smart Trading Limited (STL) made a net loss of Tk.3,150,000/= in
Bangladesh business for y/e 30.06.2017.
You Joined Smart Group: You are a newly-qualified ACA. You joined SMART Group as
Group Tax Manager. Smart Construction Ltd. has a pending tax appeal case (first
Appeal). Pending the appeal decision, a new development surfaces before you followed
by a request from Appeal Commissioner for a financial grant and a souvenir advert for a
school in his village that now pops up ethical situation for you to handle. You and
Commissioner come from the same district and know each other very well.
Expansion into new Tiles Factory: Mr. Smart understands industry well and expansion
with core competency is his outlook. His next plan is to operate a ceramic tiles factory.
Smart Trading Ltd. (STL, the 3rd unit of Smart group) is capable to sell tiles and other
building solutions, whereas STL business of imported trading is erratic now due to Govt
fiscal slaps on imported materials. STL has built accumulated loss as on 30.06.17. Mr.
Smart is keen to utilize STL retailing capacity for the tiles factory. An in-operation tiles
factory ‗Trendy Tiles Ltd.‘ (TTL) is on offer for acquisition. Mr. Smart is in the middle of
three options – whether to merge STL with TTL or acquire TTL assets or buy TTL
shares. Before he decides, Mr. Smart wants to listen to a tax-neutral advice on the three
options hinting the (i) ability of STL to carry forward and set off its losses against the
future profit of the acquired and (ii) avoidability of capital gain tax on the transfer and
consideration under the provisions of Income Tax Ordinance 1984.
Requirements:
a) Calculate the total income and tax payable of Smart Construction Ltd. for the income
year ended 30.06.2017. Your answer should include separate computation for Capital
Gain tax. Explanation/appropriate assumptions in support of your adjustment to the
disclosed profit should be given.
rd
b) Compute tax liability of Smart Trading Ltd. (STL, the 3 unit) for the period ended
30.06.2017.Computation should clearly reflect the relief, if any, under DTAA.
c) Evaluate ethical issues and explain how you would take up the Commissioner‘s
request with your MD and how you would conclude on the matter. Your explanation
should cover appropriate threats and safeguards, if any, and your conclusion on the
matter with actions.
d) Brief three options (STL to merge with TTL, STL to acquire TTL assets, STL
to acquire TTL shares) in terms of the pros and cons under the provisions of the
Ordinance so as to address Mr. Smart‘s interests.
(a) Computation of Capital Gain and Gain Tax of Smart Construction Ltd. u/s 31:
Sales - WDV Business income Capital Gain

(i)Sale of Excavator 5,00,000 3,00,000 2,00,000
-------
(ii)Sale of Loader (3,00,000) (3,00,000)
(iii)Sale of old vehicles 12,00,000 9,00,000 3,00,000
(iv)Drop in m/v of shares (100,000) ------ ---

(v)Sale of Bulldozer 2,00,000 2,00,000 3,00,000
Total 15,00,000 11,00,000 8,00,000
Less: Capital gain on sale of excavator not to be taxed as option exercised u/s 32(5)
of ITO,1984 (200,000)
6,00,000
Capital Gain Tax at 15% 90,000
Note:
(i)Sale of Excavator: Sale 12,00,000 - WDV 700,000 = Profit 5,00,000(Business income 300,000,
Capital Gain 200,000). There will be no capital gain tax on taka 200,000/= as the amount is less than the new same
capital asset purchased by the company, even at bank loan. So, taka 300,000/= shall be added to the
business income u/s 28 of the company. Ref sections are: - 19(16), 32(5)(b) & 28.
(ii)Sale of Loader: Sale 1,00,000 -WDV 4,00,000=business Loss 300,000/=. This
loss is fully deductible and chargeable against revenue during the year. Ref section 29(1)(xi) read
with Para 10(c) of 3rd Sch.
(iii) Sale of old vehicles: Sale 12,00,000 - WDV nil = Total gain 12,00,000/= (Business income
9,00,000, Capital Gain 3,00,000).
(iv) Drop in m/v of listed company shares-not to be recognized as loss due to the fact that it was not
sold. So this is not deductible.
(v) Sale of Bulldozer. This was a replacement asset three years ago when a capital gain of taka
3,00,000 was not taxed u/s 31 & 32(5)(b). To compute the profit on present sale of this bulldozer, the WDV
shall be reduced by the earlier capital gain which was not taxed three years ago on the same asset replacement.
So, WDV for the purpose of computing business income u/s 19(16) of this bulldozer shall be 8, 00,000/=
less 3,00,000 = 5,00,000/=. Total gain on present sale of bulldozer should therefore be:
200000+300000=500000/=(Business income 200,000+capital gain 300,000)
Computation of Total Income of Smart Constructions Limited u/s 28:

Taka Taka
Disclosed profit before tax 2,00,00,000
Less: Entire other Income (for separate consideration) 15,00,000
1,85,00,000
Add: Business income on sale of various assets (note above) 11,00,000 1,96,00,000
Add: Inadmissible exp-

(i) Accounting depreciation on SUV 20% on 45,00,000 9,00,000
Less: Tax depreciation on SUV 20% on 25,00,000 5,00,000 4,00,000
(Para 11(6) of 3rd sch. Applied max ceiling as per F.A 2017)
(ii) House rent paid to Chief Engr. Taka 7,50,000/=. This is a perquisite.
Addition for excess perquisite (750000 - 450000= 3,00,000). 3,00,000
(Section 30(e),2(45). F.A. 2017 applied.)
(iii) Overseas Traveling Expenses incurred by CFO taka 700,000/= Admissible. ------
This is incurred on commercial expediency, under BoD approval. Hotel cost saved,
Moreover overseas travelling exp. Tk.45,00,000/ is within the limit of 1%
of turnover u/s 30(k). Tk.500,000,000/ x 1%=50,00,000/
(iv) Office service charge paid to Lessor taka 15,00,000/—.

(This is inadmissible u/s 30(aa) as the payment is not VAT-exempted as per 15,00,000
2nd Sch. or by any specific SRO of VAT. VAT SRO 182 of 2012 for truncated VAT rate
9% on office rent(S074.00). Office service charge paid to the same lessor
under same lease agreement should be assumed to attract same VAT as office rent.)
(v) Guest house rent taka 12,00,000/= for Expat Eng. Consultant.
Consultant's personal tax assessed and cleared only on basic pay
and overseas allowance as per BIDA permission. Therefore, the guest
house rent deduction claimed by the company is inadmissible 12,00,000
(vi) Commission paid to MD's wife in securing business
should be admissible as any other ordinary commission. -----
(Assumed tax deducted).She is 10% shareholder but not the shareholder
director of the company. So the restriction of section 30(L) would not be applicable.
(vii) Interest paid to Developer on defaulted installment payment on a/c of
office floor space. Inadmissible expenditure as no such expenditure is
allowable u/s 29. Moreover it is part of capital expenditure. 2,50,000
(viii) SUV bought for taka 45,00,000/= but section 19(27) missed compliance.
Tax on this shall be considered later at income from other sources u/s 33 (Equity
4,00,00,000/=. 10% of this 40,00,000/=. SUV price 45,00,000/=
Excess of SUV price over 10% of Equity = 5,00,000/x 50% of this 2,50,000/=
(ix) Proportionate interest for lending interest free loan to
Sister concern as per section 29(1)(xxvii) 350,000
- - - - - - - - - -

Income from business as per section 28 2,36,00,000
Computation of Tax Liability of SCL

Amount Tax Rate Tax Amount
Income from business u/s 28 2,36,00,000 35% 81,60,000
Income from other source u/s 33(d)
(tax on SUV purchase, Section 19(27)
50% of 10% Excess of Cost over Equity 2,50,000 35% 87,500
Capital Gain u/s 31 6,00,000 15% 90,000
Total Tax 83,37,500
b)
Branch of Smart Trading Ltd.(STL) in Italy is a tax non-resident assessee but a Permanent Establishment(PE) in
Italy. STL, being a resident assessee in Bangladesh computes its total income and tax liability world-income
basis. The Computation of tax liability of STL shall, therefore, be as follows for the income period ended
30.06.2017 (Assessment Year 2017-18), amount in Bangladesh taka:
Particulars Income Tax Rate Tax Liability

Amount
Net profit (loss) before tax of STL (31,50,000)
ADD:
Trading profit (tax adjusted) of STL Branch in Italy 1,00,00,000
27,50,000x 100
27.50
Interest income of Branch in Italy 40,00,000 x 100 50,00,000
(100-20)
1,18,50,000 35% 41,47,500
Gross Tax
LESS:
Tax paid at source in Bangladesh on interest income by STL 10,00,000
branch in Italy. 50,00,000 x 20
100
31,47,500
LESS:
Foreign tax credit on tax paid in Italy on the income of the STL 27,50,000
branch in Italy as per provision of section 144(4) read with 7th
Schedule (Para-2).
Balance Tax Payable 3,97,500
Note: Branch in Italy, not being beneficial owner of the interest income, cannot take advantage of the DTAA for lower
tax rate of 15% on interest income.
(c)
I am at a fix what to do. Following circumstances are going through my mind:
(1) Causes of the requested grant and advert are social (school), not for the Commissioner.
(2) MD expects delivery from me on the appeal case that involves huge disputed tax demand.
(3) MD may not deny the request for grant weighing on gravity of the appeal case and social causes.
(4) MD may be upset if the appeal decision is not coming his way.
(5) My commitment in new job is either not less, appeal case may sound an opportunity to prove.
(6) How will MD react if appeal decision coming negative even after making the grants and advert.
(7) If we regret and appeal decision coming negative, MD might take ‗an opportunity slipped away‘.
(8) Commissioner hopes for a positive response from me as closely known and for appeal case.
(9) This may be an inducement which may influence appeal judgment of the Commissioner.
(10) Making grant and favorable appeal decision may sound buying the decision which is unlawful.
(11) Relationship with the Commissioner in future may turn lukewarm, if not sour, if I fail to meet.
(12) This is the first appeal; either party unhappy with the order shall make further appeal.
With the above in my mind. I now identify the various threats as I see in my handling the issue. Commissioner‘s request
for grant and advert for his school may be coined as a form of pressure for ‗inducement‘ to gain a favorable
appeal decision for my company, an element of intimidation threat. Commissioner's request is a commercial
pressure from outside, a sense of intimidation threat. My acquaintance with Commissioner and we both being in
same association may influence my decision to advise MD to agree, a case of familiarity threat. If Commissioner's
request is not met and appeal decision comes negative, MD may get upset this may cost my new job, issue of
self-interest threat.
I am a PAIB. obliged to comply all IESBA fundamental principles including Professional Behavior as it
imposes obligation on me to comply relevant regulations and avoid any action that may discredit my
profession. If I am seen to act ethically, demonstrating my professional obligation, my conduct may rather be
appreciated both by my MD and the Commissioner. I must work ethically above all doubts of identified
threat. In my evaluation, the threats identified are significant. I am in the middle of sensitive issue,
knowing that my MD would seek my advice when I would discuss the issue with him. My connection
for the grant decision (advising MD) and the matter between appeal decision and company benefits are deep
and significant. Nature of the issue is significant. I should not make an inducement which may hint a wrong
intent and may improperly influence the Commissioner in appeal decision. Although school would benefit,
not the Commissioner, both are associated. Smart group doesn’t have any social giveaway policy
to consider to assume as a safeguard for my advice to MD. If the inducement results into influence
to gain appeal decision for the company, it would be an unlawful act. Under the circumstances, I would handle
the situation in the following manner to uphold ethical principles:
I shall pass on Commissioner's request for grant and advert to my MD, brief him about pending appeal
decision with the Commissioner, my position as a PAIB and the ethical principles that apply to my
job. Finally, I shall advise my MD not to give in to Commissioner's request. I shall seek my MD‘s
permission to visit the Commissioner to communicate our decision to him.
I shall personally visit the Appeal Commissioner and shall also brief him about my ethical threats as
PAIB if responding to his requests at this moment. I shall tell him about the discussion me and my
MD have done on this. I shall convey him our wishes for the continued success of his social projects
including his school. Finally, I shall conclude the meeting with Commissioner after my final words
of regrets for not being able to respond to his requests under the circumstances, prominently pushed
by ethical threats.
(d)
Mr. Smart wants brief about tax law provisions with respect to imaginary options of `STL amalgamating with
―TTL‖ and `STL to acquire TTL assets‘ and `STL shareholders to acquire TTL shares‘.
SR to amalgamate with TTL: An amalgamation u/s 2(2) does not involve transfer of capital assets subject to
capital gain tax and also the carry-forward of amalgamating company loss is not legally possible u/s 42(4).
STL is transferor or amalgamating company, TTL is transferee or amalgamated company. Section 2(2) provided three
conditions: (i) all assets of STL shall become assets of merged TTL after merger, all liabilities of STL shall
become liabilities of merged TTL after merger, minimum 90% of the shareholders(in value) of STL shall become
shareholders of merged TTL after merger by issue from TTL. Vesting the STL assets on TTL does not meet the
definition of ‗transfer‘ in the law u/s 2(66) and, so, no capital gain tax arises u/s 31 and 32. There is no sale of
capital assets in amalgamation u/s 2(2). There is no 'price' paid for the assets vested. Amalgamated company
issues shares to shareholders of amalgamating company without any payment for shares: the assets of
amalgamating company vest in amalgamated without any payment.
There is no mutual transfer of ownership of one item for the ownership of another in an amalgamation.
However, if amalgamation scheme conditions for TTL make consideration to the shareholders of STL partly

in shares and partly in cash, the 'cash consideration' shall attract measurement of capital gain for tax u/s 31,
32. Upon the amalgamation is effected under court sanction, the transferor or amalgamating company
stands dissolved, Carry-forward of the loss of amalgamating company for set-off against profit of
amalgamated company is not possible in that a discontinued company (STL) cannot carry forward its loss u/s
42(4).
STL to acquire TTL assets:Acquisition of assets involves tax liability on assets transfer on
Transferor / seller (TTL) and the carry-forward of the loss of the seller(TTL), if any, is not possible u/s
42(4). This is a deal of assets sale (entire TTL) to STL. Capital assets (as per agreement of assets and
consideration) transfer shall attract tax u/s 28, 31 and 32. If the assets consideration is shown lower to avoid
VAT and duties, section 19(8) may be applied for fair market value application. The right to carry forward
loss lies with the company which makes loss. So, TTL loss, if any, cannot be carried forward by STL after
TTL is bought over. Section 42(4) only allows the carry-forward facility in the case when a company is
succeeded by other by inheritance, not on ordinary asset sale.
STL to acquire TTL shares: Taking ownership by shares are two routes subscription from company and
transfer from the shareholders. In share subscription from company, no tax incurs on allotting company on the
receipt of subscription amount. If it is transfer of shares from shareholders (say, TTL shareholders to STL
shareholders), transfer attracts ‗capital gain tax‘ on the transfer u/s 31, 32, tax being on the seller. Re carry-
forward of loss of selling company (say, TTL), if any, the buyer (say, STL) cannot carry forward such loss
u/s 42(4), 38. Its is the right of the company to carry forward loss only which suffers it (here it is TTL)
and ‗continuity of same business in which the loss is incurred‘ is a condition for carry-forward which
practically ceases after TTL is bought by STL by way of share acquisition.
13 You are a Chartered Accountant and working in Y Ltd. (―Company‖) as a tax manager. The May
Company is engaged in the business of export of the goods manufactured by itself. The Jun
bank, through which export proceeds of Y Ltd. is received, deducts tax at the specified rate 2015
from the total export proceeds in accordance with the provisions of section 53BB of the
Income Tax Ordinance (―ITO‖), 1984. The export proceeds net of income tax deducted at
source under Sec.53BB received by Y Ltd. during the income year 2016-17 came to
Tk.100,000,000. Export income of Y Ltd. falls under the scope of section 82C of the ITO,
1984. Generally, the Company does not have additional income from export as referred to
in section 82C (6) of the ITO, 1984.
In the income year 2016-17, a warehouse owned by the Company since 1/7/2016 was
leased out to another company for a term of 3 years from 1/7/2016 at a monthly rent of
Tk.100,000 with an advance rental payment of Tk.900,000 to be adjusted with monthly
rental payments over 3 years. Y Ltd. received rent for the income year 2016-2017, but no
tax was deducted at source from the rent paid by the lessee. Nor any VAT was paid on the
rent. The repair cost of Tk.15,000, municipal tax of Tk.10,000 and insurance premium of
Tk.1,000 were paid for the warehouse during the income year 2016-17.
The net profit before tax for the year as per the draft financial statements for the income
year came to Tk.3,304,000. The net profit as per income tax comes to the same amount,
assuming no penalty/liability (if any) for non-deduction of tax at source by the tenant and
for non-payment of VAT. There is a tax refundable of Tk.150,000 for the last assessment
year 2016-17. The income (including advance) from warehouse and its related expenses
were deposited/paid out in cash into/from an undisclosed bank account of Y Ltd. and have
not been included in the draft financial statements. The purchase money of Tk.50,000,000
(total accumulated undeclared income of Y Ltd. over the last 2 assessment years) for the
warehouse was also paid from the same bank account.
The management of Y Ltd. is thinking of assessment of income of the Company for the
income year 2016-2017 under section 82C of the ITO, 1984, upon considering the tax
collected at source by the bank from the export proceeds as final discharge of tax liability.
In a meeting with the management team of Y Ltd. on tax issues, you have been asked to
consider whether it is possible to ignore income from house property so that no demand for
additional income tax arises. To discuss the issue further, a meeting would be held next
week.
Requirements:
Calculate the total income tax liability and further income tax amount payable after
adjustment of any amount(s) as per income tax law. Assume that the undeclared/
undisclosed income as above will now be declared/disclosed.
14 Wahab& Co. Limited, a listed public limited company with its registered office in Dhaka, has Nov
shown net profit of Tk. 837,413 in the audited accounts for the income year ended June 30, Dec
2017. 2012
You are required to compute total income and tax payable on correct return u/s 82 of the ITO
1984 indicating the assessment year and after considering the following facts :
a) Excess perquisites calculated u/s 30(e) Tk. 145,000
b) Salaries and allowances of Tk. 176,000 paid without complying with the provisions of section
30(a)
c) Registration expenses and fees include Tk. 215,701 found to be personal entertainment in
nature.
d) Advertisement and publicity expenses include Tk. 125,000 as donation to a local sports club.
e) Gratuity provision during the year is Tk. 677,937 but actual payment is 276,434.
f) Rent, rates and taxes claimed at Tk. 368,212 out of which Tk. 214,640 paid as rent without
complying the provision of section 53A of the ITO 1984.
g) Accounting depreciation as per audited accounts is Tk. 2,979,211 and tax depreciation as
calculated with reference to previous year assessment is Tk. 3,727,422.
h) Technical fee of Tk. 210,000 paid to foreign collaborators charged in the accounts.
i) Export turnover was 10% of the total sales of the company.
j) The company declared 60% dividend for the year.
Wahab& Co. Limited: A Listed Public Company.
Income Year ended June 30, 2017
Assessment Year 2017 - 2018
Particulars Notes Taka Taka
Net Profit as per audited Profit & loss A/C 837,413

Add: Items to be considered separately:
Technical fee 1 210,000
Accounting depreciation 2,979,211
Gratuity Provision 677,937 3,867,148
4,704,561
Add: Inadmissible Items:
Excess perquisites u/s 30(e) 145,000
Salaries and allowance – u/s 30(a) 176,200
Donation to a local sports club not allowable u/s 29 125,000
Registration fee included personal entertainment 215,701
Rent payment without TDS disallowed u/s 30(aa) 214,640 876,541
5,581,102
Deduct: Allowable or deductible items:
Gratuity Paid 276,434
Tax depreciation 3,726,422
Technical know how fee allowable @ 8% of profit 126,260 4,129,116
Tax thereon:
Tax @ 24.75% as dividend declared more than 20% of Tk. 1,451,986 359,367
Less: Export rebate of 50% on Export turnover of 10% of Tk. 359,367 17,968
Tax payable 341,399
Note-1: Technical Know how:
Allowable upto 8% of profit of Tk. 1,578,246 u/s 30(h) of ITO 1984
Note-2: Export Tax rebate:

10% of sale of manufactured goods is export so the company will enjoy 50% tax rebate on export business under para
28 of Part A of 6th Schedule of ITO 1984.
15 Silkway Group has two companies, Silkway Toiletries Ltd.(STL), an unlisted public Nov Dec
limited company in toiletries manufacturing business and Silkway Chemicals 2017
Ltd.(subsidiary of STL with 80% equity). The subsidiary operates a factory in old Dhaka,
closed due to Environment Directorate order not to run chemical factory in city area.
Silkway Toiletries Ltd. filed its tax return showing total revenue of taka five crore; profit
taka 5,000,000 for the year ended 30.06.2017 after debits and credits of the items revealed
from the examination of accounts of the company as follows:
DEBITS
1) Depreciation on revaluation of assets Taka100,000/=
2) COGS includes (a) taka 1,000,000 for direct materials bought from supplier on
which tds was not done u/s 52, Rule 16, (b) taka 500,000 paid to an enlisted tailor
for supply of uniforms for production floor workers on which tds was not done.
3) Insurance premium paid to BGIC taka 250,000 on 02.02.2017 without doing tds.
4) Paid taka 200,000 to Grameen phone Ltd. for mobile phone sets without doing tds
5) Provision for loss in subsidiary – Taka 500,000/=
6) Written off taka 50,000 representing the value of machinery missing from physical
verification.
7) Exchange loss linked to the income from foreign agent due to delay in remitting
the income.
8) Interest taka 100,000/= on overdraft to pay interest for failure to pay advance tax.
9) Written off taka 200,000/= long due from a missing party who was advanced this
sum for raw material.
10) Commission paid taka 250,000/= to a bank for forward contract (dated 25.06.17)
to hedge each risk involving settlement of import L/C dues due after a quarter.
11) Taka 500,000/= on a/c of free samples of finished goods given to
distributors(limited 1% of turnover)
12) Trade discounts to customers taka 1,000,000/= and distributors commission paid
taka 500,000/=.
CREDITS
Dividend taka 100,000/= on investment in an approved Alternative
Investment Fund
Capital gain on sale of fixed assets taka 100,000/=
Interest earned on security deposit at bank in Kenya, taka eqvt 100,000/=.
OTHER INFORMATION
 Unabsorbed depreciation brought forward from assessment year 2016-2017
 taka two lacs.
 Return filed for the income y/e 30.06.17 on 30.09.2017; assessment
completed on 30.11.17. Company‘s assessed income in the previous income
 year was taka 6,000,000/=.
 For the reported income year, the opening stock of toiletries was valued at
taka 35 lacs and closing stock of toiletries raw materials at taka 15 lacs.
These opening stock and closing stock were wrongly overvalued and
 undervalued respectively by 5% and 10%.
 Tds done on rent payment of taka 500,000/= but did not deposit to
treasury for about six months.
 A Chinese supplier breached L/C terms to supply toiletries machineries

on order. Company received a liquidated damage for this eqvt taka
1,500,000/= which has not been credited to P&L. This machinery L/C
was done under 50% margin (taka 75 lacs) with a bank, funded by a
separate short term loan for same amount at 10% p.a. Company paid
interest on such loan taka five lacs and charged to revenue.
 Company acquired a delivery van under lease finance from a NBFI.

Registration was done in the name of the Company. Depreciation
charged taka 400,000/=.
 Company made exports of selected item of toiletries to Africa through

an agent in Kenya. Under permission from Bangladesh Bank, company
made an interest bearing security deposit with the agent‘s bank in
Kenya to cover product warranty in which interest earned was taka
100,000/=(tax paid thereon in Kenya, taka eqvt 15,000/= at 15%).
Customers total tds including tds by bank on exports realization taka
700,000/=. 
 Company paid advance tax taka 500,000/= during the income year.


(b)Silkway Toiletries Ltd.(STL) and its Managing Director own Silkway Chemical Ltd.
for 80% and 20% equity respectively. In the attempt to consolidate the business in the
face of closure of the Chemical subsidiary, the shareholders of Silkway Chemical Ltd.
resolved to wind up the subsidiary voluntarily vide EGM dated 31.08.2017. STL and its
MD acquired shares of SCL four years ago at 10% premium over the par value. Factory
land was registered to the shareholders at market value. Liquidator closed his account on
30.11.17 having paid off all liabilities as they are and disposed of all assets. Expenses
incurred during winding up process taka 100,000/= Net assets on EGM date prior to the
distribution to shareholders were as follows:
ASSETS:
Machineries net taka 500,000 (Original cost taka 4,500,000, Sold by Liquidator taka
300,000). Factory land taka 5,000,000 (market value taka 8,500,000/=). Cash and Bank
balance taka 1,500,000. Due from Silkway Toiletries Ltd. taka 1,000,000 against
chemical sale (r/m for toiletries)
LIABILITIES:
Share capital taka 5,000,000 (taka100 share). General Reserve taka 500,000. P&L App
taka 1,500,000. Payables to employees taka 500,000/=. VAT liability taka 500,000.
Requirements:
i)Compute total income and tax liability of Silkway Toiletries Ltd separately
showing computation of excess or shortfall of advance tax and explanation for
consequence.
ii)Show distribution upon liquidation, tax implication on Silkway Chemical Ltd. and
shareholders.
Silkway Toiletries Ltd.

Income y/e 30.06.2017. [AY 2017-18]
Computation of Total Income, Tax Liability and Others
Income from Business: Taka Taka
Shown Net profit
Less: Non-business income for separate consideration 5,000,000
(1)Capital gain 100,000
(2)Dividend from Alternative Investment Fund 100,000
(3)Interest from foreign bank deposit in Kenya 100,000
(300,000)
Add: Inadmissible expenses
(1)Dep. not allowable on revaluated assets 100,000
(2)Paid to enlisted contractual tailor u/s 30(aa) 500,000
(3)Paid to GP for mobile sets supply u/s 30(aa) 200,000
(4)Provision for loss is not allowable exp. u/s 29 500,000
(5)Machinery physically not found is not allowable u/s 29 50,000
(6)Commission for hedging as it is not allowable exp. u/s 29 250,000
(7)Office rent u/s 30(aa) as tds not deposited 500,000
(8)Adjustment for overvaluation of stocks:
Opening stock overvalued by 5% 166,667
Closing stock undervalued by 10% 136,364
2,403,030

Add: Compensation received from a Chinese company not credited 1,500,000
Less: Unabsorbed depreciation - carried forward for set off (200,000)
Business Income 8,403,030
Capital Gain 100,000
Income from Other Sources:
Dividend from AIF [note-11] 100,000
Interest on foreign bank deposit [note-12] 100,000
200,000
TOTAL INCOME 8,703,030
Tax calculation:
i)Tax on Business Income and interest income @35%
35% on 8,503,030 2,976,061
ii)Tax on Capital Gain (15% on 100,000) 15,000
iii)Tax on dividend 20% on 100,000 20,000
GROSS TAX LIABILITY 3,001,061
Less:
i)AIT 500,000
ii)Tds 700,000
total tax paid 1,200,000
NET TAX LIABILITY 1,801,061
Computation of simple interest for short payment of AIT:
Gross Tax 3,001,061
75% of tax comes at 2,250,796
Total AIT 1,200,000
Shortfall 1,050,796
43,783
10% interest on shortfall for 5 months 43,783
TOTAL TAX PLUS SIMPLE INT. DUE 1,844,844
Computation of Minimum Tax on gross receipts:
Gross revenue 50,000,000
Capital gain 100,000
Other source income 200,000
Gross Receipts 50,300,000
Minimum tax @ 0.60% on gross receipts 301,800
Notes:
[1]50% income rebate is applicable on export as per 6th schedule but as the export figure is not given in the
question so it is not possible to workout.
[2]Direct raw material purchase is not subject to tds and that's why not disallowed u/s 30(aa)
[3]Insurance premium paid to Insurance company is not subject to tds and that's why not disallowed u/s
30(aa)
[4]Exchange loss is allowable business loss as per section 29, so not disallowed.
[5]Bad debt Tk.2,00,000/( dues from missing supplier)is in connection with business, so allowed.
[6]Depreciation on leaseholdvehicles is allowable as per Third Schedule as it is finance lease. The
indication is that it was registered in the name of the company.
[7]Free sample exp. is within the limit prescribed at Rule-65, so nothing is disallowed from here.
[8]Interest on overdraft is allowable expenditure as per section 29 as business expenditure
[9]Trade discountTk.10,00,000 and distribution commission Tk.5,00,000/ is allowable expenditure

assuming that source tax was deducted properly from distributorship commission.
[10]Office rent fully disallowed assuming that source tax was not deposited before assessment.
[11] Dividend from Alternative Investment Fund (AIF) is taxable @ 20%. It should be noted here

that income of the fund itself is tax-free as per 6th Schedule (Part-A) Para-54, not dividend income in the
hand of shareholder.
[12] About interest income from Kenya: As there is no DTAA between Bangladesh and Kenya so no
foreign tax credit will be allowed as per section 145 as NBR not yet prescribed any rules in this behalf
b.
Silkway Chemical Limited

Distribution of assets to Shareholders upon Liquidation
Amount in
TAKA
INFLOW:
Machinery sold 300,000
Received from Silkway Toiletries 1,000,000
Cash and Bank Balance 1,500,000
2,800,000
OUTFLOW:
Expense 100,000
VAT paid 500,000
Payable settled 500,000
1,100,000
NET cash Available for Distribution 1,700,000
Distribution to Shareholders:
Total Silkway Toiletries Ltd. MD of STL
Ownership 80% 20%
Net Fund 1,700,000 1,360,000 340,000
Factory land 8,500,000 6,800,000 1,700,000
10,200,000 8,160,000 2,040,000
NOTE:
Machinery sold for 300,000/ against WDV 500,000/. Therefore, revenue loss taka 200,000/ (3rd Sch (
para-10) Factory land transferred at market value of Tk. 85,00,000/= against COA 50,00,000/ =
35,00,000/ is capital gains on Silkway Chemical Limited upon distribution of assets upon liquidation.
Total Silkway Toiletries Ltd. MD of STL
Amount of share capital in the company 5,000,000 4,000,000 1,000,000
No. of shares at taka 100 each 50,000 40,000 10,000
Cost of share to the shareholders at 10% premium 4,400,000 1,100,000
Deemed Dividend u/s 2(26) on the distribution:
Total assets value distributed to the shareholders 10,200,000 8,160,000 2,040,000
Less: Deemed DIV upto the accumulated profits 2,000,000 1,600,000 400,000
Balance after deemed dividend 8,200,000 6,560,000 1,640,000
Less: Share investment value (COA u/s 32(2)(i) 4,400,000 1,100,000
Balance -- Capital Gain u/s 31,32 in the hands 2,160,000 540,000
S/H
SUMMARY OF DISTRIBUTION TO SHAREHOLDERS:

Distribution to the extent of DEEMED DIVIDEND 1,600,000 400,000
Balance Distribution 6,560,000 1,640,000
Of which, Capital Gain 2,160,000 540,000

TDS on Dividend distribution by Silkway Chemical Ltd.
Rate of tds on company and individual 20% 10%

TDS amount on deemed dividend 320,000 40,000
Net dividend to shareholders 1,280,000 360,000
16 XYZ Ltd., a private company, is engaged in business segments that cover (i) mfg/trading of ceramic May June
tiles, (ii) mfg/export of leather products and (iii) international trading. Net profit of the company for 2017
the year ended 30.06.2017 is taka 50,00,000 after giving effect of the following items as
appropriate in the books:
i) License fee taka five lacs incurred for obtaining five-year franchise on 15 July 2016
ii) Paid cash Taka 50,000 to transport operator, Taka 150,000 to chemical supplier used in
tiles mfg.
iii) Rent taka five lacs received from letting out a part of its office premises.
Municipal tax in respect of the said part of the building amounting to taka 10,000
remains unpaid.
iv) Taka three lacs, being loss due to destruction of a machinery caused by a fire. The
insurance company compensated taka two lacs against the fire loss claim.
v) Taka 4 lacs and one lac being amounts waived by Janata Bank Ltd. out of principal and
arrear interest respectively in one-time settlement. Loan was obtained for working capital
need five years back.
vi) Dividend of taka 10,000 from Dell Ltd. on 1,000 equity shares of taka 10 each purchased at
taka 100 per share on 10th October, 2016. Dividend declared is 100%, the record date being
01.12.2016. Shares were sold on 1st March 2017 at taka 80 per share. Loss of taka 20,000
has been debited to PL account.
vii) Taka 50,000 paid to vendor of Office supplies on which VAT was not deducted.
viii) Depreciation on tangible fixed assets taka one lac including taka 50,000 on assets
revaluation.
ix) Taka 50,000 compensation paid to UK supplier for cancellation of machinery import
contract from UK.
x) Provision for deferred tax taka 1,00,000.
Additional Information gathered with respect to XYZ Ltd. for accounting year ended on
30.06.2017:
a. Depreciation on tangible fixed assets for the income year(relating to units other
than trading unit) as per income tax rules taka 1.75 lac.
b. Company obtained a loan of taka two lacs from ZXY Pvt Ltd. in which it holds
30% voting rights. Accumulated profits of ZXY Pvt Ltd. on the date of receipt of
loan was taka 50,000.
c. Company exports leather products to Spain. Balance Sheet (General Reserve:
Surplus on Devaluation) shows a credit of taka 1,75,000, amount realized and
brought in the income year from a Spanish customer as surplus on a/c of the
devaluation of BDT in 2015.
d. Company suffered heavy loss in its international trading segment. It was closed
down and the fixed assets linked to this trading unit were sold out. Company
claimed unabsorbed depreciation (on a/c of trading unit assets) of taka 50,000 in
the Return of income. Its not debited to PL a/c.
e. Under a debt restructuring with Agrani bank, the company converted arrears
interest taka 3,00,000 on term loan into a new term loan with a revised repayment
schedule. Company paid taka 50,000 towards such funded interest during the
year. Entire taka 3,00,000 debited to PL account.
f. Provision for bonus for the income year ended 30.06.2016, disallowed in same
income year, paid during the year ended 30.06.2017 taka 1,00,000.
g. Assessed brought-forward losses and unabsorbed depreciation as follows:
Losses Unabsorbed
Income Year Brought Forward Depreciation
2013-14 2 lacs 1 lacs
2014-15 ---- 3 lacs
2015-16 4 lacs 1.5lacs
Total taka 6 lacs taka 5.5 lacs

h. Tannery at Hazaribag: In connection with its leather manufacturing unit, XYZ Pvt Ltd.
operates atannery at Hazaribag. Complying the court decree involving a case with the
Government, Company transferred its tannery unit to Savar in which it incurred an expenditure
approx. taka 25,00,000 for transfer of entire unit that includes sheds, machineries, equipments,
raw material and finished leather.
Company also incurred taka 5,00,000 as legal fees as a member of Tannery association to
contest the court case which it lost. These payments shall hit accounts of the current income
year.
Planned Expansion on a Retailing unit: Company‘s ceramic tiles is not selling that well through
its dealers. Management of XYZ Pvt Ltd. identified the probable causes to such slide in
business. Management considers that a watertight retailing entity with selling focus may make a
turnaround. Being tax manager of XYZ Ltd, you are tasked to bottom up a report to
management on ‗optimum capital structure‘ for a new retailing unit which maximizes the wealth
and minimizes the cost of capital. Your look out is to strike a balance among risk, cost, control
and tax consideration arriving at a most tax-efficient model. Estimated initial fund required is
taka One crore. You are aware that BSEC introduced BSEC (Alternative Investment) Rules
2015 to open up Private Equity and Venture Capital (VC) Firm operations. Management spoke
to a VC firm who agreed to provide equity-linked debt. Available sources are 100% equity, or a
tax-efficient mixture of equity, VC Firm borrowing (interest 8%) and bank loan (interest 10%).
Expected RoI (EBIT basis) is 20%. Dividend trend in the same sector is 15%, assume tax rate
35%.
Requirements:
a) Compute total income of XYZ Ltd. for Assessment Year 2017-18. Show reasons for
treatment
b) With respect to tannery unit transfer, give your comment with explanations on whether
company can claim deductions of taka 25,00,000 and taka 5,00,000 in the current
income year tax return.
c) Suggest as a tax planner most tax-efficient and above-the-dividend-trend alternative for
new retail entity supported by detailed computations. Work out on three given
alternatives
(A : 100% equity,
B: 40% equity+40% VC Debt+20%loan, C: 20% equity+30% VC Debt+50% loan).
Answer:
ASSESSES: XYZ Pvt. Limited
Income Year Ended on 30.06.2017. [Assessment Year: 2017-2018]
in Taka
A. Income from House property u/s 24
Annual Value from premises rental (assumed reasonable) 5,00,000
Less: [ I ] Repairs & maintenance 30% of A.V. (assumed spent) 1,50,000
[2] Municipal tax levied but not paid
[Being permissible allowance without proof of actual payment u/s 25(e)] 10,000
(1,60,000)
Net taxable Income from HP: 3,40,000
B. Income from Business u/s 28:
Net Profit as per PL a/c 50,00,000
LESS: Income for consideration at separate head:
[1] Rental income (for consideration at HP income head) 5,00.000
[2]Interest waiver by bank (as it is not income u/s 19(11) 1,00,000
[3]Cash dividend (for consideration at other income head) 10,000
(6,10,000)

ADD: Inadmissible expenses
[1] 5 year's License fee paid for franchise
(Amortization will be allowed as per 3rd Schedule) 5,00,000
[2]Loss on destruction of machinery (29)(1)(xi) 2,00,000
(Being actual loss Tk.100,000 but claimed Tk.3,00,000)
[3] Accounting dep. (For separate consideration) 1,00,000
[4] Compensation paid to UK suppliers (for violation of contract) 50,000
[5] Provision for deferred tax (no such provision is allowable u/s-29) 1,00,000
[6]Capital expenditure for shifting tannery to Savar 25,00,000
[7]Municipal tax (for consideration at HP income head) 10,000
[8]Capital loss on sale of shares (as not related to business) 20,000
[9]Interest under debt reconstruction of Agrani Bank [note-5] 3,00,000
37,80,000
LESS: Items to be allowed:
[1] Amortization on License Fee (3rd Sch, para 10A) 1,00,000
[2]Tax depreciation as per 3rd schedule 1,75,000
(2,75,000)
Income from Business 78,95,000
Less: Carried forward of business loss and depreciation loss u/s 38 11,50,000
Income from Business [after carry forward and set-off of earlier 67,45,000
year's loss]
C. Capital Gain
Share Transfer:
Proceeds from share sale 80,000
Less: Cost of acquisition (100,000)
Loss on sale of share (not to be set-off as per section 37) (20,000)
Zero
D. Income from other sources:
[I] Cash dividend income from Dell Ltd. 10,000

Less: Exempted up to Tk. 25,000 as per 6 th schedule (Part-A) Pam-11 A (10,000) Zero
[2] Deemed dividend u/s 2(26)(e) for taking loan from ZXY Ltd.
50,000
(Maximum up to accumulated profit of Tk. 50,000).
TOTAL INCOME 71,35,000
Note:
[1] There is no violation of section 30(m) of ITO, 1984 for cash payment of Taka 50,000 to transport operator
and Taka 150,000 to chemical (raw material) supplier used in tiles mfg. and accordingly not disallowed u/s
30(m).
[2] There is no violation of section 30(aa) of ITO, 1984 for non-deduction of VAT at source Tk. 50,000 paid
to vendor of office supplies with effect from the assessment year 2017-18 and accordingly not disallowed
u/s 30(aa).
[3] Provision for bonus taka 1,00,000 was disallowed earlier year. This year though paid but not reflected in this
year's accounts as it is earlier year's expense. There is no provision to allow it as this year's expense u/s 29
of ITO,1984. So no tax treatment needed this year.
[4] Company claimed unabsorbed depreciation (on a/c of trading unit assets) of taka 50,000 in the Return of
income but not debited to PL a/c. No action is required as it is not allowable as per 3rd schedule.

[5] Under a debt restructuring with Agrani bank, the company converted arrear interest taka 3,00,000 on term
loan into a new term loan with a revised repayment schedule. Company paid taka 50,000 towards such
funded interest during the year. Entire taka 3,00,000 debited to PL a/c. Nothing will be allowed further as it
was allowed in the relevant income year u/s 29 on payable basis.
[6] Legal fee against Govt. decision to move tannery to Savar is allowable expenditure assuming that the cost
of the case was borne by the tannery association as per verdict of the honorable court. So it will not matter
whether they win or lose. The expenditure is fully related to business and accordingly allowable
expenditure.
[7] No tax treatment is needed in case of loan+interest waived by Janata Bank as per 1 stproviso of section
19(11) of IT0,1984.
[8] There is no tax implication of Tk.1,75,000 brought in the income year from a Spanish customer as per
Schedule(Part-A) para-48 assuming that it was brought through official channel.
b)
[1] Expenditure relating to shifting/relocating tannery to Savar is capital in nature. So it is not allowable
expenditure as per section 29 of ITO,1984
[2] Legal fee against Govt. decision to move tannery to Savar is allowable expenditure assuming that the cost
of the case was borne by the tannery association as per verdict of the honorable court. So it will not matter
whether they win or lose. The expenditure is related to business and accordingly allowable expenditure.
c)
PARTICULARS Alternative A Alternative B Alternative C
Taka Taka Taka
Share Capital 10,000,000 4,000,000 2,000,000
Bank Loan 2,000,000 5,000,000
VC Firm Debt 4,000,000 3,000,000
Total investment 10,000,000 10,000,000 10.000,000
Debt-Equity ratio
Return on Investment (EBIT basis) 20% 2,000,000 2.000,000 2,000,000
LESS:
Bank loan interest 10% - 200,000 500,000
VC Firm Debt 8% - 320,000 240,000
Total - 520,000 740,000
Net Income 2,000,000 1,480,000 1,260,000
Income tax 35% 700,000 518,000 441,000
Return on Equity Share Capital 1,300,000 962,000 819,000
Rate of Return on Equity (before
13% 24% 41%
dividend tax)
So, Alternative C is the most tax-beneficial Capital Structure (least tax. highest ROI).

17 AR Ltd. (petitioner# 1) and BA Ltd. (petitioner# 2), both being PLC(non-publicly traded), Nov Dec
and carrying on business as mobile phone operators, obtained court order for a ―horizontal 2016
amalgamation‖. Exhibit 1 for further details on ownership structure and other briefs on
scheme. As per approved amalgamation scheme, petitioner 2 (transferor, BA Ltd.) shall be
amalgamated into petitioner# 1(transferee, AR Ltd.) to enhance scale of operations and
optimize resource utilization. Cut-off for both is Dec 31. Extracts:
AR Ltd. BA Ltd.
Comprehensive Statement of Income Comprehensive Statement of Income
For the year ended 31-12-2016 For the year ended 31-12-2016
BDT(In ‗000) BDT(In ‗000)
Revenue 51,000,000 Revenue 13,000,000
Cost of revenue (29,000,000) Depreciation (network) ( 5,000,000)
Admin expense (4,000,000) Other Network Ops cost (10,000,000)
S&D expense (6,000,000) Gross Profit/(Loss) ( 2,000,000)
Operating expense (4,000,000) Other Income, net 100,000
Profit from Ops 8,000,000 G&A expense (2,000,000)
Net finance expense (100,000) S&D expense (2,000,000)
Non-ops income 400,000 Operating profit/(loss) (5,900,000)
Profit before tax 8,300,000 Finance income 50,000
Finance expense (2,000,000)
Foreign exch gain/(loss) (300,000)
Profit/(Loss) before tax (8,150,000)
Statement of Financial position (31-12-2016) reflect BA Ltd. (in 000) R/E (taka
60,000,000), equity (taka 14,000,000).
Further Findings from the records of the income year of AR LTD.:
i) Operating expense includes taka 500,000 paid to a lawyer for services
involved in acquisition of Khulna office.
ii) Representative of two shareholding companies (AR (Pvt.) Ltd. and DNT)
visited Dhaka when the talk of merger was brewed. Company paid taka
2,500,000 to Radisson on a/c of visitors, charged to admin expense.
iii) Non-ops income includes amount after tds taka 100,000 paid to a Valuer for
valuation of assets disposed.
iv) Admin expense includes taka 150,000 interest levied for late filing of tax
return and non-payment of advance tax.
v) Net finance expense includes taka 500,000 paid as interest on a/c of a
deferred payment scheme for acquiring imported cellular equipments which
are already received and installed.
vi) Cost of revenue includes accrual taka 5,000,000 BTRC annual license fee,
tds undone, payment due by Jan/2017.
vii) Operating expense includes taka 150,000 paid to a stationery goods supplier, tds not
done.
viii)Operating expense includes taka 500,000 paid to a vendor but without
deducting/paying VAT thereon. 30(aa)
ix) Company missed to write off in the books a loss of taka 500,000/= on capital
assets sold during the income year. An amount of depreciation taka
300,000/= was charged in income year on the same capital asset sold.
Further findings from the records of the income year of BA Ltd.:

i) Finance expense includes Tk. 700,000/= interest on O/D taken to pay income tax when
in cash strain.
ii) Foreign exchange loss represents loss due to rate slump between time gap of
approved foreign loan and receipt.
iii) Company changed stock valuation method for mobile set stock. Auditor did not agree
and qualified the report quantifying the resulting missed revenue Tk. 2,500,000.
iv) Tk. 1,000,000 incurred for renovation of rented site offices in the country and
charged to S&D expense.

v) Included in G&A expense, fees Tk. 500,000 paid to auditor for valuation of fixed assets in
connection with the preparation leading to primary meeting of the merger.
vi) G&A expense includes taka 2,500,000 on a/c of transfer of overdue accumulated
contribution to RPF (both employer and employee). Company could not transfer
contribution timely for cash strain overriding the PF Rules.
vii) Other network operating expense includes taka 500,000 forfeited advance paid for
acquiring a new office floor.
viii) Taka 200,000 accrued as car rent for Car rental company reported under S&D
expense, tds not done.
ix) During income year, company disposed a capital asset for taka 2,500,000. Carrying
value and the tax WDV (at 10% rate) of the asset at disposal were taka 1,000,000
and taka 800,000 respectively. A new asset was purchased for taka 5,000,000 to
replace asset in same year. Depreciation on new asset was provided wrongly at 20%.
x) G&A expense includes taka 1,000,000 for directors traveling to Singapore on a new
business negotiation, lump sum payment of taka 1,000,000 as inducement to hunt a
prospective employee from a competitor,
xi) Fees taka 500,000 paid to a lawyer to increase authorized share capital before merger
scheme.
Requirements:
a) Calculate total income and tax payable of AR Ltd. for income year ended
31.12.2016. Explanations/assumptions/relevant sections/case ref, if any, in
support of your adjustments should be given.
b) Calculate total income of BA LTD. for income year ended

31.12.2016. Explanations/ assumptions/relevant sections/case ref, if any, in
support of your adjustments should be given.
c) Consider relevant information above and in Exhibit 2 relating to ‗Slump Sale‘ of

―S‖ unit of BA Ltd. to MP Ltd. Ltd. before the ―Effective Date‖ of
Amalgamation. Compute capital gain and tax liability on ―S‖ unit sale.
Consider Exhibit 1. Write your views in the light of the I.T. Ordinance: (i) Whether
difference shall attract tax if value of shares received from AR Ltd. by shareholders
of BA Ltd. is more than the value of net assets of BA Ltd. amalgamated with AR
Ltd. (ii) Whether AR Ltd. is entitled to carry forward losses/unabsorbed depreciation
of BA Ltd. for set off against taxable profit of the transferee after amalgamation.
EXHIBIT 1 (In connection with Question No. 1)
Court approved a scheme of amalgamation under Companies Act 1994 between
AR Ltd. (Petitioner 1) and BA Ltd. (Petitioner 2). Currently, AR Ltd. (Petitioner
1) is owned by a Singapore-based company, AR (Pvt.) Ltd. (91%) and a Korean
company, DNT (9%). BA Ltd. (Petitioner 2) is owned by AB Singapore (Pvt.)
Ltd. (98%) and Mr. X of UK (2%). Petitioner 2(transferor) shall be merged into
Petitioner 1(transferee). Pre-merger and post-merger ownership structure are as
follows:

Relevant two extracts from approved Amalgamation Scheme:
i) All Assets and liabilities of amalgamating company (Transferor) shall be vested
on amalgamated company (Transferee). As part of capital reorganization,
1,300,000,000 Ordinary BDT 10 shares in transferee company shall be issued to
shareholders of transferor, resulting 25% holding for transferor company‘s
shareholders in transferee company‘s reorganized capital. Assume, shareholders
of transferor company with >9/10th in value of shares in transferor company
become shareholders of the amalgamated company. Difference of net assets of
transferor company and value of agreed issue in transferee company to
shareholders of the transferor company shall be transferred to Capital
Reserve/Goodwill.
ii) Transferee company shall be entitled to claim benefit of brought forward losses
or/and unabsorbed depreciation, as admissible under the provisions of Income
Tax Ordinance to the extent applicable, of the transferor company and to set off
against the taxable profit of the transferee company after official amalgamation.
EXHIBIT 2
SIM Kitting service unit ‘S’ of BA Ltd.:
BA Ltd. (transferor) has a small warehouse SIM kitting unit ―S‖ within its
operation. Amalgamation deal agreed not to carry on such non-core operation with
the merged entity and concluded that the deal steering committee would sell ―S‖
unit and the resulting tax, if any, shall be settled by transferee company. Within BA
Ltd. Balance Sheet, assets and liabilities on a/c of ―S‖ unit are (BDT): Non-current
liability 1,500,000, Fixed Assets 4,000,000 which includes a 1,000 sft warehouse
land space bought for bdt 1,000,000 in January 2014 (revalued bdt 1,500,000 in
Jan/2015), furniture & fixture net 300,000 (gross 500,000), electrical appliance net
320,000 (gross 400,000) and balance is other fixed assets WDV. Current assets:
Inventory of SIM and kitting materials bdt 250,000, Bank balance (150,000).
Merger steering committee has done a slump sale deal (lock, stock & barrel) with
―MP Ltd. Ltd.‖ to sell Unit ―S‖ operations of BA LTD. in April 2017 (before
―Effective Date‖ of Amalgamation). Consideration is BDT 5,000,000/=. ―S‖ unit
capital assets are depreciated u/s 29(1)(viii). Committee paid a lawyer net-of-tax fee
bdt 50,000 for deal advice.
Computation of total income and tax liability

AR Ltd.
Income year ended 3 1.12.2017. A/Y: 2017-18
BDT(`000) BDT(`000)
Net profit before tax 8,300,000
ADD Inadmissible expenses:
:
i) Lawyer payment for acquisition of Khulna office -----
[Legal exp. is allowable exp. as per sec.29 of ITO, 1984]
ii) Payments to Radisson for Shareholders' reps -------
[Allowable as the exp. is not personal, not capital rather related to
business]
iii) Payment to valuer of assets disposal 100 100
[Payments linked to capital assets sold]
iv) Interest for late return filing and default in advance tax payment 150 150
[Any exp. for violation of law is not allowable exp.]
v) Interest on assets acquired under deferred scheme 500 500
[To be disallowed being capital exp.]
vi) BTRC annual license fee [Cannot be disallowed on the ground -----
that tax was notdeducted as it would be deducted at the time of
payment]

vii) Stationery purchase through supply 150 150
[To be disallowed u/s 30(aa) for non TDS]
viii) Vendor payment without VAT deduction -----
[Not to be disallowed u/s 30(aa) for non VDS wef the AY: 17-18]
ix) Depreciation of sold assets 300 300
[Depreciation not allowed in the year of disposal]
1,200
8,301,200
Note:
There is no scope to consider loss on sale of assets Tk. 500,000 due to lack of information relating
to written down value and sales price of assets already sold.
Tax calculation
Tax @ 45% (non-listed mobile phone Operator Company) = Tk.3,735,540 ('000)
Computation of total income and tax liability

BA Ltd
Income year ended 31.12.2016. A/Y: 2017-18
BDT(`000) BDT(`000)
Net profit before tax (8,150,000)
ADD Inadmissible expenses:
:
i) Interest on O/D -----
[In case of cash shortage, company can borrow money to run
business including tax payment etc. As it is business related
exp. so it is allowable. Tax is not allowable exp. but interest
on loan to pay tax is allowable exp.]
ii) Exchange loss [Bonafide and actual and as such allowable -------
as
per sec.29]
iii) Missed revenue for stock valuation method change ------
[Assumed that stock valuation method has been
changed&recognized as per BAS]
iv) Renovation of site office 1000 1,000
[To be added as it is capital exp.]
v) Valuation fee paid to auditor in connection with 500
merger
[Not connected with day to day business of the company]
vi) RPF overdue contribution payment -----
[Action of overdue payment lies under separate PF Rules, Actual
amount whenever paid is admissible]
vii) Forfeited advance for cancellation of agreement 500
[Not to be allowed as business exp. as it was incurredfor
violation of terms and conditions]
viii) Car rent payment accrued [To be allowed as business exp. -----
because tax to be deductedat the time of payment not on the
basis of accrual]
ix) Depreciation on new asset 100
[Dep. Claimed Tk.50,00,000 x 20% = 10,00,000.
Assumed that purchased price of the old machine was
Tk.20,00,000 as it was not given in the question).
So actual tax dep. to be allowed
(Tk.50,00,000 - 5,00,000 = 45,00,000 x 20% = 9,00,000).
So excess claim Tk.10,00,000 - 9,00,000 =1,00,000 to be
disallowed.
x) Inducement payment to hunt staff [Illegal exp. not allowable 1000
at legal business]
3,100
3,100
Total Income (8,153,100)
c)
Computation of Gain and Tax Liability on 'S' Unit Slump Sale to MP Ltd.
Sales proceeds 5,000,000
Less: Net worth of ‗S' unit
Floor space value (ignoring revaluation) 1,000,000
WD V of other assets:
Furniture & Fixture (gross 500,000) 300,000
Electric appliance (gross 400,000) 320,000
Other fixed assets (40,00,000-15,00,000-3,00,000-3,20,000) 1,880,000
Inventory 250,000
Bank balance (150,000)
Value of total assets 3,600,000
Less: Liabilities
Liability of ‗S' unit 1,500,000
Legal expense gross [50,000x100/90] 55,555 1,555,555 2,044,445
I think it is goodwill money not capital gain

(as because not only capital assets are sold here) which is taxable
u/s19(10) 33 as income from other sources 2,955,555
Tax @35% 1,034,444
(as because not only capital assets are sold here) which
(d) is taxable u/s
19(10) 33 as income from other sources
Amalgamation of BA Ltd. with AR Ltd. under the approved scheme meets condition of
amalgamation as per section 2(2) of IT Ordinance. Although all assets and liabilities of BA Ltd. get
vested on the AR Ltd., such amalgamation does not meet definition of 'transfer' u/s 2(66) of the law.
There is no sale of assets in amalgamation, nor any price paid by AR Ltd. for the assets vested. So,
7.955.555
there will be no capital gain tax on such transfer or even if the value of the shares issued to the
Tax @ 35% 1,,
shareholders of BA Ltd. is more than the net value of assets vested in the merged transferee.
AR Ltd. is not entitled to carry forward the losses and unabsorbed depreciation of BA Ltd. Such
amalgamation does not meet the conditions of Section 42(4) of the Ordinance to do carry-forward
and set-off. Upon amalgamation gets effective, BA Ltd. becomes dissolved and discontinued. Section
42(4) allows the carry-forward facility in the case when a company is succeeded by inheritance.
Although this amalgamation scheme (court approved) describes the carry-forward entitlement of AR
Ltd. to claim benefit of the brought forward losses or/and unabsorbed depreciation, it made subject to
admissibility of the same under the provisions of IT Ordinance, 1984. Section 42(4) limits such carry-
forward benefit by person, if not by inheritance.
(d)
Amalgamation of BA Ltd. with AR Ltd. under the approved scheme meets condition of
amalgamation as per section 2(2) of IT Ordinance. Although all assets and liabilities of BA Ltd. get
vested on the AR Ltd., such amalgamation does not meet definition of 'transfer' u/s 2(66) of the law.
There is no sale of assets in amalgamation, nor any price paid by AR Ltd. for the assets vested. So,
there will be no capital gain tax on such transfer or even if the value of the shares issued to the
shareholders of BA Ltd. is more than the net value of assets vested in the merged transferee,
AR Ltd. is not entitled to carry forward the losses and unabsorbed depreciation of BA Ltd. Such

2a Tax Computation of Business Entities

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2 Tax Computation of Business Entities and Individuals (25%)

2a. Tax Computation of Business Entities

Bought in 2014 cost Tk.12,00,000

Courtesy: Saiful Islam Mozumder, ShirazkhanBasak& Co. smozumder@outlook.com cell-01711-981920

Interest on govt bond 1,000 1,000

Income from Interest from Securities 1,000

Profit before tax as per profit and loss account 19,700

ii Interest income (for consideration at interest on securities) 1,000

Income from Capital Gain (u/s-31)

Total income 39,300

Break up of total income

Interest on Securities(u/s-22): 1,000

Income from Capital Gain(u/s-33) 2,500

Capital loss carry forward from 2014-15 (1,000)

Whichever is higher 9,258

3 No such provision either recognized or unrecognized is allowable expenditure so disallowed fully

4 Donation to ICAB is disallowed being unapproved institution

6 Allowable U/S 30(k) up to 1% of disclosed turnover

8 Depreciation To 8,000,000(depreciation claims as per 3rd schedule so nothing to be added back.)

Income from Business or Profession: U/S 28-30

Net profit as per Accounts 2,510,000

Income before charging entertainment & technical knowhow fees 2,030,000

Less: Admissible expenses:

Income from manufacturing business including exports 1,807,000

Income from manufacturing business 903,500

Calculation of Tax Payable:

Total Income 1,630,773

Income other than 82C 903,500

Tax Payable: 903,500 X 27.5% 248,463

Workings & Necessary Notes: 01

On first 10 lac profit@4% Tk. 40,000

On balance profit .i.e Tk. 1,030,000@2% Tk. 20,600

Total Tk. 60,600

Courtesy: Saiful Islam Mozumder, ShirazkhanBasak& Co. smozumder@outlook.com cell-01711-981920

Deduct: Manufacturing expenses 6,70,00,000 1,40,00,000

Banglows Equipment Tanks Tubewell Irrigation Pumps Total Allowances

Summary of assessments- Assessment year 2017-2018

Courtesy: Saiful Islam Mozumder, ShirazkhanBasak& Co. smozumder@outlook.com cell-01711-981920

iii) Extracted from the Balance Sheet

Particulars Notes Tk. In Tk. In

Income from Other Sources

Note-2: Bad and Doubtful Debts:

Courtesy: Saiful Islam Mozumder, ShirazkhanBasak& Co. smozumder@outlook.com cell-01711-981920

Add: Inadmissible expenses:

ABC Bank Ltd.

Net Profit as per account 258,000

Courtesy: Saiful Islam Mozumder, ShirazkhanBasak& Co. smozumder@outlook.com cell-01711-981920

Add: Inadmissible Expenses

Taxable income is Tk 4,17,600 and tax is @42.5% which is Tk. 1,77,480

Particulars Taka Particulars Taka

Courtesy: Saiful Islam Mozumder, ShirazkhanBasak& Co. smozumder@outlook.com cell-01711-981920

Note — 10 In accordance with SRO # 229 of 04.07.2011, donation to an organization approved by

Month wise income before tax is given below: Figures in million

1. tax deducted at source Tk. 81,236,721 which includes Tk. 1,518,000

Month IGW ANS Dividend Total

Taxable Income 174,600,000 66,560,000 15,170,000 256,330,000

Courtesy: Saiful Islam Mozumder, ShirazkhanBasak& Co. smozumder@outlook.com cell-01711-981920

Total Taxable Income 139,502,607 53,324,251 15,170,000 207,996,868

Accumulated profit as on June 30, 2017 342,652,935

Courtesy: Saiful Islam Mozumder, ShirazkhanBasak& Co. smozumder@outlook.com cell-01711-981920