Mr. Bhandari, a trader furnished the following trading and profit and loss account for previous year: Particulars Amount Particulars Amount To…

Mr. Bhandari, a trader furnished the following trading and profit and loss account for previous year:

Particulars	Amount	Particulars	Amount
To Opening stock	90,000	By Sales	2,950,000
To Purchases	500,000	By Closing stock	55,000
To Carriage	150,000
To Wages	250,000
To Gross profit c/d	2,015,000
	3,005,000		3,005,000
To Salaries	180,000	By Gross profit b/d	2,015,000
To Legal expenses	19,000	By Commission	30,000
To Bad debts expenses	20,000	By Interest on investment	50,000
To General reserve	100,000	By Refund of income tax	20,000
To Pollution control cost	50,000	By Sundry income	25,000
To Depreciation	150,000	By Dividend (Net)	37,500
To Repairs expenses	100,000	By Bad debts recovered	15,000
To Donation paid to public school	80,000	By Amount received for accepting restriction regarding business	25,000
To Office expenses	165,000	By speculation income	5,000
To Audit fees	15,000	By Rent from staff quarter	17,500
To Hospitality expenses	20,000	By gain on sales of (non business chargeable assets)	60,000
To Advance income tax paid	7,500
To Fine and penalty	25,000
To Bonus to staffs	35,000
To Advertising	9,000
To Net profit	1,324,500		2,300,000
	2,300,000

Additional information:

• Opening stock undervalued by 10% and closing stock overvalued by 20%

• Refund of income tax includes Rs 15,000 as refund of custom duty.

• Legal expenses included Rs 5,000 for fine and penalty paid to local government.

• Depreciation on car has not been charged in the above statement. The depreciation base of the car was Rs 500,000.

• Office expenses include Rs 55,000 as a printing expenses paid at a time by cash while banking facilities available within 10 kilometers.

• Previous year business loss stood Rs 50,000.

Required:

 a. Net assessable income from Business.

 b. Net assessable income from investment.

c. Statement of total taxable income.

d. Tax liability.

 e. Giving explanation wherever necessary.