Mr. Bharat, runs trading organization registered in Value Added Department and furnished following trading and profit and loss account for previous…
2024 · Solved Question with Answer
Mr. Bharat, runs trading organization registered in Value Added Department and furnished following trading and profit and loss account for previous year:
| Particulars | Rs. | Particulars | Rs. |
| To Opening stock | 95,000 | By Sales (including VAT Rs 50,000) | 1,950,000 |
| To Purchases | 500,000 | By Closing stock | 55,000 |
| To VAT on Purchase | 25,000 | ||
| To Carriage | 150,000 | ||
| To Custom duty | 25,000 | ||
| To Wages | 200,000 | ||
| To Gross profit c/d | 1,010,000 | ||
| Total | 2,005,000 | Total | 2,005,000 |
| To Salaries | 180,000 | By Gross profit b/d | 1,010,000 |
| To Legal expenses | 19,000 | By Commission | 130,000 |
| To Bad debts expenses | 20,000 | By Interest on investment | 50,000 |
| To General reserve | 50,000 | 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) | 7,500 |
| To Repairs of fixed assets | 100,000 | By Bad debts recovered | 15,000 |
| To Donation paid to public school | 50,000 | By Amount received for accepting restriction regarding business | 40,000 |
| To Life insurance premium (Self) | 30,000 | ||
| To Office expenses | 165,000 | By Income from natural resources (net) | 85,000 |
| To Audit fees | 15,000 | ||
| To Hospitality expenses | 20,000 | ||
| To Advance income tax paid | 7,500 | ||
| To Fine and penalty | 25,000 | By Income from agriculture | 30,000 |
| To Bonus to staffs | 35,000 | ||
| To Interest on loan | 50,000 | ||
| To Advertising | 9,000 | ||
| To Net profit | 437,000 | ||
| Total | 1,412,500 | Total | 1,412,500 |
Additional information:
➤ Opening stock undervalued by 5% and closing stock overvalued by 10%
➤ Refund of income tax includes Rs 15,000 as refund of custom duty.
➤ Salary includes Rs 30,000 paid to a newly appointed staff without PAN.
➤ 25% of bank loan was used for personal purpose.
➤ Legal expenses included Rs 5,000 for income tax appeal against income tax officer.
➤ 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 costs of patent right with life period of 5 years 8 months. Charge depreciation as per rule.
➤ Sundry income included Rs 5,000 income from interest from bank deposit.
➤ 40% of bad debts recovered was not allowed as deduction in previous year due to the lack of proof.
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.