FIN623 Taxation Management Assignment 1 Solution Fall 2012

SCENARIO 1
I. Mr. Akram has a piece of agriculture land located outside the metropolitan area of City. He has given this land on annual rent of Rs. 50,000 to Mr. Bashir for growing flowers and different kinds of pulses. Mr. Akram has received rent of Rs. 50,000 during the tax year 2012.
II. Mr. Akram has a building adjacent to the land which has also been given to Mr. Bashir on rent for warehouse. Mr. Bashir uses the warehouse for storing crops and pays Rs. 40,000 rent in this regard.
Required:
• Identify the kind of income generated by Mr. Akram as per Income Tax Ordinance 2001.
• Describe the tax treatment of the above income as per the Ordinance.
SCENARIO 2
Mr. Toseef owns and operates a flour mill located in a populated city. In order to reap tax benefits, he uses his own grown wheat in his flour mill to process wheat. He also purchases wheat from the local wheat market and processes this wheat to produce flour and sells it in the market. It is estimated that 70% of the processed wheat comes from his fields. This year, his accountant, who deals with the tax matters has claimed whole amount of the income earned during the year as exempted form tax.
Required: Guide the accountant regarding the accurate tax treatment in this case.
SCENARIO 3
Mr. A and Mr. B had been facing a dispute over a piece of agricultural land since 2002. They have resolved their dispute through a compromise in 2012. According to that compromise Mr. A has agreed to receive Rs. 500,000 from Mr. B.
Required: Provide tax treatment of the above mentioned case.


SCENARIO 4
Identify the income as agricultural income, non-agricultural income or partly agricultural and
partly non-agricultural along with logical reasons:
 Income from sale of honey and its products;
 Fee paid by a tenant for renewal of the lease;
 Income from fisheries and income from cutting & selling trees;
 Income received from land used for storing timbers;
 Income of sugar mill which grows sugarcane and manufacturers sugar from it.

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