Question # 1
For each case mentioned below, identify the agriculture income (if any) along with income chargeable
to tax or in case the income is exempted from tax. You are also required to mention the reasons with
section(s) of Income Tax Ordinance 2001.
1. Mr. Ali has five acres land being used by Mr. Imran for the cultivation of bamboos and
flowers. The land is given on annual rent of Rs. 80,000 per acre. During the tax year 2012, Mr.
Ali received Rs. 400,000 from Mr. Imran.
Exempt from tax
2. Mr. Ali has a building next to his land which was given to Mr. Imran on rent for warehouse.
The rent of Rs. 40,000 for this building has been received during the tax year 2012.
Exempt from tax
3. Mr. Noor has a piece of agricultural land which has been on rent for last ten years, but during
the current tax year the land is used as a market place for the sale of agricultural produce of the
surrounding areas. Total commission of Rs. 60,000 has been received from the use of such
Chargable to tax
Question # 2
After completing MBA degree you are doing an internship in a tax consultancy firm these days, where
you have been given two cases of the “person” in which you have to identify (with reason in case the
answer is ‘Yes’) that whether the status of each person is “taxpayer” or not under the Income Tax
1. ABC Limited, a newly incorporated business in Pakistan is exempted from income tax for
coming five years starting from tax year 2010.
2. Mr. Raza owns a brand new locally manufactured car of 1300 CC.
Solution: To my point of view, status of Company ABC regarding taxpayer is ‘no’ for the current period 2012. and ‘yes’ for after completion the exemption period.
and in case no. 2 the status of Mr. Raza is ‘Taxpayer’ ‘Yes’ because he owns this car.
Note: Both fall in the category of ‘Person’ as per the section 2(42).