From the desk of KP
Email: kpetiwala@[Link]
ICMAP: Business Taxation { Tax Year 2024 }
Theoretical Questions
Chapter 1: Tax Year & Residential status
Q.2(a) August 2019
Hamdan Cement Ltd (HCL) was incorporated under the Companies Act, 2017 and became
listed on Pakistan Stock Exchange Ltd on 30.1.20X9. The control and management of the
affairs of the company is situated partly outside Pakistan for the tax year ended 30.6.20X9.
Required: Is HCL resident under the Income Tax Ordinance, 2001? State with reasons.
What is the law of resident under the Income Tax Ordinance, 2001?
(Marks 3)
Q.1(b) February 2019
In the light of section 50 of the Income Tax Ordinance, 2001, determine the taxability of
foreign source income by a short term resident individual for the tax year 20X9 in the given
scenario:
(i) Residing in Pakistan solely for employment purposes since 30.6.20X7.
(Mark 1)
(ii) Any income derived from a business established in Pakistan. (Mark
1)
(iii) Any foreign source income brought into or received in Pakistan.
(Marks 2)
Q.3(a) February 2018
Determine the residential status, in view of the provisions of the Income Tax Ordinance,
2001 and the rules made thereunder, of the following persons for the tax year ended
30.6.20X8 under the given circumstances:
(i) Mr. David came to Pakistan for the first time on a special assignment from his US
Bank on 15.5.20X7 and left the country on 15.10.20X7.
(Marks 2)
(ii) Mr. Danish, who had never travelled abroad in his life, got a job in Australia. He
went to Australia on 29.1.20X8 to assume his responsibilities as a Cost and
Management Accountant. Assume that, in June 20X8, his company may send him to
Sri Lanka on a training workshop. On 28.6.20X8, on his way back to Australia, he
may stay in Karachi for a whole day in transit.
(Marks 3)
(iii) Mr. Alexander, a spare parts dealer in Russia, came to Pakistan on 31.7.20X7.
During his visit, he stayed in Peshawar for 60 days and spent the rest of the days in
Islamabad. He left the country on 31.1.20X8.
(Marks 2)
Page 1 of 4
Q.2(a) September 2017
What do you understand by Association of Persons (AOPs) and Resident Association of
Persons under the provisions of the Income Tax Ordinance, 2001?
(Marks 5)
Q.3(a) February 2014
Merchant and Co., is a tax consultancy firm. It has a list of clients who seek advices in
respect of various tax matters.
Required: Assume that you have been working as a Tax Advisor of Merchant and Co., and
is given a task to determine the residential status of the following clients for the tax year
ended 30.6.20X4 under the given three scenarios. Also substantiate your answer with
reasons in the light of the provision of the Income Tax Ordinance, 2001 and the Income Tax
Rules, 2002:
(i) Mr. Fahim resides in London and works as Chief Accountant in a British Company.
Assume that he has come to Pakistan for the first time on a special assignment from
his company on 1.3.20X4 and left Pakistan on 31.10.20X4.
(Marks 2)
(ii) Mr. Saleem is a Federal Government employee. Assume that he is posted to the United
Arab Emirates for taking special training on Petroleum Exploration Project from
1.7.20X3 to 30.6.20X4.
(Marks 2)
(iii) Ms. Saima has got a job in St. Micheal Pharma, a reputable company of United State of
America (USA). She went to USA on 28.12.20X3 to assume her responsibilities as a
Managing Director of the company. Assume that in April 20X4 her company sent her to
China on training. On 31.5.20X4 on her way back to USA she stayed in Karachi for 3
days due to cancellation of flights.
(Marks 2)
Q.3(a)(i) March 2011
Explain Rule 14 of the Income Tax Rules, 2002 relating to the determination of persons as
resident individuals.
(Marks 5)
Q.2(c) May 2010
What does section 102 of the Income Tax Ordinance, 2001 say about “foreign source salary
of resident individuals”?
(Marks 3)
Q.3(b) May 2009
Mr. AH a professor and Irani citizen entered into an employment contract with a government
university in Pakistan for teaching and research work. The university is incorporated under
section 42 of the Companies Act as a non-profit organization.
The employment contract was effective from 1.11.20X6. However, Mr. AH arrived in Pakistan
on 2.11.20X6. Since 3.11.20X6 was Sunday therefore he could not join his office. On Monday
4.11.20X6 he became ill and had to be hospitalized for the next five days and joined office
Page 2 of 4
on 9.11.20X6. Due to his continuous illness he took sick leave and went back to Iran on
10.11.20X6.
Mr. AH came back to Pakistan on 3.1.20X7 and remained in Pakistan for the purpose of his
employment till 30.6.20X7.
Required:
(i) State the provisions applicable to “Resident Individual” under Rule 14 of the Income
Tax Rules, 2002, to determine the number of days an individual is present in Pakistan.
(Marks 6)
(ii) Determine the residential status of Mr. AH with reasons in accordance with Rule 14 of
the Income Tax Rules, 2002.
(Marks 4)
Q.2(c) May 2008
Describe the provisions of the Income Tax Ordinance, 2001 for foreign source salary of
resident individuals.
(Marks 3)
Q.2(c) May 2007
How residential status of an individual is determined under rule 14 of the Income Tax Rules,
2002?
(Marks 5)
Q.3(a) November 2006
Explain foreign source salary of resident individuals under section 102 of the Income Tax
Ordinance, 2001.
(Marks 5)
Q.4(b)(i) May 2006
Explain the term “Resident association of persons” as defined in the Income Tax Ordinance,
2001.
(Marks 2)
Q.7(a)(i) November 2005
Explain the term “Association of persons” as used in the Income Tax Ordinance, 2001.
(Marks 2)
Q.2(b) May 2005
Define the following with reference to the Income Tax Ordinance, 2001:
(i) Resident and non-resident person
(ii) Resident individual
(iii) Resident company
(Marks 8)
Q.8(b) May 2005
Elaborate the procedure for applying and grant of approval for change of year from “normal
tax year” to “special tax year”.
(Marks 7)
Q.2(c) May 2003
Define “Tax Year” with reference to the Income Tax Ordinance, 2001.
(Marks 4)
Page 3 of 4
Page 4 of 4