Mr. Bharat, runs trading organization registered in Value Added Department and furnished following trading and profit and loss account for previous year: ParticularsRs.ParticularsRs.To Opening…

Mr. Bharat, runs trading organization registered in Value Added Department and furnished following trading and profit and loss account for previous year:

ParticularsRs.ParticularsRs.To Opening stock95,000By Sales (including VAT Rs 50,000)1,950,000To Purchases500,000By Closing stock55,000To VAT on Purchase25,000To Carriage150,000To Custom duty25,000To Wages200,000To Gross profit c/d1,010,0002,005,0002,005,000To Salaries180,000By Gross profit b/d1,010,000To Legal expenses19,000By Commission130,000To Bad debts expenses20,000By Interest on investment50,000To General reserve50,000By Refund of income tax20,000To Pollution control cost50,000By Sundry income25,000To Depreciation150,000By Dividend (Net)7,500To Repairs of fixed assets100,000By Bad debts recovered15,000To Donation paid to public school50,000By Amount received for accepting restriction regarding business40,000To Life insurance premium (Self)30,000To Office expenses165,000By Income from natural resources (net)85,000To Audit fees15,000To Hospitality expenses20,000To Advance income tax paid7,500To Fine and penalty25,000By Income from agriculture30,000To Bonus to staffs35,000To Interest on loan50,000To Advertising9,000To Net profit437,0001,412,5001,412,500

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. [10+2+3+2+3]