FREQUENTLY TESTED CAF-02

FREQUENTLY TESTED QUESTIONS OF ICAP

Ch. Question Ref. of Q
in my
book
1,2,3 Do all questions of past papers
4 1) Explain the extent of tax liability of representative of deceased individual in respect 10 (a)
of the income earned by deceased before death. Also advise about obligations
relating to the tax assessment proceedings pending/arising against the deceased.
2) Briefly explain the term "legal representative" with reference to the Income Tax 6
Ordinance, 2001. What are the obligations of a legal representative?
3) State the provisions of the Income Tax Ordinance, 2001 regarding the residential 9
status of companies and association of persons and individuals.
4) Explain the Requirements of the Income Tax Ordinance, 2001 regarding change in 5 (b)
tax year from normal to special.
5) What do you understand by the concept "apportionment of expenditures" as 5 (a)
explained in the Income Tax Ordinance, 2001?
6) Discuss under what circumstances an expenditure incurred by a person are required 3
to be apportioned for the purpose of claiming a deduction under the Income Tax
Ordinance, 2001?
7) List the situations referred to in Income Tax Ordinance, 2001 where an expenditure 10 (b)
is required to be apportioned for the purpose of claiming a deduction
8) Under the provisions of the Income Tax Ordinance, 2001, state the situations where 23
expenditure is required to be apportioned for the purpose of claiming a deduction
9) Define fair market value 12 (i)
10) Under the provisions of the Income Tax Ordinance, 2001 explain the Order of 20 (c)
application of various tax credits while computing the tax liability of the taxpayer
11) Under the provisions of the Income Tax Ordinance, 2001 explain the General 20 (d)
provisions/rules which may apply to income subject to final tax. 29
5 12) State the circumstances in which a company and its shareholder shall be considered 8(ii)
as associates.
13) State the circumstances when two companies shall be considered as associates, 3
under the Income Tax Ordinance, 2001.
14) Certain payments made by a private limited company to its shareholders can be 4
treated as ‘dividend’. Explain the above in the context of Income Tax Ordinance,
2001. Also identify the exceptions to this rule.
15) Define public company, private company, dividend income, industrial undertaking,
income and small company
6 16) Explain the provisions of the Income Tax Ordinance, 2001 pertaining to foreign tax 5
credit available to a resident taxpayer.
17) Explain the tax relief which may be available in respect of donation to charitable 6
institute and the conditions that must be fulfilled to avail such relief.
7 18) Discuss the options available under the Income Tax Ordinance, 2001 and what 5
matters should he consider in deciding the best option for payment of tax on salary
received in arrears.
19) Discuss taxability of following? 4
• Option granted to an employee.
• Disposal of the option to acquire shares under the employee share scheme.
• Shares issued to an employee under option that are subject to restriction
20) A bank has announced a Golden Hand Shake Scheme. Discuss the chargeability of 2
above amounts in the hands of employees.
21) State the provisions of Income Tax Ordinance, 2001 relating to foreign-source 6
salary of resident individuals.

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22) Under what circumstances a resident individual is entitled to claim exemption from 1
tax on his foreign source salary, and when is the foreign tax treated as having been
paid?
8 23) State the provisions of the Income Tax Ordinance, 2001 relating to the change in 32 (b)
method of accounting for income chargeable to tax under the head ‘Income from
Business’.
24) Describe the methods of accounting that may be adopted under the Income Tax 32 (a)
Ordinance, 2001 by the following persons deriving income chargeable to tax under
the head ‘Income from Business’.
a. A company
b. Any person other than a company
25) State the conditions which a tangible asset should meet to qualify as a depreciable 28(a)
asset.
26) Discuss taxability of bad debt and speculation business. 25
27) What is the basis of stock-in-trade computation under the Income Tax Ordinance 18 (b)
when the taxpayer follows the cash basis of accounting?
28) Explain the provisions of section 29 with regard to the recovery of bad debts in 18 (c)
subsequent years.
29) In the context of Income Tax Ordinance 2001, 31
• state the meaning of “Intangible”.
• discuss the rules relating to claiming of amortization deduction on intangibles.
30) In Income Tax Ordinance, 2001 the term “disposal” has a wider connotation than 33
sale because it includes exchange, relinquishment, and extinguishment.
List the situations under which an asset owned by a person shall be treated to have
been disposed of.
31) Under the provisions of Income lax Ordinance, 2001 certain persons are required to 36
pay minimum tax at the rate of 1.5% of their turnover.
a. Explain the term 'Turnover’ for the purpose of minimum tax.
b. List the persons who are required to pay minimum tax.
c. Discuss the rules relating to carry forward of minimum tax paid to the
subsequent years.
32) Identify any three situations in which the fair market value of the assets shall be 43
treated to be the cost of the asset.
33) Under the provisions of the Income Tax Ordinance, 2001 and Rules made 44
thereunder, discuss the prescribed limits conditions for the deduction of
entertainment expenditure
34) Tax treatment of bad debt’s recovery 39 (b)
35) Disposal of assets 37
9 36) Discuss the provisions regarding non-adjustable amount received from a tenant by 3
the owner of a building.
37) What is chargeable to tax under the head ‘income from property’? 1
10 38) Explain the term “Capital Assets” as referred to in the Income Tax Ordinance, 2 (a)
2001.
39) Discuss which assets are not considered capital assets for the purpose of 1
determining income under the head Capital Gains.
11 40) You are required to advise about the circumstances under which the loan may be 3
included in the taxable income.
41) Specify under which head of income, following amounts of rent would be 2
chargeable to tax:
• Rent in respect of lease of a building together with plant and machinery.
• Amount included in the rent of a building for the provision of amenities,
utilities or any other service connected with the renting of such building.
12 42) Describe the principles of taxation for an AOP 1
43) Briefly discuss the provisions of Income Tax Ordinance, 2001 in respect of the 3

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following situation. Farhan received Rs. 960,000 as his share of profit from AOP,
during the tax year 2014. He also earns income from other sources.
44) State rules relating to set off and carry forward of losses of AOP 4(b)
14 45) Discuss the provisions regarding set off and carry forward of losses under the heads 8
"Income from Business" and "Capital Gains".
46) Under the Income Tax Ordinance, 2001 a deduction for capital loss is allowed 7
when consideration received on disposal of a capital asset is less than its cost. What
are the exceptions to this rule?
47) Describe the provisions relating to set-off and carry forward of foreign losses? 10
48) Discuss the provisions of the Income Tax Ordinance, 2001 regarding set off and 14
carry forward of losses under the following heads:
• Income from business
• Income from speculation business
15 49) State the deficiencies on account of which return submitted may be regarded as 20 (a)
‘incomplete’ for tax purposes.
50) Narrate the circumstances under which the Commissioner may amend assessment 20 (b)
order
51) List the persons who are required to furnish a return of income for a tax year 17 (b)
52) Circumstances under which a Commissioner of Income Tax can require a person to 17 (c)
furnish a return of income for a period of less than twelve months.
53) List down the circumstances under which an original assessment can be amended or 16
an amended assessment can further be amended, by the Commissioner of Inland 25(a)
Revenue.
54) List down the conditions under which the best judgment assessment can be made. 11
Also state the time limit within which such power can be exercised.
55) State the main particulars that are required to be included in the wealth statement. 10
56) You are required to explain the provisions contained in the Income Tax Ordinance, 9
2001 regarding stay of demand by the Appellate Tribunal.
57) What is the status of a complete return of income filed under the Income Tax 5
Ordinance, 2001?
58) Briefly state the time limit within which the Commissioner is required to pass an 4(b)
order to give effect to the finding or directions of the CIR(A)?
59) Under the provisions of Income Tax Ordinance, 2001: 21
(i) narrate the conditions which Zia has to comply with in order to submit a
valid revised return.
(ii) state the benefits which Zia could derive by filing the revised return
voluntarily.
60) Briefly explain the requirements of payment of tax viz-a-viz filing an appeal before 2
the Commissioner Inland Revenue (Appeals)?
61) Describe the requirements of Income Tax Ordinance, 2001 for a person who is 22
about to discontinue his business.
62) Under the provisions of the Income Tax Ordinance, 2001 determine the date 24
by which appeal can be filed with the Commissioner (Appeals) where assessment
order for tax year 2014 was made on 31 December 2014. Demand notice was
served on 1 January 2015.
63) Under the Income Tax Ordinance, 2001 identify four situations under which an 35(a)
appeal may be filed with the Commissioner (Appeals).
64) the concept of ‘Concealed asset’ and state the powers of the Commissioner relating 36(b)
to concealed asset of any person when it is impounded by the Federal Government.
65) List the persons who may be granted immunity from filing of tax return u/s 114 of 26
the Income Tax Ordinance, 2001 solely by reason of owning immovable property
with a land area of five hundred square yards or more or any flat located in areas
falling within the municipal limits.
66) In the light of the provisions of the Income Tax Ordinance, 2001: 27(b)
(i) Identify the circumstances under which the Commissioner of Income Tax

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may require a person to furnish a return of income for a period of less than
twelve months.
(ii) State the consequences if a person fails to furnish the return as required in
(i) above.
16 67) A company has been selected for the audit. The management is of the opinion that 1
since their tax affairs were audited last year also, they should not have been
selected for audit this year.
Required:
Discuss the management’s point of view
68) Under the provisions of the Income Tax Ordinance, 2001 and Rules made 3
thereunder, briefly explain the following:
A) Requirement of books of account to be maintained by a taxpayer who has
business income upto Rs. 500,000. (04)
B) Provisions regarding Special Audit Panel. (05)
69) Briefly explain the provisions of the Income Tax Ordinance, 2001 and Rules made 4
thereunder relating to requirement of books of account to be maintained by a
manufacturer having turnover exceeding Rs. 2.5 million.
24 70) Identify the situations in which a registered person is liable to be deregistered. 49 (a)
71) State the steps involved in case of de-registration of a person on his own initiative. 49 (b)
72) Identify the goods that shall be charged at the rate of zero per cent 46 (a)
73) List the situations in which goods identified above would not be eligible for zero 46 (b)
rating
74) List the conditions that need to be satisfied for the adjustment of input tax against 45 (a)
the output tax liability.
What are the preconditions of claiming input tax against output tax by a registered
person?
75) List any seven situations in which input tax is not allowed to be adjusted against the 45 (b)
output tax liability
State the situations when a registered person shall not be entitled to claim or deduct
input tax under the Sales Tax Act, 1990.
76) List the remedy available to if a person fails to adjust input in the period in which it 45 (c)
is paid.
77) Explain the eligibility for a refund if input tax paid is in excess of the output tax 44 (b)(i)
payable for the month.
78) Explain consequences of non-payment of the entire amount of tax due as indicated 44 (b)(ii)
in the return
79) Explain the concept of provisional and final adjustment. 44 (b)(iii)
80) List down the particulars to be mentioned on the debit note issued by the supplier in 43 (b)
the event of change in the value of supply, under the Sales Tax Rules, 2006.
81) Explain the provisions relating to change in rate of tax during a tax period 42 (c)(i)
82) Explain the provisions relating to excess tax collected from the customer 42 (c)(ii)
83) State the provisions of Sales Tax Act, 1990 relating to maintenance and retention of 41 (a)
records by a registered person making taxable supplies
84) Identify the situations under which a debit or credit note may be issued by a 51 (a)
registered person.
85) Discuss the rules relating to adjustment of input and output tax on issuance of Debit 40
or Credit Note, as specified in the Sales Tax Rules.
86) Explain provisions relating to voluntary revision of return. 38 (a)(ii)
87) Explain provisions relating to revision of return during or after issuance of a notice 38 (a)(iii)
of audit.
88) Certain food items supplied by (Pvt.) Ltd. have been returned by the customers 36 (b)
after the expiry date. Company wishes to destroy them. Specify the procedure
which would have to be followed in this regard.
89) Explain the concept of ‘Value of Supply’ under the Sales Tax Act, 1990. 35

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90) List down the persons who are required to be registered under the Sales Tax Rules, 31 (b)
2006.
91) What is the difference between zero-rated and exempt supplies? 30 (a)
92) Who is required to file a final return under the Sales Tax Act, 1990? When is it 22
required to be filed?
93) Discuss the rules relating to filing of electronic return under the Sales Tax Rules, 50 (b)
2006.
94) In the monthly sales tax return filed under the Sales Tax Act, 1990 input tax paid 24
for the month is adjusted against output tax payable. You are requested to comment
on the following issues relating to input / output adjustment:
• Can input tax paid in prior periods be claimed in a monthly tax return.
• What would happen, if input tax paid exceeds output tax payable for the
month.
• What recourse is available if output tax for the month is inadvertently disclosed
at a lesser amount.
95) What are the particulars of tax invoice? 34 (a)
96) How would the input tax on raw material be determined and claimed where a 33 (a)
registered persons is engaged in making taxable as well as exempt supplies?
97) Rapid Associates (RA) has been registered under the Sales Tax Act, 1990 since 69
2014. During the month of June 2020, RA issued fake sales tax invoices amounting
to Rs. 5 million to one of its customers. Apart from this, RA has always been in
compliance with all the regulations of the Sales Tax Act, 1990.
Required:
Under the provisions of the Sales Tax Act, 19090 and Rules made thereunder,
discuss the consequences which RA may have to face due to issuance of fake
invoices.
98) How and under what situations the Inland Revenue Department may recover the 70(a)(i)
amount of sales tax from a person without issuing him a show cause notice.
Consequences of non-payment of the entire amount of tax due as indicated in the 44(b)(ii)
return.
99) the provisions related to excess/additional amount of sales tax collected by a 64(a)(iii)
registered person.
100) With reference to Sales Tax Rules relating to the apportionment of input 28
tax, explain the following:
• Residual input tax
• Manner or computation of residual input tax credit on taxable supplies
• Concepts of provisional and final adjustment
101) - What is the significance of Third Schedule to the Sales Tax Act, 1990. 4
- Define `retail price’ in the context of Third Schedule to the Sales Tax Act,
1990.
- Whether trade discount allowed on products covered under the Third Schedule
will affect sales tax levied on such products. Give reasons in support of your
answer.
102) Under the provisions of the Sales Tax Act, 1990 explain the following 55 (a)
(i) Input tax in relation to a registered person
(ii) Supply
103) Under the provisions of the Sales Tax Act, 1990 and Rules made 56 (b)
thereunder, briefly describe the rule relating to change in the particulars
of registration other than the change of business category.
104) Under the Sales Tax Act, 1990 and Rules made thereunder, briefly 57 (a)
describe the concept of ‘Residual input tax’. How it differs from ‘Residual
input tax credit’
105) Explain the term ‘Temporary registration’. Briefly discuss the rights, 63(b)
obligations and responsibilities of a person who has obtained temporary

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registration.

IMPORTANT SCENARIO BASED QUESTIONS

CHAPTERS PAST PAPERS CHAPTERS PAST PAPERS
QUESTIONS QUESTIONS
4 11,17,24,28
5 6,13,14 10 2,3,5,7
6 6,8 13 3,4,6,7,8
7 7,8,10 15 18,19,14,1,30,31,33,35,37
8 30, 26,34,38,39,40,45,46 24 47,44,43,42(b), 61
58(b), 55(b)

IMPORTANT NUMERICALS
CHAPTERS QUESTIONS
6 Pg. 77,78 Example 4-5
8 Q.9 (Pg. 208)
9 ICAP Past papers Q. 5,6,7,9 (Pg. 217-218)
12 Q.2 and 3 (Pg. 259,260) , Q. 5 (Pg. 261) Q.1 (Pg. 274)
14 1. ICAP Past papers Q.9,11,12,15 (Pg. 304-306),
2. Example 3 on Page 302
3. Pg. 297-299 (Example 4,5,9)
19 Q. 13,18,19,21,22,24,25,26,30,31,32
25 Q. 17,19,21,24,25,26

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