FIN623 Assignment#1 SOLVED

FIN623 Assignment#1 Idea Solution..
FIN623
IDEA SOLUTION BY AZEEM ULLAH
CASE#1:
PSO Ltd is a public company incorporated under the Companies Ordinance, 1984, whose
shares were traded on the Karachi Stock Exchange from 1 January 2008 until 29 June
2009, on which date the company was delisted. PSO closes its accounts on 30 June each
year. 49% of the shares in PSO are held by the Government of the Kingdom of Saudi
Arabia and 51% by the Federal Government of Pakistan. The control and management of
the affairs of PSO was situated partly in Saudi Arabia during the year ended 30 June
20010.
Required:
State, giving reasons, whether for Pakistan tax purposes for the tax year 2010 PSO
Ltd:
1. Is a resident or a non-resident company?
Solution:
YES, PSO Ltd is a resident company for Pakistan tax purposes for the tax year 2010.
Reason:
As PSO was incorporated under the Companies Ordinance, 1984 and its 51% shares are
still held by the Federal Government of Pakistan in 2010. So it is resident company for
Pakistan.
CASE#2:
Mr Waqas, a resident of Pakistan, derived the amounts as under in the tax year 2010:
1. Rs. 1,000,000 from crops grown on his agricultural land situated in Canada.
2. Rs. 1,500,000 gross, received from the poultry farm he established in June 2010
in Rawalpindi.
3. Rs. 1,000,000 from the deposit of a prospective buyer of his flat, forfeited by Mr
Waqas when the buyer failed to fulfill the terms of the contract for the sale of the
flat.
Required:
State, giving reasons, whether the amounts received by Mr Waqas will be taxable or
exempt for the tax year 2010, based on the Income Tax Ordinance, 2001