Ch#05 Definitions

Question 1

Define “Fee for technical services”?

Answer 1

“Fee for technical services” means amount received whether periodical or lump sum,for rendering of managerial, technical and consultancy services but does not include

a) Amount received for services rendered for construction ,assembly or like projects or
b) receipts which is chargeable under the head “salary”

Question 2

Explain the term “ Associates”?

Answer 2

Two person shall be associates where the relationship between the two is such that
•one is expected to act in accordance with the intentions of other,or
•both are expected to act in accordance with the intentions of a third person.

Question 3

Under the provision of ITO,2001describe the situation in which employee may not be regarded as associates?

Answer 3

Two person shall not be associates solely because:
One is an employee of the other or
Both are employee of a third person

Question 4

Under the provision of ITO,2001describe the situation in which member of AOP and Association may be regarded as associates?

Answer 4

a member of an AOP and the AOP,where the member
Either alone or
Together with an associate or associates under another application of this section controls 50% or more of the rights to income or capital of the Association.

Question 5

Under the provision of ITO,2001describe the situation in which members of AOP may not be regarded as associates?

Answer 5

Members of an AOP shall not be associates where commissioner is satisfied that no one is expected to act in accordance with the intentions of the other .

Question 6

Under the provision of ITO,2001describe the situation in which relative may not be regarded as associates?

Answer 6

Relative shall not be associates where commissioner is satisfied that no one is expected to act in accordance with the intentions of the other .

Question 7

Under the provision of ITO,2001describe the situation in which individual and a relative of individual may be regarded as associates?

Answer 7

An individual and a relative of the individual,where the individual
Either alone or
Together with an associate or associates under another application of this section controls 50% or more of the rights to income or capital of the Association.

Question 8

Under the provision of ITO,2001describe the situation in which trust may be regarded as associates?

Answer 8

Shall be treated as associates

A trust and any person who benefits under the trust

Question 9

Briefly describe relative in relations to an individual?

Answer 9

relative in relations to an individual means :
a)
An ancestor
A descendant of any of the grandparents
Or an adopted child ,of the individual,or of a spouse of the individual; or
b)
a spouse of the individual or
a spouse of any person specified in above clause (a)

Question 10

Under the provision of ITO,2001 state the circumstances under which a shareholder in a company and the company may be regarded as associates?

Answer 10

a shareholder in a company and the company,where the shareholder,
Either alone or
Together with an associate or associates
Control either directly or through one or more interposed persons-
50% or more of the voting power in the company
50% or more of the rights to dividends; or
50% or more of the rights to capital;

Question 11

Under the provision of ITO,2001 state the circumstances under which a two companies may be regarded as associates?

Answer 11

Two companies ,where a person,
Either alone or
Together with an associate or associates
Control either directly or through one or more interposed persons-
50% or more of the voting power in both the companies
50% or more of the rights to dividends in both companies; or
50% or more of the rights to capital in both companies

Question 12

Discuss “public company” ?

Answer 12

Public company means
A company in which at least 50% of the shares are held by federal or provincial government
A company in which at least 50% of the shares are held by foreign government
A company in which at least 50% of the shares are held by foreign company owned by a foreign government
A company whose shares
We’re traded on registered stock exchange in Pakistan at any time in the tax year and
Remains listed on that stock exchange at the end of the year
A unit trust whose units are widely available to the public.

Question 13

Discuss “public company” ?

Answer 13

Public company means
A company in which at least 50% of the shares are held by federal or provincial government
A company in which at least 50% of the shares are held by foreign government

Question 14

Discuss “private company”?

Answer 14

Private company means a company that is not a Public company

Public company company means

A company in which at least 50% of the shares are held by federal or provincial government
A company in which at least 50% of the shares are held by foreign government
A company in which at least 50% of the shares are held by foreign company owned by a foreign government
A company whose shares
We’re traded on registered stock exchange in Pakistan at any time in the tax year and
Remains listed on that stock exchange at the end of the year
A unit trust whose units are widely available to the public

Question 15

Define “charitable purpose”

Answer 15

Charitable purpose include relief of the poor, education , medical relief and the advancement of any other objects of general public utility.

Question 16

Define Income?

Answer 16

Income includes :
Any amount chargeable to tax under this ordinance
Any amount on which collection or deduction of tax is treated as final tax
Any amount chargeable to tax under any provision of this ordinance
Any loss of income

Question 17

Define non profit organization?

Answer 17

non profit organization means any person other than individual, which is

• established for religious , educational, charitable ,welfare purposes for general public,or for promoting an amateur sport
• formed by or under a law as a no profit organization
• approved by the commissioner for a specified period،on an appeal in prescribed form , accompanied by the prescribed documents and
• the person do not derive any benefit from the assets

Question 18

Define principal officer?

Answer 18

Principal officer with reference to company or an association of persons Includes ;

• a director ,a manager,secretary agent accountant or any similar officer;and
• whom the commissioner has served a notice treating him as the principal officer

Question 19

Define taxpayer?

Answer 19

Taxpayer means any person who derives an amount chargeable to tax and includes:

• any representative of a person who derives an amount chargeable to tax under this ordinance
• any person who is required to deduct or collect tax;or
• any person who is required to furnish a return of income or pay tax under this ordinance

Question 20

Define tax ?

Answer 20

Tax means any tax imposed under this law,and includes any penalty,fee or other charge or any sum or amount leviable or payable under this law.