Chapter 5 Definitions

Question 1

Associates condition

Answer 1

Two person shall be associates where the relation is such that one is expected act in accordance with the intentions of other or both are respected to act in in accordance of intentions of another person

Question 2

Two persons shall not be associates solely because

Answer 2

One is employee of other
Both are employees of 3rd person

Question 3

Subsection 4 associates

Answer 3

Individual and relative
Members of aop
Member and aop or together with associate if they control more than 50 perc of shares

Question 4

Trust and shareholder associates

Answer 4

Any person who benefits from trust
Shareholder in company and the company where shareholder either alone or together with an associate or associates controls directly or through one or more interpost persons 50% of voting power dividends and rights of capital of company

Question 5

Associates two companies

Answer 5

When a person either alone or together with associate or associates control directly or through interposed people 50% of voting power dividends and right to Capital of both companies

Question 6

When relatives not considered associates and what are relatives

Answer 6

Relative cell not be considered associates when commissioner is satisfied that no one is expected to act in a contents of the other and here relatives are an ancestor a descendant of grandparents or adopted child of individual or of A spouse of individual or spouse of individual or spouse of any person specified above

Question 7

Private and public company

Answer 7

Company is a company that is not public is private

public company is a company in which at least 50% of shares are held by a foreign government and a company in which 50% of shares are held by foreign company owned by foreign government or 50% shares of their own Federal government or

a company who shares are traded ar any date or registered in stock exchange in Pakistan at any time at tax year and remains listed on that exchange at the end of the tax year

or a unit trust whose units are widely available to public

Question 8

Accumulated profits for dividend

Answer 8

Any reserve made up from allowance reduction or exemption under this ordinance
all profits of company including income gains of assets upto date of distribution
all profit of a company incomes gains of assets up to the date of liquidation

Question 9

Dividend a b

Answer 9

Any distribution by a company of accumulated profits to its shareholders whether capitalised or not if such distribution requires the release of assets by company

any distribution by company to shareholders of the debentures whether with or without profit up with the extent of accumulated profits whether capitalized or not

Question 10

Dividend c d

Answer 10

Any distribution by a company to its shareholders on its liquidation up to extent of accumulated profits weather capitalised or not

Any distribution by a company to its your holders on reduction of capital up to extent of a accumulated profits whether capitalised or not

Question 11

Private comp dividend

Answer 11

The payment by a private company has defined in companies at 2017 or trust by way of advance or known to shareholder or for the individual benefit of shareholder The payment should be from accumulated profits in case loan is paid by holder the tax on dividend will be refunded

Question 12

company tax implications dividend

Answer 12

In case of private company it is treated as dividend in the hand of shareholder and company will deduct tax on dividend income

in case of public company no tax implementation on company or shareholder

Question 13

Payments not considered dividend

Answer 13

A distribution on liquidation or reduction of capital where shareholder has no rights in surplus assets on liquidation

any advanced by company involved in lending business

Any dividend paid by a company which is set of against amount previously paid by it and treated as dividend

remittance( to head office) of after tax profit by a branch of petroleum exploration and production foreign company

Question 14

Industrial undertaking employees

Answer 14

Undertaking in Pakistan that employes
10 or more persons and involves electrical or mechanical energy and is not generated by human or animal energy

20 or more people and doesnt involve electrical mechanical or human or animal energy

Question 15

Industrial undertaking engaged in

Answer 15

Manufacture of goods and materials processing goods in a way which substantially changes their original condition
ship building
generation conversion transmission or distribution of electrical energy
working of any mine oil well or any other source of mineral deposits

Question 16

Industrial undertaking people aa ab c

Answer 16

Person doing construction of buildings roads bridges and such other structures including development of land for import of plant and machinery to be used a resident company engaged in hotel business in Pakistan and

telecommunication companies operating under licence of Pakistan telecommunication authority

Question 17

Assessment and assessment year

Answer 17

Assessment includes provisional assessment and amendment assessment and the year means assessment year as defined in the repealed ordinance

Question 18

Charitable purpose and electronic record

Answer 18

Charitable purpose includes relief of poor education medical relief and advancement of any other object of general public utility

electronic record includes contents of communication and transactions under this ordinance including attachments and annexes accounts returns notices and any other associated information created send forwarded downloaded read or printed by any one or several electronic resources

Question 19

Income and income year

Answer 19

Income year is income in repealed ordinance

Income includes
any amount chargeable to tax under this ordinance
any amount subject to collection or deduction of tax which is treated as final tax

any amount treated as income under any provision of this ordinance

any loss of income

Question 20

Non profit organization and board

Answer 20

Non profit organisation means any person other than an individual which is

established for religious educational charitable welfare purposes for general public or for promoting and amateur sport

formed by under law as non organisation approved by commissioner for specified period on an appeal in prescribed form a complete by prescribe documents

the person do not benefits from the assets

Question 21

Tax payer , resident and nonresident payer

Answer 21

Resident taxpayer is attacked sphere who is a resident person and non resident tax payer means a tax payer who is a non resident person and Tax payer means any person who derives and amount chargeable to tax and include any representative of a person who derives and amount chargeable to tax under this ordnance any person who is required to detect or collect tax or any person required to furnish a return of income under this ordinance

Question 22

Tax and principal officer

Answer 22

Tax means any tax imposed under this law and includes any penalty fee or other charges or sum or aMount payable under this law

Principal officer with reference to a company or association of person includes director manager secretary agent accountant or any similar officer and

any person connected with the management or administration of the company or an aop on whom the commissioner has served a notice treating him as the principal officer

Question 23

Royalty

Answer 23

Any amount paid or payable however describe or computed whether periodical or a lump sum as consideration for the use or right to use any patent invention design model secret formula trademark other like property or right

use of any copyright of a literary artistic or scientific work include in films or video tapes for use in connection with television or tapes in connection with radio broadcasting example PTV for broadcasting and ESPN cricket document include consideration for the sale distribution or exhibition of graphic films

the receipt or right to receive any visual images sounds or both transmitted by satellite cable optic fibre or similar technology in connection with television radio or internet broadcasting

the supply of any technical industrial commercial or scientific knowledge experience or skill

The use of right to any industrial commercial or scientific equipment

supply of any assistance that is entirely or subsidiary to any property or right as mentioned in and is furnished as means of enabling the enjoyment of any property or right and

disposal of any property or right referred to in subclasses

Question 24

Difference between royalty and technical services

Answer 24

Royalty consideration for supply of any technical industrial or scientific knowledge experience or scale while

fee for technical surface is consideration for rendering of any managerial technical or consultancy service including services of technical or other personnel
there is transfer of knowledge in royalty in contrast with fee for technical service which involves actual Rendering of surface

Question 25

It enabled services and iris

Answer 25

Include in bound or outbound call center medical transcription remote monitoring graphic designs accounting service human resource service telemedicine centers that entry operations clout computing services data storage services locally produced television programs and insurance claim processing

Iris means a web computer program for operation and management of inland revenue taxes and laws and administrated by the board

Question 26

Permanent establishment a to c

Answer 26

In relation to a person means a fixed place of business through which the business of a person is wholy or partly carried on and include a place of Management branch office factory or workshop premises for solicitng orders warehouse permanent sales exhibition or sales outlet excluding liasion office except if liasion office is involved I’m negotiation of contracts( not purchase)

A mine or gas well quarry or any other place of natural resources

Agricultural pastoral or forestory property

Building site construction assembly project or supervisory activities connected that continue for more than 90 days or 12 months period

Question 27

Permanent establishment d to e

Answer 27

The furnishing of services including consultancy services by any person through employees or his other personnel

a person acting in Pakistan the agent other than an independent agent acting in ordinary course of business on behalf of the person if the agent exercises authority to conclude on behalf of the other person

Plays principle role and conclude contracts without material modification and this contracts are in name of person or transfer of ownership property owned by enterprise for providing services by that person or

has no authority but habitually maintains stock for regular delivery on behalf of other person

Question 28

Permanent establishment f to g

Answer 28

Any substantial equipment installed or other asset or property capable of activity giving rise to income

or a fixed place of business that is used or maintained by a person if the person or an associate of a person carries on business at that place or at another place in Pakistan the place constitutes a permanent establishment of Person or associate

Business carried out by person or his associate at same place or more than one place constitutes complementary functions that are part of a cohesive business operation