Rose Ltd.’s Income Tax computation - Year of Assessment 2013Rs 000

Profit as per account 1,127Add:

Rs 000DepreciationShare issue expenses Expenditure incurred in the production of exempt income (See workings below)

302179

470 951 2,078

Less Capital allowancesDividends not chargeable to tax

2401,038

1,278 Chargeable Income 800 Income tax @ 15% 120Workings

Expenditure incurred in the production of exempt income

The following expenses fall within the purview of Section 26(3) of the Act: Rs 000

Interest on overdraft and short term loans 279Debenture Interest 514Management Fees 462Audit Fees 45Licences 8Electricity 1Printing, postage and stationery 24Accountancy Fees 17Directors Fees 175Secretarial Fees 154Bank charges 95 Total 1,774

Allowable:

Gross income (excluding exempt income)Total income (including exempt income) X 1,774

i.e 2,880 3,918 X 1,774 = 1,304

Non-allowable part (1,774 - 1,304)= 470