Mohsin Annual Report-Final 1-91:Layout 1.qxd - Siemens Pakistan

118Notes to the Financial Statements24. OTHER OPERATING INCOME 2007 2006Note (Rupees in ‘000)Exchange gain 160,760 - .Profit on sale of property, plant and equipment 15,796 15,769Sales tax refund 2,022 28,809Balances no longer payable written back 4,557 6,557Rental income 9,010 1,128Others 14,631 447206,776 52,71025. FINANCIAL INCOME AND EXPENSESMark-up from trade and other receivables 3,685 1,454Income on amounts placed with banksunder deposit accounts 255,193 80,768Financial income 258,878 82,222Interest on workers' profits participation fund 1,215 9,068Mark-up on short-term finances 147,002 92,943Mark-up on trade and other payables 21,947 7,727Commission on guarantees 16,489 15,047Bank charges for services 106,681 74,154Provision for discounting on long-term receivables 23,605 50,314Financial expenses 316,939 249,253Net finance costs 58,061 167,03126. INCOME TAX EXPENSECurrent- For the year 913,864 929,049- For prior years 102,585 88,4741,016,449 1,017,523Deferred (35,569) (233,739)26.1 980,880 783,78426.1 Reconciliation of income tax expense for the yearAccounting profit 1,964,574 1,508,320Enacted tax rate 35% 35%Tax on accounting profit at enacted rate 687,601 527,912Tax effect of income assessed underPresumptive Tax Regime 190,086 151,296Tax effect of expenses that are not allowablein determining taxable income 608 16,102Prior years' tax expense 102,585 88,474980,880 783,78426.2 The Company makes provision for taxation based on its understanding of the tax laws and regulations and on the basis of advices from its taxconsultants. These provisions may require change in case these laws and regulations are interpreted differently by tax authorities and Company’sappeals are not accepted at various forums.