CA. PRAMOD JAINFCA, FCS, FCMA, LL.B, MIMA, DISA

CA. PRAMOD JAINFCA, FCS, FCMA, LL.B, MIMA, DISA

4444thththth May May May May 2017201720172017

KCASSC, CIRC KanpurKCASSC, CIRC KanpurKCASSC, CIRC KanpurKCASSC, CIRC Kanpur

4444thththth May May May May 2017201720172017

KCASSC, CIRC KanpurKCASSC, CIRC KanpurKCASSC, CIRC KanpurKCASSC, CIRC Kanpur

ICDS OVERVIEW

IV – Revenue Recognition

V – Tangible Fixed Assets

VII – Government Grants

VIII – Securities

X – Provisions, Contingent

Liabilities & Assets

ICDS OVERVIEW

IV – Revenue Recognition

V – Tangible Fixed Assets

VII – Government Grants

VIII – Securities

X – Provisions, Contingent

Liabilities & Assets

COMPUTATION OF TAXABLE PROFITSCOMPUTATION OF TAXABLE PROFITSCOMPUTATION OF TAXABLE PROFITSCOMPUTATION OF TAXABLE PROFITS

� Pre ICDS Pre ICDS Pre ICDS Pre ICDS ---- On commercial accounting principles On commercial accounting principles On commercial accounting principles On commercial accounting principles

subject to express provision of the Act :subject to express provision of the Act :subject to express provision of the Act :subject to express provision of the Act :----

�Miss Miss Miss Miss DhunDhunDhunDhun DadabhaiDadabhaiDadabhaiDadabhai Kapadia v. CIT [(1967) 63 ITR Kapadia v. CIT [(1967) 63 ITR Kapadia v. CIT [(1967) 63 ITR Kapadia v. CIT [(1967) 63 ITR

651(SC651(SC651(SC651(SC)])])])]

� CIT CIT CIT CIT v. U.P. State Industrial Development Corporation v. U.P. State Industrial Development Corporation v. U.P. State Industrial Development Corporation v. U.P. State Industrial Development Corporation

[(1997) 225 ITR 703 (SC)] it was held that :[(1997) 225 ITR 703 (SC)] it was held that :[(1997) 225 ITR 703 (SC)] it was held that :[(1997) 225 ITR 703 (SC)] it was held that :----

“for the purposes of ascertaining profits and gains “for the purposes of ascertaining profits and gains “for the purposes of ascertaining profits and gains “for the purposes of ascertaining profits and gains

the ordinary principles of commercial accounting the ordinary principles of commercial accounting the ordinary principles of commercial accounting the ordinary principles of commercial accounting

should be applied, so long as they do not conflict should be applied, so long as they do not conflict should be applied, so long as they do not conflict should be applied, so long as they do not conflict

with any express provision of the relevant statute”with any express provision of the relevant statute”with any express provision of the relevant statute”with any express provision of the relevant statute”

� Post ICDS Post ICDS Post ICDS Post ICDS ––––As As As As per commercial accounting per commercial accounting per commercial accounting per commercial accounting

principles as modified by provisions of principles as modified by provisions of principles as modified by provisions of principles as modified by provisions of ICDSICDSICDSICDS

CA. Pramod Jain

ICDSICDSICDSICDS BACKGROUNDBACKGROUNDBACKGROUNDBACKGROUND� CG notified 10 ICDS vide notification no. 32 of 2015 CG notified 10 ICDS vide notification no. 32 of 2015 CG notified 10 ICDS vide notification no. 32 of 2015 CG notified 10 ICDS vide notification no. 32 of 2015

dated 31dated 31dated 31dated 31stststst March 2015 which were applicable from March 2015 which were applicable from March 2015 which were applicable from March 2015 which were applicable from

AY 2016AY 2016AY 2016AY 2016----17 onwards17 onwards17 onwards17 onwards

� Due to various issues and representations made Due to various issues and representations made Due to various issues and representations made Due to various issues and representations made

referred to Expert committee.referred to Expert committee.referred to Expert committee.referred to Expert committee.

� ICDS deferred by 1 year (P. R. Dt. 6ICDS deferred by 1 year (P. R. Dt. 6ICDS deferred by 1 year (P. R. Dt. 6ICDS deferred by 1 year (P. R. Dt. 6thththth July 2016).July 2016).July 2016).July 2016).

� CBDT rescinded the old ICDS through notification no. CBDT rescinded the old ICDS through notification no. CBDT rescinded the old ICDS through notification no. CBDT rescinded the old ICDS through notification no.

86/2016 dated 2986/2016 dated 2986/2016 dated 2986/2016 dated 29thththth September 2016 and issued September 2016 and issued September 2016 and issued September 2016 and issued

revised ICDS vide notification no. 87/2016 and revised ICDS vide notification no. 87/2016 and revised ICDS vide notification no. 87/2016 and revised ICDS vide notification no. 87/2016 and

amended amended amended amended TTTTax ax ax ax AAAAudit Form 3CD.udit Form 3CD.udit Form 3CD.udit Form 3CD.

� Also issued FAQs dated 25Also issued FAQs dated 25Also issued FAQs dated 25Also issued FAQs dated 25thththth March 2017March 2017March 2017March 2017

CA. Pramod Jain

WHO TO FOLLOW WHO TO FOLLOW WHO TO FOLLOW WHO TO FOLLOW ICDSICDSICDSICDS

AssesseeAssesseeAssesseeAssesseehaving having having having PGBP & PGBP & PGBP & PGBP & Other Other Other Other Source Source Source Source income income income income having having having having

Method of Method of Method of Method of AccountingAccountingAccountingAccounting

MercantileMercantileMercantileMercantile

Individual & Individual & Individual & Individual & HUFHUFHUFHUF

Tax Audit Tax Audit Tax Audit Tax Audit ––––To follow To follow To follow To follow ICDSICDSICDSICDS

No Tax No Tax No Tax No Tax Audit Audit Audit Audit –––– No No No No

ICDSICDSICDSICDS

OthersOthersOthersOthersTo follow To follow To follow To follow ICDSICDSICDSICDS

CashCashCashCash No ICDSNo ICDSNo ICDSNo ICDS

CA. Pramod Jain

SUMMARYSUMMARYSUMMARYSUMMARY•Section 145(2)Section 145(2)Section 145(2)Section 145(2)SourceSourceSourceSource

•W.e.fW.e.fW.e.fW.e.f. AY 2017. AY 2017. AY 2017. AY 2017----18 18 18 18 Effective DateEffective DateEffective DateEffective Date

•Only on PGBP & Other SourceOnly on PGBP & Other SourceOnly on PGBP & Other SourceOnly on PGBP & Other Source

•If accounts on mercantile basisIf accounts on mercantile basisIf accounts on mercantile basisIf accounts on mercantile basis

Heads of Heads of Heads of Heads of IncomeIncomeIncomeIncome

•10 vide Not. Dt. 29.09.201610 vide Not. Dt. 29.09.201610 vide Not. Dt. 29.09.201610 vide Not. Dt. 29.09.2016No. of No. of No. of No. of

StandardsStandardsStandardsStandards

•Para 13 of Form 3CD & ITRPara 13 of Form 3CD & ITRPara 13 of Form 3CD & ITRPara 13 of Form 3CD & ITRDisclosureDisclosureDisclosureDisclosure

CA. Pramod Jain

CORRESPONDING AS / CORRESPONDING AS / CORRESPONDING AS / CORRESPONDING AS / INDINDINDIND ASASASAS

ICDICDICDICD

SSSS

Name of ICDSName of ICDSName of ICDSName of ICDS CorrespondiCorrespondiCorrespondiCorrespondi

ng ASng ASng ASng AS

Corresponding Corresponding Corresponding Corresponding

IndIndIndInd ASASASAS

IIII Accounting PoliciesAccounting PoliciesAccounting PoliciesAccounting Policies 1 & 51 & 51 & 51 & 5 1111 & 8& 8& 8& 8

IIIIIIII Valuation of InventoriesValuation of InventoriesValuation of InventoriesValuation of Inventories 2222 2222

IIIIIIIIIIII Construction ContractsConstruction ContractsConstruction ContractsConstruction Contracts 7777 115115115115

IVIVIVIV Revenue RecognitionRevenue RecognitionRevenue RecognitionRevenue Recognition 9999 115115115115

VVVV Tangible Fixed AssetsTangible Fixed AssetsTangible Fixed AssetsTangible Fixed Assets 10101010 16161616

VIVIVIVI Changes in Foreign Exchange RatesChanges in Foreign Exchange RatesChanges in Foreign Exchange RatesChanges in Foreign Exchange Rates 11111111 21212121

VIIVIIVIIVII Government GrantsGovernment GrantsGovernment GrantsGovernment Grants 12121212 20202020

VIIIVIIIVIIIVIII SecuritiesSecuritiesSecuritiesSecurities 13131313 109109109109

IXIXIXIX Borrowing CostsBorrowing CostsBorrowing CostsBorrowing Costs 16161616 23232323

XXXX Provisions, Contingent Liabilities & Provisions, Contingent Liabilities & Provisions, Contingent Liabilities & Provisions, Contingent Liabilities &

ContingentContingentContingentContingent AssetsAssetsAssetsAssets

29292929 37373737

CA. Pramod Jain

BASICSBASICSBASICSBASICS� It’s for income computation only and NOT for It’s for income computation only and NOT for It’s for income computation only and NOT for It’s for income computation only and NOT for

books maintenancebooks maintenancebooks maintenancebooks maintenance

� ICAI standards amended ICAI standards amended ICAI standards amended ICAI standards amended –––– Examples removedExamples removedExamples removedExamples removed

� Would it impact incomes u/s 44AD, 44AE, Would it impact incomes u/s 44AD, 44AE, Would it impact incomes u/s 44AD, 44AE, Would it impact incomes u/s 44AD, 44AE, etcetcetcetc????

� FAQ FAQ FAQ FAQ ---- Applicable Applicable Applicable Applicable on 44 on 44 on 44 on 44 AD…wherever AD…wherever AD…wherever AD…wherever possible possible possible possible ––––

example example example example construction construction construction construction contracts, revenue contracts, revenue contracts, revenue contracts, revenue

recognition?? recognition?? recognition?? recognition??

� What about firms under s. 44AD?What about firms under s. 44AD?What about firms under s. 44AD?What about firms under s. 44AD?

� No ICDS details in ITR 1, 2 & 4No ICDS details in ITR 1, 2 & 4No ICDS details in ITR 1, 2 & 4No ICDS details in ITR 1, 2 & 4

CA. Pramod Jain

BASICSBASICSBASICSBASICS� Would Would Would Would it impact MAT / AMT??it impact MAT / AMT??it impact MAT / AMT??it impact MAT / AMT??

� ICDS not to apply on MAT but applicable on AMT ICDS not to apply on MAT but applicable on AMT ICDS not to apply on MAT but applicable on AMT ICDS not to apply on MAT but applicable on AMT –––– Q Q Q Q

6 FAQ6 FAQ6 FAQ6 FAQ

� Take care of AS 22Take care of AS 22Take care of AS 22Take care of AS 22

� Transitional provisions Transitional provisions Transitional provisions Transitional provisions ---- neither double taxation nor neither double taxation nor neither double taxation nor neither double taxation nor

escapement of escapement of escapement of escapement of incomeincomeincomeincome

� Disclosure requirements in 8 ICDSDisclosure requirements in 8 ICDSDisclosure requirements in 8 ICDSDisclosure requirements in 8 ICDS

� No changes from 2015 to 2016 in No changes from 2015 to 2016 in No changes from 2015 to 2016 in No changes from 2015 to 2016 in

� ICDS I (Accounting Policies), ICDS I (Accounting Policies), ICDS I (Accounting Policies), ICDS I (Accounting Policies),

� ICDS VII (Government Grants) & ICDS VII (Government Grants) & ICDS VII (Government Grants) & ICDS VII (Government Grants) &

� ICDS X (Contingencies..)ICDS X (Contingencies..)ICDS X (Contingencies..)ICDS X (Contingencies..)

CA. Pramod Jain

ICDSICDSICDSICDS VS. JUDICIAL PRECEDENTSVS. JUDICIAL PRECEDENTSVS. JUDICIAL PRECEDENTSVS. JUDICIAL PRECEDENTS

�Settled law Settled law Settled law Settled law that that that that notification cannot notification cannot notification cannot notification cannot

override the override the override the override the statute:statute:statute:statute:

�CIT CIT CIT CIT v. v. v. v. SirpurSirpurSirpurSirpur Paper Mills Paper Mills Paper Mills Paper Mills ((((1999) 237 ITR 41 1999) 237 ITR 41 1999) 237 ITR 41 1999) 237 ITR 41

(SC(SC(SC(SC))))

�CIT CIT CIT CIT v. Taj v. Taj v. Taj v. Taj MahalMahalMahalMahal Hotels Hotels Hotels Hotels ((((1971) 82 ITR 44 (SC1971) 82 ITR 44 (SC1971) 82 ITR 44 (SC1971) 82 ITR 44 (SC))))

�Preamble Preamble Preamble Preamble to every to every to every to every ICDS ICDS ICDS ICDS states states states states ---- in case of in case of in case of in case of

conflict conflict conflict conflict between between between between provisions provisions provisions provisions of of of of Act Act Act Act & ICDS & ICDS & ICDS & ICDS

---- Act shall Act shall Act shall Act shall prevailprevailprevailprevail

CA. Pramod Jain

ICDSICDSICDSICDS VS. JUDICIAL PRECEDENTSVS. JUDICIAL PRECEDENTSVS. JUDICIAL PRECEDENTSVS. JUDICIAL PRECEDENTS

� In In In In AvinderAvinderAvinderAvinder Singh [AIR 1979 SC 321] Singh [AIR 1979 SC 321] Singh [AIR 1979 SC 321] Singh [AIR 1979 SC 321] SC SC SC SC held that what held that what held that what held that what

constitutes an essential feature cannot be delineated. constitutes an essential feature cannot be delineated. constitutes an essential feature cannot be delineated. constitutes an essential feature cannot be delineated.

It laid It laid It laid It laid down down down down following following following following tests for valid delegation tests for valid delegation tests for valid delegation tests for valid delegation ::::

� Legislature Legislature Legislature Legislature cannot efface cannot efface cannot efface cannot efface itselfitselfitselfitself

� It cannot delegate It cannot delegate It cannot delegate It cannot delegate plenary plenary plenary plenary or the essential legislative or the essential legislative or the essential legislative or the essential legislative

functionfunctionfunctionfunction

� Even if there be Even if there be Even if there be Even if there be delegationdelegationdelegationdelegation, Parliamentary control over , Parliamentary control over , Parliamentary control over , Parliamentary control over

delegated legislation should be a living continuity as a delegated legislation should be a living continuity as a delegated legislation should be a living continuity as a delegated legislation should be a living continuity as a

constitutional necessityconstitutional necessityconstitutional necessityconstitutional necessity....

� FAQ FAQ FAQ FAQ ---- ICDS notified u/s 145(2) ICDS notified u/s 145(2) ICDS notified u/s 145(2) ICDS notified u/s 145(2) & & & & would be applicable would be applicable would be applicable would be applicable

to transactional issues dealt therein from AY 2017to transactional issues dealt therein from AY 2017to transactional issues dealt therein from AY 2017to transactional issues dealt therein from AY 2017----18 18 18 18

onwardsonwardsonwardsonwards

Lunawat & Co.

VALIDITY OF DELEGATED LEGISLATIONVALIDITY OF DELEGATED LEGISLATIONVALIDITY OF DELEGATED LEGISLATIONVALIDITY OF DELEGATED LEGISLATION

� AS 22 validity (delegated legislation) came up AS 22 validity (delegated legislation) came up AS 22 validity (delegated legislation) came up AS 22 validity (delegated legislation) came up

before the Supreme court in the case of before the Supreme court in the case of before the Supreme court in the case of before the Supreme court in the case of J.K. J.K. J.K. J.K.

Industries Ltd. v. Union of India [2008] 297 ITR 176 Industries Ltd. v. Union of India [2008] 297 ITR 176 Industries Ltd. v. Union of India [2008] 297 ITR 176 Industries Ltd. v. Union of India [2008] 297 ITR 176

(SC)(SC)(SC)(SC)

� Supreme Court upheld the validity of the Rule Supreme Court upheld the validity of the Rule Supreme Court upheld the validity of the Rule Supreme Court upheld the validity of the Rule

adopting ASadopting ASadopting ASadopting AS‐‐‐‐22 and held that the disclosure of 22 and held that the disclosure of 22 and held that the disclosure of 22 and held that the disclosure of

true and fair view of the profits and the state of true and fair view of the profits and the state of true and fair view of the profits and the state of true and fair view of the profits and the state of

affairs is the guideline inherent in the provisions affairs is the guideline inherent in the provisions affairs is the guideline inherent in the provisions affairs is the guideline inherent in the provisions

of the Companies Act delegating the powers to of the Companies Act delegating the powers to of the Companies Act delegating the powers to of the Companies Act delegating the powers to

notify accounting standards and that the notify accounting standards and that the notify accounting standards and that the notify accounting standards and that the

adoption of ASadoption of ASadoption of ASadoption of AS‐‐‐‐22 was within such guideline22 was within such guideline22 was within such guideline22 was within such guideline

CA. Pramod Jain

SEQUENCE OF PREVALENCESEQUENCE OF PREVALENCESEQUENCE OF PREVALENCESEQUENCE OF PREVALENCE

ACTACTACTACT

RULESRULESRULESRULES

ICDSICDSICDSICDS

JUDICIAL JUDICIAL JUDICIAL JUDICIAL PRECEDENTSPRECEDENTSPRECEDENTSPRECEDENTS

CA. Pramod Jain

WHAT TO DO WHAT TO DO WHAT TO DO WHAT TO DO CA. Pramod Jain

ICDSICDSICDSICDS STUDY & EVALUATIONSTUDY & EVALUATIONSTUDY & EVALUATIONSTUDY & EVALUATION

AssesseAssesseAssesseAssesse AuditorAuditorAuditorAuditor

CA. Pramod Jain

ICDSICDSICDSICDS CHECKLISTCHECKLISTCHECKLISTCHECKLISTICDICDICDICD

SSSS

Name of ICDSName of ICDSName of ICDSName of ICDS Whether Whether Whether Whether

ApplicableApplicableApplicableApplicable

Amounts in Amounts in Amounts in Amounts in

ITR & 3CDITR & 3CDITR & 3CDITR & 3CD

DisclosurDisclosurDisclosurDisclosur

es in 3CD es in 3CD es in 3CD es in 3CD

RemaRemaRemaRema

rksrksrksrks

IIII Accounting PoliciesAccounting PoliciesAccounting PoliciesAccounting Policies YesYesYesYes

IIIIIIII Valuation of InventoriesValuation of InventoriesValuation of InventoriesValuation of Inventories

IIIIIIIIIIII Construction ContractsConstruction ContractsConstruction ContractsConstruction Contracts

IVIVIVIV Revenue RecognitionRevenue RecognitionRevenue RecognitionRevenue Recognition YesYesYesYes

VVVV Tangible Fixed AssetsTangible Fixed AssetsTangible Fixed AssetsTangible Fixed Assets

VIVIVIVI Changes in Foreign Exchange Changes in Foreign Exchange Changes in Foreign Exchange Changes in Foreign Exchange

RatesRatesRatesRates

VIIVIIVIIVII Government GrantsGovernment GrantsGovernment GrantsGovernment Grants

VIIIVIIIVIIIVIII SecuritiesSecuritiesSecuritiesSecurities

IXIXIXIX Borrowing CostsBorrowing CostsBorrowing CostsBorrowing Costs

XXXX Provisions, Contingent Provisions, Contingent Provisions, Contingent Provisions, Contingent LiabLiabLiabLiab. & . & . & . &

ContingentContingentContingentContingent AssetsAssetsAssetsAssets

CA. Pramod Jain

FORM 3CD FORM 3CD FORM 3CD FORM 3CD ––––CLAUSE CLAUSE CLAUSE CLAUSE ---- 13131313�Method of accounting employed in previous Method of accounting employed in previous Method of accounting employed in previous Method of accounting employed in previous

yearyearyearyear

�Change in method of accounting appliedChange in method of accounting appliedChange in method of accounting appliedChange in method of accounting applied

� If, yes, effect thereof on profit / lossIf, yes, effect thereof on profit / lossIf, yes, effect thereof on profit / lossIf, yes, effect thereof on profit / loss

�Deviation in method of accounting from Deviation in method of accounting from Deviation in method of accounting from Deviation in method of accounting from

accounting standards prescribed u/s 145 accounting standards prescribed u/s 145 accounting standards prescribed u/s 145 accounting standards prescribed u/s 145

and effect thereof on P/Land effect thereof on P/Land effect thereof on P/Land effect thereof on P/L

� ICDS reporting brought in ICDS reporting brought in ICDS reporting brought in ICDS reporting brought in w.e.fw.e.fw.e.fw.e.f. 1.4.2017. 1.4.2017. 1.4.2017. 1.4.2017

CA. Pramod Jain

FORM 3CD FORM 3CD FORM 3CD FORM 3CD ––––CLAUSE CLAUSE CLAUSE CLAUSE ---- 13131313�((((d) d) d) d) –––– whether any adjustment is required to whether any adjustment is required to whether any adjustment is required to whether any adjustment is required to

be made to the profits or loss for complying be made to the profits or loss for complying be made to the profits or loss for complying be made to the profits or loss for complying

with the ICDS notified u/s 145(2)with the ICDS notified u/s 145(2)with the ICDS notified u/s 145(2)with the ICDS notified u/s 145(2)

� (e) (e) (e) (e) –––– Is, yes, give detailsIs, yes, give detailsIs, yes, give detailsIs, yes, give details

� (f) (f) (f) (f) –––– Disclosure as per ICDSDisclosure as per ICDSDisclosure as per ICDSDisclosure as per ICDS

�For 8 standardsFor 8 standardsFor 8 standardsFor 8 standards

�Two omitted as no disclosure required as per Two omitted as no disclosure required as per Two omitted as no disclosure required as per Two omitted as no disclosure required as per

the standard:the standard:the standard:the standard:

�Changes in Foreign Exchange RatesChanges in Foreign Exchange RatesChanges in Foreign Exchange RatesChanges in Foreign Exchange Rates

�SecuritiesSecuritiesSecuritiesSecurities

CA. Pramod Jain

FORM 3CD FORM 3CD FORM 3CD FORM 3CD ––––CLAUSE CLAUSE CLAUSE CLAUSE –––– 13 13 13 13 ---- ICDSICDSICDSICDSICDICDICDICD

SSSS

Name of ICDSName of ICDSName of ICDSName of ICDS Increase Increase Increase Increase

in Profitin Profitin Profitin Profit

Decrease Decrease Decrease Decrease

in Profitin Profitin Profitin Profit

Net Net Net Net

((((RsRsRsRs.).).).)

DescriptiDescriptiDescriptiDescripti

onononon

IIII Accounting PoliciesAccounting PoliciesAccounting PoliciesAccounting Policies

IIIIIIII Valuation of InventoriesValuation of InventoriesValuation of InventoriesValuation of Inventories

IIIIIIIIIIII Construction ContractsConstruction ContractsConstruction ContractsConstruction Contracts

IVIVIVIV Revenue RecognitionRevenue RecognitionRevenue RecognitionRevenue Recognition

VVVV Tangible Fixed AssetsTangible Fixed AssetsTangible Fixed AssetsTangible Fixed Assets

VIVIVIVI Changes in Foreign Exchange RatesChanges in Foreign Exchange RatesChanges in Foreign Exchange RatesChanges in Foreign Exchange Rates

VIIVIIVIIVII Government GrantsGovernment GrantsGovernment GrantsGovernment Grants

VIIIVIIIVIIIVIII SecuritiesSecuritiesSecuritiesSecurities

IXIXIXIX Borrowing CostsBorrowing CostsBorrowing CostsBorrowing Costs

XXXX Provisions, Contingent Provisions, Contingent Provisions, Contingent Provisions, Contingent LiabLiabLiabLiab & Assets& Assets& Assets& Assets

TotalTotalTotalTotal

CA. Pramod Jain

ITRITRITRITRSchedule ICDS Effect of Income Computation Disclosure Standards on profit

Sl. No. ICDS Amount

(i) (ii) (iii)

I Accounting Policies

II Valuation of Inventories

III Construction Contracts

IV Revenue Recognition

V Tangible Fixed Assets

VI Changes in Foreign Exchange Rates

VII Government Grants

VIII Securities

IX Borrowing Costs

X Provisions, Contingent Liabilities and Contingent Assets

XI Total Net effect (I+II+III+IV+V+VI+VII+VIII+IX+X) 0

� Is there any impact of this disclosure on Is there any impact of this disclosure on Is there any impact of this disclosure on Is there any impact of this disclosure on

Computation in ITR automatically?Computation in ITR automatically?Computation in ITR automatically?Computation in ITR automatically?

CA. Pramod Jain

WHAT IF WHAT IF WHAT IF WHAT IF ICDSICDSICDSICDS NOT FOLLOWEDNOT FOLLOWEDNOT FOLLOWEDNOT FOLLOWED� Section 145(3Section 145(3Section 145(3Section 145(3) ) ) ) ---- AO AO AO AO has the power to make best has the power to make best has the power to make best has the power to make best

judgementjudgementjudgementjudgement assessment u/s. 144 if he is not assessment u/s. 144 if he is not assessment u/s. 144 if he is not assessment u/s. 144 if he is not

satisfied about the satisfied about the satisfied about the satisfied about the ::::----

� Correctness Correctness Correctness Correctness or completeness of the accounts of the or completeness of the accounts of the or completeness of the accounts of the or completeness of the accounts of the

assesseeassesseeassesseeassessee ; or ; or ; or ; or

�Method Method Method Method of accounting is not regularly followed of accounting is not regularly followed of accounting is not regularly followed of accounting is not regularly followed

;;;;orororor

� Income Income Income Income not computed as per ICDS not computed as per ICDS not computed as per ICDS not computed as per ICDS

� Hence Hence Hence Hence ICDS has to be mandatorily followed or else ICDS has to be mandatorily followed or else ICDS has to be mandatorily followed or else ICDS has to be mandatorily followed or else

best best best best judgementjudgementjudgementjudgement assessment can be done by assessment can be done by assessment can be done by assessment can be done by

Assessing OfficerAssessing OfficerAssessing OfficerAssessing Officer.

CA. Pramod Jain

CBDT FAQS DT. 23CBDT FAQS DT. 23CBDT FAQS DT. 23CBDT FAQS DT. 23RDRDRDRD MARCH 2017MARCH 2017MARCH 2017MARCH 2017

� Total 25 FAQsTotal 25 FAQsTotal 25 FAQsTotal 25 FAQs

� ICDS to apply on ICDS to apply on ICDS to apply on ICDS to apply on IndIndIndInd AS FS tooAS FS tooAS FS tooAS FS too

� Applicable to all including bank Applicable to all including bank Applicable to all including bank Applicable to all including bank etcetcetcetc unless unless unless unless

specified specified specified specified –––– like ICDS VIII (securities) for certain like ICDS VIII (securities) for certain like ICDS VIII (securities) for certain like ICDS VIII (securities) for certain

financial institutions & ICDS I for Insurance financial institutions & ICDS I for Insurance financial institutions & ICDS I for Insurance financial institutions & ICDS I for Insurance

businessbusinessbusinessbusiness

� Reasonable Reasonable Reasonable Reasonable cause is an existing concept cause is an existing concept cause is an existing concept cause is an existing concept

conferring flexibility in deserving conferring flexibility in deserving conferring flexibility in deserving conferring flexibility in deserving casescasescasescases

� No specific ICDS yet for real estate developers & No specific ICDS yet for real estate developers & No specific ICDS yet for real estate developers & No specific ICDS yet for real estate developers &

BOT projects and leases. Normal Act & ICDS BOT projects and leases. Normal Act & ICDS BOT projects and leases. Normal Act & ICDS BOT projects and leases. Normal Act & ICDS

applicableapplicableapplicableapplicable

CA. Pramod Jain

CBDT FAQS DT. 23CBDT FAQS DT. 23CBDT FAQS DT. 23CBDT FAQS DT. 23RDRDRDRD MARCH 2017MARCH 2017MARCH 2017MARCH 2017

� For Derivative contracts :For Derivative contracts :For Derivative contracts :For Derivative contracts :

� Forward contracts and similar Forward contracts and similar Forward contracts and similar Forward contracts and similar ---- ICDS VI [Foreign ICDS VI [Foreign ICDS VI [Foreign ICDS VI [Foreign

Exchange] subject to para 3 of ICDS VIII [securities]Exchange] subject to para 3 of ICDS VIII [securities]Exchange] subject to para 3 of ICDS VIII [securities]Exchange] subject to para 3 of ICDS VIII [securities]

� For others ICDS IFor others ICDS IFor others ICDS IFor others ICDS I

� Disclosure Disclosure Disclosure Disclosure where to be made where to be made where to be made where to be made –––– Q 25Q 25Q 25Q 25

�Net effect of ICDS to be disclosed in IT Return Net effect of ICDS to be disclosed in IT Return Net effect of ICDS to be disclosed in IT Return Net effect of ICDS to be disclosed in IT Return

�Form 3CDForm 3CDForm 3CDForm 3CD

�No separate disclosures persons who are not No separate disclosures persons who are not No separate disclosures persons who are not No separate disclosures persons who are not

liable for tax liable for tax liable for tax liable for tax auditauditauditaudit

CA. Pramod Jain

IV IV IV IV –––– REVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITIONCA. Pramod Jain

ICDS IV ICDS IV ICDS IV ICDS IV –––– REVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITION� Both AS & ICDS deals with recognition of Both AS & ICDS deals with recognition of Both AS & ICDS deals with recognition of Both AS & ICDS deals with recognition of

revenue from:revenue from:revenue from:revenue from:

�Sale of goods; Sale of goods; Sale of goods; Sale of goods;

�Rendering of services; Rendering of services; Rendering of services; Rendering of services;

�Use by others of the person’s resources Use by others of the person’s resources Use by others of the person’s resources Use by others of the person’s resources

yielding interest, royalties or dividendsyielding interest, royalties or dividendsyielding interest, royalties or dividendsyielding interest, royalties or dividends.

� Does not deal with aspects of revenue dealt with Does not deal with aspects of revenue dealt with Does not deal with aspects of revenue dealt with Does not deal with aspects of revenue dealt with

other ICDSother ICDSother ICDSother ICDS

� Main issue is the timing of recognition of Main issue is the timing of recognition of Main issue is the timing of recognition of Main issue is the timing of recognition of

revenue.revenue.revenue.revenue.

CA. Pramod Jain

ICDS IV ICDS IV ICDS IV ICDS IV –––– REVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITION� Revenue for sale of goods Revenue for sale of goods Revenue for sale of goods Revenue for sale of goods ––––

� AS 9 AS 9 AS 9 AS 9 –––– ….. when no significant uncertainty exists ….. when no significant uncertainty exists ….. when no significant uncertainty exists ….. when no significant uncertainty exists

regarding amount of consideration that will be regarding amount of consideration that will be regarding amount of consideration that will be regarding amount of consideration that will be

derived .. derived .. derived .. derived ..

� ICDS IV ICDS IV ICDS IV ICDS IV ---- when there is reasonable certainty of its when there is reasonable certainty of its when there is reasonable certainty of its when there is reasonable certainty of its

ultimate collection ….. ultimate collection ….. ultimate collection ….. ultimate collection …..

� In AS & ICDS In AS & ICDS In AS & ICDS In AS & ICDS ---- Where Where Where Where the ability to assess the the ability to assess the the ability to assess the the ability to assess the

ultimate collection with reasonable certainty is ultimate collection with reasonable certainty is ultimate collection with reasonable certainty is ultimate collection with reasonable certainty is

lacking at the time of raising any claim for lacking at the time of raising any claim for lacking at the time of raising any claim for lacking at the time of raising any claim for

escalation of price and export incentives, revenue escalation of price and export incentives, revenue escalation of price and export incentives, revenue escalation of price and export incentives, revenue

recognition in respect of such claim shall be recognition in respect of such claim shall be recognition in respect of such claim shall be recognition in respect of such claim shall be

postponed to the extent of uncertainty involved postponed to the extent of uncertainty involved postponed to the extent of uncertainty involved postponed to the extent of uncertainty involved

CA. Pramod Jain

ICDS IV ICDS IV ICDS IV ICDS IV –––– REVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITION� For Service Contracts, AS allows both methods:For Service Contracts, AS allows both methods:For Service Contracts, AS allows both methods:For Service Contracts, AS allows both methods:

� Percentage completion method; andPercentage completion method; andPercentage completion method; andPercentage completion method; and

� Completed Contract methodCompleted Contract methodCompleted Contract methodCompleted Contract method

� ICDS requires mandatorily compliance of ICDS requires mandatorily compliance of ICDS requires mandatorily compliance of ICDS requires mandatorily compliance of

percentage completion method & Requirements percentage completion method & Requirements percentage completion method & Requirements percentage completion method & Requirements

of ICDS of ICDS of ICDS of ICDS –––– III, shall mutatis mutandis applyIII, shall mutatis mutandis applyIII, shall mutatis mutandis applyIII, shall mutatis mutandis apply

� However, if However, if However, if However, if revenue from service contracts revenue from service contracts revenue from service contracts revenue from service contracts is is is is

duration of not more than 90 duration of not more than 90 duration of not more than 90 duration of not more than 90 days, then revenue days, then revenue days, then revenue days, then revenue

may be recognized under completed contract may be recognized under completed contract may be recognized under completed contract may be recognized under completed contract

method. AS 9 method. AS 9 method. AS 9 method. AS 9 –––– no such duration no such duration no such duration no such duration

CA. Pramod Jain

ICDS IV ICDS IV ICDS IV ICDS IV –––– REVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITION� Interest income to accrue on time basis Interest income to accrue on time basis Interest income to accrue on time basis Interest income to accrue on time basis by the amount by the amount by the amount by the amount

outstanding and the rate applicableoutstanding and the rate applicableoutstanding and the rate applicableoutstanding and the rate applicable . Same as . Same as . Same as . Same as ASASASAS 9999

� However, as per AS 9 However, as per AS 9 However, as per AS 9 However, as per AS 9 ---- interestinterestinterestinterest, royalties & dividends to , royalties & dividends to , royalties & dividends to , royalties & dividends to

be be be be recognized recognized recognized recognized when no significant when no significant when no significant when no significant uncertainty uncertainty uncertainty uncertainty as to as to as to as to

measurability or collectability existsmeasurability or collectability existsmeasurability or collectability existsmeasurability or collectability exists

� Judicial PronouncementsJudicial PronouncementsJudicial PronouncementsJudicial Pronouncements

� Right to receive Right to receive Right to receive Right to receive ---- E.D. Sassoon & Co. Ltd. v. CIT (SC) (26 ITR 27)E.D. Sassoon & Co. Ltd. v. CIT (SC) (26 ITR 27)E.D. Sassoon & Co. Ltd. v. CIT (SC) (26 ITR 27)E.D. Sassoon & Co. Ltd. v. CIT (SC) (26 ITR 27)

� Interest income to accrue on coupon date Interest income to accrue on coupon date Interest income to accrue on coupon date Interest income to accrue on coupon date ---- DIT v. DIT v. DIT v. DIT v.

Credit Suisse First Boston (Cyprus) Ltd 351 ITR 323 (Credit Suisse First Boston (Cyprus) Ltd 351 ITR 323 (Credit Suisse First Boston (Cyprus) Ltd 351 ITR 323 (Credit Suisse First Boston (Cyprus) Ltd 351 ITR 323 (BomBomBomBom.) .) .) .)

� Interest Interest Interest Interest on security on security on security on security –––– 30/6 & 31/12. 30/6 & 31/12. 30/6 & 31/12. 30/6 & 31/12. Sells Sells Sells Sells security on security on security on security on

30th April. Accounts interest on accrual basis till 31st 30th April. Accounts interest on accrual basis till 31st 30th April. Accounts interest on accrual basis till 31st 30th April. Accounts interest on accrual basis till 31st

March. Deduction of amount already taxed but not March. Deduction of amount already taxed but not March. Deduction of amount already taxed but not March. Deduction of amount already taxed but not

received to be allowed as deduction. FAQ received to be allowed as deduction. FAQ received to be allowed as deduction. FAQ received to be allowed as deduction. FAQ –––– Q 18Q 18Q 18Q 18

CA. Pramod Jain

ICDS IV ICDS IV ICDS IV ICDS IV –––– REVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITION� Reasonable certainty of ultimate collection of interest Reasonable certainty of ultimate collection of interest Reasonable certainty of ultimate collection of interest Reasonable certainty of ultimate collection of interest

& royalty not given. Recognize and if not realised claim & royalty not given. Recognize and if not realised claim & royalty not given. Recognize and if not realised claim & royalty not given. Recognize and if not realised claim

bad debts u/s 36(1)(vii) / 43D (banks, bad debts u/s 36(1)(vii) / 43D (banks, bad debts u/s 36(1)(vii) / 43D (banks, bad debts u/s 36(1)(vii) / 43D (banks, etcetcetcetc) ) ) ) –––– FAQ FAQ FAQ FAQ –––– Q Q Q Q

13131313

� Interest on NPAs other than Banks, Interest on NPAs other than Banks, Interest on NPAs other than Banks, Interest on NPAs other than Banks, etcetcetcetc????

� Real Income theory Real Income theory Real Income theory Real Income theory ---- GodhraGodhraGodhraGodhra Electricity (SC) (225 ITR 746), Electricity (SC) (225 ITR 746), Electricity (SC) (225 ITR 746), Electricity (SC) (225 ITR 746),

� Accrual concept u/s 5Accrual concept u/s 5Accrual concept u/s 5Accrual concept u/s 5

� ICDS ICDS ICDS ICDS applicable on tax on gross basis on interest, applicable on tax on gross basis on interest, applicable on tax on gross basis on interest, applicable on tax on gross basis on interest,

royalty & FTS for nonroyalty & FTS for nonroyalty & FTS for nonroyalty & FTS for non----residents u/s 115A. FAQ residents u/s 115A. FAQ residents u/s 115A. FAQ residents u/s 115A. FAQ –––– Q 14Q 14Q 14Q 14

� Interest Interest Interest Interest on Incomeon Incomeon Incomeon Income----tax, Service Tax, etc. shall now be tax, Service Tax, etc. shall now be tax, Service Tax, etc. shall now be tax, Service Tax, etc. shall now be

taxable on receipt basis instead of accrual basis as taxable on receipt basis instead of accrual basis as taxable on receipt basis instead of accrual basis as taxable on receipt basis instead of accrual basis as

contemplated under econtemplated under econtemplated under econtemplated under earlier arlier arlier arlier ICDS ICDS ICDS ICDS

CA. Pramod Jain

ICDS IV ICDS IV ICDS IV ICDS IV –––– REVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITIONREVENUE RECOGNITION� AS 9 Para 8.5 AS 9 Para 8.5 AS 9 Para 8.5 AS 9 Para 8.5 –––– When interest, royalties & dividends When interest, royalties & dividends When interest, royalties & dividends When interest, royalties & dividends

from foreign countries require exchange permission & from foreign countries require exchange permission & from foreign countries require exchange permission & from foreign countries require exchange permission &

uncertainty in remittance is anticipated, recognition uncertainty in remittance is anticipated, recognition uncertainty in remittance is anticipated, recognition uncertainty in remittance is anticipated, recognition

may need to be postponed. may need to be postponed. may need to be postponed. may need to be postponed.

� No similar provision in ICDS No similar provision in ICDS No similar provision in ICDS No similar provision in ICDS

� Dividend to be recognised as per Act. AS 9 Dividend to be recognised as per Act. AS 9 Dividend to be recognised as per Act. AS 9 Dividend to be recognised as per Act. AS 9 ---- owner’s owner’s owner’s owner’s

right to receive is establishedright to receive is establishedright to receive is establishedright to receive is established

� Royalty to Royalty to Royalty to Royalty to be recognized with the terms of agreement be recognized with the terms of agreement be recognized with the terms of agreement be recognized with the terms of agreement

unless having regard to the substance unless having regard to the substance unless having regard to the substance unless having regard to the substance of of of of transaction, it transaction, it transaction, it transaction, it

is more appropriate to recognize revenue on some is more appropriate to recognize revenue on some is more appropriate to recognize revenue on some is more appropriate to recognize revenue on some

other systematic &other systematic &other systematic &other systematic & rational rational rational rational basis. Same as basis. Same as basis. Same as basis. Same as ASASASAS

CA. Pramod Jain

ICDS IV ICDS IV ICDS IV ICDS IV –––– TRANSITIONAL PROVISIONTRANSITIONAL PROVISIONTRANSITIONAL PROVISIONTRANSITIONAL PROVISION� The The The The transitional provisions of transitional provisions of transitional provisions of transitional provisions of ICDS III shall ICDS III shall ICDS III shall ICDS III shall mutatis mutatis mutatis mutatis

mutandis apply to mutandis apply to mutandis apply to mutandis apply to recognition recognition recognition recognition of revenue of revenue of revenue of revenue & associated & associated & associated & associated

costs for a service transaction undertaken on or before costs for a service transaction undertaken on or before costs for a service transaction undertaken on or before costs for a service transaction undertaken on or before

31.3. 31.3. 31.3. 31.3. 2016 but not completed by the said date. 2016 but not completed by the said date. 2016 but not completed by the said date. 2016 but not completed by the said date.

� Revenue Revenue Revenue Revenue for a for a for a for a transaction transaction transaction transaction other than other than other than other than dividend dividend dividend dividend

undertaken undertaken undertaken undertaken on or on or on or on or before 31.3.2016 before 31.3.2016 before 31.3.2016 before 31.3.2016 but not completed but not completed but not completed but not completed

by the said date shall be recognised in accordance with by the said date shall be recognised in accordance with by the said date shall be recognised in accordance with by the said date shall be recognised in accordance with

the provisions of this the provisions of this the provisions of this the provisions of this ICDS ICDS ICDS ICDS for the for the for the for the PY commencing on PY commencing on PY commencing on PY commencing on

1.4.2016 & 1.4.2016 & 1.4.2016 & 1.4.2016 & subsequent subsequent subsequent subsequent PY. PY. PY. PY. The amount of revenue, if The amount of revenue, if The amount of revenue, if The amount of revenue, if

any, recognised for the said transaction for any any, recognised for the said transaction for any any, recognised for the said transaction for any any, recognised for the said transaction for any PY PY PY PY

commencing commencing commencing commencing on or before on or before on or before on or before 1.4.2015 1.4.2015 1.4.2015 1.4.2015 shall be taken into shall be taken into shall be taken into shall be taken into

a/c a/c a/c a/c for recognising revenue for the said transaction for for recognising revenue for the said transaction for for recognising revenue for the said transaction for for recognising revenue for the said transaction for

the the the the PY commencing PY commencing PY commencing PY commencing on on on on 1.4.2016 & 1.4.2016 & 1.4.2016 & 1.4.2016 & subsequent subsequent subsequent subsequent PYs. PYs. PYs. PYs.

CA. Pramod Jain

ICDS IV ICDS IV ICDS IV ICDS IV –––– DISCLOSURESDISCLOSURESDISCLOSURESDISCLOSURES� In In In In a transaction involving sale of good, total amount not a transaction involving sale of good, total amount not a transaction involving sale of good, total amount not a transaction involving sale of good, total amount not

recognised as revenue during recognised as revenue during recognised as revenue during recognised as revenue during PY due PY due PY due PY due to lack of to lack of to lack of to lack of

reasonably certainty of its ultimate collection along with reasonably certainty of its ultimate collection along with reasonably certainty of its ultimate collection along with reasonably certainty of its ultimate collection along with

nature of uncertainty; nature of uncertainty; nature of uncertainty; nature of uncertainty;

� AAAAmount mount mount mount of revenue from service of revenue from service of revenue from service of revenue from service transaction transaction transaction transaction recognised recognised recognised recognised

as revenue during the as revenue during the as revenue during the as revenue during the PY; PY; PY; PY;

� MMMMethod ethod ethod ethod used to determine the stage of completion of used to determine the stage of completion of used to determine the stage of completion of used to determine the stage of completion of

service transactions in progress; and service transactions in progress; and service transactions in progress; and service transactions in progress; and

� FFFFor or or or service transactions in progress at service transactions in progress at service transactions in progress at service transactions in progress at end end end end of of of of PY: PY: PY: PY: � AAAAmount mount mount mount of costs incurred and recognised profits (less recognised losses) of costs incurred and recognised profits (less recognised losses) of costs incurred and recognised profits (less recognised losses) of costs incurred and recognised profits (less recognised losses) uptouptouptoupto end end end end

of of of of PY; PY; PY; PY;

� Amount Amount Amount Amount of advances received; and of advances received; and of advances received; and of advances received; and

� Amount Amount Amount Amount of retentionsof retentionsof retentionsof retentions. . . .

� AS AS AS AS –––– none except 1none except 1none except 1none except 1stststst

CA. Pramod Jain

ICDS IV ICDS IV ICDS IV ICDS IV –––– PRACTICAL IMPLICATIONSPRACTICAL IMPLICATIONSPRACTICAL IMPLICATIONSPRACTICAL IMPLICATIONS� Increased DisclosuresIncreased DisclosuresIncreased DisclosuresIncreased Disclosures

� Interest income on accrual basis if not Interest income on accrual basis if not Interest income on accrual basis if not Interest income on accrual basis if not

recognisedrecognisedrecognisedrecognised being doubt of being doubt of being doubt of being doubt of collection exists. collection exists. collection exists. collection exists.

other other other other than than than than 43D (banks, 43D (banks, 43D (banks, 43D (banks, etcetcetcetc) ) ) ) others may have to others may have to others may have to others may have to

disclose adjustments in ICDSdisclose adjustments in ICDSdisclose adjustments in ICDSdisclose adjustments in ICDS

� If service contract beyond 90 days and If service contract beyond 90 days and If service contract beyond 90 days and If service contract beyond 90 days and

recognisedrecognisedrecognisedrecognised on completed contract method, need on completed contract method, need on completed contract method, need on completed contract method, need

to adjust and disclosure as per ICDSto adjust and disclosure as per ICDSto adjust and disclosure as per ICDSto adjust and disclosure as per ICDS

CA. Pramod Jain

V V V V –––– TANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSCA. Pramod Jain

ICDS V ICDS V ICDS V ICDS V –––– TANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETS� Not comparable with AS 10 Not comparable with AS 10 Not comparable with AS 10 Not comparable with AS 10 ---- PPEPPEPPEPPE

� AS 10 AS 10 AS 10 AS 10 ---- Property, Plant and Equipment are tangible Property, Plant and Equipment are tangible Property, Plant and Equipment are tangible Property, Plant and Equipment are tangible

items that:items that:items that:items that:

� Are held for use in production or supply of goods or services, Are held for use in production or supply of goods or services, Are held for use in production or supply of goods or services, Are held for use in production or supply of goods or services,

for rental to others, or for administrative purposes; ANDfor rental to others, or for administrative purposes; ANDfor rental to others, or for administrative purposes; ANDfor rental to others, or for administrative purposes; AND

� Are expected to be used during more than a period of twelve Are expected to be used during more than a period of twelve Are expected to be used during more than a period of twelve Are expected to be used during more than a period of twelve

monthsmonthsmonthsmonths

� Only Only Only Only for Tangible for Tangible for Tangible for Tangible FA FA FA FA being being being being landlandlandland, , , , buildingbuildingbuildingbuilding, machinery, , machinery, , machinery, , machinery,

plant or furniture held with plant or furniture held with plant or furniture held with plant or furniture held with intention intention intention intention of being used of being used of being used of being used for for for for

purpose of producing or providing purpose of producing or providing purpose of producing or providing purpose of producing or providing goods or services and goods or services and goods or services and goods or services and

is not held for sale is not held for sale is not held for sale is not held for sale in in in in normal course of normal course of normal course of normal course of business. business. business. business.

� Not for intangibles. Not for intangibles. Not for intangibles. Not for intangibles.

� Not for rental / Administrative use?Not for rental / Administrative use?Not for rental / Administrative use?Not for rental / Administrative use?

CA. Pramod Jain

ICDS V ICDS V ICDS V ICDS V –––– TANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETS� AS 10 AS 10 AS 10 AS 10 ---- SSSSpare parts, standpare parts, standpare parts, standpare parts, stand----by equipment and servicing by equipment and servicing by equipment and servicing by equipment and servicing

equipment are recognised in accordance with this equipment are recognised in accordance with this equipment are recognised in accordance with this equipment are recognised in accordance with this

Standard when they meet the definition of property, Standard when they meet the definition of property, Standard when they meet the definition of property, Standard when they meet the definition of property,

plant and equipment. Otherwise, such items are plant and equipment. Otherwise, such items are plant and equipment. Otherwise, such items are plant and equipment. Otherwise, such items are

classified as inventoryclassified as inventoryclassified as inventoryclassified as inventory

� ICDS ICDS ICDS ICDS ---- StandStandStandStand----by by by by equipment /equipment /equipment /equipment /servicing servicing servicing servicing equipment are to equipment are to equipment are to equipment are to

be capitalised. be capitalised. be capitalised. be capitalised. Machinery Machinery Machinery Machinery spares spares spares spares to to to to be charged be charged be charged be charged to to to to

revenue as revenue as revenue as revenue as and and and and when consumed. When such spares can when consumed. When such spares can when consumed. When such spares can when consumed. When such spares can

be used only in connection with an item of tangible be used only in connection with an item of tangible be used only in connection with an item of tangible be used only in connection with an item of tangible FA FA FA FA &&&&

their use is expected to be irregular, they shall be their use is expected to be irregular, they shall be their use is expected to be irregular, they shall be their use is expected to be irregular, they shall be

capitalisedcapitalisedcapitalisedcapitalised

CA. Pramod Jain

ICDS V ICDS V ICDS V ICDS V –––– TANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETS� Time Time Time Time uptouptouptoupto which to be capitalized:which to be capitalized:which to be capitalized:which to be capitalized:

� EEEExpenditure xpenditure xpenditure xpenditure incurred on startincurred on startincurred on startincurred on start----up and commissioning up and commissioning up and commissioning up and commissioning

of the project, including the expenditure incurred on of the project, including the expenditure incurred on of the project, including the expenditure incurred on of the project, including the expenditure incurred on

test runs and experimental production, shall be test runs and experimental production, shall be test runs and experimental production, shall be test runs and experimental production, shall be

capitalised. capitalised. capitalised. capitalised. AS 10AS 10AS 10AS 10---- Initial cost to include testing costs Initial cost to include testing costs Initial cost to include testing costs Initial cost to include testing costs

� EEEExpenditure xpenditure xpenditure xpenditure incurred after the plant has begun incurred after the plant has begun incurred after the plant has begun incurred after the plant has begun

commercial production, that is, production intended commercial production, that is, production intended commercial production, that is, production intended commercial production, that is, production intended

for sale or captive consumption, shall be treated as for sale or captive consumption, shall be treated as for sale or captive consumption, shall be treated as for sale or captive consumption, shall be treated as

revenue expenditure. revenue expenditure. revenue expenditure. revenue expenditure.

� Exp. Exp. Exp. Exp. incurred till plant has begun commercial incurred till plant has begun commercial incurred till plant has begun commercial incurred till plant has begun commercial

production intended for sale or captive production intended for sale or captive production intended for sale or captive production intended for sale or captive

consumption to be capitalised. FAQ consumption to be capitalised. FAQ consumption to be capitalised. FAQ consumption to be capitalised. FAQ –––– Q 15Q 15Q 15Q 15

CA. Pramod Jain

ICDS V ICDS V ICDS V ICDS V –––– TANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETS� AS 10 AS 10 AS 10 AS 10 ---- Recognition of costs Recognition of costs Recognition of costs Recognition of costs in in in in carrying carrying carrying carrying amt. amt. amt. amt. of of of of

an item of an item of an item of an item of PPE ceases when PPE ceases when PPE ceases when PPE ceases when item is in item is in item is in item is in location location location location

and condition necessary for it to be capable of and condition necessary for it to be capable of and condition necessary for it to be capable of and condition necessary for it to be capable of

operating operating operating operating in in in in manner intended by management. manner intended by management. manner intended by management. manner intended by management.

Following costs Following costs Following costs Following costs not included:not included:not included:not included:

� CCCCosts osts osts osts incurred while an item capable of operating in incurred while an item capable of operating in incurred while an item capable of operating in incurred while an item capable of operating in

manner manner manner manner intended by management has yet to be brought intended by management has yet to be brought intended by management has yet to be brought intended by management has yet to be brought

into use or is operated at less than full capacity;into use or is operated at less than full capacity;into use or is operated at less than full capacity;into use or is operated at less than full capacity;

� IIIInitial nitial nitial nitial operating losses, such as those incurred while operating losses, such as those incurred while operating losses, such as those incurred while operating losses, such as those incurred while

demand for the output of an item builds up; demand for the output of an item builds up; demand for the output of an item builds up; demand for the output of an item builds up; andandandand

� CCCCosts osts osts osts of relocating or reorganising part or all of the of relocating or reorganising part or all of the of relocating or reorganising part or all of the of relocating or reorganising part or all of the

operations of an enterprise.operations of an enterprise.operations of an enterprise.operations of an enterprise.

CA. Pramod Jain

ICDS V ICDS V ICDS V ICDS V –––– TANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETSTANGIBLE FIXED ASSETS� An An An An Expenditure that increases the future benefits from Expenditure that increases the future benefits from Expenditure that increases the future benefits from Expenditure that increases the future benefits from

the existing asset beyond its previously assessed the existing asset beyond its previously assessed the existing asset beyond its previously assessed the existing asset beyond its previously assessed

standard of performance is added to the actual cost standard of performance is added to the actual cost standard of performance is added to the actual cost standard of performance is added to the actual cost

� AS 10 AS 10 AS 10 AS 10 ---- Provides for recognizing & derecognizing costs Provides for recognizing & derecognizing costs Provides for recognizing & derecognizing costs Provides for recognizing & derecognizing costs

of replacement of:of replacement of:of replacement of:of replacement of:

�PartsPartsPartsParts

�Major inspection costsMajor inspection costsMajor inspection costsMajor inspection costs

� If against shares If against shares If against shares If against shares –––– FV of asset acquired to be actual FV of asset acquired to be actual FV of asset acquired to be actual FV of asset acquired to be actual

cost. In AS same but with various conditionscost. In AS same but with various conditionscost. In AS same but with various conditionscost. In AS same but with various conditions

� RevaluationRevaluationRevaluationRevaluation

� Depreciation as per IT ActDepreciation as per IT ActDepreciation as per IT ActDepreciation as per IT Act

� Income on transfer as per IT ActIncome on transfer as per IT ActIncome on transfer as per IT ActIncome on transfer as per IT Act

CA. Pramod Jain

ICDS V ICDS V ICDS V ICDS V –––– TRANSITIONAL PROVISIONTRANSITIONAL PROVISIONTRANSITIONAL PROVISIONTRANSITIONAL PROVISION� The actual cost of tangible fixed assets, The actual cost of tangible fixed assets, The actual cost of tangible fixed assets, The actual cost of tangible fixed assets,

acquisition or construction of which commenced acquisition or construction of which commenced acquisition or construction of which commenced acquisition or construction of which commenced

on or before the on or before the on or before the on or before the 31.3.2016 31.3.2016 31.3.2016 31.3.2016 but not completed but not completed but not completed but not completed

by the said date, shall be recognised in by the said date, shall be recognised in by the said date, shall be recognised in by the said date, shall be recognised in

accordance with the provisions of this standard. accordance with the provisions of this standard. accordance with the provisions of this standard. accordance with the provisions of this standard.

The amount of actual cost, if any, recognised for The amount of actual cost, if any, recognised for The amount of actual cost, if any, recognised for The amount of actual cost, if any, recognised for

the said assets for any the said assets for any the said assets for any the said assets for any PY commencing PY commencing PY commencing PY commencing on or on or on or on or

before before before before 1.4.2015 1.4.2015 1.4.2015 1.4.2015 shall be taken into account for shall be taken into account for shall be taken into account for shall be taken into account for

recognising actual cost of the said assets for the recognising actual cost of the said assets for the recognising actual cost of the said assets for the recognising actual cost of the said assets for the

PY PY PY PY commencing on commencing on commencing on commencing on 1.4.2016 1.4.2016 1.4.2016 1.4.2016 and subsequent and subsequent and subsequent and subsequent

PYsPYsPYsPYs

CA. Pramod Jain

ICDS V ICDS V ICDS V ICDS V –––– DISCLOSURES DISCLOSURES DISCLOSURES DISCLOSURES –––– PARA 18 FORM 3CDPARA 18 FORM 3CDPARA 18 FORM 3CDPARA 18 FORM 3CD

� Description Description Description Description of asset or block of assets; of asset or block of assets; of asset or block of assets; of asset or block of assets;

� Rate Rate Rate Rate of depreciation; of depreciation; of depreciation; of depreciation;

� Actual Actual Actual Actual cost or cost or cost or cost or WDV, WDV, WDV, WDV, as the case may be; as the case may be; as the case may be; as the case may be;

� Additions Additions Additions Additions or deductions during the or deductions during the or deductions during the or deductions during the yryryryr with dates; in the with dates; in the with dates; in the with dates; in the

case of any addition of an asset, date put to use; case of any addition of an asset, date put to use; case of any addition of an asset, date put to use; case of any addition of an asset, date put to use;

including adjustments on account ofincluding adjustments on account ofincluding adjustments on account ofincluding adjustments on account of————

� CENVAT credit CENVAT credit CENVAT credit CENVAT credit claimed and allowed under claimed and allowed under claimed and allowed under claimed and allowed under CENVAT CENVAT CENVAT CENVAT Credit Credit Credit Credit

Rules, 2004; Rules, 2004; Rules, 2004; Rules, 2004;

� Change Change Change Change in rate of exchange of currency; in rate of exchange of currency; in rate of exchange of currency; in rate of exchange of currency;

� Subsidy Subsidy Subsidy Subsidy or grant or reimbursement, by whatever name called; or grant or reimbursement, by whatever name called; or grant or reimbursement, by whatever name called; or grant or reimbursement, by whatever name called;

� Depreciation Depreciation Depreciation Depreciation Allowable; and Allowable; and Allowable; and Allowable; and

� Written Written Written Written down value at the end of year. down value at the end of year. down value at the end of year. down value at the end of year.

CA. Pramod Jain

ICDS V ICDS V ICDS V ICDS V –––– PRACTICAL IMPLICATIONSPRACTICAL IMPLICATIONSPRACTICAL IMPLICATIONSPRACTICAL IMPLICATIONS� Disclosure Disclosure Disclosure Disclosure ---- Para Para Para Para 18 of Form 3CD. Mention 18 of Form 3CD. Mention 18 of Form 3CD. Mention 18 of Form 3CD. Mention

same in description as well as disclosuresame in description as well as disclosuresame in description as well as disclosuresame in description as well as disclosure

� If cost varies due to borrowing costs, what to If cost varies due to borrowing costs, what to If cost varies due to borrowing costs, what to If cost varies due to borrowing costs, what to

do…? No specific column in Para 18. Addition do…? No specific column in Para 18. Addition do…? No specific column in Para 18. Addition do…? No specific column in Para 18. Addition

would tally with FS too?would tally with FS too?would tally with FS too?would tally with FS too?� Add in actual cost in Para 18 and give details in additionsAdd in actual cost in Para 18 and give details in additionsAdd in actual cost in Para 18 and give details in additionsAdd in actual cost in Para 18 and give details in additions

� Would Depreciation adjustment for companies Would Depreciation adjustment for companies Would Depreciation adjustment for companies Would Depreciation adjustment for companies

etcetcetcetc to be disclosed in ICDS?to be disclosed in ICDS?to be disclosed in ICDS?to be disclosed in ICDS?

� Would gain / loss on sale of asset be disclosed Would gain / loss on sale of asset be disclosed Would gain / loss on sale of asset be disclosed Would gain / loss on sale of asset be disclosed

in ICDS?in ICDS?in ICDS?in ICDS?� To the extent of land, building, Plant, To the extent of land, building, Plant, To the extent of land, building, Plant, To the extent of land, building, Plant, MMMMach. & Furnitureach. & Furnitureach. & Furnitureach. & Furniture

CA. Pramod Jain

VII VII VII VII –––– GOVERNMENT GRANTSGOVERNMENT GRANTSGOVERNMENT GRANTSGOVERNMENT GRANTSCA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– GOVERNMENT GRANTSGOVERNMENT GRANTSGOVERNMENT GRANTSGOVERNMENT GRANTS� As per ICDS “Government grants” are As per ICDS “Government grants” are As per ICDS “Government grants” are As per ICDS “Government grants” are

� Assistance by Government in cash or kind to a Assistance by Government in cash or kind to a Assistance by Government in cash or kind to a Assistance by Government in cash or kind to a

person for past or future compliance with certain person for past or future compliance with certain person for past or future compliance with certain person for past or future compliance with certain

conditionsconditionsconditionsconditions. . . .

�They exclude:They exclude:They exclude:They exclude:

�Those forms of Government assistance which Those forms of Government assistance which Those forms of Government assistance which Those forms of Government assistance which

cannot have a value placed upon them; andcannot have a value placed upon them; andcannot have a value placed upon them; andcannot have a value placed upon them; and

�The transactions with Government which cannot The transactions with Government which cannot The transactions with Government which cannot The transactions with Government which cannot

be distinguished from the normal trading be distinguished from the normal trading be distinguished from the normal trading be distinguished from the normal trading

transactions of the persontransactions of the persontransactions of the persontransactions of the person

� Are Cash Are Cash Are Cash Are Cash assistance, duty assistance, duty assistance, duty assistance, duty drawbacks, drawbacks, drawbacks, drawbacks,

reimbursements covered !!reimbursements covered !!reimbursements covered !!reimbursements covered !!

CA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– GOVERNMENT GRANTSGOVERNMENT GRANTSGOVERNMENT GRANTSGOVERNMENT GRANTS� AS AS AS AS ----12 permits two approaches, depending on 12 permits two approaches, depending on 12 permits two approaches, depending on 12 permits two approaches, depending on

the nature of the grant:the nature of the grant:the nature of the grant:the nature of the grant:

� Capital approach Capital approach Capital approach Capital approach –––– owner’s fundsowner’s fundsowner’s fundsowner’s funds

� Income approachIncome approachIncome approachIncome approach

� ICDS ICDS ICDS ICDS –––– only income approachonly income approachonly income approachonly income approach

� Recognition Criteria:Recognition Criteria:Recognition Criteria:Recognition Criteria:

�Not be recognised until there is reasonable Not be recognised until there is reasonable Not be recognised until there is reasonable Not be recognised until there is reasonable

assurance that assurance that assurance that assurance that

�Person shall comply with conditions attached to them; & Person shall comply with conditions attached to them; & Person shall comply with conditions attached to them; & Person shall comply with conditions attached to them; &

�Grants shall be received Grants shall be received Grants shall be received Grants shall be received

�Not to be postponed beyond actual date of receiptNot to be postponed beyond actual date of receiptNot to be postponed beyond actual date of receiptNot to be postponed beyond actual date of receipt. . . .

CA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– GOVERNMENT GRANTSGOVERNMENT GRANTSGOVERNMENT GRANTSGOVERNMENT GRANTS� ASASASAS----12 12 12 12 –––– To be recognised on satisfaction of To be recognised on satisfaction of To be recognised on satisfaction of To be recognised on satisfaction of

related conditions & achieving reasonable related conditions & achieving reasonable related conditions & achieving reasonable related conditions & achieving reasonable

certainty of receipt. certainty of receipt. certainty of receipt. certainty of receipt.

� AS AS AS AS ----12 12 12 12 ---- Government Government Government Government grant with respect to grant with respect to grant with respect to grant with respect to

depreciable FA depreciable FA depreciable FA depreciable FA may may may may be either reduced be either reduced be either reduced be either reduced from from from from

gross block or may be transferred to gross block or may be transferred to gross block or may be transferred to gross block or may be transferred to PL in PL in PL in PL in

proportion.. proportion.. proportion.. proportion..

� ICDS ICDS ICDS ICDS ---- Government grant with respect to Government grant with respect to Government grant with respect to Government grant with respect to

depreciable fixed asset always required to be depreciable fixed asset always required to be depreciable fixed asset always required to be depreciable fixed asset always required to be

reduced from the actual cost of depreciable reduced from the actual cost of depreciable reduced from the actual cost of depreciable reduced from the actual cost of depreciable

fixed assetsfixed assetsfixed assetsfixed assets....

CA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– GOVERNMENT GRANTSGOVERNMENT GRANTSGOVERNMENT GRANTSGOVERNMENT GRANTS� AS 12 AS 12 AS 12 AS 12 ---- Government Government Government Government grants in respect of non grants in respect of non grants in respect of non grants in respect of non

depreciable fixed assets depreciable fixed assets depreciable fixed assets depreciable fixed assets are are are are required to be required to be required to be required to be

credited to the capital reserve account where credited to the capital reserve account where credited to the capital reserve account where credited to the capital reserve account where

there is no obligation to be fulfilled. However there is no obligation to be fulfilled. However there is no obligation to be fulfilled. However there is no obligation to be fulfilled. However

ICDS is silent over this &ICDS is silent over this &ICDS is silent over this &ICDS is silent over this & requires to be requires to be requires to be requires to be

recognized as income over the period over which recognized as income over the period over which recognized as income over the period over which recognized as income over the period over which

cost of meeting such obligation is cost of meeting such obligation is cost of meeting such obligation is cost of meeting such obligation is chargedchargedchargedcharged

� ICDS have annulled ICDS have annulled ICDS have annulled ICDS have annulled ‘The Purpose ‘The Purpose ‘The Purpose ‘The Purpose RRRRule’ ule’ ule’ ule’ that was that was that was that was

established by several Case laws pronounced established by several Case laws pronounced established by several Case laws pronounced established by several Case laws pronounced

like like like like RasoiRasoiRasoiRasoi Ltd. Now even the subsidy is for Ltd. Now even the subsidy is for Ltd. Now even the subsidy is for Ltd. Now even the subsidy is for

capital purpose the same is exposed to capital purpose the same is exposed to capital purpose the same is exposed to capital purpose the same is exposed to

taxabilitytaxabilitytaxabilitytaxability.

CA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– IT ACTIT ACTIT ACTIT ACT� Inserted by Finance Act 2015 Inserted by Finance Act 2015 Inserted by Finance Act 2015 Inserted by Finance Act 2015 ---- S. 2(24)S. 2(24)S. 2(24)S. 2(24) (xviii) (xviii) (xviii) (xviii) ----

Assistance Assistance Assistance Assistance in the form of a subsidy or grant or cash in the form of a subsidy or grant or cash in the form of a subsidy or grant or cash in the form of a subsidy or grant or cash

incentive or duty drawback or waiver or concession or incentive or duty drawback or waiver or concession or incentive or duty drawback or waiver or concession or incentive or duty drawback or waiver or concession or

reimbursement (by whatever name called) by the CG or reimbursement (by whatever name called) by the CG or reimbursement (by whatever name called) by the CG or reimbursement (by whatever name called) by the CG or

a SG or any authority or body or agency in cash or kind a SG or any authority or body or agency in cash or kind a SG or any authority or body or agency in cash or kind a SG or any authority or body or agency in cash or kind

to the to the to the to the assesseeassesseeassesseeassessee other than,other than,other than,other than,————

� Subsidy Subsidy Subsidy Subsidy or grant or reimbursement which is taken or grant or reimbursement which is taken or grant or reimbursement which is taken or grant or reimbursement which is taken

into account for determination into account for determination into account for determination into account for determination of of of of actual cost of the actual cost of the actual cost of the actual cost of the

asset in accordance with the provisions of asset in accordance with the provisions of asset in accordance with the provisions of asset in accordance with the provisions of

Explanation 10 to clause (1) of section 43; orExplanation 10 to clause (1) of section 43; orExplanation 10 to clause (1) of section 43; orExplanation 10 to clause (1) of section 43; or

� Inst. By Finance Act 2016 Inst. By Finance Act 2016 Inst. By Finance Act 2016 Inst. By Finance Act 2016 ---- Subsidy Subsidy Subsidy Subsidy or grant by or grant by or grant by or grant by CG CG CG CG

for the purpose of the corpus of a trust or institution for the purpose of the corpus of a trust or institution for the purpose of the corpus of a trust or institution for the purpose of the corpus of a trust or institution

established by the established by the established by the established by the CG CG CG CG or a or a or a or a SG, SG, SG, SG, as the case may beas the case may beas the case may beas the case may be

CA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– IT ACTIT ACTIT ACTIT ACT� Explanation 10 to 43(1) Explanation 10 to 43(1) Explanation 10 to 43(1) Explanation 10 to 43(1) ---- Where a portion of the cost of Where a portion of the cost of Where a portion of the cost of Where a portion of the cost of

an asset acquired by the an asset acquired by the an asset acquired by the an asset acquired by the assesseeassesseeassesseeassessee has been met has been met has been met has been met

directly or indirectly by the CG or SG or any authority directly or indirectly by the CG or SG or any authority directly or indirectly by the CG or SG or any authority directly or indirectly by the CG or SG or any authority

established under any law or by any other person, in established under any law or by any other person, in established under any law or by any other person, in established under any law or by any other person, in

the form of a subsidy or grant or reimbursement (by the form of a subsidy or grant or reimbursement (by the form of a subsidy or grant or reimbursement (by the form of a subsidy or grant or reimbursement (by

whatever name called), then, so much of the cost as is whatever name called), then, so much of the cost as is whatever name called), then, so much of the cost as is whatever name called), then, so much of the cost as is

relatable to such subsidy or grant or reimbursement relatable to such subsidy or grant or reimbursement relatable to such subsidy or grant or reimbursement relatable to such subsidy or grant or reimbursement

shall not be included in shall not be included in shall not be included in shall not be included in actual actual actual actual cost cost cost cost of the asset to the of the asset to the of the asset to the of the asset to the

assesseeassesseeassesseeassessee::::

CA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– IT ACTIT ACTIT ACTIT ACT� Explanation 10 to 43(1) Explanation 10 to 43(1) Explanation 10 to 43(1) Explanation 10 to 43(1) ----

� Provided that where such subsidy or grant or Provided that where such subsidy or grant or Provided that where such subsidy or grant or Provided that where such subsidy or grant or

reimbursement is of such nature that it cannot be reimbursement is of such nature that it cannot be reimbursement is of such nature that it cannot be reimbursement is of such nature that it cannot be

directly relatable to the asset acquired, so much of the directly relatable to the asset acquired, so much of the directly relatable to the asset acquired, so much of the directly relatable to the asset acquired, so much of the

amount which bears to the total subsidy or amount which bears to the total subsidy or amount which bears to the total subsidy or amount which bears to the total subsidy or

reimbursement or grant the same proportion as such reimbursement or grant the same proportion as such reimbursement or grant the same proportion as such reimbursement or grant the same proportion as such

asset bears to all the assets in respect of or with asset bears to all the assets in respect of or with asset bears to all the assets in respect of or with asset bears to all the assets in respect of or with

reference to which the subsidy or grant or reference to which the subsidy or grant or reference to which the subsidy or grant or reference to which the subsidy or grant or

reimbursement is so received, shall not be included in reimbursement is so received, shall not be included in reimbursement is so received, shall not be included in reimbursement is so received, shall not be included in

the actual cost of the asset to the the actual cost of the asset to the the actual cost of the asset to the the actual cost of the asset to the assesseeassesseeassesseeassessee....

� Also to see s. 28Also to see s. 28Also to see s. 28Also to see s. 28

CA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– TRANSITIONAL PROVISIONTRANSITIONAL PROVISIONTRANSITIONAL PROVISIONTRANSITIONAL PROVISION� All the Government grants which meet the All the Government grants which meet the All the Government grants which meet the All the Government grants which meet the

recognition criteria of para 4 on or after recognition criteria of para 4 on or after recognition criteria of para 4 on or after recognition criteria of para 4 on or after

1.4.2016 1.4.2016 1.4.2016 1.4.2016 shall be recognised for the previous shall be recognised for the previous shall be recognised for the previous shall be recognised for the previous

year commencing on or after year commencing on or after year commencing on or after year commencing on or after 1.4.2016 1.4.2016 1.4.2016 1.4.2016 in in in in

accordance with the provisions of this standard accordance with the provisions of this standard accordance with the provisions of this standard accordance with the provisions of this standard

after taking into account the amount, if any, of after taking into account the amount, if any, of after taking into account the amount, if any, of after taking into account the amount, if any, of

the said Government grant recognised for any the said Government grant recognised for any the said Government grant recognised for any the said Government grant recognised for any

previous year ending on or before previous year ending on or before previous year ending on or before previous year ending on or before 31.3.2016 31.3.2016 31.3.2016 31.3.2016

CA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– TRANSITIONAL TRANSITIONAL TRANSITIONAL TRANSITIONAL ---- FAQFAQFAQFAQ� Q 17 Q 17 Q 17 Q 17 –––– FAQ FAQ FAQ FAQ –––– Grants received prior to 1.4.2016 Grants received prior to 1.4.2016 Grants received prior to 1.4.2016 Grants received prior to 1.4.2016

shall continue to be recognised as per law shall continue to be recognised as per law shall continue to be recognised as per law shall continue to be recognised as per law

prevailing on that date. Example as per FAQ:prevailing on that date. Example as per FAQ:prevailing on that date. Example as per FAQ:prevailing on that date. Example as per FAQ:

� Total subsidy entitlement as on 31.3.16 Total subsidy entitlement as on 31.3.16 Total subsidy entitlement as on 31.3.16 Total subsidy entitlement as on 31.3.16 ---- 10 Cr10 Cr10 Cr10 Cr

� Total recognised till 31.3.2016 Total recognised till 31.3.2016 Total recognised till 31.3.2016 Total recognised till 31.3.2016 –––– 6 Cr6 Cr6 Cr6 Cr

� Pending due to satisfaction of related conditions or Pending due to satisfaction of related conditions or Pending due to satisfaction of related conditions or Pending due to satisfaction of related conditions or

achieving reasonable certainty of receipt achieving reasonable certainty of receipt achieving reasonable certainty of receipt achieving reasonable certainty of receipt –––– 4 Cr4 Cr4 Cr4 Cr

� 4 Cr to be recognized in 4 Cr to be recognized in 4 Cr to be recognized in 4 Cr to be recognized in yryryryr(s) in which (s) in which (s) in which (s) in which related related related related

conditions are met conditions are met conditions are met conditions are met & & & & reasonable certainty is reasonable certainty is reasonable certainty is reasonable certainty is achievedachievedachievedachieved

� If subsidy received prior to 1.4.2016 Para 13 of ICDS If subsidy received prior to 1.4.2016 Para 13 of ICDS If subsidy received prior to 1.4.2016 Para 13 of ICDS If subsidy received prior to 1.4.2016 Para 13 of ICDS

VII not applicable even if related conditions are met VII not applicable even if related conditions are met VII not applicable even if related conditions are met VII not applicable even if related conditions are met

after 1.4.2016. Earlier Law applicableafter 1.4.2016. Earlier Law applicableafter 1.4.2016. Earlier Law applicableafter 1.4.2016. Earlier Law applicable

CA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– DISCLOSUREDISCLOSUREDISCLOSUREDISCLOSURE�Nature Nature Nature Nature and extent of Government grants and extent of Government grants and extent of Government grants and extent of Government grants

recognised during PY:recognised during PY:recognised during PY:recognised during PY:

� By By By By way of deduction from actual cost of the asset or way of deduction from actual cost of the asset or way of deduction from actual cost of the asset or way of deduction from actual cost of the asset or

assets or from the WDV of block of assets during the assets or from the WDV of block of assets during the assets or from the WDV of block of assets during the assets or from the WDV of block of assets during the

PY; PY; PY; PY;

� As As As As income; income; income; income;

� By By By By way of deduction from actual cost of asset(s) or way of deduction from actual cost of asset(s) or way of deduction from actual cost of asset(s) or way of deduction from actual cost of asset(s) or

from WDV of block of assets and reasons thereof;from WDV of block of assets and reasons thereof;from WDV of block of assets and reasons thereof;from WDV of block of assets and reasons thereof;

� Not Not Not Not recognised during the PY as income and reasons recognised during the PY as income and reasons recognised during the PY as income and reasons recognised during the PY as income and reasons

thereof. thereof. thereof. thereof.

� AS AS AS AS –––– totally differenttotally differenttotally differenttotally different

CA. Pramod Jain

ICDS VII ICDS VII ICDS VII ICDS VII –––– PRACTICAL IMPLICATIONPRACTICAL IMPLICATIONPRACTICAL IMPLICATIONPRACTICAL IMPLICATION�Disclosures requiredDisclosures requiredDisclosures requiredDisclosures required

� If transferred to owner’s fund If transferred to owner’s fund If transferred to owner’s fund If transferred to owner’s fund –––– adjustment adjustment adjustment adjustment

required and disclosure in ICDSrequired and disclosure in ICDSrequired and disclosure in ICDSrequired and disclosure in ICDS

� If complying as per IT Act, no other If complying as per IT Act, no other If complying as per IT Act, no other If complying as per IT Act, no other

implicationimplicationimplicationimplication

CA. Pramod Jain

VIIIVIIIVIIIVIII SECURITIESSECURITIESSECURITIESSECURITIESCA. Pramod Jain

ICDS ICDS ICDS ICDS VIIIVIIIVIIIVIII SECURITIESSECURITIESSECURITIESSECURITIES� Not on investments, but only on securities held Not on investments, but only on securities held Not on investments, but only on securities held Not on investments, but only on securities held

only as stockonly as stockonly as stockonly as stock----inininin----trade trade trade trade

� In two Parts In two Parts In two Parts In two Parts –––– A & B. Part A Does not deal with:A & B. Part A Does not deal with:A & B. Part A Does not deal with:A & B. Part A Does not deal with:

� Interest and dividend which are covered by Revenue Interest and dividend which are covered by Revenue Interest and dividend which are covered by Revenue Interest and dividend which are covered by Revenue

RecognitionRecognitionRecognitionRecognition

� Securities held by business of InsuranceSecurities held by business of InsuranceSecurities held by business of InsuranceSecurities held by business of Insurance

� Securities held by, MF, VCF, Banks & PFIsSecurities held by, MF, VCF, Banks & PFIsSecurities held by, MF, VCF, Banks & PFIsSecurities held by, MF, VCF, Banks & PFIs

� At year end securities to be valued at lower of:At year end securities to be valued at lower of:At year end securities to be valued at lower of:At year end securities to be valued at lower of:

� Actual cost initially recognised; orActual cost initially recognised; orActual cost initially recognised; orActual cost initially recognised; or

�Net realisable valueNet realisable valueNet realisable valueNet realisable value

CA. Pramod Jain

ICDS ICDS ICDS ICDS VIIIVIIIVIIIVIII SECURITIESSECURITIESSECURITIESSECURITIES� ““““Securities” shall mean:Securities” shall mean:Securities” shall mean:Securities” shall mean:

�As defined in S. 2(h) of the Securities As defined in S. 2(h) of the Securities As defined in S. 2(h) of the Securities As defined in S. 2(h) of the Securities

Contracts (Regulation) Act, 1956 Contracts (Regulation) Act, 1956 Contracts (Regulation) Act, 1956 Contracts (Regulation) Act, 1956

�Share of a company in which public are not Share of a company in which public are not Share of a company in which public are not Share of a company in which public are not

substantially interested substantially interested substantially interested substantially interested

� But shall not include derivatives referred to in But shall not include derivatives referred to in But shall not include derivatives referred to in But shall not include derivatives referred to in

subsubsubsub----clause (clause (clause (clause (iaiaiaia) of clause (h)) of clause (h)) of clause (h)) of clause (h)

CA. Pramod Jain

ICDS ICDS ICDS ICDS VIIIVIIIVIIIVIII –––– SECURITIESSECURITIESSECURITIESSECURITIES� Comparison to be done categoryComparison to be done categoryComparison to be done categoryComparison to be done category----wise and not wise and not wise and not wise and not

each security wiseeach security wiseeach security wiseeach security wise

� To be To be To be To be classified into the following classified into the following classified into the following classified into the following categories:categories:categories:categories:----

� SharesSharesSharesShares; ; ; ;

�DDDDebt ebt ebt ebt securities; securities; securities; securities;

� CCCConvertible onvertible onvertible onvertible securities; securities; securities; securities; & & & &

� AAAAny ny ny ny other securities not covered above. other securities not covered above. other securities not covered above. other securities not covered above.

� Opening stockOpening stockOpening stockOpening stock----inininin----trade to betrade to betrade to betrade to be: : : :

� CCCCost ost ost ost of securities of securities of securities of securities , , , , if any, on if any, on if any, on if any, on commencement commencement commencement commencement of of of of

business business business business if if if if commenced during commenced during commenced during commenced during PY; PY; PY; PY; and and and and

� VVVValue of alue of alue of alue of securities securities securities securities on close on close on close on close of of of of immediately immediately immediately immediately

preceding preceding preceding preceding PY, PY, PY, PY, in in in in other other other other case. case. case. case.

CA. Pramod Jain

ICDS ICDS ICDS ICDS VIIIVIIIVIIIVIII –––– SECURITIESSECURITIESSECURITIESSECURITIES� Initial Recognition to be:Initial Recognition to be:Initial Recognition to be:Initial Recognition to be:

�On On On On acquisition acquisition acquisition acquisition ---- at actual cost. at actual cost. at actual cost. at actual cost.

� To To To To include include include include its purchase price and its purchase price and its purchase price and its purchase price and acquisition acquisition acquisition acquisition charges charges charges charges

such as brokerage, fees, tax, duty or cess. such as brokerage, fees, tax, duty or cess. such as brokerage, fees, tax, duty or cess. such as brokerage, fees, tax, duty or cess.

� If acquired in exchange for other If acquired in exchange for other If acquired in exchange for other If acquired in exchange for other securities / asset, securities / asset, securities / asset, securities / asset,

fair value of the security fair value of the security fair value of the security fair value of the security /asset so /asset so /asset so /asset so acquired shall be acquired shall be acquired shall be acquired shall be

its actual cost. its actual cost. its actual cost. its actual cost.

�Where Where Where Where unpaid interest has accrued before the unpaid interest has accrued before the unpaid interest has accrued before the unpaid interest has accrued before the

acquisition of an interestacquisition of an interestacquisition of an interestacquisition of an interest----bearing security and is bearing security and is bearing security and is bearing security and is

included in the price paid for the security, included in the price paid for the security, included in the price paid for the security, included in the price paid for the security, the the the the prepreprepre----

acquisition portion of the interest is deducted from acquisition portion of the interest is deducted from acquisition portion of the interest is deducted from acquisition portion of the interest is deducted from

the actual cost the actual cost the actual cost the actual cost

CA. Pramod Jain

????????????� Would the cost include Securities transaction Tax (STT)?Would the cost include Securities transaction Tax (STT)?Would the cost include Securities transaction Tax (STT)?Would the cost include Securities transaction Tax (STT)?

� Would unlisted shares cost include stamp duty paid??Would unlisted shares cost include stamp duty paid??Would unlisted shares cost include stamp duty paid??Would unlisted shares cost include stamp duty paid??

� A Ltd dealing in shares enters into following:A Ltd dealing in shares enters into following:A Ltd dealing in shares enters into following:A Ltd dealing in shares enters into following:

� Sells its asset whose FMV is Sells its asset whose FMV is Sells its asset whose FMV is Sells its asset whose FMV is RsRsRsRs. 18 Lakhs to Y Ltd.. 18 Lakhs to Y Ltd.. 18 Lakhs to Y Ltd.. 18 Lakhs to Y Ltd.

� In exchange Y Ltd. issues 1 lakh Shares of In exchange Y Ltd. issues 1 lakh Shares of In exchange Y Ltd. issues 1 lakh Shares of In exchange Y Ltd. issues 1 lakh Shares of RsRsRsRs. 10 each. 10 each. 10 each. 10 each

� What would be cost of acquisition in books of A Ltd?What would be cost of acquisition in books of A Ltd?What would be cost of acquisition in books of A Ltd?What would be cost of acquisition in books of A Ltd?

� RsRsRsRs. 10 L. 10 L. 10 L. 10 L

� Z Z Z Z Ltd dealing in shares enters into Ltd dealing in shares enters into Ltd dealing in shares enters into Ltd dealing in shares enters into following:following:following:following:� Sells shares of Reliance whose FMV is Sells shares of Reliance whose FMV is Sells shares of Reliance whose FMV is Sells shares of Reliance whose FMV is RsRsRsRs. 21 Lakhs to X Ltd.. 21 Lakhs to X Ltd.. 21 Lakhs to X Ltd.. 21 Lakhs to X Ltd.

� In In In In exchange exchange exchange exchange X X X X Ltd. Ltd. Ltd. Ltd. transfers 50000 shares of B transfers 50000 shares of B transfers 50000 shares of B transfers 50000 shares of B Pvt.Pvt.Pvt.Pvt. Ltd for Ltd for Ltd for Ltd for RsRsRsRs. . . .

10 L. B. 10 L. B. 10 L. B. 10 L. B. Pvt.Pvt.Pvt.Pvt. Ltd as immovable property worth Ltd as immovable property worth Ltd as immovable property worth Ltd as immovable property worth RsRsRsRs. 2 Cr.. 2 Cr.. 2 Cr.. 2 Cr.

� What What What What would be cost of acquisition in books of would be cost of acquisition in books of would be cost of acquisition in books of would be cost of acquisition in books of Z Ltd?Z Ltd?Z Ltd?Z Ltd?

� RsRsRsRs. 10 L. 10 L. 10 L. 10 L

CA. Pramod Jain

ICDS ICDS ICDS ICDS VIIIVIIIVIIIVIII –––– BUCKET METHODBUCKET METHODBUCKET METHODBUCKET METHODSecuritySecuritySecuritySecurity CategoryCategoryCategoryCategory CostCostCostCost NRVNRVNRVNRV Lower of Lower of Lower of Lower of

Cost or NRVCost or NRVCost or NRVCost or NRV

ICDS ICDS ICDS ICDS

ValueValueValueValue

1111 Share AShare AShare AShare A 1000100010001000 750750750750 750750750750

2222 Share BShare BShare BShare B 1200120012001200 1500150015001500 1200120012001200

3333 Share CShare CShare CShare C 1400140014001400 1200120012001200 1200120012001200

4444 Share DShare DShare DShare D 2000200020002000 1900190019001900 1900190019001900

TotalTotalTotalTotal 5600560056005600 5350535053505350 5050505050505050 5350535053505350

5555 Deb.Deb.Deb.Deb. EEEE 1500150015001500 1600160016001600 1500150015001500

6666 Deb. FDeb. FDeb. FDeb. F 1050105010501050 900900900900 900900900900

7777 Deb. GDeb. GDeb. GDeb. G 1250125012501250 1350135013501350 1250125012501250

8888 Deb HDeb HDeb HDeb H 2200220022002200 2300230023002300 2200220022002200

TotalTotalTotalTotal 6000600060006000 6150615061506150 5850585058505850 6000600060006000

TotalTotalTotalTotal 11600116001160011600 11500115001150011500 10900109001090010900 11350113501135011350

CA. Pramod Jain

ICDS ICDS ICDS ICDS VIIIVIIIVIIIVIII –––– BUCKET METHODBUCKET METHODBUCKET METHODBUCKET METHOD

SecuritySecuritySecuritySecurity CostCostCostCost NRVNRVNRVNRV Lower of Lower of Lower of Lower of

Cost or NRVCost or NRVCost or NRVCost or NRV

ICDS ICDS ICDS ICDS

ValueValueValueValue

1111 1000100010001000 20202020 20202020

2222 1000100010001000 100100100100 100100100100

3333 1000100010001000 100100100100 100100100100

4444 1000100010001000 200200200200 200200200200

5555 1000100010001000 200200200200 200200200200

6666 1000100010001000 5000500050005000 1000100010001000

TotalTotalTotalTotal 6000600060006000 5620562056205620 1620162016201620 5620562056205620

CA. Pramod Jain

ICDS ICDS ICDS ICDS VIIIVIIIVIIIVIII –––– BUCKET METHODBUCKET METHODBUCKET METHODBUCKET METHODSecuritySecuritySecuritySecurity CostCostCostCost NRVNRVNRVNRV Lower of Lower of Lower of Lower of

Cost or NRVCost or NRVCost or NRVCost or NRV

ICDS ICDS ICDS ICDS

ValueValueValueValue

YEAR 1YEAR 1YEAR 1YEAR 1

1111 1000100010001000 500500500500 500500500500

2222 1000100010001000 100100100100 100100100100

3333 3000300030003000 3500350035003500 3000300030003000

TotalTotalTotalTotal 5000500050005000 4100410041004100 3600360036003600 4100410041004100

YEAR 2YEAR 2YEAR 2YEAR 2

1111 1000100010001000 2000200020002000 1000100010001000

2222 1000100010001000 500500500500 500500500500

3333 3000300030003000 4000400040004000 3000300030003000

TotalTotalTotalTotal 5000500050005000 6500650065006500 4500450045004500 5000500050005000

CA. Pramod Jain

ICDS ICDS ICDS ICDS VIIIVIIIVIIIVIII –––– SECURITIESSECURITIESSECURITIESSECURITIES� Unlisted securities or listed but not quoted with Unlisted securities or listed but not quoted with Unlisted securities or listed but not quoted with Unlisted securities or listed but not quoted with

regularity regularity regularity regularity ---- at actual cost initially recognised. at actual cost initially recognised. at actual cost initially recognised. at actual cost initially recognised.

� Where Where Where Where actual cost initially recognised cannot be actual cost initially recognised cannot be actual cost initially recognised cannot be actual cost initially recognised cannot be

ascertained ascertained ascertained ascertained by specific by specific by specific by specific identification, identification, identification, identification, then to then to then to then to be be be be

determined on determined on determined on determined on FIFO or FIFO or FIFO or FIFO or weighted weighted weighted weighted averageaverageaverageaverage

� Part B is for Banks & PFIsPart B is for Banks & PFIsPart B is for Banks & PFIsPart B is for Banks & PFIs

�To To To To be classified, recognised be classified, recognised be classified, recognised be classified, recognised & & & & measured in measured in measured in measured in

accordance with accordance with accordance with accordance with RBI guidelines in RBI guidelines in RBI guidelines in RBI guidelines in this regard this regard this regard this regard

& & & & any any any any excess deduction not to be excess deduction not to be excess deduction not to be excess deduction not to be taken into taken into taken into taken into

a/c. a/c. a/c. a/c. To this extent, To this extent, To this extent, To this extent, ICDS ICDS ICDS ICDS VI VI VI VI relating relating relating relating to forward to forward to forward to forward

exchange contracts exchange contracts exchange contracts exchange contracts to to to to not apply not apply not apply not apply

CA. Pramod Jain

ICDS ICDS ICDS ICDS VIIIVIIIVIIIVIII –––– PRACTICAL IMPLICATIONPRACTICAL IMPLICATIONPRACTICAL IMPLICATIONPRACTICAL IMPLICATION

� No DisclosuresNo DisclosuresNo DisclosuresNo Disclosures

� One can value its inventories of securities in One can value its inventories of securities in One can value its inventories of securities in One can value its inventories of securities in

books of accounts as per Bucket method as no books of accounts as per Bucket method as no books of accounts as per Bucket method as no books of accounts as per Bucket method as no

specific AS on same. Consequently no ICDS specific AS on same. Consequently no ICDS specific AS on same. Consequently no ICDS specific AS on same. Consequently no ICDS

adjustment thereof.adjustment thereof.adjustment thereof.adjustment thereof.

CA. Pramod Jain

XXXX

PROVISIONS

CONTINGENT LIABILITIES

CONTINGENT ASSETS

CA. Pramod Jain

ICDS X ICDS X ICDS X ICDS X –––– PROVISIONS, CONTINGENT LIABILITIES / ASSETS PROVISIONS, CONTINGENT LIABILITIES / ASSETS PROVISIONS, CONTINGENT LIABILITIES / ASSETS PROVISIONS, CONTINGENT LIABILITIES / ASSETS

� Provision to be recognized when Provision to be recognized when Provision to be recognized when Provision to be recognized when it is reasonably it is reasonably it is reasonably it is reasonably

certain that an outflow of resources embodying certain that an outflow of resources embodying certain that an outflow of resources embodying certain that an outflow of resources embodying

economic benefits will be required to settle the economic benefits will be required to settle the economic benefits will be required to settle the economic benefits will be required to settle the

obligation obligation obligation obligation –––– AS 29 AS 29 AS 29 AS 29 –––– when it is when it is when it is when it is probableprobableprobableprobable

� No provision shall be recognised for costs that No provision shall be recognised for costs that No provision shall be recognised for costs that No provision shall be recognised for costs that

need to be incurred to operate in the future need to be incurred to operate in the future need to be incurred to operate in the future need to be incurred to operate in the future

� Where details of a proposed new law have yet to Where details of a proposed new law have yet to Where details of a proposed new law have yet to Where details of a proposed new law have yet to

be finalised, an obligation arises only when the be finalised, an obligation arises only when the be finalised, an obligation arises only when the be finalised, an obligation arises only when the

legislation is enacted AS 29 legislation is enacted AS 29 legislation is enacted AS 29 legislation is enacted AS 29 –––– virtual certain to virtual certain to virtual certain to virtual certain to

be be be be enactedenactedenactedenacted

CA. Pramod Jain

ICDS X ICDS X ICDS X ICDS X –––– PROVISIONS, CONTINGENT LIABILITIES / ASSETS PROVISIONS, CONTINGENT LIABILITIES / ASSETS PROVISIONS, CONTINGENT LIABILITIES / ASSETS PROVISIONS, CONTINGENT LIABILITIES / ASSETS

� Contingent asset to be recognised when Contingent asset to be recognised when Contingent asset to be recognised when Contingent asset to be recognised when it it it it

becomes reasonably certain that inflow of becomes reasonably certain that inflow of becomes reasonably certain that inflow of becomes reasonably certain that inflow of

economic benefit will arise. AS 29 economic benefit will arise. AS 29 economic benefit will arise. AS 29 economic benefit will arise. AS 29 –––– virtually virtually virtually virtually

certain certain certain certain

� Provisions of employee benefits under AS 15 Provisions of employee benefits under AS 15 Provisions of employee benefits under AS 15 Provisions of employee benefits under AS 15

covered by Act and not under ICDS. FAQ covered by Act and not under ICDS. FAQ covered by Act and not under ICDS. FAQ covered by Act and not under ICDS. FAQ –––– Q24Q24Q24Q24

� ICDS excludes onerous contracts too.ICDS excludes onerous contracts too.ICDS excludes onerous contracts too.ICDS excludes onerous contracts too.

� What about:What about:What about:What about:

� Provision for doubtful debts?Provision for doubtful debts?Provision for doubtful debts?Provision for doubtful debts?

� Provision for diminution in value of long term Provision for diminution in value of long term Provision for diminution in value of long term Provision for diminution in value of long term

investments?investments?investments?investments?

CA. Pramod Jain

ICDS X ICDS X ICDS X ICDS X –––– TRANSITIONAL PROVISIONTRANSITIONAL PROVISIONTRANSITIONAL PROVISIONTRANSITIONAL PROVISION

� All All All All provisions or assets & related income provisions or assets & related income provisions or assets & related income provisions or assets & related income to to to to be be be be

recognised for recognised for recognised for recognised for PY commencing PY commencing PY commencing PY commencing on or after on or after on or after on or after

1.4.2016 in accordance 1.4.2016 in accordance 1.4.2016 in accordance 1.4.2016 in accordance with with with with ICDS X after taking ICDS X after taking ICDS X after taking ICDS X after taking

into into into into a/c amount recognised a/c amount recognised a/c amount recognised a/c amount recognised if any, if any, if any, if any, for for for for any PY any PY any PY any PY

ending ending ending ending on or before 31.3.2016 . Q 23 of FAQ:on or before 31.3.2016 . Q 23 of FAQ:on or before 31.3.2016 . Q 23 of FAQ:on or before 31.3.2016 . Q 23 of FAQ:Provision required as per ICDS on 31.3.2017 for items Provision required as per ICDS on 31.3.2017 for items Provision required as per ICDS on 31.3.2017 for items Provision required as per ICDS on 31.3.2017 for items

brought forward from 31.3.2016 (A)brought forward from 31.3.2016 (A)brought forward from 31.3.2016 (A)brought forward from 31.3.2016 (A)

3 3 3 3 CrsCrsCrsCrs

Provisions as per ICDS for FY 2016Provisions as per ICDS for FY 2016Provisions as per ICDS for FY 2016Provisions as per ICDS for FY 2016----17 (B)17 (B)17 (B)17 (B) 5 5 5 5 CrsCrsCrsCrs

Total Gross Provision (C) = (A)Total Gross Provision (C) = (A)Total Gross Provision (C) = (A)Total Gross Provision (C) = (A) + (B)+ (B)+ (B)+ (B) 8 8 8 8 CrsCrsCrsCrs

Less: Provision already recognised in computation of PYLess: Provision already recognised in computation of PYLess: Provision already recognised in computation of PYLess: Provision already recognised in computation of PY

2016201620162016----17 or earlier (D)17 or earlier (D)17 or earlier (D)17 or earlier (D)

2 2 2 2 CrsCrsCrsCrs

Net provision to be recognized as perNet provision to be recognized as perNet provision to be recognized as perNet provision to be recognized as per ICDS for AY 2017ICDS for AY 2017ICDS for AY 2017ICDS for AY 2017----

18 as per transition provision (E) = (C) 18 as per transition provision (E) = (C) 18 as per transition provision (E) = (C) 18 as per transition provision (E) = (C) –––– (D)(D)(D)(D)

6 6 6 6 CrsCrsCrsCrs

CA. Pramod Jain

ICDS X ICDS X ICDS X ICDS X –––– DISCLOSUREDISCLOSUREDISCLOSUREDISCLOSURE� Provisions in respect of each class of provisions:Provisions in respect of each class of provisions:Provisions in respect of each class of provisions:Provisions in respect of each class of provisions:

� Brief description of the nature of the obligation; Brief description of the nature of the obligation; Brief description of the nature of the obligation; Brief description of the nature of the obligation;

� Carrying amount at the beginning and end of the PY; Carrying amount at the beginning and end of the PY; Carrying amount at the beginning and end of the PY; Carrying amount at the beginning and end of the PY;

� Additional provisions made during the PY, including Additional provisions made during the PY, including Additional provisions made during the PY, including Additional provisions made during the PY, including

increases to existing provisions; increases to existing provisions; increases to existing provisions; increases to existing provisions;

� Amounts used, that is incurred and charged against Amounts used, that is incurred and charged against Amounts used, that is incurred and charged against Amounts used, that is incurred and charged against

the provision, during the PY; the provision, during the PY; the provision, during the PY; the provision, during the PY;

� Unused amounts reversed during the PY; and Unused amounts reversed during the PY; and Unused amounts reversed during the PY; and Unused amounts reversed during the PY; and

� Amt. Amt. Amt. Amt. of any expected reimbursement, stating of any expected reimbursement, stating of any expected reimbursement, stating of any expected reimbursement, stating amtamtamtamt of of of of

asset asset asset asset that that that that is recognised is recognised is recognised is recognised for that expected for that expected for that expected for that expected reimbreimbreimbreimb....

� AS AS AS AS –––– SME exemptedSME exemptedSME exemptedSME exempted from these. But many other from these. But many other from these. But many other from these. But many other

disclosures in AS disclosures in AS disclosures in AS disclosures in AS

CA. Pramod Jain

ICDS X ICDS X ICDS X ICDS X –––– DISCLOSUREDISCLOSUREDISCLOSUREDISCLOSURE� Contingent Assets:Contingent Assets:Contingent Assets:Contingent Assets:

� Brief description of the nature of the asset and Brief description of the nature of the asset and Brief description of the nature of the asset and Brief description of the nature of the asset and

related income; related income; related income; related income;

� Carrying amount of asset at the beginning and end Carrying amount of asset at the beginning and end Carrying amount of asset at the beginning and end Carrying amount of asset at the beginning and end

of the PY; of the PY; of the PY; of the PY;

� Additional amount of asset and related income Additional amount of asset and related income Additional amount of asset and related income Additional amount of asset and related income

recognised during the year, including increases to recognised during the year, including increases to recognised during the year, including increases to recognised during the year, including increases to

assets and related income already recognised; and assets and related income already recognised; and assets and related income already recognised; and assets and related income already recognised; and

� Amount of asset and related income reversed during Amount of asset and related income reversed during Amount of asset and related income reversed during Amount of asset and related income reversed during

the PY. the PY. the PY. the PY.

� AS AS AS AS –––– no such disclosures, but have of liabilities, no such disclosures, but have of liabilities, no such disclosures, but have of liabilities, no such disclosures, but have of liabilities,

etcetcetcetc

CA. Pramod Jain

ICDS X ICDS X ICDS X ICDS X –––– PRACTICAL IMPLICATIONSPRACTICAL IMPLICATIONSPRACTICAL IMPLICATIONSPRACTICAL IMPLICATIONS� DisclosuresDisclosuresDisclosuresDisclosures

� Provisions, which are not as per ICDS to be Provisions, which are not as per ICDS to be Provisions, which are not as per ICDS to be Provisions, which are not as per ICDS to be

disclosed in ICDS like:disclosed in ICDS like:disclosed in ICDS like:disclosed in ICDS like:

�Doubtful DebtsDoubtful DebtsDoubtful DebtsDoubtful Debts

� Investments Investments Investments Investments

CA. Pramod Jain

TAKE CARETAKE CARETAKE CARETAKE CARE

Certificate of ICDS is now Certificate of ICDS is now Certificate of ICDS is now Certificate of ICDS is now

through Form 3CDthrough Form 3CDthrough Form 3CDthrough Form 3CD

CA. Pramod Jain

CA. Pramod Jain

CA. Pramod JainCA. Pramod JainCA. Pramod JainCA. Pramod Jainpramodjain@lunawat.compramodjain@lunawat.compramodjain@lunawat.compramodjain@lunawat.com

+91 9811073867+91 9811073867+91 9811073867+91 9811073867

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