2. Significant accounting policies
2.1. Accounting convention
The financial statements have been prepared in accordance with Generally Accepted Accounting Principles (GAAP) under historical cost convention on an accrual basis and GAAP includes accounting standard specified under Section 133 of the Companies Act, 2013 (the Act) read with the Companies
(Accounting Standards) Rules, 2021 (as amended) except otherwise mentioned elsewhere in the financial statements.
All assets and liabilities have been classified as current and non-current in accordance with the Normal operating cycle of the Company and other criteria set out in the Schedule III of the Act Based on nature of services, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
2.2. Use of Estimates
The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities, if any) as of the date of the financial statements and the reported income and expenses during the reporting period like provisioning for taxation, useful lives of assets etc. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Future results may vary from these estimates.
2.3. Revenue Recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
Income from consultancy services
Income from consultancy services is recognized when invoices are raised after the contract conditions are satisfied and as per the terms of agreement with the customers and the milestones achieved under the agreement. The Company collects Goods and Services Tax on behalf of the Government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded from revenue in the financial statements. Consultancy income received in advance is recognized as a liability in the financial statements. Income from Export Consultancy Services is recognized at the rate prevailing on the date of the invoice.
Interest
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head “other income” in the statement of profit and loss.
2.4. Foreign currency translation
Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency
amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date (closing rate). Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
Exchange differences
Exchange differences arising on the settlement of monetary items or on reporting the Company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.
2.5. Property, Plant and Equipment
Property, Plant and Equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met, directly attributable cost of bringing the asset to its working condition for the intended use and initial estimate of decommissioning, restoring and similar liabilities. Any trade discounts and rebates are deducted in arriving at the purchase price. Such cost includes the cost of replacing part of the plant and equipment. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred. The Company has estimated the useful lives of the assets based on the lives mentioned in the Schedule II of the Companies Act.
Depreciation on property, plant and equipment is calculated on reducing balance method using the rates prescribed under Companies Act 2013.
The Company earlier functioned as a Partnership Firm. During that period, the Company [Erstwhile Partnership Firm] provided for depreciation as per the rates prescribed under the Income Tax Rules, 1962. Upon conversion, those assets have been carried at cost in the books of the Company. The Depreciation has been re - worked retrospectively for all the assets and the difference has been recognized in the Statement of Profit and Loss of the Company for the financial year ended March 31, 2024.
4. Segment Reporting
The Company is primarily engaged in the business of consultancy advisory in the field of information technology and allied sectors. The Company operates in only one business segment and therefore, Accounting Standard 17 - “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable to the company.
5. The Company has not received intimation from its suppliers regarding their status under the Micro, Small and Medium Enterprises Act, 2006 and as a result, the outstanding amounts, if any, along with the interest thereon, has not been made available and therefore, not disclosed.
6. Earnings per Share [‘EPS’]
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity shares outstanding during the year.
Diluted EPS are calculated by dividing the profit for the year attributable to the equity holders of the Company by weighted average number of Equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.
7. Taxes on Income Current Tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
On 20 September 2019, the Government of India, vide Taxation Laws (Amendment) Ordinance 2019, inserted section 115BAA in the Income Tax Act, 1961, which provides domestic companies an option to pay Income Tax at reduced rates effective April 2019, subject to certain conditions. The tax expenses for the year ended March 31, 2024, have been provided for at such reduced rates.
Deferred Tax
Deferred tax is provided on temporary differences between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognized for all taxable temporary differences except for the following:
T ax payable on the future remittance of the past earnings of subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
8. Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of twelve months or less, which are subject to an insignificant risk of changes in value.
Fixed Deposits with original maturity exceeding Twelve months are classified as non-current investments.
For the purpose of Cash Flow Statement, cash and cash equivalents consists of cash and bank balances reported under Current Assets.
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