PROVISION AND CONTIGENT LIABILTY
Contribution to Provident Fund is made to the company's provident fund
trust. The fund is compared to aggregate liability and shortfall if any is
additionally contributed by the company and recognized as expenses.
Gratuity and Leave Encashment liability is ascertained on actuarial valuation.
However, any excess/deficit in funds managed by LIC in case of Gratuity as
compared o the actuarial liability is recognized as asset/liability immediately
and the consequent gain/loss arising from such valuation is charged to
revenue in the year in which they arise.
(xi) TAXES ON INCOME:
Current Tax: Provision for current tax is made in accordance with the
provisions of the Income Tax Act, 1961.
Deferred Tax: Deferred tax is recognised on temporary differences between
the carrying amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable profits.
Deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax assets are recognised for all deductible temporary differences
and incurred tax losses to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences can
be utilised. Such deferred tax assets and liabilities are not recognised if the
temporary difference arises from the initial recognition (other than in a
business combination) of assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit. The carrying amount of
deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are
expected to apply in the period in which the liability is settled or the asset
realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The measurement
of deferred tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the Company expects, at the end of
the reporting period, to recover or settle the carrying amount of its assets
and liabilities.
(xii) ACCOUNTING FOR INCOME AND EXPENDITURE:
Income and expenditure are accounted for in the current year on accrual
basis under natural heads of account.
(xiii) Recent pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments
to the existing standards under Companies (Indian Accounting Standards)
Rules as issued from time to time. On March 23, 2022, MCA amended the
Companies (Indian Accounting Standards) Amendment Rules, 2022,
applicable from April 1,2022, as below:
a) Ind AS 103 - Reference to Conceptual Framework
The amendments specify that to qualify for recognition as part of applying
the acquisition method, the identifiable assets acquired and liabilities
assumed must meet the definitions of assets and liabilities in the Conceptual
Framework for Financial Reporting under Indian Accounting Standards
(Conceptual Framework) issued by the Institute of Chartered Accountants of
India at the acquisition date. These changes do not significantly change the
requirements of Ind AS 103. The Company does not expect the amendment
to have any significant impact in its financial statements.
b) Ind AS 16 - Proceeds before intended use
The amendments mainly prohibit an entity from deducting from the cost of
property, plant and equipment amounts received from selling items
produced while the company is preparing the asset for its intended use.
Instead, an entity will recognise such sales proceeds and related cost in
profit or loss. The Company does not expect the amendments to have any
impact in its recognition of its property, plant and equipment in its financial
statements.
c) Ind AS 37 - Onerous Contracts - Costs of fulfilling a contract
The amendments specify that that the 'cost of fulfilling' a contract comprises
the 'costs that relate directly to the contract'. Costs that relate directly to a
contract can either be incremental costs of fulfilling that contract (examples
would be direct labour, materials) or an allocation of other costs that relate
directly to fulfilling contracts. The amendment is essentially a clarification
and the Company does not expect the amendment to have any significant
impact in its financial statements.
d) Ind AS 109 - Annual improvements to Ind AS (2021)
The amendment clarifies which fees an entity includes when it applies the
'10 percent' test of Ind AS 109 in assessing whether to derecognise a
financial liability. The Company does not expect the amendment to have any
significant impact in its financial statements.
3. CONTINGENT LIABILITIES AND COMMITMENTS:
A. Show Cause Notices issued by various Government Authorities are not
considered as Obligation.
B. When the demand notices are raised against such show cause notices
and are disputed by the Company, these are classified as disputed
obligations.
C. The treatment in respect of disputed obligations, in each case, are as
under:
a) a provision is recognized in respect of present obligations where the
outflow of resources is probable;
b) all other cases are disclosed as contingent liabilities unless the
possibility of outflow of resources is remote.
D. Capital Commitments:
Estimated amount of contracts remaining to be executed on capital accounts
are considered for disclosure.
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