The CBDT has issued a Notification dated 31st March 2015 notifying the Income Computation and Disclosure Standards (ICDS) to be followed by all income-tax assessees following the mercantile system of accounting for the purposes of computation of income chargeable to tax under the heads “Profit and gains of business or profession” or “Income from other sources”.
The ICDS come into force with effect from 1st April 2015 and accordingly, shall apply to the assessment year 2016-17 and subsequent assessment years. The details of ICDSs notified are as under.
ICDS I: Accounting Policies
ICDS II: Valuation of Inventories
ICDS III: Construction Contracts
ICDS IV: Revenue Recognition
ICDS V: Tangible Fixed Assets
ICDS VI: The effects of changes in foreign exchange rates
ICDS VII: Government Grants
ICDS VIII: Securities
ICDS IX: Borrowing Costs
ICDS X: Provisions, Contingent liabilities and Contingent assets
These ICDS are not for the purpose of maintenance of books of account.
To ADD(:
The referred requirement of company auditor’s certificate as in MCA’s Notification reads:
“(2) An application to confirm a reduction of share capital of a company shall be accompanied with –
(a) to (c)…
(d) a certificate by the company’s auditor to the effect that the accounting treatment proposed by the company for the reduction of share capital is in conformity with the accounting standards specified in section 133 or any other provisions of Act.”
(Emphasis supplied)
Having no practical experience or exposure, am not sure /confident of what “the accounting standards” exactly refer to. Be that as it may, as is to be imagined, a reduction of share capital of a company might have tax im- / -complications. Premised so, no company’s auditor, for issuing a “certificate”, can afford to, and prudently ignore, but will require to keep in mind, all such tax implications.
Besides any other,the Income Computation and Disclosure Standards (ICDS) as notified by the CBDT may have to be made a conscious note of, and be borne in mind, for proper compliance.
OFFHAND
Quite agree; but may add that, besides CBDT’s own officers, the task of CAs engaged for company audits, going by actual field experience since, could have found selves, in a truly unenviable position.
In short, in framing and mandating compliance with the subject standards, the Executive Authority cannot be regarded to have done so, mindfully, after due consideration of/ with focus on the intricacies / insurmountable complexity of the attendant facts and circumstances, in a case to case basis.
Incidentally, comes to mind, related development of a recent origin. Reference is to company’s auditor being required to issue a ‘certificate’ in respect of ‘capital reduction'(vide. the Notification by MINISTRY OF CORPORATE AFFAIRS (Dt. 15th December, 2016)
Over to CAs, in practice, for sharing any independent thoughts /viewpoints
CBDT simply uses big and bigger words and abbreviations but i wonder whether CBDT wants its officers to understand or just gloss over….!
even simple pragmatism is missing in revenue officers.