Home Case Index All Cases Companies Law Companies Law + AT Companies Law - 2019 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 1484 - AT - Companies LawExpenditure on account of CSR - threshold limit of Net Profit mentioned in Section 135(1) of Companies Act, 2013 - whether the appellant is covered under Section 135(1) of the Act or not?. Constitution of CSR committee for the Board - HELD THAT:- Section 135(1) of the Act provides that every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crores or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility of the Board consisting of three or directors, out of which at least one director shall be as independent director - As per the appellant’s own calculation as quoted above the net profit is ₹ 5,68,70,023/- for the FY 2013-14 which is apparently more than ₹ 5 crores i.e. threshold limited prescribed under Section 135(1) of the Act. Therefore, the company is covered under Section 135(1) of the Act. As such Appellant was liable to constitute Corporate Social Responsibility Committee of the Board in the year 2014-15. Expend sum towards CSR - it is argued by the appellant that even if it is the company is deemed to be covered under Section 135(1) of the Act, then also it is not liable to expend any sum towards CSR in as much since the company had incurred losses in FY 2011-2012 and 2012-13 and the average net profit calculated for the three FY comes in negative - HELD THAT:- The appellant has submitted the calculation at Page 38 (Annexure 1) of the appeal paper book in which net profit for FY 2011-12 is -2,32,31,787/- and for FY 2012-13 is -1,97,68,641 and for FY 2013-14 is ₹ 5,68,70,023/-. Thus in the last three years the company is made a profit of ₹ 1,38,69,595/- and average net profit of three years will come to ₹ 46,23, 198/- - The method of calculation of average net profit for immediately preceding three years as discussed is applicable - The company is liable to spend money towards CSR. The appellant was liable to constitute Corporate Social Responsibility Committee of the Board in terms of Section 135(1) in 2014-15 as net profit of the company in the preceding year was more than ₹ 5 crores - Appeal disposed off.
|