TMI Short Notes

TMI Short Notes on various issues

201. In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

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202. Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

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203. When can a provision be recognized as per ICDS X.

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204. What is the impact of ICDS X containing transitional provisions.

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205. Can any expenditure should set off against a provision recognised for another expendiure.

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206. Under ICDS X, whether reversal of an asset and the related income would mean that the entry which was originally passed for recognition of the asset and the income should be reversed, or whether the asset should be written off as a bad debt under section 36(1)(vii).

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207. Expenditure on post-retirement benefits like provident fund, gratuity, etc. are covered by specific provisions. There are other post-retirement benefits offered by companies like medical benefits. Such benefits are covered by AS-15 for which no parallel ICDS has been notified. Whether provision for these liabilities are excluded from scope of ICDS X.

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208. What is the manner of recording the borrowing costs.

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209. What are the activities necessary to prepare inventory for its intended sale as per ICDS IX.

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210. There are specific provisions in the Act read with Rules under which a portion of borrowing cost may get disallowed under sections like 14A, 438, 40(a)(i), 40(a)(ia), 40A(2)(b), etc of the Act. Whether borrowing costs to be capitalized under ICDS-IX should exclude portion of borrowing costs which gets disallowed under such specific provisions.

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211. How to allocate borrowing costs relating to general borrowing as computed in accordance with formula provided under Para 6 of ICDS-IX to different qualifying assets.

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212. Under ICDS IX does borrowing cost include exchange differences arising from foreign currency borrowings.

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213. Whether bill discounting charges and other similar charges would fall under the definition of borrowing cost.

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214. Which are the borrowing costs covered by ICDS IX.

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215. What is the manner in which securities held as stock-in-trade are required to be valued.

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216. Para 9 of ICDS-VIII on securities requires securities held as stock-in-trade shall be valued at actual cost initially recognised or net realisable value (NRV) at the end of that previous year, whichever is lower. Para 10 of Part-A of ICDS-VIII requires the said exercise to be carried out category wise. How the same shall be computed.

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217. Which ICDS would govern derivative instruments.

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218. For subsidy received prior to 1st day of April 2016 but not recognised in the books pending satisfaction of related conditions and achieving reasonable certainty of receipt, how shall the same be recognised under ICDS on or after 1st day of April 2016.

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219. How to deal with a situation where compensation is payable for the purposes of giving ‘immediate financial support’ with no further related cost.

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220. Whether a grant which is not directly relatable to non-depreciable assets should be concluded as an income (in accordance with section 2(24)(xviii) and therefore be offered to tax or Whether such grant should be proportionately reduced from the cost of the asset in accordance with para 7 of the ICDS VII.

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221. Where the grants are received for assets which are outside the block of assets, then what is the treatment of such grants.

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222. Whether grants should be recognised even in cases where there is no certainty that the conditions attached to the grant would be fulfilled.

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223. How are Government grants to be recognized.

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224. What is the taxability of opening balance as on 1st day of April 2016 of Foreign Currency Translation Reserve (FCTR) relating to non-integral foreign operation, if any, recognised as per Accounting Standards (AS) 11.

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225. Since section 43A is applicable for a foreign currency liability in respect of an asset acquired from a country outside India, then how the exchange difference is recognised in case of a foreign currency liability for purchase of an asset in India.

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226. How are foreign exchange differences to be recognized.

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227. How to recognise the exchange difference In respect of transactions that are settled beyond the end of the previous year.

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228. What is the manner in which foreign currency transactions are to be recorded.

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229. What is the treatment of expenditure incurred on test runs.

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230. What is the value at which fixed assets are to be recorded as per ICDS V relating to tangible fixed assets?

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231. If the taxpayer sells a security on the 30th day of April 2017. The interest payment dates are December and June. The actual date of receipt of interest is on the 30th day of June 2017 but the interest on accrual basis has been accounted as income on the 31st day of March, 2017. Whether the taxpayer shall be permitted to claim deduction of such interest i.e. offered to tax but not received while computing the capital gain.

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232. Does ICDS-IV apply to interest received by an assessee on compensation or on enhanced compensation.

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233. Whether ICDS is applicable to revenues which are liable to tax on gross basis like interest, royalty and fees for technical services for non-residents u/s. 115A of the Act.

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234. The condition of reasonable certainty of ultimate collection is not laid down for taxation of interest, royalty and dividend. Whether the taxpayer is obliged to account for such income even when the collection thereof is uncertain.

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235. How revenue from leases and hire purchase transactions will be recognised.

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236. Since there is no specific scope exclusion for real estate developers and Build -Operate- Transfer (BOT) projects from ICDS IV on Revenue Recognition, whether ICDS-III and ICDS-IV should be applied by real estate developers and BOT operators.

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237. Whether the costs incurred for securing the contract would have to be claimed in the year of incurrence or in the year in which contract is secured.

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238. What is the treatment of incidental income that arises from construction contract.

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239. Does proviso to section 36(1)(iii) apply on construction contract i.e. interest paid on capital borrowed for acquisition of an asset is not allowable as deduction if the same relates to a period beginning from the date of borrowing till the date on which such asset is first put to use.

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240. whether the recognition of retention money, receipt of which is contingent on the satisfaction of certain performance criterion is to be recognised as revenue on billing.

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241. What is the manner of recognizing contract revenue during the early stages of a contract.

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242. What is the manner of recognition of revenue and expenses from construction contracts under ICDS III.

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243. How to deal with a case where contract revenue is not recorded in the books of account, but offered to tax as per ICDS, and turns bad.

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244. Whether the recognition of retention money, receipt of which is contingent on the satisfaction of certain performance criterion is to be recognized as revenue on billing.

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245. Is it correct that even service providers are now required to record inventory?

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246. Does ICDS II apply to the trader or dealer of livestock, agriculture and forest products mineral oils, ores and gases.

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247. Does provisions of ICDS II apply to shares of a company in which public are not substantially interested.

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248. Does the provisions of ICDS II apply on derivatives.

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249. ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

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250. As per ICDS-I the Marked to Market loss or an expected loss shall not he recognized unless the recognition is in accordance with the provisions of any other ICDS. Whether similar consideration applies to recognition of Marked to Market gain or expected incomes.

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