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Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

Income Tax - 87/2016 - Dated:- 29-9-2016 - ​ GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION 87/2016 New Delhi, the 29th September, 2016 S.O. 3079 (E) In exercise of the powers conferred by sub-section (2) of section 145 of the Income-tax Act, 1961 (43 of 1961, the Central Government hereby notifies the income computation and disclosure standards as specified in the Annexure to this notification to be followed by all assessees (o .....

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Income Computation and Disclosure Standard I relating to accounting policies Preamble This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head Profits and gains of business or profession or Income from other sources and not for the purpose of maintenance of books of accounts. In the case of conflict between the provisions of the Income-tax Act, 1961 ( the Act ) and this Income Computation and Disclosure Standard, the provisions of the Act .....

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ion for the foreseeable future. (b) Consistency Consistency refers to the assumption that accounting policies are consistent from one period to another; (c) Accrual Accrual refers to the assumption that revenues and costs are accrued, that is, recognised as they are earned or incurred (and not as money is received or paid) and recorded in the previous year to which they relate. Accounting Policies 3. The accounting policies refer to the specific accounting principles and the methods of applying .....

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ed unless the recognition of such loss is in accordance with the provisions of any other Income Computation and Disclosure Standard. 5. An accounting policy shall not be changed without reasonable cause. Disclosure of Accounting Policies 6. All significant accounting policies adopted by a person shall be disclosed. 7. Any change in an accounting policy which has a material effect shall be disclosed. The amount by which any item is affected by such change shall also be disclosed to the extent asc .....

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ure of accounting policies or of changes therein cannot remedy a wrong or inappropriate treatment of the item. 9. If the fundamental accounting assumptions of Going Concern, Consistency and Accrual are followed, specific disclosure is not required. If a fundamental accounting assumption is not followed, the fact shall be disclosed. Transitional Provisions 10. All contract or transaction existing on the 1st day of April, 2016 or entered into on or after the 1st day of April, 2016 shall be dealt w .....

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e from other sources and not for the purpose of maintenance of books of accounts. In the case of conflict between the provisions of Income Tax Act, 1961 ( the Act ) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent. Scope 1. This Income Computation and Disclosure Standard shall be applied for valuation of inventories, except : (a) Work-in-progress arising under construction contract including directly related service contract which is dea .....

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value; (e) Machinery spares, which can be used only in connection with a tangible fixed asset and their use is expected to be irregular, shall be dealt with in accordance with the Income Computation and Disclosure Standard on tangible fixed assets. Definitions 2(1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified: (a) Inventories are assets: (i) held for sale in the ordinary course of business; (ii) in the process of production for such .....

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ntories shall be valued at cost, or net realisable value, whichever is lower. Cost of Inventories 4. Cost of inventories shall comprise of all costs of purchase, costs of services, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Costs of Purchase 5. The costs of purchase shall consist of purchase price including duties and taxes, freight inwards and other expenditure directly attributable to the acquisition. Trade discounts, rebat .....

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onverting materials into finished goods. Fixed production overheads shall be those indirect costs of production that remain relatively constant regardless of the volume of production. Variable production overheads shall be those indirect costs of production that vary directly or nearly directly, with the volume of production. 8. The allocation of fixed production overheads for the purpose of their inclusion in the costs of conversion shall be based on the normal capacity of the production facili .....

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sed as an expense in the period in which they are incurred. In periods of abnormally high production, the amount of fixed production overheads allocated to each unit of production is decreased so that inventories are not measured above the cost. Variable production overheads shall be assigned to each unit of production on the basis of the actual use of the production facilities. 9. Where a production process results in more than one product being produced simultaneously and the costs of conversi .....

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Interest and other borrowing costs shall not be included in the costs of inventories, unless they meet the criteria for recognition of interest as a component of the cost as specified in the Income Computation and Disclosure Standard on borrowing costs. Exclusions from the Cost of Inventories 12. In determining the cost of inventories in accordance with paragraphs 4 to paragraphs 11, the following costs shall be excluded and recognised as expenses of the period in which they are incurred, namely .....

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ects shall be assigned by specific identification of their individual costs. 14. Specific identification of cost means specific costs are attributed to identified items of inventory. 15. Where there are a large numbers of items of inventory which are ordinarily interchangeable, specific identification of costs shall not be made. First-in First-out and Weighted Average Cost Formula 16. Cost of inventories, other than the inventory dealt with in paragraph 13, shall be assigned by using the First-i .....

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la, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. The average shall be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances. Techniques for the Measurement of Cost 18(1) Techniques for the measurement of the cost of inventories, such as the standard cost method or the retail method, may be used for .....

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The cost of the inventory is determined by reducing from the sales value of the inventory, the appropriate percentage gross margin. The percentage used takes into consideration inventory, which has been marked down to below its original selling price. An average percentage for each retail department is to be used. Net Realisable Value 19. Inventories shall be written down to net realisable value on an item-by-item basis. Where items of inventory' relating to the same product line having simi .....

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. The estimates shall take into consideration fluctuations of price or cost directly relating to events occurring after the end of previous year to the extent that such events confirm the conditions existing on the last day of the previous year. 21. Materials and other supplies held for use in the production of inventories shall not be written down below the cost, where the finished products in which they shall be incorporated are expected to be sold at or above the cost. Where there has been a .....

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us year; and (ii) the value of the inventory as on the close of the immediately preceding previous year, in any other case. Change of Method of Valuation of Inventory 23. The method of valuation of inventories once adopted by a person in any previous year shall not be changed without reasonable cause. Valuation of Inventory in Case of Certain Dissolutions 24. In case of dissolution of a partnership firm or association of person or body of individuals, notwithstanding whether business is disconti .....

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April, 2016 if such inventory continue to remain part of inventory as on the close of the previous year beginning on or after 1st day of April, 2016. Disclosure 26. The following aspects shall be disclosed, namely:- (a) the accounting policies adopted in measuring inventories including the cost formulae used. Where Standard Costing has been used as a measurement of cost, details of such inventories and a confirmation of the fact that standard cost approximates the actual cost; and (b) the total .....

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Act ) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent. Scope 1. This Income Computation and Disclosure Standard should be applied in determination of income for a construction contract of a contractor. Definitions 2 (1) The following terms are used in this Income Computation and Disclosure Standard with the meanings specified: (a) Construction contract is a contract specifically negotiated for the construction of an asset or a combinat .....

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struction contract in which the contractor agrees to a fixed contract price, or a fixed rate per unit of output, which may be subject to cost escalation clauses. (c) Cost plus contract is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a mark up on these costs or a fixed fee. (d) Retentions are amounts of progress billings which are not paid until the satisfaction of conditions specified in the contract for the payment of such amounts .....

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uction of a single asset. A construction contract may also deal with the construction of a number of assets which are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use. 4. Construction contracts are formulated in a number of ways which, for the purposes of this Income Computation and Disclosure Standard, are classified as fixed price contracts and cost plus contracts. Some construction contracts may contain characteristics o .....

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ndard should be applied to the separately identifiable components of a single contract or to a group of contracts together. 6. Where a contract covers a number of assets, the construction of each asset should be treated as a separate construction contract when: (a) separate proposals have been submitted for each asset; (b) each asset has been subject to separate negotiation and the contractor and customer have been able to accept or reject that part of the contract relating to each asset; and (c .....

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the construction of an additional asset at the option of the customer or is amended to include the construction of an additional asset, the construction of the additional asset should be treated as a separate construction contract when: (a) the asset differs significantly in design, technology or function from the asset or assets covered by the original contract; or (b) the price of the asset is negotiated without having regard to the original contract price. Contract Revenue 9. Contract revenue .....

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counts as uncollectible, the same shall be recognised as an expense and not as an adjustment of the amount of contract revenue. Contract Costs 12. Contract costs shall comprise of : (a) costs that relate directly to the specific contract; (b) costs that are attributable to contract activity in general and can be allocated to the contract; (c) such other costs as are specifically chargeable to the customer under the terms of the contract; and (d) allocated borrowing costs in accordance with the I .....

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to the final completion of the contract. Costs that are incurred in securing the contract are also included as part of the contract costs, provided (a) they can be separately identified; and (b) it is probable that the contract shall be obtained. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs when the contract is obtained in a subsequent period. 15. Contract costs that relate to future act .....

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mpletion of a contract is referred to as the percentage of completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed. 18. The stage of completion of a contract shall be determined with reference to: (a) the proportion that contract costs incurred for work performed upto the reporting date bear to the e .....

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excluded are: (a) contract costs that relate to future activity on the contract; and (b) payments made to subcontractors in advance of work performed under the subcontract. 20. During the early stages of a contract, where the outcome of the contract cannot be estimated reliably contract revenue is recognised only to the extent of costs incurred. The early stage of a contract shall not extend beyond 25 % of the stage of completion. Changes in Estimates 21. The percentage of completion method is a .....

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ance with the provisions of this standard. 22.2 Contract revenue and contract costs associated with the construction contract, which commenced on or before the 31st day of March, 2016 but not completed by the said date, shall be recognised based on the method regularly followed by the person prior to the previous year beginning on the 1st day of April, 2016. Disclosure 23. A person shall disclose: (a) the amount of contract revenue recognised as revenue in the period; and (b) the methods used to .....

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n of income chargeable under the head Profits and gains of business or profession or Income from other sources and not for the purpose of maintenance of books of accounts. In the case of conflict between the provisions of the Income-tax Act, 1961 ( the Act ) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent. Scope 1(1) This Income Computation and Disclosure Standard deals with the bases for recognition of revenue arising in the course of .....

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evenue is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities of a person from the sale of goods, from the rendering of services, or from the use by others of the person s resources yielding interest, royalties or dividends. In an agency relationship, the revenue is the amount of commission and not the gross inflow of cash, receivables or other consideration. 2(2) Words and expressions used and not defined in this Income Computation and D .....

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where transfer of property in goods does not coincide with the transfer of significant risks and rewards of ownership, revenue in such a situation shall be recognised at the time of transfer of significant risks and rewards of ownership to the buyer. 4. Revenue shall be recognised when there is reasonable certainty of its ultimate collection. 5. Where the ability to assess the ultimate collection with reasonable certainty is lacking at the time of raising any claim for escalation of price and ex .....

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tion of work completed. Income Computation and Disclosure Standard on construction contract also requires the recognition of revenue on this basis. The requirements of that Standard shall mutatis mutandis apply to the recognition of revenue and the associated expenses for a service transaction. However, when services are provided by an indeterminate number of acts over a specific period of time, revenue may be recognised on a straight line basis over the specific period. 7. Revenue from service .....

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is received. (3) Discount or premium on debt securities held is treated as though it were accruing over the period to maturity. 9. Royalties shall accrue in accordance with the terms of the relevant agreement and shall be recognised on that basis unless, having regard to the substance of the transaction, it is more appropriate to recognise revenue on some other systematic and rational basis. 10. Dividends are recognised in accordance with the provisions of the Act. Transitional Provisions 11. Th .....

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nce with the provisions of this standard for the previous year commencing on the 1st day of April, 2016 and subsequent previous year. The amount of revenue, if any, recognised for the said transaction for any previous year commencing on or before the 1st day of April, 2015 shall be taken into account for recognising revenue for the said transaction for the previous year commencing on the 1st day of April, 2016and subsequent previous years. Disclosure 13. Following disclosures shall be made in re .....

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evious year: (i) amount of costs incurred and recognised profits (less recognised losses) upto end of previous year; (ii) the amount of advances received; and (iii) the amount of retentions. E. Income Computation and Disclosure Standard V relating to tangible fixed assets Preamble This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head Profits and gains of business or profession or Income from other sources and not for the purpose of main .....

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ng land, building, machinery, plant or furniture held with the intention of being used for the purpose of producing or providing goods or services and is not held for sale in the normal course of business. (b) Fair value of an asset is the amount for which that asset could be exchanged between knowledgeable, willing parties in an arm s length transaction. (2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meanin .....

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ular, they shall be capitalised. Components of Actual Cost 5. The actual cost of an acquired tangible fixed asset shall comprise its purchase price, import duties and other taxes, excluding those subsequently recoverable, and any directly attributable expenditure on making the asset ready for its intended use. Any trade discounts and rebates shall be deducted in arriving at the actual cost. 6. The cost of a tangible fixed asset may undergo changes subsequent to its acquisition or construction on .....

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sset or bringing it to its working condition, shall be included as a part of the cost of the project or as a part of the cost of the tangible fixed asset. 8. The expenditure incurred on start-up and commissioning of the project, including the expenditure incurred on test runs and experimental production, shall be capitalised. The expenditure incurred after the plant has begun commercial production, that is, production intended for sale or captive consumption, shall be treated as revenue expendit .....

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osts. Non- monetary Consideration 10. When a tangible fixed asset is acquired in exchange for another asset, the fair value of the tangible fixed asset so acquired shall be its actual cost. 11. When a tangible fixed asset is acquired in exchange for shares or other securities, the fair value of the tangible fixed asset so acquired shall be its actual cost. Improvements and Repairs 12. An Expenditure that increases the future benefits from the existing asset beyond its previously assessed standar .....

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person owns tangible fixed assets jointly with others, the proportion in the actual cost, accumulated depreciation and written down value is grouped together with similar fully owned tangible fixed assets. 15. Where several assets are purchased for a consolidated price, the consideration shall be apportioned to the various assets on a fair basis. Transitional Provisions 16. The actual cost of tangible fixed assets, acquisition or construction of which commenced on or before the 31st day of Marc .....

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accordance with the provisions of the Act. Transfers 18. Income arising on transfer of a tangible fixed asset shall be computed in accordance with the provisions of the Act. Disclosures 19. Following disclosure shall be made in respect of tangible fixed assets, namely:- (a) description of asset or block of assets; (b) rate of depreciation; (c) actual cost or written down value, as the case may be; (d) additions or deductions during the year with dates; in the case of any addition of an asset, d .....

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applicable for computation of income chargeable under the head Profits and gains of business or profession or Income from other sources and not for the purpose of maintenance of books of accounts. In the case of conflict between the provisions of the Income-tax Act, 1961 ( the Act ) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent. Scope 1. This Income Computation and Disclosure Standard deals with: (a) treatment of transactions in fore .....

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ting from reporting the same number of units of a foreign currency in the reporting currency of a person at different exchange rates. (d) Exchange rate is the ratio for exchange of two currencies. (e) Foreign currency is a currency other than the reporting currency of a person. (f) Foreign operations of a person is a branch, by whatever name called, of that person, the activities of which are based or conducted in a country other than India. (g) Foreign currency transaction is a transaction whic .....

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Forward exchange contract means an agreement to exchange different currencies at a forward rate, and includes a foreign currency option contract or another financial instrument of a similar nature; (i) Forward rate is the specified exchange rate for exchange of two Currencies at a specified future date; (j) Indian currency shall have the meaning as assigned to it in section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999); (k) Monetary items are money held and assets to be received o .....

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defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning assigned to them in the Act. Foreign Currency Transactions Initial Recognition 3(1) A foreign currency transaction shall be recorded, on initial recognition 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. (2) An average rate for a week or a month that approximates t .....

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the amount in reporting currency that is likely to be realised from or required to disburse, a foreign currency monetary item owing to restriction on remittances or the closing rate being unrealistic and it is not possible to effect an exchange of currencies at that rate, then the relevant monetary item shall be reported in the reporting currency at the amount which is likely to be realised from or required to disburse such item at the last date of the previous year; and (c) non-monetary items .....

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ious year shall be recognised as income or as expense in that previous year. (ii) In respect of non-monetary items, exchange differences arising on conversion thereof at the last day of the previous year shall not be recognised as income or as expense in that previous year. Exceptions to Paragraphs 3, 4 and 5 6. Notwithstanding anything contained in paragraph 3, 4 and 5; initial recognition, conversion and recognition of exchange difference shall be subject to provisions of section 43A of the Ac .....

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t. Exchange differences on such a contract shall be recognised as income or as expense in the previous year in which the exchange rates change. Any profit or loss arising on cancellation or renewal shall be recognised as income or as expense for the previous year. (2) The provisions of sub-para (1) shall apply provided that the contract: (a) is not intended for trading or speculation purposes; and (b) is entered into to establish the amount of the reporting currency required or available at the .....

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d the forward rate specified in the contract. Exchange difference on the contract is the difference between: (a) the foreign currency amount of the contract translated at the exchange rate at the last day of the previous year, or the settlement date where the transaction is settled during the previous year; and (b) the same foreign currency amount translated at the date of inception of the contract or the last day of the immediately preceding previous year, whichever is later. (5) Premium, disco .....

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ary items or non-monetary items, on the settlement thereof during the previous year commencing on the 1st day of April, 2016 or on conversion thereof at the last day of the previous year commencing on the 1st day of April, 2016 , shall be recognised in accordance with the provisions of this standard after taking into account the amount recognised on the last day of the previous year ending on the 31st March, 2016 for an item, if any, which is carried forward from said previous year. (3) The fina .....

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dealt with in accordance with the provisions of this standard after taking into account the income or expenses, if any, recognised in respect of said contracts for the previous year ending on or before the 31st March,2016. G. Income Computation and Disclosure Standard VII relating to government grants Preamble This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head Profits and gains of business or profession or Income from other sources .....

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s, etc. 2. This Income Computation and Disclosure Standard does not deal with:- (a) Government assistance other than in the form of Government grants; and (b) Government participation in the ownership of the enterprise. Definitions 3(1) The following terms are used in the Income Computation and Disclosure Standard with the meanings specified: (a) Government refers to the Central Government, State Governments, agencies and similar bodies, whether local, national or international. (b) Government g .....

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ct. Recognition of Government Grants 4(1) Government grants should not be recognised until there is reasonable assurance that (i) the person shall comply with the conditions attached to them, and (ii) the grants shall be received. 4(2) Recognition of Government grant shall not be postponed beyond the date of actual receipt. Treatment of Government Grants 5. Where the Government grant relates to a depreciable fixed asset or assets of a person, the grant shall be deducted from the actual cost of t .....

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so much of the amount which bears to the total Government grant, the same proportion as such asset bears to all the assets in respect of or with reference to which the Government grant is so received, shall be deducted from the actual cost of the asset or shall be reduced from the written down value of block of assets to which the asset or assets belonged to. 8. The Government grant that is receivable as compensation for expenses or losses incurred in a previous financial year or for the purpos .....

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quisition cost. Refund of Government Grants 11. The amount refundable in respect of a Government grant referred to in paragraphs 6, 8 and 9 shall be applied first against any unamortised deferred credit remaining in respect of the Government grant. To the extent that the amount refundable exceeds any such deferred credit, or where no deferred credit exists, the amount shall be charged to profit and loss statement. 12. The amount refundable in respect of a Government grant related to a depreciabl .....

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after 1st day of April, 2016 in accordance with the provisions of this standard after taking into account the amount, if any, of the said Government grant recognised for any previous year ending on or before 31st day of March,2016. Disclosures 14. Following disclosure shall be made in respect of Government grants, namely:- (a) nature and extent of Government grants recognised during the previous year by way of deduction from the actual cost of the asset or assets or from the written down value o .....

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losure Standard VIII relating to securities Preamble This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head Profits and gains of business or profession or Income from other sources and not for the purpose of maintenance of books of account. In the case of conflict between the provisions of the Income-tax Act, 1961 ( the Act ) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent. Part .....

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c financial institutions formed under a Central or a State Act or so declared under the Companies Act, 1956 (1 of 1956) or the Companies Act, 2013 (18 of 2013). Definitions 3(1) The following terms are used in this part of Income Computation and Disclosure Standard with the meanings specified: (a) Fair value is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm s length transaction. (b) Securities shall have the m .....

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al Measurement of Securities 4. A security on acquisition shall be recognised at actual cost. 5. The actual cost of a security shall comprise of its purchase price and include acquisition charges such as brokerage, fees, tax, duty or cess. 6. Where a security is acquired in exchange for other securities, the fair value of the security so acquired shall be its actual cost. 7. Where a security is acquired in exchange for another asset, the fair value of the security so acquired shall be its actual .....

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lisable value at the end of that previous year, whichever is lower. 10. For the purpose of para 9, the comparison of actual cost initially recognised and net realisable value shall be done categorywise and not for each individual security. For this purpose, securities shall be classified into the following categories, namely:- (a) shares; (b) debt securities; (c) convertible securities; and (d) any other securities not covered above. 11. The value of securities held as stock-in-trade of a busine .....

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t quoted on a recognised stock exchange with regularity from time to time, shall be valued at actual cost initially recognised. 13. For the purposes of para 9, 10 and 11 where the actual cost initially recognised cannot be ascertained by reference to specific identification, the cost of such security shall be determined on the basis of first-in-first-out method or weighted average cost formula. Part B Scope 1. This part of Income Computation and Disclosure Standard deals with securities held by .....

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he meaning assigned to it in clause (h) of Section 2 of the Securities Contract (Regulation) Act, 1956 (42 of 1956) and shall include share of a company in which public are not substantially interested; 2(2) Words and expressions used and not defined in this part of Income Computation and Disclosure Standard but defined in the Act shall have the meaning respectively assigned to them in the Act. Classification, Recognition and Measurement of Securities 3. Securities shall be classified, recognise .....

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d Disclosure Standard is applicable for computation of income chargeable under the head Profits and gains of business or profession or Income from other sources and not for the purpose of maintenance of books of account. In the case of conflict between the provisions of the Income-tax Act, 1961 ( the Act ) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent. Scope 1. (1) This Income Computation and Disclosure Standard deals with treatment o .....

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s relating to borrowings; (iii) amortised amount of ancillary costs incurred in connection with the arrangement of borrowings; (iv) finance charges in respect of assets acquired under finance leases or under other similar arrangements. (b) Qualifying asset means: (i) land, building, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets; (iii) .....

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r capitalisation shall be determined in accordance with this Income Computation and Disclosure Standard. Other borrowing costs shall be recognised in accordance with the provisions of the Act. 4. For the purposes of this Income Computation and Disclosure Standard, capitalisation in the context of inventory referred to in item (iii) of clause (b) of sub-paragraph (1) of paragraph 2means addition of borrowing cost to the cost of inventory. Borrowing Costs Eligible for Capitalisation 5. Subject to .....

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namely :- A x B/C Where A = borrowing costs incurred during the previous year except on borrowings referred to in Para 5 above; B = (i) the average of costs of qualifying asset as appearing in the balance sheet of a person on the first day and the last day of the previous year; (ii) in case the qualifying asset does not appear in the balance sheet of a person on the first day, half of the cost of qualifying asset; or (iii) in case the qualifying asset does not appear in the balance sheet of a pe .....

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ts to the extent they are directly funded out of specific borrowings; Explanation - For the purpose of this paragraph, a qualifying asset shall be such asset that necessarily require a period of twelve months or more for its acquisition, construction or production. Commencement of Capitalisation 7. The capitalisation of borrowing costs shall commence: (a) in a case referred to in paragraph 5, from the date on which funds were borrowed; (b) in a case referred to in paragraph 6, from the date on w .....

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qualifying asset is completed in parts and a completed part is capable of being used while construction continues for the other parts, capitalisation of borrowing costs in relation to a part shall cease:- (a) in case of part of a qualifying asset referred to in item (i) and (ii) of clause (b) of subparagraph (1) of paragraph 2, when such part of a qualifying asset is first put to use; (b) in case of part of inventory referred to in item (iii) of clause (b) of sub-paragraph (1) of paragraph 2, w .....

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day of March,2016. Disclosure 11. The following disclosure shall be made in respect of borrowing costs, namely:- (a) the accounting policy adopted for borrowing costs; and (b) the amount of borrowing costs capitalised during the previous year. J. Income Computation and Disclosure Standard X relating to provisions, contingent liabilities and contingent assets Preamble This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head Profits and gain .....

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resulting from executory contracts; (c) arising in insurance business from contracts with policyholders; and (d) covered by another Income Computation and Disclosure Standard. 2. This Income Computation and Disclosure Standard does not deal with the recognition of revenue which is dealt with by Income Computation and Disclosure Standard - Revenue Recognition. 3. The term provision is also used in the context of items such as depreciation, impairment of assets and doubtful debts which are adjustm .....

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ources embodying economic benefits. (c) Obligating event is an event that creates an obligation that results in a person having no realistic alternative to settling that obligation. (d) Contingent liability is: (i) a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the person; or (ii) a present obligation that arises from past events but is .....

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acts under which neither party has performed any of its obligations or both parties have partially performed their obligations to an equal extent. (g) Present obligation is an obligation if, based on the evidence available, its existence at the end of the previous year is considered reasonably certain. 4(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defined in the Act shall have the meaning respectively assigned to them in the Act. Recogniti .....

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y those obligations arising from past events existing independently of a person s future actions, that is the future conduct of its business, that are recognised as provisions 8. Where details of a proposed new law have yet to be finalised, an obligation arises only when the legislation is enacted. Contingent Liabilities 9. A person shall not recognise a contingent liability. Contingent Assets 10. A person shall not recognise a contingent asset. 11. Contingent assets are assessed continually and .....

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best estimate of the value of economic benefit arising at the end of the previous year. The amount and related income shall not be discounted to its present value. Reimbursements 14. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when it is reasonably certain that reimbursement will be received if the person settles the obligation. The amount recognised for the reimbursement shall not exceed .....

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asonably certain that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision should be reversed. 18. An asset and related income recognised as provided in para 11 shall be reviewed at the end of each previous year and adjusted to reflect the current best estimate. If it is no longer reasonably certain that an inflow of economic benefits will arise, the asset and related income shall be reversed. Use of Provisions 19. A provision shall be used .....

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