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X - Provisions, contingent liabilities and contingent assets (w.e.f. AY 2017-18)

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..... he 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 provisions, contingent liabilities and contingent assets, except those: ( a ) resulting from financial instruments; ( b ) resulting from executory contracts; ( c ) arising in insurance business from contracts with policyholders; and ( d ) covered by another Income Computation and Disclosure Standard. .....

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..... ce 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 not recognised because: (A) it is not reasonably certain that an outflow of resources embodying economic benefits will be required to settle the obligation; or (B) a reliable estimate of the amount of the obligation cannot be made. ( e ) Contingent asset is a possible asset that arises from past events the existence of which will b .....

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..... 7. It is only 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 when it becomes reasonably certain that inflow of economic benefit will arise, the asset and related income are recognised in the previous year in which the change occurs. Measurement Best Estimate .....

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..... elated 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 only for expenditures for which the provision was originally recognised . Transitional Provisions 20. All the provisions or assets and related income shall be recognised for the previous year commencing on or after 1st day of April, 2016 in accordance with the provisions of this standard after taking into account the amount recognised, if any, for the same for any previous year ending on or before .....

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