Income Computation & Disclosure Standards

by CA Kamal Garg

DETAILED CONTENTS

Bharat?	5
Preface to the Eleventh Edition	7
Contents at a glance	9

DIVISION I

Financial Reporting Framework & ICDS

Chapter 1 Financial Reporting Framework — An Introduction

1.General Purpose Financial Statements	4
2.Scope of Accounting Standards	4
3.Framework for the Preparation and Presentation of Financial Statements	5
3.1 Introduction: Purpose and Status	5
3.2 Scope	5
4.Users and Their Information Needs	6
5.The Objective of Financial Statements	8
6.Financial Position, Performance and Cash Flows	8
7.Underlying Assumptions	9
8.Qualitative Characteristics of Financial Statements	10
9.True and Fair View	12
10.The Elements of Financial Statements	12
11.Financial Position	13
12.Performance	13
13.Capital Maintenance Adjustments	14
14.Recognition of the Elements of Financial Statements	14
15.The Probability of Future Economic Benefits	14
16.Reliability of Measurement	15
17.Measurement of the Elements of Financial Statements	15
18.Concepts of Capital and Capital Maintenance	16
19.Accounting Standards	18
19.1 Introduction	18
20.Companies (Accounting Standards) Rules, 2021	26
21.Accounting Standards	27
22.Ind Accounting Standards (Ind AS)	30
22.1 Applicability and accounting principles of Indian Accounting Standards (Ind AS)	30
22.2 Applicability of Ind AS	30
22.3 Principles of Ind AS	31
22.4 Deferral of Implementation of Indian Accounting Standards (Ind AS) on Banks	32
22.5 Applicability of Ind AS on NBFCs	32

Chapter 2 Income Computation and Disclosure Standards — An Introduction

1.Applicability	34
2.Significant Observations under ICDS	35
3.Negation of Delhi High Court’s decision on ICDS	39
4.MAT and ICDS	43
5.Additional Set of Books of Accounts not required under ICDS	44
6.Way forward	44

Chapter 3 Rationalisation of Provisions of Section 115JB in Line with Indian Accounting Standard (Ind-AS)

A. MAT on Ind AS compliant financial statement	46
B. MAT on first time adoption	47
(a) PPE and intangible assets at fair value as deemed cost	48
(b) Investments in subsidiaries, joint ventures and associates at fair value as deemed cost	49
(c) Cumulative translation differences	49
C.Reference year for first time adoption adjustments	49

DIVISION II

Income Computation & Disclosure Standards

Chapter 1 Income Computation & Disclosure Standards

A.Income Computation and Disclosure Standard I relating to accounting policies	53
B.Income Computation and Disclosure Standard II relating to valuation of inventories	64
C.Income Computation and Disclosure Standard III relating to construction contracts	82
D.Income Computation and Disclosure Standard IV relating to revenue recognition	97
E.Income Computation and Disclosure Standard V relating to tangible fixed assets	123
F.Income Computation and Disclosure Standard VI relating to the effects of changes in foreign exchange rates	130
G.Income Computation and Disclosure Standard VII relating to government grants	140
H.Income Computation and Disclosure Standard VIII relating to securities	147
I.Income Computation and Disclosure Standard IX relating to borrowing costs	154
J.Income Computation and Disclosure Standard X relating to provisions, contingent liabilities and contingent assets	161

Chapter 2 Form 3CD Clause by Clause Analysis

1.Clause 9: Details of Firms, LLPs, AOPs

1.Clause 9	168
(1) Applicability	168
(2) Partners	168
(3) Minor Partner [Section 30 of the Indian Partnership Act, 1932]	171
(4) Can a minor be admitted to the benefits of partnership in a LLP	172
�
(5) Change in the constitution of the firm	173
QUERY (Partner in Representative capacity)	173
QUERY (Basis of Profit-Sharing Ratio)	173
QUERY (Profit Sharing Ratio and Loss Sharing Ratio)	174
QUERY (Minimum Guarantee given by a partner)	174
QUERY (Change in profit sharing ratio vis-à-vis year)	174
QUERY (Retirement of a partner)	175
QUERY (Death of a partner)	175
QUERY (Karta of HUF partnership as a member of the HUF in his individual capacity)	175
(6) Share of members unascertainable	175

2.Clause 10: Nature of business or profession

1. Clause 10	176
(1) Applicability	176
(2) Nature of Business or Profession	176
2.Clause 10 vis-à-vis AS 24 (on Discontinuing Operations)	179
QUERY (Discontinuing operations)	180
3.Change in the nature of business or profession – some instances	181
QUERY (Two businesses but one business did not do well in the current year)	181
QUERY (More than one business or profession	182
QUERY (Business sealed during the year)	182

3. Clause 11: Books of Account

QUERY (Books of account in CIS environment)

1.Clause 11: Books of Account	183
(1) Applicability	183
(2) Maintenance of accounts by certain persons carrying on profession or business (section 44AA)	183
(3) Books of account and other documents to be kept and maintained under section 44AA(3) by persons carrying on certain professions (Rule 6F of the Income Tax Rules, 1962)	186
(4) Books of account maintained and examined [Sub-clause (b) and (c) respectively]	189
(5) Books of account under Companies Act, 2013	189
(6) Books of account for LLP	192
(7) Books of account for Members of Stock Exchanges	192
(8) Books of account for Depositories	193
(9) Books of account for CA under ICAI	194
(10) 'Books of account' would cover books of original entry and other books of account	194
(11) Penalty for false entry, etc. in books of account	194
QUERY (Combined books for business and profession)	196
196
QUERY (Carbon copies etc. under Rule 6F – whether books of account)	196

4. Clause 12: Presumptive Income

1.Clause 12: Presumptive Income	198
(1) Applicability	198
(2) Reporting Requirements	203
(3) Special provision for computing profits and gains of business on presumptive basis [Section 44AD]	205
QUERY (Treatment of value of materials supplied by the Contractee and retention money - u/s 44AD)	210
QUERY (Computation of income u/s 44AD)	212
(4) Special provision for computing profits and gains of profession on presumptive basis [Section 44ADA]:	213
(5) Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages [Section 44AE]	217
QUERY (Computation of income u/s 44AE till AY 2018-2019)	220
QUERY (Computation of income u/s 44AE from AY 2019-2020)	221
(6) Special provisions for computing profits and gains of retail business [Section 44AF]	221
QUERY (Computation of income u/s 44AE and 44AD)	222
(7) Special provision for computing profits and gains of shipping business in the case of non-residents [Section 44B]	223
QUERY (Computation of Shipping Income)	224
(8) Special provision for computing profits and gains in connection with the business of exploration, etc., of mineral oils [Section 44BB]	224
(9) Special provision for computing profits and gains of the business of operation of aircraft in the case of non-residents [Section 44BBA]	228
QUERY (Presumptive taxation of Foreign Airlines)	228
QUERY (Computation of income u/s 44BBA)	229
(10) Special provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects [Section 44BBB]	229
(10A) Special provision for computing profits and gains of business of operation of cruise ships in case of non-residents	234
(11) Special provisions for computing income by way of royalties, etc., in the case of foreign companies [Section 44D]	236
(12) Special provision for computing income by way of royalties, etc., in case of non-residents [Section 44DA]	236
QUERY (Income from Royalty and Fees for Technical Services)	239
(13) Tax on dividends, royalty and technical service fees in the case of foreign companies [Section 115A]	240
QUERY (Whether lease rent constitutes royalty)	246
QUERY (Fees for technical services paid to a foreign company)	246
QUERY (Tax on foreign company receiving royalty)	247
QUERY (Different amounts as per presumptive section and that shown in P & L Account)	248
QUERY (Apportionment of common expenditure)	248
QUERY (Main business with an additional business under presumptive scheme but no books for latter)	249
(14) Special provisions relating to income of shipping companies	249
QUERY (computation of presumptive income for shipping companies under Chapter XII-G)	264
(15) Special provisions relating to insurance business	266

5. Clause 13: Method of Accounting

1. Clause 13: Method of Accounting	268
(1) Applicability	269
(2) Method of Accounting	269
(3) Hybrid system of Accounting not allowed	270
(4) Companies to follow Accrual method only	271
(5) LLP may follow accrual or cash basis	271
(6) AS (ICAI) vis-à-vis AS (IT)	271
(7) Disclosure of Accounting Policies (AS 1 of ICAI)	288
(8) Net profit or loss for the period, prior period items and changes in accounting policies (AS 5 of ICAI)	289
(9) Change in Method v Materiality	290
(10) Audit Materiality (SA 320)	290
QUERY (Change in accounting method for assessee’s convenience)	291
(11) Change in accounting policy is not a change in method of accounting	292
QUERY (No statutory requirement to follow accrual system and consequent reporting)	292
QUERY (Presumptive basis in preceding year but normal basis in current year)	293
QUERY (New Assessee vis-à-vis Clause 13)	293
QUERY (Previous year accounts not audited)	294
(12) Interest on enhanced compensation to be taxed on receipt basis	294
(13) Adoption of Ind AS and transition thereto – whether change in method of accounting	294
(14) Draft Disclosure Requirements for Clause 13(f) of Form 3CD	294

6. Clause 14: Method of Stock Valuation

1. Clause 14: Method of Stock Valuation	298
(1) Applicability	298
(2) Method of Stock Valuation	299
(3) Measurement of Inventories under AS 2	302
(4) Cost of Inventory	302
(5) Dissolution of firm and valuation of inventory at Net Realisable Value	303
QUERY (Stock valuation at realisable value)	303
(6) Apply AS 2 even if cash basis is followed	304
(7) Components of Cost of Inventories	304
(8) Cost of Purchase (Para 7)	304
(9) Costs of Conversion (Para 8)	304
(10) Allocation of Production Overheads to Inventories (Para 9)	304
(11) Cost Allocation for Joint Products	305
QUERY (Incorrect method of inventory valuation followed consistently for a long period)	306
(12) Change in method of valuation v Deviation	306
(13) Inclusive and Exclusive Method of Accounting (MODVAT/CENVAT consideration) vis-à-vis valuation of stock	307
QUERY (valuation of stock vis-à-vis dissolution of firm)	312
QUERY (excise duty vis-à-vis closing stock)	312
QUERY (Change in method of inventory valuation)	312
QUERY (Net realisable value cannot be replaced with realisable value)	313
QUERY (Certain quantity of inputs which always remain in the production process is work in progress under AS 2 not capital work-in-progress)	313
QUERY (Treatment of excise on closing stock at year end)	314

7. Clause 15: Capital Asset converted into Stock-in-Trade

1.Clause 15: Capital Asset converted into Stock-in-Trade	316
(1) Applicability	316
(2) Conversion of capital assets into stock in trade	320
(3) Capital gain need not be reported: It should be noted that only four tranche reporting is required under clause 15 viz.:	322
(4) Description of capital asset	322
(5) Date of Acquisition	322
(6) Date when converted need not be reported	323
(7) Amount at which converted	323
(8) Intention of conversion need not to be reported	323
(9) Conversion of stock-in-trade into capital asset need not be reported	324
QUERY (conversion of capital asset into stock in trade and computation of income)	324
QUERY (conversion of capital asset into stock in trade – real estate business)	324
(10) Special provision for full value of consideration for transfer of assets other than capital assets in certain cases [Section 43CA]	325
QUERY (transfer of an asset at a value less than the value adopted or assessed or assessable by any authority)	329

8.Clause 16: Amounts not credited to Profit and Loss Account

1.Clause 16: Amounts not credited to Profit and Loss Account	331
(1) Applicability	331
(2) Items not credited to profit and loss account vis-à-vis not credited in the books	332
(3) Items covered by section 28 not credited to Profit and Loss Account	332
(3.1) Compensations [sub-clauses (a) to (d) of section 28(ii)]	335
(3.2) Taxability of compensation in connection to business or employment	335
(3.3) Conversion of stock-in-trade into capital asset	336
(3.4) Taxability of DEPB — Section 28(iiib) and 28(iiie)	336
(3.5) Perquisites arising from business or profession	337
(3.6) Interest, salary, bonus, etc. received by a partner from firm/LLP	340
(3.7) Non-compete fee — Section 28(va)	340
(3.8) Sum received under Keyman Insurance Policy	340
(3.9) Sum receivable in cash/kind on sale etc. of capital asset whose cost was allowed as deduction under section 35AD [Section 28(vii)]	341
(3.10) Income/Loss arising from transfer of unlisted shares	341
(3.11) Foreign currency gains or losses	341
(4) Deduction in respect of expenditure on specified business: Section 35AD	342
(4.1) Disallowance of depreciation under section 32 and capital expenditure under section 35AD on cash payment	348
(4.2) Persons claiming deductions u/s 35AD also covered within the ambit of AMT	349
(4.3) Option to the assessee for not availing deduction under section 35AD	349
QUERY (implications under section 35AD)	350
QUERY:	351
QUERY (implications u/s 35AD)	352
QUERY (Section 35AD(7B) v Section 32)	352
QUERY (meaning of the word “used� appearing in section 35AD)	352
QUERY (Treatment of Subsidy)	353
QUERY (Sum received to withdraw from tender)	354
(5) Claims admitted vis-à-vis cash basis of accounting	354
(6) Escalation claims vis-à-vis cash basis of accounting	355
(7) Escalation claims under negotiations	355
(8) Any other income not credited to profit and loss account	355
(9) Capital receipts not credited to Profit & Loss Account not an accounting requirement	356
(9.1) Government Grant	�
QUERY (Loans and Borrowings vis-à-vis clause 16(e))	358
QUERY (Award to sportsman)	358

9. Clause 17: Transfer of Land and/or Building vis-à-vis Section 43CA/50C

1.Clause 17: Where any land or building or both is transferred during the previous year for a consideration less than value adopted or assessed or assessable by any authority of a State Government referred to in section 43CA or 50C, please furnish

359

10.Clause 18: Depreciation

1. Clause 18: Depreciation	375
(1) Applicability	376
(2) Depreciation under Income-tax Act, 1961	376
(3) Depreciation and Depreciable Assets – Meaning	390
(4) Accounting Depreciation v Taxation Depreciation	391
(5) Depreciation need not be provided in books to claim depreciation allowance under Income-tax Act, 1961	392
(6) Whether the “user� should be judged for block of assets or individual assets	392
(7) Continued ‘put to use’ not necessary for claiming depreciation	392
(8) In "Finance Lease" Lessor is not "Owner" for Depreciation	392
QUERY (Depreciation claim on Immovable Property not yet registered in Assessee’s name)	393
QUERY (Claim of Cost of Construction on Lease Hold Land as Revenue Expenditure)	394
QUERY (Depreciation on vehicle not registered in the Assessee’s name):	394
QUERY (Depreciation under succession of business):	395
QUERY (Computation of Depreciation in case of Amalgamation):	395
QUERY (Assets acquired under hire purchase/installment transactions):	396
QUERY (Depreciation on Hotel Building):	397
QUERY (Deduction for Technical Know How):	397
QUERY (Validity of the order of the Assessing Officer):	397
QUERY (Actual cost of Assets for the purpose of Depreciation):	398
QUERY (Depreciation on building held for personal use put into business):	400
QUERY (Interest on loan of purchased of Plant & Machinery):	401
QUERY (Foreign Company of the same name):	401
QUERY (Interest on waived debt):	402
QUERY (Treatment of MODVAT etc.):	402
QUERY (Treatment of Trial Run Expenses & Income):	403
QUERY (Treatment of Foreign Currency Fluctuation):	403
(9) BSE Membership Card:	403
(10) Depreciation on Goodwill purchased:	403
(11) Tax treatment for depreciation on emergency spares:	409
(12) Business information, contracts, records etc. are “intangible assets� & eligible for depreciation:	410
(13) Investment in new plant or machinery [Section 32AC]	417
QUERY (computation of depreciation and additional depreciation)	419
QUERY (computation of depreciation and additional depreciation – comprehensive):	420
(14) Investment in new plant or machinery in notified backward areas in certain States [Section 32AD]:	423
(15) Adjustment made to the written down value under section 115BAC/ 115BAD:	425
(15.1) Background	425
(15.2) Alternative tax rates for individual and HUF [and Others] [Section 115BAC]	429
(15.2.1) Changes made by Finance Act under section 115BAC of the Income Tax Act, 1961	430
(15.3) Alternative tax rates for resident co-operative societies [Section 115BAD]	434
(15.4) Tax on income of certain new manufacturing co-operative societies [Section 115BAE]	435
Appendix 1 Table of Rates at which Depreciation is Admissible	440
Appendix 2 Table of rates at which depreciation is admissible for power generation business	448

11. Clause 21: Certain Amounts debited to Profit and Loss Account

1.Clause 21: Certain Amounts debited to Profit and Loss Account	452
(1) Applicability	454
(2) Legal Provisions and audit considerations	455
(3) Capital expenditure determination tests	455
(4) Classification of capital expenditure while reporting	457
(5) Certain capital expenditure to be separately reported	457
(6) Low Value items under the then Schedule XIV to the Companies Act, 1956	457
(7) Legal Provisions and audit considerations	458
(8) Personal expenses attached to assessee only to be reported	458
(9) Legal Provisions and audit considerations for advertisement expenditure clause 21	458
(10) Payments made to clubs and audit considerations for clause 21	460
(11) Suggested format for reporting	460
(12) Expenditure prohibited by law and audit considerations for Clause 21 w.r.t. section 37	460
(13) Legal provisions and audit considerations for section 40(a) vis-à-vis Clause 21(b)	470
(13.1) Accountant certificate under the first proviso to sub-section (1) of section 201 of the Income-Tax Act, 1961	500
(14) Interest must be chargeable under the Act	486
(15) Actual payment must be outside India	486
(16) 'Paid' will include payments during the course of recovery proceedings	486
(17) Unpaid Purchase Price	486
(18) Salary etc. to a partner	486
(19) Equalisation levy	489
(20) Any sum paid on account of any rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains	490
(21) Audit Considerations	490
QUERY (computation of disallowance for non-deduction of tax at source on consideration given for not carrying out any business activity)	491
QUERY (computation of disallowance for no deduction of tax at source on payment of interest on loan)	492
QUERY (computation of disallowance u/s 40(a)(ia) – various cases)	492
(22) Legal provisions w.r.t. interest, salary, bonus, commission or remuneration inadmissible under section 40(b)/40(ba) and audit considerations under Clause 21(c)	493
(23) Audit Considerations: ICAI in its Guidance Note on Tax Audit has given the following guidelines for reporting	496
(24) Legal provisions and audit considerations w.r.t. section 40A(3) and (3A)	498
(25) Financial crises may be “exceptional or unavoidable circumstance� for cash payment	503
(26) Audit Considerations	507
(27) Legal provisions w.r.t. provision for payment of gratuity not allowable under section 40A(7) and audit considerations under Clause 21(e)	508
(28) Legal provisions w.r.t. sum paid by the assessee as an employer towards the setting up or formation of, or as contribution to, any fund, trust, company, association of persons, body of individuals, society registered under the Societies Registration Act, 1860, or other institution and audit considerations w.r.t. Clause 21(f)	508
(29) Reporting particulars of contingent liabilities and audit considerations w.r.t. Clause 21(g)	510
(30) Accounting Principles for Contingent Liability (AS 29)	510
(31) Audit considerations	512
(32) Legal provisions w.r.t. Section 14A and audit considerations under Clause 21(h)	513
(33) Method for determining amount of expenditure in relation to income not includible in total income (Rule 8D)	514
(34) Audit considerations	516
QUERY (computation of the amount of expenditure incurred in relation to exempt income and resultant total income)	517
(35) Legal provisions w.r.t. interest paid in respect of capital borrowed and audit considerations under Clause 21(i)	518
QUERY (Allowability of Secret Commission)	520
QUERY (Treatment of Debenture Discount)	520
QUERY (Treatment of Amount Paid to Outgoing Partner)	521
QUERY (Treatment of Land Development Expenses)	521
QUERY (Expenditure incurred on Contravening Provisions Law)	521
QUERY (Treatment of Purchase of Securities cum interest)	522
QUERY (Compensation paid for non-fulfillment of contract)	522
QUERY (Lease: Revenue v Capital Receipts)	522
QUERY (Provision for warranty Expenses)	523
QUERY (Interest on loan to subsidiary)	523
QUERY (Treatment for Tax Paid by Agent)	524
QUERY (Expenditure requiring Govt. Approval)	524
QUERY (Legal Expenses for Registration of Share Transfer)	524
QUERY (Interest on belated payment of Call Money)	525
QUERY (Exceptions to test of benefit of enduring nature)	525
QUERY (Allowability of Expenditure — Expenses on Shifting of Business)	525
QUERY (Overriding Payment to Spouse of Predecessor)	526
QUERY (Foreign Technician Expenditure resulting in increased output)	526
QUERY (Allowability of provision for expenditure disputed for payment in court of Law)	527
(36) Expenditure on interest paid/payable on unpaid purchase price	527
(37) Personal use in case of a company	527
(38) Telephone deposit	527
(39) Interest and penalty on sales tax	527
(40) Expenditure incurred for acquiring a loan for purchasing a capital asset	527
(41) Payment made to avoid competition	527
(42) Provision for excise duty on the basis of forecast notice	527
(43) Expenditure on valuation of shares	527
(44) Payment for removal of restriction, obstruction or disability	528
(45) Insurance premium on lives of the partners	528
(46) Provision in respect of contingent liability	528
QUERY (Allowability of Expenditure)	528
(47) Section 14A disallowance can be made with regard to partner’s share of profits	530
(48) Section 14A & Rule 8D	531
(49) Rule 8D cannot be invoked where entire investments were made out of interest free own funds	531
(50) No section 14A Disallowance Whilst Computing Book Profits under section 115JA/JB	532
(51) Non-compete compensation is a capital receipt	532
(52) Non-Compete Fee not eligible for depreciation or amortization:	533

12.Clause 22: Amount of interest inadmissible under section 23 of the MSMED Act, 2006

1.Clause 22: Amount of interest inadmissible under section 23 of the MSMED Act, 2006 or any other amount not allowable under clause (h) of section 43B of the Income-tax Act, 1961	534
(1) Reporting format	536

13. Clause 24: Amounts deemed to be profits and gains under section 32AC, 33AB or 33ABA or 33AC

1.Clause 24: Amounts deemed to be profits and gains under section 32AC or 32AD or 33AB or 33ABA or 33AC	543
(1) Applicability	543
(2) Legal Provisions of Section 32AC	543
(3) Legal Provisions of Section 32AD	543
(4) Legal Provisions of Section 33AB	543
(5) Legal Provisions of Section 33ABA	543
QUERY	543
(6) Legal Provisions of Section 33AC	545
(7) ICAI Guidance	545

14.Clause 25: Any amount of profit chargeable to tax under section 41 and computation thereof

1.Profit chargeable to tax	546
(1) Applicability	546
(2) Legal provisions under section 41	546
(3) Remission of unsecured loan not an income u/s 41(1)	550
(4) Excise duty refund ordered by HC but appealed against in SC	550
(5) Concession to Sick Unit to be considered case wise	550
(6) Sales tax refund received by Agent	550
QUERY (Year of taxability of balancing charge)	550
(7) Unclaimed deposits received from the customers	551
QUERY (Gain arising on exchange of shares)	552
QUERY (Recovery of loss/expenditure by the successor of business)	552
(8) Invoking section 41(1) for time barred liability	552
(9) Taxability of Waiver of loan for Purchase of Capital Asset	553
(10) Audit considerations	553
(11) Computation of profit also to be given under clause 25	554

15.Clause 26: Sums covered by section 43B

1.Clause 26: Sums covered by section 43B	555
(1) Applicability	555
(2) Legal Provisions of Section 43B	555
(3) Conversion of sales tax liability into loans by Government orders	566
(4) Conversion of Interest payable into a loan	566
(5) Interest on loan waived	570
(6) Furnishing bank guarantee will not be in compliance with section 43B	570
(7) Service tax not routed through P&L Account and its admissibility vis-à-vis liability thereof	570
(8) Advance payment of taxes or duties	570
(9) Interest is a part of sales tax liability	570
(10) Reporting under Clause 26 when date of audit report precedes date of filing Income Tax Return	571
(11) Leave Encashment to employees u/s 43B(f) struck down	571
(12) Dues to Indian Railways for use of the Railway assets	572
(13) Deferral of GST under incentive schemes may amount to actual payment	572
(14) Advance payment of duty but mandi tax is not a “tax�	573
(15) Suggested Format for presenting information under Clause 26	573

16.Clause 27: CENVAT Credit/Prior Period Items

1. Clause 27: CENVAT Credit/Prior Period Items	574
(1) Applicability	575
(2) Basic provisions of CENVAT	575
(2.1) Definitions	575
(2.2) CENVAT Credit – duties eligible to be availed and utilisation thereof: Rule 3 provides that	576
(2.3) CENVAT credit in certain cases	578
(2.4) CENVAT credit in exemption cases	578
(2.5) Conditions for allowing CENVAT credit	578
(2.6) Refund of CENVAT Credit	580
(2.7) Obligation of a manufacturer or producer of final products	580
(2.8) Distribution of credit on inputs by warehouse of manufacturer	586
(2.9) Storage of input outside the factory of the manufacturer	586
(2.10) Documents, accounts and returns	586
(2.11) Annual return	588
(2.12) Transfer of CENVAT credit	588
(2.13) Transfer of CENVAT credit of additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act	589
(2.14) Transitional Provisions	589
(2.15) Recovery of CENVAT credit wrongly taken or erroneously refunded	590
(2.16) Confiscation and penalty	590
(2.17) General penalty	590
(2.18) Power to impose restrictions in certain types of cases	590
(2.19) Supplementary provision	591
(3) Cenvat credit is not taxable as income	591
(4) Suggested format for reporting under clause 27(a)	592
(5) Prior Period Items	592
(6) Prior period items different from accounting estimate	593
(7) Deduction can be claimed only in year in which tax is actually paid vis-à-vis prior period expenditure - SMCC Construction India case (ITA 12/2010, dated 15-1-2010 by Delhi HC)	594
(8) Audit considerations	596

18. Clause 29A: Advance received on Capital Asset Forfeited

17. Clause 29: Share premium received by closely held companies in excess of FMV taxable - section 56(2)(viib) �	597
1.Clause 29A	612
(1) Applicability	612
(2) Audit considerations	612

19. Clause 29B: Income of gifts exceeding `50,000

1.Clause 29B	614
(1) Applicability	614
(2) Legal provisions	614
(2.1) Exemption of amount received for medical treatment and on account of death due to COVID-19	619
(3) Audit considerations	620

20. Clause 35: Quantitative Details

1.Clause 35: Quantitative Details	621
(1) Applicability	621
(2) ICAI Guidance on Audit Considerations	621

DIVISION III

Chapter 1 Income Computation and Disclosure Standards vis-à-vis Judicial Precedents

1.Prior-period expenses	627
2.Marked to Market, Expected and probable losses	628
3.Retention Money	628
4.Revenue Recognition	629
5.Inventory valuation	629

Chapter 2 ICDS (Revised) v AS

1.ICDS-I (Revised) v AS 1	630
2.ICDS-II (Revised) v (AS) 2	631
3.ICDS-III (Revised) v (AS) 7	632
4.ICDS-IV (Revised) v (AS) 9	634
5.ICDS-V (Revised) v (AS) 10	636
6.ICDS-VI (Revised) v (AS)11	639
7.ICDS-VII (Revised) v (AS) 12	640
8.ICDS-VIII (Revised) v AS 13	641
9.ICDS-IX (Revised) v (AS) 16	641
10.ICDS-X (Revised) v (AS) 29	644

Chapter 3 ICDS (Revised) v Ind AS

1.ICDS-I (Revised) v Ind AS 1	646
2.ICDS-II (Revised) v Ind AS 2	648
3.ICDS-III (Revised) v Ind AS 11 v Ind AS 115/ Ind AS 109	651
4.ICDS-IV v Ind AS 18 v Ind AS 115/ Ind AS 109	653
5.ICDS-V (Revised) v Ind AS 16	656
6.ICDS-VI (Revised) v Ind AS 21	657
7.ICDS-VII (Revised) v Ind AS 20	657
8.ICDS-IX (Revised) v Ind AS 23	658
9.ICDS-X (Revised) v Ind AS 37	658
Appendix 1 Tests for Distinction between Shares held as Stock-in-Trade and Shares held as Investment	659
Appendix 2 Chargeable as — Distinction between Shares held as Stock-in-Trade and Shares held as Investments — Tests for such a Distinction	661
Appendix 3 Issue of Taxability of Surplus on Sale of Shares and Securities — Capital Gains or Business Income — Instructions in Order to Reduce Litigation	664
Appendix 4 Clarifications on Income Computation and Disclosure Standards (ICDS) notified under section 145(2) of the Income-tax Act, 1961	666

About the Author

CA Kamal Garg

View other books from GST

Income Computation & Disclosure Standards

Publisher: Bharat Law House

Pages: 696

Language: English

ISBN: 9788119565061

₹ 1045 ~~Price : ₹ 1495~~
Price Inclusive of Delivery Charges

Save ₹450 (30% OFF)

Add to Cart

Have Questions About This Book?

Our course advisors are here to help you make the right decision for your career growth.

Schedule a Call

Live Chat

Other books

View All Books

DETAILED CONTENTS

DIVISION I

Financial Reporting Framework & ICDS

Chapter 1

Financial Reporting Framework — An Introduction

Chapter 2

Income Computation and Disclosure Standards — An Introduction

Chapter 3

Rationalisation of Provisions of Section 115JB in Line with Indian Accounting Standard (Ind-AS)

DIVISION II

Income Computation & Disclosure Standards

Chapter 1

Income Computation & Disclosure Standards

Chapter 2

Form 3CD Clause by Clause Analysis

1.Clause 9: Details of Firms, LLPs, AOPs

2.Clause 10: Nature of business or profession

3. Clause 11: Books of Account

4. Clause 12: Presumptive Income

5. Clause 13: Method of Accounting

6. Clause 14: Method of Stock Valuation

7. Clause 15: Capital Asset converted into Stock-in-Trade

8.Clause 16: Amounts not credited to Profit and Loss Account

9. Clause 17: Transfer of Land and/or Building vis-à-vis Section 43CA/50C

10.Clause 18: Depreciation

11. Clause 21: Certain Amounts debited to Profit and Loss Account

12.Clause 22: Amount of interest inadmissible under section 23 of the MSMED Act, 2006

13. Clause 24: Amounts deemed to be profits and gains under section 32AC, 33AB or 33ABA or 33AC

14.Clause 25: Any amount of profit chargeable to tax under section 41 and computation thereof

15.Clause 26: Sums covered by section 43B

16.Clause 27: CENVAT Credit/Prior Period Items

18. Clause 29A: Advance received on Capital Asset Forfeited

17. Clause 29: Share premium received by closely held companies in excess of FMV taxable - section 56(2)(viib)

�

19. Clause 29B: Income of gifts exceeding `50,000

20. Clause 35: Quantitative Details

DIVISION III

Chapter 1

Income Computation and Disclosure Standards vis-à-vis Judicial Precedents

Chapter 2

ICDS (Revised) v AS

Chapter 3

ICDS (Revised) v Ind AS

About the Author

CA Kamal Garg

Have Questions About This Book?

Other books

Formation, Management & Taxation of Charitable & Religious Trusts & Institutions

CA/CMA INTER COMBO - COLOURED EASY NOTES + QUESTION BANK

CA/CMA INTER EASY NOTES COLOURED

CA/CMA INTER INCOME TAX QUESTION BANK

Goods & Service Tax (IDT) BOOK - May 2026, September 2026 & January 2027 Exams

List your Books

Search Books, Live & Recorded Classes