A Private Limited Company likes to buy back it shares, the company was paying out of its free reserves, the calculation of reserves shall be at the latest audited BS date or i want to prepare the balance sheet up to September/October.
And
If, we prepare the balance sheet up to September/October, it is compulsory to make Income tax provision up to September/October
If yes, after provision only we want to calculate the reserve.
Kindly any can confirm regarding
Thanks
Sairam
Dear Sairam,
In general practice, we always take the amount of free reserves as computed in latest audited balance sheet of the company. As a special resolution passed in the general meeting of the company for the relevant accounting year and assement period, which is also later filed with ROC.
Should you prepare a new balance sheet of the company for the month of September/October, then the above procedure is reversed and this would amount to a major loss of time which might just delay the buy back prcedure. But if you are planning to go ahead with it then there has to be made a provision of income tax and the reserves should be caculated accordingly.
I hope my answer suffies with your querry.
Regards,
Jinay Savla
Latest audited balance sheet would be suffice for buy back purpose.
CCI
Pro
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