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Caro 2015 does small scale includes pvt co.

CA Piyush (CHARTERED ACCOUNTANT - PRACTICE) (361 Points)

15 March 2016

Exception of caro applies to some companies which includes pvt and small scale. 1. Exemption of pvt is applicable if Capital below 50lac Loans below 25 lac Turnover below 5 crore For small scale (other than public co.) Cap 50lac Turnover of last year below 2 cr So a pvt co. Having capital 40l Loans 30l Turnover of last year 1 cr and current year 1.5 cr My questions 1. Small scale are other than public. So it includes private co.? 2. In above example this pvt co. Doesnt fulfils first condition but fulfils second (small scale) so caro exempted or not?

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5 Replies

Ajit Hegde (CA - Final) (1367 Points)
Replied 16 March 2016

Caro is applicable if any one condition is satisfied

Varun Sharma (Proprietor-Sharma Varun & Co.) (244 Points)
Replied 16 March 2016

Section 143(11) of the Companies Act, 2013

It shall apply to every company including a foreign company as defined in clause 42 of section 2 of the Companies Act, 2013(18 of 2013), except -

(v) a private limited company with a paid up capital and reserve not more than rupees fifty lakh and which does not have loan outstanding exceeding rupees twenty five lakh from any bank or financial institution and does not have a turnover exceeding five crore at any point of time during the financial year.

Hence, if a private company satisfies all the above three conditions then Section 143(11) of CA, 2013 shall not apply.

Section 2(85) ‘‘small company’’ means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or
(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;

Hence, if a small company satisfies any of the above two conditions then Section 143(11) of CA, 2013 shall not apply.

CA Piyush (CHARTERED ACCOUNTANT - PRACTICE) (361 Points)
Replied 16 March 2016

Thanks varun. But my question is that does small scale industry includes private small scale industries as it reads as below Small scale co. (other than public)? If yes then does it mean that pvt co. Can qualify under any of two above mentioned excemption. It can take exception as per small scale too?

Varun Sharma (Proprietor-Sharma Varun & Co.) (244 Points)
Replied 16 March 2016

Private company is define u/s 2(68) whereas Small company is defined u/s 2(85), now whether both criteria is being met by your company or not, you need to check it. Yes its not that both 'private company' and 'small company' are mutually exclusive, it depends on case to case basis.

Yes it can claim exemption if any of the two criteria, of a small company, is met, but if being a private company it does not satisfy any of the exemption criteria of a 'private company' then Section 143(11) shall be applicable.

I hope you understand this time.