PART- 21B - SIGNIFICANT ACCOUNTING POLICIES & PRACTICES
1 Accounting Convention
1.1 The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014, and the relevant provisions of the Companies Act, 2013, as applicable.
1.2 The financial statements have been prepared on the basis of historical cost convention, and on the accounting principle of a going concern.
1.3 The Company follows mercantile system of accounting and recognizes income and expenditure on accrual basis except those with significant uncertainties.
2 Use of estimates
The preparation of financial statements, in conformity with the generally accepted accounting principles [GAAP], requires management to make estimates and assumptions that are considered in the reported amounts of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and reported amounts of revenues and expenses for the year. Estimates are based on historical experience , where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such difference are dealt within the period in which the results are known / materialize.
3 Property, Plant and Equipment and Intangible Assets
3.1 Property, Plant and Equipment are stated at cost, less accumulated depreciation and impairment, if any. Direct cost are capitalized until such assets are ready for use.
3.2 Tangible Property, Plant and Equipment, that are not yet ready for their intended use, are carried at costs, comprising direct cost, and other incidental/ attributable expenses and reflected under capital work in progress.
3.3 Intangible Assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.
4 Investments
Investments are either classified as current or non-current, based on Management's intention. Current investments are carried at lower of cost and fair value of each investment individually. Non-current investments are carried individually at cost. However, provision for diminution is made to recognize a decline, if any, other than temporary, in the carrying value of the investment.
5 Accounting for taxes on income
5.1 Provision for Income-Tax is made on the basis of the estimated taxable income for the accounting year in accordance with the Income-Tax Act, 1961.
5.2 The deferred tax for timing differences between the book profits and tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantially enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is a virtual certainty that these would be realized in future and are reviewed for the appropriateness of their respective carrying values at each balance sheet date.
5.3 Specific tax benefits are available to the Company after fulfilling certain conditions. As per section 10AA of the Income Tax Act, 1961 (“IT Act”), a deduction of an amount equal to one hundred percent of the profits and gains derived by an unit located in SEZ for a period of 5 consecutive assessment years beginning from the assessment year relevant to the previous year in which the unit begins to provide services from SEZ is available. Further, an amount equal to fifty percent of the profit and gains is deductible for the next 5 years. The Company has a unit in SEZ and accordingly, is eligible for the aforesaid deduction. However, the aforesaid deductions are not available while computing tax liability of the Company under Minimum Alternative Tax (MAT). Nonetheless, such MAT paid/payable on the book profits of the Company computed in terms of the provisions of IT Act, read with the Companies Act, 2013 would be eligible for credit against tax liability arising under normal provisions of tax post tax holiday period.
6 Depreciation and Amortization
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives, using the Straight Line Method based on useful life and residual value as per the provisions of Schedule II of the Companies Act, 2013 . Intangible Assets are amortized on a Straight Line basis over the estimated useful economic life. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
7 Retirement Benefits
Contributions to defined contribution schemes such as Provident Fund, ESIC and NPS are charged to the Statement of Profit and Loss as incurred. However, for payment of Gratuity and Leave Encashment no provision has been made by the company and the same are accounted for on actual payments basis only.
8 Revenue Recognition
8.1 The company records revenue from services provided on periodical basis in accordance with terms of contract on accrual basis. Items of revenue are recognized in accordance with the Accounting Standard (AS-9). Accordingly, wherever there are uncertainties in the ascertainment/ realization of income, the same is not accounted for. Revenue is recognized by excluding all the taxes and cess collectible in respect of such income.
8.2 Interest income is accounted on accrual basis.
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