Representation on TAX ACCOUNTING STANDARD (TAS)TAS).pdf · V. P. Verma Ajit Rohira Advisor Y. P....
Transcript of Representation on TAX ACCOUNTING STANDARD (TAS)TAS).pdf · V. P. Verma Ajit Rohira Advisor Y. P....
STANDARD (TAS)
THE CHAMBER OF TAX CONSULTANTS
TAX ACCOUNTING
Representationon
THE CHAMBER OF TAX CONSULTANTS
MANAGING COUNCIL2012-2013
PresidentManoj Shah
Vice PresidentYatin Desai
Hon. SecretariesHitesh ShahParas Savla
Hon. TreasurerAvinash Lalwani
Immediate Past PresidentParimal Parikh
MembersAjay Singh
Apurva ShahAshit Shah
Ashok SharmaAtul Bheda
Haresh KeniaHinesh Doshi
Jayant GokhaleK. Gopal
Keshav BhujleKetan Vajani
Kishor VanjaraNinad KarpeVijay Bhatt
Vipul ChoksiVipul Joshi
Yatin Vyavaharkar
Special InviteesBhavesh Vora
Mahendra SanghviSujal ShahV. H. Patil
LAW & REPRESENTATION2012-2013
ChairmanVipul Joshi
Co-ChairmanMahendra Sanghvi
Vice-ChairmanShailesh Bandi
Ex-OfficioManoj ShahYatin Desai
ConvenorsKrish Desai
Amrit Porwal
Past PresidentV. P. VermaAjit Rohira
AdvisorY. P. Trivedi
K. K. Ramani
Office BearersHitesh ShahParas Savla
MG Council MembersApurva Shah
Jayant Gokhale
MembersAtul Suraiya
C. N. VazeDevendra Jain
Durgashankar SharmaKiran Shah
Manish GadiaMayank ShahNitin Potdar
Niranjan DoshiNikita Badheka
Rajen GadaSunil Ramani
Shailesh ShethShilpa Sharma
Sanjay BuchShruti Shah
Sharad AbhyankarV. R. Ghelani
Draft Tax Accounting Standard (TAS)
Page 1 of 21
Representation on Tax Accounting Standard (TAS)
GENERAL PREAMBLE
At the outset, we strongly represent that there is no necessity to introduce TAS at
present because its introduction will result in conflict with the existing Tax Laws,
unsettling the settled positions under, / tax laws, will generate avoidable Tax
litigations. It will also create harrasment of doing unnecessary reconciliation
between Tax Accounting Standard and Books of Account and would also increase the
cost of compliance. However, we highlight some of the points in details in this
regard.
a.) Concept of Materiality not recognised: There are many events in business which
are trivial or insignificant in nature. The cost of recording and reporting such
events cannot be justified by the usefulness of the information derived.
Materiality concept holds that items of small significance need not be given strict
theoretically correct treatment. For example, a stapler costing around Rs.50 may
last for three years; however, the efforts involved in allocating its cost over the
three year period is not worth the benefit that can be derived from this operation.
Since the item obviously is immaterial when related to overall operations, the cost
incurred on it may be treated as the expense of the period in which it is acquired.
Materiality is a subjective concept. Whether financial data is material or not
depends not just on its users but on its purpose. Non recognisation of materiality
concept will increase the cost of compliance and result in harassment to assesses.
b.) Concept of Prudence not recognised: We have to make estimates requiring
judgment to counter the uncertainty. While making judgment we need to be
cautious and prudent. Prudence is a key accounting principle which makes sure
that assets and income are not overstated and liabilities and expenses are not
understated. Ignorance of prudence will result in pre-mature taxation of income
which is not really earned and would result in improper taxation and may create
conflicts with charging sections of Income Tax Act.
Draft Tax Accounting Standard (TAS)
Page 2 of 21
GENERAL PREAMBLE
c.) Separate books of Accounts for TAS: Though it has been stated that no separate
books are required to be maintained under income tax laws, implementing the
TAS would be impossible without maintenance of separate books of account
under tax laws, particularly where there are many accounting standards and
conflicting treatments between accounting standards issued under Companies
Act, 1956 / by ICAI and those proposed as TAS under Income Tax Act, 1961.
Reconciling the income as per the books of accounts maintained as per AS (ICAI)
and the income computed as per TAS will become cumbersome exercise. We
recommend harmonization of AS issued by ICAI with TAS proposed to be issued
under Income tax Act, 1961 Further appropriate legislative amendments should
be made to the Act to prevent any scope for leakage of revenue on account of
notification of Accounting Standards issued by the ICAI.
d.) Well settled Judicial Pronouncement: As on today, concerned issues are being
resolved smoothly in absence of TAS by courts. Therefore, TAS will bring
confusions and ambiguity on well settled issues. Further, it will create conflicts on
well settled issues.
e.) Threshold limit for Applicability: Notwithstanding what is stated above, if a TAS is
nonetheless required to be issued, it needs to have a threshold limit for non
applicability, so that smaller assesses are not required to go through such
cumbersome exercise and strict compliance.
f.) Modification in Nomenclature: The nomenclature given as “Tax Accounting
Standard” is not proper and the word “Accounting” is required to be deleted as it
implies that it is required to be accounted, whereas as stated in preamble no
separate books of accounts are required to be maintained and it is applicable to
only computation of total income. Therefore, the nomenclature should not include
the word “Accounting”.
Draft Tax Accounting Standard (TAS)
Page 3 of 21
GENERAL PREAMBLE
g.) Non-Applicability: TAS should not be made applicable to Presumptive incomes,
Shipping Companies, Insurance Companies, etc to the extent they are covered by
the special provisions of the Income tax Act.
We are of strong opinion that there is no need for introduction of TAS. Even if one
wants to introduce an uniform mechanism for computation of income, the same
can be introduced through Income Tax Rules. Nonethless, if at all one wants to
introduce TAS then to a criteria as suggested below needs to be specified so as to
avoid process compliance by small tax payers who may not be equipped to that
extent and for whom such compliance may not be economically viable.
Suggested criteria for applicability of Tax Accounting Standards:
(i) Enterprise which are listed on recognized stock exchange whether
in India or outside India
(ii) Enterprise which are in the process of listing their equity or debt
securities as evidenced by Board of Directors in this regard.
(iii) Banks including Co-operative Banks
(iv) Financial Institution, Public Sector Undertaking, enterprise
carrying on insurance business
(v) Assessee’s having turnover of Rs.100 crores or more.
Notwithstanding what is stated above, specific representation along with suggestions
and justification thereof on the each of TAS is made separately hereunder:-
Draft Tax Accounting Standard (TAS)
Page 4 of 21
DISCLOSURE OF ACCOUNTING POLICIES
… Sr.
No.
As per the Draft Suggestion Justification
1 As per para 1 This
Accounting
Standard deals with
significant
accounting policies.
Suggested wordings “This
Accounting Standard
deals with disclosure of
significant accounting
policies for the purpose of
tax computation”
This Standard is a disclosure
Standard. As such policies
are governed by the
respective standard and
therefore the suggested
wordings.
2 Wording of para 4
are “ the accounting
policies refer
…….adopted by a
person”
Suggested wording of
para 4 are “ the
accounting policies refer
…….adopted by a person
for the purpose of
computation of income as
per the Tax Accounting
Standards”
TAS are only for specific
purpose of preparation of
tax computation and also
the policies have to be in
line with the Tax Accounting
Standards and therefore
the suggested wordings.
3 The wordings of
para 5 are
“Accounting
policies adopted by
a
person……….profes
sion or vocation”
Suggested wordings are
“Accounting policies
adopted by a personshall
be such as to represent
true and fair view of
income of the business or
profession or income
from other sources as per
TAS”
(1) It does not deal with
Balance Sheet , It only
deals with
computation of
income. Therefore
‘state of affairs’ is not
required.
(2) Profession includes
vocation as defined
under the Act and
hence the word
vocation be deleted
(3) As pre preamble this
Standard is for
computation of
“business income”
and “income from
other sources” and
therefore the
suggested wordings.
Draft Tax Accounting Standard (TAS)
Page 5 of 21
DISCLOSURE OF ACCOUNTING POLICIES
4 As per para 5(i) ,
“The treatment and
………not merely by
the legal form”
This clause needs to be
deleted .
To avoide unnecessary
litigations.
5 An Accounting
policy shall not be
changed without
reasonable cause.
An accounting policy shall
not be changed without
reasonable cause.
Grammatical correction.
6 5(ii) marked to
market los……
Marked to market
loss/gain or ……… of such
loss /gain is in ……
In equity , when loss is not
allowed gain should also be
not subject to tax.
Draft Tax Accounting Standard (TAS)
Page 6 of 21
VALUATION OF INVENTORIES
Sr.
No.
As per the Draft Suggestion Justification
1. Measurement :
Para 3: Inventories
shall be valued at cost
or net realizable value,
whichever is lower,
except in case of a
service provider, the
inventories of services
shall be valued at cost.
The Sentence shall be
re drafted as
“ Inventories shall be
valued at cost or net
realizable value,
whichever is lower,
except in case of a
service provider, the
inventories for
rendering of services
shall be valued at
cost.
To remove the anomaly for
valuation of inventories for
rendering of services.
2. Cost of Inventories :-
Formulae
Cost of inventories to
be determined on First
in First out, Weighted
Average Cost Formula,
and Retail method.
The technique of
measurement of the
cost of inventories on
the basis of standard
cost to be included.
In certain type of
manufacturing industries,
such as batch production,
it is practically difficult to
measure cost of inventory
on FIFO or Weighted
Average Cost Formulae.
Standard cost method of
measurement should be
permitted which results
approximate to the actual
cost.
Draft Tax Accounting Standard (TAS)
Page 7 of 21
EVENT OCCURING AFTER THE PREVIOUS YEAR
Sr. No.
As per the Draft Suggestion Justification
1 Para 3 Adjustment to
assets, liabilities,
income or expense
shall be made for
events
occurring after the
previous year that
provide additional
information materially
affecting the
determination of the
amounts relating to
conditions existing at
the end of the relevant
previous year
Event occurring after
the end of the previous
year that provide
additional information
materially affecting the
determination of the
amounts of asssets ,
liability, income or
expense relating to the
conditions existing at
the end of the relevant
previous year, the
effects of such events be
shall be given in the
comoutation of income
Alternatively
Only adjustments to
income and expenses be
given effect in
computation of income
2 Para 4- Following disclosure shall be made in respect of each class of provision
Following disclosure shall be made in respect of adjustments made to income and expenses for the purpose of computation of income each adjustment.
For event occurring after the end of previous year , the word ‘adjustment’ is more appropriate
3 Para 4(a) a brief
description of the item of income, expense, asset or liability recognized on account of events occurring after balance sheet date (b) amount recognized
(i) A brief description of adjustments affecting item of income, expense, asset or liability on account of events occurring after the end of previous year. (b) amount adjusted
Suggested wordings to have consistency with the title of the Standard.
Draft Tax Accounting Standard (TAS)
Page 8 of 21
PRIOR PERIOD ITEMS
Sr.
No.
As per the
Draft
Suggestion Justification
1. It deals with
treatment of
prior period
expense only
– Para 2
AS – 5 deals with prior period
items i.e. income and
expenditure of a prior period.
.
TAS should be comprehensive
and therefore it should cover
treatment for prior period
income.
To be fair to tax payer it
should also consider
disallowance of prior period
item on Net basis, in case of
there is related income
pertaining to prior period
expenses.
For working out taxable
income it may be fair to work
out prior period income and
expenditure on net basis.
2. Para No. 3 (2)
…… unless the
person
proves that
such expense
accrued
during the
said previous
year.
To be modified as follows :
…… unless such expense is
crystallised during the said
previous year.
‘the person proves’ is a harsh
word. If it is concluded that
expense was crystallised
during the previous year, it
should be treated as a current
year expense.
3. Para No. 3 (3) …… accounting estimate or
change in accounting policy
shall not constitute…….
The situation may arise when
there is a prior period charge
due to change in accounting
policy.
4. Para No. 4 Prior Period Items shall be
disclosed with refence to
nature and amount..
As suggested in Sr 1. above prior period item is to be considered and therefore disclosure for the same..
Prior Period items falling in para 3(2) of TAS should only be disclosed as that is relevant.
Draft Tax Accounting Standard (TAS)
Page 9 of 21
PRIOR PERIOD ITEMS
There should be some
threshold limit for treating
item as prior period expense.
We suggest threshold limit of
Rs.100,000 or 0.1% of
turnover whichever is lower
may be considered..
To avoid cumbersome exercise
of identifying each and every
prior period expense, this is
suggested.
Draft Tax Accounting Standard (TAS)
Page 10 of 21
REVENUE RECOGNITION
Sr.
No.
As per the Draft Suggestion Justification
1. Para No. 1 (2)
It does not deal
with any aspects
of revenue
recognition
which are dealt
with by other
TAS.
Neither this TAS nor any
other TAS covers revenue
arising from insurance
contracts. TAS should
mentioned that revenue
recognition for insurance
contracts will be based on
IRDA Regulation.
This is required to take
care of revenue earned by
insurance companies,
including reliance on
actuarial valuation.
2. Para No. 2 (1) (a)
Definition of
Revenue
It should further add that
‘in an agency relationship,
the revenue is the amount
of commission and not the
gross inflow of cash,
receivable or other
consideration.’
This will cover agents and
brokers which are not
required to book revenue
on a gross basis. This will
have impact on
applicability of tax audit.
3. Para No. 3
….. property in
the goods for a
price or all
significant risk
and reward of
ownership have
been transferred
to the buyer ….
…. Property in the goods for
a consideration and all
significant risk and reward
of ownership have been
transferred to the buyer …..
Price can only be in a
monetary terms while
consideration can also be
in kind.
As per AS – 9 unless significant risk and reward of ownership have been transferred, there is no need to recognise the revenue. If TAS wording is not changed, recognition of revenue will be on transfer of property or transfer of significant risk and reward of ownership whichever is earlier.
Draft Tax Accounting Standard (TAS)
Page 11 of 21
REVENUE RECOGNITION
4. Para No. 4
….. revenue
recognition in
respect of such
claim shall be
postponed to the
extent of
uncertainty
involved.
….. revenue recognition in
respect of such claim shall
be postponed to the period
in which ultimate collection
is reasonably certain.
If TAS wordings are
retained it will mean that
revenue may have to be
booked on the basis of
percentage of certainty of
collection. To make it
clear, the wordings
change is required.
The
postponement of
revenue is
restricted only to
two items i.e.
claim for
escalation of
price and export
incentives.
The postponement should
be made applicable to any
revenue where the
collection is not reasonably
certain.
If revenue is booked for
transactions where
collection is not
reasonably certain, it may
amount to recognition of
contingent asset and will
be against the basic
principle of accounting.
5. Para No. 5
It provides that
for booking of
revenue from
service
transactions it is
mandatory to use
proportionate
completion
method.
AS – 9 gives alternative to
either used proportionate
completion method or
completed service contract
method. For certain
services it will be difficult to
apply percentage
completion method, as it
will be difficult to estimate
percentage of work
completed.
For certain service
contracts, TAS should allow
completed service contract
method. Percentage
completion method may be
made mandatory for fixed
price/period contracts,
which can be accounted on
the basis of period elapsed.
Revenue from many
services may be linked to
certain milestone
provided in the contract.
In such cases, it is difficult
to apply percentage of
completion method. For
example, Merchant
banking activity, Repair of
machinery,legal
practioners, consultancy
services etc.
Draft Tax Accounting Standard (TAS)
Page 12 of 21
REVENUE RECOGNITION Sr.
No.
As per the Draft Suggestion Justification
6. Para No. 6
….. discount or
premium on debt
securities held is
treated as though
it were accruing
over the period of
maturity.
…… discount or premium on
issuance of debt securities is
treated as if it were accruing
over the period of maturity..
Definition of cost for the
purpose of capital gain needs
to be modified accordingly.
To be inline with the
present scenario
treating discount and
premium on issuance of
debt securities to arrive
at total income.
7. Para No. 9
It is important to clarify as to
where the disclosure is
required, as financial
statements disclosure will be
based on AS.
Disclosure may form
part of form 3CD where
tax audit is applicable.
For other assesses, it
may be exempted.
8. Para No. 9(d)
….. disclosure is
required for the
amount of
retentions.
s.
(I)……. and
recognised
profits (less
recognised
losses)……
The word ‘less’ should be
removed . After the word
profit, word loss needs to be
inserted.
9. Para No. 12 & 13 As per wording given none of the improvements or repairs will get qualified as revenue expenditure. It is important to mention that if there is no increase in the future benefits from the existing assets, “beyond what was originally envisaged”, it shall be charged to revenue.
All repairs will have
future benefit and it will
not be correct to
capitalised all the
expenditure on repairs
and improvements.
Draft Tax Accounting Standard (TAS)
Page 13 of 21
REVENUE RECOGNITION
Sr.
No.
As per the Draft Suggestion Justification
10. Para No. 14
…. which becomes
an integral part of
the existing tangible
assets is to be added
to its actual cost.
TAS should specify that it will
be treated as an addition of the
previous year in which such
expenditure is incurred.
In the block concept,
there can not be any
addition to the actual
cost of the original
asset. By the present
wording it may be
construed that
depreciation shall be
calculated
retrospectively.
11. Para No. 15 & 19
There is no need to maintain
tangible fixed assets register,
where concept of block of asset
is involved. It is suggested that
the details mentioned in these
paras may be provided only in
the year of addition to the
fixed assets.
It will be cumbersome
to maintain fixed
assets register for all
the assets in the
concept of block of
asset.
12. Para No. 23
…. where these
conditions are met,
the subsequent
expenditure shall be
added to the actual
cost of the
intangible assets.
Instead of ‘actual cost’, the
word ‘block’ should be
replaced.
To be in line with
Income Tax Law.
Draft Tax Accounting Standard (TAS)
Page 14 of 21
ACCOUNTING FOR TANGIBLE FIXED ASSETS
Sr.
No.
As per the
Draft
Suggestion Justification
1. Para No. 2
(1)(a)
…. being land,
building,
machinery,
plant or
furniture held
….
It should be changed to ‘…. being
land, building, furniture & fitting,
machinery and plant, ships held ….’
It should match with
Appendix – I of the
income tax rules
which provides
different blocks. If
the wordings are
not same, it may
create difficulty in
capitalisation.
2. Para No. 2
(1)(b)
Fair Value ….
arm’s length
transaction.
It should be changed to ‘Fair Value
…. arm’s length transaction, who
are fully informed and are not
under any compulsion to transact’.
There is no need to
change definition of
fair value given in
AS – 10.
3. Para No. 6 After the para, following should be
added ‘impact of the above changes
should be adjusted from the
opening block of the respective
asset in the previous year in which
such changes arises’.
Clarification is
required as the
effect is not
expected to be given
retrospectively.
4. Para No. 8 (i)The expenditure incurred upto
start up and commissioning ………
shall be capitalized
exceptexpenditure incurred at the
project stage when there is
abnormal delay in starting of
commercial production.
AS – 10 covers the
same and specifies
that such cost
should be charged
off.
Draft Tax Accounting Standard (TAS)
Page 15 of 21
ACCOUNTING FOR TANGIBLE FIXED ASSETS
(ii) The sentence “The expenditure
incurred after the plant has begun
commercial production, i.e.,
production intended for sale or
captive consumption, shall be
treated as revenue
expenditure” needs to be deleted
and instead the following sentence
to be inserted.” The expenditure
after the completion of test run of
the plant shall be treated as
revenue expenditure”
5. Para No. 10 &
11
…. whichever is
lower.
(a) Word Market value needs to
be deleted “
(b)It should be changed to ‘….
whichever is more clearly evident’.
(a) Fair value is
broader term
and already
includes fair
market value
(b) There is no
reason for
accounting at
lower value.
Further, such
accounting
may create
issues in
arriving at
profit or loss
on sale of
asset /
security given
up.
Draft Tax Accounting Standard (TAS)
Page 16 of 21
ACCOUNTING FOR TANGIBLE FIXED ASSETS Sr.
No.
As per the Draft Suggestion Justification
6. Para No. 12 & 13 As per wording given
none of the
improvements or
repairs will get qualified
as revenue expenditure.
It is important to
mention that if there is
no increase in the future
benefits from the
existing assets, “beyond
what was originally
envisaged”, it shall be
charged to revenue.
All repairs will have
future benefit and it will
not be correct to
capitalised all the
expenditure on repairs
and improvements.
7. Para No. 14
…. which becomes an
integral part of the
existing tangible
assets is to be added
to its actual cost.
TAS should specify that
it will be treated as an
addition of the previous
year in which such
expenditure is incurred.
In the block concept,
there can not be any
addition to the actual
cost of the original asset.
By the present wording it
may be construed that
depreciation shall be
calculated
retrospectively.
8. Para No. 15 & 19
There is no need to
maintain tangible fixed
assets register, where
concept of block of asset
is involved. It is
suggested that the
details mentioned in
these paras may be
provided only in the
year of addition to the
fixed assets.
It will be cumbersome to
maintain fixed assets
register for all the assets
in the concept of block of
asset.
Draft Tax Accounting Standard (TAS)
Page 17 of 21
LEASES
Sr. No.
Issues Justifications
As per draft Suggestions
1.
Para 5 :
Classification of a lease
agreement shall be same
for the lessor and the
lessee and they shall
execute a joint
confirmation regarding
such classification.The
present requirement does
not take care of situation
(a)
TAS should provide for joint
declaration for such
changes
The present
requirement does not
take care of situation
where subsequent to
initial agreement
lease terms are
substantially modified
which may result in
change in original
classification..
2. Para 3(2)
(a) since there is provision
in TAS of joint declaration
for classification of lease ,
this deeming provision is
not required .
Alternatively, the factors
indicated in this para may
be considered while
entering into joint
declaration for lease
agreements.
The deeming
provision for finance
lease may result in a
different
classification than
that of joint
declaration.
3. Under Para 10 of TAS
(LS):
Lease payments under an
operating lease shall be
recognized as an expense
on straight line basis over
the lease term and;
(i) In case of non
cancellable operating
lease, lease payments shall
be recognized as an
expense on straight line
basis over the lease term
It is not correct to apply staright line basis for the full period of lease for cancellable lease.
Draft Tax Accounting Standard (TAS)
Page 18 of 21
LEASES
Para 15 of TAS(LS):
Lease income under an
operating lease shall be
recognised as an income
on a straight line basis
over the lease term.
The lease income/
payments in the case of
operating lease is to be
recognised only on a
straight line basis over the
lease term.
However, in cases where
the lease agreement
provides for periodic
increase in lease rentals
over the lease term, as per
the treatment prescribed
under TAS(LS), the
assessee would be
required to offer for tax
such income which has
not even arisen to him in
the given previous year.
Similar issues may arise
where the lease
agreement contains an
escalation or similar
clause.
(ii) In case of cancellable
operating lease, lease
payments shall be
recognized as an expense
on a syatematic basis over
the lease term.
Similar changes are
required under para 15 for
lease income accounting.
Draft Tax Accounting Standard (TAS)
Page 19 of 21
LEASES
4. Para 14
The balance of the
receivable at the end of
the lease term shall be
treated as the cost of
acquisition or actual
cost of the asset given
under finance lease at
the time of end of the
lease term.
It is recommended at Para
14 of TAS(LS) be deleted
Since the lessor is
required to record the
finance lease as a sale in
his books at the inception
of the lease itself, the
question of balance, if
any, in the ‘receivable
account’ of the lessor at
the end of the lease term
being regarded as the
‘cost of
acquisition’/’actual cost’
of such leased asset
(which does not at all
appear in the books of
the lessor upon the
inception of the lease)
does not arise.
Accordingly, the
provision contained in
Para 14 of TAS(LS)
cannot be given effect to.
[In fact, when at the
inception of the finance
lease, the lessor is
required to offer the
gains as his income, it is
only fair that any
unrecoverable amount
lying in the ‘receivable
account’ of the lessor at
the end of the lease term
should be allowed as a
loss to the lessor.]
Draft Tax Accounting Standard (TAS)
Page 20 of 21
INTANGIBLE ASSETS Sr.
No.
As per the Draft Suggestion Justification
1. Para No. 1
Item no. (i) – goodwill
should be excluded so
that acquired goodwill
can be treated as
intangible assets.
AS – 10 covers acquired
goodwill other than on
merger accounting. If
expenditure is incurred for
purchase of goodwill, it will
be fair to allow the same to
be capitalised.
2. Para No. 2 (1)(a) It should be provided
that computer software
will not be intangible
assets.
It is covered in depreciation
rate - Appendix I as part of
tangible assets.
3. Para No. 2(1)(g) The word ‘systematic’
may be removed from
the definition of
depreciation.
Income Tax Rules provide
specific rate of depreciation
for intangible assets and it
may not be considered as
systematic allocation. In
most of the cases,
systematic allocation will
be in the books of account
and will not match with
Income Tax Rules.
4. Para No. 2(1)(i) . It should be changed to
‘Fair Value …. arm’s
length transaction, who
are fully informed and
are not under any
compulsion to transact’
5. Para No. 2(1)(j)
...net of any
accumulated
depreciation.
It should be changed to
‘… net of depreciation
allowed/allowable in
income tax’.
Required to be in line with
the provision of income tax.
Draft Tax Accounting Standard (TAS)
Page 21 of 21
INTANGIBLE ASSETS
6. Para No. 4 Clarification is required
for treatment of
computer software on
stand alone basis.
At present it is getting
covered under Tangible
Fixed Assets.
7. Para No. 5 The reference of goodwill
in the para should be
removed, so that on the
acquired goodwill
depreciation can be
claimed.
Acquired goodwill should
be considered as
depreciable asset.
8. Para No. 14 After the para, following
should be added ‘impact
of the above changes
should be adjusted from
the opening block of the
respective asset in the
previous year in which
such changes arises’.
9. Para No. 23
…. where these
conditions are
met, the
subsequent
expenditure shall
be added to the
actual cost of the
intangible assets.
Instead of ‘actual cost’,
the word ‘block’ should
be replaced.
To be in line with Income
Tax Law.
NOTES
NOTES
NOTES
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