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Standard 15 (revised), “Employee Benefits’’. The
Group makes annual contributions to the LIC for the
Gratuity Plan in respect of employees at certain circles.
(f) Other Long term employee benefits are provided
based on actuarial valuation made at the end of each
financial year. The actuarial valuation is done as per
projected unit credit method.
(g) Actuarial gains and losses are recognised as and when
incurred.
12.PRE-OPERATIVE EXPENDITURE
Expenditure incurred by the Group from the date of
acquisition of license for a new circle or from the date of
start-up of new venture or business, up to the date of
commencement of commercial operations of the circle or
the new venture or business, not directly attributable to
fixed assets are charged to the Profit and Loss Account in
the year in which such expenditure is incurred.
13.LEASES
a) Where the Group is the lessee
Leases where the lessor effectively retains
substantially all the risks and benefits of ownership of
the leased term, are classified as operating leases.
Lease Rentals with respect to assets taken on
‘Operating Lease’ are charged to the Profit and Loss
Account on a straight-line basis over the lease term.
Leases which effectively transfer to the Company
substantially all the risks and benefits incidental to
ownership of the leased item are classified as finance
lease. Assets acquired on ‘Finance Lease’ which transfer
risk and rewards of ownership to the Group are
capitalised as assets by the Group at the lower of fair
value of the leased property or the present value of the
minimum lease payments or where applicable,
estimated fair value of such assets.
Amortization of capitalised leased assets is computed
on the Straight Line method over the useful life of the
assets. Lease rental payable is apportioned between
principal and finance charge using the internal rate of
return method. The finance charge is allocated over
the lease term so as to produce a constant periodic
rate of interest on the remaining balance of liability.
b) Where the Group is the lessor
Lease income in respect of ‘Operating Lease’ is
recognised in the Profit and Loss Account on a straightline
basis over the lease term.
Finance leases as a dealer lessor are recognised as a
sale transaction in the Profit and Loss Account and are
treated as other outright sales.
Finance Income is recognised based on a pattern
reflecting a constant periodic rate of return on the
net investment of the lessor outstanding in respect of
the lease.
c) Initial direct costs are expensed in the Profit and Loss
Account at the inception of the lease.
14.TAXATION
Current Income tax is measured at the amount expected
to be paid to the tax authorities in accordance with Indian
Income Tax Act, 1961.
Deferred income taxes reflects the impact of current year
timing differences between taxable income and
accounting income for the year and reversal of timing
differences of earlier years. Deferred tax is measured at
each balance sheet date based on the tax rates and the tax
laws enacted or substantively enacted. Deferred tax assets
and deferred tax liabilities across various countries of
operation are not set-off against each other as the Group
does not have a legal right to do so. Deferred tax assets are
recognised only to the extent that there is reasonable
certainity that sufficient future taxable income will be
available against which such deferred tax assets can be
realised. In situations where the Group has unabsorbed
depreciation or carry forward tax losses, all deferred tax
assets are recognised only if there is virtual certainty
supported by convincing evidence that they can be
realised against future taxable profits. Unrecognised
deferred tax assets of earlier years are re-assessed and
recognised to the extent that it has become reasonably
certain that future taxable income will be available
against which such deferred tax assets can be realized.
Minimum Alternative tax (MAT) credit is recognised as an
asset only when and to the extent there is convincing
evidence that the Group will pay normal income tax
during the specified period. In the period / year in which
the MAT credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained
in guidance Note issued by the Institute of Chartered
Accountants of India, the said asset is created by way of a
credit to the Profit and Loss Account and shown as MAT
Credit Entitlement. The Group reviews the same at each
balance sheet date and writes down the carrying amount
of MAT Credit Entitlement to the extent there is no longer
convincing evidence to the effect that Group will pay
normal Income Tax during the specified period.
Finance Act 2009, abolished ‘Fringe Benefit Tax’ effective
April 1, 2009. Accordingly, the group has not accounted
for fringe benefit tax.
15.MISCELLANEOUS EXPENDITURE
Premium on redemption of debentures is recognised as an
expense in the Profit and Loss Account over the period of
the related contract.
16.BORROWING COST
Bharti Airtel Annual Report 2009-10
Borrowing cost attributable to the acquisition or
construction of a qualifying asset is capitalised as part of
the cost of that asset. Other borrowing costs are
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