CPT V24P7-Art1 (Content).pmd - Taxmann

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Accounts & Audit Long-term borrowings (i) Long-term borrowings should be classified as follows: 702 (a) Bonds and debentures, (b) Term loans, u From banks u From other parties (c) Deferred payment liabilities, (d) Deposits, (e) Loans and advances from related parties, (f) Long-term maturities of finance lease obligations, (g) Other loans and advances. (ii) Borrowings shall further be sub-classified as secured and unsecured. The nature of security shall be specified separately in each case. (iii) Where loans have been guaranteed by directors or others, the aggregate amount of such loans under each head shall be disclosed. (iv) Bonds/debentures (along with the rate of interest and particulars of redemption or conversion, as the case may be) shall be stated in descending order of maturity or conversion, starting from farthest redemption or conversion date, as the case may be. Where bonds/debentures are redeemable by instalments; the date of maturity for this purpose must be reckoned as the date on which the first instalment becomes due. (v) Particulars of any redeemed bonds/debentures for which the company has power to reissue shall be disclosed. (vi) Terms of repayment of term loans and other loans shall be stated. (vii) Period and amount of continuing default as on the balance sheet date in repayment of loans and interest, shall be specified separately in each case. 3. SHORT-TERM BORROWINGS (i) Short-term borrowings should be classified as follows: (a) Loans repayable on demand u From banks u From other parties (b) Loans and advances from related parties, (c) Deposits, (d) Other loans and advances. (ii) Borrowings shall further be sub-classified as secured and unsecured. Nature of security shall be specified separately in each case. (iii) Where loans have been guaranteed by directors or others, the aggregate amount of such loans under each head shall be disclosed. (iv) Period and amount of default as on the balance sheet date in repayment of loans and interest shall be specified separately in each case. 3.1 Other current liabilities - The amounts shall be classified as: August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 82 (a) Current maturities of long-term debt, (b) Current maturities of finance lease obligations, (c) Interest accrued but not due on borrowings, (d) Interest accrued and due on borrowings.
RELEVANT GUIDANCE PROVIDED BY THE ICAI IN ITS GUIDANCE NOTE AND FAQs ON REVISED SCHEDULE VI 4. The relevant guidance with respect to disclosure of information under “borrowings” issued by the ICAI by way of its Guidance Note on Revised Schedule VI and Frequently Asked Questions are provided in the following chart:— Definition of term loan • Term loans normally have a fixed or predetermined maturity period or a repayment schedule. Deferred payment liabilities • Deferred payment liabilities would include any liability for which payment is to be made on deferred credit terms, e.g., deferred sales tax liability, deferred payment for acquisition of fixed assets, etc. Security for loans • A blanket disclosure of different securities covering all loans classified under the same head, such as “all term loans from banks” will not suffice. • Where one security is given for multiple loans, the same may be clubbed together for disclosure purposes with adequate details or cross-referencing. Default on borrowings • The disclosures relating to default should be made for all items listed under the category of borrowings, such as bonds, debentures, deposits, deferred payment liabilities, finance lease obligations, etc., and not only to items classified as “loans”, such as term-loans or loans and advances, etc. • Any default that had occurred during the year and was subsequently made good before the year end need not be disclosed. Repayment terms • Disclosure of repayment terms should include the followings: n the period of maturity with respect to the balance sheet date, n number and amount of instalments due, n applicable rate of interest, n other significant relevant terms, if any. Deposits • Deposits classified under borrowings include: n Deposits accepted from public, and n Inter-corporate deposits which are in the nature of borrowings. Default made good after • Revised Schedule VI requires disclosure of default in the repayment reporting date of loan and interest existing on the balance sheet date. A company needs to make this disclosure even if the default has been made good after the reporting date. However, it may choose to also disclose the fact that default has been made good after the reporting date. 5. CASE STUDIES - FROM PUBLISHED ACCOUNTS 5.1 Reliance Industries Limited – Extracts from Balance Sheet as at March 31, 2012 - 5.1.1 Long-term Borrowings August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 83 703
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August 1 to 15, 2012 u TAXMANN’S
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Accounts & Audit 701 707 FOUNDER ED
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INTRODUCTION Vodafone story - 1. On
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and the capital gains on transfer o
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used to introduce new rules of law,
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for earning tax exempt income. Howe
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of the hearing before the Tribunal
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(P.) Ltd.’s (supra) before the IT
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the ITAT Rules, 1946, vis-à-vis th
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Two recent instances of such practi
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ut CIT(A) are not bothered by any s
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say, twice the latter amount or mor
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Taxing the Expenditure on Litigatio
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PENALTY CHARGES FOR BREACH OF LAW C
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Exclusive Owner v. Joint Owner DIRE
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Page 39 and 40: of the Act. It will not apply to de
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CPT V24P7-Art1 (Content).pmd - Taxmann

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