ACCOUNTING STANDARDS COMMITTEE
FINAL REPORT
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF DIRECT TAXES
AUGUST 2012
CONSTITUTION OF THE COMMITTEE
Convenor
Shri H. Srinivasulu, IRS
Commissioner of Income-tax-IV Hyderabad
Members
Shri Pravin Kumar, IRS Commissioner of Income-tax, Mumbai
Shri Ankur Garg, IRS
Commissioner of Income-tax, Rajkot
Shri J. Krishna Kishore, IRS Commissioner of Income-tax, Vijayawada
Shri Pawan Kumar, IRS Director (TPL), CBDT
Shri Rajesh Kumar Bhoot, IRS Director (TPL), CBDT
and Secretary of the Committee
Shri M.P. Lohia, IRS(Retd.), FCA Chartered Accountant, Mumbai
Shri Kamlesh Vikamsey, FCA Chartered Accountant, Mumbai
Shri Milin Mehta, FCA Chartered Accountant, Vadodara
Shri Jamil Khatri, FCA Chartered Accountant, Mumbai
PREFACE
The Finance Act, 1995 empowered the Central Government to notify the Accounting Standards to be followed for computing the income under the head “Profits and gains of business or profession” or “Income from other sources”. The intention in framing the Standards under the Income-tax Act is to compute the income precisely and objectively.
In 1996, two Accounting Standards relating to disclosure of accounting policies and disclosure of prior period and extraordinary items and changes in accounting policies were notified. The Government constituted a committee in July 2002 for formulation of Accounting Standards for the purposes of notification under the Income-tax Act. This Committee recommended for notification of the Accounting Standards issued by the ICAI without any modification along with consequential legislative amendments to the Act for preventing any revenue leakage.
Subsequently, the CBDT has constituted the present Committee to harmonise the Accounting Standards issued by the ICAI with the provisions of the Act for the purposes of notification under the Act and also to suggest amendments to the Act necessitated by transition to Ind-AS/IFRS. The Committee comprised of brilliant professionals and knowledgeable officers from the Department.
The Committee deliberated on whether Accounting Standards issued by the ICAI can be notified under the Act without modification. The Committee concluded that the Accounting Standards to be notified under the Act need harmonization with the provisions of the Act. The Committee also deliberated on whether after notification of the Accounting Standards under the Act, the taxpayer is required to maintain two sets of books of account i.e. one in accordance with the Accounting Standards issued by the ICAI; and another in accordance with the Accounting Standards notified under the Act. The Committee recommends that the Accounting Standards to be notified under the Act should be made applicable only to the computation of taxable income and a taxpayer need not maintain separate set of books of account on the basis of these notified Accounting Standards. The Committee also recommends that the Accounting Standards to be notified under the Act may be termed as “Tax Accounting Standards” (TAS), to distinguish the same from the Accounting Standards issued by the ICAI.
The Committee examined all the thirty one Accounting Standards issued by the ICAI and noted that some of the Accounting Standards issued by the ICAI relate to `disclosure’ requirement, whilst some other contain matter that are adequately dealt within the Act. In view of this, the Committee recommends that Tax Accounting Standards need not to be notified in respect of seventeen Accounting Standards issued by the ICAI. The Committee formulated the drafts of Tax Accounting Standards on the issues covered by the rest of the fourteen Accounting Standards issued by the ICAI. The committee while framing the Tax Accounting Standards, broadly, adhered to the principles of ‘reduction of litigation’, ‘minimization of alternatives’ and giving ‘certainty to issues’. The Committee members during the deliberations were frank, fair and always kept the interest of the nation in mind. The Almighty has been kind in giving me an opportunity to coordinate the efforts of the members of the committee, who worked with ‘dedication’ and ‘selflessness’.
The Committee places on record its sincere thanks to the Chief Commissioners of Income-tax, Mumbai, Bengaluru and Hyderabad for their support. The Committee sincerely conveys its thanks to the Director General of Income-tax (Investigation), Delhi and Mumbai for providing the infrastructural support.
(H. SRINIVASULU)
Commissioner of Income-tax-IV, Hyderabad ,
and Convener of the Committee.
Place: New Delhi
Date: 14th August, 2012
Download Full Accounting Standards Committee Final Report -August 2012
