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Accounting Policies of Bombay Cycle & Motor Agency Ltd. Company

Mar 31, 2015

1) Impact of Pending litigation on Financial position (as compiled and certified by Directors & Management):

a) Litigation initiated by others against Company, number of suits 9, financial loss Rs. 1272.26 lacs (net of amounts provided in books of account) plus further interest, damages, etc yet to be crystallised). However Directors and Management based on legal opinion obtained are of opinion that Company has fair chance of winning these cases and as such no provision has been made in the books of account and consequently in attached Financial Statements.

b) Litigations initiated by company against others, number of suits 4, compensation of Rs. 12.5 lacs plus mesne profit further yet to be crystallized. Although Directors and Management based on legal opinion obtained, are of opinion that company has fair chance of winning in these cases, on the grounds of caution and not accounting possible gains in future have made no provision for claims yet to be crystallised and same will be accounted in the year of verdict.

2) Assessments and Appeals under Direct & Indirect Taxes:

a) Demand raised by Income Tax department of Rs. 1.35/- lacs for A.Y 2011-12, appeal lost in first stage i.e. C.I.T (appeal). Work of appeal filing before Appelate Tribunal is in process.

b) Demand raised by Income Tax department of Rs. 84,240/- for A.Y 2009-10. Appeal filed with Commissioner (Appeal) hearing of which is pending.

c) Special Leave petitions filed by income tax department for A.Y. 2001-02 and A.Y. 2006-07 for demand raised for the respective years Rs. 22.86 lacs and Rs. 30.12 lacs and reduction of returned Loss for A.Y. 2002-03 and A.Y. 2003-04 are pending in Supreme court.

d) Penalty of Rs. 6 lacs under Central Excise laws against which appeal by the company filed with commissioner (Appeals) is pending and not yet taken up for hearing.

e) Assessments under MVAT Act up to Financial Year ended 31.03.2012 have been closed and no dues are unpaid to that date. For subsequent years, the final liability remains indeterminate.

f) Municipal property taxes of Rs. 14.16 lacs not payable as of now pursuant to Bombay High court order dated 24.02.2014 in writ petition no. 2592 of 2013.

g) Directors and Management based on legal opinion obtained, are of opinion that Company has fair chance of winning all these above cases and as such no provision has been made in the books of account and consequently in attached financial statements for the same.

3) Other Contingent Liabilities & Commitments - to the extent not provided for:

a) Counter guarantees of Rs. 1 lac to bank against guarantees issued on company's behalf secured by pledge of deposits of Rs. 224,764/- (Previous year Rs. 199,199/-).

b) Commitment: Interest of Rs. 6,895/- on car loan from Volkswagen Finance Pvt. Ltd. for balance loan period.

4) Significant Accounting Policies are as under:

a) Fixed assets are carried at cost of acquisition/installation. They are shown net of accumulated depreciation/amortisation.

b) DEPRECIATION AND AMORTISATION:

I) Depreciation:

i) As required under Schedule II of the Companies Act, 2013, the Company has adopted the revised estimates of the useful life of the Tangible Assets w.e.f. 1st April, 2014. Depreciation has been provided by spreading written down value of the existing assets over remaining useful life prorate for each accounting year and additions after 1-4-2014 over useful life portion of the accounting year. Consequent to this change, the Depreciation for the year ended 31st March, 2015 is lower by Rs. 6.16 lacs and profit before & after tax is correspondingly higher by Rs. 6.16 lacs respectively. Further, an amount of Rs. 0.32 lacs has been adjusted against the opening balance of Retained Earnings as on 31-3-2014 in respect of the residual value of assets wherein the remaining useful life has become NIL as on that date itself as required by the same depreciation provisions.

ii) The Vehicles given on operating lease are also depreciated as per above method.

II) Amortisation :

i) Leasehold land is amortised over the period of lease.

ii) 1/3rd portion of balance amount in loose tools account at the end of the year is written off.

c) INVESTMENTS: All Non-Current Investments are stated at cost of acquisition. Diminution of temporary nature in value of such long-term investments is not provided for except where deter- mined to be of permanent nature. The provision for diminution is reviewed at every year end in relation to market value and suitable write backs / write offs are accounted. Current investments are stated at lower of cost and fair value.

d) Maharashtra Value Added Tax and Central Sales Tax are accounted on the basis of liability as per periodical returns filed with concerned tax authorities. Liability or refund on assessment/Vat audit report, if any, is accounted as and when the assessments/ Vat audit are completed. The final liability in respect of unassessed years/unaudited years under MVAT Act remains indeterminate.

e) i) Income and Expenditure are accounted on accrual, as they are earned or incurred, except in case of those involving significant uncertainties where the same is accounted on crystallization. ii) Assets subject to operating leases are included in fixed assets. Lease income is recognized in the Profit & Loss Account on a written down value basis over the lease term. Cost including depreciation are recognised as an expenses in the Profit and Loss Account.

f) Inventories of Stock-in-trade are valued as under:

i) Auto spare parts - at lower of cost and net realisable value.

(Cost in relation to spare parts of Auto Division business includes purchase price net of rebates and incentives from suppliers, octroi and freight)

ii) Materials purchased for preparation of and sale of Food & Beverages, in case of Hospitality Division:- At cost or net realisable value whichever is lower. Cost is determined on the basis of Weighted Average Method and includes all costs incurred for bringing these materials at doorstep of the company.

g) Retirement Benefits:

Employees' Provident Fund and Pension Scheme: Monthly contributions are remitted to Central Provident Fund Commissioner who maintains the accounts and pays the dues on retirement.

Gratuity: The Liability has been funded separately by formation of Gratuity Fund and taking out Group Gratuity Scheme Policy from Life Insurance Corporation of India. The annual premium under the same is accounted as contribution to Gratuity Fund. At the time of actual payment of Gratuity, any shortfall on account of premature retirement is accounted as expenditure of that year.

Leave Encashment: The Company provides for estimated leave encashment liability each year on the basis of accumulated leave due to employees at the year end, valued at salaries excluding allowances of the last month of Accounting Year.


Mar 31, 2013

A) Fixed assets are carried at cost of acquisition/installation. They are shown net of accumulated depreciation/amortisation.

b) DEPRECIATION AND AMORTISATION:

Depreciation : Depreciation on all assets is provided uniformly under written down value method as per the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, except in case of following assets where due to nature of business and type of assets suffering extra wear and tear, the rates used as also in earlier years are :

Hospitality Division:

Kitchen Equipments : 33.33%

Furniture & Fixture : 33.33%

Electrical Installations : 20.00%

Amortisation :

i) Leasehold land is amortised over the period of lease.

ii) 1/3rd portion of balance amount in loose tools account at the end of the year is written off.

c) INVESTMENTS: All Non-Current Investments are stated at cost of acquisition. Diminution of temporary nature in value of such long-term investments is not provided for except where deter- mined to be of permanent nature. The provision for diminution is reviewed at every year end in relation to market value and suitable write backs / write offs are accounted. Current investments are stated at lower of cost and fair value.

d) Maharashtra Value Added Tax and Central Sales Tax are accounted on the basis of liability as per periodical returns filed with concerned tax authorities. Liability or refund on assessment/Vat audit report, if any, is accounted as and when the assessments/ Vat audit are completed. The final liability in respect of unassessed years/unaudited years under MVAT Act remains indeterminate.

e) Income and Expenditure are accounted on accrual, as they are earned or incurred, except in case of those involving significant uncertainties where the same is accounted on crystallization.

f) Inventories of Stock-in-trade are valued as under:

i) Auto spare parts - at lower of cost or realisable value.

(Cost in relation to spare parts of Auto Division business includes purchase price net of rebates and incentives from suppliers, octroi and freight) ii) Food & Beverages, in case of Hospitality Division - at cost or net realisable value whichever is lower. Cost is determined on the basis of Weighted Average Method.

g) Retirement Benefits:

Employees’ Provident Fund and Pension Scheme: Monthly contributions are remitted to Central Provident Fund Commissioner who maintains the accounts and pays the dues on retirement.

Gratuity: The Liability has been funded separately by formation of Gratuity Fund and taking out Group Gratuity Scheme Policy from Life Insurance Corporation of India. The annual premium under the same is accounted as contribution to Gratuity Fund. At the time of actual payment of Gratuity, any shortfall on account of premature retirement is accounted as expenditure of that year.

Leave Encashment: The Company provides for estimated leave encashment liability each year on the basis of accumulated leave due to employees at the year end, valued at salaries excluding allowances of the last month of Accounting Year.


Mar 31, 2012

A) Fixed Assets are carried at cost of acquisition/installation. They are shown net of accumulated depreciation/amortization.

b) DEPRECIATION AND AMORTISATION :

Depreciation : Depreciation on all assets is provided uniformly under written down value method as per the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, except in case of following assets where due to nature of business and type of assets suffering extra wear and tear, the rates used as also in earlier years are :

Hospitality Division :

Kitchen Equipments : 33.33%

Furniture & Fixture : 33.33%

Electrical Installations : 20.00%

Amortisation :

i) Leasehold land is amortised over the period of lease.

ii) 1/3rd portion of balance amount in loose tools account at the end of the year is written off.

c) Investments : All Non-Current Investments are stated at cost of acquisition. Diminution of temporary nature in value of such long-term investments is not provided for except where determined to be of permanent nature. The provision for diminution is reviewed at every year end in relation to market value and suitable write backs / write offs are accounted. Current investments are stated at lower of cost and fair value.

d) Maharashtra Value Added Tax and Central Sales Tax are accounted on the basis of liability as per periodical returns filed with concerned tax authorities. Liability or refund on assessment/ Vat audit report, if any, is accounted as and when the asessments/Vat audit are completed. The final liability in respect of unassessed years/unaudited years under MVAT Act remains indeterminate.

e) Income and Expenditure are accounted on accrual, as they are earned or incurred, except in case of those involving significant uncertainties where the same is accounted on crystallization.

f) Inventories of Stock-in-trade are valued as under :

i) Auto spare parts - at lower of cost or realisable value.

(Cost in relation to spare parts of Auto Division business includes purchase price net of rebates and incentives from suppliers, octroi and freight).

ii) Food & Beverages, in case of Hospitality Division - at cost or net realisable value whichever is lower. Cost is determined on the basis of Weighted Average Method.

g) Retirement Benefits :

Employee's Provident Fund and Pension Scheme : Monthly contributions are remitted to Central Provident Fund Commissioner who maintains the accounts and pays the dues on retirement.


Mar 31, 2011

(1) Fixed assets including substantial Showroom and Service Station renovation expenses are carried at cost of acquisition/installation. Fixed assets are shown net of accumulated depreciation/amortization.

(2) DEPRECIATION AND AMORTISATION:

A) Depreciation : Depreciation on all assets is provided uniformly under written down value method as per the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, except in case of following assets where due to nature of business and type of assets suffering extra wear and tear, the rates used as also in earlier years are :

Hospitality Division

a) Kitchen Equipments : 33.33%

b) Furniture & Fixture : 33.33%

c) Electrical Installations : 20.00%

B) Amortisation:

i) Leasehold land is amortised over the period of lease.

ii) 1/3rd portion of balance amount in loose tools account at the end of the year is written off.

(3) INVESTMENTS:

All long term Investments are stated at cost of acquisition. Diminution of temporary nature in value of such long-term investments is not provided for except where determined to be of permanent nature. The provision for diminution is reviewed at every year end in relation to market value and suitable write backs / write offs are accounted. Current investments are stated at lower of cost and fair value.

(4) Maharashtra Value Added Tax and Central Sales Tax are accounted on the basis of liability as per periodical returns filed with concerned tax authorities. Liability or refund on assessment/vat audit report, if any, is accounted as and when the assessments/ vat audit are completed. The final liability in respect of unassessed years/unaudit ed years under MVAT Act remains indeterminate.

(5) Income and Expenditure are accounted on accrual, as they are earned or incurred, except in case of those involving significant uncertainties where the same is accounted on crystallization.

(6) Inventories are valued as under:

A) Finished Goods - at lower of cost or realisable value.

(Cost in relation to finished goods of auto dealership business includes purchase price, octroi and freight)

B) Raw Materials, in case of Hospitality Division - at cost or net realisable value whichever is lower. Cost is determined on the basis of Weighted Average Method.

C) Consumables, Stores and Spare Parts - at lower of cost and net realisable value.

(7) RETIREMENT BENEFITS:

A) Employees' Provident Fund and Pension Scheme : Monthly contributions are remitted to Central Provident Fund Commissioner who maintains the accounts and pays the dues on retirement.

B) Gratuity : The Liability has been funded separately by formation of Gratuity Fund and taking out Group Gratuity Scheme Policy from Life Insurance Corporation of India. The annual premium under the same is accounted as contribution to Gratuity Fund. At the time of actual payment of Gratuity, any shortfall on account of premature retirement is accounted as expenditure of that year.

C) Leave Encashment: The Company provides for estimated leave encashment liability each year on the basis of accumulated leave due to employees at the year end, valued at salaries excluding allowances of the last month of Accounting Year.

(8) Deferred tax asset permitted under Accounting Standard 22 of ICAI on net brought forward losses, brought in books in earlier year is written off on the basis of notional tax on the profits of each year at prevailing tax rates until all losses are not set off. In the year of final set off of losses, the balance deferred tax asset amount, if any, is fully written off.


Mar 31, 2010

(1) Fixed assets including substantial Showroom and Service Station renovation expenses are carried at cost of acquisition / installation. Fixed assets are shown net of accumulated depreciation / amortisation.

(2) DEPRECIATION AND AMORTISATION:

A) Depreciation : Depreciation on all assets is provided uniformly under written down value method as per the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, except in case of following assets where due to nature of business and type of assets suffering extra wear and tear, the rates used as also

B) Amortisation:

i) Leasehold land is amortised over the period of lease.

ii) 1/3rd portion of balance amount in loose tools account at the end of the year is written off.

(3) INVESTMENTS:

All long term Investments are stated at cost of acquisition. Diminution of temporary nature in value of such long-term investments is not provided for except where determined to be of permanent nature. The provision for dimunition is reviewed at every year end in relation to market value and suitable write backs/off are accounted. Current investments are stated at lower of cost and fair value.

(4) Maharashtra Value Added Tax and Central Sales Tax is accounted on the basis of liability under periodical returns filed with concerned tax authorities. Liability or refund on assessment, if any, is accounted as and when the assessments are completed. The final liability in respect of unassessed years remains indeterminate.

(5) Income and Expenditure are accounted on accrual, as they are earned or incurred, except in case of those involving significant uncertainties where the same is accounted on crystallization. Purchases of vehicles are accounted only on physical receipt of goods and after pre delivery inspection at the Companys showroom premises.

(6) Inventories are valued as under:

(A) Finished goods - at lower of cost or realisable value.

(Cost in relation to finished goods of auto dealership business includes purchase price, octroi, freight and driving cum escort charges up to showroom premises)

(B) Raw Materials, in case of Hospitality Division - At cost or net realisable value whichever is lower. Cost is determined on the basis of Weighted Average Method.

(C) Consumables, Stores and Spare Parts - at lower of cost and net realisable value.

(7) RETIREMENT BENIFITS:

(A) Employees Provident Fund and Pension Scheme : Monthly contributions are remitted to Central Provident Fund Commissioner who maintains the accounts and pays the dues on retirement.

(B) Gratuity : The Liability has been funded separately by formation of Gratuity Fund and taking out Group Gratuity Scheme Policy from Life Insurance Corporation of India. The annual premium under the same is accounted as contribution to Gratuity Fund. At the time of actual payment of Gratuity, any shortfall on account of premature retirement is accounted as expenditure of that year.

(C) Leave Encashment: The Company provides for estimated leave encashment liability each year on the basis of accumulated leave due to employees at the year end, valued at salaries excluding allowances of the last month of Accounting Year.

(8) Complimentary accessory items in the nature of sales incentives (Automobile Division) are charged to revenue in the year in which cost is incurred.

(9) Deferred tax asset permitted under Accounting Standard 22 of ICAI on net brought forward losses, brought in books in earlier year is written off on the basis of notional tax on the profits of each year at prevailing tax rates.

(10) As per the change in accounting policy made in F.Y. 2007 - 08 the eligible credit of M.A.T. payable u/s. 115JB of Income Tax Act 1961 for current year under review has been accounted as recoverable asset under seperate head in schedule of Loans and Advances.

 
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