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Accounting Policies of Bombay Cycle & Motor Agency Ltd. Company

Mar 31, 2017

1) Corporate Information:

The Company was formed in 1919 with the main object to undertake business of sales and servicing of motor cars and at present its Automobile division situated at Church gate is operational for servicing of motor cars. The company diversified its operations in Restaurant and Banquets services at its Hospitality Division situated at Opera House.

2) Significant Accounting Policies:

a) Basis of Preparation of Financial Statements: These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. The company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

All the assets and liabilities have been classified as current or noncurrent as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current/noncurrent classification of assets and liabilities.

b) Use of estimates: The preparation of financial statements requires estimates and assumptions to be made that affect the reported balances of assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

c) Revenue Recognition: 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.

d) Borrowing Costs: Borrowing costs are recognized in the Statement of Profit and Loss in the year in which they are incurred.

e) Inventories:

i) Auto spare parts:- At lower of cost and net realizable 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 realizable 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.

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

g) Method of Depreciation and Amortization:

I) Depreciation:

i) Depreciation on Building, Plant and Machinery, Electrical Installations, Furniture & Fixture and Equipment is provided on Written Down Value Method, over the estimated useful life of assets.

ii) Effective 1st April, 2014, the Company depreciates its fixed assets over the useful life in the manner prescribed in Schedule II of the Act, as against the earlier practice of depreciating at the rates prescribed in Schedule XIV of the Companies Act, 1956.

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

iv) Depreciation on additions to assets or on sale/discernment of assets is calculated prorata from the month of such addition or up to the month of such sale / discernment, as the case may be.

II) Amortization:

i) Leasehold land is amortized 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.

h) Investments: Investments that are readily realizable and are intended to be held for not more than one year from the date of investment are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary, in the value of the investments, reduction being determined and made for each investment individually.

i) Accounting for taxes: Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws.

Deferred tax is recognized on timing differences, being the difference between taxable income and accounting income, that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized only if there is a reasonable/virtual certainty that they will be realized. j) Earnings per Share: Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares as above and also the weighted average number of equity shares upon conversion of all dilutive potential equity shares. k) Employees benefits:

i) Short term employee benefits are recognized as an expense at the undiscounted amount in the Profit and loss account of the year in which the related service is rendered. These benefits include compensated absences such as paid annual leave and performance incentives.

ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses are recognized in full in the Profit and Loss account for the period in which they occur.

Liability towards gratuity is being discharged regularly in accordance with the terms of employments with the employees. l) Impairment of Assets: An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in a prior accounting period is reversed if there has been a change in the estimate of the recoverable amount. m) Provisions, Contingent Liabilities and Contingent Assets: Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

n) Others :

i) 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 unassisted years/unaudited years under MVAT Act remains indeterminate. Assessments under MVAT Act up to financial year ended 31st March, 2013 have been closed and no dues are unpaid to that date. For subsequent year, the final liability remains indeterminate.

ii) Previous year''s figures have been regrouped / restated / rearranged wherever necessary to make them comparable with current year''s figures.


Mar 31, 2016

NOTE: 27 - SIGNIFICANT ACCOUNTING POLICIES AND OTHER NOTES

1) Corporate Information:

The Company was formed in 1919 with the main object to undertake business of sales and servicing of motor cars and at present its Automobile division situated at Church gate is operational for serving of motor cars. The company diversified its operations in Restaurant and Banquets services at its Hospitality Division situated at Opera House.

2) Significant Accounting Policies:

a) Basis of Preparation of Financial Statements: These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. The company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

All the assets and liabilities have been classified as current or noncurrent as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current/non current classification of assets and liabilities.

b) Use of estimates: The preparation of financial statements requires estimates and assumptions to be made that affect the reported balances of assets and liabilities as at the date of the financial statements and the reported amounts of income and expenses during the year. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

c) Revenue Recognition: 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.

d) Borrowing Costs: Borrowing costs are recognized in the Statement of Profit and Loss in the year in which they are incurred.

e) Inventories :

i) Auto spare parts:- At lower of cost and net realizable 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 realizable 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.

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

g) Method of Depreciation and Amortization:

I) Depreciation:

i) Depreciation on Building, Plant and Machinery, Electrical Installations, Furniture & Fixture and Equipment is provided on Written Down Value Method, over the estimated useful life of assets.

ii) Effective 1st April, 2014, the Company depreciates its fixed assets over the useful life in the manner prescribed in Schedule II of the Act, as against the earlier practice of depreciating at the rates prescribed in Schedule XIV of the Companies Act, 1956.

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

iv) Depreciation on additions to assets or on sale/discernment of assets is calculated pro rata from the month of such addition or unto the month of such sale / discernment, as the case may be.

II) Amortization:

i) Leasehold land is amortized 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.

h) Investments: Investments that are readily realizable and are intended to be held for not more than one year from the date of investment are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary, in the value of the investments, reduction being determined and made for each investment individually.

i) Accounting for taxes: Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws.

Deferred tax is recognized on timing differences, being the difference between taxable income and accounting income, that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized only if there is a reasonable/virtual certainty that they will be realized. j) Earnings per Share: Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares as above and also the weighted average number of equity shares upon conversion of all dilutive potential equity shares. k) Employees benefits:

i) Short term employee benefits are recognized as an expense at the undiscounted amount in the Profit and loss account of the year in which the related service is rendered. These benefits include compensated absences such as paid annual leave and performance incentives.

ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses are recognized in full in the Profit and Loss account for the period in which they occur.

Liability towards gratuity is being discharged regularly in accordance with the terms of employments with the employees. l) Impairment of Assets: An asset is treated as impaired when the carrying cost of the asset

exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in a prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

m) Provisions, Contingent Liabilities and Contingent Assets: Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

n) Others :

i) 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 unassisted years/unaudited years under MVAT Act remains indeterminate. Assessments under MVAT Act up financial year ended 31st March, 2013 have been closed and no dues are unpaid to that date. For subsequent year, the final liability remains indeterminate.

ii) Previous year''s figures have been regrouped / restated / rearranged wherever necessary to make them comparable with current year''s figures.


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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