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APPENDIX 'A'

Schedule VI~Part I-A GENERAL PROVISIONS AS TO BALANCE SHEET

t. The authorised share capital and subscribed share capital shall be shown, distinguishing between the various classes of shares and giving the following parti- culars in respect thereof:

(a) The total number and face value per share of each class of shares and

the respective amounts paid up thereon.

(b) Whether the shares are allotted for consideration received in cash or for

consideration other than cash.

(c) Particulars of the shares allotted as bonus shares, specifying the source from which the bonus shares were issued, e.g., capitalisation of profits, or reserves, or from share premium account.

(d) Amount of calls unpaid, showing separately calls unpaid—

(i) by managing agents or secretaries and treasurers anc? where the managing agents or secretaries and treasurers arc a firm, by the partners thereof and where themanag ing agents or secretaries and treasurers are a private company, by the directors and/or members of that company.

(ii) by directors, (iii) by others.

(e) In the case of Redeemable Preference Shares, the terms of redemption or conversion, together with the earliest date of redemption or conversion.

(£) Particulars of any option to subscribe for share capital, (g) Amount received on shares forfeited.

Note: Any capital profit on reissue of forfeited shares should be treated as a capital reserve,

2. The amount of the Share Premium Account shall be shown, including details of its utilisation In accordance with Section 78 in the year of utilisation.

3. The Reserves of the Company shall be classified under heads appropriate to the company a business, and the following particulars shall be given:

(aj A distinction should be made between capital reserves and revenue reserves.

(b) Amount of Capital Redemption Reserve. (c) Particulars regarding additions and deductions since the last Balance Sheet in respect of each Reserve.

Notes:

(1) The debit balance on Profit & Loss Account shall be shown as a deduc- tion from revenue reserves.

(2) The word 'Fund' in relation to any reserve should be used only where such reserve is specifically represented by earmarked investments.

4. The amount of the company's liabilities shall be shown classified under heads appropriate to the company's business and distinguishing between current liabilities and long term liabilities and showing separately the following:

(a) Debentures, (b) Loans and Advances from Banks. (c> Loans and Advances from Subsidiary Companies.

Notes:

(1) In each case, distinction should be made between items which are secured and items which are unsecured, and the nature of the security if any, should be specified. In the case of debentures, the terms of redemption or conversion, if any, shall be stated, together with the earliest date of redemption or conversion.

(2) Particulars of any redeemed debentures which the company has power to re-issue shall be given.

(3) Where any of the company's debentures are held by a nominee or a trustee for the company, the nominal amount of the debentures and the amount at which they are stated in the books of the company shall be stated,

(4) Interest accrued and due on loans need not be specified and may be included under the appropriate headings.

(5) Loans from directors, managing agents, secretaries and treasuries and managers should be shown separately.

(6) Where loans have been guaranteed by any of the directors, managing agents, secretaries and treasurers or managers mention shall be made of such guarantees and also of the aggregate amount of such loan under each head.

(d) Acceptances. (e) Sundry Creditors. (f) Amount owing to Subsidiary Companies, other than Loans and Advances. (g) Advance Payments, for the portion for which value has still to be given (as in the case of newspapers, Theatres, Clubs and Steamship Com- panies).

(h) Unclaimed Dividends. (i) Provision for Taxation. (j) Proposed Dividends.

(k) Provision for Contingencies. (1) Provision for Provident Fund Scheme. (m) Provision for Insurance, Bonus and similar other Benefits Sc-hemes for

Employees.

Note: For the purpose of this Schedule, "Current liabilities" mean liabilities which the company would normally pay within a period ol one year from the date of the Balance Sheet and include liabilities payable on demand. "Long term liabilities" are those which are not "current liabilities".

5. The amount of the company's Contingent Liabilities shall be shown classified under suitable heads and in particular the following shall be shown:

(a) Claims against the company not acknowledged as debts. (b) Uncalled liabilities on paitly paid shares. (c) Arrears of fixed cumulative dividends giving separate particulars for each class of shares and the period for which dividends are in arrears. The amount shall be stated before deduction of income-tax.

(d) Guarantees given by the company on behalf of directors or other officers of the company, giving the general nature and the amount of each such guarantee, it material.

6. The estimated amount of contracts for capital expenditure not provided for shall be stated,

7. The assets of the company shall be classified under headings appropriate to the company's business and in particular distinguishing between fixed assets, investments and current assets. Assets other than fixed assets, investments and current assets shall, if material be separately specified, giving sufficient particulars to disclose the nature of the asset.

8. Fixed Assets shall be classified under headings appropriate to the company's business, and in particular there shall be shown separately so far as practicable assets falling, under the following heads, if material; —

(a) Goodwill. (b) Leasehold Land, distinguishing as far as possible between short-term

leases and long-term leases.

(c) Freehold Land. (d) Buildings. (e) Plant & Machinery. (f) Furniture & Fittings. (g) Patents, Trade Marks and Designs, (h) Vehicles.

Notes;

(1) Under each head the original cost and the additions thereto and the deductions therefrom during the year shall be stated and the total depreciation written off or provided up to the end of the year shall also be stated.

(21 In every case where the original cost cannot be ascertained without unreasonable expense or delay the valuation shown by the books shall be given. For the purpose of this paragraph, such valuation shall be the net amount at which an asset stood in the company's books at the commencement of this Act, after deduction of the amounts previously provided, or written off [or depreciation or dimi- nution in value, and where any such asset is sold, the amount of sales proceeds may be shown as deduction.

(3) Where sums have been written off on a reduction of capital or a revalua- tion of assets, every balance sheet (after the first balance sheet) subsequent to the reduction or revaluation shall show the reduced flsrures (with the date of the reduction) in p¹ace o* the original cost. Each balance sheet for the first five years subsequent to the date of reduction shall show also the total amount of the reduction made. Similarly, where sums have been added b" writing up the assets, every balance sheet subsequent to such writing up shall show the increased figures (with the date of the increase) In place of the

original cost. Each Balance Sheet for the first five years subsequent to the date of writing up shall also show the total amount of the increase made.

(4) Where a revaluation of assets has been carried out, the name of the person or person,; by whom such revaluation was carried out and thr basis on which such revaluation has been carried out ?hall be snuwn in every Tialance Sheet as at a date tailing within the ihrte y e a rs n t ; xt f o l l o w i ng t he d a te nf •: L:C 'I 11 v a l u a t i o n.

(5) For the purpose of this SC1K :lule, s .short-term I'-ase is one which has less than twenty-five ye'1-• to run from the ri te as at which the Balance Sheet is made i.p

P. The investments of the company shall be shown classified i,;ider the following hes.t-ngs: —

(a) Government or Trustee securities. (b) Investments in shaies, debentures or bonds of suby diary companies,

the- total umount in respect of each.

(c) Investment in shares, debintures or bonds of other cumpanies, the total

amount in respect of eiich

(d) Immovable Property.

'Notes:

(1) In each case a distinction shall be made between class of shares which

shall be separately shown.

(2) The mode of valuation of investments (e.g., "at cost", or "at market

value"¹) shall be stated.

(3) The aggregate amount of the company's quoted investments and the

market value thereof shall be stated.

(4) The aggregate amount of the company's unquoted investments shall also be stated, together with an estimate by the directors of the realisable value of such investments.

•(5) A statement of investments (wheresoever shown in the Balance Sheet) separately classifying quoted investments and unquoted investments, shall be annexed to the balance sheet. This statement shall give the names of the bodies corporate in whose shares or debentures invest- ments have been made (including all investments whether existing or not, made subsequent to the date as at which the previous balance sheet was made out), and the nature and extent of the investments so made in each such body corporate. The statement shall indicate separately these bodies corporate which are in the same group aa the company and shall give the names of the managing agents or secretaries and treasurers, if any, of every bodv corporate. However, in the case of an investment company, (that is to say, a company whose principal business is the acquisition of shares, stock deben- tures or other securities;, the statement shall show only the invest- ments existing on the date as at which the balance sheet is made out. Further, it shall not be necessary to give in the statement any particulars in respect of investments made by the Company in other companies whose managing agents or secretaries and treasurers it is.

(6) The Statement under (5) above shall include the ratio, expressed as a percentage, which the company's holding in another company boars to the total capital of that other company. This ratio need not be disclosed when it is less than ten per cent.

10. The amount of the company's current assets shall be shown classified under headings appropriate to the company's business and in particular the following shall be separately shown:-—

'(a) Stock-in-trade showing Raw Materials and Work-in-Progress separately where practicable.

(b) Stores & Spa'-e Parts, 'fc) Loose Tools, (d) Sundry Debtors.

(e) Cash and Cheques on hand. (f) Balances with Scheduled Banks. (g) Balances with other Banks. (h) Advances and Loans to Subsidiary Companies. (i) Bills of Exchange receivable. (j) Advances Eecoverable in cash or in kind or for value to be received. (k) Balances on Current Accounts with Managing Agents or secretaries.

and treasurers.

(1) Security Deposit with Customs, Port Trust, £tc.

Notes:

(1) The mode of valuation shall be stated in respect oi items (a) and (b) above,

(2) In respect of Sundry Debtors the following further particulars shall be given:—•

(i) The total amount of debts outstanding for a period exceeding sbt months shall be shown.

(ii) There shall be shown separately: —

(a) debts considered good in respect of which the company is fully secured;

(b) debts considered good, for which the company holds no security other than the debtors' personal security; and

(c) debts considered doubtful or bad.

(in") Debts due by directors or other officers of the company or any of them either severally or jointly with any other person and debts due by firms or private companies respectively m which any direc- tor is a partner or a director or a member shall be separately stated.

(iv) Debts due from other "companies under th? same management", [as denned in sub-section (IB) of Section 370], shall be disclosed, with the names of the Companies.

(v) The maximum amount due by directors or other officers of the com- pany at any time during the year shall be shown by way of a note.

(3) Loans and Advances due by the managing agents, or secretaries and treasurers, either severally or jointly with any other person shall be separately stated.

(4) Balances (whether debit or credit) on the Current Accounts of direc- tors, managing agents, secretaries and treasurers or managers shall be shown separately.

(5) The amount of the provision for bad and doubtful debts shall be shown as a deduction from the amount of Sundry Debtors. The amount of the provision to be so shown shall not exceed the amount of debts stated to be considered doubtful or bad and any surplus of such provision, if already created, should be shown as a Reserve

(6) In regard to Bank balances, particulars shall he given n[—

(a) the balances with Scheduled Banks on:

(i) current accounts

(ii) call deposit accounts and

(lii) fixed term deposit accounts;

(b) the names of the bankers other than Scheduled Banks and the

balances with each such banker on:

(i) current accounts

(il) call deposit accounts and

(iii) fixed term deposit accounts, and the maximum amount outstanding at any time during the year from each such banker; and

(c) the nature of the interest, if any, of any director, or his relative or the managing agents or secretaries and treasurers, or of any of tnejr associates in each of the bankers (other than Scheduled Banks) refer- red to in (b) above.

11. The Balance Sheet shall disclose particulars of expenditure not written off or adjusted, including in particulars:—

(1) Preliminary expenses. (2) Expenses (including commission and brokerage) on under-writing or

issue for subscription of shares or debentures. (3) Discount allowed on the issue of shares or debentures. (4) Interest paid out of capital during construction (also stating the rate

of interest).

(5) Development expenditure.

12. Where any of the items required to be stated under paragraphs 1 to 11 above are not material, they need not I"""¹ disclosed separately.

13. Where the amount in respect of any item required as aforesaid to be shown separately is not separable from the amount In respect of another item, the two may be shown together under a suitable description.

14. The information required by this Schedule to be given in the Balance Sheet may be furnished in a separate Schedule or Schedules to be annexed to, and to form part of, the Balance Sheet.

15. Except in the case of the first Balance Sheet of a company, the corres- ponding amounts as at the end of the immediately preceding financial year for all items shown in the Balance Sheet shall be given. The requirements in this behalf shall, in the case of companies preparing quarterly or half-yearly accounts, relate to the Balance Sheet as at the corresponding' date in the previous year.

16. If, in the opinion "f the Board, any of the Current Assets, Loans and Advances have not a value on realisation in the ordinary course of business at .(east equal to the respective amounts at which they are stated, the fact that the Board is of that opinion shall be stated.

APPENDIX 'I'

(Reference Section VIIIc of the Report)

KOTE DETAILING SHORTCOMINGS IN ACCOUNTING MATTERS NOTICED IN THE COMPANIES ACT, 1956. WITH THE INSTITUTE'S SUGGESTIONS IN THE MATTER*

1. SECTION 350

The correct interpretation of this Section, after its amendment in 1960, has been the subject matter of considerable debate and difference of opinion between the Department of Company Law Administration ("CLA") and eminent mem- bers of the legal and accounting professions. Without entering into the contro- versy as to the correct legal interpretation of the Section, from the view-point of defectiveneas in accounting matters, the Council wishes to point out that the words "arid at the end of each subsequent financial year" (under-lining ours) are most inappropriate in the context in which they appear, namely for the pur- pose of prescribing the point of time as at which "the written-dowh value of the assets" is to be determined for the purposes of the Section. The Council has been advised that, to give a proper meaning to the requirements of Section 350. the quoted words must necessarily be read to be "or at the end of the corres- ponding subsequent financial year as the crjse may be", the words "as the case may be" being necesgarilv understood if "and" fs read as "or". We, therefore, suggest that, in Section 350, for the words "and at the end of each subseauent financial year," there should be substituted the words "or at the end of the corres- ponding subsequent financial year as the case may be".

*This note was submitted by the Institute of Chartered Accountants of India In addition to the earlier representation.

2. SECTION 211(5)(V)

Sub-sections (1) and (2) of Section 211 contain provisions requiring that the Balance Sheet and the Profit and Loss Account ol a Company snail give a true and fair view of its state of aflairs and of its profit or loss for the financial year respectively, Section 211(5)(.v) reads as follows: —

"The Balance Sheet and the Profit and Loss Account of a Company shall not be treated as not disclosing a true and fair view of the state of affairs of the Company, merely by reason of the fact that they do not disclose--

fv) in the case of any company, any matters which are not required to be disclosed by virtue of the provisions contained in Schedule VI or by virtue of a notification issued under sub-sect;on (3) or an order issued under sub-section (4)."

In some quarters, it is apprehended that this provision is open to the inter- pretation that, so long as the Balance Sheet and the Profit and Loss Account give all the information required by Schedule VI, they should be taken as giving a true and fnir view of the state of affairs of the Company. Occasions may arise when mere disclosure of the Information required by Schedule VI may not be sufficient to give a true and fair view. But even in such cases, by virtue of the provisions of Section 211(5), the Balance Sheet and the Profit arid Loss Account shall be treated as disclosing a true and fair view of the state of affairs of the company in question. In other words, as, the law stands, it uppears to be more Important to give the information required by Schedule VI, than to give a true- and fair view of the state of the company's affairs and of the results oJi its work- ing for the relevant financial year. We presume that this was not intended by the framers of the law. It may bo pointed out that the position is just the reverse under the U.K. Companies Act, 1948, which contains a specific provision in Section 140(3) to the effyet that the requirement to give a true and fair view is the over-riding one, notwithstanding the additional reautrements as regards disclosure of details contained in the EiRhth Schedule to that Act. In this con- nectoin, reference may also be made to Paragraph 332 of the Report dated 30th May 1962 of the Company Law Committee in the U.K. ("Jenkins CommiLtee").

We, therefore, recommend a suitable amendment to the law, so as to provide that the requirement that the accounts should give a true and fair view is the over-riding one and that mere compliance with th^ detailed disclosures required by Schedule VI is not sufficient.

3. PROVISO,'; TO SUB-SECTIONS (1) AND (2) OF SUCTION 211 VERSUS SECTION 211(5) AND 227(2;

The existing Provisos to sub-scctiuns (1) and (2) of Section 211 state that nothing contained in the said sub-sections shall apply to an insurance or banking company or to any other class of company for which forms of Balance Sheet and Profit and Loss Account have been specified in or under the Act governing such class of company. Each of the said sub-sections contains two provisions, one as regards the presentation of a "true and fair view" and the other as regards compliance with the requirements of Schedule VI as regards disclosure of speci- fied information. It was never the intention that the requirement as to disclosure of a "true and fair view" should not be applicable to banking or other ''Special Act" companies, This is quite clear from the language used in Sections 211(5) and 227. The intention in inserting the above-mentioned Provisos was, quite obviously, to exempt such companies only from the provisions ss regards compli- ance with the requirements of Schedule VI. However, by the use of the; words, "nothing contained in this sub-section" in each of the said Provisos, the legal effect is that both requirements, (including the requirement to give "a true and fair view") become inapplicable for all such companies. And yet, although the requirement to give a true and fair view has thus become inapplicable for such Companies, sub-section (5) of Section 211 speaka of the Balance Sheet and Profit and Loss Account of such a Company being not "treated as not disclosing a true and fair view of the state of affairs of the Company" merely for the reasons specified' in Clauses (i) to (iv) of that sub-section. Moreover, after the amend- ment of sub-section (5) of Section 227 in 1960, the auditor of even such a Com- pany is required by Section 227(2) to state in his Report whether the Bolanco Sheet and Profit and Loss Account give a true and fair view! It becomes diffi- cult to reconcile the requirements of Section 227(2) and the implications of Section 211(5) on the one hand with the language adopted in the Provisos to sub-sections (1) and (2) of Section 211 on the other, whereby "nothing contained] in" those sub-sections applies to the classes of Companies referred to above.

The Council, therefore, recinnmcnds that the real intention should be properly brought out by suitable amendments to the Provisos somewhat on the following lines:—

The Proviso to Section 211 (1) should read as under;—

"Provided that the requirement that the Balance Sheet shall be in the form set out in Part I of Schedule VI and that it shall comply with the general instructions for the preparation of the Balance Sheet under the heading "Notes" at the end of that Fart shall not apply to any insurance or banking company or to any other class of com- pany for which a form of Balance Sheet has been specified in or under the Act governing such class of company."

In the Proviso to Section 211(2), after the words "this sub-section," the words "regarding compliance with the requirements ot Part II of Schedule VI" should be inserted.

4. PART II OF SCHEDULE VI

From the viewpoint of truth in accounting, so vital for the continuing health and growth of the national economy, the main shortcoming of Part II of Schedule VI to the Act, which contains the "Royuiremcrttj as to Profit and Loss Account," is that while a considerable mass oi' ck'Um.'iJ i:.iormation is required to be dis- closed in Lne Profit and Loss Account, not all of which appears to be entirely necessary or significant for the average lay shareholder of a Company, there is no clear-cut requirement that the Profit und Loss Account should give ''true and fair" figures of: (i) the Profit before Tax, and (ii) the Profit after Tax for the financial year; with all material adjustments to such figures of Profit in res- pect of trunsaction-S relating to other financial years, as well as all appropria- tions and transfers, including dividends paid or proposed out of such Profit, shown in a separate part of the Profit and Loss Account, On the contrary, the existing requirement!) of Part II of Schedule VI tend to have the effect of making difficult the presentation oi what should be the most significant figure in the Profit and Loss Account, namely the figure representing "the result ot the work- ing of the Company during the period covered by the account" by requiring amounts transferred to, as wejl as from. Reserve Accounts from to the Profit and Loss Account and appropriations for Proposed Dividend from the balance of Profit to be shown within the body of one single Profit and Loss Account.

The Council, therefore, recommends that Part II of Schedule VI should con- tain a specific requirement for disclosure in the Profit and Loss Account of the "true and fair" figures of: (i) the Profit before Tax, and (.ii) the Profit after Tax for the financial year; with all material adjustments to such figures of Profit in respect of transactions relating to other financial years, as well as all appropria- tions and transfers, including dividends paid or ^ropos^d out of j'.^ch Profit, shown in a separate part o± the Prolit and Loss Account. For reach¹ leiere.nce, it may be mentioned that th."- existing requirements for disclosure or :uch items in the Profit and Loss Account are contained in Clauses (vii), (vii-) and (xiv) of Paragraph 3 of Part II of Schedule VI.

5. A clear-cut and logical distinction between the requirements for disclosure of the respective items relating to the Balance Sheet and the Profit and Loss Account in Parts I and II resperiively UL Sciv-Jule VI has not h^en maintained under the existing provisions, 'Jims, for exumulc, the amount of the arrears of depreciation for the relevant financial yenr, computed in accordance with the requirements of Section 205, which i , a muter:..! item of information relating to the Piofit and Loss Account, i , not required to be shown at all. Instead, Clause (iv) of Paragraph 3 of Part II requires disclosure in the Profit and Loss Account of the total amount of the arrears of depreciation up to the Balance Sheet date, computed in accordance with Section 205(2). The total quantum of arears of depreciation up to the Balan.v Sheet date is of sjgmfcance tm consideration of the Balance Sheet and not tnc Profit and Loss Account. Similarly, the Notes Inserted in 19H0 after Clauses fx) (f) Cd) and (xli) (a) of Paragraph ii of Part II r e ^ te to information in respect of items contiined in the Balance Sheet and should therefore logically have appeared in Part I of the Schedule.

0. Schedule VI contains a number of shortcomings in accounting matters.

Examples of this are found in Notes (a), (b), (d), (g) and (1) appearing u?ider the heading "General Instructions for Preparation of Balance Sheet" appearing after the prescribed form of Balance Shc-ct in Part 1 of Schedule VI. Again, in Paragraph 4 of Part II, the words "any other person" in the preamble, need to be substituted by words adequate to narrow down the requirement to what is

actually intended, as clarified by the CLA themselves, namely disclosure of payments by third parties on behalf of the relevant Company or for work done for the relevant Company by the categories of its managerial personnel specified in the paragraphs.

The requirement in Clause (iii) of Paragraph 3 of Part II for disclosure in the Profit and Loss Account of the amounts for which works in progress "have been completed at the commencement and ut the end of the accounting period" is self-contradictory. It is not clear how there could be any amounts for which such works have been completed when one is considering "works in progress."

APPENDIX 'J (Reference Section VIII D of the Re-port)

SUGGESTIONS FOE A REORIENTATION OF THE STRUCTURE AND RATES OF DIRECT TAXATION*

The Council of my Institute have noted with great interest recent pronounce- ments regarding the need for stabilising the price level in the country end pro- moting capital formation. My Council have carefully considered the various aspects of this problem and would like to make the following submission for your consideration.

A CASE FOR REDUCTION OF RATES OP DIRECT TAXES

Apart from any punitive measures, my Council feels that if tax evasion could be rendered less attractive, that would serve as a preventive measure for the future. In this context a reduction in the rates oi taxation would be a measure worthwhile adopting. It is true that a high rate of taxation does not, by itself, constitute the only ground for evasion. All the same, if the gain involved in that activity could be made less attractive, the trend towards tax evasion would definitely be on the decline. The experience of other- countries goes to prove that the increased rates of tax has a direct bearing on the magnitude of tax evasion, particularly where the rate of taxation has crossed a reasonable limit. The general trend, therefore, in other advanced countries, is towards reduction of rates of Direct Taxes. It is, therefore, suggested that the Government should pursue a policy of progressive reduction in the rates of Direct Taxes, both for individuals and Corporations, whereby, over a period of 5 years, the maximum rate of Direct Tax for individuals is progressively brought down to 60 % and that for Corpora- tions to a flat rate of 45 %. This gesture on the part of the Government, would, to a considerable extent, remove the incentive for tax evasion. As a result the overall revenues of the Government, through Direct Taxes, both from individuals and Corporations, would increase considerably.

SIMPLIFICATION OF RATE STRUCTURE

A field where positive Improvement could be attempted is in respect of the arithmetic calculation of tax on the total income of a person. At present it is very cumbersome and complicated. Differing rates of tax including surcharges, depending upon the nature of the constituent parts of income, like earned income, unearned income, salaries, compensation, capital gains, ascertainment of tbr average rates of Income-tax and Super Tax, calculation of the amount of rebate for Income-tax and Super Tax, etc., call for Involved calculations. Again in respect of the same assessee these elaborate calculations have to be made on more than one occasion, viz., for calculating of advance tax, provisional tax, tax on regular assessment, and once again where the assessment gets revised in appeal or revision. One way of simplifying! the existing system appears to be to grant reliefs or rebates on specified category of incomes like earned income or capital gains or on specified types of outgoings like donations and payment of Life In- surance premia not by reference to the tax payable, but by an outright deduction wholly or partly from the chargeable total income as such. This would mean that after all adjustments to the total income arc made there would be one resi- duary figure on which the rate of tax is to be applied. There would be thus one basic calculation for the tax payable and that would be with reference to the chargeable income. Surcharges and additional surcharges, even if they are to be retained as special levies, could be levied by reference to such basic tax payable on the chargeable income and not by reference to the tax payable on particular segments of the total income.

CERTAINTY WITH REGARD TO LEGISLATION

In this connection, it may be mentioned that the frequency with which both the substantive provisions of tax legislation as well as the rates of tax are chang- ed by means of amendments add to the confusion. If there Is a continuity with regard to a system, that by itself adds to the understanding of it.

*TJjls Memorandum was submitted in January 1964 to the Union Finance Minis- ter by the President of the Institute of Chartered Accountants of India.

CEILING ON INCOME

It is observed that with the imposition of various Direct Taxes, particularly the Income-tax, Super Tax and Wealth Tax, there arc cases in which a person is called upon to pay even more than 100 % of his income during a year. This position becomes even more difficult when the Income-tax Department, while determining the total income of an assessee, disallows a certain portion of legiti- mate expenditure, e.g., in the case of rented properties. In order to provide sufficient incentive and inducement to the income-earners to exert more and to earn more, adding to the National product in that process, it is submitted that there should be some sort of an overall celling on the total Direct Tax which he is called upon to pay. In the context of the present conditions, it is submitted that such an overall limit should be of RO % of the total income in the case of aggre- gate of Income-tax, Super Tax, Wealth Tax, etc. This limit r-hould not include capital gains and in computing the limit, capital gains should be excluded irom the total income because of the peculiar nature of the content of what is taxed as capital gains. The limit of 80 % should bo progressively brought down to about 60% with the progressive reduction in the rate of Direct Taxes on income suggested earlier.

EXEMPTION L I M IT

The Council is of the opinion that the present limit of Rs. 3,000 up to which a person is exempt from tax is too low a figure and quite unrealistic under the present conditions, having regard to the continuous increase in the price level since the limit was originally fixed. It Is. therefore, submitted that the exemption limit for income-tax may be linked up with the rise in the general price index. The present limit of Bs, 3,000 should be increased to at least Rs. 5,000. Such a measure would provide much needed relief to the persons with limited income and at the same time, relieve the administration from a considerable amount of unproductive work.

CASE FOR ALLOWANCE FOR CHILDREN AND OTHER DEPENDANTS

A stage has now been reached when adequate relief should be given to the tax-payer in the small income group by providing suitable allowances in respect of children and other dependants by way of direct deduction from the total in- come. In order to avoid the possibility of abuse, and to guard against allowances being claimed by two assessees in respect of the same individual, it is suggested that when the husband and wife or other persons are tax-payers, then at the option of the assessee, the allowance may be claimed by any one of such persons or shared proportionately by them so that the total amount of such allowances does not exceed allowance for each such child or dependant.

COMPULSORY DEPOSIT SCHEME

It is submitted that the revenue gains are not commensurate with' the varioas administrative difficulties involved, including the detailed computations. My Council feels that there is no case for the continuation of the Compulsory Deposit Scheme for tax-payers and that it should be withdrawn, and along with it the levy of additional surcharge should be abolished.

TAXATION OP REGISTERED F I R MS

The Council had represented in 1956 that the tax on Registered Partnerships should not be made applicable to professional firms as it would retard the forma- tion of such firms as also the trend towards an increase in their size. The Council submits that in the case of professional firms, like those of Chartered Accountants, Lawyers, etc., there is no justification for the levy of such a tax.

During the last decade, the work of various professional persons, including Chartered Accountants, has become more specialised. Apart from their tradi- tional functions, they arc required to deal with a large number of specialised problems. The requirement for specialists keeps on increasing rapidly on account of the emergence of various economic, scientific and social forces. In the context of such revolutionary changes, it becomes impossible for a single professional person or a small-sized professional firm to keep abreast with the currents of thought in all the fields at the same time, These factors, coupled with the prefe- rence shown by a businessman in obtaining specialised services for the purpose of running or administering his business, have contributed to the growth in the size of the firms and a need for specialisation on the part of the various partners

of LI large professional firm. With the increase in the size of the business units, this need for specialists also increases. The Jenkins Committee in the United Kingdom recognised the importance of the necessity for increasing the size ot professional firms. It recommended that the limit set on the maximum numb'.r of partners in a partnership should not be applicable to professional firms. The relevant extract from the Report is reproduced below:

"The restriction imposed by Section 434 (Companies Act) haa brought diffi- culties for those professional firms who cannot by law, or professional practice or custom, be incorporated and who wish, as many do under existing economic conditions, to have more than twenty partners. The partners in such firms belong to professional organisations which exercise effective control over their members and we do not think it is necessary for the protection of the public¹ to maintain the restric- tion in their case."

Possibly, the tax on Registered Firms was introduced with a view to discourag- ing businessmen from resorting to the device of admitting their relatives and other nominees as partners for the purpose of avoiding or reducing the incidence of taxation. The Council sumbits that this consideration Is totally absent In the case of professional linns, like those of Chartered Accountants, Solicitors, AichitecTs, etc., where the gaining admission into the partnership, the individual has to obtain the qualifications of the appropriate professional body.

The prohibition Imposed on the carrying of the profession of Accountancy in the form of a limited company is yet another reason why special consideration should be shown to accountancy firms in the matter of taxation. II is believed that similar restrictions obtain in respect of various other professions as well.

At present, a higher rate of tax is imposed in the case of firms having five or more partners. The Council in of the opinion that this provision is most unjust lo proiessional firms as it strikes at the root of the very desirable system of hnving larger partnerships of professional persons for rendering specialised service under one roof to their clients. In view oT the above conditions. It Is submitted that at least in the case of professional firms, the Registered Firms 'fax should be abolished.

RETIREMENT BENEFITS FOR SEI.F-EMPLOYED PEOPLE

Government Securities. This would be apparent from the Insurance-c/urct- Annuity Scheme, appended to the memorandum, to Illustrate the manner in which the concession would operate in ,etl'ect. The scheme has been drawn up on the lines of a similar scheme started by the Institute of Chartered Accountants in England and Wales some years ago. The Council submits that the Government may consider granting relief on these Hues to self-employed persons in addition to what is envisaged under Section 157 ot the Income-tax Act.

COMPULSORY DISTRIBUTION OF DIVIDFNDK By COMPANIES IN WHICH THE PUBLIC ARE NOT SUBSTANTIALLY INTERESTED

The Council is aware ol the principle on which the provisions of income-tax for tne compulsory distribution of dividends by companies in which the public¹ • are not substantially interested are based. However, it is submitted that the pro- visions are no longer to he looked at merely as means lor meeting the challenge of legal avoidance of Super-tax. They should now be viewed as potent instrument Tor channelling the smooth flow of accumulated profits for the betterment of the national economy. Therefore, with a view to expediting industrial development m The country by re-investment of accumulated earnings of such companies, the Council makes the following submissions,

1. In the case of industrial undertakings, there should ho no Insistence on compulsory distribution of dividends if the income of a portion of it is credited Into a separate Reserve Account and utilised within a reasonable period for the purpose of expansion of business. This principle should apply only to an indus- trial concern and not to a trading or Investment company.

2. Tn the case of trading concerns, although the present provisions regarding compulsory distribution ot dividends may be continued, it is suggested that the requirement of 90% distribution of dividends where the reserves are equal to panl-up capital, should be waived, and the distribution of dividends should be restricted to 60'7,, in case& where the additional reserves are set apart and used, within a reasonable period, for the expansion of the business.

3. An amendment may be made to provide that any portion of the profits of o company transferred to a separate reserve and utilised for , the purchase of capital assets within a period of !i years should be excluded for the purpose of computing "distributable income."

4. In the case of Indian companies where the foreign collaborators have an equity participation of more than 25%, there should be no insistence of compulsory distribution at all. This would result In a saving of foreign exchange through reinvestment of funds by the foreign collaborators.

CAPITAL KXPLNDITUHL INCURRED PKTOR TO COMMENCEMKNT or PRODUCTION

According to the present departmental practice, expenditure by wav of salaries, rent and other administiative expenditure incurred prior to the commence- ment of business is disallowed. It is not considered to be an expenditure Incurred for earning the income, nor Is it considered capital expenditure entitled to depre- ciation and development rebate.

'i'ae distinction between capital expenditure arid revenue expenditure assums its signiiicance oi'ly for purposes of short-term financial analysis. It cannot be denied that botl> i "pes of expenditure have got to be absorhed by the business. Therefore, when an item of expenditure Incurred for purposes of business is judged to be an item of capital expenditure, it is submitted that such expenditure may either be allowed as revenue expenditure in the year in which it is incurred or alternatively amortised. Such amortisation should be either by way of deprecia- tion or otherwise spread over and allowed as a deduction over a period of years not exceeding 5 years and charged euually to the profits of 5 succeeding years.

PAYMENT FOR TECHNICAL KNOW-HOW

My Council wishes to draw your attention In particular to the manner in which payments for technical know-how are dealt with by the Taxing Department At present, payments which are specifically made In connection with drawings, lay- outs of factory, buildings, plant, etc. are allowed to be capitalised and deprecia- tion and development rebate are granted In respect of such sums But payments made for the formula for the production of goods, guidance regarding method and manner of manufacturing the articles, etc., are treated as capital payments But no depreciation or development rebate is allowed on It as such expenditure does not bring Into existence any tangible assets. My Council submits that this is not

at all justified. Such expenditure should be treated as having been made 101 purposes of business and allowed as revenue expenditure, it being on par with payments as royalty. Annual paj-roents of royalty are definitely allowed as de- duction and there Is no reason why the initial payment in lieu of royalty which would otherwise have been incurred over a number of years should not be allow- ed The lump sum payment would, in fact, be smaller than the total amount of expenditure, if the payments were to be made annualJy. Therefore, mv Council submits that payment for technical know-how should be treated on par with sclentillc research for purposes of Section 10.

TAXATION OF INTER-COTU'OKATE DIVIDENDS

It is suggested that with the high rate of taxation in the corRorate sector, the present system of taxation of inter-corporate dividends at different stages acts very harshly on the investor. Therefore, taxation of inter-corporate dividends should be done away with.

TAX ON BONUS ISSUES

In the opinion of the Council, although the rate of Bonus Tax has been reduced from 40 % to 12J%, the very principle of Bonus Tax is illogical and Ill-conceived. In respect of a bonus issue, there is no distribution of the income of the company .and, therefore, there is no justification for such a tax. Moreover, since any distribution of dividends in respect of bonus shares also attracts taxation, this levy clearly amounts to double taxation. It is. therefore, suggested that the taxation of bonus shares should be discontinued.

SUPER PROFITS TAX

The Council is of the opinion that the Super Profits Tax in its present form has acted as a definite disincentive to business efficiency and must be withdrawn at the earliest possible date or substituted by a more equitable measure. The standard deduction of 6% of the own funds acts as a discouraging factor in attracting foreign capital.

ACCORDING STUDIES IN RESPECT OF PUBLIC EXPENDITUKE

My Council submits that, apart from the suggestions made in respect of taxes, a good deal could be achieved in respect of public expenditure Itself. After all. both the quantum as well as the pattern of taxation takes its hue from the extent and structure of public expenditure. If public expenditure itself is sub- jected to scientific analysis from the accounting point of view, it would help in the discovery of many areas where economy could be effected, adding to the efficiency. The members of the Institute would be only too willing to be associat- ed with this function and the Government could draw upon the experience and knowledge of the members in conducting such management and financial analysis on a scientific basis.

R. C, COOPER,

President.

AppENnix

SCHEME OF PENSION AND LIFE INSURANCE FOR THE CHARTERED

ACCOUNTANTS All Chartered Accountants may be divided into two Groups. One Group will include all Chartered Accountants who are practising Auditors, Incometax Ex- perts, etc. In other words they are the professionals who are not employed by any Employer. The second group will consist of Chartered Accountants who are employed on fixed remuneration in various firms and business houses. The second group presents no problems because as employees the Income-tax Act confers upon them several concessions if they join schemes like Provident Fund, Superannuation Schemes, etc. which their employers may have established.

The problems of the former group (the group consisting of practising Chartered Accountants) can be solved only if the Government is prepared to have a legisla- tion more or less on the lines of the U.K. Finance Act 1956. This Finance Act has made far-reaching concessions to self-employed persons. The relevant sections of the Finance Act 1056 which doa] with tax concessions to self-employed persons are Sections 22 and 23. For a body of practising professionals, the type o£ scheme which one can envisage for groups of employed persons, is not possible of im- plementation. The income of every Individual member of the profession may

vary as also his requirements, Utmost flexibility permitting variations in contri- butions from year to year and as between one individual to another individual, though in the same income group. Is necessary. Any scheme, however, which provides Death-c?mi-Retiremen1. benefits can really be attractive only if the tax concessions available to Employer-Employee Group Schemes are also offered to- self-employed persons. As it is, each Chartered Accountant has the option of effecting individual policies with the Lite Insurance Corporation according to his needs. At the most Life Insurance Corporation can consider whether it can assist this hody of professionals by offering some concessions in rates. But the build-up of satisfactory Death and Retirement Benefits out of individual taxed incomes Is really a difficult task.

In the first instance, the suggested scheme is based on the assumption (a) that it will include only the self-employed Chartered Accountants and (b) that the necessary tax concessions will be given by Government to this class of Chartered Accounts.

PENSIONS AT RETIREMENT

It would appear that a Chartered Accountant will normally not retire from his profession, unless he Is obliged to do do on grounds of ill-health. For the- purpose of the scheme, however, it will be necessary to assume some average age at retirement which will be described as the normal retirement age. For the- snke of fixing the ideas, atfe 65 hat. been taken as the normal retirement afie.

Fixing this normal retirement age does not, however, Imply that a member of the scheme must necessarily retire at this aj[e or that he should commence receiving his retirement benefit from that age regardless of whether he retires or not. There would be provision in the scheme for retirement before the normal retirement age as also for deferment of retirement after the normal retirement age. For example, retirement between ages 55 and 65 may be permitted. Such retirements will naturally be described as early retirement and retirement after afie S3 but before sav age 70 may be termed as Deferred Retirement. This age range should normally cover the probable retirement ages of a majority, of the Members.

Contributions by tlie Members: The Member may pay every year a varying con- tribution subject to such limits as may be prescribed by the Government under its legislation giving necessary tax concessions to self-employed persons. This con- tribution would be applied by the Corporation as Single Premium for purchase of Pension at normal retirement age. If the Member retires at the normal retire- ment age, the total Pension he will receive will be the sum total of the various units of. Pension which will have been secured for him each year by the annu,al contribution which he will have paid before his retirement.

The Member would be issued by the Corporation an individual Certificate which.

will state the total contribution paid by the Member and the total Pension that Will have been Purchased for him by the contributions paid to date. Obviously such Certificate will have to be issued every year, because the total quantum of Pension and the Contributions will vary from year to year depending upon the amount of contribution which the Member will pay each year and his attained HRe.

For the purpose of simplifying the administration of the scheme, it will envi- sage provision of a normal Pension. This Pension will be guaranteed for a minimum period of 5 years and will continue so long thereafter as the Member is alive. The Member will, however, have the option to exchange this normal Pension with any other type of Pension. The optional Pension that will be o'ffered in lieu of the normal Pension will be of the following types ;

PENKTON GUARANTEED FOR LONGER PERIODS

Option 1: A pension which, instead of beirn? guaranteed for F> years, can be- guaranteed for a longer period of. say, either 1U or 15 years. If the death of the Member occurs during this period, the Pension will continue to be paid to his dependents without any reduction for the balance of the guaranteed period. If, however, the Member survives the guaranteed period, the same Pension will con- tinue to be paid to him during the remainder of his life. In this class of Pension, therefore, the Member has an assurance that regardless of his survival to the end of the guaranteed period, he or his dependents will benefit by the Pension over the minimum guaranteed period. On the contrary, if he lives beyond the guaranteed period, he has an assurance of life-long Income. There Is thus a guarantee of minimum benefit but no limit to the benefit which he can receive if he lives long enough.

Option 2: A member can purchase separate Pensions for himself and for his wife each of which may be guaranteed for an agreed period (e.g., 5, 10 or 15 years; ana continue thereafter during the life time of beneficiary until death.

Option 'A: If the Member does not wish to purchase separate Pensions for him- self and his wife, he may purchase what are commonly known as "last survivor pensions". This Pension envisages that a certain amount of pension would be payable to the member and his wife so long as both are alive. II one of them dies, the pension will continue to the survivor of until his/her death. It Is customary to provide In "last survivor Pensions" that so long as the Member and his wife is aiivc the quantum of pension should be more than the pension payable to the survivor.

It should, however, be understood that the amount of annual pension available under the options will not be of the same amount as normal Pension stated in his individual Certificate. The Member can notify to the Corporation his desire to eiect optional pensions and the Corporation will quote the amounts of equisalent Pension which the Member or his wife or both can receive in lieu of the normal Pension.

EAHLY RETIREMENT

If a Member retires before the normal retirement age, obviously the amount of his Pension will have to be adjusted. The Member will have paid fewer contribu- tions and he is expected to live longer because he retires at a younger age. Con- sequently, the Pension payale on earlier retirement age will be" a smaller amount than the normal Pension.

DKFKRRED RETIREMENT

For the same reasons, if the Member retires after the normal retirement age, the quantum or his Pension will be more than the Pension at normal retirement age.

On the Member intimating to the Corporation his desire to retire earlier or jater than the normal retirement age, individual quotations will be given of how much Pension he will receive at such retirement.

DEATH BEFORE RETIREMENT

In the event of death of the Member before the normal retirement age, his dependents will receive the contributions paid under the scheme and the interest which the Corporation may agree to pay thereon either in the form of an Income or lump sum. The form of benefit will depend upon the legislation.

The scheme suggested above is mainly intended to provide retirement benefits to the Members of the Profession, It, however, gives no cover to his dependents in the event of premature death. It is. therefore, necessary to supplement the scheme by a scheme of Life insurance.

TEMPORARY L I FE INSURANCE SCHEME

Provision of life-long incomes in adequate amounts to the dependents is very expensive. This, however, does not preclude any provision for the dependents. It li. recommended that a regular monthly income of a fixed amount commencing on the death of the Member before age (35 and payable [or a fixed period say IS years, would be a reasonable and satisfactory insurance cover for the dependents. This cover may be provided under the temporary insurance plan.

Under this plan Member will pay a level annual premium the amount of which will depend upon the monthly income to be provided for the dependents.

If a member aged ,'i5 wishes to provide a monthly income of Rs. 1,000/- payable to his dependents for 15 years from the date of his, death the sum assured required will be about Rs. 1.46 000/- for which the annual premium payable by the Member will be about Rs. 2,800/-. If his death orcures at any time before he reaches 65, a guaranteed income of Rs. 1,000/- Der month will he paid to his wife, children or any other dependents for a period of 15 years.

It must be clearly understood that if the Member survives to age 65, the insu- rance cover will cease. This plan carries neither Surrender nor Paid-up Values and consequently on the expiry of this plan, no cash benefit will accrue. In other words, the Members, or his dependents would receive no benefits under this plan, except in the event of death prior to age fi5. Member will be required to submit •to the Corporation satisfactory evidence of insurability at his expense.

The Combination of the Pension and Temporary Insurance PJan should provide reasonable security to the Members of the family as well as to the Member him- self after retirement. Under the Temporary Insurance Plan, the income will always cease at the end of the fixed perlgd of 15 years and consequently If the widow of a Member survives this period, she will have no income during her old age. It is recommended that the accumulated contributions under the Pension Plan up to the time of Member's death, should be retained with the Corporation to accumulate further and when the Income under the Temporary Insurance Plan has ceased, the accumulated balance under the Pension Scheme should be utilised in purchasing for the widow of the Member a Life Pension.

Broad outlines of the scheme have only been described In this note. This will lorm the basis of further discussions without which a scheme of this nature can rarely he finalised. Perhaps the Members would like to know what benefits would he available under a Pension Plan and also the Temporary Insurance Plan for a stated amount of contribution.

ILLUSTRATION

For the purpose of this Illustration, the following assumptions have been made: —

(1) Effective Date of Membership of the Scheme and commencement o£ Membership, 1-4-1961.

<2) Age completed at Entry, 35 years. <3) Annual Contribution Rs. 3,000/-. (4) Amount of Insurance under the Temporary Insurance Plan Rs. 50,00~0/-. (5) Normal retirement date, 1-4-91.

The following Assurances will be effected on the Member's life; — 1. Temporary Insurance:

Sum Assured Rs. 50,000/-. Annual Premium Rs. 956/- (approximately).

2. A Pure Endowment:

Sum Assured Rs. 1,08,000/- (approximately). Equivalent Pension Rs. 10,000/- p.a. approxi- mately. Annual Premium Rs. 2,044/- (approximately).

Tlie following will be the benefits assured to him under the Scheme: —

1. On survival to age 65, i.e., ] .4,1991, a Pension of Rs. 10,900/- approximately per annum payable monthly in arrear for 5 years in any event and thereafter, if the Member survives to the end of 5 years, so long he lives.

2, On death before age 65:—say at age 50, the sum of Rs. 50.000/- under the Term Insurance and Rs. 37,500/- (approximately) being the amount payable under the Pure Endowment, i.e.. Pension Plan will be payable to his dependents In the form of a monthly income of Rs. B00/- (approximately) for 15 years.

APPENDIX 'K'

(Reference Section VIII D of the Report)

REPRESENTATION SUBMITTED BY THE INSTITUTE TO GOVERNMENT ON BUDGET PROPOSALS FOR 19G4-G5

The Council of my Institute has carefully considered the provisions of the Finance Bill 1964, The Companies (Profits) Surtax Bill 1964 and The Finance Minister's Budget Speech.

My Council is "lad to note the realistic approach of the Government of India on many of the problems confronting the country's economy. The Council has also noted with satisfaction some of the measures proposed by the Government to deal with the economic problems particularly the suspension of the Compulsory Deposit Scheme and the replacement of the Super Profits Tax.

My Council would like to offer the following comments on some of the other provisions of the Bill for the consideration of the Government.

1. ADDITIONAL TAXES FOR SECTION 104 (OLD SECTION 23A) COMPANIES:

The Council is pleased to note that Government have accepted its suggestion for exempting, from the requirements of Compulsory distribution, Section 104 Companies engaged in the manufacture or processing of goods or in mining or in the generation or distribution of electricity or any other form of power. How- ever, simultaneously, it is proposed to increase the effective rate of company tax. from 50% to 60% in the case of profits and gains which are not attributable to the business of generation and distribution of electricity or in the manufacture or production of any one or more of the articles specified in the list given in Part IV of the First Schedule. Thus, the effective rates for certain classes of companies engaged in the manufacture or production of articles other than those mentioned in the aforesaid Part IV, as well as trading companies will now be 60%.

Again, such companies will also be liable to Dividend Tax even in respect of a modest distribution of dividend. The effective rate of tax for such companies, will therefore be much higher than 60%.

Having regard to the need for encouraging the middle class entrepreneur and the development of ancillary industries my Council feels that this is a retrograde step which will considerably hamper the economic development of the country, and particularly, by such small companies. It will also take away the benefit of reinvestment of earnings and industrial expansion through domestic resources, if as much as 60% of the profits are to be wiped out through income tax and corporate tax. My Council would suggest that the Government should reconsider its decision and leave the present rate structure for such companies undisturbed at 50%, Such companies should also be entitled to pay a dividend of at least 10% on their paid-up capital without having to pay tax at 7J%.

2. CAPITAL GAIN TAX ON BONUS SHARER:

In our opinion the proposed measure contained in Clause 12 of the Finance Bill aims at taxing a notional amount in respect of the bonus shares and hits at the very root of the concept of bonus shares.

In the verji well-known case of BLOTT. the considered judicial pronouncement is to the effect that on the Issue of a bonus share, the stake of the shareholders in the company does not change at all and therefore there is no element of Income whether of a revenue character or of a capital nature. Even in cases where bonus shares are sold, the element of capital gain would be determined by taking into consideration the overall cost, because on the issue of bonus shares, the value of the existing shares would be proportionately diminished.

The present provision not only negatives the judicial pronouncement as also an accountancy principle but also leads to taxation on a notional basis, This dis- advantage becomes all the more pronounced by taking the entire amount of the- market value of the bonus shares for the purpose of determination of capital Rains, because the cost to be taken into consideration would be nil.

Further, upon issue of Bonus Shares, the Company itself is subjected to taxr upon liquidation of the company entire accumulated profits are treated as dividend; and upon sale of bonus shares, the shareholders is subject to pay capital gains tax or normal Income-tax and super tax as the case may be.

It thus leads to a multiple tax levy in respect of the same transaction. My Council would therefore suggest a reconsideration of this matter and deletion of this particular clause with reference to the issue of bonus shares,

3. DIVIDEND TAX:

The need for greater ploughing back of profit for Industrial expansion cannot be over emphasised. However, my Council feels that in its present from the 7J% tax on the dividends other than for companies which have to make a compulsory- distribution requires some modification. Whereas my Council appreciates that the proposals to levy this dividend tax is for conserving the resources of companies, It would suggest that this dividend tax should not be applicable in all cases up to a limit of 10% on paid-up equity capital. The levy of dividend tax at 7i% should start in respect of equity dividends In excess of the limit of 10%.

4. ANNUITY DEPOSIT SCHEME;

The Council respectfully, endorses the object of reducing the rates of direct taxes on individuals in order to encourage hard work, initiative and enterprise;

but is unable to agree with the principle that a person who saves his money snouJd not be able to decide for himself bow he should invest it.

The Council falls t£> see the benefit accruing from the reduction in the rates of taxes to an individual assessee, because at the end of ten years, the assessee will be collecting ten instalments of annuity, which in turn will be assessed together with the interest when repaid.

I£ however, this Scheme is at ail to be retained, my Council would like to make one suggestion for its amendment, It is suggested that the assessee should be niven an option to postpone the commencement of the repayment of deposit by Government, if he so chooses.

The advantage of this modification would by that the scheme itself would be convened into a partial retirement benefit measure in so far as the assessee could e\ercise the option of starting the repayment at such time when he is anle to retire and will provide him with retirement benefit. The suggestion of inv council is not likely to lead to any appreciable loss of revenue for the Government and from Government's point of view, the additional advantage would be that the deposit money will be available for a longer period. It is hoped that this suggestion will receive attention from Government as it is likely to provide much needed relief to self employed people who do not have the benefits of provident fund, gratuity, etc.

It Is also suggested that the benefit ottered to special category of persons like actors,, authors, etc., be also extended to all self-employed peoples like professional persons.

5. Ssir ASSESSMENT AND PAYMENT;

Whereas my Council cannot object to the scheme for self assessment and pav.nent of tax by the assessee, it would like to point out some of the administra- tive difficulties involved in this matter. It is the general experience of tax payers that In spite of writing letters to the Department, even the ehallans, to enable the assessee to make payment of tax, are not readily available. Further niariy small assessers will not be familiar with detailed computations of tax.

We would therefore recommend a modification of the scheme whereby upon receipt of the income-tax return, the Income-tax Officer should make the calcula- tions of tax and send out a challan to the assessee requiring him to pay the tax within 30 days. In the opinion of my Council this will lead to smoother administrative working and remove undue Inconvenience to the assessees,

Fn this connection my Council would also like to point out that the proposal contained in the Finance Bill viz., that where the income returned by an asscssee is less than 90% of the assessed income, the assessee should be deemed If) have concealed his income or furnished inaccurate particulars thereof, is harsh, and likely to creat hardship in genuine cases where there has been an honest mistake in preparing the return or calculating the tax. My Council would strongly suggest the deletion of this measure.

6. REGISTERED PAHTNERSIIIP TAX FOR PROFESSIONAL F I RM S:

iVT.v Council would once again like tn take the opportunity of reiterating its earlier rrriuest to exempt professional partnerships from the levy of registered partner- Kr.iD tax. In resporf of professional firms where all the members of the firm are '.iislifled members of a professional institute, there is no possibility of avoidance ni +ax Ihrough the device of a registered partnership. As is well-known. professional firms cannot Incorporate themselves into corporate entitles.

Moreover, In view of scarcity nf professional talent and the need for enoourag- in2 larger professional firms for rendering more efficient and specialised services to th° public, it Is desirable to encourage formation of professional partnerships. 1\1"" Council therefore feels that the Government should give consideration to this T.fl'er and either exempt professional firms from the levy of the registered nartnership tax or at least reduce the tax substantially in case of professional firms.

7. WEALTH-TAX LIMITS :

My Council have noted the proposal to reduce the non-taxable limit for wealth tax to Rs. 1.00,000/-. The administrative difficulties Involved through this reduction ;ire Ijke'v tp be considerable and in terms of the amount of revenue derived,

the cost ol collection will not, it is submitted, make it worthwhile to make assess- ments on this basis. Including the overheads of the Wealth-tax Department the expenditure per wealth tax assessment in many cases would not cover the revenue collected from the assessee. This would particularly apply to cases where the wealth is only slightly in excess of Rs. 1,00,000/-. For instance where the net wealth is Rs. 1,20,000/- the revenue derived will be only Rs. 100/-, For Rs. L,50,000/- the revenue derived will be Rs. 250/-. In such cases, having regard to the time spent by the Wealth-tax Officer, the assessment would be unecono- mical. It would therefore be worthwhile recxamininK the proposal to consider whether the non-taxable limit should not be retained at Rs. 2,00,000/- which terms of pre-war price level, comes to less than Rs. 40,000/- per assessee.

My Council will be grateful if it is olfered an opportunity to wait in a delega- tion on the Finance Minister for more detailed discussion of some of the points mentioned in this memorandum.

APPENDIX 'L'

(Reference Section VIII D of the Report)

MEMORANDUM ON THE PRACTICAL DIFFICULTIES AND HARDSHIPS RESULTING FROM THE BUDGET PROPOSALS

1. CLAUSE 6—AMENDMENT OF SECTION 10

1.1 According to the proposed amendment, a technician becomes entitled to tax-free exemption in respect of his remuneration received for a period of 36 months if he satisfies certain prescribed conditions and his contract of service Is approved by the Central Government before the commencement of his service or within one year of such commencement. It may be clarified that this benefit will be extended to those technicians who were already in India before Slst March, 1964.

2. CLAUSE 8—GRANT OF DEVELOPMENT REBATE.

2.1 One of the conditions laid down for the grant of development rebate Is that the machinery or plant Is imported in India by the assessee. Often, assessees effect purchases of such assets from dealers in India who might have imported them on their own account. Instances are also not rare where an actual user Imports plant or machinery and transfers it to new economic units formed for the specific purpose of running an industry in which such plant or machinery are put to use. In such cases, a strict interpretation of the clause would lead to a denial of the benefit altogether. Therefore, it is submitted that the provision should be suitably modified to secure that development rebate would be granted on plant or machinery imported into India either by the assessee himself or by another person from whom the assessee had taken It over and used bv him in India for the first time.

2.2 Under the proposed amendments, where an assessee imports any second- hand machinery or plant and puts it to use, development rebate is granted subject to his fulfilling certain conditions which are to be prescribed, in addition to the four conditions already specified. It is submitted that the Government should specify the nature of the evidence to be adduced. If the Department is to insist on every assessee tracing back the history of each asset to the manufacturer and obtaining certificate from each and every person who had owned it previously, then, in most cases, the assessees would not be in a position to claim the benefit. It is submitted that a certificate from the seller to the effect that the asset has not been used by him previously in India and that no depreciation has been allowed on It, should be acceptable to the Revenue authorities. The position should, therefore, be clarified by issue of appropriate executive Instructions.

3. CLAUSE 9—EXPENSES ON ADVERTISEMENT, TRAVELLING, RESIDENTIAL ACCO- MODATION, ETC.

3.1 This clause envisages a restriction on the allowance of expenditure on adver- tisement, maintenance of accommodation, travelling expenses, etc., which is to be governed by conditions which are to be prescribed. It is submitted that undue hard- ship would result in the administration of this provision as it places vast discre- tionary powers in the hands of the Revenue authorities.

3.2 In a large business, having all India or even international connections, expenditure on advertisements, travelling, etc., is incurred keeping In mind not the immediate benefit, but the accruing benefits to the business. It could well be that benefits r?cruing from such expenditure do not occur in the years in which they

are incurred. It would be difficult, therefore, to gauge with any mathematical precision in these matters, and the grant of discretionary powers to the taxing authorities could only lead to unnecessary expenses in litigation and delay in the riiiaiity of assessments. It would be almost Impossible to prescribe conditions and limitations in the Income-tax Rules satisfying the requirements of each and every type of business. It is submitted that the justification for incurring such expenses should be left to the judgement of the businessmen themselves and that the existing provisions under which expenses get allowed only where they are in- curred wholly and exclusively for the purpose of business is a sufficient safeguard against depletion of the tax base through expense accounts.

4. CLAUSE 10—BENEFIT OR AMENITY OH FERQULITE.

4.1 A change In the drafting of the Section appears to be necessary in the light of the Explanatory Note on the Budget proposals and the speech of the Finance Minister. From these, the intention of the Government appears to have been to disallow with effect from 1st March 1964, any expenditure Incurred by a company resulting in the provision of perquisites, etc., to an employee to the extent to which such expenditure exceeds 20 per cent of the employee's salary, the celling' on the quantum of expenditure allowable being determined with reference to perquisites provided for after 29th February 1964. However, the clause, as it stands now, makes the celling applicable to perquisites in respect of the whole or the previous year relevant to 1964-65 assessment year to the extent to which L;uch expenditure exceeds 20l7n of the salary payable in respect of the period alter 29th February 19G4. That is to say trie clause, as it stands now, enlarges the abmit of expenditure liable to disallowance, reducing, at the same time, in quantum the ceiling by applying the 20% to the salary payable after 29th February 1964. A suitable modification in the wording to remove the obviously unintended hardship is called for.

4.2 Explanation 2 to Section 40 indicates that the word "salary" should have the same meaning as in clause (h) of Rule 2 of Part A of the Fourth Schedule, it is submitted that this would unduly restrict the meaning of the word "salary". Therefore, "salary" may be defined to include any fees, commissions, profits in in lieu or in addition to salary or wages as well as bonus and rent paid by the employee but reimbursed by the employer. It should also be clarified that benefits, such as medical benefits, passages, travelling allowances, which are ex- cluded from total income under Sections 10(5) and 10(6) should not be considered as perquisites fc"- this purpose.

4.3 In the case of technicians, the benefits of exemption now obtaining for a period of three years in respect of payment to them of tax-free salaries should be modified in such a way that the tax borne by the employer during the fourth and fifth years of their contract is not considered as perquisites while applying the 20% restriction.

4.4 Another difficulty that employees on a contract basis will be faced with in view of the proposed changes regarding the calculation of perquisities is with regard to the passage money. Normally, an employee gets entitled to it only at intervals of three years. It is submitted that in such a case the total amount of passage money should not be taken into account, but only on an average basis determined with reference to the number of years of service mentioned in the contract entitling him to the passage money.

5, CLAUSE 12—BONUS SHARES.

5.1 Further to the submissions we have already made that the taxation of bonus shares negatives both judicial pronouncements as well as Accountancy principles, it is submitted that unless the definition of "income" is suitably amend- ed in the Act, it Is doubtful whether the provisions of Section 35 by themselves are sufficient authority for obtaining the result envisaged.

5.2 Taxation of capital gains in respect of bonus shares issued is based on the assumption that such an issue of shares gives rise to an element of gain in the market value of the shares and the attempt made is to tax this element of gain. It is submitted that element of gain, If any, in this activity has to be viewed not In isolation but by comparing the market value of the original shares prior to the issue of bonus shares with the market value of the orginal shares plus the bonus shares after the bonus shares are Issued. If such a comparison on an overall basis discloses any element of accretion in the value, it may perhaps be justified in levying a tax on such notional accretion.

5.3 It Is not clear from the new sub-section whether the capital gains on the bonus shares are to be considered as short term or long term capital gains. It

may be clarified that they should be treated as. long term capital gains at least in instances where the original holdings have been held for a period of more than 12 months.

5.4 There seems to exist a bit of an anomaly when we take into consideration two cases, one where the shareholder retains his bonus share for a period oi more than 'M) days, and another where the shareholder transfers his bonus share befoie that period. According to the proviso to Section 45(2), in the latter case, the shareholder does not pay the bonus tax and on sale of his shares he would directly secure the benefit of the average cost concept in determination of the total DrofH or Joss which is assessable. It is submitted that it would be only lair that the person who is required to bear the tax in instances of the first type is put on par in the determination of the quantum on which tax is payable. Therefore, it may be clarified that the quantum of profit taxable under Section 45(2) would be the market value on the dale specified less cost on average basis in the light of the recent Supreme Court iudgement In the case of Dalmla Cemenl Co. It is preferable that the manner in which cost is tu be ascertained is clearly laid down in the Act itself,

fi.5 It is submitted, in any case, tlu-re is a need for consequential amendmCMl In Section 2(22), according; to which when capitalised profits are distributed o\i liquidation they are taxed us dividends. When bonus shares are beiiiK brought to tax, it Is only fair that such sums should be excluded specifically from trip- operation of Section 2(22),

5.K The proposed change is of fundamental nature and therefore my Council submits that retrospective effect should not be given to it and only issue of bonus-- shares subsnuent tn 29th February 19^4 should come up for consideration.

6. CLAUSE 13—DETERMINATION OF VALUE OP CAPITAL ASSETS.

7. CLAUSE 16.—UNEXPLAINED MONEY, ETC.

9. CLAUSE 2G—REDUCTION OP MINIMUM DISTRIBUTION OF DIVIDENDS.

with expcditiously to enable companies to comply with the requirements of Sermon 210 of the Companies Act.

10. CLAUSE 27—AMENDMENT OF SECTION 109.

10.1 The clause seems to call 'or a drafting change. The clause proposes to omit sub-clause (2) in Clause (iii) of Section 109, which would mean that no statutory percentage will be prescribed in the case of a company whose business consists wholly in the manufacture or processing of goods. However, in expla- nation 2 of Section 2(1R), reference to cluuse 1,2) of sub-section (iii) of Section 101 continues. The) efore, in effect, the proposed change in Section 103 makes the explanation of Section 2(18) meaningless. It also has Hie eiloct of increasing the rate of tax, because such companies would now no longer fall under the definition of "companies in which the public are substantially interested". It is submitted that the defect in the drafting could be removed by retaining clause (2) of Section 109 (iii) and changing the figure "45 per cent" to "nil".

11. CLAUSE :W—SECKKCY PROVISIONS.

11.1 It. is submitted that thf- removal of the secrecy provisions is not a step in Die right direction, as it would only involve opening of a flood Rate oF enquiries and growth of professional informers, which would add to the difficulties of the administration. My Council is one with the Government in that there should be free exchange of information between the various department,3 i.f the Govern- ment so that tax evaders are brought to book. But the changes made with regard to the secrecy provisions in the Act ol 1961 are wide enough and it is too early to effect any -further drastic changes. My Council submits that the proposed changes are likely Lo seriously disturb the confidence of foreign investors who arc not accustomed to lack of secrecy in tax matters. This aspect of the issue is of utmost importance in the present economic context. In any case, officers of the rank below that of the Commissioner oc Income-tax, should not be authorised TO provide any information to outsiders. In addition, oniv infoimation with regard to the quantum of tax should be disclosed and in the administration of the provision, it should be ensured that the assessees are enabled to maintain their trade secrets.

11.2. Apart from the above, the manner in which the Act is sought to be amended discloses an anomalous position. After the proposed omission of Section 137 and, in particular. Section 280, all the taxing authorities will have power to disclose particulars to anybody, while the powers in this respect of the Commissioner of Income-tax are restricted by proposed amendment to Section 138. This position needs to be rectified.

12. CLAUSE; 34—SELF ASSESSMENT.

12.1. It is submitted that the proposed scheme is not likely to be an improve- ment on the scheme of provisional assessments already obtaining under the Act. It would add to costs of representation in tax matters as even assessees having income other than business will have to seek professional help for complying with the requirement of Self-assessment, While the aim of the scheme is to secure collection of tax earlier than noi'mal period now existing, it is doubtful whether the intended result could be immediately achieved.

12.2. It is submitted that, in a large number of cases, the assessees would reauire help in the matter of calculating the tax due on the quantum of return, the composition of which may be quite varied in nature. Apart from difficulties in calculation, the assessees have also to collect challans for effecting payments. Unless requests of the assessees in respect of these two matters are attended to sneedily, collection of tax would be delayed. The delay might well go beyond the thirty days within which the assessees are required to pay the tax. There- fore, it is submitted that, apart from securing prompt attention being paid to the requests of the assessee, in calculating the period of thirty days the time taken for the issue of the Department's reply to the assessce's queries on the quantum of tax due ou the basis of the returns filed as well as issue of challans should be excluded.

12.3. This clause provides for the assessee paying tax within thirty days of his filing the return of income. Thus the starting point of his liability is the date on which he files his return under Section 139. Now, under Section 13f)(ll. an assessee is required to submit the return within six months of the close of the financial year or 30th June, whichever is later, while sub-section (2) gives the Income-tax Officer discretionary power to call for submission of return withir* 3d days of his notice. To avoid hardship, it is necessarv to provide against th* tendenev iikely to arise now for resortinj? '-discriminately to Section ]3fli.'J'¹ with a vic:w To speeding up collection of tax. Necessarv executive instructior" nced to be issued in this regard.

12.4. To secure uniformity in approach as well as avoidance of delays, the possibility of establishing a special cell in each Commissioner's charge, manned by experienced officers, who would be instructed strictly LO avoid interpreting the contents of the return but to merely calculate the tax on the basis of such returns and issue challans, would be a move in the right direction. The feasibility of issuing challans along with the return itself may also be considered.

J2.5. A matter which must gain immediate attention is to see that the casting of the additional responsibility on the assessee docs not lead to delays in com- pletion of final assessment, as the incentive for completing them is likely to be less where the due amount of revenue pets collected on the basis ol sclf-assesK- ments by assessces, Therefore, though we are doubtful whether, in the light of the existing law relating lo provisional assessments, there is need at all for the new provisions, my Council submits that its success, m any case, would depend upon the degree of promptitude on the part of the Department in attending to the queries from the tux-payers.

13. CLAUSE 40—ONUS OF PROOF AND PENALTY.

13.1. My Council submits that the changes proposed arc too far reaching and quite revolutionary in character. The omission of the word "deliberately" would rope in assessees for penal action even in instances where in accurate particulars had been given inadvertently. It is, therefore, submitted that the woid "deliberately" may be retained in the Section.

13,2 The introduction of the suggested explanation would add greatly to the difficulties of assessees. There can be several contigencies in which differences of opinion between tax-payers and the Department can arise, and penalise the assessees merely because there happens to be more than a 10 per cent difference between the income returned and the income assessed would be most arbitrary. The provision would seem to cover even estimated assessments. It would add greatly to the difficulties of assessees and it is therefore submitted that the proposal to introduce this explanation may be dropped and the burden of proof in such matters should continue to be with the Department as at present.

14. CLAUSE 44—ANNUITY DEPOSITS,

14.1 The Implementation of the scheme of Annuity Deposits, which is aimed at Increasing savings. Is beset with innumerable administrative problems. It would entail the maintenance of detailed itscords by both the Departments and the depositors. The scheme envisages the determination by the Income-tax OHiccr of the quanLum on the basis of the latest completed assessment year and the fixing of the instalments. Unless the determination of the quantum occurs sufficiently early during the year in which deposits are to be made, the number of instalments m which the payments could be made gets necessarily reduced. This aspect of the problem is an important one.

14.2 It also needs to be clarified whether when it comes to repayment, the characteristic content of the deposit returned should be taken into account or not. Unless this is done, it would lead to items of income subjected to income- tax at preferential rates during the year of deposit being taxed at the higher rates at the time when deposits are- ^being returned. To give one example, capital gains are taxed at a preferential rate compared to the rates of tax on other types of income. Capital Gains also form part of total Income for the purpose of calculating Annuity Deposit and if the return of deposit is to be treated as taxable income along with other items of the income of the year irrespective of its composition, the preferential treatment granted at the initial stage gets lost completely. If the fact that by and large capital gains arise out of transactions which are not of frequent occuranee and are quite often engaged for the purpose of liquidating debts and meeting commitments, including pay- ments of tax, is taken into account the hardship involved would be more clear.

14.3 Continuance of the preferential treatment even at the time of repayment would be a result difficult to achieve and would involve quite a series of detailed calculations. Therefore, it is submitted that the possibility of excluding capital gains from the total income altogether may be explored. If, however, this does not find favour, detailed instructions may be immediately issued to obtain the continuance of the preferential rate of tax even at the time of return of the deposit.

14.4 Another aspect of this scheme which has a bearing on the volume of work involved is the indefinite nature of a finality regarding the quantum of deposit to be made, as it depends upon the total income of an assessee which itself gets modified in appeals, revisions and references. Stay in the collection of depositi in instances of dispute before appellate and rcvisionary authorities

till a finality is reached with regard to the total income would be a step in the right direction. Issue of instructions on these lines may be considered.

14.5 Difficulties may arise for the advance payment of annuity in instances where assessees have already paid the last instalment ot advance tax un the lst/15th March 1&64 in respect of the assessment year 1184-65. instructions need to be issued that in bucn cases the excess ol income tax and super tax paid by way of advance tax should be adjusted against the annuity deposit and the assessee should be allowed to make good the balance of the annuity deposit Hi case of Q shortfall on completion of his assessment ior the assessment year 1964- H5 or by 1st March 1960, whichever is earlier.

14,6. The Annuity Deposit being a deduction from the total income, it requires to be clarified as to how rebate on the partner's share in the Lax in a registered firm is to be calculated. For example, if a partner of a registered firm has an income of Rs, 40,000 and his share of tax in the registered firm is Rs. 4,000, his tax liability can be worked out in the following two alternate ways: —

(a) Total income

Less Annuity deposit

Rs. 40,000 3,000

Taxable Income

37,000

Income-tax and Super Tax on Rs. 37,000 A Le." Rebate on share of tax in Registered Firm 4,000 • A

(h) Total income

Less Annuity deposit

37,000 40,000 3,000

Income-tax and Super Tax on Rs. 37,000 A ,

Less Rebate on share of tax in Registered Firm (37x4,000) ;

40

37,000

It would he unfair if the Department adopted the method (b) as this would be an additional burden on the partners of a registered firm.

14.7. Administrative complications ure likely to arise in taxing the repay- ment ol' the annuities in the first year of repayment in instances where the individual's original assessments are not final and conclusive. In such instances, the total amount of annuity due to be deposited cannot be ascertained and, therefore, the amount added to the following year's income as a first instalment of repayment will also remain indeterminate.

14.8, Difficulties which would be faced by a large number of assessees who have already taken up policies of insurance and/or have been contributing substantially to Provident Funds have to be taken into consideration in this context. The total amount of savings that assessees, especially those in the salaried class, can make during the course of a year out of their total income is necessarily limited. Therefore, a compulsion with regard to savings in the form of Annuity Deposits is likely to result in a reduction in the quantum of savings sought to be encouraged by the provisions of Section 87 of the Act. To that extent, even the welcome concession of a rebate even for Super Tax is not likely to serve as an incentive and add to voluntary savings.

14.9, A concrete suggestion which my Council would like to make in this behalf is that the savings effected in the form of life insurance premia p a y m e nt and contributions to Provident Funds mav be allowed to be deducted from the Total amount of Annuity Deposit under Section 44 of the Act if an assessee cnooscs to do so.

14.10. Another suggestion which my Council desires to make is that every nssrssec may be granted an option to postpone withdrawal of the sums deposited by him for periods even exceeding 10 years, Such a procedure would help in providing a kind of retirement benefit to assessees in general. In particular, it would be of help to the self-employed group of assessees who do not gain any deduction from their total income at present of sums set apart for retirement benefits. In addition, the rights provided in Section 280(u) may he extended to all types of economic pursuits. Loss of revenue resulting from these measures

is not likely to be very substantial. In addition, while this would be an effective disinflationary measure, it would also ensure Government deriving the advantage of using the sums deposited for a longer period of time.

14.11. For avoiding the necessity of maintaining records both by the Depart- ment and the assessee, the feasibility of such savings being invested in existing, securities, certificates or deposits of the Central Government may be considered.

15. DIVIDEND TAX.

15.1. Part II of the First Schedule in paragraph A proposes levy of a tax at the rate of 7 • 5 per cent in the case of existing" companies which have declared or distributed to their shareholders during a previous year any dividend other than dividends on preference shares. It needs to be made clear whether both the declaration and the actual distribution date are to be taken into account. The position could be clarified by the following example, Suppose a Company which closes its accounts on the 31st of December every year, declares a divi- dend in the last week of December 1962 and distributes it in tht. first week of January 1963. Is this to be taxed at 1\ per cent in the assessment year 1963-64 or 1964-65? Use of both the terms "declaration" and "distribution'¹ would give rise to considerable controversy if both are to be taken into account. There- fore, it is submitted that the Department should go by the declaration date to avoid confusion in the future.

15.2. Another aspect of this tax which leads to considerable hardship arises from its retrospective effect. Companies wholly engaged in manufacturing, which, not being aware that they arc no longer required to distribute dividends compulsorily, would have distributed dividends to comply with the legal require- ments existing at that time. For having complied 'with Ihc provisions of Section 104, they would now be subjected to an additional levy. This could not have been the intention. Therefore, it is submitted that this provision should not have retrospective effect, but should be applicable only in respect of divi- dends declared after 29th February 1964.

lfi, ESTATE DUTY.

16.1. My Council submits that in effecting payments of Estate Duty in the light of the new provisions, it might entail sale of assets leading to the accrual of capital gains. It would indeed be a great hardship if the assessee is to be subjected to a levy of capital gains tax in such a situation. To avoid hardship, my Council submits that provision should be made to enable the transfer of assets to the Department as a payment in specie and that such surrender to the Department for tax are not considered as "transfers" for purposes of levying Capital Gains Tax. In addition, it is submitted that the full amount of probate duty should be allowed as a deduction, as was the procedure obtaining prior to 1961.

17, EXPENDITURE TAX,

17.1. In view of the far reaching changes proposed to be made in regard to Expenditure Tax, it is submitted that expenditure incurred prior to 1st April 19R4 should not be subiect to this impost. In addition, it is submitted that extra allowance in respect of a married man and a man with dependents as opposed to single individuals should be made available. My Council also submits that the proposal to tax expenditure out of entertainment allowances not subject to income-tax, is illogical, when such expenditure is allowed Enr income-tax pur- coses as expenditure incurred wholly and exclusively for purpose of the business.

17 2 Attention is drawn to a drafting defect in respect ot the Bill. The Finance Minister had indicnted that the Act has been redrafted so as to attract expenditure tax on all expenditure above Rs. 36,000 per annum, no matter from which sources the money or expenditure came. However, the charging section of the Act has not b^en" amended with the result that a levy of tax on expen- diture exceeding Rs. 3fl,000 continues to he possible only where the income alter tax exceeded Rs. 36,000.

13. SUBTAX BILL.

13] The Bill contains provisions regarding provisional assessment indentical to those which existed in the Suoer Profits Tax Act. The wording of this parti- cular clause is ambiguous and because of this, the Department has beer, rom- pleting provisional assessments almost unilaterally without giving any weight to

the assessee's contentions. There is also a tendency on the part of the officers to delay completion of assessment. It is, therefore, suggested that provisional assessments for surtax may also be made on the basis of the income returned by the assessee as in the case of income-tax asseesment.

18.2. Divided tax payable by a company is not a deduction for arriving at the chargeable profits for Surtax purposes. This would mean company paying surtax, on the dividend tax paid by it. This position needs to be remedied.

18.3. Another difficulty is with regard to the nature of the loans included in the capital base. The Bill provides for inclusion of only loans repayable over a period of more than 10 years. It is our experience that such loans are extremely rare. Therefore, it is submitted that all bank loans irrespective of the period involved should be included in capital.

18.4. All reserves appearing on the face of the Balance Sheet created out of profits or sale of assets are to be included, excluding any reserves created on revaluation of assets. My Council submits that the reduction of other leserves "by the amount credited to such reserves as have been allowed in computing profits for the purposes of the Indian Income-tax Act 1922 or the Income-tax Act 19GI" is unnecessarily restrictive. After all, resei ves appearing on the face of the Balance Sheet (excluding reserves created on revaluation of fixed assets) are actually employed in the business, irrespective of the fact whether the same have been allowed or not in computing profits for the nurpopes of the Indian Income-tax Act 1922 or the Income-tax Act 1961.

18.5. Explanation to Rule 1 of the Second Schedule to the Surtax Bill Mates that under item 6, proposed additions to reserves under the heading "Reserves & Surplus" in Part] I of the Sixth Schedule to the Companies Act should not be included in capital. The explanation is quite ambiguous and requires clarifica- tion. This provision would appear to have the effect of not including in the capital of the following year additions to the reserves for the previous year. As an example, take the case of a company whose year ends on 31st December 1983 in which it transfers a sum to General Reserves. It would appear that such a sum would not be inculdablc in the capital for surtax purposes in respect of surtax for the year commencing on 1st January 1964. This is clearly an inequit- able result and needs to be remedied.

18.6. The provisions of clause 2 of explanation 2 state that the amounts stand- ing to the credit of the share premium account which is received in cash should form part of the paid up share capital This is too restrictive a provision. In instances of amalgamation or of foreign collaboration with existing units vvhich have been making substantial profits continuously, consideration is often paid in the shape of credits to premium account in addition to shares allotted, and not necessarily in cash. It is not clear from the provision as it stands now whether share premia on shares issued against import of plant and machinery against outstanding loans can be included under this definition. A,ftcr all, trans- actions of this type, are effected after gaining prior governmental cpproval. Therefore, it is submitted that it should be¹ clarified that amounts credited 1o the share premium account fo.r any valuable consideration previously approved by the Government would also be treated as paid-up capital.

APPENDIX 'M'

(Reference Section VIII E of the Report)

ACCOUNTING AND AUDITING PRACTICES STATEMENT ISSUED BY RESEARCH COMMITTEE OF THE INSTITUTE

Statement No. 1/83—September, 1963.

For the Guidance of Members in Future

Recommendation as to the best practice of presentation of information in cases of non-provision for taxation in spite of profits having been made in a year because of past losses,

Recently, a few cases have come to the notice of the Research Committee in which certain companies, despite profits having been made by them in a particu- lar year, have neither made any provision for income-tax, nor have disclosed the reasons, by way of a note on their published accounts as to why the provision had not been made.

Provision for tax is a charge against the profits of the year and according to paragraph 3(vi) oi Part II of Schedule VI, the Profit & Loss Account is required to set out "the amount of charge for Indian income-tax and other Indian tuxa- lion on profits, including where practicable, with Indian income-tax any taxation imposed elsewhere to the extent of the relief, if any, from Indian Income-tax and distinguishing, where practicable, between jncome-tax and other taxation."

The Research Committee is of the view that according to the best standards of presentation of information, as well as, in the context of the requirement to present a 'true and fair' view of the profit for the year, it is desirable for every company, disclosing a credit balance in its Profit and Loss Account, wherein a provision for the liability on account of taxation has not been made, to state by way of a note the reasons as to why this has not bene done.

Such a situation, generally, would arise on account of the existence of past unabsorbed losses and/or unabsorbed depreciation and/or development rebate. It would thus be a case where an advantage is being taken in the year in tiut'"- tion in respect of something which had happened in the past. In other word5. tlv events of the past would project themselves into the present Profit and Loss Accounts, making it unnecessary for the company to provide for laxation. Where such circumstances prevail, the Research Committee is of ihe view that a DOTS: on the accounts should be given on the following lines, subject lo such modifica- tions as may be necessary lo suit the ciicumstances of each case:

"Provision for tax on profits of the year would have been Rs , but bccuUMr of past unabsorbed losses and/or depreciation and/or un&bsorbea development rebate, it is not expected that the- company will be called upon Lu pay any tax and therefore no provision in this respect has been mude in the accounts."

APPENDIX 'N'

(Reference Section VIII E of the Report)

•ta) TREATMENT IN ACCOUNTS OF TAXATION AND PROPOSED DIVIDEND

1. In a recent letter addressed to the President by the Ministry of Finance, Department of Revenue, Company Law Division, it was stated that there has been a tendency on the part of several companies not to debit the Profit end Loss Account wiLh the amount of the provision for taxation as well as the dividend proposed by the Directors for the relevant year, Instead the whole amount of net profits (before making provision for taxation and dividend) is transferred to the credit o£ General Reserve with a note appended to the Balance Sheet and/or Profit and Loss Account stating the figure of the estimated tax liability in respect of the year's profit and indicating that it would be payable out of the General Reserve as and when the assessment is made, ft was also mentioned in the letter that a similar note Is given in respect of the dividends recommended by the Board.

2. It was mentioned in the same letter that it was possible to take the view that failure to make provision in the Profit and Loss Account for the tax liability mid dividend recommended by the Board would be in contravention of the requirements of Section 211 read with Schedule VI to the Companies Act, and the accounts which did not make such provisions would not represent a 'true •md fair' view of the state of affairs of the the company concerned. This view is held by 11 ii' Company Law Division of the Ministry of Finance, but they have m fairness pointed out that a contrary view has also been urged in some quarters that the presentation of the annual accounts in the aforesaid manner did not contravene any of the provisions of the Companies Act, having regard to the fact 'hat there can be no tax liability until the particular income-tax assessment is 'nude; and with regard to dividend it would become a liability only after it has been 'declared in the Annual General Meeting.

3 The institute was requested to consider these views in the context of i-stRblished principles of accountancy and commercial practice and to give suit- able directions to the members of "the profession, The above matter was very • •urcfulJy considered by the Research Committee at its meeting held on 29th November, 1963 and the views of the Committee are as under:

fa) The Committee was in agreement with the view that provision for the anticipated tax on tho profits of the year should be made in the Accounts irres- pective of line fact that the Finance Act for the succeeding assessment year may not have bwen enacted. This view is based on the premise that taxes on Income

are something which, but for a possible variation in the rates, are with us for ail time to come, and the mere fact that the Finance Act has not been enacted, yhould not except for the determination of the rates stand in the way" of a com- pany making a provision for the anticipated tax.

(b) With regard to the matter of the non-provision of the proposed dividend, the correct position in the view of the Research Committee is that the proposed dividend does not represent a liability nor does it amount to a provision, pending the approval of the shareholders in General Meeting. Since the meeting to approve the Accounts would take place after the Balance Sheet date, there could not be any liability in respect of the proposed dividend on the date of the Balance Sheet, The Committee feels that merely because the form requires proposed dividend to be shown under "Current Liabilities and Provisions", it does not mean that in fact the proposal for the dividend becomes a liability or is necessa- rily a provision. The Committee would draw attention to the forms of accounts laid down under the Insurance Act, 1£>38 und the Banking Companies Act, 1943, in both of which, it is not a requirement to show "proposed dividends" by either Insurance Companies or Banking Companies, and it cannot be contended that merely bcrause "proposed dividend" Is not shown in the accounts, that the accounts of Insurance and Banking Companies do not disclose a 'true and fair' view.

(c) Since, however, the form of Ralance Sheet prescribed in Purt I of Schedule VI requires "proposed dividends" to be shown under 'Provisions', and since para- graph 3(xiv) of Part II of the same Schedule requires the "'proposed dividends" to be disclosed, the Committee feels that, (-hough on correct accounting principles, 1he proposed dividend does not become a liability for reasons mentioned above, the attention of the shareholders would have to be drawn to the fact that no appropriation has been made for the proposed dividend.

(d) It should be appreciated that an auditor can only recommend to his client the -best practice in accountancy, but cannot enforce his views on the client because the accounts are prepared by the client and placed before the auditor for his report. As members are aware, the auditor's responsibility is to report on the accounts in terms of Section 227 of the Act and if the accounts do not show 'true and fair' view or do not give the information required by the Act to be given in the manner required, it would be the duty of the auditor to qualify his report and point out in what manner the accounts do not disclose a 'true and fair' view of the state of affairs ot the- company, or in what manner the required information has not been given. If the Directors insist that "proposed dividends"' should not be disclosed or even take the view that the tax provision should not he made but the whole of the balance of profit should be taken to the "General Reserve", the auditor's duty would be to bring these matters to the attention of the shareholders by qualiying his report.

It has been brought to the notice of the Institute that during recent inspec- tions of books of accounts of some companies by the Registrars of Companies under sub-section (4) of Section 209 of the Companies Act, 1056, large cash balances had been maintained far in excess of their normal and current business needs. In spite of these large cash balances, it was noticed that further amounts were withdrawn from banks for meeting comparatively smaller cash require- ments. While it cannot be argued that companies should not have adequate cash in hand, particularly at outlying places where banking facilities arc not available, the amount of cash held should have some relation to the current needs of the business,

In certain cases it has been observed that the large amounts of cash drawn were utilised unauthoriscdly by persons incharge of the management of the companies concerned without the payments being recorded in the Cash Book. These instances came to the notice of the auditors when a surprise count of the cash was made and it was found that the balance shown in the Cash Rook as "Cash on hand" was not in possession of the Company.

It is, therefore, suggested that if during the course of the audit, it comes to thf attention of the Auditor that the Company is in the practice of consistently maintaining an unduly large balance of cash on hand, he should make a surprise verification to ascertain whether the actual rash on hand agrees with the balance as shown by the books. If the cash on hand is less than the balance as shown in the books, it would be his duty tn draw the attention of the shareholders to this fact in the audit report. In any case, he should satisfy himself regarding the necessity for such large balances having regard to the normal working require- ments of the Company,

APPENDIX 'O'

(Reference Section IX E of the Report)

PRESIDENT

THE INSTITUTE OF CHARTERED

ACCOUNTANTS OF INDIA

P.E. No. 2(58,

Indraprastha Marg,

New Delbi-1.

IMPORTANT ANNOUNCEMENT

22nd February 1964.

Dear Member,

Re: Forthcoming Elections to the Central and Regional Councils.

I may Invite your attention to the Institute's Notification No, 54-EL(1 )/7/t34 dated lUth February 1BG4 published in Part III Section 4 oi the Gazetter oL India dated 22nd February 1964 and the Announcement in the Institute's Journal for the month of March, 1964, regarding the dates of the forthcoming elections tn the Central and Regional Councils.

In order to enable the voters to know the names of the members standing for elections, a list of the candidates contesting the elections from various Regions will be sent ten all voters by the Institute's office as soon as the scrutiny of nomina- tions is finalised.

Members' attention is invited to Regulation 54A of the Chartered Accountants Regulations (copy enclosed), which provides for disciplinary action against members under certain circumstancs in connection with the conduct of elections.

The Council feels that, In addition to the requirements under this Regulation, the candidates should refrain from all such practices as undermine honour and dignity of the profession. The Council therefore, solicits the support of members to help In conducting the elections in a spirit of dignity and decorum.

It is felt that the candidates could best bring to the attention of the voters their qualifications by taking active Interest in professional activities like contributions through the journal of the Institute, participation in Seminars, meetings and discussions and through assistance in other activities of the Institute like promotion of research, rather than through direct or indirect canvassing,

It has, therefore, been decided that any attempt at canvassing through Issue of manifestoes, circulars, etc., should be considered as "misconduct" under the Chartered Accountants Act. rendering the members concerned liable for disciplinary action. The Council has issued a notification to that effect beinf; Notification No. l-CA(34)/64 dated 22nd February 1964 (copy enclosed).

The Council reiterates its earnest appeal to every member oi the Institute to co-operate in Implementing this decision of the Council and to ensure that the forthcoming and the future elections to the Central and Regional Councils are conducted in a manner worthy of a learned profession, with all decorum ond highest ethical standards.

Yours sincerely,

R. C. COOPER,

President.

ENCLOSURE I

THE CHARTERED ACCOUNTANTS REGULATIONS

1949

Regulation 54A. "Disciplinary action against member in connection with conduct •of election.

A member of the Institute shall be liable for disciplinary action by the Council if he adopts one or more of the following practices with regard to the election to the Council, namely:

(1) Bribery, that is to say, any tfift, offer or promise by candidate or by any other person with the connivance of a candidate, of any gratification to a person wh.jinyor-ver, with the object, directly or indirectly of inducing—

(a) a person to stand or not to stand as. or to withdraw from being a candidate at an election; or

(b) an elector to vote or refrain from voting at an election or as a

reward to—

(i) a person for having so stood or not slood, or for having withdrawn his candidature; or

(ii) on elertor for having, voted or refrained from voting.

Zl--vh.imilimi : For the purpose of this clause the term "gratification" Is not re.-v.~i ""o.i to pecuniary gratifications or gratifications estimable in money, and it i'ii.\LL,:.i all forms of entertainment and all forms of employment for reward; but it c^p,3 r\ot include the payment of any expenses bonalide incurred at, or for the purpose of any election.

(2) Undue influence, that is to say, any direct or indirect interference or attempt to Interfere on the part of a candidate or of any other person with the coiniivancc of the candidate with the free exercise of any electoral right:

Providcde that—

A declaration of policy or a promise of a particular action, or the mere exeiviFe of a lefial right without Intent to Interfere with an electoral right, shall nnr be deemed to be interference within the meaning of this clause.

(3) The publication by a candidate or by any other person with the connivance of the candidate, of any statement of fact which is false, and which he either believes to be false or does not believe to be true, in relation to the personal character or conduct of an>i candidate, or in relation to the candidature or with- drawal of any candidate, being a statement reasonably calculated to prejudice the prospects of that candidate's election.

(J) The obtaining or procuring or abetting or attempting to obtain or procure by a candidate or by any other person with the connivance of a candidate, any assistance for the furtherance of the prospects of the candidate's election from anv person serving under the Government of India or the Government of any S^'t.' 01 her than the giving of vote by such person, if he is a member of the Tiisii'ute entitled to vote.

("4A) The hiring or procuring, whether on payment or otherwise of a vehicle by u mididate or by any other person with the connivance of a candidate, for th° I-LV./eyance of electors.

<4Ei The convassing for votes, or soliciting the vote of any elector or p-- ,i"L:''!i"is{ any elector not to vote for any particular candidate, or persuading any elector not to vote at the election, or exhibiting any notice or sign board f01 her than an official notice) relating to the election, by a candidate or by any oti-er oerson with the connivance of a candidate within a distance of 200 meters from n polling booth.

(ri) Any act specified in clauses (1) to (4B) above, when done by a member of the Institute who is not a candidate or a member acting with the connivance of a candidate.

(G) The receipt of, or agreement to receive, any gratification whether as a motive or a reward—

(a) by a member for standing or not standing, as, or withdrawing from being, a candidate; or

(b) by any member whomsoever for himself or any other person for voting or refraining from voting, or for Inducing or attempting to induce any elector to vote or refrain from voting, or any candidate to withdraw his candidature.

(7) Contravention or misuse of any of the provisions of this Chapter or making of any false statement knowing It to be false or without knowing it to be true while complying with any of the provisions of this Chapter."

ENCLOSURE II

New Delhi 22nd February 1964.

NOTIFICATION

(Chartered Accountants)

No. I-64(34)/64.—In exercise of the powers conferred by clause (11) of Part II of the Second Schedule to the Chartered Accountants Act, 1949, the Council of the Institute of Chartered Accountants of India specifies that a member of the Institute shall be deemed to be Ruilty of misconduct, if, in connection with election to the Centra] and/or Regional Councils of the Institute, he is found to have taken part, directly or indirectly, either himself or through any other person, In an^ of the following activities;—

1. issuing manifestoes or circulars:

2. canvassing votes by visiting places of business or residence of the voters or in any other manner; and 3. organising parties to entertain voters.

C. BALAKHISHNAN,

Secretary.

T H E I N S T m j TE OF CHARTERED ACCOUNTANTS OF INDIA,

NEW DELHI

S E C

4

]

Balance Sheet as at yt March, 19^4

31-3-64 31-3-1963 PROPERTY AJ^D ASSETS

31-3-1963 31-3-196; FUNDS AND LIABILITIES

R s,

Rs.

Rs.

Rs.

Rs. Rs.

T H E

/. Fixed Assets

/. General Reserve Account

19,05,330 1^,72,267

19,06,055

18,0^,947 Per Schedule 'C annexed

G A Z E T T E Balance as at 31-3-1963 Add; (a) Grant frvm Government to- wards cost of Regional Build- ings transferred

3,41,821

(b) Entrance Fees per Schedule

O F "A" annexed .

1,68,584

I

1,25,199

N D

I

24,16,460

A 18,97,466

Las : (a) Transfer to Rsesar- Rs.

ch Fund . 359

(b) Excess of Exp-

(Excels of Income)

E X T R A O R D

I ( + ) Sj59o

enditure over Income, per Income & Expenditure Account Annex ed. . . 24,481

- 24,840

N A R Y

23,91,620

(40 8,59O

19,06,056

//. Grant from Goz'emmcnt for Purchase of

II. Investments at cost

Regional Buildings

3-41,821

12,69,819 Per Schedule 'D' Annexed

13,12,573 3,41^21 Balance as at 31-3-1963 . Less Transfer to General Reserve

Face Value . . Rs. 13,13,445

NIL

Account . . .. 3,41,821

Market Vahic N IL Q u o t ed . .. R s. 9,93,860

U n q u o t ed . . . R s. 3,03,445 3,41,821

9 5

, 9 6

PRO?£RTi*AND ASSETS

3-3-1963 F_'NJ3 A tO LIABILITIES

31-3-19^3

Rs.

Rs.

31-1-6} Rs.

Rs.

31-3-1953 Rs.

///. R/s-:areh Fund Imesttmtus. ai Con

Per Schedi.le T.! ar-rexed

5^9,913

5>4S,9i3

5,69,641

III. Research Fund •'Part inves'.ed per contra 1 5,69,641 Balance as EL£ 31-3-1963

Face X'alue . . .Rs. 5,?4,foo Marhet Value . .Rs. 5,33,?oi —. Add Transfer from General Reserve

XIL Account • . . .

359

T H E

5,70,0c0

5,69,641

IV. Medals, & Prizes. Fund Imeslm&ns, at Cost

IV. EduL-a!icn Account

Pel Schedule " F" Annexed .

4,610

25,004

4,610 Balance as at 31-3-1963

35,028

X IL Add : ^ale of Iacome-Tax Seminar

G A Z E T T E

j-ace Value . . . Rs. 40,700 MarkeL Value. . . Rs. 31,526

66

Repcrt . . ..

4,676

O F 4,610

I

— V. Coachirg Boatd Fund

V. $. Vaidjyjt*a;k Aiyar MetTicrial Fund

Imistfficrtt, at Cost

N D

I

Per last P,alance Sheet . . . 12,038

A

12,03s

Less Transferred to Socieiy as per cen- Balance'- as at 31-3-1963 Rs. ^5,000 (a: Amount all:cated by the

tra . , . . . . 12,038 NIL ' Council

],5O,cco

75,000 75,0c0

1,50,000 Rs. 75)Oco >'b'< Gram from Government .

VI. i.lir-ce2Lmci>us Expenses for Implementation

17. Medals & Piize? Fund

of Coachi-g SeJtane

E X T R A O R D

I

8,306

27,124 Per Schedule C'B" Annexed

37,39-9

Per last Balance Sheet . . . 8,306 Less : Written off during the year . 4,469 3,837

VII. Advance to students' Association fcr •

N A R Y

Purchase cf Libt ary Books

2,500

Nil

VIII. Cuire,U Assets

VIII. S. Vaidyanalh Aiyer Memorial Fund

0 Slock of

1=,922

12,922 Balance as at 31-3-1963

c

Rs. 22,4*9 (CM Publicalii ns ai.

[

' cost . .Rs. 35,214

3i

Rs. 33,512 W Paper & Stationery

55.971

1

' at cost . . 264S5 61.659

P A R T

12/122

NIL

Less : Transferred to separale Soc'ety under ihe above name, regisier ed d urine The year under the Soc'c-ies Registration Act.

i

Debtors (Unsecured!

12,922

(=)

I I I -

16,135 (aj Considered good 65,960

1

(b) Considered doubt-

ful . . 1,296

I7>43i Rs. 1,296

S u e

.

4

]

65,960

Less : Provision ag- ainst doubt- ful debt Rs. 1,296 nil (a) Security and other

(3) Rs. 4,730

deposits . 7,755

(6) Staff Security

T H E

7,647 Rs- ²)9i7

deposit invest- ment at cost 3,442 (4) Advances and repayments VIII. Developmental Activities Account

36,498 21,023

11,197 49,277 18,130 (a) Professional Developmental

Account

(5) Interest accrued (6) Cash and Bank Balances:

Rs. 15,000 Balance as at

G A Z E T T E

31-3-63 - 15,00 0

a) Cash & Stamps

Less : Expenditure 14,896 104

O F

3,790 (

in hand Rs. 2,737

I

Rs. 50,000 (6) Publication Ac-

N D

I

A

(b) In current a,'cs. with the Bank- ers Rs. 5,07,600' 5,10,337 count . Balacce as at 31-3-63 . 50,000

7,16,600

2,94)159 2,90,369

00 Regional Councils Libraries

Fund Account.

4,32^729

Rs. 63,287 Balance as at 31-3- 63 Rs.63,287

Additions during the

E X T R A O R D

(_a) Rs. 6,421 & (6) Rs. 3,033 res- pectively marked for (a) 'Research & (b) 'Medals & Prizes' Funds).

year . . Rs. 2,033 65,320

I

(d) Research in 'Price

fixation' Account. .

N A R Y

1,48,287 Rs. 20,000 Balance as at 31-3-1963 . 20,000 1,35,424

IX. Liabilities

1. Fees and Subscriptions received in

Advance.

Rs. 75,596 (a) Membership . . 1,47,200 Rs. 1,70,596 (6) Examinations . '. 1,88,332 Rs. 5*4i8 00 Journal . . . 6,350 Rs. 5,635 00 Revision Course . . 8,140 Rs. 5,77,3ii 00 Tuition fees Rs. 7,°4.6n

Q y

g 8

31.3.1964 3I-3-I963 FUNDS AND LIABILITIES

PROPERTY AND ASSETS

31-3-1964 31-3-1964

Rs.

Rs.

Rs.

Rs. Rs. Rs.

Less : Tuition fee Instalments

7,56,568 Rs. 4,99,323 77=988 recoverable Rs. 1,19,416 5,85,195

T H E

2)917 2. Staff Security Deposit (Invested per

contra). . . ..

3,221

3. Creditors:

Rs. 75,041 (a) For expenses Rs. 1,96,442 1.-35,510 Rs. 1,10,469 (b) Others Rs. 1,01,782 2,98,224 12,36,662

G A Z E T T E

45,25,7^ 41,05,756 TOTAL

TOTAL

O F

45,25,781 41^05,756

I

N D

I

A S. R. SIRCAR, C. BALAKRISHNAN, RAGHDNATH RAI, R. C. COOPER, P. R. MEHRA, \LR- VENKATARAMAN,

Chief Accountant. Secretary Vice-President. President. Chartered Accountants.

Auditors.

NEW DELHI : 13th September, 1964.

AUDITORS* REPORT

E X T R A O R D

I We have audited the Balance Sheet as at 31st March, 1964 of the Institute of Chartered Accountants of India and also the annexed Income and Expenditure Account for the year ended on that date incorporating Asserts and Liabilities of Coaching Board and audited accounts of the Regional Councils acd report

ihat : —

N A R Y 1. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit. 2. The Balance Sheet and the Income and Expenditure Account dealt with by the report are in agreeroei.t with the books of Accounts. 3. In our opinion the accounts are maintained in conformity with the requirements of the Chartered Accountants Act, 1949- 4. In our opinion and to the best of our information and according to the explanations given to us the statements with the schedules attached and annex-

ures thereto, give a true and fair view :—

{ CO in the case of the Balance Sheet, of the State of affairs as on 31st March, 1964; and (it) in the case of the Income and Expenditure Account of the income for the year ended on that date.

P A R T

P. R. MEHKA, M. R. VENKATARAMAN,

H NFW DELHI: I+/A September, 1964.

Chartered Accountants,

I

Auditors.

—

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, NEW DELHI

Attwxure to Balance Sheet.

SCHEDULE 'A'

Schedule of Entrance Fees as on 31st March, 1964.

RB.

RB.

(a) FELLOWS:

Received during the year 1st April, 1963 to 31st March, 1964 •

36,800

(6) ASSOCIATES:

7<5>555

(i) Instalments due at on 31st March, 1963

(") Recoverable during the year 1st April, 1963 to 31st March,

1,82,100

1964

2,58,635

(w) Lest; Instalments due as on 31st March, 1964

1,26,871

i,3i.784

1,68,584

RAGHUNATH RAI,

C. BALAKHISHNAN,

Secretary.

S. R. SIRCAR,

Chief Accountant.

Vice-President.

R. C. COOPER,

President.

P. R. MEHRA, M. R. VBNKATARAMANJ

Chartered Accountants

Auditors,

NEW DELHI;

Dated 13th Sep., 1964.

j

TH E INSTITUTE OF CHARTERED ACCOUNTANTS'OF INDIA,-NEW DELHI.

o e

Amexitre to Balance Sheet.

SCHEDULE 'B*

Schedule of Medal and Prises Fund as on yut Af""A, 1964,

Lessi

Names of the Funds.

Balance Endowments

Cost of Medals &

Income earned

: Prizes

Total (Cols. 3 & 4)

SI. No.

Rs.

awarded Rs.

Rs.

Rs.

Rs.

T H E

2

6

1

3

4

5

7

G. P, Kapadia (1st President) Medal

1

30,000

Fund

B/F . . 1,378 For the Yeai . 550

420 420 21^)88

21^28

(Pre-paid)

G A Z E T T E

5*000

Miss R. Sirabhogam Locket Fund .

2

O F

B/F . . 1,046 FortheYear . '212

6,258

6;o6o

198

I

N D

10^24

2CO 10^51 Sir ShapoorjiBil&noria Prize Fund

I

10,451

3

A

TOTAL . . . .

1^38

3 5 J ° 24

38,637

37.399

R, C-CooPHR*

M. .R, VEKKATARAMAN,

E X T R A O R D

I C. BALAKRISHNAN, Secretary.

RAGHUNATH R A I, Vice-President.

S. R. SIRCAB, Chief Accountant.

President.

P. R. MEHRA, Chartered

Accountants.

Auditors.

NEW DELHI,

Dated : 13th Sep. 1964.

N A R Y

f

P A R

t

1 1 1

-

THE iNS'i'ri'U'i'li OF CHARTERED ACCOUNTANTS OF R4DtA, N E# DELHI

S E C

.

Armexure to Balance Sheet.

4

SCHEDULE 'C*

]

Schedule of Fixed Assets as on 3lrt March, 1964.

- I A TK

C O ST

DEPREC

3 N,

Book Value as on 31-3-64

Lesi on

T H E

Nature of Assets- Upto

Total

Total

Total

Additions Total

For the year

A*S£tS sold/

31-3-63

s. No.

Total upto 31-3-64

Less Sold/ Dis- carded

Bpto 31-3-64

upto 31-3-64

discarded

G A Z E T T E

1

Rs. 12 2

Rs. 10

Rs. 11

Rs. 13

Rs. 6

~Rs. 3

Rs. 3

Rs. 4

Tls. 9

Rs. 5

•Rs. 7

Q F

I 1

2,158

Lease-Hold Land .

2,158

2,158

2,158

N P

I

2 BuiHings at :

" *

A

3,19,196 "7,798

4,50,997

1,3 f,602

IJJ39J599

T UUJ / yj

t*j u

J / y j

7.097 / syy 1

1,50,-509

•kJJ7)J77

(a) NewDelhi(Cen- tral Council) (i) Bombay (W.LR.

3,82,052

18,815 3,80,875

9,522

18,815

19,992

Council) .

4,00,867

4,OO,867

9,293

E X T R A Q

(c) Madras (S.LR.

J I

4,90,201

ir^86 4,17,374 84,313 5,01,687

Council) .

IIy(B6 ir,486

5.01,687

D

I

id) Calcutta (E.I.R.

3,51,048 Council) .

35>682 3,77^126 9,604 3,86,73O

26,855 g,827 35,682

N A

3*8^730

J I

Electric Installations

3

Y

21,464 & Fittings

36,951 58,415

58,415

2,l85

"8*di^

JT'J

l6,<*51 JVJ7J

Air Conditioning

4

7gj6o2 1^6,572

1^6,572

1^6,572

M 3O

47>97°

73>i72

78^2

5

• •

r Installations. Furniture, Fixtures and safe at :

98,121

1 24

1,61^4.18

66,970

223 1,65,091

6,521

3,896 1,65,314

60,573

67,094

(a) NewDelhii'Cen- tral Counci]) [b) Bombay (W.I.R.

Council) .

12,570

7^843

12,570

661

4,034

4,695

7,875 4>727

4,695

e) Madias (S.LR.

(

19,996

9 02

19,996

15,254

4^742

!

• •

2^09

3,311 16,685

3 , 3"

Council) .

0

i

I

0 2

12

10

11

3

I

3

6

4

9

7

13 3

5

275

7,642 16,789

5,8°8

• •

7,642

24A31

r,834

24431

id) Calcutta (RIJL Council) . (e)U. P. (GLR.

7 20

7 20

2,121

(2,121

1 28

* •

1^01

2jI2I

592

Council)

(J) NewDelhi (N.LR.

5 00

881

• •

1,158

affB

2,752

3,9H

Council) .

M59 3,411

3,9H

T H E

6 Office Equipment at:

460

26,117

482

66^)92

4^686 40,435

8,667

35,749

39,975 57.9O7

66,574

G A Z E T T E

1,190

1,519

1,519

I3I90

1,519

1,132

329

58

O F

2 70

* •

2,111

• •

2,170

463

(a) New Delhi (Cen- tral Council). . (b) Bombay (IW.I.R. Council) " (e) Madras (S.I.R. Council) .

2,170

733

733 59

M37

I

(if) Calcutta (E.I.R.

N D

461

2^16

3,978

6,594

3,978

3>5I7

6,594

fr.594

I

A

842

22

301

1,165

864

S64

1,165 • •

Council) . (e) U. P. (C.LR.) Council) .

I,I 65

(f) NewDdhi(N.I.R.

970

481

2 03

481

• •

56

970

425

Councfl) .

767

489

Library Books at:

7

E X T R A O R D

I

25^26

39,169

39>i69 (a) NewDdhi (Cen- tral Council) . 57>84i

5,513

6,754 64,595

64,595 33>656

(6) Do.

N A R Y

3,022

8,319

2/383

3iO22

2,896

939

5,297 5>423

8,319

(P. G. Cotnsc Li- brary Books) (e) Bombay fW.I.R-

I9^>71

8,261

25,122

• •

14,312

2,598 19,071

Council) .

33*383

33,383 16^73

id) Madras (S.I.R.

6,421

6,421

9 26

• <

8*222

16,851

16,851

10,430

8,629

Councfl) .

5*495

(e) Calcutta (E.I.R,

[

1,180

8,684

20,644

20,644

7,284

8,684 I3>36o

Council)

H J 9 6O

7,504

P A R T

980

8,094 10^78

13^91

2^713

5,097

5^>97

13,191

4,"7

(f) U. P. (C.I.R. Council) .

(g) New Delhi (N.LR.

m

1,183

2,605

r t

750

3,788

1*183

3,788

C ) .

744

433

3,044

-

••

Motor Car

8

14)396

14)30

6,872

I4)39"

I,5O5 i 8,377

6^019

8)377

S e c Cost of Acquiring

.

9

copyrights

2,100

51,015

48.915

51,015 29)443 5,102 34)545 • •

34^545 16^70

4 1

10 Cost of Instructional

Materials

12,077

81,952

81,952

69,875

49)9"

66,236

66,236 15,716

16,325

T H E 2,06,339 25,50,693 705

23,44,354

25,49)9"8 5,48,229

6,45,242

6,44,658

584

19,05,330

97)013

S. R. SIRCAR,

R. C COOPER,

•M. R. VENKATARAM.W, Chief Accountant.

C. BALAKRISHNAM, Secretary.

RAG3UNATH RAI, Vice-President.

President.

P. R. MEHRA, Chartered

G A Z E T T E

Accountants

iuditors.

NEW DELHI ;

Dated: lyk'JSep., 1964.

O F

I

N D

I

A

E X T R A O R D

I

N A R Y

1 0 3

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, NEW DELHI.

r c > 4

Armexure to Balance Sheet.

SCHEDULE ' D'

Schedule of Investments as on 31.K March, 1964.

SI.

Cost

Face Value

Market Value

Total (Cols. 3 & 6)

Interest accrued Particulars

No.

1

²

6

7

4

5

3

T H E

Central Council

G A 1

50^,000

1,639 4% T en Y e ar T r e a s u ry S a v i n gs D e p o s it C e r t i f i c a t es . . . ..

51,639 1,00^000 2 E T T E

O F

I

I,OOSOOO 50,000 1^0,000 50^00 1^)0,000 50,000 ipo^xx)

N D

I

156

A 9 10

50^100

I^O^OOO

58

11

158

12

E X T R A O R D

I

J if -/

N A R Y

19 20

1 00 1 00 3 02

21 22 [

P A J I

T

I I I -

.tap 4] THE GAZETTE OF WftlA "EKTR4QR*>WARV

I 05

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF JNDIA, NEW DELHI.

Annexure to Balance Sheet.

SCHEDULE £' E"

Sch&dule of Research Fund Investments as on 31st March, 1964.

Face Value

C0Bt

T U EI I Particulars

Market Valise

Interest accrued

Serial No.

Re.

Rs.

Rs.

Rs.

CCols. 3 & 6) Rs.

2

1

6

4

3

5

7

1,96,823

1

98,900 2j85)2OO

7 00

99,380 2,47,260 7 01

2,38,142 694

1,483 3 37 5

1,00,863 2,47,587 706 3 % Funding Loan, 1966-68 2-3/4% Loan, 1976 4% Loan, 1972 . 3-1/2% N.P. Bonds (3rd Ser-

2 3 4

2 92

ies) 1967

4O)Ooo 35,000

66J

39,38l ', I,36,on

39,^5° 34,545

39>°89 35=945

5 4-1/4% Maharashtra State Development Loan, 1969

4-1/4% West Bengal Loan,

1,23,437

1,25,000

1,27,538

1,28,673 1 9 70 . . ..

I-I35

T O T AL . . ..

5,84,800

3,308 5,53,221

5,49,9! 3

5,33,3d

C. BALAKRISHNAN RAOHUNATH RAL R.C. COOPER,

S.R. SIRCAR,

''ice-President.

Secretary.

President.

Chief Accountant.

P. R. MfcHRA, M.R. VENRATARAMAN, Chartered Accountants

Auditors. ,

Nw> Delhi, 13th September, 1964

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, NEW DELHI.

Annexure to Balance Sheet.

SCHEDULE " F"

Schedule of Medals and prizes Fund Investments as on 31st March, 1964.

Cost

Particulars

Names of the Funds

Face Value

Serial No.

Market Value

Interest accrued

Rs.

Rs.

Total (Cols. 4 & 7) Rs.

Rs.

Rs.

1

2

6

8

3

7

4 5

1

20,000 20,000 16,700

20,023

23

2-3/4% Loan

1976

G.P. Kapadia (ist Presi- dent) Medal Fund.

2

5,004 5,000

Miss. R. Sivabhogam

9 5,013

4,935

Locket Fund.

15,700

20

Sir Shapoorji Billimoria

9,891

10,024

10,044 3

Prize Fund.

4-1/4% Ma- harashtra State. Dcv. Loan 1959 3% Conver- sion Loan 1946-86.

TOTAL

40,700 31,526

35;°28

35>oRo

52

S. R. SlRCVR,

RAGHUNATH RAT.. R. C COOPER;

C. BALAKRISHNAN,

P. R. MlHKA,

Secretary.

Chief Accountant.

President.

Vice-President.

M.R. VENKATARAMAN, Chartered Accountants,

Auditors.

New Delhi, 13th September, 1964.

I o

g THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, NEW DELHI.

AHNBXOBE TO BALANCB SHEET

Income and Expenditure Account for the year asied 31st March, 1964.

INCOME

1962-63

1962-63

EXPENDITURE 1963-64

1963-64

Rs. Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

Rs.

T H E

By Fees from Members :

To General Establishment :

99,848 By (a) Associates : •

1,58=553 7,050

To (a) Salaries and Allowances 2,01,236 (6) Contribution to ProTi- 7,744

1,54,795 (f>) Follows :

1,09,704 1,68,656

dent Fund

G A Z E T T E

2,78,360

2,54,643

(c) Medical Aid to Staff . 4,621 (d) Travel concession to 2^19

4,762 376

O F

2,15,820

Staff

27,155 Less :

I 1,70,741

Allocated towards . Subscrip-

N D

2,27,488 tion for Journal

29=750

I

A

2*48,610

43>2O8

Certificate of Practice Fee :

To Printing & Stationery

63>469

32,680 To Postage and Telegrams . 50,200

55,i88(a) Associates 62,160 49,112 (i) Fellows 53,396

i,i5=556

1,04,300

361264

54,356

To Telephones and Trunk Galls 4,156

3,584

E X T R A O R D

I

601 Restoration fees & Arrears .

To Travelling Expenses

i>O53

3,32,389

3,65,219

30,636 By Regional Council Fees

36,912

N A R Y 29>4i7 2,330

(a) Council Members . 47,212 © S t a ff . . . 4,637 5i,849

3L747

To General Charges

18,874

Less : Transferred to Bran-

23,809

ches of Regional Councils (Note 2)

1 30=638

To Building and other ex-

NiL

2,222

34,690

[ penses

By Registration Fee :

(a) Electricity, Rates & 18,428

49,97O

P A R T 14,339

44,010 (a) Articled Clerks 5,96o (6) Audit Clerks

Taxes

H

49>5co 8,760 J8,26o

I

—

23,827

(6) Repair and Maintenance .

21,561

By IncomefromExtmtinations

7.232

42,255

S K C

.

r

4

] To Regional Councils Building: Maintenance and other Expenses

(a) Preliminary  .                  4=995
(6)  Intermediate                 1,13,048
 (c)  Final                       2,03,621
(i)  Miscellaneons                    1,360

3,321

1,03,324

1,70=239

1,330

3,23,024

2,78,214

7=852

4,190

(a) Western India (6) Southern India

T H E (Including Rs. 4^00/-

By Post Graduate Course Examination Fee (including Fees for Practical Training)

700

12430

I,IOO

135

2,866

being taxes for previous pe- riod), (c) Eastern India

21,019

4)399

10,853

G A Z E T T E

2,328

To Audit Fee To Legal Charges

3,500

952

5,000 i>444

O F

I To Disciplinary cases Expenses.

] Income from In-Country Budgetary Control Team and 1st Resd. Course on Management Accountancy By Taxes, Electricity Depre- dation and Common Char- ges allocated to Coaching Board

6,500

N D

I

6,500

A 20,905 6,726

20,574

15,095

By Coaching Board's Contri-

bution on Account 0/ De-

centralisation Scheme

2,845

(a) Establishment (6) Travelling Expenses (c) Travelling Expenses

By Income from Regional

1,056

4,782

1,678

6,511

Councils Buildings

Witnesses . (i) Counsels Fees (e) Disc. Cases Book :

9,756

5>56i

9^17

302

E X T R A O R D Code of Conduct etc, •

108

I

CO General Charges (g) Section 24 cases Expen-

52=5OO

(a) Western India (b) Southern India, including Rs. 10,500/- being rent for the previous period (Note 3)

N A R Y ses

35.337

54.632

i=O55

1*760

12,690

(c) Eastern India

58,061

2,934

By Other Income

(a) Profit on Sale of Publi-

3485

cations

4=454

(6) Interest from Invest-

31,041

ments

(e) Miscellaneous

4=558

39=084

3i,372 4=147 39,973

By Excess of Expenditure over

Income transfemd to

General Reserve Account .

24>48i

I

O

7

2

Q

8

INCOME 1963 EXPEKDITURE

Rs. Rs. 1962-63 Rs. Rs.

Rs.

1963-64 1962-63 Rs. Rs.

Rs.

2,565

To Ad-hoc Cernmttee (for

enquiring into complaints

of Unjustifiable removal

of Auditors Expenses :

To Examination Expenses

(Note 1)

40,990 6,963

(a) Establishment . 41,683 {b) Printing & Stationery 13,080 (c) Printing 01 Question

T H E G A Z E T T E 3>457 11,260 1,191

O F

I

N D papers . . . 3,739 (a) Travelling expenses . 13,414 00 T.A. to Prize Winners . 7S8 (J) Remuneration to Exami- ners. Supdt., Invigilators etc. ' . .. 83,955

I

A (g) Arrangement for Exam. 19,691 (k) Publicity . 1,393 CO Freight and Misc. Ex- 22,390

S7-.951 12,473 2,018 14,946

2,00,133

p ' ses

To Expenditure on Post

E X T R A O R D 5"7io

I

7,159 3>&t3

N A R Y GmdutKe Course in Manage- ment Accounting {inclu- ding Examination) To Election Expenses To Preiirmrzary Expenses of the Publication of 50 years History of Accountancy Profession

15,157

33JO65

541 6,549 21,011

27,863

[ To Deficit on Revision Course . To Deficit on Journal expenses Per Statement No. II Annexed To Deficit on Research Ex- penses : . ..

11,368

To Per Statement No. I ll

Annexed

P A R T

6,000

H

I - To Grants to the Branches of Regional Councils {No. 2)

Sfioo

To Grants to Students Asso-

800

ciations

601

To Seminar Symposium and

4>344

Study Circle Expenses

3,n i

To Expenses towards Asian

and Pacific Accountants Conference . . . _.

2,012

To Expenditure on 4th All

India Chartered Accoun-

tants (Madras) Conference .

2,500

770

To Contribution towards All

India {Madras) Students

Conference \

a 2S6

1,000 4i

To Loss on Assets condemned .

To Publicity for attracting

better talents to the Profes-

sion . . . ..

18,429

o To Remuneration for Re-Codi- fkation of Regulations and other vxrrk done on Publi- cations

59,14°

8,300 71/524 1,296

o To Depreciation To Provision for doubtful debts To Provision for Publication

50,000

Account

30,000

To Provision for Regional

Councils Libraries Account

To S. Vaidyanath Aiyar

718

Memorial Lectures Expenses

To Excess of Income over ex-

8,59°

penditure transferred to Ge-

neral Fund

TOTAL

9,16,481 7,50,185

7,50,185

TOTAL 9ji6*f8i

1 !

Notes 1. 1 He iispenaiture cnarged unaer toe Head -.Examination lixpenses " ctoes not mcltme any cnarge in respect of the substantial amount of time which the Institute's staff devotes to examinHrion work or in respect of the use of the Institute's premises,

2. No account has beentakenin these Accounts of the amounts spent (and of any balance ]ving unspent) by the six branches of the Regional CoarLcfls, from out of these remittances.

3. This is the estimated amount, subject to fixation with the tenant.

S. R. SIRCAR C. BALAKRISHNAN RAGHUNATH KM R, C COPPER P. R. MEHRA, M. R, VENKATAHAMAN Chief Accountant Secretary Vice President. Preside) Chartered Accountants.

Auditors.

NEW imi-Hi : Doted: 13th September, 1964.

THE INSTITUTE OP CHARTERED ACCOUNTANTS OF INDIA, NEW DELHI.

H O

•

(CoAaaiNG BOARD)

Aimexme to Balance Sheet Income and Expendtatrefortheyear ended 3litMaTch,i964.

STATEMENT NO . I

Incxime

Expenditure

1902-63 Rs.

Rs.

Rs.

1963-64 Rs.

1963-64 Rs.

1962-63 Rs,

Rs.

9,030

7,265 By Registration Fee . „ Tuition Fee

3,72,404

T H E

„ Less : Amount written off as

2,99,659

To General Establishment : „ Salaries & Allowances . „ Contribution to P. Fund „ Medical Aid to Saff „ Travel Con. to Staff

1,05,353 3,33O 1,946 487

88,305

83,697 2,963 1,616 29

1,11,116

irrecoverable

6,652 3,65,752

12,133

9,848

36,128

„ Printing & Stationery . „ Duplicating & Stenciling „ of Instructional Materials

G A Z E T T E

„ Revision Course Fee „ SperialRevisionCouiseFee

49,142

2,925 7,900

2,697

1,155 1,542

39,294

O F

I 44,756 787

45,543

60,386

„ Postage & Telegrams. „ Telephones & Trunk Calls

IJ4O2

60,050 336

„ Tuntkm Fee forfeited

4,95O .

N D

I

A

3,283 7,280 1,43,288 18,226

, 2i,8&9 7,025 5,530 1,02,145 6,500

„ Travelling Expenses . „ General Charges „ Remuneration to Part-time Tutors „ Taxes, Electricity, Depreciations &

Common Charges

6,500

2,491

„ Remuneration to Experts for pre-

„ Other Income „ Intereston Investments Miscellaneous Receipts . . . .. Profit on Sale of Suggested

1,652 939

1,900

Answers

IJ55O

24,969

589

4*564

E X T R A O R D paring Revision Papers, „ Depreciation on Assets „ Cost of Printed Materials & Copy-

I

21,427

25,991

3,526 18,343

21,869

rights written off.

N A R Y

2,845

„ ExpenditureonDecentralisationof some of the Functions of Coach-

ing Board.

16,438

„ Preliminary Expenses Written off

4^469

3>43,5i6

5 T O T AL .

4,15^50 TOTAL

4=15.850 3>43=5K

•

[

P. R. MEHRA,

V. B. HABIBHAKTI,

S. R. SUtCAR, Chief Accountant.

P A R T

M. R. VENKATARAMAN, B. R. MALHOTRA, Director of Studies.

Chairman.

Chartered Accountants,

Auditors.

m

- NEW DELHI DatedT. 13th Sept. 1964

THE IMSTrTUTE OF CHARTERED ACCOUNTANTS OF INDIA, NEW DELHI.

S E C

.

4

Annexure to Balance Sheet,

]

STATEMENT N O. IT.

"Jjurncd"—Income & Expenditure Account for the year ended 3iif March, 1964

T H E 1962-63

Expenditure

I n c o me

1963-64

1963-64 1962-63

Rs.

Rs.

Rs.

Rs.

G A Z E T T E

To Establishment

By Allocation fiom M e m b e r s h ip F e es t o w a r ds S u b s-

16,222

I333i3

27)155

c r i p t i on for J o u r n al

O F

10,096

I

29,750 10,873 8,763

„ Subscription for J o u r n al . . . .. „ A d v e r t i s e m e nt in J o u r n al . . . .. , Excess of E x p e n d i t u re over i n c o me transferred to

N D

I

I n s t i t u t e 's I n c o me a nd E x p e n d i t u re A c c o o nt .

3M63 24,0.41 5>°97 3,876

A 23=923 20,235 4,500 3,041 692

„ Paper j, Printing & Binding . „ Peking & Forwarding „ Postage „ General Charges (including Stationery)

21,011

32,065

749

65,704

TOTAL

T O T AL .

65,704

. 81,448

81,448

E X T R A O R S.R. SIRCAR,

I

P. R. MEHKA, C BALAKR1SHNAN, RAGHUNATH RAJ,

R. C COOPER,

Chief Accountant.

Secretary.

Vice-President,

President.

M. R. VENKATARAMAN, Chartered Accountants.

Auditors.

^ N A R Y

NEW DELHI; Dated : 13th September, 1964.

I I I

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, NEW DELHI.

1 1 2

Ann?xitre to Balance Sheet.

STATEMENT N O. III.

"Research?'—Income Sf Expenditure Account for tkeyear ended 31K March, 1964.

Expenditure

1963-64

Income

1962-63

1962-63

1963-64

T H E

Rs.

R3.

Rs.

Rs.

G A Z E

t f

1

19,038

15,104

By Interest from Research from Fund Investments

19,038 To Establishment „ Cost of Shield and Plaques for the best presented

21,485 925

t i t

accounts

. . . ..

*

427 50

l t i

„ Proft on Sale of Research Publications „ Miscellaneous Receipts „ Deficit Transferred to Income and Expenditure

2,952 5° 27)863

b

t „ Travelling Expenses . . . .. „ Printing & Stationery . . .. „ Postage, Telegrams & Telephones

Account

1,150 4,140 198 704

2,557 994 2,817

11,368

A

„ General Charges (Including Exp. on Advertise-

ment)

. . . ..

1,387

1,125

„ Counsels Fee for opinion on Sections of Companies

f e * ^

Act

3,200

M

} k „ Provision for Research on Price Fixation „ Contribution for carrying on Research jointly with

20,000

Association of Indian Trade& Industry.

f l I

5,000

*

I

A

"

[ T O T AL

TOTAL .

30,883

30,883 49)9O3

4 9 J S "3

V

R. C. COOPER,

RAGHUNATH RAJ,

P. R. MEHRA, C. BALAQOSHNAN,

S. R. SlRCAR,

| j f e

M. R. VENKATASAMAN,

j

*

President.

Vice-President.

Secretary.

Chartered Accountant

Chief Accountant.

Auditors.

f i

x

- NEW DELHI, Dated v$th Sept. 1964.

S E C 4

] PRINTED IS DTDIA BT THE GENERAL MANAGER, GOVERNMENT OF INDIA PRESS, NEW DELHI ANB PUBLISHED BT TBS MANAGER 07 PUBLICATIONS; pEtHI, 1964..