Press Release, dated 26-10-2012

Final Report of the Committee constituted for formulating Accounting Standards for the purposes of notification under section 145(2) of the Income-tax Act, 1961

What this is

Press Release, dated 26-10-2012 was issued by the Central Board of Direct Taxes on 26 October 2012. Its subject is Final Report of the Committee constituted for formulating Accounting Standards for the purposes of notification under section 145(2) of the Income-tax Act, 1961.

What it does

Announces the Final Report, submitted in August 2012, of the committee the Board constituted in December 2010 to suggest Accounting Standards for notification under section 145(2). The committee recommended that standards notified under the Act apply only to the computation of taxable income, so a taxpayer would not have to keep books on their basis. It examined all 31 standards issued by the Institute of Chartered Accountants of India, recommended notification on 14 issues, drafted standards on those issues, and called them Tax Accounting Standards to distinguish them from the accounting standards issued by the Institute or notified under the Companies Act, 1956. The report with the 14 drafts was put on the Finance Ministry and Income-tax Department websites, with comments invited by 26 November 2012.

Why it was issued

Section 145(2) allows the Central Government to notify accounting standards for a class of assessees or class of income, and the Board had set up the committee to recommend them; this release put the final report in the public domain for comment.

Who it reaches

Assessees computing business income or income from other sources under section 145
Professional bodies and stakeholders invited to comment
Draftsmen preparing the notification under section 145(2)

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.145	s.276

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

Final Report of the Committee constituted for formulating Accounting Standards for the purposes of notification under section 145(2) of the Income-tax Act, 1961
PRESS RELEASE, dated 26-10-2012
Section 145(1) of the Income-tax Act, 1961 ('the Act') provides that the income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" shall [subject to the provisions of sub-section (2)] be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. Section 145 (2) provides that the Central Government may notify Accounting Standards ('AS') for any class of assessees or for any class of income.
2. The Central Board of Direct Taxes ('CBDT') constituted a Committee comprising of departmental officers and professionals in December, 2010 to inter alia suggest AS for the purposes of notification under section 145(2)of the Act.
3. The Committee submitted its first Interim Report in August 2011. A discussion paper containing the main recommendations of the Committee was issued in October, 2011 for inviting comments/suggestions from all stakeholders.
4. The Committee has submitted its Final Report in August, 2012. The Committee recommended that the AS notified under the Act should be made applicable only to the computation of taxable income and a taxpayer would not be required to maintain books of account on the basis of AS notified under the Act. The Committee examined all the 31 AS issued by the ICAI and recommended notification of AS on 14 issues under the Act and formulated drafts of AS on these issues. The Committee has termed them as "Tax Accounting Standards" (TAS) to distinguish from the AS issued by the ICAI/notified under the Companies Act, 1956.
5. The Final Report of the Committee (including drafts of the 14 TAS submitted by the Committee) is uploaded on the Finance Ministry website (www.finmin.nic.in) and Income-tax Department website (www.incometaxindia.gov.in) for comments from stakeholders and general public.
6. The comments and suggestions on the final report may be submitted by 26th November, 2012 at the email addresses (dirtpl3@nic.in or rkbhoot@gmail.com) or by post at the following address with "comments on Final Report of Accounting Standards Committee" written on the envelope:
Director (Tax Policy & Legislation)-III
Central Board of Direct Taxes,
Room No.147-G,
North Block,
New Delhi-110001
■■

What to watch

This is a press release inviting comments on a committee report, not a circular of the Board, and it notifies nothing.
At this stage the 14 drafts have no statutory force; they take effect only if and when notified under section 145(2).
The comment deadline of 26 November 2012 has passed.
The committee's own recommendation is that the standards touch computation only, not the books of account.

Where you meet it

You meet it as background when tracing how the standards notified under section 145(2) came to be, and in reading the committee's drafts against what was finally notified.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 86/2016 [F.No.142/13/2015-TPL] / SO 3075(E) — [To BE Published in the Gazette of INDIA, Extraordinary, Part-ii, section 3, Sub-section (ii)] 29 September 2016
Notification No. 9949 [F.No. 132/7/95-TPL] / SO 69(E) — Section 145 of the Income-tax Act, 1961 - Method of Accounting - Accounting Standard I Relating to Disclosure of Account 25 January 1996
Circular No. 288 — 1058. Whether payer would be liable to deduct tax at source from interest in a case where he follows mercantile system o 22 December 1980

← Press Release, dated 29-10-2012 · Press Release [F.No.500/96/97-FTD-II(PT. II)], dated 25-10-2012 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.