PART II — Requirements as to Profit & Loss ACCOUNT
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The provisions of this part shall apply to the income & expenditure account referred to in sub-section (2) of section 210 of the Act, in like manner as they apply to a profit and loss account, but subject to the modification of references as specified in that sub–section.
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The P & L A/c-
(a) Shall be so made out clearly to disclose the result of the working of the company during the period covered by the account and
(b) Shall disclose every material feature, including credits or receipts and debits or expenses in respect of non-recurring or exceptional transactions or transaction of exceptional nature.
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The P & L A/C shall set out the various items relating to of I & E of the Co. arranged under the most convenient heads and in particular, shall disclose the following information in respect of the period covered by the account:
(i) (a) Turnover: Aggregate amount of sales, showing amount and quantity of sales of each class of goods separately.
(b) Commission paid to sole selling agent within the meaning of section 294 of the Act
(c) Commission paid to other selling agents.
(d) Brokerage and Discount on sales (other than usual trade discount).
(ii) (a) In the case of manufacturing Companies, —
1. Item wise breakup of value and quantity of all-important basic raw materials consumed. (Items valuing 10% or more of the total value of the raw materials consumed shall be shown as a separate item). The intermediates or components procured from other manufacturers may be included in the breakup; (if their list is too large than it should be grouped under suitable heading without mentioning the quantities.
2. Value and quantity of opening and closing stocks of each class of goods produced.
(b) In case of trading companies:
Value and quantity of purchases, opening and closing stocks of each class of goods should be indicated.
(c) In case of service companies gross income derived from services rendered or supplied.
(d) In case of Company, which falls under more than one of the categories mentioned in a., b., & c. above, it shall be sufficient that the total amounts are shown in respect of opening and closing stocks, purchases, sales and consumption of raw materials with the value and quantitative break-up and the gross income form the services rendered is shown.
(e) In case of other companies, the gross income derived under different heads.
(iii) Works–in–progress at the commencement and at the end of the accounting period.
(iv) The amount provided for depreciation, renewals or diminution in value of fixed assets. Method adopted for making such provision should be given in case if provision is not made as per depreciation charge.
Depreciation, renewals or diminution in value of fixed assets. (If no provision is made, fact and quantum of arrears of depreciation u/s. 205(2) to be disclosed).
(v) The amount of interest on company’s debentures and other loans for fixed periods, stating separately the amount of interest, if any paid or payable to the managing director, managing agents, secretaries, treasures and the manager, if any.
(vi) The amount of charge for income tax and other Indian taxation on profits imposed elsewhere to the extent of the relief, if any, from Indian income tax and distinguishing, where practicable, between income tax and other taxation.
(vii) Amounts reserved for repayment of share capital/loans.
(viii) (a) The aggregate, if material, of any amounts set aside or proposed to set aside, to reserves, but not including provisions made to meet any specific liability, contingency or commitment known to exist at which the balance sheet is made up.
(b) The aggregate, if material, of any amounts withdrawn from such reserves.
(ix) (a) The aggregate, if material, of any amounts set aside to provisions made for meeting specific liabilities, contingencies or commitment
(b) The aggregate, if material, of any amounts withdrawn from such provisions, as no longer required.
(x) Expenditure incurred on each of the following items, separately for each item:—
(a) Consumption of stores and spare parts
(b) Power and fuel
(c) Rent
(d) Repairs to building
(e) Repairs to machinery
(f) (1) Salaries, wages and bonus
(2) Contribution to other funds
(3) Workmen and staff welfare expenses (to the extent not adjusted from any of previous provision or reserves.)
Note 1: information in respect of this item should also be given in the balance sheet under the relevant provision or reserve account.
(g) Insurance
(h) Rates and taxes, excluding taxes on income
(i) Miscellaneous expenses. (Exp. totalling 1% of total revenue of the Company or Rs. 5,000 whichever is higher shall be shown as a separate item.)
(xi) (a) The amount of income from investment, distinguishing between trade investments and other investments.
(b) Other income by way of interest, specifying the nature of the income.
(c) The amount of income tax deducted if the gross income is stated under sub-paragraphs a & b above.
(xii) (a) Profit or losses on investments (extent of profit or loss on account of membership of a partnership firm) (to the extent not adjusted from any previous provision or reserve.
(b) Profit or losses in respect of transactions of a kind, not usually undertaken by the company or undertaken in circumstances of an exceptional or non-recurring nature, if material in amount.
(c) Miscellaneous income
(xiii) (a) Dividend from subsidiary companies.
(b) Provisions for losses of subsidiary companies.
(xiv) The aggregate amount of the dividends paid, and proposed and stating whether such amounts are subject to deduction of income tax or not.
(xv) Amount, if material by which any items shown in the profit & loss account are affected by any change in the basis of accounting.
4. Payment to Directors including Managing Directors, managing agents, secretaries, treasurers & Manager, if any by the Company, subsidiary of the Company and any other person for following:
Managerial remuneration u/s. 198 of the Act paid or payable during the financial year to the directors (including managing director).
(a) Expenses reimbursed to the managing agent under section 354.
(b) Commission or other remuneration payable separately to managing agent or his associate under sections 356, 357 and 358.
(c) Commission received of receivable under section 359 of the Act by the managing agent or his associate as selling or buying agent of the other concerns in respect of contract entered into such concerns with the company
(d) The money value of the contracts for the sale or purchase of goods and materials or supply of services, entered into by the company with the managing agent or his associate under section 360 during the financial year.
(e) Other allowance and commission including guarantee commission (details to be given).
(f) Any other perquisite or benefits in cash or in kind. (Stating approximate money value where practicable)
(g) Pension, gratuities, payments from provident funds, in excess of own subscripttion and interest thereon, compensation for loss of office, retirement consideration, etc.
4A. Computation of net profit u/s. 349 with details of the commission payable as percentage of profits to the directors including Managing Directors/Manager (if any) should be stated by way of note.
4B. Payments to the Auditors (Whether as fees, expenses or otherwise for services rendered)
(a) As auditor;
(b) As adviser, or in any other capacity, in respect of
(i) Taxation matters;
(ii) Company law matter
(iii) Management services; and
(c) In any other manner.
4C. In case of manufacturing companies in respect of each class of goods manufactured, detailed quantitative information in regard to:
(a) The licensed capacity (where licence is in force)
(b) the installed capacity; and
(c) the actual production.
4D. Following information to be included by way of note;
(a) Value of imports on CIF basis in respect of
1. raw materials;
2. components and spare parts;
3. capital goods
(b) Expenditure in foreign currency for royalty, know-how, professional and consultation fees, interest and other matters.
(c) value of imported raw materials, spare parts and components consumed; value of indigenous raw materials, spare parts and components consumed; and percentage of each to total consumption.
(d) dividends remitted in foreign currencies; number of non-resident shareholders; number of shares held by them on which dividends are due and the year to which dividends relate.
(e) Earnings in foreign exchange, namely
Exports (F.O.B. basis)
Royalty, know-how, professional and consultation fees;
Interest and dividend
Other income, indicating the nature thereof.
5. (a) Except in the case of the first Profit & Loss A/c, the corresponding amounts for the immediately preceding financial year for all items shall also be shown.
(b) The requirements in sub–clause (1) shall, in the case of companies preparing quarterly or half yearly accounts, relate to the profit and loss account for the period which entered on the corresponding date of the previous year.
PART III — INTERPRETATION
6. (a) For the purposes of Parts I and II of this Schedule, unless the context otherwise requires:
(i) the expression "provision" shall, subject to sub-clause (b) of this clause, mean any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy;
(ii) the expression "reserve" shall not, subject as aforesaid, include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability;
(iii) the expression "capital reserve" shall not include any amount regarded as free for distribution through the profit and loss account; and the expression "revenue reserve" shall mean any reserve other than a capital reserve; and in this sub-clause the expression "liability" shall include all liabilities in respect of expenditure contracted for and all disputed or contingent liabilities.
(b) Where
(i) any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, not being an amount written off in relation to fixed assets before the commencement of this Act; or
(ii) any amount retained by way of providing for any known liability is in excess of the amount which in the opinion of the directors is reasonably necessary for the purpose, the excess shall be treated for the purposes of this Schedule as a reserve and not as a provision.
7. For the purposes aforesaid, the expression "quoted investment" means an investment in respect of which there has been granted a quotation or permission to deal on a recognized stock exchange, and the expression "unquoted investment" shall be construed accordingly.
8. The Central Government may direct that a company shall not be obliged to show the amount set aside to provisions other than those relating to depreciation, renewal or diminution in value of assets, If the Central Government is satisfied that the information should be disclosed in the public interest & would prejudice the company, but subject to the condition that in any heading stating an amount arrived at after taking into account the amount set aside as such, the provision shall not be so framed or marked as to indicate that fact.
PART IV — BALANCE SHEET ABSTRACT AND CO.’S GENERAL BUSINESS PROFILE The format as given in the part IV of the schedule VI, in which Balance Sheet abstract and company’s general business profile is to be given. The above Information is to be submitted as a part of the annual accounts.
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