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6.

15

PROFIT / LOSSES ON UNUSUAL TRANSACTIONS

Material profits or losses in respect of transactions of unusual nature or those


undertaken in circumstances of an exceptional or non-recurring nature should be
shown separately . Such a disclosure is necessary to enable a reader of the
financial statement to judge the effect of such transaction on the normal profit or
loss of the company.

6.16

EFFECT OF CHANGE IN BASIS OF ACCOUNTING

Amounts, if material, by which any item shown in the profit and loss account is
affected by any change in the basis of accounting, should be separately
disclosed . Though Schedule VI does not require a disclosure of all accounting
policies, such a disclosure is a must for understanding the true nature of
companys profit or loss and is also essential for meaningful inter-firm
comparisons.

6.17

INCOME TAX

The amount of the charge for Indian income tax and other Indian taxation on
profit should be disclosed. (Where practicable, any foreign tax to the extent
eligible for relief in Indian income tax, should also be stated). Similarly,
distinction may be made, as far as possible, between income tax and other
taxation (e.g. wealth tax on closely held companies or corporate dividend tax).

6.18

PAYMENT TO DIRECTORS / MANAGERS

The following payments made ( or provided for ) during a financial year to the
directors (including managing directors) or manager, by the company , its
subsidiaries, or any other person are to be shown separately, in the profit and
loss account, or in a note thereof.
( 1) Managerial remuneration under section 198 of the Act paid or payable during
the financial year to the directors (including managing directors) or managers if
any.
(2) Other allowances and commission including guarantee commission. Details of
such payments are to be shown.
(3) Any other perquisites or benefits in cash or in kind stating the approximate
money value where practicable.
(4) Pensions.
(5) Gratuities.

(6) Payments from provident fund, in excess of own subscription and interest
thereon.
(7) Compensation for loss of office.
(8) consideration in connection with retirement from office.
In addition, the profit and loss account has to contain, or give by way of a note, a
statement showing the computation of net profit in accordance with section 349
of the Act. The details of the calculation of the commission by way of percentage
of such profits to the directors or managers are also shown in the statement.

6.19

PAYMENT TO AUDITORS

Detailed information regarding payments to the company, whether as fees,


expenses, or otherwise for services rendered, has to be disclosed in the Profit
and Loss Account. These payments should be classified as below :
( a) as auditor
(b) as advisor, or in any other capacity, in respect of
(1) taxation matter
(2) company law,
(3) management services, and
(c) in any other matter.

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