Dear Patrons,
With the coming into force of Companies Act, 2013 ('the Act') in April, 2014, Schedule II to the Act too was enforced which speaks about computation of depreciation. Facing a lot of difficulty in calculating depreciation and for the purpose of audit, it is of grave importance that Schedule II be understood in its spirit.
In this article, Niketa Agarawal (Chartered Accountant) explains in depth the provisions of Schedule II to the Act, referring to Accounting Standard – 6 (AS 6). Answering the question that whether providing depreciation as per Schedule II would result in change in method of depreciation, the author states, "what has been proposed under the new Act is only a revision of estimated useful lives of assets, there is no change in method proposed." In the situation when a company intends to change the method of depreciation, she states that change in the method of depreciation is not permitted frequently, and, generally the method of depreciation is to be applied consistently from period to period as per AS – 6. The author points out that, "Schedule II doesn't provide any guidance for cases in which there is a change in the method of depreciation. Thus, one has to refer the Accounting Standard for guidance in a situation where there is a change in accounting policy/method."
Click here to read the illustrative article on "Solving Depreciation Complexities under Schedule II"
Best Regards,
LSI Team
Settles succession law; Legal heir, not 'nominee' entitled to deceased person's shares |
Bombay HC interprets Section 109A of Companies Act, 1956 (that empowers shareholder to nominate a person to whom all his shares shall vest on event of his death), holds that it is legal heir and not nominee who shall be ultimately vested with shares of deceased shareholder, distinguishing co-ordinate bench ruling in Harsha Nitin Kokate v. Saraswat Bank; Going through the objective of Sec 109A, holds that, "The fundamental focus of Section 109A.. is not the law of succession.. The sole intention is..to afford the company or depository..a legally valid quittance so that it does not remain forever answerable to a raft of succession litigations.. but the nominee continues to hold in a fiduciary capacity and is answerable to all claimants under succession law"; Rejects contention that since Sec 109A starts with a non-obstante clause, it over-rides every other statutory provision, including the Succession Act, and confers a 'statutory testament'; Distinguishes nomination from ordinary law of succession, and observes that if nomination is considered as statutory testament, then, "The so-called 'statutory' testament would oust this personal law entirely, even though there is nothing in either of the corporate statutes to indicate that this was ever the legislative intent..", terms it as 'unnatural'; Recognises the rights of legal heirs and holds that, "nominations under Sections 109A and 109B of the Companies Act and Bye-Law 9.11 of the Depositories Act, 1996 cannot and do not displace the law of succession, nor do they open a third line of succession"; Relies on SC rulings in Sarbati Devi v Usha Devi, Shri Vishin N. Khanchandani & Anr. v Vidya Lachmandas Khanchandani & Anr, Shipra Sengupta v Mridul Sengupta & Ors, and holds co-ordinate bench ruling in Harsha Nitin Koakte as 'per incuriam':Bombay HC |
The ruling was delivered by Justice G.S. Patel. Advocate Snehal Shah argued on behalf of the plaintiff, while Advocates P. G. Karande, Rajendra V. Pai, A. R. Pai, A. A. Dandekar, N. Thakkar, Prashant Karande and Vikas Warerka argued on behalf of the defendants. |
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