Clarification regarding sec 135 of company act 2013
RACHIT
(Querist) 27 March 2014
This query is : Resolved
Respected Sir,
I have a query regarding applicability of section 135(5) of company act 2013 which provide as under:
The Board of every company referred to in sub-section (1), shall ensure that the
company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy.
So my question is related to my company in which my internship is going on :
sec 135 is effective from 1st april 2014, where it is mentioned to contribute 2 % of the average net profits of the company made during the three immediately preceding financial years for social cause. Our Company has earned profits of more than 5 crore in preceding financial years i.e before 1st,april 2013. But in quarters of 2013-2014 it has incurred huge loss.
So is still company is requirred to contribute to fund or is the average net profit of preceding 3 financial year is taken into consideration from 1st april 2014 ????
OR
Is past profits i.e before 1st april 2014 is taken into consideration or only the profits from the date of implementation of sec 135 is consisdered ??
DR.VEDULA GOPINATH
(Expert) 27 March 2014
YES.
Your company is required to contribute for CSRl.
Turnover is your basis.
dr vedula gopinath
corproate lawyer
T. Kalaiselvan, Advocate
(Expert) 28 March 2014
For the purposes of this section “average net profit” shall be calculated
in accordance with the provisions of section 198; The provisions of section 198 are very exhaustive and elaborate, you may read it to know how your position relates to the provisions of law therein.
