Atul Ltd 2008-09

84 8.5 Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. 9 Provisions: A provision is recognised when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the Balance Sheet date and adjusted to reflect the current management estimates. 10 Research & Development expenditure: Research and Development expenditure is charged to revenue under the natural heads of account in the year in which it is incurred. However, R & D expenditure on fixed assets is treated in the same way as expenditure on other fixed assets. 11 Employee Benefits: 11.1 Defined contribution plan: Contribution paid by the Company | payable during the period to Provident Fund, EDLI, Officer Super Annuation Fund, ESIC and Labour Welfare Fund are recognised in the Profit & Loss Account. 11.2 Defined benefit plan: Provision for payments to the Employees Gratuity Fund after taking into account the funds available with the Trustees of the Gratuity Fund is based on actuarial valuation done at the close of each financial year. At the reporting date liabilities of the Company towards gratuity is determined by independent actuarial valuation using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up final obligation. Past services are recognised on a straight line basis over the average period until the amended benefits become vested. Company recognises the undiscounted amount of short term employee benefits during the accounting period based on service rendered by employees. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government Bonds where the currency and terms of the Government Bonds are consistent with the currency and estimated terms of the defined benefit obligation. 11.3 Other defined benefits: Provision for other defined benefits for long term leave encashment is made based on an independent actuarial valuation on projected unit credit method at the end of each financial year. Actuarial gain and losses are recognised immediately in the statement of Profit and Loss Account as income or expenses. Company recognises the undiscounted amount of short term employee benefits during the accounting period based on service rendered by employees. 11.4 Voluntary retirements: Compensation payable under the Voluntary Retirement Scheme is being charged to Profit and Loss Account. 12 Taxation : Income tax expense comprises current tax and deferred tax charge or credit. Provision for current tax is made on the assessable income at the tax rate applicable to the relevant assessment year. MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal Income tax within the specified period. Deferred tax asset and deferred tax liability are calculated by applying tax rate and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets on account of timing differences are recognised, only to the extent there is a reasonable certainty of its realisation. At each Balance Sheet date, the carrying amount of Deferred tax assets are reviewed to reassure realisation. The Provision for Fringe Benefit Tax has been made in respect of employee benefits and other specified expenses as determined under the Income Tax Act, 1961. 13 Government grants : 13.1 Government grants are recognised when there is reasonable assurance that the same will be received. 13.2 Revenue grants for expenses incurred are reduced from the respective expenses. 13.3 Capital grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets. 13.4 Capital grants for project capital subsidy are credited to capital reserve.