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TMI BlogICDS IV : Revenue RecognitionX X X X Extracts X X X X X X X X Extracts X X X X ..... such cases and situations where other ICDS apply. 2. Revenue:- Revenue is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities of a person from the sale of goods, from the rendering of services, or from the use by others of the person s resources yielding interest, royalties or dividends. In an agency relationship, the revenue is the amount of commission and not the gross inflow of cash, receivables or other consideration. 3. Sale of goods:- There are two cumulative criteria for recognising revenue from sale of goods: The seller has transferred the property in the goods to the buyer for a price or significant risks and rewards associated with the ownership of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here may be cases where one may have to consider whether the transaction is a service transaction. This will depend upon the facts and circumstances of the transaction. Often a transaction involves both, sale of goods and provision of service. In such a case, one will have to examine what is the predominant aspect of the transaction, whether consideration to be received for the transaction can be split into that for sale of goods and for provision of service, etc. Merely, because a transaction is liable to service tax it will not ipso facto mean that it is a service transaction as contemplated under this ICDS. For example, a real estate developer developing a property on his own account and not as a contractor will not be covered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis shall be adopted for recognising the royalties. Note: Where royalty is taxed under the provisions of any DTA, provisions of such DTA will prevail over the provisions of the Act and consequently, provisions of the ICDS will not apply. Dividends:- Dividends are recognised in accordance with the provisions of the Act . It has been defined inclusively by section 2(22) of the Act . It includes certain distributions and payments. Although, dividends in respect of which dividend distribution tax is paid under section 115-O of the Act are exempt under section 10(34) of the Act, dividends received from a foreign company are chargeable to tax. Similarly, the amount deemed to be dividend under section 2(22) (e) of the Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears. 7. Disclosure:- Following disclosures shall be made in respect of revenue recognition, namely:- in a transaction involving sale of good, total amount not recognised as revenue during the previous year due to lack of reasonably certainty of its ultimate collection along with nature of uncertainty the amount of revenue from service transactions recognised as revenue during the previous year for service transactions in progress at the end of previous year amount of costs incurred and recognised profits (less recognised losses) upto end of previous year the amount of advances received; and the amount of retentions. - Manuals - Ready reckoner - Law and practice - Reference Guide - Quick Commentary Tax Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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