LAWS(SC)-2007-11-75

J K INDUSTRIES LTD Vs. UNION OF INDIA

Decided On November 19, 2007
J.K.INDUSTRIES LTD. Appellant
V/S
UNION OF INDIA Respondents

JUDGEMENT

(1.) A short question which arises for determination in this batch of civil appeals is :

(2.) M/s. J. K. Industries Ltd. is a public limited company. It was incorporated in 1951. It carries on the business of manufacture and sale of automotive tyres, tubes, sugar and agrigenetics. It has a registered office at Calcutta. It seeks to challenge AS 22 issued by Institute of Chartered Accountants of india (for short, "institute") which has been made mandatory for all companies listed in Stock Exchanges in India in preparation of their accounts for the financial year 2001-02 onwards.

(3.) TODAY the revised Accounting Standards seeks to arrive at true accounting income. In the age of globalization the attempt is to reconcile the accounts of Indian companies with their joint venture partners abroad. The aim is to harmonise Indian accounting Standards with International Accounting Standards. With the object of bridging gap between IAS and IFRS, the institute formulated new A. S. and introduced new concepts, e. g. , deferred Tax Accounting (AS 22 impugned herein), Segment reporting (AS 17) etc. . However, as a matter of prudence and necessary adjustment, to arrive at real income, Accounting standards require provision to be made for liabilities payable in future, provision to be made for contingencies, provision to be made for diminution, provision to reflect impairment and so on which have the effect of reducing incomes and were, therefore, not readily accepted by some enterprises and tax authorities.