annual report - Jindal Group of Companies

Deferred Tax:Deferred Tax is recognised, subject to the consideration of prudence, as the tax effect of timing difference between thetaxable income & accounting income computed for the current accounting year and reversal of earlier years' timing difference.Deferred Tax Assets are recognised and carried forward to the extent that there is a reasonable certainty, except arising fromunabsorbed depreciation and carry forward losses, which are recognised to the extent that there is virtual certainty, thatsufficient future taxable income will be available against which such deferred tax assets can be realised.Fringe Benefit Tax:Fringe Benefit tax has been withdrawn by the Government wef 1st April, 2009. Hence, effective from 1st April, 2009 it is notapplicable.m. Miscellaneous Expenditure:Preliminary Expenses, if any, are written off over a period of five years in equal instalments.n. LeasesOffice Premises taken on lease under which, all risks and rewards of ownership are effectively retained by the lessor areclassified as operating lease. Lease payments under operating lease are recognized as expense on accrual basis in accordancewith the respective lease agreements.o. Claims RecoverableThe claims in respect of fixed assets lost during the process of drilling (lost in hole) are recognised on the basis of invoicesraised and correspondingly the depreciated value of the fixed assets lost in hole is charged off. Any deductions made fromthe claims raised are recognised on receipt of intimation in respect of the same.p. Prepaid ExpensesPrepaid expense is not recognised in cases where total amount spent is Rs.10,000/- or less. Such expenses are charged toprofit and loss account.q. Event Occurring after the Balance Sheet DateEvents occurring after the Balance Sheet Date and till the date on which the Financial Statement are approved, which arematerial in the nature and indicate the need for adjustments are considered in the financial statement.r. Provisions, Contingent Liabilities and Contingent AssetsProvisions involving substantial degree of estimation in measurement are recognized when there is a present obligationas a result of past events and it is probable that there will be an outflow of resources.Liabilities which are material, and whose future outcome cannot be ascertained with reasonable certainty, are treated ascontingent, and disclosed by way of notes to the accounts.Contingent Assets are neither recognized nor disclosed in the financial statement. Provisions, Contingent Liabilities andContingent Assets are reviewed at each Balance Sheet date.s. Mobilisation Charges:Mobilisation charges received from the Rig Operator Companies and paid to the Rig owning companies are allocated overthe contract period proportionately.48