in a Dynamic Environment - Domain-b

services are rendered. Revenue from fixed price contracts is recognised as per the proportionate completionmethod with contract cost determining the degree of completion.Dividends are recorded when the right to receive payment is established. Interest income is recognised on timeproportion basis.j) Research and DevelopmentResearch and Development expenditure is recognised in the profit and loss account when incurred. Fixed assetsutilised for research and development are capitalised and depreciated in accordance with the depreciation ratesset out in note 1(d).k) TaxationCurrent income tax expense comprises taxes on income from operations in India and in foreign jurisdictions.Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961. Taxexpense relating to foreign operations is determined in accordance with tax laws applicable in countries wheresuch operations are domiciled.Minimum alternative tax (MAT) paid in accordance to the tax laws, which gives rise to future economic benefitsin the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidencethat the Company will pay normal income tax after the tax holiday period. Accordingly, MAT is recognised asan asset in the balance sheet when it is probable that the future economic benefit associated with it will flow tothe Company and the asset can be measured reliably.Deferred tax expense or benefit is recognised on timing differences being the difference between taxable incomeand accounting income that originate in one period and are capable of reversal in one or more subsequentperiods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enactedor substantively enacted by the balance sheet date.In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only tothe extent that there is virtual certainty that sufficient future taxable income will be available to realise suchassets. In other situations, deferred tax assets are recognised only to the extent that there is reasonable certaintythat sufficient future taxable income will be available to realise these assets.Advance taxes and provisions for current income taxes are presented in the balance sheet after off-settingadvance taxes paid and income tax provisions arising in the same tax jurisdiction and the Company intends tosettle the asset and liability on a net basis.The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right andthese relate to taxes on income levied by the same governing taxation laws.l) Foreign currency transactionsIncome and expenses in foreign currencies are converted at exchange rates prevailing on the date of thetransaction. Foreign currency monetary assets and liabilities other than net investments in non-integral foreignoperations are translated at the exchange rate prevailing on the balance sheet date. Exchange difference arisingon a monetary item that, in substance, forms part of an enterprise’s net investments in a non-integral foreignoperation are accumulated in a foreign currency translation reserve.Premium or discount on forward exchange contracts and currency option contracts are amortised and recognisedin the profit and loss account over the period of the contract. Forward exchange contracts and currency optioncontracts outstanding at the balance sheet date, other than designated cash flow hedges, are stated at fairvalues and any gains or losses are recognised in the profit and loss account.m) Derivative instruments and hedge accountingThe Company uses foreign currency forward contracts and currency options to hedge its risks associated withforeign currency fluctuations relating to certain firm commitments and forecasted transactions. The Companydesignates these hedging instruments as cash flow hedges applying the recognition and measurement principlesset out in the Accounting Standard 30 “Financial Instruments: Recognition and Measurement” (AS–30).135