Proceedings have been initiated against False Limited for holding benami property under law relating to prohibition of benami transactions and the…
CA Intermediate · Auditing and Ethics · RTP · May 2024
Proceedings have been initiated against False Limited for holding benami property under law relating to prohibition of benami transactions and the rules made thereunder but such property is not recorded in books of accounts. As a consultant to the company, what will you advise the company as far as disclosure requirements are concerned in financial statements in relation to said proceedings?
Suggested Answer and Working Notes:
(a) Disclosure in case of Benami Properties held by the Company: Where any proceedings have been initiated or pending against the company for holding any benami property under the relevant law relating to prohibition of such transactions, the company shall disclose the following: - (a) Details of such property, including year of acquisition (b) Amount thereof (c) Details of Beneficiaries (d) If property is not in the books, then the fact shall be stated with reasons (e) Where there are proceedings against the company under this law as an abetter of the transaction or as the transferor, then the details shall be provided (f) Nature of proceedings, status of same and company's view on same.
Topics: Audit of Items of Financial Statements
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