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Sanya JalotaSanya Jalota asked 12 months ago
2 Answers
RaviRavi Staff answered 11 months ago

Sir was not keeping well for past few days, so he couldn’t reply many queries. He will be replying all of them today or max tomorrow.

RaviRavi Staff answered 11 months ago

There is no clarity by MCA with respect to this matter. ICAI clarified in case of applicability of internal audit clause of CARO 2003, that till the time 3 years are passed such internal audit clause which depends on average turnover of 3 years wont be applicable. Taking the same analogy 135 should not be applicable to new companies.
Further explanation
ICAI had opined in the context of applicability of CARO requirements on internal audit to unlisted companies on the basis of average turnover criterion as under: “…. Since average turnover of three financial years immediately preceding the year under audit is to be considered, it follows that a company cannot be covered under this clause during the first three years of its operation on the basis of the turnover criterion….” [Para 61(g) of ICAI’s Statement on CARO, 2003] On the same analogy, it can be opined that a company covered by section 135(1) will not be required to comply with mandatory corporate spends obligations in the first three years of its operations. 

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