Difference in ICAI and Income Tax Standard :Securities

The CBDT has now notified the Income Disclosure and Tax Accounting Standards vide notification no. 32/2015, F. No. 134/48/2010-TPL, dated March 31, 2015. Comparative study of Accounting Standard issued by ICAI, and notified TAS has been given hereunder

Income Computation and Disclosure Standard VIII relating to securities

This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts. In the case of conflict between the provisions of the Income-tax Act, 1961 (‘the Act’) and this Income Computation and Disclosure Standard, the provisions of the Act shall prevail to that extent

Accounting Standards issued by ICAI	Income Computation and Disclosure Standards (ICDS)
ACCOUNTING FOR INVESTMENTS / SECURITIES
A. Scope
AS-13 deals with accounting for current investments, long term investments and investment property but excludes shares, debentures or other securities held as stock-in- trade.	ICDS only deals with securities held as stock-in-trade.
B. Valuation of securities acquired in exchange
AS – 13 provides that: a) If an investment is acquired by issue of shares or other securities, the acquisition cost is the fair value of the securities issued. b) If an investment is acquired in exchange for another asset, the acquisition cost of the investment shall be the fair value of the asset given up. However, fair value of the investment acquired shall be considered if it is more clearly evident.	a) Where a security is acquired in exchange for other securities, the security acquired shall be recognised at its fair actual cost [Para 6] b) Where a security is acquired in exchange for another asset, the fair value of the security so acquired shall be its actual cost. [Para 7]
C. Valuation of securities held as stock-in trade
AS-13 indicates that though it does not apply to stock-in-trade, the manner in which they are accounted for is quite similar to current investments. In case active market exists for an investment then generally market value provides evidence of fair value. For investments where active market does not exist, other means are used to determine fair value.	a) Valuation of securities listed and quoted on a recognized stock exchange with regularity - At actual cost initially recognized or Net Relisable Value at the end of that Previous year, whichever is lower; [Para 9] b) Valuation of unlisted securities and listed securities not quoted with regularity - At actual cost initially recognized [Para 12]