The Hindu Business Line : Get empowered through ADR

Disputes often break for reasons beyond our control. However, `quick resolution of any commercial dispute is necessary for smooth functioning of business and industry,' observes the Institute of Company Secretaries of India (www.icsi.edu) in a recent publication titled Handbook on Arbitration and Alternative Dispute Resolution.

The ADR mechanism, as you may be aware, complements the legal or judicial process. Statutory backing for ADR comes from the Arbitration and Conciliation Act, 1996, a law that has predecessors in the Indian Arbitration Act of 1899 and later in the 1940 Act. "Settlement of disputes outside the courts is not new," observes the book. Examples it speaks of are the village panchayat and the ombudsman. "Long before the King came to adjudicate on disputes between persons, such disputes were quite peacefully decided by the intervention of the Kulas (family or clan assemblies), Srenis (guilds of men following the same occupation), Perishads (assemblies of learned men who knew law) and such other autonomous bodies."

But why ADR? Because of dissatisfaction with the traditional ways, where dispute resolution is in the hands of lawyers. ADR's attraction lies in its ability to empower the individuals by giving them responsibility to resolve their issues. Power read!

Tasks in tax computation

A slim publication from the Institute of Chartered Accountants of India (www.icai.org) is Guidance Note on Measurement of Income Tax Expense for Interim Financial Reporting in the Context of AS 25. The Accounting Standard under reference is the one titled `Interim Financial Reporting,' which became mandatory in respect of accounting periods commencing on or after April 1, 2002. Accounting Standards Interpretation (ASI) 27, `Applicability of AS 25 to interim financial results,' insists that recognition and measurement principles laid down in AS 25 should be applied when presenting interim financial results under Clause 41 of the Listing Agreement. Paragraph 29(c) of AS 25 is about measurement of tax expense.

It says: "Income tax expense is recognised in each interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. Amounts accrued for income tax expense in one interim period may have to be adjusted in a subsequent interim period of that financial year if the estimate of the annual income tax rate changes." The `how' of doing this is explained as follows: "Interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period." Usefully, the Guidance Note breaks down the job into a series of tasks.

Essential addition to the professional's shelf.

Tailpiece

"The problem with the New Year is... "

"That it comes only once a year?"

"No, it becomes old in a day."

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D. Murali