Page 2 - 31. COMPILER QB - CSR

CORPORATE SOCIAL RESPONSIBILTY (CSR)

(TOTAL NO. OF QUESTIONS – 8)

INDEX

S.No. Particulars Page No.

1 RTP Questions 31.1
2 MTP Questions 31.3

3 Past Exam Questions 31.5

RTPs QUESTIONS

Q1 (RTP - May 19, April 19 MTP – 8 Marks, May 20 MTP – 4 Marks, October 19 &

21 MTP – 6 Marks, Nov 20 Exam, July 21 – 5 Marks)
ABC Ltd. is a company which has a net worth of INR 200 crores, it manufactures rubber parts for

automobiles. The sales of the company are affected due to low demand of its products.
The previous year’s financial state:
(Rs in Crore)
March 31, 2019 March 31, March 31, March 31,
(Current year) 2018 2017 2016
Net Profit 3.00 8.50 4.00 3.00
Sales (turnover) 850 950 900 800
Does the Company have an obligation to form a CSR committee since the applicability criteria is not satisfied
in the current financial year?

SOLUTION

It has been clarified that ‘any financial year’ referred to under sub-section (1) of section 135 of the Act read
with Rule 3(2) of Companies CSR Rule, 2014, implies ‘any of the three preceding financial years’.
A company which meets the net worth, turnover or net profits criteria in any of the preceding three financial
years, but which does not meet the criteria in the relevant financial year, will still need to constitute a CSR
Committee and comply with provisions of sections 135(2) to (5) read with the CSR Rules.
As per the criteria to constitute CSR committee -

1) Net worth greater than or equal to INR 500 Crores: This criterion is not satisfied.
2) Sales greater than or equal to INR 1000 Crores: This criterion is not satisfied.
3) Net Profit greater than or equal to INR 5 Crores: This criterion is satisfied in the financial year ended
31. 1