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CS Professional · CSR and Social Governance · Corporate Social Responsibility

Lotus Foods Ltd has a CSR amount of Rs 45 lakh for the year and no ongoing project. It spent only Rs 30 lakh, and the Board has no CSR Committee. Which course is correct under section 135?

Because Rs 45 lakh does not exceed Rs 50 lakh, the Board itself performs the Committee's functions. For the Rs 15 lakh shortfall, with no ongoing project, the Board must state reasons in its report and transfer the amount to a Schedule VII Fund within six months of year end.

  1. AThe Board performs the Committee's functions, specifies reasons in its report, and transfers Rs 15 lakh to a Schedule VII Fund within six months of year endCorrect
  2. BThe company forms a three-member Committee and carries the Rs 15 lakh forward
  3. CThe Board transfers Rs 15 lakh to the Unspent CSR Account within thirty days
  4. DThe company may keep the Rs 15 lakh and report nothing, as the amount is below Rs 50 lakh

Explanation

Under section 135(9), where the amount to be spent does not exceed Rs 50 lakh, no Committee is needed and the Board discharges its functions. For the shortfall of Rs 15 lakh, not relating to an ongoing project, the Board must give reasons in its report and transfer it to a Schedule VII Fund within six months of year end. The Unspent Account is only for ongoing projects.

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