Skip to content

CS Professional · Compliance Management, Audit and Due Diligence · Compliance Framework

Orion Steels Ltd had an unspent CSR amount of Rs 30 lakh for the year, which does not relate to any ongoing project. The Board gave reasons in its report but took no further step, and Rs 30 lakh remained with the company. Applying section 135, which is correct?

The unspent amount, not relating to an ongoing project, must be transferred to a Schedule VII Fund within six months of the expiry of the financial year. Giving reasons alone is insufficient, and default attracts penalty under section 135(7).

  1. AGiving reasons in the Board's report fully discharges the obligation
  2. BThe amount must be transferred to a Schedule VII Fund within six months of the expiry of the financial year, and default attracts penaltyCorrect
  3. CThe amount must be moved to the Unspent CSR Account within thirty days
  4. DThe amount may be carried forward indefinitely without any transfer

Explanation

The second proviso to section 135(5) requires reasons in the Board's report and, unless the amount relates to an ongoing project, transfer to a Schedule VII Fund within six months of the end of the year. The Unspent CSR Account route under 135(6) is only for ongoing projects. Failing to transfer attracts penalty under 135(7).

Did you get it right without looking?

One question tells you little. A timed set on Compliance Framework shows your real accuracy, how long you take and where you lose marks.

Practise Compliance FrameworkFree diagnostic mock

More Compliance Framework questions