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CSEET · Economic and Business Environment · Elements of Corporate Governance

Zenith Foods Ltd did not spend its full CSR amount for a financial year, and the unspent amount relates to an ongoing project meeting the prescribed conditions. Which course is required under section 135?

For an ongoing project, the unspent amount must be transferred within thirty days of the financial year end to an Unspent CSR Account in a scheduled bank and spent within three financial years. If still unspent, it goes to a Schedule VII Fund within thirty days after the third year.

  1. ATransfer the unspent amount within thirty days of the end of the financial year to an Unspent Corporate Social Responsibility Account, to be spent within three financial years from the transferCorrect
  2. BTransfer the unspent amount to a Schedule VII Fund within six months of the end of the financial year
  3. CCarry the amount forward in the company's general reserves without any transfer
  4. DTransfer the amount to the Unspent CSR Account within three years and spend it within thirty days

Explanation

Section 135(6) requires transfer within thirty days from year end to an Unspent CSR Account in a scheduled bank, to be spent within three financial years, failing which it goes to a Schedule VII Fund within thirty days of completing the third year. The six-month transfer to a Fund applies when the amount is not for an ongoing project.

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