Private Limited Company must comply with CSR provisions under Companies Act, 2013 despite profit exemption.

The Tribunal held that the Private Limited Company must comply with Corporate Social Responsibility (CSR) provisions under Section 135 of the Companies Act, 2013 for the financial year 2014-15. The Company's argument that its profit after tax exempted it from CSR requirements was rejected. The Tribunal directed the Company to adhere to CSR spending obligations based on its net profit before tax for the preceding financial year and to disclose CSR Committee and Policy information. The Company was allowed to revise its financial statements for FY 2014-15 to include CSR details.

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Issues:
1. Interpretation of Corporate Social Responsibility (CSR) provisions under Section 135 of the Companies Act, 2013.
2. Applicability of CSR spending requirements for a Private Limited Company.
3. Compliance with CSR provisions for the financial year 2014-15.
4. Understanding and disclosure of CSR Committee and CSR Policy by the Company.
5. Calculation of average net profit for CSR spending.

Analysis:

1. The Applicant, a Private Limited Company, sought approval to revise its Board's Report for the financial year ended 31.03.2015, contending that the threshold limit of profit in Sec. 135(1) is profit after tax, hence exempting it from CSR provisions. The ROC, Coimbatore disagreed, asserting that the Company should comply with CSR provisions for the financial year 2014-15.

2. The Company argued that it did not understand the new CSR provisions clearly, leading to non-disclosure of CSR Committee and CSR Policy in its Report for the financial year ended 31.03.2015, prompting the petition.

3. The ROC contended that even if the Company falls within the purview of Sec 135(1) of the Companies Act, 2013, the average net profit u/s 135(5) being negative did not exempt it from CSR provisions. The Company's deduction of excess expenditure over income from previous years was found impermissible under the Act, resulting in the Company's net profit for FY 13-14 exceeding the threshold limit in sec 135(1).

4. The Tribunal noted that the Company's net profit for FY 13-14 was above the threshold limit mentioned in sec 135(1) of the Companies Act, 2013, as the method of calculating net profit under section 198 did not exclude losses from previous financial years. The Company was directed to adhere to CSR spending requirements for FY 2014-15 based on the net profit before tax for FY 2013-14 and comply with other provisions of section 135 regarding CSR Committee and policy.

5. The Tribunal permitted the Company to file an application for revision of financial statements or board's report after incorporating CSR information for FY 2014-15 as the financial year fell within the "three preceding financial years," as per section 131 of the Companies Act, 2013. The Company's petition was disposed of with these directions.

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