annual-report-FY2020

373 MAHINDRA & MAHINDRA LTD. INTEGRATED ANNUAL REPORT 2019-20 40. Contingent Liability & Commitments (A) Contingent Liability (a) Claims against the Group not acknowledged as debts comprise of : (i) Excise Duty, Sales Tax, and Service Tax claims disputed by the Group relating to issues of applicability and classification aggregating Rs. 2,405.43 crores before tax (2019 : Rs. 2,440.05 crores before tax). (ii) Other matters (excluding claims where amounts are not ascertainable) : Rs. 355.65 crores before tax (2019 : Rs. 402.88 crores before tax). (b) Taxation matters : (i) Demands against the Group not acknowledged as debts and not provided for, relating to issues of deductibility and taxability in respect of which the Group is in appeal and exclusive of the effect of similar matters in respect of assessments remaining to be completed : – Income-tax : Rs. 1,922.76 crores (2019 : Rs. 1,762.97 crores). (ii) Items in respect of which the Group has succeeded in appeal, but the Income-tax Department is pursuing/likely to pursue in appeal/reference and exclusive of the effect of similar matters in respect of assessments remaining to be completed : – Income-tax matters : Rs. 370.50 crores (2019 : Rs. 351.80 crores). (c) In respect of (a) & (b) above, it is not practicable for the Group to estimate the closure of these issues and the consequential timings of cash flows, if any. (B) Commitments : The estimated amount of contracts remaining to be executed on capital account and not provided for as at 31 st March, 2020 is Rs. 2,932.26 crores (2019 : Rs. 2,699.71 crores) and other commitment as at 31 st March, 2020 is Rs. 661.73 crores (2019: Rs. 982.71 crores). 41. Research and Development expenditure : In recognised Research and Development units : Debited to the Statement of Profit and Loss, including certain expenditure based on allocations made by the Group, aggregate Rs. 1,594.54 crores (2019 : Rs. 1,440.30 crores). 42 Adoption of Ind AS 116: - Leases Effective 1 April 2019, the Group has adopted Ind AS 116 - Leases using a modified retrospective approach. Accordingly, on initial application of Ind AS 116, in respect of leases previously classified as operating leases, lease liability is measured at the present value of remaining lease payments discounted using the incremental borrowing rate at the date of initial application and the right-of-use asset has been measured at the amount equal to lease liability, adjusted for any prepaid or accrued lease payments recognised in the balance sheet immediately before the date of initial application. However, few of the subsidiaries have measured the right-of-use asset at the present value of lease payments, discounted using incremental borrowing rate at the date of initial application, as if the standard is applicable since the commencement date of the lease. The difference between right-of-use asset and lease liability on the transition date is recognised in the retained earnings, net of deferred tax. Effect of initial application of Ind AS 116 on transition date is disclosed below (i) Lease liabilities recognised on the date of initial application: Rupees crores Operating lease commitments, as per Ind AS 17, as on 31 st March, 2019............................................................................... 3,643.54 Weighted average incremental borrowing rate (p.a) as on 01 st April, 2019........................................................................... 1.00%-11.34% Present value of lease commitments, using incremental borrowing rate............................................................................... 2,781.77 Adjustments for: -  Practical expedient for leases with remaining lease term less than 12 months.................................................................. (182.71)  Practical expedient for leases with low value......................................................................................................................... (15.32)  Variable lease payments recognised as an expense............................................................................................................... 17.26 Lease Liability relating to operating lease commitments as on initial application date........................................................ 2,601.00 Reclassification of finance lease as per Ind AS 17..................................................................................................................... 178.16 Lease liabilities recognised on initial application date.............................................................................................................. 2,779.16