INCOME TAX
This query is : Resolved
19 November 2008
IS PRIOR PERIOD EXPENSES DEDUCTIBLE UNDER INCOME TAX ACT.IF NOT, UNDER WHICH SECTION IS IT MENTIONED?
19 November 2008
It is not allowed in Income Tax.
19 November 2008
UNDER WHICH SECTION IS IT MENTIONED THAT PRIOR PERIOD EXPENSES ARE NOT ALLOWED IN INCOME TAX ACT. IS THERE ANY CASE LAWS TO SUBSTANTIATE THIS ARGUMENT?
19 November 2008
Under income tax act, assessee can follow either cash basis or accrual system of accounting. In cash basis there is no qus. of prior period exps. In accrual system of accounting the expenses pertains to during year is only taken into consideration.
19 November 2008
It is not explicitly mentioned in the Income tax act. However if you see section 30 to section 36 speaks of specific deductions in respect of particular items.
SEction 37 speaks of general deduction. IT states that in order to claim deduction under section 37, expenditure
should be incurred in the previous year. (Very important)..
Prior Period expenditure is not incurred in the previous year at all. In fact it is incurred in earlier years and hence do not classify for deduction u/s. 37.
In view of this prior period expenditure is not allowed as deductible expenditure under the income tax act.
SEction 37 speaks of general deduction. IT states that in order to claim deduction under section 37, expenditure
should be incurred in the previous year. (Very important)..
Prior Period expenditure is not incurred in the previous year at all. In fact it is incurred in earlier years and hence do not classify for deduction u/s. 37.
In view of this prior period expenditure is not allowed as deductible expenditure under the income tax act.
19 November 2008
better you claim and contest the time of assessment that the tax rate are same for both the years, had these expenses would have been claimed in the relevent year there would be lesser tax liability therefore in total there is no revenue loss to the govt
19 November 2008
In section 37, it is mentioned that any expenditure other than personal and capital, being laid out or expended, can be claimed as deduction.so how it can be taken for granted. The term incurred is nowhere mentioned in that section.. please help me out..
19 November 2008
In section 37, it is mentioned that any expenditure other than personal and capital, being laid out or expended, can be claimed as deduction.so how it can be taken for granted. The term incurred is nowhere mentioned in that section.. please help me out..
21 November 2008
This is covers the profit &gains from the business &profession.
The expenditure shall not cover u/s 30 to 36
Expenditure shall not be personal expenditure of the assess say LIC premium .
Expenditure shall not be capital expenditure, Capitzal expenditure covered under the head Capital gains please refer cost of acquistion .
paid out or expended for the purpose of the business& profession.
Many case laws are there for section 37
The expenditure shall not cover u/s 30 to 36
Expenditure shall not be personal expenditure of the assess say LIC premium .
Expenditure shall not be capital expenditure, Capitzal expenditure covered under the head Capital gains please refer cost of acquistion .
paid out or expended for the purpose of the business& profession.
Many case laws are there for section 37
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- STCG....................................................
- Supply through E-commerce Operators
- TAN for Partnership
- Relief u/s Section 89
- Sales return eway bill
- AMOUNT RECEIVED UNDER COMPULOSRY ACQUISITION OF AGRICULTURAL LAND
- GST Rate applicable for 0% Food Items sold by an Industrial Caterer
- GST Registration Horse racing
- Section 43B(h) – MSME Invoice Paid Before Year End but After 45 Days
- Loan by Partnership Firm
- Section 54F - Exemption on LTCG in 2026 for HP purchased in 2023
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- Nomination of Bank for refund in itr 2
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
