15 May 2011
A Govt. company has paid Interest on arrear salary of the employees. around 20 lakh. For 5 years. whether this interest on arrear salary will be treated as prior period exp. as it does not belongs to this year. or will it be allowed to Debit PL A/c in current year. or will it be recognised as Misc Exp. & will be written off in 5 subsequent year. it is affecting pL A/C very adversely. & whether this will be allowed for tax computation of Current year. Kindly reply. or suggest the Accounting STandard which relates to it & IT Sec.
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