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Prior Period Expenditure..

This query is : Resolved 
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(Querist)
26 March 2009 Respected Sir,
Our client place is availing the service of man power supply from an agency since 2004.the party has however not charged any service tax for his service,though there was an obligation for the same and now he is claiming the service tax amount which he failed to recover and we agreed to pay the same..
now the question is should we book the expenditure as prior period or not?
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CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
26 March 2009 For the purpose of income tax and books of account it will be treated as prior period expenditure and with reference claiming of service tax it is like current payment.
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CA Nitin Wadhwani

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CA Nitin Wadhwani (Expert)
26 March 2009 It is not a prior period expenditure as per AS-5.
It is the current year expenditure.
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Mohammed

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Mohammed (Querist)
28 March 2009 Thank You,for your valued reply..
Can you further clarify with regards to Income tax Implication on the above..
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CA Nitin Wadhwani

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CA Nitin Wadhwani (Expert)
29 March 2009 It will be allowed.
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