Prior Period Expense
This query is : Resolved
24 March 2011
Can anypne plz explain whether Prior period expense is disallowed.
If yes under which section.
Thanx
If yes under which section.
Thanx
24 March 2011
Can be disallowed under section 37(1) of the income tax Act,1961.
Citation:- For the purpose of computing yearly profits and gains for assessment to income-tax each year is a separate and self-contained period of time, and losses and expenses incurred before its commencement or after its expiry cannot be the subject of any allowance in assessing the income of that particular year. In making the assessment for any particular year, deductions can therefore be permitted only in respect of expenses, which are found to have been incurred in the relevant accounting period. In adjudging the admissibility of a claim for deduction, the determination of the question whether the assessee had incurred the expenditure during the relevant accounting period is an indispensable preliminary step - Seshasayee Bros. (Travancore) (P.) Ltd. v. CIT [1971] 82 ITR 442 (Ker.).
Citation:- For the purpose of computing yearly profits and gains for assessment to income-tax each year is a separate and self-contained period of time, and losses and expenses incurred before its commencement or after its expiry cannot be the subject of any allowance in assessing the income of that particular year. In making the assessment for any particular year, deductions can therefore be permitted only in respect of expenses, which are found to have been incurred in the relevant accounting period. In adjudging the admissibility of a claim for deduction, the determination of the question whether the assessee had incurred the expenditure during the relevant accounting period is an indispensable preliminary step - Seshasayee Bros. (Travancore) (P.) Ltd. v. CIT [1971] 82 ITR 442 (Ker.).
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