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WHETHER PREVIOUS YEAR EXPENSE OR NOT ?

This query is : Resolved 
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08 May 2009 A COMPANY IS DOING BUSINESS THROUGH CONSIGNEE AGENTS AND PAYS RS.1,00,000 P.M. TO EACH AGENT AS "COMMISSION" DURING F.Y.2007-08.

IN JUNE 2008 IT DECIDES TO INCREASE COMMISSION BY RS. 25,000 P.M. WITH RETROSPECTIVE EFFECT FROM NOV. 2007.

NOW WHETHER INCREASED COMMISSION FOR THE PERIOD (NOV 2007- MAR. 2008) WILL BE DISALLOWED AS EXP. U/S 37 OF INCOME TAX ACT 1961 FOR ASS. YEAR 2009-10 OR NOT ?

I THINK THAT IT WON'T BECAUSE AS PER "AS-5" IT IS NOT A "PRIOR PERIOD" ITEM.

VIEWS FROM LEARNED FRIENDS ARE EXPECTED.

THANK YOU.
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CA Nitin Wadhwani

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CA Nitin Wadhwani (Expert)
10 May 2009 Yes.
It is not a prior period item and hence will be allowed u/s 37.
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