WHETHER PREVIOUS YEAR EXPENSE OR NOT ?
This query is : Resolved
Gaurav Garg
(Querist)
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.
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.
CA Nitin Wadhwani
(Expert)
10 May 2009
Yes.
It is not a prior period item and hence will be allowed u/s 37.
It is not a prior period item and hence will be allowed u/s 37.
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