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Expenses disallowed as Prior Period Expenses

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Impetus Consultancy

2 Points Posted on 28 June 2020

Can the following expenses be disallowed as prior period expenses ?

Annual General Meeting of a company for 31.3.2019 held during FY 2019-2020. Expenses relating to the AGM like Printing of Annual report, Postage for sending Annual report, Professional fee paid to Registrar & Share transfer agent etc were paid during FY 2019-2020. Since the expenses were spent during FY 2019-2020, can those expenses be disallowed as Prior period as they relate to FY 2018-2019 ?

Audit Fee of FY 2018-2019 paid during FY 2019-2020 ; Audit services rendered during 2019-2020 though audit period relates to 2018-2019. (assuming no provision made & TDS not applicable)

Replies (2)

Quick Summary

This discussion examines whether expenses incurred in the current financial year but relating to a previous period, such as Annual General Meeting costs or audit fees for a prior year, can be disallowed as prior period expenses. The general consensus suggests that such expenses are typically not allowed as deductions in the current year unless they have clearly crystallised during the current period, often a point of contention in tax litigation.

prasad Nilugal

3924 Points Posted on 28 June 2020

The prior period expense partaining to earlier years has been a matter of litigation whether such expense could be allowed as deduction during the current year .