Dear Professionals
On leaving of an employee the salary liability on final settlement was booked in accounts in April 2011. Around six months have since passed -- the employee have not demanded the dues -- the company has also not shown any interest to communicate with the ex employee or to locate him.
Now the Thinktank has decided to write back the liability and taken a stand that it will be paid when the employee demands in future.
The question is if the demand is in next Fy 12-13 and it has booked in accounts again and paid will this be treated as Prior period expenditure as per AS 5 so as to suffer disallowance in income tax assessment.
Regards,
Dipjyoti
CAclubindia
