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Prior Period Expenses
why prior period expenses gets disallowed?
Replies (3)
it doesn't get disallowed provided you have adequate explanation to be provided to the AO in case of scrutiny. also if any expenditure is expressly disallowed under income tax then it wud added to your total taxable income
Yes prior period item is disallowed expenses under the income tax Act. Please refer section 37 (1) wherein only expenses incurred during relevant previous year is allowable. So prior period expense is totally disallowed under the income tax law.
As per Sec 37 (1), Expenditure wholly and exclusive for business is allowed. It means prior period items should be allowed considering the expenditure is for the business purpose.
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