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Prior Period Expenses

Pankaj Arora (Learner) (3134 Points)

04 August 2017

why prior period expenses gets disallowed?

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3 Replies

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 04 August 2017

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

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Poltu Ghosh (Job) (1865 Points)
Replied 04 August 2017

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.

CA.Srikrishna Subudhi (Profession) (45 Points)
Replied 21 September 2018

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.