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PRIOR PERIOD EXPENSES

Tax queries 1540 views 1 replies

hello friends i have a query. in one case of our tax audit of co for fy 2008-09 there was a demand of rs 38000 of sales tax for f/y 2006-07 which is created by AO in assesment.my question is whether d demand will be shown in p/l as prior period item or not & also whether amt of rs 38000 will be allowed under income tax in a/y 2009-10 & required to be given in audit report annx 3CD under prior period exp debited to p/l a/c since d exp is related for f/y 2006-07 but its amt is ascertained in current year
i m confused regarding its treatment

please clear d provision regarding it

Replies (1)





This shall not be treated as prior period item. As per AS 5, prior period items are items which is effected in current year's financial statement due to mistake or omission in past financial year.

The Sales Tax liability is not ascertainable in the original year and hence not provided. So it is not prior period item. Then no question arises for Income Tax. It is allowable.


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