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Prior period expenses if purhases booked on grn basis

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CA. Amer

Chartered Accountant

27 Points Posted on 08 June 2013

Purchases are booked on basis of GRN (goods receipt note) and not on invoice date basis.

If an purchase Invoice for eg is of F.Y. 2012-13 and goods has been received in F.Y. 2013-14 then the purchases will be booked in F.Y. 2013-14.

but my query is that, whether such purchases booked in F.Y. 2013-14 will be treated as prior period expenses and disallowed under income tax.

Thanks in Advance.

Replies (4)

kamaljeet

account manager

43 Points Posted on 08 June 2013

expense will not be disallowed prior period means we have done entry intentionally or by erroneus here the thing is differnet as we have done entry for good purchase basis on dc therefor it is not disallow

Z

Tax Consultation (US and India)

2348 Points Posted on 10 June 2013

If the goods are material, then AO may argue that books do not provide true and fair view and NOTIFICATION NO. 9949 , issued u/ 145(2), has not been followed which the CG has issued and is to be followed by assessee for computing income U/H PGBP & IOS

So basically disallowance is on discretion of AO

& in many judicial preeceding , courts have taken view that AS should be followed , there are some exceptions but the main criteria is NOTIFICATION NO. 9949

CA. Amer

Chartered Accountant

27 Points Posted on 13 June 2013

Thank you.

If to avoid such circumtances that is of disallowances on discretion of AO. What measures company should take. Should they book such purcahse invoices in F.Y of which it pertains.