Prior period item

as per accounting, we need to recognise total 12 months exp in the current year. but 10 months exp as normal exp. and balance 2 months as prior period items. as per AS 5, 2 months exp is to be disclosed in Profit and loss a/c separately.

As per Income Tax Prov:

Case1:  if you have not filed the return for the Finanial year of 2016-17 (assessment year 2017-18). you can consider this 2 months exp as allowable exp even thought no entry in the books, to assess taxable income.

Case 2:  if you have filed the return, you can revised the return by considering this 2 months exp. you can claim the benefit.

as per income tax act, whatever the situation 2 months exp (prior period) is not allowed for the financial year 2017-18. this is allowed in the year exp is incurred (i.e. 2016-17).