Provision for expense is allowed under income tax in the year of provision and the difference in actual and provision will be allowed in the next year.
17 April 2012
In the next year, the difference amount will not be considered as prior period expense since the difference has not arisen due to error or omission. it is change in estimate and will be allowed as expenditure in next year.
17 April 2012
As per income tax also, the exepnses will be allowed but in case of exepnses liable for TDS are allowed only if TDS is deducted.
Provision for expenses are allowed if it is made on reasonable basis and with proper estimation. In the next year, you can claim the difference amount as an expense. Only, prior period expenses are disallowed under income tax. Difference will be allowed in the neaxt year.
CAclubindia
