My query is regarding to Last years expenses. e.g. If any expense of previous year still pending to entered in our books & our balance sheet is already finalized. Even Income tax return is filed. In that situation how can we book the expense for last year? Can we show the expense in current year? Is it possible that the expense book in this year? If Yes, then How?
22 April 2008
THE INCOME TAX ACT UNDER SEC 37 STATES THAT IN ORDER TO CLAIM DEDUCTION FOR AN EXP. IT MUST BE INCURRED IN PREVIOUS YEAR. OTHERWISE, THE ASSESSING OFFICER WILL DISALLOW SUCH EXP. IF IT WAS NOT INCURRED IN THE PREVIOUS YEAR. SO YOU CANNOT CLAIM EXP. INCURRED IN PREVIOUS YEAR AS CURRENT YEAR EXP. WHAT ASSESSEES DO IN SUCH CASES IS THAT THE EXP. BILLS DATED AS CURRENT YEAR ARE OBTAINED AND CLAIMED AS CURRENT YEAR EXP. BUT THIS SHOULD ALSO SUIT YOUR SUPPLIER OR CREDITOR DEPENDING IN WHICH FIN. YEAR HE BOOKS THE INCOME. R.V.RAO
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