INCOME TAX
This query is : Resolved
19 November 2008
IS PRIOR PERIOD EXPENSES DEDUCTIBLE UNDER INCOME TAX ACT.IF NOT, UNDER WHICH SECTION IS IT MENTIONED?
19 November 2008
It is not allowed in Income Tax.
19 November 2008
UNDER WHICH SECTION IS IT MENTIONED THAT PRIOR PERIOD EXPENSES ARE NOT ALLOWED IN INCOME TAX ACT. IS THERE ANY CASE LAWS TO SUBSTANTIATE THIS ARGUMENT?
19 November 2008
Under income tax act, assessee can follow either cash basis or accrual system of accounting. In cash basis there is no qus. of prior period exps. In accrual system of accounting the expenses pertains to during year is only taken into consideration.
19 November 2008
It is not explicitly mentioned in the Income tax act. However if you see section 30 to section 36 speaks of specific deductions in respect of particular items.
SEction 37 speaks of general deduction. IT states that in order to claim deduction under section 37, expenditure
should be incurred in the previous year. (Very important)..
Prior Period expenditure is not incurred in the previous year at all. In fact it is incurred in earlier years and hence do not classify for deduction u/s. 37.
In view of this prior period expenditure is not allowed as deductible expenditure under the income tax act.
SEction 37 speaks of general deduction. IT states that in order to claim deduction under section 37, expenditure
should be incurred in the previous year. (Very important)..
Prior Period expenditure is not incurred in the previous year at all. In fact it is incurred in earlier years and hence do not classify for deduction u/s. 37.
In view of this prior period expenditure is not allowed as deductible expenditure under the income tax act.
19 November 2008
better you claim and contest the time of assessment that the tax rate are same for both the years, had these expenses would have been claimed in the relevent year there would be lesser tax liability therefore in total there is no revenue loss to the govt
19 November 2008
In section 37, it is mentioned that any expenditure other than personal and capital, being laid out or expended, can be claimed as deduction.so how it can be taken for granted. The term incurred is nowhere mentioned in that section.. please help me out..
19 November 2008
In section 37, it is mentioned that any expenditure other than personal and capital, being laid out or expended, can be claimed as deduction.so how it can be taken for granted. The term incurred is nowhere mentioned in that section.. please help me out..
21 November 2008
This is covers the profit &gains from the business &profession.
The expenditure shall not cover u/s 30 to 36
Expenditure shall not be personal expenditure of the assess say LIC premium .
Expenditure shall not be capital expenditure, Capitzal expenditure covered under the head Capital gains please refer cost of acquistion .
paid out or expended for the purpose of the business& profession.
Many case laws are there for section 37
The expenditure shall not cover u/s 30 to 36
Expenditure shall not be personal expenditure of the assess say LIC premium .
Expenditure shall not be capital expenditure, Capitzal expenditure covered under the head Capital gains please refer cost of acquistion .
paid out or expended for the purpose of the business& profession.
Many case laws are there for section 37
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