prior period expenses

This query is : Resolved

Laxmikant agrawal (Querist)
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28 June 2011 dear sir,
i want to know whether sales tax or service tax paid on assessment of earlier year is allowable expenditure under the head PGBP or it shall be treated as prior period item and disallowed.

CA Navin Jain

CA Navin Jain (Expert)
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30 June 2011 Service Tax and Sales Tax are allowed on payment basis (Section 43B).
Thus, such taxes paid on assessment, although relating to past years, are allowable as business expenditure in the year in which they are actually paid.