Prior Period Income
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
11 July 2011
One of our client had Interest income in A.Y. 2009-10 receivable from M/s. ABC on which ABC deducted TDS & deposited in bank. However our client was not aware of this interest & neither booked Interest nor the TDS in A.Y. 09-10. In the later period, on viewing form 26AS from Income Tax dept. website, he came to know about the Interest & TDS. So Can he book the Interest income & claim TDS in the subsequent year? Whether TDS will be allowed since TDS certificate is showing A.Y. as 2009-10.
Please reply.
Please reply.
12 July 2011
Current years Income can not be assessed as income in the next year so a revised return can be filed and carried foreword the Income in the next year without payment of tax, because TDS is already deducted and in case of excess paid than refund can be claimed only within the time period.
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 July 2011
Sir,
Thanks for your reply but my query is quite different.
Income tax return for A.Y. 09-10 can not be revised since the time limit for revision has expired. My question is whether our client can recognise that income in A.Y. 10-11 & claim TDS? & Whether TDS will be allowed to him for A.Y. 10-11?
Thanks for your reply but my query is quite different.
Income tax return for A.Y. 09-10 can not be revised since the time limit for revision has expired. My question is whether our client can recognise that income in A.Y. 10-11 & claim TDS? & Whether TDS will be allowed to him for A.Y. 10-11?
10 August 2024
In the scenario where a client has interest income and TDS from a previous year that was not recognized or claimed due to lack of awareness, the following steps and considerations apply:
### **1. Recognition of Prior Period Income**
**A. **Booking Interest Income:**
- **Recognition in Current Year:** Since the interest income was not recognized in the Assessment Year (A.Y.) 2009-10 due to oversight, you can book the interest income in the subsequent financial year (A.Y. 2010-11). This approach is acceptable under the principle of accounting where income should be recognized when it is earned, regardless of when it is received.
**B. **Accounting Treatment:**
- **Interest Income:** Record the interest income in the Profit and Loss Account for A.Y. 2010-11. This ensures that the financial statements reflect all earned income for the relevant period.
### **2. Claiming TDS**
**A. **Tax Deducted at Source (TDS):**
- **Claiming TDS in the Subsequent Year:** The TDS amount can be claimed as a credit against the tax liability in the year when the income is recognized. In this case, you can claim the TDS amount in A.Y. 2010-11, even though the TDS pertains to A.Y. 2009-10.
**B. **TDS Certificate and Form 26AS:**
- **Form 26AS Reference:** Ensure that the TDS amount is correctly reflected in Form 26AS. The TDS certificate showing the A.Y. 2009-10 is a supporting document, and the tax credit can be adjusted in the current year’s return.
### **3. Tax Filing Considerations**
**A. **Income Tax Return for A.Y. 2010-11:**
- **Inclusion in Return:** Include the interest income and claim the TDS credit in the Income Tax Return for A.Y. 2010-11. Make sure that the total income and TDS details are accurately reflected in the return.
**B. **Previous Year Adjustment:**
- **Not Revisable:** Since the return for A.Y. 2009-10 cannot be revised due to the expiry of the revision period, the income and TDS adjustment should be made in the return for A.Y. 2010-11.
### **4. Legal Provisions and Practical Approach**
**A. **Provisions of the Income Tax Act:**
- **Section 199:** Under Section 199 of the Income Tax Act, TDS is allowed as a credit against the tax liability of the year in which the income is assessed.
- **Section 143(1):** The Income Tax Department may assess the claim of TDS and interest income based on the records and Form 26AS. Ensure all documentation is accurate and available for review.
**B. **Practical Steps:**
- **Documenting the Income:** Ensure that all necessary documents, including Form 26AS and TDS certificates, are maintained and available to substantiate the claim.
- **Communicating with the Tax Authorities:** If there are any issues or discrepancies, it is advisable to communicate with the tax authorities and provide them with all relevant documents and explanations.
### **Summary**
- **Interest Income:** Book the interest income in A.Y. 2010-11.
- **TDS Claim:** Claim the TDS amount in A.Y. 2010-11, even though it pertains to A.Y. 2009-10.
- **Documentation:** Maintain proper documentation and ensure Form 26AS reflects the correct TDS amount.
This approach is generally accepted and aligns with the accounting and taxation principles. However, for specific legal advice or complex situations, consulting a tax professional or accountant is recommended.
### **1. Recognition of Prior Period Income**
**A. **Booking Interest Income:**
- **Recognition in Current Year:** Since the interest income was not recognized in the Assessment Year (A.Y.) 2009-10 due to oversight, you can book the interest income in the subsequent financial year (A.Y. 2010-11). This approach is acceptable under the principle of accounting where income should be recognized when it is earned, regardless of when it is received.
**B. **Accounting Treatment:**
- **Interest Income:** Record the interest income in the Profit and Loss Account for A.Y. 2010-11. This ensures that the financial statements reflect all earned income for the relevant period.
### **2. Claiming TDS**
**A. **Tax Deducted at Source (TDS):**
- **Claiming TDS in the Subsequent Year:** The TDS amount can be claimed as a credit against the tax liability in the year when the income is recognized. In this case, you can claim the TDS amount in A.Y. 2010-11, even though the TDS pertains to A.Y. 2009-10.
**B. **TDS Certificate and Form 26AS:**
- **Form 26AS Reference:** Ensure that the TDS amount is correctly reflected in Form 26AS. The TDS certificate showing the A.Y. 2009-10 is a supporting document, and the tax credit can be adjusted in the current year’s return.
### **3. Tax Filing Considerations**
**A. **Income Tax Return for A.Y. 2010-11:**
- **Inclusion in Return:** Include the interest income and claim the TDS credit in the Income Tax Return for A.Y. 2010-11. Make sure that the total income and TDS details are accurately reflected in the return.
**B. **Previous Year Adjustment:**
- **Not Revisable:** Since the return for A.Y. 2009-10 cannot be revised due to the expiry of the revision period, the income and TDS adjustment should be made in the return for A.Y. 2010-11.
### **4. Legal Provisions and Practical Approach**
**A. **Provisions of the Income Tax Act:**
- **Section 199:** Under Section 199 of the Income Tax Act, TDS is allowed as a credit against the tax liability of the year in which the income is assessed.
- **Section 143(1):** The Income Tax Department may assess the claim of TDS and interest income based on the records and Form 26AS. Ensure all documentation is accurate and available for review.
**B. **Practical Steps:**
- **Documenting the Income:** Ensure that all necessary documents, including Form 26AS and TDS certificates, are maintained and available to substantiate the claim.
- **Communicating with the Tax Authorities:** If there are any issues or discrepancies, it is advisable to communicate with the tax authorities and provide them with all relevant documents and explanations.
### **Summary**
- **Interest Income:** Book the interest income in A.Y. 2010-11.
- **TDS Claim:** Claim the TDS amount in A.Y. 2010-11, even though it pertains to A.Y. 2009-10.
- **Documentation:** Maintain proper documentation and ensure Form 26AS reflects the correct TDS amount.
This approach is generally accepted and aligns with the accounting and taxation principles. However, for specific legal advice or complex situations, consulting a tax professional or accountant is recommended.
10 August 2024
In the scenario where a client has interest income and TDS from a previous year that was not recognized or claimed due to lack of awareness, the following steps and considerations apply:
### **1. Recognition of Prior Period Income**
**A. **Booking Interest Income:**
- **Recognition in Current Year:** Since the interest income was not recognized in the Assessment Year (A.Y.) 2009-10 due to oversight, you can book the interest income in the subsequent financial year (A.Y. 2010-11). This approach is acceptable under the principle of accounting where income should be recognized when it is earned, regardless of when it is received.
**B. **Accounting Treatment:**
- **Interest Income:** Record the interest income in the Profit and Loss Account for A.Y. 2010-11. This ensures that the financial statements reflect all earned income for the relevant period.
### **2. Claiming TDS**
**A. **Tax Deducted at Source (TDS):**
- **Claiming TDS in the Subsequent Year:** The TDS amount can be claimed as a credit against the tax liability in the year when the income is recognized. In this case, you can claim the TDS amount in A.Y. 2010-11, even though the TDS pertains to A.Y. 2009-10.
**B. **TDS Certificate and Form 26AS:**
- **Form 26AS Reference:** Ensure that the TDS amount is correctly reflected in Form 26AS. The TDS certificate showing the A.Y. 2009-10 is a supporting document, and the tax credit can be adjusted in the current year’s return.
### **3. Tax Filing Considerations**
**A. **Income Tax Return for A.Y. 2010-11:**
- **Inclusion in Return:** Include the interest income and claim the TDS credit in the Income Tax Return for A.Y. 2010-11. Make sure that the total income and TDS details are accurately reflected in the return.
**B. **Previous Year Adjustment:**
- **Not Revisable:** Since the return for A.Y. 2009-10 cannot be revised due to the expiry of the revision period, the income and TDS adjustment should be made in the return for A.Y. 2010-11.
### **4. Legal Provisions and Practical Approach**
**A. **Provisions of the Income Tax Act:**
- **Section 199:** Under Section 199 of the Income Tax Act, TDS is allowed as a credit against the tax liability of the year in which the income is assessed.
- **Section 143(1):** The Income Tax Department may assess the claim of TDS and interest income based on the records and Form 26AS. Ensure all documentation is accurate and available for review.
**B. **Practical Steps:**
- **Documenting the Income:** Ensure that all necessary documents, including Form 26AS and TDS certificates, are maintained and available to substantiate the claim.
- **Communicating with the Tax Authorities:** If there are any issues or discrepancies, it is advisable to communicate with the tax authorities and provide them with all relevant documents and explanations.
### **Summary**
- **Interest Income:** Book the interest income in A.Y. 2010-11.
- **TDS Claim:** Claim the TDS amount in A.Y. 2010-11, even though it pertains to A.Y. 2009-10.
- **Documentation:** Maintain proper documentation and ensure Form 26AS reflects the correct TDS amount.
This approach is generally accepted and aligns with the accounting and taxation principles. However, for specific legal advice or complex situations, consulting a tax professional or accountant is recommended.
### **1. Recognition of Prior Period Income**
**A. **Booking Interest Income:**
- **Recognition in Current Year:** Since the interest income was not recognized in the Assessment Year (A.Y.) 2009-10 due to oversight, you can book the interest income in the subsequent financial year (A.Y. 2010-11). This approach is acceptable under the principle of accounting where income should be recognized when it is earned, regardless of when it is received.
**B. **Accounting Treatment:**
- **Interest Income:** Record the interest income in the Profit and Loss Account for A.Y. 2010-11. This ensures that the financial statements reflect all earned income for the relevant period.
### **2. Claiming TDS**
**A. **Tax Deducted at Source (TDS):**
- **Claiming TDS in the Subsequent Year:** The TDS amount can be claimed as a credit against the tax liability in the year when the income is recognized. In this case, you can claim the TDS amount in A.Y. 2010-11, even though the TDS pertains to A.Y. 2009-10.
**B. **TDS Certificate and Form 26AS:**
- **Form 26AS Reference:** Ensure that the TDS amount is correctly reflected in Form 26AS. The TDS certificate showing the A.Y. 2009-10 is a supporting document, and the tax credit can be adjusted in the current year’s return.
### **3. Tax Filing Considerations**
**A. **Income Tax Return for A.Y. 2010-11:**
- **Inclusion in Return:** Include the interest income and claim the TDS credit in the Income Tax Return for A.Y. 2010-11. Make sure that the total income and TDS details are accurately reflected in the return.
**B. **Previous Year Adjustment:**
- **Not Revisable:** Since the return for A.Y. 2009-10 cannot be revised due to the expiry of the revision period, the income and TDS adjustment should be made in the return for A.Y. 2010-11.
### **4. Legal Provisions and Practical Approach**
**A. **Provisions of the Income Tax Act:**
- **Section 199:** Under Section 199 of the Income Tax Act, TDS is allowed as a credit against the tax liability of the year in which the income is assessed.
- **Section 143(1):** The Income Tax Department may assess the claim of TDS and interest income based on the records and Form 26AS. Ensure all documentation is accurate and available for review.
**B. **Practical Steps:**
- **Documenting the Income:** Ensure that all necessary documents, including Form 26AS and TDS certificates, are maintained and available to substantiate the claim.
- **Communicating with the Tax Authorities:** If there are any issues or discrepancies, it is advisable to communicate with the tax authorities and provide them with all relevant documents and explanations.
### **Summary**
- **Interest Income:** Book the interest income in A.Y. 2010-11.
- **TDS Claim:** Claim the TDS amount in A.Y. 2010-11, even though it pertains to A.Y. 2009-10.
- **Documentation:** Maintain proper documentation and ensure Form 26AS reflects the correct TDS amount.
This approach is generally accepted and aligns with the accounting and taxation principles. However, for specific legal advice or complex situations, consulting a tax professional or accountant is recommended.
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