Prior Period Item

This query is : Resolved

varun gupta (Querist)
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21 May 2009 A STPI Unit has paid STPI membership fees of Rs 100000 for 2007-08 but subsequently it receives a notice from STPI in July 08 regarding additional payment of Rs 100000 for 2007-08 as the Turnover of company exceeded some limit and memebership for the year amounted Rs 200000. The Company pays the differential amt of Rs 100000 in July 08.
Now will this payment be an allowable Expense for the year 2008-09 as books for 2007-08 were already closed and payment made in 2008-09 or this amt will be considered as Prior Period Item in regard to 2008-09 and hence be disallowed?

chetan soni

chetan soni (Expert)
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21 May 2009 As at the time of financial of accounts, you were not knowing about the charges. You can even claim this amount as expenses.

No matter it is prior period item, the only thing you need to disclosed it.

varun gupta

varun gupta (Querist)
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22 May 2009 But don't you think that its just the Ignorance of Rule regarding STPI fees which is payable on basis of Turnover of a Co Hence, when turnover crossed that limit, the co. was liable to pay extra fees to STPI and just due to their Ignorance, It has not paid and booked. So, shd it not be considered and disallowed as a Prior Period Item?

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C.A.Javid Patel

C.A.Javid Patel (Expert)
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22 May 2009 But the company is notknown about ignorance and hence it will be allowable expenses.