According to AS-5 Prior period items is to be disclosed separately. What is the impact of these items under Income Tax Act and Companies Act? Whether it will be allowed if tds is deducted under I.T. Act, and what is the significance under Companies Act?
21 September 2009
Prior period items will not be allowed as a deduction under income tax when you debit to your profit and loss account in the subsequent years whereas you have to deduct tds otherwise penal provisions will be attracted. As per companies act you have show it as expenditure in the same head of account and in notes to accounts you have to mentions that rs. being last years expenditure debtied during the year.
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