Teatment of expenses disallowed in previous year

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amol (Querist)
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29 November 2013 Hello All,

In FY-2012-13 in books of accounts we had made the provision for future loss that may incur due to onerous contract entered during the year. We disallowed the provision in computation for FY-2012-13.Is the disallowance is correct?

In FY-2013-14 the provision will be reversed in books of accounts. How it will be treated in tax computation for FY-2013-14. Whether it will be deducted from income? if yes, under which section?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 November 2013 dear Amol,

Yes, this reversal won't result in increase in your taxable income. the principle is simple - what has not been allowed as an expense, its reversal wont account for as an income.

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