Prior period expenses

As per AS-5, Prior period exp are exp wch werent recognised in previous years due to error / ommisions.....

In current situation, the writing off of ITC cant be termed to be prior period exp...

The entry would be:

Debit balance w/off a/c      Dr.

                        To ITC

and d same ll b allowed as deduction under income tax act for the current FY .

*ITC--Input Tax Credit

plz correct me if m wrng.

Originally posted by : Lakshmi Devanand
	Hi One of my client has shown the INPUT Vat paid as asset in previous years balance sheet, as it was supposed to be refunded from the department. But, now, is has become non-recoverable from the dept. My clarification is: 1. Can I claim all the prior period expense as an expense from the current year profit and pay the income tax on the net amount arrived. However, I have made the necessary disclosures in the Report and Profit and loss account.   Kindly advise asap. Thanks in advance, Regards Lakshmi Devanand

 As exactly done, only disclosure under Notes to Accounts is required. And excess sales Tax Credit is well eligible to be cliamed as expenditure against current year profit, infact it is a current year transaction only.

agreed with CA SUMIT