Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Prior period expenses are allowed or not

30 July 2015

Dear Members

Kindly suggest me (with reference to any section of IT act, 1961) that whether prior period expense is allowable or not? Similarly whether prior period income is taxable or not?

Reply
Follow
Share

1 Replies

Rajagopalakrishnan R (PARTNER) (1422 Points)
Replied 30 July 2015

Expenses relating to a particluar period have to be claimed in that year. Only exception is that if the expenses realting to prior period came to light/was demanded/liability arose in current period then it can be claimed as expenses of current year. In fact as per the accounting principle such expenditure are not prior period expenses at all.

Income also similar principles are involved. BUt in the case of income if it was not offered for tax in the year in which the right to receive or the actual receipt took place, two options are revision of that years return. If the time limit for revision is expired then better to declare in current return.