one of our clients is in trading business and avails the services of the broker, my question is that during the year neither the broker gave any bill nor any payment was made to him, the bill was given by him in the next financial year and the payment was made thereon. is this right to book the entry in the next year or is it be treated as a prior period item???? and what would be the tax treatment???
hi manik
yes it would be treated as prior period items. and for the tax treatment when bill will be raised than entry should be passed for the same.
thanks
Defintions of prior period item is one which arises due to errors or ommission of earlier period.so as it is a omission it relates to prior period item and the Income tax is disallowed for prior period items
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