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2015 (10) TMI 732 - AT - Income TaxDisallowance of prior period expenses - Held that:- In the instant case, there is no material to show that the assessee had acknowledged the liability by 31.3.2008. Since the contractor has raised the bill on 30-06-2008 and both the parties have agreed for the said amount by that date, the liability relating to the above bill gets crystallized only on 30-06-2008 and accordingly, in our view, it cannot be considered as prior period expenses. We find merit in the alternative contention of the Ld A.R also, i.e., even, if it is considered as an item of prior period expenses, the same is required to be allowed as deduction during the instant year only since the assessee has deducted TDS during the current year. As the assessee submitted that it is declaring income on completion of flats for accounting the income from building activities. If that be the case, the construction expenses will have been shown as Work in progress only in the immediately preceding year and the same would have been allowed as deduction only in the year in which the flats are sold. In that angle also, the impugned expenses may not fall in the category of “Prior period expenses”. - Decided in favour of assessee.
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