Prior Period Items

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..... Prior Period Items
Query (Issue) Started By: - sathyanarayanan kasinathan Dated:- 8-10-2010 Last Reply Date:- 12-10-2010 Income Tax
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Income Tax
Since Prior Period Item is not an allowable expenditure under Income tax, Can the prev year returns be revised to give effect for the same. Reply By GOPALJI AGRAWAL: The Reply: In terms of the provisions of section 139(5) only. .....

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..... Reply By DEV KUMAR KOTHARI: The Reply: Prior period expenses can also be claimed and allowed, if they are incurred during the relevant previous year. The accrual can be on receiving bill or claim, on settlement of claim, and similar reasons. Some IPP is a common phenomena, because accounts have to be approved within a limited period of time, and by that time all liabilities for expenses may not .....

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..... be ascertainable and claims etc. may not be received or there can be some dispute and claim is not settled. Any expenses covered by S.43B will be allowable in the year of payment even if it relates to earlier period. so explore the possibilities of allow-ability in the year in which you have accounted for such expenses by establishing reasons for not accounting the same in earlier year and fact .....

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..... that you did nto claim the same in earlier year. Filing of revised return has some procedural and periodical limitations. Revised return can be filed only if original return was filed timely, and limitation has not yet lapsed, as rightly pointed out by Shri Goplaji Agarwal. Furthermore, mistake or omission should also be bonafide, otherwise revised return may not be accepted. Filing revised ret .....

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..... urn may also be a reason for prolonged period of scrutiny and unsettling otherwise settled assessment. So considering amount involved, tax effect, and administrative factors one has to decide as to press claim in current year or in earlier year by filing revised return.
Discussion Forum - Knowledge Sharing .....

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