Claiming Rent Expenses Invoiced Late Due to Vendor Dispute – Guidance Needed

[Ramanathan Seshan]

Dear experts,

Company A rented a premises starting January 2025. Due to disagreements with the (unregistered) vendor, rent invoices for February and March 2025 were not issued on time and were only raised in April 2025. No provision for these expenses was made in the books during FY 2024-25. As a result, the rent expense for Feb and Mar 2025 can't be claimed in the ITR for AY 2025-26, and if claimed in the next year, it may be disallowed as a prior period expense.

What options are available to legitimately claim these expenses? Is there a possible accounting or tax treatment that would allow for their deduction?

Regards,

S Ram

AI Summary

Tax Deduction Dilemma: Unissued Vendor Invoices Require Careful Documentation and Strategic Financial Reporting Approach A company encountered a rental expense issue where invoices for February and March 2025 were not issued due to vendor disputes. The primary concern was how to legitimately claim these expenses in tax filings. Legal strategies include establishing expense 'crystallization' in the subsequent financial year, providing detailed documentation, and making appropriate tax audit disclosures to support the expense recognition.