2016 (2) TMI 752

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.... The facts of the issue are that the expenditure of Rs. 37,37,300/- was incurred in the earlier years, but the actual payments to the parties were made during the current financial year relevant to the current assessment year 2010-11, by deducting and remitting the necessary TDS(Rs. 35,61,074/-). Since the assessee has not deducted any TDS in the years of incurrence of these expenses, the same were not claimed as expenditure in the respective years. Based on the actual deduction/remittance of TDS, these expenses are claimed in the current year. However, since these expenses are pertaining to the earlier years, the same were shown as prior period expenses in the accounts for the purpose of clarity. 3.1 As per the provisions of sec.40(a)(i....

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.... that sec.40(a)(ia) of the Act does not permit to allow prior period expenses. On the other hand, the ld. AR submitted that when the expenditure actually paid in the assessment year under consideration, it is allowable on actual payment basis in view of the second limb of proviso to sec.40(a)(ia) of the Act. No expenditure mentioned in sections 30 to 38 of the Act are allowable unless the necessary TDS is deducted and remitted into the government account before filing of return u/s.139(1) of the Act. The provisions of sec.40(a)(ia) stipulate that the expenses are allowable only in the year in which the necessary TDS is deducted and remitted into the government account. In the present case, though the expenditure relating to earlier period, ....