ITAT allows prior period Expenses based on principle of crystallization of liability

Kamla Retail Ltd. Vs ACIT (ITAT Chandigarh) It is no doubt true that it is incumbent upon the assessee to account for the expenses in respective financial year in which they are incurred or the liability towards such expenses has accrued which is in line with the mercantile system of accounting as well as concept of matching accounting principle where the revenues and corresponding expenses are accounted for in the respective years. At the same time, there are business exigencies where at times, the parties either disputes either the supply of goods or availment/rendering of services or the qu...