Deferred Revenue Expenditure
This query is : Resolved
27 April 2011
Hello Everyone...my query belongs to allowability of deferred revenue exp. under the Income Tax Act...
Brief description about the company :-
A Private Limited company incorporated in the first week of september, 2010 and made first purchase on 15 feb., 2010 and also the main affairs of this concern are dealing in Mobile headsets which are imported from different countries. so basicly this is trading company.
Query :-
1. What would be treatment of revenue expenditure which had expended after incorporation of company and before commencing its affairs i.e. before first purchase?
2.Under which section of income tax act, deferred revenue expenditure will allow and to the what extent?
3. what will be the period of amortisation of these expenses.
Brief description about the company :-
A Private Limited company incorporated in the first week of september, 2010 and made first purchase on 15 feb., 2010 and also the main affairs of this concern are dealing in Mobile headsets which are imported from different countries. so basicly this is trading company.
Query :-
1. What would be treatment of revenue expenditure which had expended after incorporation of company and before commencing its affairs i.e. before first purchase?
2.Under which section of income tax act, deferred revenue expenditure will allow and to the what extent?
3. what will be the period of amortisation of these expenses.
27 April 2011
1.On AS-26, intangible assets, becomes mandatory, an enterprise cannot recognize any expenditure as deferred revenue expenditure. In view of that, the referred expenditure has to be expensed out in the year of occurrence itself.
2. In income tax Act also there are only two types of expenditure, viz., capital expenditure and revenue expenditure.
3.Amortization does not arise in view of the above two observations.
2. In income tax Act also there are only two types of expenditure, viz., capital expenditure and revenue expenditure.
3.Amortization does not arise in view of the above two observations.
27 April 2011
Agreed, you can claim revenue expenditure in the same year.
Only deffered , expenditure relating to incorporation of company only.
Only deffered , expenditure relating to incorporation of company only.
27 April 2011
I want to make one more thing clear that the following expenses are treated as deferred revenue expenditure :-
Salary, Advertisement, Bank Charges and interest, office exp, water and electricity exp etc.
Basicly all the revenue type expenditure related to pre operative nature are deferred.
so whether this is right approach or any else way should be adppted to resolve this problem...
Salary, Advertisement, Bank Charges and interest, office exp, water and electricity exp etc.
Basicly all the revenue type expenditure related to pre operative nature are deferred.
so whether this is right approach or any else way should be adppted to resolve this problem...
27 April 2011
divide it in 5 years. and tr to p&l account 1/5th each year
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