07 August 2011
These are to be capitalised and generally not allowable as deduction directly.
If these are related to fixed assets, proportionately capitalise them in respective asset account.
In case preliminary expenses as described in Section 35D, like, preparation of project report, feasibility report, printing of MOA,AOA etc, 1/5th every year can be claimed upto 5 successive AYs.
However, Preliminary expenses not exceeding 5% of Cost or Project or cost of capital employed, which ever is higher, qualify for deduction.
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