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Cc processing charges before commencement of business

Akmohandas (CA Practice ) (20 Points)

06 March 2012

A company incurred 12 lakhs as processing charges on Cash Credit loan before commencement of business. Where will he show this in the Balance Sheet and how can he claim the amount as deduction in his Profit and Loss Account after the business has started?

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CA Rohit (In Practice) (71 Points)
Replied 06 March 2012

Hi..

The expenses incurred before commencement of the business is allowable in section 35 AD of I.T.Act. This section defines the criteria used for find out the preliminary expenses and i dont think so this CC processing charges covered under any criteria.

So, i think the said expeneses is not allowable as deduction in I.T.Act.