What is treatment of prelimanary exp. as per accounting and income tax act?
5 Replies
CA. Pushkar Sharma
(Chartered Accountant)
(278 Points)
Replied 12 January 2009
As per Income tax act preliminary exp is to deffered for five years and same is suggested as per accounting ( as per Indian GAAP).
CA Pawan Goswami
(CA)
(2928 Points)
Replied 12 January 2009
It's depend on the company's accounting policy to deferred the preliminary expenses in accounting books. As per income tax act, it is written off in five years.
Pavan Jain S
(Chartered Accountant)
(1575 Points)
Replied 13 January 2009
Under Income Tax Act, all expenditure which are of capital nature, is not allowed as deduction unless specifically provided. In respece of the same, a ENABLING provision is provided by way of section 35D. Accordingly, only those preiliminary expenses which are specifically enumerated in the said section, are allowed to be deferred and amortised over a period of 5 years. All other preliminary expenditure which are not specifically mentioned in the said section are treated as capital expense for which no deduction is allowed under IT Act.
Jagadish
(Student)
(368 Points)
Replied 13 January 2009
as per new ammendment on accounts this expenses should wretten of in 1st year itself
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