Milan Agrawal (Chartered Accountant) (207 Points)
31 August 2012Dear All,
My client has incorporated a Public Company. He has incurred various expenditures (e.g. ROC charges, salaries, consultacy charges, travelling expenses etc.) during the F.Y.2011-12. However, the company has not generated a single rupee of revenue.
Now, my query is whether these expenditures can be treated as Preliminary & Preopertive expenses and if yes, then how it is to be amortized keeping in mind the provisions of Revised Schedule - VI and Income Tax Act, 1961?
Thanks & regards
Amber Jain
(Article Assistant)
(206 Points)
Replied 05 September 2012
Hi Milan,
The expenses incurred before Incorporation has to shown under Preliminary expenses & the expenses incurred between the Certificate of Incorporation & Certificate of Commencement to be shown under Pre-operative expenses & can be w/o within 5years.
Amber Jain
Nithin Chettoor
(Assistant Manager)
(388 Points)
Replied 01 December 2012
AS per the revised Schedule VI, there is no such item in the format prescribed for the disclosure of Prelimiary expenses or such expenses which fell under Miscellaneous Expenditure to the extent not written off in the old schedule VI, but as per the revised schedule VI, if there is a conflict between any AS and revised schedule VI format, AS prevails. Hence, such a disclosure is a requirement as per AS and thus we can include the item under seperate head in the revised schedule VI also.
You can classify the expenditure as Prelimiary Expenses and you can start amortising the same once the business is commenced and the revenue is generated to meet the Matching concept of accounting.
Anyhow, u may claim the same as an expense as per IT act, 1/5th every year.
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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