Hi everybody, as per IT Act, it must be written off within 5 years but in accounts, AS 26 will apply. AS per AS 26, w.e.f. 1.4.2003/1.4.2004, as the case may be, preliminary exp will not be carried forward to the balance sheet since it does not meet the recognition criteria. It means u need to charge it to revenue accounts in the year in which it is incurred. After implementation of Companies (AS) Rules, 2006, ASs have become part of Companies Act. Hence one needs to follow them.
Regards, CA Shakuntala Chhangani
CAclubindia
