Pre-Operative expenses of Capital Nature are to be capitalised with the cost of fixed assets in relation to which they have been incurred.
Whereras pre-operative expenses if Revenue Nature are to be charged against the profits of the company in they year in which business has commenced.
Well you note a point:
It is normal for a company at the inception of its business to make a loss.
Now furthemore, where you are including the abovesaid pre-operative revenue expenses in the P&L statement for the first year, such expenses further add up to the losses made for the first year which can be claimed against the profit made for the subsequent 8 years.
SO, yes the abovesaid pre-operative expenses can definately be claimed as loss under the Income Tax Act.
the preoperative expenses of the revenue nature should be capitalized in the ratio of the Furniture & Fixtures: Plant & Machinery from the date of the First Sale made. For eg u take a shop on lease & pay lease rent from say sep. u strt the interiors/const/electrical work in the shop. the compltetion ends in dec & u start sale from the 1st of jan. then the exp of the rent of sep to dec paid will be the preoperative exp & will be capitalized on 01 jan in the ratio of the Furniture & Fixture( Also the interior work cost+ elecrical fitting cost) & Plant & machinery installed at that place on the basis that u paid that rent for the interiors/const/electrical work in that shop.