PPI (Profit prior to incorporation)

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Prerna (Querist)
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24 July 2011 My BCom text book says that interest to vendor is a pre-incorporation expenditure. But it is divided in the time ratio applicable for the period from date of take over of business to date of settlement of PC (Purchase consideration). Hence if the settlement of PC is after date of incorporation, the interest is charged as pre and post incorporation expenditure.
So how is it called a pre-incorporation expenditure?

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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25 July 2011 Is it as per clause of agreement and has it been due to late payment of the consideration. What is the terms of agreement. Is is that the physical possession shall be given only after payment then no question will come for interest payment otherwise the agreement will decide the issue

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