Pre production expenses
This query is : Resolved
02 August 2011
in one of my clients , i have noticed that the some of the expenses is appearing in rates and taxes and professional charges relating to a new project which is all together a new line of business in comparison to the present business.
My doubt is whether the expenses can be booked in the normal business P &L or should the same to be shown under expenditure during construction pending allocation as per the guidance note.
My doubt is whether the expenses can be booked in the normal business P &L or should the same to be shown under expenditure during construction pending allocation as per the guidance note.
03 August 2011
The Council of ICAI, at its 280th meeting, held on August 7-9, 2008, has decided to withdraw the Guidance Note on Treatment of Expenditure during Construction Period, as the same is no longer relevant in the present day context.
In view of the above, for accounting purposes, the said expenses may be expensed out through p & l account and may be disallowed for income tax purposes since no income is generated from the new project.
In view of the above, for accounting purposes, the said expenses may be expensed out through p & l account and may be disallowed for income tax purposes since no income is generated from the new project.
Message likes :
1 times
03 August 2011
The expert has given correct reply to your question.
In addition to the above I would like to let you know that it is not necessary the against each expenses there should be income and accordingly it can be claimed in P & L A/c. As per income Tax Act it can be treated as deferred Revenue expenses to be adjusted in 2 - 5 years of time as the case may be.
In addition to the above I would like to let you know that it is not necessary the against each expenses there should be income and accordingly it can be claimed in P & L A/c. As per income Tax Act it can be treated as deferred Revenue expenses to be adjusted in 2 - 5 years of time as the case may be.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Oct 2025 Invoices
- Under marginal scheme
- Import of Software Service.
- Clarification Requested: Gift → NRO → NRE → Overseas Transfer - USA/CANDA (FEMA & Tax Compliance)
- GST on Renting godown to KFCSC for Storage of Raagi
- How to Handle Active E-Invoices in GST Portal Deleted from Tally?
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
