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Querist : Anonymous

Querist : Anonymous (Querist)

23 January 2016 One of our client has commenced the business of manufacturing of Inner Garments in a proprietary firm. He has purchased some fabrics and other value added materials amounting Rs. 8.00 lacs. He has not made any sale till the end of the year. He has incurred expenses for brand, website, salary to staff for research & development amounting to Rs. 25.00 lacs. But till the end of the financial year no sale/production is made. Please let us know that.
(1) Whether brand exp. of Rs. 9.00 lacs will be capitalized and any depreciation will be charged in next year?
(2) Whether the remaining Rs. 16.00 lacs expenses will be treated as revenue expenses for the current year or will be treated as preoperative expenses and will be carried forward in next year and will be claimed in p & l a/c of next year?
Please reply.

Amol S Joglekar

Amol S Joglekar (Expert)

23 January 2016 looking at it on a stand alone basis, the entire expenses can be booked as loss.
The brand expenses as you are referring : is it a self developed brand or the existing one?

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