Reg: Allowance of Preliminary expenses u/s 35D

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Shammi_Vision (Querist)

03 July 2010 Dear sir,
I have incorporated a new company on dated 02.03.2010. The expenses incurred on its incorporation are amounting to Rs. 25,900/-.
Now I want to know that how much amount of preliminary expenses can be claimed during the previous year 2009-10 under section 35D of the Income tax Act, 1961.

For your kind information the paid up capital of the company is Rs. 100,000 while it has no fixed assests and any other long term borrowings.

Plz reply its urgent

Thanks in advance
Shammi

Aditya Maheshwari

Aditya Maheshwari (Expert)

03 July 2010 5% of the paid up capital i. e. Rs. 5,000/- to be allowable in five instalments.

Shammi_Vision

Shammi_Vision (Querist)

03 July 2010 Thanks sir but my CA sir saying that we can claim the whole amount as preliminary expenses in five sucessive financial years. Is it true?

Aditya Maheshwari

Aditya Maheshwari (Expert)

05 July 2010 As per Section 35D dedcution for preliminary expenses is restricted to 5% of the paid up capital of the company. So i have replied Rs. 5000 allowable in five instalments.

Please make ur CA read Section 35D and then reply on the same.

Sometimes one does take a chance with claiming the deduction and if the case is not selected in scrutiny then the same is allowed. That may have been there in the CA's mind and sometimes we also take a chance if the differential amount is less. But in ur case the difference is big. So please read Section 35D and ask ur CA to also read that section and then respond to it.

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