Salary for technical staff for period before incorporation

This query is : Resolved

(Querist)
Follow

10 April 2019 Respected sir
we have developed app for payment & discount purpose for that we have incorporated business in dec month
we have appointed it team of 7 person & paid salary for oct & nov month
i want to know whether salary for oct & nov month will be allowed as deduction as preliminary exp or it will not be allowed in income tax

thanks & regards
jignesh daiya

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

10 April 2019 It could have been easier for me if you could have mentioned the status of the incorporated entity.

Puja Sharma

Puja Sharma (Expert)
Follow

10 April 2019 Yes the same can be treated as preliminary expenses or can be capitalised with a particular asset if we can identify the particular asset for which the expenditure was carried out.

After the commencement of business, the preliminary expenses can be written off over the next five years under the income tax act. However under accounting terms the entire amount will be treated as an expenses in the said year of commencement of business.

The said 1/5th of the expenditure will be allowed as an admissible expenses u/s 35AD of the Income Tax Act, 1961.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

10 April 2019 If the salary has been paid towards developing the computer application meant for in-house use , then transfer the expenses to computer application account. Pl refer AS 26 -Intangible Assets.

CA jignesh daiya

CA jignesh daiya

(Querist)
Follow

10 April 2019 we are LLP & not company It team has developed one application like flipkart available in market then how to treat salary of oct & nov month?
our LLP has incorporated on 01.12.2018 but i want to know about salary of oct & nov month?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

10 April 2019 You may transfer the same to Software A/c and claim depreciation at the applicable rate.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now