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Treatment of Pre-Operative Exp.

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(Querist)
09 July 2011 Hello Friends...I have a Query..

A Private Limited Company has incorporated in September 2010 and made its first sale on 21st March 2011.
This company has incurrend the revenue expenditures of Rs. 1.50 crore between aforesaid period.

What will be the treatment of these expenditures in Accounts as well as in Income Tax Act?

Whether these expenditures are Pre-Operative expenditures and if so, than should it be amortised in 5 equal installment in accounts? and could we claim the deduction u/s 37 of IT Act.

or

any other answer that you want to give/express?
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CS Bijoy

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CS Bijoy (Expert)
09 July 2011 According to me expenditure incurred after establishment but before commencement of Production or Business can be capitalized.

So just plan your expenditure accordingly.
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Surendra Singh Chouhan

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Surendra Singh Chouhan (Querist)
09 July 2011 Hello Friends...I have a Query..

A Private Limited Company has incorporated in September 2010 and made its first sale on 21st March 2011.
This company has incurrend the revenue expenditures of Rs. 1.50 crore between aforesaid period.

What will be the treatment of these expenditures in Accounts as well as in Income Tax Act?

Whether these expenditures are Pre-Operative expenditures and if so, than should it be amortised in 5 equal installment in accounts? and could we claim the deduction u/s 37 of IT Act.

or

any other answer that you want to give/express?
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CA MANOJ GUPTA

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CA MANOJ GUPTA (Expert)
10 July 2011 THE EXPENSES INCURRED WILL BE CAPITAL IN NATURE SEE CIT v. Western India Sea Food (P) Ltd. (1993) 199 ITR 777 (Guj),

CA MANOJ GUPTA
JODHPUR
09828510543
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