Accounting entries for preliminery expenses

In accordance with paragraph 56 of AS 26 such expenditures should be expensed by way of a charge to the profit and loss account in the period in which these are incurred. For this purpose, profit and loss account will have to be prepared by the company even before the commencement of commercial operations.

Thank you for reply

but how to adjust same with section 35 AD provisions of Income Tax Act, 1961

there is provision of same to amortise expenditure for 5 years

As per AS-26 it is written off wholly in the first year but for tax purpose it is amortized over a longer period (i.e. in 5 years u/s 35D).
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This results into ‘Timing Difference’ as per AS-22. Here, timing difference results in ‘Deferred Tax Asset’.
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The deferred tax should form part of the tax expenses in the profit and loss account and it should be accounted as a deferred tax asset (DTA) in the balance sheet.