Prelim expenses

@ Eswar Reddy

Section 35 of the Companies Act is different  may not be related to preliminary  expenses    , please Confirm.

Everything is there in 35D(2). On top of them we have to asses the measurement principles as well. 

https://incometaxindia.gov.in/Acts/Income-tax

Incometax act

"

the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount equal to one-tenth of such expenditure for each of the ten successive previous years beginning with the previous year in which the business commences or, as the case may be, the previous year in which the extension of the ⁹²[***] undertaking is completed or the new ⁹²[***] unit commences production or operation :

⁹³[Provided that where an assessee incurs after the 31st day of March, 1998, any expenditure specified in sub-section (2), the provisions of this sub-section shall have effect as if for the words “an amount equal to one-tenth of such expenditure for each of the ten successive previous years”, the words “an amount equal to one-fifth of such expenditure for each of the five successive previous years” had been substituted.]"

What does it mean? Does it mean that out of 1000/- prelim expenses, just one tenth can be capitalised.

What does successive previous ten years mean? Does it mean before March 1998 and after that no need to follow this? 

Cleartax portal has different version and its directly applying 5% and amortised for 5 years. @ Mr. Sabyasachi what is the meaning of "to the extent not written off"

Preliminary expenses can be capitalized under Section 35D of the Income Tax Act, 1961

To be eligible for capitalization, preliminary expenses must meet the following conditions:

-They must be incurred before the commencement of business.

-They must be directly related to the setting up of the business.

-They must be of a capital nature, i.e., they are expected to provide a long-term benefit to the business.

If preliminary expenses meet these conditions, they can be amortized over a period of 10 years. This means that the expenses are spread out over 10 years for tax purposes, which reduces the company's taxable income in the year in which the expenses are incurred.

It gives rise to deferred taxes as well