What is treatment of prelimanary exp. as per accounting and income tax act?
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preliminare exp.
Replies (5)
As per Income tax act preliminary exp is to deffered for five years and same is suggested as per accounting ( as per Indian GAAP).
Pushkar is right.
It's depend on the company's accounting policy to deferred the preliminary expenses in accounting books. As per income tax act, it is written off in five years.
Under Income Tax Act, all expenditure which are of capital nature, is not allowed as deduction unless specifically provided. In respece of the same, a ENABLING provision is provided by way of section 35D. Accordingly, only those preiliminary expenses which are specifically enumerated in the said section, are allowed to be deferred and amortised over a period of 5 years. All other preliminary expenditure which are not specifically mentioned in the said section are treated as capital expense for which no deduction is allowed under IT Act.
as per new ammendment on accounts this expenses should wretten of in 1st year itself
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