Preliminary expenses

Others 694 views 4 replies

In my company i have preliminary expenses that are being accumulated since 2004. Recently my company has statted functioning and has recieved some rent. Now i want to know whether all preliminary expenses can be write off at once or what should be the percentage that can be adjusted or since they comming from long time back thus cant be adjusted......

Replies (4)

Whole amount of preliminary expenses should be written off by way of a charge to the profit and loss account in the period in which the same is incurred.
- Refer Para 56 of AS 26
.
Since the same has been treated incorrectly by the company in the year of incurrence, it should be rectified in the current year and disclosed appropriately as a prior period item in accordance with AS 5.

However for the computation of Total Income under Income Tax Act, Preliminary Expenses shall be Ammortised over a period of 5 yrs in Equal Installments. - Sec 35D, if im not wrong.

Well thanks to Mr Deepak and CA Finalist for looking into query

I would like to know that

MCA says that preliminary expenses should be adjusted the same or the next financial year.

Income Tax says that it can be adjusted 1/5 th each year for next 5 years .

In my case since the preliminary expenses come fromm very long back then what shpuld i do

Also i would like to tell that i am not  a ca or fellow student but since i am looking after the company i need to know each every aspect of it.

 

Considering the Standards specified by the Institute, as told by Mr.Garg, you should be debiting the amount in the Books of Accounts for the current fy, with disclosure of the same. While computing Total Income for Income Tax purpose while filing Return, you should recompute the Total Income, by apportioning the amount as said earlier. Im not sure if AO would agree with the apportionement in the CY, as the Act says, it should be apportioned from the year of commencement. Since in your case, apportionement has not been done since Date of Commencment, I dont know wat wud the AO say regarding the same. If I'm not wrong, just because a deduction was not claimed earlier, it cant be denied now. Or the company might need to to apply for Condonation for delay. P.S:-I'm students only.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 12 March 2026
Customer Relationship Executive

TAXLET

Calicut

B.Com

View Details
Company
Featured 28 March 2026
Accountant

Ashok Amol & Associates

New Delhi

B.Com

View Details
Company
Featured 14 March 2026
Article Trainee

N N V Satish&co

Hyderabad

CA Inter

View Details
Company
Featured 13 April 2026
GST CONSULTANCY

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 14 March 2026
Associate CA

N N V Satish&co

Hyderabad

CA

View Details
Company
Featured 19 March 2026
Article Assistant

Gupta Sachdeva & Co. Chartered Accountants

New Delhi

CA Final

View Details
Company
Featured 28 March 2026
CA Final

Ashok Amol & Associates

New Delhi

CA Final

View Details
Company
Featured 14 April 2026
GST CONSULTANT

Abhishek G Agrawal & Co.

Korba

CA Final

View Details