Preliminary expenses

724 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.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 24 June 2026
HEAD - AUDIT AND TAXATION

A R JADHAV AND ASSOCIATES

Mumbai

CA Inter

View Details
Company
12 June 2026
Accounts & Taxation Executive

Winshine Financial Services

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 24 June 2026
ARTICLE ASSISTANT

BHUPINDER SHAH AND COMPANY

New Delhi

CA Inter

View Details
Company
22 June 2026
Accountant

Global Image Technologies Private Limited

New Delhi

MBA

View Details
Company
ARTICLESHIP 27 June 2026
Article

SNCO

Mumbai

CA Inter

View Details
Company
04 June 2026
Semi Qualified CA

Goyal Puneet & Associates

New Delhi

CA Final

View Details
Company
ARTICLESHIP 28 June 2026
Article Assistant

Sharma Chetan And Company

Gurgaon

CA Inter

View Details
Company
ARTICLESHIP 31 May 2026
Article Assistant

KPRS And Associates

New Delhi

CA Inter

View Details