PRELIMINARY EXPENSES

As per AS - 26 issued by the ICAI (para 50-54), and IFRS only if there is a "FUTURE ECONOMIC BENEFITS" arising from the expenses it can be deferred.

Preliminary Expenses in normal cases does not have any future economic benefit arising from it. Therefore it has to be written off completely at the year of commencement and should not be deferred.

In case of companies violating the Accounting standards will lead to undermining the True and Fair view of the Books of Accounts by violation of the companies Act,1956. The auditor as a reason will not give a clean report for violating the Companies Act.

For INCOME TAX ( as per the Income Tax Act 1961), purposes you can write off these expenses over a period of 5 years in India.

In case people suggesting a different answer please substantiate it with references to Standards or Laws