Preliminary expenses from last FY

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A Pvt company will be incorporated in FY 20-21. There has been many expenses for planning this business in FY 19-20 from owner's own pocket. These are some queries regarding this.

1) Whether these expenses in FY 19-20 can be shown as preliminary expenses of company in FY 20-21?

2) Can this above amount be returned to director after showing as director's loan in FY 20-21?

Looking forward your reply. Thank you.

Replies (1)
Preliminary expenses are required to be adopted by company in first board meeting ,If company is going to incorporate before the end of FY,then as per my view it will related with FY19-20 itself ,If incorporated on or after April then obviously realted to Next FY20-21 ,Because company was not in existence when such expenses incurred !

If promoter is also director ,then on safe side ,you can do one thing ,Approve All preliminary expenses incurred by such promoter cum director which have proper audit trail and supported by evidence in board meeting and adopt ,also approve payment and pay actually from companies account ...Once money is paid ...company can again accept such money through proper channel ( or with some additional amount ) and it will be lend by him in capacity as director {which is exempted } from deposit regulations ....

Else such promoter will be shareholder and conversion his money owed by company ,may trigger sec.230 ,,..Ya until company don't have sufficient fund you can with his written consent can roll over such due to be paid at later date ....

disclaimer - For education purpose only..


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