Dear Sirs/madams,
A Ltd, Company incorporated on 02-june-2012.It is incorporated only for the purpose of Construction of a Project.
Comapny has started construction on 03-apr-2013.
My doubt is about whether Expenses incurred prior to 02-June-2012 will be treated as Preliminary Expenses or Expenses incurred upto 03-Apr-2013 will be treated as Preliminary Expenses.
Please clarify my doubt.
Thanks in advance.
Preliminary expenses covers all expenses before incorporation of the business ,if any expense has been spent after commencement or incorporation of business the same is not considered as preliminary expenses. These expenses will be written off in 5 equal year installment in profit and loss A/c. You can also transfer whole amount in single year but for income tax purpose 1/5 of the amount will be considered.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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