Treatment of Prelimniary Exp in first year

Preliminary Expenses allowed as a deduction u/s 35D

1/5 of the preliminary expense is allowed for 5years from the year of incorporation.

Originally posted by : SK Rawal
	We have incorpoarted a new company, pls suggest treatment of expenses incurred on incorporation of the company in the books of account. Pls provide reference to provisions of Companies Act or Accounting Standard.

The treatment suggested by Chirag is as per Income Tax Act, 1961. As per Companies Act, 1956, the same has to be treated as deferred revenue expenditure and to be written off over a period of time (probably 5 years).