Treatment of preoperative expenses??

Internal Audit 2772 views 4 replies

 Hi Frndz,

The company has incurred pre operative expenses, can any one pls let me know how to treat them in accounts and as per Income Tax rules??

How about treatment of depreciation on furniture and fixtures??

Replies (4)

1) in accounts all pre operative expenses has to be capitalised.

2) in income tax some pre operative incomes are taxble and some are not. ans as far as expenses are concerned they has to be capitalised and after commencement of operations the company can claime section 35 D of IT Act,

3) Depreciation can be cliamed after commencement of operations.

 Its very precisely explained in the following thread:

/forum/message_display.asp?group_id=63212&offset=1

machender is absolutely rite......

 

Please reply if any body knows about Treatment of preoperative expenses done by real estate builders and developers ......

How they can show there expenses in the books before recognition of income........

if they are not earning profit ,they can show there expenses as loss in the ITR

or just capitalize them as preoperative expense and write off at the time of revenue recognition as per AS 9. 



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