Tax Treatment of pre incorporation expenses

hi members,

the situation is before incorporation of a company the promoters were paid salaries and business paid rent to owner for the 6 months before incorporation.

as per IT Act 1961, only those expenses specified in sec 35D were allowed for the tax purposes.

now what is the tax treatment for the above expenses and how to account them in books??

thanks in advance.

regards,
Girish

 

Those expenses which were incurred prior to the incorporation of the co. and are not listed u/s 35D can not be treated as an expense for the purpose of Income Tax Act.

A foreign co. is not allowed any expense.

Kindly note that promoters are liable to tax on the income so accrued/received by them.