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ROC FEE FOR INCREASEING SHARE CAPITAL (Income Tax)

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This query is : Resolved


( Author )
10 October 2007

Hai friends,
plz send to me the answer if we increaed a share capital in the period of running business that expenditure ie ROC fee is Revenue nature or Capital nature and also send is it allowable or disallowable under income tax Act


CA. Rayan Sequeira

( Expert )
10 October 2007

HI ASHOK,
there is a slab rate for increasing authorised share capital
upto 1L - 4%
1-5L - 3%
5-50L - 2%
50-1C - 1%
Above 1C- .5%
Adding on, this expense is not allowable under the IT act u/s 37(1) as it is capital in nature


Ravikumar.G

( Expert )
10 October 2007

It is a capital expenditure. Not an awable expenditure. If it is come under 35D it can write it off over a period of 5 Years.


R.V.RAO

( Expert )
10 October 2007

FEES PAYABLE TO ROC ON INCREASE OF AUTHORISED SHARE CAPITAL IS REVENUE EXPENDITURE UNDER ACCOUNT HEAD- RATES AND TAXES.
IT IS DEDUCTIBLE UNDER INCOME TAX ACT .ROC RECEIPT( AT PRESENT YOU WILL GET MCA CHALLAN STAMPED AS PAID) IS TO BE PRODUCED ON BEING ASKED BY THE ASSESSING OFFICER OR YOUR AUDITOR.
IT CANNOT BE TREATED AS CAPITAL EXP. BECAUSE ANY EXP. IN ORDER TO BE TREATED AS CAPITAL EXP. HAS TO SATISFY A FEW TESTS LIKE SUCH EXP. SHOULD RESULT IN ENHANCING REVENUE EARNING CAPACITY, OR IMPROVE ASSET LIFE ETC....
R.V.RAO


Ravikumar.G

( Expert )
10 October 2007

Mohan Meakin Breweries Ltd. 117 ITR 501 (HP) Fees paid for increase of authorised capital is capital expenditure not deductible u/s 37(1). Also refer Punjab State Industrial Development Corp Ltd 225 ITR 792 (SC).


CA. Rayan Sequeira

( Expert )
10 October 2007

Mr Ravi is right as stated earlier this expense is capital in nature and hence not an allowable expenditure u/s 37(1).
Thanks Mr.Ravi for giving the case laws for this.

Regards
Rayan


R.V.RAO

( Expert )
10 October 2007

MR. RAVI KUMAR ,
THANKS FOR CASE LAW ON THE SUBJECT DUE TO WHICH ,I REVISE MY VIEW ALREADY EXPRESSED.
YOUR EXPOSURE ON THIS PART OF COMPANY LAW PROVED VERY USEFUL TO ALL OUR CA CLUB MEMBERS.
THANKS,
R.V.RAO


Ravikumar.G

( Expert )
10 October 2007

Welcome Mr.Rao Sir


Gul

( Expert )
10 October 2007

your knowledge and study is awesome, keep it up, thanks


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