Amortisation of expenses over a period

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UMA SHANKER SHARDA (Querist)

05 July 2009 Hi!

A Company raised its authorised share capital during the fin. year and paid substantial amount towards ROC fees. Now the Company wants to amortise it over a period of three years in Balance sheet, which that can do. My question is what will be the treatment for Income tax point of view? whether it is allowable in the year of payment or as per company's amortisation, it will be allowed in three years? Readers views are solicited urgently.
Thanks!
U S Sharda

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)

05 July 2009 The roc fees which you pay for increase in capital will not be allowed as a business expenditure. Only intial fees you pay at the time of incorporation will be allowed as preliminary expenses which can be amortised over a period of 5 years.
Eventhough you debit to profit and loss account it will be a disalowed and added to back to income for income tax purpose.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

05 July 2009 Fees payable to the ROC for enhancement of capital is a capital expenditure not deductible u/s 37(1) but deductible u/s 35D.

Citation:- Punjab State Industrial Development Corp Ltd 225 ITR 792 (SC).

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