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Discount on issue of shares

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(Querist)
07 February 2009 If a company issues its shares at discount, can the company include the discount amount under the head preliminary expenses for claiming deduction under section 35D....for a period of five years and what would be the accounting treatment....
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CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
08 February 2009 Section 35D clearly states that the expenses incurred for setting up the unit.

The discount what you are giving is not for setting up the unit. since the company wants quick capitala they are giving discount.

Therefore discounts cannot be included in the preliminery expenses.

You have to carry it like miscellaneous expenses not written off and to be amortised over a period of 5 or 10 years depending on the resoultion passed by the board.
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