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Preliminary expenses

This query is : Resolved 
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(Querist)
21 May 2008 During the course of one of my audits i came across an expenditure for the Increase in the Authorised Capital paid to MCA. In the books of accounts the same was debited as preliminary expenses. when i asked a senior CA/my Principal he said the treatment of the exp is correct but couldnt xplain the reason.

Can anyone provide me a reason for the same.
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S.Srinivasaraghavan

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S.Srinivasaraghavan (Expert)
21 May 2008 Is the company already doing business or yet to commence?
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Akhil Agrawal

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Akhil Agrawal (Querist)
22 May 2008 it is already doing business & incor in 2002 whereas the increase in A.Cap is done in 2007-08
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