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preminarly expenses

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(Querist)
18 August 2010 is the expenses related to issue of share capital of private company is treated as premilary expenses and cover under section 35D of income tax act for deduction? or it is capital nature expenditure and no tax treatment with reference to case law of Broke bond India Ltd. (SC) 1997. How can we say that issue of share capital is expansion of business to take the benefit of Section 35D of Income Tax act
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CA.Amit Revankar

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CA.Amit Revankar (Expert)
18 August 2010 As per sec-35, the deduction of preliminary exp is alloewed, if expenditure is incurred at the time of formation or substantial expansion, otherwise expenses is not covered u/s 35D
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Ranjeet

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Ranjeet (Querist)
18 August 2010 but what is the meaning of substanial expansion.....?
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CA. BIJENDER KR. BANSAL

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CA. BIJENDER KR. BANSAL (Expert)
18 August 2010 SET UP A NEW UNIT AND EXPANSION IN EXISTING UNIT IS CALLED SUBSTANTIAL EXPANSION.
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Ranjeet

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Ranjeet (Querist)
18 August 2010 is the expenses related to issue of share capital of private company is treated as premilary expenses and cover under section 35D of income tax act for deduction? or it is capital nature expenditure and no tax treatment with reference to case law of Broke bond India Ltd. (SC) 1997. How can we say that issue of share capital is expansion of business to take the benefit of Section 35D of Income Tax act
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Aditya Maheshwari

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Aditya Maheshwari (Expert)
18 August 2010 Some capital expenditure must have been incurred during the year for which it was necessary for capital funding.
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