ROC fees for increase in nominal share capital

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2010 Friends,

A co has increased nominal share capital & paid ROC fees.
Is there a case law [specially SC] to allow this expense as a deduction in Income-tax?
Thanks

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 September 2010 Delhi high court in (2001) 250 ITR 338 said 35D can be claimed if such expenditure is incurred in connection with the expansion of the industrial undertaking or in connection with setting up of the new industrial undertaking.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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18 September 2010 Agreed it will be deffered and allowed in 5 instalment.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 September 2010 But Kerala High court in The Federal Bank Ltd's case said that the referred expenditure is revenue in nature applying commerecial expedency test. I don't remember the citation right now and hence request members of this club to clarify and comment on it according to their convenience.

Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2010 Thanks Mr. Warrier,
But the said judgement of Delhi HC in CIT vs Hindustan Insectides [250 ITR 338] of 2001 says that ROC fees paid for increasing nominal capital does not qualify for deduction @ 20% pa under sec 35D(2)(c)(iii). This is because enhancing nominal capital is not the same as registering a company.
So if ROC fees are paid for increasing nominal capital that is not a public issue [Sec 35D (2)(c)(iv)] for expansion of business [Sec 35D(1)(ii)], amortisation would not be available.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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19 September 2010 Have a look at Federal Bank Ltd Vs. CIT (1989)180 ITR 241 (Ker).