Share Capital

Save Share

This query is : Resolved

First!!!! (Querist)

02 June 2008 A Company already doing business has increased its authorised Capital.
The Expenses incurred for the same has been taken as prelimenary expenses. Is the treatment right?

Shekar

Shekar (Expert)

02 June 2008 Hi..

Share Issue expenses and expenses on increasing authorised Share
Capital, being a capital expenditure, should be shown under Misc Expenditure and should be amortised over a period of ten years

CHEZHIYAN

CHEZHIYAN (Expert)

05 June 2008 Increase in share capital is completely dissallowed as per IT act..

First!!!!

First!!!! (Querist)

05 June 2008 Expenses relating to increase in share Capital. . . And an u please mention the section that increase in share capital is disallowed by the IT Act . .
Thanking You

Vineet Bansal

Vineet Bansal (Expert)

21 August 2008 No since the company is already in business therefore exp. incurred on increaseing Auth. cap ican not be treated as Preliminary expenses.

CA Sanjeev Kr Jain

CA Sanjeev Kr Jain (Expert)

19 November 2008 i request all of you to please mention the case citation as my assessment is pending

First!!!!

First!!!! (Querist)

11 December 2009 Fees paid to the Registrar of Companies for increasing Authorised Capital will result in an advantage of enduring nature and is a Capital Exp. [Case Law- Punjab State Industrial Developement Corporation Ltd V/s CIT (1997) 225 ITR 792/93 Taxman 5 (SC)].
However u/s 35D(2)(c)(iii) of the Act,only fees paid for registration of the Company is deductible.Fees paid for increase in share capital is not fees for registration of the Company,and hence it is not amortisable under this provision-Case law CIT v/s Hindustan Insecticides Ltd.[2001] 250 ITR 338 (Delhi)

Rgds,
Vaibhav/Gautam
RGD & Co.