Accounting entry for roc filling fees

one of our clients has paid ROC filling fees in order to increase its Authorized Capital. Kindly guide if the under stated accounting entry is Ok.

Preliminary Expense Dr

To Bank.

Is Section 35D of Income Tax is available for this expense? 

thank you

 

Replies (6)

No, you should book the expenses in the single year and you cannot take it to preliminary expenses

The accounting entry should be

è Filing Fees A/c ……..Dr.

                                To Bank/Cash/Party A/c

 

Further as per income tax laws expenses incurred for increase in authorized capital is not revenue expenditure hence it cannot be allowed as deduction while calculating income for tax purpose.

 

As far as section 35D is concerned only expenditure incurred

a)      Before commencement of business, or

b)      After commencement of business, in connection with extension of undertaking or in connection with setting up a new unit.

Will be allowed as deduction as per scheme provided in section 35D

thank you so much Manish. i was also of the same opinion. i will change the account head . and also i will disallow the expense in Income Tax computation

Manish, i would be greatful to you if you provide me with some case law in support of this. if any, of any tribunal, HC, SC. thanks again

Mr. Malav you can take the reference from this case study as decided by supreme court Punjab state industrial development corporation Ltd.(SC) 1997

If i paid fees & filling ROC now for F.Y 2016-17.. is entry in books this year or outstanding for 2016-17???

the entry should be in this year.

It will be allowed only in this year as per section 43B of Income Tax Act.

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