My query is regarding the allowability of Expenditure incurred against increase in authorised share capital. Based on going through some case laws adjudged by various honourable courts in India, I have an understanding that the fee paid to ROC to increase autorised share capital is a capital expenditure and hence disallowed. Names of some of important case laws are reproduced below for your ready reference: 1. Brooke Bond India limited case [(1997) 225 ITR 798 2. Punjab State Industrial Development Corporationn ltd 225 ITR 792 (SC). The same view has also been expressed by a number of members a number of times.
However, based on a discussion I also believe that the authorised share capital of a company is increased when a resolution to that effect is passed in the General Meeting and the payment of fee is statutory payment. The same neither in any case increases the capital base of the company nor does it lead to any future profitability. Thus, why it has been treated as capital expenditure?
Also basis my research over net, I have come across a view that the object of the assessee is also a decisive factor for determination of allowability.
Would request to guide in above case.
Further, in case the same is a disallowed expenditure; what will be the accounting treatment viz. to say that will the same be considered as a permanent difference.
Further more would request if someone has some recent judgements on tax treatment of fees paid to ROC.
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