fees paid for increasing authorised capital

Page no : 2

CA Vijay Kumar Gupta (partner) (1354 Points)
Replied 17 December 2009

It is disallowed under I. Tax Act,1961. however It can be written off as per company policy as defeered revenue expenditure if it is spent asfter incorporation and for pre incorporation , it is a part of preliminary exps as per companies act and canbe w/off as per company policy. however the same will be disallowed under I ncome tax act, 1961.

Airody Manjunatha Alse (ca) (100 Points)
Replied 17 December 2009

It is a capital expenditure. Will not be allowed as expenditure.

Bharat Khurana (Student) (153 Points)
Replied 19 December 2009

fee paid for increasing authorised share capital is a capital expenditure. so it is not a allowed expenditure.

VIPUL (ARTICLE ASSITANT) (68 Points)
Replied 26 December 2009

no ,it is not a allowable expenditure as per section 37

Bhavesh (Practising CA) (282 Points)
Replied 26 December 2009

But if the fees are paid for increasing the authorised capital for issuing bonus shares, then the expenses os allowable.

Kindly see the case of GENERAL INSURANCE CORPORATION 286 itr 232

Krutesh Patel (ACA) (727 Points)
Replied 26 December 2009

Yes It is capital expenditure. But it will be allowed as deduction u/s 35D. Section 35D not only covers expenses before incorporation but also includes expenses incurred for expansion of undertaking. Hence, increase in capital can be treated as expansion of capital base of company. So expense will be allowed as deduction u/s 35D for five successive assessment year.