ROC fee for increasing the authorised capital

it comes under head deffered expenses since its impact is for undefinite period.it is treaed like write off of prliminiary exp for five consecutive year under the above said head? my opinion

hi dear

my opinion differs frm the one gven by mr. ramkrishna as expenditure incurred on increasing the authorised share capital cant be amortised becz A.S -26 does not permit its capitalisation snce u r askng the accountng treatment as per the companies Act, which requires the applicable A.S to be complied with. In my opinion the whole amount should be written off in the same year in which it is incurred.

yes for the purpose of income tax Act the treatment suggested by mr. ramkrishna is correct. becz tere r case lws under the Incme tax act whch prscribes such treatment.

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Capital expenditure, not deductible:

• SC in Punjab State Industrial Development Corp (1997) and Brooke Bond (1997): fees paid to the ROC for increasing authorised capital are capital expenditure, directly related to expansion of the capital base. No deduction under Sec 37, even if the company is a profit-making business.

• Sec 35D amortisation: available for specified preliminary expenses (including registration fee and stamp duty in connection with the issue of shares for extension of the undertaking or setting up a new unit), for Indian companies. Fees for increase of authorised capital tied to extension of the undertaking may be amortised over 5 years (1/5th each year) if the Sec 35D conditions are met. Many tribunals allow it.

• Accounting: since AS 26, such expenses are written off when incurred (P&L) or adjusted against securities premium (Sec 52(2)(c), for share issue expenses).