Tax treatment of issue expenses of debentures, shares etc.

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What is the tax treatment of issue expenses of debentures, equity shares, preference shares and bonds? Which sections are applicable?

Replies (3)

Dear Hireshire,

Well I must tell u, this question only appears simple.....!

The nature of expenses will decide the treatment - eg-

1) Expenses which are covered u/s 35D can be claimed in that section in 5 installments

in connection with the issue, for public subscripttion, of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus;

2) Expenses that donot fall in above category like "ROC Fee" for "Enhancement of Authorised Capital, etc" will be dissallowed being Capital in Nature.

Well did some research and found that issue expenses of debentures are always allowed as deduction as per some case laws.

can you site the case laws please

 

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