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CA Zeal Karwa (Manager- Project Finance) (160 Points)

10 November 2010

Stamp Duty of Rs. 700000 paid on Increasing the Authorised Capital. Whether it is Capital Expenditure or Revenue Expenditure??

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5 Replies

Arvind Sharma (ACA) (1432 Points)
Replied 10 November 2010

revenue expenditure and shall be charged to PL A/c

CA Zeal Karwa (Manager- Project Finance) (160 Points)
Replied 10 November 2010

is there any case law???

sudhakar ca cwa (service) (1518 Points)
Replied 10 November 2010

there is one case law in singania book under sec. 37(1).

please check it.

A.Deepa (CA ) (195 Points)
Replied 10 November 2010

The expenses incurred by way of payment of fees to ROC and related expenses to increase of additional share capital is capital expenditure for income tax purpose. Refer following case Law: Punjab State Industrial Development Corporation Vs. CIT 225 ITR 792(SC) and Brooke Bond India Ltd. Vs. CIT 225 ITR 798 (SC). Both the decisions discusses about the allowability of the expenditure incurred for enhancement of capital.

anil kumar (team leader) (21 Points)
Replied 11 November 2010

Fees paid to Increase authorised share capital is of Capital nature.Hence not allowed as deduction for income tax purpose u/s 37.( you can find the same in g.sekhar material and in singhania also u/s 37 final books ) . its a capital expenditure.