Expenses on Increase in authorised capital, Other Topics

[Anup Kumar Grover]

Whether expenses on Increase in authorised capital, ie ROC fees etc be allowed as an expenditure u/s 37 or 35 D, or other wise treatment thereof

Posts / Replies

[dkkothari]

If there is no change in capital base say increasing capital by issue of bonus shares it will be revenue expenditure as per SC judgments. otherwise it will be capital expenditure to be allowed u/s 35D, if applicable otherwise u/s 28 ead with S. 145 according to reasonable method of accounting claim can be made over five or ten years. My view is also that authorised capital stands increased on passing relevant resolutions,ROC's filing fees is a statutory payment required whether you really issue shares or not. Thus, fees payment does not affect capital base, therefore, it should be treated as revenue expenditure and allowed u/s 37 /28 r.w.s. 43B. however, these contentions will have to go through the process of judicial scrutiny because in earlier judgments these contentions were not raised.