We have paid Rs.1.5 lakh to increase the authorised capital of our client. My query is under which a/c we have to dr. this amount. We debited to Preliminary exp. is it correct?
25 April 2008
ROC FEES ON INCREASE OF AUTH. SHARE CAPITAL IS CAPITAL EXP. THE SAME VIEW WAS TAKEN BY SOME OF OUR CA CLUB MEMBERS ALSO EARLIER AND ONE OF THEM EVEN QUOTED SOME CASE LAW ALSO. PRLIMINARY EXP. SECTION WHEN YOU READ INCOME TAX ACT IS ALL RELATED TO PROJECT EXPENDITURE.NEW/EXPANSION AND DOES NOT FIT INTO THIS TYPE OF EXP. R.V.RAO
25 April 2008
Sir thankyou for your answer. Ok if it is to be capitalized then shall I put under Misc. exp. and writeoff over 5 years like Dis. on issue of shares,debentures etc.
15 May 2008
no, there is a difference. it is capital expenditure but for income tax purpose, means it is not allowed while computing taxable income. for accounting, you should debit it to P&L a/c only not and not in misc. expenditure under assets.
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