Fees paid to Registrar for increase in authorised capital is capital expenditure.—Vide Kesoram Industries & Cotton Mills Ltd. v. CIT (1992) 196 ITR 845 (Cal) On the other hand, in Federal Bank Ltd. v. CIT (1989) 180 ITR 241 (Ker), the Kerala High Court has held that the expenditure by way of filing fees on enhancement of the authorised share capital was only for the purpose of improving an established business and cannot be said to be for the purpose of a new business. The enhancement of the authorised capital was only to broaden the capital base which would be conducive to the better conduct and efficiency and profitability of the business and, therefore, the expenditure incurred by way of filing fees is revenue expenditure deductible under section 37(1) of the Income Tax Act, 1961.
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