A Company raised its authorised share capital during the fin. year and paid substantial amount towards ROC fees. Now the Company wants to amortise it over a period of three years in Balance sheet, which that can do. My question is what will be the treatment for Income tax point of view? whether it is allowable in the year of payment or as per company's amortisation, it will be allowed in three years? Readers views are solicited urgently. Thanks! U S Sharda
05 July 2009
The roc fees which you pay for increase in capital will not be allowed as a business expenditure. Only intial fees you pay at the time of incorporation will be allowed as preliminary expenses which can be amortised over a period of 5 years. Eventhough you debit to profit and loss account it will be a disalowed and added to back to income for income tax purpose.
CAclubindia
