Fee for increase in authorised capital

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Querist : Anonymous

Querist : Anonymous (Querist)

15 February 2014 plz let me know the treatment of fee for increase in authorized capital paid to MCA through form 5

Ganeshbabu K

Ganeshbabu K (Expert)
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19 February 2014 For Accounting purpose it should be written off in the books of accounts in the year of occurance it self
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However it may be disallowed by tax auditor claiming it is not in the nature of Revenue expence
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However there is a case which allows Filing fee paid for increase of authorised capital is revenue in nature and case held against to it tribunal and infavour of assesse
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Federal bank ltd. Vs Commissioner of income tax (1989)180 ITR 241(kerala)
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hold that the Income-tax Appellate Tribunal was in error in holding that the filing fees paid under the Companies Act, 1956, in respect of enhancement of authorised capital was not an item of revenue expenditure deductible under Section 37(1) of the Income-tax Act.