professional chaeges

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madhav (Querist)
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10 May 2010 my client issued preference shares for a premium.
he debited to the premium a/c the expenses of MGMT consultancy charges for raising capital.professional fee for completing FEMA regulations,professional fee for due-diligence,professional fee for issue of preference shares(legal fee) and Stamp duty paid to sub register.
is this procedure is correct.plz given me ur valuable suggestion regarding the above issue.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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10 May 2010 The [securities] premium account may, notwithstanding anything in sub-section (1), be applied by the company-

(a) in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares;

(b) in writing off the preliminary expenses of the company;

(c) in writing off the expenses of, or commission paid or discount allowed on, any issue of shares or debentures of the company; or

(d) in providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company.

If all the expenses can fall in Point (c) in writing off the expenses of, or commission paid or discount allowed on, any issue of shares or debentures of the company then the treatment is correct