Please Help: share capital

Posted Date : 22-Dec-2011 , 08:43:16 pm | Posted By naresh777

what is the treatment in books of company if exp on increase in share capital of company is occur.(considering income tax law for this treatment)

Category : Accounts | Answers : 1 | Comments : 1 | Hits : 346

Answers

Answer By: CA VIPIN GARG

Dear Naresh, as per income tax act, the above expenditure will be of capital nature. The above expenditure cannot be allowed as revenue expenditure as per income tax act. You can also refer the case law Brooke Bond India Ltd. Vs. CIT 225 ITR 798 (SC)in which it is decided by the supreme court that the above expenditure can not be treat as revenue nature.

However if the share capital is increased for the purpose of expension then it can be allowed as deferred revenue expenditure in 5 equal installments as per section 35D on Income tax act.

Hope you got the answer you were looking for, have a nice day Naresh......