Expenses on increase in Authorised Capital

[Guest]

Hi,

I suppose that the Expenses on increase in Authorised Shares Capital by A Pvt Ltd Company is a Capital Expenditure based on number of case laws. 

But what treatment should be given to capital expenditure. Whether the same is allowable expenditure or not? If yes under which section and if no why.

 

[CAGOPALJI AGRAWAL]

Since it is in the nature of capital expenditure as decided by Apex Court, it would not be allowed under any specific or residuary section 37(1) of the Act.

AI Summary

Capital expenditure on increasing authorised capital is treated as non-deductible and not allowable under general deduction rules. Expenses for increasing a company's authorised share capital are capital expenditure in nature and, as such, are not allowable as business deductions under the general/residuary business expenditure provision.