Accounting treatment of stampduty in mergers

[RAJESH SANGHVI]

Company A is merged with Company B in 2017. The Maharashtra Stamp duty authorities have determined the Stamp duty (SD) of Rs. 1 cr on 16-3-21. Company B has gone in appeal in April 21 against this SD and matter is subjudice. Question is CAN Company B book this Rs. 1 cr as revenue expense in its P & L a/c for the FY 20-21 or 21-22 or its can be capitalised and if yes then against what Fixed assets and what about depreciation and rate of depr. Or no accounting treatment has to be passed and merely a note on Contingent liability (of Rs. 1 cr demand of SD) be passed in the audited accounts ?

AI Summary

Stamp duty accounting: whether to expense, capitalise or disclose a contested demand following a merger. A company merged in 2017 received a stamp duty demand in 2021 that is under appeal and sub judice. The question is whether to recognise the demand as a revenue expense in the profit and loss for a specified year, to capitalise it against fixed assets with attendant depreciation implications, or to avoid accounting entries and instead disclose the demand as a contingent liability in the audited accounts.