TaxTMI 
TaxTMI 
Can Interest paid on share application money recevied by a Private Limited Company to the applicants to whom shares are not alloted be treated as revenue expenditure ?
Interest on share application money - revenue expenditure
26 Nov 2009 
2 Replies 
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Interest on share application money: allowable as revenue expense if funds were used for revenue purposes, otherwise capitalised.
Interest on share application money depends on how the capital was used: if used for revenue purposes (for example, purchasing trading stock or paying creditors) interest on refund is treated as revenue expenditure and allowable; if used for capital expenditure, interest until assets are put to use must be capitalised. The key determinative factor is the nature of the expenditure funded by the application money. (AI Summary)
Interest on share application money depends on how the capital was used: if used for revenue purposes (for example, purchasing trading stock or paying creditors) interest on refund is treated as revenue expenditure and allowable; if used for capital expenditure, interest until assets are put to use must be capitalised. The key determinative factor is the nature of the expenditure funded by the application money. (AI Summary)