Expenses on Increase in authorised capital

[Anup Kumar Grover]

Whether expenses on Increase in authorised capital, ie ROC fees etc be allowed as an expenditure u/s 37 or 35 D, or other wise treatment thereof

[DEV KUMAR KOTHARI]

If there is no change in capital base say increasing capital by issue of bonus shares it will be revenue expenditure as per SC judgments. otherwise it will be capital expenditure to be allowed u/s 35D, if applicable otherwise u/s 28 ead with S. 145 according to reasonable method of accounting claim can be made over five or ten years. My view is also that authorised capital stands increased on passing relevant resolutions,ROC's filing fees is a statutory payment required whether you really issue shares or not. Thus, fees payment does not affect capital base, therefore, it should be treated as revenue expenditure and allowed u/s 37 /28 r.w.s. 43B. however, these contentions will have to go through the process of judicial scrutiny because in earlier judgments these contentions were not raised.

AI Summary

Expenses for Increasing Authorized Capital: Revenue or Capital Expenditure? Sections 37, 35D, and Judicial Views Explained. A query was raised about whether expenses incurred for increasing authorized capital, such as ROC fees, can be allowed as an expenditure under sections 37 or 35D. The response suggests that if there is no change in the capital base, such as issuing bonus shares, it is considered revenue expenditure based on Supreme Court judgments. Otherwise, it is capital expenditure allowed under section 35D or section 28 with section 145, spread over several years. The reply emphasizes that ROC fees are statutory payments and should be treated as revenue expenditure, subject to judicial scrutiny.