Capital or revenue expenses:- membership fees etc, having enduring advantage
Some contributions or payments in nature of membership fees or development fees
are made in the course of business or profession to other organizations or for trade
or local development etc. This facilitates carrying of business. Therefore such
expenses are allowed for commercial expediency as well as having been incurred for
the purpose of business or profession. However, controversy arises when a view is
taken that the expenses have some lasting utility and assessee gets benefit over more
than one accounting period. Therefore, a central legislation cannot be applied in a
uniform due to different possible views prevailing.
Incidentally a draft provision is suggested to provide for a spread over any expenses
which results in to benefit over a period of more than one accounting period. If so
provided it will go a long way to assess real income of all accounting periods.
Trade or professional bodies:
For carrying out a trade or profession effectively one may have to become a member of
trade or professional associations. The membership may be compulsory or optional. For
example, a person who wants to carry a profession should qualify for such profession and
then become a member of the professional body, and if the law, by-laws or regulations so
require, he must obtain a certificate of practice. For example, we can consider a case of
Chartered Accountant or any other professionals who are governed by professional
bodies, which regulate the profession.
The contributions or fees, which are compulsory to be paid to such institution, are
generally considered revenue expenditure. For example, admission fees for membership
as well as annual fees both are considered as revenue expenditure.
Similarly in case of a person who wants to carry business of a share broker he has to be a
member of the stock exchange. For membership of stock exchange, he is required to pass
certain tests of personal and financi