2019 (3) TMI 1989 - HC - Income Tax

Disallowance of Employees Stock Option Plan ( ESOP ) - HELD THAT - As pointed out by Assessee that the issue stands covered in favour of the Assessee and against the Revenue by the order of this Court in Commissioner of Income Tax v. Lemon Tree Hotels 2015 (11) TMI 404 - DELHI HIGH COURT - The Court had affirmed the order of the ITAT in M/S. BIOCON LIMITED 2013 (8) TMI 629 - ITAT BANGALORE deciding the issue in favour of the Assessee in the said case where the addition made by the AO by way of disallowance of the expenses debited as cost of ESOP in profit and loss account was deleted by the ITAT.

Summary

Issues involved:
1. Condonation of delay in re-filing the appeal.
2. Merits of the appeal regarding the disallowance of expenses related to the Employees Stock Option Plan (ESOP).

Condonation of Delay in Re-filing the Appeal:
The High Court noted a delay of 1126 days in re-filing the appeal and rejected the explanation provided concerning the practice directions for e-filing appeals. The Court emphasized that the practice directions were issued after consultation with the bar and provided ample time for compliance. Despite the availability of scanning machines for e-filing, the significant delay was deemed unacceptable. Consequently, the Court refused to condone the extraordinary delay in re-filing the appeal, leading to the dismissal of the application for condonation of the delay.

Merits of the Appeal - Disallowance of ESOP Expenses:
The appeal by the Revenue challenged the ITAT's order regarding the disallowance of expenses related to the Employees Stock Option Plan (ESOP) for Assessment Year 2007-08. The ITAT had overturned the Assessing Officer's decision and removed the disallowance based on a precedent set by the Special Bench of the ITAT (Bangalore). The Court highlighted that a similar issue had been addressed in a previous case, Commissioner of Income Tax v. Lemon Tree Hotels, where the ITAT's decision favoring the Assessee was upheld by the Court. The Court found the impugned order of the ITAT to be consistent with its previous judgment, leading to the conclusion that no substantial question of law arose. Consequently, the appeal was dismissed on both grounds - the delay in re-filing the appeals and on merits regarding the disallowance of ESOP expenses.

This comprehensive summary of the judgment from the Delhi High Court covers the issues of delay in re-filing the appeal and the merits of the appeal related to the disallowance of expenses linked to the Employees Stock Option Plan (ESOP).