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2018 (1) TMI 846 - AT - Income TaxDisallowance of ESOPs expenses - Held that - The facts of the matter are similar to that of the preceding AYs 2008-09 to 2012-13 which have been decided in favour of the assessee. Amortization of expenses, being the cost of the discounted value of shares allotted to the employees under the ESOP scheme dated 01.04.2007 to 30.05.2011, have been claimed by the assessee and the same being taxable in the hands of the respective employees have been included in their taxable income as perquisite u/s 17(2)(iiia) of the Act. Perusing the details of the perquisite value it is observed that against the total cost of amortized expenses of ₹ 44,57,10,475/-, ₹ 42,34,51,666/- have been included as perquisite during the FY s 2008-09 to 2012-13 itself (including under FBT in FY 2008-09 and expenses have been correctly claimed as expenses, as amortized over the years. Hence, CIT(A) by respectfully following the above precedents, has rightly deleted the addition in dispute and allowed the appeal of the assessee.
Issues:
- Disallowance of ESOP expenses - Validity of CIT(A)'s order - Ex-parte decision due to non-appearance of assessee - Application of precedents in similar cases Analysis: 1. Disallowance of ESOP expenses: The case involved an appeal by the Revenue against the CIT(A)'s order allowing relief of &8377; 5,82,70,308/- against the disallowance made by the AO on account of ESOP expenses. The ITAT Delhi Bench reviewed the facts, including the assessee's claim of expenses related to ESOPs based on ascertained liability. The ITAT noted that similar additions had been deleted in previous years based on sound logic and legal positions. The ITAT upheld the CIT(A)'s decision to delete the addition in dispute, as the expenses were correctly claimed and amortized over the years. The ITAT found no reason to interfere with the CIT(A)'s order, ultimately rejecting the Revenue's grounds on this issue. 2. Validity of CIT(A)'s order: The Revenue challenged the validity of the CIT(A)'s order dated 31.5.2016, which allowed the appeal of the assessee regarding the disallowance of ESOP expenses. The ITAT examined the order of the CIT(A) along with relevant precedents and found that the CIT(A) had rightly deleted the addition in dispute based on the factual and legal positions. The ITAT upheld the CIT(A)'s decision, emphasizing that the expenses were correctly claimed and taxable in the hands of the employees as perquisite under the Income Tax Act. Therefore, the ITAT dismissed the Revenue's appeal on this issue. 3. Ex-parte decision due to non-appearance of assessee: The ITAT noted that despite sending a notice of hearing to the assessee via Registered AD post, neither the assessee nor its authorized representative appeared for the hearing or filed an application for adjournment. Considering the facts and circumstances, the ITAT decided to proceed ex-parte qua assessee after hearing the Ld. DR and examining the records. The ITAT concluded the appeal based on the submissions and records available, ultimately dismissing the Revenue's appeal. 4. Application of precedents in similar cases: The ITAT referenced earlier orders in the assessee's own case and other relevant judgments to support its decision. Notably, the ITAT highlighted that similar additions had been deleted in preceding assessment years, and the CIT(A) had rightly followed these precedents in allowing the appeal of the assessee. By analyzing the facts and perquisite values, the ITAT concluded that the expenses were correctly claimed and amortized over the years, in line with previous decisions. Therefore, the ITAT upheld the CIT(A)'s order based on the application of precedents and rejected the Revenue's grounds on this issue. In conclusion, the ITAT upheld the CIT(A)'s order, dismissed the Revenue's appeal, and pronounced the decision on 05/01/2018.
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