2021 (4) TMI 335 - AT - Income Tax

Admission of additional ground of appeal - Allowability of deduction of Expenditure incurred in respect of Employee Stock Option Plan (ESOP) - HELD THAT - We find that the assessee had, in fact, raised the issue of deduction of education cess as well as deduction of expenditure incurred in respect of Employee Stock Option Plan (ESOP) by way of additional ground of appeal vide letter dated 04/12/2018. These two grounds remained to be adjudicated in Tribunal order dated 14/10/2019. In the MA order, the bench noted the aforesaid fact and allowed the ground of deduction of education cess but recalled the order for the purpose of adjudicating ground related to deduction of ESOP expenditure. Therefore, it is quite evident that the issues were admitted as well as argued during the hearing of original appeal, though not adjudicated in the order. Therefore, the objection raised by Ld. CIT-DR as to admission of additional ground of appeal stand rejected. On the merit of the case we concur with the submission of Ld. CIT-DR that the factual matrix with respect to issue of deduction of ESOP expenditure is not available on record and the same was not subject matter of assessment framed by Ld. AO for the year under consideration. Accordingly, while admitting this ground of appeal, we restore the same back to the file of Ld. AO to consider the factual matrix of the same and adjudicate the issue after providing due opportunity of hearing to the assessee. The assessee, in turn, is directed to substantiate his claim accordingly. Additional ground raised stand allowed for statistical purposes

Summary

Issues:
Adjudication of additional ground raised by the assessee for AY 2008-09 regarding deduction of Employee Stock Option Plan (ESOP) and education cess.

Analysis:
1. The matter was recalled for the limited purpose of adjudicating the additional ground raised by the assessee for AY 2008-09. The Tribunal found that the additional grounds related to ESOP and education cess were not adjudicated in the original appeal order. The Tribunal directed the AO to grant deduction for education cess for AY 2008-09 based on a similar decision for AY 2007-08. However, as the issue of deduction of ESOP expenditure was not adjudicated, the Tribunal recalled the order specifically for the purpose of adjudicating this ground alone.

2. The CIT-DR objected to the admission of the additional ground, stating that the facts were not available in the assessment or appellate order. The AR argued that the issue was raised by the assessee before the original hearing but was not adjudicated. The Tribunal noted that the issues of deduction of education cess and ESOP expenditure were raised by the assessee in the original appeal but remained unadjudicated. The objection to the admission of the additional ground was rejected.

3. Upon reviewing the material on record, the Tribunal found that the issues of deduction of education cess and ESOP expenditure were indeed raised by the assessee in the original appeal. While the deduction of education cess was allowed, the issue of ESOP expenditure was not addressed in the order. Therefore, the Tribunal decided to restore the issue of ESOP expenditure back to the AO for consideration based on the factual matrix and directed the assessee to support their claim.

4. The additional ground raised by the assessee was allowed for statistical purposes, and the appeal was partly allowed as per the original order. The Tribunal emphasized the need for the AO to consider the factual aspects of the ESOP expenditure issue and provide a fair opportunity for the assessee to substantiate their claim.

In conclusion, the Tribunal recalled the order to address the unadjudicated issue of ESOP expenditure raised by the assessee for AY 2008-09, while allowing the deduction of education cess. The case was remanded back to the AO for further examination and consideration of the ESOP expenditure issue based on the factual details provided by the assessee.