2023 (6) TMI 1117 - AT - Income Tax

Fresh claim by filing revised return of income - Disallowance of unamortized brokerage expenses - HELD THAT - As per the decision rendered in the case of Goetze (India) P Ltd 2006 (3) TMI 75 - SUPREME COURT the assessee can make fresh claim by filing revised return of income. Even if the revised return of income is not filed, Tribunal can admit any fresh claim. In the instant case, the assessee has claimed the deduction of unamortized brokerage expenses through revised return of income. Hence, we are of the view that the said claim was rightly made by the assessee. Whether the assessee can make a claim, which is against the accounting policy followed by the assessee in the books of account? - In the instant case, there is no dispute that the upfront brokerage expenses were incurred during the year under consideration and it was revenue expenditure. Hence, the assessee could claim entire expenditure as deduction in the current year itself. Since the assessee was following a particular method of accounting in the books of accounts with regard to the above said expenditure, it has been claiming deduction in that method in the return of income also. As per the decision rendered in the case of Taparia Tools Ltd 2015 (3) TMI 853 - SUPREME COURT the same would not preclude the assessee from claiming entire expenditure in the current year itself. CIT(A) was correct in law in deleting this disallowance and accordingly, we uphold the decision rendered by CIT(A) on this issue. Disallowance of ESOP expenses - HELD THAT - As the assessee is actually incurring expenses in purchasing shares of M/s Deutsche Bank AG. This is purchased as per the employee welfare scheme as per the agreement entered with the concerned employee. The deduction is claimed when the right is vested upon the employee. It is held in the case of Biocon Ltd 2013 (8) TMI 629 - ITAT BANGALORE that deduction can be claimed in the year of vesting. It can be noticed that it is a staff welfare expenditure incurred by the assessee and further, it is stated that the assessee has deducted TDS also thereon. No impediment in allowing this expenditure as deduction. Accordingly, we uphold the decision rendered by Ld CIT(A) on this issue.

Summary

Issues:
The judgment involves the following Issues:
1. Disallowance of unamortized brokerage expenses.
2. Disallowance of ESOP expenses.

Issue 1: Disallowance of Unamortized Brokerage Expenses:
The appeal concerns the deduction of unamortized brokerage expenses claimed by the assessee in the revised return of income for the assessment year 2015-16. The assessee, an Asset management company, incurred brokerage expenses during its business operations, following a method of amortization in its books of accounts. The claim for deduction of Rs.18.05 crores was disallowed by the AO, citing that the revised return was filed without any omission in the original return. However, the Ld CIT(A) allowed the deduction, considering the business discontinuation as a valid reason. The Tribunal upheld the decision, stating that the claim was rightfully made by the assessee, as per legal precedents.

Issue 2: Disallowance of ESOP Expenses:
The second issue pertains to the disallowance of ESOP (Employee Stock Option Plan) expenses claimed by the assessee. The AO disallowed the expense as notional, since the employees did not exercise the option during the relevant year. However, the Ld CIT(A) allowed the claim after considering the nature of the scheme and the actual expenditure incurred by the assessee. The Tribunal upheld this decision, noting that the expenses were incurred as part of a staff welfare scheme, and the deduction was permissible in the year of vesting, as supported by legal precedents.

In conclusion, the Appellate Tribunal ITAT Mumbai, in the case involving the deduction of unamortized brokerage expenses and ESOP expenses, upheld the decisions of the Ld CIT(A) in favor of the assessee, dismissing the appeal of the revenue and the cross objection of the assessee.