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2024 (6) TMI 100 - AT - Income TaxExpenses incurred on Employee Stock Option (ESOP) scheme - allowable expenses u/s 37(1) or not? - AO held as such expenses are notional and contingent in nature and are not allowable - CIT(A) deleted the expenditure - assessee is a private limited company engaged in the business of providing services in the area of real estate related consultancy, site management, professional advisory, project management - HELD THAT - Allowability of the ESOP expenses actually incurred and cross charged by the parent from an assessee has been decided in favour of the assessee in a plethora of cases including the Hon'ble jurisdictional High Court in M/S. BIOCON LTD. 2020 (11) TMI 779 - KARNATAKA HIGH COURT , LEMON TREE HOTELS LTD 2015 (11) TMI 404 - DELHI HIGH COURT , and the Coordinate Bench of ITAT Delhi Benches. Respectfully following the decision of the Hon'ble High Courts supra and Delhi ITAT CVENT INDIA PVT. LTD. 2023 (2) TMI 1063 - ITAT DELHI , we decline to interfere with the findings of the ld. CIT(A) and dismiss the ground raised by the Revenue.
Issues involved: Appeal against order of NFAC, Delhi regarding deletion of expenses on Employee Stock Option (ESOP) scheme u/s 37(1) for A.Y. 2018-19.
Facts: The assessee, a private limited company in real estate consultancy, filed return declaring income. AO disallowed ESOP expenses as notional and contingent. CIT(A) allowed the claim based on High Court decisions. Arguments: Assessee claimed actual cost incurred for ESOP, supported by invoices. Revenue contended expenses were notional and contingent. Assessee argued expenses were determined and paid during the year. Decision: Tribunal found ESOP expenses allowable u/s 37(1) based on High Court decisions. Revenue failed to provide contrary evidence. Expenses were considered incurred and allowable. Appeal dismissed in favor of assessee. Judicial Precedents: High Courts in Delhi and Madras held ESOP expenses debitable to profit and loss account. Karnataka High Court stated expenses incurred for consistent employee services are deductible u/s 37(1). Conclusion: Allowability of ESOP expenses upheld based on various court decisions. Appeal of Revenue dismissed.
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