2020 (5) TMI 617 - AT - Income Tax

Disallowance of additional ESOP expenses - HELD THAT - We note that this issue stands squarely covered by the decision of Special Bench of the Tribunal in the case of Biocon Ltd. Vs. DCIT 2013 (8) TMI 629 - ITAT BANGALORE and also in assessee s own case for the AY 2013-14 2018 (12) TMI 1724 - ITAT KOLKATA . Addition towards exchange loss - MTM profit on derivative contract from the computation of income - CIT-A deleted the addition - HELD THAT - We note that this issue is covered in favour of the assessee in assessee s own case for the AY 2013-14 in 2018 (12) TMI 1724 - ITAT KOLKATA and the Ld. DR could not point out any change in facts or law which would have warranted any interference on the part of us. In the absence of the same, we note that the issue under dispute had been dealt elaborately by the Ld. CIT(A), supra which we agree and thus in our considered opinion, does not call for any interference.

Summary

Issues:
1. Allowance of ESOP expenses
2. Treatment of exchange loss

Allowance of ESOP expenses:
The appeal was filed by the revenue against the order of Ld. CIT(A)-3, Kolkata for AY 2014-15 regarding the deletion of disallowance of additional ESOP expenses of ?65,19,000. The AO disallowed the expenses as they were not debited in the books of account. The assessee contended that the issue was covered by the decision of the Special Bench of the Tribunal and the predecessor Ld. CIT(A) in the assessee's own case for AY 2013-14. The Ld. CIT(A) allowed the deduction, relying on previous decisions. The revenue contended that the allowability of ESOP expenditure was not finalized by the Hon'ble Apex Court. However, the Tribunal noted that the issue was covered by previous decisions and dismissed the revenue's appeal, confirming the Ld. CIT(A)'s action.

Treatment of exchange loss:
The second issue was the deletion of an addition made by the AO towards exchange loss of ?1,97,06,000. The AO disallowed the deduction claimed by the assessee, considering it as notional income of marked to market provision reversed. The Ld. CIT(A) deleted the addition, citing a previous decision in the appellant's own case for AY 2013-14. The revenue appealed, but the Tribunal found no change in facts or law warranting interference. The issue had been elaborately dealt with by the Ld. CIT(A) and the previous decision was upheld. Consequently, the revenue's appeal was dismissed.

In conclusion, the Tribunal upheld the decisions of the Ld. CIT(A) in both issues, confirming the allowance of ESOP expenses and the deletion of the addition related to exchange loss. The appeal of the revenue was dismissed accordingly.