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TMI Blog2015 (8) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... vesting period and the amount of such deduction is to be found out as per the terms of ESOP by considering the period and percentage of vesting during such period. Deduction of the discounted premium during the years of vesting should be allowed on straight line basis. Then, dealing with the subsequent adjustment to discount, any adjustment to income is called for at the time of exercise of option by the amount of difference in the amount of discount calculated with reference to the market price at the time of grant of option and market price at the time of exercise of option. Respectfully following the precedent, we set aside the impugned order and send the matter to the file of AO for deciding it in conformity with the decision taken by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the pre requisite condition of recording satisfaction by the AO before computing disallowance u/s 14A is not satisfied, there can be no computation of disallowance as has been held in several judgments. We find that the absence of satisfaction by the AO in the instant case has the effect of taking away the jurisdiction to make disallowance u/s 14A in this regard. - Decided in favour of assessee. - ITA Nos.1896, 2444 & 2445/Del/2013 - - - Dated:- 31-7-2015 - SHRI R.S. SYAL AND SHRI H.S. SIDHU, JJ For The Assessee : Shri Rupesh Jain, Advocate Shri Sambhav Jain, CA For The Department : Shri T. Vasanthan, Sr. DR ORDER PER BENCH : These three appeals by the Revenue relate to assessment years 2007-08, 2008-09 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called for at the time of exercise of option by the amount of difference in the amount of discount calculated with reference to the market price at the time of grant of option and market price at the time of exercise of option. 4. Both the sides are in agreement that the facts and circumstances of the instant issue are squarely covered by this Special Bench decision. Respectfully following the precedent, we set aside the impugned order and send the matter to the file of AO for deciding it in conformity with the decision taken by the Special Bench in the aforenoted case. Needless to say, the assessee will be allowed a reasonable opportunity of hearing by the AO in such fresh proceedings. 5. The second ground is against the deletion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 962. 8. The AO has discussed this issue in para 5 of his order, wherein he initially noticed that the assessee has income from mutual fund to the tune of ₹ 4.61 crore which was claimed as exempt u/s 10 of the Act. Thereafter, he opined that the provision of Rule 14A read with Rule 8D require computation of disallowance. That is how he computed the amount disallowable at ₹ 60,14,667/-. The ld. CIT(A) has given his conclusion on this issue on the last page of his order by observing that the provisions of Rule 8D are applicable from AY 2008-09 as per the judgment of the Hon ble Bombay High Court in the case of Godrej Boyce (2010) 328 ITR 81 (Bom). That is how he deleted the addition. 9. We have heard the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfaction before making disallowance u/s 14A and the CIT(A) makes good the deficiency by recording such satisfaction, there can be no illegality in making disallowance under this provision because the powers of the first appellate authority are coterminous with that of the AO inasmuch as the first appellate authority can do anything which the AO could have done and omitted to do so. When we turn to the facts of the instant case, we find that the AO has not recorded any satisfaction whatsoever about incorrectness of the assessee s claim about the expenditure incurred in relation to exempt income. What to talk of recording satisfaction, there is no whisper in the assessment order on this score. He simply noticed the extent of exempt income i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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