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TMI Blog2017 (2) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... ng) [SB] ; [2013] 144 ITD 21 (Bang) [SB]. The assessee's like expenditure for the previous assessment year 2006-07 was the subject matter of an appeal by the Revenue. This court, by its order dated July 12, 2016 (in I. T. A. No. 366 of 2016 and connected matter), refused to entertain the appeal. Learned counsel for the Revenue contends that a substantial question of law arises because the reliance placed upon CIT v. Lemon Tree Hotels Ltd. (I. T. A. No. 107 of 2015) by the previous order of this court is not strictly justified. It was submitted that more importantly, the appeal was rejected on the ground of delay and the observations made by the court cannot be treated as conclusive. 2. Learned counsel for the assessee appearing on adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . C. (A) No. 1023 of 2005, dated June 19, 2012) [2013] 1 ITR-OL 307 (Mad). In PVP (supra), the Madras High Court, after considering the SEBI's claim held as follows (page 314 of 1 ITR-OL) : "As regards the second issue which is now canvassed before this court, viz., On the issue of expenditure of Rs. 66.82 lakhs towards the issue of shares to the employees stock option is concerned, the Tribunal pointed out that the shares were issued to the employees only for the interest of the business of the assessee to induce employees to work in the best interest of the assessee. The allotment of shares was done by the assessee in strict compliance with SEBI regulations, which mandate that the difference between the market prices and the price a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atio laid down by the hon'ble Supreme Court in Bharat Earth Movers v. CIT [2000] 245 ITR 428 (SC) and Rotork Controls India (P.) Ltd. v. CIT [2009] 314 ITR 62 (SC), it becomes vivid that the mandate of these cases is applicable with full force to the deductibility of the discount on incurring of liability on the rendition of service by the employees. The factum of the employees becoming entitled to exercise options at the end of the vesting period and it is only then that the actual amount of discount would be determined, is akin to the quantification of the precise liability taking place at a future date, thereby not disturbing the otherwise liability which stood incurred at the end of the each year on availing of the services. As re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng former employees) by reason of their employment'. Charging section 115WA of this Chapter provides that : 'In addition to the Income-tax charged under this Act, there shall be charged for every assessment year . . . 'fringe benefit tax in respect of fringe benefits provided or deemed to have been provided by an employee to his employees during the previous year'. Section 115WB gives meaning to the expression 'fringe benefits'. Sub-section (1) provides that for the purposes of this Chapter, 'fringe benefits' means any consideration for employment as provided under clauses (a) to (d). Clause (d), which is relevant for our purpose, states that : 'any specified security or sweat equity shares allotted or tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), the next question is that 'when' and for 'how much' amount should the deduction be granted ? The assessee is a limited company and hence it is obliged to maintain its accounts on mercantile basis. Under such system of accounting, an item of income becomes taxable when a right to receive it is finally acquired notwithstanding the fact that when such income is actually received. Even if such income is actually received in a later year, its taxability would not be evaded for the year in which right to receive was finally acquired. In the same manner, an expense becomes deductible when liability to pay arises irrespective of its actual dis charge. The incurring of liability and the resultant deduction cannot be marred by me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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