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TMI Blog2017 (2) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... ot in dispute that the assessee has not received any exempt income during the year under consideration. The disallowance has been made on finding of the fact that the assessee has made certain investments out of borrowed funds. In our considered opinion, since the assessee has not earned any exempt income, no disallowance u/s. 14A read with Rule 8D is called for. Our view is also fortified by the decision of the Hon ble High Court of Gujarat in the case of Corrtech Energy Ltd. [ 2014 (3) TMI 856 - GUJARAT HIGH COURT] held that the Tribunal had recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. Hence, no disallowance could be made u/s. 14A. Deduction of amortization of value of stock options to employees - HELD THAT:- As relying on First Appellate Authority derive support from the findings of the Special Bench of the Tribunal in the case of Biocon Ltd [ 2013 (8) TMI 629 - ITAT BANGALORE] amount being remuneration to employees by way of Employees Stock Option Plan debited to profit and loss account is an allowable expenditure u/s 37(1). X X X X Extracts X X X X X X X X Extracts X X X X ..... tainment tax receipt of ₹ 57,31,329/- in respect of Crystal Palm (Rajasthan) is concerned, the ld. CIT(A) observed that the policy under which the State of Rajasthan has granted is different from old policy applicable to Jaipur. The assessee strongly contended that the exemption provided is to attract investors to invest in State of Rajasthan and is applicable on new investments and therefore, on the basis of principles laid in earlier years in respect of various units entertainment tax subsidy under new policy is also capital receipt in state of Rajasthan. However, the ld. CIT(A) observed that the assessee has not furnished the copy of Rajasthan Investment Promotion Scheme of 2003. The ld. CIT(A) further observed that the assessee could not demonstrate how the assessee is fulfilling the conditions of this new scheme and how it is entitled for exemption in respect of entertainment tax receipts as the necessary documents and correspondences with the concerned authorities of Rajasthan Government for constructing Multiplexes are not furnished. The ld. CIT(A) accordingly treated ₹ 57,31,329/- as revenue receipt. 8. Aggrieved by this, the assessee is before us. The ld. coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raja hat (West Bengal) 4,050,745 First year of claim. However, same facts as in Salt Lake, Darjeeling and Burdwan apply. The applicable policy covered in favour of the appellant by ITAT, Ahmedabad' 9 Indore 2 (Madhya Pradesh) 5,641,334 First year of claim. However, same facts as in Indore apply. 10 Crystal Palm (Rajasthan) 5,731,329 First year of claim. New Policy applies. Total (Rs.) 106,989,057 11. We find that the claim of subsidy at various Multiplexes from Serial No. 1 to 9 above have been accepted as capital receipt in earlier years. This has not been disputed by any of the lower authorities. The only dispute relates to the subsidy received from the Government of Rajasthan in respect of Item No. 10 above. It is also not in dispute that in pursuance of the terms of scheme introduced by the Government of Rajasthan to encourage construction of new cinema halls, assessee was running a cinema hall. It is also not in dispute that the assessee could receive the subsidy only after the fulfillment of the mandatory conditions. These facts have not been controverted by any of the lower authorities. 12. The Hon'ble High Court of Rajasthan had the occasion to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter if the grant would be available after the business has been set up. * In the totality of the circumstances; and particularly looking to the scheme of the Act of 1957 as also the object and purport of the exemption notification, the assistance in question cannot be said to be an operational subsidy so as to be taken as a revenue receipt. * The submission that once the assessee has collected the entertainment tax from the persons admitted to the entertainment and has not deposited the same with the Government, it is required to be treated as revenue receipt remains devoid of substance. The remission by the Government had been to the proprietor of the entertainment and not to the person admitted to the entertainment. The remission had been the methodology adopted by the State Government to provide assistance to the new cinema hall; and had been essentially in the nature of a subsidy, ie., the assistance from the Government to the new cinema hall [Paras 15,16 & 17] * Accordingly, it is held that the Tribunal was justified in affirming the deletion of addition, being the amount of entertainment tax capitalized as subsidy. [Para 18] * In view of the above, the appeal fails ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst ground relates to the deletion of the addition of ₹ 10,12,57,729/- treating the same as capital receipt not exigible to tax. 23. This issue has been considered by us in ITA No. 1378/Ahd/2014 (supra) qua ground no. 1 of that appeal. For our detailed discussion therein, this ground is dismissed. 24. Ground no. 2 relates to the deletion of the disallowance of claim of Employees' Stock Option Plan of ₹ 16,21,904/-. 25. During the course of the scrutiny assessment proceedings, the A.O. noticed that the assessee has claimed deduction in respect of amortization of value of stock options to employees amounting to ₹ 16,21,904/-. The A.O. found that similar expenses claimed by the assessee in A.Y. 2008-09 have been disallowed. Taking a leaf out of this, the A.O. made an addition of ₹ 16,21,904/-. 26. Assessee carried the matter before the ld. CIT(A) and reiterated its claim. It was brought to the notice of the ld. CIT(A) that the Special Bench of Bangalore ITAT has considered this issue in the case of Biocon Ltd.35 taxmann. com 335 and has decided this issue in favour of the assessee. 27. After considering the facts and the submissions, the ld. CIT(A) observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mium, the appellant does not pay anything to its employees, but incurs obligation of issuing shares at discounted price on a future date in lieu of their services which is nothing but an expenditure u/s 37(1) of the IT Act. The Hon'ble ITAT has dealt with the similar issue in its order in detail and by relying upon decisions of various Hon'ble Courts has decided the issue in favour of assessee and against the Department. Respectfully following the decisions of Hon'ble ITAT Special Bench, Bangalore it is held that the amount of ₹ 16,21,904/- being remuneration to employees by way of Employees' Stock Option Plan debited to profit and loss account is an allowable expenditure u/s 37(1) of the IT Act. In view of this the addition of ₹ 16,21,904/- as made by the AO is hereby deleted. Thus, the ground of appeal no. 2 of the appellant is allowed. 28. Before us, the ld. D.R. could not bring any distinguishing decision in favour of the revenue. We find that the findings of the First Appellate Authority derive support from the findings of the Special Bench of the Tribunal in the case of Biocon Ltd. (supra). Therefore, we do not find any reason to interfere with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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