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TMI Blog2018 (10) TMI 1962X X X X Extracts X X X X X X X X Extracts X X X X ..... on Scheme [ESOP] expenses - revenue or capital expenditure - AO disallowed the ESOP expenses treating them as capital expenditure - As per CIT-A there are allowable as Revenue expenses u/s. 37 - HELD THAT:- CIT(A) following the decision of the Hon'ble Jurisdictional Tribunal in the case of DCIT v. Accenture Services (P.) Ltd [ 2010 (3) TMI 1107 - ITAT MUMBAI] and the Bangalore Bench of the Tribunal in the case of M/s. Novo Nordisk India (P.) Ltd. [ 2013 (11) TMI 218 - ITAT BANGALORE] and also the decision in the case of CIT v. Lemon Trees Hotel Pvt. Ltd. [ 2015 (11) TMI 404 - DELHI HIGH COURT] held that the ESOP expenses are Revenue expenses and therefore reimbursement of ESOP expenses by the assessee was deleted . We do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly placed reliance on the order of the Assessing Officer. 5. On hearing the Ld. DR and on a perusal of the order of the Ld.CIT(A), we find that the disallowance was deleted for the reason that the assessee has its own funds far exceeding the investments. The Ld.CIT(A) followed the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Reliance Utilities Power Ltd., (supra), CIT v. HDFC Bank Ltd [49 taxmann.com 335] and HDFC Bank Ltd v. DCIT [383 ITR 529]. Thus, we do not find any infirmity in the order passed by the Ld.CIT(A). This ground is rejected. 6. Coming to the disallowance of ESOP expenses, Ld. DR submitted that the Assessing Officer disallowed the ESOP expenses treating them as capital expenditure. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the ESOP expenses on the ground that it was capital expenditure as it led to a change in share capital and also that the expenses were contingent in nature. On the issue of allowability of ESOP expenses, the Special Bench of the Bangalore Tribunal in the case of Biocon Ltd. Vs Deputy Commissioner of Income-tax (LTU), Bangalore [2013] 25 ITR(T) 602 (Bangalore - Trib.) has held that discount on issue of shares to the employee stock option is allowable deduction in computing the income in the profit and loss account of business or profession and the same was on account of ascertained liability and not contingent liability. It was also held that by issuing shares at discounted price under the scheme ESOP is simply one of the motive to comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. As could be seen from the above, the Ld.CIT(A) following the decision of the Hon'ble Jurisdictional Tribunal in the case of DCIT v. Accenture Services (P.) Ltd (supra) and the Bangalore Bench of the Tribunal in the case of M/s. Novo Nordisk India (P.) Ltd. v. DCIT (supra) and also the decision of the Hon'ble Delhi High Court in the case of CIT v. Lemon Trees Hotel Pvt. Ltd held that the ESOP expenses are Revenue expenses and therefore reimbursement of ESOP expenses by the assessee was deleted . We do not find any infirmity in the order passed by the Ld.CIT(A), hence the same is sustained. 9. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on the 30th October, 2018 - - TaxTMI - TMITa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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