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TMI Blog2022 (2) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... e in nature is covered in favour of the assessee. Respectfully following the above decisions, we set aside the order of the learned CIT(A) and delete the addition. X X X X Extracts X X X X X X X X Extracts X X X X ..... was invested in A.Y. 2007-08. It is the say of the Counsel that on identical set of facts this Tribunal in A.Y. 2010-11 has deleted the disallowances made u/s. 14A of the Act. 8. Per contra the DR strongly placed reliance on the findings of the lower authorities. 9. We have carefully perused the orders of the authorities below. We find force in the contention of the counsel. This Tribunal in A.Y. 2010-11 in ITA No. 2559/Del/2016 order dated 10.12.2021 has considered a similar disallowance. The relevant findings of the coordinate Bench read as under :- 15. Now coming to ground No. 2, it relates to disallowance u/s. 14A of the Income-tax Act (for short "the Act") read with Rule 8D of the Income-tax Rules. It could be seen from the record that during the year under consideration, the assessee received a dividend income to the tune of Rs. 3,36,85,137/- and claimed the same as exempt. According to the assessee, no expenditure was incurred for earning the same, but as a matter of precaution, they have disallowed a sum of Rs. 3,06,93,175/- u/s. 14A of the Act initially, but subsequently on 24.12.2012, they revised the computation of disallowance to Rs. 33,12,333/- towards 0.5% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h investments which yielded exempt income during the year should be taken into consideration, but not the entire investment. Going by that principle, we find that during the year, the investment in Karnataka Bank Ltd. alone yielded dividend income. Assessee's contention that such an initial investment to the tune of Rs. 35.35 crores was made in the assessment year 2007-08 and for that year, the assessee had free cash reserves to the tune of Rs. 81.70 croes, was considered by the coordinate Bench of this Tribunal in ITA No. 1947/Del/2018 and batch (supra) and the Tribunal accepted the contention of the assessee as far as the investment in shares of Karnataka Bank Ltd. was concerned. It is, therefore, clear that no disallowance could be made towards interest expense u/r. 8D(2)(ii) of the rules. We accordingly uphold the finding of the ld. CIT(A) on this aspect and dismiss ground No. 2 of this appeal. 10. Finding parity of facts, respectfully following the findings of the coordinate Bench we direct the AO delete the addition of Rs. 6,43,69,971/-. Ground No. 2 to 2.6 are allowed. 11. The second grievance relates to the disallowance of SAR expenses. 12. The underlying facts of this i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, above grounds of appeal are allowed. The remaining addition of ₹ 27,89,224/- has been treated as withdrawn considering the following submissions made by the Ld. AR: "While passing the assessment order the AO has disallowed a sum of ₹ 78,18,311 being the SAR expenses claimed as a deduction by the Appellant. Vide order dated November 6, 2016 passed under Section 154 of the Act the AO has rectified the said disallowance by restricting it to ₹ 50,29,087. The copy of the rectification order has been filed with your office vide our letter dated November 23, 2015 and letter dated June 17, 2016. Therefore, the ground of appeal no. 6 has been withdrawn by the appellant." 9.7 We have perused the addition made by the Assessing Officer. The Assessing Officer in para 3 of the assessment order has mentioned that the total number of SAR that were vested and exercised was 10614 and booked loss of ₹ 50,29,087/-. According to the Assessing officer this amount included amount of ₹ 18,60,898 as SAR compensation paid to employees and ₹ 20,00,369/- as advance written off. The Assessing Officer disallowed this deduction of ₹ 50,29,087/-. Further, he mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but revenue expenditure and ascertained liability therefore it is allowable expenses. In the result the disallowance made by the Ld. and assessing officer of ₹ 1147623/- and enhancement made to that taxable income of the appellant by Ld. 1 st appellate authority of ₹ 2789501/- is held to be erroneous and therefore set aside. In the result the appeal of the assessee for AY 2008-09 is allowed." 4.4 Thus, respectfully following the above findings in the above order, grounds no. 1 to 2.2 of the appeal are allowed." 9.9 Further, the Hon'ble Delhi High Court in the case of Religare Securities Limited (supra) has held as under: "The Revenue's appeal under Section 260A of the Income Tax Act alleges that the Income Tax Appellate Tribunal (ITAT) erred in allowing 2,09,63,780/- as a capital expense. That amount was the quantum of discount given in respect of the SAR (Stock Appreciation Rights) - similar to Employee Stock Option (ESO) offered by the employer to the work force. The ITAT followed its previous decision and also cited a judgment of this Court in Commissioner of Income Tax vs. Lemon Tree Hotels Ltd, (ITA 107/2015 decided on 18.08.2015). The ITAT also relied upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n expenditure. The Tribunal pointed out that what had been adopted was not notional or contingent as had been submitted by the Revenue. Pointing out to the Employees Stock Option Plan, the Tribunal in its order stated that it was a benefit conferred on the employee. So far as the company is concerned, once the option was given and exercised by the employee, the liability in this behalf got ascertained. This was recognised by SEBI and the entire Employees Stock Option Plan was governed by guidelines issued by SEBI. On the facts thus found, the Tribunal held that it was not a case of contingent liability depending on the various factors on which the assessee had no control. The expenditure in this behalf was an ascertained liability, thus the expenditure incurred being on lines of the SEBI guidelines, there could be no interference in the relief granted by the Assessing Authority for the expenditure arising on account of Employees Stock Option Plan. This expenditure incurred as per SEBI guidelines and granted by the Officer could not be considered as erroneous one calling for exercise of jurisdiction under Section 263 of the Act." In view of the above reasoning, the Court is of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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