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TMI Blog2023 (8) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant facts, there is no specific finding that the aforesaid expenses are not genuine or that there was any irregularity with respect to the aforesaid claim of ESOP expenses. So, in our view, this is not a case where no enquiry has been made by the assessee officer during the course of assessment proceedings. As held by various Courts, Principal CIT cannot in 263 proceedings set aside an assessment order merely because he has a different opinion in the matter. Sec 263 of the Act does not visualise a case of substitution of the judgment of the Principal CIT for that of the AO, who passed the order unless the decision is held to be wholly erroneous. Principal CIT, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-visit the entire assessment and determine the income himself at a higher figure. We thus find no error in the order of Ld. AO so as to justify initiation of 263 proceedings in the instant case. The Grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses as a capital expenditure being a securities premium which is a capital item disregarding the judicial precedents of various courts wherein it is held that such ESOP expenses are revenue in nature. 7. Ld. Pr. CIT erred in law and on facts in holding the assessment order allowing the claim of ESOP expenses being valid under the law and supported by judicial precedence of various courts as erroneous and prejudicial to the interest of revenue. 8. Without prejudice ld. Pr. CIT erred in law and on facts holding assessment order erroneous prejudicial to the interest of Revenue overlooking the fact that appellant is eligible to claim MAT credit of Rs. 19,86,66,917/- against the tax liability that may arise under normal provisions if ESOP expenses are disallowed but there may not arise any additional tax/interest liability on a/c of disallowance and therefore the same cannot be said to be prejudicial to the interest of Revenue. Your appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal before the appeal is heard and decided. 3. The brief facts of the case are that the assessee company filed the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to scrutinise the claim of any other amount allowable as deduction in Schedule BP during the year under consideration. Thereafter, the counsel drew our attention to reply dated 15-11-2019 filed by the assessee giving inter alia details of employee stock compensation expenses of ₹ 4.95 crores (at pages 35-40 of paper book). Thereafter, the counsel for the assessee drew our attention to notice dated 17-12-2020 under section 142(1) of the Act and assessee s reply dated 12-01-2021 in response to the same. The counsel for the assessee drew our attention to Pages 73-124 of the Paper Book in which the assessee company had submitted sample Form 16 of various employees to the assessing officer during the course of assessment proceedings, in support of genuineness of claim of employee stock compensation expenses. Further, the counsel for the assessee invited our attention to notice dated 03-02-2021 issued under section 142(1)of the Act and assessee s reply dated 07-02-2021 and also drew our attention to page 45 onwards of the paper book in which complete details of allotment of equity shares under ESOP Scheme were furnished to the assessing officer during the course of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etail during the course of assessment proceedings. In the instant facts, it cannot be inferred that there was any lack of enquiry on part of the assessing officer during the course of assessment proceedings with respect to the claim of aforesaid ESOP expenses. This is evident from notices dated 23- 09-2019, 17-12-2020, 03-02-2021 and 11-02-2021 issued by the assessing officer during the course of assessment proceedings inquiring into the aspect of claim of ESOP expenses. Further, the assessee had also filed various responses dated 15-11-2019, 12-01-2021, 07-02-2021 and 13-02- 2021 giving detailed explanation regarding the claim of ESOP expenses, referred to above. Accordingly, there is evidently no lack of enquiry or non-application of mind by the assessing officer with respect to the claim of ESOP expenses. Further, the Principal CIT in the 263 order has not pointed out to any specific finding to the effect that the aforesaid ESOP expenses had been incorrectly claimed by the assessee company. There has been no specific finding that there was any infirmity/irregularity in claim of ESOP expenses by the assessee company, referred to above. 7. An inquiry made by the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquries or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant. 11. Now coming to the facts before us, from the records we observe that during the course of assessment, the AO called for details with respect to the claim of ESOP expenses and the assessee filed various replies to the queries raised by the assessing officer, during the course of assessment proceedings. We observe that this is not a case where there was an omission on part of the AO to examine this aspect of ESOP expenses at all. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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