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TMI Blog2023 (10) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... including the assessee s company. AO had also asked the assessee to file list of employees who had exercised this option under the scheme along with sample Form No.16, and also to furnish detailed working of the deduction claimed u/s 37. PCIT has not pointed out how and why the AO had erred in allowing assesses claim of ESOP expenses in accordance with the decision of the Special Bench of the ITAT and the Hon ble Karnataka High Court. Therefore, we do not find any merit in the Ld.Pr.CIT s finding of error in the assessment order on the allowance of claim of ESOP expenses. As noted by us above, the issue was thoroughly inquired during the assessment proceedings by the AO. His view in allowing the claim of ESOP expenses in accordance with judicial pronouncements has not been found to be at fault by the Ld.PCIT by pointing out in any way that the said decisions were not applicable to the facts of the case. Even before us Ld.DR was unable to point out how the allowance of claim of ESOP expenses in accordance with the authoritative judicial pronouncements on the issue was erroneous, or for that matter, how the case laws relied upon by the Ld.PCIT were applicable to the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act (the Assessment Order ), on the alleged ground that the same is erroneous and prejudicial to the interest of the revenue. Accordingly, the Appellant prays that the order passed by the learned PCIT under section 263 of the Act is bad in law and ought to be quashed. 2. On the facts and in the circumstances of the case, revision proceedings under section 263 of the Act tantamounts to change of opinion as while passing the assessment order under section 143(3) of the Act, the learned AO had duly applied its mind and has adopted one of the possible views allowed under the law. Accordingly, the Appellant prays that the order passed by the learned PCIT under section 263 of the Act is bad in law and ought to be quashed. 3. On the facts and in the circumstances of the case, the Learned PCIT has erred in law by holding that the AO has failed to carry out adequate enquiries / verification while passing the assessment order without appreciating the fact that the case of the Appellant has been selected under Computer Aided Scrutiny Selection (CASS) for verification of Claim of Any Other Amount Allowable as Deduction in Schedule BP which in the Appellants case wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are placed before us by the ld.counsel in Paper Book comprising of 135 pages. 5. On careful consideration of all the above we hold that there was no error in the order of the AO allowing the assessee s claim of ESOP expenses; that the entire issue had been duly inquired into during the assessment proceedings; reply of the assessee duly considered by the AO and the AO had taken a plausible view on the issue based on the existing proposition of law with regard to the claim of ESOP expenses. Our reasoning follows. We find from the documents placed before us in PB that during the assessment proceedings the assessee was asked by the AO to justify its claim of ESOP expenses to the tune of Rs. 2,52,14,540/- vide notice issued under section 142(1) of the Act dated 19.2.2021. Copy of the same was placed before us at PB Page No.55 to 56. The assessee was specifically asked to file copy of the ESOP proposal made by it to M/s.Edelweiss Financial Services Ltd., who had framed ESOP scheme for the benefit of employees of the group companies including the assessee s company. The AO had also asked the assessee to file list of employees who had exercised this option under the scheme along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the expenditure on account of ESOP claimed during the year, pointing out that it was worked out on the basis of option which were exercised by the employees during the impugned year. Copies of the form no.16 of the employees were also filed showing TDS on the perquisite of ESOP given to them, as also, copy of Edelweiss Employees Stock incentives offer, by virtue of which the ESOP given to the employees of the assessee. 7. Evidently, the assessee had explained in detail to the AO what ESOP scheme was, and how it was an expenditure for the assessee, and also basis for calculating the ESOP expenditure, pertaining to the year. Its claim was duly supported with the decision of the Special Bench of the ITAT, which was confirmed by the Karnataka High Court also. Based on these submissions of the assessee, the AO allowed the claim of the assessee. 8. The ld.Pr.CIT s order, however, reveals that he has taken a totally contrary view on the issue, that these ESOP expenses are capital in nature relating to discount on shares issued, and are notional in nature not actually incurred by the assessee, and thus not allowable. He has relied on various decisions of the ITAT to suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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