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TMI Blog2024 (1) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... statements for financial year 2015-16 and Copy of ITC Employees Stock Option Scheme-2010 policy. We further find that as per the ESOP Scheme, such expenses had been duly taxed in the hands of the employees as perquisites and included in Form-16 of the employees and due deduction of tax at source were indeed made by the assessee treating them as salary. CIT(A) had confirmed the disallowance of the AO on the ground that assessee had not rebutted the findings of the Ld. AO. This is factually incorrect as the CIT(A) himself has reproduced the various rebuttal made by the assessee on the findings of the Ld. AO and the same are duly reproduced - CIT(A) having recorded the rebuttal of the assessee on the findings of the AO in his appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order passed by Assistant Commissioner of Income Tax, Circle -9(2), New Delhi (hereinafter referred to as the Ld. AO ) u/s 143(3) of the Income Tax Act (hereinafter referred to as the Act ) on 30/12/2018 for the Assessment Year 2016-17. 2. The only issue to be decided in this appeal as to whether the Ld. CIT(A) was justified in upholding the action of the Ld. AO in rejecting the claim made by the assessee for deduction of Employees Stock Option Plan (ESOP) cost amounting to Rs. 4,27,27,652/-. 3. We have heard the rival submissions and perused the materials available on record. For the year under consideration, the assessee filed original return of income declaring total income of Rs. 9,42,13,670/- on 29/09/2016. The said return w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td in respect of the ESOP expenditure. 4. It is undisputed that the aforesaid amount of Rs. 4.27 crores was initially not debited to the Profit and Loss Account as the invoice was received by the assessee in the immediately succeeding year. Due to receipt of invoice in the immediately succeeding year, the assessee had made a claim of deduction of the said ESOP expenses in the revised return as per law and re-casted the financial statements of financial year 2015-16 (year under consideration) for the purposes of comparative representation with financial statements of financial year 2016-17 (immediately succeeding years). 5. The Ld. AO, however, disallowed the claim of deduction of his expenses on the following grounds:- 1. AO erre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of ESOP from the company and thereafter, a list of 7 employees were submitted by the assessee; (d) as per para 4.7(iv) of the assessment order, the grant dates and vesting dates pertain to different financial year not exclusively following within the relevant year; (e) ESOP expenditure was claimed only by revising the computation/return of income and the same was neither recognized as expenditure in the audited profit and loss account for the relevant year. 7. The Ld. CIT(A) upheld the disallowance made by the Ld. AO. It is not in dispute that all the relevant documents for the purpose of adjudication of the issue of allowability of deduction on account of ESOP expenditure were duly furnished by the assessee before the lower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial precedents available on the impugned issue, where it had been categorically held that ESOP expenditure is allowable expenditure in the hands of the company, the Ld. CIT(A) grossly erred in confirming the disallowance. The issue in dispute is squarely covered in favour of the assessee by the decision of Hon ble Jurisdictional High Court in the case of PCIT vs. New Delhi Television Ltd. reported in 398 ITR 57 ; decision of Hon ble Karnataka High Court in the case of CIT vs. Biocon Ltd. vs. DCIT reported in 430 ITR 151 ; decision of Hon ble Jurisdictional High Court in the case of CIT vs. Lemon Tree Hotels Ltd. in ITA No.107/2015 ; the decision of Hon ble Jurisdictional High Court in the case of PVR Ltd. vs. CIT in ITA No.564/2012 d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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