9911796707
TMI Blog2025 (1) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2013 at the total income of Rs. 168,80,49,210/-. Subsequently, this case was selected for scrutiny and the assessment u/s. 143(3) of the Act was completed on 04.05.2016 and taxable income was determined at Rs. 204,55,21,780/-. Against the order u/s. 143(3) of the Act, the assessee filed an appeal before the CIT(A) and ld. CIT(A) adjudicated the issues vide his order dated 28.11.2018. Accordingly, by giving effect to the order of the CIT(A), the AO passed a consequential order u/s. 143(3) r.w.s. 250 of the Act on 21.01.2019 determining the total income at Rs. 129,48,84,650/-. The Revenue filed an appeal before the ITAT against the order of ld. CIT (A) order and the same was disposed of vide order dated 08.12.2021. The assessee filed its cross objection on the issue of ESOP and vide order dated 08.12.2021, the ITAT remitted this issue to the file of the AO to examine the same and decide their claim in accordance with law. 4. While giving effect to the order of the ITAT, the AO observed that the assessee had neither claimed this expenditure in the return of income filed nor during the course of assessment proceedings / appeal proceedings before the CIT(A). The assessee had claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case & in law, the Ld. A.O. / Ld. CIT(A) grossly erred in not following the binding directions of the 'Hon'ble Tribunal issued vide order dated November 08, 2021 w.r.t. claim for deduction of ESOP expenditure of INR 38,90,90,948, thereby, violating the principles of judicial discipline. 2.1. In doing so, the Ld. CIT(A) exceeded its jurisdiction by questioning the power of the Hon'ble Tribunal to allow admission of a fresh claim of ESOP expenditure by filing of a cross objection in the original appellate proceedings, which is incorrect and leads to judicial impropriety and thus is liable to be struck down. 3. On the facts and circumstances of the case & in law, the Ld. A.O. / Ld. CIT(A) incorrectly held that the expenditure of short premium on the issue of ESOP, being a notional loss, is not allowable under the provisions of the Act without appreciating that the issue of allowability ESOP expenses is no more res-integra in view of decision of Special Bench of Tribunal in the case of Biocon Limited vs DCIT 35 Taxmann.com 335 (SB) and being approved by Hon'ble Karnataka High Court in the case of CIT vs Biocon Ltd [2020] 121 taxmann.com 351. 4. On facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with SEBI Guideline which resulted into no charge of the ESOP expenses in the P&L Account for the year under consideration as the Market Price prior to the date of the meeting of the Board of Directors in which options are granted/ shares are issued was equivalent to grant price. However, the use of "fair value" Method computed strictly in accordance with SEBI Guideline resulted into charge of Rs. 1,17,37,000 and t he complete disclosure of the same has been made in Audited Financial Statement. 9. It is further submitted that on account of the Nil expenditure charged to profit & loss account for the year under consideration for ESOP expenditure, no deduction was claimed by the Assessee in the return of income. However, he submitted that here it is pertinent to add that the allowance of the ESOP expenditure had been a subject matter of litigation not only with respect to its allowance as revenue expenditure but also with, respect to the quantum to be allowed in the respective years - grant, vesting and exercise year. He submitted that the aforesaid controversies on this issue had been settled by the decision in the case of Biocon Ltd. vs. DCIT (LTU) 35 taxmann.com 335 (2013) (SB) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dates before the CIT(A) vide submission dated March 27, 2024. He submitted that the average market price is considered at simple average of i) opening price & ii) closing price for the respective days. To support this contention, he attached the screenshots of website at Page No. 334-357 of the paper book. In view of the above submissions, it was prayed that the disallowance by the lower authorities with regard to claim of ESOP expenditure may be reversed and it was further reiterated that the Hon'ble Tribunal has in principle accepted the same. 11. With regard to ground no. 1 & 2 relating to violating the principles of judicial discipline are concerned, it was reiterated by the Ld. AR that during the first round of appellate proceedings, the Tribunal after giving a thoughtful consideration to the facts and the position of law, allowed the additional claim of ESOP expenditure made. It was further submitted that the Tribunal concurred with the view of the Special Bench in the case of Biocon Ltd. Vs. DCIT (supra) that the discount on issue of Employees Stock Options is an allowable deduction while computing the income under the head "profit and gains of business". The Tribunal fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matter's which, if allowed to become widespread, could result in considerable harassment to the assesses- public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them." 13. Ld. AR further submitted that the Hon'ble Supreme Court in the case of CCE v. Dunlop India Ltd. [1984] 1984 taxmann.com 492 (SC) observed that: "We hope it will never be necessary for us to say so again that "in the hierarchical system of courts" which exists in our country, it is necessary fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l having been filed by the other party, notwithstanding the fact that such a party may not have filed an appeal against related order or any part thereof, within thirty days of being so put to notice, "file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Commissioner (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3)". When this cross-objection is required to be treated as "an appeal presented", there cannot be any justification in restricting the scope of issues which can be raised in a cross-objection. Whatever issues, therefore, can be raised by way of an appeal are the issues that can be raised by way of a cross-objection. As learned counsel for the assessee aptly points out, as held by Hon'ble Gauhati High Court in the case of Purbanchal Paribartan Gosthi (supra), "it can safely be held on a point of law that there is absolutely no difference between an appeal and a cross-objection. The only difference if at all one can be pointed out is that an appeal can be preferred within 60 days from the date-of receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure based on the findings of ITAT, Special Bench, Bangalore and subsequently upheld the abovesaid findings of Special Bench by the Hon'ble Karnataka High Court. In this case, it is fact on record that on account of Nil expenditure charged to profit & loss account for the year under consideration for ESOP expenditure, no deduction was claimed by the assessee in the return of income. Considering the fact that this issue was raised first time before ITAT, the same needs examination at the lower level, therefore, the coordinate Bench has remitted back the issue to the file of Assessing Officer. The Assessing Officer has rejected the claim of the assessee without considering the decision of the ITAT, Special Bench, Bangalore and Hon'ble Karnataka High Court. In our considered view, as far as the lower authorities are concerned, the abovesaid two decisions are binding on the authorities below as well as for us. After the decision of higher wisdom, still the authorities are not respecting the same. It is clearly disrespecting the principles of judicial precedents and judicial discipline. 20. With regard to ground no. 1 & 2 relating to violating the principles of judicial discipline a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
