ESOP/ESPP/ESIP/RSU expense allowance under Income Tax Act, 1961

Facts: 

Assessee's employees were given different employee compensation plans such as Stock option schemes, stock purchase plans, stock incentive plans/restricted stock units on concessional discounted pricing. The difference between the market price and exercise price was claimed as an expense which was disallowed by lower tax authorities. On higher appeal by the assessee -

Held in favour basing earlier assessment year decision of assessee that ESOP/ESPP/ESIP/RSU were all allowable expenditure for income tax purposes.

Applied: 

Assessee's own case for assessment year 2016-17 in IT(TP)A No.213/Bang/2021 (order dated 3-10-2022) : 2022 TaxPub(DT) 7666 (Bang-Trib)

Nova Nordisk India Private Limited (ITA No. 1275/Bang/2011) : 2014 TaxPub(DT) 2272 (Bang-Trib)

Biocon Ltd. v. DCIT (2013) 25 ITR(T) 602 (Bang-Trib) : 2013 TaxPub(DT) 2046 (Bang-Trib)

ING Vysya Bank Ltd. v. ACIT (2014) 39 ITR(T) 250 (Bangalore ITAT) : 2015 TaxPub(DT) 1928 (Bang-Trib) 

Sterlite Technologies Ltd. (ITA No. 4841/Mum/2013) (Mumbai ITAT)

CERA Sanitaryware Ltd. (ITA No. 2817/Ahd/2011) (Ahmedabad ITAT) : 2015 TaxPub(DT) 2714 (Ahd-Trib)

Aditya Birla Nuvo Ltd. (ITA No. 3178/M/2012) (Mumbai ITAT) 

HDFC Bank Ltd. (ITA No. 374/Mum/2012) (Mumbai ITAT) : 2015 TaxPub(DT) 3761 (Mum-Trib)

Inox Leisure Ltd. (ITA Nos. 374 & 523/Ahd/2012) (Ahmedabad ITAT) 

Korn Ferry International Pvt. Ltd. (ITAs No. 5152/Mum/2012) (Mumbai ITAT) : 2016 TaxPub(DT) 2288 (Mum-Trib)

Sandvik Asia Pvt. Ltd. (ITA Nos. 1841 & 1842/Pn/2012) (Pune ITAT)

Religare Commodities Ltd. (ITA No. 2283/Del/2013 and ITA No. 3634/Del/2014) (Delhi ITAT) : 2017 TaxPub(DT) 0253 (Del-Trib)

DCIT v. Kotak Mahindra (IT Appeal No. 698 (Mum.) of 2016) (Mumbai ITAT) : 2018 TaxPub(DT) 0677 (Mum-Trib)

CIT v. Lemon Tree Hotels Ltd. [IT Appeal No. 107 of 2015, dated 18-8-2015] : 2015 TaxPub(DT) 4978 (Del-HC)

CIT v. PVP Ventures Ltd. (2012) 23 taxmann.com 286 (Mad) : (2012) 211 Taxman 554 (Mad.) : 2013 TaxPub(DT) 2110 (Mad-HC)

Ed. Note: The number of cases in this decision on this topic is worth noting. It is despite this that the revenue disallowed the expense. Modus operandi of an ESOP/ESPP/ESIP/RSU is also explained in this verdict,

Case: Hewlett Packard (India) Software Operation Pvt. Ltd. v. Dy. CIT 2023 TaxPub(DT) 536 (Bang-Trib)