The Tax Publishers2022 TaxPub(DT) 2243 (Bang-Trib)

INCOME TAX ACT, 1961

Section 37(1)

In the case of CIT v. Biocon Limited [(2021) 430 ITR 151 (Kar.) : 2020 TaxPub(DT) 4924 (Karn-HC)], it was held that deduction of discount on ESOP was to be spread over the vesting period in accordance with the accounting method in the books of account and assessee had not produced the employees stock Option Plan, 2009 and the amended plan, hence, it could not be determined whether the vesting was in a graded manner over the period of four years or not. Therefore, in the interest of justice and equity, the matter was restored to the files of the AO.

Business expenditure - Allowability - Employees' Stock Option -

AO noticed that assessee had debited an amount profit and loss account towards 'Employees' Stock Option Expenses', which includes an amount to prior years. AO for by placing reliance on the CBDT Circular No. 9/2007, dated 20-12-2007 held that the shares are allotted to the employees from the share capital of the company, hence, no deduction was allowable in computing the taxable income of the assessee as no expenditure had been incurred. Held: Assessee had not placed on record the Employees' stock Option Plan, 2009, namely, 'Flight Raja Employees Stock Option Plan 2009' nor the further amended plan vide 'Flight Raja Employees Stock Option Plan 2013' (ESOP). Following the case of CIT v. Biocon Limited [(2021) 430 ITR 151 (Kar.) : 2020 TaxPub(DT) 4924 (Karn-HC)] had held that deduction of discount on ESOP is to be spread over the vesting period in accordance with the accounting method in the books of account. assessee had not produced the Employees stock option plan 2009 and the amended plan, hence, it was not in a position to determine whether the vesting was in a graded manner over the period of four years or not. Therefore, in the interest of justice and equity, the matter was restored to the files of the AO. Further, AO was directed to follow the judgment of case of CIT v. Biocon Limited [(2021) 430 ITR 151 (Kar.) : 2020 TaxPub(DT) 4924 (Karn-HC)].

Followed:CIT v. Biocon Limited [(2021) 430 ITR 151 (Kar.) : 2020 TaxPub(DT) 4924 (Karn-HC)]

REFERRED : M/s. Rotork Controls India (P) Ltd. v. CIT 2009 TaxPub(DT) 1730 (SC), Bharat Earth Movers v. CIT 2000 TaxPub(DT) 1505 (SC) and CIT LTU Bangalore, Dy. CIT LTU, Bangalore v. M/s. Biocon Ltd. (2021) 430 ITR 151 (Kar.) : 2020 TaxPub(DT) 4924 (Karn-HC)

FAVOUR : Matter remanded

A.Y. :



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