ESOP deduction and derivative loss adjustments follow earlier binding precedent where facts and law remain unchanged.

Additional ESOP expense deductions were treated as allowable because the claim was already covered by the Special Bench ruling in Biocon Ltd. and by the assessee's own earlier-year decision; with no distinguishing facts or contrary legal position shown, the disallowance was deleted. Exchange loss / marked-to-market adjustment on derivative transactions was also held not sustainable because it represented reversal of a prior-year provision already considered in the earlier assessment year, and the same issue had been decided in the assessee's favour without any change in facts or law. The Tribunal therefore upheld the first appellate relief on both issues and the revenue's appeal failed.

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Issues: (i) Whether additional ESOP expenses were allowable as a deduction and the disallowance of Rs. 65,19,000 was sustainable. (ii) Whether the addition of Rs. 1,97,06,000 towards exchange loss / marked-to-market profit on derivative transactions was sustainable.

Issue (i): Whether additional ESOP expenses were allowable as a deduction and the disallowance of Rs. 65,19,000 was sustainable.

Analysis: The claim was already covered by the Special Bench decision in Biocon Ltd. and by the Tribunal's decision in the assessee's own case for the earlier assessment year. No distinguishing fact or contrary legal position was shown to warrant a different view.

Conclusion: The disallowance of ESOP expenses was not sustainable and was rightly deleted, in favour of the assessee.

Issue (ii): Whether the addition of Rs. 1,97,06,000 towards exchange loss / marked-to-market profit on derivative transactions was sustainable.

Analysis: The amount represented reversal of a prior year marked-to-market provision and had already been considered in the assessee's earlier assessment year. The issue was also covered by the Tribunal's decision in the assessee's own case, and no change in facts or law was established.

Conclusion: The addition was not sustainable and was rightly deleted, in favour of the assessee.

Final Conclusion: The Tribunal upheld the relief granted by the first appellate authority on both issues and the revenue's appeal failed in entirety.

Ratio Decidendi: Where a claim or adjustment is covered by an earlier binding or coordinate bench decision on identical facts and no material change in facts or law is shown, the same view should be followed.

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