Judgment allows Revenue's appeal on PF, ESIC; rejects appeal on ESOS expenses.

The judgment partly allowed the Revenue's appeal for statistical purposes regarding the disallowance of employees' contribution to PF and ESIC under section 43B of the IT Act, while rejecting the appeal on the disallowance of Employees Stock Option Scheme expenses under section 37 of the Act. The Tribunal referred to legal interpretations and precedents in reaching its decision, restoring the issue of employees' contribution for further examination by the Assessing Officer based on directions from a similar Mumbai Tribunal case.

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Issues involved:
The judgment involves the following issues:
1. Disallowance of employees' contribution to PF and ESIC under section 43B of IT Act.
2. Disallowance of Employees Stock Option Scheme expenses under section 37 of the Act.

Issue 1: Disallowance of employees' contribution to PF and ESIC under section 43B of IT Act:
The Revenue appealed against the order of the ld. Commissioner of Income Tax (Appeals) regarding the disallowance of employees' contribution to PF and ESIC. The Revenue contended that such disallowance should not have been deleted as the contributions were not made within the due date specified under the relevant Acts. The ld. DR argued that the issue is settled by a Supreme Court decision in the case of Checkmate Services P. Ltd. vs. CIT, where it was held that contributions remitted beyond the due date are not allowable deductions. However, the assessee's counsel referred to interpretations by different Tribunals and requested verification of due dates. The Tribunal decided to restore the issue to the Assessing Officer for further examination based on the directions in a similar Mumbai Tribunal case.

Issue 2: Disallowance of Employees Stock Option Scheme expenses under section 37 of the Act:
Regarding the second issue raised by the Revenue on the allowability of expenses incurred on Employees Stock Option Scheme under section 37 of the Act, the Tribunal found in favor of the assessee. Citing the decision of the Delhi High Court in the case of Pr. CIT vs. Lemon Tree Hotels Pvt. Ltd., the Tribunal held that the expenses were allowable deductions under section 37(1) of the Act. The Tribunal noted that the ld. CIT (Appeals) followed the Delhi High Court decision and a Special Bench Bangalore Tribunal decision, finding no fault in allowing the claim of ESOP expenses. Consequently, the ground raised by the Revenue was rejected.

Conclusion:
In conclusion, the judgment partly allowed the Revenue's appeal for statistical purposes concerning the disallowance of employees' contribution to PF and ESIC, while rejecting the appeal on the disallowance of Employees Stock Option Scheme expenses. The issues were decided based on legal interpretations and precedents, with one issue being restored for further examination by the Assessing Officer.

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