ESOP expenditure deductible as revenue expense under section 37(1) where prior years' view was followed.

Employee Stock Option Plan expenditure was treated as revenue expenditure deductible under section 37(1) because the Tribunal followed its own earlier order in the assessee's case and applied the settled view that such ESOP cost is not capital in nature. On identical facts for prior years, the coordinate bench had already allowed the deduction. The Revenue's appeal therefore failed.

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Issues: Whether expenditure incurred under an Employee Stock Option Plan (ESOP) is allowable as revenue expenditure under section 37(1) of the Income-tax Act, 1961.

Analysis: The Tribunal followed its earlier order in the assessee's own case for prior assessment years, where identical ESOP expenses had been held allowable as deduction under section 37(1). It noted that the facts were similar and that the coordinate bench had already applied the settled view that ESOP expenditure is not capital in nature but is deductible as revenue expenditure.

Conclusion: The ESOP expenditure was held allowable as revenue expenditure under section 37(1), and the Revenue's appeal failed.

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