TaxTMI 
TaxTMI 
2019 (4) TMI 2047
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....x (Appeals)-7, New Delhi [briefly "the CIT(A)"] has erred in upholding the disallowance of Rs. 23,92,281/- in respect of ESOP scheme, following its order for the assessment year 2010-11. 2.That on the facts and the circumstances of the case and in law, the CIT(A) has erred in and not following the order of Special Bench in Biocon Ltd. v. Dy. CIT(LTU) [2013] 155 TTJ (Bang-SB) 649 = 35 taxmann.com 335, wherein DCIT v. Ranbaxy Laboratories Ltd. (2009) 124 TTJ (Del) 771 was duly considered and distinguished. 3. That on the facts and the circumstances of the case and in law, the CIT(A) has erred in holding that neither any expenditure was incurred nor is there any specific provision to allow deduction of expenditure on ESOP sch....
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....s of the case and in law, Commissioner of Income tax (Appeals)-7, New Delhi [briefly "the CIT(A)"] has erred in disallowing deduction of INR 2,33,11,692/- in respect of Employee Stock Option Plan ('ESOP') scheme, holding that the issue is covered against the Appellant by the order in Dy. CIT v. Ranbaxy Laboratories Ltd. (2009) 124 TTJ (Del) 771. 1.1 That on the facts and the circumstances of the case and in law, the CIT(A) has erred in not following the order of Special Bench in Biocon Ltd. v. Dy. CIT(LTU) [2013] 155 TTJ (Bang- SB) 649, wherein, ITAT order in Ranbaxy Laboratories Ltd. (supra) was duly considered and distinguished. 1.2 That on the facts and the circumstances of the case and in law, the CIT(A) has erred in h....
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....on'ble Delhi High Court, the Tribunal has given following reasons to allow similar expenditure: "The question whether employee stock option cost incurred by the employer company is an allowable expenditure as per section 37 of the Act is no longer res-integra. The Special Bench of the Tribunal in Biocon Ltd. Vs. DCIT vide order dated 16th July 2013 (36 CCh 268, Bangalore Special Bench of the Tribunal) has held that the discount on issue of Employee Stock Option is an allowable deduction in computing the income under the head "Profit and gains of business or profession‟. The relevant "ratio decidenti" of the Special Bench is reproduced below: 9.4.1 There is another important dimension of this issue. Chapter XII_H of t....
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.... legislature itself contemplates the discount on premium under ESOP as a benefit provides by the employer to its 11 employees during the course of service. If the legislature considers such discounted premium to the employees as a fringe benefit or "any consideration for employment‟. It not open to argue contrary. Once it is held as a consideration for employment, the natural corollary which follows is that such discount i) is an expenditure ii) such expenditure is on account of an ascertained (not contingent) liability; iii) it cannot be treated as a short capital receipt. In view of the foregoing discussion, we are of the considered opinion that discount on shares under the ESOP is an allowable deduction. .............
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....th August 2015 in ITA No.2 of 2002 (CIT v. Oswal Agro Mills Ltd.) held that the expenditure incurred in connection with issue of debentures or obtaining loan should be considered as revenue expenditure. 4. In the circumstances, the impugned order of the ITAT answering the question in favour of the Assessee is affirmed." 11. Respectfully following the order of the Hon'ble Delhi High Court in Lemon Tree Hotels Ltd dated 18.8.2015 and the order of the Special Bench in Biocon Ltd. (supra), we set aside the order of the Ld. CIT(A) on this issue and direct the Assessing Officer to allow claim of ESOP expenses. 12. Since ground No.1 to 1.2 for the assessment years 2009-10 and 2010-11 involve identical issue, therefore, f....