2018 (10) TMI 1962

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....t by the Ld.CIT(A) and the second ground raised by the Revenue is in respect of deleting the Employee Stock Option Scheme [ESOP] expenses. 3. Inspite of issue of notice none appeared on behalf of the assessee and therefore we proceed to dispose of this appeal on hearing the Ld.DR. 4. In respect of disallowance u/s. 14A r.w. Rule 8D(2)(ii) of the Act is concerned, the Ld. DR submitted that disallowance was deleted by the Ld.CIT(A) on perusal of the balance sheet of the assessee and noticing that assessee has its own funds in excess of investments. Ld. DR submitted that Ld.CIT(A) following the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Reliance Utilities & Power Ltd., [313 ITR 340] deleted the interest disal....

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....nt's submissions. The appellant company is a subsidiary of M/s L&T Finance Holdings Limited. As per the Employee Stock Options Scheme established by the Holding Company, stock options were granted to the employees of the appellant. The actual cost incurred by the holding company in the form of monetary payments, in respect of options granted to employees of the Appellant was charged to the statement of profit and loss during the period and recovered by the holding company. The cost incurred on the ESOP amounting to Rs.80,86,000/- was debited to the Expenses on Employee Stock Option Plans account under the head "Employee benefit expenses" and the amount to be reimbursed to the holding company was credited to L&T Finance Holdings account.....

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....s by their employees to the parent/holding company and claimed the same as ESOP expenses. It was held that the expenses incurred by the assessee to motivate and award its employees for their hard work amounted to salary cost of the assessee and that the expenditure incurred by the assessee for the purpose of business on employees was allowable expenses. I also find that the Hon'ble Delhi High Court in the case of CIT vs Lemon Trees Hotel Pvt. Ltd. in ITA No. 107/2015 vide order dated 18.08.2015 endorsed the view that ESOP charges is allowable as revenue expenses. In view of the legal position on the issue as held by the various Courts, the disallowance of Reimbursement of ESOP Expenses of Rs. 80,86,000/- is deleted. The appellant's ....