TaxTMI 
TaxTMI 
2024 (1) TMI 656
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.... (hereinafter referred to as the 'Ld. AO') u/s 143(3) of the Income Tax Act (hereinafter referred to as 'the Act') on 30/12/2018 for the Assessment Year 2016-17. 2. The only issue to be decided in this appeal as to whether the Ld. CIT(A) was justified in upholding the action of the Ld. AO in rejecting the claim made by the assessee for deduction of Employees Stock Option Plan (ESOP) cost amounting to Rs. 4,27,27,652/-. 3. We have heard the rival submissions and perused the materials available on record. For the year under consideration, the assessee filed original return of income declaring total income of Rs. 9,42,13,670/- on 29/09/2016. The said return was later revised under section 139(5) of the Act on 31/03/2018 declaring an income o....
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....t of Rs. 4.27 crores was initially not debited to the Profit and Loss Account as the invoice was received by the assessee in the immediately succeeding year. Due to receipt of invoice in the immediately succeeding year, the assessee had made a claim of deduction of the said ESOP expenses in the revised return as per law and re-casted the financial statements of financial year 2015-16 (year under consideration) for the purposes of comparative representation with financial statements of financial year 2016-17 (immediately succeeding years). 5. The Ld. AO, however, disallowed the claim of deduction of his expenses on the following grounds:- "1. AO erred in disallowing ESOP expenditure for that the learned AO was not justified in disallowing....
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....d) as per para 4.7(iv) of the assessment order, the grant dates and vesting dates pertain to different financial year not exclusively following within the relevant year; (e) ESOP expenditure was claimed only by revising the computation/return of income and the same was neither recognized as expenditure in the audited profit and loss account for the relevant year. 7. The Ld. CIT(A) upheld the disallowance made by the Ld. AO. It is not in dispute that all the relevant documents for the purpose of adjudication of the issue of allowability of deduction on account of ESOP expenditure were duly furnished by the assessee before the lower authorities. The assessee further furnished the Copy of invoice raised by ITC Ltd. towards ESOP expenses and....