TaxTMI 
TaxTMI 
2023 (8) TMI 1626
X X X X Extracts X X X X
X X X X Extracts X X X X
....23 as a lead case and its finding will be applied mutatis mutandis to the other appeal. ITA No. 1738/Mum/2023 "1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals)-48, Mumbai ("Ld. CIT(A)") erred in confirming the action of the learned assessing officer ("td. AO") in making disallowance of INR 1,67.97,854/ on account of Employees Stock Option Plan ("ESOP") claimed by the Appellant under section 37(1) of the Income-tax Act, 1961 ("IT Act") 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO in making disallowance of INR 89.63,694/- under section 14A of the IT Act read with Rule 8D of the Income-tax Rules,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the scheme of ESOP's the company gives an option to its employees to purchase its securities at a price lower than the market price. This was a practise which was exercised in order to benefit the employees in order to retain the employees and reward them for their contribution in the growth of the company. It is also explained that its employees were the main assets, therefore, ESOP was issued to them purely from business perspective would qualify as business expenditure and the same was entitled to deduction under the guidelines prescribed by the Institute of Chartered Accountant of India. Therefore, the assessee claimed that ESOP issued to the employees was revenue expenditure for the company in the interest of the business of the comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es Share-based payments issued by ICAI. The assessee company during the course of assessment explained that ESOP issued to the employees was revenue expenditure for the company in the interest of the business of the company so that talents of the employees is retained in the company to perform and compete in the market place. During the course of appellate proceedings before us the ld. Counsel has submitted that identical issue on similar facts has been adjudicated by the ITAT Mumbai in the case of the assessee itself for assessment year 2009-10 & 2011-12 vide ITA No. 4542/Mum/2013, 2010-11 vide ITA No. 5679/Mum/2015. With the assistance of the ld. Representative we have perused the decision of ITAT as referred supra and relevant part of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....u/s 14A of the Act. 6. Aggrieved, the assessee filed the appeal before the ld. CIT(A). However, the ld. CIT(A) has dismissed the ground of appeal of the assessee by referring the amendment made by Finance Act 2022 to Sec. 14A by inserting a non-obstante clause that the provision of this section shall apply and shall be deemed to have always applied in a case where exempt income has not accrued or arisen or has not been received during the previous year relevant to assessment year and the expenditure has been incurred during the said previous year in relation to such exempt income. 7. Heard both the sides and perused the material on record. The ld. Counsel has contended that assessee has not earned any exempt income during the year under c....