2026 (1) TMI 1257

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....ort] dated 13.02.2025 for the Assessment Year 2016-17. The assessee has also filed cross objections in support of the aforesaid impugned order. 2. Brief facts of the case are, the assessee company E-filed its return of income on 30.11.2016 declaring total Income of Rs. 1,49,38,61,840/-. Subsequently, the case was selected for Complete Scrutiny through CASS with the reasons "Large any other amount allowable as deduction" claimed in schedule BP of return; Tax Credit claimed in ITR is less than tax credit available in 26AS; Mismatch in sales turnover reported in Audit Report and ITR; Total Sales/Gross Receipt in Part A-P&L of ITR; Large deduction claimed under Chapter VI-A; Large international transaction(s); Large Aggregate value of total ....

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....d the same vide order dated 24.10.2019. 5. During the course of assessment proceedings, vide Question No. 12 of Notice dated 22.10.2019 issued u/s 142(1) of the Act, it was asked as to why claim of ESOPs expenses amounting to Rs. 5,12,06,383/- may not be disallowed being notional in nature. In response, the assessee vide reply dated 06.12.2019 submitted that the deduction has been claimed on account of stock options granted to remunerate the employees in lieu of their services. The assessee company had to reimburse its ultimate holding company for ESOPs, RSUs, and shares under the ESPP scheme granted to the employees of the assessee involving actual cash out flow by the assessee company and in this regard, the assessee also relied upon v....

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.... in the said case has been admitted by the Hon'ble Supreme Court, which is pending adjudication. 5.1.3 From the submissions filed by the appellant, it is noted that under the stock options scheme, the employees of the appellant are granted an option to purchase specified number of shares of FNIS Inc., USA (the ultimate holding company of the appellant) at a pre-determined price ('grant price'). Upon exercise of such option, the difference between the grant price ('discount') and the FMV of shares of FNIS Inc. on the exercise day is payable by FNIS Inc. to the employees of the appellant. Accordingly, FNIS Inc. raises an invoice on the appellant for recovering the discount amount paid to the employees. This settle....

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....avour by the decision of Hon'ble Jurisdictional High Court. Accordingly, the ground of appeal raised by the appellant is allowed. 7. Aggrieved Revenue is in appeal before us raising following grounds of appeal :- "Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in allowing the appeal of the assessee by deleting the addition made by the AO amounting to Rs. 5,12,06,383/- on account of employees stock option plan (ESOP) for the year under consideration." 8. At the time of hearing, ld. DR of the Revenue relied on the order of the Assessing Officer. 9. On the other hand, ld. AR of the assessee submitted that the ld. CIT (A) has passed a reasoned order after relying on various decisions ....