TaxTMI 
TaxTMI 
2026 (3) TMI 1483
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....he assessee against the assessment order dated 22 March 2024 under section 143 (3) read with section 144B of The Income Tax Act, 1961 (The Act) passed by Assessment Unit, Income Tax Department (The Learned AO) determining the total income of the assessee at Rs. 29,550,814,617/- against the returned income of the assessee at 2,233,79,39,620/- wherein the only addition was with respect to the employee share-based payments [ ESOP] amounting to Rs. 7,212,874,997 was confirmed. 2. The assessee is aggrieved by the above appellate order wherein as per ground No. 1 it has challenged the validity of adjudication and as per ground No. 2 it has challenged the disallowance and treatment of the employee share-based payments expenditure disallowance c....
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.... granted to them to the assessee. In the assessee's books of account, the assessee debited the same to the profit and loss account. Assessee also deducted tax at sources on such amount u/s 192 of the Act in the hands of the employees to whom such ESOP were allotted. Form no 16 were also issued demonstrating the same. Thus, for the assessment year 2022 - 23 the assessee has accounted these expenses amounting to Rs. 11,175,688,072/- which is debited to the profit and loss account of the assessee. This sum is not actually the actual amount spent by the assessee, but it is accordingly charged to the profit and loss account of the assessee. The expenses debited to the statement of profit and loss account on accrual basis over the vesting per....
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....es are revenue in nature and further the issue is squarely decided by the honourable High Court's in favour of the assessee. Merely because the special leave petition is pending before the honourable Supreme Court, the binding precedent of the decision of the honourable Karnataka High Court in case of Biocon Ltd is not obliterated as it is in favour of the assessee. On the merits assessee also contended that the expenditure towards ESOP is incurred for retention of the employees and relates to the business of the assessee. 9. The learned assessing officer held that the cost of ESOP to the employees is capital in nature as it results in increase of capital of the parent company and it is in fact the nature of subscribing to the capita....
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....irmed the action of the learned assessing officer. He held that expenditure is capital expenditure not revenue expenditure and hence not allowable for deduction under section 37 of the act 11. Assessee is aggrieved with the same. The learned authorized representative Shri Ketan Ved chartered accountant and the ld. DR shri N Balu swamy, JCIT were heard. 12. The facts are already described above. Section 37(1) of the Income Tax Act, 1961 allows deduction of expenditure (not capital or personal) to be laid out wholly and exclusively for business purposes, outside Sections 30-36. No specific provision addresses ESOPs. 13. Biocon Ltd. v. DCIT [2013) 35 taxmann.com 335 (Bang.) (SB)], decided 16 July 2013 by the ITAT Bangalore Special Ben....