TaxTMI 
TaxTMI 
2022 (5) TMI 1716
X X X X Extracts X X X X
X X X X Extracts X X X X
....owance of employee welfare cost incurred towards ESOP were made by him during the course of assessment proceedings. 2. On the facts and circumstances of the case and in law, the learned Pr. CIT has legally erred in stating that the order passed by the AO with respect to disallowance of employee welfare cost towards ESOP is erroneous and prejudicial to the interest of revenue, when the AO has taken one of the two views permissible in law. 3. On the facts and circumstances of the case and in law, the learned Pr. CIT has erred in failing to appreciate that the method of accounting adopted by the Appellant with respect to amortization of employee welfare cost during the vesting period is in line with the decision of Special bench in the case of M/s Biocon Ltd TTJ 649] 4. On the facts and circumstances of the case and in law, when initiation of revisionary proceedings under Section 263 of the Act is invalid, subsequent inquiries/verifications made during the course of revisionary proceedings should also be invalid. 5. Without prejudice to the above, on the facts and circumstances of the case and in law, the learned Pr. CIT has legally erred in stating....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar as it is prejudicial to the interest of the revenue on the aforesaid two issues and thereby set aside the assessment order with direction to decide the issue afresh after providing opportunity of being heard in the light of the observations made in the order passed under section 263 of the Act. Feeling aggrieved from the impugned order passed by the Ld. PCIT under section 263 of the Act, the assessee has come up before the Tribunal by way of filing present appeal. 4. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 5. Undisputedly the assessee company has issued shares to its employees under ESOP at a lower price than the fair market value of such shares by treating the difference between fair market value of shares and issue price as Employee Welfare Cost and debited the amount to its profit & loss account. It is also not in dispute that the assessee company has claimed deduction of Rs.1,53,88,418/- (Rs. 7,25,18,244 minus Rs. 5,71,29,826/-) towards Employee Welfare....
X X X X Extracts X X X X
X X X X Extracts X X X X
....und for invoking the revisionary jurisdiction by the Ld. CIT(A) under section 263 of the Act that the order passed by the AO by not disallowing Employee Welfare Cost towards ESOP being erroneous and prejudicial to the interest of Revenue is concerned, first of all the Ld. A.R. for the assessee drew our attention towards annexure-1 annexed with the reply to show cause notice issued under section 263 of the Act. Annexure A is a letter dated February 3, 2016 written by assessee to the AO giving complete detail of ESOP cost recognized claim in income tax. Perusal of the annexure-1 shows that the complete detail as per recognized method of accounting has been given to the AO, who has though not discussed this issue in assessment order, but allowed the same by examining it. The Ld. A.R. for the assessee further contended that assessment order qua ESOP disallowance is neither erroneous nor prejudicial to the interest of the revenue as this issue has already been decided by the Special Bench of Tribunal in case of M/s. Biocon Ltd. 2013 155 TTJ 649 in favour of the assessee. 10. We have perused the order passed by the Special Bench of the Tribunal in case of Biocon Ltd. (supra) which is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt proceedings the same has been rightly allowed by the AO. So on this score the order passed by the AO is neither erroneous nor prejudicial to the interest of the revenue. So when issue has been decided, after discreet enquiries and verification by the AO initiation of proceedings under section 263 of the Act are not sustainable in the eyes of law. 14. So far as second ground for initiating the proceedings under section 263 of the Act by the Ld. CIT(A) that AO has failed to conduct enquiries "with regard to payments" made to FB Ireland to the tune of Rs.1,76,29,463/- as advertisement expenses without deducting any tax at source and without examining if they were advertisement expenses or use of server of the Facebook which is placed in Ireland and examination of these facts, the issue of deduction at source and consequence disallowance under section 40(a)(i) of the Act has not been examined is concerned, the Ld. A.R. for the assessee contended that this issue has already been decided in assessee's own case in favour of the assessee in the subsequent years in ITA No.1533/M/2019 & ors. for A.Y. 2015-16. 15. We have perused the order passed by the co-ordinate Bench of the Tribu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ablishment of Facebook, Ireland in India. The assessee company during the assessment proceedings has provided the tax resident certificate of Facebook, Ireland and as well as copy of remittance of the certificate (form 15CB) to the Assessing Officer. The Assessing Officer has proceeded on the basis that as per the provisions of Section 195 of the Act any amount paid to non-resident will attract this provision and the assessee is liable to make TDS except as provided under Section 195(2) or under Section 197 where such deductee obtain nil deduction certificate from the Assessing Officer and furnish the same to the deductor before receiving the credit of such amount. In the present case, the relevant sub-section 2 to Section 195 has specifically stated that a person responsible for deducting any such sum chargeable under this Act who is a non resident considers that the whole sum would not be income chargeable in the case of recipient the said person "may make an application" in such form and manner to the Assessing Officer to determine in such a manner as may be a prescribed. The said application though in the present case has not been made by the assessee cannot be treated as a man....