2025 (4) TMI 1895

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....ising out of the appeal before it against the order dated 28.03.2022 passed u/s 143(3) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred as 'the Act') by the National Faceless Assessment Centre, Delhi (hereinafter referred to as the Ld. AO). 2. Heard and perused the record. On hearing both the sides we find that the assessee has challenged the action of AO in disallowing the amount of Rs. 4,93,63,939/- being expenses incurred on Employee Stock Option (ESOP) Scheme. The assessee had submitted before the ld. CIT(A), that the AO has erred in treating it to be capital in nature and has, thus, erred in not allowing the same u/s 37(1) of the Act. Thus, the assessee submitted that this is an allowable expenditure u/s 37(1). In this ....

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....e. At best it can be construed as capital plans of the company, which may or may not reap benefit for the organization as well as the employees, depending upon the circumstances, after the fulfillment of the preconditions and after the vesting period. Thus these provision for expenses, if materialized, may be a capital expense in nature but can't be accepted to be a revenue expense. d) Furthermore, there is no way of accounting which can determine the definite amount of income that should be offered to tax in cases where no specific provisions are available. The employees become the legal and rightful owners of the shares only on the date on which they exercise the option, if at all. The discount on ESOP must be computed based ....

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....ssee u/s 37(1) of the IT Act, 1961." I find that this issue i.e. allowability of ESOP expenses u/s 37(1), has been decided in favour of the Appellant by Hon'ble Jurisdictional High Court of Delhi and Hon'ble High Court of Madras, In a recent decision, the Hon'ble Jurisdictional ITAT Delhi in the case of ACIT Vs Cvent India Pvt. Ltd., ITA No. 523/Del/2020, date of Order 24/02/2023, has placed reliance on the decisions of Hon'ble High Courts of Delhi and Madras and has held that the ESOP expenses are allowable business expenses u/s 37(1) of the Act." 4. We find that the issue is squarely covered in the assessee's own case for AY 2018-19 vide ITA No.3489/Del/2023, order dated 31.03.2024 and except for the amounts involv....