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2020 (12) TMI 769 - AT - Income TaxDisallowance in respect of ESOP expenses - Whether permissible expense u/s 37(1) ? - as per AO addition made stating that these expenses are only notional expenses and have been incurred in relation to issue of shares to employees resulting in increase in capital and is not an allowable expense - HELD THAT:- CIT(A) allowed claim of the assessee following the decision of the Bangalore Special Bench in the case of Biocon Limited [2013 (8) TMI 629 - ITAT BANGALORE] and also the decision of the Mumbai benches in the case of DCIT v. Kotak Mahindra Bank Ltd [2018 (1) TMI 320 - ITAT MUMBAI], Accenture Services Pvt. Ltd., [2010 (3) TMI 1107 - ITAT MUMBAI] and the decision of the Hon'ble Madras High Court in the case of CIT v PVP Ventures Limited [2012 (7) TMI 696 - MADRAS HIGH COURT] and deleted the disallowance made by the Assessing Officer - On reading of the order of the Ld.CIT(A) we do not find any infirmity in the order passed by the Ld.CIT(A). Thus, the grounds raised by the revenue are dismissed. Disallowance of interest u/s.36(1)(iii) - nexus between borrowed funds and capital work in progress - HELD THAT:- On a perusal of the order of the Tribunal for the A.Y.2014-15 we notice that the Tribunal upheld the order of the Ld.CIT(A) in deleting the disallowance made u/s. 36(1)(iii) of the Act as the assessee had sufficient own funds in the form of share capital and reserves. For A.Y. 2010-11 the Ld.CIT(A) deleted the disallowance for the reason that the assessee has share capital and reserves much more than the capital work-in-progress and it is the finding of the Ld.CIT(A) that no nexus between borrowed funds and capital work-in-progress has been established by the Assessing Officer and therefore Ld.CIT(A) held that no part of interest can be disallowed. He also placed reliance on the decision of the Hon'ble Bombay High Court in the case of CIT v. Reliance utilities & Power Ltd., [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT v. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] These findings of the Ld.CIT(A) could not be rebutted by the revenue with evidences. - Decided against revenue.
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