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2016 (6) TMI 1481 - AT - Income TaxNature of expenditure - Employee Stock Option Scheme Compensation - disallowance made treating it as capital in nature - HELD THAT:- Facts of the case for the present year being identical as in earlier years [2015 (8) TMI 319 - ITAT DELHI], for the same reasons and respectfully following the precedent, we set aside the impugned order of ld. CIT(A) and send the matter to the file of AO for deciding it in conformity with the decision taken in the case of Biocon Ltd. Vs. DCIT (2013 (8) TMI 629 - ITAT BANGALORE], wherein held that discount on issue of ESOP is allowable as deduction in computing income under the head 'Profits and gains of business or profession.' Since it is on account of an ascertained and not contingent liability, it cannot be treated as a short capital receipt. Thereafter, the Special Bench has laid down the mechanism for determining as to when and how much deduction should be allowed. It has been held that the liability to pay the discounted premium is incurred during the vesting period and the amount of such deduction is to be found out as per the terms of ESOP by considering the period and percentage of vesting during such period. Deduction of the discounted premium during the years of vesting should be allowed on straight line basis. Department’s appeal stands allowed for statistical purposes.
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