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2022 (9) TMI 239 - AT - Income TaxEmployee Stock Options (ESOP) expenditure - Disallowance u/s 37 - difference between the grant price and the market price on the shares as on the date of grant of options - HELD THAT:- Special Bench Bangalore in the case of Biocon Ltd [2013 (8) TMI 629 - ITAT BANGALORE] on the issue have held the discount on ESOP being a general expense, is an allowable deduction u/s 37(1) of the Act during the years of vesting on basis of percentage of vesting during such period subject to upward or downward adjustment at the time of exercise of option. When this issue was decided in favour of the assessee, the department took up this matter before the Hon”ble Karnataka High Court in the case of CIT LTU vs. Biocon Ltd [2020 (11) TMI 779 - KARNATAKA HIGH COURT] wherein permitted the deduction of ESOP expenses. We find that Ranbaxy Laboratories” [2009 (6) TMI 126 - ITAT DELHI-I] judgment which has been referred to by the department was also considered in the aforesaid judicial pronouncement. The decision of the Special Bench Bangalore has been upheld by the Hon”ble Karnataka High court (supra) and it has been categorically held that the expenditure on ESOP entitles the assessee for deduction u/s 37(1) - Decided in favour of assessee.
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