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2023 (8) TMI 924 - AT - Income TaxNature of expenses - Employee Stock Option Plan (“ESOP”) expenses - assessee submitted that the ESOP expenses are employee compensation costs - AO held that the assessee nowhere has incurred any expenditure so as to claim the same is allowable u/s 37(1) and the assessee has issued shares to the employees at a concessional rate which has increased the capital base of the company and therefore, such expenditure is to be considered as capital expenditure - HELD THAT:- We find that similar contentions of the Revenue were rejected in Biocon Ltd [2020 (11) TMI 779 - KARNATAKA HIGH COURT] wherein High Court dismissed the appeal filed by the Revenue and upheld the decision of the Special Bench of the Tribunal in Biocon Ltd [2013 (8) TMI 629 - ITAT BANGALORE] As in view of the aforesaid findings of the Hon’ble Karnataka High Court, we find no infirmity in the impugned order passed by the learned CIT(A) in allowing the claim of deduction of ESOP expenses under section 37(1) of the Act. Decided in favour of assessee. Corporate Social Responsibility (“CSR”) expenses - Deduction claimed u/s 80G when disallowed u/s 37(1) - HELD THAT:- We find that the coordinate benches of the Tribunal have consistently taken the view in favour of the assessee and held that the CSR expenses even though not allowed under section 37 of the Act pursuant to insertion of Explanation-2 to section 37 vide Finance Act, 2014 with effect from 01/04/2015. However, the said expenditure is allowable u/s 80G - no infirmity in the impugned order passed by the learned CIT(A) in allowing the claim of deduction u/s 80G of the Act on CSR expenses incurred by the assessee. Appeal by the Revenue is dismissed.
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