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2024 (1) TMI 656 - AT - Income TaxDeduction of Employees Stock Option Plan (ESOP) cost - claim made by the assessee in the revised return - HELD THAT:- The assessee furnished the Copy of invoice raised by ITC Ltd. towards ESOP expenses and period wise breakup thereof; Copy of relevant extracts of bank statement and RTGS details of the assessee company showing the payment made to ITC Ltd.; Relevant extract of audited financial statements of the assessee company for the year under 31/03/2017 i.e., immediately succeeding year to the year under consideration with comparative financial statements for financial year 2015-16 and Copy of “ITC Employees Stock Option Scheme-2010” policy. We further find that as per the ESOP Scheme, such expenses had been duly taxed in the hands of the employees as perquisites and included in Form-16 of the employees and due deduction of tax at source were indeed made by the assessee treating them as salary. CIT(A) had confirmed the disallowance of the AO on the ground that assessee had not rebutted the findings of the Ld. AO. This is factually incorrect as the CIT(A) himself has reproduced the various rebuttal made by the assessee on the findings of the Ld. AO and the same are duly reproduced - CIT(A) having recorded the rebuttal of the assessee on the findings of the AO in his appellate order ought to have at least given a preliminary finding as to how the rebuttal given by the assessee does not advance the case of the assessee. Without doing the preliminary work, and by ignoring the various judicial precedents available on the impugned issue, where it had been categorically held that ESOP expenditure is allowable expenditure in the hands of the company, the Ld. CIT(A) grossly erred in confirming the disallowance. See NEW DELHI TELEVISION LTD. [2017 (2) TMI 1399 - DELHI HIGH COURT], M/S. BIOCON LTD. [2020 (11) TMI 779 - KARNATAKA HIGH COURT] and LEMON TREE HOTELS LTD [2015 (11) TMI 404 - DELHI HIGH COURT] and M/S. PVP VENTURES LIMITED [2012 (7) TMI 696 - MADRAS HIGH COURT] Thus claim of deduction of ESOP expenditure was made by the assessee in the revised return filed on 31/03/2019 which is well within the time limit prescribed u/s 139(5) of the Act. Hence, we have no hesitation to hold that assessee’s claim of deduction is squarely allowable as deduction.
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