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2024 (2) TMI 452 - AT - Income TaxNature of expenses - Employee Stock Option Scheme compensation - AO disallowed the compensation by holding that ESOP compensation is not a revenue expenditure, amount of expenditure is not an actual expenditure, and SEBI guideline are not prerogative for determining the allowability of expense - whether expenditure is eligible for deduction u/s 37 (1) being revenue in nature? - HELD THAT:- Since the matter stand adjudicated in the case of the assessee for the AY 2007-08 to 2009-10 [2015 (8) TMI 319 - ITAT DELHI] AY 2011-12 [2019 (1) TMI 1401 - ITAT DELHI] AY 2012-13 [2020 (1) TMI 1668 - ITAT DELHI] by the coordinate bench of the Tribunal relying on the judgment of M/s. Biocon Ltd. [2020 (11) TMI 779 - KARNATAKA HIGH COURT] and Bangalore ITAT (special bench) [2014 (12) TMI 838 - ITAT BANGALORE] wherein it was that ESOP compensation is revenue in nature and hence, allowable as a deduction. Since the matter stands adjudicated in the case of the assessee from the earlier years, in the absence of any change in the factual matrix and legal preposition, we affirm the order of the ld. CIT(A) on this issue. Disallowance u/s 14A r.w.r. 8D - assessee had made investments in mutual funds - HELD THAT:- The coordinate bench ITAT Delhi in assesse’s own case for AY 2012-13 [2020 (1) TMI 1668 - ITAT DELHI] held that the disallowance u/s 14A is to be restricted to only those investments which have actually yielded tax exempt income during the year. Since the matter stands adjudicated in the case of the assessee from the earlier years, in the absence of any change in the factual matrix and legal preposition, we affirm the order of the ld. CIT(A) on this issue. Nature of expenses - ROC Fee - expenditure incurred for increase in authorized share capital by issuing bonus shares - AO had disallowed the aforesaid ROC fee expenditure by considering that it this expenditure directly related to expansion of capital base is capital expenditure - HELD THAT:- The assessee submitted that expenditure incurred for issue of bonus shares should be allowable expense since there was no flow of fresh funds or increase in the capital employed. It could not, therefore, be said that the company had acquired benefit or advantage of enduring nature. Hon ble Supreme Court in the case of CIT vs General Insurance Corporation [2006 (9) TMI 116 - SUPREME COURT] held that the expenditure incurred in connection with issuance of bonus shares is revenue expenditure. Hence, we direct the AO to re-compute the allowable expenditure. Appeal of the Revenue on this ground is dismissed. Legal & professional expenses - allowable business expenses or not? - as argued expenses have not resulted in benefit of any enduring nature to the Respondent therefore it is revenue in nature expenditure and fully allowable to the Respondent - CIT(A) deleted the addition holding that from the invoices, it is clear that such expenses have been incurred as professional and legal charges on matters relating to trademark advertisement, reporting and reviewing of registration of trademark and preparation of report, documentation. Such expenditure does not create an asset or an advantage which makes it capital in nature - HELD THAT:- In the case of DCIT vs USV Ltd. [2010 (3) TMI 1131 - ITAT MUMBAI] wherein, in similar facts and circumstances as in the case of the assessee, it was held that the expenses paid to trademark attorney is a revenue expenditure. Thus the fee paid to legal professionals in relation to trademark matters is revenue in nature expenditure and allowable as business expenditure. Additions against Creditors - stale cheques - payments made through cheques to the various parties but not credited to the account reasons known to the payee - AO held that liability shown under stale cheques is no more payable and hence added back to the total income for the year under consideration - CIT(A) appreciated the policy of company to recognise the income three years deleted such addition - HELD THAT:- The assessee has produced the subsequent utilization details of stale cheques before the AO owing that the assessee has already been settled / adjusted a sum partly - We find that the assessee is following a regular method of recognition of revenue on accounts of stale cheques/un-claimed liabilities after the period of three years. Assessee has also credited an amount of Rs 2,43,397/- in his books of accounts during the year, thus it is premature of the Assessing Officer to make an addition on account sundry creditors. Hence, we decline to interfere with the order of the ld. CIT(A). Appeal of the Revenue on this ground is dismissed.
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