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2023 (8) TMI 1478 - AT - Income TaxRectification of mistake - Disallowance of claim of ESOP expenses being the difference between the fair market value of equity shares on the date of vesting of option and on the date of exercise of option - Tribunal as rightly followed the decision rendered by the Special Bench of Bangalore ITAT in the case of Biocon Ltd 2013 (8) TMI 629 - ITAT BANGALORE has restored the matter to the file of the AO with certain directions even though the points narrated by the Tribunal for so restoring the issue to the AO has already been decided by the Special bench constituting mistakes apparent from record. HELD THAT - Tribunal we notice that the Tribunal did not appreciate the fact that the discount on ESOP arises on two different occasions. It also did not appreciate that the deduction claimed by the assessee represented second type of discount. We also notice that the Special bench of Bangalore ITAT in the case of Biocon Ltd 2013 (8) TMI 629 - ITAT BANGALORE has appreciated the fact that there may arise second type of discount and has held that it is allowable as deduction. The Special bench has also held that the SEBI guidelines did not prescribe any mandatory accounting treatment for the second type of discount and accordingly held that the taxation principles will apply for allowing deduction of second type of discount. The illustration 2 given in paragraph 11.1.6 specifically deals with the situation when there is an increase in the market price of shares at the time of actual exercise of option and it has been held that the assessee would be entitled for further deduction at the time of exercise of option.It is pertinent to note that the above said decision rendered by the Special bench has since been upheld by the Hon ble Karnataka High Court 2020 (11) TMI 779 - KARNATAKA HIGH COURT . Thus we agree with the submission of the assessee that there are mistakes apparent from record in the decision rendered by the Tribunal. Miscellaneous application filed by the assessee is allowed.
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