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2015 (8) TMI 319 - ITAT DELHI

2015 (8) TMI 319 - ITAT DELHI - TMI - Addition on account of Employee Stock Option Scheme Compensation (ESOS) - CIT(A) deleted the addition - Held that:- As decided in Biocon Ltd. Vs. DCIT [2013 (8) TMI 629 - ITAT BANGALORE] discount on issue of ESOP is allowable as deduction in computing income under the head ‘Profits and gains of business or profession.’ Since it is on account of an ascertained and not contingent liability, it cannot be treated as a short capital receipt. Thereafter, the Speci .....

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to discount, any adjustment to income is called for at the time of exercise of option by the amount of difference in the amount of discount calculated with reference to the market price at the time of grant of option and market price at the time of exercise of option. Respectfully following the precedent, we set aside the impugned order and send the matter to the file of AO for deciding it in conformity with the decision taken by the Special Bench in the aforenoted case. - Decided in favour of a .....

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ussion on the issue on merits, we are handicapped to give our independent opinion. We, therefore, set aside the impugned order and remit the matter to the file of AO for deciding this issue in conformity with the final view taken on this issue for the AY 2006-07.- Decided in favour of assessee for statistical purposes.

Disallowance u/s 14A read with Rule 8D - CIT(A) deleted the addition - Held that:- AO has not recorded any satisfaction whatsoever about incorrectness of the assessee’s .....

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faction by the AO before computing disallowance u/s 14A is not satisfied, there can be no computation of disallowance as has been held in several judgments. We find that the absence of satisfaction by the AO in the instant case has the effect of taking away the jurisdiction to make disallowance u/s 14A in this regard. - Decided in favour of assessee. - ITA Nos.1896, 2444 & 2445/Del/2013 - Dated:- 31-7-2015 - SHRI R.S. SYAL AND SHRI H.S. SIDHU, JJ For The Assessee : Shri Rupesh Jain, Advocate & .....

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(ESOS). 3. We have heard the rival submissions and perused the relevant material on record. At the outset, we find that similar issue came up for consideration before the Special Bench of the Tribunal in Biocon Ltd. Vs. DCIT (2013) 144 ITD 21 (Bang.) (SB). In this case, the Tribunal has held that discount on issue of ESOP is allowable as deduction in computing income under the head Profits and gains of business or profession. Since it is on account of an ascertained and not contingent liability .....

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d be allowed on straight line basis. Then, dealing with the subsequent adjustment to discount, the Special Bench laid down that any adjustment to income is called for at the time of exercise of option by the amount of difference in the amount of discount calculated with reference to the market price at the time of grant of option and market price at the time of exercise of option. 4. Both the sides are in agreement that the facts and circumstances of the instant issue are squarely covered by thi .....

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pos this ground are that the assessee claimed depreciation to the above extent on operating and marketing rights. Following the view taken for the AY 2006-07, the AO disallowed depreciation on intangible assets by observing that there was no transfer of intangible assets by Jeevan Sathi Internet Services Pvt. Ltd., and also the assessee had not satisfied the basic two conditions for the allowance of depreciation. The ld. CIT(A) reversed the assessment order on this point. 6. We have heard the ri .....

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ive our independent opinion. We, therefore, set aside the impugned order and remit the matter to the file of AO for deciding this issue in conformity with the final view taken on this issue for the AY 2006-07. 7. The only other ground which survives for consideration is against the deletion of addition of ₹ 60,14,667/- made by the AO u/s 14A read with Rule 8D of the Income-tax Rules, 1962. 8. The AO has discussed this issue in para 5 of his order, wherein he initially noticed that the asse .....

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Court in the case of Godrej & Boyce (2010) 328 ITR 81 (Bom). That is how he deleted the addition. 9. We have heard the rival submissions and perused the relevant material on record. The Hon ble jurisdictional High Court in Maxopp Investments Ltd. Vs. CIT (2012) 347 ITR 272 (Del) has held that the provisions of Rule 8D cannot be invoked for making any disallowance u/s 14A before AY 2008-09. As the assessment year under consideration is 2007-08, it is, but, natural that Rule 8D cannot be appli .....

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ion to income which does not form part of the total income under this Act. 11. A bare perusal of this provision indicates that the AO shall determine the amount of expenditure incurred in relation to exempt income if he, having regard to the accounts of the assessee is not satisfied with the correctness of the claim of the assessee in respect of such expenditure incurred in relation to exempt income. It shows that satisfaction of the AO about the incorrectness of the assessee s claim is sine qua .....

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do so. When we turn to the facts of the instant case, we find that the AO has not recorded any satisfaction whatsoever about incorrectness of the assessee s claim about the expenditure incurred in relation to exempt income. What to talk of recording satisfaction, there is no whisper in the assessment order on this score. He simply noticed the extent of exempt income in first two lines and, thereafter, started computing disallowance by applying Rule 8D. The ld. CIT(A) has ordered the deletion of .....

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