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TMI Blog2019 (3) TMI 1862X X X X Extracts X X X X X X X X Extracts X X X X ..... erence between purchase price of Stock Appreciation Right ('SAR') and the sale price of such SAR at the time of its exercise by the employees of the appellant holding the same to be capital loss not allowable business deduction. 1.1 That the Commissioner of Income tax (Appeals) erred on facts and in law in not appreciating that the above differential amount actually represents the loan granted by the appellant to Religare Enterprises Ltd. Employees SAR Trust ('the Trust') for the purpose of administering Employee Stock Appreciation Right Scheme ('SAR scheme'), which was not meant to be and, in fact, not recovered from the latter in accordance with the SAR scheme. 1.2 That the Commissioner of Income tax (Appeals) erred on facts and in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises Ltd. and was engaged in providing wealth management services to high net worth individuals (HNI). The company provided a wide range of investment products like, mutual funds, structured products, venture capital funds etc. and as referral agents for products like, insurance direct equity and commodities. For the year under consideration, the assessee filed return of income, declaring loss of Rs. 39,93,83,079/- on 29.11.2011. The case was selected for scrutiny and statutory notices under the Income-tax Act, 1961 (for short 'the Act') were issued and complied with. The assessment was completed under Section 143(3) of the Act on 26.03.2014 after making certain additions/disallowances, including the disallowance of Stock Appreciation Right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in favour of the assessee, observing as under: "18. The 1st and 2nd ground of appeal of the assessee is with respect to the disallowance of expenditure on stock appreciation right being the difference between the purchase price of stock appreciation right and the sale price of stock appreciation right at the time of the exercise by the employees holding the same to be capital loss and not allowable as business deduction. With respect to the enhancement made by the CIT - A of Rs. 15,99,306/- on account of difference between the sale price of stock appreciation right and the exercise price of stock appreciation right holding the same to be capital expenditure incurred in relation to the issue of share issued to the employees. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are and the purchase price of the share was claimed by the assessee as deduction as employee compensation. In the identical circumstances. With respect to one of the group companies, Religare commodities Ltd for assessment year 2008 - 09 identical issue arose before the coordinate bench, which decided this issue in ITA No. 2283/Del/2013 by order dated 04/01/2017 wherein relying upon the decision of the special bench in 144 ITD 21 claim of the assessee with respect to both the above items were allowed vide para No. 7 of that order. The coordinate bench in para No. 8 also held that the issue is also squarely covered by the decision of the Hon'ble Madras High Court in 211 Taxmann 554 wherein it has been held that the above expenditure on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 vide order dated 13.04.2018. The relevant portion of the decision is reproduced as under: "The Revenue urges four questions of law in this appeal; the first relates to the disallowance on account of the difference between purchase price of the Stock Appreciation Rights (SAR) and the sale price of such shares at the time of the exercise by the employees, which was disallowed in the hands of the Revenue. The Scheme is analogous to the Employee stock appreciation rights scheme 2007 and is covered in the favour of the assesse by the ruling of this Court in the case of 'Commissioner of Income Tax vs. New Delhi Television Limited', 2017 398 ITR 452 which had in turn relied on a previous judgment of Madras High Court in the case of 'Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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