TMI Blog2021 (8) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... te authority had the power to admit the new ground - ESOP compensation expenses during assessment proceeding as the said claim was not made while filing of return of income by the assessee - HELD THAT:- Since the appellate authority had the power to admit the new ground or a legal contention in view of the order passed by the Hon ble Jurisdictional High Court in the case of CIT vs. Mitesh Impex, [ 2014 (4) TMI 484 - GUJARAT HIGH COURT] the said claim has been admitted by the Ld. CIT(A). No explanation is forthcoming as to how without verifying the records as regards the actual expenses incurred by the appellant s claim has been allowed - As considered the order passed in the case of Biocon Ltd.[ 2013 (8) TMI 629 - ITAT BANGALORE] where it has been held that ESOP compensation expenditure is not a notional expenditure but an allowable expenditure under Section 37(1) - object of issuing of shares at a lower issue price than the market price to the employees under ESOP must be taken into consideration and thereby it cannot be treated as short receipt of securities premium but a cost on account of compensation of employees - as principally the claim on account of deduction of ESOP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. It was further submitted by the Ld. Senior Counsel that the said order was subsequently confirmed by the Hon ble High Court in the appeal preferred by the Revenue. He, therefore, relied upon the order passed by the Ld. CIT(A). 5. We have heard both the respective parties, we have also perused the relevant materials available on record. 6. The Ld. DR, however, has not been able to controvert the contention made by the Ld. AR as regards the order passed by the Hon ble ITAT further been confirmed by the Jurisdictional High Court in favour of the assessee on the ratio that Rule 8D cannot be resorted to by the Ld. AO without recording any dissatisfaction as regards suo-moto disallowance made by the appellant. 7. It appears that while allowing the appeal in favour of the assessee the First Appellate Authority observed as follows:- 5.2 I have considered the facts of the case, assessment order and submission made by the appellant. The AO made the impugned disallowance by holding that the claim of the appellant was not correct as per the provisions of Rule 8D and he accordingly computed the disallowance at ₹ 33,10,539/- u/s 14A rw Rule 8D. I find from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Tribunal has heavily relied upon the decision of the Division Bench of this Court in the case of Principal Commissioner of Income Tax Vs. India Gelatine and Chemicals Limited, [2015] 376 ITR 553 (Guj.)], and applying the said decision to the facts of the case on hand, and considering the fact that while making the addition of Rs, 1,22,12,831/ made by the Assessing Officer under Section 14A of the Income Tax Act read with Rule 8D of the Income Tax Rules, 1962, the Assessing Officer did not record as to how the expenditure as claimed by the assesses was not satisfactory, and considering the fact that the assess had sufficient Interest free fund, out of which the concerned investment had been made, it cannot be said that the learned Tribunal has committed any error in deleting the addition made by the Assessing Officer made under Section 14A of the Income Tax Act read with Rule 8D of the Income Tax Rules, 1962. Under the circumstances and considering the direct decision of the Division Bench of this Court in the case of India Gelatine and Chemicals Limited (supra), no substantial question of law arise in the present appeal. Under the circumstances, the present appeal qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed by the Hon ble Jurisdictional High Court in the case of CIT vs. Mitesh Impex, reported in [2014] 46 taxmann.com 30 (Guj.), the said claim has been admitted by the Ld. CIT(A). 10. The brief facts leading to the case is this that the appellant in 2010 had introduced a scheme called Employee Stock Option Plan, 2010 for eligible employees of the company who were granted stock options based on certain criteria. Being a listed company the appellant in accordance with the SEBI guidelines, 1999 charged the difference between the market price as on the date of grant of option and exercised price of total number of options as ESOP Expenditure in its financial statements based on vesting pattern and has claimed the same as deduction under Section 37 of the Act. 11. At the time of hearing of the instant appeal the Ld. Senior Counsel appearing for the assessee submitted before us that the issue of deductibility of ESOP expenditure has been decided extensively by the Special Bench of ITAT in Biocon Limited vs. DCIT(LTU), reported in (2013) 35 taxmann.com 335 (Bangalore Trib. SB). Therefore, relying on this decision the order passed by the Ld. CIT(A) has been supported ..... X X X X Extracts X X X X X X X X Extracts X X X X
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