TMI Blog2022 (1) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in favour of assessee. Application of admission of additional ground - fresh claim with respect of allowability of ESOP expenses and allowance of deduction of education cess and secondary and higher education cess paid - HELD THAT:- We find force in the argument of Learned AR that the ground raised is legal in nature. Hon ble Apex Court in the case of National Thermal Power Company Ltd. [ 1996 (12) TMI 7 - SUPREME COURT] has held that the purpose of the assessment proceedings before the taxing authorities is to asses correctly the tax liability of an assessee in accordance with law. It has further held that if as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. In view of the aforesaid, we admit the additional ground of appeal. Applicability of the provisions of Section 92A(2) to the transactions of the assessee with Domino s Pizza Overseas Franchise B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and therefore, we direct the AO to allow the claim of assessee in accordance with law. Thus, ground of Cross Objection of the assessee is allowed. - ITA Nos. 6558/Del/2018 & 612/Del/2019 And CO Nos. 44 & 43/Del/2021 - - - Dated:- 8-12-2021 - Sh. Anil Chaturvedi, Accountant Member And Sh. Kul Bharat, Judicial Member For the Assessee : Shri K. M. Gupta, Adv., Ms. Shruti Khimta, A.R. For the Revenue : Shri Surender Pal, CIT (DR) ORDER PER ANIL CHATURVEDI, AM : These appeals by the Revenue and cross objections by the assessee are preferred against the orders of the Commissioner of Income Tax (Appeals)-43 44, New Delhi dated 13.07.2018 28.11.2018 pertaining to Assessment Years 2013-14 2012-13 respectively. 2. At the outset, Learned AR submitted that the issue involved in all the appeals are identical except for the year and amounts involved and, therefore, the submissions made by him for one year would be applicable to the other years. Before us, both the parties submitted that appeal for A.Y. 2013-14 be taken up because CIT(A) while deciding the issue in A.Y. 2012-13 has followed his order for A.Y. 2013-14. It was further submitted that the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92A (2)(g) of the Act in respect of the transaction of the Appellant with the third parties namely Domino Pizza Overseas Franchise BV (DPOF), Domino Pizza International Franchising Inc. (DPIF) Dunkin Donuts Franchising LLC (DDFL). 3. That the Ld. CIT(A)/TPO erred incorrectly holding that entities with whom Appellant has undertaken transaction payment of royalty are Associate Enterprises of the Appellant in complete disregard of the judicial precedents. 4. On the facts and in the circumstances of the case and in law, the appellant is eligible to claim deduction for ESOP Expenses in view of Hon ble Bangalore Tribunal Special Bench in the case of Biocon Ltd. vs. DCIT (LTU) 35 taxmann.com 335 (2013) and computed inconformity with SEBI/ICAI Guidelines. 5. On the facts and in circumstances of the case and provisions of law, the Appellant is eligible to claim the deduction of education cess and secondary and higher education cess paid, while computing its income under the head Profits and Gains from Business and Profession for the year under consideration. We first proceed with the appeal of Revenue in ITA No.6558/Del/2018 for A.Y. 2013-14 : 6. The sole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from a store of Domino s pizza outlet and for this reason also the expenditure incurred by the assessee falls u/s 37(1) of the Act as being one which is necessary for business. CIT(A) thereafter relying on the decision of Hon ble Delhi High Court in the case of CIT vs. Hi Line Pens (P.) Ltd. [2008] 175 taxman 132 (DHC) held expenses to be revenue in nature. Aggrieved by the order of CIT(A), Revenue is now before us. 9. Before us, Learned DR took us to the findings of ITO and supported the order of AO. He also placed reliance on the decision rendered by Hon ble Delhi High Court in the case of Bharat Gears Ltd. Vs. C.I.T. in [2011] 337 ITR 368 (Del.) 10. Learned AR on the other hand reiterated the submissions made before the lower authorities and supported the order of CIT(A). 11. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the treatment of expenditure which has been considered by AO to be of capital in nature as against the claim of the assessee of being revenue in nature. We find that CIT(A) after considering the detailed submissions of the assessee has given a finding that consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al grounds, we have heard the rival submissions and perused the materials on record. We find force in the argument of Learned AR that the ground raised is legal in nature. Hon ble Apex Court in the case of National Thermal Power Company Ltd. (supra) has held that the purpose of the assessment proceedings before the taxing authorities is to asses correctly the tax liability of an assessee in accordance with law. It has further held that if as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. In view of the aforesaid, we admit the additional ground of appeal. 19. Before us, at the outset, Learned AR submitted that Ground No.1 is general in nature therefore require no adjudication. In view of the aforesaid submissions ground No.1 is dismissed. 20. Ground No.2 2.1 is with respect to holding the applicability of the provisions of Section 92A(2) of the Act to the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsic value method which is one of the method provided under SEBI guidelines which resulted into no charge of ESOP expenses in the P L account for the year under consideration as the market price prior to the date of meetings of the Board of Directors in which the options were granted/shares were issued was equivalent to grant price. However the use of fair value method computed in accordance with SEBI Guidelines resulted into charge of ₹ 3,12,63,000/-, the disclosure of which has been made in the Audited Financial Statements. He submitted that on account of Nil expenditure charged to Profit and Loss account for the year under consideration for ESOP expenditure, no deduction was claimed by the assessee in the return of income. However allowance of the ESOP expenditure had been a subject matter of litigation not only with respect to its allowance as Revenue expenditure but also with respect to the quantum to be allowed in the year of grant, vesting and exercise year. He submitted that the aforesaid controversies has been settled by decision of Special Bench of Tribunal in the case of Biocon Ltd. Vs DCIT (LTU) 35 taxmann.com 335 (2013). He submitted that as per the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in the case of Biocon Ltd. vs. DCIT (35 Taxmann.com 335 (2013) SB) has inter alia held that the discount on issue of Employees Stock Options is allowable deduction in computing the income under the head profit and gains of business . It is also a fact that since the claim was never claimed by the assessee before the lower authorities, there is no finding on the issue by the AO/CIT(A). In such a situation, we are of the view that the issue needs to be examined. We therefore restore the issue back to the file of AO to decide it after considering the submissions of the assessee and in accordance with law. Needless to state that AO shall grant adequate opportunity of hearing to the assessee. Assessee is also directed to promptly furnish the details called for by the AO. Thus the ground of assessee is allowed for statistical purposes. 28. Ground No.4 is with respect to the claim of education cess and secondary and higher education cess paid by the assessee. 29. This is an additional ground claimed by the assessee. Before us, Learned AR submitted that during the relevant assessment year, assessee had paid education cess amounting to ₹ 1,22,36,659/- which was not claime ..... X X X X Extracts X X X X X X X X Extracts X X X X
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