TMI Blog2018 (3) TMI 1957X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years 2008-09, 2009-10 and 2010-11 vide separate orders dated 9.3.2015. Since in all the three appeals, the assessee has raised similar grounds, the appeals are being taken up together for disposal for the sake of brevity and convenience. 2. The grounds for the assessment years 2008-09, 2009-10 and 2010-11 are identical and the same are reproduced as under: Assessment year : 2008-09 1. That on the facts and the circumstances of the case and in law, Commissioner of Income tax (Appeals)-7, New Delhi [briefly the CIT(A) ] has erred in disallowing deduction of INR 2,33,11,692/- in respect of Employee Stock Option Plan ( ESOP ) scheme, holding that the issue is covered against the Appellant by the order in Dy. CIT v. Ranbaxy Laboratories Ltd. (2009) 124 TTJ (Del) 771. 1.1 That on the facts and the circumstances of the case and in law, the CIT(A) has erred in not following the order of Special Bench in Biocon Ltd. v. Dy. CIT(LTU) [2013] 155 TTJ (Bang-SB) 649, wherein, ITAT order in Ranbaxy Laboratories Ltd. (supra) was duly considered and distinguished. 1.2 That on the facts and the circumstances of the case and in law, the CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year in question, more so because both the appeals were disposed of on the same day i.e. 9.3.2015. 2.1 That on the facts and the circumstances of the case and in law, the Assessing Officer may be directed to allow depreciation on non refundable deposit of INR 20,00,000/- paid to IRCTC, treated as intangible asset in the assessment year 2008-09. Assessment year : 2010-11 1. That on the facts and the circumstances of the case and in law, Commissioner of Income tax (Appeals)-7, New Delhi [briefly the CIT(A) ] has erred in disallowing deduction of INR 42,75,966/- in respect of Employee Stock Option Plan ( ESOP ) scheme, holding that the issue is covered against the Appellant by the order in Dy. CIT v. Ranbaxy Laboratories Ltd. (2009) 124 TTJ (Del) 771. 1.1 That on the facts and the circumstances of the case and in law, the CIT(A) has erred in not following the order of Special Bench in Biocon Ltd. v. Dy. CIT(LTU) [2013] 155 TTJ (Bang-SB) 649, wherein, ITAT order in Ranbaxy Laboratories Ltd. (supra) was duly considered and distinguished. 1.2 That on the facts and the circumstances of the case and in law, the CIT(A) has erred in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following reasons: 7.4 The appellant has claimed the expenditure on account of ESOP on the ground that the scheme was approved by SEBI. The Hon ble Supreme Court in the case of Southern Technologies Ltd. v. CIT, 320 ITR 573 has held that the guideline of any regulatory authority cannot over ride the specific provisions of the Income Tax Act. In order to claim a deduction admissible under I.T. Act, the appellant must show the specific provisions under which the same is allowable under I.T. Act. Further an expenditure should be incurred and incurred for the purpose of business of the appellant. In view of the discussion and decision of jurisdictional ITAT, Delhi in the case of Ranbaxy Ltd. (supra), which is against the appellant, I hold that the AO was fully justified in making disallowance of ₹ 2,33,11,692/- on account of ESOP. I therefore, confirm the addition on account of the disallowance made by the AO. The ground of appeal is ruled against the appellant. 6. The ld. counsel for the assessee submitted that the Ld. CIT(A) in deciding the issue against the assessee did not take any cognizance of the decision of Special Bench in Biocon Ltd (supra). It was submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by an employee to his employees during the previous year Section 115WB gives meaning to the expression fringe benefits. Sub-section (1) provides that for the purposes of this chapter, fringe benefits means any consideration for employment as provided under clause (a) to (d), clause (d), which is relevant for our purpose, states that: any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of cost or at concessional rate to his employees (including former employee or employees), shall be taken as fringe benefit. Explanation to this clause clarifies that for the purposes of this clause, -(i) specified security means the securities as defined in clause (h) of section 2 of the securities contracts (Regulation) Act, 1956 (42 of 1956) and, where employees‟ stock option has been granted under any plan or scheme thereof, includes the securities offered under such plan or scheme. Thus it is discernible from the above provisions of the Act that the legislature itself contemplates the discount on premium under ESOP as a benefit provides by the employer to its employees during the course of service. If the legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Delhi High Court in Lemon Tree Hotels Ltd dated 18.8.2015 and the order of the Special Bench in Biocon Ltd. (supra), we set aside the order of the Ld. CIT(A) on this issue and direct the Assessing Officer to allow claim of ESOP expenses. 12. Since ground No.1 to 1.2 for the assessment years 2009-10 and 2010-11 involve identical issue, therefore, for the same reasons, assessee s appeal for the assessment years 2009-10 and 2010-11 is allowed. Ground Nos.2 to 2.2 13. The brief facts in respect of grounds 2 to 2.2 are that the assessee on 7.12.2007 had entered into agreement with Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) to sell e-tickets for travel in trains of Indian Railway for a period of two years. For the said services, the assessee paid a non-refundable deposit of ₹ 20,00,000/-, which was claimed under section 37 of the IT Act. 14. The Assessing Officer taking into account that since the agreement was entered into on 7.12.2007, therefore, only proportionate deduction can be allowed. Accordingly, deduction of ₹ 3,33,333/- being proportionate to the period of 4 months was allowed. 15. In first appeal, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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