TMI Blog2019 (4) TMI 2047X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Rachna Singh, Sr. D.R. ORDER PER T. S. KAPOOR, A.M. This is an appeal filed by the assessee against the order of Learned CIT(A) dated 11/05/2016. In this appeal the assessee has raised the following grounds: 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 upholding the disallowance of ₹ 23,92,281/- in respect of ESOP scheme, following its order for the assessment year 2010-11. 2.That on the facts and the circumstances of the case and in law, the CIT(A) has erred in and not following the order of Special Bench in Biocon Ltd. v. Dy. CIT(LTU) [2013] 155 TTJ (Bang-SB) 649 = 35 taxmann.com 335, wherein DCIT v. Ran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 3 related to the issue of disallowance of ₹ 23,92,281/- in respect of ESOP scheme. We find that in the case of the assessee itself, the issue has been decided in favour of the assessee on the grounds raised by the assessee which are reproduced below: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the record and various orders on which reliance was placed and are of the view that the case is squarely covered by the decision in Biocon Ltd. (supra). In Lemon Tree Hotels Ltd v. Addl. CIT (ITA No.4588/Del/2013 dated 23.6.2014), which has been affirmed by Hon ble Delhi High Court, the Tribunal has given following reasons to allow similar expenditure: The question whether employee stock option cost incurred by the employer company is an allowable expenditure as per section 37 of the Act is no longer res-integra. The Special Bench of the Tribunal in Biocon Ltd. Vs. DCIT vide order dated 16th July 2013 (36 CCh 268, Bangalore Special Bench of the Tribunal) has held that the discount on issue of Employee Stock Option is an allowab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion) 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 11 employees during the course of service. If the legislature considers such discounted premium to the employees as a fringe benefit or any consideration for employment‟. It not open to argue contrary. Once it is held as a consideration for employment, the natural corollary which follows is that such discount i) is an expenditure ii) such expenditure is on account of an ascert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion was answered in favour of the Assessee by holding that the cost of ESOP could be debited to the profit and loss account of the Assessee. This Court has also in its decision dated 4th August 2015 in ITA No.2 of 2002 (CIT v. Oswal Agro Mills Ltd.) held that the expenditure incurred in connection with issue of debentures or obtaining loan should be considered as revenue expenditure. 4. In the circumstances, the impugned order of the ITAT answering the question in favour of the Assessee is affirmed. 11. Respectfully following the order of 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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