TMI Blog2023 (4) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... facts on record and the judicial precedents referred above as well as going through the analysis of the test contemplated u/s. 37(1) of the Act by the ld. CIT(A), we do not find any reason to interfere with the finding arrived at by the CIT(A). Accordingly, ground taken by the revenue in this respect is dismissed. - ITA No. 370/Kol/2022 - - - Dated:- 27-3-2023 - SHRI SAJNAY GARG , JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL , ACCOUNTANT MEMBER For the Appellant : Shri Biswanath Paul , CA For the Respondent : Smt. Ranu Biswas , Addl. CIT , DR ORDER PER GIRISH AGRAWAL , ACCOUNTANT MEMBER : This appeal filed by the revenue is against the order of Ld. CITA), National Faceless Appeal Centre (NFAC), Delhi vide order No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he value of perquisites added in their respective hands under the provisions of section 17(2)(vi) of the Act. The value of perquisite was computed by taking difference between the exercise price and their market price which has been added to the salary income of the respective employees in the year in which options have been exercised and TDS was done on the same. 3.2. According to the assessee, ESOP cost in the nature of discount given by the assessee to its employees on issue of shares under its ESOS scheme is an allowable business expenditure u/s. 37 of the Act which has been incurred for appreciating and encouraging employees for their loyalty and performance towards the assessee company. Assessee submitted that discount on option un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a notional loss and not actual loss requiring any deduction u/s. 37(1) of the Act as it was a capital expenditure. 6. Per contra, Ld. AR reiterated the submissions made before the Ld. AO. He stated that difference between the exercise price and fair market price is considered as perquisite in the hands of the employees and added under salary income of the respective employees and is further subjected to TDS as applicable u/s. 192 of the Act. According to him, calculation of perquisite is done as per Section 17(2)(vi) read with Rule 3(8) of the Income Tax Rules, 1962. In this respect all the details relating to name, address, PAN of employees and the calculation of perquisites were submitted before the Ld. AO. It was stated that the disco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Held, yes - Whether issuance of shares at a discount would be an expenditure incurred for purposes of section 37(1) as primary object of aforesaid exercise was not to waste capital but to earn profits by securing consistent services of employees and therefore, same could not be construed as short receipt of capital - Held, yes - Whether thus, discount on issue of ESOP was allowable deduction under section 37(1) - Held, yes [Para 10] [In favour of assessee] 6.1. Ld. Counsel also referred to the decision of Hon ble High Court of Delhi in the case of CIT Vs. Lemon Tree Hotels Ltd. in ITA No. 107/2015 dated 18.08.2015 on a similar issue which was considered by the Coordinate bench of ITAT, Delhi in the case of ACIT Vs. People Strong HR Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Delhi High Court in the case of Lemon Tree Hotels Ltd. (supra). Accordingly, we do not find any infirmity in the order of the Id. CIT (Appeals) following the judgement of Hon'ble jurisdictional High Court and also the Special Bench which has now been confirmed by the Hon'ble Karnataka High Court. The appeal of the Revenue is thus dismissed. 6.2. Reference was also made to the decision of Hon ble High Court of Madras in the case of CIT Vs. PVP Ventures Ltd. 23 taxmann.com 286 wherein also the claim of assessee was allowed. 7. We have heard the rival contentions and perused the material available on record and gone through the judicial precedents referred above. We note that there is no dispute on the quantum of claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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