TMI Blog2016 (6) TMI 1481X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of ESOP is allowable as deduction in computing income under the head 'Profits and gains of business or profession.' Since it is on account of an ascertained and not contingent liability, it cannot be treated as a short capital receipt. Thereafter, the Special Bench has laid down the mechanism for determining as to when and how much deduction should be allowed. It has been held that the liability to pay the discounted premium is incurred during the vesting period and the amount of such deduction is to be found out as per the terms of ESOP by considering the period and percentage of vesting during such period. Deduction of the discounted premium during the years of vesting should be allowed on straight line basis. Department s app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees Stock Option Scheme Compensation as per SEBI under Securities and Exchange Board of India Guidelines 1999. The company calculates the compensation based on intrinsic value method and accordingly, the excess if any of the market price of the underlying equity shares as the date of grant of the option over the exercise price of the option is recognized as employee compensation cost and amortized on straight line basis over the vesting period . The AO disallowed the assessee s claim. 4. Ld. CIT(A) allowed the assessee s claim relying on the decision in the assessee s own case for AY 2008-09 and 2009-10. 5. At the time of hearing ld. counsel for the assessee submitted that the decision of ld. CIT(A) for AY 2007-08 to 2009-10 has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g during such period. Deduction of the discounted premium during the years of vesting should be allowed on straight line basis. Then, dealing with the subsequent adjustment to discount, the Special Bench laid down that any adjustment to income is called for at the time of exercise of option by the amount of difference in the amount of discount calculated with reference to the market price at the time of grant of option and market price at the time of exercise of option . 8. Facts of the case for the present year being identical as in earlier years, for the same reasons and respectfully following the precedent, we set aside the impugned order of ld. CIT(A) and send the matter to the file of AO for deciding it in conformity with the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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