NUVAMA WEALTH MANAGEMENT LIMITED,MUMBAI vs. DCIT, PRATISHTHA BHAVAN, MUMBAI

ITA 2559/MUM/2024Status: DisposedITAT Mumbai31 October 2025Bench: SHRI AMIT SHUKLA (Judicial Member), MS PADMAVATHY S (Accountant Member)9 pages
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What did the Tribunal hold?

The Tribunal ruled that the Assessing Officer had conducted a thorough inquiry into the ESOP deduction claim. It clarified that the alleged 'recovery' was merely TDS funding, not a reimbursement of ESOP cost. The Tribunal held that the PCIT's revisional order under Section 263 was unsustainable as the original assessment was neither erroneous nor prejudicial to the revenue, affirming that ESOP discount is an allowable business expenditure under Section 37(1).

What were the facts?

The assessee, Nuvama Wealth Management Limited, claimed a deduction of Rs. 73.30 crores for ESOP expenditure. The Principal Commissioner of Income Tax (PCIT) set aside the assessment under Section 263, alleging lack of verification and an erroneous assumption that Rs. 58.02 crores was recovered from the holding company, requiring a de novo assessment.

What were the issues?

The key legal issue was the validity of the PCIT's revisional order under Section 263 to set aside an assessment concerning the allowability of ESOP expenditure, specifically whether the AO's original assessment lacked inquiry or was erroneous and prejudicial to the revenue based on a mistaken characterization of ESOP cost recovery.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 144B,Section 37(1),Section 115JB,Section 143(2),Section 142(1)

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Income Tax Appellate Tribunal, ‘B’ BENCH

For Appellant: Shri Madhur Agarwal & Shri
For Respondent: Shri Kishor Dhule-CIT DR
Hearing: 09/10/2025Pronounced: 31/10/2025

PER AMIT SHUKLA (J.M): This appeal by the assessee is directed against the revisional order dated 26 March 2024 passed under section 263 of the Income-tax Act, 1961 by the learned Principal Commissioner of Income Tax (Central)–1, Mumbai, whereby the assessment framed under section 143(3) read with section 144B on 30 September 2021 was set aside for de novo assessment on the question of allowability of deduction towards Employee Stock Option Plan (ESOP) expenditure. The 2 Navana Wealth Management Limited assessee, now known as Nuvama Wealth Management Limited (formerly Edelweiss Securities Limited), has assailed the assumption of juri iction as well as the conclusions drawn b

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