DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1), AHMEDABAD vs. AXIS BANK LIMITED, AHMEDABAD

ITA 2920/AHD/2026Status: DisposedITAT Ahmedabad22 October 20265 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal, in view of the precedents in the assessee's own cases for Assessment Years 2010-11 to 2021-22, confirmed the decision of the CIT(A) and dismissed the appeal of the Revenue. The Tribunal found no hesitation in following the decisions of the co-ordinate bench in the assessee's own cases for subsequent assessment years. The reasoning is that the issue involved in the present appeal is identical to those decided in the later years by a co-ordinate bench. The CIT(A) had accepted the assessee's claim for deduction of ESOP expenses by following these ITAT decisions. The Revenue's argument that the ITAT orders for succeeding years are under challenge before the High Court was noted, but the Tribunal chose to follow the established precedents in the assessee's own cases. The operative direction is to dismiss the Revenue's appeal.

What were the facts?

The Revenue has filed an appeal against the order of the Ld. Addl/Joint Commissioner of Income Tax (Appeals)-2, Noida, dated 30.06.2026, pertaining to Assessment Year 2009-10. The appeal concerns the deletion of an addition of Rs. 61.90 Crore made by the Assessing Officer (AO) on account of disallowance of Employee Stock Option Plan (ESOP) expenses. The AO's action was taken pursuant to a specific direction from the Honorable Gujarat High Court, which had remitted the issue to the AO for de novo decision. The AO had relied on a decision of the ITAT Delhi Bench in Ranbaxy Laboratories Ltd. instead of the ITAT Special Bench decision in Biocon Ltd. The CIT(A) deleted the addition by following ITAT Ahmedabad Benches' decisions in the assessee's own cases for subsequent assessment years.

What were the issues?

1. Whether the Ld. CIT(A) erred in deleting the addition of Rs. 61.90 Crore on account of ESOP expenses, without independently examining if the claim satisfied the requirements directed by the Honorable Gujarat High Court, especially since the proceedings arose from a High Court direction for de novo decision. 2. Whether the Ld. CIT(A) erred in deleting the addition by relying on ITAT orders for subsequent assessment years in the assessee's own case, which have been challenged by the Department before the Honorable Gujarat High Court and have not attained finality. 3. Whether the Ld. CIT(A) erred in deleting the addition merely by relying on ITAT decisions for subsequent assessment years, without independently examining the facts and computation methodology, including the terms of the ESOP scheme, vesting conditions, exercise pattern, forfeiture rate, and valuation mechanism applicable for the year under consideration. 4. Whether the Ld. CIT(A) erred in holding that the difference between the market price of shares on the date of exercise and the exercise price represents an ascertained and accrued liability allowable as deduction under Section 37 of the Act, without appreciating that it is a notional, contingent, book entry adjustment lacking certainty of crystallization during the relevant previous year. Assessee's contentions: Not explicitly recorded, but the CIT(A) followed ITAT decisions in the assessee's own cases for subsequent years. Shri Tushar Hemani, Sr. Advocate, submitted a compilation of case laws, including ITAT Ahmedabad Bench orders in the assessee's own cases for A.Ys. 2020-21 and 2021-22. Revenue's contentions: The Ld. CIT-DR argued that the ITAT orders for succeeding years have been challenged by the Revenue before the High Court and have not attained finality. The Revenue contended that the CIT(A) erred in deleting the addition without independently examining the facts and computation methodology for the year under consideration and that the difference in share price is a notional, contingent liability.

Which sections of the Income-tax Act were involved?

Section 37,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH

Before: Shri Tapas Ram Misra & Shri Gangadhar Panda

For Appellant: Shri Tushar Hemani, Sr. Advocate &, Ms. Yashvi Mashruwala, A.R
For Respondent: Shri R. V. Aroon Prasad, CIT-DR

PER TAPAS RAM MISRA, JUDICIAL MEMBER:

The present appeal has been filed by the Revenue against the order of the Ld. Addl/Joint Commissioner of Income Tax (Appeals)-2, Noida, (hereinafter referred to as “CIT(A)”), dated 30.06.2026 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2009-10. I.T.A No. 2920/Ahd/2026

2.

The Revenue has raised the following Grounds of appeal:

1.

Whether on the facts and in the circumstances

The order continues below.

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