PR. COMMISSIONER OF INCOME TAX, DELHI - 05 vs. LEMON TREE HOTELS PVT. LTD.

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ITA/862/2016HC DelhiDLHC01298321201602 December 2016Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE NAJMI WAZIRI2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises from the ITAT's order. The Court noted that the question of law was raised only for Assessment Years 2008-09 and 2009-10. It observed that there were previous orders covering Assessment Year 2008-09. Having regard to the overall circumstances and the fact that the previous orders took note of the relevant judgments, the Court concluded that a substantial question of law was not made out. Therefore, the appeal filed by the Revenue was dismissed. No specific finding on the merits of the ESOP expense disallowance was made by the High Court; the decision was based on the absence of a substantial question of law.

What were the facts?

This case involves an appeal by the Principal Commissioner of Income Tax, Delhi-05, against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had deleted a disallowance of expenses claimed by the assessee, Lemon Tree Hotels Pvt. Ltd., as part of its Employees Stock Option Plan (ESOP). The dispute pertains to the Assessment Years 2008-09 and 2009-10. The Revenue's contention is that the ITAT erred in applying the law, despite acknowledging a previous High Court decision for an earlier year. The Revenue relied on Supreme Court and High Court judgments to support its argument.

What were the issues?

1. Whether the Income Tax Appellate Tribunal (ITAT) erred in deleting the disallowance of expenses deducted as cost of Employees Stock Option Plan (ESOP)? (Question of law) Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The ITAT fell into error by not applying the law correctly, even though it took note of this Court's decision for the previous year. The Revenue argued that the ITAT's reliance on certain precedents was incorrect and cited the Supreme Court judgment in Punjab State Industrial Development Corporation Ltd., Chandigarh Vs. Commissioner of Income Tax, Patiala [1997] 225 ITR 792 (SC) and the High Court judgment in Commissioner of Income Tax Vs. Havells India Limited [2013] 352 ITR 376, which was considered in Oswal Agro’s case (decided on 04.08.2015).

AI-generated summary — verify with the full judgment below

$~33 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 862/2016 & CM No.44756/2016 PR. COMMISSIONER OF INCOME TAX, DELHI - 05..... Appellant Through: Mr. Raghvendra Singh and Mr.Rahul Choudhary, Advocates. Versus LEMON TREE HOTELS PVT. LTD. ..... Respondent Through: Mr. Pranjal Srivastava, Advocate. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI O R D E R % 02.12.2016 The question of law urged is, “whether the Income Tax Appellate Tribunal (ITAT) fall into error in deleting the disallowance of expenses deducted as cost of Employees Stock Auction Plan (ESOP)? ” The Revenue contends that the assessee/Revenue fell into error inasmuch as even though took note of the decision of this Court for the previous year (ITA No.107/2013 decided on 18.08.2015) to the extent it relied on CIT Vs. Oswal Agro Mills Limited has not applied the law correctly. In this regard, learned counsel relied upon the judgment of the Supreme Court in Punjab State Industrial Development Corporation Ltd., Chandigarh Vs. Commissioner of Income Tax, Patiala [1997] 225 ITR 792 (SC) .

The judgment in Commissioner of Income Tax Vs. Havells India Limited [2013] 352 ITR 376, was considered specifically in Oswal Agro’s case (supra) i.e. decided on 04.08.2015. Havells’case (supra) had taken note of the various judgments including Punjab State’s case (supra). Moreover, this Court notices that the question of law arose only for two years i.e. Assessment Years 2008-09 and 2009-10. There were previous orders which cover Assessment Year 2008-09. In the circumstances, having regard to the overall circumstances and the fact that the previous orders took note of the relevant judgments, it is held that no substantial question of law arises. The appeal is dismissed. S. RAVINDRA BHAT, J. NAJMI WAZIRI, J. DECEMBER 02, 2016 sb

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