DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2(4) MUMBAI, MUMBAI vs. AVANSE FINANCIAL SERVICES LIMITED, MUMBAI

ITA 473/MUM/2025Status: DisposedITAT Mumbai28 May 2025AY 2022-23Bench: SHRI OM PRAKASH KANT (Accountant Member), MS. KAVITHA RAJAGOPAL (Judicial Member)9 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the discount on ESOPs, amortized over the vesting period, represents an ascertained liability and is an allowable business expenditure under Section 37(1) of the Income Tax Act. The revenue's appeal was dismissed.

What were the facts?

The assessee claimed Rs. 4,06,00,000/- as ESOP expenses in its profit and loss account. The Assessing Officer disallowed this claim, stating the expenditure was contingent and not crystallized during the year. The CIT(A) deleted the addition, relying on High Court and ITAT decisions.

What were the issues?

Whether expenditure claimed on ESOPs is a deductible business expense or a contingent capital expenditure. Whether the discount on ESOPs represents an ascertained liability deductible under Section 37(1).

Which sections of the Income-tax Act were involved?

Section 37(1)

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Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: SHRI OM PRAKASH KANT, AM

For Appellant: Shri. Pranav Shah
For Respondent: Shri. Ram Krishn Kedia, SR. DR
Hearing: 06.03.2025Pronounced: 28.05.2025

Per Kavitha Rajagopal, J M: These appeals have been filed by the revenue, challenging the order of the learned Commissioner of Income Tax (Appeals), 48, Mumbai (‘ld. CIT(A)’ for short), passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2021-22 and 2022-23. 2. As the facts are identical, we hereby pass a consolidated order by taking ITA No. 472/Mum/2025 as a lead case. ITA No. 472/Mum/2025; (A.Y. 2021-22)

3.

The revenue has raised the following grounds of appeal:

The order continues below.

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