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Income Tax Appellate Tribunal, DELHI BENCH: ‘C’ NEW DELHI
Before: SHRI N. K. BILLAIYA & MS SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against order dated 18/04/2017 passed by CIT(A)-4 New Delhi for assessment year 2013-14.
The grounds of appeal are as under:-
“1.NON GRANT OF ADDITIONAL CLAIM FOR DEDUCTION OF ESOP EXPENSES AMOUNTING TO RS. 55.09.865:
1.1. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) - 4 [hereinafter referred to as CIT(A)], New Delhi has erred in confirming the order of the learned
Deputy Commissioner of Income Tax (DCIT), Circle-11(l), New Delhi.
1.2. The learned CIT(A) further erred in holding that the additional claim for deduction of ESOP related expenses amounting to Rs. 55,09,865/- is not maintainable by relying on the decision of the Hon'ble Supreme Court in the case of Goetz (India) Ltd. vs Commissioner of Income-tax (2006) (284 ITR 323).
1.3. The learned CIT(A) also erred in holding that the it cannot be said that the AO erred in not allowing the claim.
1.4. The learned CIT(A) erred in disallowing the additional claim by relying on the decision of the Hon'ble Supreme Court in the case of NTPC Ltd. (229 ITR 383) stating that the power to admit additional claim lies with the ITAT and not with the CIT(A). In doing so the learned CIT(A) did not give an opportunity to the appellant.
1.5. The appellant company therefore prays Your Honour to direct the learned DCIT to allow ESOP expenditure amounting to Rs. 55,09,865.
The assessee is a wholly own subsidiary of Hollister US. Hollister India is set up to act as a manufacturer engaged in manufacturing of medical catheter. The assessee filed its return of income on 30/11/2013 declaring total income at Rs.2,82,98,450/-. The assessment u/s 143(3) of the Income Tax Act was passed on 9/3/2016 thereby assessing total income of the assessee as per the return of income filed by the assessee.
The assessee filed appeal before the CIT(A) in respect of Assessment order dated 9/3/2016 thereby raising the ground of non- grant of additional claim for deduction of ESOP expenses amounting to Rs.55,09,865/- non grant of set up of brought forward MAT credited and carry forward of balance MAT credit as well as in correct levy of interest u/s 234B. The CIT(A) partly allowed the appeal of the assessee. Thereby rejecting the additional claim of ESOP expenses claimed by the assessee vide order dated 18/04/2017.
The Ld. AR submitted that the additional claim for deduction of ESOP related expenses amounting to Rs. 55,09,865/- should have not been rejected thereby relying by the decision of the Hon’ble Supreme Court in case of Goetz India Ltd. Vs. CIT 284 ITR 323. The CIT(A) should have allowed the additional claim as per the principal laid down by the Hon’ble Supreme Court in case of NTPC Ltd. 229 ITR 383 as the power to admit additional claim lies with the CIT(A) as well and not just Tribunal. The Ld. AR submitted that the CIT(A)/ Assessing Officer may be directed to allow ESOP expenditure as various decision on this issue has been allowing the said expenditure and the assessee is entitled for said claim.
The Ld. DR relied upon the assessment order and order of the CIT(A).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee during the assessment proceedings has given this claim of expenditure related to ESOP vide letter dated 23/02/2016 but the assessment order was already finalised by the Assessing Officer on 9/3/2016. The claim of ESOP expenditure has been determined as allowable expenditure by various decisions of the Hon’ble Supreme Court in following cases:-
(a) Kedarnath Jute Mill Company Ltd. 82 ITR 363. (b) (b) Sutlej Cotton Mills Ltd. 166 ITR 1 (c) United Commercial Bank 240 ITR 355 (d) Taparia Tools Ltd. 372 ITR 605 These expenses were incurred in the course of business of assessee and were let out as well as expanded wholly and exclusively for the business purpose only. Though in the original order of assessment, the Assessing Officer has not taken cognizance of this aspect and the assessee also has not made this claim it is not justifiable on the part of the CIT(A) in rejecting this additional claim. Therefore, we direct the Assessing Officer to examine this claim as per the law and allow these expenses/expenditure in respect of ESOP according to the provisions of law. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. The appeal of the assessee is partly allowed for statistical purpose.
In result, the appeal of the assessee is partly allowed for statistical purpose.