THE COMMISSIONER OF INCOME - TAX vs. M/S BIOCON LTD.,

PDF · subscribers
ITA/651/2013HC KarnatakaKAHC01007127201311 November 2020Bench: ALOK ARADHE,H.T. NARENDRA PRASAD4 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the discount on the issue of ESOPs is allowable as a deduction in computing the income under the head 'profits and gains of business'. This discount was considered remuneration for employee services.

What were the facts?

The Revenue appealed against an ITAT order that allowed a discount on the issue of ESOPs as a business deduction. The core issue revolved around whether this discount constituted a deductible expenditure.

What were the issues?

The primary issue was whether the discount on ESOPs granted to employees is an allowable business expenditure. The court also considered if this discount should be treated as remuneration and if the expenditure was contingent.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF NOVEMBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.651 OF 2013 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX

LTU

JSS TOWERS

BSK III STAGE

BANGALORE. 2. THE DY. COMMISSIONER OF INCOME-TAX

LTU

JSS TOWERS

BSK III STAGE

BANGALORE ... APPELLANTS (BY SRI.K.V.ARAVIND, ADV.,) AND: M/S BIOCON LTD. 20TH KM, HOSUR ROAD ELECTRONIC CITY HEBBAGODI BANGALORE - 560 100. ... RESPONDENT (BY SRI.T.SURYANARAYANA, ADV.) - - -

2 THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 16.07.2013 PASSED IN ITA NO.368/BANG/2010 FOR THE ASSESSMENT YEAR 2003-04, PRAYING TO: (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. (II) ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT, BANGALORE IN ITA NO.368/BANG/2010 DATED 16.06.2013 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, LTU, BANGALORE. THIS ITA COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2003-04. The appeal was admitted by a bench of this Court vide order dated 31.01.2014 on the following substantial questions of law: (i) Whether on the facts and in the circumstances of the case and in law the

3 tribunal was right in holding that the discount on issue of ESOP is allowable deduction in computing the income under the head profits and gains of the business? (ii) Whether on the facts and in the circumstances of the case and in law the tribunal was right in holding that difference between market price of the shares at the time of grant of option and offer price amounts to discount and the same has to be treated as remuneration to the employees for their continuity of service? (iii) Whether on the facts and in the circumstance of the case and in law the tribunal committed an error in not in not examining the scheme of ESOP from which it is clear that the employees will not get any right in the shares till completion of the period prescribed and the expenditure claimed is contingent and recorded perverse finding?

2.

For the reasons assigned by us in the judgment passed today in I.T.A.No.653/2013, the substantial questions of law framed by a bench of this

4 court are answered against the revenue and in favour of the assessee. In the result, we do not find any merit in this appeal, the same fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE ss

More judgments on Section 260-A

All 2,570 judgments and leading authorities on Section 260-A →

Recent GST High Court judgments

Search GST case law →