What did the Tribunal hold?

The Tribunal followed its own previous decisions in the assessee's own case, which had allowed ESOP expenses. Therefore, the CIT(A)'s order allowing the claim was upheld.

The Revenue appealed against the CIT(A)'s order deleting the disallowance of ESOP expenses. The assessee argued that an identical issue was decided in their favor in previous assessment years by the Tribunal.

What were the issues?

Whether ESOP expenses incurred by the assessee are allowable as a revenue deduction.

DCIT vs Sterlite Technologies Ltd | ITAT Mumbai 2016

Income Tax Appellate Tribunal, “E ” BENCH, MUMBAI

Before: SHRI RAJENDRA & SHRI C.N. PRASAD

Hearing: 28.07.2016Pronounced: 26.10.2016

आदेश / O R D E R

PER C.N. PRASAD, JM:

This appeal is filed by the Revenue against the order of the Ld. CIT(A)-24, Mumbai dated 18.03.2014 pertaining to assessment year 2010-11.

The only issue in the appeal of the revenue is that the Ld. CIT(A) erred in deleting the disallowance of ESOP expenses.

At the outset, the Ld. Counsel for the assessee submits that an identical issue has been decided by the Tribunal in assessee’s own case for the Assessment Years 2001-02, 2002-03 & 2007-08 in 3889/M/2006 and 4841/M/2013 vide orders dated 8.1.2008, 19.1.2009 and 14.11.2014 respectively in its favour allowing the ESOP expenses. Copies of the orders are place in paper book of pages 57 to 102. The Ld. Counsel for the assessee therefore submits that since the issue is squarely covered in assessee’s own case, the same may be followed for this Assessment Year also.

The Ld. Departmental Representative placed reliance on the orders of the assessment order.

Heard both sides, perused the orders of the authorities below and the orders placed before us. We find that the issue in appeal has been decided in favour of the assessee wherein the Co-ordinate Bench allowed the ESOP expenses incurred by the assessee observing as under: “7. We have heard the parties and carefully gone through the material available on record. We found that the CIT(A) in its appellate order has observed that the ESOP expenses of Rs. 1,86,63,187/- represented the option discount, that is, the excess of the market price of the share on the date of grant of the option under ESOP 2006 over the exercise price of the option. It has been submitted that (1) SEBI guidelines mandate that the ESOP expenses should be debited to the P&L Account, (2) the liability was not a contingent or notional liability but an ascertained liability and it was also not a capital expenditure, (3) ESOPs were granted to the employees of the company as per the scheme for motivating them to work for a certain number of years and since these were taxable in the hands of the employees, the expenditure was allowable as revenue deduction, We found that the very similar issue has been decided by the Mumbai Bench of the Tribunal in assessee's own case in for AY.2001-02 & 2002-03 in favour of assessee regarding the claim of assessee for ESOP expenses. The CIT(A) after considering the aforesaid decision

of the Tribunal allowed the claim of assessee for ESOP expenses. Respectfully following the order of the Tribunal in assessee's own case, we are of the considered view that the CIT(A) has rightly allowed the claim of the assessee. Hence, we uphold the decision of the CIT(A) regarding allowing ESOP expenses claimed by the assessee and dismiss the ground NO.1 of the Revenue.” Respectfully following the said decision of the Co-ordinate bench in assessee’s own case, we sustain the order of the Ld. CIT(A) in allowing the claim of the assessee by following the decision of the Co-ordinate Bench for the Assessment Years 2001-02 and 2002-03.

DCIT (LTU), MUMBAI vs. STERLITE TECHNOLOGIES LTD.,

What did the Tribunal hold?

What were the facts?

What were the issues?

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