DCIT, CIRCLE-7(1), DELHI, DELHI vs. FIS GLOBAL BUSINESS SOLUTIONS INDIA PRIVATE LIMITED, DELHI

PDF · subscribers
ITA 3166/DEL/2025Status: DisposedITAT Delhi22 September 2025AY 2018-19Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI S.RIFAUR RAHMAN (Accountant Member)7 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue was covered in favor of the assessee by the decision of the Delhi High Court in the case of CIT vs. Lemon Tree Hotels Pvt. Ltd. Therefore, the appeal filed by the Revenue was dismissed.

What were the facts?

The assessee claimed deduction for ESOP expenditure. The AO disallowed this amount, considering it was not an actual cash outflow. The CIT(A) allowed the assessee's appeal, relying on a High Court decision.

What were the issues?

Whether ESOP expenditure, claimed as reimbursement to the holding company, is deductible under Section 37(1) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI S.RIFAUR RAHMAN

For Appellant: Ms. Kashish Gupta, CA
For Respondent: Shri Dayainder Singh Sidhu, CIT DR
Hearing: 22.09.2025

Heard together (4 matters)

ITA No.3166/DEL/2025
CO No.133/Del/2025
ITA No.3165/DEL/2025
CO No.134/Del/2025

Read from the judgment's own cause title. This page is filed under one of them.

(Assessment Year: 2018-19) DCIT, Circle 7 (1), vs. FIS Global Business Solutions India Delhi. Private Limited, S-405, Lower Ground Floor, Greater Kailash Part II, New Delhi – 110 048. (PAN : AAACH2815H) CO No.133/Del/2025 (in (Assessment Year: 2017-18) CO No.134/Del/2025 (in (Assessment Year: 2018-19) FIS Global Business Solutions India vs, DCIT, Circle 7 (1), Private Limited, Delhi. S-405, Lower Ground Floor, Greater Kailash Part II, New Delhi – 110 048. (PAN : AAACH2815H) (APPELLANT) (RESPONDENT) ASSESSEE BY : Ms. Kashish Gupta, CA REVENUE BY : Shri Dayainder Singh Sidhu, CIT DR Date of Hearing : 22.09.2025 Date of Order : 22.09.2025

ORDER

PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :

1.

The Revenue has filed appeals against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Central (NFAC), Delhi[“Ld. CIT(A)”, for short]dated 19.03.2025for the Assessment Years 2017-18 & 2018-19 and the assessee has filed cross objections against the aforesaid impugned order dated 19.03.2025 for the aforesaid assessment years.

2.

Since the issues are common and the appeals and cross objections are connected, hence the same are being heard together and disposed off by this common order. We take up the Revenue’s appeal being for AY 2017-18 as lead case to adjudicate the issue under consideration and the Revenue has raised the following ground :- “

Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in allowing the appeal of the assessee by deleting the addition made by the AO amounting to Rs.4,89,94,158/- on account of ESOP expenditure u/s 37(1) of the Act.”

3. Brief facts of the case are, assessee filed its return of income on 30.11.2017 declaring total income of Rs.1,49,31,17,510/-. Subsequently the case was selected through CASS with the reason disclosed in the assessment order. Accordingly, notices under section 143(2) and 142(1)

& 3166/DEL/2025 CO Nos.133 & 134/Del/2025 of the Income-tax Act, 1961 (for short ‘the Act’) were issued and served on the assessee through ITBA portal from time to time. During assessment proceedings, the AO observed that assessee has claimed share based compensation to employees amounting to Rs.4,89,94,158/- debited in its Profit & Loss account comprising of compensation cost for stock options, restricted stock units and compensation towards employee’s share purchase plan for shares of ultimate holding company which are granted to the employees of assessee company. On enquiry, assessee has submitted as under :- “The above said expenses were incurred as part of employee’s benefit expenses and were wholly and exclusively for the purposes of the business of the assessee Company and assessee had to reimburse its ultimately holding company for ESOPs, RSUs and shares under the ESPP scheme granted to the employees of the assessee involving actual cash out flow by the assessee.”

Further assessee submitted that the issue under consideration is covered by the decision of Hon’ble Delhi High Court in the case of CIT vs. Lemon Tree Hotels Ltd(ITA 107/2015 dated 18.08.2015). After considering the submissions of the assessee, the AO rejected the submissions of the assessee and observed that the Revenue has filed SLP before the Hon’ble Supreme Court and it is pending for adjudication.

& 3166/DEL/2025 CO Nos.133 & 134/Del/2025 Based on the above observation, he disallowed the amount claimed by the assessee under ESOP.

4.

Aggrieved with the above order, assessee preferred an appeal before NFAC, Delhi and filed detailed submissions relating to the claim of this expenditure and ESPP scheme which was floated by the holding company of the assessee. After considering the detailed submissions and assessment record, ld. CIT (A) discussed the scheme of ESPP and how the FNIS Inc., USA i.e. holding company of the assessee has issued invoices to the assessee for recovery of discount amount paid to the employees and subsequent settlement made by the assessee. The assessee also submitted invoices and Form 15CA evidence of the remittances made to the FNIS Inc. by the assessee under the ESPP scheme. After considering the detailed submissions of the assessee and relying on the decision of Hon’ble Delhi High Court in the case of Lemon Tree Hotels Ltd. (supra), ld. CIT (A) allowed the appeal preferred by the assessee.

5.

Aggrieved with the above order, Revenue has preferred an appeal before us and assessee has filed cross objections.

6.

At the time of hearing, both the parties brought to our notice the relevant facts available on record which were already discussed in the above paragraphs. After considering the submissions of both the parties and material facts on record, we noticed that the issue under consideration is & 3166/DEL/2025 CO Nos.133 & 134/Del/2025 covered in favour of the assessee by the decision of Hon’ble Delhi High Court in the case of Lemon Tree Hotels Pvt. Ltd. (supra). Accordingly, we dismiss the appeal preferred by the Revenue.

7.

In the result, the appeal being for AY 2017-18 is dismissed. 8. With regard to AY 2018-19, since the facts are exactly similar to AY 2017-18, our above decision in AY 2017-18are applicable mutatis mutandis in Assessment Year 2018-19. Accordingly, the appeal filed by the Revenue for AY 2018-19 is dismissed.

9.

As we have dismissed the appeals of the Revenue, the cross objections filed by the assessee have become infructuous and the same are dismissed as infructuous.

10.

In the result, both the appeals filed by the Revenue as well as cross objections filed by the assessee are dismissed. Order pronounced in the open court on this22ndday of September, 2025 after the conclusion of the hearing.

More judgments on Section 37(1)

All 6,995 judgments and leading authorities on Section 37(1) →

Recent GST High Court judgments

Search GST case law →